Scheduled Base Rental Payments relating to the 2022 Bonds are set forth below under the heading "BASE RENTAL PAYMENT SCHEDULE."
THE OBLIGATION OF THE CITY TO MAKE THE RENTAL PAYMENTS, INCLUDING THE
BASE RENTAL PAYMENTS, DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OR
OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL
OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION
FOR WHICH THE CITY OR THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF
TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
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Additional Rental Payments
For the right to use and occupy the Property, the Lease Agreement requires the City to pay, as Additional Rental payments thereunder, in addition to the Base Rental Payments, such amounts as shall be required for the payment of the following:
(i) all taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein; (ii) insurance premiums for all insurance required pursuant to the Lease Agreement; and (iii) all other payments not constituting Base Rental Payments required to be paid by the City pursuant to the provisions of the Lease Agreement.
Amounts constituting Additional Rental Payments payable under the Lease Agreement will be paid by the City directly to the person or persons to whom such amounts shall be payable. The City will pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof.
Insurance
The Lease Agreement requires the City to maintain or cause to be maintained throughout the term of the Lease Agreement, a standard comprehensive general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents and employees. Such policy or policies will provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Property.
Such policy or policies will provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City. The Net Proceeds of such liability insurance will be applied toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall have been paid. The City's obligations under this subsection may be satisfied by self-insurance in accordance with the Lease Agreement. See APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — The Lease Agreement — Insurance," attached hereto.
The City will maintain or cause to be maintained casualty insurance insuring the Property against fire, lightning and all other risks covered by an extended coverage endorsement (excluding earthquake and flood) to the full insurable value of the Property, subject to a $100,000 loss deductible provision. Full insurable value will not be less than the aggregate principal amount of the Outstanding Bonds. Such coverage may be provided in the form of a policy insuring the Property and additional property owned by the City against such risks; provided, however, that the amount of the coverage provided pursuant to such policy may be less than the aggregate amount of the full insurable value of all properties insured thereby if the City provides to the Trustee a written evaluation of a qualified insurance consultant that the City's coverage is reasonable given the maximum foreseeable loss in the event of fire, lightning and all other risks covered by an extended coverage endorsement (excluding earthquake and flood), the nature of such risks insured and the proximity of the insured properties to each other. The Net Proceeds of such casualty insurance will be applied as set forth below under "Damage or Destruction of the Property." The City's obligations under this subsection may be satisfied by self-insurance in accordance with the Lease Agreement. See APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — The Lease Agreement — Insurance," attached hereto. 9 202
The City will maintain rental interruption insurance to cover the Authority's loss, total or partial, of Base Rental Payments resulting from the loss, total or partial, of the use of any part of the Property as a result of any of the hazards required to be covered pursuant to the paragraph immediately above in an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The Net Proceeds of such rental interruption insurance will be applied to the payment of Rental Payments during the period in which, as a result of the damage or destruction to the Property that resulted in the receipt of such Net Proceeds, there is substantial interference with the City's right to the use or occupancy of the Property. The City's obligations under this subsection may not be satisfied by self-insurance.
The insurance required above will be provided by reputable insurance companies with claims paying abilities determined, in the reasonable opinion of the City's professionally qualified risk manager or an independent insurance consultant, to be adequate for the purposes of the Lease Agreement. All such policies will contain a standard lessee clause in favor of the Trustee and the general liability insurance policies will be endorsed to show the Trustee, as an additional insured. All such policies will provide that coverage shall not be cancelled except with notice to the City of the expiration thereof, any intended cancellation thereof or any reduction in the coverage provided thereby. The Trustee will be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the Trustee.
The City is required under the Lease Agreement to provide, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less than the initial aggregate principal amount of the respective series of the Bonds, insuring (a) the fee interest of the City in the Property (b) the Authority's ground leasehold estate in the Property under the Ground Lease, and (c) the City's leasehold estate in the Property under the Lease Agreement, subject only to Permitted Encumbrances, and providing that all proceeds thereunder are payable to the Trustee for the benefit of the Owners. See APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — The Lease Agreement — Insurance," attached hereto.
Damage or Destruction of the Property
If the Property or any portion thereof shall be damaged or destroyed, the City shall, within 30 days of the occurrence of the event of damage or destruction, notify the Trustee in writing of the City's determination as to whether or not such damage or destruction will result in a substantial interference with the City's right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to the Lease Agreement. If the City determines that such damage or destruction will not result in a substantial interference with the City's right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to the Lease Agreement, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof.
If the City determines that such damage or destruction will result in a substantial interference with the City's right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to the Lease Agreement, then the City shall (i) apply sufficient funds from the Net Proceeds of any insurance (other than Net Proceeds of rental interruption insurance), including the proceeds of any self- insurance, received on account of such damage or destruction and other legally available funds to the repair or replacement of the Property or the portions thereof which have been damaged or destroyed to the condition that existed prior to such damage or destruction, provided that, within 40 days of the occurrence of the event of damage or destruction, the City delivers to the Trustee a Written Certificate of the City (A) certifying that the City has sufficient funds to so complete such repair or replacement of the Property or such portions thereof and identifying such funds and the location thereof, and (B) stating that such funds will not be used for any other purpose until such repair or replacement is completed, (ii) within 60 days of the occurrence of the event of damage or destruction, cause alternate real property to be substituted for all or a portion of the Property pursuant to the Lease Agreement, or (iii) within 60 days of the occurrence of the event of damage or destruction, deliver sufficient funds from such Net Proceeds and other legally available funds to the Trustee for the application to the redemption from and to the extent of any insurance proceeds or condemnation award received with respect to all or a portion of the Property (A) of all of the Outstanding Bonds, or (B) of such portion of the Outstanding Bonds as shall result in (I) the annual fair rental value of the Property after such damage or destruction, and after 10 203
any repairs or replacements made as a result of such damage or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being at least equal to 105% of the maximum amount of the principal (including principal due and payable by reason of mandatory sinking fund redemption of such Bonds) of and interest on the Bonds coming due in the then current Rental Period or any subsequent Rental Period, and (II) the fair replacement value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being at least equal to the aggregate principal amount of the Bonds then Outstanding. See APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — The Lease Agreement — Abatement," "— Substitution or Release of the Property" and "— Damage or Destruction," attached hereto.
Additional Bonds
The Authority may at any time issue one or more Series of Additional Bonds payable from Lease Revenues, as provided under the Indenture, on a parity with the 2022 Bonds and all other Bonds theretofore issued thereunder, but only subject to the conditions set in the Indenture and the Lease Agreement, which are thereby made conditions precedent to the issuance of such Additional Bonds, and which are further described in APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — Additional Bonds."
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds with respect to the 2022 Bonds are shown below.
Sources:
Principal Amount of 2022 Bonds
Plus Net Original Issue Premium
Total Sources
Uses:
Deposit to Project Fund (1)
Costs of Issuance (2)
Total Uses
Total
See "PLAN OF FINANCE."
Includes legal, municipal advisory, underwriting, rating agency, printing fees and other miscellaneous costs of issuance.
BASE RENTAL PAYMENT SCHEDULE
Following is the schedule of Base Rental Payments due with respect to the 2022 Bonds, assuming no optional or extraordinary redemption prior to maturity:
Date Principal Interest ❑ Total Payments Annual Payments 11 204
PLAN OF FINANCE
On July 25, 2021, the City entered into an Energy Services Agreement with SiteLogIQ, Inc. Under the Energy Services Agreement, the City intends to contract for implementation, including engineering, system design, fabrication and installation, of renewable energy generation and energy management systems (the "Solar Project") that will result in energy savings to the City and which shall be a supply of energy to the City at various sites owned or controlled by the City (the "Project Sites" or "Sites", and each individually a "Site"), consistent with the terms of Government Code section 4217.10, et seq. Government Code section 4217.10, et seq., authorizes the City to enter into an energy services agreement wherein the contractor provides conservation services to the City from an energy conservation facility on terms that its governing body determines are in the best interest of the City. Government Code section 4217.11(d) defines "conservation services" to include electrical, thermal, or other energy savings resulting from conservation measures, which shall be treated as a supply of such energy.
Net proceeds of the 2022 Bonds are projected to be applied to pay costs of a portion of the Solar Project.
See "ESTIMATED SOURCES AND USES OF FUNDS" herein. The contract price for the Solar Project is $8,955,062.00, and it is expected to be installed by October 1, 2022. Additionally, the City is pursuing a loan from the State of California Energy Commission which would serve to reimburse the City for contributions that the City has contributed from its General Fund for approximately $3,000,000 and to complete the Solar Project.
Any additional funds needed to complete the project will be paid from the City's General Fund.
In addition to the Solar Project, the City intends to finance the construction of street improvements (the "Street Project" and together with the Solar Project, the "Project") which include road improvements throughout the City. The Street Project and the expected costs are described below:
Capital Improvement Protect Expected Cost
Miles Developer Funding $5,500,000
Streets and Roads 2,878,250
Public Safety Road 700,000
Facilities and Equipment 280,000
Total Bond Proceeds $9,358,250
(1) Project includes flood control and street improvements surrounding large scale development on Miles Road. See, "CITY OF INDIAN WELLS FINANCES," herein.
No other funds of the City, other than the General Fund will assume a continuing obligation to make any portion of the annual Base Rental Payments nor assume any obligation to assist the Authority with its obligation to make payments of principal of and interest on 2022 Bonds.
THE PROPERTY
The Property consists of City Hall of the City (the "Property") which is located on approximately 6.3 acres. There are approximately 4 buildings in the City Hall Complex, including the City Hall administrative complex, a police sub -station, a fire station and the City's public works building, and totals 31,990 square feet of space for administration, public meetings and public safety services. The insured value and land value of the Property combine to $15,299,000.
The City and the Authority have agreed and determined that as of the date of delivery of the 2022 Bonds, the Property has an annual fair rental value greater than or equal to the maximum Base Rental Payments payable by the City in any Rental Period, and that the Fair Rental Value of the Property on the date of such termination will be not less than said amount. In making such determinations of Fair Rental Value, consideration has been given to the uses and purposes that may be served by the Property and the benefits 12 205
therefrom that will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period shall constitute the total rental for said Rental Period.
The City will lease the Property to the Authority pursuant to the Ground Lease. The Authority will then sublease the Property to the City pursuant to the Lease Agreement. See APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — The Lease Agreement — Substitution or Release of the Property," attached hereto.
THE AUTHORITY
The Indian Wells Financing Authority was organized pursuant to the provisions of Article I of Chapter 15 of Division 7 of Title 1 of the State Government Code and a Joint Exercise of Powers Agreement, dated as of January 16, 2003 as amended, by and between the City and the former Redevelopment Agency of the City of Indian Wells. Pursuant to California Health & Safety Code Section 34178(b)(3), joint powers agreements in which the former redevelopment agency is a member of the joint powers authority remain valid and bind the successor agency, subject to the constraints on the successor agency under the redevelopment agency dissolution law. The Authority was organized for the purpose of financing and assisting local agencies in financing capital improvements, working capital, liability or other insurance needs or projects. The City Council serves as the governing body of the Authority.
The Authority has no financial liability to the Owners of the Bonds with respect to the payment of Base Rental Payments by the City or with respect to the performance by the City of the other agreements and covenants it is required to perform.
CITY OF INDIAN WELLS
General
The City of Indian Wells, incorporated in 1967, is located 120 miles east of Los Angeles in the eastern portion of Riverside County known as the Coachella Valley.
Highway 111 passes through the approximate center of the City on a north -south course and provides direct connection with downtown other cities and the Coachella Valley. About six miles north of the City is Palm Springs International Airport. The City is about four miles from Interstate Highway 10, serving as a mail arterial highway across the United States.
Government and Administration
The City operates under the City Council/City Manager form of Government. Policy -making and legislative authority are vested in a governing council (Council) consisting of the Mayor and four other members, all elected on a non-partisan basis. Council members serve four-year terms and are elected at large.
The Council/Manager form of government is broadly defined as combining the political/policy leadership of elected officials with the managerial leadership of the City Manager.
The City Council appoints the City Manager and City Attorney. All other city employees are appointed by and are responsible to the City Manager. The City Manager heads the executive branch of the government, implements policies as directed and established by the City Council, and manages the administrative and operational functions utilizing City staff. The City provides a full range of services, including police and fire protection, construction and maintenance of streets and infrastructure, economic development, planning and community development, building and safety, arts and culture, and recreational activities.
See also, APPENDIX A — "GENERAL DEMOGRAPHIC INFORMATION REGARDING THE CITY OF INDIAN WELLS."
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CITY OF INDIAN WELLS FINANCES
The following selected financial information provides a brief overview of the City's finances. This financial information has been extracted from the City's audited financial statements and, in some cases, from unaudited information provided by the City's Finance Department. The most recent audited financial statements of the City with an unqualified auditors' opinion is included as Appendix B hereto. See APPENDIX B — "CITY
OF INDIAN WELLS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2021," attached hereto.
Accompanying the Independent Auditors' Report in Appendix B are introductory materials entitled the City's Letter of Transmittal, and Management's Discussion and Analysis, which are not audited, but provide additional summary detail on the City's operations and finances. Each should be reviewed in conjunction with the information presented below to obtain an understanding of the City's fmancial condition. The City's Management's Discussion and Analysis is supplementary information required by the Government Accounting Standards Board.
Tourism and hospitality are key components of the City's economy. As a result, the City's economy was particularly hard hit by the Pandemic, and while the economy has begun to improve, the impacts are expected to linger for some time. Two sources of revenue, sales tax and transient occupancy tax, accounted for approximately 48% of General Fund revenues prior to the Pandemic. In Fiscal Year 2019-20 transient occupancy tax declined by 44% or $3,890,000 and sales tax declined by 45% or $671,721. For Fiscal Year 2020-21 transient occupancy tax declined by an additional 6.5% or $322,000 and sales tax declined by 20% or $180,000. Additionally, the admissions tax had previously accounted for approximately 16% of the General Fund revenue. The admissions tax received by the City went from approximately $3,500,000 in Fiscal Year 2018-19 to $0 in Fiscal Year 2019-20 and was essentially $0 in 2020-21. Historically, the City has generated significant operating surpluses. In Fiscal Year 2018-19 the operating surplus was $6,562,365. This history of surpluses has allowed the City to manage the decline in revenues as a result of the Pandemic. The full or partial shutdown of non -essential businesses has also affected other key City revenue sources such as franchise taxes, business license taxes, and charges for services. As of June 15, 2021, California Governor Newsom terminated the executive orders that put into place the Stay Home Order and the Blueprint for a Safer Economy. He also phased out the vast majority of executive actions put in place since March 2020 as part of the Pandemic response, leaving a subset of provisions that facilitate the ongoing recovery. The new public health order effective June 15 supersedes all prior health orders. However, as a result of the spread of the "Omicron" variant of the COVID-19 pandemic, Governor Newsom has established a state-wide mask mandate from December 15, 2021 to January 15, 2022. It may be months or even years before international and interstate travel resume to prior levels, and business travel may never return to pre -virus levels. People's shopping habits may also be altered for a significant amount of time or forever.
However, transient occupancy tax and sale tax have recovered strongly in the first quarter of Fiscal Year 2021-22. This is primarily due to the reopening of the economy and increased tourism. Additionally, a key event in the City, the BNP Paribas Tennis Tournament, was held in October of 2021 and is scheduled to resume its normal schedule in March of 2022.
Two major economic development initiatives are in the planning process within the City. The first is the Brixton property described as "Planning Area One" and is currently approved for 121,000 sq. ft. mixed use commercial development on 15.7 -acres at the northeast corner of Miles and Highway 111. Allowable land uses include retail and service businesses, 2 -story hotel, specialty market, gourmet shop, coffee house, day spa, sit down restaurants, financial, office uses, museum and art galleries. The second property is the Miles Lodge property, described as "Planning Area Two" and is currently approved for a mix of Resort Commercial uses on
15.2 acres at the northwest corner of Miles and Highwayl 11. Current entitlements allow for a 139 -room key 5 - story luxury resort hotel with 31 2 -story villas functioning as part of the hotel, along with a 54 -unit 6 -story condo hotel approved for private residential ownership and short term rental use.
During Fiscal Year 2020-21 General Fund expenditures were lower than originally budgeted by approximately $3.44 million (21 %), as the City implemented measures to reduce expenditures in response to the 14 207
Pandemic. Additionally, during the Pandemic the City General Fund loaned funds to the City's Golf Resort Operations Fund and other special funds of the City to help cover operating costs. For Fiscal Year 2019-20 the net transfers out totaled $3,438,991 which also included transfers to the City Street Capital Reserve. For Fiscal Year 2020-21 there were no further net transfers out. Additionally, the City has loaned money from the General Fund to the former Redevelopment Agency, of which the City will receive a payment of $1.3 million in Fiscal Year 2021-22. The City expects to receive $8.4 million in Fiscal Year 2022-23 and the remaining balance of $8.0 million in Fiscal Year 2023-24.
As of June 30, 2021 the General Fund balance was $32,675,973. Unassigned fund balance was $3,324,092 primarily due to an Auditor reclassification of amounts to the General Fund from the City's Golf Resort Operating Fund. General Fund expenditures in Fiscal Year 2020-21 totaled $13,976,316, and unassigned fund balance totals 23% of General Fund expenses. Total Governmental Fund balance as of June 30, 2021 totaled $94,891,115. The City's reserve policy includes a requirement that the City maintain a five year Capital Improvement Plan ("CIP") reserve. The CIP and additional contributions to reserves were suspended during Fiscal Year 2019-20, due to the COVID-19 pandemic. However, the City has reinstated the transfers to reserves in the Fiscal Year 2020-21 and 2021-22 budgets. The City released its Proposed Biennial Budget for Fiscal Year 2021-23 on May 10, 2021, and adopted its Fiscal Year 2021-23 Biennial Budget on June 24, 2021. The budget projects $15,736,287 in taxes to be received by the City for Fiscal Year 2021-22. This budget reflects the operating and capital activities of 5 depailnients 28 programs and approximately 30 permanent and temporary full-time equivalent positions. The Fiscal Year 2021-22 General Fund budget is $16,861,399 million; by way of comparison, the adopted Fiscal Year 2020-21 General Fund adopted budget was $14,376,222 million.
As a result of careful planning, the Fiscal Year 2021-23 Biennial Budget reflects no deficit — either now or in the associated five-year forecast. In addition, over the past year, City operations have been stabilized and streamlined to provide the core services on which the community relies.
Accounting Policies and Financial Reporting
The City's accounting records are organized and operated on a "fund" basis, which is the basic fiscal and accounting entity in governmental accounting. The three broad fund categories include governmental, proprietary and fiduciary funds. The operations of the different funds are accounted for with separate sets of self -balancing accounts with assets, liabilities, fund balance or net assets, revenues, and expenditures or expenses. The basis of accounting for all funds is more fully explained in the Notes to the City's combined audited financial statements contained in Appendix B.
The Government Finance Officers Association has awarded its Certificate of Achievement for Excellence in Financial Reporting to the City for each of the past 36 years.
Budgetary Process
The budgetary process is guided by City Council's priorities for the next three to five years. To improve the efficiency of budget development, the City produces a biennial budget. In May of alternating years, the City Manager submits a proposed operating and capital budget to the City Council for the two Fiscal Years commencing on the following July 1. Study sessions and public hearings are conducted by the City Council to obtain City staff and citizen comments to the proposed budget, and prior to June 30, the first year of the budget is adopted, and the second year approved, each through passage of appropriate resolutions.
The City's fiscal year for budgeting and accounting purposes runs from July 1 to June 30. Since 2011, the City has utilized a biennial budget process, which allows the City to plan ahead and focus on strategic projects and capital budgeting in the second year and has the added benefit of decreasing requested budget increases from one year to the next.
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Fiscal Year 2021-22 and 2022-23 Budgets
The City adopted its Fiscal Year 2021-22 Biennial Budget on June 24, 2021, which included the adoption of the Fiscal Year 2021-22 budget and the approval of the Fiscal Year 2022-23 budget plan. The Fiscal Year 2021-22 Budget reflected the impacts of the Pandemic as noted below.
Until March 2020, the United States was experiencing the longest economic expansion in this Country's history. When the coronavirus hit, the devastating impact caused many in the local tourism community extreme fmancial hardship. The BNP Paribas Open was canceled the day before the tournament was to begin. Soon thereafter, Governor Gavin Newsom issued the Stay -at -Home Order for all of California to help stop the spread of COVID-19.
Cancelation of the tennis tournament, Coachella and Stagecoach music festivals, and numerous conferences and seminars created a significant impact on the City's finances. As a tourist destination, the City is heavily dependent on large-scale events and dollars spent by travelers to support the local economy. These events are estimated to bring $1 billion in economic activity to the region.
As anticipated, the immediate halting of daily economic activity had a significant negative impact to many of the economically sensitive revenue categories that are received in the General Fund. General secured property taxes did not significantly change and are not expected to significantly change in Fiscal Year 2021-22.
Any changes in the local real estate market that occurs in 2021 because of the COVID-19 pandemic, if any, will not be felt until Fiscal Year 2022-23.
Economic recovery will likely take 18 to 24 months with many areas of the recovery remaining a mystery. Social Distancing, vaccine requirements and the attendance levels during the BNP Paribas and other events, as well as the permitted occupancy levels with hotels in the City will play a substantial role in the City's overall budget performance in the future.
The City maintained essential and emergency operations during the Pandemic while preserving the City's financial resilience to the greatest extent possible. On March 11, 2021, the American Rescue Plan Act (ARP) was signed into law. The City has received $650,000 of the approximately $1,300,000 in aid through ARP, with the remainder to be received in Fiscal Year 2022-23. These funds will be used to support ongoing public safety costs and maintaining PPE protocols.
The City also received a nominal $66,000 allocation of federal Coronavirus Aid, Relief and Economic Security (CARES) Act funding through the State. These funds covered a very small portion of the City's unfunded needs related to the public health emergency and the economic crisis that ensued.
Historic General Fund Revenues
Taxes received by the City include property taxes, sales taxes, franchise fees, transient occupancy taxes, property transfer taxes, and admissions taxes, among others. Of such taxes, transient occupancy taxes, sales taxes and admissions taxes constitute the major sources of revenues. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS — Voter Initiative," — "Proposition 62" and — "Proposition 218" herein for a discussion of certain general taxes imposed by the City that may be affected by initiatives approved by the California voters.
As discussed below and under the caption "RISK FACTORS — Infectious Disease Outbreak — COVID- 19," the finances and operations of the City have been and can be expected to continue to be impacted by COVID-19 in the near term. See "RISK FACTORS — Infectious Disease Outbreak — COVID-19" and APPENDIX B — "CITY OF INDIAN WELLS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2021."
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The following table illustrates the property tax revenues, sales tax revenues and other revenue sources of the City's General Fund for Fiscal Years 2011-12 through 2020-21.
TABLE 1
CITY OF INDIAN WELLS
HISTORICAL GENERAL FUND REVENUES
Fiscal
Year
Ended Property Sales Transient Emergency Percentage
June 30 Tax Tax Occupancy Service Franchise Admissions Other Total Change 2011-12(�) $20,072,039 $ 992,271 $5,689,952 $2,287,339 $848,259 $1,526,042 $299,580 $31,715,482 - 2012-13 2,495,027 945,359 6,341,825 2,285,354 860,303 1,816,400 291,944 15,036,212 (56.00)% 2013-14 2,602,881 1,016,141 6,407,454 2,524,298 886,890 2,244,120 349,269 16,031,053 6.62 2014-15 2,757,592 1,121,191 6,742,840 2,604,590 924,868 2,753,412 291,763 17,196,256 7.26 2015-16 2,876,532 1,217,570 7,000,096 2,692,279 922,074 2,767,709 364,111 17,840,371 3.74 2016-17 2,873,141 1,347,804 7,826,154 2,607,921 941,937 3,073,132 396,999 19,067,088 6.87 2017-18 3,025,593 1,111,159 7,942,995 3,111,773 929,551 3,334,225 370,094 19,825,390 3.97 2018-19 3,113,540 1,493,254 8,835,433 3,139,323 992,866 3,518,852 441,050 21,534,317 7.93 2019-20 3,166,437 821,533 4,944,773 3,277,041 995,921 (41,410)(2) 268,326 13,474,031 (37.42) 2020-21 3,039,148 656,060 4,622,778 3,714,412 993,258 117,660 636,885 13,780,201 2.27 (1) Amounts in 2011-12 includes tax increment received by the former Redevelopment Agency. Upon dissolution of redevelopment agencies, and from Fiscal Year 2012-13 forward, the City no longer includes the incremental value in the receipt of property tax revenue by the General Fund. (2) Refund of taxes paid for advance ticket sales.
