Agenda packet, study session — Cathedral City City Council, March 23, 2022 (part 1 of 2)

CITY COUNCIL
AGENDA

Study Session
Wednesday, March 23, 2022
3:00 PM

PURSUANT TO AB 361 AND CATHEDRALCITY RESOLUTION 2022 -13, THIS MEETING MAY BE

CONDUCTED BY VIDEOCONFERENCE OR TELECONFERENCE AND THERE WILL BE NO IN -PERSON PUBLIC ACCESSTO THE MEET ING LOCATION. IF YOU WOULD LIKE TO ATTEND THE MEETING VIA ZOOM PLEASE USE THE FOLLOWING LINK TO REGISTER IN ADVANCE:

MAYOR
Ernesto Gutierrez

CITY COUNCIL MEMBERS

Mayor Pro Tem
Rita Lamb

Councilmember
Mark Carnevale

Councilmember
Nancy Ross

Councilmember
Raymond Gregory
• CALL TO ORDER
• ROLL CALL
• AGENDA FINALIZATION
At this time the City Council may announce any items being pulled from the agenda or continued to another date.

1. PUBLIC COMMENT
This is the opportun ity for members of the public to comment on any items not appearing on the regular agenda. Because of restrictions con tained in California Law, the City Council may not discuss or act on any item not on the agenda but may briefly respond to statements made or ask a question for clarification. The Mayor may also request a brief response from staff to questions raised durin g public comment or may request a matter be agendized for a future meeting. Public Comment will be limited to three (3) minutes.

2. STUDY SESSION
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Normally no action is taken on Study Session items, however, the City Council reserves the right to give spe cific policy direction and take specific action as necessary. Presentation will be limited to 10 minutes unless other provisions are made in advance.

A. Presentation - Coachella Valley Mosquito and Vector Control Recommendation: There is no formal action required for this item. It is a presentation only.

B. Exploring the potential Uses of FY 2022-23 Community Development Block Grant (CDBG) Funds and a Con Plan update for the City Council's information, discussion and direction only.

Recommendation: Review the Potential Uses of FY 2022-23 Community Development Block Grant (CDBG) Funds and the
Consolidated Plan Update, presented for the City Council's information, discussion and direction only.

C. Lease Revenue Bonds, Series 2022A (Federally Taxable) Recommendation: This item is for discussion and direction only, no formal action will be taken. Should it be the desire of the City Council to move forward, there is an item on the Regular Agenda for consideration.

ADJOURN
NOTES TO THE PUBLIC:

The City of Cathedral City complies with the Americans with Disabilities Act of 1990. If you require special assistance to participate in this meeting, please call the City Clerk’s Office at (760) 770-0322 at least 48 hours prior to the meeting.

Any documents p rovided to a majority of the City Council regarding any item on this agenda will be made available for public inspection in the City Clerk’s office at City Hall located at 68 -700 Avenida Lalo Guerrero during normal business hours. In addition, such documents will be posted on the City’s website at www.cathedralcity.gov.

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Staff Report

City Council

Item No. 2.A

Meeting Date: March 23, 2022
From: Tracey Hermosillo, City Clerk
Title: Presentation - Coachella Valley Mosquito and Vector Control

RECOMMENDATION:

There is no formal action required for this item. It is a presentation only.

BACKGROUND:

The Coachella Valley Mosquito and Vector Control District is a special district accountable to the residents of the Coachella Valley. Their primary charge is protecting public health within their boundaries through the c ontrol of vectors and vector -borne diseases.

The District boundary encompasses 2,400 square miles, including Cathedral City, Coachella, Desert Hot Springs, Indian Wells, Indio, La Quinta, Palm Desert, Palm Springs, Rancho Mirage and unincorporated section s of Riverside County. The District operates under the California Health and Safety Code and is governed by an 11 - member Board of Trustees. Mayor Pro Tem Rita Lamb represents Cathedral City as a member of the Board of Trustees.

DISCUSSION:

Tammy Gordon , Public Information Officer for the Coachella Valley Mosquito and Vector Control District will be providing and informational presentation regarding the results of the neighborhood mosquito control treatments that took place in summer 2021 in the City of Cathedral City.

FISCAL IMPACT:

There is no fiscal impact with this item.

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Staff Report

City Council

Item No. 2.B

Meeting Date: March 23, 2022
From: John Corella, Director of Engineering/Public Works Title: Exploring the potential Uses of FY 2022 -23 Community Development Block Grant (CDBG) Funds and a Con Plan
update for the City Council's information, discussion and direction only.

City Council

RECOMMENDATION:

Review the Potential Uses of FY 2022-23 Community Development Block Grant (CDBG) Funds and the Consolidated Plan Update, presented for the City Council's information, discussion and direction only.

BACKGROUND:

The Community Development Block Grant (CDBG) Entitlement Program provides annual grants to entitled cities and counties to develop viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities, principally for low -to-moderate (low-mod) income individuals. Entitled grantees must fall under the following categories:

• Principal city of Metropolitan Statistical Areas (MSAs) • Other metropolitan cities with populations of at least 50,000 • Qualified urban counties with populations of at least 200,000 (excluding the population of entitled cities)

CDBG funds may be used to fund the administration of the CDBG program (20% limit set by HUD), Public Services that benefit Cathedral City residents (15% limit set by HUD), and Public Improvements in low-mod areas. Citizen participation and stakeholder consultation are key components of every state or community’s Consolidated Plan. The Citizen Participation Plan (CPP) sets forth the grantee’s policies and procedures for citizen participation throughout the consolidated planning process. The CPP is a pathway for all citizens to exercise their voice and influence decisions that affect their communities, neighborhoods, and way of life.

Once the Consolidated Plan is approved by HUD, the City is awarded a grant and begins drafting the Annual Action Plan (AAP). The AAP provides a concise summary of

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the actions, activities, and the specific federal and non -federal r esources that will be used each year to address the priority needs and specific goals identified by the Consolidated Plan. The activities that are supported in the AAP must align with the priority needs outlined in the Consolidated Plan. At the end of the program year, a Consolidated Annual Performance and Evaluation Report (CAPER) will be submitted to HUD, which reports on the actual accomplishments and progress toward Consolidated Plan goals.

At the January 12, 2022, City Council Study Session City Staff presented a discussion on a proposed Substantial Amendment, which was ultimately presented to the City Council on March 9, 2022, and thus continued to tonight’s meeting March 23, 2022, for approval.

Also, at the same January 12, 2022, City Council Study Session meeting, City Staff presented the City Council with a discussion on the City’s 5 -Year Consolidated Plan.

Following the discussion, City Council requested City Staff to provide examples of various opportunities for funding qualified programs through the CDBG Program . The Council requested Staff to investigate qualified programs that have the potential to be considered and an investigation on what other CDBG entitled cities fund. All the aforementioned will provide the City Council a better insight to opportunities to address the needs of the community and appropriately allocate future CDBG funds.

DISCUSSION:

Following the Study Session, City Staff reached out to City’s in the Coachella Valley and received responses from four cities: Palm Desert, La Quinta, Indio, and Palm Springs.

Palm Desert:

According to the United States Census Bureau (USCB), Palm Desert has a population of 51,163 and qualifies as an entitlement city. Palm Desert receives around $400,000 in CDBG entitlement funds. Palm Desert did not have low -mod areas until the area by Lincoln Elementary recently was categorized as a low -mod area. As a result, the primary focus of Palm Desert’s public improvements have been park, ADA, and restroom upgrades. Other programs that Palm Desert has funded include:
• Council on Aging Southern California: Provides ombudsman services for the elderly and disabled living within long-term care facilities. • Fair Housing Council of Riverside County: Provides fair housing services. • Operation SafeHouse: Serves runaway youth, homeless, and at -risk youth ages 11-17 by providing food and transportation services.
• Martha’s Village: Energy improvements at homeless shelters. • John F. Kennedy Memorial Foundation: Flooring replacement project. o Allocated $24,000 from Public Improvements
• Coachella Valley Rescue Mission: Replace food service kitchen equipment at homeless shelter.

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o Allocated $36,000 from Public Improvements
• City of Palm Desert: Removal of architectural barriers in public areas at Palm Desert City Hall.
o Allocated $204,519 from Public Improvements

La Quinta:

La Quinta has a n estimated population of 37,558 (USCB) and does not qualify as an entitlement city. As a result , they follow the County’s Annual Action Plan. La Quinta receives $121,443 in CDBG funds. La Quinta does not have any low-mod areas in their City. The focus of public improvements through CDBG is their ADA Transition Plan, which include s curb ramp and public restroom upgrades. Their ADA Transition Plan started 10 years ago an d is nearing completion. La Quinta has allocated $103,227 to the City’s Engineering Services division for ADA improvements around the City . The other program that they fund is the Fee Waiver Reduction Program with the Coachella Valley Boys and Girls Club in the amount of $18,216.

Indio:

Indio has an estimated population of 89,137 (USCB) and qualifies as an entitlement city.

Indio supports local organizations responding to homelessness, food needs, and tenant/landlord issues with their entitlement funding . Indio also, continues its efforts to enhance street lighting and ADA ramps in some of the older parts of the city. Below is a list of programs that have been funded through Indio’s CDBG allocation:
• Coachella Valley Rescue Mission: Emergency food and overnight shelter. • Martha’s Village and Kitchen: Overnight shelter and supportive services. • FIND Food Bank: Food distribution and outreach program. • Inland Fair Housing and Meditation Board: Housing and tenant services. • Inland Counties Legal Services: Tenant representation and eviction protection. • Business Assistance Program: Personal Protective Equipment (PPE). • Meals on Wheels: Food assistance for the elderly.
• Lift to Rise: United Lift Rental Assistance Program.
• Indio Teen Center: Outreach programs for youth.
• Indio Senior Center: Support services for elderly.
• City of Indio: Minor Home Repair Program that are urgent and compromise safety or accessibility.
o For residents that are needing repairs that include plumbing, electrical, HVAC unit, water heaters, minor roofing repairs and more. o Allocated $200,000 (~$10,000 per repair) from Public Improvements.

Palm Springs:

Palm Springs has an estimated population of 44,575 (USCB) and is a principal city that has MSAs. Palm Springs received $540,416 for the FY 2021 -22 CDBG progr am. The priority goals of Palm Springs are affordable housing, public service activities for low - mod housing and non -housing community development. Programs that have been funded through Palm Springs CDBG entitlement include:
• City of Palm Springs: Demuth P ark Community Center Air Conditioning and

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Restroom Project.
o Allocated $374,333 from Public Improvements
• City of Palm Springs: Home Repair Program
o Allocated $10,000 from Public Improvements fund.
• Fair Housing Council of Riverside: Fair Housing Program

City Staff also reached out to City’s outside the Coachella Valley and received responses from the following cities: Santee, Hemet, Perris, and Rosemead / Monterey Park/ La Habra.

Santee

Santee has an estimated population of 60,037 (U SCB) and is an entitleme nt city.

Santee received $302,103 in CDBG funds for FY 2021 -22. The priority needs of Santee were identified as infrastructure, community services and facilities, economic development, and housing. Santee uses the Section 108 Loan Guarantee Program (Section 108) to leverage their annual grant allocation to access low -cost, flexible financing for economic development, housing, public facility, and infrastructure projects.

Santee has used Section 108 to complete sidewalk, storm drain, street improvements, and a city-wide ADA project. Programs funded by Santee’s CDBG include:
• CSA San Diego: Fair housing administrative services
• Crisis House: Homeless prevention
• ElderHelp San Diego: Independent living support for seniors • LSS Caring Neighbor’s Project: Affordable housing for low-mod individuals • Meals on Wheels: Home delivered meals to elder adults • Food Bank: Emergency food services
• Santee Santas: Provide meals for needy families and seniors • Voices for Children: Child support services
• Section 108: Improve community infrastructure and facilities o Improvements in low-mod Census Block
o Allocated $202,253 from Public Improvements

Hemet

Hemet has an estimated population of 89,833 (USCB) and is an entitlement city. Hemet received $1,074,431 for FY 2021 -22 CDBG funds. The goal of Hemet’s CDBG program is to increase self -sufficiency and economic opportunity for lower -income residents and individuals with special needs so that they can achieve a reasonable standard of living.

Projects funded through Hemet CDBG include:
• City of Hemet: Rental property rehabilitation program. o Provide financial assistance to property owners that need to proactively address or remediate potential code enforcement violations or otherwise improve housing conditions.
o Allocated $200,000 from Public Improvements.
• City of Hemet: Senior disabled home repair program.
o Home repairs and improvements that are health and safety issues .

Includes energy efficient appliances, HVAC units, ADA compliant showers, roof replacements and more.

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o Allocated $142,212 from Public Improvements.
• City of Hemet: City-wide ADA Projects.
o Allocated $257,572 from Public Improvements.
• Care-a-Van: Specialized transportation services for elderly, disabled, and low - mod individuals.
• Center Against Sexual Assault: Sexual assault and domestic violence support services.
• Exceed: Art in the Park.
o Interactive art program for adults with disabilities. o Allocated $17,549 from Public Services.

Perris

Perris has an estimated population of 78,700 (USCB) and is an entitlement city. The goal of Perris’s CDBG program is to assist future and existing homeowners, improve access to homeless services through outreach, community services for elderly and youth, and to improve infrastructure improvements in eligible areas. Programs funded through Perris CDBG are listed below:
• Habitat for Humanity: Home repair program.
• Grid Alternative.
• City of Perris: Park and ADA improvements.
o Allocated $347,825 from Public Improvements (Data from FY 2017-18). • Senior Center: Facility improvements.
o Allocated $116,889 from Public Improvements (FY 2018-18).

Rosemead/ Monterey Park/ La Habra

The point of contact for Rosemead’s CDBG program, as listed on the city’s website, was the Consultant. The Consultant manages the CDBG program for Rosemead, Monterey Park, and La Habra. For F Y 2021 -22 CDBG funding, Rosemead received $2,215,476, Monterey Park received $976,000, and La Habra received $636,529.

Rosemead and Monterey Park also receive HOME funding from HUD. All three cities focus on private property improvements due to the age of homes. Other priorities include affordable housing, youth centers, parks and recreation, homelessness prevention and code enforcement. Programs funded by the three cities include:
• City of Rosemead: Summer youth employment program.
o Provides summer employment for high school aged youth. o Allocated $30,000 from Public Services.
• City of Rosemead: Senior nutrition program.
• City of Rosemead: Commercial façade program.
o Provide low interest loans/grants to viable businesses to enhance exterior facades.
o Allocated $100,000 from Public Improvements.
• City of Rosemead: Business assistance program.
• City of Monterey Park: Housing rehabilitation program. • City of Monterey Park: Code enforcement program.
• City of Monterey Park: Fair housing program.
• City of Monterey Park: ADA improvements.

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o Allocated $54,985 from Public Improvements.
• City of Monterey Park: Reconstruction of deteriorated alleyways. • City of La Habra: Aldrich improvement project.
• City of La Habra: Community Center parking lot.
• City of La Habra: Old Reservoir Park improvements.
o Allocated $33,000 from Public Improvements.
• City of La Habra: Alley improvement program.
o Pavement reconstruction in several alleys to benefit residents by increasing property value, providing satisfactory pavement rideability, and alley beautification.
o Allocated $150,377 from Public Improvements.

The examples listed above are ideas for the discussion with City Council tonight in the development of the City’s 5 -Year Con Plan. The goal of the discussion is for City Council to provide guidance for Staff on the Council’s priorities for the community development needs of Cathedral City to incorporate into the City’s 5-year Con Plan.

FY 2022-26 Consolidated Plan and Annual Action Plan
The Con Plan and AAP is designed to help states and local ju risdictions assess their affordable housing and community development needs and market conditions, and make data-driven, place-based investment decisions. The Con Plan process serves as the framework for a community -wide dialogue to identify housing and co mmunity development priorities.

In preparing the Con Plan/AAP, the City is utilizing several methods to analyze the housing and community development needs of the community. Methods include hosting focus groups, surveying community residents and stakehold ers, surveying multi -family unit property owners, analyzing U.S. Census data, and utilizing information in several public planning documents. The City has hosted two community meetings as an effort to outreach and encourage the participation of all residents, particularly low-and-moderate- income residents, elderly persons and persons with disabilities. The purpose of these meetings is to inform the community about the Con Plan and AAP process, identify opportunities to improve collaborative efforts and elim inate service delivery gaps to develop and sustain decent and affordable housing, suitable living environments and expanded community and economic opportunities. The successful development of the Con Plan and AAP will summarize the City’s priorities and sp ecific objectives in addressing the needs of low -income households and communities, as well as describe how allocated funds will be made available to address identified needs.

The U.S. Department of Housing and Urban Development Office of Community Planning and Development’s guidelines in preparing a consolidated plan and annual action plan submission to HUD states, “The consolidated plan should have the clear backing and support of the Mayor or Chief Elected Official. Real cooperation and coordination will not occur without leadership by the jurisdiction's elected officials and citizens will not participate in a process that does not have leadership by elected officials. Leadership also aids in the effective implementation of the plan and increases commitment to the plan.”

The City Council Study Session complies with this guideline by encouraging the City

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Council to provide Staff with input on the community development needs of low - moderate income households and communities within the City and directio n on future funding priorities (public service, affordable housing, and capital improvements) for use within the development of the Con Plan. The following are key needs assessments to be considered during this Study Session:

1. Housing and Homeless Needs Assessment
What are the projected housing needs for the next five years for families that are anywhere between very low to middle income, owners, renters, the elderly, single and large families, the disabled, and families affected by HIV and AIDS? Also, what is the extent and characteristics of homelessness in the jurisdiction?

2. Housing Market Analysis
What are the identified challenges to increasing affordable housing and provide a strategy to increase affordable housing opportunities?

3. Community and Economic Development Needs Assessment
What are the needs for services (including childcare and other services for working families) , facilities, infrastructure, and economic opportunities for targeted income households and CDBG areas (low -moderate census trac ts)? Also, what are the needs for infrastructure projects, business incentive programs and job educational services that could significantly benefit the local target groups?

4. Non-Homeless Special Needs Assessment
What is the nature and extent of the housin g assistance / public service needs of non-homeless special needs populations such as the elderly and frail elderly, persons with disabilities, persons with HIV/AIDS, persons with alcohol or drug addictions, victims of domestic violence and any unique subg roups within the City?

This Study Session item is for the City Council to review the potential uses of FY 2022 - 23 Community Development Block Grant (CDBG) Funds and Con Plan Update for the City Council's information, discussion and direction only.

FISCAL IMPACT:

Discussion Only. No Fiscal Impact.

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Staff Report

City Council

Item No. 2.C

Meeting Date: March 23, 2022
From: Tami Scott, Administrative Services Director
Title: Lease Revenue Bonds, Series 2022A (Federally Taxable)

City Council

RECOMMENDATION:

This item is for discussion and dir ection only, no formal action will be taken. Should it be the desire of the City Council to move forward, there is an item on the Regular Agenda for consideration.

EXECUTIVE SUMMARY
On September 15, 2021, the City Council approved Resolution No. 2021 -28 to refund City of Cathedral City (“City”) obligations to the California Public Employees’ Retirement System (“CalPERS”) and, among other things, to initiate a validation action in connection with the potential issuance of Pension Obligation Bonds for such purpose.

On February 23, 2022, the City Council approved Resolution No. 2022 -10 to rescind Resolution No. 2021 -28 to terminate the validation action and to not proceed with the issuance of Pension Obligation Bonds.

Due to the current low interest rate e nvironment, the City has an opportunity to potentially generate future savings by refinancing its Unfunded Accrued Liability (“UAL”) with CalPERS for financial savings. Pursuant to the latest CalPERS annual valuation report as of June 30, 202 0, for the Cit y’s Police, Fire and Miscellaneous retirement plans, the aggregate UAL is approximately $4 6.3 million (balance as of 6/30/2 0) and reflecting the then CalPERS interest rate of 7.0% (called “discount rate”) to amortize the UAL with a 23 -year maturity term. B ased on recent information provided by CalPERS, the City’s aggregate UAL is approximately $2 7.7 million, which reflects the CalPERS investment gains in FY 2020 -21 of 21.3% and the discount rate of 6.8%, which was changed by CalPERS’ Board in November 2021. Additionally, the CalPERS unilaterally changed the final maturity term from 23 years to 15 years.

Current bond market condition indicates the City may be able to issue 12 -to-14-year bonds at approximately 3.84% (Scenario 1) to 3.74% (Scenario 2) interest (all-in true interest cost). Projected cumulative savings ranges from $5.9 million (Scenario 1) to $7.0 million (Scenario 2), with present value (PV) savings (discounting back future

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savings in today’s dollars) ranging from $4.4 million to $4.6 million. P V savings as a percentage of UAL paid off ranges from 16% to 17%.

In addition to the pension refinancing, and as part of the City's continuing ongoing effort to control costs, staff explored the benefits of refinancing the Cathedral City Financing Authority Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable) (“Series 2015A”) secured by rental payments made from the City’s General Fund. Currently, a refinancing of the Series 2015A Bond produces less than 3% PV savings. Howeve r, in order to provide flexibility in the event interest rates decline to achieve a minimum 3% PV savings, the financing documents include provisions to refund the Series 2015A Bonds. Pursuant to the City’s debt policy, refunding bonds can only be issued if they produce at least 3% present value savings.

The proposed refinancing’s will be achieved through issuance of Lease Revenue Bonds by the Cathedral City Financing Authority (“Authority”). The City will agree to make lease payments from its General Fund under a lease/leaseback of certain real property (which is expected to consist of the City Hall) (“Leased Property”).

To authorize the issuance of the Bonds, the City Council must adopt Resolution No. 2022-XX, setting forth certain financial parameters a nd approve, authorize and direct execution of certain financing documents. The significant parameters in Resolution No. 2022-XX are: $35 million maximum principal; 4.25% maximum all -in true interest cost; and 0.65% maximum underwriter’s discount. Based on current market conditions it is not anticipated that the entire $35 million will be required but would ensure sufficient cushion if there is a shift in conditions prior to issuance. The actual par amount of bonds will be a function of the final structure of the bond issue. Good Faith Estimates, as required by Government Code Section 5852.1, are provided as an attachment to the City Council Resolution.

BACKGROUND AND DISCUSSION:

PENSION REFINANCING

The annual employer pension contributions are determ ined by actuarial valuation reports prepared by CalPERS for each of the City’s eight plans. The amount the City pays to CalPERS annually is comprised of two components: Normal Cost (as a percentage of covered payroll; paid biweekly) and amortized UAL paym ent (paid monthly, or at the option of the employer, prepaid in lump -sum annually at a discount).

The Normal Cost represents the annual cost of service accrual for the upcoming fiscal year for active employees. The UAL represents the unfunded portion of past service credit earned or accrued by the members who are currently receiving benefits, active members, and those entitled to deferred benefits. The UAL is the difference between the present value of earned benefits and the market value of assets in th e City’s CalPERS account. Each year, CalPERS calculates the difference between these two

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values: they true-up by adding new Amortization Bases to adjust for the changes in the UAL.

Based on the July 2021 CalPERS reports reflecting actuarial valuation dat a as of June 30, 2020, the City’s total UAL for the three largest pension plans was $4 6.3 million. In FY 2021-22, the City was required to pay CalPERS a combined total fixed dollar UAL payment of $3,025,030 and estimated total normal costs of approximately $2,462,739 (paid with biweekly payroll). The annual payments for these three plans total $5,487,769.

Table 1 – CalPERS Pension Funded Status as of June 30, 2020

MISC FIRE POLICE TOTAL
CalPERS Actuarial Reports dated July 2021:

Actuarial valuation as of 6/30/2020
Entry Age Normal Accrued Liability (AL) 63,740,616 57,442,232 82,031,478 203,214,326 Plan’s Market Value of Assets (MVA) 48,981,527 45,078,256 62,813,744 156,873,527 Unfunded Accrued Liability (UAL) 14,759,089 12,363,976 19,217,734 46,340,799 Unfunded Ratio 30.1% 27.4% 30.6% 29.5%
Funded Ratio 76.8% 78.5% 76.6% 77.2%

As mentioned earlier, in FY 2020 -21, CalPERS achieved an investment return of 21.3% which will result in positive (credits) UAL bases across each of the City’s pension plans.

The investment gains are estimated to total $24.6 million and will be reflected in the CalPERS annual valuation reports dated July 2022. Offsetting these gains is the reduction in t he discount rate to 6.8%, which will add negative UAL bases totaling approximately $6.4 million. The below table provides a summary of the City’s Original Projected UAL balances as of June 30, 2021, and the current updated Projected UAL Balances for each of the City’s three largest pension plans.

Table 2 – Original Projected Estimate CalPERS UAL as of June 30, 2021, and current Projected Estimate based on the 21.3% Investment Return.

Original
Projected UAL
Balance as of
6/30/2021
Estimated
Funded
Ratio
Current
Projected
UAL Balance
as of 6/30/2021
Estimated
Funded
Ratio
Plan 1417, Miscellaneous, Tier 1 $14,287,293 77.6% $8,702,306 86.3% Plan 1418, Fire, Tier 1 11,875,033 79.3% 7,002,852 87.8% Plan 1419, Police, Tier 1 18,783,566 77.1% 12,048,489 85.3% Total $44,945,892 $27,753,647

Estimated Savings of POBs Financing at 100% of UAL (3 Largest Plans)

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For the CalPERS Plan 1417 Misc Tier 1, Plan 1418 Fire Tier 1 & Plan 1419 Police Tier 1 proposed for the pension refinancing, the UAL is projected to be $27,753,647 as of June 30, 2022. As mentioned earlier, the City may be able to issue 12 -to-14-year Bonds at approximately 3.84% (Scenario 1) to 3.74% (Scenario 2) interest (all -in true interest cost). Projected cumulative savings ranges from $5.9 million (Scenario 1) to $7.0 million (Scenario 2), with present value (PV) savings (discounting back future savings in today’s dollars) ranging from $4.4 million to $4.6 million. PV savings as a percentage of UAL paid off ranges from 16% to 17%. Table 3 below provides estimated savings for each of the two scenarios being evaluated.

It is important to note that the UAL and related required annual payments are not static amounts. Each year, CalPERS adds new Amortization Bases to account fo r actuarial gains and losses. The UAL and related payments are 1) increased if CalPERS performs worse than the actuarial assumptions or changes assumptions such as reducing the discount rate (currently at 6.8%), and 2) decreased if CalPERS performs better than actuarial assumptions and the investment returns exceed the current discount rate of 6.8%. Actuarial assumptions include the investment rate of return/discount rate, salary increases, retirement rates, mortality, and various others.

Table 3 – Estimated Savings of POBs Financing at 100% of UAL (3 Largest Plans)

Scenario 1: $400k Annual Savings- 14-Year Term, 2036 Final Maturity

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Fiscal Year UAL Payments to
CalPERS at 6.8%
$400K Annual
Savings Debt
Service at 3.84%
Estimated
Savings
Present Value
Savings
2022-23 3,378,196 2,973,079 405,117 387,859 2023-24 3,858,963 3,454,403 404,560 373,005 2024-25 3,667,026 3,265,667 401,359 356,372 2025-26 3,328,755 2,923,869 404,886 346,212 2026-27 2,974,815 2,571,330 403,485 332,258 2027-28 2,532,774 2,139,328 393,445 312,012 2028-29 2,642,223 2,246,123 396,100 302,503 2029-30 2,754,737 2,355,464 399,273 293,653 2030-31 2,870,401 2,471,771 398,630 282,340 2031-32 2,989,304 2,589,792 399,512 272,503 2032-33 2,903,817 2,503,796 400,021 262,762 2033-34 2,810,120 2,405,795 404,325 255,770 2034-35 2,624,843 2,221,188 403,656 245,906 2035-36 2,005,730 1,613,395 392,335 230,172 2036-37 257,021 - 257,021 145,212 Total 41,598,724 35,734,999 5,863,725 4,398,539

100% MISCELLANEOUS FIRST TIER, SAFETY FIRE AND POLICE

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Scenario 2: 12-Year Term, 2034 Final Maturity

Fiscal Year UAL Payments to
CalPERS at 6.8%
2034 Final Maturity
Debt Service at

3.74%
Estimated
Savings
Present Value
Savings
2022-23 3,378,196 3,202,795 175,401 168,110 2023-24 3,858,963 3,670,434 188,529 174,173 2024-25 3,667,026 3,485,498 181,528 161,655 2025-26 3,328,755 3,151,597 177,158 152,071 2026-27 2,974,815 2,801,132 173,683 143,709 2027-28 2,532,774 2,365,489 167,284 133,421 2028-29 2,642,223 2,482,996 159,227 122,414 2029-30 2,754,737 2,591,942 162,795 120,641 2030-31 2,870,401 2,702,081 168,320 120,236 2031-32 2,989,304 2,818,434 170,870 117,653 2032-33 2,903,817 2,730,077 173,740 115,314 2033-34 2,810,120 2,644,001 166,120 106,278 2034-35 2,624,843 - 2,624,843 1,618,710 2035-36 2,005,730 - 2,005,730 1,192,285 2036-37 257,021 - 257,021 147,271 Total 41,598,724 34,646,475 6,952,249 4,593,941

100% MISCELLANEOUS FIRST TIER, SAFETY FIRE AND POLICE

Risks Associated with Pension Refinancing Bonds

1. Poor market timing risk . A large loss (e.g., from a stock market crash) soon after Bond proceeds are invested by CalPERS will cause a larger lo ss to the City in the near-term (by causing a larger layer of UAL being created with the inclusion of the

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Bond proceeds loss). However, the following data may indicate that the “poor market timing” risk may be mitigated in the long run with the CalPERS av erage annual investment returns being greater than the Bond interest costs. Caveat:

Please note that there is no guarantee that past results will be indicative of the future performance.

CalPERS
Historical
Returns
$1,000,000
Investment
$1,000,000
Investment
$1,000,000
Investment
Year In 2008 In 2009 In 2010
2021 21.3% $2,249,246 $2,370,122 $3,118,581
2020 4.7% 1,854,284 1,953,934 2,570,966
2019 6.7% 1,771,044 1,866,222 2,455,555
2018 8.6% 1,659,836 1,749,036 2,301,364
2017 11.2% 1,528,394 1,610,531 2,119,119
2016 0.6% 1,374,455 1,448,319 1,905,683
2015 2.4% 1,366,257 1,439,681 1,894,317
2014 18.4% 1,334,236 1,405,938 1,849,919
2013 13.2% 1,126,888 1,187,448 1,562,432
2012 0.1% 995,484 1,048,982 1,380,240
2011 21.7% 994,490 1,047,934 1,378,861
2010 13.3% 817,165 861,080 1,133,000
2009 -24.0% 721,240 760,000 n/a
2008 -5.1% 949,000 n/a n/a

Compound Annual
Rate of Return: 5.96% 6.36%

8.46%

2. Poor investment earnings risk . Bond proceeds invested by CalPERS might fail to earn more than the City’s interest costs over the term of the Bonds, resulting in an increased UAL for the City.

The success of the Bond financing is dependent upon two variab les: 1) Bond interest costs and 2) CalPERS investment performance. The invested Bond proceeds may lose value if the market declines; however, they are long -term debt instruments, and the success of the Bond financing cannot be determined until final maturity of the debt. The proposed Bond financing presents a significant savings potential (approximately 21% present value savings (Scenario 1) based on the current market condition and 16% present value savings based on the maximum interest rate per Resolution No. 2022 -XX), which provides a cushion against the investment loss or underperformance. If CalPERS experiences a significant loss or underperformance over the life of the Bonds, then the savings/advantage of debt financing could be eliminated.

The following are the long-term investment returns published by CalPERS.

10.3% for the 5-year time period.

8.5% for the 10-year time period.

6.9% for the 20-year time period.

8.4% for the 30-year time period.

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3. CalPERS discount rate reduction risk . A key factor f or the actuarial calculations is the discount rate (currently 6.8%), which is the rate of return that CalPERS assumes it will earn on its investments. CalPERS has changed its investment allocations and has taken a more conservative outlook by incrementall y reducing its discount rate.

The following are the historical CalPERS discount rates. The lower the discount rates, the higher the contribution rates are for the local governments. CalPERS has discussed the possibility of lowering the discount rate agai n in the future, which would increase the City’s UAL and pension costs and reduce the probability for the success of the POBs financing.

CALPERS Discount Rate
Time Period %
1992-1994 8.75%
1994-1997 8.50%
1997-2003 8.25%
2003-2011 7.75%
2011-2016 7.50%
2016-2017 7.375%
2017-2018 7.25%
2018-2021 7.00%
2021-2022 6.80%

SERIES 2015A REFINANCING

In July 2015, the City through the Cathedral City Financing Authority , sold the Series 2015A taxable Lease Revenue Bonds in the total principal amount of $3.768 million , and were originally issued to refinance the Authority’s 1997 taxable Lease Revenue Bonds. The Series 2015A Bonds were sold via private placement and were purchased by City National Bank. The Series 2015A Bonds’ leased asset is City Hall and are secured by the City’s General Fund lease payments. The Series 2015A Bonds are currently outstanding in the principal amount of $1.997 million with a fixed interest rate of 4.25%. While the Series 2015A Bonds’ final maturity is August 1, 2027, the Se ries 2015A Bonds are eligible to be prepaid, in full, with no prepayment penalty.

In order to achieve savings from the current low interest rate environment and assuming a refinancing achieves a minimum PV savings of 3%, the City would save approximately $44,851 in gross total savings over the term of the allocable portion of the Series 2022A Bonds. Average annual cash flow savings will be approximately $ 7,475. On a fiscal year basis, t he refinancing will not extend the final term . However, the final ma turity date for the Series 2022A bonds would be December 1, 2027, instead of August 1, 2027, which is the existing final payment date for the Series 2015A Bonds. The following table depicts the projected annual savings on a bond year basis through the end of the term.

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Estimated Cashflow Savings

SERIES 2015A REFINANCING
Fiscal Year
Prior Debt
Service
Refunding Debt
Service Annual Savings
06/01/2023 $ 378,498 $ 372,334 $ 6,163 06/30/2024 377,493 372,280 5,212 06/30/2025 374,999 365,564 9,435 06/30/2026 374,974 367,887 7,087 06/30/2027 378,269 369,284 8,985 06/30/2028 377,863 369,895 7,968 $ 2,262,094 $ 2,217,243 $ 44,851

Documents to Approve
Adoption of the proposed resolutions by the City Council and the Authority Board of Directors will approve and authorize the Mayor, the City Manager, the Administ rative Services Director, or their respective designees to approve the legal documents in connection with the refinancing. The City is only a party to the Site and Facility Lease and the Lease Agreement, but the other referenced documents are essential to the transaction.
• Indenture
• Site and Facility Lease
• Lease Agreement
• Assignment Agreement
• Bond Purchase Agreement
• Continuing Disclosure Agreement
• Preliminary Official Statement

Indenture. The Indenture is a contract between The Bank of New York Mellon Trust Company, N.A. (the “Trustee”) and the Cathedral City Public Financing Authority (the “Authority”), under which the Bonds that the Authority is issuing for the benefit of the City are secured. The Indenture assigns certain duties to the Trustee and establishes the structure for the payment of the Bonds. The Authority appoints the Trustee as its agent to accept the Base Rental Payments (defined below) from the City made under the Lease Agreement and to divide these payments among the registered owners of th e Bonds, according to the interest and principal payments due to each of them. The Trustee will accept for deposit a portion of the amount equal to the net proceeds of sale of the Bonds from the purchaser. The Bonds will be issued at a fixed rate of interest in accordance with the terms set forth in the Indenture.

Site and Facility Lease . Under the Site and Facility Lease, the City leases the Leased Property to the Authority. No money is exchanged under this document.

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Lease Agreement. Under the Lease Agreement, the City will lease back from the Authority the Leased Property and agrees to make annual rental payments (“Base Rental Payments”). Base Rental Payments will represent fair market value for the Leased Property. The Lease Agreement also sets fort h the obligation of the City to make its semiannual Base Rental Payments. This document details the insurance coverage requirements for the Leased Property.

Assignment Agreement. In addition, there will be an Assignment Agreement, to which only the Authori ty and the Trustee, and not the City, are parties. In the Assignment Agreement, the Authority assigns to the Trustee for the benefit of the Bondholder all of the Base Rental Payments it would otherwise be due under the terms of the Lease Agreement.

Bond Pu rchase Agreement . Under the Bond Purchase Agreement, Raymond James & Associates, Inc. will agree to purchase all of the Bonds, subject to the conditions provided therein, from the Authority for resale to individual purchasers of the Bonds at fixed interest rates.

Continuing Disclosure Agreement. Under the Continuing Disclosure Agreement, the City will undertake to provide annual reports and notice of certain enumerated events to the Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace Access (“EMMA”) website. The undertaking by the City in the Continuing Disclosure Agreement is required for the sale of the Bonds by federal securities law.

Preliminary Official Statement . The Preliminary Official Statement (the “POS”) is the docu ment that describes the Bonds and their payment and redemption terms, material aspects of the City’s finances and operations, material risks and other matters of interest to potential investors. For example, the POS contains summary tables of the City’s assets and liabilities and revenues and expenses and recent budgets. The POS is the City’s responsibility under federal securities laws and should be reviewed closely for accuracy and any misstatement of material fact or material omission. The City has been assisted in the preparation of the POS by its Disclosure Counsel.

Finance Team

Fieldman, Rolapp & Associates, located in Irvine CA is one of California’s oldest independent municipal financial advisory firms, who has assisted the City with its municipal offerings since 2012. Norton Rose Fulbright (“NRF”), a global law firm with lawyers across the US, Europe, Canada, Australia and many other countries, has been providing Bond and Disclosure Counsel services to the City since 2004. NRF has been instrumental assisting the City and the City’s non -profits with bond related litigation, tax issues, a defunct CFD, new bond issues for three of the largest Assessment Districts in the City and consistently providing legal guidance on both new issues and refunding debt to the benefit of the City and its Special Districts. Raymond James Inc (“RJ”), founded in 1962, has been the city’s underwriter for almost 10 years. Raymond James is one of the premier underwriters for public offerings. It provides unique financing needs from new buildings and roads to reducing obligations through lower rates and shorter terms. Raymond James has been instrumental in assisting the City in refunding several outstanding obligations subsequently saving the Successor Agency and the City several million dollars, ultimately benefiting the City’s General Fund.

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Timing of Bond Issuance
The Bonds are proposed to be sold in mid-April and close around the end of April. Staff and the finance team will hold a credit presentation with Standard & Poor’s in mid-March and the rating is expected by March 31.

Fiscal Impact:

Payment of debt service of the Bonds is a liability of the General Fund. The estimated Gross Savings with respect to the proposed refinancing estimated as follows:

Pension
Refinancing

Term

Final Maturity
Estimated Gross
Annual Savings
Scenario 1 14-Year 2036 $ 5,863,725
Scenario 2 12-Year 2034 $ 6,952,249

LRB Refinancing

Term

Final Maturity
Estimated Gross
Annual Savings
Series 15A No change 5-Year 2027 $ 44,851

All f inancing-related costs will be paid from the Bond proceeds. Should City Council direct staff to move forward with the refinancing, staff recommends Scenario 2 for the pension refinancing, with an estimated gross savings of $6,952,249

If the Series 2015A refinancing achieves a minimum PV savings of 3%, total gross debt service savings would be approximately $72,768.

GOOD FAITH ESTIMATES related to the Cost of Issuance
Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the 2022A Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2022A Bonds), is $497,104 as follows:

Cost of Issuance Estimated Amounts

Bond Counsel $ 81,800
Disclosure Counsel 43,000
Municipal Advisor 57,000
Title Insurance 29,000
Trustee & Trustee’s Counsel 8,000
Printer 2,000
Rating Agency 34,000
Miscellaneous 45,484
Underwriter 196,820
Total $497,104

The foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from the estimates above due to variations from t hese estimates in the timing of 2022A Bond

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sales, the amount of 2022A Bonds sold, the amortization of the 2022A Bonds sold and market interest rates at the time of each sale. The actual interest rates at which the 2022A Bonds will be sold will depend on th e bond market at the time of each sale. The actual amortization of the 2022A Bonds will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the City’s and the Authority’s control.

ATTACHMENTS:

Authorizing Resolution - Cathedral City
Authorizing Resolution - Cathedral City Public Finance Authority Indenture
Site and Facility Lease
Lease Agreement
Assignment Agreement
Bond Purchase Contract
Continuing Disclosure Agreement
Preliminary Official Statement

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104910665.2
RESOLUTION NO. ______

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CATHEDRAL

CITY AUTHORIZING AND APPROVING THE ISSUANCE OF

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY LEASE
REVENUE BONDS, SERIES 2022 A ( FEDERALLY TAXABLE), IN THE AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $ 35,000,000

APPROVING THE EXECUTION AND DELIVERY OF A SITE AND

FACILITY LEASE, LEASE AGREEMENT, CONTINUING DISCLOSURE

AGREEMENT, BOND PURCHASE AGREEMENT AND PRELIMINARY
OFFICIAL STATEMENT; AND AUTHORIZING CERTAIN ACTIONS AND

EXECUTION OF DOCUMENTS RELATED THERETO

WHEREAS, the City of Cathedral City, California (the “City”) is a charter city duly organized and existing under and pursuant to the Constitution and laws of the State of California.

WHEREAS, the Cathedral City Financing Authority ( the “Authority”) is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated December 1, 1993, by and between the City and the Cathedral City Redevelopment Agency, and under the provi sions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, 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 and refinancing outstanding obligations; and
WHEREAS, the City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended, to make payments relating to pension benefits accr uing to the California Public Employees’ Retirement System’s (“CalPERS”) members, including the City; and WHEREAS, the City is obligated specifically to make certain payments to CalPERS in respect of current and retired public safety employees and miscella neous employees under the pension programs of CalPERS that amortize such obligations over a fixed period of time (collectively, the “CalPERS Obligation”); and WHEREAS, the City desires , subject to market conditions, that the Authority issue its Lease Revenue Bonds, Series 2022A (Federally Taxable) (the “2022A Bonds”) for the purpose of: (i) funding all or a portion of its CalPERS Obligation; (ii) refunding all of the outstanding Authority Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable) (the “Refunded Bonds”); (iii) funding a reserve for the 2022A Bonds, if necessary or desirable ; and (iv) paying the costs of issuing the 2022A Bonds; and

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Attachment: Authorizing Resolution - Cathedral City (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 104910665.2 2
WHEREAS, the 2022A Bonds are to be issued and secured pursuant to an Indenture (the “In denture”), by and between the Authority and a trustee to be named therein (the “Trustee”), the form of which will be approved by the Authority; and WHEREAS, it is proposed that the City and the Authority enter into a Site and Facility Lease (the “Site Lease”), by and between the City and the Authority, pursuant to which the City will lease property of the City as an Responsible Officer of the City shall designate (the “Leased Property”) to the Authority; and WHEREAS, it is proposed that the City and the Aut hority enter into a Lease Agreement (the “Lease”), by and between the Authority and the City , the proposed form of which is on file with the City Clerk, pursuant to which City will lease the Lea sed Property from the Authority; and
WHEREAS, under the Lease, the City will be obligated t o make lease payments to the Authority which the Authority will assign to the Trustee to pay debt service on the 2022A Bonds; and
WHEREAS, it is proposed that the City and the Authority deliver a Preliminary Official Statement and final Official Statement in connection with the marketing and sale of the 2022A Bonds; and
WHEREAS, it is proposed that the City and the Authority enter into a Bond Purchase Agreement (the “Bond Purchase Agreement”), by and between the Authority and Raymond James & Associates, Inc ., as underwriter, in connection with the sale of the 2022A Bonds; and
WHEREAS, it is proposed that the City execute and deliver a Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”), by and between the City and a dissemination agent na med therein in connection with the sale of the 2022A Bonds;
NOW, THEREFORE, BE IT RESOLVED , by the City Council of the City of Cathedral City (the “City Council”) as follows:

Section 1. Approval of 2022A Bonds. The City Council hereby a pproves the issuance of the 2022A Bonds by the Authority in the aggregate pri ncipal amount not to exceed $35,000,000.

