Through the LRSP the City continues its safety efforts by identifying areas of emphasis and systemic recommendations to enhance safety for all road users. The consulting firm Kimley-Horn worked with City staff to develop the LRSP.
DISCUSSION
The LRSP is a prerequisite for obtaining certain grant funds made available under various federal, state, regional, and local programs. The Council’s adoption of the LRSP will help strengthen the City’s standing when applying for future transportation grants with a focus on enhancing transportation safety in Palmdale. For example, a Council-adopted LRSP is required when applying through the US Department of Transportation’s (USDOT) Federal Highway Administration (FHWA) for funding toward improvements to surface roadways, including pedestrian and bicycle infrastructure.
The LRSP may be accessed at: https://cityofpalmdale.mysocialpinpoint.com/stp.
FISCAL IMPACT
$0; There is no fiscal impact associated with this action.
STRATEGIC PLAN
Goal II: Ensure long-term fiscal health of the City and maintain funding for services.
D. Pursue alternative financing opportunities for continued infrastructure improvements and quality community programs.
Goal III: Invest in infrastructure to improve community livability.
C. Plan and maintain safe and attractive neighborhoods, streets, facilities, and public spaces with exciting programming that promotes active fun for everyone.
Prepared by: Leonardo Torres, P.E.,
Director of Public Works
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Ronda Perez, City Manager
Approved as to form: William P. Curley, III, City Attorney
ATTACHMENTS
Reso. No. CC 2024-084
Local Road Safety Plan
PPT Local Road Safety Plan
CITY COUNCIL
CITY OF PALMDALE, CALIFORNIA
RESOLUTION NO. CC 2024-084
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE, TO ADOPT THE CITY OF PALMDALE LOCAL ROAD SAFETY PLAN.
WHEREAS, the City of Palmdale adopted Resolution No. CC 2024-084 on November 20, 2024, to establish a Local Road Safety Plan (LRSP) for the City of Palmdale. The LRSP has been developed by our consultant team, City staff, representatives of various state, county and local governmental agencies, the public and other stakeholder organizations; and
WHEREAS, the City of Palmdale wants to enhance traffic safety, and equity within its communities; and
WHEREAS, the City of Palmdale is committed to improving safety for all road users through patterns that have been identified in a crash analysis. The goal of the LRSP is to reduce traffic collisions with strategic investment, and help the City reach our goal of zero transportation fatalities; and
WHEREAS, certain grants from federal, state, regional and local programs require cities to adopt a LRSP to receive transportation funding. The LRSP, attached herein; and
NOW THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF
PALMDALE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:
SECTION 1. The City LRSP is hereby adopted.
SECTION 2. The City Council hereby directs the City Clerk to submit a certified copy of this Resolution to the Los Angeles County Recorder for recordation. /
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Resolution No. CC 2024-084
SECTION 3. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED and ADOPTED this 20th day of November, 2024. _________________________________
Austin Bishop
Mayor
APPROVED AS TO FORM: ATTEST:
___________________________ _________________________________ William P. Curley, III Rochelle Scott
City Attorney City Clerk
I, Rochelle, City Clerk of Palmdale, California, do hereby certify that the foregoing resolution was duly passed, approved, and adopted by the City Council of the City of Palmdale at a regular meeting of said Council held on the 20 th day of November, 2024 by the following roll call vote:
AYES:
NOES:___________________________________________________________ ABSTAIN:______________________ABSENT:___________________________ Date:
Rochelle Scott, City Clerk
1 (Per Section 148 of Title 23, United States Code [23 U.S.C. §148(h) (4)] REPORTS
DISCOVERY AND ADMISSION INTO EVIDENCE OF CERTAIN REPORTS, SURVEYS,AND INFORMATION—Notwithstanding any other provision of law, reports, surveys, schedules, lists, or data compiled or collected for any purpose relating to this section, shall not be subject to discovery or admitted into evidence in a Federal or State court proceeding or considered for other purposes in any action for damages arising from any occurrence at a location identified or addressed in the reports, surveys, schedules, lists, or other data.)
SIGNED BY ____________________________
2 Table of Contents
Executive Summary ................................ ................................ ................................ ................................ . 3 Introduction ................................ ................................ ................................ ................................ ............. 6
2. Vision and Goals ................................ ................................ ................................ ................................ . 8
3. Process ................................ ................................ ................................ ................................ ............... 9
4. Safety Partners ................................ ................................ ................................ ................................ .. 10
5. Existing Efforts................................ ................................ ................................ ................................ ... 11
6. Data Summary................................ ................................ ................................ ................................ ... 12
7. Analysis Methodology ................................ ................................ ................................ ........................ 13
8. Best Practices Evaluation and Emphasis Areas ................................ ................................ ................. 21
9. Countermeasure Toolbox................................ ................................ ................................ ................... 23
10. Funding Sources & Next Steps ................................ ................................ ................................ ........ 28 APPENDIX A – Safety Education ................................ ................................ ................................ ........... 34 APPENDIX B – Conceptual Plans ................................ ................................ ................................ .......... 37
Table of Figures
FIGURE 1: AGGRESSIVE COLLISIONS HEAT MAP AND TRAFFIC CONCERN ................................ ....................... 15 FIGURE 2: VULNERABLE USER COLLISIONS NEAR SCHOOLS ................................ ................................ ......... 17 FIGURE 3-UNSIGALIZED INTERSECTION COLLISIONS ................................ ................................ .................... 19
Table of Tables
TABLE 1 - TOP 10 SCHOOLS WITH HIGHEST COLLISIONS ................................ ................................ ............... 16 TABLE 2- UNSIGNALIZED INTERSECTION EPDO ................................ ................................ ........................... 18 TABLE 3: CITYWIDE SAFETY COUNTERMEASURE TOOLBOX ................................ ................................ .......... 27
3 Executive Summary
The City of Palmdale adopted a Sustainable Transportation Plan on June 7, 2023, and the Local Roadway Safety Plan (LRSP) is an addendum to that plan. The LRSP identifies additional emphasis areas to inform and guide further safety evaluation of the City’s transportation network.
The plan analyzes crash data previous ly used in the Sustainable Transportation Pla n. With discussion from City Staff, and the public, new specific locations were identified . The Local Roadway Safety Plan is built off the analysis of the Safety Plan section of the Sustainable Transportation Plan. Although the methodology is similar, new analysis was conducted based on additional project locations, and emphasis areas. The Local Roadway Safety Plan is an addendum that s hows the Citys’ of Palmdale dedication to implement effective roadway safety strategies, such as traffic calming measures, improved signage and markings, pedestrian and cyclist-friendly infrastructure, and enhance driver education, and awareness programs. By actively addressing safety concerns and collaborating with local authorities and stakeholders, the City of Palmdale aims to create a safer and more efficient transportation network. Through the systemic analysis for both the Sustainable Transportation Plan and the Local Roadway Safety Plan it continues to align with the opportunity for the City to:
1. Identify factors in the transportation network that reduce safety for all roadway users;
2. Improve safety at specific high-crash locations, and reduce serious injury and fatal collisions, and
3. Develop safety measures using the four E’s of safety: Engineering, Enforcement, Education, and Emergency Response to encourage safer driver behavior and lower severity outcomes. With this plan, the City continues its safety efforts by identifying areas of emphasis and systemic recommendations to enhance safety.
The City’s vision is to enhance the transportation network and reduce traffic fatalities and serious injury related crashes, and the goals for the City of Palmdale are in support of General Plan Goal CM-1:
• Build and maintain a transportation system that is safe and comfortable for travelers of all modes regardless of age or ability.
As well as its sub-goals:
• CM-1.1 Roadway design. Design and maintain the public right-of-way through a complete streets approach that facilitates safe, comfortable, and efficient travel for all roadway users.
• CM-1.2 Modal conflicts. Use a systemic safety approach to proactively identify opportunities to improve safety where conflicts between users exist.
4 • CM-1.3 Network gaps. Identify and program mitigation measures for gaps and deficiencies in the transportation system to accommodate each major transportation mode.
• CM-1.4 Speed management. Include speed reducing elements along local and connector roadways and within all new private development projects.
The General Plan Goal CM-1 are furthered by this plan through these targeted objectives:
Objective #1: Identify high-risk crash zones.
Objective #2: Demonstrate the significance of a comprehensive safety program and the systematic approach.
Objective #3: Develop safety improvement plans for near-,mid-, and long-term.
Objective #4:Idenitfy safety projects for consideration of funding through HSIP and other program sources.
This plan analyzes a range of crash data (January 1, 2017 – December 31, 2021) and roadway characteristics to assess historic trends, and areas of increasing concern. While the COVID -19 pandemic altered traffic conditions a nd crash patterns in 2020 and 2021, these years were ultimately included to understand recent trends.
Furthermore, an analysis of collision history was conducted to identify location s that exhibit a higher risk of collisions, based on either their past collision history or their similarities to other locations with frequent collision pattern. Through a comprehensive network screening process, specific locations within the City were pinpointed as having the greatest impact with implementation of safety enhancements. Additionally, collision risk factors for the entire network were derived. These findings informed the identification and prioritization of engineering and non- infrastructure safety measures aimed at addressing specific roadway characteristics and behaviors that contribute to motor vehicle collisions involving active transportation users.
Emphasis areas were developed by revisiting the vision and goals developed at the beginning of the planning process and comparing them with the trends and patterns identified in the c ollision analysis.
Emphasis Area #1: Unsignalized Intersection Improvements Emphasis Area #2: Vulnerable Road Users Improvements (Pedestrians & Bicyclists) Emphasis Area #3: Traffic Calming Improvement
The following 10 project locations were chosen as three (3) systemic projects and seven (7) corridor projects:
1. 30th Street East and Olive Drive
2. 30th Street East and Avenue Q
5 3. 20th St East : Avenue Q to Palmdale Boulevard
4. Avenue R-4 and 25th Street East
5. Avenue Q-7: 2nd Street East to Stanridge Avenue
6. 2nd Street East: Avenue Q-7 to Avenue Q-4
7. 3rd Street East: Palmdale Boulevard to Avenue Q-7
8. Division Street and Kimberly Lane
9. Avenue R-4 and Palm Vista Avenue
10. Cisero Drive and 57th Street East
These locations were identified through a comprehensive analysis process that considered various factors such as collision histories, stakeholder engagement, observed collision patterns, and differing characteristics. The goal was to gain valuable insights into potential systemic safety countermeasures that the City can implement to achieve cos t-effective safety benefits. It is important to note that these locations were not necessarily chosen based solely on the number of c ollisions, but rather on their di verse characteristics, providing a wide range of solutions applicable to most areas within the City. The findings from these project locations should not be seen as a prioritized project list, but rather as opportunities for systemic and corridor safety enhancements throughout the City.
Near-term action items were identified to accelerate the City’s achievement of the goals and vision of this LRSP. The City may:
• Actively seek other funding opportunities to improve safety for all modal users, • Collaborate with established safety partners & neighboring municipalities as improvements are made to create a cohesive transportation network, and • Iteratively evaluate existing and proposed transportation safety programs and capital improvements to design a safer transportation network in the City of Palmdale These recommendations provide the City of Palmdale with a look-ahead for safety improvements that can be applied systemically. Additionally, this information can be used to help the City apply for grants and other funding opportunities to implement these safety improvements.
To develop these countermeasures, references were made to both the California Local Roadway Safety manual (LRSM) and Caltrans Proven Safety Countermeasures, while adhering to the principles of the Safe System Approach. The potential benefit and cost of each countermeasure were evaluated. By extrapolating the potential benefits of these countermeasures to locations with similar design characteristics, proactive safety enhancements can be implemented, regardless of past collision history, to prevent future sa fety challenges. Additionally, this information can be utilized to support the City’s application for grants and other funding opportunities to implement safety improvements. Regular monitoring and updates will be conducted based on the analysis performed in this plan. A comprehensive plan update will be required five years after the City Council adopts this plan, which will maintain eligibility for HSIP funding.
6 Introduction
The Local Roadway Safety Plan identifies emphasis areas that will inform and guide further evaluation of the City’s transportation network. These areas include the type of crashes, specific locations, and notable relationships between current efforts and crash history. The plan analyzes crash data both in aggregate and at specific locations to identify areas with high crash rates, high- risk locations, and city -wide trends and patterns. This analysis of crash history throughout the City’s transportation network presents several opportunities:
1. Identify factors in the transportation network that reduce safety for all roadway users;
2. Improve safety at specific high-crash locations; and,
3. Develop safety measures using the four E’s of safety (Engineering, Enforcement, Education, and Emergency Response) to encourage safer driver behavior and lower severity outcomes.
Palmdale has taken steps to enhance all modal safety throughout the City and with this plan, Palmdale is continuing to prioritize safety in its planning processes. The Local Roadway Safety Plan serves as an addendum to the Sustainable Transportation Plan. It complements the broader goals and visions outlined in the Sustainable Transportation Plan by sp ecifically addressing the safety aspect of the City’s transportation network. By identifying emphasis areas and analyzing crash data, the Local Roadway Safety Plan helps inform and guide further safety evaluation and improvement efforts. This integration ensures that safety considerations are integrated into the overall planning and development of the City’s transportation system, promoting a holistic and sustainable approach to transportation. The following are the general six step process that was used as a framework when developing the Local Roadway Safety Plan (LRSP):
Step 1: Establish Leadership
Identify a Champion who will lead the LRSP development process.
Convene a Working Group to collaborate on the development of the plan.
Step 2: Analyze Safety Data
Gather relevant safety data, including crash data and other safety data sources.
Conduct data analysis to identify trends and patterns.
Step 3: Determine Emphasis Areas
Identify specific areas of focus for the LRSP based on the analysis of safety data.
Set objectives and performance measures for each emphasis area.
Step 4: Identify Strategies
7 Categorize and review potential strategies that can address the identified emphasis areas.
Propose ordinances and policies as necessary to support the strategies.
Step 5: Prioritize and Incorporate Strategies
Determine priorities among the identified strategies based on the objectives and performance measures.
Determine the intended implementation approach for each strategy.
Incorporate the strategies into the LRSP.
Step 6: Evaluate and Update the LRSP
Monitor the progress of implementing the strategies outlined in the LRSP.
Conduct periodic evaluations to assess the effectiveness of the plan.
Maintain the LRSP as a living document that can be updated and revised as needed.
The intent of the LRSP is to increase road safety awareness, reduce fatal and severe -injury crashes, develop partnerships, support grant applications, and prioritize investment in traffic safety.
8 2. Vision and Goals
The vision and goals for the Local Roadway Safety P lan aligns closely with those of the Sustainable Transportation Plan. Both plans aim to create a safe and sustainable transportation network for the city. They share a common goal of reducing crashes and improving the overall safety of the roadways. Additionally, both plans prioritize the integration of safety consideration into the planning and development process, ensuring that safety is a fundamental component of the City’s transportation system. Through ana lysis of historical data and trends, community outreach and input, and proactive identification, safety opportunities can be identified and implemented without relying solely on a reaction and response to crashes as they occur. By aligning their vision and goals, the Local Roadway Safety plan and the Sustainable Transportation Plan Safety Section work together to create a comprehensive and cohesive approach to roadway safety.
Goal #1: Identify areas with a high risk for crashes.
Objectives:
• Identify intersections and segments that would most benefit from mitigation. • Identify areas of interest with respect to safety concerns for vulnerable users (pedestrians and bicyclists).
Goal #2: Illustrate the value of a comprehensive safety program and the systemic process.
Objectives:
• Demonstrate the systemic process’ ability to identify locations with higher risk for crashes based on present characteristics closely associated with severe crashes. • Demonstrate, through the systemic process, the gaps and data collection activities that can be improved upon.
Goal #3: Plan future safety improvements for near-, mid- and long-term.
Objectives:
• Identify safety countermeasures for specific locations (conceptual plans). • Identify safety countermeasures that can be applied city-wide.
Goal #4: Define safety projects for future Highway Safety Improvement Plan (HSIP) and other program funding consideration.
Objectives:
• Create the outline for a prioritization process that can be used in this and forth-coming cycles to apply for funding.
• Use the systemic process to create Project Case Studies. • Use conceptual plans and the countermeasure toolbox to apply for Highway Safety Improvement Plan (HSIP) and other funding consideration. • Demonstrate the correlation between the proposed safety countermeasures with the Vision Zero goals of the City of Palmdale, Caltrans, SCAG, and the California State Highway Safety Plan.
9 3. Process
The LRSP and the Sustainable Transportation Plan share a similar process and methodology in identifying safety issues, involving stakeholders, and utilizing data to inform decision -making. In the development of the LRSP, the analysis includes a combination of quantitative and qualitative measures to identify locations with high crash frequency or crash rates. This analysis also considers crash type and severity patterns to determine the caus es of crashes and potential effective countermeasures. Both the LRSP and STP analyzed intersections and roadways utilizing four collision metrics for analysis:
• Number of Collisions- involves counting the total number of reported crashes that occurred at a specific intersection or roadway. It provides an overview of the frequency of collisions in that area.
• Critical Crash Rate (HSM Ch. 4)- quantifies the rate at which severe or fatal crashes occur within a given area or a specific roadway segment. A higher critical crash rate indicates a higher risk of severe accidents.
• Probability of Specific Crash Types Exceeding Threshold Proportion (HSM Ch. 4) - assesses the likelihood of specific types of crashes exceeding a predetermined threshold proportion. It helps identify crash types that occur more frequently than expected and require targeted interventions.
• Equivalent Property Damage Only (HSM Ch. 4) -estimates the total cost of crashes in terms of property damage. It allows for a comparison of crash severity and economic impacts across different intersections or roadways.
The LRSP establishes a systematic framework for identifying and analyzing safety concerns and proposing safety improvements . The LRSP utilizes updated data and incorporates additional analysis compared to the STP. This includes examining pedestrian and bicyclist collisions within a 250-foot radius near schools, conducting network screening using the Equivalent Property Damage Only Method, and analyzing traffic calming measures for areas with aggressive driving/traffic concerns.
In terms of countermeasure selection, both plans utilize evidence -based approaches. The LRSP incorporates Crash modification Factors (CMFs), which quantify the expected rate of crash reduction from specific countermeasures. By analyzing these collision metrics, the LRSP and STP can effectively assess the safety performance of the City’s roadway network and identify areas where targeted interventions may be necessary to improve safety and reduce the occurrence of severe crashes. More information about the analysis techniques and guidance of the LRSP can be found in the Safety Section in Palmdale’s Sustainable Transportation Plan in Section 3.
10 4. Safety Partners
To ensure that the local perspective was prioritized in the planning efforts local stakeholder were actively involved in the development of this report. Additionally, members of the public were engaged through Social Pinpoint, a website where the public ha d the opportunity to highlight specific issues areas within the city relating to local roadway safety. The city has subscribed access to Social Pinpoint, allowing for ongoing two-way communication with the public. The input and insights provided by the local stakeholders were invaluable in identifying safety issues within the city’s roadway network. Following the initial network screening and safety analysis, the stakeholder group convened to discuss potential countermeasures and emphasis areas. This included a field visit, where the stakeholders had the opportunity to observe and assess safety on selected parts of the transportation network firsthand. The summaries of the discussions and observations from the field visit are outlined below.
4.1 Field Visit Meeting
The field visit was conducted on December 7, 2023. At the meeting, stakeholders, including City officials were asked to provide local knowledge at the eight (8) locations that were identified after initial network screening and crash analysis process. This process was important to understand the factors that were contributing to the collision history. The working group then performed a field visit and walking tour of various location s through the city. The discussion during the field visit helped to inform the project development. Potential countermeasures were recommended, and emphasis areas were discussed, s pecifically vulnerable user improvements, unsignalized intersection improvements, and aggressive driving improvements.
4.2 Public Engagement
Two (2) public workshop/meetings were held to help the project team understand public areas of concerns, create public awareness of the plan, and to keep members of the public informed with the direction of the plan and the City’s response to roadway safety issues from input received from the public.
Both public meetings were held on March 7, 2024, at the Legacy Commons Senior Center. One meeting was held in the afternoon and the second meeting was held in the evening. The goal of these workshops was to introduce the project, present the crash analysis and other data, document and discuss resident concerns, and brainstorm potential traffic calming improvements.
Feedback received were documented and utilized by the LRSP team to further refine the projects that were developed for this plan.
The draft LRSP was posted to the City’s website in August 2024 for public viewing and comment.
11 5. Existing Efforts
At the beginning of the LRSP process, information was gathered on exiting plans, policies, and ongoing or recently completed projects related to transportation improvements in the City. A similar process was conducted for the Safety Plan in the STP. This compilation provided valuable insights into the efforts already underway in transportation-related improvements. Key points were identified related to transportation improvements and safety topics to inform decision-making in the LRSP. Reference Section 3 in the STP for additional information and a more detailed breakdown.
12 6. Data Summary
In alignment with the STP, this section provides an overview of the data sources utilized during the data analysis process. The same dataset was utilized to conduct further analysis. For a more comprehensive breakdown of the data, refer to Section 3 in the STP.
6.1 Roadway Network
The Caltrans California Road System (CRS) GIS database was used to build the base roadway network used for this analysis. Intersections and roadway segments were divided into control and classification categories so that each set could have its own crash rates and be compared with similar facilities or control type. Functional Classifications were imported from the City’s General Plan and confirmed by City Staff. Information on intersection traffic control was provided by the City and included in the analysis network. The collision analysis requires each intersection to be classified by type: Signalized or Unsignalized.
6.2 Count Data
Vehicular count data is used as part of the analysis process to evaluate the impact of traffic and understand the natural hierarchy of the roadway network. Count data utilized for this project was pulled from various studies and elements. For locations without volume or count data, other resources were utilized to identify a reasonable assumption for individual corridors and classification types. The traffic volume information allowed the team to assess locations for risk as well as reviewing locations with the highest number of collisions.
6.3 Collision Data
Collision data was collected from Crossroads software for the period from January 1, 2017 through December 31, 2021. Analysis of the raw collision data is the first step in understanding the specific and systemic challenges faced throughout the City. Analyzing the five years of data provided additional insight into collision trends and patterns above and beyond what was already reported in the STP.
13 7. Analysis Methodology
The Local Roadway Safety Plan was developed using a systematic and data-driven approach. The first step involved collecting data from Crossroads/SWITRS for the period of January 2017 to December 2021.
This data was then analyzed to identify patterns and trends, with a focus on factors such as crash frequency, severity, and contributing factors. Statistical techniques and Geographic Information System (GIS) were utilized to pinpoint specific areas or road segments that had a high concentration of crashes.
Contributing Factors
In order to effectively allocate resources, a prioritization process was developed after identifying areas of concentration. Various factors were taken into consideration, including the severity of crashes, intersection control type crashes, vulnerable users crashes, primary crash factor, traffic volume, and community concerns. This comprehensive prioritization approach ensured that the most critical areas received the necessary countermeasures for safety implementation:
The crash data helped identify the emphasis areas within the transportation network of the City of Palmdale:
1. Aggressive driving collisions (crashes due to speeding, following too closely, or running lights or stop signs)
2. Pedestrian/Bicyclist-involved collisions
3. Unsignalized Intersection collisions
The Local Roadway Safety Plan utilized the Sustainable Transportation Plan as a foundation to identify and prioritize intersections and segments with a higher frequency of crashes. While similar data from the STP was used, the Local Roadway Plan incorporated additional analysis to enhance the results. This allowed for the development of conceptual plans.
14 Aggressive Driving and Traffic Concerns
The analysis of aggressive driving and traffic concerns can help with the implementation of traffic calming measures by providing valuable insight into the specific problem areas and behaviors that contribute to unsafe and congested road conditions. By conducting an analysis of aggressive driving, such as speeding, following too closely, or running lights or stop signs, the locations where these behaviors are most prevalent can be identified. This information can be used to strategically implement traffic calming measures, such as roadway configuration or mini- roundabouts, in order to deter and reduce aggressive driving. Additionally, analyzing traffic concerns, such as congestion and bottle necks, can help identify areas where measures, such as signal optimization or lane configurations, can be implemented to improve traffic flow and reduce congestion. Analysis was conducted on aggressive driving in relation to traffic concerns.
Traffic concerns from the public were overlayed on aggressive driving collisions to identify locations for traffic calming measures shown in Figure 1. Top locations for traffic calming implementation include:
• Avenue R-4: 11th Street East to Prentiss Avenue
• Division Street: Avenue R-2 to 6th Street E
• Avenue R-8: 35th Street E to 67th Street E
• Fairfield Ave: 30th Street E to 37th Street E
• 57th Street E: Avenue S to Cisero Drive
• Avenue T: Fort Tejon Road to City Boundary
15 Figure 1: Aggressive Collisions Heat Map and Traffic Concern
16 Vulnerable Users Collisions
To enhance safety in the vicinity of schools, it is important to analyze pedestrian and bicycle collisions within a half-mile radius. This analysis helps identify the areas where collisions occur most frequently and the common contributing factors. By understanding these patterns, targeted countermeasures can be implemented to improve safety near schools. Examples of such countermeasures include installing additional crosswalks, improving signage and markings, or implementing bike lanes.
In the City of Palmdale, a comprehensive analysis was conducted to examine pedestrian and bicyclist collisions within a half-mile buffer around schools. Figure 2 visually represents the areas where these collisions occurred, while Table 1 highlights the top 10 schools with a high frequency of pedestrian and bicycle crashes.
By conducting this analysis and prioritizing the identified areas, the aim is to implement safety measures that specifically address the needs of these locations. This approach ensures that resources are allocated efficiently and effectively, resulting in a safer environment for pedestrians and bicyclists near schools.
Table 1 - 10 schools with highest number of nearby pedestrian and bicycle collisions Number School Name Pedestrian &
Bicycle
Crashes
Bicycle Crashes Pedestrian
Crashes
1 Palmdale High 31 12 19
2 Yucca Elementary 31 8 23
3 Space Aeronautics
Gateway to Exploration
Magnet Academy
30 10 20
4 Antelope Valley
Learning Academy
27 8 19
5 Chaparral Prep
Academy
27 8 19
6 Cimarron Elementary 24 9 15
7 Yellen Learning Center 21 6 15
8 Tamarisk Elementary 21 8 13
9 Palmdale Learning Plaza 17 4 13
10 Palmdale Aerospace
Academy
14 2 12
17 Figure 2: Vulnerable User Collisions Near Schools
18 Unsignalized Intersection improvements
An analysis was conducted to identify the top 10 stopped controlled intersections with the highest estimated property damage only (ePDO). ePDO is a weighting factor which calculates the equivalent cost of a crash in terms of property damage only which allows for prioritization of improvement efforts considering each intersections’ collision severity and frequency. This helps compare locations to each other based on economic cost for all crashes. The intersections with the highest ePDO are locations that can be selected for further investigation. Countermeasures can be applied at these intersections to reduce collisions and enhance safety.
Table 2- 10 Unsignalized Intersections ranked by Estimated Property Damage Only (ePDO) Intersection Intersection Type ePDO
110th E and Avenue O 2 way stop 636.01
25th St E and Avenue R-14 2 way stop 405.4
15th St W and Avenue O-12
(Antelope Valley Mall entrance)
2 way stop 396.8
E Challenger Way & E Columbia
Way
2 way stop 276.7
30th St E and Avenue Q 4 way stop 233.8
50th and Columbia 3 way stop 210
11th St E and Avenue Q-12 4 way stop 200.9
25th St E and Avenue Q 4 way stop 197.8
60th St W and Columbia 4 way stop 192.8
20th St E and Avenue Q 4 way stop 84.7
19 Figure 3-Unsigalized Intersection Collisions
20 The analysis of collisions at all-way, two-way, three-way stop locations, as well as the calculation of ePDO and the analysis of bicycle and pedestrian collisions within a ½ mile buffer from a school, have provided crucial insights for enhancing safety in the area. By identifying aggressive driving collisions and overlaying them with public traffic concerns, this analysis has played a significant role in addressing specific safety needs and traffic calming improvements. These plans will ultimately contribute to the creation of safer and more efficient transportation systems, ensuring the well-being of pedestrians, cyclists, and drivers alike. Overall, this analysis has been instrumental in identifying key areas for improvement and promoting the importance of safety in the City of Palmdale transportation network.
7.6 Conceptual Plan Locations
Appendix B summarize conditions at locations, and potential beneficial countermeasures.
Countermeasures were subjected to a benefit/cost assessment and selected according to their potential return on investment. These conceptual plans can be used to select the most appropriate countermeasures, and to potentially phase improvements. The potential benefits of these countermeasures at locations with similar design characteristics can then be extrapolated regardless of crash history, allowing for proactive safety enhancements that can prevent future safety challenges from developing. These conceptual plans can also be used to position the City for future grant funding opportunities.
For each location, conceptual plans were developed to provide a balanced understanding of common safety areas (aggressive driving, vulnerable users, stopped-controlled intersection collisions) at a variety of location types that can be used to associate countermeasures with specific roadway configurations and conditions.
21 8. Best Practices Evaluation and Emphasis Areas
8.1 Emphasis Areas
Emphasis areas represent crash factors that are common in the City and provide the opportunity to reduce the largest number of traffic injuries with strategic investment. Emphasis areas were developed by revisiting the vision and goals of this planning pro cess and comparing them with the trends and patterns identified in the crash analysis. Analysis conducted from the Sustainable Transportation Plan was also incorporated in the LRSP’s emphasis areas.
8.1.1 Emphasis Area #1: Stop Controlled Intersection Improvements Stopped Controlled intersection were analyzed for stopped control intersection collisions (1-way stop to 4 -way stops) For the purposes of this analysis, those that occurred within 250 feet of a stopped controlled intersection. Intersection collisions accounted for about 25.6% of all fatal and severe injury collisions and 39% of all collisions. 25 of the 92 fatal injury collisions occurred at stopped controlled intersections, and 36 of the 146 severe injury collisions occurred at stopped controlled intersections.
Goals for Emphasis Area #1:
• Reduce the number of collisions at stopped controlled intersections; • Identify hot spots for stopped controlled intersection collisions; and, • Apply for funding and implement countermeasures at City stopped controlled intersections.
Strategies for Emphasis Area #1:
• Address stopped controlled intersection collisions by implementing proven countermeasures;
• Identify priority corridors for stopped controlled intersections collisions and implement countermeasures on these corridors;
• Implement visibility and sight distance improvement at stopped controlled intersections. • Consider converting four-way stops to roundabouts if warranted by an intersection control evaluation; and,
• Install enhanced signing and pavement markings at stopped controlled intersections.
These strategies will be implemented by the City, while partnering with Caltrans, Southern California Association of Governments (SCAG), Los Angeles County Sheriff’s Department, and other community partners. Funding sources for these strategies may include HSIP, Active Transportation Program (ATP), OTS, SB 1, and SS4A grant programs.
8.1.2 Emphasis Area #2: Vulnerable Users Improvements
Vulnerable users’ safety near schools was a major concern of residents and a significant cause of severe injury and fatality crashes in Palmdale. 114 crashes (61.6%) were reported as pedestrian crashes .5 miles from schools. 49 crashes (66.2%) were reported as bicyclist crashes
22 .5 miles from schools. Vulnerable users’ crashes accounted for 23.2% of severe injuries and
30.4% in a fatality.
Goals for Emphasis Area #2:
• Reduce the number and severity of pedestrian and bicyclist crashes; • Identify hot spots and priority corridors for countermeasures to reduce vulnerable user crashes; and,
• Increase vulnerable user safety on Palmdale Streets
• Apply for funding to implement countermeasures to reduce impaired vulnerable crashes.
Strategies for Emphasis Area #2:
• Provide outreach, education, and enforcement programs to encourage safer driver behaviors near pedestrians and bicyclist around school zones. • Implement sidewalk improvements near schools
• Implement crosswalk enhancements near schools
• Develop educational programs targeting vulnerable users (bicyclists and pedestrians); • Additional enforcement presence;
• Create effective media campaigns in both visual and print media;
These strategies will be implemented by the City, law enforcement, and community organizations.
Funding sources for these strategies may include OTS, NHTSA, SB1 grant programs , HSIP, Active Transportation Program (ATP), and SS4A grant programs.
8.1.3 Emphasis Area #3: Aggressive Driving
Aggressive driving includes several behaviors including speeding, tailgating, and ignoring traffic signals and signs. 31.7% of those crashes resulted in aggressive driving. (28% of severe injuries and 22.8 % of fatal crashes were caused by aggressive driving).
Goals for Emphasis Area #3:
• Reduce the number and severity of collisions attributed to aggressive driving • Identify hot spots and priority corridors for aggressive driving; • Apply for funding and implement countermeasures to address aggressive driving Strategies for Emphasis Area #3:
• Implement driver’s education courses, implementing technology that effectively target crash producing speeders and deter speeding
• Increase enforcement to address aggressive driving behaviors that will mainly focus on education, encouragement, and enforcement; and,
• Increase enforcement near hotspots of aggressive driving collisions • Apply for funding and implement countermeasures to address aggressive driving; • Apply road design and engineering measures to obtain appropriate speeds
23 These strategies will be implemented by the City, law enforcement, and local community organizations. Funding sources for these strategies may include NHTSA, OTS, and SB1 grant programs.
9. Countermeasure Toolbox
This section provides information on general identified issues, crash reduction factors, improvements, and countermeasures identified for the City of Palmdale, as well as for specific project locations identified as part of this analysis. Countermeasures for each of the Safety Project Conceptual Plans are based on data analysis, stakeholder input, and site visits.
9.1 Infrastructure Improvements
9.1.1 Countermeasure Selection Process
Part D of the HSM provides information on Crash Modification Factors( CMFs) for roadway segments, intersections, interchanges, special facilities, and road networks. CMFs are used to estimate the safety effects of highway improvements, specifically to compare and select highway safety improvements. A CMF less than 1.0 indicates that a treatment has the potential to reduce crashes. A CMF greater than 1.0 indicates that a treatment has the potential to increase crashes.
A Crash Reduction Factor (CRF) is directly connected to the CMF and is “mathematically defined as (1 – CMF) (the higher the CRF, the greater the expected reduction in crashes) 1.” CMFs can help decision makers weigh potential alternative projects but are only one measure of a project's value and should be considered part of a larger decision-making process. Furthermore, it is important to note that not all CMFs are as reliable as others. The FHWA maintains a federal depository of CMFs and includes a star rating system to help users determine which CMFs are bolstered by the best and most thorough research. Key factors to consider when applying CMFs include:
1. Selection of an appropriate CMF;
2. Estimation of crashes without treatment;
3. Application of CMFs by type and severity; and,
4. Estimation of the combined effect for multiple treatments.
Examples of Safety Countermeasures can be found through several sources. This Report utilizes the countermeasures found in the California LRSM and the CMF Clearinghouse (CMF CH) website. The Caltrans Proven Safety Countermeasures guidance also informed the selection of these countermeasures. Countermeasures for each of the Safety Project Case Studies are based on the data analysis and site visits. Additional countermeasures were identified for the high-level issues on a city-wide level and are discussed in Section 9.
1 Local Roadway Safety Manual (Version 1.5) 2020. Page 27.
24 9.1.2 Safety P roject Locations
From the city-wide analysis, seven project locations were selected for further evaluation and field visit locations. These locations were identified through the analysis process based on their crash histories, stakeholder engagement, observed crash patterns, and differ ing characteristics to provide the most insight into potential systemic safety countermeasures that the City can employ to achieve the most cost-effective safety benefits.
Field Visits were conducted for each of the following locations:
1. Sierra Highway: Columbia Way (Avenue M) to Rancho Vista Boulevard
2. 25th St E: Pearblossom Highway to Avenue R
3. Avenue S – Sierra Highway to 40th Street E
4. Avenue R: 25th Street E to 40th Street E
5. Rancho Vista Boulevard: Avenue O-8 to Sierra Highway
6. Columbia Way (Avenue M): Sierra Hwy to 50th Street E
7. 50th Street E: Palmdale Boulevard to Avenue Q
25 9.2 Citywide Countermeasure Toolbox
This evaluation considered citywide trends to identify countermeasures that would likely provide the most benefit with widespread implementation. Table 3 outlines the citywide safety project opportunities, which is also referred to as the “Countermeasure Toolbox”. Within the toolbox, the description of the countermeasure along with its Local Roadway Safety Manual (LRSM) ID number is listed. The next column, Crash Reduction Factor (CRF), are “multiplicative factors used to estimate the expected reduction in number of crashes after implementing a given countermeasure at a specific site (the higher the CRF, the greater the expected reduction in crashes).” For each of these countermeasures, a planning level benefit/cost analysis was completed.
Applying the benefit/cost at the citywide level was estimated assuming some randomness in crash distribution. The location characteristics, such as whether there is a traffic signal, and the type of crashes, were used at the citywide level to calculate an average cost of crashes that the countermeasure might reduce. The benefit per location was then factored out to a 20-year lifecycle savings, with an Opinion of Project Probable Cost (OPCC) for the initial installation costs and a per-year maintenance cost estimate. The cost shown in Table 3 should be considered initial planning costs using 2022 dollars and not assumed final.
In order to prioritize the projects in the countermeasure toolbox, the following section highlights countermeasures that are appropriate for the networks shown in Section 7. Near-term projects can be implemented within the next two years, mid-term projects within the next five years, and long term projects within the next ten years.
9.3 Data Analysis and Project Prioritizatio n
9.3.1 Aggressive Driving Collisions
Figure 1 (on page 15) shows the network for aggressive driving collisions and traffic concerns.
This network includes segments of Avenue S, Avenue R-12, Fairfield Ave,35th St; Avenue Q and 30th St W . The following countermeasures from the toolbox can be implemented in these locations to address aggressive driving collisions:
• Install raised median (R01)
• Implement Road Diet (R14)
• Install centerline rumble strips/striping – where appropriate (R30) • Install edgeline rumble strips/striping – where appropriate (R31) • Improve signal timing (S03)
• Mini-roundabouts (NS05mr)
• Install curb extension/bulb-outs
• Mark pavement with supplementary warning messages
9.3.4 Bicycle and Pedestrian Collisions
Figure 2 (on page 17) illustrates the network for bicyclist and pedestrian collisions, encompassing segments of Palmdale Boulevard, Avenue S, Rancho Vista Boulevard, 10 St
26 West, Avenue R, and Avenue R-8, which have the highest number of bicycle and pedestrian collisions. Approximately 38% of the collisions that occurred near schools involved individuals aged 30 years or younger. About 50% of the collisions occurred during the designated school morning drop off and pick up time. The following countermeasures from the toolbox can be implemented in these locations to address pedestrian collisions:
• Install pedestrian crossing at uncontrolled locations (NS20PB) • Install Rectangular Rapid Flashing Beacon (RRFB) (NS22PB/R37PB) • Install upgraded pedestrian crossing (R35PB/S18PB)
• Install sidewalk/pathway (R34PB)
• Implement Leading Pedestrian Interval (LPI) timing (S21PB) • Install curb extension/bulb out
• Install edgeline striping (R31)
9.3.5 Unsignalized Collisions
Figure 3 (on page 19) depicts the unsignalized intersections collisions in the local area. This network includes segments of Avenue R-8, Avenue R-12, Avenue Q, and Avenue M, which have the highest number of collisions at unsignalized intersections. To address these collisions, the following countermeasures from the toolbox can be implemented at these location to improve safety and reduce unsignalized intersection collisions. • Install pedestrian crossing at uncontrolled locations (NS20PB) • Upgrade intersection pavement markings (NS07)
• Add intersection lighting (NS01)
• Install transverse rumble strips on approaches (NS10) • Install pedestrian crossing at uncontrolled locations (new signs and markings only) (NS20PB)
• Install/upgrade pedestrian crossing at uncontrolled locations (with safety enhanced safety features) (NS21PB)
• Install Pedestrian signal (including Pedestrian Hybrid Beacon (HAWK) (NS23PB) • Shoulder improvements (R15)
• Install edgelines and centerlines (r28)
27 Table 3: Citywide Safety Countermeasure Toolbox
ID Potential Countermeasures Where to apply? CRF
Per Unit
Cost (20-
year
estimate)*
Unit
NS04 Convert intersection to roundabout (from all
way stop)
Where warranted by an intersection
control evaluation Varies Varies Varies
NS07 Upgrade intersection pavement markings (to
make more visible)
Intersections where outdated or
degraded striping and pavement
markings exist
25% $38,400 per
intersection
NS20PB Install pedestrian crossing at uncontrolled
locations (new signs and markings only)
Where speed limits are less than 35
mph 25% $22,000 per
intersection
R27 Install delineators, reflectors and/or object
markers
Locations with a high number of fixed
object collisions and collisions on
curved segments
50% Varies Varies
R30 Install centerline rumble strips/stripes
Where travel speeds are greater than
45 mph and either curvature or traffic
volumes warrant
20% $50,000 per mile
R31 Install edgeline rumble strips/stripes
Where travel speeds are greater than
45 mph and either curvature or traffic
volumes warrant
15% $50,000 per mile
R33PB Install Separated Bike Lanes Locations where existing lane widths allow 45% $50,000 per mile
R35PB Install/Upgrade pedestrian crossing (with
enhanced safety features)
Locations with no controlled crossing
for significant distances 35% $30,000 per crossing
R34PB Install sidewalk/pathway (to avoid walking
along roadway)
Along roadways where sidewalks
currently do not exist 80% $300 per LF for 4’
sidewalk
S18PB Install pedestrian crossing (S.I.) Where warranted 25% $32,000 per intersection
-** Reduce turning radius Intersections with high pedestrian activity. 5% Varies Varies
*Cost estimates were calculated in 2021 dollars using Caltrans costing formulas and other recent project bids. Recent and ongoing inflation could have significant cost impacts.**There were not approved countermeasures for these improvements in the Local Roadway Safety Manual, so a conservative Crash Reduction Factor (CRF) was assumed.
28 10. Funding Sources & Next Steps
10.1 Funding
Competitive funding resources are available to assist in the development and implementation of safety projects in Palmdale. Similar to the Safety Plan in the STP the City should continue to seek available funding and grant opportunities from local, state, and federal resources to accelerate their ability to implement safety improvements throughout Palmdale. This section provides a high- level introduction to some of the main funding programs and grants for which the City can apply.
10.1.1 Highway Safety Improvement Program
The Highway Safety Improvement Program (HSIP) is a Federal program that apportions funding as a lump sum for each state, which is then divided among apportioned programs. These flexible funds can be used for projects to preserve or improve safety conditions and performance on any Federal-aid highway, bridge projects on any public road, facilities for non -motorized transportation, and other project types. Safety improvement projects eligible for this funding include:
• New or upgraded traffic signals
• Upgraded guard rails
• Pedestrian warning flashing beacons
• Marked high visibility crosswalks
• Other projects listed in the Caltrans Local Road Safety Manual California’s local HSIP focuses on infrastructure projects with national recognized crash reduction factors. Normally HSIP call-for-projects is made at an interval of one to two years. The applicant must be a city, a county, or a tribal government federally recognized within the State of California.
Additional information regarding this program at the Federal level can be found online at:
https://safety.fhwa.dot.gov/hsip/. California specific HSIP information – including dates for upcoming call for projects - can be found at: Local Highway Safety Improvement Program (HSIP) | Caltrans. The locations and countermeasures discussed in this analysis can be used to develop a grant application to the next round of Highway Safety Improvement Program funding. The next round of funding is expected in fall 2024.
10.1.2 Caltrans Active Transportation Program
Caltrans Active Transportation Program (ATP) is a statewide funding program, created in 2013, consolidating several federal and state programs. The ATP funds projects that encourage increased mode share for walking and bicycling, improve mobility and safet y for non-motorized users, enhance public health, and decrease greenhouse gas emissions. Projects eligible for this funding include:
• Bicycle and pedestrian infrastructure projects
• Bicycle and pedestrian planning projects (e.g., safe routes to school) • Non-infrastructure programs (education and enforcement)
29 This program funding is provided annually. The ATP call for projects typically comes out in the spring. Information on this program and cycles can be found online at: Active Transportation Program (ATP) | Caltrans.
10.1.3 California SB 1
The California SB (Senate Bill) 1 is a landmark transportation investment to rebuild California by fixing neighborhood streets, freeways, and bridges in communities across California and targeting funds toward transit and congested trade and commute corridor improvements.
California’s state -maintained transportation infrastructure will receive roughly half of SB 1 revenue: $26 billion. The other half will go to local roads, transit agencies and an expansion of the state’s growing network of pedestrian and cycle routes. Each year, this new funding will be used to tackle deferred maintenance needs both on the state highway system and the local road system, including:
• Local Street and Road Maintenance and Rehabilitation: $1.5 billion o This funding is dedicated to improving local road maintenance, rehabilitation, and/or safety through projects such as restriping and repaving. • Bike and Pedestrian Projects: $100 million
o This will go to cities, counties, and regional transportation agencies to build or convert more bike paths, crosswalks, and sidewalks. It is a significant increase in funding for these projects through the ATP.
• Local Planning Grants: $25 million
10.1.4 California Office of Traffic Safety Grants
This program has funding for projects related to traffic safety, including transportation safety education and encouragement activities. Grant applications must be supported by local collision data (such as the data analyzed in this report) and must relate to the following priority program areas:
o Alcohol Impaired Driving
o Distracted Driving
o Drug-Impaired Emergency Medical Services
o Motorcycle Safety
o Occupant Protection
o Pedestrian and Bicycle Safety
o Police Traffic Services
o Public Relations, Advertising, and Marketing Program
o Roadway Safety and Traffic Records
30 10.1.5 SCAG Sustainable Communities Program
This program is an innovative vehicle for promoting local jurisdictional efforts to test local planning tools. The Sustainable Communities Program (SCP) provides direct technical assistance to SCAG member jurisdictions to complete planning and policy effor ts to implement the regional Sustainable Communities Strategies (SCS). Grants are available in the following three categories:
• Integrated Land Use
o Sustainable Land Use Planning
o Transit Oriented Development (TOD)
o Land Use & Transportation Integration
• Active Transportation
o Bicycle Planning
o Pedestrian Planning
o Safe Routes to School Plans
• Green Region
o Natural Resource Plans
o Climate Action Plans (CAPs)
o Green House Gas (GHG) Reduction programs
10.1.6 Safe Streets and Roads for All (SS4A) Grant Program This program has allocated $1 billion annually for the next four years for local cities, counties, MPOs, and other roadway owners (excepting state DOTs) for safety improvement grants for Safety Planning, education, enforcement, and roadway improvements. This program is not benefit / cost based. Evaluation criteria are oriented to the project’s alignment with the Safe Systems approach. There is a 20% local match requirement (can be in-kind contribution via staff billable hours). Planning grants are open to any eligible agency and Implementation grants are open to agencies with a completed safety plan such as Local Roadway Safety Plan. Planning grants are expected to range from $100 thousand to $1 million and Implementation grants are expected to range from $1 million to $20 million. Grant applications are expected to be due in July 2024.
10.1.6 Infrastructure Investment and Jobs Act
In November 2021, the President signed into law the $1.2 trillion Infrastructure Investment and Jobs Act. In addition to the SS4A grant program described above, this law provides billions of dollars in additional funding for improvements and investment in the transportation sector nationwide. The law provides $30 billion in funding over five years for competitive RAISE grants for transportation projects, as well as additional funding for repair and environmental mitigation projects. As these grant programs continue to be developed, City can position itself by identifying potential projects and programs to pursue.
31 10.2 Implementation Plan
Once the Local Roadway Safety Plan has been completed, the city can plan to regularly review and monitor crash data for trends and changes. The County can also plan to prioritize and implement certain improvements that were identified in this plan.
10.2.1 Monitoring
The City can plan to regularly monitor the success of the LRSP and its related implementations by performing the following steps. This before and after analysis can be performed throughout the year. The City can also meet with the Sheriffs Department on a regular basis to discuss roadway safety issues and compare to the latest crash analysis. • Pull yearly crash data from Crossroads database to determine year-over year trend • Utilize Crossroads or GIS software to review the number of collisions occurring at specific locations. Locations where improvements have been made should receive priority for monitoring; and,
• Based upon changes in collision activity, determine efficacy of improvements and adjust strategies going forward.
10.2.2 Analysis Update
The city can plan to update the analysis every two years as part of a monitoring program. Every 5 years the city will perform a major update to the analysis and the Local Roadway Safety Plan by performing the following steps. This update will maintain eligibility for the HSP grant funding for the city. The analysis should continue to focus on both systemic and location specific safety needs.
1. Obtain updated Statewide Integrated Traffic Records System (SWITRS) collision data from the City’s collision database;
2. Use Excel software to update the collision trend analysis completed in Section 7, continue to compare new collision to historic trends;
3. Update the roadway shapefile with any new or upgraded roadways;
4. Update the intersection shapefile with any new or upgraded intersections;
5. Re-run the GIS-based safety collision tool to determine the number of collisions at intersections and roadways within the updated study period. The City can plan to run the collision tool for all collisions, as well as the collision types identified in Section 6
6. Update the collision analysis performed in this report, including the collision analysis tables shown in Section 7 Collision Network Screening Analysis Report; and,
7. Review the Collision Toolbox to determine if any additional countermeasures should be considered for implementation in the City
32 10.2.3 Implementation Strategies
The opportunities outlined in this report presents potential strategies and measures that can be implemented at both a systemic level and specific locations within the city. However, the actual implementation of these measures will depend on the availability of funding and resources, and its important to note that this guidance is preliminary and subject to change. In the near-term and mid-term, the City can focus its efforts on the following key areas of emphasis. • Stopped- Controlled Intersection Improvements
• Vulnerable User Improvement
• Aggressive Driving Improvement
The analysis conducted at the citywide level has identified these factors as the most common contributors to collisions within the City. The countermeasure opportunities discussed earlier in this report, which encompass both systemic improvements and project-specific enhancements, can serve as a foundation for developing projects in locations where addressing these focus areas would yield the greatest benefits. These countermeasures were determined by examining the causes and types of collisions and devising strategies to address the specific conditions associated with them. By using citywide collision rates, projects aimed at addressing these focus areas can be developed with a favorable benefit-to-cost ratio, even in locations with little or no history of collisions but with conditions that could contribute to future incidents. For location-specific improvements, the City can utilize benefit-cost ratio calculations to prioritize projects as funding and resources become available.
