HomeMy WebLinkAbout10/23/07 PFA Reports
CITY OF LAKE ELSINORE
PUBLIC FINANCE AUTHORITY AGENDA
ROBERT SCHIFFNER CHAIR
THOMAS BUCKLEY VICE CHAIR
DARYL HICKMAN AUTHORITY MEMBER
GENIE KELLEY AUTHORITY MEMBER
ROBERT MAGEE AUTHORITY MEMBER
ROBERT BRADY EXECUTIVE DIRECTOR
WWW LAKE ELSINORE ORG
(951) 6743124 PHONE
(951) 674 2392 FAX
LAKE ELSINORE CULTURAL CENTER
183 NORTH MAIN STREET
LAKE ELSINORE CA 92530
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TUESDAY, OCTOBER 23, 2007
PUBLIC SESSION AT 7 00 P M
The City of Lake ElSinore appreciates your attendance Citizens Interest provides
Public Financing Authonty with valuable information regarding Issues of the community
If you are attending thiS City Council Meeting please park In the parking lot across the
street from the Cultural Center ThiS Will assist us In limiting the Impact of meetings on
the Downtown Business Dlstnct Thank you for your cooperation
In compliance with the Americans with Disabilities Act any person with a disability who
requires a modification or accommodation In order to participate In a meeting should
contact the City Clerk s Office at (951) 674 3124 ext 262 at least 48 hours before the
meeting to make reasonable arrangements to ensure accessibility
CALL TO ORDER
ROLL CALL
PUBLIC COMMENTS - NON AGENDIZED ITEMS - 1 MINUTE
(Please read & complete a Speaker s Form at the Podium pnor to the Start of the City
Council Meeting)
PUBLIC COMMENTS - AGENDIZED ITEMS - 3 MINUTES
(Please read & complete a Speaker s Form at the Podium pnor to the Start of the City
Council Meeting The Chairman Will call on you to speak when your Item IS called)
CONSENT CALENDAR
(All matters on the Consent Calendar are approved on one motion unless an Authonty
Member or any member of the public requests separate action on a specific Item)
(1) Minutes of a Reqular Meetlnq of January 9. 2007
Recommendation Approve
PUBLIC HEARING
(2) JOint Public Heanna Resolutions Authonzlna the Issuance of Bonds and
Approvlna Bond Documents for Community Facilities Dlstnct No 2005 5 (Vlllaae
at Wasson Canvon)
Recommendations
1 City Council Waive further reading and adopt a resolution acting as the
legislative body of the City of Lake Elsinore Community Facilities Dlstnct No
2005 5 (Villages at Wasson Canyon) authonzlng the Issuance of the City of
Lake Elsinore Community Facilities Dlstnct No 2005 5 (Villages At Wasson
Canyon) authonzlng the Issuance of the City of Lake Elsinore Community
Facilities Dlstnct No 2005 5 9Vlllages at Wasson Canyon) Special Tax
Bonds 2007 Senes A approving the Issuance of the Lake Elsinore Public
Financing Authonty Local Agency Revenue Bonds (Wasson Canyon) 2007
Senes A and the Execution and Delivery of a Fiscal Agent Agreement a
Commitment Agreement and Purchase Contract a purchase Contract and a
Continuing Disclosure Agreement
2 Public Fmancmg Authority Waive further reading and adopt a resolution
approving the Issuance of Lake Elsinore Public Financing Authonty Local
Agency Revenue Bonds (Wasson Canyon) 2007 Senes A In the aggregate
pnnclpal amount not to exceed $6 500 000 pursuant to an Indenture of trust
authonzlng the sale of such bonds upon certain terms and conditions
approving an official statement approving the execution of commitment
agreement and purchase contracts for the purchase of local obligations of the
City of Lake Elsinore Community Facilities Dlstnct No 2005 5 (Villages at
Wasson Canyon) and taking other actions related thereto
BUSINESS ITEMS
None
PUBLIC COMMENTS - NON AGENDIZED ITEMS - 3 MINUTES
EXECUTIVE DIRECTOR COMMENTS
lEGAL COUNSEL COMMENTS
AUTHORITY MEMBER COMMENTS
The Lake Elsinore Public FinanCing Authonty will adjourn to a regular meeting to be
held on Tuesday January 8 2008 at 7 00 P m to be held In the Cultural Center located
at 183 N Main Street lake Elsinore CA 92530
.
AFFIDAVIT OF POSTING
I ROBERT A BRADY Authonty Secretary of the City of Lake Elsinore do hereby
affirm that a copy of the foregoing agenda was posted at City Hall 72 hours In advance
of this meeting
fA--
VIVIAN M MUNSON
AUTHORITY SECRETARY
o~ 17'/.J-Vo7
DATE
"
MINUTES
PUBLIC FINANCE AUTHORITY MEETING
CITY OF LAKE ELSINORE
183 NORTH MAIN STREET
LAKE ELSINORE, CALIFORNIA
TUESDAY JANUARY 9, 2007 5 00 P M
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CALL TO ORDER
A regular meeting of the Public Finance Authonty was called to order by Chairman
Schiffner at 8 17 P m
ROLL CALL
PRESENT CHAIRMAN SCHIFFNER
VICE CHAIRMAN BUCKLEY
MEMBER KELLEY
MEMBER MAGEE
MEMBER SCHIFFNER
ABSENT NONE
Also present were Executive Director Brady Legal Counsel Leibold Administrative
Services Director Pressey Lake & Aquatic Resources Director Kilroy Community
Development Director Prelsendanz Community Services Director Sapp Chief of Police
Fetherolf Fire Chief Gallegos City Treasurer Weber and Clerk of the Board Ray
PUBLIC COMMENTS - NON AGENDIZED ITEMS - 1 MINUTE
No comments
PUBLIC COMMENTS - AGENDIZED ITEMS - 3 MINUTES
No comments
CONSENT CALENDAR
MOVED BY VICE CHAIRMAN BUCKLEY SECONDED BY MEMBER HICKMAN AND
CARRIED BY A UNANIMOUS VOTE TO APPROVE THE CONSENT CALENDAR AS
PRESENTED
1 The following minutes were approved
1
Agenda Item No 1
Page 1 of 2
a Public Finance Authority Meeting - March 14 2006
b Public Finance Authority Meeting - December 12 2006
2 Adopted Resolution No 2007 01 naming Mr James R Riley as an additional
authorized signer for all Local Agency Investment Accounts held at the State of
California
BUSINESS ITEMS
None
PUBLIC COMMENTS - NON AGENDIZED ITEMS - 3 MINUTES
No comments
EXECUTIVE DIRECTOR COMMENTS
No comments
LEGAL COUNSEL COMMENTS
No comments
AUTHORITY MEMBER COMMENTS
No comments
ADJOURNMENT
Chairman Schiffner adjourned the Public Finance Authority Meellng at 818 p m
ROBERT SCHIFFNER, CHAIRMAN
PUBLIC FINANCE AUTHORITY
ATTEST
MICHELLE SOTO, DEPUTY CLERK OF THE BOARD
2
Agenda Item No 1
Page 2 of 2
CITY OF ~
LAKE 6LSlIiORb
, ,
V DREAM EXTREMEw
JOINT REPORT TO CITY COUNCIL AND
PUBLIC FINANCING AUTHORITY
TO HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
CHAIRMAN AND PUBLIC FINANCING AUTHORITY BOARDMEMBERS
FROM ROBERT A BRADY
CITY MANAGER I EXECUTIVE DIRECTOR
DATE OCTOBER 23, 2007
SUBJECT JOINT PUBLIC HEARING - RESOLUTIONS AUTHORIZING THE
ISSUANCE OF BONDS AND APPROVING BOND DOCUMENTS FOR
COMMUNITY FACILITIES DISTRICT NO 20055 (VILLAGES AT
WASSON CANYON)
BackQround
On August 9 2005 the City adopted the necessary resolutions and ordinances forming
Lake Elsinore Community FacIlities District (CFD) 2005 5 (Villages at Wasson Canyon)
and authorizing the levy of a special tax
The developer plans to bUild 191 residential dwelling Units
DISCUSSion
Bond Issue
In order to finance the facIlities It IS necessary to Incur bonded Indebtedness The not
to exceed bond amount authorized In August 2005 by City Council IS $8 500 000
however given the current housing market conditions staff IS recommending that this
bond Issue not exceed $6 500 000 Presented are the resolutions authorizing the
Issuance of bonds and the related bond documents Currently the anticipated amount
of the bond Issue IS approximately $3 290 000 The resolutions approve the follOWing
bond documents
1 Fiscal Agent Agreement (Pages 14 through 70)
2 Commitment Agreement and Purchase Contract (Pages 71 through 79)
3 Purchase Contract (Pages 80 through 116)
4 Continuing Disclosure Agreement (Pages 117 through 126)
5 Indenture of Trust (Pages 127 through 180)
6 Preliminary OffiCial Statement (Pages 181 through 316)
Agenda Item No 2
Page 1 of 316
Resolutions Authorizing Issuance of Bonds for CFD 2005 5
October 23 2007
Page 2
Speclaf Tax
The average residential special tax In the CFD IS estimated at $2 482 The annual CFD
tax amount when combined with all other property taxes applicable to the project IS
estimated to be within the 2% total tax rate policy within the City CFD gUidelines
FaCIlitIes
The proposed facilities list IS attached The list totals over $7 million The list Includes
over $2 7 million In City of Lake ElSinore Impact fees and Improvements The list also
Includes over $2 million of EVMWD Impact fees and Improvements
Fiscal Impact
Repayment of the bonds are secured by the special taxes leVied on all property Within the
CFD other than those properties that are exempt as proVided In the respective rate and
method of apportionment
Responsibility for the construction of the Improvements IS born by the developer The
cost of acqUiring the Improvements IS paid by the CFD bond proceeds
Recommendations
1 City Council Waive further reading and adopt a resolution acting as the
legislative body of the City of Lake ElSinore Communrty FaCIlities District No
2005-5 (Villages at Wasson Canyon) authOriZing the Issuance of the City of
Lake ElSinore Communrty FaCIlities Dlstnct No 2005 5 (Villages At Wasson
Canyon) SpeCial Tax Bonds 2007 Series A approving the Issuance of the
Lake ElSinore Public FinanCing AuthOrity Local Agency Revenue Bonds
(Wasson Canyon) 2007 Series A and the Execution and Delivery of a Fiscal
Agent Agreement a Commitment Agreement and Purchase Contract a
purchase Contract and a Continuing Disclosure Agreement
2 Public FinanCing AuthOrity Waive further reading and adopt a resolution
approving the Issuance of Lake ElSinore Public FinanCing AuthOrity Local
Agency Revenue Bonds (Wasson Canyon) 2007 Series A In the aggregate
prinCipal amount not to exceed $6 500 000 pursuant to an Indenture of trust
authOriZing the sale of such bonds upon certain terms and conditions
approving an offiCial statement approving the execution of commitment
agreement and purchase contracts for the purchase of local obligations of the
City of Lake ElSinore Communrty FaCIlities District No 2005 5 (VIllages at
Wasson Canyon) and taking other actions related thereto
Agenda Item No 2
Page 2 of 316
Prepared by
Approved by
Matt N Presse~
Director of Adm~~t1ve Services
Robert A Brady(}~
City Manager W
Agenda Item No 2
Page 3 of 316
City of Lake Elsinore
CFD No 2005 5 (VIllages at Wasson Canyon)
Exhibit A
June 28 2005
Page A 1
Boundary Map
PROPOSED BOUNDARY OF
COMMUNITY FACIUT/ES DISTRICT No 2005-5
OF THE CITY OF LAKE ELSINORE
(IIIUAGES AT WASSON CANYON)
COUNTY OF RIVERSIDE
STAlE OF CAUFORNIA
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Agenda Item No 2
Page 4 of 316
Commumty FaclhtIes District No 2005-5
(Villages at Wasson Canyon)
FacIlities List
FacihtIes Cost EstImate
Street Improvements $ I 460 333
(Streets Curb & Gutters Sidewalks)
Storm Dram Improvements $ 683 483
Engmeenng $ 114259
Dramage Area Fee Third Street $ 283 338
Wasson Canyon Dramage Fee $ 145243
CIty Fire ProtectIOn Fee $ 28 650
LIbrary Fee $ 28 650
Park Fee $ 343 800
Traffic Impact Fee $ 246 008
TUMF $ 1 384 368
MSHCP Fee $ 315341
EVMWD Sewer ConnectIOn Fees $ 908 205
EVMWD Water Connection Fees $ 1 036 939
EVMWD ImgatIOn Meter Fees $ 112427
Total EstImated ConstructIon Cost $ 7,091,044
Agenda Item No 2
Page 5 of 316
RESOLUTION NO
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE
ELSINORE, CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF
THE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT
NO 2005-5 (VILLAGES AT WASSON CANYON), AUTHORIZING THE
ISSUANCE OF THE CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO 2005 5 (VILLAGES AT WASSON CANYON)
SPECIAL TAX BONDS, 2007 SERIES A, APPROVING THE ISSUANCE
OF THE LAKE ELSINORE PUBLIC FINANCING AUTHORITY LOCAL
AGENCY REVENUE BONDS (WASSON CANYON) 2007 SERIES A,
AND THE EXECUTION AND DELIVERY OF A FISCAL AGENT
AGREEMENT, A COMMITMENT AGREEMENT AND PURCHASE
CONTRACT, A PURCHASE CONTRACT AND A CONTINUING
DISCLOSURE AGREEMENT
WHEREAS the City Council (the Council) of the City of Lake Elsinore (the
City) has previously formed the City of Lake Elsinore Community Facilities Dlstnct No
2005 5 (VIllages at Wasson Canyon) (the Dlstnct) pursuant to the Mello Roos
Community FaCIlities Act of 1982 as amended (the Act) and
WHEREAS the City desires to Issue not to exceed $6 500 000 aggregate
pnnclpal amount of bonds designated City of Lake Elsinore Community FacIlities
Dlstnct No 2005 5 (Villages at Wasson Canyon) SpeCial Tax Bonds 2007 Senes A
(the Bonds) to be purchased by the Lake Elsinore Public Financing Authonty (the
Authonty) for the purpose of financing the purchase construction expansion or
rehabilitation of certain real and other tangible property with an estimated useful life of
five years or longer including public Infrastructure faCIlities which the City or the Dlstnct
IS authonzed by law to construct own or operate which are necessary to meet
Increased demands placed upon the City as a result of development or rehabilitation
occurring within the Dlstnct (the Facilities) and
WHEREAS the Authonty Intends to Issue ItS Local Agency Revenue Bonds
(Wasson Canyon) 2007 Senes A (the Authonty Bonds) the proceeds of which Will be
used to purchase the Bonds and
WHEREAS the City has heretofore held a public heanng pursuant to Section
6586 5 of Articles 1 through 4 of Chapter 5 DIVIsion 7 TItle 1 of the Government Code
of the State of California (the Bond Law) and
WHEREAS proposed forms of a Fiscal Agent Agreement a Commitment
Agreement and Purchase Contract a Purchase Contract and a ContinUing Disclosure
Agreement have been presented to the City CounCil and are on file with the City Clerk
Agenda Item No 2
Page 6 of 316
NOW, THEREFORE the City Council of the City of Lake Elsinore California
acting as the legislative body of City of lake Elsinore Community FacIlities District No
2005-5 (VIllages at Wasson Canyon) does hereby resolve as follows
Section 1 The City Council as the legislative body of the District hereby
authorizes the Issuance of the Bonds In the aggregate principal amount not to exceed
$6 500 000
Section 2 The City hereby finds and determines that (I) the Facilities are to be
located within the boundaries of the City and (II) there are Significant public benefits
arising from the Authority s Issuance of the Authority Bonds to finance the FacIlities
including but not limited to employment benefits from undertaking the acquIsItion of the
FaCIlities In a timely fashion as contemplated by Section 6586 of the Bond Law
Section 3 The City CounCil as the legislative body of the District hereby
approves the Fiscal Agent Agreement In substantially the form on file with the City
Clerk The Mayor the City Manager the Director of Administrative Services and any
deSignee of any of them (each a Responsible Officer") are hereby authorized to
execute the Fiscal Agent Agreement In substantially the form presented hereto with
such revIsions amendments and completions as shall be approved by any Responsible
Officer with the adVice of Bond Counsel such approval to be conclUSively eVidenced by
the execution and delivery thereof by any Responsible Officer
Section 4 The City CounCil as the legislative body of the District hereby
approves the Continuing Disclosure Agreement In substantially the form on file with the
City Clerk Any Responsible Officer IS hereby authonzed to execute the ContinUing
Disclosure Agreement In substantially the form presented hereto with such reVISions
amendments and completions as shall be approved by any Responsible Officer with
the adVice of Bond Counsel such approval to be conclusively eVidenced by the
execution and delivery thereof by any Responsible Officer
Section 5 The City CounCil acting on ItS behalf and as the legislative body of
the District hereby approves the Commitment Agreement and Purchase Contract In
substantially the form on file with the City Clerk Any Responsible Officer IS hereby
authorized to execute the Commitment Agreement and Purchase Contracts In
substantially the form presented hereto with such revIsions amendments and
completions as shall be approved by any Responsible Officer with the adVice of Bond
Counsel such approval to be conclusively eVidenced by the execution and delivery
thereof by any Responsible Officer prOVided that the Bonds shall bear Interest at a rate
not to exceed 6 5%
Section 6 The City Council acting on ItS behalf and as the legislative body of
the Dlstnct hereby approves the sale of the Authority Bonds to the Underwnter
pursuant to and In accordance wIth the Purchase Contract In substantially the form on
file with the City Clerk Any Responsible Officer IS hereby authonzed to execute the
Purchase Contract with such revIsions amendments and completions as shall be
approved by any Responsible Officer with the adVice of Bond Counsel such approval
Agenda Item No 2
Page 7 of 316
to be conclusively eVidenced by the execution and delivery thereof by any Responsible
Officer
I'
I,
,
I'
II
I
Section 7 Pursuant to Section 53344 1 of the Act the Council hereby reserves
to Itself In ItS sole discretion the nght and authonty by subsequent resolution to allow
any owner of property within the Dlstnct subject to the provISions of Section 53344 1 of
the Act and those conditions as It may Impose and any applicable prepayment
penalties as prescnbed In the bond Indenture or comparable Instrument or document to
tender to the Dlstnct treasurer or fiscal agent In full payment or part payment of any
Installment of the speCial taxes or the Interest or penalties thereon which may be due or
delinquent but for which a bill has been received any bond or other obligation secured
thereby the bond or other obligation to be taken at par and credit to be given for the
accrued Interest shown thereby computed to the date of tender
Section 8 The City Manager the Director of Administrative Services the City
Clerk and all other officers of the City are hereby authOrized and directed for and In the
name and on behalf of the City and the District to do any and all things and take any
and all other actions including the publication of any notices necessary or deSirable In
connection With the sale of the Bonds and execution and delivery of any and all
assignments certificates reqUisitions agreements notices consents Instruments of
conveyance warrants and other documents which they or any of them deem
necessary or advisable In order to consummate the lawful Issuance and sale of the
Bonds and the consummation of the transactions as deSCribed herein
Section 9 This Resolution shall take effect from and after the date of ItS
passage and adoption
PASSED, APPROVED AND ADOPTED at a regular meeting of the City CounCil
of the City of Lake Elsinore California this 23rd day of October 2007
ROBERT E MAGEE
MAYOR
ATTEST
VIVIAN M MUNSON
CITY CLERK
Agenda Item No 2
Page 8 of 316
APPROVED AS TO FORM
BARBARA ZEID LEIBOLD
CITY ATTORNEY
CITY OF LAKE ELSINORE
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )ss
CITY OF LAKE ELSINORE )
I VIVIAN M MUNSON City Clerk of the City of Lake Elsinore California hereby
certify that Resolution No was adopted by the City Council of the City of
Lake Elsinore California at a regular meeting held on the 23rd day of October 2007
and that the same was adopted by the follOWing vote
AYES
NOES
ABSENT
ABSTAIN
VIVIAN M MUNSON
CITY CLERK
Agenda Item No 2
Page 9 of 316
RESOLUTION NO
A RESOLUTION OF THE LAKE ELSINORE PUBLIC FINANCING
AUTHORITY APPROVING THE ISSUANCE OF LAKE ELSINORE
PUBLIC FINANCING AUTHORITY LOCAL AGENCY REVENUE BONDS
(WASSON CANYON) 2007 SERIES A IN THE AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $6,500 000 PURSUANT TO
AN INDENTURE OF TRUST, AUTHORIZING THE SALE OF SUCH
BONDS UPON CERTAIN TERMS AND CONDITIONS, APPROVING AN
OFFICIAL STATEMENT, APPROVING THE EXECUTION OF
COMMITMENT AGREEMENT AND PURCHASE CONTRACTS FOR
THE PURCHASE OF LOCAL OBLIGATIONS OF THE CITY OF LAKE
ELSINORE COMMUNITY FACILITIES DISTRICT NO 2005-5
(VILLAGES AT WASSON CANYON) AND TAKING OTHER ACTIONS
RELATED THERETO
WHEREAS the Lake Elsinore Public Financing Authonty (the Authonty') IS a
JOint exercise of powers authonty duly organized and eXisting under and pursuant to that
certain JOint Exercise Powers Agreement by and between the City of Lake Elsinore and
the Redevelopment Agency of the City of Lake Elsinore (the Agency") 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 Authonty and
WHEREAS the City Council of the City of Lake Elsinore as the legislative body
of the City of Lake Elsinore Community FaCIlitIes District No 2005 5 (VIllages at
Wasson Canyon) (the Dlstnct) has authonzed the Issuance of City of Lake Elsinore
Community FaCIlities Dlstnct No 2005-5 (Villages at Wasson Canyon) Special Tax
Bonds 2007 Senes A (the Local ObligatIons) for the purpose of financing the
purchase construction expansion or rehabilitation of certain real and other tangible
property With an estimated useful life of five years or longer Including public
Infrastructure faCIlities which the City or the Dlstnct IS authOrized by law to construct
own or operate which are necessary to meet Increased demands placed upon the City
as a result of development or rehabilitation occurring Within the Dlstnct (the FacIlities)
and
WHEREAS for the purpose of assisting the City and the Dlstnct In financing the
FaCIlities the Authonty has determined to Issue ItS Local Agency Revenue Bonds
(Wasson Canyon) 2007 Senes A (the Bonds) and
WHEREAS the Authonty Intends to use a portion of the proceeds of the Bonds
to purchase the Local Obligations pursuant to a Commitment Agreement and Purchase
Contract (the Commitment Agreement and Purchase Contract) to be entered Into
between the Authonty and the Dlstnct and
Agenda Item No 2
Page 10 of316
WHEREAS the City as one of the members of the Authonty has heretofore
held a public hearing pursuant to Section 6586 5 of the Act and In connection therewith
has approved the Authonty's financing of the FacIlities and has found and determined
that (I) the FacIlities are to be located within the boundaries of the City and (II) there are
significant public benefits arising from the Authority s Issuance of the Bonds to finance
the Facilities Including but not limited to employment benefits from undertaking the
acquIsItion of the FacIlities In a timely fashion as contemplated by Section 6586 of the
Act
NOW, THEREFORE, the Lake Elsinore Public Financing Authonty does hereby
resolve as follows
Section 1 The foregoing reCitals are true and correct and the Authonty hereby
so finds and determines
Section 2 The Authority hereby approves the Issuance of the Bonds In the
aggregate pnnclpal amount not to exceed $6500000 pursuant to the Indenture of Trust
(the Indenture) In substantially the form on file with the Secretary of the Authonty and
presented to the Board at this meeting Anyone of the Chairman the Executive Director
and the Secretary of the Authority and each of them and any designee of any of them
(collectively the Authorized Officers) IS hereby authorized and directed for and In the
name and on behalf of the Authority to execute and deliver the Indenture with such
insertions and changes as may be approved by the Authorized Officer executing the
same subject to the prOVISions of this Resolution such approval to be conclusively
eVidenced by such execution and delivery
Section 3 The Authority hereby authorizes the sale of the Bonds to the
Underwnter pursuant to and In accordance with the Purchase Contract In substantially
the form on file with the Secretary of the Authority and presented to the Board at this
meeting Anyone of the Authonzed Officers IS hereby authorized and directed for and
In the name and on behalf of the Authonty to execute and deliver the Purchase
Contract with such Insertions and changes as may be approved by the Authonzed
Officer executing the same subject to the provISions of this Resolution such approval to
be conclUSively eVidenced by such execution and delivery The underwnter's discount
for the Bonds speCified In the Purchase Contract shall not exceed 2 0% exclusive of
Original Issue discount The Bonds shall bear Interest at a rate or rates not to exceed
6 5% per annum The matunty date of the Bonds shall not extend beyond 40 years from
their Issuance date
Section 4 The Authority hereby approves the form of the Preliminary Official
Statement (the Preliminary OffiCial Statement) In substantially the form on file with the
Authority Secretary with such changes and modifications as shall be necessary or
appropriate for completion to the satisfaction of the Executive Director of the Authonty
and approval by Fulbnght & Jaworski L L P the Authority s Disclosure Counsel The
Executive Director IS authonzed and directed on behalf of the Authonty to deem the
Preliminary OffiCial Statement final pursuant to Rule 15c2 12 under the Secuntles and
Exchange Act of 1934 The Authonty further approves dlstnbutlon of the Preliminary
Agenda Item No 2
Page 11 of 316
Official Statement by the Underwriter to persons who may be Interested In purchasing
the Bonds The Board hereby approves the final Official Statement describing the
Bonds Distribution of the final Official Statement by the Underwriter IS hereby approved
The Executive Director subject to approval by the Authority s Disclosure Counsel IS
hereby authorized and directed to approve any changes In or additions to the final form
of the Official Statement to conform to the requirements of the Purchase Contract and
the Indenture as applicable
Section 5 The AuthOrity hereby approves the purchase of the Local
Obligations pursuant to the Commitment Agreement and Purchase Contract In
substantially the form on file With the Secretary of the AuthOrity and presented to the
Board at this meeting Anyone of the AuthOrized Officers IS hereby authOrized and
directed for and In the name and on behalf of the AuthOrity to execute and deliver the
Commitment Agreement and Purchase Contract With such insertions and changes as
may be approved by the AuthOrized Officer executing the same subject to the provIsions
of this Resolution such approval to be conclUSively eVidenced by such execution and
delivery
Section 6 Anyone of the AuthOrized Officers IS hereby authOrized and
directed for and In the name and on behalf of the AuthOrity to evaluate and select one
or more mUniCipal bond Insurers for all or any portion of the Bonds and to execute and
deliver such contracts and agreements With such bond Insurers as may be approved by
the AuthOrized Officer executing the same subject to the provIsions of thiS Resolution
such approval to be conclUSively eVidenced by such execution and delivery
Section 7 The AuthOrized Officers the other officers and employees of the
AuthOrity the members of the AuthOrity s Board of Directors Bond Counsel Disclosure
Counsel and the other consultants to and agents of the Authonty are each hereby
authOrized and directed to do all things and take all actions necessary or deSirable to
effectuate the transactions contemplated by thiS Resolution and to execute such other
assignments agreements certificates receipts endorsements orders opinions and
other documents In connection With such transactions including Without limitation
clOSing documents In connection With the Issuance of the Bonds and all actions
heretofore taken by the officers employees and agents of the Authonty In connection
With the Issuance of the Bonds are hereby ratified approved and confirmed In every
respect
Agenda Item No 2
Page 12 of 316
Section 8 This Resolution shall become effective Immediately upon adoption
PASSED, APPROVED AND ADOPTED at a regular meeting of the Lake
Elsinore Public Financing Authonty this 23rd day of October 2007
ROBERT SCHIFFNER
CHAIRMAN
PUBLIC FINANCING AUTHORITY
ATTEST
ROBERT A BRADY
SECRETARY
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE )ss
CITY OF LAKE ELSINORE )
I ROBERT A BRADY Secretary of the Lake ElSinore Public FinanCing
Authonty hereby certify that Resolution No was adopted by the
Board of Directors of the Lake ElSinore Public FinanCing Authonty at a regular meeting
held on the 23rd day of October 2007 and that the same was adopted by the follOWing
vote
AYES
NOES
ABSENT
ABSTAIN
ROBERT A BRADY
SECRETARY
Agenda Item No 2
Page 13 of 316
FISCAL AGENT AGREEMENT
by and between
CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO 2005 5
(VILLAGES AT WASSON CANYON)
and
UNION BANK OF CALIFORNIA N A
as FIscal Agent
Dated as of November 1 2007
Relatmg to
$
CIty of Lake Elsmore CommunIty FacIlItIes Dlstnct No 2005 5
(VIllages at Wasson Canyon)
SpeCIal Tax Bonds 2007 Senes A
Agenda Item No 2
Page 14 of 316
TABLE OF CONTENTS
Page
ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS 2
1 1 Authonty for thIS Agreement 2
12 Agreement for Benefit of Bond Owners 2
13 DefimtIons 2
ARTICLE II THE BONDS 11
21 PnncIpal Amounts DesIgnations 11
22 Terms of Bonds 11
23 RedemptIOn 12
24 Form of Bonds 15
25 ExecutIOn of Bonds 15
26 Transfer of Bonds 15
27 Exchange of Bonds 15
28 Bond Register 16
29 Temporary Bonds 16
210 Bonds Mutilated Lost Destroyed or Stolen 16
211 LimIted OblIgation 17
212 No AcceleratIOn 17
213 Panty Bonds 17
ARTICLE III ISSUANCE OF BONDS 18
3 1 Issuance and DelIvery of the Bonds 18
32 ApplIcation of Proceeds of Sale of the Bonds 18
33 ValIdIty of Bonds 19
34 SpeClal Taxes ReceIpt Fund and SpecIal Tax Fund 19
35 Reserved 20
36 AdmImstratIve Expense Fund 20
37 hnprovement Fund 20
38 Costs of Issuance Fund 21
39 Delmquency Management Fund 21
310 ReSIdual Fund 22
311 RedemptIOn Fund 23
ARTICLE IV SPECIAL TAX REVENUES BOND FUND 23
41 Pledge of SpeCla1 Tax Revenues 23
42 Bond Fund 24
ARTICLE V OTHER COVENANTS OF THE DISTRICT 25
5 1 Punctual Payment 25
52 LImIted OblIgatIOn 25
53 ExtenSIOn of TIme for Payment 25
54 Agamst Encumbrances 25
55 Books and Records 25
55084540 1 1
Agenda Item No 2
Page 15 of 316
TABLE OF CONTENTS
( contmued)
ProtectIon of Secunty and RIghts of Owners
ComplIance with Law CompletIon of FacIlItIes
CollectIon of SpeCial Tax Revenues
Further Assurances
Tax Covenants
Covenant to Foreclose
Annual Reports to CDIAC
Contmumg Disclosure to Owners
Reserve Account Replemshment
INVESTMENTS DISPOSITION OF INVESTMENT PROCEEDS
LIABILITY OF THE DISTRICT
6 I Deposit and Investment of Moneys m Funds
6 2 Limited OblIgatIOn
63 LiabilIty ofDlstnct
6 4 Employment of Agents by Dlstnct or the City
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
7 I Events of Default
7 2 Remedies of Bond Owners
7 3 ApplIcatIOn of SpeCial Taxes and Other Funds After Default
74 Absolute OblIgatIon of the Dlstnct
75 TenmnatlOn ofProceedmgs
7 6 Remedies Not Exclusive
77 No Waiver of Default
7 8 ActIOns by Fiscal Agent as Attorney m Fact
ARTICLE VIII THE FISCAL AGENT
8 I Appomtment of Fiscal Agent
8 2 LiabilIty of Fiscal Agent
8 3 InformatIOn
8 4 NotIce to Fiscal Agent
8 5 CompensatIOn Indemmfical10n
ARTICLE IX MODIFICATION OR AMENDMENT OF THIS AGREEMENT
9 I Amendments Permitted
9 2 Owners Meetmgs
9 3 Procedure for Amendment With Wntten Consent of Owners
9 4 DisqualIfied Bonds
95 Effect of Supplemental Agreement
96 Endorsement or Replacement of Bonds Issued After Amendments
9 7 Amendatory Endorsement of Bonds
98 OpmlOn of Bond Counsel
56
57
58
59
510
511
512
513
514
ARTICLE VI
55084540 I
11
Page
26
26
26
27
27
30
31
31
31
32
32
33
33
34
34
34
35
35
36
36
36
36
36
36
36
37
39
39
39
40
40
40
41
41
41
42
42
42
Agenda Item No 2
Page 16 of316
_1_-
ARTICLE X
101
102
103
104
105
106
107
108
109
1010
1011
10 12
1013
TABLE OF CONTENTS
(contmued)
MISCELLANEOUS
Benefits of Agreement Limited to Parties
Successor IS Deemed Included m All References to Predecessor
Discharge of Agreement
ExecutIOn of Documents and Proof of Ownership by Owners
Waiver of Personal Liability
Notices to and Demands on Dlstnct and Fiscal Agent
Partial Invalidity
Unclaimed Moneys
Applicable Law
Conflict With Act
ConclUSive EVidence of Regulanty
Payment on Busmess Day
Counterparts
EXHffiIT A - FORM OF BOND
EXHffiIT B - FORM OF OFFICER S CERTIFICATE
55084540 I
111
Page
42
42
42
42
43
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Al
B 1
Agenda Item No 2
Page 17 of316
FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the Agreement) IS made and entered
mto as of November 1 2007 by and between the City of Lake Elsmore Commuruty FaCIlItIes
Dlstnct No 2005 5 (Villages at Wasson Canyon) (the Dlstnct) a community faCilItIes dlstnct
orgarnzed and eXistIng under and by Virtue of the laws of the State of CalIfornIa and Umon Bank
of CalIfornIa, N A a natIOnal bankmg associatIOn organized and eXlstmg under the laws of the
Umted States of Amenca as fiscal agent (the Fiscal Agent)
WITNESSETH
WHEREAS the City Council (the City Council ) of the City of Lake Elsmore
(the City') has formed the Dlstnct under the proViSions of the Mello Roos Commuruty
FaCIlItIes Act of 1982 as amended (SectIon 53311 et seq of the CalIfornia Government Code)
(the Act) and ResolutIOn No 2005 104 of the City Council adopted on August 9 2005 and
WHEREAS the City Council IS authonzed under the Act and pursuant to
Ordmance No 1156 adopted on August 23 2005 to levy special taxes to pay for the costs of
facilitIes proVided by the Dlstnct and
WHEREAS under the provIsIOns of the Act on June 28 2005 the City Council
actmg as the legislatIve body of the Dlstnct adopted ResolutIon No 2005 55 which resolutIOn
among other matters expressed the mtent of the City Council to authonze the Issuance of one or
more senes of bonds m the maximum aggregate pnnclpal amount as set forth therem secured by
the special taxes under the Act and
WHEREAS on October 23 2007 the City Council adopted ResolutIon No 2007
_ (the ResolutIOn) authonzmg the Issuance and sale of bonds for the Dlstnct pursuant to
thiS Agreement deslguated City of Lake Elsmore Commuruty FaCIlItIes Dlstnct No 2005 5
(Villages at Wasson Canyon) Special Tax Bonds 2007 Senes A (the Bonds) for the purpose
of financmg the acqulSltIon rehabilItatIOn and constructIon of certain publIc Improvements and
capital fees wlthm the Dlstnct (the FacilitIes ) and
WHEREAS It IS m the publIc mterest and for the benefit of the City the Dlstnct
the persons responsible for the payment of speCial taxes and the owners of the Bonds that the
Dlstnct enters mto thIs Agreement to proVide for the Issuance of the Bonds the disbursement of
proceeds of the Bonds the dispOSItIon of the special taxes secunng the Bonds and the
admlmstratlOn and payment of the Bonds and
WHEREAS all thmgs necessary to cause the Bonds when authentIcated by the
Fiscal Agent and Issued as prOVided m the Act the ResolutIon and thiS Agreement to be legal
valId and bmdmg and lImited oblIgatIons m accordance With their terms and all thIngs necessary
to cause the creatIOn authonzatlon execution and delIvery of thIs Agreement and the creatIOn
authonzatIon executIOn and Issuance of the Bonds subject to the terms hereof have m all
respects been duly authonzed
NOW THEREFORE that m order to secure the payment of the pnnclpal of
premIUm If any and the mterest on all Bonds at any tIme Issued and outstandmg under thiS
Agenda Item No 2
Page 18 of316
Agreement accordmg to their tenor and to secure the performance and observance of all the
covenants and conditIons therem and herem set forth and to declare the terms and conmtlOns
upon and subject to whIch the Bonds are to be ISSUed and receiVed and m consideratIon of the
premises and of the mutual covenants herem contamed and of the purchase and acceptance ofthe
Bonds by the holders thereof and for other valuable consideratIOn the receipt of whIch IS hereby
acknowledged the DistrIct does hereby covenant and agree With the Fiscal Agent for the benefit
of the respectIve holders from tIme to tIme of the Bonds as follows
ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
1 1 Authonty for this Agreement ThIs Agreement IS entered mto pursuant to the
prOVlSlons of the Act and the ResolutIon
1 2 Agreement for Benefit of Bond Owners The provIsIOns covenants and
agreements herem set forth to be performed by or on behalf of the City and the DistrIct shall be
for the equal benefit protectIOn and secunty of the Owners from tIme to tIme In consideratIOn
of the acceptance of the Bonds by the Owners thereof this Agreement shall be deemed to be and
shall constItute a contract between the DistrIct and the Owners and the covenants and
agreements herem set forth to be performed by the DistrIct shall be for the equal and
proportIOnate benefit secunty and protectIon of all Owners of the Bonds without preference
pnonty or dlstmctIon as to secunty or otherwise of any of the Bonds over any of the others by
reason of the number or date thereof or the tIme of sale executIOn or dehvery thereof or
otherwIse for any cause whatsoever except as expressly prOVided therem or herem All of the
Bonds Without regard to the tIme or tImes of theIr Issuance or mahmty shall be of equal rank
Without preference pnonty or dlstmctlOn of any of the Bonds over any other thereof except as
expressly prOVided m or permitted by thIs Agreement
The Fiscal Agent may become the owner of any of the Bonds m ItS own or any
other capacity With the same nghts It would have If It were not Fiscal Agent
1 3 DefimtIons Unless the context otherwise reqUIres the terms defmed m thIs
SectIOn I 3 shall for all purposes of thiS Agreement of any Supplemental Agreement and of
any certificate oplllion or other document herem mentIOned have the meamngs herem speCified
All references herem to ArtIcles SectIOns and other subdiVISions are to the correspondmg
Articles SectIOns or subdiVISions of thIs Agreement and the words herem hereof
hereunder and other words of slmJiar Import refer to thIs Agreement as a whole and not to any
particular Article SectIOn or subdiVISIOn hereof
Act means the Mello Roos Community FacJiltIes Act of 1982 as amended
bemg SectIon 53311 et seq of the CahfoDlla Government Code
AdmlllistratIve Expenses means any or all of the follOWing the fees and
expenses of the Fiscal Agent (mclumng any fees or expenses of ItS counsel) the expenses of the
City or the DistrIct m carrymg out their dutIes hereunder (mcludmg but not lImited to the
levymg and collectIOn of the SpeCial Taxes complymg With the disclosure prOVISIOns of the Act
the Contmumg Disclosure Agreement and thiS Agreement mcludmg those related to pubhc
Agenda Item No 2
Page 19of316
mqumes regardmg the SpecIal Tax and dJsclosures to Bond Owners and the Ongmal Purchaser
the costs of the CIty and the Dlstnct or theIr desIgnees related to an appeal of the SpecIal Tax
any costs of the CIty and the Dlstnct (mcludmg fees and expenses of counsel) to defend the first
lIen on and pledge of the SpeCIal Taxes to the payment of the Bonds or otheTWlse m respect of
lItIgatIOn relatmg to the Dlstnct or the Bonds or With respect to any other oblIgatIOns of the
Dlstnct any amounts reqUIred to be rebated to the federal govenunent m order for the Dlstnct to
comply With SectIOn 7 2 mcludmg the fees and expenses of ItS counsel the costs of any
dlssemmatIon agent under the contmumg dIsclosure agreements entered mto by the CIty and the
Dlstnct an allocable share of the salanes of City staff directly related thereto and a proportIOnate
amount of City general adJmmstratIve overhead related thereto and all other costs and expenses
of the City the Dlstnct or the Fiscal Agent mcurred m connectIon With the dJscharge of theu
respectIve dutIes hereunder and m the case of the City m any way related to the admmlstratlOn
of the Dlstnct and all actual costs and expenses mcurred m connectIOn With the admmlstratIon of
the Bonds and the Authonty Bonds
AdmmlstratIve Expense Fund means the fund by that name establIshed by
SectIOn 3 6(a) hereof
Agreement means thiS Fiscal Agent Agreement as It may be amended or
supplemented from tIme to tIme by any Supplemental Agreement adopted pursuant to the
provIsions hereof
Annual Debt Semce means for each Bond Year the sum of (I) the mterest due
on the Outstandmg Bonds m such Bond Year assummg that the Outstandmg Bonds are retIred as
scheduled and (n) the pnnclpal amount of the Outstandmg Bonds due m such Bond Year
AudItor means the auditor/tax collector ofthe County of RIverside
Authontv Bonds means $ Lake Elsmore PublIc Fmancmg Authonty
Local Agency Revenue Bonds ('IV asson Canyon) 2007 Senes A
Authontv Indenture means the Indenture of Trust dated as of November 1
2007 between the Lake Elsmore PublIc Fmancmg Authonty and Dmon Bank of Cahfornla
N A as trustee relatmg to the Authonty Bonds
Authonzed Officer means the Mayor City Manager ASSIstant City Manager
Duector of AdmlmstratIve Semces or City Clerk of the CIty or any other officer or employee
authonzed by the CIty Council of the City or by an Authonzed Officer to undertake the action
referenced m thiS Agreement as reqUIred to be undertaken by an Authonzed Officer
Bond Counsel means (I) Fulbnght & JaworskI L L P or (n) any attorney or
firm of attorneys acceptable to the Dlstnct and natIOnally recognized for expertIse m rendenng
opmlOns as to the legalIty and tax exempt status of secuntIes ISSUed by publIc entItIes
Bond Fund means the fund by that name establIshed by SectIOn 4 2(a) hereof
Agenda Item No 2
Page 20 of 316
Bond Year means the one year penod begInmng on the September 2 m each
year and endmg on September 1 m the followmg year except that the first Bond Year shall begIn
on the Closmg Date and end on September 1 2008
Bonds means the City of Lake Elsmore Community FacIlitIes Dlstnct No
2005 5 (VIllages at Wasson Canyon) Special Tax Bonds 2007 Senes A authonzed by and at
any tIme Outstandmg pursuant hereto
Busmess Dav means any day other than (I) a Saturday or a Sunday (11) a day on
which the offices of the City are not open for busmess or (111) a day on wluch bankmg
mstItutIons m the state m wluch the Fiscal Agent has Its pnnclpal corporate trust office IS
authonzed or oblIgated by law or executIve order to be closed
CaPitalIzed Interest Account means the account by that name establIshed by
SectIOn 4 2( d) hereof
CDIAC means the CalIfornia Debt and Investment AdVISOry CommiSSIOn of the
office of the State Treasurer of the State of CalIfornia or any successor agency or bureau thereto
Cltv' means the City of Lake Elsmore CalIfonna
Cltv CounCil means the City CouncIl of the City
City Manager means the City Manager ofthe City
Closmg Date' means the date upon whICh there IS a phYSical delIvery of the
Bonds m exchange for the amount representmg the purchase pnce of the Bonds by the angInal
Purchaser
Code means the Internal Revenue Code of 1986 as m effect on the date of
Issuance of the Bonds or (except as otherwise referenced herem) as It may be amended to apply
to oblIgatIons Issued on the date of Issuance of the Bonds together With applIcable proposed
temporary and final regulatIOns promulgated and applIcable offiCial publIc gIlldance publIshed
under the Code
Contmumg Disclosure Agreement shall mean that certam Contmumg
Disclosure Agreement by and between the City and the DlssennnatIon Agent relatmg to the
Authonty Bonds executed on the Closmg Date as ongInally executed and as It may be amended
from tIme to tIme m accordance With the terms thereof
Cornorate Trust Office means the corporate trust office of the Fiscal Agent at
Los Angeles CalIfornia or such other office deslguated from tIme to tIme by the Fiscal Agent m
wntmg to the Dlstnct
Countv' means the County of Riverside CalIfornia
Costs of Issuance means all expenses mcurred m connection With the
authonzatIon Issuance sale and delIvery of the Bonds mcludmg but not IInnted to all
Agenda Item No 2
Page 21 of 316
I
----
compensatIOn fees and expenses (mcludmg but not limited to fees and expenses for legal
cOlillsel) of the City and the Fiscal Agent compensatIOn to any financial consultants or
lillderwnters legal fees and expenses filmg and recordmg costs ratmg agency fees costs of
preparatIOn and reproduction of documents and costs of pnntmg
Costs of Issuance Flilld means the fund established pursuant to SectIOn 3 8
hereof
Debt ServICe means the scheduled amolillt of mterest and amortizatIOn of
pnnclpal payable on the Bonds dunng the penod of computation excludmg amolillts scheduled
dunng such penod whIch relate to pnnclpal which has been retired before the begmnmg of such
penod
DelmQuencv Management Flilld means the fund by that name established by
SectIOn 3 9(a) hereof
DelmQuencv Management Flilld ReQUIrement means as of any calculatIOn date
an amolillt equal to 15% of the Maximum Annual Debt Service
DlssemmatlOn Agent means Umon Bank of California N A or such other
DlssemmatlOn Agent as may be appomted by the City pursuant to the ContInumg Disclosure
Agreement
Dlstnct means the City of Lake Elsmore Commlilllty FaCIlities Dlstnct No
2005 5 (Villages at Wasson Canyon) formed pursuant to the ResolutIOn of Formation
FacIlities means the public facIlities more particularly descnbed m the
Resolution of FormatIOn or any portIOn of the FaCIlities or any authonzed capital fees
Fair Market Value means the pnce at which a WIllmg buyer would purchase the
mvestment from a WIllmg seller m a bona fide arm s length transactIOn (detenmned as of the
date the contract to purchase or sell the mvestInent becomes bmdmg) If the mvestInent IS traded
on an established secuntIes market (Wlthm the meanmg of SectIOn 1273 of the Code) and
otherwise the term Fair Market Value means the acqulSltlOn pnce m a bona fide arm s length
transaction (as referenced above) If (I) the mvestment IS a certificate of deposit that IS acquIred m
accordance With applicable regulatIOns lillder the Code (n) the mvestInent IS an agreement With
speCIfically negotiated withdrawal or remvestInent provIsions and a specifically negotiated
mterest rate (for example a guaranteed mvestInent contract a forward supply contract or other
mvestInent agreement) that IS acqUIred m accordance With applicable regulatIOns under the Code
(111) the mvestment IS a Umted States Treasury Secunty State and Local Government Senes that
IS acqUIred m accordance With applicable regulations of the Umted States Bureau of Public Debt
or (IV) any commmgled mvestInent fund m which the City and related partIeS do not own more
than a ten percent (10%) benefiCIal mterest therem If the return paid by the fund IS WithOUt
regard to the source of the mvestInent
Federal SecuntIes means any of the followmg which are non callable and
which at the time of mvestment are legal mvestments lillder the laws of the State of CalIforma
for funds held by the Fiscal Agent as shall be certified by the Dlstnct to the Fiscal Agent
Agenda Item No 2
Page 22 of 316
(1) direct general obligations of the Umted States of Amenca (mcludmg
obligatIOns ISSUed or held m book entry form on the books of the Umted
States DepartInent of the Treasury) and obligations the payment of
pnnclpal of and mterest on which are directly or mdlrectly guaranteed by
the Umted States of Amenca mcludIng without limitatIOn such of the
foregomg which are commonly referred to as stnpped obligations and
coupons
(2) any of the followmg obligations of the followmg agencies of the Umted
States of Amenca (a) dIrect obligations of the Export Import Bank (b)
certificates of benefiCial ownership Issued by the Farmers Home
AdmlmstratIon (c) participatIOn certificates Issued by the General
SeIVlces AdmlmstratIon (d) mortgage backed bonds or pass through
obligations Issued and guaranteed by the Government National Mortgage
AssoCIatIOn (e) project notes Issued by the Umted States DepartInent of
Housing and Urban Development and (f) public housmg notes and bonds
guaranteed by the Umted States of America or refunded municipal
obligations the tImely payment of pnnclpal of and mterest on are fully
guaranteed by the Umted States of Amenca
Fiscal Agent means the Fiscal Agent appointed by the District and actmg as an
mdependent fiscal agent With the duties and powers herem provided ItS successors and assigns
and any other corporatIOn or associatIOn which may at any time be substIllited m ItS place as
prOVided m Section 8 1
Fiscal Year means the twelve month penod extendmg from July 1 m a calendar
year to June 30 ofthe succeedmg year both dates inclUSIVe
Improvement Fund means the fund by that name established by Section 3 7
hereof
Interest Account means the account by that name established m the Bond Fund
pursuant to Section 4 2 hereof
Interest Payment Date means March 1 and September I of each year
commencmg March 1 2008
InvestInent Earmngs means all Interest earned and any gains and losses on the
mvestment of moneys m any fund or account created by thiS Agreement
Legislative Bodv means the City Council of the City
Maximum Annual Debt SeIVlce means the largest Annual Debt SeIVlce for any
Bond Year after the calculatIOn IS made through the final mallinty date of any Outstanding
Bonds
Net Taxes means Special Taxes less AdmlmstratIve Expenses
Agenda Item No 2
Page 23 of 316
Officer s CertIficate means a wntten certIficate of the DIstrIct or the CIty sIgned
by an Authonzed Officer ofthe CIty
Ordmance means Ordmance No 1156 adopted by the LegIslatIve Body on
August 23 2005 authonzmg the levy of the SpeCIal Taxes wlthm the DIstrIct mcludmg any
amendments thereto
Ongmal Purchaser means the Lake Elsmore PublIc Fmancmg Authonty
Outstandmg when used as of any partIcular tIme WIth reference to Bonds
means (subject to the provISIons of SectIOn 10 4) all Bonds except (I) Bonds theretofore
canceled by the FIscal Agent or surrendered to the FIscal Agent for cancellatIOn (u) Bonds paId
or deemed to have been paId wIthIn the meanmg of SectIon 11 3 and (lll) Bonds m lIeu of or m
substImtIOn for whICh other Bonds shall have been authonzed executed Issued and delIvered by
the Dlstnct pursuant to thIS Agreement or any Supplemental Agreement
Owner or Bond Owner means any person who shall be the regIstered owner
of any Outstandmg Bond
ParItv Bonds means addItIOnal bonds Issued pursuant to SectIOn 2 13 hereof
PartICIPatmg Underwnter means any of the ongmal underwnter(s) of the
Authonty Bonds reqUIred to comply WIth Rule 15c2 12(b)(5) adopted by the SecuntIes and
Exchange CommIssIon UIlder the SecuntIes and Exchange Act of 1934 as the same may be
amended from tIme to tIme In connectIon WIth the offenng of the Authonty Bonds
\
PermItted InvestInents means any of the followmg whICh at the tIme of
InvestInent are legal mvestInents UIlder the laws of the State for the moneys proposed to be
mvested therem (the FIscal Agent IS entItled to rely on wntten mvestInent dIrectIOn of the
DIstrIct as a determmatIon that such mvestInent IS a legal mvestInent) but only to the extent that
the same are acqUIred at FaIr Market Value
(a) Federal SecuntIes
(b) bonds debentures notes or other eVIdence of mdebtedness Issued or
guaranteed by any of the followmg federal agencIes and prOVIded such oblIgatIOns are backed by
the full faIth and credIt of the Umted States of Amenca (strIpped secuntIes are only permItted If
they have been strIpped by the agency Itself) (I) dIrect oblIgatIOns or fully guaranteed
certIficates of beneficIal ownershIp of the U S Export hnport Bank (u) certIficates of beneficIal
ownershIp of the Farmers Home AdmlmstratIon (lll) oblIgatIOns of the Federal Fmancmg Bank
(IV) debenmres of the Federal Housmg AdmlmstratIOn (v) partIcIpatIOn certIficates of the
General ServIces AdmllllstratIon (VI) guaranteed mortgage backed bonds or guaranteed pass
through oblIgatIOns of the Govemment NatIOnal Mortgage ASSOCIatIon (VII) guaranteed TItle XI
financmgs of the U S MarItIme AdmmlstratIOn (Vlll) project notes local authonty bonds new
commUIlltIes debentIrres and U S publIc housmg notes and bonds of the U S Department of
Housmg and Urban Development
Agenda Item No 2
Page 24 of 316
(c) bonds debentures notes or other eVIdence of mdebtedness Issued or
guaranteed by any of the followmg non full faith and credit U S government agencies (stnpped
secuntIes are only permitted If they have been stnpped by the Dlstnct Itself) (I) semor debt
obligatIons of the Federal Home Loan Bank System (11) partiCipatIOn certificates and semor debt
obligatIons of the Federal Home Loan Mortgage CorporatIon (111) mortgaged backed secuntIes
and semor debt obligatIOns of the Federal NatIOnal Mortgage ASSOCIatIon (excludmg stnpped
mortgage secuntIes whICh are valued greater than par on the portIOn of unpaid pnnclpal) (IV)
semor debt obligatIOns of the Student Loan Marketmg ASSOCiatIOn (v) obligatIOns (but only the
mterest component of stnpped obligatIons) of the ResolutIOn Fundmg CorporatIOn and (VI)
consolidated systemWide bonds and notes of the Farm Credit System
(d) money market funds (mcludmg funds of the Fiscal Agent or ItS affiliates)
registered under the Federal InvestInent Company Act of 1940 whose shares are registered
under the Federal SecuntIes Act of 1933 and havmg a ratmg by S&P of AAAm G AAAm
or AAm and Ifrated by Moody s rated Aaa Aal or Aa2
(e) certificates of depOSit secured at all tImes by collateral descnbed m (a) or
(b) above which have a matunty of one year or less which are Issued by commerCial banks
savmgs and loan associatIons or mutual savmgs banks and such collateral must be held by a
thIrd party and the Fiscal Agent must have a perfected first secunty mterest m such collateral
(f) certificates of depOSit savmgs accounts depOSit accounts or money
market depOSits (mcludmg those of the Fiscal Agent and ItS affiliates) wmch are fully msured by
the Federal DepOSit Insurance CorporatIOn
(g) mvestInent agreements mcludmg guaranteed mvestInent contracts
forward purchase agreements and Reserve Account put agreements which are general
obligatIons of an entIty whose long term debt obligatIOns or claims pa)'lng ability respectIvely
IS rated m one of the two mghest ratIng categones by Moody s or S&P
(h) commerCial paper rated at the tIme of purchase Pnme 1 by Moody s
and A I or better by S&P
(I) bonds or notes Issued by any state or mumclpalIty wmch are rated by
Moody s and S&P m one of the two mghest ratmg categones asslgued by such agencies
(J) federal funds or bankers acceptances With a maxrmum term of one year of
any bank wmch has an unsecured umnsured and unguaranteed obligatIOn ratmg of Pnme I or
A3 or better by Moody s and A 1 or A or better by S&P
(k) repurchase agreements which prOVide for the transfer of secuntIes from a
dealer bank or secuntIes firm (sellerlborrower) to the Fiscal Agent and the transfer of cash from
the Fiscal Agent to the dealer bank or secuntIes firm With an agreement that the dealer bank or
secuntIes firm will repay the cash plus a )'leld to the Fiscal Agent m exchange for the secuntles
at a speCified date wmch satIsfY the followmg cntena
(I) repurchase agreements must be between the Fiscal Agent and (A) a
pnmary dealer on the Federal Reserve reportmg dealer list wmch falls under the ]unsdlctIon of
Agenda Item No 2
Page 25 of 316
the SecuntIes Investors Protection Corporation winch are rated A or better by Moody s and
S&P or (B) a bank rated A or better by Moody s and S&P
(n) the wntten repurchase agreement contract must mclude the
followmg (A) secuntIes acceptable for transfer whIch may be dIrect U S government
oblIgatIons or federal agency oblIgations backed by the full faith and credIt of the US
government (B) the term of the repurchase agreement may be up to 30 days (C) the collateral
must be delIvered to the FIscal Agent or a thIrd party actmg as agent for the FIscal Agent
sImultaneous WIth payment (perfectIOn by possessIOn of certIficated secuntIes) (D) the FIscal
Agent must have a perfected first pnonty secunty mterest m the collateral (E) the collateral
must be free and clear of t1urd party lIens and m the case of a broker whIch falls under the
JunsdlctIon of the SecuntIes Investors ProtectIOn Corporation are not subject to a repurchase
agreement or a reverse repurchase agreement (F) faIlure to mamtam the requlSlte collateral
percentage after a two day restoratIOn penod wIll reqUIre the FIscal Agent to lIqUIdate the
collateral (G) the secuntIes must be valued weekly marked to market at current market pnce
plus accrued mterest and the value of collateral must be equal to 104% of the amoUllt of cash
transferred by the FIscal Agent to the dealer bank or secuntIes firm Ullder the repurchase
agreement plus accrued mterest (Ullless the secuntIes used as collateral are oblIgatIOns of the
Federal NatIOnal Mortgage AsSOCIation or the Federal Home Loan Mortgage CorporatIOn m
winch case the collateral must be equal to 105% of the amoUllt of cash transferred by the FIscal
Agent to the dealer bank or secuntIes firm Ullder the repurchase agreement plus accrued mterest)
If the value of secuntIes held as collateral falls below 104% of the value of the cash transferred
by the FIscal Agent then addItional cash and/or acceptable secuntIes must be transferred and
(111) a legal oplillon must be delIvered to the FIscal Agent to the effect
that the repurchase agreement meets gmdelmes Ullder state law for legal mvestment of publIc
funds and
(1) the Local Agency Investment FUlld of the State of CalIforma, created
pursuant to SectIOn 16429 1 of the CalIforma Government Code to the extent the FIscal Agent IS
authonzed to regIster such mvestment m ItS name
Person means an mdlvldual corporatIOn firm assoCIatIOn partJIershlp trust or
other legal entity or group of entitIes mcludmg a governmental entity or any agency or polItICal
subdIVISIon thereof
PnncIPal ACCOUllt means the accoUllt by that name establIshed m the Bond
Fund pursuant to SectIOn 4 2 hereof
Record Date means the fifteenth day of the month next precedmg the month of
the applIcable Interest Payment Date
RedemptIOn FUlld means the fund by that name establIshed by SectIOn 3 11
hereof
RedemptIOn Revenues means on a proportIOnate basIS to any ParIty Bonds (a)
prepayments of the SpeCIal Taxes (b) any amoUllts transferred pursuant to the Authonty
Indenture for the redemption of Bonds (c) amounts transferred from the ReSIdual FUlld for the
Agenda Item No 2
Page 26 of 316
redemption of Bonds and (d) any amounts deposIted for the Mandatory Redemption and SpecIal
Mandatory Redemption of Bonds pursuant to SectIOn 2 3 (a)(ll) and (IV)
RegIstration Books means the records mamtamed by the FIscal Agent pursuant
to Section 2 9 for the regIstration and transfer of ownershIp of the Bonds
Reserve Account means the account by that name establIshed pursuant to the
Authonty IndentJIre
ResIdual Fund means the fund by that name establIshed by SectIOn 3 10(a)
hereo f
ResolutIOn means ResolutIOn No adopted by the LegIslative Body on
October 23 2007 as now m effect or as It may hereafter be amended from tIme to time
ResolutIOn of Formation means ResolutIOn No 2005 104 adopted by the
LegIslatIve Body on AUgtlst 9 2005 as now m effect or as It may hereafter be amended from
time to time
RMA means the Rate and Method of ApportIOnment for CIty of Lake Elsmore
Commumty FaCIlIties DIstrIct No 2005 5 (VIllages at Wasson Canyon)
S&P means Standard & Poor s a dIvISIon of The McGraw RIl1 CompanIes
Inc and ItS successors
SpeCIal Tax Fund means the fund by that name establIshed by Section 34(a)
hereof
SpecIal Tax Revenues means on a proportIOnate baSIS to any Panty Bonds (a)
the proceeds of the SpecIal Taxes receIved by the DIStrICt (b) mcome and gams WIth respect to
the mvestment of amounts on depOSIt m the funds and accounts establIshed hereunder for the
Bonds except to the extent transferred to or retaIned m the ReSIdual Fund hereunder and (c)
proceeds of the redemption or sale of property sold as a result of foreclosure of the lIen of the
SpeCIal Taxes NotwIthstandmg the foregomg SpecIal Tax Revenues does not mclude any
penalties or mterest m excess of the mterest payable on the Bonds collected m connection WIth
delmquent SpeCIal Taxes
SpeCIal Taxes means the speCIal taxes leVIed WIthIn the DIStrICt pursuant to the
Act the Ordmance and thIS Agreement
State means the State of CalIfOrnIa
SUllplemental Agreement means an agreement the execution of whIch IS
authonzed by a resolutIOn whIch has been duly adopted by the LegIslative Body of the DIStrICt
under the Act and WhICh agreement IS amendatory of or supplemental to thIS Agreement but
only If and to the extent that such agreement IS specIfical1y authonzed hereunder
Agenda Item No 2
Page 27 of 316
'Tax and Nonarbltrage Certificate means With respect to the Bonds the Tax and
Nonarbltrage Certificate dated the date of Issuance ofthe Bonds as ongmally executed and as It
may from tIme to tIme be amended or supplemented pursuant to Its terms
Treasurer means the person who IS actmg m the capacity as treasurer or finance
dIrector to the City
ARTICLE II
THE BONDS
2 1 Prmclpal Amounts, DeSIgnatIOns Bonds m the aggregate pnnclpal amount of
Dollars and 00/100 Dollars ($ ) are hereby authonzed to be ISSUed
under and subject to the terms of the ResolutIOn and thiS Agreement the Act and other
applicable laws of the State ofCallfoffiIa The Bonds shall be deSignated City of Lake Elsmore
Community FacilitIes Dlstnct No 2005 5 (VIllages at Wasson Canyon) SpeCial Tax Bonds
2007 Senes A This Agreement constItutes a contInumg agreement of the Dlstnct With the
Owners from tIme to tIme of the Bonds to secure the full payment of the pnnClpal of premIUm
If any and mterest on all such Bonds subject to the covenants provIsions and conditIons herem
contamed
2 2 Terms of Bonds
(a) Form. DenommatIons The Bonds shall be Issued as fully registered
bonds WithOUt coupons m the denommatlOn of $5 000 or any mtegral multIple thereof The
Bonds shall be lettered and numbered m a customary manner as determmed by the Fiscal Agent
(b) Date of the Bonds The Bonds shall be dated the Closmg Date
(c) MatuntIes. Interest Rates The Bonds shall mature on the dates and shall
bear mterest at the rates as follows
Matunty Date
(September I)
Pnnclpal
Amount
Coupon
Agenda Item No 2
Page 28 of 316
(d) Interest The Bonds shall bear mterest at the rates set forth above payable
on the Interest Payment Dates m each year Interest shall be calculated on the basis of a 360 day
year composed of twelve 30 day months Each Bond shall bear mterest from the Interest
Payment Date next precedmg the date of authentIcatIon thereofunIess (I) It IS authentIcated after
a Record Date and on or before an Interest Payment Date and after the close of busmess on the
precedmg Record Date m which event It shall bear mterest from such Interest Payment Date or
(n) It IS authentIcated on or before February 15 2008 m winch event It shall bear mterest from
the Closmg Date or (111) mterest with respect to any Outstandmg Bond IS m default m which
event mterest with respect thereto will be payable from the date to winch mterest has previously
been paid or made available for payment thereon
(e) Method of Pavrnent Interest on the Bonds (mcludmg the final mterest
payment upon matunty or earlier redemptIOn) IS payable by check of the Fiscal Agent mailed on
the Interest Payment Dates by first class mall to the registered Owner thereof at such registered
Owner s address as It appears on the registratIon books mamtamed by the Fiscal Agent at the
close of busmess on the Record Date precedmg the Interest Payment Date or by wife transfer
made on such Interest Payment Date upon mstructlOns of any Owner of $1 000000 or more m
aggregate pnnclpal amount of Bonds
The pnnClpal of the Bonds and any premIUm on the Bonds are payable m lawful
money of the Umted States of Amenca upon surrender of the Bonds at the Corporate Trust
Office ofthe Fiscal Agent
All Bonds paid by the Fiscal Agent pursuant to thiS SectIOn shall be canceled by
the Fiscal Agent The Fiscal Agent shall destroy the canceled Bonds
2 3 Redemption
(a) RedemptIOn Dates
(I) OptIOnal RedemptIOn The Bonds are subject to redemptIOn pnor
to matunty at the optIOn of the District from any source of funds as a whole or m part on any
date on or after September I 2008 on a pro rata baSIS and by lot wltIun a matunty at the
redemptIon pnces and schedules applicable to the Authonty Bonds Notwlthstandmg anytIung
m thiS Agreement to the contrary With respect to optIonal redemptIons related to the Authonty
Bonds the District shall abide by the pnonty of redemptIOn relatmg to the Authonty Bonds
permitted by the Authonty IndentJrre
(n) SpeCial Mandatory RedemptIOn from Prepayment of SpeCial Taxes
and from ReSidual Funds The Bonds shall also be subject to mandatory redemptIon on any date
on or after March 1 2008 m whole or m part on a pro rata basiS and by lot wltIun a matunty
from amounts constItutmg prepayments of SpeCial Taxes from amounts transferred from the
ReSidual Fund hereunder and from amounts transferred by the Authonty to the District from the
ReSidual Fund under the Authonty IndentJrre at the followmg redemptIOn pnces (expressed as a
percentage of the pnnclpal amount of Bonds to be redeemed) together with accrued mterest
thereon to the redemptIOn date
Agenda Item No 2
Page 29 of 316
(111)
RedemptIOn Date
RedemptIOn Pnce
March 1 2008 through August 31 2009
September 1 2009 through August 31 2010
September 1 2010 through August 31 2011
September 1 2011 through August 31 2012
September 1 2012 through August 31 2013
September 1 2013 through August 31 2014
September 1 2014 and thereafter
103 0%
102 5%
102 0%
101 5%
101 0%
100 5%
100 0%
(IV) Mandatory Sznlang Payment RedemptIOn The Bonds are not
subject to mandatory sinking payment redemption
(V) SpeCial Mandatory RedemptIOn The Bonds are subject to special
mandatory redemption on any date to which timely notice of redemption may be given In
Integral multiples of $5 000 from unused proceeds of the Bonds after completion or
abandonment of the Improvements to be financed With such proceeds from the depOSit of fees
With the Dlstnct by a pubhc agency whIch has accepted faCIlities servmg an area of the Dlstnct
and from Insurance or condenmatlOn proceeds Without prenuum plus accrued Interest to the
redemption date on a pro rata baSIS
(b) Notice to Fiscal Agent The Dlstnct shall give the Fiscal Agent wntten
notice of Its intention to redeem Bonds pursuant to subsection (a)(I) not less than sixty (60) days
pnor to the applicable redemption date Imless such notice shall be wazved by the Fiscal Agent
Notwithstanding any proVISIOnS In thIs Agreement to the contrary upon any Optional
RedemptIOn or SpeCial Mandatory Redemption from SpeCial Taxes In part the Dlstnct shall
deliver an Officer s Certificate to the Fiscal Agent at least SIXty (60) days pnor to the proposed
redemption date or such later date as shall be acceptable to the Fiscal Agent so stating that the
remazmng payments of pnnclpal and Interest on the Bonds together With SpeCial Taxes to be
avazlable Will be suffiCient on a timely basiS to pay debt service on the Bonds as demonstrated
In a cash flow certificate delivered to the Fiscal Agent With such Officer s Certificate
The Dlstnct shall In such Officer s Certificate certify to the Fiscal Agent that
suffiCient moneys for purposes of such redemption are or WIll be on depOSit In the RedemptIOn
Fund and IS reqUired to deliver such moneys to the Fiscal Agent together With other SpeCial Tax
Revenues If any then to be delivered to the Fiscal Agent pursuant to thIs Agreement whIch
moneys are reqUired to be Identified to the Fiscal Agent III the Officer s Certificate delivered
With the SpeCial Tax Revenues
(c) Redemption Procedure by Fiscal Agent The Fiscal Agent shall cause
notice of any redemption to be mazled by first class mail postage prepazd at least thirty (30)
days but not more than sixty (60) days pnor to the date fixed for redemption to the respective
registered Owners of any Bonds deSignated for redemption at theIr addresses appeanng on the
Bond registratIOn books In the Corporate Trust Office of the Fiscal Agent but such mazlIng shall
not be a conditIOn precedent to such redemption and fazlure to mall or to receive any such notice
Agenda Item No 2
Page 30 of 316
or any defect thereIn shall not affect the validity of the proceedIngs for the redemptIOn of such
Bonds
Such notice shall state the redemption date and the redemption pnce and If less
than all of the then OutstandIng Bonds are to be called for redemptIOn shall deSignate the Bond
numbers of the Bonds to be redeemed or shall state that all Bonds between two stated Bond
numbers both InclUSive are to be redeemed or that all of the Bonds of one or more matIintIes
have been called for redemptIOn shall state as to any Bond called In part the pnnclpal amount
thereof to be redeemed and shall reqUIre that such Bonds be then surrendered at the Corporate
Trust Office of the Fiscal Agent for redemption at the said redemptIOn pnce and shall state that
further Interest on such Bonds will not accrue from and after the redemptIOn date The cost of
mailing any such redemption notice and any expenses Incurred by the Fiscal Agent In connectIOn
thereWith shall be paId by the Dlstnct
Upon the payment of the redemptIOn pnce of Bonds beIng redeemed each check
or other transfer of funds Issued for such purpose shall to the extent practicable bear the number
Identifying by Issue and matunty the Bonds beIng redeemed With the proceeds of such check or
other transfer
Whenever prOVlSlon IS made In thiS Agreement for the redemptIOn of less than all
of the Bonds or any given portion thereof the Fiscal Agent shall select the Bonds to be
redeemed from all Bonds or such gIVen portIOn thereof not previously called for redemptIOn
among matImtIes as speCified by the District In a wntten certificate delivered to the Fiscal Agent
and by lot WithIn a matIinty In any manner whIch the District In ItS sole discretIOn shall deem
appropnate and faIr In provJ(lIng such certificate the District shall prOVide for the redemption
of Bonds such that the remaInIng Debt ServIce payable on the Bonds shall remaIn as level as
pOSSible
Upon surrender of Bonds redeemed In part only the District shall execute and the
Fiscal Agent shall authenticate and deliver to the registered Owner at the expense of the District
a new Bond or Bonds of the same senes and matIinty of authonzed denomInatIOns In aggregate
pnnclpal amount equal to the unredeemed portIOn of the Bond or Bonds
(d) Effect of RedemptIOn From and after the date fixed for redemption If
funds available for the payment of the pnnclpal of and Interest and any premium on the Bonds
so called for redemption shall have been depOSited In the Bond Fund such Bonds so called shall
cease to be entitled to any benefit under tlus Agreement other than the nght to receive payment
of the redemption pnce and no Interest shall accrue thereon on or after the redemption date
speCified III such notice
All Bonds redeemed and purchased by the Fiscal Agent pursuant to tlus Section
2 3 shall be canceled by the Fiscal Agent The Fiscal Agent shall destroy the canceled Bonds
(e) Partial RedemptIOn If In the event only a portIOn of any Bond IS called
for redemption then upon surrender of such Bond the City Will execute on behalf of the District
and the Fiscal Agent Will authenticate and deliver to the Bond Owner thereof at the expense of
the District a new Bonds or Bonds of the same Series and matIinty date of authonzed
Agenda Item No 2
Page 31 of 316
denommatlons m an aggregate pnnclpal amount equal to the unredeemed portion of the Bond to
be redeemed
2 4 Form of Bonds The Bonds the form of Fiscal Agent s certificate of
authentication and the form of assignment to appear thereon shall be substantially m the forms
respectively set forth m Exhibit A attached hereto and by thiS reference mcorporated herem
With necessary or appropnate vanatlOns omissions and msertlOns as permitted or reqUIred by
thIs Agreement the ResolutIOn and the Act
2 5 ExecutIOn of Bonds The Bonds shall be executed on behalf of the Dlstnct by
the manual or facSImile signatures of the Mayor and City Clerk who are m office on the date of
adoptIOn of thIs Agreement or at any time thereafter Unless otherwise provided m any
Supplemental Agreement With respect to the Bonds the Bonds shall then be delIvered to the
Fiscal Agent for authentication If any officer whose signature appears on any Bond ceases to be
such officer before delIvery of the Bonds to the owner such signature shall nevertheless be as
effective as If the officer had remamed m office until the delIvery of the Bonds to the owner
Any Bond may be Signed and attested on behalf of the Dlstnct by such persons as at the acmal
date of the execution of such Bond shall be the proper officers of the Dlstnct although at the
nommal date of such Bond any such person shall not have been such officer of the Dlstnct
Only such Bonds as shall bear thereon a certificate of authenticatIon m
substantially the form set forth m ExhIbit A executed and dated by the Fiscal Agent shall be
valId or oblIgatory for any purpose or entitled to the benefits of thiS Agreement and such
certificate of authentication of the Fiscal Agent shall be conclUSive eVIdence that the Bonds
registered hereunder have been duly authenticated registered and delIvered hereunder and are
entitled to the benefits of tms Agreement
2 6 Transfer of Bonds Any Bond may m accordance With Its terms be transferred
upon the books reqUIred to be kept pursuant to the proVISIOns of Section 2 8 by the person m
whose name It IS registered m person or by hiS duly authonzed attorney upon surrender of such
Bond for cancellatIOn accompanied by delIvery of a duly wntten mstrument of transfer m form
approved by the Fiscal Agent The cost for any serVIces rendered or any expenses mcurred by
the Fiscal Agent m connection WIth any such transfer shall be paId by the Dlstnct The Fiscal
Agent shall collect from the Owner requestmg such transfer any tax or other governmental
charge reqUIred to be paid WIth respect to such transfer
No transfers of Bonds shall be requITed to be made (I) fifteen (IS) days pnor to
the date establIshed by the Fiscal Agent for selectIOn of Bonds for redemptIOn (II) With respect
to a Bond after such Bond has been selected for redemptIon or (111) between the 15th day of the
month next precedmg any Interest Payment Date and such Interest Payment Date
2 7 Exchange of Bonds Bonds may be exchanged at the Corporate Trust Office of
the Fiscal Agent for a lIke aggregate pnnclpal amount of Bonds of authonzed denommatlOns and
of the same mamnty The cost for any serVIces rendered or any expenses mcurred by the Fiscal
Agent m connectIon With any such exchange shall be paId by the Dlstnct The Fiscal Agent shall
collect from the Owner requestmg such exchange any tax or other governmental charge reqUIred
to be paId With respect to such exchange
Agenda Item No 2
Page 32 of 316
No exchanges of Bonds shall be reqUIred to be made (I) fifteen (15) days pnor to
the date established by the Fiscal Agent for selectIon of Bonds for redemptIOn (n) WIth respect
to a Bond after such Bond has been selected for redemptIOn or (m) between the 15th day of the
month next precedmg any Interest Payment Date and such Interest Payment Date
2 8 Bond Register The Fiscal Agent Will keep or cause to be kept at Its Corporate
Trust Office suffiCient books for the registratIon and transfer of the Bonds which books shall
show the senes number date amount rate of mterest and last known owner of each Bond and
shall at all tImes be open to mspectlOn by the Dlstnct or the City dunng regular busmess hours
upon reasonable notIce and upon presentatIOn for such purpose the Fiscal Agent shall under
such reasonable regulatIOns as It may prescnbe register or transfer or cause to be registered or
transferred on Said books the ownership of the Bonds as herembefore proVided
The Dlstnct and the Fiscal Agent Will treat the Owner of any Bond whose name
appears on the Bond register as the absolute Owner of such Bond for any and all purposes and
the Dlstnct and the Fiscal Agent shall not be affected by any notIce to the contrary The Dlstnct
and the Fiscal Agent may rely on the address of the Bond Owner as It appears m the Bond
register for any and all purposes
2 9 Temporary Bonds The Bonds may be ImtIally Issued m temporary form
exchangeable for defimtIve Bonds when ready for delivery The temporary Bonds may be
pnnted lithographed or typewntten shall be of such authonzed denommatlOns as may be
determmed by the District and may contain such reference to any of the provlSlons of this
Agreement as may be appropnate Every temporary Bond shall be executed by the Dlstnct upon
the same conditIOns and m substantIally the same manner as the defimtIve Bonds If the Dlstnct
Issues temporary Bonds It will execute and furnish defimtIve Bonds Without delay and thereupon
the temporary Bonds shall be surrendered for cancellatIon m exchange for the defimtIve Bonds
at the Corporate Trust Office of the Fiscal Agent or at such other locatIOn as the Fiscal Agent
shall deslguate and the Fiscal Agent shall authentIcate and deliver m exchange for such
temporary Bonds an equal aggregate pnnClpal amount of defimtIve Bonds of authonzed
denommatlOns UntIl so exchanged the temporary bonds shall be entItled to the same benefits
under thiS Agreement as defimtIve Bonds authentIcated and delivered hereunder
210 Bonds Mutilated, Lost, Destroyed or Stolen If any Bond shall become
mutIlated the DistrIct at the expense of the Owner of Said Bond shall execute and the Fiscal
Agent shall authentIcate and deliver a new Bond of like tenor and pnnclpal amount m exchange
and substItutIOn for the Bond so mutIlated but only upon surrender to the Fiscal Agent of the
Bond so mutIlated Every mutIlated Bond so surrendered to the Fiscal Agent shall be canceled
by It and destroyed by the Fiscal Agent who shall deliver a certificate of destructIon thereof to
the Dlstnct If any 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 be satIsfactory to It and
mdenmlty for the Dlstnct and the Fiscal Agent satIsfactory to the Fiscal Agent shall be given the
DistrIct at the expense of the Owner shalI execute and the Fiscal Agent shall authenticate and
deliver a new Bond of like tenor and pnnclpal amount m lieu of and m substItutIon for the Bond
so lost destroyed or stolen The Dlstnct may reqUIre payment of a SUIll not exceedmg the actual
cost of preparmg each new Bond delivered under thiS SectIOn and of the expenses which may be
mcurred by the Dlstnct and the Fiscal Agent for the preparatIOn executIOn authentIcatIon and
Agenda Item No 2
Page 33 of 316
delIvery Any Bond delIvered under the provIsions of this SectIon m lIeu of any Bond alleged to
be lost destroyed or stolen shall constitute an ongmal additional contractual oblIgation on the
part of the District whether or not the Bond so alleged to be lost destroyed or stolen IS at any
time enforceable by anyone and shall be equally and proportionately entitled to the benefits of
thiS Agreement With all other Bonds ISSUed pursuant to this Agreement
2 11 LImIted OblIgatIon All oblIgatIOns of the District under thiS Agreement and the
Bonds shall be speCial oblIgatIOns of the District payable solely from the SpecIal Tax Revenues
and the funds pledged therefor hereunder Neither the faith and credit nor the taxmg power of
the District (except to the lImited extent set forth herem) or the State of CalIfornia or any
polItical subdlVlSlOn thereof IS pledged to the payment of the Bonds
212 No Acceleration The pnnclpal of the Bonds shall not be subject to acceleration
hereunder Nothmg m tlus Section shall m any way prohIbit the prepayment or redemptIOn of
Bonds under Section 2 3 hereof or the defeasance of the Bonds and discharge of thiS Agreement
under Section 10 3 hereof
2 13 Panty Bonds The District covenants that any Panty Bonds whIch shall be
ISSUed or mcurred whIch are payable out of the SpeCial Tax Revenues m whole or m part shall be
Issued m accordance With the followmg
(a) the amount of such Panty Bonds shall not together With the Bonds and all
other Panty Bonds then Outstandmg exceed the total amount of bonds authonzed to be Issued
by the DistrIct
(b) The District shall be III complIance With all covenants set forth m the
applIcable Fiscal Agent Agreement and a certificate of the District to that effect shall have been
filed With the City Clerk on behalf of the Dlstnct prOVided however that Panty Bonds may be
Issued notwlthstandmg that the District IS not III complIance With all such covenants so long as
ImmedIately followmg the Issuance of such Panty Bonds the District Will be m complIance With
all such covenants and
(c) The District shall have received the followmg documents or money or
secuntles all of such documents dated or certified as the case may be as of the date of delIvery
of such Panty Bonds by the Fiscal Agent (unless the Fiscal Agent shall accept any of such
documents beanng a pnor date)
(I) An opmlOn of Bond Counsel and/or counsel to City to the effect
that (a) the Dlstnct has the nght and power under the Act to execute and delIver the
Supplemental Agreement relatmg to such Panty Bonds and the applIcable Agreement and all
such Supplemental Fiscal Agent Agreements have been duly and lawfully adopted executed and
delIvered by the District are m full force and effect and are valId and bmdmg upon the District
and enforceable m accordance With their terms (except as enforcement may be lmuted by
bankruptcy msolvency reorganizatIOn and other Similar laws relatmg to the enforcement of
creditors nghts) (b) the applIcable Fiscal Agent Agreement creates the valId pledge whIch It
purports to create of the SpeCIal Tax Revenues and RedemptIOn Revenues as proVIded III the
applIcable Fiscal Agent Agreement subject to the applIcatIOn thereof to the purposes and on the
Agenda Item No 2
Page 34 of 316
conditions permitted by the applicable Fiscal Agent Agreement and (c) such Panty Bonds are
valid and bmdmg limited obligations of the District enforceable m accordance With their terms
(except as enforcement may be hmited by bankruptcy msolvency reorganization and other
similar laws relatmg to the enforcement or creditors nghts) and the terms of the Agreement and
all Supplemental Agreements thereto and entitled to the benefits of the Agreement and all
Supplemental Agreements and such Panty Bonds have been duly and validly authonzed and
issued m accordance Wlth the Act (or other applicable laws) and the applicable Fiscal Agent
Agreement and all such Supplemental Agreements and further opmiOn of Bond Counsel to the
effect that assummg compliance by the District With certam tax covenants the issuance of the
Panty Bonds Will not adversely affect the exclUSiOn from gross mcome for federalmcome tax
purposes of mterest on any Outstandmg District Bonds and Panty Bonds theretofore issued or
the exemptiOn from State of California personalmcome taxatiOn of mterest on any Outstandmg
District Bonds and Pmty Bonds theretofore iSSUed and
(11) A certificate of an Independent Fmancial Consultant certlfymg as
of the closmg date that (a) the ratiO of the value of the property mc1uded Wlthm the District to
the amount of lien which will be on the property after the issuance of the Panty Bonds mc1udmg
the amount of any assessment bonds or bonds Issued under the Act is not less than 3 1 and (b)
the total Net Taxes which could be generated by the District by the levy of the Special Tax at the
maximum level allowed under the RMA (subject to the Act and the applicable resolutions of the
District) on all then taxable property m any Fiscal Year IS at least 1 10 times Maximum Annual
Debt Service on all Outstandmg Bonds (mc1udmg Panty Bonds previOusly issued and the Panty
Bonds proposed to be Issued)
ARTICLE III
ISSUANCE OF BONDS
3 1 Issuance and DelIvery of the Bonds At any time after the executiOn of this
Agreement the District may Issue the Bonds m the aggregate pnnclpal amount set forth m
Section 2 2 and dehver the Bonds to the Ongmal Purchaser The Authonzed Officers of the
District are hereby authonzed and directed to deliver any and all documents and mstTI1ments
necessary to cause the Issuance of the Bonds m accordance With the prOVlSlons of the Act the
ResolutiOn and tills Agreement and to do and cause to be done any and all acts and tillngs
necessary or convement for dehvery of the Bonds to the Ongmal Purchaser upon payment of the
purchase pnce for the Bonds
3 2 ApplIcanon of Proceeds of Sale of the Bonds On the Closmg Date the
proceeds of the sale of the Bonds m the amount of $ (bemg the pnnclpal amount of
the Bonds of $ less the Authonty Discount of $ ) shall be patd to the
Fiscal Agent and deposited or trartSferred by the Fiscal Agent as follows (the Fiscal Agent may
establish temporary funds or accounts to record or facilitate any such depOSit or transfer)
(a) The Fiscal Agent shall depOSit the amount of $
Issuance Fund
m the Costs of
(b) The Fiscal Agent shall depOSit the amount of $
Improvement Fund
m the
Agenda Item No 2
Page 35 of 316
(c) The Fiscal Agent shall deposit the amount of $
AdnumstratIve Expense Fund
In the
(d) The Fiscal Agent shall depOSit the amount of $
Capitalized Interest Account of the Bond Fund
In the
33 Validity of Bonds The validity of the authonzatIon and Issuance of the Bonds
shall not be dependent upon the completIon of the acqulSltlOn of the FacilitIes or upon the
performance by any person of his obligatIOn With respect to the FacilitIes
3 4 Special Taxes Receipt Fund and Special Tax Fund
(a) Establishment of SpeCial Taxes ReceIPt Fund and Special Tax Fund The
City shall establish and hold for the benefit of the Owners and owners of any Panty Bonds a fund
known as the Special Taxes Receipt Fund The City shall depOSit Special Taxes when
received In the account established for the DistrIct and munedIately thereafter transfer such
amounts to the Fiscal Agent for depOSit In the Special Tax Fund There IS hereby established as
a separate fund to be held by the Fiscal Agent the Special Tax Fund to the credit of which the
DistrIct or the City on behalf of the DistrIct shall depOSit unmedlately upon receipt all Special
Tax Revenues received by the DistrIct or the City on behalf of the DistrIct Moneys In the
Special Tax Fund shall be held In trust by the Fiscal Agent for the benefit of the DistrIct and the
Owners of the Bonds shall be disbursed as proVided below and pending any disbursement shall
be subject to a lien In favor of the Owners ofthe Bonds
(b) Disbursements After deposltmg an amount of SpeCial Tax Revenues
budgeted for AdimmstratIve Expenses to the AdimmstratIve Expense Fund pursuant to a wntten
directIon of the DistrIct no later than ten (10) Busmess Days pnor to each Interest Payment
Date the Fiscal Agent shall withdraw from the SpeCial Tax Fund and transfer to the Bond Fund
as follows
(I) To the Interest Account of the Bond Fund an amount such that the
balance In the Interest Account shall be equal to the mstalhnent of mterest due on the Bonds on
said Interest Payment Date and any mstalhnent of mterest due on a preVIous Interest Payment
Date whIch remams unpaid
(u) To the Pnnclpal Account of the Bond Fund an amount such that
the balance In the Pnnclpal Account shall at least equal the pnnclpal payment (mcludIng
mandatory smkmg payments) due on the Bonds on said Interest Payment Date and any
mstallment ofpnnclpal due on a prevIOus Interest Payment Date whIch remams unpaid
Notwithstanding the foregomg amounts shall be transferred to the Pnnclpal
Account or the Interest Account from the SpeCial Tax Fund and Immediately be paid to the
Owners of the Bonds m respect of past due payments on the Bonds
(c) Investment Moneys m the SpeCial Tax Fund shall be mvested and
depOSited m accordance With SectIon 6 I Interest earmngs and profits resultmg from such
mvestment and depOSit shall be retained m the SpeCial Tax Fund to be used for the purposes
thereof
Agenda Item No 2
Page 36 of 316
(d) DIsPosItion of Surolus On September 2 of each year comrnencmg
September 2 2008 the FIscal Agent shall transfer any amounts remaImng m the SpecIal Tax
Fund followmg payment of each dIsbursement reqwred pursuant to subsection (b) above to the
ResIdual Fund
3 5 Reserved
3 6 AdmmlstratIve Expense Fund
(a) EstablIshment of Admlmstratlve Expense Fund There IS hereby
establIshed as a separate fund to be held by the FIscal Agent the Admmlstratlve Expense
Fund to the credIt of wmch the amount budgeted and leVIed for Admlmstratlve Expenses shall
be made Moneys m the Admmlstratlve Expense Fund shall be held m trust by the FIscal Agent
for the benefit of the Dlstnct and shall be dIsbursed as proVIded below
(b) DIsbursement Amounts m the Admlmstratlve Expense Fund shall be
WIthdrawn by the FIscal Agent and paId to the DIstrIct or the CIty or ItS order upon receIpt by the
FIscal Agent of an Officer s CertIficate statmg the amount to be wIthdrawn that such amount IS
to be used to pay an Admlmstratlve Expense and the nature of such Admmlstratlve Expense
Annually at least five (5) days pnor to the last day of each Bond Year the FIscal
Agent shall wIthdraw any amounts then remalmng m the AdmlmstratIve Expense Fund that have
not been allocated to pay Admmlstratlve Expenses mcurred but not yet paId and whICh are not
otherwIse encumbered or expected to be needed for the purposes of such fund and transfer such
amounts to the SpeCIal Tax Fund
(c) Investlnent Moneys III the Adnumstratlve Expense Fund shall be
Illvested and deposIted m accordance WIth SectIOn 6 1 Interest earnmgs and profits resultmg
from SaId Illvestlnent shall be retaIned III the Admlmstratlve Expense Fund to be used for the
purposes of such fund
3 7 Improvement Fund
(a) EstablIshment of Improvement Fund There IS hereby establIshed as a
separate fund to be held by the FIscal Agent the Improvement Fund, to the credIt of wmch a
depOSIt shall be made as reqUIred by SectIon 3 2(b) hereof Moneys III the Improvement Fund
shall be held III trust by the FIscal Agent for the benefit of the CIty and the DIstrIct and shall be
dIsbursed except as otherwIse proVIded III subsection (b) of tms SectIon 3 7 for the payment or
reImbursement of costs of FacIlIties
(b) DIsbursement DIsbursements from the Improvement Fund shall be made
by the FIscal Agent upon receIpt of an Officer s CertIficate statlllg that (1) the condItIons to the
release of such funds have been satIsfied, (2) the name of the person to whom payment IS due
(3) the amount to be paId (4) the purpose for wmch the oblIgatIon to be paId was Illcurred and
(5) there has not been filed WIth or served upon the DIstrIct notice of any lIen, nght to lIen or
attachment stop notice or claIm affectlllg the nght to receIve payment of any of the moneys
payable to any of the persons named III such certIficate or wntten requlSltlOn whICh has not been
Agenda Item No 2
Page 37of316
released or will not be released sImultaneously WIth the payment of such oblIgatIon other than
matenalmen s or mechanIc s lIens accrumg by mere operatIOn of law
The FIscal Agent may conclusIvely rely on such Officer s CertIficate receIved as
complete authonzatIon to dIsburse funds m accordance WIth thIS SectIOn 3 7(b) and shall not be
responsIble for the contents of such Officer s CertIficate
(c) InvestJnent Moneys m the hnprovement Fund shall be mvested and
deposIted by the FIscal Agent m accordance WIth SectIon 6 1 hereof Interest earnmgs and
profits from such mvestJnent and deposIt shall be retamed m the hnprovement Fund untIl all
FacilItIes have been fully funded Upon closmg the hnprovement Fund all amounts remammg
m the hnprovement Fund shall be transferred for depOSIt m the RedemptIon Fund to be used for
the purposes of such fund
(d) Closmg of Fund Upon the filmg of an Officer s CertIficate executed by
the Treasurer statmg that all costs of the FacIlItIes have been paId or are not requIred to be paId
from the hnprovement Fund the FIscal Agent shall transfer the amount If any remauung In the
hnprovement Fund to the RedemptIOn Fund for applIcatIon to the payment of Bonds and the
hnprovement Fund shall be closed
3 8 Costs of Issuance Fund The FIscal Agent shall establIsh and maIntam a
separate fund to be held by the FIscal Agent known as the Costs of Issuance Fund mto whIch
shall be deposIted the amounts set forth m SectIon 32(a) above The moneys In the Costs of
Issuance Fund shall be used to pay Costs of Issuance from tIme to tIme upon receIpt of a
RequlSltIon of the DIstrIct On the date whIch IS one hundred eIghty (180) days followmg the
Closmg Date or upon the earlIer receIpt by the FIscal Agent of a wntten request of the DIstrIct
statmg that all Costs of Issuance have been paId the FIscal Agent shall transfer all remaInIng
amounts m the Costs of Issuance Fund to be deposIted m the one or more accounts of the
hnprovement Fund
3 9 DelInquency Management Fund
(a) EstablIshment of Delmquencv Management Fund There IS hereby
establIshed as a separate fund to be held by the FIscal Agent the DelInquency Management
Fund to the credIt of whIch a depOSIt shall be made as reqUIred by SectIOn 3 I O(b) hereof
Moneys m the DelInquency Management Fund shall be held m trust by the FIscal Agent for the
benefit of the Owners of the Bonds and shall be dIsbursed as provIded below
(b) DIsbursement Moneys m the Delmquency Management Fund shall be
used solely for the purpose ofpaymg the pnnclpal of mcludmg mandatory smkmg payments If
any and mterest on the Bonds when due m the event that the moneys m the Bond Fund are
msufficlent therefor If the amounts m the Bond Fund are msufficlent to pay the pnnclpal of
mcludmg mandatory smkmg payments If any or mterest on the Bonds when due the FIscal
Agent shall wIthdraw from the Delmquency Management Fund for depOSIt m the Bond Fund
moneys necessary for such purposes
In connectIOn WIth any redemptIon of the Bonds or a partIal defeasance of the
Bonds m accordance WIth SectIon 10 3 hereof aJllounts m the Delmquency Management Fund
Agenda Item No 2
Page 38 of 316
may be applIed to such redemptIOn or partial defeasance so long as the amount on deposit In the
DelInquency Management Fund follOWIng such redemptIOn or partial defeasance equals the
DelInquency Management Fund ReqUIrement To the extent that the DelInquency Management
Fund IS at the DelInquency Management Fund ReqUIrement as of the first day of the final Bond
Year for the Bonds amounts In the DelInquency Management Fund may be applIed to pay the
pnnclpal of and Interest due on the Bonds In the final Bond Year for such Issue Moneys In the
DelInquency Management Fund In excess of the DelInquency Management Fund ReqUIrement
not transferred In accordance With the precedIng provIsIons of thiS paragraph shall be withdrawn
from the DelInquency Management Fund on September 2 of each year and transferred to the
Residual Fund
(c) Investment Moneys In the DelInquency Management Fund shall be
Invested and deposited In accordance WIth SectIOn 6 I Interest earnmgs and profits resultmg
from said mvestment shall be retaIned In the DelInquency Management Fund to be used for the
purposes of such fund
310 Residual Fund
(a) EstablIshment of Residual Fund There IS hereby establIshed as a separate
fund to be held by the Fiscal Agent the Residual Fund to the credit of whIch a depOSit shall be
made as reqUIred by Sections 34(d) and 3 9(b) hereof Moneys In the Residual Fund shall be
held m trust by the Fiscal Agent for the benefit of the DistrIct and shall be disbursed as provided
below The amounts m the Residual Fund are not pledged to the repayment of the Bonds
(b) Disbursement On September 2 of each year commencIng September 2
2008 the Fiscal Agent shall transfer any amounts In the ReSidual Fund for the follOWIng
purposes In the follOWIng order of pnonty
(I) to the DelInquency Management Fund an amount If any reqUIred to
restore the amount on depOSit In the DelInquency Management Fund to the DelInquency
Management Fund ReqUIrement
(2) to the AdmInistratIve Expense Fund an amount detenmned by the Dlstnct
to pay AdmllllstratIve Expenses to the extent that the amounts on depOSit In the Admlmstratlve
Expense Fund are InsuffiCient to pay AdmInistratIve Expenses or
(3) to the SpeCial Mandatory RedemptIOn Account of the RedemptIOn Fund
for redemptIOn of the Bonds unless the Fiscal Agent has received wntten dIrectIon from the
DistrIct to expend such remalmng funds held In the ReSidual Fund for any lawful purposes of the
DistrIct IncludIng but not lImited to paYIng costs of publIc capital Improvements or reducIng the
SpeCial Taxes whIch are to be leVied In the current or the succeedmg Fiscal Year upon the
properties whIch are sub] ect to the SpeCial Tax
(c) Investment Moneys In the ReSidual Fund shall be Invested and depOSited
In accordance With SectIon 6 I Interest earnIngs and profits resultIng from Said Investment shall
be retaIned In the ReSidual Fund to be used for the purposes of such fund
Agenda Item No 2
Page 39 of 316
3 11 RedemptIOn Fund
(a) Estabhshment of the RedemptIOn Fund There IS hereby estabhshed as a
separate fund to be held by the Fiscal Agent the Redemption Fund (m which there shall be
estabhshed and created a Mandatory RedemptIOn Account an OptIOnal Redemption Account
and a Special Mandatory RedemptIOn Account) to the credit ofwluch the District or the City on
behalf of the District shall depOSit Immediately upon receipt all RedemptIOn Revenues received
by the District or the City on behalf of the District Moneys m the Redemption Fund shall be
held m trust by the Fiscal Agent for the benefit of the District and the Owners of the Bonds shall
be disbursed as provided below and pendmg any disbursement shall be subject to a hen m favor
of the Owners of the Bonds
(b) Disbursement
(I) All prepayments of Special Taxes and amounts transferred from the
Residual Fund for the redemptIOn of Bonds or transferred from the Authonty under the Authonty
Indenture for the redemptIOn of Bonds shall be deposited m the Special Mandatory Redemption
Account to be used to redeem Bonds on the next date for which notJce of redemptJon can tJmely
be gIVen
(2) Any amounts transferred for the optJonal redemptJon of Bonds shall be
deposited mto the OptJonal RedemptJon Account to be used to redeem Bonds on the next date for
wluch notJce of redemptIOn can tJmely be given
(3) All proceeds of the Bonds after completJon or abandonment of the
lnIprovements to be financed from the proceeds of the Bonds and proceeds from msurance or
condemnatIOn proceeds shall be deposited mto the Mandatory RedemptIOn Account to be used to
redeem Bonds on the next date for which notice of redemptJon can tJmely be gIVen
(c) Investment Moneys m the RedemptIOn Fund shall be mvested and
deposited m accordance with SectJon 6 I Interest eammgs and profits resultmg from Said
mvestrnent shall be retamed m the RedemptIOn Fund to be used for the purposes of such fund
ARTICLE IV
SPECIAL TAX REVENUES, BOND FUND
4 1 Pledge of SpeCIal Tax Revenues The Bonds shall be secured by a first pledge
(wluch pledge shall be effected m the manner and to the extent herem proVided) of all of the
SpeCial Tax Revenues and RedemptIOn Revenues and all moneys depOSited m the Bond Fund
and untJI disbursed as proVided herem m the SpeCial Tax Fund the RedemptJon Fund and the
Delmquency Management Fund The SpeCial Tax Revenues and all moneys depOSited mto said
funds (except as otherwise prOVIded herem) are hereby dedicated to the payment of the pnnclpal
of and mterest and any premIUm on the Bonds as prOVIded herem and m the Act until all of the
Bonds have been paid and retIred or untJI moneys or Federal SecuntJes have been set aside
Irrevocably for that purpose m accordance With SectIOn 103
Amounts m the AdmmlstratJve Expense Fund the lnIprovement Fund and the
ReSidual Fund are not pledged to the repayment of the Bonds The Faclhtles acqUired With the
Agenda Item No 2
Page 40 of 316
proceeds of the Bonds are not m any way pledged to pay the Debt Service on the Bonds Any
proceeds of condenmatlOn or destruction of any FacIlIties fmanced WIth the proceeds of the
Bonds are not pledged to pay the Debt ServIce on the Bonds and are free and clear of any lIen or
oblIgatIon Imposed hereunder
4 2 Bood Fond
(a) EstablIshment of Bond Fund There IS hereby establIshed as a separate
fund to be held by the Fiscal Agent known as the Bond Fund (m which there shall be
establIshed and created an Interest Account and a Prmclpal Account) to the credit of which
depOSits shall be made as reqUIred by Section 3 4(b) 3 7 and Section 3 9 and any other amounts
reqUIred to be depOSited therem by tlus Agreement or the Act Moneys m the Bond Fund shall
be held m trust by the Fiscal Agent for the benefit of the Owners of the Bonds shall be disbursed
for the payment of the pnnclpal of (mcludmg mandatory sll1kIng payments If any) and mterest
on the Bonds as prOVided below and pendIng such disbursement shall be subject to a lIen m
favor of the Owners of the Bonds
(b) Disbursements On each Interest Payment Date the Fiscal Agent shall
withdraw from the Pnnclpal Account and the Interest Account and pay to the Owners of the
Bonds the pnnclpal of (mcludmg mandatory smkmg payments) and Interest the Bonds
respectively prOVided that avaIlable amounts m the Prmclpal Account and the Interest Account
shall first be used to pay any past due ll1stallments of pnnclpal of (mcludmg mandatory smkIng
payments If any) and mterest on the Bonds respectively NotWIthstandmg the foregomg
amounts transferred to the Pnnclpal Account or the Interest Account from the Special Tax Fund
constItutmg delmquent payments of SpeCial Taxes pursuant to Section 3 4(b) shall Immediately
be paId to the Owners of the Bonds m respect of past due payments on the Bonds
Any mstallment of pnnclpal (IncludIng mandatory smkmg payments If any) or
mterest on the Bonds which IS not paId when due shall accrue Interest at the rate of mterest on
the Bonds until paid and shall be paid whenever funds m the Bond Fund are suffiCient therefor
If at any time the Fiscal Agent faIls to pay prmclpal and mterest due on any
scheduled payment date for the Bonds the Fiscal Agent shall notify the Dlstnct and the
Treasurer m wntmg of such faIlure and the Treasurer shall notify the CDIAC of such failure
wlthm 10 days of the faIlure to make such payment as reqUIred by Section 53359(c)(I) of the
Act
(c) CamtalIzed Interest Account There IS hereby establIshed a separate
account wlthm the Bond Fund deSignated as the Capitalized Interest Account to the credit of
wluch a depOSit shall be made as reqUIred by Section 3 2(d) hereof Moneys In the CapitalIzed
Interest Account shall be held by the Fiscal Agent and used and withdrawn solely for the purpose
ofpaymg the mterest on the Bonds as It shall become due and payable
(d) Investment Moneys m the Bond Fund shall be mvested and depOSited In
accordance With SectIOn 6 I Interest earnIngs and profits resultll1g from the mvestment and
depOSit of amounts m the Bond Fund shall be retaIned m the Bond Fund
Agenda Item No 2
Page 41 of 316
ARTICLE V
OTHER COVENANTS OF THE DISTRICT
5 1 Punctual Payment The District shall punctually payor cause to be paid the
pnnclpal of and mterest and any premIUm on the Bonds when and as due m strict conformity
with the terms ofthls Agreement and any Supplemental Agreement and It Will faithfully observe
and perform all of the conditIons covenants and reqUirements of this Agreement and all
Supplemental Agreements and of the Bonds
5 2 Limited ObligatIOn The Bonds are hmlted obhgatlOns of the District and are
payable solely from and secured solely by the Special Tax Revenues and the amounts m the
Bond Fund and the Special Tax Fund created hereunder
5 3 ExtenSIOn of Time for Payment In order to prevent any accumulatIon of claims
for mterest after matunty the District shall not directly or mdlrectly extend or consent to the
extensIOn of the tIme for the payment of any claIm for mterest on any of the Bonds and shall not
directly or mdlrectly be a party to the approval of any such arrangement by purchasmg or
fundmg SaId claIms for mterest or m any other maImer In case any such claim for mterest shall