Section 2. Approval of the Site and Facility Lease. The City Council hereby approves the Site and Facility Lease in substantially the form on file with the City Clerk.

The Mayor, the City Manager or the Administrative Services Director , any of their respective designees (each, a “Responsible Officer”) , are each hereby authorized to execute the Site and Facility Lease in substantially such form , with s uch revisions, amendments and completions as shall be approved by a Responsible Officer, such approval to be conclusively evidenced by the execution and delivery thereof.

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Attachment: Authorizing Resolution - Cathedral City (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 104910665.2 3
Section 3. Approval of the Lease Agreement. The City Council hereby approves the Lease Agreement in substantially the form on file with the City Clerk of the City. Any Responsible Officer is hereby authorized to execute the Lease Agreement in substantially such form , with such revisions, amendments and completions as shall be approved by a Responsib le Officer, such approval to b e conclusively evidenced by the execution and delivery thereof.

Section 4. Preliminary Official Statement. The proposed form of Preliminary Official Statement with respect to the issuance of the 2022A Bonds, substantially in the form on file with the City Clerk, is h ereby approved, with such revisions, amendments and completions as shall be approved by an Responsible Officer with the advice of Disclosure Counsel, in order to make the Preliminary Official Statement final as of its date, except for the omission of certa in information, as permitted by Section 240.15c2 - 12(b)(1) of Title 17 of the Code of Federal Regulations (“Rule 15c2 -12”), and any certificate relating to the finality of the Preliminary Official Statement under Rule 15c2 -

12. Any Responsible Officer is hereby authorized and directed to execute and deliver a final Official Statement in the form of the Preliminary Official Statement, with such additions and changes as may be approved by any Responsible Officer executing the same, such approval to be conclusiv ely evidenced by the execution and delivery thereof.

Section 5. Bond Purchase Agreement. The proposed form of Bond Purchase Agreement, on file with the City Clerk, is hereby approved. Any Responsible Officer is hereby authorized and dire cted, for and on behalf of the Authority with the advice of Bond Counsel, to execute and deliver the Bond Purchase Agreement, substantially in the form on file with the City Clerk, with such changes therein, deletions therefrom and additions thereto as suc h Responsible Officer shall ap prove, such approval to be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement; provided, that the principal amount of the 2022A Bonds shall not exceed $35,000,000, the true interest cost for th e 20 22A Bonds shall not exceed 4. 25%, the underwriter’s discount shall not exceed 0.65% of the principal amount of the 2022A Bonds.

Section 6. Continuing Disclosure Agreement. The proposed form of Continuing Disclosure Agreement, on file with the City Clerk, is hereb y approved. Any Responsible Officer is hereby authorized and directed for and on behalf of the City, to execute and deliver the Continuing Disclosure Agreement, substantially in the form on file with the City Clerk, with such changes therein, deletions the refrom and additions thereto as su ch Responsible Officer shall approve, such approval to be conclusively evidenced by the execution and delivery of the Continuing Disclosure Agreement.

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Attachment: Authorizing Resolution - Cathedral City (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 104910665.2 4
the 2022A Bonds, (c) the amount of pr oceeds of the 2022A Bond s expected to be received net of the fees and charges paid to third parties, and (d) the sum total of all debt service payments on the 2022A Bonds calculated to the final maturity of the 2022A Bonds, plus the fees and charges paid t o third parties not paid with the proceeds of the 2022A Bonds.

Section 8. Official Actions. The Responsible Officers , the City Clerk, any Assistant City Clerk and all other officers and agents of the City are hereby authorized and directed, for and in the name and o n behalf of the City, to do any and all things and take any and all other actions, and the execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, terminations, warrants and o ther documents, which they, or any of them, deem necessary or advisable to consummate the lawful execution and delivery of the Site and Facility Lease and the Lease Agreement and the consummation of the transactions described herein and therein.

Section 9. Electronic Signatures. This Resolution and the documents and certificates relating to the 2022A Bonds may be executed with electronic signatures in accordance with Government Code of the State of California §16.5. Such electronic signatures will be treated in all re spects as having the same effect as an original signature.

Section 10. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.

PASSED, APPROVED AND ADOPTED THIS 23rd DAY OF MARCH 2022.

_________________________________
Ernesto Gutierrez, Mayor

ATTEST:

_____________________________
Tracey R Hermosillo, City Clerk

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Attachment: Authorizing Resolution - Cathedral City (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 104910665.2 5
I HEREBY CERTIFY that the foregoing Resolution was adopted by a vote of the City Council of the City of Cathedral City at its regular meeting of March 23, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

_____________________________
Tracey R. Hermosillo, City Clerk

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Attachment: Authorizing Resolution - Cathedral City (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable))

104910665.2

EXHIBIT A

GOOD FAITH ESTIMATES
The following information was obtained from Raymond James & Associates, Inc. with respect to the 2022A Bonds approved in the attached Resolution, and is provided in compliance with Senate Bill 450 (Chapter 625 of the 2017 -2018 Session of the California Legislature) with respect to the 2022A Bonds:

1. True Interest Cost of the 2022A Bonds. Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the 2022A B onds, which m eans the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2022A Bonds, is 3.59%.

2. Finance Charge of the 2022A Bonds. Assuming an aggregate prin cipal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the 2022A Bonds, which means the sum of all fees and charges pa id to third parties (or costs associated with the 2022A Bonds), is $497,104 as follows:

Cost of Issuance Estimated Amounts
Bond Counsel $ 81,800
Disclosure Counsel 43,000
Municipal Advisor 57,000
Title Insurance 29,000
Trustee & Trustee’s Counsel 8,000
Printer 2,000
Rating Agency 34,000
Miscellaneous 45,484
Underwriter 196,820
Total $497,104

3. Amount of Proceeds to be Received. Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rat es prevailing at the time of preparation of this information, a good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the 2022A Bonds less the finance charge of the 2022A Bonds described in 2 above and any reser ves o r capitalized interest paid or funded with proceeds of the 2022A Bonds, is $29,782,896.

4. Total Payment Amount. Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rates prevailing at the time o f preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the 2022A Bonds plus the finance charge of the 2022A Bonds described in paragraph 2 above not paid with the proceeds of the 2022A Bond s, calculated to the final maturity of the 2022A Bonds, is $36,908,801.

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Attachment: Authorizing Resolution - Cathedral City (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 104910665.2 2
Attention is directed to the fact that the foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from the estimates above due to variations from these estimates in the timing of 2022A Bond sales, the amount of 2022A Bonds sold, the amortization of the 2022A Bonds sold and market in terest rates at the time of each sale. The date of sale and the amount of 2022A Bonds sold will be determined by the Authority based on need for project funds and other factors. The actual interest rates at which the 2022A Bonds will be sold will depend on the bond market at the time of each sale. The actual amortization of the 2022A Bonds will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the City’s and the Author ity’s control. The City and the Authority have approved the execution and delivery of the 2022A Bonds with a maximum true interest cost not to exceed 4.00% per annum.

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Attachment: Authorizing Resolution - Cathedral City (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable))

RESOLUTION NO. ______

RESOLUTION OF THE CATHEDRAL CITY FINANCING AUTHORITY

AUTHORIZING AND APPROVING THE ISSUANCE OF CATHEDRAL

CITY PUBLIC FINANCING AUTHORITY LEASE REVENUE BONDS,
SERIES 2022 A ( FEDERALLY TAXABLE), IN THE AGGREGATE
PRINCIPAL AMOUNT NOT TO EXCEED $35,000,000 APPROVING THE

EXECUTION AND DELIVERY OF A SITE AND FACILITY LEASE,

LEASE AGREEMENT , ASSIGNMENT AGREEMENT , BOND

PURCHASE AGREEMENT AND PRELIMINARY OFFICIAL
STATEMENT; AND AUTHORIZING CERTAIN ACTIONS AND

EXECUTION OF DOCUMENTS RELATED THERETO

WHEREAS, the City of Cathedral City, California (the “City”) is a charter city duly organized and existing under and pursuant to the Constitution and laws of the State of California.

WHEREAS, the Cathedral City Financi ng Authority (th e “Authority”) is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated December 1, 1993, by and between the City and the Cathedral City Redevelopment Agency, and u nder the provisi ons of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, 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 and re financing outstanding obligations; and
WHEREAS, the City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended, to make payments relating to pension benefits accrui ng to the Califor nia Public Employees’ Retirement System’s (“CalPERS”) members, including the City; and WHEREAS, the City is obligated specifically to make certain payments to CalPERS in respect of current and retired public safety employee s and miscellaneous employees under the pension programs of CalPERS that amortize such obligations over a fixed period of time (collectively, the “CalPERS Obligation”); and WHEREAS, the City desires , subject to market conditions, that the Authority issue its Lease Revenue Bonds, Series 2022A (Federally Taxable) (the “2022A Bonds”) for the purpose of: (i) funding all or a portion of its CalPERS Obligation; (ii) refunding all of the outstanding Authority Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable) (the “Refunded Bonds”); (iii) funding a reserve for the 2022A Bonds, if necessary o r desirable; and (iv) paying the costs of issuing the 2022A Bonds; and

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Attachment: Authorizing Resolution - Cathedral City Public Finance Authority (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 2 WHEREAS, the Authority desires to assi st the City by issuing its 2022A Bonds pursuant to an Indenture (th e “Indenture”), by and between the Authority and a trustee to be named therein (the “Trustee”), the form of which will be approved by the Authority ; and
WHEREAS, it is proposed that the City and the Authority enter into a S ite and Facility Lease (the “Site Lease”), by and between the City and the Authority, pursuant to which the City will lease property of the City (the “Leased Property”) to the Authority; and
WHEREAS, it is proposed that the City and the Autho rity enter int o a Lease Agreement (the “Lease”), by and between the Authority and the City , the proposed form of which is on file with the Secretary, pursuant to which the City will lease the Lea sed Property from the Authority; and
WHEREAS, it is proposed that the Authority and the Trustee enter into a n Assignment Agreement (the “ Assignment Agreement ”), by and between the Authority and the Trustee, the proposed form of which is on file with the Secretary, pursuant to which the Authority will assign rental under the Lease to the Trustee for payment of t he 2022A Bonds; and
WHEREAS, it is proposed that the City and the Authority deliver a Preliminary Official Statement and final Official Statement in connection with the marketing and sale of the 2022A Bonds; and
WHEREAS, it is proposed that the City and the Authority enter into a Bond Purchase Agreement (the “Bond Purchase Agreement”), by and between the Authority and Raymond James & Associates, Inc ., as underwriter, in connection with the sale of the 2022A Bonds;
NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors (the “Board”) of the Authority as follows:

Section 1. Approval of 2022A Bonds. The Board hereby app roves the issuance of the 2022A Bonds by the Authority in the aggregate pri ncipal amount not to exceed $35,000,000.

Section 2. Approval of the Site and Facility Lease. The Board hereby approves the Site and Facility Lease in substantially the form on file with the Secretary.

The Chairman, the Executive Director or the Chief Financial Officer , and any of their respective designees (each, a “ Responsible Officer”) , are each hereby authorized to execute the Site and Facility Lease in substantially such form , with such revisions, amendments and completions as shall be approved by a Responsible Officer, such approval to be conclusively evidenced by the execution and delivery thereof.

Section 3. Approval of the Lease Agreement. The Board hereby approves the Lease Agreement in substantially the form on file with the Secretary of the City. Any Responsible Officer is hereby authorized to execute the Lease Agreem ent in

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Attachment: Authorizing Resolution - Cathedral City Public Finance Authority (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 3 substantially such form, with such revisions, amendments and completions as shall be approved by a Responsible Officer, such approval to b e conclusively evidenced by the execution and delivery thereof.

Section 4. Approval of the Assignment Agreement. The Board hereby approves the Assignment Agreement in substantially the form on file with the Secretary of the City . Any Responsible Officer is hereby authorized to execute the Assignment Agreement in substantially such form , with such revisions, amendments and completions as shall be appro ved by a Responsible Officer, such approval to b e conclusively evidenced by the execution and delivery thereof.

Section 5. Preliminary Official Statement. The proposed form of Preliminary Official Statement with respect to the issuance of th e 2022A Bonds, substantially in the form on fil e with the Secretary, is h ereby approved, with such revisions, amendments and completions as shall be approved by an Responsible Officer with the advice of Disclosure Counsel, in order to make the Preliminary Official Statement final a s of its date, except for the omission of certa in information, as permitted by Section 240.15c2 - 12(b)(1) of Title 17 of the Code of Federal Regulations (“Rule 15c2 -12”), and any certificate relating to the finality of the Prelimin ary Official Statement und er Rule 15c2 -

12. Any Responsible Officer is hereby authorized and directed to execute and deliver a final Official Statement in the form of the Preliminary Official Statement, with such additions and changes as may be approved by any Responsible Officer executing the same, su ch approval to be conclusiv ely evidenced by the execution and delivery thereof.

Section 6. Bond Purchase Agreement. The proposed form of Bond Purchase Agreement, on file with the Secretary, is hereby approved. Any Responsible Officer is hereby aut horized and directe d, for and on behalf of the Authority with the advice of Bond Counsel, to execute and deliver the Bond Purchase Agreement, substantially in the form on file with the Secretary, with such changes therein, deletio ns therefrom and additions thereto as such Responsible Officer shall ap prove, such approval to be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement; provided, that the principal amount of the 2022 A Bonds shall not exceed $ 35,000,000, the true inter est cost for the 20 22A Bonds shall not exceed 4.25%, the underwriter’s discount shall not exceed 0.65% of the principal amount of the 2022A Bonds.

Section 7. Good Faith Estimates. Senate Bill 450 (Chapter 625 of the 2017 - 2018 Session of the California Legislature) (“SB 450”) requires that the governing body of a public body obtain from an underwriter, financial advisor or private lender and disclose, before authorizing the issuance of bonds with a term of greater than 13 months, certain good f aith c ost estimates. Set forth in attached Exhibit A , which is incorporated by reference, are good faith estimates of: (a) the true interest cost of the 2022A Bonds, (b) the sum of all fees and charges paid to third parties with respect to the 2022A Bonds, (c) t he amount of pr oceeds of the 2022A Bond s expected to be received net of the fees and charges paid to third parties, and (d) the sum total of all debt service payments on the 2022A Bonds calculated to the final maturity of the 2022A

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Attachment: Authorizing Resolution - Cathedral City Public Finance Authority (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 4 Bonds, plus the fees and charges paid to third parties not paid with the proceeds of the 2022A Bonds.

Section 8. Official Actions. The Responsible Officers , the Secretary, any Assistant Secretary and all other officers and agents of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all other actions, and the execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, terminations, warrants and o ther documents, which they, or any of them, deem necessary or advisable to consummate the lawful execution and delivery of the Site and Facility Lease and the Lease Agreement and the consummation of the transactions described herein and therein.

Section 10. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.

PASSED, APPROVED AND ADOPTED THIS 23rd DAY OF MARCH 2022.

_________________________________
Ernesto Gutierrez, Chairman

ATTEST:

_____________________________
Tracey R. Hermosillo, Secretary

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Attachment: Authorizing Resolution - Cathedral City Public Finance Authority (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 5 I HEREBY CERTIFY that the foregoing Resolution was adopted by a vote of the Board of Di rectors of the Cathedral City Financing Authority at its regular meet ing of March 23, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

_____________________________
Tracey, R. Hermosillo, Secretary

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Attachment: Authorizing Resolution - Cathedral City Public Finance Authority (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable))

EXHIBIT A

1. True Interest Cost of the 2022A Bonds. Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the 2022A Bond s, which m eans t he r ate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the 2022A Bonds, is 3.59%.

2. Finance Charge of the 2022A Bonds. Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold a nd based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the 2022A Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the 2022A Bonds), is $497,104 as follows:

Cost of Issuance Estimated Amounts
Bond Counsel $ 80,000
Disclosure Counsel 44,800
Municipal Advisor 57,000
Title Insurance 29,000
Trustee & Trustee’s Counsel 8,000
Printer 2,000
Rating Agency 34,000
Miscellaneous 45,484
Underwriter 196,820
Total $497,104

3. Amount of Proceeds to be Received. Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rates prevailing at the tim e of preparation of this info rmation, a good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the 2022A Bonds less the finance charge of the 2022A Bonds described in 2 above and any reserves or capitalized inter est paid or funded with proceeds of the 2022A Bonds, is $29,782,896.

4. Total Payment Amount. Assuming an aggregate principal amount of 2022A Bonds of $30,280,000 are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the 2022A Bonds plus the finance charge of the 2022A Bonds described in paragraph 2 above not paid with t he proceeds of the 2022A Bond s, calculated to the final maturity of the 2022A Bonds, is $36,908,801.

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Attachment: Authorizing Resolution - Cathedral City Public Finance Authority (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 2 Attention is directed to the fact that the foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total paymen t amount may vary from the estimates above due to variations from these estimates in the timing of 2022A Bond sales, the amount of 2022A Bonds sold, the amortization of the 2022A Bonds sold and market interest rates at the time of each sale. The date of sa le and the amount of 2022A Bonds sold will be determined by the Authority based on need for project funds and other factors. The actual interest rates at which the 2022A Bonds will be sold will depend on the bond market at the time of each sale. The actual amortization of the 2022A Bonds will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the City’s and the Authority’s control. The City and the Authority have approved the execution and delivery of the 2022A Bonds with a maximum true interest cost not to exceed 4.00% per annum.

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Attachment: Authorizing Resolution - Cathedral City Public Finance Authority (3172 : Lease Revenue Bonds, Series 2022A (Federally Taxable)) 104913545.2
NRF DRAFT – 3/7/22

INDENTURE

by and between the

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee

Dated as of April 1, 2022

Relating to

$[Par Amount]
Cathedral City Public Financing Authority
Lease Revenue Bonds,
Series 2022A (Federally Taxable)

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TABLE OF CONTENTS

Page
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ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF
BONDS; EQUAL SECURITY ........................................................................ 2 SECTION 1.01. Definitions...................................................................................... 2 SECTION 1.02. Rules of Construction .................................................................. 10 SECTION 1.03. Authorization and Purpose of Bonds ........................................... 11 SECTION 1.04. Equal Security .............................................................................. 11 ARTICLE II ISSUANCE OF BONDS ............................................................................... 11 SECTION 2.01. Designation .................................................................................. 11 SECTION 2.02. Terms of Bonds ............................................................................ 11 SECTION 2.03. Redemption of Bonds .................................................................. 12 SECTION 2.04. Form of Bonds ............................................................................. 14 SECTION 2.05. Execution of Bonds ...................................................................... 14 SECTION 2.06. Transfer of Bonds ........................................................................ 15 SECTION 2.07. Exchange of Bonds ...................................................................... 15 SECTION 2.08. Temporary Bonds......................................................................... 15 SECTION 2.09. Registration Books ....................................................................... 15 SECTION 2.10. Bonds Mutilated, Lost, Destroyed or Stolen ................................ 16 SECTION 2.11. Book-Entry System; Limited Obligation ..................................... 16 SECTION 2.12. Representation Letter ................................................................... 17 SECTION 2.13. Transfers Outside Book-Entry System ........................................ 17 SECTION 2.14. Payments and Notices to the Nominee ........................................ 18 ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS ....................................... 18 SECTION 3.01. Issuance of Bonds ........................................................................ 18 SECTION 3.02. Application of Proceeds of Sale of Bonds ................................... 18 SECTION 3.03. Costs of Issuance Fund ................................................................ 19 SECTION 3.04. Validity of Bonds ......................................................................... 19 ARTICLE IV REVENUES; FLOW OF FUNDS ................................................................. 19 SECTION 4.01. Pledge of Revenues; Assignment of Rights ................................. 19 SECTION 4.02. Lease Revenue Fund; Receipt, Deposit and Application of Revenues ...................................................................................... 20 SECTION 4.03. Investments .................................................................................. 21 SECTION 4.04. Valuation and Disposition of Investments ................................... 22 ARTICLE V COVENANTS OF THE AUTHORITY ........................................................ 22 SECTION 5.01. Punctual Payment......................................................................... 22 SECTION 5.02. Extension of Payment of Bonds ................................................... 22 SECTION 5.03. Against Encumbrances................................................................. 22 SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment ........... 22 SECTION 5.05. Accounting Records; Financial Statements ................................. 23

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SECTION 5.06. Additional Obligations ................................................................. 23 SECTION 5.07. Lease ............................................................................................ 23 SECTION 5.08. Further Assurances....................................................................... 23 ARTICLE VI THE TRUSTEE ............................................................................................. 24 SECTION 6.01. Appointment of Trustee ............................................................... 24 SECTION 6.02. Acceptance of Trusts.................................................................... 24 SECTION 6.03. Fees, Charges and Expenses of Trustee ....................................... 28 SECTION 6.04. Notice to Bond Owners of Default .............................................. 28 SECTION 6.05. Intervention by Trustee ................................................................ 28 SECTION 6.06. Removal of Trustee ...................................................................... 28 SECTION 6.07. Resignation by Trustee ................................................................ 28 SECTION 6.08. Appointment of Successor Trustee .............................................. 28 SECTION 6.09. Merger or Consolidation .............................................................. 29 SECTION 6.10. Concerning any Successor Trustee .............................................. 29 SECTION 6.11. Appointment of Co-Trustee ......................................................... 29 SECTION 6.12. Indemnification; Limited Liability of Trustee ............................. 30 ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE ............... 30 SECTION 7.01. Amendment Hereof ...................................................................... 30 SECTION 7.02. Effect of Supplemental Indenture ................................................ 31 SECTION 7.03. Endorsement or Replacement of Bonds After Amendment ........ 31 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS ............ 31 SECTION 8.01. Events of Default ......................................................................... 31 SECTION 8.02. Remedies; No Acceleration ......................................................... 32 SECTION 8.03. Application of Revenues and Other Funds After Default ............ 33 SECTION 8.04. Power of Trustee to Control Proceedings .................................... 33 SECTION 8.05. Appointment of Receivers ........................................................... 34 SECTION 8.06. Non-Waiver.................................................................................. 34 SECTION 8.07. Rights of Owners ......................................................................... 34 SECTION 8.08. Termination of Proceedings ......................................................... 34 ARTICLE IX MISCELLANEOUS ...................................................................................... 35 SECTION 9.01. Limited Liability of Authority ..................................................... 35 SECTION 9.02. Benefits of Indenture Limited to Parties ...................................... 35 SECTION 9.03. Defeasance; Discharge of Indenture ............................................ 35 SECTION 9.04. Successor is Deemed Included in All References to Predecessor .................................................................................. 36 SECTION 9.05. Content of Certificates and Opinions ........................................... 36 SECTION 9.06. Execution of Documents by Owners ........................................... 37 SECTION 9.07. Disqualified Bonds....................................................................... 37 SECTION 9.08. Waiver of Personal Liability ........................................................ 37

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SECTION 9.09. Partial Invalidity........................................................................... 38 SECTION 9.10. Destruction of Canceled Bonds ................................................... 38 SECTION 9.11. Funds and Accounts ..................................................................... 38 SECTION 9.12. Payment on Business Days .......................................................... 38 SECTION 9.13. Notices ......................................................................................... 38 SECTION 9.14. Unclaimed Moneys ...................................................................... 39 SECTION 9.15. Governing Law ............................................................................ 39

EXHIBIT A – FORM OF BOND
EXHIBIT B – FORM OF SERIES 2022A COSTS OF ISSUANCE REQUISITION

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104913545.2
1 INDENTURE
This INDENTURE is dated as of April 1, 2022 (this “Indenture”), by a nd between the CATHEDRAL CITY PUBLIC FINANCING AUTHORITY , a joint powers authority organized and existing under the laws of the State of California (the “Authority”), and The Bank of New York Mellon Trust Company, N.A. , a national banking association duly organized and existing under the laws of the United States of America with a corporate trust office in Los Angeles , California and qualified to accept and administer the trusts hereby created, as trustee (the “Trustee”).

RECITALS:

WHEREAS, the Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement , dated December 1, 1993 , by and between the City of Cathedral City, California (the “City”) and the Cathedral City Redevelopment Age ncy, and under the provisions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act (the “Bond Law”) to borro w money for the purpose of refinancing obligations; and
WHEREAS, the City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended, to make payments relating to pensio n benefits accruing to the California Public Employees’ Retirement System’s (“CalPERS”) members, including the City; and WHEREAS, the City is obligated specifically to make certain payments to CalPERS in respect of current and retired public safety employe es and miscellaneous employees under the pension programs of CalPERS that amortize such obligations over a fixed period of time (collectively, the “CalPERS Obligation”); and
WHEREAS, the Authority previously issued its Lease Revenue Bonds (Capital Faciliti es Projects), Series 2015A (Taxable) (the “Refunded Bonds”); and WHEREAS, the Authority has determined to assist the City in providing funds to refinance all or a portion of the CalPERS Obligation and to refund the Refunded Bonds by issuing its Lease Revenue Bonds, Series 2022A (Federally Taxable) (the “Bonds”), pursuant to and secured by this Indenture in the manner provided herein; and WHEREAS, to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions u pon which the Bonds are to be issued and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority has authorized the execution and delivery of this Indenture; and WHEREAS, the Authority has determined that all ac ts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set

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104913545.2 2
forth in accordance with its terms, have been done and taken, and the execution and delivery of the Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the payment of the principal of and the interest and premium (if any) on all Bonds at any time issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants an d conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:

ARTICLE I
DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;

EQUAL SECURITY
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any Supplemental Indenture and of the Bonds and of any certificate, opinion, request or other document herein mentioned have the meanings herein specified.
“Act” means Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or as thereafter amended from time to time.
“Additional Rental Payments” means the additional rental payable by the City under and pursuant to Section 3(b) of the Lease.
“Assignment Agreement” means the Assignment Agreement, dated as of April 1, 2022, by and between the Authority and the Trustee.
“Authority” means the Cathedral City Public Financing Authority , a joint powers authority duly organized and existing under the Joint Exercise of Powers Agreement and the laws of the State.
“Authority Board” means the governing body of the Authority. “Authorized Denominations” means $5,000 or any integral multiple thereof. “Authorized Representative” means the Chairman, Executive Director, Chief Financial Officer of the Authority, the Secretary of the Authority, any Deputy Secretary of the Authority or any of their respective designees.
“Base Rental Payments” means the Base Rental Payments under the Lease. “Bond Counsel” means a firm of attorneys appointed by or acceptable to the Authority.

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“Bond Law” means the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 of the Act, as in existence on the Closing Date or as thereafter amended from time to time.
“Bond Year” means each twelve -month period extending from December 2 in one calendar year to December 1 of the succeeding calendar year, both dates inclusive, except that the first Bond Year shall begin on the Closing Date and shall end on December 1, 2022. “Bonds” means the Authority’s Lease Revenue Bond s, Series 2022A (Federally Taxable).
“Business Day” means a day other than (i) a Saturday or Sunday, (ii) a day on which commercial banks in the city in which the Trustee maintains its Trust Office are authorized or required by law or executive order to close or (iii) a day on which the New York Stock Exchange is closed.
“Certificate of the Authority” means a certificate i n writing signed by an Authorized Representative of the Authority or by any other officer of the Authority duly authorized by an Authorized Representative or by the Authority for that purpose, as evidenced in writing to the Trustee.
“Certificate of the City” means a certificate in writing signed by the City Manager of the City or by any other officer of the City duly authorized for that purpose. “City” means the City of Cathedral City, California.
“Closing Date” means ________, 2022, being the date of delivery of the Bonds to the Original Purchaser thereof.
“Costs of Issuance” means all expenses incurred in connection wi th the authorization, issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and expenses (including but not limited to fees and expenses for legal counsel) of the Authority and the Trustee, compensation to any financ ial consultants, underwriters or placement agents, legal fees and expenses (including fees and expenses of Bond Counsel) , filing and recording costs, rating agency fees, costs of preparation and reproduction of documents, costs of printing and fees and costs for any guaranty, surety bond, letter of credit or other credit facility. “Defeasance Securities” means:
(1) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series — “SLGS”)
(2) Direct obligations of the Treasury which have bee n stri pped by the Treasury itself, CATS, TIGRS and similar securities.
(3) Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable.

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(4) Pre-refunded municipal bonds ra ted “Aaa” by Moody’s and “AAA” by S&P. If however, the issue is only rated by S&P (i.e., there is no Moody’s rating), then the pre-refunded bonds must have been pre -refunded with cash, direct U.S. or U.S. guaranteed o bligations, or AAA rated pre -refunded municipals to satisfy this condition.
(5) Obligations issued by the following agencies which are backed by the full faith and credit of the U.S.:
(a) U.S. Export-Import Bank (Eximbank)
(i) Direct obligations or fully guaranteed ce rtificates of beneficial ownership
(b) Farmers Home Administration (FmHA)
(i) Certificates of beneficial ownership
(c) Federal Financing Bank
(d) General Services Administration
(i) Participation certificates
(e) U.S. Maritime Administration
(i) Guaranteed Title XI financing
(f) U.S. Department of Housing and Urban Development (HUD) (i) Project Notes
(ii) Local Authority Bonds
(iii) New Communities Debentures – U.S. government guaranteed debentures
(iv) U.S. Public Housing Notes and Bonds – U.S. government guaranteed public housing notes and bonds.
“Depository” means DTC and its successors and a ssigns or if (a) the then Depository resigns from its functions as securities depository of the Bonds, or (b) the Authority discontinues use of the Depository pursuant to Section 2.13 hereof, any other securities depos itory which agrees to follow the procedures requested to be followed by a securities depository in connection with the Bonds and which is selected by the Authority.
“Depository Participant” means a member of, or participant in, the Depository.

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“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Event of Default” means any of the events described in Section 8.01. “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willin g seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Cod e) and, otherwise, the term “fair mark et value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit the value of which is determined in accordance with applicable regul ations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) the value of wh ich is determined in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security-State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bure au of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California, but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. “Fiscal Year” means any twelve -month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the Authority as its official fiscal year period. “Indenture” means this Indenture, dated as of April 1, 2022, as originally executed or as it may from time to time be amended or supplemented in accordance herewith. “Independent Certified Public Accountant” means any certified public accountant or firm of certified public accountants appointed and paid by the Authority, and who, or each of whom:
(a) is in fact independent and not under domination of the Author ity or the City;
(b) does not have any substantial interest, direct or indirect, in the Authority or the City; and
(c) is not connected with the Authority or the City as an officer or employee of the Authority or the City but who may be regularly retained to make annual or other audits of the books of or reports to the Authority or the City. “Information Services” means the Electronic Municipal Market Access System (referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Board, at http://emma.msrb.org; provided, however, in ac cordance with then current guidelines of the Securities and Exchange Commission, Information Services shall mean such other organizations

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providing information with respect to called Bonds as the Authority may designat e in writing to the Trustee.
“Interest Payment Date” means June 1 and December 1 of each year, commencing _______ 1, 2022.
“Joint Exercise of Powers Agreement” means that certain Joint Exercise of Powers Agreement, dated as of December 1, 1993 , entered int o und er the Act by the City and the Cathedral City Redevelopment Agency, together with any amendments thereof and supplements thereto.
“Lease” means that certain Lease Agreement, dated as of April 1, 2022, by and between the Authority as lessor and the City as lessee, as it may be further amended or modified. “Leased Property” means, collectively, those certain parcels of real property, together with the improvements thereon, leased by the Authority to the City pursuant to the Lease, as more fully described in Exhibit A to the Lease, as such Exhibit A may be revised and amended from time to time pursuant to the terms hereof and of the Lease. “Lease Revenue Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.02.
“Maximum Annual Debt Service” in respect of any Bond Year means the largest of the sums obtained for that or any succeeding Bond Year after totaling the following for each such Bond Year:

A. The principal amount of all Outstanding Bonds maturing or required to be redeemed by mandatory sinking account redemption in such Bond Year; and B. The interest that would be due during such Bond Year on the aggregate principal amount of Bonds which would be Outstanding in such Bond Year if the Bonds Outstanding on the date of such computation were to mature or be redeemed in accordance with the applicable maturity or mandatory sinking account redemption schedule. At the time and for the purpose of making such computation, the amount of Bonds already retired in advance of the above mentioned schedule or schedules shall be deducted pro rata from the remaining amounts thereon.
“Moody’s” means Moody’s Investors Service, and its successors and assigns. “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant hereto.
“Original Purchaser” means Raymond James & Associates, Inc. “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.07) all Bonds theretofore exe cuted, issued and delivered by the Authority under this Indenture except:

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(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and
(c) Bonds in lieu of which or in substituti on for which other Bonds shall have been executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture.
“Owner” when used with respect to any Bond, means the person in whose name the ownership of such Bond shall be registered on the Registration Books. “Permitted Investments” means any of the following whi ch at the time of investment are legal investments under the l aws of the State for the moneys proposed to be invested therein (the Trustee is entitled to conclusively rely on a Request of the Authority directing investment in such Permitted Investment as a certification by the Authority to the Trustee that such Permitted Investment is a legal investment under the laws of the State), but only to the extent that the same are acquired at Fair Market Value:
(a) Direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) or obligations the timely payment of the prin cipal of and interest on which are fully guaranteed by the United States of America, including instruments evidencing a direct ownership interest in securities described in this clause such as Stripped Treasury Coupons rated or assessed in the highest rati ng category by S&P and Moody’s and held by a custodian for safekeeping on behalf of holders of such securities.
(b) Bonds or notes which are exempt from federal income taxes and for the payment of which cash or obligations described in clause (a) of this defin ition in an amount sufficient to pay the principal of, premium, if any, and interest on when due have been irrevocably deposited with a trustee or other fiscal depositary and which are rated in the highest rating c ategory b y S&P and Moody’s.
(c) Obligations, d ebentures, notes or other evidence of indebtedness issued or guaranteed by any of the following: Federal Home Loan Bank System, Government National Mortgage Association, Farmer’s Home Administration, Federal Home Loan Mortgage Corporation or Federal Housin g Administration; provided that with respect to the funds and accounts established under this Indenture, such obligations shall at no time exceed an amount equal to ten percent (10%) of the aggregate principal amount of the Bonds Outstanding. (d) Deposit accounts, certificates of deposit or savings accounts (i) fully insured by the Federal Deposit Insurance Corporation or (ii) with banks whose short term obligations are rated no lower than A -1 by S&P and P -1 by Moody’s incl uding those of the Trustee and its affiliates.

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(e) Federal funds or banker’s acceptances with a maximum term of one year of any bank that has an unsecured, uninsured and unguaranteed obligation rating of “Prime -1” or “A3” by Moody’s and “A-l” or “A” or better by S&P (including the Trustee) and its affiliates. (f) Repurchase obligations with a term not exceeding 30 days pursuant to a written agreement between the Trustee and either a primary dealer on the Federal Reserve reporting dealer list which falls under the j urisdiction of the SIPC or a federally chartered commercial bank whose long-term debt obligations are rated A or better by S&P and Moody’s, with respect to any security described in clause (1); provided that the securities which are the subject of such repurchase obligation (i) must be free and clear of all liens, (ii) in the case of a SIPC dealer, were not acquired pursuant to a repurchase or reverse repurchase agreement, (iii) must be deposited with the Trustee and maintained through weekly market valuati ons in an amount equal to 104% of the invested funds plus accrued interest; and further provided that the Trustee must have a valid first perfected security interest in such securities. (g) Taxable government money market portfolios that have a rating by S&P o f Am-G or Am or better and rated in on e of the three highest rating categories of Moody’s, subject to a maximum permissible limit equal to six months of principal and interest on the Bonds , including such funds for which the Trustee, its affiliates or subs idiaries provide investment advisory o r other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Truste e or an affiliate of the Trustee recei ves fees from funds for services rendered, (ii) the Trustee collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees received from such funds, and (iii) services performed f or such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee;
(h) Tax-exempt government money market portfolios that have a rating by S&P of Am-G or Am or better and rated in one of t he three highest rating categorie s of Moody’s consisting of securities which are rated in the highest Rating Categories of S&P and Moody’s subject to a maximum permissible limit equal to six months of principal and interest on the Bonds, including su ch fu nds for which the Trustee, its af filiates or subsidiaries provide investment advisory or other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodia n or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from funds for services rendered, (ii) the Trustee collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees re ceived from such funds, and (iii) serv ices performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee; (i) Money market funds registered under the Investment Company Act of 1940, the shares in which are registered under the Securities Act of 1933 and that have a rating by S&P of AAAm-G or AAAm and rated in one of the two highest Rating Categories of Moody’s, including such funds for which the Trustee, its affiliates o r sub sidiaries provide investment advisory or other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from

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funds for services rendered, (ii) the Trustee collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee; (j) The Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Gover nment Code, to the extent the Trustee is authorized to register such investment in its name.
(k) Investment agreements, including guaranteed investment contracts (“GICs”) forward purchase agreements and reserve fund put agreements with banks or other financial institutions rated, or guaranteed by institutions rated, or with senior unsecured debt rated, by S&P or Moody’s, in one of the three highest rating categories assigned by such agencies. “Record Date” means, with respect to any Interest Payment Date, the f ifteenth calendar day of the month imm ediately preceding such Interest Payment Date, whether or not such day is a Business Day.
“Registration Books” means the records maintained by the Trustee pursuant to Section 2.09 for the registration and transfer of ownership of the Bonds. “Rental Payment s” means collectively the Base Rental Payments and the Additional Rental Payments.
“Request of the Authority” means a request in writing signed by an Authorized Representative of the Authority or by any other officer o f the Authority duly authorized by an Authorized Representative or by the Authority for that purpose, as evidenced in writing to the Trustee.
“Request of the City” means a request in writing signed by the City Manager , the Administrative Services Director or by any other officer of the City du ly authorized for that purpose.
“Revenues” means (i) all Base Rental Payments payable by the City pursuant to the Lease (including both timely and delinquent payments and any prepayments), (ii) any proceeds of Bonds originally deposited with the Trustee an d all moneys on deposit in the funds and accounts established hereunder, (iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by or p ayable to the Trustee relating to the Base Rental Payments.
“S&P” means S&P Global Ratings, and its successors and assigns. “Securities Depositories” means The Depository Trust Company, New York, New York and its successors and assigns or if (i) the then Securities Depository resigns from its functions as depository of the Bonds or (ii) the Authority discontinues use of the then Securities Depository pursuant to Section 2.13, any other securities depository which agrees to follow the procedures required to be followed by a securities depository i n connection with the Bonds and which is selected by the Authority.

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“Series” means any series of Bonds issued hereunder.
“Series 2022A Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03.
“Series 2022A Interest Account” means the account by that name established and held by the Trustee pursuant to Section 4.02(a).
“Series 2022A Principal Account” means the account by that name established and held by the Trustee pursuant to Section 4.02(b).
“Series 2022A Reserve Account” means the account by that name established and held by the Trustee pursuant to Section 4.02(c).
“Series 2022A Reserve Requirement” means, as of any calculation date in a Bond Year, an amount equal to Maximum Annual Debt Service.
“Site and Facility Lease” means that certain Site and Facility Lease, dated as of April 1, 2022, by and between the City and the Authority, pursuant to which the Authority leases the Leased Property from the City.
“State” means the State of California.
“Supplemental Indenture” means any agreement supplemental to or amendatory of this Indenture entered into in accordance with the provisions of Article VII. “Trust Office” means the corporate trust office of the Trustee in Los Angeles, California or such other offices as may be specified to the Authority by the Trustee in writing. “Trustee” means The Bank of New York Mellon Trust Company, N.A. , and its successors and assigns, and any other corporation or association that may a t any time be substituted in its place as provided in Article VI hereof. “Written Request of the Authority” means a request in writing signed by a Authorized Representative.

SECTION 1.02. Rules of Construction. All references in this Indenture to “Articles,” “Sections,” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; and the words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.

SECTION 1.03. Authorization and Purpose of Bonds. The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review, and hereby finds and determines that all th ings, conditions, and acts required by law to exist, to happen and to be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Authority is now autho rized under the Joint Exercise of P owers Agreement and the Bond Law and each and every requirement of law, to issue the Bonds in the

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manner and form provided in this Indenture. Accordingly, the Authority hereby authorizes the issuance of the Bonds pursuan t to the Bond Law and this Indentur e for the purpose described in the recitals hereof.

SECTION 1.04. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between the Authority and the Owners from time to time of the Bonds; and the covenants and agreements herein set forth to be performed on behalf of the Authority shall be for the equal and proportionate benefit, security and protection of all Owners without preference , pri ority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.

ARTICLE II

ISSUANCE OF BONDS
SECTION 2.01. Designation. The Bonds are authorized to be issued by the Authority under and subject to the Bond Law and the terms of this Indenture and shall be designated , respectively, as the “ Cathedral City Public Financing Aut hority Lease Revenue Bond s, Series 2022A (Federally Taxable) .” The Bonds shall be issued in the original aggregate principal amount of $[Par Amount].

SECTION 2.02. Terms of Bonds. The Bonds shall be dated the Closing Date, shall mature on the dates and in the amounts, and shall bear interest (calculated on the basis of a 360 - day year of twelve 30-day months) at the rates, as follows:

December 1
Principal
Amount
Interest
Rate

The Bonds shall be deli vered in fully registered form and delivered in Authorized Denominations. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated during the period from the day after the Record Date for an Interest Pa yment Date to and including such In terest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on or prior to the Record Date for the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provide d, however, that if, at the time of authentication of any Bond interest with respect to such Bond is in default, such Bond shall bear interest from the

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Interest Payment Date to which interest has been paid or made availab le for payment with respect to such Bond.

Interest with respect to any Bond shall be payable in lawful money of the United States of America on each Interest Payment Date to the Owner thereof as of the close of business on the Record Date, such interest to be paid by check of the Trustee, m ailed by first class mail no later than the Interest Payment Date to the Owner at his address as it appears, on such Record Date, on the Registration Books maintained by the Trustee; provided, however, that at the written request of the Owner of at least $ 1,000,000 in aggregate principal amount of Outstanding Bonds filed with the Trustee prior to any Record Date, interest on such Bonds shall be paid to such Owner on each succeeding Interest Payment Date (unless such request has been revoked in writing) by wire transfer of immediately available funds to an account in the United States designated in such written request. Payments of defaulted interest with respect to the Bonds shall be paid by check or draft to the registere d Owners of the Bonds as of a speci al record date to be fixed by the Trustee, notice of which special record date shall be given to the registered Owners of the Bonds not less than ten days prior thereto. The principal of and premium, if any, on the Bonds are payable by check when due upon surrender thereof at the Trust Office in lawful money of the United States of America.

SECTION 2.03. Redemption of Bonds.
(a) Bonds Extraordinary Redemption. The Bonds are subject to redemption prior to their respective maturity dates, up on notice as hereinafter provided, as a whole or in part on any date, from prepayments of Base Rental Payments made by the City pursuant to Section 11(a) of the Lease from funds received by the City due to a taking of the Leased Property or any portion thereof under the power of eminent dom ain or from insurance proceeds received by the City due to damage to or destruction of the Leased Property or any portion thereof, under the circumstances and upon the conditions and terms prescribed herein and in the Lea se.

