City of Palm Desert
2023-24 Mid-Year Budget Adjustments
Other Funds
Like the General Fund, the Other Governmental Funds require adjustments to 1) implement required technical/rebalancing actions to align existing revenue estimates and expenditure budgets with the most current tracking information, 2) reallocate funding among appropriations based on updated needs; and 3) implement a number of technical and net-zero adjustments between revenue categories and expenditure appropriations.
Other governmental funds include transportation, signalization, parks, drainage, fire facility fees, housing mitigation, art in public places, childcare facilities, grant funds, recycling, aquatic center, enterprise funds (including Desert Willow and Parkview Office Complex), capital improvement funds, internal service funds, debt service, assessment districts, landscape and lighting districts and housing authority funds. Estimated revenues for FY 2023-24 for Other Funds were approved at $72,025,944 with an appropriation of $146,913,035. The variance was to be covered by Fund Balance. Following staff’s analysis, we anticipate an additional amount of $2,161,266 to be
City of Palm Desert
2023-24 Mid-Year Budget Adjustments
covered by Fund Balance in Other Funds. Most of the net increase is related to the addition of SARDA budgets to the overall budget. In all prior years, the approved ROPS has served as the budget for SARDA.
Below is the breakdown of the adjustments being requested for Other Funds. Other adjustments are based on YTD Actuals.
Other Revenue:
Other Expenditures
The adjustments being requested below are also based on YTD Actuals and interest earnings.
There is sufficient fund balance to cover the variance.
Original Budget
Mid-Year
Adjustment
Needed
Revised MidYear
Budget
Appropriations from
Reserve Thru
1/25/24
Total 2023/24
Appropriations
Other Funds Revenue 72,025,944 25,210,948 97,236,892 97,236,892 Anticipated Use of Fund Balance 74,887,091 74,887,091 74,887,091 Other Funds Appropriations 146,913,035 27,372,214 174,285,249 174,285,249 Revised Other Fund Revenu Over/(Under) Expenditures - (2,161,266) (2,161,266) - (2,161,266) Original
Budget
Mid-Year
Adjustment
Request
Revised Budget
Request
2340000 - Traffic Signals 3122500 - Signalization Fees 20,000 16,000 36,000 2370000 - Energy Independence Loan 3611500 - Int-Int Fr Loan/Notes Rec - 1,200 1,200 2430000 - Cannabis Compliance Fund 3184200 - Cannabis Tax Sales 1,200,000 (300,000) 900,000 2430000 - Cannabis Compliance Fund 3184201 - Cannabis Tax Manufacturing 2,000 23,000 25,000 2430000 - Cannabis Compliance Fund 3184202 - Cannabis Tax Cultivation 8,000 500 8,500 2430000 - Cannabis Compliance Fund 3199900 - Cannabis Tax Delinq - 1,200 1,200 2710000 - El Paseo Assessm District 3553000 - Special Assessment Levied - 161,770 161,770 2770000 - Zone #1 Prs.Plaza/Parking 3553000 - Special Assessment Levied - 38,000 38,000 4250000 - Economic Development Proj 3790000 - Miscellaneous Revenue - 1,500 1,500 5100000 - PD Office Complex Ent Fd 3790000 - Miscellaneous Revenue - 15,000 15,000 5200000 - Desert Willow Golf Course 3799900 - Misc Revenue-Others - 12,000 12,000 7030000 - RDA Successor Agency 3171000 - Tax Increment-Consolidated - 23,797,450 23,797,450 7030000 - RDA Successor Agency 3611400 - Int-On Inv Trustee Sp/Esc - 10,000 10,000 8710000 - Palm Desert Housing Auth 3611400 - Int-On Inv Trustee Sp/Esc 20,000 445,000 465,000 8730000 - Housing Asset Fund 3611400 - Int-On Inv Trustee Sp/Esc - 987,828 987,828 8730000 - Housing Asset Fund 3611500 - Int-Int Fr Loan/Notes Rec - 500 500 25,210,948
OTHER FUNDS
City of Palm Desert
2023-24 Mid-Year Budget Adjustments
Original
Budget
Mid-Year
Adjustment
Request
Revised Budget
Request
2114311 - Public Works -Street Resurfac 4332000 - Repair & Maintenance Streets 4,535,406 3,420,491 7,955,897 2134317 - Road Safety Improvements 5000908 - Road Safety Improvements 2,091,361 721,735 2,813,096 2134565 - Neighborhood Traffic Control 5000909 - Haystack Traffic Calming 940,211 668,665 1,608,876 2204649 - Palma Village Park 4400100 - Capital Project 212,000 100,000 312,000 2204800 - Other Classifications -Contrib 625,920 541,974 1,167,894 2304220 - Public Safety - Fire Services 4331000 - R/M-Buildings 326,141 (10,000) 316,141 2304220 - Public Safety - Fire Services 4351000 - Utilities-Water 10,000 5,000 15,000 2304220 - Public Safety - Fire Services 4351200 - Utilities-Gas 5,000 5,000 10,000 2364195 - General Government - Administr 4219000 - Supplies-Other 55,000 8,000 63,000 2364195 - General Government - Administr 42190000 55,000 8,000 63,000 2384195 - General Government - Administr 4390301 - Rideshare 1,000 1,000 2,000 2384515 - HW- Air Quality Management 4363000 - Dues 55,000 10,000 65,000 2424549 - HW- Aquatic Facility 4219000 - Supplies-Other 20,000 5,000 25,000 2424549 - HW- Aquatic Facility 4331100 - Replacement Expenditures 15,000 (5,000) 10,000 2424549 - HW- Aquatic Facility 4331101 - Contracted Pool Maintenance 258,582 (30,000) 228,582 2424549 - HW- Aquatic Facility 4351000 - Utilities-Water 40,000 (10,000) 30,000 2424549 - HW- Aquatic Facility 4351400 - Utilities-Electric 140,000 40,000 180,000 2524662 - Library Services 4112100 - Ins Prem - Health 150,000 145,870 295,870 2714491 - CD - Promotion Benefit AD 4321500 - Other Advertising 248,500 40,000 288,500 2714491 - CD - Promotion Benefit AD 4321500 - Other Advertising 248,500 40,000 288,500 2724374 - PW - Landscape & Lighting Dist 4351400 - Utilities-Electric 3,500 1,100 4,600 2734681 - CR- Landscape/Lght-Subzone B 4351400 - Utilities-Electric 966 700 1,666 2754683 - CR-Landscape/Lght-Subzone D 4332100 - Repair Maintenance 2,000 500 2,500 2764374 - Landscape & Light-Haystack&Cyn 4309500 - Prof-Palm Tree Trimming 18,000 1,000 19,000 2764374 - Landscape & Light-Haystack&Cyn 4332100 - Repair Maintenance 16,000 4,000 20,000 2774373 - PW - Parking Lot Improvements 4309103 - Prof-Parking Lot Sweeping 6,300 1,000 7,300 2864374 - Landscape & Light Crest Z15 4309500 - Prof-Palm Tree Trimming 1,638 250 1,888 4004430 - Economic Development Project 5000912 - Lupine Plaza 1,026,115 436,708 1,462,823 4204370 - Public Works - Drainage 5000454 - Haystack Channel Rehab 3,465,315 100,000 3,565,315 4254430 - Community Development - Busine 4369603 - CAM-SEARS BUILDING - 36,847 36,847 4254430 - Community Development - Busine 4400100 - Capital Project - 15,000 15,000 4504161 - General Government - R/M-City 4400100 - Capital Project 1,870,106 192,474 2,062,580 5304331 - Public Works -Auto Fleet/Equip 4344000 - Annual Lease Payment 210,223 8,718 218,941 7034121 - General Government - Legal Spe 4301500 - Prof - Legal - 50,000 50,000 7034121 - General Government - Legal Spe 4374000 - Damage Settle/Deductible 2,188,208 139,674 2,327,882 7034195 - General Government - Administr 4302000 - Prof-Accounting/Auditing 3,590 15,000 18,590 7034195 - General Government - Administr 4309000 - Prof - Other - 729,035 729,035 7034195 - General Government - Administr 4602300 - Debt Service 22 07M - 1,639,631 1,639,631 7034195 - General Government - Administr 4605300 - Debt Service 52.390M - 5,474,875 5,474,875 7034195 - General Government - Administr 4605400 - Debt Service 140.130M - 12,052,400 12,052,400 7034195 - General Government - Administr 4605500 - Debt Service 7.365M - 681,144 681,144 7034627 - Culture/Recreation - Rda Proje 4400100 - Capital Project - 113,500 113,500 8704195 - General Government - Administr 4100100 - Salaries-Full Time 308,112 25,437 333,549 8704195 - General Government - Administr 4111500 - Retirement Contribution 57,371 (13,270) 44,101 8704195 - General Government - Administr 4111600 - Medicare Contrb-Employer 6,292 (1,455) 4,837 8704195 - General Government - Administr 4111700 - Retiree Health 7,742 (2,033) 5,709 8704195 - General Government - Administr 4111800 - Employer 457 Contribution - 1,900 1,900 8704195 - General Government - Administr 4112000 - Ins Prem - Long Term Disab. 2,145 (495) 1,650 8704195 - General Government - Administr 4112100 - Ins Prem - Health 96,379 (36,505) 59,874 8704195 - General Government - Administr 4112200 - Ins Prem-Dental/Vision 6,510 (718) 5,792 8704195 - General Government - Administr 4112400 - Ins Prem - Life 521 62 583 27,372,214
OTHER FUNDS
City of Palm Desert
2023-24 Mid-Year Budget Adjustments
Finally, staff is also updating the staff allocation resolution in order to reflect changes made by the City Manager throughout the current fiscal year to meet City Council goals. Staff is requesting amendment to Section 1 of the resolution to facilitate such changes in a more flexible manner.
Legal Review:
This report has been reviewed by the City Attorney’s office.
FINANCIAL IMPACT:
Pursuant to the Reserve Policy, any positive general fund balance at year end must be used to replenish funds expended during the prior fiscal year. Therefore, the estimated $2.2M will be used to replenish the appropriations requests as needed throughout 2023-24 and applied to the appropriate General Fund reserve category.
Attachments
1. Resolution Approving 2023-24 Midyear Budget Adjustments
2. Resolution Approving Revised Staff Allocation
3. Exhibit A to Resolution – Revised Staff Allocation
REVISED GENERAL FUND REVENUE AND EXPENDITURES REVISED OTHER FUND REVENUE AND EXPENDITURES Original General Fund Revenue Budget 75,554,467 Original Other Fund Revenue Budget 72,025,944 Requested Adjustments 2,420,853 Anticipated Use of Fund Balance 74,887,091 Requested Adjustments 25,210,948
Revised General Fund Revenue 77,975,320 Revised Other Fund Revenue 172,123,983 Original General Fund Appropriations 75,353,985 Original Other Fund Appropriations 146,913,035 Requested Adjustments 381,296 Requested Adjustments 27,372,214 Revised General Fund Appropriations 75,735,281 Revised Other Fund Appropriations 174,285,249 Revised General fund Revenue Over/(Under) Expenditures 2,240,039 Revised Other fund Revenue Over/(Under) Expenditures (2,161,266)
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING THE FISCAL YEAR 2023-24 BUDGET AS A RESULT OF
MID-YEAR ADJUSTMENTS
WHEREAS, as a result of a mid-year review, it is desirable to revise the FY 2023- 24 Budget;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, California, that the FY 2023-24 Budget is hereby revised as follows:
1. Each of the amounts shown in Exhibit A, attached hereto, in the General and Other Funds Revenue column entitled “Revised Budget Request”, are hereby accepted as the revised Estimated Revenues for the identified revenue categories.
2. Each of the amounts shown in Exhibit A, attached hereto, in the General and Other Funds Expenditure column entitled "Revised Budget Request", are hereby adjusted and appropriated to the departments, activities and projects identified therein as the revised budgets.
ADOPTED ON February 15, 2024.
________
KARINA QUINTANILLA, MAYOR
ATTEST:
_____________
ANTHONY MEJIA, CITY CLERK
CITY OF PALM DESERT, CALIFORNIA
Resolution No. _____ Page 2
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, hereby certify that Resolution No. 2022-__ is a full, true, and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Desert on _______________________, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Desert, California, on ______________, 20__.
ANTHONY J. MEJIA
CITY CLERK
Resolution No. _____ Page 2
EXHIBIT A
GENERAL FUND REVENUE REQUEST:
GENERAL FUND EXPENDITURES REQUEST:
General Fund Original
Budget
Midyear
Adjustment
Revised
Midyear
Budget
1104111 - General Gov - City Clerk 4100100 - Salaries-Full Time
684,341
22,568
706,909
1104130 - General Gov - City Manager 4100100 - Salaries-Full Time
954,561
117,132
1,071,693
1104134 - General Gov - Capital
Projects 4100100 - Salaries-Full Time
1,199,893
(259,036)
940,857
1104150 - General Gov- Finance 4100100 - Salaries-Full Time
1,705,807
(78,706)
1,627,101
1104154 - General Gov- Human
Resources 4100100 - Salaries-Full Time
433,895
31,131
465,026
1104190 - General Gov- Information
Techn 4100100 - Salaries-Full Time
648,678
112,367
761,045
1104250 - Public Safety - Pw-St Light/Tr 4100100 - Salaries-Full Time
451,088
91,147
542,235
1104300 - Public Works-Administration 4100100 - Salaries-Full Time
804,888
156,052
960,940
1104310 - Public Works -Street &
Mainten 4100100 - Salaries-Full Time
1,084,422
27,817
1,112,239
1104340 - Public Works -Public Bldg 4100100 - Salaries-Full Time
518,635
(146,657)
371,978
1104417 - Community Dev - Marketing 4100100 - Salaries-Full Time
476,446
109,054
585,500
GENERAL FUND Original
Budget
Mid-Year
Adjustment
Request
Revised Budget
Request
3133000 - Sales Tax/Meas A Sales Tx 26,623,447 (1,623,447) 25,000,000 3166000 - Business License Tax 1,300,000 (200,000) 1,100,000 3188300 - Transient Occupancy Tax 18,500,000 1,500,000 20,000,000 3199600 - Business Lic Delinq Fee 20,000 10,000 30,000
3199800 - Transient Occ Tax Delinq 20,000 (10,000) 10,000 3221100 - Building Permits 1,228,300 200,000 1,428,300
3221200 - Grading Permits 25,000 (10,000) 15,000
3221500 - ROW Encroachment Permits 150,000 (50,000) 100,000 3221700 - Miscellaneous Permits - 800 800
3221800 - Business Regulatory Perm 22,500 (10,000) 12,500 3365600 - Motor Veh In Lieu Fee 24,000 26,000 50,000
3411300 - Zoning Fees 40,000 10,000 50,000
3411400 - Plan Check Fees 307,768 100,000 407,768
3411500 - Sale Of Map/Plan/Public 5,000 (2,500) 2,500
3424500 - Nuisance Abatement Tax 20,000 (10,000) 10,000 3511100 - Vehicle Code Fines Non-Mv 35,000 (10,000) 25,000 3611000 - Interest Income 500,000 2,500,000 3,000,000
2,420,853
Resolution No. _____ Page 2
1104420 - Community DevBuilding&Safety 4100100 - Salaries-Full Time 774,876
(35,726)
739,150
1104421 - Comm Dev - Permit Center 4100100 - Salaries-Full Time
385,302
(20,470)
364,832
1104422 - B & Safety - Code
Enforcement 4100100 - Salaries-Full Time
489,275
92,501
581,776
1104430 - Comm Dev -Economic
Development 4100100 - Salaries-Full Time
972,374
(80,865)
891,509
1104470 - Comm Dev - Planning/Comm
Devel 4100100 - Salaries-Full Time
1,130,335
57,793
1,188,128
1104614 - Culture/Rec - Landscaping 4100100 - Salaries-Full Time
526,544
74,971
601,515
1104130 - General Gov - City Manager 4100200 - Salaries-Overtime
-
500
500
1104150 - General Gov- Finance 4100200 - Salaries-Overtime
1,000
5,000
6,000
1104190 - General Gov- Information
Techn 4100200 - Salaries-Overtime
10,000
2,000
12,000
1104250 - Public Safety - Pw-St Light/Tr 4100200 - Salaries-Overtime
1,000
9,000
10,000
1104310 - Public Works -Street &
Mainten 4100200 - Salaries-Overtime
20,000
40,000
60,000
1104340 - Public Works -Public Bldg 4100200 - Salaries-Overtime
10,000
10,000
20,000
1104420 - Community DevBuilding&Safety 4100200 - Salaries-Overtime 1,000
5,000
6,000
1104421 - Comm Dev - Permit Center 4100200 - Salaries-Overtime
500
500
1,000
1104422 - B & Safety - Code
Enforcement 4100200 - Salaries-Overtime
-
10,000
10,000
1104430 - Comm Dev -Economic
Development 4100200 - Salaries-Overtime
500
250
750
1104614 - Culture/Rec - Landscaping 4100200 - Salaries-Overtime
3,000
10,000
13,000
1104110 - General Gov - City Council 4101000 - Meeting Compensation
138,768
(1,982)
136,786
1104159 - General Gov - General
Services
4101500 - Retirement
Contribution
2,805,167
(125,000)
2,680,167
1104110 - General Gov - City Council
4111500 - Retirement
Contribution
18,438
(262)
18,176
1104111 - General Gov - City Clerk
4111500 - Retirement
Contribution
90,501
2,979
93,480
1104130 - General Gov - City Manager
4111500 - Retirement
Contribution
126,146
15,464
141,610
1104134 - General Gov - Capital
Projects
4111500 - Retirement
Contribution
158,626
(34,241)
124,385
1104150 - General Gov- Finance
4111500 - Retirement
Contribution
225,575
(10,414)
215,161
1104154 - General Gov- Human
Resources
4111500 - Retirement
Contribution
57,370
4,110
61,480
1104190 - General Gov- Information
Techn
4111500 - Retirement
Contribution
85,746
14,929
100,675
1104250 - Public Safety - Pw-St Light/Tr
4111500 - Retirement
Contribution
59,640
12,060
71,700
1104300 - Public Works-Administration
4111500 - Retirement
Contribution
106,413
20,623
127,036
Resolution No. _____ Page 2
1104310 - Public Works -Street &
Mainten
4111500 - Retirement
Contribution
143,456
3,674
147,130
1104340 - Public Works -Public Bldg
4111500 - Retirement
Contribution
68,580
(19,380)
49,200
1104417 - Community Dev - Marketing
4111500 - Retirement
Contribution
63,011
14,419
77,430
1104420 - Community DevBuilding&Safety4111500 - Retirement Contribution
102,476
(4,740)
97,736
1104421 - Comm Dev - Permit Center
4111500 - Retirement
Contribution
50,980
(2,702)
48,278
1104422 - B & Safety - Code
Enforcement
4111500 - Retirement
Contribution
64,728
12,234
76,962
1104430 - Comm Dev -Economic
Development
4111500 - Retirement
Contribution
128,570
(10,698)
117,872
1104470 - Comm Dev - Planning/Comm
Devel
4111500 - Retirement
Contribution
149,445
7,652
157,097
1104614 - Culture/Rec - Landscaping
4111500 - Retirement
Contribution
69,624
9,920
79,544
1104110 - General Gov - City Council
4111600 - Medicare ContrbEmployer
2,012
(27)
1,985
1104111 - General Gov - City Clerk
4111600 - Medicare ContrbEmployer
9,923
327
10,250
1104130 - General Gov - City Manager
4111600 - Medicare ContrbEmployer
13,841
1,699
15,540
1104134 - General Gov - Capital
Projects
4111600 - Medicare ContrbEmployer
17,399
(3,757)
13,642
1104150 - General Gov- Finance
4111600 - Medicare ContrbEmployer
24,735
(1,142)
23,593
1104154 - General Gov- Human
Resources
4111600 - Medicare ContrbEmployer
6,291
452
6,743
1104190 - General Gov- Information
Techn
4111600 - Medicare ContrbEmployer
9,406
1,634
11,040
1104250 - Public Safety - Pw-St Light/Tr
4111600 - Medicare ContrbEmployer
6,541
1,322
7,863
1104300 - Public Works-Administration
4111600 - Medicare ContrbEmployer
11,671
2,263
13,934
1104310 - Public Works -Street &
Mainten
4111600 - Medicare ContrbEmployer
15,724
404
16,128
1104340 - Public Works -Public Bldg
4111600 - Medicare ContrbEmployer
7,520
(2,125)
5,395
1104417 - Community Dev - Marketing
4111600 - Medicare ContrbEmployer
6,909
1,591
8,500
1104420 - Community DevBuilding&Safety4111600 - Medicare ContrbEmployer 11,236
(518)
10,718
1104421 - Comm Dev - Permit Center
4111600 - Medicare ContrbEmployer
5,587
(297)
5,290
1104422 - B & Safety - Code
Enforcement
4111600 - Medicare ContrbEmployer
7,095
1,341
8,436
1104430 - Comm Dev -Economic
Development
4111600 - Medicare ContrbEmployer
14,100
(1,173)
12,927
1104470 - Comm Dev - Planning/Comm
Devel
4111600 - Medicare ContrbEmployer
16,390
837
17,227
1104614 - Culture/Rec - Landscaping
4111600 - Medicare ContrbEmployer
7,635
1,087
8,722
1104111 - General Gov - City Clerk 4111700 - Retiree Health
10,898
2,417
13,315
Resolution No. _____ Page 2
1104130 - General Gov - City Manager 4111700 - Retiree Health
21,580
1,625
23,205
1104134 - General Gov - Capital
Projects 4111700 - Retiree Health
15,260
5,060
20,320
1104150 - General Gov- Finance 4111700 - Retiree Health
30,611
4,629
35,240
1104154 - General Gov- Human
Resources 4111700 - Retiree Health
7,742
6,209
13,951
1104190 - General Gov- Information
Techn 4111700 - Retiree Health
982
2,618
3,600
1104250 - Public Safety - Pw-St Light/Tr 4111700 - Retiree Health
1,257
2,483
3,740
1104300 - Public Works-Administration 4111700 - Retiree Health
5,879
3,908
9,787
1104310 - Public Works -Street &
Mainten 4111700 - Retiree Health
4,150
(1,163)
2,987
1104340 - Public Works -Public Bldg 4111700 - Retiree Health
1,053
198
1,251
1104417 - Community Dev - Marketing 4111700 - Retiree Health
8,783
6,521
15,304
1104420 - Community DevBuilding&Safety 4111700 - Retiree Health 8,587
466
9,053
1104421 - Comm Dev - Permit Center 4111700 - Retiree Health
7,943
(2,535)
5,408
1104422 - B & Safety - Code
Enforcement 4111700 - Retiree Health
4,298
3,749
8,047
1104430 - Comm Dev -Economic
Development 4111700 - Retiree Health
12,080
(2,565)
9,515
1104470 - Comm Dev - Planning/Comm
Devel 4111700 - Retiree Health
16,632
6,557
23,189
1104614 - Culture/Rec - Landscaping 4111700 - Retiree Health
4,051
1,507
5,558
1104111 - General Gov - City Clerk
4111800 - Employer 457
Contribution
-
1,200
1,200
1104130 - General Gov - City Manager
4111800 - Employer 457
Contribution
-
3,250
3,250
1104134 - General Gov - Capital
Projects
4111800 - Employer 457
Contribution
-
5,650
5,650
1104150 - General Gov- Finance
4111800 - Employer 457
Contribution
-
10,500
10,500
1104154 - General Gov- Human
Resources
4111800 - Employer 457
Contribution
-
2,700
2,700
1104190 - General Gov- Information
Techn
4111800 - Employer 457
Contribution
-
4,800
4,800
1104250 - Public Safety - Pw-St Light/Tr
4111800 - Employer 457
Contribution
-
6,550
6,550
1104300 - Public Works-Administration
4111800 - Employer 457
Contribution
-
12,000
12,000
1104310 - Public Works -Street &
Mainten
4111800 - Employer 457
Contribution
-
6,300
6,300
1104340 - Public Works -Public Bldg
4111800 - Employer 457
Contribution
-
3,600
3,600
1104417 - Community Dev - Marketing
4111800 - Employer 457
Contribution
-
5,300
5,300
1104420 - Community DevBuilding&Safety4111800 - Employer 457 Contribution
-
4,800
4,800
Resolution No. _____ Page 2
1104421 - Comm Dev - Permit Center
4111800 - Employer 457
Contribution
-
4,600
4,600
1104422 - B & Safety - Code
Enforcement
4111800 - Employer 457
Contribution
-
5,600
5,600
1104430 - Comm Dev -Economic
Development
4111800 - Employer 457
Contribution
-
9,200
9,200
1104470 - Comm Dev - Planning/Comm
Devel
4111800 - Employer 457
Contribution
-
8,200
8,200
1104614 - Culture/Rec - Landscaping
4111800 - Employer 457
Contribution
-
4,600
4,600
1104111 - General Gov - City Clerk
4112000 - Ins Prem - Long Term
Disab.
3,383
112
3,495
1104130 - General Gov - City Manager
4112000 - Ins Prem - Long Term
Disab.
4,720
580
5,300
1104134 - General Gov - Capital
Projects
4112000 - Ins Prem - Long Term
Disab.
5,932
(1,281)
4,651
1104150 - General Gov- Finance
4112000 - Ins Prem - Long Term
Disab.
8,435
(390)
8,045
1104154 - General Gov- Human
Resources
4112000 - Ins Prem - Long Term
Disab.
2,145
155
2,300
1104190 - General Gov- Information
Techn
4112000 - Ins Prem - Long Term
Disab.
3,207
558
3,765
1104250 - Public Safety - Pw-St Light/Tr
4112000 - Ins Prem - Long Term
Disab.
2,230
451
2,681
1104300 - Public Works-Administration
4112000 - Ins Prem - Long Term
Disab.
3,980
771
4,751
1104310 - Public Works -Street &
Mainten
4112000 - Ins Prem - Long Term
Disab.
5,362
138
5,500
1104340 - Public Works -Public Bldg
4112000 - Ins Prem - Long Term
Disab.
2,565
(725)
1,840
1104417 - Community Dev - Marketing
4112000 - Ins Prem - Long Term
Disab.
2,356
544
2,900
1104420 - Community DevBuilding&Safety4112000 - Ins Prem - Long Term Disab.
3,831
(177)
3,654
1104421 - Comm Dev - Permit Center
4112000 - Ins Prem - Long Term
Disab.
1,905
(101)
1,804
1104422 - B & Safety - Code
Enforcement
4112000 - Ins Prem - Long Term
Disab.
2,419
457
2,876
1104430 - Comm Dev -Economic
Development
4112000 - Ins Prem - Long Term
Disab.
4,808
(398)
4,410
1104470 - Comm Dev - Planning/Comm
Devel
4112000 - Ins Prem - Long Term
Disab.
5,589
286
5,875
1104614 - Culture/Rec - Landscaping
4112000 - Ins Prem - Long Term
Disab.