be extended or funded whether or not With the consent of the District such claim for mterest so
extended or funded shall not be entItled m case of default hereunder to the benefits of thIs
Agreement except subject to the pnor payment m full of the pnnClpal of all of the Bonds then
Outstandmg aIld of all claims for mterest whIch shall not have so extended or funded Nothmg
m thiS sectIon shall be deemed to limit the nght of the District to Issue bonds for the purpose of
refundmg any outstandmg Bonds and such Issuance shall not be deemed to constitute an
extensIOn of matunty of the Bonds
5 4 Agamst Encumbrances The District Will not encumber pledge or place any
charge or hen upon any of the Special Tax Revenues or other amounts pledged to the Bonds
supenor to or on a parity With the pledge and hen herem created for the benefit of the Bonds
except as permitted by this Agreement
5 5 Books and Records The District Will keep or cause to be kept proper books of
record and accounts separate from all other records and accounts of the District m whIch
complete and correct entries shall be made of all transactions relatmg to the expenditure of
amounts disbursed from the Admlllistratlve Expense Fund and the SpeCial Tax Fund aIld relatmg
to the SpeCial Tax Revenues Such books of record and accounts shall at all tImes dunng
busmess hours and upon reasonable pnor notIce be subject to the mspectlOn of the Fiscal Agent
and the Owners of not less than ten percent (10%) of the pnnclpal amount of the Bonds then
Outstandmg or their representatIves duly authonzed m wntmg
The Fiscal Agent will keep or cause to be kept proper books of record and
accounts separate from all other records and accounts of the Fiscal Agent m whIch complete
and correct entries shall be made of all transactIons relatmg to the expenditure of amounts
disbursed from the Bond Fund and the Costs of Issuance Fund Such books of record and
accounts shall at all tImes dunng busmess hours and upon reasonable pnor notICe be subject to
the mspectlOn of the City the Dlstnct aIld the Owners of not less than ten percent (10%) of the
Agenda Item No 2
Page 42 of 316
pnnclpal amount of the Bonds then Outstandmg or their representatIves duly authonzed m
wntmg
5 6 ProtectIOn of Security and Rights of Owners The Dlstnct will preserve and
protect the secunty of the Bonds and the nghts of the Owners and will warrant and defend their
nghts agamst all claims and demands of all persons From and after the delivery of any of the
Bonds by the Dlstnct the Bonds shall be mcontestable by the Dlstnct
5 7 Compliance With Law, CompletIon of FacIlitIes The Dlstnct and the City will
comply With all applicable proVIsIOns of the Act and law m completmg the acqUisItIon and
constructIon of the FacilitIes
5 8 CollectIon of Special Tax Revenues The Dlstnct shall comply With all
reqUirements of the Act so as to assure the tImely collectIon of Special Tax Revenues mcludmg
Without limitatIon the enforcement of delmquent Special Taxes
The Treasurer shall effect the levy of the Special Taxes each Fiscal Year on the
parcels wlthm the Dlstnct m accordance With the OrdInance such that the computatIOn of the
levy IS complete before the final date on whICh the Auditor Will accept the transmiSSIOn of the
Special Tax amounts for the parcels wlthm the Dlstnct for InclusIOn on the next secured tax roll
Upon the completIon of the computatIon of the amounts of the levy the Treasurer shall prepare
or cause to be prepared and shall transmit to the Auditor such data as the Auditor reqUires to
mclude the levy of the Special Taxes on the next secured tax roll The Special Taxes so levied
shall be payable and be collected m the same maJIDer and at the same tIme and In the same
mstallments as the general taxes on real property are payable and have the same pnonty
become delinquent at the same tIme and m the same proportIOnate amounts and bear the same
proportIOnate penaltIes and mterest after delmquency as do the general taxes on real property
unless othelWlse provided by the Dlstnct
In the event that the Treasurer determmes to levy all or a portion of the Special
Taxes by means of direct billing of the property owners of the parcels wlthm the Dlstnct the
Treasurer shall not less than forty five (45) days pnor to each Interest Payment Date send bills
to the owners of such real property located wltlnn the Dlstnct subject to the levy of the Special
Taxes for Special Taxes m an aggregate amount necessary to meet the financial obligatIons of
the Dlstnct due on the next Interest Payment Date said bills to specify that the amounts so levied
shall be due and payable not less than tlnrty (30) days pnor to such Interest Payment Date and
shall be delinquent Ifnot paid when due
In any event the Treasurer shall fix and levy the amount of Special Taxes wlthm
the Dlstnct reqUired (I) for the payment ofpnnclpal of and Interest on any outstandmg Bonds of
the Dlstnct becommg due and payable dunng the ensumg year (taking mto consideratIon
antIcipated delmquencJes) and (n) to pay the AdmlIDstratIve Expenses dunng such year all m
accordance WIth the RMA and the OrdInance The Special Taxes so levied shall not exceed the
authonzed amounts as provided m the proceedmgs pursuant to the ResolutIon of FormatIon
The Treasurer IS hereby authonzed to employ consultants to asSiSt m computmg
the levy of the Special Taxes hereunder and any reconCiliatIOn of amounts levied to amounts
Agenda Item No 2
Paqe 43 of 316
received The fees and expenses of such consultants and the costs and expenses of the Treasurer
(mcludmg a charge for City or Dlstnct staff time) m conductmg Its duties hereunder shall be an
Admmlstrative Expense hereunder
5 9 Further Assurances The Dlstnct shall adopt make execute and dehver any and
all such further resolutiOns Instnlments and assurances as may be reasonably necessary or proper
to carry out the mtention or to faclhtate the performance of thIs Agreement and for the better
assunng and confirmmg unto the Owners of the nghts and benefits proVided m thiS Agreement
510 Tax Covenants
(a) Special DefimtiOns When used m thiS SectiOn the followmg terms have
the followmg meamngs
Code means the Internal Revenue Code of 1986 as amended
ComputatIOn Date has the meamng set forth m sectiOn 1 148 I (b) of the Tax
RegulatiOns
Gross Proceeds means any proceeds as defined m sectiOn I 148 l(b) of the Tax
Regulatwns (refemng to sales mvestrnent and transferred proceeds) and any replacement
proceeds as defined m sectiOn 1 148 I(c) of the Tax Regulations of the Bonds
Investment has the meamng set forth m sectiOn I 148 I (b) of the Tax
RegulatiOns
Nonpurpose Investment means any mvestrnent property as defined m section
148(b) of the Code m wluch Gross Proceeds of the Bonds are mvested and that IS not acqmred
to carry out the governmental purposes ofthat senes of Bonds
Rebate Amount has the meanmg set forth m section I 148 l(b) of the Tax
Regulations
Tax RegulatIOns means the Umted States Treasury Regulations promulgated
pursuant to sectiOns 103 and 141 through 150 of the Code or section 103 of the 1954 Code as
apphcable
YIeld' of any Investment has the rneamng set forth m section 1 148 5 of the Tax
RegulatiOns and of any Issue of governmental obhgatiOns has the meanmg set forth m section
1 148-4 of the Tax RegulatIons
(b) Not to Cause Interest to Become Taxable The Dlstnct covenants that It
shall not use and shall not permit the use of and shall not Olll1t to use Gross Proceeds or any
other amounts (or any property the acqulSltion construction or Improvement of wluch IS to be
financed directly or mdlrectly With Gross Proceeds) m a manner that If made or omitted
respectIvely could cause the mterest on any Bond to fall to be excluded pursuant to section
103(a) of the Code from the gross mcome of the owner thereof for federal mcome tax purposes
WithOut hmltmg the generahty of the foregomg unless and until the Fiscal Agent receIVes a
Agenda Item No 2
Page 44 of 316
wntten oplmon of Bond Counsel to the effect that failure to comply WIth such covenant will not
adversely affect such exclusIOn of the mterest on any Bond from the gross mcome of the owner
thereof for federal mcome tax purposes the City shall comply With each of the speCific
covenants m thiS Section
(c) Pnvate Use and Pnvate Pavrnents Except as would not cause any Bond to
become a pnvate activity bond wlthm the meamng of section 141 of the Code and the Tax
RegulatIOns the Dlstnct shall take all actIOns necessary to assure that the Dlstnct at all times
pnor to the final cancellation of the last of the Bonds to be retired
(I) exclUSively owns operates and possesses all property the
acquISItIOn constructIOn or Improvement of which IS to be financed or refinanced directly or
mdIrectly With Gross Proceeds of the Bonds and not use or permit the use of such Gross
Proceeds (mcludmg through any contractual arrmgement With terms different than those
applicable to the general public) or any property acqUired constructed or Improved With such
Gross Proceeds m any actiVIty carned on by my person or entity (mcludmg the Umted States or
any agency department and mstnunentality thereof) other than a state or local govenunent
unless such use IS solely as a member of the general public md
(II) does not dIrectly or mdlrectly unpose or accept any charge or other
payment by any person or entity (other than a state or local govenunent) who IS treated as usmg
any Gross Proceeds of the Bonds or any property the acqUisItion construction or Improvement of
which IS to be financed or refinanced directly or mdJrectly WIth such Gross Proceeds
(d) No Pnvate Loan Except as would not cause any Bond to become a
pnvate actIVIty bond wlthm the meamng of sectIOn 141 of the Code and the Tax RegulatIOns
and rulmgs thereunder the Dlstnct shall not use or permit the use of Gross Proceeds of the
Bonds to make or finance loans to any person or entity other than a state or local govenunent
For purposes ofthe foregomg covenant such Gross Proceeds are conSidered to be loaned to a
person or entity If (I) property acqUired constructed or Improved With such Gross Proceeds IS
sold or leased to such person or entity m a transactIOn that creates a debt for federal mcome tax
purposes (II) capacity m or service from such property IS comrmtted to such person or entity
under a take or pay output or smlllar contract or arrangement or (Ill) mdlrect benefits of such
Gross Proceeds or burdens and benefits of ownership of any property acqUired constructed or
Improved With such Gross Proceeds are otherwise transferred m a transactIOn that IS the
economic eqUivalent of a loan
(e) Not to Invest at Huffier Yield Except as would not cause the Bonds to
become arbItrage bonds WIt\un the meamng of section 148 of the Code md the Tax
RegulatIOns and rulings thereunder the Dlstnct shall not (and shall not permIt any person to) at
my time pnor to the final cancellation of the last Bond to be retired dIrectly or mdlrectly mvest
Gross Proceeds m any Investment If as a result of such mvestment the YIeld of any Investment
acqUired With Gross Proceeds whether then held or preVIously disposed of would matenally
exceed the YIeld of the Bonds wlthm the meanmg of said sectIOn 148
(f) Not Federallv Guaranteed Except to the extent permItted by sectIOn
149(b) of the Code and the Tax Regulations and rulmgs thereunder the Dlstnct shall not take or
Agenda Item No 2
Page 45 of 316
omit to take (and shall not permit any person to take or omit to take) any action that would cause
any Bond to be federally guaranteed wlthm the meanmg of section l49(b) of the Code and the
Tax RegulatIOns and rulmgs thereunder
(g) InformatIOn Reoort The DistrIct shall tImely file any mformatlOn
reqUired by sectIOn 149( e) of the Code With respect to Bonds with the Secretary of the Treasury
on Form 8038 G or such other form and m such place as the Secretary may prescnbe
(h) Rebate of Arbitrage Profits Except to the extent otherwise provided m
sectIOn 148(f) of the Code and the Tax RegulatIons
(I) The DistrIct shall account for all Gross Proceeds (mcludmg all
receipts expenditures and mvestrnents thereof) on Its books of account separately and apart from
all other funds (and receipts expendltIires and mvestrnents thereof) and shall retam all records of
accountmg for at least SIX years after the day on which the last Bond IS discharged However to
the extent permitted by law the DistrIct may commmgle (and may allow the City to commmgle)
Gross Proceeds of Bonds With ItS other momes proVided that It separately accounts for each
receipt and expendltIire of Gross Proceeds and the obligatIons acquired therewith
(n) Not less frequently than each ComputatIon Date the DistrIct shall
calculate the Rebate Amount m accordance With rules set forth m sectIon 148(f) of the Code and
the Tax RegulatIOns and rulmgs thereunder The DistrIct shall mamtam a copy of the calculatIOn
With ItS offiCial transcnpt of proceedmgs relatmg to the Issuance of the Bonds untIl SIX years
after the final ComputatIon Date
(m) In order to assure the excludability pursuant to sectIOn 103(a) of
the Code of the mterest on the Bonds from the gross mcome of the owners thereof for federal
mcome tax purposes the DistrIct shall pay to the Umted States the amount that when added to
the futIire value of preVIous rebate payments made for the Bonds equals (I) m the case of the
Fmal ComputatIon Date as defined m sectIon 1 148 3(e)(2) of the Tax RegulatIons one hundred
percent (100%) of the Rebate Amount on such date and (n) m the case of any other
ComputatIOn Date mnety percent (90%) of the Rebate Amount on such date In all cases such
rebate payments shall be made by the Dlstnct at the tImes and m the amounts as are or may be
requued by sectIon 148(f) of the Code and the Tax RegulatIons and rulings thereunder and shall
be accompanied by Form 8038 T or such other forms and mformatIon as IS or may be reqUired
by sectIOn 148(f) of the Code and the Tax RegulatIons and rulmgs thereunder for executIon and
filmg by the DistrIct Notwlthstandmg the foregomg and prOVided that the DistrIct takes all
steps aVaIlable to It to cause the proViSion of such amounts the monetary obligatIon of the
DistrIct under thiS paragraph (3) shall be lumted to amounts prOVided to It for such purpose by
the DistrIct
(I) Not to Divert Arbitrage Profits Except to the extent permitted by sectIon
148 of the Code and the Tax RegulatIOns and rulmgs thereunder the DistrIct shall not and shall
not permit any person to at any tIme pnor to the final cancellatIOn of the last of the Bonds to be
retIred enter mto any transactIon that reduces the amount reqUired to be paId to the Umted States
pursuant to paragraph (h) of this SectIon because such transactIOn results m a smaller profit or a
Agenda Item No 2
Page 46 of 316
larger loss than would have resulted If the transactIOn had been at arm s length and had the
Yields on the Bonds not been relevant to either party
(J) Bonds Not Hedge Bonds
(I) The Dlstnct represents that none of the Bonds IS or will become a
hedge bond wlthm the meamng of sectIon 149(g) of the Code
(11) Without lImitatIOn of paragraph (I) above the Dlstnct belIeves
(upon appropnate mvestIgatlOn) (A) that on the date of Issuance of the Bonds the Dlstnct
reasonably expected that at least 85% of the spendable proceeds of the Bonds Will be expended
wltlun the three year penod commencmg on such date of Issuance and (B) no more than 50% of
the proceeds of the Bonds Will be mvested m Nonpurpose Investments haVIng a substantIally
guaranteed YIeld for a penod of four years or more
(k) ElectIOns The Dlstnct hereby directs and authonzes any Authonzed
Officer to make electIons permitted or reqUIred pursuant to the proVISIOns of the Code or the Tax
RegulatIons as such RepresentatIve (after consultatIOn With Bond Counsel) deems necessary or
appropnate m connectIOn With the Bonds m the Certificate as to Tax ExemptIOn or smular or
other appropnate certIficate form or document
(I) Closmg Certificate The Dlstnct agrees to execute and delIver m
connectIon With the Issuance of the Bonds a Tax and Nonarbltrage Certificate or slffillar
document contammg additIonal representatIOns and covenants pertauung to the exclUSIOn of
mterest on the Bonds from the gross mcome of the owners thereof for federal mcome tax
purposes which representatIOns and covenants are mcorporated as though expressly set forth
herem
511 Covenant to Foreclose The Dlstnct Will review the publIc records of the County
of RIverside CalIforma m connectIOn With the collectIon of the Special Tax not later than July 1
of each year to determme the amount of SpeCial Tax collected m the pnor Fiscal Year and With
respect to mdlvldual delInquenCies If the Dlstnct deterrnmes that any smgle property owner
subject to the SpeCial Tax IS delInquent m the payment of SpeCIal Taxes m the aggregate of
$5 000 or more or that the delInquent SpeCIal Taxes represent more than 5% of the aggregate
Special Taxes wlthm the Dlstnct then the Dlstnct Will send or cause to be sent a notIce of
delmquency (and a demand for Immediate payment thereof) to the property owner Wltlun 45
days of such determmatIon and (If the delInquency remams uncured) the Dlstnct Will cause
JudiCial foreclosure proceedmgs to be filed m the Supenor Court wlthm nmety (90) days of such
determmatlOn agaInst aU properties for wluch the Special Taxes remaIn delmquent
The City Attorney IS hereby authonzed to employ counsel to conduct any such
foreclosure proceedmgs The fees and expenses of any such counsel and costs and expenses of
the City Attorney (mcludmg a charge for City or Dlstnct staff tIme) m conductmg foreclosure
proceedmgs shall be an AdrnmlstratIve Expense hereunder
Notwlthstandmg any provlSlon of the Act or other law of the State to the contrary
III connectIon With any foreclosure related to delmquent Special Taxes
Agenda Item No 2
Page 47 of 316
(a) The City or the Fiscal Agent IS hereby expressly authonzed to credIt bid
at any foreclosure sale wIthout any reqUirement that funds be placed m the Bond Fund or
otherwise be set asIde m the amount so credIt bId m the amount specIfied m Section 53356 5 of
the Act or such less amount as determmed under clause (b) below or otherwise under SectIOn
533566 of the Act
(b) The Dlstnct may permit m ItS sole and absolute dIscretion property With
delInquent SpecIal Tax payments to be sold for less than the amount specified m SectIOn 53356 5
of the Act If It determmes that such sale IS m the mterest of the Bond Owners The Bond
Owners by their acceptance of the Bonds hereby consent to such sale for such lesser amounts
(as such consent IS descnbed m Section 53356 6 of the Act) and hereby release the Dlstnct and
the CIty and theIr respective officers and agents from any lIabIlIty m connection thereWIth
(c) The Dlstnct IS hereby expressly authonzed to use amounts m the SpeCIal
Tax Fund to pay costs of foreclosure of delmquent SpeCIal Taxes
(d) The Dlstnct may forgive all or any portIOn of the SpeCIal Taxes leVied or
to be leVIed on any parcel m the Dlstnct so long as the Dlstnct determmes that such forgIveness
IS not expected to adversely affect ItS oblIgatIOn to pay pnnClpal of and mterest on the Bonds
under Section 3 4(b) hereof
5 12 Annual Reports to CDIAC Not later than October 30 of each year
commencmg October 30 2008 and until the October 30 followmg the final maturIty of the
Bonds the Treasurer shall supply the mformatIOn requIred by SectIOn 53359 5(b) or (c) of the
Act to CDIAC (on such forms as CDIAC may specIfy) and the Dlstnct
5 13 Contmumg Disclosure to Owners In addition to ItS oblIgatIOns under SectIOn
5 12 the Dlstnct hereby covenants and agrees that It wIll carry out all of ItS oblIgatIOns under the
Contmumg DIsclosure Agreement relatmg to the Authonty Bonds NotwIthstandIng any other
proVISIOn of thIS Agreement failure of the Dlstnct to comply WIth the Contmumg Disclosure
Agreement shall not be conSIdered a default hereunder however any Partlclpatmg Underwnter
or any holder or benefiCIal owner of the Authonty Bonds may take such actIOns as may be
necessary and appropnate to compel performance by the Dlstnct of ItS oblIgations under thiS
SectIOn 5 13 mc1udmg seekmg mandate or speCific performance by court order
5 14 Reserve Account Replemshment The Dlstnct hereby covenants that to the
extent there IS a draw upon the Reserve Account pursuant to the Authonty Indentlrre as a result
of a delmquency m the collectIOn of SpeCial Taxes the Dlstnct shall cause the Treasurer to effect
the next annual levy of Special Taxes m an amount suffiCient to replemsh such delmquency m
addition to those reqUired by SectIOn 5 8 and m addition to amounts that would be leVied Ifthere
were no such delmquency prOVided however the amount of Special Taxes leVied shall not
exceed the maximum permitted by the Ordmance and RMA
Agenda Item No 2
Page 48 of 316
ARTICLE VI
INVESTMENTS, DISPOSITION OF INVESTMENT PROCEEDS,
LIABILITY OF THE DISTRICT
6 1 DepOSit and Investment of Moneys In Funds Moneys In any fund or account
created or estabhshed by tlus Agreement and held by the Fiscal Agent shall be Invested by the
Fiscal Agent In Permitted Investments as directed pursuant to an Officer s Certificate filed With
the Fiscal Agent at least two (2) BUSIness Days In advance of the makIng of such Investments
In the absence of any such Officer s Certificate the Fiscal Agent shall Invest any such moneys In
Permitted Investments descnbed In clause (d) of the defimtlOn thereof to the extent practicable
which by their terms mature pnor to the date on which such moneys are reqUIred to be paid out
hereunder or are held umnvested The Treasurer shall make note of any Investment of funds
hereunder In excess of the )'leld on the Bonds so that appropnate actions can be taken to assure
comphance With SectIOn 6 2
Moneys In any fund or account created or estabhshed by thiS Agreement and held
by the Treasurer shall be Invested by the Treasurer In Permitted Investments wluch In any event
by their terms matllre pnor to the date on which such moneys are reqUIred to be paid out
hereunder ObhgatlOns purchased as an Investment of moneys In any fund shall be deemed to be
part of such fund or account subject however to the requuements ofthls Agreement for transfer
of Interest earmngs and profits resultIng from Investment of amounts In funds and accounts
Whenever m thiS Agreement any moneys are reqUIred to be transferred by the Dlstnct to the
Fiscal Agent such transfer may be accomphshed by transfemng a hke amount of Permitted
Investments
The Fiscal Agent or an affihate or the Treasurer may act as pnnclpal or agent In
the acqUISitIOn or dispOSItion of any Investment and shall be entitled to ItS customary fee
therefor Neither the Fiscal Agent nor the Treasurer shall Incur any hablhty for losses anSIng
from any Investments made pursuant to thiS SectIOn For purposes of determInIng the amount on
depOSit In any fund or account held hereunder all Permitted Investments or Investments credited
to such fund or account shall be valued at the cost thereof (excludmg accrued Interest and
brokerage commiSSIOns If any)
Except as otherwise proVided In the next sentence all Investments of amounts
deposited m any fund or account created by or pursuant to tlus Agreement or otherwise
contalmng gross proceeds of the Bonds (WithIn the meamng of section 148 of the Code) shall be
acqUIred disposed of and valued (as of the date that valuation IS reqUIred by tlus Agreement or
the Code) at Fair Market Value NotwithstandIng the prevIous sentence Investments In funds or
accounts (or portions thereof) that are subject to a )'leld restnctlOn under the apphcable
proVISIOns of the Code shall be valued at thelr present value (WithIn the meamng of section 148
of the Code) The Fiscal Agent shall not be hable for venficatlon of the apphcatlOn of such
sections of the Code
Investments In any and all funds and accounts may be commmgled In a separate
fund or funds for purposes of makIng holdmg and WSpOSIng of Investments notwithstandIng
proVISIOns hereIn for transfer to or holdIng In or to the credit of particular funds or accounts of
amounts received or held by the Fiscal Agent or the Treasurer hereunder prOVIded that the Fiscal
Agenda Item No 2
Page 49 of 316
Agent or the Treasurer as applicable shall at all tImes account for such mvestInents strIctly m
accordance With the funds and accounts to which they are credited and otherwise as provided m
thiS Agreement
The Fiscal Agent or the Treasurer as applicable shall sell at the highest pnce
reasonably obtamable or present for redemptIon any mvestInent secunty whenever It shall be
necessary to provide moneys to meet any reqmred payment transfer Withdrawal or disbursement
from the fund or account to which such mvestInent secunty IS credited and neither the Fiscal
Agent nor the Treasurer shall be liable or responsible for any loss resultmg from the acqulSltIon
or dispOSItIon of such mvestment secunty m accordance hereWIth
6 2 Limited OblIgation The DistrIct s oblIgatIons hereunder are limited oblIgatIons
of the DistrIct and are payable solely from and secured solely by the Special Tax Revenues and
the amounts m the SpeCial Tax Fund and the Bond Fund
6 3 LiabilIty of District The DistrIct shall not mcur any responsibilIty m respect of
the Bonds or thiS Agreement other than m connectIon With the dutIes or obligatIOns explIcitly
herem or m the Bonds asSigned to or Imposed upon It The DistrIct shall not be lIable m
connectIon WIth the performance of ItS dutIes hereunder except for ItS own negligence or WIllful
default The DistrIct shall not be bound to ascertam or mqmre as to the performance or
observance of any of the terms condItIons covenants or agreements of the Fiscal Agent herem
or of any of the docmnents executed by the Fiscal Agent m connectIOn With the Bonds or as to
the eXistence of a default or event of default thereunder
In the absence of bad faith the Dlstnct mcludmg the Treasurer may conclUSively
rely as to the truth of the statements and the correctIiess of the opmlOns expressed therem upon
certificates or opmlOns furnished to the DistrIct and conformmg to the reqmrements of thiS
Agreement The DistrIct mcludmg the Treasurer shall not be liable for any error of Judgment
made m good faith unless It shall be proved that It was negligent m ascertalmng the pertment
facts
No provIsion of thiS Agreement shall reqmre the Dlstnct to expend or nsk ItS own
general funds or otherwise mcur any finanCIal lIabilIty (other than With respect to the SpeCial Tax
Revenues) m the performance of any of ItS obligatIons hereunder or m the exercise of any of ItS
nghts or powers If It shall have reasonable grounds for believmg that repayment of such funds
or adequate mdenmlty agamst such nsk or liabilIty IS not reasonably assured to It
The DistrIct may rely and shall be protected m actIng or refraImng from actmg
upon any notIce resolutIOn request consent order certificate report warrant bond or other
paper or document believed by It to be genmne and to have been signed or presented by the
proper party or proper parties The DistrIct may consult WIth counsel who may be the City
Attorney With regard to legal questIons and the oplmon of such counsel shall be full and
complete authonzatlOn and protectIOn m respect of any actIon taken or suffered by It hereunder
m good faith and m accordance therewith
Agenda Item No 2
Page 50 of 316
The DIstrIct shall not be bound to recogrnze any person as the Owner of a Bond
unless and untIl such Bond IS submItted for mspectIon If reqUIred and hIs tItle thereto
satIsfactonly establIshed If dIsputed
Whenever m the admmlstratlOn of ItS dutIes under thIS Agreement the DIstrIct
shall deem It necessary or deSIrable that a matter be proved or establIshed pnor to takmg or
suffenng any actIon hereunder such matter (unless other eVIdence m respect thereof be herem
specIfically prescnbed) may m the absence of wIllful mIsconduct on the part of the Dlstnct be
deemed to be conclusIvely proved and establIshed by a certIficate of the FIscal Agent and such
certIficate shall be full warranty to the Dlstnct for any actIOn taken or suffered under the
provlSlons of tlus Agreement or any Supplemental Agreement upon the faIth thereof but m ItS
dIscretIOn the DIstrIct may m lIeu thereof accept other eVIdence of such matter or may reqUIre
such addItIonal eVIdence as to It may seem reasonable
6 4 Employment of Agents by DistrIct or the City In order to perform theIr
respectIve dutIes and oblIgatIons hereunder the CIty the DIstrIct and/or the Treasurer may
employ such persons or entItIes as they deem necessary or adVIsable The City the DIstrIct
and/or the Treasurer shall not be lIable for any of the acts or omIsSIons of such persons or entItIes
employed by them m good faIth hereunder and shall be entItled to rely and shall be fully
protected m domg so upon the opmlOns calculatIOns determmatlOns and dIrectIons of such
persons or entItIes
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
7 1 Events of Default. The followmg events shall be Events of Default
(a) FaIlure to pay any mstallment of pnnclpal of any Bonds when and as the
SaIne shall become due and payable whether at matImty as therem expressed by proceedmgs for
redemptIon or otherwIse
(b) FaIlure to pay any mstalhnent of mterest on any Bonds when and as the
SaIne shall become due and payable
(c) FaIlure by the DIstrIct to observe and perform any of the other covenants
agreements or condItIons on ItS part m thIS Agreement or m the Bonds contaIned If such faIlure
shall have contmued for a penod of 60 days after wntten notIce thereof speclfymg such faIlure
aJId requmng the SaIne to be remedIed shall have been gIven to the DIstrIct by the Fiscal Agent
or the Owners of not less than 25% m aggregate pnnClpal aInount of the Bonds at the tIme
Outstandmg prOVided however If m the reasonable oplmon of the DIstrIct the faIlure stated m
the notIce can be corrected but not wlthm such 60 day perIod such faIlure shall not constIillte an
Event of Default If correctIve actIon IS mstIillted by the DIstrIct wltlun such 60 day penod aJId
the DIstrIct shall thereafter dlhgently and m good faIth cure such faIlure m a reasonable penod of
tIme
(d) Commencement by the DIstrIct of a voluntary case under TItle II of the
Umted States Code or any substItute or successor staillte
Agenda Item No 2
Page 51 of 316
(e) Default under a Supplemental Agreement secunng the Issuance of Panty
Bonds
72 RemedIes of Bond Owners Subject to the prOVISIons of SectIOn 7 8 any Bond
Owner shall have the nght for the equal benefit and protectIOn of all Bond Owners sImIlarly
sItuated
(a) by mandamus SUIt action or proceedmg to compel the DIStnCt and ItS
officers agents or employees to perform each and every term proVIsIon and covenant contamed
m thIS Agreement and In the Bonds and to reqUIre the carryIng out of any or all such covenants
and agreements of the DIstnct and the fulfillment of all duties Imposed upon It by the Act
(b) by SUIt actIOn or proceedmg m eqUIty to enJom any acts or thmgs whIch
are unlawful or the VIOlatIOn of any of the Bond Owners nghts or
(c) upon the happemng of any Event of Default by SUIt actIOn or proceedmg
m any court of competent JunsdIctIon to reqUIre the DIStnCt and ItS officers and employees to
account as If It and they were the trustees of an express trust
7 3 ApplIcatIOn of Special Taxes and Other Funds After Default. If an Event of
Default shall occur and be contmUlng all SpecIal Taxes mcludmg any penalties costs fees and
other charges accrumg under the Act and any other funds then held or thereafter receIved by the
FIscal Agent under any of the prOVlSlons oftms Agreement shall be applIed by the FIscal Agent
as follows and m the followmg order
(a) To the payment of any expenses necessary In the opImon of the FIscal
Agent to protect the mterest of the Owners of the Bonds and payment of reasonable fees
charges and expenses of the FIscal Agent (mcludmg reasonable fees and dIsbursements of ItS
counsel) mcurred m and about the performance of Its powers and duties under thIS Agreement
(b) To the payment of the pnncIpal of and mterest then due WIth respect to the
Bonds (upon presentation of the Bonds to be paId and stampmg thereon of the payment If only
partIally paId or surrender thereof If fully paId) subject to the proVIsIons of thIs Agreement as
follows
Fust To the payment to the Persons entitled thereto of all mstallments of mterest
then due m the order of the matunty of such mstallments and If the amount aVaIlable shall not
be sufficIent to pay In full any mstallment or Installments matunng on the same date then to the
payment thereof ratably accordmg to the amounts due thereon to the Persons entItled thereto
WIthout any dIscnmmatIon or preference and
Second To the payment to the Persons entitled thereto of the unpaId pnncIpal of
any Bonds whIch shall have become due whether at matunty or by call for redemptIOn WIth
mterest on the overdue pnnClpal at the rate borne by the respective Bonds on the date of matunty
or redemption and If the amount avaIlable shall not be suffiCIent to pay m full all the Bonds
together WIth such mterest then to the payment thereof ratably accordmg to the amounts of
pnncIpal due on such date to the Persons entitled thereto WIthout any dIscnmmatIOn or
preference
Agenda Item No 2
Page 52 of 316
Fund
(c) Any remammg funds shall be transferred by the Fiscal Agent to the Bond
7 4 Absolute OblIgatiOn of the DistrIct Nothmg m SectIOn 7 7 or m any other
provlSlon of this Agreement or m the Bonds contamed shall affect or Implllr the obligatIOn of the
District which IS absolute and unconditional to pay the pnncipal of and mterest on the Bonds to
the respective Owners of the Bonds at their respective dates of matunty or upon call for
redemptIOn as herem provided but only out of the Special Taxes and other moneys herem
pledged therefor and received by the District or the Fiscal Agent or affect or Implllr the nght of
such Owners which IS also absolute and unconditional to enforce such payment by virtue ofthe
contract embodied m the Bonds
75 TermmatIon of Proceedmgs In case any proceedmgs taken by anyone or more
Bond Owners on account of any Event of Default shall have been dlscontmued or abandoned for
any reason or shall have been deternuned adversely to the Bond Owners then m every such case
the District and the Bond Owners subject to any determmatlOn m such proceedmgs shall be
restored to their former posItions and nghts hereunder severally and respectively and all nghts
remedies powers and duties of the City and the Bond Owners shall contmue as though no such
proceedmgs had been taken
76 Remedies Not ExclusIVe No remedy herem conferred upon or reserved to the
Fiscal Agent or to the Owners of the Bonds IS mtended to be exclusive of any other remedy or
remedies and each and every such remedy to the extent permitted by law shall be cumulative
and m addition to any other remedy given hereunder or now or hereafter eXistmg at law or m
eqUity or otherwise
7 7 No WaIVer of Default No delay or Olll1SSlOn of any Owner of the Bonds to
exercise any nght or power ansmg upon the occurrence of any default shalllmplllr any such nght
or power or shall be construed to be a Wlllver of any such default or acqUiescence therem and
every power and remedy given by thiS Agreement to the Owners of the Bonds may be exercised
from time to time and as often as may be deemed expedient
7 8 ActIons by Fiscal Agent as Attorney m Fact. Any SUit actIOn or proceedmg
wmch any Owner shall have the nght to bnng to enforce any nght or remedy hereunder may be
brought by the Fiscal Agent for the equal benefit and protectIOn of all Owners and the Fiscal
Agent is hereby appomted (and the succeSSiVe respective Owners of the Bonds by takmg and
holdmg the same shall be conclUSively deemed so to have appomted it) the true and lawful
attorney m fact of the Owners for the purpose of bnngmg any such SUit action or proceedmg
and to do and perform any and all acts and tmngs for and on behalf of the Owners as a class or
classes as may be necessary or adVisable m the opimon of the Fiscal Agent as such attorney m
fact
ARTICLE VIII
THE FISCAL AGENT
8 1 Appomtment of Fiscal Agent. Umon Bank of California, N A is hereby
appomted Fiscal Agent and paying agent for the Bonds The Fiscal Agent undertakes to perform
Agenda Item No 2
Page 53 of 316
such duties and only such duties as are specifically set forth m this Agreement and no ImplIed
covenants or oblIgatIOns shall be read mto thiS Agreement agamst the Fiscal Agent
Any company mto whIch the Fiscal Agent may be merged or converted or With
which It may be consolIdated or any company resultmg 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 busmess prOVided such company shall be
elIgible under the followmg paragraph of thiS Section shall be the successor to such Fiscal Agent
Without the execution or filIng of any paper or any further act anythIng herem to the contrary
notwlthstandmg
So long as there IS no Event of Default hereunder the District may remove the
Fiscal Agent mltIally appomted and any successor thereto and may appomt a successor or
successors thereto but any such successor shall be a bank or trust company haVIng a combmed
capital (exclusive of borrowed capital) and surplus of at least Fifty MillIon Dollars
($50 000 000) and subject to supervision or exammatlOn by federal or state authonty If such
bank or trust company publIshes a report of condition at least annually pursuant to law or to the
reqUirements of any superVIsmg or examlmng authonty above referred to then for the purposes
of thiS Section 8 I combmed capital and surplus of such bank or trust company shall be deemed
to be ItS combmed capital and surplus as set forth m ItS most recent report of condition so
publIshed
The Fiscal Agent may at any time resign by glvmg wntten notice to the Dlstnct
and by gIVmg to the Owners notice by mall of such resignatIOn Upon receiVIng notice of such
resignation the Dlstnct shall promptly appomt a successor Fiscal Agent by an mstnmIent m
wntmg Any resignatIOn or removal of the Fiscal Agent shall become effective upon acceptance
of appomtment by the successor Fiscal Agent
If no appomtment of a successor Fiscal Agent shall be made pursuant to the
foregomg prOVlSlons of thIs Section 8 1 wlthm forty five (45) days after the Fiscal Agent shall
have given to the District wntten notice or after a vacancy m the office of the Fiscal Agent shall
have occurred by reason of ItS mabllIty to act the Fiscal Agent or any Bond Owner may apply to
any court of competent Junsdlctlon to appomt a successor Fiscal Agent Said court may
thereupon after such notice If any as such court may deem proper appomt a successor Fiscal
Agent
If by reason of the JudgInent of any court the Fiscal Agent IS rendered unable to
perform ItS duties hereunder all such duties and all of the nghts and powers of the Fiscal Agent
hereunder shall be assumed by and vest m the Treasurer of the City m trust for the benefit of the
Owners The District covenants for the direct benefit of the Owners that the Treasurer m such
case shall be vested With all of the nghts and powers of the Fiscal Agent hereunder and shall
assume all of the responsibilIties and perform all of the duties of the Fiscal Agent hereunder m
trust for the benefit of the Owners of the Bonds
8 2 LIabilIty of FIscal Agent. The recitals of facts covenants and agreements herem
and m the Bonds contamed shall be taken as statements covenants and agreements of the
District and the Fiscal Agent assumes no responslblhty for the correcmess of the same nor
Agenda Item No 2
Page 54 of 316
makes any representatIOns as to the validity or sufficiency of tIns Agreement or of the Bonds nor
shall mcur any responsibility m respect thereof other than m connectIOn With the duties or
obligations herem or m the Bonds assigned to or Imposed upon It The Fiscal Agent shall not be
liable m connection With the performance of ItS duties hereunder except for Its own negligence
or wIllful default The Fiscal Agent assumes no responsibility or liability for any mformatIon
statement or reCital m any offenng memorandum or other disclosure matenal prepared or
dlstnbuted With respect to the Issuance of the Bonds
In the absence of bad faith the Fiscal Agent may conclUSively rely as to the truth
of the statements and the correctness of the oplmons expressed therem upon certificates or
oplmons furnished to the Fiscal Agent and conformmg to the procedural reqUirements of tIns
Agreement but m the case of any such certificates or oplmons by which any prOVISIOn hereof are
speCifically reqUired to be furnished to the Fiscal Agent the Fiscal Agent shall be under a duty to
examme the same to determme whether or not they conform to the procedural requirements of
thiS Agreement Except as prOVided above m thiS paragraph Fiscal Agent shall be protected and
shall mcur no liability m actmg or proceedmg or m not actmg or not proceedmg m good faith
reasonably and m accordance With the terms of thiS Agreement upon any resolutIOn order
notice request consent or waiver certificate statement affidaVIt or other paper or document
wluch It shall m good faith reasonably believe to be genume and to have been adopted or Signed
by the proper person or to have been prepared and furnIshed pursuant to any proVISIOn of tIns
Agreement and the Fiscal Agent shall not be under any duty to make any mvestIgatIon or
mqUlry as to any statements contamed or matters referred to m any such mstrument
The Fiscal Agent shall not be bound to ascertam or mqUlre as to the performance
or observance of any of the terms conditions covenants or agreements of the City or the Dlstnct
herem or of any of the documents executed by the City or the Dlstnct m connectIOn With the
Bonds or as to the eXistence of a default or event of default thereunder
The Fiscal Agent shall not be liable for any error of Judgment made m good faith
by a responSible officer unless It shall be proved that the Fiscal Agent was negligent m
ascertammg the pertment facts
No provIsion of tIns Agreement shall requITe the Fiscal Agent to expend or nsk Its
own funds or otherwise mcur any finanCial liability m the performance of any of ItS duties
hereunder or m the exercise of any of ItS nghts or powers If It shall have reasonable grounds for
belieVIng that repayment of such funds or adequate mdemmty agamst such nsk or liability IS not
reasonably assured to It
The Fiscal Agent shall be under no obligation to exercise any of the nghts or
powers vested m It by tlus Agreement at the request or direction of any of the Owners pursuant
to tIns Agreement unless such Owners shall have offered to the Fiscal Agent reasonable secunty
or mdemmty agamst the costs expenses and liabilities whICh might be mcurred by It m
compliance With such request or directIOn
The Fiscal Agent may become the owner of the Bonds With the same nghts It
would have If It were not the Fiscal Agent
Agenda Item No 2
Page 55 of 316
All mdemmficatlOns and releases from liabIlity granted to the FISCal Agent
hereunder shall extend to the dIrectors officers and employees of the FIscal Agent
8 3 InformatIon The FIscal Agent shall proVIde to the DIStrIct such mformatIon
relatmg to the Bonds and the funds and accounts mamtamed by the FIscal Agent hereunder as the
DIStrICt shall reasonably request mcludmg but not lmuted to quarterly statements reportmg
funds held and transactions by the FIscal Agent
84 NotIce to FIscal Agent The FIscal Agent may rely and shall be protected m
actmg or reframmg from actmg upon any notice resolutIOn request consent order certIficate
report warrant Bond or other paper or document believed by It to be genwne and to have been
sIgned or presented by the proper party or proper partIes The FIscal Agent may consult With
counsel who may be counsel to the DIStrICt wIth regard to legal questIOns and the opmlOn of
such counsel shall be full and complete authonzatlOn and protectIOn m respect of any actIOn
taken or suffered by It hereunder m good faIth and m accordance thereWIth
The FIscal Agent shall not be bound to recognIze any person as the Owner of a
Bond unless and untIl such Bond IS submItted for mspectIon If reqwred and hIS tItle thereto
satIsfactonly established If dIsputed
Whenever m the admmlstratlOn of ItS duties under thIS Agreement the FIscal
Agent shall deem It necessary or deSIrable that a matter be proved or established pnor to taking
or suffenng any actIOn hereunder such matter (unless other eVIdence m respect thereof be herem
specIfically prescnbed) may m the absence of Willful mIsconduct on the part of the FIscal
Agent be deemed to be conclusIvely proved and established by a certIficate of the Dlstnct and
such certIficate shall be full warrant to the FIscal Agent for any action taken or suffered under
the provIsIons of thIS Agreement or any Supplemental Agreement upon the faIth thereof but m
ItS dIscretIOn the FIscal Agent may m lieu thereof accept other eVIdence of such matter or may
reqwre such addItional eVIdence as to It may seem reasonable
8 5 CompensatIon, IndemDlficatIon The DIStrICt shall pay to the FIscal Agent from
tIme to time reasonable compensation for all servIces rendered as FIscal Agent under thIS
Agreement and also all reasonable expenses charges counsel fees and other dIsbursements
mcIudmg those of theIr attorneys agents and employees mcurred m and about the performance
of therr powers and dutIes under thIS Agreement but the FIscal Agent shall not have a lien
therefor on any funds at any time held by It under trus Agreement The DIStrICt further agrees to
the extent permItted by applicable law to mdemmfy and save the FIscal Agent ItS officers
employees dIrectors and agents harmless agamst any liabIlities wruch It may mcur m the
exerCIse and performance of ItS powers and dutIes hereunder wluch are not due to ItS neglIgence
or WIllful mIsconduct The oblIgatIOn of the DIstrIct under thIS SectIon shall survIve reSIgnatIon
or removal of the FIscal Agent under tlus Agreement and payment of the Bonds and dIscharge of
thiS Agreement but any monetary obligation of the DistrIct arJsmg under tlu.s Section shall be
limIted solely to amounts on depOSIt m the AdmlmstratIve Expense Fund
Agenda Item No 2
Page 56 of316
ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
9 1 Amendments PermItted Tlns Agreement and the nghts and obligations of the
Dlstnct and of the Owners of the Bonds may be modified or amended at any time by a
Supplemental Agreement pursuant to the affirmative vote at a meetmg of Owners or With the
wntten consent Without a meetmg of the Owners of at least SIXty percent (60%) m aggregate
pnnclpal amount of the Bonds then Outstandmg exclUSive of Bonds disqualified as provided m
Section 94 No such modificatIOn or amendment shall (I) extend the matImty of any Bond or
reduce the mterest rate thereon or otherwise alter or Impair the obligatIOn of the Dlstnct to pay
the pnnClpal of and the mterest and any premIUm on any Bond WithOUt the express consent of
the Owner of such Bond or (n) permit the creatIOn by the Dlstnct of any pledge or lien upon the
Special Taxes supenor to or on a panty With the pledge and lien created for the benefit of the
Bonds (except as otherwise penmtted by the Act the laws of the State of CalIfonna or thiS
Agreement) or (m) reduce the percentage of Bonds reqUired for the amendment hereof Any
such amendment may not modify any of the nghts or obligations of the Fiscal Agent WithOUt ItS
wntten consent
ThiS Agreement and the nghts and obligations of the Dlstnct and of the Owners
may also be modified or amended at any time by a Supplemental Agreement WithOUt the consent
of any Owners only to the extent permitted by law and only for anyone or more of the followmg
purposes
(a) to add to the covenants and agreements of the Dlstnct m tlns Agreement
contamed other covenants and agreements thereafter to be observed or to limit or surrender any
nght or power herem reserved to or conferred upon the Dlstnct
(b) to make modifications not adversely affectmg any Outstandmg Bonds of
the Dlstnct m any matenal respect
(c) to make such proVISIOns for the purpose of cunng any ambigUIty
mconslstency or omiSSIOn of cunng correcting or supplementing any defective prOVISIOn
contamed m thiS Agreement or m regard to questIOns ansmg under tlns Agreement as the
Dlstnct and the Fiscal Agent may deem necessary or deSirable and not mconslstent With this
Agreement and wlnch shall not adversely affect the nghts of the Owners of the Bonds
(d) to make such additions deletions or modifications as may be necessary or
deSirable to assure the exclUSIOn from gross mcome for federal mcome tax purposes of mterest
on the Bonds
(e) To provide for the Issuance of Panty Bonds m accordance With the
prOVISions of tlns Agreement
9 2 Owners' Meetmgs The Dlstnct may at any time call a meetmg of the Owners
In such event the Dlstnct IS authonzed to fix the time and place of Said meetmg and to proVIde
for the glvmg of notice thereof and to fix and adopt rules and regulations for the conduct of Said
meetmg
Agenda Item No 2
Page 57 of 316
9 3 Procedure for Amendment with Wntten Consent of Owners The DIStnCt and
the FIscal Agent may at any time adopt a Supplemental Agreement amendmg the provIsIons of
the Bonds or of thIS Agreement or any Supplemental Agreement to the extent that such
amendment IS permItted by SectIOn 9 I to take effect when and as provIded m tills Section A
copy of such Supplemental Agreement together WIth a request to Owners for theIr consent
thereto shall be malled by first class maIl by the FIscal Agent to each Owner of Bonds
Outstandmg but faIlure to mall copIes of such Supplemental Agreement and request shall not
I
affect the valIdIty of the Supplemental Agreement when assented to as m thIS Section proVIded
Such Supplemental Agreement shall not become effective unless there shall be
filed WIth the FIscal Agent the wntten consents of the Owners of at least SIxty percent (60%) m
aggregate pnncIpal amount of the Bonds then Outstandmg (exclusIve of Bonds dIsqualIfied as
prOVIded m SectIOn 94) and a notice shall have been maIled as heremafter m thIS SectIOn
proVIded Each such consent shall be effective only If accompanIed by proof of ownershIp of the
Bonds for whIch such consent IS gIven whIch proof shall be such as IS permItted by SectIOn
10 4 Any such consent shall be bmdmg upon the Owner of the Bonds gIvmg such consent and
on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless
such consent IS revoked m wntmg by the Owner gIvmg such consent or a subsequent Owner by
filing such revocation WIth the FIscal Agent pnor to the date when the notice heremafter m thIS
Section prOVIded for has been maIled
After the Owners of the reqUIred percentage of Bonds shall have filed theIr
consents to the Supplemental Agreement the DIStnCt shall mall a notIce to the Owners m the
mallller herembefore proVIded m tills SectIOn for the maIlmg of the Supplemental Agreement
statmg m substance that the Supplemental Agreement has been consented to by the Owners of
the requIred percentage of Bonds and WIll be effective as proVIded m tills SectIon (but faIlure to
mall copIes of sald notice shall not affect the valIdIty of the Supplemental Agreement or
consents thereto) Proof of the maIlmg of such notice shall be filed WIth the FIscal Agent A
record consIstmg of the papers reqUIred by thIS SectIOn 9 3 to be filed WIth the FIscal Agent
shall be proof of the matters therem stated until the contrary IS proved The Supplemental
Agreement shall become effective upon the filmg Wlth the FISCal Agent of the proof of mallmg
of such notice and the Supplemental Agreement shall be deemed conclUSIvely bmdmg (except
as otherwIse heremabove speCIfically proVIded m tills Article) upon the DIstnct and the Owners
of all Bonds at the expIratIOn of sIXty (60) days after such filIng except m the event of a final
decree of a court of competent JunsmctIOn settmg asIde such consent m a legal actIon or
eqUItable proceedmg for such purpose commenced Wltilln such SIxty day penod
94 DisqualIfied Bonds Bonds owned or held for the account of the CIty or the
DIStnCt exceptmg any penSIOn or retirement fund shall not be deemed Outstandmg for the
purpose of allY vote consent or other action or allY calculatIOn of Outstalldmg Bonds proVIded
for m tills ArtIcle IX and shall not be entitled to vote upon consent to or take any other action
proVIded for m thIS ArtIcle IX
9 5 Effect of Supplemental Agreement From and after the tIme allY Supplemental
Agreement becomes effective pursuant to thIS ArtIcle IX tills Agreement shall be deemed to be
modIfied alld amended m accordallce thereWlth the respective nghts duties and oblIgatIOns
under tills Agreement of the DIStnCt and all Owners of Bonds Outstandmg shall thereafter be
Agenda Item No 2
Page 58 of 316
deterrmned exercised and enforced hereunder subject m all respects to such modificatIOns and
amendments and all the terms and conditions of any such Supplemental Agreement shall be
deemed to be part of the terms and conditIOns ofthls Agreement for any and all purposes
9 6 Endorsement or Replacement of Bonds Issned After Amendments The
DistrIct may determme that Bonds Issued and delivered after the effective date of any actIOn
taken as provided m thIs Article IX shall bear a notatIOn by endorsement or otherwise m form
approved by the DistrIct as to such action In that case upon demand of the Owner of any Bond
Outstandmg at such effective date and presentation of hIs Bond for that purpose at the Corporate
Trust Office of the Fiscal Agent or at such other office as the DistrIct may select and designate
for that purpose a sUitable notation shall be made on such Bond The DistrIct may determme
that new Bonds so modified as m the oplmon of the DistrIct IS necessary to conform to such
Owners action shall be prepared executed and delivered In that case upon demand of the
Owner of any Bonds then Outstandmg such new Bonds shall be exchanged at the Corporate
Trust Office of the Fiscal Agent Without cost to any Owner for Bonds then Outstandmg upon
surrender of such Bonds
97 Amendatory Endorsement of Bonds The prOVISIOns of thiS Article IX shall not
prevent any Owner from acceptmg any amendment as to the particular Bonds held by hIm
provided that due notation thereof IS made on such Bonds
9 8 OpIDlon of Bond Counsel In connectIOn With any Supplemental Agreement the
Fiscal Agent shall be entitled to receive an oplmon of Bond Counsel that any such Supplemental
Agreement IS authonzed or permitted by thIs Agreement and the Fiscal Agent may conclusively
rely upon such opmlOn
ARTICLE X
MISCELLANEOUS
101 Benefits of Agreement Limited to Parties NothIng m thIs Agreement
expressed or Implied IS mtended to give to any person other than the DistrIct City the Fiscal
Agent and the Owners any nght remedy claim under or by reason of this Agreement Any
covenants stipulations promises or agreements m thIs Agreement contamed by and on behalf of
the DistrIct shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent
102 Successor IS Deemed Included ID All References to Predecessor Whenever m
this Agreement or any Supplemental Agreement either the DistrIct or the Fiscal Agent IS named
or referred to such reference shall be deemed to mclude the successors or asslgI1S thereof and all
the covenants and agreements m thIs Agreement contamed by or on behalf of the DistrIct or the
Fiscal Agent shall bmd and mure to the benefit of the respective successors and asSignS thereof
whether so expressed or not
10 3 Discharge of Agreement The DistrIct shall have the option to pay and discharge
the entire mdebtechiess on all or any portIOn of the Bonds Outstandmg m anyone or more of the
followmg ways
(a) by well and truly paymg or causmg to be paid the pnnclpal of and mterest
and any premIUm on such Bonds Outstanding as and when the same become due and payable
Agenda Item No 2
Page 59 of 316
(b) by deposltmg With the Fiscal Agent m trust at or before matunty money
wluch together With the amounts then on deposit m the funds and accounts provided for m
SectIon 4 2 IS fully suffiCient to pay such Bonds Outstandmg mcludmg all pnnclpal mterest and
redemptIOn premIUms or
(c) by lITevocably deposltmg With the Fiscal Agent m trust cash and Federal
SecuntIes and/or mvestInents descnbed m clause (I) of the defimtlOn ofPennltted InvestInents m
such amount as the Dlstnct shall determme as confirmed by Bond Counselor an mdependent
certified public accountant Will together With the mterest to accrue thereon and moneys then on
depOSit m the fund and accounts proVided for m SectIOn 4 2 be fully suffiCient to pay and
discharge the mdebtedness on such Bonds (mcludmg all pnnclpal mterest and redemptIOn
premIUms) at or before theIr respectIve matunty dates
If the Dlstnct shall have taken any of the actIOns specified m (a) (b) or (c) above
and If such Bonds are to be redeemed pnor to the matImty thereof notice of such redemptIon
shall have been given as m thiS Agreement proVided or provlSlon satIsfactory to the Fiscal Agent
shall have been made for the glvmg of such notIce then at the electIon of the Dlstnct and
notwlthstandmg that any Bonds shall not have been surrendered for payment the pledge of the
Special Taxes and other funds proVided for m thiS Agreement and all other obligatIOns of the
Dlstnct under thiS Agreement With respect to such Bonds Outstandmg shall cease and termmate
NotIce of such electIOn shall be filed With the Fiscal Agent Notwlthstandmg the foregomg the
obligatIOn of the Dlstnct to payor cause to be paId to the Owners of the Bonds not so
surrendered and paId all sums due thereon and all amounts owmg to the Fiscal Agent pursuant to
SectIOn 8 5 and otherwise to assure that no actIon IS taken or failed to be taken If such actIon or
failure adversely affects the exclUSIOn of mterest on the Bonds from gross mcome for federal
mcome tax purposes shall contmue m any event
Upon compliance by the Dlstnct With the foregomg With respect to all Bonds
Outstandmg any funds held by the Fiscal Agent after payment of all fees and expenses of the
Fiscal Agent which are not reqUired for the purposes of the precedmg paragraph shall be paid
over to the Dlstnct and any SpeCial Taxes thereafter received by the Dlstnct shall not be remitted
to the Fiscal Agent but shall be retaIned by the Dlstnct to be used for any purpose permitted
under the Act
104 ExecutIon of Documents and Proof of Ownership by Owners Any request
declaratIon or other mstnmJent which this Agreement may reqUire or permit to be executed by
Owners may be m one or more mstruments of Similar tenor and shall be executed by Owners m
person or by their attorneys appomted m wntIng
Except as otherwise herem expressly proVided the fact and date of the executIOn
by any Owner or Ius attorney of such request declaration or other mstnmJent or of such wntmg
appomtmg such attorney may be proved by the certificate of any notary public or other officer
authonzed to take acknowledgments of deeds to be recorded m the state m which he purports to
act that the person slgmng such request declaratIOn or other mstnmJent or wntIng
acknowledged to him the executIOn thereof or by an affidaVit of a witness of such executIon
duly sworn to before such notary public or other officer
Agenda Item No 2
Page 60 of 316
Except as otherwise herem expressly provided the ownership of regIstered Bonds
and the amount matunty number and date of holdmg the same shall be proved by the regIstry
books
Any request declaratIOn or other mstrument or wntmg of the Owner of any Bond
shall bmd all future Owners of such Bond m respect of anythmg done or suffered to be done by
the Dlstnct or the Fiscal Agent m good faith and m accordance therewith
105 Waiver of Personal LiabilIty No member officer agent or employee of the
Dlstnct or the City shall be mdlVldually or personally hable for the payment of the pnnClpal of
or mterest or any premium on the Bonds but nothmg herem contamed shall reheve any such
member officer agent or employee from the performance of any official duty proVIded by law
106 NotIces to and Demands on District and Fiscal Agent Any nol1ce or demand
wluch by any provlSlon of tlus Agreement IS reqUIred or permitted to be given or served by the
Fiscal Agent to or on the Dlstnct may be given or served by bemg deposited postage prepaid m a
post office letter box addressed (unl1l another address IS filed by the Dlstnct With the Fiscal
Agent) as follows
City of Lake Elsmore Commumty Faclhl1es Dlstnct No 2005 5
(VIllages at Wasson Canyon)
c/o City of Lake Elsmore
130 South Mam Street
Lake Elsmore Cahfornm 92530
Attn City Manager
Any nol1ce or demand which by any provlSlon of thiS Agreement IS reqUIred or
permitted to be given or served by the Dlstnct to or on the Fiscal Agent may be given or served
by bemg depOSited postage preprod m a post office letter box addressed (unl1l another address IS
filed by the Fiscal Agent With the Dlstnct) as follows
Druon Bank of CalIforrua, N A
120 South San Pedro Street 4th Floor
Los Angeles California 90012
Attenl10n Corporate Trust Department
10 7 PartIal InvalIdity If any Secl10n paragraph sentence clause or phrase of thiS
Agreement shall for any reason be held Illegal or unenforceable such holdmg shall not affect the
vahdlty of the remrorung porl1oilS of thiS Agreement The Dlstnct hereby declares that It would
have adopted thiS Agreement and each and every other Secl10n paragraph sentence clause or
phrase hereof and authonzed the Issue of the Bonds pursuant thereto mespecl1ve of the fact that
anyone or more SectIOns paragraphs sentences clauses or phrases of tlus Agreement maybe
held Illegal mvahd or unenforceable
108 Unclaimed Moneys Anyt1ung controned herem to the contrary notwlthstandmg
any moneys held by the Fiscal Agent m trust for the payment and illscharge of the pnnclpal of
and the mterest and any premium on the Bonds wluch remams unclaimed for two (2) years after
the date when the payments of such pnnclpal mterest and preffilum have become payable If
Agenda Item No 2
Page 61 of 316
such money was held by the Fiscal Agent at such date shall be repaid by the Fiscal Agent to the
District as Its absolute property free from any trust and the Fiscal Agent shall thereupon be
released and discharged with respect thereto and the Bond Owners shall look only to the District
for the payment of the pnnclpal of and mterest and any premIUm on such Bonds
109 ApplIcable Law Tlus Agreement shall be governed by and enforced m
accordance With the laws of the State of CalIfornia applIcable to contracts made and performed
m the State of CalIforma
1010 ConflIct With Act In the event of a conflict between any provIsion of thiS
Agreement With any provISIon of the Act as m effect on the Closmg Date the provIsion of the
Act shall prevail over the confllctmg provIsion of thiS Agreement
1011 ConclUSive EVidence of Regulanty Bonds Issued pursuant to thiS Agreement
shall constitute conclUSive eVIdence of the regulanty of all proceedmgs under the Act relative to
their Issuance and the levy of the Special Taxes
1012 Payment on Busmess Day In any case where the date of the matIinty ofmterest
or of pnnclpal (and premIUm If any) of the Bonds or the date fixed for redemptIOn of any Bonds
or the date any actIOn IS to be taken pursuant to thiS Agreement IS other than a Busmess Day the
payment of mterest or pnnClpal (and premIUm If any) or the actIon need not be made on such
date but may be made on the next succeedmg day which IS a Busmess Day With the same force
and effect as If made on the date reqUired and no mterest shall accrue for the penod after such
date
1013 Counterparts Tlus Agreement may be executed m counterparts each ofwluch
shall be deemed an ongmal
Agenda Item No 2
Page 62 of 316
IN WITNESS WHEREOF the Dlstnct has caused tills Agreement to be executed
III Its name and the Fiscal Agent has caused tills Agreement to be executed III Its name all as of
November I 2007
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO 20055
(VILLAGES AT WASSON CANYON)
By
Mayor
ATTEST
By
City Clerk
UNION BANK OF CALIFORNIA N A
as Fiscal Agent
By
Authonzed Officer
Agenda Item No 2
Page 63 of 316
EXHIBIT A
FORM OF BOND
No
$
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO 2005 5
(VILLAGES AT WASSON CANYON)
SPECIAL TAX BOND 2007 SERIES A
INTEREST RATE MATURITY DATE DATED DATE
September 1
REGISTERED OWNER UNION BANK OF CALIFORNIA N A AS TRUSTEE FOR
THE LAKE ELSINORE PUBLIC FINANCING AUTHORITY
PRINCIPAL AMOUNT DOLLARS
The City of Lake Elsmore Community FacIlities DistrIct No 2005 5 (Villages at
Wasson Canyon) (the DistrIct) for value received hereby promises to pay solely from the
Special Tax (as herem after defined) to be collected wlthm the Dlstnct or amounts m the funds
and accounts held under the Agreement (as heremafter defmed) to the registered owner named
above or registered asSignS on the matImty date set forth above unless redeemed pnor thereto
as heremafter provided the pnnClpal amount set forth above and to pay mterest on such
pnnclpal amount from the Interest Payment Date (as heremafter defined) next precedmg the date
of authentication thereof unless (a) It IS authenticated after a Record Date (as heremafter
defined) and on or before an Interest Payment Date and after the close of busmess on the
precedmg Record Date m wluch event mterest With respect thereto Will be payable from such
Interest Payment Date (b) It IS authenticated on or before February 15 2008 m which event
mterest With respect thereto Will be payable from ItS Dated Date or (c) mterest With respect to
any Outstandmg Bond IS m default m which event mterest With respect thereto will be payable
from the date to which mterest has been paId m full payable on each Interest Payment Date
payable semlaJlllually on March 1 and September 1 m each year commencmg March 1 2008
(each an Interest Payment Date ) at the mterest rate set forth above until the pnnclpal amount
hereof IS paid or made aVaIlable for payment The pnnClpal of thiS Bond IS payable to the
registered owner hereof m lawful money of the Umted States of Amenca upon presentation and
surrender of tlus Bond at the Corporate Trust Office of Umon Bank of California N A (the
Fiscal Agent) Interest on thiS Bond shall be paId by check of the Fiscal Agent maIled on each
Interest Payment Date to the registered owner hereof as of the close of busmess on the fifteenth
day of the month precedmg the month m which the mterest payment date occurs (the Record
Date ) at such registered owner s address as It appears on the registratIOn books mamtamed by
the Fiscal Agent
Agenda Item No 2
Page 64 of 316
This Bond IS one of a duly authonzed Issue of bonds m the aggregate pnnclpal
amount of $ approved by the qualified electors of the DistrIct on
pursuant to the Mello Roos Commumty FaCilitIes Act of 1982 as amended SectIons 53311 et
seq of the California Government Code (the Mello Roos Act) for the purpose offinancmg the
acquIsItIon of certam faCilitIes (the ProJect) and IS one of the Bonds deSignated City of Lake
Elsmore Commumty FaCilitIes DistrIct No 2005 5 (VIllages at Wasson Canyon) Special Tax
Bonds 2007 Senes A (the Bonds) The creatIOn of the Bonds and the terms and conditIOns
thereof are prOVided for by the Fiscal Agent Agreement dated as of November 1 2007 (the
Agreement ) by and between the DistrIct and the Fiscal Agent and tlus reference mcorporates
the Agreement herem and by acceptance hereof the owner of thiS Bond assents to said terms and
conditIons
Pursuant to the Mello Roos Act and the Agreement the pnnclpal of and mterest
on tlus Bond are payable solely from the annual speCial tax authonzed under the Mello Roos
Act to be collected wlthm the DistrIct (the SpeCial Tax ) and certam funds held under the
Agreement
Any tax for the payment hereof shall be limited to the SpeCial Tax except to the
extent that provlSlon for payment has been made by the City as may be permitted by law The
Bonds do not constIl11te obligatIons of the City of Lake Elsmore for which Said City IS obligated
to levy or pledge or has leVied or pledged general or speCial taxatIon other than descnbed
heremabove The DistrIct has covenanted for the benefit of the owners of the Bonds that It Will
order and cause to be commenced as proVided m the Agreement and thereafter diligently
prosecute to Judgment an actIOn m the supenor court to foreclose under the clfcumstances set
forth m the Agreement the lien of any SpeCial Tax or mstallment thereof not paid when due
The Bonds are subject to redemptIOn pnor to matunty at the optIon of the DistrIct
from any source of funds as a whole or m part on any date on or after September 1 2008 on a
pro rata baSIS and by lot Wlthm a mal11nty at the redemptIOn pnces and schedules applicable to
the Authonty Bonds Notwlthstandmg anythmg m thiS Agreement to the contrary With respect
to optIonal redemptIOns related to the Authonty Bonds the Dlstnct shall abide by the pnonty of
redemptIon relatmg to the Authonty Bonds permitted by the Authonty Indenl11re
The Bonds shall also be subject to mandatory redemptIon on any date on or after
March 1 2008 m whole or m part on a pro rata basiS and by lot wltlun a mal11nty from amounts
constIl11tmg prepayments of Special Taxes from amounts transferred from the ReSidual Fund
hereunder and from amounts transferred by the Authonty to the DistrIct from the ReSidual Fund
under the Authonty Indenture at the followmg redemptIon pnces (expressed as a percentage of
the pnnclpal amount of Bonds to be redeemed) together With accrued mterest thereon to the
redemptIon date
Agenda Item No 2
Page 65 of 316
Redemption Date
RedemptIOn Pnce
March 1 2008 through August 31 2009
September 1 2009 through August 31 2010
September 1 2010 through August 31 2011
September 1 2011 through August 31 2012
September 1 2012 through August 31 2013
September 1 2013 through August 31 2014
September 1 2014 and thereafter
103 0%
102 5%
1020%
101 5%
101 0%
1005%
100 0%
The Bonds are not subject to mandatory smkmg payment redemptIOn
The Bonds are subject to specIal mandatory redemption on any date to winch
timely notice of redemption may be gIven In mtegral multIples of $5 000 from unused proceeds
of the Bonds after completion or abandonment of the Improvements to be financed WIth such
proceeds and from Insurance or condemnation proceeds WIthout premIUm plus accrued mterest
to the redemption date on a pro rata basIS
NotIce of redemption WIth respect to the Bonds to be redeemed shall be gIven to
the registered owners thereof m the manner to the extent and subject to the prOVISIons of the
Agreement
TIns Bond shall be registered m the name of the owner hereof as to both pnnClpa1
and mterest
Each registration and transfer of regIstration of thiS Bond shall be entered by the
Fiscal Agent m books kept by It for thiS purpose and authenticated by ItS manual slgnatl1re upon
the certIficate of authentication endorsed hereon
Except as proVIded m the Agreement any Bond may In accordance With ItS
terms be transferred upon the books reqUIred to be kept pursuant to the proVISIOns of the
Agreement by the person m whose name It IS registered m person or by hIS duly authonzed
attorney upon surrender of such Bond for cancellatIOn accompanied by delIvery of a duly
wntten Instrument of transfer m a form approved by the Fiscal Agent The cost for any services
rendered or any expenses mcurred by the Fiscal Agent m connectIOn WIth any such transfer shall
be paId by the District The Fiscal Agent shall collect from the Owner requestIng such transfer
any tax or other governmental charge reqUIred to be paId WIth respect to such transfer
Whenever any Bond or Bonds shall be surrendered for transfer the District shall
execute and the Fiscal Agent shall authenticate and delIver a new Bond or Bonds for lIke
aggregate pnnClpal amount
No transfers of Bonds shall be reqUIred to be made (I) fifteen (15) days pnor to
the date establIshed by the Fiscal Agent for selectIOn of Bonds for redemption (11) WIth respect
to a Bond after such Bond has been selected for redemptIOn or (lll) between the last day of the
month next precedmg any Interest Payment Date and such Interest Payment Date
Agenda Item No 2
Page 66 of 316
Bonds may be exchanged at the Corporate Trust Office of the Fiscal Agent for a
lIke aggregate pnnClpal amount of Bonds of authonzed denommatIons and of the same matunty
The cost for any services rendered or any expenses mcurred by the Fiscal Agent m connectIOn
with any such exchange shalI be paid by the DistrIct The Fiscal Agent shall colIect from the
Owner requestmg such exchange any tax or other governmental charge requIred to be paid with
respect to such exchange
No exchanges of Bonds shall be reqUired to be made (I) fifteen (15) days pnor to
the date establIshed by the Fiscal Agent for selectIOn of Bonds for redemptIon (11) With respect
to a Bond after such Bond has been selected for redemptIon or (111) between the last day of the
month next precedmg any Interest Payment Date and such Interest Payment Date
The Agreement and the nghts and oblIgatIons of the DistrIct thereUllder may be
modified or amended as set forth therem
Tlns Bond shalI not become valId or oblIgatory for any purpose untIl the
certificate of authentIcatIOn and registratIOn hereon endorsed shalI have been dated and Signed by
the Fiscal Agent
IT IS HEREBY CERTIFIED RECITED AND DECLARED that alI acts
conditIons and tlnngs required by law to eXist happen and be performed precedent to and m the
Issuance oftlns Bond have eXisted happened and been performed m due tIme form and manner
as reqUired by law and that the amoUllt of tlns Bond does not exceed any debt lImit prescnbed
by the laws or ConstItJItIon of the State of CalIforrna
IN WITNESS WHEREOF the City of Lake Elsmore on behalf of CommU11lty
FaCIlItIes DistrIct No 2001 1 (May Farms) of the City of Lake Elsmore has caused tlns Bond to
be dated as of the date first above wntten and to be Signed by the manual slgnatIire of ItS Mayor
and cOUllterslgned by the manual slgnatIire of the City Clerk
CITY OF LAKE ELSINORE
BY
Mayor
BY
City Clerk
Agenda Item No 2
Page 67 of 316
FISCAL AGENT S CERTIFICATE OF AUTHENTICATION
Tlus IS one of the Bonds descnbed III the Resolution and the Agreement which
has been authenticated on
UNION BANK OF CALIFORNIA N A
as Fiscal Agent
BY
Authonzed Officer
ASSIGNMENT
For value received the undersigned do(es) hereby sell asSign and transfer unto
(Name Address and Tax IdentificatIOn or Social Secunty Number of ASSignee)
the wlthlll Bond and do(es) hereby Irrevocably constitute and appolllt
attorney to transfer the same on the registratIOn books of the Fiscal Agent With
full power of substitutIOn III the premises
Dated
NOTICE The slgnature(s) on tlus asslgrunent
must correspond With the name(s) as wntten on the
face of the wltlun Bond III every particular Without
alteration or enlargement or any change whatsoever
Signature Guaranteed
NOTICE
Slgnature(s) must be guaranteed by a member finn of
the New York Stock Exchange or a commercial bank
or trust company
Agenda Item No 2
Page 68 of 316
EXHIBIT B
FORM OF OFFICER'S CERTIFICATE
City of Lake Elsmore Community FaCIlitIes Dlstnct No 2005 5
(Villages at Wasson Canyon)
Officer s Certificate
Dlrectmg Disbursements From the Improvement Fund
The undersigned hereby states and certifies
(I) That he IS the duly qualified City Manager of the City of Lake
Elsmore a general law city and public body corporate and politIc duly organized and eXlstmg
under the laws of the State of California (the Clty')1 actmg on behalf of City of Lake Elsmore
Commuruty FaCIlitIes Dlstnct No 2005 5 (Villages at Wasson Canyon) (the Dlstnct) and as
such IS familiar With the facts herem certified and IS authonzed and qualified to execute and
deliver thiS certificate
(u) That he IS an Authonzed Officer as defined m the Fiscal Agent
Agreement dated as of November I 2007 (the Fiscal Agent Agreement) by and between the
Dlstnct and Umon Bank of California N A as Fiscal Agent (the Fiscal Agent) for the
Dlstnct s Special Tax Bonds 2007 Senes A
(lll) That pursuant to Section 3 6(b) of the Fiscal Agent Agreement the
Fiscal Agent IS hereby directed to disburse thIs date from the Improvement Fund established
pursuant to the Fiscal Agent Agreement to the payee designated on Exhibit A attached hereto
and by thIs reference mcorporated herem at the address set forth below such payee name the
respectIve sums set forth opposite such payees m payment for the obligatIon descnbed on SaId
ExhIbit A
(IV) That each obligatIon shown on ExhIbit A has been properly
venfied and approved by the Dlstnct and IS a proper charge agamst the Improvement Fund and
that all conditIons to release of such funds have been satIsfied mcludmg those conditIons m
SectIOn 3 6(c) ofthe Fiscal Agent Agreement
(v) That no Item to be paid pursuant to thiS Officer s Certificate has
been prevIOusly paId or reimbursed from the Improvement Fund and
(VI) That capitalized terms used herem and not otherwise defined shall
have the meanmgs ascnbed thereto m the Fiscal Agent Agreement
Agenda Item No 2
Page 69 of 316
(Vll) That there has not been filed or served upon the Dlstnct notice of
any hen nght to hen or attachment stop notice or claim affectmg the nght to receive payment of
any moneys payable to any of the persons named m thiS requlSltIon whIch has not been released
or which will not be released simultaneously With the payment of such obhgatlOn other than
matenahnen s or mechanic s hens accnnng by mere operatIon of law
DATED
200
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO 2005 5
(VILLAGES AT WASSON CANYON)
City Manager
Agenda Item No 2
Page 70 of 316
---
COMMITMENT AGREEMENT AND PURCHASE CONTRACT
FOR PURCHASE AND SALE OF LOCAL OBLIGATION BONDS
City of Lake ElsInore
CommuDlty FacIlities DistrIct No 2005 5
(VIllages at Wasson Canyon)
Special Tax Bonds, 2007 SerIes A
THIS COMMITMENT AGREEMENT AND PURCHASE CONTRACT (the Purchase
Contract) dated 2007 IS by and between the LAKE ELSINORE PUBLIC
FINANCING AUTHORITY a Jomt exercIse of powers authonty organIzed and eXlstmg under
and by vIrtue of the laws of the State of CalIfOrnIa (the Authonty') and the CITY OF LAKE
ELSINORE COMMUNITY FACILITIES DISTRICT NO 20055 (VILLAGES AT WASSON
CANYON) a commumty faCIlItIes dIstrIct duly organIzed and eXlstmg under the laws of the
State of CalifOrnIa (the DIstrIct)
WITNESSETH
WHEREAS pursuant to ArtIcles I through 4 (commencmg WIth SectIOn 6500) of
Chapter 5 DlVlslOn 7 TItle I of the Govemment Code of the State of Call forma (the Act) the
Redevelopment Agency of the CIty of Lake Elsmore (the Agency) and the CIty of Lake
Elsmore (the CIty') have by Jomt ExerCIse of Powers Agreement dated July 25 1989 (the
Agreement ) created the Authonty for the purposes among other thmgs of asslstmg the CIty
and the Agency m the financmg and refinancmg of public capItal Improvements pursuant to the
Marks Roos Local Bond Poolmg Act of 1985 bemg ArtIcle 4 of the Act (commencmg WIth
SectIon 6584) (the Bond Law)
WHEREAS the Authonty for the purpose of acqumng certam local oblIgatIon bonds has
detenmned to Issue ItS Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A (the
Authonty Bonds ) pursuant to an rndenture of Trust dated as of November I 2007
WHEREAS a portIOn of the proceeds of the Authonty Bonds wIll be used to purchase
local oblIgatIOns of the Dlstnct deSIgnated as CIty of Lake Elsmore Commumty FaCIlItIes
DIstrIct No 2005 5 (VIllages at Wasson Canyon) SpecIal Tax Bonds 2007 Senes A m the
mltIal pnnclpal amount of $ (referred to herem as the Local OblIgatIon Bonds )
and
WHEREAS the Authonty and the DIstrIct deSIre to enter mto tins Purchase Contract
provldmg for the purchase and sale of the Local OblIgatIon Bonds and contannng the other
agreements herem set forth
NOW THEREFORE m conSIderatIon of the murnal agreements herem contamed and
for other good and valuable consIderatIOn the receIpt and suffiCIency of whIch IS hereby
acknowledged the Authonty and the DIstrIct agree as follows
I Upon the terms and condItIOns and upon the baSIS of the representatIOns
warrantIes and agreements heremafter set forth the DIstrIct hereby sells to the Authonty and the
Agenda Item No 2
Page 71 of 316
Authonty hereby purchases from the Dlstnct all of the aggregate pnnclpal amount of the Local
OblIgahon Bonds such Local OblIgahon Bonds to bear the armual mterest rates and to be sold to
the Authonty at the purchase pnce set forth m Exhibit A attached hereto and hereby made a part
hereof plus accrued mterest If any from the date of the Local OblIgahon Bonds to the date of
delivery of the Local ObligatIOn Bonds to the Authonty (the Closmg Date)
2 The City hereby speCifies 2007 (or as soon thereafter as shall be
feasible) as the Closmg Date and the Dlstnct hereby confirms that It reasonably expects to
deliver the Local OblIgahon Bonds to the Authonty on such date
3 The Authonty agrees that Dillon Bank of California N A will act as Fiscal
Agent for the Local ObligatIOn Bonds under and as further prOVided m the Fiscal Agent
Agreement dated as of November I 2007 (the Fiscal Agent Agreement) by and between the
Dlstnct and such Fiscal Agent
4 The Local OblIgahon Bonds shall be Issued and secured under the provIsIons of a
resolutIOn authonzmg the Issuance of the Local ObligatIOn Bonds adopted by the City CounCil
of the City actmg as the legIslahve body of the Dlstnct on , 2007 (the
ResolutIOn) and related proceedmgs authonzmg the Issuance of the Local OblIgahon Bonds
mcludmg Without lunltatlOn the Fiscal Agent Agreement (collechvely the Proceedmgs') The
Local ObligatIOn Bonds and mterest thereon Will be payable from Special Taxes (as defined m
the Fiscal Agent Agreement) Proceeds of the sale of the Local ObligatIOn Bonds will be used
by the Dlstnct m accordance With the Proceedmgs
5 Any actIOn under tlus Purchase Contract taken by the Authonty mciudmg
payment for and acceptance of the Local OblIgahon Bonds and delivery and executIOn of any
receipt for the Bonds and any other Instnunents m connectIOn With the ciosmg on the Closmg
Date shall be valid and suffiCient for all purposes and bmdmg upon the Authonty proVided that
any such actIOn shall not Impose any obligatIOn or liability upon the Authonty other than as may
anse as expressly set forth m thiS Purchase Contract
6 It IS a condlhon to the Dlstnct s sale of the Local OblIgahon Bonds and the
oblIgahon of the Dlstnct to deliver the Local ObligatIOn Bonds to the Authonty and to the
Authonty s purchase of the Local ObligatIOn Bonds and the oblIgahons of the Authonty to
accept delivery of and to pay for the Local ObligatIOn Bonds that the enhre aggregate pnnclpal
amount of the Local OblIgahon Bonds of $ shall be delivered by the Dlstnct and
accepted and pllld for by the Authonty on the Closmg Date The Authonty Will pay for the
Local ObligatIOn Bonds With the proceeds of the Authonty Bonds
7 The Dlstnct represents and warrants to the Authonty that
(a) The Dlstnct IS an entity duly orgarnzed and validly eXlstmg under the laws
of the State of CalIforma and has and on the Closmg Date Will have full legal nght
power and authonty (I) to enter mto thiS Purchase Contract (n) to adopt or enter mto the
Proceedmgs relatmg to the Local OblIgahon Bonds (m) to Issue sell and deliver the
Local OblIgahon Bonds to the Authonty as prOVided herem and m the Fiscal Agent
Agreement and (IV) to carry out and consummate the transactIOns on ItS part
Agenda Item No 2
Page 72 of 316
contemplated by this Purchase Contract the Proceedmgs and the Fiscal Agent
Agreement
(b) The Dlstnct has complied and will on the Closmg Date be m compliance
m all respects With the Proceedmgs
(c) By offiCial actIOn of the City pnor to or concurrently With the acceptance
hereof the City has duly adopted the ResolutIOn has duly authonzed and approved the
executIOn and delivery of and the performance by the Dlstnct of the Dlstnct s
obligatIOns contamed m the Fiscal Agent Agreement the Local ObligatIOn Bonds tills
Purchase Contract and the other Proceedmgs and the consummation by the Dlstnct of all
other transactions on ItS part contemplated by the Proceedmgs mcludmg Without
llIDltatlOn the application of SpeCial Taxes to the payment of the Local Obligation
Bonds
(d) The execution and delivery of tills Purchase Contract and the Local
Obligation Bonds the adoptIOn of the Resolution and the adoption or entenng mto of the
other Proceedings mcIudlng Without limitation the Fiscal Agent Agreement and
compliance With the provlSlons of each thereof will not conflict With or constitute a
breach of or a default under any applicable law or administrative regulation of the State
of California or the Umted States of Arnenca or any applicable Judgment decree
agreement or other Instrument to willch the Dlstnct IS a party or IS otherwise subject
( e) There IS no action SUIt proceeding or investigatIOn before or by any court
public board or body pending or to the knowledge of the Dlstnct threatened wherein an
unfavorable declSlon rulmg or finding would (I) affect the creation organization
eXistence or powers of the Dlstnct or the titles of Its members and officers to their
respective offices (ll) enJoin or restram the Issuance sale and delivery of the Local
ObligatIOn Bonds the levy and receIpt of the SpeCial Taxes or the pledge thereof UlIder
the Fiscal Agent Agreement (Ill) In any way question or affect any of the nghts powers
duties or obligatIOns of the Dlstnct WIth respect to the moneys pledged or to be pledged
to pay the pnnclpal of premIUm If any or Interest on the Local Obligation Bonds (IV) In
any way questIon or affect any authonty for the Issuance of the Local ObligatIOn Bonds
or the valid1ty or enforceabIlity of the Local ObligatIOn Bonds the FIscal Agent
Agreement or the other Proceedings or (v) In any way question or affect tlus Purchase
Contract or the transactions contemplated by thIS Purchase Contract the FIscal Agent
Agreement or any other agreement or Instnunent to which the Dlstnct IS a party relatmg
to the Local ObligatIOn Bonds
(f) The Issuance and sale of the Local ObligatIOn Bonds IS not subject to any
transfer or other documentary stamp taxes of the State of Califorma or any political
subdiVISIOn thereof
(g) The Dlstnct has not been notified of any listing or proposed listmg by the
Internal Revenue Service to the effect that the Dlstnct IS a bond Issuer whose arbitrage
certifications may not be relied upon
Agenda Item No 2
Page 73 of 316
(h) Any certificate signed by any official of the Dlstnct authonzed to do so
and delIvered to the Authonty shall be deemed a representatIOn and warranty by the
Dlstnct to the Authonty as to the statements made therem and
(I) The Dlstnct wIll apply the proceeds of the Local OblIgatIon Bonds
mcludmg the mvestInent thereof m accordance With the Fiscal Agent Agreement and the
other Proceedmgs
8 At 8 00 a m Los Angeles Time on the Closmg Date or at such other tIme or on
such other date as IS mutually agreed by the Dlstnct and the Authonty the Dlstnct will delIver
the Local OblIgatIOn Bonds to the Authonty m defimtIve form duly executed together With the
other documents heremafter mentIOned and subject to the terms and conditIons hereof the
Authonty Will accept such delivery and payor cause to be paId the purchase pnce of the Local
ObligatIOn Bonds as referenced m paragraph I hereof by certified or bank cashIer s check or
wire transfer or other funds whIch are good funds on the Closmg Date Delivery and payment
as aforesaid shall be made at such place as shall have been mutJJally agreed upon by the Dlstnct
and the Authonty
9 The Authonty has entered mto thiS Purchase Contract m reliance upon the
representatIOns warrantIes and agreements of the Dlstnct contamed herem and to be contamed m
the documents and mstnmJents to be delivered on the Closmg Date and upon the performance
by the Dlstnct of ItS obligatIons hereunder both as of the date hereof and as of the Closmg Date
Accordmgly the Authonty s obligatIOns under thIs Purchase Contract to purchase to accept
delivery of and to pay for the Local ObligatIon Bonds shall be subject to the performance by the
Dlstnct of ItS obligatIOns to be performed hereunder and under such documents and mstnmJents
at or pnor to the Closmg Date and shall also be subject to the followmg conditIons
(a) The representatIOns and warrantIes of the Dlstnct contamed herem shall be
true and correct on the date hereof and on and as of the Closmg Date as If made on the
Closmg Date
(b) On the Closmg Date the Proceedmgs shall be m full force and effect and
shall not have been amended modified or supplemented except as may have been agreed
to by both the Authonty and the Dlstnct
(c) As of the Closmg Date all offiCial actIOn of the Dlstnct relatmg to the
Proceedmgs shall be m full force and effect and there shall have been taken all such
actIons as m the opmlOn of Fulbnght & JaworskI L L P (Bond Counsel) shall be
necessary or appropnate m connectIon thereWith With the Issuance of the Local
ObligatIon Bonds and With the transactIOns contemplated hereby
(d) The Authonty shall have the nght to termmate the Authonty s obligatIOns
under thIs Purchase Contract to purchase to accept delivery of and to pay for the Local
ObligatIon Bonds by notIfying the Dlstnct of their electIon to do so If after the executIOn
hereof and pnor to the Closmg (I) the marketability of the Local Obligation Bonds or
the market pnce thereof m the opmlOn of the Authonty has been matenally and
adversely affected by any declSlon Issued by a court of the Uruted States (mcludmg the
Agenda Item No 2
Page 74 of316
Umted States Tax Court) or of the State of CalIforma., by any rulIng or regulatIOn (final
temporary or proposed) Issued by or on behalf of the Department of the Treasury of the
Umted States the Internal Revenue ServIce or other governmental agency of the Urnted
States or any governmental agency of the State of CalIforrna or by a tentatIve declSlon
With respect to legislatIOn reached by a committee of the House of RepresentatIves or the
Senate of the Congress of the Umted States or by legislatIOn enacted by pendmg m or
favorably reported to either the House of RepresentatIves or the Senate of the Congress of
the Umted States or either house of the Legislature of the State of CalIfornia., or formally
proposed to the Congress of the Umted States by the President of the Umted States or to
the Legislature of the State of CalIfornia by the Governor of the State of CalIfornia m an
executIve commumcatIon affectIng the tax status of the DistrIct ItS property or mcome
ItS bonds (mcludmg the Local OblIgatIon Bonds) or the mterest thereon or any tax
exemptIon granted or authonzed by the Bond Law (11) the Umted States shall have
become engaged m hostIlItIes winch have resulted m a declaratIon of war or natIonal
emergency or there shall have occurred any other outbreak of hostIlItIes or a local
natIonal or mternatlOnal calarmty or cnsls financial or otherwise the effect of such
outbreak calamity or cnsls bemg such as m the reasonable opmlOn of the Authonty
would affect matenally and adversely the marketabilIty of the Bonds (It bemg agreed by
the Authonty that there IS no outbreak calamity or cnsls of such a character as of the date
hereof) (111) there shall have occurred a general suspensIOn of tradmg on the New York
Stock Exchange or the declaratIOn of a general bankmg moratonum by the Umted States
New York State or CalIfornia State authontles (IV) there shall have occurred a
withdrawal or downgradmg of any ratmg assigned to any secuntles of the DistrIct by a
natIOnal mumClpal bond ratmg agency (v) any proposed development descnbed m the
Proceedmgs shall have been repudiated by the applIcable developer or any lItigatIOn or
proceedmgs shall be pendmg or threatened questlOmng the proposed development or
seekmg to enJom the development thereof or the Dlstnct shall have received notice from
the applIcable developer that It wIll be unable to proceed With the development as
descnbed m the Proceedmgs (VI) any Federal or CalIforrna court authonty or regulatory
body shall take actIOn matenally and adversely affectmg the abilIty of a developer to
proceed With the development as contemplated by the Proceedmgs
(e) On or pnor to the Closmg Date the Authonty shall have received each of
the followmg documents
(I) All documents and opmlOns reqUIred to be received by the trustee
for the Authonty Bonds pnor to the applIcatIOn of proceeds of the Authonty
Bonds to the purchase of the Local OblIgatIon Bonds
(2) An oplmon m form and substance satIsfactory to the Dlstnct and
the Authonty dated as of the Closmg Date of Bond Counsel approvmg Without
customary qualIficatIOns the valIdity of the Local OblIgatIon Bonds
(3) A supplementary opmlOn dated the date of the Closmg and
addressed to the Authonty of Bond Counsel to the effect that (I) thiS Purchase
Contract has been duly authonzed executed and delIvered by and assummg due
authonzatlon executIOn and delIvery by the Authonty constitutes a legal valId
Agenda Item No 2
Page75of316
and bmdmg agreement of the DistrIct enforceable m accordance With Its terms
except as such enforceabilIty may be lImited by the applIcatIOn of eqUItable
pnnclples If eqUItable remedies are sought and (n) the Local OblIgation Bonds
are not subject to the regIstratIon reqUIrements of the SecuntIes Act of 1933 as
amended and the Fiscal Agent Agreement IS exempt from qualIficatIOn under the
Trust IndentIJre Act of 1939 as amended
(4) A certificate dated the Closmg Date addressed to the Authonty
Signed by the City Manager of the City and by the City Clerk on behalf of the
DistrIct to the effect that
(I) The representatIOns and warrantIes of the DistrIct contaIned
herem are true and correct m all matenal respects on and as of the Closmg
Date as Ifmade on the Closmg Date
(n) There IS no actIOn SUIt proceedmg or mvestIgatlOn before
or by any court publIc board or body pendmg or threatened wherem an
unfavorable declSlon rulmg or findmg would (A) affect the creatIon,
organizatIOn eXistence or powers of the DistrIct or the tItles of ItS
members and officers to theIr respectIve offices (B) enJom or restraIn the
Issuance sale and delIvery of the Local OblIgatIOn Bonds the levy or
collectIon of the SpeCial Taxes or any other moneys or property pledged or
to be pledged under the Fiscal Agent Agreement or the pledge thereof
(C) m any way questIOn or affect any of the nghts powers dutIes or
oblIgatIOns of the DistrIct With respect to the SpeCIal Taxes or moneys and
assets pledged or to be pledged to pay the pnnClpal of premIUm If any or
mterest on the Local OblIgatIOn Bonds (D) m any way questIOn or affect
any authonty for the Issuance of the Local OblIgatIOn Bonds or the
valIdity or enforceabilIty of the Local OblIgatIOn Bonds or the
Proceedmgs or (E) m any way questIOn or affect tlus Purchase Contract or
the transactIons contemplated by tills Purchase Contract the Fiscal Agent
Agreement or the other Proceedmgs and
(m) The District has complIed WIth all agreements covenants
and arrangements and satIsfied all conmtIons on ItS part to be complIed
With or satIsfied on or pnor to the Closmg Date
(5) An opinIon dated the date of Closmg and addressed to the
Authonty of the City Attorney of the City as SpeCIal Counsel to the District that
there IS no actIon SUIt proceedmg or mvestIgatIon before or by any court publIc
board or body penmng or threatened wherem an unfavorable declSlon rulmg or
findmg would (I) affect the creatIon organizatIOn eXistence or powers of fue
Dlstnct or the tItles of ItS members and officers to their respectIve offices (n)
enJom or restram the Issuance sale and delIvery of the Local OblIgatIOn Bonds
the receipt of any other moneys or property pledged or to be pledged under the
Fiscal Agent Agreement or the pledge thereof (111) m any way questIon or affect
any of the nghts powers dutIes or oblIgatIons of the DistrIct With respect to the
Agenda Item No 2
Page 76 of 316
Special Taxes or the moneys and assets pledged or to be pledged to pay the
pnnclpal of premIUm If any or mterest on the Local ObligatIon Bonds (IV) m
any way questIon or affect any authonty for the Issuance of the Local ObligatIOn
Bonds or the validity or enforceability of the Local Obligation Bonds or (v) m
any way questIon or affect thiS Purchase Contract or the transactIOns
contemplated by thiS Purchase Contract the Fiscal Agent Agreement or the other
Proceedmgs and
(6) Such additIonal legal oplIDons certificates mstruments and
documents as the Authonty may reasonably request to eVidence the truth and
accuracy as of the date hereof and as of the Closmg Date of the District s
representations and warrantIes contamed herem
In additIon to the foregomg the District shall on the Closmg Date proVide the
Proceedmgs certified by authonzed officers of the City on behalf of the District
under ItS seal as true copies and as haVing been adopted or executed (as
applicable) With only such amendinents modificatIons or supplements as may
have been agreed to by the Authonty
All of the opmlOns letters certificates mstrIiments and other documents mentIOned
above or elsewhere m tlus Purchase Contract shall be deemed to be m compliance With the
provIsIOns hereof If but only If they are m form and substance satIsfactory to the Authonty but
the approval of the Authonty shall not be unreasonably Withheld Receipt of and payment for
the Local ObligatIon Bonds shall constItute eVidence of the satIsfactory nature of such as to the
Authonty The performance of any and all obligatIons of the District hereunder and the
performance of any and all conditIons contamed herem for the benefit of the Authonty may be
waived by the Authonty m ItS sole discretIon
If the Dlstnct shall be unable to satIsfy the conditIons to the obligatIOns of the Authonty
to purchase accept delivery of and pay for the Bonds contamed m thiS Purchase Contract or If
the obligatIons of the Authonty to purchase accept delivery of and pay for the Bonds shall be
termmated for any reason permitted by thiS Purchase Contract thiS Purchase Contract shall
temunate and neither the Authonty nor the District shall be under further obligatIOn hereunder
except that the respective obligatIons of the District and the Authonty set forth m paragraphs II
and 12 hereof shall contmue m full force and effect
10 The Authonty shall be under no obligatIOn to pay and the District shall pay the
followmg expenses mCldent to the performance of the District s obligatIOns hereunder (I) the
cost of the preparatIOn of the Local OblIgatIon Bonds (11) the fees and disbursements of Bond
Counsel and of SpeCial Counsel to the District and (111) the fees and disbursements of
accountants advisers and of any other experts or consultants retamed by the District
II ThiS Purchase Contract IS made solely for the benefit of the District and the
Authonty (mcludmg their successors and asSignS) and no other person shall acquIre or have any
nght hereunder or by virtue hereof All of the District s representatIons warrantIes and
agreements contamed m thiS Purchase Contract shall remam operatIve and m full force and effect
regardless of (I) any mvestIgatlOns made by or on behalf of the Authonty or (11) delivery of and
Agenda Item No 2
Page 77 of 316
payment for the Bonds pursuant to tlus Purchase Contract The agreements contamed m this
paragraph and m paragraph 11 shall survive any termmatIon of tlus Purchase Contract
12 This Purchase Contract shall become effective upon the executIOn of the
acceptance hereof by the slgnatIires of the Mayor or Mayor Pro Tern of the City and the
Executive Director of the Authonty and shall be valid and enforceable as of the time of such
execution
13 This Purchase Contract may be executed by the parties hereto m separate
counterparts each of which when so executed and delivered shall be an ongmal but all such
counterparts shall together constitute but one and the same mstrument
14 In case anyone or more of the provIsions contamed herem shall for any reason be
held to be mvalId Illegal or unenforceable m any respect such mvalIdlty Illegality or
unenforceabllIty shall not affect any other proVISIOn hereof
15 The validity mterpretatlOn and performance of this Purchase Contract shall be
governed by the laws of the State of California applicable to contracts made and performed m
such State
IN WITNESS WHEREOF the Authonty and the Dlstnct have each caused this Purchase
Contract to be executed by their duly authonzed officers all as of the date first above wntten
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
By
Executive Director
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO 2005 5 (VILLAGES AT
WASSON CANYON)
By
Mayor
Agenda Item No 2
Page 78 of 316
EXHIBIT A
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO 2005 5
(VILLAGES AT WASSON CANYON)
SPECIAL TAX BONDS 2007 SERIES A
Annual Interest Rates
and Purchase Pnce
PURCHASE PRICE $
Matunty Date
(September 1)
Pnnclpal
Amount
Total
_~L
Interest
Rate
Agenda Item No 2
Page 79 of 316
$
Lake Elsmore PublIc Fmancmg Authonty
Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
Purchase Contract
,2007
Lake Elsmore PublIc Fmancmg Authonty
130 South Mam Street
Lake Elsmore CalIfonua 92530
Commumty FacIlIties Dlstnct No 2005 5
(Wasson Canyon) of the City of Lake Elsmore
c/o the City of Lake Elsmore
130 South Mam Street
Lake Elsmore CalIforma 92530
Ladles and Gentlemen
Southwest Secunties Inc (the Underwnter) hereby offers to enter mto the
followmg agreement with the Lake Elsmore PublIc Fmancmg Authonty (the Authonty') and
the Community FacIlIties Dlstnct No 2005 5 (Wasson Canyon) ofthe City of Lake Elsmore (the
Dlstnct) Upon the acceptance hereof by you tills offer Will be bmdmg upon the Authonty
the Dlstnct and the Underwnter Tills offer IS made subject to (I) the wntten acceptance hereof
by you and (n) withdrawal by the Underwnter upon wntten notice (by faCSimile or otherwise)
delIvered to you at any time pnor to the acceptance hereof by you
I Purchase and Sale Upon the tenus and conditions and upon the baSIS of
the representatIOns warranties and agreements set forth herem the Underwnter hereby agrees to
purchase from the Authonty at the Closmg Time on the Closmg Date (both as defined herem)
and the Authonty hereby agrees to sell and delIver to the Underwnter $ aggregate
pnnclpal amount of ItS Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A (the
Bonds) The Bonds shall be dated the date of their mltial delIvery and shall mature on
September I m the years shown on ExhibIt A hereto shall bear mterest at the rates shown on
ExhIbIt A hereto and shall be subject to redemptIon and have such other terms as are prOVIded m
the Indenture of Trust dated as of November I 2007 (the Indenture) by and between the
Authonty and Umon Bank of CalIfonna N A as trustee (the Trustee) Interest on the Bonds
shall be payable each March I and September I to matunty or earlIer redemptIOn of the Bonds
begmnmg March I 2008 The purchase pnce for the Bonds shall be an amount equal to
$ (bemg the aggregate pnnclpal amount thereof ($ ) less an underwnter s
dIscount of $ and less an ongmal Issue mscount of $ ) (The date of such
payment and delIvery IS referred to herem as the Closmg Date the hour and date of such
delIvery and payment IS referred to herem as the Closmg Time and the other actions
LE (We) BPAb docIMC/721
