Jones Hall Draft 6.26.23
PRELIMINARY OFFICIAL STATEMENT DATED ____________, 2023 NEW ISSUE-FULL BOOK ENTRY RATINGS: Insured Bonds: S&P: “____” Underlying Rating: S&P: “A”
(See “RATINGS” herein)
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax.
Interest on the Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes. See "LEGAL MATTERS — Tax Matters" herein. $____________*
PATTERSON PUBLIC FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS
SERIES 2023
Dated: Date of Delivery Due: September 1, as shown on inside cover General. The Special Tax Revenue Refunding Bonds, Series 2023 (the “Bonds”) are being issued by the Patterson Public Financing Authority (the “Authority”) to refund the Authority’s outstanding Revenue Bonds, Senior Series 2013A (Community Facilities District 2001-1) and Subordinate Series 2013B (Community Facilities District 2001-1) (together, the “2013 Bonds”), to provide for a Reserve Fund, as described herein, and to provide the City with money for capital improvements. The 2013 Bonds were issued by the Authority primarily to assist the City of Patterson (the “City”) in the financing and refinancing of certain special tax bonds issued by the City to finance improvements for its Community Facilities District No. 2001-1 (Public Improvements) (the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”).
Bond Terms. The Bonds will be issued in denominations of $5,000 or any integral multiple of $5,000. Interest is payable semiannually on each March 1 and September 1, commencing March 1, 2024. The Bonds will be initially issued only in bookentry form and registered to Cede & Co. as nominee of The Depository Trust Company (“DTC”), which will act as securities depository of the Bonds. Principal and interest (and premium, if any) on the Bonds is payable by the Trustee to DTC, which remits such payments to its Participants for subsequent distribution to the registered owners as shown on the Trustee’s books.
See “THE BONDS – General Provisions” and “– Book-Entry Only System.” Security and Sources of Payment for the Bonds and CFD Bonds. The Bonds are payable solely from “Revenues” pledged by the Authority under the Indenture (described herein), which consist primarily of payments received by the Authority as owner of bonds issued on behalf of the District by the West Patterson Financing Authority captioned “Special Tax Refunding Bonds, Series 2013-A-1 and Series 2013-A-2,” and “Special Tax Bonds, Series 2013-B” (collectively, the “CFD Bonds”). The CFD Bonds are payable from special taxes levied on parcels within the District on the regular county tax bills sent to owners of property against which there are unpaid special taxes, which payments are secured by liens on parcels within the CFD as authorized under the Act, as more fully described herein. Debt service payments on the CFD Bonds are payable to the Trustee, on behalf of the Authority as owner of the CFD Bonds. Scheduled payments under the CFD Bonds are sufficient to permit the Authority to pay the principal of and interest on the CFD Bonds. The CFD Bonds are not being refunded or amended in connection with the issuance of the Bonds. See “SECURITY FOR THE BONDS AND SOURCES OF PAYMENT THEREFOR.” Reserve Fund. Under the Indenture, the Trustee will establish a Reserve Fund for the purpose of paying debt service on the Bonds in the event of insufficient Revenues. See “SECURITY FOR THE BONDS AND SOURCES OF PAYMENT THEREFOR – Reserve Fund.”
Redemption. The Bonds are subject to redemption prior to maturity as described herein. See “THE BONDS – Redemption.”
Risk Factors. The Bonds are payable from limited revenue sources. See “RISK FACTORS” for a discussion of the risk factors that should be considered in evaluating the investment quality of the Bonds. [Bond Insurance and Reserve Fund Insurance. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy to be issued by ______________ concurrently with the delivery of the Bonds. B_____ will also issue a reserve fund insurance policy for deposit into the Reserve Fund being established for the Bonds.]
[insurer logo]
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED SOLELY BY THE REVENUES AND FUNDS PLEDGED THEREFOR IN THE INDENTURE. THE BONDS ARE NOT A DEBT OR
LIABILITY OF THE AUTHORITY, THE CITY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISIONS THEREOF
OTHER THAN THE AUTHORITY TO THE LIMITED EXTENT DESCRIBED HEREIN, AND NEITHER THE FAITH AND
CREDIT OF THE AUTHORITY, THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS ARE PLEDGED TO
THE PAYMENT OF PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE BONDS AND NEITHER THE AUTHORITY (EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN), THE CITY, THE STATE NOR ANY OF ITS POLITICAL
SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE BONDS OR ANY INTEREST THEREON BE
PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AUTHORITY AS SET FORTH IN THE INDENTURE. NEITHER THE BONDS NOR THE OBLIGATION TO MAKE PAYMENTS ON THE CFD BONDS CONSTITUTES
AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. THE AUTHORITY HAS NO TAXING POWER.
Maturity Schedule
(see inside cover)
The Bonds will be offered when, as and if issued and received by Hilltop Securities, Inc., as underwriter, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel. Certain legal matters will be passed upon for the Authority and the WPFA by the City Attorney of the City. Jones Hall is also serving as Disclosure Counsel to the Authority. Kutak Rock LLP, Irvine, California, is acting as counsel to the Underwriter. It is anticipated that the Bonds in definitive form will be available for delivery through the facilities of DTC on or about _________, 2023. [HILLTOP LOGO]
The date of this Official Statement is _______, 2023.
* Preliminary; subject to change.
MATURITY SCHEDULE
$__________
PATTERSON PUBLIC FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS
SERIES 2023
(Base CUSIP†: _________)
$________________ Serial Bonds
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield Price CUSIP†
$__________ __________% Term Bonds Due September 1, 20__; Price: ________ to Yield: ________% CUSIP† ___________
† CUSIP is a Registered Trademark of The American Bankers Association. FactSet Research Systems Inc. operates The CUSIP Service Bureau for the ABA. These data are not intended to create a database and do not serve in any way as a substitute for the CUSIP services. Neither the Authority, the City nor the Underwriter is responsible for the selection or correctness of the CUSIP numbers set forth above.
PATTERSON PUBLIC FINANCING AUTHORITY
(STANISLAUS COUNTY, CALIFORNIA)
BOARD OF DIRECTORS OF THE AUTHORITY
AND MEMBERS OF THE CITY COUNCIL
Michael Clauzel, Mayor/Chairperson of the Authority
Shivaugn Alves, Councilmember/Boardmember
Jessica Romero, Councilmember/Boardmember
Dominic Farinha, Councilmember/Boardmember
Carlos Roque, Councilmember/Boardmember
CITY AND AUTHORITY OFFICERS
Ken Irwin, City Manager/Executive Director
Jennifer Riedeman, Finance Director/Treasurer
White Brenner LLP, City Attorney/Authority Counsel
Aracely Alegre, City Clerk/Secretary
___________________________________________
SPECIAL SERVICES
Bond Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Trustee
U.S. Bank Trust Company, National Association
San Francisco, California
Municipal Advisor
Del Rio Advisors, LLC
Modesto, California
Community Facilities District Administrator
Goodwin Consulting Group, Inc.
Sacramento, California
Verification Agent
___________
___________
Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Authority or the City, in any press release and in any oral statement made with the approval of an authorized officer of the City, 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.” 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. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the Authority or the City since the date hereof.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Authority or the City to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Authority, the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
Involvement of Underwriter. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the City since the date hereof.
All summaries of the documents referred to in this Official Statement, are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.
Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof and said public offering prices may be changed from time to time by the Underwriter.
Insurer Disclaimer. [ to come if applicable]
Website. The City maintains an Internet website; however, the information on that website is not incorporated into this Official Statement.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT.
THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. i
TABLE OF CONTENTS
INTRODUCTION ........................................................2 FINANCING PLAN......................................................6 ESTIMATED SOURCES AND USES OF FUNDS......7
THE BONDS...............................................................8 General Provisions .................................................8 Redemption*...........................................................8 Book-Entry Only System ......................................11 Registration, Transfer and Exchange of Bonds....11
DEBT SERVICE SCHEDULES AND COVERAGE ..13
SECURITY FOR THE BONDS AND SOURCES OF
PAYMENT THEREFOR .......................................15 Limited Obligation.................................................15 Revenues and Flow of Funds...............................16 Surplus Fund ........................................................17 Reserve Fund.......................................................17 Additional Bonds and CFD Bonds for Refunding
Purposes Only .................................................18 SECURITY FOR THE CFD BONDS.........................19
General.................................................................19 Special Taxes.......................................................19 Rate and Method..................................................21 Prepayment and Satisfaction of Special Tax........24
Special Tax Fund..................................................24 Bond Fund............................................................25 No Additional Obligations of District .....................25 Covenant for Superior Court Foreclosure.............26
BOND INSURANCE .................................................27 THE DISTRICT.........................................................28 Introduction...........................................................28 General.................................................................28 Formation of the District and Issuance of Previous
Bonds...............................................................32 Assessed Values..................................................35 Top Ten Taxpayers ..............................................35 Value-to-Lien Ratios ............................................ 36 Special Tax Collection and Delinquency Rate..... 39
Projected Overall Tax Burden.............................. 41 Direct and Overlapping Governmental Obligations42
RISK FACTORS....................................................... 44 Limited Obligation to Pay Debt Service ............... 44 Levy and Collection of the Special Taxes............ 44 Payment of Special Taxes is not a Personal
Obligation of the Property Owners .................. 45 Assessed Valuations............................................ 45 Property Values ................................................... 45 Enforcement of Special Taxes on Governmentally
Owned Properties............................................ 47 Bankruptcy Delays............................................... 49 Disclosure to Future Purchasers.......................... 49 No Acceleration; Right to Pursue Remedies........ 50
Loss of Tax Exemption ........................................ 50 Voter Initiatives .................................................... 50 No Acceleration Provisions.................................. 51 Secondary Market for Bonds ............................... 51 Cyber Security ..................................................... 51 THE AUTHORITY .................................................... 52 LEGAL MATTERS ................................................... 52 Tax Matters.......................................................... 53 Absence of Litigation............................................ 55 Legal Opinion....................................................... 55 RATINGS ................................................................. 55 UNDERWRITING..................................................... 55 CONTINUING DISCLOSURE.................................. 56 MISCELLANEOUS................................................... 58 Verification of Mathematical Computations.......... 58
Professionals Involved in the Offering ................. 58 Execution ............................................................. 58 APPENDIX A - Summary of Certain Provisions of Principal Legal Documents APPENDIX B - General Information about the City of Patterson and Stanislaus County APPENDIX C - Rate and Method of Apportionment of Special Taxes for the CFD APPENDIX D - Form of Bond Counsel Opinion
APPENDIX E - Form of Continuing Disclosure Certificate
APPENDIX F - DTC and the Book-Entry-Only System
[APPENDIX G - Specimen Municipal Bond Insurance Policy] 2 OFFICIAL STATEMENT
$______________1
PATTERSON PUBLIC FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS
SERIES 2023
This Official Statement, including the cover page and the appendices hereto, is provided to furnish information regarding the issuance by the Patterson Public Financing Authority (the “Authority”) of its Special Tax Revenue Refunding Bonds, Series 2023 (the “Bonds”) in the aggregate principal amount set forth above.
Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Definitions of certain terms used herein and not defined herein have the meaning set forth in the Indenture or the CFD Fiscal Agent Agreement described herein.
INTRODUCTION
This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement.
The offering of the Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used but not defined in this Official Statement have the meanings set forth in the Indenture (as defined below). See “APPENDIX A – Summary of Certain Provisions of Principal Legal Documents.”
Financing Plan. The Bonds are being issued by the Authority to refund the Authority’s outstanding special tax revenue bonds captioned (i) “$67,190,000 Patterson Public Financing Authority Revenue Bonds, Senior Series 2013A (Community Facilities District No. 2001-1)” and (ii) “$6,465,000 Patterson Public Financing Authority Revenue Bonds, Subordinate Series 2013B (Community Facilities District No. 2001-1) (together, the “2013 Bonds”). The 2013 Bonds were issued by the Authority primarily to assist the City of Patterson (the “City”) in the financing and refinancing of certain special tax bonds issued by the West Patterson Financing Authority (the “WPFA”) to refinance and finance improvements for its Community Facilities District No. 2001-1 (Public Improvements) (the “CFD” or the “District”).
In connection with the issuance by the Authority of the 2013 Bonds, the WPFA in 2013 issued and sold to the Authority its “Special Tax Refunding Bonds, Series 2013-A-1 and Series 2013-A-2,” and “Special Tax Bonds, Series 2013-B” (collectively, the “CFD Bonds”). Payment on the CFD Bonds provided the primary security and source of payment for the 2013 Bonds and will provide the primary security and source of payment for the Bonds. The CFD Bonds are not being refunded or amended in connection with the issuance of the Bonds. See “FINANCING 1 Preliminary; subject to change.
3 PLAN” and “SECURITY FOR THE BONDS AND SOURCES OF PAYMENT THEREFOR” herein.
Authority for Issuance. The Bonds are issued under the provisions of Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), and the terms of an Indenture dated as of _______ 1, 2023 (the “Indenture”) by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The CFD Bonds were issued in 2013 by the WPFA under the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Act”), and a Fiscal Agent Agreement, dated as of August 1, 2013, as amended by the Amendment to Fiscal Agent Agreement dated as of _______ 1, 2023 (together, the “CFD Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as successor to The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the “CFD Fiscal Agent”).
The Authority and the City. The Authority is a joint exercise of powers authority duly organized and existing under the laws of the State of California (the “State”). The WPFA is likewise a joint exercise of powers authority. Both the Authority and the WPFA are managed and controlled by the City. The City is a general law city duly organized and existing under the laws of the State, located within Stanislaus County (the “County”). For more information about the City and the County, see “APPENDIX B - General Information about the City of Patterson and Stanislaus County.”
Security for the Bonds and CFD Bonds. The Bonds are special obligations of the Authority, payable from and secured by “Revenues” (as defined in the Indenture and described herein) of the Authority consisting primarily of payments received by the Authority from the WPFA in connection with the CFD Bonds. The Bonds are structured so that the scheduled payments to be received by the Authority on the CFD Bonds are sufficient to pay the principal of and interest on the Bonds when due. See “SECURITY FOR THE BONDS AND SOURCES OF PAYMENT THEREFOR” and “SECURITY FOR THE CFD BONDS” below.
The Bonds are secured by a lien on and security interest in all of the Revenues and any other amounts held in certain funds established under the Indenture. See “SECURITY FOR THE BONDS AND SOURCES OF PAYMENT THEREFOR – Revenues and Flow of Funds.” A reserve fund for the CFD Bonds established in 2013 under the CFD Fiscal Agent Agreement will be closed as of the date of issuance of the Bonds. A reserve fund for the Bonds will be established and held by the Trustee under the Indenture..
The CFD Bonds were issued upon and are secured by special taxes (the “Special Tax” or “Special Taxes”) levied against taxable property in the District, and such unpaid Special Taxes are secured by a lien on taxable parcels in the District and constitute a trust fund for the redemption and payment of the principal of the CFD Bonds and the interest thereon.
The Special Taxes are levied by the Authority on taxable real property within the boundaries of the District. The Special Tax applicable to each taxable parcel is levied and collected according to the tax liability determined by staff of the City and the administrator of the CFD through the application of a rate and method of apportionment of Special Tax for the District (the “Rate and Method”), which was approved by the WPFA in connection with the formation of the District. The Rate and Method for the District is set forth in APPENDIX C. The Special Taxes represent liens on the parcels of land subject to a Special Tax, and failure to pay 4 the Special Taxes could result in proceedings to foreclose the delinquent property. See “SECURITY FOR THE CFD BONDS — Special Tax Methodology.” Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within the District, and the owners have made no commitment to pay the principal of or interest on the CFD Bonds or the Bonds or to support payment of the Bonds in any manner. In the event of delinquency, proceedings may be conducted only against the particular parcel securing the delinquent Special Tax.
Additional Bonds and CFD Bonds for Refunding Purposes Only. The Authority covenants in the Indenture that no additional bonds, notes or other indebtedness shall be issued or incurred which are payable out of Revenues in whole or in part, except that the Authority may issue additional bonds, notes or other indebtedness secured on parity with the Bonds to refund a portion of the Bonds to realize savings associated therewith. Likewise, additional CFD Bonds secured on parity with the CFD Bonds may be issued only for refunding purposes.