Source: City of Indian Wells.
A brief discussion of Property Taxes, Transient Occupancy Taxes, Sales Taxes, Admissions Taxes, Franchise Taxes, and Business License Taxes follows. Property Taxes, Transient Occupancy Taxes, Admissions Taxes, and Sales Taxes have constituted the largest major tax revenue sources for the City for many years.
Property Taxes. Property Tax receipts of approximately $3 million received during Fiscal Year 2020- 21, representing one of the largest major tax revenue sources for the City, contributed approximately 22% of General Fund tax revenues and approximately 24% of total General Fund revenues during Fiscal Year 2020-21.
For Fiscal Year 2021-22, Property Tax receipts allocable to the General Fund are projected to be approximately $2,902,037, See "PROPERTY TAXATION" and "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS" herein for discussion of pertinent aspects of the City's property tax revenues. The City's receipt of property taxes is affected by property tax delinquencies, appeals, refunds and collection of delinquent amounts, and the City has not experienced delinquencies in the property tax collections. Additionally, the City rarely experiences appeals in assessed value. The County of Riverside (the "County") offers a "Teeter Plan" advances (i.e., the alternative method of distribution of tax levies and collections and of tax sale proceeds, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code), however, the City does not participate in the Teeter Plan. Most properties located within the City are private residences, and 44% of the homes in the City are not primary homes.
Transient Occupancy Tax. Transient Occupancy Tax ("TOT") receipts of approximately $4.6 million received during Fiscal Year 2020-21, representing one of the larger major tax revenue sources for the City, contributed approximately 34% of General Fund tax revenues and approximately 37% of total General Fund revenues during Fiscal Year 2020-21. For Fiscal Year 2021-22, Transient Occupancy Tax receipts allocable to the General Fund are projected to be $7,103,830. The TOT is imposed on persons staying 30 days or less in a hotel, motel, inn, hostelry, tourist home, rooming house or other lodging place within the City. The current tax rate is 12.25%, last increased in 2019. Exemptions are granted to federal, State and City officials or employees on official business. Exemptions account for a very minor amount of the total TOT base. Payments are primarily made to the City on a monthly basis and are deposited to the City's General Fund. See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS," herein.
Sales Tax. Sales Tax receipts of approximately $656,060 received during Fiscal Year 2020-21, is one of the largest major tax revenue sources for the City. For Fiscal Year 2021-22, Sales Tax receipts allocable to the General Fund are projected to be approximately $1.1 million during Fiscal Year 2021-22. A sales tax is 17 210
imposed on retail sales or consumption of personal property. The statewide sales tax rate is established by the California State Legislature and local overrides may be approved by voters. As of the date of this Official Statement, the Statewide tax rate is 7.25%. The California Department of Tax and Fee Administration ("CDTFA") collects and administers the tax, makes distributions on taxes collected within the City, and transfers tax receipts to the City's General Fund each month. The total sales tax rate within the City is currently
7.75%.
Sales taxes are collected and administered by the CDTFA subject to further administration and allocation applicable to each tax measure. The CDTFA began operation following the enactment of the Taxpayer Transparency and Fairness Act of 2017 which restructured the State Board of Equalization into three separate entities: The State Board of Equalization, the CDTFA and the Office of Tax Appeals. The State Board of Equalization remains independent from any agency, and retains its constitutional responsibilities, including reviewing, equalizing, or adjusting property tax assessments, assessing taxes on insurers, and assessing/collecting excise taxes on alcoholic beverages. CDTFA is housed within the Government Operations Agency and handles most of the taxes and fees previously collected by the Board of Equalization, including sales and use tax. The Office of Tax Appeals is an independent entity.
Admissions Tax. Admissions tax is added to the ticket price that attendees pay to enter entertainment venues or events in the City. The current admissions tax rate is 10%. Admissions tax revenues are expected to increase in future Fiscal Years due to the success of the BNP Paribas Open, and other professional tennis events held at the Indian Wells Tennis Gardens The City projects that admissions tax revenues will be $3,250,000 in Fiscal Year 2021-22, $3,500,000 for Fiscal Year 2022-23, and $3,570,000 for Fiscal Year 2023-24.
Franchise Tax. Franchise Tax receipts of approximately $993,258 received during Fiscal Year 2020- 21 contributed approximately 7.2% of General Fund tax revenues and approximately 7.4% of total General Fund revenues. For Fiscal Year 2021-22, Franchise tax receipts allocable to the General Fund are projected to be similar to Fiscal Year 2020-21. See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS," herein.
As provided by the California Constitution, insurance companies are exempt from the Franchise Tax. In addition, county, state, federal and foreign governments within the City are not subject to this tax, as the City has no authority to impose a tax on these entities. Exemptions account for a minor amount of the total Franchise Tax base.
All utility companies collect and transmit the Franchise Tax monthly to the City's Finance Department which then deposits the tax revenues into the General Fund.
Emergency Services and Other Revenue Sources. The City recognizes a credit from the County to pay for emergency services. This amount represents a share of the 1% ad valorem taxes which would otherwise be allocable to the County's general fund but is credited to the City as an off set for the City's expenses relating to fire and emergency services. In Fiscal Year 2020-21, the amount credited was $3.7million. For the next two Fiscal Years, the City has budgeted the amount of $3.5million in emergency service revenues. Business License Tax receipts of approximately $145,000 received during Fiscal Year 2020-21. For Fiscal Year 2021-22, Business License tax receipts allocable to the General Fund are projected to be similar to Fiscal Year 2020-21.
The business license tax represents a City tax upon gross receipts of certain business activities located in the City. Since the tax in any Fiscal Year is based on the prior calendar year gross receipts of businesses, the full impact of the Pandemic on these taxes will not be seen until Fiscal Year 2021-22. See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING CITY REVENUE AND APPROPRIATIONS," herein.
Proposition lA of 2004
City services are funded with money from local taxes, fees and user charges, State aid and other sources.
Property tax, sales taxes, transient occupancy tax, franchise tax, business license tax, parking revenues and development -related fees constitute the majority of City revenue sources. 18 211
On November 3, 2004 the voters of the State approved Proposition lA ("Proposition lA of 2004").
Proposition 1A of 2004 amended the State Constitution to, among other things, reduce the Legislature's authority over local government revenue sources by placing restrictions on the State's access to local governments' property, sales, and vehicle license fee (VLF) revenues as of November 3, 2004. Pursuant to Proposition 1A of 2004, the State is able to borrow up to 8% of local property tax revenues but only if the Governor proclaims such action is necessary due to a severe State fiscal hardship and two-thirds of both houses of the State Legislature approve the borrowing. Any amounts borrowed are required to be repaid within three years. Proposition lA of 2004 also peiiiuts the State to borrow from local property tax revenues for no more than two fiscal years within a period of 10 fiscal years, and only if previous borrowings have been repaid. In addition, the State cannot reduce the local sales tax rate or restrict the authority of the local governments to impose or change the distribution of the Statewide local sales tax. Proposition lA of 2004 generally prohibits the State from mandating activities on cities, counties, or special districts without providing the funding needed to comply with the mandates, and if the State does not provide funding for the activity that has been determined to be mandated, the requirement on cities, counties, or special districts to abide by the mandate is suspended.
Proposition lA of 2004 also expanded the definition of what constitutes a mandate to encompass State action that transfers to cities, counties, and special districts financial responsibility for a required program for which the State previously had partial or complete responsibility. The State mandate provisions of Proposition lA of 2004 do not apply to schools or community colleges or to mandates relating to employee rights.
Proposition 22
Proposition 22 eliminates the State's ability to borrow or shift local revenues and certain State revenues that fund transportation programs. It restricts the State's authority over a broad range of tax revenues, including property taxes allocated to cities (including the City), counties, special districts and redevelopment agencies, VLF, State excise taxes on gasoline and diesel fuel, the State sales tax on diesel fuel, and the former State sales tax on gasoline. It also makes a number of significant other changes, including restricting the State's ability to use motor vehicle fuel tax revenues to pay debt service on voter -approved transportation bonds.
Proposition 22 supersedes certain provisions of Proposition 1A of 2004. See "—Proposition lA of 2004" above. In addition, Proposition 22 generally eliminates the State's authority to temporarily shift property taxes from cities, counties, and special districts to schools, temporarily increase school and community college district's share of property tax revenues, prohibits the State from borrowing or redirecting redevelopment property tax revenues or requiring increased pass -through payments thereof, and prohibits the State from reallocating VLF revenues to pay for State imposed mandates. In addition, Proposition 22 requires a two-thirds vote of each house of the State Legislature and a public hearing process to be conducted in order to change the amount of fuel excise tax revenues shared with cities and counties.
Proposition 22 prohibits the State from borrowing sales taxes or excise taxes on motor vehicle fuels or changing the allocations of those taxes among local government except pursuant to specified procedures involving public notices and hearings. In addition, Proposition 22 requires that the State apply the formula setting forth the allocation of State fuel tax revenues to local agencies revert to the formula in effect on June 30, 2009.
Ad Valorem Property Taxes
Taxes are levied for each fiscal year on taxable real and personal property which is situated in the County as of the preceding January 1. However, upon a change in ownership of real property or completion of new construction, State law permits an accelerated recognition and taxation of increases in real property assessed valuation (known as a "floating lien date"). 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 and County assessed property secured by a lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS" herein.
19 212
The County levies a one percent property tax on behalf of all taxing agencies in the County. The taxes collected are allocated on the basis of a formula established by State law enacted in 1979. Under this formula, the County and all other taxing entities receive a base year allocation plus an allocation on the basis of "situs" growth in assessed value (new construction, change of ownership, inflation) prorated among the jurisdictions which serve the tax rate areas within which the growth occurs. Tax rate areas are specifically defmed geographic areas which were developed to permit the levying of taxes for less than county -wide or less than city-wide special and school districts. In addition, the County levies and collects additional approved property taxes and assessments on behalf of any taxing agency within the County.
Property taxes on the secured roll are due in two installments, on November 1 and February 1. If unpaid, such taxes become delinquent after December 10 and April 10, respectively, and a ten percent penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is declared tax -defaulted on or about June 30. Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty, plus costs and redemption penalty of one and one-half percent per month to the time of redemption. If taxes are unpaid for a period of five years or more, the tax - defaulted property is subject to sale by the Treasurer and Tax Collector of the County of Riverside. The County offer a "Teeter Plan" advances (i.e., the alternative method of distribution of tax levies and collections and of tax sale proceeds, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code).
Property taxes on the unsecured roll are assessed as of the January 1 lien date and become delinquent, if unpaid, on August 31. A ten percent penalty attaches to delinquent taxes on property on the unsecured roll and an additional penalty of one and one-half percent per month begins to accrue on November 1. The taxing authority has four ways of collecting delinquent unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for recordation in the County Recorder's office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the taxpayer. City taxes are collected on the same bill as County taxes.
See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS — Article XIIIA of the California Constitution" herein for information on the effect, if any, of current litigation on assessed values in the City or the availability of revenue sources which may be provided by the State to replace lost property tax revenues.
Assessed Valuations
As discussed under "Property Taxes" above, the City receives a share of ad valorem taxes levied on real property within its boundaries. The basic levy is equal to 1% of the assessed value of secured and unsecured property. The City receives approximately 7% of the basic levy before the administration of statutory pass - through amounts due from the Successor Agency to other overlapping taxing agencies. After the allocation of statutory pass -through payments, the City receives approximately 4.5% of the basic levy. The following table shows the assessed valuation of the City for the last five fiscal years.
The City uses the facilities and services of the County for the assessment and collection of property taxes. City taxes are collected at the same time and on the same tax rolls as are the County, City and special district taxes. Assessed valuations are the same for both City and County taxing purposes.
The valuation of property in the City is established by the Riverside County Assessor, except for public utility property, which is assessed by the State Board of Equalization. Assessed valuations are reported at 100% of the full value of the property, as defmed in Article XIIIA of the California Constitution. Prior to Fiscal Year 1981-82, assessed valuations were reported at 25% of the full value of the property. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS" herein.
The California State Legislature adopted two types of State -reimbursed exemptions beginning in the tax year 1969-70. The first currently exempts 100% of the full value of business inventories from taxation. The 20 213
second exemption currently provides a credit of $7,000 of the full value of an owner -occupied dwelling for which application has been made to the Riverside County Assessor. Revenue estimated to be lost to local taxing agencies due to the above exemptions has in the past been reimbursed from State sources. Reimbursement is based upon total taxes due upon such exemption values and therefore is not reduced by any estimated amount of actual delinquencies.
TABLE 2
CITY OF INDIAN WELLS
SCHEDULE OF ASSESSED PROPERTY VALUE
(As of June 30)
Fiscal Year
Ended Taxable
June 30 Secured Unsecured Assessed Value
2017-18 $5,518,872,281 $25,666,311 $5,544,538,592
2018-19 5,874,726,868 30,977,949 5,905,704,817
2019-20 6,097,333,872 41,477,418 6,138,811,290
2020-21 6,326,136,156 35,017,026 6,361,153,182
2021-22 6,567,932,379 31,680,036 6,599,612,415
Source: City Audited Financial Statements and Riverside County Auditor -Controller; California Municipal Statistics, Inc.
Set forth in the following table are property tax collections and delinquencies in the City as of June 30 for Fiscal Years 2012 through 2021. The County operates under a statutory program entitled the Alternate Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"). Under the Teeter Plan local taxing entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the County. The City elected not to enroll in the Teeter Plan; accordingly, the City's receipt of its property tax revenues may be impacted by delinquencies in payment, as well as by the collection of interest and penalties on past delinquencies.
TABLE 3
CITY OF INDIAN WELLS
PROPERTY TAX LEVIES AND COLLECTIONS
(As of June 30, 2020)
Collected within the
Fiscal Year of Levy Total Collections to Date
Fiscal Taxes Levied Collections in
Year Ended for the Percent Subsequent Percent
June 30 Fiscal Year Amount of Levy Years Amount of Levy 2012 $34,811,422 $26,913,209 77.31% $74,738 $26,987,947 77.53% 2013 2,172,899 2,478,806 114.08 16,221 2,495,027 114.82 2014 2,184,854 2,583,498 118.25 19,383 2,602,881 119.13 2015 2,330,206 2,665,988 114.41 91,604 2,757,592 118.34 2016 2,329,290 2,807,108 120.51 69,424 2,876,532 123.49 2017 2,420,606 2,802,166 115.76 70,974 2,873,141 118.70 2018 2,494,755 2,965,260 118.86 60,334 3,025,593 121.28 2019 2,555,040 3,104,015 121.49 9,525 3,113,540 121.86
2020 2,556,217 3,153,150 123.35 13,287 3,166,437 123.87 2021 2,704,296 3,039,148 112.38 - 3,039,148 112.38
Note: The amounts presented include City property taxes and Redevelopment Agency tax increment. On February 1, 2012, all redevelopment agencies in California were dissolved. Fiscal year ending June 30, 2013 is reflective of the RDA dissolution resulting in a decrease in property tax collections.
Source: County of Riverside Auditor and Controller: Property Tax Apportionment. 21 214
Principal Property Taxpayers
The 20 principal property taxpayers in the City and their taxable assessed values are listed below.
TABLE 4
CITY OF INDIAN WELLS
Principal Property Taxpayers
For Fiscal Year 2021-22
(Based on Taxes Paid)
Property Owner
1. Garden Of Champions
2. H E Indian Wells
3. BBC Esmeralda
4. Standard Pacific Corp
5. Village Shopping Center at Indian Wells
6. Vintage Club
7. IW Golf Club
8. PCG & RGG General Partnership
9. Toscana Homes
10. Toscana Country Club Inc.
11. Indian Wells Prop
12. Private Residence
13. Private Residence
14. Private Residence
15. Private Residence
16. Leo W. Cook
17. Schmid Inv
18. Indian Wells Village II
19. Eldorado Country Club
20. Private Residence
Total Assessed Valuation
Primary Land Use
Tennis Facility
Hotel
Hotel
Residential Development
Shopping Center
Country Club
Country Club
Residential Properties
Residential Properties
Country Club
Hotel
Residential
Residential
Hotel
Residential
Residential
Office Building
Shopping Center
Country Club
Residential
00) 2021-22 Local Secured Assessed Valuation: $6,567,932,379.
Source: County of Riverside Auditor and Controller.
2021-22
Assessed % of
Valuation Tota1o>
$260,809,454 3.97%
117,305,417 1.79
75,865,347 1.16
30,081,261 0.46
24,172,829 0.37
22,533,735 0.34
17,923,719 0.27
17,154,070 0.26
16,561,176 0.25
16,332,152 0.25
16,000,000 0.24
15,305,472 0.23
15,142,400 0.23
14,665,818 0.22
14,491,544 0.22
13,922,570 0.21
13,650,603 0.21
13,534,131 0.21
13,459,346 0.20
13,440,000 0.20
$742,351,044 11.30%
22 215
The table below shows assessed valuation in the City by land use category.
TABLE 5
CITY OF INDIAN WELLS
Assessed Valuation and Parcels by Land Use
Non -Residential:
Commercial/Office
Vacant Commercial
Hotel
Recreational/ Tennis & Golf
Subtotal Non -Residential
Residential:
Single Family Residence
Condominium
Miscellaneous Residential
Vacant Residential
Subtotal Residential
Total
(1)
2021-22
Assessed Valuation')
$ 78,382,473
59,669,767
276,467,435
301,275,778
$ 715,795,453
$4,833,742,309
901,433,136
9,954,100
107,007,381
$5, 852,136,926
$6,567,932,379
Local Secured Assessed Valuation, excluding tax-exempt property.
Retail and Total Taxable Sales
2020.
% of No. of No. of
Total Parcels Total
1.19% 27 0.48%
0.91 29 0.52
4.21 34 0.61
4.59 174 3.11
10.90% 264 4.72%
73.60% 3,146 56.21%
13.72 1,761 31.46
0.15 39 0.70
1.63 387 6.91
89.10% 5,333 95.28%
100.00% 5,597 100.00%
The following table presents the retail taxable transactions of the City for calendar years 2016 through TABLE 6
CITY OF INDIAN WELLS
TAXABLE RETAIL SALES
($ in thousands)
Category
Motor Vehicle and Parts Dealers
Home Furnishings and Appliance Stores
Building Material and Garden Equipment and Supplies Dealers Food and Beverage Stores
Gasoline Stations
Clothing and Clothing Accessories Stores
General Merchandise Stores
Food Services and Drinking Places
Other Retail Group
Total Retail and Food Services
All Other Outlets
Total All Outlets
2016 2017
$ 0 $ 0
1,882,400 807,366
0 0
0 0
0 0
444,431 635,443
0 0
14,335,986 15,185,290
14,454,335 12,158,048
$ 31,117,152 $ 28,786,147
$ 75,469,454 $ 73,980,204
$106,586,606 $102,766,351
Source: California Department of Tax and Fee Administration. 2018 2019 2020
$ 0 $ 0 $ 0
1,417,062 0 0
0 0 0
0 0 0
0 0 0
584,835 498,497 298,309
0 0 0
18,772,134 33,345,252 10,802,823
13,059,409 12,697,142 6,878,093
$ 33,833,440 $ 46,540,891 $17,979,225
$ 76,710,757 $ 67,763,211 $35,447,260
$110,544,197 $114,304,102 $53,426,485
23 216
Transient Occupancy Sales
The following table summarizes the number of residential building permits issued in the City from Fiscal Year 2011-12 through 2020-21.
TABLE 7
CITY OF INDIAN WELLS
TRANSIENT OCCUPANCY TAX
Fiscal Years 2011-12 through 2020-21
Resort Hotels
Short -Term Rentals
Transient Occupancy Tax
Rate in effect
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 $5,677,939 $6,318,721 $6,374,616 $6,625,288 $6,719,057 $7,626,203 $7,716,357 $8,635,851 $4,811,599 $4,451,687 12,013 23,104 32,838 117,552 281,039 229,213 226,660 199,582 133,174 171,091 $5,689,952 $6,341,825 $6,407,454 $6,742,840 $7,000,096 $7,855,416 $7,943,017 $8,835,433 $4,944,773 $4,622,778
11.25% 11.25% 11.25% 11.25% 11.25% 11.25% 11.25% 12.25% 12.25% 12.25% a. Specific revenue detail by operator is unavailable due to confidentiality. b• Voter approved 1% rate increase, effective January 1, 2019.
Source: Published CAFR Reports.
24 217
City Financial Data
The following tables provide a five-year history of the City's Comparative Balance Sheets, and summarize General Fund revenues, expenditures, transfers, and ending fund balances for the City for Fiscal Years 2016-17 through 2020-21. See also "Budgetary Process and Current Budget" above for estimated revenues and expenses for the current Fiscal Year.
TABLE 8
CITY OF INDIAN WELLS
GENERAL FUND COMPARATIVE BALANCE SHEET
(As of June 30)
2017 2018 2019 2020 2021
Assets
Cash and investments $17,889,532 $17,174,331 $19,206,352 $10,493,344 $ 4,756,533 Receivables
Accounts 1,028,357 1,109,519 1,111,069 2,162,668 1,013,108 Accrued interest 36,841 46,827 71,154 23,292 8,267
Prepaid costs 24,666 1,911 7,738 2,865 15,086
Other assets 108,955 11,159 40,677
Due from other funds 1,366,967 2,794,852 3,853,047 8,181,586 10,458,681 Notes receivable 1,206,675 1,178,678 1,138,972
Due from Successor Agency 17,739,192 17,739,192 17,739,192 17,739,192 17,739,192 Total assets $38,085,555 $38,866,632 $43,304,182 $39,792,784 $35,170,516 Liabilities and Fund Balances
Liabilities
Accounts payable $ 1,043,413 $ 1,286,115 $ 2,318,271 $ 4,568,547 $ 1,546,613 Accrued liabilities 81,532 65,873 68,239 103,203 118,932 Deposits payable 336,926 375,867 424,273 256,457 828,998 Due to other funds - - - - -
Total liabilities $ 1,461,871 $ 1,727,855 $ 2,810,783 $ 4,928,207 $ 2,494,543 Fund Balances
Nonspendable
Prepaid costs $ 24,666 $ 1,911 $ 7,738 $ 2,865 $ 15,086 Notes and loans 17,739,192 17,739,192 18,945,867 18,917,870 29,336,845 Restricted for
Community development
Public safety -
Public works - - -
Committed to Capital projects 5,500,000 5,500,000
Assigned Capital projects -
Unassigned 18,859,826 19,397,674 16,039,794 10,443,842 3,324,042 Total fund balances $36,623,684 $37,138,777 $40,493,399 $34,864,577 $32,675,973 Total Liabilities and Fund Balances $38,085,555 $38,866,632 $43,304,182 $39,792,784 $35,170,516 Source: City Audited Financial Statements.
25 218
TABLE 9
CITY OF INDIAN WELLS
STATEMENT OF GENERAL FUND REVENUES, EXPENDITURES AND BALANCES (Fiscal Year Ending June 30)
2021 2020 2019 2018 2017
Revenues
Taxes $ 9,779,512 $ 9,837,497 $18,057,355 $16,353,573 $16,137,074 Licenses and permits 499,644 541,605 504,326 462,426 641,628 Intergovernmental 505,900 485,587 478,269 414,372 483,456 Charges for services 317,458 427,652 485,714 576,143 480,245 Investment income 147,618 327,061 747,096 55,432 12,838 Fines and forfeitures 41,412 58,587 43,100 39,584 35,473 Rental income - - - 825
Assessments
Developer fees - - -
Other income 496,168 501,879 479,349 609,054 502,271
Total revenues $11,787,712 $12,179,868 $20,795,209 $18,541,409 $18,292,985 Expenditures
Current
General government 6,628,933 6,712,868 7,023,498 7,025,621 7,347,657 Public safety 3,711,435 3,717,090 3,646,539 3,479,352 3,528,045 Community development 1,400,549 1,358,158 1,401,939 1,429,142 1,387,624 Public works 2,235,399 2,581,583 2,160,868 1,970,241 2,132,082 Capital outlay - - - - -
Total expenditures $13,976,316 $14,369,699 $14,232,844 $13,904,356 $14,395,408 Excess (Deficiency) of Revenues Over (Under) (2,188,604) (2,189,831) 6,562,365 4,637,053 3,897,577 Expenditures
Other Financing Sources (Uses)
Proceeds from sale of land - - -
Transfers in - 6,000,000 1,242,257 6,500,000
Transfers out - (9,438,991) (4,450,000) (4,121,960) (2,396,324) Total other financing sources (uses) $ - $ (3,438,991) $ (3,207,743) $ (4,121,960) $ 4,103,676 Net Change in Fund Balances (2,188,604) (5,628,822) 3,354,622 515,093 8,001,253 Fund Balances, Beginning of Year 34,864,577 40,493,399 37,138,777 36,623,684 28,622,431 Fund Balances, End of Year $32,675,973 $34,864,577 $40,493,399 $37,138,777 $36,623,684 0) Includes operating, capital and debt services transfers in. (2) Includes operating, capital and debt service transfer out.