Agenda Item No 2
Page 80 of 316
contemplated hereby to take place at the time of such payment and delIvery bemg herem
sometimes called the Closmg)
2 The Bonds The Bonds shall be descnbed m and shall be Issued and
secured pursuant to the proVISIOns of the Constltlitlon and the laws of the State of Cahfonua
mcludmg the provIsions of the Marks Roos Local Bond PoolIng Act of 1985 constltutmg Article
4 of Chapter 5 (commencmg With SectIOn 6584) of DIVISion 7 of Title I of the Government
Code of the State of CalIfonua (the Bond Law) and the Indenture authonzmg the Issuance of
the Bonds
The Bonds are bemg Issued for the purpose of fundmg a reserve fund for the
Bonds to acqUire from the Dlstnct the Dlstnct Bonds (as defined m the Indentlire) bemg Issued
by the Dlstnct pursuant to the Fiscal Agent Agreement dated as of November I 2007 (the
Fiscal Agent Agreement ) by and between the Dlstnct and Umon Bank of CalIfornia N A as
fiscal agent (the Fiscal Agent ) and to pay the costs of Issuance of the Bonds and the Dlstnct
Bonds The Bonds are secured by Revenues (as defined m the IndentJJre) conslstmg pnmanly
of amounts received by the Authonty from the Dlstnct pursuant to the Dlstnct Bonds
(
The Bonds shall be payable and shall be subject to redemption as prOVided m the
Indenture and shall be as descnbed m the PrelImmary OffiCial Statement of the Authonty dated
2007 (the PrelImmary OffiCial Statement) and the OffiCial Statement of the
Authonty dated of even date hereWith Such OffiCial Statement mcludmg the cover page and
the appendices thereto relatmg to the Bonds as amended to conform to the terms of this
Purchase Contract and With such changes and amendments thereto as have been mutlially agreed
to by the Authonty the Dlstnct and the Underwriter are heremafter referred to as the OffiCial
Statement
ThiS Purchase Contract and the Indenture are referred to herem as the Authonty
DocUlllents ThiS Purchase Contract the Fiscal Agent Agreement and the Contmumg
Disclosure Agreement dated as of November I 2007 (the Dlstnct Contmumg Disclosure
Agreement ) by and between the Dlstnct and Umon Bank of CalIfornia N A as dlssemmatlOn
agent are referred to herem as the Dlstnct DocUlllents
3 Offermg by the UnderwrIter It shall be a condition to the Authonty s
oblIgations to sell and to delIver the Bonds to the Underwnter and to the Underwnter s
oblIgatIOn to purchase to accept delIvery of and to pay for the Bonds that the entire pnnclpal
amount of the Bonds shall be Issued sold and delIvered by the Authonty and purchased
accepted and paid for by the Underwnter at the Closmg It IS understood that the Underwnter
proposes to offer the Bonds for sale to the public (which may mclude selected dealers) at pnces
or Yields as set forth on the cover page of the OffiCial Statement ConcessIOns from the publIc
offenng pnce may be allowed to selected dealers It IS understood that the ImtIaI publIc offenng
pnce and concessIOns set forth m the OffiCial Statement may vary after the mltlal publIc offenng
It IS further understood that the Bonds may be offered to the publIc at pnces other than the par
value thereof The net premlUlll on the sale of the Bonds to the publIc If any shall accrue to the
benefit of the Underwnter
2
Aqenda Item No 2
LE(WC)BI'A~'{jE!~~lof 316
4 Officl3l Statement, DelIvery of Other Documents, Use of Documents
(a) The Authonty and the Dlstnct hereby authonze the use by the Underwnter
of the PrelImmary Official Statement and the Official Statement (mcludmg any supplements or
amendments thereto) and the Indenture and the Fiscal Agent Agreement and the mformatIon
therem contamed m connectIon with the publIc offenng and sale of the Bonds
(b) The Authonty shall delIver to the Underwnter Wlthm seven busmess days
from the date hereof such number of copies of the final Official Statement executed on behalf of
and approved for dlstnbutlOn by the Authonty as the Underwnter may reasonably request m
order for the Underwnter to comply With the rules of the MuniCipal SecuntIes Rulemakmg
Board and Rule 15c2 12(b)(4) under the SecuntIes Exchange Act of 1934
(c) As soon as practIcable followmg receipt thereof the Underwnter shall
delIver the Official Statement and any supplements or amendments thereto to a natIOnally
recogmzed municipal secuntIes mformatlOn repository
5 RepresentatIOns, Warranties and Agreements of the AuthOrIty The
Authonty represents warrants and agrees as follows
(a) The Authonty IS a Jomt exercise of powers authonty duly organized and
valIdly eXlstmg under the laws of the State of CalIfornia
(b) The Authonty has full legal nght power and authonty (I) to enter mto the
Authonty Documents (n) to sell Issue and delIver the Bonds to the Underwnter as provided
herem and (111) to carry out and consummate the transactIons on ItS part contemplated by the
Authonty Documents and the OffiCial Statement
(c) By all necessary offiCIal actIon the Authonty has duly authonzed and
approved the Authonty Documents has duly authonzed and approved the PrelImmary OffiCial
Statement and the OffiCial Statement has duly authonzed and approved the executIOn and
delIvery of and the performance by the Authonty of the oblIgatIOns m connectIon With the
Issuance of the Bonds on Its part contamed m the Bonds and the Authonty Documents and the
consunmJatIon by It of all other transactIons contemplated by the Authonty Documents m
connectIon With the Issuance of the Bonds
(d) To the best of Its knowledge the Authonty IS not m any matenal respect
m breach of or default under any applIcable constitutIonal proVISIOn law or admlmstratIve
regulation of any state or of the Umted States or any agency or mstrumentahty of either or any
applIcable Judgment or decree or any loan agreement mdenture bond note resolutIOn
agreement (mcludmg Without lImitatIon the Indenture) or other mstrument to wIDch the
Authonty IS a party WIDch breach or default has or may have an adverse effect on the abilIty of
the Authonty to perform ItS oblIgatIOns under the Indenture and no event has occurred and IS
contmumg which With the passage of tIme or the g1Vmg of notIce or both would constItute such
a default or event of default under any such mstrument and the executIOn and delIvery of the
Bonds and the Authonty Documents and complIance With the provlSlons on the Authonty s part
contamed therem Will not conflict m any matenal way With or constitute a rnatenal breach of or
a matenal default under any constitutIOnal proVISIOn law admmlstratIve regulatIOn Judgment
3
Aaenda Item No 2
LE (We) 1lI'^P'1:.gtl9?21 of 316
decree loan agreement mdenture bond note resolutIOn agreement or other mstrument to
which the Authonty IS a party nor will any such executIOn delivery adoptIOn or compliance
result m the creatIOn or ImpositIOn of any lien charge or other secunty mterest or encumbrance
of any nature whatsoever upon any of the property or assets of the Authonty or under the terms
of any such law regulatIOn or mstrument except as provided by the Bonds and the Indenture
(e) To the best of ItS knowledge all authonzatlOns approvals licenses
permits consents and orders of any governmental authonty legislative body board agency or
commiSSIOn havmg junsdICtlOn of the matter which are reqUired for the due authonzatlon by or
whICh would constltJite a conditIOn precedent to or the absence of whICh would matenally
adversely affect the due performance by the Authonty of ItS obligations m connectIOn With the
Issuance of the Bonds under the Authonty Documents have been duly obtamed except for such
approvals consents and orders as may be reqUired under the Blue Sky or secuntles laws of any
state or of the Umted States m connection with the offenng and sale of the Bonds except as
descnbed m or contemplated by the Official Statement all authonzatlOns approvals licenses
permits consents and orders of any governmental authonty board agency or commiSSIOn
havmg junsdlctlOn of the matters which are reqUired for the due authonzatlOn by or which
would constitute a condition precedent to or the absence of which would matenally adversely
affect the due performance by the Authonty of ItS obligations under the Indenture have been
duly obtamed
(f) The Bonds when Issued Will conform to the descnptlons thereof contamed
m the OffiCial Statement under the captIOns INTRODUCTORY STATEMENT and THE
BONDS and the Authonty Documents when executed and delivered Will conform to the
descnptlons thereof contamed m the OffiCial Statement under the captIOns INTRODUCTORY
STATEMENT THE BONDS SOURCES OF PAYMENT FOR THE BONDS and
APPENDIX A - SUMMARY OF THE INDENTURE
(g) The Bonds when Issued authenticated and delivered m accordance With
the Indenture and sold to the Underwnter as proVided herem Will be validly Issued and
outstandmg obligatIOns of the Authonty entitled to the benefits of the Indenture and upon such
Issuance and delivery the Indenture Will provide for the benefit of the owners from time to time
of the Bonds the legally valid and bmdmg pledge of and lien and secunty mterest It purports to
create
(h) As of the date hereof there IS no actIOn SUIt proceedmg mqUlry or
mvestlgatlOn notice of which has been served on the Authonty at law or m eqUity before or by
any court government agency public board or body pendmg or to the best knowledge of the
officer of the City executmg thIs Purchase Contract on behalf of the Authonty threatened
agamst the Authonty affectmg the eXistence ofthe Authonty or affectmg or seekmg to prohibit
restram or enjom the sale Issuance or delivery of the Bonds or the pledge and lien on the
Revenues pursuant to the Indenture or contestmg or affectmg as to the Authonty the validity or
enforceability of the Bond Law the Bonds or the Authonty Documents or contestmg the tax
exempt statJis of mterest on the Bonds or contestmg the completeness or accuracy of the
Prelimmary OffiCial Statement or the OffiCial Statement or contestmg the powers of the
Authonty for the Issuance of the Bonds or the executIOn and delivery or adoption by the
Authonty of the Authonty Documents or m any way contestmg or challenging the
4
Aaenda Item No 2
LE(WC)Bl'A~~cg~IOf 316
I
II
I
consummatIon of the transactIOns contemplated hereby or thereby nor to the best knowledge of
the Authonty IS there any basiS for any such actIon SUIt proceedmg mqUlry or mvestIgatlOn
wherem an unfavorable declSlon rulmg or findmg would matenally adversely affect the vahdlty
of the Bond Law as to the Authonty or the authonzatlOn executIOn dehvery or performance by
the Authonty of the Bonds or the Authonty Documents
(I) The Authonty will furnIsh such mformatIon execute such mstruments and
take such other actIon m cooperatIOn with the Underwnter as the Underwnter may reasonably
request m order (x) to quahfy the Bonds for offer and sale under the Blue Sky or other secuntIes
laws and regulatIOns of such states and other junsmctIons of the Umted States as the Underwnter
may deSignate (y) to determme the ehgtblhty ofthe Bonds for mvestrnent under the laws of such
states and other junsdlctIons and w1l1 use ItS best efforts to contmue such quahficatIons m effect
so long as reqUired for the dlstnbutIon of the Bonds provided however that the Authonty shall
not be reqUired to execute a general or speCial consent to servICe of process or quahfy to do
busmess m connectIOn With any such quahficatlOn or determmatIon m any junsdlctlOn proVIded
that the Underwnter shall bear all costs m connectIOn with the Authonty s actIOn under (x) and
(y) herem and (z) assure or mamtam the tax exempt status of the mterest on the Bonds
(j) As of the date thereof the Prehmmary OffiCial Statement does not except
for the omiSSIOn of certam mformatIon permitted to be omitted m accordance with Rule 15c2 12
contam any untrue statement of a matenal fact or omit to state a matenal fact necessary to make
the statements therem with respect to the Authonty m hght of the circumstances under which
they were made not mlsleadmg
(k) At the tIme of the Authonty s acceptance hereof and (unless an event
occurs of the nature descnbed m paragraph (m) of tlus SectIOn 5) at all tImes subsequent thereto
up to and mcludmg the date of the Closmg the OffiCial Statement does not and Will not contam
any untrue statement of a matenal fact or omit to state a matenal fact necessary to make the
statements therem m hght of the circumstances under which they were made not mlsleadmg
prOVided however that these representatIons and warrantIes of the Authonty shall apply only to
the mformatlOn contamed m the OffiCial Statement relatmg to the Authonty
(I) If the OffiCial Statement IS supplemented or amended pursuant to
paragraph (m) of tlus SectIon 5 at the tIme of each supplement or amendment thereto and
(unless subsequently agam supplemented or amended pursuant to such paragraph) at all tImes
subsequent thereto up to and mcludmg the date of the Closmg the OffiCial Statement as so
supplemented or amended Will not contam any untrue statement of a matenal fact or omit to state
a matenal fact necessary to make the statements therem m hght of the circumstances under
which they were made not mIsleadmg prOVided however that these representatIOns and
warranties of the Authonty shall apply only to the mformatlOn contamed m the OffiCial
Statement relatmg to the Authonty
(m) If between the date of tlus Purchase Contract and that date whICh IS 25
days after the end of the underwntmg penod (as determmed m accordance With SectIon 14
hereof) any event known to the Authonty shall occur affectmg the Authonty which might
adversely affect the marketablhty of the Bonds or the market pnces thereof or which might
cause the OffiCial Statement as then supplemented or amended to contam any untrue statement
5
Aaenda Item No 2
LE (WC) BP'Aipllfaif~~ of 316
II
II
of a matenal fact or to omIt to state a matenal fact necessary to make the statements thereIn In
lIght of the cIrcumstances under whIch they were made not mIsleadIng the Authonty shall
notIfy the Underwnter thereof and If In the opInIOn of the Underwnter such event reqUIres the
preparatIon and publIcatIOn of a supplement or amendment to the OfficIal Statement the
Authonty wIll at Its expense prepare and fumlsh to the Underwnter a reasonable number of
copIes of such supplement to or amendment of the OfficIal Statement In a form and In a manner
approved by the Underwnter
(n) The Authonty wIll refram from takIng any actIon or permIttIng any actIOn
to be taken wIth regard to whIch the Authonty may exercIse control that results m the loss of
the tax exempt status of the mterest on the Bonds
(0) Any certIficate sIgned by any officer of the CIty on behalf of the Authonty
and delIvered to the Underwnter pursuant to the Indenture thIS Purchase Contract or any
document contemplated thereby shall be deemed a representatIOn and warranty by the Authonty
to the Underwnter as to the statements made therem
(P) The Authonty WIll cause the proceeds from the sale of the Bonds to be
paId to the Trustee for the purposes specIfied m the Indenture and the OffiCIal Statement So
long as any of the Bonds are outstandmg and except as may be authonzed by the Indenture the
Authonty WIll not Issue or sell any bonds or other oblIgatIOns other than the Bonds sold thereby
the mterest on and premIum If any or pnnClpal of whIch WIll be payable from the payments to
be made under the Indenture
(q) The Authonty shall honor all other covenants on ItS part contamed m the
Indenture whIch are mcorporated herem and made a part of thIs Purchase Contract
6 RepresentatIons, WarrantIes and Agreements of the Dlstnct The
Dlstnct represents warrants and agrees as follows
(a) The Dlstnct IS a commumty faCIlItIes dlstnct duly organIzed and valIdly
eXlstmg under the laws of the State of CalI foml a
(b) The Dlstnct has full legal nght power and authonty (I) to enter mto the
Dlstnct Documents and (n) to carry out and consummate the transactIons on ItS part
contemplated by the Dlstnct Documents and the OffiCIal Statement
(c) By all necessary offiCIal actIOn the Dlstnct has duly authonzed and
approved the Dlstnct Documents has duly authonzed and approved the PrelImmary OffiCIal
Statement and the OffiCIal Statement has duly authonzed and approved the executIOn and
delIvery of and the performance by the Dlstnct of the oblIgatIOns m connectIOn WIth the
Issuance of the Bonds on ItS part contamed m the Bonds and the Dlstnct Documents and the
consummatIOn by It of all other transactIOns contemplated by the Dlstnct Documents m
connectIOn WIth the Issuance of the Dlstnct Bonds
(d) To the best of ItS knowledge the Dlstnct IS not In any matenal respect In
breach of or default under any applIcable constItutIOnal prOVISIOn law or admlmstratIve
regulatIOn of any state or of the Umted States or any agency or mstrumentalIty of eIther or any
6
Aaenda Item No 2
LE(WC)Bl"A~a~cg~ of 316
I
I'
applicable judgment or decree or any loan agreement mdenture bond note resolution
agreement (mcludmg Without hmltatlOn the Fiscal Agent Agreement) or other mstrument to
wluch the District IS a party whICh breach or default has or may have an adverse effect on the
ability of the Dlstnct to perform ItS obhgatlons under the Fiscal Agent Agreement and no event
has occurred and IS contmumg wluch With the passage of time or the glvmg of notice or both
would constitute such a default or event of default under any such mstrument and the executIOn
and dehvery of the Bonds and the District Documents and compliance With the provlSlons on the
District s part contamed therem will not conflict m any matenal way With or constitute a
matenal breach of or a matenal default under any constitutIOnal provlSlon law admmlstratlVe
regulatIOn judgment decree loan agreement mdenture bond note resolution agreement or
other mstrument to wluch the District IS a party nor Will any such executIOn delivery adoption
or comphance result m the creatIOn or ImpOSItion of any hen charge or other secunty mterest or
encumbrance of any nature whatsoever upon any of the property or assets of the District or under
the terms of any such law regulation or mstrument except as prOVided by the DIStrict
Documents
(e) To the best of ItS knowledge all authonzatlOns approvals licenses
permIts consents and orders of any governmental authonty legIslative body board agency or
commISSIOn havmg junsdICtlon of the matter wluch are reqUIred for the due authonzatlon by or
whICh would constitute a condition precedent to or the absence of whIch would matenally
adversely affect the due performance by the Dlstnct of ItS obhgatlOns m connection WIth the
Issuance of the DIStrict Bonds under the DIStrict Documents have been duly obtamed except for
such approvals consents and orders as may be reqUIred under the Blue Sky or secuntles laws of
any state or of the Umted States m connection WIth the offenng and sale of the Bonds or the
Dlstnct Bonds except as descnbed m or contemplated by the OffiCial Statement all
authonzatlOns approvals hcenses permits consents and orders of any governmental authonty
board agency or commiSSIOn haVIng junsdlctlOn of the matters which are reqUIred for the due
authonzatlOn by or which would constitute a condition precedent to or the absence of which
would matenally adversely affect the due performance by the District of ItS obhgatlOns under
the District Documents have been duly obtamed
(f) The District Bonds when Issued Will conform to the descnptlOns thereof
contamed m the OffiCial Statement under the captions INTRODUCTORY STATEMENT and
THE BONDS and the Dlstnct Documents when executed and dehvered will conform to the
descnptlOns thereof contamed m the OffiCial Statement under the captIOns INTRODUCTORY
STATEMENT THE BONDS SOURCES OF PAYMENT FOR THE BONDS and
APPENDIX B - SUMMARY OF THE FISCAL AGENT AGREEMENT
(g) The District Bonds when Issued authenticated and dehvered m
accordance With the Fiscal Agent Agreement and sold to the Authonty as proVided m the
Commitment Agreement and Purchase Contract for Purchase and Sale of Local ObhgatlOn
Bonds dated as of November 1 2007 by and between the Authonty and the District (the Local
ObhgatlOn Purchase Contract ) will be the vahdly Issued and outstandmg obhgatlOn of the
District entitled to the benefits of the Fiscal Agent Agreement and upon such Issuance and
dehvery the Fiscal Agent Agreement WIll proVide for the benefit of the owners from time to
time of the Dlstnct Bonds the legally vahd and bmdmg pledge of and hen and secunty mterest It
purports to create
7
Aaenda Item No 2
LE (we) BI"A~lf91F8'l:l of 316
(h) As of the date hereof there IS no action SUit proceedmg mqmry or
mvestlgatlon notice of which has been served on the District at law or m eqmty before or by
any court government agency public board or body pendmg or to the best knowledge of the
officer of the City executmg tlns Purchase Contract on behalf of the Dlstnct threatened agamst
the District affectmg the eXistence of the District or affectmg or seekmg to prolublt restram or
enJom the sale Issuance or delivery of the Bonds or the District Bonds or the pledge and lIen on
the Revenues pursuant to the Indenture or the pledge and lIen on the SpeCial Tax Revenues
pursuant to the Fiscal Agent Agreement or contestmg or affectmg as to the District the validity
or enforceabilIty of the Bond Law the Bonds the District Bonds or the District Documents or
contestmg the tax exempt status of mterest on the Bonds or the District Bonds or contestmg the
completeness or accuracy of the Prelimmary Official Statement or the Official Statement or
contestmg the powers of the District for the Issuance of the District Bonds or the executIOn and
delIvery or adoptIOn by the District of the Dlstnct Documents or m any way contestmg or
challengmg the consmnmatlOn of the transactIOns contemplated hereby or thereby nor to the
best knowledge of the Dlstnct IS there any basiS for any such action smt proceedmg mqmry or
mvestlgatlOn wherem an unfavorable declSlon rulmg or findmg would matenally adversely
affect the validity of the Bond Law as to the Dlstnct or the authonzation executIOn delIvery or
performance by the District ofthe Bonds the Dlstnct Bonds or the District Docmnents
(I) [RESERVED]
(j) As of the date thereof the Prelimmary OffiCial Statement does not except
for the omiSSIOn of certam mformatlOn permitted to be omitted m accordance With Rule 15c2 12
contam any untrue statement of a matenal fact or omit to state a matenal fact necessary to make
the statements therem With respect to the District m light of the clrcmnstances under wluch they
were made not mlsleadmg
(k) At the time of the District s acceptance hereof and (unless an event occurs
of the nature descnbed m paragraph (m) of this SectIOn 6) at all times subsequent thereto up to
and mc1udmg the date of the Closmg the OffiCial Statement does not and Will not contam any
untrue statement of a matenal fact or omit to state a matenal fact necessary to make the
statements therem m lIght of the Clfcmnstances under wluch they were made not mlsleadmg
prOVided however that these representations and warranties of the Dlstnct shall apply only to
the mformatlOn contamed m the OffiCial Statement relatmg to the District
(I) If the OffiCial Statement IS supplemented or amended pursuant to
paragraph (m) of thiS SectIOn 6 at the time of each supplement or amendment thereto and
(unless subsequently agam supplemented or amended pursuant to such paragraph) at all times
subsequent thereto up to and mcludmg the date of the Closmg the OffiCial Statement as so
supplemented or amended will not contam any untrue statement of a matenal fact or omit to state
a matenal fact necessary to make the statements therem m lIght of the clrcmnstances under
which they were made not mlsleadmg prOVided however that these representatIOns and
warranties of the District shall apply only to the mformatlOn contamed m the OffiCial Statement
relatmg to the Dlstnct
(m) If between the date of tlns Purchase Contract and that date wluch IS 25
days after the end of the underwntmg penod (as determmed m accordance With SectIOn 14
8
Aaenda Item No 2
LE (We) Bl"At>lf~ctl?I of 316
hereof) any event known to the Dlstnct shall occur affectmg the Dlstnct which might adversely
affect the marketablhty of the Bonds or the market pnces thereof or which might cause the
Official Statement as then supplemented or amended to contam any untrue statement of a
matenal fact or to omit to state a matenal fact necessary to make the statements therem m hght
of the circumstances under which they were made not mlsleadmg the Dlstnct shall notify the
Underwnter thereof and If m the opmIOn of the Underwnter such event reqUIres the preparatIOn
and pubhcatIOn of a supplement or amendment to the Official Statement the Dlstnct wlll at Its
expense prepare and furnish to the Underwnter a reasonable number of copies of such
supplement to or amendment of the Official Statement m a form and m a manner approved by
the Underwnter
(n) The Dlstnct Will refram from takmg any actIOn or permlttmg any actIOn
to be taken With regard to which the Dlstnct may exercise control that results m the loss of the
tax exempt status of the mterest on the Bonds or the Dlstnct Bonds
(0) Any certificate signed by any officer of the City on behalf of the Dlstnct
and dehvered to the Underwnter pursuant to the Fiscal Agent Agreement thiS Purchase
Contract the Local ObhgatIOn Purchase Contract or any document contemplated thereby shall be
deemed a representation and warranty by the Dlstnct to the Underwnter as to the statements
made therem
(p) The Dlstnct shall honor all other covenants on ItS part contamed m the
Fiscal Agent Agreement whICh are mcorporated herem and made a part of thiS Purchase
Contract
(q) At or pnor to the Closmg the Dlstnct shall have duly authonzed executed
and dehvered the Dlstnct ContmUlng Disclosure Agreement winch shall comply With the
provlSlons of Rule 15c2-12(b)( 5) and shall be substantially m the form appended to the OffiCial
Statement as Appendix F thereto
7 Closmg At 8 00 a m Cahfornla time on 2007 or on such
earher date or as soon thereafter as practicable as may be mutually agreed upon by the
Authonty the Dlstnct and the Underwnter the Authonty Will subject to the terms and
conditions hereof cause the Trustee to dehver to the Underwnter the Bonds m defimtlve form
duly authenticated by the Trustee together With the other documents heremafter mentioned and
the Underwnter Will accept such dehvery and Will pay the purchase pnce of the Bonds at the
offices of Fulbnght & Jaworski L L P Los Angeles Cahfornla as set forth m SectIOn 1 hereof
by dehvenng federal or other Immediately avallable funds m the amount of such purchase pnce
to the Trustee The Bonds shall be prepared m fully registered form Without coupons m
authonzed denommatIOns and registered III the name of the Underwnter
8 Closmg CondItIons The Underwnter has entered mto thIS Purchase
Contract m rehance upon the representatIOns and warranties of the Authonty and the Dlstnct
contamed herem and m rehance upon the representatIOns and warranties to be contamed m the
documents and mstnunents to be dehvered at the Closmg and upon the performance by the
Authonty and the Dlstnct of their respective obhgatlons hereunder both as of the date hereof
and as of the date of the Closmg Accordmgly the Underwnter s obhgatlons under thiS
9
Aaenda Item No 2
LE (we) BJ'A~gfttlf1~ of 316
Purchase Contract to purchase to accept delIvery of and to pay for the Bonds shall be
conditIOned upon the performance by the Authonty and the Dlstnct of their oblIgatIOns to be
performed hereunder and under such documents and mstnunents at or pnor to the Closmg and
shall also be subject to the followmg additional conditions
(a) The representatIOns and warranties of the Authonty and the Dlstnct
contamed herem shall be true complete and correct on the date hereof and on and as of the date
of the Closmg as Ifmade on the date ofthe Closmg
(b) At the time of the Closmg the Indenture and the Fiscal Agent Agreement
shall be m full force and effect m accordance With Its terms and shall not have been amended
moddled or supplemented and the Official Statement shall not have been supplemented or
amended except m any such case as may have been agreed to by the Underwnter
(c) At the time of the Closmg all necessary offiCial action of the Authonty
and the Dlstnct and of the other parties thereto relatmg to the Authonty Documents and the
Dlstnct Documents shall have been taken and shall be m full force and effect and shall not have
been amended modified or supplemented m any matenal respect
(d) Subsequent to the date hereof there shall not have occurred any change m
or affectmg particularly the Authonty the Dlstnct the Bonds or the Dlstnct Bonds as the
foregomg matters are descnbed m the OffiCial Statement winch m the reasonable Opl1l10n of the
Underwnter matenally Impairs the mvestment qualIty of the Bonds
(e) At or pnor to the Closmg the Underwnter shall have received copies of
each of the followmg documents
(1) The OffiCial Statement and each supplement or amendment If any
thereto executed by the Executive Director of the Authonty
(2) A copy of the Indenture executed by the Authonty and the
Trustee
(3) Copies of the Fiscal Agent Agreement executed by the Dlstnct
and the Fiscal Agent
(4) A copy of thiS Purchase Contract executed by the Authonty the
Dlstnct and the Underwnter
(5) A copy ofthe Local OblIgatIOn Purchase Contract executed by the
Authonty and the Dlstnct
(6) Certificates of the Authonty and the Dlstnct respectively With
respect to the matters descnbed m SectIOns 5 and 6 and m paragraphs (a) (b) (c) and (d)
of thiS Section 8
(7) An opmlOn (the Fmal Approvmg Legal OpmlOn ) dated the date
of the Closmg and addressed to the Dlstnct of Fulbnght & JaworskI L L P Bond
10
Aaenda Item No 2
LE (We) BI'A~~il'W8'!} of 316
Counsel for the Authonty substantially m the form set forth m Appendix H to the
Official Statement
(8) A supplemental opmlOn dated the date of the Closmg and
addressed to the Underwnter of Fulbnght & Jaworski L L P Bond Counsel for the
Authonty m substantially the form attached hereto as Exlnblt B
(9) An opmlOn dated the date of the Closmg and addressed to the
Underwnter of the City Attorney of the City as Special Counsel for the Dlstnct and the
Authonty m substantially the form attached hereto as Exlnblt C
(10) A relIance letter dated the date of the Closmg and addressed to the
Underwnter and the Fiscal Agent respectively of Fulbnght & Jaworski L L P Bond
Counsel for the Authonty regardmg the final approvmg opmlOn
(11) An oplIDon dated the date of the Closmg and addressed to the
Underwnter the Authonty and the Dlstnct of Fulbnght & Jaworski L L P Disclosure
Counsel m substantially the form attached hereto as Exhibit D
(12) Transcnpts of all proceedmgs relatmg to the authonzatIon and
Issuance of the Bonds certified by the Secretary or an Assistant Secretary of the
Authonty
(13) An opmlOn of counsel to the Trustee and the Fiscal Agent to the
effect that
(I) Due OrganizatIOn and EXistence - the Trustee and Fiscal
Agent have been duly organized and are valIdly eXlstmg and m good standmg
With full corporate power to undertake the trust duties and oblIgations under the
Indenture and the Fiscal Agent Agreement
(11) Corporate ActIOn - the Trustee and Fiscal Agent have duly
authonzed executed and delIvered the Indenture and the Fiscal Agent Agreement
and by all proper corporate actIOn have authonzed the acceptance of the duties
and oblIgatIOns of the Trustee and the Fiscal Agent under the IndentI1re and the
Fiscal Agent Agreement respectively and to authonze m such capacity the
authenticatIOn and delIvery of the Bonds and the Dlstnct Bonds
(m) Due AuthonzatIon. ExecutIOn and DelIverv - assummg due
authonzatIon executIOn and delIvery by the Authonty and the Dlstnct the
Indenture and the Fiscal Agent Agreement are the valId legal and bmdmg
agreements of the Trustee and the Fiscal Agent respectively enforceable m
accordance With theIr terms except as such enforcement may be lImited by
bankruptcy msolvency reorganizatIOn or other similar laws affectmg the
enforcement of creditors nghts m general and by general eqUity pnnclples
(regardless of whether such enforcement IS conSidered m a proceedmg m eqUity
or at law) and
11
Aaenda Item No 2
LE (We) gp"~g~<g1al of 316
(IV) Consents - exclusIve of federal or state secuntIes laws and
regulatIons to the best of such counsel s knowledge after reasonable mqUlry and
mvestIgatIon other than routme filmgs reqUIred to be made WIth governmental
agencIes m order to preserve the Trustee and the FIscal Agent s authonty to
perform a trust busmess (all of wmch routme filmgs such counsel belIeves after
reasonable mqUlry and mvestIgatIon to have been made) no consent approval
authonzatIon or other actIOn by any governmental or regulatory authonty havmg
junsdlctIon over the Trustee or the FIscal Agent IS or wIll be reqUIred for the
executIOn by the Trustee or the FIscal Agent of the Indenture or the FIscal Agent
Agreement or the authentIcatIOn and delIvery of the Bonds or the Dlstnct Bonds
(14) The general resolutIons of the Trustee and the FIscal Agent
authonzmg the executIon and delIvery of certam documents by certam officers of the
Trustee and FIscal Agent whICh resolutIOns authonze the executIOn and delIvery of the
Indenture and the FIscal Agent Agreement
(15) A certIficate of the Trustee and FIscal Agent dated the date of
Closmg certlfymg that subject to the lImItatIons provIded herem the Trustee and FIscal
Agent represent and warrant and agree WIth the Underwnter that as of the date of
Closmg
(I) Due OrganIzatIon and EXIstence - the Trustee and FIscal
Agent are duly organIzed and eXlstmg as natIOnal bankmg assocIatIOns m good
standmg under the laws of the Umted States of Amenca havmg the full power and
authonty to enter mto and perform theIr dutIes under the Indenture and the FIscal
Agent Agreement respectIvely and to authentIcate and delIver the Bonds and the
Dlstnct Bonds to the Underwnter pursuant to the terms of the Indenture and the
FIscal Agent Agreement respectIvely
(11) No ConflIct - to the best of the knowledge of the Trustee
and the FIscal Agent after due mvestIgatlOn the executIOn and delIvery by the
Trustee of the Indenture and by the FIscal Agent of the FIscal Agent Agreement
and the authentIcatIOn and delIvery by the Trustee and the FIscal Agent of the
Bonds and the Dlstnct Bonds respectIvely and complIance WIth the terms thereof
wIll not m any matenal respect conflIct WIth or result m a VIOlatIon or breach of
or constItute a default under any loan agreement mdenMe bond note
resolutIOn or any other agreement or mstrument to whIch the Trustee or the FIscal
Agent IS a party or by whIch It IS bound or any law or any rule regulatIOn order
or decree of any court or governmental agency or body havmg junsdlctIon over
the Trustee or the FIscal Agent or any of ItS actIvItIes or propertIes or result m the
creatIon or ImposItIOn of any lIen charge or other secunty mterest or
encumbrance of any nature whatsoever upon any of the property or assets of the
Trustee or the FIscal Agent and
(111) No LItIgatIOn - to the best of the knowledge of the Trustee
and the FIscal Agent no lItIgatIOn has been served upon the Trustee or the FIscal
Agent to restram or enjom the Trustee s or the FIscal Agent s partIcIpatIOn m or
12
Aqenda Item No 2
LE (We) BP'A~~{ji~'lf of 316
m any way contestmg the powers of the Trustee or the FIscal Agent wIth respect
to the transactIOns contemplated by the Indenture or the FIscal Agent Agreement
respecttvely
(16) Executed copIes of the DIstrict Contmumg DIsclosure Agreement
by and between the DIstrIct and Umon Bank of Cahforma N A as dlssemmatlOn agent
substanttally m the form presented m AppendIx F to the OffiCIal Statement
(17) Executed copy of the Developer Contmumg DIsclosure
Agreement dated as of November I 2007 substantIally m the form presented m
AppendIx G to the OffiCIal Statement and by and between Umon Bank of Cahfomla
N A as dtssemmatlon agent and Lennar Homes of Cahfomla Inc a Cahfomla
corporatIOn (the Developer)
(18) A certIficate dated the date hereof from the Developer together
WIth a bnng down certIficate dated the Closmg Date m substanttally the forms attached
hereto as ExhIbIt E and ExhIbIt F respecttvely
(19) An oplmon dated the date of the Closmg and addressed to the
Authonty the DIstrict and the Underwnter of counsel to the Developer m the form
acceptable to the Underwnter
(20) Good standmg certIficate for the Developer from the Secretary of
State of Cahfomla
(21) A certIficate dated the Closmg Date sIgned by an authonzed
pnnclpal of Hams Realty AppraIsal (the AppraIser) m a form sattsfactory to the
Underwnter and ItS counsel to the effect that (I) the mdlVldual slgnmg the certtficate IS an
authonzed representatIve of the AppraIser and as such IS famlhar WIth the facts certIfied
and IS authonzed and quahfied to certIfy the same (n) m the opmlOn of the AppraIser the
assumpttons made m the appratsal report WIth respect to the Commumty Faclhttes
DIstrict No 2005 5 (Wasson Canyon) of the CIty of Lake Elsmore dated October _
2007 (the AppraIsal) are reasonable (111) that the AppraIser IS not aware of any event
or act whIch has occurred smce the date of the Appnllsal whtch m ItS oplmon would
matenally and adversely affect the conclUSIOn as to the appratsed value reached m the
AppraIsal (IV) the AppraIser consents to the reproductton of the AppraIsal as AppendIx C
to the OffiCial Statement and to the references to the AppraIser and the Appratsal made m
the OffiCIal Statement (v) that the OffiCIal Statement has been reVIewed on behalf of the
Appratser and to the best knowledge of the Appratser the statements concernmg the
AppraIsal and the value of the property contamed m the OffiCIal Statement are true
correct and complete m all matenal respects and do not contatn any untrue statement of a
matenal fact or omIt to state a matenal fact reqUIred to be stated therem or necessary m
order to make the statements therem m the hght of the ctrcumstances under whIch they
were made not mlsleadmg and (VI) the DIstrict and the Underwnter are entttled to rely
on the CertIficate
(22) A copy of the AppraIsal
13
Aaenda I~j:l!p No 2
LE(WC)BI'A~ag~Cg2' of 316
(23) A copy of the Market AbsorptIOn Study dated August 6 2007 (the
Market Absorption Study') prepared by EmpIre Economics Inc (the Market
Consultant )
(24) A certificate from the Market Consultant to the followmg effect (I)
the mdlvldual slgrung the certificate IS an authonzed representative of the Market
Consultant and as such IS familIar With the facts certified and IS authonzed and qualIfied
to certify the same (n) m the oplillon of the Market Consultant the assumptIOns made m
the Market AbsorptIOn Study are reasonable (111) that the Market Consultant IS not aware
of any event or act which has occurred smce the date of the Market AbsorptIOn Study
which m ItS oplillon would matenally and adversely affect the conclUSIOns of the Market
AbsorptIOn Study (IV) the Market Consultant consents to the reproductIOn of the Market
Absorption Study as AppendiX D to the OffiCIal Statement and to the references to the
Market Consultant and the Market AbsorptIOn Study made m the OffiCial Statement and
(v) the Market Consultant certifies that as of the date of the certificate the Market
AbsorptIOn Study contamed m the OffiCial Statement and the statements m the OffiCIal
Statement under the captions THE DISTRICT ESTIMATED ABSORPTION
SCHEDULE msofar as such statements purport to summarIze the Market AbsorptIOn
Study are accurate m all matenal respects and do not omit to state a matenal fact
necessary m order to make the statement contamed therem m the lIght of the
circumstances under whIch they are made not mlsleadmg and no events or occurrences
have been ascertamed by the Market Consultant as have come to ItS attention that would
substantially adversely change the oplillons set forth m the Market AbsorptIOn Study
(such statement may note that m makmg the foregomg statement that the Market
Consultant has undertaken no additional research With respect to the Project and the dates
of market entry for each project referenced m the Market AbsorptIOn Study may be
delayed as a result of the delay m commencement of development of the applIcable
project and that the dates for absorption may expenence a correspondmg delay as well)
and (VI) the Dlstnct and the Underwnter are entitled to rely on the Certificate
(25) A certificate from Hams & ASSOCiates ( SpeCial Tax Consultant )
to the effect that (I) the SpeCial Tax If applIed m accordance WIth the terms as set forth m
the rate and method of apportIOn of speCial taxes With respect of the Dlstnct (the
RMA ) after deductmg Admlillstratlve Expenses Will annually YIeld suffiCIent revenue
to make timely pay:tnents of debt service on the Dlstnct Bonds prOVIded thdt mformatlOn
and other data supplIed by the Dlstnct by the Developer by the Appraiser by the
Underwnter or by any of their agents which has been relIed upon by the SpeCial Tax
Consultant IS true and correct (n) the SpeCial Tax If collected m the maximum amounts
permitted pursuant to the RMA on the Closmg Date would generate at least 110% of the
maximum debt service payable With respect to the Dlstnct Bonds payable from such
SpeCIal Tax dunng each fiscal year based on a debt service schedule supplIed by
Southwest Secuntles Inc and the net taxable footage or acreage projectIOn and other
data proVided by the Developer to the SpeCial Tax Consultant and confirmed m the
certificates of the Developer preVIOusly delIvered to the SpeCial Tax Consultant and
relIed upon by the SpeCial Tax Consultant (111) the debt service With respect to the
Dlstnct Bonds If paid m accordance With their terms Will be suffiCient to pay debt
service payable With respect to the Bonds (IV) the mformatlOn supplIed by such firm for
14
Aaenda Item No 2
LE(WC)BJ<A~,!%~~ of 316
use m the sectIOns of the Official Statement captioned APPENDIX E - RATE AND
METHOD OF APPORTIONMENT IS true and correct as of the date of the Official
Statement and as of the Closmg Date and (v) the descnptlon of the Special Tax Formula
contamed m the sectIOn of the Official Statement captioned SPECIAL TAXES AND
DISTRICT BONDS DEBT SERVICE COVERAGE - RATE AND METHOD OF
APPORTION IS correctly presented m all matenal respects and
(26) Such additional legal oplmons certificates mstruments and other
documents as the Underwnter may reasonably request to eVidence the truth and accuracy
as of the date hereof and as of the date of the Closmg of the Authonty s and the
Dlstnct s representatIOns and warranties contamed herem and of the statements and
mformatlon contamed m the OffiCial Statement and the due performance or satisfactIOn
by the Authonty and the Dlstnct on or pnor to the date of the Closmg of all the
agreements then to be performed and conditIOns then to be satisfied by It
All the opmlOns letters certificates mstruments and other documents mentIOned
above or elsewhere m thiS Purchase Contract shall be deemed to be m compliance With the
prOVISIOns hereof If but only If they are m form and substance satisfactory to Bond Counsel and
the Underwnter The opmlOns and other documents presented as exhibits to thiS Purchase
Contract or as Appendices to the OffiCial Statement shall be deemed satisfactory proVided they
are substantially m the forms attached as exhibits to thiS Purchase Contract or as Appendices to
the OffiCial Statement
If the Authonty and the Dlstnct shall be unable to satisfy the conditIOns to the
obligatIOns of the Underwnter to purchase to accept delivery of and to pay for the Bonds
contamed m thiS Purchase Contract or If the obligations of the Underwnter to purchase to
accept delivery of and to pay for the Bonds shall be termmated for any reason permitted by thiS
Purchase Contract thiS Purchase Contract shall termmate and neither the Underwnter nor the
Dlstnct shall be under any further obligation hereunder
9 Termmatlon The Underwnter shall have the nght to termmate the
Underwnter s obligatIOns under tlus Purchase Contract to purchase to accept delivery of and to
pay for the Bonds by notifying the Authonty and the Dlstnct m wntmg or by telegram of their
electIOn to do so If after the execution hereof and pnor to the Closmg (a) the Umted States has
become engaged m hostilities wmch have resulted m a declaration of war or a national
emergency (b) there shall have occurred the declaratIOn of a general bankmg moratonum by any
authonty of the Umted States or the States of New York or California (c) an event shall have
occurred or been discovered as descnbed m paragraph (m) of SectIOn 5 or paragraph (m) of
SectIOn 6 hereof which m the opInIOn of the Underwnter reqUires the preparatIOn and publication
of disclosure matenal or a supplement or amendment to the OffiCial Statement (d) any
legislatIOn ordmance rule or regulation shall be mtroduced m or be enacted by any
governmental body department or agency m the State of California or a deCISion by any court of
competent ]unsdlctlOn Withm the State of Califorma shall be rendered which m the
Underwnter s reasonable opmlOn matenally adversely affects the market pnce of the Bonds (e)
leglslatlOn shall be mtroduced by amendment or otherwise or be enacted by the House of
Representatives or the Senate of the Congress of the Umted States or a declSlon by a court of the
Umted States shall be rendered or a stop order ruling regulatIOn or offiCial statement by or on
15
Aaenda Item No 2
LE(WC)B'I'~~cg'410f 316
behalf of the Secuntles and Exchange COmITnSSIOIT or other governmental agency havmg
JunsdlCtlOn of the subject matter shall be made or proposed to the effect that the Issuance
offenng or sale of oblIgations of the general character of the Bonds or the Bonds as
contemplated hereby or by the OfficIal Statement IS or would be m VIOlatIOn of any provIsIon of
the Secuntles Act of 1933 as amended and as then m effect or the Secuntles Exchange Act of
1934 as amended and as then m effect or the Trust Indentl1re Act of 1939 as amended and as
then m effect or WIth the purpose or effect of otherwIse prohlbltmg the Issuance offenng or sale
of oblIgations of the general character of the Bonds or the Bonds as contemplated hereby or by
the OffiCIal Statement (f) addItional materIal restnctIons not m force as of the date hereof shall
have been Imposed upon tradmg m secuntles generally by any goverI1ll1ental authonty or by any
national secuntles exchange (g) the New York Stock Exchange or other national secuntles
exchange or aSSOCIatIOn or any governmental authonty shall Impose as to the Bonds or
oblIgatIOns of the general character of the Bonds any matenal restnctlOns not now m force or
mcrease matenally those now m force WIth respect to the extensIOn of credIt by or the charge to
the net capItal reqUIrements of broker dealers (h) tradmg m secuntIes on the New York Stock
Exchange or the Amencan Stock Exchange shall have been suspended or lImIted or mlmmum
pnces have been establIshed on eIther such exchange or (I) any action shall have been taken by
any government m respect of ItS monetary affaIrs whIch m the reasonable oplmon of the
Underwnter has a matenal adverse effect on the Umted States secuntles market
If thIS Purchase Contract shall be termmated pursuant to Section 8 or thIS
Section 9 or If the purchase provIded for herem IS not consummated because any condItion to
the Underwnter s oblIgatIOn hereunder IS not satisfied or because of any refusal mabllIty or
faIlure on the part of the Authonty or the Dlstnct to comply WIth any of the terms or to fulfill any
of the condItions of thIs Purchase Contract or If for any reason the Authonty or the Dlstnct shall
be Ullable to perform all of ItS oblIgatIOns under thIS Purchase Contract neIther the Authonty nor
the Dlstnct shall be lIable to the Underwnter for damages on acCOUllt of loss of antICIpated
profits arIsmg out ofthe transactIOns covered by thIS Purchase Contract
10 Payment of Costs and Expenses (a) All costs and expenses mCldent to
the sale and delIvery of the Bonds to the Underwnter mcludmg but not lImIted to (I) the fees
and expenses of the Authonty and ItS COUllsel the Fmancmg Consultant DIsclosure Counsel and
other consultants (u) the fees and expenses of the Dlstnct ItS COUllSel the Fmancmg
Consultant DIsclosure COUllsel and other consultants (111) the fees and expenses of Bond
Counsel (IV) all costs and expenses mcurred m coooectlon WIth the preparatIOn and pnntmg of
the Bonds and the Dlstnct Bonds (v) all expenses m coooectlOn WIth the preparatIOn pnntmg
dlstnbutlon and delIvery of the PrelImmary OffiCIal Statement the OffiCIal Statement and any
amendment or supplement thereto (VI) CalIfornIa Mumclpal Statistics fees CUSIP Bureau
charges fees of PublIc Secuntles ASSOCIatIOn and CalIfornIa PublIc Secuntles ASSOCIatIOn
MSRB fees CalIfornIa Debt and Investment AdVISOry CommIssIon fees (vu) the fees and
expenses of the Trustee and FIscal Agent and ItS cOUllsel and all other fees and expenses of the
Underwnter except as proVIded m paragraph (b) below shall be payable by the Authonty from
the proceeds of the Bonds
(b) The Underwnter shall pay all advertlsmg expenses m coooectlon WIth the
publIc offenng of the Bonds and all other expenses mcurred by It m coooectIon WIth ItS publIc
offenng and dlstnbutlOn of the Bonds
16
Aqenda Item No 2
LE (We) Bl'A~~fEf9'gl of 316
II RepresentatIOns, WarrantIes and Agreements to SUrvIve Delivery
The representatIOns warrantIes mdemmtIes agreements and other statements of the Authonty
the Dlstnct and the Underwnter or then officers or partners set forth m or made pursuant to this
Purchase Contract will remam operative and m full force and effect regardless of any
mvestIgatIon made by or on behalf of the Authonty the Dlstnct or the Underwnter or any
controlling person and Will survive delivery of and payment for the Bonds
12 NotIces Any notIce or other commUnIcatIOn to be gIVen under thiS
Purchase Contract may be given by delivenng the same m wntIng
To the Authonty
Lake Elsmore Public Fmancmg Authonty
c/o City of Lake Elsmore
130 South Mam Street
Lake Elsmore Califorma 92530
AttentIOn City Manager
To the Dlstnct
Community FaCilitIes Dlstnct No 2005 5
(Wasson Canyon) ofthe City of Lake Elsmore
c/o City of Lake Elsmore
130 South Mam Street
Lake Elsmore California 92530
AttentIon City Manager
To the Underwnter
Southwest SecuntIes Inc
620 Newport Center Dnve SUite 300
Newport Beach California 92660
AttentIon Tony Wetherbee
13 PartIes m Interest ThiS Purchase Contract IS made solely for the benefit
of the Authonty the Dlstnct and the Underwnter (mcludmg the successors or assigns of the
Underwnter) and no other person shall acqUire or have any nght hereunder or by Virtue hereof
All of the Authonty s and the Dlstnct s representatIOns warrantIes and agreements contamed m
thiS Purchase Contract shall remam operatIve and m full force and effect regardless of (I) any
mvestIgatIons made by or on behalf of the Underwnter (11) delivery of and payment for the
Bonds pursuant to thiS Purchase Contract and (111) any termmatlOn of this Purchase Contract
14 DetermmatIon of End oftbe Underwntmg Penod For purposes of thiS
Purchase Contract the End of the Underwntmg Penod for the Bonds shall mean the earlier of
(a) the day of the Closmg unless the Authonty and the Dlstnct have been notified m wntmg by
the Underwnter on or pnor to the day of the Closmg that the end of the underwntmg penod
for the Bonds for all purposes of Rule 15c2 12 of the SecuntIes and Exchange Commission
promulgated under the SecuntIes Exchange Act of 1934 (the Rule ) will not occur on the day of
the Closmg or (b) the date on whICh notIce IS gIVen to the Authonty and the Dlstnct by the
Underwnter m accordance With the followmg sentence In the event that the Underwnter has
given notice to the Authonty and the Dlstnct pursuant to clause (a) above that the end of the
underwntmg penod for the Bonds will not occur on the day of the Closmg the Underwnter
17
Aaenda Item No 2
LE (We) BI'AlpI%i~/9't5 of 316
agrees to notify the Authonty and the Dlstnct m wntmg as soon as practicable followmg the
end of the underwntmg penod for the Bonds for all purposes of the Rule
15 Effectiveness Tills Purchase Contract shall become effectIve upon the
execution of the acceptance by the desIgnees of the Authonty and the Dlstnct and shall be vahd
and enforceable at the time of such acceptance
16 Headmgs The headmgs of the sectIOns of thIs Purchase Contract are
mserted for convemence only and shall not be deemed to be a part hereof
17 Governmg Law ThIs Purchase Contract shall be construed m
accordance WIth the laws of the State ofCahfomla
18 Counterparts ThIs Purchase Contract may be executed m any number of
counterparts
18
Aaenda Item No 2
LE (we) BP'A1j:9g:~~1lJ of 316
II
If the foregomg IS m accordance with your understandmg of the Purchase
Contract please Sign and return to us the enclosed duphcate copies hereof whereupon It will
become a bmdmg agreement between the Dlstnct and the Underwnter m accordance With ItS
terms
Very truly yours
SOUTHWEST SECURITIES, INC
By
Title
Accepted
This _ day of 2007
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
By
Executive Duector
COMMUNITY FACILITIES DISTRICT NO 2005 5
(WASSON CANYON) OF THE CITY OF LAKE ELSINORE
By
City Manager
19
Aaenda Item No 2
LE (we) BJlA~~i~1f~ of 316
I
II
55081067 I
Exhibit A
$
Lake Elsmore Pubhc Fmancmg Authonty
Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
Matunty Date
(September I)
Pnnclpal
Amount
Coupon
Yield
Al
Agenda Item No 2
Page 99 of 316
ExhibIt B
Supplemental OpmlOn ofFulbnght & Jaworski L L P
Addressed to the Underwnter
$
Lake Elsmore PublIc Fmancmg Authonty
Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
[Closmg Date]
Southwest SecuntIes Inc
620 Newport Center Dnve Smte 300
Newport Beach CalIfornia 92660
Ladles and Gentlemen
ThiS letter IS addressed to you as the Underwnter pursuant to SectIOn 8( e )(8) of
the Purchase Contract dated 2007 (the Purchase Contract) by and among you the
Lake Elsmore PublIc Fmancmg Authonty (the Authonty') and the Commumty FaCIlItIes
DistrIct No 2005 5 (Wasson Canyon) of the City of Lake Elsmore (the Dlstnct) provldmg for
the purchase of $ aggregate pnnclpal amount of Lake Elsmore PublIc Fmancmg
Authonty Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A (the Authonty
Bonds) The Authonty Bonds are bemg Issued pursuant to the IndentI1re of Trust dated as of
November I 2007 between the Authonty and Umon Bank of CalIfornia N A (the Trustee)
CapitalIzed terms not otherwise defined herem shall have the meanmgs ascnbed thereto m the
Indentl1re of Trust or If not defined m the IndentI1re of Trust m the Purchase Contract
In additIon to the opmlOns set forth m our final legal opmlOn concernmg the
valIdity of the Authonty Bonds and certam other matters dated the date hereof and addressed to
the Authonty (but whIch may be relIed upon by you to the same extent as If such opmlOn were
addressed to you) and based on and subject to the matters referred to m the second through
fourth paragraphs of Said final legal opmlOn (but excludmg the last sentence of the fourth
paragraph thereof) (which are hereby mcorporated herem by reference) and m relIance thereon
as of the date hereof we are of the followmg opmlOns or have reached the followmg
conclUSIOns
550810671
B 1
Agenda Item No 2
Page 100 of 316
1 The Authonty Bonds are not subject to the regIstratIOn reqUIrements of the
SecuntIes Act of 1933 as amended and the Indenture of Trust IS exempt from qualificatIOn
pursuant to the Trust Indenture Act of 1939 as amended
2 The Purchase Contract has been duly executed and delivered by the
Authonty and the Dlstnct and (assmnmg due authonzatlOn executIon and delivery by and
validity agamst the Underwnter) IS a valid and bmdmg agreement of the Authonty and the
Dlstnct We call attentIOn to the fact that the nghts and obligatIOns under the Purchase Contract
may be subject to bankruptcy msolvency reorganizatIOn arrangement fraudulent conveyance
moratonmn and other laws relatmg to or affectmg creditors nghts to the applicatIon of
eqUItable pnnclples and to the exercise of Judicial discretIOn m appropnate cases and to the
limitatIons on legal remedies agamst entItIes formed pursuant to Government Code SectIOn 6500
and followmg m the State of California We express no opmlOn With respect to any
mdemmficatlOn contnbutlOn chOice of law chOice of forum or waiver provlSlons contamed
therem
3 The statements contamed m the OffiCial Statement dated 2007
with respect to the Authonty Bonds on the cover of the OffiCial Statement and under the
captIOns INTRODUCTORY STATEMENT THE BONDS SOURCES OF PAYMENT
FOR THE BONDS LEGAL MATTERS - Tax Matters APPENDIX A - SUMMARY OF
THE INDENTURE and APPENDIX B - SUMMARY OF THE FISCAL AGENT
AGREEMENT msofar as such statements expressly SUlllillanze certam proVISIOns of the
Indenture the Fiscal Agent Agreement the Authonty Bonds and our opmlOn concernmg certam
federal tax matters relatmg to the Authonty Bonds are accurate m all matenal respects
This letter IS furnished by us as bond counsel to the Authonty No attorney client
relatIOnship has eXisted or eXists between our firm and you m connectIon With the Authonty
Bonds or by virtue of tills letter Our engagement With respect to the Authonty Bonds has
termmated as of the date hereof and we disclaim any obligatIOn to update thiS letter ThiS letter
IS delivered to you as Underwnter IS solely for your benefit as such Underwnter and IS not to be
used Circulated quoted or otherwise referred to or relied upon for any other purpose or by any
other person ThiS letter IS not mtended to be relied upon by owners of the Authonty Bonds
The foregomg represent our mterpretatIon of applicable law to the facts as
descnbed herem We bnng to your attentIon the fact that our conclUSIOns are an expressIOn of
profeSSIOnal Judgtnent and are not a guarantee of a result
Respectfully submltted
550810671
B2
Agenda Item No 2
Page 101 of316
ExlnbIt C
Oplmon ofFulbnght & Jaworski L L P
Special Counsel to the Authonty and the Dlstnct and addressed to the Underwnter
$
Lake Elsmore Public Fmancmg Authonty
Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
[ Closmg Date]
Lake Elsmore Public Fmancmg Authonty
130 South Mam Street
Lake Elsmore California 92530
Community Facllltles Dlstnct No 2005 5
(Wasson Canyon) of the City of Lake Elsmore
c/o City of Lake Elsmore
Lake Elsmore Califonua 92530
Southwest Secuntles Inc
620 Newport Center Dnve SUite 300
Newport Beach California 92660
Ladles and Gentlemen
We are actmg as counsel for the Lake Elsmore Public Fmancmg Authonty (the
Authonty) the Commumty Facllltles Dlstnct No 2005 5 (Wasson Canyon) of the City of
Lake EIsmore (the Dlstnct) and the City of Lake Elsmore (the City) and have acted as
counsel to the Authonty the Dlstnct and the City m COllilectlOn with the matters referred to
herem As such counsel we have exammed and are familiar with (I) docUlllents relatmg to the
eXistence organizatIOn and operatIOn of the Authonty the Dlstnct and the City provIded to us by
the Authonty the DIStnCt and the City (11) certIficatIOns by officers of the Authonty the Dlstnct
and the City and (m) all necessary docUlllentatlOn of the Authonty the Dlstnct and the City
relatmg to the authonzatlOn executIOn and delivery of the Indenture of Trust (the Authonty
IndentJire ) dated as of November 1 2007 by and between the Authonty and Dmon Bank of
California N A (the Trustee) Terms used herem and not otherwise defined have the
respective meamngs set forth m the Purchase Contract dated . 2007 by and among
Southwest Secuntles Inc the Authonty and the Dlstnct
Based upon the foregomg and such exammatlOn of law and such other
mformatlOn papers and docUlllents as we deem necessary or adVIsable to enable us to render thIS
opmlOn mcIudmg the ConstitutIOn and laws of the State of California together With the
550810671
C 1
Agenda Item No 2
Page 102 of 316
resolutIOns ordmances and public proceedmgs of the Authonty and the Dlstnct we are of the
followmg oplmons
(1) The Authonty IS duly organized and eXlstmg under the laws of the
State of Califorma
(2) The Dlstnct IS duly orgamzed and eXlstmg under the laws of the
State of Cali forma
of California
(3) The City IS duly organized and eXlstmg under the laws of the State
(4) To the best of our knowledge the ResolutIOn of the Authonty
authonzmg the Indenture the Purchase Contract and the Local ObligatIOn Purchase
Contract were duly adopted at meetmgs of the Authonty which were duly called and
held
(5) To the best of our knowledge the ResolutIOns of the City Council
actmg on behalf of the Dlstnct relatmg to formatIon of the Dlstnct the levy of the
SpecIal Tax m the Dlstnct and authonzmg the Fiscal Agent Agreement and the Local
ObligatIOn Purchase Contract were duly adopted at meetmgs of the City CouncIl which
were duly called and held
(6) To the best of our knowledge the Ordmance of the City
authonzmg the levy of the Special Tax m the Dlstnct was duly read and adopted at a
meetmg of the City Council winch was duly called and held
(7) To the best of our knowledge the statements and mformatIon
contamed m the Official Statement m the sectIOn entItled LEGAL MATTERS - Absence
of LltIgatJon as of the date thereof and as of the date hereof does not contam an untrue
statement of a matenal fact or omit to state a matenal fact reqUIred to be stated therem or
necessary to make the statements therem m light of the circumstances under which they
were made not mlsleadmg
(8) To the best of our knowledge there IS no actIOn SUIt proceedmg
mqUlry or mvestIgatlOn at law or m eqUIty before or by any court governmental agency
public board or body pendmg or threatened agamst the Authonty the Dlstnct or the
City wherem an unfavorable decIsIOn rulmg or findmg would (I) affect the creatIOn
organizatIOn eXistence or powers of the Authonty the Dlstnct or the City or the title of
their respectIve members and officers to their respectIve offices (n) enJom or restram the
Issuance sale or delivery of the Authonty Bonds or the Dlstnct Bonds the receipt of any
other moneys or property pledged or to be pledged under the Indenture the Fiscal Agent
Agreement or the pledge thereof (m) m any way questIon or affect any of the nghts
powers duties or obligatIOns of the Authonty under the Indenture or of the Dlstnct under
the Fiscal Agent Agreement or with respect to the Special Taxes m the Dlstnct or the
moneys and assets pledged or to be pledged to pay the pnnclpal of premium If any or
mterest on the Bonds or the Dlstnct Bonds (IV) m any way questIomng or affectmg any
authonty for the Issuance of the Bonds the DlstnCt Bonds or the validity or
550810671
C2
Agenda Item No 2
Page 103 of 316
enforceability of the Bonds or the Dlstnct Bonds or (v) In any way questIomng or
affectIng the Purchase Contract or the Local ObligatIOn Purchase Contract or the
transactions contemplated by the Purchase Contract the Local ObligatIOn Purchase
Contract the IndenlIIre or the Fiscal Agent Agreement
(9) The executIOn and delivery of the Authonty Documents and the
other Instruments contemplated by any of such documents to which the Authonty IS a
party and compliance With the provIsIOns of each thereof will not conflict with or
constItute a breach of or default under any applicable law or admlmstratIve rule or
regulatIon of the State of California the Umted States or any department diVISIOn
agency or Instrumentality of either thereof or any applicable court or admInistratIve
decree or order or any loan agreement note resolutIOn IndenlIIre contract agreement or
other Instrument to which the Authonty IS a party or IS otherwise subject or bound In a
manner which would matenally adversely affect the Authonty s performance under the
Authonty Documents
(10) The executIOn and delivery ofthe Dlstnct Documents and the other
Instruments contemplated by any of such documents to which the Dlstnct IS a party and
compliance With the provIsIOns of each thereof will not conflict With or constItute a
breach of or default under any applicable law or admlmstratIve rule or regulatIon of the
State of California the Umted States or any department diVISIOn agency or
Instrumentality of either thereof or any applicable court or admInistratIve decree or order
or any loan agreement note resolutIOn Indenture contract agreement or other
Instrument to winch the Dlstnct IS a party or IS otherWIse subject or bound In a manner
which would matenally adversely affect the Dlstnct s performance under the Dlstnct
Documents
(II) All approvals consents authonzatlOns electIOns and orders of or
filIngs or registratIOns With any governmental authonty board agency or commiSSIOn
haVIng JunsdlctIon which would constItute a conditIOn precedent to or the absence of
which would matenally adversely affect the performance by the Authonty and the
Dlstnct of their obligatIOns under the Authonty Documents and the Dlstnct Documents
respectIvely have been obtaIned and are In full force and effect
550810671
C3
Agenda Item No 2
Page 104of316
I
ThIS opmlOn IS rendered only WIth respect to the laws of the State of Cahforma
and the Umted States of Amenca and IS addressed only to the Authonty the Dlstnct the CIty
and Southwest Secuntles Inc Tlus letter IS furnIshed by us as counsel to the Authonty the
Dlstnct and the CIty Other than the Authonty the Dlstnct and the CIty no attorney chent
relatlOnslup has eXIsted or eXIsts between us and Southwest Secuntles Inc m connectIOn WIth
the Bonds or by vIrtue of thIS letter Our engagement WIth respect to the Bonds has termmated
as of the date hereof and we dIsclaim any obhgatlon to update thIS letter Tlus letter IS dehvered
to you IS solely for your benefit and IS not to be used cIrculated quoted or otherwIse referred to
or rehed upon for any other purpose or by any other person Tlus letter IS not mtended to and
may not be rehed upon by owners of the Bonds No other person IS entitled to rely on thIS
opmlOn nor may the addressees rely on It m connection WIth any transactIOns other than those
descnbed herem
Respectfully submItted
550810671
C4
Agenda Item No 2
Page 105 of 316
Exhibit D
OpmlOn of Fulbnght & Jaworski L L P Disclosure Counsel
Addressed to the Issuer the Dlstnct and the Underwnter
$
Lake Elsmore Public Fmancmg Authonty
Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
[Closmg Date]
Lake Elsmore Public Fmancmg Authonty
130 South Mam Street
Lake Elsmore California 92530
Cornmumty Facilities Dlstnct No 2005 5
(Wasson Canyon) of the City of Lake Elsmore
c/o City of Lake Elsmore
Lake Elsmore California 92530
Southwest Secuntles Inc
620 Newport Center Dnve SUite 300
Newport Beach California 92660
Ladles and Gentlemen
We have acted as Disclosure Counsel to the Lake Elsmore Public Fmancmg
Authonty (the Issuer) With respect to the Issuance of the above captIOned bonds (the Bonds)
The Bonds are bemg Issued pursuant to the prOVISIOns of the Constitution and the laws of the
State of California mcludmg the provISIons of the Marks Roos Local Bond Pooling Act of 1985
constltutmg Article 4 of Chapter 5 (cornmencmg With Section 6584) of DIVISion 7 of Title I of
the Government Code of the State of Califorma as m eXistence on the Closmg Date or as
thereafter amended from time to time (the Bond Law) The Bonds shall be Issued and secured
pursuant to an Indenture of Trust dated as of November I 2007 (the Indenture) by and
between the Authonty and Umon Bank of California, N A as trustee (the Trustee)
authonzmg the Issuance of the Bonds The Bonds are more fully descnbed m the final OffiCial
Statement of the Issuer dated 2007 (the OffiCial Statement) Capitalized terms not
otherwise defined herem shall have the meanmg ascnbed thereto m the OffiCial Statement
In rendenng thiS opmlOn we have reViewed such records documents certificates
and opmlOns and made such other mvestlgatlOns of law and fact as we have deemed necessary
or appropnate
55081067 I
D I
Agenda Item No 2
Page 106 of 316
This opmlOn IS limited to matters governed by the Federal secuntIes law of the
Umted States and we asslDDe no responsibility with respect to the applicability or effect of the
laws of any other junsdlctIon
In our capacity as Disclosure Counsel we have rendered certam legal advice and
assistance to you m connectIOn WIth the preparatIOn of the Official Statement Rendenng such
legal advice and assistance mvolved among other thmgs discussIOns and mqumes concernmg
vanous legal matters review of certam records doclDDents and proceedmgs and partiCipatIOn m
conferences With among others your representatIves and representatIves of Bond Counsel the
Fmancmg Consultant the Authonty the City the Dlstnct and other consultants at which
conferences the contents of the OffiCial Statement and related matters were discussed On the
basIs of the mformatIon made available to us m the course of the foregomg (but without haVing
undertaken to determme or venfy mdependently or asslDDmg any responSibility for the
accuracy completeness or fairness of any of the statements contamed m the OffiCial Statement)
no facts have come to the attentIon of the personnel m our firm directly mvolved m rendenng
legal adVice and assistance m connectIOn with the preparatIOn of the OffiCial Statement which
cause us to believe that the OffiCial Statement as of ItS date (excludmg therefrom financial
engmeenng and statIstIcal data forecasts projectIOns estImates assumptIOns and expressIOns of
opmlOns the treatment of the Bonds or the mterest discount or premllDD related thereto for tax
purposes under the law of any junsdlctlOn and the statements contamed m the OffiCial Statement
under the captIOns LEGAL MATTERS - Tax Matters and m the Appendices thereto as to all
of which we express no view) contamed any untrue statement of a matenal fact or omitted to
state a matenal fact necessary to make the statements therem m the light of the CIrClDDstances
under which they were made not mlsleadmg
Dunng the penod from the date of the OffiCial Statement to the date of tlus
opmlOn except for our review of the certificates and opmlOns regardmg the OffiCial Statement
delivered on the date hereof we have not undertaken any procedures or taken any actIOns which
were mtended or likely to eliCit mformatlOn concernmg the accuracy completeness or fairness of
any of the statements contamed m the OffiCial Statement
We are furmslung thiS oplmon to you as Disclosure Counsel to the Issuer solely
for your benefit ThiS opmlOn IS rendered m connectIon With the transactIOn descnbed herem
and may not be relied upon by you for any other purpose ThiS opmlOn shall not extend to and
may not be used circulated quoted referred to or relied upon by any other person firm
corporatIOn or other entIty WithOUt our pnor wntten consent Our engagement With respect to
tlus matter termmates upon the delivery oftlus opmlOn to you at the tIme of the closmg relatmg
to the Bonds and we have no obligatIOn to update thiS opmlOn
Very truly yours
550810671
D2
Agenda Item No 2
Page 107 of 316
Exhibit E
Certificate of the Developer
Reference IS made to the Lake Elsmore Public Fmancmg Authonty Local Agency
Revenue Bonds (Wasson Canyon) 2007 Senes A (the Authonty Bonds) to the Purchase
Contract (the Purchase Contract) by and among the Lake Elsmore Public Fmancmg Authonty
(the Authonty') the Commumty FaCIlitIes Dlstnct No 2005 5 (Wasson Canyon) of the City of
Lake Elsmore (the Dlstnct) and Southwest SecuntIes Inc (the Underwnter) relatmg to the
Authonty Bonds and to the Dlstnct Bonds ThiS certificate IS delivered pursuant to SectIOn
(8)(e)(18) of the Purchase Contract Capitalized terms used herem and not otherwise defined
have the meanmgs ascnbed to them m the Purchase Contract
The underSigned certifies that he IS familiar WIth the facts herem certified and IS
authonzed and qualified to certify the same as an authonzed officer of Lennar Homes of
California rnc a California corporatIOn (the Developer) and the undefSlgned on behalf of the
Developer further certifies as follows
1 The Developer has been duly mcorporated and organized and validly
eXists m good standmg under the laws of the State of California and has all requlSlte
nght power and authonty (I) to execute and deliver thiS Certificate and to execute and
deliver at Closmg Its Contmumg Disclosure Agreement (the Contmumg Disclosure
Agreement ) dated as of November 1 2007 by and between the Developer and Umon
Bank of California N A as dlssemmatlOn agent (n) to own and develop ItS property
WIthm the Dlstnct as descnbed m the PrelImmary OffiCial Statement (111) to carry on Its
busmess as presently conducted and (IV) to undertake all of the transactIons on ItS part
contemplated by the Contmumg Disclosure Agreement and descnbed m the PrelImmary
OffiCial Statement
2 As set forth m and as of the date of the PrelImmary OffiCial Statement
the Developer owns the property (the Property) wlthm the Dlstnct The Developer
makes the representatIOns herem With respect to all of such parcels to whIch It holds tItle
m the Dlstnct as of the date hereof Except as otherwise descnbed m the PrelImmary
OffiCial Statement the Developer IS and the Developer s current expectatIon IS that the
Developer shall remam the developer of the Property Except as otherwise descnbed m
the PrelImmary OffiCial Statement the Developer has not entered mto an agreement for
development or management of the Property With any entIty
3 The Developer has or will have pnor to Closmg duly authonzed the
executIOn and delivery at Closmg of ItS Contmumg Disclosure Agreement and IS duly
authonzed to perform the obligatIOns on Its part to be performed thereunder To the
Actual Knowledge of the Undersigned the Developer has not prevIOusly failed to comply
With any oblIgatIOns Imposed upon It under Rule l5c2 12 of the SecuntIes and Exchange
CommiSSIOn under the SecuntIes Exchange Act of 1934 as amended to proVide penodlC
550810671
E 1
Agenda Item No 2
Page 108 of 316
contmumg disclosure reports or notices of matenal events m California m the past five
years
4 Except as disclosed m the Prelunmary Official Statement to the Actual
Knowledge of the UnderSigned the Developer IS not m breach of or m default under any
applicable law or admmlstratlve regulatIOn of the State of California or the Uruted States
or any agency or mstrumentality of either whICh breach or default would m any way
matenally and adversely affect the Contmumg Disclosure Agreement the Developer s
ability to perform ItS obligations under the Contmumg Disclosure Agreement or the
Developer s ability to pay the special taxes levied agamst the Property pnor to
delinquenCies (the Special Taxes) and to the Actual Knowledge of the UndefSlgned no
event has occurred and IS contmumg which With the passage of time or givmg of notice
or both would constitute such a breach or default and to the Actual Knowledge of the
UndefSlgned the executIOn and delivery at Closmg by the Developer of ItS Contmumg
Disclosure Agreement and compliance With the provlSlons thereof will not conflict With
or constitute a breach of or default under any law or admlmstratlve regulatIOn applicable
to the Developer
5 Except as disclosed m the Prelimmary OffiCial Statement to the Actual
Knowledge of the UndefSlgned the Developer IS not m breach of or m default under any
applicable Judgment or decree or any loan agreement option agreement development
agreement mdenture fiscal agent agreement bond note resolutIOn agreement or other
mstrument to winch the Developer IS or will upon Issuance of the Bonds be a party or
otherwise subject which breach or default would m any way matenally and adversely
affect the Contmumg Disclosure Agreement the Developer s ability to perform ItS
obligations under the Contmmng Disclosure Agreement or ItS ability to pay the Special
Taxes on the Property and no event has occurred and IS contmumg that With the passage
of time or glvmg of notice or both would constitute such a breach or default and the
execution and delivery at Closmg by the Developer of ItS Contmumg Disclosure
Agreement and compliance With the provlSlons thereof will not to the Actual Knowledge
of the Undersigned conflICt With or constitute a breach of or default under any
Judgment decree loan agreement mdenture fiscal agent agreement bond note
resolutIOn agreement or other mstrument to which the Developer IS a party or otherwise
subject winch breach or default would m any way matenally and adversely affect the
Contmumg Disclosure Agreement the Developer s ability to perform ItS obligatIOns
under the Contmumg Disclosure Agreement ItS ability to develop the Property or ItS
ability to pay the Special Taxes levied on such Property
6 To the Actual Knowledge of the underSigned the Developer IS not
currently m matenal default on any loans lmes of credit or other obligatIOn related to ItS
development which could have a matenal adverse affect by the Developer of ItS property
wlthm the District
7
has no loans
Property
Except as descnbed m the Prelimmary OffiCial Statement the Developer
outstandmg and unpaid and no Imes of credit that are secured by the
55081067 I
E2
Agenda Item No 2
Page 109 of 316
8 Except as set forth m the PrelImmary Official Statement to the Actual
Knowledge of the UndersIgned no lItIgatIOn IS pendmg (WIth servIce of process to the
Developer havmg been accomplIshed) or to the Actual Knowledge of the UndersIgned
threatened (a) to restram or enJom collectIOn of SpeCIal Taxes or other sums pledged or to
be pledged to pay the pnnclpal of and mterest on the Bonds (b) to restram or enJom the
executIon of and performance of the Developer s oblIgatIOns under ItS Contmumg
DIsclosure Agreement (c) to restram or enJom development of the Property (d) m any
way contestmg or affectmg the valIdIty of the Special Taxes ItS Contmumg DIsclosure
Agreement or any other document lIcense permIt or approval necessary to the
performance on the Developer s part under ItS Contmumg DIsclosure Agreement or (e)
whIch would m any way matenally and adversely affect ItS abIlIty to develop the
Property or to pay SpeCIal Taxes
9 Except as set forth m the PrelImmary OffiCial Statement to the Actual
Knowledge of the UndersIgned no lItIgatIOn IS pendmg (wIth servICe of process to the
Developer haVIng been accomplIshed) or to the Actual Knowledge of the UndersIgned
threatened agamst the Developer whIch would matenally and adversely affect the abIlIty
of the Developer to complete the development and sale of the Property or ItS abIlIty to
pay SpeCIal Taxes or ad valorem tax oblIgatIOns pnor to delmquency on ItS Property
wlthm the DIstrIct
10 As of the date hereof except as clanfied below the PrelImmary OffiCIal
Statement solely WIth respect to mformatlOn contamed therem WIth respect to the
Developer the ownershIp and proposed development of the Property property ownershIp
wlthm the DIstrIct the Developer s development plan the Developer s financmg plan
the Developer s lenders and contractual arrangements If any as set forth under the
captIOns THE DISTRICT (excludmg the mformatlOn regardmg the AppraIsal the
absorptIOn study market value ratIO and annual special tax ratIo) IS true and correct m all
matenal respects and does not contam any untrue statement of a matenal fact or omIt to
state a matenal fact reqUIred to be stated therem or necessary to make the statements
therem m the lIght of the CIrcumstances under whIch they were made not mlsleadmg
11 The Developer has full power and authonty to own and develop the
Property and to carry on Its busmess as presently conducted and as descnbed m the
PrelImmary OfficIal Statement
12 The Developer covenants that whIle the Bonds or any refundmg
oblIgatIons related thereto are outstandmg the Developer wIll not bnng any actIOn SUIt
proceedmg mqUlry or mvestIgatIon at law or m eqUIty before aJlY court regulatory
agency publIc board or body that m any way seeks to challenge or overturn the
formatIon of the Dlstnct to challenge the adoptIOn of the ordmance levymg SpeCIal
Taxes wlthm the DIstrIct to mvalIdate the DIstrIct or any of the Bonds or any refundmg
oblIgatIOns or to mvalIdate the special tax lIens Imposed under SectIOn 31155 of the
Streets aJld HIghways Code based on recordatIOn of the notIces of speCIal tax lIen relatmg
thereto The foregomg covenant shall not prevent the Developer m any way from
bnngmg any other actIOn SUIt proceedmg mqUlry or mvestIgatlOn at law or m eqUIty
relatmg to the followmg (I) that the SpeCIal Tax has not been leVIed m accordance WIth
55081067 1
E3
Agenda Item No 2
Page 110of316
the methodologies contamed m the DIstrIct s rate and method of apportIOn (the Rate and
Method of ApportIOnment) pursuant to whIch the SpecIal Taxes are levIed (ll) the
applIcatIOn or use of the SpecIal Taxes levIed and collected or (m) the enforcement of
the oblIgatIons of the DIstrIct under the FIscal Agent Agreement or any other agreements
between the Developer the CIty and/or the DIstrIct or for whIch the Developer IS a party
or benefiCIary
13 Except as dIsclosed m the PrelImmary OffiCIal Statement to the Acrual
Knowledge of the UnderslgIled no other publIc debt secured by a tax or assessment on
the land m the DIstrIct IS m the process ofbemg authonzed and no assessment dIstrIcts or
commumty facIlItIes dIstrIcts are m the process of bemg formed that mclude any portIOn
of the land wlthm the Dlstnct
14 Except as descnbed m the PrelImmary OffiCIal Statement the Developer
has not assumed any oblIgatIons under any JudgIllent decree contract or otherwIse that
would matenally mterfere WIth the Developer s executIon and performance of Its
oblIgatIOns under the Contmumg DIsclosure Agreement or whIch would m any way
matenally and adversely affect ItS abIlIty to develop the Property or to pay SpecIal Taxes
15 To the Actual Knowledge of the UnderslgIled and except as dIsclosed m
the PrelImmary OffiCIal Statement the Developer and ItS affilIates have not prevIOusly
defaulted m a matenal amount or manner m payment of or are not currently delmquent
on any ad valorem assessment or specIal tax oblIgatIons that was not eIther cured WIthIn
the fiscal year m whICh the specIal tax or assessment was levIed or pnor to a foreclosure
actIOn bemg commenced
16 The Developer has receIved a copy of the Rate and Method of
ApportIOnment contammg the prepayment formula The Developer acknowledges that
any prepayment of the levy of the SpecIal Taxes WIth respect to any parcel of property
shall only be made m accordance WIth saId terms
17 The Developer shall comply WIth the provIsIOn of the Bond Law relatmg
to the NotIce of SpecIal Tax descnbed m CalIfornIa Government Code SectIOn 53341 5
m connectIon WIth the sale of the Property
18 To the Acrual Knowledge of the underslgIled the Developer IS solvent and
no proceedmgs are pendmg or to the Acrual Knowledge of the UnderslgIled threatened
m whIch the Developer may be adjudICated as bankrupt or dIscharged from any and all of
Its debts or oblIgatIOns or granted an extensIOn of tIme to pay ItS debts or oblIgatIOns or a
reorganIzatIon or readjustment of ItS debts
19 To the Actual Knowledge of the UnderslgIled the Developer has not filed
for nor IS the Developer aware of a reassessment of the assessed value of the Property
20 To the Actual Knowledge of the UnderslgIled there are no claIms
dIsputes SUItS actIOns or contmgent lIabIlItIes of the Developer whIch may matenally or
adversely affect the development of the Property
550810671
E4
Agenda Item No 2
Page 111 of 316
21 To the Actual Knowledge of the Undersigned there are no clauns
disputes SUitS aclions or contmgent habilllies among by and between the Developer or
ItS financial partners or among, by and between the Developer and any contractors
workmg m the Dlstnct whICh may matenally adversely affect the development of the
Property or the payment of the Special Taxes
22 Based upon ItS current development plans mcludmg Without hmltalion
ItS current budget and subject to economic condllions and nsks generally mherent m the
development of real property the Developer anliclpates that It will have suffiCient funds
to carryon ItS busmess presently conducted and develop the Property as descnbed m the
Prehmmary OffiCial Statement and to pay Special Taxes assessed agamst the Property
However the Developer IS not obhgated to make any addllional capital contnbuhon or
loan to the Developer at any time and the Developer IS not obhgated to payor to
contnbute addltlOnal capital for the payment of Special Taxes
23 To the Actual Knowledge of the UndefSlgned all mformalion submitted
by or on behalf of the Developer to the City the Dlstnct the SpeCial Tax Consultant or
the Underwnter m connectlOn With the Issuance of the Bonds and to Hams Realty
Appraisal (the Appraiser') m conneclion With the preparatlOn of the appraisal relatmg to
the Dlstnct was at the lime of submissIOn and IS as of the date of thiS certificate to the
Actual Knowledge of the Undersigned true and correct m all matenal respects
24 The Developer consents to the Issuance of the Bonds The Developer
acknowledges and agrees that the proceeds of such Bonds will be used together m some
cases With the proceeds of bonds Issued for other Improvement areas for the
Improvements as descnbed m the Prehmmary OffiCial Statement and that the costs of
acqulSllion and construclion of such Improvements are eslimates Any mcrease m costs
m excess of the eslimated costs relatmg to Improvements will reduce the Improvements
which may be financed by the Dlstnct and neither the City nor the Dlstnct has any
obhgatlOn to provide moneys to pay for any such costs
25 As to mformatlOn mdlcated m SectIOn 9 hereof concemmg the Developer
and development wltlnn the Dlstnct and subject to the hmltatlOns and exclUSIOns set
forth m Seclion 9 the Developer agrees to mdemmfy and hold harmless to the extent
permitted by law the Dlstnct and the City and their offiCials and employees and each
person if any who controls any of the foregomg wlthm the meanmg of SectIOn 15 of the
Secuntles Act of 1933 as amended or of SectlOn 20 of the Secunlies Exchange Act of
1934 as amended agamst any and all losses claims damages or habillhes Jomt or
several to which such mdemmfied party may become subject under any statute or at law
or m eqUity or otherwise and shall reimburse any such mdemmfied party for any legal or
other expense mcurred by It m connectIOn With mveshgatmg any such claims agamst It
and defendmg any such aclions msofar as such losses claims damages habilllies or
actIOns arise out of or are based upon any untrue statement or alleged untrue statement of
a matenal fact or the omiSSion or alleged omission to state m the final OffiCial Statement
or m any amendment or supplement to such final OffiCial Statement a matenal fact
necessary to make the statement therem m hght of the circumstances under winch It was
made not misleadmg ThiS mdemmty proVISIOn shall not be construed as a hmitatlOn on
55081067 I
E5
Agenda Item No 2
Page 112of316
any other lIabilIty winch the Developer may othefWlse have to any mdemmfied party
provided that m no event shall the Developer be oblIgated for double mdemmficatlOn or
for the neglIgence or Willful misconduct of an mdemmfied party
26 The Developer agrees to execute Its Contmumg Disclosure Agreement
substantially m the form attached as AppendIx G to the OffiCial Statement With such
addItIOnal changes as may be agreed upon by the Developer
27 If between the date hereof and the date of the Closmg any event relatmg to
or affectmg the Developer or the development shall occur of whICh the underSigned has
actual knowledge whICh might or would cause the PrelImmary OffiCial Statement as then
supplemented or amended to contam an untrue statement of a matenal fact or to omit to
state a matenal fact reqUired to be stated therem or necessary to make the statements
therem m the lIght of the circumstances under which they were made not mlsleadmg
the Developer shall notify the Dlstnct and the Underwnter and If m the opmlOn of
counsel to the Dlstnct or the Underwnter such event reqUires the preparatIOn and
publIcation of a supplement or amendment to the PrelImmary OffiCial Statement the
Developer shall reasonably cooperate WIth the Dlstnct m the preparation of an
amendment or supplement to the PrelImmary OffiCial Statement m form and substance
satisfactory to counsel to the Dlstnct and to the Underwnter
28 For a penod of 90 days after the Issuance of the Bonds If any event
relatmg to or affectmg the Developer or the development shall occur of which the
underSigned has actual knowledge as a result of winch It IS necessary m the oplmon of
the Underwnter or counsel to the Dlstnct to amend or supplement the OffiCial Statement
m order to make the OffiCial Statement not mlsleadmg m the lIght of the ClrcUlUstances
eXlstmg at the hme It IS delIvered to a purchaser the Developer shall reasonably
cooperate With the Dlstnct and the Underwnter m the preparatIOn of an amendment or
supplement to the OffiCial Statement m form and substance satisfactory to the
Underwnter and counsel to the Dlstnct winch will amend or supplement the OffiCial
Statement so that It will not contam an untrue statement of a matenal fact or omit to state
a matenal fact necessary m order to make the statements therem m the lIght of the
ClfcUlUstances eXlstmg at the time the OffiCial Statement IS delIvered to a purchaser not
mlsleadmg
29 The Developer agrees to delIver a bnng down certificate dated the date of
Issuance of the Bonds at the time of Issuance of the Bonds m substantially the form
attached as Exhibit F to the Purchase Contract to affirm and restate the Developer s
certificatIOns made herem prOVided that If any event related to or affectmg the
Developer ItS AffilIates or the development of the Property shall occur as a result of
which It IS necessary to modify the bnng down certificate the Developer agrees to
delIver a new bnng down certificate revised to reflect such event
30 On behalf of the Developer I have reviewed the contents of thiS
Certificate and the Developer has consulted With counsel regardIng the meanmg of ItS
contents The Developer acknowledges and understands that a vanety of state and
federal laws mcludmg but not lImited to the Secuntles Act of 1933 and Rule lOb 5
55081067 I
E6
Agenda Item No 2
Page 113 of 316
promulgated under the Secuntles Exchange Act of 1934 may apply to the Developer and
that under some circumstances certificatIOn as to the matters set forth m tins Certificate
without additional disclosures or other actIOn may not fully discharge all duties and
obligations of the Developer under such laws
31 As used herem the term Actual Knowledge of the UndefSlgned shall
mean the knowledge that the undefSlgned currently has as of the date of this Certificate or
has obtamed from an mtervlew With such officers and responsible employees of the
Developer as the undersigned has reasonably determmed are likely m the ordmary
course of their respective duties to have knowledge of the matters set forth herem Other
than as set forth m the Immediately precedmg sentence with your permission the
underSigned has not conducted any additional mspectlOn or mqUlry
DATED
2007
LENNAR HOMES OF CALIFORNIA INC
a Califorma corporatIOn
By
Name
Title
5503\067 \
E7
Agenda Item No 2
Page 114 of 316
Exhibit F
Bnng Down Certificate of the Developer
Reference IS made to the Lake Elsmore Public Fmancmg Authonty Local Agency
Revenue Bonds (Wasson Canyon) 2007 Senes A and to the Purchase Contract (the Purchase
Contract) by and among the Lake Elsmore Public Fmancmg Authonty (the Authonty) the
Community FacilitIes Dlstnct No 2005 5 (Wasson Canyon) of the City of Lake Elsmore (the
Dlstnct ) and Southwest SecuntIes Inc (the' Underwnter) dated 2007 Tills
certificate IS delivered pursuant to the Purchase Contract Capitalized terms used herem and not
otherwise defined have the meamngs ascnbed to them m the Certificate dated 2007
delivered by Lennar Homes of California Inc a Califonua corporatIon (the Certificate)
which IS attached hereto as Exhibit A
The undersigned certifies that [he/she] IS familiar with the facts herem certified
and IS authonzed and qualified to certify the same as an authonzed officer of the Developer and
the underSigned on behalf of the Developer further certifies as follows
I Each statement made m the Certificate IS affirmed and restated as If made
on the date hereof provided that each statement made m the Certificate refemng to the
Prelimmary OffiCIal Statement IS affirmed as It related to the final OffiCial Statement
2 To the Actual Knowledge of the UnderSigned no event has occurred smce
the date of the Prelimmary OffiCIal Statement which has adversely affected or Will matenally and
adversely affect the busmess properties operatlons prospects or finanCial condltlon of the
Developer which would matenally and adversely affect the Developer s ability to develop the
Property or ItS ability to pay Special Taxes
3 Each statement made m the Certificate refemng to the Contmumg
Disclosure Agreement IS affirmed as If It relates to the Contmumg Disclosure Agreement as
executed and delivered
550810671
F I
Agenda Item No 2
Page 1150f316
4 The Developer IS duly authonzed to execute and deliver ItS Continuing
Disclosure Agreement and to perform the obligatIOns on ItS part to be performed thereunder and
ItS Continuing Disclosure Agreement constitutes the legal valid and binding obligatIOns of the
Developer enforceable against It In accordance With ItS terms except as such enforcement IS
limited by bankruptcy Insolvency reorganizatIOn arrangement moratonum fraudulent
conveyance and other similar laws relating to or affecting the nghts of creditors and certain
eqUitable legal or statutory pnnclples affecting the enforcement of contractual nghts generally
regardless of whether such enforcement IS considered In a proceeding In eqUity or at law
DATED November
2007
LENNAR HOMES OF CALIFORNIA lNC
a California corporation
By
Name
Title
55081067 I
F2
Agenda Item No 2
Page 116 of 316
CONTINUING DISCLOSURE AGREEMENT
(City of Lake Elsmore CommumtyFacilltles Dlstnct No 20055 (Villages at Wasson Canyon))
This Contmumg Disclosure Agreement (the Disclosure Agreement) dated as of
November 1 2007 IS executed and dehvered by the City of Lake Elsmore Commumty Faclhtles
Dlstnct No 20055 (Villages at Wasson Canyon) (the Dlstnct) and Umon Bank ofCahfornla
N A as Dlssemmatlon Agent (the Dlssemmatlon Agent ) m connectIOn with the Issuance of
the $ Lake Elsmore Pubhc Fmancmg Authonty Local Agency Revenue Bonds (Wasson
Canyon) 2007 Senes A (the Bonds) The Bonds are bemg Issued pursuant to prOVISIOns of an
Indenture of Trust dated as of November 1 2007 (the Indenture') by and between the Lake
Elsmore Pubhc Fmancmg Authonty (the Issuer) and Umon Bank of Cahfornla N A (the
Trustee) The Dlstnct and the Dlssemmatlon Agent covenant and agree as follows
SECTION 1 Purpose onhe Disclosure Agreement This Disclosure Agreement IS bemg
executed and dehvered by the Dlstnct and the DlssemmatlOn Agent for the benefit of the
Beneficial Owners of the Bonds and m order to assist the Partlclpatmg Underwnter m complymg
With S E C Rule l5c2 l2(b)(5)
SECTION 2 Defimtlons In addition to the defimtlOns set forth m the Indenliire which
apply to any capltahzed term used m thiS Disclosure Agreement unless otherwise defined m thiS
SectIOn the followmg capltahzed terms shall have the followmg meanmgs
Annual Report shall mean any Annual Report prOVided by the Dlstnct pursuant to and
as descnbed m Sections 3 and 4 of thiS Disclosure Agreement
BeneficlalOwner shall mean any person which (a) has the power directly or mdlrectly
to vote or consent With respect to or to dispose of ownerslup of any Bonds (mcludmg persons
holdmg Bonds through nommees, deposltones or other mtermedlanes) or (b) IS treated as the
owner of any Bonds for federal mcome tax purposes
Disclosure Representative shall mean the City Manager of the City or hiS or her
deSignee or such other officer or employee as the DIstnct shall deSignate m wntmg to the
DlssemmatlOn Agent from time to time
DlssemmatlOn Agent shall mean Umon Bank of Cahfornla, N A actmg m ItS capacity
as Dlssemmatlon Agent hereunder or any successor Dlssemmatlon Agent deSignated m wntmg
by the Dlstnct
Listed Events shall mean any of the events listed m SectIOn 5(a) of thiS Disclosure
Agreement
NatIOnal RepOSitory shall mean any NatIOnally Recognized MuniCipal Secuntles
InformatIOn Reposllory for purposes of the Rule The National ReposItones currently approved
by the Secuntles and Exchange CommISSIOn are set forth m the SEC web sIte located at
hltp Ilwww sec gov
60031320 1
Agenda Item No 2
Page 117of316
Partlclpatmg Underwnter shall mean any of the ongmal underwnters of the Bonds
reqUired to comply With the Rule m connectlOn With offenng of the Bonds
RepOSitory' shall mean each NatlOnal RepOSitory and each State RepOSitory
Rule shall mean Rule l5c2 l2(b)(5) adopted by the Secunlles and Exchange
CommlsslOn under the Secunlles Exchange Act of 1934 as the same may be amended from llme
to llme
State shall mean the State ofCahforma
State RepOSitory' shall mean any pubhc or pnvate repository or enllty deSignated by the
State as a state repository for the purpose of the Rule and recognized as such by the Secunlles
and Exchange CommlsslOn As of the date ofthls Agreement there IS no State RepOSitory
SECTION 3 ProvlSlon of Annual Reports
(a) The Dlstnct shall or shall cause the DlssemmatlOn Agent to not later than
225 days after the end of the City s fiscal year commencmg With fiscal year endmg June 30
2007 provide to each RepOSitory and the Partlclpatmg Underwnter an Annual Report whiCh IS
consistent With the reqUirements of SectlOn 4 of tills Disclosure Agreement The Annual Report
may be submitted as a smgle docmnent or as separate docmnents compnsmg a package and may
mclude by reference other mformatlOn as provided m SectlOn 4 of tills Disclosure Agreement
(b) Not later than fifteen (15) Busmess Days pnor to the date speCified m
subsecllon (a) for provldmg the Annual Report to Reposltones the Dlstnct shall proVide the
Annual Report to the DlssemmatlOn Agent If by such date the Dlssemmallon Agent has not
received a copy of the Annual Report the Dlssemmallon Agent shall contact the Dlstnct to
determme If the Dlstnct IS m compliance With the first sentence of tills subsectlOn (b) The
Dlstnct shall prOVide a wntten certlficatlOn With each Annual Report furnished to the
DlssemmatlOn Agent to the effect that such Annual Report conslltutes the Annual Report
reqUired to be furnished by It hereunder The DlssemmatlOn Agent may conclUSively rely upon
such certlficallon of the Dlstnct and shall have no duty or obligallon to review such Annual
Report
(c) If the DlssemmatlOn Agent IS unable to venfy that an Annual Report has
been prOVided to Reposltones by the date reqUired m subsectlOn (a) the DlssemmatlOn Agent
shall send a nollce to each RepOSitory or to the MuniCipal Secunlles Rulemakmg Board and the
State RepOSitory If any m substantially the form attached as Exhibit A
(d) The DlssemmatlOn Agent shall
(I) determme each year pnor to the date for provldmg the Annual Report the name
and address of each NatlOnal RepOSitory and the State RepOSitory If any and
(11) to the extent mformatlOn IS known to It file a report With the Authonty and (Ifthe
DlssemmatlOn Agent IS not the Trustee) the Trustee certlfymg that the Annual Report has
60031320 I
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Agenda Item No 2
Page 118 of 316
been provided pursuant to tins Disclosure Agreement statmg the date It was proVided and
hstmg all the Reposltones to which It was proVided
SECTION 4 Content of Annual Reoorts The Dlstnct s Annual Report shall contam or
mclude by reference the followmg (as of June 30 next precedmg the Annual Report date or the
most recent readily aVllllable mformatlOn)
(a) The pnnclpalll1llount ofthe Bonds outstandmg
(b) The balance of the Reserve Account and the Reserve ReqUirement
(c) The balance of the Improvement Fund
(d) A table showmg value to hen ratios (either mdlvldually of m categones
such as 'below 3 I 3 I to 4 1 4 I to 5 1 etc) for all parcels subject to special taxes m the
Dlstnct based on the ratIO of assessed valuation of such parcels to all overlappmg direct debt
(e) The starns of the payment of special taxes for the properties wlthm the
Dlstnct wluch were due and payable dunng the precedmg fiscal year (the Special Taxes)
mcludmg as to dehnquent parcels
(1) the number of parcels dehnquent m the payment of Special Taxes
(2) the aggregate ll1llount ofthe delmquent SpeCial Taxes
(3) as to any parcel for wluch the delmquent Special Taxes represents
more than 5% ofthe aggregate Special Taxes wlthm the DIStnCt
(II) the assessor s parcel number
(Ill) the Identity of the owner(s) of such parcel based on the
Assessor s Roll or County delmquency report received by the City
wluchever IS more current
(IV) the aggregate ll1llount of delmquent property taxes
assessments (both fixed hen and armual) and SpecIal Taxes and the
accrued penalties and mterest on such aggregate amount and
(4) the assessment delmquency rate for such precedmg fiscal year
(f) The status of any JudICial foreclosure proceedmgs ImtJated by the Dlstnct
as a result of the delmquency m the payment of Special Taxes and the sUllllllary of the results of
foreclosure sales If available
(g) As to any parcel for whICh the armual speCial tax levy represents more
than 5% of the aggregate special tax levy Wlthm the DIStnCt
60031320 1
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Agenda Item No 2
Page 119 of 316
(1) names of the owners of such parcels as shown on the Assessor s
Roll or County delmquency report received by the City whichever
IS more current
(2) percentage ofthe speCial tax levy allocated to such parcels
(3) Developed Property or Undeveloped Property status (as such terms
are defined m the RMA) of such parcels
(4) slgmficant amendments to applicable Dlstnct granted land use
entitlements
(5) status of any slgmficant conditIons of approval of development
Imposed by the Dlstnct as to any undeveloped parcel and
(6) status of any slgmficant legislative admlmstratlve or Judicial
challenges to the development of any undeveloped parcels or to the
use or contmumg use of any parcel known to the Dlstnct
(h) The audited finanCial statements for the City for the precedmg fiscal year
(or If not available at the time of filmg the unaudited finanCial statements) The audited
finanCial statements shall be prepared m accordance With generally accepted accountmg
pnnclples as prescnbed for govenunental unitS by the Govenunental Accountmg Standards
Board proVided however that the City may from time to time If reqUired by federal or state
legal reqUirements modify the baSIS upon which ItS finanCial statements are prepared
(I) The pnnClpal amount of prepayments of the SpeCial Tax With respect to
the Dlstnct for the precedmg fiscal year
Any or all of the Items listed above may be mcluded by speCific reference to other documents
mcludmg offiCial statements of debt Issues ofthe City or related public entities whICh have been
submitted to each of the Reposltones or the Secuntles and Exchange CommiSSIOn If the
document mcluded by reference IS a final offiCial statement It must be available from the
MuniCipal Secuntles Rulemakmg Board The Dlstnct shall clearly Identify each such other