Bond Insurance and Reserve insurance.
[[ to come if applicable]]
The District and Value of Land in the District. The District is comprised of land located within the City and was formed to finance a portion of certain infrastructure improvements of benefit to such District. The District was formed in 2001. Of the 2,239 parcels in the District, 2,338 have been has been developed into a total of 2,338 finished single-family residential lots in six separate developments, within an area of the City locally known as Walker Ranch.
Taxable property in the District is security for the CFD Special Taxes. In connection with valuing property in the District, the Authority has obtained the 2022-23 County assessed valuation (the “Assessed Valuation”) of the taxable property in the District. The aggregate Assessed Valuation of taxable property in the District (2,338 single family homes and one undeveloped parcel) is $806,292,194.
Direct Debt Value to Lien Ratios. The aggregate Assessed Valuation of taxable property in the District is $806,292,194 (consisting solely of assessed land value and structure value), which is approximately ____* times the $__________* aggregate principal amount of the CFD Bonds (not including overlapping debt) that will be outstanding as of__________, 2023.
Overlapping Debt Value to Lien Ratios. The aggregate Fiscal Year 2022-23 Assessed Valuation of taxable property in the District is $806,292,194 (consisting solely of assessed land value and structure value), which is approximately ___* times the $_____* total direct and overlapping debt in the District (based on the amount of CFD Bonds that will be outstanding as of_____ , 2023 and overlapping bonded debt as of _____, 2023).
For more information on assessed values and value-to-lien ratios in each of the District, see “THE DISTRICT.”
* Preliminary, subject to change.
5 Risks of Investment. See the section of this Official Statement entitled “RISK FACTORS” for a discussion of special factors that should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. The Bonds are limited obligations of the Authority. Payments received by the Authority from the WPFA in connection with the CFD Bonds is the primary security and source of payment for the Bonds. The general fund of the City, the Authority or WPFA is not liable and the full faith and credit of the City is not pledged for the payment of the interest on, or principal of or redemption premiums, if any, on the CFD Bonds. The CFD Bonds and the Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the WPFA or any of its income or receipts, except the money in the Special Tax Fund (described herein) established under the CFD Fiscal Agent Agreement, and neither the payment of the interest on nor principal of or redemption premiums, if any, on the CFD Bonds or the Bonds is a general debt, liability or obligation of the City, the WPFA or the Authority.
Limited Scope of Official Statement. There follow in this Official Statement descriptions of the Authority, the Bonds, the Indenture, the City, the CFD Bonds, the CFD Fiscal Agent Agreement, and certain other documents. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions. All statements herein with respect to such documents are qualified in their entirety by reference to each such document for the complete details of all of their respective terms and conditions. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors’ rights generally. Terms not defined herein shall have the meanings set forth in the Indenture or the CFD Fiscal Agent Agreement, as applicable. See APPENDIX A.
The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement nor any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the City or the District since the date hereof.
All financial and other information presented in this Official Statement has been provided by the City from its records, except for information expressly attributed to other sources. The presentation of information is intended to show recent historic information and is not intended to indicate future or continuing trends in the financial or other affairs of the Authority, the City, WPFA or the District. No representation is made that past experience, as it might be shown by such financial and other information, will necessarily continue or be repeated in the future. 6 FINANCING PLAN
The Bonds are being issued primarily to defease and refund the special tax revenue bonds issued by the Authority in 2013 captioned (i) “$67,190,000 Patterson Public Financing Authority Revenue Bonds, Senior Series 2013A (Community Facilities District No. 2001-1)” and (ii) “$6,465,000 Patterson Public Financing Authority Revenue Bonds, Subordinate Series 2013B (Community Facilities District No. 2001-1). Proceeds of the Bonds will also be used to pay costs of issuance of the Bonds and to provide the City with funds to construct capital improvements within the City.
The 2013 Bonds were previously issued by the Authority to purchase the CFD Bonds from the WPFA. The CFD Bonds were issued in 2013 and are not being refunded or amended in connection with the issuance of the Bonds (although any references in the CFD Fiscal Agent Agreement to the Authority’s 2013 Bonds and the related Indenture will be amended to refer to the Bonds and the Indenture entered into in connection with the Bonds).
The 2013 Bonds will be redeemed in full on September 1, 2023 (the “Redemption Date”), at a redemption price equal to 100% of the principal amount thereof, together with accrued interest to the redemption date, without premium.
A portion of the proceeds of the Bonds will be transferred to The Bank of New York Mellon Trust Company, N.A., acting as escrow agent (the “Escrow Bank”) under an Escrow Agreement dated as of ________ 1, 2023 (the “Escrow Agreement”), by and between the Authority and the Escrow Bank on the closing date for the Bonds. These funds, together with certain amounts held by the trustee for the 2013 Bonds, which will also be transferred to the Escrow Bank, will be sufficient to pay and redeem the 2013 Bonds in full on the Redemption Date. See “MISCELLANEOUS – Verification of Mathematical Computations.” A portion of the proceeds of the Bonds will be transferred to the City for capital improvements of benefit to homes in the District. Scheduled payments under the CFD Bonds are sufficient to provide the Authority with money to pay the principal of and interest on the Bonds when due.
The moneys held by the Escrow Bank under the Escrow Agreement are pledged to the payment of the 2013 Bonds, and will not be available for the payment of the Bonds or the CFD Bonds.
7 ESTIMATED SOURCES AND USES OF FUNDS
The sources and uses of funds relating to the Bonds and certain amounts held by the trustee for the 2013 Bonds are anticipated to be as follows:
Sources:
Principal Amount of the Bonds $
Plus: Net Original Issue Premium
Plus: Amounts held by trustee for the 2013 Bonds
Total Sources $
Uses:
Deposit to Escrow Fund(1) $
Deposit to Project Fund
Deposit to Costs of Issuance Fund(2)
Underwriter’s Discount
Total Uses $
(1) To be used to defease and redeem the 2013 Bonds.
(2) Costs of issuance include fees and expenses of the Trustee, Escrow Bank, Verification Agent, Bond Counsel, Disclosure Counsel and other professionals involved in the offering, printing costs, rating agency costs, [[premiums for the Policy]], and other related costs of issuing the Bonds.
8 THE BONDS
This section provides summaries of the Bonds and certain provisions of the Indenture.
See “APPENDIX A – Summary of Certain Provisions of Principal Legal Documents” for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPENDIX A.
General Provisions
The Bonds will be dated their date of delivery, and will be issued in the aggregate principal amounts set forth on the inside cover page hereof. The Bonds will bear interest from their dated date at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing March 1, 2024 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside cover page hereof. The Bonds will be issued in fully registered form in denominations of $5,000 each or any integral multiple thereof.
Interest calculated on the basis of a 360-day year of twelve 30-day months on the Bonds will be payable on each Interest Payment Date to the person whose name appears on the Bond Register as the Owner of such Bond as of the fifteenth calendar day of the month preceding the month in which such Interest Payment Date occurs, whether or not such day is a Business Day (the “Record Date”) immediately preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed on such Interest Payment Date by first class mail, postage prepaid, to the Owner at the address of such Owner as it appears on the Bond Register or by wire transfer to an account in the United States of America made on such Interest Payment Date upon instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds of a Series provided to the Trustee in writing at least 5 Business Days before the Record Date for such Interest Payment Date.
Principal of and premium (if any) on any Bond will be paid upon presentation and surrender of such Bond, at maturity or the prior redemption of such Bond, at the Trust Office of the Trustee.
Each 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 February 15, 2018, in which event it will bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest on such Bond is in default, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on such Bond, or from the Closing Date if no interest has been paid or made available for payment.
Redemption2
Optional Redemption. The Bonds maturing on or before September 1, ______, are not subject to optional redemption prior to maturity. The Bonds maturing on and after September 1, ______, may be redeemed at the option of the Authority, from any source of available funds, prior to maturity on any date on or after September 1, ______, as a whole, or in part from maturities corresponding proportionately to the maturities of the CFD Bonds simultaneously 2 Preliminary; subject to change.
9 redeemed, if any redemption of CFD Bonds is being accomplished in conjunction with such optional redemption, and otherwise from such maturities as are selected by the Authority, and by lot within a maturity, at a redemption price equal to principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.
Mandatory Special Redemption from Prepayments. The Bonds are subject to mandatory call and redemption prior to maturity, as a whole or in part among such maturities as are selected by the Authority and by lot within a maturity, on any Interest Payment Date on or after March 1, 2024, from amounts received by the Authority due to the redemption of CFD Bonds from the prepayment of Special Taxes, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed), as set forth below, together with accrued interest thereon to the date fixed for redemption:
Redemption
Dates
Redemption
Prices
March 1, 2024, and Interest Payment Dates to and including September 1, 2028 %
March 1, 2028 and Interest Payment Dates to and including March 1, 2039
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, ____ (the “Term Bonds”), are subject to redemption prior to their stated maturity, in part, by lot from amounts deposited into the Principal Account in the following amounts and on the following dates, at the principal amount thereof on the date fixed for redemption, without premium, but which amounts will be proportionately reduced by the principal amount of all Bonds optionally redeemed:
Mandatory Redemption Dates
(September 1)
Principal
Amount
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039 (maturity)
The redemption provisions of the Bonds and the CFD Bonds do not differ from the above.
Notice of Redemption. The Trustee on behalf, and at the expense, of the Authority will mail (by first class mail, postage prepaid) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Bond 10 Register, and to the Securities Depositories and to the Municipal Securities Rulemaking Board, at least 20 but not more than 60 days prior to the date fixed for redemption. Neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the redemption date, the redemption place and the redemption price and will designate the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue after the redemption date.
Any such redemption notice may specify that redemption on the specified date will be subject to receipt by the Authority of moneys sufficient to cause such redemption (and will specify the proposed source of such moneys), and neither the Authority nor the Trustee will have any liability to the Owners or any other party as a result of its failure to redeem the Bonds as a result of insufficient moneys.
In addition to the foregoing notice, further notice will be given by the Trustee in said form by first class mail to any Bondowner whose Bond has been called for redemption but who has failed to submit his Bond for payment by the date which is 60 days after the redemption date, but no defect in said further notice nor any failure to give or receive all or any portion of such further notice will in any manner defeat the effectiveness of a call for redemption.
Rescission of Redemption Notice. The Authority will have the right to rescind any redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption will be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default hereunder. The Trustee will mail notice of rescission of redemption in the same manner notice of redemption was originally provided.
Selection of Bonds of a Maturity for Redemption. Unless otherwise provided under the Indenture, whenever provision is made in the Indenture or in the applicable Supplemental Indenture for the redemption of fewer than all of the Bonds of a maturity, the Trustee will select the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption, by lot in any manner which the Trustee in its sole discretion will deem appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 authorized denominations, and such separate authorized denominations will be treated as separate Bonds which may be separately redeemed.
Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption will have been duly provided, such Bonds so called will cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest will accrue on such Bonds from and after the redemption date specified in such notice.
11 Certification of Independent Financial Consultant. In connection with any optional or special mandatory redemption of Bonds from prepayments, the Authority will deliver to the Trustee a certificate of an Independent Accountant verifying that, following such redemption of Bonds, the principal and interest generated from the remaining CFD Bonds is adequate to make the timely payment of principal and interest due on the Bonds that will remain Outstanding hereunder following such redemption.
Book-Entry Only System
General. The Bonds will be issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations set forth above, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants (as defined in this Official Statement) as described in this Official Statement. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. See “APPENDIX F — DTC and the Book-Entry-Only System.”
If the book-entry-only system is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See “–Registration, Transfer and Exchange of Bonds” below.
Payments Made to DTC. While the Bonds are subject to the book-entry system, the principal and interest with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Bonds, as described in “APPENDIX F — DTC and the Book-EntryOnly System.” Registration, Transfer and Exchange of Bonds
Bond Register. The Trustee will keep or cause to be kept at its Trust Office sufficient records for the registration and transfer of the Bonds, which will be the Bond Register and will at all times during regular business hours be open to inspection by the Authority upon reasonable notice; and, upon presentation for such purpose, the Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said records, Bonds as provided under the Indenture.
Transfer of Bonds. Subject to the book-entry only provisions of the Indenture, any Bond may in accordance with its terms, be transferred, upon the Bond Register, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond is surrendered for transfer, the Authority will execute and the Trustee will thereupon authenticate and deliver to the transferee a new Bond or Bonds of like Series, tenor, maturity and aggregate principal amount. No Bonds selected for redemption will be subject to transfer, nor will any Bond be subject to transfer during the 15 days prior to the selection of Bonds for redemption.
Exchange of Bonds. Bonds may be exchanged at the Trust Office of the Trustee for Bonds of the same Series, tenor and maturity and of other authorized denominations. No Bonds selected for redemption will be subject to exchange, nor will any Bond be subject to 12 exchange during the 15 days prior to the selection of Bonds for redemption. The Owners of the Bonds will be required to pay any tax or other governmental charge required to be paid for any exchange and the Owners of the Bonds will be required to pay the reasonable fees and expenses of the Trustee and Authority in connection with the exchange of any Bonds.
The cost of printing any Bonds and any services rendered or any expenses incurred by the Trustee in connection with any transfer or exchange will be paid by the Authority. However, the Owners of the Bonds will be required to pay any tax or other governmental charge required to be paid for any exchange or registration of transfer and the Owners of the Bonds will be required to pay the reasonable fees and expenses of the Trustee and Authority in connection with the replacement of any mutilated, lost or stolen Bonds. 13 DEBT SERVICE SCHEDULES AND COVERAGE
Debt Service Schedule for the Bonds. The table below presents a schedule of debt service and debt service coverage for the Bonds, assuming no early redemptions are made.
Debt service coverage is based on annual Special Tax Levy combined for the District, as shown.
PATTERSON PUBLIC FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS
SERIES 2023
Annual Debt Service Schedule
Year Ending
Sept. 1 Principal Interest Total
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
* Preliminary; subject to change.
Source: Underwriter.
14 WEST PATTERSON FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2001-1 (PUBLIC INFRASTRUCTURE) SPECIAL TAX REFUNDING BONDS, SERIES 2013-A-1, 2013-A-2,” and 2013-B and
PATTERSON PUBLIC FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS, SERIES 2023 Projected Debt Service Coverage - Bonds and CFD Bonds (1) Year
Ending
Sept. 1
Projected
Maximum
Special Tax (2)
Less:
Estimated
Administrative
Expenses *
Net
Maximum
Special Tax
2013 CFD Bonds
Debt Service
2013 CFD Bonds
Debt Service
Coverage
2023 Authority
Bonds
Debt Service *
2023 Authority
Bonds Debt
Service
Coverage
2024 $6,408,571 ($78,199) $6,330,372 $5,379,654 117.672% $4,866,500 110.545% 2025 $6,536,742 ($79,763) $6,456,979 $5,451,505 118.444% $4,932,250 110.528% 2026 $6,667,477 ($81,358) $6,586,119 $5,489,860 119.969% $4,964,250 110.588% 2027 $6,800,826 ($82,985) $6,717,841 $5,495,740 122.237% $4,968,750 110.606% 2028 $6,936,843 ($84,645) $6,852,198 $5,489,678 124.820% $4,966,750 110.529% 2029 $7,075,580 ($86,338) $6,989,242 $5,486,509 127.390% $4,963,250 110.543% 2030 $7,217,091 ($88,065) $7,129,027 $5,493,699 129.767% $4,968,000 110.582% 2031 $7,361,433 ($89,826) $7,271,607 $5,515,360 131.843% $4,990,250 110.523% 2032 $7,508,662 ($91,622) $7,417,039 $5,561,828 133.356% $5,028,750 110.601% 2033 $7,658,835 ($93,455) $7,565,380 $5,310,323 142.466% $4,802,250 110.580% 2034 $7,812,012 ($95,324) $7,716,688 $5,041,949 153.050% $4,558,500 110.605% 2035 $7,968,252 ($97,230) $7,871,022 $5,393,485 145.936% $4,878,500 110.556% 2036 $8,127,617 ($99,175) $8,028,442 $5,478,188 146.553% $4,954,250 110.576% 2037 $8,290,169 ($101,159) $8,189,011 $5,598,260 146.278% $5,061,750 110.599% 2038 $8,455,973 ($103,182) $8,352,791 $5,669,076 147.340% $5,128,750 110.535% 2039 $8,625,092 ($105,245) $8,519,847 $5,839,593 145.898% $5,281,500 110.567% ___________________________
* Preliminary; Subject to change.