This project prioritization process will help the City be ready for the funding opportunities identified in Section 9. Project prioritization will also help to guide the projects as they are taking into the design and construction project. Prioritization can be based on cost and ease of installation. Coordination with City departments will be key in the completion of these implementations.
The City can also plan to implement the non-engineering improvements identified throughout this report, including actions related to Enforcement, Education, and Emergency Services.
These actions will require coordination with internal and external stakeholders, such as City departments, law enforcement, local government organizations, and local community organizations. Early buy-in and engagement from these stakeholders will be key to the success of these actions.
To aid in these actions, the City can assemble a ‘Task Force’ of representatives from different City departments, such as Public Works, Development Services, and Public Safety. This task force will be instrumental in the monitoring, analysis update, project development and project implementation outlined in this plan.
33 10.3 Next Steps
The City has completed the LRSP to guide the process of future transportation safety improvements for years to come. In addition to the actions identified in the Implementation Plan, the City can perform the following to guide the success of this LRSP and the safety efforts overall.
• Develop investment programs to help achieve the City’s crash reduction goals. • Work with state and partner agencies on implementation of large-scale programs and policies;
• Incorporate safety analysis findings in future updates of safety programs; • Monitor statewide safety priorities, guidance, and funding opportunities.
34 APPENDIX A – SAFETY EDUCATION
35 A-1
Behavioral Safety Countermeasures
This appendix provides an overview of the implementation of behavioral safety countermeasures in the Local Roadway Safety Plan. The primary objective is to address the critical issue of promoting safe behaviors among road users, focusing on drivers, pedest rian, and cyclists. By targeting specific behaviors such as speeding, distracted driving, failure to yield, and disobeying traffic signals, the aim is to create a culture of responsible and cautious road use in the City of Palmdale. This section outlines potential strategies including education campaigns, enforcements efforts, and targeted interventions, with the ultimate goal of reducing fatal and severe injuries in the local roadways.
Education Campaigns
To raise awareness about safe driving
practices and the potential consequences
of risky behaviors. These campaigns can
use various platforms such as social media,
community events, and informational
materials to educate road users on the
importance of following traffic rules and
being mindful of their actions on the roads.
Educational campaigns increase
awareness among road users about the
significance of following traffic rules and
regulations. By providing information on safe driving practices, the responsibilities of pedestrians, and rights of cyclists, these campaigns ensure that individuals have a clear understanding of their role in promoting road safety. These campaigns aim to bring about a change in behavior by highlighting the risks associated with unsafe actions. By emphasizing the potential consequences of behaviors like speeding, distracted driving, and failure to yield, these campaigns encourage individuals to adopt safer practices and make responsible choices on the road. Additionally, education campaigns focus on equipping road users with the necessary knowledge and skills to navigate the road safely. By providin g information on defensive driving techniques, pedestrian safety guidelines, and cycling bes t practices, individuals are empowered to make informed decisions and take appropriate actions to prevent collisions. Moreover, these campaigns foster community engagement and participation in promoting local roadway safety. By involving local residents, schools, businesses, and community organizations, a collective effort is made to create a culture of safety behaviors. Through consistent reinforcement of safe practices and ongoing education, these campaigns can instill a sense of responsibility and caution in road users, leading to a significant reduction in fatal and serious injuries on local roadways over time.
Enforcement Efforts
Through collaboration with law enforcement agencies, stricter monitoring and enforcement of traffic laws can discourage unsafe action. Targeted enforcement operations are conducted in
36 A-2
areas with a history of collisions or high -risk behaviors, with the aim of deterring violations and promoting compliance with traffic regulations.
Enforcement ensures that individuals adhere to traffic rules and regulations. By enforcing consequences for unsafe actions authorities create a deterrent effect and encourage compliance with safe practices. This enforcement serves as a reinforcement mechanism, reinforcing the importance of following traffic rules and holding individuals accountable for their actions on the road.
Targeted Interventions
To address specific areas of behaviors that pose a higher risk to road safety, countermeasures incorporate targeted interventions. These interventions include installing traffic calming measures, improving signage and road markings, and adjusting traffic signal timing in high- collision locations. By implementing these
measures, the city can mitigate risks and
create safer conditions for all road users.
Targeted interventions are a more focused
and efficient approach compared to broad,
one-size-fits-all strategies, as they address
specific areas or behaviors that pose a higher
risk to road safety.
The behavioral safety countermeasure
implemented in the local roadway safety plan
is a comprehensive approach to promoting
safe behaviors among road users. By
targeting specific behaviors and employing
strategies such as education campaigns, enforcement efforts, and targeted interventions, it aims to create a culture of responsible and cautious road use in our community. By addressing efforts to address specific areas of behaviors, it can maximize the effectiveness of countermeasures and promote safer conditions for all road users. This aligns with the safe system approach, recognizing that humans make mistakes and aiming to establish a forgiving road system that minimizes the impact of these errors. Through these efforts, it is anticipated a significant reduction in accidents and injuries on local roadways, ultimately enhancing overall road safety.
37 APPENDIX B – CONCE PTUAL PLANS
Palmdale
Local Roadway Safety Plan
High Visibility Crosswalks and
Shared Road with Bicycles
Figure 1
Marking to Enhance Bicycle/Pedestrian Safety
on 2nd St. East and Avenue Q-7
2nd Street E2nd Street E
Avenue Q7Avenue Q7
Palmdale
Local Roadway Safety Plan
High Visibility Crosswalks and
Shared Road with Bicycles
High Visibility Crosswalks and
Shared Road with Bicycles
3rd Street E3rd Street E
E Avenue Q7E Avenue Q7
Figure 2
Marking to Enhance Bicycle/Pedestrian Safety
on 3rd St. East and East Avenue Q-7
Palmdale
Local Roadway Safety Plan
E Avenue QE Avenue Q
E Avenue Q2E Avenue Q2
20th Street E20th Street E
Convert to a
Roundabout
Bike Lanes
Figure 3
Marking to Enhance Bicycle/Pedestrian Safety
on 20th St. East and East Avenue Q
Palmdale
Local Roadway Safety Plan
E Avenue QE Avenue Q
E Avenue Q2E Avenue Q2
Convert to
a Signalized
Intersection
Bike Lanes
Figure 4
Marking to Enhance Bicycle/Pedestrian Safety
on 20th St. East and East Avenue Q
Raised Median
20th Street E20th Street E
Palmdale
Local Roadway Safety Plan
Figure 5
Marking to Enhance Bicycle/Pedestrian Safety
on Division St. and Kimberly Lane
Kimberly LaneKimberly Lane
Division StreetDivision Street
Buffered Bike Lanes
with Vertical Delineators
Palmdale
Local Roadway Safety Plan
25th Street E25th Street E
E Avenue R-4E Avenue R-4
Figure 6
Marking to Enhance Bicycle/Pedestrian Safety
on E Avenue R-4 and 25th Street E
Crosswalk, Limit
Line, Stop Legend
and Stop Sign
Continue
Sidewalk
Palmdale
Local Roadway Safety Plan
Figure 7
Marking to Enhance Bicycle/Pedestrian Safety
on E Avenue R-4 and 25th Street E
E Avenue R-4E Avenue R-4
Palm Vista AvePalm Vista Ave
High Visibility
Crosswalk
Palmdale
Local Roadway Safety Plan
Figure 8
Marking to Enhance Bicycle/Pedestrian Safety
on Olive Drive and 30th St E
Buffered Bike
Lane with No
Parking
Bike Lane
with Parking
Centerline
Striping
Bike Lane
New Limit Line
and Stop Legend
Crosswalk and
School Advanced
Warning for
Pedeestrians
30th Street E30th Street E
Olive DriveOlive Drive
Palmdale
Local Roadway Safety Plan
Figure 9
Marking to Enhance Bicycle/Pedestrian Safety
on 2nd St E and E Avenue Q7
E Avenue Q7E Avenue Q7
2nd Street E2nd Street E
High Visibility Crosswalks and
Shared Road with Bicycles
High Visibility Crosswalks and
Shared Road with Bicycles
Palmdale
Local Road Safety Plan
Introduction
Darryl DePencier
Project Manager
Kimley-Horn
Jay Nelson
City Traffic Manager
City of Palmdale
What is a LRSP ?
• A statewide data-driven traffic safety that coordinates the efforts of a wide range of organizations to reduce traffic accident fatalities and serious injuries on all public roads
• Creates a framework to systematically identify and analyze safety problems and recommend safety improvements.
• Is a program organized and funded by Caltrans
• Is necessary to receive Highway Safety Improvement Program (HSIP) funding and makes City competitive for other grant funding opportunities • The Caltrans Strategic Highway Safety Plan address the 4Es of traffic safety:
• Engineering, Enforcement, Education, and Emergency Services
Goals & Objectives
• Understand the factors that
contribute to collisions
• Develop strategies to reduce traffic
injuries
• Develop an action plan to prioritize
safety improvements
• Increase the City's competitiveness
for safety funding
Grant Opportunities
Highway Safety
Improvement Program (HSIP)
Safe Streets 4 All
Public Engagement
Timeline
Final PlanCity Council
Approval Draft PlanPublic Safety
Campaign
Emphasis
Area
Strategy
Development
Field
Investigation
Preliminary
Collision
Analysis
CURRENT
STATUS
Citywide
Safety
Background
and Trends
0 200
400
600
800
1000
1200
1400
1600
1800
2017 2018 2019 2020 2021
Vehicle - Pedestrian
Sideswipe
Rear-End
Overturned
Other
Hit Object
Head-On
Broadside
Citywide Safety Background and Trends
Crash Type by Year (2017-2021)
Citywide
Safety
Background
and Trends
0 200
400
600
800
1000
1200
1400
1600
1800
2017 2018 2019 2020 2021
Severe Injury
Property Damage Only
Other Visible Injury
Fatal
Complaint of Pain
Injury Collisions by Year (2017-2021)
Citywide
Safety
Background
and Trends
Involved With Fatal Severe Injury
Bicycle 0 9
Fixed Object 14 19
Motor Vehicle on Other Roadway 1 2
Non-Collision 1 5
Other Motor Vehicle 48 83
Other Object 0 2
Parked Motor Vehicle 0 1
Pedestrian 28 25
Total 92 146
Injury Collisions by Type of User Involved
(2017-2021)
Citywide
Crash
Trends
17.03%
6.60%
5.22%
0.16%
0.06%
1.23%
21.25%
0.04%
0.01%0.06%0.32%
1.15%1.14%
0.52%
1.23%
8.49%
8.27%
4.32%
18.03%
3.55%
1.31%
Auto R/W Violation
Driving Under Influence
Following Too Closely
Hazardous Parking
Impeding Traffic
Improper Passing
Improper Turning
Lights
Other
Other Equipment
Other Hazardous Movement
Other Improper Driving
Other Than Driver
Ped R/W Violation
Pedestrian Violation
Traffic Signals and Signs
Unknown
Unsafe Lane Change
Unsafe Speed
Unsafe Starting or Backing
Wrong Side of Road
Causes of Crashes (2017-2021)
Systemic
Projects
• Vulnerable Users Improvements
• Unsignalized Intersection Improvements
• Traffic Calming Improvements
Aggressive
Driving
Unsignalized
Improvements
Bike & Ped
Collisions
near schools
Potential Improvements
Raised Median
Shoulder Improvements Mini Roundabout Install Centerlines and Edgelines Edgeline Rumble Strips Centerline Rumble Strips Rectangular Rapid
Flashing Beacon (RRFB)
Sidewalk/Pathway
Curb Extension/Bulb Out
Pavement Warning
Messages
Pedestrian Hybrid Beacon
Pedestrian Crossings at
Uncontrolled Locations
Upgraded Pedestrian
Crossing
Leading Pedestrian Interval
Edgeline Striping
Intersection Lighting
Transverse Rumble Strips
on Approaches
Intersection Markings
Thank You
Jay Nelson
Email: [email protected]
Contact
Darryl DePencier
Email: [email protected]
CC/SA – November 6, 2024 – 5PM 1
MINUTES
CITY COUNCIL/SA
CITY HALL COUNCIL CHAMBER
38300 SIERRA HIGHWAY, SUITE B
PALMDALE, CALIFORNIA
NOVEMBER 6, 2024
www.cityofpalmdale.org
1) CALL MEETING TO ORDER
Mayor Bishop called the meeting to order at 5:05 pm.
Note: All City Council memberships are reflected in their City Council titles.
2) ROLL CALL MAYOR BISHOP, MAYOR PRO TEM LOA, COUNCILMEMBERS OHLSEN, BETTENCOURT, ALARCÓN
PRESENT: Austin Bishop, Richard J. Loa, Eric Ohlsen, Laura Bettencourt, Andrea Alarcón.
ABSENT: None.
3) PLEDGE OF ALLEGIANCE AND MOMENT OF SILENCE
Mayor Pro Tem Loa led the pledge of allegiance.
4) PRESENTATIONS
4.1) Antelope Valley Union High School District (AVUHSD) Stem Expo Recognition.
Representatives from Antelope Valley Union High School District displayed a video and spoke about the Science Technology Engineering and Math (STEM) Program.
Mayor Bishop spoke regarding Science Technology Engineering and Math and presented certificates to the participants of the STEM Expo.
4.2) Association of Sister Cities of Palmdale 50th year Anniversary presentation.
Sylvia Magallanes, President of the Association of Sister Cities of Palmdale, presented a plaque and commemorative items to the Council on behalf of the Sister City in recognition of the 50th Anniversary.
Mayor Pro Tem Loa spoke about community events held in Poncitlan Square and the relationship with Jalisco, Mexico.
5) PUBLIC COMMENTS
CONSENT CALENDAR, APPOINTMENT(S), NEW BUSINESS, AND CLOSED SESSION:
Public Comments: None.
CC/SA – November 6, 2024 – 5PM 2
Councilmember Alarcón pulled items 6.6, 6.7, and Councilmember Bettencourt pulled item 6.8 for discussion.
6) CONSENT CALENDAR
6.1) Waive full reading of the Resolution(s) and/or Ordinance(s) to be considered and voted on at this meeting. (This allows for reading the title only in lieu of reciting the entire text).
6.2) Receive and file the Monthly and Quarterly Investment Activity Reports for September 2024.
6.3) Adopt Resolution No. CC 2024 -081, a Resolution of the City Council of the City of Palmdale of consideration to alter the rate and method of apportionment of special taxes for the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch phase 1 Public Facilities).
6.4) Adopt Resolution No. CC 2024 -057, a Resolution of the City Council of the City of Palmdale declaring certain property surplus land (APN’s 3008 -041-001 through -010 and 3128-015-903).
6.5) Receive and file the annual Activity Report for the Development Agreement pertaining to the Oasis Wellness Village project located at the southeast corner of Palmdale Boulevard and Tierra Subida Avenue.
6.6) Approve Agreement with Flock Group Inc. to provide Flock Services to 75 License Plate Reader cameras with a not to exceed amount of $1,133,950 for a contract term of five years from October 5, 2024, through October 4, 2029.
Councilmember Bettencourt recused herself from this item because she works for the Sheriff's Department. She stepped away from the dais at this time.
Deputy City Manager Gallagher presented the staff report.
Councilmember Alarcón provided details on the item.
Captain Bardon discussed the benefits of having flock cameras. Council spoke in favor of this item.
Motion: Approve Agreement with Flock Group Inc. to provide Flock Services to 75 License Plate Reader cameras with a not to exceed amount of $1,133,950 for a contract term of five years from October 5, 2024, through October 4, 2029.
Moved by Andrea Alarcón, seconded by Richard J. Loa.
Vote: Motion carried (4-0)
Yes: Austin Bishop, Richard J. Loa, Eric Ohlsen, Andrea Alarcón.
Councilmember Bettencourt returned to the dais.
CC/SA – November 6, 2024 – 5PM 3
6.7) Accept the Charging and Fueling Infrastructure Discretionary Grant Opportunity from the U.S. Department of Transportation Federal Highway Administration for the funding amount of $14,810,000 and approve agreements for the implementation of the EVequity Leadership Project.
Manager Lucha provided a brief overview of this item.
Councilmember Alarcón commended the City Team and spoke regarding disadvantaged communities.
Councilmember Bettencourt asked if some of the money could be allocated to apartment complexes. Mr. Lucha stated that this grant cannot be used for apartment complexes; however, they are looking at other resources to provide that service.
Discussion ensued regarding charging stations and their locations.
Motion: Accept the Charging and Fueling Infrastructure Discretionary Grant Opportunity from the U.S. Department of Transportation Federal Highway Administration for the funding amount of $14,810,000 and approve agreements for the implementation of the EVequity Leadership Project.
Moved by Andrea Alarcón, seconded by Richard J. Loa.
Vote: Motion carried (5-0)
Yes: Austin Bishop, Richard J. Loa, Eric Ohlsen, Laura Bettencourt, Andrea Alarcón.
6.8) Approve Final Parcel Map No. 83985 (located at the Northeast corner of Avenue S and 40th Street East).
Councilmember Bettencourt recused herself from this item and stepped away from the dais because she lives close to the location being discussed.
Motion: Approve Final Parcel Map No. 83985 (located at the Northeast corner of Avenue S and 40th Street East).
Moved by Richard J. Loa, seconded by Eric Ohlsen.
Vote: Motion carried (4-0)
Yes: Austin Bishop, Richard J. Loa, Eric Ohlsen, Andrea Alarcón.
Councilmember Bettencourt returned to the dais.
6.9) Adopt Resolution No. CC 2024 -083, a Resolution of the City Council of the City of Palmdale declaring its intention to conduct a public hearing to consider the vacation of portions of 8th Street East south of Rancho Vista Boulevard and north of Avenue P-8.
6.10) Approve the minutes from the previous meeting.
Motion: Approve all items listed under the Consent Calendar except Items 6.6, 6.7, and 6.8.
Moved by Richard J. Loa, seconded by Eric Ohlsen.
CC/SA – November 6, 2024 – 5PM 4
Vote: Motion carried (5-0)
Yes: Austin Bishop, Richard J. Loa, Eric Ohlsen, Laura Bettencourt, Andrea Alarcón.
7) PUBLIC HEARING
7.1) Adopt Resolution No. CC 2024 -080, a Resolution of the City Council of the City of Palmdale declaring results of majority protest proceedings and renewing the Palmdale Tourism Improvement District.
City Clerk Scott read the title of Resolution No. CC 2024-080.
Acting Director of Economic and Community Development Taggart presented the staff report.
Mayor Bishop discussed the success of the Palmdale Tourism Improvement District.
Mayor Bishop opened the Public Hearing.
Testimony: None.
Mayor Bishop closed the Public Hearing.
Motion: Adopt Resolution No. CC 2024-080, a Resolution of the City Council of the City of Palmdale declaring results of majority protest proceedings and renewing the Palmdale Tourism Improvement District.
Moved by Richard J. Loa, seconded by Andrea Alarcón.
Vote: Motion carried (5-0)
Yes: Austin Bishop, Richard J. Loa, Eric Ohlsen, Laura Bettencourt, Andrea Alarcón.
7.2) Adopt Resolution No. CC 2024-085, a Resolution of the City Council of the City of Palmdale approving Major Modification 24-0023; a request for modifications to Site Plan Review 23-003 an approved mixed-use commercial and residential development located north of Avenue R and west of 30th Street East and find that the project is categorically exempt from environmental review (APN: 3018-026-001).
Councilmember Bettencourt recused herself from this item because she lives in the project area. She stepped away from the dais at this time.
City Clerk Scott read the title of Resolution No. CC 2024-085.
Planning Manager Magana provided a brief overview of the project.
Tim, a representative from Together California , provided detailed information about the project.
CC/SA – November 6, 2024 – 5PM 5
There was Council discussion regarding the construction timeline and benefits of the project.
Mayor Bishop opened the Public Hearing.
Testimony: Chuck Murphy spoke in support of the project.
Mayor Bishop closed the Public Hearing.
Motion: Adopt Resolution No. CC 2024 -085, a Resolution of the City Council of the City of Palmdale approving Major Modification 24-0023.
Moved by Andrea Alarcón, seconded by Richard J. Loa.
Vote: Motion carried (4-0)
Yes: Austin Bishop, Richard J. Loa, Eric Ohlsen, Andrea Alarcón.
Councilmember Bettencourt returned to the dais.
7.3) Adopt Resolution No. CC 2024 -082, a Resolution of the City Council of the City of Palmdale approving the issuance of Revenue Bonds by the California Municipal Finance Authority (the "CMFA") in an aggregate outstanding principal amount not to exceed $15,000,000 to finance and refinance a 48 -unit qualified residential rental project for the benefit of 9th Street E. Housing, LP, a California Limited Partnership, or another entity to be created by Milare Housing Investments, Inc. (or an affiliate), and certain other matters relating thereto.
City Clerk Scott read the title of Resolution No. CC 2024-082.
Director of Operations Samson presented the staff report.
Mayor Bishop opened the Public Hearing.
Testimony: None.
Mayor Bishop closed the Public Hearing.
Motion: Adopt Resolution No. CC 2024-082, a Resolution of the City Council of the City of Palmdale approving the issuance of Revenue Bonds by the California Municipal Finance Authority (the "CMFA") in an aggregate outstanding principal amount not to exceed $15,000,000 to finance and refinance a 48 -unit qualified residential rental project for the benefit of 9th Street E. Housing, LP,.
Moved by Richard J. Loa, seconded by Eric Ohlsen.
Vote: Motion carried (5-0)
Yes: Austin Bishop, Richard J. Loa, Eric Ohlsen, Laura Bettencourt, Andrea Alarcón.
CC/SA – November 6, 2024 – 5PM 6
8) CITY MANAGER’S REPORT
City Manager Perez reported on the following: Palmdale Sheriff's Station Halloween- themed open house, SAVES Spooktacular Trick or Treat drive -through, Palmdale Sheriff's Booster Trunk or Treat, AV Alta Academy Ribbon Cutting at Sam Yellen Park, 9th Street East Food Trucks on Fridays, ILead Youth Conference Friday, November 8, IServe Program, Palmdale Regional Medical Center Heart and Stroke Walk, Saturday, November 9, Veteran's Day Ceremony on Monday, November 11, Youth for Justice Intro, Holiday Boutique, State Route 14 Public Scoping Meeting Tuesday, November 19 , and welcomed Public Safety Director Palmieri and Public Works Director Torres to the City Team.
9) COUNCIL REPORTS, ANNOUNCEMENTS AND REQUESTS FOR FUTURE
AGENDA ITEMS
Councilmember Bettencourt reported on the following: Audit Committee meeting, Making Strides Against Breast Cancer Walk, AV Chamber State of the County, Sanitation District meeting, Kaleidoscope Fall Festival, Trick or Treat Pumpkin Walk, Palmdale Recycled Water Authority meeting, AV Hispanic Chamber Commerce State of the State luncheon, Annual Chili Cook -Off, District 3 Neighborhood Watch meeting, AV Edge Fall Forum luncheon, Vet in the Park, Sheriff's Department Trunk or Treat event, and Pasadena pet event.
Mayor Pro Tem Loa reported on the following: Spanish Talk Radio, Veterans Administration meeting regarding workforce housing in Palmdale, AV Chamber State of the County meeting, hosted the Executive Committee
meeting for the North County Regional Round Table on homelessness, High Desert Corridor meeting, Kaleidoscope Fall Festival, meeting with Dr. Smith, CEO of Mojave Airport about bringing an airport to Palmdale, AVAQMD meeting, 3rd Annual AV Mental Health Awareness Day event, AVTA meeting, AV Hispanic Chamber of Commerce State of the State luncheon, Executive Committee for Regional Homeless Alignment m eeting, Three Heart Connections Thriver's Gala, Together California reception at Karen Bass’ home, and Lancaster and AV Edge meeting.
Councilmember Ohlsen reported on the following: meetings with Mayor Karen Bass, Palmdale Sheriff's Station haunted house, congratulated Mayor Bishop and Mayor Pro Tem Loa on their reelection, thanked the voters for having faith and confidence related to the passage of Measure PD, and Coffee4Vets ball.
Councilmember Alarcón reported on the following: Together California Fundraising event at Mayor Bass' home, Three Heart Connections Thriver's Gala, and Hispanic Chamber of Commerce Dia De Los Muertos event.
Mayor Bishop reported on the following: Bob's Discount Furniture grand opening, KFI Radio interview on the pillowcase rapist, Kaleidoscope Fall Festival, Dodger Game watch parties, Yellen Park Soccer Field, 14th Annual Ride to End Violence, and the Palmdale Partners Academy Graduation Ceremony.
10) NON-AGENDA PUBLIC COMMENTS:
The following individuals provided public input: Eugene Hernandez commented on restroom supplies and safety at the library and requested more bus benches in the CC/SA – November 6, 2024 – 5PM 7
City; Mr. Medrano, J&J Auto Repairs, raised concerns regarding his business and code enforcement guidelines. Mayor Bishop directed Mr. Medrano to Community Services Supervisor Vallarta; Kim Nguyen spoke regarding children's development areas; and Marsha Furman provided information on the Honor Flight in Bakersfield/Kern County and spoke regarding her personal experience.
11) PRESENTATION BY CITY ATTORNEY
City Attorney Curley confirmed items would be heard as listed.
11.1) CONFERENCE WITH LEGAL COUNSEL—EXISTING LITIGATION Los Angeles County Superior Court Case No. 22STCV01269
This closed session is being held pursuant to the authority of California Government Code Section 54956.9(d)(1).
11.2) CONFERENCE WITH LEGAL COUNSEL—EXISTING LITIGATION Los Angeles County Superior Court Case No. 22STCV29463
This closed session is being held pursuant to the authority of California Government Code Section 54956.9(d)(1).
12) ANNOUNCEMENT BY CITY ATTORNEY
Closed Session was held from 6:46 pm - 7:28 pm.
City Attorney Curley announced items 11.1 and 11.2 were discussed, Council was updated, and there were no further reportable actions.
13) ADJOURNMENT
Mayor Bishop announced the meeting would be adjourned in honor of Lieutenant Commander Lyndsay P. Evans
Councilmember Ohlsen spoke about Lieutenant Commander Lyndsay P. Evans accomplishments in the U.S. Navy.
Mayor Bishop adjourned the meeting at 7:31 pm to November 20, 2024, at 5:00 p.m. in the City Hall Council Chamber located at 38300 Sierra Highway, Suite B, Palmdale, California.
PASSED, APPROVED, and ADOPTED this 20th day of November 2024.
Austin Bishop, Mayor
ATTEST:
Rochelle Scott, City Clerk
City Council Staff Report
DATE: NOVEMBER 20, 2024
TO: HONORABLE MAYOR AND CITY COUNCIL
FROM: OPERATIONS DEPARTMENT
FINANCE DIVISION
DISTRICT: ALL
SUBJECT: ADOPT RESOLUTION NO. CC 2024-087, A RESOLUTION OF THE
CITY COUNCIL OF THE CITY OF PALMDALE AUTHORIZING THE
ISSUANCE OF SPECIAL TAX BONDS FOR THE CITY O F
PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022 -3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES) AND APPROVING
RELATED DOCUMENTS AND ACTIONS
RECOMMENDATION
Staff recommends that the City Council adopt Resolution No. CC 2024 -087, a Resolution of the City Council of the City of Palmdale authorizing the issuance of Special Tax Bonds for the City of Palmdale Community Facilities District No. 2022 -3 (Ritter Ranch Phase 1 Public Facilities) and approving related documents and actions.
BACKGROUND
RdR Development Holdings, LLC is the property owner of the Phase 1 property portion of the Community Facilities District No. 2022 -3 (“CFD 2022-3”) and has requested that the City proceed with the approval of the first series of Special Tax Bonds (“Bonds”) for CFD 2022-3. Certain actions are required by the City Council for the issuance of the Bonds.
DISCUSSION
The Phase 1 development contains 1,180 residential units. These units will be built over time. RdR Development Holdings, LLC (Master Developer) wish to issue the first series of Bonds now to be supported by the Special Taxes on all of the 688 detached single - family units. This encompasses all the units in Phase 1A and 135 units in Phase 1B. A future series of Bonds (subject to future City Council consideration and action) is proposed for 2026, to be secured by the remaining 492 attached residential units.
Report to Mayor and City Council
Re: Adopt Resolution CC 2024-087
November 20, 2024
The Special Taxes generated by the detached single-family units supports approximately $33.4 million in Bonds. This will provide funding of an estimated $28.4 million in infrastructure improvements. A reserve fund for the Bonds is also anticipated to be funded with Bond proceeds. The following table provides the anticipated size of the bond issue, including funding of the costs of issuance and capitalized interest. Capitalized interest is used to pay debt service on the Bonds during the first two tax years until taxes can be levied.
Cost of Issuance $ 808,000
Reserve Fund 1,226,000
Capitalized Interest through 9/1/2026 2,830,000
City Administrative Fees 86,000
Construction Fund 28,405,000
Par Amount of Bonds Issued $33,355,000
$16,465,000
All costs associated with the Bonds will be paid out of proceeds from the issuance of the bonds as outlined below.
Bond Counsel/Disclosure Counsel $80,000
Municipal Advisor 80,000
Special Tax Consultant 19,000
Trustee 10,000
Staff Reimbursable Costs 35,000
Total Fixed Costs $224,000
Underwriting 584,000
Total Expected Issuance Expenses $808,000
It is anticipated that the Bonds will be issued on February 27, 2025.
Special Tax Bonds typically mature in 30 years. These Bonds will mature in 2064, a forty- year maturity. This longer maturity was negotiated with the RdR parties as part of the creation of CFD 2022-3 and cancellation of the City’s CFD 93-1 (Ritter Ranch) Special Tax Bonds currently secured by the Phase 1 property. The interest rate is expected to be 6%.
The infrastructure expected to be funded with this current series of Bonds include street improvements, domestic water facilities, and sewer and storm drain facilities. The City and the Master Developer are parties to an Acquisition Agreement, dated as of November 1, 2022, relating to the construction by the Master Developer of some of the infrastructure for CFD 2022-3 and the parties are required to approve a Supplement No. 1 to Acquisition Agreement (Acquisition Agreement Supplement) to update the type of facilities to be financed and the budget for the infrastructure to be constructed by the Report to Mayor and City Council
Re: Adopt Resolution CC 2024-087
November 20, 2024
Master Developer. The Acquisition Agreement Supplement will be presented for consideration at a future meeting.
The Bonds will be sold by Hilltop Securities Inc. to the Master Developer or a related entity such as Preston Hollow Community Capital (Bondholder). Due to the significant amount of infrastructure required to be built to support the first phase of development, remaining land use approvals and other issues affecting the ability to build homes in Phase 1, the Bondholder will hold the Bonds as an investment until such time as certain transfer restrictions are lifted. The Bonds should be held by sophisticated investors during the buildout period in case development delays occur or other impediments to development materialize. Currently there are no improvements in CFD 2022-3 and the assessed value of the 235 acres is only $1,156,708. The value of the property is an important factor in determining the investment quality of the Bonds.
The Master Developer has advised that, given the land use entitlements that have been obtained for Phase 1A and a portion of Phase 1B and are in process for the remainder of Phase 1B, and the expected use of proceeds of the Bonds to finance infrastructure improvements incident to the development of the property in the CFD, the fair market value of the property may be significantly greater than its current County-assessed value, and the fair market value of the property will in any event increase as infrastructure improvements are completed and homes are constructed in the CFD. However, prudent provisions have been included in the Fiscal Agent Agreement that only allow the Bonds to be transferred to other designated sophisticated investors, or used as security for lenders to the Bondholder, until the appraised value to the lien of the Bonds is at least 3:1 and all land use entitlements and zoning for development of all 1,180 residential units is obtained.
A preliminary limited offering memorandum, describing CFD 2022-3, the Bonds, the Master Developer, the proposed development, and the Bond transfer restrictions was prepared by staff and the Disclosure Counsel, with input from the City’s bond counsel and from the Master Developer.
Approval of the financing requires that the City adopt a resolution authorizing distribution of the preliminary limited offering memorandum in connection with the bond sale, sale of the Bonds on certain terms and conditions, and execution of various documents in connection with the bond sale by the City Manager and the Director of Operations.
The parameters for the Bond sale are: (1) the par amount of the Bonds cannot exceed $46,000,000, (2) the true interest cost must be less than 7% and (3) the underwriters’ discount cannot exceed 1.75% of the par amount of the Bonds.
The City Council resolution also approves the form of the following documents:
Report to Mayor and City Council
Re: Adopt Resolution CC 2024-087
November 20, 2024
A Fiscal Agent Agreement between the City and the US Bank National Association, as Fiscal Agent;
A Bond Purchase Agreement between the City and Hilltop Securities Inc.; A Preliminary Limited Offering Memorandum; and,
A Continuing Disclosure Agreement (appended to the Preliminary Limited Offering Memorandum).
The Bonds are also issued in compliance with the City’s Local Goals and Policies for Community Facilities Districts – Residential and with the City’s Debt Management Policy.
FISCAL IMPACT
$0; There is no fiscal impact to the City as a result of this action. The special taxes to pay for the Bonds will be levied on property within CFD 2022-3.
STRATEGIC PLAN
Goal III: Invest in infrastructure to improve community livability.
A. Seek innovative, cost-effective, customer-focused methods of service delivery.
C. Plan and maintain safe and attractive neighborhoods, streets, facilities, and public spaces with exciting programming that promotes active fun for everyone.
Prepared by: Janelle Samson, Director of Operations
Certified as to availability of Funds: Janelle Samson, Director of Operations Approved by: Ronda Perez, City Manager
Approved as to form: William P. Curley, III, City Attorney
ATTACHMENTS
Reso. No. CC 2024-087
Agrmt No. A-9125 with US Bank National Association, Fiscal Agent Agrmt No. A-9126 with Hilltop Securities Inc., Bond Purchase Preliminary Limited Offering Memorandum
CITY COUNCIL
CITY OF PALMDALE, CALIFORNIA
RESOLUTION NO. CC 2024 -087
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALMDALE
AUTHORIZING THE ISSUANCE OF SPECIAL TAX BONDS FOR THE
CITY OF PALMDALE COMMUNITY FACILITIES DISTRICT NO. 2022-3 (RITTER RANCH PHASE 1 PUBLIC FACILITIES) AND APPROVING
RELATED DOCUMENTS AND ACTIONS
WHEREAS, the City Council of the City of Palmdale (the “City”) has conducted proceedings under and pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), to form the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “District”), to authorize the levy of special taxes upon the land within the District, and to issue bonds secured by said special taxes to finance public facilities authorized to be funded by the District (the “Facilities”); and
WHEREAS, the City Council has determined that it is in the best interest of the owners of property in the District that special tax bonds of the City for the District be issued in an original aggregate principal amount which shall not exceed $46,000,000 (the “2025 Bonds”) to provide financing for the Facilities; and WHEREAS, there have been submitted to this City Council certain documents providing for the issuance of the 2025 Bonds and the use of the proceeds of the 2025 Bonds to finance the Facilities, and this City Council has reviewed said documents and found them to be in proper order; and
WHEREAS, there has been submitted to the City Council a Fiscal Agent Agreement No. A-9125 (the “Fiscal Agent Agreement”), between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), providing for the issuance of the 2025 Bonds under the authority provided in the Act, and the City Council, with the aid of City staff, has reviewed the Fiscal Agent Agreement and found it to be in proper order, and now desires to approve the Fiscal Agent Agreement and the issuance of the 2025 Bonds; and
WHEREAS, there has been presented to the City Council a preliminary limited offering memorandum (the “Preliminary Limited Offering Memorandum”) describing the 2025 Bonds, and the City Council now desires to approve the Preliminary Limited Offering Memorandum in connection with the offering of the 2025 Bonds to the prospective purchaser of the 2025 Bonds; and
WHEREAS, there has been presented to the City Council a Bond Purchase Agreement No. A-9126 (the “Purchase Contract”) to be executed by the City, for and on behalf of the District, and Hilltop Securities Inc. (the “Underwriter”), and the City Resolution No. CC 2024-087
Council now desires to approve such agreement in connection with the sale of the 2025 Bonds; and
WHEREAS, there has been presented to the City Council a Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”) to be executed by the City, for and on behalf of the District, and a dissemination agent, and the City Council now desires to approve such agreement in connection with the administration of the 2025 Bonds; and
WHEREAS, it appears that each of said documents which are now before the City Council at this meeting is in appropriate form and is an appropriate document to be executed and delivered for the purpose intended; and WHEREAS, pursuant to Section 53345.8 of the California Government Code, the legislative body of a community facilities district may issue and sell bonds of the District only if it determines, based on the full cash value as shown on the ad valorem Assessment Roll or upon an appraisal, that the value of the real property that would be subject to the special tax to pay debt service on the bonds will be at least three times the principal amount of the bonds to be secured by the special tax on property within the district, or unless the legislative body finds that the proposed bonds do not present any unusual credit risk due to the availability of credit enhancements or for other reasons specified by the legislative body; and
WHEREAS, if the 2025 Bonds are issued in an original aggregate principal amount of $46,000,000, the value of the parcels of real property within the boundaries of the District that will be subject to the levy of Special Taxes (as defined in the Fiscal Agent Agreement for the 2025 Bonds) to pay the principal of and interest on the 2025 Bonds, based on the full cash value as shown on the Assessment Roll of the County of Los Angeles of parcels within the District, will be less than three times the aggregate principal amount of the 2025 Bonds; and
WHEREAS, the issuance and sale of the 2025 Bonds should proceed for the following reasons, (i) the 1995 Bonds, defined below, are in payment default and will be cancelled as a result of this transaction, (ii) the issuance of the 2025 Bonds is a part of the orderly development of land within the District, and (iii) special measures have been taken with respect to the issuance of the 2025 Bonds such that only Qualified Institutional Buyers, as defined in the Fiscal Agent Agreement, are eligible to own the 2025 Bonds, unless the land within the District meets certain thresholds in value or Special Tax revenues; and
Resolution No. CC 2024-087
WHEREAS, pursuant to Section 5852.1 of the California Government Code, certain information relating to the 2025 Bonds is set forth in Exhibit A attached to this Resolution, and such information is hereby disclosed and made public; and WHEREAS, the boundaries of the District overlap the boundaries of the City’s Community Facilities District No. 93-1 (Ritter Ranch) (“CFD 93-1”), and the owner of all of the outstanding special tax bonds issued in 1995 for CFD 93-1 (the “1995 Bonds”) has agreed to tender the 1995 Bonds to the City for cancellation without any further payment of debt service owing on the 1995 Bonds, so that the special tax lien securing the repayment of the 1995 Bonds can be discharged, thereby increasing the value of the land in the District that also is located in CFD 93-1; and WHEREAS, subject to the tender of the 1995 Bonds to the City as described above, the City Council desires to make a determination that the special tax authorized to be levied by the City for CFD 93-1 shall cease to be levied and to direct the recording of a Notice of Cessation of Special Tax Lien (the “Notice of Cessation”) with respect to the property in CFD 93-1; and
WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the 2025 Bonds as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Act
NOW THEREFORE, BE IT RESOLVED, THE CITY COUNCIL OF THE CITY OF
PALMDALE DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER AS FOLLOWS:
SECTION 1. Findings. The City Council finds (a) that the preceding recitals are true and correct, (b) that the sale of the 2025 Bonds at private sale, without advertising for bids, will result in a lower overall cost to the District, (c) that if the 2025 Bonds are issued and sold in an original aggregate principal amount not to exceed $46,000,000, the value of the parcels of real property within the boundaries of the District which will be subject to the levy of Special Taxes to pay the principal of and interest on the 2025 Bonds, based on the full cash value as shown on the Assessment Roll of the County of Los Angeles will be less than three times such aggregate principal amount and the principal amount of all other outstanding bonds, that are secured by special taxes that are to be levied on such parcels or special assessments that have been levied on such parcels, and (d) the sale of the 2025 Bonds should proceed, notwithstanding the value of the land for the following reasons, (i) the issuance of the 2025 Bonds together with other actions to be taken by the City will permit the cancellation of the 1995 Bonds, (ii) the Facilities to be financed with the 2025 Bonds are needed to allow development to occur in the District in an orderly fashion, and (iii) the 2025 Bonds may only be sold by the Underwriter to one or more Qualified Institutional Buyers each of whom will confirm Resolution No. CC 2024-087
in writing that they are fully informed as to matters with respect to the District, the limited obligation of the City and the District to repay the 2025 Bonds, and otherwise with respect to the credit quality of the 2025 Bonds and the owner of the land in the District responsible for paying the Special Taxes to be used to repay the 2025 Bonds SECTION 2 . Issuance of 2025 Bonds; Approval of Fiscal Agent Agreement.
Pursuant to the Act, this Resolution and the Fiscal Agent Agreement, special tax bonds of the City for the District designated as “City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds” (the “2025 Bonds”), in an aggregate principal amount not to exceed $46,000,000, are hereby authorized to be issued in order to provide financing for the Facilities. The 2025 Bonds shall be executed in the form set forth in and otherwise as provided in the Fiscal Agent Agreement.
The City Council hereby approves the Fiscal Agent Agreement in the form presented at this meeting. The Mayor, the City Manager and the Director of Operations (each, a “Designated Officer”), each acting alone, are hereby authorized to execute the Fiscal Agent Agreement, for and in the name and on behalf of the City and the District, in such form, together with any additions thereto or changes therein deemed necessary or advisable by the Designated Officer executing the Fiscal Agent Agreement upon consultation with the City Attorney and Bond Counsel. The proceeds of the 2025 Bonds shall be applied by the City for the purposes and in the amounts set forth in the Fiscal Agent Agreement. The City Council hereby authorizes the delivery and performance by the City of the Fiscal Agent Agreement.
The City Council finds that the 2025 Bonds, when issued pursuant to the Fiscal Agent Agreement, will be in accordance with the City’s Local Goals and Policies for Community Facilities Districts – Residential Property approved by the City Council on May 26, 2004, except with respect to credit quality requirements which requirements are hereby waived by the City Council with respect to the 2025 Bonds for the reasons stated in Section 1 of this Resolution. The City Council hereby further finds and determines that the 2025 Bonds are in compliance with the City’s Debt Management Policy, as adopted by the City Council on January 4, 2017 SECTION 3 . Purchase Contract. The City Council hereby approves the Purchase Contract in the form presented at this meeting. The Designated Officers, each acting alone, are hereby authorized to accept the offer of the Underwriter to purchase the 2025 Bonds contained in the Purchase Contract; provided that (i) the principal amount of the 2025 Bonds sold thereby is not in excess of $46,000,000, (ii) the true interest cost of the 2025 Bonds is not in excess of 7.00%, and (iii) the Underwriter’s discount is not in excess of 1.75% of the principal amount of the 2025 Bonds. The Designated Officers, each acting alone, are hereby authorized to execute and deliver the Purchase Contract in said form (if the requirements of the preceding Resolution No. CC 2024-087
sentence are satisfied), with such additions thereto or changes therein as are recommended or approved by the Designated Officer executing such document upon consultation with the City Attorney and Bond Counsel. The City Council hereby authorizes the delivery and performance by the City of the Purchase Contract.
SECTION 4. Preliminary Limited Offering Memorandum. The Preliminary Limited Offering Memorandum in the form presented at this meeting is hereby approved. The Designated Officers are hereby authorized, for and in the name and on behalf of the City, to make changes to the Preliminary Limited Offering Memorandum prior to its dissemination to prospective investors, and to bring the Preliminary Limited Offering Memorandum into the form of a final limited offering memorandum (the “Limited Offering Memorandum”), including in each case such additions thereto or changes therein as are recommended or approved by any such officer upon consultation with the City Attorney and Disclosure Counsel. The City Manager is hereby authorized and directed to execute and deliver the Limited Offering Memorandum. The Underwriter is hereby authorized to distribute copies of the Preliminary Limited Offering Memorandum to persons who may be interested in the purchase of the 2025 Bonds and is directed to deliver a copy of the Limited Offering Memorandum to all actual purchasers of the 2025 Bonds.
The Designated Officers, each acting alone, are hereby authorized to execute a certificate or certificates to the effect that the Limited Offering Memorandum and the Preliminary Limited Offering Memorandum were deemed “final” as of their respective dates for purposes of Rule 15c2-12 of the Securities Exchange Act of 1934, and each Designated Officer is authorized to so deem such statements final.
SECTION 5 . Continuing Disclosure Agreement. The Continuing Disclosure Agreement in the form appended as Appendix E to the Preliminary Limited Offering Memorandum is hereby approved. The Designated Officers, each acting alone, are hereby authorized, for and in the name of and on behalf of the City, to execute and deliver the Continuing Disclosure Agreement in said form, with such additions thereto or changes therein as are deemed necessary, desirable or appropriate by the Designated Officer executing the Continuing Disclosure Agreement upon consultation with the City Attorney and Disclosure Counsel, the approval of such changes to be conclusively evidenced by the execution and delivery by a Designated Officer of the Continuing Disclosure Agreement. The City Council hereby authorizes the delivery and performance by the City of the Continuing Disclosure Agreement.
SECTION 6. Delivery of the 2025 Bonds. The 2025 Bonds, when executed, shall be delivered to the Fiscal Agent for authentication. The Fiscal Agent is hereby requested and directed to authenticate the 2025 Bonds by executing the Fiscal Agent’s certificate of authentication and registration appearing thereon, and to deliver the 2025 Bonds, when duly executed and authenticated, to the Underwriter in accordance with Resolution No. CC 2024-087
written instructions executed on behalf of the City by the City Manager or the Director of Operations which instructions such officers, each acting alone, are hereby authorized, for and in the name and on behalf of the City, to execute and deliver to the Fiscal Agent. Such instructions shall provide for the delivery of the 2025 Bonds to the Underwriter in accordance with the Purchase Contract upon payment of the purchase price therefor.
SECTION 7. Fiscal Agent for 2025 Bonds. U.S. Bank Trust Company, National Association, is hereby designated to act as the Fiscal Agent and to perform the actions and duties required of the Fiscal Agent under the Fiscal Agent Agreement, including those for the authentication, transfer, registration, and payment of the 2025 Bonds.
The City Manager or the Director of Operations, each acting alone, are hereby authorized to enter into an agreement with the Fiscal Agent for its services as the Fiscal Agent under the Fiscal Agent Agreement.
SECTION 8. Foreclosure Covenant. The City hereby covenants, for the benefit of the 2025 Bondowners, to commence and diligently pursue to completion any foreclosure action regarding delinquent installments of any amount levied as a special tax for the payment of interest or principal of the 2025 Bonds, said foreclosure action to be commenced and pursued as more completely set forth in the Fiscal Agent Agreement.
SECTION 9 . Actions for CFD 93-1. The City Council, in its capacity as the legislative body for CFD 93-1, hereby determines that, upon the tender of all of the outstanding 1995 Bonds to the Director of Operations of the City for cancellation without further payment of debt service on the 1995 Bonds, the special tax authorized to be levied by the City for CFD 93-1 shall cease to be levied on property in CFD 93-1.
The City Council hereby approves the form of Notice of Cessation attached as Exhibit B to this Resolution, and hereby authorizes and directs the City Clerk to record the Notice of Cessation in such form in the Los Angeles County Recorder’s Office following such tender of the 1995 Bonds to the City.
SECTION 10 . Official Actions. All actions heretofore taken by the officers and agents of the City with respect to the sale and issuance of the 2025 Bonds are hereby approved, confirmed and ratified, and the proper officers of the City are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the 2025 Bonds in accordance with this Resolution, and any certificate, agreement, and other document described in the documents herein approved.
Resolution No. CC 2024-087
SECTION 11. The City Clerk shall certify to the adoption of this resolution.
PASSED, APPROVED and ADOPTED this 20th day of November, 2024. _________________________________
Approved as to form: Austin Bishop, Mayor
ATTEST:
___________________________ _________________________________ William P. Curley, III Rochelle Scott, City Clerk
City Attorney
I, Rochelle Scott, City Clerk of the City of Palmdale, California, do hereby certify that the foregoing resolution was duly passed, approved, and adopted by the City Council of the City of Palmdale at a regular meeting of said Council held on the 20th day of November, 2024 by the following roll call vote:
AYES:
NOES:___________________________________________________________ ABSTAIN:______________________ABSENT:___________________________ Date:
Rochelle Scott, City Clerk
Resolution No. CC 2024-087
EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by the Underwriter which has been represented to have been provided in good faith:
(A) True Interest Cost of the 2025 Bonds: 6.134%
(B) Finance Charges of the 2025 Bonds: $808,000
(C) Net Proceeds of the 2025 Bonds to be Received: $28,495,000 (net of Finance Charges, reserves and capitalized interest)
(D) Total Payment Amount through Maturity (sum of all 2025 Bond net debt service):
$88,460,000
The foregoing estimates constitute good faith estimates only and are based on market conditions prevailing at the time of preparation of such estimates on November 4, 2024.
The principal amount of the 2025 Bonds, the true interest cost of the 2025 Bonds, 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) the actual date of the sale of the 2025 Bonds being different than the date used for purposes of such estimates, (b) the actual principal amount of 2025 Bonds sold being different from the estimated amount used for purposes of such estimates, (c) the actual principal amortization of the 2025 Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates on the 2025 Bonds at the time of sale of the 2025 Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the City’s financing plan, or a combination of such factors. The actual date of sale of the 2025 Bonds and the actual principal amount of the 2025 Bonds sold will be determined based on the timing of the need for proceeds of the 2025 Bonds and other factors. The actual interest rates on the 2025 Bonds will depend on market interest rates at the time of sale thereof.
The actual amortization of the principal of the 2025 Bonds will also depend, in part, 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.
Resolution No. CC 2024-087
EXHIBIT B
NOTICE OF CESSATION OF SPECIAL TAX
RECORDING REQUESTED BY
THE CITY OF PALMDALE
WHEN RECORDED MAIL TO:
CITY OF PALMDALE
OFFICE OF THE CITY CLERK
38300 SIERRA HIGHWAY, SUITE C
PALMDALE, CA 93550
SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE
THIS DOCUMENT IS EXEMPT FROM DOCUMENTARY TRANSFER TAX
PURSUANT TO SECTION 11922 OF THE REVENUE & TAXATION CODE.
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE GOVERNMENT CODE.
TITLE(S)
NOTICE OF CESSATION OF SPECIAL TAX
Resolution No. CC 2024-087
EXHIBIT B
RECORDING REQUESTED BY:
City Clerk, City of Palmdale
38300 Sierra Highway Suite C
Palmdale, California 93550
WHEN RECORDED RETURN TO:
RdR Development Holdings, LLC
2121 North Pearl Street, Suite 600
Dallas, Texas 75201
Attention: General Counsel
_____________________________________________________________________
NOTICE OF CESSATION OF SPECIAL TAX
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 93-1
(RITTER RANCH)
1. The City of Palmdale (the “City”), County of Los Angeles, State of California, with respect to the City of Palmdale Community Facilities District No. 93-1 (Ritter Ranch) (the “District”), hereby gives notice that:
2. On November 20, 2024, the City Council of the City, acting as the legislative body of the District, adopted a resolution determining that special taxes shall cease to be levied for the District on the property in the District, which property consists of the Los Angeles County Assessor’s Parcels identified in Attachment A hereto (collectively, the “District Parcels”) and directed the City Clerk to record this Notice of Cessation of Special Tax in the Office of the Los Angeles County Recorder.
3. The obligation of the District Parcels to pay the special taxes authorized to be levied on property in the District has ceased and the lien imposed by the Amended and Restated Notice of Special Tax Lien recorded on March 27, 2014 as document no. 20140311807 in the records of the County Recorder of Los Angeles County, State of California, as amended by the First Amendment to Notice of Special Tax Lien recorded on September 21, 2016 as document no. 20161148547 in the records of the County Recorder of Los Angeles County, State of California, is extinguished as to the District Parcels.
4. The map of the boundaries of the District was recorded in Book 179 of Maps of Assessment and Community Facilities Districts at Page 79, in the office of the County Recorder for the County of Los Angeles, State of California.
Dated:____________________, 2024 By: ________________________ City Clerk,
City of Palmdale
Resolution No. CC 2024-087
ATTACHMENT A
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 93-1
(RITTER RANCH)
LOS ANGELES COUNTY ASSESSOR'S PARCEL NUMBERS AND
OWNER OF LAND OF DISTRICT PARCELS
Los Angeles County
Assessor’s Parcel Nos. Owners of Parcels
3205-002-028 RDR DEVELOPMENT HOLDINGS LLC
3205-002-051 RDR DEVELOPMENT HOLDINGS LLC
3205-002-053 RDR DEVELOPMENT HOLDINGS LLC
3206-005-008 RDR DEVELOPMENT HOLDINGS LLC
3206-006-016 RDR DEVELOPMENT HOLDINGS LLC
3206-006-028 RDR DEVELOPMENT HOLDINGS LLC
3206-007-001 RDR DEVELOPMENT HOLDINGS LLC
3206-007-002 RDR DEVELOPMENT HOLDINGS LLC
3206-008-012 RDR DEVELOPMENT HOLDINGS LLC
3206-009-014 RDR DEVELOPMENT HOLDINGS LLC
3206-010-011 RDR DEVELOPMENT HOLDINGS LLC
3206-016-008 RDR DEVELOPMENT HOLDINGS LLC
3206-017-009 RDR DEVELOPMENT HOLDINGS LLC
3206-018-014 RDR DEVELOPMENT HOLDINGS LLC
3206-018-033 RDR DEVELOPMENT HOLDINGS LLC
3206-020-010 RDR DEVELOPMENT HOLDINGS LLC
3206-020-017 RDR DEVELOPMENT HOLDINGS LLC
3206-021-002 RDR DEVELOPMENT HOLDINGS LLC
3206-021-005 RDR DEVELOPMENT HOLDINGS LLC
3206-022-001 RDR DEVELOPMENT HOLDINGS LLC
3206-025-001 RDR DEVELOPMENT HOLDINGS LLC
3206-025-002 RDR DEVELOPMENT HOLDINGS LLC
3206-026-003 RDR DEVELOPMENT HOLDINGS LLC
3206-026-004 RDR DEVELOPMENT HOLDINGS LLC
3206-026-005 RDR DEVELOPMENT HOLDINGS LLC
3206-026-006 RDR DEVELOPMENT HOLDINGS LLC
3206-026-007 RDR DEVELOPMENT HOLDINGS LLC
Resolution No. CC 2024-087
Los Angeles County
Assessor’s Parcel Nos. Owners of Parcels
3206-026-008 RDR DEVELOPMENT HOLDINGS LLC
3206-026-009 RDR DEVELOPMENT HOLDINGS LLC
3206-026-010 RDR DEVELOPMENT HOLDINGS LLC
3206-027-002 RDR DEVELOPMENT HOLDINGS LLC
3206-027-004 RDR DEVELOPMENT HOLDINGS LLC
3206-027-005 RDR DEVELOPMENT HOLDINGS LLC
3206-027-006 RDR DEVELOPMENT HOLDINGS LLC
3206-027-007 RDR DEVELOPMENT HOLDINGS LLC
3206-027-008 RDR DEVELOPMENT HOLDINGS LLC
3206-027-009 RDR DEVELOPMENT HOLDINGS LLC
3206-027-010 RDR DEVELOPMENT HOLDINGS LLC
3206-027-012 RDR DEVELOPMENT HOLDINGS LLC
3206-027-800 SOUTHERN CALIFORNIA EDISON COMPANY
3206-011-901 STATE OF CALIF
3206-014-900 STATE OF CALIF
3206-015-900 STATE OF CALIF
3216-002-900 STATE OF CALIF
3216-002-901 STATE OF CALIF
3216-002-902 STATE OF CALIF
3216-002-903 STATE OF CALIF
3217-002-901 STATE OF CALIF
3217-002-902 STATE OF CALIF
3206-014-010 STELO INVESTMENTS LLC AND & BRANSON SNIDER LLC 09960.00000\42886166.2
FISCAL AGENT AGREEMENT
(A-9125)
by and between
CITY OF PALMDALE, CALIFORNIA
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Fiscal Agent
dated as of February 1, 2025
relating to:
$____________
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
2025 Special Tax Bonds
09960.00000\42886166.2
TABLE OF CONTENTS
Page
i
ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement........................................................................... 2 Section 1.02. Agreement for Benefit of Bondowners............................................................ 2 Section 1.03. Definitions........................................................................................................ 2
ARTICLE II
THE 2025 BONDS
Section 2.01. Principal Amount; Designation...................................................................... 12 Section 2.02. Terms of 2025 Bonds..................................................................................... 12 Section 2.03. Redemption.................................................................................................... 13 Section 2.04. Form of 2025 Bonds ...................................................................................... 16 Section 2.05. Execution of Bonds........................................................................................ 16 Section 2.06. Transfer of Bonds .......................................................................................... 16 Section 2.07. Exchange of Bonds ........................................................................................ 17 Section 2.08. Registration Books......................................................................................... 17 Section 2.09. Temporary Bonds........................................................................................... 18 Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen.................................................. 18 Section 2.11. Limited Obligation......................................................................................... 18 Section 2.12. No Acceleration ............................................................................................. 19 Section 2.13. Book-Entry Only System............................................................................... 19 Section 2.14. Issuance of Parity Bonds................................................................................ 20
ARTICLE III
ISSUANCE OF 2025 BONDS
Section 3.01. Issuance and Delivery of 2025 Bonds ........................................................... 22 Section 3.02. Application of Proceeds of Sale of 2025 Bonds and CFD 93-1 Funds ......... 22 Section 3.03. Improvement Fund......................................................................................... 22 Section 3.04. Special Tax Fund. .......................................................................................... 24 Section 3.05. Administrative Expense Fund........................................................................ 25 Section 3.06. Costs of Issuance Fund. ................................................................................. 26 Section 3.07. Validity of Bonds........................................................................................... 26
ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues.................................................................... 27 Section 4.02. Bond Fund...................................................................................................... 27 Section 4.03. Reserve Fund. ................................................................................................ 29
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment........................................................................................... 31 Section 5.02. Limited Obligation......................................................................................... 31 09960.00000\42886166.2
TABLE OF CONTENTS
(continued)
Page
ii
Section 5.03. Extension of Time for Payment ..................................................................... 31 Section 5.04. Against Encumbrances................................................................................... 31 Section 5.05. Books and Records ........................................................................................ 31 Section 5.06. Protection of Security and Rights of Owners ................................................ 31 Section 5.07. Compliance with Law.................................................................................... 31 Section 5.08. Continuing Disclosure ................................................................................... 31 Section 5.09. Federal Guarantee Prohibition ....................................................................... 31 Section 5.10. Collection of Special Tax Revenues.............................................................. 31 Section 5.11. Further Assurances......................................................................................... 33 Section 5.12. No Arbitrage .................................................................................................. 33 Section 5.13. Maintenance of Tax-Exemption .................................................................... 33 Section 5.14. Covenant to Foreclose.................................................................................... 33 Section 5.15. No Additional Bonds ..................................................................................... 34 Section 5.16. Yield of the 2025 Bonds ................................................................................ 34 Section 5.17. Private Activity Bond Limitation................................................................... 34 Section 5.18. Reduction of Special Taxes ........................................................................... 34 Section 5.19. State Reporting Requirements ....................................................................... 34 Section 5.20. Limits on Special Tax Waivers and Bond Tenders ....................................... 35 Section 5.21. City Bid at Foreclosure Sale .......................................................................... 35
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY Section 6.01. Deposit and Investment of Moneys in Funds ................................................ 37 Section 6.02. Rebate of Excess Investment Earnings to the United States.......................... 38 Section 6.03. Liability of City.............................................................................................. 39 Section 6.04. Engagement of Agents by City...................................................................... 39
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent......................................................................... 41 Section 7.02. Liability of Fiscal Agent ................................................................................ 42 Section 7.03. Information; Books and Accounts ................................................................. 44 Section 7.04. Notice to Fiscal Agent ................................................................................... 44 Section 7.05. Compensation, Indemnification..................................................................... 44
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted.................................................................................. 46 Section 8.02. Owners’ Meetings.......................................................................................... 47 Section 8.03. Procedure for Amendment with Written Consent of Owners........................ 47 Section 8.04. Disqualified Bonds......................................................................................... 47 Section 8.05. Effect of Supplemental Agreement................................................................ 48 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments.............. 48 09960.00000\42886166.2
TABLE OF CONTENTS
(continued)
Page
iii
Section 8.07. Amendatory Endorsement of Bonds.............................................................. 48
ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties ..................................................... 49 Section 9.02. Successor is Deemed Included in All References to Predecessor ................. 49 Section 9.03. Discharge of Agreement ................................................................................ 49 Section 9.04. Execution of Documents and Proof of Ownership by Owners...................... 50 Section 9.05. Waiver of Personal Liability.......................................................................... 50 Section 9.06. Notices to and Demands on City and Fiscal Agent ....................................... 50 Section 9.07. Partial Invalidity............................................................................................. 51 Section 9.08. Unclaimed Moneys ........................................................................................ 51 Section 9.09. Applicable Law.............................................................................................. 51 Section 9.10. Conflict with Law .......................................................................................... 51 Section 9.11. Conclusive Evidence of Regularity ............................................................... 51 Section 9.12. Payment on Business Day.............................................................................. 51 Section 9.13. Counterparts................................................................................................... 51 Section 9.14. U.S.A. Patriot Act .......................................................................................... 51 Section 9.15. Electronic Transactions.................................................................................. 51 EXHIBIT A FORM OF 2025 BOND..........................................Error! Bookmark not defined.
EXHIBIT B FORM OF INVESTOR LETTER............................Error! Bookmark not defined. 09960.00000\42886166.2
1 FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT NO. A-9125 (the “Agreement”), dated as of February 1, 2025, is by and between the City of Palmdale, California, a municipal corporation and chartered city organized and existing under its charter and the laws of the State of California (the “City”), for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “District”), and U.S. Bank Trust Company, National Association, a national banking association duly organized and existing under the laws of the United States of America, as fiscal agent (the “Fiscal Agent”).
RECITALS:
WHEREAS, the City Council of the City (the “City Council”) has formed the District under the provisions of the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the “Law”) and Resolution No. CC 2022-109 of the City Council adopted on October 24, 2022;
WHEREAS, the City Council, as the legislative body with respect to the District, is authorized under the Law to levy special taxes to pay for the costs of facilities eligible to be financed by the District and to authorize the issuance of bonds, including bonds to refund any bonds issued for the District, secured by said special taxes under the Law; WHEREAS, under the provisions of the Law, on November 20, 2024, the City Council adopted its Resolution No. CC 2024-____ (the “Resolution”), which Resolution, among other matters, authorized the issuance of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds (the “2025 Bonds”) to provide funds to finance improvements authorized to be financed by the District, and provided that said issuance would be in accordance with this Agreement, and authorized the execution hereof; WHEREAS, it is in the public interest and for the benefit of the City, the District and the owners of the 2025 Bonds that the City enter into this Agreement to provide for the issuance of the 2025 Bonds, the disbursement of proceeds of the 2025 Bonds, the disposition of the special taxes securing the 2025 Bonds and the administration and payment of the 2025 Bonds; and WHEREAS, the City has determined that all things necessary to cause the 2025 Bonds, when authenticated by the City for the District and issued as in the Law, the Resolution and this Agreement provided, to be legal, valid and binding and special obligations of the City for the District in accordance with their terms, and all things necessary to cause the creation, authorization, execution and delivery of this Agreement and the creation, authorization, execution and issuance of the 2025 Bonds, subject to the terms hereof, have in all respects been duly authorized.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:
09960.00000\42886166.2
2 ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement . This Agreement is entered into pursuant to the provisions of the Law and the Resolution. Agreement for Benefit of Bondowners . The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. Any action by any Owner to enforce the provisions of this Agreement shall be for the equal benefit and protection of all Owners of the Bonds.The Fiscal Agent may become the Owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Fiscal Agent.
Section 1.03. Definitions . Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof.“Acquisition Agreement” means the Acquisition Agreement No. A-8174, dated as of November 1, 2022, between the City and RdR Development Holdings, LLC, as amended by Supplement No. 1 to Acquisition Agreement (A-____), dated as of February 1, 2025, between the City and RdR Development Holdings, LLC, and as it may be further amended or supplemented in accordance with its terms. “Administrative Expenses” means any or all of the following: the fees and expenses of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying out its duties hereunder (including, but not limited to, the levying and collection of the Special Taxes, and the foreclosure of the liens of delinquent Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff related thereto and a proportionate amount of City general administrative overhead related thereto, any amounts paid by the City from its general funds pursuant to Section 6.02, any amounts paid or payable to any persons or entities (including but not limited to any Tax Consultant) employed by the City in connection with the discharge of any of the City’s obligations hereunder (including, but not limited to, the calculation of the levy of the Special Taxes, foreclosures with respect to delinquent taxes and expenses of the City and/or the District in connection with any bankruptcy proceedings involving parcel(s) in the District with delinquent Special Taxes, and the calculation of amounts subject to rebate to the United States), and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the discharge of their respective duties hereunder or in connection with the Bonds and, in the case of the City, in any way related to the administration of the Bonds or the District.
Administrative Expenses shall include any such expenses incurred in prior years but not yet paid. “Administrative Expense Fund” means the fund by that name established by Section
3.05(A).
09960.00000\42886166.2
3 “Affiliate” means, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, another Person. For the purpose of this definition, “control” means having direct or indirect power to direct or cause the direction of the management or policies of a non-natural Person (including the right to veto policy decisions), whether through the ownership of voting interests, by agreement, or otherwise.
“Agreement” means this Fiscal Agent Agreement No. A-9125, as it may be amended or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof.
“Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of the provisions of Section 2.03(A)(ii) providing for mandatory sinking payments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking payment due in such Bond Year pursuant to Section 2.03(A)(ii)). “Auditor” means the auditor/controller of the County, as such other official at the County who is responsible for preparing property tax bills.
“Authorized Denominations” means: (a) with respect to the 2025 Bonds: (i) until such time as the requirements of Section 2.06(B)(ii) have been satisfied, $250,000 or any integral multiple of $5,000 in excess thereof, except that one 2025 Bond may be in the principal amount of the portion of the then Outstanding principal amount of the 2025 Bonds not divisible by $250,000; and (ii) from and after the requirements of Section 2.06(B)(ii) have been satisfied, $100,000 or any integral multiple of $5,000 in excess thereof, except that one 2025 Bond may be in the principal amount of the portion of the then Outstanding principal amount of the 2025 Bonds not divisible by $100,000; and (b) with respect to any series of Parity Bonds, the denominations specified in the Supplemental Agreement providing for the issuance of such series of Parity Bonds. “Authorized Officer” means the Mayor, the City Manager, the Director of Operations, the Director of Finance, the City Clerk, or any other officer or employee of the City authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer. “Bond Counsel” means any attorney or other firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.
“Bond Fund” means the fund by that name established by Section 4.02(A). “Bond Year” means the one-year period beginning on September 2 in each year and ending on September 1 in the following year except that the first Bond Year shall begin on the Closing Date and end on September 1, 2025.
“Bonds” means, collectively, the 2025 Bonds, and, if the context requires, any Parity Bonds, at any time Outstanding under this Agreement or any Supplemental Agreement. 09960.00000\42886166.2
4 “Business Day” means any day other than (i) a Saturday or a Sunday, or (ii) a day on which banking institutions in the state in which the Principal Office is located are authorized or obligated by law or executive order to be closed.
“Capitalized Interest Account” means the account by that name established within the Bond Fund pursuant to Section 4.02(A).
“CDIAC” means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State or any successor agency or bureau thereto. “CFD 93-1” means the City of Palmdale Community Facilities District No. 93-1 (Ritter Ranch).
“CFD 93-1 Funds” means the funds held in the Improvement Fund under the 1995 Fiscal Agent Agreement deposited to the 1995 Account of the Improvement Fund pursuant to the second paragraph of Section 3.02.
“City” means the City of Palmdale, California.
“Closing Date” means__________ , 2025, being the date upon which there is a physical delivery of the 2025 Bonds in exchange for the amount representing the purchase price of the 2025 Bonds by the Original Purchaser.
“Code” means the Internal Revenue Code of 1986 as in effect on the date of issuance of the 2025 Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the 2025 Bonds, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of _________, 2024, executed by the City and NBS as the initial Dissemination Agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the 2025 Bonds which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee, fees and expenses of Fiscal Agent’s counsel, expenses incurred by the City in connection with the issuance of the 2025 Bonds and the transfer of the CFD 93-1 Funds to the Fiscal Agent, special tax consultant fees and expenses, municipal advisor fees and expenses, Bond (underwriter’s) discount, appraisal fees, legal fees and charges including those of bond counsel and disclosure counsel, charges for execution, transportation and safekeeping of the 2025 Bonds and other costs, charges and fees in connection with the foregoing. “Cost of Issuance Fund” means the fund by that name established by Section 3.06(A). “County” means the County of Los Angeles, California.
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5 “DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Debt Service” means the scheduled amount of interest and amortization of principal (including principal payable by reason of Section 2.03(A)(ii)) on the Bonds and the scheduled amount of interest and amortization of principal payable on any Parity Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period.
“Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository pursuant to Section 2.13.
“District” means the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), formed pursuant to the Law and the Resolution of Formation. “District Value” means the market value as determined by reference to (i) an appraisal performed within three (3) months of, as applicable, (a) the date of issuance of any proposed Parity Bonds pursuant to Section 2.14, or (b) a change in the transfer restrictions and Authorized Denominations of the 2025 Bonds pursuant to Section 2.06(B)(ii), in each case by an MAI appraiser (the “Appraiser”) selected by the City, of the parcels of real property in the District subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired with any amounts then on deposit in the Improvement Fund and with the proceeds of any proposed series of Parity Bonds, or (ii), in the alternative, as to some or all of the parcels, the assessed value of any such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the Finance Director. Neither the City nor the Finance Director shall be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provided for purposes of this definition or by reason of any exercise of discretion made by any Appraiser pursuant to this definition.
“Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, or (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt. “Federal Securities” means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State for funds held by the Fiscal Agent:
09960.00000\42886166.2
6 (i) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as “stripped” obligations and coupons; or
(ii) any of the following obligations of the following agencies of the United States of America: (a) direct obligations of the Export-Import Bank, (b) certificates of beneficial ownership issued by the Farmers Home Administration, (c) participation certificates issued by the General Services Administration, (d) mortgage-backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association, (e) project notes issued by the United States Department of Housing and Urban Development, and (f) public housing notes and bonds guaranteed by the United States of America. “Finance Director” means the Director of Operations of the City or any person otherwise acting as the chief financial officer of the City, or such person’s written designee. “Fiscal Agent” means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation, bank or association which may at any time be substituted in its place, as provided in Section 7.01.
“Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.
“Improvement Fund” means the fund by that name established by Section 3.03(A). “Independent Financial Consultant” means any consultant or firm of such consultants appointed by the City or any Authorized Officer, and who, or each of whom: (i) is judged by the person or entity that approved them to have experience in matters relating to the issuance and/or administration of bonds under the Law; (ii) is in fact independent and not under the domination of the City; (iii) does not have any substantial interest, direct or indirect, with or in the City, or any owner of real property in the District, or any real property in the District; and (iv) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City.
“Information Services” means the Electronic Municipal Market Access System (referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Board, (at http://emma.msrb.org); and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such services providing information with respect to called bonds as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Interest Payment Dates” means March 1 and September 1 of each year, commencing September 1, 2025.
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7 “Law” means the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code.
“Maximum Annual Debt Service” means the largest Annual Debt Service for the then current Bond Year and any Bond Year after the calculation is made through the final scheduled maturity date for any Outstanding Bonds.
“Minimum Administrative Expense Requirement” means (a) for Fiscal Year 2025-2026, $100,000.00; and (b) for each Fiscal Year after Fiscal Year 2025-2026, an amount equal to 102% of the Minimum Administrative Expense Requirement in effect for the immediately preceding Fiscal Year.
“Moodys” means Moody’s Investors Service, New York, New York, or its successors. “1995 Account” means the 1995 Account within the Improvement Fund established pursuant to Section 3.03(A).
“1995 Fiscal Agent Agreement” means the Amended and Restated Fiscal Agent Agreement (A-4261), dated as of March 1, 2014, between the City, for and on behalf of CFD 93- 1, and U.S. Bank Trust Company, National Association, formerly U.S. Bank National Association, as fiscal agent, as amended and in effect on the Closing Date. “Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.
“Ordinance” means Ordinance No. 1597, adopted by the City Council of the City on October 24, 2022, and any other ordinance of the City levying the Special Taxes. “Original Purchaser” means the first purchaser of the 2025 Bonds from the City, being Hilltop Securities Inc.
“Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.04) all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to this Agreement or any Supplemental Agreement.
“Owner” or “Bondowner” means any person who shall be the registered owner of any Outstanding Bond.
“Parity Bonds” means bonds issued by the City for the District payable and secured on a parity with any then Outstanding Bonds, pursuant to Section 2.14. “Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure Agreement.
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8 “Permitted Investments” means the following, but only to the extent that the same are acquired at Fair Market Value and are otherwise legal investments for funds of the City:
(a) Federal Securities.
(b) Registered state warrants or treasury notes or bonds of the State, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the State or by a department, board, agency, or authority of the State, which are rated in one of the two highest short-term or long-term rating categories by either Moody’s or S&P, and which have a maximum term to maturity not to exceed three years.
(c) Time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank or trust company, or a state or federal savings and loan association which may include the Fiscal Agent and its affiliates; provided, that the certificates of deposit shall be one or more of the following: continuously and fully insured by the Federal Deposit Insurance Corporation and/or continuously and fully secured by securities described in subdivision (a) or (b) of this definition of Permitted Investments which shall have a market value, as determined on a marked-to-market basis calculated at least weekly, and exclusive of accrued interest, or not less than 102 percent of the principal amount of the certificates on deposit.
(d) Commercial paper which at the time of purchase is of “prime” quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody’s or S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an “A” or higher rating for the issuer’s debentures, other than commercial paper, by either Moody’s or S&P, provided that purchases of eligible commercial paper may not exceed 180 days’ maturity nor represent more than 10 percent of the outstanding commercial paper of an issuing corporation.
Purchases of commercial paper may not exceed 20 percent of the total amount invested pursuant to this definition of Permitted Investments.
(e) A repurchase agreement with a state or nationally charted bank or trust company or a national banking association or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, provided that all of the following conditions are satisfied: (1) the agreement is secured by any one or more of the securities described in subdivision (a) of this definition of Permitted Investments, (2) the underlying securities are required by the repurchase agreement to be held by a bank, trust company, or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and which is independent of the issuer of the repurchase agreement, and (3) the underlying securities are maintained at a market value, as determined on a marked-to-market basis calculated at least weekly, of not less than 103 percent of the amount so invested.
(f) An investment agreement or guaranteed investment contract with, or guaranteed by, a financial institution the long-term unsecured obligations of which are 09960.00000\42886166.2
9 rated Aa2 and “AA” or better, respectively, by Moody’s and S&P at the time of initial investment. The investment agreement shall be subject to a downgrade provision with at least the following requirements: (1) the agreement shall provide that within five business days after the financial institution’s long-term unsecured credit rating has been withdrawn, suspended, other than because of general withdrawal or suspension by Moody’s or S&P from the practice of rating that debt, or reduced below “AA-” by S&P or below “Aa3” by Moody’s (these events are called “rating downgrades”) the financial institution shall give notice to the City and, within the five-day period, and for as long as the rating downgrade is in effect, shall deliver in the name of the City or the Fiscal Agent to the City or the Fiscal Agent Federal Securities allowed as investments under subdivision (a) of this definition of Permitted Investments with aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement invested with the financial institution at that time, and shall deliver additional allowed federal securities as needed to maintain an aggregate current market value equal to at least 105 percent of the principal amount of the investment agreement within three days after each evaluation date, which shall be at least weekly, and (2) the agreement shall provide that, if the financial institution’s long-term unsecured credit rating is reduced below “A3” by Moody’s or below “A-” by S&P, the Fiscal Agent or the City may, upon not more than five business days’ written notice to the financial institution, withdraw the investment agreement, with accrued but unpaid interest thereon to the date, and terminate the agreement.
(g) The Local Agency Investment Fund of the State.
(h) Investments in a money market mutual fund (including any funds of the Fiscal Agent or its affiliates and including any funds for which the Fiscal Agent or its affiliates provides investment advisory or other management services) rated in the highest rating category (without regard to plus (+) or minus (-) designations) by Moody’s or S&P. (i) Money market deposit accounts, time deposits and certificates of deposits, issued by commercial banks (including those of the Fiscal Agent, its parent and its affiliates), savings and loan associations or mutual savings banks whose short-term obligations of which are rated on the date of purchase “A-1” or better by S&P and “P-1” by Moody’s.
(j) Any other lawful investment for City funds.
“Person” means an individual, corporation, limited liability company, firm, association, partnership, trust or other legal entity or group of entities. “Phase 1 Interim Agreement” means the Phase 1 Interim Agreement – Ritter Ranch Development (A-7796), dated April 20, 2022, among RdR Development Holdings, LLC, PHCC and the City.
“PHCC” means PHCC LLC (d/b/a Preston Hollow Community Capital), a Delaware limited liability company, and any successor thereto.
“Principal Office” means the corporate trust office of the Fiscal Agent as identified pursuant to Section 9.06, or at such other address as the Fiscal Agent may designate from time to 09960.00000\42886166.2
10 time in accordance with Section 9.06; provided, however, for the purpose of maintenance of the Registration Books and surrender of Bonds for payment, transfer or exchange such term means the office at which the Fiscal Agent conducts its corporate agency business, or such other or additional offices as may be designated by the Fiscal Agent. “Project” means the facilities eligible to be funded by the District, as specified by the Resolution of Formation.
“Qualified Institutional Buyer” has the meaning given such term in Rule 144A of the Securities Act.
“Rate and Method of Apportionment” means the Amended and Restated Rate and Method of Apportionment of Special Tax for the District, as approved by proceedings pursuant to Resolution of Consideration, and as it may be amended from time to time in accordance with the provisions of the Law.
“Record Date” means the fifteenth (15th) day of the month next preceding the month of the applicable Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day. “Refunding Bonds” means bonds issued by the City for the District the net proceeds of which are used to refund all or a portion of the then Outstanding Bonds; provided that the debt service on the Refunding Bonds in any Bond Year is not in excess of the debt service on the Bonds being refunded, and the final maturity of the Refunding Bonds is not later than the final maturity of the Bonds being refunded.
“Registration Books” means the records maintained by the Fiscal Agent pursuant to Section 2.08 for the registration and transfer of ownership of the Bonds. “Regulations” means temporary and permanent regulations promulgated under the Code. “Reserve Fund” means the fund by that name established pursuant to Section 4.03(A). “Reserve Requirement” means, as of any date of calculation, an amount equal to one-half of the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of the then average Annual Debt Service , or (iii) ten percent (10%) of the initial principal amount of the Bonds. The Reserve Requirement as of the Closing Date is $____________. “Resolution” means Resolution No. CC 2024-002, adopted by the City Council of the City on November 20, 2024, authorizing the issuance of the 2025 Bonds. “Resolution of Consideration” means Resolution No. CC 2024____, adopted by the City Council of the City on November 6, 2024.
“Resolution of Formation” means Resolution No. CC 2022-109, adopted by the City Council of the City on October 24, 2022.
“S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services LLC business, New York, New York, or its successors.
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11 “Securities Act” means the United States Securities Act of 1933, as amended and in effect from time to time.
“Securities Depositories” means The Depository Trust Company, 55 Water Street, 1SL, New York, New York 10041-0099, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Special Tax Fund” means the fund by that name established by Section 3.04(A). “Special Tax Prepayments” means the proceeds of any prepayments of Special Taxes received by the City, as calculated pursuant to the Rate and Method of Apportionment, less any administrative fees or penalties collected as part of any such prepayment. “Special Tax Prepayments Account” means the account by that name within the Bond Fund established by Section 4.02(A).
“Special Tax Revenues” means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes up to the amount of said lien, but shall not include interest and penalties, if any, collected with the Special Taxes that are in excess of the rate of interest payable on the Bonds. “Special Taxes” means the special tax levied within the District pursuant to the Law, the Ordinance and this Agreement.
“State” means the State of California.
“Supplemental Agreement” means an agreement the execution of which is authorized by a resolution which has been duly adopted by the City under the Law and which agreement is amendatory of or supplemental to this Agreement, but only if and to the extent that such agreement is specifically authorized hereunder.
“Tax Consultant” means NBS, or another independent financial or tax consultant retained by the City for the purpose of computing the Special Taxes. “2025 Bonds” means the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds, issued and Outstanding under this Agreement.
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12 ARTICLE II
THE 2025 BONDS
Section 2.01. Principal Amount; Designation . The 2025 Bonds in the aggregate principal amount of _____________ Million _____________ Hundred Thousand Dollars ($____________) are hereby authorized to be issued by the City for the District under and subject to the terms of the Resolution, this Agreement, the Law and other applicable laws of the State.
The 2025 Bonds are hereby designated the “City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds.”Terms of 2025 Bonds.
On the Closing Date, the 2025 Bonds will be issued in fully registered form without coupons in the form of a single 2025 Bond in the principal amount equal to the aggregate principal amount of the 2025 Bonds as stated in Section 2.01. The 2025 Bond initially issued may be exchanged for 2025 Bonds of Authorized Denominations pursuant to Section 2.07.The 2025 Bonds will be dated the Closing Date, will mature on September 1, 2064 and will bear interest (calculated on the basis of a 360-day year of twelve 30-day months) at a rate of ____% per annum.
Interest on the 2025 Bonds shall be payable on each Interest Payment Date to the person whose name appears on the Registration Books maintained by the Fiscal Agent as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owner at the address of such Owner as it appears on the Registration Books maintained by the Fiscal Agent as of the preceding Record Date. Principal of and premium (if any) on any 2025 Bond shall be paid by check upon presentation and surrender thereof, at maturity or the prior redemption thereof, at the Principal Office of the Fiscal Agent. The principal of and interest and premium (if any) on the 2025 Bonds shall be payable in lawful money of the United States of America.
Each 2025 Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) it is authenticated on or before August 15, 2025, in which event it shall bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any 2025 Bond, interest thereon is in default, such 2025 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. “CUSIP” identification numbers shall be imprinted on the 2025 Bonds, but such numbers shall not constitute a part of the contract evidenced by the 2025 Bonds, and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the 2025 Bonds, or result in any liability of the City or the Fiscal Agent. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute any violation of the City’s contract with such Owners and shall not impair the effectiveness of any such notice.
All 2025 Bonds paid by the Fiscal Agent pursuant to this Article shall be canceled by the Fiscal Agent. The Fiscal Agent shall dispose of the canceled 2025 Bonds in accordance with its then customary procedures and issue a certificate of destruction thereof to the City. 09960.00000\42886166.2
13 Section 2.03. Redemption .
(A) Redemption Dates.
(i) Optional Redemption . The 2025 Bonds are subject to optional redemption prior to their stated maturity at the option of the City on any date occurring on or after September 1, 2035, as a whole, or in part by lot, at a redemption price equal to the principal amount of the 2025 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.
(ii) Mandatory Sinking Payment Redemption . The 2025 Bonds are subject to mandatory sinking payment redemption in part on September 1, 2027, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:
Redemption Date
(September 1) Sinking Payments
Redemption Date
(September 1) Sinking Payments
2027 $ 2046 $
2028 2047
2029 2048
2030 2049
2031 2050
2032 2051
2033 2052
2034 2053
2035 2054
2036 2055
2037 2056
2038 2057
2039 2058
2040 2059
2041 2060
2042 2061
2043 2062
2044 2063
2045 2064 (maturity)
The amounts in the foregoing table shall be reduced to the extent practicable so as to maintain the same debt service profile for the 2025 Bonds as in effect prior to such redemption, as a result of any prior partial redemption of the 2025 Bonds pursuant to Section 2.03(A)(i) above or Section 2.03(A)(iii) below, as specified in writing by the Finance Director to the Fiscal Agent.
(iii) Mandatory Redemption From Special Tax Prepayments. Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant 09960.00000\42886166.2
14 to clause (iii) of the second paragraph of Section 3.04(A) and Section 4.03(F), respectively, shall be used to redeem 2025 Bonds on the next Interest Payment Date for which notice of redemption can timely be given under Section 2.03(E), by lot, at a redemption price equal to the principal amount of the 2025 Bonds to be redeemed, together with accrued interest to the date fixed for redemption, and a premium (expressed as a percentage of the principal amount of the 2025 Bonds to be redeemed), as follows:
Redemption Dates
Redemption
Premium
any Interest Payment Date to and including March 1, 2033 3% September 1, 2033 and March 1, 2034 2
September 1, 2034 and March 1, 2035 1
September 1, 2035 and any Interest Payment Date thereafter 0 (B) Notice to Fiscal Agent. The City shall give the Fiscal Agent written notice of its intention to redeem 2025 Bonds pursuant to subsection (A)(i) or (iii) above not less than forty-five (45) days prior to the applicable redemption date, or such lesser number of days as the Fiscal Agent shall allow. No notice need be given by the City to the Fiscal Agent of a redemption of 2025 Bonds pursuant to subsection (A)(ii) above. (C) Priority of Redemption. Whenever provision is made in this Agreement for the redemption of less than all of the 2025 Bonds pursuant to Section 2.03(A)(i) or (iii), the future sinking payment installments in Section 2.03(A)(ii) shall be reduced as directed in writing by the Finance Director (who shall reduce such sinking fund installments so as to maintain as much as practicable substantially the same debt service profile for the 2025 Bonds as in effect prior to such redemption), in any event such 2025 Bonds to be redeemed shall be selected by the Fiscal Agent by lot. For purposes of selection of 2025 Bonds to be redeemed, all 2025 Bonds shall be deemed to be comprised of separate $5,000 portions and such portions shall be treated as separate 2025 Bonds which may be separately redeemed.
(D) Purchase of Bonds in lieu of Redemption. In lieu of redemption under Section 2.03(A) above, moneys in the Bond Fund or in the Special Tax Prepayments Account may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2025 Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase prior to the selection of 2025 Bonds for redemption, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may 2025 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. (E) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services (or by such other means as permitted by such services), and to the respective registered Owners of any 2025 Bonds designated for redemption, at their addresses appearing on the Registration Books in the Principal 09960.00000\42886166.2
15 Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such 2025 Bonds.
Such notice shall state the redemption date and the redemption price and, if less than all of the then outstanding 2025 Bonds are to be called for redemption, shall designate the CUSIP numbers and bond numbers of the 2025 Bonds to be redeemed by giving the individual CUSIP number and bond number of each 2025 Bond to be redeemed or shall state that all 2025 Bonds between two stated bond numbers, both inclusive, are to be redeemed or that all of the 2025 Bonds of one or more maturities have been called for redemption, shall state as to any 2025 Bond called in part the principal amount thereof to be redeemed, and shall require that such 2025 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such 2025 Bonds will not accrue after the redemption date.
Notwithstanding the foregoing, in the case of any redemption of the 2025 Bonds under Section 2.03(A)(i) above, the notice of redemption may state that the redemption is conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the 2025 Bonds on the anticipated redemption date, and that the redemption shall not occur if by no later than the scheduled redemption date sufficient moneys to redeem the 2025 Bonds have not been deposited with the Fiscal Agent. In the event that the Fiscal Agent does not receive sufficient funds by the scheduled redemption date to so redeem the 2025 Bonds to be redeemed, the Fiscal Agent shall send written notice to the owners of the 2025 Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the 2025 Bonds for which notice of redemption was given shall remain Outstanding for all purposes of this Agreement.
Upon the payment of the redemption price of 2025 Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying the 2025 Bonds being redeemed with the proceeds of such check or other transfer.
Upon surrender of 2025 Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new 2025 Bond or 2025 Bonds, of the same maturity, of Authorized Denominations in aggregate principal amount equal to the unredeemed portion of the 2025 Bond or 2025 Bonds.
(F) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the 2025 Bonds so called for redemption shall have been deposited in the Bond Fund, such 2025 Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date.
All 2025 Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall dispose of the 09960.00000\42886166.2
16 canceled Bonds in accordance with its then customary procedures and issue a certificate of destruction thereof to the City.
(G) Redemption of Parity Bonds. Redemption provisions, if any, pertaining to any Parity Bonds shall be set forth in the Supplemental Agreement providing for such Parity Bonds.
Section 2.04. Form of 2025 Bonds . The 2025 Bonds, the form of Fiscal Agent’s certificate of authentication and the form of assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement, the Resolution and the Law.Execution of Bonds. The Bonds shall be executed on behalf of the City by the facsimile signatures of the Mayor of the City and the City Clerk who are in office on the date of adoption of this Agreement or at any time thereafter, and the seal of the City shall be impressed, imprinted or reproduced by facsimile signature thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the owner. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City.Only such 2025 Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A executed manually and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the 2025 Bonds registered hereunder have been duly authenticated, registered and delivered hereunder and are entitled to the benefits of this Agreement.
Section 2.06. Transfer of Bonds . (A) Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City from any lawfully available funds of the District, including but not limited to amounts in the Administrative Expense Fund. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer.Notwithstanding any other provision of this Agreement, no transfers of the 2025 Bonds shall occur unless the following conditions, as applicable, have been satisfied:
(i) Until such time as an Authorized Officer has certified in writing to the Fiscal Agent that the requirements set forth in Section 2.06(B)(ii) have been met, the 2025 Bonds may only be transferred: (a) in denominations of $250,000 principal amount or any integral multiple of $5,000 in excess thereof, except that one 2025 Bond may be in the principal amount of the portion of the then Outstanding principal amount of the 2025 Bonds not divisible by $250,000; (b) to a transferee that has provided to the City and the Fiscal Agent a certificate substantially in the form of the Investor’s Letter in Exhibit B hereto; and (c) to a 09960.00000\42886166.2
17 transferee that is a Qualified Institutional Buyer, as represented in paragraph 1 of the Investor’s Letter.
Notwithstanding the foregoing, the foregoing provisions of clauses (b) and (c) shall not apply to transfers to or from (x) PHCC, (y) an Affiliate of PHCC, or (z) a trust or other custodial arrangement established by PHCC or an Affiliate thereof (such as a tender option bond trust or similar securitization vehicle) pursuant to which 2025 Bonds owned by PHCC or an Affiliate thereof are held, the beneficiaries of which trust or other custodial arrangement are required to be Qualified Institutional Buyers.
(ii) From and after the date on which an Authorized Officer has certified in writing to the Fiscal Agent that (a) the then District Value to Outstanding principal of the Bonds is at least 3:1 as certified by an Independent Financial Consultant, (b) all City land use entitlements and necessary zoning for the development of at least 1,180 single family homes in the District, as required by applicable City ordinances and rules and regulations, have been obtained; and (c) RdR Development Holdings, LLC is current in any reporting requirements under any continuing disclosure obligation entered into by it on the Closing Date related to its activities in the District (the Finance Director may rely on a certificate of the dissemination agent under such obligation as to the foregoing); then the 2025 Bonds may be transferred: (x) in denominations of $100,000 principal amount or any integral multiple of $5,000 in excess thereof, except that one 2025 Bond may be in the principal amount of the portion of the then Outstanding principal amount of the 2025 Bonds not divisible by $100,000; and (y) the transferee must be a Qualified Institutional Buyer, or an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.
(C) Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of the same series and maturity, for like aggregate principal amount. (D) No transfers of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to a Bond after such Bond has been selected for redemption.
Section 2.07. Exchange of Bonds . Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of Authorized Denominations of the same series and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange.No exchanges of Bonds shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption, or (ii) with respect to a Bond after such Bond has been selected for redemption.
Section 2.08. Registration Books . The Fiscal Agent will keep or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds which books shall 09960.00000\42886166.2
18 show the series number, date, amount, rate of interest and last known owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided.The City and the Fiscal Agent will treat the Owner of any Bond whose name appears on the Registration Books as the absolute Owner of such Bond for any and all purposes, and the City and the Fiscal Agent shall not be affected by any notice to the contrary. The City and the Fiscal Agent may rely on the address of the Bondowner as it appears in the Registration Books for any and all purposes.
Section 2.09. Temporary Bonds . The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of Authorized Denominations. Until so exchanged, the temporary bonds shall be entitled to the same benefits under to this Agreement as definitive Bonds authenticated and delivered hereunder.Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like series and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled and disposed of by the Fiscal Agent in accordance with its then customary procedures.If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity for the City and the Fiscal Agent satisfactory to the Fiscal Agent shall be given, the City, at the expense of the Owner, shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like series, tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under this Section and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement.
Section 2.11. Limited Obligation . All obligations of the City under this Agreement and the Bonds shall be special obligations of the City, payable solely from the Special Tax Revenues and the funds pledged therefore hereunder. Neither the faith and credit nor the taxing power of the City (except with respect to the levy of Special Taxes in the District, to the limited extent set forth herein) or the State or any political subdivision thereof is pledged to the payment of the 09960.00000\42886166.2
19 Bonds.No Acceleration. The principal of the Bonds shall not be subject to acceleration hereunder.
Nothing in this Section shall in any way prohibit the redemption of Bonds under Section 2.03, or the defeasance of the Bonds and discharge of this Agreement under Section 9.03. Book-Entry Only System. DTC shall act as the initial Depository for the 2025 Bonds. One 2025 Bond for each maturity of the 2025 Bonds shall be initially executed, authenticated, and delivered as set forth herein with a separate fully registered certificate (in printed or typewritten form). Upon initial execution, authentication, and delivery, the ownership of the 2025 Bonds shall be registered in the Registration Books kept by the Fiscal Agent for the Bonds in the name of Cede & Co., as nominee of DTC or such nominee as DTC shall appoint in writing.The representatives of the City and the Fiscal Agent are hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the 2025 Bonds for the Depository’s book-entry system, including the execution of the Depository’s required representation letter.
With respect to Bonds registered in the Registration Books in the name of Cede & Co., as nominee of DTC, neither the City nor the Fiscal Agent shall have any responsibility or obligation to any broker-dealer, bank, or other financial institution for which DTC holds Bonds as Depository from time to time (the “DTC Participants”) or to any person for which a DTC Participant acquires an interest in the Bonds (the “Beneficial Owners”). Without limiting the immediately preceding sentence, neither the City nor the Fiscal Agent shall have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the City elects to redeem the Bonds in part, (iv) the payment to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any amount with respect to the principal of or interest on the Bonds, or (v) any consent given or other action taken by the Depository as Owner of the Bonds; except that so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, any Beneficial Owner of $1,000,000 or more in aggregate principal amount of any series of Bonds who has filed a written request to receive notices, containing such Beneficial Owner’s name and address, with the Fiscal Agent shall be provided with all notices relating to such Bonds by the Fiscal Agent.
Except as set forth above, the Fiscal Agent may treat as and deem DTC to be the absolute Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the principal of and interest on such Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bonds, for the purpose of registering transfers with respect to such Bonds, and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and interest on the Bonds only to or upon the order of the Owners as shown on the Registration Books, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and interest on the Bonds to the extent of the sums or sums so paid.
No person other than an Owner, as shown on the Registration Books, shall receive a physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions in Section 2.06, references to “Cede & Co.” in this Section 2.13 shall refer to such new nominee of DTC.
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20 DTC may determine to discontinue providing its services with respect to the v2025 Bonds at any time by giving written notice to the Fiscal Agent during any time that the 2025 Bonds are Outstanding, and discharging its responsibilities with respect thereto under applicable law. The City may terminate the services of DTC with respect to the 2025 Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the 2025 Bonds or that continuation of the system of book-entry transfers through DTC is not in the best interest of the Beneficial Owners, and the City shall mail notice of such termination to the Fiscal Agent.
Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions hereunder can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the Beneficial Owners of the 2025 Bonds that they be able to obtain certificated Bonds, the 2025 Bonds shall no longer be restricted to being registered in the Registration Books of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or name the Owners shall designate at that time, in accordance with Section 2.06.
To the extent that the Beneficial Owners are designated as the transferee by the Owners, in accordance with Section 2.06, the 2025 Bonds will be delivered to such Beneficial Owners as soon as practicable.
Section 2.14. Issuance of Parity Bonds . The City may issue one or more series of Parity Bonds, in addition to the 2025 Bonds authorized under Section 2.01, by means of a Supplemental Agreement and without the consent of any Bondowners, upon compliance with the provisions of this Section 2.14. Any such Parity Bonds shall constitute Bonds hereunder and shall be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds hereunder on a parity with all other Bonds Outstanding hereunder. The City may issue Parity Bonds subject to the following specific conditions precedent:Current Compliance. The City shall be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in this Agreement and all Supplemental Agreements.
(B) Payment Dates. The Supplemental Agreement providing for the issuance of such Parity Bonds shall provide that interest thereon shall be payable on March 1 and September 1, and principal thereof shall be payable on September 1 in any year in which principal is payable (provided that there shall be no requirement that any Parity Bonds pay interest on a current basis).
(C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement providing for the issuance of such Parity Bonds may provide for the establishment of separate funds and accounts, and for a deposit to the Reserve Fund in an amount, if any, necessary so that the amount on deposit in the Reserve Fund following the issuance of such Parity Bonds is equal to the Reserve Requirement.
(D) Aggregate Value-to-Lien Ratio. From and after the conditions listed in clauses (a) through (d) of subsection (ii) of Section 2.06(B) with respect to the transfer of 2025 Bonds have been satisfied, the District Value shall be at least three times the sum of:
(i) the aggregate principal amount of all Bonds then Outstanding, plus (ii) the aggregate 09960.00000\42886166.2
21 principal amount of the series of Parity Bonds proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in the District subject to the levy of Special Taxes, plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within the District (the “Other District Bonds”) equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within the District, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other District Bonds occurs), based upon information from the most recent available Fiscal Year. (E) The Special Tax Coverage. The City shall obtain a certificate of a Tax Consultant to the effect that (i) the amount of the maximum Special Taxes that may be levied in each Fiscal Year is at least one hundred ten percent (110%) of the total Annual Debt Service for each such Fiscal Year on the Bonds then Outstanding and the proposed Parity Bonds plus estimated Administrative Expenses for each such Fiscal Year, and (ii) based upon the Special Taxes that may be levied under the Rate and Method of Apportionment of the Special Taxes for the District, the aggregate Special Tax Prepayments that could occur after the issuance of the Parity Bonds is not less than the principal amount of the Bonds then Outstanding and such Parity Bonds. (F) Officer’s Certificate. The City shall deliver to the Fiscal Agent an Officer’s Certificate certifying that the conditions precedent to the issuance of such Parity Bonds set forth in subsections (A), (B), (C), (D) (if applicable) and (E) of this Section 2.14 have been satisfied. In delivering such Officer’s Certificate, the Authorized Officer that executes the same may conclusively rely upon such certificates of the Fiscal Agent, the Tax Consultant and others selected with due care, without the need for independent inquiry or certification.
Notwithstanding the foregoing, the City may issue Refunding Bonds as Parity Bonds without the need to satisfy the requirements of clauses (D) and (E) above, and without limitation on the number of series of such Refunding Bonds; and, in connection therewith, the Officer’s Certificate in clause (F) above need not make reference to said clauses (D) and (E).
Nothing in this Section 2.14 shall prohibit the City from issuing bonds or otherwise incurring debt for the District secured by a pledge of Special Tax Revenues subordinate to the pledge thereof under Section 4.01 of this Agreement.
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22 ARTICLE III
ISSUANCE OF 2025 BONDS
Section 3.01. Issuance and Delivery of 2025 Bonds . At any time after the execution of this Agreement, the City may issue the 2025 Bonds for the District in the aggregate principal amount set forth in Section 2.01 and deliver the 2025 Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of the 2025 Bonds in accordance with the provisions of the Law, the Resolution and this Agreement, to authorize the payment of Costs of Issuance and to do and cause to be done any and all acts and things necessary or convenient for delivery of the 2025 Bonds to the Original Purchaser. Application of Proceeds of Sale of 2025 Bonds and CFD 93-1 Funds . The proceeds of the purchase of the 2025 Bonds by the Original Purchaser (being $____________) shall be paid to the Fiscal Agent, who shall forthwith set aside, pay over and deposit such proceeds on the Closing Date as follows:Deposit in the Reserve Fund $____________.
(B) Deposit in the Costs of Issuance Fund $____________. (C) Deposit in the Capitalized Interest Account $____________. (D) Deposited to the Improvement Fund $____________.
(E) Deposit to the Administrative Expense Fund $____________.
In addition to the foregoing, the Fiscal Agent, in its capacity as the Fiscal Agent under the 1995 Fiscal Agent Agreement, shall transfer the CFD 93-1 Funds to the 1995 Account of the Improvement Fund.
The Fiscal Agent may establish a temporary fund or account in its records to facilitate any of the deposits or transfers referred to in this Section 3.02.
Section 3.03. Improvement Fund .
(A) Establishment of Improvement Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2022- 3 (Ritter Ranch Phase 1 Public Facilities) Improvement Fund, and within the Improvement Fund a 1995 Account. Deposits shall be made to the Improvement Fund pursuant to Section
3.02(D), clauses (iii)(a) of the second paragraph of Section 3.04(A), and Section 3.06(B); and shall be made to the 1995 Account pursuant to the second paragraph of Section 3.02.
Moneys in the Improvement Fund and the 1995 Account shall be held by the Fiscal Agent for the benefit of the City, and shall be disbursed, except as otherwise provided in subsection (D) of this Section, for the payment or reimbursement of costs of the Project. (B) Procedure for Disbursements. Disbursements from the Improvement Fund shall be made by the Fiscal Agent upon receipt of an Officer’s Certificate which shall:
09960.00000\42886166.2
23 (i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and
(ii) certify that the disbursement is for amounts owing by the City under the Acquisition Agreement or otherwise for a purpose eligible to be funded with the amount to be so disbursed, and in any event that no portion of the amount then being requested to be disbursed was set forth in any Officer’s Certificate previously filed requesting disbursement.
The Fiscal Agent, in making disbursements from the Improvement Fund, shall first use any amounts deposited therein pursuant to Section 3.02(D), and then pursuant to Section 3.06(B) in each case including any investment earnings on such amounts, before using amounts deposited to the Improvement Fund pursuant to clause (iii)(a) of the second paragraph of Section 3.04(A) and any investment earnings thereon.
Disbursements shall be made by the Fiscal Agent from the 1995 Account upon receipt of an Officer’s Certificate which shall:
(i) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and
(ii) certify that the disbursement is pursuant to and in accordance with the provisions of the Phase 1 Interim Agreement, and that no portion of the amount then being requested to be disbursed was set forth in any Officer’s Certificate previously filed requesting disbursements.
For purposes of complying with the foregoing paragraphs, the Fiscal Agent may conclusively rely and shall be protected in acting upon an Officer’s Certificate provided to it by the City.
(C) Investment. Moneys in the Improvement Fund and the 1995 Account shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits from the investment of amounts in the Improvement Fund and the 1995 Account shall be retained in the Improvement Fund and the 1995 Account, respectively, to be used for the purposes thereof.
(D) Closing of Fund and Account. Upon the filing of an Officer’s Certificate stating that the portion of the Project to be financed and any other expenses to be paid from the Improvement Fund have been completed and paid, respectively, the Fiscal Agent shall transfer the amount, if any, remaining in the Improvement Fund to the Bond Fund for application to the payment of principal of and interest on the Bonds in accordance with Section 4.02, and the Improvement Fund shall be closed.
Upon the filing of an Officer’s Certificate stating that the work described in Exhibit 1, Exhibit 2 and Exhibit 3 to the Phase 1 Interim Agreement has been completed and paid for, the 09960.00000\42886166.2
24 Fiscal Agent shall transfer the amount, if any, remaining in the 1995 Account to the City to be used by the City for costs related to CFD 93-1, or otherwise authorized to be funded by CFD 93-1.
Section 3.04. Special Tax Fund .
(A) Establishment of Special Tax Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2022- 3 (Ritter Ranch Phase 1 Public Facilities) Special Tax Fund. There shall be deposited to the Special Tax Fund all Special Tax Revenues received by the City, which the City hereby agrees to transfer, as soon as practicable following receipt by the City, to the Fiscal Agent.
In addition, the Fiscal Agent shall deposit in the Special Tax Fund amounts to be transferred thereto pursuant to Section 3.05(B).
Notwithstanding the foregoing,
(i) with respect to the first Special Tax Revenues collected by the City in any Fiscal Year in the amount of the Minimum Administrative Expense Requirement for such Fiscal Year; first, the City may retain all or any portion thereof, and not remit the same to the Fiscal Agent, to the extent the City determines that it needs said amount to pay Administrative Expenses of the City (and the City shall so use such amount to pay Administrative Expenses); and second, any remaining portion of such amount shall be separately identified by the City and shall be deposited by the Fiscal Agent in the Administrative Expense Fund; (ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the City and shall be deposited by the Fiscal Agent first, in the Bond Fund to the extent needed to pay any past due debt service on the Bonds; second, to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund up to the then Reserve Requirement; and third, to the Special Tax Fund for use as described in Section 3.04(B) below; and
(iii) any proceeds of Special Tax Prepayments shall be separately identified by the City and shall be deposited by the Fiscal Agent as follows (as directed in writing by the Finance Director): (a) that portion of any Special Tax Prepayment constituting the CFD Public Facilities Costs (as defined in Section I of the Rate and Method of Apportionment) shall be deposited by the Fiscal Agent to the Improvement Fund so long as the Improvement Fund has not theretofore been closed pursuant to Section 3.03(D), and if the Improvement Fund has been closed, then such amount shall be retained by the City to be used to pay Project costs; and (b) any remaining portion of any Special Tax Prepayment shall be deposited by the Fiscal Agent in the Special Tax Prepayments Account established pursuant to Section 4.02(A).
Moneys in the Special Tax Fund shall be held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, shall be disbursed as provided below and, pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds and the City. 09960.00000\42886166.2
25 (B) Disbursements. From time to time as needed to pay the obligations of the District, but no later than the Business Day before each Interest Payment Date or date for optional redemption of the Bonds, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority (i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers from the Improvement Fund, the Special Tax Fund, the Reserve Fund, the Special Tax Prepayments Account and the Capitalized Interest Account to the Bond Fund pursuant to Sections 3.03(D), 3.04(A)(ii), 4.03(C), (E), (F) and (G), and
4.02(B)(ii) and (iii), such that the amount in the Bond Fund equals the principal (including any sinking payment, or principal due pursuant to optional or special tax prepayment redemptions), premium, if any, and interest due on the Bonds on the next Interest Payment Date or date of optional redemption of the Bonds, as applicable, and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement; provided that no such transfers shall exceed the amount then available to be transferred from the Special Tax Fund.
In addition to the foregoing, if in any Fiscal Year there are sufficient funds in the Special Tax Fund to make the foregoing transfers to the Bond Fund and the Reserve Fund in respect of the Interest Payment Dates occurring in the Bond Year that commences in such Fiscal Year, the Finance Director may direct the Fiscal Agent to transfer, from time to time, any amount in the Special Tax Fund in excess of the amount needed to make transfers to the Bond Fund and the Reserve Fund referred to in the prior paragraph, to the Administrative Expense Fund, if the Finance Director determines that monies are needed to pay Administrative Expenses in excess of the amount then on deposit in the Administrative Expense Fund.
(C) Investment. Moneys in the Special Tax Fund shall be invested in accordance with Section 6.01. Interest earnings and profits resulting from investment of amounts in the Special Tax Fund shall be retained in the Special Tax Fund to be used for the purposes thereof.
Section 3.05. Administrative Expense Fund .
(A) Establishment of Administrative Expense Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) Administrative Expense Fund, to the credit of which deposits shall be made as required by Section 3.02(E), clause (i) of the second paragraph of Section 3.04(A) and Section 3.04(B). Moneys in the Administrative Expense Fund shall be held by the Fiscal Agent for the benefit of the City, and shall be disbursed as provided below.
(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer’s Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense, and the nature of such Administrative Expense.
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26 Annually, on the last day of each Fiscal Year commencing with the last day of Fiscal Year 2025-26, the Fiscal Agent shall withdraw any amounts then remaining in the Administrative Expense Fund in excess of $25,000.00 that have not otherwise been allocated to pay Administrative Expenses incurred but not yet paid, and which are not otherwise encumbered, and transfer such amounts to the Special Tax Fund. (C) Investment. Moneys in the Administrative Expense Fund shall be invested in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained in the Administrative Expense Fund to be used for the purposes of such fund.
Section 3.06. Costs of Issuance Fund .
(A) Establishment of Costs of Issuance Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2022- 3 (Ritter Ranch Phase 1 Public Facilities) Costs of Issuance Fund, to the credit of which a deposit shall be made as required by Section 3.02(B). Moneys in the Costs of Issuance Fund shall be held by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section.
(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent concurrently with the delivery of the 2025 Bonds. The Fiscal Agent shall pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer’s Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the Fiscal Agent on the Closing Date. Each such Officer’s Certificate shall be sufficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts. The Fiscal Agent shall maintain the Cost of Issuance Fund for a period of 90 days from the Closing Date and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Improvement Fund, and following such transfer the Fiscal Agent shall close the Cost of Issuance Fund. (C) Investment. Moneys in the Cost of Issuance Fund shall be invested in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Cost of Issuance Fund to be used for the purposes of such fund.
Section 3.07. Validity of Bonds . The validity of the authorization and issuance of the Bonds shall not be dependent upon the performance by any person of such person’s obligation with respect to the Project.
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27 ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues . The Bonds shall be secured by a first pledge of all of the Special Tax Revenues (other than the Special Tax Revenues to be retained by the City or deposited to the Administrative Expense Fund pursuant to clause (i) of the second paragraph of Section 3.04(A)) and all moneys deposited in the Bond Fund (including the Capitalized Interest Account therein), the Reserve Fund and, until disbursed as provided herein, in the Special Tax Fund. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided herein) are hereby dedicated to the payment of the principal of, and interest and any premium on, the Bonds as provided herein and in the Law until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03.Amounts in the Improvement Fund and the 1995 Account therein, the Administrative Expense Fund, the Costs of Issuance Fund and the Special Tax Revenues to be retained by the City or deposited to the Administrative Expense Fund pursuant to clause (i) of the second paragraph of Section 3.04(A) or deposited to the Improvement Fund pursuant to clauses (iii)(a) of the second paragraph of Section 3.04(A), are not pledged to the repayment of the Bonds. The facilities financed by the District are not in any way pledged to pay the debt service on the Bonds. Any proceeds of the sale, condemnation or destruction of any facilities financed by the District are not pledged to pay the debt service on the Bonds and are free and clear of any lien or obligation imposed hereunder.
Section 4.02. Bond Fund .
(A) Establishment of Bond Fund, Capitalized Interest Account and Special Tax Prepayments Account. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) Bond Fund, to the credit of which deposits shall be made as required by the first subclause of clause (ii) of the second paragraph of Section 3.04(A), Section 3.04(B), and Section 4.03, and any other amounts required to be deposited therein by this Agreement or the Law. There are also hereby created in the Bond Fund separate accounts held by the Fiscal Agent, consisting of (i) the Capitalized Interest Account, to the credit of which a deposit shall be as provided in Section 3.02(C), and (ii) the Special Tax Prepayments Account to the credit of which deposits shall be made as required by clause (iii) of the second paragraph of Section 3.04(A). Moneys in the Bond Fund and the accounts therein shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
(B) Disbursements. (i) Bond Fund Disbursements. On each Interest Payment Date and on each date of optional redemption of the Bonds, and following any transfers required pursuant to Sections 3.03(D), 3.04(B), 4.02(B)(ii) , 4.02 (B)(iii) and 4.03(C), (E), (F) and (G) in connection with such Interest Payment Date or optional redemption date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds, 09960.00000\42886166.2
28 including any amounts due on the Bonds by reason of the sinking payments set forth in Section 2.03(A)(ii), or a redemption of the Bonds required by Section 2.03(A)(i) or (iii), such payments to be made in the priority listed in the second succeeding paragraph.
Notwithstanding the foregoing, amounts in the Bond Fund as a result of a transfer pursuant to clause (ii) of the second paragraph of Section 3.04(A) shall be immediately disbursed by the Fiscal Agent to pay past due amounts owing on the Bonds.
In the event that amounts in the Bond Fund are insufficient for the purpose set forth in the preceding paragraph, the Fiscal Agent shall withdraw from the Reserve Fund to the extent of any funds therein amounts to cover the amount of such Bond Fund insufficiency.
Amounts so withdrawn from the Reserve Fund shall be deposited by the Fiscal Agent in the Bond Fund.
If, after the foregoing transfers, there are insufficient funds in the Bond Fund to make the payments provided for in the first sentence of the first paragraph of this Section
4.02(B), the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds including principal due by reason of sinking payments. Each such payment shall be made ratably to the Owners of the Bonds based on the then Outstanding principal amount of the Bonds, if there are insufficient funds to make the corresponding payment for all of the then Outstanding Bonds. Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date.
(i) Special Tax Prepayments Account Disbursements. Moneys in the Special Tax Prepayments Account shall be transferred by the Fiscal Agent to the Bond Fund on the next date for which notice of redemption of Bonds under Section
2.03(A)(iii) can timely be given by the Fiscal Agent under Section 2.03(E), and shall be used (together with any amounts transferred pursuant to Section 4.03(F)) to redeem Bonds on the redemption date selected in accordance with Section 2.03. (ii) Capitalized Interest Account Disbursements. Moneys in the Capitalized Interest Account shall be transferred to the Bond Fund (a) on the Business Day prior to March 1, 2025, September 1, 2025, March 1, 2026 and September 1, 2026 in the amount necessary to pay the Debt Service due on the 2025 Bonds on each immediately succeeding Interest Payment Date, and (b) on the Business Day prior to March 1, 2027, any then remaining amount in the Capitalized Interest Account. When no amounts remain on deposit in the Capitalized Interest Account, the Capitalized Interest Account shall be closed. (C) Investment. Moneys in the Bond Fund, the Special Tax Prepayments Account and the Capitalized Interest Account shall be invested in accordance with Section
6.01. Interest earnings and profits resulting from investment of amounts in the Bond Fund, the Special Tax Prepayments Account and the Capitalized Interest Account shall be retained in the Bond Fund, the Special Tax Prepayments Account and the Capitalized Interest Account, respectively, to be used for the purposes of such fund and accounts as applicable.
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29 Section 4.03. Reserve Fund .
(A) Establishment of Reserve Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, the Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) Reserve Fund, to the credit of which a deposit shall be made as required by Section 3.02(A), which deposit is equal to the Reserve Requirement as of the Closing Date, and deposits shall be made as provided in Section 2.14(C), subclause second of clause (ii) of the second paragraph of Section 3.04(A), and Section
3.04(B). Moneys in the Reserve Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds as a reserve for the payment of principal of, and interest and any premium on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds. (B) Use of Reserve Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds or, in accordance with the provisions of this Section, for the purpose of redeeming Bonds from the Bond Fund. (C) Transfer of Excess of Reserve Requirement. Whenever, on the Business Day before any Interest Payment Date, or on any other date at the request of an Authorized Officer, the amount in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent shall provide written notice to the City of the amount of the excess and shall transfer an amount equal to the excess from the Reserve Fund to the Bond Fund to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with Section 4.02.
(D) Transfer for Rebate Purposes. Amounts in the Reserve Fund shall be withdrawn, at the written request of an Authorized Officer, for purposes of making payment to the federal government to comply with Section 6.02. (E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date for which notice of redemption can timely be given to the payment and redemption, in accordance with Section 4.02 or 2.03, as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred to the City to be used for any lawful purpose under the Law.
Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund pursuant to this Section 4.03(E) until after (i) the calculation, pursuant to Section
6.02, of any amounts due to the federal government following payment of the Bonds and withdrawal of any such amount under Section 4.03(D) for purposes of making such 09960.00000\42886166.2
30 payment to the federal government, and (ii) payment of any fees and expenses due to the Fiscal Agent.
(F) Transfer Upon Special Tax Prepayment. Whenever Special Taxes are prepaid and Bonds are to be redeemed with the proceeds of such prepayment pursuant to Section 2.03(A)(iii) and 4.02(B)(ii), an amount equal to the “Reserve Fund Credit,” as described in and computed pursuant to Section I of the Rate and Method of Apportionment (as such amount is confirmed by the Finance Director to the Fiscal Agent) shall be transferred on the Business Day prior to the redemption date by the Fiscal Agent to the Bond Fund to be applied to the redemption of the Bonds pursuant to Section 2.03(A)(iii). (G) Investment. Moneys in the Reserve Fund shall be invested in accordance with Section 6.01. One Business Day before each Interest Payment Date, interest earnings and profits resulting from said investment shall be transferred by the Fiscal Agent to the Bond Fund to be used by the Fiscal Agent for the purposes of such fund, but any such transfer shall be made only to the extent that following such transfer the amount on deposit in the Reserve Fund equals the then Reserve Requirement. 09960.00000\42886166.2
31 ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment . The City will punctually pay or cause to be paid the principal of and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds.Limited Obligation. The Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Bond Fund (including the Capitalized Interest Account and the Special Tax Prepayments Account therein), the Reserve Fund and the Special Tax Fund created hereunder.Extension of Time for Payment . In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement. Books and Records. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the Special Tax Revenues. Such books of record and accounts shall at all times during City business hours and following reasonable prior written notice be subject to the inspection of the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons.
From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City.Compliance with Law. The City will comply with all applicable provisions of the Law in administering the District; provided that the City shall have no obligation to advance any of its own funds for any purpose whatsoever under this Agreement. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Agreement, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered a default on the Bonds or a breach of any other provision of this Agreement; however the Participating Underwriter or any 2025 Bondholder may take such actions as may be necessary and appropriate to compel performance by the City of its obligations under the Continuing Disclosure Agreement, including seeking mandate or specific performance by court order. Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the 2025 Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Code. Collection of Special Tax Revenues . The City shall comply with all requirements of the Law so as to assure the timely collection of Special Tax 09960.00000\42886166.2
32 Revenues, including without limitation, the enforcement of delinquent Special Taxes.On or about July 1 of each year, the Fiscal Agent shall provide the Finance Director with a notice stating the amounts then on deposit in the Bond Fund and the accounts therein and the Reserve Fund. The receipt of such notice by the Finance Director shall in no way affect the obligations of the City under the following three paragraphs. Upon receipt of such notice, the Finance Director shall communicate with the Auditor or other appropriate official of the County to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. In computing the amount of Special Taxes to be levied, the City shall take into account funds available in the Bond Fund and the accounts therein and the Special Tax Fund to make the payment of debt service on the Bonds due on the Interest Payment Dates occurring in the next calendar year, along with any transfers of investment earnings pursuant to Sections 4.03(C) or 4.03(G) to the Bond Fund expected to occur on such Interest Payment Date.
The City shall effect the levy of the Special Taxes from time to time during each Fiscal Year in accordance with the Ordinance and the Rate and Method of Apportionment. Specifically, the City shall compute the amount of Special Taxes to be so levied each Fiscal Year before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next secured or unsecured, as applicable, real property tax roll. Upon the completion of the computation of the amounts of the levy, the City shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll. The Special Taxes so levied shall be payable and be collected in the same manner and at the same time and in the same installment as the taxes on property levied on the tax roll are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general ad valorem taxes levied on the County tax roll.
In the event that the City determines to levy all or a portion of the Special Taxes by means of direct billing of the property owners within the District, and to the extent permitted by the Ordinance, the City shall, not less than forty-five (45) days prior to the first Interest Payment Date for which the levy is being made, send bills to the property owners in the District for Special Taxes necessary to meet the financial obligations of the District due on the Interest Payment Dates for which the levy is being made, said bills to specify that the amounts so levied shall be due and payable in two equal installments with each installment due not less than thirty (30) days prior to the related Interest Payment Date and each installment shall be delinquent if not paid when due.
In any event, the City shall fix and levy the amount of Special Taxes within the District required for the timely payment of principal of and interest on any Outstanding Bonds becoming due and payable, including any necessary replenishment of the Reserve Fund to the amount of the then Reserve Requirement and an amount estimated to be sufficient to pay the Administrative Expenses, and shall take into account any prepayments of Special Taxes theretofore received by the City. The Special Taxes so levied shall not exceed the maximum amounts as provided in the Rate and Method of Apportionment.
The Finance Director is hereby authorized to employ consultants to assist in computing the levy of the Special Taxes hereunder and any reconciliation of amounts levied to amounts received.
The fees and expenses of such consultants and the costs and expenses of the Finance Director 09960.00000\42886166.2
33 (including a charge for City staff time) in conducting its duties hereunder shall be an Administrative Expense hereunder.
Section 5.11. Further Assurances . The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement.No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the proceeds of the 2025 Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the 2025 Bonds would have caused the 2025 Bonds to be “arbitrage bonds” within the meaning of section 148 of the Code. Maintenance of Tax-Exemption . The City shall take all actions necessary to assure the exclusion of interest on the 2025 Bonds from the gross income of the owners of the 2025 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the 2025 Bonds.Covenant to Foreclose. The City hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following paragraph. The Finance Director shall notify legal counsel of any such delinquency of which it is aware, and such legal counsel shall commence, or cause to be commenced, such proceedings.On or about August 15 of each Fiscal Year, the Finance Director shall compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City; and:
(A) Individual Delinquencies. If the Finance Director determines that any single parcel subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the greater of (i) the aggregate amount of $5,000 or more, or (ii) the payment of four or more installments of Special Taxes levied on such parcel, then the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured), foreclosure proceedings shall be commenced by the City against the delinquent parcel within 90 days of such determination and shall be diligently pursued by the City to completion.
(B) Aggregate Delinquencies. If the Finance Director determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the Finance Director shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and the City shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency.
Notwithstanding the foregoing, the Finance Director may defer any mailing of notices of delinquency or foreclosure action if the amount in the Reserve Fund is at least equal to the Reserve Requirement.
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34 The Finance Director is hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel (including a charge for City staff time) in conducting foreclosure proceedings shall be an Administrative Expense hereunder.
Section 5.15. No Additional Bonds . Except as expressly permitted by Section 2.14, the City shall not issue any additional bonds or incur any other obligation secured by (A) a pledge of Special Taxes on a parity with or senior to the pledge thereof under Section 4.01; or (B) any amounts in any funds or accounts established hereunder.
Section 5.16. Yield of the 2025 Bonds . In determining the yield of the 2025 Bonds to comply with Section 5.12 and 6.02, the City will take into account redemption (including premium, if any) in advance of maturity based on the reasonable expectations of the City, as of the Closing Date, regarding prepayments of Special Taxes and use of prepayments for redemption of the 2025 Bonds, without regard to whether or not prepayments are received or 2025 Bonds redeemed.Private Activity Bond Limitation. The City shall assure that the proceeds of the 2025 Bonds are not so used as to cause the 2025 Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. Reduction of Special Taxes. The City covenants and agrees to not consent or conduct proceedings with respect to a reduction in the maximum Special Taxes that may be levied in the District below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due on the Bonds in such Fiscal Year, plus a reasonable estimate of Administrative Expenses for such Fiscal Year. It is hereby acknowledged that Bondowners are purchasing the Bonds in reliance on the foregoing covenant, and that said covenant is necessary to assure the full and timely payment of the Bonds.State Reporting Requirements . The following requirements shall apply to the 2025 Bonds, in addition to those requirements under Section 5.17:Annual Reporting. Not later than October 30 of each calendar year, beginning October 30, 2025, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the City shall cause the information required by California Government Code Section 53359.5(b) to be supplied to CDIAC. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC.
No later than January 31 of each calendar year, commencing January 31, 2025, the City shall provide to CDIAC the annual report information required by Section 8855(k)(1) of the California Government Code. Such annual report shall be made using such form or forms as may be prescribed by CDIAC.
Additionally, no later than January 31 of each calendar year, commencing January 31, 2026, the City shall provide to the California State Controller, Division of Accounting and Reporting, the annual report information required by Section 12463.2 of the California Government Code.
(B) Other Reporting. If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve Fund to pay principal and interest on the Bonds, the Fiscal Agent shall notify the City of such failure or withdrawal in writing. The City shall notify CDIAC and the Original Purchaser of such failure or withdrawal within 10 days of such failure or 09960.00000\42886166.2
35 withdrawal, and the City shall provide notice under the Continuing Disclosure Agreement of such event as required thereunder.
(C) Special Tax Reporting. The Finance Director shall file, or cause to be filed, a report with the City no later than January 1, 2026, and at least once a year thereafter, which annual report shall contain: (i) the amount of Special Taxes collected and expended with respect to the District, (ii) the amount of Bond proceeds collected and expended with respect to the District, and (iii) the status of the Project. It is acknowledged that the Special Tax Fund and the Special Tax Prepayments Account are the accounts into which Special Taxes collected in the District will be deposited for purposes of Section 50075.1(c) of the California Government Code, and the funds and accounts listed in Section 4.01 are the funds and accounts into which Bond proceeds will be deposited for purposes of Section 53410(c) of the California Government Code, and the annual report described in the preceding sentence is intended to satisfy the requirements of Sections 50075.1(d), 50075.3(d) and 53411 of the California Government Code. (D) Amendment. The reporting requirements of this Section 5.19 shall be amended from time to time, without action by the City or the Fiscal Agent (i) with respect to subparagraphs (A) and (B) above, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the California Government Code, or Section 8855(k)(1) or Section 12463.2 of the California Government Code, and (ii) with respect to subparagraph (C) above, to reflect any amendments to Section 50075.1, 50075.3, 53410 or 53411 of the California Government Code. Notwithstanding the foregoing, any such amendment shall not, in itself, affect the City’s obligations under the Continuing Disclosure Agreement. The City shall notify the Fiscal Agent in writing of any such amendments which affect the reporting obligations of the Fiscal Agent under this Agreement. (E) No Liability. None of the City and its officers, agents and employees (including but not limited to the Finance Director), or the Fiscal Agent, shall be liable for any inadvertent error in reporting the information required by this Section 5.19.
The Finance Director shall provide, or cause to be provided, copies of any reports prepared pursuant to this Section 5.19 to any Bondowner upon the written request of a Bondowner and payment by the person requesting the information of the cost of the City to produce such information and pay any postage or other delivery cost to provide the same, as determined by the Finance Director. The term “Bondowner” for purposes of this Section
5.19 shall include any beneficial owner of the Bonds.
Section 5.20. Limits on Special Tax Waivers and Bond Tenders . The City covenants not to exercise any rights it may have under the Law to waive delinquency and redemption penalties related to the Special Taxes or to declare Special Tax penalties amnesty program if to do so would materially and adversely affect the interests of the Owners of the Bonds. The City further covenants not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds that will remain Outstanding following such tender.City Bid at Foreclosure Sale. The City will not bid at a foreclosure sale of property in respect of delinquent Special Taxes unless it expressly 09960.00000\42886166.2
36 agrees to take the property subject to the lien for Special Taxes imposed by the District and that the Special Taxes levied on the property are payable while the City owns the property. 09960.00000\42886166.2
37 ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds . Moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments.
The Officer’s Certificate shall contain a certification to the Fiscal Agent that the investments being directed are Permitted Investments as required hereunder, and which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. In the absence of any such Officer’s Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause (h) of the definition thereof; provided, however, that any such investment shall be made by the Fiscal Agent only if, prior to the date on which such investment is to be made, the Fiscal Agent shall have received an Officer’s Certificate specifying a specific money market fund into which the funds shall be invested and, if no such Officer’s Certificate is so received, the Fiscal Agent shall hold such moneys uninvested.Moneys in any fund or account created or established by this Agreement and held by the City shall be invested by the City in any lawful investments that the City may make or in any Permitted Investment, which in any event by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in this Agreement any moneys are required to be transferred by the City to the Fiscal Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments.
The Fiscal Agent or the Finance Director may act as principal or agent in the acquisition or disposition of any investment, and all investments may be made through the Fiscal Agent’s investment department or that of its affiliates. The Fiscal Agent or its affiliates may act as sponsor, agent manager or depository with regard to any Permitted Investment. Neither the Fiscal Agent nor the Finance Director shall incur any liability for any losses, fees, taxes or other charges arising from any investment actions taken pursuant to this Section.
Except as otherwise provided in the next sentence, the City shall direct or make investments hereunder such that all investments of amounts deposited in any fund or account created by or pursuant to this Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Agreement or the Code) at Fair Market Value. The City shall direct or make investments hereunder such that investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in the Reserve Fund shall be valued at their present value (within the meaning of section 148 of the Code). The Fiscal Agent shall have no duty in connection with the determination of the Fair Market Value of any investment other than to follow:
(A) its normal practices in the purchase, sale and determining the value of Permitted Investments; and (B) the investment directions of the City.
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38 Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Finance Director hereunder, provided that the Fiscal Agent or the Finance Director, as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement.
The Fiscal Agent shall sell or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Finance Director shall be liable or responsible for any loss, fee, tax, or other charges resulting from the acquisition or disposition of such investment security in accordance herewith.
The City acknowledges that regulations of the Comptroller of the Currency grant the City the right to receive brokerage confirmations of security transactions to be effected by the Fiscal Agent hereunder as they occur. The City specifically waives the right to receive such notification to the extent permitted by applicable law and agrees that it will instead receive monthly cash transactions statements which include detail for the investment transactions effected by the Fiscal Agent hereunder; provided, however, that the City retains its rights to, upon written request to the Fiscal Agent, receive brokerage confirmation on any investment transaction requested by the City and effected by the Fiscal Agent at no additional cost.
Section 6.02. Rebate of Excess Investment Earnings to the United States . The City shall take any and all actions necessary to assure compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2025 Bonds.The City shall direct the Fiscal Agent to withdraw such amounts from the Reserve Fund pursuant to Section 4.03(D) as necessary to make any required rebate payments, and pay such amounts to the federal government as required by the Code and the Regulations. In the event of any shortfall in amounts available to make such payments under Section 4.03(D), the City shall make such payment from any amounts available in the Administrative Expense Fund or from any other lawfully available funds of the District. Any fees or expenses incurred by the City under or pursuant to this Section 6.02 shall be Administrative Expenses.
In order to provide for the administration of this Section 6.02, the Finance Director may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Finance Director may deem appropriate and in addition, and without limitation of the provisions of Sections 7.01 and 7.02, the Finance Director may rely conclusively upon and be fully protected from all liability in relying upon the opinions, determinations, calculations and advice of such agents, attorneys and consultants employed hereunder.
The Fiscal Agent may rely conclusively upon the City’s determinations, calculations and certifications required by this Section. The Fiscal Agent shall have no responsibility to 09960.00000\42886166.2
39 independently make any calculation or determination or to review the City’s calculations hereunder or for the adequacy or accuracy of any rebate report.
Section 6.03. Liability of City . The City shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The City shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The City shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Fiscal Agent herein or of any of the documents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder.In the absence of bad faith, the City, including the Finance Director, may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the City and conforming to the requirements of this Agreement. The City, including the Finance Director, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the City to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The City may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The City may consult with counsel, who may be the City Attorney, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
The City shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactory established, if disputed.
Whenever in the administration of its duties under this Agreement the City shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the City, be deemed to be conclusively proved and established by a certificate of the appropriate agent or consultant, and such certificate shall be full warrant to the City for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the City may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
Section 6.04. Engagement of Agents by City . In order to perform its duties and obligations hereunder, the City and/or the Finance Director may employ such persons or entities 09960.00000\42886166.2
40 as it deems necessary or advisable. The City shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
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41 ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent . U.S. Bank Trust Company, National Association, at its corporate trust office in Los Angeles, California is hereby appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.Any corporation, bank or association into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company or association resulting from any merger, conversion or consolidation to which it shall be a party or any company or association to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company or association shall be eligible under the following paragraph of this Section, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. The Fiscal Agent shall give the Finance Director written notice of any such succession hereunder.
The City may remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank, association or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank, association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, combined capital and surplus of such bank, association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective only upon acceptance of appointment by the successor Fiscal Agent. Upon such acceptance, the successor Fiscal Agent shall be vested with all rights and powers of its predecessor hereunder without any further act.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within forty-five (45) days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
If, by reason of the judgment of any court, or reasonable agency, the Fiscal Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Finance Director for the benefit of the Owners. The City covenants for the direct benefit of the Owners that its Finance Director in such case shall be vested with all of the rights and powers of the Fiscal Agent hereunder, and shall 09960.00000\42886166.2
42 assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the Owners of the Bonds. In such event, the Finance Director may designate a successor Fiscal Agent qualified to act as Fiscal Agent hereunder.
Section 7.02. Liability of Fiscal Agent . The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct.
The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds.In the absence of negligence or willful misconduct on its part, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. Except as provided above in this paragraph, Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, requisition, Officer’s Certificate, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.
The Fiscal Agent shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers.
The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.
The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, and its liability shall be limited to the proper accounting for such funds as it shall actually receive.
The Fiscal Agent may consult with counsel, who may be counsel of or to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization 09960.00000\42886166.2
43 and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
In order to perform its duties and obligations hereunder, the Fiscal Agent may employ such persons or entities as it deems necessary or advisable. The Fiscal Agent shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.
The Fiscal Agent agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods; provided, however, that the Fiscal Agent shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the City elects to give the Fiscal Agent e-mail or facsimile instructions (or instructions by a similar electronic method) and the Fiscal Agent in its discretion elects to act upon such instructions, the Fiscal Agent’s reasonable understanding of such instructions shall be deemed controlling. The Fiscal Agent shall not be liable for any losses, costs or expenses arising directly or indirectly from the Fiscal Agent’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The City agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Fiscal Agent, including without limitation the risk of interception and misuse by third parties.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement, unless such Owners shall have offered to the Fiscal Agent security or indemnity reasonably satisfactory to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The permissive rights of the Fiscal Agent enumerated in this Agreement shall not be construed as duties. In no event shall the Fiscal Agent be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Fiscal Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.
The Fiscal Agent shall not be considered in breach of or in default in its obligations hereunder or progress in respect thereto in the event of delay in the performance of such obligations due to unforeseeable causes beyond its control and without its own fault or negligence, including, but not limited to, acts of God or of the public enemy or terrorists, acts of a government, fires, floods, pandemics, epidemics, recognized public emergencies, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, war, civil or military disturbances, nuclear or natural catastrophes, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes, interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, and hacking, cyber-attacks, or other use or infiltration of the Fiscal Agent’s technological infrastructure exceeding authorized access or any similar event and/or occurrences beyond the control of the Fiscal Agent.
09960.00000\42886166.2
44 Section 7.03. Information; Books and Accounts . The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including but not limited to periodic cash transaction statements which include detail for all investment transactions effected by the Fiscal Agent or brokers selected by the City. Upon the City’s election, such statements will be delivered via the Fiscal Agent’s online service and upon electing such service, paper statements will be provided only upon request.The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Improvement Fund, the Special Tax Fund, the Bond Fund, the Special Tax Prepayments Account, the Capitalized Interest Account, the Reserve Fund, the Administrative Expense Fund and the Costs of Issuance Fund. Such books of record and accounts shall upon reasonable prior notice at all times during business hours be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
Section 7.04. Notice to Fiscal Agent . The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, requisition, Officer’s Certificate, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties.The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
Section 7.05. Compensation, Indemnification . The City shall pay to the Fiscal Agent from time to time, promptly upon written request, reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent shall not have a lien therefor on any funds at any time held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any liabilities, losses, claims, damages, taxes or expenses which it may incur in the exercise and performance of its powers and duties hereunder (including legal fees and expenses) which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement, 09960.00000\42886166.2
45 but any monetary obligation of the City arising under this Section shall be limited solely to amounts on deposit in the Administrative Expense Fund.
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46 ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted . This Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent, without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Law, the laws of the State or this Agreement), or reduce the percentage of Bonds required for the amendment hereof, without the express consent of the Owners of all of the then Outstanding Bonds. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent.This Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(A) to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (B) to make modifications not adversely affecting any Outstanding Bonds in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the City may deem necessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners of the Bonds;
(D) to make such additions, deletions or modifications as may be necessary or desirable to assure the exclusion from gross income, for purposes of federal income taxation, of interest on the 2025 Bonds; and
(E) in connection with the issuance of Parity Bonds under and pursuant to Section 2.14.
The Fiscal Agent shall not be obligated to enter into any such Supplemental Agreement authorized by this Section which materially adversely affects the Fiscal Agent’s rights, duties or immunities under this Fiscal Agent Agreement or otherwise with respect to the Bonds or any agreements related thereto. The Fiscal Agent may request and shall be fully protected in relying 09960.00000\42886166.2
47 upon, an opinion of Bond Counsel that any proposed Supplemental Agreement complies with the applicable requirements of this Section 8.01
Section 8.02. Owners’ Meetings . The City may at any time call a meeting of the Owners.
In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting.Procedure for Amendment with Written Consent of Owners. The City and the Fiscal Agent may at any time adopt a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01, to take effect when and as provided in this Section. The City or the Fiscal Agent may obtain an opinion of Bond Counsel that such Supplemental Agreement complies with the provisions of this Article VIII, and the City and Fiscal Agent may rely conclusively upon such opinion. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided.Such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period.
Section 8.04. Disqualified Bonds . Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article 09960.00000\42886166.2
48 VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII. Upon written request, the City shall specify to the Fiscal Agent those Bonds disqualified pursuant to this Section 8.04. The Fiscal Agent may conclusively rely upon such request.Effect of Supplemental Agreement . From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes. Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond.
The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners’ action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. Amendatory Endorsement of Bonds . The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds. 09960.00000\42886166.2
49 ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties . Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent. Successor is Deemed Included in All References to Predecessor . Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.Discharge of Agreement. The City shall have the option to pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways:by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable; (B) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the funds and accounts provided for in Sections 4.02 and 4.03 is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or
(C) by irrevocably depositing with the Fiscal Agent, in trust, cash and Federal Securities in such amount as the City shall determine as confirmed by Bond Counsel, an Independent Financial Consultant or an independent certified public accountant will, together with the interest to accrue thereon and moneys then on deposit in the fund and accounts provided for in Sections 4.02 and 4.03, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates.
If the City shall have taken any of the actions specified in (A), (B) or (C) above, and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to such Bonds Outstanding shall cease and terminate. Notice of such election shall be filed with the Fiscal Agent. Notwithstanding the foregoing, the obligations of the City to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon, to pay all amounts owing to the Fiscal Agent pursuant to Section 7.05, and otherwise to assure that no action is taken or failed to be taken if such action or failure adversely affects the exclusion of interest on the Bonds from gross income for federal income tax purposes, shall continue in any event.
Upon compliance by the City with the foregoing with respect to all Bonds Outstanding, any funds held by the Fiscal Agent after payment of all fees and expenses of the Fiscal Agent, 09960.00000\42886166.2
50 which are not required for the purposes of the preceding paragraph, shall be paid over to the City and any Special Taxes thereafter received by the City shall not be remitted to the Fiscal Agent but shall be retained by the City to be used for any purpose permitted under the Law.
Section 9.04. Execution of Documents and Proof of Ownership by Owners . Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing.Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.
Except as otherwise herein expressly provided, the ownership of the Bonds and the amount, maturity, number and date of holding the same shall be proved by the Registration Books.
Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith.
Section 9.05. Waiver of Personal Liability . No City Council member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.Notices to and Demands on City and Fiscal Agent . Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the City with the Fiscal Agent) as follows:City of Palmdale
38300 Sierra Highway, Suite D
Palmdale, California 93550
Attention: Director of Finance
Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Fiscal Agent with the City) as follows:
U.S. Bank Trust Company, National Association
633 West 5th Street, 24th Floor
Los Angeles, CA 90071
Attention: Global Corporate Trust
Reference: Palmdale CFD 2022-3 (Ritter Ranch Phase 1 Public Facilities) 09960.00000\42886166.2
51 Section 9.07. Partial Invalidity . If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal, invalid or unenforceable. Unclaimed Moneys . Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remain unclaimed for two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys were held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the City for the payment of the principal of, and interest and any premium on, such Bonds. Any right of any Owner to look to the City for such payment shall survive only so long as required under applicable law.Applicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State applicable to contracts made and performed in the State. Conflict with Law. In the event of a conflict between any provision of this Agreement with any provision of the Law as in effect on the Closing Date, the provision of the Law shall prevail over the conflicting provision of this Agreement.Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Law relative to their issuance and the levy of the Special Taxes. Payment on Business Day . In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. The exchange of copies of this Agreement and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement as to the parties hereto and may be used in lieu of the original Agreement and signature pages for all purposes. U.S.A. Patriot Act . The City acknowledges that in accordance with Section 326 of the U.S.A. Patriot Act, the Fiscal Agent, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Fiscal Agent. The City agrees that it will provide the Fiscal Agent with such information as the Fiscal Agent may reasonably request in order for the Fiscal Agent to satisfy requirements of the U.S.A. Patriot Act as specified in a written request to the City that specifies in detail the needed information. Electronic Transactions. The transactions described in this Agreement may be conducted and the related documents may be stored by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law.
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52 IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name and the Fiscal Agent has caused this Agreement to be executed in its name, all as of February 1, 2025.
CITY OF PALMDALE, CALIFORNIA for
and on behalf of the CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT
NO. 2022-3 (RITTER RANCH PHASE 1
PUBLIC FACILITIES)
By:
Ronda Perez,
City Manager
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Fiscal Agent
By:
Authorized Officer
09960.00000\42886166.2
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A
EXHIBIT A
FORM OF 2025 BOND
No. $ $
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BOND,
INTEREST RATE MATURITY DATE BOND DATE CUSIP
______% September 1, ____ __________, 2025
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Palmdale, California (the “City”), for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “District”), for value received, hereby promises to pay solely from the Special Tax (as hereinafter defined) to be collected in the District or amounts in the funds and accounts held under the Agreement (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Bond Date shown above, or from the most recent Interest Payment Date (defined below) to which interest has been paid or duly provided for, semiannually on March 1 and September 1, commencing September 1, 2025 (each, an “Interest Payment Date”), at the Interest Rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the designated corporate trust office of U.S. Bank Trust Company, National Association (the “Fiscal Agent”). Interest on this Bond shall be paid by check of the Fiscal Agent mailed on each Interest Payment Date to the Registered Owner hereof as of the close of business on the 15th day of the month preceding the month in which the Interest Payment Date occurs, whether or not such 15th day is a business day (the “Record Date”) at such Registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent, or (i) if the Bonds are in book-entry-only form, or (ii) otherwise upon written request filed with the Fiscal Agent prior to any Record Date by a Registered Owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to the depository for the Bonds or to an account in the United States designated by such Registered Owner in such written request, respectively.
Interest on this Bond shall be payable from the Interest Payment Date next preceding the date of authentication hereof, unless (i) it is authenticated on an Interest Payment Date, in which 09960.00000\42886166.2
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event it shall bear interest for such Interest Payment Date, or (ii) such date of authentication is after a Record Date but on or prior to an Interest Payment Date, in which event interest will be payable from such Interest Payment Date, or (iii) such date of authentication is prior to the first Record Date, in which event interest will be payable from the Bond Date shown above; provided however, that if at the time of authentication of this Bond, interest is in default hereon, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment hereon.
This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $____________ approved by the City Council of the City on March 20, 2024 pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et set. of the California Government Code (the “Law”) for the purpose of financing costs of facilities authorized to be funded by the District, and is one of the series of Bonds designated “City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds” (the “Bonds”). The creation of the Bonds and the terms and conditions thereof are provided for the Fiscal Agent Agreement No. A-____, dated as of February 1, 2025, between the City, for and on behalf of the District, and the Fiscal Agent (the “Agreement”) and this reference incorporates the Resolution and the Agreement herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. In addition to the Bonds, the Agreement allows for the issuance of Parity Bonds (as defined in the Fiscal Agent Agreement) by the City from time to time, secured by a lien on funds held under the Agreement on a parity with the lien securing the Bonds. The Agreement is authorized under and this Bond is issued under, and both are to be construed in accordance with, the Law and other applicable laws of the State of California.
The Bonds are not general obligations of the City, but are limited obligations payable solely from the revenues and funds pledged therefor under the Agreement. Neither the faith and credit nor the taxing power of the City (except to the extent of the Special Tax levy in the District, as set forth in the Agreement) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.
Pursuant to the Law, and the Agreement, the principal of and interest on this Bond are payable solely from the annual Special Tax authorized under the Law to be collected within the District and certain funds held under the Agreement. Any tax for the payment hereof shall be limited to the Special Tax, except to the extent that provision for payment has been made by the City, as may be permitted by law. The Bonds do not constitute obligations of the City for which said City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove.
The City has covenanted for the benefit of the owners of the Bonds that it will commence and pursue to completion appropriate foreclosure actions in the event of delinquencies of any Special Tax installments levied for payment of principal and interest as more particularly set forth in the Agreement.
The Bonds are subject to optional redemption prior to their stated maturity at the option of the City on any date occurring on or after September 1, 2034, as a whole, or in part by lot, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium. 09960.00000\42886166.2
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The Bonds are subject to mandatory sinking payment redemption in part on September 1, 2026 and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as provided in the Agreement.
The Bonds are also subject to redemption from the proceeds of Special Tax Prepayments and any corresponding transfers from the Reserve Fund pursuant to the Agreement, on the next Interest Payment Date for which notice of redemption can timely be given under the Agreement, by lot, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest to the date fixed for redemption, and a premium (expressed as a percentage of the principal amount of the 2025 Bonds to be redeemed), as follows:
Redemption Dates
Redemption
Premium
any Interest Payment Date to and including March 1, 2033 3% September 1, 2033 and March 1, 2034 2
September 1, 2034 and March 1, 2035 1
September 1, 2035 and any Interest Payment Date thereafter 0 Notice of redemption with respect to the Bonds to be optionally redeemed or to be redeemed from special tax prepayments shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Agreement. Notices of optional redemption may be conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the Bonds on the anticipated redemption date, and if the Fiscal Agent does not receive sufficient funds by the scheduled redemption date the redemption shall not occur and the Bonds for which notice of redemption was given shall remain outstanding for all purposes of the Agreement.
The Bonds are issuable as fully registered Bonds without coupons in denominations of $250,000 or any integral multiple of $5,000 in excess thereof ($100,000 or any integral multiple of $5,000 in excess thereof upon satisfaction of certain requirements in the Agreement); provided that in any event one Bond may be in a principal amount of the portion of the then outstanding principal amount of the Bonds not divisible by $250,000 (by $100,000 upon the satisfaction of certain requirements specified in the Agreement). Subject to the limitations and upon payment of the charges, if any, provided in the Agreement, Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount and maturity of Bonds of other authorized denominations.
Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated as herein provided, and satisfaction of the applicable requirements of Section 2.06(B) of the Agreement; and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such owner’s order. The Fiscal Agent shall require the registered owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid 09960.00000\42886166.2
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with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made (i) fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.
The Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein. The Agreement contains provisions permitting the City to make provision for the payment of the interest on, and the principal of the Bonds so that such Bonds will no longer be deemed to be outstanding under the terms of the Agreement.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and manually signed by the Fiscal Agent.
Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Fiscal Agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by the Law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by the Law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
IN WITNESS WHEREOF, City of Palmdale, California, has caused this Bond to be dated the Bond Date shown above, to be signed by the facsimile signature of the Mayor of the City and countersigned by the facsimile signature of the City Clerk.
CITY OF PALMDALE, CALIFORNIA
By:
Austin Bishop
Mayor
[S E A L]
Attest:
Rochelle Scott
City Clerk
09960.00000\42886166.2
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FISCAL AGENT’S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the Resolution and the Agreement which has been authenticated on.
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
as Fiscal Agent
By:_______________________________________
Authorized Signatory
09960.00000\42886166.2
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned do(es) hereby sell, assign and transfer unto (Name, address and Tax identification Number of Assignee) the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney,
to transfer the same on the books of the Fiscal Agent with full power of substitution in the premises.
Dated:
Signatures Guaranteed:
Note:Signature guarantee shall be made by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Fiscal Agent.
Note:The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever.
09960.00000\42886166.2
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B
EXHIBIT B
FORM OF INVESTOR LETTER
[date of transfer]
City of Palmdale
Palmdale, California
U.S. Bank Trust Company, National Association
Los Angeles, California
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
2025 Special Tax Bonds
Ladies and Gentlemen:
In connection with our purchase of the above-referenced bonds (referred to in this letter as the “Bonds”) on the date hereof, the undersigned (the “Purchaser”) hereby represents and warrants to, and agrees with, the City of Palmdale, California (the “City”) and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”), as follows:
1. The Purchaser is a qualified institutional buyer, as defined in Rule 144A of the United States Securities Act of 1933 that is purchasing $____________ principal amount of the Bonds. The principal amount being purchased is in an Authorized Denomination, as defined in the Fiscal Agent Agreement (A-9125), dated as of February 1, 2025 (the “Fiscal Agent Agreement”), between the City and the Fiscal Agent pursuant to which the Bonds were issued.
2. The Purchaser has sufficient knowledge and experience in financial and business matters to be able to evaluate the risks and merits of the investment represented by the purchase of the Bonds, and is able to bear the economic risk of that investment.
3. The Purchaser understands that the Bonds are payable solely from the sources pledged therefor in the Fiscal Agent Agreement.
4. The Purchaser has reviewed the Fiscal Agent Agreement, the Rate and Method of Apportionment of Special Taxes applicable to the District, and other documents relating to the Bonds and such other records of the City and information concerning the Bonds and the District as the Purchaser deems necessary in order to be fully informed with respect to the Bonds, the Rate and Method of Apportionment of Special Taxes, the Special Taxes, the District and the property in the District (the “Property”), and, in particular, in the exercise of due diligence the Purchaser has made its own inquiry and analysis with respect to the Rate and Method of Apportionment of Special Taxes; the value of the Property; litigation that could directly or indirectly affect the ability of the owners of land in the District to develop their property; the rights and remedies of the Purchaser in the event of a failure of the City to pay the principal of or the interest on the Bonds; 09960.00000\42886166.2
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and all other factors that, in the judgment of the Purchaser, might relate to the security for and value of the Bonds.
5. The Purchaser has been supplied with or has had access to all information to which a reasonable investor would attach significance in making investment decisions with respect to the Bonds and has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Bonds, the Rate and Method of Apportionment of Special Taxes, the Special Taxes, the District, other special taxes and assessments applicable to the Property, and the Property, so that, as a reasonable investor, the Purchaser has been able to make an informed, independent decision to purchase the Bonds; and in this regard, representatives of the City have responded to the satisfaction of the Purchaser to all of the Purchaser’s requests for information, the Purchaser has received from representatives of the City all the information that the Purchaser has requested from them, and there is no pending and unanswered request by the Purchaser for information from the City.
6. The Purchaser acknowledges that the Bonds (a) are not being registered under the United States Securities Act of 1933 and are not being registered or otherwise qualified for sale under the “Blue Sky” laws and regulations of any state, (b) will not be listed on any stock or other securities exchange, (c) are not expected to be assigned a rating, (d) contain substantial restrictions on their transferability and (e) are not expected to be readily marketable.
7. The Purchaser agrees to not directly or indirectly sell, assign, transfer (other than a transfer by operation of law), dispose of or offer the Bonds or any interest therein for sale without first complying with the conditions to transfer set forth in Section 2.06(B)(i) of the Fiscal Agent Agreement.
8. The Purchaser agrees to indemnify, defend and hold harmless the City with respect to any claim, loss, liability, action, judgment, cost and expense (including reasonable attorneys’ fees and costs) asserted against or suffered or incurred by the City in respect of the Bonds or any investment therein solely to the extent it is brought by a person or entity that acquired any Bonds (or any interest in any Bonds) from the Purchaser in violation of the provisions of Section 2.06 of the Fiscal Agent Agreement.
Capitalized terms used above have the meanings give them in the Fiscal Agent Agreement. __________________________________________
By: ______________________________________
4859-2636-4146v3/200640-0017
$___________
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
BOND PURCHASE CONTRACT
(A-9126)
__________, 2025
City of Palmdale,
for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities)
38300 Sierra Highway, Suite A
Palmdale, CA 93550
Attention: City Manager
Ladies and Gentlemen:
Hilltop Securities Inc. (the “ Underwriter”) offers to enter into this Bond Purchase Contract (A-9126) (this “ Purchase Contract”) with the City of Palmdale (the “ City”), for and on behalf of Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “ District”).
This offer is made subject to the City’s acceptance by execution of this Purchase Contract and delivery of the same to the Underwriter on or before 11:59 p.m., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon written notice delivered to the City at any time prior to such acceptance. Upon the City’s acceptance hereof, the Purchase Contract will be binding upon the City and the Underwriter. Capitalized terms that are used in this Purchase Contract and not otherwise defined have the respective meanings given to such terms in the Fiscal Agent Agreement (as such term is defined below).
Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations that are set forth in this Purchase Contract, the Underwriter agrees to purchase from the City, and the City, for and on behalf of the District, agrees to sell and deliver to the Underwriter, all (but not less than all) of the $_________ City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds (the “Bonds”), at a purchase price of $____________ (being an amount equal to the principal amount of the Bonds, plus an original issue premium of $__________, and less an Underwriter’s discount of $____________). The obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be conditioned on the sale and delivery of all of the Bonds by the City to the Underwriter at Closing (as such term is defined herein).
The City and the Underwriter acknowledge and agree that: (1) the purchase and sale of the Bonds under this Purchase Contract is an arm’s-length commercial transaction between the City and the Underwriter; (2) in connection with the purchase and sale of the Bonds and with the discussions, undertakings, and procedures leading up to the consummation of the purchase and sale of the Bonds Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
2 under this Purchase Contract, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the City; (3) the Underwriter has not assumed a fiduciary responsibility in favor of the City with respect to (A) the offering of the Bonds contemplated by this Purchase Contract or the process leading to this Purchase Contract (whether or not the Underwriter or any affiliate of the Underwriter has advised or is currently advising the City on other matters), or (B) any other obligation to the City with respect to the offering contemplated by this Purchase Contract except the obligations expressly set forth in this Purchase Contract; and (4) the City and the Underwriter have consulted their own legal, financial, and other advisors to the extent they have deemed appropriate in connection with this transaction. This paragraph does not limit the Underwriter’s obligations of fair dealing under Municipal Securities Rulemaking Board Rule G-17.
Section 2. Bond Terms; Authorizing Instruments; Prior Bonds. (a) The Bonds shall be dated their date of delivery and shall mature and bear interest as set forth on Exhibit A. The Bonds shall be as described in, and shall be issued and secured under the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), Resolution No. __________ adopted by the City Council on __________ (the “ Resolution of Issuance ”), a Fiscal Agent Agreement (A-8586), dated as of [February 1, 2025] (the “Fiscal Agent Agreement”), by and between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). The Bonds are payable and subject to redemption as provided in the Fiscal Agent Agreement and as described in the Limited Offering Memorandum (as such term is defined herein).
(b) The Bonds will be issued pursuant to the Act. The Bonds are payable from and secured by the City’s pledge of Special Tax Revenues under and as defined in the Fiscal Agent Agreement. (c) The net proceeds of the sale of the Bonds will be used to: (i) fund capital improvements of the City; (ii) fund a reserve fund for the Bonds to satisfy the Reserve Requirement; (iii) fund capitalized interest on the Bonds through __________; (iv) fund administrative expenses for the Bonds; and (v) pay the costs of issuing the Bonds.
(d) The City has previously issued its City of Palmdale Community Facilities District No. 93-1 (Ritter Ranch) Special Tax Bonds, Series 1995-A Senior Bonds (the “ Prior Bonds ”) to finance various public infrastructure improvements within and in the vicinity of the Ritter Ranch development, pursuant to a Fiscal Agent Agreement (A-4261), dated as of March 1, 2014 by and between the City, for and on behalf of the City of Palmdale Community Facilities District No. 93-1 (Ritter Ranch), and U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as fiscal agent (as amended and in effect on the date hereof, the “ Prior Bonds Fiscal Agent”). PHCC LLC (d/b/a Preston Hollow Community Capital), a Dealware limited liability company (the “Prior Bonds Holder”) owns all of the outstanding Prior Bonds.
Section 3. Limited Offering and Establishment of Issue Price. The Underwriter agrees to offer of all of the Bonds, at not in excess of the initial yields or price that is set forth on Exhibit A and incorporated herein by reference.
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
3 (a) The following definitions apply only in this Section 3:
(1) “Underwriter” means (A) any person who agrees under a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (B) any person that agrees under a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the Public). (2) A purchaser of any of the Bonds is a “Related Party” to an Underwriter if the Underwriter and the purchaser are subject, directly or indirectly, to (A) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another); (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another); or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other).
(3) “Sale Date ” means the date of execution of this Purchase Contract by all parties.
(b) The Underwriter shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at the Closing an “issue price” or similar certificate, together with the supporting pricing wire or equivalent communications, substantially in the form attached hereto as Exhibit B, with any modifications that be appropriate or necessary, in the reasonable judgment of the Underwriter, the City, and Bond Counsel, to accurately reflect, as applicable, the sales price or the initial offering price of the Bonds. All actions to be taken by the City under this section to establish the issue price of the Bonds may be taken on behalf of the City by the City’s municipal advisor, Harrell & Company Advisors (the “Municipal Advisor”), and any notice or report to be provided to the City may be provided to the Municipal Advisor.
(c) The Underwriter confirms that the Underwriter has offered the Bonds to the purchaser on or before the date of this contract at par (the “Initial Offering Price”), set forth in Exhibit A attached hereto, except as otherwise set forth therein.
(d) The Underwriter acknowledges that sales of any Bonds to any person who is a Related Party to the Underwriter will not constitute sales for purposes of this Section 3.
Section 4. Limited Offering Memorandum; Continuing Disclosure. (a) The City has delivered to the Underwriter the Preliminary Limited Offering Memorandum dated __________ (the “ Preliminary Limited Offering Memorandum ”) and will deliver to the Underwriter the final Limited Offering Memorandum dated the date of this Purchase Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
4 Contract (as amended and supplemented from time to time pursuant to Section 5(i) of this Purchase Contract, the “Limited Offering Memorandum”) within seven business days of the date hereof. (b) The City authorizes the use of the Limited Offering Memorandum and the information that is contained therein by the Underwriter in connection with the public offering and the sale of the Bonds. The City consents to the use by the Underwriter prior to the date hereof of the Preliminary Limited Offering Memorandum in connection with the public offering of the Bonds. The Underwriter agrees that it will not send any confirmation requesting payment for the purchase of any Bonds unless the confirmation is accompanied by or preceded by the delivery of a copy of the Limited Offering Memorandum. The Underwriter agrees: (i) to provide the City with final pricing information on the Bonds on a timely basis prior to the Closing; and (ii) to take any and all other actions that are necessary to comply with applicable rules of the Securities and Exchange Commission (the “ SEC”) and the Municipal Securities Rulemaking Board (the “ MSRB”) governing the offering, sale and delivery of the Bonds to the ultimate purchaser through the Electronic Municipal Marketplace Access website of the MSRB, at 9:00 a.m., California time, on _____________, 2025, or at such other time or on such other date as shall have been mutually agreed upon by the City, on behalf of the District, and the Underwriter (the “Closing Date”).
(c) In connection with the issuance of the Bonds, and in order to assist the Underwriter in complying with the provisions of SEC Rule 15c2-12 (“ Rule 15c2-12”), the City will enter into a Continuing Disclosure Agreement (the “ Continuing Disclosure Undertaking ”) dated as of __________ 1, 2025, under which the City will undertake to provide certain financial and operating data as required by Rule 15c2-12. The form of the Continuing Disclosure Undertaking is attached as Appendix E to the Preliminary Limited Offering Memorandum. (d) RdR Development Holdings, LLC (the “ Property Owner”) has agreed to execute at the closing of the Bonds the Continuing Disclosure Agreement – Master Developer (the “ Master Developer Contnuing Disclosure Undertaking”) substantially in the form attached as Appendix F to the Preliminary Limited Offering Memorandum, with such additional changes as may be agreed upon by the Property Owner, the City and the Underwriter.
Section 5. Representations, Warranties and Covenants of the City . The City hereby represents, warrants and agrees with the Underwriter that:
(a) The City Council of the City has taken official action by the adoption of the Resolution of Issuance that was adopted by two-thirds of the members of the City Council of the City at a regular meeting that was duly called, noticed and conducted, at which a quorum was present and acting throughout, authorizing the execution, delivery and due performance of: (i) the Fiscal Agent Agreement; (ii) the Continuing Disclosure Undertaking; and (iii) this Purchase Contract (collectively, the “City Agreements”) and the Limited Offering Memorandum, and the taking of any and all such action as may be required on the part of the City to carry out, give effect to and consummate the transactions that are contemplated hereby.
(b) The City is a charter city that is duly organized and existing under the laws of the State of California (the “ State”) and has all necessary power and authority to adopt the Resolution of Issuance defined in 2(a) and the District Resolutions/Ordinance (as such term is defined herein) and to enter into and perform its duties under the City Agreements and the District Resolutions/Ordinance.
The District is a community facilities district that is duly organized and existing under the Act.
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
5 (c) By all necessary official action, the City has: (i) duly authorized the preparation and delivery of the Preliminary Limited Offering Memorandum and the preparation, execution and delivery of the Limited Offering Memorandum; (ii) duly authorized and approved the execution and delivery of, and the performance of its obligations under, the Bonds, the City Agreements and the District Resolutions/Ordinance; and (iii) duly authorized the consummation by the City of all other transactions on the part of the City that are contemplated by the Resolution of Issuance, the City Agreements, the District Resolutions/Ordinance and the Limited Offering Memorandum. When executed and delivered, the City Agreements (assuming due authorization, execution and delivery by and enforceability against the other parties thereto) will be in full force and effect and each will constitute a legal, valid and binding agreement of the City, enforceable against the City with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally, the application of equitable principles, the exercise of judicial discretion and the limitations on legal remedies against public entities in the State.
(d) At the time of the City’s acceptance hereof and at all times subsequent thereto up to and including the time of the Closing (as defined herein), the information and statements in the Limited Offering Memorandum (except under the information under the captions “INTRODUCTION – The District,” and “—Land Valuation,” “PLAN OF FINANCING — Overview (Second paragraph), “THE DEVELOPMENT AND THE DISTRICT —The Master Developer,” “—Description of the District” “—Land Ownership,” “—Plan for Development in the District” “—Projected Special Tax Revolves,” “SPECIAL RISK FACTORS — Litigation Affecting the Development of Property in the District,” and “CONTINUING DISCLOSURE — The Master Developer” as to which no view is expressed) do not and will not contain any untrue statement of a material fact or omit to state a material fact that is required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that no representation is made with respect to information relating to DTC (as such term is defined herein) or DTC’s book-entry system. (e) As of the date hereof, except as described in the Preliminary Limited Offering Memorandum, there is no action, suit, proceeding or investigation before or by any court, public board or body that is pending against, and notice of which has been served on and received by, the City or the District, or, to the best knowledge of the City, threatened against the City or the District, wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City or the District, or the titles of their respective officers; (ii) in any way question or affect the validity or enforceability of the City Agreements, the District Resolutions/Ordinance, the Second Amended and Restated Notice of Special Tax Lien related to the District (the “ Notice of Special Tax Lien;” together with the District Resolutions/Ordinance, the “ Formation Documents”) the Bonds or the exclusion of the interest on the Bonds from federal income taxation; or (iii) in any way question or affect this Purchase Contract or the transactions contemplated by this Purchase Contract, the Limited Offering Memorandum, or any other agreement or instrument to which the City or the District is a party relating to the Bonds.
(f) There is no consent, approval, authorization or other order of, filing or registration with, or certification by, any regulatory authority that has jurisdiction over the City or the District that is required for the execution and delivery of this Purchase Contract and the other City Agreements or the consummation by the City or the District of the other transactions that are contemplated by the Limited Offering Memorandum, the Formation Documents or the City Agreements.
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
6 (g) Any certificate that is signed by any official of the City or the District who is authorized to do so shall be deemed a representation and warranty by the City or the District, as applicable, to the Underwriter as to the statements made therein.
(h) Other than with respect to their obligations in connection with the District’s Special Tax Bonds, Series 1995-A Senior Bonds, neither the City nor the District is in default, and at no time have the City or the District defaulted in any material respect, on any bond, note or other obligation for borrowed money or any agreement under which any such obligation is or was outstanding. (i) If any event occurs of which the City has knowledge between the date of this Purchase Contract and the date of the Closing that might or would cause the Limited Offering Memorandum, as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact that is required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City will notify the Underwriter and if, in the opinion of the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Limited Offering Memorandum, the City will cooperate with the Underwriter in causing the Limited Offering Memorandum to be amended or supplemented in a form and in a manner that is approved by the Underwriter. All expenses that are thereby incurred will be paid by the City, and the Underwriter will file, or cause to be filed, the amended or supplemented Limited Offering Memorandum with the MSRB’s Electronic Municipal Market Access database (“EMMA”).
(j) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order: (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions. The City will not be required to execute a general or special consent to service of process or to qualify to do business in connection with any such qualification or determination in any jurisdiction.
(k) The City and the District are not in any material respect in breach of or default under:
(i) any applicable constitutional provision, law or administrative regulation of any state or of the United States, or or instrumentality of either; (ii) any applicable judgment or decree; or (iii) any loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the City or the District is a party, which breach or default has or may have an adverse effect on the ability of the City to perform its obligations under the City Agreements or the District Resolutions/Ordinance, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the adoption, execution and delivery of the City Agreements, if applicable, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, trust agreement, bond, note, resolution, agreement or other instrument to which the City or the District is a party, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or the District or under the terms of any such law, regulation or instrument, except as may be provided by the City Agreements.
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
7 (l) The City has complied in all material respects with its continuing disclosure undertakings in the past five years. The District has had no such prior obligation. (m) Except as disclosed in the Limited Offering Memorandum or otherwise disclosed in writing to the Underwriter, there has not been any materially adverse change in the financial condition of the City or the District or in their respective operations since June 30, 2023, and there has been no occurrence, circumstance or combination thereof that is reasonably expected to result in any such materially adverse change.
(n) The City and the District will refrain from taking any action, or permitting any action within its control to be taken, with regard to which the City or the District may exercise control, that results in the loss of the tax-exempt status of the interest on the Bonds.
Section 6. The Closing.
(a) At 8:00 A.M., California time, on _________, 2025, or on such earlier or later time or date as may be agreed upon by the Underwriter and the City (the “Closing”), the City shall deliver, or cause to be delivered, to the Fiscal Agent the Bonds in definitive form, registered in the name of Cede & Co., as the nominee of The Depository Trust Company, New York, New York (“ DTC”) (so that the Bonds may be authenticated by the Fiscal Agent and credited to the account that is specified by the Underwriter under DTC’s FAST procedures). Prior to the Closing, the City shall deliver, at the offices of Best Best & Krieger LLP (“Bond Counsel”), in Riverside, California, or at such other place as is mutually agreed upon by the Underwriter and the City, the other documents that are described in this Purchase Contract. On the date of the Closing, the Underwriter shall pay the purchase price of the Bonds as set forth in Section 1 of this Purchase Contract in immediately available funds to the order of the Fiscal Agent.
(b) The Bonds shall be issued in fully registered form and shall be prepared and delivered as one Bond registered in the name of Cede & Co., a nominee of DTC. It is anticipated that a CUSIP identification number will be inserted on the Bonds, but neither the failure to provide such number nor any error with respect thereto shall constitute a cause for failure or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Purchase Contract.
Section 7. Conditions to Underwriter’s Obligations. The Underwriter has entered into this Purchase Contract in reliance upon the representations and warranties of the City contained herein and to be contained in the documents and instruments to be delivered on the date of the Closing, and upon the performance by the City of its obligations to be performed hereunder and under such documents and instruments to be delivered at or prior to the date of the Closing. The Underwriter’s obligations under this Purchase Contract are and shall also be subject to the following conditions:
(a) The representations and warranties of the City that are contained in this Purchase Contract shall be true and correct in all material respects on the date of this Purchase Contract and on and as of the date of the Closing as if made on the date of the Closing. (b) As of the date of the Closing, the Limited Offering Memorandum shall not have been amended, modified or supplemented, except in any case as may have been agreed to by the Underwriter.
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
8 (c) As of the date of the Closing, (i) the Resolution of Issuance, the Formation Documents and the City Agreements shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to by the City and the Underwriter; and (ii) the City and the District shall perform or shall have performed all of their obligations that are required under or specified in the Resolution of Issuance, the District Resolutions/Ordinance and the City Agreements to be performed at or prior to the date of the Closing. (d) As of the date of the Closing, all necessary official action of the City and the District relating to the City Agreements, the Formation Documents, the City Resolution and the Limited Offering Memorandum shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect.
(e) Subsequent to the date of this Purchase Contract, up to and including the date of the Closing, there shall not have occurred any change in the financial affairs of the City or the District, as described in the Limited Offering Memorandum, which in the reasonable professional judgment of the Underwriter materially impairs the investment quality of the Bonds. (f) As of or prior to the date of the Closing, the Underwriter shall have received each of the following documents:
(A) A certified copy of the Resolution of Issuance.
(B) Duly executed copies of the City Agreements.
(C) The Preliminary Limited Offering Memorandum and the Limited Offering Memorandum, with the Limited Offering Memorandum duly executed on behalf of the City, along with an executed copy of the Continuing Disclosure Untertaking. (D) The Master Developer Continuing Disclosure Undertaking executed by the Property Owner.
(E) An approving opinion of Bond Counsel, dated the date of the Closing, as to the validity of the Bonds and the exclusion of interest on the Bonds from federal and State income taxation, addressed to the City, substantially in the form attached as Appendix D to the Limited Offering Memorandum, and a reliance letter with respect thereto addressed to the Underwriter and the Fiscal Agent.
(F) A supplemental opinion or opinions of Bond Counsel, dated the date of the Closing, addressed to the Underwriter, to the effect that:
(1) The Purchase Contract has been duly executed and delivered by the City and (assuming due authorization, execution and delivery by and enforceability against the Underwriter) is valid and binding upon the City, subject to laws relating to bankruptcy, insolvency, reorganization or creditors’ rights generally and to the application of equitable principles; (2) The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended;
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
9 (3) The statements contained in the Limited Offering Memorandum on the cover and under the captions “INTRODUCTION,” “PLAN OF FINANCING,” “THE 2025 BONDS” (excluding therefrom the statements pertaining to DTC), “SECURITY FOR THE 2025 BONDS” and “TAX MATTERS,” and in Appendices C and D, excluding any material that may be treated as included under such captions by cross-reference, are accurate insofar as such statements expressly purport to describe certain provisions of the Act, the Bonds, the City Agreements, the Formation Documents and the form and content of Bond Counsel’s final approving opinion; and (4) The Prior Bonds have been tendered by the Prior Bonds Holder to the City for cancellation and are no longer outstanding under the fiscal agent agreement pursuant to which they were assigned.
(G) The letter of Best Best & Krieger LLP, as disclosure counsel (“Disclosure Counsel”) dated the Closing Date and addressed to the City and to the Underwriter, to the effect that, without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the District, the Special Tax Consultant and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Official Statement, as of its date contained, or as of the Closing Date contains, any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no view need be expressed with respect to (i) the expressions of opinion, the assumptions, the projections, estimates and forecasts, the charts, the financial statements or other financial, numerical, economic, demographic or statistical data, assessed valuations, absorption schedules, or archeological or environmental matters contained in the Official Statement; (ii) any CUSIP numbers or information relating thereto; (iii) any information with respect to The Depository Trust Company and its book- entry system; (iv) any information contained in the Appendices to the Official Statement; (v) any information incorporated by reference into the Official Statement; and (vi) any information with respect to the Underwriter or underwriting matters with respect to the Bonds, including but not limited to information under the caption “UNDERWRITING”).
(H) An opinion of the City Attorney, dated the date of the Closing, addressed to the Underwriter and Fiscal Agent, substantially in the form attached hereto as Exhibit E. (I) An executed Rule 15c2-12 certificate of the City, dated the date of the Preliminary Limited Offering Memorandum, substantially in the form attached hereto as Exhibit C. (J) An executed closing certificate of the City, dated the date of the Closing, substantially in the form attached hereto as Exhibit D. (K) The opinion of counsel of the Fiscal Agent, addressed to the City and the Underwriter, substantially to the effect that:
(1) The Fiscal Agent is a national banking association that is duly organized, validly existing and in good standing under the laws of the United States of America, having full powers and authority and being qualified to enter into, accept and administer the trust created under the Fiscal Agent Agreement and to enter into the Fiscal Agent Agreement; and Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
10 (2) The Fiscal Agent Agreement has been duly authorized, executed and delivered by the Fiscal Agent, and, assuming due authorization, execution and delivery by the City, the Fiscal Agent Agreement constitutes the legal, valid and binding agreement of the Fiscal Agent, enforceable in accordance with its terms, subject to laws relating in bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and the application of equitable principles if equitable remedies are sought.
(L) A certificate or certificates, dated the date of the Closing, in form and substance acceptable to the Underwriter, of an authorized officer of officers of the Fiscal Agent to the effect that the Fiscal Agent is duly authorized to enter into the Fiscal Agent Agreement, has accepted the respective duties imposed by the Fiscal Agent Agreement and are authorized to carry out such duties, and that the Fiscal Agent has duly authenticated the Bonds. (M) Evidence of required filings with the California Debt and Investment Advisory Commission.
(N) A copy of the executed Blanket Issuer Letter of Representations by and between the City and DTC relating to the book-entry system. (O) A certified copy of the general resolution of the Fiscal Agent authorizing the execution and delivery of the Fiscal Agent Agreement by certain officers of the Fiscal Agent, which resolution authorizes the execution and delivery of the Fiscal Agent Agreement and the authentication and delivery of the Bonds by the Fiscal Agent.
(P) An opinion of Stradling Yocca Carlson & Rauth LLP, counsel to the Underwriter, addressed to the Underwriter and in form and substance satisfactory to the Underwriter. (Q) A Certificate as to Arbitrage and a Certificate Regarding Use of Proceeds with respect to maintaining the tax-exempt status of the Bonds, duly executed by the City, together with IRS Form 8038-G, duly executed by the City.
(R) Certified copies of the resolutions and the ordinances of the City listed in Exhibit F relating to formation and change proceedings of the District and authorization of the Special Tax levy (collectively, the “District Resolutions/Ordinance”) and the Notice of Special Tax Lien, and all amendment proceedings relating thereto.
(S) A certificate, dated the date of the Closing, of NBS, Temecula, California, Special Tax Consultant, addressed to the City and the Underwriter to the effect that: (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Second Amended and Restated Rate and Method of Apportionment of Special Taxes, would generate an amount equal to at least estimated annual Administrative Expenses plus 110% of the Maximum Annual Debt Service payable with respect to the Bonds, based on such assumptions and qualifications as shall be acceptable to the Underwriter; and (ii) the statements in the Limited Offering Memorandum concerning the Second Amended and Restated Rate and Method of Apportionment of Special Tax, and all information supplied by the Special Tax Consultant for use in the Preliminary LOM and the Limited Offering Memorandum, including, but not limited to, the tables that are sourced to the Special Tax Consultant, were as of the date of the Limited Offering Memorandum and are as of the date of the Closing true and correct, and do not contain any untrue statement of a material fact or omit to state a material fact Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
11 necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(T) An Investor Letter, executed by PHCC LLC (d/b/a Preston Hollow Community Capital), in the form set forth in Exhibit B of the Fiscal Agent Agreement. (U) Evidence that the Prior Bonds have been tendered to Bond Counsel for cancellation, per the written instruction of the Prior Bonds Holder. (V) Evidence of filing with the County Recorder of a Notice of Cessation of Special Tax Lien with respect to City of Palmdale Community Facilities District 93-1 (Ritter Ranch). (W) Letter of Representation and the Closing Certificate of RdR Development Holdings, LLC, in the form set forth in Exhibit G attached hereto. (X) An opinion of counsel to RdR Development Holdings, LLC, to the effect that:
(i) to their knowledge, except as set forth in the Official Statement, there is no litigation pending against Property Owner (with service of process to Property Owner having been duly given and completed) or overtly threatened against Property Owner which would materially and adversely affect the validity or enforceability of the Letter of Representations, Property Owner’s ability to complete the development of its property as proposed in the Official Statement or to pay the Special Taxes.
(ii) To their knowledge, no facts have come to their attention during the course of their representation of the Property Owner which caused them to believe that the information in the Preliminary Official Statement describing the Property Owner, its development within the District and its financing plan, as of its date and as of the date of the Purchase Contract, or in the the Official Statement describing the Property Owner, its development within the District and its financing plan, as of its date and as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (iii) The Continuing Disclosure Undertaking constitutes the legally valid and binding obligation of the Property Owner, enforceable against the Property Owner in accordance with its terms.
(Y) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the City with legal requirements, the truth and accuracy, as of the date of the Closing, of the representations of the City contained herein and of the Limited Offering Memorandum and the due performance or satisfaction by the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the City hereunder.
All of the opinions, letters, certificates, instruments and other documents that are mentioned in this Purchase Contract shall be deemed to be in compliance with the provisions of this Purchase Contract if, but only if, they are in form and substance satisfactory to the Underwriter. If the City is unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
12 and to pay for the Bonds as set forth in this Purchase Contract, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the City shall be under any further obligations hereunder, except that the respective obligations of the City and the Underwriter that are set forth in Section 11 of this Purchase Contract shall continue in full force and effect.
Section 8. Conditions to City’s Obligations . The performance by the City of its obligations under this Purchase Contract is conditioned upon: (i) the performance by the Underwriter of its obligations hereunder; and (ii) receipt by the City of opinions addressed to the City, receipt by the Underwriter of opinions addressed to the Underwriter and the delivery of certificates on the date of the Closing by persons and entities other than the City as provided in Section 7(f).
Section 9. Termination Events. The Underwriter shall have the right to terminate the Underwriter’s obligations under this Purchase Contract to purchase, accept delivery of and pay for the Bonds by notifying the City of its election to do so if, after the execution hereof and prior to the Closing, any of the following events occurs:
(a) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially and adversely affected by any decision that is issued by a court of the United States (including the United States Tax Court) or of the State, by any ruling or regulation (final, temporary or proposed) that is issued by or on behalf of the Department of the Treasury of the United States, the Internal Revenue Service, or other governmental agency of the United States, or any governmental agency of the State, or by a tentative decision or announcement by any member of the House Ways and Means Committee, the Senate Finance Committee, or the Conference Committee with respect to contemplated legislation or by legislation enacted by, pending in, or favorably reported to either the House of Representatives or either House of the Legislature of the State, or formally proposed to the Congress of the United States by the President of the United States or to the Legislature of the State by the Governor of the State in an executive communication, affecting the tax status of the City or the District, their property or income, their debt or contractual obligations (including the Bonds) or the interest thereon or any tax exemption granted or authorized with respect thereto by the Internal Revenue Code of 1986, as amended;
(b) the United States becomes engaged in hostilities that result in a declaration of war or a national emergency, or any other outbreak of hostilities occurs, or a local, national or international calamity or crisis occurs, financial or otherwise, the effect of such outbreak, calamity or crisis being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds;
(c) there occurs a general suspension of trading on the New York Stock Exchange or the declaration of a general banking moratorium by the United States, New York or State authorities; (d) a stop order, ruling, regulation or official statement by, or on behalf of, the SEC is issued or made to the effect that the issuance, offering or sale of the Bonds or obligations similar to the Bonds is or would be in violation of any provision of the Securities Act of 1933, as then in effect, the Securities Exchange Act of 1934, as then in effect, or the Trust Indenture Act of 1939, as then in effect; Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
13 (e) legislation is enacted by the House of Representatives or the Senate of the Congress of the United States of America, a decision by a court of the United States of America is rendered or a ruling or regulation by or on behalf of the SEC or other governmental agency having jurisdiction of the subject matter is made or proposed to the effect that the Bonds are not exempt from registration, qualification or other similar requirements of the Securities Act of 1933, as then in effect, or of the Trust Indenture Act of 1939, as then in effect;
(f) in the reasonable judgment of the Underwriter, the market price of the Bonds, or the market price of obligations of the general character of the Bonds, might be materially and adversely affected because additional material restrictions that are not in force as of the date hereof are imposed upon trading in securities generally by any governmental authority or by any national securities exchange;
(g) the Office of the Comptroller of the Currency, The New York Stock Exchange, or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, or financial responsibility requirements of the Underwriter; (h) a general banking moratorium is established by federal, New York or State authorities; (i) any legislation, ordinance, rule or regulation is introduced in or enacted by any governmental body, department or agency in the State or a decision of a court of competent jurisdiction within the State is rendered, which, in the reasonable opinion of the Underwriter, after consultation with the City, materially adversely affects the market price of the Bonds; (j) any federal or State court, authority or regulatory body takes action materially and adversely affecting the collection of the Special Tax Revenues that are pledged under the Fiscal Agent Agreement;
(k) an event occurs which in the reasonable opinion of the Underwriter requires a supplement or amendment to the Limited Offering Memorandum and: (i) the City refuses to prepare and furnish such supplement or amendment; or (ii) in the reasonable judgment of the Underwriter, the occurrence of such event materially and adversely affects the marketability of the Bonds or renders the enforcement of the sale contracts of the Bonds impracticable; (l) an order, decree or injunction that is issued by any court of competent jurisdiction, or order, ruling, regulation (final, temporary or proposed), official statement or other form of notice or communication that is issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental authority having jurisdiction of the subject matter, to the effect that:
(i) obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from qualification under the Trust Indenture Act of 1939, as amended; or (ii) the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as contemplated hereby or by the Limited Offering Memorandum, is or would be in violation of the federal securities laws as amended and then in effect;
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
14 (m) additional material restrictions that are not in force as of the date hereof shall have been imposed upon trading in securities generally by any domestic governmental authority or by any domestic national securities exchange, which are material to the marketability of the Bonds; or (n) the commencement of any action, suit or proceeding described in Section 5(e).
Section 10. Changes in Limited Offering Memorandum. After the Closing, the City will not adopt any amendment of or supplement to the Limited Offering Memorandum to which the Underwriter shall reasonably object in writing. Within 90 days after the Closing or within 25 days following the “end of the underwriting period” (as such term is defined below), whichever occurs first, if any event relating to or affecting the Bonds, the District or the City occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Limited Offering Memorandum in order to make the Limited Offering Memorandum not misleading in any material respect in the light of the circumstances existing at the time that it is delivered to a purchaser, the City will forthwith prepare and furnish to the Underwriter an amendment or supplement that will amend or supplement the Limited Offering Memorandum so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time that the Limited Offering Memorandum is delivered to a purchaser, not misleading. The City will cooperate with the Underwriter in the filing by the Underwriter of such amendment or supplement to the Limited Offering Memorandum with the MSRB.
As used herein, the term “ end of the underwriting period ” means the later of such time as:
(i) the City delivers the Bonds to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public.
Notwithstanding the foregoing, unless the Underwriter gives notice to the contrary, the “end of the underwriting period” will be the date of the Closing. Any notice that is delivered pursuant to this provision will be written notice delivered to the City at or prior to the date of the Closing and will specify a date (other than the date of the Closing) to be deemed the “end of the underwriting period.” Section 11. Payment of Expenses.
(a) The Underwriter shall be under no obligation to pay, and the City shall pay the following expenses incident to the performance of the City’s obligations hereunder:
(i) the fees and disbursements of Bond Counsel and of Disclosure Counsel; (ii) the cost of printing and delivering the Bonds, the Preliminary Limited Offering Memorandum and the Limited Offering Memorandum (and any amendment or supplement that is prepared pursuant to Section 10 of this Purchase Contract); (iii) the fees and disbursements of accountants, advisors and any other experts or consultants retained by the City, including the Municipal Advisor City Attorney; and
(iv) any other expenses and costs of the City that are incident to the performance of its obligations in connection with the authorization, issuance and sale of the Bonds, including out-of-pocket expenses and regulatory expenses, and any other expenses agreed to by the parties.
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
15 (b) The Underwriter shall pay all expenses incurred by it in connection with the public offering and distribution of the Bonds including, but not limited to:
(i) all advertising expenses in connection with the offering of the Bonds; (ii) all out-of-pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Bonds (including, without limitation, the fees and expenses of its counsel and MSRB, CUSIP Bureau, California Debt and Investment Advisory Commission and California Public Securities Association fees, if any), except as provided in clause (a) above or as otherwise agreed to by the Underwriter and the City; and (iii) the Underwiter’s Counsel fees.
Section 12. Notices. Any notice or other communication to be given to the City under this Purchase Contract may be given by delivering the same in writing to the City at the address that is set forth on the first page of this Purchase Contract, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to:
Hilltop Securities Inc.
6100 Fairview Road, Suite 550
Charlotte, NC 28210
Attention: Joshua Lentz
Section 13. Survival of Representations, Warranties, Agreements . All of the City’s representations, warranties and agreements that are contained in this Purchase Contract shall remain operative and in full force and effect regardless of: (a) any investigations made by or on behalf of the Underwriter; or (b) delivery of and payment for the Bonds pursuant to this Purchase Contract. The agreements contained in this Section and in Section 11 shall survive the termination of this Purchase Contract.
Section 14. Benefit; No Assignment . This Purchase Contract is made solely for the benefit of the City and the Underwriter (including their successors and assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. The rights and obligations created by this Purchase Contract are not subject to assignment by the Underwriter or the City without the prior written consent of the other party hereto.
Section 15. Severability. In the event that any provision of this Purchase Contract is held to be invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision of this Purchase Contract.
Section 16. Counterparts. This Purchase Contract may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute the Purchase Contract by signing any such counterpart.
Section 17. Governing Law. This Purchase Contract shall be governed by the laws of the State applicable to contracts made and performed in the State.
Bond Purchase Agreement (A-9126)
Hilltop Securities Inc.
__________, 2025
2 (Signature page follows.)
S-1
4859-2636-4146v3/200640-0017
Section 18. Effectiveness. This Purchase Contract shall become effective upon the execution of the acceptance hereof by an authorized officer of the City, and shall be valid and enforceable as of the time of such acceptance.
Very truly yours,
HILLTOP SECURITIES INC.
By:
Title: Authorized Officer
Accepted:
CITY OF PALMDALE
By:
Title: Authorized Officer
Time of Execution: ________________ California Time
-Signature Page-
Bond Purchase Contract
A-1
4859-2636-4146v3/200640-0017
EXHIBIT A
$___________
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield
Initial
Offering
Price
T Term bond.
B-1
EXHIBIT B
$_____________
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, Hilltop Securities Inc (“ Hilltop”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
1. Bond Purchase Contract. On ___, 2025 (the “Sale Date”), Hilltop and the Issuer executed a Bond Purchase Contract (the “Purchase Agreement”) in connection with the sale of the Bonds. Hilltop has not modified the Purchase Agreement since its execution on the Sale Date.
2. Sale of General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities is the respective price listed in Schedule A.
3. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Issuer means City of Palmdale, for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities). (c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates or CUSIP identification numbers, are treated as separate maturities. (d) Related Party means any entity that shares with another entity (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). (e) Sale Date means the first day on which there is a binding contract in writing for the sale of the Bonds. The Sale Date of the Bonds is ___________, 2025. (f) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the B-2
Bonds to the Public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Hilltop’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in its Certificate as to Arbitrage and with respect to compliance with the federal income tax rules affecting the Bonds, and by Bond Counsel, in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
HILLTOP SECURITIES INC.
By:
[Title]
B-3
Schedule A
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield
Initial Offering
Price
T Term bond.
C-1
EXHIBIT C
$______*
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies and represents that the undersigned is the duly appointed and acting representative of the City of Palmdale (the “ City”), and as such is duly authorized to execute and deliver this Certificate on behalf of the City, and further hereby certifies and reconfirms on behalf of the City as follows:
(1) This Certificate is delivered in connection with the offering and sale of the above captioned bonds (the “ Bonds”) in order to enable the underwriter of the Bonds to comply with Securities and Exchange Commission Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (the “Rule”).
(2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Limited Offering Memorandum, setting forth information concerning the Bonds and the City (the “Preliminary Limited Offering Memorandum”).
(3) As used herein, “ Permitted Omissions” means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds. (4) The Preliminary Limited Offering Memorandum is, except for the Permitted Omissions, deemed final within the meaning of the Rule.
Dated: _________
CITY OF PALMDALE
By:
Director of Operations
* Preliminary, subject to change.
D-1
EXHIBIT D
$_____
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
CLOSING CERTIFICATE OF THE CITY
The undersigned hereby certifies and represents that the undersigned is the duly appointed and acting representative of the City of Palmdale (the “City”), and is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the City as follows:
(i) The representations, warranties and covenants of the City that are contained in the Bond Purchase Contract, dated ______________ (the “Purchase Contract”), by and between the City and Hilltop Securities Inc., as underwriter, are true and correct and in all material respects on and as of the date of the Closing, with the same effect as if made on the date of the Closing. (ii) The Resolution of Issuance and the Formation Documents are in full force and effect at the date of the Closing and have not been amended, modified or supplemented, except as agreed to by the City and the Underwriter.
(iii) The City has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied under the Purchase Contract on or prior to the date of the Closing.
Capitalized terms used but not defined herein have the meanings given to such terms in the Purchase Contract.
Dated: _________
CITY OF PALMDALE
By:
City Manager
E-1
EXHIBIT E
Form of Opinion of City Attorney
__________
Hilltop Securities Inc.
6100 Fairview Road, Suite 550
Charlotte, NC 28210
U.S. Bank Trust Company, National Association
633 West Fifth Street, 24th Floor
Los Angeles, CA 90071
$______
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
Ladies and Gentlemen:
In my capacity as the City Attorney to the City of Palmdale (the “ City”), in connection with the issuance by the City of the above-referenced bonds (the “ Bonds”), I have examined such documents, certificates and records as I have deemed relevant and necessary as the basis for the opinion set forth herein. Capitalized terms that are used and not otherwise defined herein have the same meanings as assigned to them in the Bond Purchase Contract, dated _____, 2025 (the “ Purchase Contract”), by and between Hilltop Securities Inc., as underwriter, and the City.
Relying on my examination described above and pertinent law and subject to the limitations and qualifications set forth hereinafter, I am of the following opinion:
1. The City is a charter city that is duly organized and existing under the Constitution of the State of California, and has all necessary power and authority to adopt the Resolution of Issuance and the District Resolutions/Ordinance and to enter into and perform its duties under the City Agreements. The Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), City of Palmdale, County of Los Angeles, State of California (the “District”) is a community facilities district that is duly organized and existing under the Act.
2. Each of the Resolution of Issuance and the District Resolutions/Ordinance have been duly adopted at a meeting of the City Council of the City that was duly called and held pursuant to law, with all required public notice and at which a quorum was present and acting throughout. Each of the Resolution of Issuance and the District Resolutions/Ordinance is in full force and effect and has not been amended or repealed.
3. The City has duly authorized, executed and delivered the City Agreements. Assuming due authorization, execution and delivery by the other parties thereto, the City Agreements constitute legal, valid and binding agreements of the City that are enforceable against the City in accordance with their terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, debt adjustment, fraudulent conveyance or transfer, moratorium, reorganization or other laws affecting the enforcement of creditors’ rights generally and equitable remedies if equitable remedies are sought, E-2
to the exercise of judicial discretion in appropriate cases and limitations on remedies against public agencies.
4. Except as disclosed in the Limited Offering Memorandum, there is no action, suit or proceeding before or by any court, public board or body pending (with service of process having been accomplished on the City) or, to the best of my knowledge, threatened, against the City wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City or the District or the titles of their respective officers to their respective offices; (b) in any way question or affect the validity or enforceability of the City Agreements, the Formation Documents or the Bonds; (c) render illegal, invalid or unenforceable the City Agreements or the transactions contemplated thereby, the Formation Documents or any other agreement or instrument related to the issuance of the Bonds or the levy of the Special Tax described in the Formation Documents to which the City or the District is a party; or (d) have a material adverse effect on the ability of the City to make payments of principal of and interest on the Bonds when due or levy the Special Tax described in the Formation Documents.
5. The execution and delivery of the City Agreements, issuance of the Bonds and compliance with the provisions of each of the City Agreements and the Bonds will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State of California, the United States or any department, division, agency or instrumentality of either thereof, any applicable court or administrative decree or order or any loan agreement, note, resolution, indenture, trust agreement, contract, agreement or other instrument to which the City or the District is a party or is otherwise subject or bound in a manner that would materially adversely affect the City’s performance under the City Agreements.
6. Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended, except as certain of the Formation Documents amend others, and the City and the District are in full compliance with the Formation Documents.
7. The Special Tax constituting the security for the Bonds has been duly and lawfully authorized and may be levied under the Act and the Constitution and other applicable laws of the State of California, and such Special Tax, when levied, will constitute a valid and legally binding continuing lien on the properties on which it has been levied.
The opinion is based on such examination of the laws of the State of California as I have deemed relevant for the purposes of this opinion. I have not considered the effect, if any, of the laws of any other jurisdiction upon matters covered by this opinion. I have assumed the genuineness of all documents and signatures, presented to me. I have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in such documents. I express no opinion as to the status of the Bonds, the interest thereon or the City Agreements under any federal securities laws or any state securities or “Blue Sky” law or any federal, state or local tax law.
Without limiting any of the foregoing, I express no opinion as to any matter other than as expressly set forth above.
I am furnishing this opinion as City Attorney to the City. Except for the City and the District, no attorney-client relationship has existed or exists between me and the addressee hereof in connection with the Bonds or by virtue of this opinion. This opinion is rendered solely in connection with the financing described herein, and may not be relied upon by you for any other purpose. I disclaim any obligation to update this opinion. This opinion shall not extend to, and may not be used, quoted, E-3
referred to, or relied upon by any other person, firm, corporation or other entity without my prior written consent.
Respectfully submitted,
F-1
4859-2636-4146v3/200640-0017
EXHIBIT F
$______
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
DISTRICT RESOLUTIONS/ORDINANCE
1. City Resolution No. CC 2022-100, entitled “A Resolution of the City Council of the City of Palmdale Declaring its Intention to Establish a Community Facilities District and to Authorize the Levy of Special Taxes Therein – Ritter Ranch Phase 1 Public Facilities,” adopted by City Council of the City on September 21, 2022.;
2. City Resolution No. CC 2022-101, entitled “A Resolution of the City Council of the City of Palmdale Declaring Its Intention to Incur Bonded Indebtedness of the Proposed Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities),” adopted by the City Council of the City on September 21, 2022;
3. City Resolution No. CC 2022-109, entitled “A Resolution of the City Council of the City of Palmdale of Formation of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), Authorizing the Levy of a Special Tax Within the District, Preliminarily Establishing an Appropriations Limit for the District, and Approving Acquisition Agreement,” adopted by the City Council of the City on October 24, 2022;
4. City Resolution No. CC 2022-110, entitled “A Resolution of the City Council of the City of Palmdale Determining the Necessity to Incur Bonded Indebtedness for the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities),” adopted by the City Council of the City of October 24, 2022;
5. City Resolution No. CC 2022-111, entitled “A Resolution of the City Council of the City of Palmdale Calling Special Election Within Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities),” adopted by the City Council of the City on October 24, 2022;
6. City Resolution No. CC 2022-112, entitled “A Resolution of the City Council of the City of Palmdale Declaring Results of Special Election and Directing Recording of Notice of Special Tax Lien – Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities),” adopted by the City Council of the City on October 24, 2022;
7. City Ordinance No. 1597, entitled “An Ordinance of the City Council of the City of Palmdale, California Levying Special Taxes Within City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities),” adopted by the City Council of the City on October 24, 2022;
8. Resolution No. CC 2024-019 A Resolution of the City Council of the City of Palmdale of Consideration to Alter the Rate and Method of Apportionment of Special Taxes for the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities); F-2
9. Resolution No. CC 2024-022 A Resolution of the City Council of the City of Palmdale Calling Special Election Regarding Alteration of the Rate and Method of Apportionment of Special Taxes for the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities); and
10. Resolution No. CC 2024-023 A Resolution of the City Council of the City of Palmdale Declaring Results of Special Election in the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities), Determining that Alteration of the Rate and Method of Apportionment of Special Taxes for the District is Lawfully Authorized, and Directing Recording of Amended and Restated Notice of Special Tax Lien.
11. [UPDATE WITH RECENT DOCUMENTS]
G-1
EXHIBIT G
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
LETTER OF REPRESENTATIONS
_______________, 2025
City of Palmdale,
for and on behalf of the City of Palmdale
Community Facilities District
No. 2022-3 (Ritter Ranch Phase 1 Public Facilities)
38300 Sierra Highway, Suite A
Palmdale, CA 93550
Hilltop Securities Inc.
6100 Fairview Road, Suite 550
Charlotte, NC 28210
Ladies and Gentlemen:
Reference is made to the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds (the “ Bonds”) and to the Bond Purchase Contract (the “Purchase Contract”) by and between Hilltop Securities Inc. (the “Underwriter”) and the City of Palmdale, for and on behalf of the City of Palmdale Community Facilities District No. 2022- 3 (Ritter Ranch Phase 1 Public Facilities) (the “ District”), expected to be entered into in connection with the issuance, sale and delivery of the Bonds. Capitalized undefined terms used herein have the meanings ascribed thereto in the Purchase Contract.
This Letter of Representations (this “ Letter of Representations”) is delivered in connection with the delivery to the Underwriter, on the date hereof, of the Preliminary Limited Offering Memorandum, dated the date hereof, relating to the Bonds (the “ Preliminary Limited Offering Memorandum”).
The undersigned is an officer or representative of RdR Development Holdings, LLC (the “Developer”) and is duly authorized to execute this Letter of Representations on behalf of the Developer.
The undersigned, on behalf of the Developer, certifies as follows:
1. The Developer is duly organized and validly existing under the laws of the State of Delaware and has all requisite right, power and authority (i) to execute and deliver this Letter of Representations, and (ii) to develop its property in the District as described in the Preliminary Limited Offering Memorandum.
2. As described in the Preliminary Limited Offering Memorandum, the District is authorized to levy special taxes (the “Special Taxes”) on the property within the District. As further described in the Preliminary Limited Offering Memorandum, title to all of the property within the District and not exempt from the Special Taxes (the “Property”) is held in the name G-2
of the Developer. Except as otherwise described in the Preliminary Limited Offering Memorandum, the Developer’s current expectation is that the Developer will remain the party responsible for the development of the Property to the stage of development described in the Preliminary Limited Offering Memorandum.
3. Except as otherwise described in the Preliminary Limited Offering Memorandum, to the Actual Knowledge of the Undersigned, the Developer is not in violation of any applicable law or administrative regulation of the State of California or the United States of America, or any agency or instrumentality of either, which violation could reasonably be expected to materially and adversely affect the Developer’s ability to pay, prior to the delinquency thereof, the Special Taxes levied on the Property for which the Developer is responsible.
For purposes of this Letter of Representations, the term “ Actual Knowledge of the Undersigned” means the actual (as opposed to constructive) knowledge that the undersigned, as the individual executing this Letter of Representations on behalf of the Developer, currently has, including such knowledge obtained through (i) interviews with such current officers and responsible employees of the Developer and its Affiliates as the undersigned has determined are reasonably likely, in the ordinary course of their respective duties, to have knowledge of the matters certified by the undersigned in this Letter of Representations, and/or (ii) review of documents that were reasonably available to the undersigned and that the undersigned has reasonably deemed necessary for the undersigned to obtain knowledge of the matters certified by the undersigned in this Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer’s current business.
Individuals who are no longer employees or representatives of the Developer or its Affiliates have not been contacted.
For purposes of this Letter of Representations, the term “Affiliate” means, with respect to the Developer (i) any Person that, directly or indirectly, controls, is controlled by, or is under common control with the Developer; for purposes of which definition “control” means having direct or indirect power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and (ii) for which Person information, including financial information or operating data, concerning such Person would be material to an evaluation of the merits of an investment in the Bonds (i.e., information relevant to (a) the Developer’s development plans with respect to the Property and the payment of the Special Taxes levied thereon, or (b) such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Preliminary Offering Memorandum or to pay Special Taxes with respect to the portion of the Property then owned by the Developer, to the extent the responsibility of the Developer, prior to delinquency). For purposes of this Letter of Representations, the term “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof.