document so mcluded by reference
SECTION 5 Reportmg ofSlgmficant Events
(a)
cause to be gIVen
Bonds Ifmatenal
Pursuant to the prOVlSlons of thiS SectIOn 5 the Dlstnct shall give or
notice of the occurrence of any of the followmg events With respect to the
I
pnnclpal and mterest payment delmquencles
2
non payment related defaults
3
modificatIOns to nghts of Bondholders
6003 I 320 1
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Agenda Item No 2
Page 120 of 316
4 optIOnal contmgent or unscheduled bond calls
5 defeasances
6 ratmg changes
7 adverse tax opmlOns or events adversely affectmg the tax exempt status of
the Bonds
8 unscheduled draws on the debt service reserves reflectmg financial
dIfficultIes
9 unscheduled draws on credit enhancements reflectmg financial
difficultIes
10 release substItutIOn or sale of property secunng repayment of the Bonds
and
11 substItutIOn of credit or liqUidity providers or their failure to perform
(b) The Disclosure RepresentatIve shall wlthm one (1) Busmess Day of
obtammg actual knowledge of the occurrence of any of the Listed Events or as soon as
reasonably practIcable thereafter promptly notIfy the DlssemmatIon Agent m wntmg whether or
not to report the event pursuant to subsectIon (f) and to the Bondholders
(c) Whenever the Dlstnct obtams knowledge of the occurrence of a Listed
Event the Dlstnct shall as soon as pOSSible determme If such event would be matenal under
applicable federal secuntIes laws
(d) If the Dlstnct has determmed that knowledge of the occurrence of a Listed
Event would be matenal under applicable federal secuntIes laws the Dlstnct shall promptly
notIfy the DlssemmatlOn Agent m wntmg Such notIce shall mstruct the DlssemmatlOn Agent to
report the occurrence pursuant to subsectIOn (f)
(e) If m response to a request under subsectIon (b) the Dlstnct determmes
that the Listed Event would not be matenal under applicable federal secuntles laws the Dlstnct
shall so notify the DlssemmatIon Agent m wntmg and mstruct the DlssemmatlOn Agent not to
report the occurrence pursuant to subsectIOn (f)
(f) If the DlssemmatlOn Agent has been mstructed by the Dlstnct to report the
occurrence of a Listed Event the DlssemmatlOn Agent shall file a notIce of such occurrence With
the MUnICipal SecuntIes Rulemakmg Board and the State RepOSitory or the Reposltones
Notwlthstandmg the foregomg notIce of Listed Events descnbed m subsectIons (a)(4) and (5)
need not be given under thiS subsectIOn any earlier than the notIce (If any) of the underlymg
event IS given to Holders of affected Bonds pursuant to the Indenture
SECTION 6 TermmatIon of Reoortmg ObligatIOn The Dlstnct s obligatIOns under thiS
Disclosure Agreement shall termmate upon the legal defeasance pnor redemptIOn or payment m
6003 I 320 1
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Agenda Item No 2
Page 121 of316
full of all of the Bonds If such termmatlOn occurs pnor to the final matunty of the Bonds the
Dlstnct shall give notIce of such termmatlOn m the same manner as for a Listed Event under
SectIon 5(f)
SECTION 7 DlssemmatIon Agent The Dlstnct may from tIme to tIme appomt or
engage a DlssemmatIon Agent to assist It m carrymg out ItS oblIgatIOns under thiS Disclosure
Agreement and may discharge any such DlssemmatlOn Agent WIth or Without appomtmg a
successor DlssemmatIon Agent The DlssemmatlOn Agent shall not be responsible m any
manner for the content of any notIce or report prepared by the Dlstnct pursuant to thiS Disclosure
Agreement The ImtIal DlssemmatlOn Agent shall be Dmon Bank of CalIfornia N A The
DlssemmatlOn Agent may resign by provldmg thirty days wntten notIce to the Dlstnct The
DlssemmatIon Agent shall not be responsible for the content of any report or notIce prepared by
the Dlstnct The DlssemmatlOn Agent shall have no duty to prepare any mformatlOn report nor
shall the DlssemmatIon Agent be responsible for filmg any report not proVided to It by the
Dlstnct m a tImely manner and m a form SUItable for filmg
SECTION 8 Amendment. Waiver Notwlthstandmg any other prOVISIOn of thiS
Disclosure Agreement the Dlstnct and the DlssemmatlOn Agent may amend thiS Disclosure
Agreement (and the DlssemmatlOn Agent shall agree to any amendment so requested by the
Dlstnct) proVided the DlssemmatIon Agent shall not be oblIgated to enter mto any such
amendment that modifies or mcreases ItS dutIes or oblIgatIOns hereunder and any proVISIOn of
thiS Disclosure Agreement may be waived prOVided that the followmg conditIons are satIsfied
(a) If the amendment or WaIver relates to the prOVlSlons of SectIOns 3(a) 4 or
5(a) It may only be made m connectIOn WIth a change m CIrCUlllstances that arises from a change
m legal requirements change m law or change m the IdentIty nalIIre or status of an oblIgated
person With respect to the Bonds or the type of bus mess conducted
(b) The undertakmg as amended or takmg mto account such WaIver would
m the opmlOn of natIOnally recognized bond counsel have complIed With the reqUIrements of the
Rule at the tIme of the ongmallssuance of the Bonds after takmg mto account any amendments
or mterpretatlOns of the Rule as well as any change m ClrcUlllstances and
(c) The amendment or waiver either (I) IS approved by the Holders of the
Bonds m the same manner as prOVided m the Indenture for amendments to the Indenture With the
consent of Holders or (n) does not m the oplmon of natIonally recogmzed bond counsel
matenally Impair the mterests ofthe Holders or BenefiCial Owners ofthe Bonds
In the event of my amendment or waiver of a prOVISIOn of thiS Disclosure Agreement the
Dlstnct shall descnbe such amendment m the next Annual Report and shall mclude as
applIcable a narratIve explmatIon of the reason for the amendment or WaIver md ItS Impact on
the type (or m the case of a change of accountmg pnnclples on the presentatIOn) of finmclal
mformatlOn or operatmg data bemg presented by the Dlstnct
SECTION 9 AdditIOnal InformatIOn Nothmg m this Disclosure Agreement shall be
deemed to prevent the Dlstnct from dlssemmatmg any other mformatlOn usmg the means of
dlssemmatlOn set forth m thiS Disclosure Agreement or any other means of communicatIon or
60031320 I
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Agenda Item No 2
Page 122 of 316
mcludmg any other mformatlOn m any Annual Report or notIce of occurrence of a LIsted Event
m addItIOn to that whIch IS reqUIred by thIS DIsclosure Agreement If the DIStnCt chooses to
mclude any mformatlOn m any Annual Report or notIce of occurrence of a LIsted Event m
addItIon to that whIch IS specIfically reqUIred by thIS DIsclosure Agreement the DIStnCt shall
have no obhgatlOn under thIS Agreement to update such mformatlOn or mclude It m any futIrre
Annual Report or notIce of occurrence of a LIsted Event
SECTION 10 Central Post Office In heu of fihng WIth the ReposItones fihng under
thIs DIsclosure Agreement may be made solely by transmIttmg such filmg to the Texas
MunIcIpal AdVISOry CouncIlor any successor thereto (the MAC) as provIded at
http //www dIsclosuresusa org unless the Umted States SecuntIes and Exchange CommIssIOn has
wIthdrawn the mterpretIve advIce m ItS letter to the MAC dated September 7 2004 or any other
organIzatIon or method approved by the staff or members of the Umted States SecuntIes and
Exchange CommIssIOn as an mtermedIary through whIch Issuers may m comphance WIth the
Rule make filmgs reqUIred by thIS DIsclosure Agreement
SECTION 11 Default In the event of a farlure of the DIstnct or the DIssemmatlOn
Agent to comply wIth any provIsIOn of thIS DIsclosure Agreement any Holder or BeneficIal
Owner of the Bonds may take such actIons as may be necessary and appropnate mcludmg
seekIng mandate or specIfic performance by court order to cause the DIstnct or DIssemmatlOn
Agent as the case may be to comply wIth ItS obhgatlOns under thrs DIsclosure Agreement A
default under thIS DIsclosure Agreement shall not be deemed an Event of Default under the
Indenture and the sole remedy under thIS DIsclosure Agreement m the event of any farlure of the
DIstnct or the DIssemmatlOn Agent to comply wIth thIS DIsclosure Agreement shall be an actIon
to compel performance
SECTION 12 DutIes. InununItIes and LIabIhtIes ofDIssemmatlOn Agent ArtIcle VI of
the Indenture pertammg to the Trustee IS hereby made apphcable to thIS DIsclosure Agreement
as If thIS DIsclosure Agreement were (solely for thIS purpose) contamed m the Indenture and the
DIssemmatlOn Agent shall be entItled to the protectIons hmItatlOns from habIhty and
mdemmtIes afforded the Trustee thereunder The DrssemmatlOn Agent shall have only such
dutIes as are specIfically set forth m thIS DIsclosure Agreement and the DIStnCt agrees to
mdemmfy and save the DIssemmatlOn Agent ItS officers dIrectors employees and agents
harmless agamst any loss expense and habIhtIes whIch they may mcur ansmg out of or m the
exerCIse or performance of ItS powers and dutIes hereunder mcludmg the costs and expenses
(mcludmg attorneys fees) ofdefendmg agamst any clarm ofhabIhty but excludmg habIhtIes due
to the DIssemmatIon Agent s neghgence or wIllful mIsconduct The DIssemmatlOn Agent shall
be paId compensatIOn by the DIstnct for ItS servIces provIded hereunder m accordance WIth ItS
schedule of fees as amended from tIme to tIme and all expenses legal fees and advances made or
mcurred by the DIssemmatIon Agent m the performance of ItS dutIes hereunder The
DIssemmatlOn Agent shall have no duty or obhgatlOn to reVIew any mformatIon provIded to It
hereunder and shall not be deemed to be actmg m any fidUCIary capacIty for the DIstnct the
Bondholders or any other party The DIssemmatlOn Agent shall not have any habIhty to the
Bondholders or any other party for any monetary damages or finanCIal habIhty of any kmd
whatsoever related to or ansmg from thIS Agreement The obhgatIons of the DIStnCt under thIS
SectIOn shall survIve reSIgnatIon or removal of the DIssemmatlOn Agent and payment of the
Bonds
60031320 1
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Agenda Item No 2
Page 123 of 316
SECTION 13 Notices Any notIces or commurucatlOns to or among any of the partIes
to thIS DIsclosure Agreement may be gIVen as follows
To the DIStnCt
CIty of Lake ElsInore Commumty FaCilities DIStnCt
No 2005 5 (VIllages at Wasson Canyon)
c/o CIty of Lake ElsInore
130 South MaIn Street
Lake ElsInore CalifornIa 92530
Attn CIty Manager
To the DIssemmatlon Agent
Umon Bank of CalI forma N A
120 South San Pedro Street 4th Floor
Los Angeles CalIforma 90012
Attn Corporate Trust Department
Any person may by wntten notice to the other persons listed above deSIgnate a dIfferent address
or telephone number(s) to whIch subsequent notIces or commumcatlons should be sent
SECTION 14 BeneficIanes ThIS DIsclosure Agreement shall Inure solely to the benefit
of the DIstnct the DIssemmatIon Agent the PartIcIpatmg Underwnter and Holders and
BeneficIal Owners from time to time of the Bonds and shall create no nghts m any other person
or entity
60031320 1
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Agenda Item No 2
Page 124 of 316
SECTION 15 Counterparts Tills DIsclosure Agreement may be executed m several
counterparts each ofwillch shall be an ongmal and all of whICh shall constItute but one and the
same mstnmIent
CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO 20055
(VILLAGES AT WASSON CANYON)
By
Mayor on behalf of the Dlstnct
UNION BANK OF CALIFORNIA N A
as DlssemmatlOn Agent
By
Authonzed Officer
60031320 1
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Agenda Item No 2
Page 125 of 316
EXHillIT A
NOTICE TO REPOSITORIES OF F AlLURE TO FILE ANNUAL REPORT
Name of Obligated Party
CIty of Lake Elsmore CommunIty FacIlitIes DIstrIct No 2005 5
(VIllages at Wasson Canyon)
Name of Bond Issue
Lake Elsmore Public Fmancmg Authonty
Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
Date ofIssuance
2007
NOTICE IS HEREBY GIVEN that the CIty has not provIded an Annual Report WIth
respect to the above named Bonds as reqUIred by the Contmumg DIsclosure Agreement dated as
of November I 2007 WIth respect to the Bonds [The DIstrIct antIcIpates that the Annual
Report wIll be filed by ]
Dated
UNION BANK OF CALIFORNIA N A
as DlssemmatIon Agent
on behalf of DIstrIct
cc Issuer
60031320 1
Agenda Item No 2
Page 126 of 316
INDENTURE OF TRUST
by and between the
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
and
UNION BANK OF CALIFORNIA N A
as Trustee
Dated as of November 1 2007
Relatmg to
$
Lake Elsmore PublIc Fmancmg Authonty
Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
60031213 1
Agenda Item No 2
Page 127 of 316
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AUTHORIZATION AND PURPOSE OF BONDS
EQUALSEC~TY 2
Section I 01 DefimtlOns 2
SectIon 1 02 Rules of Construction 10
SectIOn 1 03 Authonzatlon and Purpose of Bonds 10
SectIOn 1 04 Equal Secunty 10
ARTICLE II
SectIOn 2 01
SectIon 2 02
SectIOn 2 03
SectIOn 2 04
SectIOn 2 05
SectIon 2 06
SectIon 2 07
SectIOn 2 08
SectIOn 2 09
Section 2 10
SectIon 2 11
ARTICLE III
SectIOn 3 01
SectIOn 3 02
SectIOn 3 03
Section 3 04
SectIOn 3 05
ARTICLE IV
SectIon 4 01
SectIon 4 02
SectIOn 4 03
SectIOn 4 04
SectIon 4 05
SectIOn 4 06
SectIOn 4 07
ARTICLE V
SectIOn 5 01
SectIOn 5 02
SectIOn 5 03
SectIOn 5 04
SectIon 5 05
ISSUANCE OF THE BONDS
Terms of the Bonds
RedemptIOn of Bonds
Form of the Bonds
ExecutIOn of Bonds
Transfer of Bonds
Exchange of Bonds
RegIstratIon Books
Bonds MutIlated Lost Destroyed or Stolen
CUSIP Numbers
Use ofSecuntIes DepOSitory
Temporary Bonds
DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS
Issuance of Bonds
ApplicatIOn of Proceeds of Sale of Bonds and Other Amounts
Bond Purchase Fund
Costs ofIssuance Fund
Validity of Bonds
REVENUES FLOW OF FUNDS
Pledge of Revenues AsslgIUllent ofRlghts
Receipt DepOSit and ApplicatIOns of Revenues
Cash Flow Management Fund
RedemptIOn Fund
ReSidual Fund
Investments
ValuatIon and DIspOSitIOn of Investments
COVENANTSOFTHEAUTHO~TY
Punctual Payment
ExtenSIOn of Payment of Bonds
Agamst Encumbrances
Power to Issue Bonds and Make Pledge and AsslgIUllent
Accountmg Records and FmanCla1 Statements
I
10
10
11
14
14
15
15
15
IS
16
16
17
18
18
18
18
18
18
19
19
19
21
22
22
23
24
24
24
24
24
24
25
Agenda Item No 2
Page 1280f316
SectIOn 5 06
SectIOn 5 07
SectIon 5 08
SectIon 5 09
SectIOn 5 10
SectIOn 5 11
ARTICLE VI
SectIOn 6 01
SectIOn 6 02
SectIOn 6 03
SectIOn 6 04
SectIOn 6 05
SectIOn 6 06
SectIon 6 07
SectIOn 6 08
SectIon 6 09
SectIon 6 10
SectIon 6 11
SectIon 6 12
TABLE OF CONTENTS
(contmued)
Page
No AdditIonal Panty Debt
Tax Covenants Relatmg to Bonds
Dlstnct Bonds
Further Assurances
Innnumty
No AcceleratIOn
25
25
28
28
29
29
29
29
29
31
31
32
32
32
32
33
33
33
34
THE TRUSTEE
Appomtment of Trustee
Acceptance of Trusts
Fees Charges and Expenses of Trustee
Notice to Bond Owners of Default
InterventIOn by Trustee
Removal of Trustee
ResignatIon by Trustee
AppomtInent of Successor Trustee
Merger or ConsohdatlOn
Concemmg any Successor Trustee
AppomtInent to Co Trustee
IndemmficatlOn Limited Llablhty of Trustee
ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE 34
SectIOn 7 01
SectIOn 7 02
SectIon 7 03
SectIOn 7 04
Amendment Hereof
Effect of Supplemental IndentIlre
Endorsement or Replacement of Bonds After Amendment
Amendment by Mutual Consent
34
35
35
35
36
36
36
37
37
38
38
38
39
39
39
40
40
40
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
SectIon 8 01
SectIOn 8 02
SectIOn 8 03
SectIOn 8 04
SectIOn 8 05
SectIOn 8 06
SectIOn 8 07
SectIOn 8 08
ARTICLE IX
SectIOn 9 01
SectIOn 9 02
SectIon 9 03
SectIon 9 04
Events of Default
Remedies Upon Event of Default
ApphcatlOn of Revenues and Other Funds After Default
Power of Trustee to Control Proceedmgs
AppomtInent of Receivers
Non Waiver
RIght to Institute SUIt ActIon or Proceedmg
TermmatlOn ofProceedmgs
MISCELLANEOUS
Limited Llablhty of Authonty
Benefits ofIndentIlre Limited to PartIes
Discharge 0 fIndentIlre
Is Deemed Included m All References to Predecessor
11
Agenda Item No 2
Page 1290f316 I
SectIOn 9 05
SectIOn 9 06
Section 9 07
SectIOn 9 08
Section 9 09
Section 9 10
SectIOn 9 11
Section 9 12
SectIOn 9 13
Section 9 14
Section 9 15
Section 9 16
TABLE OF CONTENTS
( contmued)
Page
Content of CertIficates
ExecutIOn of Documents by Bond Owners
-DIsqualIfied Bonds
WaIver of Personal LIabIlIty
PartlallnvalIdlty
DestructIOn of Canceled Bonds
Funds and Accounts
Payment on Busmess Days
Notices
UnclaImed Moneys
Governmg Law
Execution of Counterparts
40
41
41
42
42
42
42
42
43
43
43
44
EXHllilT A - FORM OF BOND
Al
III
Agenda Item No 2
Page 130 of 316
INDENTURE OF TRUST
THIS INDENTURE OF TRUST (tins Indenture) IS made and entered mto as of
November I 2007 by and between the LAKE ELSINORE PUBLIC FINANCING
AUTHORITY a Jomt powers authonty organized and eXlstmg under the laws of the State of
Califorma (the Authonty) and UNION BANK OF CALIFORNIA N A a natIOnal bankmg
associatIOn organized and eXlstmg under the laws of the Umted States of Amenca havmg a
corporate trust office m Los Angeles Cali forma and bemg qualified to accept and adrmmster the
trusts hereby created (the Trustee)
WITNESSETH
WHEREAS the Authonty IS a Jomt powers authonty duly orgamzed and eXlstmg under
and pursuant to that certam Jomt ExerCise of Powers Agreement dated July 25 1989 by and
between the City of Lake Elsmore (the City) and the Redevelopment Agency of the CIty of
Lake Elsmore (the Agency) and under the provIsIOns of Articles I through 4 (commencmg
With Section 6500) of Chapter 5 of DIvIsIOn 7 of Title I of the Government Code of the State of
California (the Act) and IS authonzed pursuant to Article 4 of the Act (the Bond Law ) to
borrow money for the purpose of financmg the acqUisItion of bonds notes and other obligatIOns
of or for the purpose of makmg loans to the City the Agency and any associate member to
proVide financmg for public capital Improvements of the City the Agency and any associate
member and
WHEREAS for the purpose of fundmg certam public facilities the Authonty deslfes to
proVide for the Issuance of ItS Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A
(the Bonds) and
WHEREAS m 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 pnnclpal thereof premIUm (If any) and mterest thereon the Authonty
has authonzed the executIOn and delivery of tins Indenture and
WHEREAS the Authonty has found and determmed and hereby affirms that all acts
and proceedmgs reqUired by law necessary to make the Bonds when executed by the Authonty
authenticated and delivered by the Trustee and duly Issued the valid bmdmg and legal speCial
obligatIOns of the Authonty and to constitute thiS Indenture a valid and bmdmg agreement for
the uses and purposes herem set forth m accordance With ItS terms have been done and taken
and the executIOn and delivery of tins Indenture have been m all respects duly authonzed
NOW THEREFORE THIS INDENTURE WITNESSETH that m order to secure the
payment ofthe pnnclpal of and the mterest and premlUlU (If any) on all Bonds at any time Issued
and Outstandmg under thiS Indenture accordmg to thelf tenor and to secure the performance and
observance of all the covenants and conditions therem and herem set forth and to declare the
terms and conditions upon and subject to whICh the Bonds are to be Issued and repaid and m
consideratIOn of the premises and of the mutual covenants herem contamed and of the purchase
and acceptance of the Bonds by the Owners thereof and for other valuable consideratIOn the
receipt and suffiCiency of which IS hereby acknowledged the Authonty does hereby covenant
600312131
Agenda Item No 2
Page 131 of316
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 01 DefimtJons Unless the context otherwIse reqUIres the terms defined m
thIs SectIOn 1 01 shall for all purposes of thIs IndentIJre of any Supplemental IndentIJre and of
the Bonds and of any certIficate opmlOn request or other documents herem mentIOned have the
meanmgs herem specIfied
Act means ArtIcles 1 through 4 (commencmg WIth SectIon 6500) of Chapter 5
DIVISIon 7 TItle I of the Government Code of the State as m eXIstence on the Closmg Date or
as thereafter amended from tIme to tIme
Agency means the Redevelopment Agency of the CIty of Lake Elsmore a publIc body
corporate and polItIc organIzed under the laws of the State and any successor thereto
Annual Debt ServIce means for each Bond Year the sum of (a) the mterest payable on
the Outstandmg Bonds m such Bond Year and (b) the pnnclpal amount of the Outstandmg
Bonds scheduled to be paId m such Bond Year
Authonty means the Lake Elsmore PublIc Fmancmg Authonty a Jomt powers
authonty duly organIzed and eXlstmg under the Jomt ExerCIse of Powers Agreement dated July
25 1989 by and between the CIty and the Agency together WIth any amendments thereof and
supplements thereto and under the laws ofthe State
Authonty RepresentatIve means the ChaIrman VIce ChaIrman ExecutIve DIrector or
Treasurer of the Authonty or any other authonzed representatIve of the Authonty as eVIdenced
by a certIficate of the ChaIrman or ExecutIve DIrector
Board means the Board of DIrectors ofthe Authonty
Bond Counsel means Fulbnght & JaworskI L L P or any attorney or firm of attorneys
appomted by or acceptable to the Authonty of natIonally recognIzed expenence m the field of
munIcIpal law whose opmlOns are generally accepted by purchasers of munIcIpal bonds or notes
Bond Fund means the fund by that name establIshed and held by the Trustee pursuant
to SectIon 4 02(b) hereof
Bond Law means the Marks Roos Local Bond Poolmg Act of 1985 constItJJtmg
ArtIcle 4 of the Act (commencmg WIth SectIOn 6584) as m eXIstence on the Closmg Date or as
thereafter amended from tIme to tIme
Bond Purchase Fund means the fund establIshed pursuant to SectIon 3 03 hereof
60031213 I
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Agenda Item No 2
Page 132 of 316
Bond Year means each twelve month penod begmnmg on September 2 of each year
and endmg September I of the followmg year except that the first Bond Year shall begm on the
Closmg Date and end on September I 2008
Bonds means the Lake Elsmore PublIc Fmancmg Authonty Local Agency Revenue
Bonds (Wasson Canyon) 2007 Senes A authonzed by and at any tIme Outstandmg pursuant to
the Bond Law and thIS Indenture
Busmess Day means a day of the year other than a Saturday or Sunday on whIch
banks m Los Angeles CalIfornIa, and San FranCISCo CalIfornIa are not reqUIred or authonzed to
remam closed and on whIch the New York Stock Exchange IS not closed
Cash Flow Management Fund means the fund by that name establIshed by SectIon
4 03(a) hereof
Cash Flow Management Fund ReqUIrement means as of any calculatIon date an
amount equal to 15% of the MaxImum Annual Debt ServIce
CertIficate or Wntten Request of the Authonty means a wntten certIficate or wntten
request sIgned m the name of the Authonty by an Authonty RepresentatIve Any such certIficate
or request may but need not be combmed m a smgle mstnJrnent WIth any other mstnJrnent
opmlOn or representatIon and the two or more so combmed shall be read and construed as a
smgle mstrument
CIty means the CIty of Lake Elsmore a polItIcal subdIVISIon organIzed and eXlstmg
under the laws ofthe State
Closmg Date means the date of delIvery of the Bonds to the ongmal purchasers
thereof
Code means the Internal Revenue Code of 1986 as m effect on the date of Issuance of
the Bonds or (except as otherwIse referenced herem) as It may be amended to apply to
oblIgatIOns Issued on the date of Issuance of the Bonds together WIth applIcable proposed
temporary and final regulatIons promulgated and applIcable officIal publIc guIdance publIshed
under the Code
Corporate Trust Office means the corporate trust office of the Trustee at the address set
forth m SectIOn 9 13 and such office as the Trustee may deSIgnate m wntmg to the Authonty
from tIme to tIme
Costs of Issuance means all expenses mcurred m connectIOn WIth the authonzatlOn
Issuance sale and delIvery of the Bonds the purchase of the Dlstnct Bonds mcludmg but not
lImIted to all compensatIon fees and expenses (mcludmg but not lImIted to fees and expenses for
legal counsel) of the Authonty the Trustee and the developer compensatIOn to any financIal
consultants or underwnters legal fees and expenses filmg and recordmg costs ratmg agency
fees costs of preparatIon and reproductIOn of documents and costs of pnntmg
60031213 1
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Agenda Item No 2
Page 133 of 316
Costs of Issuance Fund means the fund established and held by the Trustee pursuant to
SectIOn 3 04 hereof
Dlstnct means City of Lake Elsmore Commumty FacIlities Dlstnct No 2005 5
(Villages at Wasson Canyon)
Dlstnct Bonds means the City of Lake Elsmore Community Facilities Dlstnct No
2005 5 (Wasson Canyon) Special Tax Bonds 2007 Senes A
DTC means The Depository Trust Company New York New York and ItS successors
and assigns
Event of Default means any of the events descnbed m Section 8 01 hereof
Excess Investlnent Earnmgs means the amount of excess mvestlnent earnmgs
determmed to be subject to rebate to the Umted States of Amenca with respect to the mvestlnent
of the gross proceeds of the Bonds determmed pursuant to SectIOn 148(t) of the Code
Fair Market Value means the pnce at which a willmg buyer would purchase the
mvestment from a willmg seller m a bona fide arm s length transaction (determmed as of the
date the contract to purchase or sell the mvestlnent becomes bmdmg) If the mvestment IS traded
on an established secuntles market (wlthm the meanmg of SectIOn 1273 of the Code) and
otheJ"Wlse the term Fair Market Value means the acqulSltlOn pnce m a bona fide arm s length
transaction (as referenced above) If (I) the mvestment IS a certificate of depOSit that IS acqUired m
accordance With applicable regulations under the Code (n) the mvestlnent IS an agreement With
specifically negotiated Withdrawal or remvestment provlSlons and a specifically negotiated
mterest rate (for example a guaranteed mvestlnent contract a forward supply contract or other
mvestlnent agreement) that IS acqUired m accordance With applicable regulations under the Code
(111) the mvestlnent IS a Umted States Treasury Secunty State and Local Government Senes that
IS acqUired m accordance With applicable regulatIOns of the Umted States Bureau of Public Debt
or (IV) any commmgled mvestlnent fund m which the City and related parties do not own more
than a ten percent (10%) benefiCial mterest therem If the return paid by the fund IS Without
regard to the source of the mvestlnent
Federal Secuntles means any of the followmg whICh are non callable and whICh at the
time of mvestlnent are legal mvestments under the laws of the State of California for funds held
by the Trustee as shall be certified by the Authonty to the Trustee
(1) direct general obligatIOns of the Umted States of Amenca (mcludmg obligations
Issued or held m book entry form on the books of the Umted States Department of
the Treasury) and obligatIOns the payment of pnnclpal of and mterest on which
are directly or mdlrectly guaranteed by the Umted States of Amenca mcludmg
Without limitatIOn such of the foregomg which are commonly referred to as
stnpped obligations and coupons
(2) any of the followmg obligatIOns of the followmg agencies of the Umted States of
Amenca (a) direct obligations of the Export hnport Bank (b) certificates of
benefiCial ownership Issued by the Farmers Home AdmmlstratlOn (c)
600312131
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Agenda Item No 2
Page 134of316
partlclpatJon certificates Issued by the General ServIces Ad1mmstratlOn (d)
mortgage backed bonds or pass through obligatIOns Issued and guaranteed by the
Govemment NatIOnal Mortgage ASSOCiatIOn (e) project notes Issued by the
Umted States Department of Housmg and Urban Development and (f) public
housmg notes and bonds guaranteed by the Umted States of Amenca or refunded
munICIpal obligatIOns the tJmely payment of pnnclpal of and mterest on are fully
guaranteed by the Umted States of Amenca
FIscal Agent means Umon Bank of CalifornIa N A as fiscal agent under the FIscal
Agent Agreement
FIscal Agent Agreement means the FIscal Agent Agreement dated as of November I
2007 by and between the DIstrIct and Umon Bank of Callfonua, N A as saId agreement may be
aIllended from tJme to tJme m accordance WIth ItS tenus
FIscal Year means any twelve month penod extend1ng from July 1 m one calendar year
to June 30 of the succeedmg calendar year both dates mcluslve or any other twelve month
penod selected and deSIgnated by the Authonty as ItS offiCIal fiscal year penod and certIfied to
the Trustee m wntmg by an Authonty RepresentatJve
Indenture means tills Indenture of Trust as ongmally executed or as It may from tJme
to tJme be supplemented modIfied or aIllended by any Supplemental Indenture pursuant to the
proVIsIOns hereof
Independent Accountant means any certIfied public accountant or firm of certIfied
public accountants appomted and paId by the Authonty and who or each of whom (a) IS m fact
mdependent and not under dommatJon of the Authonty or the CIty (b) does not have any
substantJal mterest dIrect or md1rect m the Authonty or the CIty and (c) IS not connected WIth
the Authonty or the CIty as an officer or employee of the Authonty or the CIty but who may be
regularly retamed to make annual or other audIts of the books of or reports to the Authonty or
the CIty
InformatIOn ServIces means Fmanclal InformatIOn Inc s Dally Called SpeCIal
ServIce 30 Montgomery Street 10th Floor Jersey CIty NJ 07302 AttentIOn EdItor
Mergent/FIS Inc 5250 77 Center Dnve SUIte 150 Charlotte North Carolma 28217 AttentJon
Mumclpal News Reports and Kenny S&P 55 Water Street 45th Floor New York New York
10041 AttentIOn NotJficatlOn Department and m accordance WIth then current guldelmes of
the SecuntJes and Exchange CommISSIOn such other addresses and/or such other servIces
provldmg mformatlOn WIth respect to the redemptIOn of bonds as the Authonty may deSIgnate m
a Request ofthe Authonty delivered to the Trustee
Interest Account means the account by that naIlle established and held by the Trustee
pursuant to SectIOn 4 02(c)(I) hereof
Interest Payment Date means March I and September I m each year begmmng March
1 2008 and contmumg thereafter so long as any Bonds remam Outstandmg
60031213 1
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Agenda Item No 2
Page 135 of 316
Letter of RepresentatIOns means the letter of the Authonty and the Trustee delIvered to
and accepted by DTC (or such other applIcable Secunlies Depository) on or pnor to the Issuance
of the Bonds m book entry form settmg forth the basIs on wluch DTC (or such other applIcable
Secunlies Depository) serves as depository for the Bonds Issued m book entry form as ongmally
executed or as It may be supplemented or revised or replaced by a letter to a subslitute Secunlies
DepOSitory
Maximum Annual Debt ServICe means as of the date of calculatIOn the maximum
amount obtamed by totalmg for the current or any future Bond Year the sum of (a) the
pnnclpal amount of all such Outstandmg Bonds matunng m such Bond Year and (b) the mterest
which would be due dunng such Bond Year on the aggregate pnnclpal amount of such Bonds
wluch would be Outstandmg m such penod If such Bonds are relired as scheduled but deductmg
and excludmg from such aggregate pnnclpal amount the aggregate pnnclpal amount of such
Bonds no longer Outstandmg
Moody s means Moody s Investors ServICe and ItS successors and assigns
Outstandmg when used as of any particular lime With reference to Bonds means all
Bonds theretofore executed Issued and delIvered by the Authonty under thiS Indenliire except
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellatIOn (b)
Bonds paid or deemed to have been paid wlthm the meanmg of Seclion 9 03 and (c) Bonds m
lIeu of or m subslitulion 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 m
whose name the ownership of such Bond shall be registered on the Regtstralion Books
Panty Dlstnct Bonds means Panty Bonds as such term IS defined m the Fiscal Agent
Agreement
Permitted Investments means any of the followmg wluch at the lime of mvestrnent are
legal mvestments under the laws of the State for the moneys proposed to be mvested therem (the
Trustee enlitled to rely on wntten mvestrnent dlreclion of the Authonty as a determmatlOn that
such mvestment IS a legal mvestment) but only to the extent that the same are acqmred at Fair
Market Value
(a) Federal Secuntles
(b) bonds debenliires notes or other eVidence of mdebtedness Issued or
guaranteed by any of the followmg federal agencies and provIded such oblIgatIOns are
backed by the full faIth and credIt of the Umted States of Amenca (stnpped secunlies are
only permItted If they have been stnpped by the agency Itself) (1) dIrect oblIgalions or
fully guaranteed certIficates of beneficial ownershIp of the U S Export Import Bank (Il)
certIficates ofbenefiClal ownerslup of the Farmers Home AdmmlstratlOn (m) oblIgalions
of the Federal Fmancmg Bank (IV) debenliires of the Federal Housmg AdmlmstratlOn
(v) partIcIpalion certIficates of the General Services AdmmlstratlOn (VI) guaranteed
mortgage backed bonds or guaranteed pass through oblIgatIOns of the Govenunent
NatIOnal Mortgage ASSOCiatIOn (Vll) guaranteed Title XI financmgs of the U S Manlime
600312131
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Agenda Item No 2
Page 136of316
AdmmlstratJon (vm) project notes local authonty bonds new commumtIes debentures
and U S publIc housmg notes and bonds of the U S Department of Housmg and Urban
Development
(c) bonds debentures notes or other eVidence of mdebtedness Issued or
guaranteed by any of the followmg non full faith and credit U S government agencies
(strIpped secuntIes are only permitted If they have been strIpped by the Authonty Itself)
(I) semor debt oblIgatIOns of the Federal Home Loan Bank System (11) participatIon
certIficates and semor debt oblIgatIons of the Federal Home Loan Mortgage CorporatIon
(m) mortgaged backed secuntIes and semor debt oblIgatIons of the Federal NatIOnal
Mortgage ASSOCiatIon (excludmg strIpped mortgage secuntIes wmch are valued greater
than par on the portIOn of unpaid pnnclpal) (IV) SenIor debt oblIgatIOns of the Student
Loan Marketmg ASSOCiatIon (v) oblIgatIons (but only the mterest component of strIpped
oblIgatIons) of the ResolutIOn Fundmg CorporatIOn and (VI) consolIdated systemwide
bonds and notes of the Farm Credit System
(d) money market funds (mcludmg funds of the Trustee or ItS affilIates)
registered under the Federal Investment Company Act of 1940 whose shares are
registered under the Federal SecuntIes Act of 1933 and havmg a ratmg by S&P of
AAAm G AAAm or AAm and Ifrated by Moody s rated Aaa Aal or Aa2
(e) certificates of depOSit secured at all tImes by collateral descnbed m (a) or
(b) above which have a matunty of one year or less which are Issued by commercial
banks savmgs and loan aSSOCiatIOns or mutual savmgs banks and such collateral must be
held by a third party and the Trustee must have a perfected first secunty mterest m such
collateral
(f) certificates of depOSit savmgs accounts depOSit accounts or money
market depOSits (mcludmg those of the Trustee and ItS affilIates) which are fully msured
by the Federal DepOSit Insurance CorporatIOn
(g) mvestment agreements mcludmg guaranteed mvestJnent contracts
forward purchase agreements and Reserve Account put agreements which are general
oblIgatIOns of an entIty whose long term debt oblIgatIons or claims paymg abIlity
respectIvely IS rated m one of the two mghest ratmg categones by Moody s or S&P
(h) commerCial paper rated at the tIme of purchase Pnme 1 by Moody s
and A 1 or better by S&P
(I) bonds or notes Issued by any state or muniCipalIty wmch are rated by
Moody sand S&P m one of the two highest ratmg categones aSSigned by such agencies
(j) federal funds or bankers acceptances With a maximum term of one year of
any bank which has an unsecured unmsured and unguaranteed oblIgatIOn ratmg of
Pnme 1 or A3 or better by Moody s and A 1 or A or better by S&P
(k) repurchase agreements whICh proVide for the transfer of secuntJes from a
dealer bank or secuntIes firm (sellerlborrower) to the Trustee and the transfer of cash
600312131
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Agenda Item No 2
Page 137 of 316
from the Trustee to the dealer bank or secuntles firm with an agreement that the dealer
bank or secuntles firm will repay the cash plus a yield to the Trustee m exchange for the
secuntles at a specIfied date whICh satIsfy the followmg cntena
(I) repurchase agreements must be between the Trustee and (A) a
pnmary dealer on the Federal Reserve reportmg dealer lIst whIch falls under the
junsdlCtlOn of the Secuntles Investors ProtectIOn CorporatIOn whICh are rated A
or better by Moody s and S&P or (B) a bank rated A or better by Moody sand
S&P
(II) the wntten repurchase agreement contract must mc1ude the
followmg (A) secuntles acceptable for transfer whICh may be dIrect U S
govenunent oblIgatIOns or federal agency oblIgations backed by the full faIth and
credit of the US govenunent (B) the term of the repurchase agreement may be
up to 30 days (C) the collateral must be delIvered to the Trustee or a thIrd party
actmg as agent for the Trustee simultaneous With payment (perfection by
possessIOn of certIficated secuntles) (D) the Trustee must have a perfected first
pnonty secunty mterest m the collateral (E) the collateral must be free and clear
of thud party lIens and m the case of a broker whIch falls under the junsdlctlOn
of the Secuntles Investors Protection Corporation are not subject to a repurchase
agreement or a reverse repurchase agreement (F) failure to mamtam the reqmslte
collateral percentage after a two day restoration penod will reqmre the Trustee to
IIqmdate the collateral (G) the secuntles must be valued weekly marked to
market at current market pnce plus accrued mterest and the value of collateral
must be equal to 104% of the amount of cash transferred by the Trustee to the
dealer bank or secuntles firm under the repurchase agreement plus accrued
mterest (unless the secuntles used as collateral are oblIgatIOns of the Federal
NatIOnal Mortgage ASSOCIation or the Federal Home Loan Mortgage CorporatIOn
m whIch case the collateral must be equal to 105% of the amount of cash
transferred by the Trustee to the dealer bank or secuntles firm under the
repurchase agreement plus accrued mterest) If the value of secuntles held as
collateral falls below 104% of the value of the cash transferred by the Trustee
then additional cash and/or acceptable secuntles must be transferred and
(m) a legal opmlOn must be delIvered to the Trustee to the effect that
the repurchase agreement meets guldelmes under state law for legal mvestment of
publIc funds and
(I) the Local Agency Investment Fund of the State of CalifornIa created
pursuant to SectIOn 16429 1 of the CalIfonua Govenunent Code to the extent the Trustee
IS authonzed to register such mvestment m ItS name
Pnnclpal Account means the account by that name establIshed and held by the Trustee
pursuant to SectIOn 4 02(c)(II) hereof
Rebate Account means the account establIshed and held by the Trustee pursuant to
SectIOn 4 02( e) hereof
60031213 1
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Agenda Item No 2
Page 138of316
Record Date means WIth respect to any Interest Payment Date the fifteenth (15th)
calendar day of the month precedIng such Interest Payment Date
RedemptIOn Fund means the fund by such name establIshed and held by the Trustee
pursuant to SectIOn 4 04 hereof
RedemptIon Revenues means (a) amounts receIved from the redemptIOn of the DIstrIct
Bonds from amounts constItutIng prepayments of SpecIal Taxes (b) amounts receIved from the
optIonal redemptIOn of the DIstrIct Bonds and (c) amounts receIved from the specIal mandatory
redemptIOn and mandatory redemptIon of the Dlstnct Bonds
Reserve Account means the account by that name establIshed and held by the Trustee
pursuant to SectIon 4 02(C)(1ll) hereof
Reserve ReqUIrement means as of any calculatIon date an amount equal to the least of
(I) ten percent (10%) of the proceeds of the Bonds (WIthIn the meanIng of sectIOn 148 of the
Code) (II) 125% of average Annual Debt ServIce or (lll) MaxImum Annual Debt ServIce
RegIstratIon Books means the records maIntaIned by the Trustee pursuant to SectIOn
2 07 for the regIstratIon and transfer of ownershIp of the Bonds
ReSIdual Fund means the fund by that name establIshed and held by the Trustee
pursuant to SectIOn 4 05(a) hereof
Revenue Fund means the fund by that name establIshed and held by the Trustee
pursuant to SectIOn 4 02(a) hereof
Revenues means (a) all amounts received by the Authonty from the DIstrIct as
pnnclpal of or Interest on the Dlstnct Bonds (b) all moneys depOSIted and held from tIme to
tIme by the Trustee In the funds and accounts establIshed hereunder for the Bonds other than the
Rebate Account the RedemptIon Fund and the ReSIdual Fund and (c) Income and gaInS WIth
respect to the InvestInent of amounts on depOSIt In the funds and accounts establIshed hereunder
for the Bonds other than the Rebate Account the RedemptIOn Fund and the ReSIdual Fund
S&P means Standards & Poor s a dIVISIOn of The McGraw HIll Compames ItS
successors and asSIgnS
SecuntIes Deposltones means DTC 55 Water Street New York 10041 AttentIOn
Call NotIficatIon DepartInent Fax (212) 855 7232 and In accordance WIth then current
gUIdelInes of the Secuntles and Exchange CommIssIon such other addresses and/or such other
secuntIes deposltones as the Authonty may deSIgnate In a CertIficate of the Authonty delIvered
to the Trustee
State means the State of CalIfornIa
Supplemental Indenture means any Indenture agreement or other Instrument hereafter
duly executed by the Authonty and the Trustee In accordance WIth the prOVISIOns of SectIOn 7 0 I
hereof
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Agenda Item No 2
Page 139 of 316
Tax and Nonarbltrage CertIficate means the Tax and Non ArbItrage CertIficate dated
the Closmg Date and executed by the Authonty
Tax RegulatIOns means temporary and permanent regulatIOns promulgated under or
wIth respect to SectIOn 103 and SectIOns 141 through 150 mclusIVe of the Code
Trustee means Umon Bank of CalIfornIa N A and Its successors and assIgns and any
other corporatIon or assocIatIon whIch may at any tIme be substIroted m ItS place as proVIded m
ArtIcle VI hereof
SectIon 1 02 Rules of ConstructIOn All references m thIS IndentI1re to ArtIcles
SectIOns and other subdIvIsIons are to the correspondmg ArtIcles SectIons or subdIvIsIOns of
thIS IndentI1re and the words herem hereof hereunder and other words of SImIlar Import
refer to thIS IndentI1re as a whole and not to any partIcular ArtIcle SectIOn or subdIVISIon hereof
SectIon 1 03 AuthorIzatIon and Purpose of Bonds The Authonty has revIewed all
proceedmgs heretofore taken relatIve to the authonzatlOn of the Bonds and has found as a result
of such revIew and hereby finds and determmes that all thmgs condItIOns and acts reqUIred by
law to eXIst happen and be performed precedent to and m the Issuance of the Bonds do eXIst
have happened and have been performed m due tIme form and manner as reqUIred by law and
the Authonty IS now authonzed under the Bond Law and each and every reqUIrement of law to
Issue the Bonds m the manner and form prOVIded m thIS IndentI1re Accordmgly the Authonty
hereby authonzes the Issuance of the Bonds pursuant to the Bond Law and thIS IndentI1re for the
purpose ofprovldmg funds to pay for Bonds of the DIstrIct
SectIon 1 04 Equal SecurIty In consIderatIOn of the acceptance of the Bonds by the
Owners thereof thIS IndentI1re shall be deemed to be and shall constlrote a contract among the
Authonty the Trustee and the Owners from tIme to tIme of the Bonds and the covenants and
agreements herem set forth to be performed on behalf of the Authonty shall be for the equal and
proportIOnate benefit secunty and protectIOn of all Owners of Bonds wIthout preference pnonty
or dlstmctIon as to secunty or otherwIse of any of the Bonds over any of the others by reason of
the nUlllber or date thereof or the tIme of sale executIOn or delIvery thereof or otherwIse for any
cause whatsoever except as expressly proVIded therem or herem
ARTICLE II
ISSUANCE OF THE BONDS
SectIon 2 01 Terms of the Bonds The Bonds authonzed to be Issued by the AUthonty
under and subject to the Bond Law and the terms of thIS IndentI1re shall be deSIgnated the Lake
Elsmore PublIc Fmancmg Authonty Local Agency Revenue Bonds (Wasson Canyon) 2007
Senes A whIch shall be Issued m the ongmal aggregate pnnclpal amount of $
The pnnclpal of and mterest and premIUm (If any) on the Bonds shall be payable m
lawful money of the Umted States of Amenca
The Bonds shall be Issued m fully regIstered form wIthout coupons m denommatlOns of
$5 000 or any mtegral multIple thereof so long as no Bond shall have more than one matunty
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Agenda Item No 2
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date The Bonds shall be ImtIally regIstered m the name of Cede & Co as nommee of The
DeposItory Trust Company New York New York and shall be eVIdenced by one Bond for each
of the matuntles m the pnnclpal amOlmts set forth below and DTC IS hereby appomted
depOSItory for the Bonds and regIstered ownershIp may not thereafter be transferred except as
set forth m SectIOn 2 05 hereof The Bonds shall be dated as of the Closmg Date shall matIJre m
the followmg amOlmts and shall bear mterest (calculated on the baSIS of a 360 day year of twelve
30 day months) at the follOWIng rates
Bonds
Matunty Date
September I
PnnClpal
Amount
Interest
Rate
Interest on the Bonds shall be payable on each Interest Payment Date to the person whose
name appears on the RegIstratIOn Books as the Owner thereof as of the Record Date nnmedlately
precedmg each such Interest Payment Date such mterest to be pllld by check of the Trustee
maIled by first class mllll postage prepllld on each Interest Payment Date to the Owner at the
address of such Owner as It appears on the RegIstration Books as of the precedmg Record Date
proVIded however that at the wntten request of the Owner of at least $1 000000 In aggregate
pnnclpal amount of Outstandmg Bonds filed WIth the Trustee pnor to any Record Date, mterest
on such Bonds shall be paId to such Owner on each succeedmg Interest Payment Date by WIre
transfer of ImmedIately avaIlable funds to an account m the contmental Umted States deSIgnated
m such wntten request Any such wntten request shall remam m effect until rescmded m wntmg
by the Owner Pnnclpal of and premIUm (If any) on any Bond shall be pllld upon presentation
and surrender thereof at matunty or the pnor redemption thereof at the Corporate Trust Office
of the Trustee The pnnClpal of and mterest and premIUm (If any) on the Bonds shall be payable
m lawful money of the Umted States of Amenca
Each Bond shall bear mterest from the Interest Payment Date next precedmg the date of
authentIcation thereof unless (a) It IS authenticated on or before the Interest Payment Date and
after the close of busmess on the precedmg record date m whIch event It shall bear Interest from
such Interest Payment Date or (b) It IS authenticated on or before February 15 2008 m whIch
event It shall bear mterest from the Closmg Date or (c) mterest WIth respect to any outstandmg
Bond IS m default such Bond shall bear mterest from the Interest Payment Date to whIch mterest
has preVIously pllld m full or made avaIlable for payment thereon payable on each Interest
Payment Date
SectIOn 2 02 RedemptIon of Bonds
(a) OotIonal Redemption The Bonds are subject to redemptIon pnor to
matunty at the optIOn of the Authonty on any date on or after September I 2008 as a whole or
m part on a pro rata basIS and by lot wlthm a matunty from any avaIlable source of funds at the
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Agenda Item No 2
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followmg redemptIOn pnces (expressed as a percentage of the pnnclpal amount of Bonds to be
redeemed) together with accrued mterest thereon to the date fixed for redemptIOn as follows
RedemptIOn Dates
RedemptIOn Pnces
(b) Mandatory Smkmg Payment RedemptIOn The Bonds matunng
September I _ are subject to mandatory redemptIon m part by lot on September I m each year
commencmg September I _ from mandatory smkmg payments made by the Authonty mto
the Pnnclpal Account of the Bond Fund at a redemptIOn pnce equal to the pnnclpal amount
thereof to be redeemed Without premIUm plus accrued mterest thereon to the date ofredemptlOn
m the aggregate pnnclpal amounts and on September 1 m the respectIve years as set forth m the
followmg schedules provided however that (I) m heu of redemptIOn thereof such Bonds may
be purchased by the Authonty and tendered to the Trustee and (11) If some but not all of such
Bonds have been redeemed pursuant to the redemptIOn provIsIOns descnbed m subsectIOns (a)
above or (c) or (d) below the total amount of all future mandatory smkmg payments Will be
reduced by the aggregate pnnclpal amount of such Bonds so redeemed to be allocated among
such mandatory smkmg payments on a pro rata baSIS (as nearly as practIcable) m mtegral
multIples of $5 000 as determmed by the Authonty
Smkmg Fund
RedemptIOn Date
(September 1)
Pnnclpal Amount
to be Redeemed
(c) Special Mandatory RedemptIon From Prepayment of Special Taxes and
from ReSidual Funds The Bonds shall also be subject to mandatory redemptIOn pnor to matunty
on any date on or after March 1 2008 m whole or m part on a pro rata baSIS and by lot wlthm a
matunty from the redemptIOn of Dlstnct Bonds from amounts constItIJtmg prepayments of
SpecJaI Taxes from amounts transferred from the Resldual Fund under the Fiscal Agent
Agreement and from amounts transferred by the Authonty to the D1StnCt from the ReSidual Fund
under the Indenture at the followmg redemptIon pnces (expressed as a percentage of the
pnnclpal amount of Bonds to be redeemed) together With accrued mterest thereon to the
redemptIOn date
RedemptIon Dates
RedemptIon Pnces
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Agenda Item No 2
Page 142 of 316
~I
(d) Mandatorv RedemptIOn The Bonds are subject to mandatory redemptIOn
on any date to which tImely notice of redemptIOn may be given m mtegral multiples of $5 000
equal to the pnnclpal amount ofDlstnct Bonds from unused proceeds of the Dlstnct Bonds after
completIOn or abandonment of the Improvements to be financed with such proceeds from the
depOSit of fees with the Dlstnct by a publIc agency which has accepted facIlItIes servmg an area
of the Dlstnct and from msurance or condemnatIOn proceeds relatmg to the Dlstnct Bonds
without premIUm plus accrued mterest to the redemptIOn date on a pro rata basiS and by lot
wlthm a matunty
(e) NotIce of RedemptIOn The Trustee on behalf and at the expense of the
Authonty shall mail (by first class mail) notIce of any redemptIOn to the respectIve Owners of
any Bonds deSignated for redemptIon at their respectIve addresses appeanng on the RegistratIon
Books to the SecuntIes Deposltones and to one or more informatIon Services at least thirty (30)
but not more than sixty (60) days pnor to the date fixed for redemptIOn Neither failure to
receive any such notIce so mailed nor any defect therem shall affect the valIdity of the
proceedmgs for the redemptIOn of such Bonds or the cessatIOn of the accrual of mterest thereon
Such notIce shall state the date of the notice the redemptIOn date and the redemptIOn pnce and
shall deSignate the CUSIP numbers the Bond numbers (but only If less than all of the
Outstandmg Bonds are to be redeemed) and the matunty of the Bonds to be redeemed and shall
reqUire that such Bonds be then surrendered at the Corporate Trust Office of the Trustee for
redemptIOn at the redemptIon pnce glvmg notIce also that further mterest on such Bonds Will
not accrue from and after the redemptIon date
(f) In additIon to the foregomg notIce further notIce shall be given by the
Trustee m said form by first class mail to any Bond Owner whose Bond has been called for
redemptIon but who has failed to tender Ius Bond for payment by the date which IS sixty days
after the redemptIOn date but no defect m Said further notIce nor any failure to give all or any
portIOn of such further notIce shall m any maIlller defeat the effectIveness of a call for
redemptIon
(g) Upon the payment of the redemptIOn pnce of Bonds bemg redeemed each
check or other transfer of funds Issued for such purpose shall to the extent practIcable bear the
CUSIP number IdentIfymg by Issue and matunty the Bonds bemg redeemed With the proceeds
of such check or other transfer
(h) Partial RedemptIOn of Bonds In the event only a portion of any Bond IS
called for redemptIon then upon surrender of such Bond the Authonty shall execute and the
Trustee shall authentIcate and delIver to the Owner thereof at the expense of the Authonty a
new Bond or Bonds of the same Senes and matunty date of authonzed denommatlOns m
aggregate pnnclpal amount equal to the UlIredeemed portIOn of the Bond to be redeemed
(I) Effect of RedemptIon From and after the date fixed for redemptIOn If
funds aVailable for the payment of the pnnclpal of and mterest (and premlnm 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 nght to receive payment of the
redemptIOn pnce and no mterest shall accrue thereon from and after the redemptIOn date
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Agenda Item No 2
Page 143 of 316
specified m such notIce All Bonds redeemed pursuant to tills SectIOn 2 02 shall be canceled and
destroyed
(J) Purchase m Lieu of RedemptIOn In lIeu of redemptIOn of any Bond
amounts on deposit m the Revenue Fund may also be used and withdrawn by the Trustee at any
tIme upon the Wntten Request of the Authonty for the purchase of such Bonds at publIc or
pnvate sale as and when and at such pnces (mcludmg brokerage and other charges but
excludmg accrued mterest willch IS payable from the Interest Account) as the Authonty may m
ItS discretIOn detemune m accordance with all applIcable laws and m accordance with the
pnonty afforded the relative Bond under the IndenhIre Purchase m lIeu of redemptIOn of any
Senes 2007C Bond reqUIres the approval of the Insurer wherem any 2007C Bond so purchased IS
not extmgUlshed
(k) Authontv NotIce NotwIthstandmg any provlSlons m the IndenhIre to the
contrary upon any optIOnal redemptIon or mandatory redemptIOn from SpeCial Taxes m part the
Authonty shall delIver a Wntten Certificate to the Trustee at least sixty (60) days pnor to the
proposed redemptIOn date or such later date as shall be acceptable to the Trustee so statmg that
the remammg payments of pnnclpal and mterest on the DistrIct Bonds together With other
Revenues Will be suffiCient on a tImely baSIS to pay debt service on the Bonds The Authonty
shall certify m such Wntten Certificate that sufficient moneys for purposes of such redemptIOn
are or Will be on depOSit m the RedemptIon Fund and IS reqUIred to delIver such moneys to the
Trustee together with other Revenues If any then to be delIvered to the Trustee which moneys
are reqUIred to be IdentIfied to the Trustee m the Wntten Certificate delIvered WIth the Revenues
SectIon 2 03 Form of the Bonds The Bonds the form of Trustee s certificate of
authentIcatIOn and the form of assignment to appear thereon shall be substantIally m the form
set forth m Exillblt A and Exhibit B attached hereto and by tills reference mcorporated herem
With necessary or appropnate vanatlOns omiSSIOns and msertlOns as permitted or reqUIred by
thiS Indenture
SectIon 2 04 ExecutIon of Bonds The Bonds shall be signed m the name and on
behalf of the Authonty With the manual or faCSimile signatures of ItS Chairperson or ExecutIve
DIrector and attested with the manual or faCSimile slgnahIre of ItS Secretary or any assistant duly
appoInted by the Board under the pnnted seal of the Authonty and shall be delIvered to the
Trustee for authentIcatIOn by It In case any officer of the Authonty who shall have Signed any
of the Bonds shall cease to be such officer before the Bonds so Signed shall have been
authentIcated or delIvered by the Trustee or Issued by the Authonty such Bonds may
nevertheless be authentIcated delIvered and Issued and upon such authentIcatIon delIvery and
Issue shall be as bmdIng upon the Authonty as though the mdlvldual who Signed the same had
contInued to be such officer of the Authonty Also any Bond may be Signed on behalf of the
Authonty by any mdlvldual who on the actual date of the executIon of such Bond shall be the
proper officer although on the nommal date of such Bond such mdlvldual shall not have been
such officer
Only such of the Bonds as shall bear thereon a certificate of authenticatIon m
substantially the form set forth m Exhibit A and Exhibit B manually executed by the Trustee
shall be valId or oblIgatory for any purpose or entitled to the benefits of thiS IndenhIre and such
600312131
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Agenda Item No 2
Page 144 of 316
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 Indenmre
SectIOn 2 05 Transfer of Bonds Subject to SectIOn 210 any Bond may m
accordance With ItS terms be transferred upon the RegistratIOn Books by the person m whose
name It IS registered m person or by hiS duly authonzed attorney upon surrender of such Bond
for cancellatIon accompanied by delIvery of a wntten mstrunIent oftransfer m a form acceptable
to the Trustee duly executed Whenever any Bond or Bonds shall be surrendered for transfer
the Authonty shall execute and the Trustee shall authentIcate and delIver to the transferee a new
Bond or Bonds of lIke matunty and aggregate pnnclpal amount of authonzed denommatlOns
The Trustee may reqUire payment by the Bondowner requestmg such transfer or exchange of any
tax or other governmental charge reqUired to be paid With respect to such transfer or exchange
The Trustee shall not be reqUired to transfer pursuant to tlus SectIOn either (a) all Bonds dunng
the penod establIshed by the Trustee for the selectIon of Bonds for redemptIon or (b) any Bonds
selected for redemptIOn pursuant to SectIOn 2 02 The cost of pnntmg Bonds and any services
rendered or expenses mcurred by the Trustee m connectIon With any transfer shall be paid by the
Authonty
Section 2 06 Exchange of Bonds The Bonds of any senes may be exchanged at the
Corporate Trust Office of the Trustee for a lIke aggregate pnnclpal amount of Bonds ofthe same
senes of other authonzed denommatIons and of the same mamnty The Trustee shall not be
reqUired to exchange pursuant to thiS SectIOn either (a) all Bonds dunng the penod establIshed
by the Trustee for the selectIon of Bonds for redemptIOn or (b) any Bonds selected for
redemptIOn pursuant to SectIOn 2 02 The cost of pnntmg Bonds and any servIce rendered or
expenses mcurred by the Trustee m connectIon With any exchange shall be paid by the Authonty
SectIOn 2 07 Registration Books The Trustee Will keep or cause to be kept at ItS
Corporate Trust Office suffiCient records for the registratIon and transfer of the Bonds which
shall at all reasonable tImes dunng regular busmess hours be open to mspectlOn by the Authonty
With reasonable pnor notIce and upon presentatIOn for such purpose the Trustee shall under
such reasonable regulatIOns as It may prescnbe register or transfer or cause to be registered or
transferred on SaId records Bonds as herembefore prOVided
Section 2 08 Bonds Mutilated, Lost, Destroyed or Stolen If any Bond shall become
mutIlated the Authonty at the expense of the Owner of said Bond shall execute and the
Trustee shall thereupon authentIcate and delIver a new Bond of lIke senes tenor and authonzed
denommatIon m exchange and substImtlOn for the Bond so mutIlated but only upon surrender to
the Trustee of the Bond so mutIlated Every mutIlated Bond so surrendered to the Trustee shall
be cancelled by It and destroyed If any Bond hereunder shall be lost destroyed or stolen
eVidence of such loss destructIOn or theft may be submitted to the Trustee and the Authonty and
If such eVidence be satIsfactory to the Trustee and the Authonty and mdenmlty for the Trustee
and the Authonty satIsfactory to the Trustee shall be gIVen the Authonty at the expense of the
Bond Owner shall execute and the Trustee shall thereupon authenticate and delIver a new Bond
of lIke Senes and tenor m lIeu of and m substImtlOn for the Bond so lost destroyed or stolen (or
If any such Bond shall have matured or shall have been called for redemptIOn mstead of Issumg
a substItute Bond the Trustee may pay the same Without surrender thereof upon receipt of
mdenmlty satIsfactory to the Trustee) The Authonty may reqUire payment of a fee for prepanng
60031213 I
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Agenda Item No 2
Page 145 of 316
and authentIcatmg each new Bond Issued under thIs SectIOn and of expenses whIch may be
mcurred by the Authonty and the Trustee Any Bond Issued under the provIsIOns of thIs SectIOn
2 08 m lIeu of any Bond alleged to be lost destroyed or stolen shall constIrute an ongmal
contractual oblIgatIon on the part of the Authonty 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 Indenrure WIth all other Bonds secured by thIs
Indenture
Section 2 09 CUSIP Numbers The Trustee and the Authonty shall not be lIable for
any defect or maccuracy m the CUSIP number that appears on any Bond or m any redemptIOn
notIce The Trustee may m ItS dIscretIOn mclude m any redemptIon notIce a statement to the
effect that the CUSIP numbers on the Bonds have been assIgned by an mdependent servIce and
are mcluded m such notIce solely for the convemence of the Owners and that neIther the Trustee
or the Authonty shall be lIable for any maccuracles m such numbers
Section 2 10 Use of SecurIties DepOSItory
(a) The Bonds shall be mltIally regIstered as provIded m SectIOn 201
RegIstered ownershIp of the Bonds or any portIOn thereof may not thereafter be transferred
except
(I) to any successor of Cede & Co as nommee of DTC as ItS
nommee or to any substIrute depOSItory deSIgnated pursuant to clause (11) of thIs SectIOn (a
substItute deposItory) provIded that any successor of Cede & Co as nommee of DTC or a
substItute depOSItory shall be qualIfied under any applIcable laws to provIde the servIces
proposed to be provIded by It
(11) to any substIrute depOSItory upon (I) the resIgnatIOn of DTC or ItS
successor (or any substIrute depOSItory or ItS successor) from ItS functIOns as depOSItory or (2) a
determmatlOn by the Authonty to substIrute another depOSItory for DTC (or ItS successor)
because DTC or ItS successor (or any substItute depOSItory or ItS successor) IS no longer able to
carry out ItS functIOns as depOSItory provIded that any such substIrute depOSItory shall be
qualIfied under any applIcable laws to proVIde the servIces proposed to be provIded by It or
(m) to any person as provIded below upon (1) the resIgnatIOn of DTC
or ItS successor (or substItute depOSItory or ItS successor from ItS functIOns as depOSItory or (2) a
detenmnatlOn by the Authonty to remove DTC or ItS successor (or any substItute depOSItory or
ItS successor) from ItS functIons as depOSItory
(b) In the case of any transfer pursuant to clause (I) or clause (11) of subsectIOn
(a) hereof upon receIpt of the Outstandmg Bonds by the Trustee together WIth a Request of the
Authonty to the Trustee a new Bond for each marunty shall be authentIcated and delIvered m
the aggregate pnnclpal amount of the Bonds then Outstandmg regIstered m the name of such
successor or such substIrute depOSItory or theIr nommees as the case may be all as specIfied m
such Request of the Authonty
(c) In the case of any transfer pursuant to clause (m) of subsectIOn (a) hereof
upon receIpt of the Outstandmg Bonds by the Trustee together WIth a Wntten Request of the
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Agenda Item No 2
Page 146 of 316
Authonty to the Trustee new Bonds shall be authenticated and delivered m such denommatlOns
numbered m the manner determmed by the Trustee and registered In the names of such persons
as are requested m such a Wntten Request of the Authonty subject to the limitatIOns of SectIOn
201 hereof provided the Trustee shall not be reqUired to deliver such new Bonds wlthm a
penod less than sixty (60) days from the date of receipt of such a Wntten Request of the
Authonty After any transfer pursuant to thiS subsectIOn the Bonds shall be transferred pursuant
to SectIOn 2 05
(d) The authonty and the Trustee shall be entitled to treat the person m whose
name any Bond IS registered as the Owner thereof for all purposes of the Indenture and any
applicable laws notwIthstandIng any notice to the contrary received by the Trustee or the
Authonty and the Authonty and the Trustee shall have no responsibility for transmlttmg
payments to commumcatlOn With notIfYIng or otherwise dealmg with any beneficial owners of
the Bonds and neither the Authonty nor the Trustee will have any responSibility or obligatIOns
legal or otherwise to the benefiCial owners or to any other party Includmg DTC or ItS successor
(or substitute depOSitory or ItS successor) except for the Owner of any Bonds
(e) So long as the OutstandIng Bonds are registered In the name of Cede &
Co or ItS registered assigns the Authonty and the Trustee shall cooperate With Cede & Co as
sole registered Owner or ItS registered assigns m effectIng payment of the pnnclpal of and
Interest on the Bonds by arrangmg for payment m such manner that funds for such payments are
properly Identified and are made Immediately available on the date they are due
\ I
I
(f) Notwlthstandmg anythmg to the contrary contamed hereIn so long as the
Bonds are registered as proVided m thiS SectIOn 2 10 payment of pnnclpal of and mterest on the
Bonds shall be made m accordance with the Letter of Representations delivered to DTC With
respect to the Bonds
SectIOn 2 11 Temporary Bonds The Bonds may be Imtlally delivered m temporary
form exchangeable for defimtlve Bonds when ready for delivery which temporary Bonds shall
be pnnted lithographed or typewntten shall be of such denommatlOns as may be determIned by
the Trustee shall be In fully registered form and shall contam such reference to any of the
prOVISIOns hereof as may be appropnate Every temporary Bond shall be authenticated and
delivered by the Trustee upon the same conditIOns and terms and m substantially the same
manner as defimtlve Bonds If the Trustee authenticates and delivers temporary Bonds It Will
register and authenticate defimtlve Bonds and In that case upon demand of the Owner of any
temporary Bonds such defimtlve Bonds shall be exchanged by the Trustee at Its Corporate Trust
Office without cost to such Owner for temporary Bonds upon surrender of such temporary
Bonds and UlltIl so exchanged such temporary Bonds shall be entItled to the same benefit
protectIOn and secunty hereunder as the defimtlve Bonds executed and delivered hereUllder All
temporary Bonds surrendered pursuant to the proVISIOns of this SectIOn shall be canceled by the
Trustee and shall not be redelIvered
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Agenda Item No 2
Page 147 of 316
ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF BONDS
SectIon 3 01 Issuance of Bonds Upon the executIon and delivery of thiS Indenture
the Authonty shall execute and deliver the Bonds m the aggregate pnnclpal amount of
Dollars ($ ) to the Trustee for authentIcatIOn and delivery to the
ongmal purchaser thereof upon the Wntten Request of the Authonty
SectIon 3 02 ApplicatIon of Proceeds of Sale of Bonds and Other Amounts Upon
the receipt of payment for the Bonds on the Closmg Date the Trustee shall apply the proceeds of
sale thereof m the amount of $ (bemg the pnnclpal amount of $ plus a net
ongmallssue premIUm of $ less an underwnter s discount of $ as
follows
(a) The Trustee shall deposit the amount of $ m the Bond
Purchase Fund which amount constitutes the purchase pnce of the Dlstnct Bonds
(b)
The Trustee shall deposit the amount of $
m the Reserve
Account
(c)
Issuance Fund
The Trustee shall deposit the amount of $
m the Costs of
SectIon 3 03 Bond Purchase Fund The Trustee shall establish and mamtam a
separate fund to be known as the Bond Purchase Fund mto which shall be deposited a portIon
of the proceeds of the sale of the Bonds m the amount set forth m SectIOn 3 02(a) The Trustee
shall disburse all amounts m the Bond Purchase Fund on the Closmg Date to purchase the
Dlstnct Bonds The Trustee shall transfer the funds m the Bond Purchase Fund upon receipt
thereof to the Fiscal Agent for depOSit pursuant to the Fiscal Agent Agreement Followmg the
disbursement of all amounts to purchase the Dlstnct Bonds the Trustee shall close the Bond
Purchase Fund
SectIOn 3 04 Costs of Issuance Fund There IS hereby established a fund to be held by
the Trustee known as the Costs of Issuance Fund mto wluch shall be depOSited a portIOn of the
Bond proceeds as set forth m SectIon 3 02(c) The moneys m the Costs of Issuance Fund shall
be used to pay Costs of Issuance from tIme to tIme upon receipt of a Wntten Request of the
Authonty On the date wluch IS one hundred twenty (120) days followmg the Closmg Date or
upon the earlier receipt by the Trustee of a Wntten Request of the Authonty statmg that all Costs
of Issuance have been paid the Trustee shall transfer all remammg amounts m the Costs of
Issuance Fund to the Revenue Fund The Authonty may at any tIme file a Wntten Request of
the Authonty requestmg that the Trustee retam a speCified amount m the Costs of Issuance Fund
and transfer to the Revenue Fund all remammg amounts and the Trustee shall comply With such
request
SectIOn 3 OS ValidIty of Bonds The validity of the authonzatlOn and Issuance of the
Bonds shall not be affected m any way of any proceedmgs taken by the Dlstnct With respect to
the applicatIOn of the proceeds of the sale of the Dlstnct Bonds and the recital contamed m the
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18
Agenda Item No 2
I
Page 1480f316
Bonds that the same are Issued pursuant to the Bond Law shall be conclusive eVidence of their
validity and of the regulanty of their Issuance
ARTICLE IV
REVENUES, FLOW OF FUNDS
Section 4 01 Pledge of Revenues, Assignment of Rights The Bonds shall be secured
by a first lien on and pledge (wluch shall be effected m the manner and to the extent heremafter
provided) of all of the Revenues and Redemption Revenues and a first pledge of all of the
moneys m the Bond Fund the Revenue Fund the Redemption Fund and the Cash Flow
Management Fund mcludmg all amounts denved from the mvestInent of such moneys The
Bonds shall be equally secured by a pledge charge and first lien upon the Revenues and
RedemptIOn Revenues and such moneys WithOUt pnonty for number date of Bonds date of
execution or date of delivery and the payment of the mterest on and pnnclpal of the Bonds and
any premIUms upon the redemptIOn of any thereof shall be and are secured by an exclusive
pledge charge and first lien upon the Revenues and RedemptIOn Revenues and such moneys
So long as any of the Bonds are Outstandmg the Revenues and RedemptIOn Revenues
and such other money shall not be used for any other purpose except as descnbed hereunder for
the payment of the Bonds except that out of the Revenues and RedemptIOn Revenues there may
be apportioned such sums for such purposes as are expressly permitted by SectIOn 402 and
Section 4 05 respectively
The Authonty hereby transfers m trust and asSignS to the Trustee for the benefit of the
Owners from time to time of the Bonds all of the Revenues and all of the nght title and mterest
of the Authonty (but not the obligatIOns) m the Dlstnct Bonds (other than the nghts of the
Authonty under Sections 1001 and 1008 hereof and any nghts of the Authonty m the Rebate
Account or to notices or consent herem) The Trustee shall be entitled to and shall receive all of
the Revenues and any Revenues collected or received by the Authonty shall be deemed to be
held and to have been collected or received by the Authonty as the agent of the Trustee and
shall forthwith be paid by the Authonty to the Trustee The assignment to the Trustee IS solely
m ItS capacity as Trustee under thiS IndentIire and m acceptmg such assignment and taking any
actIOns With respect to the Dlstnct Bonds the Trustee shall be entitled to all the mdemmtIes
protectIOns ImmunIties and limitatIOns from liability afforded It as Trustee under thiS Indenture
The Trustee also shall be entitled to and subject to the provIsIOns hereof shall take all steps
actIOns and proceedmgs reasonably necessary m ItS Judgment to enforce either Jomtly with the
Authonty or separately all of the nghts of the Authonty and all of the obligations of the Dlstnct
under the Dlstnct Bonds
SectIon 4 02 Receipt, DepOSIt and ApphcatIons of Revenues
(a) DepOSit of Revenues. Revenue Fund All Revenues (excludmg
Redemption Revenues) shall be promptly deposited by the Trustee upon receipt thereof m a
special fund deSignated as the Revenue Fund wluch the Trustee shall establish mamtam and
hold m trust hereunder
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Agenda Item No 2
Page 149 of 316 I
(b) Deposit of Revenues. Bond Fund The Trustee shall establish mamtam
and hold m trust a fund entitled Bond Fund Wlthm such fund the Trustee shall establish
mamtam and hold m trust separate special accounts entitled Interest Account and Pnnclpal
Account and the Reserve Account) On or before each Interest Payment Date the Trustee
shall transfer from the Revenue Fund for depOSit mto the Bond Fund the followmg amounts m
the pnonty set forth m Subsection (c) below
(c) ApplicatIOn of Revenues. Bond Fund On or before each Interest Payment
Date the Trustee shall transfer from the Revenue Fund and depOSit mto the Bond Fund and the
followmg respective special accounts therem the followmg amounts m the followmg order of
pnonty the reqUirements of each such special account (mcludmg the makmg up of any
defiCienCies m any such account resultmg 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 m pnonty
(I) Interest Account On or before each Interest Payment Date the
Trustee shall depOSit m the Interest Account an amount reqUired to cause the aggregate amount
on depOSit m the Interest Account to equal the amount of mterest becommg due and payable on
such Interest Payment Date on all Outstandmg Bonds No depOSit need be made mto the Interest
Account If the amount contamed therem IS at least equal to the mterest becommg due and
payable upon all Outstandmg Bonds on such Interest Payment Date All moneys m the Interest
Account shall be used and Withdrawn by the Trustee solely for the purpose of paymg the mterest
on the Bonds as It shall become due and payable (mcludmg accrued mterest on any Bonds
redeemed pnor to matlmty)
(11) Prmclpal Account On or before each date on wluch the pnnclpal
of the Bonds shall be payable the Trustee shall depOSit m the Pnnclpal Account an amount
reqUired to cause the aggregate amount on depOSit m the Pnnclpal Account to equal the
aggregate amount of pnnclpal (mcludmg smkmg fund payments) commg due and payable on
such date on the Bonds pursuant to SectIOn 2 01 All moneys m the Pnnclpal Account shall be
used and Withdrawn by the Trustee solely for the purpose of paymg the pnnclpal of the Bonds
(mcludmg smkmg fund payments)
(m) Reserve Account All amounts on depOSit m the Revenue Fund on
or before each Interest Payment Date to the extent not reqUired to pay any mterest on or
pnnclpal of any Outstandmg Bonds then havmg come due and payable shall be credited to the
replemshment of the Reserve Account m an amount suffiCient to mamtam the Reserve
ReqUirement therem
The Authonty shall depOSit from the repayment of the Dlstnct Bonds and to the extent
necessary and to the extent permitted by law from available surplus revenues With respect to
other senes of bonds Issued by the Authonty relatmg to community faCilities dlstncts and
mamtam an amount of money equal to the Reserve ReqUirement m the Reserve Account at all
times while the Bonds are Outstandmg Amounts m the Reserve Account Will be used to pay
debt service on the Bonds to the extent other moneys (mcludmg amounts m the Cash Flow
Management Fund) are not available therefor Earmngs on amounts m the Reserve Account m
excess of the Reserve ReqUirement shall be deposited mto the Revenue Fund If and to the extent
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Agenda Item No 2
Page 150 of 316
such earnmgs are not reqUIred to be retamed m the Reserve Account to meet the Reserve
Requlfement Upon redemptIOn of the Bonds amounts on deposIt m the Reserve Account shall
be reduced (to an amount not less than the Reserve ReqUIrement) and the excess moneys shall be
transferred to the RedemptIon Account and used for the redemptIOn of the Bonds Amounts m
the Reserve Account may be used to pay the final year s debt servIce on the Bonds
(IV) Surplus All remammg amounts on September 2 (or the next
Busmess Day to the extent September 2 IS not a Busmess Day) of each year commencmg
September 2 2008 on depOSIt m the Revenue Fund shall be transferred to the ResIdual Fund
(V) Rebate Account The Trustee shall depOSIt m the Rebate Account
from tIme to tIme as set forth m thIS Indenture an amount determmed by the Authonty to be
subject to rebate to the Umted States of Amenca m accordance wIth SectIon 5 07(h) Amounts
m the Rebate Account shall be applied and dIsbursed by the Trustee solely for the purposes and
at the tImes set forth m wntten requests of the Authonty filed wIth the Trustee pursuant to
SectIon 5 07(h) The Trustee shall not be responsIble for calculatmg rebate amounts or for the
adequacy or correctness of any rebate report or rebate calculatIOns The Trustee shall be deemed
conclUSIVely to have complied WIth the proVISIOnS of the Indenture and any other agreement
relatmg to the Bonds regardmg calculatIOn and payment of rebate If It follows the dIrectIOns of
the Authonty and It shall have no mdependent duty to reVIew such calculatIOns or enforce the
compliance WIth such rebate reqUIrements by the Authonty
SectIOn 4 03 Cash Flow Management Fund
(a) Establishment of Cash Flow Management Fund There IS hereby
established as a separate fund to be held by the Trustee the Cash Flow Management Fund to
the credIt of whIch a depOSIt shall be made as reqUIred by SectIOn 405 hereof or such other
legally avallable funds depOSIted by the Authonty from surplus revenues of another senes of
local agency revenue bonds Issued by the Authonty Moneys m the Cash Flow Management
Fund shall be held m trust by the Trustee for the benefit of the Owners of the Bonds and shall be
dIsbursed as prOVIded below
(b) DIsbursement Moneys m the Cash Flow Management Fund shall be used
(pnor to any draw on the Reserve Account) solely for the purpose of paYIng the pnncIpal of
mcludmg smkmg fund payments and mterest on any Bonds when due m the event that the
moneys m the Interest Account or the PnncIpal Account are msufficIent therefor If the amounts
m the Interest Account or the PnnCIpal Account are msufficIent to pay the pnncIpal of mcludmg
smkmg fund payments or mterest on any Bonds when due the Trustee shall WIthdraw from the
Cash Flow Management Fund for depOSIt m the Interest Account or the PnncIpal Account
moneys necessary for such purposes
In connectIon WIth any redemptIon of the Bonds or a partial defeasance of the Bonds m
accordance WIth SectIOn 2 02 hereof amounts m the Cash Flow Management Fund may be
applied to such redemptIOn or partIal defeasance so long as the amount on depOSIt m the Cash
Flow Management Fund followmg such redemptIon or partIal defeasance equals the Cash Flow
Management Fund ReqUIrement To the extent that the Cash Flow Management Fund IS at the
Cash Flow Management Fund ReqUIrement as of the first day of the final Bond Year for the
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Agenda Item No 2
Page 151 of316
Bonds amounts m the Cash Flow Management Fund may be applied to pay the pnnclpal of and
mterest due on the Bonds m the final Bond Year for such Issue Moneys m the Cash Flow
Management Fund m excess of the Cash Flow Management Fund ReqUirement not transferred m
accordance With the precedmg provlSJons of this paragraph shall be withdrawn from the Cash
Flow Management Fund on September 2 of each year and transferred to the Residual Fund
SectIOn 4 04 RedemptIOn Fund There IS hereby established as a separate fund to be
held by the Trustee the RedemptIOn Fund to the credit of which the Authonty shall deposit
Immediately upon receipt all RedemptIOn Revenues Moneys m the Redemption Fund shall be
held m trust by the Trustee for the benefit of the Authonty and the Owners of the Bonds and
shall be used and Withdrawn by the Trustee to redeem Bonds pursuant to SectIOns 202(a)
2 02(c) and 2 02(d) hereof on the applicable date thereof
Section 4 05 ReSidual Fund
(a) Establishment of Residual Fund There IS hereby established as a separate
fund to be held by the Trustee the ReSidual Fund to the credit of which a deposit shall be
made as reqUired by Section 402(d)(lv) and SectIOn 4 03(b) hereof Moneys m the ReSidual
Fund shall be held m trust by the Trustee for the benefit of the Authonty and shall be disbursed
as provided below The amounts m the ReSidual Fund are not pledged to the repayment of the
Bonds
(b) Disbursement On September 2 of each year commencmg September 2
2008 the Trustee shall transfer any amounts m the ReSidual Fund for the followmg purposes m
the followmg order ofpnonty
(I) to the Cash Flow Management Fund an amount Ifany reqUired to
restore the amount on deposit m the Cash Flow Management Fund to the Cash Flow
Management Fund ReqUirement
(n) at the wntten dIrectIOn of the Authonty to the trustee With respect
to any other senes of local agency revenue bonds Issued by the Authonty related to community
faCilities dlstncts an amount reqUired to replemsh any reserve account to ItS reserve reqUirement
With respect to such senes of bonds to the extent penmtted by law
(lll) at the wntten election of the Authonty and to the extent permitted
by law to the trustee With respect to any other senes of local agency revenue bonds Issued by the
Authonty related to community faCilities districts an amount requIred to replemsh any cash
flow management fund to ItS cash flow management fund reqUirement WIth respect to such senes
of bonds
(IV) to the Fiscal Agent or any other fiscal agent With respect to any
Panty Dlstnct Bonds for deposit m the Special Mandatory RedemptIOn Account of the
RedemptIOn Fund or an eqUivalent account for redemption of the District Bonds or such Panty
District Bonds (m proportIOn to the outstandmg pnnclpal amount With respect to the District
Bonds and any Panty Dlstnct Bonds or such other allocatIOn determmed by the Authonty) unless
the Trustee has received wntten directIOn from the Authonty and to the extent permitted by law
to expend such remammg funds held m the ReSidual Fund for any lawful purposes of the
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Agenda Item No 2
Page 152 of 316
Authonty mcludmg but not lllmted to paymg or relmbursmg the payment of the costs and
expenses mcurred by the City or the Authonty m admmlstenng the Bonds and the Dlstnct
Bonds paymg costs of public capital Improvements or reducmg the SpeCial Taxes (m proportIOn
to the outstandmg pnnclpal amount with respect to the Dlstnct Bonds and any Panty Dlstnct
Bonds or such other allocatIOn as determmed by the Authonty) winch are to be levied m the
current or the succeedmg Fiscal Year upon the properties which are subject to the Special Taxes
wlthm the Dlstnct
SectIOn 4 06 Investments All moneys m any of the funds or accounts established with
the Trustee pursuant to thiS Indenture shall be mvested by the Trustee solely m Permitted
Investments pursuant to the Wntten Request of the Authonty gIven to the Trustee at least two (2)
Busmess Days m advance of the makmg of such mvestments Each such wntten direction shall
contam the representation of the Authonty that the mvestments Identified therem constitute
Permitted Investments hereunder upon winch the Trustee may conclusively rely In the absence
of any such directIOn from the Authonty the Trustee shall mvest any such moneys m clause (d)
of the defimtlOn of Permitted Investments Obligations purchased as an mvestment of moneys m
any funds shall be deemed to be part of such fund or account
All mterest or gam denved from the mvestment of amounts m any of the funds or
accounts established hereunder shall be deposited m the fund or account from winch such
mvestment was made For purposes of acqumng any mvestments hereunder the Trustee may
commmgle funds held by It hereunder upon the Wntten Request of the Authonty The Trustee
or ItS affiliate may (but shall not be obligated to) act as pnnclpal or agent m the acqUisItion or
dispOSItion of any mvestment and shall be entitled to ItS customary fees therefor The Trustee IS
reqUired to sell or present for redemptIOn any Permitted Investment It purchases whenever It
shall be necessary to proVide momes to meet any reqUired payment transfer withdrawal or
disbursement from the fund to which such permitted mvestment IS created The Trustee shall
mcur no liability for losses ansmg from any mvestments made pursuant to tins Section
The Authonty acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the Authonty the nght to receive brokerage
confirmations of secunty transactIOns as they occur the Authonty speCifically waives receipt of
such confirmatIOns to the extent permitted by law The Trustee will furmsh to the Authonty
penodlC cash transactIOn statements which mclude detail for all mvestment transactions made by
the Trustee hereunder
The Trustee may purchase or sell to Itself or any affiliate as pnnclpal or agent
mvestments authonzed by thiS SectIOn The Trustee may act as purchaser or agent m the makIng
or dlsposlllg of any Investment Such Investments If regIstered shall be regIstered III the name
ofthe Trustee for the benefit of the Owners and held by the Trustee
The Trustee or any of ItS affiliates may act as sponsor adVisor or manager or proVide
admmlstratlve services In connection With any Permitted Investments
Investment of funds IS also subject to the provIsions of the Tax and Nonarbltrage
Certificate
600312131
23
Agenda Item No 2
Page 1530f316
SectIon 4 07 ValnatIon and DIsposItIon of Investments Except as otherwIse
provIded m the next sentence all mvestments of amounts deposIted m any fund or account
created by or pursuant to thIS Agreement or otherwIse contammg gross proceeds of the Bonds
(wlthm the meanmg of sectIOn 148 of the Code) shall be acqUIred dIsposed of and valued (as of
the date that valuatIOn IS reqUIred by tlus Agreement or the Code) at FaIr Market Value
Investments m funds or accounts (or portIOns thereof) that are subject to a yteld restrIctIOn under
the applIcable provlSlons of the Code shall be valued at theIr present value (wlthm the meanmg
of sectIon 148 of the Code)
ARTICLE V
COVENANTS OF THE AUTHORITY
SectIon 5 01 Punctual Payment The Authonty shall punctIIally payor cause to be
paId the pnnclpal mterest and premIUm (If any) to become due m respect of all the Bonds m
stnct conformIty WIth the terms of the Bonds and of thIS IndentIrre accordmg to the true mtent
and meanmg thereof but only out of Revenues and other assets pledged for such payment as
proVIded m thIS Indenture
SectIon 5 02 ExtenSIOn of Payment of Bonds The Authonty shall not dIrectly or
mdlrectly extend or assent to the extensIOn of the matIInty of any of the Bonds or the tIme of
payment of any claIms for mterest by the purchase of such Bonds or by any other arrangement
and m case the matunty of any of the Bonds or the tIme of payment of any such claIms for
mterest shall be extended such Bonds or chums for mterest shall not be entItled m case of any
default hereunder to the benefits of thIS Indenture except subject to the pnor payment m full of
the pnnclpal of all of the Bonds then Outstandmg and of all claIms for mterest thereon wluch
shall not have been so extended Nothmg m thIS SectIon shall be deemed to lImIt the nght of the
Authonty to Issue Bonds for the purpose ofrefundmg any Outstandmg Bonds and such Issuance
shall not be deemed to constItute an extensIOn ofmatunty ofthe Bonds
SectIon 5 03 Agamst Encumbrances The Authonty shall not create or permIt the
creatIOn of any pledge lIen charge or other encU1llbrance upon the Revenues and other assets
pledged or aSSIgned under thIS IndentIrre whIle any of the Bonds are Outstandmg except the
pledge and assIgnment created by t1us Indenture Subject to thIS lImItatIon the Authonty
expressly reserves the nght to enter mto one or more other mdentures for any of ItS corporate
purposes mcludmg but not lImIted to the purchase of Panty DIstrIct Bonds and other programs
under the Bond Law and reserves the nght to Issue other oblIgatIons for such purposes
SectIOn 5 04 Power to Issue Bonds and Make Pledge and ASSIgnment The
Authonty IS duly authonzed pursuant to law to Issue the Bonds and to enter mto t1us IndentIIre
and to pledge and asSIgn the Revenues the DIstrIct Bonds and other assets purported to be
pledged and aSSIgned respectIvely under thIS Indenture m the manner and to the extent prOVIded
m thIS Indenture The Bonds and the provIsIons of thIS IndentIrre are and WIll be the legal valId
and bmdmg speCIal oblIgatIOns of the Authonty m accordance WIth then terms and pnonty of
payment and the Authonty and the Trustee subject to the prOVISIOns of thIS IndentIrre shall at
all tImes to the extent permItted by law defend preserve and protect saId pledge and assIgnment
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Agenda Item No 2
Page 154 of 316
of Revenues and other assets and all the nghts of the Bond Owners under tins Indenture agamst
all claims and demands of all persons whomsoever
SectIOn 5 OS Accountmg Records and Fmanclal Statements The Trustee shall at all
times keep or cause to be kept proper books of record and account prepared m accordance with
mdustry standards m which complete and accurate entnes shall be made of all transactIOns made
by the Trustee relatmg to the proceeds of Bonds the Revenues and all funds and accounts
established by the Trustee pursuant to tins Indenture Such books of record and account shall be
available for mspectlOn by the Authonty dunng regular busmess hours With reasonable pnor
notice
Not later than 45 days followmg each Interest Payment Date the Trustee shall prepare
and file With the Authonty a report settmg forth (I) amounts withdrawn from and deposited mto
each fund and account mamtamed by the Trustee under the IndentJire (11) the balance on deposit
m each fund and account as of the date for winch such report IS prepared and (111) a bnef
descnptlOn of all obligations held as mvestments m each fund and account Copies of such
reports may be mmled to any owner of at least 50% aggregate pnnclpal amount of Bonds
Outstandmg upon the owner s wntten request at a cost not to exceed the Trustee s actual costs
of duplicatIOn and mmlmg Smd reports may be m the form of the Trustee s regular semiannual
statements
Section 5 06 No AddItIOnal Panty Debt Except for the Bonds or bonds Issued for
the purpose of refundmg the Bonds the Authonty covenants that no additIOnal bonds notes or
other mdebtedness shall be Issued or mcurred which are payable out of the Revenues m whole or
m part
Section 5 07 Tax Covenants Relatmg to Bonds
(a) SpeCial DefimtlOns When used m tins SectIOn the followmg terms have
the followmg meanmgs
(I) Bonds means unless otherwise qualified the Bonds
(11) Code means the Internal Revenue Code of 1986 as amended
(111) ComputatIOn Date has the meamng set forth III sectIOn I 148
l(b) of the Tax Regulations
(IV) Gross Proceeds means any proceeds as defined m sectIOn 1 148
I(b) of the Tax RegulatIOns (refemng to sales Illvestment and transferred proceeds) and any
replacement proceeds as defined m sectIOn I 148 I(c) of the Tax RegulatIOns of the Bonds
(v) Investment has the meamng set forth m section I 148 l(b) ofthe
Tax RegulatIOns
(VI) 'Nonpurpose Investment means any mvestment property as
defined m sectIOn 148(b) of the Code m which Gross Proceeds of the Bonds are mvested and
that IS not acqUired to carry out the governmental purposes of that senes of Bonds
600J121J I
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Agenda Item No 2
Page 155 of 316
(vu)
of the Tax RegulatIOns
Rebate Amount has the meamng set forth m sectIOn 1 148 1(b)
(vm) Tax RegulatIOns means the Umted States Treasury RegulatIOns
promulgated pursuant to sectIons 103 and 141 through 150 of the Code or sectIOn 103 of the
1954 Code as applicable
(IX) Yield of any InvestJnent has the meanmg set forth m sectIOn
I 148 5 of the Tax RegulatIons and of any Issue of governmental obligatIons has the meanmg
set forth m sectIon 1 148 4 of the Tax RegulatIOns
(b) Not to Cause Interest to Become Taxable The Authonty covenants that It
shall not use and shall not permit the use of and shall not omit to use Gross Proceeds or any
other amounts (or any property the acqulSltIon constructIOn or Improvement of which IS to be
financed directly or mdIrectly with Gross Proceeds) m a manner that If made or omitted
respectIvely could cause the mterest on any Bond to faIl to be excluded pursuant to SectIOn
103(a) of the Code from the gross mcome of the owner thereof for federal mcome tax purposes
Without limltmg the generality of the foregomg unless and untIl the Trustee receives a wntten
opmlOn of Bond Counsel to the effect that fll1lure to comply With such covenant wIll not
adversely affect such exclUSIOn of the mterest on any Bond from the gross mcome of the owner
thereof for federal mcome tax purposes the Authonty shall comply with each of the specific
covenants m thiS SectIOn
(c) Pnvate Use and Pnvate Pavrnents Except as would not cause any Bond
to become a pnvate actIvity bond wlthm the meanmg of sectIOn 141 of the Code and the Tax
RegulatIons the Authonty shall take all actIons necessary to assure that the DistrIct or City or
other public agency at all tImes pnor to the final cancellatIon of the last of the Bonds to be
retIred
(I) exclUSively owns operates and possesses all property the
acqUIsItIon constructIOn or Improvement of which IS to be financed or refinanced directly or
mdlrectly With Gross Proceeds of the Bonds and not use or permit the use of such Gross
Proceeds (mcludmg through any contractJJal arrangement With terms different than those
applicable to the general public) or any property acqUIred constructed or Improved With such
Gross Proceeds m any actIvity carned on by any person or entIty (mcludmg the Umted States or
any agency department and mstrumentality thereof) other than a state or local government
unless such use IS solely as a member ofthe general publIc and
(u) does not dIrectly or mdlrectly Impose or accept any charge or other
payment by any person or entIty (other than a state or local government) who IS treated as usmg
any Gross Proceeds of the Bonds or any property the acqUIsItIon constructIOn or Improvement of
whICh IS to be financed or refinanced directly or mdlrectly With such Gross Proceeds
(d) No Pnvate Loan Except as would not cause any Bond to become a
pnvate actIvity bond wlthm the meanmg of sectIOn 141 of the Code and the Tax RegulatIOns
and rulIngs thereunder the Authonty shall not use or permit the use of Gross Proceeds of the
Bonds to make or finance loans to any person or entity other than a state or local government
600312131
26
Agenda Item No 2
Page 156 of 316
For purposes of the foregomg covenant such Gross Proceeds are consIdered to be loaned to a
person or entIty If (I) property acqUIred constructed or Improved wIth such Gross Proceeds IS
sold or leased to such person or entIty m a transactIOn that creates a debt for federal mcome tax
purposes (n) capacIty m or servIce from such property IS commItted to such person or entIty
under a take or pay output or sImIlar contract or arrangement or (m) mdlrect benefits of such
Gross Proceeds or burdens and benefits of ownershIp of any property acqUIred constructed or
Improved WIth such Gross Proceeds are otherwIse transferred m a transactIOn that IS the
economIc eqUIvalent of a loan
(e) Not to Invest at Humer YIeld Except as would not cause the Bonds to
become arbItrage bonds Wlthm the meanmg of sectIOn 148 of the Code and the Tax
RegulatIons and rulIngs thereunder the Authonty shall not (and shall not perrmt any person to)
at any tIme pnor to the final cancellatIon of the last Bond to be retIred dIrectly or mdlrectly
mvest Gross Proceeds m any InvestInent If as a result of such mvestInent the YIeld of any
Investment acqUIred WIth Gross Proceeds whether then held or prevIOusly dIsposed of would
matenally exceed the YIeld ofthe Bonds wlthm the meanmg of saId sectIOn 148
(f) Not Federallv Guaranteed Except to the extent permItted by sectIon
149(b) of the Code and the Tax RegulatIOns and rulIngs thereunder the Authonty shall not take
or omIt to take (and shall not permIt any person to take or omIt to take) any actIon that would
cause any Bond to be federally guaranteed wltlun the meamng of sectIOn 149(b) of the Code
and the Tax RegulatIOns and rulmgs thereunder
(g) InformatIon Report The Authonty shall tImely file any mformatlOn
reqUIred by sectIon 149(e) of the Code WIth respect to Bonds WIth the Secretary of the Treasury
on Form 8038 G or such other form and m such place as the Secretary may prescnbe
(h) Rebate of ArbItrage Profits Except to the extent otherwIse provIded m
sectIon 148(f) of the Code and the Tax RegulatIons
(I) The Authonty shall account for all Gross Proceeds (mcludmg all
receIpts expendItures and mvestInents thereof) on Its books of account separately and apart from
all other funds (and receIpts expendItures and mvestInents thereof) and shall retam all records of
accountmg for at least SIX years after the day on whIch the last Bond IS dIscharged However to
the extent permItted by law the Authonty may commmgle Gross Proceeds of Bonds WIth ItS
other momes prOVIded that It separately accounts for each receIpt and expendllIIre of Gross
Proceeds and the oblIgatIons acqUIred therewIth
(u) Not less frequently than each ComputatIOn Date the Authonty
shall calculate the Rebate Amount m accordance WIth rules set forth m sectIOn 148(f) of the
Code and the Tax RegulatIons and rulmgs thereunder The Authonty shall mamtam a copy of
the calculatIOn WIth Its officIal transcnpt of proceedmgs relatmg to the Issuance of the Bonds
untIl SIX years after the final ComputatIon Date
(m) In order to assure the excludabIlIty pursuant to sectIOn 103(a) of
the Code of the mterest on the Bonds from the gross mcome of the owners thereof for federal
mcome tax purposes the Authonty shall pay to the Umted States the amount that when added to
60031213 1
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Agenda Item No 2
Page 157 of 316
the future value of prevIOus rebate payments made for the Bonds equals (I) In the case of the
FInal ComputalIon Date as defined In sectIOn I 148 3(e)(2) of the Tax RegulatIOns one hundred
percent (100%) of the Rebate Amount on such date and (n) In the case of any other
ComputalIon Date mnety percent (90%) of the Rebate Amount on such date Upon the Wntten
Request of the Authonty the Trustee shall pay over to the Authonty amounts In the Rebate
Account for such purpose In all cases such rebate payments shall be made by the Authonty at
the tImes and m the amounts as are or may be reqUIred by sectIOn 148(f) of the Code and the Tax
RegulatIOns and rulIngs thereunder and shall be accompamed by Form 8038 T or such other
forms and mformalIon as IS or may be reqUIred by sectIOn 148(f) of the Code and the Tax
RegulatIOns and rulIngs thereunder for executIOn and filmg by the Authonty
(I) Not to DIvert ArbItrage Profits Except to the extent permItted by sectIOn
148 of the Code and the Tax RegulatIOns and rulmgs thereunder the Authonty shall not and
shall not permIt any person to at any tIme pnor to the final cancellalIon of the last of the Bonds
to be relIred enter Into any transaclIon that reduces the amount reqUIred to be paId to the Umted
States pursuant to paragraph (h) of thIs SectIOn because such transaclIon results m a smaller
profit or a larger loss than would have resulted If the transactIOn had been at arm s length and
had the YIelds on the Bonds not been relevant to eIther party
(J) Bonds Not Hedge Bonds The Authonty represents that none of the
Bonds IS or wIll become a hedge bond WIthIn the meanmg of sectIOn 149(g) of the Code
(k) EleclIons The Authonty hereby dIrects and authonzes any Authonty
RepresentalIve to make electIOns permItted or reqUIred pursuant to the provIsIOns of the Code or
the Tax RegulatIons as such RepresentatIve (after consultatIOn WIth Bond Counsel) deems
necessary or appropnate m cOmIeclIon WIth the Bonds m the CertIficate as to Tax ExemptIOn or
SImIlar or other appropnate certIficate form or document
(I) Closmg CertIficate The Authonty agrees to execute and delIver m
COmIectlOn WIth the Issuance of the Bonds a Tax and Nonarbltrage CertIficate or sImIlar
document contammg addItIonal representatIOns and covenants pertaImng to the exclusIOn of
mterest on the Bonds from the gross mcome of the owners thereof for federal mcome tax
purposes whICh representatIOns and covenants are mcorporated as though expressly set forth
herem
SectIOn 5 08 DIstrIct Bonds The Trustee as assIgnee of the Authonty nghts pursuant
to SectIOn 401 shall (subject to the provISIons of thIS Indenl11re) promptly collect all amounts
due as pnnclpal and mterest on Dlstnct Bonds from the DIstrIct and subject to the provISIons
hereof shall enforce and take all steps actIOns and proceedmgs reasonably necessary for the
enforcement of all of the nghts of the Authonty thereunder and for the enforcement of all of the
oblIgalIons of the Dlstncts thereunder
SectIon 5 09 Further Assurances The Authonty shall cause to be collected and paId
to the Trustee all Revenues as such Revenues become due and payable The Authonty wIll
adopt make execute and delIver any and all such further resolutIOns mstrImJents and assurances
as may be reasonably necessary or proper to carry out the mtentlOn or to facIlItate the
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Agenda Item No 2
Page 1580f316
performance of thIS Indenture and for the better assunng and confirmIng unto the Owners of the
Bonds the nghts and benefits provIded In thIS Indenture
SectIon 510 ImmuDlty The Authonty IS not entItled to any unmumty sovereIgn or
otherwIse from any legal proceedIngs to enforce or collect upon thIS Indenture or the Bonds To
the extent that the Authonty has or hereafter may acqUIre any nght to Immumty the Authonty
hereby waIves such nghts for Itself In respect of ItS oblIgatIons ansIng under thIS Indenture and
the Bonds
SectIon 5 11 No AcceleratIOn The pnnClpal of the Bonds shall not be subject to
acceleratIOn hereUllder NothIng In thIS SectIon shall In any way promblt the prepayment or
redemptIon of Bonds or the defeasance of the Bonds and dIscharge ofthls Agreement
ARTICLE VI
THE TRUSTEE
SectIOn 6 01 Appomtment of Trustee Umon Bank of CalIforma N A In Los
