The City Council formed the City of Rancho Mirage Community Facilities District No. 4C ("CFO No. 4C") on May 6, 2021, under the provisions of the Mello-Roos Community Facilities Act of 1982 (the "Act"), which authorizes CFDs to levy special taxes (the "Special Taxes") to pay for the costs of certain public facilities, including the Facilities, and to issue bonds payable from the Special Taxes. In accordance therewith, CFO No. 4C now intends to issue Special Tax Bonds, Series 2022 (the "Series 2022 Bonds"), secured by the special tax levy on 378 homes within the boundaries of CFO No. 4C. The City Council action proposed approves the sale and issuance of approximately 6.4 million in CFO No. 4C Special Tax Bonds and approves related documents including the preliminary bond official statement, bond indenture, bond purchase agreement, and other related documents. The bond sale is proposed for the week of September 12, 2022, and a bond closing at the end of September.
CFO No. 4A 4B 4C Total
Development Phase 1 & 2 3&4 5&6
Units 344 307 378 1,029
Home buyers will be subject to a CFO special tax to pay the principal and interest on the bonds. The amount of the special tax depends on the size of the home and is expected to range from $799 annually to $1,723 annually- see Assigned Special Tax Rates table below. It is anticipated that the overall effective tax rate for residential units within the Project will not exceed 1.70% of assessed valuation of each individual home.
ASSIGNED SPECIAL TAX RATES
Land Use Building Square
Class Land Use Type Footage Assigned Special Tax
1 Single Family Property > 2,550 $1,723 per Residential Unit 2 Single Family Property 2,401 - 2,550 $1,602 per Residential Unit 3 Single Family Property 2,251 - 2,400 $1,494 per Residential Unit 4 Single Family Property 2,101 - 2,250 $1,351 per Residential Unit 5 Single Family Property 1,951 - 2,100 $1,238 per Residential Unit 6 Single Family Property 1,801 - 1,950 $1,113 per Residential Unit 7 Single Family Property 1,651 - 1,800 $1,019 per Residential Unit 8 Single Family Property 1,501 - 1,650 $920 per Residential Unit 9 Single Family Property s 1,500 $799 per Residential Unit 10 Multi-Family Property NA $8,308 per Acre
AGENDA ITEM#
12-3
DATE: September 1, 2022
CFD 4C Bonds
JUSTIFICATION OR INFORMATION CONTINUED:
DISCUSSION
CFO No. 4C was formed for phases five and six of the Project and covers 378 homes and was approved on May 6, 2021, by the City Council.
As of August 15, 2022, a total of 290 building permits within CFO No. 4C have been issued, and of these permits issued, 196 home closings have occurred and there are an additional 100 homes in escrow, (6 lots have been sold without building permits). The Developer forecasts that all homes will have closed to homeowners by the end of September 2023.
Following issuance of all building permits, the Maximum Special Tax for the district will be $470,333. In addition to bond debt service, Special Taxes will be levied to pay for annual administration of the Series 2022 Bonds by CFO No. 4C.
For CFO No. 4C, it is proposed that bonds be sold to generate approximately $6 million in bond proceeds, depending on bond market conditions at time of sale. The bond sale is expected to occur the week of September 12, 2022, with a closing by the end of September 2022. Bond proceeds will be used to fund approximately $5.3 million in reimbursements for public improvements and public facilities fees paid by the Developer, fund a one-year bond reserve fund, capitalized interest fund, and fund costs of bond issuance, including a fee to cover City staff time spent towards issuing the Series 2022 Bonds. The term of the Series 2022 Bonds will be 30 years and debt service is expected to not exceed $415,000 per year.
The bond true interest rate, depending on bond market condition at time of sale, is expected to be under 5.0%.
The Series 2022 Bonds will be sold by CFO No. 4C through negotiated sale. Stifel is the proposed bond underwriter procured by the City following an RFP process in 2021. Stifel was also the bond underwriter on the CFO No 4A and CFO 4B Bonds. Stifel is the leading bond underwriter of CFO bonds in California. The Series 2022 Bonds will be non-rated as development related CFO bonds do not qualify for investment grade bond ratings from Standard and Poor's or Moody's given the real estate security, ownership concentration (status of bond sales) and development risk. The City has issued non-rated bonds in the past for its various assessment districts. The CFO 4A Bonds and CFO 4B Bonds sold in 2019 and 2021 respectively, were also sold on a non-rated basis.
The security and source of repayment for the bonds are 378 homes subject to the special taxes. A land appraisal is required. The City retained Kitty Siino & Associates, Inc., an experienced MAI appraiser and qualified appraiser of CFO projects, following an RFP process, which has valued the property subject to the CFO No. 4C Special Taxes. The appraised value of the properties as of July 1, 2022, totals $146,810,527 and will exceed the amount of Series 2022 Bonds issued by a factor of 23.25 (the appraised value exceeds the amount of the bonds by approximately 23.25 times). This is considered very high coverage for CFO bonds. The property values become significant in the event a property owner fails to pay special taxes and AGENDA ITEM#
12-4
DATE: September 1, 2022
CFD 4C Bonds
JUSTIFICATION OR INFORMATION CONTINUED:
it becomes necessary to initiate foreclosure proceedings in order to obtain payment of special taxes. In the bond documents, the City has covenanted, as was the case in the CFO No. 4A and CFO No. 48 bonds to initiate property foreclosure proceeding in the event of a failure to pay the special taxes. This covenant is required in order for investors to buy the bonds. The property tax delinquency rate in CFO No. 4A and CFO No. 48 is very low and no such action has been taken to date. The Special Tax lien is co-equal in priority to general property taxes and is senior to any mortgages. Property owners can prepay their respective share of CFO No. 4C Special Taxes at any time subject to a small premium. The CFO No. 4C Bonds will also be callable from property owner prepayment or refunding. Bonds are expected to be called from prepayments on any interest payment date and for refunding purposes beginning in 2030. The Series 2022 Bonds will have a fully funded bond reserve fund equal to maximum annual bond debt service.
CFO No. 4C's bond and disclosure counsel, Orrick Herrington, has prepared a preliminary bond official statement to be provided to investors and a substantial final draft is attached as part of this Staff Report together with the bond indenture, bond purchase agreement, and other legal documents related to the sale and issuance of the bonds. The official statement will disclose information about the CFO and will describe the risks associated with the bonds to investors. The final bond official statement will be available after the bond sale and will be delivered to investors. Neither the City nor CFO No. 4C has any obligation to pay debt service on the bonds in the event of default or non-payment by property owners.
The Special Taxes levied in CFO No. 4C will only be available to pay the principal and interest on the Series 2022 Bonds issued for CFO No. 4C. There is no cross collateralization with the other CFOs. Property owners in CFO No. 4C cannot be taxed for bond debt service in CFO Nos. 4A or 48. The same is true of CFO Nos. 4A and 48. Special Taxes levied in a CFO can only be used to pay bond debt service in that CFO.
Buyers of homes in CFO Nos. 4A, 48 and 4C have been and will receive a detailed CFO disclosure notices regarding the terms of the special taxes levied on their homes and its impact on their property tax bill.
The City will be required to annually calculate the special taxes necessary to pay bond debt service and pay annual administrative costs. The City CFO Administrator will place these amounts on the County property tax roll annually. Once the City collects the taxes, the funds will be sent to the bond trustee to make interest and principal payments on the bonds. The City together with the bond trustee will also manage the bond reserve fund to apply any investment earnings to the related bond debt service. If there are property owners who are delinquent in their payment, as referenced above, the City will be required to undertake foreclosure actions.
The City CFO Administrator will monitor and take any required actions. Any costs associated with administering the CFO will come from the Administrative Expense account funded by the special taxes set up for such purposes. The City is NOT obligated to pay principal and interest on the bonds or associated CFD administrative costs.
AGENDA ITEM#
12-5
DATE: September 1, 2022
CFD 4C Bonds
JUSTIFICATION OR INFORMATION CONTINUED:
In addition, as referenced in the attached resolution, various required documents have been prepared for use in implementing the bond issuance. The following documents are on file with the City Clerk and are in substantially final form. Included are:
1. A Preliminary Official Statement ("POS"): The POS is the "offering document" for the Series 2022 Bonds. The City has an obligation to ensure that the POS includes all information that would be material to a prospective investor's decision whether to purchase the Series 2022 Bonds.
2. A Bond Indenture. Between CFO No. 4C and U.S. Bank National Association, as Trustee: Key legal document that lays out the legal structure and terms of the financing of the Series 2022 Bonds.
3. A Bond Purchase Contract, between CFO No. 4C and Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), providing for the sale of the Series 2022 Bonds to the Underwriter;
4. A Continuing Disclosure Agreement, between CFO No. 4C and Willdan Financial Services, requiring the City to make certain annual disclosure filings with the Municipal Securities Rulemaking Board in connection with Series 2022 Bonds.
FISCAL IMPACT
There is no direct fiscal impact to the City General Fund as a result of CFO No. 4C issuing the bonds. All staff costs associated with administering the CFO will come from the CFO funds, CFO special taxes and other actions authorized by the CFO.
ATTACHMENT(S)
1. Resolution
2. Indenture
3. Bond Purchase Agreement
4. Continuing Disclosure Agreement
5. Preliminary Official Statement
AGENDA ITEM#
12-6
ATTACHMENT 1
RESOLUTION
(SEE ATTACHED)
12-7
RESOLUTION NO. 2022-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO MIRAGE AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $7,500,000 AGGREGATE
PRINCIPAL AMOUNT OF CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT) SPECIAL TAX BONDS, SERIES 2022,
APPROVING THE EXECUTION AND DELIVERY OF AN INDENTURE, A BOND
PURCHASE AGREEMENT AND A CONTINUING DISCLOSURE AGREEMENT AND
THE PREPARATION OF AN OFFICIAL STATEMENT AND OTHER MATTERS
RELATED THERETO
WHEREAS, the City Council (the "City Council") of the City of Rancho Mirage (the "City") has formed the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District"), under the provisions of the Mello-Roos Community Facilities Act of 1982 (the "Act"); WHEREAS, the Community Facilities District is authorized under the Act to levy special taxes (the "Special Taxes") to pay for the costs of certain public facilities (the "Facilities") and to issue bonds payable from the Special Taxes; WHEREAS, in order to provide funds to finance certain costs of the Facilities authorized to be financed through the levy of Special Taxes on taxable property located in the Community Facilities District, the Community Facilities District desires to provide for the issuance of City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Bonds"), in the aggregate principal amount of not to exceed $7,500,000;
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured, and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Community Facilities District proposes to enter into an Indenture with U.S. Bank Trust Company, National Association, as trustee (the "Trustee") (such Indenture, in the form presented to this meeting, with such changes, insertions, and omissions as are made pursuant to this Resolution, being referred to herein as the "Indenture");
WHEREAS, Stifel, Nicolaus & Company, Incorporated (the "Underwriter"), has presented the Community Facilities District with a proposal, in the form of a Bond Purchase Agreement, to purchase the Bonds from the Community Facilities District (such Bond Purchase Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Bond Purchase Agreement");
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12") requires that, in order to be able to purchase or sell the Bonds, the Underwriter must have reasonably determined that the Community Facilities District or an obligated person has undertaken in a written agreement or contract for the benefit 12-8
of the holders of the Bonds to provide disclosure of certain financial and operating data and certain listed events on an ongoing basis;
WHEREAS, in order to assist in providing for the satisfaction of such requirement, the Community Facilities District desires to enter into a Continuing Disclosure Agreement with Willdan Financial Services, as dissemination agent (such Continuing Disclosure Agreement, in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Continuing Disclosure Agreement"); WHEREAS, a Preliminary Official Statement to be used in connection with the offering and sale of the Bonds has been prepared (such Preliminary Official Statement in the form presented to this meeting, with such changes, insertions and omissions as are made pursuant to this Resolution, being referred to herein as the "Preliminary Official Statement");
WHEREAS, there have been prepared and submitted to this meeting forms of:
(a) the Indenture;
(b) the Bond Purchase Agreement;
(c) the Continuing Disclosure Agreement; and
(d) the Preliminary Official Statement;
WHEREAS, Kitty Siino & Associates, Inc. has prepared and provided to the Community Facilities District an appraisal report (the "Appraisal"), providing an opinion of value of the property within the Community Facilities District that is subject to the levy of the Special Tax;
WHEREAS, the "Rate and Method of Apportionment of Special Tax - City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project)" (the "Rate and Method") provides the terms and conditions of the special taxes authorized to be levied within the Community Facilities District (capitalized undefined terms used herein have the meanings ascribed thereto in the Rate and Method);
WHEREAS, on October 5, 2017, the City Council adopted a Debt Management Policy for the City and its community facilities districts (the "Debt Management Policy") that complies with Government Code Section 8855(i), and the sale and issuance of the Bonds as contemplated by this Resolution is in compliance with the Debt Management Policy;
WHEREAS, Section 5852.1 of the California Government Code requires that the City Council obtain from an underwriter, financial advisor or private lender and disclose, prior to authorization of the issuance of bonds with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third parties 12-9
with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d) the sum total of all debt service payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; WHEREAS, in compliance with Section 5852.1 of the California Government Code, the City Council has obtained from Columbia Capital Management, LLC, as the Community Facilities District's municipal advisor (the "Municipal Advisor"), and the Underwriter the required good faith estimates and such estimates are disclosed and set forth in Exhibit A attached hereto;
WHEREAS, Senate Bill 1029 ("SB 1029") was signed by the California Governor on 12, 2016, and places additional responsibilities on any issuer of public debt including the adoption of debt management policies that meet certain criteria; WHEREAS, the City has represented that it is in compliance with the applicable SB 1029 pre-issuance requirements and that it expects to comply with all post-issuance requirements of SB 1029 applicable to the Bonds;
WHEREAS, the City Council desires to authorize the issuance of the Bonds and the execution and delivery of such documents and the performance of such acts by or on behalf of the Community Facilities District as may be necessary or desirable to effect the issuance of the Bonds and the execution and delivery of such documents; and WHEREAS, the City Council is the legislative body of the Community Facilities District;
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED, by the City Council of the City of Rancho Mirage as follows:
Section 1. Subject to the provisions of Section 2 hereof, the issuance of the Bonds, in an aggregate principal amount of not to exceed $7,500,000, on the terms and conditions set forth in, and subject to the limitations specified in, the Indenture, is hereby authorized and approved. The Bonds shall be dated, shall bear interest at the rates, shall mature on the dates, shall be subject to call and redemption, shall be issued in the form, and shall be as otherwise provided in the Indenture, as the same shall be completed as provided in this Resolution.
Section 2. The Indenture, in substantially the form submitted to this meeting and made a part hereof as though set forth herein, be and the same is hereby approved.
Each of the City's Mayor, and any such officer designated or appointed in an acting or interim capacity and such other member of the City Council as the Mayor may designate, the City Manager, and any such other officer of the City as the City Manager may designate, and the Director of Administrative Services (each an "Authorized Officer"), is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Indenture in the form submitted to this meeting, with such changes, insertions, and 12-10
omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Indenture by such Authorized Officer; provided, however, that such changes, insertions, and omissions shall not authorize an aggregate principal amount of Bonds in excess of $7,500,000, shall not result in a final maturity date of the Bonds later than September 1, 2053, and shall not result in a true interest cost for the Bonds in excess of 6.00%.
Section 3. The Bond Purchase Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Bond Purchase Agreement in the form presented to this meeting, with such changes, insertions, and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Bond Purchase Agreement by such Authorized Officer; provided, however, that such changes, insertions, and omissions shall not result in an aggregate Underwriter's discount (not including any original issue discount) from the principal amount of the Bonds in excess of 1.50% of the aggregate principal amount of the Bonds. The City Council hereby finds and determines that the sale of the Bonds at negotiated sale as contemplated by the Bond Purchase Agreement will result in a lower overall cost.
Section 4. The Continuing Disclosure Agreement, in substantially the form submitted to this meeting and made a part hereof as though set forth in full herein, be and the same is hereby approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to execute and deliver the Continuing Disclosure Agreement in the form presented to this meeting, with such changes, insertions, and omissions as the Authorized Officer executing the same may require or approve, such requirement or approval to be conclusively evidenced by the execution of the Continuing Disclosure Agreement by such Authorized Officer.
Section 5. The Preliminary Official Statement, in substantially the form presented to this meeting and made a part hereof as though set forth in full herein, with such changes, insertions and omissions therein as may be approved by an Authorized Officer, be and the same is hereby approved, and the use of the Preliminary Official Statement in connection with the offering and sale of the Bonds is hereby authorized and approved. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is hereby directed, for and in the name of the Community Facilities District, to certify to the Underwriter that the Preliminary Official Statement has been "deemed final" as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2-12).
Section 6. The preparation and delivery of a final Official Statement (the "Official Statement"), and its use in connection with the offering and sale of the Bonds, be and the same is hereby authorized and approved. The Official Statement shall be in 12-11
substantially the form of the Preliminary Official Statement with such changes, insertions, and omissions as may be approved by an Authorized Officer, such approval to be conclusively evidenced by the execution and delivery thereof. Each of the Authorized Officers is hereby authorized, and any one of the Authorized Officers is . hereby directed, for and in the name of the Community Facilities District, to execute the final Official Statement and any amendment or supplement thereto .
Section 7. The assessed or appraised values, as applicable, of the property within the Community Facilities District that is subject to the levy of the Special Tax are set forth in the Appraisal and the Preliminary Official Statement and the value-to -lien information with respect thereto is set forth therein and, based thereon, the City Council, for purposes of Section 53345.8 of the Act and the City's Value-to-Lien requirements set forth in the City's Local Goals and Policies Concerning use of Mello-Roos Community Facilities Act of 1982, hereby finds and determines that the value of the real property that would be subject to the Special Tax to pay debt service on the Bonds will be at least three times the principal amount of the Bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on property within the Community Facilities District or a special assessment levied on property within the Community Facilities District.
Section 8. With the passage of this Resolution, the City hereby certifies that the Debt Management Policy complies with Government Code Section 8855(i), and that the Bonds authorized to be issued pursuant to this Resolution are consistent with such policy, and instructs Orrick, Herrington & Sutcliffe LLP, as Bond Counsel, on behalf of the Community Facilities District, with respect to the Bonds issued pursuant to this Resolution, (a) to cause notices of the proposed sale and final sale of the Bonds to be filed in a timely manner with the California Debt and Investment Advisory Commission pursuant to Government Code Section 8855, and (b) to check, on behalf of the Community Facilities District, the "Yes" box relating to such certifications in the notice of proposed sale filed pursuant to Government Code Section 8855.
Section 9. In accordance with Section 5852.1 of the California Government Code, good faith estimates of the following have been obtained from the Municipal Advisor and the Underwriter and are set forth in Exhibit A attached hereto : (a) the true interest cost of the Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds.
Section 10. The Authorized Officers and the officers and employees of City are, and each of them is, hereby authorized and directed, for and in the name of the Community Facilities District, to do any and all things, and to execute and deliver any and all other documents which they or any of them deem necessary or advisable in order to consummate the transactions contemplated by this Resolution and otherwise to carry out, give effect to, and comply with the terms and intent of this Resolution. 12-12
Section 11. The City Council hereby approves the execution and delivery of any and all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the Government Code using DocuSign.
Section 12. All actions heretofore taken by the officers and employees of City with respect to the issuance of the Bonds, or in connection with or related to any of the agreements or documents referred to herein, are hereby approved, confirmed, and ratified.
Section 13. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED AND ADOPTED on this 1st day of September, 2022. 12-13
EXHIBIT A
GOOD FAITH ESTIMATES
The following information was obtained from the Community Facilities District's Municipal Advisor and the Underwriter, and is provided in compliance with Section 5852.1 of the California Government Code with respect to the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Bonds"):
1. Principal Amount. Based on the Community Facilities District's financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be issued and sold is $6,315,000, plus approximately $142,133.70 of net original issue premium estimated to be generated based on current market conditions. Net original issue premium is generated when, on a net aggregate basis for a single issuance of bonds, the price paid for such bonds is higher than the face value of such bonds. Such estimated principal amount plus such estimated net original issue premium would produce approximately $6,457,133.70 of gross proceeds.
2. True Interest Cost of the Bonds. Assuming that $6,315,000 principal amount of Bonds is sold, and based on market interest rates prevailing at the time of preparation of this information and assuming the original issue premium described above, a good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 4.910%.
3. Finance Charge of the Bonds. Assuming that $6,315,000 principal amount of Bonds is sold, and based on market interest rates prevailing at the time of preparation of this information and assuming the original issue premium described above, a good faith estimate of the finance charge of the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $324,593.75.
4. Amount of Proceeds to be Received. Assuming that $6,315,000 principal amount of Bonds is sold, and based on market interest rates prevailing at the time of preparation of this information and assuming the original issue premium described above, a good faith estimate of the amount of proceeds expected to be received by the Community Facilities District for sale of the Bonds less the finance charge of the Bonds described in paragraph 2 above and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $5,702,558.33.
5. Total Payment Amount. Assuming that $6,315,000 principal amount of Bonds is sold, and based on market interest rates prevailing at the time of preparation of this information and assuming the original issue premium described above, a good faith estimate of the total payment amount, which means the sum total of all payments the Community Facilities District will make to pay debt service on the Bonds plus the A-1
12-14
finance charge of the Bonds described in paragraph 2 above not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $12,310,750.
Attention is directed to the fact that the foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from those presently estimated due to variations from these estimates in the timing of the sale of the Bonds, the actual principal amount of Bonds sold, the amortization of the Bonds sold and market interest rates at the time of sale. The date of sale and the amount of Bonds sold will be determined by the Community Facilities District based on need for improvement funds and other factors.
The actual interest rates at which the Bonds will be sold will depend on the bond market at the time of sale. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale. Market interest rates are affected by economic and other factors beyond the Community Facilities District's control. The City Council has approved the issuance of the Bonds with a maximum true interest cost of 6.00%.
A-2
12-15
[Insert City Clerk's Certificate Regarding Due Adoption of Resolution] 12-16
ATTACHMENT 2
INDENTURE
(SEE ATTACHED)
12-17
OH&S 8/17/22 Draft
INDENTURE
by and between
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO. 4C
(DEL WEBB PROJECT)
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
AS TRUSTEE
4142-0544-6456.2
Dated as of ____ 1, 2022
Relating to
City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project)
Special Tax Bonds, Series 2022
12-18
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; EQUAL SECURITY .................... ..................................................... 2 Section 1.01. Definitions ............................................. ..................... ................................ .................. 2 Section 1.02. Equal Security ...................................................................................................... ...... 10 ARTICLE II THE BONDS .............................................................................................................. 10 Section 2.01. Authorization of Bonds .............................................. ................................ ................ 10 Section 2.02. Terms of Series 2022 Bonds ....................................................................................... 10 Section 2.03. Transfer and Exchange of Bonds ............................................................................ .... 12 Section 2.04. Registration Books ..................................................................................................... 12 Section 2.05. Execution of Bonds ..................................... ............................................................... 12 Section 2.06. Authentication ofBonds ........................ ..................................................................... 12 Section 2.07. Temporary Bonds ........................ ................................ ............................................... 13 Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen .......................................................... .... 13 Section 2.09. Book-Entry Bonds ...................................................................................................... 13 ARTICLE III ISSUANCE OF BONDS; APPLICATION OF PROCEEDS ; ADDITIONAL BONDS ................................................................................................ ....................... 15 Section 3.01. Issuance of Series 2022 Bonds ................................................................................ ... 15 Section 3 .02. Application of Proceeds of the Series 2022 Bonds .................................................... 15 Section 3.03. Costs of Issuance Fund ............................................................................................... 15 Section 3.04. Improvement Fund ............................................. .................................................... .... 15 Section 3.05. Conditions for the Issuance of Additional Bonds .............................................. ......... 16 Section 3 .06. Procedure for the Issuance of Additional Bonds ................................................ ........ 17 Section 3 .07. Additional Bonds ........................................................................................................ 18 ARTICLE IV REDEMPTION OF BONDS ...................................................................................... 18 Section 4.01. Redemption of Series 2022 Bonds ............................................................................. 18 Section 4.02. Notice of Redemption ................................................ .................................... ............. 20 Section 4.03. Selection of Bonds for Redemption ........................................................................ .... 21 Section 4.04. Purchase In Lieu of Redemption ................................................................................ 21 Section 4.05. Partial Redemption of Bonds .................... ................................................................ .. 21 Section 4.06. Effect of Notice of Redemption ............................................................................ ...... 21 ARTICLE V SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS .......................... 22 Section 5.01. Pledge ..................................................... ....................................................... ............. 22 Section 5 .02. Special Tax Fund ........................................................................ ............................ .... 22 Section 5 .03. Bond Fund ...................................................................................................... ............ 23 4142-0544-6456 .2
12-19
TABLE OF CONTENTS
(continued)
Page
Section 5.04. Redemption Fund ................................................ ................................... .................... 23 Section 5 .05. Reserve Fund ........................................... .................................. ................................. 24 Section 5.06. Rebate Fund .................................................................... ............................................ 24 Section 5.07. Administrative Expense Fund .................................................................................... 25 Section 5.08. Surplus Fund ................................................... ...................................... ...................... 25 Section 5.09. Investment of Moneys ........................................ ....................................... ................. 25 Section 5.10. State Reporting ..................................................................... ...................................... 26 ARTICLE VI COVENANTS ................. ....................................... .............................. ...................... 26 Section 6.01. Collection of Special Tax Revenues ....................... ....................................... ............. 26 Section 6.02. Foreclosure .................................... .............................................. ............................... 27 Section 6.03. Punctual Payment ........................ ........................................................ ....................... 27 Section 6.04. Extension of Payment of Bonds ..................................... ............................................ 27 Section 6.05. Against Encumbrances .................................................. ............................................. 28 Section 6.06. Power to Issue Bonds and Make Pledge ............................................... ...................... 28 Section 6.07. Accounting Records and Financial Statements .......................................................... 28 Section 6.08. Tax Covenants ............................................................................... ............................. 28 Section 6.09. Continuing Disclosure ......................................... .......................................... ............. 29 Section 6.10. Annual Reports to the California Debt and Investment Advisory Commission ......... 29 Section 6.11. Non-Cash Payments of Special Taxes ...................................... .................................. 29 Section 6.12. Reduction in Special Taxes ........................... ......................................... .................... 29 Section 6.13. Further Assurances ............................................ .................................... ..................... 29 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES ............................................................. 30 Section 7.01. Events ofDefault ........................................................................................................ 30 Section 7.02. Foreclosure ................................................................... .............................................. 30 Section 7.03. Other Remedies .......................................................................................................... 30 Section 7.04. Application of Net Special Tax Revenues After Default ........................................... 31 Section 7.05. Power of Trustee to Enforce .............................................. ......................................... 31 Section 7.06. Bond Owners Direction of Proceedings ..................................................................... 31 Section 7 .07. Limitation on Bond Owners' Right to Sue .............................................................. ... 31 Section 7.08. Absolute Obligation .................................................................................................... 32 Section 7.09. Termination of Proceedings ............................................................................ ............ 32 Section 7 .10. Remedies Not Exel usive ..................................................... ........................................ 3 2 Section 7.11. No Waiver of Default .................................................................................... ............. 32 11 4142-0544-6456 .2
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TABLE OF CONTENTS
(continued)
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ARTICLE VIII TRUSTEE ................................................................................................................... 32 Section 8.01. Duties and Liabilities of Trustee .............................................. .................................. 32 Section 8.02. Merger or Consolidation ............................................................................................. 34 Section 8.03. Liability of Trustee ................... .................................................................................. 34 Section 8.04. Right to Rely on Documents .................................................................................. .... 35 Section 8.05. Preservation and Inspection of Documents ............. ................................................... 35 Section 8.06. Compensation and Indemnification ................... ................... ........................ .............. 35 ARTICLE IX MODIFICATION OR AMENDMENT ............................................................ ......... 36 Section 9.01. Amendments Permitted .............................................................................................. 36 Section 9.02. Effect of Supplemental Indenture .......................................................... ................ ..... 37 Section 9.03. Endorsement of Bonds; Preparation ofNew Bonds ................................................... 37 Section 9.04. Amendment of Particular Bonds ............... ........................................ ......................... 37 ARTICLE X DEFEASANCE .......................................................................................................... 37 Section 10.0 I. Discharge of Indenture ............................................................................................... 3 7 Section I 0.02. Bonds Deemed To Have Been Paid .................. .................................. ....................... 38 Section 10.03. Payment of Bonds After Discharge of Indenture ....................................................... 38 ARTICLE XI MISCELLANEOUS .................................................................................................. . 39 Section 11.01. Special Obligations ..................................................................................................... 39 Section 11 .02. Successor Is Deemed Included in All References to Predecessor ................... ........... 39 Section I 1.03. Limitation of Rights .................... .............................................................. ................. 39 Section 11.04. Waiver of Notice; Requirement of Mailed Notice ..................................................... 39 Section 11.05. Destruction ofBonds .................................................................................................. 39 Section 11.06. Severability of Invalid Provisions .................................................................. ............ 39 Section 11. 07. Notices ................................ ........................................................................................ 40 Section 11.08. Evidence of Rights of Bond Owners ....................... .................................................. .40 Section 11.09. Disqualified Bonds ......................................................... ..................................... ....... 41 Section 11.10. Money Held for Particular Bonds ............................................................................... 41 Section 11.11. Funds and Accounts ..................... ..................................... ...................................... ... 41 Section 11.12. Payment on Non-Business Days .............. ........................................ ................. ......... .41 Section 11.13. Waiver of Personal Liability .................................. .................................................... .41 Section 11.14. Interpretation .............. ....................... ......................................................................... 41 Section 11.15. Conflict with Act ........................................................................................................ 42 Section 11 .16. Conclusive Evidence of Regularity ................................................. ................. .......... 42 111
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Section 11.17. Electronic Signature ................................ ................................................................... 42 Section 11.18. Execution in Several Counterparts ............................................................................. 42 Section 11 .19. Governing Laws ............................ ..................................... ........................................ 42
EXHIBIT A
EXHIBIT B
EXHIBITC
EXHIBITD
EXHIBIT E
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FORM OF SERIES 2022 BOND ............................................... .............................. A-1
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES
DISTRICT FOR DISBURSEMENTS FROM COSTS OF ISSUANCE FUND ..... B-1
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES
DISTRICT FOR DISBURSEMENTS FROM THE IMPROVEMENT FUND ...... C-1
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES
DISTRICT FOR DISBURSEMENTS FROM ADMINISTRATIVE EXPENSE
FUND ............................ .............................................................................. ............. D-1
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES
DISTRICT FOR TRANSFER FROM SURPLUS FUND ....................................... E-1 IV
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INDENTURE
THIS INDENTURE (this "Indenture"), dated as of ____ 1, 2022, is by and between CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT), a community facilities district organized and existing under and by virtue of the laws of the State of California (the "Community Facilities District"), and U.S. BANK TRUST COMPANY , NATIONAL ASSOCIATION , a national banking association organized and existing under the laws of the United States of America , as trustee (the "Trustee ").
WITNE SSE TH:
WHEREAS, the City Council of the City of Rancho Mirage has formed the Community Facilities District under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, constituting Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing at Section 53311 of the California Government Code (the "Act");
WHEREAS, the Community Facilities District is authorized under the Act to levy special taxes (the "Special Taxes") to pay for the costs of certain public facilities (the "Facilities") and to authorize the issuance of bonds payable from the Special Taxes;
WHEREAS, in order to provide funds to finance certain of the Facilities authorized to be financed through the levy of Special Taxes on taxable property located in the Community Facilities District, the Community Facilities District desires to provide for the issuance of City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Series 2022 Bonds") , in the aggregate principal amount of not to exceed $ ____ _ WHEREAS, the Community Facilities District desires to provide for the issuance of additional bonds (the "Additional Bonds") payable from the Special Taxes on a parity with the Series 2022 Bonds, provided that said issuance is in accordance with the Act and this Indenture (the Series 2022 Bonds and any such Additional Bonds being collectively referred to as the "Bonds"); WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon , the Community Facilities District has authorized the execution and delivery of this Indenture ; and WHEREAS, the Community Facilities District has determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Community Facilities District, authenticated and delivered by the Trustee and duly issued, the valid, binding, and legal special obligations of the Community Facilities District, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Indenture has been in all respects duly authorized ; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof , and for other valuable consideration, the receipt whereof is hereby acknowledged, the Community Facilities District does hereby 4 142-0544-6456.2
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covenant and agree with the Trustee, for the benefit of the respective owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any certificate, opinion or other document herein or therein mentioned, have the meanings herein specified.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, constituting Section 53311 et seq. of the California Government Code. "Additional Bonds" means Bonds other than Series 2022 Bonds issued hereunder in accordance with the provisions of Sections 3 .05 and 3 .06.
"Administrative Expense Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.07.
"Administrative Expenses" means the actual or reasonably estimated costs related to the administration of the Community Facilities District, including, but not limited to: the costs of preparing and computing the Special Taxes (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City, the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, the Community Facilities District, or any designee thereof complying with arbitrage rebate requirements, including without limitation rebate liability costs and periodic rebate calculations; the costs to the City, the Community Facilities District, or any designee thereof complying with disclosure or reporting requirements of the City or the Community Facilities District, associated with applicable federal and State laws; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs to the City, the Community Facilities District, or any designee thereof related to an appeal of the Special Tax; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or the Community Facilities District for any other administrative purposes of the Community Facilities District, including attorney's fees and other costs related to commencing and pursuing any foreclosure of delinquent Special Taxes. "Annual Debt Service" means, for each Bond Year, the sum of: (a) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of mandatory sinking fund redemptions); and (b) the principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking fund redemptions due in such Bond Year).
"Appraised Value" means the value of all or any portion of the Taxable Property, as set forth in a Qualified Appraisal Report prepared by a Qualified Appraiser. "Assessed Value" means, with respect to all or any portion of the Taxable Property, as of any date, the assessed value thereof, as such value is shown on the most recently equalized assessment roll. "Auditor" means the Auditor/Controller of the County of Riverside. 2 4142-0544-6456.2
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"Authorized Denominations" means (a) with respect to the Series 2022 Bonds, $5,000 and any integral multiple thereof, and (b) with respect to each Series of Additional Bonds, the authorized denominations for such Series of Additional Bonds specified in the Supplemental Indenture pursuant to which such Additional Bonds are issued.
"Authorized Representative" means, with respect to the Community Facilities District, each of the City's Mayor, the City Manager, and the Director of Administrative Services, and any other Person designated as an Authorized Representative of the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee. · "Average Annual Debt Service" means the average of the Annual Debt Service for all remaining Bond Years, including the Bond Year in which the calculation is made. "Bond Counsel" means a firm of nationally recognized bond counsel selected by the Community Facilities District.
"Bond Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.03.
"Bond Year" means each twelve-month period beginning on September 2 in each year and extending to the next succeeding September 1, both dates inclusive, except that the first Bond Year shall begin on the Closing Date and end on September 1, 2023. "Bonds" means the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds issued hereunder , and includes the Series 2022 Bonds and any Additional Bonds .
"Book-Entry Bonds" means the Bonds of a Series registered in the name of the nominee of OTC, or any successor securities depository for such Series of Bonds, as the registered owner thereof pursuant to the terms and provisions of Section 2.09.
"Business Day" means a day which is not (a) a Saturday, Sunday, or legal holiday in the State of California, (b) a day on which banking institutions in the State of California, or in any state in which the Office of the Trustee is located, are required, or authorized by law (including executive order) to close, or (c) a day on which the New York Stock Exchange is closed. "Capitalized Interest Account" means the account by that name within the Bond Fund established pursuant to Section 5 .03 hereof.
"Cede & Co." means Cede & Co., the nominee of OTC, and any successor nominee of OTC with respect to a Series of Book -Entry Bonds.
"CFD Administrator" has the meaning ascribed thereto in the Rate and Method. "City" means the City of Rancho Mirage, a political subdivision organized and existing under and by virtue of the laws of the State of California.
"City Council" means the City Council of the City.
"Closing Date" means the date upon which the Series 2022 Bonds are delivered to the Original Purchaser , being _____ , 2022 .
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"Code" means the Internal Revenue Code of 1986.
"Community Facilities District" means City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project), a community facilities district organized and existing under and by virtue of the laws of the State of California , and any successor thereto. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Community Facilities District relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses , rating agency fees, filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel, including the Trustee's first annual administrative fee, fees, charges and disbursements of attorneys, municipal advisors, accounting firms, appraisers, consultants, and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds, any premium for a bond insurance policy securing payment of the Bonds, any premium for a reserve facility and any other cost, charge or fee in connection with the original issuance of the Bonds. "Costs of Issuance Fund" means the fund by that name established and held by the Trustee pursuant to Section 3.03.
"County" means the County of Riverside, a county and political subdivision of the State organized and existing under the laws of the State, and any successor thereto. "Developed Property" has the meaning ascribed thereto in the Rate and Method. "Developer" means Pulte Home Company, LLC, a Michigan limited liability company and its successors or assigns.
"Developer Continuing Disclosure Agreement" means the Continuing Disclosure Agreement, dated as of _____ I, 2022, by the Developer and Willdan Financial Services, as dissemination agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof. "District Continuing Disclosure Agreement" means the Continuing Disclosure Agreement , dated as of ____ _ I, 2022, by the Community Facilities District and Willdan Financial Services, as dissemination agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof .
"DTC" means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York, and its successors as securities depository for any Series of Book-Entry Bonds, including any such successor appointed pursuant to Section 2.09. "Facilities" means those facilities and governmental fees, as applicable, as defined and further described in Section 6 of the Resolution of Formation.
"Federal Securities" means (a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), and (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are fully guaranteed by the United States of America.
"Final Map" has the meaning ascribed thereto in the Rate and Method. 4 4142-0544-6456 .2
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"Fiscal Year" means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official fiscal year period of the Community Facilities District designated in a Written Certificate of the Community Facilities District delivered to the Trustee.
"Improvement Fund" means the fund by that name established and held by the Trustee pursuant to Section 3 .04.
"Indenture" means this Indenture, as originally executed and as it may be amended or supplemented from time to time by any Supplemental Indenture. "Independent Consultant" means any consultant or firm of such consultants selected by the Community Facilities District and who, or each of whom: (a) is generally recognized to be qualified in the financial consulting field ; (b) is in fact independent and not under the control of the Community Facilities District or the City; ( c) does not have any substantial interest , direct or indirect , with or in the Community Facilities District or the City, or any owner of real property in the Community Facilities District, or any real property in the Community Facilities District; and (d) is not connected with the Community Facilities District or the City as an officer or employee thereof , but who may be regularly retained to make reports to the Community Facilities District or the City.
"Interest Account" means the account by that name within the Bond Fund established and held by the Trustee pursuant to Section 5 .03.
"Interest Payment Dates" means March 1 and September 1 of each year, commencing March 1, 2023, so long as any Bonds remain Outstanding.
"Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year, including the Bond Year the calculation is made .
"Maximum Special Tax" has the meaning ascribed thereto in the Rate and Method. "Moody's" means Moody's Investors Service, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Community Facilities District.
"Net Special Tax Revenues" means Special Tax Revenues , less amounts required to pay Priority Administrative Expenses.
"Office of the Trustee" means the principal corporate trust office of the Trustee in Los Angeles , California, or such other office as may be specified to the Community Facilities District by the Trustee in writing .
"Ordinance" means any ordinance adopted by the City levying the Special Taxes. "Original Purchaser" means the original purchaser of the Series 2022 Bonds from the Community Facilities District.
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"Other CFD Bonds" means, as of the date of determination, any and all bonds, notes or other evidence of indebtedness, other than the Bonds, then outstanding and issued by an Overlapping CFO under the Act and payable at least partially from special taxes to be levied on parcels of Taxable Property. "Outstanding" means, when used as of any particular time with reference to Bonds, subject to the provisions of Section 11.09, all Bonds theretofore , or thereupon being, authenticated and delivered by the Trustee under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Community Facilities District shall have been discharged in accordance with Section 10.01, including Bonds (or portions of Bonds) disqualified under Section 11.09; and ( c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture. "Overlapping CFD" means a separate community facilities district established by the City or another local agency that includes all or a portion of the Taxable Property in the Community Facilities District and that levies special taxes pursuant to its own rate and method of apportionment on such property. "Owner" means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books.
"Participant" means any entity which is recognized as a participant by OTC in the book-entry system of maintaining records with respect to Book-Entry Bonds. "Permitted Investments" means the following , to the extent that such securities are otherwise eligible legal investments of the Community Facilities District:
(a) Federal Securities ;
Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America , including:
Export-Import Bank;
Rural Economic Community Development Administration;
U.S. Maritime Administration;
Small Business Administration ;
U.S. Department of Housing & Urban Development (PHAs) ; Federal Housing Administration; and
Federal Financing Bank;
(b) Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America:
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Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) ; Obligations of the Resolution Funding Corporation (REFCORP); 6 12-28
Senior debt obligations of the Federal Home Loan Bank System; and Senior debt obligations of other Government Sponsored Agencies approved by the Insurer;
(c) U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "P-1" by Moody's and "A-1" or "A-1 +" by S&P and maturing not more than 360 calendar days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank);
( d) Commercial paper which is rated at the time of purchase in the single highest classification, "P-1" by Moody's and "A-1+" by S&P and which matures not more than 270 calendar days after the date of purchase;
(e) Investments in a money market fund rated "AAAm" or "AAAm-G" or better by S&P;
(f) Pre-refunded Municipal Obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and
(1) which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of Moody's or S&P or any successors thereto; or (2) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in clause (2) of the definition of "Defeasance Securities" contained in this Indenture, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate; (g) Municipal Obligations rated in the top two rating categories or higher by both Moody's and S&P;
(h) Investment Agreements rated in the top two rating categories or higher by Moody's or S&P (supported, as may be required, by appropriate opinions of counsel); (i) Any investment authorized by California Government Code Section 53601; (j) The Local Agency Investment Fund or similar pooled fund operated by or on behalf of the State of California and which is authorized to accept investments of moneys held in any of the funds or accounts established pursuant to this Indenture; (k) The Riverside County Investment Pool; and
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(I) Other forms of investments rated in the top two rating categories or higher by Moody's or S&P (supported, as may be required, by appropriate opinions of counsel) .
Any references to long-term rating categories in this definition of "Permitted Investments" shall not take into account any plus or minus sign or numerical modifiers . "Person" means an individual, corporation, limited liability company, firm, association, partnership , trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof .
"Principal Account" means the account by that name within the Bond Fund established and held by the Trustee pursuant to Section 5.03.
"Priority Administrative Expenses" means $15,000 in annual Administrative Expenses. "Qualified Appraisal Report" means a real estate appraisal report which (a) has been prepared by a Qualified Appraiser, (b) uses a date of value that is no earlier than three months prior to the date on which the value reported in such appraisal report is used in accordance with the provisions of this Indenture, ( c) is prepared in accordance with the applicable standards of the Appraisal Institute for such reports, and ( d) is prepared in accordance with the applicable guidelines of the California Debt and Investment Advisory Commission for such reports, as such guidelines are in effect on the Closing Date. "Qualified Appraiser" means a real estate appraiser selected by the Community Facilities District and having an "MAI" designation from the Appraisal Institute. "Rate and Method" means the "Rate and Method of Apportionment of Apportionment of Special Tax - City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project)" a copy of which was recorded on May 17, 2021 in the office of the Riverside County Clerk-Recorder as document number 2021-0302734.