Source: City Audited Financial Statements.
26 219
Set forth in the following table is the General Fund budget for Fiscal Year 2020-21 compared with actual results and the adopted budget for Fiscal Year 2020-21. During the course of each Fiscal Year, the budget is amended and revised as necessary by the City Council. The adopted budget for each fiscal year shown below is the final adopted budget as adjusted by the City Council.
TABLE 10
CITY OF INDIAN WELLS
GENERAL FUND BUDGETS AND RESULTS
Budgetary Fund Balance,
Beginning of Year
Resources (Inflows)
Taxes
Licenses and permits
Intergovernmental
Charges for services
Investment income
Fines and forfeitures
Other income
Amounts available for appropriations
Charges to Appropriation (Outflows) General
government
Legislation and policy
City manager
City clerk
City attorney
Financial services
Central services
Community & cultural events
Human resources
Technology
Public safety Administration
Community development
Administration
Inspections and examinations
Current and advanced planning
Code enforcement
Public works
City engineering
Maintenance services
City parkway landscape
Total charges to appropriations
Budgetary Fund Balance,
End of Year
2021 Budget Amounts Actual
Original Final Amounts
$ 34,864,577 $ 34,864,577 $ 34,864,577
15,318,268
395,940
481,137
454,335
196,974
43,960
504,782
52,259,973
217,038
574,182
366,252
324,973
1,373,154
2,144,986
3,148,055
214,913
430,776
4,718,267
185,157
719,361
291,118
468,639
620,556
773,755
813,888
$ 17,385,070
$ 34,874,903
Source: City of Indian Wells 2020-21 Audited Financial Statements. 10,013,268
395,940
481,137
439,211
196,974
43,960
504,782
46,939,849
99,874
679,160
323,894
399,645
932,960
772,224
4,562,447
204,386
461,567
4,722,780
175,777
607,494
307,517
474,122
693,328
783,021
906,486
$ 17,106,682
$ 29,833,167
Variance
9,779,512 (233,756)
499,644 103,704
505,900 24,763
317,458 (121,753)
147,618 (49,356)
41,412 (2,548)
496,168 (8,614)
46,652,289 (287,560)
93,812 6,062
650,584 28,576
291,916 31,978
371,653 27,992
856,517 76,443
763,806 8,418
2,975,323 1,587,124
158,463 45,923
435,244 26,323
3,715,111 1,007,669
157,700 18,077
550,471 57,023
260,667 46,850
459,644 14,478
633,126 60,202
753,595 29,426
848,684 57,802
13,976,316 $3,130,366
32,675,973 $2,842,806
The City Council adopted a balanced Fiscal Year 2021-22 budget, which reflects an approximately 34% increase in annual growth of taxes and assessments and a 26.5% increase in expenditures as compared to Fiscal Year 2020-21 budget.
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The following table summarizes the Fiscal Year 2021-22 and 2022-23 City Budgets. The City may make minor mid -year adjustments to the current adopted budget.
TABLE 11
CITY OF INDIAN WELLS
GENERAL FUND BUDGET
(Fiscal Year 2021-22 through 2022-23)
Revenues
TRANSIENT OCCUPANCY TAX
ADMISSIONS TAX
PROPERTY TAXES
SALES TAXES
FRANCHISE TAXES
OTHER REVENUES
LICENSE & PERMIT FEES
INTERGOVERNMENTAL
CURRENT SERVICE CHARGES
INTEREST INCOME
REAL PROPERTY TRANSFER TAX
BUSINESS LICENSES
FINES & FORFEITURES
Total General Fund Revenues
Expenses
City Council
City Manager
Legal Services
City Clerk
Human Resources
Economic Development
Community Services
Resident Amenities
Community Assistance
Tourism
Building & Safety
Planning
Code Enforcement
Finance
Information Technology
Central Services
Internal Contributions
Risk Management
Police
Engineering
Maintenance Services
City Parkways
Total Expenditures
Net Change in Fund Balance
2021-2022
Adopted Budget
$7,103,830
3,250,000
2,902,037
1,076,240
1,022,500
523,770
476,070
472,330
466,340
365,900
236,500
145,180
46,310
$18,087,007
$ 193,659
622,685
327,280
145,860
216,551
243,817
307,064
1,999,357
320,731
802,629
710,982
377,520
380,366
919,950
436,032
1,450,000
446,866
4,408,668
708,217
901,631
941,534
$16,861,399
$ 1,225,608
2022-2023
v.
2022-2023 2021-2022
Adopted Budget % change
$ 8,382,680 18.0%
3,500,000 7.7
2,974,580 2.5
1,108,150 3.0
1,048,070 2.5
536,860 2.5
487,970 2.5
484,140 2.5
478,010 2.5
375,050 2.5
242,410 2.5
148,810 2.5
47,480 2_5
$19,814,210 9.5%
$ 198,633
640,653
335,637
150,290
221,351
250,023
315,944
2,046,393
283,299
854,055
736,682
380,545
393,661
948,446
449,171
1,471,173
458,698
4,522,171
735,022
939,871
1,001,705
$17,333,425
$ 2,480,785
2.6%
2.9 2.6
3.0 2.2
2.5 2.9
2.4 -11.7
6.4 3.6
0.8 3.5
3.1 3.0
0.0 1.5
2.6 2.6
3.8 4.2
6.4 2.8%
102.4%
Source: City of Indian Wells, Adopted Budget of City of Indian Wells for Fiscal Year 2020-21, 2021-22 and Proposed Budget for Fiscal Year 2022-23.
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Investment of City Funds
The City may invest public funds until such time as the funds are needed to pay the obligations of the City. The City maintains an Investment Policy which sets forth guidelines of the City Treasurer's investment of such funds. The Treasurer is a trustee and therefore a fiduciary subject to the prudent investor standards, and the primary objective shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet liquidity needs, and the third objective shall be to achieve a market rate of return.
The City matches its investments with anticipated cash flow requirements. Pursuant to the California Government Code, maximum maturities shall not exceed five (5) years, without specific approval of the City Council. The City's investment policy limits the investment of the City's funds by specifying term, diversification and credit quality. The requirements of the City's policy regarding these investments are either the same as or more restrictive than the requirements of State law. The City has elected not to permit other types of investments which are permitted by State law.
The City's investment portfolio had a market value as of June 30, 2021 of approximately $79.6 million.
The following table presents a breakdown of the City's investment portfolio by type of security as of that date.
Market Value % of
(in Millions) Portfolio
Federal Agency Issues 34.9 43.8%
Managed Pool Account — LAIF 17.8 22.4
Medium term Corporate Notes 13.0 16.3
Negotiable CD's 10.6 13.3
Local Agency Bonds 2.3 2.9
Section 115 Trust 0.9 1.1
Money Market Sweep/Checking Account 0.1 0.1
Totals 79.6 100.0%
Source: City Finance Department.
As of June 30, 2021, the average days to maturity of the City's investment portfolio was 900 days.
Risk Management
The City is a member of the California Joint Powers Insurance Authority (Authority). The Authority is composed of 117 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self -insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine -member Executive Committee.
Self -Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for self- insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk -sharing pool.
General Liability
Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for 29 222
each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $30,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $30,000 to $750,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $750,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers.
For 2020-21 the Authority's pooled retention is $2 million per occurrence, with reinsurance to $20 million, and excess insurance to $50 million. The Authority's reinsurance contracts are subject to the following additional pooled retentions: (a) $2.5 million annual aggregate deductible in the $3 million in excess of $2 million layer, and (b) $3 million annual aggregate deductible in the $5 million in excess of $10 million layer.
There is a third annual aggregate deductible in the amount of $2.5 million in the $5 million in excess of $5 million layer, however it is fully covered under a separate policy and therefore not retained by the Authority.
The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence.
Costs of covered claims for subsidence losses have a sub -limit of $50 million per occurrence.
Workers' Compensation
Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $50,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $50,000 to $100,000 for each occurrence and is evaluated as a percentage of the pool's total incurred costs within the second layer. (4) Incurred costs from $100,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.
For 2020-21, the Authority's pooled retention is $2 million per occurrence, with reinsurance to statutory limits under California Workers' Compensation Law. Employer's Liability losses are pooled among members to $2 million. Coverage from $2 million to $5 million is purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million to $10 million are pooled among members.
Property Insurance
The City participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. The City property is currently insured according to a schedule of covered property submitted by the City to the Authority. The City property currently has all-risk property insurance protection in the amount of $106,748,474. There is a $10,000 deductible per occurrence except for non -emergency vehicle insurance which has a $2,500 deductible.
Earthquake and Flood Insurance
The City purchases earthquake and flood insurance on a portion of its property. The earthquake insurance is part of the property protection insurance program of the Authority. The City property currently has earthquake protection in the amount of $104,235,663. There is a deductible of 5% per unit of value with a minimum deductible of $100,000.
The City purchases crime insurance coverage in the amount of $1,000,000 with a $2,500 deductible.
The fidelity coverage is provided through the Authority.
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were also no significant reductions in pooled or insured liability coverage in 2020-21.
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Retirement Program
All qualified permanent and probationary employees are eligible to participate in the City's Employee Pension Plan, a cost -sharing multiple -employer defined benefit pension plan administered by the California Public Employees Retirement System (Ca1PERS). The Ca1PERS Plan consists of a miscellaneous pool and a safety pool (referred to as "risk pools"), which are comprised of individual employer miscellaneous and safety rate plans, respectively. The risk pools are included within the Public Employees' Retirement Fund C (PERF C).
Benefit provisions under the Plan are established by State statute and may be amended by City resolution.
Ca1PERS issues publicly available reports that include a full description of the pension plans regarding benefit provision, assumption and membership information. Copies of the reports can be found on the Ca1PERS website.
Benefits Provided
Ca1PERS 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 each plan are applied as specified by the Public Employees' Retirement Law.
The Public Employees' Pension Reform Act of 2013 (PEPRA) requires new benefits and member contributions for new members as defined by PEPRA, that are hired after January 1, 2013. These PEPRA members in pooled plans are reflected in the new Miscellaneous and Safety risk pools created by the Ca1PERS Board in response to the passage of PEPRA, beginning with the June 30, 2013, risk -pool valuations.
The Plans' provisions and benefits in effect at June 30, 2021 are summarized below:
Benefit Formula
Benefit Vesting Schedule
Monthly Benefits, as a % of Eligible Compensation
Retirement Age
Monthly Benefits, as a % of eligible compensation
Required Employee Contribution Rates
Required Employer Contribution Rates
Classic Members Hired Prior
to January 1, 2013
2.7% @ 55
5 years of credited service
Monthly for life
50 and up
2.0% to 2.7%
8.00%
15.037%
PEPRA Members Hired
After January 1, 2013
2% @ 62
5 years of credited service
Monthly for life
62 1%to2%
7.25%
7.874%
Section 20814(c) of the California Public Employees' Retirement Law (PERL) requires that 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. Funding contributions for the Miscellaneous Plan are determined annually on an actuarial basis as of June 30 by Ca1PERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Contributions to the pension plan were $379,796 for the year ended June 30, 2020. The City reported a net pension liability (asset) for its proportionate share of the net pension liability of the Miscellaneous Plan as of June 30, 2020, in the amount of $(781,863). A more complete discussion of the calculation of the City's pension assets is provided in APPENDIX B — "CITY OF INDIAN WELLS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2021."
Defined Contribution Plan
The City contributes to the ICMA Retirement Corporation Prototype Money Purchase Plan and Trust, a defined contribution plan 401(a). The plan is a multiple -employer public employee retirement program. The 31 224
reportable payroll for the employees covered by the plan is $3,435,862 compared with a total payroll of $3,517,107 for the fiscal year ended June 30, 2021. The plan provisions are established and may be amended by City Council.
All full-time employees are eligible to participate in the plan and benefits vest immediately. The required period of service is six months. Eligible employees at age 50 or more may begin to collect defined contribution benefits immediately upon retirement. The employer contribution is 2.5 percent of earnings. No employee contributions are permitted. The total contribution made by the City was $103,419. Contributions are established and amended by State Law and City Resolution.
Deferred Compensation Payable
The City has adopted a deferred compensation plan in accordance with Internal Revenue Code Section 457 for its eligible employees wherein they may execute an individual agreement with the City for amounts earned by them to be paid at a future date when certain circumstances are met. These circumstances are terminated by reasons of death, disability, retirement or unforeseeable emergency. Employees may contribute into the deferred compensation plan up to $19,500 in any year, as amended from time -to -time by the Internal Revenue Service (IRS). Employees aged fifty or older may contribute an additional $6,500 for a total of $26,000. The City has no liability for losses under the plan, but does have the duty of due care that would be required of an ordinary prudent investor.
On January 1, 1997, the City formally established a trust in accordance with IRC 457(g) for its deferred compensation plan for the exclusive benefit of plan participants and their beneficiaries. Accordingly, the deferred compensation assets placed in the trust were not reported in the financial statements.
Other Post Employment Benefit Plan (OPEB)
The City participates in the California Employers' Retiree Benefit Fund (CERBT), an agent multiple - employer defined benefit healthcare plan administered by the California Public Employees' Retirement System (Ca1PERS). A summary of the OPEB amounts for the City's plan is shown below:
Net OPEB Liability $ 30,772
Deferred Outflows related to OPEB 862,756
OPEB Expense 353,775
The City has established a Retiree Healthcare Plan (HC Plan), and participates in an agent multiple - employer defined benefit retiree healthcare plan administered by the Ca1PERS, which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the HC Plan are established by City contracts with the employee associations. Ca1PERS issues a publicly available financial report that can be found on the Ca1PERS website. Benefits provided, employees covered, and other information regarding the HC Plan are more completely described in APPENDIX B — "CITY OF INDIAN WELLS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2021." Section 115 Trust
In June 2018, the City Council approved the creation of a Section 115 Trust Agreement with U.S. Bank National Association, and Public Agency Retirement Services (PARS), Trust Administrator. The Section 115 Trust was established as a means to set aside monies to fund the City's pension and OPEB obligations.
Contributions to the Section 115 Trust are irrevocable, the assets are dedicated to providing benefits to plan members, and the assets are protected from creditors of the City. The purpose of the creation of the Section 115 Trust was to address the City's pension obligations by accumulating assets to reduce the net pension liability.
However, in accordance with generally accepted accounting principles, the assets in the Section 115 Trust are not considered to have present service capacity as plan assets and are therefore considered restricted assets of the City rather than pension plan assets. Accordingly, the Section 115 Trust's assets are recorded as restricted for pension benefits in the City's Employee Benefits Internal Service Fund rather than assets of the pension plan 32 225
during the measurement of the net pension liability. The assets held in trust will be considered pension plan assets at the time they are transferred out of the Trust into the pension plan.
The balance in the Trust for the fiscal year ended June 30, 2021 was $937,402. During Fiscal Year 2020-21, the Trust earned $10,913 in interest income.
The City currently funds its OPEB obligations through the CERBT program, and although the newly established Section 115 Trust is able to accept OPEB funds, the City has no immediate plans to fund OPEB obligations through the Section 115 Trust.
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Direct and Overlapping Debt
Contained within the City are numerous overlapping local agencies providing public services. These local agencies have outstanding obligations issued in the form of general obligation, lease, revenue and special assessment bonds. The following is a listing of direct and overlapping bonded debt on property in the City together with lease obligation debt of agencies in the area, as of November 1, 2021.
TABLE 12
CITY OF INDIAN WELLS
DIRECT AND OVERLAPPING DEBT
2021-22 Assessed Valuation: $6,599,612,415
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Desert Community College District
Desert Sands Unified School District
Desert Sands Unified School District Community Facilities District No. 1 City of Indian Wells
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT:
Riverside County General Fund Obligations
Riverside County Pension Obligations
Desert Sands Unified School District Certificates of Participation
TOTAL OVERLAPPING GENERAL FUND DEBT
OVERLAPPING TAX INCREMENT DEBT (Successor Agencies):
COMBINED TOTAL DEBT
Ratios to 2021-22 Assessed Valuation:
Direct Debt 0.00%
Total Direct and Overlapping Tax and Assessment Debt 1.28% Combined Total Debt 2.74%
Ratios to Redevelopment Successor Agencies Incremental Valuation ($4,653,031,071):
Total Overlapping Tax Increment Debt 1.31%
% Applicable
7.105%
14.623
11.088
100.00
1.994%
1.994
14.623
0.178 -100.
Debt 11/1/21
$26,556,359
57,587,567
63,756
0 $84,207,682
$14,557,781
17,578,606
3,649,901
$35,786,288
$60,645,167
$180,639,1370)
(1) Excludes the 2022 Bonds.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
STATE OF CALIFORNIA BUDGET INFORMATION
Although the State is not a significant source of City revenues, there can be no assurance that the State's annual budget or other legislation will not materially adversely affect the financial condition of the City, in particular given that the City receives certain revenues such as sales tax proceeds and VLF from the State. The following information describes the State budget process and the current and upcoming State budgets.
General
Information about the State budget is regularly available at various State -maintained websites. Text of proposed and adopted budgets may be found at the website of the State Department of Finance (the "DOF"), http://www.dof.ca.gov , under the heading "California Budget." An impartial analysis of the budget is posted by the Legislative Analyst's Office (the "LAO") at http://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, http://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 take no responsibility for the continued accuracy of these 34 227
Internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references.
Budget for State Fiscal Year 2021-22
On July 16, 2021, the Governor signed a series of bills representing the State budget for State fiscal year 2021-22 (the "2021-22 Budget"). The Governor's signing followed negotiations between the Governor and the State Legislature regarding the final provisions of the 2021-22 Budget, including the expenditure of a large projected State general fund surplus. The State Legislature passed temporary budgetary legislation in June 2021 to meet the required State Constitutional budget deadline. The following is drawn from the DOF summary of the 2021-22 Budget.
The 2021-22 Budget indicates that revenues are up significantly from the forecast included in the Governor's proposed State budget for State fiscal year 2021-22, resulting in a large budgetary surplus. This is a result of strong cash trends, two major federal relief bills since the beginning of 2021 (as discussed under the caption "THE CITY—COVID-19 Outbreak"), continued stock market appreciation and a significantly upgraded economic forecast from the prior State fiscal year. The 2021-22 Budget also reports that the State has received approximately $285 billion in federal COVID-19 stimulus funding for State programs. Although the 2021-22 Budget acknowledges that building reserves and paying down debts are critical, the 2021-22 Budget allocates approximately 85% of discretionary funds to one-time spending. The multi -year forecast reflects a budget roughly in balance, although the 2021-22 Budget assumes that risks remain to the economic forecast, including a stock market decline that could reduce State revenues.
For State fiscal year 2020-21, the 2021-22 Budget projects total general fund revenues and transfers of $188.8 billion and authorizes expenditures of $166.1 billion. The State is projected to end State fiscal year 2020-21 with total available reserves of $39.8 billion, including $25.1 billion in the traditional general fund reserve, $12.3 billion in the State's basic reserve fund, known as the Budget Stabilization Account (the "BSA"), $1.9 billion in the Public School System Stabilization Account and $450 million in the Safety Net Reserve Fund. For State fiscal year 2021-22, the 2021-22 Budget projects total general fund revenues and transfers of $175.3 billion and authorizes expenditures of $196.4 billion. The State is projected to end State fiscal year 2021-22 with total available reserves of $25.2 billion, including $4 billion in the traditional general fund reserve, $15.8 billion in the BSA, $4.5 billion in the Public School System Stabilization Account and $900 million in the Safety Net Reserve Fund.
The 2021-22 Budget sets the Proposition 98 minimum funding guarantee for State fiscal year 2021-22 at $93.7 billion. This results in per -pupil funding of $13,976 from Proposition 98 funding, growing to $21,555 when accounting for all funding sources. The 2021-22 Budget also makes retroactive increases to the minimum school funding guarantee in fiscal years 2019-20 and 2020-21, setting them at $79.3 billion and $93.4 billion, respectively. Collectively, this represents a three-year increase in the minimum funding guarantee of $47 billion from the level projected by the 2020-21 Budget.
Other significant features of the 2021-22 Budget include the following:
General Apportionments — An increase of $395 million in ongoing Proposition 98 funding for general apportionments, comprised of: (i) $371.2 million to fund a 5.07% cost -of -living adjustment; and (ii) $23.8 million to fund 0.50% enrollment growth.
Deferrals — $1.453 billion in Proposition 98 funding to repay apportionment deferrals, of which $144.6 million is from State fiscal year 2019-20, $1.1 billion is from State fiscal year 2020-21 and $229.8 million is from State fiscal year 2021-22.
Student Assistance — $250 million in one-time ARP Act funds to support emergency student financial assistance grants. The 2021-22 Budget also provides $160 million in Proposition 98 funding for student assistance, comprised of $100 million in one-time funding available over three years to address student basic needs including food and housing insecurity, $30 million in ongoing 35 228
funding to support student mental health services and $30 million in ongoing funding for colleges to establish basic needs centers and hire basic needs coordinators. •
Workforce Programs — $42.4 million in ongoing Proposition 98 funding to increase program funding and enable community college districts to support work -based learning opportunities. The 2021-22 Budget also provides $20 million in one-time Proposition 98 funding to support community college participation in High Road Training Partnerships and regional partnerships developed by the California Workforce Development Board.
Facilities — $581.4 million in State general obligation bond funding, including $8.2 million to start nine new capital outlay projects and $573.2 million for the construction phase of 32 projects anticipated to complete design by the spring 2022. In addition, the 2021-22 Budget provides $511 million in one-time Proposition 98 funding to address deferred maintenance.
For additional information regarding the 2021-22 Budget, see the DOF and LAO websites. The information presented on such websites is not incorporated herein by reference.
None of the websites or webpages that are referenced above is in any way incorporated into this Official Statement. They are cited for informational purposes only. The City, the Authority and the Underwriter makes no representation whatsoever as to the accuracy or completeness of any of the information on such websites.
There can be no assurance that additional legislation will not be enacted in the future to implement provisions relating to the State budget, address the COVID-19 outbreak or otherwise that may affect the City or its General Fund revenues.
Potential Impact of State Financial Condition on the City The State has experienced significant financial stress in recent years, with budget shortfalls in the several billions of dollars. The COVID-19 outbreak materially adversely impacted the financial condition of the State and the waning of the infection crisis is expected to be followed by increases in unfunded liabilities of the two main retirement systems managed by State entities, Ca1PERS and Ca1STRS. The State also has a significant unfunded liability with respect to other post -employment benefits.
Current and future State budgets will be significantly affected by the COVID-19 outbreak and other factors over which the City has no control. The City cannot determine what actions will be taken in the future by the State Legislature and the Governor to deal with the COVID-19 outbreak, future recessions and resulting changing State revenues and expenditures. There can be no assurance that, as a result of the COVID-19 outbreak or otherwise, the State will not significantly reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of its efforts to address State financial conditions. Although the State is not a significant source of City revenues, there can be no assurance that State actions to respond to the COVID-19 outbreak will not materially adversely affect the financial condition of the City. The State's ability to undertake such revenue reductions or shifting has been limited by provisions of the State Constitution. See the caption "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS —Proposition 22."
Redevelopment Dissolution
General. On December 29, 2011, the State Supreme Court upheld Assembly Bill 1x26 ("AB 1x26"), which dissolved redevelopment agencies in the State. The effect of AB 1x26 upon the City is the termination of the redevelopment functions of the Ontario Redevelopment Agency (the "Former Agency") and the transfer of such functions to a successor agency (the City, referred to in this context as the "Successor Agency"), which was tasked with winding down the Former Agency's redevelopment activities. Under AB 1x26, the Successor Agency cannot enter into new redevelopment projects or obligations and its assets can be used only to pay enforceable obligations, which enforceable obligations are generally limited to obligations in existence in mid - 36 229
2011, when AB 1x26 was signed by the Governor. In addition, the Successor Agency will receive tax increment revenues in amounts that are sufficient to pay 100% (but no greater amount) of such enforceable obligations until such obligations (including accrued interest, as applicable) are paid in full, at which time the Successor Agency will be dissolved. Certain tax revenues formerly allocable to the Former Agency will continue to be available to the Successor Agency to pay certain obligations, and a portion of such revenues may be redirected to other taxing agencies, such as the County, the local school districts and the City. The Successor Agency's activities are subject to review by an oversight board established under AB 1x26. Under AB 1x26, liabilities of the Successor Agency are not liabilities of the City.