Angeles CalIfornIa IS hereby appoInted Trustee by the Authonty for the purpose ofrecelVlng all
moneys reqUIred to be deposIted wIth the Trustee hereUllder and to allocate use and apply the
same as provIded In thIS Indenture The Authonty agrees that It wIll maIntaIn a Trustee haVIng a
corporate trust office In the State wIth a combIned capItal and surplus of at least Seventy FIve
MIllIon Dollars ($75 000 000) and subject to supervlSlon or examInatIon by federal or State
authonty so long as any Bonds are OutstandIng If such bank or trust company publIshes a
report of condItIon at least annually pursuant to law or to the requIrements of any supervlSlng or
examInIng authonty above referred to then for the purpose of thIS SectIOn 601 the combIned
capItal and surplus of such bank 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
The Trustee IS hereby authonzed to pay the pnnclpal of and Interest and redemptIOn
premIUm (If any) on the Bonds when duly presented for payment at maturIty or on redemptIon
or purchase pnor to matunty and to cancel all Bonds upon payment thereof The Trustee shall
keep accurate records of all funds admlmstered by It and of all Bonds paId and dIscharged
SectIon 6 02 Acceptance of Trusts The Trustee hereby accepts the trusts Imposed
upon It by thIS Indenture and agrees to perform s31d trusts but only upon and subject to the
follOWIng express terms and condItIOns
(a) The Trustee pnor to the occurrence of an Event of Default and after
cunng of all Events of Default whIch may have occurred Ulldertakes 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 w31ved) the Trustee may exerCIse such of
the nghts and powers vested In It by thIS Indenture and shall use the same degree of care and
skIll and dIlIgence III theIr exercIse as a prudent person would use In the conduct of ItS own
aff31rs
(b) The Trustee may execute any of the trusts or powers hereof and perform
the dutIes reqUIred of It hereUllder by or through attorneys agents or receIvers and shall be
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Agenda Item No 2
Page 159 of 316
entItled to advice of counsel concenung all matters of trust and Its duty hereunder The Trustee
may conclusively rely on an oplmon of counsel as full and complete protectIOn for any actIOn
taken or suffered by It hereunder
(c) The Trustee shall not be responsible for any recital herem or m the Bonds
or for any of the supplements hereto or thereto or mstruments of further assurance or for the
suffiCiency of the secunty for the Bonds Issued hereunder or mtended to be secured hereby and
the Trustee shall not be bound to ascertam or mqUlre as to the observance or performance of any
covenants conditIons or agreements on the part of the Authonty hereunder
(d) The Trustee may become the Owner of Bonds secured hereby with the
same nghts which It would have If not the Trustee may acqUire and dispose of other bonds or
eVidences of mdebtedness of the Authonty with the same nghts 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 m any other capacity with respect to any committee formed to protect the nghts
of Owners of Bonds whether or not such committee shall represent the Owners of the maJonty
m aggregate pnnclpal amount of the Bonds then Outstandmg
(e) The Trustee shall be protected m actmg upon any notIce request consent
certIficate order affidaVit letter telegram or other paper or document believed by It to be
genume 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 pursuant to thiS Indenture upon the request or
authonty or consent of any person who at the tIme of makmg such request or glvmg such
authonty or consent IS the Owner of any Bond shall be conclUSIVe and bmdmg upon all future
Owners of the same Bond and upon Bonds Issued m exchange therefor or m place thereof The
Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any
actIOn at hiS request unless the ownership of such Bond by such person shall be reflected on the
RegistratIOn Books
(f) As to the eXistence or non eXistence of any fact or as to the suffiCiency or
validity of any mstrument paper or proceedmg the Trustee shall be entItled to rely upon a
CertIficate of the Authonty as suffiCient eVidence of the facts therem contamed and pnor to the
occurrence of an Event of Default hereunder of winch the Trustee has been given notice or IS
deemed to have notice as proVided m SectIOn 6 02(h) hereof shall also be at liberty to accept a
Certificate of the Authonty to the effect that any particular dealmg transactIOn or action IS
necessary or expedient but may at ItS discretion secure such further eVidence deemed by It to be
necessary or advisable but shall m no case be bound to secure the same
(g) The permissive nght of the Trustee to do thmgs enumerated m thiS
Indenture shall not be construed as a duty and It shall not be answerable for other than ItS
negligence or Willful misconduct The Immunities and exceptIOns from liability of the Trustee
shall extend to ItS officers directors employees and agents
(h) The Trustee shall not be reqUired to take notIce or be deemed to have
notice of any Event of Default hereunder except failure by the Authonty to file With the Trustee
any document reqUired by thiS Indenture to be so filed subsequent to the Issuance of the Bonds
unless the Trustee shall be specifically notIfied m wntmg of such default by the Authonty or by
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Agenda Item No 2
Page 160 of 316
the Owners of at least twenty five percent (25%) m aggregate pnnclpal amount of the Bonds
then Outstandmg and all notices or other mstnmJents reqUired by thiS Indenture to be delivered
to the Trustee must m order to be effective be delivered at the Corporate Trust Office of the
Trustee and m the absence of such notice so delivered the Trustee may conclusively assume
there IS no Event of Default hereunder except as aforesaid
(I) At any and all reasonable times the Trustee and ItS duly authonzed agents
attorneys experts accountants and representatives shall have the nght (but not the duty) fully to
mspect all books papers and records of the Authonty pertalmng to the Bonds and to make
copies of any of such books papers and records such as may be deSired but which IS not
pnvlleged by statute or by law
(J) The Trustee shall not be reqUired to give any bond or surety m respect of
the executIOn of the Said trusts and powers or othelWlse m respect of the premises hereof
(k) Notwlthstandmg anythmg elsewhere m thiS Indenture With respect to the
execution of any Bonds the Withdrawal of any cash the release of any property or any actIOn
whatsoever wlthm the purview of thiS Indenture the Trustee shall have the nght but shall not be
reqUired to demand any showmgs certificates opmlOns appraisals or other mformatlon or
corporate action or eVidence thereof as may be deemed deSirable for the purpose of establishmg
the nght of the Authonty to the execution of any Bonds the Withdrawal of any cash or the
takmg of any other actIOn by the Trustee
(I) Before takmg the action referred to m Section 8 02 the Trustee may
reqUire that a satisfactory mdemmty bond be furnished for the reimbursement of all expenses to
which It may be put and to protect It against all liability except liability which IS adjudicated to
have resulted from ItS negligence or Willful default m connectIOn With any such action
(m) All moneys received by the Trustee shall until used or applied or mvested
as herem prOVided be held m trust for the purposes for which they were received but need not be
segregated from other funds except to the extent reqUired by law
(n) The Trustee shall have no responsibility or liability With respect to any
mformatlOn statements or reCital m any offenng memorandum or other disclosure matenal
prepared or dlstnbuted With respect to the Issuance ofthe Bonds
SectJon 6 03 Fees, Charges and Expenses of Trustee The Trustee shall be entitled to
payment and reimbursement for reasonable fees for ItS services rendered hereunder and all
advances counsel fees (mcludmg expenses) and other expenses reasonably and necessanly made
or mcurred by the Trustee m connectIOn With such services Upon the occurrence of an Event of
Default hereunder but only upon an Event of Default the Trustee shall have a first lien With
nght of payment pnor to payment of any Bond upon the amounts held hereunder for the
foregomg fees charges and expenses mcurred by It respectively The Trustee s nght to payment
of ItS fees and expenses shall survive the discharge and payment or defeasance of the Bonds and
termmatlon ofthe Indenture and the reSignatIOn or removal ofthe Trustee
SectIOn 6 04 NotJce 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
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Agenda Item No 2
Page 161 of 316
notice as provided m SectIOn 6 02(h) hereof then the Trustee shall promptly give wntten notice
thereof by first class mail to the Owner of each such Bond unless such Event of Default shall
have been cured before the givmg of such notice proVIded however that unless such Event of
Default consists of the failure by the Authonty to make any payment when due the Trustee may
elect not to give such notice to the Bond Owners If and so long as the Trustee m good f:uth
determmes that such Event of Default does not matenally adversely affect the mterests of the
Bond Owners or that It IS otherwise not m the best mterests of the Bond Owners to give such
notice
SectIon 6 05 InterventIOn by Trustee In any JudICIal proceedmg to whIch the
Authonty IS a party whICh m the oplmon of the Trustee and ItS counsel has a substantial beanng
on the mterests of Owners of any of the Bonds ansmg under thIs Indentlire the Trustee may
mtervene on behalf of such Bond Owners and subject to SectIOn 602(1) hereof shall do so If
requested m wntmg by the Owners of at least twenty five percent (25%) aggregate pnnclpal
mnount of such Bonds then Outstandmg
SectIon 6 06 Removal of Trustee The Owners of a majonty m aggregate pnnclpal
mnount of the Outstandmg Bonds may at any time or the Authonty may (and the Authonty at
the request of the Dlstnct shall) so long as no Event of Default shall have occurred and then be
contmumg remove the Trustee Imtially appomted and any successor thereto by an mstrument
or concurrent mstruments m wntmg delivered to the Trustee at least thirty (30) days pnor to the
effective date of such removal whereupon the Authonty or such Owners as the case may be
shall appomt a successor or successors thereto provided that any such successor shall be a bank
or trust company meetmg the reqUirements set forth m Section 6 01
SectIon 6 07 ReSIgnatIon by Trustee The Trustee and any successor Trustee may at
any time give thIrty (30) days wntten notice of ItS mtention to resign as Trustee hereunder such
notice to be given to the Authonty and the Dlstnct by registered or certified mall Upon
recelvmg such notice of reSignatIOn the Authonty shall promptly appomt a successor Trustee
SectIOn 6 08 Appomtment of Successor Trustee In the event of the removal or
resignation of the Trustee pursuant to SectIOns 6 06 or 6 07 respectively With the pnor wntten
consent ofthe Dlstnct the Authonty shall promptly appomt a successor Trustee In the event the
Authonty shall for any reason whatsoever fail to appomt a successor Trustee wlthm mnety (90)
days followmg the delivery to the Trustee of the mstnunent descnbed m Section 6 06 or wlthm
mnety (90) days followmg the receipt of notice by the Authonty pursuant to SectIOn 6 07 the
Trustee may apply to a court of competent junsdICtlOn for the appomtment of a successor
Trustee meetmg the reqUirements of SectIOn 6 0 I hereof Any such successor Trustee appomted
by such court shall become the successor Trustee hereunder notwlthstandmg any actIOn by the
Authonty purportmg to appomt a successor Trustee followmg the eXpiratIOn of such mnety day
penod
Any resignation or removal of the Trustee pursuant to SectIOn 6 06 or SectIOn 6 07 and
appomtment of a successor Trustee shall become effective upon wntten acceptance of
appomtment by the successor Trustee Upon such acceptance the Authonty shall cause notice
thereof to be given by first class m:ul postage prep:ud to the Bond Owners at their respective
addresses set forth on the RegistratIOn Books
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Agenda Item No 2
Page 162 of 316
SectIOn 6 09 Merger or ConsolIdatIOn Any company mto which the Trustee may be
merged or converted or with which It may be consolIdated or any company resultmg from any
merger converSIOn or consolIdatIOn to which It shall be a party or any company to winch the
Trustee may sell or transfer all or substantially all of ItS corporate trust busmess provided that
such company shall meet the reqUirements set forth m SectIon 6 0 I 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
ImmumtIes pnvIleges and all other matters as was ItS predecessor WIthOut the execution or
filmg of any paper or further act anythmg herem to the contrary notwlthstandmg
SectIon 6 10 Concernmg any Successor Trustee Every successor Trustee appomted
hereunder shall execute acknowledge and delIver to ItS predecessor and also to the Authonty an
mstrument m wntmg acceptmg such appomtInent hereunder and thereupon such successor
Without any further act deed or conveyance shall become fully vested WIth all the estates
properties nghts powers trusts duties and oblIgatIOns of ItS predecessors but such predecessor
shall nevertheless on the request of the Authonty or of the Trustee s successor execute and
delIver an mstrument transfemng to such successor all the estates properties nghts powers and
trusts of such predecessor hereunder and every predecessor Trustee shall delIver all secuntIes
and moneys held by It as the Trustee hereunder to ItS successor Should any mstrument m
wntmg from the Authonty be reqUired by any successor Trustee for more fully and certamly
vestmg m such successor the estate nghts powers and dutIes hereby vested or mtended to be
vested m the predecessor Trustee any and all such mstruments m wntmg shall on request be
executed acknowledged and delivered by the Authonty
SectIOn 6 11 Appomtment to Co Trustee It IS the purpose of thiS IndentIIre that there
shall be no VIOlatIOn of any law of any junsdICtlon (mcludmg partICularly the law of the State)
denymg or restricting the nght of bankmg corporations or associatIons to transact busmess as
Trustee m such junsdlctlOn It IS recognized that m the case of litIgatIOn under tins Indenture
and m particular m case of the enforcement of the nghts of the Trustee on default or m the case
the Trustee deems that by reason of any present or future law of any junsdlctIon It may not
exercise any of the powers nghts or remedies herem granted to the Trustee or hold tItle to the
properties m trust as herem granted or take any other actIOn winch may be deSirable or
necessary m connectIOn thereWIth It may be necessary that the Trustee appomt an additIOnal
mdlvldual or mstItutlOn as a separate or co trustee The followmg proVIsIOns of this SectIon 6 II
are adopted to these ends
In the event that the Trustee appomts an additIOnal mdlvldual or mstltutlOn as a separate
or co trustee each and every remedy power nght claim demand cause of actIon Immumty
estate title mterest and lien expressed or mtended by thiS Indenture to be exerCised by or vested
m or conveyed to the Trustee With respect thereto shall be exerCisable by and vest m such
separate or co trustee but only to the extent necessary to enable such separate or co trustee to
exerCise such powers nghts and remedies and every covenant and obligatIOn necessary to the
exercise thereofby such separate or co trustee shall nm to and be enforceable by either ofthem
Should any mstrument m wntmg from the Authonty be reqUired by the separate trustee
or co trustee so appomted by the Trustee for more fully and certamly vestmg m and confirmmg
to It such properties nghts powers trusts dutIes and obligations any and all such mstruments m
wntmg shall on request be executed acknowledged and delivered by the Authonty In case any
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Agenda Item No 2
Page 163 of 316
separate trustee or co trustee or a successor to eIther shall become mcapable of actmg resIgn or
be removed all the estates propertIes nghts powers trusts dutIes and obligatIOns of such
separate trustee or co trustee so far as permItted by law shall vest m and be exercIsed by the
Trustee untIl the appomtment of a new trustee or successor to such separate trustee or co trustee
SectIOn 6 12 IndemmficatJon, LImIted LIabIlIty of Trustee The Authonty further
covenants and agrees to mdemmfY and save the Trustee and ItS officers dIrectors agents and
employees harmless agamst any loss costs claIms expense and liabIlitIes whIch It may mcur
ansmg out of or m the exerCIse and performance of ItS powers and dutIes hereunder mcludmg
the costs and expenses of defendmg agamst any cllllm of liabIlity but excludmg any and all
losses costs claIms expenses and liabIlitIes whIch are due to the negligence or WIllful
mIsconduct of the Trustee ItS officers dIrectors agents or employees No prOVISIOn m tills
Indenture shall reqUire the Trustee to nsk or expend ItS own funds or otherwIse mcur any
finanCIal liabIlity hereunder If It IS not assured to ItS satIsfactIon that repayment of such funds or
adequate mdemmty aglllnst such liabIlity or nsk IS not assured to It The Trustee shall not be
liable for any actIOn taken or omItted to be taken by It m accordance WIth the dIrectIon of the
Owners of a maJonty m aggregate pnncIpalll1ll0Ullt of Bonds Outstandmg relatmg to the tIme
method and place of conductmg any proceedmg or remedy aVlIllable to the Trustee Ullder thIS
Indenture The obligatIons of the Authonty under tills paragraph shall survIve the reSIgnatIon or
removal of the Trustee Ullder thIS Indenture or any defeasance of the Bonds
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
SectIon 7 01 Amendment Hereof
(a) ThIS Indenture and the nghts and obligatIons of the Authonty and of the
Owners of the Bonds may be modIfied or lI1llended at any tIme by a Supplemental Indenture
whIch shall become bmdmg upon executIOn by the Authonty and the Trustee and upon pnor
wntten consent of the DIStnCt WIthout consent of any Bond Owners to the extent permItted by
law but only for anyone or more ofthe followmg purposes
(I) to add to the covenants and agreements of the Authonty contlllned
m thIS Indenture other covenants and agreements hereafter to be observed to pledge or aSSIgn
addItIonal secunty for the Bonds (or any portIOn thereof) or to surrender any nght or power
herem reserved to or conferred upon the Authonty
(II) to make such prOVISIOns for the purpose of cunng any lI1llbIgUlty
mconsIstency or omISSIOn or of cunng or correctmg any defectIve proVISIon contamed m thIS
Indenture or m any other respect whatsoever as the Authonty may deem necessary or deSIrable
proVIded that such modIficatIon or lI1llendment does not matenally adversely affect the mterests
of the Bond Owners m the opmIOn of Bond COUllsel
(III) to modIfy lI1llend or supplement the Indenture m such manner as
to permIt the qualificatIOn of thIS Indenture Ullder the Trust Indenture Act of 1939 as lI1llended
600312131
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Agenda Item No 2
Page 164 of 316
or any similar federal statute hereafter m effect and to add such other terms conditions and
provIsIOns as may be permitted by said act or similar federal statute or
(IV)
necessary or desirable to
Bonds
to make such additions deletIOns or modificatIOns as may be
assure exemption from federal mcome taxatIOn of mterest on the
(b) Except as set forth m the precedmg paragraph of this SectIOn 701 tlu.s
Indenture and the nghts and obligatIOns of the Authonty and of the Owners of the Bonds may
only be modified or amended at any time by a Supplemental Indenture which shall become
bmdmg when the wntten consents of the Owners of a maJonty m aggregate pnnClpal amount of
the Bonds then Outstandmg are filed With the Trustee No such modification or amendment shall
(a) extend the matunty of or reduce the mterest rate on any Bond or otherwise alter or Impair the
obligatIOn of the Authonty to pay the pnnclpal mterest or premIUms (If any) at the time and
place and at the rate and m the currency provided therem of any Bond Without the express
wntten consent of the Owner of such Bond (b) reduce the percentage of Bonds reqUired for the
wntten consent to any such amendment or modificatIOn or (c) Without ItS wntten consent
thereto modify any of the nghts or obligatIOns of the Trustee
(c) The Trustee shall be proVided an opmlOn of Bond Counsel that any such
Supplemental Indenture entered mto by the Authonty and the Trustee complies With the
provIsions of tins Article VII and the Trustee may conclUSively rely upon such opmlOn
SectIon 7 02 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 m accordance therewith the respective nghts duties and
obligations of the parties hereto or thereto and all Owners of Outstandmg Bonds as the case may
be shall thereafter be determmed exercised and enforced hereunder subject m all respects to
such modificatIOn and amendment and all the terms and conditIOns of any Supplemental
Indenture shall be deemed to be part of the terms and conditions of thiS Indenture for any and all
purposes
SectIon 7 03 Endorsement or Replacement of Bonds After Amendment After the
effective date of any actIOn taken as heremabove proVided the Authonty may determme that the
Bonds shall bear a notation by endorsement m form approved by the Authonty as to such
actIOn and m that case upon demand of the Owner of any Bond Outstandmg at such effectIVe
date and presentatIOn of hiS Bond for that purpose at the Corporate Trust Office of the Trustee a
SUitable notatIOn as to such actIOn shall be made on such Bond If the Authonty shall so
determme new Bonds so modified as m the OplD10n of the Authonty shall be necessary to
conform to such Bond Owners action shall be prepared and executed and m that case upon
demand of the Owner of any Bond Outstandmg at such effective date such new Bonds shall be
exchanged at the Corporate Trust Office of the Trustee WithOUt cost to each Bond Owner for
Bonds then Outstandmg upon surrender of such Outstandmg Bonds
SectIon 7 04 Amendment by Mutual Consent The proViSions of tlu.s Article VII
shall not prevent any Bond Owner from acceptmg any amendment as to the particular Bond held
by him proVided that due notatIOn thereof IS made on such Bond
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Agenda Item No 2
Page 165of316
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SectIon 8 01 Events of Default The followmg events shall be Events of Default
hereunder
(a) Default m the due and punctual payment of the pnnclpal of any Bond
when and as the same shall become due and payable whether at matunty as therem expressed
by proceedmgs for redemplion or otherwise
(b) Default m the due and punCl11al payment of any mstallment of mterest on
any Bond when and as such mterest mstallment shall become due and payable
(c) Failure by the Authonty to observe and perform any of the covenants
agreements or condllions on Its part m thiS Indenture or m the Bonds contamed other than as
referred to m the precedmg clauses (a) and (b) for a penod of thirty (30) days after wntten
nolice speclfymg such failure and requestmg that It be remedied has been given to the Authonty
by the Trustee or to the Authonty and the Trustee by the Owners of the Bonds of not less than
twenty five percent (25%) m the aggregate pnnclpal amount of the Bonds at that lime
Outstandmg proVided however that If m the reasonable opmlOn of the Authonty proVided to
the Trustee m wntmg the fmlure stated m such nolice can be corrected but not Wltlun such
thirty (30) day penod such failure shall not conslil11te an Event of Default If correclive actIOn IS
mslituted by the Authonty wlthm such thirty (30) day penod and diligently pursued until such
failure IS corrected
(d) The filmg by the Authonty of a pelitlOn or answer seekmg reorganizatIOn
or arrangement under the federal bankruptcy laws or any other applicable law of the Umted
States of Amenca or If a court of competent junsdlctlOn shall approve a pelilion filed with or
Without the consent of the Authonty seekmg reorganizatIOn under the federal bankruptcy laws
or any other applicable law of the Umted States of Amenca or If under the prOVlSlons of any
other law for the relief or md of debtors any court of competent JurisdictIOn shall assume
custody or control ofthe Authonty or of the whole or any substanlial part of ItS property
SectIon 8 02 Remedies Upon Event of Default Upon the occurrence and dunng the
contmuance of an Event of Default the Trustee may pursue any available remedy at law or m
eqUity to enforce the payment of the pnnclpal of and mterest and premium (If any) on the Bonds
and to enforce any nghts of the Trustee under or with respect to thiS Indenture
If an Event of Default shall have occurred and be contmumg the Trustee may If
requested so to do by the Owners of a majonty m aggregate pnnclpal amount of Outstandmg
Bonds and mdemmfied as proVided m SectIOn 6 02(1) the Trustee shall be obligated to exercise
such one or more of the nghts and powers conferred by tlus Article VIII as the Trustee bemg
adVised by counsel shall deem most expedient m the mterests of the Bond Owners
No remedy by the terms of this Indenl11re conferred upon or reserved to the Trustee (or to
the Bond Owners) IS mtended to be exclUSive of any other remedy but each and every such
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Agenda Item No 2
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I
I
remedy shall be cumulatIve and shall be m additIon to any other remedy given to the Trustee or
to the Bond Owners hereunder or now or hereafter eXlstmg at law or m eqUity
No delay or omiSSIOn to exercise any nghts or power accrumg upon any Event of Default
shall Impair any such nght or power or shall be construed to be a waiver of any such Event of
Default or acqUiescence therem such nght or power may be exercised from tIme to time as often
as may be deemed expedient
SectIOn 8 03 ApplIcatIOn of Revenues and Other Funds After Default All amounts
received by the Trustee pursuant to any nght gIVen or actIon taken by the Trustee under the
provlSlons of thiS Indenture shall be applIed by the Trustee m the followmg order upon
presentation of the several Bonds and the stampmg thereon of the amount of the payment If only
partIally paid or upon the surrender thereof If fully paid
FIrSt to the payment of the fees costs and expenses of the Trustee m declanng such
Event of Default and m carrymg out the provlSlons of thiS ArtIcle VIII mcludmg reasonable
compensatIOn to ItS agents attorneys and counsel and any outstandmg fees and expenses of the
Trustee and
Second to the payment of the whole amount of mterest on and pnnclpal of the Bonds
then due and unpaid With mterest on overdue mstallments ofpnnclpal and mterest to the extent
permitted by law at the net effective rate of mterest then borne by the Outstandmg Bonds
provided however that m the event such amounts shall be msufficlent to pay m full the full
amount of such mterest and pnnclpal then such amounts shall be applied m the followmg order
of pnonty
(a) first to the payment of all mstallments of mterest on the Bonds then due
and unpaid
(b)
due and unpaid
(c) third to the payment of the redemptIOn pnce (mcludmg pnnclpal and
mterest accrued to the redemptIOn date but excludmg any premIUm) of the Bonds to be
redeemed pursuant to tills Indenture and
second to the payment of all mstallments of pnnclpal of the Bonds then
(d) fourth to the payment ofmterest on overdue mstallments ofpnnclpal and
mterest on the Bonds
Section 8 04 Power of Trustee to Control Proceedmgs In the event that the Trustee
upon the happenmg of an Event of Default shall have taken any actIOn by JudiCial proceedmgs
or otherwise pursuant to ItS duties hereunder whether upon ItS own discretIOn or upon the
request of the Owners of at least a maJonty m aggregate pnnclpal amount of the Bonds then
Outstandmg It shall have full power m the exerCise of ItS discretion for the best mterests of the
Owners of the Bonds With respect to the contmuance dlscontmuance Withdrawal compromise
settlement or other disposal of such actIOn proVided however that the Trustee shall not unless
there no longer contmues an Event of Default dlscontmue Withdraw compromise or settle or
otherwise dispose of any litIgatIOn pendmg at law or m eqUity If at the tIme there has been filed
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Agenda Item No 2
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with It a wntten request signed by the Owners of a maJonty m aggregate pnnclpal amount ofthe
Outstandmg Bonds opposmg such dlscontmuance withdrawal compromise settlement or other
disposal of such liligatlOn Any SUIt actIOn or proceedmg which any Owner of Bonds shall have
the nght to bnng to enforce any nght or remedy hereunder may be brought by the Trustee for the
equal benefit and protectIOn of all Owners of Bonds snmlarly situated and the Trustee IS hereby
appomted (and the successive respeclive Owners of the Bonds Issued hereunder by takmg and
holdmg the same shall be conclUSively deemed so to have appomted It) the true and lawful
attorney m fact of the respeclive Owners of the Bonds for the purpose ofbnngmg any such SUIt
actIOn or proceedmg and to do and perform any and all acts and thmgs for and on behalf of the
respeclive Owners of the Bonds as a class or classes as may be necessary or adVisable m the
opmlOn ofthe Trustee as such attorney m fact
SectIon 8 05 Appomtment of ReceIvers Upon the occurrence of an Event of Default
hereunder and upon the filing of a SUIt or other commencement of JudIcIal proceedmgs to
enforce the nghts of the Trustee and of the Bond Owners under thIS Indenture the Trustee shall
be entItled as a matter ofnght to the appomlinent of a receiver or receivers of the Revenues and
other amounts pledged hereunder pendmg such proceedmgs With such powers as the court
makmg such appomlinent shall confer
SectIOn 8 06 Non WaIver Nothmg m thIS Arlicle VIII or m any other prOVISIOn of thIS
Indenture or m the Bonds shall affect or Impair the obligatIOn of the Authonty which IS
absolute and unconditIOnal to pay the mterest on and pnnclpal of the Bonds to the respeclive
Owners of the Bonds at the respeclive dates ofmalimty as herem proVIded out of the Revenues
and other moneys herem pledged for such payment
A waIver of any default or breach or 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 nghts 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 nght or power accrumg upon any default or breach
shall ImpaIr any such nght or power or shall be construed to be a waiver of any such default or
breach or an acqUiescence therem and every power and remedy conferred upon the Trustee or
Bond Owners by the Bond Law or by thiS Arlicle VIII may be enforced and exercised from lime
to lime and as often as shall be deemed expedient by the Trustee or the Bond Owners as the case
may be
SectIon 8 07 RIght to InstItute SUIt, ActIon or Proceedmg No Owner of any Bond
Issued hereunder shall have the nght to msliliIte any SUIt actIOn or proceedmg at law or m
eqUity for any remedy under or upon thIs Indenture unless (a) such Owner shall have prevIOusly
given to the Trustee wntten notice of the occurrence of an Event of Default (b) the Owners of a
maJonty m aggregate pnnclpal amount of all Bonds then Outstandmg shall have made wntten
request upon the Trustee to exercise the powers herembefore granted or to mslitute such actIOn
SUIt or proceedmg m ItS own name (c) Said Owners shall have tendered to the Trustee mdemmty
reasonably acceptable to the Trustee against the costs expenses and liabilities to be mcurred m
compliance With such request (d) the Trustee shall have refused or omitted to comply With such
request for a penod of sixty (60) days after such wntten request shall have been receIVed by and
Said tender ofmdenmlty shall have been made to the Trustee and (e) no dlreclion mconslstent
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Agenda Item No 2
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WIth such wntten request has been gIven to the Trustee dunng such sIxty (60) day penod by the
Owners of maJonty m aggregate pnnclpal amount of the Bonds then Outstandmg
Such notIficatIOn request tender of mdemrnty and refusal or omISSIOn are hereby
declared m every case to be condItIOns precedent to the exerCIse by any Owner of Bonds of any
remedy hereunder It bemg understood and mtended that no one or more Owners of Bonds shall
have any nght m any mamJer whatever by hIs or then actIOn to enforce any nght under thIs
Indenture except m the mamJer herem provIded and that all proceedmgs at law or m eqUIty to
enforce any prOVISIOn of thIs Indenture shall be mstItuted had and mamtamed m the mamJer
herem provIded and for the equal benefit of all Owners of the Outstandmg Bonds
The nght of any Owner of any Bond to receIve payment of the pnnClpal of and mterest
and premIUm (If any) on such Bond as herem provIded or to mstItute SUIt for the enforcement of
any such payment shall not be ImpaIred or affected WIthout the wntten consent of such Owner
notwlthstandmg the foregomg provlSlons of thIS SectIOn 8 07 or any other proVIsIOn of thIs
Indenture
Section 8 08 TermmatIon of Proceedmgs In case the Trustee shall have proceeded to
enforce any nght under thIS Indenture by the appomtInent of a receIVer or otherwIse and such
proceedmgs shall have been dlscontmued or abandoned for any reason or shall have been
determmed adversely then and m every such case the Authonty the Trustee and the Bond
Owners shall be restored to theIr former posItIOns and nghts hereunder respectIvely WIth regard
to the property subject to thIs Indenture and all nghts remedIes and powers of the Trustee shall
contmue as Ifno such proceedmgs had been taken
ARTICLE IX
MISCELLANEOUS
Section 9 01 LlImted LIabIlIty of AuthOrIty Notwlthstandmg anythIng m thIs
Indenture contamed the Authonty shall not be reqUIred to advance any moneys denved from
any source of mcome other than the Revenues for the payment of the pnnclpal of or mterest on
the Bonds or any premIUms upon the redemptIon thereof or for the performance of any
covenants herem contamed (except to the extent any such covenants are expressly payable
hereunder from the Revenues) The Authonty may however advance funds for any such
purpose provIded that such funds are denved from a source legaJly avaIlable for such purpose
and may be used by the Authonty for such purpose WIthout mcurnng mdebtedness
The Bonds shall be revenue bonds payable exclUSIvely from the Revenues and other
funds as m thIS Indenture provIded The general fund of the Authonty IS not lIable and the
credIt of the Authonty IS not pledged for the payment of the mterest and premIUm (If any) on or
pnnclpal of the Bonds The Owners of the Bonds shall never have the nght to compel the
forfeIture of any property of the Authonty The pnnclpal of and mterest on the Bonds and any
premIUms upon the redemptIon of any thereof shall not be a legal or equItable pledge charge
hen or encUlllbrance upon any property of the Authonty or upon any of ItS mcome receIpts or
revenues except the Revenues and other funds pledged to the payment thereof as m thIs
IndentIJre provIded
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Agenda Item No 2
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Section 9 02 Benefits of Indenture LImIted to PartIes Nothmg m thiS Indenture
expressed or Implied IS mtended to gIve to any person other than the Authonty the Dlstnct the
Trustee and the Owners of the Bonds any nght remedy or claIm under or by reason of thiS
Indenture Any covenants stIpulatIOns promIses or agreements m thiS Indenture contamed by
and on behalf of the Authonty shall be for the sole and exclusIve benefit of the Trustee the
Dlstnct and the Owners of the Bonds
SectIOn 9 03 DIscharge of Indenture If the Authonty shall pay and dIscharge any or
all of the Outstandmg Bonds m anyone or more of the followmg ways
(a) by well and truly paYIng or causmg to be pllld the pnnclpal of and the
mterest and premIUm (If any) on such Bonds as and when the same become due and payable
(b) by lITevocably deposltmg with the Trustee m trust at or before matunty
money wluch altogether with the aVllllable amounts then on depOSit m the funds and accounts
established with the Trustee pursuant to tlus Indenture IS fully suffiCient to pay such Bonds
mcludmg all pnnclpal mterest and premIUms (If any) or
(c) by lITevocably deposltmg With the Trustee or any other fidUCiary m trust
Federal SecuntIes m such amount as an Independent Accountant shall determme Will together
with the mterest to accrue thereon and available moneys then on depOSit m the funds and
accounts established With the Trustee pursuant to thiS Indenture be fully suffiCient to pay and
discharge the mdebtedness on such Bonds (mcludmg all pnnclpal mterest and redemptIOn
premIUms) at or before thelf respectIve matunty dates and If such Bonds are to be redeemed
pnor to the matunty thereof notIce of such redemptIOn shall have been mlllled pursuant to
SectIOn 2 02(f) or provlSlon satIsfactory to the Trustee shall have been made for the mailmg of
such notIce then at the Wntten Request of the Authonty and notwlthstandmg that any of such
Bonds shall not have been surrendered for payment the pledge of the Revenues and other funds
proVided for m thiS Indenture with respect to such Bonds pledge of Revenues and all other
pecuniary obligatIons of the Authonty under !lus Indenture with respect to all such Bonds shall
cease and termmate except only the obligatIOn of the Authonty to payor cause to be pllld to the
Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aSide
for such purpose as aforesaid and all expenses and costs of the Trustee Any funds held by the
Trustee followmg any payments or discharge of the Outstandmg Bonds pursuant to thiS SectIOn
9 03 which are not reqUired for said purposes shall be paid over to the Authonty
SectIOn 9 04 Is Deemed Included III All References to Predecessor Whenever m
tlus Indenture or any Supplemental Indenture the Authonty IS named or referred to such
reference shall be deemed to mclude the successor to the powers dutIes and functIOns With
respect to the management admmlstratlOn and control of the affairs of the Authonty that are
presently vested m the Authonty and all the covenants agreements and provIsIOns contlllned m
thiS Indenture by or on behalf of the Authonty shall bmd and mure to the benefit of Its successors
whether so expressed or not
SectIOn 9 05 Content of CertIficates Every certificate With respect to compliance
With a conditIon or covenant proVided for m thiS Indenture shall mclude (a) a statement that the
person or persons makmg or gIvmg such certificate have read such covenant or conditIon and the
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Agenda Item No 2
Page 170 of 316
definitIOns herem relatmg thereto (b) a bnef statement as to the nature and scope of the
exammatlOn or mvestIgatIon upon which the statements or opinions contamed m such certificate
are based (c) a statement that m the opinion of the signers they have made or caused to be
made such exammatIon or mvestIgatlon as IS necessary to enable them to express an mformed
opinion as to whether or not such covenant or conditIOn has been complIed With and (d) a
statement as to whether m the opmlOn of the signers such conditIon or covenant has been
complIed with
Any such certificate made or given by an officer of the Authonty may be based msofar
as It relates to legal matters upon a certificate or opinion of or representatIons by counsel unless
such officer knows that the certificate or opmlOn or representatIOns with respect to the matters
upon which hiS certificate may be based as aforesaid are erroneous or m 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 msofar as It relates to factIial
matters on mformatlOn With respect to whICh IS m the possessIOn of the Authonty or upon the
certificate or opmlOn of or representatIOns by an officer or officers of the Authonty unless such
counsel knows that the certificate or opinion or representatIOns With respect to the matters upon
wluch Ius certificate opmlOn or representatIOn may be based as aforesaid are erroneous or m
the exercise of reasonable care should have known that the same were erroneous
SectIOn 9 06 ExecutIon of Documents by Bond Owners Any request consent or
other mstrument reqUired by thiS Indenture to be signed and executed by Bond Owners may be m
any number of concurrent wntmgs of substantIally Similar tenor and may be Signed or executed
by such Bond Owners m person or by their agent or agents duly appomted m wntmg Proof of
the executIOn of any such request consent or other mstrument or of a wntmg appomtmg any
such agent shall be suffiCient for any purpose of thiS IndentIire and shall be conclUSive m favor
ofthe Trustee and of the Authonty If made m the maJlller proVided m thiS SectIOn 906
The fact and date of the executIOn by any person of any such request consent or other
mstrument or wntmg may be proved by the affidaVit of a wltIiess of such executIOn or by the
certificate of any notary publIc or other officer of any junsdlctlon authonzed by the laws thereof
to take acknowledgments of deeds certlfymg that the person slgnmg such request consent or
other mstrument or wntmg acknowledged to him the executIOn thereof
The ownership of Bonds shall be proved by the RegistratIOn Books Any request
consent or vote of the Owner of any Bond shall bmd every futIire Owner of the same Bond and
the Owner of any Bond Issued m exchange therefor or m lIeu thereof m respect of anytlung done
or suffered to be done by the Trustee or the Authonty m pursuance of such request consent or
vote In lieu of obtammg any demand request directIon consent or waiver m wntmg the
Trustee may call and hold a meetmg of the Bond Owners upon such notIce and m accordance
With such rules and obligatIOns as the Trustee conSiders fair and reasonable for the purpose of
obtammg any such actIOn
SectIOn 9 07 Disqualified Bonds In determining whether the Owners of the reqUisite
aggregate pnnClpal amount of Bonds have concurred m any demand request direction consent
or Waiver under thiS Indenture Bonds wluch are owned or held by or for the account of the
Dlstnct or the Authonty (but excludmg Bonds held m any employees retIrement fund) shall be
60031213 I
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Agenda Item No 2
Page 171 of 316
disregarded and deemed not to be Outstandmg for the purpose of any such determmatlOn
provided however that for the purpose of determmmg whether the Trustee shall be protected m
relymg on any such demand request directIOn consent or Wlllver only Bonds wluch the Trustee
knows to be so owned or held shall be disregarded
SectIOn 9 08 WaIver of Personal LIabIlIty No officer agent or employee of the
Authonty shall be mdlVIdually or personally lIable for the payment of the mterest on or pnnclpal
of the Bonds but notlung herem contlllned shall relIeve any such officer agent or employee from
the performance of any offiCial duty provided by law
SectIon 9 09 PartIal InvalIdIty If anyone or more of the covenants or agreements or
portIOns thereof provided m thiS Indenture on the part of the Authonty (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 remammg covenants and agreements or portIOns thereof and shall m no way affect the
valIdity of this Indenture or of the Bonds but the Bond Owners shall retllln all nghts and benefits
accorded to them under the Bond Law or any other applIcable proVisIOns ofIaw The Authonty
hereby declares that It would have entered mto thiS Indenture and each and every other sectIon
paragraph subdiVISIOn sentence clause and phrase hereof and would have authonzed the
Issuance of the Bonds pursuant hereto lITespectIve of the fact that anyone or more sectIOns
paragraphs subdiVISIOns sentences clauses or phrases of thiS Indenture or the applIcatIOn
thereof to any person or circumstance may be held to be unconstItutIOnal unenforceable or
mvalId
SectIon 9 10 DestructIon of Canceled Bonds Whenever m thiS Indenture proVISIOn IS
made for the surrender to the Authonty of any Bonds which have been paid or canceled pursuant
to the proVISIOns of thiS Indenture the Trustee shall destroy such Bonds
SectIon 9 11 Funds and Accounts Any fund or account reqUired by thiS Indenture to
be establIshed and mamtamed by the Authonty or the Trustee may be establIshed and mamtlllned
m the accountmg records of the Authonty 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 Authonty shall at all tImes be mamtlllned
m accordance With generally accepted accountmg pnnclples and all such records WIth respect to
all such funds and accounts held by the Trustee shall be at all tImes mamtamed m accordance
With mdustry practIces m each case With due regard for the protectIOn of the secunty of the
Bonds and the nghts of every Owner thereof Any fund or account reqUired by thiS Indenture to
be establIshed and mamtamed by the Authonty or the Trustee may be established and mamtamed
m the form of multIple funds accounts or sub accounts therem
SectIon 9 12 Payment on Busmess Days Whenever m thiS Indenture any lllllOunt IS
reqUired to be pllld on a day which IS not a Busmess Day such payment shall be reqUired to be
made on the Busmess Day Immediately followmg such day proVided that mterest shall not
accrue from and after such day
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Agenda Item No 2
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SectIon 9 13 NotIces Any notice request complamt demand or other commumcatlOn
under this Indenture shall be given by first class mail or personal delivery to the party entitled
thereto at ItS address set forth below or by telecopy or other form of telecommumcatlOn at ItS
number set forth below Notice shall be effectIve either (a) upon transmiSSIOn by telecopy or
other form of telecommumcatlOn (b) 48 hours after deposit m the Umted States mall postage
prepaid or (c) m the case of personal delivery to any person upon acmal receipt The Authonty
the Dlstnct or the Trustee may by wntten notice to the other parties from time to time modify
the address or number to which commumcations are to be gIVen hereunder
Ifto the Authonty
Lake Elsmore Public Fmancmg Authonty
101 North D Street
Lake Elsmore California 92570
AttentIOn Executive Director
If to the Dlstnct
City of Lake Elsmore Community Facilities
Dlstnct No 2005 5 (Villages at Wasson Canyon)
c/o City of Lake Elsmore
130 South Main Street
Lake Elsmore California 92530
Attention City Manager
If to the Trustee
Umon Bank of California N A
120 South San Pedro Street 4th Floor
Los Angeles California 90011
AttentIOn Corporate Trust Department
SectiOn 914 Unclaimed Moneys Anythmg m tlus Indenture to the contrary
notwlthstandmg subject to the laws of the State any moneys held by the Trustee m trust for the
payment and discharge of any of the Bonds whICh remain unclaimed for two (2) years after the
date when such Bonds or any mterest thereon have become due and payable either at their stated
mamnty 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
Authonty 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
Authonty for the payment of such Bonds prOVided however that before bemg reqUired to make
any such payment to the Authonty the Trustee shall at the expense of the Authonty cause to be
mailed to the Owners of all such Bonds at their respective addresses appeanng on the
RegistratIOn Books a notice that said moneys remam unclaimed and that after a date naJiled m
Said notice which date shall not be less than t1nrty (30) days after the date of mallmg of such
notice the balance of such moneys then unclaimed Will be returned to the Authonty
Section 915 Govermng Law ThiS Agreement shall be construed and governed m
accordance With the laws of the State of California
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Agenda Item No 2
Page 1730f316
SectIon 916 ExecutIon of Counterparts Tills Indenture may be executed in any
number of counterparts each of which shall for all purposes be deemed to be an onginal and all
of whICh shall together constitute but one and the same instrument
IN WITNESS WHEREOF the LAKE ELSINORE PUBLIC FINANCING
AUTHORITY has caused thiS Indenture to be signed in ItS name and UNION BANK OF
CALIFORNIA N A in token of ItS acceptance of the trust created hereunder has caused thiS
Indenture to be signed in ItS corporate name by ItS officer Identified below all as of the day and
year first above wntten
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
By
Executive Director
ATTEST
By
Secretary
UNION BANK OF CALIFORNIA N A as
Trustee
By
Authonzed Officer
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Agenda Item No 2
Page 174 of 316
EXHIBIT A
FORM OF BOND
No R
$
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATNE OF THE
DEPOSITORY (AS DEFINED IN THE INDENTURE OF TRUST) TO THE TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY BOND
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATNE OF THE DEPOSITORY
(AND ANY PAYMENT IS MADE TO CEDE & CO OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATNE OF THE DEPOSITORY) ANY
TRANSFER PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF
CEDE & CO HAS AN INTEREST HEREIN
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RNERSIDE
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BOND (WASSON CANYON) 2007 SERIES A
RATE OF INTEREST MATURITY DATE DATED DATE CUSIP
REGISTERED OWNER Cede & Co
PRINCIPAL AMOUNT
The LAKE ELSINORE PUBLIC FINANCING AUTHORITY a Jomt powers authonty
orgamzed and eXlstmg under the laws of the State of California (the Authonty') for value
received hereby promises to pay (but only out of the Revenues and other moneys and secuntles
heremafter referred to) to the Registered Owner Identified above or registered asSignS (the
Registered Owner) on the Matunty Date Identified above the Pnnclpal Amount Identified
above m lawful money of the Umted States of Amenca and to pay mterest thereon at the Rate of
Interest Identified above m like money from the Interest Payment Date (as heremafter defined)
next precedmg the date of authentICatIOn of thiS Bond (unless tlus Bond IS authenticated on or
before an Interest Payment Date and after the fifteenth calendar day of the month precedmg such
Interest Payment Date occurs m wluch event It shall bear mterest from such Interest Payment
Date or unless thiS Bond IS authenticated on or pnor to February 15 2008 m wluch event It
shall bear mterest from the Dated Date Identified above prOVided however that If at the time of
authenticatIOn of thiS Bond mterest IS m default on thiS Bond thiS Bond shall bear mterest from
the Interest Payment Date to which mterest hereon has prevIOusly been paid or made aVailable
for payment) payable semlaJIUually on March I and September I m each year commencmg
March I 2008 (each an Interest Payment Date ) until payment of such Pnnclpal Amount m
full The Pnnclpal Amount hereof IS payable upon presentatIOn hereof at the corporate trust
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Agenda Item No 2
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office (the Corporate Trust Office ) of Umon Bank of CalifornIa, N A as trustee (the
Trustee ) or such other place as deSIgnated by the Trustee Interest hereon IS payable by check
of the Trustee maIled by first class maIl on each Interest Payment Date to the RegIstered Owner
hereof at the address of the RegIstered Owner as It appears on the RegIstratIOn Books of the
Trustee as of the first calendar day of the month m winch such Interest Payment Date occurs
except that at the wntten request of the owner of at least $1 000 000 m aggregate pnnclpal
amount of outstandmg Bonds filed wIth the Trustee pnor to the fifteenth calendar day of the
month precedmg any Interest Payment Date mterest on such Bonds shall be paId to such owner
on such Interest Payment Date by wife transfer of nmnedlately aVaIlable funds to an account m
the contmental Umted States deSIgnated m such wntten request Notwlthstandmg any other
provIsIon herem to the contrary so long as thIS Bond shall be regIstered m book entry only form
the payment of the pnnclpal of and redemptIon premIUm If any and mterest on thIS Bond shall
be paId m ImmedIately avaIlable funds m such manner as determmed by the Authonty the
Trustee and the Owner
It IS hereby certIfied that all t1ungs condItIons and acts reqUIred to eXIst to have
happened and to have been performed precedent to and m the Issuance of thIS Bond do eXIst
have happened and have been performed m 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 mdebtedness of the Authonty does not exceed any limIt prescnbed
by the ConstItutIon or statutes of the State of Cali forma 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
manually sIgned by the Trustee
Tins Bond IS one of a duly authonzed Issue of bonds of the Authonty deSIgnated the
Lake Elsmore Public Fmancmg Authonty Local Agency Revenue Bonds (Wasson Canyon)
2007 Senes A (the Bonds) limIted m pnnclpal amount to $ secured by an
Indenture of Trust dated as of November I 2007 (the Indenture) by and between the
Authonty and the Trustee Reference IS hereby made to the Indenture and all mdentures
supplemental thereto for a descnptlOn of the nghts thereunder of the owners of the Bonds of the
nature and extent of the Revenues (as that term IS defined m the Indenture) of the nghts dutIes
and Immumtles of the Trustee and of the nghts and obligatIOns of the Authonty thereunder and
all of the terms of the Indenture are hereby mcorporated herem and constItute a contract between
the Authonty and the RegIstered Owner hereof and to all of the provISIons of winch Indenture
the RegIstered Owner hereof by acceptance hereof assents and agrees
The Bonds are authonzed to be Issued pursuant to the provISIons of the Marks Roos
Local Bond Pooling Act of 1985 constItutmg ArtIcle 4 (commencmg WIth SectIOn 6584) of
Chapter 5 of DIvIsIOn 7 of TItle I of the Government Code of the State of Cali forma (the Act)
The Bonds are specIal obligatIOns of the Authonty and as and to the extent set forth m the
Indenture are payable solely from and secured by a first lien and pledge of the Revenues and
certam other moneys and secuntles held by the Trustee as provIded m the Indenture All of the
Bonds are equally secured by a first pledge of and charge and lien upon all of the Revenues and
such other moneys and secuntIes and the Revenues and such other moneys and secuntIes
constItute a trust fund for the secunty and payment of the pnnclpal of and mterest and premIUm
60031213 1
A2
Agenda Item No 2
Page 176 of 316
(If any) on the Bonds The full faIth and credIt of the Authonty IS not pledged for the payment of
the pnnclpal of or mterest or redemption premIUms (If any) on the Bonds The Bonds are not
secured by a legal or eqUItable pledge of or charge hen or encumbrance upon any of the
property of the Authonty or any of Its mcome or receIpts except the Revenues and such other
moneys and secuntles as provIded m the Indenture
The Bonds have been Issued to proVIde funds to be apphed by the Authonty to purchase
of bonds of CIty of Lake Elsmore Commumty FacJ!ltles Dlstnct No 2005 5 (Wasson Canyon)
(the Dlstnct Bonds) as more partIcularly descnbed m the Indenture
The Bonds are subject to redemption pnor to theIr matunty date at the optIOn of the
Authonty on any date on or after September I 2008 as a whole or m part on a pro rata baSIS and
by lot wltlun a matunty from any aVailable source of funds at the followmg redemptIOn pnces
(expressed as percentages of the pnnclpal aJilount of the Bonds to be redeemed) together WIth
accrued mterest thereon to the date fixed for redemptIOn as follows
RedemptIOn Dates
Redemption Pnces
The Bonds matunng September I _ are subject to mandatory redemptIOn m part by lot
on September I m each year commencmg September I 20_ from mandatory smkmg payments
made by the Authonty as proVIded m the Indenture at a redemption pnce equal to the pnnclpal
aJilOUllt thereof to be redeemed WIthout premIUm plus accrued mterest thereon to the date of
redemptIOn m the aggregate pnnclpal aJilOUlltS and on September I m the respective years as set
forth m the followmg schedules provIded however that (I) m heu of redemptIOn thereof such
Bonds may be purchased by the Authonty and tendered to the Trustee and (11) If some but not all
of such Bonds have been redeemed pursuant to the redemption provIsIOns descnbed above or
below the total aJilount of all future mandatory smkmg payments WIll be reduced by the
aggregate pnnclpal aJilOUllt of such Bonds so redeemed to be allocated aJilong such mandatory
sInking payments on a pro rata baSIS (as nearly as practicable) m mtegral multiples of $5 000 as
determmed by the Authonty
TERM BOND MATURING SEPTEMBER 1.
Smkmg Fund
RedemptIOn Date
(September 1 )
PnnClpal AmOUllt
to be Redeemed
*matunty
600312\3 1
A3
Agenda Item No 2
Page 177of316
The Bonds shall also be subject to mandatory redemptIon on any date on or after March
I 2008 m whole or m part on a pro rata basIs and by lot Wlthm a matunty from the redemptIOn
of DIStnCt Bonds from amounts constItIItmg prepayments of SpecIal Taxes from amounts
transferred from the ReSIdual Fund under the FIscal Agent Agreement and from amounts
transferred by the Authonty to the DIStnCt from the ReSIdual Fund under the Indenture at the
followmg redemptIOn pnces (expressed as a percentage of the pnncIpal amount of Bonds to be
redeemed) together WIth accrued mterest thereon to the redemptIOn date
RedemptIOn Dates
RedemptIOn Pnces
The Bonds are subject to specIal mandatory redemptIon on any date to whICh tImely
notIce of redemptIOn may be gIven m mtegral multIples of $5 000 equal to the pnncIpal amount
of DIstnct Bonds redeemed from unused proceeds of the DIStnCt Bonds after completIOn or
abandomnent of the Improvements to be financed WIth such proceeds from the depOSIt of fees
WIth the DIStnct by a publIc agency whIch has accepted facilItIes servmg an area of the DIstnct
and from msurance or condemnatIon proceeds WIthout premIUm plus accrued mterest to the
redemptIon date on a pro rata basIS and by lot wIthm a matunty
IN WITNESS WHEREOF the Authonty has caused thiS Bond to be executed m ItS name
and on ItS behalf by the manuaJ sIgnatIIres of ItS ChllIrperson and Secretary all as of the Dated
Date IdentIfied above
LAKE ELSINORE PUBLIC FINANCING
AUTHORITY
By
ChaIrman
Attest
Secretary
60031213 I
A4
Agenda Item No 2
Page 178 of 316
TRUSTEE S CERTIFICATE OF AUTHENTICATION
This IS one of the Bonds descnbed m the Wlthm mentIOned Indenture and registered on
the registratIOn books of the Trustee
Dated
2007
UNION BANK OF CALIFORNIA N A
as Trustee
By
Authonzed Signatory
60031213 1
A5
Agenda Item No 2
Page 1790f316
ASSIGNMENT
For value receIved the undersIgned hereby sells asSIgnS and transfers unto
(Name Address and Tax IdentIficatIOn or SOCIal Secunty Number of ASSIgnee)
the WIthIn Bond and hereby lITevocably constItute(s) and appoInt(s)
attorney to transfer the same on the regIstratIon books of the Trustee WIth full power of
substItutIOn In the premIses
Dated
SIgnature Guaranteed
SIgnature
Note SIgnature(s) must be guaranteed by an
elIgIble guarantor InstItutIon
Note The sIgnature(s) on thIS asSIgnment
must correspond WIth the name(s) as wntten on
the face of the wIthm regrstered Bond In every
partIcular WIthout alteratIon or enlargement or
any change whatsoever
60031213 1
A6
Agenda Item No 2
Page 180 of 316
NEW ISSUE BOOK ENTRY ONLY
NOT RATED
(See CONCLUDING INFORMATION No Ratmgs on the Bonds herem)
In the opinion of Fulbrzght & Jaworski L L P Los Angeles Califorma Bond Counsel under eXlstmg law mterest on the Bonds IS exempt
from personal Income taxes of the State of Califorma and assummg compliance wlth the tax covenants described herem mterest on the
Bonds IS excluded pursuant to sectzon 103(0) afthe Internal Revenue Code of 1986 (the Code } from the gross Income a/the owners
thereof for federal mcome tax purposes and IS not an !tern of preference under see/JOn 57(0) of the Code for purposes of the federal
alternatIve minimum tax See LEGAL .MATTERS Tax Matters herem regardmg cerlam other tax conslderatlOns
COUNTY OF RIVERSIDE
STATE OF CALIFORNIA
$3,290,0000*
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BONDS
(WASSON CANYON) 2007 SERIES A
Dated Date of Delivery Due September 1 as shown below
This cover page contams certam mformanon for qUick reference only It IS not a summary of the Issue PotentlallDvestors must
read the ennre OffiCial Statement to obtam mformation essential to the makmg of an mformed mvestment deCISIon Investment
m the Bonds (as defined herem) mvolves nsks See BONDOWNERS RISKS herem for a diSCUSSion of special nsk factors that
should be conSidered ID evaluatmg the investment quabty of the Bonds
Interest on the Bonds IS payable semiannually on March 1 and September I of each year commencmg March 1 2008 unt11 matunty or
earher redemptIon thereof (see 'THE BONDS General PrOVISions and 'THE BONDS Redempnon herem)
The mformatIon contamed wIthm thIS OffiCIal Statement was prepared under the directIOn
of the Lake Elsmore Public Fmancmg Authonty (the Authonty) by the followmg firm servmg as Fmancmg Consultant to the Authonty
ROD GUNN ASSOCIATES INC
MATURITY SCHEDULE
$ * SERIAL BONDS
MatUrity Date
SeDtember 1
2009
2010
2011
2012
2013
2014
2015
Prmcipal
Amount
Interest
Rate
Reoffermg
Rate
Matunty Date
Seotember 1
2016
2017
2018
2019
2020
2021
Pnnclpal
Amount
Interest
Rate
Reoffermg
Rate
$ * / Term Bond due September 1 2024 PrIce /0
$ * _0/ Term Bond due September 1 2038 PrIce /
Proceeds from the Bonds WIll be used m part to acqUIre on the dehvery date of the Bonds the DIstnct Bonds (as defined herem) to be
Issued under the Mello Roos Community FacIlitIes Act of 1982 as amended (SectIons 53311 et seq of the Government Code of the State
of CalIfornIa) The Bonds are specIal obhgatlons of the Authonty payable solely from and secured by revenues from repayment of the
DIstnct Bonds the Reserve Account held by the Trustee (as defined herem) and under certam CIrcumstances by any avaIlable surplus
revenues WIth respect to other senes of bonds Issued by the Authonty as descnbed herem Repayment of the DIstnct Bonds will be from
the Special Taxes (as defined herem) to be leVied agamst certam real property wIthm CIty of Lake Elsmore Commumty Faclhhes DIstnct
No 2005 5 (Wasson Canyon) as descnbed herem (see SOURCES OF PAYMENT FOR THE BONDS and BONDOWNERS RISKS
herem) It IS antIcIpated that the Bonds m book entry form Will be avaIlable for delivery through the faCIlItIes of The Depository Trust
Company on or about _ 2007 (see APPENDIX I BOOK ENTRY SYSTEM) The date of the Officlal Statement IS
Prehmmary subject to change
SOUTHWEST SECURITIES, INC
Agenda Item No 2
Page 181 of 316
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LAKE ELSINORE, CALIFORNIA
AUTHORITY BOARD AND CITY COUNCIL
Robert E Magee Mayor
Daryl Hickman Mayor Pro Tem
Robert Schiffner CouncIl Member / PFA Chair
Thomas Buckley CouncIl Member / PFA Vice Chair
Geme Kelley CouncIl Member
CITY STAFF
Robert A Brady City Manager
Matt N Pressey DIrector of AdminIstratIve ServIces
VIvian Munson City Clerk
PROFESSIONAL SERVICES
Bond Counsel and Disclosure Counsel
Fulbnght & Jaworski L L P
Los Angeles Californ18
City Attorney
Leibold McClendon & Mann PC
Laguna Hills Califorma
Fmancmg Consultant
Rod Gunn Associates Inc
Huntmgton Beach California
Appraiser
Hams Realty Appraisal
Newport Beach Californ18
Market AbsorptIon Study
Empire Economics Inc
Capistrano Beach California
UnderwrIter
Southwest Secuntles Inc
Newport Beach California
SpeCial Tax Consultant
Hams & Associates
Irvme California
Trustee and Fiscal Agent
Umon Bank ofCaliforn18 N A
Los Angeles Cahforn18
UnderWrIter s Counsel
McFarlin & Anderson LLP
Lake Forest California
FOR ADDITIONAL INFORMATION
Matt Pressey City of Lake Elsmore (951) 6743124
Southwest Secunl1es Inc (949) 717 2000
111
Agenda Item No 2
Page 182 of 316
GENERAL INFORMATION ABOUT THE OFFICIAL STATEMENT
Use of OfficIal Statement 11l1s Offic]al Statement IS submItted m connectIOn WIth the offer and sale of the Bonds
referred to herem and may not be reproduced or used 10 whole or 10 part for any other purpose Th]s OffiCial
Statement IS not to be construed as a contract wIth the purchasers of the Bonds
EstImates and Forecasts When used In thIS OffiCial Statement and III any contmumg disclosure by the Dlstnct III
any press release and 10 any oral statement made WIth the approval of an authonzed officer of the City the words or
phrases Will hkely result are expected to 'will contmue ]S antlc]pated eslImate 'project forecast
expect Intend and SImilar expressIOns Identify forward lookmg statements wlthm the meanmg of the Pnvate
SecunlIes L1t]gatlOn Reform Act of 1995 SectIOn 2IE of the UOIted States Secur]lIes Exchange Act of 1934 as
amended and SectIOn 27 A of the UOIted States Secuntles Act of 1933 as amended Such statements are subject to
nsks and uncettamlIes that could cause actual results to differ matenally from those contemplated 10 such forward
lookmg statements Any forecast IS subject to such uncertamtIes Inevitably some assumptions used to develop the
forecasts Will not be reahzed and unantlc]pated events and CIrcumstances may occur Therefore there are hkely to
be differences between forecasts and actual results and those mfferences may be matenal The mformalIon and
expreSSIOns of OpInIOn herem are subject to change WIthout notIce and neither the dehvery of thiS OffiCial Statement
nor any sale made hereunder shall under any CIrcumstances give nse to any ImphcatlOo that there has been no
change m the affOlrs of the Dlslnct or any other entIty descnbed or referenced herem smce the date hereof Ne]ther
the Authonty nor the Dlstnct plan to Issue any updates or reVISiOns to the forward loolang statements set forth In
thiS OffiCial Statement
LImIted Offermg No dealer broker salesperson or other person has been authonzed by the Authonty or the
Dlstnct 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 representatIOn must not be relIed
upon as havmg been authonzed by the Authonty the D]slnct or the Underwnter Th]s OffiCial Statement does not
constitute an offer to sell or the SohcltalIon of an offer to buy nor shall there be any sale of the Bonds by a person 10
any JunsdlCtlOn In which It IS unlawful for such person to make such an offer solICItatIon or sale
Involvement of Underwriter The Underwnter has suboutted the followmg statement for mcluslOn 10 thIs OffiCial
Statement The Underwriter has reVIewed the informatIon In thiS OffiCial Statement In accordance With and as a part
of ItS responsibIlItIes to Investors under the federal secuntles laws as applIed to the facts and circumstances of thIS
transactIOn but the Underwriter does not guarantee the accuracy or completeness of such informatIon The
mformatIon and expressIOns of opinIOns herem are subject to change Without notIce and neIther 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 DiStrict the CIty or any other entIty descnbed or referenced herem smce the date
hereof All summanes of the documents referred to 10 thiS OffiCial Statement are made subject to the provIsIOns of
such documents and do not purport to be complete statements of any or all of such proVISIOns
StabIlIzatIOn 0/ Pnces ]0 connectIon With thiS offenng the Underwnter may over allot or effect transactIons whIch
stab]hze or mamtam the market pnce of the Bonds at a level above that whIch ought otherwIse preVail 10 the open
market Such stabilIZIng If commenced may be dlscontmued at any lime The Underwnter may offer and sell the
Bonds to certam dealers and others at pnces lower than the public offenng pnces set forth on the mSIde cover page
hereof and saId pubhc offenng pnces may be changed from time to time by the Underwriter
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURlTlES ACT OF 1933 AS AMENDED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH
ACT THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURlTlES LAWS OF
ANY STATE
IV
Agenda Item No 2
Page 183of316
TABLE OF CONTENTS
INTRODUCTORY STATEMENT I Partial RedemptIOn 21
THE AUTHORITY I ADDITIONAL OBLIGATIONS 21
THE DISTRICT 2 The Bonds 21
AuthorIzation 2 The Dlstnct Bonds 21
FormatIOn 2 SCHEDULED DEBT SERVICE ON THE
Bond AuthonzatlOn and Issuance 2 BONDS 23
General LocaUon and Boundaries 2 SCHEDULED DEBT SERVICE ON THE
The Property Owners and the Developer 2 DISTRICT BONDS 25
Planned Development 3 SOURCES OF PAYMENT FOR THE BONDS 27
Status of Development 3 REPAYMENT OF THE BONDS 27
SECURITY AND SOURCES OF General 27
REPAYMENT 4 ApphcatlOn of Revenues Flow of Funds 27
The Bonds 4
The DlStnct Bonds 5 Reserve Account 28
ReSIdual Fund 28
PURPOSE 5 Cash Flow Management Fund 29
The Bonds 5
The DlStnct Bonds 5 RedemptIOn Fund 29
THE BONDS 6 REPAYMENT OF THE DISTRICT BONDS 29
RedemptIOn 6 General 29
DenommatIons 6 SpecIal Taxes 30
ReglStraUon Transfer and Exchange 6 ApphcatlOn of SpecIal Taxes Flow of Funds 30
Payment 6 Dehnquency Management Fund 31
Notice 7 RedempUon Fund 31
LEGAL MATTERS 7 Covenant for Supenor Court Foreclosure 32
PROFESSIONAL SERVICES 7 BONDOWNERS RISKS 34
OFFERING OF THE BONDS 7 THE BONDS 34
Authonty for Issuance 7 Early Bond RedempUon 34
Offenng and Dehvery of the Bonds 8 No Llablhty of the Authonty to the Bondowners 34
CONTINUING DISCLOSURE 8 Loss of Tax ExemptIOn 34
AVAILABILITY OF LEGAL DOCUMENTS 9 IRS AudIts 34
AERIAL PHOTO 10 Secondary Market 35
SELECTED FACTS 11 THE DISTRICT BONDS 35
RISk Factors Relatmg to Real Estate Market
ESTIMATED SOURCES AND USES OF CondlUons 35
FUNDS 15 RISk Factors RelaUng to Land Values 36
THE BONDS l5 RIsk Factors Relatmg to the Levymg and
THE DISTRICT BONDS 16 CollectIOn of the SpeCIal Taxes 39
INVESTMENT OF FUNDS 16 RIsk Factors Relatmg to Tax Burden 44
THE BONDS 17 RIsk Factors Relatmg to Governmental Rules
AUTHORIZATION 17 ImtIatIves Etc 45
The Bonds 17 RIsk Factors Relatmg to LImItatIOns of the
The DlStnct Bonds 17 Bonds and the DlStnct 46
GENERAL PROVISIONS 17 THE AUTHORITY 48
Repayment of the Bonds 17 GENERAL 48
Transfer or Exchange of Bonds 17 CITY AND GOVERNMENT
Bonds MutIlated Lost Destroyed or Stolen 18 ORGANIZATION 48
REDEMPTION 18 DEBT SERVICE COVERAGE ON THE
OptIOnal RedempUon 18 AUTHORITY BONDS 49
SpeCIal Mandatory RedemptIOn 19 SPECIAL TAXES AND DISTRICT BONDS
Mandatory Smkmg Payment RedemptIOn 19 DEBT SERVICE COVERAGE 51
Mandatory RedemptIOn 20 ADMINISTRATION OF THE SPECIAL TAX 51
NotIce of RedemptIOn 20 RATE AND METHOD OF
Effect of RedempUon 21 APPORTIONMENT 51
v
Agenda Item No 2
Page 184 of 316
AssIgned Special Tax Rates 52 RedemptIOn Fund A9
Backup Special Tax 53 ResIdual Fund A 10
Rate and Method Of ApportIOnment 53 EstablIshment of ResIdual Fund A 10
SPECIAL TAX PROJECTIONS 54 DIsbursement A 10
ProjectIOn of Assigned Special Tax Rates 54 Bond Purchase Fund A 10
Square Footage And Product MIX AssumptIOns 57 Costs oflssuance Fund A 10
DEBT SERVICE COVERAGE ON THE Investments AU
DISTRICT BONDS 59 ValuatIOn and DIsposItIon of InveslInents AU
DELlNQUENCIES 61 COVENANTS OF THE AUTHORlTY AU
FORECLOSURE ACTIONS 61 Tax Covenants RelatIng to Bonds A 12
THE DISTRICT 63 Dlstnct Bonds A 15
MODIFICATION AND AMENDMENT OF
BOUNDARlES OF THE DlSTRlCT 63 THE lNDENTURE A 15
FACILITIES AND FEES ELIGIBLE TO BE Effect of Supplemental Indenture A 16
FlNANCED BY THE DlSTRlCT 65 EVENTS OF DEFAULT AND REMEDIES A 16
ESTIMATED COSTS OF FACILITIES 65 Events of Default A 16
THE DEVELOPER 67 Rememes Upon Event of Default A 17
DESCRIPTION OF DEVELOPMENT 67
Pnvate Improvements 67 ApplIcatIOn of Revenues and Other Funds After
Default A 17
PublIc Improvements 68 Power of Trustee to Control Proceedmgs A 18
HOME PRlClNG 69
District 69 AppomlInent of ReceIVers A 18
SALES HISTORY 69 Rlghts and RemedIes of Bond Owners A 18
TYPES OF MORTGAGE LOANS 71 Discharge of Indenture A 19
ESTIMATED ABSORPTION SCHEDULE 72 APPENDIX B SUMMARY OF THE FISCAL
FlNANClNG PLANS OF THE DEVELOPER 72 AGENT AGREEMENT Bl
HISTORY OF PROPERTY TAX PAYMENT DEFlNITIONS OF CERTAlN TERMS B I
LOAN DEFAULTS BANKRUPTCY 73 SPECIAL TAX FUND B4
LEGAL MATTERS 74 EstablIshment of SpeCial Tax Fund B4
EnforceabIlity of RemedIes 74 DIsbursements B-4
Investment B5
Approval of Legal Proceedmgs 74 DIspOSItIon of Surplus B5
Tax Matters 74
Absence of LitIgatIOn 76 ADMlNISTRATIVE EXPENSE FUND B5
EstablIshment of AmmmstratIve Expense Fund B 5
CONCLUDING INFORMATION 77 DIsbursement B5
NO RATINGS ON THE BONDS 77 Investment B5
UNDERWRITlNG 77 COSTS OF ISSUANCE FUND B5
EXPERTS 77 IMPROVEMENT FUND B6
THE FlNANClNG CONSULTANT 77 EstablIshment oflmprovement Fund B6
FORWARD LOOKlNG STATEMENTS 77 DELlNQUENCY MANAGEMENT FUND B6
ADDITIONAL lNFORMATlON 78 EstablIshment of DelInquency Management
EXECUTION 78 Fund B6
APPENDIX A SUMMARY OF THE DIsbursement B6
INDENTURE Al Investment B6
DefimtmD of Certam Terms 10 the Indenture Al Dlstnct ReSIdual Fund B7
REVENUES FLOW OF FUNDS A7 EstablIshment ofDlstnct ReSidual Fund B7
Pledge of Revenues ASSIgnment of Rights A7 DIsbursement B7
Investment B7
ReceIpt DepOSit and ApplIcatIOns of Revenues A7 DIstnct RedemptIOn Fund B7
DepOSIt of Revenues Revenue Fund A7
DepOSIt of Revenues Bond Funds A7 RedemptIon under the FIscal Agent Agreements B7
ApplIcatIOn of Revenues Bond Fund A8 EstablIshment of the Dlstnct RedemptIon Fund B9
DIsbursement B9
Surplus A8 Investment B9
Rebate Account A9 SPECIAL TAX REVENUES DlSTRlCT
Cash Flow Management Fund A9 BOND FUND B9
EstablIshment of Cash Flow Management Fund A9 Pledge of SpeCial Tax Revenues B9
DIsbursement A9
VI
Agenda Item No 2
Page 185 of 316
DISTRICT BOND FUND B 10
Establlshment ofDlstnct Bond Fund B ]0
DISbursements B 10
Capltallzed Interest Account B ] 0
Investment B ] 0
OTHER COVENANTS OF THE DISTRICT B] 0
Tax Covenants B ] 2
COVENANT TO FORECLOSE B]5
ANNUALREPORTSTOCDlAC B 16
CONTINUING DISCLOSURE TO OWNERS B 16
RESERVE ACCOUNT REPLEN]SHMENT B 16
INVESTMENTS DlSPOS]TlON OF
INVESTMENT PROCEEDS B 16
DepOSIt and Investment of Moneys m Funds B 16
EVENTS OF DEFAULT AND REMEDIES OF
BOND OWNERS B 17
Events of Default B 17
RemedIes of Bond Owners B 18
AppllcatlOn of SpecIal Taxes and Other Funds
After Default B ] 8
Rememes Not ExclusIve B 19
ActIOns by FIScal Agent as Attorney m Fact B 19
MODIFICATION OR AMENDMENT OF THE
AGREEMENT B 19
Amend1nents PermItted B 19
Owners Meetmgs B 20
Procedure for Amend1nent WIth Wntten Consent
of Owners B 20
DIscharge of Agreement B 20
APPENDIX C APPRA]SAL REPORT CI
APPENDIX D MARKET ABSORPTION
STUDY 01
APPENDIX E RATE AND METHOD OF
APPORTIONMENT E I
APPENDIX F TYPES OF MORTGAGE
LOANS FI
APPENDIX G FORMS OF CONTINUING
DISCLOSURE AGREEMENTS GI
APPENDIX H PROPOSED FORM OF BOND
COUNSEL OPINION HI
APPENDIX I BOOK ENTRY SYSTEM I I
VII
Agenda Item No 2
Page 186of316
INSERT VICINITY MAP #1
Vlll
Agenda Item No 2
Page 187of316
OFFICIAL STATEMENT
$3,290,0000*
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BONDS
(WASSON CANYON) 2007 SERIES A
This OffiCial Statement which mcludes the cover page and appendices (the OffiCial Statement) IS
provided to furnish certam mformal1on concernmg the sale of the Lake Elsmore Pubhc Fmancmg
Authonty Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A (the Bonds) m the aggregate
pnnClpal amount of $3 290 0000 ·
INTRODUCTORY STATEMENT
Th,s Introductory Statement contams only a brzef descrzptlOn of thIS Issue and does not purport to be
complete Th,s Introductory Statement IS subject m all respects to more complete mformatlOn m the
entire Official Statement and the offermg of the Bonds to potential mvestors IS made only by means of the
entire OffiCial Statement and the documents summarzzed herem Investment m the Bonds mvolves rzsks
PotentIal Investors must read the entire OffiCial Statement to obtam mformatlOn essential to the makmg
of an ,'!formed mvestment decIsIOn WIth respect to the Bonds (see 'BONDOWNERS RISKS herem)
THE AUTHORITY
The Lake Elsmore Pubhc Fmancmg Authonty (the Authonty) IS a Jomt exerCise of powers authonty
organized and eXlstmg under and by virlue of the Jomt Exercise of Powers Act consl1tutmg ArtICles I
through 4 (commencmg With Secl10n 6500) of Chapter 5 DIVISIOn 7 Title I of the Government Code of
the State (the Jomt Powers Act) The City of Lake Elsmore (the City ) pursuant to ResolutIOn No 89
32 adopted on July 25 1989 and the Lake Elsmore Redevelopment Agency (the Agency) pursuant to
ResolutIOn No 89 4 adopted on July 25 1989 formed the Authonty by the executIOn of a Jomt exercise
of powers agreement (the Jomt Powers Agreement) (see THE AUTHORITY herem) Pursuant to the
Jomt Powers Act the Authonty IS authonzed among other thmgs to Issue revenue bonds to proVide
funds to acqUire local obhgatlOns Issued to finance or refinance pubhc capital Improvements such
revenue bonds to be repaid from the repayment of the local obhgal1ons so acqUired by the Authonty
On the dehvery date of the Bonds the Authonty will acqUire bonds (the Dlstnct Bonds) to be Issued by
the City of Lake Elsmore Community Faclhl1es Dlstnct No 2005 5 (Villages at Wasson Canyon) (the
Dlstnct ) as descnbed herem secured and payable only from Special Taxes leVied wlthm the Dlstnct
(see SELECTED FACTS and SPECIAL TAXES AND DISTRICT BONDS DEBT SERVICE COVERAGE
herem)
The Authonty IS not authonzed to Issue any addll10nal bonds under the Indenture (as defined herem)
secured by repayment of the Dlstnct Bonds except for refundmg purposes (see THE BONDS -
ADDITIONAL OBLIGATIONS and THE AUTHORITY" herem) However the DIstnct IS authonzed to Issue
additIOnal bonds secured by the Special Taxes on a panty With the DIStnCt Bonds and the Authonty may
Issue bonds to acqUire the additIOnal bonds of the Dlstnct When and If Issued the Bonds and the new
Authonty bonds would be secured by separate bonds of the DistrIct which are m turn secured by the same
Special Taxes on a panty With each other
PrelImmary subject to change
Agenda Item No 2
Page 188 of 316
THE DISTRICT
AuthorizatIOn
The Mello Roos CommunIty FaClhtles Act of 1982 as amended constltutmg Section 53311 et seq of the
Government Code of the State of Cahfornla (the Act) was enacted by the Cahfornla LegIslature to
provIde an alternative method of financmg certam pubhc faclhtles Improvements and servICes The Act
authonzes local govemmental entities to estabhsh communIty faClhtles dlstncls as legally constituted
governmental entitIes wlthm defined boundanes WIth the legIslative body of the local governmental
entity actmg on behalf of such dlstnct Subject to approval by at least a two thIrds vote of the votes cast
by quahfied electors wlthm such dlstnct and comphance WIth the provIsIons of the Act the legIslative
body may Issue bonds for such community faclhtles dlstnct estabhshed by It and may levy and collect a
special tax (the Special Tax ) Wlthm such chstnct to repay such bonds (see "SELECTED FACTS" and
SPECIAL TAXES AND DISTRICT BONDS DEBT SERVICE COVERAGE herem)
FormatIOn
On August 9 2005 the CIty formed the Dlstnct by the adoption of ResolutIOn No 2005 104 On August
9 2005 the quahfied electors wlthm the DIstrIct approved the tax levy of the Special Tax m accordance
WIth the rate and method of apportIOnment (the Rate and Method of ApportIOnment ) and approved
Issuance of the bonds by the Dlstnct (see "SPECIAL TAXES AND DISTRICT BONDS DEBT SERVICE
COVERAGE herem and "APPENDIX E -RATE AND METHOD OF APPORTIONMENT)
Bond AuthOrization and Issuance
The bond authonzatlOn amount for the Dlstnct approved by the quahfied electors on _August 9 2005 IS
$8 500 000 On the date of dehvery of the Bonds the Dlstnct wIll Issue bonds (the DIStrICt Bonds) m
the pnnclpal amount of $3 290 0000' whICh wIll be acqUIred by the Authonty
After Issuance of the DIstrIct Bonds the Dlstnct may Issue an addItional senes of bonds secured by
SpeCial Taxes levIed m DIstrIct to fmance addItional faclhtles authonzed to be fmanced by the Dlstnct
(see THE BONDS - ADDITIONAL OBLIGATIONS - the DIstrict Bonds and SPECIAL TAXES AND DISTRICT
BONDS DEBT SERVICE COVERAGE herem)
General Location and Boundaries
The boundanes of the Dlstnct generally encompass the reSIdential communIty known as VIllages at
Wasson Canyon Villages at Wasson Canyon IS a 5854 gross acre reSIdential community planned for
190 homes (the Development) The Dlstnct IS generally located m an area known as Rosetta Hills
southeast of Highway 74 and northeast oflnterstate 15
The Property Owners and the Developer
As of October I 2007 the property owners are Lennar Homes of Cahfornla Inc a Cahfornla
corporation ( Lennar Homes ) GMAC Model Home Fmance LLC a Delaware hmlted habIllty
company ( GMAC Model Home Fmance LLC ) and 51mdlVldual homeowners GMAC Model Home
Fmance LLC IS the owner of the model homes At or near the sale of all production homes Lennar
Homes WIll begm marketmg as selhng agent for GMAC Model Home Fmance LLC all model homes to
mdlvldual homeowners
The sole bUIlder m the Development IS Lennar Homes (sometimes referred to herem as the Developer)
Lennar Homes IS a Cahfornla corporatIOn based m Ahso VIeJo Cahfornla that has been m the busmess of
developmg reSIdential real estate communities m Cahfornla smce 1995 Lennar Homes IS a wholly
2
Agenda Item No 2
Page 189of316
owned Subsidiary of Lennar Homes lnc a Flonda corporal1on which IS a wholly owned SUbSidiary of
Lennar CorporatIOn
Planned Development
Lennar Homes is bUlldmg two product hnes m the DIStnct referred to as Magnoha and Pnmrose
Magnoha consists of 93 lots and Pnmrose consists of 97 lots Shown m the table below are the square
footage and sales pnces as of October I 2007 for each floor plan offered m the Magnoha and Pnmrose
product hnes (see THE DISTRICT herem)
MAGNOLIA
PRIMROSE
Sauare Footalle
Sales Pnce
Souare Footalle
Sales Price
Plan 1
2904
$352 990
Plan 1
3504
$368 990
Plan 2
3049
359290
Plan 2
3676
370490
Plan 3
3399
383 490
Plan 3
3875
386 990
Source Lennar Homes
* Prehmmary subject to change
Status of Development
As of October 1 2007 Magnoha had 14 produCl1on homes under constructIOn and 36 completed homes
As of October I 2007 there were 33 closed escrows and an additIOnal 11 homes m escrow wIthm the
Magnoha subdiVISIOn As of October 1 2007 Pnmrose had 12 productIOn homes under constructIOn and
25 completed homes As of October 1 2007 there were 24 closed escrows and an additIOnal 7 homes m
escrow wlthm the Pnmrose subdIvIsion
The table below summanzes the status of the constructIOn and sale of homes m each of the Magnoha and
Pnmrose product hnes as October 1 2007
3
Agenda Item No 2
Page 190 of 316
Production U mts Homes Homes wIth Closed
Total Lots Under Construction Comoleted Escrows Homes m Escrow
Magnolia 93 14 36 33 11
Pnmrose 97 II 2S 24 1
Total 190 26 61 57 18
Source Lennar Homes
As IS common With sales at this stage of development the sales are subject to a number of contmgencles
and Lermar Homes can prOVide no assurance that the current sales wIll result m closed escrows See
THE DISTRICT herem for a descnptlOn of development wlthm the Dlstnct See also THE DISTRICT -
ESTIMATED ABSORPTION SCHEDULE And THE DISTRICT - SALES mSTORY herem
SECURITY AND SOURCES OF REPAYMENT
The Bonds
The Bonds are secured under an Indenture of Trust dated as of November I 2007 (the Indenture)
between the Authonty and Umon Bank of CalifornIa N A Los Angeles California as trustee (the
Trustee) (see APPENDIX A SUMMARY OF THE INDENTURE) The Bonds are speCIal obligatIOns of
the Authonty payable solely from and secured by the proceeds of
(I) Payment of the Dlstnct Bonds to be acqUIred by the Authonty WIth the proceeds of the Bonds
(11) The Reserve Account established With the proceeds of the Bonds and held pursuant to the
Indenture
(m) Any mvestment eammgs With respect to such moneys except to the extent transferred to or
held m the ReSidual Fund
(IV) Any momes that may be aVailable from the Cash Flow Management Fund established and held
pursuant to the Indenture
(collectIvely the Revenues)
In addition the Bonds may be payable from any avaIlable surplus revenues WIth respect to other senes of
local agency revenue bonds related to commumty faCilitIes dlstncts Issued by the Authonty to the extent
such surplus revenues are avaIlable to replemsh the Reserve Account to ItS reqUIrement and to replemsh
the Cash Flow Management Fund (as defined m the Indenture) to ItS reqUIrement (see SOURCES OF
PAYMENT FOR THE BONDS" and "BONDOWNERS RISKS herem)
The Bonds are speCIal oblIgatIons of the AuthOrIty The Bonds do not constItute a debt or lIabIlity
of the CIty State of CalIforma (the State) or of any politIcal subdIVISIon thereof other than the
AuthorIty The AuthOrIty shaD only be oblIgated to pay the prmclpal of the Bonds or the mterest
thereon from the funds deSCrIbed herem and neIther the faIth and credIt nor the taxmg power of
the DIstrIct (except to the lImIted extent deSCrIbed herem) the CIty the State or any of ItS polItIcal
subdIVISIons IS pledged to the payment of the prmclpal of or tbe mterest on the Bonds The
AuthOrIty does not have any taxmg power
4
Agenda Item No 2
Page 191 of 316
The DIstrIct Bonds
The Dlstnct Bonds are bemg Issued pursuant to a Fiscal Agent Agreement dated as of November I 2007
(the Fiscal Agent Agreement) between the Dlstnct and Umon Bank of Cahfomla N A Los Angeles
Cahfomla as the Fiscal Agent (the Fiscal Agent) (see APPENDIX B SUMMARY OF TIlE FISCAL
AGENT AGREEMENT )
The Dlstnct has covenanted m the Fiscal Agent Agreement to levy m each Fiscal Year the Special Taxes
on parcels of land wlthm the Dlstnct pledged to the repayment of the Dlstnct Bonds m an amount
sufficient to pay Annual Debt Service on the Dlstnct Bonds mcludmg an allowance for dehnquencles and
the adrmmstrattve expenses related to the Dlstnct subject to the hmltatlon on the maximum annual
Special Tax that may be leVied on such land wlthm the Dlstnct (see "SPECIAL TAXES AND DISTRICT
BONDS DEBT SERVICE COVERAGE for a descnptton of the Special Tax wlthm the Dlstnct) (see also
SOURCES OF PAYMENT FOR TIlE BONDS and BONDOWNERS RISKS herem)
The Dlstnct Bonds are specIal obhgatlons of the Dlstnct The DIstrIct Bonds do not constItute a
debt or habIiIty of the CIty the State or of any pohncal subdIvIsIon thereof other than the Dlstnct
The Dlstnct shall only be obhgated to pay the pnnclpal of the Dlstnct Bonds or the mterest
thereon from the funds and accounts held pursuant to the FIscal Agent Agreement descnbed
herem and neIther the faIth and credIt nor the taxmg power of the CIty the State or any of Its
pohncal subdIvIsIons IS pledged to the payment of the pnnclpal of or the mterest on the Dlstnct
Bonds The Dlstnct has no ad valorem taxmg power (see "SOURCES OF PAYMENT FOR TIlE BONDS
and BONDOWNERS RISKS herem)
PURPOSE
The Bonds
A portton of the proceeds from the Bonds Will be used to acqUIre the Dlstnct Bonds on the date of
dehvery of the Bonds In addltton Bond proceeds Will be used to make a depOSit to the Reserve Account
and to pay the expenses of the Authonty and the Dlstnct m connectIOn With the Issuance of the Bonds and
the Dlstnct Bonds The amount of Bond proceeds deposited mto the Reserve Account Will be m an
amount equal to $ · (see ESTIMATED SOURCES AND USES OF FUNDS and SOURCES OF
PAYMENT FOR TIlE BONDS - REPAYMENT OF TIlE BONDS herem)
The Dlstnct Bonds
The Dlstnct Bonds are bemg Issued to prOVide the Dlstnct With funds to finance pubhc mfrastructure and
capital fees related to the Dlstnct (see TIlE DISTRICT - FACILITIES AND FEES ELIGIBLE TO BE
FINANCED BY TIlE DISTRICT herem) to fund mterest on the Dlstnct Bonds to and mcludmg September
I 2008 and to pay the expenses of the Dlstnct m connectIOn With the Issuance of the Dlstnct Bonds (see
"ESTIMATED SOURCES AND USES OF FUNDS herem)
PrelImmary subject to change
5
Agenda Item No 2
Page 192of316
THE BONDS
RedemptIOn
The Bonds are subject to opllonal redemptIOn pnor to matunty m whole or m part on a pro rata basIs and
by lot wlthm a matunty on September I 2008 and on any date thereafter at a redempllon pnce equal to
the pnnclpal amount thereof plus accrued mterest to the date of redemptIOn plus a premIUm as descnbed
herem (see THE BONDS REDEMPTION OpnonaI Redempnon herem)
The Bonds are subject to speCIal mandatory redempllon m whole or m part on a pro rata basIs and by lot
wlthm a matunty on any date on or after March I 2008 from redemptIOn of Dlstnct Bonds from
amounts constltutmg prepayments of SpeCIal Taxes from amounts transferred by the Authonty to the
Dlstnct from the ReSidual Fund held under the Indenture and from amounts transferred from the ReSIdual
Fund under the FIscal Agent Agreement for the redemptIOn of DIStrICt Bonds at a redemptIOn pnce equal
to the pnnClpal amount thereof plus accrued mterest to the date of redemptIOn plus a premIUm as
descnbed herem (see THE BONDS REDEMPTION - SpeCIal Mandatory Redempnon" herem)
The Bonds matunng September I 2024 and September I 2038 are subject to mandatory smkmg
payment redempllon WIthout premIum pnor to theIr matunty date m part by lot on September I m each
year commencmg September I 2022 With respect to the Bonds matunng September I 2024 and
September I 2025 WIth respect to the Bonds matunng September I 2038 from Smkmg Account
payments under the Indenture (see "THE BONDS REDEMPTION - Mandatory Smkmg Payment
RedemptIOn" herem)
The Bonds are subject to mandatory redemptIOn m whole or m part on a pro rata baSIS and by lot wlthm
a matunty on any date WIthOut prenuum from msurance condemnatIOn proceeds or unused proceeds (see
THE BONDS - REDEMPTION -Mandatory RedemptIOn" herem)
DenommatIons
The Bonds will be Issued m the nummum denommallon of $5 000 each or any mtegral mulllple thereof
(see THE BONDS GENERAL PROVISIONS herem)
RegistratIon, Transfer and Exchange
The Bonds Will be Issued m fully regIstered form WIthout coupons Any Bond may m accordance WIth
ItS terms be transferred or exchanged pursuant to the proVISIons of the Indenture (see THE BONDS
GENERAL PROVISIONS Transfer or Exchange of Bonds herem) When delIvered the Bonds will be
registered m the name of The DepOSItory Trust Company New York New York ("DTC ) or ItS nommee
DTC WIll act as secunlles depOSitory for the Bonds IndiVidual purchases of Bonds will be made m book
entry form only m the pnnclpal amount of $5 000 each or any mtegral thereof Purchasers of the Bonds
will not receIve certIficates representmg thelf Bonds purchased (see APPENDIX I BOOK ENTRY
SYSTEM")
Payment
PnnClpal of the Bonds and any premIUm upon redemptIOn will be payable m each of the years and m the
amounts set forth on the cover page hereof upon surrender at the corporate trust office of the Trustee m
Los Angeles CalIfornIa Interest on the Bonds will be paid by check of the Trustee mailed by first class
mail on the Interest Payment Date (as defined m the Indenture) to the person entItled thereto (except as
otherwise descnbed herem for mterest paid to an account m the contmentaJ Umted States of Amenca by
wire transfer as requested m wnllng no later than the Record Date (as defmed m the Indenture) by owners
of $1 000000 or more m aggregate pnnclpal amount of Bonds) (see THE BONDS GENERAL
PROVISIONS herem) Imllally mterest on and prmclpal and premIum If any of the Bonds will be
payable when due by wIre of the Trustee to DTC whIch will m turn remit such mterest pnnclpal and
6
Agenda Item No 2
Page 193of316
prenuum If any to DTC ParticIpants (as defined herem) whICh wIll m turn remIt such mterest princIpal
and premlUm If any to BeneficIal Owners (as defined herem) of the Bonds (see APPENDIX I BOOK
ENTRY SYSTEM herem)
Notice
Notice of any redemptIOn wIll be maIled by first class maIl by the Trustee at least lblrty (30) but no more
than SIXty (60) days prior to lbe date fixed for redemptIon to lbe registered owners of any Bonds
desIgnated for redemptIOn and to lbe SecuritIes DeposItories and InformatIOn ServIces provIded m lbe
Indenture Nellber failure to receIVe such notIce nor any defect m the notIce so maIled WIll affect lbe
suffiCiency of lbe proceedmgs for redemptIOn of such Bonds or lbe cessatIon of accrual of mterest on the
redemptIOn date (see THE BONDS REDEMPTION Notice of RedemptIon herem)
LEGAL MATTERS
The legal proceedmgs m connectIon wllb the Issuance of lbe Bonds are subject to lbe approvmg opmlOn
of Fulbright & JaworskI L L P Los Angeles CalIfornia as Bond Counsel Such oplllion and certam tax
consequences mCldent to the ownershIp of the Bonds mcludmg certam exceptIOns to the tax treatment of
mterest are descrlhed more fully under the headmg "LEGAL MATTERS herem CertaIn legal matters Will
be passed on for lbe City by LeIbold McClendon & Mann PC Laguna Hills CalIfornIa as CIty
Attorney and by Fulbright & JaworskI L L P Los Angeles CalIfornia as DIsclosure Counsel Certam
legal matters wIll be passed on for the UnderWriter by McFarlm & Anderson LLP Lake Forest
CalIfornia Underwnter s Counsel and for lbe Developer by Goodwm Procter LLP Los Angeles
CalIfornia
PROFESSIONAL SERVICES
Umon Bank of CalIfornia N A Los Angeles CalIfornIa wIll serve as Trustee under the Indenture and
Fiscal Agent under the FIscal Agent Agreement The Trustee wIll act on behalf of lbe Bondowners for lbe
purpose ofrecelVlng all moneys reqUIred to be paid to lbe Trustee to allocate use and apply lbe same to
hold receIve and dIsburse the SpecIal Taxes and olber funds held under lbe Indenture and olberwlse to
hold all lbe offices and perform all the functIOns and dutIes provided m lbe Indenture to be held and
performed by lbe Trustee
Harns & ASSOCIates Irvme CalIfornia Special Tax Consultant prepared lbe cash flow certIficate for lbe
Dlstnct demonstratmg lbat lbere wIll be suffiCIent SpecIal Taxes assunung tImely receipt to pay debt
servICe on lbe Bonds (see CONCLUDING INFORMATION - Experts" herem)
Rod Gunn ASSOCIates Inc Huntmgton Beach CalIfornia Fmancmg Consultant adVIsed the CIty and the
AuthOrity as to the financial structure and certam other financIal matters relatmg to lbe Bonds
Fees payable to Bond Counsel DIsclosure Counsel Underwnter s Counsel and lbe Fmancmg Consultant
are contmgent upon lbe sale and delIvery of lbe Bonds
OFFERING OF THE BONDS
AuthOrIty for Issuance
The Bonds are Issued m accordance WIth lbe laws of lbe State and partIcularly the Marks Roos Local
Bond PoolIng Act of 1985 as amended constItutmg ArtIcle 4 (commencmg wllb SectIOn 6584) of
Chapter 5 DIVISion 7 Tale I of lbe Government Code of lbe State (the Bond Law )
The Bonds are bemg Issued by lbe AuthOrity pursuant to lbe Indenture The Aulborlty IS not aulborlzed to
Issue any addItIOnal bonds under lbe Indenture secured by repayment of the DIstrict Bonds except for
7
Agenda Item No 2
Page 194 of 316
refundmg purposes The Dlstnct IS authonzed to Issue additIOnal bonds secured by the Special Taxes
levied wlthm the Dlstnct and pledged pursuant to the Fiscal Agent Agreement (see "THE BONDS -
ADDITIONAL OBLIGATIONS herem)
Offermg and Delivery of the Bonds
The Bonds are offered when as and If Issued subject to the approval as to their legahty by Fulbnght &
Jaworski L L P Los Angeles Cahfomla as Bond Counsel It IS anticipated that the Bonds m book entry
form will be available for dehvery through the faclhlles of DTC on or about , 2007 The Bonds
are bemg sold to Southwest Secunlles Inc (the Underwnter) pursuant to a Purchase Contract approved
by the Authonty by Resolullon No PFA--, adopted October 23 2007
CONTINUING DISCLOSURE
The Authonty has detenruned that except for mformatlOn relatmg to fund balances held by the Trustee
With respect to the Bonds no financial or operatmg data concernmg the Authonty IS matenal to any
deCISIOn to purchase hold or sell the Bonds and the Authonty Will not prOVide any such mformatlOn The
Dlstnct has undertaken aU responslblhlles for any contmumg disclosure to Bond Owners as descnbed
below and the Authonty shall have no hablhty to the Owners (as defined m the Indenture) of the Bonds
or any other person With respect to such disclosures
The Dlstnct and the Developer have covenanted for the benefit of Owners of the Bonds to prOVide certam
financial mformatlOn and operatmg data relatmg to the Dlstnct each year The Dlstnct and the Developer
have agreed to make such mformatlOn available not later than 225 days after the end of the City s fiscal
year commencmg With fiscal year endmg June 30 2007 m the case of the Dlstnct and May I of each
year m the case of the Developer commencmg May I 2008 (each an Annual Report and collecllvely
the Annual Reports) and to proVide nollces of the occurrences of certam enumerated events If
matenal The Dlstnct and the Developer shall file or cause to be filed the Annual Reports With each
NatIOnally Recogmzed MuniCipal Secunlles InformatIOn RepOSitory and With the appropnate State
InformatIOn Depository If any The nollces of matenal events Will be filed by the Dlssemmallon Agent
on behalf of the Dlstnct and the Developer With the MuniCipal Securllles Rulemaklng Board (and With the
appropnate State InformatIOn DepOSitory If any) The speCific nature of mformallon to be contamed m
the Annual Reports or the nollce of matenal events IS set forth m "APPENDIX G FORMS OF CONTINUING
DISCLOSURE AGREEMENTS These covenants have been made by the Dlstnct and the Developer m order
to assist the Underwnter m complymg With the Rule 15c2 12 of the Secunlles Exchange Act of 1934 as
amended (the Rule) The Developer Will be released from Its obhgallon under the Property Owner
Contmumg Disclosure Agreement to prOVide an Annual Report at such lime as the property owned by the
Developer wlthm Dlstnct IS no longer obhgated to pay 20% or more of the SpeCial Taxes wlthm Dlstnct
The Dlstnct has never failed to meet ItS contmumg disclosure reqUirement under such Rule An
authonzed officer of the Developer will execute a certificate m which the Developer Will represent that
among other thmgs to the actual knowledge of such authonzed officer the Developer has not prevIOusly
failed to comply With any obhgatlOns Imposed upon It to prOVide pen odic contmumg disclosure reports or
notices of matenal events m the State of Cahfornla m the past five years
Each year unlll the final matunty of the Dlstnct Bonds the Dlstnct IS reqUITed to not later than October
30 of each year supply the followmg mformatlOn to the Cahfornla Debt and Investment AdVISOry
Commission by mail postage prepaid
I The pnnclpal amount of Dlstnct Bonds outstanding
2 The balance many Dlstnct Bonds Reserve Account
3 The balance many capltahzed mterest fund
8
Agenda Item No 2
Page 195 of 316
4 The number of parcels whICh are delinquent With respect to theIT Special Tax payments the amount
that each parcells delinquent the length of lime that each has been delinquent and when foreclosure
was commenced for each delinquent parcel
5 The balance m any constructIOn funds
6 The assessed value of all parcels subject to Special Tax to repay the District Bonds as shown on the
most recent equalized roll
In additIOn both the Authonty and the DiStriCt are requITed to nOlify the California Debt and Investment
AdVISOry CommiSSIOn by mail postage prepaid wlthm 10 days If any of the followmg events occur
I The Authonty the Dlstnct or Its Trustee fails to pay pnnclpal and mterest due on any scheduled
payment date
2 Funds are Withdrawn from any Reserve Account to pay pnnclpal and mterest on the Bonds or the
District Bonds
None of the District the Authonty or the Califonua Debt and Investment AdVISOry ComrrnsslOn will be
liable for any madvertent error m reportmg the reqUIred mformatlOn The failure by the District to
comply With ItS reportmg obligalions IS not Imlially a default under the Fiscal Agent Agreement
AVAILABILITY OF LEGAL DOCUMENTS
The SUmmanes and references contamed herem With respect to the IndentJrre the Bonds the Dlstnct
Bonds the Fiscal Agent Agreements and other statutes or documents do not purport to be comprehenSive
or defimtlve and are qualified by reference to each such document or statute and references to the Bonds
are qualified m their enlirety by reference to the form thereof mcluded m the IndentJrre Copies of the
documents descnbed herem are available for mspeclion dunng the penod of Imlial offenng of the Bonds
at the offices of the Underwnter Southwest Secunl1es Inc 620 Newport Center Dnve SUIte 300
Newport Beach California 92660 telephone (949) 717 2000 Copies of these documents may be
obtamed after delivery of the Bonds from the City at 130 S Mam Street Lake Elsmore CalifornIa 92530
telephone (951) 6743124
9
Agenda Item No 2
Page 1960f316
AERIAL PHOTO
MAP 2
10
Agenda Item No 2
Page 1970f316
SELECTED FACTS
The following summary does not purport to be complete Reference IS hereby made to the complete
Offielal Statement In thIs regard Furthermore the following summary makes certain assumptIOns
regardmg valuatIOn of property wlIhm the Dlstrlct NeIther the Authority nor the Dlstrlct makes any
representatzon as to the current value of property In the Dlstrlct or proVIdes any assurance as to the
estImated values of property being achIeved (see BONDOWNERS RISKS herem)
THE BONDS
PnnClpal Amount of Bonds
$3 290 0000'
AddItlonal Bonds
The Authonty IS not authonzed to Issue any additIOnal
bonds under the Indenture secured by repayment of the
Dlstnct Bonds except for refundmg purposes (see THE
BONDS ADDITIONAL OBLIGATIONS herem)
However the Dlsmct IS authonzed to Issue addltlonal
bonds secured by the SpeCial Taxes on a panty With the
Dlsmct Bonds and the Authonty may Issue bonds to
acqUlre the addltlonal bonds of the Dlsmct When and
If Issued the Bonds and the new Authonty bonds
would be secured by separate bonds of the Dlstnct
which are m turn will be secured by the same Special
Taxes on a panty With each other
First OphonaI Redemptlon Date
September 1 2008 at 103% of prmclpal amount (see
THE BONDS - REDEMPTION - Optional RedemptIon
herem)
FlfSt SpeCial Mandatory RedemptIOn Date
On any date on or after March I 2008 from the specIal
mandatory redemptlon of DIstnct Bonds at a premIUm
as descnbed herem (see THE BONDS REDEMPTION -
Special Mandatory Redemption herem)
Pnmary Source of Revenues for
Repayment
The Bonds are payable from Revenues (as defined
herem) received from the payment of the Dlsmct
Bonds and certam other sources (see SOURCES OF
PAYMENT FOR THE BONDS" and "BONDOWNERS
RISKS herem)
Pnonty
The Bonds are secured by a first pledge of and hen on
the Revenues as descnbed herem (see "SOURCES OF
PAYMENT FOR THE BONDS and "BONDOWNERS
RISKS herem)
Prehmmary subject to change
11
Agenda Item No 2
Page 198 of 316
Debt ServIce Coverage from Repayment of 100%
Dlstnct Bonds (see THE AUTHORITY-
DEBT SERVICE COVERAGE ON THE
AUTHORITY BONDS herem)
THE DISTRICT BONDS
Aggregate Pnnclpal Amount of Dlstnct
Bonds
MaxImum Bond Authonzal1on
AddItIOnal Dlstnct Bonds
Pnmary Source of Revenues for Repayment
of the Dlstnct Bonds
Pnonty
FIrSt OptIOnal RedemptIOn Date
THE DISTRICT
Property Owners
Number of Property Owners as of October
I 2007 (see BONDOWNERS RISKS - THE
DISTRICT BONDS - RIsk Factors Relating to
the LevyIng and Collecoon of the SpecIal
Taxes - Concentration of OwnershIp herem)
'" Prehmmary subject to change
$3 290 0000.