Redemption of Bonds pursuant t o this subparagraph (a) shall be made at a redemption price equal to the sum of the principal of the Bonds to be redeemed plus accrued interest thereon to the date fixed for redemption, without premium.
(b) Optional Redemptio n from Prepayments of Base Rental P ayments. The Bonds maturing on or after _________ 1, 20__ shall be subject to redemption prior to their respective maturity dates, upon written notice from Authority to the Trustee at least forty -five (45) days (or such lesser number of days acceptable to the Trustee, in the sole discretion of the Trustee) prior to the date fixed for redemption, as a whole or in part on any date on or after _________ 1, 20__, in such maturities as the Authority shall designate (and by lot within any maturity), from prepayments of Base Rental Payments made at the option of the City pursuant to Section 11 of the Lease, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued but unpaid interest to the date fixed for redemption, without premium (c) Mandatory Sinking Account Redemption . The Bonds maturing December 1, 20__ are subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule commencing December 1, 20__, and on December 1 in each year thereafter to and including December 1, 20__ at a redemption price equal to the principal amount

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thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Redemption
Date
(December 1)
Principal Amount
To be Redeemed
Redemption
Date
(December 1)
Principal Amount
To be Redeemed

__________________
* Maturity.

If some but not all of the Bonds have been redeemed pursuant to optional or mandatory redemptions, the tota l amount of sinking account payments to be made subsequent to such redemption shall be reduced in an amount equal to the principal amount of the Bonds so redeemed by reducing each such future sinking account payment on a pro rata basis (as nearly as practicable) in Authorized Denominations, as shall be designated pursuant to written notice filed by Authority with the Trustee. The Authority shall provide the Trustee with a revised sinking fund schedule.
(d) Notice of Redemption. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories, if the B onds are held by the Securities Depositories, and to one or more Information Services at least 20 days but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive a ny such notice so m ailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the red emption place and t he redemption pr ice and shall designate the CUSIP numbers, if any are assigned, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that suc h Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Neither th e Authority nor the Trustee shall have any responsibility for any defect in any CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that such CUSIP numbers, if any, have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any inaccuracy in such numbers.
(e) Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of le ss than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption, in such maturities as the Authority shall designate (and by lot within any maturity). For purposes of such sel ection, all

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Bonds shall be deemed to be comprised of separate Authorized Denomination portions and such portions shall be treated as separate Bonds, which may be separately redeemed. (f) Partial Redemption of Bonds . If only a portion of any Bond is called for redemption, then upon surrender of such Bond the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series, interest rate and mat urity date, in aggregate principal amount equal to the unredeemed portion of the Bond being redeemed.
(g) Effect of Redemption . From and after the date fixed for redemption, if funds available for the payment of the principal of, premium, if any, and interest on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date. All Bonds redeemed pursuant to this Section 2.03 shall be canceled by the Trustee. All moneys held by or on behalf of the Trustee for the payment of principal of or interest or premium on Bonds, whether at redemption o r maturity, shall b e held in trust for the account of the Owners thereof and the Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any interest earned on, moneys so held.

SECTION 2.04. Form of Bonds. The Bonds, the form of Trustee’ s certificate of authentication, and the form of assignment to appear thereon, shall be substantially in the form set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.

SECTION 2.05. Execution of Bonds. The Bonds shall be signed in the name and on behalf of the Authority with the manual or facsimile si gnature any Authorized Representative , and attested with the manual or facsimile si gnature of its Secretary or any Deputy Secretary, and shall be delivered to the Trustee for authentication by it. In case any officer of the Authority who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though the indivi dual who signed the same had continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the Authority by any individual who on the actual date of the execution of such Bond shall be the proper officer although on the nominal date of such Bond s uch individual s hall not have been such officer.

Only such of the Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, executed on behalf of the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

SECTION 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by his duly authorized attorney, upon presentation and surrender of such Bon d for

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cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond shall be surrendered for transfer, the Authority shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a ne w Bond or Bonds of like tenor, interest rate, maturity and aggregate principal amount in Authorized Denominations. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in connection with any such transfer shall be paid by the Authority, except that the Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. The Trustee shall n ot be required to t ransfer, pursuan t to this Section, any Bond during the period established by the Trustee for the selection of Bonds for redemption.

SECTION 2.07. Exchange of Bonds. Bonds may be exchanged at the Trust Office of the Trustee for the same aggregate principal amount of Bonds of the same tenor, interest rate and maturity and of other Authorized Denominations. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in connection with any such exchange shall be paid by th e Authority, except that the Truste e shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to exchange, pursuant to this Section, any Bond during the period established by the Trustee for the selection of Bonds for redemption.

SECTION 2.08. Temporary Bonds. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by th e Authority and be registered and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and t hereupon the tempor ary Bonds shall be surrendered, for cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds definitive Bonds of like tenor, maturity and aggregate principal amount in Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder.

SECTION 2.09. Registration Books. The Trustee will kee p or cause to be ke pt at its Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all times during regular business hours be open to inspection by the Authority with reasonable prior notice; and, upon presentation for such purpose, t he Trustee shall , under such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on said records, Bonds as herein provided.

SECTION 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authori ty, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, maturity and aggregate principal amount in an Authorized Denomination in exc hange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it. If any Bond issued

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hereunder shall be lost, destroyed or stolen , evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence shall be satisfactory to it and indemnity satisfactory to it shall be given, the Authority, at the expense of the Bond Owner, shall execute, and the Trustee shall thereupon authenticate and d eliver, a new Bond of like series and tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a s ubstitute Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee). The Authority may require payment of a reasonable fee for each new Bond issued under this Section and of the expenses that may be incurred by the Au thority and the Trustee.

Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the part of the Authority whether or not th e Bond alleged to b e lost, destroye d or stolen shall be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.

SECTION 2.11. Book-Entry System; Limited Obliga tion. The Bonds sh all be initially executed, authenticated and delivered in the form of a separate single fully registered Bond, registered in the Bond Register in the name of the Cede & Co.. Thereafter, the Bonds may, at the direction of the Authority , with the consent of the City, be registered in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.13 hereof, all of the Outstanding Bonds shall be registered in the Bond Register kept by the Trustee and may be transferred, in whole but not in part, only as provided herein.

Each Bond registered in the name of the Nominee shall bear a legend substant ially to the following effect: “UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED

REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE INDENTURE) TO THE

TRUSTEE FOR R EGISTRATION 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 REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE T O CEDE & CO. OR TO SUCH OTHER

ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE 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.” With respect to Bonds registered in the Bond Register in the name of the Nominee, the Authority and the Trustee shall have no responsibility or obligation to any Depository Participant or to any person on behalf of which such a Depo sitory Participant holds a benefici al interest in the Bonds. Without limiting the immediately preceding sentence, the Authority and the Trustee shall have no responsibility or obligation with respect to (a) the accuracy of the records of the Depository, the Nominee or any Depository Participant with respect to any beneficial ownership interest in the Bonds, (b) the delivery to any Depository Participant, beneficial owner or any other person, other than the Depository, of any notice with respect to the Bond s, including any Redemption Notice, (c) the selection by the Depository and the Depository Participants of the beneficial interests in the Bonds to be redeemed in part, or (d) the payment to any Depository Participant, beneficial owner or any other person, other than the Depository, of any amount with respect to principal of, interest on, or premium, if any, of the Bonds. The Authority and the

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Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute Owner of such Bond for the purpose of payment of principal of, premium, if any, and interest on, the Bond, for the purpose of giving Redemption Notices with respect to the Bonds and other notices with respect to the Bonds, and for all other pu rposes whatsoever, including, without limitation, registering transfers with respect to the Bonds.

The Trustee shall pay all principal of, premium, if any, and interest on, the Bonds only to or upon the order of the respective Bond Owners, as shown in the Bond Register kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments shall be valid hereunder with respect to payment of principal of, premium, if any, and interest on, the Bonds to the extent of the sum or sum s so paid. No pers on other than a Bond Owner, as shown in the Bond Register, shall receive a Bond evidencing the obligation to make payments of principal of, premium, if any, and interest on, such Bond pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the Authority of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Ind enture shall refer to such new nominee of the Depository.

SECTION 2.12. Representation Letter . To qualify the Bonds for the Depository’s book-entry system if necessary in the future , the Authority is authorized to execute, countersign and deliver to such Depository a l etter from the Auth ority representing such matters as shall be necessary to so qualify the Bonds (the “Representation Letter”). The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.11 hereof or in any other way impose upon the Author ity or the City any obligation whatsoever with respect to persons having beneficial interests in the Bonds other than the Owners, as shown in the Bond Register kept by the Trustee. In the written acceptance by the Truste e of the Representa tion Letter, the Trustee shall agree, and hereby agrees, to take all actions necessary for all representations of the Trustee in the Representation Letter with respect to the Trustee to at all times be complied with. In addition to the execution and deliv ery of the Repre sentation Letter, the Authority Representative and all other officers of the Authority, and their respective deputies and designees, each is hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.

SECTION 2.13. Transfers Outside Book -Entry System. If the Bonds are registered in the name of the Nominee and the Depository notifies the Authority that it is unwilling or unable to continue as Depository with respect to the Bonds or if at any time the Depository shall no longer be registered or in good standing under the Securities Exchange Act or other applicable statute or regulation and a successor Depository is not appointed by the Authority within 90 days after the Aut hority receives notice or becomes aware of such condition, as the case may be, Section 2.11 hereof shall no longer be applicable and the Authority shall execute and the Trustee shall authenticate and d eliver Bonds as provided below. In a ddition, the Authority may determin e at any time that the Bonds shall no longer be represented by global bonds and that the provisions of Section 2.11 hereof shall no longer apply to the Bonds. In any such event the Authority shall execute and the Trustee shall authenticate and deliver Bon ds as provided below. Bonds executed, authenticated and delivered in exchange for global bonds

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pursuant to this Section 2.13 shall be registered in such names and delivered in such Authorized Denominations as the Deposit ory, pursuant to in structions from the Depository Participants or otherwise, shall instruct the Authority and the Trustee. The Trustee shall deliver such Bonds to the persons in whose names such Bonds are so registered.

If the Authority determines to repl ace the Depository with another qua lified securities depository, the Authority shall prepare or cause to be prepared a new fully -registered global bond for each of the maturities of the Bonds, registered in the name of such successor or substitute securiti es depository or it s nominee, or ma ke such other arrangements as are acceptable to the Authority, the Trustee and such securities depository and not inconsistent with the terms of this Indenture.

SECTION 2.14. Payments and Notices to the Nominee . Notwithstanding any ot her provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments of principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respe ctively, as provide d in the Representation Letter or as otherwise instructed by the Depository.

ARTICLE III

DEPOSIT AND APPLICATION OF PROCEEDS
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this Indenture, the Authority shall execute and deliver the Bonds to the Trustee for authentication and delivery to the Original Purchaser upon the Request of the Authority.

SECTION 3.02. Application of Proceeds of Sale of Bonds. Upon the receipt of payment for the Bonds on the Closing Date, the Trustee shall deposit and transfer $____________ of the net proceeds of the sale of the Bonds as follows:
(1) into the Series 2022A Costs of Issuance Fund the amount of $________. (2) to The Bank of New York Mellon Trust Company, N.A. , as trustee for the Refunded Bonds, the amount of $______, and to CalPERS, the amount of $______. (3) into the Series 2022A Reserve Account the amount of $_______ representing the Series 2022A Reserve Requirement as of the Closing Date.

The Trustee may establish such temporary funds, accounts and subaccounts as may be necessary or desirable to accomplish such deposits.

SECTION 3.03. Costs of Issuance Fund. There is hereby established a fund to be held by the Trustee known as the “ Series 2022A Costs of Issuance Fund ,” into which shall be deposited a portion of the proceeds of the sale of the Bonds pursuant to Section 3.02(a). The moneys in the Series 2022A Costs of Issuance Fund shall be used to pay Costs of Issuance related to the Bonds from time to time and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition, sub stantially in the f orm attached her eto as Exhibit B, executed by an officer of the Authority. Each such requisition shall be sufficient evidence to the Trustee of the

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facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On the date that is 180 days following the Closing Date, or upon the earlier receipt by the Trustee of a Request of the Authority certifying that all Costs of Issuance related to the Bonds have been paid or provided for, the Trustee shall transfer any remaining amounts in the Series 2022A Costs of Issuance Fund to the Lease Revenue Fund and the Trustee shall then close the Series 2022A Costs of Issuance Fund.

SECTION 3.04. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not b e affected in any w ay by any procee dings taken with respect to the application of the proceeds of the Bonds, and the recital contained in the Bonds that the same are issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the regularity of their issuance.

ARTICLE IV
REVENUES; FLOW OF FUNDS
SECTION 4.01. Pledge of Revenues; Assignment of Rights. Subject to the provisions of Section 6.03, the Bonds shall be secured by a first lien on and pledge (which shall be effected in the manner and to the extent h ereinafter provided ) of all of the Revenues, including all of the moneys in the Interest Account, the Principal Account and the Reserve Account, including all amounts derived from the investment of such moneys. The Bonds shall be equally secured by a pled ge, charge and lien upon the Revenu es and such moneys without priority for number, date of the Bonds, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds and any premiums upon the redemption of any portion thereof shall be and are secured by an exclusive pledge, charge and lien upon the Revenues and such moneys. So long as any of the Bonds are Outstanding, the Revenues and such moneys shall not be used for any other purpose; except that out of the Revenues t here may be apporti oned such sums, for such purposes, as are expressly permitted by Section 4.02.

The Authority hereby transfers in trust and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues and all of the right, title and interest of the Authority in the Lease with respect to the Revenues, including its rights to receive the Base Rental Payments scheduled to be paid by the City under and pursuant to the Lease and any and all of the other rights of th e Authority under t he Lease as may be necessary to enforce payment of such Base Rental Payments when due or otherwise to protect the interest of the Owners of the Bonds, including its leasehold title to the Leased Property leased to the City pursuant to th e Lease with respe ct to the Base Re ntal Payments. The Trustee accepts such assignments. The Trustee shall be entitled to and shall receive all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee.

SECTION 4.02. Lease Revenue Fund; Receipt, Deposit and Application of Revenues. All Revenues shall be deposited by the Trustee in a sp ecial fund designat ed as the “Lease Revenue Fund,” which the Trustee shall establish, maintain and hold in trust hereunder.

In the event the City pays more than 100% of the Base Rental Payments coming due 15 days

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prior to any Interest Payment Date, the Tr ustee shall deposit into the Lease Revenue Fund only that portion of the Base Rental Payments which the City is required to make under Section 3(a) of the Lease, and shall remit any excess to the City.

On or before each Interest Payment Date, the Trustee s hall transfer from the Lease Revenue Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Lease Revenue Fund), the following amounts in the following order of priority, the requirements of each such accoun t (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
(a) Interest Account. The Trustee shall establish and maintain a separate account to be known as the “Series 2022A Interest Account.” On or before each Interest Payment Date, the Trustee shall deposit in the Series 2022A Interest Account an amount required to cause the aggregate amount on deposit in the Series 2022A Interest Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds. No deposit shall be made into the Series 2022A Interest Account if the amount contained therein is at least equal to the interest becoming due and payable upon all Outstanding Bonds on each succeeding Interest Payment Date wit hin the then current Bond Year. All moneys in the Series 2022A Interest Account shall be used and withdrawn by th e Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity).
(b) Principal Account. The Trustee shall establish and maintain a separate account to be known as the “Series 2022A Principal Account.” On or before each Interest Payment Date, the Trustee shall deposit in the Series 2022A Principal Account an amount required to cause the aggregate amount on deposit in the Series 2022A Principal Account t o equal the principal amount of the Bonds maturing on such Interest Payment Date pursuant to Section 2.02 or Section 2.03 or pursuant to a Supplemental Indenture, as the case may be. All moneys in the Series 2022A Principal Account shall b e used and withd rawn by the Trustee solely for the purpose of paying the principal of the Bonds.
(c) Reserve Account. Upon written direction of the Authority, t he Trustee shall establish and maintain a separate account to be known as the “ Series 2022A Reserve Account.” On or before each Interest Payment Date, the Trustee shall deposit in the Series 2022A Reserve Account such amount as may be necessary to maintain a balance therein equal to the Series 2022A Reserve Requirement. No deposit shall be made in the Series 2022A Reserve Account so long as there shall be on deposit an amount equal to the Series 2022A Reserve Requirement.

Initially, the Series 2022A Reserve Account shall not be funded. The Authority may direct the Trustee in writin g to deposit funds into the Series 2022A Reserve Account and to change the Series 2022A Reserve Requirement. All money in the Series 2022A Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Series 2022A Interest Account or t he Series 2022A Principal Account in such order, in the event of any deficiency at any time in either of such accounts, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the even t that no other mon ey of the Authority is lawfully available therefor. All moneys in the Series 2022A Reserve Account in

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excess of the Reserve Requirement may be applied to the retirement of all Bonds then Outstanding.
(d) Surplus. On or before June 1 and December 1 of each y ear the Trustee sh all determine the amount, if any, remaining in the Lease Revenue Fund after making the deposits required by paragraphs (a) through (c) above and the transfers of investment earnings pursuant to Section 4.03, and shall app ly such amount as a credit against the next following Base Rental Payment.

SECTION 4.03. Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted Investments pursuant to the wri tten direction of the Authority given to the Trustee two Business Days in advance of the making of such investments. In the absence of any such direction from the Authority, the Trustee shall invest any such moneys in money market funds d escribed in subsection (i ) of the d efinition of Permitted Investments provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written direction of the Authority specifying a specific money market fund and, if no such written direction of the Authority is so received, the Trustee shall hold such moneys uninvested. Moneys in the Series 2022A Reserve Account shall not be invested in investments having maturities extending beyond 5 years and shall not be invested in (j) of the definition of Permitted Investments; provided, however, that if such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date, any amount in the Series 2022A Reserve Account may be invested in such redeemable Permitted Investments maturing on any date on or prior to the final scheduled payment date of the Bonds.

Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account.

The Trustee shall transfer all investment earnings on amounts in the Series 2022A Principal Account, the Series 2022A Interest Account and the Series 2022A Reserve Account (to the extent not necessary to replenish the Series 2022A Reserve Account to the Series 2022A Reserve Requirement), to the Lease Revenue Fund. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee may act as principal or agent in the acqu isition of any inv estment and may impose its customary charges therefor. The Trustee may act as manager, sponsor, advisor or depository with respect to any Permitted Investment. The Trustee shall incur no liability for losses arising from any investments made pursuant to t his Section. The Authority acknowledges that regulations of the Comptroller of the Currency grant the Authority the right to receive brokerage confirmations of security transactions to be effected by the Trustee hereunder as they occur. The Authority spec ifically waives the right to receive such confirmation to the extent permitted by applicable law and agrees that it will instead receive periodic cash transaction statements which shall include detail for the investment t ransactions effected by the Trustee hereunder; provided, however, that the Authority retains its right to receive brokerage confirmation on any investment transaction requested by the Authority.

SECTION 4.04. Valuation and Disposition of Investments. Except with respec t to the Series 2022A Reserve Account, for the purpose of determining the amount in any fund or account, Permitted Investments credited to such fund or account shall be valued at least

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semiannually on or before each Interest Payment Date at cost (excluding any brokerage commissions and excl uding any accrued interest) by the Authority . With respect to the Series 2022A Reserve Account, investments shall be valued by the Authority at Fair Market Value and marked to market semiannually on or before each Interest Payment Date.

ARTICLE V

COVENANTS OF THE AUTHORITY
SECTION 5.01. Punctual Payment. The Authority shall punctua lly pay or cause to be paid the principal, interest and premium (if any) to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Inden ture, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged for such payment as provided in this Indenture.

SECTION 5.02. Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such cla ims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstand ing and of all cl aims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.

SECTION 5.03. Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this I ndenture while an y of the Bonds are Outstanding, except the pledge and assignm ent created by this Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under th e Bond Law, and reserves the right to issue other obligations for such purposes.

SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and as sign the Revenues, the Lease and other assets purported to be pledged and assigned, respectively, under this Indenture in the manner and to the extent provided in this Indenture. The Bonds and the provisions of this Inde nture are and wil l be the legal, va lid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee (subject to the provisions of Section 6.02 hereof) shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all persons whomsoever.

SECTION 5.05. Accounting Records; Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with

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corporate trust industry standards, in which complete and accurate entries shall be made of all transactions made by the Trustee relating to the proceeds of Bonds, the Revenues, the Lease and all funds and accounts established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Authority and the City during regular business hours with reasonable prior notice.

SECTION 5.06. Additional Obligations. The Authority covenants that no additional bonds, notes or indebtedness shall be issued or incurred that are payable out of the Revenues in whole or in part.

SECTION 5.07. Lease. The Trustee, as assignee of the Authority’s rights u nder the Lease wi th respect to the Revenues pursuant to Section 4.01 hereof and the Assignment Agreement, shall receive amounts due from the City pursuant to the Lease with respect to the Revenues.

The Authority will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Lease required to be complied with, kept, observed and performed by it and, together with the Trustee, will enforce the Lease against the City in accordance with its terms.

So long as any Bond remains Outstanding, the Authority will not alter, amend or modify the Lease without the prior written consent of the Trustee, which consent shall be given only (i) if the Trustee receives an opinion of counsel selected by the Authority t hat such alterati on, amendment or modification will not result in any material impairment of the covenants made or the security given or intended to be given for the payment of the Base Rental Payments, or (ii) if the Trustee first receives the written con sents of the Owne rs of at least a m ajority in aggregate principal amount of the Bonds then Outstanding to such alteration, amendment or modification.

Prior to any amendment or modification of the Lease pursuant to this Section, the Authority shall deliver to the Trustee an opinion of nation ally recognized bond counsel to the effect that such amendment or modification has been adopted in accordance with the requirements of this Indenture.

SECTION 5.08. Further Assurances. The Authority will adopt, make, execute and deliver any and all su ch further resolut ions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bo nds the rights an d benefits provided in this Indenture.

ARTICLE VI

THE TRUSTEE
SECTION 6.01. Appointment of Trustee. The Bank of New York Mellon Trust Company, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority agrees that it will

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maintain a Trustee which has (or whic h is a wholly -owned subsidiary of a corporation which has) a combined cap ital and surplus of at least $75 ,000,000, and which is subject to supervision or examination by Federal or State authority, so long as any Bonds are Outstanding. If such bank national banking association or trust company or such parent corporation publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose o f this Section 6.01 the combined capital and surplus of such bank national banking association or trust company or such parent corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

The Trustee is hereby authorized to pay the principal of and interest and redemption premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds and accounts administered 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 said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer of the Trustee, unless it shall be proved that the Trustee was negligent i n ascertaining the pertinent facts.
(b) Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence is herein specifi cally prescribed) may, in the absence of bad faith on its part, rely upon a Certificate of the Authority. (c) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or dir ection of any of the Owners pursuan t to this Indenture, unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond or other paper or document. (e) The Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no covenants of or against the Trustee shall be implie d in this Indenture. In case an Event of Default hereunder or under the Lease has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by this Indenture and b y the Lease, and shall use the same degree of care and skill in the exercise of such rights and powers as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

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(f) The Trustee may execute any of the trusts or powers hereunder and perform the duties required of it hereunder either directly or by or through attorneys, receivers or agents, shall not be liable for the acts or omissions of such attorneys, receivers or agents appointed with due care, and shall be entitled to advice of counsel conce rning all matters of trust and its duties hereunder. The Trustee may conclusively rely on an opinion of counsel as full and complete authorization and protection for any action taken, suffered or omitted by it hereunder. (g) The Trustee shall not be responsib le for any recital herein, in the Lease, or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby an d makes no represe ntation as to the validity or sufficiency of the Bonds, this Indenture or the Lease. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements o n the part of the Authority hereunder or on the part of the Authority or the City under the Lease. The Trustee shall not be responsible for the application by the Authority or the City of the proceeds of the Bonds. (h) The Trustee may become the Owner or pled gee of Bonds secured hereby with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same rights it would have if it were not the Trustee; and may act as a deposita ry for and permit any of its office rs or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. (i) The Trustee may rely and shall be protected in acting or refraining from acting, in good faith and without negligence, upon any notice, resolution, opinion, report, direction, request, requisition, c onsent, certifica te, order, affidav it, letter, telegram or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to this Indenture or the Lease upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at his request unless the ownership of such Bond by such person shall be reflected on the Registration Books. (j) The permissive right of the Trustee to do things enumerated in this Indenture or in the Lease shall not be construed as a duty and it shall not be answerable for other than its negligence or willful default . The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. (k) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder or under the Lease except failure by the Authority or the City to make any of the payments to the Trustee required to be made by the Authority pursuant hereto or thereto or failure by the Authority or the City to file with the Trustee any document required by this Indenture or the Lease to be so filed subseq uent to the issuance of the Bonds, unless the Trustee shall be specifically notified in writing of such default by the Authority or by the Owners

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of at least 25% in aggregate principal amount of the Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to the Trustee must, to be effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid. (l) At any and all reasonable times the Trustee and its duly authorized agents, attorneys, experts, accountants and representatives, shall have the right but shall not be required to inspect all books, pap ers and records o f the Authority pe rtaining to the Bonds, and to make copies of any of such books, papers and records which are not privileged by statute or by law. (m) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises hereof. (n) Notwithstanding anything elsewhere in this Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the p urpose of establishing the right of the Authority to the execution of any Bonds, the withdrawal of any cash or the taking of any other action by the Trustee.
(o) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust fo r the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (p) Whether or not expressly provided therein, every provision of this Indenture and the Lease relating to the conduc t or affecting th e liability of the Trustee shall be subject to the provisions of this Section.
(q) The Trustee is authorized and directed to enter into the Assignment Agreement in its capacity as Trustee.
(r) The Trustee shall have the right to accept and act upon ins tructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means (“Electronic Means” shall mean the following communications methods: e - mail, facsimile transmission, se cure electronic t ransmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provid ed, however, that the Authority and City shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which i ncumbency certificate shall be amended by the Authority and City whenever a person is to be added or deleted from the listing. If the Authority and City elect to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Authority and City understand and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall c onclusively presum e that directions that purport to have been sent by an

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Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Authority and City shall be responsibl e for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the Authority and City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, p asswords and/or a uthentication keys upon receipt by the Authority and City. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directio ns conflict or are inconsistent with a subsequent written instruction. The Authority and City agree: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation th e risk of the Trustee acting on una uthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Authority and City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a co mmercially reasonable degree of pro tection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
(s) The Trustee shall not be liable to the pa rties hereto or de emed in breach or default hereunder if and to the extent its performance hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.
(t) The Trustee will not be liable in connection with the performa nce of its duties hereunder except for its own negligence, willful misconduct or breach of duty. (u) The Trustee does not have a duty to review any financial statements or reports of the Authority and City, is not considered to have notice of the content of any such statements or reports and does not have a duty to verify the accuracy of such financial statements or reports. (v) The Trustee may consult with counsel, who may be bond counsel or other counsel of or to the Authority and City, with regard to l egal questions, an d the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. (w) The Trustee shall have no responsibility o r liability with r espect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds.

SECTION 6.03. Fees, Charges and Expenses of Trustee. The Trustee shall be paid and reimbursed by the Authority for reasonable fees for its services rendered hereunder and all advances (with interest on such advances at the maximum rate allowed by law), counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred b y the Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder,

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but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment of any Bo nd upon the amoun ts held hereunder for the foregoing fees, charges and expenses incurred by it.

SECTION 6.04. Notice to Bond Owners of Default. If an Event of Default hereunder or under the Lease occurs with respect to any Bonds of which the Trustee has been given or i s deemed to have notice, as provide d in Section 6.02(k) hereof, then the Trustee shall, within 30 days of the receipt of such notice, give written notice thereof by first class mail to the Owner of each such Bond, unless such Event of Default shall have be en cured before t he giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Authority to make any payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice.

SECTION 6.05. Intervention by Trustee. In any judicial proceeding to which the Authority or the City is a party that, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to Section 6.02(c), shall do so if requested in writing by the Owners of at least 25% in aggregate principal amount of such Bonds then Outstanding.

SECTION 6.06. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds. Th e Authority may also remove the Trustee at any time upon 30 days ’ notice, except during the existence of an Event of Default. The Trustee may be removed at any time for any breach of the Trustee’s duties set forth herein.

SECTION 6.07. Resignation by Trustee. The Trustee and any successor Trustee may at any time give written notice of its intention to resign as Trustee hereunder, such notice to be given to the Authority and the City by registered or certified mail. Upon receiving such notice of resignation, the Author ity shall prompt ly appoint a succes sor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority shall cause notice thereof to be given by fir st class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Registration Books.

SECTION 6.08. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant t o Sections 6.06 o r 6.07, respective ly, the Authority shall promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever fail to appoint a successor Trustee within 60 days following the delivery to the Trustee of the instrument described in Section 6.06 o r within 6 0 days following the receipt of notice by the Authority pursuant to Section 6.07, the Trustee may, at the expense of the Authority, apply to a court of competent jurisdiction for the appointment of a successor T rustee meeting th e requirements of Section 6.01. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the Authority purporting to appoint a successor Trustee following the expiration of such 60-day period.

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SECTION 6.09. Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any c ompany to which t he Trustee may sel l or transfer all or substantially all of its corporate trust business, provided that such company shall meet the requirements set forth in Section 6.01, shall be the successor to the Trustee and vested with all of the ti tle to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.

SECTION 6.10. Concerning any Successor T rustee. Every suc cessor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority an instrument in writing accepting such appointment hereunder and thereupon such successor, without an y further act, de ed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Request of the Authority, or of the Trustee’ s successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and moneys held by it as the Trus tee hereunder to its successor. Should any instrument in writing from the Authority be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor T rustee, any and al l such instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority.

SECTION 6.11. Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture , and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein grante d to the Trustee or hold title to t he properties, in trust, as herein granted, or take any other action that may be desirable or necessary in connection therewith, it may be necessary that the Trustee or the Authority appoint an additional individual or in stitution as a se parate trustee or co-trustee. The following provisions of this Section are adopted to these ends.

If the Trustee or the Authority appoints an additional individual or institution as a separate trustee or co -trustee, each and every remedy, power, right, cl aim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separ ate trustee or co -trustee but only to the extent necessary to enable such separate trustee or co -trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate trustee or co -trustee shall run to and be enforceable by either of them.

Should any instrument in writing from the Authority be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in

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writing shall, on request, be executed, acknowledged and delivered by the Authority. In case any separate trustee or co -trustee, or a successor to either, shall become in capable of acting , shall resign or shall be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co -trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the app ointment of a new trustee or succes sor to such separate trustee or co-trustee.

SECTION 6.12. Indemnification; Limited Liability of Trustee. The Authority covenants and agrees, to the extent permitted by law, to indemnify and save the Trustee and its officers, directors , agents and empl oyees, harmless from and against any loss, expense and liabilities including legal fees and expenses arising out of or in the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending agains t any claim of liability and fees and expenses of its attorneys, but excluding any and all losses, expenses and liabilities that are due to the negligent or willful misconduct of the Trustee, its officers, directors or employees. No provision in this Inde nture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of the Owners of at least 25% in aggreg ate principal amount of Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under this Indenture or exercising any power conferred upon the Trustee under this Indenture. The obligations of the Authority u nder this Section and Section 6.03 shall survive the resignation or removal of the Trustee under this Indenture and defeasance of the Bonds.

ARTICLE VII

MODIFICATION AND AMENDMENT OF THE INDENTURE
SECTION 7.01. Amendment Hereof. This Indenture a nd the rights and obligations of the Authority and of the Owners may be modified or amended at any time by a Supplemental Indenture, which shall become binding upon adoption, without consent of any Owner, to the extent permitted by law, but only for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Authority in this Indenture contained, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers herein reserved to or conferr ed upon the Authority so long as su ch limitation or surrender of such rights or powers shall not materially adversely affect the Owners; (b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defectiv e provision contained in this Inden ture, or in any other respect whatsoever as the Authority may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not materially adversely affect the interests of the Owners in the reasonable judgment of the Authority; or (c) for any other purpose that does not materially adversely affect the interests of the Owners.

Except as set forth in the preceding paragraph of this Section, this Indenture and the rights and obligation s of the Authorit y and of the Owner s may only be modified or amended at

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any time by a Supplemental Indenture, which shall become binding when the written consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding are fi led with the Trus tee. No such modif ication or amendment shall modify any of the rights or obligations of the Trustee without its written consent thereto.

SECTION 7.02. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effectiv e pursuant to thi s Article VII, thi s Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may be, shall thereafter be de termined, exercise d and enforced hereunder subject in 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.

Prior to entering into any Supplemental Indenture pursuant to this Section, the Authority shall deliver to the Trustee an opinion of Bond Counsel to the effect that such Supplemental Indenture has been adopted in accordance with the requirements of this Indenture.

SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that the Bonds shall bear a notation, by endorsement in form approved by the Authority , as to such action, and in that case upon demand of the Owner at such effective date and presentation of such Bond for that purpose at the Trust Office of the Trustee, a suitable notation as to such action shall be made on such Bond. If the Authority shall so determine, n ew Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such Owners’ action shall be prepared and executed, and in that case upon demand of the Owner at such effective date such new Bonds shall be exchanged at the Trust Office of the Trustee, without cost to each Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01. Events of Default. The following events shall be Even ts of Default hereunder:
(a) Default in the due and punctual payment of the principal of or premium on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, or by proceedings for redemption.
(b) Default in the due an d punctual paymen t of any installme nt of interest on any Bond when and as such interest installment shall become due and payable. (c) Failure by the Authority to observe and perform any of the covenants, agreements or conditions on its part in this Indenture o r in the Bonds co ntained, other than as referred to in the preceding clauses (a) and (b), for a period of 30 days after written notice, specifying such failure and requesting that it be remedied has been given to the Authority by the Trustee, or to the Authority and the Trustee by the Owners of not less than 25% in aggregate principal amount

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of the Outstanding Bonds; provided, however, that if in the reasonable opinion of the Authority the failure stated in such notice can be corrected, but not within such 60-day period, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Authority within such 60 -day period and diligently pursued until such failure is corrected.
(d) The filing by the Aut hority of a petiti on or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed wit h or without the consent of the Aut hority, seeking reorganization under the Federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of com petent jurisdicti on shall assume cu stody or control of the Authority or of the whole or any substantial part of its property.

SECTION 8.02. Remedies; No Acceleration. Upon the occurrence of an Event of Default the Trustee shall have the right:
(a) by mandamus or other acti on or proceeding or suit at law or in equity to enforce its rights against the Authority or any member, officer or employee thereof, to compel the Authority or any such member, officer or employee to perform and carry out its or his or her duties under law and the agreemen ts and covenants r equired to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the Authority and its members, officers and employees to account as the trustee of an express trust.

If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of at least 25% in aggregate principal amount of Outstanding Bonds and indemnified as provided in Section 6.02(c), the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners.

No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addi tion to any other remedy given to t he Trustee or the Owners hereunder or now or hereafter existing at law or in equity.

No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver or any suc h Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.

The Trustee shall have no right to declare the principal of or interest on the Bonds to be due and payable immediately.

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SECTION 8.03. Application of Revenues and Other Funds After Default. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of this Indenture shall be applied by the Trustee in the following order upon presentation of the Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid:

First, to the payment of the fees, costs and expenses of the Trustee, includi ng reasonable compensation to its agents, attorneys and counsel; Second, to the payment of the whole amount of interest on and principal of the Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitt ed by law at the lesser of 3% per a nnum or the maximum rate permitted by law, provided, however, that in the event such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied to the p ayment of such pr incipal and intere st without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest; and SECTION 8.04. Power of Trustee to Control Pro ceedings. If the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the reques t of the Owners o f at least a major ity in aggregate principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuan ce, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigatio n pending at law or in equity, if a t the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation and if the Trustee is indemnified as provided in Section 6.02(c). Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equa l benefit and pro tection of all Owners similarly situated and the Trustee is hereby appointed (and the successive respective Owners issued hereunder by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful a ttorney-in-fact of the respective O wners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.

SECTION 8.05. Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of t he Owners under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.

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SECTION 8.06. Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of th e Trustee or any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be.

SECTION 8.07. Rights of Owners. No Owner sha ll have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) th e Owners of a maj ority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have t endered to the Tru stee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the e xercise by any Owner of any remedy hereunder; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, excep t in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners.

The right of any Owner t o receive payment of the principal of and interest and premium (if any) on such Bond as herein provided or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.

SECTION 8.08. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such pr oceedings shall h ave been discontin ued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the Authority, the Trustee and the Owners shall be restored to their former positions and rights hereunder, respective ly, with regard t o the property sub ject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.

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ARTICLE IX

MISCELLANEOUS
SECTION 9.01. Limited Liability of Authority. Notwithstanding anything in this Indenture contained, the Authority shall no t be required to advance any moneys derived from any source of income other than the Revenues for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the performan ce of any covenants herein containe d (except to the extent any such covenants are expressly payable hereunder from the Revenues or otherwise from amounts payable under the Lease). The Authority may, however advance funds for any such purpose, provided that such funds are derived from a sour ce legally available for such purpose and may be used by the Authority for such purpose without incurring indebtedness.

The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds as in this Indenture provided. The general fund of the Authority is not liable, and the credit of the Authority is not pledged, for the payment of the interest and premiums (if any) on or principal of the Bonds. The Owners shall never have the right to compel the forfe iture of any property of the Author ity except the Revenues and other funds pledged to the payment of the Bonds as provided in this Indenture. The principal of and interest on the Bonds, and any premiums upon the redemption of any thereof, shall not be a le gal or equitable pledge, charge, lien or encumbrance upon any property of the Authority or upon any of its income, receipts or revenues except the Revenues and other funds pledged to the payment thereof as provided in this Indenture.

SECTION 9.02. Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Authority, the Trustee, the City and the Owners, any right, remedy or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in thi s Indenture contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the Trustee, the City and the Owners.

SECTION 9.03. Defeasance; Discharge of Indenture. If the Authority shall pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and premiums (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Tru stee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums (if any); or (c) by irrevocably depositing with the Trustee or an escrow agent, in trust pursuant to an escrow deposit agreement, Defeasance Securities in such amount as an Independent Certified Public Accountant sh all determine in a written report a cceptable in form and substance to the Authority, and addressed, to the Authority and the Trustee, filed with the Trustee (upon which report the Trustee may conclusively rely) will, together with the interest to accrue th ereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant

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to this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums ) at or before their respective maturity dates;
and delivering an opinion of Bond Counsel acceptable in form and substance to the Authority , and addressed, to the Authority and the Trustee to the effect that the Bonds are no longer Outstanding under the In denture, and if s uch Bonds are to b e redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to Section 2.03(d) or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the Request of th e Authority, and n otwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Revenues and other funds provided for in this Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority under this Inde nture with respect to all such Bonds, shall cease and terminate, except only the obligation of the Authority to pay or cause to be paid to the Owners not so surrendered and paid all sums due thereon from amounts set aside fo r such purpose as aforesaid, and all amounts due the Trustee. Any funds held by the Trustee following any payment or discharge of the Outstanding Bonds pursuant to this Section, which are not required for said purposes, shall after payment of amounts due the Trustee hereunder be paid over to the Authority.

SECTION 9.04. Successor i s Deemed Included in All References to Predecessor.

Whenever in this Indenture or any Supplemental Indenture the Authority is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions, with respect to the management, administration and control of the affairs of the Authority, that are presently vested in the Authority, and all the covenants, agreements and provisions contained in this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors whether so expressed or not.

SECTION 9.05. Content of Certificates and Opinions. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture except the certificate of destruction pursuant to Section 9.10 shall include (a) a statement that the person or persons making or giving such certificate or opinion have read such covenant or conditions and the definitions herein rela ting thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examinat ion or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with.

Any such certificate made or given by an officer of the Authority may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer k nows that the cer tificate or opinio n or representations with respect to the matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certifi cate or opinion or representation made or given by counsel may be based, insofar as it relates to factual matters, on information with respect to which is in the possession of the Authority, or upon the certificate or opinion of or representations by an of ficer or officers of the Authority, unless such

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counsel knows that the certificate or opinion or representations with respect to the matters upon which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous.

SECTION 9.06. Execution of Documents by Owners. Any request, consent or other instrument required by this Indenture to be signed and executed by Owners may be in any number of concurrent writings of su bstantially similar tenor and may b e signed or executed by such Owners in person or by their agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Authority if made in the manner provided in this Section.

The fact and date of the execution by any person of any such request, consent or other instrument or writi ng may be proved b y the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person s igning such reque st, consent or other instrument or writing acknowledged to him the execution thereof.

The ownership of Bonds shall be proved by the Registration Books. Any request, consent or vote of the Owner shall bind every future Owner with respect to the same Bond an d the Owner with r espect to any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote. In lieu of obtaining an y demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Owners upon such notice and in accordance with such rules and obligations as the Trustee considers fair and reasonable for the purpose of obtaining any such action.

SECTION 9.07. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, unless all Bonds are then so owned, Bonds that are owned or held by or for th e account of the City or the Authority (but excluding Bonds held in any employees’ retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose o f determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held shall be disregarded.

Upon request of the Trustee, the Au thority and City shall specify in a certificate to the Trustee those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate.

SECTION 9.08. Waiver of Personal Liability. No officer, agent or employee of the Authority shall be individually or personally liable for the payment of the interest on or principal of the Bonds; but nothing herein contained shall relieve any such officer, agent or employee from the performance of any official duty provided by law.

SECTION 9.09. Partial Invalidity. If any one or m ore of the covenan ts or agreements, or portions thereof, provided in this Indenture on the part of the Authority (or of the Trustee) to be performed should be contrary to law, then such covenant or covenants, such

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agreement or agreements, or such portions thereof, shall be null and void and shall be deemed separable from the remaining covenants and agreements or portions thereof and shall in no way affect the validity of this Indenture or of the Bonds; but the Owners shall retain all rights and benefits accorded to them under the Bond Law or any other applicable provisions of law.

SECTION 9.10. Destruction of Canceled Bonds. Whenever in this Indenture provision is made for the surrender of any Bonds which have been paid or canceled pursuant to the provisi ons of this Inden ture, the Trustee shall cancel and destroy such Bonds and upon Request of the Authority furnish to the Authority a certificate of such destruction.

SECTION 9.11. Funds and Accounts. Any fund or account required by this Indenture to be established and m aintained by the Authority or the T rustee may be established and maintained in the accounting records of the Authority or the Trustee, as the case may be, either as a fund or an account, and may, for the purpose of such records, any audits thereof and any reports or statem ents with respect thereto, be treated either as a fund or as an account. All such records with respect to all such funds and accounts held by the Authority shall at all times be maintained in accordance with generally accepted accounting principles and al l such records with respect to all such funds and accounts held by the Trustee shall be at all times maintained in accordance with corporate trust industry practices; in each case with due regard for the protection of the security of the Bonds and the rights of every Owner thereof.

SECTION 9.12. Payment on Business Days. Whenever in this Indenture any amount is required to be paid on a day that is not a Business Day, such payment shall be required to be made, without accruing additional interest thereby , on the Business Day immediately f ollowing such day.

SECTION 9.13. Notices. Any notice, request, demand, communication or other paper shall be sufficiently given and shall be deemed given when delivered or upon receipt if mailed by first class mail, postage prepaid, or sent by facsimile transmission, addressed as follows:

If to the Authority: Cathedral City Public Financing Authority c/of City of Cathedral City
68-700 Avenida Lalo Guerrero
Cathedral City, California 92234
Attention: Chief Financial Officer
If to the City: City of Cathedral City
68-700 Avenida Lalo Guerrero
Cathedral City, California 92234
Attention: Administrative Services Director
If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 400 South Hope Street, Suite #400
Los Angeles, California 90071
Attention: Corporate Trust Administration

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The Authority and the Trustee may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.

SECTION 9.14. Unclaimed Moneys. Anything i n this Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds that remain unclaimed for two years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid by the Trustee to the Authority, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Authority for the payment of such Bonds; provided, however, that before being required to make any such payment to the Authority, the Trustee shall, at the written request and expense of the Authority, cause to be mailed to the Owners, at their respective addresses appearing on the Registration Books, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the Authority.

SECTION 9.15. Governing Law. This Indenture shall be governed by and construed and in accordance with the laws of the State of California.

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104913545.2
1 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be signed by their respective officers, all as of the day and year first above written.

ATTEST:

CATHEDRAL CITY PUBLIC FINANCING

AUTHORITY

By __________________________________
Tami Scott
Chief Financial Officer

By __________________________________
Tracey R. Hermosillo CMC
Secretary

THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee

By __________________________________
Authorized Officer

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EXHIBIT A

[FORM OF BOND]

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE

DEPOSITORY (AS DEFINED IN THE INDENTURE) TO THE TRUSTEE FOR

REGISTRATION OF T RANSFER, 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 REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTI TY AS IS

REQUESTED BY AN AUTHORIZED REPRESENTATIVE 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.