(1) 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 or default by the owner of any other assessor's parcel within the District by more than 10% above the amount that would have been levied in the fiscal year had there never been any such delinquencies or defaults. (2) Based on currently expected land uses in the CFD. Subject to change pursuant to Section D of the Rate and Method.
Sources: Hilltop Securities, Inc.; Goodwin Consulting Group, Inc. 15 SECURITY FOR THE BONDS AND SOURCES OF PAYMENT THEREFOR The Bonds are special obligations of the Authority, payable from and secured by Revenues (as defined herein) of the Authority consisting primarily of payments received by the Authority from the WPFA on the CFD Bonds. Scheduled payments under the CFD Bonds are sufficient to provide the Authority with money to pay the principal of and interest on the Bonds when due. This section provides summaries of the security for the Bonds and certain provisions of the Indenture. See “APPENDIX A – Summary of Certain Provisions of Principal Legal Documents” for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPENDIX A.
Limited Obligation
In order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms and the provisions of the Indenture, and subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, the Authority pledges all of the Revenues and any other amounts held in any fund or account established pursuant to the Indenture, other than amounts on deposit in the Rebate Fund and Surplus Fund. This pledge constitutes a first pledge of and charge and lien upon such assets for the payment of the Bonds in accordance with their terms and will be valid and binding from and after issuance of the Bonds, without any physical delivery thereof or further act. The pledge is also irrevocable until all of the bonds issued under the Indenture are no longer Outstanding.
Under the Indenture, the Authority transfers in trust, grants a security interest in and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds all of the Revenues and all of the right, title and interest of the Authority in the CFD Bonds, subject to the terms of the Indenture. The Trustee shall be entitled to and shall collect and receive all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the Trustee. Subject to the provisions of the Indenture, the Trustee also shall be entitled to and shall take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the WPFA under the CFD Bonds.
The CFD Bonds are a limited obligation of the WPFA and secured primarily of monies received by the WPFA as payment of special taxes levied against taxable property within the District. Scheduled payments of the CFD Bonds are sufficient to provide the Authority with money to pay the principal of and interest on the Bonds when due. Staff of the City administers the functions of the Authority and the WPFA. The CFD Bonds are payable solely from and secured solely by the Special Taxes, and the amounts in the Special Tax Fund created with respect to the CFD Bonds (the “Special Tax Fund”) under the applicable CFD Fiscal Agent Agreement. The WPFA and the City are not obligated to advance available surplus funds of the Authority or the City treasury to cure any deficiency in any Special Tax Fund. See “SECURITY FOR THE CFD BONDS.”
All obligations of the Authority under the Indenture and the Bonds are special obligations of the Authority, payable solely from and secured by Revenues and the amounts in the funds established by the Indenture (except amounts in the Rebate Fund or Surplus Fund). All obligations of the WPFA under the CFD Fiscal Agent Agreement are not general obligations of 16 the Authority or the City, but are limited obligations of the WPFA, payable solely from the special taxes and the funds pledged therefor under the CFD Fiscal Agent Agreement. Neither the faith and credit of the City, the Authority, the WPFA, nor of the State nor any political subdivision thereof is pledged to the payment of the Bonds or CFD Bonds.
Revenues and Flow of Funds
Revenues. The Bonds are secured by a first lien on and pledge of all of the Revenues.
The Indenture defines “Revenues” as follows:
(a) all amounts received from the CFD Bonds;
(b) any proceeds of the Bonds originally deposited with the Trustee and all moneys deposited and held from time to time by the Trustee in the funds and accounts established under the Indenture with respect to the Bonds (other than the Rebate Fund and the Surplus Fund); and
(c) investment income with respect to any moneys held by the Trustee in the funds and accounts established under the Indenture with respect to the Bonds (other than investment income on moneys held in the Rebate Fund or the Surplus Fund).
Collection by the Trustee. The Trustee will collect and receive all of the Revenues, and any Revenues collected or received by the Authority will be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and will forthwith be paid by the Authority to the Trustee. The Trustee also is entitled to, and may take all steps, actions and proceedings reasonably necessary in its judgment to, enforce, either jointly with the Authority or separately, all of the rights of the Authority and all of the obligations of the WPFA under the CFD Bonds.
Under the Indenture, the Trustee is directed to establish, maintain and hold in trust a special fund designated as the “Revenue Fund” and deposit the Revenues, when and as received by the Trustee, therein. All moneys at any time held in the Revenue Fund shall be held in trust for the benefit of the Owners and shall be disbursed, allocated, and applied solely for payment of the Bonds and for any other uses and purposes set forth in the Indenture.
Application of Revenues. For each Bond Year, on each Interest Payment Date and date for redemption of the Bonds, the Trustee will transfer from the Revenue Fund, and deposit into the following respective accounts for the Bonds, the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
Interest Account. On each Interest Payment Date and redemption date, the Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds or to be paid on the Bonds being redeemed on such date. No deposit need be made into the Interest Account if the amount contained in such account is at least equal to the interest becoming due and payable upon all Outstanding Bonds on the next succeeding Interest Payment Date or redemption date, as applicable. 17 All moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it becomes due and payable (including accrued interest on any Bonds redeemed prior to maturity). If the amounts on deposit in the Interest Account on any Interest Payment Date or redemption date are insufficient for any reason to pay the aggregate amount of interest then coming due and payable on the Outstanding Bonds, the Trustee will apply such amounts to the payment of interest on each of the Outstanding Bonds on a pro rata basis.
Principal Account. On each Interest Payment Date and redemption date on which the principal of the Bonds will be payable, the Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of, and premium (if any) on, the Bonds coming due and payable on such Interest Payment Date, or required to be redeemed on such date; provided, however, that no amount will be deposited to effect a mandatory special redemption unless the Trustee has first received a certificate of an Independent Accountant certifying that such deposit to effect the redemption of the Bonds will not impair the ability of the Authority to make timely payment of the principal of and interest on the Bonds, assuming for such purposes that the WPFA continues to make timely payments on all CFD Bonds not then in default.
All moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds at the maturity thereof or upon any earlier redemption thereof.
Deficiencies. If on any Interest Payment Date or date for redemption the amount on deposit in the Revenue Fund is inadequate to make the transfers described above as a result of a payment default on the CFD Bonds, the Trustee will immediately notify the City of the amount needed to make the required deposits. In the event that within 5 Business Days of delivering such notice the Trustee receives additional payments from the WPFA to cure such shortfall, the Trustee will deposit such amounts to the account designated in writing by the City.
A reserve fund for the CFD Bonds established in 2013 under the CFD Fiscal Agent Agreement will be closed as of the date of issuance of the Bonds and a reserve fund for the Bonds will be established under the Indenture and held by the Trustee..
Deposit into Rebate Fund. On each Interest Payment Date after making the transfers described above, upon receipt of a Request of the Authority to do so, the Trustee will transfer from the Revenue Fund to the Rebate Fund for deposit in the accounts in the Rebate Fund the amounts specified in such Request.
Surplus Fund. On September 2 of each year, after making the deposits described above, the Trustee will transfer all amounts remaining on deposit in the Revenue Fund to the Surplus Fund. See “–Surplus Fund” below.
Surplus Fund
Any amounts transferred to the Surplus Fund will no longer be considered Revenues and are not pledged to repay the Bonds. So long as CFD Bonds are outstanding, on September 3 of each year, after setting aside any amount specified in a Request of the Authority to be transferred to the Administrative Expense Fund for payment of Administrative Expenses, any moneys remaining in the Surplus Fund will be transferred to the City for any lawful purpose. 18 Reserve Fund
Under the Indenture, the Trustee will establish a Reserve Fund for the Bonds (the “Reserve Fund”). All money in (or available to) the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account or the Principal Account (in such order) in the event of any deficiency therein. [Deposit of 2023 Reserve Policy. The Reserve Requirement will be satisfied in the form of the issuance of the Reserve Policy by the Insurer. The Trustee shall comply with all of the terms and provisions of the 2023 Reserve Policy for the purpose of assuring that funds are available thereunder when required for the purposes of the Reserve Fund.] “Reserve Requirement” means at the time of calculation an amount equal to the lesser of (i) Maximum Annual Debt Service on the Bonds, (ii) 125% of Average Annual Debt Service on the Bonds, or (iii) 10% of the amount (within the meaning of Section 148 of the Code) of the Bonds. The Reserve Requirement will be established at the time of issuance of the Bonds, and will not be subject to increase at a later date.
Use of Reserve Fund. In the event of a withdrawal of amounts from the Fund (or draws on the Reserve Policy) to make payments to the Interest Account or the Principal Account, the Trustee shall deposit in such Reserve Fund (or pay to the Insurer) moneys from the Revenue Fund necessary to restore the amount in the Reserve Fund to the Reserve Requirement (or to reimburse and pay the costs owed to the Insurer), but only from the Revenues available to restore said amounts.
The Reserve Policy is a “Qualified Reserve Fund Credit Instrument” under the Indenture, which is defined as (a) the Reserve Policy and (b) any other irrevocable standby or direct-pay letter of credit, insurance policy, or surety bond issued by a commercial bank or insurance company and deposited with the Trustee, provided that all of the following requirements are met at the time of acceptance thereof by the Trustee: (i) at the time of issuance of the letter of credit, insurance policy or surety bond is rated in the top two categories (without regard to modifiers) by either S&P or Moody’s; (ii) such letter of credit, insurance policy or surety bond has a term of at least 12 months; (iii) such letter of credit, insurance policy or surety bond has a stated amount at least equal to the Reserve Requirement or, if such letter of credit, insurance policy or surety bond is being provided with respect to only a portion of the Reserve Requirement, such letter of credit, insurance policy or surety bond has a stated amount at least equal to that portion of the Reserve Requirement with respect to which funds are proposed to be released; and (iv) the Trustee is authorized pursuant to the terms of such letter of credit, insurance policy or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required thereby.
If the long-term credit rating of the provider of a Qualified Reserve Fund Credit Instrument is downgraded or the provider fails to perform, the Authority shall have no obligation to replace the Qualified Reserve Fund Credit Instrument or otherwise fund the Reserve Fund Fund with cash.
Additional Bonds and CFD Bonds for Refunding Purposes Only Additional Bonds for Refunding. The Authority covenants in the Indenture that no additional bonds, notes or other indebtedness shall be issued or incurred which are payable out 19 of Revenues in whole or in part, except that the Authority may issue additional bonds, notes or other indebtedness secured on parity with the Bonds to refund a portion of the Bonds to realize savings associated therewith.
Additional CFD Bonds for Refunding. Under the CFD Fiscal Agent Agreement, the WPFA may establish one or more additional series of bonds secured under the applicable CFD Fiscal Agent Agreement, equally and ratably with CFD Bonds previously issued, but only so long as the additional bonds are issued for the purpose of refunding all or a portion of the CFD Bonds then outstanding.
SECURITY FOR THE CFD BONDS
General
The WPFA’s obligation to pay the principal of, and interest and any premium on, the CFD Bonds is secured by a first pledge of the following:
• the Special Tax Revenues; and
• funds on deposit in the Bond Fund, and the Special Tax Fund created under the CFD Fiscal Agent Agreement.
“Special Tax Revenues” is defined in the CFD Fiscal Agent Agreement as the proceeds of the Special Taxes received by the City (on behalf of the WPFA), including any scheduled payments and any prepayments thereof, interest 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 and interest thereon, but it excludes any penalties collected in connection with delinquent Special Taxes that are in excess of the rate of interest on the CFD Bonds. Under the CFD Fiscal Agent Agreement, Special Taxes collected each fiscal year will be used to pay debt service on the CFD Bonds, before such amounts are used to pay Administrative Expenses. See “SECURITY FOR THE CFD BONDS—Special Tax Fund.”
Amounts in the Administrative Expense Fund, the Refunding Fund and the Improvement Fund established under the CFD Fiscal Agent Agreement are not pledged to the repayment of the Bonds. The facilities financed with the proceeds of the CFD Bonds are not in any way pledged to pay debt service on the Bonds or the CFD Bonds.
Special Taxes
Levy of Special Taxes. The WPFA has covenanted in the CFD Fiscal Agent Agreement to comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the levy of the Special Taxes each Fiscal Year so long as the Bonds are outstanding, and the enforcement of delinquent Special Taxes. The Special Taxes were first levied in the District in Fiscal Year 2003-2004, and have been levied in the District each Fiscal Year thereafter in accordance with the Rate and Method described below.
Under the CFD Fiscal Agent Agreement, the Finance Director of the City, acting as the Treasurer of the WPFA is obligated to effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each July 15 that the Bonds are outstanding, or otherwise such that the computation of the levy is complete before the final date on which the auditor- 20 controller of the County will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Treasurer is obligated to prepare or cause to be prepared, and to transmit to the auditor-controller of the County, such data as the auditorcontroller requires to include the levy of the Special Taxes on the next real property tax roll.
The Treasurer of the WPFA is obligated to fix and levy the amount of Special Taxes within the District in an amount at least equal to the amount required for the payment of principal of and interest on any outstanding CFD Bonds becoming due and payable during the ensuing calendar year, including any amount necessary to cure any past delinquency on the CFD Bonds, and an amount estimated to be sufficient to pay the Administrative Expenses during such calendar year, and taking into account any amounts transferred by the Trustee to the CFD Fiscal Agent pursuant to the Indenture. The Special Taxes so levied may not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation.
See “SECURITY FOR THE CFD BONDS—Rate and Method – Maximum Special Taxes.” Under the CFD Fiscal Agent Agreement, Special Taxes collected each fiscal year will be used to pay debt service on the CFD Bonds, before such amounts are used to pay Administrative Expenses. See “SECURITY FOR THE CFD BONDS—Special Tax Fund.” No Reduction of Maximum Special Taxes. The WPFA has covenanted in the CFD Fiscal Agent Agreement not to consent to 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 maximum annual debt service due on the CFD Bonds, plus a reasonable estimate of Administrative Expenses for such Fiscal Year.
Manner of Collection. The CFD Fiscal Agent Agreement provides that the Special Taxes are payable and will be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the ad valorem taxes on real property; provided that, pursuant to and in accordance with the Ordinance, the Special Taxes may be collected by means of direct billing of the property owners within the District, in which event the Special Taxes will become delinquent if not paid when due pursuant to said billing.
Because the Special Tax levy is limited to the maximum Special Tax rates set forth in the Rate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the receipts of Special Taxes will, in fact, be collected in sufficient amounts in any given year to pay the scheduled debt service on the CFD Bonds. See “FACTORS AFFECTING THE CFD BONDS,” for a discussion of factors that could impact the amount of Special Taxes collected by the WPFA and the amount, if any, to be realized by Bond owners as a result of a foreclosure action in respect of a delinquency in the payment of Special Taxes.
Teeter Plan Not Applicable to Special Taxes. The County has adopted a Teeter Plan as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, under which a tax distribution procedure is implemented and secured roll taxes are distributed to taxing agencies within the County on the basis of the tax levy, rather than on the basis of actual tax collections. By policy, the County does not include assessments, reassessments and special taxes, including the Special Taxes of the District, in its Teeter program. 21 Rate and Method
General. The following is a summary of certain provisions of the Rate and Method of Apportionment of Special Taxes for the District (referred to in this Placement Memorandum as the “Rate and Method”), and is qualified by more complete and detailed information contained in the entire Rate and Method included in Appendix C. The meaning of the capitalized terms used in this section that are not defined below have the meanings given to such terms in the Rate and Method, as set forth in Appendix C.