"Rebate Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.06.
"Rebate Requirement" has the meaning ascribed thereto in the Tax Certificate. "Record Date" means, with respect to interest payable on any Interest Payment Date, the 15th calendar day of the month preceding each Interest Payment Date, whether or not such day is a Business Day.
"Redemption Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.04.
"Redemption Price" means the aggregate amount of principal of and premium, if any, on the Bonds upon the redemption thereof pursuant hereto.
"Registration Books" means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.04. "Representation Letter" means the Letter of Representations from the Community Facilities District to OTC, or any successor securities depository for any Series of Book-Entry Bonds, in which the 8 4142-0544-6456 .2
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Community Facilities District makes certain representations with respect to issues of its securities for deposit by DTC or such successor depository .
"Reserve Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.05.
"Reserve Requirement" means, as of the date of any calculation, the least of (a) "10% of the proceeds of the issue," within the meaning of Section 148 of the Code, with respect to the Bonds (excluding from such calculation Bonds refunded with the proceeds of subsequently issued Bonds), (b) Maximum Annual Debt Service, and ( c) 125% of Average Annual Debt Service. "Resolution of Formation" means the Resolution No. 2021-16 , adopted by the City Council of the City on May 6, 2021, establishing and forming the Community Facilities District, as originally adopted and as it may be amended or supplemented from time to time . "S&P" means S&P Global Ratings, a business unit of Standard and Poor's Financial Services, LLC, and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "S&P" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Community Facilities District.
"Series" means the initial series of Bonds executed, authenticated , and delivered on the date of initial issuance of the Bonds and identified pursuant to this Indenture as the Series 2022 Bonds, and any Additional Bonds issued pursuant to a Supplemental Indenture and identified as a separate Series of Bonds. "Series 2022 Bonds" means the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 issued hereunder. "Special Tax Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.02.
"Special Tax Revenues" means the proceeds of the Special Taxes received by or on behalf of the Community Facilities District, including any prepayments thereof , interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, which shall be limited to the amount of said lien and interest and penalties thereon. "Special Taxes" has the meaning ascribed thereto in the Rate and Method . "Supplemental Indenture" means any supplemental indenture amendatory of or supplemental to this Indenture , but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
"Surplus Fund" means the fund by that name established and held by the Trustee pursuant to Section 5.08.
"Tax Certificate" means the Tax Certificate executed by the Community Facilities District at the time of issuance of the Series 2022 Bonds relating to the requirements of Section 148 of the Code, as originally executed and as it may be amended from time to time in accordance with the terms thereof . "Taxable Property" has the meaning ascribed thereto in the Rate and Method . 9 4 142-0544-6456.2
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"Trustee" means U.S. Bank Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, or any successor thereto as Trustee hereunder, appointed as provided herein.
"Underwriter" has the meaning ascribed thereto m the Developer Continuing Disclosure Agreement.
"Written Certificate" and "Written Request" of the Community Facilities District mean , respectively , a written certificate or written request signed in the name of the Community Facilities District by an Authorized Representative . Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion, or representation , and the two or more so combined shall be read and construed as a single instrument.
Section 1.02. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof , this Indenture shall be deemed to be and shall constitute a contract among the Community Facilities District , the Trustee and the Owners from time to time of all Bonds authorized , executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, premium, if any, and interest on all Bonds which may from time to time be authorized , executed, issued and delivered hereunder, subject to the agreements , conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Community Facilities District shall be for the equal and proportionate benefit , protection, and security of all Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution , issuance , or delivery thereof or for any cause whatsoever , except as expressly provided herein or therein.
ARTICLE II
THE BONDS
Section 2.01. Authorization of Bonds. The Community Facilities District hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture , the Act and other applicable laws of the State of California. The Bonds may consist of one or more Series of varying denominations, dates , maturities , interest rates and other provisions , subject to the provisions and conditions contained herein.
The Bonds shall be designated generally as the "City of Rancho Mirage Community Facilities District No . 4C (Del Webb Project) Special Tax Bonds," each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds.
Section 2.02. Terms of Series 2022 Bonds. (a) The Series 2022 Bonds shall be designated "City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022." The aggregate principal amount of Series 2022 Bonds that may be issued and Outstanding under this Indenture shall not exceed$ ____ _ , except as may be otherwise provided in Section 2.08. (b) The Series 2022 Bonds shall be issued in fully registered form without coupons in Authorized Denominations . The Series 2022 Bonds shall be dated as of the Closing Date , shall be issued in the aggregate principal amount of$ _____ , shall mature on September I of each year and shall bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates per annum , and shall be in the principal amounts as follows:
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Maturity Date
(September 1)
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2053
Principal
Amount
$
Interest
Rate
%
(c) Interest on the Series 2022 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2022 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a Series 2022 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Series 2022 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for. Interest shall be paid in lawful money of the United States of America on each Interest Payment Date. Interest sha ll be paid by check of the Trustee mailed by first class mail, postage prepaid, or by wire transfer made on such Interest Payment Date upon the written instructions of any Owner of $1,000,000 or more Series 2022 Bonds to an account within the United States of America, on each Interest Payment Date to the Series 2022 Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Series 2022 Bond which is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Series 2022 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date.
(d) The principal of the Series 2022 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee. Payment of principal of any Series 2022 Bond shall be made only upon presentation and surrender of such Bond at the Office of the Trustee.
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(e) The Series 2022 Bonds shall be subject to redemption as provided in Article IV. (f) The Series 2022 Bonds shall be in substantially the form set forth in Exhibit A hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby.
Section 2.03. Transfer and Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred upon the Registration Books by the Person in whose name it is registered, in person or by its or their duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer , duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer , the Community Facilities District shall execute , and the Trustee shall authenticate and shall deliver, a new Bond or Bonds of the same Series and maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer.
The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series and maturity of other Authorized Denominations. The Trustee shall require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period established by the Trustee for the selection of Bonds of such Series for redemption, or with respect to any Bonds of such Series selected for redemption .
Section 2.04. Registration Books. The Trustee will keep or cause to be kept, at the Office of the Trustee , sufficient records for the registration and transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the Community Facilities District; and, upon presentation for such purpose , the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred , on such records, the ownership of the Bonds as hereinbefore provided .
Section 2.05. Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Community Facilities District with the manual, electronic or facsimile signature of the Mayor of the City attested by the manual, electronic or facsimile signature of the City Clerk of the City. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers of the City who shall have signed or attested any of the Bonds shall cease to be such officers before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee , or issued by the Community Facilities District, such Bonds may nevertheless be authenticated , delivered , and issued and, upon such authentication, delivery and issue, shall be as binding upon the Community Facilities District as though those who signed and attested the same had continued to be such officers, and also any Bonds may be signed and attested on behalf of the Community Facilities District by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the City although at the nominal date of such Bonds any such Person shall not have been such officer of the City.
Section 2.06. Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit A hereto for the Series 2022 Bonds, manually executed by the Trustee , shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed , authenticated, and delivered hereunder and are entitled to the benefits of this Indenture.
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Section 2.07. Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed, or typewritten, shall be of such Authorized Denominations as may be determined by the Community Facilities District, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Community Facilities District and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Community Facilities District issues temporary Bonds of a Series it shall execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and thereupon the temporary Bonds of such Series may be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of such Series and maturities in Authorized Denominations. Until so exchanged, the temporary Bonds of such Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder.
Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Community Facilities District, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated .
Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Community Facilities District. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence and indemnity satisfactory to the Trustee shall be given, the Community Facilities District, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor and Series in lieu of and in replacement for the Bond so lost, destroyed, or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Community Facilities District may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses which may be incurred by the Community Facilities District and the Trustee. Any Bond of a Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Community Facilities District whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture.
Section 2.09. Book-Entry Bonds. (a) Prior to the issuance of a Series of Bonds, the Community Facilities District may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds and, in such event, the Bonds of such Series for each maturity shall be in the form of a separate single fully registered Bond (which may be typewritten). The Series 2022 Bonds shall initially be issued as Book-Entry Bonds.
Except as provided in subsection (c) of this Section, the registered Owner of all of the Book-Entry Bonds shall be DTC and the Book-Entry Bonds shall be registered in the name of Cede & Co., as nominee of OTC. Notwithstanding anything to the contrary contained in this Indenture, payment of interest with respect to any Book-Entry Bond registered as of each Record Date in the name of Cede & Co. shall be made by wire transfer of same-day funds to the account of Cede & Co. on the payment date for the Book Entry Bonds at the address indicated on the Record Date for Cede & Co . in the Registration Books or as otherwise provided in the Representation Letter.
(b) The Trustee and the Community Facilities District may treat DTC (or its nominee) as the sole and exclusive Owner of the Book-Entry Bonds registered in its name for the purposes of payment of 13 4142-0544-6456 .2
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the principal, premium, if any, or interest with respect to the Book -Entry Bonds, selecting the Book-Entry Bonds or portions thereof to be redeemed, giving any notice permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, registering the transfer of Book-Entry Bonds, obtaining any consent or other action to be taken by Owners of Book-Entry Bonds and for all other purposes whatsoever, and neither the Trustee nor the Community Facilities District shall be affected by any notice to the contrary.
Neither the Trustee nor the Community Facilities District shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Book-Entry Bonds under or through OTC or any Participant, or any other person which is not shown on the Registration Books as being an Owner, with respect to the accuracy of any records maintained by OTC or any Participant, the payment by OTC or any Participant of any amount in respect of the principal, premium, if any, or interest with respect to the Book-Entry Bonds, any notice which is permitted or required to be given to Owners of Book-Entry Bonds under this Indenture, the selection by OTC or any Participant of any person to receive payment in the event of a partial redemption of the Book -Entry Bonds, or any consent given or other action taken by OTC as Owner of Book-Entry Bonds. The Trustee shall pay all principal, premium, if any and interest with respect to the Book-Entry Bonds, only to OTC, and all such payments shall be valid and effective to fully satisfy and discharge the Community Facilities Districts obligations with respect to the principal , premium , if any, and interest with respect to the Book-Entry Bonds to the extent of the sum or sums so paid. Except under the conditions of subsection ( c) of this Section, no person other than OTC shall receive an executed Book-Entry Bond for each separate stated maturity. Upon delivery by OTC to the Trustee of written notice to the effect that OTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to record dates, the term "Cede & Co." in this Indenture shall refer to such new nominee of OTC.
( c) In the event (i) OTC, including any successor as securities depository for a Series of Bonds, determines not to continue to act as securities depository for such Series of Bonds, or (ii) the Community Facilities District determines that the incumbent securities depository shall no longer so act as securities depository for such Series of Bonds, and delivers a written certificate to the Trustee to that effect, then the Community Facilities District will discontinue the book-entry system with the incumbent securities depository for such Series of Bonds. If the Community Facilities District determines to replace the incumbent securities depository for such Series of Bonds with another qualified securities depository , the Community Facilities District shall prepare or direct the preparation of a new single, separate , fully registered Bond of such Series for the aggregate outstanding principal amount of Bonds of such Series of each maturity , registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Community Facilities District , the Trustee and the successor securities depository for the Bonds of such Series as are not inconsistent with the terms of this Indenture. If the Community Facilities District fails to identify another qualified successor securities depository for such Series of Bonds to replace the incumbent securities depository, then the Bonds of such Series shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository for such Series of Bonds, or its nominee , shall designate. In such event the Community Facilities District shall execute, and deliver to the Trustee, a sufficient quantity of Bonds of such Series to carry out the transfers and exchanges provided in Sections 2.03, 2.07 and 2.08. All such Bonds of such Series shall be in fully registered form in denominations authorized by this Indenture. (d) Notwithstanding any other provision of this Indenture to the contrary, so long as any Book- Entry Bond is registered in the name of OTC, or its nominee , all payments with respect to the principal, premium , if any, and interest with respect to such Book-Entry Bond and all notices with respect to such Book -Entry Bond shall be made and given, respectively , as provided in the Representation Letter. (e) In connection with any notice or other communication to be provided to Owners of Book- Entry Bonds pursuant to this Indenture by the Community Facilities District or the Trustee with respect to 14 4142-0544-6456. 2
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any consent or other action to be taken by Owners, the Community Facilities District or the Trustee, as the case may be, shall establish a record date for such consent or other action and give OTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS; ADDITIONAL BONDS Section 3.01. Issuance of Series 2022 Bonds. The Community Facilities District may, at any time, execute the Series 2022 Bonds and deliver the same to the Trustee. The Trustee shall authenticate the Series 2022 Bonds and deliver the Series 2022 Bonds to the Original Purchaser upon receipt of a Written Request of the Community Facilities District and upon receipt of the purchase price therefor .
Section 3.02. Application of Proceeds of the Series 2022 Bonds. On the Closing Date, the proceeds of the sale of the Series 2022 Bonds received by the Trustee in the amount of $ ---- (representing the principal amount of the Series 2022 Bonds, [less net original issue discount of$ ___ _ and] less underwriter's discount of$ ___ ~, shall be deposited by the Trustee as follows:
(a) the Trustee shall deposit the amount of$ in the Reserve Fund, which is - - -- equal to the Reserve Requirement;
(b) the Trustee shall deposit the amount of $ ____ in the Capitalized Interest Account;
(c) the Trustee shall deposit the amount of$ _____ in the Improvement Fund; and
(d) the Trustee shall deposit the amount of$ in the Costs of Issuance Fund. ---- Section 3.03. Costs oflssuance Fund. The Trustee shall establish and maintain a separate fund designated the "Costs of Issuance Fund." On the Closing Date, the Trustee shall deposit in the Costs of Issuance Fund the amount required to be deposited therein pursuant to Section 3.02.
The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the Community Facilities District in the form attached hereto as Exhibit B stating: (a) the Person to whom payment is to be made; (b) the amount to be paid; ( c) the purpose for which the obligation was incurred; ( d) that such payment is a proper charge against the Costs of Issuance Fund; and ( e) that such amounts have not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder. On the last Business Day that is no later than six months after the Closing Date, the Trustee shall transfer any amount remaining in the Costs of Issuance Fund to the Improvement Fund and, upon making such transfer, the Costs of Issuance Fund shall be closed.
If the Costs of Issuance Fund has been closed in accordance with the provisions hereof, the Costs of Issuance Fund shall be reopened and reestablished by the Trustee in connection with the issuance of any Additional Bonds, if so provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued.
Section 3.04. Improvement Fund. (a) The Trustee shall establish and maintain a separate fund designated the "Improvement Fund." On the Closing Date, the Trustee shall deposit in the Improvement Fund the amount required to be deposited therein pursuant to Section 3.02. The Trustee shall establish, as 15 4142-0544-6456 .2
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needed, separate subaccounts within the Improvement Fund to permit the separate accounting for amounts derived from Bond proceeds and from Special Taxes.
(b) The moneys in the Improvement Fund shall be used and withdrawn by the Trustee from time to time to pay the costs of the Facilities upon submission of a Written Request of the Community Facilities District in the form attached hereto as Exhibit C stating (i) the Person to whom payment is to be made, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment constitutes a cost of the Facilities and is a proper charge against the Improvement Fund, and (v) that such amounts have not been the subject of a prior disbursement from the Improvement Fund. (c) Upon the filing of a Written Certificate of the Community Facilities District stating (i) that the Facilities to be financed from the Improvement Fund have been completed and that all costs of such Facilities have been paid, or (ii) that the Facilities have been substantially completed and that all remaining costs of the Facilities have been determined and specifying the amount to be retained therefor, the Trustee shall (A) if the amount remaining in the Improvement Fund (less any such retention) is equal to or greater than $25,000, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption Fund, to be applied to the redemption of Bonds, and (B) after making the transfer, if any, required to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the Improvement Fund (less any such retention) to the Interest Account of the Bond Fund, to be applied to the payment of interest on the Bonds.
Section 3.05. Conditions for the Issuance of Additional Bonds. The Community Facilities District may at any time issue one or more Series of Additional Bonds payable from Net Special Tax Revenues as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions , which are hereby made conditions precedent to the issuance of such Additional Bonds:
(a) upon the issuance of such Additional Bonds, no Event of Default shall have occurred and be continuing hereunder;
(b) the issuance of such Additional Bonds shall have been authorized under and pursuant to this Indenture and the Act and shall have been provided for by a Supplemental Indenture which shall specify the following:
(i) the purpose for which the proceeds of such Additional Bonds are to be applied, which purpose may only include providing funds to refund any Bonds previously issued hereunder , and providing funds to pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds;
(ii) the principal amount and designation of such Series of Additional Bonds and the interest rate to be borne by each maturity of such Additional Bonds; (iii) that such Additional Bonds shall be payable as to interest on the Interest Payment Dates, except that the first installment of interest may be payable on either March 1 or September 1 and shall be for a period of not longer than twelve months; (iv) the date, the maturity date or dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, however , that each such maturity date and date on which a mandatory sinking fund redemption is to be made shall be September 1 and, provided , further, that serial maturities of serial Bonds or mandatory sinking fund 16 4142-0 544-6456.2
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redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates; (v) the redemption premiums and terms, if any, for such Additional Bonds; (vi) the form of such Additional Bonds;
(vii) the amount, if any, to be deposited from the proceeds of sale of such Additional Bonds in the Reserve Fund; and
(viii) such other provisions that are appropriate or necessary and are not inconsistent with the provisions hereof.
(c) Annual Debt Service in each Bond Year, calculated for all Bonds that will be Outstanding after the issuance of such Additional Bonds, will be less than or equal to Annual Debt Service in such Bond Year, calculated for all Bonds which are Outstanding immediately prior to the issuance of such Additional Bonds.
Notwithstanding the foregoing, if (i) such Additional Bonds are being issued to refund previously issued Bonds, and (ii) Annual Debt Service in each Bond Year, calculated for all Bonds that will be Outstanding after the issuance of such Additional Bonds, will be less than or equal to Annual Debt Service in such Bond Year, calculated for all Bonds which are Outstanding immediately prior to the issuance of such Additional Bonds, the receipt of the certificate described in paragraph ( c ), above, shall not be a condition precedent to the issuance of such Additional Bonds.
Nothing contained herein shall limit the issuance of any special tax bonds payable from Special Taxes if, after the issuance and delivery of such special tax bonds, none of the Bonds theretofore issued hereunder will be Outstanding.
Section 3.06. Procedure for the Issuance of Additional Bonds. At any time after the sale of any Additional Bonds in accordance with the Act, such Additional Bonds shall be executed by the Community Facilities District for issuance hereunder and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following:
(a) an executed copy of the Supplemental Indenture authorizing the issuance of such Additional Bonds;
(b) a Written Request of the Community Facilities District as to the delivery of such Additional Bonds;
(c) a Written Certificate of the Community Facilities District stating that the conditions precedent to the issuance of such Additional Bonds specified in Section 3 .05 have been satisfied;
(d) an opinion of Bond Counsel substantially to the effect that (i) this Indenture and all Supplemental Indentures have been duly authorized , executed and delivered by, and constitute the valid and binding obligations of, the Community Facilities District (except as enforcement may be limited by bankruptcy , insolvency, reorganization, moratorium and other similar laws affecting creditors' rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State) and (ii) such Additional Bonds constitute valid and binding special 17 4142-0 544-6456.2
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obligations of the Community Facilities District (except as enforcement may be limited by bankruptcy , insolvency, reorganization, moratorium and other similar laws affecting creditors' rights and by the application of equitable principles and by the exercise of judicial discretion in appropriate cases and subject to the limitations on legal remedies against political subdivisions in the State);
( e) the proceeds of the sale of such Additional Bonds; and (f) such further documents or money as are required by the provisions hereof or by the provisions of the Supplemental Indenture authorizing the issuance of such Additional Bonds.
Section 3.07. Additional Bonds. So long as any of the Bonds remain Outstanding , the Community Facilities District shall not issue any Additional Bonds or obligations payable from Net Special Tax Revenues on a parity with the Bonds, except pursuant to Sections 3.05 and 3.06. So long as any of the Bonds remain Outstanding , the Community Facilities District shall not issue any obligations payable from Net Special Tax Revenues on a basis senior to the Bonds . In addition, (i) the City may form Overlapping CFDs in the future, (ii) the special taxes levied in such Overlapping CFDs shall have the same lien priority in case of delinquency as the Special Taxes, (iii) nothing in this Indenture shall prohibit or limit in any way the issuance by the Overlapping CFDs of Other CFO Bonds , which may be issued without compliance with the provisions of Sections 3 .05 and 3 .06 but will nonetheless be secured by other special taxes the lien of which would be co-equal to the lien of the Special Taxes, (iv) in the event that special taxes collected from property that is in both the Community Facilities District and the Overlapping CFDs established by the City are less than the amounts levied on such property by the Community Facilities District and such Overlapping CFDs, the actual amount of special taxes collected shall be distributed pro rata to the Community Facilities District and such Overlapping CFDs based on the amounts levied by each of the Community Facilities District and such Overlapping CFDs on such property, and (v) in the event amounts collected in foreclosure proceedings from property that is in both the Community Facilities District and the Overlapping CFDs established by the City are less than the amounts due from such property to both the Community Facilities District and such Overlapping CFDs, then the actual amounts collected from such property in foreclosure proceedings shall be distributed pro rata to the Community Facilities District and such Overlapping CFDs based on the amounts due from such property to each of the Community Facilities District and such Overlapping CFDs.
ARTICLE IV
REDEMPTION OF BONDS
Section 4.01. Redemption of Series 2022 Bonds. (a) Optional Redemption. [The Series 2022 Bonds maturing on and after September 1, 2030, shall be subject to optional redemption, in whole or in part in Authorized Denominations, on any Interest Payment Date on or after September 1, 2029, from any source of available funds, at the following respective Redemption Prices ( expressed as percentages of the principal amount of the Series 2022 Bonds to be redeemed), plus accrued interest thereon to the date of redemption]:
Redemption Dates
September 1, 2029 and March 1, 2030
September 1, 2030 and March 1, 2031
September 1, 2031 and March 1, 2032
September 1, 2032 and any Interest Payment Date thereafter 18 4 142-0544-6456.2
Redemption Price
103%
102
I 01
100
12-40
The Community Facilities District shall give the Trustee written notice of its intention to redeem Series 2022 Bonds pursuant to this subsection not less than 45 days prior to the applicable redemption date, unless such notice shall be waived by the Trustee.
(b) Mandatory Redemption.from Special Tax Prepayments. [The Series 2022 Bonds shall be subject to mandatory redemption, in whole or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of any prepayment of Special Taxes, at the following respective Redemption Prices ( expressed as percentages of the principal amount of the Series 2022 Bonds to be redeemed), plus accrued interest thereon to the date of redemption]:
Redemption Dates
[March I, 2023] through and including March I, 2030
September 1, 2030 and March 1, 2031
Redemption Price
103%
102
September 1, 2031 and March 1, 2032 101
September 1, 2032 and any Interest Payment Date thereafter 100 ( c) Mandatory Sinking Fund Redemption. The Series 2022 Bonds maturing September I, 20 shall be subject to mandatory sinking fund redemption, in part, on September I in each year, commencing September 1, 20 _, at a Redemption Price equal to the principal amount of the Series 2022 Bonds maturing September 1, 20_ to be redeem ed, without premium , plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows :
Sinking Fund
Redemption Date
(September 1)
20 20
20 20
20_ (Maturity)
Principal Amount
to be
Redeemed
$
If some but not all of the Series 2022 Bonds maturing on September 1, 20 _ are redeemed pursuant to Section 4.0l(a), the principal amount of Series 2022 Bonds maturing on September 1, 20_ to be redeemed pursuant to Section 4.0l(c) on any subsequent September I shall be reduced, by $5,000 or an integral multiple thereof, as designated by the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee; provided , however, that the aggregate amount of such reductions shall not exceed the aggregate amount of Series 2022 Bonds maturing on September 1, 20_ redeemed pursuant to Section 4.0l(a). If some but not all of the Series 2022 Bonds maturing on September 1, 20 _ are redeemed pursuant to Section 4.01 (b ), the principal amount of Series 2022 Bonds maturing on September 1, 20_ to be redeemed pursuant to Section 4.0l(c) on any subsequent September 1 shall be reduced by the aggregate principal amount of the Series 2022 Bonds maturing on September 1, 20_ so redeemed pursuant to Section 4.0l(b), such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Community Facilities District.
The Series 2022 Bonds maturing September 1, 20 _ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20 _, at a Redemption Price equal to the principal amount of the Series 2022 Bonds maturing September 1, 20 _ to be redeemed, 19 4142-0544-6456 .2
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without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(Septem her 1)
20 20
20 20
20 _ (Maturity)
Principal Amount
to be
Redeemed
$
If some but not all of the Series 2022 Bonds maturing on September I, 20 _ are redeemed pursuant to Section 4.0l(a), the principal amount of Series 2022 Bonds maturing on September I, 20_ to be redeemed pursuant to Section 4.0l(c) on any subsequent September I shall be reduced, by $5,000 or an integral multiple thereof, as designated by the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee; provided , however, that the aggregate amount of such reductions shall not exceed the aggregate amount of Series 2022 Bonds maturing on September 1, 20_ redeemed pursuant to Section 4.0l(a). If some but not all of the Series 2022 Bonds maturing on September 1, 20_ are redeemed pursuant to Section 4.0l(b), the principal amount of Series 2022 Bonds maturing on September I, 20_ to be redeemed pursuant to Section 4.0l(c) on any subsequent September 1 shall be reduced by the aggregate principal amount of the Series 2022 Bonds maturing on September I, 20_ so redeemed pursuant to Section 4.0l(b), such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Community Facilities District.
Section 4.02. Notice of Redemption. The Trustee on behalf and at the expense of the Community Facilities District shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books and to the Original Purchaser, at least 30 but not more than 60 days prior to the date fixed for redemption. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, if any, the Bond numbers and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of all of the Bonds of such maturity or maturities in whole), and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so mailed , nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of any optional redemption of Bonds of a Series, unless at the time such notice is given the Bonds to be redeemed shall be deemed to have been paid within the meaning of Section 10.01, such notice shall state that such redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the Redemption Price of, and accrued interest on, the Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Community Facilities District shall not be required to redeem such Bonds. In the event a notice ofredemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption shall not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the 20 4142-0544-6456.2
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notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Bonds pursuant to such notice of redemption .
Section 4.03. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption ofless than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption: (a) with respect to any optional redemption of Bonds of a Series, among maturities of Bonds of such Series as directed in a Written Request of the Community Facilities District ; (b) with respect to any redemption pursuant to Section 4.01 (b) and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued , among maturities of all Series of Bonds on a pro rata basis as nearly as practicable; and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued , and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds which may be separately redeemed .
Section 4.04. Purchase In Lieu of Redemption. In lieu of an optional , mandatory or mandatory sinking fund redemption , the Community Facilities District may elect to purchase such Bonds at public or private sale at such prices as the Community Facilities District in its discretion may determine; provided, that, unless otherwise authorized by law, the purchase price (including brokerage and other charges) thereof will not exceed the principal amount thereof, plus accrued interest accrued to the purchase date and any premium which would otherwise be due if such Bonds were to be redeemed in accordance with this Indenture.
Section 4.05. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Community Facilities District shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Community Facilities District, a new Bond or Bonds of the same Series in Authorized Denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered.
Section 4.06. Effect of Notice of Redemption. Notice having been mailed as aforesaid, and moneys for the Redemption Price , and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date .
If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon.
All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed.
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ARTICLE V
SECURITY FOR BONDS; FLOW OF FUNDS; INVESTMENTS
Section 5.0l. Pledge. Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Net Special Tax Revenues and any other amounts (including proceeds of the sale of the Bonds) held in the Special Tax Fund, the Bond Fund, the Redemption Fund and the Reserve Fund are hereby pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act. Said pledge shall constitute a first lien on such assets.
Section 5.02. Special Tax Fund. (a) The Trustee shall establish and maintain a separate fund designated the "Special Tax Fund." As soon as practicable after the receipt by the Community Facilities District of any Special Tax Revenues, but in any event no later than the date ten Business Days prior to the Interest Payment Date after such receipt, the Community Facilities District shall transfer such Special Tax Revenues to the Trustee for deposit in the Special Tax Fund; provided, however, that for any prepayments of Special Taxes under the Rate and Method, any portion of any such prepayment that are to be applied to the payment of the Redemption Price of Bonds in accordance with the provisions hereof shall be identified to the Trustee as such by the Community Facilities District and shall be deposited in the Redemption Fund. (b) Upon receipt of a Written Request of the Community Facilities District, the Trustee shall withdraw from the Special Tax Fund and transfer to the Administrative Expense Fund the Priority Administrative Expenses specified in such Written Request of the Community Facilities District. (c) On the Business Day immediately preceding each Interest Payment Date, after having made any requested transfer of the Priority Administrative Expenses to the Administrative Expense Fund, the Trustee shall withdraw from the Special Tax Fund Net Special Tax Revenues in an amount sufficient to enable the Trustee to make the following transfers in the following order of priority:
(i) Interest Account of the Bond Fund. To the Interest Account, the amount, if any, necessary to cause the amount on deposit in the Interest Account to be equal to the interest due on the Bonds on such Interest Payment Date;
(ii) Principal Account of the Bond Fund. To the Principal Account , the amount, if any, necessary to cause the amount on deposit in the Principal Account to be equal to the principal, if any, due on the Bonds on such Interest Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds; and (iii) Reserve Fund. To the Reserve Fund, the amount, if any, necessary to cause the amount on deposit in the Reserve Fund to be equal to the Reserve Requirement. (d) On or after each September 2, after having made the transfers pursuant to subsection (c) of this Section, the Trustee shall withdraw from the Special Tax Fund any Net Special Tax Revenues therein as of such September 2 to make the following transfers in the following order of priority:
(i) Administrative Expense Fund. To the Administrative Expense Fund, if upon receipt of a Written Request of the Community Facilities District for an amount greater than the Priority Administrative Expenses, the amount necessary to be transferred thereto in order to have sufficient amounts available therein to pay Administrative Expenses; and (ii) Surplus Fund. To the Surplus Fund.
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Section 5.03. Bond Fund. (a) The Trustee shall establish and maintain a separate fund designated the "Bond Fund." Within the Bond Fund, the Trustee shall establish and maintain a separate account designated the "Principal Account," a separate account designated the "Interest Account" and a separate account designated the "Capitalized Interest Account." On the Closing Date, the Trustee shall deposit in the Capitalized Interest Account the amount required to be deposited therein pursuant to Section
3.02. The Trustee shall deposit in the Bond Fund from time to time the amounts required to be deposited therein pursuant to Section 5.02. The Trustee shall deposit in the Interest Account and the Principal Account from time to time the amounts required to be deposited therein pursuant to Section 5.02. In addition, to the extent Net Special Tax Revenues are insufficient to make the required [deposits in the Interest Account on March 1, 2023 and September 1, 2023), the Trustee shall transfer from the Capitalized Interest Account to the Interest Account the amount, if any, necessary to cause the amount on deposit in the Interest Account to be equal to the interest due on the Bonds on such date[s]. On [September 2, 2023), the Trustee shall transfer any amounts then remaining in the Capitalized Interest Account to the Interest Account, and the Capitalized Interest Account shall be closed . There shall additionally be deposited in the Interest Account the portion, if any, of the proceeds of the sale of Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. (b) In the event that, on the Business Day prior to an Interest Payment Date, amounts in the Interest Account are insufficient to pay the interest on the Bonds due and payable on such Interest Payment Date, the Trustee shall withdraw from the Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts so withdrawn to the Interest Account. ( c) On each Interest Payment Date, the Trustee shall withdraw from the Interest Account for payment to the Owners of the Bonds the interest on the Bonds then due and payable. ( d) In the event that, on the Business Day prior to a September 1 on which principal of the Bonds is due and payable, including principal due and payable by reason of mandatory sinking fund redemption of the Bonds, amounts in the Principal Account are insufficient to pay such principal, after having withdrawn any amounts from the Reserve Fund required to be withdrawn therefrom on such date pursuant to subsection (b) of this Section, the Trustee shall withdraw from the Reserve Fund, to the extent of any funds therein, the amount of such insufficiency, and shall transfer any amounts so withdrawn to the Principal Account.
(e) On each September 1 on which principal of the Bonds is due and payable, including principal due and payable by reason of mandatory sinking fund redemption of the Bonds, the Trustee shall withdraw from the Principal Account for payment to the Owners of the Bonds such principal then due and payable.
Section 5.04. Redemption Fund. The Trustee shall establish and maintain a special fund designated the "Redemption Fund." As soon as practicable after the receipt by the Community Facilities District of prepaid Special Taxes designated for redemption of Bonds, but in any event not later than ten Business Days after such receipt, the Community Facilities District shall transfer such prepaid Special Taxes to the Trustee for deposit in the Redemption Fund. Additionally, the Trustee shall deposit in the Redemption Fund amounts received from the Community Facilities District in connection with the Community Facilities District's exercise of its rights to optionally redeem Series 2022 Bonds pursuant to Section 4.01 ( a) and any other amounts required to be deposited therein pursuant to Section 5 .05 or pursuant to any Supplemental Indenture .
Amounts in the Redemption Fund shall be disbursed therefrom for the payment of the Redemption Price of Series 2022 Bonds redeemed pursuant to Section 4.0l(a) or Section 4.0l(b) and to pay the 23 4142-0544-6456 .2
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Redemption Price of Additional Bonds redeemed under the Supplemental Indenture pursuant to which such Additional Bonds are issued ( other than mandatory sinking fund redemptions thereof).
Section 5.05. Reserve Fund. The Trustee shall establish and maintain a special fund designated the "Reserve Fund." On the Closing Date, the Trustee shall deposit in the Reserve Fund the amount required to be deposited therein pursuant to Section 3 .02. The Trustee shall deposit in the Reserve Fund from time to time the amounts required to be deposited therein pursuant to Section 5.02(c). There shall additionally be deposited in the Reserve Fund, in connection with the issuance of Additional Bonds, the amount required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued.
Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the principal of and interest on the Bonds or, in accordance with the provisions of this Section, for the purpose ofredeeming Bonds. Transfers shall be made from the Reserve Fund to the Bond Fund in the event of a deficiency in the Bond Fund, in accordance with Section 5.03.
So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Fund in excess of the Reserve Requirement on September 2 of each year shall be withdrawn from the Reserve Fund by the Trustee and shall, prior to the date on which a Written Certificate of the Community Facilities District is delivered to the Trustee pursuant to Section 3.04(c), be deposited in the Improvement Fund and, thereafter, shall be deposited in the Interest Account of the Bond Fund. Notwithstanding the foregoing, before any such deposit shall be made, such amount shall be available for the payment of any rebate that may be owed under the Code, as specified in a Written Request of the Community Facilities District delivered to the Trustee on or before September 2 of each year.
Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Trustee shall, upon receipt of a Written Request of the Community Facilities District, transfer the amount in the Reserve Fund to the Bond Fund or Redemption Fund, as applicable, to be applied, on the next succeeding Interest Payment Date to the payment and redemption of all of the Outstanding Bonds .
Whenever Bonds are to be redeemed pursuant to Section 4.0l(a) or Section 4.0l(b) or the corresponding provisions of a Supplemental Indenture , a proportionate share, determined as provided below, of the amount on deposit in the Reserve Fund shall, on the Business Day prior to the date on which such Bonds are to be redeemed, be transferred by the Trustee from the Reserve Fund to the Redemption Fund and shall be applied to the redemption of said Bonds; provided , however, that such amount shall be so transferred only if and to the extent that the amount remaining on deposit in the Reserve Fund will be at least equal to the Reserve Requirement ( excluding from the calculation thereof said Bonds to be redeemed).
Such proportionate share shall be equal to the largest integral multiple of the minimum Authorized Denomination for said Bonds that is not larger than the amount equal to the product of (i) the amount on deposit in the Reserve Fund on the date of such transfer, times (ii) a fraction, the numerator of which is the principal amount of Bonds to be so redeemed and the denominator of which is the principal amount of Bonds to be Outstanding on the day prior to the date on which such Bonds are to be so redeemed.
Section 5.06. Rebate Fund. (a) The Trustee shall establish and maintain a special fund designated the "Rebate Fund" when and if needed. There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of the Community Facilities District. All money at any time deposited in the Rebate Fund shall be 24 4142-0544-6456.2
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held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X hereof or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Community Facilities District, and shall have no liability or responsibility to enforce compliance by the Community Facilities District with the terms of the Tax Certificate. The Trustee may conclusively rely upon the Community Facilities District's determinations, calculations and certifications required by the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Community Facilities District's calculations.
(b) Any funds remaining in the Rebate Fund after payment in full of all of the Bonds and after payment of any amounts described in this Section, shall, upon receipt by the Trustee of a Written Request of the Community Facilities District, be withdrawn by the Trustee and remitted to the Community Facilities District.
Section 5.07. Administrative Expense Fund. The Trustee shall establish and maintain a special fund designated the "Administrative Expense Fund." The Trustee shall additionally deposit in the Administrative Expense Fund the amounts transferred from the Special Tax Fund and required to be deposited therein pursuant to Section 5.02.
The moneys in the Administrative Expense Fund shall be used and withdrawn by the Trustee from time to time to pay the Administrative Expenses upon submission of a Written Request of the Community Facilities District attached hereto as Exhibit D stating: (a) the Person to whom payment is to be made; (b) the amount to be paid; ( c) the purpose for which the obligation was incurred and that such purpose constitutes an Administrative Expense; (d) that such payment is a proper charge against the Administrative Expense Fund; and ( e) that such amounts have not been the subject of a prior disbursement from the Administrative Expense Fund; in each case together with a statement or invoice for each amount requested thereunder.
Section 5.08. Surplus Fund. The Trustee shall establish and maintain a special fund designated the "Surplus Fund." The Trustee shall deposit in the Surplus Fund the amounts transferred from the Special Tax Fund and required to be deposited therein pursuant to Section 5.02. The moneys in the Surplus Fund shall be used and withdrawn by the Trustee from time to time, upon receipt of a Written Request of the Community Facilities District attached hereto as Exhibit E, directing the Trustee to transfer the amount so specified in such Written Request to: (i) the Redemption Fund to redeem Bonds; or (ii) transfer such amount to the Community Facilities District to be applied to the payment of costs of facilities authorized to be financed by the Community Facilities District pursuant to the Resolution of Formation.
Section 5.09. Investment of Moneys. Except as otherwise provided herein, all moneys in any of the funds or accounts established pursuant to this Indenture and held by the Trustee shall be invested by the Trustee solely in Permitted Investments, as directed in writing by the Community Facilities District two Business Days prior to the making of such investment. Moneys in all funds and accounts held by the Trustee shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture; provided, however, that Permitted Investments in which moneys in the Reserve Fund are so invested shall mature no later than the earlier of five years from the date of investment or the final maturity date of the Bonds; provided, further, that if such Permitted Investments may be redeemed at par so as to be available on each Interest Payment Date, any amount in the Reserve Fund may be invested in such redeemable Permitted Investments maturing on any date on or prior to the final maturity date of the Bonds. Absent timely written direction from the 25 4142-0544-6456.2
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Community Facilities District, the Trustee shall invest any funds held by it in Permitted Investments described in clause ( e) of the definition thereof.
Subject to the provisions of Section 5.06, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture ( other than the Reserve Fund) shall be retained therein. Subject to the provisions of Section 5.06, all interest, profits or other income received from the investment of moneys in the Reserve Fund shall, prior to the date on which a Written Certificate of the Community Facilities District is delivered to the Trustee pursuant to Section 3.04(c), be transferred to the Improvement Fund and, thereafter, shall be transferred to the Interest Account of the Bond Fund; provided, however, that, notwithstanding the foregoing, any such transfer shall be made only if and to the extent that, after such transfer, the amount on deposit in the Reserve Fund is at least equal to the Reserve Requirement.
Permitted Investments acquired as an investment of moneys in any fund or account established under this Indenture shall be credited to such fund or account. For the purpose of determining the amount in any fund or account , all Permitted Investments credited to such fund shall be valued by the Trustee at the market value thereof, such valuation to be performed not less frequently than semiannually on or before each February 15 and August 15. The Trustee may utilize and rely upon securities pricing services available to it for such valuations, including those available through the Trustee's accounting system.
The Trustee may act as principal or agent in the making or disposing of any investment. Upon the Written Request of the Community Facilities District, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investments is credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment , the Trustee may commingle moneys in any of the funds and accounts established hereunder. The Community Facilities District acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Community Facilities District the right to receive brokerage confirmations of security transactions as they occur, the Community Facilities District specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Community Facilities District periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.
Section 5.10. State Reporting. If at any time the Trustee fails to pay principal or interest due on any scheduled payment date for the Bonds, or if funds are withdrawn from the Reserve Fund to pay principal or interest on the Bonds, the Trustee shall notify the Community Facilities District in writing of such failure or withdrawal, and the Community Facilities District shall notify the California Debt and Investment Advisory Commission of such failure or withdrawal within 10 days of the failure to make such payment or the date of such withdrawal.
ARTICLE VI
COVENANTS
Section 6.01. Collection of Special Tax Revenues. The Community Facilities District shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes.
Prior to August 1 of each year, the Community Facilities District shall ascertain from the County Assessor the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. The Community Facilities District shall effect the levy 26 4142-0 544-6456.2
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of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 10 that the Bonds are Outstanding, or otherwise such that the computation of the levy is complete before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the Community Facilities District for inclusion on the next real property tax roll. Upon the completion of the computation of the amounts of the levy, the Community Facilities District shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the next real property tax roll.
The Community Facilities District shall fix and levy the amount of Special Taxes within the Community Facilities District in accordance with the Rate and Method and, subject to the limitations in the Rate and Method as to the maximum Special Tax that may be levied, in an amount sufficient to yield the amount required for the payment of principal of and interest on any Outstanding Bonds becoming due and payable during the Bond Year commencing in such Fiscal Year, the amount required for any necessary replenishment of the Reserve Fund and the amount estimated to be sufficient to pay the Administrative Expenses during such year, taking into account the balances in the funds and accounts established hereunder.
The Special Taxes shall be payable and 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.
Section 6.02. Foreclosure. (a) Pursuant to Section 53356.1 of the Act, the Community Facilities District hereby covenants with and for the benefit of the Owners of the Bonds that it will determine or cause to be determined, no later than February 15 and June 15 of each year, whether or not any owners of property within the Community Facilities District are delinquent in the payment of Special Taxes and, subject to subsection (b) hereof, if such delinquencies exist, the Community Facilities District will order and cause to be commenced no later than April 1 (with respect to the February 15 determination date), or August 1 (with respect to the June 15 determination date), and thereafter diligently prosecute, an action in the superior court to foreclose the lien of any Special Taxes or installment thereof not paid when due. (b) Notwithstanding the foregoing, however, the Community Facilities District shall not be required to order the commencement of foreclosure proceedings under subsection (a) above, if (i) the total Special Tax delinquency in the Community Facilities District for such Fiscal Year is less than 5% of the total Special Tax levied in such Fiscal Year, and (ii) no draw has been made on the Reserve Fund that has not been replenished . However, if the Community Facilities District determines that any single property owner in the Community Facilities District is delinquent in the aggregate in excess of $5,000 in the payment of the Special Tax, then the Community Facilities District will diligently institute, prosecute and pursue foreclosure proceedings against such property owner, notwithstanding the first sentence of this subsection (b ).