No. 1 $___________

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, SERIES 2022A
(FEDERALLY TAXABLE)

RATE OF INTEREST:

DATED DATE:

MATURITY DATE

CUSIP
REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT:

The CATHEDRAL CITY PUBLIC FINANCING AUTHO RITY, a joint exercise of powers authority organize d and existing under the laws of the State of California (the “Authority”), for value received, hereby promises to pay (but only out of the Revenues, as defined in the Indenture hereinafter referred to, an d certain other m oneys) to the Registered Owner ide ntified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above or any earlier redemption date, the Principal Amount identified above in lawful money of the United State s of America; and to pay interest thereon at the Ra te of Interest identified above in like money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payme nt Date and after the fifteenth ca lendar day of the month preceding such Interest Payment Date (the “Record Date”) , in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to the Record Date for the first Interest Payment Date in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bea r interest from t he Interest Payment Date to which interest hereon has previously been paid or made available for payment), payable semiannually on June 1 and December 1 in each year, commencing ________ 1, 2022 (the “Interest Payment Dates”) until payment of such Principal Amount in full.

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The Principal Amount hereof is payable by check upon presentation hereof upon maturity or earlier redemption at the principal corporate trust office (the “Trust Office”) of The Bank of New York Mellon Trust Company, N.A ., as trustee (th e “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 th e fifteenth calendar day of the mo nth preceding such Interest Payment Date (except that in the case of a Registered Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds, such payment may, at such Registered Owner ’s option, be made by wire transfer of immediately available funds in accordance with written instructions provided by such Registered Owner prior to the fifteenth calendar day of the month preceding such Interest Payment Date).

This Bond is one of a duly authorized issue of bonds of the Authority designat ed the “Cathedral City Public Financing Authority Lease Revenue Bond s, Series 2022A (Federally Taxable)” (the “ Bonds”), in an aggregate principal amount of $ [Par Amount] issued under an Indenture, dated as of April 1, 2022 (the “Indenture”), by and between the Authority and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the owners of the Bonds, of the nature and e xtent of the Revenues (as that term is defined in t he Indenture), of the rights, duties and immunities of the Trustee and of the rights and obligations of the Authority thereunder; and all of the terms of the Indenture are hereby incorporated herein and co nstitute a contract between the Authority and the Registered Owner hereof, and to all of the provisions of which Indenture the Registered Owner hereof, by acceptance hereof, assents and agrees.

The Bonds are authorized to be issued pursuant to the provisio ns of the Marks -Roos Local Bond Pooling Act of 1985 , constituting Article 4, Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”). The Bonds are special obligations of the Authority and, as and to the extent set forth in the Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues as provided in the Indenture. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues, and the Revenues constitute a trust fund for the security and payment of t he principal of and interest on the Bonds.

The full faith and credit of the Authority are not pledged for the payment of the principal of or interest or premium (if any) on the Bonds. The Bonds are not s ecured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except the Revenues and such other moneys and securities as provided in the Indenture. The Authority and the City have entered into a Lease Agreement, dated as of April 1, 2022 (the “Lease”), under which the City is obligated to pay amounts which are anticipated to be sufficient to enable the Authority to pay the principal of and interest on the Bonds.

The Bonds are subject to redemption as provided in the Indenture.

The Bonds may be issued in denominations of $5,000 or any integral multiple thereof.

Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, this Bond may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount, interest rate and maturity of fully registered Bonds of other authorized denominations.

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This Bond is transferable by the Registered Owner hereof, in person or by his attor ney duly authorized in writing, at the Trust Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new ful ly registered Bon d or Bonds, of Authorized Denomination or Denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The Authority and the Trustee may treat the Registered Owner he reof as the absol ute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. The Trustee shall not be required to register the transfer or exchange of any Bond during the period in which the Trustee is selecting Bonds for redemption or any Bond selected for redemption.

The Indenture and the rights and obligations of the Authority and of the owners of the Bonds and of the Trustee may be modified or amended from time to time and at any time in the manner, to the e xtent, and upon the terms provided in the Indenture; provided, that no such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or premiums at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee, all as more fully set forth in the Indenture.

It is hereby certified that all things, conditions and acts required to exist, to have happened and to have been perform ed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California and by the Act (as such term is defined on the reverse sid e hereof) and the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of California or by the Act.

This Bond shall not be entitled to any benefit under the Indenture (as such term is defined on the reverse side hereof), or become valid or obligatory for any purpose, until the certificate of authentication hereon shall have been manually signed by the Trustee.

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IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name and on its behalf by the manual signatures of its Chief Financial Officer and its Secretary as of the Dated Date identified above.

CATHEDRAL CITY PUBLIC FINANCING

AUTHORITY

By
Tami Scott
Chief Financial Officer
ATTEST:

___________________________
Tracey R. Hermoillo CMC
Secretary

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TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described i n the within-mentioned Indenture and registered on the Bond Registration Books.

Date: _________, 2022
The Bank of New York Mellon Trust Company, N.A.,
as Trustee

By
Authorized Officer

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ASSIGNMENT
For value received the undersigned do(es) hereby sell , assign and transfer unto ________ ______________________________________________________________________________ _____________________________, whose tax identification number is ________, the within - mentioned registered Bond and hereby irrevocably consti tute(s) and appoi nt(s) _____________ ______________________________________________________ attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.

Dated:

Signature guaranteed: ______________________________________ NOTE: The signature(s) on this Assignment
must correspond with the name(s) as written on
the face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.
_____________________________________
NOTICE: Signature must be guaranteed by a
member of an institution which is a participant
in the Securities Transfer Agent Medallion
Program (STAMP) or other similar program.

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EXHIBIT B

FORM OF SERIES 2022A COSTS OF ISSUANCE REQUISITION
REQUISITION NO. __

with reference to

$[Par Amount]
Cathedral City Public Financing Authority
Lease Revenue Bonds
(Capital Facilities Projects)
Series 2022A (Federally Taxable)

I. The Cathedral City Public Financing Authority (the “Authority”) hereby requests The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), pursuant to that certain Indenture, dated as of April 1, 2022 (the “Indenture”), by and between the Authority and the Trustee, under the terms of which the Authority has issued its Lease Revenue Bonds (Capital Facilities Projects), Series 2022A (Federally Taxab le), t o pay from the moneys in the Series 2022A Costs of Issuance Fund established pursuant to the Indenture, the amounts shown on Schedule I attached hereto to the parties indicated in Schedule I.

II. The payees, the purposes for which the costs have been incurred, and the amount of the disbursements requested are itemized on Schedule I hereto.

III. Each obligation mentioned in Schedule I hereto has been properly incurred and is a proper cha rge against the Costs of Issuance Fund . None of the items for whi ch payment is requested has been reimbursed previously from the Costs of Issuance Fund.

Dated: ________, 20__

CATHEDRAL CITY PUBLIC FINANCING

AUTHORITY

By
Tami Scott
Chief Financial Officer

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AFTER RECORDATION PLEASE RETURN TO: NRF DRAFT – 3/7/22
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Russell C. Trice, Esq.

SITE AND FACILITY LEASE

Dated as of April 1, 2022

by and between

CITY OF CATHEDRAL CITY

and

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY

Relating to the

$_________
Cathedral City Public Financing Authority
Lease Revenue Bonds, Series 2022A
(Federally Taxable)

THIS IS A FINANCING DOCUMENT.

NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT TO REVENUE AND TAXATION CODE SECTION 11922 AND THIS DOCUMENT IS EXEMPT FORM RECORDING FEES PURSUANT TO GOVERNMENT CODE SECTION 27383.

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TABLE OF CONTENTS

Page

SECTION 1. DEFINITIONS ................................................................................................. 1 SECTION 2. SITE LEASE .................................................................................................... 1 SECTION 3. TERM .............................................................................................................. 2 SECTION 4. RENTAL .......................................................................................................... 2 SECTION 5. TITLE .............................................................................................................. 2 SECTION 6. DEFAULT ....................................................................................................... 2 SECTION 7. EMINENT DOMAIN ...................................................................................... 3 SECTION 8. RIGHT OF ENTRY ......................................................................................... 3 SECTION 9. TERMINATION .............................................................................................. 3 SECTION 10. QUIET ENJOYMENT BY THE AUTHORITY ............................................. 3 SECTION 11. ASSIGNMENTS AND SUBLEASES ............................................................ 3 SECTION 12. WAIVER OF PERSONAL LIABILITY ......................................................... 4 SECTION 13. TAXES ............................................................................................................. 4 SECTION 14. LAW GOVERNING ........................................................................................ 4 SECTION 15. NOTICES ......................................................................................................... 4 SECTION 16. VALIDITY AND SEVERABILITY ............................................................... 4 SECTION 17. PURPOSE OF THE LEASED PROPERTY ................................................... 5 SECTION 18. WAIVER OF DEFAULT ................................................................................ 5 SECTION 19. SECTION HEADINGS ................................................................................... 5 SECTION 20. AMENDMENTS ............................................................................................. 5 SECTION 21. EXECUTION ................................................................................................... 5

EXHIBIT A - DESCRIPTION OF THE LEASED PROPERTY

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SITE AND FACILITY LEASE
This SITE AND FACILITY LEASE, dated as of April 1, 2022 (this “Site Lease”), is made by and between the CITY OF CATHEDRAL CITY , a charter city duly organized and existing under the la ws of the State of California (the “City”), as lessor, and the CATHEDRAL CITY PUBLIC FINANCING AUTHORITY , a joint exercise of powers authority, duly organized and existing under the laws of the State of California (the “Authority”), as lessee.

RECITALS:

WHEREAS, to assist the City the Authority has determined to issue its Lease Revenue Bonds, Series 2022A (Federally Taxable) (the “Bonds”) pursuant to an Indenture, dated as of April 1, 2022 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”); and WHEREAS, concurrently with the execution of this Site Lease, the Authority will lease the Leased Property to the City pursuant to a Lease Agreement, dated as of April 1, 2022 (the “Lease”) , b y and between the City and the Authority, in consideration for Base Rental Payments equal to the principal and interest coming due on the Bonds (“Base Rental Payments”); and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Site Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Site Lease;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:

SECTION 1. DEFINITIONS.

Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture or the Lease.

SECTION 2. SITE LEASE.

The City hereby leases the Leased Property to the Aut hority and the Authority hereby leases the Leased Property from the City, on the terms and conditions hereinafter set forth, as described in Exhibit A.

SECTION 3. TERM.

The term of this Site Lease shall commence on ____________, 2022. This Site Lease shall constitute a lease of the City’s interest in the Leased Property.

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The term of this Site Lease shall expire on the earliest of (i) the Expiration Date; (ii) the date the last Base Rental Payment is made under the provisions of the Lease; or (iii) the date of dischar ge of the Indenture pursuant to Section 9.03 thereof. Notwithstanding the foregoing, the term of this Lease shall automatically be extended for a period of ten (10) years, if, on the Expiration Date, the Indenture has not been fully discharged, and shall t erminate on the date when the Indenture has been fully discharged.

SECTION 4. RENTAL.

The Authority agrees to pay to the Trustee, on the Closing Date, the proceeds of the Bonds, as advance rental for the use and right to possession of the Leased Property for the term of this Site Lease. The rental shall be applied by the Trustee as provided in the Indenture.

SECTION 5. TITLE.

Throughout the term of this Site Lease, title to the Leased Property shall remain in the City.

SECTION 6. DEFAULT.
(a) If the Authority shall fail to keep, observe or pe rform any term, covenant or condition contained herein to be kept or performed by the Authority, or (b) if (1) the Authority’s interest in this Site Lease or any part thereof is assigned or transferred without the written consent of the City, either voluntarily or by operation of law or otherwise, except as provided in Section 11 hereof, or (2) any proceeding under the United States Bankruptcy Code or any federal or state bankruptcy, insolvency or similar law or any law providing for the appointment of a receiver, liquidator, trustee or similar official of the Authority or of all or substantially all of its assets is instituted by or with the consent of the Authority, or is instituted without its consent and is not permanently stayed or dismisse d within sixty (60) days, or if the Authority offers to the Authority’s creditors to effect a composition or extension of time to pay the Authority’s debts, or asks, seeks or prays for a reorganization or to effect a plan or reorganization or for readjustm ent of the Authority’s debts, or if the Authority shall make a general assignment or any assignment for the benefit of the Authority’s creditors, then the Authority shall be deemed to be in default hereunder and it shall be lawful for the City to exercise any and all rights and remedies available pursuant to law; provided however, that:
(i) no merger of this Site Lease and of the Lease shall be deemed to occur as a result thereof; and (ii) so long as any Bonds remain outstanding the City shall have no powe r to terminate this Site Lease by reason of any default on the part of the Authority if such termination would prejudice the exercise of the remedies provided in Section 10 (captioned “DEFAULT”) of the Lease.

Neither the City nor the Authority shall in any event be in default in the performance of any of its obligations hereunder or imposed by law unless and until the City or the Authority (as the case may be) shall have failed to perform such obligations within sixty (60) days after notice by the Authority or the City to the nonperforming party properly specifying wherein such party has failed to perform any such obligation.

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SECTION 7. EMINENT DOMAIN.

If the whole or any part of the Leased Property shall be taken under the power of eminent domain, the interest of the Authority shall be recognized and is hereby determined to be the amount of the unpaid principal components of Base Rental Payments due under the Lease, and all accrued interest thereon, and the amount of the unpaid Additional Rental Payments due under the Lease, and the balance of the award, if any, shall be paid to the City.

SECTION 8. RIGHT OF ENTRY.

The City and its assignees shall have the right to enter the Leased Property during reasonable business hours (and in emergencies at all times) (a) to inspect the same, (b) for any purpose connected with the City’s or the Authority’s rights or obligations under this Site Lease and (c) for all other lawful purposes.

SECTION 9. TERMINATION.

The Authority agrees, upon the termination of this Site Lease, to quit and surrender the Lease d Property in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and the Authority and the City agree that any permanent improvements and structures existing upon the Leased Property at the time of the termination of this Site Lease shall remain thereon and title thereto shall be vested in the City.

SECTION 10. QUIET ENJOYMENT BY THE AUTHORITY.

The Authority shall at all times during the term of this Site Lease peaceably and quietly have, hold and enjoy the Leased Property without suit, trouble or hindrance from the City, subject to the Authority’s compliance with the terms and provisions hereof and of the Lease.

SECTION 11. ASSIGNMENTS AND SUBLEASES.

The Authority shall not assign, mortgage, hypothecate or otherwise encumber this Site Lease or any rights hereunder or the leasehold created hereby by trust agreement, indenture or deed of trust or otherwise or sublet the Leased Property without the written consent of the City, except as may be permitted under the Lease.

SECTION 12. WAIVER OF PERSONAL LIABILITY.

All liabilities hereunder on the part of the Authority shall be solely liabilities of the Authority as a separate legal entity, and no member, officer or employee of the Authority shall at any time or u nder any circumstances be individually or personally liable hereunder for anything done or omitted to be done by the Authority hereunder.

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SECTION 13. TAXES.

The Authority shall cause the City to agree and covenant to pay, any and all assessments of any kind or charact er and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Property (including both land and improvements thereon).

SECTION 14. LAW GOVERNING.

This Site Lease shall be governed exclusively by the provisions hereof and by the laws of the State of California.

SECTION 15. NOTICES.

All notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered personally or if mailed by United States registered or certified mail, return receipt requested, postage pre -paid, and, if to the City, addressed to the Administrative Services Director, City of Cathedral City, 68- 700 Avenida L alo Guerrero, Cathedral City, California 92234, or if to the Authority, addressed to the Chairman, c/of the City, or to such other addresses as the respective parties may from time to time designate by notice in writing.

SECTION 16. VALIDITY AND SEVERABILITY.

If any one or more of the terms, provisions, covenants or conditions of this Site Lease shall to any extent be declared invalid, unenforceable, void or voidable for any reason whatsoever by a court of competent jurisdiction, the finding or order or decree of which becomes final, none of the remaining terms, provisions, covenants and conditions of this Site Lease shall be affected thereby, and each provision of this Site Lease shall be valid and enforceable to the fullest extent permitted by law.

If for any reason this Site Lease shall be held by a court of competent jurisdiction to be void, voidable, or unenforceable by the City or by the Authority, or if for any reason it is held by such a court that any of the covenants and conditions of the Authority hereunder is unenforceable for the full term hereof, then and in such event this Site Lease is and shall be deemed to be a lease from year to year and all of the rental and other terms, provisions and conditions of this Site Lease, except to the extent tha t such terms, provisions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect.

SECTION 17. PURPOSE OF THE LEASED PROPERTY.

The Authority covenants that during the term of this Site Lease, it shall use the Leased Property for the purposes described in the Lease and for such other purposes as may be incidental thereto.

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SECTION 18. WAIVER OF DEFAULT.

Failure of the City to take advantage of any default on the part of the Authority shall not be, or be construed as, a waiver thereof, n or shall any custom or practice which may grow up between the parties in the course of administering this Site Lease be construed to waive or to lessen the right of the City to insist upon performance by the Authority of any term, covenant or condition hereof, or to exercise any rights given the City on account of such default.

A waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any term, covenant or condition of this Site Lease.

SECTION 19. SECTION HEADINGS.

All section headings contained are for convenience of reference only and are not intended to define or limit the scope of any provision of this Site Lease.

SECTION 20. AMENDMENTS.

This Site Lease may be amended in writing as may be mutually agreed by the Authority and the City.

SECTION 21. EXECUTION.

This Site Lease may be executed in any number of counterparts, each of which shall be deemed to an original, but all together shall constitute but one and the same Site Lease.

It is also agreed that separate counterparts of this Site Lease may separately be executed by the City and the Authority, all with the same force and effect as though the same counterpart had been executed by both the City and the Authority.

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IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease to be executed by their respective representatives thereunto duly authorized, all as of the day and year first above written.

ATTEST:

CATHEDRAL CITY PUBLIC FINANCING

AUTHORITY

By __________________________________
Tami Scott
Chief Financial Officer

By __________________________________
Tracey R. Hermosillo CMC
Secretary

CITY OF CATHEDRAL CITY

By __________________________________
Tami Scott
Administrative Services Director

ATTEST:

By __________________________________
Tracey R. Hermosillo CMC
City Clerk

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A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE

VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE

DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.

STATE OF CALIFORNIA )
) ss:

COUNTY OF RIVERSIDE )
On ______________________________ before me,__________________________(insert name of the officer), Notary Public, personally appeared _________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

_________________________________ [Seal]

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A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE

VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE

DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.

STATE OF CALIFORNIA )
) ss:

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

_________________________________ [Seal]

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EXHIBIT A

DESCRIPTION OF THE LEASED PROPERTY

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AFTER RECORDATION PLEASE RETURN TO: NRF DRAFT – 3/7/22
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Russell C. Trice, Esq.

LEASE AGREEMENT

Dated as of April 1, 2022

by and between the

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY

and the

CITY OF CATHEDRAL CITY

Relating to

$_______
Cathedral City Public Financing Authority
Lease Revenue Bonds, Series 2022A
(Federally Taxable)

THIS IS A FINANCING DOCUMENT.

NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT TO REVENUE AND TAXATION CODE SECTION 11922 AND THIS DOCUMENT IS EXEMPT FORM RECORDING FEES PURSUANT TO GOVERNMENT CODE SECTION 27383.

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TABLE OF CONTENTS

Page

104926194.2 i
SECTION 1. DEFINITIONS ................................................................................................. 2 SECTION 2. TERM .............................................................................................................. 3 SECTION 3. RENTAL .......................................................................................................... 3 SECTION 4. USE OF PROCEEDS ...................................................................................... 5 SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS .................. 5 SECTION 6. CHANGES TO THE LEASED PROPERTY .................................................. 6 SECTION 7. SUBSTITUTION AND RELEASE OF PROPERTY ..................................... 6 SECTION 8. INSURANCE ................................................................................................... 7 SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION;
APPLICATION OF NET PROCEEDS ........................................................... 9 SECTION 10. DEFAULT ..................................................................................................... 11 SECTION 11. PREPAYMENT AND CREDITS.................................................................. 13 SECTION 12. MECHANICS’ LIENS .................................................................................. 13 SECTION 13. QUIET ENJOYMENT................................................................................... 13 SECTION 14. INDEMNIFICATION.................................................................................... 14 SECTION 15. ASSIGNMENT .............................................................................................. 14 SECTION 16. ABATEMENT OF RENTAL ........................................................................ 15 SECTION 17. WAIVER........................................................................................................ 15 SECTION 18. NET LEASE .................................................................................................. 15 SECTION 19. AMENDMENTS ........................................................................................... 15 SECTION 20. ESSENTIALITY............................................................................................ 16 SECTION 21. LAW GOVERNING ...................................................................................... 16 SECTION 22. NOTICES ....................................................................................................... 16 SECTION 23. VALIDITY AND SEVERABILITY ............................................................. 16 SECTION 24. SECTION HEADINGS ................................................................................. 17 SECTION 25. NO MERGER ................................................................................................ 17 SECTION 26. EXECUTION ................................................................................................. 17

EXHIBIT A — DESCRIPTION OF THE LEASED PROPERTY
EXHIBIT B — BASE RENTAL PAYMENT SCHEDULE

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LEASE AGREEMENT
This Lease Agreement, dated as of April 1, 2022 (this “Lease”), is made by and between the CATHEDRAL CITY PUBLIC FINANCING AUTHORITY , a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”), as lessor, and the CITY OF CATHEDRAL CITY , a charter city duly organized and existing under the laws of the State of California (the “City”), as lessee.

RECITALS:

WHEREAS, the Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated December 1, 1993, by and between the City of Cathedral City, California (the “City”) and the Cathedral City Redevelopment Agency, and under the provisions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act (the “Bond Law”) to b orrow money for the purpose of refinancing obligations; and
WHEREAS, the City is obligated by the Public Employees’ Retirement Law, commencing with Section 20000 of the Government Code of the State of California, as amended, to make payments relating to p ension benefits accruing to the California Public Employees’ Retirement System’s (“CalPERS”) members, including the City; and WHEREAS, the City is obligated specifically to make certain payments to CalPERS in respect of current and retired public safety e mployees and miscellaneous employees under the pension programs of CalPERS that amortize such obligations over a fixed period of time (collectively, the “CalPERS Obligation”); and
WHEREAS, the Authority previously issued its Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable) (the “Refunded Bonds”); and WHEREAS, the Authority has determined to assist the City in providing funds to refinance all or a portion of the CalPERS Obligation and to refund the Refunded Bonds by issuing its Lease Revenue Bonds, Series 2022A (Federally Taxable) (the “Bonds”), pursuant to and secured by this Indenture in the manner provided herein; and WHEREAS, in connection with such financing, the City has determined to lease its fee interest in the Lea sed Property described in Exhibit A to the Authority pursuant to a Site and Facility Lease, dated as of April 1, 2022 (the “Site and Facility Lease”); and WHEREAS, the Authority, pursuant to this Lease, will sublease the Leased Property described in Exhibit A to the City, in consideration for base rental payments to be made by the City pursuant to this Lease, in accordance with the base rental schedule attached hereto as Exhibit B (the “Base Rental Payments”), which correspond in timing and amount to the pr incipal and interest coming due with respect to the Bonds; and

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WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease;
NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS
Terms used herein and not otherwise defined herein but d efined in the Indenture shall have the meanings ascribed to them in the Indenture. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease, have the meanings herein specified, the following definitions to be equally applicable to both the singular and plural forms of any of the terms herein defined:
“Additional Base Rental Payments” means any Additional Base Rental Payments as defined in Section 3(a) of this Lease.
“Additional Rental ” means any Addition al Rental as defined in Section 3(b) of this Lease.
“Assignment Agreement” means the Assignment Agreement, dated as of April 1, 2022, by and between the Authority and the Trustee, relating to this Lease. “Base Rental Payments” means the Base Rental Payments due under this Lease. “Bonds” means the Bonds (as defined in the Recitals hereto). “Expiration Date” means August 1, 20____, unless extended in accordance with the terms of this Lease.
“Insurance Consultant ” means an individual or firm retained by the Ci ty as an independent insurance consultant, experienced in the field of risk management. “Interest Component” means the interest component of any Base Rental Payments as set forth in the exhibit to this Lease relating to such Base Rental Payments. “Lease” means this Lease Agreement.
“Net Proceeds” means any insurance or condemnation proceeds, paid with respect to the Leased Property remaining after payment therefrom of all expenses in the collection thereof.

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“Permitted Encumbrances” means, with respect to t he Leased Property, as of any particular time, (i) the Site and Facility Lease; (ii) this Lease, (iii) the Indenture, the Assignment Agreement and the Trustee’s and the Authority’s interests in the Leased Property, (iv) liens for taxes and assessments not then delinquent, (v) utility, access and other easements and rights of way, restrictions and exceptions that as certified in a Certificate of the City will not interfere with or impair the use intended to be made of the Leased Property; (vi) encumbrances u pon any additions and improvements to the Leased Property as permitted in this Lease and which do not materially impair the use intended to be made of the portions of the Leased Property other than such additions and improvements; (vii) any sublease or use permitted by this Lease, (viii) covenants, conditions or restrictions or liens of record relating to the Leased Property and existing on the Closing Date; (xiv) such minor defects, irregularities, encumbrances and clouds on title as normally exist with re spect to property similar in character to the Leased Property and as do not materially impair the use intended to be made of property affected thereby ; and (xv) any encumbrances listed in the Preliminary Title Report (Order Number: NCS-739250-LA2), dated June 26, 2015, issued by First American Title Company relating to the Leased Property. “Principal Component” means the principal component of any Base Rental Payments as set forth in the exhibit to this Lease relating to such Base Rental Payments.

SECTION 2. TERM
The Authority hereby leases to the City and the City hereby leases from the Authority, on the terms and conditions hereinafter set forth, the Leased Property. The term of this Lease shall commence on __________, 2022.

The term of the leasehold interest creat ed hereby shall expire on the earliest of (i) the Expiration Date; (ii) the date the last Base Rental Payment is made under the provisions hereof; or (iii) the date of discharge of the Indenture pursuant to Section 9.03 thereof.

Notwithstanding the forego ing, the term of this Lease Agreement shall automatically be extended for a period of ten (10) years, if, on the Expiration Date, the Indenture has not been fully discharged, and shall terminate on the date when the Indenture has been fully discharged.

Throughout the term of this Lease Agreement, fee title to the Leased Property shall remain vested in the City.

SECTION 3. RENTAL
Subject to the provisions of Section 16 hereof, the City agrees to pay to the Authority, its successors or assigns, as rental for the use and possession of the Leased Property, the following amounts at the following times:
(a) Base Rental Payments . The City shall pay the Base Rental Payments to the Authority or to the Trustee, as hereinafter provided, in accordance with the Base Rental Payment Sch edule attached hereto as Exhibit B , less any amounts credited against the Base Rental Payments pursuant to Section 4.02(d) of the Indenture. The obligation of the City to pay the Base Rental Payments and any “Additional Base Rental Payments ” payable with respect to the Leased Property shall each rank pari passu. Upon and after the issuance of any other bonds secured by Base Rental Payments with respect to the Leased Property, the City shall pay the

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Base Rental Payments with respect to such bonds as provid ed in the Indenture for such bonds, in accordance with the Base Rental Payment Schedule which shall be attached hereto as an Exhibit prior to the delivery of such bonds, as adjusted for any prepayments. On or before each January 15 and July 15 the City sh all pay to the Trustee the Base Rental Payments coming due on the next succeeding February 1 and August 1, respectively, as set forth in Exhibit B and such payments shall constitute payment in arrears in consideration for the City’s use and possession of the Leased Property for the six -month period preceding the due date of such Base Rental Payments.
(b) Additional Rental . The City shall also pay, as “Additional Rental” hereunder, in addition to the Base Rental Payments, to the Authority or to the Trustee, as hereinafter provided, such amounts in each year as shall be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of this Lease or the assignment hereof, the Indenture, or the Authority’s or the Trustee’s interest in the Leased Property, including, but not limited to, all fees, costs and expenses, all administrative costs of the Authority relating to the Leased Property (including, without limiting the generality of the foregoing, salaries and wages of employees, overhead, insurance prem iums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture), fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds o r of the Indenture. Such Additional Rental shall be billed to the City by the Authority or the Trustee from time to time. Amounts so billed shall be paid by the City within sixty (60) days after receipt of the bill by the City.
(c) Fair Rental Value . Such pa yments of Base Rental Payments and Additional Rental for each rental payment period shall constitute the total rental for said rental payment period, and shall be paid by the City in each rental payment period for and in consideration of the right of the u se and possession of, and the continued quiet use and enjoyment of, the Leased Property during each such period for which said rental is to be paid.

The parties hereto have agreed and determined that such total rental represents the fair rental value of the Leased Property for each such period. In making such determination, consideration has been given to other obligations of the parties under this Lease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which wil l accrue to the City and the general public. The determination of fair rental value of the Leased Property pursuant to this paragraph shall not be deemed to be controlling in connection with a determination of fair value of the Leased Property by the parties hereto for any other purpose. (d) Payment of Base Rental Payments . Each installment of Base Rental Payments payable hereunder shall be paid in lawful money of the United States of America to the order of the Trustee at the corporate trust office of the Tr ustee, or such other place as the Trustee shall designate. Each installment of Additional Base Rental Payments payable hereunder shall be paid in lawful money of the United States of America to the order of a trustee designated with respect thereto. The Base Rental Payments and any Additional Base Rental Payments which the City shall enter into with respect to the Leased Property shall be made on a pari passu basis with each other. Notwithstanding any dispute between the City and the Authority, the City sh all

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make all Base Rental Payments when due, without deduction or offset of any kind, and shall not withhold any Base Rental Payments pending the final resolution of any such dispute. In the event of a determination that the City was not liable for said Ba se Rental Payments or any portion thereof, said Base Rental Payments or excess of payments, as the case may be, shall, at the option of the City, be credited against subsequent Base Rental Payments due hereunder or be refunded at the time of such determination.
(e) Increases in Aggregate Base Rental Payments ; Additional Base Rental Payments. The City covenants that, except for the Base Rental Payments, it shall not incur any Additional Base Rental Payments, or permit an increase in the Base Rental Pa yments, without first obtaining evidence to the effect that the resulting aggregate Base Rental Payments are not greater than the fair rental value (as such term is used in subsection (c) of this Section 3) of the Leased Property.
(f) Covenant to Budget and Appropriate . The City covenants to take such action as may be necessary to include all Base Rental Payments and Additional Rental due hereunder in its annual budget and to make the necessary annual appropriations for all such Base Rental Payments and Additional Renta l, subject only to abatement as provided in Section 16 hereof. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease agreed to be carried out and performed by t he City. The obligation of the City to make Base Rental Payments or Additional Rental payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Base Rental Payments or Additional Rental payments constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

SECTION 4. USE OF PROCEEDS
The parties hereto agree that the proceeds of the Bonds will be used as set forth in the Indenture.

SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS During such time as the City or any assignee or sublessee thereof is in possession of the Leased Property, all maintenance and repair, ordinary or extraordinary, of the Leased Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of (a) all utility services supplied to the Leased Property, (b) the cost of operation of the Leased Property, and (c) the costs of maintenance of and repair to the Leased Property resulting from ordinary wear and tear or want of care on the part of the City. The C ity shall at the City’s sole cost and expense keep and maintain the Leased Property clean and in a safe and good condition and repair. The Authority shall have no obligation to alter, remodel, improve, repair, decorate, or paint the Leased Property or any part thereof, and the parties hereto affirm

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that the Authority has made no representations or warranties to the City respecting the condition of the Leased Property.

The City shall comply with all statutes, ordinances, regulations, and other requirements of all governmental entities that pertain to the occupancy or use of the Leased Property. The Authority has no responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the Leased Property.

The City waives the r ight to make repairs at the Authority’s expense under Subsection 1 of Section 1932 and Section 1942 of the California Civil Code, or any other such law, statute, or ordinance now or hereafter in effect.

The parties hereto contemplate that the Leased Proper ty will be used for public purposes by the City and, therefore, that the Leased Property will be exempt from all taxes presently assessed and levied with respect to real and personal property, respectively. In the event that the use, possession or acquisi tion by the Authority or the City of the Leased Property is found to be subject to taxation in any form, the City will pay during the term hereof, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Leased Property and any other property acquired by the City in substitution for, as a renewal or replacement of, or a modification, improvement or addition to the Leased Property; provided, that with respect to any governmental charges or taxes that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are accrued during such time as this Lease is in effect.

SECTION 6. CHANGES TO THE LEASED PROPERTY
The City shall have the right during the term of this Lease to acquire and construct improvements or to attach fixtures, structures or signs to the Leased Property if such improvements, fixtures, structures or signs are necessary or benefi cial for the use of the Leased Property by the City; provided, however, that no such acquisition or construction shall result in a material reduction in the value of the Leased Property, reduce the fair rental value thereof or substantially alter the nature of the Leased Property.

Upon termination of this Lease, the City may remove any fixture, structure or sign added by the City, but such removal shall be accomplished so as to leave the Leased Property, except for ordinary wear and tear and damage by casua lty, in substantially the same condition as it was in before the fixture, structure or sign was attached.

SECTION 7. SUBSTITUTION AND RELEASE OF PROPERTY
The City shall have, so long as this Lease is in effect, and is hereby granted, the option at any time and from t ime to time, to substitute other real property (the “Substitute Property”) for any portion of the Leased Property (the “Former Property”) or release any identifiable real property and/or improvements currently constituting the Leased Property (in such case, Substitute Property shall mean the Former Property less any portion released pursuant to this Section); provided, that the City shall satisfy all of the following requirements , which are conditions precedent to such substitution:

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(a) No default under Sectio n 10 hereof or Event of Default shall have occurred and be continuing;
(b) The City shall file with the Authority and the Trustee, and cause to be recorded in the office of the County Recorder, sufficient memorialization of an amendment hereof which replaces Exhibit A hereto with description of such Substitute Property and deletes therefrom the description of the Former Property;
(c) The City shall obtain an extended CLTA policy of title insurance insuring the City’s leasehold estate hereunder (and the Authority’s leasehold estate therein under the Site and Facility Lease ) in such Substitute Property, subject only to Permitted Encumbrances, in an amount at least equal to the estimated fair market value thereof; (d) The City shall provide a Certificate of the City to the Authority and to the Trustee stating that such Substitute Property constitutes property which the City is permitted to lease under the laws of the State of California and is at least as essential as the Former Property; (e) The substitution of the Substitute Property shall not cause the City to violate any of its covenants, representations and warranties made herein; (f) The City shall file with the Authority and the Trustee a Certificate of the City or other evidence which establishes that the annual fair rental value of the Substitute Property after substitution or release will be at least equal to 100% of the maximum amount of the Lease Payments becoming due in the then current fiscal year or in any subsequent fiscal y ear and the useful economic life of the Sub stitute Property shall be at least equal to the remaining term of this Lease; and
(g) The City shall furnish to the Trustee a n opinion of Bond Counsel addressed to the Trustee, the City and the Authority to the effect that the substitution or release is permitted under this Lease and will not in and of itself impair the validity and enforceability of this Lease.

Upon the satisfaction of all such conditions precedent, and upon the City delivering to the Authority and the Trustee a Certificate of the City certifying that the conditions set forth in subsections (a) and (e) of this Section have been satisfied, the Term of this Lease shall thereupon end as to the Former Property and shall thereupon commence as to the Substitute Property, and all references to the For mer Property shall apply with full force and effe ct to the Substitute Property. The City shall not be entitled to any reduction, diminution, extension or other modification of the Base Rental Payments whatsoever as a result of any substitution or release hereunder.

SECTION 8. INSURANCE
(a) The City shall secure and maintain or cause to be secured and maintained at all times with insurers of recognized responsibility or through a program of self -insurance to the extent specifically permitted in this Section 8, all coverag e on the Leased Property required by this Section 8.

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Such insurance shall consist of:
(1) Comprehensive general liability coverage against claims for damages including death, personal injury, bodily injury or property damage arising from operations involving t he Leased Property. The City shall maintain or cause to be maintained, throughout the term of this Lease, insurance against loss or damage to any or all of the Leased Property by flood, fire and lightning, with extended coverage and vandalism and malicious mischief insurance, and against loss of Leased Property by theft.

Said extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. Earthquake insurance shall be obtained if, in the judgment of the City , such coverage is available at a reasonable cost. Such insurance shall afford protection with a combined single limit of not less than $1,000,000 per occurrence with respect to bodily injury, death or property damage liability, or such greater amount as may from time to time be recommended by the City’s risk management officer or an independent insurance consultant retained by the City for that purpose; provided, however, that the City’s obligations under this clause ( 1) may be satisfied by self-insurance;
(2) Workers’ compensation insurance issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the Labor Code of the State, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Leased Property and to cover full liability for compensation under any such act; provided, however, that the City’s obligations under this clause (2) may be satisfied by self-insurance; and (3) Rental interruption insurance in an amount not less than the maximum remaining scheduled Base Rental Paymen ts in any twenty -four-month period, by an insurance provider rated at least “A” by A.M. Best & Company, to insure against loss of use of the Leased Property caused by perils covered by the insurance required in Section 8(a)(1). Such insurance may be maint ained as part of or in conjunction with any other rental interruption insurance carried by the City and must list the Authority and the Trustee as additional insured parties. Such insurance shall be in place as of the Closing Date. The Net Insurance Proc eeds of such insurance shall be paid to the Trustee and deposited in the Lease Revenue Fund, and shall be credited toward the payment of the Base Rental Payments in the order in which such Lease Payments come due and payable. (4) The City shall, on or before t he Closing Date, deliver to the Trustee a CLTA or ALTA title insurance policy insuring the leasehold interest in the Leased Property of the City and the Authority, in an amount acceptable to the Authority.

All policies or certificates issued by the respective insurers for insurance, with the exception of workers’ compensation insurance, shall provide that such policies or certificates shall not be canceled or materially changed without at least 30 days’ prior written notice to the Authority and the Trustee. Certificates of comprehensive general liability and workers’ compensation insurance shall be furnished by applicable insurers to the City, and, at least ten

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days prior to the expiration dates of such policies, if any, evidence of renewals shall be deposit ed with the Trustee.

If the City elects to provide self -insurance pursuant to clauses (1) and/or (2) above, the City shall annually cause to be delivered to the Trustee a certificate of an Insurance Consultant certifying to the adequacy of the City’s reserves for such insurance.

All policies or certificates of insurance provided for herein shall name the City as a named insured and the Authority and the Trustee as additional insureds. All proceeds of insurance maintained under clauses (1) and (2) shall be deposited with the City.

Notwithstanding the generality of the foregoing, the City shall not be required to maintain or cause to be maintained more insurance than is specifically referred to above or any policies of insurance other than standard policies of insurance with standard deductibles offered by reputable insurers at a reasonable cost on the open market. (b) Form of Policies. All policies of insurance required by this Lease and any statements of self-insurance shall be in form satisfactory to the Author ity. The City shall pay or cause to be paid when due the premiums for all insurance policies required by this Lease and shall promptly furnish or cause to be furnished evidence of such payments to the Authority. All such policies shall provide that the A uthority and the Trustee shall be given thirty (30) days’ notice of each expiration, and any intended cancellation thereof or reduction of the coverage provided thereby. The City shall deliver to the Trustee on or before the Closing Date and each anniversary of the Closing Date a Certificate of the City that all insurance required under this Lease is in full force and effect. In the event that the City obtains insurance through a pooled insurance program of governmental entities, an annual statement or me morandum of coverage delivered to the Authority and the Trustee will satisfy the requirements of this subsection. The Trustee and the Authority shall not be responsible for the sufficiency of any insurance herein required or payment of premium and shall b e fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the City. (c) Advances. If the City shall fail to perform any of its obligations under this Section, then the Authority ma y, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money on behalf of the City, and the City shall be obligated to repay all such advances as soon as possible.

SECTION 9. DAMAGE, DESTRUCTION AND C ONDEMNATION;

APPLICATION OF NET PROCEEDS
If prior to the termination of the term hereof (a) the Leased Property is destroyed (in whole or in part) or is damaged by fire of other casualty, or (b) title to, or the temporary use of, any portion of the Leased Property or the estate of the Authority or the City in the Leased Property or any portion shall be taken under the exercise of the power of eminent domain by any governmental body or by any person or firm or corporation acting under governmental authority, then the City and the Authority shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Leased Property or portion thereof, in accordance with the provisions of

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this Section 9. If Net Proceeds are insufficient to repair or replace the Leased Property or portion thereof, the City shall, to the extent permitted by law, use its best efforts to fund any deficiency from any legally available funds.

If there is an abatement of rental payments pursuant to Section 16 hereof as a result of such casualty or event, and the City elects pursuant to Section 11(a) hereof to apply such insurance proceeds and such other sums as are deposited b y the City pursuant to such Section to the prepayment of Base Rental Payments rather than replacing or repairing the destroyed or damaged portion of the Leased Property, then this Lease shall terminate with respect to the destroyed or damaged portion of th e Leased Property as of the later of the date of such election by the City or the date the amount required by Section 11(a) hereof is received by the Trustee.

The provisions of Section 1932, Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, including any amendments thereto and any other law which may hereinafter be in force during the term of this Lease which authorizes the termination of this Lease upon the partial or complete destruction of the Leased Property, are hereby waive d by the City.

The City hereby covenants and agrees, to the extent it may lawfully do so, that so long as any of the Bonds remain outstanding and unpaid, the City will not exercise the power of condemnation with respect to the Leased Property. The City fu rther covenants and agrees, to the extent it may lawfully do so, that if for any reason the foregoing covenant is determined to be unenforceable or if the City should fail or refuse to abide by such covenant and condemns the Leased Property, the appraised value of the Leased Property shall not be less than the greater of (i) if such Bonds are then subject to redemption, the principal and interest due on the Bonds outstanding through the date of their redemption, or (ii) if such Bonds are not then subject to redemption, the amount necessary to defease such Bonds to the first available redemption date in accordance with the Indenture.

The City shall deposit any proceeds received from i nsurance and condemnation awards with respect to the destruction or partial destruction of Leased Property with the Trustee for deposit in to the Lease Revenue Fund if the C ity elects to redeem the Bonds. The City shall have 45 days from the date of any such destruction or partial destruction to determine whether to repair the Leased Property or use insurance and condemnation award proceeds received to redeem Bonds. If the City determines to repair the Leased Property, disbursements by the Trustee shall only be made upon presentation of a requisition setting for the payees, the purposes for which the costs have been incurred, and the amount of the disbursements requested , stating that the proposed payment has been properly incurred and has not been previously reim bursed, and there is no Event of Default that has occurred and is conti nuing under the Indenture . If the City determines to cause the redemption of less than the full amount of the Bonds Outstanding, such redemption shall only be made to the extent the remaining fair market value of the Leased Property is sufficient to suppo rt the remaining Base Rental Payments supporting debt service on the Bonds.

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SECTION 10. DEFAULT
(a) Each of the following events constitutes an Event of Default hereunder:
(1) Failure by the City to pay any Base Rental Payment or other payment (including Additional Rental Pay ments) required to be paid hereunder at the time specified herein.
(2) Failure by the City to observe and perform any covenant, condition or agreement on its part to be observed or performed hereunder, other than as referred to in the preceding subsection (1), for a period of thirty ( 30) days after written notice specifying such failure and requesting that it be remedied has been given to the City by the Authority. However, if the City notifies the Authority that in its reasonable opinion the failure stated in the notice can be corrected, but not within such thirty (30) day period, the failure will not constitute an Event of Default if the City commences to cure the failure within such thirty (30) day period and thereafter diligently and in good faith cures such failure in a reasonable period of time; provided, that such cure period shall not extend beyond sixty (60) days.
(3) The filing by the City of a voluntary petition in bankruptcy, or failure by the City promptly to lift any execution, garnishment or attachmen t, or adjudication of the City as a bankrupt, or assignment by the City for the benefit of creditors, or the entry by the City into an agreement of composition with creditors, or the approval by a court of competent jurisdiction of a petition applicable to the City in any proceedings instituted under the provisions of the Federal Bankruptcy Code, as amended, or under any similar acts which may hereafter be enacted.