2,604
370
2,974
1104110 - General Gov - City Council 4112100 - Ins Prem - Health
76,598
54,732
131,330
1104111 - General Gov - City Clerk 4112100 - Ins Prem - Health
160,117
6,729
166,846
1104130 - General Gov - City Manager 4112100 - Ins Prem - Health
162,185
(60,909)
101,276
1104134 - General Gov - Capital
Projects 4112100 - Ins Prem - Health
268,127
(84,611)
183,516
1104150 - General Gov- Finance 4112100 - Ins Prem - Health
365,522
(42,247)
323,275
1104154 - General Gov- Human
Resources 4112100 - Ins Prem - Health
96,379
8,808
105,187
Resolution No. _____ Page 2
1104190 - General Gov- Information
Techn 4112100 - Ins Prem - Health
112,000
74,920
186,920
1104250 - Public Safety - Pw-St Light/Tr 4112100 - Ins Prem - Health
89,147
4,267
93,414
1104300 - Public Works-Administration 4112100 - Ins Prem - Health
169,835
23,935
193,770
1104310 - Public Works -Street &
Mainten 4112100 - Ins Prem - Health
302,260
(7,174)
295,086
1104340 - Public Works -Public Bldg 4112100 - Ins Prem - Health
109,455
(39,655)
69,800
1104417 - Community Dev - Marketing 4112100 - Ins Prem - Health
75,564
47,513
123,077
1104420 - Community DevBuilding&Safety 4112100 - Ins Prem - Health 163,021
(1,838)
161,183
1104421 - Comm Dev - Permit Center 4112100 - Ins Prem - Health
89,605
30,214
119,819
1104422 - B & Safety - Code
Enforcement 4112100 - Ins Prem - Health
115,643
35,749
151,392
1104430 - Comm Dev -Economic
Development 4112100 - Ins Prem - Health
176,282
(24,273)
152,009
1104470 - Comm Dev - Planning/Comm
Devel 4112100 - Ins Prem - Health
183,300
73,202
256,502
1104614 - Culture/Rec - Landscaping 4112100 - Ins Prem - Health
122,177
20,281
142,458
1104110 - General Gov - City Council 4112200 - Ins Prem-Dental/Vision
7,690
727
8,417
1104111 - General Gov - City Clerk 4112200 - Ins Prem-Dental/Vision
11,805
1,949
13,754
1104130 - General Gov - City Manager 4112200 - Ins Prem-Dental/Vision
8,640
(215)
8,425
1104134 - General Gov - Capital
Projects 4112200 - Ins Prem-Dental/Vision
16,107
(2,626)
13,481
1104150 - General Gov- Finance 4112200 - Ins Prem-Dental/Vision
23,643
3,943
27,586
1104154 - General Gov- Human
Resources 4112200 - Ins Prem-Dental/Vision
6,510
958
7,468
1104190 - General Gov- Information
Techn 4112200 - Ins Prem-Dental/Vision
9,409
2,131
11,540
1104250 - Public Safety - Pw-St Light/Tr 4112200 - Ins Prem-Dental/Vision
8,691
222
8,913
1104300 - Public Works-Administration 4112200 - Ins Prem-Dental/Vision
13,986
949
14,935
1104310 - Public Works -Street &
Mainten 4112200 - Ins Prem-Dental/Vision
26,294
(4,394)
21,900
1104340 - Public Works -Public Bldg 4112200 - Ins Prem-Dental/Vision
8,913
(1,446)
7,467
1104417 - Community Dev - Marketing 4112200 - Ins Prem-Dental/Vision
5,740
2,172
7,912
1104420 - Community DevBuilding&Safety 4112200 - Ins Prem-Dental/Vision 14,208
(2,170)
12,038
1104421 - Comm Dev - Permit Center 4112200 - Ins Prem-Dental/Vision
8,913
497
9,410
1104422 - B & Safety - Code
Enforcement 4112200 - Ins Prem-Dental/Vision
10,590
2,172
12,762
1104430 - Comm Dev -Economic
Development 4112200 - Ins Prem-Dental/Vision
14,927
(2,173)
12,754
Resolution No. _____ Page 2
1104470 - Comm Dev - Planning/Comm
Devel 4112200 - Ins Prem-Dental/Vision
17,330
4,620
21,950
1104614 - Culture/Rec - Landscaping 4112200 - Ins Prem-Dental/Vision
8,417
950
9,367
1104111 - General Gov - City Clerk 4112400 - Ins Prem - Life
1,156
35 1,191
1104130 - General Gov - City Manager 4112400 - Ins Prem - Life
1,610
196
1,806
1104134 - General Gov - Capital
Projects 4112400 - Ins Prem - Life
2,025
(437)
1,588
1104150 - General Gov- Finance 4112400 - Ins Prem - Life
2,883
(133)
2,750
1104154 - General Gov- Human
Resources 4112400 - Ins Prem - Life
700
85 785
1104190 - General Gov- Information
Techn 4112400 - Ins Prem - Life
1,096
189
1,285
1104250 - Public Safety - Pw-St Light/Tr 4112400 - Ins Prem - Life
761
153
914
1104300 - Public Works-Administration 4112400 - Ins Prem - Life
1,360
261
1,621
1104310 - Public Works -Street &
Mainten 4112400 - Ins Prem - Life
1,837
46 1,883
1104340 - Public Works -Public Bldg 4112400 - Ins Prem - Life
880
(254)
626
1104417 - Community Dev - Marketing 4112400 - Ins Prem - Life
807
183
990
1104420 - Community DevBuilding&Safety 4112400 - Ins Prem - Life 1,308
(58)
1,250
1104421 - Comm Dev - Permit Center 4112400 - Ins Prem - Life
654
(37)
617
1104422 - B & Safety - Code
Enforcement 4112400 - Ins Prem - Life
829
155
984
1104430 - Comm Dev -Economic
Development 4112400 - Ins Prem - Life
1,640
(136)
1,504
1104470 - Comm Dev - Planning/Comm
Devel 4112400 - Ins Prem - Life
1,907
97 2,004
1104614 - Culture/Rec - Landscaping 4112400 - Ins Prem - Life
889
126
1,015
1104300 - Public Works-Administration 4211000 - Office Supplies
7,500
2,500
10,000
1104250 - Public Safety - Pw-St Light/Tr 4219000 - Supplies-Other
5,000
5,000
10,000
1104330 - Public Works - Corp. Yard 4219000 - Supplies-Other
14,500
2,500
17,000
1104340 - Public Works -Public Bldg 4219000 - Supplies-Other
44,500
1,500
46,000
1104610 - Civic Center Park 4219000 - Supplies-Other
25,000
(5,000)
20,000
1104611 - Park Maintenance 4219000 - Supplies-Other
33,000
(5,000)
28,000
1104614 - Culture/Rec - Landscaping 4219000 - Supplies-Other
14,500
(5,000)
9,500
1104300 - Public Works-Administration
4300300 - Prof-Temporary PartTime
30,000
25,000
55,000
1104300 - Public Works-Administration 4301000 - Prof-Architectural/Eng
337,278
(79,000)
258,278
Resolution No. _____ Page 2
1104416 - Community Dev- Special
Events 4306101 - City Produced Events
548,500
10,000
558,500
1104114 - General Gov - Elections 4309000 - Prof - Other
301,100
(35,000)
266,100
1104130 - General Gov - City Manager 4309000 - Prof - Other
21,700
91,375
113,075
1104159 - General Gov - General
Services 4309000 - Prof - Other
2,027,312
(415,990)
1,611,322
1104230 - Public Safety - Animal
Regulat 4309000 - Prof - Other
360,000
20,000
380,000
1104250 - Public Safety - Pw-St Light/Tr 4309000 - Prof - Other
125,000
(50,000)
75,000
1104340 - Public Works -Public Bldg 4309000 - Prof - Other
26,000
9,000
35,000
1104421 - Comm Dev - Permit Center 4309000 - Prof - Other
32,000
24,000
56,000
1104430 - Comm Dev -Economic
Development 4309000 - Prof - Other
757,321
53,762
811,083
1104470 - Comm Dev - Planning/Comm
Devel 4309000 - Prof - Other
137,907
250,000
387,907
1104159 - General Gov - General
Services
4309300 - Prof-Other Admn
Expenses
500,000
(250,000)
250,000
1104340 - Public Works -Public Bldg
4311500 - Mileage
Reimbursement
500
500
1,000
1104150 - General Gov- Finance
4312000 - Conf- SeminarsWorkshops
12,500
7,500
20,000
1104422 - B & Safety - Code
Enforcement
4312000 - Conf- SeminarsWorkshops
15,000
(9,000)
6,000
1104430 - Comm Dev -Economic
Development
4312000 - Conf- SeminarsWorkshops
20,000
5,000
25,000
1104614 - Culture/Rec - Landscaping
4312000 - Conf- SeminarsWorkshops
31,750
(5,000)
26,750
1104430 - Comm Dev -Economic
Development
4312100 - Committee
Conferences
5,000
(5,000)
-
1104154 - General Gov- Human
Resources 4312101 - City Wide Training
122,340
35,000
157,340
1104150 - General Gov- Finance 4312500 - Local Meetings
1,500
(750)
750
1104417 - Community Dev - Marketing 4312500 - Local Meetings
500
5,000
5,500
1104344 - Public Works - Portola Comm 4331000 - R/M-Buildings
48,500
(8,500)
40,000
1104610 - Civic Center Park 4331000 - R/M-Buildings
64,200
25,000
89,200
1104611 - Park Maintenance 4331000 - R/M-Buildings
94,500
(5,000)
89,500
1104610 - Civic Center Park
4332001 - RM-Landscaping
Services
708,467
(50,000)
658,467
1104611 - Park Maintenance
4332001 - RM-Landscaping
Services
690,040
25,000
715,040
1104610 - Civic Center Park 4332100 - Repair Maintenance
161,500
(10,000)
151,500
1104614 - Culture/Rec - Landscaping 4332501 - R/M-Others
35,000
5,000
40,000
1104331 - Public Works -Auto
Fleet/Equip
4334000 - R/M-Motor VehiclesFleet
170,000
25,000
195,000
Resolution No. _____ Page 2
1104614 - Culture/Rec - Landscaping 4337001 - R/M-Medians
1,732,888
(40,000)
1,692,888
1104610 - Civic Center Park 4337100 - Tri-Cities Sport Facility
176,691
(10,000)
166,691
1104330 - Public Works - Corp. Yard 4351000 - Utilities-Water
6,500
3,500
10,000
1104340 - Public Works -Public Bldg 4351000 - Utilities-Water
5,500
4,500
10,000
1104344 - Public Works - Portola Comm 4351000 - Utilities-Water
5,000
2,500
7,500
1104250 - Public Safety - Pw-St Light/Tr 4351400 - Utilities-Electric
160,000
45,000
205,000
1104330 - Public Works - Corp. Yard 4351400 - Utilities-Electric
40,000
5,000
45,000
1104344 - Public Works - Portola Comm 4351400 - Utilities-Electric
20,000
6,000
26,000
1104610 - Civic Center Park 4351400 - Utilities-Electric
130,000
65,000
195,000
1104611 - Park Maintenance 4351400 - Utilities-Electric
70,000
(25,000)
45,000
1104614 - Culture/Rec - Landscaping 4351400 - Utilities-Electric
35,000
15,000
50,000
1104150 - General Gov- Finance 4361000 - Printing / Duplicating
5,000
(4,000)
1,000
1104159 - General Gov - General
Services 4361000 - Printing / Duplicating
4,000
(2,750)
1,250
1104190 - General Gov- Information
Techn 4362001 - Software License Fee
1,348,029
250,000
1,598,029
1104159 - General Gov - General
Services
4364800 - Sb2557/County Admin
Fees
70,000
(5,000)
65,000
1104192 - General Gov - Insurance
4371000 - Liab & Property
Damage
1,144,000
(154,000)
990,000
1104800 - Other Class - Outside Agency 4388500 - Cntrb-Museum
40,000
40,000
80,000
1104614 - Culture/Rec - Landscaping 4390500 - Arbor Day
1,500
1,500
3,000
1104614 - Culture/Rec - Landscaping 4391001 - Holiday Decorations
96,400
(10,000)
86,400
1104154 - General Gov- Human
Resources 4391500 - Employee Safety
2,500
10,000
12,500
1104614 - Culture/Rec - Landscaping 4392101 - Entrada del Paseo
216,614
5,000
221,614
1104159 - General Gov - General
Services 4404000 - Cap-Office Equipment
50,000
(45,000)
5,000
1104331 - Public Works -Auto
Fleet/Equip 4404000 - Cap-Office Equipment
25,083
3,500
28,583
1104470 - Comm Dev - Planning/Comm
Devel 4404000 - Cap-Office Equipment
20,000
(15,000)
5,000
381,296
Resolution No. _____ Page 2
OTHER FUND REVENUE REQUEST:
OTHER FUND EXPENDITURES REQUEST:
REVISED GENERAL FUND REVENUE AND EXPENDITURES
General Fund Revenue 87,591,508
General Fund Appropriation 2023-24 85,351,469
Revised General Fund Revenue Over/(Under) Expenditures 2,240,039 Original
Budget
Mid-Year
Adjustment
Request
Revised Budget
Request
2340000 - Traffic Signals 3122500 - Signalization Fees 20,000 16,000 36,000 2370000 - Energy Independence Loan 3611500 - Int-Int Fr Loan/Notes Rec - 1,200 1,200 2430000 - Cannabis Compliance Fund 3184200 - Cannabis Tax Sales 1,200,000 (300,000) 900,000 2430000 - Cannabis Compliance Fund 3184201 - Cannabis Tax Manufacturing 2,000 23,000 25,000 2430000 - Cannabis Compliance Fund 3184202 - Cannabis Tax Cultivation 8,000 500 8,500 2430000 - Cannabis Compliance Fund 3199900 - Cannabis Tax Delinq - 1,200 1,200 2710000 - El Paseo Assessm District 3553000 - Special Assessment Levied - 161,770 161,770 2770000 - Zone #1 Prs.Plaza/Parking 3553000 - Special Assessment Levied - 38,000 38,000 4250000 - Economic Development Proj 3790000 - Miscellaneous Revenue - 1,500 1,500 5100000 - PD Office Complex Ent Fd 3790000 - Miscellaneous Revenue - 15,000 15,000 5200000 - Desert Willow Golf Course 3799900 - Misc Revenue-Others - 12,000 12,000 7030000 - RDA Successor Agency 3171000 - Tax Increment-Consolidated - 23,797,450 23,797,450 7030000 - RDA Successor Agency 3611400 - Int-On Inv Trustee Sp/Esc - 10,000 10,000 8710000 - Palm Desert Housing Auth 3611400 - Int-On Inv Trustee Sp/Esc 20,000 445,000 465,000 8730000 - Housing Asset Fund 3611400 - Int-On Inv Trustee Sp/Esc - 987,828 987,828 8730000 - Housing Asset Fund 3611500 - Int-Int Fr Loan/Notes Rec - 500 500 25,210,948
OTHER FUNDS
Resolution No. _____ Page 2
Original
Budget
Mid-Year
Adjustment
Request
Revised Budget
Request
2114311 - Public Works -Street Resurfac 4332000 - Repair & Maintenance Streets 4,535,406 3,420,491 7,955,897 2134317 - Road Safety Improvements 5000908 - Road Safety Improvements 2,091,361 721,735 2,813,096 2134565 - Neighborhood Traffic Control 5000909 - Haystack Traffic Calming 940,211 668,665 1,608,876 2204649 - Palma Village Park 4400100 - Capital Project 212,000 100,000 312,000 2204800 - Other Classifications -Contrib 625,920 541,974 1,167,894 2304220 - Public Safety - Fire Services 4331000 - R/M-Buildings 326,141 (10,000) 316,141 2304220 - Public Safety - Fire Services 4351000 - Utilities-Water 10,000 5,000 15,000 2304220 - Public Safety - Fire Services 4351200 - Utilities-Gas 5,000 5,000 10,000 2364195 - General Government - Administr 4219000 - Supplies-Other 55,000 8,000 63,000 2364195 - General Government - Administr 42190000 55,000 8,000 63,000 2384195 - General Government - Administr 4390301 - Rideshare 1,000 1,000 2,000 2384515 - HW- Air Quality Management 4363000 - Dues 55,000 10,000 65,000 2424549 - HW- Aquatic Facility 4219000 - Supplies-Other 20,000 5,000 25,000 2424549 - HW- Aquatic Facility 4331100 - Replacement Expenditures 15,000 (5,000) 10,000 2424549 - HW- Aquatic Facility 4331101 - Contracted Pool Maintenance 258,582 (30,000) 228,582 2424549 - HW- Aquatic Facility 4351000 - Utilities-Water 40,000 (10,000) 30,000 2424549 - HW- Aquatic Facility 4351400 - Utilities-Electric 140,000 40,000 180,000 2524662 - Library Services 4112100 - Ins Prem - Health 150,000 145,870 295,870 2714491 - CD - Promotion Benefit AD 4321500 - Other Advertising 248,500 40,000 288,500 2714491 - CD - Promotion Benefit AD 4321500 - Other Advertising 248,500 40,000 288,500 2724374 - PW - Landscape & Lighting Dist 4351400 - Utilities-Electric 3,500 1,100 4,600 2734681 - CR- Landscape/Lght-Subzone B 4351400 - Utilities-Electric 966 700 1,666 2754683 - CR-Landscape/Lght-Subzone D 4332100 - Repair Maintenance 2,000 500 2,500 2764374 - Landscape & Light-Haystack&Cyn 4309500 - Prof-Palm Tree Trimming 18,000 1,000 19,000 2764374 - Landscape & Light-Haystack&Cyn 4332100 - Repair Maintenance 16,000 4,000 20,000 2774373 - PW - Parking Lot Improvements 4309103 - Prof-Parking Lot Sweeping 6,300 1,000 7,300 2864374 - Landscape & Light Crest Z15 4309500 - Prof-Palm Tree Trimming 1,638 250 1,888 4004430 - Economic Development Project 5000912 - Lupine Plaza 1,026,115 436,708 1,462,823 4204370 - Public Works - Drainage 5000454 - Haystack Channel Rehab 3,465,315 100,000 3,565,315 4254430 - Community Development - Busine 4369603 - CAM-SEARS BUILDING - 36,847 36,847 4254430 - Community Development - Busine 4400100 - Capital Project - 15,000 15,000 4504161 - General Government - R/M-City 4400100 - Capital Project 1,870,106 192,474 2,062,580 5304331 - Public Works -Auto Fleet/Equip 4344000 - Annual Lease Payment 210,223 8,718 218,941 7034121 - General Government - Legal Spe 4301500 - Prof - Legal - 50,000 50,000 7034121 - General Government - Legal Spe 4374000 - Damage Settle/Deductible 2,188,208 139,674 2,327,882 7034195 - General Government - Administr 4302000 - Prof-Accounting/Auditing 3,590 15,000 18,590 7034195 - General Government - Administr 4309000 - Prof - Other - 729,035 729,035 7034195 - General Government - Administr 4602300 - Debt Service 22 07M - 1,639,631 1,639,631 7034195 - General Government - Administr 4605300 - Debt Service 52.390M - 5,474,875 5,474,875 7034195 - General Government - Administr 4605400 - Debt Service 140.130M - 12,052,400 12,052,400 7034195 - General Government - Administr 4605500 - Debt Service 7.365M - 681,144 681,144 7034627 - Culture/Recreation - Rda Proje 4400100 - Capital Project - 113,500 113,500 8704195 - General Government - Administr 4100100 - Salaries-Full Time 308,112 25,437 333,549 8704195 - General Government - Administr 4111500 - Retirement Contribution 57,371 (13,270) 44,101 8704195 - General Government - Administr 4111600 - Medicare Contrb-Employer 6,292 (1,455) 4,837 8704195 - General Government - Administr 4111700 - Retiree Health 7,742 (2,033) 5,709 8704195 - General Government - Administr 4111800 - Employer 457 Contribution - 1,900 1,900 8704195 - General Government - Administr 4112000 - Ins Prem - Long Term Disab. 2,145 (495) 1,650 8704195 - General Government - Administr 4112100 - Ins Prem - Health 96,379 (36,505) 59,874 8704195 - General Government - Administr 4112200 - Ins Prem-Dental/Vision 6,510 (718) 5,792 8704195 - General Government - Administr 4112400 - Ins Prem - Life 521 62 583 27,372,214
OTHER FUNDS
Resolution No. _____ Page 2
Original Budget
Mid-Year
Adjustment
Needed
Revised MidYear
Budget
Appropriations from
Reserve Thru
1/25/24
Total 2023/24
Appropriations
Other Funds Revenue 72,025,944 25,210,948 97,236,892 97,236,892 Anticipated Use of Fund Balance 74,887,091 74,887,091 74,887,091 Other Funds Appropriations 146,913,035 27,372,214 174,285,249 174,285,249 Revised Other Fund Revenu Over/(Under) Expenditures - (2,161,266) (2,161,266) - (2,161,266)
REVISED GENERAL FUND REVENUE AND EXPENDITURES REVISED OTHER FUND REVENUE AND EXPENDITURES Original General Fund Revenue Budget 75,554,467 Original Other Fund Revenue Budget 72,025,944 Requested Adjustments 2,420,853 Anticipated Use of Fund Balance 74,887,091 Requested Adjustments 25,210,948
Revised General Fund Revenue 77,975,320 Revised Other Fund Revenue 172,123,983 Original General Fund Appropriations 75,353,985 Original Other Fund Appropriations 146,913,035 Requested Adjustments 381,296 Requested Adjustments 27,372,214 Revised General Fund Appropriations 75,735,281 Revised Other Fund Appropriations 174,285,249 Revised General fund Revenue Over/(Under) Expenditures 2,240,039 Revised Other fund Revenue Over/(Under) Expenditures (2,161,266)
RESOLUTION NO. 2024-____
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, ADOPTING AUTHORIZED CLASSIFICATIONS
AND ALLOCATED POSITIONS INCLUDED HEREIN ATTACHED AS
EXHIBIT “A” AND RESCINDING RESOLUTION NO. 2023-022
WHEREAS, the City of Palm Desert identifies employees by classifications and groups for the purpose of salary and benefit administration; and WHEREAS, the City of Palm Desert has met and conferred in good faith with the Palm Desert Employees Organization (PDEO) in accordance with the Meyers-MiliasBrown Act and the City’s Employer-Employee Relations Ordinance; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PALM DESERT AS FOLLOWS:
SECTION I - ALLOCATED POSITIONS AND AUTHORIZED CLASSIFICATIONS The City of Palm Desert’s Personnel System, Section 2.52 of the Palm Desert Municipal Code prescribes specific terms for appointment and tenure of all City employees. Exhibit A contains the tables of salary ranges that will be retroactively effective to July 1, 2023.
The City Manager is annually authorized to modify the Allocated Classifications, Positions and Salary Schedule during each fiscal year that he determines are reasonably necessary or appropriate for business necessity including, without limitation, the implementation of title and responsibility changes, any minimum wage laws, use of over-hires for training, limited term student internships and modification of vacant positions in so far as such modifications do not exceed the adopted 2023-24 budget. Such modifications have been included in the resolution and accompanying allocated positions; however, it may be necessary to modify them again based on the business necessity of the City. Changes to the allocation will be updated as necessary by the City Manager, and brought back to City Council at year-end for ratification.
SECTION II – PERSONNEL GROUPS/DESIGNATIONS
The City assigns classifications to designated groups for the purposes of defining exempt status, benefits allocation and purchasing authority. These classifications, (listed in the table below), are categorized as follows:
Title
Exempt
Group
Executive
Contract At Will
City Manager X Yes Yes
Assistant City Manager X Yes Yes
City Clerk X Yes Yes
Resolution No. 2024-_____ Page 2
City Engineer X Yes Yes
Director of Capital Projects X Yes Yes
Director of Development Services X Yes Yes
Director of Economic Development X Yes Yes
Director of Finance/City Treasurer X Yes Yes
Director of Library Services X Yes Yes
Director of Public Works A No No
Accounting Manager B No No
Accounting Supervisor B No No
Assistant Building Official B No No
Assistant Director of Library Services B No No
Assistant Planner B No No
Assistant City Clerk B No No
Associate Planner I/II B No No
Business Operations Manager B No No
Capital Projects Manager B No No
Chief Building Official B No No
Code Compliance Supervisor B No No
Communications Analyst B No No
Community Relations Supervisor B No No
Community Services Manager B No No
Deputy Director of Development Services B No No
Deputy Director of Economic Development B No No
Deputy Director of Finance B No No
Deputy Director of Public Works B No No
Economic Development Coordinator B No No
Finance Supervisor B No No
Homeless and Support Services Manager B No No
Housing Manager B No No
Human Resources Manager B No No
Information Systems Manager B No No
Landscape Supervisor B No No
Library Manager B No No
Management Analyst I/II B No No
Resolution No. 2024-_____ Page 3
Principal Planner B No No
Project Manager B No No
Public Affairs Manager B No No
Senior Contracts and Grants Analyst B No No
Senior Engineer B No No
Senior Management Analyst B No No
Senior Planner B No No
Senior Project Manager B No No
Special Events Coordinator B No No
Streets Maintenance Supervisor B No No
Executive Assistant/Coordinator (City
Manager) C No No
Human Resources Analyst C No No
Group X: Executive Contract Positions:
The classifications designated as Group X, Executive Contract, have the highest level of executive responsibility and authority; these positions are governed by individual employment agreements.
Group A: Directors and Department Heads
The classifications designated as Group A have a higher level of responsibility and authority and they are exempt from overtime provisions as defined by the Fair Labor Standards Act and set forth in the Personnel Rules and Regulations, Section 2.52.305.
They may be At Will and governed by employment agreements. Among other things, these positions require spending numerous extra hours at meetings, conferences and work.
Group B: Mid-Management/Professional
The classifications designated as Group B are managerial, supervisorial or professional in nature and they are exempt from overtime provisions as defined by the Fair Labor Standards Act and set forth in the Personnel Rules and Regulations, Section 2.52.305.
Among other things, these positions require spending occasional extra hours at meetings, conferences and work.
Group C: Confidential
The classifications designated as Group C are professional in nature and they are exempt from overtime provisions as defined by the Fair Labor Standards Act and set forth in the Personnel Rules and Regulations, Section 2.52.305. Among other things, these positions
Resolution No. 2024-_____ Page 4
require spending occasional extra hours at meetings, conferences and work. These positions also assist and act in a confidential capacity to persons who formulate, determine, and effectuate management policies with regard to labor relations, and are defined as “Confidential” in the Personnel Rules and Regulations, Section 2.53.100.
ADOPTED ON FEBRUARY 15, 2024.
KARINA QUINTANILLA
MAYOR
ATTEST:
ANTHONY J. MEJIA
CITY CLERK
Resolution No. 2024-_____ Page 5
I, Anthony J. Mejia, City Clerk of the City of Palm Desert, hereby certify that Resolution No. 2023-__ is a full, true, and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Desert on February 16, 2023, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Palm Desert, California, on _____________________.
ANTHONY J. MEJIA
CITY CLERK
FY 2023-2024 City of Palm Desert
Allocated Positions
Resolution No. 2024-____
Exhibit "A"
Classification
Allocated
Positions Salary Grade
Exempt
Status Notes:
City Manager 1 CM Exempt X
Assistant City Manager 1 73 Exempt X
City Engineer 1 70 Exempt B
Management Analyst I/II 1 40/42 Exempt B
Homeless and Support Services Manager 1 48 Exempt B
Executive Assistant/Coordinator 1 36/40 Non-Exempt C (confidential) 1104130 6
Human Resources
HR Manager 1 62 Exempt B
HR Specialist 1 36 Non-Exempt
Human Resources Analyst I/II 2 40/42 Exempt C (confidential) 1104154 4
City Clerk 1 66 Exempt X
Assistant City Clerk 1 46 Exempt B
Administrative Assistant I/II- City Council 1 28/32 Non-Exempt Receptionist 1 20 Non-Exempt
Records Coordinator 1 38 Non-Exempt
Senior Deputy Clerk 1 38 Non-Exempt
Deputy Clerk I/II 1 34/36 Non-Exempt
1104111 7
Total City Manager 17
Library Services
Director of Library Services 1 68 Exempt X
Assistant Director of Library Services 1 56 Exempt B
Library Manager 2 50 Exempt B
Library Technician/Specialist 14 20/24/28 Non-Exempt
2524662 18
Total Library Services 18
Finance
Director of Finance/City Treasurer 1 71 Exempt X
Deputy Director of Finance 2 63 Exempt B
Finance Supervisor 1 46 Exempt B
Senior Contracts and Grants Analyst 1 46 Exempt B
Management Analyst I/II 2 40/42 Exempt B
Accountant 3 43 Non-Exempt
Senior Administrative Assistant 1 34 Non-Exempt
Administrative Assistant I/II 1 28/32 Non-Exempt
Accounting Technician I/II 4 28/32 Non-Exempt
1104150 16
Affordable Housing
Housing Manager 1 51 Exempt B
CITY MANAGER
City Clerk
FINANCE
LIBRARY SERVICES
FY 2023-2024 City of Palm Desert
Allocated Positions
Resolution No. 2024-____
Exhibit "A"
Classification
Allocated
Positions Salary Grade
Exempt
Status Notes:
Management Analyst I/II 1 40/42 Exempt B
8704195 2
Information Technology
Information Systems Manager 1 62 Exempt B
Technician 1 28/32
Senior Information Systems Administrator 1 48 Non-Exempt Senior Network Engineer 1 48 Non-Exempt
Senior GIS Admin 1 47 Non-Exempt
Biz Systems Enterprise 2 42 Non-Exempt
1104190 7
Total Finance 25
Director, Econ Development 1 70 Exempt X
Deputy Director, Econ Development 1 63 Exempt B
Economic Development Coordinator 1 46 Exempt B
Administrative Assistant I/II - Econ. Dvlpt. 1 28/32 Non-Exempt 4430 4
Special Programs
Special Events Coordinator 1 42 Exempt B
Management Analyst I/II- Environmental 1 40/42 Exempt B Management Analyst I/II - Art 1 40/42 Exempt B
Administrative Assistant I/II - Special Programs 1 28/32 Non-Exempt 4430 4
Public Affairs
Public Affairs Manager 1 56 Exempt B
Community Relations Supervisor 1 46 Exempt B
Communications Analyst I/II 1 40/42 Exempt B
Management Analyst I/II 1 40/42 Exempt B
Marketing Assistant 1 28 Non-Exempt
Office Assistant I/II 1 20/24 Non-Exempt
4417 6
TotalEconomic Development 14
Development Services /Planning
Director of Development Services 1 70 Exempt X
Dep Dir of Development Services 1 63 Exempt B
Executive Assistant 1 36 Non-Exempt
Principal Planner 1 53 Exempt B
Senior Planner 1 46 Exempt B
Associate Planner I/II 1 42/44 Exempt B
Planning Technician 2 34 Non-Exempt
DEVELOPMENT SERVICES
Economic Development
FY 2023-2024 City of Palm Desert
Allocated Positions
Resolution No. 2024-____
Exhibit "A"
Classification
Allocated
Positions Salary Grade
Exempt
Status Notes:
Management Analyst I/II 2 40/42 Exempt
Land Development Technician 1 38 Non-Exempt
4470 11
Building & Safety
Chief Building Official 1 62 Exempt B
Assistant Building Official 1 51 Exempt B
Senior Building Inspector 1 42 Non-Exempt
Building Inspector I/II 3 34/38 Non-Exempt
Adminstrative Assistant I/II 1 28/32 Non-Exempt
4420 7
Code Compliance
Code Compliance Supervisor 1 46 Exempt B
Code Compliance Officer I/II 4 30/34 Non-Exempt
Administrative Assistant I/II 1 28/32 Non-Exempt
Office Assistant II 1 20/24 Non-Exempt
4422 7
Palm Desert Permit Center
Senior Permit Technician 1 35 Non-Exempt
GIS Analyst 1 42 Non-Exempt
Permit Technician I/II 3 28/32 Non-Exempt
4421 5
Total Development Services 30
Capital Projects Administration
Director of Capital Projects 1 70 Exempt X
Capital Projects Manager 1 53 Exempt B
Senior Project Manager 1 50 Exempt B
Project Manager 2 48 Exempt B
Public Works Inspector I/II 3 34/37 Non-Exempt
Total Capital Projects 8
Director of Public Works 1 70 Exempt X
Deputy Director of Public Works 1 63 Exempt B
Business Operations Manager 1 50 Exempt B
Senior Management Analyst 1 45 Exempt B
Project Manager 1 48 Exempt B
Management Analyst I/II 1 40/42 Exempt B
Senior Administrative Assistant 1 34 Non-Exempt
Office Assistant I/II 1 20/24 Non-Exempt
4300 8
Community Services
Community Services Mger 1 51 Exempt B
PUBLIC WORKS
CAPITAL PROJECTS
FY 2023-2024 City of Palm Desert
Allocated Positions
Resolution No. 2024-____
Exhibit "A"
Classification
Allocated
Positions Salary Grade
Exempt
Status Notes:
Supervising Landscape Supervisor 1 46 Exempt B
Landscape Inspector 3 34 Non-Exempt
4614 5
Facilities Management
Project Manager 1 48 Exempt B
Senior Facilities Specialist 1 38 Non-Exempt
Facilities Specialist 1 36 Non-Exempt
Project Technician 1 34 Non-Exempt
4340 4
Streets Maintenance
Streets Maintenance Supervisor 1 46 Exempt B
Administrative Assistant I/II 1 28/32 Non-Exempt
Senior Maintenance Worker 2 40 Non-Exempt
Maintenance Worker III 4 36 Non-Exempt
Maintenance Worker I/II 5 28/32 Non-Exempt
4310 13
Traffic Signal Maintenance
Senior Project Manager 1 50 Exempt B
Senior Traffic Signal Specialist 1 45 Non-Exempt
Traffic Signal Technician I/II 3 34/38 Non-Exempt
4310 5
Total Public Works 35
TOTAL ALLOCATED POSITIONS 147
2023-24 Mid-year Budget Adjustments
Request for Approval Mid-Year Budget Report and Staff Allocation City Council – February 15, 2024
General Fund Net Positive Adjustment Requested
GF Budget Request Summary
Major Changes to General Fund
MAJOR CHANGES TO
REVENUE
• Decrease to Sales Tax
Estimate – ($1.6M)
• Increase to TOT Estimate –
$1.5M
• Increase to Interest Earnings
Estimate - $2.5M
MAJOR CHANGES TO
EXPENDITURES
• Increase to Software License
Costs – $250k
• Increase to Utility Costs -
$111k
• Increase/Decrease to
Salaries/Benefits – Net Zero
Special Funds Adjustment Requested to be covered by Fund Balance
Special Funds Summary
Major Changes to Special Funds
MAJOR CHANGES TO
REVENUE
• Addition of SARDA Budget–
$23.8M
• Decrease to Cannabis
Estimate – ($300k)
• Inc to HA/HAF Interest
Earning Estimates- $1.4M
MAJOR CHANGES TO
EXPENDITURES
• Increase to Measure A Costs
– $4.9M
• Addition of SARDA Budget-
$23.8M
• Increase/Decrease to Hsg
Salaries/Benefits – Net Zero
Staff Allocation Update
The City Manager is authorized to modify the allocated
classification, positions, and salary schedule as
necessary throughout each fiscal year that he
determines to be necessary to meet the needs of the
City.
The update provided with the midyear budget is
intended to support current staffing.
Staff Allocation Updates will be brought forward as a
ratification in the future.
Questions?
Request for Approval of FY 2023-24 Mid-Year Budget Report and Staff Allocation
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: February 15, 2024
PREPARED BY: Veronica Chavez, Director of Finance
REQUEST: APPROVE RESOLUTION AUTHORIZING THE ISSUANCE OF UNIVERSITY PARK COMMUNITY FACILITIES DISTRICT NO. 2021-1 SPECIAL TAX BONDS, SERIES 2024
RECOMMENDATION:
Adopt a Resolution entitled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
DESERT, CALIFORNIA, ACTING FOR ITSELF AND AS THE LEGISLATIVE BODY OF CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK), TO AUTHORIZE THE ISSUANCE OF THE DISTRICT’S SPECIAL TAX BONDS, SERIES 2024,
AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH).
BACKGROUND/ANALYSIS:
The City of Palm Desert Community Facilities District No. 2005-1 (University Park), issued two series of bonds in 2006 (the “2006 Bonds”) and in 2007 (the “2007 Bonds”) with a combined par amount of $70 million. In early 2016, the City authorized a bond call of the outstanding 2007 Bonds and part of the outstanding 2006 Bonds using unspent bond proceeds.
On April 22, 2021, the City Council, as legislative body of the District approved a Resolution of Formation forming the District and held an election on May 13, 2021, authorizing the levy of a special tax and the issuance of bonds by the District in an aggregate principal amount not to exceed $50,000,000. The District issued its Community Facilities District No. 2021-1 (University Park), Special Tax Bonds, Series 2021 (the “2021 Bonds”) in the amount of $15,200,000, pursuant to a Bond Indenture dated as of July 1, 2021 (the “Master Indenture”).
The proceeds of the 2021 Bonds refunded a pro-rata share of the remaining 2006 Bonds and provided approximately $1.974 million of new money for the Project. The remaining portion of the 2006 Bonds remained with the original Community Facilities District No. 2005-1 (University Park) and were subsequently refunded in a separate action.
As of the appraisal date, December 15, 2023, there were approximately 102 single-family homes owned by individuals, Toll Brothers owns 169 lots, UPI owns the remainder of the properties in the District including 53 single-family lots, 81 approved lots and 664 undeveloped lots. The debt service coverage, from maximum special taxes, is estimated to be greater than 1.25x each year when the debt service is combined for both the 2021 Bonds and the proposed 2024 Bonds. The appraised value of the property to the principal amount of both the outstanding 2021 Bonds and the proposed 2024 Bonds generates a value-to-lien ratio of approximately 6.64:1. The relatively high debt service coverage; the relatively high value-to-lien ratio; approximately 10% of the
City of Palm Desert
Consideration of University Park CFD 2021-1 Special Tax Bond, Series 2024
property being with individual owners; a recent land sale to a merchant builder and good sales traffic within the District, all help to enhance the story and the credit of the 2024 Bonds.
The 2024 Bonds will be issued as non-rated securities in the approximate principal amount of $11,900,000 and, after costs of issuance, capitalized interest and a deposit to a reserve fund, will generate approximately $10,000,000 for the acquisition of public infrastructure. As part of the legislative action, the attached resolution authorizing the issuance requires certain not-toexceed parameters to be established. The not-to-exceed principal amount is set at $13,000,000 The not-to-exceed true interest cost is set at 6.50%, and The not-to-exceed underwriter’s discount is set at 1.50%.
The 2024 Bonds will be sold on parity with the 2021 Bonds. Parity means that both the 2021 Bonds and the 2024 Bonds have an equal right to the special tax revenue from the District and all funds held under the Master Indenture. As of January 4, 2024, the issuance is currently estimated as follows:
Interest rates ranged from 4.25 to 5.50% and yields ranged from 4.50% to 5.58%. The currently principal amount is $11,900,000
The true interest cost is 5.56%
The underwriter’s discount is 1.30% ($154,700), and
The costs of issuance are at a fixed $265,000.
The estimated interest rates and yields are subject to changing market conditions and will not be final until the date of sale, currently anticipated to be Wednesday March 6, 2024.
The Resolution of Issuance approves the following documents in substantially final form, and authorizes the Mayor (or in the Mayor’s absence, the Vice Mayor) and the City Manager (or in the City Manager’s absence, the Assistant City Manager) to execute such documents with such changes as approved by such authorized officer:
1. First Supplemental Indenture: The First Supplement Indenture, together with the Master Indenture, provides the terms of the 2024 Bonds, including provisions for security and payment of the 2024 Bonds. The Master Indenture for the 2021 Bonds established U.S. Bank National Association (“U.S. Bank”) as Trustee for the 2021 Bonds. U.S. Bank will also be Trustee for the 2024 Bonds, will authenticate the 2024 Bonds and deliver them to the Underwriter in accordance with instructions provided in the Bond Purchase Agreement.
2. Official Statement and Continuing Disclosure Agreement: The Official Statement is the primary document used by the Underwriter to market the bonds to investors. The Official Statement describes the 2024 Bonds in detail and all the information about the District used by investors to make an informed purchase decision. The Preliminary Official Statement will be deemed final pursuant to Rule 15c-2-12 under the Securities Exchange Act of 1934. The only permitted items to be excluded from the Preliminary Official Statement are data and tables related to final pricing information for the 2024 Bonds.
City of Palm Desert
Consideration of University Park CFD 2021-1 Special Tax Bond, Series 2024
The Continuing Disclosure Agreement, included as an attachment to the Official Statement, describes covenants of the City to provide ongoing continuing disclosure to investors in the form of an annual report due by April 1 each year and posted to the electronic platform known as the Electronic Municipal Market Access (“EMMA”) system. The City also covenants to provide notices of certain listed events also known as “material event notices” if and when they occur.
3. Bond Purchase Agreement: The Bond Purchase Agreement between the City and Piper Sandler & Co. as Underwriter will reflect all the terms and conditions of the sale and the required documents to close the transaction. The Bond Purchase Agreement, when executed, will reflect the final interest rates, yields and prices of the various maturities of the 2024 Bonds sold to investors.
There are many participants involved in the issuance of the 2024 Bonds.
Participant Purpose Description of Duties
Del Rio Advisors, LLC Municipal Advisor (MA) Assists City with structure, timing, and terms of the bonds. Was MA for the 2021 Bonds.
Piper Sandler & Co Underwriter Sells the bonds to market. Was the UW for the 2021 Bonds.
Richards Watson & Gershon Bond Counsel
Advises City on Bond Law. Prepares key
documents and delivers opinion regarding
validity of the bonds.
Best, Best & Krieger Disclosure Counsel Prepares Official Statement (OS) Willdan Special Tax Consultant
Provides key information for OS, administers
special tax statement, and assist with
continuing disclosure requirements.
Capital Realty Analysts Appraiser Provides appraisal of all properties within the district
US Bank Trustee Manages the funds associated with the bonds and makes the debt service payments.
Legal Review:
This report has been reviewed by the City’s Bond Counsel at Richards, Watson & Gershon.
Strategic Plan:
Approval of the City of Palm Desert, Community Facilities District No. 2021-1 (University Park), Special Tax Bonds, Series 2024 (the “2024 Bonds”) supports the Land Use, Housing and Open Space Priority 2 by providing funds to assist in further development of Community Facilities District No. 2021-1 (University Park) (the “District”).
FINANCIAL IMPACT:
The 2024 Bonds are not a debt or obligation of the City. The debt service on the 2024 Bonds and the 2021 Bonds will be paid from the special tax, which is added each year to the property owner tax bills and paid in accordance with normal property tax collection and payment procedures.
City of Palm Desert
Consideration of University Park CFD 2021-1 Special Tax Bond, Series 2024
The costs paid to the financing professionals for the 2024 Bonds includes compensation to the Underwriter in the form of an underwriter’s discount which is a based on a percentage of the principal amount and will vary depending on the final principal amount of the 2024 Bonds. Other fixed costs include the fees and expenses of the Municipal Advisor, the Bond Counsel, the Disclosure Counsel, the Special Tax Consultant, the Appraiser, the Trustee and other costs (i.e., staff costs and printing costs for the official statement). The total cost is estimated to be 3.53% of the total principal amount of the 2024 Bonds, or approximately $420,418.54, which includes an estimated underwriter’s discount in the amount of $154,700.00 and the estimated fixed costs of issuance in the amount of $265,718.54.
Good Faith Estimates
California Government Code Section 5852.1 requires that the City disclose specified information obtained as good faith estimates from an underwriter or municipal advisor prior to authorization of the issuance of the 2024 Bonds. The City has received such information from the Underwriter as set forth below:
(1) Name of Underwriter: Piper Sandler & Co.
(2) City Council Meeting Date: February 15, 2024
(3) Name of Bond Issue: City of Palm Desert, Community Facilities District No. 2021-1 (University Park), Special Tax Bonds, Series 2024
(4) The Underwriter has provided to the City the following required good faith estimates relating to the 2024 Bonds in the estimated principal amount of $11,900,000:
a) The true interest cost of the 2024 Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue of bonds: 5.558472%.
b) The finance charge of the 2024 Bonds, which means the sum of all fees and charges paid to third parties: $420,418.54 (includes both the underwriter’s discount in the estimated amount of $154,700.00 and costs of issuance in the estimated amount of $265,718.54). c) The amount of proceeds received by the public body for sale of the 2024 Bonds less the finance charge of the 2024 Bonds described in subparagraph b) and less any reserves or capitalized interest paid or funded with proceeds of the 2024 Bonds: $9,935,000. d) The total payment amount, which means the total of all payments the public body will make to pay debt service on the 2024 Bonds (which total payment amount is calculated to the final maturity of the 2024 Bonds): $25,744,946.09.
The foregoing estimates constitute good faith estimates only. The actual principal amount of the 2024 Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to a variety of factors. The actual interest rates borne by the 2024 Bonds and the actual amortization of the 2024 Bonds will depend on market interest rates at the time of sale thereof. Market interest rates are affected by economic and other factors beyond the control of the City.
City of Palm Desert
Consideration of University Park CFD 2021-1 Special Tax Bond, Series 2024
ATTACHMENTS:
1. Resolution Approving the Sale of the 2024 Bonds
2. First Supplemental Indenture
3. Preliminary Official Statement (Including the Continuing Disclosure Agreement)
4. Bond Purchase Agreement
5. Draft Bond Numbers
RESOLUTION NO. 2024-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT,
CALIFORNIA, ACTING FOR ITSELF AND AS THE LEGISLATIVE BODY OF CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK), TO AUTHORIZE THE ISSUANCE OF THE DISTRICT’S SPECIAL TAX BONDS, SERIES 2024, AND APPROVING CERTAIN
DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH
RECITALS:
WHEREAS, the City Council of the City of Palm Desert (the “City”), located in Riverside County, California (the “City Council”, and hereinafter sometimes referred to also as the “legislative body of the District”), has formed the City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”), pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Act”); WHEREAS, the District was formed by the City Council at the request and petition of University Park Investor, LLC, the owner and developer of the property within the District (the “Developer”) to finance certain public facilities necessary to meet the increased demands placed upon the public infrastructure, the City, and the Coachella Valley Water District as a result of the development of the property within the boundaries of the District (including development impact fees therefor);
WHEREAS, based upon Resolution No. 2021-10 (the “Resolution of Formation”) and Resolution No. 2021-11, each adopted by the legislative body of the District on April 22, 2021, and an election held on May 13, 2021 authorizing the levy of a special tax and the issuance of bonds by the District, the District is authorized to issue bonds for one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $50,000,000 for the purpose of financing certain public facilities identified in the Resolution of Formation (the “Project”); WHEREAS, the City, the District, and the Developer, entered into an Acquisition Agreement, dated as of June 24, 2021, which specifies the public facilities the Developer will construct that are eligible to be financed from bond proceeds; WHEREAS, in July 2021, pursuant to a Bond Indenture, dated as of July 1, 2021 (the “Master Indenture”), by and between the District and U.S. Bank Trust Company, National Association, as trustee, the District issued its Special Tax Bonds, Series 2021 (the “Series 2021 Bonds”) in the initial aggregate principal amount of $15,200,000.
WHEREAS, the District deems it necessary and desirable to issue bonds on a parity with the Series 2021 Bonds designated as the “City of Palm Desert Community Facilities District No. 2021-1 (University Park), Special Tax Bonds, Series 2024” (the “Series 2024 Bonds”), for the purpose of financing additional costs of the Project.
WHEREAS, as a precondition to the issuance of the Series 2024 Bonds; Section 53345.8 of the Act requires the value of the real property in the District subject to the special tax to pay debt service on the Series 2024 Bonds to be not less than three (3) times the principal amount of the Series 2024 Bonds and the principal amount of all other bonds outstanding
RESOLUTION NO. 2024-__
2 P6401-1054\2839900v3.doc
(including the Series 2021 Bonds) that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District; WHEREAS, in order to effect the issuance of the Series 2024 Bonds, the City Council, for itself and as the legislative body of the District, desires to approve the form of a Preliminary Official Statement and to approve the forms of, and authorize the execution and delivery of, a First Supplemental Indenture for the Series 2024 Bonds, a Bond Purchase Agreement, and a Continuing Disclosure Agreement, the forms of which are on file with the City Clerk.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT,
ACTING FOR ITSELF AND AS THE LEGISLATIVE BODY OF CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK), DOES HEREBY RESOLVE, FIND, DECLARE AND ORDER AS FOLLOWS:
Section 1. Each of the above recitals is true and correct and is adopted by the City Council, acting for itself and as the legislative body of the District.
Section 2. The legislative body of the District hereby finds and determines that, as determined in accordance with Section 53345.8 of the Act and as required by the City’s Goals and Policies for Community Facilities Districts adopted by Resolution No. 05-86 approved by the City Council on October 13, 2005 pursuant to Section 53312.7 of the Act (the “CFD Goals and Policies”), the value of the real property in the District subject to the special tax to pay debt service on the Series 2024 Bonds is not less than three (3) times the principal amount of the Series 2024 Bonds and the principal amount of all other bonds outstanding (including the Series 2021 Bonds) that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District. This determination is based on an appraisal with respect to the real property within the District, which appraisal has been made in a manner consistent with the CFD Goals and Policies, as further described in the Preliminary Official Statement (as defined in Section 6 below).
Section 3. The issuance of the Series 2024 Bonds in an aggregate principal amount not to exceed $13,000,000 is hereby authorized, with the exact principal amount of the Series 2024 Bonds to be determined by the official signing the Bond Purchase Agreement in accordance with Section 5 below. The Bonds may be issued as a single issue, or as separate series, as determined by Bond Counsel to comply with applicable tax law. The legislative body of the District hereby determines that it is prudent in the management of its fiscal affairs to issue the Series 2024 Bonds. The Series 2024 Bonds shall mature on the dates and pay interest at the rates set forth in the Bond Purchase Agreement to be executed by the District in accordance with Section 5 hereof. The Series 2024 Bonds shall be governed by the terms and conditions of the Master Indenture, as supplemented by the First Supplemental Indenture presented at this meeting, on file with the City Clerk and incorporated herein by reference (the “First Supplemental Indenture”). The First Supplemental Indenture shall be executed by any one of the Mayor, the Mayor Pro Tem (in the Mayor’s absence), the City Manager, the Assistant City Manager (in the City Manager’s absence), or any deputy of such officers (each, an “Authorized Officer”), acting singly, in substantially the form presented at this meeting, with such additions thereto and changes therein as may be approved by such officer upon consultation with Bond Counsel.
Approval of such changes shall be conclusively evidenced by the execution and delivery of the First Supplemental Indenture by any one of the Authorized Officers. The date or dates, maturity or maturities, pledge or assignment of any revenues of the District to the repayment of the Series 2024 Bonds, the manner of investment of any bond proceeds and other revenues, manner of
RESOLUTION NO. 2024-__
3 P6401-1054\2839900v3.doc
payment, interest rate or rates, interest payment dates, denominations, form, registration privileges, manner of execution, place of payment, terms of redemption, rebate provisions, funds designated to pay the costs of issuance of the Series 2024 Bonds, and other terms of the Series 2024 Bonds shall be as provided in the Master Indenture, as supplemented by the First Supplemental Indenture, as finally executed, and shall be in conformance with any such terms set forth in the Bond Purchase Agreement described in Section 5 below and the Official Statement described in Section 6 below and delivered to the purchasers of the Series 2024 Bonds.
Capitalized terms used in this Resolution which are not defined herein have the meanings ascribed to them in the Master Indenture, as supplemented by the First Supplemental Indenture.
Section 4. The Series 2024 Bonds shall be executed on behalf of the District by the manual or facsimile signature of the Mayor of the City and attested with the manual or facsimile signature of the City Clerk. The appointment of U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”) under the First Supplemental Indenture is hereby approved.
Section 5. The form of the Bond Purchase Agreement by and between the District and the Underwriter presented at this meeting, on file with the City Clerk and incorporated herein by reference (the “Bond Purchase Agreement”), is hereby approved, and any one of the Authorized Officers is hereby authorized to execute the Bond Purchase Agreement in substantially the form hereby approved, with such additions thereto and changes therein as may be approved by such officer upon consultation with Bond Counsel. Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement; provided, however, that the Bond Purchase Agreement shall be signed only if (i) the Series 2024 Bonds are purchased by the Underwriter at a price that results in a total interest cost that does not exceed 6.50%, (ii) the discount paid to the Underwriter (exclusive of original issue discount) does not exceed 1.50% of the principal amount of the Series 2024 Bonds, (iii) the aggregate principal amount of the Series 2024 Bonds does not exceed $13,000,000. The legislative body of the District hereby finds and determines, pursuant to Section 53360.4 of the Act, that the sale of the Series 2024 Bonds at a negotiated sale to the Underwriter, as contemplated by the Bond Purchase Agreement, will result in a lower overall cost than a public sale. Each of the Authorized Officers is authorized to determine the day on which the Series 2024 Bonds are to be priced in order to attempt to produce the lowest borrowing cost for the District and may reject any terms presented by the Underwriter if determined not to be in the best interest of the District.