Section 6.03. Punctual Payment. The Community Facilities District shall punctually pay or cause to be paid the principal, premium, if any, and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture , according to the true intent and meaning thereof, but only out of Net Special Tax Revenues and other assets pledged for such payment as provided in this Indenture and received by the Community Facilities District or the Trustee.
Section 6.04. Extension of Payment of Bonds. The Community Facilities District shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, 27 4142-0 544-6456.2
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such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Community Facilities District to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
Section 6.05. Against Encumbrances. The Community Facilities District shall not create, or permit the creation of, any pledge, lien, charge, or other encumbrance upon the Special Tax Revenues and other assets pledged under this Indenture while any of the Bonds are Outstanding, except as permitted by this Indenture.
Section 6.06. Power to Issue Bonds and Make Pledge. The Community Facilities District is duly authorized pursuant to the Act to issue the Bonds and to enter into this Indenture and to pledge the Net Special Tax Revenues and other assets pledged under this Indenture in the manner and to the extent provided in this Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid, and binding special obligations of the Community Facilities District in accordance with their terms, and the Community Facilities District and the Trustee (subject to the provisions of Article VIII) shall at all times, to the extent permitted by law, defend, preserve and protect said pledge of Net Special Tax Revenues and other assets and all the rights of the Bond Owners of Bonds under this Indenture against all claims and demands of all Persons whomsoever.
Section 6.07. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with prudent corporate trust industry standards, in which accurate entries shall be made of all transactions made by it relating to the proceeds of the Bonds, the Special Tax Revenues and all funds and accounts established by - it pursuant to this Indenture . Such books of record and account shall be available for inspection by the Community Facilities District, during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. The Trustee shall deliver to the Community Facilities District a monthly accounting of the funds and accounts it holds under this Indenture ; provided, however, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (a) has a balance of zero, and (b) has not had any activity since the last reporting date.
Section 6.08. Tax Covenants. (a) The Community Facilities District shall not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Series 2022 Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, the Community Facilities District shall comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full or defeasance of the Series 2022 Bonds. (b) In the event that at any time the Community Facilities District is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the funds or accounts established hereunder, the Community Facilities District shall so instruct the Trustee in writing , and the Trustee shall take such action as may be necessary in accordance with such instructions .
(c) Notwithstanding any provisions of this Section, if the Community Facilities District shall provide to the Trustee an opinion of Bond Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Series 2022 Bonds, the Trustee may conclusively rely 28 4142-0544-6456.2
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on such opinion in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent.
Section 6.09. Continuing Disclosure. (a) The Community Facilities District shall comply with and carry out all of the provisions of the District Continuing Disclosure Agreement. Notwithstanding any other provision of this Indenture , failure of the Community Facilities District to comply with the District Continuing Disclosure Agreement shall not be considered an Event of Default; provided , however, that the Trustee may (and, at the written direction of any of the Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Series 2022 Bonds, and upon indemnification of the Trustee to its reasonable satisfaction , shall) or any holder or beneficial owner of the Series 2022 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
(b) The Developer has agreed to enter into the Developer Continuing Disclosure Agreement.
Notwithstanding any other provision of this Indenture, failure of the Developer to comply with the Developer Continuing Disclosure Agreement shall not be considered an Event of Default; provided, however, that the Trustee may (and, at the written direction of any of the Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Series 2022 Bonds, and upon indemnification of the Trustee to its reasonable satisfaction, shall) or any holder or beneficial owner of the Series 2022 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
Section 6.10. Annual Reports to the California Debt and Investment Advisory Commission.
Not later than October 30 of each year, commencing October 30, 2023 and until the October 30 following the final maturity of the Bonds, the Community Facilities District shall supply to the California Debt and Investment Advisory Commission the information required to be provided thereto pursuant to Section 53359.S(b) of the Act. Such information shall be made available to any Owner upon written request to the Community Facilities District accompanied by a fee determined by the Community Facilities District to pay the costs of the Community Facilities District in connection therewith . The Community Facilities District shall in no event be liable to any Owner or any other person or entity in connection with any error in any such information.
Section 6.11. Non-Cash Payments of Special Taxes. The Community Facilities District shall not authorize owners of taxable parcels within the Community Facilities District to satisfy Special Tax obligations by the tender of Bonds unless the Community Facilities District shall have first obtained a report of an Independent Consultant certifying that doing so would not result in the Community Facilities District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds when due.
Section 6.12. Reduction in Special Taxes. The Community Facilities District shall not initiate proceedings under the Act to modify the Rate and Method if such modification would adversely affect the security for the Bonds. If an initiative or referendum measure is proposed that purports to modify the Rate and Method in a manner that would adversely affect the security for the Bonds, the Community Facilities District shall, to the extent permitted by law, commence and pursue reasonable legal actions to prevent the modification of the Rate and Method in a manner that would adversely affect the security for the Bonds.
Section 6.13. Further Assurances. The Community Facilities District shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Indenture . 29 4142-0544 -6456.2
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default:
(a) Failure to pay any installment of principal of any Bonds when and as the same shall become due and payable , whether at maturity as therein expressed , by proceedings for redemption or otherwise.
(b) Failure to pay any installment of interest on any Bonds when and as the same shall become due and payable.
(c) Failure by the Community Facilities District to observe and perform any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained , if such failure shall have continued for a period of 60 days after written notice thereof, specifying such failure and requiring the same to be remedied , shall have been given to the Community Facilities District by the Trustee or the Owners of not less than 5% in aggregate principal amount of the Bonds at the time Outstanding ; provided, however , if in the reasonable opinion of the Community Facilities District the failure stated in the notice can be corrected, but not within such 60 day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Community Facilities District within such 60 day period and the Community Facilities District shall thereafter diligently and in good faith cure such failure in a reasonable period of time . (d) The Community Facilities District or the City shall commence a voluntary case under Title 11 of the United States Code or any substitute or successor statute.
Section 7.02. Foreclosure. If any Event of Default shall occur under Section 7.0l(a) or Section 7.01 (b) then , and in each and every such case during the continuance of such Event of Default, the Trustee may, or at the written direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding, and upon being indemnified to its satisfaction therefor, shall, commence foreclosure against any parcels of land in the Community Facilities District with delinquent Special Taxes, as provided in Section 53356.1 of the Act; provided , however, that the Trustee need not commence any such foreclosure if such foreclosure has been commenced by the Community Facilities District.
Section 7 .03. Other Remedies . If an Event of Default shall have occurred under Section 7.01 , the Trustee shall have the right :
(a) by mandamus , suit, action or proceeding , to compel the Community Facilities District and its officers, agents or employees to perform each and every term , provision and covenant contained in this Indenture and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the Community Facilities District and the fulfillment of all duties imposed upon it by this Indenture and the Act ;
(b) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful , or the violation of any of the rights of Trustee or Owners of Bonds ; or ( c) by suit, action or proceeding in any court of competent jurisdiction , to require the Community Facilities District and its officers and employees to account as if it and they were the trustees of an express trust.
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Section 7.04. Application of Net Special Tax Revenues After Default. If an Event of Default shall occur and be continuing, all Net Special Tax Revenues and any other funds thereafter received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Trustee to protect the interests of the Owners of the Bonds and payment of reasonable fees, charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; (b) To the payment of the principal of and interest then due with respect to the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture, as follows:
First : To the payment to the Persons entitled thereto of all installments of interest then due in the order of the maturity of such installments and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the Persons entitled thereto, without any discrimination or preference; and Second: To the payment to the Persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds on the date of maturity or redemption, and , if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereofratably , according to the amounts of principal due on such date to the Persons entitled thereto, without any discrimination or preference.
( c) Any remaining funds shall be transferred by the Trustee to the Special Tax Fund.
Section 7.05. Power of Trustee to Enforce. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by . the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of the Owners of such Bonds, subject to the provisions of this Indenture .
Section 7.06. Bond Owners Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to any Owners of Bonds not parties to such direction.
Section 7.07. Limitation on Bond Owners' Right to Sue. No Owner of any Bonds shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Act or any other applicable law with respect to such Bonds, unless : (a) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such 31 4142-0544 -6456.2
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suit, action or proceeding in its own name; ( c) such Owner or said Owners shall have tendered to the Trustee indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and ( d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification , request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by its or their action to affect, disturb, or prejudice the security of this Indenture or the rights of any other Owners of Bonds, or to enforce any right under the Bonds, this Indenture , the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this Indenture.
Section 7.08. Absolute Obligation. Nothing in Section 7.07 or in any other provision of this Indenture or in the Bonds contained shall affect or impair the obligation of the Community Facilities District, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the Bonds at their respective dates of maturity , or upon call for redemption, as herein provided, but only out of the Net Special Tax Revenues and other assets herein pledged therefor and received by the Community Facilities District or the Trustee , or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.
Section 7.09. Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Owners of Bonds on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Owners of Bonds, then in every such case the Community Facilities District, the Trustee and the Owners of Bonds, subject to any determination in such proceedings , shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies , powers, and duties of the Community Facilities District, the Trustee and the Owners of Bonds shall continue as though no such proceedings had been taken .
Section 7.10. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
Section 7.11. No Waiver of Default. No delay or omission of the Trustee or of any Owner of the Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein , and every power and remedy given by this Indenture to the Trustee or to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient.
ARTICLE VIII
TRUSTEE
Section 8.01. Duties and Liabilities of Trustee. (a) Duties of Trustee Generally. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default which may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this 32 4142-0 544-6456.2
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Indenture. The Trustee shall, during the existence of any Event of Default which has not been cured or waived, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.
(b) Removal of Trustee. The Community Facilities District may upon 30 days prior written notice remove the Trustee at any time unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding ( or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with subsection ( e) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent , or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation, or liquidation, in each case by giving written notice of such removal to the Trustee and thereupon shall appoint a successor Trustee by an instrument in writing . (c) Resignation of Trustee. The Trustee may at any time resign by giving written notice of such resignation by first class mail, postage prepaid, to the Community Facilities District, and to the Owners of Bonds at the respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the Community Facilities District shall promptly appoint a successor Trustee by an instrument in writing. The Trustee shall not be relieved of its duties until such successor Trustee has accepted appointment.
(d) Appointment of Successor Trustee. Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee ; provided, however , that under any circumstances the successor Trustee shall be qualified as provided in subsection (e) of this Section. If no qualified successor Trustee shall have been appointed and have accepted appointment within 45 days following giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Owner of Bonds ( on behalf of its or theirself and all other Owners of Bonds) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee.
Any successor Trustee appointed under this Indenture shall signify its acceptance of such appointment by executing and delivering to the Community Facilities District and to its predecessor Trustee a written acceptance thereof , and after payment by the Community Facilities District of all unpaid fees and expenses of the predecessor Trustee, then such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties, and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Written Request of the Community Facilities District or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign, and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth . Upon request of the successor Trustee, the Community Facilities District shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties, and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the Community Facilities District shall mail or cause the successor Trustee to mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to each rating agency which then maintains a rating on the Bonds and to the Owners of Bonds at the addresses shown on the Registration Books. If the Community Facilities District fails to mail 33 4142-0544 -6456.2
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such notice within 15 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Community Facilities District. (e) Qualifications of Trustee . The Trustee shall be a trust company or bank having trust powers in good standing in or incorporated under the laws of the United States or any state thereof, having (or if such bank or trust company is a member of a bank holding company system, its parent bank holding company shall have) a combined capital and surplus of at least $75,000,000, and subject to supervision or examination by federal or state agency. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection ( e ), the Trustee shall resign immediately in the manner and with the effect specified in this Section .
Section 8.02. Merger or Consolidation. Any bank or trust company into which the Trustee may be merged or converted or with which it may be consolidated or any bank or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any bank or trust company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such bank or trust company shall be eligible under subsection (e) of Section 8.01 shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
Section 8.03. Liability of Trustee. (a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Community Facilities District, and the Trustee shall not assume responsibility for the correctness of the same, or make any representations as to the validity or sufficiency of this Indenture or of the Bonds or shall incur any responsibility in respect thereof , other than as expressly stated herein in connection with the respective duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of any Bonds, or in respect of the security afforded by this Indenture and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds for value , the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee, or the application of any moneys paid to the Community Facilities District or others in accordance with this Indenture. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture . The Trustee may become the Owner of Bonds with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of a majority in aggregate principal amount of the Bonds then Outstanding.
(b) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer , unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
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(c) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture.
( d) No provision of this Indenture shall require the Trustee to risk or advance its own funds.
The Trustee may execute any of its powers or duties hereunder through attorneys, agents or receivers and shall not be answerable for the actions of such attorneys, agents, or receivers if selected by it with reasonable care.
( e) The Trustee shall not be deemed to have knowledge of an Event of Default hereunder unless it has actual knowledge thereof.
(f) The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement or any other disclosure material prepared or distributed with respect to the Bonds .
Section 8.04. Right to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bonds, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be counsel of or to the Community Facilities District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
Whenever in the administration of the duties imposed upon it by this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter ( unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the Community Facilities District, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.
Section 8.05. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject during business hours and upon reasonable notice to the inspection of the Community Facilities District, the Owners and their agents and representatives duly authorized in writing.
Section 8.06. Compensation and Indemnification. Subject to the provisions of Section 11.01, the Community Facilities District shall pay to the Trustee from time to time all reasonable compensation pursuant to a pre-approved fee letter for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees pursuant to a pre-approved fee letter, and other disbursements pursuant to a pre-approved fee letter and those of its attorneys, agents, and employees, incurred in and about the performance of their powers and duties under this Indenture. Subject to the provisions of Section 11.01, the Community Facilities District further agrees, to the extent permitted by law, to indemnify and save the Trustee , its officers, employees, directors and agents harmless against any liabilities, costs, claims, or expenses, including those of its attorneys, which it may incur in the exercise and performance of its powers and duties hereunder and under any related documents, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its willful misconduct. The duty of the 35 4142-0544-6456.2
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Community Facilities District to indemnify the Trustee shall survive the termination and discharge of this Indenture.
ARTICLE IX
MODIFICATION OR AMENDMENT
Section 9.01. Amendments Permitted. (a) This Indenture and the rights and obligations of the Community Facilities District , the Owners of the Bonds and the Trustee may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Community Facilities District and the Trustee may enter into with the written consent of the Owners of a majority in aggregate principal amount of all Bonds then Outstanding, which shall have been filed with the Trustee. No such modification or amendment shall (i) extend the fixed maturity of any Bonds, reduce the amount of principal thereof or the rate of interest thereon , alter the redemption provisions thereof or extend the time of payment thereof, without the consent of the Owner of each Bond so affected , or ( ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment , without the consent of the Owners of all of the Bonds then Outstanding , or (iii) permit the creation of any lien on the Net Special Tax Revenues and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Owners of the Bonds of the lien created by this Indenture on such Net Special Tax Revenues and other assets (except as expressly provided in this Indenture), without the consent of the Owners of all of the Bonds then Outstanding . It shall not be necessary for the consent of the Owners of Bonds to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof.
(b) This Indenture and the rights and obligations of the Community Facilities District, the Trustee and the Owners of the Bonds may also be modified or amended from time to time and at any time by a Supplemental Indenture , which the Community Facilities District and the Trustee may enter into without the consent of any Owners of Bonds for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Community Facilities District in this Indenture contained other covenants and agreements thereafter to be observed, to pledge, or assign additional security for the Bonds ( or any portion thereof) , or to surrender any right or power herein reserved to or conferred upon the Community Facilities District; (ii) to make such provisions for the purpose of curing any ambiguity , inconsistency, or omission, or of curing or correcting any defectiv e provision contained in this Indenture; (iii) to provide for the issuance of one or more Series of Additional Bonds , and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Article III; (iv) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute;
(v) to modify, amend or supplement this Indenture in such manner as to cause interest on the Bonds to be excludable from gross income for purposes of federal income taxation by the United States of America; and
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(vi) in any other respect whatsoever as the Community Facilities District may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the interests of the Owners of Bonds hereunder . (c) Promptly after the execution by the Community Facilities District and the Trustee of any Supplemental Indenture , the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Community Facilities District), by first class mail postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture.
Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties, and obligations under this Indenture of the Community Facilities District, the Trustee and all Owners of Bonds Outstanding shall thereafter be determined , exercised , and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the Community Facilities District so determines shall, bear a notation by endorsement or otherwise in form approved by the Community Facilities District and the Trustee as to any modification or amendment provided for in such Supplemental Indenture , and, in that case, upon demand of the Owner of any Bonds Outstanding at the time of such execution and presentation of its or their Bonds for the purpose at the Office of the Trustee a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Community Facilities District and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Community Facilities District and authenticated by the Trustee, and upon demand of the Owners of any Bonds then Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond Owner, for Bonds then Outstanding , upon surrender for cancellation of such Bonds, in equal aggregate principal amount of the same interest rate and maturity .
Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner.
ARTICLEX
DEFEASANCE
Section 10.01. Discharge oflndenture. If the Community Facilities District shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium , if any, thereon at the times and in the manner stipulated herein and therein, then the Owners of such Bonds shall cease to be entitled to the pledge of the Net Special Tax Revenues and the other assets as provided herein, and all agreements , covenants and other obligations of the Community Facilities District to the Owners of such Bonds hereunder shall thereupon cease, terminate , and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Community Facilities District all such instruments as may be necessary or desirable to evidence such discharge and satisfaction , and the Trustee shall pay over or deliver to the Community Facilities District all money or securities held by it pursuant hereto which are not required for the payment of the principal of and interest and premium , if any, on such Bonds.
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Subject to the provisions of the above paragraph, when any of the Bonds shall have been paid and if, at the time of such payment, the Community Facilities District shall have kept, performed and observed all of the covenants and promises in such Bonds and in this Indenture required or contemplated to be kept, performed and observed by the Community Facilities District or on its part on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bonds and such Bonds shall cease to be entitled to the lien of this Indenture and such lien and all covenants, agreements and other obligations of the Community Facilities District hereunder shall cease, terminate become void and be completely discharged as to such Bonds.
Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owners of the Bonds and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal of and interest and premium, if any, on the Bonds, to pay to the Owners of Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the satisfaction and discharge of this Indenture or the discharge of this Indenture in respect of any Bonds, those provisions of this Indenture contained in Section 8.06 relating to the compensation of the Trustee shall remain in effect and shall be binding upon the Trustee and the Community Facilities District.
Section 10.02. Bonds Deemed To Have Been Paid. If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bonds and the interest thereon at the maturity or redemption date thereof, such Bonds shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01. Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 if (a) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the Community Facilities District shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.02, notice of redemption of such Bonds on said redemption date, said notice to be given in accordance with Section 4.02, (b) there shall have been deposited with the Trustee either (i) money in an amount which shall be sufficient, or (ii) Federal Securities that are not subject to redemption other than at the option of the holder thereof, the interest on and principal of which when paid will provide money which, together with the money, if any deposited with the Trustee at the same time, shall, as verified by an independent certified public accountant, be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bonds, which sufficiency shall be verified in a report of an independent firm of nationally recognized certified public accountants, and (c) in the event such Bonds are not by their terms subject to redemption within the next succeeding 60 days, the Community Facilities District shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the owners of such Bonds that the deposit required by clause (b) above has been made with the Trustee and that such Bonds, are deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bonds.
Section 10.03. Payment of Bonds After Discharge of Indenture. Notwithstanding any provisions of this Indenture, to the extent permitted by law, any moneys held by the Trustee in trust for the payment of the principal of, or premium or interest on, any Bonds and remaining unclaimed for two years after the date of deposit of such moneys, shall be repaid to the Community Facilities District free from the trusts created by this Indenture, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided, however, that before the repayment of such moneys to the Community Facilities District 38 4142-0544-6456.2
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as aforesaid, the Trustee may (at the cost of the Community Facilities District) first mail, by first class mail postage prepaid, to the Owners of Bonds which have not yet been paid, at the respective addresses shown on the Registration Books, a notice, in such form as may be deemed appropriate by the Trustee with respect to the Bonds so payable and not presented and with respect to the provisions relating to the repayment to the Community Facilities District of the moneys held for the payment thereof .
ARTICLE XI
MISCELLANEOUS
Section 1 l.01. Special Obligations. All obligations of the Community Facilities District under this Indenture shall be special obligations of the Community Facilities District, payable solely from Special Tax Revenues and the other assets pledged therefor hereunder; provided, however, that all obligations of the Community Facilities District under the Bonds shall be special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues and the other assets pledged therefor hereunder.
Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth herein), the City, or the State of California, or any political subdivision thereof, is pledged to the payment of the Bonds.
Section l l.02. Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the Community Facilities District or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained required hereby to be performed by or on behalf of the Community Facilities District or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 11.03. Limitation of Rights. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Trustee, the Community Facilities District and the Owners of the Bonds, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained, and all such covenants, conditions, and provisions are and shall be held to be for the sole and exclusive benefit of the Trustee, the Community Facilities District and the Owners of the Bonds.
Section 1 l.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the Person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Whenever in this Indenture any notice shall be required to be given by mail, such requirement shall be satisfied by the deposit of such notice in the United States mail, postage prepaid, by first class mail.
Section 11.05. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Community Facilities District of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds.
Section 11.06. Severability oflnvalid Provisions. If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality, or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Community Facilities District hereby declares that it would have entered into this Indenture and each and every other Section, subsection, 39 4142-0544 -6456.2
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paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, subsections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.
Section 11.07. Notices. Any written notice, statement, demand, consent, approval , authorization, offer, designation, request or other communication to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
If to the Community Facilities District:
If to the Trustee:
City of Rancho Mirage
69-825 Highway 111
Rancho Mirage, California 92270
Attention : City Manager
Re: CFO No. 4C
U.S. Bank Trust Company, National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Corporate Trust Services
Re: City of Rancho Mirage CFO No. 4C
Each such notice, statement , demand , consent, approval, authorization , offer, designation, request, or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier , upon the sender 's receipt of an appropriate answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested , deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier , with courier charges prepaid , 24 hours after delivery to said overnight courier, or ( e) if given by any other means, upon delivery at the address specified in this Section.
Section I 1.08. Evidence of Rights of Bond Owners. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Owners of Bonds may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Owners of Bonds in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent , or other instrument or of a writing appointing any such agent, or of the holding by any Person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and the Community Facilities District if made in the manner provided in this Section .
The fact and date of the execution by any Person of any such request, consent , or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the Person signing such request, consent or other instrument acknowledged thereto the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. 40 4142-0544-6456.2
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The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Community Facilities District in accordance therewith or reliance thereon.
Section 11 .09. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are known by the Trustee to be owned or held by or for the account of the Community Facilities District, or by any other obligor on the Bonds, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Community Facilities District or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Community Facilities District or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee .
Section 11. 10. Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject , however, to the provisions of Section 10.03 but without any liability for interest thereon.
Section 11.11. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with prudent corporate trust industry standards to the extent practicable, and with due regard for the requirements of Section 6.07 and for the protection of the security of the Bonds and the rights of every Owner thereof.
The Trustee may establish any such additional funds or accounts as it deems necessary to perform its obligations hereunder .
Section 11.12. Payment on Non-Business Days. In the event any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day with the same effect as if made on such non-Business Day.
Section 11. 13. Waiver of Personal Liability. No member, trustee, officer, agent, or employee of the Community Facilities District or the City shall be individually or personally liable for the payment of the principal of or premium or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof; but nothing herein contained shall relieve any such member, trustee , officer, agent, or employee from the performance of any official duty provided by law or by this Indenture.
Section 11.14. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine , or feminine gender is for convenience only and shall be deemed to include the neuter, masculine or feminine gender, as appropriate.
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(b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.
(c) All references herein to "Articles ," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof ," "hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
Section 11.15. Conflict with Act. In the event of any conflict between any provision of this Indenture and any provision of the Act, the provision of the Act shall prevail over the provision of this Indenture.
Section 11.16. Conclusive Evidence of Regularity. Bonds issued pursuant to this Indenture shall constitute evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.
Section 11.17. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Indenture may be conducted by electronic means. Each party agrees, and acknowledges that it is such party's intent (i) that, by signing this Indenture using an electronic signature, it is signing, adopting and accepting this Indenture, and (ii) that signing this Indenture using an electronic signature is the legal equivalent of having placed the undersigned officer's handwritten signature on this Indenture on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Indenture in a usable format.
Section 11.18. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
Section 11.19. Governing Laws. This Indenture shall be governed by and construed m accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the parties hereto have executed and attested this Indenture by their officers thereunto duly authorized as of the day and year first written above.
ATTEST:
By: _____________ _
City Clerk
43 4142 -0544-6456.2
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By: ____________ _
Authorized Officer
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT)
By: ____________ _
City Manager
12-65
EXHIBIT A
FORM OF SERIES 2022 BOND
No. $ _____ _
COUNTY OF RIVERSIDE ST ATE OF CALIFORNIA
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT) SPECIAL TAX BONDS, SERIES 2022
Interest Rate Maturity Date Dated Date Cusip
September 1, 20_ _ ___ ,2022
REGISTERED OWNER: CEDE&CO.
PRINCIPAL AMOUNT:
The City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District"), for value received, hereby promises to pay, solely from the sources hereinafter described, to the Registered Owner identified above or registered assigns (the "Registered Owner"), on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof, payable semiannually on March 1 and September 1 in each year, commencing March 1, 2023 (the "Interest Payment Dates"), until payment of such Principal Amount in full. This Bond shall bear interest from the Interest Payment Date next preceding the date of authentication of this Bond ( unless this Bond is authenticated on or before an Interest Payment Date and after the fifteenth calendar day of the month preceding such Interest Payment Date, whether or not such day is a business day, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to February 15, 2023, in which event it shall bear interest from the Dated Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has previously been paid or duly provided for). The Principal Amount hereof is payable upon surrender hereof upon maturity or earlier redemption at the Office of the Trustee (as hereinafter defined) . Interest hereon is payable by check of U.S. Bank Trust Company, National Association, as Trustee (the "Trustee"), mailed by first class mail, postage prepaid, or by wire transfer made on such Interest Payment Date upon the written instructions of any Owner of $1,000,000 or more Series 2022 Bonds to an account within the United States, on each Interest Payment Date to the Registered Owner hereof at the address of the Registered Owner as it appears on the Registration Books of the Trustee as of the close of business on the fifteenth calendar day of the month preceding such Interest Payment Date. "Office of the Trustee" means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Community Facilities District by the Trustee in writing .
This Bond is one of a series of a duly authorized issue of bonds approved by the qualified electors of the Community Facilities District , pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, constituting Sections 53311 et seq. of the California Government Code (the "Act"), and issued for the purpose of financing certain public facilities, and is one of the series of bonds designated "City of A-1
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Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022" (the "Series 2022 Bonds") issued in the aggregate principal amount of$ ____ . The Series 2022 Bonds are issued pursuant to the terms and conditions of the Indenture, dated as of _____ 1, 2022 (the "Indenture"), by and between the Community Facilities District and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, additional bonds ("Additional Bonds") may be issued by the Community Facilities District secured by a lien on a parity with the lien securing the Series 2022 Bonds. The Series 2022 Bonds and any Additional Bonds are collectively referred to as the "Bonds." The Indenture is entered into, and this Bond is issued under, the Act and the laws of the State of California. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture.
Pursuant to the Act and the Indenture, the principal of and interest on the Bonds are payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. Net Special Tax Revenues generally consist of the annual Special Taxes authorized under the Act to be collected within the Community Facilities District, after the payment therefrom of certain administrative expenses. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Net Special Tax Revenues and any other amounts (including proceeds of the sale of the Bonds) held in the Special Tax Fund, the Bond Fund, the Redemption Fund and the Reserve Fund established under the Indenture are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge constitutes a first lien on such assets.
The Series 2022 Bonds shall be subject to optional and mandatory redemption, in accordance with the redemption provisions contained in the Indenture.
The Trustee on behalf and at the expense of the Community Facilities District shall mail (by first class mail) notice of any redemption to the respective owners of any Series 2022 Bonds designated for redemption, at their respective addresses appearing on the Registration Books maintained by the Trustee, at least 30 but not more than 60 days prior to the redemption date; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Series 2022 Bonds or the cessation of the accrual of interest thereon from and after the date fixed for redemption. The redemption price of the Series 2022 Bonds to be redeemed shall be paid only upon presentation and surrender thereof at the Office of the Trustee. From and after the date fixed for redemption of any Series 2022 Bonds, interest on such Series 2022 Bonds will cease to accrue.
The Series 2022 Bonds are issuable as fully registered Bonds without coupons in Authorized Denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, fully registered Series 2022 Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount and maturity of fully registered Series 2022 Bonds of other Authorized Denominations.
This Bond is transferable by the Registered Owner hereof, in person or by its or their attorney duly authorized in writing, at the Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond.
Upon such transfer a new fully registered Series 2022 Bond or Series 2022 Bonds, of Authorized Denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The Community Facilities District and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Community Facilities District and the Trustee shall not be affected by any notice to the contrary.
A-2
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The Indenture and the rights and obligations of the Community Facilities District, the owners of the Bonds and the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (a) extend the fixed maturity of any Bonds, or reduce the principal thereof or the rate of interest borne thereby, alter the redemption provisions thereof or extend the time of payment, without the consent of the owner of such Bond, (b) reduce the percentage of Bonds the consent of the owners of which is required to effect any such amendment or modification, without the consent of the owners of all outstanding Bonds, or (c) permit the creation of any lien on the Net Special Tax Revenues and other assets pledged under the Indenture prior to or on a parity with the lien created by the Indenture , or deprive the Bonds owners of the lien created under the Indenture on such Net Special Tax Revenues and such other assets ( except as expressly provided in the Indenture), without the consent of the owners of all outstanding Bonds.
The Indenture contains provisions permitting the Community Facilities District to make provision for the payment of interest on, and the principal and premium, if any, of any of the Bonds so that such Bonds shall no longer be deemed to be outstanding under the terms of the Indenture.
All obligations of the Community Facilities District under the Bonds shall be special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues and the other assets pledged therefor thereunder . Neither the faith and credit nor the taxing power of the Community Facilities District ( except to the limited extent set forth herein and in the Indenture), the City or the State of California , or any political subdivision thereof, is pledged to the payment of the Bonds.
Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof , Cede & Co., has an interest herein.
IN WITNESS WHEREOF, the Community Facilities District has caused this Bond to be signed in its name and on its behalf by the manual, electronic or facsimile signature of the Mayor of the City of Rancho Mirage and attested to by the manual, electronic or facsimile signature of the City Clerk , all as of the Dated Date identified above .
ATTEST:
By: _ ____________ _
City Clerk
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A-3
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT)
By: _ ____________ _
Mayor
12-68
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series 2022 Bonds described in the within-mentioned Indenture and registered on the Registration Books.
Date: ______ , 2022
A-4
4142-0544-6456.2
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By: _____________ _
Authorized Signatory
12-69
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto whose address and social security or other tax identifying number is _________ , the within-mentioned Bond and hereby irrevocably constitute(s) and appoint(s) _______________ attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises .
Date: _____ ,2022
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor.
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A-5
Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever.
12-70
EXHIBITB
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES DISTRICT
FOR DISBURSEMENTS FROM COSTS OF ISSUANCE FUND
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT) SPECIAL TAX BONDS, SERIES 2022
Requisition No. __ _
City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project), a community facilities district organized and existing under the laws of the State of California (the "Community Facilities District"), hereby states and certifies :
(a) that _________ is the duly appointed, qualified and acting -------- of the City of Rancho Mirage and, as such, is an "Authorized Representative" of the Community Facilities District, as such term is defined in the Indenture, dated as of _____ 1, 2022 (the "Indenture"), by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as trustee (the "Trustee");
(b) that the Trustee is hereby requested to disburse from the Costs of Issuance Fund, established pursuant to Section 3.03 of the Indenture, to the payees set forth on Schedule I attached hereto and by this reference incorporated herein, the amount set forth on Schedule I opposite each such payee, for payment of such costs incurred for the purposes identified on said Schedule I; ( c) that each such payment is a proper charge against the Costs of Issuance Fund; ( d) that each such amount has not been the subject of a prior disbursement from the Costs of Issuance Fund; and
( e) that a statement or invoice for each amount requested hereunder is attached hereto.
Capitalized undefined terms used herein have the meanings ascribed thereto in the Indenture .
Dated: , 20_ -----
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8-1
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT)
By: ___________ _ _
12-71
SCHEDULE I TO EXHIBIT B
COSTS OF ISSUANCE FUND DISBURSEMENTS
Payee Name and Address Purpose of Obligation Amount*
• Not-to-exceed amount. Actual amounts to be paid upon presentation of invoice.
B-2
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12-72
EXHIBITC
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES DISTRICT
FOR DISBURSEMENTS FROM THE IMPROVEMENT FUND
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT) SPECIAL TAX BONDS, SERIES 2022
Requisition No. __ _
To: U.S. Bank Trust Company, National Association, as Trustee City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) , a community facilities district organized and existing under the laws of the State of California (the "Community Facilities District"), hereby states and certifies:
(a) that ________ is the duly appointed, qualified and acting _________ of the City of Rancho Mirage and, as such, is an "Authorized Representative" of the Community Facilities District, as such term is defined in the Indenture , dated as of _ ____ 1, 2022 (the "Indenture "), by and between the Community Facilities District and U.S. Bank Trust Company, National Association , as trustee (the "Trustee");
(b) that the Trustee , under the Indenture , is hereby requested to disburse from the Improvement Fund, established pursuant to Section 3.04(a) of the Indenture to the payees set forth on Schedule I attached hereto and by this reference incorporated herein, the amount set forth on Schedule I opposite such payee, for the payment of a cost of Facilities, and is a proper charge to the Improvement Fund as identified on said Schedule I; and
( c) that each such amount shown on Schedule I has not been the subject of a prior disbursement from the Improvement Fund.
Capitalized undefined terms used herein have the meanings ascribed thereto in the Indenture.
Dated: _____ , 20_
C- 1
4142-0544-6456.2
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT)
By: ____________ _
12-73
SCHEDULE I TO EXHIBIT C
IMPROVEMENT FUND DISBURSEMENTS
Payee Name and Address
Description of
Corresponding Facilities
C-2
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Amount
12-74
EXHIBITD
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES DISTRICT
FOR DISBURSEMENTS FROM ADMINISTRATIVE EXPENSE FUND
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT) SPECIAL TAX BONDS, SERIES 2022
Requisition No. __ _
To: U.S. Bank Trust Company, National Association , as Trustee City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project), a community facilities district organized and existing under the laws of the State of California (the "Community Facilities District"), hereby states and certifies:
(a) that ____ _____ is the duly appointed, qualified and acting -------- of the City of Rancho Mirage and, as such, is an "Authorized Representative" of the Community Facilities District, as such term is defined in the Indenture , dated as of ____ 1, 2022 (the "Indenture "), by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as trustee (the "Trustee");
(b) that the Trustee, under the Indenture, is hereby requested to disburse from the Administrative Expense Fund, established pursuant to Section 5.07 of the Indenture to the payees set forth on Schedule I attached hereto and by this reference incorporated herein, the amount set forth on Schedule I opposite such payee, for the payment of a cost of an Administrative Expense, and is a proper charge to the Administrative Expense Fund as identified on said Schedule I; and ( c) that each such amount shown on Schedule I has not been the subject of a prior disbursement from the Administrative Expense Fund.
Capitalized undefined terms used herein have the meanings ascribed thereto in the Indenture.
Dated: _____ , 20_
D-1
4142 -0544-6456.2
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT)
By: ____________ _ _
12-75
SCHEDULE I TO EXHIBIT D
ADMINISTRATIVE EXPENSE FUND DISBURSEMENTS
Payee Name and Address Purpose of Obligation
D-2
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Amount
12-76
EXHIBITE
FORM OF WRITTEN REQUEST OF THE COMMUNITY FACILITIES DISTRICT
FOR TRANSFER FROM SURPLUS FUND
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT) SPECIAL TAX BONDS, SERIES 2022
Requisition No. __ _
To: U.S. Bank Trust Company, National Association, as Trustee City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project), a community facilities district organized and existing under the laws of the State of California (the "Community Facilities District"), hereby states and certifies:
(a) that _________ is the duly appointed, qualified and acting _________ of the City of Rancho Mirage and, as such, is an "Authorized Representative" of the Community Facilities District, as such term is defined in the Indenture, dated as of ____ 1, 2022 (the "Indenture"), by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"); and
(b) that the Trustee, under the Indenture, is hereby requested to transfer from the Surplus Fund the amount of$ ______ to the [Redemption Fund to redeem the Bonds][Community Facilities District to be applied to the payment of costs of facilities authorized to be financed by the Community Facilities District pursuant to the Resolution of Formation].
Capitalized undefined terms used herein have the meanings ascribed thereto in the Indenture.
Dated: _____ , 20_
E-1
4142-0544-6456.2
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT
NO. 4C (DEL WEBB PROJECT)
By: ____________ _
12-77
ATTACHMENT 3
BOND PURCHASE AGREEMENT
(SEE ATTACHED)
12-78
$ -----
Stradling Yocca Carlson & Rauth
Draft of 8/22/22
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
BOND PURCHASE AGREEMENT
____ ,2022
City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) 69825 Highway 111
Rancho Mirage, CA 92270
Attention: Director of Administrative Services
Ladies and Gentlemen:
Stifel, Nicolaus & Company, Incorporated (the "Underwriter") offers to enter into this Bond Purchase Agreement (this "Purchase Contract") with the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "District"), which, upon your acceptance of this offer, will be binding upon the District and the Underwriter. Capitalized terms used and not otherwise defined in this Purchase Contract have the meanings given to them in Indenture described below.
This offer is made subject to the acceptance by the District of this Purchase Contract on or before 11 :59 p.m. on the date set forth above.
1. Purchase and Sale of the Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the District, and the District hereby agrees to sell to the Underwriter, all (but not less than all) of the above-captioned bonds (the "Bonds") at a purchase price (the "Purchase Price") of $ _____ (equal to the initial principal amount of the Bonds($ ____ ~, plus net original issue premium of$ _ _ ___ , less an Underwriter 's discount of$ ___ __, The District acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Purchase Contract is an arm's-length commercial transaction between the District and the Underwriter, (ii) in connection with such transaction and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the District, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the District with respect to the offering of the Bonds or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing services to the District on other matters) and the Underwriter has no obligation to the District with respect to the offering contemplated by this Purchase Contract except the obligations expressly set forth in this Purchase Contract, and (iv) the District has consulted with its own legal, financial and other advisors to the extent it deemed appropriate in connection with the offering of the Bonds. 4882-638 I-9566v3 /200356 -0544
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The Bonds are being issued by the District under the authority of the Mello-Roos Community Facilities Act of 1982 (constituting Section 53311 et seq. of the California Government Code) (the "Act"), and Resolution No. 2022-_ adopted on ____ , 2022 (the "Bond Resolution") by the City Council of the City of Rancho Mirage (the "City") acting as the legislative body of the District (the "City Council") .
The special taxes that will provide a source of payment for the Bonds (the "Special Taxes") are being levied pursuant to the following:
(i) Resolution No. 2021-16 of the City Council adopted May 6, 2021 (the "Resolution of Formation"), and
(ii) Ordinance No. 1182, adopted by the City Council on May 20, 2021 (the "Ordinance").
The Bonds will be issued under an Indenture (the "Indenture") , dated as of _____ , 2022 , between the District and U.S. Bank Trust Company, National Association, as trustee (the "Trustee").
The proceeds of the sale of the Bonds will be applied by the District in accordance with the Indenture to: (i) pay the costs of the acquisition of certain public facilities (the "Facilities") and related costs and fees necessary for the development of the District , (ii) fund capitalized interest for a portion of the Series 2022 Bonds, (iii) fund a reserve fund for the Bonds, and (iv) to pay the costs of issuing the Bonds.
The Bonds will mature on the dates and in the principal amounts, bear interest at the rates, and be subject to redemption as set forth in Exhibit A hereto.
2. Public Offering and Establishment of Issue Price.
(a) The Underwriter agrees to make a bona fide public offering of the Bonds at the initial public offering price or prices set forth on the inside cover page of the Final Official Statement (as defined in Section 3 hereof) and in Exhibit A hereto and subject Section 2(c) and 2(d) hereof , the Underwriter reserves the right to change such initial public offering prices as the Underwriter deems necessary or desirable, in its sole discretion, in connection with the marketing of the Bonds, and to sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial offering prices set forth in the Final Official Statement. A "bona fide public offering" shall include an offering to institutional investors or registered investment companies, regardless of the number of such investors to which the Bonds are sold.
(b) The Underwriter agrees to assist the District in establishing the issue price of the Bonds and shall execute and deliver to the District at Closing (defined below) an "issue price" or similar certificate, together with copies of supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit I, with such modifications as may be appropriate or necessary, in the reasonable judgment of Orrick, Herrington & Sutcliffe LLP, Los Angeles , California ("Bond Counsel") to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the District under this section to establish the issue price of the Bonds may be taken on behalf of the District by the 2 4882-6381-9566v3 /200356-0 544
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District's municipal advisor, Columbia Capital Management, LLC, Carlsbad, California (the "Municipal Advisor") and any notice or report to be provided to the District may be provided to the District's Municipal Advisor.
( c) Except as otherwise set forth in Exhibit A attached hereto, the District will treat the first price at which 10% of each maturity of the Bonds (the "10% test"), identified under the column "10% Test Used" in Exhibit A, is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Contract, the Underwriter shall report to the District the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the District the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter's reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the District or Bond Counsel. For purposes of this section, if Bonds mature on the same date but have different interest rates, each separate CU SIP number within that maturity will be treated as a separate maturity of the Bonds. (d) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Contract at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in Exhibit A attached hereto , except as otherwise set forth therein. Exhibit A also sets forth, identified under the column "Hold the Offering Price Rule Used," as of the date ofthis Purchase Contract , the maturities, if any, ofthe Bonds for which the 10% test has not been satisfied and for which the District and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the District to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the "hold-the-offering-price rule"). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the District promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (e) The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third party distribution agreement, as applicable:
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(A) (i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity , provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter , and (ii) to comply with the hold-the-offering -price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and
(C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable , if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (f) The District acknowledges that, in making the representations set forth in this section , the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering -price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The District further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold the-offering-price rule, if applicable to the Bonds.
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(g) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public ( each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:
(i) "public" means any person other than an underwriter or a related party;
(ii) "underwriter" means (A) any person that agrees pursuant to a written contract with the District ( or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public); (iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
(iv) "sale date" means the date of execution of this Purchase Contract by the District and the Underwriter.
3. Official Statement, Continuing Disclosure Undertaking. The District agrees to deliver to the Underwriter as many copies of the Official Statement, dated the date hereof, relating to the Bonds (as supplemented and amended from time to time, the "Final Official Statement") as the Underwriter shall reasonably request as necessary to comply with paragraph (b )( 4) of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (the "Rule"). The District agrees to deliver such Final Official Statement within seven business days after the execution hereof, or such earlier date identified by the Underwriter to be necessary to allow the Underwriter to meet its obligations under the Rule and Rule G-32 of the Municipal Securities Rulemaking Board (the "MSRB"). The Underwriter agrees to file the Final Official Statement with the MSRB on or as soon as practicable after the Closing Date. The Underwriter agrees to deliver a copy of the Final Official Statement to each of its customers purchasing Bonds no later than the settlement date of the transaction.