Special Tax Requirement. The Rate and Method provides that the Special Tax levy each fiscal year is calculated by first determining the “Special Tax Requirement” for the fiscal year.
The Special Tax Requirement is defined in the Rate and Method to be the amount necessary in any fiscal year: (i) to pay principal and interest on the CFD Bonds which is due in the calendar year which begins in such fiscal year, (ii) to create or replenish Reserve Fund, (iii) to cure any delinquencies in the payment of principal or interest on the CFD Bonds which have occurred in the prior fiscal year or, based on delinquencies in the payment of Special Taxes which have already taken place, are expected to occur in the fiscal year in which the tax will be collected, (iv) to pay Administrative Expenses, (v) to satisfy any unfunded obligations of the District to the Patterson Unified School District under Section 2 of the Joint Community Facilities Agreement – School Facilities, dated as of December 18, 2001 among the Authority, the WPFA, the District and the Patterson Unified School District (all of which were satisfied prior to the issuance of the Bonds), and (vi) to pay the costs of public improvements and public infrastructure authorized to be financed by the District. The amounts referred to in clauses (i) and (ii) of the preceding sentence may be reduced in any fiscal year by (i) interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against debt service pursuant to the CFD 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 the CFD Bonds as determined by the Administrator.
Pursuant to the Rate and Method, a Maximum Special Tax, calculated as more fully described below, will be assigned to each taxable parcel in the District. No Special Tax will be assigned to parcels classified as tax-exempt parcels, i.e. (i) parcels that have been conveyed to a Public Agency, except as otherwise provided in the Act and, until certain conditions are met, and (ii) certain parcels classified as Williamson Act Property (i.e., parcels which remain subject to contracts set in place pursuant to the California Land Conservation Act). Such Williamson Act Property will be considered taxable property and will be taxed at the same rates as the Parcels within Zone 2 (comprised of all Parcels in the District not constituting Williamson Act Property) in the first fiscal year after Williamson Act Property is no longer classified as such. No property in the District is subject to the Williamson Act. (Note that the Rate and Method provides that the Walker Ranch II property is exempt from the Special Tax until the owner of the property files a written request with the Authority requesting that it be subject to the Special Tax, and such written request was filed by the owner of the Walker Ranch II property on November 2, 2002.) Method of Apportionment of Special Tax. The Special Tax levy commenced in fiscal year 2002-03 and will continue as long as there are outstanding CFD Bonds, On or about July 1 of each fiscal year, the District Administrator will identify the current assessor’s parcel numbers for taxable property within the District. The District Administrator will also determine, (i) whether each parcel is located within Zone 1 or Zone 2, (ii) whether each parcel is Developed Property or Undeveloped Property, (iii) for Developed Property, whether each parcel is Residential Property, Senior Housing Property or Other Property, and (iv) whether any property that had 22 been Williamson Act Property in prior fiscal years has become Taxable Property for the then current fiscal year.
The Rate and Method provides that the WPFA’s CFD administrator will determine the Special Tax Requirement to be collected in each fiscal year. The Special Tax then will be levied as follows:
First: The Special Tax will be levied proportionately on each parcel of Developed Property up to 100% of the Maximum Special Tax for each parcel for such fiscal year;
Second: If additional revenues are needed after applying the above step, and after applying capitalized interest to the Special Tax Requirement, the Special Tax will be levied proportionately on each assessor’s parcel of Undeveloped Property up to 100% of the Maximum Special Tax for Undeveloped Property for such fiscal year;
Third: If additional revenues are needed after applying the first two steps, the Special Tax will be levied proportionately on each parcel of Public Property within the District, exclusive of property exempt from the Special Tax, up to 100% of the Maximum Special Tax for Undeveloped Property for such fiscal year.
Maximum Special Taxes. The annual Maximum Special Tax amounts for Fiscal Year 2013-14 and the actual Special Tax levy for such Fiscal Year are shown in the following table:
Table 1
West Patterson Financing Authority
Community Facilities District No. 2001-1
(Public Infrastructure)
Projected Maximum and Actual Special Tax Rates
Type of Property
Projected
FY 2023-24 Maximum
Special Tax (1)
Projected FY 2023-24
Actual Special Tax (2)
Residential Property $2,782.76 per unit $2,372.40 per unit Senior Housing Property $3,031.34 per acre $2,584.30 per acre Other Property (3) $23,849.00 per acre $20,331.94 per acre Undeveloped Property $23,849.00 per acre $0.00 per acre ________________
(1) On July 1, 2024 and each July 1 thereafter, the Maximum Special Taxes shall be increased by an amount equal to 2% of the amount in effect for the prior fiscal year. (2) The projected fiscal year 2023-24 special tax levy is based on the estimated debt service due in 2024 on the CFD Bonds and an estimate of administrative expenses.
(3) Includes all parcels of Developed Property which are not Residential Property or Senior Housing Property, as defined in the RMA.
Sources: Goodwin Consulting Group, Inc.
The annual Special Tax payment for each Taxable Parcel may not exceed the Maximum Special Tax for the applicable property classification. Under no circumstances will the Special Tax levied against any assessor’s parcel used for private residential purposes be increased by more than ten percent per fiscal year as a consequence of delinquency or default by the owner of any other parcel within the District.
23 Annual Special Tax Levies. The District Administrator is to establish tax rates, up to the Maximum Special Tax rates described above, to be used to levy and apportion the Special Tax within the District on an annual basis. The Special Tax will be levied until debt service on the CFD Bonds has been paid in full. However, in no event will the Special Tax be levied after fiscal year 2049-2050.
The actual amount of the Special Tax that may be levied and collected during any Fiscal Year will depend upon the Special Tax rates imposed and the level of delinquent Special Tax installments. See “FACTORS AFFECTING THE CFD BONDS—Insufficiency of Special Taxes.” The Special Tax was first levied in the District in Fiscal Year 2003-2004. Under the CFD Fiscal Agent Agreement, Special Taxes collected each fiscal year will be used to pay debt service on the CFD Bonds, before such amounts are used to pay Administrative Expenses. See “SECURITY FOR THE CFD BONDS— Special Tax Fund.”
The Special Taxes levied in the District are customarily billed with ad valorem property taxes and are collected by the County. When received, the Special Taxes will be deposited in the Special Tax Fund of the District to be held for the payment of administrative expenses and for payment of debt service on the CFD Bonds. Although the Special Taxes will be levied against, and constitute a lien against, taxable parcels within the District, they do not constitute a personal indebtedness of the respective property owners. There is no assurance that the property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so. See generally “FACTORS AFFECTING THE CFD BONDS⎯Insufficiency of Special Taxes.”
Limitation on Maximum Annual Special Tax Rate. The annual levy of the Special Tax is subject to the maximum annual Special Tax rate authorized in the Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds.
In addition to the maximum annual Special Tax rate limitation in the Rate and Method, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such fiscal year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds.
Priority of Lien. The principal of and interest on the CFD Bonds is payable from the Special Tax authorized to be collected within the District, and payment of the Special Tax is secured by a lien on certain real property within the District. Such lien is co-equal to and independent of the lien for general taxes and any other liens imposed under the Act, regardless of when they are imposed on the property in the District. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and coequal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies, including the Authority and the WPFA ,are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within the District.
24 Private liens, such as deeds of trust securing loans obtained by owners of property in the District, may be placed upon property in the District at any time. Under State law, the Special Taxes have priority over all existing and future private liens imposed on property subject to the lien of the Special Taxes.
Parcels in the District are subject to a bonded special tax lien and non-bonded special taxes and assessments for services. See “THE DISTRICT.” Limited Obligation Upon Delinquency. ALL OBLIGATIONS OF THE AUTHORITY
UNDER THE INDENTURE AND THE BONDS ARE SPECIAL OBLIGATIONS OF THE
AUTHORITY, PAYABLE SOLELY FROM AND SECURED BY THE REVENUES AND THE
AMOUNTS IN THE REVENUE FUND AND OTHER FUNDS PLEDGED THEREFOR UNDER THE INDENTURE. EACH ISSUE OF CFD BONDS ARE LIMITED OBLIGATION BONDS
UNDER THE ACT AND ARE PAYABLE SOLELY FROM AND ARE SECURED SOLELY BY
THE SPECIAL TAXES AND THE AMOUNTS IN THE SPECIAL TAX FUND AND OTHER
FUNDS PLEDGED THEREFOR UNDER THE APPLICABLE CFD FISCAL AGENT AGREEMENT.
The Authority, the WPFA and the City have no obligation to advance moneys to pay bond debt service in the event of delinquent special taxes. Bondowners should not rely upon the Authority, the City or the WPFA to advance moneys to the Special Tax Fund.
Notwithstanding the foregoing the Authority, the City or the WPFA may, at its sole option and in its sole discretion, elect to advance available surplus funds of the Authority, the City or the WPFA to pay for any delinquent Special Taxes pending sale, reinstatement, or redemption of any delinquent property.
Prepayment and Satisfaction of Special Tax
Property owners may permanently satisfy all or any portion of the Special Tax obligation of a parcel on any Interest Payment Date by a cash payment to the WPFA as permitted under Government Code Section 53344. The procedure for permanently satisfying the Special Tax obligation is set forth in the Rate and Method set forth in APPENDIX C hereto. To date, the City reports that Special Taxes have been prepaid in full for 133 parcels as of December 15, 2022 in the District and have been prepaid in part for four parcels in the District. The Authority and the WPFA have no means to estimate future prepayments of Special Taxes.
Pursuant to the CFD Fiscal Agent Agreement, the City, on behalf of the WPFA, is required to transfer any amounts received as prepayments of the Special Tax to the CFD Fiscal Agent in order to redeem CFD Bonds or portions thereof in authorized denominations on any Interest Payment Date as more fully set forth in the CFD Fiscal Agent Agreement. See “SECURITY FOR THE CFD BONDS—Special Tax Fund.” Redemptions of CFD Bonds will result in redemptions of the Bonds. See “THE BONDS—Redemption – Special Redemption From Redemption of CFD Bonds.”
Special Tax Fund
When received, the Special Taxes are required to be transferred to the CFD Fiscal Agent for deposit into the Special Tax Fund. Notwithstanding the foregoing, (i) any proceeds of Special Tax Prepayments, as identified by the Treasurer of the City to the CFD Fiscal Agent, shall be transferred by the Treasurer to the CFD Fiscal Agent for deposit by the CFD Fiscal Agent directly in the Special Tax Prepayments Account established pursuant to the CFD Fiscal 25 Agent Agreement, and (ii) any Special Tax Revenues constituting the collection of delinquencies in payment of Special Taxes shall be separately identified by the Treasurer and shall be deposited by the CFD Fiscal Agent first, in the Bond Fund to the extent needed to pay any past due debt service on the CFD Bonds; second, to the Administrative Expense Fund to the extent that amounts in such fund were used to pay costs related to the collection of such delinquencies; and third, to the Special Tax Fund for use as described below.
Moneys in the Special Tax Fund are held by the CFD Fiscal Agent for the benefit of the City and the owners of the CFD Bonds, and will be disbursed as described below and, pending any disbursement, are subject to a lien in favor of the owners of the CFD Bonds.
Amounts on deposit in the Special Tax Fund are required by the CFD Fiscal Agent Agreement to be transferred by the CFD Fiscal Agent from time to time as needed to pay the obligations of the District, but no later than each Interest Payment Date, to the following accounts and funds, 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 such that the amount in the Bond Fund equals the principal, premium, if any, and interest then due on the CFD Bonds. Amounts then in the Special Tax Fund shall also be transferred from time to time by the CFD Fiscal Agent to the Treasurer of the WPFA for deposit by the Treasurer in the Administrative Expense Fund as directed by the Treasurer in order to pay Administrative Expenses, but any such transfers shall only occur in any Fiscal Year when the amount on deposit in the Special Tax Fund is sufficient to pay the remaining scheduled debt service due on the CFD Bonds in the calendar year commencing in such Fiscal Year (being the March 1 occurring in such Fiscal Year and the September 1 occurring in the next Fiscal Year) and to replenish any draws on the CFD Reserve Fund in the Prior Fiscal Year.
Bond Fund
Moneys in the Bond Fund established under the CFD Fiscal Agent Agreement are held by the CFD Fiscal Agent for the benefit of the owner of the CFD Bonds, and are subject to a lien in favor of the owner of the CFD Bonds. On each Interest Payment Date, the CFD Fiscal Agent will withdraw from the Bond Fund and pay the principal of, premium, if any, and interest then due and payable on the CFD Bonds, including amounts due upon any redemption of the CFD Bonds.
If, after the foregoing transfers, there are insufficient funds in the Bond Fund to pay the debt service then due on the CFD Bonds, the CFD Fiscal Agent shall apply the available funds first to the payment of interest on the CFD Bonds, then to the payment of principal due on the CFD Bonds.
No Additional Obligations of District
The WPFA for and on behalf of District has covenanted in the CFD Fiscal Agent Agreement that it will not issue additional bonds secured by a pledge of Special Taxes of any amounts in any funds of accounts established under the CFD Fiscal Agent Agreement, except for Refunding Bonds. Refunding Bonds is defined in the CFD Fiscal Agent Agreement as bonds issued by the Authority for the District the net proceeds of which are used solely to refund all or a portion of the then outstanding CFD Bonds; provided that, as of the date they are issued, the scheduled debt service on the Refunding Bonds in each Bond Year over their term is not in excess of the remaining scheduled debt service on the CFD Bonds being refunded, and the final maturity of the Refunding Bonds is not later than the final maturity of the CFD Bonds being 26 refunded. Any such Refunding Bonds issued for the District will be secured on parity with the CFD Bonds not refunded thereby under the CFD Fiscal Agent Agreement.
Covenant for Superior Court Foreclosure
Although judicial foreclosure proceedings are not mandatory, the WPFA has covenanted in the CFD Fiscal Agent Agreement to initiate and pursue judicial foreclosure under specified circumstances with respect to the lien of delinquent Special Taxes. The Mello-Roos Act authorizes the institution of an action in the Superior Courts of the State to foreclose such liens.
In such action the real property subject to the Special Taxes may be sold at a judicial foreclosure sale. The ability of the WPFA to effect such foreclosures may be limited in certain instances and may require prior consent of the property owner in the event the property is owned by or in receivership of the Resolution Trust Corporation (the “RTC”) or the Federal Deposit Insurance Corporation (the “FDIC”). See “Bankruptcy and Foreclosure” and “Insufficiency of Special Taxes” under “FACTORS AFFECTING THE CFD BONDS.” In the CFD Fiscal Agent Agreement, the WPFA has covenanted with the owner of the CFD Bonds (being the Trustee owning on behalf of the Authority), that it will, on or about February 15 and June 15 of each Fiscal Year, compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the WPFA, and:
Individual Delinquencies. If the WPFA determines that any single parcel subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of $2,500 or more, then the Treasurer of the WPFA 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 WPFA within 90 days of such determination. Notwithstanding the foregoing.
Aggregate Delinquencies. If the Treasurer of the WPFA 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 Treasurer of the WPFA 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 WPFA shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency.
There could be a default or a delay in payments on the CFD Bonds, and, consequently a default in payments of debt service to the owners of the Bonds pending prosecution of foreclosure proceedings and receipt by the WPFA of foreclosure sale proceeds, if any, and subsequent use of those proceeds to pay any past due debt service on the CFD Bonds. Within the limits of the Rate and Method, the WPFA for and on behalf of the District may adjust the Special Taxes levied on all property within the District, up to the limit of the maximum Special Tax, to provide an amount required to pay debt service on the CFD Bonds and to pay the District Administrative Expenses. Under no circumstances, however, will the Special Tax levied against any assessor’s parcel used for private residential purposes be increased by more than ten percent per fiscal year as a consequence of delinquency or default by the owner of any other parcel within the District.
27 A judgment debtor (property owner) has at least 140 days from the date of service of the notice of levy in which to redeem the property to be sold and may have other redemption rights afforded by law. If a judgment debtor fails to so 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 the purchaser at the sale was the judgment creditor. If a foreclosure sale is thereby set aside, the judgment is revived, the judgment creditor is entitled to interest on the revived judgment and any liens extinguished by the sale are revived as if the sale had not been made. (Sections 701.545 and 701.680 of the California Code of Civil Procedure.) The constitutionality of the aforementioned legislation has not been tested, and there can be no assurance that, if tested, such legislation will be upheld.