The Authority expressly waives the right to receive any amount from the City pursuant to Section 1951.2(a)(3) of the California Civil Code. (b) Whenever any Event of Default has happened and is continuing, the Authority may exercise any and all remedies available under law or granted under this Lease .

Notwithstanding anything herein to the contrary, there shall be no right under any circumstances to accelerate the Base Rental Payments or otherwise declare any Base Rental Payments not then in default to be immediately due and payable. Notwithstanding anything herein to the contrary, there shall be no r ight under any circumstances for the Authority to terminate this Lease and re - let the property to any party. Each and every covenant hereof to be kept and performed by the City is expressly made a condition and upon the breach thereof the Authority may exe rcise any and all rights granted hereunder . Upon the occurrence and during the continuance of any Event of Default, the Authority may exercise each and every one of the following remedies:
(1) Enforcement of Payments Without Termination . If the Authority does not elect to terminate this Lease in the manner hereinafter provided for in subsection (b)(2) of this Section, the City agrees to remain liable for the payment of all Base Rental Payments and the performance of all conditions herein contained, and the Authority may take whatever action at law or in equity may appear necessary or desirable, to collect each Base Rental Payment as it becomes due hereunder. The City

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will reimburse the Authority for any deficiency arising out of the re -leasing or sale of the Leased Property or portion thereof, or, if the Authority is unable to re -lease or sell the Leased Property, then for the full amount of all Base Rental Payments to the end of the term of this Lease, but said Base Rental Payments and/or deficiency will be p ayable only at the same time and in the same manner as hereinabove provided for the payment of Base Rental Payments hereunder, notwithstanding such entry or re-entry by the Authority or any suit in unlawful detainer, or otherwise, brought by the Authority for the purpose of effecting such re-entry or obtaining possession of the Leased Property or portion thereof or the exercise of any other remedy by the Authority.

The City hereby irrevocably appoints the Authority as the agent and attorney-in-fact of the City and the shall allow the Trustee at the direction of the Insurer to enter upon and re -lease the Leased Property upon the occurrence and continuation of an Event of Default and to remove all personal property whatsoever situated upon the Leased Property, to place such property in storage or other suitable place in the State of California for the account of and at the expense of the City, and the City hereby agrees to save harmless the Authority from any costs, loss or damage whatsoever arising or occasioned by any such entry upon and re-leasing of the Leased Property and the removal and storage of such property by the Authority or its duly authorized agents in accordance with the provisions herein contained. The City agrees that the terms of this Lease constitute full and sufficient notice of the right of the Authority to re -lease the Leased Property in the event of such re -entry without effecting a surrender of this Lease, and further agrees that no acts of the Authority in effecting such re -leasing const itute a surrender or termination of this Lease irrespective of the term for which such re-leasing is made or the terms and conditions of such re -leasing, or otherwise, but that, on the contrary, in the event of such default by the City the right to terminate this Lease will vest in the Authority to be effected in the sole and exclusive manner hereinafter provided for in subsection (2) of this Section. The City agrees to surrender and quit possession of the Leased Property upon demand of the Authority for t he purpose of enabling the Leased Property to be re-let under this paragraph. Any rental obtained by the Authority in excess of the unpaid Base Rental Payments will be applied as a credit against future Base Rental Payments.
(2) Termination of Lease . If an Event of Default occurs and is continuing hereunder, the Authority at its option may terminate this Lease and re-lease all or any portion of the Leased Property. If the Authority terminates this Lease at its option and in the manner hereinafter provided o n account of default by the City (and notwithstanding any re -entry upon the Leased Property by the Authority in any manner whatsoever or the re -leasing of the Leased Property), the City nevertheless agrees to pay to the Authority all costs, loss or damages howsoever arising or occurring payable at the same time and in the same manner as is herein provided in the case of payment of Base Rental Payments. Any surplus received by the Authority from such re -leasing will be applied as a credit against future Bas e Rental Payments. Neither notice to pay rent or to deliver up possession of the premises given under law nor any proceeding in unlawful detainer taken by the Authority will of itself operate to terminate this Lease, and no termination of this Lease on account of default by the City will be or become effective by operation of law, or otherwise, unless and until the Authority has given written notice to

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the City of the election on the part of the Authority to terminate this Lease. The City agrees that no surrender of the Leased Property, or of the remainder of the term hereof or any termination of this Lease will be valid in any manner or for any purpose whatsoever unless stated or accepted by the Authority by such written notice. (3) Proceedings at Law or In E quity. If an Event of Default occurs and continues hereunder, the Authority may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder or to enforce any other of its rights hereunder. (4) Remedies under the Site Lease . If an Event of Default occurs and continues hereunder, the Authority may exercise its rights under the Site Lease.

SECTION 11. PREPAYMENT AND CREDITS
(a) Prepayment From Net Proceeds.
(1) The City may prepay, from Net Procee ds of insurance or a condemnation award received by it pursuant to Section 8, the Principal Component of Base Rental Payments then unpaid (and corresponding Interest Component), in whole or in part on any date, pursuant to Section 9 hereof, at a prepayment price equal to the sum of the Principal Component prepaid plus accrued interest thereon to the date of prepayment.
(2) Prepayments made pursuant to this subsection (a) shall be allocated pro rata among the Principal Components of Base Rental Payments and any Additional Base Rental Payments.

SECTION 12. MECHANICS’ LIENS
In the event the City shall at any time during the term of this Lease cause any improvements or other work to be done or performed or materials to be supplied, in or upon the Leased Property, the City shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Leased Property and which may be secured by any mechanics’, materialmen’s or other liens against the Leased Property or the Authority’s interest therein, and will cause any such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that, if the City desires to contest any such lien it may do so. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment.

SECTION 13. QUIET ENJOYMENT
The parties hereto mutually covenant that the City, so long as it keeps and performs the covenants and agreements herein contained, shall at all times during the term of this

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Lease peaceably and quietly have, hold and enjoy the Leased Property without suit, trouble or hindrance from the Authority.

SECTION 14. INDEMNIFICATION
The City shall, to the full extent then permitted by law, indemnify, defend, protect and hold harmless the Authority, the Trustee and their members, officers, directors and employees from and against any and all liabilities, obligations, losses, claims and damages whatsoever, regardless of the cause thereof (except for claims aris ing out of willful misconduct or gross negligence on the part of the Authority or the Trustee), and expenses in connection therewith, including, without limitation, counsel fees and expenses, penalties and interest arising out of or as the result of the en tering into of this Lease and the Indenture, the payment of the costs of acquiring the Leased Property or any accident in connection with the operation, use, condition or possession of the Leased Property or any portion thereof resulting in damage to property or injury to or death to any person or the Trustee’s acceptance or administration of the trust of the Indenture, or the exercise or performance of any of its powers or duties thereunder or under any of the documents relating to the Bonds to which it is a party. The indemnification arising under this section shall continue in full force and effect notwithstanding the full payment of all rent obligations hereunder or the termination hereof for any reason. The City agrees not to withhold or abate any portion of the payments required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of the Leased Property. The Authority and the City mutually agree to promptly give notice to each other of any claim or liability hereby indemnif ied against following either party’s learning thereof. The right to indemnity hereunder and rights to payment of fees and reimbursement of expenses pursuant to Sections 3(b) shall survive the final payment or defeasance of the Bonds and in the case of the Trustee any resignation or removal.

The provisions of this Section shall survive the termination of this Lease.

SECTION 15. ASSIGNMENT
The parties understand that this Lease and the rights of the Authority hereunder, with certain exceptions, will be assigned to the Trustee as provided in the Indenture and the Assignment Agreement, to which assignments the City hereby consents.

Neither this Lease nor any interest of the City hereunder shall be mortgaged, pledged, assigned or transferred by the City by voluntary act or by operation of law or otherwise; provided that, subject to the provisions of Section 17 hereof, the City may sublease all or any portion of the Leased Property, and may grant concessions to others involving the use of any portion of the Leased Property, whether such concessions purport to convey a leasehold interest or a license to use a portion of the Leased Property. The City shall at all times remain liable for the performance of the covenants and conditions on its part to be performed under this Leas e, notwithstanding any subletting or granting of concessions which may be made. Nothing herein contained shall be construed to relieve the City from its obligation to pay Base Rental Payments and Additional Rental Payments as provided in this Lease or to relieve the City from any other obligations contained herein.

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SECTION 16. ABATEMENT OF RENTAL
The obligation of the City to pay Base Rental Payments and Additional Rental Payments shall be abated during any period in which by reason of any damage, destruction or condemnation there is substantial interference with the use by the City of the Leased Property or any portion thereof. Such abatement shall be in an amount such that the resulting Base Rental Payments in any year during which such interference continues does n ot exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction or taking do not substantially interfere with the City’s use and right of possession, as evidenced by a Certificate of the City. Such abatement sha ll continue for the period commencing with the date of such interference and ending with the restoration of the Leased Property to tenantable condition.

SECTION 17. WAIVER
Failure of the Authority to take advantage of any default on the part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may be established between the parties in the course of administering this Lease be construed to waive or to lessen the right of the Authority to insist upon performance by the Ci ty of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent default. The acceptance of rent here under shall not be, nor be construed to be, a waiver of any term, covenant or condition of this Lease.

SECTION 18. NET LEASE
Subject to the provisions of Section 16 (“Abatement of Rental”), this Lease shall be deemed and construed to be a “Triple -Net-Lease” and the Ci ty hereby agrees that rental provided for herein shall be an absolute net return to the Authority, free and clear of any expenses, taxes, fees, insurance premiums, rebate payments, Leased Property costs, reserve deposits, charges or setoffs whatsoever.

SECTION 19. AMENDMENTS.

This Lease may be amended in writing as may be mutually agreed by the Authority and the City, subject to the written consent of Trustee; provided, that no such amendment which materially adversely affects the rights of the Owners shall be effectiv e unless it shall have been consented to by the Owners of more than majority in aggregate principal amount of the Bonds then Outstanding, and provided further, that no such amendment shall (a) extend the payment date of any Base Rental Payment, without the prior written consent of the Owner of each Bond so affected, or (b) reduce the percentage of the Bonds the consent of the Owners of which is required for the execution of any amendment hereof.

This Lease and the rights and obligations of the Authority and the City hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto which shall become binding upon execution by the Authority and the City without the written consents of any Owners, but only to the extent permi tted by law and only for any one or more of the following purposes:

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(a) to add to the agreements, conditions, covenants and terms required by the Authority or the City to be observed or performed herein and other agreements, conditions, covenants and terms the reafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein to or conferred herein on the Authority or the City, and which in either case shall not materially adversely affect the interests of the Owners; (b) to make such provisions for the purpose of curing any ambiguity of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Authority or the City may deem desirable or necessary and not inconsistent herewith, and which shall not materially adversely affect the interests of the Owners;
(c) to effect a Substitution or Release;
(d) for any other purpose which shall not materially adversely affect the interests of the Owners.

SECTION 20. ESSENTIALITY
The City covenants and agrees that the Leased Property is essential to the City’s exercise of its governmental functions.

SECTION 21. LAW GOVERNING
This Lease shall be governed by and construed in accordance with the laws of the State of California.

SECTION 22. NOTICES
All notices , statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if delivered perso nally or by facsimile transmission or if mailed by United States first class mail, postage prepaid, and, if to the City, addressed to the Administrative Services Director, City of Cathedral City, 68 -700 Avenida Lalo Guerrero, Cathedral City, California 92234, or if to the Authority, addressed to the Administrative Services Director , c/of the City , or to such other addresses as the respective parties may from time to time designate by notice in writing.

SECTION 23. VALIDITY AND SEVERABILITY
If for any reason this Lease shall be held by a court of competent jurisdiction to be void, voidable, or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants of the City hereunder, including the covenant to pay rentals hereunder, is unenforceable for the full term hereof, then and in such event this Lease is and shall be deemed to be a lease from year to year under which the rentals are to be paid by the City monthly in consideration of the right of the City to possess , occupy and use the Leased Property, and all of the rental and other terms, provisions and conditions of this Lease, except to

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the extent that such terms, provisions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect.

SECTION 24. SECTION HEADINGS
All section headings contained are for convenience of reference only and are not intended to define or limit the scope of any provision of this Lease.

SECTION 25. NO MERGER
If both the Authority’s and the City’s estate under this or an y other lease relating to the Leased Property or any portion thereof shall at any time or for any reason become vested in one owner, this Lease and the estate created hereby shall not be destroyed or terminated by the doctrine of merger unless the City so elects as evidenced by recording a written declaration so stating, and unless and until the City so elects, the City shall continue to have and enjoy all of its rights and privileges as to the separate estates.

SECTION 26. EXECUTION
It is agreed that separate counterparts of this Lease may separately be executed by the Authority and the City, all with the same force and effect as though the same counterpart had been executed by both the Authority and the City.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be executed by their respective officers thereunto duly authorized, all as of the da y and year first above written.

ATTEST:

CATHEDRAL CITY PUBLIC FINANCING

AUTHORITY

By __________________________________
Tami Scott
Chief Financial Officer

By __________________________________
Tracey R. Hermosillo, CMC
Secretary

CITY OF CATHEDRAL CITY

By __________________________________
Tami Scott
Administrative Services Director
ATTEST:

By __________________________________
Tracey R. Hermosillo, CMC
City Clerk

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A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE

VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE

DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.

STATE OF CALIFORNIA )
) ss:

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

_________________________________ [Seal]

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A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE

VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE

DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.

STATE OF CALIFORNIA )
) ss:

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

_________________________________ [Seal]

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EXHIBIT A

DESCRIPTION OF THE LEASED PROPERTY

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EXHIBIT B

BASE RENTAL PAYMENT SCHEDULE

Payment
Dates(1) Principal Interest Debt Service
Annual Debt
Service

________________________________
(1) Base Rental Payments are made fifteen (15) days prior to each Interest Payment Date.

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AFTER RECORDATION PLEASE RETURN TO: NRF DRAFT – 3/7/22
Norton Rose Fulbright US LLP
555 South Flower Street, Suite 4100
Los Angeles, California 90071
Attention: Russell C. Trice, Esq.

ASSIGNMENT AGREEMENT
Dated as of April 1, 2022
From

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY
To
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Relating to the

$_________
Cathedral City Public Financing Authority
Lease Revenue Bonds, Series 2022A
(Federally Taxable)

THIS IS A FINANCING DOCUMENT.

NO DOCUMENTARY TRANSFER TAX IS DUE PURSUANT TO REVENUE AND TAXATION CODE SECTION 11922 AND THIS DOCUMENT IS EXEMPT FORM RECORDING FEES PURSUANT TO GOVERNMENT CODE SECTION 27383.

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TABLE OF CONTENTS

Page

104928571.2 i
SECTION 1. DEFINITIONS ................................................................................................. 1 SECTION 2. ASSIGNMENT ................................................................................................ 1 SECTION 3. ACCEPTANCE OF ASSIGNMENT .............................................................. 2 SECTION 4. NO ADDITIONAL RIGHTS OR DUTIES ..................................................... 2 SECTION 5. FURTHER ASSURANCES ............................................................................ 2 SECTION 6. COUNTERPARTS .......................................................................................... 2 SECTION 7. LAW GOVERNING ........................................................................................ 2 SECTION 8. NOTICES ......................................................................................................... 2 SECTION 9. BINDING EFFECT; SUCCESSORS .............................................................. 2

EXHIBIT A — DESCRIPTION OF THE LEASED PROPERTY

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ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of April 1, 2022 (the “Assignment Agreement”), from the CATHEDRAL CITY PUBLIC FINANCING AUTHORITY , a joint powers authority duly organized and existing under the laws of the State of California (the “Authority”) and The Bank of New York Mellon Trust Company, N.A. , a national banking association, organized and existing under the laws of the United States of America and authorized to accept assignments of the nature herein set forth, as trustee (the “Trustee”); W I T N E S S E T H:

WHEREAS, the Authority has entered into a Site and Facility Lease, dated as of April 1, 2022 (the “Site and Facility Lease ”), with the City of Cathedral City (the “City”), whereby the Authority has agreed to lease certain real property lo cated within the City, as described in Exhibit A attached hereto (the “Leased Property”), from the City; and WHEREAS, the Authority has entered into a Lease Agreement, dated as of April 1, 2022 (the “Lease”), with the City , whereby the Authority has agreed to lease the Leased Property to the City; and
WHEREAS, under and pursuant to the Lease, the City is obligated to make rental payments, including the Base Rental Payments as defined therein, to the Authority for the lease of the Leased Property; and
WHEREAS, the Base Rental Payments have been pledged by the Authority as security for the payment of principal of and interest on its Lease Revenue Bonds , Series 2022 A (Federally Taxable) (the “Bonds”), authorized and issued pursuant to an Indenture, dated as of April 1, 2022 (the “Indenture”), by and between the Authority and the Trustee acting as trustee thereunder; and
WHEREAS, the Authority desires to assign to the Trustee without recourse certain of its rights under the Lease and the Site and Facility Lease , including all of its rights to receive the Base Rental Payments scheduled to be paid by the City under and pursuant to the Lease; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Definitions. All capitalized terms used herein without definition shall have the meanings given to such terms in the Indenture or the Lease, as appropriate.

Section 2. Assignment. The Authority does hereby assign and transfer to the Trustee all of the Authority’s rights, title and interest in and to the Lease and the Site and Facility Lease (excepting only (i) the Authority’s rights to the p ayment of Additional Rental Payments pursuant to Section 3(b) of the Lease and to indemnification pursuant to Section 14 of the Lease, and (ii) the Authority’s rights to receive base rental payments other than the Base Rental Payments), including the Authority’s rights to receive Base Rental Payments, as well as its rights to enforce

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payment of such Base Rental Payments when due or otherwise to protect its interests in the event of a default by the City under the Lease, in accordance with the terms thereof, in trust nonetheless and provided that should the Authority well and truly perform all of its obligations under the Indenture, this Assignment Agreement shall terminate and all interest in the Lease shall revert to the Authority. The Base Rental Payments shall be applied, and the rights of the Authority assigned hereunder shall be exercised by the Trustee, as provided in the Indenture.

Section 3. Acceptance of Assignment . The Trustee hereby accepts the assignment and transfer of such of the Authority’s rights, titl e and interest in and to the Lease and the Site and Facility Lease as are assigned and transferred pursuant to the terms of this Assignment Agreement.

Section 4. No Additional Rights or Duties . Excepting only the assignment and transfer of rights to the Trustee purs uant to Section 2 hereof, this Assignment Agreement shall not confer any rights nor impose any duties, obligations or responsibilities upon the Trustee beyond those expressly provided in the Lease, the Site and Facility Lease and the Indenture. The Trustee does not warrant the accuracy of any of the recitals hereto. This Assignment Agreement shall not impose any duties, obligations or responsibilities upon the Authority or the City beyond those expressly provided in the Lease, the Site and Facility Lease and the Indenture or as otherwise set forth herein.

Section 5. Further Assurances. The Trustee will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to fa cilitate the performance of this Assignment Agreement, and for the better assuring and confirming to the Trustee the rights and obligations intended to be conveyed pursuant hereto.

Section 6. Counterparts. This Assignment Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement.

Section 7. Law Governing . This Assignment Agreement is governed by and construed in accordance with the laws of the State of California.

Section 8. Notices. All notice s under this Assignment Agreement shall be in accordance with Section 9.13 of the Indenture.

Section 9. Binding Effect; Successors. This Assignment Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors an d assigns. Whenever in this Assignment Agreement any party is named or referred to, such reference shall be deemed to include such party’s successors and assigns and all covenants and agreements contained in this Assignment Agreement by or on behalf of an y party hereto shall bind and inure to the benefit of such party’s successors and assigns whether so expressed or not.

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IN WITNESS WHEREOF , the parties hereto have executed this Assignment Agreement as of the date first above written.

CATHEDRAL CITY PUBLIC FINANCING

AUTHORITY

By ______________________________________
Tami Scott
Chief Financial Officer

ATTEST:

________________________________________
Tracey R. Hermosillo CMC
Secretary

THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee

By
Authorized Officer

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A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE

VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE

DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.

STATE OF CALIFORNIA )
) ss:

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

_________________________________ [Seal]

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A NOTARY PUBLIC OR OTHER OFFICER COMPLETING THIS CERTIFICATE

VERIFIES ONLY THE IDENTITY OF THE INDIVIDUAL WHO SIGNED THE

DOCUMENT TO WHICH THIS CERTIFICATE IS ATTACHED, AND NOT THE TRUTHFULNESS, ACCURACY, OR VALIDITY OF THAT DOCUMENT.

STATE OF CALIFORNIA )
) ss:

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

_________________________________ [Seal]

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EXHIBIT A

DESCRIPTION OF THE LEASED PROPERTY

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Draft of March 3, 2022

4854-8719-3874/200545-0048
$__________

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2022 SERIES A
(FEDERALLY TAXABLE)

BOND PURCHASE CONTRACT
__________, 2022
Cathedral City Public Financing Authority
c/o Cathedral City
68700 Avenida Lalo Guerrero
Cathedral City, California 92234

Ladies and Gentlemen:

Raymond James & Associates, Inc. (the “ Underwriter”) offers to enter into this Bond Purchase Contract (this “ Purchase Contract”) with the Cathedral City Public Financing Authority (the “Authority”) which will be binding upon the Authority and the Underwriter upon the acceptance hereof by the Authority. This offer is made subject to its acceptance by the Authority by execution of this Purchase Contract and its delivery to the Underwriter on or before 8:00 p.m., California time, on the date hereof. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture (as hereinafter defined).

Each of the Authority and the City acknowledge and agree that: (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm’s length commercial transaction among the Authority, the City and the Underwriter; (ii) in connection with such transaction, the Underwriter is acting solely as principal and not as agent or fiduciary of the Authority nor the City ; (iii) the Underwriter has not assumed (individually or collectively) a fiduciary responsibility in favor of the Authority or the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Authority and the City on other matters); and (iv) the Authority and the City have consulted with their own legal and financial advisors to the extent they have deemed appropriate.

1. Purchase, Sale and Delivery of the Bonds . Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Authority for offering to the public, and the Authority hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of the $_________ aggregate principal amount of the Authority’s Lease Revenue Bonds, 2022 Series A (Federally Taxable) (the “Bonds”), at a purchase price equal to $__________ (being the aggregate principal amount thereof, plus original issue premium of $________ and less an Underwriter’s discount of $__________). The Bonds are to be purchased by the Underwriter from the Authority. Such payment and delivery and the other actions contemplated hereby to take place at the time of such payment and delivery are herein sometimes called the “Closing.”

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The Bonds shall mature on the dates and in the amounts, and will bear interest at the rates, set forth in Exhibit A hereto and as further described in the Official Statement.

2. The Bonds and Related Documents . The Bonds shall be substantially in the form described in, and shall be issued and secured under the provisions of an Indenture, dated as of April 1, 2022 (the “ Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “ Trustee”) and pursuant to the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencin g with Section 6584) and Sections 53570 et seq. and 53580 et seq. of the California Government Code and a resolution of the Authority adopted on ________ (the “ Resolution”). The Bonds shall be as described in the Indenture and the Official Statement dated the date hereof relating to the Bonds (which, together with all exhibits and appendices included therein or attached thereto and such amendments or supplements thereto which shall be approved by the Underwriter, is hereinafter called the “Official Statement”).

The Bonds are special limited obligations of the Authority secured by a nd payable from (i) Revenues pledged under the Indenture, consisting primarily of the Base Rental Payments paid by the City to the Authority pursuant to the Lease Agreement , dated as of April 1, 2022 (the “Lease Agreement”), by and between the Authority and the City, (ii) amounts held in the funds and accounts established pursuant to the Indenture, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, (iii) investment income with respect to such moneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the Base Rental Payments.

The Bonds are further secured by an assignment of all of the right, title and interest of the Authority in and to the Site Lease and the Lease Agreement, including the right to receive Base Rental Payments and the right to exercise any remedies provided in the Lease Agreement in the event of a default by the City thereunder. The Leased Property is initially leased by the City to the Authority pursuant to a Site and Facility Lease dated as of April 1, 2022 (the “ Site Lease”), by and between the City and the Authority.

The Bonds are being issued for the purpose of (i) refinancing all or a portion of the Authority’s CalPERS Obligation; (ii) refunding all of the outstanding Authority Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable) (the “Refunded Bonds”); (iii) funding a reserve for the Bonds; and (iv) paying costs of issuing the Bonds.

The Authority will undertake pursuant to the provisions of a Continuing Disclosure Agreement, to be dated the date of the Closing (the “ Authority Disclosure Agreement”), between the Authority and ________________, as Dissemination Agent thereunder , to provide certain a nnual information and notices of the occurrence of certain events. A description of the undertaking is set forth in the Preliminary Official Statement (as defined below) and will also be set forth in the Official Statement.

The Indenture, the Authority Disclosure Agreement, the Lease, the Site Lease, the Assignment Agreement and this Purchase Contract are sometimes collectively referred to herein as the “Authority Legal Documents.”
The City will undertake pursuant to the provisions of a Continuing Disclosu re Agreement, to be dated the date of the Closing (the “ City Disclosure Agreement ”), between the City and ________________, as Dissemination Agent thereunder, to provide certain annual information and

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notices of the occurrence of certain events. A descrip tion of the undertaking is set forth in the Preliminary Official Statement (as defined below) and will also be set forth in the Official Statement.

The City Disclosure Agreement, the Lease the Site Lease, and this Purchase Contract are sometimes collectively referred to herein as the “City Legal Documents.”

3. Offering. It shall be a condition to the Authority’s obligations to sell and to deliver the Bonds to the Underwriter and to the Underwriter’s obligations to purchase, to accept delivery of and to pay for the Bonds that the entire $_______ aggregate principal amount of the Bonds shall be issued, sold and delivered by the Authority and purchased, accepted and paid for by the Underwriter at the Closing. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the initial public offering prices or yields set forth in Exhibit A hereto and on the inside front cover page of the Official Statement. The Underwriter reserves the right to change, subsequent to the initial public offering, such initial offering prices as it shall deem necessary in connection with the marketing of the Bonds.

4. Use and Preparation of Documents . The Authority has caused to be prepared and delivered to the Underwriter prior to the execution of this Purchase Contract copies of the Preliminary Official Statement dated _________, 2022 , relating to the Bonds (the “ Preliminary Official Statement”), which was approved by a resolution of the Authority adopted on _______, 2022 (the “Authority OS Resolution ”). The Authority ratifies, confirms and approves the use by the Underwriter prior to the date hereof of the Preliminary Official Statement. The Authority has previously deemed the Preliminary Offici al Statement to be final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (“ Rule 15c2 -12”), except for information permitted to be omitted therefrom by Rule 15c2 -12. The Authority hereby agrees to deliver or cause to be delivered to the Underwriter, within seven (7) business days of the date hereof, but not less than one (1) business day prior to Closing a sufficient number of copies of the final Official Statement relating to the Bonds, dated the date hereof, which includes all information permitted to be omitted by Rule 15c2-12 and any amendments or supplements to such Official Statement as have been approved by the Authority and the Underwriter to enable the Underwriter to distribute a single copy of each Official Statement to any potential customer of the Underwriter requesting an Official Statement during the time period beginning when the Official Statement becomes available and ending 25 days after the End of the Underwriting Period (defined below). The Authority hereby approves of the use and distribution (including the electronic distribution) by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offer and sale of the Bonds. The Underwriter agrees that it will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Official Statement.

5. Representations, Warranties and Agreements of the Authority. The Authority hereby represents, warrants and agrees as follows:
(a) The Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated December 1, 1993 (the “JPA”), by and between the City and the Cathedral City Redevelopment Agency, and under the provisions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “JPA Law”).

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(b) The Authority has full legal right, power and authority to enter into the Authority Legal Documents and carry out and consummate the transactions on its part contemplated by the Authority Legal Documents.
(c) By all necessary official action of the Authority prior to or concurrently with the acceptance hereof, the Authority has duly authorized and approved the preparation and use of the Preliminary Official Statement and the Official Statement, the execution and delivery of the Official Statement and the Authority Legal Documents, and the performance by the Authority of all transactions on its part contemplated by the Authority Legal Documents; and when executed by the Authority and the other respective parties thereto the Authority Legal Documents will constitute legal, valid and binding obligations of the Authority, enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.
(d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation to which it is subject or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agr eement (including, without limitation, the Indenture) or other instrument to which the Authority is a party or to which the Authority or any of its property or assets is otherwise subject, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument, which in any case has or may have a material adverse effect on the Authority’s ability to comply with its obligations under the Authority Legal Documents; and the execution and delivery of the Authority Legal Documents, and compliance with the provisions on the Authority’s part contained therein, will not conflict with or constitute a material breach of or a material default under any con stitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or to which the Authority or any of its property or assets is otherwise subject, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such constitutional provision, law, regulation or instrument, except as provided by the Indenture.
(e) Except as described in or contemplated by the Official Statement, all authorizations, approva ls, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of wh ich would materially adversely affect the due performance by, the Authority of its obligations under the Authority Legal Documents have been duly obtained. (f) Except as otherwise disclosed in the Official Statement, between the date of this Purchase Contract and the date of the Closing, the Authority will not, without the prior written consent of the Underwriter, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, payable from the Revenues , nor will there be any adverse change of a material nature in the financial position, results of operations or condition, financial or otherwise, of the Authority.

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(g) To the best knowledge of the officer of the Authority executing this Purchase Contract, after due inquiry, as of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity before or by any court, government agency, public board or body, pending with respect to which the Authority has been served w ith process or threatened against the Authority, affecting the existence of the Authority or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the execution and delivery of the Indenture or the pledge of the Revenues or contesting or affecting, as to the Authority , the validity or enforceability of the Authority Legal Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Authority, or in any way contesting or challenging the consummation of the transactions contemplated hereby, or which might result in a material adverse change in the financial condition of the Authority or which might materially adversely affect the Revenues of the Authority; nor, to the best knowledge of the Authority, is there any known basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the authorization, execution, delivery or performance by the Authority of the Authority Legal Documents.
(h) As of the time of acceptance hereof and as of the date of the Closing, the Authority does not and will not have outstanding any indebtedness which indebtedness is secured by a lien on the Revenues superior to or on a parity with the lien provided for in the Indenture, other than as disclosed in the Official Statement. (i) As of the date thereof, the Preliminary Official Statement did n ot contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein in light of the circumstances under which they were made, not misleading (except that this representation does not include information relating to The Depository Trust Company or the book-entry only system). (j) As of the date thereof and at all times subsequent thereto to and including the date which is 25 days following the End of the Underwriting Period (as such term is hereinafter defined) for the Bonds, the Official Statement did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circ umstances under which they were made not misleading (except that this representation does not include information relating to The Depository Trust Company or the book-entry only system). (k) If between the date hereof and the date which is 25 days after the En d of the Underwriting Period for the Bonds, an event occurs which would cause the information contained in the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact requir ed to be stated therein or necessary to make such information herein, in the light of the circumstances under which it was presented, not misleading, the Authority will notify the Underwriter, and, if in the opinion of the Underwriter or the Authority , or their respective counsel, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will cooperate in the preparation of an amendment or supplement to the Official Statement in a form and manner app roved by the Underwriter, and shall pay all expenses thereby incurred. For the purposes of this subsection, between the date hereof and the date which is 25 days of the End of the Underwriting Period for the Bonds, the Authority will furnish

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such information with respect to itself as the Underwriter may from time to time reasonably request. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Authority delivers the Bonds to the Underwriter; or (ii) the Underwriter does not retain, directly or as members of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Notwithstanding the foregoing, unless the Underwriter gives notice to the contrary, the “End of the Underwriting Period” shall be the Closing Date. (l) If the information contained in the Official Statement is amended or supplemented pursuant to paragraph (l) hereof, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant t o such subparagraph) at all times subsequent thereto up to and including the date which is 25 days after the End of the Underwriting Period for the Bonds, the portions of the Official Statement so supplemented or amended (including any financial and statis tical data contained therein) will not contain any untrue statement of a material fact required to be stated therein or necessary to make such information therein in the light of the circumstances under which it was presented, not misleading (except that t his representation does not include information relating to The Depository Trust Company or the book-entry only system). (m) After the Closing, the Authority will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter shall reasonably object in writing or which shall be disapproved by counsel for the Underwriter.
(n) Any certificate signed by any officer of the Authority and delivered to the Underwriter in connection w ith the Bonds, or the Authority Legal Documents shall be deemed a representation by the Authority to the Underwriter as to the statements made therein. (o) The Authority will apply the proceeds from the sale of the Bonds for the purposes specified in the Official Statement.
(p) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter, at the expense of the Underwriter, as it may reasonably request in order to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; provided, however, that the Authority will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction. (q) Except as disclosed in the Preliminary Official Statement, the Authority has not defaulted in any material respect under any prior continuing disclosure undertaking within the previous five years.

6. Representations, Warranties and Agreements of the City. The City hereby represents, warrants and agrees as follows:
(a) The City is a charter city duly organized and validly existing under the Constitution and laws of the State of California.

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(b) The City has full legal right, power and authority to enter into the City Legal Documents and carry out and consummate the transactions on its part contemplated by the City Legal Documents.
(c) By all necessary official action of the City prior to or concurrently with the acceptance hereof, the City has duly authorized and approved the preparation and use of the Preliminary Official Statement and the Off icial Statement, the execution and delivery of the Official Statement and the City Legal Documents, and the performance by the City of all transactions on its part contemplated by the City Legal Documents; and when executed by the City and the other respec tive parties thereto the City Legal Documents will constitute legal, valid and binding obligations of the City, enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally. (d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative reg ulation to which it is subject or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the Indenture) or other instrument to which the City is a party or to which the City or any of its property or assets is otherwise subject, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument, which in any case has or may have a material adverse effect on the City’s ability to comply with its obligations under the City Legal Documents; and the execution and delivery of the City Legal Documents, and compliance with the provisions on the City’s part contained therein, will not conflict with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or to which the City or any of its property or assets is otherwise subject, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encum brance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such constitutional provision, law, regulation or instrument. (e) Except as described in or contemplated by the Official Statement, all authorizations, app rovals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Legal Documents have been duly obtained. (f) Except as otherwise disclosed in the Official Statement, between the date of this Purchase Contract and the date of the Closing, the City will not, without the prior written consent of the Underwriter, offer or issue any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, nor will there be any adverse change of a material nature in the financial position, results of operations or condition, financial or otherwise, of the City.
(g) To the best knowledge of the officer of the City executing this Purchase Contract, after due inquiry, as of the date hereof, there is no action, suit, proceeding, inquiry or investigation, at law or in equity before or by any court, government agency, public board or

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body, pending with respect to which the City has been served with process or threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the pledge of the Revenues or contesting or affecting, as to the City, the validity or enforceability of the City Legal Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the City, or in any way contesting or challenging the consummation of the transactions contemplated here by, or which might result in a material adverse change in the financial condition of the City or which might materially adversely affect the Revenues of the City; nor, to the best knowledge of the City, is there any known basis for any such action, suit, p roceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the authorization, execution, delivery or performance by the City of the City Legal Documents. (h) As of the time of acceptance hereof and as of the date of the Closing, the City does not and will not have outstanding any indebtedness which indebtedness is secured by a lien on the Revenues superior to or on a parity with the lien provided for in the Indenture, other than as disclosed in the Official Statement.
(i) As of the date thereof, the Preliminary Official Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein in light of the circumstances under which they were made, not misleading (except that this representation does not include information relating to The Depository Trust Company or the book-entry only system). (j) As of the date thereof and at all times subsequent there to to and including the date which is 25 days following the End of the Underwriting Period (as such term is hereinafter defined) for the Bonds, the Official Statement did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made not misleading (except that this representation does not include information relating to The Depository Trust Company or the book-entry only system). (k) If between the date hereof and the date which is 25 days after the End of the Underwriting Period for the Bonds, an event occurs which would cause the information contained in the Official Statement, as then supplemen ted or amended, to contain an untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make such information herein, in the light of the circumstances under which it was presented, not misleadin g, the City will notify the Underwriter, and, if in the opinion of the Underwriter or the City, or their respective counsel, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will cooperate in the preparation of an amendment or supplement to the Official Statement in a form and manner approved by the Underwriter, and shall pay all expenses thereby incurred. For the purposes of this subsection, between the date hereof and the date which is 2 5 days of the End of the Underwriting Period for the Bonds, the City will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. As used herein, the term “ End of the Underwriting Period” means the later of such time as: (i) the City delivers the Bonds to the Underwriter; or (ii) the Underwriter does not retain, directly or as members of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Notwithstanding

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the foregoing, unless the Underwriter gives notice to the contrary, the “End of the Underwriting Period” shall be the Closing Date.
(l) If the information contained in the Official Statement is amended or supplemented pursuant to paragraph (l) hereof, at the time of each supplem ent or amendment thereto and (unless subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent thereto up to and including the date which is 25 days after the End of the Underwriting Period for the Bonds, the portion s of the Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact required to be stated therein or necessary to make such information therein in the light of the circumstances under which it was presented, not misleading (except that this representation does not include information relating to The Depository Trust Company or the book-entry only system). (m) After the Closing, the City will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter shall reasonably object in writing or which shall be disapproved by counsel for the Underwriter.
(n) Any certificate signed by any officer of the City and delivered to the Underwriter in connection with the Bonds, or the City Legal Documents shall be deemed a representation by the City to the Underwriter as to the statements made therein. (o) The City will apply the proceeds f rom the sale of the Bonds for the purposes specified in the Official Statement.
(p) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter, at the expense of the Underwriter, as it may re asonably request in order to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; provided, however, that the City will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction. (q) Except as disclosed in the Preliminary Official Statement, the City has not defaulted in any material respect under any prior continuing disclosure undertaking within the previous five years.

7. Closing. At 8: 00 A.M., California time, on _______, 2022 (the “ Closing” or the “Closing Date”), or on such other date and time as may be mutually agreed upon by the Authority and the Underwriter, the Authority will, subject to the terms and conditions hereof, sell and deliver the Bonds to the Underwriter, duly executed and authenticated, together w ith the other documents hereinafter mentioned, and, subject to the terms and conditions hereof, the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof in federal funds.

Sale, delivery and payment as aforesaid shall be made at the offices of Norton Rose Fulbright US LLP, Los Angeles, California (“Bond Counsel”), or such other place as shall have been mutually agreed upon by the Authority and the Underwriter, except that the Bonds (with one certific ate for each maturity and otherwise in a form suitable for the book -entry system) shall be delivered to the Underwriter in New York, New York, through the book -entry system of The Depository Trust

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Company (“DTC”). Unless the DTC Fast Automated Securities Transfer (“FAST”) is utilized, the Bonds will be made available for inspection by DTC at least one business day prior to the Closing.

8. Closing Conditions . The Underwriter has entered into this Purchase Contract in reliance upon the representations and warranties of the Authority contained herein, and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Authority of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter’s obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Bond s shall be conditioned upon the performance by the Authority of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions:
(a) The Underwriter shall receive, within seven (7) business days of the date hereof, but in no event less than 1 business day prior to Closing, copies of the Official Statement (including all information previously permitted to have been omitted from the Preliminary Official Statement by Rule 15c2-12 and any amendments or supplements as have been approved by the Underwriter), in such reasonable quantity as the Underwriter shall have requested;
(b) The representations and warranties of the Authority contained herein shall be true and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing and the statements of the officers and other officials of the Authority made in any certificate or other document furnished pursuant to the prov isions hereof are accurate;
(c) At the time of the Closing, the Authority Legal Documents shall have been duly authorized, executed and delivered by the respective parties thereto, and the Official Statement shall have been duly authorized, executed and delive red by the Authority, all in substantially the forms heretofore submitted to the Underwriter, with only such changes as shall have been agreed to by the Underwriter, and shall be in full force and effect; and there shall be in full force and effect such re solution or resolutions of the governing body of the Authority as, in the opinion of Bond Counsel, shall be necessary or appropriate in connection with the transactions contemplated hereby;
(d) At the time of the Closing, all necessary official action of the Authority relating to the Official Statement and the Authority Legal Documents shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect; and
(e) At or prior to the Closing, the Underwriter shall have received copies of each of the following documents:
(1) Bond Counsel Opinion . The approving opinion of Bond Counsel to the Authority, dated the date of the Closing and substantially in the form included as Appendix B to the Official Statement;
(2) Supplemental Opinion of Bond Counsel . A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter and dated the date of the

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Closing, stating that the Underwriter may rely on the opinions of Bond Counsel described in paragraph (1) above as if such opinion was addressed to the Underwriter and to the following effect:
(i) the Purchase Contract and the Continuing Disclosure Agreement have been duly executed and delivered by the Authority and (assuming due authorization, execution and delivery by and validity against the other parties thereto , as applicable) constitute the valid and binding obligations of the Authority, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors’ rights and by the application of equitable principles; (ii) the statements contained in the Official Statement under the captions “INTRODUCTION,” “ DESCRIPTION OF THE 2022A BONDS ,” “SECURITY AND SOURCES OF PAYME NT FOR THE 2022A BONDS,” “ TAX MATTERS” and in Appendices C and E thereto, insofar as such statements expressly summarize certain provisions of the Indenture or the opinion of Bond Counsel, are accurate in all material respects; and
(iii) the Bonds are not subjec t to the registration
requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. (3) Authority Counsel Opinion . An opinion of Counsel to the Authority, dated the date of the Closing and addressed to the Underwriter, to the following effect:
(i) the Authority is a joint powers authority duly organized and existing under and pursuant to the JPA, and under the provisions of the JPA Law, with full right, power and authority to execute, deliver and perform its obligations under the Authority Legal Documents;
(ii) the Authority Resolution and the Authority OS
Resolution were duly adopted at meetings of the Authority, called and held pursuant to law, with all public notice required by law and at which quorums were present and acting throughout; and the Authority Resolution and the Authority OS Resolution are in full force and effect and have not been modified amended or rescinded since their respective adoption date; (iii) The Authority Legal Documents have been duly
authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery by the other parties thereto, the Authority Legal Documents constitute the valid, legal and binding obligations of the Authority enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought;
(iv) The preparation, delivery and execution of the Official Statement has been duly authorized by the Authority;

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(v) The execution and delivery of the Authority Legal
Documents and the Officia l Statement and compliance with the provisions of the Authority Legal Documents, under the circum stances contemplated thereby, (A ) do not and will not in any material respect conflict with or constitute on the part of the Authority a breach of or default under any agreement or other instrument to which the Authority is a party or by which it is bound, and (B ) do not and will not in any material respect constitute on the part of the Authority a violation, breach of or default under a ny existing law, regulation, court order or consent decree to which the Authority is subject; and
(vi) to the best of such counsel’s knowledge, except as otherwise disclosed in the Official Statement, there is no litigation or proceeding, pending and served upon the Authority, or threatened, challenging the creation, organization or existence of the Authority, or the validity of the Bonds or the Authority Legal Documents or seeking to restrain or enjoin any of the transactions referred to therein or contemplated thereby, or under which a determination adverse to the Authority would have a material adverse effect upon the financial condition or the revenues of the Authority, or which, in any manner, questions the right of the Authority to issue, sell and deliver the Bonds, to enter into the Indenture or to use the Revenues for repayment of the Bonds or affects in any manner the right or ability of the Authority to pledge the Revenues.
(4) City Attorney Opinion. An opinion of the City Attorney to the City, dated the date of the Closing and addressed to the Underwriter, to the following effect:
(i) the City is a charter city duly organized and validly existing under the Constitution and laws of the State of California , with full right, power and authority to execute, deliver and perform its obligations under the City Legal Documents; (ii) the resolutions of the City authorizing the execution and delivery of the City Documents and the Official Statement were duly adopted at meetings of the City, called and held pursuant to law, with all public notice required by law and at which quorums were present and acting throughout; and such resolutions are in full force and effect and have not been modified amended or rescinded since their respective adoption date; (iii) The City Legal Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, the City Legal Documents constitute the valid, legal and binding obligations of the City enforceable in accord ance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights and by the application of equitable principles if equitable remedies are sought;
(iv) The preparation, delivery and execution of the Official Statement has been duly authorized by the City;
(v) The execution and delivery of the City Legal
Documents and the Official Statement and compliance with the provisions of the City Legal Documents, under the circumstances contemplated thereby, (A) do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or by which it is bound, and

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(B) do not and will not in any material respect constitute on the part of the City a violation, breach of or default under any existing law, regulation, court order or consent decree to which the City is subject; and
(vi) to the best of such counsel’s knowledge, except as otherwise disclosed in the Official Statement, there is no litigation or proceeding, pending and served upon the City, or threatened, challenging the creation, organization or existence of the City, or the validity of the Bonds or the City Legal Documents or seeking to restrain or enjoin any of the transactions referred to therein or contemplated thereby, or under which a determination adverse to the City would have a material adverse effect upon the financial condition or the revenues of the City.
(5) Trustee Counsel Opinion . The opinion of counsel to the Trustee, dated the date of the Closing, addressed to the Underwriter, to the effect that:
(i) The Trustee is a national banking association, duly organized and validly existing under the laws of the United States of America, having full power to enter into, accept and administer the trusts created under the Indenture; (ii) The Indenture has been duly authorized, executed and delivered by the Trustee and the Indenture constitute s the legal, valid and binding obligation of the Trustee, enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought; and (iii) Except as may be required under Blue Sky or other securities laws of any state, no consent, app roval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery by it of the Indenture, or the consummation of the transactions on its part contemplated by the Indenture. (6) Authority Certificate. A certificate of the Authority, dated the date of the Closing, signed on behalf of the Authority by a duly authorized officer of the Authority, to the effect that:
(i) the representations and warranties of the Authority contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing;
(ii) to his or her knowledge, no even t affecting the
Authority has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein , in the light of the circumstances under which they were made, not misleading; and
(iii) no further consent is required to be obtained for the inclusion of the City of Cathedral City ’s audited financial statements, including the accompanying independent auditor’s report, for the Fiscal Year ended June 30, 2021 in the Official Statement.