On June 27, 2012, the Governor signed Assembly Bill 1484 ("AB 1484"), which made certain amendments to AB 1x26. Under AB 1484, the County Auditor -Controller, the DOF and the State Controller may require the return of funds that were improperly spent or transferred to a public entity in conflict with the provisions of the Community Redevelopment Law, as amended by AB 1x26 and AB 1484, and if such funds are not returned within 60 days, they may be recovered through an offset of sales and use tax or property tax allocations to the relevant local agency, which, in the case of the Successor Agency, is the City.
On September 22, 2015, the following amendments to AB 1x26 and AB 1484 were enacted as Senate Bill 107 ("SB 107"): (1) redevelopment successor agencies that enter into a written agreement with the DOF to remit unencumbered cash to the county auditor -controller will receive a finding of completion, which provides successor agencies with additional fiscal tools and reduced State oversight; (2) successor agencies that that have a "Last and Final" ROPS (as discussed below) may expend a portion of proceeds of bonds issued in 2011, which proceeds are currently frozen; (3) pension or State Water Project override revenues that are not pledged to or not needed for redevelopment bond debt service will be returned to the entity that levies the override; (4) agreements relating to State highway improvements and money loaned to successor agencies to pay costs associated with redevelopment dissolution litigation will be considered enforceable obligations; and (5) reentered agreements entered into after the passage of AB 1484 are unenforceable unless entered into for the purpose of providing administrative support.
SB 107 also: (a) requires the preparation of a Recognized Obligation Payment Schedule with respect to enforceable obligations (a "ROPS"), which are required to be submitted to the oversight board and the DOF in accordance with AB 1x26, once a year beginning with the ROPS period that commenced on July 1, 2016 (rather than twice a year under prior law); (b) establishes an optional "Last and Final" ROPS process beginning in September 2015; under this process, a successor agency that elected to submit a "Last and Final ROPS would no longer submit a periodic ROPS and the enforceable obligations set forth in the "Last and Final" ROPS would be binding on all parties; and (c) clarifies that former tax increment caps and plan limits do not apply for the purposes of paying approved enforceable obligations.
Impact on the City. Significant provisions of AB 1x26, AB 1484, SB 107 and implementing actions of affected parties, including the Successor Agency, the oversight board, the County and the DOF, may be subject to legal challenge, statutory or administrative changes and other clarifications which could affect the impact of the dissolution of redevelopment on the City and its General Fund. The DOF has periodically proposed additional legislation which would modify statutes affecting redevelopment dissolution; it is not known whether additional legislation will be enacted. The full extent of the impact of the implementation of AB 1 x26, AB 1484 and SB 107 or potential future legislation on the City's General Fund is unknown at this time. While certain administrative costs previously charged to the Former Agency by the General Fund will no longer be supported by the Successor Agency, certain property tax revenues formerly allocated to the Former Agency will now be received by the City's General Fund.
The City does not believe that it has received material amounts from the Former Agency or the Successor Agency which may be asserted to be in violation of AB 1x26 or AB 1484, and the City is not currently engaged in any disputes with the DOF with respect to amounts received from the Former Agency. 37 230
RISK FACTORS
The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating purchase of the 2022 Bonds. However, they do not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the 2022 Bonds.
In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.
General Considerations — Security for the Bonds
The Bonds are special obligations of the Authority, payable, as provided in the Indenture, solely from Lease Revenues and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds. The Lease Revenues consist of all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee's pursuit of remedies under the Lease Agreement upon a Lease Default Event. The Authority has no taxing power.
The obligation of the City to make the Rental Payments, including the Base Rental Payments, does not constitute a debt of the City or of the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation.
Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay the Base Rental Payments and Additional Rental Payments from any source of legally available funds and the City has covenanted in the Lease Agreement that it will take such action as may be necessary to include all Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make necessary annual appropriations for all such 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 Base Rental Payments.
The City has the capacity to enter into other obligations which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event the City's revenue sources are less than its total obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Lease Agreement. 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. However, the City's appropriations have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS — Article XIIIB of the California Constitution" herein.
Abatement
In the event of substantial interference with the City's right to use and occupy any portion of the Property by reason of damage to, or destruction or condemnation of the Property, or any defects in title to the Property, Rental Payments will be subject to abatement. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Abatement" herein. In the event that such portion of the Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City's rental interruption insurance will be available in lieu of Base Rental Payments or in the event that casualty insurance proceeds are insufficient to provide for complete repair or replacement of such portion of the Property or redemption of the Bonds, there could be insufficient funds to make payments to Owners in full.
It is not possible to predict the circumstances under which such an abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. 38 231
For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Property is substantially higher or lower than its value at the time of the execution and delivery of the Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Bonds.
If damage, destruction, title defect or eminent domain proceedings with respect to the Property results in abatement of the Rental Payments related to such Property and if such abated Base Rental Payments, if any, together with moneys from rental interruption or use and occupancy insurance (in the event of any insured loss due to damage or destruction) and eminent domain proceeds, if any, are insufficient to make all payments of principal of and interest on Bonds during the period that the Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Under the Lease Agreement and the Indenture, no remedy is available to the Bond Owners for nonpayment under such circumstances. To the extent that Net Proceeds of rental interruption insurance are available for the payment of Rental Payments due under the Lease Agreement, Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from such Net Proceeds. The City will not fund a reserve fund for the 2022 Bonds.
Infectious Disease Outbreak — COVID-19
The spread of the novel strains of coronavirus collectively called SARS-CoV-2, which cause the disease known as COVID-19 ("COVID-19"), and local, State and federal actions in response to COVID-19, have impacted the City's operations and finances. In response to the increasing number of COVID-19 infections and fatalities, health officials and experts have recommended, and some governments have mandated, a variety of responses ranging from travel bans and social distancing practices to complete shutdowns of certain services and facilities. The World Health Organization has declared the COVID-19 outbreak to be a pandemic and, on March 4, 2020, as part of the State's response to address the outbreak, the Governor declared a state of emergency. On March 13, 2020, the President declared a national emergency, freeing up funding for federal assistance to state and local governments. Many school districts across the State temporarily closed some or all school campuses (including schools within the City) in response to local and State directives or guidance.
On March 19, 2020, the Governor issued Executive Order N-33-20, a mandatory Statewide shelter -in - place order applicable to all non -essential services. Certain aspects of the shelter -in -place directives were extended indefinitely until indicators for modifying the stay-at-home order were met. The County also declared a state of emergency in response to the COVID-19 outbreak. On May 4, 2020, the Governor issued an executive order informing local health jurisdictions and industry sectors that they could gradually re open under new modifications and guidance provided by the State. A phased re -opening of various sectors was underway beginning in mid -2020 in accordance with a four -stage re -opening plan that ended with a full reopening of the State's economy on June 15, 2021. Although pursuant to the re -opening plan certain restrictions on activities were eased, restrictions were also re -imposed in various jurisdictions as local conditions warranted, and such restrictions may be renewed as the pandemic continues.
In addition, the Governor extended the deadline to file and pay spring 2020 property taxes for residential and certain commercial property owners and first quarter 2020 sales and use tax returns by 90 days for all but the very largest taxpayers. As a result of the extended deadline to file sales and use tax returns, it is estimated that up to 361,000 California businesses with less than $5 million in taxable annual sales were permitted to defer up to $50,000 in sales tax payments and enter into 12 -month payment plans at zero interest.
On March 27, 2020, the President signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Stabilization Act (the "CARES Act") which provides, among other measures, $150 billion in financial aid to states, tribal governments and local governments to provide emergency assistance to those most significantly impacted by COVID-19. Under the CARES Act, local governments are eligible for reimbursement of certain costs which were expended to address the impacts of the pandemic. The City received a total reimbursement of $66,000 under the CARES Act. The funds received by the City under the CARES Act are not available for payment of the 2022 Bonds and cannot be used to backfill any City revenue losses related to COVID 19. 39 232
On December 27, 2020, the President signed the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act. Although the act did not provide additional financial assistance to state and local governments, it did extend the deadline (to October 2021) for them to use unspent funds that were previously approved under the CARES Act.
On March 11, 2021, the President signed the American Rescue Plan Act of 2021 (the "ARP Act"), a $1.9 trillion economic stimulus package designed to help the United States' economy recover from the adverse impacts of the COVID-19 pandemic. The ARP Act includes approximately $350 billion in aid to state and local governments such as the City, consisting of both direct funding from the United States Department of Treasury and program moneys that will flow from other federal agencies. Half of the aid to state and local governments was distributed in spring 2021, with the other half following in 2022. The City has been allocated a total of approximately $1.3 million, of which $650,000 was received in spring 2021. This funding is available for a broad range of uses, including responding directly to the health emergency, addressing its negative economic impacts with assistance to households and small businesses, restoring government services that were reduced in response to pandemic -related revenue losses and making certain necessary infrastructure improvements. The City has not yet determined how the ARP Act funds that it has received and expects to receive will ultimately be spent, but planning efforts are underway.
The effects of the COVID-19 outbreak and governmental actions responsive to it have altered the behavior of businesses and people in a manner that has had significant negative impacts on global and local economies. In addition, financial markets in the United States and globally have experienced significant volatility attributed to COVID-19 concerns. Volatility in the financial markets caused the California Public Employees Retirement System's ("Ca1PERS") earnings to fall below its investment targets in Fiscal Year 2020.
See the caption "CITY FINANCIAL INFORMATION —Retirement Contributions." The outbreak resulted in increased pressure on State finances as budgetary resources were directed towards containing the pandemic and tax revenues sharply declined in early 2020. Identified cases of COVID-19 and deaths attributable to the COVID-19 outbreak continue to occur throughout the United States, including the County.
Potential impacts to the City associated with the COVID-19 outbreak include, but are not limited to, increasing costs and challenges to the public health system in and around the City, cancellations of public events and disruption of the regional and local economy, with corresponding decreases in General Fund revenues, including as a result of reduced sales and the cancellation of events at the City's convention center and sports and entertainment arena, all of which are subject to sales and other taxes, reduced hotel occupancy, which is subject to transient occupancy taxes, and fewer business license applications. See the captions "CITY FINANCIAL INFORMATION —Sales Taxes," "CITY FINANCIAL INFORMATION —Property Taxes" and "CITY FINANCIAL INFORMATION —Other Taxes."
In response to the COVID-19 outbreak, the City modified its operations to implement remote work opportunities for employees and provide City services online, closed many City facilities to the public, cancelled many programs, rentals and community events and deferred several non -essential capital improvement projects.
With improvements in local case rates, the City has phased in the resumption of normal operations and activities while complying with public health orders and California Occupational Safety and Health Administration COVID-19 Prevention Plan mandates. Large gatherings of City personnel at any one time were prohibited for much of 2020 and early 2021 per health officer orders and on -site personnel wore masks and practiced social distancing while working. City Council and other board meetings occurred via teleconference, and public comment and participation for City Council meetings was also conducted via teleconference and electronic means. The City has not experienced and does not at this time foresee a future negative impact on the execution of City services as a result of the COVID 19 outbreak. The City has worked diligently to provide its employees with personal protective equipment and voluntary access to vaccinations. However, there can be no assurance that absences of employees or City leadership due to COVID-19 will not adversely impact City operations.
The COVID-19 outbreak, including the Delta and Omicron variants of the virus, is ongoing, and the duration and severity of the outbreak and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are uncertain. The ultimate impact of COVID-19 on the operations and finances of the City and the General Fund is unknown. 40 233
See the caption "CITY FINANCIAL INFORMATION — Budget Procedure, Current Budget and Historical Budget Information." No CARES Act or ARP Act funding is included in the City's budgets for Fiscal Years 2021-22 or 2022-23.
The City continues to actively monitor General Fund revenues and expenditures so that any further impacts of the COVID-19 pandemic can be anticipated. The City does not currently expect that the COVID 19 outbreak will have a material adverse effect on the City's ability to repay the 2022 Bonds.
A continued spread of COVID-19, future outbreak of COVID-19, its variants, or another infectious disease, or the fear of any such outbreak, and measures taken to prevent or reduce it, could adversely impact State, national and global economic activities and, accordingly, adversely impact the financial condition and operations of the City, and the extent of impact could be material. These events and other factors resulting from such an outbreak, particularly if prolonged, could result in, or increase the likelihood of, the occurrence of certain of the other potential adverse effects described in this Official Statement, including those relating to declines in the collection of City TOT and sales and use tax revenues and/or future collections of TOT, sales and use tax revenues and property tax revenues within the City. Additionally, the City cannot predict what impact the Pandemic may have on the City's general financial condition or operations, or the assessed values of property within the City.
Hazardous Substances
The discovery of hazardous substances on the Property could impact the City's ability to make Rental Payments. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA") is the most well- known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition on the property whether or not the owner or operator has anything to do with creating or handling the hazardous substance.
The effect, therefore, should the Property be affected by a hazardous substance, would be to reduce the marketability and value of the Property by the costs of, and any liability incurred by, remedying the condition.
Such reduction in the value of the Property could adversely impact the fair rental value of the Property and potentially result in abatement of the Lease Payments.
The City is unaware of any hazardous substances on the Property.
Earthquake, Natural Disasters and Climate Change
There are no known major faults within City limits; however, there are several faults in the Indian Wells area that potentially could result in damage to buildings, roads, bridges, and property within the City in the event of an earthquake. Past experiences, including the July 1992, Landers 7.5 and Big Bear 6.6 Richter Scale earthquakes, have not resulted in damage to infrastructure or property in the City. One fault that could affect the City is the San Andreas Fault, which is located approximately 8 to 10 miles northeast of the City. Other faults in the vicinity of the City include the San Jacinto Fault located 25 to 30 miles southwest of the City, and the Mission Creek Fault located 10 to 12 miles northeast of the City.
If an earthquake were to substantially damage or destroy taxable property within the City, the assessed valuation of such property could be reduced. Such a reduction of assessed valuations could result in a reduction of the funds in the General Fund and available to make Base Rental Payments that secure the Bonds.
Although heavy rainfall is rare in the City, even moderate precipitation can cause significant flooding as the desert soil is unable to hold water. Droughts and wildfires are common hazards in the City, particularly during the summer season. Dust devils can cause havoc with wind speeds of 40 to 60 miles per hour. 41 234
California continues to be negatively impacted by unsustainable emissions of greenhouse gas emissions which negatively impact residents, natural resources and wildlife. The State is experiencing rising average temperatures, decreasing snowpack, warmer storms, higher sea levels and more extreme natural disasters such as floods, landslides and wildfire. The desert eco-system represents one-third of California's biodiversity, and rising average temperatures threaten the sustainability of plant and wildlife in the region, together with air quality as a result of agri-business and development with the Coachella Valley.
Cybersecurity
The City, like other public and private entities, relies on a large and complex technology environment to conduct its operations, and consequently faces the threat of cybersecurity incidents. Such incidents can result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the City's information technology systems to misappropriate assets or information or to cause operational disruption and damage. The City and its departments face cyber threats from time -to -time, including but not limited to hacking, viruses, malware, phishing, distributed denial -of -service, and other attacks on computers, networks, and systems. The City has not experienced a major cyber breach that resulted in a financial loss. The City currently purchases cyber insurance coverage.
The City maintains a Cyber Risk Management program that identifies and prioritizes the digital risks and had developed a complex layered cyber security posture to protect the City's digital assets and networks. In addition, the City is instituting measures to increase cloud security with the use of safety measures that will aid in the governance of the City's cloud solutions and protect City data stored with cloud -based providers.
In an effort to cultivate a cybersecurity culture, the City practices annual mandatory security awareness training and monthly phishing simulations for end -users to assess the City's human risk exposure. The City disseminates notices of common threat vectors and safeguards that staff should follow.
Substitution and Removal of Property
The Authority and the City may amend the Lease Agreement to substitute alternate real property for any portion of the Property or to release a portion of the Property from the Lease Agreement, upon compliance with all of the conditions set forth in the Lease Agreement. After a substitution or release, the portion of the Property for which the substitution or release has been effected shall be released from the leasehold encumbrance of the Lease Agreement and the Ground Lease. See "SECURITY FOR AND SOURCES OF PAYMENT FOR THE BONDS — Substitution or Release of the Property" herein.
Although the Lease Agreement requires, among other things, that the Property, as constituted after such substitution or release, have an annual fair rental value greater than or equal to 105% of the maximum Base Rental Payments payable by the City in any Rental Period, such a replacement or release could have an adverse impact on the security for the Bonds, particularly if an event requiring abatement of Base Rental Payments were to occur subsequent to such substitution or release. See APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — The Lease Agreement — Substitution or Release of the Property," attached hereto.
Limited Recourse on Default; No Acceleration of Base Rental Failure by the City to make Base Rental Payments or other payments required to be made under the Lease Agreement, or failure to observe and perform any other terms, covenants or conditions contained in the Lease Agreement or in the Indenture for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, constitute events of default under the Lease Agreement and permit the Trustee or the Authority to pursue any and all remedies available. In the event of a default, notwithstanding anything in the Lease Agreement or in the Indenture 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, nor shall the Authority or the Trustee have any right to re-enter or re -let the Property except as described in the Lease Agreement. 42 235
The enforcement of any remedies provided in the Lease Agreement and the Indenture could prove both expensive and time consuming. If the City defaults on its obligation to make Base Rental Payments with respect to the Property, the Trustee, as assignee of the Authority, may retain the Lease Agreement and hold the City liable for all Base Rental Payments thereunder on an annual basis and enforce any other terms or provisions of the Lease Agreement to be kept or performed by the City.
Alternatively, the Authority or the Trustee may terminate the Lease Agreement, retake possession of the Property and proceed against the City to recover damages pursuant to the Lease Agreement. Due to the specialized nature of the Property or any property substituted therefor pursuant to the Lease Agreement, no assurance can be given that the Trustee will be able to re -let the Property so as to provide rental income sufficient to make all payments of principal of, and premium, if any, and interest on the Bonds when due, and the Trustee is not empowered to sell the Property for the benefit of the Owners of the Bonds. Any suit for money damages would be subject to limitations on legal remedies against cities in California, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" herein and APPENDIX C — "DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS — The Lease Agreement — Default."
Possible Insufficiency of Insurance Proceeds
The Lease Agreement obligates the City to keep in force various forms of insurance, subject to deductibles, for repair or replacement of the Property in the event of damage, destruction or title defects, subject to certain exceptions. The Authority and the City make no representation as to the ability of any insurer to fulfill its obligations under any insurance policy obtained pursuant to the Lease Agreement and no assurance can be given as to the adequacy of any such insurance to fund necessary repair or replacement or to pay principal of and interest on the Bonds when due. In addition, certain risks, such as earthquakes and floods, are not covered by the insurance required under the Lease Agreement. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Insurance" herein.
Limitations on Remedies
The rights of the Owners of the Bonds are subject to the limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Additionally, enforceability of the rights and remedies of the Owners of the Bonds, and the obligations incurred by the City, may become subject to the federal bankruptcy code (Title 11, United States Code) (the "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, equity principles which may limit the specific enforcement under State law of certain remedies, the exercise by the United States of America of the powers delegated to it by the U.S. Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose and the limitations on remedies against cities in the State. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation, or modification of their rights. Under Chapter 9 of the Bankruptcy Code, which governs the bankruptcy proceedings for public agencies such as the City, there are no involuntary petitions in bankruptcy. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the Bonds, the Trustee and the Authority could be prohibited from taking any steps to enforce their rights under the Lease Agreement, and from taking any steps to collect amounts due from the City under the Lease Agreement.
Additional City Obligations
The Base Rental Payments under the Lease Agreement are payable from funds that are lawfully available to the City. The City is currently liable for other obligations payable from general revenues of the City. The City has the authority to enter into other obligations that constitute additional claims on such general 43 236
revenues, including Additional Bonds payable from a lease of the Leased Premises. To the extent that the City incurs additional obligations, the funds available to make Base Rental Payments may be decreased. See the captions "CITY FINANCIAL INFORMATION — Other Indebtedness — General Fund Supported Obligations" and "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Additional Bonds." The City does not currently have plans to issue Additional Bonds.
Loss of Tax Exemption
As discussed under the heading "TAX MATTERS," the interest on the 2022 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the 2022 Bonds, as a result of acts or omissions of the Authority or the City in violation of its covenants in the Indenture and the Lease Agreement. Should such an event of taxability occur, the 2022 Bonds would not be subject to a special redemption and would remain Outstanding until maturity or until redeemed under the redemption provisions contained in the Indenture.
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 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 Agreement 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.
CONSTITUTIONAL AND STATUTORY LIMITATIONS
ON TAXES AND APPROPRIATIONS
Article XIIIA of the California Constitution
Section 1(a) of Article XIIIA of the California Constitution limits the maximum ad valorem tax on real property to 1% of full cash value (as defined in Section 2 of Article XIIIA), to be collected by each county and apportioned among the county and other public agencies and funds according to law. Section 1(b) of Article XIIIA provides that the 1% limitation does not apply to ad valorem taxes to pay interest or redemption charges on (a) indebtedness approved by the voters prior to July 1, 1978, (b) any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition, or (c) bonded indebtedness incurred by a school district or a community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55% of the voters of the district, but only if certain accountability measures are included in the proposition. Section 2 of Article XIIIA defines "full cash value" to mean "the County Assessor's valuation of real property as shown on the 1975-76 tax bill under full cash value or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year or to reflect a reduction in the consumer price index or comparable data for the area under the taxing jurisdiction, or reduced in the event of declining property values caused by substantial damage, destruction, or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above.
In addition, legislation enacted by the California Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. Prior to Fiscal Year 1981-82, assessed valuations were reported at 25% of the full value of the property. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100% of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100% of assessed value. 44 237
On June 3, 1986, California voters approved an amendment to Article XIIIA, which added an additional exemption to the 1% tax limitation imposed by Article XIIIA. Under this amendment to Article XIIIA, local governments and school districts may increase the property tax rate above 1% for the period necessary to retire new general obligation bonds, if two-thirds of those voting in a local election approve the issuance of such bonds and the money raised through the sale of the bonds is used exclusively to purchase or improve real property.
In the June 1990 election, the voters of the State approved amendments to Article XIIIA permitting the State Legislature to extend the replacement dwelling provisions applicable to persons over 55 to severely disabled homeowners for a replacement dwelling purchased or newly constructed on or after June 5, 1990, and to exclude from the definition of "new construction" triggering reassessment improvements to certain dwellings for the purpose of making the dwelling more accessible to severely disabled persons. In the November 1990 election, the voters of the State approved an amendment of Article XIIIA to permit the State Legislature to exclude from the definition of "new construction" seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.
Since 1990, the voters have approved several other minor exemptions from the reassessment provisions of Article XIIIA.
Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership, 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 school districts will share the growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each Agency's allocation the following year. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the 1% limit except for taxes to support indebtedness approved by the voters as described above.
In a Minute Order issued on November 2, 2001 in County of Orange v. Orange County Assessment Appeals Board No. 3, case no. 00CC03385, the Orange County Superior Court held that where a home's taxable value did not increase for two years, due to a flat real estate market, the Orange County assessor violated the two percent inflation adjustment provision of Article XIIIA, when the assessor tried to "recapture" the tax value of the property by increasing its assessed value by 4% in a single year. The assessors in most California counties, including Los Angeles County, use a similar methodology in raising the taxable values of property beyond 2% in a single year. The State Board of Equalization has approved this methodology for increasing assessed values.
The Orange County Superior Court has not ruled on a motion to restate the complaint as a class action, which could have the effect of extending this ruling to other similar cases.
The City is unable to predict at this time the outcome of this litigation and what effect, if any, it might have on assessed values in the City or the availability of revenue sources which may be provided by the State to replace lost property tax revenues.
Article XIIIB of the California Constitution
On November 6, 1979, California voters approved Proposition 4, which added Article XIIIB to the California Constitution. In June 1990, Article XIIIB was amended by the voters through their approval of Proposition 111. Article XIIIB of the California Constitution limits the annual appropriations 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 annually for changes in the cost -of -living, population and services rendered by the governmental entity. The "base year" for establishing such appropriation limit is the 1978-79 fiscal year.