BOND INSURANCE
28 THE DISTRICT
Introduction
Property in the District is comprised predominantly of single-family residential homes.
Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within the District, and the owners have made no commitment to pay the principal of or interest on the CFD Bonds or the Bonds or to support payment of the CFD Bonds or the Bonds in any manner. There is no assurance that the owners have the ability to pay the special taxes or that, even if they have the ability, they will choose to pay such taxes. An owner may elect to not pay the special taxes when due and cannot be legally compelled to do so. Neither the Authority, the WPFA, the City nor any Bondholder will have the ability at any time to seek payment from the owners of property within the District of any special tax or any principal or interest due on the CFD Bonds or the Bonds, or the ability to control who becomes a subsequent owner of any property within the District.
General
The District was formed by the Board of Directors of the WPFA on December 18, 2001 in accordance with the Act. See “THE DISTRICT—District Proceedings.” The District (other than the portion that includes Sutter Point described below, which is in the northern area of the City) is located in the northwest section of the City, north and south of Sperry Avenue, east of Baldwin Road and west of Ward Avenue. Walker Ranch I and II and Creekside Meadows comprise a portion of the area covered by the Creekside Concept Plan adopted by the City Council.
Taxable parcels in the District comprise 2,338 parcels developed as single-family dwelling units or senior housing facilities, and one undeveloped single family residential parcel.
The next three pages set forth the original site plans for the developments in the District:
(i) Walker Ranch/Creekside, (ii) Patterson Gardens, and (iii) Sutter Point (formerly Wilding Ranch). The-25 lot Miraggio development is not depicted. While the configuration of each development remains the same, the builders depicted, and the street and neighborhood names have changed.
29 30
31 32
Formation of the District and Issuance of Previous Bonds As required by the Act, the City Council of the City, in its capacity as the Board of Directors of the WPFA, has taken the following actions with respect to establishing the District and providing for the issuance of the CFD Bonds:
Resolution of Intention: On June 5, 2001, the City Council of the City, in its capacity as the Board of Directors of the WPFA adopted Resolution No. 01-3 and Resolution No. 01-4 (collectively the “Resolutions of Intention”), stating its intention to form the District, to authorize the levy of a special tax and to incur bonded indebtedness in an amount not to exceed $110,000,000 within the District for the purpose of financing certain public improvements. On July 17, 2001, the Board of Directors of the WPFA amended the Resolutions of Intention to allow for financing of school facilities and to change the date of public hearings referred to in the Resolutions of Intention. On September 18, 2001, the Board of Directors of the WPFA continued the date of those public hearings in a resolution making a finding of complexity with regard to the proposed District. On December 18, 2001, the Board of Directors of the WPFA further amended Resolution No. 01-3 to modify the list of authorized Facilities and the Rate and Method of Apportionment of the Special Tax.
Resolution of Formation: Subsequent to a noticed public hearing on December 18, 2001, the Board of Directors of the WPFA adopted Resolution No. 01-8 (the “Resolution of Formation”) which established the District and authorized the levy of a special tax within the District, and Resolution No. 01-9, which determined the necessity to incur bonded indebtedness in an amount not to exceed $110,000,000 within the District.
Landowner Election and Declaration of Results: On December 18, 2001, an election was held within the District in which the then landowners eligible to vote, being the qualified electors within the District, approved a ballot proposition by a 100 percent “yes” vote authorizing the issuance of up to $110,000,000 in bonds to finance the acquisition and construction of the Facilities, the levy of a special tax within the District and the establishment of an appropriations limit for the District. Following the election, the Board of Directors of the WPFA adopted Resolution No. 01-11, pursuant to which the Board of Directors of the WPFA approved the canvass of the votes and declared the District to be fully formed with the authority to levy the Special Taxes, to incur the bonded indebtedness and to have the established appropriations limit., and the Board introduced Ordinance No. 01-1 entitled “An Ordinance of the West Patterson Financing Authority Levying Special Taxes Within West Patterson Financing Authority District No. 2001-1 (Public Improvements)” (the “Ordinance”). The Ordinance was adopted by the Board of Directors on January 15, 2002. A Notice of Special Tax Lien for the District was recorded in the Office of the County Recorder on December 27, 2001.
Issuance of Series 2002-A Bonds. On December 18, 2001, the Board of Directors of the WPFA adopted Resolution No. 01-12 approving the issuance and sale by the WPFA of the Series 2002-A Bonds. On January 30, 2002, the WPFA, for and on behalf of the District, issued the Series 2002-A Bonds in the initial principal amount of $3,865,000.
Alteration Proceedings: On October 15, 2002, the Board of Directors of the WPFA adopted Resolution No. 2002-01 amending the description of the Facilities and the rate and method of apportionment of the Special Tax to accommodate a potential funding source for some of the Facilities and to better allow for annexations to the District. On November 19, 2002, the Board of Directors of the WPFA adopted Resolution No. 2002-02 calling for a special 33 election of the then landowners in the District regarding the amendments, the election was held and canvassed, and the Board of Directors of the WPFA adopted Resolution No. 2002-03 determining that the alterations to the Facilities and the rate and method of apportionment of the Special Tax were lawfully authorized, and directing the recordation of an Amended Notice of Special Tax Lien. The Amended Notice of Special Tax Lien was recorded on December 4, 2002 in the Office of the County Recorder.
Issuance of Series 2003-A Bonds. On December 5, 2002, the Board of Directors of the WPFA adopted Resolution No. 02-04 approving the issuance by the Authority of the Series 2003-A Bonds. On February 6, 2003, the WPFA, for and on behalf of the District, issued the Series 2003-A Bonds in the initial principal amount of $11,100,000.
Annexation Proceedings: On May 6, 2003, the Board of Directors of the WPFA adopted Resolution No. 03-01 expressing its intent to annex the land within the residential portion of the Patterson Gardens development and the Wilding Ranch development to the District. On June 17, 2003, the Board of Directors of the WPFA adopted Resolution No. 03-02 annexing the developments to the District and calling for an election by the owners of the property to be annexed. On June 17, 2003, the then two landowners voted in favor of the annexation, and the Board of Directors of the WPFA adopted Resolution No. 03-03 declaring the results of election.
On July 1, 2003, the WPFA recorded in the Office of the County Recorder a First Amendment to Amended and Restated Notice of Special Tax Lien imposing the lien of the Special Taxes on the property annexed to the District.
Issuance of Series 2003-B Bonds. On June 17, 2003, the Board of Directors of the WPFA adopted Resolution No. 03-04 approving the issuance by the Authority of the Series 2003-B Bonds. On September 16, 2003, the WPFA, for and on behalf of the District, issued the Series 2003-B Bonds in the initial principal amount of $15,040,000.
Issuance of Series 2004-A Bonds. On January 6, 2004, the Board of Directors of the WPFA adopted Resolution No. 04-01 approving the issuance by the WPFA of the Series 2004- A Bonds and a reduction in the maximum bonded indebtedness limit of the District to $80,000,000. On March 9, 2004, the WPFA, for and on behalf of the District, issued the Series 2004-A Bonds in the initial principal amount of $19,100,000.
Issuance of Series 2004-B Bonds. On September 21, 2004, the Board of Directors of the WPFA adopted Resolution No. 04-02 approving the issuance by the WPFA of the Series 2004- B Bonds. On October 20, 2004, the WPFA, for and on behalf of the District, issued the Series 2004-B Bonds in the initial principal amount of $19,890,000.
Issuance of the 2005 Notes. On July 19, 2005, the Board of Directors of the WPFA adopted Resolution No. 05-01 approving the issuance by the WPFA of the 2005 Notes. On September 29, 2005, the WPFA, for and on behalf of the District, issued the 2005 Notes in the initial principal amount of $4,100,000.
Issuance of the 2007 Notes. On July 17, 2007, the Board of Directors of the WPFA adopted Resolution No. 2007-01 approving the issuance by the WPFA of the 2007 Notes. On August 1, 2007, the WPFA, for and on behalf of the District, issued the 2007 Notes in the initial principal amount of $4,810,000, and used the net proceeds of the 2007 Notes to pay, on August 1, 2007, the principal due on the 2005 Notes.
34 Issuance of Series 2009-A and 2009-B Bonds. On June 16, 2009, the Board of Directors of the WPFA adopted Resolution No. 2009-01 approving issuance and sale by the WPFA of the Series 2009-A Bonds and the Series 2009-B Bonds. On July 28, 2009, the WPFA, for and on behalf of the District, issued the Series 2009-A Bonds in the initial principal amount of $2,615,000 and the Series 2009-B Bonds in the initial principal amount of $3,240,000, and used the net proceeds of the Series 2009-A Bonds and the Series 2009-B Bonds to pay, on August 1, 2009, the principal due on the 2007 Notes.
Issuance of the Series 2013-A Bonds and the Series 2013-B Bonds. On June 18, 2013, the Board of Directors of the WPFA adopted Resolution No. 2013-03 (the “Bond Resolution”) approving the issuance and sale by the WPFA of the CFD Bonds, and authorizing the execution and delivery of the CFD Fiscal Agent Agreement.
35 Assessed Values
The following table shows a history of assessed valuations of land in the District since Fiscal Year 2018-19.
Table 2
West Patterson Financing Authority
Community Facilities District No. 2001-1
(Public Infrastructure)
Assessed Valuation History
Fiscal Year
Land
Assessed
Value
Improvement
Assessed
Value
Total
Assessed
Value
Parcels of
Developed
Property (1)
2018-19 $144,134,267 $499,264,121 $643,398,388 2,347
2019-20 154,239,315 536,980,899 691,220,214 2,363
2020-21 160,870,642 555,799,441 716,670,083 2,357
2021-22 175,441,779 574,038,992 749,480,771 2,353
2022-23 197,344,631 609,454,969 806,799,600 2,340
________________ (1) Represents the number of parcels for which a final building permit inspection was conducted, or a certificate of occupancy was issued prior to June 1 of the prior fiscal year. Does not include parcels which have prepaid the special tax starting in the year in which such parcels were exempted from the special tax levy.
Sources: Stanislaus County Assessor's Office; Goodwin Consulting Group, Inc.
Investors should be aware that, because of the requirements of Article XIIIA of the California Constitution, assessed value may not necessarily reflect current market values. The Authority has not engaged an appraiser to determine current market values. 36 Top Ten Taxpayers
The following table shows the top ten taxpayers in the District for Fiscal Year 2022-23 and the value to lien ration of the parcels owned.
Table 3
West Patterson Financing Authority
Community Facilities District No. 2001-1
(Public Infrastructure)
Top Ten Taxpayers and Assessed Value to Lien (1)
Owner
No. of
Parcels Acres
FY 2022-23
Assessed
Value (2)
% of
Projected
Special
Tax
Levy(3)
Total
Projected CFD
and Other
Debt(4)
Average
Assessed
Value to Lien
Nilesh Patterson LLC 10 1.6 $2,030,485 0.4% $281,970 7.2 : 1 Mission NSS LLC 8 1.4 1,590,963 0.3 $25,006 7.1 : 1
Shephali Patterson LLC 7 1.2 1,560,822 0.3 199,758 7.8 : 1 Individual Owner 5 0.8 890,597 0.2 138,859 6.4 : 1
Individual Owner 4 0.5 1,318,538 0.2 121,424 10.9 : 1
Individual Owner 4 0.8 962,173 0.2 115,346 8.3 : 1
Individual Owner 3 0.5 957,530 0.1 90,533 10.6 : 1
Patterson Frozen Foods Inc. 3 0.5 1,164,308 0.1 94,060 12.4 : 1 Individual Owner 3 0.4 523,594 0.1 83,132 6.3 : 1
Individual Owner 3 0.4 826,648 0.1 88,301 9.4 : 1
Subtotal 50 8.1 $11,825,658 2.2 $1,438,388 8.2 : 1
All Other Taxpayers 2,289 370.6 794,466,536 97.8 69,134,188 11.5:1 Totals 2,339 378.7 $806,292,194 100.0% $70,572,576 11.4:1 ___________________________
(1) Does not include parcels for which the Special Tax obligation has been prepaid prior to December 15, 2022. (2) Based on the Stanislaus County Assessor’s Roll for fiscal year 2022-23. (3) Includes an estimated $5,379,654 in debt service du in 2024 on the CFD Bonds plus an estimated $78,244 in administrative expenses. Subject to change.
(4) Includes (i) the $29,540,762 outstanding principal amount of the Series 2013A-1 Bonds, the $23,885,232 outstanding principal amount of the Series 2013A-2 Bonds, and the $3,476,156 outstanding principal amount of the Series 2013B Bonds. Allocated based on the Projected FY 2023-24 Special Tax Levy and (ii) the overlapping debt liens listed under "Direct and Overlapping Tax and Assessment Debt" in the overlapping debt report prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcels and assessed values as of FY 2022-23.
Sources: Stanislaus County Tax Collector's Office; Goodwin Consulting Group, Inc.
Value-to-Lien Ratios
The Special Tax will be levied and collected on all 2,339 taxable parcels in the District through the application of the appropriate amount or rate as described in the Rate and Method in an amount each year at least sufficient to pay debt service on outstanding CFD Bonds and administrative expenses of the District. See “SECRITY FOR THE CFD BONDS – Rate and Method” and APPENDIX A.
37 Aggregate Assessed Valuation, Special Tax Levy and Value-to-Lien. The property within the District has been developed into a total of 2,338 finished single-family residential units in six separate neighborhoods known as Walker Ranch I & II, Creekside Meadows, Miraggio, Patterson Gardens, and Sutter Point. One parcel in the District is undeveloped, the remaining 2,338 taxable parcels are developed as single-family dwelling units or senior housing facilities. The following table shows 2022-23 assessed valuations and projected 2023-24 values for maximum special taxes revenues, and the value-to-lien ratio for land in the District.
Table 4
West Patterson Financing Authority
Community Facilities District No. 2001-1
(Public Infrastructure)
Projected Status of Development for Fiscal Year 2023-24(1) Type of Property
No. of
Parcels Acres
FY 2022-23
Assessed
Value (2)
Projected
FY 2023-24
Maximum
Special Tax
Projected
FY 2023-24
Special Tax
Levy (3)
Percent of
Projected
Special Tax
Levy
CFD
Bonds (4)
Overlapping
Debt (5)
Total
Debt
Average
Assessed
Value-toLien
Residential Property 2,296 372.2 $792,560,971 $6,382,970 $5,441,705 99.7% $56,733,331 $13,438,787 $70,172,118 11.29 Senior Housing Property 42 6.3 $13,603,723 $18,993 $16,193 0.3% $168,819 $229,465 $398,283 34.16 Other Property (6) 0 0.0 $0 $0 $0 0.0% $0 $0 $0 N/A
Undeveloped Property (7) 1 0.3 $127,500 $6,607 $0 0.0% $0 $2,175 $2,175 58.63 Total 2,339 378.7 $806,292,194 $6,408,571 $5,457,897 100.0% $56,902,150 $13,670,426 $70,572,576 11.4: 1 ___________________________ (1) Does not include parcels for which the special tax obligation has been prepaid prior to December 15, 2022. (2) Based on the Stanislaus County Assessor's Roll for fiscal year 2022-23. (3) Includes an estimated $5,379,654 in debt service due in 2024 on the CFD Bonds plus an estimated $78,244 in administrative expenses. Subject to change. (4) Includes the $29,540,762 outstanding principal amount of the Series 2013A-1 Bonds, the $23,885,232 outstanding principal amount of the Series 2013A-2 Bonds, and the $3,476,156 outstanding principal amount of the Series 2013B Bonds. Allocated based on the Projected FY 2023-24 Special Tax Levy. (5) Includes the overlapping debt liens listed under "Direct and Overlapping Tax and Assessment Debt" in the overlapping debt report prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcels and assessed values as of FY 2022-23. (6) Includes all parcels of Developed Property which are not Residential Property or Senior Housing Property, as defined in the RMA. (7) No special tax is anticipated to be levied on parcels of Undeveloped Property for fiscal year 2023-24.