$8 500 000
AddItIOnal DlStnct Bonds on a panty WIth the DlStnct
Bonds are authonzed (see THE BONDS -ADDITIONAL
OBLIGATIONS and SPECIAL TAXES AND DISTRICT
BONDS DEBT SERVICE COVERAGE herem)
SpeCIal Taxes leVIed wlthm the DIstrIct (see SPECIAL
TAXES AND DISTRICT BONDS DEBT SERVICE
COVERAGE and SOURCES OF PAYMENT FOR THE
BONDS - REPAYMENT OF THE DISTRICT BONDS"
herem)
The Dlstnct Bonds are secured by a first pledge of and
hen on all real property and SpeCIal Taxes leVIed wlthm
the Dlstnct (see "SOURCES OF PAYMENT FOR THE
BONDS and BONDOWNERS RISKS" herem)
September I 2008 at 103% of pnnClpal amount (see
THE BONDS REDEMPTION herem)
6 model homes GMAC Model Home Fmance LLC
133 lots Lermar Homes (see THE DISTRICT - THE
DEVELOPER herem)
51 homes - Indtvldual Homeowners
12
Agenda Item No 2
Page 199 of316
Value To Lien Ratios
Appraised ValuatIOn of Property wlthm Dlstoct
as of October I 2007
RatIO of AppraIsed Value to PonClpal Amount of
Dlstoct Bonds
Special Taxes
Rallo of the assumed ASSIgned SpeCIal Taxes m
any FIscal Year to Annual Debt ServIce on the
Dlstoct Bonds
EffectIve Tax Rate
DelInquency Percentage m Dlstoct
DescriptIOn of Development
Descopllon of Development m Dlstoct
ApproXImate Acreage
$ (see APPENDIX C - APPRAISAL
REPORT herem)
_ to 1* (see BONDOWNERS RISKS - THE
DISTRICT BONDS - Risk Factors Relahng to Land
Values" herem)
ApproXImately I 10 to I (see SPECIAL TAXES AND
DISTRICT BONDS DEBT SERVICE COVERAGE"
herem)
ApproXImately 2 00/ based upon assumed home
poces (see SPECIAL TAXES AND DISTRICT BONDS
DEBT SERVICE COVERAGE - SPECIAL TAX
PROJECTIONS herem)
None (Special Taxes wIll be leVIed for first tIme for
2007/08 FIscal Year) (see SPECIAL TAXES AND
DISTRICT BONDS DEBT SERVICE COVERAGE
herem)
190 smgle famIly homes m 2 subdiVISIOns referred
to as MagnolIa (93 lots) and Pomrose (97 lots)
(see THE DISTRICT herem)
58 54 Gross Acres
13
Agenda Item No 2
Page 200 of 316
Status of Development as of October I 2007
FInIshed Lots
Model Homes
ProductIOn Homes under ConstructIOn
Completed Production Homes
Number of Closed Escrows
Estunated Pnce Range of Homes as of October 1
2007
Magnolia
Pnmrose
Esl1mated Homes SIzes as of October I 2007
Magnolia
Pnmrose
Estimated Absorpl1on Penod
All 190 lots 10 finIshed or near finIshed condll1on
Total 6 completed model homes (3 models at
Magnolia and at Pnmrose)
Magnolia has 14 and Pnmrose has 12 producl1on
homes 10 vanous stages of constructIOn
Magnolia has 36 completed homes and Pnmrose
has 25 completed homes
Magnolia has closed 33 homes and Pnmrose has 24
closed escrows
(see THE DISTRICT - SALES mSTORY herem)
$352 990 to $383 490
$368 990 to $386 990
(see SPECIAL TAXES AND DISTRICT BONDS DEBT
SERVICE COVERAGE SPECIAL TAX
PROJECTIONS" and THE DISTRICT - HOME
PRICING herem)
2 904 square feet to 3 399 square feet
3 504 square feet to 3 875 square feet
(see SPECIAL TAXES AND DISTRICT BONDS DEBT
SERVICE COVERAGE SPECIAL TAX
PROJECTIONS" herem)
The Developer currently estImates the project to be
sold out by second quarter of 2009 The Market
AbsorptIOn Study esl1mates escrows to close on all
190 homes by later part of 2010 (see APPENDIX D
- MARKET ABSORPTION STUDY and THE
DISTRICT - ESTIMATED ABSORPTION SCHEDULE"
herem)
14
Agenda Item No 2
Page 201 of 316
ESTIMATED SOURCES AND USES OF FUNDS
THE BONDS
Proceeds from the sale of the Bonds will be used to provide funds to acqUire the Dlstnct Bonds m the
aggregate pnnclpal amounts mdlcated below Under the proVISIOns of the Indenture the Trustee will
receive the proceeds from the sale of the Bonds and will apply them as follows
Sources of Funds
Pnnclpal Amount of the Bonds
Ongmal Issue Discount
Underwnter s Discount
Total
Uses of Funds
Bond Purchase Fund (1)
Costs ofIssuance Fund (2)
Reserve Account (3)
Total
(I) To be used to acqUire Ihe Dlstncl Bonds
(2) Expenses mclude fees of the AuIhonty Bond Counsel the Fmancmg Consultant DISclosure Counsel
Underwnter s Counsel the Trustee costs of pnntmg the OffiCIal Statement and other costs of Issuance of the
Bonds
(3) Equal to Ihe Reserve ReqUirement
15
Agenda Item No 2
Page 202 of 316
THE DISTRICT BONDS
The Dlstnct w1l1 deposit the proceeds from the Dlstnct Bonds as follows
DistrIct Bond Proceeds
Sources
Pnnclpal Amount of Dlstnct Bonds
Bond Purchase DIscount
Total Avallable Funds
Uses
Construclton Fund (I)
Interest Account (Bond Fund)(2)
Costs ofIssuance Fund (3)
AdmlDlstraltve Expense Fund (4)
Total
(1) See THE DISTRICT FACILITIES AND FEES ELIGIBLE TO BE FINANCED BY THE DISTRICT herem
(2) Capllahzed Inlerest through Seplember I 2008
(3) COSIs of Issuance mclude fees of Bond Counsel the Fmancmg Consultant, DISclosure Counsel AppraIser
Markel Consultant SpeCial Tax Consultant the FIScal Agent and other COSIs related to the adnumstratlOn of the
Dlstnct and Issuance of the Dlstnct Bonds
(4) FIrst year adnumstratlOn expenses and DIstnct formation costs
INVESTMENT OF FUNDS
All moneys m any of the funds or accounts estabhshed WIth the Trustee pursuant to the Indenture or to be
held by the FIscal Agent pursuant to the FIscal Agent Agreement WIll be mvested solely m Penmtted
Investments as dtrected pursuant to the Wntten Request of the Authonty or the Dlstnct filed WIth the
Trustee or the FIscal Agent at least two (2) Busmess Days m advance of the makmg of such mvesltnents
In the absence of any such Wntten Request the Trustee WIll mvest any such moneys m money market
funds Obhgaltons purchased as an mvestment of moneys m any fund shall be deemed to be part of such
fund or account For the purpose of determmmg the amount m any fund the value of PermItted
Investments credited to such fund Will be calculated at the market value thereof (excludmg any accrued
mterest)
16
Agenda Item No 2
Page 203 of 316
THE BONDS
AUTHORIZATION
The Bonds
The Bonds are bemg Issued pursuant to the Indenture The Bonds are bemg sold to the Underwnter
pursuant to and subject to the tenus and condItIOns of the Purchase Contract by and among the
Underwnter the CIty and the Authonty (the Purchase Contract) The Indenture and the Purchase
Contract were approved by the Authonty pursuant to ResolutIOn No PFA -' adopted on October 23
2007
The Dlstnct Bonds
The Dlstnct Bonds are bemg Issued pursuant to the FIscal Agent Agreement
The City Council of the CIty (the City CouncIl) on behalf of the Dlstnct pursuant to ResolutIOn No
_ adopted on October 23 2007 approved the Issuance of the DIstrICt Bonds and the Conumtrnent
Agreement and Purchase Contract for Purchase and Sale of Local OblIgallon Bonds sellmg the Dlslnct
Bonds to the Authonty The Board of DIrectors of the Authonty pursuant to ResolutIOn No PFA-,
adopted on October 23 2007 authonzed the Authonty to acqUIre the Dlslnct Bonds
GENERAL PROVISIONS
Repayment of the Bonds
Interest IS payable on the Bonds at the rates per armum set forth on the cover page hereof Interest WIth
respect to the Bonds wIll be computed on the basiS of a year conslstmg of 360 days and twelve 30 day
months
Each Bond WIll be dated the Date of DelIvery and mterest With respect thereto wIll be payable from the
Interest Payment Date next precedmg the date of authenllcatlOn thereof unless ( a) It IS authentICated on or
before an Interest Payment Date and after the close of busmess on the precedmg Record Date m whIch
event mterest WIth respect thereto wIll be payable from such Interest Payment Date (b) It IS authentIcated
on or before February 15 2008 m whIch event mterest With respect thereto Will be payable from the Date
of DelIvery or (c) mterest WIth respect to any Outstandmg Bond IS m default m whICh event mterest With
respect thereto wIll be payable from the date to whICh mterest has been paid m full payable on each
Interest Payment Date
Interest WIth respect to the Bonds wIll be payable by check of the Trustee maIled by first class maIl on the
Interest Payment Date to the Owners thereof proVIded that m the case of an Owner of $1 000 000 or
greater m pnnclpal amount of Outstandmg Bonds such payment may at such Owner s opllon be made
by wire transfer of Immediately aVailable funds to an account m the contmental Untted States of Amenca
m accordance With wntten mstructlOns provIded pnor to the Record Date to the Trustee by such Owner
The Owners of the Bonds shown on the regIstratIOn books on the Record Date for the Interest Payment
Date wIll be deemed to be the Owners of the Bonds on saId Interest Payment Date for the purpose of the
paymg of mterest Pnnclpal of the Bonds and any prenuum upon early redempllon IS payable upon
presentallon and surrender thereof at the corporate trust office of the Trustee m Los Angeles CalIfornIa
Transfer or Exchange of Bonds
Any Bond may m accordance WIth ItS tenus be transferred or exchanged pursuant to the prOVISIons of
the Indenture upon surrender of such Bond for cancellatIOn at the corporate trust office of the Trustee
Whenever any Bond or Bonds shall be surrendered for transfer or exchange the Trustee shall authentIcate
17
Agenda Item No 2
Page 204 of 316
and deliver a new Bond or Bonds for like aggregate pnnclpal amount of authonzed denommatlOns The
Trustee may reqUire the payment by the Bondowner requestmg such transfer or exchange of any tax or
other govenunental charge requITed to be paid with respect to such transfer or exchange The Trustee IS
not reqUired to transfer or exchange (a) any Bonds or porl1ons thereof durmg the penod established by the
Trustee for selectIOn of Bonds for redemptIOn or (b) any Bonds selected for redempl10n
Bonds MutIlated, Lost, Destroyed or Stolen
If any Bond becomes mutilated the Authonty at the expense of the Bondowner will execute and the
Trustee will thereupon authenl1cate and deliver a new Bond of like senes tenor and authonzed
denommatlOn 10 exchange and subsl1tul1on for the Bond so mutilated but only upon surrender to the
Trustee of the Bond so mul1lated Every mutilated Bond so surrendered to the Trustee will be canceled by
[t If any Bond Issued under the Indenture IS lost destroyed or stolen eVidence of such loss destructIOn
or theft may be sublOltted to the Trustee and the Authonty and If such eVidence [S sal1sfactory to them
and mdemmty sal1sfactory to them IS given the Authonty at the expense of the Bondowner will execute
and the Trustee will thereupon authentICate and deliver a new Bond of like senes and tenor 10 lieu of and
10 subsl1tutlOn for the Bond so lost destroyed or stolen (or [f any such Bond has matured or has been
called for redemptIOn mstead of Issumg a substitute Bond the Trustee may pay the same Without
surrender thereof upon receipt of mdemmty sal1sfactory to the Trustee) The Authonty may reqUire
payment by the Bondowner of a sum not exceedmg the actual cost of prepanng each new Bond Issued
under the proVISIOns of the Indenture descnbed 10 thiS paragraph and of the expenses which may be
mcurred by the Authonty and the Trustee Any Bond Issued under the proVISIOns of the Indenture
descnbed 10 thiS paragraph 10 lieu of any Bond alleged to be lost destroyed or stolen Will be equally and
proporl1onately entitled to the benefits of the Indenture With all other Bonds secured by the Indenture
REDEMPTION
Notwlthstandmg any proVISIOns 10 the Indenture to the contrary upon any optIOnal redemptIOn speCial
mandatory or mandatory redempl10n m part the Authonty shall deliver a Wntten Certificate (as defined
10 the Indenture) to the Trustee at least SIXty (60) days pnor to the proposed redemptIOn date or such later
date as shall be acceptable to the Trustee so statmg that the remammg payments of pnnClpal and mterest
on the Dlstnct Bonds together With other Revenues to be available will be suffiCient on a tunely baSIS to
pay debt service on the Bonds
The Authonty IS reqUired 10 such Wntten Certificate to certify to the Trustee that suffiCient moneys for
purposes of such redemptIOn are or will be on depOSit 10 the Redempl10n Fund and [S reqUired to deliver
such moneys to the Trustee together With other RedemptIOn Revenues If any then to be delivered to the
Trustee pursuant to the Indenture whICh moneys are reqUired to be Identified to the Trustee 10 the Wntten
Certificate delivered With the RedemptIOn Revenues
OptIonal RedemptIon
The Bonds are subject to redemptIOn pnor to maturity at the opl1on of the Authonty on any date on or
after September I 2008 as a whole or 10 part on a pro rata basiS and by lot wlthm a maturity from any
available source of funds at the followmg redemptIOn pnces (expressed as a percentage of the pnnclpal
amount of the Bonds to be redeemed) together With accrued mterest thereon to the date fixed for
redemptIOn as follows
18
Agenda Item No 2
Page 205 of 316
RedemotJon PerIods
RedemotJon PrIces
September I 2008 tbrough August 31 2009
September I 2009 tbrough August 31 2010
September I 20 I 0 tbrough August 31 2011
September I 2011 tbrough August 31 2012
September I 2012 tbrough August 31 2013
September I 2013 tbrough August 31 2014
September I 2014 and thereafter
1030%
102 5%
102010
1015%
1010%
100 5%
100 0%
SpecIal Mandatory RedemptIon
The Bonds are subject to redemptIOn pnor to matunty on any date on or after March I 2008 m whole or
m part on a pro rata baSIS and by lot wlthm a matunty from the redemptIOn of Dlstnct Bonds from
amounts constItutmg prepayments of SpecIal Taxes amounts transferred from the ResIdual Fund and
amounts transferred by the Authonty to the DIstrIct from the ResIdual Fund under the Indenture at the
followmg redemptIon pnces (expressed as a percentage of the prmclpal amount of Bonds to be
redeemed) together With accrued mterest thereon to the date fixed for redemptIOn
RedemotIon PerIods
March I 2008 through August 31 2009
September I 2009 tbroughAugust 31 2010
September I 2010 tbrough August 31 2011
September I 2011 through August 31 2012
September I 2012 tbrough August 31 2013
September I 2013 through August 31 2014
September I 2014 and thereafter
RedemotJon PrIces
103 0%
102 50/
1020%
1015%
1010%
100 5%
100 0%
Mandatory Smkmg Payment RedemptIon
The Bonds matunng September I 2024 and September I 2038 are subject to mandatory redemptIOn m
part by lot on September I m each year commencmg September I 2022 m the case of the Bonds
matunng September I 2024 and September I 2025 m the case of the Bonds matunng 2038 from
mandatory smkmg payments made by the Authonty pursuant to the Indenture at a redemption pnce equal
to the pnnclpal amount thereof to be redeemed WIthout premIUm plus accrued mterest thereon to the date
of redemptIOn m the aggregate pnnclpal amounts and on September I m the years as set forth m the
followmg schedule proVided however that (I) m heu of redemptIOn thereof the Bonds may be
purchased by the Authonty and tendered to the Trustee and (II) If some but not all of the Bonds have been
redeemed pursuant to optIOnal redemptIon speCIal mandatory or mandatory redemptIOn prOVISIOns
descnbed herem the total amount of all future smkmg payments WIll be reduced by the aggregate
pnnclpal amount of the Bonds so redeemed to be allocated among such smkmg payments on a pro rata
baSIS (as nearly as practIcable) m mtegral multIples of $5 000 as detenmned by the Authonty
19
Agenda Item No 2
Page 206 of 316
SCHEDULE OF MANDATORY SINKING PAYMENT REDEMPTIONS
BONDS MATURING SEPTEMBER 1 2024
September 1
Year
2022
2023
Prmclpal
Amount*
September 1
1m
2024
Pnnclpal
Amount*
SCHEDULE OF MANDATORY SINKING PAYMENT REDEMPTIONS
BONDS MATURING SEPTEMBER 1 2038
September 1
Year
2025
2026
2027
2028
2029
2030
2031
Prmclpal
Amount*
September 1
1m
2032
2033
2034
2035
2036
2037
2038
Prmclpal
Amount*
Mandatory Redempnon
The Bonds are subject to special mandatory redemptIOn on any date to whIch llmely nollce ofredemptlOn
may be given m mtegral multIples of $5 000 equal to the pnnclpal amount of Dlstnct Bonds redeemed
wIth unused proceeds of the Dlstnct Bonds after completIOn or abandonment of the Improvements to be
financed With such proceeds from the depOSIt of fees With the Dlstnct by a publIc agency which has
accepted facIlllles servmg an area of the Dlstnct and from msurance or condemnatIOn proceeds or other
mandatory redemptIOn sale or acceleratIOn relatmg to the Dlstnct Bonds WIthout premIUm plus accrued
mterest to the redemptIOn date all as detenruned by the Authonty
Nonce of Redempnon
When redemptIOn IS authonzed or reqUIred the Trustee IS reqUIred to gIVe wotten nollce of the
redemptIOn of Bonds to the Bondowners deSIgnated for redemptIon at their addresses appeanng on the
bond regIstratIOn books to certam Securllles Deposltones and to one or more InformatIOn ServICes all as
provIded m the Indenture by first class mall postage prepaId no less than thirty (30) nor more than SIXty
(60) days pnor to the date fixed for redemptIOn NeIther faIlure to receIve such nollce nor any defect m
the nollce so maIled Will affect the suffiCiency of the proceedmgs for redemptIOn of such Bonds or the
cessatIOn of accrual of mterest on the redemptIOn dale
Prehmmary subject to change
20
Agenda Item No 2
Page 207 of 316
Effect of Redemption
The nghts of a Bondowner to receIve mterest wIll tenmnate on the date If any on WhICh the Bond IS to
be redeemed pursuant to a call for redempllon The Indenture contams no proVIsions reqUITIng any
pubhcatlOn of nOllce of redemptIOn and Bondowners must mamtam a current address on file WIth the
Trustee to receive any nOllces ofredempllon
Partial Redemption
In the event only a porllon of any Bond IS called for redempl10n then upon surrender of such Bond the
Authonty wIll execute and the Trustee wIll authentIcate and dehver to the Bondowner thereof at the
expense of the Authonty a new Bond or Bonds of the same senes and maturity date of authonzed
denommatlOns m an aggregate pnnclpal amount equal to the unredeemed portIOn of the Bond to be
redeemed
ADDITIONAL OBLIGATIONS
The Bonds
The Authonty WIll not have any mdebtedness secured by the Revenues other than the Bonds except
bonds Issued to refund the Bonds However the Dlstnct IS authonzed to Issue addItIOnal bonds secured
by the Special Taxes on a panty WIth the Dlstnct Bonds and the Authonty WIll Issue bonds to acqUire the
addlllonal bonds of the DIStnCt When and If Issued the Bonds and the new Authonty bonds would be
secured by separate bonds of the Dlstnct WhICh are m turn secured by the same Special Taxes on a parIty
With each other
The District Bonds
The quahfied electors wlthm the DIStnCt authonzed bonded mdebtedness m the amount of $8 500 000
Pursuant to the proVIsIOns of the FIscal Agent Agreements the DIStnCt IS authonzed to Issue addIllonal
panty bonds for the Dlstnct and currently expects to Issue one or more senes of addItIOnal panty bonds to
finance facIlItIes pursuant to the proVISIOns below
Panty Bonds The DIStnCt covenants that any Panty Bonds WhICh shall be Issued or mcurred whIch are
payable out of the SpeCial Taxes of the DIStnCt m whole or 10 part shall be Issued m accordance With the
followmg
(a) The amount of such Panty DIStnCt Bonds shall not together WIth all other DIStnCt Bonds and
Panty Dlstnct Bonds then Outstandmg exceed the total amount of Dlstnct Bonds authonzed to be Issued
by the Dlstnct
(b) The Dlstnct shall be m comphance With all covenants set forth 10 the FIscal Agent Agreement
and a certIficate of the DIStnCt to that effect shall have been filed WIth the City Clerk on behalf of the
DIStnCt proVIded however that Panty Bonds may be Issued notwlthstandmg that the Dlstnct IS not m
comphance WIth all such covenants so long as nnmedlately follow1Og the Issuance of such ParIty Bonds
the Dlstnct Will be 10 comphance WIth all such covenants and
(c) The DIStnCt shall have receIved the follow1Og docmnents or money or secunlles all of such
documents dated or certIfied as the case =y be as of the date of dehvery of such Panty Bonds by the
Fiscal Agent (unless the FIscal Agent shall accept any of such docmnents beanng a pnor date)
(I) An oplmon of Bond Counsel and/or counsel to the CIty to the effect that (a) the Dlstnct
has the nght and power under the Act to execute and dehver the Supplemental Fiscal Agent Agreement
21
Agenda Item No 2
Page 208 of 316
relatmg to such Panty Bonds and the Fiscal Agent Agreement and all such Supplemental Fiscal Agent
Agreements have been duly and lawfully adopted executed and dehvered by the District are m full force
and effect and are vahd and bmdmg upon the Dlstnct and enforceable m accordance With their terms
(except as enforcement may be l10uted by bankruptcy 1Osolvency reorgamzatlOn and other Similar laws
relatmg to the enforcement of creditors nghts) (b) the Fiscal Agent Agreement creates the vahd pledge
which It purports to create of the Net Taxes of the District as provided 10 the Fiscal Agent Agreement
subject to the apphcatlOn thereof to the purposes and on the condllions permitted by the Fiscal Agent
Agreement and (c) such Panty Bonds are vahd and b10dmg lmuted obhgatlOns of the District
enforceable 10 accordance With theIr terms (except as enforcement may be l10uted by bankruptcy
1Osolvency reorganlzalion and other SImilar laws relat10g to the enforcement or creditors nghts) and the
terms of the FIscal Agent Agreement and all Supplemental Fiscal Agent Agreements thereto and enlitled
to the benefits of the Fiscal Agent Agreement and all such Supplemental Fiscal Agent Agreements and
such Panty Bonds have been duly and vahdly authonzed and Issued 10 accordance With the Act (or other
laws) and the Fiscal Agent Agreement and all such Supplemental Fiscal Agent Agreements and further
op1OlOn of Bond Counsel to the effect that assum10g comphance by the Dlstnct With certam tax
covenants the Issuance of the Panty Bonds will not adversely affect the exclUSIOn from gross 1Ocome for
federal 1Ocome tax purposes of 10terest on any Outstand1Og Dlstnct Bonds and Panty Bonds theretofore
Issued or the exemptIOn from State of CahfomIa personal mcome taxatIOn of 10terest on any Outstandmg
DIStrIct Bonds and Panty Bonds theretofore Issued and
(2) A certificate of an Independent F10anClal Consultant certlfymg as of the closmg date that
(a) the ralio of the appraIsed or assessed value of the property mcluded wlth10 the Dlstnct to the amount
of hen WhICh Will be on the property after the Issuance of the Panty Bonds mcludmg the amount of any
assessment bonds or bonds Issued under the Act IS not less than 3 I and (b) the total SpeCial Tax revenues
whICh could be generated by the District by the levy of the SpeCIal Tax at the MaxImum Special Tax
(pursuant to the Act and the resolutIOns of the Dlstnct) on all then taxable property m any FIscal Year IS
SCHEDULED DEBT SERVICE ON THE BONDS
The followmg IS the scheduled debt servIce on the Bonds
Interest Pavment Date
Princmal
March I 2008
September 1 2008
March 1 2009
September 1 2009
March 1 2010
September 1 2010
March 1 2011
September 1 2011
March 1 2012
September 1 2012
March 1 2013
September 1 2013
March 1 2014
September 1 2014
March 1 2015
September 1 2015
March 1 2016
September 1 2016
March 1 2017
September 1 2017
March 1 2018
September 1 2018
March 1 2019
September 1 2019
March 1 2020
September 1 2020
March 1 2021
September 1 2021
March 1 2022
September 1 2022
March 1 2023
September 1 2023
March 1 2024
September 1 2024
March 1 2025
September 1 2025
March 1 2026
September I 2026
March 1 2027
September 1 2027
March 1 2028
September 1 2028
March 1 2029
September I 2029
23
Interest
Annual Debt Service
Agenda Item No 2
Page 210 of 316
Scheduled Debt Service On the Bonds (Contmued)
Interest Pavment Date
PnncIDal
Interest
March I 2030
September I 2030
March 1 2031
September 1 2031
March 1 2032
September 1 2032
March I 2033
September 1 2033
March 1 2034
September I 2034
March I 2035
September 1 2035
March 1 2036
September 1 2036
March I 2037
September 1 2037
March 1 2038
September 1 2038
24
Annual Debt Service
Agenda Item No 2
Page 211 of316
SCHEDULED DEBT SERVICE ON THE DISTRICT BONDS
The followmg IS the scheduled debt servIce on the DIstrIct Bonds
Interest Payment Date
PrmcIDal
Interest
Annual Debt Service
March 1 2008
September 1 2008
March 1 2009
September 1 2009
March 1 2010
September I 2010
March I 2011
September 1 2011
March 1 2012
September 1 2012
March 1 2013
September 1 2013
March 1 2014
September 1 2014
March 1 2015
September I 2015
March 1 2016
September I 2016
March I 20 I7
September I 2017
March 1 2018
September 1 2018
March 1 2019
September I 2019
March I 2020
September 1 2020
March 1 2021
September 1 2021
March 1 2022
September I 2022
March I 2023
September 1 2023
March I 2024
September I 2024
March I 2025
September 1 2025
March 1 2026
September I 2026
March 1 2027
September 1 2027
March 1 2028
September 1 2028
March I 2029
September I 2029
25
Agenda Item No 2
Page 212 of 316
Scheduled Debt ServIce on the DIstrIct Bonds (Contmued)
Interest Payment Date
PrmclDal
Interest
Annual Debt ServIce
March I 2030
September 1 2030
March 1 2031
September I 2031
March 1 2032
September I 2032
March I 2033
September 1 2033
March 1 2034
September 1 2034
March I 2035
September 1 2035
March I 2036
September 1 2036
March 1 2037
September I 2037
March I 2038
September 1 2038
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SOURCES OF PAYMENT FOR THE BONDS
REPAYMENT OF THE BONDS
General
The Bonds are payable solely from and secured by payment of tbe DistrIct Bonds tbe Cash Flow
Management Fund the Reserve Account held pursuant to tbe Indenture and certam mveslInent earmngs
on the funds and accounts held under the Indenture In addll10n the Bonds may be payable from any
available surplus revenues Wltb respect to otber senes of local agency revenue bonds related to
community faclhtles distrIcts Issued by the Authonty to the extent such surplus revenues are available to
replemsh the Reserve Account to Its reqUirement and to replemsh the Cash Flow Management Fund to Its
reqUirement
The Bonds are speCial obligalIons of the Authority The Bonds shall not be deemed to conslltute a
debt or liability of the State or of any polillcal subdivIsion thereof other than the Authority The
Authority shall only be obligated to pay the principal of the Bonds and the mterest thereon from the
funds deSCribed herem and neIther the faIth and credIt nor the taxmg power of the CIty or the
DIstrict except to the limIted extent deSCribed herem the State or any of Its polilIcal subdIvIsIons IS
pledged to the payment of the prmclpal of or the mterest on the Bonds The Authority has no
taxmg power
ApplicatIon of Revenues Flow of Funds
Revenue Fund The Trustee will depOSit all Revenues (excludmg Redempl10n Revenues) upon receipt
tbereof m a special fund deSignated as the Revenue Fund wluch the Trustee shall estabhsh mamtam
and hold m trust under tbe Indenture
DepOSIt of Revenues Bond Fund The Trustee will estabhsh mamtam and hold m trust a separate fund
entitled tbe Bond Fund Wltbm the Bond Fund tbe Trustee will estabhsh mamtam and hold m trust
separate spec181 accounts enl1tled Interest Account and Pnnclpal Account and the Reserve Account
On or before each Interest Payment Date the Trustee shall transfer from the Revenue Fund for depOSit
mto tbe Bond Fund tbe amounts and m tbe pnonty set forth below
ApplicatIOn of Revenues Bond Fund On or before each Interest Payment Date tbe Trustee Will
transfer from tbe Revenue Fund and depOSit mto the Bond Fund and the followmg specIal accounts
therem tbe followmg amounts m the followmg order of pnonty tbe reqUirements of each such special
account (mcludmg tbe makmg up of any defiCienCies m any such account resultmg from lack of Revenues
suffiCient to make any earher requITed depOSit) at tbe lime of depOSit to be satisfied before any transfer IS
made to any account subsequent m pnonty
Interest Account On or before each Interest Payment Date tbe Trustee shall depOSit m tbe Interest
Account an amount reqUired to cause the aggregate amount on depOSit m the Interest Account to
equal tbe amount of mterest becommg due and payable on such Interest Payment Date on all
Outstandmg Bonds No depOSit need be made mto tbe Interest Account If tbe amount contamed
therem IS at least equal to the mterest becommg due and payable upon all Outstandmg Bonds on
such Interest Payment Date All moneys m tbe Interest Account shall be used and wltbdrawn by the
Trustee solely for the purpose of paymg the mterest on tbe Bonds as It shall become due and
payable (mcludmg accrued mterest on any Bonds redeemed pnor to maturity)
Prmclpal Account On or before each date on whICh the pnnClpal of the Bonds shall be payable
the Trustee shall depOSit m the Pnnclpal Account an amount reqUired to cause tbe aggregate amount
on depOSit m the Pnnclpal Account to equal tbe aggregate amount of pnnclpal (mcludmg slllk1ng
fund payments) conung due and payable on such date on tbe Bonds All moneys III the Pnnclpal
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Agenda Item No 2
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1
Account shall be used and withdrawn by the Trustee solely for the purpose of paymg the pnnclpal
of the Bonds (mcludmg smkmg fund payments)
Reserve Account All amounts on depOSit m the Revenue Fund on or before each Interest Payment
Date to the extent not reqUired to pay any mterest on or pnnclpal of any Outstandmg Bonds then
havmg come due and payable shall be credited to the replemshment of the Reserve Account m an
amount suffiCient to mamtam the Reserve Requrrement therem
Surplus All remammg amounts on September 2 (or the next Busmess Day to the extent September 2 IS
not a Busmess Day) of each year commencmg September 2 2008 on depOSit m the Revenue Fund shall
be transferred to the ReSidual Fund
Reserve Account
In order to secure further the lImely payment of pnnclpal of and mterest on the Bonds the Authonty IS
reqUired upon dehvery of the Bonds to depOSit m the Reserve Account for the Bonds an amount equal to
the Reserve RequlTement The Reserve ReqUirement means with respect to the Bonds the least of (I) 10%
of the proceeds of the Bonds (wlthm the meanmg of secllon 148 of the Code) ( (11) Maximum Annual
Debt ServIce or (111) 125% of the Average Annual Debt Service
The amount of Bond proceeds deposited mto the Reserve Account wIll be m an amount equal to
$ · (see ESTIMATED SOURCES AND USES OF FUNDS") Thereafter the Authonty IS reqUired to
depOSit from the repayment of the DiStrIct Bonds and to the extent necessary from available surpl11s
revenues With respect to other senes of bonds Issued pursuant to the Indenture and mamtam an amount of
money equal to the Reserve ReqUirement m the Reserve Account at all limes while the Bonds are
011tstandmg Amounts m the Reserve Account will be used to pay debt servICe on the Bonds to the extent
other moneys are not available therefor Amounts m the Reserve Account m excess of the Reserve
ReqUirement will be depOSIted mto the Bond Fund If not allocated to a Reserve Account whICh IS not at
the reserve reqUirement Amounts m the Reserve Account may be used to pay the final year s debt
servICe on the Bonds (see APPENDIX A SUMMARY OF TIlE INDENTURE" herem) Upon redemptIOn
amounts on depOSit m the Reserve Account shall be reduced (to an amount not less than the Reserve
ReqUirement) and excess money shall be transferred to the RedemptIOn Fund and used for the redemptIOn
of Bonds
ReSidual Fund
On September 2 of each year (or the next busmess day to the extent September 2 IS not a busmess day)
commencmg September 2 2008 the Trustee shall transfer any amounts remammg m the Revenue Fund to
the ReSIdual Fund Amounts If any deposited mto the ReSidual Fund shall be apphed for the followmg
purposes m the followmg order of pnonty
(I) The Trustee will transfer mto the Cash Flow Management Fund an amount If any reqUired to
restore the amount on depOSit m the Cash Flow Management Fund to the Cash Flow Management
ReqUirement
>I< PrelImmary subject to change
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Agenda Item No 2
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I
I
(n) The Trustee shall transfer to the trustee of any other senes of local agency revenue bonds
related to commumty facIlIties mstncts Issued by the Authonty an amount reqUIred to replemsh
any reserve account to Its reqUIrement with respect to such senes of bonds and an amount to
replemsh any cash flow management fund to Its requrrement With respect to such senes of bonds
(111) The Trustee shall transfer all remammg amounts to the Fiscal Agent for the Dlstnct Bonds for
deposit 10 the Dlstnct Special Mandatory RedemptIOn Account of the Redemption Fund for the
redemption of Dlstnct Bonds (10 proportIOn to the outstandmg pnnClpal amount With respect to
each senes of Dlstnct Bonds or such other fmr allocation detenrnned by the Authonty) unless the
Trustee has receIVed written direction from the Authonty and to the extent penmtted by law to
expend such remammg funds held 10 the ReSidual Fund for any lawful purposes of the Authonty
mcludmg but not lImited to paymg or relmbursmg the payment of the costs and expenses
mcuned by the City or the Authonty 10 adJrumstenng the Bonds and the Dlstnct Bonds paymg
costs of publIc capital Improvements or reducmg the SpeCial Taxes (10 proportIOn to the
outstandmg pnnclpal amount WIth respect to each senes of Dlstnct Bonds or such other fair
allocatIOn detenmned by the Authonty) which are to be leVied 10 the current or the succeedmg
Fiscal Year upon the properties which are subject to the SpeCial Tax wlthm the Dlstnct
Amounts 10 the ReSidual Fund are not pledged as security for the Bonds
Cash Flow Management Fund
The Cash Flow Management ReqUIrement IS 15% of maximum annual aggregate debt service on the
Bonds There Will not be an mltlal depOSit of Bond proceeds mto the Cash Flow Management Fund The
Cash Flow Management Fund wIll be funded from surplus Revenues transferred from the ReSidual Fund
and under certam Circumstances and at the electIOn of the Authonty by any avaIlable surplus revenues
With respect to other senes of local agency revenue bonds Issued pursuant to the Indenl1rre Amounts m
the Cash Flow Management Fund wIll be used pnor to any draw on the Reserve Account to pay debt
servICe on the Bonds to the extent Revenues are msuftiClent for such purpose Amounts If any 10 the
Cash Flow Management Fund 10 excess of the Cash Flow Management Requrrement wIll be transferred
on September 2 of each year to the ReSidual Fund
RedemptIOn Fund
The Trustee wIll establIsh as a separate fund to be called the RedemptIOn Fund to the credit of whICh
the Authonty shall depOSit Immediately upon receipt all RedemptIOn Revenues Moneys 10 the
Redempl10n Fund shall be held 10 trust by the Trustee for the benefit of the Authonty and the Owners of
the Bonds and shall be used to redeem Bonds (except for mandatory smkmg fund redempl1on) pursuant
to the Indenture
REPAYMENT OF THE DISTRICT BONDS
General
The pnnclpal of premIUm If any and the mterest on the Dlstnct Bonds and the Admmlstral1ve Expenses
of the Dlstnct are payable from the SpeCial Taxes collected on real property wlthm the Dlstnct and funds
mcludmg any amounts avaIlable 10 the Delmquency Management Fund (as defined 10 the Fiscal Agent
Agreement) held by the Fiscal Agent and avaIlable for such purposes pursuant to the Fiscal Agent
Agreement
The Dlstnct Bonds are lImited oblIgatIons of the Dlstnct payable from the proceeds of SpeCIal Taxes
leVIed on certam parcels wlthm the DIstrict The Dlstnct Bonds shall not be deemed to constItute a
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Agenda Item No 2
Page216of316
debt or lIabilIty of the City the State or of any polItIcal snbdlvlslon thereof other than the DistrIct
NeIther the faIth and credIt nor the taxmg power of the City the DistrIct, the State or any of Its
polItIcal subdivIsIOns IS pledged to the payment of the prmclpal of or the mterest on the DistrIct
Bonds except for the lImIted extent prOVIded herem
Special Taxes
The SpecIal Taxes are excepted from the tax rate lImitatIon of CalIforma ConstItutIOn ArtICle XIIIA
pursuant to SectIOn 4 thereof as a specIal tax authonzed by at least a two thirds vote of the qualified
electors as set forth 10 the Act Consequently the CIty CouncIl of the City on behalf of the Dlstnct has
the power and IS oblIgated by the Fiscal Agent Agreement to cause the levy and collectIOn of the SpecIal
Taxes
The Dlstnct has covenanted 10 the Fiscal Agent Agreement to levy (subject to the maximum SpeCial Tax
for the Dlstnct) 10 each Fiscal Year the SpecIal Taxes wlthm the Dlstnct m an amount sufficient to pay the
debt servICe on the Dlstnct Bonds mcludmg an allowance for delmquencles and the cost of provldmg
certam AdrmmstratIve Expenses of the Dlstnct and the Authonty
The SpecIal Taxes are to be levied and collected accordmg to the Rate and Method of ApportIOnment
descnbed m the sectIOn entitled SPECIAL TAXES AND DISTRICT BONDS DEBT SERVICE COVERAGE _
RATE AND METHOD OF APPORTIONMENT herem
Although the SpeCIal Taxes wIll constItute a lIen on parcels of real property wlthm the Dlstnct they do
not constItute a personal mdebtedness of the owner(s) of real property wlthm the Dlstnct There IS no
assurance that the property owner(s) or any successors and/or asSignS thereto or subsequent purchaser(s)
of land wlthm the Dlstnct Will be able to pay the annual SpeCial Taxes or If able to pay the SpeCIal Taxes
that they wIll do so (see BONDOWNERS RISKS herem)
The SpeCIal Taxes mltIally are reqUired to be collected by the County of Riverside Tax Collector m the
same manner and at the same tIme as regular ad valorem property taxes are collected by the Tax Collector
of the County When received such SpeCIal Taxes Will be transferred by the City to the Fiscal Agent as
soon as pOSSible after receipt Momes m the SpeCIal Tax Fund are held m trust for the benefit of the
Dlstnct and owners of the Dlstnct Bonds and disbursed pursuant to the Fiscal Agent Agreement
ApplIcatIon of SpeCial Taxes, Flow of Funds
DistrIct Bond Fund The Fiscal Agent wIll deposit all SpeCIal Taxes With respect to the Dlstnct Bonds
when received from the City mto the SpeCIal Tax Fund (exclusIVe of Dlstnct Redemption Revenues
received which shall be deposited mto the Dlstnct RedemptIon Fund) The Fiscal Agent from tIme to
tIme pursuant to a wntten directIOn of the Dlstnct Will transfer to the AdmmlstratIve Expense Fund an
amount for budgeted Adrmmstratlve Expenses
At least ten (10) Busmess Days pnor to each Interest Payment Date the Fiscal Agent wIll transfer from
the SpeCIal Tax Fund for depOSit mto the Dlstnct Bond Fund which consists of the followmg accounts
the followmg amounts m the followmg order ofpnonty the requirements of each such account (mcIudmg
the makmg up of any defiCienCies m any such account resultmg from lack of Special Taxes suffiCient to
make any earlIer reqUired depOSit) at the tIme of depOSit to be satIsfied before any transfer IS made to any
account subsequent m pnonty
(I) The Fiscal Agent wIll depOSit mto the Interest Account an amount which together With the amount
then on depOSit therem IS suffiCient to cause the aggregate amount on depOSit 10 the Interest Account to
equal the amount then reqUITed to DJake the payment of mterest on the Dlstnct Bonds on the next
Interest Payment Date
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Agenda Item No 2
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I
(n) The FIscal Agent wIll deposIt mto the Pnnclpal Account an amount whIch together with the
amount then on depOSIt therem IS sufficIent to cause the aggregate amount on depOSIt m the Pnnclpal
Account to equal the amount of pnnclpal or smkmg account payment commg due and payable on the
next Interest Payment Date on the Outstandmg Dlstnct Bonds upon the stated matunty or redemptIOn
thereof
Dlstnct ResIdual Fund On September 2 of each year commencmg September 2 2008 the FIscal Agent
shall transfer any amounts remammg m the SpecIal Tax Fund to the related Dlstnct Residual Fund
SpecIal Taxes If any deposited mto the Dlstnct ReSidual Fund shall be applIed for the followmg purposes
m the followmg order of pnonty
(I) The FIscal Agent WIll depOSit mto the Delmquency Management Fund an amount If any reqUIred
to restore the amount on depOSIt m the Delmquency Management Fund to the DelInquency
Management Fund ReqUIrement
(n) The FIscal Agent shall transfer at the wntten electIOn of the Dlstnct to the AdnnnIstratIve
Expense Fund an amount detenmned by the Dlstnct to be applIed to payor reunburse the payment of
the costs and expenses mcurred by the Dlstnct or the Authonty to adminIster the Bonds and the
Dlstnct Bonds to the extent amounts m the AdminIstratIve Expense Fund are msufficlent therefor
(m) The FIscal Agent shall transfer all remammg amounts to the Special Mandatory RedemptIOn
Account for redemptIOn of the Dlstnct Bonds unless the FIscal Agent has receIved wntten dIrectIOn
from the Dlstnct to expend such remammg funds held m the Dlstnct ReSIdual Fund for any lawful
purposes of the DIStriCt mcludmg but not lunlted to paymg costs of publIc capital Improvements or
reducmg the SpeCIal Taxes whIch are to be leVIed m the current or the succeedmg FIscal Year upon the
properties whICh are subject to the SpecIal Tax
Amounts m the Dlstnct ReSIdual Fund are not pledged as secunty for the Bonds or the Dlstnct Bonds
Dehnquency Management Fund
The Delmquency Management Fund ReqUIrement IS 15% of Maxunum Annual Debt ServIce on the
DIstrIct Bonds The Delmquency Management Fund WIll be funded from SpecIal Taxes and mvestment
earnmgs to the extent the amounts thereof received by the Fiscal Agent are m excess of the debt service
due on the DIstrIct Bonds and all admInIstratIve expenses of the DIStrICt have been paId Amounts m the
DelInquency Management Fund WIll be used to pay debt servIce on the Dlstnct Bonds to the extent
SpeCIal Taxes are msufficlent for such purpose Amounts If any m the Delmquency Management Fund
m excess of the Delmquency Management ReqUIrement on September 2 2008 WIll be transferred to the
Dlstnct ReSidual Fund
RedemptIOn Fund
The Fiscal Agent Will establlsh a RedemptIon Fund (m whIch there shall be establIshed and created an
OptIOnal RedemptIOn Account a SpeCIal Mandatory RedemptIOn Account and a Mandatory RedemptIon
Account) to the credIt of whIch the Dlstnct or the CIty on behalf of the Dlstnct Will depOSIt
ImmedIately upon receIpt all RedemptIOn Revenues received by the Dlstnct or the City on behalf of the
Dlstnct Moneys m the RedemptIOn Fund WIll be dIsbursed as proVided below and pendmg any
dIsbursement shall be subject to a lIen m favor of the Owners of the Dlstnct Bonds
(I) All prepayments of Spectal Taxes any amounts transferred pursuant to the Authonty
Indenture for the redemptIOn of DiStrICt Bonds and amounts transferred from the ReSidual Fund
for the redemptIon of the related Dlstnct Bonds Will be depOSited m the SpeCial Mandatory
RedemptIOn Account to be used to redeem Dlstnct Bonds on the next date for whICh notIce of
redemptIon can tImely be given
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Agenda Item No 2
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I
(2) All momes deposited for the opl1onal redempl10n of Dlstnct Bonds will be deposited mto the
OptIOnal Redempl10n Account to be used to redeem the related Dlstnct Bonds on the next date
for which nol1ce of redemptIOn can timely be given
(3) All proceeds from msurance or condemnatIOn proceeds unused proceeds after completion
or abandonment of the IDlprovement Will be depOSited mto the Mandatory RedemptIOn Account
to be used to redeem the Dlstnct Bonds on the next date for whIch nol1ce of redempl10n can
l1mely be gIVen
Covenant for Superior Court Foreclosure
Pursuant to Secl10n 53356 I of the Act 10 the event of a del10quency 10 the payment of the SpeCial Taxes
leVied on a parcel the Dlstnct may order the msl1tutlOn of a supenor court actIOn to foreclose the hen
therefor proVided such actIOn IS brought not later than four years after the final matunty date of the
Dlstnct Bonds In such an actIOn the real property subject to the unpaid amount may be sold at a JudiCial
foreclosure sale
The Dlstnct has covenanted 10 the Fiscal Agent Agreements for the benefit of the owners of the Dlstnct
Bonds that the Dlstnct Will revIew the pubhc records of the County of Riverside Cahfomla 10
connectIOn With the collectIOn of the SpeCial Tax not later than July I of each year to determme the
amount of SpeCial Tax collected 10 the pnor Fiscal Year and With respect to 10dlVldual dehnquencles If
the Dlstnct determmes that any smgle property owner subject to the SpeCial Tax IS dehnquent 10 the
payment of SpeCial Taxes 10 the aggregate of $5 000 or more or that as to any s10gle parcel the dehnquent
SpeCial Taxes represent more than 5% of the aggregate SpeCial Taxes wlth10 the Dlstnct then the Dlstnct
Will send or cause to be sent a notice of delmquency (and a demand for Immediate payment thereot) to the
property owner wlth10 45 days of such determ1Oal1on and (If the dehnquency remams uncured) the
Dlstnct Will cause JudiCial foreclosure proceed1Ogs to be filed 10 the supenor court wlth10 90 days of such
detenmnatlOn agamst any property for whICh the SpeCial Taxes remalO dehnquent
Notwlthstandmg any prOVISIOn of the Act or other law of the State to the contrary 10 connecl1on With any
foreclosure related to dehnquent SpeCial Taxes
(A) The City or the Fiscal Agent IS expressly authonzed under the Fiscal Agent Agreement to
credit bid at any foreclosure sale Without any reqUIrement that funds be placed 10 the Dlstnct Bond Fund
or otherwise be set aSide 10 the amount so credit bid 10 the amount speCified 10 Section 533565 of the
Act or such lesser amount as determmed under clause (B) below or otherwise under Secl10n 533566 of
the Act
(B) The Dlstnct may permit 10 Its sole and absolute dlscrel10n property With del10quent SpeCial
Tax payments to be sold for less than the amount specIfied 10 Section 53356 5 of the Act (but not for less
than the amount of dehnquent scheduled pnnclpal and 10terest Without wntten consent of the
Bondowners) If It detenmnes that such sale IS 10 the mterest of the Bondowners The Bondowners by
therr acceptance of the Dlstnct Bonds consent to such sale for such lesser amounts (as such consent IS
descnbed 10 SectIOn 533566 of the Act) and release the Dlstnct the City and their officers and agents
from any hablllty 10 connecl1on thereWIth
(C) The Dlstnct IS expressly authonzed under the FIscal Agent Agreement to use amounts 10 the
SpeCial Tax Fund to pay costs of foreclosure of dehnquent SpeCial Taxes
(D) The Dlstnct may forgIve all or any portIOn of the SpeCial Taxes leVied or to be leVied on any
parcel 10 the DIStrICt so long as the Dlstnct detenmnes that such forgIVeness IS not expected to adversely
affect Its obhgatlon to pay pnnclpal of and mterest on the Dlstnct Bonds under the FIscal Agent
Agreement
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Agenda Item No 2
Page 219 of 316
No assurances can be given that the real property subject to foreclosure and sale at a JudIcial foreclosure
sale will be sold or If sold that the proceeds of such sale will be sufficient to pay any dehnquent Special
Tax mstallment Although the Act authonzes the Dlstnct to cause such an actIOn to be commenced and
<hhgently pursued to completIOn the Act does not reqUITe the Dlstnct or the City to purchase or otherwIse
acqUire any lot or parcel of property sold at the execution sale pursuant to the Judgment m any such actIOn
If there IS no other purchaser at such sale nor does the Act specify the pnonty relatIOnshIp If any
between the SpecIal Taxes and other taxes and assessment hens
As a result of the foregomg m the event of a dehnquency or nonpayment by the property owners of one
or more SpecIal Taxes mstallments there can be no assurance that there would be available to the Dlstnct
suffiCient funds to pay when due the pnnclpal of mterest on and prermmn If any on the Dlstnct Bonds
(see BONDOWNERS RISKS - THE DISTRICT BONDS - Risk Factors Relatmg to the Levymg and Collecnon
of the SpecIal Taxes - Foreclosure and Sale Proceedmgs BONDOWNERS RISKS - THE DISTRICT BONDS -
Risk Factors Relatmg to the Levymg and CollectIOn of the Special Taxes Bankruptcy and Foreclosure
Delays and BONDOWNERS RISKS - THE DISTRICT BONDS - Risk Factors Relanng to the Levying and
Collecnon of the SpecIal Taxes Property Controlled by Federal Deposit Insurance Corporation and otber
Federal AgencIes herem)
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Agenda Item No 2
Page 220 of 316
BONDOWNERS'RISKS
BEFORE PURCHASING ANY OF THE BONDS ALL PROSPECTNE INVESTORS AND THEIR
PROFESSIONAL ADVISORS SHOULD CAREFULLY CONSIDER, AMONG OTHER THINGS THE
FOLLOWING RISK FACTORS WHICH ARE NOT MEANT TO BE AN EXHAUSTIVE LISTING OF ALL
RISKS ASSOCIATED WITH THE PURCHASE OF THE BONDS MOREOVER THE ORDER OF
PRESENTATION OF THE RISK FACTORS DOES NOT NECESSARILY REFLECT THE ORDER OF THEIR
IMPORTANCE
The purchase of the Bonds Involves Investment rISk If a rISk factor materzalzzes to a suffiCIent degree It
could delay or prevent payment of prinCIpal of and/or mterest on the Bonds Such risk factors mclude
but are not !tmlted to the followmg matters
THE BONDS
The ability of the Authonty to pay the pnnclpal and mterest on the Bonds depends upon the receipt by the
Trustee of suffiCient Revenues from repayment of the Dlstnct Bonds amounts on depOSit m the Cash
Flow Management Fund the Reserve Account and mterest earnmgs on amounts m the funds and accounts
for the Bonds established by the Indenture A number of nsks that could prevent the Dlstnct from
repaymg the D[stnct Bonds are outlmed below
Early Bond RedemptIOn
The Bonds are subject to optIOnal speCial mandatory and mandatory redemptIOn pnor to their stated
matunt[es SpeCIal mandatory redemptIOn may occur on any date commencmg March 1 2008 (see THE
BONDS REDEMPTION herem)
No LiabilIty of the Authonty to the Bondowners
Except as expressly proVided m the Indenture the Authonty wIll not have any obligatIOn or liability to the
Owners of the Bonds With respect to the payment when due of the Dlstnct Bonds or With respect to the
observance or performance by the D[stnct of other agreements conditIOns covenants and terms reqUIred
to be observed or performed by It under the Dlstnct Bonds the Fiscal Agent Agreement or any related
documents or With respect to the performance by the Trustee of any duty reqUIred to be performed by It
under the Indenture
Loss of Tax Exemptton
As discussed under the caption LEGAL MATTERS TAX EXEMPTION herem mterest on the Bonds could
become mcludable m gross mcome for purposes of federal mcome taxatIon retroactive to the date the
Bonds were Issued as a result of future acts or onuSSlons of the Authonty or the Dlstnct m VIOlatIOn of
their covenants contamed m the Indenture and the Fiscal Agent Agreement Should such an event of
taxability occur the Bonds are not subject to speCIal redemption or any mcrease m mterest rate and Will
remaIn outstandmg untIl matunty or untIl redeemed under one of the redemptIon provlSlons contamed 10
the Indenture \
IRS Audits
The Internal Revenue Semce (the IRS) has ImtIated an expanded program for the audlt10g of tax
exempt bond Issues 1Oclud1Og both random and targeted audits It IS pOSSible that the Bonds wIll be
selected for audit by the IRS It [S 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 ofslnuIar bonds)
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Agenda Item No 2
Page 221 of 316
l
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or If a secondary market
eXists that such Bonds can be sold for any particular pnce OccasIOnally because of general market
conditIons or because of adverse history or economic prospects connected With a particular Issue
secondary marketmg practIces m connectIOn With a particular Issue are suspended or tenrunated
Additionally pnces of Issues for which a market IS bemg made WIll depend upon then prevalimg
circumstances Such pnces could be substantIally dtfferent from the ongmal purchase pnce
THE DISTRICT BONDS
RlSk Factors Relatmg to Real Estate Market CondItions
Current Real Estate Market CondItIons Pnor to 2006 the housmg market m southern Cahfomla
expenenced slgmficant pnce appreCIatIon and accelerated demand Recent trends mdlCate the housmg
market has slgmficantly weakened In 2006 home developers appraisers and market absorptIOn
consultants began to report weakemng of the new home market due to factors such as (I) lower demand
for new homes (n) slgmficant mcreases m cancellatIOn rates for homes under contract (111) the eXit of
speculators from the new home market (IV) a growmg supply of new and eXlstmg homes avaliable for
purchase (v) mcreases m competItion for new homes orders (VI) prospectIve home buyers havmg a more
dIfficult time selhng therr eXlstmg homes m the more competitIve environment and (vn) higher
mcentlves reqUIred to stimulate new home orders or to mduce home buyers not to cancel purchase
contracts
Adjustable Rate and UnconventIonal Mortgage Structures Smce the end of 2002 many persons have
financed the purchase of new homes usmg loans With httle or no down payment and With adjustable
mterest rates that start low and are subject to bemg reset at higher rates on a speCified date or upon the
occurrence of speCified conditIOns Many of these loans allow the borrower to pay mterest only for an
mltIal penod m some cases up to 10 years Currently m southern Cahfomla a substantial portIOn of
outstandmg home loans are adjustable rate loans which were obtamed at hlstoncally low mterest rates In
the oplmon of some economists the slgmficant mcrease m home pnces m thiS time penod has been
dnven m part by the ablhty of home purchasers to access adjustable rate and non conventIOnal loans
Recent mcreases m mterest rates on new loans and the resettmg of adjustable rate loans which have
resulted m mcreased loan payments have contnbuted to a decrease m home sales as purchasers are
unable to qualIfy for loans With higher mterest rates Such decrease m home sales has resulted m a
decrease m home pnces Such reductIOn m home pnces has resulted m recent homebuyers havmg loan
balances that exceed the value of their homes given their low down payments and small amount of eqUIty
m their homes
Furthermore many borrowers who purchased homes m recent years ntay not be able to access
replacement financmg for their adjustable rate mortgage loans for a number of reasons Many borrowers
have financed 100% of the pnce of their home With adjustable rate loans As home values dechne such
borrowers may not be able to obtam replacement financmg because the outstandmg loan balances exceed
the value of their homes In addition there has been tlghtemng of underwntmg cntena for mortgage
loans such that lenders no longer offer 100% financmg or reqUIre stncter venficatIon higher mcome to
loan ratIO higher credtt ratIos or some combmatIon of such factors In the event borrowers expenence a
dechne m mcome or mcrease m mortgage mterest rates or both they may not be able to pay their SpeCial
Taxes when due See APPENDIX F - TYPES OF MORTGAGE LOANS for a partial hstmg of the
charactenstIcs of the mortgage loans obtamed by homeowners m the Dlstnct
For the reasons discussed above homeowners m the Dlstnct who purchase their homes With adjustable
rate loans may expenence dIfficulty m makmg therr loan payments and paymg the SpeCial Taxes leVied
35
Agenda Item No 2
Page 222 of 316
l
on their property This could result m an mcrease m the Special Tax delmquency rate m the Dlstnct (see
SPECIAL TAXES AND DISTRICT BONDS DEBT SERVICE COVERAGE - DELINQUENCIES herem)
Some econonnsts have also predicted that as mortgage loan defaults mcrease bankruptcy fihngs by such
homeowners are also hkely to mcrease Bankruptcy filmgs by homeowners With delmquent Special
Taxes would delay the commencement and completIOn of foreclosure proceedmgs to collect dehnquent
Special Taxes (see "BONDOWNERS RISKS - THE DISTRICT BONDS - Risk Factors Relating to the LeVYIng
and CollectIon of the SpecIal Taxes - Foreclosure and Sale Proceedings and BONDOWNERS RISKS - THE
DISTRICT BONDS - Risk Factors Relating to the LeVYIng and CollectIon of the SpecIal Taxes - Bankruptcy
and Foreclosure Delays below)
Land Development A major nsk to the Bondowners IS that development by the property owners of
undeveloped land m the DiStriCt may be subject to unexpected delays disruptIOns and changes which may
affect the wllhngness and ablhty of the property owners to pay Special Taxes when due For example
proposed development wlthm the Dlstnct could be adversely affected by unfavorable economIC
conditIOns competmg development projects an mablhty of the current owners or future owners of the
parcels to obtam financmg fluctuatIons m the real estate market or mterest rates unexpected mcreases m
development costs changes m federal State or local govemmental pohCles relatmg to the ownership of
real estate faster than expected depletIOn of eXlstmg water allocatIons the appearance of prevIOusly
unknown envrronmental Impacts necessltatmg preparatIOn of a supplemental envrronmental Impact
report and by other srrmlar factors There can be no assurance that land development operatIOns wlthm
the DistrICt will not be adversely affected by the factors descnbed above
In additIOn partially developed land IS less valuable than developed land and prOVides less secunty for
the Dlstnct Bonds (and therefore to the owners of the Bonds) should It be necessary for the Dlstnct to
foreclose on undeveloped property due to the non payment of SpeCial Taxes Moreover failure to
complete future development on a tImely baSIS could adversely affect the land values of those parcels
which have been completed Lower land values result m less secunty for the payment of pnnclpal of and
mterest on the Dlstnct Bonds and lower proceeds from any foreclosure sale necessitated by dehnquencles
m the payment of the SpeCial Taxes
Furthermore an mablhty to develop the land wlthm the District as planned Will reduce the expected
diverSity of ownership of land wlthm the Dlstnct makmg the payment of debt service on the Dlstnct
Bonds more dependent upon tImely payment of the SpeCial Taxes leVied on the undeveloped property
Because of the concentratIOn of undeveloped property ownership the tImely payment of the Dlstnct
Bonds depends upon the wllhngness and ablhty of the current owners of undeveloped land to pay the
SpeCial Taxes leVied on the undeveloped land when due Furthermore contmued concentratIOn of
ownership mcreases the potentIal negatIve Impact of a bankruptcy or other finanCial difficulty
expenenced by the eXlstmg landowners (see BONDOWNERS RISKS - THE DISTRICT BONDS - Risk
Factors RelatIng to the Levymg and Collection of the SpeCial Taxes - ConcentratIOn of OwnershIp below)
RlSk Factors Relatmg to Land Values
Land Values If a property owner defaults m the payment of the SpeCial Tax the Dlstnct s only remedy
IS to commence foreclosure proceedmgs agamst the defaultmg property owner s real property wlthm the
Dlstnct for whICh the SpeCial Tax has not been paid m an attempt to obtam funds to pay the dehnquent
SpeCial Tax Therefore the value of the land and rrnprovements wlthm the Dlstnct IS a cntIcal factor m
determmmg the mvestrnent quahty of any senes of bonds Issued by or for the Dlstnct ReductIOns m
property values wlthm the DistrICt due to a downturn m the economy or the real estate =ket events
such as earthquakes droughts or floods stncter land use regulatIons or other events may adversely
Impact the value of the security underlymg the SpeCial Tax
The Dlstnct had the followmg two studies prepared m order to estImate the current bulk market value of
land m the DistrICt
36
Agenda Item No 2
Page 223 of 316
I Market AbsorptIon Study Commumty FacilItIes DIstrIct No 2005 5 (Wasson Canyon) prepared by
Empire Econonucs Inc CapIstrano Beach Cahfomla dated August 6 2007 (the Market AbsorptIon
Study )
2 AppraIsal Report City of Lake Elsmore Commumty FacilItIes DistrIct 2005 5 (Wasson Canyon)
prepared by Hams Realty AppraIsal Newport Beach Cahfornla (the Appraiser') wIth an I
2007 date of value (the Appraisal)
CollectIVely the studies are referred to herem as the AppraIsal Documents The purpose of the
Appraisal was to estImate the bulk value of land wlthm the DIstrIct m Its as IS condItIon (whIch
assumes sale of the Dlstnct Bonds and fundIng ofpubhcly financed Improvements)
On the baSIS of the assumptIons and hnutatlOns descnbed m the AppraIsal the Appraiser has estImated
the discounted bulk sale value of the land m the DiStrIct as of October I 2007 to be as shown below
Aooralsed Value
Value-to LIen Ratio
DIStrict
$
to 1*
Value to LIen RatIos Value to hen ratIOs are denved by dIVidIng the appraIsed value of the property m
the DistrIct by the pnnclpal amount of the Dlstnct Bonds For example a 3 I ratIo means that the value
of the property In the DIstrIct IS three tImes the total bond amount Pursuant to the current CIty Goals and
Pohcles for Commumty FaclhtIes DIstrIcts and Assessment DistrIcts (the Goals and Pohcles) the
value to hen ratIO IS requITed to be at least 3 to I (the Value to LIen ReqUIrement )
The value to hen ratIO of mdlvldual parcels may be less or more than the aggregate value to hen ratIo for
the DIstrIct In partIcular the value of developed property IS substantIally more than undeveloped
property (see BONDOWNERS RISKS - THE DISTRICT BONDS - Risk Factors RelatIng to the Levymg and
CollectIOn of the SpecIal Taxes - ConcentratIon of OwnershIp below)
Investors must recogmze the uncertamtles WIth respect to the faIr market values of the parcels
smce the Dlstnct Bonds are secured by the SpeCIal Taxes leVIed on the parcels Potential purchasers
of the Bonds should be aware that If a parcel bears a SpeCIal Tax hablhty m excess of Its market
value then there may be httle mcentlve for the owner of the parcel to pay the SpeCIal Taxes on such
parcel and httle hkehhood that such property would be purchased m a foreclosure sale
* PrelImmary subject to change
37
Agenda Item No 2
Page 224 of 316
Prospeclive purchasers of the Bonds should not assume that the land and nnprovements could be sold for
the appraised amount at a foreclosure sale for dehnquent Special Taxes In particular the values of
mdlvldual properlies m the Dlstnct Will vary m some cases slgOlficantly The actual value of the land IS
subject to future events which rrught render mvahd some or all of the basic assumptIOns of the Appraiser
The future value of the land can be expected to fluctuate due to many different not fully predictable real
estate related mveslinent nsk factors mcludmg but not hmlted to general tax law changes related to real
estate changes m compelilion general area employment base changes populatIOn changes changes m
real estate related mterest rates affectmg general purchasmg power advertlsmg changes m allowed
zoOlng uses and denSity natural disasters such as floods earthquakes and landshdes and slrrular factors
Appraisals m general are the result of an mexact process and estimated market value IS dependent m
part upon assumptIOns winch mayor may not be reahzed and upon market conditIOns and perceptIOns of
market value which are hkely to change over lime The appraisal valuatIOns represent opmlOns only and
are not mtended to be absolutes or assurances of speCific resale values If more than one appraiser were
employed It IS reasonable to assume that a reasonable range of value opmlOns on the land and the
Improvement value wlthm the Dlstnct would be reflected dependmg upon personal profeSSIOnal
mterpretalion of data facts and Circumstances reviewed and assumptIOns employed
ProspectIVe purchasers should not assume that the land could be sold for the appraised amount at a
foreclosure sale for dehnquent Special Taxes
A copy of the Appraisal IS mcluded as AppendiX C hereto The surmnary herem of some of the
conclUSIOns m the Appraisal does not purport to be complete Reference IS made to the Appraisal for
further 1OformatlOn The Dlstnct makes no representalions as to the value of the real property wlthm the
Dlstnct and prospeclive purchasers of the Bonds are referred to the Appraisal m evaluatmg the value of
real property wlthm the Dlstnct
Earthquakes Southern Cahfornla IS among the most selsrrucally aclive regIOns m the UOlted States of
Amenca The occurrence of seismIC aclivlty m the Dlstnct could result m substantial damage to
properties 10 the Dlstnct which m turn could substanlially reduce the value of such properties and could
affect the ablhty or wIllmgness of the property owners to pay their SpeCial Taxes Any major damage to
structures as a result of selsrruc aclivlty could result 10 a greater rehance on Undeveloped Property m the
payment of SpeCial Taxes In the event of a severe earthquake there may be Significant damage to both
property and mfrastructure m the Dlstnct As a result a substanlial portion of the property owners may be
unable or unwIlhng to pay the SpeCial Taxes when due In additIOn the value of land m the Dlstnct could
be dlm10lshed m the aftermath of such an earthquake reducmg the resultmg proceeds of foreclosure sales
m the event of dehnquencles m the payment of SpeCial Taxes
Certa10 procedures and deSign standards are reqUired to be followed dunng the construclion of buIld10gs
wlthm the Dlstnct to ensure that each bUlldmg IS deSigned and constructed to meet at a mmlmum the
highest seismiC standards reqUired by law
GeologiC, TopographiC and Chmalic Conditions The value of the Taxable Property m the Dlstnct m
the future can be adversely affected by a vanety of addllional factors partICularly those which may affect
mfrastructure and other pubhc Improvements and pnvate Improvements on the parcels of Taxable
Property and the contmued habitabIlity and enjoyment of such pnvate Improvements Such addllional
factors mclude Without hrrutatlon geologiC conditIOns such as earthquakes and volcaOlc eruptIOns
topographiC conditIOns such as earth movements landshdes hquefaclion floods or fires and cll1nalic
conditions such as tornadoes droughts and the pOSSible reduclion 10 water allocatIOn or avallablhty
Some homes he m a hilly area and grading and slopes are to be constructed 10 a manner expected to
remam stable It IS pOSSible that one or more of the condllions referenced above Olay occur and may
result m damage to Improvements of vary10g senousness that the damage may entail slgOlficant repair or
replacement costs and that repair or replacement may never occur either because of the cost or because
repair or replacement Will not facIlitate habltablhty or other use or because other conslderalions preclude
38
Agenda Item No 2
Page 225 of 316
such repair or replacement Under any of these circumstances the value of the Taxable Property may
well depreCiate or disappear
Water Supply LegislatIou State legislatIOn passed on October 9 2001 (Senate Bill No 221) whICh
prohibits the approval of a tentalive tract map or a development agreement for a subdiVISIOn of property
of more than 500 dwelhng umts unless the leglslalive body of a City or county or ItS planmng comrmsslOn
provides wntten venficatlOn from the dlstnct pubhc water supply system that a suffiCient water supply IS
available for the development project SuffiCient water supply IS defined as the total water supphes
aV3\lable dunng normal smgle dry and mulliple dry years wlthm a 20 year projectIOn that will meet the
projected demand associated With the proposed development project 10 additIOn to eXlstmg and pl3\med
futJrre uses mcludmg but not hrmted to agncultJrral and mdustnal uses The legislatIOn bec3\ne
effective on January I 2002 The legislatIOn provides that It shall not apply to any resldenlial prOject
proposed for a site that IS wltlun an urbanized area and has been prevIOusly developed for urban uses or
where the Immediate conliguous properties surroundmg the resldenlial project area are or prevIOusly
have been developed for urban uses It also provides that It IS not mtended to change eXlstmg law
concemmg a pubhc water system s obhgalion to provide water serYlce to Its eXlstmg customers or to any
potenlial future customers Nevertheless the legislatIOn provides for mterested parl1es seekmg mand3\nus
to compel comphance With ItS provIsIOns The apphcatlOn to thiS legIslatIOn will undoubtedly be subject
of hligatlOn and ultunate deterrmnatlOn by the courts
Endangered and Threatened Species Durmg the past several years there has been an mcrease 10
aclivlty at the State and federal level related to the hstmg and possible hstmg of certam plant and anrrnal
species found 10 the State as endangered species and 10 progr3\nS deSigned to set aside addllional
geographical areas for habitat conservatIOn A techmcal memorandum sunnnanzmg recommendalions
regardmg areas bemg conSidered for conservatIOn under the Western Riverside County Mulliple Species
Habitat ConservatIOn Plan (MSHCP) was released Although none of the areas wlthm Improvement Area
Nos 6 and 7 have been mcluded 10 the MSHCP study area there IS no assurance that such areas will
remam excluded from the MSHCP study area or future study areas An mcrease 10 the number of
endangered species and/or the deSignatIOn of additIOnal habitat areas to be subjected to conservatIOn
pl3\mmg Similar to areas subject to the MSHCP IS expected to curtail development 10 a number of areas 10
the State the DiStriCt IS not known to contam any plant or amrnal species whICh either the CallfornJa Fish
and G3\ne CommissIOn or the Umted States Fish and Wildhfe Service has hsted as endangered or to the
knowledge of the Authonty proposed for additIOn to the endangered species hst Further approval may
be reqUired for any pl3\med cleanng of land or construclion across or rrnpactmg waterways creeks or
other dramages If reqUired there IS no assurance that such approvals will be obtamed and that
development Will be perrmtted to proceed as projected
On a regular baSIS new species are proposed to be added to the State and federal protected species hsts
Regardless of the stage of enlitIements and actual development of a particular development any actIOn by
the State or federal governments to protect species located on or adjacent to the property wlthm the
Dlstnct could negalively affect the property owner s ablhty to complete the development of ItS property
wlthm the Dlstnct as plarmed ThiS 10 turn could reduce the ablhty or the wilhngness of the property
owners to pay the SpecJaI Taxes when due and would hkely reduce the value of the land and the potenlial
revenues available at a foreclosure sale for dehnquent SpeCial Taxes
RIsk Factors ReIatmg to the Levymg and CollectIOn ofthe SpecIal Taxes
InsuffiCIency of SpecIal Taxes As discussed herem the 3\nount of SpecJaI Taxes that are collected
wlthm the Dlstnct could be msufficlent to pay pnnclpal of mterest and prermum If any on the Dlstnct
Bonds due to nonpayment of the SpeCial Taxes leVied and msufficlent or lack of proceeds received from a
foreclosure sale ofland wlthm the Dlstnct
The Dlstnct has covenanted m the Fiscal Agent Agreement to mstltute foreclosure proceedmgs upon
dehnquencles m the payments of the Special Taxes as descnbed herem and to sell any real property With a
39
Agenda Item No 2
Page 226 of 316
lIen of delInquent Special Taxes to obtam funds to pay debt servIce on the DIstrIct Bonds (see SPECIAL
TAXES AND DISTRICT BONDS DEBT SERVICE COVERAGE - DELINQUENCIES herem) If foreclosure
proceedmgs are ever mstItuted any holder of a mortgage or deed of trust could but would not be reqUIred
to advance the amount of delmquent Special Taxes to protect Its secunty mterest See SOURCES OF
PAYMENT FOR THE BONDS REPAYMENT OF THE DISTRICT BONDS Covenant for Superior Court
Foreclosure herem for provlSlons whIch apply m the event foreclosure IS reqUIred and whIch the DiStrICt
IS reqUIred to follow m the event of delmquency m the payment of Special Taxes
Maximum Rates Wlthm the lImits of the Rate and Method of ApportIonment the Dlstnct may adjust
the Special Tax levIed on all property wlthm the Dlstnct to proVIde an amount reqUIred to pay debt
service on the Dlstnct Bonds and other oblIgatIOns of the Dlstnct and the amount If any necessary to
pay all annual AdnumstratIve Expenses and make rebate payments to the Umted States government
However the amount of the SpecIal Tax that may be levied agamst partICular categones of property
wlthm the Dlstnct IS subject to the maxImum rates proVIded m the Rate and Method of ApportIonment
There IS no assurance that the maxImum rates wIll at all tImes be suffiCient to pay the amounts reqUIred to
be paid by the FIscal Agent Agreement (see SPECIAL TAXES AND DISTRICT BONDS DEBT SERVICE
COVERAGE -RATE AND METHOD OF APPORTIONMENT and SPECIAL TAXES AND DISTRICT BONDS
DEBT SERVICE COVERAGE - DEBT SERVICE COVERAGE ON THE DISTRICT BONDS herem)
No Personal LiabilIty for Special Taxes No property owner WIll be personally lIable for the payment of
the SpecIal Taxes to be applIed to pay the pnnclpal of and mterest on the DIstrICt Bonds In additIon
there IS no assurance that any property owner WIll be able to pay the SpeCial Taxes or that any property
owner WIll pay such SpeCial Taxes even If It IS financially able to do so
Concentration of Ownership As of October I 2007 there was one large property owner and _
mdlvldual homeowners wlthm the Dlstnct Payment of the SpecIal Taxes IS dependent upon the current
and future property owners WillIngness to pay SpecIal Taxes assessed on theIr property m the Dlstnct
(see BONDOWNERS RISKS - THE DISTRICT BONDS - RIsk Factors Relating to Real Estate Market
ConditIons - Land Development" and No Personal LiabIlIty for SpeCial Taxes above and "THE DISTRICT
herem) The only asset of the current property owners or future property owners whIch constitutes
secunty for the DIStriCt Bonds IS theIr property holdmgs assessed wlthm the DIStrICt There are expected
to be subsequent transfers of ownershIp of the property wlthm the DlStnct to mdlvldual owners of smgle
family homes dunng the development of the land wlthm the DlStnct Durmg the penod of tIme a
Slgmficant portIOn of the land m the DlStnct IS owned by a lumted number of property owners there IS a
substantial nsk to the Bond Owners that such lImIted number of owners wIll not pay their SpeCIal Taxes
SpeCial Taxes Are Not Wdhm Teeter Plan The County has adopted a Teeter Plan as proVided for m
SectIon 4701 et seq of the CalIfornia Revenue and TaxatIOn Code under whICh a tax dlstnbutIon
procedure IS Implemented and secured roll taxes are dlstnbuted to taxmg agenCIes wlthm the County on
the basIS of the tax levy ratber tban on the basIS of actual tax collectIons However by polIcy the County
does not mclude assessments reassessments and speCIal taxes m Its Teeter program Tbe SpeCial Taxes
are not mcluded m the County s Teeter Program
RIverside County Property Tax DelInquency Rates Accordmg to data proVIded by tbe County
delInquenCies m the payment of FIscal Year 2004 05 and Fiscal Year 2005 06 ad valorem taxes by
property owners wlthm the City generally are hIgher tban the reported delInquency levels for pnor FIscal
Years
The CIty IS not aware of the causes for the mcreased delmquencles m the payment of property taxes for
FIscal Year 2004 05 and FIscal Year 2005 06 although mformatlOn avaIlable to the CIty mdtcates that m
recent years the County Assessor s office has expenenced (a) delays m processmg property ownershIp
transfers that m many cases have led to property tax bIlls bemg sent to former not current owners and to
consequent delays m the actual property owners recelvmg and paymg theIT property taxes and (b) delays
m processmg property tax payments that have led to delays m credttmg speCial taxes toward the accounts
40
Agenda Item No 2
Page 227 of 316
of the appropnate commumty faCIlIties dlStnCt To the extent these mcreases m delmquenCles are
mdICatlve of a trend toward actual property tax delmquencles by homeowners who receIved property tax
bIlls delmquencles m the payment of property taxes (and If affecting propertIes wlthm the Dlstnct
delInquenCIes m the payment of SpecIal Taxes) may occur and continue at sImilar levels or mcrease m the
near future
Under the FIscal Agent Agreement the Dlstnct has the authonty and the oblIgation to mcrease the levy of
SpeCial Taxes agamst non delInquent property owners m the DIStrIct If other owners are delInquent m
the payment of SpecIal Taxes However the Dlstnct s abIlIty to mcrease SpecIal Tax leVIes for thIS
purpose IS lImIted by two factors (a) the MaxImum SpeCial Tax rates set forth m the Rate and Method
of ApportIOnment and (b) the lImitatIOns on such mcreases set forth m the Act whIch prOVIdes that under
no cIrcumstances may the SpeCial Tax leVIed agamst any parcel used for pnvate reSIdential purposes be
mcreased as a consequence of delmquency or default by an owner of any other parcel or parcels wlthm
such Dlstnct by more than 10% Thus the Dlstnct U1ay not be able to mcrease SpeCIal Tax leVIes m
future Fiscal Years by enough to make up for delInquenCIes for pnor Fiscal Years (see SPECIAL TAXES
AND DISTRICT BONDS DEBT SERVICE COVERAGE - DELINQUENCIES herem)
Foreclosure and Sale Proceedmgs In order to pay debt servIce on the Dlstnct Bonds It IS necessary
that the SpeCIal Tax leVIed agamst land wlthm the Dlstnct be paId m a tunely manner The Dlstnct has
covenanted m the FIscal Agent Agreement under certam condItIons to mstltute foreclosure proceedmgs
agamst property With delmquent SpeCial Taxes m order to obtam funds to pay debt service on the Dlstnct
Bonds If foreclosure proceedmgs were mstltuted any mortgage or deed of trust holder could but would
not be reqUIred to advance the amount of the delInquent Special Tax to protect lis secunty mterest
In the event such supenor court foreclosure IS necessary there could be a delay m pnnClpal and mterest
payments to the Authonty as the owner of the Dlstnct Bonds pendmg prosecutIOn of the foreclosure
proceedmgs and receipt of the proceeds of the foreclosure sale If any No assurances can be gIven that
the real property subject to foreclosure and sale at a JudICIal foreclosure sale WIll be sold or If sold that
the proceeds of such sale wIll be suffiCIent to pay any delInquent SpeCial Tax mstallment Although the
Act authonzes the Dlstnct to cause such an action to be commenced and dilIgently pursued to completion
the Act does not specIfy the oblIgations of the Dlstnct WIth regard to purchasmg or otherwise acqUlnng
any lot or parcel of property sold at the foreclosure sale If there IS no other purchaser at such sale (see
SOURCES OF PAYMENT FOR THE BONDS - REPAYMENT OF THE DISTRICT BONDS Covenant for
Supenor Court Foreclosure herem)
SuffiCiency of the foreclosure sales proceeds to cover the delInquent amount depends m part upon the
market for and the value of the parcel at the tune of the foreclosure sale (see "BONDOWNERS RISKS-THE
DISTRICT BONDS - R...k Factors Relating to Land Values above)
The current assessed value IS some eVidence of such future value However future events may result m
slgmficant changes from the current assessed value Such events could mclude a downturn m the
economy as well as a number of addItIOnal factors Any of these factors may result m a SIgnificant
erosIOn m value With consequent reduced secunty of the Dlstnct Bonds and consequently the Bonds
SuffiCIency of foreclosure sale proceeds to cover a dehnquency may also depend upon the value of pnor
or panty lIens and Similar claIms A variety of governmental lIens may presently eXIst or may anse m the
future WIth respect to a parcel whICh unless subordmate to the lIen secunng the SpeCial Taxes may
effectively reduce the value of such parcel
TImely foreclosure and sale proceedmgs WIth respect to a parcel may be forestalled or delayed by a stay
m the event the owner of the parcel becomes the subject of bankruptcy proceedmgs Further should the
stay not be lIfted payment of SpeCIal Taxes may be subordmated to bankruptcy law pnontles
41
Agenda Item No 2
Page 228 of 316
Bankruptcy and Foreclosure Delays The payment of the Special Taxes and the abilIty ofthe Dlstnct to
foreclose the hen of a dehnquent unpaid Special Tax ntay be lnmted by bankruptcy msolvency or other
laws generally affectmg credItors ngbts or by the laws of the State of Cahfornla relatmg to Judicial
foreclosure
The vanous legal opmlOns to be dehvered concurrently WIth the dehvery of the Bonds and the Dlstnct
Bonds (mcludmg Bond Counsel s approvmg legal opmlOn) wIll be quahfied as to the enforceabilIty of the
vanous legal mstruments by bankruptcy reorganIzatIon msolvency or other snnllar laws affectmg the
nghts of creditors generally
Although bankruptcy proceedings would not cause the SpeCial Taxes to become extmgUlshed bankruptcy
of a property owner or of a partner or other owner of a property wlthm the Dlstnct could result m a delay
m prosecutmg supenor court foreclosure proceedings and could result m loss of pnonty of the hen
secunng any SpeCIal Taxes WIth respect to SpeCIal Taxes leVied while bankruptcy proceedmgs are
pendmg In addll10n the amount of any hen on property secunng the payment of delmquent Special
Taxes could be reduced If the value of the property were determmed by the bankruptcy court to have
become less than the amount of the hen and the amount of the dehnquent SpeCIal Taxes m excess of the
reduced hen could be treated as an unsecured c1aun by the court Such delay or loss of pnonty or
nonpayment would mcrease the hkehhood of a delay or default m payment of the prmclpal of and
mterest on the Dlstnct Bonds and the POSSlblhty of dehnquent SpeclaJ Tax mstallments not bemg paid m
full To the extent a slgmficant percenrage of the property m Improvement Area Nos 6 and 7 contmues to
be owned by a hmlted number of property owners the payment of the SpeCIal Taxes and the ablhty of the
Dlstnct to foreclose the hen of a dehnquent unpaId Special Tax mstallment could be delayed by
bankruptcy msolvency or other laws generally affectmg creditors nghts or by the laws of the State
relatmg to JudIcial foreclosure
On July 30 1992 the Umted Srates Court of Appeals for the Nmth CIrcUlt Issued Its opmlOn m a
bankruptcy case enl1tled In re Glasply Marine Industries In that case the court held that ad valorem
property taxes leVIed by Snoho1ll1sh County m the State of Washmgton after the date that the property
owner filed a pel1l1on for bankruptcy were not enl1tled to pnonty over a secured creditor With a pnor hen
on the property The court upheld the pnonty of unpaid taxes Imposed after the fihng of the bankruptcy
petitIOn as ad1mmstratlve expenses of the bankruptcy estate payable after all secured credItors As a
result the secured credItor was to foreclose on the property and reram all of the proceeds of the sale
except the amount of the pre petItIOn taxes
Accordmg to the court s ruhng as adInmlstral1ve expenses post pel1l1on taxes would have to be paId
assummg that the debtor has suffiCient assets to do so In certam cIrcumstances payment of such
admmlstratlve expenses may be allowed to be deferred Once the property IS transferred out of the
bankruptcy esrate (through foreclosure or otherwIse) It would at that lime become subject to current ad
valorem taxes
The Act proVides that the SpecIal Taxes are secured by a contmumg hen whIch IS subject to the same hen
pnonty m the case of dehnquency as ad valorem taxes No case law eXIsts WIth respect to how a
bankruptcy court would treat the hen for the SpeCial Taxes leVied after the fihng of a petition m
bankruptcy Glasply IS controllmg precedent for bankruptcy courts m the State If the Glasply precedent
was apphed to the levy of the SpecIal Tax the amount of SpeCIal Tax receIved from parcels whose owners
declared bankruptcy could be reduced
It should also be noted that on October 22 1994 Congress enacted 11 US C SectIOn 362(b)(I8) whIch
added a new excepl10n to the automal1c sray for ad valorem property taxes Imposed by a pohl1cal
subdiVISIOn after the fihng of a bankruptcy pel1l1on Pursuant to thIS new provIsIon oflaw m the event of
a bankruptcy petitIOn filed on or after October 22 1994 the hen for ad valorem taxes m subsequent fiscal
years WIll attach even If the property IS part of the bankruptcy estate Bondowners should be aware that
42
Agenda Item No 2
Page 229 of 316
the potenlial effect of 11 US C SectIOn 362(b)(18) on the SpeCial Taxes depends upon whether a court
were to determme that the Special Taxes should be treated like ad valorem taxes for this purpose
Disclosure to Future Land Buyers A Nolice of SpeCial Tax Lien (the Nolice) for the Dlstnct has
been recorded pursuant to SectIOn 533283 of the Act and SectIOn 31145 of the Streets and Highways
Code With the County Recorder for the County (the County Recorder) The Nolice sets forth among
other thmgs the Rate and Method of ApportIOnment the legal descnptlOn of property wlthm the Dlstnct
as of the date of recordmg the Nolice and the boundanes of the Dlstnct by reference to the map(s)
recorded With the County Recorder While title msurance and search companies normally refer to such
nolices 10 litle reports and sellers of property wlthm the Dlstnct are reqUired to give prospectIVe buyers a
nolice of speCial tax m accordance With Seclions 533602 or 53341 5 of the Act there can be no
assurances that such reference Will be made or nolice given or If made or given that prospective
purchasers or lenders Will conSider such SpeCial Tax obligatIOn m the purchase of land wlthm the Dlstnct
or the lendmg of money thereon Failure to disclose the eXistence of the SpeCial Tax may affect the
willingness and ability of future landowners wlthm the DiStriCt to pay the SpeCial Tax when due
Exempt Properhes Certam properties are exempt from the SpeCial Tax 10 accordance With the Rate and
Method of ApportIOnment and proVISIOns of the Act The Act prOVides that properties or enlilies of the
State federal or local government at the lime of fonnatlOn of the Dlstnct are exempt from the SpeCial
Tax prOVided however that property wlthm the DistriCt acqUired by a pubhc enlity through negoliated
transactIOns or by gIft or deVise whICh IS not otherwise exempt from the SpeCial Tax Will contmue to be
subject to the SpeCial Tax In additIOn the Act prOVides that If property subject to the SpeCial Tax IS
acqUired by a public enlity through emment domam proceedmgs the obligatIOn to pay the SpeCial Tax
With respect to that property IS to be treated as If It were a speCial assessment and be paid from the
emment domam award The constitutIOnality and operation of these prOVISIOns of the Act have not been
tested If for any reason property subject to the SpeCial Tax becomes exempt from taxatIOn by reason of
ownership by a non taxable entity such as the federal government or another public agency subject to the
limitatIOn of the maximum authonzed rate of levy the SpeCial Tax may be reallocated to the remammg
taxable properties wlthm the Dlstnct This would result m the owners of such property paymg a greater
amount of the SpeCial Tax and could have an adverse lmpact upon the timely payment of the SpeCial Tax
however the amount of SpeCial Tax to be leVied and collected from the property owner IS subject to the
Maximum SpeCial Tax as set forth m the Rate and Method of ApportIOnment and to the lumtatlOn m the
Act that under no circumstances may the SpeCial Taxes leVied on any resldenlial parcel be mcreased by
more than ten percent as a consequence of delinquency by the owner of any parcel If a substantial portIOn
of land wlthm the Dlstnct became exempt from the SpeCial Tax because of public ownership or
otherwise the maximum SpeCial Tax which could be leVied upon the remammg acreage ought not be
suffiCient to pay pnnclpal of and mterest on the DiStriCt Bonds when due and a default Will occur With
respect to the payment of such pnnclpal and mterest
The Act further prOVides that no other properlies or enlitles are exempt from the SpeCial Tax unless the
properties or enlilies are expressly exempted m a resolutIOn of consideratIOn to levy a new speCial tax or
to alter the rate or method of apportIOnment of an eXlstmg speCial tax The Act would prohibit the City
CounCil actmg as the leglslalive body of the Dlstnct from adoptmg a resolution to reduce the rate of the
SpeCial Tax or tenmnate the levy of the SpeCial Tax unless the City Council actmg as the leglslalive body
of the DiStriCt determmed that the reductIOn or termmalion of the SpeCial Tax would not mterfere With
the limely relirement of the Dlstnct Bonds (see BONDOWNERS RISKS - THE DISTRICT BONDS - RIsk
Factors Relatmg to Government Rules InlliatlVes Etc RIght to Vote on Taxes Act" below)
Property Controlled by Federal DepOSit Insurance Corporahon and other Federal AgenCies The
Dlstnct s ability to collect mterest and penallies specified by State law and to foreclose the hen of a
delinquent SpeCial Tax payment may be limited 10 certam respects With regard to properties 10 which the
Internal Revenue Semce the Drug Enforcement Agency the Federal DepOSit Insurance Corporalion (the
FDIC ) or other Similar federal agencies has or obtams an mterest SpeCifically With respect to the
FDIC on June 4 1991 the FDIC Issued a Statement of Policy Regarding the Payment of State and Local
43
Agenda Item No 2
Page 230 of 316
Real Property Taxes The 1991 Policy Statement was revised and superseded by a new Policy Statement
effectlve January 9 1997 (the Policy Statement) The Policy Statement proVIdes that real property
owned by the FDIC IS subject to state and local real property taxes only If those taxes are assessed
accordmg to the property s value and that the FDIC IS Immune from real property taxes assessed on any
basIS other than property value Accordmg to the Policy Statement the FDIC wIll pay ItS property tax
obligatIons when they become due and payable and wIll pay cbums for delinquent property taxes as
promptly as IS consIstent WIth sound busmess practlce and the orderly adrmmstratlon of the mstltutlOn s
affaIrs unless abandonment of the FDIC s mterest m the property IS appropnate The FDIC wIll pay
claIms for mterest on delmquent property taxes owed at the rate provIded under state law to the extent
the mterest payment obligatIOn IS secured by a valid lien The FDIC WIll not pay any amounts m the
nature of fines or penaltles and WIll not payor recogmze liens for such amounts If any property taxes
(mcludmg mterest) on FDIC owned property are secured by a valid lien (m 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 gamlshment foreclosure or sale WIthout the
FDIC s consent In addltlon the FDIC wIll not penmt a lien or secunty mterest held by the FDIC to be
elimmated by foreclosure WIthout the FDIC s consent
The Policy Statement states that the FDIC generally wIll not pay non ad valorem taxes mcludmg speCIal
assessments on property m which It has a fee mterest unless the amount of tax IS fixed at the tlme that
the FDIC acqUIres ItS fee mterest m the property nor WIll It recogmze 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 determmes the speCIal tax due each year are speCIfically
Identlfied m the PolIcy Statement as bemg Imposed each year and therefore covered by the FDIC s
federallmmumty WIth respect to property m CalifornIa owned by the FDIC on January 9 1997 and
that was owned by the Resolutlon Trust CorporatIOn (the RTC) on December 31 1995 or that became
property of the FDIC through foreclosure of a secunty mterest held by the RTC on that date the FDIC
WIll contmue the RTC s pnor practlce of paymg speCIal taxes Imposed pursuant to the Mello Roos Act If
the taxes were Imposed pnor to the RTC s acqUIsItIon of an mterest m the property All other special
taxes mcludmg the Special Taxes whIch secure the Dlstnct Bonds may be challenged by the FDIC
The Authonty and the Dlstnct are unable to prechct what effect the applicatIOn of the Policy Statement
would have m the event of a delinquency With respect to a parcel m which the FDIC has an mterest
although prohlbltmg the lien of the FDIC to be foreclosed on at a Juchclal foreclosure sale would likely
reduce the number of or elirmnate the persons wIllmg to purchase such a parcel at a foreclosure sale
Owners of the Bonds should assume that the Authonty and the Dlstnct WIll be unable to foreclose on any
parcel owned by the FDIC The Authonty has not undertaken to determme whether the FDIC currently
has or IS likely to acquIre any mterest m any of the parcels and therefore expresses no vIew concernmg
the likelIhood that the nsks descnbed above wIll matenalIze while the Bonds are outstandmg
RIsk Factors Relatmg to Tax Burden
BIUmg of SpecIal Taxes A specIal tax can result m a substantlally heaVIer property tax burden bemg
rrnposed upon propertIes wlthm a commumty facllitles dlstnct than elsewhere m a cIty or county and thiS
m turn can lead to problems m the collectlon of the speCIal tax In some communIty facllitles dlstncts the
taxpayers have refused to pay the specIal tax and have commenced lItIgatIOn challengmg the specIal tax
the community facIlltles chstrIct and the bonds Issued by the DIstrIct
Under provISIons of the Act the SpeCIal Taxes are bIlled to the propertIes wlthm Improvement Area Nos
6 and 7 whIch were entered on the Assessment Roll of the County Assessor by January I of the prevIOus
fiscal year on the regular property tax bIlls sent to owners of such propertIes Such SpeCIal Tax
mstalhnents are due and payable and bear the same penaltIes and mterest for non payment as do regular
property tax mstallments These SpeCial Tax mstalhnent payments cannot be made separately from
property tax payments Therefore the unwIllingness or mabllity of a property owner to pay regular
property tax bIlls as eVIdenced by property tax delInquenCIes may also mdICate an unwIllmgness or
mabllity to make regular property tax payments and mstallment payments of SpecIal Taxes m the future
44
Agenda Item No 2
Page 231 of 316
See SOURCES OF PAYMENT FOR THE BONDS REPAYMENT OF THE DISTRICT BONDS Covenant for
Supenor Court Foreclosure" for a discussion of the provIsions which apply and procedures whIch the
DiStrICt IS obhgated to follow m the event of dehnquency m the payment of mstallments of Specml Taxes
AdditIonal TaxatIon On June 3 1986 Cahfornm voters approved an amendment to Article XIIIA of the
Cahfornla ConstItutIon to allow local governments and school districts to raise therr property tax rates
above the constItutIOnally mandated 1% ceilmg for the purpose of repaymg certam new general obhgatlon
debt Issued for the acqUIsItIon or the rrnprovement of real property and approved by at least two thirds of
the votes cast by the quahfied electorate If any such voter approved debt IS Issued It may be on a panty
with the hen of the Specml Taxes on the parcels wlthm the Dlstnct
Panty Taxes and Special Assessments The Special Taxes and any penalties thereon Will constItute a
hen agamst the lots and parcels of land wlthm the DIstrict on which they Will be annually Imposed until
they are paId m full Such hen IS on a parity with all special taxes and specml assessments leVied by other
pubhc entItIes agenCies and dIstricts and IS co equal to and mdependent of the hen for general property
taxes regardless of when they are Imposed upon the same real property The Specml Taxes have pnonty
over all eXlstmg and future pnvate hens Imposed on the real property wlthm the District The District
however has no control over the ablhty of other pubhc entIties agencies and districts to Issue
mdebtedness secured by specml taxes or assessments payable from all or a portIOn of the real property
wlthm the DIStriCt Any such specml taxes or assessments may have a hen on such real property on a
panty with the SpecIal Taxes
Accordmgly the hens on the real property wlthm the DIStriCt could greatly mcrease without any
correspondmg mcrease m the value of the property wlthm the District and thereby severely reduce the
value to hen ratIO of the land secured pubhc debt eXlstmg at the tIme the Bonds are Issued The
ImposItIon of such additIonal mdebtedness could also reduce the wllhngness and ablhty of the property
owners wlthm the DIStriCt to pay the Specml Taxes when due
RIsk Factors Relatmg to Governmental Rules, ImtIatIves, Etc
Right to Vote on Taxes Act An mltIatIve measure cornmonly referred to as the Right to Vote on Taxes
Act (PropoSItIon 218 ) was approved by the voters of the State ofCahforrua at the November 5 1996
general electIOn Proposition 218 added ArtIcle XIIIC ( Article XIIIC ) and Article XIIID to the
Cahfornla ConstitutIOn According to the Title and Summary of ProposItIon 218 prepared by the
Cahfornm Attorney General ProposItIon 218 lumts the authonty of local governments to Impose taxes
and property related assessments fees and charges Generally the provlSlons of ProposItIon 218 have
not yet been mterpreted by the courts although a number of laWSUIts have been filed requestmg the courts
to mterpret vanous aspects of PropoSItIon 2 I 8
Among other thmgs Section 3 of Article XIIIC states that the ImtIatlve power shall not be prohibIted or
otherwise hmlted m matters of reducmg or repeahng any local tax assessment fee or charge
ProposItIon 218 proVides for a procedure which mcludes notice heanng protest and votmg reqUIrements
to alter the rate and method of apportIOnment of an eXlstmg speCial tax However ProposItIon 218
prohibits a legislative body from adoptmg any resolutIOn to reduce the rate of any special tax or tenrrrnate
the levy of any specml tax pledged to repay any debt mcurred pursuant to Proposltton 218 unless such
legislatIve body detenmnes that the reductIOn or tenmnatlOn of the speCial tax would not mterfere With
the tImely retIrement of that debt Although the matter IS not free from doubt It IS hkely that the exerCise
by the voters m the District of the mltlatlve power referred to m Article XIIIC to reduce or termmate the
SpeCIal Tax IS subject to the same restrictIOns as IS the DIstrict pursuant to the Act Accordingly although
the matter IS not free from doubt It IS hkely that PropOSitIOn 218 has not conferred on the voters m the
Dlstnct the power to repeal or reduce the SpeCial Taxes If such reductIOn would mterfere WIth the tImely
retIrement of the Dlstnct Bonds
45
Agenda Item No 2
Page 232 of 316
It may be possible however for voters of the Dlstnct to reduce the SpecIal Taxes 10 a marmer which does
not mterfere WIth the llmely repayment of the DIStrICt Bonds but whIch does reduce the maxunum
amount of Special Taxes that may be levied 10 any year below the eXlstmg levels Therefore no assurance
Can be gIven WIth respect to the levy of Special Taxes for Admlmstrallve Expenses Furthermore no
assurance can be gIven wIth respect to the future levy of the SpecIal Taxes 10 amounts greater than the
amount necessary for the tImely rellrement of the Dlstnct Bonds
The mterpretatIon and applIcallon of ProposItion 218 will ulllmately be determmed by the courts WIth
respect to a number of the matters chscussed above and It IS not possIble at thIS lime to predICt WIth
certamty the outcome of such determmallon or the tunelmess of any remedy afforded by the courts
Ballot ImtIabves and LegIslatIve Measures Proposlllon 218 was adopted pursuant to a measure
qualIfied for the ballot pursuant to CalIfornIa s conslltutlOnallmllatIve process and the State LegIslature
has 10 the past enacted leglslallon which has altered the spenchng lllmtatlOns or establIshed IDlmmum
fundmg proVIsIons for partIcular acllvllles From lime to lime other Imllallve measures could be adopted
by CalIfornIa voters or legIslatIOn enacted by the State LegIslature The adoptIOn of any such Imllatlve or
enactment of leglslallon mIght place lunllatlOns on the abIlIty of the State the CIty or local Dlstnct to
mcrease revenues or to mcrease appropnallons or on the abIlIty of a property owner to complete the
development of the property
Risk Factors Relatmg to LimitatIOns of the Bonds and the Dlstnct
Limited OblIgatIon NeIther the faith and credIt nor the taxmg power of the CIty the State or any
polIllcal subdiVISion thereof other than the Dlstnct IS pledged to the payment of the Dlstnct Bonds
Except for the SpecIal Taxes denved from the Dlstnct no other taxes are pledged to the payment of the
DiStrICt Bonds The DIStriCt Bonds are not general or speCIal oblIgallons of the CIty the State or any
polItIcal subdiVISIOn thereof or general oblIgatIOns of the DiStriCt but are speCIal oblIgatIOns of the
Dlstnct payable solely from SpeCial Taxes and the other assets pledged therefor under the FIscal Agent
Agreement
LimitatIons on Remedies RemedIes avaIlable to the Bondowners may be lImIted by a variety of factors
and may be madequate to assure the tImely payment of pnnclpal of and mterest on the DIstrICt Bonds or
to preserve the tax exempt status of the Bonds Bond Counsel has IIlDlted ItS opmlOn as to the
enforceabIlIty of the Bonds and the Dlstnct Bonds and of the Indenture and the FIscal Agent Agreements
to the extent that enforceabIlIty may be lImIted by bankruptcy msolvency reorganlzallon fraudulent
conveyance or transfer moratonum or others sunllar laws affectmg generally the enforcement of
creditors nghts by eqUItable pnnclples and by the exerCIse of Juchclal discretIOn AddItIonally the
Dlstnct Bonds are not subject to acceleratIOn 10 the event of the breach of any covenant or duty under the
Indenture The lack of availabIlIty of certam remedIes or the IIlDltatlOn of remedIes DIaY entail nsks of
delay lImItatIOn or mochficatlOn of the nghts of the Owners
EnforceabIlIty of the nghts and remedIes of the owners of the DIstrIct Bonds and the oblIgations mcurred
by the DIStnCt may become subject to the federal bankruptcy code and bankruptcy msolvency
reorganIzatIOn moratonum or SImilar laws relatmg to or affectmg the enforcement of creditor s nghts
generally now or hereafter m effect eqUIty pnnclples whIch may hmIt the specIfic enforcement under
State law of certam remeches the exercIse by the Umted States of Amenca of the powers delegated to It
by the ConstItutIOn the reasonable and necessary exerCIse 10 certam exceptIonal sltuallons of the polIce
powers mherent 10 the sovereIgnty of the State and Its goverrunental bodies m the mterest of servmg a
SIgnificant and leglllDIate publIc purpose and the IIlDltatIons on remedIes agamst Jomt powers authonlles
10 the State See "BONDOWNERS RISKS THE DISTRICT BONDS - Risk Factors Relatmg to the Levymg and
ColleclIon of the SpeCIal Taxes above
No AcceleratIon PrOVISion The FIscal Agent Agreement for the DiStrICt does not contam a provIsIOn
allowmg for the acceleratIon of the pnnclpal of the Dlstnct Bonds 10 the event of a payment default or
46
Agenda Item No 2
Page 233 of 316
other default under the terms of the Dlstnct Bonds or the Fiscal Agent Agreement AccordIngly the
Indenture does not contaIn a provIsIOn alloWIng for acceleration of the Bonds
47
Agenda Item No 2
Page 234 of 316
THE AUTHORITY
GENERAL
The Authonty IS a Jomt exercise of powers authonty organized and eXlstmg under and by virtue of the
Jomt Powers Act The City pursuant to ResolutIOn No 8932 adopted on July 25 1989 and the Agency
pursuant to ResolutIOn No 89 4 adopted on July 25 1989 formed the Authonty by the executIOn of a
J omt Exercise of Powers Agreement (the J omt Powers Agreement )
The Bond Law provides for the Issuance of revenue bonds of Jomt exercise of powers authonl1es such as
the Authonty to be repaid solely from the revenues of certam public obligatIOns such as the Dlstnct
Bonds The Authonty has no taxmg power Pursuant to the Bond Law the Authonty IS authonzed to
Issue ItS revenue bonds for the purpose of fmancmg among other thmgs pubbc capital Improvement
projects
The Bonds are bemg sold to provide moneys to enable the Authonty to purchase the Dlstnct Bonds The
Authonty authonzed the executIOn of the Indenture the refundmg and the purchase of the Dlstnct Bonds
pursuant to ResolutIOn No PFA _ adopted October 23 2007
CITY AND GOVERNMENT ORGANIZATION
The City of Lake Elsmore (the City) was founded 10 1883 and mcorporated on Apnl 23 1888 and 10
1893 the Elsmore Valley prevIOusly 10 San Diego County became a part of the new County of Riverside
The City IS located 73 miles east of Los Angeles 472 Illiles south of San FranCISco and 74 Illiles north of
San Diego It covers an area of approximately 39 I square miles With 10 5 miles of lake shore and has an
elevatIOn of I 258 feet above sea level
The City IS mcorporated as a general law City The City has a Council/Manager form of municipal
government The City Council appomts the City Manager who IS responSible for the day to day
admmlstratlOn of City busmess and the coordmatlOn of all departments of the City The City Council IS
composed of five members elected bl annually at large to four year alternatmg terms The mayor IS
selected by the City Council from among ItS members The City employs a staff of 37 full lime
employees and 18 part lime employees under the dIrectIOn of the City Manager
Pursuant to the Jomt Powers Agreement the City Council of the City acts as the Governmg Board of the
Authonty The City Council as the leglslal1ve body of the City also acts as the governmg body of the
Dlstnct The City Council members and term explral10n dates are as follows
Council Members
Term EXDlres
November 2008
November 2008
November 2008
November 2010
November 2010
Robert E Magee Mayor
Daryl Hickman Mayor Pro Tern
Robert Schiffner Member / PFA Chair
Thomas Buckley Member / PFA VICe Chair