Increases in appropriations by a governmental entity are also permitted (i) if financial responsibility for providing services is transferred to the governmental entity, or (ii) for emergencies so long as the appropriations limits for the three years following the emergency are reduced to prevent any aggregate increase above the California Constitution limit. Decreases are required where responsibility for providing services is transferred from the governmental entity.
Appropriations subject to Article XIIIB include, generally, any authorization to expend during the fiscal year the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State 45 238
subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. Appropriations subject to limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or legally authorized as of January 1, 1979, on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified outlay projects, and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990 levels. "Proceeds of taxes" include, but are not limited to, all tax revenues and the proceeds to any entity of government from (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation, (ii) the investment of tax revenues, and (iii) certain State subventions received by local governments. 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 rates or fee schedules over the subsequent two fiscal years.
As amended in June 1990, the appropriations limit for the City in each year is based on the limit for the prior year, adjusted annually for changes in the costs of living and changes in population, and adjusted, where applicable, for transfer of financial responsibility of providing services to or from another unit of government.
The change in the cost -of -living is, at the City's option, either (i) the percentage change in California per capita personal income, or (ii) the percentage change in the local assessment roll for the jurisdiction due to the addition of nonresidential new construction. The measurement of change in population is a blended average of statewide overall population growth, and change in attendance at local school and community college ("K-14") districts.
As amended by Proposition 111, the appropriations limit is tested over consecutive two-year periods.
Any excess of the aggregate "proceeds of taxes" received by the City over such two-year period above the combined appropriations limits for those two years is to be returned to taxpayers by reductions in tax rates or fee schedules over the subsequent two years.
Article XIIIB permits any government entity to change the appropriations limit by vote of the electorate in conformity with statutory and Constitutional voting requirements, but any such voter -approved change can only be effective for a maximum of four years.
The City adopted its Fiscal Year 2021-23 Biennial Budget on June 24, 2021 and has calculated its appropriations limit at $102,773,694 for Fiscal Year 2021-22, with appropriations subject to the limit estimated at $16,681,389.
The City's appropriations have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. The impact of the appropriations limit on the City's financial needs in the future is unknown.
Articles XIIIC and XIIID of the California Constitution On November 5, 1996, the voters of the State approved Proposition 218, known as the "Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the California Constitution, which contain a number of provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of certain provisions of Proposition 218 will ultimately be determined by the courts with respect to some of the matters discussed below. It is not possible at this time to predict with certainty the future impact of such interpretations. The provisions of Proposition 218, as so interpreted and applied, may affect the City's ability to meet certain obligations.
Proposition 218 (Article XIIIC) requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City require a majority vote and taxes for specific purposes, even if deposited in the City's General Fund, require a two-thirds vote. Further, any general-purpose tax which the City imposed, extended or increased, without voter approval, after December 31, 1994 may continue to be imposed only if approved by a majority vote in an election which must be held within two years of November 5, 1996. The City has not so imposed, extended or increased any such taxes which are currently in effect.
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Article XIIIC also expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date such taxes, assessments, fees and charges were imposed. Article XIIIC expands the initiative power to include reducing or repealing assessments, fees, and charges, which had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996 and absent other legal authority could result in the retroactive reduction in any existing taxes, assessments, or fees and charges. No assurance can be given that the voters of the City will not, in the future, approve initiatives which reduce or repeal, or prohibit the future imposition or increase of, local taxes, assessments, fees or charges.
The voter approval requirements of Proposition 218 reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase such taxes in the future to meet increased expenditure needs.
Proposition 218 (Article XIIID) also added several new provisions relating to how local agencies may levy and maintain "assessments" for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional special benefit conferred on a parcel, (ii) a requirement that the assessment must confer a "special benefit," as defined in Article XIIID, over and above any general benefits conferred, and (iii) a majority protest procedure which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party. "Assessment" in Article XIIID is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property. While this definition applies to landscape and maintenance assessments for open space areas, street medians, streetlights and parks, the City currently has no landscape and maintenance assessments for open space areas, street medians, streetlights and parks.
In addition, Proposition 218 (Article XIIID) added several provisions affecting "fees" and "charges," defined for purposes of Article XIIID to mean "any levy other than an ad valorem tax, a special tax, or an assessment, imposed by a [local government] upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service." All new and existing property related fees and charges must conform to requirements prohibiting, among other things, fees and charges which (i) generate revenues exceeding the funds required to provide the property related service, (ii) are used for any purpose other than those for which the fees and charges are imposed, (iii) are for a service not actually used by, or immediately available to, the owner of the property in question, or (iv) are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Depending on the interpretation of what constitutes a "property related fee" under Article XIIID, there could be future restrictions on the ability of the City's General Fund to charge its enterprise funds for various services provided. Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land affected by such fee or charge. The City must then hold a hearing upon the proposed imposition or increase, and if written protests against the proposal are presented by a majority of the owners of the identified parcels, the City may not impose or increase the fee or charge. Moreover, except for fees or charges for wastewater, water and refuse collection services, or fees for electrical and gas service, which are not treated as "property related" for purposes of Article XIIID, no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge or, at the option of the local agency, two-thirds voter approval by the electorate residing in the affected area.
Proposition 218 (Article XIIIC) also removes many of the limitations on the initiative power in matters of reducing or repealing any local tax, assessment, fee or charge. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City's General Fund. "Assessments," "fees" and "charges" are not defined in Article XIIIC, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIIIC as for Article XIIID described above. If not, the scope of the 47 240
initiative power under Article XIIIC potentially could include any General Fund local tax, assessment, or fee not received from or imposed by the federal or State government or derived from investment income.
The City does not levy any property related "fees" or "charges" which it considers subject to challenge under Proposition 218 (Article XIIIC). The City is a defendant, with over 80 other California water providers, in litigation brought by a water ratepayer arguing the inclusion in water rates of costs to fund public fire hydrant flows violates Proposition 218 because these fire flows are not property -based water service, but a general government service to be funded by taxes. The City cannot currently estimate potential costs of this litigation.
See "ABSENCE OF MATERIAL LITIGATION — Legal Challenge To Water Rates For Water Distributed Through Hydrants."
Statutory Spending Limitations
A statutory initiative ("Proposition 62") was adopted by the voters of the State at the November 4, 1986 General Election which (a) requires that any tax for general governmental purposes imposed by local governmental entities be approved by resolution or ordinance adopted by two-thirds vote of the governmental agency's legislative body and by a majority of the electorate of the governmental entity, (b) requires that any special tax (defined as taxes levied for other than general governmental purposes) imposed by a local governmental entity be approved by a two-thirds vote of the voters within the jurisdiction, (c) restricts the use of revenues from a special tax to the purposes or for the service for which the special tax is imposed, (d) prohibits the imposition of ad valorem taxes on real property by local governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of transaction taxes and sales taxes on the sale of real property by local governmental entities and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985 be ratified by a majority vote of the electorate within two years of the adoption of the initiative or be terminated by November 15, 1988. The requirements imposed by Proposition 62 were upheld by the California Supreme Court in Santa Clara County Local Transportation Authority v. Guardino, 11 Ca1.4th 220; 45 Ca1.Rptr.2d 207 (1995).
Proposition 62 applies to the imposition of any taxes or the effecting of any tax increases after its enactment in 1986, but the requirements of Proposition 62 are subsumed by the requirements of Proposition 218 for the imposition of any taxes or the effecting of any tax increases after November 5, 1996. See "— Articles XIIIC and XIIID of the California Constitution" above.
In the opinion of the City Attorney, the provisions of Proposition 62 do not apply to charter cities, although this position is being challenged by various groups, and may be the subject of future litigation. If ultimately found valid and applicable to charter cities, however, Proposition 62 could affect the ability of the City to continue the imposition of certain taxes, such as Franchise Taxes, Sales Taxes and Transient Occupancy Taxes, and may further restrict the City's ability to raise revenue.
Unitary Property
Some amount of property tax revenue of the City is derived from utility property which is considered part of a utility system with components located in many taxing jurisdictions ("unitary property"). Under the State Constitution, such property is assessed by the CDTFA as part of a "going concern" rather than as individual pieces of real or personal property. State -assessed unitary and certain other property is allocated to the counties by the CDTFA, taxed at special county -wide rates, and the tax revenues distributed to taxing jurisdictions (including the City) according to a statutory formula that is generally based on the distribution of taxes in the prior year.
Proposition 22
On November 2, 2010, State voters approved Proposition 22, which eliminates the State's ability to borrow or shift local revenues and certain State revenues that fund transportation programs. Proposition 22 restricts the State's authority over a broad range of tax revenues, including property taxes allocated to cities (including the City), counties and special districts, the VLF, State excise taxes on gasoline and diesel fuel, the 48 241
State sales tax on diesel fuel, and the former State sales tax on gasoline. It also makes a number of significant other changes, including restricting the State's ability to use motor vehicle fuel tax revenues to pay debt service on voter -approved transportation bonds.
Proposition 26
On November 2, 2010, State voters 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: (a) 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 the privilege; (b) a charge imposed 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; (c) a charge imposed for the reasonable regulatory costs of a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders and the administrative enforcement and adjudication thereof; (d) a charge imposed for entrance to or use of local government property, or the purchase, rental or lease of local government property; (e) 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; (f) a charge imposed as a condition of property development; and (g) 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. The City does not believe that Proposition 26 will adversely affect its General Fund revenues.
Future Initiatives
Article XIIIA, Article XIHB, Article XIIIC and Article XIIID and Propositions 22, 25, 26 and 62 were each adopted as measures that qualified for the ballot pursuant to California's constitutional initiative process.
From time -to -time other initiative measures could be adopted, affecting the ability of the City to increase revenues and to increase appropriations. For example, ballot initiatives currently in process for qualification for consideration at future elections include a measure that would require a two-thirds vote of the electorate for all taxes, including local general and special taxes put on the ballot through an initiative and a measure to revoke Proposition 13 protections for commercial and industrial properties.
Risk of Tax Audit
In December 1999, as a part of a larger reorganization of the Internal Revenue Service (the "IRS"), the IRS commenced operation of its Tax Exempt and Government Entities Division (the "TE/GE Division"), as the successor to its Employee Plans and Exempt Organizations division. The TE/GE Division has a subdivision that is specifically devoted to tax-exempt bond compliance. The City has not been contacted by the IRS regarding the examination of any of its tax-exempt bond transactions. The City is audited from time -to -time and is currently undergoing an IRS audit relating to settlement payments for litigation and other disputes.
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, bond counsel to the Authority ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the 2022 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the 2022 Bonds is not a specific preference item for purposes of the federal alternative minimum tax. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix F hereto.
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To the extent the issue price of any maturity of the 2022 Bonds is less than the amount to be paid at maturity of such 2022 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2022 Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the 2022 Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the 2022 Bonds is the first price at which a substantial amount of such maturity of the 2022 Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the 2022 Bonds accrues daily over the term to maturity of such 2022 Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such 2022 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such 2022 Bonds. Beneficial owners of the 2022 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2022 Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such 2022 Bonds in the original offering to the public at the first price at which a substantial amount of such 2022 Bonds is sold to the public. 2022 Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of Bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2022 Bonds. The Authority and the City have each made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the 2022 Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the 2022 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the 2022 Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the 2022 Bonds may adversely affect the value of, or the tax status of interest on, the 2022 Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Bond Counsel is of the opinion that interest on the 2022 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the 2022 Bonds may otherwise affect a beneficial owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2022 Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the 2022 Bonds. Prospective purchasers of the 2022 Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion. 50 243
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the 2022 Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts.
Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority or the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Authority and the City have each covenanted, however, to comply with the requirements of the Code.
Bond Counsel's engagement with respect to the 2022 Bonds ends with the issuance of the 2022 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority, the City, or the beneficial owners regarding the tax-exempt status of the 2022 Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority, the City and their appointed counsel, including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority or the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the 2022 Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the 2022 Bonds, and may cause the Authority, the City or the beneficial owners to incur significant expense.
CERTAIN LEGAL MATTERS
The validity of the 2022 Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix F hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Best Best & Krieger LLP, as Disclosure Counsel, will provide certain other legal services for the Authority and the City. Orrick, Herrington & Sutcliffe LLP will receive compensation from the City contingent upon the sale and issuance of the 2022 Bonds. Certain legal matters will be passed on for the Authority and the City by the City Attorney of the City. Certain legal matters will be passed upon for the Underwriter by its, Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California.
ABSENCE OF MATERIAL LITIGATION
There is no action, suit or proceeding known to be pending or threatened either restraining or enjoining the execution or delivery of the 2022 Bonds, the Lease Agreement or the Indenture, or in any way contesting or affecting the validity of the foregoing or any proceedings of the Authority or the City taken with respect to any of the foregoing. Various claims and suits have been and can be expected to be filed against the City in the normal course of business. The aggregate amount of the uninsured liabilities of the City which may result from all claims will not, in the opinion of the City, materially affect the City's finances or impair its ability to make Base Rental Payments under the Lease Agreement. The City has determined that four subject matter claims involving the City are potentially relevant to the making of an informed investment decision:
UNDERWRITING
The 2022 Bonds are being purchased by UBS Financial Services Inc. (the "Underwriter"). Pursuant to a Bond Purchase Agreement between the Underwriter and the Authority (the "Purchase Agreement"), the Underwriter has agreed to purchase the 2022 Bonds for an aggregate purchase price of $ , which represents the par amount of the 2022 Bonds, plus net original issue premium of $ , less an underwriter's discount of $ , subject to the conditions set forth in the Purchase Agreement. The Purchase Agreement provides that the Underwriter will purchase all of the 2022 Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. 51 244
The Underwriter may offer and sell the 2022 Bonds to certain dealers, institutional investors and others at prices lower than the public offering prices stated on the inside cover page hereof and such public offering prices may be changed from time -to -time by the Underwriter.
UBS Financial Services Inc. ("UBS FSI") has entered into a distribution and service agreement with its affiliate UBS Securities LLC ("UBS Securities") for the distribution of certain municipal securities offerings.
Pursuant to such agreement, UBS FSI will share a portion of its underwriting compensation with UBS Securities. UBS FSI and UBS Securities are each subsidiaries of UBS Group AG.
RATING
S&P Global Ratings ("S&P") assigned a rating of " " to the 2022 Bonds. Such rating reflects only the views of such rating agency, and an explanation of the significance of the ratings may be obtained by contacting it at: Standard & Poor's, 55 Water Street, New York, New York 10041. Such rating is not a recommendation to buy, sell or hold the 2022 Bonds. There is no assurance that such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by such organization, if in its judgment circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2022 Bonds.
MUNICIPAL ADVISOR
Columbia Capital Management, LLC serves as Municipal Advisor (the "Municipal Advisor") to the Authority and the City with respect to the issuance of the 2022 Bonds. The Municipal Advisor has not been engaged, nor has it undertaken, to audit, authenticate or otherwise verify the information set forth in this Official Statement with respect to accuracy and completeness of disclosure of such information. The Municipal Advisor will receive compensation contingent upon the sale and issuance of the 2022 Bonds.
CONTINUING DISCLOSURE
The City has covenanted for the benefit of the Owners of the 2022 Bonds to provide annually certain financial information and operating data relating to the 2022 Bonds and the City (the "Annual Report") and notice of certain events. For a complete listing of items of information which will be provided in the Annual Report and notices of enumerated events, see APPENDIX E — "FORM OF CONTINUING DISCLOSURE CERTIFICATE," attached hereto. Such information is to be provided by the City not later than nine (9) months after the end of the City's fiscal year (which currently would be April 1), commencing with the report for Fiscal Year 2021-22. Pursuant to the Continuing Disclosure Certificate, the Annual Report will be filed by the City through the Electronic Municipal Market Access (EMMA) website of the MSRB, or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to S.E.C. Rule 15c2 - 12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended ("Rule 15c2-12"). These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2 -12(b)(5).
[Discussion of any non-compliance]. The City has adopted disclosure policies and procedures in an effort to formalize its disclosure practices and implement additional procedures to timely file complete annual reports and event notices in the future.
MISCELLANEOUS
References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof. Copies of the Indenture, the Lease Agreement and other documents are available, upon request, and upon payment to the City of a charge for copying, mailing and handling, from the City Clerk at the City of Indian Wells, 44-950 Eldorado Drive, Indian Wells, California 92210. 52 245
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Authority or the City and the purchasers or Owners of any of the 2022 Bonds.
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The execution and delivery of this Official Statement have been duly authorized by the Authority and the City.
INDIAN WELLS FINANCING AUTHORITY
By:
Executive Director
CITY OF INDIAN WELLS
By:
City Manager
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APPENDIX A
GENERAL DEMOGRAPHIC INFORMATION REGARDING
THE CITY OF INDIAN WELLS
Information contained in this Appendix A is presented as general background data. The 2022 Bonds are payable solely from Base Rental Payments to be made by the City of Indian Wells. The County of Riverside and the State of California have no obligation to make any payments with respect to the 2022 Bonds. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" herein for a description of the security for the 2022 Bonds. Further, the information in this Appendix A is obtained from publicly available sources which do not yet provide current information in many cases to reflect the adverse impact of the Pandemic, particularly with respect to employment and taxable transactions. See "CITY OF INDIAN WELLS FINANCES" and "RISK FACTORS — Infectious Disease Outbreak — COVID-19" in this Official Statement for additional information.
General
The City, incorporated in 1967, is located 120 miles east of Los Angeles in the eastern portion of the County known as the Coachella Valley.
Its pristine natural setting, upscale residential country clubs, first-class resorts, championship golf courses, and abundance of leisure and cultural activities distinguish the Indian Wells community. The City boasts 5,403 full-time residents spread over 15.04 square miles. An additional 4,000 to 5,000 part- time residents call Indian Wells home during the winter season.
The City maintains a website at www.cityofindianwells.org . However, the information presented there is not part of this Official Statement, is not incorporated by reference herein and should not be relied upon in making an investment decision with respect to the 2022 Bonds.
City Government
Indian Wells operates under the City Council/City Manager form of Government. Policy -making and legislative authority are vested in a governing council (Council) consisting of the Mayor and four other members, all elected on a non-partisan basis. Council members serve four-year terms and are elected at large. The Council/Manager form of government is broadly defined as combining the political/policy leadership of elected officials with the managerial leadership of the City Manager.
The City Council appoints the City Manager and City Attorney. All other city employees are appointed by and are responsible to the City Manager.
The City Manager heads the executive branch of the government, implements policies as directed and established by the City Council, and manages the administrative and operational functions utilizing City staff. The City provides a full range of services, including police and fire protection, construction and maintenance of streets and infrastructure, economic development, planning and community development, building and safety, arts and culture, and recreational activities.
A-1
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Population
As of January 1, 2021, the California Department of Finance estimates that Indian Wells has a population of 5,428. Indian Wells is a low -density community and has a stable population consisting predominately of single-family homes.
TABLE A-1
CITY OF INDIAN WELLS
ANNUAL POPULATION ESTIMATES
(As of January 1)
Year City of Indian Wells Riverside County State of California 2017 5,450 2,374,555 39,352,398
2018 5,574 2,397,662 39,519,535
2019 5,445 2,419,057 39,605,361
2020 5,403 2,440,719 39,648,938
2021 5,428 2,454,453 39,466,855
Source: California State Department of Finance.
Employees and Labor Relations
The City currently employs [30] full-time equivalent employees. The following table presents the number of full-time City employees for the Fiscal Years 2016-17 through 2020-21.
TABLE A-2
CITY OF INDIAN WELLS
FULL-TIME CITY EMPLOYEES
(Fiscal Years 2016-17 through 2020-21)
Fiscal Number of
Year Full -Time Employeesw
2016-17 29
2017-18 29
2018-19 29
2019-20 30
2020-21 30
Source: City of Indian Wells Finance Department.
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Income Levels
The City of Indian Wells is primarily a bedroom community with primary employment in nearby cities. Indian Wells median household income is $101,145, which is higher than the national average of $61,937 and 150% higher than the State of California average of $75,277. The table below sets forth the per capita and personal income for the City for the fiscal years 2011-12 through 2019-20.
TABLE A-3
CITY OF INDIAN WELLS
PER CAPITA AND PERSONAL INCOME
(Fiscal Years 2011-12-2019-20)
Personal Per Capita
Fiscal Year Population Income Personal Income
2011-12 5,035 $585,987,499 $116,383
2012-13 5,081 599,972,864 118,082
2013-14 5,137 474,294,073 92,329
2014-15 5,194 469,484,673 90,390
2015-16 5,412 447,589,123 82,703
2016-17 5,450 472,424,421 86,683
2017-18 5,574 513,911,206 92,198
2018-19 5,445 529,521,295 97,249
2019-20 5,403 546,486,273 101,145
Source:
Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other than labor -related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax payments, fines, fees, penalties, etc.) and personal contributions to social security insurance and federal retirement payroll deductions. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." A-3
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The following table summarizes the total effective buying income for the County, the State and the United States for the period 2017 through 2021:
TABLE A-4
RIVERSIDE COUNTY AND CALIFORNIA
TOTAL EFFECTIVE BUYING INCOME,
MEDIAN HOUSEHOLD EFFECTIVE BUYING INCOME AND
PERCENT OF HOUSEHOLDS WITH INCOMES OVER $50,000(1)
2017
Riverside County
California
United States
2018
Riverside County
California
United States
2019
Riverside County
California
United States
2020
Riverside County
California
United States
2021
Riverside County
California
United States
Total Effective Buying
Income(2)
$ 47,509,909
1,036,142,723
8,132,748,136
$ 51,784,973
1,113,648,181
8,640,770,229
$ 54,118,453
1,183,264,399
9,017,967,563
$ 59,340,416
1,243,564,816
9,487,165,436
$ 60,749,087
1,290,894,604
9,809,944,764
Median Household
Effective Buying
Income
$50,287
55,681
48,043
$53,505
58,858
50,735
$54,920
61,895
52,841
$59,167
65,285
55,303
$60,203
67,510
56,790
Percent of Households
with Income over
$50, 000
50.23%
54.27 53.29%
57.15 54.41%
59.16 57.60% o
61.45 58.41%
62.86 (1) Estimated, as of January 1 of each year.
(2) Dollars in thousands.
Source: The Nielsen Company, Site Reports, 2017-2018; Environics Analytics, Spotlight Claritas Reports 2019-2021.
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Industry and Employment
The County is a part of the Riverside -San Bernardino -Ontario Primary Metropolitan Statistical Area ("PMSA"), which includes all of Riverside and San Bernardino Counties. In addition to varied manufacturing employment, the PMSA has large and growing commercial and service sector employment. The number of employed persons in the PMSA by industry is set forth in the following table.
TABLE A-5
RIVERSIDE -SAN BERNARDINO-ONTARIO PMSA
ANNUAL AVERAGE EMPLOYMENT BY INDUSTRY(1)
(In Thousands)
Industry 2016 2017 2018 2019 2020
Agriculture 14.6 14.4 14.5 14.6 13.9
Construction 92.0 97.0 104.8 101.1 105.0
Finance Activities 44.6 44.5 43.7 44.2 43.7
Government 242.3 250.0 257.5 268.8 249.1
Manufacturing: 98.6 98.7 101.3 102.6 94.3
Nondurables 34.2 34.8 36.2 15.4 34.6
Durables 64.4 63.9 65.1 65.7 59.7
Mining & Logging 0.9 0.9 1.0 1.2 1.3
Retail Trade 178.0 182.1 180.8 191.1 168.8
Professional and Business Services 145.0 147.2 150.6 160.7 154.0 Education and Health Services 214.3 224.8 240.0 260.5 248.7 Leisure & Hospitality 160.2 165.7 170.0 174.5 139.2
Other Services 44.6 45.6 45.6 43.1 39.6
Transportation, Warehousing and Utilities 107.3 120.2 132.6 146.3 170.5 Wholesale Trade 62.8 63.7 64.9 65.0 64.6
Information 11.5 11.3 11.2 11.3 9.4
Total, All Industries 1,416.6 1,466.0 1,518.7 1,585.0 1,501.8 (1) The employment figures by industry, which are shown above, are not directly comparable to the "Total, All Industries" employment figures due to rounded data.
Source: State Employment Development Department, Labor Market Information Division.
Unemployment data for the County, the State and the United States for the years 2017 through 2020 and preliminary data for June 2021 (as indicated) are set forth in the following table.