The District has authorized and approved the Preliminary Official Statement relating to the Bonds , dated _____ , 2022 (as supplemented and amended from time to time, the "Preliminary Official Statement"), and the Final Official Statement and consents to their distribution and use by the Underwriter in connection with the offer and sale of the Bonds . The District deems such Preliminary Official Statement final as of its date for purposes of the Rule, except for information 5 4882-638 l-9566v3 /200356-0544
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allowed by the Rule to be omitted, and has executed a certificate to that effect in the form of Exhibit C.
In connection with the issuance of the Bonds, and in order to assist the Underwriter in complying with the Rule, the District will execute a Continuing Disclosure Agreement dated as of _____ , 2022 (the "District Continuing Disclosure Agreement") by and between the District and Willdan Financial Services, as dissemination agent. The form of the District Continuing Disclosure Agreement is included in Appendix G to the Final Official Statement.
Concurrently, Pulte Home Company, LLC , a Michigan limited liability company (the "Developer") will execute a separate Developer Continuing Disclosure Agreement (the "Developer Continuing Disclosure Agreement") dated as of _ _ ___ , 2022. The form of the Developer Continuing Disclosure Agreement is included in Appendix H to the Final Official Statement.
4. Representations and Warranties of the District. The District represents and warrants to the Underwriter that:
(a) The District is a community facilities district duly established and validly existing under the laws of the State of California (the "State"), including the Act, and has the full legal right, power and authority upon satisfaction of the conditions in this Purchase Contract and the Indenture (i) to issue the Bonds for the purposes specified in Section 1 hereof , and (ii) to secure the Bonds in the manner contemplated in the Indenture. (b) The City Council has the full legal right, power and authority to adopt the Bond Resolution, the Resolution of Formation and the Ordinance, and the District has the full legal right, power and authority (i) to enter into this Purchase Contract, the Indenture and the District Continuing Disclosure Agreement, (ii) to issue, sell and deliver the Bonds to the Underwriter as provided herein , and (iii) to carry out and consummate all other transactions on its part contemplated by each of the aforesaid documents (such documents are collectively referred to herein as the "District Documents"), and the District and the City Council have complied with all provisions of applicable law, including the Act, in all matters relating to such transactions.
(c) The City Council has duly authorized (i) the execution and delivery by the District of the Bonds and the execution, delivery and due performance by the District of its obligations under the District Documents, (ii) the distribution and use of the Preliminary Official Statement and execution , delivery and distribution of the Final Official Statement , and (iii) the taking of any and all such action as may be required on the part of the District to carry out, give effect to and consummate the transactions on its part contemplated by such instruments. To the best of its knowledge , all consents or approvals necessary to be obtained by the District in connection with the foregoing have been received, and the consents or approvals so received are still in full force and effect. (d) The Bond Resolution, the Resolution of Formation and the Ordinance have been duly adopted by the City Council, and are in full force and effect; and the District Documents, when executed and delivered by the District and the other party or parties thereto, will constitute legal, valid and binding obligations of the District for and on behalf of the District enforceable against the District in accordance with their terms , except as 6 4882-638 I-9566v3 /200356 -0544
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enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally.
(e) When delivered to the Underwriter, the Bonds will have been duly authorized by the City Council, as the legislative body of the District, and duly executed, issued and delivered by the District and will constitute legal, valid and binding obligations of the District enforceable against the District in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, and will be entitled to the benefit and security of the Indenture. (t) The information contained in the Preliminary Official Statement is (except the information under the caption entitled "THE DEVELOPMENT AND THE DEVELOPER," as to which no view need be expressed) as of its date and as of the date hereof, was and is true and correct in all material respects and did not and does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and as of the Closing Date the information in the Final Official Statement will be ( except for the information under the caption entitled "THE DEVELOPMENT AND THE DEVELOPER," as to which no view need be expressed), true and correct in all material respects, and will not, as of the Closing Date contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(g) If, at any time prior to the earlier of receipt of notice from the Underwriter that the Final Official Statement is no longer required to be delivered under the Rule and the Closing Date (as described in Section 6 below), any event known to the officers of the District participating in the issuance of the Bonds occurs as a result of which the Final Official Statement, as then amended or supplemented, includes an untrue statement of a material fact or omits any material fact necessary to make the statements in the Final Official Statement, in light of the circumstances under which they were made, not misleading, the District shall promptly notify the Underwriter in writing of such event. Any information supplied by the District for inclusion in any amendments or supplements to the Final Official Statement will not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (h) None of the adoption of the Bond Resolution, the Resolution of Formation and the Ordinance, the execution and delivery of the District Documents, the consummation of the transactions on the part of the District contemplated herein or therein and the compliance by the District with the provisions hereof or thereof will conflict in any material respect with, or constitute on the part of the District a material violation of, or a material breach of or default under, (i) any indenture, mortgage, commitment, note or other agreement or instrument to which the District is a party or by which it is bound, (ii) any provision of the State Constitution, or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the District ( or the members of the City Council or any of its officers in their respective capacities as such) is subject, that would have a material adverse effect on the ability of the District to perform its obligations under the District Documents. 7 4882-6381-9566v3 /200356-0544
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(i) The District has never been in default at any time, as to principal of or interest on any obligation which it has issued, which default may have an adverse effect on the ability of the District to consummate the transactions on its part under the District Documents, except as specifically disclosed in the Final Official Statement; and other than the Indenture, the District has not entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on the Net Special Tax Revenues (as defined in the Final Official Statement) following issuance of the Bonds.
(j) Except as is specifically disclosed in the Final Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the District has been served with process or known by the District to be threatened, which in any way questions the powers of the City Council or the District referred to in paragraph (b) above, or the validity of any proceeding taken by the City Council in connection with the issuance of the Bonds, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions on the part of the District contemplated by this Purchase Contract, or of any other District Document, or which, in any way, could adversely affect the validity or enforceability of the Bond Resolution, the Ordinance, the Indenture, the Bonds or this Purchase Contract or, to the knowledge of the officer of the District executing this Purchase Contract, which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes, in any other way questions the status of the Bonds under California tax laws or regulations, challenges the validity of the Special Taxes, or which seeks to restrain or prohibit further development within the District. (k) Any certificate signed by an official of the District authorized to execute such certificate and delivered to the Underwriter in connection with the transactions contemplated by the District Documents shall be deemed a representation and warranty by the District to the Underwriter as to the truth of the statements therein contained. (I) The District has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon.
(m) The Bonds will be paid from Net Special Tax Revenues received by the District and moneys held in certain funds and accounts established under the Indenture and pledged thereunder to the payment of the Bonds.
(n) The Special Taxes may lawfully be levied in accordance with the Rate and Method of Apportionment of Special Tax for the District (the "Rate and Method") and the Ordinance, and, when levied, the Special Taxes so levied will be secured by a lien on the property on which they are levied.
(o) The Indenture creates a valid pledge of and first lien upon the Net Special Tax Revenues deposited thereunder, and the moneys in certain funds and accounts established pursuant to the Indenture, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein.
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(p) Except as described in the Preliminary Official Statement and the Final Official Statement , the District has not failed in any material respect to comply with any undertaking of the District under the Rule in the previous five years.
5. Blue Sky. The District covenants with the Underwriter that the District will cooperate with the Underwriter (at the cost and written direction of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may reasonably request; provided, however, that the District shall not be required to consent to suit or to service of process, or to qualify to do business, in any jurisdiction.
The District consents to the use by the Underwriter of the District Documents, the Preliminary Official Statement and the Final Official Statement in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions related to the offering and sale of the Bonds.
6. Delivery of the Bonds. At 9:00 a.m. on _ ____ , 2022 (the "Closing Date") or at such other time or date as are mutually agreed upon by the District and the Underwriter, the District will deliver or cause to be delivered to the Underwriter the Bonds in definitive form duly executed and authenticated by the Trustee together with the other documents mentioned in Section 8 hereof; and the Underwriter will accept such delivery and pay the Purchase Price of the Bonds by making a wire transfer in federal funds payable to the order of the Trustee for the account of the District.
The activities relating to the final execution and delivery of the Bonds and the Indenture, the payment for the Bonds and the delivery of the certificates, opinions and other instruments as described in Section 8 of this Purchase Contract shall occur at the offices of Bond Counsel. The payment for the Bonds and simultaneous delivery of the Bonds to the Underwriter is herein referred to as the "Closing."
The Bonds will be delivered as fully registered , book-entry only Bonds initially in denominations equal to the principal amount of each maturity thereof. The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company , and will be made available for checking by the Underwriter at such place as the Underwriter and the Trustee shall agree not less than 24 hours prior to the Closing Date.
7. Cancellation by the Underwriter. The Underwriter shall have the right to cancel its obligations to purchase the Bonds if between the date hereof and the date of Closing :
(a) the House of Representatives or the Senate of the Congress of the United States, or a committee of either , has pending before it, or passes or recommends favorably, legislation introduced previous to the date hereof, or legislation is recommended for passage by the President of the United States, which, if enacted in its form as introduced or as amended, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the District or by any similar body under the Indenture or upon interest received on obligations of the general character of the Bonds, or of causing interest on obligations of the general character of the Bonds, to be includable in gross income for purposes of federal income taxation, and such legislation, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; or
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(b) a tentative decision with respect to legislation is reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation is favorably reported or re-reported by such a committee or is introduced , by amendment or otherwise, in or is passed by the House of Representatives or the Senate, or is recommended to the Congress of the United States for passage by the President of the United States, or is enacted, or a decision by a federal court of the United States or the United States Tax Court is rendered, or a ruling, release, order, circular, regulation or official statement by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency is made or proposed to be made, having the purpose or effect, or any other action or event occurs which has the purpose or effect, directly or indirectly, of adversely affecting the federal income tax consequences of owning the Bonds, including causing interest on the Bonds to be included in gross income for purposes of federal income taxation , or imposing federal income taxation upon revenues or other income of the general character to be derived by the District under the Indenture or upon interest received on obligations of the general character of the Bonds , or the Bonds and also including adversely affecting the tax-exempt status of the District under the Code, which , in the reasonable opinion of the Underwriter, materially adversely affects the market price of or market for the Bonds; or
( c) legislation is enacted, or actively considered for enactment with an effective date prior to the Closing Date, or a decision by a court of the United States is rendered , the effect of which is that the Bonds or the Indenture, as the case may be, are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (d) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds or the execution and delivery of the Indenture as contemplated hereby or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect , the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (e) any event occurs or any information becomes known to the Underwriter that causes the Underwriter to reasonably believe that the Final Official Statement includes an untrue statement of a material fact, or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or
(f) there occurs any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or (g) there is in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the 4882-638 l-9566v3 /200356-0544
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reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or
(h) a general banking moratorium is declared by federal, New York or State authorities; or
(i) any investigation or proceeding is pending or threatened by the Securities and Exchange Commission against the City or the District; or G) additional material restrictions not in force as of the date hereof are imposed upon trading in securities generally by any governmental authority or by any national securities exchange which in the reasonable judgment of the Underwriter materially adversely affects the Underwriter's ability to sell the Bonds; or (k) the New York Stock Exchange or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increases materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or
(1) the occurrence of an event listed in subparagraph (j) to Section 4 hereof; or (m) an amendment to the federal or State constitution is enacted or action taken by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the District, its property, income or securities ( or interest thereon), the validity or enforceability of the Special Tax or the ability of the District to issue the Bonds and levy the Special Tax as contemplated by the Indenture, the Rate and Method and the Final Official Statement.
8. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to purchase the Bonds shall be subject (a) to the performance by the District of its obligations to be performed by it hereunder at and prior to the Closing Date, (b) to the accuracy as of the date hereof and as of the Closing Date of the representations and warranties of the District herein, and ( c) to the following conditions, including the delivery by the District of such documents as are enumerated herein in form and substance satisfactory to the Underwriter and the accuracy as of the Closing Date of the representations and warranties included therein:
(a) At the time of Closing, (i) the Final Official Statement, this Purchase . Contract, the District Continuing Disclosure Agreement, the Developer Continuing Disclosure Agreement, and the Indenture shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to by the Underwriter, and (ii) the District shall have duly adopted and there shall be in full force and effect such resolutions and ordinances (including, but not limited to, the Bond Resolution, the Resolution of Formation and the Ordinance) as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated hereby. (b) Receipt of the Bonds, executed by the District and authenticated by the Trustee, at or prior to the Closing Date. The terms of the Bonds, when delivered, shall in all instances be as described in the Final Official Statement. 11 4882-638 l-9566v3 /200356-0544
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(c) At or prior to the Closing Date, the Underwriter shall receive the following documents in such number of counterparts as shall be mutually agreeable to the Underwriter and the District:
(i) A final approving opinion of Bond Counsel dated the date of Closing in the form attached to the Final Official Statement as Appendix E. (ii) A letter or letters of Bond Counsel addressed to the Underwriter and the Trustee , which includes a statement to the effect that Bond Counsel's final approving opinion may be relied upon by the Underwriter and the Trustee to the same extent as if such opinion were addressed to the Underwriter and the Trustee, and a supplemental opinion of Bond Counsel addressed to the Underwriter to the effect that:
(A) the statements contained in the Final Official Statement on the cover page and under the captions "THE SERIES 2022 BONDS" (other than information relating to OTC and its book-entry only system, as to which no opinion need be expressed), "SECURITY FOR THE BONDS" and "CONCLUDING INFORMATION-Tax Matters," and in Appendices D and E thereto, are accurate insofar as such statements expressly summarize certain provisions of the Bonds, the Indenture and Bond Counsel's opm1on concerning certain federal tax matters relating to the Bonds; (B) the District has duly and validly executed and delivered this Purchase Contract and the District Continuing Disclosure Agreement and this Purchase Contract and the District Continuing Disclosure Agreement constitute the legal, valid and binding obligations of the District enforceable against the District in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought;
(C) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. (iii) A letter of Orrick, Herrington & Sutcliffe LLP, as disclosure counsel to the District in connection with the Bonds ("Disclosure Counsel"), addressed to the District and the Underwriter, to the effect that based upon an examination which they have made, and without having undertaken to determine independently or assuming any responsibility for the accuracy or completeness or fairness of the statements, and based on its participation in the conferences (which did not extend beyond the date of the Official Statement), and in reliance thereon, on oral and written statements and representations of the District and others and on the records, documents, certificates, opinions and matters therein mentioned, such counsel advises the District and the Underwriter as a matter of fact and not opinion that, during the course of such counsel's representation of the District as Disclosure Counsel on this matter, (a) as of the date of the Preliminary Official Statement, no facts had come to the attention of the attorneys in such counsel's firm rendering legal services to the District as 12 4882-6381-9566v3/200356-0544
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Disclosure Counsel in connection with the Preliminary Official Statement which caused it to believe that the Preliminary Official Statement contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (b) as of the date of the Final Official Statement and as of the Closing Date, no facts had come to the attention of the attorneys in such counsel's firm rendering legal service to the District as Disclosure Counsel in connection with the Final Official Statement which caused it to believe as of the date of the Final Official Statement and as of the Closing Date that the Final Official Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, such counsel expressly excludes from the scope of this paragraph and expresses no view or opinion about (i) with respect to the Preliminary Official Statement, any difference in information contained therein compared to what is contained in the Final Official Statement, whether or not related to pricing or sale of the Bonds, and whether any such difference is material and should have been included in the Preliminary Official Statement, and (ii) with respect to both the Preliminary Official Statement and the Final Official Statement, any CUSIP numbers, financial, accounting, statistical or economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, management discussion and analysis, environmental matters, environmental litigation, information relating to OTC and its book-entry system, the appendices thereto, and information relating to ratings, rating agencies, tax exemption, included or referred to therein or omitted therefrom, which such counsel expressly excludes from the scope of this paragraph and as to which such counsel expresses no opinion or view, and no responsibility is undertaken or view expressed with respect to any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Preliminary Official Statement or the Final Official Statement.
(iv) The Final Official Statement executed on behalf of the District by a duly authorized officer of the District.
(v) Certified copies of the Bond Resolution, the Resolution of Formation and the Ordinance.
(vi) Evidence of recordation in the real property records of the County of Riverside of the Notice of Special Tax Lien (as such term is used in the Final Official Statement), and any amendments thereto, in the form required by the Act. (vii) A certificate, in form and substance as set forth in Exhibit B hereto, of the District, dated as of the Closing Date.
(viii) Evidence that Federal Form 8038-G has been executed by the District and will be filed with the Internal Revenue Service.
(ix) Executed copies of the Indenture and the District Continuing Disclosure Agreement.
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(x) An arbitrage certificate in form satisfactory to Bond Counsel. (xi) An opinion, dated the Closing Date and addressed to the Underwriter and the Trustee, of the City Attorney of the City, as counsel to the District, to the effect that:
(A) the District is duly organized and validly existing as a community facilities district under the laws of the State; (B) the District has duly and validly executed and delivered the Indenture and the District Continuing Disclosure Agreement, and the Indenture and the District Continuing Disclosure Agreement constitute legal, valid and binding obligations of the District enforceable against the District in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought;
(C) the Bond Resolution, the Resolution of Formation and the Ordinance were each duly adopted at meetings of the City Council which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Bond Resolution, the Resolution of Formation and the Ordinance are in full force and effect and have not been modified, amended or rescinded; (D) except as described in the Final Official Statement, there is no litigation, action, suit, proceeding or investigation at law or in equity before or by any court, governmental agency or body, pending and notice of which has been served on and received by the District or, to the best of such counsel's current actual knowledge, threatened against the District, challenging the creation, organization or existence of the District, or the validity of the Bonds or the District Documents or contesting the authority of the District to enter into or perform its obligations under any of such documents, or which, in any manner, questions the right of the District to issue the Bonds, to the levy of Special Taxes, or the allocation and payment of the Net Special Tax Revenues to the District and the other security for the Bonds provided by the Indenture;
(E) to the best of such counsel's knowledge, the authorization, execution and delivery of the Bonds and the District Documents by the District, the compliance with the provisions thereof by the District, and the performance by the District of its obligations thereunder, will not conflict with, or constitute a breach or default under, in any material respect, any law, administrative regulation, court decree, resolution, ordinance or other agreement to which the City or the District is subject or by which the City or the District is bound; and
(F) with respect to the Preliminary Official Statement and the Final Official Statement, insofar as the statements therein purport to 14 4882-638 l-9566v3/200356-0544
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summarize information with respect to the District, the pledge of the Net Special Tax Revenues and the City, without having undertaken to determine independently the accuracy, completeness or fairness of such discussion, nothing has come to such counsel's attention which would lead such counsel to believe that such discussion (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (xii) In connection with printing and distribution of the Preliminary Official Statement, an executed certificate of the District in the form attached hereto as Exhibit C.
(xiii) A certificate in form and substance as set forth in Exhibit D hereto of the Trustee .
(xiv) An opm1on of counsel to the Trustee in form and substance satisfactory to the Underwriter dated the Closing Date and addressed to the District and the Underwriter to the effect that the Trustee has duly authorized, executed and delivered the Indenture and that the Indenture is a valid and binding obligation of the Trustee enforceable in accordance with its terms.
(xv) A certificate of Kitty Siino & Associates, Inc., Tustin, California (the "Appraiser"), in the form attached hereto as Exhibit E, along with a copy of its appraisal report in the form attached to the Final Official Statement as Appendix B. (xvi) A copy of the Developer Continuing Disclosure Agreement executed by the Developer.
(xvii) An executed certificate, dated the date of the Preliminary Official Statement, of the Developer. in the form attached hereto as Exhibit F with such changes as may be approved by the Underwriter.
(xviii) An executed closing certificate, dated the Closing Date, of the Developer in the form attached hereto as Exhibit G with such changes as may be approved by the Underwriter.
(xix) An opinion or opinions of counsel to the Developer addressed to the District and the Underwriter to the effect that: (A) the Developer is a Michigan limited liability company duly organized and existing under the laws of the State of Michigan; (B) the Developer has duly and validly authorized the execution and delivery of the Developer Continuing Disclosure Agreement and the same is in full force and effect as of the Closing Date and is a valid and legally binding obligation of the Developer, enforceable against the Developer in accordance with its terms, (C) the execution and delivery by the Developer of the Developer Continuing Disclosure Agreement and the performance of its obligations thereunder do not and will not result in a violation of any provision of, or default under any agreement or other instrument to which the Developer is a party, (D) the Developer is not in 15 4882-6381-9566v3/2003 56-0544
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violation of any provision of or in default under, its organizational documents or any agreement or other instrument, violation of or default under which would materially and adversely affect the Developer 's ability to comply with its obligations under the Developer Continuing Disclosure Agreement or the Developer's ability to pay the Special Taxes , (E) except as set forth in the Final Official Statement , there is no litigation pending against the Developer (with service of process to the Developer having been duly given and completed) or overtly threatened against the Developer which would materially and adversely affect the validity or enforceability of the Developer Continuing Disclosure Agreement or the Developer's ability to pay the Specia l Taxes and (F) without having undertaken to determine independently the accuracy or completeness of the statements contained in the Preliminary Official Statement or the Final Official Statement and without passing upon or assuming responsibility for the accuracy, completeness or fairness of such statements, no information has come to the attention of such counsel(s) during the course of their representation of the Developer which causes them to believe that the statements contained in the Preliminary Official Statement, as of its date, or the Final Official Statement, as of its date and the Closing Date, under the captions entit led "INTRODUCTION-The Development and the Developer," "THE
DEVELOPMENT AND THE DEVELOPER-The Development", "-The
Developer , "-Land Use Approvals and Environmental Review ," "CONCLUDING INFORMATION - Continuing Disclosure, " and "-Absence of Litigation-The Developer" solely as such information describes the Developer, the Developer's organization, the property owned by the Developer in the District, and the Developer's development and financing plans regarding the property owned by the Developer in the District, contains or contained any untrue statement of a material fact or omits or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading ( except that no opinion or belief need to be expressed as to any information which is attributable to a source other than the Developer contained in the Preliminary Official Statement or the Fina l Official Statement); (xx) An opinion of Stradling, Yocca Carlson & Rauth , a Professional Corporation, as counsel to the Underwriter, in form and substance acceptable to the Underwriter.
(xxi) A certificate of Willdan Financial Services, Temecula California. (the "Special Tax Consultant") in the form attached as Exhibit H. (xxii) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the District with legal requirements, the truth and accuracy, as of the time of Closing, of the respective representations of the District herein contained and the due performance or satisfaction by the District at or prior to such time of all agreements then to be performed and all conditions then to be satisfied.
If the District shall be unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Contract, or if the obligations of the Underwriter to purchase and accept delivery of the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the District shall be under further 16 4882-638 l-9566v3 /200356-0544
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obligation hereunder; except that the respective obligations to pay expenses, as provided m Section 11 hereof shall continue in full force and effect.
9. Conditions to the Obligations of the District. The obligations of the District to issue and deliver the Bonds on the Closing Date shall be subject, at the option of the District, to the performance by the Underwriter of its obligations to be performed hereunder at or prior to the Closing Date, and to the delivery by Bond Counsel and Disclosure Counsel of the opinion and the letter, respectively, described in Sections 8(c)(i) and (iii) above.
10. Survival of Representations and Warranties. All representations, warranties and agreements of the District hereunder shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the Closing. herein:
11. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth (a) The Underwriter shall be under no obligation to pay, and the District shall pay or cause to be paid (out of any legally available funds of the District) all expenses incident to the performance of the District's obligations hereunder, including, but not limited to, the cost of printing, engraving and delivering the Bonds to the Underwriter, the cost of preparation, printing, distribution and delivery of the Indenture, the Preliminary Official Statement, the Final Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Special Tax Consultant, the Municipal Advisor, the Trustee, the Appraiser, Bond Counsel and Disclosure Counsel and any accountants, engineers or any other experts or consultants the City or the District has retained in connection with the Bonds; and
(b) The District shall be under no obligation to pay, and the Underwriter shall pay, any fees of the California Debt and Investment Advisory Commission; the fees and expenses of its counsel, the MSRB and the CUSIP Bureau; any reports run by the Underwriter for the purpose of determining compliance by the District with the Rule; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including any advertising expenses and transaction-related financing team meal expenses.
12. Notices. Any notice or other communication to be given to the District under this Purchase Contract may be given by delivering the same in writing at its address set forth above, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to the following: Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, California 94104, Attention: Sara Oberlies Brown, Managing Director.
13. Parties in Interest. This Purchase Contract is made solely for the benefit of the District and the Underwriter (including the successors or assigns of the Underwriter) and no other person, including any purchaser of the Bonds, shall acquire or have any right hereunder or by virtue hereof.
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14. Governing Law. This Purchase Contract shall be governed by and construed m accordance with the laws of the State applicable to contracts made and performed in the State.
15. Effectiveness. This Purchase Contract shall become effective upon acceptance hereof by the District.
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16. Execution in Counterparts. This Purchase Contract may be executed by the parties hereto in separate counterparts , each of which when so executed and delivered shall be an original , but all such counterparts shall together constitute but one and the same instrument.
Accepted and agreed to as of
the date first above written:
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO.
4C (DEL WEBB PROJECT)
By: ____________ _
Director of Administrative Services
Time of Execution: ___ ___ _
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S-1
STIFEL, NICOLAUS & COMPANY,
INCORPORATED
By: _____ _ ______ _
Managing Director
12-97
EXHIBIT A
$ __ _
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
Maturity Date
(September 1)
r Term Bond.
Principal
Amount
SPECIAL TAX BONDS, SERIES 2022
MATURITY SCHEDULE
Interest
Rate
Yield
REDEMPTION PROVISIONS
Price
10%
Test
Used
Hold
the
Offering
Price
Rule
Used
Optional Redemption. The Bonds maturing on and after September 1, 20 _, shall be subject to optional redemption, in whole or in part in Authorized Denominations, on any Interest Payment Date on or after September 1, 20_, from any source of available funds, at the following respective Redemption A-1
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Prices ( expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
%
Mandatory Redemption from Special Tax Prepayments. The Bonds shall be subject to mandatory redemption, in whole or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of any prepayment of Special Taxes, at the following respective Redemption Prices ( expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date ofredemption:
Redemption Dates
Redemption
Price
%
Mandatory Sinking Fund Redemption. The Bonds maturing September 1, 20_ (the "20_ Term Bonds") shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20_, at a Redemption Price equal to the principal amount of the 204_ Term Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(September 1)
(Maturity)
Principal Amount
to be
Redeemed
$
The Bonds maturing September 1, 20_ (the "20_ Term Bonds") shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20_, at a Redemption Price equal to the principal amount of the 20_ Term Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
A-2
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Sinking Fund
Redemption Date
(Septem her 1)
_ (Maturity)
Principal Amount
to be
Redeemed
$
The Bonds maturing September 1, 20 _ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20_, at a Redemption Price equal to the principal amount of the Bonds maturing September 1, 20 _ to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(Septem her 1)
(Maturity)
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A-3
Principal Amount
to be
Redeemed
$
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EXHIBIT B
$ -----CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
DISTRICT CLOSING CERTIFICATE
I, the undersigned, hereby certify that I am the City Manager of the City of Rancho Mirage, the City Council of which is the legislative body for the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "District"), a community facilities district duly organized and existing under the laws of the State of California (the "State") and that as such, I am authorized to execute this Certificate on behalf of the District in connection with the issuance of the above-referenced Special Tax Bonds, Series 2022 (the "Bonds").
I hereby further certify on behalf of the District that:
(A) the representations and warranties made by the District in the Bond Purchase Agreement, dated as of _____ , 2022 (the "Purchase Contract") by and between the District and Stifel, Nicolaus & Company, Incorporated (the "Underwriter") are true and correct in all material respects on the date hereof, with the same effect as if made on the date hereof;
(B) no event has occurred since the date of the Final Official Statement that, as of the date hereof, would cause any statement or information contained in the Final Official Statement (except the information under the caption entitled "THE DEVELOPMENT AND THE DEVELOPER," as to which no view need be expressed) to be incorrect or incomplete in any material respect or would cause the information in the Final Official Statement to contain an untrue statement of a material fact or omit to state a material fact necessary in order to make such statements therein, in the light of the circumstances under which they were made, not misleading;
(C) as of the date hereof, the Indenture and the District Continuing Disclosure Agreement are in full force and effect in accordance with their terms and have not been amended, modified or supplemented except in such case as may have been agreed to by the Underwriter; and
(D) the District has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the District Documents prior to issuance of the Bonds.
Capitalized terms used in this Certificate and not defined herein have the meanings set forth in the Purchase Contract.
B-1
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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the date set forth below.
Dated: , 2022 ---- -
B-2
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CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO.
4C (DEL WEBB PROJECT)
By: ____________ _
City Manager
12-102
EXHIBITC
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
RULE 15C2-12 CERTIFICATE
The undersigned hereby certifies and represents that he is the duly appointed and acting City Manager of the City of Rancho Mirage, California and, as such, is duly authorized to execute and deliver this Certificate on behalf the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "District") and further hereby certifies as follows:
(1) This Certificate is delivered in connection with the offering and sale of the above- referenced bonds (the "Bonds") in order to enable the underwriter of the Bonds to comply with Securities and Exchange Commission Rule l 5c2-12 under the Securities Exchange Act of 1934, as amended (the "Ru le").
(2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement dated _____ , 2022, setting forth information concerning the Bonds and the District (the "Preliminary Official Statement"). (3) As used herein, "Permitted Omissions" means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds. (4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of the Rule.
IN WITNESS WHEREOF, I have executed this Rule l 5c2-12 Certificate as of 2022.
C-1
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-----
CITY OF RANCHO MIRAGE
COMMUNITY FACILITIES DISTRICT NO.
4C (DEL WEBB PROJECT)
By: ____________ _
City Manager
12-103
EXHIBITD
$ ____ _
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
CERTIFICATE OF TRUSTEE
The undersigned hereby states and certifies that the undersigned is an authorized officer of U.S. Bank Trust Company , National Association, which is acting as trustee (the "Trustee") under that certain Indenture, dated as of _____ , 2022 (the "Indenture"), by and between the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "District") and the Trustee relating to the above-captioned bonds (the "Bonds") and as such, is familiar with the following facts and is authorized and qualified to certify the following facts on behalf of the Trustee:
(1) The Trustee is duly organized and existing as a national banking association under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Indenture.
(2) The Indenture has been duly authorized, executed and delivered by the Trustee, and is a legal, valid and binding agreement of the Trustee enforceable upon the Trustee in accordance with its terms.
(3) The Bonds have been authenticated by a duly authorized representative of the Trustee in accordance with the Indenture.
(4) There is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending against the Trustee or threatened against the Trustee which in the reasonable judgment of the undersigned would affect the existence of the Trustee or in any way contesting or affecting the validity or enforceability of the Indenture or contesting the powers of the Trustee or its authority to enter into and perform its obligations under the Indenture. (5) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds, or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture. The Trustee is not certifying as to the compliance with any federal or state securities laws.
(6) The execution and delivery by the Trustee of the Indenture and compliance with the terms thereof will not, in any material respect, conflict with, or result in a violation or breach of, or constitute a default under, any material agreement or material instrument to which the Trustee is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Trustee or any of its activities or properties, or ( except with respect to the lien of the Indenture) result D-1
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in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Trustee.
Dated: , 2022 ----- U.S. BANK NATIONAL ASSOCIATION
By ____________ _
Authorized Officer
D-2
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EXHIBIT E
$ ____ _
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
CERTIFICATE OF APPRAISER
The undersigned, on behalf of Kitty Siino & Associates, Inc. (the "Appraiser") , has prepared an "Appraisal Report" with a date of value of _____ , 2022 (the "Appraisal Report") regarding the value of parcels of real property and related improvements (the "Appraised Property") within the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "District") that are subject to the levy of special taxes in the District, and certifies that:
1. The assumptions made in the Appraisal Report are reasonable. The Appraisal Report fairly and accurately described, as of the stated date of value, the market values of the Appraised Property.
2. The Appraiser is not aware of any event or act that occurred since the date of value of the Appraisal Report which, in her opinion, would materially and adversely affect the conclusions as to the market value of the Appraised Property.
3. The Appraiser consents to the reproduction of the Appraisal Report as Appendix B to the Preliminary Official Statement dated _____ , 2022 (the "Preliminary Official Statement"), and the Official Statement dated ____ , 2022 (the "Official Statement"), each with respect to the above-referenced bonds, and to the references to the Appraiser and the Appraisal Report made in the Preliminary Official Statement and the Official Statement.
4. The Appraiser has reviewed the Preliminary Official Statement and the Official Statement, and the statements concerning the Appraisal Report and the value of the Appraised Property contained in the Preliminary Official Statement and the Official Statement are true, correct and complete in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made , not misleading.
5. A true and correct copy of the Appraisal Report is attached as Appendix B to the Preliminary Official Statement and as Appendix B to the Official Statement.
6. The Appraisal Report complies with the Appraisal Standards for Land-Secured Financings issued by the California Debt and Investment Advisory Commission and dated July 2004.
E-1
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Dated: , 2022 KITTY SIINO & AS SOCIA TES, INC. -----
By: ____________ _
Its: ______________ _
E-2
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EXHIBIT F
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
LETTER OF REPRESENTATIONS OF
PULTE HOME COMPANY, LLC
_____ ,2022
City of Rancho Mirage
Community Facilities District No. 4C (Del Webb Project) Rancho Mirage, California
Stifel Nicolaus & Company, Incorporated
San Francisco, California
In connection with the issuance and sale of the above-captioned bonds (the "Bonds") , and pursuant to the Bond Purchase Agreement (the "Bond Purchase Agreement") to be executed by and between the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project (the "District"), and Stifel Nicolaus & Company, Incorporated, as underwriter (the "Underwriter"), the undersigned , on behalf of Pulte Home Company, LLC, a Michigan limited liability company (the " Developer") has executed this Letter of Representations of Pulte Home Company , LLC (the "Letter of Representations") and hereby certifies, represents , warrants and covenants that :
1. While the Bonds or any refunding obligations related thereto are outstanding, Developer will not bring any action, suit, proceeding , inquiry or investigation at law or in equity, before any court, regulatory agency , public board or body, that in any way seeks to challenge or overturn the formation of the District, to challenge the adoption of the ordinance levying Special Taxes within the District, to invalidate the District or any of the Bonds or any refunding obligations relating thereto, or to invalidate the special tax lien imposed under Section 3115 .5 of the Streets and Highways Code based on recordation of the notice of special tax lien relating thereto. The foregoing covenant shall not prevent Developer in any way from bringing any other action , suit, proceeding , inquiry, or investigation at law or in equity relating to the following: (i) that the Special Taxes have not been levied in accordance with the methodologies contained in the rate and method of apportionment of special tax (the "Rate and Method of Apportionment") pursuant to which the Special Taxes are levied, (ii) the application or use of the Special Taxes levied and collected, or (iii) the enforcement of the obligations of the City of Rancho Mirage (the "City") and/or the District under the Bond Resolution, the Resolution of Formation, the Ordinance or the Indenture or any other agreement among or between the Developer, the City and/or and the District or to which Developer is a party or of which it is a beneficiary .
2. An appraisal of the taxable properties within the District (the "Appraisal Report") was prepared by Kitty Siino & Associates (the "Appraiser "). The Appraisal Report estimates the minimum market value of the taxable properties the District as of ____ _ , 2022 (the "Date of Value"). To the Actual Knowledge of the Undersigned (as defined herein), all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the portions of F-1
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the Appraisal Report highlighted in yellow on Appendix A attached hereto, was true and correct in all material respects as of the Date of Value.
3. As of the date hereof, the information in the Preliminary Official Statement dated ____ , 2022 (the "Preliminary Official Statement") under the captions "INTRODUCTION The Development and the Developer," "THE DEVELOPMENT AND THE DEVELOPER - The Development", "-The Developer, "-Land Use Approvals and Environmental Review," "CONCLUDING INFORMATION-Continuing Disclosure," and "-Absence of Litigation - The Developer" solely as such information pertains to Developer, its Affiliates (as defined herein), the property owned by Developer and/or its Affiliates in the District (the "Property"), the Developer's plans for the development of the Property and Developer's contractual arrangements with respect thereto, and the Developer's compliance with its undertakings to provide continuing disclosure pursuant to the SEC's Rule 15c2-12 (but in all cases under all captions excluding therefrom (i) information regarding the Appraisal Report, market value ratios and annual special tax ratios, and (ii) information which is identified as having been provided by a source other than the Developer) is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
4. Except as disclosed in the Preliminary Official Statement, the Developer has not been adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts within the past ten years. Except as disclosed in the Preliminary Official Statement, the Developer does not have any proceedings pending (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned (as defined below), threatened in writing in which the Developer may be adjudicated as bankrupt, become the debtor in a bankruptcy proceeding , be discharged from any or all of its debts or obligations, be granted an extension of time to pay its debts or obligations , or be granted a reorganization or readjustment of its debts or obligations.
5. Except as disclosed in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending against the Developer (with proper service of process or proper notice to the Developer having been accomplished), or to the Actual Knowledge of the Undersigned, overtly threatened in writing against the Developer (a) which, if successful, is reasonably likely to materially and adversely affect the Developer's ability to complete the development and sale of the Property as described in the Preliminary Official Statement, or to pay the applicable Special Tax, or ordinary ad valorem property tax obligations levied on the Property owed by it when due, or (b) which challenges or questions the validity or enforceability of the Bonds or the Continuing Disclosure Agreement to be executed by the Developer in connection with the issuance of the Bonds, a form of which is attached as Appendix H to the Preliminary Official Statement.
6. Except as disclosed in the Preliminary Official Statement , to the Actual Knowledge of the Undersigned, no other public debt secured by a tax or assessment on the Property is in the process of being authorized and no assessment districts or community facilities districts have been or are in the process of being formed which include any portion of the Property.
7. Except as disclosed in the Preliminary Official Statement, there are no events of monetary default or events which with the passage of time would constitute a monetary default under any loan or similar credit arrangement to which Developer is a party the result of which could · F-2
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reasonably be expected to have a material adverse effect on the Developer's ability to complete the development and sale of the Property as described in the Preliminary Official Statement or to pay the applicable Special Tax obligation levied on the Property owned by it when due.
8. It is the policy of the Developer to pay all taxes applicable to property owned by it when due in the absence of a bona fide dispute as to the amount owed. However, as a large, nation wide developer of residential projects, the Developer cannot represent with assurance that it and its Affiliates have consistently complied with this policy. Nevertheless, to the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any Affiliate (during its period of ownership) has been delinquent to any material extent in the payment of any ad valorem property tax, special assessment or special tax on property in California owned by the Developer or by any such Affiliate (during the period of ownership) included within the boundaries of a community facilities district or an assessment district that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being filed in a court of law against the delinquent Developer or Affiliate.
9. As used in this Letter of Representations, the term "Actual Knowledge of the Undersigned" means the knowledge that the undersigned currently has as of the date of this Letter of Representations or has obtained through (i) interviews with such current officers and responsible employees of the Developer and its Affiliates (or its members or agents) as the undersigned has reasonably determined are likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this Letter of Representations, and/or (ii) reviews of documents that were reasonably available to the undersigned and which the undersigned has deemed necessary for the undersigned sign this Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Developer's financial operations, such as those interviews and reviews mentioned above. The Developer further notes that its indirect parent PulteGroup, Inc., a Michigan corporation ("PulteGroup"), including its subsidiaries such as the Developer and its Affiliates, have undergone several restructurings, including office closures and division consolidations. Individuals who are no longer with the various entities have not been contacted.
10. As used in this Letter of Representations, the term "Affiliate" of Developer means any person directly (or indirectly through one or more intermediaries) that exercises managerial control over Developer or that is under managerial control of Developer, and about whom information could be material to potential investors in their investment decision regarding the Bonds (including without limitation information relevant to the proposed development of the Property, or to Developer's ability to pay the applicable Special Tax obligation levied on the Property owned by it when due).
11. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Bond Purchase Agreement.
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The undersigned has executed this Letter of Representations solely in his or her capacity as an officer or authorized representative of the Developer and he or she will have no personal liability arising from or relating to this Letter of Representations. Any liability arising from or relating to this Letter of Representations may only be asserted against the Developer. 4882-638 l-9566v3/200356 -0544
PULTE HOME COMPANY, LLC, a Michigan
limited liability company
By:----------------
Name:
Title:
F-4
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APPENDIX A
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
DEVELOPER PROVIDED INFORMATION IN APPRAISAL REPORT
See attached .
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EXHIBITG
$ _ _ __ _
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
CLOSING CERTIFICATE OF PULTE HOME COMPANY, LLC
, 2022 -----
City of Rancho Mirage
Community Facilities District No. 4C (Del Webb Project) Rancho Mirage, California
Stifel Nicolaus & Company, Incorporated
San Francisco , California
Reference is made to the above-captioned bonds (the "Bonds") and to the Bond Purchase Agreement , dated _____ , 2022 (the "Bond Purchase Agreement "), entered into between the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "District") and Stifel, Nicolaus & Company, Incorporated (the "Underwriter") in connection therewith. This Closing Certificate of Pulte Home Company, LLC (the "Closing Certificate") is delivered pursuant to the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Letter of Representations of Pulte Home Company , LLC (the "Letter of Representations "), dated _____ , 2022, delivered by Pulte Home Company , LLC, a Michigan limited liability company (the "Developer "), which is attached hereto as Exhibit A.
The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same as an authorized officer or representative of the Developer, and the undersigned , on behalf of the Developer, further certifies as follows:
1. The Developer is duly authorized to execute, delivery and perform its obligations under the Developer Continuing Disclosure Agreement, dated as of _ ____ , 2022 (the "Continuing Disclosure Agreement") , by and between the Developer and Willdan Financial Services, and the Developer has duly executed and delivered the Continuing Disclosure Agreement.
2. The Developer has received the final Official Statement dated ____ _ , 2022 relating to the Bonds (the "Official Statement"). To the Actual Knowledge of the Undersigned , each statement, representation and warranty made in the Letter of Representations is true and correct in all material respects on and as of the date hereof with the same effect as if made on the date hereof , except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Official Statement.
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3. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information described in Paragraph 3 of the Letter of Representations (and subject to the limitations and exclusions contained in Paragraph 3 of the Letter of Representations) relating to the Developer, its Affiliates, ownership of the Property, the Developer's development plan as it relates to the Property, the Developer's financing plan, the Developer's lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer's development plan or the Developer's financing plan, other loans of such Affiliates), which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make such statements and information contained in the Official Statement not misleading in any material respect.
4. For the period through 25 days after the "End of the Underwriting Period" as defined in the Bond Purchase Agreement (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Agreement), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer's and its Affiliates' ownership of the Property, the Developer's development plan, the Developer's financing plan, the Developer's lenders, if any, and contractual arrangements of the Developer or any Affiliates (including, if material to the Developer's development plan or the Developer's financing plan, other loans of such Affiliates), as it pertains to the Property, shall occur as a result of which it is necessary, in the opinion of the Underwriter, the District or counsel to the District, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it was delivered to a purchaser, the Developer shall reasonably cooperate with the District and the Underwriter in the preparation . and publication of a supplement or amendment to the information described in the sections of the Official Statement referenced in paragraph 3 of the Letter of Representations, in form and substance satisfactory to the Underwriter and the District which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading.
The undersigned has executed this Closing Certificate solely in his or her capacity as an officer of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.
4882-638 l -9566v3/200356-0544
PULTE HOME COMP ANY, LLC, a Michigan
limited liability company
By:---------- ------
Name:
Title:
G-2
12-114
EXHIBITH
$ ____ _
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
CERTIFICATE OF SPECIAL TAX CONSULTANT
Willdan Financial Services (the "Special Tax Consultant"), Temecula, California is the Special Tax Consultant for the referenced community facilities district and has read the Rate and Method of Apportionment of Special Tax (the "Rate and Method") set forth in Appendix A to the Official Statement dated ____ , 2022 (the "Official Statement") relating to the above- referenced bonds (the "Bonds"). The Special Tax Consultant hereby certifies that the Special Tax, if collected in the maximum amounts permitted pursuant to the Rate and Method would be sufficient to pay the Administrative Expenses (as defined in the Rate and Method) and the scheduled debt service on the Bonds, provided that the annual debt service figures on the debt service schedule included in the Official Statement, which were relied upon by the Special Tax Consultant, are substantially true and correct.
The summary of the Rate and Method in the section of the Official Statement entitled "THE COMMUNITY FACILITIES DISTRICT-Rate and Method of Apportionment of Special Tax" is a fair and accurate summary of the Rate and Method, and a true and correct copy of the Rate and Method is attached to the Official Statement as Appendix A. All of the tabular and financial information provided by the Special Tax Consultant and included in the Official Statement is true and correct in all material respects.
Dated: , 2022 -----
WILLDAN FINANCIAL SERVICES
By: ______________ _
Its: ------------------
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EXHIBIT I
$ ____ _
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Stifel , Nicolaus & Company, Incorporated ("Stifel") hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the "Bonds") .
I. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Initial Offering Price of the Hold-the-Offering-Price Maturities . (a) Stifel offered the Hold-the-Offering -Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial Offering Prices") on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated ____ , 2022, by and between Stifel and the Issuer, Stifel has agreed in writing that, (i) for each Maturity of the Hold the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the "hold-the-offering-price rule"), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker -dealer who is a party to the retail distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to such agreement , no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering -Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
3. Reserve Fund.
The establishment of the Reserve Fund for the Bonds in the amount of the Reserve Requirement (as such term is defined in the Indenture , dated as of _ ____ , 2022, by and between the Issuer and U.S. Bank Trust Company, National Association , as Trustee (the "Trustee") pursuant to which the Bonds are being issued) was vital to the marketing of the Bonds and reasonably required to assure payment of debt service on the Bonds.
4. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the "General Rule Maturities."
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(b) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the "Hold-the-Offering-Price Maturities." (c) Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date ~----' 2022), or (ii) the date on which the Underwriter has sold at least 10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity. (d) Issuer means the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project).
( e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(f) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term "related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is _____ , 2022. (h) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Stifel' s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended , and the Treasury Regulations thereunder.
The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in a Tax Certificate for the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds, and by Orrick, Herrington & Sutcliffe LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes , the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
Dated: , 2022 -----
4882-638 l -9566v3/200356-0544
STIFEL, NICOLAUS & COMPANY,
IN CORPORA TED
By: ______________ _
Name: ------------------
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES AND INITIAL OFFERING
PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES
(Attached)
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SCHEDULEB
PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)
1-4
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ATTACHMENT 4
CONTINUING DISCLOSURE AGREEMENT
(SEE ATTACHED)
12-120
CONTINUING DISCLOSURE AGREEMENT
City of Rancho Mirage
Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022
OH&S 8/22/22 Draft
THIS CONTINUING DISCLOSURE AGREEMENT (this "Disclosure Agreement"), dated as of _____ 1, 2022, is by and between the City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District"), and Willdan Financial Services, as disclosure dissemination agent (the "Dissemination Agent" as defined below).
WITNESSETH:
WHEREAS, pursuant to the Indenture, dated as of _ ____ 1, 2022 (the "Indenture") by and between the Community Facilities District and U.S. Bank Trust Company, National Associat ion, as trustee (the "Trustee"), the Community Facilities District has issued its City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Series 2022 Bonds"), in the aggregate principal amount of$ _____ ; and
WHEREAS, this Disclosure Agreement is being executed and delivered by the Community Facilities District and the Dissemination Agent for the benefit of the Owners and Beneficial Owners of the Series 2022 Bonds and in order to assist the underwriter of the Series 2022 Bonds in complying with Securities and Exchange Commission Rule 15c2-12(b)(5);
NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Disclosure Agreement have the meanings herein specified. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture. "Annual Report" means any Annual Report provided by the Community Facilities District pursuant to, and as described in, Sections 2 and 3 hereof.
"Annua l Report Date" means the date in each year that is the first day of the month following the ninth month after the end of the Community Facilities District's fiscal year, which date, as of the date of this Disclosure Agreement, is Apri l 1.
"Disclosure Representative" means the Director of Administrative Services of the City or his or her designee, or such other officer or employee of the City as the City shall designate in writing to the Dissemination Agent from time to time.
"Dissemination Agent" means Willdan Financial Services, acting in its capacity as Dissemination Agent hereunder, or any successor dissemination agent appointed to act as Dissemination Agent in accordance with this Disclosure Agreement.
"Financial Obligation" means (a) a debt obligation of the Community Facilities District, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the Community Facilities District, or (c) a guarantee of (i) a debt obligation of the Community Facilities District, or (ii) a derivative instrument described in clause (b), 4150-1068-7288.2
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above; provided, however, that the term "Financial Obligation" shall not include "municipal securities" (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a "final official statement" (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule. "Indenture" means the Indenture , dated as of _____ 1, 2022 by and between the Community Facilities District and U.S. Bank Trust Company, National Association, as trustee, as originally executed and as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms.
"Listed Events" means any of the events listed in subsection (a) or subsection (b) of Section 4 hereof.
"MSRB" means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
"Official Statement" means the Official Statement, dated _____ , 2022, relating to the Series 2022 Bonds.
"Participating Underwriter" means the original underwriter of the Series 2022 Bonds required to comply with the Rule in connection with the offering of the Series 2022 Bonds. "Rule" means Rule l 5c2-12(b )( 5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Trustee" means U.S. Bank Trust Company , National Association, as trustee under the Indenture , or any successor thereto as Trustee thereunder, substituted in its place as provided therein .
Section 2. Provision of Annual Reports. (a) The Community Facilities District shall, or shall cause the Dissemination Agent to, provide to the MSRB an Annual Report that is consistent with the requirements of Section 3 hereof, not later than the Annual Report Date, commencing with the report for the 2021-22 Fiscal Year (which is due no later than April 1, 2023). The Annual Report may include by reference other information as provided in Section 3 hereof; provided , however, that the audited financial statements of the Community Facilities District, if any, may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Community Facilities District's fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB. (b) Not later than 15 business days prior to the date specified in subsection (a) of this Section for the providing of the Annual Report to the MSRB, the Community Facilities District shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent) .
If by such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Community Facilities District and the Dissemination Agent to determine if the Community Facilities District is in compliance with the first sentence of this subsection (b). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a) of this Section, the Dissemination Agent shall, in a timely manner, send a notice to the MSRB in substantially the form attached as Exhibit A. 2 4150 -1068-7288 .2
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(d) The Dissemination Agent shall :
(i) provide each Annual Report received by it to the MSRB, as provided herein; and (ii) file a report with the Community Facilities District and (if the Dissemination Agent is not the Trustee) the Trustee certifying that such Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided to the MSRB.
Section 3. Content of Annual Reports. The Community Facilities District 's Annual Report shall contain or incorporate by reference the following:
(a) The Community Facilities District ' s audited financial statements , if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Community Facilities District's audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 2 hereof, the Annual Report shall contain unaudited financial statements, in a format similar to that used for the Community Facilities District's audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available .
(b) The following information with respect to the Series 2022 Bonds:
(i) The principal amount of Series 2022 Bonds Outstanding as of the December 31 next preceding the Annual Report Date;
(ii) The principal amount of Bonds Outstanding as of the December 31 next preceding the Annual Report Date;
(iii) The principal amount of additional bonds payable on a parity with the Bonds, if any, outstanding as of the December 31 next preceding the Annual Report Date; (iv) The balance in the Reserve Fund established under the Indenture , and a statement of the Reserve Requirement, as of the December 31 next preceding the Annual Report Date; (c) The following information with respect to the Community Facilities District:
(i) The total assessed value of all parcels within the Community Facilities District on which the special taxes of the Community Facilities District are levied as shown on the assessment roll of the Riverside County Assessor last equalized prior to the December 31 next preceding the Annual Report Date;
(ii) A five year summary of special tax collections for the Community Facilities District and delinquencies for all parcels within the Community Facilities District ; (iii) An update for the Community Facilities District of the table for the Community Facilities District entitled "Value-to-Lien Stratification" in the Official Statement , including Overlapping Debt if material;
(iv) The status of foreclosure proceedings and a summary of the results of any foreclosure sales with respect to parcels within the Community Facilities District as of the December 3 1 next preceding the Annual Report Date;
3 4150-1068 -7288.2
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(v) The identity of any property owner representing more than 5% of the special tax levy for the Community Facilities District delinquent in payment of such special taxes as of the December 31 next preceding the Annual Report Date; and
(vi) A land ownership summary listing property owners responsible for more than 5% of the annual special tax of the Community Facilities District, as shown on the assessment roll of the Riverside County Assessor last equalized prior to the December 31 next preceding the Annual Report Date and a summary of any pending assessed value appeals to parcels owned by each one.
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 Community Facilities District or related public entities, that have been made available to the public on the MSRB ' s website. The Community Facilities District shall clearly identify each such other document so included by reference .
Section 4. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Community Facilities District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten business days after the occurrence of the event:
(i) Principal and interest payment delinquencies.
(ii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iii) Unscheduled draws on credit enhancements reflecting financial difficulties. (iv) Substitution of credit or liquidity providers, or their failure to perform. (v) Adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB). (vi) Tender offers .
(vii) Defeasances.
(viii) Rating changes.
(ix) Bankruptcy, insolvency, receivership or similar event of the Community Facilities District.
(x) Default , event of acceleration, termination event , modification of terms or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties .
For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver , fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Community Facilities District , or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority , or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Community Facilities District. 4 4150-1068 -7288.2
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(b) Pursuant to the provisions of this Section, the Community Facilities District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2022 Bonds, if material, in a timely manner not later than ten business days after the occurrence of the event:
(i) Unless described in paragraph (v) of subsection (a) of this Section, material notices or determinations by the Internal Revenue Service with respect to the tax status of the Series 2022 Bonds or other material events affecting the tax status of the Series 2022 Bonds. (ii) Modifications to rights of holders of the Series 2022 Bonds. (iii) Optional, unscheduled or contingent Series 2022 Bond calls. (iv) Release, substitution, or sale of property securing repayment of the Series 2022 Bonds.
(v) Non-payment related defaults.
(vi) The consummation of a merger, consolidation, or acqms1tion involving the Community Facilities District or the sale of all or substantially all of the assets of the Community Facilities District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.
( vii) Appointment of a successor or additional trustee or the change of name of a trustee. (viii) Incurrence of a Financial Obligation, or agreement to covenants , events of default, remedies, priority rights or other similar terms of a Financial Obligation, any of which affect holders of the Series 2022 Bonds.
( c) The Dissemination Agent shall, within one business day of obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative and inform such person of the event.
(d) If a Listed Event described in subsection (b) of this Section occurs, the Community Facilities District shall determine if such event would be material under applicable Federal securities law. (e) If a Listed Event described in subsection (a) of this Section occurs, or if the Community Facilities District determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities law, the Community Facilities District shall, or shall cause the Dissemination Agent to, file a notice of the occurrence of such Listed Event with the MSRB, in a timely manner not later than ten business days after the date of such occurrence. (f) Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of subsection (b) of this Section need not be given any earlier than the notice (if any) of the underlying event is given to holders of affected Series 2022 Bonds pursuant to the Indenture.
Section 5. Format for Filings with MSRB . Any report or filing with the MSRB pursuant to this Disclosure Agreement must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB.
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Section 6. Termination of Reporting Obligation . The Community Facilities District's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Series 2022 Bonds. If such termination occurs prior to the final maturity of the Series 2022 Bonds, the Community Facilities District shall give, or cause to be given, notice of such termination in a filing with the MSRB.
Section 7. Dissemination Agent. The Community Facilities District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days ' written notice to the Community Facilities District , such resignation to become effective upon the appointment of a successor Dissemination Agent. The Dissemination Agent shall have no duty to prepare the Annual Report nor shall the Dissemination Agent be responsible for filing any Annual Report not provided to it by the Community Facilities District in a timely manner and in a form suitable for filing.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Community Facilities District and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Community Facilities District ; provided, however, that the Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of subsection (a) of Section 2 hereof, Section 3 hereof or subsection (a) or (b) of Section 4 hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements , change in law, or change in the identity , nature or status ofan obligated person with respect to the Series 2022 Bond s, or the type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would , in the opinion of nationally recognized bond counsel , have complied with the requirements of the Rule at the time of the primary offering of the Series 2022 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 (i) is approved by Owners of the Series 2022 Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of Owners , or (ii) does not, in the opinion ofnationally recognized bond counsel , materially impair the interests of Owners or Beneficial Owners of the Series 2022 Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement , the Community Facilities District shall describe such amendment or waiver in the next Annual Report, and shall include , as applicable , a narrative explanation of the reason for the amendment or waiver and its impact on the type ( or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Community Facilities District. In addition , if the amendment relates to the accounting principles to be followed in preparing financial statements (i) notice of such change shall be given in a filing with the MSRB, and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible , in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles .
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Community Facilities District from disseminating any other information , using the means of 6 4150-1068-7288.2
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dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice required to be filed pursuant to this Disclosure Agreement, in addition to that which is required by this Disclosure Agreement. If the Community Facilities District chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Agreement, the Community Facilities District shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event or any other event required to be reported.
Section 10. Default. In the event of a failure of the Community Facilities District or the Dissemination Agent to comply with any provision of this Disclosure Agreement, as provided in the Indenture, the Trustee may (and, at the written direction of any Participating Underwriter or the Owners of at least 25% of the aggregate principal amount of Outstanding Series 2022 Bonds, shall, upon receipt of indemnification reasonably satisfactory to the Trustee), or any Owner or Beneficial Owner of the Series 2022 Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Community Facilities District, or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture , and the sole remedy under this Disclosure Agreement in the event of any failure of the Community Facilities District or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Agreement. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement to the extent permitted by law, the Community Facilities District agrees to indemnify and save the Dissemination Agent, and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur 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, and which are not due to its negligence or its willful misconduct. The obligations of the Community Facilities District under this Section shall survive resignation or removal of the Dissemination Agent and the termination of this Disclosure Agreement.
Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Community Facilities District, the Dissemination Agent, the Participating Underwriter and the Owners and Beneficial Owners from time to time of the Series 2022 Bonds, and shall create no rights in any other person or entity .
Section 13. Governing Laws. This Disclosure Agreement shall be governed by and construed in accordance with the laws of the State of California.
Section 14. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Disclosure Agreement may be conducted by electronic means. Each party agrees and acknowledges that it is such party' s intent, that if such party signs this Disclosure Agreement using an electronic signature, it is signing, adopting and accepting this Disclosure Agreement and that signing this Disclosure Agreement using an electronic signature is the legal equivalent of having placed the undersigned officer's handwritten signature on this Disclosure Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Disclosure Agreement in a usable format.
Section 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same 7 4150-1068-7288. 2
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instrument. The Dissemination Agent and the Community Facilities District have caused this Disclosure Agreement to be executed, on the date first written above, by their respective officers duly authorized . 4150-1068-7288 .2
CITY OF RANCHO MIRAGE COMMUNITY
FACILITIES DISTRICT NO. 4C (DEL WEBB
PROJECT)
By: _________ _ ___ _ _
Disclosure Representative
WILLDAN FINANCIAL SERVICES, as
Dissemination Agent
By: ______ ________ _
Authorized Representative
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EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Obligor: City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District")
Name oflssue: City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022
Date of Issuance: _______ , 2022
NOTICE IS HEREBY GIVEN that the Community Facilities District has not provided an Annual Report with respect to the above-named Bonds as required by the Disclosure Agreement, dated as of - - -- 1, 2022, between the Community Facilities District and Willdan Financial Services, as Dissemination Agent. [The Community Facilities District has notified the Dissemination Agent that it anticipates that the Annual Report will be filed by ______ .] Dated: ------
cc: Disclosure Representative
4 I 50-1068-7288.2
WILLDAN FINANCIAL SERVICES, as
Dissemination Agent, on behalf of the
Community Facilities District
A-1
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ATTACHMENT 5
PRELIMINARY OFFICIAL STATEMENT
(SEE ATTACHED)
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OH&S 8/22/22 Draft
PRELIMINARY OFFICIAL STATEMENT DATED ___ _ , 2 022
NEW ISSUE - BOOK-ENTRY ONLY NOT RATED
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Community Facilities District, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2022 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Series 2022 Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax.
Bond Counsel observes that, for tax years beginning after December 31, 2022, interest on the Series 2022 Bonds included in aqjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2022 Bonds. See "CONCLUDING INFORMATION - Tax Matters" herein. $6,315,000°
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
Dated: Date of Delivery Due: September 1, as shown on inside cover The City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Series 2022 Bonds"), are being issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended ( constituting Section 53311, et seq., of the California Government Code) (the "Act") and an Indenture (the "Indenture"), dated as of ____ I, 2022, by and between City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District") and U.S. Bank Trust Company, National Association, as trustee (the "Trustee").
Proceeds of the Series 2022 Bonds will be used (i) to pay the costs of the acquisition of certain public facilities (the "Facilities") necessary for the development of the Community Facilities District, (ii) to fund capitalized interest for a portion of the Series 2022 Bonds, (iii) to fund a reserve fund for the Bonds, and (iv) to pay the costs of issuing the Series 2022 Bonds. The Series 2022 Bonds are payable from Net Special Tax Revenues derived from the levy of the Special Taxes (as such capitalized terms are defined in the Indenture) on real property located within the boundaries of the Community Facilities District and are secured by a pledge of all of the Net Special Tax Revenues and moneys deposited in certain funds established under the Indenture. Pursuant to the Indenture, additional bonds ("Additional Bonds") solely for refunding purposes payable from Net Special Tax Revenues on parity with the Series 2022 Bonds may be issued by the District, as described in this Official Statement. The Series 2022 Bonds and any such Additional Bonds are collective ly referred to as the "Bonds." The Series 2022 Bonds will be issued as fully registered bonds in denominations of $5,000 or any integral multiple thereof. The Series 2022 Bonds will be delivered in fully registered form only, and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("OTC"). OTC will act as securities depository of the Series 2022 Bonds.
Ownership interests in the Series 2022 Bonds may be purchased in book-entry form only. Purchasers will not receive bonds or certificates representing their interest in the Series 2022 Bonds purchased. Payments of principal of and interest on the Series 2022 Bonds will be payable by the Trustee to OTC, which is obligated in turn to remit such principal and interest to the OTC Participants for subsequent disbursement to the Beneficial Owners of the Series 2022 Bonds, as more fully described in this Official Statement. See APPENDIX F - "OTC AND THE BOOK ENTRY SYSTEM" herein. Interest on the Series 2022 Bonds is payable March I and September I of each year, commencing March I, 2023.
The Series 2022 Bonds are subject to optional redemption, mandatory redemption from prepayments of Special Tax, and mandatory sinking fund redemption, all as more fully described in this Official Statement. See "THE SERIES 2022 BONDS - Redemption." All obligations of the Community Facilities District under the Series 2022 Bonds are special obligations of the Community Facilit ies District, payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth in the Indenture), the City of Rancho Mirage, the County of Riverside, or the State of California, or any political subdivision thereof, is pledged to the payment of the Series 2022 Bonds.
This cover page contains certain information for quick reference only. It is not a complete summary of the terms of this bond issue.
Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Series 2022 Bonds. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain risk factors that should be considered, in addition to the other matters discussed herein, in considering the investment quality of the Series 2022 Bonds.
The Series 2022 Bonds are being offered when, as and if issued by the Community Facilities District, subject to the approval as to their legality by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the Community Facilities District by the City Attorney and by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, Disclosure Counsel, and for the Underwriter by its counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California. Delivery of the Series 2022 Bonds is expected to occur through the facilities of DTC on or about ----~ 2022. .
Preliminary, subject to change.
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OH&S 8/22/22 Draft
Stifel
Dated ____ ,2022
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MATURITY SCHEDULE•
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
Maturity Date
(September 1)
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
SPECIAL TAX BONDS, SERIES 2022
CUSIP No. Prefix: ___ t
$ ___ Serial Bonds
Principal
Amount
Interest
Rate Price
CUSIPNo.
Suffixt
$ _____ % Term Bonds due September 1, 20_ - Price __ % CUSIP No. _t $ __ % Term Bonds due September 1, 2053 - Price __ % CUSIP No. _t Preliminary, subject to change.
t CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (COS) is managed on behalfofthe American Bankers Association by FactSet Research Systems Inc. Copyright© 2022 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the COS database. CUSIP® numbers are provided for convenience of reference only. The Community Facilities District, the City, the Municipal Advisor and the Underwriter assume no responsibility for the accuracy of such CUSIP® numbers . 4147-9245-2408.3
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4147-9245-2408.3
CITY OF RANCHO MIRAGE
CITY COUNCIL
Charles Townsend, Mayor
Richard W. Kite, Mayor Pro Tem
Steve Downs, Councilmember
Iris Smotrich, Councilmember
Ted Weill , Councilmember
Isaiah Hagerman, City Manager
Kofi Antobam , Director of Administrative Services
Kristie Ramos, City Clerk
Steven B. Quintanilla , City Attorney
PROFESSIONAL SERVICES
Bond Counsel
Orrick, Herrington & Sutcliffe LLP
Los Angeles , California
Disclosure Counsel
Orrick , Herrington & Sutcliffe LLP
Los Angeles , California
Municipal Advisor
Columbia Capital Management , LLC
Carlsbad , California
Appraiser
Kitty Siino & Associates, Inc.
Tustin , California
Special Tax Consultant
Willdan Financial Services
Temecula, California
Trustee
U.S. Bank Trust Company , National Association
Los Angeles, California
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No dealer, broker, salesperson or other person has been authorized by the Community Facilities District or the Underwriter to give any information or to make any representations with respect to the Series 2022 Bonds other than those contained in this Official Statement and, if given or made , such other information or representations must not be relied upon as having been authorized by the Community Facilities District 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 Series 2022 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
This Official Statement is not to be construed as a contract with the purchasers of the Series 2022 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, are intended solely as such and are not to be construed as representations of fact.
The information set forth in this Official Statement has been obtained from the Community Facilities District, the City of Rancho Mirage and other sources which are believed to be reliable , but it is not guaranteed as to accuracy or completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement.
The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors and under 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 in this Official Statement 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 changes in the affairs of the Community Facilities District since the date hereof. All summaries of the Indenture or other documents are made subject to the provisions of such documents, and do not purport to be complete statements of any or all of such provisions.
This Official Statement is submitted in connection with the sale of the Series 2022 Bonds and may not be reproduced or used, in whole or in part, for any other purpose .
In connection with the offering of the Series 2022 Bonds, the Underwriter may effect transactions which stabilize or maintain the market price of the Series 2022 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 Series 2022 Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page hereof. The public offering prices may be changed from time to time by the Underwriter.CUSIP data included in this Official Statement is subject to Copyright 2022, American Bankers Association. CUSIP data included in this Official Statement is provided by the Standard & Poor's CUSIP Service Bureau , a division of The McGraw-Hill Companies, Inc. and is provided for convenience of reference only. None of the Community Facilities District, the Municipal Advisor or the Underwriter take any responsibility for the accuracy of such numbers.
The City maintains a website. However, the information presented on that website is not part of this Official Statement and should not be relied upon in making investment decisions with respect to the Series 2022 Bonds.
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TABLE OF CONTENTS
Page
INTRODUCTION ...................... .................................................................. ................................................................. 1 General ....................................... ......................................................... ........................... ........................................ 1 The City and the Community Facilities District... .................................................................................................. 1 Special Tax Levy ................................................................................................................ ........................ ............ 3 Application of Proceeds of the Series 2022 Bonds ........................................ ........................................................ 3 The Development and the Developer .................................................................................... ................................. 3 Description of the Series 2022 Bonds .................................................................................................................... 5 Sources of Payment for the Series 2022 Bonds ............................................ ...................... .................................... 5 Appraised Value .................................... ........................................................................... ................................ ...... 6 Continuing Disclosure ............................................................................................ ................................................ 6 Risk Factors ............................................................................................................................................... ............. 7 Limited Liability ....................................................................... ............................................................................. 7 Professional s Involved in the Offering ................................................................................ ................................... 7 Additional Information ....................... .................................................................................................................... 8 ESTIMATED SOURCES AND USES OF FUNDS ................................. .................................................................... 8 SCHEDULED ANNUAL DEBT SERVICE FOR THE SERIES 2022 BONDS ......................................................... 9 THE SERIES 2022 BONDS ................................................................................................................. ...................... 10 Authority for Issuance .............................................. ............................................................................................ 10 Purpose of the Series 2022 Bonds .................................... .................................................................................... 10 Description of the Series 2022 Bonds ............................................................................... ....................... ............ 10 Redemption .......................................................................................................................................................... 11 Discontinuation of Book Entry Only System ....................................................................................................... 15 SECURITY FOR THE BONDS ................................................................................................................................. 15 Limited Liability .................................................................................................................................................. 15 Pledge of Net Special Tax Revenues ......................... .......................... ................................................................ 15 Collection of Special Tax Revenues .............. ....................................... .............. ................................................. 16 Flow of Funds ...................................................................................................................................................... 17 Appraised Value ................................... ................................. ............................................................................... 18 Covenant for Superior Court Foreclosure ............................................................................................................ 22 No Teeter Plan ...................................................................................................................................................... 23 Reserve Fund ............. ................................ ........................................................................................................... 23 Additional Bonds for Refunding Only ............... .................................................................................................. 24 Overlapping CFDs ............................................................................................................................................... 24 THE COMMUNITY FACILITIES DISTRICT ..................................................... ............................................. ........ 24 Location and Description ..................................... ................................................................................................ 24 Rate and Method of Apportionment of Special Tax .................. ........................................................................... 28 The Facilities ........................................................................................................................................................ 31 THE DEVELOPM ENT AND THE DEVELOPER .................................................................................................... 32 The Development ....................... .................... ...................................................................................................... 33 The Developer ........................... ..................... ...................................................................................................... 33 - I-
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TABLE OF CONTENTS
( continued)
Page
Land Use Approvals and Environmental Review ................................................................................................ 37 Services ................................................................................................................................................................ 37 Direct and Overlapping Indebtedness ...................................................... ............................................................ 38 SPECIAL RISK FACTORS ........................................................................................................................................ 39 Risks of Real Estate Secured Investments Generally ......................................... ............... .................................. . 39 Limited Obligations ............................................................................................................................................. 39 Concentration of Ownership ................................................................................................................................ 40 Failure to Develop Properties; Government Approvals ....................................................................................... 40 Real Estate Market Fluctuations ........................... ...................................... ..................... ..................................... 41 Competition ............... .................. .................. ................ ....................................................................................... 42 Land Value ................................................................................. .......................................... ................................ 42 Local, State and Federal Land Use Regulations ................................................................................................... 43 Maximum Annual Special Tax Rates ................................................................................................................... 43 Insufficiency of Special Tax Revenues ................................................................................................................ 44 Potential Early Redemption of Bonds from Special Tax Prepayments ................................................................ 45 Special Tax Delinquencies ................................................................................................................................... 45 Cybersecurity .................... ................... ......................................................... ............................ ......................... .. 46 Infectious Disease Outbreak ................................................................................................................................. 46 Bankruptcy and Foreclosure Delays ............................................ ..................................................... .................... 48 Hazardous Materials .................................................................................................................... ......................... 49 Natural Disasters ; Seismic Hazards ..................................................................................................................... 49 Property Interest of Government Agencies; Federal Deposit Insurance Corporation .......................................... 50 Disclosure to Future Property Owners or Lenders ............................................................................................... 51 Non-Cash Payments of Special Taxes .................................................................................................................. 52 Payment of the Special Tax is not a Personal Obligation of the Owners ................ ............................................. 52 Limitations on Remedies ............ ..................... ............. .................................................. ......................... ............. 52 Loss of Tax Exemption ........................................................................................................................................ 52 Proposition 218 ........................................................................ ............................................................................ 53 IRS Audit of Tax-Exempt Issues ............. .................................................................. .................. ......................... 54 No Acceleration Provision ................................................................................................................................... 54 Ballot Initiatives ................................................................................................................................................... 54 Limited Liquidity of the Series 2022 Bonds ................................. ......................................... .............................. 54 Absence of Secondary Market ............................................................................................................................. 54 CONCLUDING INFORMATION .............................................................................................................................. 55 Continuing Disclosure .......................................................................................................................................... 55 Absence of Litigation ................................. ........................................................................................................ .. 56 Tax Matters .......................................................................................................................................................... 56 Legal Matters Incident to the Issuance of the Series 2022 Bonds ........................................................................ 59 Municipal Advisor ...................................................................... ......................................................................... 59 No Rating ............................................... .............................................................................................................. 59 Underwriting ........................................................................................................................................................ 59 Miscellaneous ....................................................................................................................................................... 60 - 11-
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TABLE OF CONTENTS
( continued)
Page
APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX .......................................... A-1 APPENDIX B APPRAISAL REPORT ......................... ..................................................... ............................. ......... 8-1 APPENDIX C CITY OF RANCHO MIRAGE ECONOMIC AND DEMOGRAPHIC INFORMATION ............. C-1 APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE .............................................. D-1 APPENDIX E PROPOSED FORM OF OPINION OF BOND COUNSEL ............................................................ E-1 APPENDIX F DTC AND THE BOOK ENTRY SYSTEM ...................................................................................... F-1 APPENDIX G FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT ........................................ G-1 APPENDIX H FORM OF DEVELOPER CONTINUING .DISCLOSURE AGREEMENT ................................... H-1 - 111-
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[REGIONAL LOCATION MAP]
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OFFICIAL STATEMENT
$6,315,000*
CITY OF RANCHO MIRAGE COMMUNITY FACILITIES DISTRICT NO. 4C (DEL WEBB PROJECT)
SPECIAL TAX BONDS, SERIES 2022
INTRODUCTION
General
This Official Statement, including the cover page, inside cover page and appendices hereto, sets forth certain information concerning the issuance by City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) (the "Community Facilities District"), of its City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project) Special Tax Bonds, Series 2022 (the "Series 2022 Bonds"). The Series 2022 Bonds are being issued under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (constituting Section 53311 et seq. of the California Government Code) (the "Act"), a Resolution adopted by the Rancho Mirage City Council (the "City Council") on September 1, 2022 and an Indenture, dated as of ____ 1, 2022 (the "Indenture"), between the Community Facilities District and U.S. Bank Trust Company, National Association, as trustee (the "Trustee").
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, this entire Official Statement, including the cover page, inside cover page and appendices hereto, and the documents summarized or otherwise described in this Official Statement. A full review should be made of this entire Official Statement and such documents prior to making an investment in the Series 2022 Bonds. The sale and delivery of the Series 2022 Bonds to potential investors is made only by means of the entire Official Statement.
Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given to them in the Indenture. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
The City and the Community Facilities District
The City. The City of Rancho Mirage (the "City") is located in the County of Riverside, California (the "County"), approximately 116 miles southeast of Los Angeles and 12 miles southeast of Palm Springs. It is in the center of the resort area making up the northwestern portion of the Coachella Valley which includes the cities of Palm Springs, Desert Hot Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, Indio, La Quinta, and Coachella along with unincorporated areas of Thousand Palms, Thermal, Sky Valley, Happy Valley, Sun City and Bermuda Dunes. The population of the City has [ declined approximately 2.4% from 20 IO through 2022, attributable to declines reported in January 2021 and 2022).
The City operates under the Council-Manager form of government. The five City Council members, including the Mayor, are elected at large to four-year terms on alternate slates every two years.
The Mayor, appointed every year by the City Council from among its members on a rotational basis, • Preliminary, subject to change.
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serves a one-year term, presides over the meetings and has one vote. The City Council appoints a City Manager, the City Attorney and the City Clerk.
Under the Act, the City Council of the City is authorized to establish and act as the legislative body for community facilities districts. However, the City has no liability in connection with the Community Facilities District or the Series 2022 Bonds. See "SECURITY FOR THE BONDS - Limited Liability" herein . For additional information, see also, APPENDIX C - "CITY OF RANCHO MIRAGE ECONOMIC AND DEMOGRAPHIC INFORMATION."
The Community Facilities District. The Community Facilities District is proposed for 378 single-family detached residences within the City as described herein . The Community Facilities District consists of the third and final phase (sometimes referred to as Phase III herein) of Del Webb at Rancho Mirage, a master planned community proposed for 1,029 detached, age-qualified homes. The first phase, which is not included in the Community Facilities District (sometimes referred to as Phase I herein) is sold out (total of 344 homes), with the exception of the 10 model homes and 24 final build-out lots which have not yet been released. The second phase, which is not included in the Community Facilities District (sometimes referred to as Phase II herein) is sold and closed out (total of 307 homes).
The Community Facilities District consists of approximately 102 gross acres of irregularly shaped land located just south of Interstate- IO at Bob Hope Drive in the City of Rancho Mirage in the area known as the Coachella Valley in eastern Riverside County, California. The Community Facilities District is bounded by the existing Phase I and Phase II to the south beyond which is Dinah Shore Drive and the Westin Mission Hills Golf Resort and Spa; undeveloped desert land to the east (beyond which is Bob Hope Drive); undeveloped desert land to the north (beyond which is Ramon Road and 1-1 O); and, Phase II to the west beyond which is Los Alamos Road and the Mission Hills Golf Course residential community. There is a recently built Agua Caliente Gas Station at the southwest corner of Bob Hope Drive and Ramon Road. The surrounding uses include golf courses, residences, a golf resort and spa, undeveloped desert lands and the Agua Caliente Resort Casino, located one quarter mile northeast of the subject site at the northeast corner of Bob Hope Drive and Ramon Road. The site was generally level at surrounding street grade of Los Alamos Road and Dinah Shore Drive.
The approximately 102 gross acres within the Community Facilities District includes 378 single family detached residential lots, with surrounding infrastructure generally in place. These approximately 102 gross acres represent approximately one-third of an approximately 313 gross acre residential development known as "Del Webb at Rancho Mirage" (the "Development"). The Development is located within the City and proposed to contain 1,029 age qualified single family detached residential units at completion. The Development encompasses Planning Area 8 of the Section 24 Specific Plan (as described in this Official Statement and in the Appraisal as defined herein "Planning Area 8"). In addition to the 378 lots in the Community Facilities District, the Development is comprised of 344 lots in Phase I (an area which constitutes City of Rancho Mirage Community Facilities District No. 4A ("CFO No. 4A")) and 307 lots in Phase II (an area which constitutes City of Rancho Mirage Community Facilities District No. 4B ("CFO No. 4B")). Special taxes derived from property within CFO No. 4A and CFO No. 4B are not available to pay debt service on the Series 2022 Bonds.
This Official Statement describes only the development and status of development of the 3 78 properties in the Community Facilities District. Principal of and interest on the Series 2022 Bonds are payable solely from Special Taxes levied within the Community Facilities District, as further described in this Official Statement. Community f aci/ities districts were also formed for Phase I and Phase II described above. As to each, special tax bonds were issued to fund improvements. CFD No. 4A issued $6,530,000 principal amount of special tax bonds in 2019. CFD No. 4B issued $5,975,000 principal amount of special tax bonds in 2021. While the Developer's Development consists of three community 2 4147-9245 -2408.3
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facilities districts, each community facilities district and related bond issues are only secured by special taxes levied in the respective community facilities district.
District Formation. Under the Act, the City Council is authorized to establish a community facilities district and act as the legislative body for the district. Subject to approval by a two-thirds vote of the qualified electors voting, and compliance with the provisions of the Act, the City Council, acting as the legislative body of a community facilities district, may authorize the issuance of bonds by such district, and the levy and collection of a special tax within such district (and/or one or more improvement areas within such district), to repay such indebtedness.
Pursuant to the Act, on April 1, 2021, the City Council adopted its Resolution No. 2021-14 stating its intention to establish the Community Facilities District. On May 6, 2021, the City Council adopted its Resolution No. 2021-16 establishing the Community Facilities District (the "Resolution of Formation"), its Resolution No. 2021-17 deeming it necessary to incur bonded indebtedness in an aggregate principal amount not to exceed $9,000,000 for the Community Facilities District, and its Resolution No. 2021-18 calling a special election within the Community Facilities District. The qualified electors within the Community Facilities District voted in favor of, among other things, the incurrence of bonded indebtedness in a principal amount not to exceed $9,000,000 to finance certain infrastructure and other improvements (the "Facilities") to be owned by the City or the Coachella Valley Water District, County of Riverside, State of California, a public agency of the State of California ("CVWD"), as authorized to be financed by the Special Tax.
Special Tax Levy
At the time of formation of the Community Facilities District, the qualified electors also voted in favor of the levy of a Special Tax ("Special Tax") on certain property in the Community Facilities District, to pay, among other things, the principal of and interest on bonds (including the Series 2022 Bonds) to be issued to finance a portion of the Facilities, to pay administrative expenses of the Community Facilities District, and to make any replenishments to the Reserve Fund consistent with the Rate and Method of Apportionment of Special Tax (the "Rate and Method"). The Rate and Method also provides for the levy of an additional tax (the "Backup Special Tax") in certain specified circumstances in order to assure maintenance of the required debt service coverage ratio on indebtedness payable from Special Tax. See "SECURITY FOR THE BONDS - Backup Special Tax." See APPENDIX A - "RA TE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." The Special Taxes are levied pursuant to Ordinance No. 1182, adopted by the City Council on May 20, 2021 (the "Ordinance") . See "THE COMMUNITY FACILITIES DISTRICT - Rate and Method of Apportionment of Special Tax" and " The Facilities" herein .
Application of Proceeds of the Series 2022 Bonds
Proceeds of the Series 2022 Bonds will be used (i) to pay the costs of the acquisition of certain public facilities (the "Facilities") necessary for the development of the Community Facilities District, (ii) to fund capitalized interest for a portion of the Series 2022 Bonds through and including [September 1, 2023], (iii) to fund a reserve fund for the Bonds, and (iv) to pay the costs of issuing the Series 2022 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" and "THE COMMUNITY FACILITIES DISTRICT - The Facilities."
The Development and the Developer
As previously mentioned, the Community Facilities District comprises approximately 102 acres or approximately one-third of the larger Development to be completed within Planning Area 8, which is a 3 4147-9245 -2408.3
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portion of the Agua Caliente Band of Cahuilla Indians Section 24 Specific Plan ("Section 24 SP").
Section 24 SP is bounded to the north by Ramon Road beyond which are undeveloped lands and 1-1 O; to the east by Bob Hope Drive beyond which is the Agua Caliente Casino and Resort/Spa and vacant lands; to the south by Dinah Shore Drive beyond which is the Westin Mission Hills Golf Resort, Spa and Villas; and to the west by Los Alamos Road beyond which is the Gary Player Signature Golf Course. As a result of the purchase of Planning Area 8 by the Developer (defined below) , the Agua Caliente Band of Cahuilla Indians no longer has any ownership or jurisdictional or land use approval rights with regard to the Development.
The approximately 102 gross acres within the Community Facilities District has been developed into 378 single family residential detached lots with surrounding infrastructure generally in place . The internal streets are generally physically complete with utilities stubbed to each lot. No commercial development will be included within the boundaries of the Community Facilities District.
The developer/builder is Pulte Home Company, LLC a Michigan limited liability company (the "Developer") , an indirect wholly-owned subsidiary of PulteGroup, Inc., a Michigan corporation (the "Parent Entity"). The Developer serves as the owner and homebuilder of projects within and outside of the Community Facilities District and has financed its land acquisition and various site development and home construction costs related to its projects, including the property in the Community Facilities District, with cash generated from its home building operations and , where necessary , internal corporate financing from its Parent Entity. The Developer expects to finance its remaining site development and home construction costs utilizing these same sources . See "THE COMMUNITY FACILITIES DISTRICT" and "THE DEVELOPMENT AND THE DEVELOPER - The Developer." The Developer is building out three neighborhoods, all for residents age 55+ years, consisting of a total of ten different home plans within the Community Facilities District. Within the Community Facilities District, as of July 1, 2022, which is the effective date of valuation (the "Date of Value") of the Appraisal (see"- Appraised Value," below), of the 378 planned residential lots subject to the Special Tax levy in the Community Facilities District , 186 have completed homes constructed thereon and conveyed to individuals and 192 are Developer owned properties . Of these Developer owned properties, as of the Date of Value, five have homes over 95 percent complete (all in escrow and expected by the Developer to close upon completion), 72 are homes under construction (under 95% complete with 70 in escrow) and 115 are remaining lots in a generally physically finished condition (28 in escrow). For these remaining lots, 8 building permits had been issued as of the Date of Value. In short , as of the Date of Value, of the 378 proposed residential lots within the Community Facilities District , the Developer has sold 289 and closed 186 as of the Date of Value, leaving 192 lots owned by the Developer as of the Date of Value all but 89 of which are in escrow. Between the Date of Value and August 15, 2022, an additional 19 building permits had been issued, and an additional 10 home sales had closed escrow to individual homeowners. In total, 196 residential units have been conveyed to individual homeowners as of August 15, 2022 and 100 of the then-remaining 182 lots owned by the Developer were in escrow to individual homeowners. Homes sold may not result in closed escrows as sales contracts are subject to cancellation.
Within the Community Facilities District, home plans range from approximately 1,438 to approximately 2,726 square feet with base pricing as of July 1, 2022 ranging from approximately $548 ,990 to approximately $842,990. Base prices are subject to change at any time by the Developer and are exclusive of any premiums , options, upgrades , incentives, and any selling concessions or price reductions being offered . Planned amenities for the Development include a clubhouse complex known as "The Outlook," which includes the clubhouse, a putting green, an event lawn, both a covered and an outdoor pool, an in-ground spa, pickleball courts, tennis courts and bocce ball courts. Within the clubhouse is a great room/bar, a ballroom, a billiards room, a golf simulator room, a multi-purpose room, a fitness gym and an aerobics room along with ancillary buildings including a kitchen and bathrooms . 4 4147-924S- 2408.3
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The Series 2022 Bonds are special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues derived from property within the Community Facilities District and amounts in certain funds established under the Indenture, as more fully described in this Official Statement.
The Facilities eligible to be financed with the Series 2022 Bond proceeds consist of street facilities, storm control facilities, dry utility facilities, including but not limited to electrical lines, undergrounding, pole relocation, incidental expenses, and appurtenant facilities, including fees to finance such facilities; and CVWD improvements including sewer improvements, sanitary sewers, incidental expenses, and appurtenant facilities, fees to finance such facilities and domestic water facilities, and connection and capacity fees, including but not limited to sewer treatments and connection fees, water supply fees, water meter fees, water connection fees, and any other capital facilities fees which are part of these fee programs and capital improvement programs, and other public improvements located within, or designed to provide services to, the Community Facilities District. Facilities also include certain development and other fees charged to the Developer by the City and other public agencies, and for which the Developer may be reimbursed including City public benefit fees, including but not limited to traffic signals fees, bus shelter fees, City Hall / Corporate Yard fees, fire fees, park fees, and other required capital facilities' fees.
Pursuant to the Acquisition and Funding Agreement dated as of April 1, 2018 (the "Acquisition and Funding Agreement"), by and between the City and the Developer, the Facilities specified therein are to be constructed by the Developer, and are to be acquired by the Community Facilities District when such Facilities are operational, such Facilities as described in this Official Statement to be paid from the proceeds of the Series 2022 Bonds. The Developer becomes eligible for reimbursement of the costs related to the Facilities when they are accepted . See "THE COMMUNITY FACILITIES DISTRICT - The Facilities ."
Description of the Series 2022 Bonds
The Series 2022 Bonds will be issued and delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to purchasers of the Series 2022 Bonds (the "Beneficial Owners") in denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described in this Official Statement. See "THE SERIES 2022 BONDS - Description of the Series 2022 Bonds" and APPENDIX F - "DTC AND THE BOOK ENTRY SYSTEM ." So long as the Series 2022 Bonds are in book-entry-only form, all references in the Official Statement to the owners or holders of the Series 2022 Bonds shall mean DTC and not the Beneficial Owners of the Series 2022 Bonds.
The Series 2022 Bonds are subject to optional redemption and mandatory redemption as described in this Official Statement. For more complete descriptions of the Series 2022 Bonds and the Indenture pursuant to which they are being issued and delivered, see "THE SERIES 2022 BONDS" and APPENDIX D- "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Sources of Payment for the Series 2022 Bonds
Under the Indenture, the Series 2022 Bonds are payable from, and secured by a pledge of and lien on, the Net Special Tax Revenues and amounts held in the Special Tax Fund, the Bond Fund, the Redemption Fund, and the Reserve Fund of the Indenture. The term "Net Special Tax Revenues" means Special Tax Revenues, less amounts required to pay Priority Administrative Expenses. "Special Taxes" consist of any special tax levied within the Community Facilities District pursuant to the Act and the Rate 5 4147-9245-2408.3
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and Method. The term "Special Tax Revenues " means the proceeds of the Special Taxes received by or on behalf of the Community Facilities District , including any prepayments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, which shall be limited to the amount of said lien and interest and penalties thereon. Under the Indenture, the Community Facilities District has agreed to repay the Series 2022 Bonds from the Net Special Tax Revenues collected and received by the Community Facilities District, and from amounts on deposit in certain funds established under the Indenture . See "SECURITY FOR THE BONDS" and APPENDIX D- "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Pursuant to the Indenture , additional bonds ("Additional Bonds") solely for refunding purposes payable from Net Special Tax Revenues on parity with the Series 2022 Bonds may be issued by the District, as described in this Official Statement. The Series 2022 Bonds and any such Additional Bonds are collectively referred to as the "Bonds." See "SECURITY FOR THE BONDS - Additional Bonds for Refunding Only" and APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
In the event that the Special Taxes are not paid when due, the only other source of funds to repay the Series 2022 Bonds will be the amounts held by the Trustee in certain of the funds established under the Indenture, including amounts held in the Reserve Fund, and the proceeds, if any, from foreclosure sales of land with delinquent Special Taxes. A portion of the proceeds of the Series 2022 Bonds equal to the initial Reserve Requirement will be deposited in the Reserve Fund, which may be drawn upon as needed to pay the scheduled debt service on the Bonds, in accordance with the provisions of the Indenture. Amounts in the Reserve Fund may also be used to redeem Bonds in conjunction with the prepayments of Special Tax, and to pay rebate payments to the federal government. See "SECURITY FOR THE BONDS - Reserve Fund" and APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Resolution No. 2021-16 of the City Council provides that Bonds payable from Special Taxes may be issued in an amount not to exceed $9,000 ,000.
Appraised Value
In connection with the offering and sale of the Series 2022 Bonds, an Appraisal Report (the "Appraisal") was prepared by Kitty Siino & Associates, Inc. (the "Appraiser") , dated August 8, 2022, with a date of value of July 1, 2022 . According to the Appraisal , as of the Date of Value, the aggregate value of the residential property subject to the Special Tax in the Community Facilities District was $146,810,527 , of which $31,526,032 represented land owned by the Developer , $2,699,903 represented completed homes owned by the Developer and $112,584,592 represented property owned by individual homeowners. The Appraisal contain various assumptions and conditions and should be read in its entirety by those interested in an investment in the Series 2022 Bonds. A complete copy of the Appraisal is attached hereto as APPENDIX B - "APPRAISAL REPORT." See "SECURITY FOR THE BONDS - Appraised Value" for various tables indicating value-to-lien ratios by development status and product type of the homes permitted and expected to be constructed in the Community Facilities District.
Continuing Disclosure
The Community Facilities District , pursuant to a Continuing Disclosure Agreement (the "Community Facilities District Continuing Disclosure Agreement"), and the Developer, pursuant to a Continuing Disclosure Agreement (the "Developer Continuing Disclosure Agreement") , have each agreed to provide , or cause to be provided, to the Electronic Municipal Market Access ("EMMA") maintained by the Municipal Securities Rulemaking Board, certain annual financial and other information and notice of 6 4147-9245-2408.3
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certain enumerated events. The Developer has also agreed to provide additional semiannual financial and other information. The Community Facilities District Continuing Disclosure Agreement is being executed by the Community Facilities District in order to assist the Underwriter in complying with Rule l 5c2- l 2(b )(5) of the Securities and Exchange Commission, as amended (the "Rule"). The Developer Continuing Disclosure Agreement shall terminate at such time as the Developer and its Affiliates (as defined in the Continuing Disclosure Agreement), in the aggregate, own less than 76 or 20% of the residential lots within the Community Facilities District. In addition, the Developer Continuing Disclosure Agreement may terminate in certain other circumstances, as described in the Developer Continuing Disclosure Agreement. See "CONCLUDING INFORMATION - Continuing Disclosure," APPENDIX G - "FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT" and APPENDIX H - "FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT." Risk Factors
The purchase of the Series 2022 Bonds involves certain risks which should be considered by prospective purchasers. See "SPECIAL RISK FACTORS" herein for a description of certain such risks .
Limited Liability
Although the unpaid Special Taxes constitute liens on parcels within the Community Facilities District, they do not constitute a personal indebtedness of the Developer or any other property owners or homeowners . There is no assurance that the Developer or any other landowner will be financially able to pay the Special Taxes levied on their property in the Community Facilities District, or that they will pay the Special Taxes even though financially able to do so.
All obligations of the Community Facilities District under the Series 2022 Bonds are special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth in the Indenture), the City, the County, or the State of California, or any political subdivision thereof, is pledged to the payment of the Series 2022 Bonds.
Professionals Involved in the Offering
Orrick, Herrington & Sutcliffe LLP, Los Angeles, California , is acting as Bond Counsel to the Community Facilities District. Certain legal matters will be passed upon for the Community Facilities District by the City Attorney, and by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California , acting as Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth , a Professional Corporation, Newport Beach, California, Underwriter's Counsel.
Columbia Capital Management , LLC, Carlsbad, California, will serve as the Community Facilities District's Municipal Advisor. Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter's Counsel is contingent upon the sale and issuance of the Series 2022 Bonds.
The City, on behalf of the Community Facilities District , engaged Kitty Siino & Associates, Inc., Tustin , California, to complete the Appraisal Report, dated August 8, 2022, attached hereto as Appendix B. The firm of Willdan Financial Services, Temecula, California, is the Special Tax Consultant to the Community Facilities District for the financing. Willdan Financial Services will also serve as the initial dissemination agent under the Continuing Disclosure Agreements. 7 4147-9 245-2408.3
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Additional Information
Brief descriptions of the Series 2022 Bonds, the security for the Series 2022 Bonds, certain special risk factors, the Community Facilities District, the City, the Developer, the development within the Community Facilities District and other information are included in this Official Statement, together with summaries of certain provisions of the Series 2022 Bonds, the Indenture and other documents. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions herein of the Series 2022 Bonds, resolutions and other documents are qualified in their entirety by reference to the complete text thereof and the information with respect thereto included in the Indenture. All such descriptions are further qualified in their entirety by reference to laws and principles of equity relating to or affecting generally the enforcement of creditors' rights.
Unless the context clearly requires otherwise, capitalized terms used but not defined in this Official Statement have the meanings given to them in the Indenture, some of which are set forth in Appendix D hereto.
ESTIMATED SOURCES AND USES OF FUNDS
The sources and uses of funds in connection with the Series 2022 Bonds are estimated to be applied as follows:
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Source of Funds
Principal Amount of Series 2022 Bonds
Plus: Net Original Issue Premium
Less: Underwriter's Discount
Total Sources
Application of Funds
(I)
(2)
(3)
(4)
Deposit to Improvement Fund<1l
Deposit to Reserve Fund<2l
Deposit to Capitalized Interest Account<3l
Deposit to Costs of Issuance Fund<4l
Total Uses
To be used, together with other Special Tax Revenues availab le to the Community Facilities District, to pay costs of the Facilities . See "THE COMMUNITY FACILITIES DISTRICT - The Facilities." An amount equal to the initial Reserve Requirement. See "SECURITY FOR THE BONDS - Reserve Fund."
To be used to pay a portion of the interest due on the Series 2022 Bonds through and including [September I, 2023).
Includes fees and expenses of Bond Counsel, Disclosure Counse l, the Municipal Advisor , the Trustee, the Appraiser , the Special Tax Consultant , the City, printing expenses and other costs related to the issuance of the Series 2022 Bonds .
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SCHEDULED ANNUAL DEBT SERVICE FOR THE SERIES 2022 BONDS The table below sets forth the scheduled annual debt service payments on the Series 2022 Bonds, assuming no optional redemption of the Series 2022 Bonds or mandatory redemption of the Series 2022 Bonds from prepayments of Special Taxes.
Year Ending
September 1
4147 -9245-2408.3
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
Total
Principal Interest Total
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THE SERIES 2022 BONDS
The following is a summary of certain provisions of the Series 2022 Bonds. Reference is made to the Series 2022 Bonds for the complete text thereof and to the Indenture for a more detailed description of such provisions. The discussion herein is qualified by such reference. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Authority for Issuance
The Series 2022 Bonds are being issued pursuant to the Act and the Indenture. The Act was adopted by the State Legislature to provide an alternate method of financing certain public capital facilities and services . Once duly established by a local governmental agency, a community facilities district is itself a legally constituted governmental entity, with the governing board or legislative body of the local agency that established it constituting the legislative body of the community facilities district.
Subject to approval by a two-thirds vote of a community facilities district's qualified electors and compliance with the provisions of the Act, the legislative body may authorize the issuance of bonds for the community facilities district in order to finance certain public improvements, and the legislative body may levy and collect a special tax within such community facilities district (and/or one or more improvement areas within such district), to repay such indebtedness. The total aggregate principal amount of the 842,990s authorized to be issued and payable from Net Special Tax Revenues is $9,000,000. See "SECURITY FOR THE BONDS" and APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Purpose of the Series 2022 Bonds
Proceeds of the Series 2022 Bonds will be used (i) to pay the costs of the acquisition of certain public facilities (the "Facilities") necessary for the development of the Community Facilities District, (ii) to fund capitalized interest for a portion of the Series 2022 Bonds through and including [September 1, 2023], (iii) to fund a reserve fund for the Bonds, and (iv) to pay the costs of issuing the Series 2022 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" and "THE COMMUNITY FACILITIES DISTRICT-The Facilities."
Description of the Series 2022 Bonds
The Series 2022 Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof ("Authorized Denominations") and will be dated as of their date of issuance. The Series 2022 Bonds are scheduled to mature on September 1 in the years and in the principal amounts and will bear interest at the rates shown on the inside cover page of this Official Statement. Interest on the Series 2022 Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day months and will be payable semiannually on March 1 and September I of each year, commencing March 1, 2023.
Interest on the Series 2022 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2022 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date, (ii) a Series 2022 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Series 2022 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for. 4147-9245-2408 .3
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Interest shall be paid in lawful money of the United States of America on each Interest Payment Date. Interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, or by wire transfer made on such Interest Payment Date upon the written instructions of any Owner of $1,000,000 or more Series 2022 Bonds to an account within the United States of America, on each Interest Payment Date to the Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Series 2022 Bond which is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Series 2022 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. The principal of the Series 2022 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee .
All obligations of the Community Facilities District under the Series 2022 Bonds are special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth in the Indenture), the City, the County, or the State of California, or any political subdivision thereof, is pledged to the payment of the Series 2022 Bonds.
Redemption
Optional Redemption: The Series 2022 Bonds maturing on and after September 1, 2030 are subject to redemption in Authorized Denominations, in whole or in part, on any Interest Payment Date on or after September 1, 2029, at the following respective Redemption Prices ( expressed as percentages of the principal amount of the Series 2022 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
September 1, 2029 and March 1, 2030
September 1, 2030 and March 1, 2031
September 1, 2031 and March 1, 2032
September 1, 2032 and thereafter
Redemption Price
103%
102
101
100
Mandatory Redemption from Special Tax Prepayments.• The Series 2022 Bonds are subject to mandatory redemption, in whole or in part in Authorized Denominations, on any Interest Payment Date, from and to the extent of any prepayment of Special Taxes, at the following respective Redemption Prices (expressed as percentages of the principal amount of the Series 2022 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
[March 1, 2023] through and including March 1, 2030
September 1, 2030 and March 1, 2031
September 1, 2031 and March 1, 2032
September 1, 2032 and thereafter
• Preliminary , subject to change.
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Redemption Price
103%
102
101
100
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The redemption of Series 2022 Bonds purchased at a premium greater than the Redemption Price could reduce the otherwise expected yield on the Series 2022 Bonds. See "SPECIAL RISK FACTORS - Potential Early Redemption of Bonds from Special Tax Prepayments." Mandatory Sinking Fund Redemption. The Series 2022 Bonds maturing September 1, 20 _ shall be subject to mandatory sinking fund redemption, in part, on September I in each year, commencing September 1, 20 _ , at a Redemption Price equal to the principal amount of the Series 2022 Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(Septem her 1)
(Maturity)
Principal Amount
to be
Redeemed
$
If some but not all of the Series 2022 Bonds maturing on September 1, 20 _ are redeemed pursuant to the provisions described in "- Optional Redemption," above, the principal amount of Series 2022 Bonds maturing on September 1, 20 _ to be redeemed pursuant mandatory sinking fund redemption on any subsequent September 1 shall be reduced , by $5,000 or an integral multiple thereof, as designated by the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee; provided , however, that the aggregate amount of such reductions shall not exceed the aggregate amount of Series 2022 Bonds maturing on September 1, 20 _ redeemed pursuant to the provisions described in "- Optional Redemption ," above. If some but not all of the Series 2022 Bonds maturing on September 1, 20_ are redeemed pursuant to the provisions described in "Mandatory Redemption from Special Tax Prepayments" above, the principal amount of Series 2022 Bonds maturing on September 1, 20 _ to be redeemed pursuant to mandatory sinking fund redemption on any subsequent September 1 shall be reduced by the aggregate principal amount of the Series 2022 Bonds maturing on September 1, 20_ so redeemed pursuant to the provisions described in"- Mandatory Redemption from Special Tax Prepayments" above, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Community Facilities District.
The Series 2022 Bonds maturing September 1, 20 _ shall be subject to mandatory sinking fund redemption, in part, on September 1 in each year, commencing September 1, 20_, at a Redemption Price equal to the principal amount of the Series 2022 Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption, in the aggregate respective principal amounts in the respective years as follows:
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Sinking Fund
Redemption Date
(September 1)
_ (Maturity)
Principal Amount
to be
Redeemed
If some but not all of the Series 2022 Bonds maturing on September I, 20 _ are redeemed pursuant to the provisions described in "- Optional Redemption," above , the principal amount of Series 2022 Bonds maturing on September I, 20 _ to be redeemed pursuant mandatory sinking fund redemption on any subsequent September I shall be reduced, by $5,000 or an integral multiple thereof, as designated by the Community Facilities District in a Written Certificate of the Community Facilities District filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of Series 2022 Bonds maturing on September I, 20 _ redeemed pursuant to the provisions described in "- Optional Redemption," above. If some but not all of the Series 2022 Bonds maturing on September I, 20 _ are redeemed pursuant to the provisions described in "-Mandatory Redemption from Special Tax Prepayments" above, the principal amount of Series 2022 Bonds maturing on September I, 20 _ to be redeemed pursuant to mandatory sinking fund redemption on any subsequent September I shall be reduced by the aggregate principal amount of the Series 2022 Bonds maturing on September I, 20_ so redeemed pursuant to the provisions described in"- Mandatory Redemption from Special Tax Prepayments" above, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis in amounts of $5,000 or integral multiples thereof, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Community Facilities District.
Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee will select the Series 2022 Bonds to be redeemed from all Bonds not previously called for redemption: (a) with respect to any optional redemption of Series 2022 Bonds, among maturities of Series 2022 Bonds as directed by the Community Facilities District; (b) with respect to any redemption from prepayment of Special Taxes and the corresponding provision of any Supplemental Indenture pursuant to which Additional Bonds are issued, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable; and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds which may be separately redeemed.
Notice of Redemption. So long as OTC is acting as securities depository for Series 2022 Bonds, notice of redemption, containing the information required by the Indenture, will be mailed by first-class mail, postage prepaid, by the Trustee to OTC (not to the Beneficial Owners of any Series 2022 Bonds designated for redemption) at least 30 but not more than 60 days prior to the date fixed for redemption.
The Indenture provides that the Trustee will mail (by first class mail) notice of any redemption to the respective Owners of any Series 2022 Bonds designated for redemption at their respective addresses appearing on the Registration Books, at least 30 but not more than 60 days prior to the date fixed for redemption . Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, if any, the Series 2022 Bond numbers and the maturity or maturities of the Series 2022 Bonds to be redeemed ( except in the event of redemption of all of the Series 2022 Bonds of such maturity or maturities in whole), and shall require that such Series 13 4147-9245-2408.3
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2022 Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Series 2022 Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Series 2022 Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of any optional redemption of Series 2022 Bonds, unless at the time such notice is given the Series 2022 Bonds to be redeemed shall be deemed to have been paid within the meaning of the Indenture , such notice shall state that such redemption is conditional upon receipt by the Trustee , on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Trustee , are sufficient to pay the Redemption Price of, and accrued interest on, the Series 2022 Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Community Facilities District shall not be required to redeem such Series 2022 Bonds. In the event a notice of redemption of Series 2022 Bonds contains such a condition and such moneys are not so received, the redemption of Series 2022 Bonds as described in the conditional notice of redemption shall not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Series 2022 Bonds pursuant to such notice of redemption.
Partial Redemption of Series 2022 Bonds. Upon surrender of any Series 2022 Bond redeemed in part only, the Community Facilities District will execute and the Trustee will authenticate and deliver to the Owner thereof a new Bond or Bonds representing the unpaid principal amount of the Series 2022 Bond surrendered.
Effect of Notice of Redemption. Notice having been mailed as described under the caption " Notice of Redemption, " and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside in the Redemption Fund, the Series 2022 Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date.
If, on the date fixed for redemption, moneys for the Redemption Price of all the Series 2022 Bonds to be redeemed , together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Series 2022 Bonds shall cease to accrue and become payable . All moneys held by or on behalf of the Trustee for the redemption of Series 2022 Bonds shall be held in trust for the account of the Owners of the Series 2022 Bonds so to be redeemed without liability to such Owners for interest thereon.
All Series 2022 Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed.
Purchase In Lieu of Redemption. In lieu of an optional, extraordinary mandatory or mandatory sinking fund redemption , the Community Facilities District may elect to purchase Series 2022 Bonds at public or private sale at such prices as the Community Facilities District in its discretion may determine ; provided, that, unless otherwise authorized by law, the purchase price (including brokerage and other charges) thereof will not exceed the principal amount thereof , plus accrued interest accrued to the purchase date and any premium which would otherwise be due if such Series 2022 Bonds were to be redeemed in accordance with the Indenture.
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Discontinuation of Book Entry Only System
Initially, The Depository Trust Company (OTC) will act as securities depository for the Series 2022 Bonds. See APPENDIX F - "OTC AND THE BOOK ENTRY SYSTEM." In the event (i) OTC, including any successor as securities depository for the Series 2022 Bonds, determines not to continue to act as securities depository for the Series 2022 Bonds, or (ii) the Community Facilities District determines that the incumbent securities depository shall no longer so act as securities depository for the Series 2022 Bonds, and delivers a written certificate to the Trustee to that effect, then the Community Facilities District will discontinue the bookcentry system with the incumbent securities depository for the Series 2022 Bonds. If the Community Facilities District determines to replace the incumbent securities depository for the Series 2022 Bonds with another qualified securities depository, the Community Facilities District shall prepare or direct the preparation of a new single, separate, fully registered Series 2022 Bond for the aggregate outstanding principal amount of Series 2022 Bonds of each maturity, registered in the name of such successor or substitute qualified securities depository, or its nominee, or make such other arrangement acceptable to the Community Facilities District, the Trustee and the successor securities depository for the Series 2022 Bonds as are not inconsistent with the terms of the Indenture. If the Community Facilities District fails to identify another qualified successor securities depository for the Series 2022 Bonds to replace the incumbent securities depository, then the Series 2022 Bonds shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository for the Series 2022 Bonds, or its nominee, shall designate. In such event the Community Facilities District shall execute, and deliver to the Trustee, a sufficient quantity of the Series 2022 Bonds to carry out the transfers and exchanges provided for in the Indenture . All such the Series 2022 Bonds shall be in fully registered form in denominations authorized by the Indenture.
SECURITY FOR THE BONDS
Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, the Community Facilities District pledges under the Indenture all of the Net Special Tax Revenues and any other amounts (including proceeds of the sale of the Series 2022 Bonds) held in the Special Tax Fund, the Bond Fund, the Redemption Fund, and the Reserve Fund to secure the payment of the principal of, premium , if any, and interest on the Series 2022 Bonds in accordance with their terms, the provisions of the Indenture and the Act. Said pledge shall constitute a first lien on such assets. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" for a description of the Special Tax Fund and the Bond Fund.
Limited Liability
All obligations of the Community Facilities District under the Series 2022 Bonds are special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues and the other assets pledged therefor under the Indenture. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth in the Indenture), the City, the County, or the State of California, or any political subdivision thereof, is pledged to the payment of the Series 2022 Bonds.
Pledge of Net Special Tax Revenues
In accordance with provisions of the Act, the qualified electors within the Community Facilities District voted to approve a bonded indebtedness in an amount not to exceed $9,000,000 to finance the Facilities, said indebtedness to be secured by a pledge of the Net Special Tax Revenues. At the same time, the City Council approved the levy of the Special Taxes as provided in the Rate and Method to pay 15 4147-9245 -2408.3
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the principal and interest on the Bonds, to pay the administrative expenses of the Community Facilities District, and to replenish the Reserve Fund to the Reserve Requirement. The Special Tax Revenues will be transferred by the Community Facilities District to the Trustee for deposit by the Trustee in the Special Tax Fund established under the Indenture as soon as practicable after they have been received by the Community Facilities District, except for Special Tax prepayments, which amounts will be deposited into the Redemption Fund. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
Net Special Tax Revenues are Special Tax Revenues less amounts required to pay Priority Administrative Expenses. "Priority Administrative Expenses" are defined as a portion of the specified annual actual or reasonably estimated costs directly related to the administration of the Community Facilities District equal to $15,000 in annual Administrative Expenses. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ."
The Special Tax is levied in each Fiscal Year on each Assessor 's Parcel of Taxable Property within the Community Facilities District to fund the Special Tax Requirement for Facilities (as such terms are defined in the Rate and Method). The Special Tax constitutes the principal source of payment for the Series 2022 Bonds. The Rate and Method provides for the levy and collection of a Backup Special Tax under specified circumstances. The Backup Special Tax will be levied only if and to the extent required in order to assure the Community Facilities District's ability to collect the Maximum Special Tax (as defined in the Rate and Method). See "THE COMMUNITY FACILITIES DISTRICT - Rate and Method of Apportionment of Special Taxes."
Pursuant to the Indenture , additional bonds ("Additional Bonds") solely for refunding purposes payable from Net Special Tax Revenues on parity with the Series 2022 Bonds may be issued by the District, as described in this Official Statement. The Series 2022 Bonds and any such Additional Bonds are collectively referred to as the "Bonds." See "SECURITY FOR THE BONDS - Additional Bonds for Refunding Only" and APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
See "THE COMMUNITY FACILITIES DISTRICT - Rate and Method of Apportionment of Special Tax - Estimated Debt Service Coverage. "
Collection of Special Tax Revenues
Pursuant to the Indenture, the Community Facilities District is to comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues , including the enforcement of delinquent Special Taxes.
Prior to August 1 of each year, the Community Facilities District will ascertain from the County Assessor the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year. The Community Facilities District will effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance by each August 10 that the Series 2022 Bonds are Outstanding , or otherwise such that the computation of the levy is complete before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the Community Facilities District for inclusion on the next real property tax roll.
The Community Facilities District shall fix and levy the amount of Special Taxes within the Community Facilities District in accordance with the Rate and Method and, subject to the limitations in the Rate and Method as to the maximum Special Tax that may be levied, in an amount sufficient to yield the amount required for the payment of principal of and interest on any Series 2022 Bonds becoming due 16 4147-9245-2408 .3
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and payable during the Bond Year commencing in such Fiscal Year, the amount required for any necessary replenishment of the Reserve Fund and the amount estimated to be sufficient to pay the Administrative Expenses during such year , taking into account the balances in the funds and accounts established under the Indenture.
The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installments 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.
Although the Special Tax will constitute a lien on property subject to taxation within the Community Facilities District , it does not constitute a personal indebtedness of the owner of such property. There is no assurance that the Developer or any other landowner will be financially able to pay their annual Special Tax or that they will pay such tax even if financially able to do so. The risk of the Developer, or subsequent landowners or homeowners, not paying the annual Special Tax is more fully described in "SPECIAL RISK FACTORS - Insufficiency of Special Tax Revenues. " In accordance with the Act and the Rate and Method , under no circumstances will the Special Tax levied in any Fiscal Year against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of a delinquency or default in the payment of the Special Tax applicable to any other Assessor's Parcel within the Community Facilities District by more than 10% above what would have been levied in the absence of such delinquencies or defaults.
Flow of Funds
As soon as practicable after the receipt by the Community Facilities District of any Special Tax Revenues, but in any event no later than the date ten Business Days prior to the Interest Payment Date after such receipt, · the Community Facilities District will transfer such Special Tax Revenues to the Trustee for deposit in the Special Tax Fund; provided, that for any prepayments of Special Taxes under the Rate and Method , any portion of any such prepayment or payment that is to be applied to the payment of the Redemption Price of Bonds in accordance with the provisions of the Indenture will be deposited in the Redemption Fund.
Upon receipt of a Written Request of the Community Facilities District , the Trustee will withdraw from the Special Tax Fund and transfer to the Administrative Expense Fund the Priority Administrative Expenses specified in such Written Request of the Community Facilities District.
On the Business Day immediately preceding each Interest Payment Date, after having made any reque sted transfer of the Priority Administrative Expenses to the Administrative Expense Fund, the Trustee will withdraw from the Special Tax Fund Net Special Tax Revenues in an amount sufficient to enable the Trustee to make the following transfers in the following order of priority:
(i) Interest Account of the Bond Fund. To the Interest Account , the amount , if any, necessary to cause the amount on deposit in the Interest Account to be equal to the interest due on the Bonds on such Interest Payment Date;
(ii) Principal Account of the Bond Fund. To the Principal Account , the amount , if any, necessary to cause the amount on deposit in the Principal Account to be equal to the principal , if any, due on the Bonds on such Interest Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds; and 17 414 7-924 5-2408.3
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(iii) Reserve Fund. To the Reserve Fund, the amount , if any, necessary to cause the amount on deposit in the Reserve Fund to be equal to the Reserve Requirement.
On or after each September 2, after having made the transfers described in paragraphs (i)-(iii) above, the Trustee shall withdraw from the Special Tax Fund any Net Special Tax Revenues therein as of such September 2 to make the following transfers in the following order of priority:
(i) Administrative Expense Fund. To the Administrative Expense Fund, if upon receipt of a Written Request of the Community Facilities District for an amount greater than the Priority Administrative Expenses , the amount necessary to be transferred thereto in order to have sufficient amounts available therein to pay Administrative Expenses; and (ii) Surplus Fund. To the Surplus Fund.
Amounts in the Surplus Fund may be transferred by the Trustee pursuant to a written request of the Community Facilities District to the Redemption Fund to redeem Bonds or to the Community Facilities District to be applied to the payment of costs of Facilities authorized to be financed by the Community Facilities District pursuant to the Resolution of Formation .
Appraised Value
The Community Facilities District has been furnished with the Appraisal prepared by the Appraiser dated August 8, 2022 . The Appraisal summarizes the Appraiser 's conclusion that the value, as defined therein, of the property within the Community Facilities District that is subject to the levy of the Special Tax, as of the Date of Value, was $146,810,527, detailed as shown below.
Developer Owned (Five Houses)
Developer Owned (187 Lots)
Individual Owners (186 Houses)
Aggregate Total for the Community Facilities District
$ 2,699,903
31,526,032
112,584,592
$146,810,527
The Community Facilities District contains 378 single family detached lots, of which 192 were owned by the Developer as of the Date of Value and 186 which have completed construction and have been conveyed to individuals , each as valued above. Of those owned by the Developer as of the Date of Value , development was comprised of 115 lots (28 in escrow) , 72 lots under construction (70 in escrow) and five production homes over 95 percent complete (all in escrow). Homes sold may not result in closed escrows as sales contracts are subject to cancellation.
As more particularly described in the Appraisal , the Developer has certain remammg land development hard costs to complete and related fees as of the Date of Value. Had these items been completed and the related fees paid by the Developer as of the Date of Value, the values above attributed to the Developer's current ownership would have been greater. The estimated remaining site costs and fees have been considered in the Developer's appraised values above and are detailed in the Appraisal and summarized in the paragraphs that follow. The values are stated subject to the Assumptions and Limiting Conditions of the Appraisal, the Appraiser's Certification and as of July 1, 2022. See APPENDIX B - "APPRAISAL REPORT." The valuation in the Appraisal is based primarily on a sales comparison methodology and a discounted cash flow analysis.
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The Appraiser's estimate of the appraised value of the property in the Community Facilities District on which the Special Tax is levied as reflected in the Appraisal is approximately 24 • times the initial principal amount of the Series 2022 Bonds. Property in the Community Facilities District is also subject to certain overlapping indebtedness . See "SPECIAL RISK FACTORS - Direct and Overlapping Indebtedness."
Based on the above information, the remaining costs of land development associated with the 378 properties in the Community Facilities District, which are included in the concluded value, are shown below.
• Net of CFO reimbursed fees.
Description
Hard Costs
Soft Costs (Fees)*
Total Remaining Costs
Remaining
$3,679,843
419,954
$4,099,797
As of the Date of Value, 186 homes have closed to individuals. In determining a value for Developer owned property, the Appraiser spread the remaining land development hard costs of $3,679,843 among the 192 lots owned by the Developer (115 finished lots, 72 lots under construction and five production homes over 95 percent complete). This results in an estimated $19,165.85 in remaining hard costs per lot ($3,679,843 divided by 192 lots) and $419,954 in remaining fees associated with the remaining lots. A complete copy of the Appraisal is attached hereto as APPENDIX B - "APPRAISAL REPORT."
The Community Facilities District makes no representation or warranty as to the accuracy or completeness of the Appraisal or the absorption discussion as part of the Appraisal. A complete copy of the Appraisal is included as Appendix B hereto.
Set forth below are four tables that show the expected ratio of the value of taxable parcels to the allocable portion of bonded indebtedness (referred to as "lien" in the tables) of the Taxable Property in the Community Facilities District, based on the respective appraised values of the parcels of Taxable Property reflected in the Appraisal, the percentage of the Fiscal Year 2023-24 Special Tax levy on those parcels, the initial principal amount of the Series 2022 Bonds and the development status of the respective parcels as of the Date of Value. Table 1 below sets forth value-to-lien ratios based on the classification of the Taxable Property in the Community Facilities District under the Rate and Method. Table 2 sets forth value-to-lien ratios by ownership status. Table 3 sets forth value-to-lien ratios for each of the ten types of production homes. Table 4 sets forth the stratification of the value-to-lien ratios for all of the Taxable Property in the Community Facilities District.
• Preliminary, subject to change .
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(I)
(2)
(3)
(4)
(5)
(6)
Table 1
Community Facilities District No. 4C of the City of Rancho Mirage (Del Webb Project)
Value-to-Lien by Development Status as of July 1, 2022
Estimated
Appraised Assigned Principal of the
Parcel Property Special Tax Series 2022
Development Status Count<1> Value<2> Levy<3l Bonds<4l*
Developed Property<5l 271 $128,771,568 $337,948 $4,980,494 Approved Property<6l 107 18,038,959 90,552 1,334,506
Totals 378 $146,810,527 $428,500 $6,315,000
Includes 378 residential lots within the boundaries of the Community Facilities District comprised of I residential unit each.
Based on the Appraisal with a date of value of July I, 2022.
Value-to-
Lien
Ratio*
25.86:1
13.52:1
23.25:1
Represent s the Assigned Special Tax to be levied on parcels classified as Developed Property for Fiscal Year 2023-24 and a Special Tax levy on Approved Property sufficient to meet the revenue requirements of the Series 2022 Bonds, assuming no further development beyond July I, 2022.
Pro-rata allocation based on percentage of Estimated Assigned Special Tax Levy.
Parcels for which a Building Permit was issued prior to May 1st of the Fiscal Year preceding the Fiscal Year for which the Special Tax is being levied become Developed Property, as more particularly provided in the Rate and Method. See "THE COMMUNITY FACILITIES DISTRICT - Rate and Method of Apportionment of Special Tax" and APPENDIX A- "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
Assessor's Parcels of Taxable Property : (i) that are included in a Final Map that was recorded prior to the January I st of the Fiscal Year preceding the Fiscal Year for which the Special Tax is being levied, and (ii) that have not been issued a Building Permit on or prior to the May I st of the Fiscal Year preceding the Fiscal Year for which the Special Tax is being levied. See "THE COMMUNITY FACILITIES DJSTRICT - Rate and Method of Apportionment of Special Tax" and APPENDJX A - "RA TE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
* Preliminary , subject to change.
Source: Wi/ldan Financial Services.
Table 2
Community Facilities District No. 4C of the City of Rancho Mirage (Del Webb Project)
Value-to-Lien by Ownership Status
Estimated Principal
Appraised Assigned of the
Parcel Property Special Tax Series 2022
Ownership Status Count<1> Value<2> Levy<3l Bonds<4l*
Individuals 186 $112,584,592 $229,097 $3,376,307
Developer (95% Complete/Model Home) 5 2,699,903 7,512 110,708 Developer (Under Construction) 72 12,138,365 91,328 1,345,942 Developer (Finished Lots)<5l 115 19,387,667 100,563 1,482,043 Totals 378 $146,810,527 $428,500 $6,315,000
Value-to-
Lien
Ratio*
33.35: 1
24.39:1
9.02:1
13.08:1
23.25:1
(I)
(2)
(3)
Includes 378 residential lots within the boundaries of the Community Facilities District comprised of I residential unit each.
Based on the Appraisal with a date of value of July I, 2022.
Represents the Assigned Special Tax to be levied on parcels classified as Developed Property for Fiscal Year 2023-24 and a Special Tax levy on Approved Property sufficient to meet the revenue requirements of the Series 2022 Bonds, assuming no further development beyond July I, 2022.
(4)
(5)
*
Source:
Pro-rata allocation based on percentage of estimated Assigned Special Tax Levy.
As of July I, 2022, building permits had been issued for 8 of these lots.
Preliminary , subject to change.
Willdan Financial Services.
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Production
Type of
Homes
Plan 1
Plan 2
Plan 3
Plan4
Plan 5
Plan 6
Plan 7
Plan 8
Plan 9
Plan 10
Plan TBD
Totals
Table 3
Community Facilities District No. 4C of the City of Rancho Mirage (Del Webb Project)
Value-to-Lien by Production Type of Home
Estimated
Assigned
Approved Developed Total Appraised Special Percentage
Parcel Property Residential Property Tax of Special
Count Units Units Value<1> Levy<2> Tax Levy<3>
0 23 23 $ 11,738,225 $ 18,861 4%
0 21 21 10,527,638 21,399 5
0 19 19 9,317,051 19,455 5
0 40 40 20,652,787 44,520 10
0 31 31 13,086,932 34,503 8
0 41 41 18,266,457 52,001 12
0 31 31 15,205,145 43,454 10
0 28 28 12,581,167 41,940 10
0 21 21 10,397,012 34,247 8
0 16 16 6,999,153 27,568 6
107 0 107 18,038,959 90,552 210
107 271 378 $146,810,527 $428,500 100%
Principal
of the
Series
2022
Bonds<3>*
$ 277,963
315,367
286,717
656,112
508,486
766,362
640,401
618,089
504,714
406,282
1,334,506
$6,315,000
(I) Based on the Appraisal with a date of value of July I, 2022 with appraised, retail and bulk values allocated to individual lots by Willdan.
Value-
to-Lien
Ratio*
42.23:1
33.38: 1
32.50:1
31.48:1
25.74:1
23.84:1
23.74:1
20.35:1
20. 60:1
17.23:1
13:52:1
23.25:1
(2) Represents the Assigned Special Tax to be levied on parcels classified as Developed Property for Fiscal Year 2023-24 and a Special Tax levy on Approved Property sufficient to meet the revenue requirements of the bonds, assuming no further development beyond July I, 2022. ()) Pro-rata allocation based on percentage of estimated Assigned Special Tax levy. * Preliminary , subject to change.
Source: Wi/ldan Financial Services.
(I)
(2)
Table 4
Community Facilities District No. 4C of the City of Rancho Mirage (Del Webb Project)
Value-to-Lien Stratification Based Upon Development Status as of July 1, 2022 Average Estimated Principal
Appraised Assigned Percentage of Series Value-to-
Value-to-Lien Number of Property Special Tax of Special 2022 Lien Category Units Value<1> Levy<2> Tax Levy Bonds<3>* Ratio* Greater than 18.00 191 $115,284,495 $236,609 55% $3,487,015 33.06:1
12.01 to 18.00 112 18,881,902 94,547 22 1,393,382 13.55: 1
9.01 to 12.00 41 6,912,125 45,943 11 677,083 10.21:1
6.01 to 9.00 34 5,732,006 51,401 12 757,520 7.57:1
0.0 to 6.00 0 0 0 0 0 NA
378 $146,810,528 $428,500 100% $6,315,000 23.25:1
Based on the Appraisal with a date of value of July I, 2022 with appraised, retail and bulk values allocated to individual lots by Willdan .
Assumes development status as of July I, 2022.
Represents the Assigned Special Tax to be levied on parcels classified as Developed Property for Fiscal Year 2023-24 and a Special Tax levy on Approved Property sufficient to meet the revenue requirements of the bonds, assuming no further development beyond July I, 2022 .
<3J Pro-rata allocation based on percentage of estimated Assigned Special Tax Levy. * Preliminary, subject to change.
Source : Wi/ldan Financial Services.
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As of the Date of Value, 107 building permits remained to be issued and 89 lots remain to be sold. Between the July 1, 2022 Date of Value and August 15, 2022, an additional 19 building permits had been issued, and an additional 10 home sales had closed escrow to individual homeowners. As described in the Appraisal, the model home complex and 24 final build-out lots which have not yet been released are part of Phase I and not included in the Community Facilities District, and is anticipated to be included in the final build-out phase of the Development planned for 1,029 homes as described in this Official Statement.
Covenant for Superior Court Foreclosure
Pursuant to Section 53356.1 of the Act, the Community Facilities District covenants in the Indenture that it will determine or cause to be determined, on or about October 1 of each year, whether or not any owners of property within the Community Facilities District are delinquent in the payment of Special Taxes and, if such delinquencies exist, the Community Facilities District will send or cause to be sent a notice of delinquency and demand for payment thereof to the property owner within 45 days of such determination and if such delinquency remains uncured, order and cause to be commenced within 90 days of such determination of delinquency, and thereafter diligently prosecute, an action in the superior court to foreclose the lien of any Special Taxes or installment thereof not paid when due.
The Community Facilities District is not required to order the commencement of foreclosure proceedings as described in the preceding paragraph, if (i) the total Special Tax delinquency in the Community Facilities District for such Fiscal Year is less than 5% of the total Special Tax levied in such Fiscal Year, and (ii) no draw has been made on the Reserve Fund that has not been replenished.
However, if the Community Facilities District determines that any single property owner in the Community Facilities District is delinquent in excess of $5,000 in the payment of the Special Tax, then the Community Facilities District is required to diligently institute, prosecute and pursue foreclosure proceedings against such property owner.
No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment.
Subject to the maximum rates, the Rate and Method is designed to generate from all Taxable Property within the Community Facilities District an annual amount sufficient to pay the current year's debt service and Administrative Expenses. However, if foreclosure proceedings are necessary, and the Reserve Fund has been depleted, there could be a delay in payments to owners of the Series 2022 Bonds pending prosecution of the foreclosure proceedings and receipt by the Community Facilities District of the proceeds of the foreclosure sale.
The ability of the Community Facilities District to foreclose the lien of delinquent unpaid Special Taxes may be limited in certain instances and may require prior consent of the obligee in the event the property is owned by or in receivership of a federal government entity. See "SPECIAL RISK FACTORS - Bankruptcy and Foreclosure Delays" and "- Property Interests of Government Agencies; Federal Deposit Insurance Corporation."
No assurances can be given that a judicial foreclosure action, once commenced, will be completed or that it will be completed in a timely manner. If a judgment of foreclosure and order of sale is obtained, the judgment creditor (the Community Facilities District) must cause a Notice of Levy to be issued. Under current law, a judgment debtor (property owner) has 120 days from the date of service of the Notice of Levy in which to redeem the property to be sold, which period may be shortened to 20 days for parcels other than those on which a dwelling unit for not more than four persons is located. If a judgment debtor fails to redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action, a foreclosure 22 4147-9245-2408.3
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sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made (Section 701.680 of the California Code of Civil Procedure).
The constitutionality of the aforementioned legislation, which repeals the former one-year redemption period, has not been tested; and there can be no assurance that, if tested , such legislation will be upheld.
Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post-judgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding bonds is obtained. However, under Section 53356.5 of the Act, the Community Facilities District, as judgment creditor, is entitled to purchase any property sold at foreclosure using a "credit bid," where the Community Facilities District could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the Community Facilities District becomes the purchaser under a credit bid, the Community Facilities District must pay the amount of its credit bid into the Redemption Fund under the Indenture, but this payment may be made up to 24 months after the date of the foreclosure sale.
Neither the Act nor the Indenture requires the Community Facilities District to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale, and the Community Facilities District has no current intent to be such a purchaser.
The Community Facilities District will levy Special Taxes to pay the current year's debt service and related Administrative Expenses and to replenish the Reserve Fund to the Reserve Requirement, subject to the Rate and Method. However, if superior court foreclosure proceedings are necessary to collect delinquent Special Taxes, and if the Reserve Fund is depleted, there could be a delay in payments of principal of and interest on the Series 2022 Bonds pending prosecution of the foreclosure proceedings and receipt by the Community Facilities District of the proceeds of the foreclosure sale. See "SPECIAL RISK FACTOR - Bankruptcy and Foreclosure Delays ."
No Teeter Plan
Although the Riverside County of Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan") which allows each entity levying secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code, the Community Facilities District is not included in the County Teeter Plan.
Consequently, the Community Facilities District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments within the Community Facilities District.
Reserve Fund
In order to further secure the payment of principal and interest on the Bonds, the Community Facilities District will initially deposit a portion of the Series 2022 Bonds proceeds into the Reserve Fund held by the Trustee in an amount equal to the initial Reserve Requirement. The Reserve Requirement is defined in the Indenture as an amount, as of any date of calculation, equal to the least of ( a) I 0% of the original aggregate principal amount of the Bonds ( excluding Bonds refunded with the proceeds of subsequently issued Bonds), (b) Maximum Annual Debt Service on the outstanding Bonds, or (c) 125% of Average Annual Debt Service on the outstanding Bonds. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
The Indenture provides for amounts in the Reserve Fund to be transferred to the Bond Fund in such amounts as are needed, taking into account amounts available for such purpose in the Bond Fund, to pay the scheduled principal of and interest on the Bonds when due. Amounts in the Reserve Fund may also be used to redeem Bonds in connection with prepayments of Special Taxes in accordance with the 23 4147-9245-2408.3
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provisions of the Indenture. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE. "
Additional Bonds for Refunding Only
The Indenture provides for the issuance of Additional Bonds solely for the purpose of providing funds to refund any Bonds previously issued thereunder and providing funds to pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds. See APPENDIX D - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ." The Community Facilities District is authorized to incur bonded indebtedness secured by Special Taxes levied in the Community Facilities District in an amount not to exceed $9,000,000.
Overlapping CFDs
The Act permits the creation of separate community facilities districts that could be established by the City, the County or another local agency that could include all or a portion of the Taxable Property in the Community Facilities District for the purpose of levying special taxes pursuant to their own rate and method of apportionment on such property ( each, an "Overlapping CFO"). The special taxes levied in such Overlapping CFDs will have the same lien priority as the Special Taxes. The Indenture does not prohibit or limit in any way the issuance by the Overlapping CFDs of bonds payable at least partially from special taxes to be levied on parcels of Taxable Property, on a parity with the Bonds. In the event that special taxes collected from property that is in both the Community Facilities District and the Overlapping CFDs are less than the amounts levied on such property by the Community Facilities District and the Overlapping CFDs, the actual amount of special taxes collected shall be distributed pro rata to the Community Facilities District and the Overlapping CFDs based on the amounts levied by each of the Community Facilities District and the Overlapping CFDs on such property. In the event amounts collected in foreclosure proceedings from property that is in both the Community Facilities District and the Overlapping CFDs are less than the amounts due from such property to both the Community Facilities District and the Overlapping CFDs, then the actual amounts collected from such property in foreclosure proceedings shall be distributed pro rata to the Community Facilities District and the Overlapping CFDs based on the amounts due from such property to each of the Community Facilities District and the Overlapping CFDs. All Taxable Property in the Community Facilities District is included in City of Rancho Mirage Community Facilities District No. 1 ("Rancho Mirage CFO No . l "), which levies an annual special tax for police and fire services. The annual special tax per home for Rancho Mirage CFO No. 1 is $357.78 for thle 2022-23 tax year.
THE COMMUNITY FACILITIES DISTRICT
Location and Description
General. The Community Facilities District , which is irregular in shape and encompasses approximately 102 gross acres, is located in the central portion of the County in the area known as the Coachella Valley which includes the cities of Palm Springs, Desert Hot Springs, Cathedral City, Rancho Mirage, Palm Desert, Indian Wells, Indio, La Quinta, and Coachella along with unincorporated areas of Thousand Palms, Thermal, Sky Valley , Happy Valley, Sun City and Bermuda Dunes. More specifically , Del Webb at Rancho Mirage is located in the northern portion of the City of Rancho Mirage,just south of Interstate 10 ("I-1 O") at Bob Hope Drive.
The Community Facilities District comprises approximately 102 gross acres or approximately one-third of the larger Development, which is a planned 313-acre residential adult active community for residents age 55+ years, proposed to contain 1,029 single-family detached residences at completion. The 24 4147-9245-2408.3
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Developer is building out three neighborhoods within the Community Facilities District, proposed for 378 single-family detached residences , consisting of a total of ten home plans. The Development is a portion of the larger Section 24 SP as described below. Final maps authorizing the subdivision of the property within the Community Facilities District into 378 residential lots were recorded on April 15, 2021 (Tract 36809 comprising 186 lots and Tract 36809-5 comprising 192 lots).
Within the Community Facilities District as of the Date of Value, out of the 378 proposed residential lots within the Community Facilities District, five have homes over 95 percent complete (all in escrow and expected by the Developer to close upon completion) owned by the Developer, 187 are lots in various stages of construction (of which 72 homes are under construction (under 95% complete with 70 in escrow) and 115 remaining lots are in a generally physically finished condition (28 in escrow)) owned by the Developer, and 186 are completed homes that have been conveyed to individuals. As of the date of Value, building permits had been issued for all but 107 lots. Between the July 1, 2022 Date of Value and August 15, 2022, an additional 19 building permits had been issued, and an additional 10 home sales had closed escrow to individual homeowners. As of August 15, 2022, a total of 196 residential units have been conveyed to individual homeowners and 100 of the then-remaining 182 lots owned by the Developer were in escrow to individual homeowners. The Community Facilities District is planned to be built out into three neighborhoods by the Developer known as the Classic series, the Encore series and the Retreat series with a total of ten different home plans. No commercial development will be included within the boundaries of the Community Facilities District.
The home plans range from approximately 1,438 square feet to approximately 2,726 square feet with base prices as of July 1, 2022 ranging from approximately $548,990 to approximately $842,990.
Base prices are subject to change at any time by the Developer and are exclusive of any premiums, options, upgrades , incentives , and any selling concessions or price reductions currently being offered.
Planned amenities for the Development include a clubhouse complex known as "The Outlook ," which includes the clubhouse, a putting green, an event lawn, both a covered and an outdoor pool, an in-ground spa, pickleball courts, tennis courts and bocce ball courts. Within the clubhouse is a great room/bar, a ballroom, a billiards room, a golf simulator room, a multi-purpose room, a fitness gym and an aerobics room along with ancillary buildings including a kitchen and bathrooms.
The Community Facilities District constitutes approximately one third of the Development. The Development is coterminous with Planning Area 8 and a portion of Section 24 SP. As described below and in the Appraisal, the Community Facilities District contains approximately 102 of the approximately 313 gross acres of the 577-acre Section 24 SP (defined below). Section 24 SP (the Agua Caliente Band of Cahuilla Indians Section 24 Specific Plan) covers the Community Facilities District, the Development and additional lands. Section 24 SP is bounded to the north by Ramon Road beyond which are undeveloped lands and 1-1 O; to the east by Bob Hope Drive beyond which is the Agua Caliente Casino and Resort/Spa and vacant lands; to the south by Dinah Shore Drive beyond which is the Westin Mission Hills Golf Resort, Spa and Villas ; and to the west by Los Alamos Road beyond which is the Gary Player Signature Golf Course. Section 24 SP beyond the Development is proposed to be developed into a master planned, mixed-land use community with a higher density mix of retail, entertainment , office, hotel and residential land uses within the areas fronting Bob Hope Drive and Ramon Road, in combination with the lower density Development on Dinah Shore Drive.
At time of inception the Section 24 SP was controlled by the Agua Caliente Band of Cahuilla Indians and located in an unincorporated area of the County. Per the City of Rancho Mirage Notice of Determination recorded September 15, 2015, Planning Area 8 was annexed into the City along with the approval of development of an age-restricted residential community of up to 1,200 residential dwelling units. At the same time, Tentative Tract Map 36809 and the Development Agreement were approved by the City. As a result of the purchase of Planning Area 8 by the Developer, the Agua Caliente Band of 25 4147-9245-2408.3
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Cahuilla Indians no longer has any ownership or jurisdictional/land use rights with regard to the Development.
The following page contains an aerial photo of the area included within the boundaries of the Community Facilities District.
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[AERIAL PHOTO]
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Rate and Method of Apportionment of Special Tax
General. The amount of Special Tax that the Community Facilities District may levy in any year is strictly limited by the Maximum Special Taxes set forth in the Rate and Method . Special Taxes will be levied on each parcel in the Community Facilities District subject to such Special Taxes as set forth in the Rate and Method . Special Taxes include Special Tax, levied annually , and the Backup Special Tax, levied only under specified circumstances set forth in the Rate and Method. See "- Backup Special Tax" below, and APPENDIX A- "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." As provided in the Rate and Method , each Assessor ' s Parcel within the Community Facilities District will be classified as Taxable Property or Exempt Property. In addition, all Taxable Property will further be classified as Developed Property , Approved Property, Undeveloped Property or Provisional Property, and all such Taxable Property shall be subject to the levy of Special Taxes in accordance with the Rate and Method of Apportionment. Furthermore, each Assessor's Parcel of Developed Property shall be classified according to its applicable Land Use Class based on its Building Square Footage.
As provided in the Rate and Method, for each Fiscal Year, commencing Fiscal Year 2021-22, the CFD Administrator shall levy the Special Tax on all Taxable Property in accordance with the following steps:
Step 1:
Step 2:
Step 3:
Step 4:
Step 5:
The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax as needed to satisfy the Special Tax Requirement;
If additional monies are needed to satisfy the Special Tax Requirement after Step 1 has been completed , the Special Tax shall be levied Proportionately on each Assessor's Parcel of Approved Property in an amount up to I 00% of the Maximum Special Tax for Approved Property;
If additional monies are needed to satisfy the Special Tax Requirement after Step 2 has been completed , the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property in an amount up to 100% of the Maximum Special Tax for Undeveloped Property ;
If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax amount determined in Step 1 shall be increased Proportionately on each Assessor's Parcel of Developed Property in an amount up to 100% of the Maximum Special Tax for Developed Property.
If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed , then the Special Tax shall be levied Proportionately on each Assessor ' s Parcel of Provisional Property in an amount up to 100% of the Maximum Special Tax for Provisional Property.
The Maximum Special Tax for Developed Property shall be the greater of the Assigned Special Tax for Developed Property or the Backup Special Tax for Developed Property. The Assigned Special Tax applicable to an Assessor ' s Parcel classified as Developed Property commencing in Fiscal Year 2021-22 shall be determined pursuant to Table I of the Rate and Method, and ranges from $799 to $1,723 per Residential Unit. The foregoing defined terms have the meaning set forth in the Rate and Method and for reference are reproduced below .
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"Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a Building Permit on or prior to the May 1st preceding the Fiscal Year in which the Special Tax is being levied.
"Assigned Special Tax" means the Special Tax of that name described in Section 3.A of the Rate and Method.
"Backup Special Tax" means the Special Tax of that name described in Section 3 .B of the Rate and Method.
"Developed Property" means for each Fiscal Year, all Taxable Property, exclusive of Provisional Property, for which a Building ~ermit was issued prior to May 1st of the previous Fiscal Year and as more particularly provided in the Rate and Method.
"Maximum Special Tax" means for each Assessor' s Parcel, the maximum Special Tax, determined in accordance with Sections 3.C and 3.D of the Rate and Method, which may be levied in a given Fiscal Year on such Assessor's Parcel of Taxable Property. "Provisional Property" means all Assessor's Parcels of Public Property, Property Owner Association Property, Non-Residential Property or property that would otherwise be classified as Exempt Property pursuant to the provisions of Section 8 of the Rate and Method, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage as set forth in Section 8.
"Residential Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental, separate from adjacent residential dwelling units. "Special Tax Requirement" means that amount required in any Fiscal Year to: (i) pay regularly scheduled Debt Service on all Outstanding Bonds; (ii) pay periodic costs on the Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on the Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) accumulate funds to pay directly for acquisition or construction of facilities, provided that the inclusion of such amount does not cause an increase in the Special Tax to be levied on Approved Property, Undeveloped Property, or Provisional Property, until the date that all Bonds have been issued; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the Special Tax levy, as determined by the CFO Administrator pursuant to the Indenture. "Taxable Property" means all of the Assessor's Parcels within the boundaries of the Community Facilities District, which are not exempt from the levy of the Special Tax pursuant to law or Section 8 of the Rate and Method.
Notwithstanding the above, under no circumstances will the Special Tax levied in any Fiscal Year against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased as a result of a delinquency or default in the payment of the Special Tax applicable to any other Assessor's Parcel within the Community Facilities District by more than 10% above what would have been levied in the absence of such delinquencies or defaults.
The Special Tax shall be levied as long as necessary to meet the Special Tax Requirement for a period not to exceed 45 Fiscal Years commencing with Fiscal Year 2021-22, provided however that the 29 4147-9245-2408.3
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Special Tax will cease to be levied in an earlier Fiscal Year if the CFO Administrator has determined that all required interest and principal payments on Bonds have been paid.
Property owners may prepay and permanently satisfy the Special Tax Obligation by a cash settlement with the City as permitted under Government Code Section 53344 and in accordance with the Rate and Method.
The levy of the Special Tax commenced in fiscal year 2021-22. Of the $17,703 levied in parcels within the Community Facilities District for Fiscal Year 2021-22 on lots that had building permits as of May 1, 2021, $969.50 was delinquent as of May 5, 2022. See "SPECIAL RISK FACTORS - Special Tax Delinquencies" and "- Infectious Disease Outbreak" for the information with respect to the potential increased risk of future delinquencies resulting from the economic impact of COVID-19 or variants thereof and the potential of a grant of waivers on penalties, based on application and approval, benefiting certain taxpayers.
Estimated Debt Service Coverage. The issuance of the Series 2022 Bonds has been sized so that the levy of the Maximum Special Tax at Buildout of the 378 properties will be sufficient to provide for a debt service coverage ratio of not less than 110%. The Community Facilities District will only levy Special Taxes in an amount sufficient to fund the annual Special Tax Requirement (as defined in the Rate and Method).
Table 5 below sets forth the estimated debt service coverage for the Series 2022 Bonds for a representative Bond Year assuming Maximum Annual Debt Service on the Series 2022 Bonds. Pursuant to the Rate and Method, and subject to the Maximum Special Tax prescribed therein and permitted by the Act, the Community Facilities District will only levy Special Taxes in an amount sufficient to fund the annual Special Tax Requirement (as defined in the Rate and Method).
Maximum
Special Tax
From Units
With
Building
Permits<'>
$337,948
Table 5
City of Rancho Mirage Community Facilities District No. 4C (Del Webb Project)
Maximum Special Tax and Series 2022 Bond Debt Service Coverage Maximum Coverage
Maximum Annual Priority From Lots
Special Tax · Debt Administration With Building
at Buildout Service Expense Permits<'>
$470,333 $413,500 $15,000 78.10%
OJ Building permit data as of July I, 2022.
Source: Willdan Financial Services ; except Series 2022 Bonds Debt Service, which was provided by the Undenvriter .
Total Debt
Service
Coverage
110.21%
See "SECURITY FOR THE BONDS - Pledge of Net Special Tax Revenues" for other information regarding the Special Taxes.
Estimated Sample Tax Bills. Set forth in Table 6 below are estimated, sample property tax bills for Fiscal Year 2022-23 that would be received by individual homeowners in the Community Facilities District if their respective property was classified for such Fiscal Year as Developed Property under the Rate and Method. See "SPECIAL RISK FACTORS - Direct and Overlapping Indebtedness" for a table 30 4147-9245-2408.3
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that describes the overlapping indebtedness for which taxes would be levied on the parcels m the Community Facilities District as shown in the table below.
Table 6
Community Facilities District No. 4C of the City of Rancho Mirage (Del Webb Project)
Fiscal Year 2022-23 Estimated Sample Tax Bill for a Developed Property Home Prices Plan<1> Plan 1 Plan 5 Plan 10
Base Price $503,300 $572 ,264 $776 ,910
Homeowner's Exemption (7,000) (7,000) (7,000)
Equals: Net Taxable Assessed Value $496 ,300 $565 ,264 $769 ,910 Fiscal Year 2021-22 Tax Distribution Tax Rate Amount Amount Amount Ad Valorem Taxes<2>
General Property Tax Levy 1.0000% $ 4,963 $ 5 ,653 $ 7,699 Desert Community College District General Obligation Bonds 0.0395 196 223 304 Palm Springs Unified School District General Obligation Bonds 0.1503 746 850 1,157 CV Water District State Water Project 0.1100 546 622 847 Total on Ad Valorem Taxes $ 5,905 $ 6 ,726 $ 9,160
Fixed Rate Levies
CVWD Sewer Service Charge $ 295 $ 295 $ 295
City of Rancho Mirage Fire Protection 60 60 60
CSA 152-Rancho Mirage Stormwater 5 5 5
Rancho Mirage CFD No. 1 <3> 353 353 353
Coachella Valley Mosquito & RIF A 14 14 14
Rancho Mirage Fire Excise Tax 14 14 14
Rancho Mirage Citywide Park Tax 33 33 33
Rancho Mirage Citywide Landscape 26 26 26
Rancho Mirage CFD No . 4C (the Community Facilities District) 799 1,113 1,723 Total Fixed Rate Levies $ 1 ,599 $ 1,913 $ 2,523
Projected Total Property Taxes $ 7,504 $ 8,639 $ 11,684 Total Effective Tax Rate (As% of Net Taxable Assessed Value) 1.51% 1.53% 1.52% <1> Based on Appraisal with a date of value of July l , 2022. <2> Estimate based on actual Fiscal Year 2021-22 ad va/orem rates. <3> Represents the Rancho Mirage CFD No. I special tax for funding police and fire services.
Source: Willdan Financial Services.
The Facilities
Under the prov1s10ns of the Resolution of Formation and the Acquisition and Funding Agreement , the Facilities that may be financed with Bonds secured by Special Taxes consist of street improvements , storm drains, access ramps , roadways, sidewalk, curb , gutters , striping , lighting, traffic signalization, signage, landscaping of public streets, incidental expenses, and rights-of -way and appurtenant facilities, including fees to finance such facilities; dry utility facilities , including, but not limited to, electrical lines, undergrounding , pole relocation, incidental expenses, and appurtenant facilities, including fees to finance such facilities; City public benefit fees, including but not limited to, 31 4147-9245-2408 .3
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traffic signals fees, bus shelter fees, City Hall / Corporate Yard fees, fire fees, park fees, and other required capital facilities' fees. CVWD facilities and fees are also authorized to be funded by the Community Facilities District.
The construction and acquisition of the Facilities to be owned by CVWD are governed by the terms of a Joint Community Facilities Agreement, dated as of February 1, 2018, by and among CVWD, the City and the Developer, under which the Developer is required to pay certain payment of the CVWD Fees as a condition of receiving water and sewer service to the Community Facilities District and to construct and transfer to CVWD certain facilities required by CVWD for domestic water and sanitation service. A portion of these facilities are intended to serve the larger Planning Area 8, and that portion allocable to the Community Facilities District will be paid from a portion of the proceeds of the Series 2022 Bonds. The Developer is required to ensure operating permit compliance and meet other success criteria before the CVWD will assume responsibility for operation and maintenance of the facilities.
The Developer has completed the backbone infrastructure required for the Community Facilities District. The remaining onsite development costs necessary to construct 378 planned residential units within the Community Facilities District includes paving, dry utilities, landscaping, common area, and drainage improvements totaling approximately $3. 7 million. The Developer expects to incur approximately $31 .0 million on remaining site development costs, home construction costs, and marketing and sales costs to complete its proposed development within the Community Facilities District.
As described above under the caption "SECURITY FOR THE BONDS - Appraised Value," as a component of those remaining costs, the Developer has approximately $4.1 of remaining costs (not to be financed with proceeds of the Series 2022 Bonds) attributable to the development of the Community Facilities District which include in-tract site costs, some off-site costs and related fees as of the Date of Value. The Developer has completed the backbone infrastructure required for CFD No. 4A and CFD No. 4B.
In addition to the Facilities to be constructed by the Developer, under the Acquisition and Funding Agreement, the Series 2022 Bond proceeds may be used to finance the costs of certain public facilities to be constructed by the City or another public agency for which the Developer will receive a credit for certain improvement fees, development impact fees, and/or water connection fees or be reimbursed for improvement fees, development impact fees, and/or water connection fees previously paid by the Developer.
THE DEVELOPMENT AND THE DEVELOPER
The following information regarding the Developer and the ownership and planned development within the Community Facilities District has been provided by, or on behalf of, the Developer for use in this Official Statement, and has not been independently confirmed or verified by the Community Facilities District or the Underwriter. Neither the Community Facilities District nor the Underwriter makes any representation as to the accuracy or adequacy of this information or the absence of any material change after the date of this Official Statement. No assurance can he given that the proposed development will occur as described in this Official Statement or that it will he completed in a timely manner or that the Developer or its Parent Entity has the resources or the ability to complete the development as described in this Official Statement. See "SPECIAL RISK FACTORS."
The Series 2022 Bonds and the Special Taxes are not personal obligations of the Developer or any other current or subsequent property owners and, in the event the Developer or any other current or subsequent property owner defaults in the payment of Special Taxes, the Community Facilities District may proceed with judicial foreclosure hut has no direct recourse to the assets of the Developer 32 414 7-9245-2408.3
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or any other current or subsequent property owner. As a result, other than as provided in this Official Statement, no financial statements or information is or will be provided about the Developer or any other current or subsequent property owner. The Series 2022 Bonds are secured solely by the Net Special Tax Revenues and other amounts pledged under the Indenture. See "SECURITY FOR THE BONDS" and "SPECIAL RISK FACTORS."
The Development
The Developer acquired the property within the Community Facilities District in August 2017 and October 2018 from certain Indian Allotees of the Agua Caliente Band of Cahuilla Indians, Palm Springs. Equivest LLC was the original buyer under an option agreement dated February 15, 2013. In the agreement Equivest assigned the option to SCC Rancho Mirage Holdings LP who then sold the option to the Developer. Final tract maps authorizing the subdivision of the land within the Community Facilities District were recorded on April 15, 2021 (Tract 36809 comprising 186 lots and Tract 36809-5 comprising 192 lots), which subdivided the Community Facilities District into 378 residential parcels.
The general area su·rrounding the Development includes developed lands, including golf courses, residences, a golf resort and spa, and undeveloped desert lands and the Agua Caliente Resort Casino (northeast of the subject site). The Development site is generally level at surrounding street grade of Los Alamos Road and Dinah Shore Drive.
The Developer
Pulte Home Company, LLC. As previously defined in this Official Statement, the Developer is Pulte Home Company, LLC, a Michigan limited liability company, an indirect wholly-owned subsidiary of PulteGroup, Inc., a Michigan corporation (the "Parent Entity"). The Parent Entity is a publicly-held holding company based in Atlanta, Georgia, whose subsidiaries engage primarily in the homebuilding business. The Parent Entity also has mortgage banking operations, conducted principally through Pulte Mortgage LLC, and title operations. The Parent Entity is a Michigan corporation organized in 1956 whose common stock trades on the New York Stock Exchange under the symbol "PHM." The property in the Community Facilities District is being developed by the Developer's southern California division.
Through its brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, John Weiland Homes and Neighborhoods, and American West, the Parent Entity and its subsidiaries offer a wide variety of home designs, including single-family detached, townhouses, condominiums, and duplexes at different prices and with varying levels of options and amenities to the company's major customer groups: first-time, move-up, and active adult. Over its history, the Parent Entity and its subsidiaries have delivered nearly 750,000 homes. As of December 31, 2021, the Parent Entity, through its subsidiaries, operated in 41 markets across 24 states.
The Parent Entity is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith is obligated to file reports, proxy statements and other information, including financial statements, with the Securities and Exchange Commission ("SEC"). Such filings, particularly the Parent Entity's annual report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 7, 2022, set forth certain data relative to the consolidated results of operations and financial position of the Parent Entity and its subsidiaries, including the Developer as of such dates.
The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including the Parent Entity. The address of such Internet web site is www.sec.gov. All documents subsequently filed by the 33 4147-9245-2408.3
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Parent Entity pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes. Copies of the Parent Entity's Annual Report and each of its other quarterly and current reports, including any amendments , are available from the Parent Entity's website at www.pultegroup.com. The foregoing internet addresses are included for reference only and the information on these internet sites are not a part of this Official Statement and are not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such internet sites.
Development Plan
Under its Del Webb brand, the Developer plans to develop 378 single family age-qualified homes in the Community Facilities District. These homes will be located in a gated planned residential community marketed as three product types known as the Classic series, Retreat series, and Encore series.
The Classic series is planned to include 94 lots within Tract Nos. 36809-5 and 36809 with a minimum lot size 5,500 square feet and homes ranging from approximately 1,438 square feet to approximately 1,770 square feet. The Retreat series is planned to include 196 lots within Tract Nos. 36809-5 and 36809 with a minimum lot size of approximately 6,000 square feet and homes ranging from approximately 1,832 square feet to approximately 2,187 square feet. The Encore series is planned to include 88 lots within Tract Nos . 36809 -5 and 36809 with a minimum lot size of approximately 7,500 square feet and homes ranging from approximately 2,329 square feet to approximately 2,726 square feet.
The Developer has completed the backbone infrastructure required for the Community Facilities District. The remaining onsite development costs necessary to construct 378 planned residential units within the Community Facilities District includes paving, dry utilities, landscaping, common area, and drainage improvements totaling approximately $3.7 million. As of the Date of Value of the Appraisal, of the 378 planned residential units, 186 homes have closed to individuals, leaving 192 Developer owned lots, 103 of which have been sold, pending close of escrow . Of the 192 Developer owned lots as of the Date of Value, five have homes over 95 percent complete (all in escrow and expected to close upon completion) and 187 are remaining lots of which 72 homes are under construction (under 95% complete with 70 in escrow) and 115 remaining lots are in a generally physically finished condition (28 in escrow)).
Between the July 1, 2022 Date of Value and August 15, 2022, an additional 19 building permits had been issued, an additional 10 home sales had closed escrow to individual homeowners and 100 of the then remaining 182 lots owned by the Developer were in escrow to individual homeowners. In total, 196 residential units have been conveyed to individual homeowners as of August 15, 2022. [The Developer currently expects all remaining building permits to be issued before May 1, 2023). 34 4147 -9245-2408.3
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Plan
No.
I
2 3
4 5
6 7
8 9
10 Table 7 below sets forth the development status as of July 1, 2022.
Series
Classic
Classic
Classic
Retreat
Retreat
Retreat
Retreat
Encore
Encore
Encore
Table 7
Community Facilities District No. 4C of the City of Rancho Mirage (Del Webb Project)
Plan
Description
Getaway
Solitude
Expedition
Sanctuary
Haven
Preserve
Refuge
Serenity
Journey
Voyage
Status of Planned Residential Development
As of July 1, 2022
Base
Plan
Square Base Closed Under
Footage Price<1> Homes Construction
1,438 $548,990 18 5
1,649 573,990 16 5
1,759 595,990 14 5
1,832 $642,990 36 10
1,858 647,990 13 8
2,008 669,990 26 12
2,187 690,990 24 10
2,329 $790,990 16 6
2,504 815,990 13 5
2,726 842,990 10 6
Completed
Not Closed
0 0
0 l
0 0
l
0 2
Finished
Lots Total
10 33
10 31
11 30
16 63
13 34
13 51
13 48
9 31
9 29
11 28
Total 186 72 5 115 378
(I) Base sales prices are as of July 1, 2022 or as of the date of sale of the last available plan. Base sales prices are exclusive of any premiums, options, upgrades, incentives and any selling concessions or prior reductions currently being offered. There can be no assurance that base sales prices in the future will not differ from the estimated/actua l base sales prices set forth in the table. (2) As of August 15, 2022, the Developer had closed 196 homes to homeowners and owns 94 homes in various stages of construction (89 of which were in escrow) and 88 finished lots ( 11 of which were in escrow) . Homes under contract may not result in closed escrows as sales contracts are subject to cancellation.
Source: The Developer.
According to the Appraiser, the absorption analysis included as part of the Appraisal notes in conclusion that within all three phases of the Development there are 905 homes sold to date (803 of which have closed to individuals) suggesting an average sales rate of 18.5 homes per month, a rate much higher than the competing projects in the area. All five ofthe Developer owned homes over 95% complete have been released and all are in escrow and anticipated to close upon completion. Considering the attractiveness of the Development and current market conditions, the Appraiser has stated that the exposure time for the builder's ownership in a bulk sale or a single individually-owned house is less than one year.
The Appraiser notes that in the Desert Riverside submarket an average absorption rate within 21 projects an absorption rate of 4.87 sales per month (year to date average), which is considered to be a very good absorption rate. The average monthly sales rate in the Community Facilities District has been over 18 sales per month, a rate much higher than the competing projects. The Appraiser has concluded that the five, builder-owned homes will be absorbed over a two-month time period at the concluded prices. As noted herein and in the Appraisal, the remaining 187 lots (115 lots (28 in escrow) and 72 lots under construction (70 in escrow)) are owned by the Developer as of the Date of Value. The Appraiser notes that is anticipating an overall tax rate in the 1.5 percent range and that while this is a bit higher than some of the competition, it doesn't seem to be a hinderance to the sales based on the sales rate of over 18 homes per month within the larger Development since inception in June 2018. See Appendix B. 35 4147-9245-2408.3
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Financing Plan
The Developer estimates that, as of August 15, 2022 it has expended approximately $96.1 million on land acquisition, site development, and home construction costs related to the 378 homes that the Developer plans to construct within the Community Facilities District, and other development, marketing and sales costs ( exclusive of internal financing repayment and corporate overhead allocation) related to its property in the Community Facilities District. The Developer expects to incur approximately $31.0 million on remaining site development, home construction costs and marketing and sales costs to complete its planned development within the Community Facilities District.
The Developer has financed its land acquisition and various site development and home construction costs related to its property in the Community Facilities District with cash generated from its home building operations and, where necessary , internal corporate financing from its Parent Entity. The Developer expects to finance its remaining site development and home construction costs to complete its planned development within the Community Facilities District with a combination of cash generated from its home building operations (including revenues generated from home sales in the Community Facilities District) and, where necessary, internal corporate financing from its Parent Entity. Notwithstanding the internal corporate financing from its Parent Entity, and revenues generated from home sales in the Community Facilities District, there can be no assurance that the Developer will have timely access to the sources of funds which will be necessary to complete the remaining proposed development in the Community Facilities District. Neither the Developer nor its Parent Entity has a legal obligation to Owners of the Series 2022 Bonds to make any such funds available to fund the remaining development costs or to pay ad valorem property taxes or Special Taxes related to its property in the Community Facilities District. Many factors beyond the Developer's control, or a decision by the Developer to alter its current plans, may cause the actual sources and uses to differ from the projections.
If and to the extent that internal funding, including but not limited to home sales revenues and corporate financing from the Parent Entity is inadequate to pay the costs to complete the planned development by the Developer within the Community Facilities District and other financing by the Developer is not put into place, there could be a shortfall in the funds required to complete the proposed development by the Developer in the Community Facilities District and the remaining portions of the Developer's projects in the Community Facilities District may not be developed See "SPECIAL RISK FACTORS - Failure to Develop Properties; Government Approvals" herein.
At the time of delivery and payment for the Series 2022 Bonds, the Developer will deliver a certificate to the effect that there are no events of monetary default or events which with the passage of time would constitute a monetary default under any loan or similar credit arrangement to which Developer is a party the result of which could reasonably be expected to have a material adverse effect on the Developer ' s ability to complete its planned development and sale of the residential units within the Community Facilities District as described in this Official Statement or to pay the applicable Special Tax obligation levied on the property in the Community Facilities District owned by the Developer when due.
COVID-19 Pandemic
The development of the Developer's planned development within the Community Facilities District is subject to disruption due to the COVID-19 pandemic and related public health and governmental authorities' orders and actions. With housing construction considered an essential function , the Developer has largely continued, with certain modifications, its home construction and sales activities in the Community Facilities District. That is, the Developer has been able to sell, complete , obtain inspections for and close homes during such period, and intends to continue its operations to the extent permitted. See "SPECIAL RISK FACTORS - Infectious Disease Outbreak" herein. 36 4147-9 245-2408.3
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During the early days of the COVID -19 pandemic, the Developer closed its sales offices and established a virtual appointment only program for homebuyers. However, the Developer's sales office for its development within the Community Facilities District was reopened and now customers have the option of an in-person tour or a virtual tour. While the Developer is no longer appointment -only in many of its new home galleries, in the event that the Developer believes it is advisable to re-implement such measures in all or some of its markets (including within the Community Facilities District) in response to a resurgence of COVID-19 or orders by applicable governmental authorities, the Developer may experience negative impacts on its business and operations. As of the date of this Official Statement, the Developer has not experienced any material increases in costs, delays in home construction resulting from decisions to reduce financing for the project, work stoppages , reduced attendance of workers, lack of or delays in the delivery of building materials or the ability to obtain necessary inspections and approvals attributable to the COVID-19 pandemic .
The Developer cannot predict the ultimate effects of the COVID-19 outbreak and related public health and governmental authorities' orders and actions (including, without limitation , the scope of restrictions under the current or any amended shelter in place orders) , on their ability to continue to sell and close units within the Community Facilities District. Such effects, if and as they arise, could have a material adverse effect on the ability to develop the Community Facilities District as planned, and no assurance can be provided that the Developer will be able to (a) complete in whole or in any part, or within any particular time, its planned development within the Community Facilities District ; (b) avoid material increases in development costs or delays resulting from work stoppages, reduced attendance of workers , shortages or delays in the delivery of building materials, and/or delays in obtaining necessary inspections and approvals; or ( c) close any additional homes or not experience additional purchase contract cancellations , due to in each case public health or governmental restrictions, further spread of COVID-19 , an economic downturn driven by the COVID-19 pandemic, or otherwise.
Land Use Approvals and Environmental Review
All discretionary entitlements are in place, and the Developer is not aware of any additional entitlements required to continue with development of its property in the Community Facilities District, other than building permits. All final tract maps for the property in the Community Facilities District were recorded on April 15, 2021 (Tract 36809 comprising 186 lots and Tract 36809-5 comprising 192 lots). A Phase I and Limited Phase II Environmental Site Assessment on the subject property and additional lands dated March 15, 2013, was prepared by Leighton and Associates, Inc. of Palm Desert, California. The report states that historically the site was vacant, undeveloped land. Subsequently, an Environmental Impact Statement on the subject property and additional lands dated March 2015, was prepared by Meridian Consultants of Westlake Village, California in connection with the approval of the Section 24 SP by the Agua Caliente Band of Cahuilla Indians. On June 16, 2016, the City Council approved that Environmental Impact Statement respecting the property in the Community Facilities District as being compliant with the California Environmental Quality Act (CEQA). The Developer is not aware of any current liabilities related to its property in the Community Facilities District with respect to the presence of substances presently classified as hazardous under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 or applicable California law, and is not aware of the presence of endangered or threatened species or habitat for endangered or threatened species that could adversely affect its proposed development of the property in the Community Facilities District.
Services
Water service for both potable and reclaimed water in the Community Facilities District is provided by CVWD , which will also provide sanitation service through its wastewater treatment facilities. 37 4147-9245-2408.3
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Electric service is provided by Southern California Edison and the City's Rancho Mirage Energy Authority (RMEA), a local renewable electric service provider. Homeowners have the option to choose based on cost of service. The City's community choice program was approved by the California Public Utilities Commission in January 2018 and commenced in May 2018. Natural gas service is provided by Southern California Gas. The Palm Springs Unified School District serves the Community Facilities District.
Direct and Overlapping Indebtedness
The ability of an owner of land within the Community Facilities District to pay the Special Taxes could be affected by the existence of other taxes and assessments imposed upon the property. In addition, other public agencies whose boundaries overlap those of the Community Facilities District could, without the consent of the Community Facilities District, and in certain cases without the consent of the owners of the land within the Community Facilities District, impose additional taxes or assessment liens on the property within the Community Facilities District in order to finance public improvements to be located inside of or outside of the Community Facilities District. The lien created on the property within the Community Facilities District through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Taxes. The Community Facilities District cannot predict the amount of additional debt or authorized but unissued bonds that will ultimately be issued by such local agencies, nor can it predict when such debt would be issued or the debt service payments thereon.
Table 8 below sets forth the direct and overlapping debt on the property in the Community Facilities District as of April 1, 2022, as reported by the Special Tax Consultant, and assumes the issuance of the Series 2022 Bonds:
Table 8
Community Facilities District No. 4C of the City of Rancho Mirage (Del Webb Project)
Direct and Overlapping Debt
Appraised Value as of July 1, 2022:$146,810 ,527
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Desert Community College District General Obligation Bonds Palm Springs Unified School District General Obligation Bonds City of Rancho Mirage Community Facilities District No. 4C
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
GROSS COMBINED TOTAL DEBT<2l
COMBINED TOT AL DEBT<2l
Ratios to 7/1/22 Appraised Value:
Direct Debt ($0) ............... .......................................................... 4.30% Total Direct and Overlapping Tax and Assessment Debt.. ........ 4.33% Combined Total Debt ........ ............ ................ ........ ................. ... 4.33% % Applicable
0.003%
0 .. 001
100.000
<1> Series 2022 Bonds to be sold. Preliminary, subject to change. All other indebtedness above is as of April I, 2022.
Debt 4/1/22
$ 12,464
28,276
6,3 J5,000(l)
$6,355 ,740
$6,355 ,740
$6,355,740< 2)
<2> Excludes general fund debt, tax and revenue anticipation notes, enterprise revenue, mortgage revenue bonds and non-bonded capital lease obligations.
Source: Wil/dan Financial Services.
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Not included numerically or otherwise in the descriptions of overlapping debt in Table 8 above or elsewhere in this Official Statement are assessments which may exist on properties within the Community Facilities District for the benefit of the Western Riverside Council of Governments ("WRCOG") Property Assessed Clean Energy ("PACE") Programs, in which multiple programs the County participates as a member, through WRCOG in collaboration with its private sector partners, which provide financing for energy efficiency, renewable energy, and water conservation retrofits on residential and commercial properties . Under this program a property owner is permitted to finance the up-front cost of energy or other eligible improvements on a property, with such costs financed over a term of years through a voluntary assessment attached to the improved property. Payments for such projects and retrofits are secured by assessments on such participating residential and commercial properties. The overlapping debt information included in this Official Statement is necessarily understated by the amount of such assessments on properties within the Community Facilities District, if any.
SPECIAL RISK FACTORS
The purchase of the Series 2022 Bonds involves certain investment risks. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Series 2022 Bonds. The discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Series 2022 Bonds, and this Official Statement should be read in its entirety for the purpose of making an informed investment decision.
The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the Community Facilities District to pay their Special Taxes when due.
Such failure to pay Special Taxes could result in the inability of the Community Facilities District to make full and punctual payments of debt service on the Series 2022 Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the Community Facilities District.
Risks of Real Estate Secured Investments Generally
The Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (a) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the Community Facilities District, the supply of or demand for competitive properties in such area, and the market value of homes or institutional facilities and/or sites in the event of sale or foreclosure, (b) changes in real estate tax rates and other operating expenses, governmental rules (including , without limitation, zoning laws and laws relating to hazardous materials) and fiscal policies, (c) natural disasters (including, without limitation, earthquakes, wildfires, floods and droughts), which may result in uninsured losses; and (d) increased delinquencies due to rising mortgage costs and other factors . No assurance can be given that the individual property owners will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See " Bankruptcy and Foreclosure Delays" for a discussion of certain limitations on the Community Facilities District's ability to pursue judicial proceedings with respect to delinquent parcels.
Limited Obligations
The Series 2022 Bonds and the interest thereon and all obligations of the Community Facilities District under the Indenture shall be special obligations of the Community Facilities District, payable solely from Special Tax Revenues and the other assets pledged therefor hereunder; provided, however, that all obligations of the Community Facilities District under the Series 2022 Bonds shall be special obligations of the Community Facilities District, payable solely from Net Special Tax Revenues and the 39 4147-924 5-2408.3
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other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power of the Community Facilities District (except to the limited extent set forth herein), the City, or the State of California, or any political subdivision thereof, is pledged to the payment of the Series 2022 Bonds.
The Community Facilities District's legal obligations with respect to any delinquent Special Taxes are limited to: (1) payments from the Reserve Fund to the extent of funds on deposit therein; and (2) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See "SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure." The Series 2022 Bonds cannot be accelerated in the event of any default.
The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. Enforcement of Special Tax payment obligations by the Community Facilities District is limited to judicial foreclosure in the County Superior Court. There is no assurance that any current or subsequent owner of a parcel subject to a Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so.
Concentration of Ownership
As of the Date of Value, the Developer owned 192 of the 378 residential lots, consisting of five which have homes over 95 percent complete (all in escrow and expected by the Developer to close upon completion) owned by the Developer, and 187 lots (of which 72 homes are under construction (under 95% complete with 70 in escrow) and 115 remaining lots are in a generally physically finished condition (28 in escrow)). See Table 2 in "SECURITY FOR THE BONDS -Appraised Value." Lack of diversity of ownership in the Community Facilities District, and, therefore, in the obligation to pay Special Taxes, presents a risk to Owners of Series 2022 Bonds. Failure of the Developer or owners of the property within the Community Facilities District to pay the annual Special Taxes when due could result in the rapid, total depletion of the Reserve Fund prior to replenishment from the resale of property upon a foreclosure or otherwise. In that event, there could be a default in payments of the principal of, and interest on, the Series 2022 Bonds. See "SPECIAL RISK FACTORS - Insufficiency of Special Tax Revenues" below. Between the Date of Value and August 15, 2022, an additional 19 building permits had been issued, and an additional IO home sales had closed escrow to individual homeowners and 100 of the then-remaining 182 lots owned by the Developer were in escrow to individual homeowners. Homes sold may not result in closed escrows as sales contracts are subject to cancellation.
Failure to Develop Properties; Government Approvals
Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. Such approvals, once obtained, may still be challenged or subject to subsequent referendum, and issuance of additional building permits for the homes in the Development may be delayed. Revocation or challenge of any such agency approval could adversely affect the planned land development.
All discretionary entitlements are in place and the Developer is not aware of any additional entitlements required to continue with development of its property in the Community Facilities District, other than the remaining building permits. See "THE DEVELOPMENT AND THE DEVELOPER - Land Use Approvals and Environmental Review."
The development of land is also subject to economic considerations such as the strength of the regional economy and the resulting demand for land and homes. Another economic downturn, similar to 40 4147-9245- 2408.3
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the recent national recession, for example, could adversely impact the demand for homes and land development operations generally throughout the Rancho Mirage and Coachella area. See "SPECIAL RISK FACTORS - Real Estate Market Fluctuations ." Other factors out of the control of the Developer, such as weather conditions, may delay development.
Owners of the Series 2022 Bonds should assume that any event that significantly impacts the ability to develop land in the Community Facilities District could cause the property values within the Community Facilities District to decrease from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the Community Facilities District to pay the Special Taxes when due. See "THE DEVELOPMENT AND THE DEVELOPER - The Development" for information regarding the status of development in the Community Facilities District. The Appraiser makes limited observations about such potential impacts and market conditions. See Appendix B.