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(7) City Certificate. A certificate of the Authority, dated the date of the Closing, signed on behalf of the Authority by a duly authorized officer of the Authority, to the effect that:
(i) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing;
(ii) to his or her knowledge, no event affecting the City has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and
(iii) no further consent is required to be obtained for the inclusion of the City of Cathedral City’s audited financial statements, including the accompanying independent auditor’s report, for the Fiscal Year ended June 30, 2021 in the Official Statement.
(8) Trustee Certificate. A certificate, dated the Closing Date, to the effect that:
(i) The Trustee is a national banking association duly organized and validly existing under the laws of the United States of America; (ii) The Trustee has full power, authority and legal right to comply with the terms of the Indenture and to perform its obligations stated therein; and (iii) The Indenture has been duly authorized, executed and delivered by the Trustee and (assuming due authorization, execution and delivery by the Authority) constitutes legal, valid and binding obligation of the Trustee in accordance with its respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.
(9) Legal Documents. Executed copies of this Purchase Contract and the other Authority Legal Documents.
(10) Disclosure Letter. A letter of Norton Rose Fulbright US LLP, Los Angeles, California (“Disclosure Counsel”), dated the date of the Closing, addressed to the Authority, the City and the Underwriter, to the effect that, without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and the Official Statement, but on the basis of their participation in conferences with representatives of the Authority, counsel to the Authority, representatives of the City, the City Attorney of the City of Cathedral City, the Municipal Advisor, the Underwriter and others, and their examination of certain documents, no facts have come to their attention which would lead them to believe that the Preliminary Official Statement, as of its date, and the Official Statement, as of its date or as of the Closing Date , contained or contains any untrue statement of a material fact or omitted or omits to state any

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material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial, statistical, economic, engineering, or demographic data or forecasts, numbers, charts, tables, graphs, maps, estimates, projections, assumptions or expressions of opinion, or any information about valuation, real estate, or environmental matters, the Appendices to the Preliminary Official Statement and the Official Statement or any information about debt service requirements, book -entry, or the Depository Trust Company contained in the Preliminary Official Statement and the Official Statement). (11) Underwriter’s Counsel Opinion . An opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, dated the Closing Date, addressed to the Underwriter, in form and substance acceptable to the Underwriter. (12) Municipal Advisor Certificate. A Certificate, dated the date of Closing, signed by an authorized office of Fieldman, Rolapp & Associates, Inc. , the Authority’s Municipal Advisor, addressed to the Underwriter and the Authority and without having undertaken any investigation, to the ef fect that, in connection with its role in the preparation of the Official Statement, nothing has come to the attention of the Municipal Advisor that would lead it to believe that the statements and information contained in the Preliminary Official Statement and the Official Statement as of the date thereof and the date of the Closing, contains an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.
(13) CDIAC Notices. Copies of the preliminary and final notices to the California Debt and Investment Advisory Commission relating to the Bonds (14) Rating Letter. Evidence that the rating on the Insured Bonds and Uninsured Bonds are as described in the Official Statement. (15) Defeasance Opinions . An opinion or opinions of Bond Counsel, addressed to the Underwriter, dated the Closing Date, to the effect that the Refunded Bonds are no longer outstanding.
(16) Additional Documents . Such additional certificates, instruments and other documents as Bond Counsel, the Authority or the Underwriter may reasonably deem necessary.

All the opinions, letters, certificates, instruments and other documents mentioned above o r elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter.

If the Authority shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Purchase Contract, if the Authority shall determine in good faith (and provide written notice to the Underwriter) that legislation has been introduced or proposals made by the Governor of the State which if enacted and effective would impose additional limitations or burdens on the Authority by reason of the issuance of the Bonds or which purport to p rohibit the issuance of the Bonds, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted

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by this Purchase Contract, this Purchase Contract shall terminate and neither the Authority nor the Underwriter shall have any further obligation hereunder.

9. Termination. The Underwriter may terminate this Purchase Contract by written notification to the Authority if at any time after the date hereof and prior to the Closing:
(a) legislation shall have been enacted by the United States or the State or shall have been reported out of committee or be pending in committee, or a decision shall have been rendered by a court of the United States or the Tax Court of the United States, or a ruling shall have been made or a regulation, proposed regulation, or a temporary regulation shall have been published in the Federal Register or any other release or announcement shall have been made by the Treasury Department of the United States or the In ternal Revenue Service, with respect to Federal or State taxation upon revenues or other income or payments of the general character to be derived by the Authority or upon interest received on obligations of the general character of the Bonds, which, in the reasonable opinion of the Underwriter (after consultation with, and receipt of advice from, the Authority), materially adversely affects the market for the Bonds; or
(b) in the reasonable opinion of the Underwriter (after consultation with, and receipt of advice from, the Authority or its Municipal Advisor), any of the following events materially adversely affects the market for the Bonds: (a) the United States shall have become engaged in hostilities that have resulted in a declaration of war or a national emergency or the President of the United States of America shall have committed the armed forces of the United States of America to combat so as to adversely affect the financial markets in the United States of America, (b) any other calamity or crisis in the financial markets of the United States or elsewhere which did not exist on, or has escalated since, the dated date of this Purchase Contract, (c) the sovereign debt rating of the United States is downgraded by any major credit rating agency or a paymen t default occurs on United States Treasury obligations, or (d) a default with respect to the debt obligations of, or the institution of proceedings under any federal bankruptcy laws by or against, any state of the United States or any city, county, or other political subdivision located in the United States having a population of over 500,000; or (c) there shall have occurred a general suspension of trading on the New York Stock Exchange or other major exchange, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the Securities and Exchange Commission or any other Governmental Authority having jurisdiction, or a general banking moratorium shall have been declared by Federal, California, or New York authorities having jurisdiction and being in force; or
(d) there shall have occurred an adverse change in the financial po sition, results of operations, or financial condition of the Authority that, in the reasonable opinion of the Underwriter (after consultation with, and receipt of advice from, the Authority), materially adversely affects the market for the Bonds; or
(e) any legislation, ordinance, rule, or regulation shall be introduced in, or be enacted by, any governmental body, department, or agency of the State, or a decision by any court of competent jurisdiction within the State or any court of the United States shall be

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rendered that, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or
(f) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation, or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offer ing, or sale of obligations of the general character of the Bonds, or the issuance, offering, or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs t o be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (g) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange, which restrictions materially adversely affect the ability of underwriters to trade obligations of the general character of the Bonds; or (h) there shall have occurred or any notice shall have been given of any intended review, downgrading, suspension, withdrawal, or negative change in credit watch status by any national rating service to any of the Authority’s obligations secured in a like manner, which, in the Underwriter’s reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or
(i) the commencement of any action, suit, or proceeding described in Section 6(g) that, in the judgment of the Underwriter, materially adversely affects the market price of the Bonds; or
(j) any event occurring, or information becoming known that, in the reasonable judgment of the Underwriter, makes any statement or information contained in the Official Statement, as of its date, untrue in any material adverse respect, or has the effect that the Official Statement, as of its date, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

10. Expenses. No expenses and costs of the Authority incident to the performance of the Authority’s obligations in connection with the authorization, issuance, and sale of the Bonds to the Underwriter, such as the costs of preparation (including word processing, printing, and reproduction), distribution and delivery of the Preliminary Official Statement, the Official Statement, and this Purchase Contract, in reasonable quantities, fees of rating agencies, fees and expenses of any municipal advisor to the Authority , and fees and expenses of Bond Counsel or Disclosure Counsel for the Authority shall be paid by the Underwriter. Except as indicated above, all out -of-pocket expenses of the Underwriter, including the California Debt and Investment Advisory Commission fee, traveli ng, advertising expenses, any costs and expenses incurred in connection with the preparation and distribution of any blue sky surveys or any legal investment memoranda, fees and expenses of Underwriter’s Counsel and other expenses and the fees and expenses of the Underwriter, shall be paid by the Underwriter.

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11. Notices. Any notice or other communication to be given to the Authority under this Purchase Contract may be given by delivering the same in writing at the Authority’s address set forth above; Attention: Executive Director, and to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Raymond James & Associates, Inc., 39 E. Union Street, Pasadena, California 91103, Attention: Josè Vera, Managing Director.

12. Parties in Interest . This Purchase Contract is made solely for the benefit of the Authority and the Underwriter and no other person shall acquire or have any right hereunder or by virtue hereof. All of the representations, warranties and agreements of the Authority contained in this Purchase Contract shall remain operative and in full force and effect, regardless of: (i) any investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for the Bonds pursuant to this Purchase Contract; and (iii) any termination of this Purchase Contract.

13. Effectiveness and Counterpart Signatures . This Purchase Contract shall become effective upon the execution of the acceptance by an authorized officer of the Authority and shall be valid and enforceabl e at the time of such acceptance and approval. This Purchase Contract may be executed by the parties hereto by facsimile transmission and in separate counterparts, each of which when so executed and delivered (including delivery by facsimile transmission) shall be an original, but all such counterparts shall together constitute but one and the same instrument.

14. Headings. The headings of the sections of this Purchase Contract are inserted for convenience only and shall not be deemed to be a part hereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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15. Governing Law. This Purchase Contract shall be constr ued in accordance with the laws of the State of California.

Very truly yours,
RAYMOND JAMES & ASSOCIATES, INC., as
Underwriter
By:

Its: Authorized Officer

Accepted:

CITY OF CATHEDRAL CITY

PUBLIC FINANCING AUTHORITY

By:

Tami E. Scott, Chief Financial Officer

CITY OF CATHEDRAL CITY, CALIFORNIA

By:

Tami E. Scott, Administrative Services Director

Time of Execution: _____ p.m. Pacific Time

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EXHIBIT A

MATURITY SCHEDULE

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2022 SERIES A
(FEDERALLY TAXABLE)

Maturity Date
(August 1)
Principal
Amount Interest Rate Yield Price CUSIP

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CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement ”), dated as of April 1, 2022, is executed and delivered by the City of Cathedral City (the “City”), and [DISSEMINATION AGENT], as dissemination agent (the “Dissemination Agent”) in connection with the issuance by the Cathedral City Public Financing Authority (the “Authority”) of its $___________ aggregate initial principal amount of Lease Revenue Bonds, Series 2022A (Federally Taxable) (the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of April 1, 2022 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A. , as Trustee (the “Trustee”). The City and the Dissemination Agent covenant and agree as follows:

Section 1. Purpose of the Disclosure A greement. This Disclosure Agreement is being executed and delivered by the City and the Dissemination Agent for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule (as defined below).

Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Dissemination Agent” shall mean [DISSEMINATION AGENT], or any successor Dissemination Agent designated in writing by the Ci ty and which has filed with the City a written acceptance of such designation.
“EMMA” shall mean the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for Municipal Securities disclosures, maintained on the internet at http://emma.msrb.org. “Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the U.S. Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website. “Official Statement” shall mean the final Official Statement, dated _________, 2022, relating to the Bonds.
“Participating Underwriter” shall mean the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” shall mean Rule 15c2-12 adopted by the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

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Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later March 31 of each year, commencing March 31, 2023 with the report for the 2021-22 fiscal year, provide to the MSRB, in an electronic format accompanied by identifying information as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separat e documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b).
(b) Not later than fifteen (15) business days prior to the date specified in subsection (a) above for providing the Annual Report to the MSRB, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by such date, the Dissem ination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the first sentence of this subsection (b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A , or in such other form as prescribed or acceptable to MSRB.
(d) The Dissemination Agent (if other than the City) shall, if and to the extent, the City has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the City certifying that the Annual Report has been provided to the MSRB pursuant to this Disclosure Agreement, and stating the date it was provided.

Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) Audited financial statements of the City prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Financial information and operating data contained in the Official Statement presented on an annual basis for the immediately preceding Fiscal Year of the type set forth in Tables 1, 2, 5, 6 and 7 contained in the body of the Official Statement.

Any or all of the items listed above may be included by specific reference to other documents, including the audited financial statements, official statements of debt issues of the City or related public entities, which have been availa ble to the public on the MSRB’s internet website or filed with the U.S.

Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference in the applicable Annual Report.

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3 Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds, which notice shall be given in a timely manner, not in excess of ten (10) business days after the occurrence of such Listed Event:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhance ments reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed I ssue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security;
(7) Modifications to rights of security holders, if material; (8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the securities, if material
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership or similar event of the City; (13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an acti on or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material;
(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material;
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material; and

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4 (16) Default, event of a cceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties.

The term “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “financial obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule. (b) The City shall, in a timely manner not later than nine (9) business days after its occurrence, notify the Disclosure Dissemination Agent in writing of the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall be accompanied by a Certification. Such notice or Certification shall identify the Notice Event that has occurred, inclu de the text of the disclosure that the City desires to make, contain the written authorization of the City for the Disclosure Dissemination Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination Age nt to disseminate the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event). (c) The Disclosure Dissemination Agent is under no obligation to notify the City or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within two business days of receipt of such notice (but in any event not later than the tenth business day after the occurrence of the Notice Event, if the City determines that a Notice Event has occurred), instruct the Disclosure Dissemination Agent that either (i) a Notice Event has not occurred and no filing is to be made or (ii) a Not ice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (d) of this Section 5, together with a Certification. Such Certification shall identify the Notice Event that has occurred, include the text of the disclosure that the City desires to make, contain the written authorization of the City for the Disclosure Dissemination Agent to disseminate such information, and identify the date the City desires for the Disclosure Dissemination Agent to dissemina te the information (provided that such date is not later than the tenth business day after the occurrence of the Notice Event).
(d) If the Disclosure Dissemination Agent has been instructed by the City as prescribed in subsection (b) or (c) of this Section 5 to report the occurrence of a Notice Event, the Disclosure Dissemination Agent shall promptly file a notice of such occurrence with MSRB.

Section 6. Termination of Reporting O bligation. The City’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 7. Dissemination Agent.
(a) The City hereby appoints and engages [DISSEMINATION AGENT] as the Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement. The City may replace the Dissemination Agent with or without cause. If at the time there is no designated Dissemination Agent appointed by the City, the City shall be the Dissemination Agent and undertake or assume its obligations hereunder.

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5 Any company succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The Dissemination Agent may resign its duties hereunder by giving 30-days written notice to the City.
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees agreed to between the Dissemination Agent and the City from time to time and for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemi nation Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, holders or beneficial owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the City or an opinion of nationally recognized bond counsel.

Section 8. Amendment; Waiver . Notwithstanding any other provision of this Disclosure Agreement, the City, and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the City, provided the Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations), and any provision of this Disclosure Agreement may be waived, provided that in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the Rule.

In the event of any amendment or waiver of a provis ion of this Disclosure Agreement, the City shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for t he amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual fi nancial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the MSRB in the same manner as for a Listed Event under Section 5(b). No amendment to this Agreement which modifies the duties or rights of the Dissemination Agent shall be made without the prior written consent of the Dissemination Agent.

Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other informa tion in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

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6 Section 10. Default. In the event of a failure of the City, or the Dissemination Agent to comply with any provision of this Disclosure Agreement, any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City, or the Dissemination Agent, as the case may be, to comply with its respective obligations under this 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 in the event of any failure of the City, or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of Dissemination A gent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees to indemnify and save the Dissemination Agent, and its, officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorney’s fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction f rom the City or an opinion of nationally recognized bond counsel. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Section 12. Notices. Any notices or communications to or among an y of the parties to this Disclosure Agreement may be given as follows:

To the City: City of Cathedral City
68-700 Avenida Lalo Guerrero
Cathedral City, California 92234
Attention: Administrative Services Director

To the Dissemination Agent: [DISSEMINATION AGENT]

Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

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S-1
IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first written above.

CITY OF CATHEDRAL CITY
______________________________________
Tami Scott, Administrative Services Director

[DISSEMINATION AGENT],
as Dissemination Agent
______________________________________
Authorized Representative

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A-1

EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING

BOARD OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Cathedral City Public Financing Authority Name of Bond Issue: $_______ principal amount of Cathedral City Public Financing Authority Lease Revenue Bonds, Series 2022A (Federally Taxable) Date of Issuance: __________, 2022
NOTICE IS HEREBY GIVEN that the City of Cathedral City (the “City”) has not provided an Annual Report with respect to the above -named Bonds as required by the Indenture, dated as of July 1, 2020, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee.

The City anticipates that the Annual Report will be filed by _______________________.

Date: __________, 20_ _______________________,
as Dissemination Agent
By:

Title:

cc: Administrative Services Director, City of Cathedral City

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This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstance shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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PRELIMINARY OFFICIAL STATEMENT DATED _______, 2022

NEW ISSUE BOOK-ENTRY-ONLY RATING:

S&P “__”
(See “RATING” herein.)
In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel to the City (“Bond Counsel”), interest on the 2022A Bonds is exempt from personal income taxes imposed by the State of California. Interest on the 2022A Bonds is includable in the gross income of the owners of the 2022A Bonds for federal income tax purposes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receip t of interest on the 2022A Bonds. See “TAX MATTERS” herein.
$[Par Amount]*

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2022 SERIES A
(FEDERALLY TAXABLE)
Dated: Date of Delivery Due: December 1, as shown on the inside cover The Cathedral City Public Financing Authority (the “Authority”) is issuing its $ [Par Amount] * Lease Revenue Bonds, 2022 Series A (Federally Taxable) (the “ 2022A Bonds”), for the purpose of: (i) refinancing all or a po rtion of its CalPERS Obligation ; (ii) refunding all of the outstanding Authority Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable) ; (iii) funding a reserve for the 2022A Bonds; and (iv) paying costs of issuing the 2022A Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” herein.

Interest on the 2022A Bonds is payable on June 1 and December 1 of each year, commencing ________ 1, 2022. The 2022A Bonds are being issued as fully registered bonds and, when executed and delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). The 2022A Bonds, if issued, will be issued in denominations of $5,000 or any integral multiple thereof. DTC will act as securities depository of the 2022A Bonds. Individual purchases of 2022A Bonds will be made in book -entry form only. Payments of principal of and interest on the 2022A Bonds are to be made to purchasers by DTC through DTC Participants. Purchasers will not receive physical delivery of the 2022A Bonds purchased by th em. See APPENDIX F – “BOOK-ENTRY SYSTEM.”
The 2022A Bonds are subject to redemption prior to their stated maturities, as described herein. See “DESCRIPTION OF THE 2022A BONDS – Redemption” herein.

The 2022A Bonds are special limited obligations of the Authority secured by and payable from Revenues pledged to the 2022A Bonds under the Indenture, as hereinafter described. Such Revenues primarily consist of 2022A Base Rental Payments to be made by the City to the Authority under the Lease, as hereinafter described. Pursuant to the Lease, the City will lease certain property described herein (the “Leased Property”) from the Authority. The City is required under the Lease to make 2022A Base Rental Payments each year in consideration for the use of the Leased Property, as described herein, from any source of legally available funds, in an amount sufficient to pay the annual principal of and interest on the 2022A Bonds. The City’s obligat ion to make 2022A Base Rental Payments is subject to abatement in the event of substantial interference with the use and possession of all or a part of the Leased Property supporting the 2022A Bonds, as described herein. See “RISK FACTORS – Abatement” herein. The City has covenanted in the Lease to take such action as may be necessary to include and maintain all 2022A Base Rental Payments in its budget and to make the necessary appropriations therefor, subject to such abatement.

The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the 2022A Bonds. The 2022A Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Author ity or any of its income or receipts, except the Revenues and such other moneys and securities as provided in the Indenture. The obligation of the City to make 2022A Base Rental Payments or Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the 2022A Bonds nor the obligation of the City to make 2022A Base Rental Payments or Additional Rental P ayments constitutes an indebtedness of the City, the State of California or any of its political subdivisions (other than the Authority) within the meaning of any constitutional or statutory debt limitation or restriction.

This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

The 2022A Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approving opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel to the Authority. Certain legal matters will be passed on for th e Underwriter by Stradling Yocca Carlson & Rauth , Newport Beach, California, as Underwriter’s Counsel. Certain legal matters will be passed on for the Authority by Norton Rose Fulbright US LLP, Los Angeles, California, Disclosure Counsel and for the Authority and the City by the City Attorney. It is anticipated that the 2022A Bonds will be available for delivery through the book-entry facilities of DTC on or about ________, 2022.

Raymond James & Associates, Inc.

Dated: __________, 2022

* Preliminary, subject to change.

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MATURITY SCHEDULE

$__________*
Cathedral City Public Financing Authority
Lease Revenue Bonds, 2022 Series A
(Federally Taxable)

(Base CUSIP No.† ______)

Maturity Date
(December 1)
Principal
Amount
Interest
Rate Yield Price CUSIP†

$___________ ___% Term Bonds due December 1, 20__, Yield: ___% CUSIP†: __________

* Preliminary, subject to change.
† CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Ratings on behalf of The American Ban kers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP numbers have been assigned by an independent company not affiliated with the District and are included solely for the convenience of investors. None of the City, the Authority, the Underwriter or the Municipal Advisor is responsible for the selection or uses of these CUSIP numbers, and no representati on is made as to their correctness on the 2022A Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2022A Bonds as a result of various subsequent actions including, but not limited to, refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the 2022A Bonds.

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CITY OF CATHEDRAL CITY

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY

CITY COUNCIL/BOARD OF DIRECTORS
Ernesto M. Gutierrez, Mayor/Chairman
Rita Lamb, Mayor Pro Tem/Vice-Chairman
Mark Carnevale, Member
Raymond Gregory, Member
Nancy Ross, Member

____________________

CITY/AUTHORITY OFFICIALS
Charles P. McClendon, City Manager/Executive Director
Tami E. Scott, Administrative Services Director/Chief Financial Officer Tracey R. Hermosillo CMC, City Clerk/Secretary

____________________

SPECIAL SERVICES
Bond Counsel and Disclosure Counsel
Norton Rose Fulbright US LLP
Los Angeles, California
Municipal Advisor
Fieldman, Rolapp & Associates, Inc.

Irvine, California

Trustee
The Bank of New York Mellon Trust Company, N.A.

Los Angeles, California

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No dealer, broker, salesperson or other person has been authorized by the Cathedral City Public Financing Authority (the “Authority”), the City of Cathedral City , California (the “City”) or the Underwriter to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, such inf ormation or representations must not be relied upon as having been authorized by the Authority, the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the 2022A Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the 2022A Bonds.

Statements contained in this Official Statement that involve estimates, forecasts or matters of opinion, whether or not expressly described herein, are in tended solely as such and are not to be construed as representations of fact.

The information set forth herein has been furnished by the Authority and the City and includes information from sources th at are believed to be reliable. The information and expr essions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the City, or other matters described herein since the date hereof.

The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

This Official St atement, including any supplement or amendment hereto, is intended to be deposited with the Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace Access (“EMMA”) website. The City maintains a website. The information presented on such websites is not part of this Official Statement and should not be relied on in making investment decisions with respect to the 2022A Bonds. Unless otherwise expressly stated, references to the websites in this Official Statement are shown for ref erence and convenience only, and none of their content is incorporated in this Official Statement by reference. The City and the Authority make no representation regarding the accuracy or completeness of the information presented on such websites.

IN CONNECTION WITH THE OFFERING OF THE 2022A BONDS, THE UNDERWRITER

MAY OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2022A BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF CO MMENCED, MAY BE DISCONTINUED AT ANY TIME.

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___________________________________

CAUTIONARY STATEMENTS REGARDING

FORWARD-LOOKING STATEMENTS IN

THIS OFFICIAL STATEMENT
Certain statements included or incorporated by reference in this Official Statement cons titute “forward-looking statements.” Such statements are generally identifiable by the terminology used such as “plan,” “project,” “expect,” “anticipate,” “intend,” “believe,” “estimate,” “budget” or other similar words.

The achievement of certain result s or other expectations contained in such forward -looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, p erformance or achievements expressed or implied by such forward-looking statements. Except as otherwise noted, neither the City nor the Authority plan to issue any updates or revisions to those forward -looking statements if or when its expectations or events, conditions or circumstances on which such statements are based occur.

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INTRODUCTION ....................................................................................................................................... 1 Purpose of the 2022A Bonds .......................................................................................................... 1 City Pension Funding Strategy ....................................................................................................... 1 Security for the 2022A Bonds ......................................................................................................... 1 2022A Reserve Fund....................................................................................................................... 2 The City .......................................................................................................................................... 2 Continuing Disclosure .................................................................................................................... 2 DESCRIPTION OF THE 2022A BONDS .................................................................................................. 3 Redemption ..................................................................................................................................... 3 Selection of Bonds for Redemption ................................................................................................ 3 Notice of Redemption ..................................................................................................................... 4 Partial Redemption of Bonds .......................................................................................................... 4 Effect of Redemption ...................................................................................................................... 4 SECURITY AND SOURCES OF PAYMENT FOR THE 2022A BONDS ............................................... 4 2022A Bonds .................................................................................................................................. 4 Additional Rental Payments ........................................................................................................... 5 Covenant to Budget and Appropriate ............................................................................................. 5 Limited Obligation .......................................................................................................................... 5 2022A Reserve Fund....................................................................................................................... 6 Abatement of Base Rental Payments .............................................................................................. 6 Maintenance, Utilities, Taxes and Assessments ............................................................................. 7 Insurance Coverages ....................................................................................................................... 7 Substitution and Release of Property .............................................................................................. 8 PLAN OF FINANCE ................................................................................................................................... 9 LEASED PROPERTY ................................................................................................................................. 9 ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 10 DEBT SERVICE REQUIREMENTS ........................................................................................................ 11 THE AUTHORITY ................................................................................................................................... 11 THE CITY ................................................................................................................................................. 11 General .......................................................................................................................................... 11 Audited Financial Statements ....................................................................................................... 12 Principal General Fund Tax Revenues.......................................................................................... 15 Management Discussion ............................................................................................................... 17 City Budget ................................................................................................................................... 18 Appropriations Limit .................................................................................................................... 20 Economic Development ................................................................................................................ 20 Assessed Valuation ....................................................................................................................... 20 Redevelopment Agencies .............................................................................................................. 22 Direct and Overlapping Debt ........................................................................................................ 23 General Fund Long-Term Obligations .......................................................................................... 24 Labor Contracts ................................................................................................................. 24 Pension Plans ................................................................................................................................ 24 STATE OF CALIFORNIA BUDGET INFORMATION .......................................................................... 28 State Budget .................................................................................................................................. 28 2021-22 State Budget .................................................................................................................... 28

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2022-23 State Budget .................................................................................................................... 28 Future State Budgets ..................................................................................................................... 30 RISK FACTORS ....................................................................................................................................... 30 2022A Base Rental Payments Are Not Debt; 2022A Bonds are Limited Obligations ................. 30 Abatement ..................................................................................................................................... 31 Risk of Uninsured Loss ................................................................................................................. 31 Eminent Domain ........................................................................................................................... 32 City General Fund ......................................................................................................................... 32 Public Health Emergencies ........................................................................................................... 32 Bankruptcy .................................................................................................................................... 33 State Finances ............................................................................................................................... 34 No Liability of Authority to the Owners ....................................................................................... 35 No Limitation on Incurring Additional Obligations ..................................................................... 35 Natural Disasters ........................................................................................................................... 35 Climate Change ............................................................................................................................. 36 Hazardous Substances ................................................................................................................... 36 Limitations on Remedies .............................................................................................................. 37 Limitations on Remedies under the Lease .................................................................................... 37 Substitution of Property ................................................................................................................ 37 Secondary Market Risk ................................................................................................................. 37 Unitary Property ........................................................................................................................... 41 MUNICIPAL ADVISOR ........................................................................................................................... 41 RATING .................................................................................................................................................... 41 UNDERWRITING .................................................................................................................................... 42 CONTINUING DISCLOSURE ................................................................................................................. 42 TAX MATTERS ........................................................................................................................................ 42 ERISA CONSIDERATIONS .................................................................................................................... 45 LITIGATION ............................................................................................................................................. 46 FINANCIAL STATEMENTS ................................................................................................................... 47 APPROVAL OF LEGAL PROCEEDINGS .............................................................................................. 47 EXECUTION AND DELIVERY .............................................................................................................. 47

APPENDIX A – SELECTED DEMOGRAPHIC AND FINANCIAL INFORMATION RELATING TO THE CITY OF CATHEDRAL CITY AND RIVERSIDE COUNTY ............... A-1 APPENDIX B – AUDITED FINANCIAL STATEMENTS OF THE CITY OF CATHEDRAL CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2021 ........... B-1 APPENDIX C – SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS ........................................................................................... C-1 APPENDIX D – FORM OF CONTINUING DISCLOSURE AGREEMENT ................................... D-1 APPENDIX E – FORM OF OPINION OF BOND COUNSEL ......................................................... E-1 APPENDIX F – BOOK-ENTRY SYSTEM ........................................................................................ F-1

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1 OFFICIAL STATEMENT
$[PAR AMOUNT]*

CATHEDRAL CITY PUBLIC FINANCING AUTHORITY
LEASE REVENUE BONDS, 2022 SERIES A
(FEDERALLY TAXABLE)

INTRODUCTION
This Official Statement, which includes the cover page, the inside cover page and attached appendices, provides certain information in connection with the sale and delivery of the $ [Par Amount]* Cathedral City Public Financing Authority Lease Revenue Bonds, 2022 Series A (Federally Taxable) (the “2022A Bonds”). Capitalized terms used and not otherwise defined herein shall h ave the meanings given in the Indenture or the Lease (each as hereinafter defined) or in APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS.”
Purpose of the 2022A Bonds
The 2022A Bonds are being issued under the provisions of the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6584) and Sections 53570 et seq. and 53580 et seq. of the California Government Code (collectively, the “Bond Law”). The 2022A Bonds are also being issued and secured by an Indenture, dated as of April 1, 2022 (the “Indenture”), by and between the Cathedral City Public Financing Authority (the “Authority”) and The Bank of New York Mellon Trust Company, N.A. , as trustee (the “Trust ee”). The 2022A Bonds were authorized by a resolution of the Authority, adopted on _________, 2022.

The Authority is issuing the 2022A Bonds, for the purpose of: (i) refinancing all or a portion of its CalPERS Obligation; (ii) refunding all of the outstanding Authority Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable); (iii) funding a reserve for the 2022A Bonds; and (iv) paying costs of issuing the 2022A Bonds . See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS.”
City Pension Funding Strategy
The issuance of the 2022A Bonds is part of the City’s strategy to address a significant unfunded liability to each of the City’s plans with California Public Employees’ Retirement System’s (“CalPERS”).

In addition to creating a more affordable and sustainable shape for its pension costs, the City has determined that the 2022A Bonds should help create enhanced resiliency for the General Fund of the City to handle adverse economic situations in the future.

Security for the 2022A Bonds
The 2022A Bonds shall be secured by a first lien on and pledge (which shall be effected in the manner and to the extent provided in the Indenture) of all of the Revenues, including all of the moneys in the 2022A Interest Account, the 2022A Principal Account and the 2022A Reserve Fund, including all amounts derived from the investment of such moneys. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2022A BONDS.”

* Preliminary, subject to change.

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2 Pursuant to a Site Lease, dated as of April 1, 2022 (the “Site Lease”), by and between the City and the Authority, the Authority will lease from the City Civic Center complex as more particularly described herein (the “Leased Property”). Pursuant to the Lease Agreement, dated as of April 1, 2022 (the “Lease”), by and between the Authority and the City, the Author ity has or will sublease the Leased Property to the City. See “LEASED PROPERTY.” Pursuant to the Lease, the City will pay to the Trustee, as the assignee of the Authority, base rental payments (collectively, the “2022A Base Rental Payments”) in amounts equal to scheduled debt service on the 2022A Bonds, as set forth in the base rental payment schedule for the 2022A Bonds (the “2022A Base Rental Payment Schedule”). The obligation of the City to make 2022A Base Rental Payments or Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.

Neither the 2022A Bonds nor the obligation of the City to make 2022A Base Rental Payments or Additional Rental Payments constitutes an indebtedness of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. Pursuant to the Lease, the City has covenanted to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due hereunder in its annual budget and to make the necessary annual appropriations for all such Base Rental Payments and Additional Rental Payments required to be made under the Lease, subject only to abatement as provided therein. 2022A Reserve Fund
Pursuant to the Indenture, a 2022A Reserve Fund will be established for the 2022A Bonds and funded at the 2022A Reserve Requirement. “2022A Reserve Requirement” means, as of any calculation date in a Bond Year, an amount equal to Maximum Annual Debt Service. See “SECURITY AND SOURCES OF PAYMENT FOR THE 2022A BONDS – 2022A Reserve Fund.” The City
The City of Cathedral City (the “City”) is located in Riverside County (the “County”) located in the Coachella Valley, which is 115 miles southeast of downtown Los Angeles. The City was incorporated in 1981 and covers approximately 22 square miles and had an estimated population of more than 54,000.

The City is bordered by the City of Palm Springs to the west, the City of Rancho Mirage to the south and east, and an unincorporated area of the County to the north and northeast. See “THE CITY.” Continuing Disclosure
The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the 2022A Bonds and as such, the Authority will not provide any such information.

The City has agreed to provide, with respect to the 2022A Bonds, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (the “EMMA System”), certain annual financial information and operating data relating to the City and, in a timely manner, notice of certain events. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2 -12, as amended (the “Rule 15c2 -12”) adopted by the U.S. Securities and Exchange Commission (the “SEC”) und er the Securities Exchange Act of 1934, as amended. See “CONTINUING DISCLOSURE” herein and APPENDIX D – “FORM OF CONTINUING DISCLOSURE AGREEMENT” for a description of the annual reports and notices of enumerated events to be provided by the City.

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3 DESCRIPTION OF THE 2022A BONDS
The 2022A Bonds will be dated their date of delivery and issued in the aggregate principal amount and bear interest at the rates and mature on the dates set forth on the inside cover page of this Official Statement. Interest on the 2022A Bonds will be payable semiannually on June 1 and December 1 of each year, commencing _______ 1, 2022 (each an “Interest Payment Date”). Each 2022A Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is executed after the fifteenth calendar day of the month immediately preceding an Interest Payment Date, in which case interest will bear from such Interest Payment Date, or (ii) it is authenticated on or before July 15, 2022, in which event interest will accrue from the date of initial delivery of the 2022A Bonds. If, at the date of authentication of any 2022A Bond, interest thereon is in default, such 2022A Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on such outstanding 2022A Bond, or if no interest has been paid, from the date of initial delivery of the 2022A Bonds. Interest on the 2022A Bonds will be computed on the basis of a 360 -day year of twelve 30 -day months.

The 2022A Bonds are being issued as fully registered bonds and, when executed and delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). The 2022A Bonds will be issued in denominations of $5,000 or any integral multiple thereof. Individual purchases of 2022A Bonds will be made in book-entry form only. Payments of principal of and interest on the 2022A Bonds are to be made to purchasers by DTC through DTC Participants.

Purchasers will not receive physical delivery of the 2022A Bonds purchased by them. See APPENDIX F – “BOOK –ENTRY SYSTEM.”
Redemption*
Optional Redemption of Bonds. The 2022A Bonds maturing on or after _______ 1, 2033 shall be subject to redemption prior to their respective maturity dates as a whole or in part on any date on or after ________ 1, 2032, in any order deemed reasonable by the Authority, and by lot within a maturity, from prepayments of 2022A Base Rental Payments made at the option of the City pursuant to the Lease, at a redemption price equal to the principal amount of the 2022A Bonds to be redeemed, plus accrued but unpaid interest to the date fixed for redemption, without premium.

Mandatory Sinking Account Redemption of 2022A Bonds. The 2022A Term Bond maturing on December 1, 20__ is subject to mandatory redemption, in part by lot, from sinking account payments set forth in the following schedule commencing December 1, 20__, and on December 1 in each year thereafter to and including December 1, 20__ at a redemption price equal to t he principal amount thereof to be redeemed (without premium), together with interest accrued thereon to the date fixed for redemption.

Redemption Date
(December 1)
Principal Amount
To be Redeemed

*
_________________
* Maturity.

Selection of Bonds for Redemption
Whenever provision is made in the Indenture for the redemption of less than all of the 2022A Bonds, the Trustee shall select the 2022A Bonds to be redeemed from all 2022A Bonds not previously called for redemption, in such maturities as the Authority shall designate (and by lot within any maturity).

* Preliminary, subject to change.

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4 For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 portions and such portions shall be treated as separate 2022A Bonds, which may be separately redeemed.

Notice of Redemption
The Trustee on behalf and at the expense of the Authority shall send (by first class mail or other means acceptable to the recipient thereof) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, to the Securities Depositories and to one or more Information Services, at least twenty (20) but not more than sixty (60) days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the redemption place and the redemption price and shall designate the CUSIP numbers, the 2022A Bond numbers and the maturity or maturities (except in the event of redemption of all of the 2022A Bonds) of the 2022A Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any inaccuracy in such numbers.

Any notice given pursuant to the Indenture may be conditional and/or rescinded by written notice given to the Trustee by the Authority and the Trustee shall provide notice of such rescission as soon thereafter as practicable in the same manner, and to the same recipients, as notice of such redemption was given pursuant to the Indenture.

Partial Redemption of Bonds
If only a portion of any Bond is called for redemption, then upon surrender of such Bond the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new 2022A Bond or Bonds, interest rate and maturity date, in aggregate principal amount equal to the unredeemed portion of the 2022A Bond being redeemed.

Effect of Redemption
From and after the date fixed for redemption, if funds available for the payment of the principal of, premium, if any, and interest on the 2022A Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under the Inde nture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date. All 2022A Bonds redeemed pursuant to the Indenture shall be canceled by the Trustee. All moneys held by or on behalf of the Trustee for the payment of principal of or interest or premium on Bonds, whether at redemption or maturity, shall be held in trust for the account of the Owners thereof and the Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any interest earned on, moneys so held.

SECURITY AND SOURCES OF PAYMENT FOR THE 2022A BONDS
2022A Bonds
General. The 2022A Bonds will be secured by a first lien on and pledge of the Revenues. “Revenues” means (i) all 2022A Base Rental Payments payable by the City pursuant to the Lease (including prepayments), (ii) any proceeds of Bonds deposited with the Trustee and all moneys on deposit in the funds and accounts established under the Indenture, (iii) investment income with respect to such moneys held by

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5 the Trustee and (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee relating to the 2022A Base Rental Payments.

The 2022A Base Rental Payments will be paid by the City in an amount sufficient to pay the principal of and interest on the 2022A Bonds on each Interest Payment Date. On or before the fifteenth (15) Business Day preceding each Interest Payment Date, the City is required to pay to the Trustee the 2022A Base Rental Payments coming due on the next succeeding Interest Payment Date, respectively, from any legally available sources.

Pursuant to an Assignment Agreement, dated as of April 1, 2022 (the “Assignment Agreement”), by and between the Authority and the Trustee, relating to the 2022A Bonds, the Authority has and will assign, as further security for its obligations to make timely payment of principal of and interest on the 2022A Bonds to the Trustee for the benefit of the Owners certain of the Authority’s rights under the Lease and Site Lease, including the right to receive all 2022A Base Rental Payments.

Additional Rental Payments
Under the Lease, in addition to 2022A Base Rental Payments, the City has agreed to pay Additional Rental Payments in such amounts in each year as shall be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of sale of the 2022A Bonds) incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of the Lease or the assignment thereof, the Indenture, or the Authority’s or the Trustee’s interest in the Leased Property, including, but not limited to, all fees, costs and expenses, all administrative costs of the Authority relating to the Leased Property (including, withou t limiting the generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture), fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the 2022A Bonds or of the Indenture. Such Additional Rental Payments shall be billed to the City by the Authority or the Trustee from time to time.

Amounts so billed shall be paid by the City within sixty (60) days after receipt of the bill by the City.

Covenant to Budget and Appropriate
The City has covenanted in the Lease to take such action as may be necessary to include all 2022A Base Rental Payments and Additional Rental Payments due under the Lease in its budget and to make the necessary annual appropriations for all such 2022A Base Rental Payments and Additional Rental Payments, subject only to abatement as provided in the Lease. The covenants on the part of the City contained in the Lease shall be deemed to be and shall be construed to be duties imposed by law and it shall be the du ty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in the Lease agreed to be carried out and performed by the City.

Limited Obligation
The full faith and credit of the Authority is not pledged for the payment of the principal of or interest or premium (if any) on the 2022A Bonds. The 2022A Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except the Revenues and such other moneys and securities as provided in the Indenture.

The obligation of the City to ma ke 2022A Base Rental Payments or Additional Rental Payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the 2022A Bonds nor the obligation of the City to make Base Rental Payments or Additional Rental Payments constitutes an

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6 indebtedness of the City, the State or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. 2022A Reserve Fund
Under the Indenture, a 2022A Reserve Fund is established for the 2022A Bonds that will be funded at the 2022A Reserve Requirement, and any deficiency therein shall be replenished from the first available Revenues pursuant to the Indenture. Moneys in the 2022A Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the 2022A Bonds, including the redemption price of the 2022A Bonds coming due and payable by operation of mandatory sinking fund redemption pursuant to the Indenture, if the Revenues are insufficient therefor.

If the amount on deposit in the Lease Revenue Fund on any date is insufficient to enable the Trustee to pay in full the aggregate amount of principal of and intere st on the Bonds coming due and payable, including the redemption price of the 2022A Bonds coming due and payable by operation of mandatory sinking fund redemption pursuant to the Indenture, the Trustee shall withdraw the amount of such insufficiency from the 2022A Reserve Fund and transfer such amount to the Lease Revenue Fund. If the amount on deposit in the 2022A Reserve Fund exceeds the 2022A Reserve Requirement on the fifteenth (15th) calendar day of the month preceding any Interest Payment Date, the amount of such excess shall be withdrawn therefrom by the Trustee and transferred to the Lease Revenue Fund and credited against the Base Rental Payments next due from the City.