Sources: Hilltop Securities, Inc.; California Municipal Statistics, Inc; Stanislaus County Assessor's Office; Goodwin Consulting Group, Inc. 38 Value-to-Lien Stratification Table. The following table shows the District value to lien stratification of land in the District based 2022-23 assessed valuations and projected 2023-24 values for maximum special taxes revenues, and the value-to-lien ratio for land in the District.
Table 5
West Patterson Financing Authority
Community Facilities District No. 2001-1
(Public Infrastructure)
Assessed Value-to-Lien Ratios (1)
Assessed
Value-to-Lien
Category
No. of
Parcels Acres
FY 2022-23
Assessed
Value (2)
Projected
FY 2023-24
Special Tax
Levy (3)
Percent of
Projected
Special Tax
Levy
CFD
Bonds (4)
Overlapping
Debt (5)
Total
Debt
Average
Assessed
Value-toLien
20:1 or Greater 43 6.3 $13,937,999 $15,762 0.3% $164,332 $235,166 $399,498 34.9: 1 15:1 to 20:1 289 50.4 $160,116,672 $681,177 12.5% $7,101,720 $2,711,738 $9,813,458 16.3: 1 10:1 to 15:1 1,120 180.2 $436,249,706 $2,657,088 48.7% $27,701,880 $7,407,348 $35,109,228 12.4: 1 5:1 to 10:1 883 141.2 $195,483,963 $2,094,380 38.4% $21,835,282 $3,307,580 $25,142,863 7.8: 1 3:1 to 5:1 4 0.6 $503,854 $9,490 0.2% $98,935 $8,594 $107,529 4.7: 1 Totals 2,339 378.7 $806,292,194 $5,457,897 100.0% $56,902,150 $13,670,426 $70,572,576 11.4: 1 (1) Does not include parcels for which the special tax obligation has been prepaid prior to December 15, 2022. (2) Includes an estimated $5,379,654 in debt service due in 2024 on the CFD Bonds plus an estimated $78,244 in administrative expenses. Subject to change. (4) Includes the $29,540,762 outstanding principal amount of the Series 2013A-1 Bonds, the $23,885,232 outstanding principal amount of the Series 2013A-2 Bonds, and the $3,476,156 outstanding principal amount of the Series 2013B Bonds. Allocated based on the Projected FY 2023-24 Special Tax Levy. (5) Includes the overlapping debt liens listed under "Direct and Overlapping Tax and Assessment Debt" in the overlapping debt report prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcels and assessed values as of FY 2022-23.
Sources: Hilltop Securities, Inc.; California Municipal Statistics, Inc; Stanislaus County Assessor's Office; Goodwin Consulting Group, Inc.
Limitations on Increases in Special Tax Levy. If owners are delinquent in the payment of Special Taxes, the WPFA may not increase Special Tax levies to make up for delinquencies for prior Fiscal Years above the Maximum Annual Special Tax rates specified for each category of property within the District. In addition, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds. See “BOND OWNERS’ RISKS.”
39 Special Tax Collection and Delinquency Rate
The Special Tax delinquency rate in the District has been less than 1% for the last five fiscal years. The table below shows the annual Special Tax levies and current delinquencies for the past four years.
Table 6
West Patterson Financing Authority
Community Facilities District No. 2001-1
(Public Infrastructure)
Special Tax Collections and Delinquencies
As of the end of each fiscal year As of May 12, 2023
Fiscal
Year
Amount
Levied
Number of
Parcels
Delinquent
Amount
Delinquent
Percentage
Delinquent
Number of
Parcels
Delinquent
Amount
Delinquent
Percentage
Delinquent
2018-19 $5,274,276 30 $50,448 0.96% 4 $7,996 0.15%
2019-20 $5,305,504 21 $36,526 0.69% 6 $10,273 0.19%
2020-21 $5,354,737 26 $41,899 0.78% 4 $8,085 0.15%
2021-22 $5,408,866 34 $58,604 1.08% 8 $16,362 0.30%
2022-23 $5,390,664 N/A N/A N/A 42 $71,898 1.33%
___________________________
Sources: Stanislaus County Tax Collector's Office; Goodwin Consulting Group, Inc.
Property tax and Special Tax delinquencies in the District peaked with the 2007-08 tax roll. That year, the City recognized the need for an effective, pro-active program to address and resolve Special Tax delinquencies and instituted a delinquency procedures program. Initial Special Tax delinquencies have steadily declined since the procedures were put in place and were________% in the tax year 2022-23 and continued to decline in subsequent Fiscal Years. The City’s experience is that pro-active procedures along with educating, communicating and working with property owners to bring Special Taxes current has been very effective.
No assurance can be given with respect to the amount of any future Special Tax delinquencies. Neither the WPFA, the Authority or the City has obligated itself to advance any of its own funds to cover any delinquency or payment of any Special Tax installment.
Future delinquencies in the payment of property taxes (including the Special Taxes) with respect to property in the District could result in a default in the payment on the Bonds. See “BOND OWNERS’ RISKS.” Jones Hall Draft 626.23
40 Special Tax Enforcement and Collection Procedures. The WPFA could receive additional funds for the payment of debt service through foreclosure sales of delinquent property, but no assurance can be given as to the amount foreclosure sale proceeds or when foreclosure sale proceeds would be received. The WPFA has covenanted in the CFD Fiscal Agent Agreement to take certain enforcement actions and commence and pursue foreclosure proceedings against delinquent parcels under the terms and conditions described in this Official Statement. See “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.”
Foreclosure actions would include, among other steps, formal City Council, as the WPFA Board of Directors, action to authorize commencement of foreclosure proceedings, mailing multiple demand letters to the record owners of the delinquent parcels advising them of the consequences of failing to pay the applicable special taxes and contacting secured lenders to obtain payment. If these efforts were unsuccessful, they would be followed (as needed) by the filing of an action to foreclose in superior court against each parcel that remained delinquent.
Limitations on Increases in Special Tax Levy. If owners are delinquent in the payment of Special Taxes, the WPFA may not increase Special Tax levies to make up for delinquencies for prior Fiscal Years above the Maximum Annual Special Tax rates specified for each category of property within the District. See “SECURITY FOR THE BONDS – Rate and Method.” In addition, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds. See “RISK FACTORS.”
41 Projected Overall Tax Burden
The following table shows the projected overall tax burden for a single-family residential home in the District, for Fiscal Year 2022-23, with an estimated assessed value of $433,000.
Table 7
West Patterson Financing Authority
Community Facilities District No. 2001-1
(Public Infrastructure)
Sample FY 2022-23 Tax Bill - Patterson Gardens Area
Net Taxable Value Amount
Average Assessed Value (1) $ 433,000.00
Less: Homeowner's Exemption (7,000.00)
Net Taxable Value $426,000.00
Ad Valorem Property Taxes Rate Amount
Base Property Tax 1.000000% $4,260.00
Patterson Unif-Bond 01A 0.030812% $131.26
Patterson Unif-Bond 01B 0.007859% $33.48
Patterson Unif-Bond 2008A 0.009993% $42.57
Patterson Unif-2016 GO Refunding 0.006695% $28.52
Patterson Unif-Bond 2018 A 0.046326% $197.35
YCCD - Bond 2007C 0.009875% $42.07
Yosemite 2020 GOB Refunding Series B 0.006848% $29.17
Yosemite 2022 GOB Refunding 0.006694% $28.52
Total Ad Valorem Property Taxes 1.125102% $4,792.93
Parcel Charges, Assessments, and Special Taxes Amount
Patterson Garden LMD $590.74
Patterson Gardens Fire Suppression $572.38
Patterson Gardens BAD $169.98
Patterson Ambulance District $27.20
WPFA CFD No. 2001-01 $2,341.14
Turlock Mosquito Abatement $5.16
Total Parcel Charges, Assessments, and Special Taxes $3,706.60 Total Taxes $8,499.53
Total Effective Tax Rate 1.96%
___________________________
(1) Represents the average fiscal year 2022-23 assessed value of single-family homes sold within the Patterson Gardens area of the CFD in the previous five years. Other areas in the CFD are expected to be similar.
Sources: Stanislaus County Tax Collector's Office; Goodwin Consulting Group, Inc. 42 Direct and Overlapping Governmental Obligations
Overlapping Debt Statement. Contained within the boundaries of the District are certain overlapping local agencies providing public services. Many of these local agencies have outstanding debt.
In addition to the lien of the Special Taxes, properties within the District are subject to general ad valorem taxes and other authorized taxes and assessments. The text under the heading “THE DISTRICT—Overlapping Governmental Obligations” contains overlapping debt information for the District and a discussion of those taxes and assessments which may be on a parity with the Special Taxes. Also, the property within the District is subject to existing and future authorized indebtedness of governmental entities payable from taxes and assessments.
This may include general obligation debt and other debt secured by ad valorem or other property taxes. The ability and willingness of an owner of land to pay the Special Taxes could be adversely affected by the existence of other taxes and assessments imposed upon the parcels.
The Special Taxes and any penalties thereon constitute a lien against the lots and parcels of land on which they are annually imposed until they are paid. Such Special Tax lien is on a parity with all special taxes and special assessments levied by the City and other governmental agencies. The Special Taxes, however, do have priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See “FACTORS AFFECTING THE CFD BONDS—Bankruptcy and Foreclosure.” The Special Tax lien is co-equal to and independent of the lien of general and special taxes.
The WPFA has covenanted that it will not issue any additional bonds of the District, other than refunding bonds. However, the City and the WPFA have no control over the amount of additional debt payable from taxes or assessments on all or a portion of the property within the District that may be issued in the future by other governmental entities or districts having jurisdiction over all or a portion of such land. Nothing prevents the owners of land within the District from consenting to the issuance of additional debt by other public 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 MelloRoos Act or taxes, such assessments, special taxes and taxes may have a lien on such property on a parity with the lien of the Special Taxes. See “FACTORS AFFECTING THE CFD BONDS ⎯ Parity Taxes and Special Assessments.”
Thus, liens on the property within the District which are on a parity with the lien of the Special Taxes could greatly increase, without any corresponding increase in the value of such property. The imposition of such additional indebtedness could also reduce the willingness and ability of the property owners to pay the Special Taxes when due. See “FACTORS AFFECTING THE CFD BONDS ⎯ Parity Taxes and Special Assessments.” Moreover, in the event of a delinquency in the payment of a Special Tax levy, no assurance can be given that the proceeds of any foreclosure sale would be sufficient to pay the delinquent Special Taxes and any other delinquent special taxes, assessments or taxes. See “Property Values” and “Insufficiency of Special Taxes” under “FACTORS AFFECTING THE CFD BONDS.” 43 The direct and overlapping debt affecting the District is shown in the table below, which is an overlapping debt report (“Debt Report”) prepared by California Municipal Statistics, Inc.
The Debt Report is included for general information purposes only. The City and the Authority have not reviewed the Debt Report for completeness or accuracy and makes no representation in connection therewith.
The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the District in whole or in part. These long-term obligations are not payable from revenues of the District (except as indicated) nor are they necessarily obligations secured by land within the District. In many cases long-term obligations issued by a public agency are payable only from the general fund or other revenues of such public agency. The amount shown reflects the amount outstanding as of the date indicated and does not reflect the amount of authorized but unissued debt.
Table 8
West Patterson Financing Authority
Community Facilities District No. 2001-1 (Public Improvements) Direct and Overlapping Governmental Obligations
As of May 1, 2023
2022-23 Local Secured Assessed Valuation: $806,292,194
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/23 Yosemite Community College District General Obligation Bonds 0.962% $ 2,436,478 Patterson Joint Unified School District General Obligation Bonds 21.122 11,233,948 West Patterson Public Financing Authority CFD No. 2001-1 100. 56,902,150 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $70,572,576(1) OVERLAPPING GENERAL FUND DEBT:
Stanislaus County Certificates of Participation 1.300% $ 71,650 Stanislaus County Office of Education Certificates of Participation 1.300 10,208 Patterson Joint Unified School District Certificates of Participation 21.122 2,178,768 City of Patterson General Fund Obligations 29.700 563,823 TOTAL OVERLAPPING GENERAL FUND DEBT $2,824,449
COMBINED TOTAL DEBT $73,397,025(2)
(1) Mello-Roos Act bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2022-23 Assessed Valuation:
Direct Debt ($56,902,150)........................................ 7.06% Total Direct and Overlapping Tax and Assessment Debt 8.75% Combined Total Debt ................................................. 9.10% 44 RISK FACTORS
The purchase of the Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks that should be considered before making an investment decision.
Limited Obligation to Pay Debt Service
The Bonds. The Bonds are special obligations of the Authority payable solely from and secured solely by the Revenues, consisting primarily of debt service on the CFD Bonds, and other amounts held and pledged therefor under the Indenture. The Authority has no obligation to pay principal of or interest on the Bonds if the Revenues and the amounts in the other funds pledged for the Bonds, including the Reserve Fund, are insufficient pay the debt service on the Bonds. The Authority is not obligated to advance funds to pay debt service on the Bonds.
The CFD Bonds. The Authority, the WPFA and the City have no obligation to pay principal of or interest on the CFD Bonds if Special Tax collections are delinquent or insufficient, including funds derived from the foreclosure and sale of parcels for Special Tax delinquencies, to pay the debt service on the CFD Bonds. Neither the Authority, the WPFA or the City is obligated to advance funds to pay debt service on the CFD Bonds.
Levy and Collection of the Special Taxes
General. The principal source of payment of principal of and interest on each series of the CFD Bonds is the proceeds of the annual levy and collection of the Special Tax against taxable property within the applicable District.
Limitation on Special Tax Rate. The annual levy of the Special Tax on any parcel is limited to the maximum Special Tax rate authorized in the applicable Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the CFD Bonds.
No Relationship Between Property Value and Special Tax Levy. Because the Rate and Method is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels of taxable property and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels of taxable property and their proportionate share of debt service on the CFD Bonds, and certainly not a direct relationship.
Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular parcel of taxable property to vary from the Special Tax that might otherwise be expected:
Transfers to Governmental Entities. The number of parcels of taxable property could be reduced through the acquisition of taxable property by a governmental entity (by exercise of its rights as mortgage guarantor, or for other reasons) and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining taxed parcels. No investigation has been 45 made as to whether any governmental entity currently owns or has an interest in any property in the District.
Property Tax Delinquencies. Failure of the owners of taxable property to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Taxes. For a summary of Special Tax collections and delinquencies in the District, see “THE DISTRICT – Delinquencies on a Combined Basis.”
Delays Following Delinquencies and Foreclosure Sales. The CFD Fiscal Agent Agreement provide that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in “SECURITY FOR THE CFD BONDS – Covenants of the WPFA” and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by the County.
If sales or foreclosures of property are necessary, there could be a delay in payments to the Authority, as owner of the CFD Bonds, pending such sales or the prosecution of foreclosure proceedings and receipt by the Authority of the proceeds of sale. See “SECURITY FOR THE CFD BONDS.”
Payment of Special Taxes is not a Personal Obligation of the Property Owners Property owners are not personally obligated to pay their respective Special Taxes.
Rather, the Special Taxes are obligations only against the respective parcels against which they are levied. If, after a default in the payment of the Special Tax and a foreclosure sale, the resulting proceeds are insufficient, taking into account other obligations also constituting a lien against the parcel, the WPFA has no personal recourse against the parcel owner.
Assessed Valuations
The Authority has not commissioned an appraisal of the parcels in any of the District in connection with the issuance of the Bonds. Therefore, the estimated valuation of the taxable property in the District set forth in this Official Statement are based on the County Assessor’s values. The Assessed Valuation, derived from the County Assessor’s Fiscal Year 2016-17 property tax roll, is not necessarily an indication of what a willing buyer might pay for a property.
The assessed value is not necessarily evidence of future value because future facts and circumstances may differ significantly from the present.