Geme Kelley Member
48
Agenda Item No 2
Page 235 of 316
Current City ammrustratJve staff mcludes
Robert E Brady Cay Manager
Matt N Pressey Director of Admlnlstratlve ServIces
VIVian Munson Cay Clerk
As of the dehvery date of the Bonds the District has retamed Hams & Associates to asSiSt m the
preparatIOn of the Special Tax roll and the deternunatlOn of the amount of Special Taxes reqUIred m each
Fiscal Year
DEBT SERVICE COVERAGE ON THE AUTHORITY BONDS
The Bonds are special obhgatJons of the Authonty payable solely from and secured by revenues from
repayment of the Dlstnct Bonds and certam funds and accounts estabhshed under the Indenture mc1udmg
the Cash Flow Management Fund and the Reserve Account held by the Trustee In additIOn the Bonds
may be payable from any available surplus revenues With respect to other senes of local agency revenue
bonds related to community faclhtJes dlstncts Issued by the Authonty and to the extent such surplus
revenues are available to replemsh the Reserve Accounts to ItS requirement and to replemsh the Cash
Flow Management Fund to Its reqUIrement (see SOURCES OF PAYMENT FOR THE BONDS - REPAYMENT
OF THE BONDS - ApplicatIOn of Revenues Flow of Funds herem)
The receipt of revenues from repayment of the Dlstnct Bonds IS subject to several vanables descnbed
herem (see BONDOWNERS RISKS - THE DISTRICT BONDS herem)
49
Agenda Item No 2
Page 236 of 316
TABLE NO 1
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
LOCAL AGENCY REVENUE BONDS
2007 SERIES A (WASSON CANYON)
DEBT SERVICE COVERAGE
Bond
Year
District Bond Debt
ServIce Payments
Debt Service
on the Bonds
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
Prehmmary subject to change
50
Coverage
RatIo
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Agenda Item No 2
Page 237 of 316
SPECIAL TAXES AND DISTRICT BONDS
DEBT SERVICE COVERAGE
ADMINISTRATION OF THE SPECIAL TAX
The DIstrict IS reqUired each FIscal Year to determme the amount of SpecIal Taxes needed to pay debt
servIce on the District Bonds an allowance for dehnquencles Wlthm the Dlstnct and AdrmmstratlVe
Expenses of the DIstrict The District IS expected to mcur among other thmgs Adrmmstratlve Expenses
for the levy and collectIOn of the Special Taxes foreclosure proceedmgs FIscal Agent fees and arbItrage
rebate calculatIOns
The DIstrict IS requITed to conrrnunlcate WIth the County AudItor to ascertam the relevant parcels on
whICh the SpecIal Taxes are to be levIed takIng mto account any parcel sphts dunng the precedmg and
then current FIscal Year The District IS requITed by resolutIOn to provIde for the levy of the SpecIal Taxes
m the current F,scal Year A certIfied hst of all parcels subject to the SpecIal Tax mcludmg the amount of
the Special Tax to be levied on each such parcel IS filed by the Dlstnct WIth the County AudItor on or
before the tenth (10th) day of August of that tax year The SpecIal Taxes so leVied may not exceed the
authonzed amounts as provIded m the Rate and Method of ApportlOrrrnent (see RATE AND METHOD OF
APPORTIONMENT" below)
The SpecIal Taxes are payable and are collected m the same manner and at the same time and m the same
mstallment as the general taxes on real property are payable and have the same pnonty become
dehnquent at the same times and m the same proportIOnate amounts and bear the same proportIOnate
penaltIes and mterest after dehnquency as do the general taxes on real property
Special Taxes are due m two equal mstallments SpecIal Taxes leVIed become delmquent If not paId by
the followmg December 10th and Apnll Oth Currently a 10% penalty IS added to dehnquent taxes
When receIved the Special Taxes from the Dlstnct are reqUired to be transferred by the CIty to the FIscal
Agent as provided m the FIscal Agent Agreement and deposIted by the FIscal Agent m a separate SpeCIal
Tax Fund for the DIstrict
As of the dehvery date of the Bonds the DIstrict has retamed Hams & ASSOCiates to assIst m the
preparation of the Special Tax roll and the determmatlOn of the amount of SpeCial Taxes reqUired m each
Fiscal Year
RATE AND METHOD OF APPORTIONMENT
The CIty Councll actmg on behalf of the Dlstnct leVies the SpeCial Taxes m accordance WIth the Rate
and Method of ApportlOrrrnent (see APPENDIX E -RATE AND METHOD OF APPORTIONMENT herem)
Because the Special Taxes have been authonzed by a two thIrds (2/3) vote of the quahfied electorate of
the DIstrict the Special Taxes are a speCIal tax Imposed wlthm the hrmtatlOns of SectIOn 4 of ArtIcle
XIlIA of the State ConstitutIOn The City CounCil as the legIslative body of the Dlstnct has the power
and IS obhgated pursuant to the covenants contamed m the F,scal Agent Agreement to cause the levy and
collectIOn of the SpeCIal Taxes wlthm the DIstrict annually
The ASSIgned SpeCIal Tax Rate under the Rate and Method of ApportlOrrrnent were set pursuant to CIty
Pohcy not to exceed an expected total tax rate percentage of 2% when takmg mto account all taxes and
assessments on property of all JunsdICtlOns based upon the then projected home pnces (see SPECIAL TAX
PROJECTIONS below) The Dlstnct may reduce the ASSIgned SpeCIal Tax rate to mamtam ItS pohcy not
to exceed a total tax rate percentage of 20/ when takmg mto account all taxes and assessments on property
of all J unsdlctlOns The Dlstnct has covenanted however that no reduction of the ASSIgned SpeCIal Tax
rate for the Dlstnct shall be approved whICh would prohIbIt the District from levymg the ASSigned
51
Agenda Item No 2
Page 238 of 316
Special Tax rate m any Fiscal Year at such a rate as could generate Special Taxes m each Fiscal Year after
deductIOns for Admmlstralive Expenses at least equal to lIOIo ofarmual debt service m such Fiscal Year
for the Dlstnct Bonds and any parity bonds
ASSigned Spectal Tax Rates
When a commumty facliltles dlstnct IS formed a special tax may be leVied on each parcel of taxable
property wlthm the commumty faclhlies dlstnct to pay for the constructIOn acqUisitIOn and rehablhtatlOn
of pubhc faclhtles to pay for authonzed services or to repay bonded mdebtedness or other related
expenses mcurred by the commumty faclillies dlstnct ThiS special tax may be appomoned m any
reasonable marmer however the tax may not be apportioned on an ad valorem basiS Pursuant to SectIOn
53325 3 of the Act the tax Imposed IS a Special Tax and not a special assessment and there IS no
reqUirement that the tax be apportIOned on the baSIS of benefit to any property
When more than one type of land use or houses of different sizes are present wlthm a commumty
faclhlies distnct several cntena may be considered when apportlOnmg the special tax Generally cntena
are based on bUlldmg square footage or residential floor area acreage and land use Categones based on
such cntena are estabhshed to differentiate between parcels of property Specific special tax levels are
assigned to each category With all parcels wlthm a category assigned the same speCial tax rate
In the Rate and Method of ApportlOmnent categones have been estabhshed for Developed Property as
shown m the tables below The Special Tax for a smgle farmly resldenlial property Will vary directly With
the amount of resldenlial floor area on each parcel and m which zone It IS located The tables below
shows the ASSigned SpeCial Tax rates for Fiscal Year 2007/08 that are to be leVied agamst Developed
Property wlthm the Dlstnct The MaXimum SpeCial Taxes for Developed Property carmot exceed the
rates shown for Fiscal Year 2007/08 except when the Backup Special Tax IS used as discussed below
The ASSigned Special Taxes and Backup SpeCial Taxes are authonzed by the Rate and Method of
ApportlOmnent to mcrease at a rate of 2% per year
RATE AND METHOD OF APPORTIONMENT
ASSIGNED SPECIAL TAXES FOR DEVELOPED PROPERTY
FISCAL YEAR 2007/08
Land Use Tvne Rate Cateeorv Assumed SnecJal Tax
ResldentlOl Property Less than 3 100 Sq Ft $2 282 per dwelling umt
ReSidential Property 3100Sq Ft t03224Sq Ft $2 392 per dwellmg umt
Resldenl1al Property 3 225 Sq Ft to 3 349 Sq Ft $2424 per dwelling umt
ReSidential Property 3350 Sq Ft to 3 474 Sq Ft $2 498 per dwellmg umt
ResldentlOl Property 3 475 Sq Ft to 3 599 Sq Ft $2 639 per dwelling umt
Resldenl1al Property 3 600 Sq Ft or greater $2 658 per dwelling umt
52
Agenda Item No 2
Page 239 of 316
Each year the Dlstnct shall levy the SpecIal Tax subject to the methodology and MaxImum SpecIal
Taxes set forth m the Rate and Method of Apportionment m an amount suffiCIent to meet the Special Tax
ReqUIrement
The Assigned Special Tax IS levIed agamst Developed Property pursuant to the Rate and Method of
ApportIOnment unltl the SpeCIal Tax ReqUIrement for the Dlstnct IS met If the ASSIgned SpecIal Tax IS
not suffiCient to meet the SpecIal Tax ReqUIrement dunng the penod of ltme there IS Undeveloped
Property the Rate and Method of ApportIOnment provides for the levy of a SpecIal Tax agamst
Undeveloped Property m the Dlstnct (see BONDOWNERS RISKS - THE DISTRICT BONDS - RIsk Factors
Relatmg to the Levying and Colieclton of the Special Taxes - Concentralton of Ownership and APPENDIX E
-RATE AND METHOD OF APPORTIONMENT herem)
Backup SpecIal Tax
Pursuant to the Rate and Method of ApportIOnment the MaxImum SpecIal Tax for Developed Property IS
the greater of (I) the amount denved by applIcatIOn of the ASSigned SpeCIal Tax or (u) the amount denved
by applIcatIOn of the Backup Special Tax If any The Backup SpeCIal Tax Will mcrease at a rate of 2% per
year
Under certam cIrcumstances the SpecIal Tax for some parcels classIfied as Developed Property Will be
mcreased above the ASSigned SpeCIal Tax untIl the SpecIal Tax ReqUIrement IS met However under no
cIrcumstances wIll the SpeCIal Tax on an Assessor s Parcel of Developed Property be mcreased above the
greater of the Backup Tax or the ASSigned SpeCIal Tax
Rate and Method Of ApportIonment
Pursuant to the Rate and Method of ApportIOnment for each FIscal Year the Dlstnct shall detenmne the
SpeCIal Tax ReqUIrement and levy the SpecIal Tax untIl the amount of SpeCIal Taxes equals the SpeCIal
Tax ReqUIrement The Special Tax shall be leVIed each FIscal Year as follows
FITSt The Special Tax shall be leVIed ProportIOnately on each Assessor s Parcel of Developed
Property m an amount up to 100% of the ASSIgned Special Tax as necessary to satIsfY the SpeCial
Tax ReqUIrement
Second If addItIOnal momes are needed to satIsfY the SpeCIal Tax ReqUIrement after the first
step has been completed the SpeCIal Tax shall be leVIed ProportIOnately on each Assessor s
Parcel of Undeveloped Property up to 100% of the MaxImum SpeCial Tax
ThIrd If additIOnal momes are needed to saltsfY the SpeCIal Tax ReqUlTement after the fITSt two
steps have been completed then the levy of the SpeCIal Tax on each Assessor s Parcel of
Developed Property whose MaXimum SpeCIal Tax IS determmed through the applIcatIOn of the
Backup SpeCial Tax shall be mcreased ProportIOnately from the ASSIgned SpeCIal Tax up to the
MaxImum SpeCIal Tax for each such Assessor s Parcel
Fourth If addlltonal momes are needed to saltsfY the SpeCIal Tax Requrrement after the frrst three
steps have been completed then the SpecIal Tax shall be leVied ProportIOnately on each
Assessor s Parcel of ProVISIOnal Undeveloped Property at up to 100% of the MaxImum SpeCial
Tax for ProvlSlonal Undeveloped Property
Notwlthstandmg the above under no cIrcumstances wIll the SpeCial Tax leVIed agamst any
Assessor s Parcel of Resldenltal Property for which an occupancy penmt for pnvate resldenltal
use has been Issued be mcreased by more than ten percent as a consequence of delInquency or
default by the owner of any other Assessor s Parcel wlthm IA Nos 6 and 7 except for those
53
Agenda Item No 2
Page 240 of 316
Resldentlal Propertles whose owners are also delmquent or m default on their SpecIal Tax
payments for one or more other propertIes
SPECIAL TAX PROJECTIONS
The prOjectIOn of SpeCIal Taxes IS a functIOn of multlplymg the tax rate by the number of homes m a tax
rate category The DIstrIct s assumptIons for determmmg tax rates and product mIX are dIscussed below
PrOjectIOn of ASSigned Special Tax Rates
The ASSigned SpecIal Tax Rates under the Rate and Method of ApportIOnment were set pursuant to CIty
Pohcy not to exceed a total tax rate percentage of 2% when takmg mto account all taxes and assessments
on property of all JunsdlctlOns based upon the then projected home pnces However home pnces have
dechned smce the approval of the Rate and Method of ApportIOnment To satIsfy the CIty Pohcy the
pnnclpal amount of the Dlstnct Bonds IS calculated so that the expected speCIal taxes reqUired to pay debt
service on the Dlstnct Bonds when combmed wIth all other overlappmg hens wIll not exceed a total tax
rate of 2/0 assummg certam estlmated base home pnces and assummg no delmquenCles To account for
potentIal further decreases m home pnces the assumed home pnces for purposes of determmmg the
pnnclpal amount of the Dlstnct Bonds are assumed to decrease than the Developer s antlclpated base
home sales pnces A companson of the home pnces antlClpated by the Developer and the Dlstnct s
projected home pnces for projectIOn purposes IS shown m the tables below
TABLE NO 2
COMMUNITY FACILITIES DISTRICT 2005 1
(WASSON CANYON)
ASSUMED HOME PRICES FOR PROJECTIONS
AS OF OCTOBER 1 2007
Mal!noha
Developer s Estimate of
Home Pnces
Assumed Home Prices for
ProJectIOns
Planl
$352990
$317691
Plan 2
359290
323361
Plan 3
383 490
345141
Primrose
Developer s Estimate of
Home Prices
Assumed Home Prices for
PrOJectIons
Planl
$368 990
$332091
Plan 2
373 990
333441
Plan 3
386990
348 291
The effectIVe tax rate IS the ratIO of total taxes speCial taxes and assessments as a percentage of property
value (the Effective Tax Rate) As shown m Table No 3 below for purposes of Dlstnct Bond slZlng
54
Agenda Item No 2
Page 241 of 316
the Assumed Assigned Special Tax rate IS the rate that results from applymg a 2% effecl1ve tax rate to the
assumed home pnces shown above
55
Agenda Item No 2
Page 242 of 316
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Agenda Item No 2
Page 243 of 316
Square Footage And Product MIX Assumptions
Shown below m colunms 3 and 4 are the Developer s expectatIOn as to the square footage of homes and
the product mix for each rate category For purposes of slZlng the DistrIct Bonds the DistrIct assumed
that more umts would be constructed m the smallest rate category than the Developer estrmates In
adverse market conwtlOns builders will often down size their product lme and lower pnces (see BOND
OWNERS RISKS and APPENDIX D - MARKET ABSORPTION STUDY herem)
57
Agenda Item No 2
Page 244 of 316
TABLE NO 4
COMMUNITY FACILITIES DISTRICT NO 2005 5
(WASSON CANYON)
ASSUMED PRODUCT MIX FOR ASSUMPTIONS
Developer s Expected Assumed Number of
Product Lme! Plan Actual Home Square Number of Homes Homes for
Rate CateQ:orv Number Footal!e Def Rate CateQ:orv PrOJectIOns
3 100 Sq Ft orless Magnolia 2904 21 21
Plan 1
3 100 Sq Ft orless Magnoha 3049 33 33
Plan 2
3100 Sq Ft orless Magnoha 3399 0 10
Plan 3
Total for 3 100 Sq Ft 64
or less
3 350 Sq Ft to 3475 Magnoha 3399 39 29
Sq Ft Plan 3
Total for 3,350 Sq Ft 29
to 3 475 Sq Ft
3475 Sq Ft to Pnmrose 3504 25 25
3 599Sq Ft Plan 1
3475 Sq Ft to Pnmrose 3676 0 10
3 599Sq Ft Plan 2
3475 Sq Ft to Pnmrose 3875 0 12
3 599Sq Ft Plan 3
Total for 3 475 Sq Ft 47
to 3 599Sq Ft
3600 Sq Ft or Pnmrose 3676 34 24
Greater Plan 2
3600 Sq Ft 0 Prm ose 3875 38 26
Greater Plan 3
Total for 3 600 Sq Ft 50
or Greater
Total
58
Agenda Item No 2
Page 245 of 316
Table No 5 shows the projected total SpeCIal taxes that may be collected m the Dlstnct based on the
Assumed AssIgned SpecIal Tax rates for FIscal Year 2007/08 and the Assumed Product MIX at buIld out
shown above wIthout accountmg for any delmquencles
If the Dlstnct s assumptIOns for pnclng and product mIx are not reahzed there may be addItIonal bondmg
capacity avaIlable to finance authonzed facIlitIes If there IS addItIOnal bonding capacIty and the parIty
bonds tests are otherwIse satIsfied the Dlstnct expects to Issue addItIOnal senes of bonds that wIll be
secured by SpecIal Taxes leVIed In the Dlstnct
TABLE NO 5
COMMUNITY FACILITIES DISTRICT NO 2005 5 (WASSON CANYON)
PROJECTION OF THE TOTAL ASSUMED ASSIGNED SPECIAL TAXES
FISCAL YEAR 2007/08
Assumed Number of
Assumed ASSigned VUlts per Rate
SpecIal Tax Category Total Assumed
Rate Catet!orv (see Table No 3 ) (see Table No 4 ) Sneclal Taxes
Greater than 3 600 Sq Ft $1172 68 50 $58 634
3475 Sq Ft to 3599 Sq Ft 114932 47 54018
3350 Sq Ft to 3474 Sq Ft I 37998 29 40019
Less than 3100 Sq Ft 114430 64 73.235
Total 190 $225 907
DEBT SERVICE COVERAGE ON THE DISTRICT BONDS
The follOWing table presents the projected annual debt servIce coverage on the Dlstnct Bonds based upon
the reahzatlOn of certain assumptIons and the aggregate projected ASSigned Special Tax (see SPECIAL
TAX PROJECTIONS above) No allowance was made for delmquencles
Pursuant to the Rate and Method of ApportIOnment under no CIrcumstances wIll the Special Tax leVied
agamst any parcel of Developed Property for which an occupancy penrut for pnvate reSIdentIal use has
been Issued be mcreased from the prevIOus FIscal Year by more than ten percent (10%) as a consequence
of dehnquency or default by the owner of any other parcel wlthm the Dlstnct Accordmgly the Dlstnct
may not be able to levy the MaXImum SpeCIal Tax m certam circumstances
The total Assumed ASSigned SpeCIal Taxes for the Dlstnct projected III Table 6 IS approxrrnately I I 0% of
the projected debt servIce on the DlStnCt Bonds after an allowance for Admmlstratlve Expenses but
assummg no dehnquencles The ASSigned Special Tax as well as the debt servIce on the Dlstnct Bonds
mcreases at a rate of two percent per year
UntIl such tIme as the receIpt of SpecIal Taxes from the levy of the ASSIgned SpeCIal Tax IS suffiCIent to
pay debt servIce on the Dlstnct Bonds the Rate and Method of Apportionment prOVIdes for the levy of an
Undeveloped Property tax (see APPENDIX E -RATE AND METHOD OF APPORTIONMENT" and
BONDOWNERS RISKS - THE DISTRICT BONDS - RISk Factors Relatmg to the Levymg and Collecoon of the
Special Taxes - Concentrahon of Ownership )
59
Agenda Item No 2
Page 246 of 316
FIscal
Xill
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
TABLE NO 6
COMMUNITY FACILITIES DISTRICT NO 2005 5 (WASSON CANYON)
DEBT SERVICE COVERAGE
Total SpecIal
Taxes
AdmmlstratIve
Exnense
Debt Semce
Net Sueclal Taxes
Prehmmary subject to change
60
Coverage
RatJo*
Agenda Item No 2
Page 247 of 316
DELINQUENCIES
Under the Fiscal Agent Agreement the District has the authonty and the obligatIOn to mcrease the levy of
SpeCial Taxes agamst non delinquent property owners m the District If other owners m the District are
dehnquent m the payment of SpeCial Taxes However the District s ability to mcrease SpeCial Tax leVies
for thiS purpose IS limited by two factors
(a) The maximum SpeCial Tax rates set forth m the Rate and Method of ApportIOnment and
(b) The limitatIOns on such mcreases set forth III the Act whICh provides that under no
circumstances =y the SpeCial Tax leVied agamst any parcel used for pnvate residential purposes
be mcreased as a consequence of delmquency or default by an owner of any other parcel or
parcels wlthm the such dlstnct by more than 10 10
DelinquenCies m the payment of property taxes and the SpeCial Taxes may result from any of a number of
factors affectmg mdlvldual property owners See BONDOWNERS RISKS for diSCUSSIOns of certam
potential causes of property tax delmquencIes Thus WithOUt mlligatlOn measures the Dlstnct may not
receive suffiCIent SpeCial Taxes m a Fiscal Year to pay the then current debt service on the District Bonds
The DIStriCt and the Authonty have taken several actIOns to assist m rmligatmg agamst future
delinquenCies mcludmg the followmg
(a) An allowance for dehnquencles m the annual SpeCial Tax levy
(b) The District mamtammg a Delmquency Management Fund under the Fiscal Agent Agreement
m the amount of up to 15% of Maximum Annual Debt Service The Delinquency Management
Fund will not be funded from Bond proceeds and IS dependent upon the transfer and depOSit of
funds from the Dlstnct ReSIdual Fund (see SOURCES OF PAYMENT FOR THE BONDS -
REPAYMENT OF THE DISTRICT BONDS - Applicalion of SpeCial Taxes Flow of Funds")
(c) The Authonty mamtammg a Cash Flow Management Fund under the Indenture of up to 15%
of Maximum Annual Debt Service The Cash Flow Management Fund will not be funded from
Bond proceeds and IS dependent upon the transfer and depOSit of funds from the ReSidual Fund
( SOURCES OF PAYMENT FOR THE BONDS - REPAYMENT OF THE BONDS - Apphcalion of
Revenues Flow of Funds )
(d) The Bonds may be payable from any available surplus revenues With respect to other senes
of local agency revenue bonds Issued pursuant to the Indenture to the extent such surplus
revenues are available to replemsh the Reserve Account to Its reqUirement and at the electIOn of
the Authonty to replemsh the Cash Flow Management Fund to Its reqUirement
FORECLOSURE ACTIONS
Pursuant to SectIOn 53356 I of the Act m the event of any delinquency m the payment of the SpeCial Tax
the District may order the mslitutlOn of a supenor court actIOn to foreclose the lien therefor wltlun
speCified lime hrmis In such an aclion the real property subject to the unpaid amount may be sold at
JudICIal foreclosure sale Under the provlSlons of the Act such JudiCial foreclosure actIOn IS not
mandatory The DIstnct has covenanted to Imliate foreclosure actIOn m the supenor court agamst parcels
With delmquent SpeCial Taxes as proVided m the Fiscal Agent Agreement (see "SOURCES OF PAYMENT
FOR THE BONDS - REPAYMENT OF THE DISTRICT BONDS - Covenant for Superior Court Foreclosure
herem)
Foreclosure proceedmgs are directed by the District through a nolificatlOn to foreclosure counsel as to the
dehnquent assessor parcel numbers for whICh foreclosure proceedmgs are to be Imliated The DIStriCt
first removes the dehnquent SpeCial Taxes from the County Tax Roll as reqUired by law Foreclosure
61
Agenda Item No 2
Page 248 of 316
counsel then mlllates a request for a llt1e search to Idenllfy the current legal owner of a dehnquent parcel
Foreclosure counsel also sends a wntten demand for payment to the owner shown on the Tax Roll
followed by the fihng of a complamt With the Supenor Court m RIverside County (the Court) and
recordmg a lis pendens agamst the property at the office of the County Recorder
II
I
Each legal owner and all holders of any other mterest m the land must file an answer to the complamt
wlthm 30 days followmg the complellon of servICe of process on them If no answer IS filed wlthm such
30 day penod foreclosure counsel files a request that a default Judgment be entered by the Court If any
party files an answer then the case must be hllgated and foreclosure counsel Will typically file a mollon
for summary Judgment
Followmg the entry of a Judgment whether by default or otherwise agamst all defendants foreclosure
counsel requests a wnt of sale from the Court for dehvery to the Riverside County Shenff's Department
(the Shentr) The wnt of sale IS dehvered to the Shenff With mstructlOns to execute on the dehnquent
parcel Levy by the Shenff consists of posllng notICe on the delmquent property followed by mailmg of
notICe to the last known address of the legal owner and pubhcatlOn of the nollce of levy
Thereafter the delmquent property owner IS enllt1ed to a redemptIOn penod of 120 days Followmg such
120 day penod foreclosure proceedmgs can contmue followmg the pubhcallon and mailmg of a notice of
sale of the delmquent parcel or parcels which sale must be at least 20 days followmg such notICe The
foreclosure process descnbed above typICally takes at least SIX months from the date on whICh a Judgment
IS entered and can take substanllally longer It should be noted that any foreclosure proceedmgs
commenced as descnbed above could be stayed by the commencement of bankruptcy proceedmgs by or
agamst the owner of the delmquent property (see BONDOWNERS RISKS - THE DISTRICT BONDS - Risk
Factors Relatmg to the Levymg and Collechon of the Special Taxes - Foreclosure and Sale Proceedmgs and
BONDOWNERS RISKS - THE DISTRICT BONDS - Risk Factors Relahng to the Levymg and Collection of
the SpecIal Taxes - Bankruptcy and Foreclosure Delays herem)
I
I
'I
No assurances can be gIVen that the real property subject to sale or foreclosure Will be sold or If
sold that the proceeds of sale WIll be suffiCient to pay any delmquent SpecIal Tax mstallment The
Act does not requIre the CIty or the DIstrict to purchase or otherWIse acqUIre any lot or parcel of
property olTered for sale or subject to foreclosure If there IS no other purchaser at such sale The
Act does speCIfy that the Specml Tax WIll have the same hen priOrity III the case of dehnquency as
for ad valorem property taxes (see "BONDOWNERS RISKS - THE DISTRICT BONDS - Risk Factors
Relatmg to Land Values herem)
The DIStnCt reserves the nght to elect to accept payment from a property owner of at least the enrolled
amount of the SpeCial Taxes for a parcel(s) but less than the full amount of the penalties mterest costs
and attorneys fees related to the SpeCial Tax delinquency for such parcel(s) The Bondowners are
deemed to have consented to the foregomg reserved nght of the Dlstnct notWlthstandmg any proVISIOn of
the Act or other law of the State or any other term set forth m the Fiscal Agent Agreement to the contrary
The Bondowners by their acceptance of the Bonds consent to such payment for such lesser amounts
Further notwlthstandmg any proVISIOn of the Act or other law of the State or any other term set forth m
the FIscal Agent Agreement to the contrary In connection WIth any JudICIal foreclosure proceedmg related
to delinquent SpeCial Taxes the Dlstnct or the Fiscal Agent IS expressly authonzed to credit bid at any
foreclosure sale Without any reqUirement that funds be set aside m the amount so credit bid In the
amount speCified m Secllon 53356 5 of the Act or otherwise under SectIOn 53356 6 of the Act
62
Agenda Item No 2
Page 249 of 316
THE DISTRICT
The mformatzon set forth herem regardmg current ownershIp of real property m the DIStrict and any
proposed development of property m the Dlslrlct was provIded by Lennar Homes and has not been
mdependently verified The Authority makes no representatzon as to the accuracy or completeness of any
such mformatzon ThIS mformatzon has been mcluded because It IS consIdered relevant to an mformed
evaluatzon of the DIstrict Bonds As development of property m the DIstrict has not been completed no
assurance can be gIven that It WIll occur that It wIll occur as described herem or that It WIll occur m a
tImely manner ThIs mformatzon should not be construed to suggest that the Dlslrlct Bonds or the SpeCial
Taxes that wIll be used to pay the Dlslrlct Bonds are personal obhgatzons of Lennar Homes
The owners of property wlthm the Dlslrlct WIll not be personally hable for payments of the SpeCial Taxes
to be apphed to pay the prmclpal of and mterest on the Dlslrlct Bonds Accordmgly Lennar Homes s
financial statements have not been mcluded m thIS OffiCial Statement Furthermore no representatzon IS
made that Lennar Homes wIll have funds aVallable to complete the proposed development wlthm the
Dlslrlct
The followmg sectzon prOVIdes a brief descrlptzon of Lennar Homes a brief d,scusszon of the type of
prOject the status of land use enllllements and the experience and plans of Lennar Homes There can be
no assurance that the development plans deSCribed herem wIll be completed or WIll not be modified m the
future In addllzon there can be no assurance that sufficIent funds WIll or can be made aVallable to
complete the development plans or pay SpeCial Taxes as deSCribed herem
Any websltes mcluded herem are mcluded for reference only and the mformatzon on such webs lies IS not
a part of thIS OffiCial Statement or mcorporated by reference mto thIS OffiCial Statement No
representatzon IS made m thIS OffiCial Statement as to the accuracy or adequacy of the mformatzon
mcluded m such mternet sItes
Pubhcly traded compames are subject to the mformatzonal reportmg reqUIrements of the Securities
Exchange Act of 1934 as amended (the Exchange Act) and m accordance therewllhfile reports proxy
statements and other mformatlOn WIth the SeCUritIes and Exchange CommlSszon ( SEC) Such filmgs
partICularly the Annual Report on Form IO K and the most recent Quarterly Report on Form IO Q may
be mspected and copIed at the pubhc reference faclhtles mamtamed by the SEC at 450 Fiflh Street N W
Washmgton DC 20549 and at the SEC s regzonal office at Northwestern Alrlum Center 500 West
MadIson Street SUIte 1400 ChIcago IIImOls 60661 at prescribed rates Such filmgs can also be
accessed over the mternet at the SEC s webslle at wwwsec gov In addItIOn the aforementIOned material
may also be mspected at the offices of the New York Stock Exchange at 20 Broad Street New York New
York 10005 All documents subsequently filed pursuant to the reqUIrements of the Exchange Act afier the
date of thIS OffiCial Statement WIll be avallable for Inspectzon m such manner as the SEC prescribes
BOUNDARIES OF THE DISTRICT
The boundaries of the Dlstnct COinCide With the development generally known as Rosetta Hllls at Wasson
Canyon The Dlstnct IS located I 1/2 miles east of the Interstate 15 fteeway and south of Highway 74
The boundaries of the District are descnbed on the reduced scale map entitled Boundary Map of
Commumty Facllil1es District No 2005 5 (Wasson Canyon) A full scale map IS on file With the Clerk
of the City and was recorded With the County Recorder County ofRtverslde In Book _ Page _ of Maps
of Assessment and Commumty FaCilities Dlstncts Document Number
63
Agenda Item No 2
Page 250 of 316
Boundary Map
64
Agenda Item No 2
Page 251 of 316
FACILITIES AND FEES ELIGIBLE TO BE FINANCED BY THE
DISTRICT
The Dlstnct IS authonzed to Issue the Bonds to fund the plannmg deSIgn pernuttmg and construction of
pubhc mfrastructure conslstmg pnmanly of street sewer and water as well as the fundmg of faclhtles
mcluded m the CIty and Elsmore Valley MunICIpal Water DISInCt fee programs Table No 7 summanzes
authonzed Dlstnct factlllles w/uch are to be deSigned acqUIred or constructed from proceeds of the
Bonds
ESTIMATED COSTS OF FACILITIES
The followmg table summanzes the authonzed Dlstnct faclhtles whIch are currently expected to be
financed WIth proceeds of the Dlstnct Bonds Other faclhlles may be substituted for those descnbed
below WIth the consent of the CIty and the Developer or as proVIded m an agreement between the City
and the Developer
To the extent the proceeds of the Bonds are msufficlent to fund all of the ehglble costs for all of the
Factlllles such costs WIll be borne by the Developer
65
Agenda Item No 2
Page 252 of 316
TABLE NO 7
COMMUNITY FACILITIES DISTRICT NO 2005 5
(WASSON CANYON)
ESTIMATED COSTS OF ELIGIBLE FACILITIES
CFD ElIgIble Improvements
Street Improvements
$1460333
Storm Dram Improvements
683 483
Plannmg DeSign Engmeenng Bonds & Fees
1\4 259
Contmgency
611.842
Subtotal
$13 190 792
City Impact Fees
City Dramage Fee $283 338
Wasson Canyon Dramage Fee 145243
MSHCP 315341
TUMP I 384368
Fife 28 650
Library 28 650
Traffic Impact Fee 246 008
Park Fee 343 800
Subtotal $2 775 398
Water ConnectiOn Fee $1036939
Imgatton Meter Fees 1\2427
Sewer ConnectIOn Fee 908.205
Subtotal $2 057 571
Total CFD Eligible $7091 044
66
Agenda Item No 2
Page 253 of 316
-<:
THE DEVELOPER
LENNAR HOMES OF CALIFORNIA INC
Lennar Homes IS a Cahfornm corporatIOn based m Ahso VIeJo Cahfornla that has been m the busmess of
developmg resIdentIal real estate commumtIes m Cahfornm smce 1995 Lennar Homes IS a wholly
owned subsIdIary of Lennar Homes Inc a Flonda corporatIOn whIch IS a wholly owned SUbSidIary of
Lennar CorporatIon
Lennar CorporatIOn founded m 1954 and pubhcly traded under the symbol LEN smce 1971 IS one of
the natIOn s largest home bUilders operatmg under a number of brand names mcludmg Lennar Homes
US Home and Greystone Homes m Southern Cahfornm Lennar Homes develops resIdentIal
communitIes both wlthm the Lennar famIly of bUilders and through consohdated and unconsohdated
partnershIps m whICh Lennar Homes mamtams an mterest
Lennar CorporatIOn IS subject to the mformatIonal reqUirements of the SecuntIes Exchange Act of 1934
as amended and m accordance therewIth files reports proxy statements and other mformatlOn WIth the
SEC Such filmgs partIcularly the Annual Report on Form 10 K and Its most recent Quarterly Report on
Form 10 Q may be mspected and copIed at the pubhc reference faClhtIes mamtamed by the SEC at 450
FIfth Street N W Washmgton D C 20549 at prescnbed rates Such files can also be accessed over the
Internet at the SEC s websIte at wwwsec gov CopIes of such matenal can be obtamed from the pubhc
reference sectIon of the SEC at 450 FIfth Street N W Washmgton D C 20549 at prescnbed rates In
addItIon the aforementIOned matenal may also be mspected at the office of the NYSE at 20 Broad Street
New York New York 10005
The Internet addresses and references to filmgs With the SEC are mcluded for reference only and the
mformatlOn on these Internet sItes and on file With the SEC are not a part of thIS OffiCIal Statement and
are not mcorporated by reference mto thiS OffiCial Statement
DESCRIPTION OF DEVELOPMENT
PrIvate Improvements
The DIstnct has two resIdentIal communitIes or product hnes under development Magnoha and
PrImrose Magnoha IS a 93 lot resIdentIal communIty Pnmrose IS a 97 lot resIdentIal communIty
Shown below are the expected home sIzes and current development status of the lots m the Dlstnct
There can be no assurance that the development plan descnbed herem Will be completed or that It Will not
be modified m the future In adverse market condItIOns bUilders Will often downsIze theIr product lme
(see BONDOWNERS RISKS herem and APPENDIX D - MARKET ABSORPTION STUDY) See SPECIAL
TAXES AND DISTRICT BONDS DEBT SERVICE COVERAGE - SPECIAL TAX PROJECTIONS herem for the
square footage assumptIOns used m proJectmg the SpecIal Taxes
67
Agenda Item No 2
Page 254 of 316
TABLE NO 8
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO 2005 5
DESCRIPTION OF DEVELOPMENT
AS OF OCTOBER I 2007
MAGNOLIA PRODUCT LINE
Production Umts
Floor Sauare Footal!.e Fmlshed Lots Under ConstructJon Comoleted Totnl
Plan
Plan I 2 904 Sq Ft II 2 8 21
Plan 2 3449 Sq Ft 13 4 16 33
Plan 3 3 399 Sq Ft 19 3 17 39
Total 43 9 41 93
PRIMROSE PRODUCT LINE
Production Umts
Floor Souare Foota2e Fmlshed Lots Under ConstructJon Comoleted Total
f!!n
Plan I 3 504 Sq Ft 16 2 7 25
Plan 2 3 676 Sq Ft 20 4 10 34
Plan 3 3 873 Sq Ft 24 5 9 38
Total 60 11 26 97
Source Lennar Homes
PublIc Improvements
Set forth below IS the status of the mfrastructure Improvements (I e water sewer streets storm dram and
street Improvements and dry utlhlles) as of October 1 2007
Facilities
Magnolia
100/
100/
100/
Pnmrose
Water Improvements
Sewer Improvements
Storm Dram
Improvements
Street Improvements
Dry UtilitIes
100/
100/
100/
90/
90/
90/
90/
Source Lennar Homes
68
Agenda Item No 2
Page 255 of 316
HOME PRICING
District
Shown below IS the Developer s current base pnce and the lowest and highest pnce (mcludmg oplIons
less mcenlIves) for each plan type that have closed escrow Home pnces were last adjusted October I
2007 for Magnoha and October I 2007 for Pnmrose
TABLE NO 9
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO 2005 5
HOME PRICING
AS OF OCTOBER 1 2007
MAGNOLIA PRODUCT LINE
Plan 1
Developer s
Nnmber of Cnrrent Base Lowest Sales Highest Sales
Escrows Closed Price Price! Date PflcelDate
5 $352 990 $302645/9 12 07 $427 990 / 3 30 07
14 $359 290 $305061 /9 28 07 $449 990 / 5 30 07
14 $383490 $317142
Plan 2
Plan 3
Source Lennar Homes
PRIMROSE PRODUCT LINE
Nnmber of Developer s Lowest Sales Price! Highest Sales
Escrows Closed Current Base Date pflcelDate
Price
Plan 1 6 $368 990 $359551/62907 $400 600 17 31 07
Plan 2 9 $370 490 $353 423 /9 28 07 $501990/51807
Plan 3 9 $386 990 $335 817 / 9 28 07 $408344/6 1907
Source Lennar Homes
SALES HISTORY
The actual sales record of Lennar Homes m the Dlstnct as of October I 2007 IS shown below As IS
common WIth sales at thiS stage of development the sales are subject to a number of contmgencles and
Lennar Homes can proVIde no assurance that the current sales wIll result m closed escrows
69
Agenda Item No 2
Page 256 of 316
MAGNOLIA PRODUCT LINE
Sales for Magnoha commenced In October 2006 Model Homes for Magnoha were opened In January
2007
TABLENO 10
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO 2005 5
SALES HISTORY (INCLUDING MODEL HOMES)
AS OF OCTOBER 1 2007
MAGNOLIA PRODUCT LINE
Number of
Sales
PrIOr 10
January 2007 5
February 2007 10
Marcb 2007 6
April 2007 2
May 2007 11
Jnne 2007 2
July 2007 0
August 2007 9
September 2007
9
Source Lennar Homes
Number of
Cancellauons
3
3
2
3
7
o
3
3
3
Number of Escrows Number of Homes
~ m Escrow
0 7
3 8
0 15
4 15
2 12
9 7
2 7
5 7
3 10
5 11
70
Agenda Item No 2
Page 257 of 316
~~ -
PRIMROSE PRODUCT LINE
Sales for the Pnmrose product lme commenced m November 2006 Model Homes for Pnmrose were
opened m January 2007
TABLE NO 10 (CONTINUED)
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO 2005 5
SALES HISTORY (INCLUDING MODEL HOMES)
AS OF OCTOBER 1 2007
PRIMROSE PRODUCT LINE
Number of Number of Number of Number of
fu!k! Cancellanons Escrows Closed Homes In Escrow
Prior 4 0 3
January 2007 6 0 3 6
February 2007 2 0 7
March 2007 6 3 0 10
AprIl 2007 5 5 0 10
May 2007 8 2 5 11
June 2007 2 7 5
July 2007 6 3 2 6
August 2007 7 2 2 9
September 2007 6 3 5 7
Source Lennar Homes
TYPES OF MORTGAGE LOANS
Generally m the real estate market there has been a lIghtemng of underwntmg cntena for mortgage loans
With the result that some purchasers are unable to quahfy for loans (see BONDOWNERS RISKS THE
DISTRICT BONDS - RIsk Factors Relatmg to Real Estate Market Condinons - AdJnstable Rate and
UnconventIOnal Mortgage Structures herem) Lennar Homes has entered mto an arrangement With
to assIst them m processmg and fundmg mortgage loans See APPENDIX F - Types of
Mortgage Loans for a partial hstmg of the mortgage loans funded m the Dlstnct
71
Agenda Item No 2
Page 258 of 316
ESTIMATED ABSORPTION SCHEDULE
The Dlstnct had a market absorplIon study prepared by EmpIre Economics Inc CapIstrano Beach
Cahforma m order to estnnate the absorptIOn rate wlthm the DlSlnct Please refer to APPENDIX D -
MARKET ABSORPTION STUDY herem for the potenlIal market and financIal nsk factors that are expected
to mfluence the absorptIOn of homes wlthm the DlSlnct Empire Econormcs predICts that as mterest rates
on new loans mcrease and as the mterest rates on eXlstmg adjustable rate loans are reset (and payments
are mcreased) there wIll be a decrease m home sales due to the mabIllty of purchasers to quahfy for loans
WIth hIgher mterest rates The eSlImated absorptIOn rates for the Dlslnct contamed m the Market Study
are shown below
TABLE NO 11
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO 2005 5
ESTIMATED ABSORPTION SCHEDULES
Calendar Year
MaeDoha
Pnmrose
2007
15
20
2008
20
IS
2009
25
20
2010
14
12
Source Market AbsorptIOn Study (see APPENDIX D MARKET ABSORPTION STUDY herem)
FINANCING PLANS OF THE DEVELOPER
As of October I 2007 the cost to develop the 190 lots to the stage of fimshed lots ready to buIld homes
WIth the foregomg backbone mfrastructure was eSlImated as follows
DescrintJon
EslImated Cost
Land & Enl1tlements
Infrastructure
$35 945 287
8 105071
6 604 608
9.881.931
$60 536 897
Local III tract Improvements & gradmg costs
Fees mcludmg school fees
Total
Fees are paid by the Developer or merchant bUilder as bUlldmg permIts or certIficates of occupancy are
Issued
The Developer has ImlIally funded approxmIately $53 000 000 of the foregomg costs and approxImately
$3 500 000 of such costs are expected to be paId WIth the proceeds of the Bonds
72
Agenda Item No 2
Page 259 of 316
Lennar Homes has financed and wIll contmue to finance the cost of land acqUls[tlon mfrastructure
Improvements and home constructIOn costs through mternal corporate financmg (which generally
COnsists of workmg capital provided by Lennar CorporatIOn and revenues from home sale proceeds)
Lennar Homes mtends to use mternal corporate financmg to finance all carrymg costs for the property
(mcludmg property taxes and any SpeCial Taxes leVied agamst property It owns) untIl full sell out of Its
smgle farmly homes the Dlstnct However if and to the extent thIS source of finanCing IS Inadequate to
pay the cost to complete the planned development of the property there can be no assurance of the
willingness or abIlIty of Lennar CorporatIOn to make such funds avaIlable In the future or the abIlIty of
Lennar Homes to obtain financmg from other sources There IS no legal oblIgatIOn to the owners of the
Bonds to make any such funds aVallable for constructIOn or development or the payment of ad valorem
property taxes or any SpeCIal Taxes leVIed agalnst property It owns
mSTORY OF PROPERTY TAX PAYMENT, LOAN DEFAULTS,
BANKRUPTCY
An Authonzed represental1ve of Lennar Homes has made the followmg representatIOns to the best of his
or her knowledge
Lennar Homes has not prevIOusly defaulted m a matenal amount or marmer m payment of and are not
currently delinquent m the payment of any ad valorem property taxes speCial assessments or speCial
taxes m the Dlstnct m any other community facIl[tles dlstnct or assessment d[stncts m California wlthm
the past five years
(a) Lennar Homes IS not m breach of or m default under any Judgment or decree or any loan
agreement opl1on agreement development agreement mdenture fiscal agent agreement
bond note resolutIOn or other mstrument to which It IS or Will upon Issuance of the
Bonds or D[stnct Bonds be a party or otherwise subject which breach or default IS
reasonably likely to matenally and adversely affect Its ability to pay the SpeCial Taxes
and no event has occurred and [S contmumg that With the passage of lime or glvmg of
nol1ce or both would consl1tute such a breach or default
(b) Except as descnbed herem and except for credit that may be extended by contractors
subcontractors tradesmen or suppliers m the ordmary course of development [t has no
loans outstandmg and unpaid which could have a matenal adverse affect on the
development by Lennar Homes of ItS properties m the Dlstnct and no lines of credit
relatmg to Its development m the Dlstnct and
(c) there [S no lil1gatlOn pendmg of any nature m which Lennar Homes has been served or to
the actual knowledge of the person executmg the certificate threatened agamst Lennar
Homes whICh If successful IS reasonably likely to matenally adversely affect the abIlity
of Lennar Homes to develop the property they own m the D[strICt or the ability of
Lennar Homes to pay SpeCial Taxes on their property w[thm the D[stnct
73
Agenda Item No 2
Page 260 of 316
LEGAL MATTERS
EnforceabilIty of Remedies
The remedIes avallable to the Trustee and the Owners of the Bonds upon an event of default under the
Indentures the Fiscal Agent Agreement or any other document descnbed herem are m many respects
dependent upon regulatory and Judicial actlOns whIch are often subject to dlscretlOn and delay Under
eXlstmg law and JudICial declslOns the remedies proVided for under such documents may not be readlly
avallable or may be limited The vanous legal opmlOns to be delivered concurrently with the delivery of
the Bonds wIll be qualified to the extent that the enforceabIlity of certam legal nghts related to the
Indentures IS subject to ImlltatlOns Imposed by bankruptcy reorganlzatlOn msolvency or other smlllar
laws affectmg the nghts of creditors generally and by eqUitable remedies and proceedmgs generally
Approval of Legal Proceedmgs
Fulbnght & Jaworski L L P Los Angeles California as Bond COU1lSel wIll render an opmlOn which
states that the Bonds and the Fiscal Agent Agreement are valid and bmdmg obligatlOns of the Authonty
enforceable m accordance With their terms The legal opinion of Bond Counsel w1l1 be subject to the
effect of bankruptcy msolvency moratonum and other slmllar laws affectmg creditors nghts and to the
exercise of Judicial dlscretlOn m accordance With general pnnClples of eqUity
The Authonty has no knowledge of any fact or other mformatlOn whICh would mdICate that the Bonds
and the Fiscal Agent Agreement are not so enforceable agamst the Authonty except to the extent such
enforcement IS limited by pnnclples of eqUity and by state and federal laws relatmg to bankruptcy
reorganlzahon moratonum or creditors nghts generally
Certam legal matters Will be passed on for the Agency by Van Blarcom Leibold McClendon & Mann
PC Laguna Hills California Agency Counsel and by Fulbnght & Jaworski L L P Los Angeles
CalifornIa as Disclosure Counsel Certam legal matters Will be passed on for the Underwnter by
McFarlm & Anderson LLP Lake Forest California as Underwnter s Counsel
Fees payable to Bond Counsel City Attorney Disclosure Counsel and Underwnter s Counsel are
contmgent upon the sale and delivery of the Bonds
Tax Matters
The Internal Revenue Code of 1986 as amended (the Code) Imposes certam reqUirements that must be
met subsequent to the Issuance and delivery of the Bonds for mterest thereon to be and remam excluded
pursuant to sectlOn I03(a) of the Code from the gross mcome of the owners thereof for federal mcome tax
purposes Noncompliance With such reqUirements could cause the mterest on the Bonds to be mcluded m
the gross mcome of the owners thereof for federal mcome tax purposes retroachve to the date of Issuance
of the Bonds The Agency has covenanted m the Fiscal Agent Agreement to mamtam the exclUSlOn of the
mterest on the Bonds from the gross mcome of the owners thereof for federal mcome tax purposes
In the opmlOn of Fulbnght & Jaworski L L P Los Angeles California Bond Counsel under eXlstmg law
mterest on the Bonds IS exempt from personal mcome taxes of the State of California and and assummg
compliance With the aforementlOned covenant mterest on the Bonds IS excluded pursuant to sectlOn
I03(a) of the Code from the gross mcome of the owners thereof for federal mcome tax purposes Bond
Counsel IS also of the opmlOn that assummg compliance With the aforementlOned covenant the Bonds
are not speCified pnvate achvlty bonds wlthm the meanmg of sectlOn 57(a)(5) of the Code and
therefore the mterest on the Bonds Will not be treated as an Item of tax preference for purposes of
computmg the alternahve nunlmum tax Imposed by section 55 of the Code The receipt or accrual of
mterest on Bonds owned by a corporatlOn may affect the computatlOn of ItS alternahve minimum taxable
mcome upon which the alternahve minimum tax IS Imposed to the extent that such mterest IS taken mto
74
Agenda Item No 2
Page 261 of 316
account m deternllnmg the adjusted current earnmgs of that corporatIOn (75 percent of the excess If any
of such adjusted current earnmgs over the alternative mmlmum taxable mcome bemg an adJustlnent to the
alternative rnmlrnurn taxable mcorne (deterrmned without regard to such adJuStlnent or to the alternative
tax net operatmg loss deductIOn))
The excess of the stated redemptIOn pnce at matunty of the Bonds over the mltlal offenng pnce to the
public of the Bonds set forth on the cover of thiS OffiCial Statement IS ongmallssue discount Such
ongmallssue discount accrumg on a Bond IS treated as mterest excluded from the gross mcome of the
owner thereof for federal mcome tax purposes and exempt from California personal mcome tax Ongma!
Issue discount on any Bond purchased at such mltlal offenng pnce and pursuant to such mltlal offenng
will accrue on a semiannual baSIS over the term of the Bond on the baSIS of a constant Yield method and
wlthm each semiannual penod will accrue on a ratable dlllly basiS The amount of ongmallssue discount
on such a Bond accrumg dunng each penod IS added to the adjusted basiS of such Bond to deterrmne
taxable gam upon diSpOSitIOn (mcludmg sale redemptIOn or payment on matunty) of such Bond The
Code mcludes certam provIsIOns relatmg to the accrua! of ongmallssue discount 10 the case of purchasers
of the Bonds who purchase the Bonds other than at the mltlal offenng pnce and pursuant to the mltlal
offenng Any person consldenng purchasmg a Bond should consult hiS or her own tax adVISOrs With
respect to the tax consequences of ownership of bonds With ongmal Issue discount mcludmg the
treatment of purchasers who do not purchase m the ongmal offenng and at the ongmal offenng pnce the
allowance of a deductIOn for any loss on a sale or other dispOSItion and the treatlnent of accrued ongma!
Issue discount on such bonds under federal mdivldual and corporate alternative mmnnum taxes
Bond Counsel has not undertaken to advise m the future whether any events after the date of Issuance of
the Bonds may affect the tax status of mterest on the Bonds or the tax consequences of the ownership of
the Bonds No assurance can be gIVen that future legislatIOn or amenmnents to the Code If enacted mto
law will not contam provIsIOns that could directly or mdlrectly reduce the benefit of the exemptIOn of
mterest on the Bonds from personal mcome taxatIOn by the State of California or of the exclUSIOn of
mterest on the Bonds from the gross mcome of the owners thereof for federal mcome tax purposes
Furthermore Bond Counsel Will express no opmlOn as to any federal state or local tax law consequences
With respect to the Bonds or the mterest thereon If any actIOn IS taken With respect to the Bonds or the
proceeds thereof perrmtted or predicated upon the adVice or approval of counsel If such adVice or
approval IS given by other counsel
Although Bond Counsel IS of the opmlOn that mterest on the Bonds IS exempt from state personal mcome
taxation and excluded from the gross mcome of the owners thereof for federal mcome tax purposes an
owner s federal state or local tax liability may be othefWlse affected by the ownership or dispOSItion of
the Bonds The nature and extent of these other tax consequences Will depend upon the owner s other
Items of mcome or deductIOn WithOUt limltmg the generality of the foregomg prospective purchasers of
Bonds should be aware that (I) sectIOn 265 of the Code demes a deductIOn for mterest on mdebtedness
mcurred or contmued to purchase or carry the Bonds or 10 the case of finanCial mstltutlOn that portIOn of
an owner s mterest expense allocated to the Bonds (u) With respect to msurance companies subject to the
tax Imposed by sectIOn 831 of the Code sectIOn 832(b )(5)(B)(I) reduces the deductIOn for loss reserves by
15 percent of the sum ofcertam Items mcluding mterest on the Bonds (Ill) mterest on Bonds earned by
certam foreign corporatIOns domg busmess m the Umted States could be subject to a branch profits tax
nnposed by sectIOn 884 of the Code (IV) passive mvestment mcome mcludmg mterest on Bonds earned
by Subchapter S corporatIOns that have Subchapter C earnmgs and profits at the close of a taxable year
may be subject to federal mcome taxatIOn under sectIOn 1375 of the Code If greater than 25% of the gross
receipts of such Subchapter S corporation IS passive mvestlnent mcome (v) sectIOn 86 of the Code
reqUires recipients of certam SOCial Security and certllln Railroad Retirement benefits to take mto
account m deterrmmng the taxability of such benefits receipts or accruals of mterest on Bonds and (VI)
under sectIOn 32(1) of the Code receipt of mvestlnent mcome mcludmg mterest on the Bonds may
disqualify the reCipient thereof from obtammg the earned mcome credit Bond Counsel has expressed no
opmlon regardmg any such other tax consequences
75
Agenda Item No 2
Page 262 of 316
Bond Counsel s opinIOn IS not a guarantee of a result but represents ItS legal Judgment based upon ItS
review of eXisting statutes regulatIOns published rulings and court decIsIOns and the representatIOns and
covenants of the Agency descnbed above No ruling has been sought from the Internal Revenue Service
(the Service) With respect to the matters addressed In the opinIOn of Bond Counsel and Bond Counsel s
opinIOn IS not binding on the Service The Service has an ongoing program of auditing the tax exempt
status of the Interest on mumclpal obligatIOns If an auwt of the Bonds IS commenced under current
procedures the Service IS likely to treat the Agency as the taxpayer and the Owners would have no nght
to participate In the audit process In responding to or defending an audit of the tax exempt status of the
Interest on the Bonds the Agency may have different or conflicting Interest from the Owners Further the
wsclosure of the ImliatlOn of an audit may adversely affect the market pnce of the Bonds regardless of
the final dlsposllion of the audit
Absence of LItigation
The Authonty Will furnish a certificate dated as of the date of delivery of the Bonds stating that there IS
not now known to be pending or threatened any liligalion restraining or enjOining the execulion or
delivery of the Fiscal Agent Agreement or the sale or delivery of the Bonds or In any manner questlOmng
the proceedings and authonty under winch the Fiscal Agent Agreement IS to be executed and delivered or
the Bonds are to be delivered or affecting the valiwty thereof
76
Agenda Item No 2
Page 263 of 316
II
II
CONCLUDING INFORMATION
NO RATINGS ON THE BONDS
The Authonty has not made and does not contemplate makmg any apphcatlOn for a ratmg on the Bonds
No such ratmg should be assumed based upon any other Authonty ratmg that may be obtamed
ProspectIve purchasers of the Bonds are reqUIred to make mdependent determmal10ns as to the credit
quahty of the Bonds and thelf appropnateness as an mvesllnent Should a Bondowner elect to sell a Bond
pnor to mal1mty no representatIOns or assurances can be made that a market wIll have been estabhshed or
mamtamed for the purchase and sale of the Bonds The Underwnter assumes no obhgatlOn to estabhsh or
mamtam such a market and IS not obhgated to repurchase any of the Bonds at the request of the owner
thereof
UNDERWRITING
Southwest Secunl1es Inc Newport Beach CalIfornIa (the Underwnter) IS offenng the Bonds at the
pnces set forth on the cover page hereof The mll1al offenng pnces may be changed from tIme to lime
and concessIOns from the offermg pnces may be allowed to dealers banks and others
The Underwnter has purchased the Bonds at a pnce equal to approxImately % ($ ) of the
aggregate pnnclpal amount of the Bonds whICh amount represents the pnnclpal amount of the Bonds
less the Underwnter s dIscount of $ and a premlUm of $
The Underwnter wIll pay certaIn of Its expenses relatIng to the offenng
EXPERTS
The Market AbsorptIOn Study prepared by EmpIre Econormcs Inc CapIstrano Beach CahfornIa and the
AppraIsal prepared by Hams Realty AppraIsal Newport Beach CahfomIa as well as the SpecIal Tax
projectIOns prepared by Hams & AssocIates irvIne Cahfornla Special Tax Consultant have been
mcluded m thIS OffiCIal Statement In rehance on and upon the authonty of saId firms as experts In the
matters covered therem
THE FINANCING CONSULTANT
The matenal contaIned m th,s OffiCIal Statement was prepared by Rod Gmm AssocIates Inc HuntIngton
Beach Cahfornla an Independent finanCIal consultIng firm who adVised the Authonty as to the finanCIal
structure and certaIn other financIal matters relatmg to the Bonds The InformatIOn set forth herem has
been obtaIned by Rod Gunn AssocIates Inc from sources whIch are beheved to be rehable but such
InformatIOn IS not guaranteed by Rod Gunn AssocIates Inc as to accuracy or completeness nor has It
been Independently venfied Fees paId to Rod Gunn AssocIates Inc are contIngent upon the sale and
dehvery of the Bonds
FORWARD LOOKING STATEMENTS
Certam statements Included or Incorporated by reference m thiS OffiCIal Statement consl1tute forward
lookmg statements wlthm the meanmg of the Umted States Pnvate Securll1es LIl1gal1on Reform Act of
1995 SectIOn 21 E of the Umted States Secunl1es Exchange Act of 1934 as amended and Secl10n 27 A of
the Umted States Secunl1es Act of 1933 as amended Such statements are generally Idenl1fiable by the
termmology used such as plan expect estimate project budget or SImIlar words Such
forward lookmg statements mclude but are not hmlted to certam statements contamed m the mformal1on
under the captIOn SPECIAL TAXES AND DISTRICT BONDS DEBT SERVICE COVERAGE herem
77
Agenda Item No 2
Page 264 of 316
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
ADDITIONAL INFORMATION
The summanes and references contamed herem With respect to the Indenture the Fiscal Agent
Agreement the Bonds statutes and other documents do not purport to be comprehensive or defimtlve
and are qualified by reference to each such document or statute and references to the Bonds are qualified
m their entirety by reference to the form hereof mcluded m the Indenture Copies of the Indenture and the
Fiscal Agent Agreement are available for mspectlOn dunng the penod of Imtlal offenng on the Bonds at
the offices of the Underwriter Southwest Secuntles Inc 620 Newport Center Dnve SUite 300 Newport
Beach California 92660 telephone (949) 717 2000 Copies of these documents may be obtamed after
delivery of the Bonds from the City through the City Manager City of Lake Elsmore 130 S Mam Street
Lake Elsmore California 92530
REFERENCES
1\
Any statements m thiS OffiCial Statement mvolvmg matters of opmlOn whether or not expressly so stated
are mtended as such and not as representatIOns of fact ThiS OffiCial Statement IS not to be construed as a
contract or agreement between the Authonty and the purchasers or Owners of any of the Bonds
EXECUTION
The execution of thiS OffiCial Statement by the Executive Director has been duly authonzed by the Lake
Elsmore Public Fmancmg Authonty
LAKE ELSINORE PUBLIC FINANCING AUTHORITY
By /s/
City Manager of the City
78
Agenda Item No 2
Page 265 of 316
APPENDIX A
SUMMARY OF THE INDENTURE
The followmg IS a summary of certam proVISIOns under the Indenture to the Bonds and does not purport
to be a complete restatement thereof Reference IS hereby made to the Indenture for further mformatlOn m
thIS regard Caples of the Indenture are aVallable from the Authorlty upon request upon payment of a
charge for copymg handlmg and mallmg For convemence m the dIscussIOn below references are made
to certam funds and accounts relatmg to the Bonds In the event other serles of bonds are Issued m the
fUture separate fUnds and accounts with sImIlar names but approprlate bond Serles desIgnatIOn have
been or WIll be established wIth respect to such serles of bonds
DefimtIon of CertaIn Terms In the Indenture
Unless otherwise defined m thiS OffiCial Statement the followmg terms have the followmg meanmgs
Act means Arlicles I through 4 (commencmg with SectIOn 6500) of Chapter 5 DIvIsion 7 Title I of
the Government Code ofthe State as m eXistence on the Closmg Date or as thereafter amended from lime
to lime
Annual Debt Service means for each Bond Year with respect to each senes of Bonds the sum of (a)
the mterest payable on such senes ofOutstandmg Bonds m such Bond Year and (b) the pnnclpal amount
of such senes of Outstandmg Bonds scheduled to be paid 10 such Bond Year
AuthOrity Representative means the Chairperson Vice Chairperson Execulive Director ASSistant
Execulive Drrector or Treasurer of the Authonty or any other authonzed represeutalive of the Authonty
as eVIdenced by a certificate of the Charrperson or Execulive Drrector
Bond Counsel means an attorney at law or a firm of attorneys selected by the CFD of natIOnally
recogOlzed standmg 10 matters pertammg to the tax exempt nature of mterest on bonds Issued by states
and their pohlical subdiVISions duly admitted to the praclice of law before the highest court of any state of
the UOlted States of Amenca or the Dlstnct of Columb18
Bond Law means the Marks Roos Local Bond Poohng Act of 1985 constltutmg ArtICle 4 of the Act
(commencmg With SectIOn 6584) as 10 eXistence on the Closmg Date or as thereafter amended from lime
to lime
Bond Year means each twelve month penod begmOlng on September 2 of each year and endmg
September I of the followmg year except that the first Bond Year shall begm on the Closmg Date and end
on September I 2008 proVided however that for purpose of calculatmg the reserve reqUirement under
the code Bond Year shall mean the one year penod begmnmg on the closmg date and endmg one year
later
Busmess Day means a day of the year other than a Saturday or Sunday on which banks 10 Los
Angeles Cahforn18 and San FranCISCo Cahfornla are not reqUired or authonzed to remam closed and on
whICh The New York Stock Exchange IS not closed
Cash Flow Management Fund ReqUirement means as of any calculatIOn date an amount equal to
15% of the Maximum Annual Debt Service
Certificate or Written Request of the Authonty means a wntten certificate or wntten request
Signed 10 the name of the Authonty by an Authonty RepresentatIve Any such certificate or request may
but need not be combmed m a smgle mstrument With any other mstrument oplUlon or representalion and
the two or more so combmed shall be read and construed as a smgle mstrument
Al
Agenda Item No 2Page 266 of 316
Closmg Date means the date of dehvery of the Bonds to the ongmal purchasers thereof
Code means the Internal Revenue Code of 1986 as m effect on the date of Issuance of the Bonds or
(except as otherwise referenced herem) as It may be amended to apply to obhgatlOns Issued on the date of
Issuance of the Bonds together With proposed temporary and final regulations promulgated and official
pubhc gUidance pubhshed under the Code
Corporate Trust Office means the corporate trust office of the Trustee at the address set forth m the
Indenture or such other office deSignated by the Trustee from time to time and such office as the Trustee
may deSIgnate m wntmg to the Authonty
Costs of Issuance means all expenses mcurred m connectIOn With the authonzatlOn Issuance sale and
dehvery of the Bonds the purchase of the Dlstnct Bonds mcludmg but not hmlted to all compensatIOn
fees and expenses (mcludmg but not luruted to fees and expenses for legal counsel) of the Authonty and
the Trustee compensation to any financial consultants or underwnters legal fees and expenses fihng and
recordmg costs ratmg agency fees costs of preparation and reproductIOn of documents and costs of
pnntmg
Defeasance Secuntles mean With respect to the Bonds
(A) Cash (msured at all times by the Federal DepOSit Insurance CorporatIOn)
(B)ObhgatlOns of or obhgatlOns guaranteed as to prmClpal and mterest by the U S or any agency
or mstrumentahty thereof when such obhgatlOns are backed by the full faith and credit of
the U S mcludmg
(I)U S treasury obhgatlOns
(u)All direct or fully guaranteed obhgatlons
(m)Farmers Home AdlIllmstratlOn
(Iv)General ServICes Admmlstratlon
(v)Guaranteed Title XI financmg
(vI)Govemment NatIOnal Mortgage ASSOCiatIOn (GNMA)
(vu)State and Local Government Senes
Any secunty used for defeasance must proVide for the timely payment of prmclpal and
mterest and cannot be callable or prepayable pnor to matunty or earher redemptIOn of the
Bonds (excludmg secuntles that do not have a fixed par value and/or whose terms do not
promise a fixed dollar amount at matunty or call date)
Dlstnct Bonds means the Commumty Facilities Dlstnct No 2005 5 of the City of Lake Elsmore
Special Tax Bonds 2007 Senes A
A2
Agenda Item No 2
Page 267 of 316
DTC means The Depository Trust Company New York New York and Its successors and assigns
Event of Default means any of the events descnbed m the Indenture
Excess Investment Earnmgs means the amount of excess mvestment eammgs detenmned to be
subject to rebate to the Umted States of Amenca with respect to the mvestment of the gross proceeds of
the Bonds detenmned pursuant to SectIon 148(1) of the Code
Fiscal Year means any twelve month penod extendmg from July I m one calendar year to June 30 of
the succeedmg calendar year both dates mcluslve or any other twelve month penod selected and
designated by the Authonty as Its offiCIal fiscal year penod and certIfied to the Trustee m wntmg by an
Authonty Representative
Indenture means the Indenture of Trust as ongmally executed or as It may from time to time be
supplemented modified or amended by any Supplemental Indenture pursuant to the Indenture
Independent Accountant means any certified pubhc accountant or firm of certIfied pubhc accountants
appomted and paid by the Authonty and who or each of whom (a) IS m fact mdependent and not under
dommatlOn of the Authonty or the CIty (b) does not have any substantial mterest direct or mdirect m the
Authonty or the City and (c) IS not connected With the Authonty or the City as an officer or employee of
the Authonty or the City but who may be regularly retamed to make annual or other audits of the books of
or reports to the Authonty or the City
Information Semces means Fmanclal InformatIOn Inc s Dally Called SpeCIal Service 30
Montgomery Street 10th Floor Jersey City NJ 07302 Attention Editor Mergent/FIS Inc 5250 77
Center Dnve SUlte 150 Charlotte North Carohna 28217 AttentIOn MunICipal News Reports and
Kenny S&P 55 Water Street 45th Floor New York New York 10041 AttentIOn NotificatIOn
Department and m accordance with then current guldehnes of the Secuntles and Exchange CommISSIOn
such other addresses and/or such other servICes provldmg mformatlOn With respect to the redemptIOn of
bonds as the Authonty may deSignate m a Request of the Authonty dehvered to the Trustee
Interest Payment Date means March I and September I m each year beglnnmg March I 2008 and
contmumg thereafter so long as any Bonds remam Outstandmg
Letter of RepresentatIons means the letter of the Authonty and the Trustee dehvered to and accepted
by DTC (or such other Secuntles DepOSitory) on or pnor to the Issuance of the Bonds m book entry form
settmg forth the baSIS on whICh DTC (or such other Securities DepOSitory) serves as depOSitory for the
Bonds Issued m book entry form as ongmally executed or as It may be supplemented or reVised or
replaced by a letter to a substitute Secuntles DepOSitory
MaXimum Annual Debt Service means as of the date of calculatIOn the maxnnum amount obtamed
by totahng for the current or any future Bond Year the sum of (a) the pnnclpal amount of all such
Outstandmg Bonds maturmg m such Bond Year and (b) the mterest whICh would be due durmg such
Bond Year on the aggregate pnnclpaJ amount of such Bonds whICh would be Outstandmg m such penod
If such Bonds are rehred as scheduled but deductmg and excludmg from such aggregate pnnclpal amount
the aggregate pnnclpal amount of such Bonds no longer Outstandmg
Moody s means Moody s Investors Service and Its successors and assigns
Outstandmg when used as of any partICular tIme With reference to Bonds means all Bonds
theretofore executed Issued and dehvered by the Authonty under the Indenture except (a) Bonds
theretofore canceled by the Trustee or surrendered to the Trustee for cancellatIOn (b) Bonds paid or
deemed to have been paid wlthm the meanmg of the Indenture and (c) Bonds m heu of or m substitutIOn
A3
Agenda Item No 2
Page 268 of 316
II
for which other Bonds shall have been executed Issued and delivered pursuant to the Indenture or any
Supplemental Indenture
Owner or "Bond Owner when used with respect to any Bond means the person m whose name the
ownership of such Bond shall be registered on the Reglstral10n Books
Permitted Investments meanS With respect to the Bonds any of the followmg which at the time of
mvesturent are legal mvestments under the laws of the State for the moneys proposed to be mvested
therem but only to the extent that the same are acqUired at FlUr Market Value
(A) (I) Cash (msured at all limes by the Federal DepOSit Insurance Corporal1on)
(2) ObhgatlOns of or obligal1ons guaranteed as to pnnclpal and mterest by the U S or any
agency or mstrumentahty thereof when such obhgal1ons are backed by the full
faith and credit of the U S mcluding
(I)U S treasury obligal1ons
(n)All direct or fully guaranteed obhgal1ons
(m)Farmers Home AchnmlstratlOn
(Iv)General Services AchnlOlstratlon
(v)Guaranteed Title XI financmg
(vI)Government NatIOnal Mortgage ASSOCiatIOn (GNMA)
(vn)State and Local Government Senes
(B) (1) ObhgatlOns of any of the followmg federal agencies which obhgatlOns represent the
full faith and credit of the UOlted States of Amenca mcludmg
(I) Export Import Bank
(n) Rural EconomlC CommuOlty Development AchnmlstratlOn
(m) US Manl1me AdmlOlstratlOn
(IV) Small Busmess Ad1mOlstratlOn
(v) U S Deparl1nent ofHousmg & Urban Development (pHAs)
(VI) Federal Housmg AchnmlstratlOn
(vn) Federal Fmancmg Bank
(2) Drrect ObhgatlOns of any of the folloWlOg federal agencies whlCh obhgal1ons are not
fully guaranteed by the full faith and credIt of the UOlted States of Amenca
(I) SeOlor debt obligal1ons Issued by the Federal NatIOnal Mortgage Assoclal1on
(FNMA) or Federal Home Loan Mortgage CorporatIOn (FHLMC)
(n) Obhgal1ons of the Resolul1on Fundmg CorporatIOn (REFCORP)
(m) SeOlor debt obhgatlOns of the Federal Home Loan Bank System
(IV) SeOlor debt obhgal1ons of other Government Sponsored AgenCies approved by
the Insurer
(3) U S dollar denomlOated depOSit accounts federal funds and bankers acceptances With
domestic commercial banks which may mclude the Trustee and ItS affiliates which
have a raung on their short term certificates of depOSit on the date of purchase of
P I by Moody s and A I or A I + by S&P and matunng not more than 360
A4
Agenda Item No 2
Page 269 of 316
calendar days after the date of purchase (Ratmgs on holdmg compames are not
considered as the ratmg of the bank)
(4) Cornmerclal paper whICh IS rated at the ttme of purchase 10 the smgle highest
classIficatIOn P I by Moody s and A I + by S&P and which matures not more
than 270 calendar days after the date of purchase
(5) Investlnents 10 a money market fund rated AAAm or AAAm G or better by S&P
mcludmg funds for which the Trustee ItS parent company If any or any affiliates
or subsldlanes of the Trustee proVide mvestment advIsory or other management
servIces
(6) Pre refunded Mumclpal ObligatIOns defined as follows any bonds or other obligattons
of any state of the Umted States of Amenca or of any agency mstrumentality or
local governmental umt of any such state which are not callable at the optIOn of the
Authonty pnor to matunty or as to which Iffevocable mstructlons have been given
by the Authonty to call on the date specified 10 the nottce and
(A) whICh are rated based on an Irrevocable escrow account or fund (the
escrow) 10 the highest ratmg category of Moody s or S&P or any
successors thereto or
(B)(I) which are fully secured as to pnnClpal and mterest and redemptIOn premIUm
If any by an escrow conslstmg only of cash or obligatIOns descnbed 10
paragraph A (2) above which escrow may be applied only to the payment
of such pnnclpal of and mterest and redemptton premIUm If any on such
bonds or other obligatIOns on the matunty date or dates thereof or the
specified redemptIOn date or dates pursuant to such lITevocable
mstructtons as appropnate and (ll) which escrow IS suffiCient as venfied
by a natIOnally recogOlzed mdependent certtfied public accountant to pay
pnnClpal of and mterest and redemptton premIUm If any on the bonds or
other obligattons descnbed m thiS paragraph on the matunty date or dates
specified 10 the lITevocable mstructlOns referred to above as appropnate
(7) Mumclpal obligatIOns rated Aaa/ AAA or general obligatIOns of States With a ratmg
of A2/ A or higher by both Moody s and S&P
(8) Investlnent Agreements approved m wntmg by the Insurer (supported by appropnate
opmlOns of counsel)
(9) the Local Agency Investment Fund of the State of California created pursuant to
SectIOn 16429 1 of the California Government Code and
(10) other forms of mvestlnents (mcludmg repurchase agreements) approved m wntmg by
the Insurer
(C) The value of the above mvestments shall be determmed as follows
a) For the purpose of determmmg the amount m any fund all Permitted Investlnents
credited to such fund shall be valued at faIT market value The Trustee shall determme
A5
Agenda Item No 2
Page 270 of 316
the fair market value based on accepted mdustry standards and from accepted mdustry
provIders Accepted mdustry proVIders shall melude but are not hmlted to pncmg
servIces proVIded by Fmanclal TImes Interachve Data CorporatIOn Memll Lynch
Salomon SmIth Bamey Bear Steams or Lehman Brothers
b) As to certificates of depOSIt and bankers acceptances the face amount thereof plus
accrued mterest thereon and
c) As to any mvestment not specIfied above the value thereof estabhshed by pnor
agreement among the Authonty the Trustee and the Insurer
Record Date' means With respect to any Interest Payment Date the fifteenth (15th) calendar day of the
month precedmg such Interest Payment Date
RedemptIOn Revenues means (a) amounts receIved from the redemphon of the Dlstnct Bonds from
amounts conshtutmg prepayments of SpeCIal Taxes (b) amounts receIved from the optIOnal redemphon
of the Dlstnct Bonds and (c) amounts received from the special mandatory redemptIOn of the Dlstnct
Bonds
'RegIstratIon Books means the records mamtamed by the Trustee pursuant to the Indenture for the
regIstratIOn and transfer of ownershIp of the Bonds
Revenues means (a) all amounts payable by the Dlstnct as pnnclpal or mterest on the Dlstnct Bonds
(b) all moneys deposIted and held from tIme to hme by the Trustee m the funds and accounts estabhshed
hereunder for the Bonds other than the Rebate Account the RedemptIOn Fund and the ReSidual Fund
and (c) mcome and gams With respect to the mvestment of amounts on depOSIt 10 the funds and accounts
estabhshed hereunder for the Bonds other than the Rebate Account the RedemptIOn Fund and the
ReSIdual Fund
S&P means Standards & Poor s a dIVISIOn of The McGraw HIli Compames It successors and assIgns
SecurItIes DepOSItorIes means DTC 55 Water Street New York 10041 AttentIOn Call NotificatIOn
Department Fax (212) 855 7232 and 10 accordance WIth then current gUldehnes of the Secunhes and
Exchange CommIssIOn such other addresses and/or such other secunhes deposltones as the Authonty
may deSIgnate m a certificate of the Authonty dehvered to the Trustee
Supplemental Indenture means any mdenture agreement or other mstrument hereafter duly executed
by the Authonty and the Trustee 10 accordance With the provIsIOns of the Indenture
Tax and Non ArbItrage CertIficate means the Tax and Non Arbitrage CertIficate dated the date of
closmg and executed by the Authonty
Tax RegulatIons means temporary and permanent regulatIOns promulgated under or WIth respect to
SectIOn 103 and Sechons 141 through 150 meluslve of the Code
Trustee means Umon Bank NatIOnal ASSOCIatIOn and ItS successors and assIgns and any other
corporatIOn or aSSOCIatIOn whIch may at any tIme be substItuted m ItS place as proVIded m the Indenture
Reserve Account means the account by that name estabhshed and held by the Trustee pursuant to the
Indenture
Reserve ReqUIrement means as of any calculatIOn date an amount equal to the least of (I) ten percent
(10%) of the proceeds of the 2007B Bonds (wlthm the meanmg of sectIOn 148 of the Code) (11) 125% of
A6
Agenda Item No 2
Page 271 of 316
average Annual Debt Service with respect to the Bonds or (m) MaJ<lmum Annual Debt Service with
respect to the Bonds
REVENUES, FLOW OF FUNDS
Pledge of Revenues, AssIgnment of RIghts
The Bonds shall be secured by a first hen on and pledge (whICh shall be effected 10 the manner and to the
extent heremafter provided) of all of the Revenues and RedemptIOn Revenues and a pledge of all of the
moneys m the Revenue Fund Bond Fund RedemptIOn Fund and 10 the Cash Flow Management Fund
mcludmg all amounts denved from the mvestment of such moneys The Bonds shall be equally secured
by a pledge charge and first hen upon the Revenues and RedemptIOn Revenues and such moneys
Without pnonty for number date of Bonds date of execulion or date of dehvery and the payment of the
mterest on and pnnclpal of the Bonds and any premiums upon the redemplion of any thereof shall be and
are secured by an exclUSIVe pledge charge and first hen upon the Revenues and RedemptIOn Revenues
and such moneys
So long as any of the Bonds are Outstandmg the Revenues and RedemptIOn Revenues and such other
money shall not be used for any other purpose except as descnbed hereunder for the payment of the
Bonds except that out of the Revenues and RedemptIOn Revenues there may be apportioned such sums
for such purposes as are expressly permitted by the Indenture
The Authonty transfers 10 trust and assigns to the Trustee for the benefit of the Owners from lime to lime
of the Bonds all of the Revenues and all of the nght litle and mterest of the Authonty (but not the
obhgatlOns) m the Dlstnct Bonds (other than certam nghts descnbed m the Indenture) The Trustee shall
be enlitled to and shall receive all of the Revenues and any Revenues collected or received by the
Authonty shall be deemed to be held and to have been collected or received by the Authonty as the
agent of the Trustee and shall be paid by the Authonty to the Trustee The assignment to the Trustee IS
solely m Its capacity as Trustee under the Indenture and m acceptmg such assignment and takmg any
actIOns With respect to the DIStnCt Bonds the Trustee shall be entitled to all the mdemmlies proteclions
Immumtles and hmltatlOns from hablhty afforded It as Trustee under the Indenture The Trustee also shall
be enlitled to and subject to the proVISions of the Indenture shall take all steps aclions and proceedmgs
reasonably necessary 10 ItS Judgment to enforce either Jomtly With the Authonty or separately all of the
nghts of the Authonty and all of the obhgatlOns of the Dlstnct under the District Bonds
ReceIpt, Deposit and AppbcatIons of Revenues
DepOSIt of Revenues, Revenue Fund
All Revenues (excludmg RedemptIOn Revenues) shall be promptly deposited by the Trustee upon receipt
thereof m a special fund deSignated as the Revenue Fund which the Trustee shall estabhsh mamtam
and hold m trust as prOVided m the Indenture
DeposIt of Revenues Bond Funds
,I
The Trustee shall estabhsh mamtam and hold m trust a separate fund one enlitled the Bond Fund
Wlthm the Bond Fund the Trustee shall estabhsh mamtam and hold 10 trust separate speCial accounts
enlitled Interest Account and Prmclpal Account and the Reserve Account On or before each
Interest Payment Date the Trustee shall transfer from the Revenue Fund for depOSit first mto the Bond
Fund the followmg amounts 10 the pnonty set forth below
A7
Agenda Item No 2
Page 272 of 316
ApplicatIon of Revenues Bond Fund
On or before each Interest Payment Date the Trustee shall transfer from the Revenue Fund and deposit
mto the Bond Fund and the followmg special accounts therem the followmg amounts m the followmg
order of pnonty the reqUirements of each such special account (mcludmg the makmg up of any
deficiencies m any such account resultmg from lack of Revenues suffiCient to make any earher reqUired
depOSit) at the tune of depOSit to be sal1sfied before any transfer IS made to any account subsequent m
pnonty
Interest Account On or before each Interest Payment Date the Trustee shall depOSit m the Interest
Account an amount reqUired to cause the aggregate amount on depOSit m the Interest Account to equal the
amount of mterest beconung due and payable on such Interest Payment Date on all Outstandmg Bonds
No depOSit need be made mto the Interest Account If the amount contamed therem IS at least equal to the
mterest becommg due and payable upon all Outstandmg Bonds on such Interest Payment Date All
moneys m the Interest Account shall be used and Withdrawn by the Trustee solely for the purpose of
paymg the mterest on the Bonds as It shall become due and payable (mcludmg accrued mterest on any
Bonds redeemed pnor to matunty)
PrmcllJa/ Account On or before each date on which the pnnclpal of the Bonds shall be payable the
Trustee shall depOSit m the Pnnclpal Account an amount reqUired to cause the aggregate amount on
depOSit m the Pnnclpal Account to equal the aggregate amount of pnnclpal (mcludmg smkmg fund
payments) commg due and payable on such date on the Bonds pursuant to the Indenture All moneys m
the Pnnclpal Account shall be used and withdrawn by the Trustee solely for the purpose of paymg the
pnnclpalofthe Bonds (mcludmg smkmg fund payments)
Reserve Account All amounts on depOSit m the Revenue Fund on or before each Interest Payment Date
to the extent not reqUired to pay any mterest on or pnnclpal of any Outstandmg Bonds then havmg come
due and payable shall be credited to the replemshment of the Reserve Account m an amount suffiCient to
mamtam the Reserve ReqUirement therem
The Authonty shall depOSit from the repayment of the Dlstnct Bonds (and from any available surplus
revenues With respect to other senes of local agency revenue bonds related to community faclhl1es
dlstncts Issued by the Authonty to the extent pernutted by law and to the extent such surplus revenues are
available to replemsh the Reserve Account to ItS reqUirement) and mamtam an amount of money equal to
the Reserve ReqUirement m the Reserve Account at all limes while the Bonds are Outstandmg Amounts
m the Reserve Account Will be used to pay debt service on the Bonds to the extent other moneys
(mcludmg amounts m the Cash Flow Management Fund) are not aVailable therefor Earmngs on amounts
m the Reserve Account shall be deposited mto the Revenue Fund If and to the extent such eammgs are
not reqUired to be retamed m the Reserve Account to meet the Reserve ReqUirement Upon mandatory
redemptIOn from prepayment of the Dlstnct Bonds amounts on depOSit m the Reserve Account shall be
reduced (to an amount not less than the Reserve ReqUirement) and the excess moneys shall be transferred
to the Revenue Fund Amounts m the Reserve Account =y be used to pay the final year s debt servICe
on the Bonds
Surplus
All remammg amounts on September 2 (or the next Busmess Day to the extent September 2 IS not a
Busmess Day) of each year commencmg September 2 2008 on depOSit m the Revenue Fund shall be
transferred to the ReSidual Fund
A8
Agenda Item No 2
Page 273 of 316
Rebate Account
The Trustee shall deposit m the Rebate Account from lime to lime as set forth m the Indenture an
amount detenmned by the Authonty to be subject to rebate to the Umted States of Amenca m accordance
with the Indenture Amounts m the Rebate Account shall be applied and disbursed by the Trustee solely
for the purposes and at the times set forth m written requests of the Authonty filed With the Trustee
pursuant to the Indenture The Trustee shall not be responsible for calculatmg rebate amounts or for the
adequacy or correctness of any rebate report or rebate calculatIOns The Trustee shall be deemed
conclUSively to have complied With the proVIsions of the Indenture and any other agreement relatmg to
the Bonds regardmg calculalion and payment of rebate If It follows the dlreclions of the Authonty and It
shall have no mdependent duty to review such calcuJatlOns or enforce the compliance With such rebate
reqUirements by the Authonty
Cash Flow Management Fund
Establishment of Cash Flow Management Fund
The Indenture establishes as a separate fund to be held by the Trustee the Cash Flow Management
Fund to the credit of winch a depOSit shall be made as reqUired by the Indenture Moneys m the Cash
Flow Management Fund shall be held m trust by the Trustee for the benefit of the Owners of the Bonds
and shall be disbursed as proVided below
Disbursement
Moneys m the Cash Flow Management Fund shall be used (pnor to any draw on the Reserve Account)
solely for the purpose of paymg the pnnClpal of mcluding smkmg fund payments and mterest on any
Bonds when due m the event that the moneys m the Interest Account or the PnnClpal Account are
msuffiClent therefor If the amounts m the Interest Account or the Prmclpal Account are msufficlent to
pay the pnnclpal of mcludmg smkmg fund payments or mterest on any Bonds when due the Trustee
shall withdraw from the Cash Flow Management Fund for depOSit m the Interest Account or the Pnnclpal
Account moneys necessary for such purposes
In conneclion With any redemplion of the Bonds or a parlial defeasance of the Bonds m accordance With
the Indenture amounts m the Cash Flow Management Fund may be applied to such redemptIOn or partial
defeasance so long as the amount on depOSit m the Cash Flow Management Fund followmg such
redemptIOn or partial defeasance equals the Cash Flow Management Fund Requrrement To the extent
that the Cash Flow Management Fund IS at the Cash Flow Management Fund ReqUirement as of the first
day of the final Bond Year for the Bonds amounts m the Cash Flow Management Fund may be applied to
pay the pnnclpal of and mterest due on the Bonds m the final Bond Year for such Issue Moneys m the
Cash Flow Management Fund m excess of the Cash Flow Management Fund ReqUirement not transferred
m accordance With the precedmg provIsions of thiS paragraph shall be Withdrawn from the Cash Flow
Management Fund on September 2 of each year and transferred to the ReSidual Fund
Redemption Fund
The Indenture establishes as a separate fund to be held by the Trustee the RedemptIOn Fund to the
credit of which the Authonty shall depOSit Immediately upon receipt all Redemption Revenues Moneys
m the RedemptIOn Fund shall be held m trust by the Trustee for the benefit of the Authonty and the
Owners of the Bonds and shall be used and Withdrawn by the Trustee to redeem Bonds pursuant to the
Indenture on the date thereof
A9
Agenda Item No 2
Page 274 of 316
Residual Fund
Establishment of ResIdual Fund
The Indenture estabhshes as a separate fund to be held by the Trustee the Residual Fund to the credit
of which a deposit shall be made as reqUired by the Indenture (from the Revenue Fund) Moneys m the
Residual Fund shall be held m trust by the Trustee for the benefit of the Authonty and shall be disbursed
as prOVided below The amounts m the Residual Fund are not pledged to the repayment of the Bonds
DIsbursement
On September 2 of each year commencmg September 2 2008 the Trustee shall transfer any amounts m
the Residual Fund for the followmg purposes m the followmg order of pnonty
(I) to the Cash Flow Management Fund an amount Ifany reqUired to restore the amount on depOSit
m the Cash Flow Management Fund to the Cash Flow Management Fund ReqUirement
(2) at the wntten dlreclion of the Authonty to the trustee of any other senes of local agency revenue
bonds related to commumty faclhlies dlstncts Issued by the Authonty to the extent penmtted by law
an amount reqUired to replemsh any reserve account to ItS reqUirement With respect to such senes of
bonds and at the electiOn of the Authonty an amount to replemsh any cash flow management fund to
ItS reqUirement with respect to such senes of bonds
(3) to the Fiscal Agent for the Dlstnct Bonds for depOSit m the RedemptiOn Fund for redemptiOn of
the Dlstnct Bonds (m proportiOn to the outstandmg pnnclpal amount With respect to each senes of
Distnct Bonds or such other fair allocatiOn detenmned by the Authonty) unless the Trustee has
received wntten directiOn from the Authonty to expend such remammg funds held m the ReSidual
Fund for any lawful purposes of the Authonty mcludmg but not hmlted to paymg or relmbursmg
the payment of the costs and expenses mcurred by the City or the Authonty m adimmstenng the
Bonds and the DiStrict Bonds paymg costs of pubhc capltalllDprovements or reducmg the SpeCial
Taxes (m proporlion to the outstandmg pnnclpal amount With respect to each senes of Dlstnct
Bonds or such other fair allocatiOn detennmed by the Authonty) which are to be leVied m the current
or the succeedmg Fiscal Year upon the properties which are subject to the SpeCial Tax wlthm the
Dlstnct
Bond Purchase Fund
The Indenture estabhshes a separate fund to be known as the Bond Purchase Fund mto whICh shall be
deposited a portiOn of the proceeds of the sale of the Bonds m the amount set forth m the Indenture The
Trustee shall disburse all amounts m the Bond Purchase Fund on the Closmg Date to purchase the DistrICt
Bonds Followmg the disbursement of all amounts to purchase the Dlstnct Bonds the Trustee shall close
the Bond Purchase Fund
Costs of Issuance Fund
The Indenture estabhshes a fund to be held by the Trustee known as the Costs of Issuance Fund mto
which shall be deposited a portiOn of the Bond proceeds as set forth m the Indenture The moneys m the
Costs ofIssuance Fund shall be used to pay Costs ofIssuance from time to lime upon receipt of a Wntten
Request of the Authonty On the date which IS one hundred twenty (120) days followmg the CloslOg
Date or upon the earher receipt by the Trustee of a Wntten Request of the Authonty statmg that all Costs
ofIssuance have been paid the Trustee shall transfer all remammg amounts m the Costs ofIssuance Fund
to the Revenue Fund The Authonty may at any tllDe file a Wntten Request of the Authonty requestlOg
AIO
Agenda Item No 2
Page 275 of 316
that the Trustee retam a specified amount m the Costs of Issuance Fund and transfer to the Revenue Fund
all remammg amounts and the Trustee shall comply With such request
Investments
All moneys m any of the funds or accounts established With the Trustee pursuant to the Indenture shall be
mvested by the Trustee solely m Pernntted Investtnents pursuant to the Wntten Request of the Authonty
given to the Trustee at least two (2) Busmess Days m advance of the makmg of such mvesttnents Each
such wntten directIOn shall contam the representatIOn of the Authonty that the mvesttnents Identlfied
therem constltute Perrmtted Investments upon which the Trustee may conclusively rely In the absence of
any such directIOn from the Authonty the Trustee shall mvest any such moneys m clause (d) of the
defimtlon ofPerrmtted Investtnents (I e money market funds) ObligatIOns purchased as an mvesttnent
of moneys m any funds shall be deemed to be part of such fund or account
All mterest or gam denved from the mvesttnent of amounts m any of the funds or accounts established
shall be deposited m the fund or account from which such mvestment was made For purposes of
acqumng any mvesttnents the Trustee may commmgle funds held by It upon the Wntten Request of the
Authonty The Trustee or Its affiliate may (but shall not be obligated to) act as pnnclpal or agent m the
acqUisitIOn or dlsposltlon of any mvesttnent and shall be entitled to Its customary fees therefor The
Trustee IS reqUired to sell or present for redemptIOn any Pernntted Investtnent It purchases whenever It
shall be necessary to proVide momes to meet any reqUired payment transfer withdrawal or disbursement
from the fund to which such pernntted mvestment IS created The Trustee shall mcur no liability for
losses ansmg from any such mvestments
The Trustee may purchase or sell to Itself or any affiliate as pnnClpal or agent mvesttnents authonzed by
the Indenture The Trustee may act as purchaser or agent m the makmg or dlsposmg of any mvestment
Such mvesttnents If registered shall be registered m the name of the Trustee for the benefit of the
Owners and held by the Trustee The Trustee or any of ItS affiliates may act as sponsor adVisor or
manager or proVide admmlstratlve services m connectlon With any Pernntted Investtnents
Investtnent of funds IS also subject to the provlSlons of the Tax and No Arbitrage Certificate
ValuatIon and DIspOSItIon of Investments
All mvesttnents of amounts deposited m any fund or account created by or pursuant to the Indenture or
otherwise contammg gross proceeds of the Bonds (wlthm the meamng of sectIOn 148 of the Code) shall
be acqUired disposed of and valued (as of the date that valuatlon IS reqUired by the Indenture or the
Code) at Fair Market Value (as defined m the Indenture) Notwlthstandmg the prevIOus sentence
mvesttnents m funds or accounts (or portIOns thereof) that are subject to a Yield restnctlOn under the
prOVISIOns of the Code shall be valued at thelf present value (wlthm the meanmg of sectIOn 148 of the
Code) The Fiscal Agent shall not be liable for venficatlOn of the applicatIOn of such sectlons of the
Code
COVENANTS OF THE AUTHORITY
Punctual Payment The Authonty shaJJ punctually payor cause to be paid the pnnClpal mterest and
premIUm (If any) to become due m respect of all the Bonds m stnct confornnty With the terms of the
Bonds and of the Indenture accordmg to the true mtent and meanmg of but only out of Revenues and
other assets pledged for such payment as prOVided m the Indenture
ExtenSIOn of Payment of Bonds The Authonty shall not directly or mdlrectly extend or assent to the
extensIOn of the maturity of any of the Bonds or the time of payment of any claims for mterest by the
purchase of such Bonds or by any other arrangement and m case the matunty of any of the Bonds or the
tlme of payment of any such claims for mterest shall be extended such Bonds or claims for mterest shall
All
Agenda Item No 2
Page 276 of 316
not be entltled 10 case of any default to the benefits of the Indenture except subject to the pnor payment
10 full of the prmclpal of all of the Bonds then Outstandmg and of all claims for mterest thereon which
shall not have been so extended Nothmg 10 thiS SectIOn shall be deemed to lnmt the nght of the
Authonty to Issue Bonds for the purpose of refundmg any Outstandmg Bonds and such Issuance shall not
be deemed to constltute an extensIOn of matunty of the Bonds
Agamst Encumbrances The Authonty shall not create or penmt the creatIOn of any pledge hen
charge or other encumbrance upon the Revenues and other assets pledged or assigned under the Indenture
while any of the Bonds are Outstandmg except the pledge and assignment created by the Indenture
Subject to this hmltatlOn the Authonty expressly reserves the nght to enter mto one or more other
mdentures for any of Its corporate purposes mcludmg other programs under the Bond Law and reserves
the nght to Issue other obhgatlOns for such purposes
Power to Issue Bonds and Make Pledge and ASSignment The Authonty IS duly authonzed pursuant to
law to Issue the Bonds and to enter mto the Indenture and to pledge and asSign the Revenues the Dlstnct
Bonds and other assets purported to be pledged and assigned ly under the Indenture 10 the manner and to
the extent provided 10 the Indenture The Bonds and the proVISIOns of the Indenture are and will be the
legal vahd and bmdmg speCial obhgatlOns of the Authonty 10 accordance With therr terms and pnonty of
payment and the Authonty and the Trustee subject to the provIsIOns of the Indenture shall at all tlmes
to the extent penmtted by law defend preserve and protect said pledge and assignment of Revenues and
other assets and all the nghts of the Bond Owners under the Indenture agamst all clalO1S and demands of
all persons whomsoever
Accountmg Records and Fmanclal Statements The Trustee shall at all tlmes keep or cause to be kept
proper books of record and account prepared 10 accordance with mdustry standards 10 which complete
and accurate entnes shall be made of all transactIOns made by the Trustee relatmg to the proceeds of
Bonds the Revenues and all funds and accounts estabhshed by the Trustee pursuant to the Indenture
Such books of record and account shall be available for mspectlOn by the Authonty dunng regular
busmess hours With reasonable pnor notlce
Not later than 45 days follow1Og each Interest Payment Date the Trustee shall prepare and file With the
Authonty a report sett10g forth (I) amounts Withdrawn from and deposited mto each fund and account
ma10tamed by the Trustee under the Indenture (11) the balance on depOSit 10 each fund and account as of
the date for which such report IS prepared and (111) a bnef descnptlOn of all obhgatlOns held as
mvestroents 10 each fund and account Copies of such reports may be mailed to any owner of at least
50% aggregate pnnclpal amount of Bonds Outstandmg upon the owner s wntten request at a cost not to
exceed the Trustee s actllal costs of duphcatlOn and mail10g Said reports may be 10 the form of the
Trustee s regular semiannual statements
No AdditIonal Parity Debt Except for the Bonds or bonds Issued for the purpose of refundmg the
Bonds the Authonty covenants that no addltlonal bonds notes or other mdebtedness shall be Issued or
10curred whICh are payable out of the Revenues 10 whole or 10 part
Tax Covenants Relatmg to Bonds
Sneclal Defimhons When used 10 thiS SectIOn the followmg terms have the follow1Og meanmgs
Bonds means unless otherwise quahfied the Bonds
Code means the Internal Revenue Code of 1986 as amended
ComputatIOn Date has the mean10g set forth 10 sectlon I 148 1 (b) of the Tax RegulatIOns
A 12
Agenda Item No 2
Page 277 of 316
Gross Proceeds means any proceeds as defined m sectIOn I 148 I (b) of the Tax RegulatIOns (refemng
to sales mvestment and transferred proceeds) and any replacement proceeds as defined m sectIOn I 148
I(c) of the Tax RegulatIOns of the Bonds
Investment has the meanmg set forth m sectIOn I 148 I (b) of the Tax RegulatIOns
Nonpurpose Investment means any mvestment property as defined m sectIOn 148(b) of the Code m
which Gross Proceeds of the Bonds are mvested and that IS not acqUired to carry out the governmental
purposes of that senes of Bonds
Rebate Amount has the meanmg set forth m sectIOn I 148 I (b) of the Tax RegulatIOns
Tax RegulatIOns means the Umted States Treasury RegulatIons promulgated pursuant to sectIOns 103
and 141 through 150 of the Code or sectIOn 103 of the 1954 Code as
YIeld of any Investment has the meamng set forth m sectIOn I 148 5 of the Tax RegulatIOns and of any
Issue of governmental obligatIOns has the meanmg set forth m sectIOn I 148 4 of the Tax RegulatIOns
Not to Cause Interest to Become Taxable The Authonty covenants that It shall not use and shall not
perrmt the use of and shall not omit to use Gross Proceeds or any other amounts (or any property the
acqUisitIOn constructIon or Improvement of whICh IS to be financed drrectly or mdlrectly With Gross
Proceeds) m a manner that If made or ormtted ly could cause the mterest on any Bond to fail to be
excluded pursuant to SectIOn 103(a) of the Code from the gross mcome of the owner thereof for federal
mcome tax purposes Without limitIng the generality of the foregomg unless and untIl the Trustee
receIVes a wntten opmlOn of Bond Counsel to the effect that failure to comply With such covenant will
not adversely affect such exclUSIOn of the mterest on any Bond from the gross mcome of the owner
thereof for federal mcome tax purposes the Authonty shall comply With each of the specific covenants m
the Indenture
Pnvate Use and Pnvate Payments Except as would not cause any Bond to become a pnvate activity
bond wlthm the meanmg of sectIOn 141 of the Code and the Tax RegulatIOns the Authonty shall take all
actIOns necessary to assure that the Dlstnct or the City at all times pnor to the final cancellatIOn of the last
of the Bonds to be retIred
(1) exclUSively owns operates and possesses all property the acqUisitIOn constructIOn or
Improvement of whICh IS to be financed or refinanced directly or mdlrectly With Gross Proceeds of
the Bonds and not use or perrUlt the use of such Gross Proceeds (mcludmg through any contractual
arrangement With terms different than those to the general public) or any property acqUired
constructed or Improved With such Gross Proceeds m any actIvity camed on by any person or entIty
(mcludmg the Umted States or any agency departInent and mstrumentality thereof) other than a
state or local government unless such use IS solely as a member of the general public and
(2) does not directly or mdrrectly Impose or accept any charge or other payment by any person or
entity (other than a state or local government) who IS treated as usmg any Gross Proceeds of the
Bonds or any property the acqUisItIon constructIOn or rrnprovement of which IS to be financed or
refinanced directly or mdlrectly With such Gross Proceeds
No Pnvate Loan Except as would not cause any Bond to become a pnvate actIvity bond wlthm the
meanmg of sectIOn 141 of the Code and the Tax RegulatIOns and rulings thereunder the Authonty shall
not use or perrUlt the use of Gross Proceeds of the Bonds to make or finance loans to any person or entIty
other than a state or local government For purposes of the foregomg covenant such Gross Proceeds are
conSidered to be loaned to a person or entIty If (I) property acqurred constructed or Improved With
such Gross Proceeds IS sold or leased to such person or entIty m a transactIon that creates a debt for
federal mcome tax purposes (ll) capacity m or service from such property IS cornmltted to such person or
A13
Agenda Item No 2
Page 278 of 316
entity under a take or pay output or snmlar contract or arrangement or (m) mdlrect benefits of such
Gross Proceeds or burdens and benefits of ownershIp of any property acquIred constructed or Improved
WIth such Gross Proceeds are otherwIse transferred m a transactIOn that IS the econonuc eqUIvalent of a
loan
Not to Invest at HIgher YIeld Except as would not cause the Bonds to become arbItrage bonds wlthm
the meanmg of sectIOn 148 of the Code and the Tax Regulations and ruhngs thereunder the Authonty
shall not (and shall not permIt any person to) at any time pnor to the final cancellation of the last Bond to
be retired dlfectly or mdlrectly mvest Gross Proceeds m any Investment If as a result of such mvestrnent
the Yield of any Investment acqulfed wIth Gross Proceeds whether then held or prevIOusly dIsposed of
would matenally exceed the YIeld of the Bonds wlthm the meanmg of saId sectIOn 148
Not Federally Guaranteed Except to the extent permItted by sectIOn 149(b) of the Code and the Tax
RegulatIons and ruhngs thereunder the Authonty shall not take or onut to take (and shall not permIt any
person to take or onut to take) any action that would cause any Bond to be federally guaranteed wlthm
the meamng of sectIOn 149(b) of the Code and the Tax RegulatIOns and rulmgs thereunder
InformatIon Report The Authonty shall timely file any mforrnatlOn reqUIred by sectIOn 149(e) of the
Code WIth respect to Bonds WIth the Secretary of the Treasury on Form 8038 G or such other form and m
such place as the Secretary may prescnbe
Rebate of ArbItrage Profits Except to the extent otherwIse proVIded m section 148(f) of the Code and
the Tax RegulatIOns
The Authonty shall account for all Gross Proceeds (mc1udmg all receIpts expenchtures and mvestments
thereof) on Its books of account separately and apart from all other funds (and receIpts expenchtllfes and
mvestments thereof) and shall retam all records of accounting for at least SIX years after the day on whIch
the last Bond IS dIscharged However to the extent permItted by law the Authonty may commmgle
Gross Proceeds of Bonds WIth ItS other momes proVIded that It separately accounts for each receIpt and
expendIture of Gross Proceeds and the oblIgatIOns acqUIred thereWIth
Not less frequently than each Computation Date the Authonty shall calculate the Rebate Amount m
accordance WIth rules set forth m sectIOn l48(f) of the Code and the Tax RegulatIOns and rulIngs
thereunder The Authonty shall mamtam a copy of the calculatIOn WIth ItS offiCIal transcnpt of
proceedmgs relatmg to the Issuance of the Bonds untIl SIX years after the fmal ComputatIon Date
In order to assure the excludabIlIty pursuant to section 103(a) of the Code of the mterest on the Bonds
from the gross mcome of the owners thereof for federal mcome tax purposes the Authonty shall pay to
the Umted States the amount that when added to the futllfe value of prevIOus rebate payments made for
the Bonds equals (I) m the case of the Fmal ComputatIon Date as defined m section 1148 3(e)(2) of the
Tax RegulatIOns one hundred percent (100%) of the Rebate Amount on such date and (Il) m the case of
any other ComputatIOn Date mnety percent (90%) of the Rebate Amount on such date Upon the Wntten
Request of the Authonty the Trustee shall pay over to the Authonty amounts m the Rebate Account for
such purpose In all cases such rebate payments shall be made by the Authonty at the times and m the
amounts as are or may be requlfed by sectIOn 148(f) of the Code and the Tax RegulatIOns and rulmgs
thereunder and shall be accompamed by Form 8038 T or such other forms and mformatlon as IS or may
be reqUIred by sectIOn 148(f) of the Code and the Tax Regulations and rulmgs thereunder for execution
and filIng by the Authonty
Not to DIvert ArbItrage Profits Except to the extent permItted by sectIOn 148 ofthe Code and the Tax
RegulatIOns and rulIngs thereunder the Authonty shall not and shall not permIt any person to at any time
pnor to the final cancellation of the last of the Bonds to be retired enter mto any transactIOn that reduces
the amount reqUIred to be paId to the Umted States pursuant to the 1ndentllfe because such transaction
A 14
Agenda Item No 2
Page 279 of 316
results m a smaller profit or a larger loss than would have resulted If the transactIOn had been at arm s
length and had the Yields on the Bonds not been relevant to either party
Bonds Not Hedge Bonds The Authonty represents that none of the Bonds IS or will become a hedge
bond wlthm the meanmg of sectIOn 149(g) of the Code
ElectIOns The Authonty hereby dnects and authonzes any Authonty Representalive to make electIOns