Real Estate Market Fluctuations
The Appraiser notes market pressures including inflation, supply chain issues and costs of funds which have had and may continue to have an impact on the regional economy. Among other things , the Federal Reserve Board announced the beginning of several increases in the Federal Reserve Rate . Thus far there have been four increases: the first effective on March 17, 2022 for one-quarter percent, the second effective on May 5, 2022 for one-half percent , and most recently two rate increases of three quarters percent each effective on June 16, 2022 and July 28, 2022 . The Federal Reserve Board (the "Board") has stated there will be further increases in order to slow down inflation. These increases are creating further volatility in the stock market and increasing home mortgage rates .
Between approximately November 2021 and July 2022, mortgage interest rates for 30-year loans have increased from approximately 3.1% to 5.0%. Mortgage interest rates are expected to continue to increase in the near term. Increases in mortgage interest rates could have a negative impact on the sale of the remaining homes in the Community Facilities District described herein. Increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower-priced home relative to renting a residence, thereby making purchasing less attractive.
With respect to move-up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate . In addition, the new home would likely have a higher interest rate on a new mortgage loan as well as a higher purchase price and property taxes. Such considerations may decrease the desire for move -up households to purchase a new home. The foregoing factors could reduce demand for and/or the ability to achieve the sales prices of the remaining homes to be sold within the Community Facilities District as described herein.
As more completely described in the Appraisal, over the past 25 years, the Inland Empire economy has had significant cycles with home prices almost doubling from 1995 to 2005 , then falling by over 50 percent during the Great Recession , taking prices back to 2002 levels. Home values appeared to hit bottom in 2009 then remained essentially flat for two to three years with the majority of the Inland Empire's housing market seeing an improvement beginning in mid-2012. While coastal Southern California housing enjoyed significant increases between 2012 and 2015, the Inland Empire bounced back slower with overall Riverside County finally passing the previous median home price peak in early 2020 (prior to the pandemic). Contrary to homebuilder ' s original thoughts of a slowdown due to the pandemic, new home buyers stepped up in the spring of 2020 and new home sales were significantly higher during the second half of 2020 versus the previous year. In addition, since May 2020 there has been a significant increase in residential builder land purchases in the Inland Empire. While land purchases essentially stopped in February, March and April 2020. Beginning in May 2020 builders began looking for land and entering escrow on land purchases with residential land moving at a brisk pace since the second half of 41 4147-9245 -2408.3
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2020. Most recently builders are attempting to renegotiate residential land escrows as rates have risen in the past two months which are anticipated to slow new home sales. The exceptional activity in new home sales since May 2020 is thought to be due to several factors, including: a tight resale supply of homes; historically low interest rates; millennials finally buying homes; and, the work from home factor during the pandemic, which is allowing residents to live in more suburban areas without long commutes. Along with dropping the interest rate to O - 0.25 percent at the beginning of the pandemic, the Board began quantitative easing by buying 80 billion in Treasury Bonds and 40 billion in Mortgage-Backed Securities each month. These measures helped shore up the national economy during the pandemic. See APPENDIX B - "APPRAISAL REPORT."
As of the Date of Value of the Appraisal , of the 3 78 planned residential units, 186 homes have closed to individuals , leaving 192 Developer owned lots, 103 of which have been sold, pending close of escrow. Of the Developer owned lots, 115 are in a generally physically finished condition (with 28 in escrow) as of the Date of Value. For these finished lots, 8 building permits had been issued as of the Date of Value. Between the July 1, 2022 Date of Value and August 15, 2022, an additional 19 building permits had been issued, and an additional 10 home sales had closed escrow to individual homeowners.
In total, 196 residential units have been conveyed to individual homeowners as of August 15, 2022. See Appendix B. Prospective purchasers of the Series 2022 Bonds should not assume that the absorption of the remaining 182 Developer owned homes and lots incorporated as part of the Appraisal in order to make an informed decision whether to purchase the Series 2022 Bonds.
Competition
The housing market in the area in which the Community Facilities District is located has other pending and proposed projects that may be competitive with the projects in the Community Facilities District. This competition could impact the future value of the property and the rate at which homes are sold and absorbed. See the Appraisal in Appendix B and "SPECIAL RISK FACTORS - Real Estate Market Fluctuations ."
Land Value
The value of land within the Community Facilities District is a critical factor in determining the investment quality of the Series 2022 Bonds. If a landowner defaults in the payment of a Special Tax, the Community Facilities District's only remedy is to commence foreclosure proceedings in an attempt to obtain funds to pay the delinquent Special Tax.
Prospective purchasers of the Series 2022 Bonds should not assume that the land within the Community Facilities District could be sold for the appraised value described under the heading "SECURITY FOR THE BONDS - Appraised Value" at a foreclosure sale for delinquent Special Taxes .
For example, it is unlikely that common ownership would be maintained through foreclosure sales of multiple delinquent parcels because at foreclosure each parcel must be sold separately for the Special Tax lien claims against it and multiple parcels may not be foreclosed in a single "bulk" foreclosure sale. In particular, the Appraiser notes that it has assumed that the cost information provided by the Developer is true and accurate , and that it has reviewed and analyzed the summarized costs as received and they appear reasonable; however, it does not have expertise in cost estimating and if the actual remaining costs differ, it will affect the value of the property. See APPENDIX B - "APPRAISAL REPORT" for descriptions of other assumptions made by the Appraiser in determining its appraised values for the property in the Community Facilities District.
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Additionally, reductions in land values within the Community Facilities District could occur due to a downturn in the economy, physical events such as earthquakes or floods or other events, all of which will adversely impact the security underlying the Special Tax.
Local, State and Federal Land Use Regulations
There can be no assurance that land development operations within the Community Facilities District will not be adversely affected by future government policies, including, but not limited to, governmental policies which directly or indirectly restrict or control development. During the past several years, citizens of a number of local communities in California have placed measures on the ballot designed to control the rate of future development. It is possible that future initiatives applicable to the City or the Community Facilities District could be enacted and could negatively impact the ability of the property owners to further develop their land. In addition, state or federal laws and regulations could be adopted which would have preemptive effect on local land use regulations.
During the past several years, state and federal regulatory agencies have significantly expanded their involvement in local land use matters through increased regulatory enforcement of various environmental laws, including the Endangered Species Act, the Clean Water Act and the Clean Air Act, among others. Such regulations can substantially impair the rate and amount of development without requiring just compensation unless the effect of the regulation is to deny all economic use of the affected property . While the Developer believes that it has obtained all relevant environmental approvals for the Development of the nature described in the second preceding sentence (see "THE DEVELOPMENT AND THE DEVELOPER - Land Use Approvals and Environmental Review"), Owners of Series 2022 Bonds should assume that any event that significantly impacts the ability to develop land in the Community Facilities District could cause the land values within the Community Facilities District to decrease substantially and could affect the willingness and ability of the owners of land to pay the Special Taxes when due or to proceed with development of land in the Community Facilities District. See "SPECIAL RISK FACTORS -Governmental Approvals" and"- Land Values" herein .
Maximum Annual Special Tax Rates
Within the limits of the Rate and Method, the Community Facilities District may adjust the Special Tax levy on all property within the Community Facilities District to provide the amount required each year to pay Annual Debt Service, to replenish the Reserve Fund to an amount equal to the Reserve Requirement and to pay Administrative Expenses. Pursuant to the Rate and Method, the Special Taxes levied on Developed Property will always bt levied in an amount sufficient to satisfy the Special Tax Requirement. However, the amount of Special Tax that may be levied against each category of Approved Property and Undeveloped Property is subject to the maximum tax rate set forth in the Rate and Method.
In the event of significant Special Tax delinquencies, there is no assurance that said maximum tax rates would be sufficient to pay the amounts required to be paid pursuant to the Indenture .
Furthermore, pursuant to the Rate and Method, and also 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 Community Facilities District by more than 10% above the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults . As a result, it is possible that the Community Facilities District may not be able to increase the tax levy to a level sufficient to collect Special Tax in the amount specified in the Rate and Method in all years. However, subject to the limitations on the Community Facilities District's ability to levy the necessary amount of Special Taxes as imposed by the Rate and Method and by Section 5332 l(d) of the Government Code, the Community Facilities District can levy Special Taxes on 43 4147-9245 -2408.3
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Approved Property, Undeveloped Property and Provisional Property (as defined in the Rate and Method) to make up all or a portion of any shortfall in the Special Tax levy. See "THE COMMUNITY FACILITIES DISTRICT - Rate and Method of Apportionment of Special Tax" and APPENDIX A - "RA TE AND METHOD OF APPORTIONMENT OF SPECIAL TAX."
Insufficiency of Special Tax Revenues
In order to pay debt service on the Series 2022 Bonds, it is necessary that the Special Taxes levied against land within the Community Facilities District be paid in a timely manner. Should the Special Taxes not be paid on time, the Community Facilities District has established the Reserve Fund to pay debt service on the Series 2022 Bonds to the extent other funds are not available therefore. Although the Community Facilities District may levy the Special Taxes in an amount sufficient to replenish the Reserve Fund, the levy would be subject to the maximum annual Special Tax rates set forth in the Rate and Method and the limitation in the Act on increasing the Special Tax levy on property in residential use by no more than l 0% as a consequence of delinquencies in the payment of Special Taxes. See "THE COMMUNITY FACILITIES DISTRICT - Rate and Method of Apportionment of Special Tax." As discussed below, Net Special Tax Revenues could be insufficient to pay the Series 2022 Bonds either due to nonpayment of the amounts levied or in the event that acreage within the Community Facilities District were to become exempt from taxation due to title being transferred to a public agency.
The Act provides that, if any property within the Community Facilities District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. The Owners of Series 2022 Bonds will be dependent on the ability and/or willingness of the public entity to pay the Special Tax levied on such property when due. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award . The constitutionality and operation of these provisions of the Act have not been tested. If for any reason property subject to the Special Tax becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government, or another public agency, subject to the limitation of the maximum authorized rate of levy, the Special Tax will be reallocated to the remaining taxable properties within the Community Facilities District, but in no case more than the maximum authorized Special Tax for such properties. If a substantial portion of land within the Community Facilities District became exempt from the Special Tax because of public ownership or otherwise, the maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Series 2022 Bonds when due and a default may occur with respect to the payment of such principal and interest.
The Community Facilities District has covenanted to institute foreclosure proceedings under specified circumstances to sell property with delinquent Special Taxes in order to obtain funds to pay debt service on the Series 2022 Bonds. If foreclosure proceedings were ever instituted , any mortgage or deed of trust holder could, but would not be required to, advance the amount of delinquent Special Taxes to protect its security interest. See "SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure" for provisions which apply in the event foreclosure is required and which the Community Facilities District is required to follow in the event of delinquency in the payment of Special Taxes. In the event such superior court foreclosure or foreclosures are necessary, there could be a delay in payments to Owners of the Series 2022 Bonds pending prosecution of the foreclosure sale, if the Reserve Fund were depleted.
No assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold, or, if sold, that the proceeds of such sale will be sufficient to pay any 44 4147-9245 -2408.3
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delinquent Special Taxes. Although the Act authorizes the Community Facilities District to cause such an action to be commenced and diligently pursued to completion, the Act does not specify the obligations of the Community Facilities District with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the execution sale pursuant to the judgment in any such action if there is no other purchaser at such sale.
Potential Early Redemption of Bonds from Special Tax Prepayments Property owners within the Community Facilities District are permitted to prepay their Special Taxes at any time. Such payments will result in a mandatory redemption of Series 2022 Bonds from a prepayment of Special Taxes on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of such prepayment of Special Taxes. The resulting redemption of Series 2022 Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Series 2022 Bonds. See "THE SERIES 2022 BONDS - Redemption - Mandatory Redemption from Special Tax Prepayments."
Special Tax Delinquencies
Special Tax will be billed to properties within the Community Facilities District on the ad valorem property tax bills sent to owners of such properties by the County. Such Special Tax installments will be due and payable and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.
Significant delinquencies in the payment of annual Special Tax installments, or delays in the prosecution of foreclosure proceedings to collect such Special Taxes, could result in the depletion of the Reserve Fund and default in payment of debt service on the Series 2022 Bonds. See "SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure," for a discussion of the provisions that apply, and the procedures that the Community Facilities District is obligated to follow, under the Indenture in the event of delinquencies in the payment of Special Taxes. See "- Property Interest of Government Agencies; Federal Deposit Insurance Corporation" and "- Bankruptcy and Foreclosure Delays" for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and limitations on the Community Facilities District' s ability to foreclose on the lien of the Special Taxes in certain circumstances.
Other laws generally affecting creditors' rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six month period after termination of such military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.
A prior program, permitting the County Treasurer-Tax Collector to waive penalties for property taxpayers who, as a result of the impact of COVID-19 do not pay an installment of their property tax bills, on qualifying properties, is no longer available. The County Treasurer-Tax Collector will, pursuant to State law permit limited options to postpone property taxes are for some residents under a State program which allows homeowners who are seniors (62 years of age or older), or taxpayers who have a disability, to defer current-year property taxes on their principal residence. There are several requirements for participation in the program, including at least 40 percent equity in the home and an annual household income of $45,000 or less. The deadline to apply for the state Property Tax Postponement Program is February 10.
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Cybersecurity
The City, including on behalf of the Community Facilities District, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As the custodian of such information, the City, including on behalf of the Community Facilities District, may face cybersecurity threats from time to time including, but not limited to, hacking, viruses, malware and other attacks on computer and other sensitive digital networks and systems . Entities or individuals may attempt to gain unauthorized access to the City, including on behalf of the Community Facilities District's systems for the purposes of misappropriating assets or information or causing operational disruption or damage.
The City has never had a major cyber breach that resulted in a financial loss. The City maintains insurance coverage for cyber security losses should a successful breach ever occur.
No assurance can be given that the City, including on behalf of the Community Facilities District ' s efforts to manage cyber threats and attacks will, in all cases, be successful or that any such attack will not materially impact the operations or finances of the City, including on behalf of the Community Facilities District,. The Community Facilities District is reliant on other entities and service providers, such as the County Treasurer for investment of funds and levy of the Special Taxes, the Trustee in its role as Trustee, and Willdan Financial Services, in its role as Special Tax Consultant and in its role as Dissemination Agent in connection with compliance with its disclosure undertakings. No assurance can be given that the City or the Community Facilities District may not be affected by cyber threats and attacks against other entities or service providers in a manner which may affect the Owners or Beneficial Owners of the Series 2022 Bonds, e.g., systems related to the timeliness of payments to Owners of the Series 2022 Bonds or compliance with disclosure filings pursuant to the Continuing Disclosure Agreement.
Infectious Disease Outbreak
[In general, the outbreak of a highly contagious disease or epidemic disease could harm the value of property in the Community Facilities District or the willingness or ability of owners to pay property taxes as and when due. The current impacts of COVID-19 have raised general awareness that the ability or willingness of property owners to pay the Special Tax on property in the Community Facilities District when due, the value of the property in the Community Facilities District, development and/or sale of homes within the Community Facilities District, or the ability of the Community Facilities District to collect delinquent Special Taxes through judicial foreclosure could be adversely affected by a global, national or localized outbreak of an infectious disease, such as the COVID-19 virus, or by the fear of such an outbreak, including such things as supply chain slowdowns or shutdowns resulting from the unavailability of workers in locations producing construction materials, slowdowns or shutdowns by local governmental agencies in providing governmental permits , inspections, title and document recordation or other services and activities related to real estate development. Further, alterations in the behavior of businesses and people due to an infectious disease can occur in a manner that has a negative impact on global and/or local economies, and which results in a volatile stock market response. Such events and other factors resulting from such an outbreak, particularly if prolonged, could result in, or increase the likelihood of, the occurrence of certain of the other potential adverse effects described in this Official Statement, including those relating to declines in the value of property, slowing of development and/or sale of homes within the Community Facilities District, the inability or unwillingness to pay the Special Tax, and delays in (or insufficient funds received from) the collection of delinquent Special Taxes through judicial foreclosure. A future outbreak of the COVID-19 virus or another infectious disease or the fear of any such outbreak could have similar or additional adverse effects. Neither the Community Facilities District nor the City can predict the ultimate effects of the COVID-19 virus outbreak or any 46 4147-9245-2408.3
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future outbreak or potential future outbreak of an infectious disease, or whether any such effects would have a material adverse effect on the ability to develop the Community Facilities District as planned, the ability or willingness of property owners to pay Special Taxes when due, or the ability of either Community Facilities District to pay the principal of, and interest on, the Series 2022 Bonds when due.
COVID-19 Background. The outbreak of the respiratory disease caused by COVID-19 has been declared a pandemic by the World Health Organization, a national emergency by President Trump and a state of emergency by the Governor of the State. The current spread of COVID-19 has altered the behavior of businesses and people in a manner that has had negative effects on global, national and local economies. Additionally, stock markets in the U.S. and globally have seen significant recent declines and volatility attributed to concerns about the COVID-19 virus. As a result, the amount of Special Taxes to be collected semi-annually on the real property within the Community Facilities District and development and/or sale of homes within the Community Facilities District could be adversely affected by such events beyond either Community Facilities District's control. See also, "SECURITY FOR THE 2022 BONDS - The Special Taxes" and "- Covenant for Superior Court Foreclosure" for further information regarding the collection and distribution of delinquent Special Taxes.
Specific Information Regarding Responses to the COVID-19 Virus. After California Governor Gavin Newsom' s declaration of a State of Emergency to exist in California as a result of the threat of the COVID-19 virus and the issuance of the State-wide stay-at-home order, the County Tax Collector in March 2020, announced his plan to grant waivers on penalties to taxpayers as allowed by existing law to assist them during these challenging times, providing for taxpayers that do not make payment of property taxes, including the Special Taxes, due to the COVID-19 virus by April 10. Such taxpayers would be expected to submit to the Treasurer-Tax Collector a "cancellation of penalty request form" and documentation to support the cancellation of penalties as allowed in limited circumstances under current State law, allowing for waiver of penalties, costs and other charges when failure to make a timely payment is due to reasonable cause and circumstances beyond the taxpayer's control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect. Related thereto, On May 6, 2020, California Governor Gavin Newsom issued Executive Order N-61-20, which ordered that certain provisions of the California Revenue and Taxation Code were suspended until May 6, 2021, to the extent those provisions require a tax collector to impose penalties, cost, or interest for the failure to pay taxes on property on the secured or unsecured roll, or to pay a supplemental bill, before the dates and time such taxes became delinquent, and that a tax collector shall cancel such penalties, costs, and interest provided all of several conditions are satisfied, including that the taxpayer demonstrates to the satisfaction of the tax collector that the taxpayer has suffered economic hardship, or was otherwise unable to tender payment of taxes in a timely fashion, due to the COVID-19 pandemic, or any local, state or federal government response to COVID-19.
Additional Information . The COVID-19 health crisis, including COVID-19 variants which have materialized and may materialize, is ongoing, and the ultimate geographic spread of the virus, the duration and severity of the health crisis, and the economic and other of actions that may be taken by governmental authorities to contain the health crisis or to treat its impact are uncertain. The City and the Community Facilities District are unable to predict at this time whether new proposals will be enacted or in what form they may take, or whether any new requirements related to reducing the spread of COVID- 19 and variants will materially impact its finances or operations. Additional information with respect to events surround the health crisis of COVID-19 and responses thereto can be found on federal, State and local government websites, including but not limited to, the CDC (https://www.cdc .gov), the Governor's office (http://www.gov.ca.gov), the California Department of Public Health (https://covidl 9.ca.gov/) and the local County health agency (https://rivcoph.org/coronavirus). The information on these websites are not incorporated by reference herein, and neither the Community Facilities District nor the City can take 47 4147-9245-2408.3
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responsibility for the continued accuracy of this internet address or for the accuracy, completeness or timeliness of information posted therein.
The ultimate impact of COVID-19 and its variants is unknown. There can be no assurances that the spread of COVID-19, or the responses thereto by local, State, or the federal government, will not materially adversely impact the local, State and national economies or the assessed valuation of property within the Community Facilities District.]
Bankruptcy and Foreclosure Delays
The payment of Special Taxes and the ability of the Community Facilities District to foreclose the lien of a delinquent unpaid Special Tax, as discussed in the section herein entitled "SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure ," may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure.
In addition, the prosecution of a foreclosure could be delayed due to crowded local court calendars or legal delaying tactics.
The various legal opinions to be delivered concurrently with the delivery of the Series 2022 Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, reorganization , insolvency or other similar laws affecting the rights of creditors generally.
Regardless of the priority of the Special Taxes securing the Series 2022 Bonds over non governmental liens on a parcel, the exercise by the Community Facilities District of the foreclosure and sale remedy may be forestalled or delayed by bankruptcy, reorganization, insolvency, or other similar proceedings of the owner of, or anyone else who claims an interest in, a parcel. The federal bankruptcy laws provide for an automatic stay of foreclosure and sale proceedings, thereby delaying such proceedings perhaps for an extended period. Delay in exercise of remedies or the institution of bankruptcy proceedings may cause Special Tax collections to be insufficient to pay debt service on the Series 2022 Bonds.
Further, should remedies be exercised under the bankruptcy law against a parcel, payment of Special Taxes may be subordinated to other claims in the bankruptcy proceedings. Thus, certain claims may have priority over a claim for unpaid Special Taxes, even though, in the absence of the bankruptcy proceedings, no such priority would exist.
The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem property taxes. Pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, P.L. 109-8, the lien for special taxes established after the filing of a petition in bankruptcy will be treated thereafter as a lien for ad valorem taxes.
However, the amount of any such lien on property with delinquent Special Taxes could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien. The amount of the delinquent Special Taxes in excess of the reduced lien would then be treated as an unsecured claim by the court.
Any prohibition of or delay in the enforcement of the Special Tax lien would increase the likelihood of a delay or default in payment of the principal of and interest on the Series 2022 Bonds.
Because a substantial portion of the taxable property in the Community Facilities District is initially owned by the Developer, the payment of Special Taxes and the ability of the Community Facilities District to foreclose the lien of a delinquent unpaid Special Tax could be substantially curtailed by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State 48 4147-9245-2408 .3
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relating to judicial foreclosure. No assurances can be given that any financial difficulties experienced by the Developer will not adversely affect the completion of the Development.
Hazardous Materials
While government taxes, assessments and charges are a common claim against the value of a taxed parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value that may be realized to pay the Special Tax is a claim with regard to a hazardous substance. In general, the owners and operators of a taxed parcel 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 1989, sometimes referred to as "CERCLA" or "Superfund Act," is one such law, but California laws with regard to hazardous substances are also stringent and somewhat similar. Under many of these laws, the owner (or operator) is obligated to remediate hazardous substances on, under or about the property whether or not the owner ( or operator) has anything to do with creating or handling the hazardous substance; however, an owner (or operator) who is not at fault may seek recovery of its damages from the actual wrongdoer. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, may be to reduce the marketability and value of the parcel, because the purchaser, upon becoming an owner, may become obligated to remedy the condition just as is the seller.
Natural Disasters; Seismic Hazards
Natural disasters, including floods and earthquakes, could damage improvements and/or property in the Community Facilities District, or impair the ability of landowners within the Community Facilities District to develop their properties or to pay property taxes.
There are several identified faults within close proximity to or within the boundaries of the Community Facilities District, including the Southern Segment of the San Andreas Fault that could potentially result in damage to buildings, roads, bridges, and property within the Community Facilities District in the event of an earthquake. Past earthquakes have resulted in minimal damage to the infrastructure and property within the City. A majority of the property within the City has been developed in conformity with the 1988 Uniform Building Code standards.
However, like other areas of Southern California, property in the Community Facilities District is subject to the risk of major earthquake damage. Known active faults that could cause significant ground shaking in the Community Facilities District include, but are not limited to, the Southern Segment of the San Andreas Fault. It should be assumed, therefore, that an earthquake or one or more of such other conditions may occur and may cause damage to improvements on parcels in the Community Facilities District of varying seriousness, that such 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 usability or because other considerations may preclude such repair or replacement.
Consequently, the occurrence of any of these conditions could result in a significant decrease in the market value of property in the Community Facilities District or in such property becoming unmarketable. Most recently, southern California has experienced a series of significant earthquakes centered in and around the Ridgecrest area, approximately 181 miles north of the City. The City reports that although these earthquakes and aftershocks were felt within the City, no significant structural damage has been reported.
If an earthquake were to substantially damage or destroy taxable property within the Community Facilities District, the assessed valuation of such property would be reduced. Such a reduction of 49 4147 -9245-2408.3
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assessed valuations could result in a reduction of the Special Tax Revenues that secure the Series 2022 Bonds .
The Appraisal states that the Community Facilities District is not located within an Alquist Priolo Earthquake study zone . Also according to the Appraisal, the Community Facilities District is located within FEMA Map 06065Cl595G dated August 28, 2008. The site is shown as Zone X which is outside of any flood zone area.
The Community Facilities District is not located within a Very High or High Fire Hazard Severity Zone , which are Cal Fire's designation for places highly vulnerable to devastating wildfires.
Designations are based on the factors that influence fire likelihood and fire behavior. Many factors are considered such as fire history, existing and potential fuel (natural vegetation), predicted flame length, blowing embers, terrain, and typical fire weather for the area.
Property Interest of Government Agencies; Federal Deposit Insurance Corporation The ability of the Community Facilities District to collect the Special Taxes, and interest and penalties specified by State law, and to foreclose or to compel the foreclosure of the lien of delinquent Special Taxes may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC") or other similar federal governmental agencies has or obtains an interest. On June 4, 1991, the FDIC issued a Statement of Policy Regarding the Payment of State and Local Property Taxes (the "1991 Policy Statement"). The 1991 Policy Statement was revised and superseded by a new Policy Statement effective January 9, 1997 (the "Policy Statement"). The Policy Statement provides that real 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 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 special tax formula 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.
With respect to property in California owned by the FDIC on January 9, 1997, and that was owned by the Resolution Trust Corporation ("RTC") on December 31 , 1995, or that became the property of the FDIC through foreclosure of a security interest held by the RTC on that date, the FDIC will continue the RTC's prior practice of paying special taxes imposed pursuant to the Act if the taxes were imposed prior to the RTC's acquisition of an interest in the property . All other special taxes may be challenged by the FDIC. 50 4147-9245-2408.3
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The Community Facilities District is unable to predict what effect the FDIC's application of the Policy Statement would have in the event of a delinquency on a parcel within the Community Facilities District in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed at a judicial foreclosure sale would reduce or eliminate the persons willing to purchase a parcel at a foreclosure sale. Owners of the Series 2022 Bonds should assume that the Community Facilities District will be unable to foreclose on any parcel owned by the FDIC. Such an outcome could cause draws on the Reserve Fund and perhaps, ultimately, a default in payment on the Series 2022 Bonds.
Based upon the secured tax roll for Fiscal Year 2022-23, the FDIC does not presently own any of the property in the Community Facilities District.
The ability of the Community Facilities District to collect the Special Taxes and interest and penalties specified by State law, and to foreclose the lien of delinquent Special Taxes, may be limited in certain respects with regard to properties in which the FDIC , the Federal National Mortgage Association (Fannie Mae), Freddie Mac, the Drug Enforcement Agency, the Internal Revenue Service, or other similar federal governmental agencies has or obtains an interest.
Other laws generally affecting creditors' rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of such military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate.
Similarly, in the event a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution ("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, anything in the Constitution or Laws of any State to the contrary notwithstanding"), in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of taxable property 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 .
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and a Community Facilities District 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.
Disclosure to Future Property Owners or Lenders
The Community Facilities District has recorded a Notice of Special Tax Lien in the Office of the County Recorder. While title insurance and search 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 Special Tax obligation imposed on parcels in the Community Facilities District in the purchase of property or the lending of money thereon. Under the Act, the Developer will also have an obligation to disclose the existence of the Special Taxes to homebuyers. 51 4147-9245 -2408.3
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Failure to disclose the existence of the Special Tax may affect the willingness and ability of future owners of property within the Community Facilities District to pay the Special Tax when due.
Non-Cash Payments of Special Taxes
Under the Act, the Community Facilities District may reserve to itself the right and authority to allow the owner of any taxable parcel to tender a Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus , if Bonds can be purchased in the secondary market at a discount , it may be to the advantage of an owner of a taxable parcel to pay the Special Tax applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the Community Facilities District to make payments with respect to any Series 2022 Bonds then outstanding ; and , unless the practice was limited by the Community Facilities District , the Special Tax paid in cash could be insufficient to pay the debt service due with respect to the Series 2022 Bonds.
In order to provide some protection against the potential adverse impact on cash flows which might be caused by the tender of Bonds in payment of the Special Tax, the Indenture includes a covenant pursuant to which the Community Facilities District will not authorize owners of taxable parcels to satisfy Special Tax obligations by the tender of Bonds unless the Community Facilities District shall have first obtained a report of an Independent Financial Consultant certifying that doing so would not result in the Community Facilities District having insufficient Net Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds when due.
Payment of the Special Tax is not a Personal Obligation of the Owners An owner of a property is not personally obligated to pay the Special Tax . The Special Tax is an obligation which is secured only by a lien against the property on which it is levied . If the value of a taxable parcel is not sufficient , taking into account other liens imposed by public agencies , to secure fully the payment of the Special Tax , the Community Facilities District has no recourse against the owner . See "SPECIAL RISK FACTORS - Direct and Overlapping Indebtedness " for a table showing overlapping indebtedness payable from taxes to be levied on parcels in the Community Facilities District.
Limitations on Remedies
Remedies available to the owners of the Series 2022 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the. Series 2022 Bonds or to preserve the tax -exempt status of the Series 2022 Bonds .
Bond Counsel has limited its opinion as to the enforceability of the Series 2022 Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization , moratorium, fraudulent conveyance or transfer, or other similar laws affecting creditors ' rights generally , by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on remedies against public agencies in the State of California. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners of the Series 2022 Bonds.
Loss of Tax Exemption
As discussed under the caption "CONCLUDING INFORMATION - Tax Matters" herein , interest on the Series 2022 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2022 Bonds were issued , as a result of future acts or omissions of the Community Facilities District in violation of its covenants in the Indenture. Should such 52 4147-9 245-2408.3
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an event of taxability occur, the Series 2022 Bonds are not subject to a special redemption and will remain outstanding until maturity or until redeemed under one of the other redemption provisions contained in the Indenture .
In addition, legislation affecting the tax exemption of interest on the Series 2022 Bonds may be considered by the United States Congress and the State legislature. Federal and state court proceedings and the outcome of such proceedings could also affect the tax exemption of interest on the Series 2022 Bonds. No assurance can be given that legislation enacted or proposed, or actions by a court, after the date of delivery of the Series 2022 Bonds will not have an adverse effect on the tax exemption of interest on the Series 2022 Bonds or the market value of the Series 2022 Bonds.
Proposition 218
An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State at the November 5, 1996 general election. The Initiative added Article XIIIC ("Article XIIIC") and Article XIIID to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General , the Initiative limits "the authority of local governments to impose taxes and property-related assessments, fees and charges." Among other things, Section 3 of Article XIIIC states that " ... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure, which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that:
"Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election , shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution."
Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the Series 2022 Bonds.
It may be possible, however, for voters within the Community Facilities District or the City Council, acting as the legislative body of the Community Facilities District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Series 2022 Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels.
Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the Series 2022 Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses.
Nevertheless, to the maximum extent that the law permits it to do so, the Community Facilities District has covenanted not to initiate proceedings under the Act to modify the Rate and Method if such modification would adversely affect the security for the Series 2022 Bonds. If an initiative is adopted that 53 4147-9245 -2408.3
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purports to modify the Rate and Method in a manner that would adversely affect the security for the Series 2022 Bonds, the Community Facilities District shall, to the extent permitted by law, commence and pursue reasonable legal actions to prevent the modification of the Rate and Method in a manner that would adversely affect the security for the Series 2022 Bonds. No assurance can be given as to the enforceability of the foregoing covenants.
The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "- Limitations on Remedies ."
IRS Audit of Tax-Exempt Issues
The Internal Revenue Service (the "IRS") has initiated an expanded program for the auditing of tax-exempt issues, including both random and targeted audits. It is possible that the Series 2022 Bonds will be selected for audit by the IRS. It is also possible that the market value of the Series 2022 Bonds might be affected as a result of such an audit of the Series 2022 Bonds (or by an audit of similar obligations). See "CONCLUDING INFORMATION - Tax Matters ." No Acceleration Provision
The Series 2022 Bonds do not contain a provision allowing for the acceleration of the unpaid principal of the Series 2022 Bonds in the event of a payment default or other default under the terms of the Series 2022 Bonds or the Indenture.
Ballot Initiatives
The Initiative was adopted pursuant to measures qualified for the ballot pursuant to the State's Constitutional initiative process and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities . On March 6, 1995, in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by State voters or legislation enacted by the State Legislature . The adoption of any such initiative or legislation might place limitations on the ability of the City, the State, the County or local districts to increase revenues or appropriations or on the ability of the property owners within the Community Facilities District to complete the remaining proposed development. See "- Failure to Develop Properties; Government Approvals ."
Limited Liquidity of the Series 2022 Bonds
The Community Facilities District has not applied for, and does not expect to receive, a rating on the Series 2022 Bonds from any nationally recognized rating organization . This fact may limit the secondary market for, and therefore the liquidity of, the Series 2022 Bonds.
Absence of Secondary Market
No representation is made concerning the existence of any secondary market for the Series 2022 Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Series 2022 Bonds and no assurance can be given that the initial offering prices for the 54 4147-9245-2408.3
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Series 2022 Bonds will continue for any period of time . Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances.
CONCLUDING INFORMATION
Continuing Disclosure
The Community Facilities District, pursuant to the Community Facilities District Continuing Disclosure Agreement, and the Developer, pursuant to the Developer Continuing Disclosure Agreement, have each agreed to provide certain financial information and operating data on an annual basis, and to provide notices of the occurrence of certain enumerated events. In addition, the Developer has agreed to provide mid-year reports. See APPENDIX G - "FORM OF DISTRICT CONTINUING DISCLOSURE AGREEMENT" and APPENDIX H - "FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT." The covenants in the Community Facilities District Continuing Disclosure Agreement have been made by the Community Facilities District in order to assist the Underwriter in complying with the Rule. The Underwriter does not consider the Developer to be an "obligated person" with respect to the Series 2022 Bonds for purposes of the Rule. The Developer Continuing Disclosure Agreement shall terminate at such time as the Developer and its Affiliates, in the aggregate, own less than 76 or 20% of the residential lots within the Community Facilities District. In addition, the Developer's Continuing Disclosure Agreement may terminate in certain other circumstances, as described in the Developer Continuing Disclosure Agreement.
A failure by the Community Facilities District or the Developer to comply with its respective continuing disclosure obligations will not constitute a default under the Indenture. However, the Continuing Disclosure Agreements provide that, in the event of a failure of the Community Facilities District or the Developer, as applicable, to comply with any provision of their respective Continuing Disclosure Agreement, any Bond Owner, any Beneficial Owner, the Trustee or the Underwriter may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Community Facilities District or the Developer to comply with its obligations under its respective Continuing Disclosure Agreement. The sole remedy under each Continuing Disclosure Agreement in the event of any failure of the Community Facilities District or the Developer to comply with its respective Continuing Disclosure Agreement is an action to compel performance.
Community Facilities District Prior Continuing Disclosure Compliance. The Community Facilities District has not had any prior continuing disclosure obligations under the Rule. The City will assist the Community Facilities District in preparing its continuing disclosure reports.
Neither the Community Facilities District nor the City has undertaken to determine whether the Developer is an obligated person under Rule 15c2-12. Neither the Community Facilities District nor the City has participated in the preparation, negotiation or implementation of the Developer Continuing Disclosure Agreement. Neither the Community Facilities District nor the City takes any responsibility for the adequacy of the Developer Continuing Disclosure Agreement for its intended purpose . None of the Community Facilities District, the City or the Trustee is a party to the Developer Continuing Disclosure Agreement, and none of the Community Facilities District, the City or the Trustee has any obligation or right to monitor or enforce compliance by the Developer with its obligations under the Developer Continuing Disclosure Agreement.
Developer Prior Continuing Disclosure Compliance. The Developer has represented to the Community Facilities District that, based on a review of prior continuing disclosure undertakings, the Developer [(with respect to its Southern California Division)] has not failed to comply in any material respect with any previous undertaking by it to provide periodic continuing disclosure reports or notices of 55 4147-9245-2408.3
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listed events with respect to community facilities districts or assessment districts in [southern] California within the past five years . [The Northern California Division of [Pulte Home Company, LLC] failed to file its first periodic report due December 15, 2021 with respect to the $21,920,000 City of Alameda Community Facilities District No. 13-1 (Alameda Landing Public Improvements, 2021 Special Tax Subordinate Bonds, which [Pulte Home Company, LLC] subsequently filed on June 15, 2022. This is the first known continuing disclosure undertaking by the Northern California Division.] Absence of Litigation
The Community Facilities District. At the time of delivery of and payment for the Series 2022 Bonds, the Community Facilities District will deliver a certificate to the effect that there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court, public board or body, pending with respect to which the Community Facilities District has been served with process or known by the official of the Community Facilities District executing the Bond Purchase Agreement with the Underwriter for the Series 2022 Bonds to be threatened, which in any way questions the powers of the City Council or the Community Facilities District with respect to the Community Facilities District entering into the Indenture or the Continuing Disclosure Agreement, or the issuance, sale and delivery of the Series 2022 Bonds, or the validity of any proceeding taken by the City Council in connection with the issuance of the Series 2022 Bonds, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions on the part of the Community Facilities District contemplated by any of such documents, or which, in any way, could adversely affect the validity or enforceability of the resolutions adopted by the City Council with respect to the Community Facilities District and the ordinance levying Special Taxes in the Community Facilities District, the Indenture, the Series 2022 Bonds or the Bond Purchase Agreement or which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Series 2022 Bonds for federal income tax purposes or in any other way questions the status of the interest on the Series 2022 Bonds under State tax law or regulations.
The Developer. At the time of delivery and payment for the Series 2022 Bonds, the Developer will deliver a certificate to the effect that to the Actual Knowledge of the Developer (as defined in such certificate), no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Developer (with proper service of process or proper notice to the Developer having been accomplished) or to the Actual Knowledge of the Developer, overtly threatened in writing against the Developer (a) which, if successful, is reasonably likely to materially and adversely affect the Developer's ability to complete the development and sale of the property owned by the Developer in the Community Facilities District (the "Property") as described in this Official Statement, or to pay its Special Taxes, or ordinary ad valorem property tax obligations related to the Property when due; or (b) which challenges or questions the validity or enforceability of the Series 2022 Bonds or the Continuing Disclosure Agreement to be executed by the Developer in connection with the issuance of the Series 2022 Bonds.
Tax Matters
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Community Facilities District ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Series 2022 Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Series 2022 Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that, for tax years beginning after December 31, 2022, interest on the Series 2022 Bonds included in adjusted financial statement income of certain corporations is not 56 4147-9245-2408.3
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excluded from the federal corporate alternative mm1mum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2022 Bonds . A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix E hereto.
To the extent the issue price of any maturity of the Series 2022 Bonds is less than the amount to be paid at maturity of such Series 2022 Bonds ( excluding amounts stated to be interest and payable at least annually over the term of such Series 2022 Bonds), the difference constitutes "original issue discount ," the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Series 2022 Bonds which is excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Series 2022 Bonds is the first price at which a substantial amount of such maturity of the Series 2022 Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2022 Bonds accrues daily over the term to maturity of such Series 2022 Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Series 2022 Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Series 2022 Bonds. Beneficial Owners of the Series 2022 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series 2022 Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Series 2022 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2022 Bonds is sold to the public.
Series 2022 Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2022 Bonds.
The Community Facilities District has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Series 2022 Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Series 2022 Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Series 2022 Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Series 2022 Bonds may adversely affect the value of, or the tax status of interest on, the Series 2022 Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Bond Counsel is of the opinion that interest on the Series 2022 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Series 2022 Bonds may otherwise affect a Beneficial Owner's federal, state or local tax liability . The 57 414 7-9245-2408.3
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nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Current and future legislative proposals , if enacted into law, clarification of the Code or court decisions may cause interest on the Series 2022 Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation , or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Series 2022 Bonds.
Prospective purchasers of the Series 2022 Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation , regulations or litigation, as to which Bond Counsel expresses no opinion .
The opinion of Bond Counsel is based on current legal authority , covers certain matters not directly addressed by such authorities, and represents Bond Counsel ' s judgment as to the proper treatment of the Series 2022 Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts . Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Community Facilities District , or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Community Facilities District has covenanted, however , to comply with the requirements of the Code.
Bond Counsel's engagement with respect to the Series 2022 Bonds ends with the issuance of the Series 2022 Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Community Facilities District or the Beneficial Owners regarding the tax-exempt status of the Series 2022 Bonds in the event of an audit examination by the IRS. Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process. Moreover , because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Community Facilities District legitimately disagrees , may not be practicable . Any action of the IRS, including but not limited to selection of the Series 2022 Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Series 2022 Bonds, and may cause the Community Facilities District or the Beneficial Owners to incur significant expense.
Payments on the Series 2022 Bonds generally will be subject to U.S. information reporting and possibly to "backup withholding. " Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate Beneficial Owner of Series 2022 Bonds may be subject to backup withholding with respect to "reportable payments ," which include interest paid on the Series 2022 Bonds and the gross proceeds of a sale, exchange , redemption, retirement or other disposition of the Series 2022 Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number ("TIN") to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect , (iii) there has been a "notified payee underreporting" described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(l )(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner's federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain Beneficial Owners (including among others, corporations and certain tax exempt organizations) are not subject to backup withholding . The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS. 58 4147-9245 -2408.3
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Legal Matters Incident to the Issuance of the Series 2022 Bonds Certain legal matters incident to the authorization and issuance of the Series 2022 Bonds are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, acting in its capacity as Bond Counsel to the Community Facilities District. Bond Counsel, as such, undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Community Facilities District by the City Attorney, and by Orrick, Herrington & Sutcliffe LLP, Disclosure Counsel. Certain legal matters will be passed upon for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Underwriter's Counsel.
Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and Underwriter's Counsel is contingent upon the sale and issuance of the Series 2022 Bonds.
The various legal opinions to be delivered concurrently with the delivery of the Series 2022 Bonds will be qualified as to enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally .
Municipal Advisor
Columbia Capital Management, LLC, Carlsbad, California, has served as Municipal Advisor to the Community Facilities District in connection with the issuance of the Series 2022 Bonds. The Municipal Advisor 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 Municipal Advisor is an independent financial advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.
No Rating
The Series 2022 Bonds are not rated. No application has been made by the Community Facilities District to any rating agency for the assignment of a municipal bond credit rating for the Series 2022 Bonds .
Underwriting
The Series 2022 Bonds are being purchased by the Underwriter for a price of$ ____ , which is equal to the initial principal amount of the Series 2022 Bonds, plus a net original issue premium of $ ____ , and less an Underwriter's discount of$____ The Underwriter has committed to purchase all of the Series 2022 Bonds if any of the Series 2022 Bonds are purchased . The Series 2022 Bonds are being offered for sale to the public at the prices set forth on the inside cover page of this Official Statement, which prices may be changed by the Underwriter from time to time without notice.
The Series 2022 Bonds may be offered and sold to dealers, including the Underwriter and dealers acquiring Series 2022 Bonds for their own account or an account managed by them, at prices lower than the public offering price.