The Authority may fund all or a portion of the 2022A Reserve Requirement with o ne or more Qualified Reserve Fund Credit Instruments. A “ Qualified Reserve Fund Credit Instrument” means an irrevocable standby or direct -pay letter of credit or surety bond issued by a commercial bank, national banking association or insurance company and deposited with the Trustee pursuant to the Indenture provided that all of the following requirements are met: (i) the long -term credit rating of such bank or insurance company at the time of delivery of such letter of credit or surety bond is rated in one of the two highest rating categories by Moody’s or S&P and, if rated by A.M. Best & Company, a minimum rating of “A”; (ii) such letter of credit or surety bond or policy has a term which ends no earlier than the last Interest Payment Date of the 2022A Bonds; (iii) such letter of credit or surety bond has a stated amount at least equal to the portion of the 2022A Reserve Requirement with respect to which funds are proposed to be released pursuant the Indenture; and (iv) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the amounts available to repay the principal of and interest on the 2022A Bonds. See APPENDIX C – “SUMMARY OF CE RTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – THE INDENTURE.”
Abatement of Base Rental Payments
The obligation of the City to pay 2022A Base Rental Payments and Additional Rental Payments is subject to abatement during any period in which by reason of any damage, destruction, condemnation or title defect there is substantial interference with the use by the City of the Leased P roperty or any portion thereof. See “RISK FACTORS – Abatement.” Such abatement shall be in an amount such that the resulting Base Rental Payments in any year during which such interference continues does not exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction, taking or title defect does not substantially interfere with the City’s use and right of possession, as evidenced by a Certificate of the City. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation, taking or title defect and, with respect to damage to or destruction of the Leased Property, ending with the substantial completion of the work of repair or replacement of the Leased Property, or the portion thereof so damaged or destroyed.

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7 An abatement will continue for the period commencing with the date on which the Leased Property is not available for use and occupancy and ending with the date on which the Leased Property is available for use and occupancy by the City. T he term of the Lease will be extended by the period during which 2022A Base Rental Payments or Additional Rental Payments is abated, except that the term may in no event be extended beyond ten years following the stated term thereof.

The spread of COVID-19 in the past few years has resulted in the imposition from time to time of restrictions on gatherings, widespread temporary closings of businesses and schools (including within the City) and implementation of safer-at-home orders for citizens to remain at home, except for certain essential purposes. These restrictions limited public access to certain City-owned facilities but would not have caused 2022A Base Rental Payments or Additional Rental Payments to be abated under the Lease.

Maintenance, Utilities, Taxes and Assessments
During such time as the City or any assignee or sublessee thereof is in possession of the Leased Property, all maintenance and repair, ordinary or extraordinary, of the Leased P roperty shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of (a) all utility services supplied to the Leased Property, (b) the cost of operation of the Leased Property, and (c) the costs of maintenance of and repair to the Leased Property resulting from ordinary wear and tear or want of care on the part of the City. The City shall at the City’s sole cost and expense keep and maintain the Leased Property clean and in a safe and good condition and repair. The Authority shall have no obligation to alter, remodel, improve, repair, decorate, or paint the Leased Property or any part thereof, and the parties hereto affirm that the Authority has made no representations or warranties to the City respecting the condition of the Leased Property. The City shall comply with all statutes, ordinances, regulations, and other requirements of all governmental entities that pertain to the occupancy or use of the Leased Property. The Authority has no responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the Leased Property. The City waives the right to make repairs at the Authority’s expense under Subsection 1 of Section 1932 and Section 1942 of the California Civil Code, or any other such law, statute, or ordinance now or hereafter in effect.

The Leased Property will be used for public purposes by the City and, therefore, the Leased Property will be exempt from all taxes presently assessed and levied with respect to real and p ersonal property, respectively. If the use, possession or acquisition by the Authority or the City of the Leased Property is found to be subject to taxation in any form, the City will pay during the term hereof, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Leased Property and any other property acquired by the City in substitution for, as a renewal or replacement of, or a modification, improvement or addition to the Leased Property; provided, that with respect to any governmental charges or taxes that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are accrued during such time as the Lease is in effect.

Insurance Coverages
Pursuant to the Lease, the City shall secure and maintain or cause to be secured and maintained at all times with insurers of recognized responsibility or through a program of self -insurance to the extent specifically permitted in the Lease, all coverage on the Leased Property required by the Lease. Such insurance shall consist of comprehensive general liability coverage against claims for damages including death, personal injury, bodil y injury or property damage arising from operations involving the Leased Property. Such insurance shall afford protection with a combined single limit of not less than $1,000,000 per occurrence with respect to bodily injury, death or property damage liability, or such greater amount as may from time to time be recommended by the City’s risk management officer or an independent insurance consultant retained by the City for that purpose, subject to a deductible clause of not to exceed $500,000.

The City’s co mprehensive general liability coverage may be satisfied by self -insurance. Insurance also

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8 includes casualty insurance, throughout the term of the Lease, against loss or damage to any or all of the Leased Property by fire and lightning, with extended covera ge and vandalism and malicious mischief insurance, and against loss of Leased Property by theft. Such extended coverage insurance shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke and such other hazards as are normally covered by such insurance. The casualty insurance required by the Lease shall be in an amount not less than the principal amount of the Outstanding Bonds, if the Leased Property is other than streets in the City. The City’s casualty insurance coverage may be satisfied by self-insurance.

The Lease also requires workers’ compensation insurance to be issued by a responsible carrier authorized under the laws of the State to insure employers against liability for compensation under the Labor Code of the State, or any act enacted as an amendment or supplement thereto or in lieu thereof, such workers’ compensation insurance to cover all persons employed by the City in connection with the Leased Property and to cover full liability for compensation under any such act; provided, however, that the City’s obligations under such worker’ compensation insurance may be satisfied by self-insurance.

Certificates of comprehensive general liability and workers’ compensation insurance shall be furnished by applicable insurers to the City, and, at least ten days prior to the expiration dates of such policies, if any, evidence of renewals shall be deposited with the Trustee. If the City elects to pro vide self-insurance, the City shall annually cause to be delivered to the Trustee, upon request, a certificate of an Insurance Consultant certifying to the adequacy of the City’s reserves for such insurance. All policies or certificates of insurance provid ed for in the Lease shall name the City as a named insured and the Trustee as an additional insured. Notwithstanding the generality of the foregoing, the City shall not be required to maintain or cause to be maintained more insurance than is specifically referred to above or any policies of insurance other than standard policies of insurance with standard deductibles offered by reputable insurers at a reasonable cost on the open market.

See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – THE LEASE.”
Substitution and Release of Property
Pursuant to the Lease, the City and the Authority specifically acknowledge that the annual fair rental value of the Leased Property is in excess of the maximum annual 2022A Base Rental Payments. The City shall have, so long as the Lease is in effect, and is granted under the Lease, the option at any time and from time to time, to substitute other real property (the “Substitute Property”) for any portion of the Leased Property (the “Former Property”) or release any identifiable real property and/or improvements currently constituting the Leased Property (in such case, Substitute Property shall mean the Former Property less any portion released pursuant to the Lease); provided, that the City must satisfy all of the following requirements, which are conditions precedent to such substitution:
(a) No default under the Lease or Event of Default shall have occurred and be continuing; (b) The City shall file with the Authority and the Trustee, and cause to be recorded in the office of the County Recorder, if necessary, sufficient memorialization of amendments to the Lease and the Site Lease which replaces Exhibit A to the Lease and Exhibit A to the Site Lease with a description of such Substitute Property which deletes therefrom the description of the Former Property; (c) The City shall obtain an extended California Land Title Association (“CLTA”) policy of title insurance insuring the City’s fee or leasehold estate in such Substitute Property, if the Sub stitute Property are not streets of the City, the City’s leasehold estate hereunder, and the Authority’s leasehold

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9 estate under the Site Lease in such Substitute Property, subject only to Permitted Encumbrances, in an amount not less than the aggregate principal amount of the Outstanding Bonds; provided, however, that this requirement shall not apply to Substitute Property that consists only of Former Property less any released portion;
(d) The City shall provide a Certificate of the City to the Authority and to the Trustee that such Substitute Property constitutes property which the City is permitted to lease under the laws of the State of California;
(e) The substitution of the Substitute Property shall not cause the City to violate any of its covenants, representations and warranties made herein;
(f) The City shall file with the Authority and the Trustee a Certificate of the City or other evidence which establishes that the annual fair rental value of the Substitute Property after substitution or release will be at least equal to 100% of the maximum amount of the Base Rental Payments becoming due in the then current fiscal year or in any subsequent fiscal year and the useful economic life of the Substitute Property shall be at least equal to the maximum remaining term of the Lease; and (g) The City shall furnish to the Trustee an opinion of Bond Counsel addressed to the Trustee, the City and the Authority to the effect that the substitution or release is permitted under the Lease.

Upon the satisfaction of all such conditions precedent, and upon the City delivering to the Authority and the Trustee a Certificate of the City certifying that the conditions set forth in subsections (a), (c) and (e) outlined above have been satisfied, the Term of the Lease shall thereupon end as to the Leased Property and shall thereupon commence as to the Substitute Property, and all references to the Leased Property shall apply with full force and effect to the Substitute Property. The City shall not be entitled to any reduction, diminution, extension or other modification of the Base Rental Payments whatsoever as a result of any substitution or removal under the Lease.

PLAN OF FINANCE
The Authority is issuing the 2022A Bonds for the purpose of: (i) refinancing all or a portion of its CalPERS Obligation; (ii) refunding all of the outstanding Authority Lease Revenue Refunding Bonds (Capital Facilities Projects), Series 2015A (Taxable) (the “2015A Bonds”) ; (iii) funding a reserve for the 2022A Bonds; and (iv) paying costs o f issuing the 2022A Bonds . See “ESTIMATED SOURCES AND USES OF FUNDS.”

LEASED PROPERTY
Leased Property. The Leased Property consists of the City’s Civic Center, a 3-story, steel frame, 55,343 square feet building. The Civic Center was constructed in 1998 and houses all of the main municipal functions of the City: administration, economic and community development, public works, fire and police.

Simultaneously with the delivery of the 2022A Bonds, the Authority will acquire a leasehold interest in the Leased Property from the City. The Authority will sublease the Leased Property to the City pursuant to the Lease. While the City is in possession of the Leased Property, all maintenance and re pair of the Leased Property is the responsibility of the City. The City has determined that the annual fair rental value of the Leased Property is in excess of the annual Base Rental Payments.

Substitution and Release of Property. Pursuant to the Lease, t he City may substitute other real property for any portion of the Leased Property described above, or release any identifiable real property and/or improvements currently constituting the Leased Property, provided the City satisfies the provisions of the Lease. See “SECURITY AND SOURCES OF PAYMENT OF THE 2022A BONDS – Substitution and Release of Property.”

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10 Limited Remedies. The City has not granted any security interest in the Leased Property for the benefit of the owners of the 2022A Bonds, and there is no remedy of foreclosure on the Leased Property upon the occurrence of an Event of Default under the Indenture or the Lease.

ESTIMATED SOURCES AND USES OF FUNDS
The following table shows the estimated sources and uses of the proceeds from the sale of the 2022A Bonds:

Sources:

Par amount of the 2022A Bonds
Total Sources
Uses:

Transfer to CalPERS
Refunding of 2015A Bonds
2022A Reserve Fund
2022A Costs of Issuance Fund(1)
Total Uses
_____________
(1) Costs of issuance include fees and expenses for Bond Counsel, Disclosure Counsel, Municipal Advisor, Trustee, printing expenses, rating fee, underwriter’s discount and other miscellaneous costs.

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11 DEBT SERVICE REQUIREMENTS
The following table sets forth the debt service requirements for the 2022A Bonds.

Fiscal Year
Ending June 30, Principal Interest Total

2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Totals

THE AUTHORITY
The Authority was established pursuant to the Joint Exercise of Powers Agreement dated as of December 1, 1993 (the “Joint Powers Agreement”) by and between the City and the Successor Agency of the Cathedral City Redevelopment Agency, in accordance with the provisions of Article 1 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the Californi a Government Code, as amended (the “Act”) for the purpose of assisting the City by issuing bonds and other obligations for authorized purposes. The Authority is administered by a Board of Directors comprised of members of the City Council of the City (the “City Council”). The Authority has no separate staff, but operates using City staff members.

THE CITY
General
The City is located in Riverside County, located in the Coachella Valley, which is 115 miles southeast of downtown Los Angeles. The City was incor porated in 1981 and covers approximately 22 square miles and had an estimated population of more than 54,000. The City is bordered by the City of Palm Springs to the west, the City of Rancho Mirage to the south and east, and an unincorporated area of the County to the north and northeast. See APPENDIX A – “SELECTED DEMOGRAPHIC AND

FINANCIAL INFORMATION RELATING TO THE CITY OF CATHEDRAL CITY AND RIVERSIDE COUNTY.”

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12 At the November 8, 2016 Election, the voters of the City voted to become a Charter City, effective January 1, 2017. Under the Charter, the City operates under the council-manager form of government and has full power and authority to adopt, make, exercise and enforce all legislation, laws, and regulations and to take all actions relating to mun icipal affairs, without limitation, which may be lawfully adopted, made, exercised, taken or enforced under the Constitution of the State of California.

Policymaking and legislative authority are vested in a City Council comprised of a Mayor and four other Council members. The City Council is responsible, among other things, for passing ordinances, adopting minute orders and resolutions (such as the budget), appointing committees, and hiring both the City Manager and City Attorney. In addition to sitting as the governing board of the City, the City Council also acts as the Board of Directors of the Cathedral City Public Financing Authority.

The City Council is elected on a nonpartisan basis. Council members serve four -year staggered terms, with two council members representing districts one and two elected in November 2020, and three Council members elected in November 2022 representing districts three through five. The Mayor is appointed by the City Council to serve a one-year rotating term.

The City Manager is responsible for carrying out the policies and ordinances of the City Council, overseeing day-to-day operations of the City, and appointing the senior management positions (Assistant City Manager and the various department heads).

Audited Financial Statements
The following table sets forth the City’s General Fund assets, liabilities and fund balances based upon audited financial statements for Fiscal Years ended June 30, 2017 through June 30, 2021 . City management’s discussion of financial performance for the fiscal year ended June 30, 2021 is presented in the City’s audited financial statements for the fiscal year ended June 30, 2021 attached hereto as APPENDIX B. Significant developments relating to the operations and finances of the City since June 30, 2021 are described herein. See, in particular the tables set forth herein, “– Management Discussion” below and “RISK FACTORS.”

[Remainder of page intentionally left blank.]

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13 TABLE 1

CITY OF CATHEDRAL CITY

GENERAL FUND BALANCE SHEET
FOR FISCAL YEARS ENDED JUNE 30, 2017 THROUGH JUNE 30, 2021 2017 2018 2019 2020 2021
Assets
Cash and investments $20,711,523 $18,956,233 $21,801,266 $19,186,204 $35,026,012 Receivables:

Interest 107,642 146,424 330,632 381,826 142,951
Accounts Taxes 4,069,187 4,445,005 5,040,812 5,222,728 7,079,825 Loans 2,948,544 6,156,308 5,943,772 5,887,851 4,154,966 Intergovernmental receivable 26,123 - 582,376 795,623 495,382 Prepaid assets 10,267 16,298 6,105 63,634 76,940
Total assets 27,873,286 29,720,268 33,704,963 31,537,866 46,976,076

Liabilities
Accounts payable 1,732,185 2,198,043 2,259,031 2,004,320 2,423,998 Intergovernmental payable - 5,775 - - -
Deposits from others 554,532 526,912 653,077 726,321 762,511 Unearned revenue 318,810 258,681 218,521 228,489 8,940,356 Total liabilities 2,605,527 2,989,411 3,130,629 2,959,130 12,126,865

Deferred Inflows of Resources:

Unavailable revenue 266,545 1,010,526 1,236,378 1,023,917 994,124 Total Deferred Inflows of Resources 266,545 1,010,526 1,236,378 1,023,917 994,124

Fund Balances:

Nonspendable 10,267 16,298 6,105 63,634 1,979,849
Restricted 2,994,001 2,797,674 2,632,034 2,587,047 2,587,045 Assigned 4,340,569 2,829,904 833,351 503,353 1,133,390
Unassigned 17,656,377 20,076,455 25,866,466 24,400,785 28,154,803 Total fund balances 25,001,214 25,720,331 29,337,956 27,554,819 33,855,087 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $27,873,286 $29,720,268 $33,704,963 $31,537,866 $46,976,076 ____________________
Source: City of Cathedral City.

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14 The following table summarizes the audited financial statements for the City’s General Fund for the Fiscal Years ended June 30, 2017 through June 30, 2021 . This information has been derived from the audited financial statements of the City for the fiscal years shown. This information should be read in conjunction with APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF CATHEDRAL CITY FOR FISCAL YEAR ENDED JUNE 30, 2021.”
TABLE 2

CITY OF CATHEDRAL CITY

GENERAL FUND

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR FISCAL YEARS ENDED JUNE 30, 2017 THROUGH JUNE 30, 2021 2017 2018 2019 2020 2021

REVENUES
Taxes $30,566,036 $34,319,181 $40,590,244 $38,588,503 $44,459,614 Intergovernmental 67,757 117,919 27,284 146,366 276,709 Licenses and permits 1,349,341 1,876,558 2,498,178 2,860,841 2,956,610 Fines and forfeitures 213,764 138,542 108,317 276,786 348,714 Charges for services 4,693,930 5,802,638 5,575,676 5,863,531 5,713,802 Special assessments 88,095 116,728 148,401 192,983 1,059,225 Use of money and property 499,539 507,632 1,145,369 852,542 573,659 Contributions from other governments 492,643 533,216 423,959 177,196 249,989 Other revenues 79,588 218,606 34,058 35,113 19,732
Total Revenues 38,050,693 43,631,020 50,551,486 48,993,861 55,658,054

EXPENDITURES
Current:

General government 9,577,907 10,795,178 11,064,804 13,164,100 12,455,162 Community development 2,799,125 3,445,211 4,039,515 4,196,620 4,350,509 Culture and recreation 434,440 458,128 854,274 588,508 409,996 Public safety 23,041,043 26,520,138 28,515,551 30,508,947 30,620,998 Public works 698,728 743,523 1,189,164 960,287 734,179
Capital outlay 28,904 - 54,366 1,273,641 585,678
Debt Service
Principal 245,318 255,897 261,934 - -
Interest 32,420 21,842 10,814 - -
Total expenditures 36,857,885 42,239,917 45,990,422 50,692,103 49,156,522

Excess (Deficiency) of Revenues Over
(Under) Expenditures 1,192,808 1,391,103 4,561,064 (1,698,242) 6,501,532

Other Financing Sources (Uses)
Transfers in - - - 1,034,343 750,248
Transfers out (507,559) (798,834) (943,432) (1,969,919) (951,512) Proceeds from sale of capital assets 1,075,348 126,848 - 850,681 - Total Other Financing Sources (Uses) 567,789 (671,986) (943,432) (84,895) (201,264) Net Change in Fund Balances 1,760,597 719,117 3,617,632 (1,783,137) 6,300,268 Fund balances – July 1 23,240,617 25,001,214 25,720,324 29,337,956 27,554,819

Fund Balances – June 30 $25,001,214 $25,720,331 $29,337,956 $27,554,819 $33,855,087 _________________________
Source: City of Cathedral City.

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15 Principal General Fund Tax Revenues
The table below provides the amount of General Fund tax revenues that each source represents for the fiscal years shown. The City cannot predict the ultimate impacts on such revenues for the Fiscal Year ending June 30, 2022 as a result of the COVID-19 pandemic and potential related economic consequences.

See “RISK FACTORS – COVID-19 Pandemic.”
Table 3
City of Cathedral City
Principal General Fund Tax Revenues
(In Thousands)
Revenue Source
Actual
FY 2017
Actual
FY 2018
Actual
FY 2019
Actual
FY 2020
Actual
FY 2021
Sales taxes
Transactions and use
Cannabis
Property
In-lieu VLF
Transient occupancy
Other taxes
Totals
_____________________
Source: City of Cathedral City.

Sales Taxes. A sales tax is imposed on the privilege of consuming personal property in California.

California does not tax services. The tax rate is established by the State Legislature, and is presently 7.25%, statewide (of which 1% is paid to the City). The State’s actual administrative costs with respect to the portion of sales taxes allocable to the City are deducted before distribution. In addition, many of California’s cities, counties, and communities have special taxing jurisdiction to impose a transaction (sales) or use tax.

These so-called district taxes increase the tax rate in a particular area by adding the local option tax to the statewide tax. These district taxes can vary up to 1%, and more than one district tax may be in effect for a particular location.

Transactions and Use Taxes. In June 2014, voters approved Measure B, extending the existing 1% transactions and use tax on all retailers doing business in the City indefinitely. The transactions and use tax is a general tax, the proceeds of which are deposited in the City’s General Fund to be used for general governmental purposes, such as City operations, police and fire services, street sweeping and repair, paramedics, parks and recreation, emergency response services, capital projects and other essential services.

Cannabis Taxes. The City of Cathedral City has a young and burgeoning new business cluster with the cannabis industry, including dispensary, cultivation, manufacturing, distribution, transportation and laboratory testing. As of June 30, 2021, the City had 96 cannabis businesses with 176 licenses, operating 56 sites comprised of 45 generating tax revenues, including 14 dispensaries, 27 cultivators, and 7 manufacturers resulting in almost $5.1 million in tax revenue versus the more than $4.3 million in tax revenue in Fiscal Year ended June 30, 2020. No assurance can be provided by the City regarding the impact of federal or State law on cannabis cultivation, manufacturing, or distribution in the future or whether any or all of the cannabis dispensaries in the City will continue to operate. Loss of cannabis tax revenue in the future may have an adverse impact on the City’s finances and such impact may be material.

Property Taxes. Taxes are levied by the County for each Fiscal Year on taxable real and personal property which is situated in the City as of the preceding January 1. Effective July 1, 1983, real property which changes ownership or is newly constructed is reassessed at the time the change in ownership occurs or the new construction is completed. The current year property tax rate will be applied to the reassessment,

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16 and the taxes will then be adjusted by a proration factor to reflect the portion of the remaining tax year for which taxes are due.

For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State assessed public utilities property and real property having a tax lien which is sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” Unsecured property comprises all property not attached to land, such as personal property or business property. Boats and airplanes are examples of unsecured property.

Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each Fiscal Year, and if unpaid become delinquent on December 10 and April 10, respectively, subject to a penalty of ten percent. Property on the secured roll with respect to which taxes are delinquent becomes tax defaulted on or about June 30 of the Fiscal Year. Such property may thereafter be redeemed by payment of a penalty of 1.5 percent per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector.

Property taxes on the unsecured roll are due as of the January 1 lien date and, in general, become delinquent on August 31, subject to a ten percent penalty. If unsecured taxes are unpaid on October 31, an additional penalty of 1.5 percent attaches to them on the first day of each month until paid. The City has four ways of collecting delinquent unsecured personal property taxes: (1) bringing a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Clerk and Recorder’s office in order to obtain a lien on certain property of the taxpayer, and (4) seizing and selling personal property, improvements or possessory interests belonging or assessed to the assessee.

Economic and other factors beyond the City’s control, such as economic recession, deflation of land values, or the complete or partial destruction of taxable property caused by, among other things, earthquake, flood or other natural disaster could cause a reduction in the assessed value of taxable property in the City. See also “LIMITATIONS ON REVENU ES AND APPROPRIATIONS – Property Tax Limitations – Article XIIIA, XIIIB, XIIIC (Proposition 218)” and “ – Article XIIIA Implementing Legislation.”
Recently, State legislations have been introduced in order to assist various affected people and companies as a result of the COVID-19 outbreak. For example, Senate Bill 939 would allow under certain circumstances a commercial tenant that is a small business or is an eating or drinking establishment, place of entertainment, or performance venue that meets specifie d financial criteria, including experiencing a specified decline in revenue after a shelter-in-place order took effect, to terminate a lease without any liability for future rent, fees, or costs that otherwise may have been due under the lease. Also, Senate Bill 1431 would expand the provisions allowing for reassessment of property. Under existing law, property may be reassessed for damage or destruction caused by one of 3 specified occurrences, including a major misfortune or calamity in an area or region subsequently proclaimed by the Governor to be in a state of disaster if the property was damaged or destroyed by the misfortune or calamity that caused the Governor to proclaim the region to be in a state of disaster. Senate Bill 1431 would specify that “damage” includes diminution in the value of property as a result of any law, order, rule, or regulation of the state or any city, county, or other political subdivisions providing tenant protections in response to the COVID-19 outbreak and would also specify that the term “major misfortune or calamity” includes the COVID-19 outbreak. It is unknown what net impact, if any, these legislative efforts or other future similar bills, if enacted, would have on the assessed values of real property within the City.

Teeter Plan. The County adopted the Teeter Plan in 1993 with respect to col lection of property taxes. The Teeter Plan is an alternate procedure authorized in Chapter 3, Part 8, Division 1 of the Revenue

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17 and Taxation Code of the State of California (comprising Sections 4701 through 4717, inclusive), commonly referred to as the “Teeter Plan” for distribution of certain property tax and assessment levies on the secured roll. The City participates in the County’s Teeter Plan, and therefore, the amount of the levy of property tax revenue that can be allocated to the City does not depend upon the actual collections of taxes within the City.

Generally, the Teeter Plan provides for a tax distribution procedure by which secured roll taxes are distributed to taxing agencies, such as the City, within the County included in the Teeter Plan (the “Revenue Districts”) on the basis of the tax levy, rather than on the basis of actual tax collections. The County th en receives all future delinquent tax payments, penalties and interest. In connection with its adoption of the Teeter Plan, the County advanced to the participating taxing agencies an amount equal to 95% of the total then-prior years’ delinquent secured property taxes and 100% of the then-current year’s secured roll levy.

Supplemental taxes are currently excluded from the Teeter Plan.

To implement a Teeter Plan, the board of supervisors of a county generally must elect to do so by July 15 of the fiscal year in which it is to apply. As a separate election, a county may elect to have the Teeter Plan procedures also apply to assessments on the secured roll. Once adopted, a county’s Teeter Plan will remain in effect in perpetuity unless the board of supervisors orders its discontinuance or unless prior to the commencement of a fiscal year a petition for discontinuance is received and joined in by resolutions of the governing bodies of not less than two thirds of the participating districts in the county. An electing county may, however, determine to discontinue the Teeter Plan with respect to any levying agency in the county if the board of supervisors, by action taken not later than July 15 of a fiscal year, elects to discontinue the procedure with respect to such levying agency and the rate of secured tax delinquencies in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured roll by that agency.

In-lieu VLF. The City receives a portion of the Department of Motor Vehicles fees collected Statewide and other payments in-lieu of taxes. Payment of State assistance depends on the adoption of the State of its budget, including the appropriations therein providing for local assistance. [expand] Transient Occupancy Taxes (“TOT”). The City levies a transient occupancy tax is imposed on guest stays of thirty days (29 nights) or less. The City’s TOT increased almost $300,000 to just under $3.7 million in Fiscal Year 2020 -21. The continued growth in TOT from Short -Term Vacation Rentals (“STVRs”) revenue increased to almost $1.25 million in Fiscal Year 2020-21 from $750,000 in Fiscal Year 2019-20. However, with the commencement of a phasing out of some of the STVR properties over the next two years, there could be an adverse financial impact to TOT.

Management Discussion
Good Governance Policies. The City Council has adopted a number of important policies designed for good fiscal management within the City.

Debt Management Policy On September 23, 2020, the City Council adopted a Debt Management Policy (the “Debt Policy”) consistent with Section 8855 of the Government Code of the State of California.

The Debt Policy applies to the City, the Successor Agency to the Former Redevelopment Agency and the Authority. The City is committed to long-term financial planning, maintaining appropriate reserves levels and employing prudent practices in governance, ma nagement and budget administration. The primary objectives under the Debt Policy of the City’s debt and financing related activities are to:

• Maintain cost -effective access to the capital markets through prudent fiscal management policies and practices;
• Ensure that judicious debt service commitments are made through effective planning and cash management;
• Ensure compliance with all applicable federal and state securities laws;

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18 • Achieve the highest practical credit ratings within the context of the City's financing needs and financing capabilities;
• Ensure that all debt is structured in order to protect both current and future taxpayers, ratepayers and constituents of the City; and
• Ensure that the City's debt is consistent with the City's planning goals and objectives and capital improvement program or budget, as applicable.

Investment Policy In accordance with California Government Code, Sections 53600 et seq., the City maintains an Investment Policy, which was adopted by City Council on May 12, 2021 (the “Investment Policy”). The Investment Policy contains elements and guidelines on investing public funds, such as authorized and suitable investments, liquidity, authorized financial institutions and dealers, safekeeping and custody, diversification, interna l controls and performance standards, and ethical and fiduciary responsibilities.

Under the Investment Policy, the standard to be used by the investment officials of the City will be that of a “prudent investor” and shall be applied in the context of managing all aspects of the overall portfolio. Government Code Section 53600.3 provides that those persons to whom investment decisions have been delegated are trustees with a fiduciary duty to act as a prudent investor. This standard of care directs that a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, that a prudent person acting in like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.

Fund Balance Policy The Fund Balance Policy of the City was adopted by City Council on September 10, 2014, as a key element of financial stability of the City. The City Council may assign fund balance to a specific purpose in relation to the Fund Balance Policy. By resolution, the City Council has also authorized the City Manager and/or Administrative Services Director to assign fund balance. Such assignments of fund balance do not require formal action by the City Council; however, each assignment must be approved by either of the authorized officials before the item can be presented in the City’s financial statements. To the extent the unassigned fund balance is positive, the City may draw upon the fund balance to provide cash financing for capital projects or other one-time purchases. Should economic projections and prudent measures warrant, City Council may also approve the systematic reduction of any excess fund balance as a tactic to prevent tax increases.

Of the available fund balance, the City strive s to assign a minimum of 33% of budgeted expenditures and transfers out, for the following purposes: (1) cash flow reserves (50%); (2) economic uncertainties (40%); and (3) budget -related reserves (10%). These assignments are designed to alleviate significant unanticipated budget shortfalls and to ensure the orderly provisions of services to citizens.

Information Technology Security Policy The City has a comprehensive Information Te chnology Security Policy, dated January 2018. Among other matters, the Information Technology Security Policy addresses remote access, anti -virus, system security, information confidentiality, data retention, system backup and other important cyber security matters.

City Budget
The budget serves as a policy document and the foundation for the City’s financial planning and control. The objective of the City’s budgetary controls is to ensure compliance with legal provisions embodied in the budget approve d by the City Council. To achieve time and cost efficiencies over a traditional annual budget, the City prepares and adopts a biennial budget for two separate fiscal years. Under this cycle, the second year is adopted by the City Council at the same time t he first year is adopted. Each year is separate and distinct. For the General Fund, unencumbered funds from the first year do not carry over into the second year. On June 9, 2021, City Council adopted the biennial budget for Fiscal Years 2021- 22 and 2022-23.

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19 The City Manager and the Administrative Services Director prepare and submit the budget to the City Council and administer it after adoption. The City Manager or the Administrative Services Director is authorized to adjust appropriations within each department or activity, while ensuring those adjustments do not exceed the amounts approved in the budget or any amending orders or resolutions approved by the governing body.

Management can make transfers between departments provided expenditures do not ex ceed appropriations at the fund level. Transfers of cash or unappropriated fund balance from one fund to another can only be made with City Council’s approval. For each fund, total expenditures may not legally exceed total appropriations. Any overall amendments/adjustments to these two budgets are made as a result of City Council actions/approval
Table 4
City of Cathedral City
General Fund
Comparison of Adopted Budget to Actual Results

FY 2019-20
Actual
FY 2020-21
Actual
FY 2021-22
Adopted
FY 2022-23
Adopted

BEGINNING BALANCE $25,763,355 $25,441,153 $21,654,527

Revenues and Other Sources 50,837,501 54,861,720 54,823,566

Expenditures and Other Uses 52,258,262 58,648,346 59,955,600

Net increase (decrease) (1,420,761) (3,786,626) (5,132,034)

ENDING BALANCE 24,342,594 21,654,527 16,522,493

33% Fund Balance Reserve Policy 17,245,227 19,353,954 19,785,348

Available General Fund Balance $ 7,097,367 $ 2,300,573 (3,262,855) _______________________
Source: City of Cathedral City.

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20 Appropriations Limit
Section 7910 of the Government Code of the State requires the City to adopt a formal appropriations limit for each fiscal year. The City’s appropriations lim it for Fiscal Year 2022 -23 is $ _________. The appropriations limit is not expected to have any impact on the ability of the City to budget and appropriate the 2022A Base Rental Payments and Additional Rental Payments as required by the Lease.

Economic Development
There is active economic development within the City. The following projects are examples of recently completed/underway projects. The City makes no assurance whether or when any of the below - listed projects will be completed.
[to come]

Assessed Valuation
The City’s largest revenue source, property tax, is imposed on real property (land and permanently attached improvements, such as buildings) and tangible personal property (moveable prop erty) located within the City. The assessed valuation of property in the City is established by the County Assessor, except for public utility property which is assessed by the California State Board of Equalization (the “Board of Equalization”). Assessed valuations are reported at 100% of the full cash value of the property, as defined in Article XIII A of the California Constitution. See “ – Limitations on Taxes and Appropriations” below.

Certain classes of property such as churches, colleges, not -for-profit hospitals and charitable institutions are exempt from property taxation and do not appear on the tax rolls.

Property tax revenue is recognized in the fiscal year for which the taxes have been levied providing they become available. Available means then due or past due and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter (not to exceed 60 days) to be used to pay liabilities of the current period. The County collects propert y taxes for the City.

Tax liens attach annually as of 12:01 A.M. on the first day in January proceeding the fiscal year for which the taxes are levied. Taxes are levied on both real and personal property as it exists on that date. The tax levy covers the fiscal period July 1 to June 30. All secured personal property taxes and one-half of the taxes on real property are due November 1; the second installment is due February 1. All taxes are delinquent, if unpaid, on December 10 and April 10, respectively. Unsecured personal property taxes become due on the first of March each year and are delinquent, if unpaid, on August 31.

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21 The following table sets forth the historical assessed valuations for secured and unsecured property within the City for the fiscal years shown.

Table 5
City of Cathedral City
Gross Assessed Value of All Taxable Property
(Fiscal Year ended June 30)
(in Thousands)
Fiscal
Year Secured Unsecured Total
Percentage
Change
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
_____________________
Source: ___________.

The following table sets forth property tax levies and collections for the City for the fiscal years show.

Table 6
City of Cathedral City
Tax Levies and Collections
(Fiscal Year ended June 30)

Fiscal
Year
Total Tax
Levy for
Fiscal Year
Collections within the
Fiscal Year of the Levy
Collections
in
Subsequent
Years
Total Collections to Date
Amount
Percentage
of Levy Amount
Percentage of
Levy

_______________________
Source: _________________.

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22 Principal Property Taxpayers
The following table sets forth the ten principal taxpayers in the City by taxable assessed value as of June 30, 2021.

Table 7

CITY OF CATHEDRAL CITY
Top Ten Taxpayers
(In Thousands)

Taxpayer
Taxable
Assessed Value
Percent of
Total Taxable
Assessed Value

1. MHC Date Palm LLC $ 35,465 0.68%

2. Welk Park North 33,408 0.64

3. M2 Palm Springs 21,307 0.41

4. CC RP LLC 21,053 0.40

5. Frome Development Omega 19,487 0.37

6. Robertas LP 18,750 0.36

7. T Alliance One Palm Springs LLC 18,552 0.36

8. Ocotillo Place Apartments LLC 18,101 0.35

9. Eddie R Fischer 17,891 0.34

10. Bobs LLC 17,374 0.33
Top Ten Total $221,388 4.24%
__________________________
Source: City of Cathedral City.

Redevelopment Agencies
Until February 1, 2012, the California Redevelopment Law (Part 1 of Division 24 of the Health & Safety Code of the State) authorized the redevelopment agency of any city or county to receive an allocation of tax revenues resulting from increases in assessed values of properties within designated redevelopment project areas (the “incremental value”) occurring after the year the project area was formed. In effect, local taxing authorities, such as the City, realized tax revenues only on the assessed value of such property at the time the redevelopment project was created for the duration of such redevelopment project.

The State Legislature approved two bills, AB X1 26 and AB X1 27, during the 2011-12 State budget process. AB X1 26 co ntemplated the elimination of redevelopment agencies State -wide, and AB X1 27 proposed to authorize the continued existence of redevelopment agencies that agreed to remit a percentage of their “tax increment” to the State’s taxing entities. The California Redevelopment Association and the League of California Cities filed a petition with the California Supreme Court (the “Court”), requesting the Court to review the constitutionality of AB X1 26 and AB X1 27. On December 29, 2011, the Court issued its opinion and upheld AB X1 26, but invalidated AB X1 27. As a result of the decision, all California redevelopment agencies, including the Former Redevelopment Agency, were dissolved as of February 1, 2012. Certain tax revenues allocable to the Former Redevelopment Agency will continue to be allocated to the Successor Agency to the Former Redevelopment Agency, to pay certain financial obligations approved by the Successor Agency’s Oversight Board and State Department of Finance (“DOF”), and some of those revenues may be redirected to other taxing agencies, such as the County, school districts and the City.

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23 Direct and Overlapping Debt
Set forth on the following table is a direct and overlapping debt report (the “Debt Report”) for the City prepared by California Mun icipal Statistics, Inc., dated as of _________, 2022. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith.

The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long -term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases long-term obligations issued by a public agency are payable from the general fund or other revenues of such public agency.

TABLE 8

CITY OF CATHEDRAL CITY
Statement of Direct and Overlapping Debt
(________, 2022)

______________
Source: California Municipal Statistics, Inc.

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24 General Fund Long-Term Obligations
The following obligations payable from the City’s General Fund are identified in the City’s audited financial statements for the Fiscal Year ended June 30, 2021. [confirm other long-term are all payable from the General Fund and are not attributable to other governmental activities]

Long-Term Debt
Balance at
July 1, 2020 Additions Deletions
Balance
June 30, 2021
Due within
One Year

2015A Bonds: $ 2,561,000 - ($277,000) $ 2,284,000 $ 287,000

Other Long-Term Liabilities:

Compensated absences 4,398,440 $ 2,961,059 (2,658,791) 4,700,708 2,350,000 Net Pension Liability 37,556,227 8,121,563 (4,773,538) 40,904,252 - Other post-employment benefits 73,734,143 24,342,257 (1,995,022) 96,081,378 - Claims and judgments payable 4,185,119 591,572 (1,180,974) 3,595,717 1,000,000 Total $122,434,929 $36,016,451 $147,566,055
_______________
Source: City of Cathedral City and APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF CATHEDRAL CITY FOR THE FISCAL YEAR ENDING JUNE 30, 2021 – Note 8 Long-Term Debt.” (1) Lease payments made from tax increment.

Labor Contracts
The following table sets forth the City’s employ ee groups. [Terms of existing contracts roll forward upon expiration until each group and the City agrees to a new contract.] Group
Budgeted
Number of
Employees
Date of Contract
Expiration

Total
_______________
Source: City of Cathedral City.

Pension Plans
Plan Description. All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost -Sharing Multiple -Employer Defined Benefit Pension Plan ( collectively, the “Plan”) administered by the California Public Employees’ Retirement System (“CalPERS”). The CalPERS Plan operates under the provisions of the California Public Employees’ Retirement Law (“PERL”), the California Public Employees’ Pension Reform Act of 2013 (“PEPRA”), and the regulations, procedures and policies adopted by the CalPERS Board of Administration. The Plan’s authority to establish and amend the benefit terms are set by the PERL and PEPRA, and may be amended by the California state legislature and in some cases require approval by the CalPERS Board.

The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate

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25 plan in the miscellaneous or safety risk pools. The City sponsors eight rate plans (three miscellaneous and five safety). Benefit provisions under the Plan are established by State statute and Local Government resolution. CalPERS issues publicly available reports with a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website, wwww.calpers.ca.gov.

Benefits Provided. CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries.

Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following:

The Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for the plan are applied as specified by the Public Employees’ Retirement Law.

The CalPERS Plan’s provisions and benefits in effect at June 30, 2021, are summarized as follows:

Safety (Police)
Tier 1 PEPRA
Hire date Prior to
January 1, 2013
On or After
January 1, 2013
Benefit formula 3% @ 55 2.7% @ 55
Benefit vesting schedule 5 Years’ service 5 years’ service Benefit payments Monthly for life Monthly for life
Retirement age 50 minimum 50 minimum
Monthly benefits, as a % of
eligible compensation

2.4%-3.0%
50 yrs – 55+ yrs

2.0%-2.7%
50 yrs – 57+ yrs
Required employee contribution rates 9.00% 12%
Required employer contribution rates 21.75% 13.04%
Required Employer UAL rate 22.14% 1.00%
Total Required Employer Contribution Rate 43.88% 14.04% Safety (Fire)
Tier 1 Tier 2 PEPRA
Hire date
Prior to
November 25, 2012
On or After
November 25, 2012
and Prior to
January 1, 2013
On or After
January 1, 2013
Benefit formula 3% @ 55 2% @ 55 2.7% @ 55
Benefit vesting schedule 5 Years’ service 5 Years’ service 5 years’ service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50 minimum 50 minimum 50 minimum
Monthly benefits, as a % of
eligible compensation

2.4%-3.0%
50 yrs – 55+ yrs

1.426%-2.0%
50 yrs – 55+ yrs

1.426%-2.0%
50 yrs – 57+ yrs
Required employee contribution rates 9.00% 7.00% 10%
Required employer contribution rates 21.75% 14.81% 11.11% Required Employer UAL rate 18.54% 0.71% 0.84%
Total Required Employer Contribution Rate 40.29% 15.52% 11.95% Miscellaneous
Tier 1 Tier 2 PEPRA
Hire date
Prior to
November 25, 2012
On or After
November 25, 2012
and Prior to
January 1, 2013
On or After
January 1, 2013
Benefit formula 2% @ 55 2% @ 60 2% @ 62
Benefit vesting schedule 5 Years’ service 5 Years’ service 5 years’ service Benefit payments Monthly for life Monthly for life Monthly for life Retirement age 50 minimum 50 minimum 52 minimum

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26 Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is based on the estimated amount necessary to pay the Plan’s allocated share of the risk pool’s costs of benefits earned by employees during the year, and any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. The City’s contributions to the Plan for the year ended June 30, 2021 were $7,127,388.

Net Pension Liability. The City’s net pension liability for the CalPERS Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. As of June 30, 2020, the City reported a net pension liability for its proportionate share of the net pension liability of the Plan of $40,904,252. See APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF CATHEDRAL CITY FOR FISCAL YEAR ENDED JUNE 30, 2021” changes in Net Pension Liability and Proportionate Share of Net Pension Liability and asset allocation and return information.

A summary of principal assumptions and methods used to determine the net pension liability is as follows:

Actuarial Cost Method Entry Age Normal

Actuarial Assumptions:

Discount Rate 7.15%

Inflation 2.50%

Salary Increases Varies by Entry Age and Service

Mortality Rate Table Derived using CalPERS’ Membership Data for all Funds

Post-Retirement Benefit Increase Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies
____________________
Source: APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF CATHEDRAL CITY FOR FISCAL YEAR ENDED JUNE 30, 2021.”

Other Post-Employment Benefits. The City provides certain health care benefits for employees who retire directly from the City. As of June 30, 2021, there were 177 active employees covered and 122 retirees receiving such benefits.

Employees taking a qualified retirement under the CalPERS system within 120 days of separation from the City may elect to participate in such group health insurance policies as provided by the City under the following conditions: (a) the unit member must be age 50 and have worked for the City at least 5 years prior to retiring; and (b) all retired unit members shall be eligible for a City -paid contribution up to the applicable maximum (caps) for single, single plus one, and family coverage. Eligible retired employees (annuitants) under the Public Employees’ Medical and Hospital Care Act (“PEMHCA”), Government Code Section 22750, et seq. are subject to PEMHCA laws.