No assurance can be given that any of the taxable property in the District could be sold for the Assessed Valuations if that property should become delinquent and subject to foreclosure proceedings.
Property Values
The value of taxable property within the District is a critical factor in determining the investment quality of the Bonds. If a parcel owner defaults in the payment of the Special Taxes, the Authority’s only remedy is to foreclose on the delinquent property. 46 The following is a discussion of specific risk factors that could affect the value of property in the District.
Prolonged Economic Downturn. Land values in and around the City have been in the past and likely would be in the future adversely affected by national and local economic conditions. To the extent of an economic downturn, property values could remain flat and/or decrease for an indefinite period.
Declines in home values in the District could also result in property owner unwillingness or inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes, when due. Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings.
Risks Related to Mortgage Loans. Although residential projects that have their homes built and occupied by homeowners are typically viewed as providing bondholders with strong credits, some of the home purchasers within the District, especially those during 2004 to 2013, may face challenges in making their mortgage and tax payments on a timely basis, due to their initial high loan to value ratios, creative mortgage loan structures, and potential negative equity levels.
Events in the United States and world-wide capital markets could adversely affect the availability of mortgage loans to homeowners, including potential buyers of homes within the District. Any such unavailability could hinder the ability of the current homeowners to resell their homes, and adversely affect the market prices available to current homeowners.
Natural Disasters. The value of the parcels in the District in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the parcels in the District and the continued habitability and enjoyment of such private improvements.
For example, the areas in and surrounding the District, like those in much of the State, may be subject to earthquakes or other unpredictable seismic activity, however, the District are not located in a seismic special studies zone.
Other natural disasters could include, without limitation, landslides, floods, droughts or fires. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the parcels may well depreciate.
Hazardous Substances. One of the most serious risks in terms of the potential reduction in the property values is a claim with regard to a hazardous substance. In general, the owners and operators of property may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the 47 most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property in the District be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
Although the City is not aware that the owners or operators of any of the Taxable Property in the District have such a current liability, it is possible that such liabilities do currently exist. Further, it is possible that liabilities may arise in the future resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but that has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently on the parcel of a substance not presently classified as hazardous but that may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the property values that would otherwise be realized upon a delinquency.
No information is available as to the existence of any hazardous substances within the District.
Other Factors. Other factors that could adversely affect property values in the District include, among others, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, and destruction of property caused by man-made disasters.
Enforcement of Special Taxes on Governmentally Owned Properties General. The ability of the WPFA to foreclose the lien of delinquent unpaid Special Tax or Reassessment installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or city cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest.
The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.” This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the District, but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. 48 Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the City wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
Neither the City nor the Authority has undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within the District. No assurance can be given as to the likelihood that the risks described above will materialize while the CFD Bonds are outstanding.
FDIC. If any financial institution making any loan secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan (or loans) goes into default, resulting in ownership of the property by the FDIC, then the ability of the City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.
The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value.
According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.
The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special taxes and assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Act and a Rate and Method, which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes.
49 The Authority and the City are unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District, in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome couldReserve Fund, if enough property were to become owned by the FDIC, a default in payment on the CFD Bonds.
Exemptions Under Rate and Method and the Mello-Roos Act. Certain properties are exempt from the Special Tax in accordance with the Rate and Method and the Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax.
In addition, although the Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Tax. The Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.
Bankruptcy Delays
The payment of the Special Taxes, and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax, may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by State laws relating to judicial foreclosure.
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the CFD Bonds, as applicable.
Disclosure to Future Purchasers
The City has caused to be recorded, in the Office of the County Recorder, a notice of the Special Tax lien with respect to the District. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider the obligations represented by the Special Taxes 50 in the purchase of a parcel of land or a home in the District, or the lending of money secured by property in the District.
No Acceleration; Right to Pursue Remedies
Neither the Bonds nor the CFD Bonds contain a provision allowing for acceleration if a payment default or other default occurs under the Indenture or the CFD Fiscal Agent Agreement. See “APPENDIX A – Summary of Certain Provisions of Principal Legal Documents.”
So long as the Bonds are in book-entry form, DTC will be the sole Bond Owner and will be entitled to exercise all rights and remedies of Bond Owners under the Bonds and the Indenture.
Loss of Tax Exemption
As discussed under the caption “LEGAL MATTERS – Tax Matters,” interest on the Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the Authority in violation of its covenants in the Indenture, or of the City in violation of its covenants in the CFD Fiscal Agent Agreement.
The Indenture does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to be includable in gross income for purposes of federal income taxation, the Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to mandatory redemption. See “THE BONDS – Redemption.”
In addition, Congress has considered in the past, is currently considering and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation.
Voter Initiatives
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.
Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the CFD Bonds.
Proposition 218—Voter Approval for Local Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment, added Articles XIIIC and 51 XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act”. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote.
The Special Taxes and the CFD Bonds were authorized by not less than a two-thirds vote of the landowners within the CFD who constituted the qualified electors at the time of such voted authorization. The City believes, therefore, that issuance of the CFD Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.
Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on the District can be determined. Certain provisions of Proposition 218 and Proposition 26 may be examined by the courts for their constitutionality under both State and federal constitutional law, the outcome of which cannot be predicted.
No Acceleration Provisions
The Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other default under the terms of the Indenture, the Bonds or the CFD Fiscal Agent Agreement. Under the CFD Fiscal Agent Agreement, a Bondholder is given the right for the equal benefit and protection of all Bondowners similarly situated to pursue certain remedies.
So long as the Bonds are in book-entry form, DTC will be the sole Bondholder and will be entitled to exercise all rights and remedies of Bond holders.
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.
No assurance can be given that the market price for the Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the Bonds for audit examination, or the course or result of any Internal Revenue Service audit or examination of the Bonds or obligations that present similar tax issues as the Bonds.
Cyber Security
52 The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. In addition, the City relies on the County to provide the District with information technology services and personnel. As a recipient and provider of personal, private or other sensitive electronic information, each of the District and the County is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the District’s or County’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the District, the County or the Systems, or the administration of the Bonds. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the Trustee and the dissemination agent. No assurance can be given that the District, the County and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
THE AUTHORITY
The Authority is a a joint powers authority established under Sections 6500 et seq. of the California Government Code and a Joint Exercise of Powers Agreement dated as of September 25, 1990, by and between the City of Patterson and the Redevelopment Agency of the City of Patterson (now succeeded by the Successor Agency to the Redevelopment Agency of the City of Patterson). The Authority is qualified to assist in financing projects and certain public improvements and to issue the Bonds under the Bond Law. The Authority has no taxing power.
The Authority and the City are each separate and distinct legal entities, and the debts and obligations of one such entity are not debts or obligations of the other entity.
The Authority is governed by a five-member Board of Directors. The City Council members constitute the members of the Board of Directors of the Authority. The Executive Director of the Authority is the City Manager. The Authority is specifically granted the power to issue bonds and to sell such bonds to public or private purchasers at public or by negotiated sale. The Authority is entitled to exercise powers common to its members and necessary to accomplish the purpose for which it was formed and those additional powers granted to it under the California Government Code.
THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE
SOLELY FROM AND SECURED SOLELY BY THE REVENUES AND OTHER AMOUNTS PLEDGED THEREFOR IN THE INDENTURE. THE BONDS ARE NOT A DEBT OR LIABILITY
OF THE CITY, THE WEST PATTERSON FINANCING AUTHORITY, THE STATE OR ANY OF
ITS POLITICAL SUBDIVISIONS OTHER THAN THE AUTHORITY, AND THEN ONLY TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE. NEITHER THE FAITH AND CREDIT
NOR THE TAXING POWER OF THE CITY, THE WEST PATTERSON FINANCING
AUTHORITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF PRINCIPAL OF OR INTEREST ON THE BONDS. THE AUTHORITY HAS NO TAXING POWER. EXCEPT FOR THE REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE WPFA, THE CITY, THE AGENCY
AND THE SUCCESSOR AGENCY HAVE NO OBLIGATION WHATSOEVER WITH RESPECT TO THE BONDS.
LEGAL MATTERS
53 Tax Matters
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax.
The opinions set forth in the preceding paragraph are subject to the condition that the Authority and the District comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The Authority and the District have made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.
Tax Treatment of Original Issue Discount and Premium. The issue price for original issue discount (as further discussed below) and market discount purposes (the “OID Issue Price”) for each maturity of the Bonds is the price at which a substantial amount of such maturity of the Bonds is first sold to the public (excluding bond houses and brokers and similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The OID Issue Price of a maturity of the Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof.
If the OID Issue Price of a maturity of the Bonds is less than the principal amount payable at maturity, the difference between the OID Issue Price of each such maturity, if any, of the Bonds (the “OID Bonds”) and the principal amount payable at maturity is original issue discount.
For an investor who purchases an OID Bond in the initial public offering at the OID Issue Price for such maturity and who holds such OID Bond to its stated maturity, subject to the condition that the District complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals under the Code; and (d) the accretion of original issue discount in each year may result in certain collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. An OID Bond would be treated in a similar manner for purposes of California personal income taxes.
Owners of Bonds who dispose of Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the OID Issue Price or purchase Bonds subsequent to the initial public offering should consult their own tax advisors.
54 If a Bond is purchased at any time for a price that is less than the Bond’s stated redemption price at maturity or, in the case of an OID Bond, its OID Issue Price plus accreted original issue discount (the “Revised Issue Price”), the purchaser will be treated as having purchased a Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser’s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Bonds.
An investor may purchase a Bond at a price in excess of its stated principal amount.
Such excess is characterized for federal income tax purposes as “bond premium” and must be amortized by an investor on a constant yield basis over the remaining term of the Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor’s basis in the bond. Investors who purchase a Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Bond’s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Bond.
California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. 55 Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.
Absence of Litigation
The Authority and the City will certify at the time the Bonds are issued that no litigation is pending or threatened concerning the validity of the Bonds and that no action, suit or proceeding is known by the Authority or the City to be pending that would restrain or enjoin the delivery of the Bonds, or contest or affect the validity of the Bonds, or any proceedings of the Authority or the City taken with respect to the Bonds.
Legal Opinion
All proceedings in connection with the issuance of the Bonds are subject to the approval as to their legality of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. The form of unqualified opinion of Bond Counsel approving the validity of the Bonds is attached as APPENDIX D.
RATINGS
It is anticipated that S&P Global Ratings (“S&P”) will assign its municipal bond rating of “____” to the Bonds that are insured, based on the understanding that the Insurer will issue its 2023 Insurance Policy in connection with the closing of the Bonds. S&P has also assigned an underlying municipal bond rating of “A” to the Bonds. These ratings reflect only the views of S&P, and an explanation of the significance of such ratings may be obtained from S&P.
There is no assurance that any rating will continue for any given period of time for the Bonds or that it will not be revised downward or withdrawn entirely by S&P, if, in the judgment of S&P, circumstances so warrant. The District and the Authority undertake no responsibility to oppose any downward revision or withdrawal of any rating obtained. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
UNDERWRITING
56 Hilltop Securities, Inc. (the “Underwriter”), has agreed to purchase the Bonds at a purchase price of $____________ (being the principal amount of the Bonds ($_________) [plus/less] net original issue [premium/discount] of $___________ and less an underwriter’s discount of $___________).
The Underwriter may change the initial public offering prices of the Bonds from time to time. The agreement under which the Underwriter has agreed to purchase the Bonds provides that the Underwriter will purchase all the Bonds if any are purchased, and that the obligation to make such purchase is subject to certain terms and conditions set forth therein, including, among others, the approval of certain legal matters by counsel.
The Underwriter and its respective affiliates are full-service financial institutions engaged in various activities that may include securities trading, commercial and investment banking, municipal advisory, brokerage, and asset management. In the ordinary course of business, the Underwriter and its respective affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its respective affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Issuer. The Underwriter and its respective affiliates may make a market in credit default swaps with respect to municipal securities in the future. The Underwriter and its respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Authority.
CONTINUING DISCLOSURE
The City, on behalf of itself and the Authority, will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data relating to the District (the “Annual Report”) by not later than nine months following the end of the City’s Fiscal Year (currently March 31 based on the City’s Fiscal Year ending June 30), commencing March 31, 2024, with the report for the Fiscal Year ending June 30, 2023, and to provide notices of the occurrence of certain listed events.
These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5), as amended (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events is set forth in APPENDIX E.
A review of the City’s compliance with prior continuing disclosure undertakings in the last five years indicates that:
(1) [ to come?]
(2)
[[Supplemental annual reports, notices of rating changes and other filings to correct all of the known failures by the City to comply with its continuing disclosure undertakings have been made. The City has engaged contract support for the preparation and filing of its continuing 57 disclosure reports, including as to the District, in order to ensure compliance with future continuing disclosure obligations.]]
58 MISCELLANEOUS
Verification of Mathematical Computations
_____________, _____________, independent accountants, upon delivery of the Bonds, will deliver one or more reports on the mathematical accuracy of certain computations contained in schedules provided to them which were prepared by the Authority and the City relating to the sufficiency of moneys and securities deposited into the Escrow Fund to pay, when due, the redemption price of the 2013 Bonds.
Professionals Involved in the Offering
All proceedings in connection with the issuance of the Bonds are subject to the approval of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Jones Hall, A Professional Law Corporation, is also acting as Disclosure Counsel to the Authority.
U.S. Bank Trust Company, National Association, San Francisco, California, will serve as the Trustee. Kutak Rock LLP, Irvine, California, is acting as counsel to the Underwriter.
The Authority has retained Del Rio Advisors, LLC, Modesto, California, as municipal advisor (the “Municipal Advisor”) in connection with the planning, structuring and issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement.
The compensation of Bond Counsel, Disclosure Counsel, the Trustee, the Municipal Advisor and Underwriter’s counsel is contingent upon issuance of the Bonds.
Execution
The execution and delivery of this Official Statement have been duly authorized by the Authority.
PATTERSON PUBLIC FINANCING
AUTHORITY
By:
Chief Financial Officer/Treasurer
A-1
APPENDIX A
SUMMARY OF CERTAIN PROVISONS OF PRINCIPAL LEGAL DOCUMENTS B-1
APPENDIX B
THE CITY OF PATTERSON AND STANISLAUS COUNTY
The District is located in the City of Patterson (“City”) in Stanislaus County (“County”), California (“State”). The financial and economic data for the City are presented for information purposes only. The Bonds are not a debt or obligation of the City, the West Patterson Financing Authority (“Authority”), the County or the State, but are a limited obligation of the Authority secured solely by the funds held pursuant to the CFD Fiscal Agent Agreement.
The City is located in the County on Highway 33, along the Interstate 5 corridor, 280 miles north of Los Angeles, 92 miles south of Sacramento, 89 miles southeast of San Francisco and 45 miles southeast of Livermore. Incorporated in 1919, the City encompasses a total of 5.9 square miles.
With a current population of 24,317, the City is a rural, small town surrounded by agricultural land. With agriculture as its primary economic base, orchards of apricots, almonds and walnuts, as well as row crops of dry beans, tomatoes, broccoli, spinach, peas and melons play an important role in Patterson’s history. Patterson is the apricot capital of the world.
Municipal Government
The City Council of the City is composed of five members, a Mayor and four Council Members, elected at large by the citizens of Patterson. The Mayor serves a two-year term, and Council Members serve four-year overlapping terms. The Mayor presides over the meetings and performs other ceremonial duties. As the policy-making legislative body, the City Council is responsible for the enactment of all programs, policies and services of the City.
The City Council acts upon all legislative matters concerning the City, approving and adopting all ordinances, resolutions, contracts and other matters requiring overall policy decisions and leadership. The Council appoints the City Manager, City Attorney and various other commissions, boards and citizen advisory committees, all of which ensure broad-based input into the affairs of the City.
B-2
Population
The following table lists population figures for the County and City for the last five calendar years for which data is available.
Table A-1
CITY OF PATTERSON, STANISLAUS COUNTY,
STATE OF CALIFORNIA
Population Estimates, as of January 1
2019 2020 2021 2022 2023
Patterson 23,086 23,150 23,658 24,142 24,317
Stanislaus County 553,131 554,931 551,353 548,719 545,939 State of California 39,605,361 39,648,938 39,286,510 39,078,674 38,940,231 Source: California State Department of Finance.