TABLE A-6
COUNTY OF RIVERSIDE
COUNTY, STATE AND NATIONAL UNEMPLOYMENT DATA
June
2017 2018 2019 2020 2021(2)
County(') 5.2% 4.4% 3.7% 9.9% 7.9%
California(1) 4.8 4.2 4.2 10.1 7.7
United States(3) 4.4 3.9 3.7 8.1 5.9
(1) Data is not seasonally adjusted. The unemployment data for the County and State is calculated using unrounded data. (2) Unemployment rate information is preliminary for June 2021. (3) Data is seasonally adjusted.
Source: State of California Employment Development Department Labor Market Information Division; U.S. Bureau of Labor Statistics.
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Commercial Activity
Commercial activity is an important factor in the County's economy. Much of the County's commercial activity is concentrated in central business districts or small neighborhood commercial centers in cities. There are five regional shopping malls in the County: Galleria at Tyler (Riverside), Hemet Valley Mall, Westfield Palm Desert Shopping Center, Moreno Valley Mall and the Promenade at Temecula. There are also three factory outlet malls (Desert Hills Factory Stores, Cabazon Outlets and Lake Elsinore Outlet Center) and over 200 area centers in the County.
The following tables sets forth taxable sales transactions in the County for the years 2016 through 2020, the last year being the most recent full year of which annual data is currently available. [Remainder of Page Intentionally Left Blank]
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TABLE A-7
COUNTY OF RIVERSIDE
TAXABLE SALES TRANSACTIONS
2016 2017 2018 2019 2020
Motor Vehicle and Parts Dealers $ 5,047,533,639 $ 5,348,811,902 $ 5,407,138,856 $ 5,551,535,521 $ 5,786,471,096 Home Furnishings and Appliance Stores 1,386,985,312 1,730,565,510 1,962,649,727 2,092,520,010 2,097,785,280 Building Material and Garden Equipment and Supplies Dealers 1,965,100,962 2,161,592,712 2,346,507,775 2,487,360,007 3,091,784,448 Food and Beverage Stores 1,574,029,504 1,666,856,136 1,790,507,202 1,821,669,581 1,938,870,682 Gasoline Stations 2,704,278,307 2,933,668,373 3,381,768,451 3,383,592,749 2,622,849,376 Clothing and Clothing Accessories Stores 2,190,227,577 2,199,516,627 2,315,432,567 2,361,182,097 1,824,772,212 General Merchandise Stores 3,304,959,106 3,375,622,686 3,560,754,579 3,966,881,856 4,122,093,914 Other Retail Group 2,452,590,954 2,586,953,725 3,273,275,986 3,079,536,332 5,031,910,636 Food Services and Drinking Places 3,648,980,299 3,852,753,167 4,004,656,656 4,276,122,483 3,547,301,048 Total Retail and Food Services $ 24,274,685,660 .__$ _ (AM $ 28,042,691,799 $ 29,020,400,636 $ 30,063,838,692 All Other Outlets $ 10,209,007,883 $ 10,551,119,262 $ 10,876,805,756 $ 11,537,443,970 $ 11,854,183,849 Total All Outlets $ 34,483,693,543 $ 36,407,460,100 $ 38,919,497,555 $ 40,557,844,606 $ 41,918,022,541 Source: California Department of Tax and Fee Administration. [Remainder of Page Intentionally Left Blank.]
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Building and Real Estate Activity
The two tables below set forth a summary of building permit valuations and new dwelling units authorized in the County (in both incorporated and unincorporated areas) from 2016 through 2020.
TABLE A-8
COUNTY OF RIVERSIDE
BUILDING PERMIT VALUATIONS
(IN THOUSANDS)
2016 2017 2018 2019 2020
RESIDENTIAL
New Single -Family
New Multi -Family
Alterations and Adjustments
Total Residential
$ 1,526,768 $ 1,670,542 $ 2,200,021 $1,834,821 $2,315,365 106,292 109,309 232,707 282,465 93,149
126,475 123,567 125,353 158,117 110,788
$ 1,759,535 $ 1,903,418 $ 2,558,081 $ 2,275,404 $2,519,303
NON-RESIDENTIAL
New Commercial(1) $ 540,447 $ 522,769 $ 703,977 $ 312,035 $ 313,728 New Industrial 59,439 410,275 529,326 493,872 225,401
Other Buildings(2) 374,917 136,935 410,606 179,861 233,709 Alterations & Additions 371,216 363,711 315,771 300,086 380,937 Total Nonresidential $ 1,346,020 $ 1,433,690 $ 1,959,680 $ 1,285,855 $1,153,777
TOTAL ALL BUILDING
$ 3,105,554 $ 3,337,108 $ 4,517,761 $3,561,260 $3,673,080 (1)
Includes office buildings, stores & other mercantile, hotels & motels, amusement & recreation, parking garages and service stations & repair.
(2) Includes churches and religious buildings, medical and institutional buildings, agricultural and storage buildings, hospitals and institutional buildings, public works and utility buildings, schools and educational buildings, structures other than buildings, and residential garages.
Source: California Homebuilding Foundation.
TABLE A-9
COUNTY OF RIVERSIDE
NUMBER OF NEW DWELLING UNITS
2016 2017 2018 2019 2020
Single Family 5,662 6,265 7,540 6,563 8,443
Multi -Family 897 1,070 1,628 1,798 732
TOTAL 6,559 7,335 9,168 8,361 9,166
Source: California Homebuilding Foundation.
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The following table sets forth the annual median housing prices for Los Angeles County, Riverside County, San Bernardino County and Southern California for the years 2017 through 2021.
TABLE A-10
COUNTIES OF LOS ANGELES, RIVERSIDE AND SAN BERNARDINO
AND SOUTHERN CALIFORNIA
MEDIAN HOUSING PRICES
Southern
Year Los Angeles Riverside San Bernardino California
2017 560,000 356,000 310,000 491,000
2018 597,000 379,000 330,000 521,000
2019 615,000 392,000 343,750 530,000
2020 643,000 430,000 365,000 600,125
2021(2) 790,000 510,000 443,000 742,750
Southern California is comprised of Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura Counties.
Until June 30, 2021
Source: CoreLogic; DQNews.
The following table sets forth the home and condominium foreclosures recorded in Los Angeles County, Riverside County, San Bernardino County and Southern California for the years 2016 through 2020.
TABLE A-11
COUNTIES OF LOS ANGELES, RIVERSIDE AND SAN BERNARDINO
AND SOUTHERN CALIFORNIA
COMPARISON OF HOME FORECLOSURES
Year
Southern
Los Angeles Riverside San Bernardino California"
2016 3,191 2,045 1,954 9,354
2017 2,316 1,453 1,641 6,968
2018 1,552 1,233 1,184 5,184
2019 1,516 872 977 4,391
2020(2) 713 314 396 1,866
(1) Southern California is comprised of Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura Counties. (2) Foreclosures were lower in 2020 than in prior years due to a moratorium on foreclosure of certain mortgage and court closures related to the COVED -19 pandemic.
Source: CoreLogic; DQNews.
Agriculture
In 2020, principal agricultural products were nursery stock, milk, table grapes, dates, alfalfa, bell peppers, eggs, lemons, avocado, and carrots.
Four areas in the County account for a major portion of the agricultural activity: the Riverside/Corona and San Jacinto/Temecula Valley Districts in the western portion of the County, the Coachella Valley in the central portion and the Palo Verde Valley near the County's eastern border.
Agricultural production in the County may be impacted by drought conditions. See "-Environmental Control Services -Water Supply" below. The County cannot predict the impact that a future prolonged drought would have on agricultural production in the County.
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The following table sets forth the value of agricultural production in the County for the years 2016 through 2020, the last year being the most recent year of which data is currently available.
TABLE A-12
COUNTY OF RIVERSIDE
VALUE OF AGRICULTURAL PRODUCTION
2016 2017
Citrus Fruits $ 200,101,000
Trees and Vines 227,444,000
Vegetables,
Melons,
Misc.
Field and Seed
Crops
Nursery
Apiculture
Aquaculture
Livestock and
Poultry
Grand Total
$ 177,055,000
228,315,000
365,157,000 331,986,000
97,184,000 99,224,000
150,426,000 153,749,000
5,082,000 5,415,000
4,624,000 4,764,000
225,758,000 221,750,000
$ 1,275,776,000 $ 1,222,258,000
Source: Riverside County Agricultural Commissioner.
Utilities
2018
$ 170,775,000
249,150,000
371,570,000
93,282,000
165,758,000
5,473,000
4,732,000
238,468,000
2019
$ 121,934,000
268,368,000
2020
$ 126,567,000
282,840,000
354,217,000 334,440,000
141,652,000
204,768,000
6,123,000
4,776,000
156,114,000
247,765,000
5,858,000
4,596,000
219,427,000 260,040,000
$ 1,299,208,000 $ 1,321,265,000
$ 1,418,220,000
Water and sewer services for the City are provided by the regional Coachella Valley Water District.
Electricity is supplied by the Southern California Edison Company and the Imperial Irrigation District and natural gas is supplied by the Southern California Gas Company.
Transportation
State Highway 111 passes through the City. Highway 111 is the principal highway connecting the desert communities of eastern Riverside County. State Highway 74, which links with Highway 111 at Palm Desert, leads to San Diego. Highway 111 intersects Interstate 10, a major transportation artery connecting Los Angeles to Phoenix and parts east. Interstate 10 provides access from the City to the major interchange at Beaumont where the San Bernardino, Pomona and Riverside Freeways all meet.
Approximately 17 miles to the north in Palm Springs is the county's largest airport, Palm Springs Municipal Airport. With a 7,000 foot runway and modern terminal, the airport serves as the flight hub for the Coachella Valley.
A Southern Pacific main line moves 5 miles north of the City. The Sunline Transit Agency provides bus service between the Coachella Valley communities, while Greyhound and Continental Trailways provide expanded regional bus transportation out of Palm Springs. Overnight delivery service is available to Los Angeles, San Diego, Phoenix and San Francisco. Two direct truck carriers run daily to Los Angeles.
Education
The City is part of the Desert Sands Unified School District. Children in grades K through 5 attend school one mile away at the Gerald Ford Elementary School. Two Palm Desert Schools also serve the City, Grades K through 5 at the Washington School and Grades 3 through 5 at the Lincoln School. Palm Desert Charter Middle School is for grades 6 through 8, and Palm Desert High School is the area's high school (grades 9-12). The Desert Sands Unified School District also operates an adult continuation school.
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The College of the Desert is a public community college offering two-year programs and is located midway between the City and Palm Springs. Other community colleges in the area include Mt. San Jacinto College and Riverside City College.
California State University, San Bernardino has established a satellite campus in nearby Palm Desert to serve the residents of the Coachella Valley.
The Riverside Campus of the University of California is located 75 miles west of the City. Other institutions of higher education in the general area include Loma Linda University, California Baptist College, the University of Redlands, California Polytechnic College at Pomona and the Claremont Colleges.
Community Facilities
Resort amenities coupled with a spectacular contrast between the desert and the mountains make the City a popular location for retirees and tourists. In addition to the golf resorts, the City enjoys a close proximity to the San Bernardino National Forest and the San Jacinto Wilderness Area. Camping, hiking, biking, fishing and mountain climbing are all regional attractions.
Nine television stations (via cable) and at least seven radio stations serve the Indian Wells area. In addition to the Los Angeles Times, the City receives local news in the daily Desert Sun. A paper of more regional interest, the Riverside Press Enterprise is also circulated in the City.
Medical Facilities
Although the City has no major hospitals within its incorporation limits, there are two major medical facilities within five miles either east or west of the City. The John F. Kennedy Memorial Hospital in Indio serves the City and has 162 beds. The Eisenhower Medical Center, nationally known for its Betty Ford Center, is in Rancho Mirage and has a 261 bed capacity.
The City, along with the communities of Palm Desert and Rancho Mirage formed the Joint Power Agreement of the Cove Communities Public Services Commission to pool paramedic, firefighting resources and certain recreation services. As a result, the communities have realized greater economies in the provision of these services.
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APPENDIX B
CITY OF INDIAN WELLS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2021
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APPENDIX C
DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX D
BOOK -ENTRY -ONLY SYSTEM
The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the 2022 Bonds, payment of principal of and interest on 2022 Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the 2022 Bonds, and other bonds -related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the City and the Authority each believes to be reliable, but the City and the Authority take no responsibility for the completeness or accuracy thereof The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the 2022 Bonds. The 2022 Bonds will be authenticated and issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered bond certificate for each maturity of the 2022 Bonds will be authenticated and issued for the 2022 Bonds in the aggregate principal amount of such maturity, and will be deposited with DTC.
DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC").
DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com . The information on such website is not incorporated herein by such reference or otherwise.
Purchases of 2022 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2022 Bonds on DTC's records. The ownership interest of each actual purchaser of each 2022 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2022 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in 2022 Bonds, except in the event that use of the book -entry system for the 2022 Bonds is discontinued.
To facilitate subsequent transfers, all 2022 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2022 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2022 Bonds; DTC's records reflect only the identity of the D-1
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Direct Participants to whose accounts such 2022 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time -to -time. Beneficial Owners of 2022 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2022 Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Indenture and Lease Agreement. For example, Beneficial Owners of 2022 Bonds may wish to ascertain that the nominee holding the 2022 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Prepayment notices shall be sent to DTC. If less than all of the 2022 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2022 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts 2022 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Prepayment proceeds, distributions, and dividend payments on the 2022 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name" and will be the responsibility of such Participant and not of DTC, the Trustee, or the City, subject to any statutory or regulatory requirements as may be in effect from time -to -time. Payment of prepayment proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the 2022 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, 2022 Bonds will be printed and delivered to DTC.
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (this "Disclosure Certificate"), dated as of , 2022, is executed and delivered by the City of Indian Wells (the "City").
WHEREAS, pursuant to the Indenture, dated as of 1, 2022 (the "Indenture"), by and among the Indian Wells Financing Authority (the "Authority"), the City and U.S. Bank National Association, as trustee (the "Trustee"), the Authority has issued $ aggregate principal amount of its Indian Wells Financing Authority Lease Revenue Bonds (Solar Project), Series 2022 (the "Bonds"); WHEREAS, the Bonds are payable from the base rental payments to be made by the City under the Lease Agreement, dated as of 1, 2022, by and between the City, as lessee, and the Authority, as lessor; and
WHEREAS, this Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Underwriter of the Bonds in complying with Securities and Exchange Commission Rule 15c2 -12(b)(5); NOW, THEREFORE, the City covenants as follows:
Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Certificate have the meanings herein specified. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. "Annual Report" means any Annual Report provided by the City pursuant to, and as described in, Sections 2 and 3 hereof.
"Annual Report Date" means the date in each year that is nine months after the end of the City's fiscal year, which date, as of the date of this Disclosure Certificate, is April 1. "Dissemination Agent" means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. "Financial Obligation" means (a) a debt obligation of the City, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the City, or (c) a guarantee of (i) a debt obligation of the City, or (ii) a derivative instrument described in clause (b), above; provided, however, that the term "Financial Obligation" shall not include "municipal securities" (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a "final official statement" (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule. "Listed Events" means any of the events listed in Section 4(a) or (b) hereof. "MSRB" means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org .
"Official Statement" means the Official Statement, dated , 2022 (including all exhibits or appendices thereto), relating to the offering and sale of Bonds. "Participating Underwriter" means the original Underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds.
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"Rule" means Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time -to -time.
Section 2. Provision of Annual Reports. (a) The City shall, or shall cause the Dissemination Agent to provide to the MSRB an Annual Report which is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2021-22 fiscal year. The Annual Report may include by reference other information as provided in Section 3 hereof; provided, however, 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 they are not available by that date. If the City's fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB.
(b) During any period in which the City is the Dissemination Agent, the City shall file each Annual Report with the MSRB not later than the Annual Report Date for such Annual Report. (c) During any period in which the City is not the Dissemination Agent (i) the City shall, not later than 15 Business Days prior to each Annual Report Date (a), provide to the Dissemination Agent the Annual Report to be filed not later than such Annual Report Date, (ii) the Dissemination Agent shall (A) not later than such Annual Report Date, file such Annual Report received by it with the MSRB, as provided herein, and (B) file a report with the City certifying that such Annual Report has been filed with the MSRB pursuant to this Disclosure Certificate and stating the date such Annual Report was so filed. (d) If the City is unable to file, or cause the Dissemination Agent to file, an Annual Report with the MSRB by the Annual Report Date for such Annual Report, the City shall, in a timely manner, file or cause to be filed with the MSRB, a notice in substantially the form attached as Exhibit A.
Section 3. Content of Annual Reports. The City's Annual Report shall contain or include by reference the following:
(a) Audited financial statements of the City for the preceding fiscal year, prepared in accordance with the generally accepted auditing standards for municipalities in the State of California. If the City's audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section 2(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to the fmancial statements contained in the Official Statement, and the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when such audited financial statements become available.
(b) To the extent not included in the audited financial statements of the City, the Annual Report shall include the principal amount of Bonds Outstanding as of the January 2 next preceding the Annual Report Date.
(c) To the extent not included in the audited financial statements of the City, the Annual Report shall include the following items, providing financial and operating data (as of the end of the preceding fiscal year) substantially similar to that provided in the corresponding tables and charts in the Official Statement:
(i) City Principal Property Taxpayers;
(ii) City Assessed Value of Taxable Property;
(iii) City Property Tax Rates, Secured Levies, and Collections and Delinquencies; (iv) City Tax Revenues by Source;
(v) City General Fund Balance Sheet;
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(vi) City General Fund Statement of Revenues and Expenditures; (vii) City Statement of Overlapping Debt;
(viii) Information in the Official Statement under the captions "CITY OF INDIAN WELLS FINANCES — Retirement System" and "— Other Postemployment Benefits"; and (ix) Summary of City's current fiscal year's investments most recently completed and accepted by City Council, including types and amounts of investments, return on investments, average yield of investments and market value of investments.
Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities that have been made available to the public on the MSRB website. The City shall clearly identify each such other document so included by reference.
Section 4. Reporting of Listed Events. (a) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten business days after the occurrence of the event:
(i) principal and interest payment delinquencies;
(ii) unscheduled draws on debt service reserves reflecting financial difficulties; (iii) unscheduled draws on credit enhancements reflecting financial difficulties; (iv) substitution of credit or liquidity providers or their failure to perform; (v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB); (vi) tender offers;
(vii) defeasances;
(viii) rating changes;
(ix) bankruptcy, insolvency, receivership or similar event of the City; and (x) Default, event of acceleration, teiuunation event, modification of terms or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties.
For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
(b) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not later than ten business days after the occurrence of the event:
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(i) unless described in paragraph (v) of subsection (a) of this Section, other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; (ii) modifications to rights of Owners;
(iii) optional, unscheduled or contingent bond calls;
(iv) release, substitution or sale of property securing repayment of the Bonds; (v) non-payment related defaults;
(vi) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; (vii) appointment of a successor or additional Trustee or the change of name of a Trustee; and
(viii) Incurrence of a Financial Obligation, or agreement to covenants, events of default, remedies, priority rights or other similar terms of a Financial Obligation, any of which affect holders of the Bonds.
(c) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (b) of this Section, the City shall determine if such event would be material under applicable Federal securities laws.
(d) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities laws, the City shall file, or shall cause the Dissemination Agent to file, within ten business days of such occurrence, a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of subsection (b) of this Section need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture.
Section 5. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.
Section 6. Termination of Reporting Obligation. The City's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give, or, if the City is not the Dissemination Agent, cause the Dissemination Agent to give, notice of such termination in a filing with the MSRB.
Section 7. Dissemination Agent. The City may, from time -to -time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. 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 Certificate. The initial Dissemination Agent shall be the City. If at any time there is not any other designated Dissemination Agent, the City shall be the Dissemination Agent.
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Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Section 2(a), Section 3 or Section 4(a) or (b) hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by the Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment or waiver in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Certificate, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice required to be filed pursuant to this Disclosure Certificate.
Section 10. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Owner 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 to comply with its obligations under this Disclosure Certificate; provided, that any such action may be instituted only in Superior Court of the State of California in and for the County of Riverside or in U.S. City Court in or nearest to the County of Riverside. A default under this Disclosure Certificate shall not be deemed an event of default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. The City covenants that, if a Dissemination Agent other than the City has been appointed pursuant to Section 7 hereof, the City will indemnify and save such Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to such Dissemination Agent's negligence or willful misconduct.
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The obligations of the City under this Section shall survive resignation or removal of such Dissemination Agent and payment of the Bonds.
Section 12. Electronic Signature. The City acknowledges that the transaction consisting of this Disclosure Certificate may be conducted by electronic means. The City agrees, and acknowledges that it is its intent, that by signing this Disclosure Certificate using an electronic signature, it is signing, adopting, and accepting this Disclosure Certificate and that signing this Disclosure Certificate using an electronic signature is the legal equivalent of having placed its handwritten signature on this Disclosure Certificate on paper. The City acknowledges that it is being provided with an electronic or paper copy of this Disclosure Certificate in a usable format.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the Owners and Beneficial Owners from time -to - time of the Bonds, and shall create no rights in any other person or entity.
CITY OF INDIAN WELLS
By:
Finance Director
ATTEST:
City Clerk
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Name of Issuer:
Name of Issue:
Date of Issuance:
EXHIBIT A
FORM OF NOTICE OF FAILURE TO FILE ANNUAL REPORT
Indian Wells Financing Authority
Indian Wells Financing Authority Lease Revenue Bonds
(Solar and Infrastructure Projects), Series 2022
, 2022
NOTICE IS HEREBY GIVEN that the City of Indian Wells (the "City") has not provided an Annual Report with respect to the above -named Bonds as required by Section 2 of the Continuing Disclosure Certificate, dated as of , 2022, executed and delivered by the City. [The City anticipates that the Annual Report will be filed by .]
Dated:
CITY OF INDIAN WELLS
By:
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APPENDIX F
PROPOSED FORM OF OPINION OF BOND COUNSEL
Upon delivery of the Bonds, Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel, proposes to render its final approving opinion with respect to the Bonds in substantially the following form:
[Date of Delivery]
Indian Wells Financing Authority
Indian Wells, California
Indian Wells Financing Authority
Lease Revenue Bonds (Solar and Infrastructure Projects), Series 2022 (Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel to the Indian Wells Financing Authority (the "Authority") in connection with the issuance of its $ aggregate principal amount of Indian Wells Financing Authority Lease Revenue Bonds (Solar and Infrastructure Projects), Series 2022 (the "Bonds").
In such connection, we have reviewed the Indenture, dated as of , 2022 (the "Indenture"), by and among the Authority, the City of Indian Wells (the "City") and , as trustee (the "Trustee"), the Ground Lease, dated as of , 2022 (the "Ground Lease"), by and between the City and the Authority, the Lease Agreement, dated as of , 2022 (the "Lease Agreement"), by and between the City and the Authority, the Tax Certificate of the Authority, dated the date hereof (the "Tax Certificate"), opinions of counsel to the Authority, the City, the Trustee and others, certificates of the Authority, the City, the Trustee and others and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Capitalized undefined terms used herein have the meanings ascribed thereto in the Indenture.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the original delivery of the Bonds on the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the original delivery of the Bonds on the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures provided to us and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority and the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Ground Lease, the Lease Agreement and the Tax Certificate, including, without limitation, covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes.
We call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Ground Lease, the Lease Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws F-1
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relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases, and to the limitations on legal remedies against joint powers authorities and cities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute or having the effect of a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinions with respect to the state or quality of title to or interest in any real or personal property described in the Ground Lease, the Lease Agreement or as subject to the lien of the Indenture, or the accuracy or sufficiency of the descriptions contained therein of, or the remedies available to enforce liens on, any such property. Our services did not include financial or other non -legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The Bonds constitute the valid and binding special obligations of the Authority, payable solely from the Lease Revenues and the other assets pledged therefor under the Indenture.
2. The Indenture, the Ground Lease and the Lease Agreement have been duly executed and delivered by, and constitute valid and binding obligations of, the Authority.
3. The Indenture, the Ground Lease and the Lease Agreement have been duly executed and delivered by, and constitute valid and binding obligations of, the City.
4. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes.
Interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
Respectfully yours,
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OMNI
City of Indian Wells
1/6/2022
44-950 Eldorado Drive,
Indian Wells
File #: 010-22 Item #: A.
Indian Wells City Council
Staff Report - City Attorney
January 6, 2022
Annual Review of FPPC Gift Restrictions, City Ticket Distribution Policy, and City Campaign Contribution Reporting Requirement
RECOMMENDATION:
Council RECEIVES and FILES this informational report.