4. Except as otherwise described in the Preliminary Limited Offering Memorandum, to the Actual Knowledge of the Undersigned, the Developer is not in breach of or in default under any applicable judgment or decree, which breach or default could reasonably be expected to materially and adversely affect the Developer’s ability to develop G-3
the Property as described in the Preliminary Limited Offering Memorandum or to pay, prior to the delinquency thereof, the Special Taxes levied on the Property for which the Developer is responsible
5. Except as otherwise described in the Preliminary Limited Offering Memorandum (i) there is no material indebtedness of the Developer that is secured by an interest in the Property, and (ii) to the Actual Knowledge of the Undersigned, the Developer is not in default on any obligation to repay borrowed money, which default could reasonably be expected to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Limited Offering Memorandum or to pay, prior to the delinquency thereof, the Special Taxes levied on the Property for which the Developer is responsible.
6. Except as otherwise described in the Preliminary Limited Offering Memorandum (i) no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, regulatory agency, public board or body with respect to which the Developer has been properly served is pending against the Developer, or (ii) to the Actual Knowledge of the Undersigned, no such no action, suit, proceeding, inquiry or investigation at law or in equity has been overtly threatened in writing against the Developer that, if successful, could reasonably be expected to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Limited Offering Memorandum or to pay, prior to the delinquency thereof, the Special Taxes levied on the Property for which the Developer is responsible.
7. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no legal proceedings with respect to which the Developer has been properly served are pending against the Developer or, to the Actual Knowledge of the Undersigned, overtly threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, granted an extension of time to pay its debts or obligations or be allowed to reorganize or readjust its debts that, if successful, could reasonably be expected to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Limited Offering Memorandum or to pay, prior to the delinquency thereof, the Special Taxes levied on the Property for which the Developer is responsible.
8. To the Actual Knowledge of the Undersigned, no legal proceedings are pending against an Affiliate of the Developer with respect to which such Affiliate has been properly served or, to the Actual Knowledge of the Undersigned, overtly threatened in writing in which such Affiliate may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, granted an extension of time to pay its debts or obligations or be allowed to reorganize or readjust its debts that, if successful, could reasonably be expected to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Limited Offering Memorandum or to pay, prior to the delinquency thereof, the Special Taxes levied on the Property for which the Developer is responsible.
9. As of the date of the Preliminary Limited Offering Memorandum, to the Actual Knowledge of the Undersigned, the information contained therein solely with respect to the Developer, PHCC LLC (d/b/a Preston Hollow Community Capital), the proposed development of the Property by the Developer, the Developer’s development plan for the Property, the Developer’s financing plan for development of the Property, contractual arrangements of the G-4
Developer with respect to its ownership and development of the Property and litigation affecting the Property, as set forth under the captions “INTRODUCTION – The District,” and “—Land Valuation,” “PLAN OF FINANCING — Overview (Second paragraph), “THE DEVELOPMENT AND THE DISTRICT —The Master Developer,” “—Description of the District” “—Land Ownership,” “—Plan for Development in the District” “—Projected Special Tax Revolves,” “SPECIAL RISK FACTORS — Litigation Affecting the Development of Property in the District,” and “CONTINUING DISCLOSURE — The Master Developer,” but in all cases, excluding information under such captions that is identified as having been provided by a source other than the Developer, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
10. Based upon the Developer’s current development plan for the Property and its current financing plan with respect thereto, and subject to economic conditions and risks generally inherent in the development of real property, including, but not limited to, the risks described in the Preliminary Limited Offering Memorandum under the caption “SPECIAL RISK FACTORS,” to the Actual Knowledge of the Undersigned (i) the Developer presently anticipates it will have sufficient funds available (a) to develop the Property as described in the Preliminary Limited Offering Memorandum, and (b) to pay, prior to the delinquency thereof, the Special Taxes levied on the Property for which the Developer is responsible, and (ii) the Developer does not presently anticipate that the City or the District will be required to resort to a draw on the Reserve Fund for payment of principal of or interest on the Bonds due to the Developer’s nonpayment of Special Taxes levied on the Property; provided, however, that (A) neither the Developer nor any of its Affiliates is obligated to make any additional funds available to pay any of the costs of development of the Property, (B) the Developer reserves the right to change or abandon its development plan for the Property and its financing plan therefor at any time without notice (except as required by the Master Developer Continuing Disclosure Undertaking), and (C) there is no recourse against the Developer for any failure to pay Special Taxes levied on any parcel of the Property other than the filing of a foreclosure action against such parcel.
11. Except as otherwise described in the Preliminary Limited Offering Memorandum, to the Actual Knowledge of the Undersigned, the Developer is not aware that any public debt, other than the Bonds, secured by a tax or assessment on the Property exists or is in the process of being authorized or that any assessment district or community facilities district, other than the District, that includes any portion of the Property has been or is in the process of being formed.
12. The Developer has been developing or has been involved in the development of numerous projects over an extended period of time. It is likely that the Developer has been delinquent at one time or another in the payment of ad valorem property taxes, special assessments or special taxes. However, to the Actual Knowledge of the Undersigned, during the last five years, the Developer has not been delinquent to any material extent in the payment of any ad valorem property tax, special assessment or special tax on property in California owned by the Developer included within the boundaries of an assessment district or a community facilities district that (i) would have caused a draw on a reserve fund relating to such assessment district or community facilities district financing, or (ii) resulted in a foreclosure action being filed in a court of law against such property.
G-5
13. The Developer has not had any previous continuing disclosure undertaking pursuant to Rule 15c2-12 promulgated under the Securities and Exchange Act of 1934 as amended.
14. The undersigned (i) has reviewed the contents of this Letter of Representations and has met with counsel to the Developer for the purpose of discussing the meaning of the contents hereof, and (ii) is familiar with the facts herein certified and is authorized and qualified to certify the same on behalf of the Developer.
Consents, acknowledgements and agreements of the Developer:
A. The Developer (i) consents to the issuance of the Bonds pursuant to the Fiscal Agent Agreement and as described in the Preliminary Limited Offering Memorandum, and (ii) acknowledges and agrees that the proceeds of the Bonds will be applied as described the Fiscal Agent Agreement and in the Preliminary Limited Offering Memorandum.
B. The Developer agrees to comply with the provisions of California Government Code Section 53341.5 in connection with the sale of the Property or portions thereof.
C. Solely as to the limited information in the portions of the Preliminary Limited Offering Memorandum as to which certifications on behalf of the Developer are made in Paragraph 9 above, but subject to the limitations and exclusions specified in said Paragraph 9, the Developer agrees to indemnify and hold harmless, to the extent permitted by law, the City and the District, and their officials and employees, and each Person, if any, that controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended (each an “Indemnified Party” and collectively the “Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject under any statute or at law or in equity and to reimburse such Indemnified Party for any actual reasonable legal or other expense reasonably incurred by it in connection with investigating any such claim against it and defending any such claim, insofar as and solely to the extent such losses, claims, damages or liabilities or actions arise out of or are based on any untrue statement by the Developer of a material fact contained in the information in such portions of the Preliminary Limited Offering Memorandum, but subject to the limitations and exclusions specified in said Paragraph 9, as of its date, or the omission by the Developer to state in the information in such portions of the Preliminary Limited Offering Memorandum, subject to the limitations and exclusions specified in said Paragraph 9, as of its date, a material fact necessary to make the statements made by the Developer contained therein, in light of the circumstances under which they were made, not misleading. This indemnity provision shall not be construed as a limitation on any other liability that the Developer may otherwise have to any Indemnified Party, provided that in no event shall the Developer be obligated or liable for (i) double indemnification, or (ii) the negligence or willful misconduct of an Indemnified Party.
If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand (each of which, a “proceeding”) shall be brought or asserted against any Indemnified Party in respect of which indemnification is owed pursuant to the above paragraph, such Indemnified Party shall promptly notify the Developer in writing of such proceeding; provided, however, that the failure to so notify the Developer shall not relieve it from any liability that it may have hereunder except to the extent that it has been materially G-6
prejudiced by such failure, and, provided, further, that the failure to so notify the Developer shall not relieve it from any liability that it may have to an Indemnified Party otherwise than under the above paragraph unless such liability was also conditioned upon such notice. If any such proceeding shall be brought or asserted against an Indemnified Party and it shall have notified the Developer thereof, the Developer shall retain counsel reasonably satisfactory to such Indemnified Party and approved thereby to represent such Indemnified Party in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, an Indemnified Party subject thereto shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Developer and such Indemnified Party shall have mutually agreed to the contrary, (ii) the Developer has failed within a reasonable time to retain counsel reasonably satisfactory to such Indemnified Party, (iii) such Indemnified Party shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Developer such that a material conflict of interest exists for such counsel, or (iv) the named parties in such proceeding (including any impleaded parties) include both the Developer and such Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Developer shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one firm (in addition to any local counsel) for all Indemnified Parties, and that all such fees and expenses, to the extent reasonable, shall be paid or reimbursed as they are incurred. Any such separate firm shall be designated in writing by such Indemnified Parties.
The Developer shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Developer agrees to indemnify each Indemnified Party from and against any loss or liability by reason of such settlement or judgment to the extent set forth in the above paragraph. The Developer shall not, without the written consent of an Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Party is a party and indemnification could have been sought hereunder by such Indemnified Party, unless such settlement (i) includes an unconditional release of such Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability on claims that are the subject matter of such proceeding and as to which Developer has an obligation pursuant the above paragraph to indemnify such Indemnified Party, and (ii) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of such Indemnified Party.
D. If, between the date hereof and the Closing Date, to the Actual Knowledge of the Undersigned, any event relating to or affecting the Developer, its ownership of the Property, the Developer’s development plan for the Property, the Developer’s financing plan for development of the Property, and contractual arrangements of the Developer with respect to its ownership and development of the Property shall occur that the undersigned believes would cause information in the portions of the Preliminary Limited Offering Memorandum as to which certifications on behalf of the Developer are made in Paragraph 9 above, but subject to the limitations and exclusions specified in said Paragraph 9, to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer agrees to notify the City and the Underwriter thereof and if in the opinion of counsel to the City or the Underwriter such event requires the preparation and publication of a supplement or amendment to the Preliminary Limited Offering Memorandum, the Developer shall reasonably G-7
cooperate with the City in the preparation of such amendment or supplement to the Preliminary Limited Offering Memorandum in form and substance reasonably satisfactory to counsel to the City and to the Underwriter.
E. The Developer agrees that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and Affiliates thereof that it controls will not bring or participate in any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency or public board or body, that in any way seeks to challenge or overturn the formation of the District, to challenge the adoption of the ordnance levying Special Taxes within the District, to invalidate the District, the levy of Special Taxes by the District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax lien imposed under Section 3115.5 of the California Streets and Highways Code based on recordation of the Notice of Special Tax Lien. The foregoing agreement shall not prevent the Developer and its Affiliates in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency or public board or body, including, but not limited to (i) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the District’s Amended and Restated Rate and Method of Apportionment of Special Taxes pursuant to which the Special Taxes are levied, (ii) an action or suit with respect to the application or use of the Special Taxes levied and collected or (iii) an action or suit to enforce the obligations of the City and/or the District under the District Resolutions/Ordinance, the Fiscal Agent Agreement or any other agreements among the Developer or its Affiliates, the City and/or the District or to which the Developer or its Affiliates is a party or beneficiary.
F. The Developer agrees to deliver a Closing Certificate, dated the date of issuance of the Bonds at the time of issuance of the Bonds, in substantially the form attached hereto as Exhibit 1, with such changes therein as may be necessary to reflect any event related to or affecting the Developer, its Affiliates or the ownership, development or sale of the Property occurring between the date hereof and the Closing Date.
The undersigned has executed this Letter of Representations on behalf of the Developer, solely in the undersigned’s capacity as an officer or representative of the Developer and, by its acceptance hereof, each of the City and the Underwriter agree that the undersigned shall have no personal liability arising from or relating to this Letter of Representations and that any liability arising from or relating to this Letter of Representations may only be asserted against the Developer.
RdR Development Holdings, LLC, a
Delaware limited liability company
By: PHCC LLC (d/b/a Preston Hollow Community
Capital), its sole member
By: _______________________________
G-8
EXHIBIT 1
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
CLOSING CERTIFICATE
_______________, 2025
City of Palmdale,
for and on behalf of the City of Palmdale
Community Facilities District
No. 2022-3 (Ritter Ranch Phase 1 Public Facilities)
38300 Sierra Highway, Suite A
Palmdale, CA 93550
Hilltop Securities Inc.
6100 Fairview Road, Suite 550
Charlotte, NC 28210
Ladies and Gentlemen:
Reference is made to the City of Palmdale Community Facilities District No. 2022-2 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds (the “ Bonds”) and to the Bond Purchase Contract, dated __________, 2025 (the “Purchase Contract”), by and between Hilltop Securities Inc. (the “Underwriter”) and the City of Palmdale, for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities). This Closing Certificate, (the “Closing Certificate”) is delivered by RdR Development Holdings, LLC (the “Developer”) pursuant to the Purchase Contract. Capitalized undefined terms used herein have the meanings ascribed thereto in the Letter of Representations of RdR Development Holdings, LLC (the “ Letter of Representations”), dated _________, 2025, delivered by the Developer.
The undersigned is an officer or representative of the Developer and is duly authorized to execute this Letter of Representations on behalf of the Developer.
The undersigned, on behalf of the Developer, certifies as follows:
1. The Developer has received the final Limited Offering Memorandum, dated __________, 2025, relating to the Bonds (the “ Final Limited Offering Memorandum ”).
Each statement, representation and certification made by the Developer in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof, except that all references therein to the Preliminary Limited Offering Memorandum shall be deemed to be references to the Final Limited Offering Memorandum.
2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Limited Offering Memorandum affecting information in the portions of the Preliminary Limited Offering Memorandum as to which certifications on behalf of the Developer are made in Paragraphs 9 and 10 of the Letter of Representations, but subject to the limitations and exclusions specified in said Paragraphs 9 and 10, relating to the Developer, its ownership of the Property, the Developer’s development plan for the Property, the G-9
Developer’s financing plan for development of the Property and contractual arrangements of the Developer with respect to its ownership and development of the Property that would need to be included in the Final Limited Offering Memorandum in order for such information not to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The Developer agrees that, for the period through 25 days after the End of the Underwriter Period, as defined in the Purchase Contract, if any event relating to or affecting the Developer, its ownership of the Property, the Developer’s development plan for the Property, the Developer’s financing plan for development of the Property or contractual arrangements of the Developer with respect to its ownership and development of the Property shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City, to amend or supplement the Final Limited Offering Memorandum in order to make the information in the portions of the Final Limited Offering Memorandum as to which certifications on behalf of the Developer with respect to the Preliminary Limited Offering Memorandum were made in Paragraphs 9 and 10 of the Letter of Representations, but subject to the limitations and exclusions specified in said Paragraphs 9 and 10, not misleading in the light of the circumstances existing at the time the Final Limited Offering Memorandum is delivered to a purchaser, the Developer shall reasonably cooperate with the City and the Underwriter in the preparation of an amendment or supplement to such information in the Final Limited Offering Memorandum in form and substance satisfactory to counsel to the City and the Underwriter in order to amend or supplement the Final Limited Offering Memorandum so that such information will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The undersigned has executed this Closing Certificate on behalf of the Developer, solely in the undersigned’s capacity as an officer or representative of the Developer and, by its acceptance hereof, each of the City and the Underwriter agree that the undersigned shall have no personal liability arising from or relating to this Closing Certificate and that any liability arising from or relating to this Letter of Representations may only be asserted against the Developer.
RdR Development Holdings, LLC, a
Delaware limited liability company
By: PHCC LLC (d/b/a Preston Hollow Community
Capital), its sole member
By: _______________________________
PRELIMINARY LIMITED OFFERING MEMORANDUM DATED __________, 2024 NEW ISSUE – BOOK ENTRY-ONLY NO RATING
THIS LIMITED OFFERING MEMORANDUM IS FURNISHED SOLELY FOR THE PURPOSE OF CONSIDERATION OF AN INVESTMENT IN THE 2025 BONDS BY SOPHISTICATED INVESTORS WITH THE EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND EVALUATE THE HIGH DEGREE OF RISK INHERENT IN THE INVESTMENT. DUE IN PART TO THE CURRENT STATUS OF THE LAND IN THE DISTRICT, PURCHASE OF THE 2025 BONDS WILL CONSTITUTE AN INVESTMENT
SUBJECT TO A HIGH DEGREE OF RISK, INCLUDING THE RISK OF NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF THE INVESTMENT. THERE CAN BE NO ASSURANCE THAT THE PROPERTY OWNERS IN THE DISTRICT WILL PAY THE SPECIAL TAXES LEVIED ON SUCH PROPERTY WHEN DUE. SEE “SPECIAL RISK FACTORS” HEREIN.
TRANSFERS OF THE 2025 BONDS ARE LIMITED TO “QUALIFIED INSTITUTIONAL BUYERS” WITHIN THE MEANING OF THE RULE 144A OF THE SECURITIES ACT. IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN EXAMINATION OF THE DISTRICT AND THE TERMS OF THE 2025 BONDS, INCLUDING THE MERITS AND RISKS INVOLVED. THE INFORMATION AND EXPRESSION OF OPINION HEREIN ARE SUBJECT TO CHANGE
WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS LIMITED OFFERING MEMORANDUM NOR ANY SALE MADE IN CONNECTION WITH THE 2025 BONDS SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF.
In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, subject, however, to certain qualifications described in this Limited Offering Memorandum, under existing law, the interest on the 2025 Bonds is excluded from gross income for federal income tax purposes and interest on the 2025 Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, for tax years beginning after December 31, 2022, interest on the 2025 Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. In the further opinion of Bond Counsel, interest on the 2025 Bonds is exempt from State of California personal income taxes. See “TAX MATTERS.” $33,355,000
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
Dated: Date of Delivery Due: August 1, as shown on the inside cover page The City of Palmdale, California (the “City”), for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “District”), is issuing the above-captioned bonds (the “2025 Bonds”) to (i) finance public facilities authorized to be funded by the District, (ii) fund a reserve fund for the 2025 Bonds, (iii) fund a capitalized interest account for the 2025 Bonds, (iv) pay costs of issuing the 2025 Bonds, and (v) fund administrative expenses related to the District. See “PLAN OF FINANCING.” The 2025 Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of ____________ 1, 2025, by and between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).
The 2025 Bonds are payable from the proceeds of annual Special Taxes (as defined in the Fiscal Agent Agreement) to be levied on property located within the District (see “THE DEVELOPMENT AND THE DISTRICT — Description of the District”), and from certain funds pledged under the Fiscal Agent Agreement. The Special Taxes will be levied according to an amended and restated rate and method of apportionment of Special Taxes. See “SECURITY FOR THE 2025 BONDS — Special Taxes” and Appendix B – “ Second Amended and Restated Rate and Method of Apportionment of Special Taxes.”
The 2025 Bonds will be issued in the principal amount of $250,000 and any integral multiple of $5,000 in excess thereof. Interest on the 2025 Bonds is payable on March 1 and September 1 of each year, commencing on September 1, 2025. The 2025 Bonds will be issued in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the 2025 Bonds. Individual purchases of the 2025 Bonds will be made in book-entry form only. Purchasers of the 2025 Bonds will not receive physical certificates representing their ownership interests in the 2025 Bonds purchased. Principal of and interest on the 2025 Bonds are payable directly to DTC by the Fiscal Agent. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to the beneficial owners of the 2025 Bonds. See “THE 2025 BONDS” and Appendix G – “DTC and the Book-Entry Only System.” The 2025 Bonds are subject to optional and mandatory redemption prior to maturity. See “THE 2025 BONDS — Redemption.” Transfers of the 2025 Bonds are restricted under the Fiscal Agent Agreement. See “THE 2025 BONDS — Transfer or Exchange of 2025 Bonds – Restrictions on Transfers.”
The City may issue additional bonds for the District secured by a lien on the Special Tax Revenues (as defined in the Fiscal Agent Agreement) and by funds pledged under the Fiscal Agent Agreement for the payment of the 2025 Bonds, on a parity with the 2025 Bonds. See “SECURITY FOR THE 2025 BONDS — Issuance of Additional Bonds.”
THIS LIMITED OFFERING MEMORANDUM IS FURNISHED SOLELY FOR THE PURPOSE OF CONSIDERATION OF AN INVESTMENT IN THE 2025 BONDS BY SOPHISTICATED INVESTORS WITH THE EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND EVALUATE THE HIGH DEGREE OF RISK INHERENT IN THE INVESTMENT. DUE IN PART TO THE CURRENT STATUS OF THE LAND IN THE DISTRICT, PURCHASE OF THE 2025 BONDS WILL CONSTITUTE AN INVESTMENT SUBJECT TO A
HIGH DEGREE OF RISK, INCLUDING THE RISK OF NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF THE INVESTMENT. THERE CAN BE NO ASSURANCE THAT THE PROPERTY OWNERS IN THE DISTRICT WILL PAY THE SPECIAL TAXES LEVIED ON SUCH PROPERTY WHEN DUE. SEE “SPECIAL RISK FACTORS” HEREIN.
Preliminary, subject to change.
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE CITY OR THE STATE OF CALIFORNIA OR OF ANY OF THEIR RESPECTIVE POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE 2025 BONDS. EXCEPT FOR THE SPECIAL TAX REVENUES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2025 BONDS. THE 2025 BONDS ARE LIMITED OBLIGATIONS OF THE CITY
FOR THE DISTRICT, PAYABLE SOLELY FROM CERTAIN AMOUNTS PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS LIMITED OFFERING MEMORANDUM.
This cover page contains certain information for quick reference only. Investors should read the entire Limited Offering Memorandum to obtain information essential to the making of an informed investment decision with respect to the 2025 Bonds.
The 2025 Bonds are offered when, as and if issued, subject to approval as to their legality by Best Best & Krieger LLP, Riverside, California, Bond Counsel, and certain other conditions. Certain legal matters with respect to the 2025 Bonds will be passed upon for the City by the City Attorney, and by Best Best & Krieger LLP, in its capacity as Disclosure Counsel to the City for the 2025 Bonds. Certain legal matters related to the 2025 Bonds will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, acting as Underwriter’s Counsel. It is anticipated that the 2025 Bonds in definitive form will be available for delivery on or about _____________, 2025.
Hilltop Securities, Inc.
The date of this Limited Offering Memorandum is ______________, 2025. $31,150,000*
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
Base CUSIP®(1):____
MATURITY SCHEDULE
Maturity
Date
(August 1)
Principal
Amount
Interest
Rate Yield CUSIP®(1)
$________ _____% Term Bonds maturing August 1, 20__; Yield: ____%C; CUSIP®(1): ______ $________ _____% Term Bonds maturing August 1, 20__; Yield: ____%C; CUSIP®(1): ______
* Preliminary, subject to change.
(1) CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© 2024 CUSIP Global Services. All rights reserved.
CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the District, the Fiscal Agent, the Underwriter or their agents or counsel are responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the applicable 2025 Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the 2025 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 2025 Bonds.
CITY OF PALMDALE
LOS ANGELES COUNTY, CALIFORNIA
City Council
Austin Bishop, Mayor, District 1
Richard J. Loa, Mayor Pro Tem/Councilmember, District 2 Laura Bettencourt Councilmember, District 3
Eric Ohlsen, Councilmember, District 4
Andrea Alarcón, Councilmember, District 5
City Officials
Ronda Perez, City Manager
Megan Taggart, Acting Director Economic & Community Development Lee Torres, Director of Public Works
Janelle Samson, Director of Operations
William P. Curley III, City Attorney
PROFESSIONAL SERVICES
Municipal Advisor
Harrell & Company Advisors, LLC
Orange, California
Fiscal Agent
U.S. Bank Trust Company, National Association
Los Angeles, California
Special Tax Consultant and Dissemination Agent
NBS
Temecula, California
Bond Counsel and Disclosure Counsel
Best Best & Krieger LLP
Riverside, California
GENERAL INFORMATION ABOUT THIS LIMITED OFFERING MEMORANDUM The information contained in this Limited Offering Memorandum has been obtained from sources that are believed to be reliable. No representation, warranty or guarantee, however, is made by the Underwriter as to the accuracy or completeness of any information in this Limited Offering Memorandum, including, without limitation, the information contained in the Appendices, and nothing contained in this Limited Offering Memorandum should be relied upon as a promise or representation by the Underwriter.
Neither the City nor the Underwriter has authorized any dealer, broker, salesperson or other person to give any information or make any representations with respect to the offer or sale of 2025 Bonds other than as contained in this Limited Offering Memorandum. If given or made, any such information or representations must not be relied upon as having been authorized by the City or the Underwriter. The information and expressions of opinion in this Limited Offering Memorandum are subject to change without notice, and neither the delivery of this Limited Offering Memorandum nor any sale of the 2025 Bonds shall under any circumstances create any implication that there has been no change in the affairs of any party described in this Limited Offering Memorandum, or in the status of any property described in this Limited Offering Memorandum, subsequent to the date as of which such information is presented.
This Limited Offering Memorandum and the information contained in this Limited Offering Memorandum are subject to amendment without notice. The 2025 Bonds may not be sold, and no offer to buy the 2025 Bonds may be accepted, prior to the time the Limited Offering Memorandum is delivered in final form. Under no circumstances shall this Limited Offering Memorandum constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the 2025 Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
When used in this Limited Offering Memorandum and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced in this Limited Offering Memorandum, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized, and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.
All summaries of the documents referred to in this Limited Offering Memorandum are qualified by the provisions of the respective documents summarized and do not purport to be complete statements of any or all of such provisions.
The Underwriter has provided the following sentence for inclusion in this Limited Offering Memorandum: The Underwriter has reviewed the information in this Limited Offering Memorandum in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or the completeness of such information.
The 2025 Bonds have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption from the registration requirements contained in the Securities Act. The 2025 Bonds have not been registered or qualified under the securities laws of any state.
The City maintains an Internet website, but the information on the website is not incorporated in this Limited Offering Memorandum.
TABLE OF CONTENTS
-i-
INTRODUCTION............................................................... 1 General .......................................................................... 1 Authority for Issuance................................................... 2 The 2025 Bonds ............................................................ 2 Security for the 2025 Bonds ......................................... 2 Reserve Fund................................................................. 3 The Development .......................................................... 3 The District.................................................................... 4 Land Valuation.............................................................. 4 Limited Obligation ........................................................ 5 Issuance of Additional Bonds........................................ 5 Bondowners’ Risks ....................................................... 5 Continuing Disclosure................................................... 5 Other Information.......................................................... 6 PLAN OF FINANCING ..................................................... 6 Overview....................................................................... 6 Sources and Uses of Funds............................................ 7 THE 2025 BONDS ............................................................. 7 Authority for Issuance................................................... 7 General Provisions ........................................................ 8 Redemption ................................................................... 8 Transfer or Exchange of 2025 Bonds.......................... 11 Discontinuance of DTC Services ................................ 12 Scheduled Debt Service .............................................. 12 SECURITY FOR THE 2025 BONDS .............................. 13 General ........................................................................ 13 Limited Obligation ...................................................... 14 Special Taxes .............................................................. 14 Special Tax Fund......................................................... 15 Summary of Rate and Method..................................... 16 Reserve Fund............................................................... 20 Covenant for Superior Court Foreclosure ................... 21 No Teeter Plan............................................................. 22 Investment of Moneys................................................. 22 Issuance of Additional Bonds...................................... 23 THE DEVELOPMENT AND THE DISTRICT................ 24
Location and Description of the Development............ 24 History of the District.................................................. 26 The Improvements....................................................... 27 The Master Developer................................................. 29 Description of the District ........................................... 30 Land Ownership .......................................................... 33 Plan for Development in the District........................... 33 Projected Special Tax Revenues ................................. 34 Property Values........................................................... 36 Direct and Overlapping Governmental
Obligations ............................................................ 37 Projected Debt Service Coverage................................ 42 SPECIAL RISK FACTORS.............................................. 44 No General Obligation of the City or the
District................................................................... 44 Concentration of Ownership ....................................... 45 Litigation Affecting the Development of
Property in the District .......................................... 45 Failure to Complete or Delay in Completion of
the Development ................................................... 45 Payment of the Special Tax is not a Personal
Obligation.............................................................. 45 Property Value ............................................................ 45 Increasing Mortgage Interest Rates ............................. 46 Public Health Emergencies ......................................... 46 Exempt Properties ....................................................... 46 Parity Taxes and Special Assessments ........................ 47 Insufficiency of Special Taxes .................................... 47 Potential Early Redemption of Bonds from
Special Tax Prepayments ...................................... 48 Tax Delinquencies....................................................... 48 Bankruptcy Delays ...................................................... 48 Proceeds of Foreclosure Sales..................................... 48 Natural Disasters and Potential Drought
Conditions ............................................................. 49 Hazardous Substances................................................. 50 Cybersecurity .............................................................. 50 Disclosure to Future Purchasers .................................. 50 FDIC/Federal Government Interests in
Properties .............................................................. 50 No Acceleration Provision .......................................... 52 Taxability Risk ............................................................ 52 Enforceability of Remedies ......................................... 52 No Secondary Market.................................................. 53 Proposition 218 ........................................................... 53 Future Measures and Initiatives; Initiative
1935....................................................................... 54 IRS Audit of Tax-Exempt Bond Issues ....................... 54 TAX MATTERS............................................................... 54 LEGAL MATTERS .......................................................... 55 MUNICIPAL ADVISOR .................................................. 55 NO RATING..................................................................... 56 LITIGATION.................................................................... 56 UNDERWRITING............................................................ 56 CONTINUING DISCLOSURE ........................................ 56 The City....................................................................... 56 The Master Developer................................................. 56 Remedies for Failures to Comply................................ 57 MISCELLANEOUS.......................................................... 57 APPENDIX A – GENERAL, ECONOMIC AND
DEMOGRAPHIC INFORMATION
RELATING TO THE CITY AND THE
COUNTY ........................................................ A-1 APPENDIX B – SECOND AMENDED AND
RESTATED RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAXES ...B-1
APPENDIX C – SUMMARY OF THE FISCAL
AGENT AGREEMENT...................................C-1
APPENDIX D - FORM OF OPINION OF BOND
COUNSEL ...................................................... D-1 APPENDIX E – FORM OF CONTINUING
DISCLOSURE AGREEMENT OF THE CITYE-1
APPENDIX F – FORM OF CONTINUING
DISCLOSURE AGREEMENT – MASTER
DEVELOPER .................................................. F-1 APPENDIX G – DTC AND THE BOOK-ENTRY
ONLY SYSTEM............................................. G-1 [THIS PAGE INTENTIONALLY LEFT BLANK]
1 LIMITED OFFERING MEMORANDUM
$31,150,000
CITY OF PALMDALE
COMMUNITY FACILITIES DISTRICT NO. 2022-3
(RITTER RANCH PHASE 1 PUBLIC FACILITIES)
2025 SPECIAL TAX BONDS
INTRODUCTION
This introduction is not a summary of this Limited Offering Memorandum and is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in this entire Limited Offering Memorandum and the documents summarized or described in this Limited Offering Memorandum. A full review should be made of this entire Limited Offering Memorandum by those interested in purchasing the 2025 Bonds. The sale and delivery of 2025 Bonds to potential investors is made only by means of the entire Limited Offering Memorandum. Certain capitalized terms used in this Limited Offering Memorandum and not defined herein have the meanings set forth in Appendix C — “Summary of the Fiscal Agent Agreement — Definitions” and in Appendix B — “Second Amended and Restated Rate and Method of Apportionment of Special Taxes.” INVESTMENT IN THE 2025 BONDS IS LIMITED TO SOPHISTICATED INVESTORS WITH THE
EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND EVALUATE THE HIGH DEGREE OF RISK INHERENT IN THE INVESTMENT. DUE IN PART TO THE CURRENT STATUS OF THE LAND IN THE DISTRICT, PURCHASE OF THE 2025 BONDS WILL CONSTITUTE AN
INVESTMENT SUBJECT TO A HIGH DEGREE OF RISK, INCLUDING THE RISK OF
NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF THE INVESTMENT. THERE CAN BE NO ASSURANCE THAT THE PROPERTY OWNERS IN THE DISTRICT WILL PAY THE SPECIAL TAXES LEVIED ON SUCH PROPERTY WHEN DUE. SEE “SPECIAL RISK FACTORS” HEREIN.
TRANSFERS OF THE 2025 BONDS ARE LIMITED TO “QUALIFIED INSTITUTIONAL BUYERS” WITHIN THE MEANING OF THE RULE 144A OF THE SECURITIES ACT. IN MAKING
AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN EXAMINATION OF THE DISTRICT AND THE TERMS OF THE 2025 BONDS, INCLUDING THE MERITS AND RISKS INVOLVED. THE INFORMATION AND EXPRESSION OF OPINION HEREIN ARE SUBJECT TO
CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS LIMITED OFFERING MEMORANDUM NOR ANY SALE MADE IN CONNECTION WITH THE 2025 BONDS SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF.
General
The purpose of this Limited Offering Memorandum, which includes the cover page, the table of contents and the attached appendices (the “Limited Offering Memorandum”), is to provide certain information concerning the issuance by the City of Palmdale, California (the “City”), for and on behalf of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) (the “District”), of the City of Palmdale Community Facilities District No. 2022-3 (Ritter Ranch Phase 1 Public Facilities) 2025 Special Tax Bonds (the “2025 Bonds”). The 2025 Bonds are being issued to (i) finance costs of public facilities authorized to be funded by the District, (ii) fund a reserve fund for the 2025 Bonds, (iii) fund a capitalized interest account for the 2025 Bonds, (iv) pay costs of issuing the 2025 Bonds, and (v) fund administrative expenses related to the District. See “PLAN OF FINANCING” and “THE DEVELOPMENT AND THE DISTRICT — The Improvements.”
Preliminary, subject to change.
2 Authority for Issuance
General. The District was formed in October, 2022 under the authority of the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the “Law”). The Law authorizes the City Council to establish community facilities districts with defined boundaries. Subject to approval by at least a two-thirds vote of the votes cast by the qualified electors within a district and compliance with the provisions of the Law, the City Council may issue bonds for a community facilities district established by it and may levy and collect a special tax within the community facilities district to repay the bonds.
Bond Authority. The 2025 Bonds are authorized to be issued pursuant to the Law, Resolution No. CC 2024-___ adopted on November 20, 2024 by the City Council, acting as the legislative body of the District, and the Fiscal Agent Agreement, dated as of ____________ 1, 2025 (the “Fiscal Agent Agreement”), between the City, for and on behalf of the District, and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). For more detailed information about the formation of the District and the authority for issuance of the 2025 Bonds, see “THE 2025 BONDS — Authority for Issuance” and “THE DEVELOPMENT AND THE DISTRICT — History of the District.” When used in this Limited Offering Memorandum the term “Bonds” means the 2025 Bonds and any Parity Bonds that may be issued in the future under and as such term is defined in the Fiscal Agent Agreement. See “SECURITY FOR THE 2025 BONDS — Issuance of Additional Bonds.” The 2025 Bonds
General. The 2025 Bonds will be issued only as fully registered bonds, initially in denominations of $250,000 or any integral multiple of $5,000 in excess thereof, and will bear interest at the rate per annum and will mature on the date and in the principal amount set forth on the cover page of this Limited Offering Memorandum.
The 2025 Bonds will be dated the date of their issuance and interest on the 2025 Bonds will be payable on March 1 and September 1 of each year, commencing September 1, 2025 (each an “Interest Payment Date”). The 2025 Bonds will be issued in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the 2025 Bonds. See “THE 2025 BONDS — General Provisions.” Redemption Prior to Maturity. The 2025 Bonds are subject to optional and mandatory redemption prior to maturity. See “THE 2025 BONDS — Redemption.”
Restrictions on Transfers of 2025 Bonds. Transfers of the 2025 Bonds are subject to restrictions set forth in the Fiscal Agent Agreement including, except for certain transferees and otherwise if certain requirements are satisfied, the delivery by any transferee of an investor letter to the City and the Fiscal Agent in the form required by the Fiscal Agent Agreement. See “THE 2025 BONDS — Transfer or Exchange of 2025 Bonds – Restrictions on Transfers.”
Security for the 2025 Bonds
Pledge Under the Fiscal Agent Agreement. Pursuant to the Fiscal Agent Agreement, the 2025 Bonds are secured by a first pledge of all of the Special Tax Revenues after deducting the Minimum Administrative Expense Requirement in each Fiscal Year (referred to in this Limited Offering Memorandum as the “Pledged Special Tax Revenues”), and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, in the Special Tax Fund, all of which funds are held by the Fiscal Agent under the Fiscal Agent Agreement. “Special Tax Revenues,” as defined in the Fiscal Agent Agreement, means the proceeds of the Special Taxes levied on property in the District and received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and 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, but does not include interest and penalties, if any, collected with the Special Taxes that are in excess of the rate of interest payable on the Bonds. “Minimum Administrative Expense Requirement” is defined in the Fiscal Agent Agreement to mean (a) for Fiscal Year 2025-26, $100,000.00; and (b) for each Fiscal Year after Fiscal Year 2025-26, an 3 amount equal to 102% of the Minimum Administrative Expense Requirement in effect for the immediately preceding Fiscal Year.
The Pledged Special Tax Revenues, and all moneys on deposit in the Bond Fund, the Reserve Fund and the Special Tax Fund are dedicated to the payment of the principal of, and interest and any premium on, the 2025 Bonds in accordance with the Fiscal Agent Agreement until all of the 2025 Bonds have been paid or defeased.
See “SECURITY FOR THE 2025 BONDS — Special Taxes.”
Special Taxes; Rate and Method . The Special Taxes to be used to pay debt service on the 2025 Bonds will be levied in accordance with the Second Amended and Restated Rate and Method of Apportionment of Special Taxes (referred to in this Limited Offering Memorandum as the “Rate and Method”) for the District, which is described under the heading “SECURITY FOR THE 2025 BONDS — Summary of Rate and Method,” and is set forth in its entirety in Appendix B — “Second Amended and Restated Rate and Method of Apportionment of Special Taxes.” “Special Taxes” as defined in the Fiscal Agent Agreement, means the special tax levied within the District pursuant to the Law, Ordinance No. 1597 adopted by the City Council on October 24, 2022 (the “Ordinance Levying Special Taxes”), which provides for the levy of the Special Taxes in accordance with the Rate and Method, and the Fiscal Agent Agreement. The Special Taxes are levied on “Taxable Property,” which is defined in the Rate and Method as all of the County of Los Angeles Assessor’s Parcels within the District which are not exempt from the Special Tax by applicable law or the Rate and Method (which exempts up to 35.20 acres of Property Owner Association Property and up to 120.70 acres of Public Property of the approximately 236 acres of property in the District). See “SECURITY FOR THE 2025 BONDS — Special Taxes” and “ — Summary of Rate and Method.”
Limitations. The first Special Tax Revenues in the amount of the applicable Minimum Administrative Expense Requirement received by the City in each Fiscal Year, as well as amounts in the Administrative Expense Fund, the Improvement Fund and the Costs of Issuance Fund, each of which is established under the Fiscal Agent Agreement, are not pledged to the repayment of the 2025 Bonds. The improvements financed by the District are not pledged to pay the debt service on the 2025 Bonds. The proceeds of any sale, condemnation or destruction of any of the improvements financed by the District are not pledged to pay the debt service on the 2025 Bonds.
In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the 2025 Bonds are amounts held by the Fiscal Agent in the Bond Fund, the Special Tax Fund and the Reserve Fund established under the Fiscal Agent Agreement, and the proceeds, if any, from foreclosure sales of Taxable Property within the District in respect of delinquent Special Taxes.
Reserve Fund
The Fiscal Agent Agreement establishes a Reserve Fund as a reserve for the payment of principal of and interest on the Bonds (which includes the 2025 Bonds and any Parity Bonds). The Reserve Fund is required to be funded on the Closing Date at the “Reserve Requirement,” which is defined in the Fiscal Agent Agreement as an amount, as of any date of calculation, equal to one-half of the least of (i) the then Maximum Annual Debt Service, (ii) one hundred twenty-five percent (125%) of the then average Annual Debt Service, or (iii) ten percent (10%) of the initial principal amount of the Bonds. Amounts in the Reserve Fund will be available to pay the debt service on the 2025 Bonds and any Parity Bonds in the event of a shortfall in the amount in the Bond Fund for such purpose. The Reserve Requirement as of the date of issuance of the 2025 Bonds will be $____________. See “ SECURITY FOR THE 2025 BONDS — Reserve Fund.”
The Development
The property included in the District consists of approximately 236 acres, constituting a portion of the larger, approximately 767 acre, Phase 1 of the proposed master-planned community known as Ritter Ranch (the “Development”), located in the south western portion of the City. The entire approximately 10,625 acre Development is currently planned to be a mixed use project that is expected to include over 7,500 acres of open 4 space, along with residential, public facility, recreational, school and commercial uses. Certain land use entitlements for the property in the Development have expired, and the plans for the Development are subject to change. See “THE DEVELOPMENT AND THE DISTRICT — Location and Description of the Development.” The property in the Development is currently owned by RdR Development Holdings, LLC (the “Master Developer”), a limited liability company for which PHCC LLC (d/b/a Preston Hollow Community Capital) is the sole member. See “THE DEVELOPMENT AND THE DEVELOPER — The Master Developer.” The District
The District was formed by the City Council pursuant to proceedings conducted under the Law on October 24, 2022 with a maximum bonded indebtedness of $75,000,000. See “THE DEVELOPMENT AND THE DISTRICT — History of the District.” The District includes approximately 236 acres consisting of Phase 1A and Phase 1B of the Development, expected to be improved with a total of 553 detached single family homes in Phase 1A and 135 detached single family homes and 492 attached, detached or condominium single family homes in Phase 1B. The Master Developer has obtained land use approvals for the 553 single family homes to be constructed in Phase 1A, and land use approvals are pending approval by the City for the 135 single family detached homes and the 492 attached, detached or condominium single family homes to be constructed in Phase 1B. When used in this Limited Offering Memorandum, “homes” is meant to refer to both detached and attached single-family homes, condominiums and townhomes.
Certain public improvements necessary for the development of Phase 1A and Phase 1B have been completed and additional infrastructure work is expected to begin after the 2025 Bonds are issued, and substantial additional infrastructure improvements are needed before homes can be completed and sold.
Home construction has not yet commenced, but is projected by the Master Developer to begin, following the completion of necessary infrastructure improvements, with an expected buildout of the property in the District to occur over a five year period. See “THE DEVELOPMENT AND THE DISTRICT — Description of the District,” and “ — Plan for Development in the District” for additional information concerning development occurring and to occur in the District.
Land Valuation
The City has not obtained any appraisal of the property located in the District. The land currently includes twelve County Assessor’s parcels aggregating approximately 236 acres of property subject to the levy of Special Tax in the District that was valued by the Los Angeles County Assessor for ad valorem property tax purposes on the 2024-25 property tax roll at an aggregate of $1,156,708. See the table under the heading “THE DEVELOPMENT AND THE DISTRICT — Property Values” which projects the 2025-26 assessed value of the property in the District. The Master Developer has advised that it expects that, given the land use entitlements that have been obtained for Phase 1A and a portion of Phase 1B and are in process for the remainder of Phase 1B (see “THE DEVELOPMENT AND THE DISTRICT — Description of the District”), and the expected use of proceeds of the 2025 Bonds to finance infrastructure improvements incident to the development of the property in the District (see “THE DISTRICT — The Improvements”), the fair market value of the Taxable Property may be significantly greater than its current County-assessed value, and the fair market value of the Taxable Property will in any event increase as infrastructure improvements are completed and homes are constructed in the District.
However, no representation is made as to the current actual fair market value of the Taxable Property subject to the levy of Special Taxes. See “SPECIAL RISK FACTORS — Property Value.” In addition to the foregoing, the values of individual parcels in the District vary significantly. No assurance can be given that should Special Taxes levied on one or more of the parcels in the District become delinquent, and should the delinquent parcels be offered for sale at a judicial foreclosure sale, that any bid would be received for the property or, if a bid is received, that such bid would be sufficient to pay such parcel’s delinquent Special Taxes. See “SPECIAL RISK FACTORS — Property Value” and “SPECIAL RISK FACTORS — Insufficiency of Special Taxes.”
5 Limited Obligation
Although the unpaid Special Taxes constitute liens on the Taxable Property within the District on which they are levied, they do not constitute a personal indebtedness of any owners of the Taxable Property. There is no assurance that the Master Developer, which is the initial entity responsible for payment of the Special Taxes until property in the District is sold to homebuilders and/or homes and townhomes are built and sold to home buyers, will be financially able to pay the Special Taxes levied on their property in the District or that it will pay the Special Taxes even though financially able to do so.
NONE OF THE FAITH AND CREDIT OF THE DISTRICT, THE CITY OR THE STATE OF
CALIFORNIA OR OF ANY OF THEIR RESPECTIVE POLITICAL SUBDIVISIONS IS PLEDGED TO THE PAYMENT OF THE 2025 BONDS. EXCEPT FOR THE SPECIAL TAX REVENUES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2025 BONDS. THE 2025 BONDS ARE NEITHER GENERAL
NOR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT
ARE LIMITED OBLIGATIONS OF THE CITY FOR THE DISTRICT PAYABLE SOLELY FROM CERTAIN
AMOUNTS PLEDGED THEREFOR UNDER THE FISCAL AGENT AGREEMENT, AS MORE FULLY DESCRIBED IN THIS LIMITED OFFERING MEMORANDUM.
Issuance of Additional Bonds
The City may in the future incur additional bonded indebtedness that is secured by a lien on the Special Tax Revenues and on the funds pledged under the Fiscal Agent Agreement for the payment of the 2025 Bonds on a parity with the 2025 Bonds (“Parity Bonds”), subject to the applicable provisions of the Fiscal Agent Agreement, which include a valuation test and a Special Tax coverage test (except for Refunding Bonds that are to be Parity Bonds). The Fiscal Agent Agreement allows for the issuance of Parity Bonds in a principal amount of up to $43,850,000* (which is an amount equal to the difference between the $75,000,000 bonded indebtedness limit of the District, and the initial principal amount of the 2025 Bonds) to provide additional financing for the public improvements authorized to be funded by the District (the “Improvements”), and otherwise that are Refunding Bonds. See “SECURITY FOR THE 2025 BONDS — Issuance of Additional Bonds.” However, it is not expected that any issue of Parity Bonds to provide additional financing for the Improvements will be substantially less than such additional bonded indebtedness capacity of the District. See “PLAN OF FINANCING — Overview.” Bondowners’ Risks
THIS LIMITED OFFERING MEMORANDUM IS FURNISHED SOLELY FOR THE PURPOSE OF CONSIDERATION OF AN INVESTMENT IN THE 2025 BONDS BY SOPHISTICATED INVESTORS WITH
THE EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND EVALUATE THE HIGH DEGREE OF RISK INHERENT IN THE INVESTMENT. DUE IN PART TO THE CURRENT STATUS OF THE LAND IN THE DISTRICT, PURCHASE OF THE 2025 BONDS WILL CONSTITUTE AN
INVESTMENT SUBJECT TO A HIGH DEGREE OF RISK, INCLUDING THE RISK OF NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF THE INVESTMENT. THERE CAN
BE NO ASSURANCE THAT THE PROPERTY OWNERS IN THE DISTRICT WILL PAY THE SPECIAL TAXES LEVIED ON SUCH PROPERTY WHEN DUE. SEE “SPECIAL RISK FACTORS” HEREIN.
Continuing Disclosure
For purposes of complying with Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934, as amended (the “Rule”), the City has agreed to provide, or cause to be provided, to the Municipal Securities Rulemaking Board (the “MSRB”) certain annual financial information and notice of certain significant events.
These covenants have been made in order to assist the Underwriter in complying with the Rule. See “CONTINUING DISCLOSURE — The City” and Appendix E – “Form of Continuing Disclosure Agreement of the City” for a description of the specific nature of the annual reports and notices of significant events, as well as 6 the terms of the Continuing Disclosure Agreement to which the City will be a party and pursuant to which such reports and notices are to be made.
The Master Developer has agreed to enter into a separate Continuing Disclosure Agreement – Master Developer pursuant to which it will provide certain information on an annual and a semi-annual basis and notice of certain events relative to property in the District it owns. The obligation of the Master Developer to provide such information will terminate on the date on which less than twenty percent (20%) of the expected aggregate annual Special Tax levy will be on the Taxable Property in the District owned by the Master Developer, or with respect to property for which another entity has assumed its disclosure obligations. See “CONTINUING DISCLOSURE — The Master Developer,” and see Appendix F — “Form of Continuing Disclosure Agreement – Master Developer” for the complete text of the Continuing Disclosure Agreement – Master Developer.
Other Information
This Limited Offering Memorandum speaks only as of its date, and the information contained in this Limited Offering Memorandum is subject to change without notice. Except where otherwise indicated, all information contained in this Limited Offering Memorandum has been provided by the City on behalf of the District.
Copies of the Fiscal Agent Agreement and certain other documents referenced in this Limited Offering Memorandum are available for inspection at the office of, and (upon written request and payment to the City of a charge for copying, mailing and handling) are available for delivery from, the City’s Director of Operations, c/o City of Palmdale, 38300 Sierra Highway, Suite D, Palmdale, California 93550.
PLAN OF FINANCING
Overview
The District was formed for the purpose of providing financing for costs of the Improvements necessitated by development occurring in and in the vicinity of the District, including street, storm drain, sanitary sewer, landscaping, public parks and water system improvements. The City, for and on behalf of the District, has entered into an Acquisition Agreement (A-8174) with the Master Developer, dated as of November 1, 2022 (as amended by a Supplement No. 1 to Acquisition Agreement, dated as of February 1, 2025, the “Acquisition Agreement”), pursuant to which the City has agreed to use proceeds of Bonds issued for the District to pay costs of the construction by the Master Developer of the Improvements. See “THE DEVELOPMENT AND THE DISTRICT — The Improvements.”
While certain infrastructure improvements in the District have been completed, the physical construction of the Improvements to be financed with proceeds of the 2025 Bonds, including certain public infrastructure needed for the construction of homes on the property in the District, has not yet been commenced by the Master Developer. The costs of the Improvements to be initially constructed pursuant to the Acquisition Agreement are estimated by the Master Developer to be $78,159,023. The Master Developer anticipates commencing physical construction of the Improvements following the issuance of the 2025 Bonds, with buildout of the property in the District over a five year period. See “PLAN OF FINANCING — Sources and Uses of Funds” and “THE DEVELOPMENT AND THE DISTRICT — The Improvements.”