Section 6. The form of the Preliminary Official Statement for the Series 2024 Bonds presented at this meeting, on file with the City Clerk and incorporated herein by reference (the “Preliminary Official Statement”) is hereby approved. For purposes of this Section 6, the term “Authorized Officers” shall include the City Treasurer. The Underwriter is hereby authorized to distribute the Preliminary Official Statement to prospective purchasers of the Series 2024 Bonds in substantially the form hereby approved, together with such additions thereto and changes therein as are determined necessary by any one of the Authorized Officers, upon consultation with Bond Counsel and Disclosure Counsel, to make the Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 of the Securities and Exchange Commission, including, but not limited to, such additions and changes as are necessary to make all information set forth therein accurate and not misleading. Each of the Authorized Officers is hereby authorized to execute a final Official Statement in substantially the form of the Preliminary Official Statement, together with such changes as are determined necessary by the Authorized Officer executing the Official Statement, upon consultation with Bond Counsel, to make such Official Statement complete and accurate as
RESOLUTION NO. 2024-__
4 P6401-1054\2839900v3.doc
of its date. The Underwriter is further authorized to distribute the final Official Statement for the Series 2024 Bonds and any supplement thereto to the purchasers thereof upon its execution on behalf of the District as described above.
Section 7. The form of the Continuing Disclosure Agreement for the Series 2024 Bonds presented at this meeting and appended to the Preliminary Official Statement, on file with the City Clerk and incorporated herein by reference (the “Continuing Disclosure Agreement”), is hereby approved, and any one of the Authorized Officers is hereby authorized and directed to execute the Continuing Disclosure Agreement in substantially the form hereby approved, with such additions thereto and changes therein as may be approved by such officer upon consultation with Bond Counsel and Disclosure Counsel, with such approval to be conclusively evidenced by the execution and delivery of the Continuing Disclosure Agreement.
Section 8. Appointment of Financing Team. The appointments of Del Rio Advisors, LLC, as municipal advisor; Richards, Watson & Gershon, A Professional Corporation, as bond counsel; Best Best & Krieger LLP, as disclosure counsel; Capital Realty Analysts, as appraiser; and Piper Sandler & Co, Inc., as underwriter, in connection with the proposed issuance of the Series 2024 Bonds, are hereby approved and affirmed.
Section 9. All actions heretofore taken by the officers and agents of the City and the District with respect to the establishment of the District, the issuance and sale of the Series 2024 Bonds, or in connection with or related to any of the agreements or documents referenced herein are hereby approved, confirmed, and ratified. The Mayor, each of the Authorized Officers, the Director of Finance, the Development Services Director, the Public Works Director, and other officers and staff of the City and the District responsible for the fiscal affairs of the District are hereby authorized and directed to take any actions, and execute and deliver any and all documents as are necessary to accomplish (a) the issuance, sale and delivery of the Series 2024 Bonds in accordance with the provisions of this Resolution; (b) the transactions contemplated by the First Supplemental Indenture, the Bond Purchase Agreement, and the Continuing Disclosure Agreement; and (c) the fulfillment of the purposes of the Series 2024 Bonds, including, but not limited to, providing certificates as to the accuracy of any information relating to the District which is included in the Official Statement. Any document authorized herein to be signed by the City Clerk may be signed by a duly appointed deputy clerk.
Section 10. Effective Date. This Resolution shall take effect immediately upon adoption.
RESOLUTION NO. 2024-__
5 P6401-1054\2839900v3.doc
PASSED, APPROVED and ADOPTED by the City Council of the City of Palm Desert, California, on this _____ day of ____________, 2024, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
________________________________
Karina Quintanilla
Mayor
ATTEST:
________________________________
City Clerk
City of Palm Desert, California
2837234
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of [March] 1, 2024
Relating to
$[principal amount]
City of Palm Desert
Community Facilities District No. 2021-1
(University Park)
Special Tax Bonds
Series 2024
TABLE OF CONTENTS
Page
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ARTICLE I AUTHORITY AND DEFINITIONS .................................................................................2 SECTION 1.01. SUPPLEMENTAL INDENTURE .................................................................2 SECTION 1.02. AUTHORITY FOR FIRST SUPPLEMENTAL INDENTURE ...................................2 SECTION 1.03. DEFINITIONS .....................................................................................2 ARTICLE II THE SERIES 2024 BONDS.......................................................................................3 SECTION 2.01. AUTHORIZATION ................................................................................3 SECTION 2.02. TERMS OF SERIES 2024 BONDS ............................................................3 SECTION 2.03. BOOK-ENTRY SYSTEM .........................................................................4 SECTION 2.04. FORM OF SERIES 2024 BONDS .............................................................4 SECTION 2.05. EXECUTION AND AUTHENTICATION ........................................................5 SECTION 2.06. REDEMPTION OF SERIES 2024 BONDS ...................................................5 SECTION 2.07. APPLICATION OF PROCEEDS OF SERIES 2024 BONDS.................................7 ARTICLE III MISCELLANEOUS...................................................................................................7 SECTION 3.01. EXECUTIONS IN COUNTERPARTS ............................................................7 APPENDIX A – FORM OF SERIES 2024 BOND
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FIRST SUPPLEMENTAL INDENTURE
This First Supplemental Indenture, dated as of [March] 1, 2024, is entered into by and between City of Palm Desert Community Facilities District No. 2021-1 (University Park), a community facilities district established under the Mello-Roos Community Facilities Act of 1982 (the “District”), and U.S. Bank Trust Company, National Association, a national banking association duly organized and existing under laws of the United States of America and authorized to accept and execute trusts of the character herein set forth, as trustee (the “Trustee”).
Recitals
A. The District is a community facilities district established under the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”), duly created, established and authorized to finance certain public facilities and services and exercise its powers, all under and pursuant to the Act (as defined in the Master Indenture hereinafter described), and the powers of the District include the power to issue bonds for the financing of authorized public facilities.
B. The City Council of the City of Palm Desert, located in Riverside County, California (hereinafter sometimes referred to as the “legislative body of the District” or the “City”), has heretofore undertaken proceedings and declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Act.
C. Based upon Resolution Nos. 2021-10 and 2021-11 adopted by the legislative body of the District on April 22, 2021 and an election held May 13, 2021 authorizing the levy of a special tax and the issuance of bonds by the District, the District is authorized to issue bonds for one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $50,000,000, for the purpose of financing the Project.
D. Pursuant to a Bond Indenture, dated as of July 1, 2021 (the “Master Indenture”), by and between the District and U.S. Bank Trust Company, National Association, as trustee, the District has heretofore issued its Special Tax Bonds, Series 2021 (the “Series 2021 Bonds”) in the initial aggregate principal amount of $15,200,000.
E. The District deems it necessary and desirable to issue Parity Bonds (as defined in the Master Indenture) for the purpose of financing additional costs of the Project.
F. To accomplish such purpose, the District has determined to issue its Special Tax Bonds, Series 2024 (the “Series 2024 Bonds”), in the aggregate principal amount of $[principal amount], all pursuant to and secured by the Master Indenture, as amended and supplemented by this First Supplemental Indenture (together, the “Indenture”) in the manner provided therein and herein.
G. The execution and delivery of the Series 2024 Bonds and of this First Supplemental Indenture have been duly authorized and all things necessary to make the Series 2024 Bonds, when executed by the District and authenticated by the Trustee, valid and binding legal obligations
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of the District and to make this First Supplemental Indenture a valid and binding legal instrument for the security of the Series 2024 Bonds, have been done.
NOW THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and the interest and premium, if any, on, all Series 2024 Bonds at any time issued and Outstanding under the Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Series 2024 Bonds are to be issued, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Series 2024 Bonds by the owners thereof, and for other valuable consideration, the receipt whereof is hereby acknowledged, the District does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the Series 2024 Bonds, as follows:
ARTICLE I
AUTHORITY AND DEFINITIONS
SECTION 1.01. Supplemental Indenture. This First Supplemental Indenture is supplemental to the Master Indenture. Save and except as amended and supplemented by this First Supplemental Indenture, the Master Indenture shall remain in full force and effect.
SECTION 1.02. Authority for First Supplemental Indenture. This First Supplemental Indenture is adopted (i) pursuant to the provisions of the Act and (ii) in accordance with Section
6.1 and Article IX of the Master Indenture.
SECTION 1.03. Definitions. Except as provided by this First Supplemental Indenture, all terms which are defined in Section 1.1 of the Master Indenture shall have the same meanings, respectively, in this First Supplemental Indenture. The following additional terms shall, for all purposes of the Indenture, have the following meanings:
“Bonds” means the Series 2021 Bonds, the Series 2024 Bonds and any additional Parity Bonds.
“Capitalized Interest Subaccount” means the subaccount by that name created and established in the Interest Account of the Special Tax Fund pursuant to Section 3.1 of the Master Indenture and Section 2.07 of this First Supplemental Indenture. “Closing Date” means, with respect to the Series 2024 Bonds, [Closing Date], 2024. “Continuing Disclosure Agreement” means that certain Continuing Disclosure Agreement dated as of __, 2024, by and between the District and Willdan Financial Services, as dissemination agent, together with any amendments thereto.
“Master Indenture” means the Bond Indenture, dated as of July 1, 2021, by and between the District and U.S. Bank Trust Company, National Association, as trustee.
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“Reserve Requirement” shall mean, as of the date of calculation, an amount equal to the least of (i) Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds; (ii) 10% of the original amount of the Bonds and Parity Bonds; or (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and Parity Bonds; provided, if as of a date following the Delivery Date for a Series of Bonds, the foregoing calculation results in an amount greater than the initial Reserve Requirement for such Series of Bonds (calculated as of the Delivery Date for such Series of Bonds), then the amount of the “Reserve Requirement” shall not increase and in such event shall mean the amount of the initial Reserve Requirement for such Series of Bonds (calculated as of the Delivery Date for such Series of Bonds) until such time as the foregoing calculation results in a lower amount; provided however, notwithstanding the foregoing, the required deposit from the proceeds of Parity Bonds shall not exceed the least of the three prong test described above as if calculated on a stand-alone basis for such Parity Bonds. “Series 2024 Bonds” means the City of Palm Desert Community Facilities District No. 2021- 1 (University Park) Special Tax Bonds, Series 2024, issued pursuant to this First Supplemental Indenture, in the aggregate principal amount of $[principal amount]. “Series 2024 Term Bonds” the Series 2024 Bonds maturing on September 1, 20__ and September 1, 20__.
“Underwriter” means, with respect to the Series 2024 Bonds, Piper Sandler & Co.
ARTICLE II
THE SERIES 2024 BONDS
SECTION 2.01. Authorization. The Series 2024 Bonds are hereby authorized to be issued in the aggregate principal amount of $[principal amount] for the purpose of financing a portion of the cost of the Project.
SECTION 2.02. Terms of Series 2024 Bonds. The Series 2024 Bonds authorized to be issued by the District under and subject to the terms of the Indenture and the Act shall be designated the “City of Palm Desert Community Facilities District No. 2021-1 (University Park) Special Tax Bonds, Series 2024” and shall be in the aggregate principal amount of $[principal amount]. The Series 2024 Bonds shall be dated as of the Closing Date for the Series 2024 Bonds, shall bear interest at such rates (payable on March 1 and September 1 in each year, commencing [September 1, 2024]), and shall mature and become payable as to principal on September 1 in each of the years in the amounts set forth below:
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
$ %
Interest on the Series 2024 Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. The Series 2024 Bonds shall be issued as fully registered bonds in the
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denomination of $5,000, or any integral multiple of $5,000 (not exceeding the principal amount of Series 2024 Bonds maturing at any one time). The Series 2024 Bonds shall be numbered as determined by the Trustee.
Principal of and redemption premiums, if any, and interest on the Series 2024 Bonds shall be paid in lawful money of the United States of America. Principal and interest on, and redemption premiums, if any, on the Series 2024 Bonds shall be payable upon the surrender thereof at maturity or the earlier redemption thereof at the Principal Office of the Trustee.
The Series 2024 Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) such date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of the Series 2024 Bonds, in which event interest shall be payable from the dated date thereof; provided, however, that if at the time of authentication of any Series 2024 Bond, interest is in default on the Outstanding Series 2024 Bonds, interest on the Series 2024 Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on such Series 2024 Bond, interest on that Bond shall be payable from its dated date.
Interest on the Series 2024 Bonds shall be paid to the person whose name appears in the Bond Register as the Owner of such Series 2024 Bond as of the close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed on the Interest Payment Date by first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond Register. In addition, upon a request in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Series 2024 Bonds, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account designated by such Owner.
SECTION 2.03. Book-Entry System. The Series 2024 Bonds shall be initially issued as Book-Entry Bonds, in accordance with Section 2.12 of the Master Indenture.
SECTION 2.04. Form of Series 2024 Bonds. The Series 2024 Bonds, the authentication and registration endorsement and the assignment to appear thereon shall be substantially in the forms attached hereto as Appendix A, with necessary or appropriate variations, omissions and insertions as permitted or required by this First Supplemental Indenture.
SECTION 2.05. Execution and Authentication.The provisions set forth in Section 2.7 of the Master Indenture shall apply to the Series 2024 Bonds.
SECTION 2.06. Redemption of Series 2024 Bonds.
(a) Optional Redemption.
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The Series 2024 Bonds maturing on or before September 1, 20__ are not subject to optional redemption prior to maturity. The Series 2024 Bonds maturing on or after September 1, 20__ shall be subject to call and redemption prior to maturity and may be redeemed, at the option of the District, from any source of funds on any date on or after September 1, 20__ in whole, or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Dates Redemption Prices
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and any date thereafter 100
In the event the District elects to redeem Series 2024 Bonds as provided above, the District shall give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Series 2024 Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at least forty-five (45) but no more than ninety (90) days prior to the redemption date, or by such later date as is acceptable to the Trustee, in its sole discretion. (b) Mandatory Sinking Fund Redemption.
(i) The Series 2024 Bonds maturing on September 1, 20__ and September 1, 20__ (the “Series 2024 Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account, beginning on September 1, 20__ and September 1, 20__, respectively, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Series 2024 Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Series 2024 Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
SERIES 2024 BONDS MATURING SEPTEMBER 1, 20__
Redemption Date
(September 1) Principal Amount
$
(maturity)
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SERIES 2024 BONDS MATURING SEPTEMBER 1, 20__
Redemption Date
(September 1) Principal Amount
$
(maturity)
In the event of a partial optional redemption or extraordinary redemption of the Series 2024 Term Bonds, each of the remaining Sinking Fund Payments for such Series 2024 Term Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis, in integral multiples of $5,000.
(ii) Purchase of Term Bonds in Lieu of Redemption. As provided in Section 3.5(d) of the Master Indenture, if during the Fiscal Year immediately preceding one of the redemption dates specified above, the District purchases Series 2024 Term Bonds, at least fortyfive (45) days prior to the redemption date, the District shall notify the Trustee as to the principal amount purchased and the amount of Series 2024 Term Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming Sinking Fund Payment for the applicable maturity of the Series 2024 Term Bonds so purchased. All Series 2024 Term Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 of the Master Indenture.
(c) Extraordinary Redemption. The Series 2024 Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, in integral multiples of $5,000 as nearly as possible, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to Section 3.2 of the Master Indenture, plus amounts transferred from the Reserve Account pursuant to Section 3.6(c) of the Master Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Dates Redemption Prices
Any Interest Payment Date through March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and Interest Payment Dates thereafter 100 The District shall give written notice to the Trustee of its intention to redeem Series 2024 Bonds pursuant to this subsection, the redemption date, and the principal amount of the Series 2024 Bonds of each maturity to be redeemed at least 45 but no more than 90 days prior to the redemption date, or by such later date as is acceptable to the Trustee, in its sole discretion. (d) Purchase In Lieu of Redemption. As provided in Section 3.5(d) of the Master Indenture and Section 2.06(b)(ii), as applicable, in lieu or partially in lieu of any optional
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redemption, extraordinary redemption or mandatory sinking fund redemption as described above, moneys deposited in the Redemption Account, other than Prepayments, may be used to purchase Outstanding Series 2024 Bonds. Such purchases of Series 2024 Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary redemption, the premium applicable at the next following call date. Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date. All Series 2024 Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 of the Master Indenture.
(e) General Redemption Provisions. Except with respect to the foregoing, the provisions set forth in Sections 4.2 through 4.5 of the Master Indenture shall apply to the Series 2024 Bonds.
SECTION 2.07. Application of Proceeds of Series 2024 Bonds. On the Closing Date, the Trustee shall receive proceeds from the sale of the Series 2024 Bonds in the amount of $__ (representing the aggregate principal amount of the Series 2024 Bonds, less a net original issue discount of $__, and less an underwriter’s discount of $__. Immediately upon receipt, the Trustee shall set aside and deposit or transfer such proceeds as follows:
(a) $___ shall be deposited in the Reserve Account of the Special Tax Fund the amount of $____ (being the Reserve Requirement for all Outstanding Bonds); (b) $__ shall be deposited in the Series 2024 Improvement Account of the Improvement Fund;
(c) $__ shall be deposited in the Series 2024 Costs of Issuance Account of the Costs of Issuance Fund to pay the Costs of Issuance of the Bonds; (d) $___ shall be deposit in the 2024 Bonds Capitalized Interest Subaccount (which subaccount the Trustee shall establish) of the Interest Account of the Special Tax Fund to pay interest on the Series 2024 Bonds through and including September 1, 2024.
The Trustee may, in its discretion, establish a temporary fund or account in its books and records to facilitate such transfers.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Executions in Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, as many of them as the District and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021- 1 (UNIVERSITY PARK) has caused this First Supplemental Indenture to be signed by the Mayor of the City of Palm Desert, acting as the legislative body of the District and attested thereto by the City Clerk of the City of Palm Desert, and U.S. Bank Trust Company, National Association, in token of its acceptance of the trust created hereunder, has caused this First Supplemental Indenture to be signed in its corporate name by its officer identified below, all as of the day and year first above written.
CITY OF PALM DESERT COMMUNITY FACILITIES
DISTRICT NO. 2021-1 (UNIVERSITY PARK)
By:
Mayor of the City of Palm Desert, California
ATTEST:
City Clerk of the City of Palm Desert, California
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:
Its: Authorized Officer
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EXHIBIT A
FORM OF SPECIAL TAX BOND, SERIES 2024
Unless this Series 2024 Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the District or the Trustee for registration of transfer, exchange, or payment, and any Series 2024 Bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
R-__ $___________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF RIVERSIDE
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
SPECIAL TAX BOND, SERIES 2024
INTEREST RATE MATURITY DATE DATED DATE CUSIP
____% September 1, ____ ___, 2024 ___________
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: _____________________________________ DOLLARS CITY OF PALM DESERT COMMUNITY FACILITIES DISTRICT NO. 2021-1 (UNIVERSITY PARK) (the “District”) which was formed by the City of Palm Desert (the “City”) and is situated in the County of Riverside, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to
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pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date (as hereinafter defined) but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the date of authentication is prior to the close of business on the first Record Date in which event interest shall be payable from the Dated Date set forth above. Notwithstanding the foregoing, if at the time of authentication of this Series 2024 Bond interest is in default, interest on this Series 2024 Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Series 2024 Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1 and September 1 (each, an “Interest Payment Date”), commencing [September 1, 2024], at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.
The principal of and premium, if any, on this Series 2024 Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Series 2024 Bond at the Principal Office of the Trustee (as such term is defined in the Bond Indenture), initially U.S. Bank Trust Company, National Association (the “Trustee”). Interest on this Series 2024 Bond shall be paid by check of the Trustee mailed by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Registered Owner’s address as it appears on the registration books maintained by the Trustee.
This Series 2024 Bond is one of a duly authorized issue of “City of Palm Desert Community Facilities District No. 2021-1 (University Park) Special Tax Bonds, Series 2024” (the “Series 2024 Bonds”) issued in the aggregate principal amount of $[principal amount] pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the “Act”) for the purpose of financing certain public facilities, funding a reserve account, and paying certain costs related to the issuance of the Series 2024 Bonds. The issuance of the Series 2024 Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City acting in its capacity as the legislative body of the District (the “Legislative Body”) on February 15, 2024 and a Bond Indenture dated as of July 1, 2021 (the “Master Indenture”), as amended and supplemented by a First Supplemental Indenture, dated as of [March] 1, 2024, by and between the District and the Trustee executed in connection therewith (the Master Indenture, as so amended and supplemented, and as the same may be further amended and supplemented from time to time in accordance with the terms thereof, the “Indenture”), and this reference incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Series 2024 Bond assents to said terms and conditions. The Indenture is executed under and
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this Series 2024 Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.
Pursuant to the Act and the Indenture, the principal of, premium, if any, and interest on this Series 2024 Bond are payable solely from the portion of the annual special taxes authorized under the Act to be levied and collected within the District (the “Special Taxes”) and certain other amounts pledged to the repayment of the Series 2024 Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Special Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amounts deposited to the Special Tax Fund (other than the Administrative Expenses Account therein) established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Series 2024 Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Series 2024 Bonds.
The Series 2024 Bonds maturing on or before September 1, 20__ are not subject to optional redemption prior to maturity. The Series 2024 Bonds maturing on or after September 1, 20__ shall be subject to call and redemption prior to maturity and may be redeemed, at the option of the District, from any source of funds on any date on or after September 1, 20__ in whole, or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Dates Redemption Prices
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and any date thereafter 100
The Series 2024 Bonds maturing on September 1, 20__ and September 1, 20__ (the “Series 2024 Term Bonds”) shall be called before maturity and redeemed, from Sinking Fund Payments deposited into the Redemption Account, beginning on September 1, 20__ and September 1, 20__, respectively, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth in the Indenture at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium.
The Series 2024 Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments of Special Taxes deposited to the Redemption Account, plus amounts transferred from the Reserve Account in connection with such transfers, at the
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following redemption prices expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:
Redemption Dates Redemption Prices
Notice of redemption with respect to the Series 2024 Bonds to be redeemed shall be mailed to the registered owners thereof not less than thirty (30) nor more than forty-five (45) days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Series 2024 Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date. Thereafter, the registered owners of such Series 2024 Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Series 2024 Bonds.
This Series 2024 Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.
The Series 2024 Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Series 2024 Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture. This Series 2024 Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Series 2024 Bond. Upon such transfer, a new registered Series 2024 Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.
The Trustee shall not be required to register transfers or make exchanges of (i) any Series 2024 Bonds for a period of fifteen (15) days next preceding any selection of the Series 2024 Bonds to be redeemed, or (ii) any Series 2024 Bonds chosen for redemption.
The rights and obligations of the District and of the registered owners of the Series 2024 Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Indenture.
A-5
2837234
THE SERIES 2024 BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF PALM
DESERT OR OF THE DISTRICT FOR WHICH THE CITY OF PALM DESERT OR THE DISTRICT IS
OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, GENERAL OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE SERIES 2024 BONDS ARE LIMITED
OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND
OTHER AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY OF
PALM DESERT, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.
This Series 2024 Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Series 2024 Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Series 2024 Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
IN WITNESS WHEREOF, City of Palm Desert Community Facilities District No. 2021-1 (University Park) has caused this Series 2024 Bond to be dated as of ____, 2024, to be signed on behalf of the District by the Mayor of the City by his manual signature and attested by the manual signature of the City Clerk of the City.
CITY OF PALM DESERT COMMUNITY
FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
Mayor of the City of Palm Desert, California
ATTEST:
City Clerk of
the City of Palm Desert, California
A-6
2837234
[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Series 2024 Bonds described in the within-mentioned Indenture which has been registered on the Bond registration books.
Dated: [Closing Date], 2024 U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:
Its: Authorized Signatory
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sell(s), assign(s) and transfer(s) unto (Name, Address, and Tax Identification or Social Security Number of Assignee) the within-mentioned Series 2024 Bond and hereby irrevocably constitute(s) and appoint(s) _________________________________________________________________________ attorney,
to transfer the same on the Registration Books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature must be guaranteed by a
member of an institution which is a participant
in the Securities Transfer Agent Medallion
Program (STAMP) or other similar program.
Note: The signature(s) on this Assignment
must correspond with the name(s) as
written on the face of the within
Series 2024 Bond in every particular
without alteration or enlargement or
any change whatsoever.
A
-1
2837234
29.PRELIMINARY OFFICIAL STATEMENT DATED _____________, 2024 NEW ISSUE—BOOK-ENTRY ONLY NO RATING
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax; however, for tax years beginning after December 31, 2022, interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax, and (ii) interest on the Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion as to any other tax consequences regarding the Bonds. For a more complete discussion of the tax aspects, see “TAX MATTERS” herein.
$__________*
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
SPECIAL TAX BONDS, SERIES 2024
Dated: Delivery Date Due: September 1, as shown on inside cover page The City of Palm Desert Community Facilities District No. 2021-1 (University Park) Special Tax Bonds, Series 2024 (the “Bonds”) are being issued by the City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”) to: (i) finance the acquisition of certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City of Palm Desert (the “City”) and water and sewer facilities to be owned and operated by the Coachella Valley Water District (“CVWD”); (ii) fund a reserve account for the Bonds; (iii) pay costs of issuance for the Bonds; and (iv) fund capitalized interest to pay debt service on the Bonds through and including September 1, 2024. The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and pursuant to that certain Bond Indenture, dated as of July 1, 2021 (the “Original Indenture”), as supplemented by the First Supplemental Indenture, dated as of [March 1, 2024] (the “First Supplemental Indenture” together with the “Original Indenture” is referred to as the “Indenture”), by and between the District and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
The Bonds are payable from Net Taxes (as defined herein) derived from a certain annual Special Tax (as defined herein) to be levied on taxable parcels within the District and from certain other funds pledged under the Indenture, all as further described herein. The Special Tax is to be levied according to the rate and method of apportionment (the “Rate and Method”) approved by the City Council of the City and the qualified electors within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes,” “THE DISTRICT — Formation Proceedings,” and “APPENDIX A — RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of the Bonds will be in book-entry form only and may be made in principal amounts of authorized denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”). See “THE BONDS — General Provisions.” Purchasers of Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described herein.
Interest on the Bonds will be payable on each March 1 and September 1, commencing [September 1, 2024]. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, who will remit such payments to the Beneficial Owners of the Bonds.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR
SPECIAL OBLIGATIONS OF THE CITY OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE
DISTRICT PAYABLE SOLELY FROM NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.
The Bonds are subject to optional redemption, extraordinary redemption and mandatory sinking fund redemption prior to maturity as set forth herein. See the caption “THE BONDS — Redemption.”
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER ITS FINANCIAL CONDITION AND THE RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE BONDS. The property subject to the lien of Special Taxes within the District consists of approximately 175 acres.
The developer, University Park Investor, LLC (the “Developer”) plans on developing the District property in five areas, with 1,069 projected residential units. The estimated completion date for development is the end of 2026. See “SPECIAL RISK FACTORS —Construction Risks, and —Property Values” for a discussion of certain risk factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds. This cover page contains information for general reference only. It is not a complete summary of the Bonds. Investors should read the entire Official Statement to obtain information essential to making an informed investment decision.