perrmtted or reqUired pursuant to the provIsIOns of the Code or the Tax RegulatIOns as such
Representalive (after consultatIOn With Bond Counsel) deems necessary or appropnate m connectIOn With
the Bonds m the Cerlificate as to Tax ExemptIOn or smular or other appropnate cerlificate form or
document
Closmg Cerhficate The Authonty agrees to execute and dehver m connectIOn With the Issuance of the
Bonds a Tax and Nonarbltrage Cerl1ficate or smular document contammg additIOnal represental10ns and
covenants pertammg to the exclUSIOn of mterest on the Bonds from the gross mcome of the owners
thereof for federal mcome tax purposes which representatIOns and covenants are mcorporated as though
expressly set forth herem
District Bonds
The Trustee as assignee of the Authonty nghts pursuant to the Indenture shall (subject to the prOVISIOns
of the Indenture) promptly collect all amounts due as pnnclpal and mterest on DiStrict Bonds from the
Dlstnct and subject to the provIsIOns the Indenture shall enforce and take all steps actIOns and
proceedmgs reasonably necessary for the enforcement of all of the nghts of the Authonty under the
Indenture and for the enforcement of all of the obhgal1ons of the Dlstncts thereunder
MODIFICATION AND AMENDMENT OF THE INDENTURE
Amendment of the Indentnre
The Indenture and the nghts and obhgal1ons of the Authonty and of the Owners of the Bonds may be
modified or amended at any tnne by a Supplemental Indenture whICh shall become bmding upon
executIOn by the Authonty and the Trustee and upon pnor wntten consent of the Dlstncts WithOut
consent of any Bond Owners to the extent perrmtted by law but only for anyone or more of the followmg
purposes
(I) to add to the covenants and agreements of the Authonty contamed m the Indenture other
covenants and agreements hereafter to be observed to pledge or assign addll10nal security for the
Bonds (or any portIOn thereof) or to surrender any nght or power herem reserved to or conferred
upon the Authonty
(2) to make such provIsIOns for the purpose of cunng any ambigUity mconslstency or omiSSion or
of curmg or correctmg any defecl1ve proVISIOn contamed m the Indenture or m any other respect
whatsoever as the Authonty may deem necessary or deSirable prOVided that such modificatIOn or
amendment does not matenally adversely affect the mterests of the Bond Owners m the opmlOn of
Bond Counsel
(3) to modify amend or supplement the Indenture m such manner as to perrmt the quahficatlOn of
the Indenture under the Trust Indenture Act of 1939 as amended or any Similar federal statute
hereafter m effect and to add such other terms conditIOns and provIsions as may be permitted by
said act or Similar federal statute or
(4) to make such additIOns deletIOns or modificatIOns as may be necessary or desnable to assure
exemptIOn from federal mcome taxatIOn of mterest on the Bonds
A 15
Agenda Item No 2
Page 280 of 316
Except as set forth III the Indenture the Indenture and the nghts and obligatIOns of the Authonty and of
the Owners of the Bonds may only be modIfied or amended at any trme by a Supplemental Indenture
whIch shall become bllldlllg when the wntten consents of the Owners of a maJonty III aggregate pnnclpal
amount of the Bonds then Outstandlllg are filed With the Trustee No such modIficatIOn or amendment
shall (a) extend the matunty of or reduce the mterest rate on any Bond or otherwIse alter or Imparr the
obligatIOn of the Authonty to pay the pnnClpal mterest or premIUms (If any) at the trme and place and at
the rate and m the currency proVIded therem of any Bond WIthout the express wntten consent of the
Owner of such Bond (b) reduce the percentage of Bonds requIred for the wntten consent to any such
amendment or modIficatIOn or (c) WIthout Its wntten consent thereto modify any of the nghts or
obligatIOns of the Trustee
The Trustee shall be proVIded an opmlOn of Bond Counsel that any such Supplemental Indenture entered
lOto by the Authonty and the Trustee complies With the provlSlons of the Indenture and the Trustee may
conclUSIvely rely upon such opmlOn
Effect of Supplemental Indenture
From and after the tIme any Supplemental Indenture becomes effectIve the Indenture shall be deemed to
be modIfied and amended m accordance thereWIth the nghts dutIes and obligatIOns of the partIes hereto
or thereto and all Owners of Outstandmg Bonds as the case may be shall thereafter be deternnned
exerCIsed and enforced hereunder subject III all respects to such modIficatIOn and amendment and all the
terms and condItIons of any Supplemental Indenture shall be deemed to be part of the terms and
condItIOns of the Indenture for any and all purposes
EVENTS OF DEFAULT AND REMEDIES
Events of Default
The followmg events shall be Events of Default under the Indenture
(I) Default m the due and punctual payment of the pnnClpal of any Bond when and as the same
shall become due and payable whether at matunty as therem expressed by proceedmgs for
redemptIon by acceleratIOn or otherwIse
(2) Default III the due and punctual payment of any mstallment of mterest on any Bond when and as
such mterest mstalhnent shall become due and payable
(3) FaIlure by the Authonty to observe and perform any of the covenants agreements or condItIons
on ItS part m the Indenture or m the Bonds contamed other than as referred to m the precedlllg
clauses (I) and (2) for a penod of thIrty (30) days after wntten notIce speClfymg such faIlure and
requestmg that It be remedIed has been gIVen to the Authonty by the Trustee or to the Authonty and
the Trustee by the Owners of the Bonds of not less than twenty five percent (25%) m the aggregate
pnnclpal amount of the Bonds at that trme Outstandmg prOVIded however that If m the reasonable
opmlOn of the Authonty proVIded to the Trustee m wntmg the failure stated m such notIce can be
corrected but not wlthm such thIrty (30) day penod such faIlure shall not constItute an Event of
Default If correctIve actIOn IS mstItuted by the Authonty wlthm such thIrty (30) day penod and
diligently pursued untIl such faIlure IS corrected
(4) The filing by the Authonty of a petItIOn or answer seekmg reorganIzatIon or arrangement under
the federal bankruptcy laws or any other law of the Umted States of Amenca or If a court of
competent JunsdlctIon shall approve a petItIon filed With or WIthOUt the consent of the Authonty
seeklOg reorgamzatlOn under the federal bankruptcy laws or any other law of the Umted States of
Amenca or If under the proVISIOns of any other law for the relief or aid of debtors any court of
A 16
Agenda Item No 2
Page 281 of 316
competent JunsdlCtlOn shall assume custody or control of the Authonty or of the whole or any
substanlial part of Its property
Remedies Upon Event of Default
Upon the occurrence and dunng the contmuance of an Event of Default the Trustee may pursue any
ava1lable remedy at law or m eqUity to enforce the payment of the pnnClpal of and mterest and prenuum
(If any) on the Bonds and to enforce any nghts of the Trustee under or with respect to the Indenture
If an Event of Default shall have occurred and be contmumg the Trustee may If requested so to do by the
Owners of a maJonty m aggregate prmclpal amount of Outstandmg Bonds and mdemmfied as provided
m the Indenture the Trustee shall be obhgated to exercise such one or more of the nghts and powers
conferred by the Indenture as the Trustee bemg adVised by counsel shall deem most expedient m the
mterests of the Bond Owners
No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bond
Owners) IS mtended to be exclUSive of any other remedy but each and every such remedy shall be
cumulalive and shall be m addItIOn to any other remedy given to the Trustee or to the Bond Owners under
the Indenture or now or hereafter eXlstmg at law or m eqUity
No delay or omiSSIOn to exercise any nghts or power accrumg upon any Event of Default shalllmparr any
such nght or power or shall be construed to be a waiver of any such Event of Default or acqUiescence
therem such nght or power may be exercised from lime to lime as often as may be deemed expedient
ApplIcatIon of Revenues and Other Funds After Default
All amounts received by the Trustee pursuant to any nght given or actIOn taken by the Trustee under the
provlSlons of the Indenture shall be apphed by the Trustee m the followmg order upon presentation of the
several Bonds and the stampmg thereon of the amount of the payment If only partially paid or upon the
surrender thereof If fully paid
First to the payment of the fees costs and expenses ofthe Trustee m deelanng such Event of Default and
m carrymg out the proVISions of the Indenture meludmg reasonable compensatIOn to ItS agents attorneys
and counsel and any outstandmg fees and expenses of the Trustee and
Second, to the payment of the whole amount of mterest on and pnnclpal of the Bonds then due and
unpaid With mterest on overdue mstallments of pnnClpal and mterest to the extent permitted by law at the
net effeclive rate of mterest then borne by the Outstandmg Bonds prOVided however that m the event
such amounts shall be msufficlent to pay m full the full amount of such mterest and pnnclpal then such
amounts shall be apphed m the followmg order of pnonty
(I) first to the payment ofallmstalhnents ofmterest on the Bonds then due and unpaid
(ll) second to the payment ofallmstalhnents ofpnnclpal of the Bonds then due and unpaid
(m) third to the payment of the redemption pnce (meludIng pnnclpal and mterest accrued to the
redemptIOn date but exeludmg any prenuum) of the Bonds to be redeemed pursuant to the
Indenture and
(IV) fourth to the payment ofmterest on overdue mstalhnents ofpnnclpal and mterest on the Bonds
Al7
Agenda Item No 2
Page 282 of 316
Power of Trustee to Control Proceedmgs
In the event that the Trustee upon the happemng of an Event of Default shall have taken any actIOn by
JudICIal proceedmgs or otherwIse pursuant to Its duties under the Indenture whether upon Its own
discretIOn or upon the request of the Owners of at least a maJonty m aggregate pnnclpal amount of the
Bonds then Outstandmg It shall have full power m the exercIse of Its dIscretion for the best mterests of
the Owners of the Bonds WIth respect to the contmuance dlscontmuance wlthdrawal compromIse
settlement or other dIsposal of such actIOn provIded however that the Trustee shall not unless there no
longer contmues an Event of Default dlscontmue withdraw compromIse or settle or otherwIse dIspose
of any htlgatlon pendmg at law or m eqUIty If at the lime there has been filed WIth It a wntten request
sIgned by the Owners of a maJonty m aggregate pnnclpal amount of the Outstandmg Bonds opposmg
such dlscontmuance Withdrawal compromIse settlement or other disposal of such hl1gatlOn Any SUIt
aCl10n or proceedmg whIch any Owner of Bonds shall have the nght to brmg to enforce any nght or
remedy may be brought by the Trustee for the equal benefit and protecl1on of all Owners of Bonds
smulariy sItuated and the Trustee IS appomted under the Indenture (and the successive Owners of the
Bonds by takmg and holdmg the same shall be conclUSIvely deemed so to have appomted It) the true and
lawful attorney m fact of the Owners of the Bonds for the purpose of bnngmg any such SUIt actIOn or
proceedmg and to do and perform any and all acts and thmgs for and on behalf of the Owners of the
Bonds as a class or classes as may be necessary or adVIsable m the opmlOn of the Trustee as such
attorney m fact
Appomtment of Receivers
Upon the occurrence of an Event of Default under the Indenture and upon the fihng of a SUIt or other
commencement of JudiCial proceechngs to enforce the nghts of the Trustee and of the Bond Owners under
the Indenture the Trustee shall be enl1tled as a matter of nght to the appoml1nent of a receiver or
receivers of the Revenues and other amounts pledged pendIng such proceedmgs WIth such powers as the
court makmg such appoml1nent shall confer
Rights and Remedies of Bond Owners
No Owner of any Bond shall have the nght to mstltute any SUIt actIOn or proceedmg at law or m eqUIty
for any remedy under or upon the Indenture unless (a) such Owner shall have preVIOusly gIVen to the
Trustee wntten nOl1ce of the occurrence of an Event of Default (b) the Owners of a maJonty m aggregate
pnnclpal amount of all Bonds then Outstandmg shall have made wntten request upon the Trustee to
exercise the powers granted or to mSl1tute such actIOn SUIt or proceedmg m ItS own name (c) saId
Owners shall have tendered to the Trustee mdemmty reasonably acceptable to the Trustee agamst the
costs expenses and hablhl1es to be mcurred m comphance WIth such request (d) the Trustee shall have
refused or omitted to comply With such request for a penod of sIxty (60) days after such wntten request
shall have been receIved by and sald tender of mdemmty shall have been made to the Trustee and (e) no
dlfectlon mconslstent WIth such wntten request has been gIven to the Trustee dunng such SIXty (60) day
penod by the Owners of maJonty m aggregate pnnclpal amount of the Bonds then Outstandmg
Such nOl1fical1on request tender of mdenmlty and refusal or onusslon are hereby declared m every case
to be conditIOns precedent to the exercIse by any Owner of Bonds of any remedy It bemg understood and
mtended that no one or more Owners of Bonds shall have any nght m any marmer whatever by hiS or
thelf actIOn to enforce any nght under the Indenture except m the marmer therem provIded and that all
proceedmgs at law or m eqUIty to enforce any proVIsIon of the Indenture shall be mstltuted had and
mamtamed m the marmer proVIded m the Indenture and for the equal benefit of all Owners of the
Outstandmg Bonds
The nght of any Owner of any Bond to receIve payment of the pnnclpal of and mterest and prenuum (If
any) on such Bond or to mSl1tute SUlt for the enforcement of any such payment shall not be Impaired or
A 18
Agenda Item No 2
Page 283 of 316
affected without the wnrten consent of such Owner notwithstanding the foregoing prOVISIOns of the
Indenture
Discharge of Indenture
If the Authonty shall pay and discharge any or all of the Outstanding Bonds In anyone or more of the
following ways
(I) by well and truly paYing or causing to be paid the pnnclpal of and the mterest and premIUm (If
any) on such Bonds as and when the same become due and payable
(2) by lITevocably deposltmg With the Trustee m trust at or before matunty money whICh
altogether With the available amounts then on depOSit In the funds and accounts establIshed with the
Trustee pursuant to the Indenture IS fully suffiCient to pay such Bonds mcludmg all pnnclpal
Interest and premIUms (If any) or
(3) by lITevocably depOSiting with the Trustee or any other fiduciary m trust Defeasance
Secunlies m 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 the indenture be fully suffiCient to pay and discharge the
Indebtedness on such Bonds (mcludlng all pnnclpal Interest and redemptIOn prermums) at or
before their matunty dates
and If such Bonds are to be redeemed pnor to the matunty thereof notice of such redemptIOn shall have
been mailed or provIsion salisfactory to the Trustee shall have been made for the mailing of such nolice
then at the Wnrten Request of the Authonty and notwlthstandmg that any of such Bonds shall not have
been surrendered for payment the pledge of the Revenues and other funds provided for In the Indenture
With respect to such Bonds pledge of Revenues and all other pecuniary oblIgatIOns of the Authonty under
the Indenture With respect to all such Bonds shall cease and terminate except only the oblIgatIOn of the
Authonty to payor cause to be paid to the Owners of such Bonds not so surrendered and paid all sums
due thereon from amounts set aside for such purpose as aforesaid and all expenses and costs of the
Trustee Any funds held by the Trustee followmg any payments or discharge of the Outstandmg Bonds
pursuant to the Indenture which are not reqUired for Said purposes shall be paid over to the Authonty
A 19
Agenda Item No 2
Page 284 of 316
APPENDIX B
SUMMARY OF THE FISCAL AGENT AGREEMENT
The followmg IS a brief summary of the prOVISIOns of the Fiscal Agent Agreement relating to the D1SfrlCt
Bonds and does not purport to be a complete restatement thereof Such summary IS not Intended to be
defimtlve and reference IS made to the complete Fiscal Agent Agreement for the complete terms thereof
copies of which are avazlable upon request sent to the Authority upon payment of a charge for copYing
handling and mazlmg
DEFINITIONS OF CERTAIN TERMS
In addition to the terms defined m thiS OffiCial Statement or the Indenture the followmg additIonal terms
used m the Fiscal Agent Agreement have the folloWIng meamngs
Act means the Mello Roos Cornmunlty FaclhtIes Act of 1982 as amended beIng SectIon 53311 et seq
of the Cahfomla Government Code
AdmInIstratIve Expenses means any or all of the followmg the fees and expenses of the Fiscal Agent
(mcludmg any fees or expenses of Its counsel) the expenses of the City or the District m carryIng out
their dutIes under the Indenture (Includmg but not hmlted to the levymg and collectIOn of the SpeCial
Taxes complymg With the disclosure proVISIOns of the Act the Contmumg Disclosure Agreement and the
Fiscal Agent Agreement mcludmg those related to pubhc mqumes regardmg the SpeCial Tax and
disclosures to Bond Owners and the Ongmal Purchaser the costs of the City and the District or their
deSignees related to an appeal of the SpeCIal Tax any costs of the City and the District (mcludmg fees and
expenses of counsel) to defend the first hen on and pledge of the SpeCial Taxes to the payment of the
District Bonds or otherwise m respect of htIgatIon relatmg to the District or the District Bonds or with
respect to any other obhgatlOns of the District any amounts reqUired to be rebated to the federal
government m order for the District to comply With the Indenture mcludmg the fees and expenses of ItS
counsel the costs of any dIssemmatlOn agent under the contmumg disclosure agreements entered mto by
the City and the District an allocable share of the salanes of City staff directly related thereto and a
proportIOnate amount of City general achmmstratIve overhead related thereto and all other costs and
expenses of the City the Dlstnct or the Fiscal Agent Incurred m connectIOn With the discharge of their
duties under the Indenture and m the case of the City m any way related to the adImmstratlOn of the
Dlstnct and all actual costs and expenses mcurred m connectIOn With the adImmstratIon of the Bonds and
the Authonty Bonds
Agreement means the Fiscal Agent Agreement as It may be amended or supplemented from tIme to
tune by any Supplemental Agreement adopted pursuant to the proVISIOns hereof
Auditor means the audItor/tax collector of the County of RIverSide
Authonty Bonds means Lake Elsmore Pubhc Fmancmg Authonty Local Agency Revenue Bonds
(Wasson Canyon) 2007 Senes A
Authonty Indenture or Indenture means the Iodenture of Trust dated as of November 1 2007
between the Lake Elsmore Pubhc Fmancmg Authonty and Umon Bank NatIOnal ASSOCiatIon as trustee
relatmg to the Authonty Bonds
AuthorIzed Officer means the City Manager ASSistant City Manager Fmance Director or City Clerk
of the City or any other officer or employee authonzed by the City CouncIl of the City or by an
Authonzed Officer to undertake the actIOn referenced m the Fiscal Agent Agreement as reqUired to be
undertaken by an Authonzed Officer
B 1
Agenda Item No 2
Page 285 of 316
CDIAC" means the Cahforma Debt and Investment AdvIsory CommissIOn of the office of the State
Treasurer of the State of Cahfornla or any successor agency or bureau thereto
Closmg Date means the date upon which there IS a physical dehvery of the District Bonds m exchange
for the pnor Dlstnct Bonds and the amount representmg the purchase pnce of the Dlstnct Bonds by the
Ongmal Purchaser
Code means the Internal Revenue Code of 1986 as m effect on the date of Issuance of the Bonds or
(except as otherwise referenced herem) as It may be amended to apply to obhgatlOns Issued on the date of
Issuance of the Bonds together With proposed temporary and fmal regulatIOns promulgated and official
pubhc guidance pubhshed under the Code
Contmumg Disclosure Agreement shall mean that certam Contmumg Disclosure Agreement by and
between the City and the DlssemmatlOn Agent relatmg to the Authonty Bonds executed on the Closmg
Date as ongmally executed and as It may be amended from time to tlme m accordance With the terms
thereof
Debt SerVice means the scheduled amount of mterest and amortlzatlOn of pnnclpal payable on the
Dlstnct Bonds dunng the penod of computatIOn excludmg amounts scheduled durmg such penod which
relate to pnnClpal which has been retired before the begmmng of such penod
Delmquency Management Fund ReqUirement means as of any calculatlon date an amount equal to
15% of the Maximum Annual Debt ServICe on the Dlstnct Bonds
Defeasance Securltles shall have the meanmg given to such term m the Indenture
DlssemmatlOn Agent means MunlFmanclal or such other DlssemmatlOn Agent as may be appomted
by the City pursuant to the Contmumg Disclosure Agreement
Fair Market Value means the pnce at which a wIlhng buyer would purchase the mvestlnent from a
willmg seller m a bona fide arm s length transactIOn (determmed as of the date the contract to purchase
or sell the mvestment becomes bmdmg) If the mvestlnent IS traded on an estabhshed secuntJes market
(wlthm the meanmg ofSectlon 1273 of the Code) and otherwise the term Fair Market Value means the
acqulSltlOn pnce m a bona fide arm s length transactIOn (as referenced above) If (I) the mvestlnent IS a
certlficate of depOSit that IS acqUired m accordance With reguIatJons under the Code (n) the mvestment IS
an agreement With speCifically negotlated Withdrawal or remvestment proVISions and a speCifically
negotlated mterest rate (for example a guaranteed mvestlnent contract a forward supply contract or other
mvestlnent agreement) that IS acquired m accordance With regulatlons under the Code (111) the
mvestlnent IS a Umted States Treasury Secunty State and Local Govemment Senes that IS acqUired m
accordance With regulatIOns of the Umted States Bureau of Pubhc Debt or (IV) any commmgled
mvestment fund m whICh the City and related parties do not own more than a ten percent (10%) beneficial
mterest therem If the retlrrn paid by the fund IS WithOUt regard to the source of the mvestlnent
Federal SecuritIes means the same as defined m the Authonty Indenture
Fiscal Agent means the Fiscal Agent appomted by the Dlstnct and actmg as an mdependent fiscal
agent With the dutles and powers provided ItS successors and assigns and any other corporatJon or
associatIOn which may at any tlme be substltuted m ItS place as prOVided m the Fiscal Agent Agreement
Interest Payment Date means March I and September 1 of each year commencmg March 1 2008
Investment Earnings means allmterest eamed and any gams and losses on the mvestlnent of moneys
m any fund or account created by the Fiscal Agent Agreement
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Agenda Item No 2
Page 286 of 316
LegIslatIve Body means the City CounCil of the CIty
MaXImum Annual Debt ServIce means the largest Annual Debt ServIce for any Bond Year after the
calculatIOn IS made through the final matunty date of any Outstand1Og Dlstnct Bonds
Officer s CertIficate' means a wntten certIficate of the Dlstnct or the CIty sIgned by an Authonzed
Officer of the City
Ordmance means any ordmance of the CIty levymg the Special Taxes 10 the Dlstnct
Ongmal Purcbaser means the Lake Els100re Pubhc Fmanc10g Authonty
Outstandmg when used as of any partIcular tIme wIth reference to Dlstnct Bonds means all Dlstnct
Bonds except (I) Dlstnct Bonds theretofore canceled by the FIScal Agent or surrendered to the FIscal
Agent for cancellatIOn (11) Dlstnct Bonds paId or deemed to have been paId wlthm the meanmg of the
FIscal Agent Agreement and (m) Dlstnct Bonds 10 heu of or 10 substItutIOn for whIch other Dlstnct
Bonds shall have been authonzed executed Issued and dehvered by the Dlstnct pursuant to the FIscal
Agent Agreement or any Supplemental Agreement
Owners respect to the DIStnCt Bonds means the Authonty
PermItted Investments means the same as defined under the Authonty Indenture
Person means an mdIVldual corporatIOn firm associatIOn partnershIp trust or other legal entIty or
group of entItIes 10cludmg a governmental entIty or any agency or pohtIcal subdIvIsIon thereof
"Dlstnct RedemptIon Fund means the fund by that name estabhshed by the FIscal Agent Agreement
RedemptIon Revenues means (a) prepayments of the SpecIal Taxes (b) any amounts transferred
pursuant to tbe Authonty Indenture for the redemptIOn of Dlstnct Bonds (c) amounts transferred from the
ResIdual Fund for the redemptIOn of DIstrIct Bonds (d) Backup SpecIal Tax transferred from the Backup
Special Tax Fund to be used to redeem DIStriCt Bonds and (e) any amounts deposited for the Special
Mandatory RedemptIOn ofDlstnct Bonds pursuant to the FIscal Agent Agreement)
RegIstratIon Books means the records ma10tamed by the FIscal Agent pursuant to the Fiscal Agent
Agreement for the regIstratIOn and transfer of ownershIp of the Bonds
ResolutIon means ResolutIOn No _ adopted by the LegislatIve Body on October 9 2007 as now
10 effect or as It may hereafter be amended from tIme to tIme
ResolntIon of FormatIon means the ResolutIOn estabhshmg the Dlstncts
"ResolutIon of IntentIon means the ResolutIOn statmg the CIty s mtent to estabhsh the Dlstncts
RMA means the Amended and Restated Rate and Metbod of ApportIOnment of the SpeCial Tax for
each ofImprovement Area Nos 6 and 7 as
Spec181 Tax Revenues means (a) the proceeds of the SpeCIal Taxes receIved by the Dlstnct (b) mcome
and gams WIth respect to the mvestInent of amounts on depOSIt m the funds and accounts establIshed
under the FIscal Agent Agreement for the Dlstnct Bonds except to the extent transferred to or retamed 10
the ReSidual Fund pursuant to the Fiscal Agent Agreement and (c) proceeds of the redemptIOn or sale of
property sold as a result of foreclosure of the hen of the SpeCIal Taxes Notwlthstandmg the foregomg
SpeCial Tax Revenues does not mclude any penaltIes or mterest m excess of the mterest payable on the
DistrICt Bonds collected 10 connectIOn WIth delInquent SpecIal Taxes
B3
Agenda Item No 2
Page 287 of 316
'SpecIal Taxes means the special taxes levIed wlthm the Improvement Area pursuant to the Act the
Ordmance and the FIscal Agent Agreements
Supplemental Agreement means an agreement the executIon of whIch IS authonzed by a resolutIOn
whIch has been duly adopted by the LegIslatIve Body of the Dlstnct under the Act and which agreement
IS amendatory of or supplemental to the FIscal Agent Agreement but only If and to the extent that such
agreement IS specIfically authonzed under the Indenture
Tax and Nonarbltrage CertIficate means WIth respect to the Bonds the Tax and Nonarbltrage
Certificate dated the date of Issuance of the Bonds as ongmally executed and as It may from tIme to tIme
be amended or supplemented pursuant to Its terms
Treasurer means the person who IS actmg m the capaCIty as treasurer or finance dIrector to the CIty
SPECIAL TAX FUND
Estabhshment of SpeCIal Tax Fund
The FIscal Agent Agreement establIshes as a separate fund to be held by the Fiscal Agent the SpeCIal
Tax Fund to the credIt of which the Dlstnct or the City on behalf of the Dlstnct shall depOSIt
rrnmedlately upon receIpt all SpeCIal Tax Revenues received by the DIStriCt or the City on behalf of the
Dlstnct The City shall establIsh a fund known as the SpeCial Taxes ReceIpt Fund (m whIch there shall
be establIshed and created an account for each dlstnct wlthm the CIty) The City shall depOSit SpeCIal
Taxes when received m the account establIshed for each of the Dlstncts and ImmedIately thereafter
transfer such amounts to the FIscal Agent for depOSit m the SpeCIal Tax Fund Moneys m the SpeCIal Tax
Fund shall be held m trust by the FIscal Agent for the benefit of each Dlstnct and the Owners of the
Dlstnct Bonds shall be disbursed as proVIded below and pendmg any disbursement shall be subject to a
lIen m favor of the Owners of the Dlstnct Bonds
Dlshursements
After deposltmg an amount of SpeCIal Tax Revenues budgeted for AdImmstratIve Expenses to the
Admmlstratlve Expense Fund pursuant to a wntten dIrection of the Dlstnct no later than ten (10)
BUSIness Days pnor to each Interest Payment Date as determmed by the Dlstnct the FIscal Agent shall
WIthdraw from the SpeCIal Tax Fund and transfer to the Dlstnct Bond Fund as follows
(I) To the Interest Account of the Dlstnct Bond Fund an amount such that the balance m the
Interest Account shall be equal to the Installment of mterest due on the Dlstnct Bonds on said
Interest Payment Date and any Installment of mterest due on a prevIOUS Interest Payment Date
whIch remaInS unpaId
NotwIthstandIng the foregomg amounts shall be transferred to the Pnnclpal Account or the Interest
Account from the SpeCIal Tax Fund and ImmedIately be paId to the Owners of the Dlstnct Bonds m
respect of past due payments on the Dlstnct Bonds
(2) To the Pnnclpal Account of the Dlstnct Bond Fund an amount such that the balance In the
Pnnclpal Account shall at least equal the pnnclpal payment (Includmg mandatory slnlang
payments) due on the DIStriCt Bonds on saId Interest Payment Date and any mstallment ofpnnclpal
due on a prevIous Interest Payment Date whICh remams unpaId
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Agenda Item No 2
Page 288 of 316
Investment
Moneys In the Special Tax Fund shall be Invested and depOSIted In accordance WIth the FIscal Agent
Agreement Interest earnings and profits resulting from such Investment and depOSIt shall be retained In
the SpeCIal Tax Fund to be used for the purposes thereof
DIspOSItIon of Surplus
On September 2 of each year commencing September 2 2008 the FIscal Agent shall transfer any
amounts remaining In the SpeCial Tax Fund follOWing payment of each dIsbursement reqUIred pursuant to
the FIscal Agent Agreement to the Dlstnct ReSidual Fund
ADMINISTRATIVE EXPENSE FUND
Estabhshment of AdmIDlstrahve Expense Fund
The Fiscal Agent Agreement estabhshes as a separate fund to be held by the Fiscal Agent the
Admlnlstrahve Expense Fund to the credit of whICh the amount budgeted and leVIed for Adrmmstrahve
Expenses shall be made Moneys In the Admlnlstrahve Expense Fund shall be held In trust by the FIscal
Agent for the benefit of the DIstrict and shall be disbursed as prOVIded below
DIsbursement
Amounts In the Admlnlstrahve Expense Fund shall be wIthdrawn by the FIscal Agent and paid to the
D1StnCt or the CIty or ItS order upon receIpt by the FIscal Agent of an Officer s Certificate stating the
amount to be Withdrawn that such amount IS to be used to pay an Adrmmstrahve Expense and the nature
of such Adrmmstrahve Expense
Annually at least five (5) days prior to the last day of each Bond Year the FIscal Agent shall withdraw
any amounts then remaining In the Admlmstrahve Expense Fund that have not been allocated to pay
Adrmmstrahve Expenses Incurred but not yet paid and whICh are not otherwIse encumbered or expected
to be needed for the purposes of such fund and transfer such amounts to the SpeCial Tax Fund
Investment
Moneys In the Admlnlstrahve Expense Fund shall be Invested and deposIted In accordance WIth the Fiscal
Agent Agreement Interest earnings and profits resulting from saId Investment shall be retained In the
Admlnlstrahve Expense Fund to be used for the purposes of such fund
COSTS OF ISSUANCE FUND
The FIscal Agent shall estabhsh and maintain a separate fund to be held by the FIscal Agent known as the
Costs of Issuance Fund Into whIch shall be deposIted the amounts set forth UI the Indenture The
moneys In the Costs of Issuance Fund shall be used to pay Costs of Issuance from time to tune upon
receIpt of a ReqUISitIOn of the District On the date which IS one hundred eIghty (180) days follOWing the
ClOSing Date or upon the earher receIpt by the FIscal Agent of a wntten request of the Dlstnct stating that
all Costs of Issuance have been paid the FIscal Agent shall transfer all remaining amounts In the Costs of
Issuance Fund to be deposIted In the ReSIdual Fund
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Agenda Item No 2
Page 289 of 316
IMPROVEMENT FUND
EstablIshment of Improvement Fnnd
The FIscal Agent Agreement establIshes as a separate fund to be held by the FIscal Agent the
Improvement Fund to the credtt of whIch a deposIt shall be made as reqUIred by the Indenture Moneys
m the Improvement Fund shall be held In trust by the FIscal Agent for the benefit of the CIty and the
Dlstnct and shall be dIsbursed except as otherwIse provided In the FIscal Agent Agreement for the
payment or reImbursement of costs of FacIlItIes
DELINQUENCY MANAGEMENT FUND
EstablIshment of DelInquency Management Fund
The FIscal Agent Agreement establIshes as a separate fund to be held by the FIscal Agent the
DelInquency Management Fund to the credit of which a deposIt shall be made as requIred by the FIscal
Agent Agreement Moneys In the DelInquency Management Fund shall be held m trust by the FIscal
Agent for the benefit of the Owners of the Dlstnct Bonds and shall be disbursed as provIded below
DIsbursement
Moneys In the DelInquency Management Fund shall be used solely for the purpose of paYIng the
pnnclpal of IncludIng mandatory smkIng payments and Interest on any Dlstnct Bonds when due m the
event that the moneys In the Dlstnct Bond Fund are InsuffiCIent therefor If the amounts In the Dlstnct
Bond Fund are msufficlent to pay the pnnclpal of IncludIng mandatory SInkIng payments or Interest on
any Dlstnct Bonds when due the FIscal Agent shall WIthdraw from the DelInquency Management Fund
for depOSIt In the DIStriCt Bond Fund moneys necessary for such purposes
In connectIOn WIth any redemptIOn of the Dlstnct Bonds or a partial defeasance of the Dlstnct Bonds In
accordance With the Fiscal Agent Agreement amounts In the DelInquency Management Fund may be
applIed to such redemptIOn or partial defeasance so long as the amount on depOSIt In the DelInquency
Management Fund follOWIng such redemptIOn or partial defeasance equals the DelInquency Management
Fund ReqUIrement To the extent that the DelInquency Management Fund IS at the DelInquency
Management Fund ReqUIrement as of the first day of the final Bond Year for the Dlstnct Bonds amounts
In the DelInquency Management Fund may be applIed to pay the pnnClpal of and Interest due on the
Dlstnct Bonds In the final Bond Year for such Issue Moneys In the Delmquency Management Fund In
excess of the Delmquency Management Fund ReqUIrement not transferred m accordance WIth the
precedIng provIsIOns of thIS paragraph shall be WIthdrawn from the DelInquency Management Fund on
September 2 of each year and transferred to the DIStriCt ResIdual Fund
Investment
Moneys m the Delmquency Management Fund shall be mvested and deposited m accordance WIth the
Fiscal Agent Agreement Interest earnmgs and profits resultIng from saId mvestment shall be retaIned In
the Delmquency Management Fund to be used for the purposes of such fund
B6
Agenda Item No 2
Page 290 of 316
District Residual Fund
Estabbshment of DIstrIct ResIdual Fund
The Fiscal Agent Agreement establishes as a separate fund to be held by the Fiscal Agent the Dlstnct
ReSidual Fund to the credit of which a deposit shall be made as reqUIred by the Fiscal Agent Agreement
Moneys 10 the Dlslnct ReSidual Fund shall be held 10 trust by the Fiscal Agent for the benefit of the
Dlslnct and shall be disbursed as proVided below The amounts 10 the Dlslnct ReSidual Fund are not
pledged to the repayment of the Dlslnct Bonds
DIsbursement
On September 2 of each year commencmg September 2 2008 the Fiscal Agent shall transfer any
amounts 10 the District ReSidual Fund for the followmg purposes 10 the followmg order of pnonty
(1) to the Delmquency Management Fund an amount If any reqUIred to restore the amount on
deposit 10 the Delinquency Management Fund to the Delmquency Management Fund Requrrement
(2) to the Admlmstral1ve Expense Fund an amount determmed by the DiStrict to pay
AdImmstratlve Expenses to the extent that the amounts on deposit 10 the AdImmstral1ve Expense
Fund are msuffiClent to pay AdImmstral1ve Expenses or
(3) to the Special Mandatory Redemption Account for redempl10n of the Dlstnct Bonds unless the
Fiscal Agent has received wntten drrectlOn from the DiStriCt to expend such remammg funds held 10
the Dlslnct ReSidual Fund for any lawful purposes of the Dlslnct mcludmg but not Irrmted to
paymg costs of public capital Improvements or reducmg the SpeCial Taxes which are to be leVied 10
the current or the succeedmg Fiscal Year upon the properties WhICh are subject to the SpeCial Tax
Investment
Moneys m the DiStriCt ReSidual Fund shall be mvested and deposited 10 accordance With the Fiscal Agent
Agreement Interest earmngs and profits resultmg from said mvestment shall be retamed 10 the DiStriCt
ReSidual Fund to be used for the purposes of such fund
District RedemptIOn Fund
Redemptton under the FIscal Agent Agreements
OptIonal RedemptIon The Dlstnct Bonds are subject to redemption pnor to matunty at the optIOn of
the Dlstnct from any source of funds as a whole or 10 part on any date on or after September I 2008 on
a pro rata baSIS at the redemptIOn pnces and schedules to the Authonty Bonds Notwlthstandmg
anythmg m the FIscal Agent Agreement to the to the contrary WIth respect to optional redemptIons related
to the Authonty Bonds the Dlslnct shall abide by the pnonty of redemptIOn relatmg to the Authonty
Bonds perrmtted by the Authonty Indenture
SpeCial Mandatory RedemptIon from Prepayment of SpeCial Taxes and from ReSidual Funds The
Dlstnct Bonds are subject to redempl10n pnor to matunty on any date on or after September 1 2007 10
whole or 10 part on a pro rata baSIS from prepayments of SpeCial Taxes from amounts transferred from
the DiStrICt ReSidual Fund and from amounts transferred by the Authonty to the Dlslnct from the
ReSidual Fund under the Indenture at the followmg redemptIOn pnces (expressed as a percentage of the
B7
Agenda Item No 2
Page 291 of 316
pnnclpal amount of the Dlstnct Bonds or portIOns thereof to be redeemed) together With accrued mterest
thereon to the date fixed for redemptIOn as follows
Redempllon Dates
RedemptIOn Pnces
September I 2007 through August 31 2009 103 0%
September 1 2009 through August 31 2010 102 5%
September 1 20 I 0 through August 31 2011 102 0%
September I 2011 through August 31 2012 1015%
September 1 2012 through August 31 2013 1010%
September 1 2013 through August 31 2014 100 5%
September 1 2014 and thereafter 100 0%
Mandatory Redempbon The Dlstnct Bonds are subject to special mandatory redempllon on any date to
which timely notice of redemptIOn may be given m mtegral mulllples of $5 000 from msurance or
condemnallon proceeds without premIUm plus accrued mterest to the redempllon date on a pro rata
baSIS
Nollce to Fiscal Agent The Dlstnct shall give the Fiscal Agent wntten nollce of ItS mtentlOn to
optIOnally redeem Dlstnct Bonds not less than SIXty (60) days pnor to the redemptIOn date unless such
nollce shall be waived by the Fiscal Agent NotWlthstandmg any prOVISIOns m the Fiscal Agent
Agreement to the contrary upon any Opllonal Redempllon or SpeCial Mandatory Redempllon from
SpeCial Taxes m part the Dlstnct shall dehver an Officer s Certificate to the Fiscal Agent at least SIXty
(60) days pnor to the proposed redemptIOn date or such later date as shall be acceptable to the FlscaJ
Agent so statmg that the remammg payments of pnnClpal and mterest on the Dlstnct Bonds together With
SpeCial Taxes to be available will be suffiCient on a llmely baSIS to pay debt servICe on the Dlstnct
Bonds as demonstrated m a cash flow certificate dehvered to the Fiscal Agent With such Officer s
Certificate
The DiStriCt shall m such Officer s Certificate certify to the Fiscal Agent that suffiCient moneys for
purposes of such redemptIOn are or will be on depOSit m the Redempllon Fund and IS reqUired to dehver
such moneys to the Fiscal Agent together With other SpeCial Tax Revenues If any then to be dehvered to
the Fiscal Agent pursuant to the Fiscal Agent Agreement whICh moneys are reqUired to be Identified to
the Fiscal Agent m the Officer s Certificate delivered WIth the SpeCial Tax Revenues
Redempbon Procedure by FIscal Agent The Fiscal Agent shall cause notICe of any redemptIOn to be
mailed by first class mail postage prepaid at least thirty (30) days but not more than SiXty (60) days pnor
to the date fixed for redemptIOn to the registered Owners of any Dlstnct Bonds deSignated for
redempllon at the" addresses appeanng on the DiStriCt Bond reglstrallon books m the Corporate Trust
Office of the Fiscal Agent but such mmhng shall not be a condlllon precedent to such redempllon and
failure to mail or to receive any such nollce or any defect therem shall not affect the vahdlty of the
proceedmgs for the redemptIOn of such Dlstnct Bonds
B8
Agenda Item No 2
Page 292 of 316
Effect of Redemption From and after the date fixed for redemptIon If funds avaIlable for the payment
of the pnnclpal of and mterest and any premIUm on the D1StnCt Bonds so called for redemptIon shall
have been deposIted m the Dlstnct Bond Fund such Dlstnct Bonds so called shall cease to be entItled to
any benefit under the FIscal Agent Agreement other than the nght to receive payment of the redemptIon
pnce and no mterest shall accrue thereon on or after the redemptIOn date specIfied m such notIce
EstablIshment of the Dlstnct RedemptIon Fund
The Fiscal Agent Agreement estabhshes as a separate fund to be held by the FIscal Agent the Dlstnct
RedemptIOn Fund (m whIch there shall be estabhshed and created a Prepayment Account an OptIOnal
RedemptIOn Account and a SpeCial Mandatory RedemptIOn Account) to the credtt of whIch the Dlstnct
or the CIty on behalf of the DIstrIct shall deposIt Immedtately upon receIpt all Dlstnct RedemptIOn
Revenues receIved by the Dlstnct or the CIty on behalf of the D1StnCt Moneys m the Dlstnct
RedemptIOn Fund shall be held m trust by the F,scal Agent for the benefit of the Dlstnct and the Owners
of the Dlstnct Bonds shall be dIsbursed as prOVided below and pendmg any dIsbursement shall be
subject to a hen m favor of the Owners of the Dlstnct Bonds
Disbursement
(I) All prepayments of SpeCIal Taxes and amounts transferred from the Authonty Indenture and the
ReSIdual Fund shall be deposIted m the SpeCial Mandatory RedemptIOn Aecount to be used to redeem
Dlstnct Bonds on the next date for whIch notIce of redemptIOn can tImely be given
(2) Any amounts transferred mto the OptIOnal RedemptIon Account to be used to redeem D1StnCt Bonds
on the next date for whIch notIce of redemptIon can tImely be given
(3) All proceeds from msurance or condemnatIOn proceeds shall be depOSIted mto the Mandatory
RedemptIOn Account to be used to redeem Dlstnct Bonds on the next date for whIch notIce of redemptIOn
can tImely be gIven
Investment
Moneys m the Dlstnct RedemptIon Fund shall be mvested and deposited m accordance WIth the FIscal
Agent Agreement Interest earnmgs and profits resuitmg from said mvestrnent shall be retamed m the
Dlstnct RedemptIOn Fund to be used for the purposes of such fund
SPECIAL TAX REVENUES, DISTRICT BOND FUND
Pledge of SpeCial Tax Revenues
The Dlstnct Bonds shall be secured by a first pledge (which pledge shall be effected m the manner and to
the extent proVIded m the Fiscal Agent Agreement) of all of the SpeCIal Tax Revenues and DIstrICt
RedemptIon Revenues and all moneys depoSlted m the Dlstnct Bond Fund and untIl dIsbursed m the
SpeCIal Tax Fund the DiStrICt RedemptIOn Fund and the Delmquency Management Fund The SpeCial
Tax Revenues and all moneys deposIted mto said funds (except as otherwIse proVIded m the FIscal Agent
Agreement) are dedIcated to the payment of the prmclpal of and mterest and any premIUm on the Dlstnct
Bonds m the Act untIl all of the D.stnct Bonds have been paId and retIred or untIl moneys or Federal
SecuntIes have been set aSIde Irrevocably for that purpose m accordance WIth the FIscal Agent
Agreement
Amounts m the Adtmmstratlve Expense Fund the Improvement Fund and the Dlstnct ReSIdual Fund are
not pledged to the repayment of the DIstrIct Bonds
B9
Agenda Item No 2
Page 293 of 316
DISTRICT BOND FUND
EstablIshment of Dlstnct Bond Fund
The Fiscal Agent Agreement establishes as a separate fund to be held by the Fiscal Agent known as the
Bond Fund (m whICh there shall be established and created an Interest Account and a PnnClpal
Account) to the credit of whICh depOSits shall be made as reqUired by the Fiscal Agent Agreement and
any other amounts reqUIred to be depOSited therem by the Fiscal Agent Agreement or the Act Moneys m
the Dlstnct Bond Fund shall be held m trust by the Fiscal Agent for the benefit of the Owners of the
Dlstnct Bonds shall be disbursed for the payment of the pnnclpal of (mcludmg mandatory smkmg
payments) and mterest on the Dlstnct Bonds as provided below and pendmg such disbursement shall be
subject to a lien m favor ofthe Owners of the Dlstnct Bonds
Disbursements
On each Interest Payment Date the Fiscal Agent shall wtthdraw from the Pnnclpal Account and the
Interest Account and pay to the Owners of the Dlstnct Bonds the pnnclpal of (mcludmg mandatory
smkmg payments) and mterest on the Dlstnct Bonds Iy proVided that avallable amounts m the Pnnclpal
Account and the Interest Account shall first be used to pay any past due mstallments of pnnClpal of
(mc1udmg mandatory smkmg payments) and mterest on the District Bonds Iy Notwtthstandmg the
foregomg amounts transferred to the Pnnclpal Account or the Interest Account from the SpeCial Tax
Fund shall Immediately be paid to the Owners of the Dlstnct Bonds m respect of past due payments on
the Dlstnct Bonds
Any mstallment of pnnclpal (mc1udmg mandatory smkmg payments) or mterest on the Dlstnct Bonds
which IS not paid when due shall accrue mterest at the rate of mterest on the District Bonds untll paid and
shall be paid whenever funds m the Dlstnct Bond Fund are suffiCient therefor
If at any time the Fiscal Agent falls to pay pnnclpal and mterest due on any scheduled payment date for
the DistrICt Bonds the Fiscal Agent shall nol1fy the Dlstnct and the Treasurer m wntmg of such fallure
and the Treasurer shall notify the CDIAC of such failure wlthm 10 days of the fallure to make such
payment as reqUIred by SectIOn 53359(c)(I) of the Act
CapitalIzed Interest Account
There IS established a separate account wlthm the Bond Fund deSignated as the Capitalized Interest
Account to the credit of whICh a depOSit shall be made as reqUired by the Fiscal Agent Agreement
Moneys m the Capitalized Interest Account shall be held by the Fiscal Agent and used and withdrawn
solely for the purpose of paymg the mterest on the Dlstnct Bonds as It shall become due and payable
Investment
Moneys m the Dlstnct Bond Fund shall be mvested and deposited m accordance With the Fiscal Agent
Agreement Interest eammgs and profits resultmg from the mvestrnent and depOSit of amounts m the
Dlstnct Bond Fund shall be retamed m the Bond Fund
OTHER COVENANTS OF THE DISTRICT
Punctual Payment The Dlstnct shall punctually payor cause to be paid the pnnClpal of and mterest
and any premIUm on the DiStrict Bonds when and as due 10 stnct conforrruty With the terms of the Fiscal
Agent Agreement and any Supplemental Agreement and It wlll faithfully observe and perform all of the
BIO
Agenda Item No 2
Page 294 of 316
condltlOns covenants and reqUIrements of the FIscal Agent Agreement and all Supplemental Agreements
and of the Dlstnct Bonds
LImIted OblIganon The DIstrict Bonds are Imuted obhgatlOns of the Dlstnct and are payable solely
from and secured solely by the Special Tax Revenues and the amounts m the DIstrict Bond Fund and the
SpeCIal Tax Fund created under the FIscal Agent Agreement
ExtenSIOn of TIme for Payment In order to prevent any accumulatlOn of claims for mterest after
matunty the District shall not dIrectly or mdIrectly extend or consent to the extenslOn of the llme for the
payment of any clann for mterest on any of the District Bonds and shall not dIrectly or mdIrectly be a
party to the approval of any such arrangement by purchasmg or fundmg said claIms for mterest or m any
other manner In case any such c1ann for mterest shall be extended or funded whether or not WIth the
consent of the DIstrict such claIm for mterest so extended or funded shall not be enlltled m case of
default under the Fiscal Agent Agreement to the benefits of the FIscal Agent Agreement except subject to
the pnor payment m full of the pnnclpal of all of the DIstrict Bonds then Outstlmdmg and of all claIms for
mterest whIch shall not have so extended or funded Nothmg m the FIscal Agent Agreement shall be
deemed to lImIt the nght of the DIstrict to Issue DIstrIct Bonds for the purpose of refundmg any
outstandmg Dlstnct Bonds and such Issuance shall not be deemed to conslltute an extenslOn of maturIty
of the Dlstnct Bonds
Agamst Encumbrances The DIstrict wIll not encumber pledge or place any charge or lIen upon any of
the SpecIal Tax Revenues or other amounts pledged to the DIStrIct Bonds supenor to or on a panty wlth
the pledge and hen created for the benefit of the Dlstnct Bonds except as permItted by the FIscal Agent
Agreement
Books and Records The Dlstnct wIll keep or cause to be kept proper books of record and accounts
separate from all other records and accounts of the DIstrIct m whJCh complete and correct entnes shall be
made of all transactlOns relatmg to the expendIture of amounts dIsbursed from the AdImmstrallve
Expense Fund and the SpecIal Tax Fund and relatmg to the SpecIal Tax Revenues Such books of record
and accounts shall at all tImes durmg busmess hours and upon reasonable pnor nollce be subject to the
mspectlOn of the FIscal Agent and the Owners of not less than ten percent (10%) of the pnnclpal amount
of the DIStrICt Bonds then Outstandmg or theIr representallves duly authonzed m Wrltmg
The FIscal Agent WIll keep or cause to be kept proper books of record and accounts separate from all
other records and accounts of the FIscal Agent m whIch complete and correct entries shall be made of all
transactlOns relatmg to the expendIture of amounts dIsbursed from the Dlstnct Bond Fund and the Costs
of Issuance Fund Such books of record and accounts shall at all llmes durmg busmess hours and upon
reasonable pnor nollce be subject to the mspectlOn of the CIty the DistrIct and the Owners of not less
than ten percent (10%) of the pnnclpal amount of the DIstrict Bonds then Outstlmdmg or theIr
representatIves duly authonzed m Wrltmg
Protecnon of SecurIty and RIghts of Owners The DIStnct WIll preserve and protect the secunty of the
DIstrIct Bonds and the nghts of the Owners and wIll warrant and defend theIr nghts agamst all claIms
and demands of all persons From and after the delIvery of any of the DIstriCt Bonds by the DIstrict the
DIstrict Bonds shall be mcontestable by the Dlstnct
CoUecl1on of SpecIal Tax Revenues The DIstrict shall comply With all reqUIrements of the Act so as to
assure the llmely collectlOn of SpeCIal Tax Revenues mcludmg WIthout hmltallon the enforcement of
delInquent Special Taxes
The Treasurer shall effect the levy of the SpecIal Taxes each FIscal Year on the parcels wlthm the District
m accordance With the Ordmance such that the computatlOn of the levy IS complete before the final date
on whJCh the Auditor wIll accept the transmlSSlOn of the SpecIal Tax amounts for the parcels wIthm the
DIstrIct for mclUSlOn on the next secured tax roll Upon the completlOn of the computallon of the
Bll
Agenda Item No 2
Page 295 of 316
amounts of the levy the Treasurer shall prepare or cause to be prepared and shall transrrut to the AudItor
such data as the AudItor reqUIres to mclude the levy of the SpecIal Taxes on the next secured tax roll The
SpecIal Taxes so leVIed shall be payable and be collected 10 the same marmer and at the same time and 10
the same mstallments as the general taxes on real property are payable and have the same pnonty
become delmquent at the same tIme and 10 the same proportIonate amounts and bear the same
proportIOnate penaltIes and mterest after delmquency as do the general taxes on real property unless
otherwIse prOVided by the Dlstnct
In the event that the Treasurer detenmnes to levy all or a portIOn of the SpecIal Taxes by means of direct
b[llIng of the property owners of the parcels wlthm the DIstrIct the Treasurer shall not less than forty
five (45) days pnor to each Interest Payment Date send bIlls to the owners of such real property located
wlthm the Dlstnct subject to the levy of the SpecIal Taxes for SpecIal Taxes m an aggregate amount
necessary to meet the finanCIal oblIgatIOns of the DIstrIct due on the next Interest Payment Date slUd bIlls
to specify that the amounts so leVIed shall be due and payable not less than thIrty (30) days pnor to such
Interest Payment Date and shall be delInquent If not paId when due
In any event the Treasurer shall fix and levy the amount of SpeCIal Taxes wlthm the DIstrIct reqUIred (I)
for the payment of pnnc[pal of and mterest on any outstandmg DIstrIct Bonds of the DistrIct becommg
due and payable dunng the ensumg year (takmg mto consIderatIOn antICipated delInquenCIes) and (11) to
pay the AdrrumstratIve Expenses dunng sl1ch year all m accordance WIth the RMA and the Ordmance
The SpeCial Taxes so leVied shall not exceed the authonzed amounts as prOVIded 10 the proceedmgs
pursuant to the ResolutIOn of FormatIon
The Treasurer IS authonzed to employ consultants to assist 10 computIng the levy of the Spec[al Taxes
under the Indenture and any reconCIlIatIOn of amounts leVIed to amounts receIved The fees and expenses
of such consultants and the costs and expenses of the Treasurer (IncludIng a charge for CIty or DIstrIct
staff tIme) 10 conductmg ItS dutIes under the Indenture shall be an AdmmlstratI ve Expense under the
FIscal Agent Agreement
Further Assurances The DistrIct shall adopt make execute and delIver any and all such further
resolutIOns mstruments and assurances as may be reasonably necessary or proper to carry out the
mtentlOn or to facilitate the performance of the FIscal Agent Agreement and for the better assurmg and
confirmmg unto the Owners of the DIstrIct Bonds of the nghts and benefits provided 10 the FIscal Agent
Agreement
Tax Covenants
SpeCIal Defimtlons When used 10 the FIscal Agent Agreement the followmg terms have the followmg
meanmgs
Code means the Internal Revenue Code of 1986 as amended
ComputatIOn Date has the meanmg set forth 10 sectIon I 148 1 (b) of the Tax RegulatIons
Gross Proceeds means any proceeds as defined m sectIon 1 148 1 (b) of the Tax Regulations (refemng
to sales mvestInent and transferred proceeds) and any replacement proceeds as defined 10 sectIOn I 148
I (c) of the Tax RegulatIOns of the DIstrIct Bonds
Investment has the meanmg set forth 10 sectIOn I 148 1 (b) of the Tax RegulatIOns
Nonpurpose Investment means any mvestInent property as defined 10 sectIOn 148(b) of the Code 10
whIch Gross Proceeds of the D[str[ct Bonds are mvested and that [S not acqurred to carry out the
governmental purposes of that senes of DIstrIct Bonds
B 12
Agenda Item No 2
Page 296 of 316
Rebate Amount has the meamng set forth m sectIOn I 148 I (h) of the Tax RegulatIOns
Tax RegulatIOns means the Umted States Treasury RegulatIOns promulgated pursuant to secllons 103
and 141 through 150 of the Code or secllon 103 of the 1954 Code as
Yield' of any Investment has the meanmg set forth m sectIOn I 148 5 of the Tax Regulations and of any
Issue of governmental obligatIOns has the meanmg set forth m sectIOn I 148 4 of the Tax Regulallons
Not to Cause Interest to Become Taxable The Dlstnct covenants that It shall not use and shall not
permit the use of and shall not ormt to use Gross Proceeds or any other amounts (or any property the
acqUlslllon constructIOn or Improvement of which IS to be financed drrectly or mdrrectly With Gross
Proceeds) m a manner that If made or omitted ly could cause the mterest on any Bond to fall to be
excluded pursuant to sectIOn 103(a) of the Code from the gross mcome of the owner thereof for federal
mcome tax purposes Without lirmtmg the generality of the foregomg unless and unlll the Fiscal Agent
receives a wntten opmlOn of Bond Counsel to the effect that faIlure to comply WIth such covenant Will
not adversely affect such exclUSIOn of the mterest on any Bond from the gross mcome of the owner
thereof for federal mcome tax purposes the City shall comply With each of the specific covenants m the
Fiscal Agent Agreement
Pnvate Use and Pnvate Payments Except as would not cause any Bond to become a pnvate actiVity
bond wlthm the meamng of sectIOn 141 of the Code and the Tax Regulallons the Dlstnct shall take all
actIOns necessary to assure that the Dlstnct or a public agency at all llmes pnor to the final cancellallon of
the last of the Dlstnct Bonds to be rellred
(I) exclUSIvely owns operates and possesses all property the acqUIsItIOn construction or
Improvement of whIch IS to be fmanced or refinanced dIrectly or mdtrectly With Gross Proceeds of
the Dlstnct Bonds and not use or permIt the use of such Gross Proceeds (mcludtng through any
contractual arrangement With terms different than those to the general public) or any property
acqUIred constructed or Improved WIth such Gross Proceeds m any activity carned on by any
person or entity (mcludmg the Umted States or any agency department and mstrumentality
thereof) other than a state or local government unless such use IS solely as a member of the
general public and
(n) does not directly or mdlrectly Impose or accept any charge or other payment by any person or
entity (other than a state or local government) who IS treated as usmg any Gross Proceeds of the
District Bonds or any property the acqUlslllon construcllon or Improvement of which IS to be
fmanced or refmanced directly or mdlrectly WIth such Gross Proceeds
No Pnvate Loan Except as would not cause any Bond to become a pnvate acllvlty bond wltInn the
meamng of secllon 141 of the Code and the Tax Regulallons and rulmgs under the Indenture the D1StnCt
shall not use or permit the use of Gross Proceeds of the Dlstnct Bonds to make or finance loans to any
person or enllty other than a state or local government For purposes of the foregomg covenant such
Gross Proceeds are conSidered to be loaned to a person or enllty If (I) property acqUIred constructed or
Improved With such Gross Proceeds IS sold or leased to such person or enllty m a transactIOn that creates a
debt for federal mcome tax purposes (11) capacity m or servICe from such property IS committed to such
person or enllty under a take or pay output or Similar contract or arrangement or (lll) mdlrect benefits of
such Gross Proceeds or burdens and benefits of ownership of any property acqUIred constructed or
Improved With such Gross Proceeds are otherwise transferred m a transactIOn that IS the econormc
eqUIvalent of a loan
Not to Invest at HIgher YIeld Except as would not cause the Dlstnct Bonds to become arbitrage
Bonds wlthm the meamng of section 148 of the Code and the Tax RegulatIOns and rulings thereunder
the Dlstnct shall not (and shall not permit any person to) at any llme pnor to the final cancellatIOn of the
last Bond to be rellred directly or mdlrectly mvest Gross Proceeds m any Investment If as a result of
B13
Agenda Item No 2
Page 297 of 316
such mvestment the YIeld of any Investment acqUired wIth Gross Proceeds whether then held or
prevIously dIsposed of would matenally exceed the YIeld of the Dlstnct Bonds wlthm the meamng of
saId sectIOn 148
Not Federally Guaranteed Except to the extent penmtted by sectIOn 149(b) of the Code and the Tax
RegulatIons and ruhngs under the Indenture the Dlstnct shall not take or omit to take (and shall not
permIt any person to take or omIt to take) any actIOn that would cause any Bond to be federally
guaranteed wlthlO the meanlOg of sectIOn 149(b) of the Code and the Tax RegulatIOns and ruhngs
thereunder
InformatIOn Report The Dlstnct shall tnnely file any lOformatlOn reqUired by sectIon 149( e) of the
Code With respect to Dlstnct Bonds wIth the Secretary of the Treasury on Form 8038 G or such other
form and m such place as the Secretary may prescnbe
Rebate of ArbItrage Profits Except to the extent otherwise provIded 10 sectIOn 148(t) of the Code and
the Tax RegulatIOns
The Dlstnct shall account for all Gross Proceeds (lOcludmg all receIpts expendItures and mvestments
thereot) on Its books of account separately and apart from all other funds (and receIpts expendItures and
lOvestments thereot) and shall retalO all records of accountlOg for at least SIX years after the day on whIch
the last Bond IS dIscharged However to the extent penmtted by law the Dlstnct may commlOgle (and
may allow the City to commlOgle) Gross Proceeds of Dlstnct Bonds WIth Its other momes proVIded that
It separately accounts for each receIpt and expendIture of Gross Proceeds and the obhgatlOns acqUired
therewIth
Not less frequently than each ComputatIon Date the Dlstnct shall calculate the Rebate Amount 10
accordance With rules set forth 10 sectIOn 148(t) of the Code and the Tax RegulatIOns and ruhngs
thereunder The Dlstnct shall malOtalO a copy of the calculatIOn WIth ItS offiCial transcnpt of proceedlOgs
relatlOg to the Issuance of the Dlstnct Bonds untIl SIX years after the fmal ComputatIOn Date
In order to assure the excludablhty pursuant to sectIon 103(a) of the Code of the mterest on the Dlstnct
Bonds from the gross lOcome of the owners thereof for federal lOcome tax purposes the Dlstnct shall pay
to the Umted States the amount that when added to the future value of prevIOus rebate payments made for
the Dlstnct Bonds equals (I) 10 the case of the FlOal ComputatIOn Date as defined 10 sectIOn 1148 3(e)(2)
of the Tax RegulatIOns one hundred percent (100%) of the Rebate Amount on such date and (11) 10 the
case of any other ComputatIon Date mnety percent (90%) of the Rebate Amount on such date In all
cases such rebate payments shall be made by the DIstrICt at the tImes and m the amounts as are or may be
reqUired by sectIon 148(t) of the Code and the Tax RegulatIons and ruhngs under the Indenture and shall
be accompanied by Form 8038 T or such other forms and lOformatlOn as IS or may be reqUired by sectIon
148(t) of the Code and the Tax RegulatIons and ruhngs under the Indenture for executIOn and fihng by the
Dlstnct Notwlthstandmg the foregolOg and prOVided that the Dlstnct takes all steps avaIlable to It to
cause the prOVISIOn of such amounts the monetary obhgatIon of the Dlstnct shall be Imnted to amounts
prOVided to It for such purpose by the DIstrIct
Not to DIvert ArbItrage Profits Except to the extent penmtted by sectIOn 148 of the Code and the Tax
RegulatIons and ruhngs thereunder the Dlstnct shall not and shall not penmt any person to at any tIme
pnor to the final cancellatIon of the last of the Dlstnct Bonds to be retrred enter mto any transactIon that
reduces the amount reqUired to be paId to the Umted States pursuant to the Indenture because such
transactIOn results m a smaller profit or a larger loss than would have resulted If the transactIOn had been
at arm s length and had the YIelds on the Dlstnct Bonds not been relevant to eIther party
B 14
Agenda Item No 2
Page 298 of 316
DIstrIct Bonds Not Hedge Bonds
The Dlstnct represents that none of the Dlstnct Bonds IS or wIll become a hedge bond wlthm the
meamng of sectIOn 149(g) of the Code
The Dlstnct belIeves (upon appropnate mvestIgatlOn) (A) that on the date of Issuance of the DiStrIct
Bonds the DiStrIct reasonably expected that at least 85% of the spendable proceeds of the Dlstnct Bonds
wIll be expended wlthm the three year penod commencmg on such date of Issuance and (B) no more
than 50% of the proceeds of the Dlstnct Bonds wdl be mvested m Nonpurpose Investments havmg a
substantially guaranteed Yield for a penod of four years or more
Elections The Dlstnct directs and authonzes any Authonzed Officer to make electIons penmtted or
reqUIred pursuant to the proVISions of the Code or the Tax RegulatIOns as such RepresentatIve (after
consultatIOn With Bond Counsel) deems necessary or appropnate m connectIOn With the Bonds m the
Certificate as to Tax ExemptIOn or sundar or other appropnate certIficate form or document
Closmg Certificate The DiStrict agrees to execute and delIver m connectIOn With the Issuance of the
Bonds a Tax and Nonarbltrage Certificate or slfmlar document contammg additIOnal representatIOns and
covenants pertammg to the exclUSIOn of mterest on the Bonds from the gross mcome of the owners
thereof for federal mcome tax purposes
COVENANT TO FORECLOSE
The District wIll review the publIc records of the County of Riverside CalIfornia m connectIOn With the
collectIOn of the Special Tax not later than July I of each year to detenmne the amount of Special Tax
collected m the pnor Fiscal Year and With respect to md,v,dual delmquencles If the Dlstnct detenmnes
that any smgle property owner subject to the Special Tax IS delInquent m the payment of Special Taxes m
the aggregate of $5 000 or more or that the delmquent SpeCial Taxes represent more than 5% of the
aggregate SpeCial Taxes wlthm the Dlstnct then the Dlstnct wdl send or cause to be sent a notIce of
delmquency (and a demand for Immechate payment thereof) to the property owner wlthm 45 days of such
detenmnatlOn and (If the delInquency remams uncured) the Dlstnct wlil cause Judicial foreclosure
proceedmgs to be filed m the Supenor Court wlthm mnety (90) days of such detenmnatlOn agamst all
propertIes for whICh the SpeCial Taxes remam delInquent
The City Attorney IS authonzed to employ counsel to conduct any such foreclosure proceedmgs The fees
and expenses of any such counsel and costs and expenses of the City Attorney (mcludmg a charge for
City or Dlstnct staff tIme) m conductmg foreclosure proceechngs shall be an AdmmlstratIve Expense
under the FIScal Agent Agreement
Notwlthstandmg any proVISIOn of the Act or other law of the State to the contrary m connectIOn With any
foreclosure related to delInquent SpecIal Taxes
The Cay or the Fiscal Agent IS expressly authonzed to credit bid at any foreclosure sale Without any
reqUIrement that funds be placed m the Bond Fund or otherwise be set aSide m the amount so credit bid
m the amount speCified m SectIOn 53356 5 of the Act or such less amount as detenmned under clause (b)
below or otherwise under SectIOn 53356 6 of the Act
The DIStnCt may pcnmt m Its sole and absolute discretIOn property With delInquent Special Tax
payments to be sold for less than the amount speCified m SectIon 53356 5 of the Act If It determmes that
such sale IS m the mterest of the Bond Owners The Bond Owners by their acceptance of the Dlstnct
Bonds consent to such sale for such lesser amounts (as such consent IS descnbed m SectIOn 53356 6 of
B 15
Agenda Item No 2
Page 299 of 316
the Act) and release the Dlstnct and the City and theIr officers and agents from any lIabilIty 10
connectIon therewIth
The Dlstnct IS expressly authonzed to use amounts 10 the SpeCIal Tax Fund to pay costs of foreclosure of
delInquent SpecIal Taxes
The Dlstnct may forgIve all or any portIOn of the Special Taxes leVIed or to be leVIed on any parcel 10 the
Dlstnct so long as the Dlstnct detenmnes that such forgIveness IS not expected to adversely affect Its
obhgatlOn to pay pnnclpal of and mterest on the Dlstnct Bonds under the Fiscal Agent Agreement
ANNUAL REPORTS TO CDIAC
Not later than October 30 of each year commencmg October 30 2008 and untIl the October 30 followmg
the final matunty of the Dlstnct Bonds the Treasurer shall supply the mformallon reqUired by SectIOn
53359 5(b) or (c) of the Act to CDIAC (on such forms as CDIAC may specIfy) and the Dlstnct
CONTINUING DISCLOSURE TO OWNERS
In additIOn to ItS oblIgatIOns under FIscal Agent Agreement the Dlstnct covenants and agrees that It wIll
cause the CIty to carry out all of Its oblIgatIOns under the Contmumg Disclosure Agreement relatmg to the
Authonty Bonds Notwlthstandmg any other provIsIOn of the FIscal Agent Agreement faIlure of the
Dlstnct to comply WIth the Contmumg DIsclosure Agreement shall not be conSidered a default under the
Indenture however any Partlclpatmg Underwnter or any holder or benefiCIal owner of the Authonty
Dlstnct Bonds may take such acllons as may be necessary and appropnate to compel performance by the
Dlstnct of Its oblIgations under the FIscal Agent Agreement mcludmg seekmg mandate or speCIfic
performance by court order
RESERVE ACCOUNT REPLENISHMENT
The Dlstnct covenants that to the extent there IS a draw upon the Reserve Account pursuant to the
Authonty Indenture as a result of a delInquency 10 the colleclIon of SpeCIal Taxes the Dlstnct shall cause
the Treasurer to effect the next annual levy of SpeCIal Taxes 10 an amount suffiCIent to replemsh such
delInquency 10 additIOn to those reqUired by the Fiscal Agent Agreement and 10 addllIon to amounts that
would be leVied If there were no such delmquency proVIded however the amount of SpeCIal Taxes
leVIed shall not exceed the maxImum permllted by the Ordmance and RMA
INVESTMENTS, DISPOSITION OF INVESTMENT PROCEEDS
DeposIt and Investment of Moneys lD Funds
Moneys 10 any fund or account created or establIshed by the Fiscal Agent Agreement and held by the
FIscal Agent shall be IOvested by the FIscal Agent 10 Penmtted Invesllnents as dIrected pursuant to an
Officer s Certificate filed With the Fiscal Agent at least two (2) Busmess Days 10 advance of the makmg
of such mvestments In the absence of any such Officer s CertIficate the FIscal Agent shall mvest any
such moneys 10 money market funds to the extent praclIcable whIch by therr terms mature pnor to the
date on whICh such moneys are reqUired to be paId out under the FIscal Agent Agreement or are held
unmvested The Treasurer shall make note of any IOveslInent of funds under the Indenture 10 excess of the
Yield on the Dlstnct Bonds so that appropnate actions can be taken to assure complIance WIth the FIscal
Agent Agreement
Moneys 10 any fund or account created or establIshed by the FIscal Agent Agreement and held by the
Treasurer shall be IOvested by the Treasurer 10 Permitted Investments whIch 10 any event by theIr terms
mature pnor to the date on whIch such moneys are requrred to be paId out under the Indenture
B 16
Agenda Item No 2
Page 300 of 316
OblIgatIOns purchased as an mvestment of moneys m any fund shall be deemed to be part of such fund or
account subject however to the reqUirements of the Fiscal Agent Agreement for transfer of mterest
earmngs and profits resultmg from mvestment of amounts m funds and accounts Whenever m the Fiscal
Agent Agreement any moneys are reqUired to be transferred by the Dlstnct to the Fiscal Agent such
transfer may be accomplIshed by transfemng a lIke amount of Perrmtted Investments
The Fiscal Agent or an affilIate or the Treasurer may act as pnnclpal or agent m the acqUisItion or
dispositIOn of any mvestment and shall be entitled to ItS customary fee therefor Neither the Fiscal Agent
nor the Treasurer shall mcur any lIabilIty for losses ansmg from any mvestments made pursuant to the
Fiscal Agent Agreement For purposes of deterrmmng the amount on deposit ill any fund or account held
under the Indenture all Perrmtted Investments or mvestments credited to such fund or account shall be
valued at the cost thereof (excludmg accrued mterest and brokerage comrmsslOns Ifany)
Except as otherwise proVided m the next sentence all mvestments of amounts deposited m any fund or
account created by or pursuant to the Fiscal Agent Agreement or otherwise contammg gross proceeds of
the District Bonds (wlthm the meanmg of sectIOn 148 of the Code) shall be acqUired disposed of and
valued (as of the date that valuatIOn IS reqUITed by the Fiscal Agent Agreement or the Code) at Fair
Market Value Investments m funds or accounts (or portions thereof) that are subject to a Yield restnctlon
under the provISions of the Code shall be valued at their present value (wlthm the meanmg of sectIOn 148
of the Code) The Fiscal Agent shall not be lIable for venficatlOn of the applIcatIOn of such sectIOns of
the Code
Investments m any and all funds and accounts may be commmgled m a separate fund or funds for
purposes of makmg holdmg and dlsposmg of mvestments notwlthstandmg proVISIOns herem for transfer
to or holdmg m or to the credit of partICular funds or accounts of amounts received or held by the Fiscal
Agent or the Treasurer under the Indenture prOVided that the Fiscal Agent or the Treasurer as shall at all
times account for such mvestments strictly m accordance With the funds and accounts to which they are
credited and otherwise as proVided m the Fiscal Agent Agreement
The Fiscal Agent or the Treasurer as shall sell at the highest pnce reasonably obtamable or present for
redemptIOn any mvestment security 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
mvestment security IS credited and neither the Fiscal Agent nor the Treasurer shall be lIable or responsible
for any loss resultmg from the acqUisitIOn or dispOSitIOn of such mvestment secunty m accordance With
the Fiscal Agent Agreement
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
Events of Default
The followmg events shall be Events of Default
(1) Failure to pay any mstalhnent ofpnnclpal of any Dlstnct Bonds when and as the same shall
become due and payable whether at matunty as therem expressed by proceedmgs for redemptIOn
or otherwise
(2) Failure to pay any mstalhnent of mterest on any Dlstnct Bonds when and as the same shall
become due and payable
(3) Failure by the Dlstnct to observe and perform any of the other covenants agreements or
conditions on ItS part In the Fiscal Agent Agreement or m the Dlstnct Bonds contamed If such
failure shall have contmued for a penod of 60 days after wntten nolice thereof speclfymg such
failure and requITIng the same to be remedied shall have been given to the District by the Fiscal
B 17
Agenda Item No 2
Page 301 of316
Agent or the Owners of not less than 250/ m aggregate pnnclpal amount of the DIstrIct Bonds at
the lime Outstandmg provIded however If m the reasonable opmlOn of the Dlstnct the faIlure
stated m the nollce can be corrected but not wlthm such 60 day penod such faIlure shall not
conslltute an Event of Default If correcllve actIOn IS mstltuted by the Dlstnct wlthm such 60 day
penod and the DiStrIct shall thereafter dlhgently and m good faIth cure such failure m a reasonable
penod of lime
(4) Commencement by the DIStrict of a voluntary case under TItle 11 ofthe Umted States Code or
any subslltute or successor statute
Remedies of Bond Owners
Subject to the provIsIOns of the Fiscal Agent Agreement any Bond Owner shall have the ngbt for the
equal benefit and protectIOn of all Bond Owners snmlarly sItuated
(I) by mandamus SUIt actIOn or proceedmg to compel the Dlstnct and Its officers agents or
employees to perform each and every term prOVISIOn and covenant contamed m the FIscal Agent
Agreement and m the Dlstnct Bonds and to reqUITe the carrymg out of any or all such covenants
and agreements of the Dlstnct and the fulfillment of all dutIes Imposed upon It by the Act
(2) by SUIt actIOn or proceedmg m eqUity to enJom any acts or thmgs whIch are unlawful or the
vlOlallon of any of the Bond Owners nghts or
(3) upon the happemng of any Event of Default by SUIt acllon or proceedmg m any court of
competent Junsdlctlon to reqUire the Dlstnct and ItS officers and employees to account as If It and
they were the trustees of an express trust
ApplIcatIOn of Special Taxes and Other Funds After Default
If an Event of Default shall occur and be contmumg all SpecIal Taxes mciudmg any penaltIes costs fees
and other charges accrumg under the Act and any other funds then held or thereafter received by the
Fiscal Agent under any of the provISIOns of the FIscal Agent Agreement shall be apphed by the FIscal
Agent as follows and m the followmg order
(1) To the payment of any expenses necessary m the opmlOn of the FIscal Agent to protect the
mterest of the Owners of the Dlstnct Bonds and payment of reasonable fees charges and expenses
of the FIscal Agent (mcludmg reasonable fees and dIsbursements of ItS counsel) mcurred m and
about the performance of Its powers and dulles under the FIscal Agent Agreement
(2) To the payment of the pnnclpal of and mterest then due WIth respect to the Dlstnct Bonds
(upon presentatIOn of the Dlstnct Bonds to be paId and stampmg thereon of the payment If only
partIally paId or surrender thereof If fully paId) subject to the provIsIOns of the FIscal Agent
Agreement as follows
FIrst To the payment to the Persons entItled thereto of all mstallments of mterest then due
m the order of the matunty of such mstallments and If the amount avaIlable shall not be
sufficIent to pay m full any mstallment or mstallments matunng on the same date then to the
payment thereof ratably accordmg to the amounts due thereon to the Persons enl1tled
thereto WIthout any mscnmmallon or preference and
Second To the payment to the Persons enlltled thereto of the unpaId pnnclpal of any
Dtstrlct Bonds whIch shall have become due whether at matunty or by call for redempllon
WIth mterest on the overdue pnnclpal at the rate borne by the Dlstnct Bonds on the date of
matunty or redempllon and If the amount avaIlable shall not be suffiCient to pay m full all
B 18
Agenda Item No 2
Page 302 of 316
the District Bonds together with such mterest then to the payment thereof ratably
accordmg to the amounts of pnnclpal due on such date to the Persons enlitled thereto
without any lliscnmmatlOn or preference
Any remammg funds shall be transferred by the Fiscal Agent to the Bond Fund
RemedIes Not ExclusIve
No remedy conferred upon or reserved to the Fiscal Agent or to the Owners of the DiStrict Bonds IS
mtended to be exclusive of any other remedy or remedies and each and every such remedy to the extent
perrmtted by law shall be cumulalive and m additIOn to any other remedy given under the Fiscal Agent
Agreement or now or hereafter eXlstmg at law or m eqUity or otherwise
ActIons by FIscal Agent as Attorney m Fact
Any SUIt actIOn or proceedmg which any Owner shall have the nght to bnng to enforce any nght or
remedy under the Fiscal Agent Agreement may be brought by the Fiscal Agent for the equal benefit and
proteclion of all Owners and the Fiscal Agent IS appomted (and the successive Owners of the Dlstnct
Bonds by takmg and holdmg the same shall be conclUSively deemed so to have appomted It) the true and
lawful attorney m fact of the Owners for the purpose of bnngmg any such SUIt actIOn or proceedmg and
to do and perform any and all acts and thmgs for and on behalf of the Owners as a class or classes as may
be necessary or adVisable m the opmlOn of the Fiscal Agent as such attorney m fact
MODIFICATION OR AMENDMENT OF THE AGREEMENT
Amendments PermItted
The Fiscal Agent Agreement and the nghts and obhgatlOns of the Dlstnct and of the Owners of the
Dlstnct Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the
affirmative vote at a meetmg of Owners or With the wntten consent WithOUt a meetmg of the Owners of
at least SIXty percent (60%) m aggregate pnnclpal amount of the Dlstnct Bonds then Outstandmg
exclUSive of Dlstnct Bonds dlsquahfied as proVided m the Fiscal Agent Agreement No such
modificatIOn or amendment shall (I) extend the maturity of any Bond or reduce the mterest rate thereon
or otherwise alter or Impair the obhgatlOn of the Dlstnct to pay the pnnclpal of and the mterest and any
premIUm on any Bond Without the express consent of the Owner of such Bond or (n) permit the creatIOn
by the Dlstnct of any pledge or hen upon the SpeCial Taxes supenor to or on a panty With the pledge and
hen created for the benefit of the Dlstnct Bonds (except as otherwise perrmtted by the Act the laws of the
State of Cahfornla or the Fiscal Agent Agreement) or (111) reduce the percentage of Dlstnct Bonds
reqUired for the amendment of the Fiscal Agent Agreement Any such amendment may not mollify any of
the nghts or obhgatlOns of the Fiscal Agent Without ItS wntten consent
The Fiscal Agent Agreement and the nghts and obhgatlOns of the Dlstnct and of the Owners may also be
modified or amended at any lime by a Supplemental Agreement WithOUt the consent of any Owners only
to the extent perrmtted by law and only for anyone or more of the followmg purposes
(I) to add to the covenants and agreements of the DiStrict m the Fiscal Agent Agreement
contamed other covenants and agreements thereafter to be observed or to Imnt or surrender any
nght or power herem reserved to or conferred upon the Dlstnct
(2) to make modificatIOns not adversely affectmg any Outstanlling Dlstnct Bonds of the Dlstnct
m any matenal respect
B 19
Agenda Item No 2
Page 303 of 316
(3) to make such provIsIOns for the purpose of cunng any ambIguity mconslstency or omISSIOn
of cunng correctmg or supplementmg any defectIve provIsIOn contamed m the FIscal Agent
Agreement or m regard to questIons ansmg under the FIscal Agent Agreement as the Dlstnct
and the Fiscal Agent may deem necessary or deSIrable and not mconslstent WIth the Fiscal Agent
Agreement and whIch shall not adversely affect the nghts of the Owners of the Dlstnct Bonds
(4) to make such additIons deletIOns or modIficatIOns as may be necessary or desuable to assure
the exclUSIOn from gross mcome for federal mcome tax purposes of mterest on the Dlstnct Bonds
Owners Meetmgs
The Dlstnct may at any trrne call a meetmg of the Owners In such event the DIstrIct IS authonzed to fix
the tIme and place of saId meetmg and to provIde for the glvmg of notIce thereof and to fix and adopt
rules and regulatIons for the conduct of saId meetmg
Procedure for Amendment With Wntten Consent of Owners
The Dlstnct and the FIscal Agent may at any tIme adopt a Supplemental Agreement amendmg the
provlSlons of the Dlstnct Bonds or of the Fiscal Agent Agreement or any Supplemental Agreement to the
extent that such amendment IS penmtted by the Fiscal Agent Agreement to take effect when and as
provIded m the IndenlIlfe A copy of such Supplemental Agreement together WIth a request to Owners
for theIr consent thereto shall be maIled by first class mall by the FIscal Agent to each Owner of Dlstnct
Bonds OutstandIng but faIlure to mall caples of such Supplemental Agreement and request shall not
affect the valIdity of the Supplemental Agreement when assented to as provIded m the FIscal Agent
Agreement
Such Supplemental Agreement shall not become effectIve unless there shall be filed WIth the Fiscal Agent
the wntten consents of the Owners of at least SIXty percent (60%) m aggregate pnnclpal amount of the
Dlstnct Bonds then Outstandmg (exclusIve of Dlstnct Bonds wsqualIfied as provIded m the FIscal Agent
Agreement) and a notIce shall have been maIled as heremafter m the Indenture provIded Each such
consent shall be effectIve only If accompamed by proof of ownershIp of the DIStrict Bonds for whICh such
consent IS gIven which proof shall be such as IS penmtted by the FIscal Agent Agreement Any such
consent shall be bmdmg upon the Owner of the DiStrICt Bonds glvmg such consent and on any subsequent
Owner (whether or not such subsequent Owner has notIce thereof) unless such consent IS revoked m
wntmg by the Owner glvmg such consent or a subsequent Owner by filIng such revocatIOn WIth the
FIscal Agent pnor to the date when the notICe provIded for m the Fiscal Agent Agreement has been
maIled
After the Owners of the reqUIred percentage of Dlstnct Bonds shall have filed theu consents to the
Supplemental Agreement the DIstrIct shall maIl a notIce to the Owners m the manner herembefore
provIded m the Indenture for the maIlmg of the Supplemental Agreement statmg m substance that the
Supplemental Agreement has been consented to by the Owners of the requued percentage of Dlstnct
Bonds and wIll be effectIve as proVided m the Indenture (but failure to maIl caples of saId notICe shall
not affect the valIdIty of the Supplemental Agreement or consents thereto) Proof of the mailIng of such
notICe shall be filed WIth the FIscal Agent A record conslstmg of the papers reqUIred by the IndenlIlfe to
be filed WIth the FIscal Agent shall be proof of the matters therem stated untIl the contrary IS proved The
Supplemental Agreement shall become effectIve upon the filIng WIth the FIscal Agent of the proof of
maIlmg of such notIce and the Supplemental Agreement shall be deemed conclUSIvely bmdmg (except as
otherwIse heremabove speCIfically proVided m thIS ArtIcle) upon the DIstrIct and the Owners of all
DiStrICt Bonds at the expIratIOn of SIXty (60) days after such filmg except m the event of a final decree of
a court of competent JunsdlctlOn settmg aside such consent m a legal actIon or eqUItable proceedmg for
such purpose commenced wlthm such SIXty day penod
DIscharge of Agreement
B 20
Agenda Item No 2
Page 304 of 316
The Dlstnct shall have the option to pay and discharge the entire mdebtedness on all or any portIOn of the
Dlstnct Bonds Outstandmg 10 anyone or more of the followmg ways
(I) by well and truly paymg or causmg to be pllld the prmclpal of and mterest and any premIUm
on such Dlstnct Bonds Outstandmg as and when the same become due and payable
(2) by deposltmg With the Fiscal Agent 10 trust at or before matunty money whICh together
with the amounts then on depOSit 10 the funds and accounts proVided for 10 Fiscal Agent
Agreement IS fully suffiCient to pay such DIstnct Bonds Outstanding mcluding all pnnClpal
mterest and redemption premIUms or
(3) by lITevocably deposltmg with the Fiscal Agent 10 trust cash and Federal Secuntles and/or
mvestments descnbed 10 clause (I) of the defimtlon of Penmtted Investments 10 such amount as
the Dlstnct shall detenmne as conflITOed by Bond Counselor an mdependent certified public
accountant Will together With the mterest to accrue thereon and moneys then on depOSit 10 the
fund and accounts proVided for 10 the Fiscal Agent Agreement be fully suffiCient to pay and
discharge the mdebtedness on such Dlstnct Bonds (mcludmg all pnnclpal mterest and
redemptIOn premIUms) at or before their matunty dates
If the Dlstnct shall have taken any of the actIOns speCified 10 (a) (b) or (c) above and If such Dlstnct
Bonds are to be redeemed pnor to the matunty thereof notice of such redemptIOn shall have been given as
10 the Fiscal Agent Agreement proVided or proVISion satisfactory to the Fiscal Agent shall have been made
for the glVlng of such notice then at the election of the Dlstnct and notwlthstandmg that any Dlstnct
Bonds shall not have been surrendered for payment the pledge of the Special Taxes and other funds
prOVided for 10 the Fiscal Agent Agreement and all other obligatIOns of the Dlstnct under the Fiscal Agent
Agreement With respect to such DIstnct Bonds Outstandmg shall cease and termmate Notice of such
electIOn shall be filed With the Fiscal Agent Notwlthstandmg the foregomg the obligation of the DiStrICt
to payor cause to be paid to the Owners of the Dlstnct Bonds not so surrendered and paid all sums due
thereon and all amounts owmg to the Fiscal Agent pursuant to the Fiscal Agent Agreement and otherwise
to assure that no actIOn IS taken or failed to be taken If such action or failure adversely affects the
exclUSIOn of mterest on the Dlstnct Bonds from gross mcome for federal mcome tax purposes shall
contmue 10 any event
Upon compliance by the Dlstnct With the foregomg With respect to all Dlstnct Bonds Outstanding any
funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent which are not
reqUired for the purposes of the precedmg paragraph shall be paid over to the DiStriCt and any SpeCial
Taxes thereafter received by the Dlstnct shall not be relDltted to the Fiscal Agent but shall be retamed by
the Dlstnct to be used for any purpose permitted under the Act
B 21
Agenda Item No 2
Page 305 of 316
APPENDIX C
APPRAISAL REPORT
C 1
Agenda Item No 2
Page 306 of 316
APPENDIX D
MARKET ABSORPTION STUDY
D 1
Agenda Item No 2
Page 307 of 316
APPENDIX E
RATE AND METHOD OF APPORTIONMENT
E 1
Agenda Item No 2
Page 308 of 316
APPENDIX F
TYPES OF MORTGAGE LOANS
F 1
Agenda Item No 2
Page 309 of 316
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Agenda Item No 2
Page 310 of 316
APPENDIX G
FORMS OF CONTINUING DISCLOSURE AGREEMENTS
G 1
Agenda Item No 2
Page 311 of316
APPENDIX H
PROPOSED FORM OF BOND COUNSEL OPINION
[Closmg Date]
Lake Elsmore Pubhc Fmancmg Authonty
130 South Mam Street
Lake Elsmore Cahfonlla 92530
$
Lake Elsmore Pubhc Fmancmg Allthonty
Local Agency Revenue Bonds (Wasson Canyon)
2007 Senes A
Members of the Board of Directors
We have acted as bond counsel to the Lake Elsmore Pubhc Fmancmg Authonty (the Authonty) m
connectIOn with the Issuance by the Authonty of $ aggregate pnnclpal amount of Lake Elsmore
Pubhc Fmancmg Authonty Local Agency Revenue Bonds (Wasson Canyon) 2007 Senes A (the
Bonds) pursuant to the provIsions of Article 4 (commencmg With section 6584) of Chapter 5 of
DIVISIOn 7 of Title I of the Cahfornla Government Code (the Law) pursuant to an Indenture of Trust
dated as of November I 2007 (the Indenture) by and between the Authonty and Umon Bank of
Cahfornla N A as trustee (the Trustee) We have exammed the Law and such certified proceedmgs
and other papers as we deem necessary to render thIS opmlOn
As to questIOns of fact matenal to our opmlOn we have rehed upon representatIOns of the Authonty
contamed m the Indenture and m the certified proceedmgs and certificatIOns of pubhc offiCials and others
furnished to us without undertakmg to venfy the same by mdependent mvestlgatlOn
Based upon the foregomg we are of the opmlOn under eXlstmg law as follows
I The Authonty IS a Jomt exerCise of powers authonty duly orgamzed and vahdly eXlstmg under the laws
of the State of Cahfomla With the full power to enter mto the Indentures to perform the agreements on ItS
part contamed therem and to Issue the Bonds
2 The Indentures have been duly approved by the Authonty and constitute the vahd and bmdmg
obhgatlons of the Authonty enforceable agamst the Authonty m accordance with their terms The Eighth
Supplemental Indenture IS authonzed by and IS conSIstent With the Indenture
3 The Indentures create a vahd hen on the funds pledged by the Indentures for the secunty of the Bonds
subject to no pnor hen granted under the Law
4 The Bonds have been duly authonzed executed and dehvered by the Authonty and are vahd and
bmdmg speCial obhgatlons of the Authonty payable solely from the sources prOVided therefor m the
Indentures
HI
Agenda Item No 2
Page 312 of 316
5 The Internal Revenue Code of 1986 as amended (the Code) sets forth certam reqUIrements that must
be met subsequent to the Issuance and delivery of the Bonds for mterest thereon to be and remam
excluded from the gross mcome of the owners thereof for federal mcorne tax purposes Noncompliance
with such reqUIrements could cause the mterest on the Bonds to be mcluded m gross mcome retroacl1ve to
the date of Issue of the Bonds The Authonty has covenanted m the Indentures to mamtam the exclusIOn
of mterest on the Bonds from the gross mcome of the owners thereof for federal mcorne tax purposes
In our opmlOn under eXlstmg law mterest on the Bonds IS exempt from personal mcorne taxal10n of the
State of California and assUlmng compliance With the aforemenl1oned covenant mterest on the Bonds IS
excluded pursuant to sectIOn I03(a) of the Code from the gross mcome of the owners thereof for federal
mcome tax purposes We are further of the opmlOn that under eXlstmg statutes regulal10ns rulings and
court deCISIOns the Bonds are not speCified pnvate acl1vlty bonds wlthm the meamng of sectIOn
57(a)(5) of the Code and therefore the mterest on the Bonds Will not be treated as an Item of tax
preference for purposes of cornputmg the alternal1ve nummum tax Imposed by secl10n 55 of the Code
The receipt or accrual of mterest on Bonds owned by a corporatIOn may affect the computatIOn of the
alternative mlmmum taxable mcome upon which the altemal1ve nummum tax IS Imposed to the extent
that such mterest IS taken mto account m detenmnmg the adjusted current earnmgs of that corporal1on (75
percent of the excess If any of such adjusted current earmngs over the alternative nummum taxable
mcome bemg an adjustment to alternal1ve nummum taxable mcome (detenmned Without regard to such
adjustment or to the alternal1ve tax net operatmg loss deducl1on))
Except as stated m the precedmg two paragraphs we express no opmlOn as to any federal or state tax
consequences of the ownership or dispOSitIOn of the Bonds
The nghts of the owners of the Bonds and the enforceability of the Bonds and the Indentures may be
subject to bankruptcy msolvency reorgamzal1on rnoratonum and other Similar laws affectmg credItors
nghts heretofore or hereafter enacted and may also be subject to the exercise of JudICial discretIOn m
appropnate cases
Our opmlOns are based on eXlstmg law which IS subJ ect to change Such opmlOns are further based on
our knowledge of facts as of the date hereof We assume no duty to update or supplement our opmlOns to
reflect any facts or circumstances that may thereafter come to our attenl10n or to reflect any changes m
any law that may thereafter occur or become effecl1ve Moreover our opmlOns are not a guarantee of
result and are not bmdmg on the Internal Revenue Service rather such oplmons represent our legal
Judgment based upon our review of eXlstmg law that we deem relevant to such opmlOns and m reliance
upon the representatIOns and covenants referenced above
Respectfully submJtted
H2
Agenda Item No 2
Page 313 of 316
APPENDIX I
BOOK-ENTRY SYSTEM
The followzng descrlptlOn of the procedures and record keepzng wIth respect to beneficial ownershIp
znterests zn the Bonds payment of prznclpal of and Interest on the Bonds to Direct PartIcIpants Indirect
Partzclpants or BeneficIal Owners (as such tenns are defined below) of the Bonds confinnatlOn and
transfer of beneficial ownershIp znterests zn the Bonds and other Bond related transactIOns by and
between DTC Direct PartIcIpants IndIrect PartIcIpants and BenefiCial Owners of the Bonds IS based
solely on znfonnatlon fUrmshed by DTC to the Authorlty whIch the Authorlty be/zeves to be re/zable but
the Authorlty and the Underwrlter do not and cannot make any zndependent representatIOns concermng
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 foregozng
znfonnatzon with respect to such matters but should Instead corifirm 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 secuntJes depOSitory for the
Bonds The Bonds will be Issued as fully registered secuntJes registered m the name of Cede & Co
(DTC s partnership nommee) or such other name as may be requested by an authonzed representatJve of
DTC One fully registered Bond will be Issued for each matunty of the Bonds each m the aggregate
prmcipal amount of such matunty and will be deposited With DTC
DTC the world s largest secuntJes depOSitory IS a hmlted purpose trust company organized under the
New York Bankmg Law a bankmg orgamzatlOn wlthm the meanmg of the New York Bankmg Law a
member of the Federal Reserve System a clearmg corporatIOn wlthm the meanmg of the New York
Umform Commercial Code and a cleanng agency registered pursuant to the provIsions of SectJon 17 A
of the Secuntles Exchange Act of 1934 DTC holds and proVides asset serviCmg for over 2 2 nulhon
Issues of U S and non U S eqUity Issues corporate and municipal debt Issues and money market
mstruments from over 100 countnes that DTC s partJclpants ( Direct PartiCipants ) depOSit With DTC
DTC also faclhtates the post trade settlement among Direct PartiCipants of sales and other secuntJes
transactIOns m deposited secuntJes through electromc computenzed book entry transfers and pledges
between Direct Participants accounts This ehnunates the need for phySical movement of secuntles
certJficates Drrect Participants mclude both U S and non U S secuntJes brokers and dealers banks
trust companies cleanng corporatIOns and certam other organizatIOns DTC IS a wholly owned
subSidiary of The DepOSitory Trust & Clearmg CorporatIOn ( DTCC) DTCC m turn IS owned by a
number of Direct Participants of DTC and Members of the NatJonal SecuntJes Cleanng CorporatIOn
Fixed Income Clearmg CorporatIOn and Emergmg Markets Cleanng CorporatIOn (NSCC FICC and
EMCC also subsldlanes of DTCC) as well as by the New York Stock Exchange Inc the Amencan
Stock Exchange LLC and the NatIOnal ASSOCiatIOn of SecuntJes Dealers Inc Access to the DTC system
IS also available to others such as both U S and non U S securltJes brokers and dealers banks trust
compames and clearmg corporatJons that clear through or mamtam a custodial relatIOnship With a Direct
PartiCipant either directly or mdlrectly ( Indirect PartJClpants) DTC has Standard & Poor s highest
ratmg AAA The DTC Rules to ItS Participants are on file With the SecuntJes and Exchange
CommiSSIOn More mformatJon about DTC can be found at wwwdtcc com and wwwdtc org
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 mterest of each actual purchaser of each
Bonds ( BenefiCial Owner ) is m turn to be recorded on the Direct and Indirect Participants records
BenefiCial Owners will not receive wntten confrrmatlOn from DTC of their purchase BenefiCIal Owners
are however expected to receive wntten confirmatIOns provldmg details of the transactIOn as well as
penodlc statements of their holdmgs from the Direct or Indirect Participant through whiCh the BenefiCial
Owner entered mto the transactJon Transfers of ownership mterests m the Bonds are to be accomphshed
by entnes made on the books of Direct and Indirect PartJClpants actmg on behalf of BenefiCial Owners
I I
Agenda Item No 2
Page 314 of 316
BeneficIal Owners wIll not receIve cerllficates representmg therr ownershIp mterests m the Bonds except
m the event that use of the book entty system for the Bonds IS dtscontmued
To faclhtate subsequent transfers all Bonds deposIted by DIrect PartIcIpants wIth DTC are regIstered m
the name of DTC s partnershIp nommee Cede & Co or such other name as requested by an authonzed
representatIve of DTC The deposIt of the Bonds WIth DTC and theIr regIstratIOn m the name of Cede &
Co or such other DTC nommee do not effect any change m beneficial ownershIp DTC has no
knowledge of the actual BeneficIal Owners of the Bonds DTC s records reflect only the Idenllty of the
DIrect PartIcIpants to whose accounts such Bonds are credIted whIch mayor may not be the Beneficial
Owners The DIrect or IndIrect PartIcIpants will remam responsIble for keepmg account of theIr holdmgs
on behalf of theIr customers
Conveyance of nollces and other commumcallons by DTC to DIrect PartIcIpants by Drrect PartIcIpants to
IndIrect PartIcIpants and by DIrect PartIcIpants and Imhrect PartIcIpants to BeneficIal Owners will be
governed by arrangements among them subject to any statutory or regulatory reqUIrements as may be m
effect from lime to lime BeneficIal Owners of Bonds may wIsh to take certam steps to augment the
transnusslOns to them of notIces of slgmficant events WIth respect to the Bonds such as redemptIOns
tenders defaults and proposed amendments to the Bonds documents For example BenefiCIal Owners of
the Bonds may wIsh to ascertam that the nommee holdmg the Bonds for theIr benefit has agreed to obtam
and transmIt notIces to BenefiCIal Owners In the alternallve BenefiCial Owners may wIsh to proVIde
theIr names and addresses to the Trustee and request that copIes of nollces be proVIded dIrectly to them
RedemptIOn notIces shall be sent to DTC If less than all of the Bonds are bemg redeemed DTC s
practIce IS to determme by lot the amount of the mterest of each DIrect PartIcIpant m such matunty to be
redeemed
NeIther DTC nor Cede & Co (nor such other DTC nommee) will consent or vote WIth respect to the
Bonds unless authonzed by a DIrect PartIcIpant m accordance wIth DTC s Procedures Under ItS usual
procedures DTC malls an OmnIbus Proxy to the Authonty as soon as pOSSIble after the record date The
OmnIbus Proxy assIgns Cede & Co s consentmg or votmg nghts to those DIrect PartIcIpants to whose
accounts the Bonds are credIted on the record date (IdentIfied m a hstmg attached to the OmnIbus Proxy)
Pnnclpal redempllon pnce and mterest payments on the Bonds will be made to Cede & Co or such
other nonunee as may be requested by an authonzed representallve of DTC DTC s practIce IS to credIt
Duect PartIcIpants accounts upon DTC s receIpt of funds and correspondmg detail mformatlOn from the
Authonty or the Trustee on payable date m accordance WIth theIr holdmgs shown on DTC s records
Payments by PartIcIpants to BenefiCIal Owners will be governed by standmg mstructlOns and customary
practIces as IS the case WIth secuntles held for the accounts of customers m bearer form or regIstered m
street name and will be the responslblhty of such PartIcIpant and not of DTC the Trustee or the
Authonty subject to any statutory or regulatory reqUIrements as may be m effect from lime to tIme
Payment of pnnclpal redemptIOn pnce and mterest payments to Cede & Co (or such other nommee as
may be requested by an authonzed representatIve of DTC) IS the responslblhty of the Authonty or the
Trustee dIsbursement of such payments to DIrect PartICIpants will be the responslblhty of DTC and
dIsbursement of such payments to the BenefiCial Owners will be the responslblhty of DIrect and IndIrect
PartIcIpants
DTC may dlscontmue provldmg ItS servIce as depOSItory WIth respect to the Bonds at any lime by glvmg
reasonable nollce to the Authonty or the Trustee Under such CIrcumstances m the event that a successor
depOSItory IS not obtamed Bond certIficates are reqUIred to be pnnted and dehvered
The Authonty may deCIde to dlscontmue use of the system of book entry only transfers through DTC (or
a successor secunlles depOSItory) In that event the Bonds certIficates WIll be pnnted and dehvered to
DTC
12
Agenda Item No 2
Page315of316
The mfonnatlOn m thiS sectIOn concemmg DTC and DTC s book entry system has been obtamed from
sources that the Authonty beheves to be rehable but the Authonty takes no responslblhty for the
accuracy thereof
Dlscontmuance of DTC ServIces
In the event that (a) DTC detenmnes not to contmue to act as secunlles depOSitory for the Bonds or (b)
the Authonty detennmes that DTC shall no longer act and dehvers a wrItten certificate to the Trustee to
that effect then the Authonty will dlscontmue the Book Entry System With DTC for the Bonds If the
Authonty detennmes to replace DTC With another quahfied secunlles depOSitory the Authonty will
prepare or drrect the preparallon of a new smgle separate fully registered Bond for each matunty of the
Bonds registered m the name of such successor or subslltute secunlles depOSitory as are not mconslstent
With the tenns of the Indenture If the Authonty fails to Identify another quahfied secunlles depOSitory to
replace the mcumbent secunlles depOSitory for the Bonds then the Bonds shall no longer be restncted to
bemg registered m the Bonds registratIOn books m the name of the mcumbent secunlles depOSitory or ItS
nommee but shall be registered m whatever name or names the mcumbent secunlles depOSitory or ItS
nommee transfemng or exchangmg the Bonds shall deSignate
In the event that the Book Entry System IS dlscontmued the followmg provIsIOns would also apply (I)
the Bonds will be made available m phYSical fonn (n) prmclpal of and redemptIOn premiums If any on
the Bonds will be payable upon surrender thereof at the trust office of the Trustee Identified m the
Indenture and (m) the Bonds will be transferable and exchangeable as prOVided m the Indenture
The AuthOrity or the Trustee do not have any responsIbIlity or obligatIOn to DTC PartIcIpants to the
persons for whom they act as nommees to Benefictal Owners or to any other person who IS not shown on
the regIStratIOn books as bemg an owner of the Bonds with respect to (I) the accuracy of any records
mamtamed by DTC or any DTC PartICIpants (ll) the payment by DTC or any DTC PartIcIpant of any
amount m respect of the prmclpal of redemptIOn price of or mterest on the Bonds (Ill) the delivery of any
nollce whIch IS permitted or reqUIred to be gIven to regIstered owners under the Indenture (IV) the
selectIOn by DTC or any DTC PartIcIpant of any person to receIve payment m the event of a partial
redemptIOn of the Bonds (v) any consent gIven or other actIOn taken by DTC as regIstered owner or (VI)
any other matter arlsmg with respect 10 the Bonds or the Indenture The AuthOrity or the Trustee cannot
and do not gIve any assurances that DTC DTC PartIcIpants or others wIll d,strzbute payments of
prmclpal of or mterest on the Bonds pazd to DTC or Its nommee as the regIstered owner or any notIces
to the BenefiCial Owners or that they wIll do so on a tImely basIS or wIll serve and act m a manner
deSCribed m thIS OffiCial Statement The AuthOrity or the Trustee are not responSIble or liable for the
fazlure of DTC or any DTC PartIcIpant to make any payment or gIve any notIce to a BenefiCial Owner m
respect to the Bonds or any error or delay relatmg thereto
13
Agenda Item No 2
Page 316of316