Monthly benefits, as a % of
eligible compensation

1.426%-2.418%
50 yrs – 63+ yrs

1.092%-2.418%
50 yrs – 63+ yrs

1.0%-2.5%
52 yrs – 67+ yrs
Required employee contribution rates 7.00% 7.00% 6.75% Required employer contribution rates 11.03% 8.79% 7.73% Required Employer UAL rate 16.54% 0.41% 0.44%
Total Required Employer Contribution Rate 27.58% 9.20% 8.17%

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27 Under PEMHCA’s “equal contribution rule” (Government Code Section 22892), the City is required to contribute the same premium amount for both active employees and annuitants, but not less than “the PEMHCA minimum,” which is an amount adjusted annually by CalPERS to reflect any change in the medical care component of the Consumer Price Index. The “PEMHCA” minimum for 2021 is $143 per month. Under the “equal contribution rule,” reducing the City’s contribution for future hires’ retiree benefits require the same contribution reduction for active employees’ benefits. To avoid decreasing the City’s contribution towards the cost of medical premiums for active employees, the City can pay directly to CalPERS the “PEMHCA minimum” amount for active emplo yees and then make the remainder of the City’s premium contribution for active employees under the premium cost -share formula. For CalPERS’ purposes, the City pays only the “PEMHCA minimum” for active employees. The employees continue to receive the City contribution to medical premiums required by the City’s cost-share formula. In addition to group health insurance, the City will continue to pay the full premiums for both dental and vision insurance, as applicable to each of the respective labor unit agree ments as long as the total premiums are under the respective caps. The plan is a single- employer defined benefit plan. Since no assets are legally segregated for the sole purpose of paying benefits under the Plan, the plan does not issue a separate financ ial report.

For additional detail, see APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF CATHEDRAL CITY FOR FISCAL YEAR ENDED JUNE 30, 2021.”
The plan is funded on a pay -as-you-go basis. There is no requirement imposed by CalPERS to contribute any amount beyond the pay -as-you-go contributions. No additional contributions have been made to date. The annual contribution is based on the actuarially determined contribution. For the measurement date ended June 30, 2020, the City’s cash contributions were $1,995,022 in total payments, which were recognized as a reduction to the OPEB liability.

The City’s Total OPEB measured liability as of June 30, 2020 was determined by an actuarial valuation dated January 1, 2019 that was rolled forward to determine the June 30, 2020 total OPEB liability.

As of June 30, 2020, the City reported a total OPEB liability of $96,081,378.

A summary of principal assumptions and methods used to determine the total OPEB liability is as follows:

Actuarial valuation date January 1, 2019

Contribution Policy No pre-funding

Discount Rate 2.21% at June 30, 2020 (Bond Buyer 20-bond Index)

3.50% at June 30, 2019 (Bond Buyer 20-bond Index)

Actuarial cost method Entry age normal cost

Amortization method Level percentage of payroll, closed

Actuarial assumptions:

Inflation 2.75%
Projected salary increases 3.00%
Healthcare cost trend 7.5% (non-Medicare) and 6.5% (Medicare) for 2020, reduced each year thereafter until an ultimate rate of 4.0% is reached in 2076 and later years

Retirement age Based on CalPERS 1997-2015 Experience Study ____________________
Source: APPENDIX B – “AUDITED FINANCIAL STATEMENTS OF THE CITY OF CATHEDRAL CITY FOR FISCAL YEAR ENDED JUNE 30, 2021.”

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28 STATE OF CALIFORNIA BUDGET INFORMATION
State Budget
General. Information about the State budget is regularly available at var ious State-maintained websites. Text of proposed and adopted budgets may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets and the impact of those budgets on cities in the State, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the City or the Authority, and the City and the Authority can take no responsibility fo r the continued accuracy of these internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references. 2021-22 State Budget
On July 16, 2021, Governor Newsom signed into law the Fiscal Year 2021 -22 State Budget (the “2021-22 State Budget”). The 2021 -22 State Budget totals about $262.6 billion. General Fund spending would increase over Fiscal Year 2020 -21 by about $30.4 billion (18.3%) to $196.4 billion. The State is projected to end the Fiscal Year 2020-21 with available general fund reserves that include: $15.8 billion in the Budget Stabilization Account (the General Fund’s “rainy -day” fund) for fiscal emergencies; $900 million in the Safety Net Reserve (used to maintain benefits and services for CalWORKs and Medi -Cal participants during economic downturns) and $4.5 billion in the Public School System Stabilization Account (the Proposition 98 “rainy-day” fund used to lessen the impact of State revenue volatility on K-14 schools). The multi -year forecast reflects a budget roughly in balance; however, risks to the economic forecast remain, including a stock market decline that would significantly reduce State revenues. 2022-23 State Budget
Governor’s Propo sed Fiscal Year 2022 -23 Budget. On January 10, 2022, Governor Gavin Newsom presented his proposed Fiscal Year 2022 -23 State Budget (the “Proposed Budget”) to the California Legislature. The Proposed Budget totals approximately $286.4 billion. The Proposed Budget projects that the State will maintain a surplus of $45.7 billion, which includes $20.6 billion in the State’s General Fund for discretionary purposes, $16.1 billion in additional Proposition 98 funding for K -14 education, and $9 billion in reserve d eposits and supplemental pension payments. The Proposed Budget allocates 86 percent of the discretionary surplus to one-time investments.

The Proposed Budget also reflects $34.6 billion in budgeted reserves, including $20.9 billion in the Proposition 2 Budget Stabilization Account (Rainy Day Fund) for fiscal emergencies, $9.7 billion in the Public School System Stabilization Account, $900 million in the Safety Net Reserve, and $3.1 billion in the State’s operating reserve. Under th e Proposed Budget, the Rainy Day Fund would reach its constitutional maximum limit of 10 percent of General Fund revenues, requiring $2.4 billion to be dedicated for infrastructure investments in 2022 -23. The Proposed Budget accelerates the pay -down of Sta te retirement liabilities as required by Proposition 2, with $3.9 billion in additional payments in 2022-23 and nearly $8.4 billion projected to be paid over the subsequent three years.

Significant features of the Proposed Budget affecting public agencies in California include:

• COVID-19 Pandemic Response – $1.4 billion in early action monies for efforts to increase vaccination rates and expansion of testing.

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29 • Education and Parents Agenda – $119 billion in total funding for K-12 education; K-12 per-pupil funding totals $15,261 in Proposition 98 General Fund monies and $20,855 per pupil from all funding sources; $1 billion in Proposition 98 General Fund monies to begin universal transitional kindergarten to all four -year-olds; $3.4 billion Proposition 98 General Fund ongoing to support access to expanded -day, full-year instruction for all elementary school students; $937 million Proposition 98 General Fund to support integrating arts and music into school enrichment programs; expansion of the Young Child Tax Credit to families that file returns without income and proposes to index the credit to inflation.

• Transportation – $9.1 billion ($4.9 billion General Fund and $4.2 billion Proposition 1A bond funds) to support the development of high-speed rail in California, regional transit and rail projects, bicycle a nd pedestrian projects, and climate adaptation projects; $1.3 billion General Fund for improvements to the State’s goods movement infrastructure, including improving date interconnectivity to reduce congestion and increase supply chain efficiency; $6.1 billion over five years to support zero -emission vehicles and charging infrastructure in low -income communities across the State.

• Energy – $2 billion in General Fund appropriations over two years to provide incentives for long- duration-storage projects, renewable hydrogen, and industrial decarbonization including the food processing sector.

• CalWORKs Grant Increase – 7.1 percent increase to CalWORKs Maximum Aid Payment levels, with an estimated cost of $200.7 million in 2022-23. These costs are funded via the Child Poverty and Family Supplemental Support Subaccount of the 1991 Local Revenue Fund.

• Homelessness – $2 billion over two years, in addition to last fiscal year’s three -year $12 billion allocation, to continue the State’s efforts to address homelessness by investing in behavioral health housing and encampment cleanup grants.

• Crime – $285 million General Fund allocation over three years for grants to bolster local law enforcement response to organized retail theft crime; $25 million to provide matchin g grants for local government firearm buy-back programs; $20 million to support small businesses affected by retail theft; $20 million for a drug interdiction program at the California-Mexico border.

• Wildfires – $1.5 billion to significantly increase the State’s ability to prevent wildfires by proposing $1.2 billion over two years for investments in forest health and fire prevention, including reforestation efforts; $400 million to support CAL FIRE firefighters in addressing the effects of the recent prolonged wildfire seasons.

• Drought – $750 million General Fund appropriation to address immediate drought response needs, including $250 million set aside as contingency. This funds are in addition to last fiscal year’s budget appropriation of $5.2 billion over three years to support drought response and long -term water sustainability.

• Workforce Training and Opportunity – $1.5 billion Proposition 98 General Fund appropriation to support development of college and career pathways focused on education, health care, technology, and climate-related fields; $1.7 billion to expand the State’s health and human services workforce.

LAO Overview of Proposed 2022 -2023 State Budget. The Legislative Analyst’s Office (the “LAO”) is a nonpartisan State office which provides fiscal and policy information an d advice to the State Legislature. On January 13, 2022, the LAO released its report on Governor Newsom’s Proposed 2022 -23 State Budget entitled “The 2022-23 Budget: Overview of the Governor’s Budget.”

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30 In its report, the LAO states that the Governor’s new s pending proposals exceed the administration’s estimates of the Budget’s capacity in future years. The LAO also advises that the State Legislature provide greater appropriations to the State budget reserves, as the reserves – aside from the Proposition 98 reserves which have increased from zero in fiscal year 2019-20 to nearly $10 billion in the Proposed Budget – have not increased as a share of other General Fund spending and are currently below their pre-pandemic share.

The LAO finds that the Proposed Budget is projected to end fiscal year 2022-23 with approximately $24.8 billion in total general purpose reserves, representing an increase of $4.3 billion from the budgeted reserves level of $20.7 billion in fiscal year 2021-22 as set forth in the 2021-22 State Budget. The increase in the reserves is the result of three factors: (1) a $1.6 billion deposit in the State’s Budget Stabilization Account, (2) a $3.5 billion “true-up” deposit in the Budget Stabilization Account for 2020-21 and 2021-22 primarily due to higher estimates of capital gains revenues from those fiscal years, and (3) a decrease in the discretionary Special Fund for Economic Uncertainties of nearly $1 billion.

Future State Budgets
No prediction can be made by the City as to whether the State w ill encounter budgetary problems in future fiscal years, and if it were to do so, it is not clear what measures would be taken by the State to balance its budget, as required by law. In addition, the City cannot predict the final outcome of future State budget negotiations, the impact that such budgets will have on City finances and operations or what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures. There can be no assurance that actions taken by the State to address its financial condition will not materially adversely affect the financial condition of the City. Current and future State budgets will be affected by national and State economic conditions and other factors, in cluding the current economic downturn, over which the City has no control.

RISK FACTORS
Purchase of the 2022A Bonds will constitute an investment subject to certain risks, including the risk of nonpayment of principal and interest. Before purchasing any of the 2022A Bonds, prospective investors should carefully consider, among other things, the risk factors described below. However, the following is not meant to be an exhaustive listing of all the risks associated with the purchase of the 2022A Bonds. Moreover, the order of presentation of the risk factors does not necessarily reflect the order of their importance.
2022A Base Rental Payments Are Not Debt; 2022A Bonds are Limited Obligations The obligation of the City to make the 2022A Base Rental Payments u nder the Lease does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the 2022A Bonds nor the obligation of the City to make 2022A Base Rental Payments constitutes a debt of the City, the State or any political subdivision thereof (other than the Authority) within the meaning of any constitutional or statutory debt limitation or restriction.

The 2022A Bonds are not general obligations of the Authority, but are limited obligations payable solely from and secured by a pledge of Revenues and amounts held in the funds and accounts created under the Indenture, consisting primarily of applicable 2022A Base Rental Payments. The Authority has no taxing power.

The 2022A Bonds are being issued by the Authority pursuant to the Act. The Supreme Court of the State in its 1998 decision of Rider v. City of San Diego, 18 Cal. 4th 1035, upheld the validity of a joint powers agency financing and found that bonds issued pursuant to the Act and payable from lease payments

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31 made pursuant to a lease with the City of San Diego were not subject to the State constitutional provisions that require two-thirds voter approval of indebtedness incurred by a city, county or school district. No voter approval of the 2022A Bonds or the Lease has been sought.

Although the Lease does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease to pay the 2022A Base Rental Paym ents from any source of legally available funds and the City has covenanted in the Lease that, for so long as the Leased Property is available for its use, it will make the necessary annual appropriations within its budget for the 2022A Base Rental Payments. The City is currently liable and may become liable on other obligations payable from general revenues, some of which may have a priority over the 2022A Base Rental Payments, or which the City, in its discretion, may determine to pay prior to the 2022A Base Rental Payments.

The City has the capacity to enter into other obligations payable from the City’s General Fund, without the consent of or prior notice to the Owners of the 2022A Bonds. To the extent that additional obligations are incurred by the Ci ty, the funds available to make 2022A Base Rental Payments may be decreased. If the City’s revenue sources are less than its total obligations, the City could choose to fund other activities before making 2022A Base Rental Payments and other payments due under the Lease. The same result could occur if State constitutional expenditure limitations were to prohibit the City from appropriating and spending all of its otherwise available revenues.

Abatement
The obligation of the City to pay 2022A Base Rental Payments and Additional Rental Payments shall be abated during any period in which by reason of any damage, destruction, condemnation or title defect there is substantial interference with the use by the City of the Leased Property or any portion thereof.

Such abatement shall be in an amount such that the resulting 2022A Base Rental Payments in any year during which such interference continues does not exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction, t aking or title defect does not substantially interfere with the City’s use and right of possession, as evidenced by a Certificate of the City. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation, taking or title defect and, with respect to damage to or destruction of the Leased Property, ending with the substantial completion of the work of repair or replacement of the Leased Property, or the portion thereof so damaged o r destroyed, and the term of the Lease shall be extended as provided in the Lease. Notwithstanding the foregoing, to the extent that moneys are available for the payment of base rental payments in any of the funds and accounts established under the Indenture, such base rental payments shall not be abated but shall be payable by the City as a special obligation payable solel y from such funds and accounts. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Abatement of Rental.”
Risk of Uninsured Loss
The City covenants under the Lease to maintain certain insurance policies on the Leased Property.

These insurance policies do not cover all types of risk. The Leased Property could be damaged or destroyed due to earthquake or other casualty for which the Leased Property is uninsured. The Lease does not require earthquake insurance. Additionally, the Leased Property could be the subject of an eminent domain proceeding. Under these circumstances an abatement of 2022A Base Rental Payments could occur and could continue indefinitely. There can be no assurance that the providers of the City’s liability will in all events be able or willing to make payments under the respective policies for such loss should a claim be made under such policies. Further, there can be no assurances that amounts received as proceeds from insurance or from condemnation of the Leased Property will be sufficient to repair the Leased Property or to redeem the 2022A Bonds secured by 2022A Base Rental Payments.

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32 Certain of the City’s insurance policies provide for deductibles up to $500,000. Should the City be required to meet such deductible expenses, the availability of General Fund revenues to make 2022A Base Rental Payments may be correspondingly affected.

Eminent Domain
If the Leas ed Property is taken permanently under the power of eminent domain or sold to a government threatening to exercise the power of eminent domain, the term of the Lease will cease as of the day possession is taken. If less than all of the Leased Property is t aken permanently, or if the Leased Property or any part thereof is taken temporarily, under the power of eminent domain, (a) the Lease will continue in full force and effect and will not be terminated by virtue of such taking, and (b) there will be a partial abatement of base rental payments as a result of the application of net proceeds of any eminent domain award to the prepayment of the base rental payments, in an amount to be agreed upon by the City and the Authority such that the resulting base rental payments represent fair consideration for the use and occupancy of the remaining usable portion of the Leased Property. The City covenants in the Lease to contest any eminent domain award which is insufficient to either: (i) prepay the base rental payments in whole, if all the Leased Property is condemned; or (ii) prepay a pro rata share of base rental payments, in the event that less than all of the Leased Property is condemned.

City General Fund
In General. The 2022A Base Rental Payments and other payments due under the Lease are payable from funds lawfully available to the City. If the amounts which the City is obligated to pay in a fiscal year exceed the revenues for such year, the City may choose to make some paym ents rather than making other payments, including 2022A Base Rental Payments, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare. For more information regarding California Constitutional limits on expenditures see “LIMITATIONS ON REVENUES AND APPROPR IATIONS – Property Tax Limitations – Article XIIIA, XIIIB, XIIIC (Proposition 218).” Risk of Increased Expenditures . Under the Lease, provided the City is not currently in default thereunder, the City is permitted to expend for any municipal purpose or ot herwise incur other evidences of indebtedness or other obligations payable from the City’s General Fund without the consent of Owners of the 2022A Bonds. To the extent that additional obligations are incurred by the City, the funds available to pay 2022A Base Rental Payments could decrease.

Risk of Decreased Revenues. A variety of national, state or regional factors, which are beyond the control of the City’s fiscal policies, as well as the City’s fiscal policies could reduce the amount of th e City’s General Fund revenues. To the extent that City revenues decrease, the funds available to pay 2022A Base Rental Payments could decrease. See “THE CITY.”
Public Health Emergencies
In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. On February 11, 2020 the World Health Organization (“WHO”) declared the COVID-19 outbreak to be a pandemic, and states of emergency have been declared from time to time by the City, the Governor of the State and the President of the United States. Beginning in early 2020, to mitigate the public health impacts from COVID-19, all counties in the Bay Area implemented and revised, from time to time, shelter -in-place (“Shelter-in-Place”) emergency orders, which dir ected individuals to stay home, except for limited travel for the conduct of essential services. The outbreak resulted in the imposition of restrictions on mass gatherings, universities and schools. Many retail establishments (including restaurants, bars a nd nightclubs, entertainment venues and gyms) were closed or restricted in

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33 response to the Shelter -in-Place orders. The spread of COVID -19 and the public health responses by government authorities contributed to negative economic impacts throughout the world, including the City.

Variants of the coronavirus responsible for COVID -19 could lead to greater disease rates. The longer-term effectiveness of vaccines is yet unproven, and future vaccination rates and any necessary booster vaccinations cannot be pred icted with certainty. There can be no assurances against a resurgence of the disease and re-imposition of Shelter-in-Place or similar or more restrictive public health restrictions in response. Thus, the duration, severity and economic effects of the pande mic remain uncertain in many respects. The ultimate impact of COVID -19 on the operations and finances of the City is not predictable, bus such impacts could be material and adverse.

Bankruptcy
A bankruptcy petition may be filed by the City. In particular , the City may file a petition under Chapter 9 (“Chapter 9”) of Title 11 of the United States Code (the “Bankruptcy Code”), provided that it complies with requirements of Section 53760 et seq. of the Government Code of the State. Under the Government Code, a local public entity, including the City, is prohibited from filing under the Bankruptcy Code unless it has participated in a specified neutral evaluation process with interested parties, as defined, or it has declared a fiscal emergency and has adopted a resolution by a majority vote of the governing board at a noticed public hearing that includes findings that the financial state of the local public entity jeopardizes the health, safety, or well-being of the residents of the local public entity’s jurisdiction or service area absent bankruptcy protections.

If the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Among the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other acti on for the purpose of recovering or collecting a claim against the City; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may have a priority of payment superior to that of the 2022A Base Rental Payments under the Lease as they relate to Revenues due to Owners of 2022A Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the City’s debt (a “Plan”) without the consent of the Trustee or all of the Owners of 2022A Bonds, which Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable.

In addition, the City could either reject the Lease or assume the Lease despite any provision of the Lease which makes the bankruptcy or insolvency of the City an event of default thereunder. If the City rejects the Lease, the Trustee, on behalf of the Owners of the 2022A Bonds, would have a pre-petition claim that may be limited under the Bankruptcy Code and treated in a manner under a Plan over the objections of the Trustee or Owners of the 2022A Bonds. Moreover, such rejection would terminate the Lease and the City’s obligations to make payments thereunder.

Further, t he Authority is a public agency and, like the City, is not subject to the involuntary procedures of the Bankruptcy Code. The Authority may also seek voluntary protection under Chapter 9 of the Bankruptcy Code. In the event the Authority were to become a debtor under the Bankruptcy Code, the Authority would be entitled to all of the protective provisions of the Bankruptcy Code as applic able in a Chapter 9 proceeding. Such a bankruptcy could adversely affect the payments under the Indenture. Among the adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the Authority or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the Authority; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may

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34 have priority of payment superior to that of the Owners of the 2022A Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the Authority’s debt without the consent of the Trustee or all of the Owners of the 2022A Bonds, which plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable. However, the bankruptcy of the Authority, and not the City, should not affect the Trustee’s rights under the Lease. The Authority could still challenge the assignment, and the Trustee and/or the Owners of the 2022A Bonds could be required to litigate these issues in order to protect their interests.

The adjustment plans approved by the Bankruptcy Courts in connection with the bankruptcies of the cities of Vallejo, San Bernardino and Stockton resulted in significant reductions in the amounts payable by the cities under lease revenue obligations substantially identical or similar to the 2022A Bonds. The City can provide no assurances about the outcome of the bankruptcy cases of other California municipalities or the nature of any adjustment plan if it were to file for bankruptcy.

The various legal opinions to be delivered concurrently with the 2022A Bonds (including Bond Counsel’s approving opinion) will be qualified as to the enforceability of the various agreements relating to the 2022A Bonds by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by general principles of equity applied in the exercise of judicial discretion.

State Finances
According to the State Constitution, the Governor is required t o propose a budget to the State Legislature by no later than January 10 of each year, and a final budget must be adopted by the vote of each house of the Legislature no later than June 15, although this deadline has been breached in the past. In November 2010, the voters of the State passed Proposition 25, which reduced the vote required to adopt a budget to a majority vote of each house and which provided that there would be no appropriation from the current budget or future budget to pay any salary or re imbursement for travel or living expenses for members of the Legislature for the period during which the budget was presented late to the Governor. The State budget becomes law upon the signature of the Governor, who may veto specific items of expenditure.

The State’s financial condition and budget policies affect communities and local public agencies throughout California. State budgets are affected by regional, national or even international economic conditions and a multitude of other factors over which the City has no control. The City cannot give any assurances regarding the financial conditions of the State during any period of time. The City also cannot predict what measures the State will adopt to respond to any future financial difficulties. The City can provide no guarantees regarding the outcome of future State budget negotiations, the actions that will be taken in the future by the State Legislature and Governor to deal with changing State revenues and expenditures, or the impact that such budg ets or actions will have on the City’s finances and operations.

Some of the State’s budget solutions have caused in the past, and may cause in the future, increased financial stress to cities, counties and other local governments by: (i) decreasing local r evenues (for example, the property tax, road improvement funding, public safety or other categorical funded initiatives), or (ii) increasing directly or indirectly demand for local programs (such as public safety or indigent health programs).

Information about the State budget and State spending is available at various State -maintained websites. Text of proposed and adopted budgets may be found at the website of the State Department of Finance, www.dof.ca.gov. An analysis of the budget is posted by the Of fice of the Legislative Analyst at www.lao.ca.gov. In addition, various official statements for State -issued bonds, many of which contain a summary of the current and past State budgets may be found at the website of the State Tr easurer, www.treasurer.ca.gov. None of the websites referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. The City makes no representation concerning,

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35 and does not take any responsibility for, the accuracy or timeliness of information posted on such websites or the continued maintenance of such websites by the respective entities.

No Liability of Authority to the Owners
Except as expressly provided in the Indenture, the Authority will not have any obligation or liability to the Owners of the 2022A Bonds with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease or the Indenture, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Indenture.

No Limitation on Incurring Additional Obligations
Neither the Lease nor the Indenture contains any limitations on the ability of the City to enter into other obligations that may constitute additional claims against its General Fund revenues. To the extent that the City incurs additional obligations, the funds available to make 2022A Base Rental Payments may be decreased. The City is currently liable on other obligations payable from General Fund revenues and expects to enter into other such obligations in the future. Such obligations may impose significant additional burdens on the City’s General Fund.

Natural Disasters
General. From time to time, the City is subject to natural calamities which could result in the substantial interference with the use and occupancy of the Leased Property, which could re sult in 2022A Base Rental Payments being subject to abatement or an adverse impact on the City’s General Fund. Under such circumstances, no assurance can be given that the City would have insurance or other resources available to make repairs to the Leased Property or to make 2022A Base Rental Payments under the Lease.

Geological and Seismic. The San Andreas Fault System runs through the northeastern portion of the Valley from along the east shore of the Salton Sea to the San Bernardino Mountains at Mission Creek.

The San Jacinto Fault System runs along western portion of the San Jacinto Mountains but is very active and capable of generating strong ground shaking in the Coachella Valley. Both fault systems have complex structural characteristics and slip rates.

A major earthquake could cause widespread destruction and significant loss of life in a populated area such as the City. If an earthquake were to substantially damage or destroy taxable property within the City, a reduction in taxable values of property in the City and a reduction in revenues available to the General Fund to make 2022A Base Rental Payments would be likely to occur and therefore, Revenues available to pay debt service on the Bonds could be materially adversely affected. Seismic activity may also reduce or eliminate the use and occupancy of the Leased Property by the City. There is no assurance that, in the event of a natural disaster, sufficient City reserves or Federal Emergency Management Agency assistance would be available for the repair or replacement of any Leased Property.

Flooding. The City is susceptible to flooding primarily from rainstorm flooding. The City most recently experienced damage resulting from the rainstorms and flooding that occurred throughout Southern California from February 10 - 15, 1992. The City is bisected by the Walnut Creek Wash, a flood control project. Prior to the flood control system being built, Walnut Creek, which flows across the central section of the City from east to west, would overflow its banks.

Wildfires. In recent years, portions of California have experienced wildfires that have burned thousands of acres and destroyed thousands of homes and structures, even in areas not previously thought to be prone to wildfires. Such areas affected by wildfires are more prone to flooding and mudslides that can further lead to the destruction of homes. Fires may cause damage to the Leased Property, which could result

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36 in 2022A Base Rental Payments being subject to abatement or an adverse impact on the City’s Gene ral Fund.

The City’s emergency response to such an event s may add unanticipated expenditures to the General Fund budget, some or all of which may not be reimbursed by federal or state disaster funding, and, if reimbursed, may not be received by the City in a timely manner. This could lead to reduced ability by the City to make 2022A Base Rental Payments and therefore, Revenues available to pay debt service on the 2022A Bonds could be materially adversely affected. Such event could also result in substantial damage to properties in the City, which, in turn, could substantially reduce the value of such properties and could affect the ability or willingness of the property owners to pay their property taxes or of businesses to operate and generate sales tax.

Other Force Majeure Events. The Leased Property may also be at risk from other events of force majeure, such as damaging storms, explosions, strikes, sabotage, riots and spills of hazardous substances, among other events. The City cannot predict what force majeure events may occur in the future.

Climate Change
Numerous scientific studies on global climate change show that, among other effects on the global ecosystem, sea levels will rise, extreme temperatures will become more common, wildfires will becom e more common and intense, and extreme weather events will become more frequent as a result of increasing global temperatures attributable to atmospheric pollution. For example, the Fourth National Climate Assessment, published by the U.S. Global Change Re search Program, in November 2018 (NCA4) finds that more frequent and intense extreme weather and climate -related events, as well as changes in average climate conditions, are expected to continue to damage infrastructure, ecosystems and social systems over the next 25 to 100 years.

On November 13, 2013, the City adopted a Climate Action Plan for the development and implementation of policies and programs to reduce greenhouse gas emissions within the City. The Plan identifies 77 specific action items or measures to achieve such reductions.

Hazardous Substances
The public works activities of the City may, from time to time, result in the use of hazardous substances on the facilities owned and operated by the City, including, but not limited, to the Lease d Property. Accordingly, it is possible that spills, discharges or other adverse environmental consequences of such use in the future could cause an adverse effect on the fair rental value of the Leased Property and lead, in an extreme case, to abatement, in whole or in part, of all or a portion of the 2022A Base Rental Payments. See “RISK FACTORS – Abatement” above.

Cybersecurity
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations and finances. As a recipient and provider of personal, private or other electronic sensitive information, the City is potentially subject to multiple cyber threats including, but not limited to, hacking, viruses, malware, ransomware and other attacks on computer and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to the City’s systems for the purposes of misappropriating assets or information or causing operational disruption or damage.

The City provides training to its staff on phishing and safe browsing and how to avoid potential cyber threats. However, no assurances can be given that the security and operational control measures of the City will be successful in guarding against any and each cyber threat or breach.

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37 Limitations on Remedies
The enforceability of the rights and remedies of the owners of the 2022A Bonds and the Trustee, and the obligations incurred by the Authority and the City, respectively, may be subject to the following, among others: the limitations on legal remedies against joint powers authorities and cities in California; the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; principles of equity that may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the U.S. Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose.

Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the 2022A Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitations or modification of their rights. See also, “Bankruptcy” above.

Limitations on Remedies under the Lease
If an event of default occurs and in continuing under the Lease, there is no remedy of acceleration of any Base Rental Payments which have not come due, and no right for the Authority, the Trustee or any Owner to terminate the Lease and re -let the Leased Property. The remedy provided under the Lease is to exercise any action at law or in equity necessary or desirable to collect the amounts then due and owing under the Lease. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS.”
Substitution of Property
Pursuant to the Lease, the City will have, so long as the Lease is in effect, the option at any time and from time to time, to substitute other real property for any portion of the Leased Property or release any identifiable real property and/or improvements constituting the Leased Property, provided that the City shall satisfy all of the requirements set forth in the Lease. See APPENDIX C – “SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS – The Lease – Substitution and Release of Property.”
Secondary Market Risk
There can be no assurance that there will be a secondary market for purchase or sale of the 2022A Bonds, and from time to time there may be no market for them, depending upon prevailing mar ket conditions, the financial condition or market position of firms who may make the secondary market and the financial condition of the City.

LIMITATIONS ON REVENUES AND APPROPRIATIONS
There are a number of provisions in the State of California Constitution that limit the ability of the City to raise and expend revenues. Contained below is a description of some of these limitations. In addition to the ones discussed in this section below, other initiative measures could be adopted from time to time further affecting the City’s revenues and finances.

Property Tax Limitations – Article XIIIA, XIIIB, XIIIC (Proposition 218) Article XIIIA of the California Constitution limits the amounts of ad valorem tax on real property to 1% of “full cash value” as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the City Assessor’s valuation of real property as shown on the 1975 -76 tax bill under `full cash value’, or thereafter the appraised value of real property when purchased, newl y constructed, or a change

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38 in ownership has occurred after the 1975 assessment period.” Furthermore, all real property valuation may be increased to reflect the inflation rate, as shown by the consumer price index, not to exceed 2% per year, or may be reduced in the event of declining property values caused by damage, destruction or other factors.

Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978 by two-thirds of the voters voting on the proposition approving such bonds, and requires a vote of two-thirds of the qualified electorate to impose special taxes, while totally precluding the imposition of any additional ad valorem , sales or transaction tax on real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State legislature to change any State tax law resulting in increased tax revenues.

Article XIIIB of the California Constitution limits the annual appropriations from the proceeds of taxes of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the governmental entity. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amount permitted to be spent, the excess would have to be returned by revising tax or fee schedules over the subsequent two years.

On November 5, 1996, California voters approved an initiative to amend the California Constitution known as the Right to Vote on Taxes Act (“Proposition 218”), which added Article XIIIC and XIIID to the California Constitution. Among other provisions, Proposition 218 requires majority voter approval for the imposition, extension or increase of general taxes and two -thirds voter approval for the imposition, extension or increase of special taxes by a local government, which is defined in Proposition 218 to include cities. Proposition 218 also provides that any general tax imposed, extended or increased without voter approval by any local government on or after January 1, 1995 and prior to November 6, 1996 will continue to be imposed only if approved by a majority vote in an election held within two years of November 6, 1996. Proposition 218 also provides that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. This extension of the initiative power is not limited by the terms of Proposition 218 to impositions after November 6, 1996 and absent other legal authority, could r esult in retroactive reduction in any existing taxes, assessments, fees and charges. In addition, Proposition 218 limits the application of assessments, fees and charges and requires certain existing, new and increased assessments, fees and charges to be submitted to property owners for approval or rejection, after notice and public hearing. Neither the City nor the Authority expects the provisions of Proposition 218 to have any immediate material effect on the revenues from which Base Rental Payments are expected to be appropriated.

Article XIIIA Implementing Legislation
Legislation enacted by the California Legislature to implement Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, notwithstanding any other law, local agencies may n ot levy any property tax, except to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article XIIIA of $4.00 per $100 assessed valuation (based on the traditional prac tice of using 25% of full cash value as the assessed value for tax purposes).

The legislation further provided that, for Fiscal Year 1978-79 only, the tax levied by each county was to be appropriated among all taxing agencies within the county in proportion to their average share of taxes levied in certain previous years.

Future assessed valuation growth allowed under Article XIIIA (i.e., new construction, change of ownership, and 2% annual value growth) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools will share the growth of “base” revenue from the tax rate area. Each year’s growth allocation becomes part of each agency’s allocation in the following y ear. The Authority is unable to predict the nature or magnitude of

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39 future revenue sources that may be provided by the State to replace lost property tax revenues. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above those described above, even with the approval of the affected voters.

Challenges to Article XIIIA
There have been many challenges to Article XIIIA of the California Constitution. The United States Supreme Court heard the appeal in Nordlinger v. Hahn, a challenge relating to residential property.

Based upon the facts presented in Nordlinger, the United States Supreme Court held that the method of property tax assessment under Article XIIIA did not violate the federal Constitution. Neither the Authority nor the City can predict whether there will be any future challenges to California’s present system of property tax assessment and cannot evaluate the ultimate effect on the Agency’s receipt of tax increment revenues should a future decision hold unconstitutional the method of assessing property.

Statutory Revenue Limitations – Proposition 62
Proposition 62 is a statewide statutory initiative adopted by the voters at the November 4, 1986 general election. It added Sections 53720 to 53730 to the Government Code to require that all new local taxes be approved by the voters. The statute provides that all local taxes are either general taxes or special taxes. General taxes are imposed for general governmental purposes. Special taxes are imposed for specific purposes only. General taxes may not be imposed by local government unless approved by a two -thirds vote of the entire legislative body and a majority of the voters voting on the proposed general tax. Special taxes may not be imposed by local government unless approved by a majority of the entire legislative body and by two -thirds of the voters voting on the special tax. Soon after Proposition 62 was adopted by the voters, legal challenges to taxes adopted contrary to its provision s were filed. In 1991, in the most significant case, City of Woodlake v. Logan , the California Court of Appeal held that the statutory voter approval requirement for gener al taxes was unconstitutional. The California Supreme Court refused to review Woodlake.

On September 28, 1995, the California Supreme Court, on a 5-2 vote, in a decision entitled Santa Clara County Local Transportation Authority v. Guardino (Case No. S036269), “disapproved” Woodlake and held that the voter approval requirements of Proposi tion 62 are valid. On December 14, 1995, the Supreme Court made minor nonsubstantive changes to its written opinion and denied the petition for rehearing. The decision provides that the voter approval requirements of Proposition 62 for both general and s pecial taxes are valid. The Guardino case fails to say (1) whether the decision is retroactively applicable to general taxes adopted prior to the decision; (2) whether taxpayers have any remedies for refund of taxes paid under a tax ordinance that was not voter approved; (3) what statute of limitations applies to taxes adopted without voter approval prior to Guardino; (4) whether Proposition 62 applies only to new taxes or to tax increases as well.

The Court of Appeals in a December 15, 1997 decision entitled McBearty v. City of Brawley (Case No. D027877) addressed some of these issues. In Brawley, a taxpayer challenged the city’s utility tax that was passed by the city council in 1991 without a vote of the electorate. The Court of Appeals held that (i) a three year statute of limitations applies to challenges to a tax ordinance subject to Proposition 62; and (ii) the statute of limitations did not begin to run until September 1995 when the Guardino case determined that Proposition 62 was constitutional. The effect of the holding in Brawley is that any tax ordinances passed between November 1986 and December 1995 that were not approved by the electorate would be subject to a challenge until December 1998. The court ordered the city to either cease collecting the tax or seek voter approval to continue levying the tax. However, in Howard Jarvis Taxpayers Association v. City of La Habra, decided on June 4, 2001, the California Supreme Court overruled part of McBearty, finding that the three year statute of limitations applicable to such taxes does not run from the date of the Guardino decision, but rather the continued imposition and collection of such tax is an ongoing violation, upon which the limitations period begins with each new collection.

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40 Several questions raised by the Guardino decision remain unresolved. Proposition 62 provides that if a jurisdiction imposes a tax in violation of Proposition 62, the portion of the one percent general ad valorem tax levy allocated to that jurisdiction is reduced by $ 1 for every $1 in revenue attributable to the improperly imposed tax for each year that such tax is collected. The practical applicability of this provision has not been fully determined. Potential future litigation and legislation may resolve some or all of the issues raised by the Guardino decision.

Neither the Authority nor the City can predict the outcome of any pending or future litigation concerning the validity of Proposition 62, nor can either predict the scope of the Guardino or McBearty decisions discussed above. Proposition 62 could affect the ability of the City to continue the imposition of, or to retain, certain taxes, and restrict the City’s ability to raise revenue.

Proposition 1A
Proposition 1A (“Proposition 1A”), proposed by the Legislat ure in connection with the 2004 -05 Budget Act and approved by the voters in November 2004, restricts State authority to reduce major local tax revenues such as the tax shifts permitted to take place in Fiscal Years 2004/05 and 2005-06. Proposition 1A provides that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions.

Proposition 1A generally prohibits the Stat e from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any fiscal year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county must be approved by two-thirds of both houses of the Legislature. Proposition 1A provides, however, that beginning in Fiscal Year 2008-09, the State may shift to schools and community colleges up to 8% of local government property tax revenues, which amount must be repaid, with interest, within three years, if the Governor proclaims that the shift is needed due to a severe state financial hardship, the shift is approved by two-thirds of both houses and certain other cond itions are met. Such a shift may not occur more than twice in any ten-year period. The State may also approve voluntary exchanges of local sales tax and property tax revenues among local governments within a county.

Proposition 1A provides that if the State reduces the vehicle license fee (“VLF”) rate below 0.65% of vehicle value, the State must provide local governments with equal replacement revenues. Further, Proposition 1A requires the State to suspend State mandates affecting cities, counties and special districts, excepting mandates relating to employee rights, schools or community colleges, in any year that the State does not fully reimburse local governments for their costs to comply with such mandates.

Proposition 22
On November 2, 2010, voters in the State approved Proposition 22. Proposition 22, known as the “Local Taxpayer, Public Safety, and Transportation Protection Act of 2010,” eliminates or reduces the State’s authority to (i) temporarily shift property taxes from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for state-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Proposition 26
On November 2, 2010, voters in the State also approved Proposition 26. Proposition 26 amends Article XIIIC of the State Constitution to expand the definition of “tax” to include “any levy, charge, or exaction of any kind imposed by a local government” except the following: (1) a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting

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41 the privilege; (2) a charge impos ed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product; (3) a charge imposed for t he reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections, and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof; (4) a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property; (5) a fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government, as a result of a violation of law; (6) a charge imposed as a condition of property development; and (7) assessments and property -related fees imposed in accordance with the provisions of Article XIIID. Proposition 26 provides that the local government bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity. Neither the City nor the Authority expects provisions of Proposition 26 to materially impede the City’s ability to pay Base Rental Payments when due.

Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”), commencing with the 1988 -89 fiscal year, will be alloca ted as follows: (i) each jurisdiction will receive up to 102% of its prior year State - assessed revenue; and (ii) if county -wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.

The provisions of AB 454 do not constitute an elimination of the assessment of any State-assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county.

MUNICIPAL ADVISOR
The City has retained Fieldman, Rolapp & Associates, Inc. , as Municipal Advisor in connection with the authorization and delivery of the 2022A Bonds. The Municipal Advisor is not obligated to undertake, and have not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement. The Municipal Advisor is an independent municipal advisory firm and are not engaged in the business of underwriting, trading or distributing municipal securities or other public securities.

RATING
S&P Global Ratings (“S&P”) has assigned its rating of “___” to all of the 2022A Bonds. Such rating reflects only the view of S&P. Any explanation of the significance of such rating may only be obtained from S&P. The information set forth on such website is not incorporated by reference herein.

Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that such rating will continue for any given period of time or that any of them will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating agency circumstances so warrant. Any such downward revision, suspension or withdrawal of such rating may have an adverse effect on the market price of the 2022A Bonds.

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42 UNDERWRITING
Raymond James & Associates, Inc. (the “Underwriter”) has agreed, subject to certain customary conditions precedent to closing, to purchase the 2022A Bonds from the Authority at a price eq ual to $__________ (which equals the principal amount of the 2022A Bonds, less an underwriting discount of $__________).

The Underwriter intends to offer the 2022A Bonds to the public initially at the prices set forth on the inside cover page of this Offi cial Statement, plus accrued interest from the dated date of the 2022A Bonds to their date of delivery, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the 2022A Bonds to the public. In connection with the offering of the 2022A Bonds, the Underwriter may over allot or effect transactions that stabilize or maintain the market price of the 2022A Bonds at levels above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.

CONTINUING DISCLOSURE
The Authority has determined that no financial or operating data concerning the Authority is material to any decision to purchase, hold or sell the 2022A Bonds and the Authority will not provide any such information.

The City has covenanted for the benefit of the holders and beneficial owners of the 2022A Bonds pursuant to a Continuing Disclosure Agreement, dated the date of issuance of the 2022A Bonds (the “Continuing Disclosure Agreement”), by and between the City and ____________, as dissemination agent, to provide certain financial information and operating data relating to the City (the “Annual Re port”) no later than March 31 following the end of each fiscal year, commencing with the report for Fiscal Year 2021- 22, and to provide notices of the occurrence of certain enumerated events through the EMMA System. The specific nature of the information to be contained in the Annual Report and the enumerated events is set forth in APPENDIX D – “FORM OF CONTINUING DISCLOSURE AGREEMENT.”

TAX MATTERS
State Income Tax
In the opinion of Bond Counsel, under existing law interest on the 2022A Bonds is exempt from personal income taxes of the State. Except as stated in the immediately preceding sentence, Bond Counsel will express no opinion as to any federal or state t ax consequence of the receipt of interest on, or the ownership or disposition of, the 2022A Bonds. A copy of the form of opinion of Bond Counsel relating to the 2022A Bonds is included in Appendix E.

Federal Income Tax Considerations
The following is a ge neral summary of certain United States federal income tax consequences of the purchase and ownership of the 2022A Bonds. The discussion is based upon the laws, Treasury Regulations, rulings and decisions now in effect, all of which are subject to change (p ossibly, with retroactive effect) or possibly differing interpretations. No assurances can be given that future changes in the law will not alter the conclusions reached herein.

The discussion below does not purport to deal with United States federal income tax consequences applicable to all categories of investors. Further, the discussion below does not discuss all aspects of federal income taxation that may be relevant to a particular investor in the 2022A Bonds in light of the investor’s particular circumstances or to certain types of investors subject to special treatment under federal income tax laws (including insurance companies, tax exempt organizations, financial institutions, broker -dealers,

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43 and persons who have hedged the risk of owning the 2022A Bonds). The discussion below is limited to certain issues relating to initial investors who will hold the 2022A Bonds as “capital assets” within the meaning of section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”), and acquire such 2022A Bonds for investment and not as a dealer or fo r resale. The discussion below addresses certain federal income tax consequences applicable to beneficial owners of the 2022A Bonds who are United States persons within the meaning of section 7701(a)(30) o f the Code (“United States persons”) and, except as discussed below, does not address any consequence to persons other than United States persons.

Prospective investors should note that no rulings have been or will be sought from the Internal Revenue Service (the “IRS”) with respect to any of the United States federal income tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions.

ALL PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN

DETERMINING THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX

CONSEQUENCES TO THEM FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE 2022A BONDS.

Stated Interest on the 2022A Bonds. The stated interest on the 2022A Bonds will be included in the gross income, as defined in section 61 of the Code, of the beneficial owners thereof and will be subject to United States federal income taxation when received or accrued, depending on the tax accounting method applicable to the beneficial owners thereof.

Cathedral City City CouncilMarch 23, 2022

Cathedral City City Council
March 23, 2022