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT INTENDED TO BE A SUMMARY OF THE SECURITY OR TERMS OF THIS ISSUE. INVESTORS ARE ADVISED TO READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by Best Best & Krieger LLP, Indian Wells, California, City Attorney, and for the District by Best Best & Krieger LLP, Riverside, California, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the Bonds in book-entry form will be available for delivery on or about [March 20, 2024]. [INSERT PIPER LOGO]
Dated: ________, 2024
* Preliminary, subject to change
$________†
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
SPECIAL TAX BONDS, SERIES 2024
MATURITY SCHEDULE
Base CUSIP No.† _______
Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP†©
$______ _______% Term Bonds due September 1, 20__ Yield: ______% Price: ______ CUSIP No.† ____ $______ _______% Term Bonds due September 1, 20__ Yield: ______% Price: ______ CUSIP No.† ____ $______ _______% Term Bonds due September 1, 20__ Yield: ______% Price: ______ CUSIP No.† ____
†
Preliminary, subject to change
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is owned by FactSet Research Systems Inc. (“FactSet”). FactSet will manage the CUSIP system on behalf of the American Bankers Association. This information is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the City, the District or the Underwriter and are included solely for the convenience of the registered owners of the applicable Bonds. None of the City, the District or the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.
CITY OF PALM DESERT
CITY COUNCIL
Karina Quintanilla, Mayor
Kathleen Kelly, Councilmember
Evan Trubee, Councilmember
Gina Nestande, Councilmember
Jan Harnik, Mayor Pro Tem
STAFF
Todd Hileman, City Manager
Veronica Chavez, City Treasurer/Director of Finance
Anthony Mejia, City Clerk
Best Best & Krieger LLP, City Attorney
MUNICIPAL ADVISOR
Del Rio Advisors, LLC
Modesto, California
BOND COUNSEL
Richards, Watson & Gershon, A Professional Corporation
Los Angeles, California
DISCLOSURE COUNSEL
Best Best & Krieger LLP
Riverside, California
SPECIAL TAX CONSULTANT
Willdan Financial Services
Temecula, California
APPRAISER
Capital Realty Analysts
San Marcos, California
TRUSTEE
U.S. Bank Trust Company, National Association
Los Angeles, California
Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the District, the Trustee or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement, deemed final by the City and the District, is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Official Statement, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment to this Official Statement, is intended to be deposited with the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org.
The information set forth in this Official Statement which has been obtained from third party sources is believed to be reliable but is not guaranteed as to accuracy or completeness by the City or the District. The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the District or any other parties described in this Official Statement since the date of this Official Statement. All summaries of the Trustee Agreement or other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is made by this Official Statement to such documents on file with the City for further information. While the City maintains an Internet website for various purposes, none of the information on that website is incorporated by reference in this Official Statement or intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds or any other bonds or obligations of the City. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded.
The Underwriter has provided the following sentence for inclusion in this Official Statement:
The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
Certain statements included or incorporated by reference in this Official Statement constitute “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption “THE DISTRICT.”
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED
TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO
ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
INTRODUCTION
The District
Investor Suitability
Sources of Payment for the Bonds
Appraisal Report
Description of the Bonds
Tax Exemption
Professionals Involved in the Offering
Continuing Disclosure
Parity Bonds
Bond Owners’ Risks
Other Information
ESTIMATED SOURCES AND USES OF FUNDS
PLAN OF FINANCE
THE BONDS
Authority for Issuance
General Provisions
Debt Service Schedule
Redemption
Registration, Transfer and Exchange
SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
Special Taxes
Covenant for Superior Court Foreclosure
Special Tax Fund
Reserve Account of the Special Tax Fund
District Not Included In Teeter Plan
Parity Bonds
Estimated Combined Debt Service Schedule
THE DISTRICT
General Description of the District
Formation Proceedings
Description of Authorized Facilities
Direct and Overlapping Debt
Expected Tax Burden
Appraisal Report
Estimated Appraised Value-to-Lien Ratios
Largest Taxpayer
Increasing Mortgage Interest Rates
Impact of Economic Conditions on the Development in the District
PROPERTY OWNERSHIP AND THE DEVELOPMENT
Property Ownership
The Developer
Proposed Development and Current Development Status
SPECIAL RISK FACTORS
Concentration of Ownership
Risks of Real Estate Secured Investments Generally
Construction Risks
Insufficiency of Special Tax Revenues
Property Values
Exempt Properties
Climate Change
Geologic, Topographic and Climatic Conditions
Flood Zone
Drought
Hazardous Substances
Cybersecurity
Depletion of Reserve Account
Enforcement Delays – Bankruptcy
Increasing Mortgage Interest Rates
Impact of Economic Conditions on the Development in the District FDIC/Federal Government Interests in Properties
Direct and Overlapping Indebtedness
Effect of Parity Bonds on Credit Quality
Payment of Special Taxes is not a Personal Obligation of the Property Owners No Acceleration Provision
Limited Obligations
Ballot Initiatives
Proposition 218
Litigation with Respect to Community Facilities Districts Loss of Tax Exemption
No Ratings – Limited Secondary Market
Limitations on Remedies
Potential Early Redemption of Bonds from Prepayments
District Not Included in Teeter Plan
CONTINUING DISCLOSURE
TAX EXEMPTION
LEGAL OPINION
ABSENCE OF LITIGATION
NO RATING
UNDERWRITING
FINANCIAL INTERESTS
MUNICIPAL ADVISOR
MISCELLANEOUS
APPENDIX A — RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX A-1 APPENDIX B — FORM OF OPINION OF BOND COUNSEL B-1
APPENDIX C — APPRAISAL REPORT................ D-1
APPENDIX D — SUMMARY OF THE INDENTURED-1
APPENDIX E — FORMS OF DISTRICT CONTINUING DISCLOSURE AGREEMENT AND DEVELOPER CONTINUING DISCLOSURE CERTIFICATE E-1
APPENDIX F — BOOK-ENTRY ONLY SYSTEM F-1
APPENDIX G — GENERAL ECONOMIC DATA CONCERNING THE CITY OF PALM DESERT AND THE COUNTY OF RIVERSIDE G-1
[INSERT VICINITY MAP]
$_________*
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
SPECIAL TAX BONDS, SERIES 2024
INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.
The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the “Official Statement”), is to provide certain information concerning the issuance by City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”) of its Special Tax Bonds, Series 2024 in the aggregate principal amount of $__________‡(the “Bonds”). The proceeds of the Bonds will be used to (i) finance the acquisition of certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Coachella Valley Water District (“CVWD”) (ii) fund a reserve account for the Bonds; (iii) pay costs of issuance for the Bonds; and (iv) fund capitalized interest on the Bonds through and including September 1, 2024.
The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and a Bond Indenture, dated as of July 1, 2021 (the “Original Indenture”), as supplemented by a First Supplemental Indenture, dated as of [March 1, 2024] (the “First Supplemental Indenture” together with the “Original Indenture” are referred to as the “Indenture”), by and between the District and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Bonds and Series 2021 Bonds (defined herein) are secured under the Indenture by a pledge of and lien upon Net Taxes (as such term is defined herein) and all moneys in the Special Tax Fund (other than the Administrative Expenses Account therein) as described in the Indenture.
All capitalized terms used in this Official Statement and not defined have the meanings set forth in Appendix D.
The District
General. The City of Palm Desert (the “City”) is located in the County of Riverside (the “County”) within the area known as the Coachella Valley. The City is situated approximately midway between the cities of Indio and Palm Springs, approximately 117 miles east of Los Angeles, approximately 118 miles northeast of San Diego and approximately 515 miles southeast of San Francisco. The City covers an area of approximately 26 square miles and has a current population of approximately 50,615 . The City was incorporated in 1973 and is a charter city operating under a council-manager form of government.
The District is located north of Frank Sinatra Drive, south of Gerald Ford Drive, west of Cook Street and east of Portola Avenue. The area is locally known as “University Park,” due to the location immediately west of the facilities and future facility expansion area of the satellite campus of California State University, San Bernardino and University of California at Riverside, at the northeast corner of Frank Sinatra Drive and Cook Street.
‡ Preliminary, subject to change
9 The District consists of approximately 175 gross acres. As of January 1, 2024, the developer “University Park Investor, LLP” (“UPI” or “Developer”) developed 236 residential units on the District property, which are subject to the Special Tax (as defined herein). 105 of the 236 residential units are owned by individual homeowners. UPI owns the remaining 131 units. See “SPECIAL RISK FACTORS — Concentration of Ownership” herein. The development within the District (the “Project”) is made up of five separate project areas (“Area No. 1,” “Area No. 2,” “Area No. 3,” “Area No. 4” and “Area No. 5”) which are planned to include 1,069 units at buildout consisting of eight product types of for-sale single-family detached homes, for-sale attached townhomes and for-rent multifamily apartments. Area No. 1, consisting of 236 single-family lots, is currently under construction and has closed on 105 units, as of January 1, 2024. The lots in Area No. 3 consist of finished and nearly finished lots.
CITY OF PALM DESERT CFD 2021-1(UNIVERSITY PARK)
STATUS OF DEVELOPMENT AS OF DECEMBER 15, 20231
Development
Area
Total
Number
of Lots
Units
Completed,
Sold and
Closed
Units
Completed
and
Unclosed
Homes
Under
Construction
Homes
in
Escrow
Finished
Lots
Building
Permits
Undeveloped
Lots
Area No. 12 236 102 10 43 6 81 155 236
Area No. 2 146 0 0 0 0 0 0 146
Area No. 33 169 0 0 0 0 169 0 169
Area No 4 182 0 0 0 0 0 0 182
Area No. 5 336 0 0 0 0 0 0 336
1,069 102 10 43 6 250 155 1,069
1Based on status of development as of the December 15, 2023 Date of Value. 2Area No. 1 lot counts do not tie out to 236 when adding horizontally due to overlap between categories. 3Although Area No. 3 has both finished and near-finished lots, this table considers all 169 lots as finished since all units are permit ready.
The Project is being developed by UPI, the master developer within the District. UPI is managed by MVP Development California, LLC (“MVP”), who manages the day-to-day operations and development of the Project.
On November 29, 2023, UPI sold all 169 lots in Area No. 3 to AG EHC II Toll CA 2 LP (“AG EHC”) for $34,304,000. [Toll Brothers, a ___________, (“Toll”) entered into a land banking arrangement on _____, 2024 (the “Land Banking Agreement”) with AG EHC for development of the property in Area No. 3. Pursuant to the Land Banking Agreement, Toll is responsible for payment of Special Taxes in Area No. 3.] See the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT” for further information with respect to the District, UPI, Toll, and development within the District.
Investor Suitability
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER ITS FINANCIAL CONDITION AND THE RISKS INVOLVED TO DETERMINE THE SUITABILITY OF INVESTING IN THE BONDS. See “SPECIAL RISK FACTORS – Concentration of Ownership, — Construction Risks, and — Property Values” for a discussion of certain risk factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds. Investors should read the entire Official Statement to obtain information essential to making an informed investment decision.
Sources of Payment for the Bonds
Special Taxes. As used in this Official Statement, the term “Special Tax” means the annual special tax which has been authorized pursuant to the Act and the rate and method of apportionment (the “Rate and Method”) to be levied upon taxable property within the District. See the caption “SOURCES OF PAYMENT FOR THE
10 BONDS — Special Taxes,” “THE DISTRICT — Formation Proceedings,” and “APPENDIX A — RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” See the caption “THE DISTRICT.” Under the Indenture, the District has pledged to repay the Bonds and any Parity Bonds (as defined herein) from the Special Tax revenues remaining after the payment of certain annual Administrative Expenses of the District (the “Net Taxes”) and from other amounts in the Special Tax Fund (other than the Administrative Expenses Account therein) established under the Indenture. The Special Taxes are the primary source of security for the repayment of the Bonds and any Parity Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Parity Bonds are amounts held by the Trustee in the Special Tax Fund, including amounts held in the Reserve Account therein, to the limited extent described in the Indenture. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.”
Foreclosure Proceeds. The District will covenant in the Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it (i) will commence judicial foreclosure proceedings against any parcel with either (A) at least four (4) consecutive installments of delinquent Special Taxes or (B) delinquent Special Taxes in excess of $10,000 on any one parcel, in each instance by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) will commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied for such Fiscal Year, and (iii) will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided, however, that the District may elect to defer foreclosure proceedings on any parcel so long as the amount on deposit in the Reserve Account is at least equal to the Reserve Requirement, and such delinquencies will not cause moneys in the Reserve Account to be withdrawn on the next succeeding Interest Payment Date. The District will covenant that it will deposit the net proceeds of any foreclosure in the Special Tax Fund. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” There is no assurance that the property within the District can be sold for the appraised values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of Special Taxes by the current or future landowners within the District. See the caption “SPECIAL RISK FACTORS— Property Values.”
EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY
OR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE
DISTRICT PAYABLE SOLELY FROM NET TAXES AND AMOUNTS HELD UNDER THE INDENTURE, AS MORE FULLY DESCRIBED HEREIN.
Appraisal Report
The District has obtained an appraisal of the land and existing improvements within the District (the “Appraised Property”) dated January 15, 2024, with a date of value as of December 15, 2023 (the “Appraisal Report”). The Appraisal was prepared by Capital Realty Analysts, San Marcos, California (the “Appraiser”). The Appraiser is of the opinion that, based upon the assumptions and conditions contained in the Appraisal Report, the market value of the Appraised Property, as of December 15, 2023 (the “Date of Value”), was $176,855,000.
See “APPENDIX C — APPRAISAL REPORT.”
Based on such appraised value of the Appraised Property and the estimated amount of land secured debt allocated to parcels within the District, the overall value-to-lien ratio of the property within the District is approximately ____*. See “THE DISTRICT — Appraisal Report, “APPENDIX C — APPRAISAL REPORT” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.”
*
Preliminary, subject to change.
11 Description of the Bonds
The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in “Authorized Denominations”, defined to mean any integral multiple of $5,000 in excess thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. See “THE BONDS — General Provisions.” Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entry only system described herein is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture.
Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. See “APPENDIX F — BOOK-ENTRY ONLY SYSTEM.”
The Bonds are subject to optional redemption, extraordinary redemption and mandatory sinking fund redemption prior to maturity as described herein. See the caption “THE BONDS — Redemption.” For a more complete description of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see the caption “THE BONDS” and “APPENDIX D — SUMMARY OF THE INDENTURE.” Tax Exemption
In the opinion of Richards, Watson & Gershon, A Professional Corporation, (“Bond Counsel”), under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax, however for tax years beginning after December 31, 2022, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose for computing the alternative minimum tax imposed on certain corporations, and (ii) interest on the Bonds is exempt from State of California personal income taxes.
Interest on the Bonds may be subject to certain federal income taxes imposed only on certain corporations. Bond Counsel expresses no opinion as to any other tax consequences regarding the Bonds. See the caption “TAX EXEMPTION.”
Set forth in Appendix B is the form of opinion of Bond Counsel expected to be delivered in connection with the issuance of the Bonds. For a more complete discussion of such opinion and certain tax consequences incident to the ownership of the Bonds, see the caption “TAX EXEMPTION.” Professionals Involved in the Offering
U.S. Bank Trust Company, National Association, Los Angeles, California, will act as Trustee under the Indenture. Piper Sandler & Co. (the “Underwriter”) is the Underwriter of the Bonds. Certain proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, Bond Counsel to the District in connection with the issuance of the Bonds. Certain legal matters will be passed on for the City and the District by Best Best & Krieger LLP, Indian Wells, City Attorney, and Best Best & Krieger LLP, Riverside, California, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Other professional services have been performed by Del Rio Advisors, LLC, Modesto, California, as Municipal Advisor, Willdan Financial Services, Temecula, California, as Special Tax Consultant (the “Special Tax Consultant”), by and by Capital Realty Analysts, San Marcos, California, as Appraiser.
12 For information concerning circumstances in which certain of the above-mentioned professionals, advisors, counsel and consultants may have a financial or other interest in the offering of the Bonds, see the caption “FINANCIAL INTERESTS.”
Continuing Disclosure
Pursuant to a District Continuing Disclosure Agreement to be executed by the District and Willdan Financial Services, as dissemination agent (the “District Continuing Disclosure Agreement”), the District will agree to provide, or cause to be provided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”), maintained on the Internet at http://emma.msrb.org, certain annual financial information and operating data and notices of certain enumerated events. These covenants are being made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission (“Rule 15c2-12”). Pursuant to a Developer Continuing Disclosure Certificate (the “Developer Continuing Disclosure Certificate”) to be executed by UPI and Toll, UPI and Toll will agree to provide, or cause to be provided, to EMMA certain information relating to the development of the Project on an annual basis and notices of certain enumerated events.
See “CONTINUING DISCLOSURE” and “APPENDIX E — FORMS OF DISTRICT CONTINUING DISCLOSURE AGREEMENT AND DEVELOPER CONTINUING DISCLOSURE CERTIFICATE.” Parity Bonds
In 2021, the City issued $15,200,000 City of Palm Desert Community Facilities District No. 2021-1 (University Park) Special Tax Bonds, Series 2021 (the “Series 2021 Bonds”). The Bonds are being issued as Parity Bonds with respect to the Series 2021 Bonds. The District may issue additional indebtedness secured by the Net Taxes on a parity with the Bonds, which include the Series 2021 Bonds (“Parity Bonds”). See the caption “SOURCES OF PAYMENT FOR THE BONDS — Parity Bonds.” Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes may also be levied in the future on the property within the District, which could adversely affect the willingness of the landowners to pay the Special Taxes when due. See the captions “THE DISTRICT — Direct and Overlapping Debt” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.”
The District expects to issue additional series of bonds up to the remaining balance of bond authorization, which bonds are expected to be secured by Net Taxes on a parity with the Bonds. Such Parity Bonds are expected to be issued once property values within the District meet the minimum value-to-lien requirements required under the Parity Bonds test in the Indenture. See “SPECIAL RISK FACTORS – Effect of Parity Bonds on Credit Quality.”
Bond Owners’ Risks
Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The purchase of the Bonds involves risks, and the Bonds may not be appropriate investments for some types of investors.
Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to change.
Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the Constitution and laws of the State, as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and
13 with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined in this Official Statement have the meanings set forth in Appendix D.
Copies of the Indenture and other documents and information are available for inspection and copies may be obtained from the City, 73510 Fred Waring Drive, Palm Desert, California, 92260, Attention: City Clerk.
ESTIMATED SOURCES AND USES OF FUNDS
The following table sets forth the expected sources and uses of Bond proceeds.
Sources of Funds
Principal Amount of Bonds
Plus: Original Issue Premium
Less: Underwriter’s Discount
Total Sources
Uses of Funds:
Improvement Fund
Costs of Issuance Fund(1)
Reserve Account of the Special Tax Fund
[Capitalized Interest Account]
Total Uses
________________________
(1) To pay costs of issuing the Bonds, including legal fees, printing costs, Municipal Advisor, Bond Counsel, Disclosure Counsel, Appraiser, Special Tax Consultant and Trustee fees.
PLAN OF FINANCE
A portion of the proceeds of the Bonds will used to finance certain public improvements necessary to meet the increased demands placed upon the public infrastructure, the City, and CVWD as a result of the development of the property within the District.
The following table lists the facilities expected to be financed with the proceeds of the Bonds and the estimated costs:
Description of Facilities Estimated Costs
Approved Phase 1 Facilities
CVWD1-B(b) $ 2,127,400.81
CVWD – Reservoir Facility Payment #3 596,460.23
CVWD Sewer & Domestic Water #2 264,597.02
City Storm Drain #2, City Streets, Site Amenities, Misc. 4,339,903.27 Pending Phase 1 Facilities
CVWD Payment for Well Site 2,500,000.00
Phase 2 Facilities
CVWD – Phase 2 2,675,000.00
City of Palm Desert – Phase 2 4,790,639.00
Total $17,294,000.33
___________________
Source: UPI
Pursuant to a Special Domestic Water System Installation Agreement between UPI and CVWD (the “Water Installation Agreement”), UPI is required to contribute to the costs of CVWD’s construction of certain reservoir facilities, and invoicing for the reservoir facilities commenced in April 2021. UPI is invoiced monthly
14 by CVWD for 14.5% of the cost of the reservoir facilities based on monthly invoices received by CVWD from its contractor. Construction of the reservoir facilities has been completed.
THE BONDS
Authority for Issuance
The Act was adopted by the State Legislature to provide an alternate method of financing certain public capital facilities and services, especially in developing areas of the State. Once duly established by a local governmental agency, a community facilities district such as the District is itself a legally constituted governmental entity, with the governing board or legislative body of the local agency that established it constituting the legislative body of such community facilities district. Subject to approval by a two-thirds vote of a community facilities district’s qualified electors and compliance with the provisions of the Act, the legislative body may authorize the issuance of bonds for the community facilities district in order to finance certain public improvements, and the legislative body may levy and collect a special tax within such community facilities district to repay such indebtedness.
The specific actions taken by the City Council to form the District, authorize the levy of the Special Tax on the Taxable Property (as defined in the Rate and Method) within the District and authorize the issuance of the Bonds are described under the caption “THE DISTRICT — Formation Proceedings.” General Provisions
The Bonds will be dated their date of delivery and will bear interest at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing [September 1, 2024] (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The Bonds will be issued in fully registered form in Authorized Denominations.
Interest will be calculated on the basis of a 360-day year comprised of twelve 30-day months. Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest will be payable from such date of authentication; (ii) the date of authentication is after the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day (each, a “Record Date”) but prior to the immediately succeeding Interest Payment Date, in which event interest will be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest will be payable from the dated date of the Bonds; provided, however, that if at the time of authentication of a Bond, interest on outstanding Bonds are in default, interest on such Bond will be payable from the last Interest Payment Date to which the interest has been paid or made available for payment, or, if no interest has been paid or made available for payment on such Bond, interest on such Bond will be payable from its dated date.
Interest on any Bond will be paid to the person whose name appears as its owner in the registration books held by the Trustee on the close of business on the Record Date. Principal of, premium, if any, due upon redemption is payable upon presentation and surrender of the Bonds at the principal corporate trust office of the Trustee in Los Angeles, California.
The Bonds will be issued as fully registered bonds and will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in Authorized Denominations, as described more particularly above in this section. So long as DTC is the securities depository all payments of principal and interest on the Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC’s procedures and the procedures of DTC’s Participants. See “APPENDIX F — BOOK-ENTRY-ONLY SYSTEM.”
15 In the event the Bonds are not held in book-entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, to the Bondowner at its address on the registration books kept by the Trustee.
Pursuant to a written request prior to the Record Date of a Bondowner of at least $1,000,000 in aggregate principal amount of Bonds, payment will be made by wire transfer in immediately available funds to a designated account in the United States.
The Bonds are not general or special obligations of the City but are special obligations of the District payable solely from Net Taxes and the other amounts held under the Indenture in the Special Tax Fund (other than the Administrative Expenses Account therein), including the Reserve Account therein. Neither the faith and credit nor the taxing power of the City, the District (except to the limited extent set forth in the Indenture), the State or any political subdivision thereof is pledged to the payment of the Bonds. See the caption “SPECIAL RISK FACTORS — Limited Obligations.”
Debt Service Schedule
The following table presents the annualized debt service on the Bonds and Series 2021 Bonds (including sinking fund redemptions), assuming that there are no optional or extraordinary redemptions. See the caption “— Redemption” below.
Year Ending
September 1
Series 2021
Bonds Debt
Service
Bond
Principal
Bond
Interest Total Debt Service
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
Total
___________________
Source: The Series 2021 Bond debt service is provided by the Trustee. The Bond debt service is provided by the Underwriter.
16 Redemption
Optional Redemption. The Bonds maturing on or before September 1, 20__ are not subject to optional redemption prior to maturity. The Bonds maturing on or after September 1, 20__ shall be subject to call and redemption prior to maturity and may be redeemed, at the option of the District, from any source of funds on any date on or after September 1, 20__ in whole, or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date::
Redemption Date Redemption Price
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and any date thereafter 100
In the event that the District elects to redeem Bonds as provided above, the District will give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee will be given at least 45 but no more than 90 days prior to the redemption date, or by such later date as is acceptable to the Trustee.
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__, September 1, 20__, and September 1, 20__ (collectively, the “Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established by the Indenture, on September 1, 20__, September 1, 20__, and September 1, 20__, respectively, and on each September 1 thereafter prior to maturity, in accordance with the schedules of Sinking Fund Payments set forth below. The Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Payments
(maturity)
17 Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Payments
(maturity)
Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Payments
(maturity)
If the District purchases Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District will notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased will be credited at the time of purchase to the next Sinking Fund Payment for the Term Bond so purchased, to the extent of the full principal amount of the purchase. All Term Bonds purchased will be cancelled pursuant to the Indenture.
Purchase of Bonds in Lieu of Redemption. If during the Fiscal Year immediately preceding one of the redemption dates specified above, the District purchases Bonds, at least forty-five (45) days prior to the redemption date, the District shall notify the Trustee as to the principal amount purchased and the amount of Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming Sinking Fund Payment for the applicable maturity of the Bonds so purchased. All Bonds purchased pursuant to this subsection shall be cancelled pursuant to the Original Indenture.
In the event of a partial optional redemption or extraordinary redemption of the Bonds, each of the remaining Sinking Fund Payments for such Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis, in integral multiples of $5,000.
18 Extraordinary Redemption from Special Tax Prepayments. The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account plus amounts transferred from the Reserve Account at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date: :
Redemption Date Redemption Price
Any Interest Date through March 1, 20__ 103%
September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100 The District will give written notice to the Trustee of its intention to redeem Bonds pursuant to extraordinary redemption, the redemption date, and the principal amount of the Bonds and of each maturity to be redeemed at least 45 but no more than 90 days prior to the redemption date, or by such later date as is acceptable to the Trustee, in its sole discretion.
Notice of Redemption. So long as the Bonds are held in book-entry form, notice of redemption will be sent by the Trustee to DTC and not to the Beneficial Owners of the Bonds under the DTC book-entry only system.
Neither the District nor the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in accordance with the procedures in effect for the DTC book-entry system. See “APPENDIX F — BOOK-ENTRY ONLY SYSTEM.”
The Trustee will give notice, in the name of the District, of the redemption of Bonds or Parity Bonds.
Such notice of redemption will: (a) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds or Parity Bonds selected for redemption, except that where all of the Bonds or all of an issue of Parity Bonds are subject to redemption, or all of the Bonds or Parity Bonds of one maturity, are to be redeemed, the bond numbers of such issue need not be specified; (b) state the date fixed for redemption and surrender of the Bonds or Parity Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds or Parity Bonds are to be redeemed; (e) in the case of Bonds or Parity Bonds to be redeemed only in part, state the portion of such Bond or Parity Bond which is to be redeemed; (f) state the date of issue of the Bonds or Parity Bonds as originally issued; (g) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds or Parity Bonds being redeemed as specified by the Trustee. Such notice will further state that on the date fixed for redemption, there will become due and payable on each Bond or Parity Bond, or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon will cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. The actual receipt by the Owner of any Bond or Parity Bond of notice of such redemption is not a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the proceedings for the redemption of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture will be conclusive as against all parties and the Owner is not entitled to show that he or she failed to receive notice of such redemption.
In addition to the foregoing notice, further notice will be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.
19 Each further notice of redemption will be sent (i) not later than two (2) Business Days before the date that notice of redemption is mailed to the Bondowners pursuant to the Indenture, to the Depository in such electronic format and manner as specified by the Depository and to any other registered securities depositories (in such electronic format and manner as specified thereby) then in the business of holding substantial amounts of obligations of types comprising the Bonds and Parity Bonds as determined by Trustee, and (ii) not later than the date that notice of redemption is mailed to the Bondowners pursuant to the Indenture, to the Information Services in such electronic format and manner as specified by the Information Services.
The District will have the right to rescind any optional redemption by written notice to the Trustee one (1) Business Day prior to the date fixed for redemption. Any notice of optional redemption will be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds or Parity Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The District and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed, each check or other transfer of funds issued for such purpose will to the extent practicable bear the CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with the proceeds of such check or other transfer.
Selection of Bonds for Redemption. If less than all of the Bonds or Parity Bonds Outstanding are to be redeemed, the Trustee will select the Bonds or Parity Bonds to be redeemed from all Outstanding Bonds or Parity Bonds of such Series or such given portion thereof not previously called for redemption, on a pro rata basis among the maturities (unless the maturity or maturities are otherwise specified in the Indenture or in writing by the District) and by lot within a maturity in any manner which the Trustee in its discretion deems appropriate. For purposes of such selection, all Bonds or Parity Bonds of a denomination of more than $5,000 will be deemed to be comprised of separate $5,000 portions, and such portions will be treated as separate Bonds or Parity Bonds, as applicable, which may be separately redeemed. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee shall promptly notify the District in writing of the Bonds or Parity Bonds, or portions thereof, selected for redemption.
Partial Redemption of Bonds or Parity Bonds. Upon surrender of any Bond or Parity Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations.
Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (a) the Bonds and Parity Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture or in any Supplemental Indenture with respect to Parity Bonds, anything in the Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding; (b) upon presentation and surrender thereof at the Principal Office of the Trustee, the redemption price of such Bonds and Parity Bonds will be paid to the Owners thereof; (c) as of the redemption date the Bonds or the Parity Bonds, or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds or Parity Bonds, or portions thereof, will cease to bear further interest; and (d) as of the date fixed for redemption no Owner of any of the Bonds, Parity Bonds or portions thereof so designated for redemption will be entitled to any of the benefits of the Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available.
20 Registration, Transfer and Exchange
Registration. The Trustee will keep or cause to be kept, at the Principal Office of the Trustee, sufficient books for the registration and transfer of the Bonds and any Parity Bonds which will upon reasonable prior notice be open to inspection by the District during all regular business hours, and, subject to the limitations set forth in the Indenture, upon presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as provided in the Indenture.
The District and the Trustee may treat the Owner of any Bond or Parity Bond whose name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all purposes, and the District and the Trustee will not be affected by any notice to the contrary. The District and the Trustee may rely on the address of the Bondowner as it appears in the Bond Register for any and all purposes. It will be the duty of the Bondowner to give written notice to the Trustee of any change in the Bondowner’s address so that the Bond Register may be revised accordingly.
Transfer or Exchange. Any Bond, or any portion thereof, may only be transferred in principal amounts equal to Authorized Denominations. No transfers of Bonds shall be required to be made (a) during a period of fifteen (15) days next preceding any selection of the Bonds or Parity Bonds to be redeemed, or (b) with respect to Bonds or Parity Bonds which have been selected for redemption.
Subject to the limitations set forth in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the Principal Office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Bondowner or his or her duly authorized attorney.
Bonds or Parity Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity and issue.
The Trustee may not collect from the Owner any charge for any new Bond or Parity Bond issued upon any exchange or transfer, but will require the Bondowner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds or Parity Bonds are surrendered for registration of transfer or exchange, the District will execute and the Trustee will authenticate and deliver a new Bond or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee is not required to register transfers or make exchanges of: (i) Bonds or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed; or (ii) any Bonds or Parity Bonds chosen for redemption.
SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
The Bonds are special, limited obligations of the District payable only from amounts pledged under the Indenture and from no other sources.
The Net Taxes are the primary source of security for the repayment of the Bonds. Under the Indenture, the District has pledged to repay the Bonds from the Net Taxes (which are Special Tax revenues remaining after the payment of the annual Administrative Expenses in an amount not to exceed the Administrative Expenses Priority Amount (as defined in the Indenture)) and from amounts held in the Special Tax Fund (other than amounts held in the Administrative Expenses Account therein). Net Taxes consist of a portion of the Special Taxes levied on the Taxable Property in the District pursuant to the Rate and Method. The Indenture defines “Net Taxes” as Gross Taxes minus amounts set aside to pay Administrative Expenses not to exceed the Administrative Expenses Priority Amount. The term “Gross Taxes” means (i) the amount of all Special Taxes received by the District,
21 together with (ii) the proceeds collected from the sale of property pursuant to the foreclosure provisions of the Indenture for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions. The Administrative Expenses Priority Amount is equal to $50,000 per Bond Year, escalating by 2% each Bond Year commencing July 1, 2022.
In the event that the Special Tax revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are the proceeds collected from the sale of property pursuant to the foreclosure provisions of the Indenture for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions, and amounts held by the Trustee in the Special Tax Fund (other than the Administrative Expenses Account therein), including amounts held in the Reserve Account therein, for the exclusive benefit of the Owners of the Bonds.
As described in more detail under “— Special Tax Fund” below, the Trustee will transfer the Special Taxes on deposit in the Special Tax Fund to the various specified accounts and funds established and held by the Trustee under the Indenture in a specified order of priority, in certain amounts, and at certain specified times during each Bond Year. Following the deposits specified in the Indenture to the Administrative Expenses Account, the Interest Account, the Principal Account, the Redemption Account, and the Reserve Account of the Special Tax Fund, remaining Special Taxes (if any), are transferred to the Rebate Fund and the Surplus Fund. Net Taxes deposited in the Rebate Fund and the Surplus Fund will no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Improvement Fund, the Costs of Issuance Fund, or the Administrative Expenses Account of the Special Tax Fund will be construed as a trust fund held for the benefit of the Owners of the Bonds or any Parity Bonds.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY,
THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY BUT ARE
LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE NET TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.
Furthermore, the obligations of the property owners within the District to pay Special Taxes are nonrecourse and none of such property owners or any of their respective members, partners, managers and officers has any personal liability with respect to the Bonds. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” See “APPENDIX D — SUMMARY OF THE INDENTURE.” Special Taxes
Authorization and Pledge. In accordance with the provisions of the Act, the City established the District on April 22, 2021 for the purpose of financing of various public improvements required in connection with the proposed development within the District. At a special election held on May 13, 2021, the qualified electors within the District authorized the District to incur indebtedness in an amount not to exceed $50,000,000 for the District and the levy of the Special Taxes on property within the District to repay such bonds and to finance the purchase, construction, modification, expansion, improvement or rehabilitation of certain real or other tangible property, which are generally comprised of storm drainage, water and sewer facilities, roadway, landscaping and other public facilities of the City and sewer facilities and other public facilities of CVWD. The qualified electors within the District also voted to approve the Rate and Method which authorized the Special Tax to be levied to repay indebtedness of the District, including the Bonds. The term “Special Tax” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the election in the District, including any scheduled payments and any Prepayments thereof, the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien, and penalties and interest thereon.
22 The Bonds will be repaid only from annual Net Taxes derived from the levy and collection of Special Taxes pursuant to the Rate and Method. The Rate and Method permits the prepayment of Special Taxes for an Assessor’s Parcel, and any such Prepayments will be applied to redeem Bonds and Parity Bonds, if any. The Net Taxes collected from the annual Special Tax levy and the proceeds of any Prepayment have been pledged under the Indenture to the repayment of the Bonds and Parity Bonds.
The Special Taxes levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See “— Rate and Method of Apportionment of Special Tax” and “APPENDIX A —RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Net Taxes will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS—Insufficiency of Special Tax Revenues.” Rate and Method of Apportionment of Special Tax. The District is legally authorized and will covenant in the Indenture to cause the levy of the Special Taxes in an amount determined according to the Rate and Method.
The Rate and Method apportions the total amount of Special Taxes to be collected among the taxable parcels in the District as more particularly described below.
The following is a synopsis of the provisions of the Rate and Method for the District, which should be read in conjunction with the complete text of the Rate and Method which is attached as APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The meaning of the defined terms used in this section are as set forth in APPENDIX A. This section provides only a summary of the Rate and Method, and is qualified by more complete and detailed information contained in the entire Rate and Method attached as APPENDIX A.
Assignment to Land Use Categories. Each Fiscal Year, beginning with Fiscal Year 2021-22, each Assessor’s Parcel within the District will be classified as Taxable Property or Exempt Property. In addition, each Assessor’s Parcel of Taxable Property will be further classified as Developed Property, Approved Property, Undeveloped Property, Provisional Welfare Property, or Provisional Property and as being in Zone 1, Zone 2 or Zone 3. Each Assessor’s Parcel of Developed Property will be classified as Single Family Property, Apartment Property, or Non-Residential Property. Each Assessor’s Parcel of Single Family Property will be classified according to its applicable Land Use Class based on its Building Square Footage.
Exempt Property. The CFD Administrator will classify as Exempt Property (i) Assessor’s Parcels of Public Property, (ii) Assessor’s Parcels of Property Owner Association Property, (iii) Assessor’s Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Lower Income Households Welfare Exemption Property, and (vi) Assessor’s Parcels classified as Non-Residential Property, provided that no such classification would reduce the sum of all Taxable Property in the District to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3. Assessor’s Parcels of Lower Income Households Welfare Exemption Property which cannot be classified as Exempt Property because such classification would reduce the sum of all Taxable Property in the District to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3 shall be classified as Provisional Welfare Property and will continue to be subject to the Special Taxes accordingly. Assessor’s Parcels which cannot be classified as Exempt Property because such classification would reduce the sum of all Taxable Property in the District to less than 44.86 Acres in Zone 1, 48.84 Acres in Zone 2 or 11.12 Acres in Zone 3 shall be classified as Provisional Property and will continue to be subject to the District Special Taxes accordingly.
Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes eligible for classification as Exempt Property, except for Non-Residential Property, which will be assigned tax exempt status only after all other eligible property types have been classified as Exempt Property.
23 Maximum Special Tax, Assigned Special Tax and Backup Special Tax.
Maximum Special Tax. The Maximum Special Tax for Developed Property and Provisional Welfare Property shall be the greater of the Assigned Special Tax for Developed Property and Provisional Welfare Property or the Backup Special Tax for Developed Property and Provisional Welfare Property.
The Maximum Special Tax for Provisional Property, Approved Property, and Undeveloped Property commencing in Fiscal Year 2024-25 will be $16,363 per Acre for Zone 1, $20,505 per Acre for Zone 2 and $24,049 per Acre for Zone 3. The Maximum Special Tax for Provisional Property, Approved Property and Undeveloped Property will be increased by two percent (2%) of the amount in effect in the prior Fiscal Year on each July 1, beginning July 1, 2022.
Assigned Special Tax. The Assigned Special Tax applicable to an Assessor’s Parcel classified as Developed Property or Provisional Welfare Property is shown in Tables 1-3 of Section C of the Rate and Method attached as APPENDIX A, which rates increase will increase by two percent (2%) of the amount in effect in the prior Fiscal Year on each July, beginning July 1, 2022. The Assigned Special Tax applicable to an Assessor’s Parcel classified as Developed or Provisional Welfare Property in Fiscal Year 2024-25 ranges from $2,441 to $1,353 per Residential Unit for Zone 1; $3,210 to $2,626 per Residential Unit for Zone 2; and $2,441 to $796 per Residential Unit for Zone 3.
Backup Special Tax. The Backup Special Tax for Developed Property and Provisional Welfare Property in Fiscal Year 2024-25 will be $16,363 per Acre for Zone 1; $20,505 per Acre for Zone 2 and $24,049 per Acre for Zone 3, which will increase by two percent (2%) of the amount in effect in the Prior Fiscal Year on each July 1, beginning July 1, 2022.
Method of Apportionment of Special Tax. Each Fiscal Year, beginning with Fiscal Year 2021-22, the CFD Administrator will levy the Special Tax on all Taxable Property in accordance with the following steps:
Step 1: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement.
Step 2: If additional monies are needed to satisfy the Special Tax Requirement after Step 1 has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Approved Property in an amount up to 100% of the Maximum Special Tax for Approved Property.
Step 3: If additional monies are needed to satisfy the Special Tax Requirement after Step 2 has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property in an amount up to 100% of the Maximum Special Tax for Undeveloped Property.
Step 4: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax amount determined in Step 1 shall be increased Proportionately on each Assessor’s Parcel of Developed Property in an amount up to 100% of the Maximum Special Tax for Developed Property.
Step 5: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Provisional Welfare Property in an amount up to 100% of the Maximum Special Tax for Provisional Property.
Step 6: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Provisional Property in an amount up to 100% of the Maximum Special Tax for Provisional Property. “Special Tax Requirement” is defined in the Rate and Method to mean that amount required in any Fiscal Year to: (i) pay regularly scheduled Debt Service on all Outstanding Bonds; (ii) pay periodic costs on the
24 Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) accumulate funds to pay directly for acquisition or construction of facilities, provided that the inclusion of such amount does not cause an increase in the Special Tax to be levied on Approved Property, Undeveloped Property, or Provisional Property, until the date that all Bonds have been issued; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture.
Notwithstanding the above, under no circumstances will the Special Tax levied in any Fiscal Year on any Assessor’s Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of a delinquency or default in the payment of the Special Tax applicable to any other Assessor’s Parcel within the District by more than ten percent (10%) above what would have been levied in the absence of such delinquencies or defaults.
Prepayment of Special Tax. The Special Tax obligation for an Assessor’s Parcel of Developed Property, Approved Property, Undeveloped Property, or Provisional Property that has been included in a Final Map may be prepaid in full, or in part, and only if there are no delinquent Special Taxes with respect to such Assessor’s Parcel at the time of prepayment, provided that the terms set forth under Section F of the Rate and Method are satisfied.
The Prepayment Amount is calculated based on the Bond Redemption Amount plus Redemption Premium plus the Future Facilities Costs plus the Defeasance Amount plus the Administrative Fees and Expenses, less a credit for the resulting reduction in the Reserve Requirement for the Bonds, and less a credit for the resulting reduction in capitalized interest (if any), all as specified in APPENDIX A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX — Section F.” The Bonds are subject to extraordinary redemption from any such prepayments. See “THE BONDS — Redemption — Extraordinary Redemption from Special Tax Prepayments.”
Mandatory redemption of Bonds from Special Tax prepayments may result in the reduction in the otherwise expected yield on such Bonds if the Bonds were purchased at a price greater than par. See “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Special Tax Prepayments.” Estimated Debt Service Coverage. In connection with the issuance of the Bonds, the Special Tax Consultant will certify that the Maximum Special Tax that may be levied in each Fiscal Year on Assessor’s Parcels within the District classified as Taxable Property will be at least equal to the sum of: (i) 110% of Maximum Annual Debt Service on the Bonds and the Series 2021 Bonds; plus (ii) the Administrative Expenses Priority Amount of $50,000 that will escalate by two percent (2%) annually beginning July 1, 2022. Actual collections of the Special Tax will depend on the amount of Special Tax delinquencies.
Even if the Maximum Special Tax, if levied in accordance with the Rate and Method, would produce coverage levels which are higher than 110% of debt service in certain circumstances, because of the limitations imposed by Section 53321(d) of the Act, investors should assume that the maximum amount that could be levied in any Fiscal Year is the amount that would produce 110% of debt service due on the Bonds in the corresponding Bond Year.
Section 53321(d) of the Act provides that the special tax levied against any Assessor’s parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other Assessor’s parcel by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults.
Levy, Collection and Application of Special Taxes. The Special Taxes are levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes, although it is possible that the District could elect to provide handbills to property owners within the District.
25 The District will covenant in the Indenture that each year it will levy Special Taxes, subject to the maximum rates permitted under the Rate and Method, in an amount equal to the Special Tax Requirement (as defined in the Rate and Method) which includes, but is not limited to, sufficient, together with other amounts on deposit in the Special Tax Fund, to pay the principal of and interest on any Outstanding Bonds and Parity Bonds, to replenish the Reserve Account to the Reserve Requirement and to pay Administrative Expenses.
The District will make certain covenants in the Indenture which are intended to ensure that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to collect sufficient Special Taxes to pay debt service on the Bonds, Parity Bonds and Administrative Expenses when due.
First, the District will covenant in the Indenture that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.
Second, the District will covenant in the Indenture, to the maximum extent that the law permits it to do so, not to initiate proceedings to reduce the maximum Special Tax rates for the District.
Third, the District will covenant in the Indenture that, in the event that any initiative is adopted by the qualified electors within the District which purports to reduce the maximum Special Tax below the levels specified in the preceding paragraph or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. The District can provide no assurance that any such legal action will be successful. See the caption “SPECIAL RISK FACTORS — Proposition 218.”
Fourth, the District will covenant in the Indenture that it will not adopt any policy pursuant to the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District has first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due.
Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See the captions “THE DISTRICT—Direct and Overlapping Debt” and “SPECIAL RISK FACTORS—Direct and Overlapping Indebtedness.” There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described under the caption “SPECIAL RISK FACTORS.”
Collection of Special Taxes and Flow of Funds. The Special Taxes will be levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes, although it is possible that the District could elect to provide handbills to property owners within the District.
When the County apportions Special Taxes to the District, the District will transmit the Special Taxes to the Trustee for deposit in the Special Tax Fund established by the Indenture.
Covenant for Superior Court Foreclosure
The net proceeds received following a judicial foreclosure sale of property within the District resulting from a property owner’s failure to pay the Special Taxes when due are included within the Net Taxes pledged to the payment of principal of and interest on the Bonds under the Indenture.
Pursuant to Section 53356.1 of the Act, the City Council, as the legislative body of the District, may covenant for the benefit of the Owners of the Bonds to commence and diligently pursue a Superior Court action
26 to foreclose the lien within specified time limits to collect delinquent installments of Special Taxes. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District will covenant in the Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it (i) will commence judicial foreclosure proceedings against any parcel with either (A) at least four (4) consecutive installments of delinquent Special Taxes or (B) delinquent Special Taxes in excess of $10,000 on any one parcel, in each instance by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) will commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied for such Fiscal Year, and (iii) will diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided, however, that the District may elect to defer foreclosure proceedings on any parcel so long as the amount on deposit in the Reserve Account is at least equal to the Reserve Requirement, and such delinquencies will not cause moneys in the Reserve Account to be withdrawn on the next succeeding Interest Payment Date.
The District will covenant in the Indenture that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds.
Notwithstanding the foregoing, the Indenture provides that, if at any time, the County’s Teeter Plan (adopted pursuant to Sections 4701 through 4717 of the California Revenue and Taxation Code) is in effect and is made applicable to the District and the Special Taxes being levied in connection with the Bonds, the District may, in its discretion, elect not to commence any judicial foreclosure proceeding pursuant to the foregoing provisions or defer the commencement of such proceedings until such time as the District deems appropriate. See “District Not Included in Teeter Plan” below. If foreclosure is necessary and other funds (including amounts in the Reserve Account) have been exhausted, debt service payments on the Bonds could be delayed unless the foreclosure proceedings produce sufficient net foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See the caption “SPECIAL RISK FACTORS — Enforcement Delays — Bankruptcy” and “— FDIC/Federal Government Interests in Properties.” Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the net proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption “SPECIAL RISK FACTORS — Property Values.” Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.
The mere commencement of foreclosure proceedings will not assure a prompt and favorable resolution of Special Tax delinquencies. The ability of the District to foreclose the lien of delinquent unpaid Special Taxes may be limited. See “SPECIAL RISK FACTORS — Enforcement Delays — Bankruptcy” and “— FDIC/Federal Government Interests in Properties.” Moreover, even if a judgment of foreclosure and order of sale is obtained, the District must cause a notice of levy to be issued. Under current law, the property owner has 120 days from the date of service of the notice of levy in which to redeem the subject property. If the property owner fails to redeem the property and it is sold, the property owner’s only remedy is an action to set aside the sale, which action must be brought within 90 days of the date of sale. If such an action results in the setting aside of the foreclosure sale, the judgment is revived, and the District would be entitled to receive interest on the revived judgment as if the sale had not been made. Under former law a property owner had a period of one year within which to redeem property to be sold, and the constitutionality of the legislation that eliminated the one year redemption period has not been tested.
27 There can be no assurance that, even if the subject property is sold, the proceeds from such sale will be sufficient to pay the delinquent installments of the Special Tax. The Act does not require the District or any other governmental agency to purchase or otherwise acquire any Assessor’s Parcel being sold if there is no other purchaser at such sale. The Act does require that property being sold pursuant to foreclosure under the Act must be sold for not less than the judgment amount (which must include reasonable attorneys’ fees, together with interest, penalties, and other authorized charges and costs) plus post judgment interest and authorized costs, unless a lower bid price is authorized by the Owners of not less than 75% by value of the Bonds Outstanding.
Special Tax Fund
Except for Prepayments, which will be deposited with the Trustee, together with a Certificate of Authorized Representative designating such Special Taxes as Prepayments and specifying the respective amounts to be deposited in the various funds and accounts held under the Indenture. The Trustee will, on or promptly after each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. In general, the Indenture provides that the Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates, in the amounts and in the following order of priority, to:
First: To the Administrative Expenses Account in an amount up to the Administrative Expenses Priority Amount.
Second: To the Interest Account, an amount such that the balance in the Interest Account three (3) Business Days prior to each Interest Payment Date is equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.
Third: To the Principal Account, an amount such that the balance in the Principal Account three (3) Business Days prior to September 1 of each year, commencing September 1, 2022, is equal to the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.
Fourth: To the Redemption Account, the amount needed to make the balance in the Redemption Account three (3) Business Days prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1 and thereafter, to pay the principal and premium, if any, due in connection with an optional redemption of Bonds or Parity Bonds; provided, in the event of a shortfall of amounts on deposit in the Special Tax Fund (such shortfall being determined excluding amounts on deposit in, and prior to drawing upon, the Reserve Account) to make the transfers to the Principal Account and to the Redemption Account (pursuant to the paragraph immediately above and this paragraph) necessary to pay in full both (x) the principal payment due on the Bonds and any Parity Bonds maturing on the applicable September 1 and (y) the Sinking Fund Payment due on any Outstanding Bonds and any Parity Bonds on such September 1, the Trustee shall transfer the available amount from the Special Tax Fund to the Principal Account and the Redemption Account on a pro rata basis (calculated with reference to the respective principal payment and Sinking Fund Payment coming due and payable on such September 1) at least three (3) Business Days prior to such September 1.
Fifth: To the Reserve Account of the Special Tax Fund to the extent necessary to replenish the Reserve Account to the Reserve Requirement.
28 Sixth: To the Rebate Fund established by the Indenture to the extent directed by the City pursuant to the Indenture.
Seventh: To the Surplus Fund established by the Indenture such remaining amounts in the Special Tax Fund after making the foregoing transfers as soon as practicable after each September 1, and in any event prior to each October 1. Unless on or prior to such date, the Trustee has received a Certificate of Authorized Representative directing that certain amounts be retained in the Special Tax Fund because the District has included such amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes in such Fiscal Year.
Reserve Account of the Special Tax Fund
In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the Bonds, to deposit in the Reserve Account and thereafter to maintain in the Reserve Account an amount equal to the Reserve Requirement. The Reserve Requirement may be satisfied by crediting to the Reserve Account moneys or one or more Reserve Policies or any combination thereof, which in the aggregate make funds available equal to the Reserve Requirement. “Reserve Requirement” with respect to the Bonds is defined in the Indenture to mean, as of the date of calculation an amount equal to the least of: (i) Maximum Annual Debt Service on the then Outstanding Bonds of such Series; (ii) 10% of the original amount of the Bonds (“amount” meaning the principal amount of the Bonds, unless the Bonds were issued with original issue discount greater than two percent of the principal amount, or original issue premium greater than the sum of two percent of the principal amount plus original issue premium attributable exclusively to reasonable underwriters’ compensation, in which case “amount” means issue price); or (iii) 125% of average Annual Debt Service on the then Outstanding Bonds of such Series; provided, if as of a date following the Delivery Date for the Bonds, the foregoing calculation results in an amount greater than the initial Reserve Requirement for the Bonds (calculated as of the Delivery Date for the Bonds), then the amount of the “Reserve Requirement” shall not increase and in such event shall mean the amount of the initial Reserve Requirement for the Bonds (calculated as of the Delivery Date for the Bonds) until such time as the foregoing calculation results in a lower amount.
Subject to the limits on the maximum annual Special Tax levy set forth in the Rate and Method and in the Indenture, the District will covenant in the Indenture to levy Special Taxes in an amount sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Account at the Reserve Requirement. Amounts in the Reserve Account are to be applied: (i) to pay debt service on the Bonds, or any Parity Bonds, including Sinking Fund Payments, to the extent that other monies are not available therefor; (ii) to redeem Bonds or Parity Bonds in the event of prepayment of Special Taxes, to optionally redeem Bonds or Parity Bonds or in connection with a partial defeasance of Bonds or Parity Bonds, so long as the amount on deposit in the Reserve Account following such redemption or partial defeasance equals the Reserve Requirement (taking into account Outstanding Bonds and Parity Bonds after such redemption or partial defeasance) and in accordance with the Indenture; and (iii) to pay any rebate requirements, to the extent of Net Taxes remaining following the deposits required by the Indenture each Bond Year to the Interest Account, the Principal Account, the Redemption Account, and to the Reserve Account if needed to replenish the Reserve Requirement. See “ — Special Tax Fund” above.
District Not Included In Teeter Plan
The Riverside County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”) which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. While the City’s ad valorem taxes are included in the Teeter Plan, the District will not be included in the Teeter Plan. Consequently, the District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payment.
29 Parity Bonds
The District may at any time after the issuance and delivery of the Bonds under the Indenture issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expenses Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds issued under the Indenture or under any Supplemental Indenture, provided, however, Parity Bonds may only be issued for the purposes of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding or for financing the Project Costs or other purposes of the District in an original principal amount not to exceed, together with the original principal amount of the Bonds, the Series 2021 Bonds and any new money Parity Bonds, $50 million. Parity Bonds issued are subject to certain specific conditions, which are made conditions precedent to the issuance of any such Parity Bonds, including but not limited to the following:
(a) The District is in compliance with all covenants set forth in the Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect has been filed with the Trustee; provided, however, that Parity Bonds may be issued if the District is not in compliance with all covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants.