The principal amount of the 2025 Bonds has been sized to leverage the annual Special Tax Revenues expected to be derived from the 553 detached single family homes expected to be constructed in Phase 1A of the Development and the 135 detached single family homes expected to be constructed in Phase 1B of the Development, after deduction of the Minimum Administrative Expense Requirement, with at least 110% coverage of debt service on the 2025 Bonds.
7 The Fiscal Agent Agreement allows for the issuance of Parity Bonds in a principal amount of up to $43,850,000 (which is an amount equal to the difference between $75,000,000 bonded indebtedness limit of the District, and the initial aggregate principal amount of the 2025 Bonds of $31,150,000 *), and otherwise that are Refunding Bonds, which Parity Bonds will be secured on a parity with the 2025 Bonds. Proceeds of any Parity Bonds that are not used for refunding purposes will be available to pay additional costs of the Improvements pursuant to the Acquisition Agreement. However, given the Maximum Special Tax rates for the Taxable Property, it is projected that proceeds of Parity Bonds available to pay costs of the Improvements may be only approximately $14,500,000 (based on the projected Maximum Special Taxes from the 492 townhomes that may be constructed in Phase 1B of the Development), so that the Master Developer will need to access other funds to complete the Improvements. See “THE DEVELOPMENT AND THE DISTRICT — The Master Developer – Financing Plan” and “–Plan for Development in the District.”
In addition to providing financing for the Improvements, proceeds of the 2025 Bonds will also be used to fund the Reserve Fund for the 2025 Bonds, make a deposit to a Capitalized Interest Account to pay interest on the 2025 Bonds through September 1, 2026, to fund administrative expenses related to the District and to pay the costs of issuance of the 2025 Bonds.
Sources and Uses of Funds
The sources and uses of funds in connection with the 2025 Bonds are as follows:
Principal of Bonds $
Less: Underwriter’s Discount _______
Total Sources $
Deposit to Improvement Fund $
Deposit to Reserve Fund
Deposit to Costs of Issuance Fund
Deposit to Capitalized Interest Account
Deposit to Administrative Expense Fund _______
Total Uses $
(1) To be used to finance costs of public facilities authorized to be funded by the District. See “PLAN OF FINANCING — Overview” and “THE DEVELOPMENT AND THE DISTRICT — The Improvements.” (2) Equal to the initial Reserve Requirement. See “SECURITY FOR THE 2025 BONDS — Reserve Fund.” (3) Costs of issuance include, without limitation, Municipal Advisor fees and expenses, Fiscal Agent fees and expenses, Bond Counsel and Disclosure Counsel and other legal fees and expenses, and printing costs. (4) Equal to the interest due on the 2025 Bonds through and including September 1, 2026. (5) To be used to pay costs of administering the District.
THE 2025 BONDS
Authority for Issuance
Pursuant to the Law, on October 24, 2022, the City Council adopted Resolution No. CC 2022-109 establishing the District (“Resolution of Formation”). Also on October 24, 2022, the then sole owner of the property in the District (being the Master Developer), and thereby the qualified elector for the District, voted in favor of the issuance of up to $75,000,000 principal amount of bonded indebtedness by the City for the District to finance the Improvements, and approved the levy of the Special Taxes pursuant to the Rate and Method on Taxable Property in the District. See “THE DEVELOPMENT AND THE DISTRICT — History of the District.” The 2025 Bonds are authorized to be issued pursuant to the Law, Resolution No. CC 2024-___ adopted on November 20, 2024, by the City Council, acting as the legislative body of the District, and the Fiscal Agent
Preliminary, subject to change.
8 Agreement. The Special Taxes to be used to pay debt service on the 2025 Bonds will be levied in accordance with the Rate and Method.
General Provisions
The 2025 Bonds will be issued only as fully registered 2025 Bonds, in denominations of $250,000 or any integral multiple of $5,000 in excess thereof, and will bear interest at the rates per annum and will mature on the dates set forth on the inside cover page of this Limited Offering Memorandum. The 2025 Bonds will be dated the date of their issuance and interest will be payable on each Interest Payment Date, commencing September 1, 2025.
Each 2025 Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it will bear interest from such Interest Payment Date; or (b) it is authenticated on or before August 15, 2024, in which event it will bear interest from the date of issuance of the 2025 Bonds; provided, however, that if, as of the date of authentication of any 2025 Bond, interest thereon is in default, such 2025 Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. The term “Record Date” as defined in the Fiscal Agent Agreement means the fifteenth (15th) day of the month next preceding the month of the applicable Interest Payment Date, whether or not such fifteenth (15th) day is a Business Day.
The 2025 Bonds will be payable both as to principal and interest, and as to any premium upon the redemption thereof, in lawful money of the United States of America. The principal of the 2025 Bonds and any premium due upon the redemption thereof will be payable by check of the Fiscal Agent upon presentation and surrender of the applicable 2025 Bonds at the Principal Office of the Fiscal Agent. Interest with respect to each Bond will be computed using a year of 360 days comprised of twelve 30-day months.
The 2025 Bonds will be issued in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the 2025 Bonds. Individual purchases of the 2025 Bonds will be made in book-entry form only. Purchasers of the 2025 Bonds will not receive physical certificates representing their ownership interests in the 2025 Bonds purchased. Principal and interest payments represented by the 2025 Bonds are payable directly to DTC by the Fiscal Agent. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to the beneficial owners of the 2025 Bonds. See Appendix G — “DTC and the Book-Entry Only System.” So long as the 2025 Bonds are registered in the name of Cede & Co., as nominee of DTC, references in this Limited Offering Memorandum to the owners shall mean Cede & Co., and shall not mean the purchasers or Beneficial Owners of the 2025 Bonds.
Redemption
Optional Redemption. The 2025 Bonds are subject to optional redemption prior to their stated maturity on any date on or after September 1, 2035 as a whole, or in part by lot, at a redemption price equal to the principal amount of the 2025 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Payment Redemption . The 2025 Bonds are subject to mandatory sinking payment redemption in part on September 1, 2027, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date fixed for redemption, without premium, from sinking payments as follows:
9 Redemption Date
(September 1) Sinking Payments
Redemption Date
(September 1) Sinking Payments
2027 2046 $
2028 2047
2029 2048
2030 2049
2031 2050
2032 2051
2033 2052
2034 2053
2035 2054
2036 2055
2037 2056
2038 2057
2039 2058
2040 2059
2041 2060
2042 2061
2043 2062
2044 2063
2045 2064 (maturity)
The amounts in the foregoing tables will be reduced as a result of any prior partial redemption of the 2025 Bonds pursuant to the optional redemption or redemption from special tax prepayments provisions of the Fiscal Agent Agreement, so as to maintain to the extent practicable the same debt service profile for the Bonds as in effect prior to such redemption, as specified in writing by the City’s Finance Director to the Fiscal Agent.
Mandatory Redemption From Special Tax Prepayments . The 2025 Bonds are subject to mandatory redemption prior to their stated maturity on any Interest Payment Date from the proceeds of Special Tax Prepayments and corresponding transfers of funds from the Reserve Fund (as described below under “SECURITY FOR THE 2025 BONDS — Reserve Fund”), as a whole, or in part by lot, at a redemption price equal to the principal amount of the 2025 Bonds to be redeemed, together with accrued interest to the date fixed for redemption, and a premium (expressed as a percentage of the principal amount of the 2025 Bonds to be redeemed), as follows:
Redemption Dates Redemption Premium
any Interest Payment Date to and including March 1, 2033 3% September 1, 2033 and March 1, 2034 2
September 1, 2034 and March 1, 2035 1
September 1, 2035 and any Interest Payment Date thereafter 0 No assurance can be given regarding future prepayments of Special Taxes which, if they occur, could result in a redemption of 2025 Bonds prior to maturity. See the last paragraph under the heading “SECURITY FOR THE 2025 BONDS — Summary of Rate and Method” and “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Special Tax Prepayments.”
Purchase of 2025 Bonds In Lieu of Redemption. In lieu of redemption as described above, moneys in the Bond Fund or in the Special Tax Prepayments Account may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2025 Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase prior to the selection of 2025 Bonds for redemption, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event 10 may 2025 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase.
Priority of Redemption. Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2025 Bonds or any given portion thereof pursuant to the optional redemption or redemption from Special Tax Prepayment provisions of the Fiscal Agent Agreement, the future sinking payment installments for the 2025 Bonds shall be reduced as directed in writing by the Finance Director (who shall reduce such sinking fund installments so as to maintain as much as practicable substantially the same debt service profile for the 2025 Bonds as in effect prior to such redemption), and in any event such 2025 Bonds to be redeemed shall be selected by the Fiscal Agent by lot. For purposes of selection of 2025 Bonds to be redeemed, all 2025 Bonds shall be deemed to be comprised of separate $5,000 portions, and such portions shall be treated as separate 2025 Bonds that may be separately redeemed.
Notice of Redemption. The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services (or by such other means as permitted by such services), and to the respective registered Owners of any 2025 Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing is not a condition precedent to redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such 2025 Bonds. The redemption notice will state the redemption date and the redemption price and, if less than all of the then Outstanding 2025 Bonds are to be called for redemption, will designate the CUSIP numbers and Bond numbers of the 2025 Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or will state that all 2025 Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the 2025 Bonds of one or more maturities have been called for redemption, will state as to any Bond called in part the principal amount thereof to be redeemed, and will require that such 2025 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and will state that further interest on such 2025 Bonds will not accrue after the redemption date.
Notwithstanding the foregoing, any notice of redemption in connection with an optional redemption of 2025 Bonds may state that the redemption is conditioned upon receipt by the Fiscal Agent of sufficient moneys to redeem the 2025 Bonds on the anticipated redemption date, and that the redemption will not occur if by no later than the scheduled redemption date sufficient moneys to redeem the 2025 Bonds have not been deposited with the Fiscal Agent. In the event that the Fiscal Agent does not receive sufficient funds by the scheduled redemption date to so redeem the 2025 Bonds to be redeemed, the Fiscal Agent will send written notice to the owners of the 2025 Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the 2025 Bonds for which notice of redemption was given will remain Outstanding for all purposes of the Fiscal Agent Agreement.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the 2025 Bonds so called for redemption have been deposited in the Bond Fund, such 2025 Bonds so called will cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date.
Tender of 2025 Bonds in Payment of Special Taxes . The City has covenanted in the Fiscal Agent Agreement not to permit the tender of 2025 Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the City having insufficient Special Tax Revenues to pay the principal or and interest on the Bonds that will remain Outstanding following such tender.
11 Transfer or Exchange of 2025 Bonds
General. So long as the 2025 Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of 2025 Bonds shall be made in accordance with DTC procedures. See Appendix G — “DTC and the Book-Entry Only System.” If the book-entry only system for the 2025 Bonds is ever discontinued, any 2025 Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2025 Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent.
Whenever any 2025 Bond or 2025 Bonds are surrendered for transfer or exchange, the City will execute and the Fiscal Agent will authenticate and deliver a new 2025 Bond or 2025 Bonds, for a like aggregate principal amount of 2025 Bonds of Authorized Denominations. The Fiscal Agent has no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under the Fiscal Agent Agreement or under applicable law with respect to any transfer of any interest in any Bond (including any transfers between or among Depository participants or beneficial owners of interests in any Bond) other than to require delivery of such certificates and other documentation or evidence as is expressly required by, and to do so if and when expressly required by the terms of the Fiscal Agent Agreement, and to examine the same to determine substantial compliance as to form with the express requirements thereof. Neither the Fiscal Agent nor any agent has any responsibility or liability for any actions taken or not taken by DTC. The Fiscal Agent will collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange.
No transfers or exchanges of 2025 Bonds will be required to be made (i) within the 15 days prior to the date designated by the Fiscal Agent as the date for selecting 2025 Bonds for redemption, or (ii) with respect to any 2025 Bond after such 2025 Bond has been selected for redemption.
Restrictions on Transfers. The Fiscal Agent Agreement provides that no transfers of the 2025 Bonds shall occur unless the following conditions, as applicable, have been satisfied:
(i) Until such time as an Authorized Officer has certified in writing to the Fiscal Agent that the requirements described in paragraph (ii) below have been met, the 2025 Bonds may only be transferred:
(a) in denominations of $250,000 principal amount or any integral multiple of $5,000 in excess thereof, except that one 2025 Bond may be in the principal amount of the portion of the then Outstanding principal amount of the 2025 Bonds not divisible by $250,000; (b) to a transferee that has provided to the City and the Fiscal Agent a certificate substantially in the form of the Investor’s Letter attached as Exhibit B to the Fiscal Agent Agreement; and (c) to a transferee that is a qualified institutional buyer, as defined in Rule 144A of the Securities Act, as represented in paragraph 1 of the Investor’s Letter.
Notwithstanding the foregoing, the foregoing provisions of clauses (b) and (c) shall not apply to transfers to or from (x) PHCC LLC (d/b/a Preston Hollow Community Capital), a Delaware limited liability company, and any successor thereto (“PHCC”), (y) an Affiliate (as defined in the Fiscal Agent Agreement) of PHCC, or (z) a trust or other custodial arrangement established by PHCC or an Affiliate thereof (such as a tender option bond trust or similar securitization vehicle) pursuant to which 2025 Bonds owned by PHCC or an Affiliate thereof are held, the beneficiaries of which trust or other custodial arrangement are required to be qualified institutional buyers, as defined in Rule 144A of the Securities Act.
(ii) From and after the date on which an Authorized Officer has certified in writing to the Fiscal Agent that (a) the then District Value to Outstanding principal of the Bonds is at least 3:1 as certified by an Independent Financial Consultant (see “SECURITY FOR THE 2025 BONDS — Issuance of Additional Bonds” for the definition of District Value), (b) all City land use entitlements and necessary zoning for the development of at least 1,180 single family homes in the District, as required by applicable City ordinances and rules and regulations, have been obtained; and (c) RdR Development Holdings, LLC is current in any reporting requirements under any continuing disclosure obligation entered into by it on the Closing Date related to its activities in the District (the Finance Director may rely on a certificate of 12 the dissemination agent under such obligation as to the foregoing); then the 2025 Bonds may be transferred: (x) in denominations of $100,000 principal amount or any integral multiple of $5,000 in excess thereof, except that one 2025 Bond may be in the principal amount of the portion of the then Outstanding principal amount of the 2025 Bonds not divisible by $100,000; and (y) the transferee must be a qualified institutional buyer, as defined in Rule 144A of the Securities Act, or an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.
Discontinuance of DTC Services
DTC may determine to discontinue providing its services with respect to the 2025 Bonds at any time by giving written notice to the Fiscal Agent during any time that the 2025 Bonds are Outstanding, and discharging its responsibilities with respect to the 2025 Bonds under applicable law. The City may terminate the services of DTC with respect to the 2025 Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the 2025 Bonds or that continuation of the system of book-entry transfers through DTC is not in the best interest of the Beneficial Owners. The City will mail any such notice of termination to the Fiscal Agent.
Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the Beneficial Owners of the 2025 Bonds that they obtain certificated bonds, the 2025 Bonds will no longer be restricted to being registered in the Registration Books of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or name the Owners designate at that time, in accordance with the Fiscal Agent Agreement.
To the extent that the Beneficial Owners are designated as the transferee by the Owners, the 2025 Bonds will be delivered to such Beneficial Owners as soon as practicable in accordance with the Fiscal Agent Agreement.
Scheduled Debt Service
The following is the debt service schedule for the 2025 Bonds, assuming no optional redemption or any redemption with proceeds of Special Tax Prepayments of the 2025 Bonds:
Period Ending
September 1 Principal(1) Interest Total
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
13 2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
Totals
(1) Payable as mandatory sinking payments. See “THE 2025 BONDS — Redemption-Mandatory Sinking Payment Redemption.”
SECURITY FOR THE 2025 BONDS
INVESTMENT IN THE 2025 BONDS IS LIMITED TO SOPHISTICATED INVESTORS
WITH THE EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND EVALUATE THE HIGH DEGREE OF RISK INHERENT IN THE INVESTMENT. DUE IN
PART TO THE CURRENT STATUS OF THE LAND IN THE DISTRICT, PURCHASE OF THE 2025 BONDS WILL CONSTITUTE AN INVESTMENT SUBJECT TO A HIGH DEGREE OF
RISK, INCLUDING THE RISK OF NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF THE INVESTMENT. THERE CAN BE NO ASSURANCE
THAT THE PROPERTY OWNERS IN THE DISTRICT WILL PAY THE SPECIAL TAXES LEVIED ON SUCH PROPERTY WHEN DUE. SEE “SPECIAL RISK FACTORS” HEREIN.
TRANSFERS OF THE 2025 BONDS ARE LIMITED TO “QUALIFIED
INSTITUTIONAL BUYERS” WITHIN THE MEANING OF THE RULE 144A OF THE SECURITIES ACT. IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST
RELY ON THEIR OWN EXAMINATION OF THE DISTRICT AND THE TERMS OF THE 2025 BONDS, INCLUDING THE MERITS AND RISKS INVOLVED. THE INFORMATION
AND EXPRESSION OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT
NOTICE, AND NEITHER THE DELIVERY OF THIS LIMITED OFFERING MEMORANDUM NOR ANY SALE MADE IN CONNECTION WITH THE 2025 BONDS
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF. 14 General
Pursuant to the Fiscal Agent Agreement, the 2025 Bonds are secured by a pledge of all of the Special Tax Revenues as described below (other than the first Special Tax Revenues in the amount of the Minimum Administrative Expense Requirement received by the City in each Fiscal Year, which are to be used to pay Administrative Expenses), and all moneys deposited in the Bond Fund, the Reserve Fund and, until disbursed in accordance with the Fiscal Agent Agreement, the Special Tax Fund. “Special Tax Revenues,” as defined in the Fiscal Agent Agreement, means the proceeds of the Special Taxes received by the City, including any scheduled payments and any prepayments thereof, interest and penalties thereon and 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, but does not include interest and penalties, if any, collected with the Special Taxes that are in excess of the rate of interest payable on the Bonds. The Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal of, and interest and any premium on, the 2025 Bonds in accordance with the Fiscal Agent Agreement until all of the 2025 Bonds have been paid or defeased.
The Fiscal Agent Agreement provides for a Capitalized Interest Account within the Bond Fund established under the Fiscal Agent Agreement. The amount deposited to the Capitalized Interest Account from the proceeds of the 2025 Bonds will be an amount sufficient to pay the interest due on the 2025 Bonds through and including September 1, 2025. See “PLAN OF FINANCING — Sources and Uses of Funds.” Amounts in the Administrative Expense Fund, in the Improvement Fund and in the Costs of Issuance Fund, and amounts in the Special Tax Fund to be retained by the City or deposited to the Administrative Expense Fund to be used to pay Administrative Expenses, are not pledged to the repayment of the 2025 Bonds. The Improvements are not pledged to pay the debt service on the 2025 Bonds. The proceeds of any funds realized following condemnation or destruction of any of the Improvements are not pledged to pay the debt service on the 2025 Bonds.
Limited Obligation
The 2025 Bonds are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues (other than the first Special Tax Revenues in the amount of the Minimum Administrative Expense Requirement received by the City in each Fiscal Year, which are to be used to pay Administrative Expenses), and the amounts in the Bond Fund, the Reserve Fund and the Special Tax Fund created pursuant to the Fiscal Agent Agreement.
In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the 2025 Bonds are amounts held by the Fiscal Agent under the Fiscal Agent Agreement in the Bond Fund, the Special Tax Fund and the Reserve Fund, and the proceeds, if any, from foreclosure sales of parcels with delinquent Special Taxes levies.
Special Taxes
The Rate and Method is set forth in its entirety in Appendix B. The Rate and Method provides for the levy of “Special Taxes” in order to fund the “Annual Special Tax Requirement,” which includes the amounts needed to pay the debt service on the Bonds, to pay the costs of administering the District, to replenish any draws on the Reserve Fund, and to account for reasonably anticipated delinquencies in the payment of Special Taxes.
The first Special Tax levy will be for fiscal year 2025-26, for debt service due on the 2025 Bonds in calendar year 2026 and for administrative expenses of the District. The Special Taxes levied on any parcel of Taxable Property may not exceed the applicable maximum amount as provided in the Rate and Method. See “SECURITY FOR THE 2025 BONDS — Summary of Rate and Method.”
15 The Special Taxes levied on Taxable Property will be payable and will be collected in the same manner, at the same time and in the same installment as the County ad valorem taxes on property levied on the secured tax roll, and pursuant to the Law will have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the taxes levied on the County secured tax roll. Notwithstanding the foregoing, the Special Taxes may be collected at a different time or in a different manner if necessary to meet the District’s financial obligations.
Although the Special Taxes will constitute a lien on parcels of Taxable Property within the District, they do not constitute a personal indebtedness of the owners of the property within the District. Pursuant to the Law, in the event of any delinquency in the payment of the Special Tax on a parcel of Taxable Property, the City may order the institution of a superior court action to foreclose the lien on the parcel of Taxable Property within specified time limits. In such an action, the real property subject to the unpaid amount of the Special Tax lien may be sold at judicial foreclosure sale. The Law provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem property taxes. See “SECURITY FOR THE 2025 BONDS — Summary of Rate and Method,” “SECURITY FOR THE 2025 BONDS — Covenant for Superior Court Foreclosure” and “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.” Other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future. See “THE DEVELOPMENT AND THE DISTRICT — Direct and Overlapping Governmental Obligations” and “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.” There is no assurance that any owner of a parcel subject to the Special Tax levy will be financially able to pay the annual Special Taxes or that it will pay such taxes even if financially able to do so. See “SPECIAL RISK FACTORS.”
Special Tax Fund
Deposit of Special Tax Revenues. The Special Tax Fund is established by the Fiscal Agent Agreement as a separate fund to be held by the Fiscal Agent. The Fiscal Agent Agreement provides that there shall be deposited to the Special Tax Fund all Special Tax Revenues received by the City, which the City has agreed in the Fiscal Agent Agreement to transfer, as soon as practicable following receipt by the City, to the Fiscal Agent.
Notwithstanding the foregoing,
(i) with respect to the first Special Tax Revenues collected by the City in any Fiscal Year in the amount of the Minimum Administrative Expense Requirement for such Fiscal Year (see “INTRODUCTION — Security for the 2025 Bonds – Pledge Under the Fiscal Agent Agreement” for the definition of “Minimum Administrative Expense Requirement”); first, the City may retain all or any portion thereof, and not remit the same to the Fiscal Agent, to the extent the City determines that it needs said amount to pay Administrative Expenses of the City (and the City shall so use such amount to pay Administrative Expenses); and second, any remaining portion of such amount shall be separately identified by the City and shall be deposited by the Fiscal Agent in the Administrative Expense Fund; (ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the City and shall be deposited by the Fiscal Agent first, in the Bond Fund to the extent needed to pay any past due debt service on the Bonds; second, to the Reserve Fund to the extent needed to increase the amount then on deposit in the Reserve Fund up to the then Reserve Requirement; and third, to the Special Tax Fund for use as described below; and (iii) any proceeds of Special Tax Prepayments shall be separately identified by the City and shall be deposited by the Fiscal Agent as follows (as directed in writing by the Finance Director): (a) that portion of any Special Tax Prepayment constituting the Future Facilities Costs (as defined in Section I of the Rate and Method) shall be deposited by the Fiscal Agent to the Improvement Fund so long as the Improvement Fund has not theretofore been closed, and if the Improvement Fund has been closed, then 16 such amount shall be retained by the City to be used to pay costs of the Improvements; and (b) any remaining portion of any Special Tax Prepayment shall be deposited by the Fiscal Agent in the Special Tax Prepayments Account within the Bond Fund to be used to redeem Bonds pursuant to the Fiscal Agent Agreement (see “THE 2025 BONDS — Redemption – Mandatory Redemption From Special Tax Prepayments”).
Moneys in the Special Tax Fund will be held by the Fiscal Agent for the benefit of the City and the Owners of the Bonds, will be disbursed as described below and, pending disbursement, will be subject to a lien in favor of the Owners of the Bonds and the City.
Disbursements. From time to time as needed to pay the obligations of the District, but no later than the Business Day before each Interest Payment Date or date for optional redemption of the Bonds, the Fiscal Agent will withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority:
(i) to the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund and any expected transfers under the Fiscal Agent Agreement from the Improvement Fund, the Reserve Fund and the Special Tax Fund to the Bond Fund, such that the amount in the Bond Fund equals the principal (including any mandatory sinking payment or principal due on the Bonds pursuant to optional or special tax prepayment redemptions), premium, if any, and interest due on the Bonds on the next Interest Payment Date or date of optional redemption of the Bonds, as applicable, and (ii) to the Reserve Fund an amount, taking into account amounts then on deposit in the Reserve Fund, such that the amount in the Reserve Fund is equal to the Reserve Requirement; provided that no such transfers shall exceed the amount then available to be transferred from the Special Tax Fund.
In addition to the foregoing, if in any Fiscal Year there are sufficient funds in the Special Tax Fund to make the foregoing transfers to the Bond Fund and the Reserve Fund in respect of the Interest Payment Dates occurring in the Bond Year that commences in such Fiscal Year, the Finance Director may direct the Fiscal Agent to transfer to the Administrative Expense Fund, from time to time, any amount in the Special Tax Fund in excess of the amount needed to make such transfers to the Bond Fund and the Reserve Fund, to the Administrative Expense Fund, if the Finance Director determines that monies are needed to pay Administrative Expenses in excess of the amount then on deposit in the Administrative Expense Fund.
Summary of Rate and Method
The Rate and Method is used to allocate the amount of the Special Taxes that is needed to be collected each fiscal year to fund the Annual Special Tax Requirement among the Taxable Property within the District based upon the development status of the Taxable Property and the building square footage and lot square feet of the applicable property, subject to specified maximum tax rates. The Rate and Method is set forth in full in Appendix B and the following is a summary of the Rate and Method. Capitalized terms used below and not otherwise defined in this Limited Offering Memorandum or in the Fiscal Agent Agreement have the meanings given to them in the Rate and Method.
The Rate and Method classifies all Taxable Property, i.e., all Assessor’s Parcels in the District not exempt pursuant to law or the Rate and Method from the levy of the Special Taxes, into five categories: Developed Property, Final Map Property, Taxable Public Property, Taxable Property Owner Association Property, and Undeveloped Property. Developed Property includes Taxable Property for which a Building Permit for new construction was issued by the City prior to March 1 of the preceding Fiscal Year. Final Mapped Property includes, in any Fiscal Year, Taxable Property, exclusive of Developed Property, Taxable Public Property or Taxable Property Owner Association Property, for which a Final Subdivision Map (that creates individual lots for which Building Permits may be issued without further subdivision) has been recorded prior to January 1 of the 17 preceding Fiscal Year. Taxable Public Property and Taxable Property Association Property include Public Property in excess of 120.70 acres of Public Property and Property Association Property in excess of 35.20 acres of such property, respectively. All of the Taxable Property in the District is currently Undeveloped Property.
The amount of Special Taxes that the District may levy on each parcel of Taxable Property is limited by the Maximum Special Tax applicable to the property, which is the greater of the applicable Assigned Special Tax or Backup Special Tax. Under the Rate and Method, the Assigned Special Tax and the Backup Special Tax for Developed Property and Final Map Property increases each July 1, commencing July 1, 2026 through and including July 1, 2038, by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. Assigned Special Tax rates for Developed Property for Fiscal Year 2024-25 for the various tracts of Taxable Property in the District are as set forth in Table 1 and Table 2 below. The Backup Special Tax applicable to an Assessor’s Parcel of Taxable Property is determined pursuant to the provisions of Section C.1.b. of the Rate and Method based on the acreage of the Taxable Property as described in the Rate and Method.
The maximum Assigned Special Taxes for Fiscal Year 2024-25 for each Land Use Class of Developed Property in the District is shown in Tables 1 and 2 below.
TABLE 1
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Assigned Special Tax for Developed Property and Final Map Property for Tracts: ______, __________ and ____________ for Fiscal Year 2025/26 Land Use
Class Expected Land Use(1)
Building
Square Feet Lot Square Feet
Assigned
Special Tax(2)
1-A Single Family Attached Property >= 1,900 BSF N/A $_________ per Unit 2-A Single Family Attached Property < 1,900 BSF N/A $_________ per Unit 1-B Single Family Detached Property >= 2,600 BSF <= 5,999 LSF $_________ per Unit 2-B Single Family Detached Property = 2,300 - < 2,600 BSF <= 5,999 LSF $_________ per Unit 3-B Single Family Detached Property < 2,300 BSF <= 5,999 LSF $_________ per Unit 1-C Single Family Detached Property >= 3,300 BSF > 5,999 - = 6,999 LSF $_________ per Unit 2-C Single Family Detached Property = 3,000 - < 3,300 BSF > 5,999 - = 6,999 LSF $_________ per Unit 3-C Single Family Detached Property < 3,000 BSF > 5,999 - = 6,999 LSF $_________ per Unit 1-D Single Family Detached Property >= 3,300 BSF > 6,999 LSF $_________ per Unit 2-D Single Family Detached Property < 3,300 BSF > 6,999 LSF $_________ per Unit 1-E Accessory Dwelling Unit N/A N/A See below
2-E Non-Residential Property (1) N/A N/A $________ per Acre (1) Expected Land Uses are based on the Rate and Method of Apportionment. (2) _________.
Source: RdR Development Holdings, LLC, NBS.
The Assigned Special Tax for an Accessory Dwelling Unit shall be calculated as a percentage of the Assigned Special Tax for the primary Unit the ADU is accessory to, based on Building Square Footage. For example, if a primary Unit in Land Use Class 1-A of 2,000 BSF has an ADU of 800 BSF, the Assigned Special Tax for the ADU shall be calculated by the following steps:
1. 800 BSF / 2,000 BSF = 0.40 or 40%; and
2. $_________ Assigned Special Tax per Unit x 40% = $_________ Assigned Special Tax for such ADU.
18 TABLE 2
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Assigned Special Tax for Developed Property
Final Subdivision Map for All Other Tracts
for Fiscal Year 2025/26
Land Use
Class Expected Land Use(1) Building Square Feet Lot Square Feet Assigned
Special Tax(2)
1-A Single Family Attached Property >= 1,900 BSF N/A $2,692.56 per Unit 2-A Single Family Attached Property < 1,900 BSF N/A $2,140.10 per Unit 1-B Single Family Detached Property >= 2,600 BSF <= 5,999 LSF $3,519.67 per Unit 2-B Single Family Detached Property =2,300 - < 2,600 BSF <= 5,999 LSF $3,172.18 per Unit 3-B Single Family Detached Property < 2,300 BSF <= 5,999 LSF $2,758.10 per Unit 1-C Single Family Detached Property >= 3,300 BSF > 5,999 - = 6,999 LSF $4,253.16 per Unit 2-C Single Family Detached Property =3,000 - < 3,300 BSF > 5,999 - = 6,999 LSF $3,977.45 per Unit 3-C Single Family Detached Property < 3,000 BSF > 5,999 - = 6,999 LSF $3,563.37 per Unit 1-D Single Family Detached Property >= 3,300 BSF > 6,999 LSF $4,597.79 per Unit 2-D Single Family Detached Property < 3,300 BSF > 6,999 LSF $4,037.79 per Unit 1-E Accessory Dwelling Unit N/A N/A See below
2-E Non-Residential Property N/A N/A $23,441.25 per Acre (1) Expected Land Uses are based on the Rate and Method of Apportionment. (2) On each July 1, commencing on July 1, 2026 and ending on July 1, 2038, the Assigned Special Tax for Developed Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.
Source: RdR Development Holdings, LLC, NBS.
The Assigned Special Tax for an Accessory Dwelling Unit shall be calculated as a percentage of the Assigned Special Tax for the primary Unit the ADU is accessory to, based on Building Square Footage. For example, if a primary Unit in Land Use Class 1-A of 2,000 BSF has an ADU of 800 BSF, the Assigned Special Tax for the ADU shall be calculated by the following steps:
1. 800 BSF / 2,000 BSF = 0.40 or 40%; and
2. $2,692.56 Assigned Special Tax per Unit x 40% = $1,077.02 Assigned Special Tax for such ADU.
Tracts _________, ___________ and ________ include ___ of the single family detached homes currently expected to be constructed on the Taxable Property in Phase 1A of the Development and all other tracts include the remainder of the Taxable Property in Phase 1A of the Development currently anticipated to be developed with an additional _____ single family detached homes and all of the Taxable Property in Phase 2 of the Development currently expected to be developed with _____ detached single family homes and ___ townhomes.
The Maximum Special Tax for each Assessor’s Parcel of Final Map Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property is $23,441.25 per Acre for Fiscal Year 2025-26. On each July 1, commencing on July 1, 2026 through and including July 1, 2038, such Maximum Special Tax will increase by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.
Each Fiscal Year, commencing with Fiscal Year 2025-26, the CFD Administrator determines the Special Tax Requirement and will levy the Special Taxes until the total Special Tax levy equals the Annual Special Tax Requirement. The Annual Special Tax Requirement is defined in the Rate and Method as the amount required in any Fiscal Year for the District to (i) pay the Debt Service on all Outstanding 2025 Bonds and any Parity Bonds 19 due in the Debt Year that commences in such Fiscal Year, (ii) pay debt service on bonds expected to be issued for the District due in the Debt Year that commences in such Fiscal Year; (iii) pay Administrative Expenses, (iv) provide any amount required to establish or replenish a reserve fund in connection with any Bonds, (v) provide an amount equal to reasonably anticipated Special Tax delinquencies based on the delinquency rate for Special Taxes levied in the previous Fiscal Year as determined by the CFD Administrator, as limited by the Law, and without duplicating any amounts described in clauses (iii) or (iv). The amounts referred to in the preceding sentence may be reduced in any Fiscal Year by (i) surplus balances in funds and accounts for Bonds to the extent that such balances are available to apply against Debt Service pursuant to the Fiscal Agent Agreement, (ii) proceeds from the collection of penalties associated with delinquent Special Taxes, and (iii) any other revenues available to pay Debt Service on outstanding Bonds or other indebtedness as determined by the CFD Administrator.
The Rate and Method provides that certain property in the District will be exempt from the levy of the Special Tax, including 35.20 acres of property classified as Property Owner Association Property and 120.70 acres of property classified as Public Property, and certain Welfare Exempt Property.
The Rate and Method includes a Section J, entitled “Special Tax Reduction” that provided for the reduction, in certain circumstances, of the Maximum Special Taxes for some of the land use classes prior to the issuance of the 2025 Bonds so that Total Effective Tax Rate for all Plan Types in a Land Use Class is less than or equal to 2.00%. The Maximum Special Taxes in Tables 1 and 2 above reflect such provisions.
Under the Rate and Method, the City will levy the Special Taxes in six steps, in the following order, until the amount of the levy equals the amount needed to be collected to satisfy the Annual Special Tax Requirement.
The City will:
First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Annual Special Tax Requirement.
Second: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Final Map Property at a rate up to 100% of the Maximum Special Tax for Final Map Property to satisfy the Annual Special Tax Requirement.
Third: If additional monies are needed to satisfy the Annual Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Undeveloped Property at a rate up to 100% of the Maximum Special Tax for Undeveloped Property to satisfy the Annual Special Tax Requirement.
Fourth: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first three steps have been completed, then the levy of the Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the applicable Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor’s Parcel to satisfy the Annual Special Tax Requirement.
Fifth: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first four steps have been completed, the Special Tax shall be levied on each Assessor’s Parcel of Taxable Property Owner Association Property at a rate up to 100% of the Maximum Special Tax for Taxable Property Owner Association Property to satisfy the Annual Special Tax Requirement.
20 Sixth: If additional monies are needed to satisfy the Annual Special Tax Requirement after the first five steps have been completed, then the Special Tax shall be levied Proportionately on all Taxable Public Property at a rate up to 100% of the Maximum Special Tax for Taxable Public Property to satisfy the Annual Special Tax Requirement.
The term “Proportionately” as used in the above steps means, for Developed Property and Final Map Property, that the ratio of the Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal.
For Undeveloped Property, “Proportionately” means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal.
The Rate and Method also provides that the Special Taxes may be levied for no more than 60 years from the initial levy of the Special Tax. In any event no Special Tax is authorized to be levied after the 2083/84 Fiscal Year.
The Special Taxes obligation applicable to a parcel of Taxable Property within the District may be prepaid and the obligation to pay any Special Taxes for such Taxable Property may be fully or partially satisfied as described in the Rate and Method. See Section I – Prepayment of Special Tax in the Rate and Method in Appendix B. No assurance can be given that partial or full prepayments of Special Taxes will not occur in the future.
Prepayments of Special Taxes will result in a mandatory redemption of the 2025 Bonds. See “THE 2025 BONDS — Redemption – Mandatory Redemption From Special Tax Prepayments” and “SPECIAL RISK FACTORS — Potential Early Redemption of Bonds from Special Tax Prepayments.” Reserve Fund
The Fiscal Agent Agreement establishes a debt service reserve fund (the “Reserve Fund”) as a separate fund to be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds (which include the 2025 Bonds and any Parity Bonds), as a reserve for the payment of principal of, and interest and any premium on, the Bonds and moneys in the Reserve Fund are subject to a lien in favor of the Owners of the Bonds. The Reserve Fund is required by the Fiscal Agent Agreement to be funded in an amount equal to the Reserve Requirement, which amount is, as of any date of calculation, an amount equal to one-half of the least of (i) the then Maximum Annual Debt Service, (ii) the then one hundred twenty-five percent (125%) of the then average Annual Debt Service, or (iii) ten percent (10%) of the initial principal amount of the 2025 Bonds. The Reserve Requirement as of the date of issuance of the 2025 Bonds will be $____________, and that amount will be deposited to the Reserve Fund from proceeds of the 2025 Bonds. See “PLAN OF FINANCING — Sources and Uses of Funds.” Except as otherwise provided in the Fiscal Agent Agreement (with respect to the use of moneys in the Reserve Fund for the payment of any rebate liability due to the federal government, and the use of excess moneys in the Reserve Fund to pay debt service on the Bonds), all amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of, and interest and any premium on, the Bonds. See Appendix C — “Summary of the Fiscal Agent Agreement — Funds and Accounts – Reserve Fund.”
Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the Outstanding Bonds. In the event that the amount transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund will be transferred to the City to be used for any lawful purpose under the Law. Notwithstanding the foregoing, no amounts will be transferred from the Reserve Fund for the foregoing purposes until after (i) amounts in the Reserve Fund are withdrawn, at the written request of the Treasurer, for purposes of making any rebate payment due to the federal government in accordance with the Fiscal Agent Agreement following payment of the Bonds, and (ii) payment of any fees and expenses due to 21 the Fiscal Agent. See Appendix C — “Summary of Fiscal Agent Agreement – Funds and Accounts – Reserve Fund.”
Covenant for Superior Court Foreclosure
Foreclosure Under the Law. Pursuant to the Law, in the event of any delinquency in the payment of the Special Tax on any Taxable Property, the City may order the institution of a superior court action to foreclose the lien on the taxed parcel within specified time limits. In such an action, the real property subject to the unpaid amount of the Special Tax lien may be sold at judicial foreclosure sale.
City Foreclosure Covenant. Judicial foreclosure proceedings in the event of delinquent Special Taxes are not mandatory. However, the City has covenanted in the Fiscal Agent Agreement for the benefit of the Bondowners that it will order, and cause to be commenced as described below, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as described in the following paragraphs.
On or about August 15 of each Fiscal Year, the Finance Director shall compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City, and:
(A) Individual Delinquencies. If the Finance Director determines that any single parcel subject to the Special Tax in the District is delinquent in the payment Special Taxes in the greater of (i) the aggregate amount of $5,000 or more, or (ii) the payment of four or more installments of Special Taxes levied on such parcel, then the Finance Director shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured), foreclosure proceedings shall be commenced by the City against the delinquent parcel within 90 days of such determination and shall be diligently pursued by the City to completion.
(B) Aggregate Delinquencies . If the Finance Director determines that the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District (including the total of delinquencies under subsection (A) above), exceeds 5% of the total Special Tax due and payable for the prior Fiscal Year, the Finance Director shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and the City shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency.
Notwithstanding the foregoing, the Finance Director may defer any mailing of notices of delinquency or foreclosure action if the amount in the Reserve Fund is at least equal to the Reserve Requirement.
No assurance can be given as to the time necessary to complete any foreclosure sale or that any foreclosure sale will be successful. See “SPECIAL RISK FACTORS — Proceeds of Foreclosure Sales.” The City is not required to be a bidder at any foreclosure sale.
In a foreclosure proceeding the City is entitled to recover penalties and interest on the delinquent Special Taxes through the date that an order of sale is entered. However, under the Fiscal Agent Agreement, the Special Taxes pledged to the payment of the Bonds do not include any such penalties and interest collected by the City that are in excess of the rate of interest payable on the Bonds. Also it should be noted that prompt commencement of foreclosure proceedings may not, in and of itself, result in a timely or complete payment of delinquent Special Taxes.
Sufficiency of Foreclosure Sale Proceeds; Foreclosure Limitations and Delays . No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. Subject to the maximum rates, the Rate and 22 Method is designed to generate from all Taxable Property within the District the current year’s debt service on the 2025 Bonds, administrative expenses, and replenishment of the Reserve Fund to the Reserve Requirement. If foreclosure proceedings are necessary, however, and the Reserve Fund has been depleted, there could be a delay in payments to owners of the 2025 Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale.
The ability of the City to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain instances and may require prior consent of the obligee in the event the property is owned by or in receivership of the Federal Deposit Insurance Corporation. See “SPECIAL RISK FACTORS — FDIC/Federal Government Interests in Properties.”
No assurance can be given that a judicial foreclosure action, once commenced, will be completed or that it will be completed in a timely manner. If a judgment of foreclosure and order of sale is obtained, the judgment creditor (the City for the District) must cause a Notice of Levy to be issued. Under current law, a judgment debtor (property owner) has 120 days from the date of service of the Notice of Levy in which to redeem the property to be sold, which period may be shortened to 20 days for parcels other than those on which a dwelling unit for not more than four persons is located. If a judgment debtor fails to redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action, a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made (Section 701.680 of the California Code of Civil Procedure).
Section 53356.6 of the Law provides that property sold pursuant to foreclosure under the Law may not be sold for less than the amount of judgment in the foreclosure action, plus post-judgment interest and authorized costs, without the consent of the owners of 75% by value of the outstanding Bonds. However, under Section 53356.6 of the Law, the City, as judgment creditor, is entitled to purchase any property sold at foreclosure using a “credit bid,” where the City could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the City becomes the purchaser under a credit bid, the City must pay the amount of its credit bid into the Bond Fund for the Bonds, within 24 months after the date of the foreclosure sale. Neither the Law nor the Fiscal Agent Agreement requires the City to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale, and the City has no intent to be such a purchaser.
The City will levy the Special Tax to pay the current year’s debt service on the 2025 Bonds and related administrative expenses, and to replenish the Reserve Fund to the Reserve Requirement, subject to Maximum Special Tax rates. However, if superior court foreclosure proceedings are necessary to collect delinquent Special Taxes, and if the Reserve Fund has been depleted, there could be a delay in payments of principal of and interest on the 2025 Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale. See “SPECIAL RISK FACTORS — Bankruptcy Delays” and “ — Proceeds of Foreclosure Sales.”
No Teeter Plan
Collection of the Special Taxes is not subject to the “Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds,” as provided for in Section 4701 et seq. of the California Revenue and Taxation Code (known as the “Teeter Plan”). Accordingly, collections of Special Taxes will reflect actual delinquencies, if any.
Investment of Moneys
Except as otherwise provided in the Fiscal Agent Agreement, all moneys in any of the funds or accounts established pursuant to the Fiscal Agent Agreement will be invested by the Fiscal Agent solely in Permitted Investments, as directed by the City. See Appendix C — “Summary of the Fiscal Agent Agreement” for a 23 definition of “Permitted Investments” and for additional provisions regarding the investment of funds held under the Fiscal Agent Agreement.
Issuance of Additional Bonds
Parity Bonds. The Fiscal Agent Agreement authorizes the City to issue one or more series of Parity Bonds.
Subject to meeting the conditions summarized below, the Parity Bonds will be secured by a lien on the Special Tax Revenues and funds pledged for the payment of the Bonds under the Fiscal Agent Agreement on a parity with all other Bonds Outstanding under the Fiscal Agreement.
The City may issue the Parity Bonds subject to the following specific conditions precedent, as set forth in the Fiscal Agent Agreement:
(A) Current Compliance. The City must be in compliance on the date of issuance of the Parity Bonds with all covenants set forth in the Fiscal Agent Agreement and all Supplemental Agreements. (B) Payment Dates . The interest on the Parity Bonds must be payable on March 1 and September 1, and principal of the Parity Bonds must be payable on September 1 in any year in which principal is payable (provided that there is no requirement that any Parity Bonds pay interest on a current basis).
(C) Funds and Accounts; Reserve Fund Deposit. The Supplemental Agreement providing for the issuance of the Parity Bonds may provide for the establishment of separate funds and accounts, and shall provide for a deposit to the Reserve Fund in an amount necessary so that the amount on deposit in the Reserve Fund following the issuance of such Parity Bonds, is equal to the Reserve Requirement. (D) Aggregate Value-to-Lien Ratio. From and after the conditions listed in clauses (a) through (d) of paragraph (ii) under the heading “THE 2025 BONDS — Transfer or Exchange of 2025 Bonds – Restrictions on Transfers” have been satisfied, the District Value shall be at least three times the sum of:
(i) the aggregate principal amount of all Bonds then Outstanding, plus (ii) the aggregate principal amount of the series of Parity Bonds proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in the District subject to the levy of Special Taxes, plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within the District (the “Other District Bonds”) equal to the aggregate principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within the District, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which the special taxes are levied to pay the Other District Bonds (such fraction to be determined based upon the maximum special taxes which could be levied in the year in which maximum annual debt service on the Other District Bonds occurs), based upon information from the most recent available Fiscal Year. (E) The Special Tax Coverage. The City shall obtain a certificate of a Tax Consultant to the effect that (i) the amount of the maximum Special Taxes that may be levied in each Fiscal Year shall be at least one hundred ten percent (110%) of the total Annual Debt Service for each such Fiscal Year on the Bonds and the proposed Parity Bonds plus estimated Administrative Expenses, and (ii) based upon the Special Taxes that may be levied under the Rate and Method, the aggregate Special Tax Prepayments that could occur after the issuance of the Parity Bonds is not less than the Outstanding principal amount of the Bonds and such Parity Bonds.
(F) Officer’s Certificate. The City must certify to the Fiscal Agent that the conditions for the issuance of Parity Bonds described above in the Fiscal Agent Agreement have been satisfied. The City 24 can conclusively rely on certificates of the Fiscal Agent, the Tax Consultant and others in providing the certification.
Refunding Bonds. The City may issue Refunding Bonds as Parity Bonds without the need to satisfy the requirements of paragraphs (D) or (E) above, and, in connection therewith, the Officer’s Certificate referred to in paragraph (F) above need not make reference to said paragraphs (D) and (E).
The term “District Value” referred to in (D) above and as used in the Fiscal Agent Agreement with respect to the transfer restrictions for the 2025 Bonds (see “THE 2025 BONDS — Transfer or Exchange of 2025 Bonds – Restrictions on Transfers”), means the market value as determined by reference to (i) an appraisal performed within three (3) months of, as applicable, (a) the date of issuance of any proposed Parity Bonds, or (b) a change in the transfer restrictions and Authorized Denominations of the 2025 Bonds, in each case by an MAI appraiser selected by the City, of the parcels of real property in the District subject to the levy of the Special Taxes and not delinquent in the payment of any Special Taxes then due and owing, including with respect to such nondelinquent parcels the value of the then existing improvements and any facilities to be constructed or acquired with any amounts then on deposit in the Improvement Fund and with the proceeds of any proposed series of Parity Bonds, or (ii), in the alternative as to some or all of the parcels, the assessed value of all such nondelinquent parcels and improvements thereon as shown on the then current County real property tax roll available to the Finance Director.
Neither the City nor the Finance Director shall be liable to the Owners, the Original Purchaser or any other person or entity in respect of any appraisal provided for purposes of the foregoing definition or by reason of any exercise of discretion made by any appraiser pursuant to the foregoing definition.
Subordinate Bonds. The provisions of the Fiscal Agent Agreement do not in any way prohibit the City from issuing bonds or otherwise incurring debt secured by a pledge of Special Tax Revenues subordinate to the pledge of such Special Tax Revenues under the Fiscal Agent Agreement.
THE DEVELOPMENT AND THE DISTRICT
INVESTMENT IN THE 2025 BONDS IS LIMITED TO SOPHISTICATED INVESTORS
WITH THE EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND EVALUATE THE HIGH DEGREE OF RISK INHERENT IN THE INVESTMENT. DUE IN
PART TO THE CURRENT STATUS OF THE LAND IN THE DISTRICT, PURCHASE OF THE 2025 BONDS WILL CONSTITUTE AN INVESTMENT SUBJECT TO A HIGH DEGREE OF
RISK, INCLUDING THE RISK OF NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF THE INVESTMENT. THERE CAN BE NO ASSURANCE
THAT THE PROPERTY OWNERS IN THE DISTRICT WILL PAY THE SPECIAL TAXES LEVIED ON SUCH PROPERTY WHEN DUE. SEE “SPECIAL RISK FACTORS” HEREIN.