DISCUSSION:
The Council Policy Manual states the Council shall conduct a review of applicable regulations and City policies pertaining to (1) the FPPC's gift restrictions, (2) the City's ticket distribution policy and (3) the City's campaign contribution reporting requirement at the first meeting following the annual Council reorganization.
Gift Restrictions
Last year, we reported that effective January 1, 2021, through December 31, 2022, state and local officials and employees are prohibited from receiving a gift or gifts totaling more than $520 in a calendar year from certain sources. No changes have taken place this year that require a change.
Ticket Distribution Policy
State regulations now require the city and city officials to avoid "the disproportionate use of tickets or passes by a member of the governing body, chief administrative officer of the agency, political appointee, or department head." (2 CCR 18944.1(b)(4).) Thus, to avoid the appearance of a "disproportionate use of tickets," we suggest that the city not give city officials more than two tickets for city business. If an official receives two all -access passes to an event as a representative of the City on City business, the official should not be given any more priority tickets for the same event.
This will be included in the revisions to the City Council Policy Manual that is being reviewed by the Policy Manual Update Ad -Hoc Committee.
City of Indian Wells
272yLegistarTM
File #: 010-22 Item #: A.
Campaign Contribution Reporting
Last year we reported that state law now sets a default contribution limit for elective county, cities, and state to no more than $4,700 from a single contributor per election year, and that the city's contribution limit defaulted to the state contribution limit on Jan 1, 2021, and will remain in place unless the Council directs staff to revise the limit. No change is required, but the Council may direct a change if it desires.
The City Attorney and staff are available to answer questions from Council as to the applicability and/or interpretation of the law or policy.
City of Indian Wells
273' LegistarT""
City of Indian Wells
1/6/2022
44-950 Eldorado Drive,
Indian Wells
File #: ORD-001-22 Item #: B.
Indian Wells City Council
Staff Report - Community Development
January 6, 2022
Proposed Ordinance Amending Section 1.20.150 and Chapter 5.20 of the Indian Wells Municipal Code and Finding the Action to Be Exempt from CEQA
RECOMMENDED ACTIONS:
Council INTRODUCES to read by title only, discuss, and further reading waved, amending Section
1.20.150 and Chapter 5.20 of the Indian Wells Municipal Code; and FINDS the action to be exempt from CEQA.
BACKGROUND:
This agenda item mainly concerns the administration and enforcement of the City's short-term residential rental ("STR") ordinance, found within chapter 5.20 of the Indian Wells Municipal Code.
The City Council most recently considered this topic at the December 17, 2020, meeting when it adopted an ordinance amending chapter 5.20 to clarify several of its provisions. This ordinance further clarifies the City's STR regulations.
Discussion:
The proposed ordinance makes the following changes:
1. The ordinance clarifies that restricted permit holders must only report and remit transient occupancy taxes following conclusion of the annual tennis tournament.
When the City Council last considered this topic on December 17, 2020, it established two categories of STR permits that a person may obtain - unrestricted and restricted.
An unrestricted permit allows a person to operate an STR year-round and is not subject to the 29 - night minimum stay requirement of section 5.20.140. An unrestricted permit may only be obtained in City of Indian Wells
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File #: ORD-001-22 Item #: B.
accordance with sections 5.20.190 (master associations), 5.20.200 (new residential developments), or 5.20.210 (common interest developments).
By contrast, a restricted permit is available to any person not operating under section 5.20.140,
5.20.190, or 5.20.210. It only allows for STR use during the period immediately before and after the annual tennis tournament, and it requires a minimum seven -night stay.
All STR owners, whether the STR is unrestricted or restricted, must report and remit transient occupancy taxes ("TOT") to the City. As currently written, section 5.20.080 requires all STR permit holders to report and remit TOT on a quarterly basis.
The proposed ordinance revises this section to clarify that restricted permit holders only need to report and remit TOT following the conclusion of the annual tennis tournament.
Unrestricted permit holders must continue to report and remit TOT on a quarterly basis.
2. The ordinance clarifies that a common interest development seeking to allow STRs must consist of at least four separate legal parcels, with each parcel sharing a boundary with at least one other parcel in the common interest development Section 5.20.210 permits common interest developments to "opt in" to allow STRs upon a majority vote of all owners of parcels within the common interest development. The common interest development must consist of at least four separate legal parcels, exclusive of the common area.
The proposed ordinance clarifies that each of the parcels must share a boundary with at least one other parcel that is in the common interest development.
This change is to make express the City's existing interpretation and application of the four -parcel minimum. The purpose of the minimum and of the HOA-opt-in provision generally is to allow neighbors to choose to allow STRs in their midst, with all of the impacts that come with STRs. That purpose is defeated if the City allows common interest developments with disparate lots to qualify for the opt -in provision; the owners of disparate lots could impose STRs on neighbors who didn't have a say but who must nevertheless assume the burden of STR impacts. With that in mind, the City has consistently interpreted and applied the code to require contiguity. That interpretation is now being formalized with this ordinance, to make the contiguity requirement (shared boundaries) even more apparent.
3. The ordinance clarifies procedures regarding suspension and revocation.
Sections 5.20.160 and 5.20.175 allow for suspension and revocation of a business license and STR permit, and suspension of a Resident Benefit Card. The proposed ordinance further elaborates on these procedures by requiring written decisions by the City and removing review by the Planning Commission (appeals will go directly to the City Council, since the STR licensing code provisions are not part of the city's zoning code). The 60 -day time for appeal and other prerequisites are adapted City of Indian Wells
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File #: ORD-001-22 Item #: B.
from section 21.06.110.
4. The ordinance gives the city manager, or a designee, and the city attorney's office authority to issue administrative subpoenas to investigate violations of chapter
5.20. The proposed ordinance amends section 5.20.170 to authorize the city manager, or the manager's designee, and the city attorney's office to issue administrative subpoenas to investigate violations of chapter 5.20. The record -keeping requirements that are added to section 5.20.090 are part of this regulatory scheme. Other cities such as Newport Beach, Santa Monica, and San Francisco use administrative subpoenas to investigate violations of their STR ordinances.
The amendments give the city power to compel production of business records and testimony regarding unlawful STRs and will assist the city in its efforts to collect TOT and ensure compliance with the vehicle -parking provisions of section 5.20.150.
Affected persons would have 30 days to seek judicial review of the subpoena prior to compliance.
The proposed ordinance makes noncompliance with a subpoena a criminal misdemeanor.
The four-year record keeping requirement in section 5.20.090 align with the statute of limitations for bringing civil actions to recover unpaid TOT.
5. The ordinance amends section 1.20.150 to allow the city to recover monetary penalties in a civil action to abate a public nuisance.
Section 1.20.150 provides the city with a variety of methods to enforce the municipal code, including remedies such as recovery of staff time charges, abatement costs, and attorney's fees. The proposed ordinance expressly entitles the city to recover monetary penalties of up to $1,000 per violation in civil actions to abate a public nuisance. This provision could be used in a variety of actions, including those to enforce the STR ordinance, and serves to further deter people from violating the city's laws.
ATTACHMENTS:
1. Code Redline (Proposed vs Existing)
2. Proposed Ordinance No. 732
City of Indian Wells
276y LegistarTM
ATTACHMENT #1
Code Redline (Proposed vs Existing)
1.20.150 Alternative remedies.
(a) In addition to, or as an alternative to the administrative proceedings set forth in this Chapter, the City may abate a public nuisance by any or all of the following:
(1)
An inspection warrant issued under Code of Civil Procedure Section 1822.050 et seq.;
(2) An abatement warrant issued in accord with the statutory requirements of Code of Civil Procedure Section 1822.050 et seq.;
A civil action filed in the Superior Court;
Civil or criminal contempt proceedings;
A criminal citation or criminal complaint.
(3)
(4)
(5)
(b) In any such administrative proceeding, warrant proceeding, civil action, civil contempt proceeding, criminal proceeding, or other special proceeding brought to the City to abate a nuisance, the City shall be entitled to recover its staff time charges, expert or consultant fees and abatement costs. In addition, the prevailing party shall recover its reasonable attorney fees if the City elects, at the initiation of the individual action or proceeding, to seek recovery of its own attorney fees. The amount of attorney fees awarded in such action, administrative proceeding or special proceeding shall not exceed the amount of reasonable attorney fees incurred by the City in the action or proceeding. (California Government Code Sections 38773.1 and 38773.5) Further, in any civil action to abate a public nuisance, the City shall be entitled to recover civil penalties of up to $1,000 per violation for each day a violation of this Code has been proven to exist. In deciding the amount of civil penalty to be imposed, the Court may consider the following non - exhaustive list of factors:
(1) the nature of the violation;
(2) the duration of the violation,
(3) the number of violations;
(4) the impact of the violation upon the community; and (5) the willfulness of the responsible party's misconduct. (c) The remedies set forth in this Chapter may be sought from the property owner as shown upon the last available assessment roll, from the occupant or from any other responsible party.
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Attachment 1: Code Redline (Proposed vs Existing)
Chapter 5.20 SHORT-TERM RESIDENTIAL RENTALS
5.20.010 Violation —Nuisance —Applicability.
It is unlawful and a violation of this Chapter, and is hereby declared a public nuisance, for any person or entity owning, renting, leasing, occupying, or having charge, control or possession of any real or improved property within the City of Indian Wells to cause, permit, maintain or allow any violation of this Chapter to exist thereon. Any violation of this Chapter is punishable as a misdemeanor and as otherwise permitted by this Code. Each and every violation of this Chapter that exists constitutes a separate and distinct violation as does each and every day, or portion thereof that any violation exists.
Notwithstanding any provision of this Chapter to the contrary, this Chapter shall not be applicable to any timeshare, as defined in Section 21.08.462 of this Code, that exists as of July 4, 2015.
5.20.020 Definitions.
The following words and phrases, whenever used in this Chapter, shall have the meaning defined in this Section unless the context clearly requires otherwise:
"City" means the City of Indian Wells.
"Code" means the Indian Wells Municipal Code and any other codes incorporated or adopted therein.
"Common interest development" means a residential development that is subject to the Davis -Stirling Act of the State of California, and where there exists a common area owned by an association of owners of separate interests, there has been recorded a declaration and final subdivision map, there has been conveyed to each homeowner a separate interest coupled with an interest in the common area or membership in the association, and there is a board of directors elected by the association of homeowners.
"Country club" means The Reserve Club, Vintage Club, Eldorado Country Club, Desert Horizons Country Club, and Toscana Country Club, and any successor in interest to any of the foregoing operating within the boundaries identified in Sections 21.14.020, 21.14.030, 21.14.090, and 21.14.110 of this Code.
"Good Neighbor Brochure" means a document prepared by the City, as may be revised from time to time, that summarizes the general rules of conduct, consideration and respect pertaining to the use and occupancy of the short-term residential rental units. 2 26529.0000034636588.2
278
Attachment 1: Code Redline (Proposed vs Existing)
"Law enforcement officers" and "officers" means a law enforcement officer employed or otherwise charged by the City to enforce codes, ordinances, mandates, regulations, resolutions, rules or other laws adopted by the City, including officers employed by the City or providing services to the City under contract. This includes, but is not limited to, City code enforcement officers and building officials, and Riverside County Sheriff's Department deputies. "Local agent" means the person designated by the owner or managing agency or agent who shall be available twenty-four (24) hours per day, seven (7) days per week pursuant to Section
5.20.060 for the purpose of responding to public safety calls, nuisances, or other complaints regarding the use, condition, operation or conduct of transients and other persons at the premises. "Managing agency or agent" means any person as it is defined in this Section who is appointed by an owner to solicit applications, execute agreements, or otherwise act on the owner's behalf in the operation of a short-term residential rental. "Master association" means any entity which has written and valid contractual jurisdiction and authority to act on behalf of common interest developments within a country club and to exclusively manage all short-term residential rentals within that entire country club, as defined in this Section 5.20.020, and which retains and manages security officers or contractors/vendors who patrol the country club and promptly respond in the event of short-term residential rental violations or problems.
"Multiple rentals" means the maintenance by a person of a financial interest in more than one (1) short-term residential rental within the City. For this purpose, financial interest includes both legal and beneficial ownership as well as any arrangement that provides for receipt of any portion of the revenues generated by the short-term residential rental. "Owner" means any person or entity having fee -title ownership or appearing on the last equalized assessment roll of Riverside County showing controlling interest of the premises. "Parcel" means a parcel of land as that term is defined in Section 21.08.370 of this Code. "Person" means any individual or entity, including, but not limited to, all domestic and foreign corporations, associations, syndicates, joint stock corporations, partnerships of every kind, clubs, business or common law trusts, societies, or limited liability companies. "Premises" means the actual single-family house or other residential dwelling unit, or any portion thereof, such as a room, including all of its improved real property, which is used as a short-term residential rental. For purposes of this definition, a residential dwelling unit shall include a recreational vehicle or camper parked on public streets or private property. 3 26529.0000034636588.2
279
Attachment 1: Code Redline (Proposed vs Existing)
"Responsible person" means any owner, managing agency or agent, transient, or other person as they are defined in this Chapter who violates or causes, authorizes, allows, participates, or enables the violation of any provision of this Chapter or Code. "Short-term residential rental" means the rental of a premises by the owner thereof, or any managing agency or agent acting on t irthe owner's behalf, to a transient for a continuous period of less than thirty (30) days in the aggregate, in exchange for any form of monetary or non - monetary consideration such as, but not limited to, trade, fee, swap or any other in lieu of cash payment.
"Sub -common interest development" means a common interest development that is wholly or partially located within one (1) or more other common interest developments and that is comprised of fewer parcels than the largest common interest development within which it is located.
"Transient" means any person who rents, stays, or otherwise occupies a short-term residential rental for any period less than thirty (30) consecutive calendar days. "Transient occupancy tax" means the tax levied by the City in accordance with Chapter
3.12 of the Municipal Code. This tax is levied upon individuals or businesses engaged in the sale of sleeping accommodations to the public.
5.20.030 Locations and conditions of operations of short-term residential rentals. (a) Pursuant to this Chapter and any other applicable provisions of this Code, short-term residential rentals are permitted in the very low density, low density, medium density, and medium high density residential zones, and other General Plan designated zones of the City in which a new development described in subsection (e) of this Section 5.20.030 is located only if the requirements of this Chapter are met. (b) The requirements of this Chapter shall be met before a short-term residential rental is permitted.
(c) Pursuant to this Chapter and any other applicable provisions of this Code, multiple rentals are prohibited.
(d) Pursuant to this Chapter and any other applicable provisions of this Code, a short-term rental business license and/or permit are void on sale of registered property. (e) Notwithstanding any provisions in this Chapter to the contrary, short-term residential rentals shall be permitted pursuant to business licenses and short-term residential rental permits issued by the City in any new development containing at least ten (10) residential units, subject to the following:
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(1) The City has approved and issued to the developer/land owner of such new development a conditional use permit, pursuant to Chapter 21.06 of this Code, allowing short-term residential rentals in such new development and specifying the minimum required duration of rentals for short-term residential rentals within the new development;
(2) The developer/land owner of such new development has entered into a development agreement with the City pursuant to Government Code Section 65864 et seq., or otherwise, that explicitly allows for short-term residential rentals within the new development;
(3)
The City issues to an applicant for a short-term residential rental within the new development a business license and short-term residential rental permit; and (4) All of the provisions set forth in this Chapter shall be applicable to the conditional use permit, and the business license and short-term residential rental permit, except for the provisions set forth in Section 5.20.140 pertaining to minimum duration of short-term residential rentals.
Further, a development agreement between the City and developer/land owner of a new development may include an exception to Section 5.20.040(c)'s prohibition of multiple rentals by a person so long as it is explicitly stated within the development agreement.
5.20.040 Business license and short-term residential rental permit. (a) Business License and Short -Term Residential Rental Permit Required. The short-term residential rental of any premises in the City is deemed to be a "business" as defined in Chapter 5.01 of this Code. It is unlawful for any person to engage in the business of short-term residential rentals without first obtaining and maintaining both: (1) a valid business license pursuant to Chapter 5.01 of this Code; and (2) a short-term residential rental permit. The business license and short-term residential rental permit, or copies thereof, shall be prominently displayed in a visible location at the premises during any periods of occupancy thereof by any transients.
(b) Classification of Short -Term Residential Rental Permits. Depending upon which enabling provision a person is operating a short-term residential rental pursuant to (either Section
5.20.190, 5.20.200, 5.20.210 or 5.20.220 of this Chapter), a person may either obtain an unrestricted or restricted short-term residential rental permit. (1) Unrestricted Short -Term Residential Rental Permit. An unrestricted short-term residential rental permit may be granted to a person operating pursuant to Sections
5.20.190, 5.20.200 or 5.20.210 of this Chapter. Under those Sections, a premises 5 26529.0000034636588.2
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may be used as a short-term residential rental year-round and is not subject to the twenty-nine (29) consecutive nights minimum stay requirement set forth in Section 5.20.140. However, it may be subject to the restrictions that may be set forth in any applicable development agreement, conditional use permit, covenants, conditions and restrictions (CC&Rs), or other restrictions governing use of the premises.
(2) Restricted Short -Term Residential Rental Permit. A restricted short-term residential rental permit may be granted to a person not operating pursuant to Sections 5.20.190, 5.20.200 or 5.20.210 of this Chapter. Such a person may only operate a short-term residential rental during the annual tennis tournament held each year pursuant to Section 5.20.220 of this Chapter, and is subject to the seven (7) night minimum stay requirement set forth in that Section. (c) Prohibition of Multiple Rentals. It is unlawful for a person to operate multiple rentals within the City. Only one (1) short-term residential rental permit shall be issued to any person.
(d) At no time shall the short-term residential rental be used for activities such as weddings, receptions, and large parties attended by more than the occupants of the short-term residential rental without first obtaining a temporary use permit pursuant to Section
21.06.060 (Temporary Use Permit) of this Code.
5.20.050 Registration.
On a written form prepared by the City Manager or designee, the owner shall register with the City as the point of contact for the short-term residential rental and shall be responsible for all requirements of this Chapter. However, such registration is deemed satisfied if accomplished by a managing agency or agent on behalf of the owner. The owner of the premises shall retain primary responsibility for all requirements of this Code related to short-term residential rentals, notwithstanding registration by a managing agency or agent. There shall be no subleasing of any premises for short-term residential rental purposes; instead, only a rental agreement executed by the owner shall be permitted for any premises when used for short-term residential rentals. A fee may be established by resolution of the City Council to cover costs of processing the registration.
Either the owner of the premises or a managing agency or agent shall provide all of the following information to the City at the time of registration, and shall promptly upon change of any such information update such information to maintain accuracy:
(a) Full legal name of the owner of the premises and if a business entity of any nature, the individual who has responsibility to oversee its ownership of the premises; 6 26529.0000034636588.2
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(b) Street and mailing addresses of the owner of the premises; (c) Telephone number of the owner of the premises;
(d) Email address of the owner of the premises;
(e) Full legal name or business name of a managing agency or agent, if any; (f) Street and mailing addresses of a managing agency or agent, if any; (g) Telephone number of a managing agency or agent, if any; (h) Street and mailing addresses of the premises;
(i) Telephone number of the premises;
(j) The name, address and telephone numbers of any other natural persons, entities, limited liability companies, or personal or family trusts that hold any financial interest in the premises as well as copies of legal documents creating such financial interests; (k) List of all online websites used to advertise premises for short-term residential rental along with all listing numbers;
(1) Full name and telephone number of twenty-four (24) hour emergency local contact person;
(m) Submit a transit occupancy tax (TOT) registration fee as set by resolution of the Indian Wells City Council;
(n) Submit a short-term residential rental registration fee as set by resolution of the Indian Wells City Council; and
(o) Any other contact information the City may reasonably require.
A current business license, short-term residential rental permit, TOT registration, and Good Neighbor Brochure shall be hung and/or placed in a conspicuous location within the premises at all times of the short-term residential rental business operation. In addition, each responsible person for the premises shall be provided with a copy of the City's Good Neighbor Brochure by the owner or managing agency or agent.
The owner or managing agency or agent shall provide language in theifthe rental agreement allowing for immediate termination of the rental contract, and immediate eviction upon any violation of the Municipal Code by any occupant. The responsible person shall acknowledge 7 26529.0000034636588.2
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understanding of all the City's short-term residential rental rules and theirthe responsible person's liability for any fines incurred by occupants.
5.20.060 Personal availability.
(a) For each short-term residential rental, a local contact person shall be available by telephone on a seven (7) day per week, twenty-four (24) hour per day basis to respond to public safety calls, nuisances, or other complaints regarding the use, condition, operation, or conduct of transients and other persons on the premises. (b) The local contact person shall be physically present within the geographical limits of the City during the term of the short-term residential rental or be otherwise physically available to respond by visiting the premises in person, at the request of the City or its law enforcement officers, concerning any alleged nuisance or violation of this Chapter.
5.20.070 Notice to transients.
The owner or managing agency or agent shall provide transients the following information prior to occupancy of the premises and shall post such information in a conspicuous place within the dwelling on the premises:
(a) The name of the owner or managing agency or agent and a telephone number at which each may be reached on a seven (7) day per week, twenty-four (24) hour per day basis; (b) Notification of the maximum number of overnight and daytime occupants permitted on the premises pursuant to this Chapter;
(c) Notification of the City's noise standards, as provided in Chapter 9.06 of this Code, as may be amended from time to time;
(d) Notification of the parking standards of this Chapter; (e) A copy of this Chapter of the Code, as may be amended from time to time; (f) Notification that an occupant may be cited or fined by the City, in addition to any other remedies available at law, for violating any provisions of this Chapter; (g) A copy of the Good Neighbor Brochure; and
(h) The owner or managing agency or agent shall keep on file a signed agreement acknowledging that the transient(s) agree to the general rules summarized in the Good Neighbor Brochure and rental contract, including, without limitation, the immediate termination provision in the rental contract for any violation of the Code by any transient. 8 26529.0000034636588.2
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5.20.080 Transient occupancy tax.
All short-term residential rentals shall be subject to the City's transient occupancy tax (TOT) as required by law and in accordance with the provisions of Chapter 3.12 of this Code. The provisions of Chapter 3.12 shall apply except as otherwise provided in this Chapter. owner orUnrestricted Short -Term Residential Rental Permit Holders. An owner operating under an unrestricted short-term residential rental permit, or a managing agency er-agent acting on the owner's behalf, shall report and remit TOT to the City,— even if a zero balance exists for the reporting period, once per quarter, on or before the 30th day following the dates of March 31, June 30, September 30, and December 31 of each year, on a form prepared by the City or in a manner otherwise acceptable to the City. Any owner(s), or managing agency or agent on behalf of owner(s), who fails to report and remit TOT, or submit a form indicating a zero balance, concerning a premises with a registered operating permit, subject to Section 5.20.040 of this Code, within seven (7) days of written notification of delinquency from the City, shall have their operating permit for the subject premises revoked. Such written notification will be mailed by certified U.S. mail to the address(es) provided to the City pursuant to Section 5.20.050 of this Code.
(b) Restricted Short -Term Residential Rental Permit Holders. The owner operating under a restricted short-term residential rental permit, or a managing agent acting on the owner's behalf, shall report and remit TOT to the City even if a zero balance exists for the reporting period, on or before the 30th day following the end of the month in which the annual, professional tennis tournament is held on a form prepared by the City or in a manner otherwise acceptable to the City.
5.20.090 ResefvedRecord Keeping Requirements.
Each owner, or managing agent acting on the owner's behalf, shall keen the followin records for a period of four years:
(a) The names of transients who have booked a short-term residential rental at the premises along with the names of their guests;
(b) The mailing address for transients who have booked a short-term residential rental along with their email address and telephone number;
(c) The dates of each short-term residential rental along with booking confirmation numbers and receipts;
(d) The make, model, and license plate number of any transient vehicles to be parked at the premises during a rental;
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(e) The amount of monetary or non -monetary consideration collected for each short-term residential rental along with receipts;
(f) Advertisements for short-term residential rentals at the premises; and (g)
Transient Occupancy Tax remittance forms submitted to the City pursuant to Section
5.20.080.
5.20.100 Signs/advertisement.
(a) No sign, as that term is defined in Section 17.04.030 of this Code, shall be posted on the premises to advertise the availability of the short-term residential rental to the public. (b) All advertisements for short-term residential rentals, including online advertisements, shallmust include the following information:
(1) The assigned short-term residential rental permit number; (2) The number of occupants allowed to occupy the short-term residential rental pursuant to Section 5.20.120; and
(3)
The minimum number of rental nights pursuant to Sections 5.20.140 and
5.20.220.