(b) The issuance of such Parity Bonds has been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds has been provided for by a Supplemental Indenture duly adopted by the District containing the specifications set forth in the Indenture. (c) The District has received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Trustee (unless the Trustee shall accept any of such documents bearing a prior date):
(1) a certified copy of the Supplemental Indenture authorizing the issuance of such Parity Bonds;
(2) a written request of the District as to the delivery of such Parity Bonds; (3) an opinion of Bond Counsel and/or general counsel to the District to the effect that (a) the District has the right and power under the Act to adopt the Indenture and the Supplemental Indentures relating to such Parity Bonds, and the Indenture and all such Supplemental Indentures have been duly and lawfully adopted by the District, are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights); (b) the Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in the Indenture, subject to the application thereof to the purposes and on the conditions permitted by the Indenture; and (c) such Parity Bonds are valid and binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights) and the terms of the Indenture and all Supplemental Indentures thereto and entitled to the benefits of the Indenture and all such Supplemental Indentures, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture and all such Supplemental Indentures; and a further opinion of Bond Counsel to the effect that, assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds theretofore issued on a Tax-exempt basis, or the exemption from State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds theretofore issued;
30 (4) a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of the Indenture
(5) where the entire principal amount of the Parity Bonds is issued to refund the Bonds or other Parity Bonds, a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; (6) where the Parity Bonds are being issued other than to refund the Bonds or other Parity Bonds, a Certificate of the Special Tax Administrator certifying that (i) the maximum Special Taxes that may be levied in each Fiscal Year net of the Administrative Expenses Priority Amount is at least 110% of the Annual Debt Service in the Bond Year that begins in such Fiscal Year; and (ii) the Value of District Property is not less than four (4) times the sum of Direct Debt for District Property plus Overlapping Debt allocable to all property in the District subject to the Special Tax. For purposes of the foregoing Certificate of Special Tax Administrator, all calculations shall consider the Parity Bonds proposed to be issued to be Outstanding. If all or any portion of the Parity Bonds are issued as Escrow Bonds, each time that amounts are to be released from the escrow account established under a Supplemental Indenture, as a condition of such release, the Trustee shall have received a Certificate of the Special Tax Administrator certifying that (x) following such release, the requirements of (i) and (ii) above will be satisfied, and (y) the amount of Special Taxes levied in such Fiscal Year and to be levied in the following Fiscal Year, together with amounts on deposit in the Interest Account, will be sufficient to pay the principal of and interest on all Outstanding Bonds and Parity Bonds (other than the remaining Escrow Bonds). For purposes of any Escrow Bonds release test, there will be allocated to the property in the District the largest principal amount of Bonds that results in a Value of District Property at least four (4) times the sum of Direct Debt for District Property plus Overlapping Debt allocable to all property in the District subject to the Special Tax; and
(7) such further documents, money and securities as are required by the provisions of the Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds.
See “APPENDIX D — SUMMARY OF THE INDENTURE” for summary of other conditions precedent to issuance of such Parity Bonds.
Estimated Combined Debt Service Schedule
The following table presents an estimated debt service on the Bonds and the Series 2021 Bonds, assuming there are no optional or extraordinary redemptions. See the caption “— Redemption.”
Bond Year
Ending
(September 1)
Maximum
Special Tax from
Developed
Property
Maximum
Special
Tax at Buildout Annual Costs
2024 Debt
Service(1)§
2021 Debt
Service(1)*
Debt Service and
Administration
Debt Service
Coverage from
Developed
Property*
Debt Service
Coverage at
Buildout*
2024 $306,164 $1,977,670 $52,020 $306,940 $873,000 $1,231,960 21.54% 163.20% 2025 360,519 2,017,224 53,060 656,419 873,550 1,583,029 20.10 128.38 2026 367,729 2,057,568 54,122 670,356 873,800 1,598,278 20.31 129.74 2027 375,084 2,098,720 55,204 678,656 873,750 1,607,610 20.61 131.64 2028 382,586 2,140,694 56,308 691,531 873,400 1,621,239 20.85 133.19 2029 390,237 2,183,508 57,434 708,769 872,750 1,638,953 21.04 134.43 2030 398,042 2,227,178 58,583 724,519 871,800 1,654,902 21.27 135.85 2031 406,003 2,271,722 59,755 739,269 870,550 1,669,573 21.51 137.40 2032 414,123 2,317,156 60,950 753,019 874,000 1,687,968 21.71 138.67 2033 422,405 2,363,499 62,169 770,769 873,000 1,705,937 21.92 140.00 2034 430,853 2,410,769 63,412 782,269 871,400 1,717,081 22.22 141.95 2035 439,471 2,458,985 64,680 797,769 874,200 1,736,649 22.42 143.20 2036 448,260 2,508,164 65,974 817,019 871,200 1,754,193 22.64 144.66 2037 457,225 2,558,327 67,293 829,769 872,600 1,769,662 22.91 146.33 2038 466,370 2,609,494 68,639 846,269 873,200 1,788,108 23.13 147.77 2039 475,697 2,661,684 70,012 866,269 873,000 1,809,281 23.33 149.01 2040 485,211 2,714,918 71,412 879,100 872,000 1,822,512 23.63 150.96 2041 494,915 2,769,216 72,841 900,394 870,200 1,843,434 23.84 152.29 2042 504,813 2,824,600 74,297 919,638 872,600 1,866,535 24.02 153.46 2043 514,910 2,881,092 75,783 936,831 869,000 1,881,615 24.32 155.35 2044 525,208 2,938,714 77,299 956,975 869,600 1,903,874 24.52 156.65 2045 535,712 2,997,488 78,845 978,488 869,200 1,926,532 24.73 157.96 2046 546,426 3,057,438 80,422 997,313 872,800 1,950,534 24.92 159.19 2047 557,355 3,118,587 82,030 1,013,450 870,200 1,965,680 25.23 161.21 2048 568,502 3,180,959 83,671 1,036,900 871,600 1,992,171 25.40 162.29 2049 579,872 3,244,578 85,344 1,052,125 871,800 2,009,269 25.70 164.21 2050 591,469 3,309,469 87,051 1,073,400 870,800 2,031,251 25.94 165.75 2051 603,299 3,375,659 88,792 1,096,100 873,600 2,058,492 26.12 166.87 2052 615,365 3,443,172 90,568 1,119,950 - 1,210,518 46.86 299.35 2053 627,672 3,512,035 92,379 1,144,675 - 1,237,054 46.76 298.74 _______________________
(1) Debt service for each Bond Year ending September 1 will be paid from Special Taxes collected during the immediately preceding fiscal year. For example, debt service for the Bond Year ending September 1, 2024 will be paid from Special Taxes levied and collected during Fiscal Year ending June 30, 2024.
Source: The Underwriter.
§ Preliminary, subject to change.
THE DISTRICT
General Description of the District
The District is located north of Frank Sinatra Drive, south of Gerald Ford Drive, west of Cook Street and east of Portola Avenue. The area is locally known as “University Park,” due to the location immediately west of the facilities and future facility expansion area of the satellite campus of California State University, San Bernardino and University of California at Riverside, at the northeast corner of Frank Sinatra Drive and Cook Street.
The District consists of approximately 175 gross acres. As of January 1, 2024, UPI is responsible for approximately 28% of the Fiscal Year 2023-24 Special Tax, Toll is responsible for approximately 47.5% of the Fiscal Year 2023-24 Special Tax, and individual homeowners are responsible for approximately 24.6% of the Fiscal Year 2023-24 Special Tax. See “SPECIAL RISK FACTORS — Concentration of Ownership” herein. The Project is made up of five separate project areas which are planned to included 1,069 units at buildout consisting of eight product types of for-sale single-family detached homes, for-sale attached townhomes and for-rent multifamily apartments and single-family homes.
The Project is being developed by UPI, the master developer within the District. UPI is managed by MVP, who manages the day-to-day operations and development of the Project. Toll is responsible for the development and sale of 169 lots in Area No. 3 of the Project. Individual homeowners own 105 lots within Area No. 1, as of January 1, 2024.
See the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT” for further information with respect to the District, UPI, Toll, MVP and development within the District.
Investment in the Bonds involves risks that are not appropriate for certain investors. Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS” for a discussion of certain risk factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds.
A map showing the location of the District appears following the Table of Contents.
Formation Proceedings
The District was formed on April 22, 2021 pursuant to the Act. The Act was enacted to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.
Pursuant to the Act, on March 11, 2021, the City Council adopted Resolution No. 2021-05 (the “Resolution of Intention”), stating its intention to form the District and to authorize the levy of a special tax on the taxable property within the District, and Resolution No. 2021-06, stating its intention to incur bonded indebtedness in an aggregate principal amount not to exceed $50,000,000 for the purpose of financing the purchase, construction, expansion or rehabilitation of certain public facilities to serve the area within the District.
Subsequent to a noticed public hearing on April 22, 2021, the City Council adopted certain resolutions (collectively, the “Resolution of Formation”). The Resolution of Formation: (i) established the District; (ii) authorized the levy of a special tax (the “Special Tax”) within the District; (iii) determined the necessity to incur bonded indebtedness in an amount not to exceed $50,000,000 within the District; and (iv) called an election within
33 the District on the proposition of incurring bonded indebtedness, levying the Special Tax and setting an appropriations limit.
On May 13, 2021, an election was held within the District in which the property owners within the District approved the proposition authorizing the issuance of bonds in an amount not to exceed $50,000,000 to finance the purchase, construction, modification, expansion, improvement or rehabilitation of certain real or other tangible property described in the Resolution of Formation, which are generally comprised of storm drainage, street improvements, landscaping and irrigation, public open space and recreational facilities and other public facilities of the City and water, sewer and other public facilities of CVWD. A Notice of Special Tax Lien for the District was recorded in the office of the County Recorder on May 25, 2021, as Document No 2021-0320187. On May 27, 2021, the City Council adopted Ordinance No. 1365 (the “Ordinance”) which authorizes the levy of a special tax pursuant to the Rate and Method of Apportionment approved at the May 13, 2021, election (the “Rate and Method”), a copy of which is attached hereto as Appendix A. The Ordinance will become effective 30 days from the date of adoption. Any successful challenge of the Ordinance, if not cured, may have an adverse impact on the ability of the District to levy the Special Taxes necessary to pay debt service on the Bonds.
The City, the District and UPI have entered into that certain Acquisition Agreement pursuant to which the City will acquire from UPI certain storm drainage, street improvements, landscaping and irrigation, public open space and recreational facilities and other public facilities.
The City, CVWD and UPI also entered into that certain Joint Community Facilities Agreement, dated June 8, 2021, pursuant to which CVWD would acquire from UPI certain water and sewer improvements to be owned by CVWD.
The District expects to issue additional series of bonds up to the remaining balance of bond authorization, which bonds are expected to be secured by Net Taxes on a parity with the Bonds and Series 2021 Bonds. Such Parity Bonds are expected to be issued once development progresses in the District. See “SPECIAL RISK FACTORS – Effect of Parity Bonds on Credit Quality.”
Description of Authorized Facilities
The City, the District and UPI have entered into that certain Acquisition Agreement pursuant to which the City will acquire from UPI certain street improvements, storm drainage, landscaping and irrigation, public open space and recreational facilities, and other improvements to be owned by the City. Proceeds of the Bonds are expected to be used to pay for a portion of such acquisition.
The City, CVWD and UPI have also entered into that certain Joint Community Facilities Agreement pursuant to which CVWD will acquire from UPI certain water and sewer system improvements to be owned by CVWD. Proceeds of the Bonds are expected to be used to pay for a portion of such acquisition.
The expected total cost of the facilities eligible to be financed with the proceeds of bonds to be issued by the District (the “Facilities”), based on the current estimated cost of the Facilities, is approximately [$__________]. The Facilities consist of street and bridge improvements, curbs and gutters, sidewalks, trails, medians, traffic signalization and signage, street lights, utilities, storm water drainage, on and off-site detention and treatment facilities, and landscaping and irrigation related thereto, sewer collection and conveyance facilities, land and facilities for parks and recreational uses, fire facilities and equipment, library facilities and equipment, transit facilities, fiber optic telecommunication facilities, general government office, administrative and meeting facilities, bus and rapid transit facilities and land, rights of way and easements necessary for any of such facilities.
The cost of the Facilities necessary to serve the property within the District, based on current estimates, is expected to exceed the amount of proceeds of the Series 2021 Bonds, the Bonds and future Parity Bonds available to finance such Facilities. The costs of the Facilities in excess of available proceeds from the sale of the
34 Bonds and future Parity Bonds that may be issued by the District have been and are expected to continue to be paid for by UPI. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT” below.
Direct and Overlapping Debt
The ability of an owner of land within the District to pay the Special Taxes could be affected by the existence of other taxes and assessments imposed upon the property. These other taxes and assessments which secure direct and overlapping debt outstanding in the District are set forth in Table 1 below (the “Debt Report”).
The Debt Report sets forth those entities which have issued debt and does not include entities which only levy or assess fees, charges, ad valorem taxes or special taxes. See “—Expected Tax Burden” below for information regarding other entities levying taxes, assessments or other charges on property in the District. The Debt Report includes the principal amount of the Bonds. The Debt Report has been derived from data assembled and reported to the District by the County as of July 1, 2023. None of the District, the City, or the Underwriter has independently verified the information in the Debt Report and do not guarantee its completeness or accuracy.
As discussed under “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments,” the property within the District may be subject to additional taxes and assessments imposed by other public agencies in the future. Table 1 below does not include any authorized and unissued debt of other agencies.
TABLE 1
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
DIRECT AND OVERLAPPING DEBT
Appraised Value as of December 15, 2023: $176,855,000
DIRECT AND OVERLAPPING ASSESSMENT DEBT: % Applicable
Debt as of
July 1, 2023
Desert Community College District General Obligation Bonds 0.028% $ 137,598 Palm Springs Unified School District General Obligation Bonds 0.074 308,256 City of Palm Desert Community Facilities District No. 2021-1 - Series 2024
100.000 12,000,000
City of Palm Desert Community Facilities District No. 2021-1 - Series 2021
100.000 14,650,000
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT
DEBT
$27,095,854
OVERLAPPING GENERAL FUND DEBT:
Riverside County General Fund Obligations 0.008% $ 54,278 Riverside County Pension Obligation Bonds 0.008 59,159
TOTAL OVERLAPPING GENERAL FUND DEBT $ 113,437
OVERLAPPING TAX INCREMENT DEBT (SUCCESSOR AGENCY): $ 510,870 COMBINED TOTAL DEBT $27,720,161(1)
Ratios to Appraised Value:
Direct Debt ($26,650,000) 15.07%
Total Direct and Overlapping Tax and Assessment Debt 15.32% Combined Total Debt 15.67%
_______________________
(1) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Source: California Municipal Statistics, Inc., Special Tax Consultant.
35 Expected Tax Burden
Table 2 below sets the effective tax rate of the smallest floorplan by products, based on sale prices provided by UPI.
The expected tax burden of the Special Taxes and other taxes and assessments on individual parcels located within the District will vary among parcels. Actual amounts charged and the effective tax rates may vary and may increase or decrease in future years.
TABLE 2
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
ESTIMATED SPECIAL TAXES
Land Use
Class Land Use Type
Building Square
Footage
Assigned
Special Tax per
Residential
Unit Fiscal
Year
2023-24
Developed
Property
Fiscal Year
2023-24 (1)
Special Taxes
for Fiscal Year
2023-24
Developed
Property (2)
Assigned Special
Tax per
Residential Unit
Fiscal Year
2024-25 (3)
Developed
Property
Fiscal Year
2024-25 (3)
Estimated
Special Taxes
for Fiscal Year
2024-25
Developed
Property (3)
Number of
Units at
Buildout
Projected Special
Tax Revenues at
Buildout (4)
Zone
1 Single Family Property Greater Than 2,500 $2,392.92 0 $ 0.00 $2,440.78 0 $ 0.00 13 $31,730.12 2 Single Family Property 2,400 - 2,499 2,314.89 10 23,148.90 2,361.19 12 28,334.25 12 28,334.25 3 Single Family Property 2,300 - 2,399 2,262.87 25 56,571.75 2,308.13 28 64,627.57 96 221,580.23 4 Single Family Property 2,200 - 2,299 2,184.84 10 21,848.40 2,228.54 10 22,285.37 18 40,113.66 5 Single Family Property 2,100 - 2,199 2,106.81 9 18,961.29 2,148.95 9 19,340.52 36 77,362.06 6 Single Family Property 2,000 - 2,099 2,002.77 11 22,030.47 2,042.83 11 22,471.08 42 85,798.67 7 Single Family Property 1,900 - 1,999 1,664.64 11 18,311.04 1,697.93 14 23,771.06 55 93,386.30 8 Single Family Property 1,800 - 1,899 1,612.62 15 24,189.30 1,644.87 17 27,962.83 53 87,178.24 9 Single Family Property Less than 1,800 1,326.51 0 0.00 1,353.04 0 0.00 64 86,594.57 Zone
1 Single Family Property Greater Than 3,400 3,147.21 0 0.00 3,210.15 0 0.00 24 77,043.70 2 Single Family Property 3,200 - 3,399 3,095.19 0 0.00 3,157.09 0 0.00 24 75,770.25 3 Single Family Property 3,000 - 3,199 2,991.15 0 0.00 3,050.97 0 0.00 48 146,446.70 4 Single Family Property 2,800 - 2,999 2,913.12 10 29,131.20 2,971.38 13 38,627.97 55 163,426.03 5 Single Family Property 2,600 - 2,799 2,783.07 13 36,179.91 2,838.73 15 42,580.97 59 167,485.15 6 Single Family Property 2,400 - 2,599 2,731.05 11 30,041.55 2,785.67 14 38,999.39 80 222,853.68 7 Single Family Property 2,200 - 2,399 2,705.04 0 0.00 2,759.14 0 0.00 0 0.00 8 Single Family Property 2,000 - 2,199 2,679.03 0 0.00 2,732.61 0 0.00 27 73,780.49 9 Single Family Property Less than 2,000 2,574.99 10 25,749.90 2,626.49 12 31,517.88 27 70,915.22 Zone
1 Single Family Property Greater Than 2,500 2,392.92 0 0.00 2,440.78 0 0.00 0 0.00 2 Single Family Property 2,400 - 2,499 2,314.89 0 0.00 2,361.19 0 0.00 0 0.00 3 Single Family Property 2,300 - 2,399 2,262.87 0 0.00 2,308.13 0 0.00 0 0.00 4 Single Family Property 2,200 - 2,299 2,184.84 0 0.00 2,228.54 0 0.00 0 0.00 5 Single Family Property 2,100 - 2,199 2,106.81 0 0.00 2,148.95 0 0.00 0 0.00 6 Single Family Property 2,000 - 2,099 2,002.77 0 0.00 2,042.83 0 0.00 0 0.00 7 Single Family Property 1,900 - 1,999 1,664.64 0 0.00 1,697.93 0 0.00 0 0.00 8 Single Family Property 1,800 - 1,899 1,612.62 0 0.00 1,644.87 0 0.00 0 0.00 9 Single Family Property Less than 1,800 1,326.51 0 0.00 1,353.04 0 0.00 0 0.00 10 Apartment Property 780.30 0 0.00 795.91 0 0.00 336 267,424.42 11 Non Residential Property N/A 0 N/A N/A 0 N/A 0 N/A
Totals 135 $306,163.71 155 $360,518.89 1,069 $2,007,223.76 ______________________
(1) Under the Rate and Method, property is classified as “Developed Property” for special tax levy purposes if a building permit has been issued for the parcel prior to May 1 of the previous fiscal year. See “SECURITY FOR THE BONDS -- Rate and Method of Apportionment of Special Taxes” and “APPENDIX B -- Rate and Method of Apportionment of Special Taxes.” Based on Building Permits issued as of May 1, 2023. (2) Represents the Special Taxes levied on Developed Property for Fiscal Year 2023-24. (3) Represents the Assigned Special Tax for Developed Property in Fiscal Year 2024-25 and Developed Property assuming Building Permits as of December 15, 2023. (4) Represents the Assigned Special Tax for Developed Property in Fiscal Year 2024-25 assuming all Residential Units are developed in accordance with the development plan through buildout.
Source: Willdan Financial Services.
Appraisal Report
As a result of the requirements of Article XIIIA of the California Constitution, a property’s assessed value is not necessarily indicative of its market value. In order to provide information with respect to the market value of the fee simple estate by parcel of taxable property within the District, the City engaged the Appraiser, to prepare the Appraisal Report. The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land-secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City, the Underwriter or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The Appraisal Report is intended to comply with the appraisal guidelines of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the Uniform Standards of Appraisal Practice, adopted by the Appraisal Standards Board of the Appraisal Foundation. The City instructed the Appraiser to prepare its analysis and report in conformity with City-approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as “APPENDIX C — APPRAISAL REPORT” to this Official Statement.
The purpose of the Appraisal Report was to estimate the market value of the fee simple estate by parcel of property within the District. The estimate of market value assumes that eligible fees proposed for the District have been paid. Subject to the assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of the Date of Value, the market value of property within the District was $176,855,000. In valuing the property within the District, the Appraiser used a sales comparison approach for each of the parcels of Taxable Property within the District.
Reference is made to APPENDIX C for a complete list of the Appraiser’s assumptions and limiting conditions and a full discussion of the appraisal methodology and the basis for the Appraiser’s opinions. In the event that any of the assumptions and limiting conditions are not actually realized, the value of the property within the District may be less than the amount reported in the Appraisal Report. In any case, there can be no assurance that any parcels of Taxable Property within the District would actually sell for the amount indicated by the Appraisal Report.
The Appraisal Report is a statement of the Appraiser’s opinion as to the market value of the taxable property in the District as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future. See “SPECIAL RISK FACTORS — Property Values.” It is a condition precedent to the issuance of the Bonds that the Appraiser deliver to the District a certification to the effect that, nothing has come to the attention of the Appraiser subsequent to the date of the Appraisal Report that would cause the Appraiser to believe that the value of the property in the District is less than the value reported in the Appraisal Report. However, the Appraiser notes that acts and events may have occurred since the date of the Appraisal Report which could result in both positive and negative effects on market value within the District. Neither the City nor the Underwriter makes any representation as to the accuracy of the Appraisal Report. See “APPENDIX C — APPRAISAL REPORT.” There is no assurance that the property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the landowner. See “SPECIAL RISK FACTORS — Property Values” and “APPENDIX C — APPRAISAL REPORT.”
Estimated Appraised Value-to-Lien Ratios
Table 3 below sets forth the estimated appraised value-to-lien ratio for the Taxable Property within the District based on the appraised value of each parcel as of the Date of Value, as set forth in the Appraisal Report, the principal amount of the Bonds and the Series 2021 Bonds and the Fiscal Year 2024- 25 Special Tax. Based on the principal amount of the Bonds and the Series 2021 Bonds, the estimated appraised value-to-lien ratio of the Taxable Property within the District is 6.64:1**. This ratio does not include overlapping debt within the District. See “— Direct and Overlapping Indebtedness” above. Taking the overlapping debt into account, which consists of overlapping general obligation debt, the ratio of the aggregate appraised value of the Taxable Property within the District to the total principal amount of the Bonds is approximately 6.38:1*.
TABLE 3
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
APPRAISED VALUE-TO-LIEN RATIOS BY OWNER AND DEVELOPMENT STATUS Property Owner
Land Use
Classification(1)
No. of
Residential
Lots
Appraised
Value(2)
Percentage
of
Appraised
Value
2021 & 2024
Bonds(3)
Value-to-Lien
Ratio(4)*
Est. 2024-25
Special Tax(5)
Percentage
of Total
Fiscal Year
2024-25 Est.
Special Tax Levy
Individuals Single Family Property 102 $ 69,895,000 39.5% $ 4,000,473 17.47:1 $ 237,631 15.0% UPI Single Family Property 53 26,365,000 14.9 2,068,795 12.74:1 122,888 7.8 UPI/Toll Approved 250 50,180,000 28.4 11,691,824 4.29:1 694,503 43.9 UPI Undeveloped 664 30,415,000 17.2 8,888,907 3.42:1 528,007 33.4 Totals 1,069 $176,855,000 100.0% $26,650,000 6.64:1 $1,583,029 100.0% _______________________________
(1) Based on building permits issued as of December 15, 2023. Under the Rate and Method, property is considered “Developed Property” for special tax levy purposes if a building permit has been issued for the assessor’s parcel prior to May 1 preceding the applicable tax year. See “SECURITY FOR THE BONDS -- Rate and Method of Apportionment of Special Taxes” and “APPENDIX A -- Rate and Method of Apportionment of Special Taxes”. (2) Based on the Appraisal dated January 5, 2024, with a December 15, 2023 date of value. See “APPENDIX C -- Appraisal Report”. (3) Allocated based on percentage of Assigned Special Tax on Developed Property at buildout. (4) Value-to-Lien Ratio is calculated as “Appraised value” divided by “Principal Amount of Bonds”. (5) Based on Assigned Special Tax on Developed Property, and includes the Administrative Expense Priority Amount of $50,000 for Bond Year 2021 and escalating 2% annually beginning July 1, 2022 and to be used to pay administrative expenses. See “THE DISTRICT -- Estimated Special Taxes and Debt Service Coverage” for more details.
Source: Willdan Financial Services.
** Preliminary, subject to change.
Table 4 below sets forth the estimated appraised value-to-lien ratio for Taxable Property within the District based on the category.
TABLE 4
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
APPRAISED VALUE-TO-LIEN RATIOS BY CATEGORY
VTL Category(1)
No. of
Residential
Lots
Appraised
Value(2)
Percentage of
Appraised
Value
2021 & 2023
Bonds(3)*
Value-to-Lien
Ratio(4)*
Est. Fiscal Year
2024-25
Special Tax(5)*
Percentage of Total
Fiscal Year 2024-25 Est.
Special Tax Levy*
Not Greater than 3.00:1 32 $ 6,488,621 3.7% $ 2,362,150 2.75:1 $ 140,313 8.9%
3.01:1 to 6.00:1 796 56,908,416 32.2 15,971,897 3.56:1 948,742 59.9
6.01:1 to 9.00:1 76 15,168,082 8.6 2,029,069 7.48:1 120,528 7.6
9.01:1 to 12.00:1 24 9,448,722 5.3 878,184 10.76:1 52,165 3.3 Greater than 12.00:1 141 88,841,160 50.2 5,408,701 16.43:1 321,281 20.3 Totals 1,069 $176,855,000 100.0% $26,650,000 6.64:1 $1,583,029 100.0% _____________________________
(1) Based on building permits issued as of December 15, 2023. Under the Rate and Method, property is considered “Developed Property” for special tax levy purposes if a building permit has been issued for the assessor’s parcel prior to May 1 preceding the applicable tax year. See “SECURITY FOR THE BONDS -- Rate and Method of Apportionment of Special Taxes” and “APPENDIX B -- Rate and Method of Apportionment of Special Taxes”. (2) Based on the Appraisal dated January 5, 2024, with a December 15, 2023 date of value. See “APPENDIX C -- Appraisal Report”. (3) Allocated based on percentage of Assigned Special Tax on Developed Property at buildout. (4) Value-to-Lien Ratio is calculated as “Appraised value” divided by principal amount of bonds. (5) Based on Assigned Special Tax on Developed Property, and includes the Administrative Expense Priority Amount of $50,000 per Bond Year 2021 and escalating 2.00% annually beginning July 1, 2022, to be used to pay administrative expenses. See “THE DISTRICT -- Estimated Special Taxes and Debt Service Coverage” for more details.