TRANSFERS OF THE 2025 BONDS ARE LIMITED TO “QUALIFIED
INSTITUTIONAL BUYERS” WITHIN THE MEANING OF THE RULE 144A OF THE SECURITIES ACT. IN MAKING AN INVESTMENT DECISION, PURCHASERS MUST
RELY ON THEIR OWN EXAMINATION OF THE DISTRICT AND THE TERMS OF THE 2025 BONDS, INCLUDING THE MERITS AND RISKS INVOLVED. THE INFORMATION
AND EXPRESSION OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT
NOTICE, AND NEITHER THE DELIVERY OF THIS LIMITED OFFERING MEMORANDUM NOR ANY SALE MADE IN CONNECTION WITH THE 2025 BONDS
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF. 25 Location and Description of the Development
The property included in the District consists of approximately 236 acres, constituting a portion of the larger, approximately 767 acre, Phase 1 of the proposed master-planned community known as Ritter Ranch (the “Development”), located in the south western portion of the City. The entire approximately 10,625 acre Development is currently planned to be a mixed use project that is expected to include over 7,500 acres of open space, along with residential, public facility, recreational, school and commercial uses. Certain land use entitlements for the property in the Development have expired, and the plans for the Development are subject to change. See “THE DEVELOPMENT AND THE DISTRICT — Location and Description of the Development.” The property in the Development is currently owned by RdR Development Holdings, LLC (the “Master Developer”), a limited liability company for which PHCC LLC (d/b/a Preston Hollow Community Capital) is the sole member. See “THE DEVELOPMENT AND THE DEVELOPER — The Master Developer.” The Development is currently planned as a mixed-use project that is expected to incorporate residential, open space, public facility, recreational, school and commercial uses. As currently designed, Ritter Ranch will provide a range of housing opportunities, including multi-family housing. entry-level single-family homes, luxury and equestrian estate homes and senior housing. The current plans include community facilities and amenities such as day care centers, schools, a regional library, a fire station, churches, lakes, an outdoor amphitheater, an equestrian center, a swim center, a championship golf course and over eighty-five miles of regional trails.
A Specific Plan for the Development was approved by the City in 1992, and in that year an environmental impact report was certified by the City Council, that allowed for a master planned community consisting of 7,200 residences, 7,628 acres of open space and public utilities, recreational amenities, schools and commercial uses to support the community.
In 1995 the City entered into a Development Agreement with the then developer of the Development and approved six vesting tentative tract maps for the Development that were not recorded. Lots were graded and internal roadways for a portion of the Development were partially installed. The vesting tentative maps expired in 2017.
In 2004, a revised Development Agreement was approved for the Development, that subsequently expired in 2012. In 2006, the City approved additional vesting tentative tract maps for the Development that subsequently expired in 2019. Subsequent to the expiration, mass grading consistent with a prior vesting tentative tract map was completed, and backbone roads (Westland Drive and Ranch Center Drive) were installed. These roadways are currently open to public travel. Portions of the required perimeter walls along these roadways were also installed.
During the period from late 2016 to late 2018 no substantial development work occurred and the ownership of the Development changed hands.
In 2020, PHCC became the owner of the Development, following a transfer of the land in lieu of foreclosure, and transferred the land to the Master Developer. On September 1, 2020, the City Council adopted a resolution approving certain actions related to the Development, including financial agreements and land use approvals.
On February 10, 2022 the City Planning Commission approved Conditional Use Permit 22-001, Planned Development 21-001, and Vesting Tentative Tract Maps 51604, 51605, 51606, 51607, 52093, and 52116 for Phase 1 of the overall Development.
The Master Developer, PHCC LLC (d/b/a Preston Hollow Community Capital) and the City entered into a Phase 1 Interim Agreement – Ritter Ranch Development (A-7796) (the “Phase 1 Agreement”) that requires that certain actions be taken by the Master Developer prior to the commencement of construction in the District. Those conditions include City Council confirmation that the RdR Phase 1 Entitlements (as defined therein) comply with 26 CEQA and mitigation in the Final EIR or supplemental, addendum or new environmental document and that the Master Developer provide the City with certain subdivision improvement agreements and supporting surety bonds. Those conditions have been satisfied; however, the Master Developer must obtain extensions of the posted surety bonds or replacements at or prior to the expiration of the current surety bonds.
The Phase 1 Agreement also requires the construction of certain improvements prior to the City providing the 321st building permit for homes in Phase 1A, including certain undergrounding, street and street light improvements, and allows for draws on the funds transferred from the 1995 Fiscal Agent Agreement (as defined in the Fiscal Agent Agreement) to the 1995 Account of the Improvement Fund (approximately $____________) and amounts held in an escrow account by a surety to be used to complete the required improvements. The Master Developer has advised that it expects to complete the subject improvements well before the need for the 321st building permit.
As currently designed, the Development will provide a range of housing opportunities, including multifamily housing, entry-level single-family homes, luxury and equestrian estate homes and senior housing.
The current plans of the Master Developer include community facilities and amenities such as day care centers, schools, a regional library, a fire station, churches, lakes, an outdoor amphitheater, an equestrian center, a swim center, a championship golf course and over eighty-five miles of regional trails.
The Master Developer anticipates that the Development will be developed in four phases over a fourteen year period. Notwithstanding the foregoing, no assurance can be given with respect to the future construction of infrastructure improvements, housing and other physical facilities in the Development, and changes to the plans for such construction, as well as the ownership of all or a portion of the Development may occur without any requirement for notice to (except with respect to notice related to certain aspects of the development of the property in the District) or the consent of the owners of the 2025 Bonds. The property in the District is currently classified as Undeveloped Property in the Rate and Method.
History of the District
Pursuant to the Law, the City Council of the City, acting in its capacity as the legislative body for the District, adopted Resolution No. CC 2022-100 on September 21, 2022, stating its intention to establish the District and to levy the special tax within the District. On October 24, 2022, the City Council formed the District pursuant to its Resolution No. CC-2022-109, and adopted Resolution No. CC 2022-111 authorizing a special election with respect to the incurrence of indebtedness for the District and the levy of the Special Tax. Also on October 24, 2022, the then sole landowner in the District, the Master Developer (see “THE DEVELOPMENT AND THE DISTRICT — Land Ownership”), and thereby the sole qualified elector for the District, voted in favor of the incurrence of up to $75,000,000 principal amount of bonded indebtedness to finance the Improvements and approved the levy of Special Taxes and an appropriations limit for the District.
On October 24, 2022, the City Council adopted Ordinance No. 1597 providing for the levy of the Special Taxes on property in the District. On November 2, 2022, the City recorded a Notice of Special Tax Lien as Document No. 20221039610 in the Los Angeles County Recorder’s Office, with respect to the lien securing the payment of the Special Taxes to be levied on property in the District.
On December 18, 2024, the City Council authorized the City to enter into Joint Community Facilities Agreements with the County of Los Angeles Waterworks District No. 40, Antelope Valley Region (the “County Water Agency”) and with the Antelope Valley East Kern Water Agency with respect to various water system improvements needed for the development of the property in the District.
On November 6, 2024, the City Council, acting as the legislative body for the District, adopted Resolution No. CC 2024-___, of consideration to alter the then rate and method of apportionment of special taxes for the District, in order to change certain land use categories and Maximum Special Tax Rates for the Taxable Property in the District. On December 18, 2024, following a public hearing and vote by the Master Developer, as the sole 27 qualified elector of the District, the City Council adopted a Resolution declaring the results of the election, approved the Amended and Restated Rate and Method of Apportionment of Special Taxes for the District (referred to in this Limited Offering Memorandum as the “Rate and Method”), and directed the recording of an Amended and Restated Notice of Special Tax Lien for the District. The Amended and Restated Notice of Special Tax Lien was recorded in the Los Angeles County Recorder’s Office on December __, 2024.
On November 20, 2024, the City Council, acting as the legislative body for the District, adopted Resolution No. CC 2024- ___ authorizing the issuance of the 2025 Bonds, and approving related documents (including the Fiscal Agent Agreement) and actions.
The Improvements
The District is authorized to fund various public infrastructure improvements, including the following:
• Domestic water facilities, including but not limited to construction and installation of water distribution, treatment and storage facilities, pumpstations, irrigation lines and related appurtenances.
• Street improvements, including but not limited to construction and installation of streets, curbs, gutters, medians, traffic signals, street signs, street lights, entry monuments and appurtenances. • Sanitary sewer facilities, including but not limited to construction and installation of sewer lines and related appurtenances.
• Storm control facilities, including but not limited to pipes, basins and treatment facilities. • Installation of landscaping and related irrigation improvements in public rights of way, construction and development of parks, parkways and trails and installation of walls and fencing in public rights of way and related appurtenances.
• Recreational facilities, including fixtures and equipment. • Water system improvements to be designated by the Los Angeles County Waterworks District No. 40 and the Antelope Valley – East Kern Water Agency otherwise to be financed with annexation and capital facilities fees and connection charges related to improvements to be constructed in the Ritter Ranch development.
• Flood control facilities related to the downstream flood control project identified as the Amargosa Recharge Facility that otherwise would be financed with capital facilities fees, connection charges or other permit fees.
• Fire control and suppression facilities, including buildings and related facilities that otherwise would be financed with capital facilities fees, connection charges or other permit fees. • Sanitation district facilities, including sewer treatment, collection, transmission and reclamation facilities, sewer collection lines, wastewater treatment facilities, reclaimed water facilities, treated wastewater facilities and related and appurtenant facilities, and land, rights-of-way and easements necessary for any of such facilities, which facilities otherwise would be financed with capital facilities fees, connection charges or other permit fees.
The improvements eligible to be financed include the costs of design, engineering and planning, the costs of any environmental or other studies, surveys or reports, the cost of any required environmental mitigation, erosion control, grading, soils testing, permits, plan check and inspection fees, insurance, legal and related 28 overhead costs, coordination and supervision, City staff and consultant costs, and any other costs or appurtenances related to any of the public improvements to be financed or any of the foregoing.
See “THE DEVELOPMENT AND THE DISTRICT — Plan for Development in the District” for the Master Developer’s current budget for the costs of the infrastructure improvements for the District.
Limitations on Development in the District
The City and the Master Developer, defined herein below, are parties to the Phase 1 Interim Agreement – Ritter Ranch Development (A-7796), dated April 20, 2022 (the "Interim Agreement"). The Interim Agreement provides for the Master Developer to undertake specified work in furtherance of the development of Phase 1 of Ritter Ranch, and requires that specified portions of the work be completed before, in some cases the commencement of construction, and in other cases before certain certificates of occupancy are to be provided by the City for homes to be constructed in Phase 1.
Below is a summary of milestones specified in the Interim Agreement. The Agreement effectively requires, in particular:
1. No construction is to commence until:
a. The City Council has confirmed that the Master Developer Phase 1 Entitlements comply with CEQA and mitigation as provided in the Final EIR or any other subsequent, supplemental, addendum or new environmental document.
b. The Master Developer shall provide the City with appropriate Subdivision Improvement Agreements with supporting surety bonds securing the applicable costs of improvements related to the applicable grading, street, sewer, drainage, or other plans for Elizabeth Lake Road, Ranch Center Drive required by Final Maps 51508-01 and 51508-02 and not otherwise covered In the Interim Agreement, including, without limitation, improvements for Final Map No 51508-21, Ranch Center Drive & Elizabeth Lake Road Undergrounding and Elizabeth Lake Road Street Improvements, in the amounts agreed between the Master Developer and the City.
c. The Master Developer shall provide City with appropriate Subdivision Improvement Agreements with supporting surety bonds for the costs of improvements related to applicable grading, street, sewer, drainage, or other plans for Westland Drive and Ritter Ranch Road required by Final Map 51508-01 and 51508-2, and not otherwise covered In the Interim Agreement, including, without limitation, the Westland Drive & RRR Streetlight Improvements.
d. The parties shall have executed appropriate Subdivision Improvement Agreements and the Master Developer has provided the City with appropriate Surety Bonds to replace the Lien Contracts.
2. Prior to the issuance of the 321st building permit in Phase 1A:
a. The Master Developer shall complete, in their entirety, the Ranch Center Drive & Elizabeth Lake Road Undergrounding and ELR Street Improvements.
b. The Master Developer shall complete the Westland Drive & Ritter Ranch Road Street Light Improvements, in their entirety.
The sources of funds to pay for certain of the work required by the Interim Agreement include funds held in the Improvement Fund ($2,755,967.79 as of February 22, 2024), and in the Elizabeth Lake Road Escrow. 29 [DESCRIPTION OF CONDITIONS WHICH HAVE CURRENTLY BEEN SATISFIED TO COME] The Master Developer
The information provided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the 2025 Bonds and the District. No assurance can be given, however, that the Master Developer will or will not retain ownership of the property within the District. There may be material adverse changes in this information after the date of this Limited Offering Memorandum. Neither the 2025 Bonds nor any of the Special Tax are personal obligations of any property owner within the District and, in the event that any property owner defaults in the payment of its Special Tax, the City may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof. The 2025 Bonds are secured solely by the Special Tax Revenues and amounts on deposit in certain of the funds and accounts maintained by the Fiscal Agent under the Fiscal Agent Agreement. See “SPECIAL RISK FACTORS” for a discussion of certain of the risk factors that should be considered in evaluating the investment quality of the 2025 Bonds. The following information has been provided by the Master Developer. No representation is made by the City or the Underwriter as to the accuracy or adequacy of such information so provided.
RdR Development Holdings, LLC, a Delaware limited liability company (referred to in this Limited Offering Memorandum as the “Master Developer”) is the owner and developer of the Ritter Ranch property and the remainder of the Development. The Master Developer is a wholly-owned subsidiary of PHCC, LLC (d/b/a Preston Hollow Community Capital) (“PHCC”). Founded in 2014 and headquartered in Dallas, Texas, PHCC is an independent specialty finance company with approximately $1.6 billion in permanent equity capital. PHCC is not guaranteeing any of the Master Developer’s obligations with respect to the Development or any other obligations incurred in connection with the 2025 Bonds. Preston Hollow Community Capital maintains a website at phccap.com with information regarding its activities.
The foregoing Internet address is included for reference only, and the information on the Internet site is not a part of this Limited Offering Memorandum and is not incorporated by reference into this Limited Offering Memorandum. No representation is made in this Limited Offering Memorandum as to the accuracy or adequacy of the information contained on the Internet site. Neither of the Master Developer nor PHCC is obligated to advance funds to pay for development or construction costs or to pay ad valorem property taxes or the Special Taxes, and investors should not rely on the information contained on such internet site in evaluating whether to buy, hold or sell the 2025 Bonds.
Financing Plan. To date, the Master Developer has financed its land acquisition and site development costs related to its property in the District through internally generated funds. The Master Developer expects to use internally generated funds, including cash generated from its land development and property sales operations, along with proceeds of the 2025 Bonds, to complete development of its property in the District.
Although the Master Developer expects to have sufficient funds available to complete the proposed development in the District, there can be no assurance that amounts necessary to fund the planned development of the property within the District will be available to the Master Developer when needed. Neither the Master Developer, nor any of its related entities, is under any legal obligation of any kind to expend funds for the development of the property in the District, or the payment of ad valorem property taxes or the Special Taxes.
Any contributions by the Master Developer or any other entity or person to fund the costs of such development are entirely voluntary.
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 the Master Developer is able to complete the construction of infrastructure improvements and sell property in the District to homebuilders or homebuyers and ultimately demand by and the ability of individuals to purchase homes within the District. Such events and factors could include a renewed increase in inflation and interest rates, 30 possible supply chain issues, further impacts of the COVID-19 pandemic and global market instability caused by the wars in Ukraine and in Israel. Any adverse impact of the foregoing and other economic factors on the development in the District and the real estate market in general cannot be predicted.
Description of the District
The District was formed by the City Council pursuant to proceedings conducted under the Law on October 24, 2022 with a maximum bonded indebtedness of $75,000,000. See “THE DEVELOPMENT AND THE DISTRICT — History of the District.” The District includes approximately 236 acres consisting of Phase 1A and Phase 1B of the Development, expected to be improved with a total of 553 detached single family homes in Phase 1A and 135 detached single family homes and 492 attached, detached or condominium single family homes in Phase 1B. The Master Developer has obtained land use approvals for the 553 single family homes to be constructed in Phase 1A, and land use approvals are pending approval by the City for the 135 single family detached homes and the 492 attached, detached or condominium single family homes to be constructed in Phase 1B. When used in this Limited Offering Memorandum, “homes” is meant to refer to both detached and attached single-family homes, condominiums and townhomes.
Certain public improvements necessary for the development of Phase 1A and Phase 1B have been completed and additional infrastructure work is expected to begin after the 2025 Bonds are issued, and substantial additional infrastructure improvements are needed before homes can be completed and sold.
Home construction has not yet commenced, but is projected by the Master Developer to begin, following the completion of necessary infrastructure improvements, with an expected buildout of the property in the District to occur over a five year period. See “THE DEVELOPMENT AND THE DISTRICT — Description of the District,” and “ — Plan for Development in the District” for additional information concerning development occurring and to occur in the District.
The next page contains a current site plan for the property in the District provided by the Master Developer. Note that the site plan is subject to change at any time without any requirement for notice to or approval by the Bondowners.
31 Site Plan for the Property in the
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
as of March, 2024
32 33
Land Ownership
Currently all of the property in the District is owned by the Master Developer. The Master Developer may continue with the development of the property in the District, or may sell all or a portion of the property in the District to one or more homebuilders. See “SPECIAL RISK FACTORS — Concentration of Ownership” and “ — Failure to Complete or Delay in Completion of the Development.” The Master Developer has advised that it is in the process of negotiating with a homebuilder with respect to the sale of lots in the District. No assurance can be given with respect to if and when any such sale will occur.
Plan for Development in the District
The Master Developer has provided the following Table 3 that depicts the Master Developer’s current budget for the infrastructure needed for the development of the property in the District.
TABLE 3
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Estimated Infrastructure Development Costs and Timing for Development Backbone In-Tracts Total
Estimated
Timing
CONSTRUCTION ITEMS
Water Facilities & Tank $21,196,991 $ - $ 21,196,991 Forthcoming Grading 2,224,777 2,118,845 4,343,622
Erosion Control 105,140 887,129 992,269
Environmental Mitigation 50,000 - 50,000
Amenities - Entries 568,323 1,184,455 1,752,778
Landscaping & Irrigation 10,970,108 4,807,252 15,777,359 Parks 14,536,488 - 14,536,488
Trails 461,470 - 461,470
Fencing, Walls, Entry Monuments 270,753 2,134,182 2,404,935 Sanitary Sewer 962,941 4,724,894 5,687,835
Sanitary Sewer Lift Station 524,700 - 524,700
Domestic Water 3,051,852 6,498,743 9,550,595
Raw Water System 355,000 - 355,000
Storm Drainage 465,564 1,820,172 2,285,737
Street Improvements 6,200,104 10,085,877 16,285,981
Traffic Signals 400,000 - 400,000
Street Lights 4,743,375 1,579,754 6,323,129
Utilities 6,996,000 7,385,883 14,381,883
Utilities - Conversion 2,080,000 - 2,080,000
Bond Exoneration 186,003 601,755 787,758
Contingency 4,100,330 3,570,567 7,670,897 TOTAL CONSTRUCTION $80,449,919 $47,399,508 $127,849,427 TOTAL SERVICES & FEES(1) $ 7,094,866 $44,577,616 $ 51,672,483 GRAND TOTAL $87,544,786 $91,977,124 $179,521,910
(1) Includes all soft costs, consulting services, bonds, entitlement and planning fees, permits, impact fees, and related contingencies.
The infrastructure costs set forth in Table 3 are based on estimates. No assurance can be given that the development costs will be in the amounts set forth in Table 3, or will not otherwise significantly change if the Master Developer’s current plans for the development of the property in the District change. 34 Projected Special Tax Revenues
The following Table 4 sets forth the expected Maximum Special Taxes that can be levied on the Taxable Property in the District for fiscal year 2025-26, assuming all of the Taxable Property is classified as Developed Property based on the Master Developer’s current plans for the development of the property in the District, including the current projected sizes of and number of respective homes of each size to be constructed in the District. Developed Property, as defined in the Rate and Method, means, in any Fiscal Year, all Taxable Property in the District for which a Building Permit for new construction was issued by the City prior to March 1 of the preceding Fiscal Year. Currently, all of the Taxable Property in the District is classified as Undeveloped Property under the Rate and Method.
TABLE 4
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Expected Land Uses and Related Fiscal Year 2025-26
Developed Maximum Special Tax Revenue at Buildout
For Tracts ____, ____ and _________
Expected Land Uses
(1)
Building
Square Feet Lot Square Feet
Assigned Per
Unit Special
Tax for
Developed
Property
(2)
Expected
Units
Expected
Developed
Maximum
Special Taxes
Single Family Attached Property >= 1,900 BSF N/A
Single Family Attached Property < 1,900 BSF N/A
Single Family Detached Property >= 2,600 BSF <= 5,999 LSF Single Family Detached Property = 2,300 - < 2,600 BSF <= 5,999 LSF Single Family Detached Property < 2,300 BSF <= 5,999 LSF Single Family Detached Property >= 3,300 BSF > 5,999 - = 6,999 LSF Single Family Detached Property = 3,000 - < 3,300 BSF > 5,999 - = 6,999 LSF Single Family Detached Property < 3,000 BSF > 5,999 - = 6,999 LSF Single Family Detached Property >= 3,300 BSF > 6,999 LSF Single Family Detached Property < 3,300 BSF > 6,999 LSF Totals
(1) Expected Land Uses are based on the Rate and Method. (2) On each July 1, commencing on July 1, 2026 and ending on July 1, 2038, the Assigned Special Tax for Developed Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.
Source: RdR Development Holdings, LLC, NBS.
35 For All Other Tracts in the District
Expected Land Uses
(1)
Building
Square Feet Lot Square Feet
Assigned Per
Unit Special
Tax for
Developed
Property
(2)
Expected
Units
Expected
Maximum
Special Taxes
Single Family Attached Property >= 1,900 BSF N/A $ 2,692.56 227 $ 611,211.12 Single Family Attached Property < 1,900 BSF N/A 2,140.10 265 567,126.50 Single Family Detached Property >= 2,600 BSF <= 5,999 LSF 3,519.67 0 0.00 Single Family Detached Property = 2,300 - < 2,600 BSF <= 5,999 LSF 3,172.18 354 1,122,951.72 Single Family Detached Property < 2,300 BSF <= 5,999 LSF 2,704.02 124 342,004.40 Single Family Detached Property >= 3,300 BSF > 5,999 - = 6,999 LSF 4,169.76 0 0.00 Single Family Detached Property = 3,000 - < 3,300 BSF > 5,999 - = 6,999 LSF 3,899.46 0 0.00 Single Family Detached Property < 3,000 BSF > 5,999 - = 6,999 LSF 3,493.50 126 448,984.62 Single Family Detached Property >= 3,300 BSF > 6,999 LSF 4,507.38 84 386,192.52 Single Family Detached Property < 3,300 BSF > 6,999 LSF 3,958.62 0 0.00 Totals 1180 $ 3,478,470.88
Grand Total
(1) Expected Land Uses are based on the Rate and Method. (2) On each July 1, commencing on July 1, 2026 and ending on July 1, 2038, the Assigned Special Tax for Developed Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.
Source: RdR Development Holdings, LLC, NBS.
The expected land uses, building square footage and expected number of units are subject to change and no assurance can be given with respect to what those will be at the time of the final buildout of the property in the District.
The following Table 5 allocates the principal amount of the 2025 Bonds to the current 12 County Assessor’s parcels in the District based on their expected maximum Special Taxes for Fiscal Year 2025-26.
TABLE 5
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Expected Fiscal Year 2025-26 Maximum Special Tax and Bond Allocation (Undeveloped Property)
APN(1)
Undeveloped
Acreage(2)
Estimated
Maximum
FY 2025-26
Special Tax(2)
Percent of
Estimated
Maximum
FY 2025-26
Special Tax
Pro Rata
Share of
2025 Bonds(4)
3206-020-017 95.311 $2,234,208.98 40.54% $12,627,544.06 3206-026-005 4.58 107,360.93 1.95 606,794.09
3206-026-007 20.884 489,547.07 8.88 2,766,875.07
3206-027-002 12.102 283,686.01 5.15 1,603,367.27
3206-027-004 19.705 461,909.83 8.38 2,610,671.97
3206-027-005 4.059 95,148.03 1.73 537,767.95
3206-027-006 26.341 617,465.97 11.20 3,489,860.96
3206-027-007 21.878 512,847.67 9.31 2,898,567.94
3206-027-008 3.595 84,271.29 1.53 476,293.62
3206-027-009 6.368 149,273.88 2.71 843,682.27
3206-027-010 14.688 344,305.08 6.25 1,945,980.71
3206-027-012 5.605 131,388.21 2.38 742,594.08
36 Totals 235.116 $5,511,412.94 100.00% $31,150,000.00
* Preliminary, subject to change.
(1) As of October 2024, all property in the District was owned by RdR Development Holdings, LLC. See “The Development and the District - Land Ownership.”
(2) All property in the District is anticipated to be classified as Undeveloped Property for the Fiscal Year 2025/26 special tax levy, based on the definitions in the Rate and Method of Apportionment for the CFD. (3) Based on Maximum Special Taxes assuming all parcels are classified as Undeveloped Property for the Fiscal Year 2025/26 special tax levy.
(4) Allocated based on the proportionate share of the Fiscal Year 2025/26 Maximum Special Taxes for Undeveloped Property by parcel.
Sources: Los Angeles County Assessor's Office; Hilltop Securities Inc.; NBS Property Values
The value of property within the District is an important factor in determining the investment quality of the 2025 Bonds. If a property owner defaults in the payment of the Special Tax, the City’s primary remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax.
The Special Tax is not a personal obligation of the owners of the property. A variety of economic, political, and natural occurrences incapable of being accurately predicted can affect property values. See “SPECIAL RISK FACTORS — Property Value.”
Set forth in Table 6 below are projected Fiscal Year 2024-25 County assessed values of each of the current 12 parcels in the District.
TABLE 6
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Assessed Value of Taxable Property
APN(1)
Undeveloped
Acreage(2)
Estimated
Fiscal Year 2024-25
Assessed Value(3)
Pro Rata Share
of 2025 Bonds(4)*
Assessed Value
to Lien*
3206-020-017 95.311 $488,155.00 $12,627,544.06 0.039:1
3206-026-005 4.580 10,612.00 606,794.09 0.017:1
3206-026-007 20.884 107,181.00 2,766,875.07 0.039:1
3206-027-002 12.102 62,610.00 1,603,367.27 0.039:1
3206-027-004 19.705 100,814.00 2,610,671.97 0.039:1
3206-027-005 4.059 21,224.00 537,767.95 0.039:1
3206-027-006 26.341 119,916.00 3,489,860.96 0.034:1
3206-027-007 21.878 96,569.00 2,898,567.94 0.033:1
3206-027-008 3.595 18,039.00 476,293.62 0.038:1
3206-027-009 6.368 32,897.00 843,682.27 0.039:1
3206-027-010 14.688 72,161.00 1,945,980.71 0.037:1
3206-027-012 5.605 26,530.00 742,594.08 0.036:1
Totals 235.116 $1,156,708.00 $31,150,000.00 0.037:1
* Preliminary, subject to change.
(1) As of October 2024, all property in the District was owned by RdR Development Holdings, LLC. See “The Development and the District - Land Ownership.”
(2) All property in the District is anticipated to be classified as Undeveloped Property for the Fiscal Year 2025/26 special tax levy, based on the definitions in the Rate and Method of Apportionment for the CFD. (3) Per the Los Angeles Assessor’s roll data for fiscal year 2024/25, with a January 1 valuation date. Assessed value does not reflect any changes made to valuation after July 1, 2024 as a result of assessment appeal, correction or any other changes. (4) Allocated based on the proportionate share of the Fiscal Year 2025/26 Maximum Special Taxes for Undeveloped Property by parcel.
Sources: Los Angeles County Assessor's Office; Hilltop Securities Inc.; NBS.
The Master Developer has advised that it expects that, given the land use entitlements that have been obtained for Phase 1A and are in process for the remainder of Phase 1B (see “THE DEVELOPMENT AND THE 37 DISTRICT — Description of the District”), and the expected use of proceeds of the 2025 Bonds to finance infrastructure improvements incident to the development of the property in the District (see “THE DISTRICT — The Improvements”), the fair market value of the Taxable Property may be significantly greater than its current County-assessed value, and the fair market value of the Taxable Property will in any event increase as infrastructure improvements are completed and homes are constructed in the District. However, no representation is made as to the current actual fair market value of the Taxable Property subject to the levy of Special Taxes. See “SPECIAL RISK FACTORS — Property Value.”
Direct and Overlapping Governmental Obligations
General. Presently, land within the District is subject to approximately $657,196,123 of total direct and overlapping tax and assessment debt, in addition to the $31,150,000 initial principal amount of the 2025 Bonds.
The land within the District is also subject to the levy of special taxes by the City for its Community Facilities District No. 2022-2 (Ritter Ranch Maintenance Services) (“CFD 2022-2”), the boundaries of which are coterminous with those of the District.
To repay direct and overlapping debt, the owners of the land within the District must pay the annual Special Taxes and the general property tax levy. The ability of the City to collect the Special Taxes could be adversely affected if additional debt is issued with respect to the Taxable Property in the District. The land, at any time, could become subject to additional debt with a parity claim on property values in the event of foreclosure either by the formation of additional community facilities districts or the imposition of other taxes and assessments by public agencies other than the City on behalf of the property owners within the District. The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of the landowners to pay the Special Taxes and may increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes.
Direct and overlapping tax and assessment debt as of November 1, 2024 is shown in the following Table 7 compiled by California Municipal Statistics, Inc. Neither the City nor the Underwriter has independently verified the information in the Table and they make no representation as to its completeness or accuracy. 38 TABLE 7
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Direct and Overlapping Tax and Assessment Debt Summary
2024-25 Assessed Valuation: $18,211,962,847
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 11/1/24 Antelope Valley Joint Community College District 36.769% $151,773,577 Antelope Valley Union High School District 41.737 6,014,249 Acton-Agua Dulce Unified School District 0.009 600
Eastside Union School District 22.588 3,215,402
Lancaster School District 0.482 296,007
Palmdale School District 94.722 184,465,924
Westside Union School District 40.612 12,465,381
Palmdale School District Community Facilities District No. 90-1 98.844 70,761,207 Westside Union School District Community Facilities Districts 100.000 8,595,000 City of Palmdale Community Facilities Districts 100.000 34,653,749 City of Palmdale Assessment District No. 2006-1 100.000 860,000 City of Palmdale Street Lighting and Maintenance Assessment Districts 100.000 6,986,218 California Municipal Finance Authority Community Facilities District No. 2022-08 100.000 6,425,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $486,512,314 DIRECT AND OVERLAPPING GENERAL FUND DEBT:
Los Angeles County General Fund Obligations 0.866% $ 28,013,708 Los Angeles County Superintendent of Schools Certificates of Participation 0.866 20,193 Antelope Valley Joint Community College District Certificates of Participation 36.769 3,647,485 Acton-Agua Dulce Unified School District Certificates of Participation 0.009 116 Antelope Valley Union High School District General Fund Obligations 41.737 1,909,468 Lancaster School District Certificates of Participation 0.482 27,233 Palmdale School District Certificates of Participation 94.722 15,969,997 City of Palmdale General Fund Obligations 100.000 72,071,003(1) TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $121,659,203 OVERLAPPING TAX INCREMENT DEBT:
Successor Agency to Palmdale Redevelopment Agency 100.000 % $49,024,606 TOTAL OVERLAPPING TAX INCREMENT DEBT $49,024,606
COMBINED TOTAL DEBT $657,196,123(2)
Ratios to 2024-25 Assessed Valuation:
Direct Debt ($72,071,003).....................................................................0.40% Total Overlapping Tax and Assessment Debt .........................................2.67% Combined Total Debt..............................................................................3.61% Ratio to Successor Agency Redevelopment Incremental Valuation ($7,661,588,123):
Overlapping Tax Increment Debt............................................................0.64% (1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
CFD 2022-2. At the time of formation of the District, the City Council also formed CFD 2022-2, which has boundaries that are coterminous with the boundaries of the District. The City is authorized to levy special taxes for CFD 2022-2 to fund municipal services, including maintenance and lighting of streets, roadways, parks, parkways, trails and open space; flood and storm protection services; police protection, fire protection and suppression services and ambulance and paramedic services; and maintenance and irrigation of landscaping in public rights of way; as well as administrative expenses of CFD 2022-2. The maximum special tax that may be levied for Fiscal Year 2023-24 for single family residential detached property is $1,067.00 per home, for single family residential attached property is $993.00 per home, for undeveloped property is $9,295.00 per acre; and for accessory dwelling units is approximately 40% of the otherwise special tax for a related home. On July 1 of each 39 Fiscal Year, commencing on July 1, 2025, the maximum special tax increases by an amount equal to the Tax Escalation Factor, being between 2% and 6%. The maximum special tax rates are subject to an additional increase upon the earlier of Fiscal Year 2084/85 or when all of the Bonds have been repaid. The lien on the Taxable Property in the District securing the payment of the Special Taxes pledged to the repayment of the 2025 Bonds is co-equal with the lien securing the payment of the special taxes levied for CFD 2022-2.
Sample Tax Bill. Set forth below are Tables 8 and 9, which provide, for a home classified as Developed Property, Land Use Class 2-A in the Rate and Method and Land Use Class 2-B in the Rate and Method, respectively, using as the sales price the anticipated typical land and structure assessed value for single family residential parcels within the District, the expected property tax bill that would be received by a respective owner of the applicable Taxable Property for fiscal year 2024- 25. 40 TABLE 8
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Sample Tax Bill for Single Family Residential Property
for Fiscal Year 2024-25
Land Use Class 2-A
Residential Floor Area < 1,900 BSF
Amount used for calculation purposes (in square feet) 1,500 Estimated Property Characteristics
Average Assessed Value
(1)
$488,000.00
Homeowner's Exemption (7,000.00)
Estimated Net Assessed Value $481,000.00
Ad Valorem Tax Rate
General Purpose Ad Valorem Tax (Proposition 13) 1.000000% $4,810.00 Community College 0.043355% 208.54
Elementary Schools 0.058077% 279.35
High Schools 0.020988% 100.95
Special Water 0.070490% 339.06
Total Ad Valorem Taxes 1.192910% $5,737.90
Special/Direct Assessments, Taxes and Charges
PALMDALE CFD 2022-3(2) $2,140.10
PALMDALE CFD 2022-2(2) 1,012.86
RPOSD MEASURE A(3) 27.15
CNTY SAN DIST 20 466.89
TRAUMA/EMERG SRV(3) 75.00
LA CO FIRE DEPT 76.65
ANTELOPE MOSQ AB 6.00
WATER STANDBY 40 15.00
PALMDALE SEWER 103.63
Total Special/Direct Assessments, Taxes and Charges $3,923.28 Total Estimated Annual Property Taxes $9,661.18
Effective Tax Rate 1.9797%
(1) Based upon anticipated typical land and structure assessed value for single family residential parcels within the District.
(2) Represents the amount of special tax based on the Assigned Special Tax rates shown in Table 1 of the Amended and Restated RMA for the district. The special tax is not levied in Fiscal Year 2024/25. (3) Calculation based on Residential Floor area as shown above.
Note: Estimate of annual property taxes does not include any new special financing district fees, assessments, and/or special taxes imposed by the state, county, or local agencies that are yet to be established or any future annexation into existing special financing districts required by conditions of approval of development or any other imposed requirement. Information contained within is based upon records and official documents provided by various governmental agencies and third-party sources.
Sources: Alliant Tax Research.
41 TABLE 9
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Sample Tax Bill for Single Family Residential Property
for Fiscal Year 2024-25
Land Use Class 2-B
Residential Floor Area 2,300 - 2,600 BSF
Amount used for calculation purposes (in square feet) 2,450 Average Lot Size < 5,000 s.f.
Amount used for calculation purposes (in square feet) 4,900 Estimated Property Characteristics
Average Assessed Value
(1)
$655,000.00
Homeowner's Exemption (7,000.00)
Estimated Net Assessed Value $648,000.00
Ad Valorem Tax Rate
General Purpose Ad Valorem Tax (Proposition 13) 1.000000% $6,480.00 Community College 0.043355% 280.94
Elementary Schools 0.058077% 376.34
High Schools 0.020988% 136.00
Special Water 0.070490% 456.78
Total Ad Valorem Taxes 1.192910% $7,730.06
Special/Direct Assessments, Taxes and Charges
PALMDALE CFD 2022-3(2) $3,172.18
PALMDALE CFD 2022-2(2) 1,088.34
RPOSD MEASURE A(3) 44.35
CNTY SAN DIST 20 622.52
TRAUMA/EMERG SRV(3) 122.50
LA CO FIRE DEPT 76.65
ANTELOPE MOSQ AB 6.00
WATER STANDBY 40 15.00
PALMDALE SEWER 103.63
Total Special/Direct Assessments, Taxes and Charges $5,251.17 Total Estimated Annual Property Taxes $12,981.23
Effective Tax Rate 1.9819%
(1) Based upon anticipated typical land and structure assessed value for single family residential parcels within the District.
(2) Represents the amount of special tax based on the Assigned Special Tax rates shown in Table 1 of the Amended and Restated RMA for the district. The special tax is not levied in Fiscal Year 2024/25. (3) Calculation based on Residential Floor area as shown above.
Note: Estimate of annual property taxes does not include any new special financing district fees, assessments, and/or special taxes imposed by the state, county, or local agencies that are yet to be established or any future annexation into existing special financing districts required by conditions of approval of development or any other imposed requirement. Information contained within is based upon records and official documents provided by various governmental agencies and third-party sources.
Sources: Alliant Tax Research.
42 Other Potential Debt. The City has no control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the Taxable Property within the District which may be incurred in the future by other governmental agencies having jurisdiction over all or a portion of the Taxable Property within the District. Furthermore, nothing prevents the owners of Taxable Property within the District from consenting to the issuance of additional debt by other governmental agencies which would be secured by taxes or assessments on a parity with the Special Taxes. To the extent such indebtedness is payable from assessments, other special taxes levied pursuant to the Law or taxes, such assessments, special taxes and taxes will be secured by liens on the Taxable Property within the District on a parity with the lien of the Special Taxes.
Accordingly, the debt on the property within the District could increase, without any corresponding increase in the value of the property therein, and thereby severely reduce the estimated value-to-lien ratio that exists at the time the 2025 Bonds are issued. The imposition of such additional indebtedness could reduce the willingness and ability of the owners of the Taxable Property within the District to pay the Special Taxes when due. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.” Moreover, in the event of a delinquency in the payment of Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of Taxable Property with delinquent Special Taxes would be sufficient to pay the delinquent Special Taxes. See “SPECIAL RISK FACTORS — Property Value.” Projected Debt Service Coverage
Set forth in Table 10 below is the projected Maximum Special Taxes for Fiscal Year 2025-26 that would be realized from the 1,180 homes to be built in the District that will to be subject to the levy of Special Taxes, assuming no delinquencies in the payment of Special Taxes, that could be available to pay the debt service on the 2025 Bonds, and the resulting debt service coverage. The Maximum Special Taxes that can be levied on Taxable Property in the District in any Fiscal Year increases by two percent (2%) over the Maximum Special Taxes for the prior Fiscal Year through Fiscal Year 2038-39. See “SECURITY FOR THE 2025 BONDS — Special Taxes” and “ — Summary of Rate and Method.”
43 TABLE 10
City of Palmdale
Community Facilities District No. 2022-3
(Ritter Ranch Phase 1 Public Facilities)
Developed Property Maximum Special Tax and
Estimated Debt Service Coverage at Buildout
Bond Year
Ending
September 1st
Developed
Property
Maximum
Special Tax(1)
Minimum
Administrative
Expense
Requirement(2)
Pledged Special
Tax Revenues
2025 Bonds
Debt Service*
Estimated
Maximum Special
Capacity(3)*
2025(4) $3,478,471 $ 0 $ 0 N/A
2026(4) 3,548,040 102,000 2,024,750 1.70
2027 3,619,001 104,040 2,024,750 1.74
2028 3,691,381 106,121 2,024,750 1.77
2029 3,765,209 108,243 2,044,750 1.79
2030 3,840,513 110,408 2,043,450 1.83
2031 3,917,323 112,616 2,092,150 1.82
2032 3,995,670 114,869 2,102,600 1.85
2033 4,075,583 117,166 2,152,075 1.84
2034 4,157,095 119,509 2,192,975 1.84
2035 4,240,237 121,899 2,235,625 1.84
2036 4,325,041 124,337 2,284,700 1.84
2037 4,411,542 126,824 2,329,550 1.84
2038 4,499,773 129,361 2,375,175 1.84
2039 4,589,768 131,948 2,421,250 1.84
2040 4,589,768 134,587 2,417,450 1.84
2041 4,589,768 137,279 2,416,700 1.84
2042 4,589,768 140,024 2,413,675 1.84
2043 4,589,768 142,825 2,413,375 1.84
2044 4,589,768 145,681 2,410,475 1.84
2045 4,589,768 148,595 2,404,975 1.85
2046 4,589,768 151,567 2,406,875 1.84
2047 4,589,768 154,598 2,400,525 1.85
2048 4,589,768 157,690 2,401,250 1.85
2049 4,589,768 160,844 2,398,400 1.85
2050 4,589,768 164,061 2,391,975 1.85
2051 4,589,768 167,342 2,391,975 1.85
2052 4,589,768 170,689 2,387,750 1.85
2053 4,589,768 174,102 2,384,300 1.85
2054 4,589,768 177,584 2,381,300 1.85
2055 4,589,768 181,136 2,378,425 1.85
2026 4,589,768 184,759 2,375,350 1.85
2057 4,589,768 188,454 2,371,750 1.86
2058 4,589,768 192,223 2,367,300 1.86
2059 4,589,768 196,068 2,366,675 1.86
2060 4,589,768 199,989 2,359,225 1.86
2061 4,589,768 203,989 2,354,950 1.86
2062 4,589,768 208,069 2,353,200 1.86
2063 4,589,768 212,230 2,348,325 1.86
2064 4,589,768 216,474 2,348,325 1.86
44 * Preliminary, subject to change.
(1) Assigns the Maximum Special Tax for Developed Property to all expected land uses. Developed Property means, in any fiscal year, all taxable property in the CFD for which a building permit for new construction was issued by the City prior to March 1 of the preceding fiscal year. On each July 1, commencing on July 1, 2026 and ending on July 1, 2038, the Assigned Special Tax for Developed Property shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. (2) Equal to $100,000 for Fiscal Year 2025/26, increasing each Fiscal Year by an additional 2% of the amount in effect for the prior Fiscal Year.
(3) Developed Property Maximum Special Taxes, less Minimum Administrative Expense Requirement, divided by scheduled 2025 Bonds debt service. Pursuant to Section 53321(d) of the Government Code, 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 of default by the owner of any other Assessor's parcel within the District by more than ten percent above the amount that would have been levied in the fiscal year had there never been any such delinquencies of defaults. (4) For the bond years ending September 1, 2025 and September 1, 2026, the debt service on the 2025 Bonds will be funded by capitalized interest. See “PLAN OF FINANCING—Estimated Sources and Uses of Funds.” Sources: Hilltop Securities Inc.; NBS
SPECIAL RISK FACTORS
The following is a description of certain risk factors affecting the District, the property owners in the District, the parcels subject to the levy of Special Taxes and the payment of and security for the 2025 Bonds. The following discussion of risks is not meant to be a complete list of the risks associated with the purchase of the 2025 Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors along with all other information in this Limited Offering Memorandum in evaluating the investment quality of the 2025 Bonds. There can be no assurance that other risk factors will not become material in the future.
INVESTMENT IN THE 2025 BONDS IS LIMITED TO SOPHISTICATED INVESTORS WITH
THE EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND EVALUATE THE HIGH DEGREE OF RISK INHERENT IN THE INVESTMENT. DUE IN PART TO THE CURRENT STATUS OF THE LAND IN THE DISTRICT, PURCHASE OF THE 2025 BONDS WILL CONSTITUTE AN
INVESTMENT SUBJECT TO A HIGH DEGREE OF RISK, INCLUDING THE RISK OF
NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF THE INVESTMENT. THERE CAN BE NO ASSURANCE THAT THE PROPERTY OWNERS IN THE DISTRICT WILL PAY THE SPECIAL TAXES LEVIED ON SUCH PROPERTY WHEN DUE. SEE “SPECIAL RISK FACTORS” HEREIN.
TRANSFERS OF THE 2025 BONDS ARE LIMITED TO “QUALIFIED INSTITUTIONAL BUYERS” WITHIN THE MEANING OF THE RULE 144A OF THE SECURITIES ACT. IN MAKING
AN INVESTMENT DECISION, PURCHASERS MUST RELY ON THEIR OWN EXAMINATION OF THE DISTRICT AND THE TERMS OF THE 2025 BONDS, INCLUDING THE MERITS AND RISKS INVOLVED. THE INFORMATION AND EXPRESSION OF OPINION HEREIN ARE SUBJECT TO
CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS LIMITED OFFERING MEMORANDUM NOR ANY SALE MADE IN CONNECTION WITH THE 2025 BONDS SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE HEREOF.
No General Obligation of the City or the District
The City’s obligations under the 2025 Bonds and under the Fiscal Agent Agreement are limited obligations of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund. The 2025 Bonds are neither general or special obligations of the City nor general obligations of the District, but are limited obligations of the City for the District payable solely from the revenues and funds pledged therefor and under the Fiscal Agent Agreement. Neither the faith and credit nor the taxing power of the City or the State of California or of any of their respective political subdivisions is pledged to the payment of the 2025 Bonds. 45 Concentration of Ownership
All of the Taxable Property in the District is currently owned by the Master Developer. Accordingly, until it sells property in the District to merchant builders or homebuyers, the Master Developer will be responsible for the payment of all of Special Taxes levied on the Taxable Property in the District. The lack of diversity in ownership of property in the District, and the consequent lack of diversity in the obligation to pay the Special Taxes levied in the District, represents significant risk to the owners of the 2025 Bonds in that the ability of the Master Developer to pay the Special Taxes levied on property it owns may depend, in part, on the successful sales of homes in the District.
Failure of the Master Developer to pay the annual Special Taxes when due on the property in the District that it owns could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of the delinquent parcels of land upon a foreclosure or otherwise. In that event, there could be a default in payments of the principal of, and interest on, the 2025 Bonds. See “SPECIAL RISK FACTORS — Insufficiency of Special Taxes.”
Litigation Affecting the Development of Property in the District The Leona Valley Town Council, a California non-profit corporation (the “LVTC”) filed a lawsuit in the Superior Court of the State of California for the County of Los Angeles (Case No. 22 ST CP 01932) naming the City and the City Council as defendants. The complaint in the lawsuit alleged certain violations of the California Environmental Quality Act (“CEQA”). The lawsuit sought to have the Superior Court set aside and vacate the City’s approval of the development the Master Developer plans to conduct in the District, that the Court mandate that the City conduct a subsequent environmental impact report for the development and that the City be enjoined from issuing any permits or approvals for the development of the property in the District.
On February 26, 2024, the Court issued an order denying the LVTC’s petition for writ of mandate. On April 26, 2024, LVTC, the City and the Master Developer entered into a Settlement Agreement which resolved, settled and extinguished all claims and cross claims of the parties. There are no remaining claims or pending proceedings with respect to this matter.
Failure to Complete or Delay in Completion of the Development The completion of the development of the planned 1,180 homes in the District requires the completion of certain on-site and off-site improvements and the construction of the homes. The Master Developer currently estimates that the buildout of the District will occur over a five year period. No assurance can be given that the Master Developer will complete the construction of all of the 1,180 homes as currently expected or at all.
Payment of the Special Tax is not a Personal Obligation The Master Developer and any homebuilders or homebuyers that purchase Taxable Property in the District are not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation that is secured only by a lien against the Taxable Property on which it is levied. If the value of a Taxable Property is not sufficient to secure fully the payment of the Special Tax levied and to be levied on it, the City has no recourse against the owners of the Taxable Property.
Property Value
If the Master Developer, or another future owner of property in the District, defaults in the payment of the Special Tax, the only legal remedy is the institution of a superior court action to foreclose on the delinquent Taxable Property in an attempt to obtain funds with which to pay the Special Tax. The value of the Taxable Property in the District could be adversely affected by economic factors beyond the City’s control, 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 46 market value of residential property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other expenses of owning Taxable Property, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, wildfire, earthquakes, tsunamis and floods), which may result in uninsured losses.
See “SPECIAL RISK FACTORS — Natural Disasters and Potential Drought Conditions.” No assurance can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. Although the Law authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Law does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale. The City is not obligated and does not expect to be a bidder at any such foreclosure sale. See “SECURITY FOR THE 2025 BONDS — Covenant for Superior Court Foreclosure” and “SPECIAL RISK FACTORS — Proceeds of Foreclosure Sales.”
Increasing Mortgage Interest Rates
Since approximately November, 2021 mortgage interest rates have increased significantly. Mortgage interest rates may continue to increase in the near term. Increases in mortgage interest rates could have a negative impact on the construction of the homes, and the sale of the homes to be built in the District. Increased mortgage interest rates adversely impact the affordability of the homes as they increase mortgage payment levels, and may impact the desire of current homeowners to purchase homes, especially if their present home has a relatively low mortgage interest rate. In addition, the new homes would likely have a higher interest rate on a new mortgage loan as well as higher property taxes. Such considerations may decrease the desire for households to purchase a home.
The foregoing factors could reduce demand for the homes that are to be constructed in the District.
Public Health Emergencies
The COVID-19 Pandemic commenced in approximately March 2020 and resulted in a global public health crisis that was fluid and unpredictable with unknown financial and economic impacts. The health emergency and related declarations have ceased, although investors continue to be cautioned that the City cannot predict the full impacts that the COVID-19 Pandemic may have had either directly or indirectly on the development and sales of homes in the District. Further, there could be future outbreaks of other COVID-19 variants or other public health emergencies that could have material adverse effects on the development and sales of homes in the District.
No prediction can be made with respect to possible future COVID-19 or similar viral outbreaks and related public health and governmental authorities’ orders and actions. Such effects, if and as they arise, could have a material adverse effect on the ability to sell lots and develop the homes in the District as planned, and no assurance can be provided that the Master Developer will be able to (a) complete in whole or in any part, or within any particular time, the construction of homes within the District; (b) avoid additional material increases in development costs or delays resulting from work stoppages, reduced attendance of workers, shortages or delays in the delivery of building materials, and/or delays in obtaining necessary inspections and approvals; or (c) sell homes, and close home sales, due to in each case to public health or governmental restrictions, further spread of COVID-19, an economic downturn driven by the pandemic, or otherwise.