(c) No owner or managing agency or agent shall advertise, including by online advertisement, that a transient may use the owner's Resident Benefit Card while renting, staying or otherwise occupying a short-term residential rental.
5.20.110 Noise.
It is unlawful for any person to make, continue or cause to be made or continued any loud, unnecessary or unusual noise which disturbs the peace and quiet of any neighborhood or which causes discomfort or annoyance to any reasonable person of normal sensitiveness residing in the area, or that violates any provision of Chapter 9.06 (Noise) of this Code. For the purposes of determining whether a violation of this Section has occurred, the standards set forth in Chapter
9.06 of this Code shall apply. Fines for violation of the noise provisions in the Code, as applicable to short-term residential rentals shall be those established pursuant to Section 5.20.170 of this Chapter.
5.20.120 Occupancy.
The maximum overnight occupancy on the premises of the short-term residential rental, from the hours of 11:00 p.m. through 6:00 a.m. on the following morning, shall not exceed two (2) persons per bedroom with an exception for children under the age of six (6) who may 10 26529.0000034636588.2
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additionally occupy the premises, and no additional occupants shall be permitted on the premises during such hours. In any advertising concerning the premises for short-term residential rental, the owner or managing agency or agent shall advertise the maximum number of overnight occupants allowed as set forth above.
5.20.130 Maintenance of residential character.
The appearance of the premises shall not conflict with the residential character of the neighborhood, either by the use of colors, materials, lighting, landscaping, window coverings or otherwise. All applicable development, design, and landscaping standards, including, but not limited to, Chapter 21 of this Code, are expressly made applicable to a premises used for short- term residential rentals.
5.20.140 Minimum duration of rental.
TheExcept as otherwise allowed under this Chapter, the duration of any lease or rental of a premises as a short-term residential rental registered pursuant to Section 5.20.050 of this Code shall be for a minimum of twenty-nine (29) consecutive nights (twenty-eight (28) consecutive nights if the rental covers the month of February during a non -leap year) during which time there shall be no overlapping leases or rental of the premises.
5.20.150 Parking.
During the term of any short-term residential rental, a maximum of one (1) vehicle per bedroom shall be permitted for the premises, and no additional vehicles shall be permitted. All vehicles of occupants of the short-term residential rental shall be parked only in an approved driveway or garage on the premises.
5.20.160 Denial, suspension and revocation of business license and short-term residential rental permit.
(a) Suspension. The City Manager or theirthe City's Manager's designee shall suspend the business license and short-term residential rental permit of an owner or their managing agency or agent for a period of one (1) year upon finding an owner or managing agency or agent has committed three (3) violations of the following:
(1) Violated any provision of this Chapter or Code, or is not in compliance with the requirements thereof; or
(2) Gave false or misleading information in the material submitted to the City during the application process, in any transient occupancy tax reporting and remittance forms, during an administrative hearing concerning a violation of this Chapter or 11 26529.0000034636588.2
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Code, or during investigation of a violation of this Chapter or Code by the City and its law enforcement officers.
It is unlawful for any person to operate a short-term residential rental during thea period of their suspension under this Section, and doing so shall result in permanent revocation of an owner's business license and short-term residential rental permit.
It is the responsibility of the owner or managing agency or agent to pay any applicable license or permit fees in order to reinstate such under this Chapter, as well as provide necessary or updated registration and contact information pursuant to Sections 5.20.050 and 5.20.060. (b) Permanent Revocation. The City Manager or ti the City's Manager's designee shall permanently revoke the business license and short-term residential rental permit of an owner or managing agency or agent upon finding an owner or managing agency or agent has committed one (1) violation of the following any time after having theirthe business license and short-term residential permit reinstated following suspension under subsection (a) of this Section:
(1) Violated any provision of this Chapter or Code, or is not in compliance with the requirements thereof; or
(2) Gave false or misleading information in the material submitted to the City during the application process, in any transient occupancy tax reporting and remittance forms, during an administrative hearing concerning a violation of this Chapter or Code, or during investigation of a violation of this Chapter or Code by the City and its law enforcement officers.
(c) Appeal from Denial, Suspension or Revocation. Any applicant for a business license or short-term residential rental permit whose application was denied by the City, and any licensee whose business license and short-term residential rental permit is suspended or revoked by the City Manager or theirthe City's Manager's designee, may, within ten (10) days following service of such decision, appeal the decision to the Planning Commission who shall determine whether to affirm or reverse the decision. If the Planning Commission affirms the decision of the City Manager or their designee, the applicant or Commission's decision to the City Council in accordance with the provisions of Section
21.06.110 of this Codc, as amended from timc to timcCity Council by filing a notice of appeal with the City Clerk. The notice shall state the reasons for the appeal with specificity. Appeals by the City Council shall be heard within 60 days of filing the notice of appeal, except that the 60 -day period shall automatically be extended if no meeting is held due to the normal cancellation of meetings during July and August or due to any other cancellation. The City Council shall not be required to hold a public hearing on any 12 26529.0000034636588.2
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appeal that it receives, but shall permit the appellant to address the body. The standard of review by the City Council shall be to review the decision for error; it is not a de novo review. The decision of the Planning CommissionCity Manager or the City Manager's designee shall not be vacated during the pendency of any appeal to the City Council. A decision of the City Council shall be final. Decisions by the Planning Commission and City Council to affirm or deny areverse a previous decision shall require a majority vote of members present at the hearing.=
(d) Notice and Opportunity to be Heard Required; Agency Case File; Service Procedures. No decision as contemplated within this Section may be made without notice to the applicant or licensee and an opportunity to be heard. Service of the Notice of Hearing shall be made at least fifteen (15) days prior to the hearing by certified and U.S. mail to the address on record for the owner or managing agency or agent pursuant to Section
5.20.050. At least ten (10) days prior to the hearing, the person whose business license and short-term residential rental permit is being suspended or revoked shall be provided with a copy of theany documentary evidence relied upon by the City. Decisions shall be rendered under a preponderance of evidence standard. Formal rules of evidence do not apply. Within 30 days of a hearing by the City Manager or the City Manager's designee under this Section, the City shall issue a written decision containing its findings; service to be made upon the applicant or licensee or permit holder by certified and U.S. mail. The written decision shall specify the time for appeal to the City Council. Upon a final decision by the City Council, the City shall notify the applicant or licensee that the time to seek judicial review of the decision is governed by Code of Civil Procedure section 1094.6. Failure to issue the written decision in accordance with the provisions of this Subsection shall not affect the validity of the decision.
5.20.170 Enforcement.
(a) The City seeks to achieve voluntary compliance with the provisions of this Chapter but reserves the right to use any and all available administrative and judicial remedies provided by law and this Chapter in its enforcement. The City and its law enforcement officers shall have authority to use any and all of the following methods of enforcement in addition to any other remedies provided in this Code or other law:
(1) Warning. The City may issue an informal warning notifying a person they are not in compliance with this Chapter.
(2) Notice of Violation. The City may issue a formal notice of violation mandating that certain corrective actions be completed within a set time frame. A notice of violation may be issued in conjunction with an administrative citation imposing a monetary fine.
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(3)
Administrative Citation. The City may issue an administrative citation imposing a monetary fine to any responsible person for a violation of this Chapter or any other provision of this Code which is violated during a short-term residential rental, including, without limitation, the City's noise ordinance, as follows:
(i) Transient:
(A) First violation —Warning;
(B) Second violation within any sixty (60) day period —Five hundred dollar ($500.00) fine;
(C) Third and subsequent violations within any sixty (60) day period — One thousand dollar ($1,000.00) fine for each violation. (ii) Owners or managing agency or agent:
(A) First violation —Two thousand five hundred dollar ($2,500.00) fine;
(B) Second and subsequent violations within any twelve (12) month period —Five thousand dollar ($5,000.00) fine.
(iii) The provisions of Chapter 1.20 of this Code shall govern the issuance of administrative citations under this Chapter. All complaints against a short- term residential rental for any violation of this Code may be handled by the City's law enforcement officers on a twenty-four (24) hour basis. A law enforcement officer may submit a written report concerning theirthe officer's response or investigation to the City's Code Enforcement Depai intent for review, processing, and issuance of an administrative citation. Each and every day, or portion thereof, that a violation of this Chapter exists constitutes a separate and distinct violation for which an administrative citation may be issued.
(4) Cease and Desist Order. The City may issue a cease and desist order requiring immediate cessation of any activity prohibited by this Chapter. (5) Civil and Criminal Enforcement.
(i)Through the City Attorney's Office, the City may initiate civil and criminal actions against any responsible person in the Superior Court according to Section 1.20.150 of this Code.
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ii Any owner or managing agency or agent convicted in a criminal action or found to be liable in a civil action for violatingIn addition to the remedies or forms of relief set forth in Section 1.20.150, any person found to have violated any provision of this Chapter shall be ordered to reimburse the City its full investigative costs, pay all unpaid transient occupancy tax amounts owed, if applicable — including for those periods where a person was operating a short-term residential rental illegally without a business license or short-term residential rental permit, and remit all illegally obtained revenue to the City. In addition, the prevailing party in such criminal or civil action shall recover its reasonable attorney's fees and costs.or in violation of minimum duration requirements. Any and all responsible persons so ordered shall be jointly and severally liable. iii The City may specifically seek to abate any violation of this Chapter through a civil injunction.
Administrative Subpoenas.
(i)In investigating potential violations of the provisions of this Chapter, the City Manager, the City's Manager's designee or the City Attorney's Office shall have the power to issue administrative subpoenas upon a witnesses, compel their attendance and testimony, administer oaths and affirmations, take evidence, and require the production of any books, papers, records or other items relevant to the investigation. The City Manager, the City's Manager's designee or the City Attorney's Office may exercise this power prior to the filing of any civil or administrative action by the City. (ii)A subpoena issued pursuant to this Subdivision shall not compel the attendance of a witness or the production of any books, papers, records or other items sooner than 30 calendar days from the date of service of the subpoena during which time the witness may seek judicial review of the subpoena.
Failure to comply with a subpoena issued pursuant to this Subdivision is punishable as a criminal misdemeanor pursuant to Section 1.16.010 of this Code.
5.20.175 Violators may have their Resident Benefit Card suspended. (a) Violation of any section of this Chapter may result in a two (2) year suspension of an owner's Resident Benefit Card. Upon issuance of an administrative citation or a final determination in favor of the City in any judicial action to enforce the provisions of this Chapter, the City may suspend a violator's Resident Benefit Card following a noticed 15 26529.0000034636588.2
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hearing before the City Manager or theifthe City's Manager's designee. Service of the notice shall be made in accordance with Section 1.20.040 of this Code.
In making a determination to suspend a violator's Resident Benefit Card, the City Manager or theirthe City's Manager's designee shall take into consideration the following nonexclusive list of factors:
(1) The nature of the violation;
(2) Whether it is a first violation or if there is a history of violations; (3)
The violator's willingness to take corrective actions to address the violation prior to issuance of the administrative citation or filing of the judicial action, if applicable; and
(4) The violator's willingness to accept responsibility for the violation and sincerity in committing to compliance with the provisions of this Chapter in the future. (b) Appeal from Suspension. Any resident whose Resident Benefit Card has been suspended pursuant-te-this-Seetion-mayTwithin-ten-(4-04-clays-f-ettewing-such decision, appeal the decision to the City Council in accordance with the provisions of Section 21.06.1 10 of decision of the City Council shall be final. Decisions by the City Council to affirm or deny a decision shall require a majority vote of members present at the hearing. hearing and appeal procedures. The hearing and appeal provisions of Subdivisions (c) and (d) of Section 5.20.160 of this Chapter apply to proceedings under this Section.
5.20.180 Duty to comply with all other laws, rules, regulations, and orders.
All owners, managing agencies, agents, transients, and other persons staying, occupying, or visiting a short-term residential rental shall comply with all laws, rules, regulations, and orders enacted or issued by the State of California, County of Riverside or the City not included in this Chapter. This includes, but is not limited to, emergency health orders.
5.20.190 Master associations.
AnyA master association, acting on behalf of owners of premises within a country club, may choose to operate may allow short-term residential rentals, and if so shall register premises for operation as a short term residential rental pursuant to the requirements of Section 5.20.050.
In such event, short term residential rentals registered by the master association shall not be restricted by any minimum duration of rental as otherwise for a minimum number of consecutive nights and days as determined by its governing board and owners of premises therein (including a 16 26529.0000034636588.2
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number of nights and days that is fewer than that set forth in Section 5.20.140) in accordance with the provisions set forth in Section 5.20.210 of this Chapter.
5.20.200 New residential developments.
Any new development approved by the City Council pursuant to Section 5.20.030(e) may allow short-term residential rentals, subject to those terms and conditions prescribed by the City Council, and if so the owner desiring to do so therein shall register premises for operation as a short-term residential rental pursuant to the requirements of Section 5.20.050. In such event, short- term residential rentals registered in the new development shall not be restricted by any minimum duration of rental as otherwise set forth in Section 5.20.140, but shall be subject to any minimum duration of rental or other requirements specified in the conditional use permit or development agreement applicable to that development.
5.20.210 Common interest developments.
(a) A common interest development, separate and apart from a master association, may allow short-term residential rentals for a minimum number of consecutive nights and days as determined by its governing board and owners of premises therein (including a number of nights and days that is fewer than that set forth in Section 5.20.140), provided it satisfies all of the following:
(1) The governing board of the common interest development shall propose the issue of allowing the proposed specific minimum consecutive night and day short-term residential rentals by a formal election/vote of all owners of parcels within the common interest development.
(2) At least a majority of those members voting from within the common interest development shall have, by recorded vote, approved the proposal. (3)
The governing board of the common interest development shall file with the City's Community Development Director written certification of the results of such election/vote, signed by the president or chair of the governing board and in a form and substance approved by the Community Development Director in his or her discretion.
(4) Upon filing a certification with the City that the proposal was approved, short- term residential rentals within the common interest development shall not be restricted by the minimum duration of rental as set forth in Section 5.20.140, but may be operated for any minimum duration established by the above described vote.
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(5)
A common interest development may repeal this authority by following the election/voting procedures set forth in subsections (a)(1)-(4) of this section. If this authority is repealed, all short-term residential rental permits and business licenses issued to owners in the common interest development shall remain valid and in effect, but shall automatically be deemed to be amended to allow a minimum duration of twenty-nine (29) nights (twenty-eight (28) nights in February of non -leap years), as set forth in Section 5.20.140. (6) The common interest development must contain four (4) or more separate legal parcels, exclusive of the common area, in order to allow for short-term residential rentals of fewer nights and days than set forth in Section 5.20.140 pursuant to this Section. Each of the parcels must share a boundary with at least one other parcel in the common interest development.
(7)
A sub -common interest development may not allow for short-term residential rentals pursuant to this Section 5.20.210 except to the extent that the larger common interest development in which it is wholly or partially located has previously determined that short-term rentals are permitted. (b) If a common interest development has not chosen to allow short-term residential rentals for a minimum duration of less than that set forth in Section 5.20.140, in accordance with the procedures set forth in this Section, then individual owners within the common interest development may still apply for a restricted short-term residential rental permit for their own premises in accordance with Section 5.20.050 and if granted, the individual owner's short-term residential permit shall be subject to the minimum duration period set forth in Section 5.2� 1405.20.220.
5.20.220 Tennis tournament exception.
owner(s), who register their
premisesregisters a property for operation as a short-term residential rental pursuant to Section
5.20.050 may rent theifthe property for a period of no less than seven (7) consecutive nights during the period commencing one (1) week preceding and ending three (3) days after conclusion of the annual professional tennis tournament held each year at the Indian Wells Tennis Garden.
5.20.240 Disclosure of short-term rental ordinance in home sale agreements.
Any agreement for the sale of real property located within the City shall include the following disclosure:
"Buyer is aware that the City of Indian Wells has adopted an ordinance regulating the use of this property as a short-term rental, 18 26529.0000034636588.2
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defined as the renting of a residential dwelling unit to another party for a continuous period of less than thirty (30) days. The ordinance can be found within Chapter 5.20 of the Indian Wells Municipal Code. By signing this agreement, buyer acknowledges they have read the short-term rental ordinance and understand its provisions.
Violation of any provision of the ordinance is punishable as a misdemeanor as well as subject to administrative fines and civil suits. Upon violation, the City may pursue any of these remedies without future warning."
For purposes of this section, agreement of sale shall mean any agreement or written instrument which provides that title to the real property in question shall thereafter be transferred from the current owner to another.
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ATTACHMENT #2
ORDI NANCE NO. 732
AN ORDINANCE OF THE CITY OF INDIAN WELLS,
CALI FORNI A, AMENDING SECTI ON 1.20.150 AND
CHAPTER 5.20 OF THE I NDI AN WELLS MUNI CI PAL CODE
AND Fl NDI NG THE ACTI ON TO BE EXEMPT FROM CEQA
WHEREAS, the City of Indian Wells ("City") has the authority under Article XI , section 5 of the California Constitution and the City Charter to make and enforce all ordinances and regulations with respect to municipal affairs; WHEREAS, the City has the authority to regulate land uses and businesses operating within its boundaries;
WHEREAS, short-term rental uses of private residences are business ventures subject to the City's business licensing ordinance;
WHEREAS, the City has authorized the limited use of private residences for short- term residential rentals as a business subject to the provisions of Indian Wells Municipal Code Chapter 5.20, and in accordance with the General Plan and Zoning Code; WHEREAS, the City has amended Chapter 5.20 in recent years in response to factual situations encountered in its administration and enforcement; and WHEREAS, the City now seeks to amend Section 1.20.150 and amend Chapter
5.20 in order to clarify their provisions and better facilitate enforcement.
NOW, THEREFORE, THE CI TY COU N CI L OF THE CI TY OF I N DI AN WELLS DOES HEREBY ORDAI N AS FOLLOWS:
Section 1. That the foregoing Recitals are true and correct and are incorporated herein by this reference.
Section 2. The City Council finds that the adoption of this Ordinance is not subject to environmental review under the California Environmental Quality Act ("CEQA") because it is not a CEQA "project" pursuant to CEQA Guidelines sections 15060(c)(2) and (c)(3) and 15378 because it has no potential of creating a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. 26529.00000\34637050.2
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Therefore, the city council directs that a notice of exemption for this ordinance be filed with the county clerk of the county of Riverside within five business days in accordance with CEQA Guidelines.
Section 3. Section 1.20.150 and Chapter 5.20 of the Indian Wells Municipal Code are hereby amended as set forth in Exhibit A of this ordinance, which exhibit is incorporated herein by this reference.
Section 4. This ordinance takes effect 30 days following its adoption. The city clerk is directed to publish this ordinance in the manner and within the time prescribed by law.
PASSED, APPROVED, AND ADOPTED by the City Council of Indian Wells, California, on the day of
DANA REED
MAYOR
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STATE OF CALI FORN I A )
COUNTY OF RI VERSI DE) ss.
CITY OF INDIAN WELLS)
CERTI Fl CATI ON FOR ORDI NANCE NO. 732
I , Angelica Avila, City Clerk of the City Council of the City of Indian Wells, California, DO HEREBY CERTI FY that Ordinance No. 732, having been introduced at a regular meeting of the City Council on January 6, 2022, was again introduced, the reading in full thereafter unanimously waived, and duly passed and adopted at a regular meeting of the City Council held on the day of and said Ordinance was passed and adopted by the following stated vote, to wit:
AYES:
NOES:
and was thereafter on said day signed by the Mayor of the Qty of Indian Wells.
ATTEST: APPROVED AS TO FORM:
ANGELI CA AVI LA TODD LEI SHMAN
CI TY CLERK CI TY ATTORNEY
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Exhibit "A"
Section 1.20.150 of the municipal code is amended to read in its entirety as follows:
1.20.150 Alternative remedies.
(a) In addition to, or as an alternative to the administrative proceedings set forth in this Chapter, the City may abate a public nuisance by any or all of the following:
(1) An inspection warrant issued under Code of Civil Procedure Section 1822.050 et seq.;
(2) An abatement warrant issued in accord with the statutory requirements of Code of Civil Procedure Section 1822.050 et seq.;
(3) A civil action filed in the Superior Court;
(4) Civil or criminal contempt proceedings;
(5) A criminal citation or criminal complaint.
(b) In any such administrative proceeding, warrant proceeding, civil action, civil contempt proceeding, or other special proceeding brought to the Qty to abate a nuisance, the Qty shall be entitled to recover its staff time charges, expert or consultant fees and abatement costs. In addition, the prevailing party shall recover its reasonable attorney fees if the City elects, at the initiation of the individual action or proceeding, to seek recovery of its own attorney fees. The amount of attorney fees awarded in such action, administrative proceeding or special proceeding shall not exceed the amount of reasonable attorney fees incurred by the Qty in the action or proceeding. (California Government Code Sections 38773.1 and 38773.5) Further, in any civil action to abate a public nuisance, the Qty shall be entitled to recover civil penalties of up to $1,000 per violation for each day a violation of this Code has been proven to exist. In deciding the amount of civil penalty to be imposed, the Court may consider the following non -exhaustive list of factors:
(1) the nature of the violation;
(2) the duration of the violation;
(3) the number of violations;
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(4) the impact of the violation upon the community; and (5) the willfulness of the responsible party's misconduct. (c) The remedies set forth in this Chapter may be sought from the property owner as shown upon the last available assessment roll, from the occupant or from any other responsible party.
Chapter 5.20 of the municipal code is amended to read in its entirety as follows:
Chapter 5.20 SHORT-TERM RESI DENT! AL RENTALS
5.20.010 Violation —Nuisance —Applicability.
It is unlawful and a violation of this Chapter, and is hereby declared a public nuisance, for any person or entity owning, renting, leasing, occupying, or having charge, control or possession of any real or improved property within the City of Indian Wells to cause, permit, maintain or allow any violation of this Chapter to exist thereon. Any violation of this Chapter is punishable as a misdemeanor and as otherwise permitted by this Code. Each and every violation of this Chapter that exists constitutes a separate and distinct violation as does each and every day, or portion thereof that any violation exists.
Notwithstanding any provision of this Chapter to the contrary, this Chapter shall not be applicable to any timeshare, as defined in Section 21.08.462 of this Code, that exists as of July 4, 2015.
5.20.020 Definitions.
The following words and phrases, whenever used in this Chapter, shall have the meaning defined in this Section unless the context clearly requires otherwise:
"City" means the Qty of Indian Wells.
"Code" means the Indian Wells Municipal Code and any other codes incorporated or adopted therein.
"Common interest development" means a residential development that is subject to the Davis -Stirling Act of the State of California, and where there exists a common area owned by an association of owners of separate interests, there has been recorded a declaration and final subdivision map, there has been conveyed to each homeowner a separate interest coupled with an interest in the common 26529.00000\34637050.2
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area or membership in the association, and there is a board of directors elected by the association of homeowners.
"Country club" means The Reserve aub, Vintage aub, Eldorado Country Oub, Desert Horizons Country Club, and Toscana Country Club, and any successor in interest to any of the foregoing operating within the boundaries identified in Sections 21.14.020, 21.14.030, 21.14.090, and 21.14.110 of this Code. "Good Neighbor Brochure" means a document prepared by the City, as may be revised from time to time, that summarizes the general rules of conduct, consideration and respect pertaining to the use and occupancy of the short-term residential rental units.
"Law enforcement officers" and "officers" means a law enforcement officer employed or otherwise charged by the City to enforce codes, ordinances, mandates, regulations, resolutions, rules or other laws adopted by the City, including officers employed by the City or providing services to the City under contract. This includes, but is not limited to, City code enforcement officers and building officials, and Riverside County Sheriff's Department deputies. "Local agent" means the person designated by the owner or managing agency or agent who shall be available twenty-four (24) hours per day, seven (7) days per week pursuant to Section 5.20.060 for the purpose of responding to public safety calls, nuisances, or other complaints regarding the use, condition, operation or conduct of transients and other persons at the premises. "Managing agency or agent" means any person as it is defined in this Section who is appointed by an owner to solicit applications, execute agreements, or otherwise act on the owner's behalf in the operation of a short-term residential rental.
"Master association" means any entity which has written and valid contractual jurisdiction and authority to act on behalf of common interest developments within a country club and to exclusively manage all short-term residential rentals within that entire country club, as defined in this Section 5.20.020, and which retains and manages security officers or contractors/vendors who patrol the country club and promptly respond in the event of short-term residential rental violations or problems.
"Multiple rentals" means the maintenance by a person of a financial interest in more than one (1) short-term residential rental within the City. For this purpose, 26529.00000\34637050.2
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