*Preliminary, subject to change.
Source: Willdan Financial Services.
Table 5 below sets forth the special tax collections and delinquencies for the fiscal years below:
TABLE 5
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
SPECIAL TAX COLLECTIONS AND DELINQUENCIES(1)
Delinquencies at Fiscal Year End Delinquencies as of September 2023 Fiscal Year
Parcels
Levied
Amount
Levied
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Amount
Delinquent
Percent
Delinquent
2021-22(1) 10 $922,163 0 $ 0 0.00% 0 $0 0.00%
2022-23 243 969,306 0 0 0.00 0 0 0.00
2023-24(2) 405 978,724 N/A N/A N/A N/A N/A N/A
________________________
(1) No levy prior to Fiscal Year 2021-22.
(2) No delinquency data available for Fiscal Year 2023-24 levy.
Source: Willdan Financial Services.
Table 6 below sets forth the estimated total effective tax rate for Fiscal Year 2022-23.
TABLE 6
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
ESTIMATED TOTAL EFFECTIVE TAX RATE
VALUES
Zone 1 Class 8
Detached
1,800 to 1,899
Sq. Ft.
Zone 2 Class 9
Detached
Less than
2,000
Sq. Ft.
Zone 3 Class 8
Detached
1,800 to 1,899
Sq. Ft.
Median Base Price(1) $593,000.00 $695,900.00 $578,900.00 Less: Homeowner’s Exemption (7,000.00) (7,000.00) (7,000.00) Estimated Net Assessed Value $586,000.00 $688,900.00 $571,900.00 AD VALOREM PROPERTY TAXES(2)
Basic Levy 1.0000% $ 5,860.00 $ 6,889.00 $ 5,719.00
Palm Springs Unified School District 0.1449 849.29 998.42 828.85 CV Water District 0.1100 644.60 757.79 629.09
Desert Community College 0.0395 231.47 272.12 225.90
Total $ 7,585.36 $ 8,917.33 $ 7,402.85
ASSESSMENTS, SPECIAL TAXES AND CHARGES
FC Coachella Valley Mosquito & RIFA(2) $ 14.38 $ 14.38 $ 14.38 Palm Desert Emergency Services(2) 60.00 60.00 60.00
Coachella VL RC/PK TP 97-1
(2) 62.40 62.40 62.40
CVWD Sewer’s Service Charge(2) 348.48 348.48 348.48
City of Palm Desert CFD 2021-1 Special Tax(3) 1,612.62 2,574.99 1,612.62 Total $ 2,083.50 $ 3,045.87 $ 2,083.50
PROJECTED TOTAL PROPERTY TAXES $ 9,668.86 $11,963.20 $ 9,486.35 Estimated Effective Tax Rate 1.63% 1.72% 1.64%
_______________________
(1) Based on the Appraisal dated February 23, 2023, with a February 1, 2023 date of value. See “APPENDIX C – Appraisal Report.” (2) Based on the Fiscal Year 2022/2023 tax bills for subject property. (3) Based on the Rate and Method.
Source: Willdan Financial Services.
41 Largest Taxpayer
Based on ownership status as of January 1, 2024, UPI will be responsible for approximately 53% of the projected Fiscal Year 2024-25 Special Tax levy and Toll will be responsible for approximately 32% of the projected Fiscal Year 2024-25 Special Tax Levy. Individual property owners will be responsible for approximately 15% of the projected Fiscal Year 2024-25 Special Tax levy. See the caption “SPECIAL RISK FACTORS — Concentration of Ownership.” Fiscal Year 2021-22 was the first year the Special Tax is levied on property within the District.
Increasing Mortgage Interest Rates
Most of the purchasers of the homes finance their acquisitions with mortgage financing. As such, rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements or increased monthly mortgage costs could have a negative impact on the estimated absorption rates of UPI’s and Toll’s planned for-sale homes in the District. Further, a combination of higher mortgage rates, delays in construction stemming from delays in the supply chain, homebuyers’ inability to sell their existing homes and adverse changes in local, regional or national economic conditions, among other factors, could contribute to an increase in UPI’s and Toll’s rate of home order cancellations. An increase in the level of such cancellations could similarly have a negative impact on the estimated absorption rates of UPI’s and Toll’s planned for-sale homes in the District.
Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which UPI and Toll can complete the remaining future homes, and demand by, and the ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, further impacts of the COVID-19 pandemic and global market instability caused by the war in Ukraine. Any adverse impact of the foregoing and other economic factors on the Project in the District and the real estate market in general cannot be predicted.
42 PROPERTY OWNERSHIP AND THE DEVELOPMENT
The information about the property ownership contained in this section of the Official Statement has been provided by UPI and Toll and has not been independently confirmed or verified by the Underwriter, the City or the District. No assurance can be given that the proposed development will occur as described in this Official Statement or that it will be completed in a timely manner, if at all, or that UPI and Toll will continue to own the property. Neither the Bonds nor the Special Taxes are personal obligations of UPI, Toll, or any affiliate thereof, and, in the event that a property owner defaults in the payment of its Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of such property owner or any affiliate thereof. Neither the Underwriter, the City nor the District make any representation as to the accuracy or adequacy of this information. Further, there may be material adverse changes in this information after the date of this Official Statement.
Property Ownership
The table below shows the ownership of taxable property within the District, as of January 1, 2024. Special Taxes were not levied on undeveloped property in Fiscal Year 2023-24.
TABLE 7
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
PROPERTY OWNERSHIP
(As of January 1, 2024)
By Actual Fiscal Year By Fiscal Year 2023-24 By Fiscal Year 2023-24 Owner 2023-24 Levy Amount Taxable Parcels Taxable Acreage Individuals $240,409.72 24.6% 105 25.5% 12.92 10.3%
UPI 273,798.84 28.0 137 33.3 86.50 69.1
Toll 464,515.38 47.5 169 41.1 25.69 20.5
Total $978,723.94 100.0% 411 100.0% 125.11 100.0%
________________________
Source: UPI.
As of January 1, 2024, UPI has commenced construction on Area No. 1 and Area No. 3. UPI has closed on 105 homes to individual homeowners and 21 homes are under contract to be closed in the next year. See “PLAN OF FINANCE” herein and “— Proposed Development and Current Development Status” below.
The Developer
Acquisition of the Project. UPI purchased the vacant land constituting the Project on August 4, 2017 for $20,000,000. The prior sale of the property along with an additional 21.36 acres that is not included in the District occurred in August 2005 for $120,000,000. Lennar Homes purchased a portion of the 21.36 acres adjacent to the District that is entitled for 196 residential units on December 23, 2020 for $14,577,000. On November 29, 2023, UPI sold 169 lots in Area No. 3 to AG EHC II Toll CA 2 LP for $34,304,000.
Ownership Structure and Experience. As of January 1, 2024, UPI is the owner of approximately 69.1% of the Taxable Property within the District. Toll is responsible for approximately 20.5% of the Taxable Property within the District. Individual homeowners own approximately 10.3% of the Taxable Property within the District.
UPI - UPI is a single purpose entity formed to develop the Project. UPI is managed by MVP pursuant to that certain Amended and Restated Limited Liability Company Agreement of University Park Investor. UPI is an investment entity, wholly owned by University Park Aggregator, LLC (“UPA”), which in turn is owned by various investment management clients for the purpose of investing in the Project.
43 UPA is managed by BlackRock Financial Management, Inc. (“BlackRock”). MVP is managing the dayto-day operations and development of the Property. The key individuals of MVP who are responsible for the development of the Property are seasoned real estate professionals with significant experience in master planned community development, having worked at KB Home and Trumark Companies. The principals of MVP developed Jordan Ranch, a partnership between MVP and its investors, and a different BlackRock managed entity, which acquired, entitled, developed, and sold 933 finished lots in Dublin, California. From 2008 through 2019, Jordan Ranch produced over $283 million in revenues, $147.5 million in profits, with a 27.5% internal rate of return.
Toll – [TO COME]
Proposed Development and Current Development Status
No assurances can be made that UPI, AG EHC or any future owner of property within the District will have the resources, willingness, and ability to successfully complete development activities on the property within the District. No representation is made as to the ability (financial or otherwise) of UPI, AG EHC or any future owner of property within the District to complete development as currently planned. Moreover, the development and financing plans described below are as of the dates indicated; UPI, Toll will continue to evaluate the real estate market and make adjustments to the development and financing plans as determined necessary by UPI and Toll.
Background and Entitlement Status. The Final Map for TR 37506-1 was recorded on March 17, 2021 and the Final Map for TR 37506-2 was recorded on September 29, 2022. UPI has pulled 168 building permits in Area No. 1 as of January 1, 2024. Area No. 1 is entitled for 236 single family residential units. Area No. 2 is entitled for 146 single family residential units. Area No. 3 is entitled for 169 single family residential units. Area No. 4 is entitled for 72 single family residential units and 110 townhomes. Area No. 5 is entitled for 336 apartment units. An environmental impact report was prepared and approved in 2016 and an addendum was completed in 2018, a Phase I Environmental Site Assessment was prepared by Sladden Engineering (“Sladden”) dated May 9, 2016 and a soils report was prepared by Sladden dated August 10, 2005 and updated May 10, 2018.
Infrastructure Development. Area No. 1 is currently under construction with 105 units closed to individual homeowners. Area No. 3 is in a near finished state. UPI is currently constructing improvements, which include: storm drains, sanity sewer system, water facilities, streets, signals, landscaping, and site amenities. Site development for Area No. 1 is complete and site development for Area No. 3 is near completion. Approximately 58% of the budgeted improvements are complete.
Once improvements have been completed to serve each lot and fees have been paid the City will issue building permits. A special services agreement with CVWD lists the water system backup facility fee payment requirements and the timing of construction of an offsite well for the Project necessary for water service. CVWD typically charges this fee prior to each water meter/service and it will credit UPI’s lump sum payments against these fees. UPI’s total costs for eligible and non-eligible horizontal improvements for all five areas, including the fees, is expected to be approximately $56.52 million.
Perimeter public streets for the Project have been installed. The Project will tie into the utility mains in these streets and complete all onsite grading and public/private street improvements in a phased fashion. The current schedule anticipates all work by UPI on the Project to be completed by the end of 2026. Set forth below is an estimate of the infrastructure development costs, the approximate percentage complete and the approximate remaining cost to complete that will be undertaken by UPI. The estimate does not include any work that will be done by merchant builders. The table below provides a status of the construction improvements, not including service and fee items.
44 TABLE 8
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
STATUS OF INFRASTRUCTURE IMPROVEMENTS
(As of January 1, 2024)
Construction Improvements
Actual/Estimated
Total Costs
Actual
Costs
Incurred
Approximate
Percentage
Complete
(Project-Wide)
Approximate
Remaining
Cost to
Complete
Demolition $ 135,000 $ 85,000 63% $ 50,000
Mobilization/Site Preparation 938,609 448,957 48 489,652 Grading to “Blue Top” 4,913,297 2,088,133 42 2,825,165
Retaining Walls 1,855,598 1,280,818 69 574,780
Erosion Control 423,099 219,641 52 203,368
Storm Drainage 1,272,478 653,793 51 618,685
Sanitary Sewer 2,538,250 1,574,359 62 963,891
Domestic Water 4,574,362 2,655,935 58 1,918,427
Street Improvements 7,037,644 4,514,287 64 2,523,357
Dry Utilities 3,687,861 2,174,681 59 1,513,180
Landscaping and Irrigation 4,087,773 2,283,022 56 1,804,751 Site Amenities 8,510,789 5,478,357 64 3,032,432
Walls and Fencing 3,035,036 1,503,509 50 1,531,527
Subtotal Construction Costs $43,009,705 $24,960,492 58 $18,049,213 Contingency 6,451,456 3,744,074 58 2,707,382
Total Construction Costs $49,461,161 $28,704,566 58% $20,756,595 ________________________
Source: UPI.
The table below shows the service and fee items in UPI’s budget for the Project.
TABLE 9
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
SERVICE AND FEE ITEMS BUDGET
(As of January 1, 2024)
Service and Fee Items
Actual/Estimated
Total Costs
Actual
Costs
Incurred
Approximate
Percentage
Complete
(Project-Wide)
Approximate
Remaining
Cost to
Complete
Consulting Services $2,979,476 $1,898,354 64% $1,081,122 Subdivision Bonds 597,561 346,305 58 251,256
Entitlement Fees 71,212 40,484 57 30,728
Permit, Plan Check, and Inspection Fees 1,328,699 960,867 72 367,832 Development Impact Fees 1,952,142 1,711,971 88 240,171
Subtotal Services & Fees $6,929,089 $4,957,981 72 $1,971,108 Contingency 138,582 99,160 72 39,422
Total Services & Fees $7,067,671 $5,057,141 72% $2,010,530 _______________________
Source: UPI.
Home Development and Sales. The Project is made up of five separate project areas being developed in different areas, which are planned to include 1,069 units at buildout consisting of eight product types of for-sale
45 single-family detached homes, for-sale attached townhomes and for-rent multifamily apartments. Below is a map of the Project.
[INSERT MAP]
Area No. 1 consisting of 236 home sites and Area No. 3 consisting of 169 homes sites are under construction. The horizontal improvements for Area No. 1 are complete and the estimated cost to build the 236 homes (excluding the cost of land) is an additional approximately $31.1 million (or $33.9 million inclusive of soft costs). Area No. 1 is expected to be built out in February of 2026. The estimated cost to complete the horizontal improvements for Area No. 3 is approximately $850,0000 and the estimated cost to build the 169 homes (excluding the cost of the land) is an additional approximately $58.3 million (or $53.2 million inclusive of soft costs). Future areas are anticipated to begin horizontal improvements and construction in April 2024 (Area No. 2), July 2024 (Area Nos. 5) and January 2025 (Area No. 4). Area Nos. 2 and 4 will be delivered in blue top condition with onsite backbone streets, and no private in-tract work. Area No. 5 is currently contemplated for the development of for-rent multifamily apartments and will be delivered as a super pad.
In mid-July 2021, UPI and CVWD clarified the status and estimated timing of CVWD’s construction of the reservoir facilities under the Water Installation Agreement, for which UPI is required to contribute 14.5% of the cost based on the estimated peak day domestic water demands and required fire flow for the Project. The reservoir facilities have been completed and are operational. The anticipated phasing plan as of January 1, 2024, is set forth below.
PHASING PLAN
Area Product Quantity Construction Start
1 Village E 110
Village D (portion) 78
Village F (portion) 48
236 In Process
2 Village D (portion) 48
Village G 98
146 April 2024
3 Village C 120
Village F (portion) 49
169 In Process
4 Village H 72
Village A 110
182 July 2025
5 Apartments 336 July 2024
Total Number of Projected Residential
Units:
1,069
______________________
Source: UPI.
As of January 1, 2024, the current estimated product mix for the homes for sale within the District and their anticipated base prices is set forth below.
The table below reflects projected sales prices of residential units to end users and, therefore, excludes the 336 for-rent apartment units currently proposed for Area 5 of the Project.
TABLE 10
CITY OF PALM DESERT
COMMUNITY FACILITIES DISTRICT NO. 2021-1
(UNIVERSITY PARK)
PROPOSED UNIT MIX (HOMES FOR SALE)
(excludes for-rent apartment units proposed for Area 5) Village Unit Type
No.
Available
Average
Home
Size
Average
Lot Size
Average
Base
Price
Average
Base
Price/SF Options Premiums
Total
Price
Price
per SF
Village A Townhome 110 1,742 1,800 $426,790 $245 $29,619 $ 6,188 $462,598 $266 Village C Single-Family
(60x100)
120 2,954 6,000 708,960 240 49,202 10,280 768,442 260
Village D Single-Family (55x90) 126 2,550 4,950 690,889 271 57,312 31,174 799,375 306 Village E Single-Family (2-Pac) 110 2,188 4,050 606,980 277 30,668 17,884 655,532 300 Village F Single-Family (Alley) 97 2,168 3,200 581,910 268 37,148 21,339 640,397 295 Village G Single-Family
(50x100)
98 2,653 5,000 655,200 247 45,471 9,500 710,171 268
Village H Single-Family (4-Pac) 72 2,214 3,750 553,500 250 38,413 8,026 599,939 271 SF Total/Weighted Avg: 733 2,371 4,171 $608,934 $257 $41,722 $15,536 $666,193 $281 __________________________
Source: UPI.
An agreement between UPI and Woodbridge Homes (“WPG”) (Woodbridge Pacific Group https://woodbridgepacific.com) to develop the 236 homes in Area No. 1 was signed on March 30, 2021. The contract provides for UPI to issue a license to WPG to build homes per the City-approved architectural plans.
Upon sale to an individual homebuyer, UPI will initially convey the parcel to WPG, and WPG will convey the home to the individual homebuyer. UPI will retain responsibility for paying the Special Taxes on property until the property is transferred to the homeowners. WPG provided a deposit of over $1 million that was released to UPI upon expiration of the final due diligence period. The deposit will be applied ($5,000/lot) to the base lot price paid to UPI. UPI will provide the capital necessary for WPG to construct the homes and earn a market return on this capital. Additionally, there is a profit sharing arrangement whereby UPI will receive 75% of the net sales proceeds after WPG pays UPI for: (i) costs to build the home plus a return on those costs; (ii) the base price of the lot; and then WPG receives a: (a) return of their overhead, and (b) agreed upon profit margin.
For Areas 2 and 4, UPI intends to perform the horizontal development and sell finished or blue top lots to builders as soon as practically feasible. Area 5 is planned for an apartment project and UPI intends to sell the site to an apartment developer that will be responsible for a majority of the land development costs. Area 5 could be sold and developed at any time.
The anticipated schedule as of January 1, 2024 of lot sales to builders, construction of homes and is set forth below.
ESTIMATED CONSTRUCTION AND SALES SCHEDULE
Area
Horizontal
Improvements Begin Lot Sales Begin Home Sales Begin
3 In process In process March 2024
2 April 2024 Q2 2024 January 2025
4 January 2026 Q2 2024 January 2025
_______________________
Source: UPI.
Financing Plan.
UPI - UPI has committed to invest up to $76.6 million toward the development of the property within the District. That investment amount included the land purchase price of $20 million, as well as additional investment of up to $56.6 million to complete UPI’s portion of the improvements to the property. The Project is not expected to be financed with debt financing nor is there existing debt financing on the property.
Notwithstanding the belief of UPI that it will have sufficient funds to complete its planned development in the District, no assurance can be given that sources of financing available to UPI will be sufficient to complete the property development, that UPI will be able to sell to builders and that home construction will be completed as currently anticipated. If and to the extent that financing is inadequate to pay the costs to complete UPI’s planned development in the District and other financing is not put into place, there could be a shortfall in the funds required to complete the proposed development by UPI, UPI may not able to sell to builders and portions of the Project may not be developed.
The development and financing plans discussed above are solely projections as of the dates indicated in this Official Statement. Such plans are subject to change. No assurance can be given that such plans will remain in their current state or that the plans will ultimately be carried out according to the discussions set forth above.
Toll – [TO COME]
50 SPECIAL RISK FACTORS
The Bonds have not been rated by any rating agency, and the purchase of the Bonds involves significant risks that are not appropriate for certain investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. The Bonds have not been rated by a rating agency. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due.
Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See “— Property Values” and “— Limited Secondary Market” below.
The principal source of payment of debt service on the Bonds will be payments of the Special Tax made with respect to the Taxable Property. As discussed under “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS — Special Taxes,” the Special Tax is to be levied annually against all such Taxable Property either at the maximum rate authorized by the Rate and Method or at such lower rates as are determined by the District Administrator to raise sufficient funds to comply with the agreements, conditions, covenants and terms contained in the Indenture, and in accordance with the Act. The Special Tax is to be collected on the tax roll of the District at the same time and in the same manner as general ad valorem real property taxes are collected. The Special Tax cannot be levied at a tax rate higher than the maximum tax rate even if the maximum tax rate will not produce sufficient Net Taxes to pay the principal and interest then payable with respect to the Bonds. See discussions below under “— Levy of the Special Tax” and “— Collection of the Special Tax.” Payment of the Special Tax levied on a parcel is secured by a continuing lien against such parcel. In the event an installment of the Special Tax included in the tax bill for a parcel of Taxable Property is not paid when due, the District has covenanted to institute foreclosure proceedings in court to cause the parcel to be sold in order to attempt to recover the delinquent amount from the sale proceeds. Foreclosure and sale may not always result in the recovery of the full amount of delinquent installments of the Special Tax. See “— Collection of the Special Tax.” The sufficiency of the foreclosure sale proceeds to cover the delinquent amount depends in part upon the market for and the value of the parcel at the time of the sale. Sufficiency of the foreclosure sale proceeds to cover a delinquency may also depend upon the value of prior or parity liens and similar claims. Further, other governmental claims, such as hazardous substance claims, may affect the realizable value even though such claims may not rise to the status of liens. See “— Hazardous Substances.” Timely foreclosure and sale proceedings with respect to a parcel of Taxable Property may be forestalled or delayed by a stay in the event the owner of the parcel becomes the subject of bankruptcy proceedings. Not only may foreclosure and sale proceedings be forestalled or delayed, but the sale of a parcel may also be similarly affected by a bankruptcy stay. Further, should the stay not be lifted, payment of the Special Tax may be subordinated to bankruptcy law priorities. See “— Enforcement Delays — Bankruptcy.” Although bankruptcy proceedings may forestall or delay a foreclosure and sale or a tax sale of a delinquent parcel of Taxable Property, the Special Tax is secured by a lien which, assuming proper procedures are followed, may be enforced against the parcel. There may not be any recourse against a bankrupt property owner since the owner is not personally obligated to pay the Special Tax. Further, if proper disclosure of the authorization of the Special Tax is not made to the owner, the willingness or ability of an owner to pay the Special Tax may be adversely affected. See “— Payment of the Special Tax is Not a Personal Obligation of the Owners.” The District is not obligated to advance funds to pay such debt service except from moneys on deposit in the Reserve Fund. See “— Limited Obligations.”
51 Even if debt service is timely paid, interest on the Bonds may have to be included in the gross income of the owner of the Bonds by reason of some circumstance occurring subsequent to issuance of the Bonds, thereby reducing the after-tax yield. See “— Loss of Tax Exemption.” Concentration of Ownership
UPI will be responsible for the payment of approximately 53%, Toll will be responsible for the payment of approximately 32%, and individual homeowners will be responsible for approximately 15% of the projected Special Taxes levied on Taxable Property within the District in Fiscal Year 2024-25. A number of factors, many of which are beyond the control of UPI and Toll could have an adverse impact on the development of the Project, value of the Project and UPI’s and Toll’s willingness or ability to pay Special Taxes, including adverse changes in the national economy, failure of the development to proceed as planned, competition from other residential development in the vicinity of the District. energy costs, governmental rules and policies (including changes in zoning and land use), potential environmental and other liabilities, and tax laws affecting real estate. There may be an adverse impact on the development of the Project and UPI’s and Toll’s willingness or ability to pay Special Taxes. The timely payment of the principal of and interest on the Bonds depends upon the willingness and ability of UPI, Toll and future landowners in the District to pay the Special Taxes when due. The willingness and ability of the owners of UPI and Toll, as well as other property owners, to pay property taxes and the Special Taxes could be adversely affected by changes in general or local economic conditions, fluctuations in the real estate market and other factors. A description of the Project, Toll, and UPI is set forth under the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” The City, the District, the Municipal Advisor, and the Underwriter make no representation as to the accuracy or completeness of such information. Failure of UPI and Toll (or any future owner of a significant amount of taxable property within the District) to pay Special Taxes when due could cause the depletion of the Reserve Account held under the Indenture prior to reimbursement from the resale of foreclosed property and repayment of the delinquent Special Taxes. In such an event, there may be insufficient revenues from Special Taxes to meet the District’s obligations under the Indenture. In that event, there could be a delay or failure in payments of the principal of and interest on the Bonds.
Risks of Real Estate Secured Investments Generally
The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation: (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which may result in uninsured losses; (iv) adverse changes in local market conditions; and (v) increased delinquencies due to rising mortgage costs and other factors.
No assurance can be given that the property owners within the District will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption “— Enforcement Delays — Bankruptcy” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels.
Construction Risks
There can be no assurance that the development, construction and completion will be accomplished on schedule and within budget. The failure of any or all of these measures or the realization of other development, construction or completion risks, including, but not limited to, delays in the issuance of required permits or other necessary approvals, strikes, shortages of materials, fire, adverse sub-surface conditions and adverse weather conditions, could result in a failure to complete or a delay in the completion; or an increase in the cost of the completion, or both. No assurance can be made that UPI would have sufficient funds to complete construction in
52 the event of a significant cost overrun. Any such failure or cost increase may adversely affect UPI’s ability or willingness to pay the Special Taxes as they become due and payable.
Insufficiency of Special Tax Revenues
As discussed below, the Special Taxes may not produce revenues sufficient to pay the debt service on the Bonds either due to nonpayment of the amounts levied or because acreage within the District becomes exempt from taxation due to the transfer of title to a public agency.
In order to pay debt service on the Bonds, it is generally necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established a Reserve Account under the Indenture to be maintained in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent other funds are not available. See “SOURCES OF PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.” The District will covenant in the Indenture to maintain in the Reserve Account an amount equal to the Reserve Requirement, subject, however, to the availability of Net Taxes in amounts sufficient to do so and to the limitation that the District may not levy the Special Tax in any Fiscal Year at a rate in excess of the maximum amounts permitted under the Rate and Method. See Appendix D hereto. As a result, if a significant number of Special Tax delinquencies occurs within the District, the District could be unable to replenish the Reserve Account to the Reserve Requirement due to the limitations on the amount of the Special Tax that may be levied. If such defaults were to continue in successive years, the Reserve Account could be depleted and a default on the Bonds could occur.
The Act provides that, if any property within the District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested in the courts, but it is doubtful that they would be upheld as to, for example, property owned by the federal government. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Special Tax, the Special Tax will be reallocated to the remaining taxable parcels within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon their willingness and/or ability to pay the Special Tax. Moreover, if a substantial portion of additional land within the District became exempt from the Special Tax because of public ownership, or otherwise, the Maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default will occur with respect to the payment of such principal and interest.
The District will covenant in the Indenture that, under certain circumstances, it will institute foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales” for provisions which apply in the event of such foreclosure and which the District is required to follow in the event of delinquencies in the payment of the Special Tax.
In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds (if the Reserve Account has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City on behalf of the District of the proceeds of sale. The District may adjust the future Special Tax levied on taxable parcels in the District, subject to limitations described above under the caption “THE DISTRICT—Rate and Method of Apportionment,” to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to replenish the Reserve Account to an amount