B-3
Principal Employers
The following table shows the principal employers in the City for fiscal year ending June 30, 2021.
PRINCIPAL EMPLOYERS
City of Patterson
As of June 30, 2021
Employer
Number of
Employees
Amazon Fulfillment Center 945
Patterson Joint Unified School District 750
CVS Caremaker Distribution Center 510
Grainger Distribution Center 445
Walmart Supercenter 300
City of Patterson 221
Restoration Hardware 186
King’s Roofing 167
Save Mart 139
Mc Donald’s 75
Total – Top Ten 3,738
Total City-Wide Employment 9,600
Source: City of Patterson Comprehensive Annual Financial Report for Fiscal Year 2020-21.
B-4
Employment and Industry
The unemployment rate in the Stanislaus County was 6.9 percent in March 2023, down from a revised 6.8 percent in February 2023, and above the year-ago estimate of 5.9 percent.
This compares with an unadjusted unemployment rate of 4.8 percent for California and 3.6 percent for the nation during the same period. The following sets forth employment information for the Modesto MSA in the County for the prior five years.
Table A-2
MODESTO MSA, STANISLAUS COUNTY
Civilian Labor Force, Employment and Unemployment; Employment by Industry (Annual Averages)
March 2022 Benchmark
2018 2019 2020 2021 2022
Civilian Labor Force (1) 243,100 242,900 242,500 240,200 242,300 Employment 227,300 228,100 215,900 220,200 229,100
Unemployment 15,700 14,800 26,600 20,000 13,100
Unemployment Rate 6.5% 6.1% 11.0% 8.3% 5.4%
Wage and Salary Employment: (2)
Agriculture 14,400 14,900 14,500 14,000 14,200
Mining, Logging, and Construction 10,200 10,500 9,800 10,700 11,400 Manufacturing 21,600 21,400 21,200 21,800 22,800
Wholesale Trade 6,300 6,200 5,900 5,600 5,700
Retail Trade 23,200 22,800 21,900 23,000 23,200
Transportation, Warehousing & Utilities 7,900 8,700 9,000 9,100 9,900 Information 1,000 1,000 800 800 800
Financial Activities 5,300 5,300 5,100 4,900 5,000
Professional & Business Services 15,400 15,300 15,100 15,400 15,300 Educational & Health Services 33,600 34,700 34,600 35,000 35,700 Leisure & Hospitality 19,300 19,200 15,800 18,200 20,600 Other Services 5,800 5,900 5,100 5,500 6,100
Federal Government 800 800 900 700 700
State Government 2,200 2,100 2,100 2,000 2,200
Local Government 26,600 27,400 25,900 25,700 26,800
Total, All Industries 193,600 196,200 187,600 192,400 200,300 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department.
B-5
The following tables list the major employers in the County as of May 2023.
Table A-3
STANISLAUS COUNTY
Major Employers
(As of May 2023)
Employer Name Location Industry
Amazon Fulfillment Ctr Patterson Mail Order Fulfillment Service Bartles & Jaymes Co Modesto Wineries (mfrs)
Bronco Wine Co Ceres Wineries (mfrs)
Conagra Brands Inc Oakdale Food Products (whls)
Del Monte Foods Inc Modesto Food Products & Manufacturers Duarte Nursery Hughson Nurserymen
Duarte Nursery Inc Hughson Nurserymen
E & J Gallo Winery Modesto Wineries (mfrs)
Emanuel Medical Ctr Turlock Hospitals
Foster Farms Turlock Poultry Processing Plants (mfrs)
Frito-Lay Inc Modesto Potato Chips (whls)
Health Services Agency Modesto Clinics
Memorial Medical Ctr Modesto Hospitals
Modesto Bee Modesto Newspapers (publishers/Mfrs)
Modesto Irrigation District Modesto Utilities
Oak Valley Hospital District Oakdale Health Care Management Pacific Southwest Contnr LLC Modesto Corrugated & Solid Fiber Boxes (mfrs) Patterson City Office Modesto City Government-Executive Offices Stanislaus County Welfare Dept Modesto Government Offices-County Storer Coachways Modesto Buses-Charter & Rental
Sysco Central Ca-Whls Rstrnt Modesto Food Products (whls) Temsa Turlock Nonclassified Establishments
Turlock Irrigation District Turlock Electric Companies
Vsp Products Inc Newman Dried/Dehydrated Fruits Vegetables Walmart Modesto Department Stores
Source: State of California Employment Development Department; extracted from America’s Labor Market Information System Employer Database, 2023 2nd Edition.
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Construction Permits
The following charts show the total number of residential building permits issued in the City and the County, the value of those permits and the value of non-residential permits, for each of the last five calendar years for which data is available, from calendar years 2017 through 2021.
Table A-4
CITY OF PATTERSON
Total Building Permit Valuations
(Valuations In Thousands)
2017 2018 2019 2020 2021
Permit Valuation
New Single-family $29,282.2 $7,000.5 $5,251.7 $22,943.8 $24,297.3 New Multi-family 855.7 0.0 765.2 0.0 0.0
Res. Alterations/Additions 298.2 536.1 16.0 83.6 210.7
Total Residential 30,436.1 7,536.6 6,032.9 23,027.4 24,508.0 New Commercial 2,372.1 10,290.4 4,181.5 1,609.9 2,504.1 New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 2,558.2 1,385.1 926.5 888.0 1,616.0
Com. Alterations/Additions 310.0 1,442.5 1,561.6 226.1 780.9 Total Nonresidential $5,240.3 $13,118.0 $6,669.6 $2,724.0 $4,901.0 New Dwelling Units
Single Family 107 26 28 98 86
Multiple Family 12 0 4 0 0
TOTAL 119 26 32 98 86
Source: Construction Industry Research Board, Building Permit Summary.
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Table A-5
STANISLAUS COUNTY
Total Building Permit Valuations
(Valuations in Thousands)
2017 2018 2019 2020 2021
Permit Valuation
New Single-family $168,250.6 $141,972.2 $117,995.9 $138,915.1 $165,543.8 New Multi-family 26,655.7 1,268.9 19,128.6 18,152.6 17,992.0 Res. Alterations/Additions 46,491.2 33,278.3 36,671.9 31,153.4 27,562.7 Total Residential 241,397.5 176,519.4 173,796.4 188,221.1 211,098.5 New Commercial 79,468.2 96,200.9 97,980.1 $65,798.9 $167,221.6 New Industrial 32,379.3 12,626.4 30,302.6 17,429.8 14,000.0 New Other 32,339.9 87,441.3 30,777.0 30,371.3 34,862.0
Com. Alterations/Additions 99,818.3 54,449.5 104,465.8 68,270.3 47,614.7 Total Nonresidential $244,005.7 $250,718.1 $263,525.5 $181,870.3 $263,698.3 New Dwelling Units
Single Family 788 684 561 646 707
Multiple Family 95 10 178 110 80
TOTAL 883 694 739 756 787
Source: Construction Industry Research Board, Building Permit Summary.
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Taxable Sales
A summary of historic taxable sales within the City during the past five years in which data is available is shown in the following table. Total taxable sales during calendar year 2022 in the City of Patterson were reported to be $1,081,591,617 a 1.88% increase over the total taxable sales of $1,061,666,518 reported during calendar year 2021.
Table A-6
CITY OF PATTERSON
Taxable Transactions
(Dollars In Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2018 296 234,336 432 480,660
2019 288 257,099 433 505,236
2020 305 256,562 472 570,363
2021 317 751,927 463 1,061,666
2022 329 721,280,559 489 1,081,591
Source: State Department of Tax and Fee Administration.
A summary of historic taxable sales within the County during the past five years in which data is available is shown in the following table. Total taxable sales during calendar year 2022 in the County were reported to be $12,972,355,378 a 5.15% increase over the total taxable sales of $12,336,565,051 reported during calendar year 2021.
Table A-7
STANISLAUS COUNTY
Taxable Transactions
(Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2018 7,297 6,245,295 11,647 9,298,941
2019 7,442 6,465,963 12,084 9,679,826
2020 8,329 6,882,397 13,500 10,087,295
2021 7,848 8,695,930 12,854 12,336,565
2022 7,903 8,659,163 13,158 12,972,355
Source: State Department of Tax and Fee Administration.
B-9
Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income for the City, the County, the State and the United States for the period 2019 through 2023.
Table A-8
CITY OF PATTERSON, STANISLAUS COUNTY,
STATE OF CALIFORNIA
Effective Buying Income
As of January 1, 2019 through 2023
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective Buying
Income
2019 City of Patterson $435,633 $53,695
Stanislaus County 11,772,166 51,340
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2020 City of Patterson $469,838 $63,143
Stanislaus County 12,241,056 55,212
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 City of Patterson $492,209 $64,872
StanislausCounty 12,472,918 55,452
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of Patterson $541,652 $70,358
Stanislaus County 13,889,615 63,128
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
2023 City of Patterson $561,791 $69,561
Stanislaus County 14,125,584 63,716
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
Source: The Nielsen Company (US), Inc for 2018; Claritas, LLC for 2019 and 2023.
Jones Hall Draft 626.23
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APPENDIX C
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES
Jones Hall Draft 626.23
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APPENDIX D
FORM OF BOND COUNSEL OPINION
_______, 2023
Patterson Public Financing Authority
311 Vernon Street
Patterson, California 95678
OPINION: $________ Patterson Public Financing Authority Special Tax Revenue Refunding Bonds, Series 2023
Members of the Authority:
We have acted as bond counsel to the Patterson Public Financing Authority (the “Authority”) in connection with the delivery by the Authority of the above-referenced bonds (the “Bonds”), issued under the provisions of Article 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code (the “Bond Law”), and pursuant to an Indenture of Trust dated as of July 1, 2023 (the “Indenture”), between the Authority and U.S. Bank Trust Company, National Association, as trustee. We have examined the Bond Law, an executed copy of the Indenture and such certified proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the Authority contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
Based upon our examination we are of the opinion, under existing law, that:
1. The Authority is a public agency duly organized and existing under the laws of the State of California, with power to enter into the Indenture, to perform the agreements on its part contained therein and to issue the Bonds.
2. The Bonds have been duly authorized, executed and delivered by the Authority and are legal, valid and binding obligations of the Authority, payable solely from the sources provided therefor in the Indenture.
3. The Indenture has been duly approved by the Authority and constitutes a legal, valid and binding obligation of the Authority enforceable against the Authority in accordance with its terms.
4. Pursuant to the Bond Law, the Indenture establishes a valid lien on and pledge of the Revenues (as such term is defined in the Indenture) for the security of the Bonds.
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5. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the Authority and the City of Patterson (the “City”) comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Authority and the City have covenanted to comply with each such requirement.
Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.
6. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally, and by equitable principles, whether considered at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$_________
PATTERSON PUBLIC FINANCING AUTHORITY
SPECIAL TAX REVENUE REFUNDING BONDS
SERIES 2023
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of Patterson (the “City”), for and on behalf of itself and the West Patterson Financing Authority and the Patterson Public Financing Authority (the “Authority”), in connection with the issuance by the Authority of the Special Tax Revenue Refunding Bonds captioned above (the “Bonds”). The Bonds are generally secured by revenues derived from debt service payments made on special tax refunding bonds issued by the West Patterson Financing Authority in 2013 captioned “Special Tax Refunding Bonds, Series 2013-A-1 and Series 2013- A-2,” and “Special Tax Bonds, Series 2013-B” (collectively, the “CFD Bonds”). The CFD Bonds are generally secured by special taxes levied against taxable property the West Patterson Financing Authority’s Community Facilities District No. 2001-1. The Bonds are being issued under an Indenture of Trust, dated as of ________ 1, 2023 (the “Indenture”), by and between the Authority and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
The City, on behalf of itself and the Authority, hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City, for and on behalf of itself and the Authority, for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.
Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means the date that is 9 months after the end of the City’s Fiscal Year (currently March 31 based on the City’s Fiscal Year end of June 30). “Dissemination Agent” means Goodwin Consulting Group, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for E-2
purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement executed by the Authority in connection with the issuance of the Bonds.
“Participating Underwriter” means Hilltop Securities, Inc., the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2024, with the report for the 2022-23 Fiscal Year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City and the Authority may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder. (b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide in a timely manner (or cause the Dissemination Agent to provide in a timely manner) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
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(a) The audited financial statements of the City and the Authority, together with the following statement:
THE CITY’S AND THE AUTHORITY’S ANNUAL FINANCIAL STATEMENTS ARE
PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE
COMMISSION STAFF’S INTERPRETATION OF RULE 15C2-12. NO FUNDS OR
ASSETS OF THE CITY OR THE AUTHORITY OTHER THAN THOSE PLEDGED
UNDER THE INDENTURE ARE REQUIRED TO BE USED TO PAY DEBT SERVICE
ON THE BONDS, AND NEITHER THE CITY NOR THE AUTHORITY ARE OBLIGATED
TO ADVANCE AVAILABLE FUNDS FROM ANY SOURCE TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL
CONDITION OF THE CITY OR THE AUTHORITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS.
The audited financial statements shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Additional Items relating to the Authority and the District:
1. Principal amount of Bonds outstanding as of September 30th preceding the filing of the Annual Report.
2. Balance in funds and accounts held by Authority or Trustee related to the Bonds as of September 30th preceding the filing of the Annual Report.
4. The Special Tax levy, the delinquency rate, total amount of delinquencies, number of parcels delinquent in payment for the five most recent fiscal years for the District with outstanding CFD Bonds.
5. Notwithstanding the June 30th reporting date for the Annual Report, the following information shall be reported as of the last day of the month immediately preceding the date of the Annual Report rather than as of June 30th. For the District, identity of each delinquent taxpayer responsible for 5% or more of the total Special Tax levied, and the following information with respect thereto: assessor parcel number, assessed value of applicable properties, amount of Special Tax levied, amount delinquent by parcel number and status of foreclosure proceedings. If any foreclosure has been completed, summary of results of foreclosure sales or transfers.
6. For the District, additional debt authorized to be issued by the City that is payable from or secured by assessments or special taxes with respect to property within such District.
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
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(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.
(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
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(14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the District, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the District, any of which affect security holders, if material (for the definition of “financial obligation,” see clause (e)).
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the District, any of which reflect financial difficulties (for the definition of “financial obligation,” see clause (e)).
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture. (c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier “if material.” The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the City determines the event’s occurrence is material for purposes of U.S. federal securities law. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in E-6
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Goodwin Consulting Group. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(c).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or E-7
including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder, and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
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Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Date: ______________, 2023
CITY OF PATTERSON, for and on behalf of
the PATTERSON PUBLIC FINANCING
AUTHORITY and WEST PATTERSON
FINANCING AUTHORITY
By:
____________
AGREED AND ACCEPTED:
Goodwin Consulting Group,
as Dissemination Agent
By:
Name:
Title:
E-9
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Patterson Public Financing Authority
Name of Issue: Patterson Public Financing Authority Special Tax Revenue Refunding Bonds, Series 2023
Date of Issuance: _________, 2023
NOTICE IS HEREBY GIVEN that the City of Patterson (the “City”) for and on behalf of the Authority has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated as of _______, 2023, executed by and between the City and countersigned by Goodwin Consulting Group, as dissemination agent.
The City anticipates that the Annual Report will be filed by ________________.
Dated:
DISSEMINATION AGENT:
Goodwin Consulting Group
By:
Its:
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APPENDIX F
DTC AND THE BOOK-ENTRY-ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”) will act as securities depository for the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each maturity of the Securities in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and F-2
dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC is rated “AA+” by Standard & Poor’s.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices will be sent to DTC. If less than all of the Securities within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
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7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Principal, redemption price and interest payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Issuer or the Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Agent, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer or the Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. If applicable, a Beneficial Owner will give notice to elect to have its Securities purchased or tendered, through its Participant, to tender/remarketing agent, and will effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to tender/remarketing agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to tender/remarketing agent’s DTC account.
10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Issuer or the Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
11. The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
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APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY