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CITY AS SUCCESSOR AGENCY TO RDA 1 JANUARY 19, 2016
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
MINUTES
TUESDAY, JANUARY 19, 2016
A regular meeting of the La Quinta City Council in their capacity as Successor Agency
to the La Quinta Redevelopment Agency (“SA”) was called to order at 8:43 pm by
Chairperson Evans.
PRESENT: Agency Members Franklin, Osborne, Peña, Radi, Chairperson Evans
ABSENT: None
CONFIRMATION OF AGENDA - Confirmed
CLOSED SESSION - None
PUBLIC COMMENT ON MATTERS NOT ON THE AGENDA – None
ANNOUNCEMENTS, PRESENTATIONS AND WRITTEN COMMUNICATIONS – None
CONSENT CALENDAR
1. APPROVE MINUTES OF SEPTEMBER 15, 2015 4-0 abstain
2. ADOPT A RESOLUTION APPROVING A RECOGNIZED OBLIGATION PAYMENT
SCHEDULE OF THE FORMER LA QUINTA REDEVELOPMENT AGENCY FOR THE
PERIOD OF JULY 1, 2016 THROUGH JUNE 30, 2017 [RESOLUTION SA 2016-001]
3. ADOPT A RESOLUTION APPROVING THE SUCCESSOR AGENCY
ADMINISTRATIVE BUDGET FOR THE PERIOD OF JULY 1, 2016 THROUGH JUNE
30, 2017 [RESOLUTION SA 2016-002]
MOTION – A motion was made and seconded by Agency Members Radi/Franklin to
approve Consent Calendar Item No. 1 as written. Motion passed: ayes 4, noes 0,
abstain 1 (Osborne)
MOTION – A motion was made and seconded by Agency Members Radi/Franklin to
approve Consent Calendar Item Nos. 2 and 3, adopting Resolutions SA 2016-001 and
SA 2019-002 as recommended. Motion passed unanimously.
BUSINESS SESSION – None
STUDY SESSION – None
CONSENT CALENDAR 1
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CITY AS SUCCESSOR AGENCY TO RDA 2 JANUARY 19, 2016
PUBLIC HEARINGS – None
DEPARTMENTAL REPORTS - None
CHAIR AND BOARD MEMBERS' ITEMS – None
REPORTS AND INFORMATIONAL ITEMS – None
ADJOURNMENT
There being no further business, it was moved and seconded by Agency Members
Peña/Franklin to adjourn at 8:44 p.m. Motion passed unanimously.
Respectfully submitted,
SUSAN MAYSELS, Agency Secretary
Successor Agency to the dissolved
La Quinta Redevelopment Agency
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City of La Quinta
SUCCESSOR AGENCY MEETING: July 5, 2016
STAFF REPORT
AGENDA TITLE: ADOPT A RESOLUTION APPROVING A BOND EXPENDITURE AGREEMENT
WITH THE CITY OF LA QUINTA, THE LA QUINTA HOUSING AUTHORITY, AND THE
SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY TO FACILITATE THE
EXPENDITURE OF EXCESS BOND PROCEEDS
RECOMMENDATION
Adopt a Resolution approving a Bond Expenditure Agreement by and between the City of
La Quinta, the La Quinta Housing Authority, and the Successor Agency to the La Quinta
Redevelopment Agency.
EXECUTIVE SUMMARY
The Successor Agency to the La Quinta Redevelopment Agency (Successor Agency)
received its finding of completion from the California Department of Finance (DOF)
on November 6, 2013.
The Dissolution Act allows a Successor Agency that has received a finding of
completion to enter into agreements with City or Housing Authority as appropriate
to expend excess bond proceeds in a manner consistent with the original bond
covenants.
The Oversight Board is required to approve the expenditure agreement prior to
submitting to DOF for final approval.
The expenditure agreement will be included as an enforceable obligation on
Recognized Obligation Payments Schedule (ROPS) 2017/18 and will enable the
Successor Agency to proceed with its submittal of a last and final ROP’s.
FISCAL IMPACT
This agreement will facilitate the expenditure of bond proceeds for their originally
intended purpose.
BACKGROUND/ANALYSIS
The Successor Agency received its finding of completion from DOF on November 6, 2013.
In September of 2015, Senate Bill 107 was enacted that allows for the expenditure of
100% of 2011 Housing Bond Proceeds and a portion of the 2011 Non-Housing Bond
Proceeds. The Dissolution Act allows Successor Agencies that received a finding of
CONSENT CALENDAR 2
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completion to enter into bond proceeds agreements to expend excess proceeds in a
manner consistent with the original bond covenants.
Housing Bond Proceeds totaling $27,761,073 would be transferred to the Housing
Authority as follows:
Project Areas No. 1 and 2 Refunding Bonds, 2014 Series A (used for refinancing
2004 Tax Allocation Housing Bonds) in the approximate amount of $2,200,000
La Quinta Financing Authority Local Agency Subordinate Taxable Revenue Bonds,
2011 Series A (2011 Housing Bonds) in the amount of $25,561,073.
Non-Housing Bond Proceeds totaling $6,696,805 would be transferred to the City as
follows:
Project Areas No. 1 and 2 Refunding Bonds, 2013 Series A (used for refinancing
2002 Tax Allocation Bonds) in the amount of $6,575,791.87
La Quinta Redevelopment Agency Project Area No. 2 Subordinate Taxable Tax
Allocation Bonds, Series 2011 (2011 Non-Housing Bonds). Currently 5% of the
$2,420,268.52 in proceeds or $121,014.33 may be expended. This percentage
could increase by $500,000 after DOF reviews and approves the Successor
Agency's Last and Final ROPS.
The Housing Authority and City respectively have the responsibility to spend the proceeds
consistent with the bond covenants and on projects identified within a bond spending
plan. Currently the Washington Street Apartments Projects is identified as a housing
project and the construction of Silverrock Way is a non-housing project. Both the City and
Housing Authority can amend their respective spending plan as deemed necessary and at
their sole discretion provided the expenditures remain consistent with the applicable
bond covenants.
Approving this agreement will facilitate the expenditure of excess bond proceeds for their
originally intended purpose and enable a submittal of a Last and Final ROP’s to the
Department of Finance.
ALTERNATIVES
No alternatives are recommended.
Prepared by: Gil Villalpando, Management Specialist
Approved by: Frank J. Spevacek, City Manager
Attachments: 1. Bond Expenditure Agreement
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RESOLUTION NO. SA 2016-
A RESOLUTION OF THE CITY OF LA QUINTA ACTING AS
THE SUCCESSOR AGENCY TO LA QUINTA
REDEVELOPMENT AGENCY APPROVING A BOND
EXPENDITURE AGREEMENT
WHEREAS, the Successor Agency to the La Quinta Redevelopment
Agency (Successor Agency) received its Finding of Completion under Health and
Safety Code Section 34179.7 from the California Department of Finance on
November 6, 2013; and
WHEREAS, Health and Safety Code Section 34191.4(c) allows a successor
agency that has received a finding of completion to use bond proceeds from
“non-housing” bonds issued prior to 2011, and a prescribed percentage of
“non-housing” bond proceeds for bonds issued between January 1, 2011 and
June 28, 2011, for purposes for which the bonds were sold, provided that such
proceeds in excess of amounts needed to satisfy approved enforceable
obligations shall be expended in a manner consistent with the original bond
covenants, and further provides that such expenditures shall constitute “excess
bond proceeds obligations” that shall be listed separately on the successor
agency’s Recognized Obligation Payment Schedule (“ROPS”); and
WHEREAS, Health and Safety Code section 34176(g) allows the a
housing successor to use 100% excess bond proceeds secured by the former La
Quinta Redevelopment Agency’s Low and Moderate Income Housing Fund
(“LMIHF”), as long as the “housing” bonds were issued prior to June 28, 2011;
and
WHEREAS, the Successor Agency will have so-called “excess bond
proceeds,” i.e., tax allocation bond proceeds, from both “non-housing” and
“housing” bonds, that are not otherwise obligated for a project or other
enforceable obligation. The Successor Agency wishes to use such proceeds for
redevelopment and affordable housing purposes consistent with applicable
bond covenants; and
WHEREAS, the California Community Redevelopment Law (Health and
Safety Code Section 33000, et seq.) provides for a cooperative relationship
between cities and their redevelopment agencies, as well as their successor
agencies who have assumed the duties and obligations of the former
redevelopment agencies. Under Health and Safety Code Section 33220, a city
may aid and cooperate in the planning, undertaking, construction, or operation
of redevelopment projects. Health and Safety Code Section 33220(e)
specifically authorizes a city to enter into an agreement with its redevelopment
agency or any other public entity to further redevelopment purposes. Health
and Safety Code Section 34176(g)(1)(A) [for housing bond proceeds] and
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Resolution No. SA 2016-
Expenditure of Bonds
Adopted: July 5, 2016
Page 2 of 3
Sections 34191.4(c)(1)(A) and 34191.4(c)(2) [for non-housing bond proceeds]
allow a housing successor, successor agency, and sponsoring city to enter into
agreements with the approval of the oversight board; and
WHEREAS, the Successor Agency desires to provide “non-housing”
excess bond proceeds to the City of La Quinta (City) to enable the City to use
such funds in a manner consistent with the original “non-housing” bonds’
covenants, and the Successor Agency desires to provide “housing” excess bond
proceeds to the La Quinta Housing Authority (Housing Authority) to enable the
Housing Authority to use such funds in a manner consistent with the original
housing bonds’ covenants; and
WHEREAS, in order to facilitate the use of excess bond proceeds
consistent with the bond covenants, the Successor Agency, City, and Housing
Authority have negotiated an agreement requiring the transfer of current and
future excess bond proceeds by the Successor Agency to the City and Housing
Authority, respectively, and the use of such excess bond proceeds consistent
with applicable bond covenants. If approved by the Oversight Board for the La
Quinta Successor Agency (Oversight Board), the Successor Agency will list the
agreement, and the requirement to transfer excess bond proceeds herein on a
ROPS as an obligation to be funded with excess bond proceeds.
NOW, THEREFORE, BE IT RESOLVED by City of La Quinta Acting as the
Successor Agency to La Quinta Redevelopment Agency, does hereby resolve as
follows:
SECTION 1. The foregoing recitals are true and correct and are incorporated
into the approval of this Resolution.
SECTION 2. The Successor Agency hereby approves the Bond Expenditure
Agreement substantially in the form attached as Exhibit A.
SECTION 3. The City Manager shall have the authority to execute the
Agreement on behalf of the City, the Housing Authority’s Executive Directors
shall have the authority to execute the Agreement on behalf of the Housing
Authority, and the Successor Agency’s Executive Directors shall have the
authority to execute the Agreement on behalf of the Successor Agency. The
City Manager or designee shall have the authority to take any and all
implementing actions to effectuate the terms and conditions of this
Agreement.
SECTION 4. The Bond Expenditure Agreement and ROPS on which the Bond
Expenditure Agreement is listed shall become effective when the Oversight
Board and California Department of Finance render their respective approvals
as required by the dissolution law, Health and Safety Code Section 34170 et seq.
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Resolution No. SA 2016-
Expenditure of Bonds
Adopted: July 5, 2016
Page 3 of 3
PASSED, APPROVED, and ADOPTED at a regular meeting of the
Successor Agency to the Dissolved La Quinta Redevelopment Agency held on
this 5TH day of July, 2016, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
LINDA EVANS, Chairperson
City of La Quinta Acting as
Successor Agency to the La
Quinta Redevelopment Agency
ATTEST:
__________________________________________
SUSAN MAYSELS, Secretary
City of La Quinta Acting as Successor
Agency to the La Quinta Redevelopment Agency
(AGENCY SEAL)
APPROVED AS TO FORM:
________________________________________
WILLIAM H. IHRKE, Counsel
City of La Quinta Acting as Successor
Agency to the La Quinta Redevelopment Agency
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698/099999-6000
9804274.2 a06/29/16
Attachment 1
BOND EXPENDITURE AGREEMENT
(La Quinta Housing & Non-Housing Tax Allocation Bonds)
This Bond Expenditure Agreement (the “Agreement”) is entered into and effective
____________________, 2016, by and between the City of La Quinta, a California municipal
corporation (the “City”), the La Quinta Housing Authority, in its capacity as the housing
successor pursuant to Health and Safety Code Section 34176(a)(3) (“Housing Authority”), and
the Successor Agency to the La Quinta Redevelopment Agency, a public agency, corporate and
politic, pursuant to Health and Safety Code Section 34173 (“Successor Agency”).
Recitals:
A. The Successor Agency received its Finding of Completion under Health and
Safety Code Section 34179.7 from the California Department of Finance on November 6, 2013.
B. Health and Safety Code Section 34191.4(c) allows a successor agency that has
received a finding of completion to use bond proceeds from “non-housing” bonds issued prior to
2011, and a prescribed percentage of non-housing bond proceeds for bonds issued between
January 1, 2011 and June 28, 2011, for purposes for which the bonds were sold, provided that
such proceeds in excess of amounts needed to satisfy approved enforceable obligations shall be
expended in a manner consistent with the original bond covenants, and further provides that such
expenditures shall constitute “excess bond proceeds obligations” that shall be listed separately on
the successor agency’s Recognized Obligation Payment Schedule (“ROPS”).
C. Health and Safety Code section 34176(g) allows a housing successor to use 100%
excess bond proceeds secured by the former La Quinta Redevelopment Agency’s Low and
Moderate Income Housing Fund (“LMIHF”), as long as the “housing” bonds were issued prior to
June 28, 2011.
D. The Successor Agency will have so-called “excess bond proceeds,” i.e., tax
allocation bond proceeds, from both “non-housing” and “housing” bonds, that are not otherwise
obligated for a project or other enforceable obligation. The Successor Agency wishes to use
such proceeds for redevelopment and affordable housing purposes consistent with applicable
bond covenants.
E. The California Community Redevelopment Law (Health and Safety Code
Section 33000, et seq.) provides for a cooperative relationship between cities and their
redevelopment agencies, as well as their successor agencies who have assumed the duties and
obligations of the former redevelopment agencies. Under Health and Safety Code
Section 33220, a city may aid and cooperate in the planning, undertaking, construction, or
operation of redevelopment projects. Health and Safety Code Section 33220(e) specifically
authorizes a city to enter into an agreement with its redevelopment agency or any other public
entity to further redevelopment purposes. Health and Safety Code Section 34176(g)(1)(A) [for
housing bond proceeds] and Sections 34191.4(c)(1)(A) and 34191.4(c)(2) [for non-housing bond
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proceeds] allow a housing successor, successor agency, and sponsoring city to enter into
agreements with the approval of the oversight board.
F. The Successor Agency desires to provide “non-housing” excess bond proceeds to
the City to enable the City to use such funds in a manner consistent with the original “non-
housing” bonds’ covenants, and the Successor Agency desires to provide “housing” excess bond
proceeds to the Housing Authority (if not already provided) to enable the Housing Authority to
use such funds in a manner consistent with the original housing bonds’ covenants. The non-
housing and housing bonds’ covenants are summarized in the Official Statements for the
“Bonds,” identified below in this Agreement, and the Official Statements and all bond
documents governing the authorized spending of the “Bond Proceeds,” as defined below in this
Agreement, are incorporated by reference and generally referred to as the “Bond Spending Plan.”
The Bond Spending Plan is intended to advance the City’s community development goals and
Housing Authority’s affordable housing goals, while maximizing fiscal and social benefits
flowing to the taxing entities from successful development. The La Quinta Successor Agency’s
Oversight Board (“Oversight Board”) has determined that the expenditure of excess bond
proceeds in accordance with this Agreement will benefit the affected taxing entities, and has
approved the execution of this Agreement and the provision of excess bond proceeds to the City
and Housing Authority for the purposes described herein.
G. In order to facilitate the use of excess bond proceeds consistent with the bond
covenants, the Successor Agency, City, and Housing Authority have negotiated this Agreement
requiring the transfer of current and future excess bond proceeds by the Successor Agency to the
City and Housing Authority, respectively, and the use of such excess bond proceeds consistent
with applicable bond covenants. The parties intend that this Agreement shall constitute an
excess bond proceeds obligation within the meaning of Health and Safety Code
Sections 34176(g)(1)(A) and 34191.4(c) to be paid from excess bond proceeds. With Oversight
Board approval, the Successor Agency has listed or will list this Agreement, and the requirement
to transfer excess bond proceeds herein, on its Recognized Obligation Payment Schedule
(“ROPS”) as an obligation to be funded with excess bond proceeds.
NOW, THEREFORE, the parties hereto do mutually agree as follows:
1. RECITALS.
The recitals above are an integral part of this Agreement and set forth the intentions of
the parties and the premises on which the parties have decided to enter into this Agreement.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the indicated meaning:
“Bonds” means all of the following bond issuances:
Successor Agency to the La Quinta Redevelopment Agency La Quinta
Redevelopment Agency Project Areas No. 1 and 2 Refunding Bonds, 2014
Series A (used for refinancing 2004 Tax Allocation Housing Bonds), and
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any refinancing or refunding thereof authorized by the Dissolution Law
(referred to in this Agreement as the “2004 Housing Bonds”).
Successor Agency to the La Quinta Redevelopment Agency La Quinta
Redevelopment Project Areas No. 1 and 2 Subordinate Tax Allocation
Refunding Bonds, 2013 Series A (used for refinancing 2002 Tax
Allocation Bonds), and any refinancing or refunding thereof authorized by
the Dissolution Law (referred to in this Agreement as the “2002 Non-
Housing Bonds”).
La Quinta Financing Authority Local Agency Subordinate Taxable
Revenue Bonds, 2011 Series A, and any refinancing or refunding thereof
authorized by the Dissolution Law (referred to in this Agreement as the
“2011 Housing Bonds”).
La Quinta Redevelopment Agency Project Area No. 2 Subordinate
Taxable Tax Allocation Bonds, Series 2011, and any refinancing or
refunding thereof authorized by the Dissolution Law (referred to in this
Agreement as the “2011 Non-Housing Bonds”).
“Bond Proceeds” means (1) proceeds remaining from the Bonds secured by a pledge of
the Redevelopment Agency’s tax increment, (2) rents, sale proceeds and other revenues
generated by properties acquired and/or improved with proceeds from the Bonds, (3) interest and
principal paid on loans funded by proceeds from the Bonds, and (4) other income or revenues
generated from assets acquired or funded with proceeds from the Bonds. As of the date of this
Agreement, the Bond Proceeds remaining from the Bonds described in clause (1) are
approximately: $2,200,000 from the 2004 Housing Bonds; $6,600,000 from the 2002 Non-
Housing Bonds; $25,500,000 from the 2011 Housing Bonds; and $2,400,000 from the 2011
Non-Housing Bonds, with the exact amounts of Bond Proceeds remaining set forth in the
spreadsheet entitled “City of La Quinta – Bond Proceeds” attached to this Agreement as
Exhibit A and incorporated herein by reference (collectively, the “Remaining Bond Proceeds”).
“Bond Spending Plan” is defined in Recital F. In further explanation and not limitation
of the definition in Recital F, the “Bond Spending Plan” includes but is not limited to the
following projects that would use the following Excess Bond Proceeds:
Use of Housing Excess Bond Proceeds from the 2004 Housing Bonds for
that certain affordable housing project known as the “Washington Street
Apartments” project located at 42-800 Washington Street in the City; and
Use of Non-Housing Excess Bond Proceeds from the 2002 Non-Housing
Bonds for the construction of SilverRock Way.
“Dissolution Law” means Parts 1.8 and 1.85 of Division 24 of the California Health and
Safety Code, commencing with Section 34170, and other statutes governing the dissolution of
redevelopment agencies and the wind-down of redevelopment activities.
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“Enforceable Obligations” mean enforceable obligations, other than Excess Bond
Proceeds obligations, as defined under the Dissolution Law.
“Excess Bond Proceeds” means Bond Proceeds that are not needed to satisfy Enforceable
Obligations (other than this Agreement) approved on a ROPS. As of the date of this Agreement,
the Remaining Bond Proceeds qualify as Excess Bond Proceeds.
“Housing Excess Bond Proceeds” mean Excess Bond Proceeds tied to the 2004 Housing
Bonds or 2011 Housing Bonds, or both.
“Non-Housing Excess Bond Proceeds” mean Excess Bond Proceeds tied to the 2002
Non-Housing Bonds or 2011 Non-Housing Bonds, or both; provided, however, that “Non-
Housing Excess Bond Proceeds” from the 2011 Non-Housing Bonds may not exceed the
percentage of the Remaining Bond Proceeds from the 2011 Non-Housing Bonds authorized to be
expended pursuant to Health and Safety Code section 34191.4(c)(2) (or successor statute). At
the time of this Agreement, 5% of the Remaining Bond Proceeds from the 2011 Non-Housing
Bonds may be expended without a Last and Final ROPS, as the 2011 Non-Housing Bonds were
issued June 14, 2011. If the percentage of allowable expenditure from the Remaining Bond
Proceeds of the 2011 Non-Housing Bonds increases after the date of this Agreement, then any
Remaining Bond Proceeds from the 2011 Non-Housing Bonds that may be expended under an
amendment to the Dissolution Law shall be deemed Non-Housing Excess Bond Proceeds and
will be governed by the terms and conditions of this Agreement without need for further
amendment of this Agreement.
“ROPS” means Recognized Obligation Payment Schedule as defined in the Dissolution
Law. For purposes of this Agreement, ROPS includes the Last and Final ROPS (and any
allowable amendments thereto) pursuant to the Dissolution Law.
3. SUCCESSOR AGENCY’S OBLIGATIONS.
The Successor Agency shall have the following obligations under this Agreement:
3.1 CURRENT NON-HOUSING EXCESS BOND PROCEEDS. The Successor
Agency shall transfer to the City, no later than 30 days after the approval of this Agreement (or
Oversight Board Resolution approving this Agreement) by the California Department of Finance
(“DOF”), Non-Housing Excess Bond Proceeds currently held by the Successor Agency.
3.2 CURRENT HOUSING EXCESS BOND PROCEEDS. The Successor Agency
shall transfer to the Housing Authority, no later than 30 days after the approval of this
Agreement (or Oversight Board Resolution approving this Agreement) by the DOF, Housing
Excess Bond Proceeds currently held by the Successor Agency.
3.3 FUTURE EXCESS BOND PROCEEDS. The Successor Agency shall transfer to
the City all future Non-Housing Excess Bond Proceeds held or received by the Successor
Agency, and the Successor Agency shall transfer to the Housing Authority all future Housing
Excess Bond Proceeds held or received by the Successor Agency. Such future Excess Bond
Proceeds shall include, without limitation, (1) Bond Proceeds previously obligated to a project or
other Enforceable Obligation that become unobligated for any reason, (2) Bond Proceeds that
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become available in the form of rents, sale proceeds, loan repayments, or other revenues that are
generated by properties or other assets acquired and/or improved with Bond Proceeds and that
are not otherwise obligated to a project or other Enforceable Obligation, and (3) any other funds
held by the Successor Agency that qualify as Excess Bond Proceeds under this Agreement.
The parties intend that payments of future Non-Housing Excess Bond Proceeds be made
to the City and payments of future Housing Excess Bond Proceeds be made to the Housing
Authority, as soon as possible after such Excess Bond Proceeds become available. The transfer
of future Excess Bond Proceeds shall be made pursuant to an approved ROPS within 30 days of
the commencement of the relevant ROPS period, or within 30 days of the future Excess Bond
Proceeds becoming available to the Successor Agency after this Agreement has been approved
by DOF on an operative ROPS, whichever date is applicable. The Successor Agency shall be
responsible for ensuring that payments of future Excess Bond Proceeds, as such funds become
available, are included on a ROPS by identifying this Agreement.
3.4 PROJECTS FUNDED BY NON-HOUSING EXCESS BOND PROCEEDS. The
Successor Agency assigns to the City all responsibilities in relation to the administration of any
projects or programs funded by Non-Housing Excess Bond Proceeds. The Successor Agency
assigns to the City all contracts entered into by the Successor Agency or the former La Quinta
Redevelopment Agency (“Redevelopment Agency”) related to activities to be funded by Non-
Housing Excess Bond Proceeds, with the exception of those contracts retained by the Successor
Agency relating to Enforceable Obligations.
3.5 PROJECTS FUNDED BY HOUSING EXCESS BOND PROCEEDS. The
Successor Agency assigns to the Housing Authority all responsibilities in relation to the
administration of any projects or programs funded by Housing Excess Bond Proceeds. The
Successor Agency assigns to the Housing Authority all contracts entered into by the Successor
Agency or the Redevelopment Agency related to activities to be funded by Housing Excess Bond
Proceeds, with the exception of those contracts retained by the Successor Agency relating to
Enforceable Obligations.
4. CITY’S OBLIGATIONS.
The City shall have the following obligations under this Agreement:
4.1 RETENTION OF NON-HOUSING EXCESS BOND PROCEEDS. The City
shall accept, hold, and disburse Non-Housing Excess Bond Proceeds transferred to the City by
the Successor Agency under this Agreement, including current Non-Housing Excess Bond
Proceeds and future Non-Housing Excess Bond Proceeds. The City shall retain any Non-
Housing Excess Bond Proceeds that it receives, such as revenue generated from properties
acquired or improved with Non-Housing Excess Bond Proceeds or payments on loans funded
from Non-Housing Excess Bond Proceeds, without any obligation to return such funds to the
Successor Agency, and shall use such funds for uses consistent with applicable bond covenants.
4.2 USE OF NON-HOUSING EXCESS BOND PROCEEDS. The City may spend
Non-Housing Excess Bond Proceeds received or retained under this Agreement on any project,
program, or activity authorized under the Bond Spending Plan. The City must spend Non-
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Housing Excess Bond Proceeds consistent with the original bond covenants applicable to the
Non-Housing Excess Bond Proceeds, and must comply with all requirements of federal tax law
and all applicable requirements of the California Community Redevelopment Law as to the use
of such funds. The City shall be solely responsible for ensuring that Non-Housing Excess Bond
Proceeds are maintained and spent in accordance with bond covenants and other applicable laws.
The City may transfer funds between approved projects, programs and activities, as long as the
transfer is within a single project area if applicable bond covenants restrict such funds to a
particular project area.
The City assumes all contracts entered into by the Successor Agency or the former
Redevelopment Agency related to activities to be funded by Non-Housing Excess Bond
Proceeds, with the exception of those contracts retained by the Successor Agency relating to
Enforceable Obligations. The City shall perform its obligations hereunder, and under such
assumed contracts, in accordance with the applicable provisions of federal, state and local laws,
and shall timely complete the work required for each project.
4.3 BOND SPENDING PLAN. The City shall be solely responsible for maintaining
and implementing the Bond Spending Plan with respect to Non-Housing Excess Bond Proceeds.
The City may amend the Bond Spending Plan, with respect to use of Non-Housing Excess Bond
Proceeds, as the City deems necessary in its sole discretion. Any amendments to the adopted
Bond Spending Plan shall consider uses that advance the City’s community development goals
while maximizing fiscal and social benefits flowing to the taxing entities from successful
development. The Bond Spending Plan shall conform to applicable bond covenants and all
applicable requirements of federal tax law and the California Community Redevelopment Law.
Notwithstanding any contrary provision hereof, unless the City expressly agrees otherwise, the
City shall not be obligated to provide funding for any program or project in an amount exceeding
the Non-Housing Excess Bond Proceeds provided to the City pursuant to this Agreement.
5. HOUSING AUTHORITY’S OBLIGATIONS.
The Housing Authority shall have the following obligations under this Agreement:
5.1 RETENTION OF HOUSING EXCESS BOND PROCEEDS. The Housing
Authority shall accept, hold, and disburse Housing Excess Bond Proceeds transferred to the
Housing Authority by the Successor Agency under this Agreement, including current Housing
Excess Bond Proceeds and future Housing Excess Bond Proceeds. The Housing Authority shall
retain any Housing Excess Bond Proceeds that it receives, such as revenue generated from
properties acquired or improved with Housing Excess Bond Proceeds or payments on loans
funded from Housing Excess Bond Proceeds, without any obligation to return such funds to the
Successor Agency, and shall use such funds for uses consistent with applicable bond covenants.
5.2 USE OF HOUSING EXCESS BOND PROCEEDS. The Housing Authority may
spend Housing Excess Bond Proceeds received or retained under this Agreement on any project,
program, or activity authorized under the Bond Spending Plan. The Housing Authority must
spend Housing Excess Bond Proceeds consistent with the original bond covenants applicable to
the Housing Excess Bond Proceeds, and must comply with all requirements of federal tax law
and all applicable requirements of the California Community Redevelopment Law as to the use
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698/099999-6000
9804274.2 a06/29/16 -7-
of such funds. The Housing Authority shall be solely responsible for ensuring that Housing
Excess Bond Proceeds are maintained and spent in accordance with bond covenants and other
applicable laws. The Housing Authority may transfer funds between approved projects,
programs and activities, as long as the transfer is within a single project area if applicable bond
covenants restrict such funds to a particular project area.
The Housing Authority assumes all contracts entered into by the Successor Agency or the
former Redevelopment Agency related to activities to be funded by Housing Excess Bond
Proceeds, with the exception of those contracts retained by the Successor Agency relating to
Enforceable Obligations. The Housing Authority shall perform its obligations hereunder, and
under such assumed contracts, in accordance with the applicable provisions of federal, state and
local laws, and shall timely complete the work required for each project.
5.3 BOND SPENDING PLAN. The Housing Authority shall be solely responsible
for maintaining and implementing the Bond Spending Plan with respect to Housing Excess Bond
Proceeds. The Housing Authority may amend the Bond Spending Plan, with respect to use of
Housing Excess Bond Proceeds, as the Housing Authority deems necessary in its sole discretion.
Any amendments to the adopted Bond Spending Plan shall consider uses that advance the
Housing Authority’s affordable housing goals while maximizing fiscal and social benefits
flowing to the taxing entities from successful development. The Bond Spending Plan shall
conform to applicable bond covenants and all applicable requirements of federal tax law and the
California Community Redevelopment Law. Notwithstanding any contrary provision hereof,
unless the Housing Authority expressly agrees otherwise, the Housing Authority shall not be
obligated to provide funding for any program or project in an amount exceeding the Housing
Excess Bond Proceeds provided to the Housing Authority pursuant to this Agreement.
6. ENTIRE AGREEMENT; WAIVERS; AND AMENDMENTS.
6.1 This Agreement constitutes the entire understanding and agreement of the parties
with respect to the transfer and use of Excess Bond Proceeds. This Agreement integrates all of
the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations
or previous agreements between the parties with respect to the subject matter of this Agreement.
6.2 This Agreement intended solely for the benefit of the City, Housing Authority,
and the Successor Agency. Notwithstanding any reference in this Agreement to persons or
entities other than the City, Housing Authority and the Successor Agency, there shall be no third
party beneficiaries under this Agreement, except the La Quinta Financing Authority, a public
agency, corporate and politic.
6.3 All waivers of the provisions of this Agreement and all amendments to this
Agreement must be in writing and signed by the authorized representatives of the parties.
7. SEVERABILITY.
If any term, provisions, covenant or condition of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall
continue in full force and effect unless the rights and obligations of the parties have been
materially altered or abridged by such invalidation, voiding or unenforceability. In addition, the
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698/099999-6000
9804274.2 a06/29/16 -8-
parties shall cooperate in good faith in an effort to amend or modify this Agreement in a manner
such that the purpose of any invalidated or voided provision, covenant, or condition can be
accomplished to the maximum extent legally permissible.
8. DEFAULT.
If either party fails to perform or adequately perform an obligation required by this
Agreement within thirty (30) calendar days of receiving written notice from the non-defaulting
party, the party failing to perform shall be in default hereunder. In the event of default, the non-
defaulting party will have all the rights and remedies available to it at law or in equity to enforce
the provisions of this contract, including without limitation the right to sue for damages for
breach of contract or to seek specific performance. The rights and remedies of the non-
defaulting party enumerated in this paragraph are cumulative and shall not limit the non-
defaulting party’s rights under any other provision of this Agreement, or otherwise waive or
deny any right or remedy, at law or in equity, existing as of the date of the Agreement or
hereinafter enacted or established, that may be available to the non-defaulting party against the
defaulting party.
9. BINDING ON SUCCESSORS.
This Agreement shall be binding on and shall inure to the benefit of all successors and
assigns of the parties, whether by agreement or operation of law.
10. FURTHER ASSURANCES.
Each party agrees to execute, acknowledge and deliver all additional documents and
instruments, and to take such other actions as may be reasonably necessary to carry out the intent
of this Agreement.
11. CITY MANAGER DELEGATED AUTHORITY TO IMPLEMENT.
The City Manager shall have the authority to execute this Agreement on behalf of the
City, the Housing Authority’s Executive Directors shall have the authority to execute this
Agreement on behalf of the Housing Authority, and the Successor Agency’s Executive Directors
shall have the authority to execute this Agreement on behalf of the Successor Agency . The City
Manager or designee shall have the authority to take any and all implementing actions to
effectuate the terms and conditions of this Agreement.
[SIGNATURES ON NEXT PAGE]
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698/099999-6000
9804274.2 a06/29/16 -9-
In witness whereof, the undersigned parties have executed this Bond Expenditure
Agreement effective as of the date first above written.
“CITY”
THE CITY OF LA QUINTA,
a municipal corporation
By:
City Manager
Attest:
By:
City Clerk
Approved as to form:
By:
City Attorney
“HOUSING AUTHORITY”
LA QUINTA HOUSING AUTHORITY,
in its capacity as the housing successor
pursuant to Health and Safety Code
Section 34176
By:
Executive Director
Attest:
By:
Agency Secretary
Approved as to form:
By:
Agency Counsel
“SUCCESSOR AGENCY”
THE SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT
AGENCY,
a public agency, corporate and politic,
pursuant to Health and Safety Code
section 34173
By:
Executive Director
Attest:
By:
City Clerk
Approved as to form:
By:
Agency Counsel
21
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City of La Quinta
SUCCESSOR AGENCY MEETING: July 5, 2016
STAFF REPORT
AGENDA TITLE: ADOPT A RESOLUTION FOR ISSUANCE AND SALE OF SUBORDINATE TAX
ALLOCATION REFUNDING BONDS
RECOMMENDATION
Adopt a Resolution authorizing the issuance of Subordinate Tax Allocation Refunding
Bonds by the Successor Agency to the La Quinta Redevelopment Agency in the
approximate amount of $35,280,000, 2016 Series A Bonds, and authorizing certain
actions in connection therewith.
EXECUTIVE SUMMARY
In 2011, the La Quinta Redevelopment Agency issued $6,000,000 of Tax Allocation
Bonds of which $5,850,000 are currently outstanding and the La Quinta Financing
Authority issued $28,850,000 Taxable Revenue Bonds of which $27,225,000 are
currently outstanding (together the “2011 Bonds”).
Current bond interest rates are at historically low levels and refinancing the 2011
Bonds will reduce annual bond payments, allowing additional property tax revenue
distribution to the City and taxing agencies.
The Successor Agency has approximately $2.3 million of unspent 2011 Bond
proceeds on deposit with the Trustee, which will be used to pay down the principal
amount of the 2016 Bonds.
The 2011 Bonds are not subject to optional call and redemption until September 1,
2020 so the bond proceeds would be deposited in an escrow fund held by an
escrow bank, and used to pay regularly scheduled principal and interest payments
on the 2011 Bonds until September 1, 2020 (an advanced refunding).
Refinancing the 2011 Bonds will require State Department of Finance approval,
which may take up to 60 days.
FISCAL IMPACT
Lower bond interest costs with yield lower annual debt service savings of approximately
$614,000 or $12.82 million over the twenty-three year term of these bonds.
BACKGROUND/ANALYSIS
Starting in 1985, the La Quinta Redevelopment Agency (RDA) issued tax allocation bonds
to raise capital for infrastructure, public facility, economic development, and affordable
CONSENT CALENDAR: 3
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housing investment. Bond debt service payments are funded by property tax revenue.
When the RDA was eliminated in February 2012, the Successor Agency assumed the
responsibility to ensure that bond debt service payments are made. These payments are
classified as enforceable obligations and are tracked on the Recognized Obligation
Payment Schedule (ROPS).
The Successor Agency may refinance outstanding bonds and other obligations of the
RDA. The City’s financial advisors determined that today’s lower bond interest rates
would yield cost savings; all bond refinancing must be first approved by the Oversight
Board and the DOF.
In December 2013, the Successor Agency issued $97,190,000 2013 Series A and
$23,055,000 2013 Taxable Series B refinancing bonds. These bonds refinanced the
former RDA’s 1998 PA 1 Bonds, 1998 PA 2 Bonds, 2001 Bonds, 2002 Bonds and 2003
Bonds. The 2013 refunding bond program resulted in annual debt service savings of more
than $555,000 per year with an overall savings of $10,650,000.
In July 2014, the Successor Agency again successfully refinanced $65,600,000 of
additional former RDA bonds resulting in annual debt service savings of more than
$680,000 per year with an overall savings of $13,700,000.
In the current bond market, an opportunity exists to further reduce annual debt service
by refinancing the 2011 Bonds. Interest rates for the 2016 refunding bonds are estimated
at 3% to 5% with yield potentials 0.50% to 4.50%, on a taxable basis. The 2011 Bonds
have interest rates ranging from 5.375% to 8.15% on a taxable basis.
By refinancing bonds, debt service payments will be reduced by $12.8 million over 23
years This would free property tax revenue for distribution to other taxing agencies and
the City, with approximately $8 million to schools districts, $2.8 million to Riverside
County, $922,000 to the Coachella Valley Water District, $634,000 to the City, and
$225,000 to parks and recreation over the 23 year period.
ALTERNATIVES
As refinancing would result in an annual savings on bond debt service, staff does not
have an alternative.
Prepared by: Gilbert Villalpando, Management Specialist
Approved by: Frank J. Spevacek, City Manager
Attachments: 1. Bond Purchase Contract
2. Preliminary Official Statement
3. Continuing Disclosure Agreement
4. Escrow Agreement
5. Second Supplemental Indenture of Trust
6. Summary of 2016 Refinancing
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RESOLUTION NO. SA 2016 -
A RESOLUTION OF THE SUCCESSOR AGENCY TO THE LA
QUINTA REDEVELOPMENT AGENCY AUTHORIZING THE
ISSUANCE AND SALE OF SUBORDINATE TAX ALLOCATION
REFUNDING BONDS APPROVING THE FORM OF A SECOND
SUPPLEMENTAL INDENTURE OF TRUST, OFFICIAL
STATEMENT, BOND PURCHASE CONTRACT, CONTINUING
DISCLOSURE AGREEMENT, FORM OF ESCROW AGREEMENT,
AND RELATED DOCUMENTS AND AUTHORIZING CERTAIN
OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, the La Quinta Redevelopment Agency (the “Prior Agency”) was a
public body, corporate and politic, duly created, established and authorized to
transact business and exercise its powers under and pursuant to the provisions of the
Community Redevelopment Law (Part 1 of Division 24 (commencing with Section
33000) of the Health and Safety Code of the State of California) (the “Law”), and the
powers of the La Quinta Redevelopment Agency included the power to issue Bonds for
any of its corporate purposes; and
WHEREAS, a Redevelopment Plan for a redevelopment project known and
designated as the “La Quinta Redevelopment Project Area No. 1” has been adopted
and approved by Ordinance No. 43 of the City of La Quinta on November 29, 1983, and
all requirements of the Law for and precedent to the adoption and approval of the
Project Area No. 1 Redevelopment Plan, as amended, have been duly complied with;
and
WHEREAS, a Redevelopment Plan for a redevelopment project known and
designated as the “La Quinta Redevelopment Project Area No. 2” has been adopted
and approved by Ordinance No. 139 of the City of La Quinta on May 16, 1989, and all
requirements of the Law for and precedent to the adoption and approval of the
Project Area No. 2 Redevelopment Plan, as amended, have been duly complied with;
and
WHEREAS, the Prior Agency has previously issued $6,000,000 La Quinta
Redevelopment Agency, La Quinta Redevelopment Project Area No. 2 Subordinate
Taxable Tax Allocation Bonds, Series 2011 (the “2011 Project Area No. 2 Taxable
Bonds”); and
WHEREAS, the Authority on behalf of the Prior Agency has previously issued
$28,850,000 La Quinta Financing Authority, Local Agency Subordinate Taxable
Revenue Bonds, 2011 Series A (the “2011 Taxable Housing Bonds”) and loaned the
proceeds to the Prior Agency pursuant to the terms of a loan agreement dated
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Resolution No. SA 2016-
Tax Allocation Refunding Bonds
Adopted: July 5, 2016
Page 2 of 6
February 3, 2004 and a Second Supplemental Indenture, dated as of March 1, 2011
(the “2011 Loan Obligation”); and
WHEREAS, Assembly Bill AB X1 26, effective June 29, 2011, together with
Assembly Bill 1484 (“AB 1484”) (collectively, the “Dissolution Act”) resulted in the La
Quinta Redevelopment Agency being dissolved as of February 1, 2012; and
WHEREAS, the authority, rights, powers, assets, duties and obligations of the
Prior Agency were transferred on February 1, 2012 to the Successor Agency; and
WHEREAS, AB1484 specifically authorizes the issuance of refunding bonds by
the Successor Agency to refund the bonds or other indebtedness of the Prior Agency
to provide savings to the Successor Agency, provided that (A) the total interest cost to
maturity on the refunding bonds plus the principal amount of the refunding bonds
shall not exceed the total remaining interest cost to maturity on the bonds to be
refunded plus the remaining principal of the bonds to be refunded, and (B) the
principal amount of the refunding bonds shall not exceed the amount required to
defease the refunded bonds, to establish customary debt service reserves, and to pay
related costs of issuance; and
WHEREAS, the Successor Agency to the La Quinta Redevelopment Agency (the
“Successor Agency”) has determined that it is cost effective and efficient to refund
and defease, in their entirety, the 2011 Project Area No. 2 Taxable Bonds and the 2011
Loan Obligation (collectively, the “Refunded Bonds”) on a subordinate basis to the
$65,600,000 Successor Agency to the La Quinta Redevelopment Agency, La Quinta
Redevelopment Project Areas Nos. 1 and 2, Tax Allocation Refunding Bonds, 2014
Series A (the “2014 Bonds or the “Senior Bonds”) and on a parity basis with the
$97,190,000 Successor Agency to the La Quinta Redevelopment Agency La Quinta
Redevelopment Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding
Bonds, 2013 Series A (the “2013 Series A Bonds”) and the $23,055,000 Successor
Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project
Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2013 Taxable Series B
(the “2013 Series B Bonds”) (collectively, the “2013 Series A Bonds and the 2013 Series
B Bonds, the “2013 Bonds” or the “Parity Bonds”); and
WHEREAS, the Successor Agency deems it necessary and proper to issue
taxable tax allocation refunding bonds to refund and defease the Refunded Bonds;
and
WHEREAS, for the corporate purposes of the Successor Agency, the Successor
Agency deems it necessary to issue at this time tax allocation refunding bonds in a
principal amount of not to exceed Thirty-Nine million dollars ($39,000,000) (the
“Bonds”), and to irrevocably set aside a portion of the proceeds of such Bonds in a
separate segregated trust fund which will be used to refund the outstanding Refunded
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Resolution No. SA 2016-
Tax Allocation Refunding Bonds
Adopted: July 5, 2016
Page 3 of 6
Bonds of the Prior Agency, to pay costs in connection with the issuance of the Bonds,
and to make certain other deposits as required by the Indenture (defined herein); and
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 and interest
and redemption premium (if any) thereon, the Successor Agency wishes to approve
the issuance of the Bonds and authorize the execution and delivery of the Second
Supplemental Indenture of Trust; and
WHEREAS, pursuant to Section 34179 of the Law, an oversight board (the
“Oversight Board”) has been established for the Successor Agency and the Successor
Agency has requested that the Oversight Board approve the issuance of the Bonds by
the Successor Agency, as authorized by Section 34177.5(f) of the Law; and
WHEREAS, the Successor Agency hereby certifies that all acts and proceedings
required by law necessary to make the Bonds, when executed by the Successor
Agency, and authenticated and delivered by the Trustee, the valid, binding and legal
special obligations of the Successor Agency, and to constitute the Indenture a valid
and binding agreement for the uses and purposes herein set forth in accordance with
its terms, have been done or taken.
WHEREAS, the Successor Agency wishes at this time to approve all matters
relating to the issuance and sale of the Bonds;
NOW, THEREFORE, BE IT RESOLVED, by the Successor Agency to the La Quinta
Redevelopment Agency as follows:
SECTION 1. The Second Supplemental Indenture of Trust, by and between the
Successor Agency and U.S. Bank National Association, dated as of June 1, 2016, in
substantially the form submitted at this meeting and made a part hereof as though
set forth in full herein (the “Second Supplemental Indenture”), is hereby approved. An
Authorized Representative, as defined below, is hereby authorized and directed to
execute and deliver the Second Supplemental Indenture in the form presented at this
meeting with such changes insertions and omissions as may be requested by Bond
Counsel and approved by the Authorized Representative, said execution being
conclusive evidence of such approval.
SECTION 2. Subject to the provisions of the Second Supplemental Indenture referred
to in Section 1 hereof, the issuance of the Bonds in the aggregate principal amount of
not to exceed Thirty-Nine million dollars ($39,000,000) on the terms and conditions
set forth in, and subject to the limitations specified in, the Second Supplemental
Indenture, is hereby authorized and approved. The Bonds will be dated, will bear
interest at the rates, will mature on the dates, will be issued in the form, will be
subject to redemption, and will be as otherwise provided in the Second Supplemental
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Resolution No. SA 2016-
Tax Allocation Refunding Bonds
Adopted: July 5, 2016
Page 4 of 6
Indenture, as the same will be completed as provided in this Resolution. The proceeds
of the sale of the Bonds shall be applied as provided in the Second Supplemental
Indenture.
SECTION 3. The Bond Purchase Contract (the “Bond Purchase Contract”) between the
Successor Agency and Hilltop Securities Inc. (the “Underwriter”), in substantially the
form submitted at this meeting and made a part hereof as though set forth in full
herein, is hereby approved. An Authorized Representative is hereby authorized and
directed to execute the Bond Purchase Contract in the form presented at this meeting
with such changes, insertions and omissions as may be approved by the Authorized
Representative, said execution being conclusive evidence of such approval; provided,
however, that the Bond Purchase Contract shall be signed only if the terms of the
agreement are such that (i) the existing indebtedness is not accelerated, except to the
extent necessary to achieve substantially level debt service, (ii) the principal amount
of the Bonds will not exceed the amount required to finance the refunding of the
Refunded Bonds and including establishing a customary debt service reserve fund and
paying related costs of issuance, (iii) the Underwriter’s Discount not including original
issue discount, shall not exceed three-quarters percent (.750%) of the par value of the
Bonds; and (iv) the net present value savings amount generated from the issuance of
the Bonds, expressed as a percentage of the aggregate principal amount of the
Refunded Bonds, will be at least 3.00%.
SECTION 4. The Preliminary Official Statement relating to the Bonds (the “Preliminary
Official Statement”), in the form presented and on file with the Secretary, is hereby
approved. An Authorized Representative is hereby authorized and directed, for and in
the name and on behalf of the Successor Agency, to cause the Preliminary Official
Statement in substantially said form, with such additions or changes therein as the
Authorized Representative may approve, to be deemed final for the purposes of Rule
15c2-12 of the Securities and Exchange Act of 1934 (“Rule 15c2-12”). The Underwriter
is hereby authorized to distribute the Preliminary Official Statement to prospective
purchasers of the Bonds in substantially the form hereby approved, together with such
additions thereto and changes therein as are determined necessary by the Authorized
Representative to make the Preliminary Official Statement final as of its date for
purposes of Rule 15c2-12, including, but not limited to, such additions and changes as
are necessary to make all information set forth therein accurate and not misleading.
SECTION 5. The preparation and delivery of an Official Statement, and its use by the
Successor Agency and the Underwriter, in connection with the offering and sale of the
Bonds, is hereby authorized and approved. The Official Statement shall be in
substantially the form of the Preliminary Official Statement with such changes,
insertions and omissions as may be requested by Bond Counsel or the Underwriter
and approved by an Authorized Representative, as defined below, such approval to be
conclusively evidenced by the execution and delivery thereof. The Authorized
Representative is hereby authorized and directed to execute the final Official
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Resolution No. SA 2016-
Tax Allocation Refunding Bonds
Adopted: July 5, 2016
Page 5 of 6
Statement and any amendment or supplement thereto, in the name of and on behalf
of the Successor Agency, and thereupon to cause the final Official Statement and any
such amendment or supplement to be delivered to the Underwriter.
SECTION 6. The form of the Continuing Disclosure Agreement in substantially the
form submitted at this meeting and made a part hereof as though set forth in full
herein, is hereby approved. The Authorized Representative is hereby authorized and
directed to execute and deliver the Continuing Disclosure Agreement(s) in the form
presented at this meeting with such changes insertions and omissions as may be
requested by Bond Counsel and approved by the Authorized Representative, said
execution being conclusive evidence of such approval.
SECTION 7. The form of the Escrow Agreement, by and among the Successor Agency,
the Authority and U.S. Bank National Association, dated as of June 1, 2016, in
substantially the form submitted at this meeting and made a part hereof as though
set forth in full herein, is hereby approved. An Authorized Representative, as defined
below, is hereby authorized and directed to execute and deliver the Escrow
Agreement relating to each of the series of Refunded Bonds in the general form
presented at this meeting with such changes insertions and omissions as may be
requested by Bond Counsel and approved by the Executive Director, said execution
being conclusive evidence of such approval.
SECTION 8. The Chair of the Successor Agency, the Executive Director of the
Successor Agency, the Assistant Executive Director of the Successor Agency, the
Secretary of the Successor Agency, their written designee, and any other proper officer
of the Successor Agency (“Authorized Representative”), acting singly, be and each of
them hereby is authorized and directed to execute and deliver any and all documents
and instruments, relating to the Bonds, and each series thereof, and to do and cause
to be done any and all acts and things necessary or proper for carrying out the
transactions contemplated by the Indenture, the Second Supplemental Indenture, the
Bond Purchase Contract, the Preliminary Official Statement, the Continuing Disclosure
Agreement, the Escrow Agreement, this Resolution and any such agreements
approved by Bond Counsel.
SECTION 9. U.S. Bank National Association is hereby appointed as Trustee and
Escrow Bank, Rutan & Tucker, LLP is hereby appointed as Bond Counsel, Norton Rose
Fulbright US, LLP, a Professional Corporation is hereby appointed as Disclosure
Counsel. Harrell & Company Advisors, LLP is hereby appointed as Financial Advisor
and the Executive Director of the Successor Agency is authorized to execute contracts
for any or all such services pursuant to proposals on file with the Executive Director,
and Willdan Financial Services is hereby appointed as Dissemination Agent and the
Executive Director of the Successor Agency is authorized to execute contracts for any
or all such services pursuant to proposals on file with the Executive Director.
29
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Resolution No. SA 2016-
Tax Allocation Refunding Bonds
Adopted: July 5, 2016
Page 6 of 6
SECTION 10. The Successor Agency is hereby authorized to recover its costs of
issuance with respect to the Bonds, including staff time and costs.
SECTION 11. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED, AND ADOPTED at the meeting of the Successor Agency to the
La Quinta Redevelopment Agency held this 5th of July 2016, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
LINDA EVANS, Chairperson
City of La Quinta Acting as Successor Agency to
the La Quinta Redevelopment Agency
ATTEST:
SUSAN MAYSELS, Secretary
City of La Quinta Acting as Successor
Agency to the La Quinta Redevelopment Agency
(AGENCY SEAL)
APPROVED AS TO FORM:
__________________________________________
WILLIAM H. IHRKE, Counsel
City of La Quinta Acting as Successor
Agency to the La Quinta Redevelopment Agency
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NRF DRAFT –6/7/16
ATTACHMENT 1
$___________
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
La Quinta Redevelopment Project Areas No. 1 and 2
Subordinate Tax Allocation Refunding Bonds
2016 Taxable Series A
BOND PURCHASE CONTRACT
____________, 2016
Successor Agency to the La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, California 92253
Ladies and Gentlemen:
Hilltop Securities Inc. (the “Underwriter”), acting not as fiduciary or agent for you, but on
behalf of itself, hereby offers to enter into this Bond Purchase Contract (the “Purchase Contract”)
with the Successor Agency to the La Quinta Redevelopment Agency (the “Issuer”) for the purchase
from the Issuer, of the Issuer’s La Quinta Redevelopment Project Areas No. 1 and 2 Subordinate Tax
Allocation Refunding Bonds 2016 Taxable Series A (the “Bonds”). This offer is made subject to
acceptance thereof by the Issuer prior to 6:00 p.m., California time, on ____________, 2016, and
upon such acceptance, as evidenced by the signature of the Executive Director of the Issuer in the
space provided herein. This Purchase Contract shall be in full force and effect in accordance with its
terms and shall be binding upon the Issuer and the Underwriter.
The Issuer 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 Issuer and the
Underwriter; (ii) in connection with such transaction, the Underwriter is acting solely as a principal
and not as an agent or a fiduciary of the Issuer; (iii) the Underwriter has not assumed (individually or
collectively) a fiduciary responsibility in favor of the Issuer with respect to: (x) the offering of the
Bonds or the process leading thereto (whether or not any Underwriter, or any affiliate of the
Underwriter, has advised or is currently advising the Issuer or affiliates of the Issuer on other
matters); or (y) any other obligation to the Issuer except the obligations expressly set forth in this
Purchase Contract; and (iv) the Issuer has consulted with its own legal and financial advisor to the
extent they deemed appropriate in connection with the offering of the Bonds.
1. Purchase and Sale of the Bonds. Upon the terms and conditions and upon the basis of
the representations and agreements herein set forth, the Issuer hereby agrees to sell and the
Underwriter hereby agrees to purchase from the Issuer for offering to the public all (but not less than
all) of the $___________ aggregate principal amount of the Successor Agency to the La Quinta
Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax
Allocation Refunding Bonds, 2016 Taxable Series A, at a purchase price equal to $__________
(representing an aggregate principal amount of $_________, [plus/less] a net original issue
[premium/discount] of $________, and less an underwriter’s discount of $_________).
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The Bonds will mature and bear interest at the interest rates as shown in Appendix A hereto
and will be subject to redemption according to the terms set forth in the Indenture of Trust, dated as
of ___________ 1, 2016 (the “Indenture”), by and between the Issuer and U.S. Bank National
Association (the “Trustee”). The Bonds will be authorized and issued pursuant to the Indenture
approved by Resolution No. SA-________ adopted by the Issuer on ___________, 2016 (the
“Resolution”), and by Resolution No. OB-______ adopted by the Oversight Board for the Issuer on
___________, 2016 (the “Oversight Board Resolution”), and in accordance with Article 11
(commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government
Code (the “Bond Law”), Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with
Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27,
2012 by Assembly Bill No. 1484 (“AB 1484”), enacted as Chapter 26, Statutes of 2012 and as
further amended on September 22, 2015 by Senate Bill 107 (“SB 107”), enacted as Chapter 325,
Statutes of 2015 (collectively, as amended from time to time, the “Dissolution Act”), and the
Constitution and other applicable laws of the State of California (the “State”).
The Underwriter agrees to make a bona fide public offering of the Bonds at the initial
offering yields set forth in the Official Statement; however, the Underwriter reserves the right to
make concessions to dealers and to change such initial offering yields as the Underwriter shall deem
necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection
with the public offering and initial delivery of the Bonds to the purchasers thereof from the
Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the
final Official Statement prepared in connection with the Bonds (the “Official Statement”), for the
time period required under Rule 15c2-12 promulgated under the Securities Exchange Act of 1934
(“Rule 15c2-12”). Terms defined in the Official Statement are used herein as so defined.
The Bonds are being issued by the Issuer on a subordinate basis to the $65,600,000 Successor
Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and
2, Tax Allocation Refunding Bonds, 2014 Series A of which $________ are currently outstanding.
The Bonds are being issued to refinance on an advance basis the La Quinta Redevelopment
Agency’s (the “Prior Agency”) previously issued $6,000,000 La Quinta Redevelopment Project Area
No. 2, Subordinate Taxable Tax Allocation Bonds, Series 2011 (the “2011 Agency Bonds”) of which
$________ are currently outstanding and the Prior Agency’s loan obligation under the Loan
Agreement, dated February 3, 2004 as supplemented by the Second Supplemental Loan Agreement,
dated as of March 1, 2011 (the “2011 Loan Obligation”) in connection with the La Quinta Financing
Authority (the “Authority”) previously issued $28,850,000 Local Agency Subordinate Taxable
Revenue Bonds, 2011 Series A (the “2011 Authority Bonds”) of which $________ are currently
outstanding. The 2011 Agency Bonds and the 2011 Authority Bonds are sometimes collectively
referred to herein as the “Refunded Bonds.”
In connection with such refunding, the Issuer, as successor to the La Quinta Redevelopment
Agency, will enter into an Escrow Agreement, dated as of ___________ 1, 2016 (the “Escrow
Agreement”), by and between the Issuer and U.S. Bank National Association, as Escrow Bank.
2. Official Statement. The Issuer shall deliver, or cause to be delivered, to the
Underwriter two (2) executed copies of the Official Statement prepared in connection with the
Bonds, in such form as shall be approved by the Issuer and the Underwriter and such additional
conformed copies thereof as the Underwriter may reasonably request. The Issuer deems the
Preliminary Official Statement, dated ___________, 2016 (the “Preliminary Official Statement”) to
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be “final” as of its date for purposes of Rule 15c2-12. By acceptance of this Purchase Contract, the
Issuer hereby authorizes the use of copies of the Official Statement in connection with the public
offering and sale of the Bonds, and ratifies and approves the distribution by the Underwriter of the
Preliminary Official Statement.
3. Delivery of the Bonds. At approximately 9:00 a.m., California time, on
___________, 2016, or at such earlier or later time or date, as shall be agreed upon by the Issuer, and
the Underwriter (such time and date herein referred to as the “Closing Date”), the Issuer shall deliver
to the Underwriter, acting on its own behalf at a location to be designated by the Underwriter, in
Costa Mesa, California, or such other place as designated by the Underwriter, the Bonds in definitive
form and authenticated by the Trustee. The Underwriter, acting on its own behalf, shall accept such
delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by same day funds
(such delivery and payment being herein referred to as the “Closing”). The form of the Bonds shall
be made available to the Underwriter not later than one business day before the Closing Date for
purposes of review and approval. The Bonds shall be delivered as registered bonds in the name of
Cede & Co., Inc.
4. Representations and Agreements of the Issuer. The Issuer represents and agrees that:
(a) The Issuer is a public entity, duly organized and existing, and authorized to
transact business and exercise powers, under and pursuant to the Constitution and laws of the
State, including the Dissolution Act, and has, and at the date of the Closing will have, full
legal right, power and authority (i) to enter into this Purchase Contract, (ii) to issue, sell and
deliver the Bonds to the Underwriter, acting on its own behalf, as provided herein, (iii) to
adopt the Resolution approving the Indenture, and (iv) to carry out and to consummate the
transactions contemplated by this Purchase Contract, the Indenture, the Escrow Agreement,
the Continuing Disclosure Agreement, dated as of ___________, 2016 (the “Disclosure
Agreement”), between the Issuer and Willdan Financial Services., as Dissemination Agent
(the “Dissemination Agent”) with respect to the Bonds, and the Official Statement;
(b) The Preliminary Official Statement, as of its date, was true, correct and
complete in all material respects and did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not misleading;
(c) The Official Statement is, and will be, as of the Closing Date, true, correct
and complete in all material respects and does not, and will not, as of the Closing Date,
contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements contained therein, in light of the circumstances under which
they were made, not misleading;
(d) The Issuer to the best of its knowledge has complied, and will at the Closing
Date be in compliance, in all respects with the Bond Law, the Dissolution Act, and any other
applicable laws of the State;
(e) By all necessary official action of the Issuer prior to or concurrently with the
acceptance hereof, the Issuer has duly authorized and approved the Preliminary Official
Statement and the Official Statement, and has duly authorized and approved the execution
and delivery of, and the performance by the Issuer of the obligations on its part contained in,
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the Indenture, the Escrow Agreement, the Bonds, the Disclosure Agreement and this
Purchase Contract, and, as of the date hereof, such authorizations and approvals are in full
force and effect and have not been amended, modified or rescinded;
(f) As of the time of acceptance hereof and as of the time of the Closing, except
as otherwise disclosed in the Official Statement, the Issuer to the best of its knowledge is not
and will not be in any material respect in breach of or in default under any applicable
constitutional provision, law or administrative rule or regulation of the State, of the United
States, or any applicable judgment or decree or any trust agreement, loan agreement, bond,
note, indenture, resolution, ordinance, agreement or other instrument to which the Issuer is a
party or is otherwise subject, and no event has occurred and is continuing which, with the
passage of time or the giving of notice, or both, would constitute such a default or event of
default under any such instrument; and the adoption of the Resolution and the execution and
delivery of the Bonds, the Indenture, the Escrow Agreement, the Disclosure Agreement and
this Purchase Contract, and compliance with the provisions of each thereof, will not conflict
in any material way with or constitute a material breach of or material default under any law,
administrative regulation, judgment, decree, loan agreement, note, indenture, resolution,
agreement or other instrument to which the Issuer is a party or is otherwise subject; and,
except as described in the Official Statement, the Issuer has not entered into any contract or
arrangement of any kind which might give rise to any lien or encumbrance on the revenues
and amounts pledged pursuant to, or subject to the lien of, the Indenture;
(g) To the best of its knowledge all approvals, consents and orders of any
governmental authority, board, agency or commission having jurisdiction which would
constitute a condition precedent to adoption of the Resolution approving the Indenture,
execution and delivery by the Issuer of the Indenture, the Escrow Agreement, the Disclosure
Agreement, and this Purchase Contract, and the issuance, sale and delivery of the Bonds have
been obtained or will be obtained prior to the Closing;
(h) The Bonds when issued, authenticated and delivered in accordance with the
Indenture will be validly issued, and will be valid and binding, obligations of the Issuer;
(i) To the best of its knowledge the terms and provisions of the Indenture comply
in all respects with the requirements of the Bond Law, the Dissolution Act, and the Indenture,
the Escrow Agreement, the Disclosure Agreement and this Purchase Contract, when properly
executed and delivered by the respective parties thereto and hereto, will constitute the valid,
legal and binding obligations of the Issuer enforceable in accordance with their respective
terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and general rules of equity
(regardless of whether such enforceability is considered in a proceeding at law or in equity);
(j) Except as disclosed in the Official Statement, there is no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, government
agency, public board or body, pending against the Issuer and notice of which has been served
upon the Issuer, or to the best knowledge of the officer of the Issuer executing this Purchase
Contract threatened against the Issuer, affecting the existence of the Issuer or the titles of its
members or officers, or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of
the Bonds or the payment or collection of any amounts pledged or to be pledged to pay the
principal of, redemption premium, if any, and interest on the Bonds, or the pledge thereof, or
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in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture,
the Escrow Agreement, the Disclosure Agreement or this Purchase Contract or the
consummation of the transactions contemplated thereby and hereby, or contesting in any way
the completeness or accuracy of the Preliminary Official Statement or the Official Statement,
or contesting the power or authority of the Issuer to issue the Bonds, to adopt the Resolution
approving the Indenture or to execute and deliver the Indenture, the Escrow Agreement, the
Disclosure Agreement, or this Purchase Contract, nor is there any basis therefor, wherein an
unfavorable decision, ruling or finding would materially adversely affect the Issuer’s
performance under the Bonds, the Indenture, the Escrow Agreement, the Disclosure
Agreement, or this Purchase Contract, or the validity or enforceability of the Bonds, the
Indenture, the Escrow Agreement, the Disclosure Agreement, or this Purchase Contract;
(k) Any certificate signed by an authorized officer or official of the Issuer and
delivered to the Underwriter shall be deemed a representation of the Issuer to the Underwriter
as to the statements made therein;
(l) Each of the Bonds shall be secured in the manner and to the extent set forth in
the Indenture under which each such Bond is to be issued;
(m) The Issuer will furnish such information, execute such instruments and take
such other action in cooperation with the Underwriter as the Underwriter may reasonably
request to qualify the Bonds for offer and sale under the “blue sky” or other securities laws
and regulations of such states and other jurisdictions of the United States as the Underwriter
may designate; provided, however, that the Issuer shall not be required to consent to service
of process outside of California;
(n) The Issuer will apply the proceeds of the Bonds in accordance with the
Indenture and all other applicable documents and as described in the Official Statement;
(o) The Issuer has paid to the County Auditor-Controller the amount of “surplus”
demanded, if any, by the County Auditor-Controller pursuant to Health and Safety Code
Section 34183.5;
(p) The Issuer shall provide to the Underwriter, not later than seven (7) business
days after the date of this Purchase Contract, but in any event in sufficient time to accompany
any confirmation sent by the Underwriter to a purchaser of the Bonds, not more than 200
copies of the Official Statement to satisfy the Underwriter’s obligation under Rule 15c2-12
with respect to the distribution of the Official Statement;
(q) The Oversight Board has duly adopted the Oversight Board Resolution
approving the issuance of the Bonds and no further Oversight Board approval or consent is
required for the issuing of the Bonds or the consummation of the transactions described in the
Preliminary Official Statement;
(r) The Department of Finance of the State (the “Department of Finance”) has
issued a letter, dated ___________, 2016, approving the issuance of the Bonds. The Issuer
knows of no further Department of Finance approval or consent that is required for the
issuance of the Bonds or the consummation of the transactions describe in the Preliminary
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Official Statement. The Issuer has received its Finding of Completion from the Department
of Finance;
(s) In the past five years, except as disclosed in the Official Statement, the City,
the Prior Agency and the Issuer did not fail to comply in any material respect with its
obligation to file annual reports, but did fail on occasion to timely file notices of rating
changes and certain other matters. The City and the Issuer have established procedures that
they believe will be sufficient to ensure timely future compliance with its continuing
disclosure undertakings; and
(t) Neither the Prior Agency nor the Issuer has 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.
5. Representations of the Underwriter. The Underwriter represents that it has full right,
power, and authority to enter into this Purchase Contract.
6. Covenants re Official Statement. The Issuer covenants with the Underwriter that so
long as the Underwriter, or dealers, if any, are participating in the distribution of the Bonds which
constitute the whole or a part of their unsold participations, if an event known to the Issuer occurs
affecting the Issuer, or the transactions contemplated by the Indenture and the issuance of the Bonds,
which could cause the Official Statement to contain an untrue statement of a material fact or to omit
to state a material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, the Issuer shall notify the Underwriter and if in the
opinion of the Issuer, the Underwriter or Bond Counsel, such event requires an amendment or
supplement to the Official Statement, the Issuer will amend or supplement the Official Statement in a
form and in a manner jointly approved by the Issuer and the Underwriter, and the Issuer will bear the
cost of making and printing such amendment or supplement to the Official Statement and distributing
such amendment or supplement to Owners of the Bonds. The obligations of the Issuer under this
Section 6 shall terminate on the earlier of (a) ninety (90) days from the “end of the underwriting
period,” as defined in Rule 15c2-12, or (b) the time when the Official Statement is available to any
person from a nationally recognized municipal securities information repository, but in no case less
than twenty-five (25) days following the end of the underwriting period. Unless otherwise notified
by the Underwriter in writing not later than thirty (30) days after the Closing Date, the Issuer may
assume that the end of the underwriting period is the Closing Date.
7. Conditions to Obligations of Underwriter. The Underwriter has entered into this
Purchase Contract in reliance upon the representations and agreements of the Issuer contained herein
and upon the accuracy of the statements to be contained in the documents, opinions, and instruments
to be delivered at the Closing. Accordingly, the Underwriter’s obligation under this Purchase
Contract to purchase, accept delivery of, and pay for the Bonds on the Closing Date is subject to the
performance by the Issuer of its obligations hereunder at or prior to the Closing. The following
additional conditions precedent relate to the Closing, in connection with the Underwriter’s obligation
to purchase the Bonds:
(a) At the time of the Closing, (i) the representations of the Issuer contained
herein to the best of its knowledge shall be true, complete and correct in all material respects;
and (ii) 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 in writing by the Underwriter;
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(b) The Underwriter shall have the right to cancel its obligation to purchase the
Bonds if between the date hereof and the Closing, (i) legislation shall have been enacted (or
indenture or resolution passed) by or introduced or pending legislation amended in the
Congress of the United States or the State or shall have been reported out of committee or be
pending in committee, or a decision shall have been rendered by a court of the United States
or the State, or a ruling shall have been made or indenture shall have been proposed or made
or any other release or announcement shall have been made by the Treasury Department of
the United States or other federal or State authority, with respect to State taxation upon
interest on obligations of the general character of the Bonds or with respect to the security
pledged to pay debt service on the Bonds, that, in the Underwriter’s reasonable judgment,
materially adversely affects the market for the Bonds, or the market price generally of
obligations of the general character of the Bonds or (ii) there shall exist any event that, in the
Underwriter’s reasonable judgment, either (A) makes untrue or incorrect in any material
respect any statement or information in the Official Statement or (B) is not reflected in the
Official Statement but should be reflected therein in order to make the statements and
information therein not misleading in any material respect, or (iii) there shall have occurred
any outbreak of hostilities or other local, national or international calamity or crisis, or a
default with respect to the debt obligations of, or the institution of proceedings under the
federal bankruptcy laws, the effect of which on the financial markets of the United States will
be such as in the Underwriter’s reasonable judgment, makes it impracticable for the
Underwriter to market the Bonds or enforce contracts for the sale of the Bonds, or (iv) there
shall be in force a general suspension of trading on the New York Stock Exchange, or
minimum or maximum prices for trading shall have been fixed and be in force, or maximum
ranges for prices of securities shall have been required and be in force on the New York
Stock Exchange, whether by virtue of determination by that Exchange or by order of the
Securities and Exchange Commission of the United States or any other governmental
authority having jurisdiction that, in the Underwriter’s reasonable judgment, makes it
impracticable for the Underwriter to market the Bonds or enforce contracts for the sale of the
Bonds, or (v) a general banking moratorium shall have been declared by federal, New York
or State authorities having jurisdiction and be in force that, in the Underwriter’s reasonable
judgment, makes it impracticable for the Underwriter to market the Bonds or enforce
contracts for the sale of the Bonds, or (vi) legislation shall be enacted or be proposed or
actively considered for enactment, or a decision by a court of the United States shall be
rendered, or a ruling, regulation, proposed regulation or statement by or on behalf of the
Securities and Exchange Commission of the United States or other governmental agency
having jurisdiction of the subject matter shall be made, to the effect that the Bonds or any
obligations of the general character of the Bonds are not exempt from the registration,
qualification or other requirements of the Securities Act of 1933, as amended and as then in
effect, or of the Trust Indenture Act of 1939, as amended and as then in effect, or otherwise
are or would be in violation of any provision of the federal securities laws, or (vii) the New
York Stock Exchange or other national securities exchange, or any governmental authority,
shall impose any material restrictions not now in force with respect to the Bonds or
obligations of the general character of the Bonds or securities generally, or materially
increase any such restrictions now in force, including those relating to the extension of credit
by, or the charge to the net capital requirements of, underwriters, or (viii) there shall have
been any materially adverse change in the affairs of the Issuer which in the Underwriter’s
reasonable judgment materially adversely affects the market for the Bonds, or (ix) general
political, economic or market conditions which, in the reasonable judgment of the
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Underwriter, shall make it impracticable for the Underwriter to market the Bonds or enforce
contracts for the sale of the Bonds; and
(c) At or prior to the Closing, the Underwriter and the Issuer shall receive the
following:
(1) The unqualified approving opinion of Rutan & Tucker, LLP, Costa
Mesa, California, bond counsel (the “Bond Counsel”), in form and substance
acceptable to the Underwriter, addressed to the Issuer, dated the date of the Closing,
together with a letter from such counsel, dated the date of the Closing and addressed
to the Underwriter, to the effect that the foregoing opinion may be relied upon by the
Underwriter to the same extent as if such opinion were addressed to it;
(2) A supplemental opinion of Bond Counsel, addressed to the
Underwriter, the Issuer and Norton Rose Fulbright US LLP, Los Angeles, California,
disclosure counsel (“Disclosure Counsel”), in form and substance acceptable to each
of them, dated the date of Closing, to the following effect:
(i) The Issuer has duly authorized, executed and delivered the
Indenture, the Escrow Agreement, the Disclosure Agreement and the
Purchase Contract. The Indenture, the Escrow Agreement, the Disclosure
Agreement and the Purchase Contract constitute the legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting creditors’ rights, to the application of
equitable principles when equitable remedies are sought and to the exercise of
judicial discretion in appropriate cases;
(ii) The Official Statement has been duly authorized, executed
and delivered by the Issuer;
(iii) The statements and information contained or summarized in
the Preliminary Official Statement and Official Statement on the cover page
and under the headings “INTRODUCTORY STATEMENT,” “THE
BONDS,” “SECURITY FOR THE BONDS,” “THE INDENTURE,”
“CONCLUDING INFORMATION – Legal Opinion,” “CONCLUDING
INFORMATION – Tax Matters,” “APPENDIX A – Definitions” and
“APPENDIX B – Form of Bond Counsel Opinion” (but not including any
statistical or financial information set forth under such headings, as to which
no opinion need be expressed) insofar as such statements purport to
summarize certain provisions of the Bond Law, the Dissolution Act, the
Redevelopment Law, the Bonds, the Indenture and the Escrow Agreement,
and the opinion of such Bond Counsel concerning certain federal and state tax
matters relating to the Bonds, are accurate in all material respects;
(iv) The Bonds are exempt from registration under the Securities
Act of 1933, as amended;
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(v) The Indenture is exempt from qualification under the Trust
Indenture Act of 1939, as amended; and
(vi) The Issuer has obtained all authorizations, approvals, consents
or other orders of the State or any other governmental authority or agency
within the State having jurisdiction over the Issuer for the valid authorization,
issuance and delivery by the Issuer of the Bonds.
(3) The opinion of counsel to the Issuer, addressed to the Underwriter and
the Issuer, in form and substance acceptable to each of them, dated the date of the
Closing, to the following effect:
(i) The Issuer is a public entity, duly organized and validly
existing under and by virtue of the Constitution and the laws of the State;
(ii) The Indenture, the Disclosure Agreement, the Escrow
Agreement, and the Purchase Contract have been duly approved by the
Resolution of the Issuer adopted at a regular meeting duly called and held in
accordance pursuant to law and with all public notice required by law and at
which a quorum of the members of the Issuer was continuously present, and
the Resolution is in full force and effect and has not been modified, amended
or rescinded;
(iii) The Indenture, the Disclosure Agreement, the Escrow
Agreement, and the Purchase Contract have been duly approved by the
Oversight Board Resolution adopted at a special meeting duly called and held
in accordance pursuant to law and with all public notice required by law and
at which a quorum of the members of the Oversight Board was continuously
present, and the Oversight Board Resolution is in full force and effect and has
not been modified, amended or rescinded;
(iv) The information in the Official Statement under the captions
“SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT
AGENCY” and “THE PROJECT AREAS,” insofar as such statements
purport to summarize information with respect to the Issuer and its Pass-
Through obligations, fairly and accurately summarizes the information
presented therein;
(v) Except as described in the Official Statement, there is no
litigation pending against the Issuer and notice of which has been served on
the Issuer, or to the best of such counsel’s knowledge after due inquiry,
threatened against the Issuer, which: (a) challenges the right or title of any
member or officer of the Issuer to hold his or her respective office or exercise
or perform the powers and duties pertaining thereto; (b) challenges the
validity or enforceability of the Bonds, the Indenture, the Escrow Agreement,
the Disclosure Agreement, or the Purchase Contract; (c) seeks to restrain or
enjoin the issuance and sale of the Bonds, the adoption or effectiveness of the
Resolution and Indenture, or the execution and delivery by the Issuer of, or
the performance by the Issuer of its obligations under the Bonds, the
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Indenture, the Escrow Agreement, the Disclosure Agreement, or the Purchase
Contract; or (d) if determined adversely to the Issuer or its interests, would
have a material and adverse affect upon the financial condition, assets,
properties or operations of the Issuer; and
(vi) The execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, the Bonds, the Indenture,
the Escrow Agreement, the Disclosure Agreement, and the Purchase
Contract, do not in any material respect conflict with, violate or constitute a
default under any provision of any law, court order or decree or any contract,
instrument or agreement to which the Issuer is a party or by which it is bound.
(4) A certificate dated the date of the Closing, signed by the Executive
Director or appropriate officer of the Issuer, to the effect that to the best of such
officer’s knowledge: (i) the representations and covenants of the Issuer contained
herein are true and correct in all material respects on and as of the date of the Closing
with the same effect as if made on the Closing Date; (ii) the Issuer has complied with
all the agreements and satisfied all of the conditions on its part to be performed or
satisfied at or prior to the Closing; (iii) no event affecting the Issuer has occurred
since the date of the Official Statement which either makes untrue or incorrect in any
material respect as of the Closing Date any statement or information contained in the
Official Statement or is not reflected in the Official Statement but should be reflected
therein in order to make the statements and information therein not misleading in any
material respect; and (iv) the Indenture remains in full force and effect and has not
been amended in any respect, except as approved in writing by the Underwriter, since
the date of the Indenture;
(5) A certificate of the Trustee dated the date of the Closing, to the effect
that: (i) the Trustee is organized and existing as a national banking association under
and by virtue of the laws of the United States of America, having full power and
being qualified and duly authorized to perform the duties and obligations of the
Trustee and Escrow Bank under and pursuant to the Indenture and the Escrow
Agreement (together, the “Trustee Documents”); (ii) the Trustee has agreed to
perform the duties and obligations of the Trustee as set forth in the Indenture; (iii) to
the best of its knowledge, compliance with the provisions on the Trustee’s part
contained in the Trustee Documents will not conflict with or constitute a breach of or
default under the Articles of Incorporation or Bylaws of the Trustee or any material
law, administrative regulation, judgment, decree, loan agreement, indenture,
resolution, bond, note, agreement or other instrument to which the Trustee is a party
or is otherwise subject, as a result of which the Trustee’s ability to perform its
obligations under the Trustee Documents would be impaired, nor will any such
compliance result in the creation or imposition of any lien, charge or other security
interest or encumbrance of any nature whatsoever upon any of the properties or assets
held by the Trustee pursuant to the Indenture under the terms of any such law,
administrative regulation, judgment, decree, loan agreement, indenture, bond, note,
agreement or other instrument, except as provided by the Trustee Documents; and
(iv) to the best of the knowledge of the Trustee, the Trustee has not been served in
any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, governmental agency, public board or body, pending nor is any such
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action, suit, proceeding, inquiry or investigation threatened against the Trustee,
affecting the existence of the Trustee, or the titles of its officers to their respective
offices or seeking to prohibit, restrain or enjoin the delivery of the Bonds issued
under the Indenture or the collection of revenues pledged or to be pledged to pay the
principal of, premium, if any, and interest on the Bonds issued under the Indenture, or
the pledge thereof, or in any way contesting the powers of the Trustee or its authority
to enter into or perform its obligations under the Trustee Documents, wherein an
unfavorable decision, ruling or finding would materially adversely affect the validity
or enforceability of the Indenture or the Disclosure Agreement;
(6) An opinion of counsel to the Trustee dated the Closing Date and
addressed to the Issuer and the Underwriter, in form and substance satisfactory to the
Underwriter, to the effect that: (i) the Trustee has been duly organized and is validly
existing and in good standing as a national banking association under the laws of the
United States of America with full corporate power to undertake the trust of the
Indenture; (ii) the Trustee has duly authorized, executed and delivered the Trustee
Documents, and by all proper corporate action has authorized the acceptance of the
duties and obligations of the Trustee under the Trustee Documents and to authorize in
its capacity as trustee thereunder the authentication and delivery of the Bonds;
(iii) assuming due authorization, execution and delivery by the City, the Trustee
Documents are valid, legal and binding agreements of the Trustee, enforceable in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights in general and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity or at
law); (iv) exclusive of federal or state securities laws and regulations, to the best of
such counsel’s knowledge after reasonable inquiry and investigation, other than
routine filings required to be made with governmental agencies in order to preserve
the Trustee’s authority to perform a trust business (all of which routine filings such
counsel believes, after reasonable inquiry and investigation, to have been made), no
consent, approval, authorization or other action by any governmental or regulatory
authority having jurisdiction over the Trustee is or will be required for the execution
and delivery by the Trustee of the Trustee Documents or the authentication and
delivery of the Bonds; (v) to the best of such counsel’s knowledge, the execution and
delivery by the Trustee of the Trustee Documents and the Bonds, 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 loan agreement, indenture,
bond, note, resolution or any other agreement or 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 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; and (vi) to the best of such counsel’s knowledge, there is no litigation
pending or threatened against or affecting the Trustee to restrain or enjoin the
Trustee’s participation in, or in any way contesting the powers of the Trustee with
respect to the transactions contemplated by the Bonds and the Trustee Documents;
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(7) Two (2) copies of this Purchase Contract duly executed and delivered
by the parties thereto;
(8) Two (2) copies of the Official Statement, executed on behalf of the
Issuer by the Executive Director of the Issuer;
(9) One (1) certified copy of the Indenture, the Escrow Agreement, the
Disclosure Agreement, and all resolutions of the Issuer and the Oversight Board
relating to the issuance of the Bonds (including without limitation the Resolution and
the Oversight Board Resolution);
(10) An opinion, dated the date of the Closing and addressed to the
Underwriter and the Issuer, of Disclosure Counsel, to the effect that based upon its
participation in the preparation of the Official Statement and without having
undertaken to determine independently the accuracy or completeness of the
statements in the Official Statement such Counsel has no reason to believe that, as of
the date of Closing, the Official Statement (except for Appendices A, B, C, E, F, G
and H to the Official Statement, any information about the book-entry system or
DTC, the bond insurance policy and the bond insurer, statements relating to the
treatment of the Bonds or the interest or discount related thereto for tax purposes
under the law of any jurisdiction, or financial, statistical and numerical data included
in the Official Statement, as to which no view need be expressed) contains any 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;
(11) A defeasance opinion of Bond Counsel, dated the Closing Date, to the
effect that the lien of the Refunded Bonds with respect to the Pledged Tax Revenues
has been discharged;
(12) A Certificate of Willdan Financial Services (“Willdan”), to the
following effect:
(i) Willdan is duly authorized to execute and deliver the
Continuing Disclosure Agreement and to perform as Dissemination Agent
thereunder, and Willdan had duly executed and delivered the Disclosure
Agreement;
(ii) Willdan’ execution and delivery of the Disclosure Agreement
and performance as Dissemination Agent thereunder do not and will not
conflict in any way with any law, judgment, agreement or other instrument to
which Willdan is a party or is subject; and
(iii) In the past five years, the City, the Prior Agency and the
Issuer did not fail to comply in any material respect with its obligation to file
annual reports, but did fail on occasion to timely file notices of rating changes
and certain other matters. The City or the Issuer subsequently filed all such
notices and has established procedures that they believe will be sufficient to
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ensure timely future compliance with its continuing disclosure undertakings
pursuant to Rule 15c2-12.
(13) A Certificate of Harrell & Company Advisors (“Financial Advisor”)
to the following effect:
(i) in connection with the issuance of the Bonds, Financial
Advisor has provided the Issuer certain projections and estimates (the
“Projections”) and a fiscal consultant report (the “Financial Advisor’s
Report”) with respect to the taxable valuation and Pledged Tax Revenues
with respect to the Project Areas. The Financial Advisor has obtained such
information from the County of Riverside and other sources as the Financial
Advisor deemed necessary and relevant to generate the Financial Advisor’s
Report and to express an informed opinion with respect to the matters
discussed in such Financial Advisor’s Report;
(ii) the Financial Advisor has reviewed the Official Statement
and, in particular, information presented in the tables set forth in the Official
Statement under the captions “THE PROJECT AREAS” and “PLEDGED
TAX REVENUES,” and as of the date of the Official Statement and as of the
Closing Date, such information and the Financial Advisor’s Report fairly and
accurately reflect the Projections and, to the best knowledge of the Financial
Advisor, do not contain any untrue or misleading statement of a material fact
and do not fail to state a material fact necessary in order to make the
information contained therein, not misleading;
(iii) Nothing has come to the attention of the Financial Advisor
which would cause the Financial Advisor to believe that the statements and
information contained in the Official Statement that are attributable to the
Financial Advisor, including but not limited information under the captions
“THE PROJECT AREAS,” “PLEDGED TAX REVENUES” and
“APPENDIX F – Financial Advisor’s Report” as of the date of the Official
Statement, are inaccurate in any material respect; and no event or act known
to the Financial Advisor has occurred since the date of the Official Statement
which would make such statements and information inaccurate or misleading;
(iv) the Financial Advisor affirms its consent to the inclusion of
such Projections in the Official Statement and the reproduction of the
Financial Advisor’s Report in the appendices of the Official Statement;
(14) A municipal bond insurance policy insuring the payment of principal
and interest on [the _____ and _____ maturities on] the Bonds (the “Bond Insurance
Policy”), issued by [BOND INSURER] (the “Bond Insurer”);
(15) A certificate of the Bond Insurer of an opinion of counsel to the Bond
Insurer, dated the date of Closing, regarding the accuracy of the information in the
Official Statement describing the Bond Insurer and the Bond Insurance Policy;
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(16) An opinion (or opinions) of counsel to the Bond Insurer, dated the
date of Closing, addressed to the Issuer, the Trustee and the Underwriter, regarding
the Bond Insurer’s valid existence, power and authority, the Bond Insurer’s due
authorization and issuance of the Bond Insurance Policy and, the Bond Insurance
Policy’s enforceability against the Bond Insurer;
(17) A rating letter from S&P Global Ratings confirming the rating on the
Bonds;
(18) A verification Report prepared by [Grant Thornton, Minneapolis,
Minnesota] in form satisfactory to Bond Counsel; and
(19) Such additional legal opinions, certificates, proceedings, instruments
and other documents as the Underwriter, Bond Counsel or Disclosure Counsel may
reasonably request to evidence compliance by the Issuer with this Purchase Contract,
legal requirements, and the performance or satisfaction by the Issuer at or prior to
such time of all agreements then to be performed and all conditions then to be
satisfied by the Issuer.
The Issuer will furnish the Underwriter with such conformed copies of such opinions,
certificates, letters and documents as the Underwriter may reasonably request. If the Issuer is unable
to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Contract, or
if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase
Contract, this Purchase Contract shall terminate and none of the Underwriter, the Issuer shall have
any further obligations hereunder. However, the Underwriter may in its discretion waive one or
more of the conditions imposed by this Purchase Contract for the protection of the Underwriter and
proceed with the related Closing.
If this Purchase Agreement shall be terminated pursuant to this Section, including but not
limited to paragraphs (b) and (c), or if the purchase provided for herein is not consummated because
any condition to the Underwriter’s obligation hereunder is not satisfied or because of any refusal,
inability or failure on the part of the Issuer to comply with any of the terms or to fulfill any of the
conditions of this Purchase Agreement, or if for any reason the Issuer shall be unable to perform all
of their respective obligations under this Purchase Agreement, the Issuer shall not be liable to the
Underwriter for damages on account of loss of anticipated profits arising out of the transactions
covered by this Purchase Agreement.
8. Expenses.
The Underwriter shall be under no obligation to pay, and the Issuer shall pay from its
available funds or from the proceeds of the Bonds, certain expenses set forth in this Section,
including but not limited to: (i) all expenses in connection with the preparation, distribution and
delivery of the Preliminary Official Statement, the Official Statement and any amendment or
supplement thereto, (ii) all expenses in connection with the printing, issuance and delivery of the
Bonds, (iii) the fees and disbursements of Bond Counsel and Disclosure Counsel in connection with
the Bonds, (iv) the fees and disbursements of counsel to the Issuer in connection with the Bonds,
(v) the disbursements of the Issuer in connection with the issuance of the Bonds, (vi) the fees and
disbursements of the Trustee, (vii) rating agency fees, (viii) fees of the Financial Advisor, and
(ix) bond insurance and Debt Service Reserve Surety premiums.
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The Underwriter shall pay (i) fees, if any, payable to the California Debt and Investment
Advisory Commission in connection with the issuance of the Bonds; (ii) the cost of preparation of
the Blue Sky and Legal Investment Memoranda and all Blue Sky filing fees in connection with the
public offering of the Bonds; (iii) all advertising expenses in connection with the public offering of
the Bonds; and (iv) all other expenses incurred by it in connection with its public offering and
distribution of the Bonds.
9. Notice. Any notice or other communication to be given to the Issuer under this
Purchase Contract may be given by delivering the same in writing at the address set forth above.
Any such notice or communication to be given to the Underwriter may be given by delivering the
same in writing to:
Hilltop Securities Inc.
2533 S. Coast Hwy. 101, Suite 250
Cardiff by the Sea, California 92007
Attention: Ms. Robin M. Thomas
10. Governing Law. This Purchase Contract shall be governed by the laws of the State of
California. 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.
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S-1
11. Parties in Interest. This Purchase Contract is made solely for the benefit of the
signatories hereto (including the successors or assigns of the Underwriter) and no other person shall
acquire or have any right hereunder or by virtue hereof except as provided in Section 11 hereof. All
representations in this Purchase Contract shall remain operative and in full force and effect,
regardless of (a) delivery of and payment for any of the Bonds and (b) any termination of this
Purchase Contract.
Respectfully submitted,
HILLTOP SECURITIES INC.
By:
Its: Senior Vice President
Accepted as of the date first stated above:
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
By
Its: Executive Director
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A-1
APPENDIX A
$___________
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
La Quinta Redevelopment Project Areas No. 1 and 2
Subordinate Tax Allocation Refunding Bonds
2016 Taxable Series A
Maturity Date
Principal
Amount Interest Rate Yield Price
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NRF DRAFT –6/7/16
PRELIMINARY OFFICIAL STATEMENT DATED ____________, 2016
ATTACHMENT 2
NEW ISSUE—BOOK-ENTRY S&P: “___” (Insured)
“___” (Underlying)
(See “CONCLUDING INFORMATION — Ratings” Herein)
In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is exempt from State of
California personal income taxes. [TO BE CONFIRMED BY BOND COUNSEL] See “CONCLUDING INFORMATION — Tax Matters” herein.
$___________*
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
La Quinta Redevelopment Project Areas No. 1 and 2
Subordinate Tax Allocation Refunding Bonds
2016 Taxable Series A
Dated: Delivery Date Due: September 1, as shown on the inside front cover
The $_________* Successor Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2,
Subordinate Tax Allocation Refunding Bonds, 2016 Taxable Series A (the “Bonds”) will be 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 ultimate purchasers
(“Beneficial Owners”) in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Beneficial
Owners will not be entitled to receive delivery of bonds representing their ownership interest in the Bonds. The interest on the Bonds (due March 1
and September 1 of each year, commencing _______ 1, 2016) will be payable by U.S. Bank National Association, as Trustee, to DTC for subsequent
disbursement to DTC participants, so long as DTC or its nominee remains the registered owner of the Bonds (see “THE BONDS — Book-Entry
System” herein).
The Bonds are being issued by the Successor Agency to the La Quinta Redevelopment Agency (the “Agency”) to refinance on an advance
basis the La Quinta Redevelopment Agency’s (the “Prior Agency”) previously issued $6,000,000 La Quinta Redevelopment Project Area No. 2,
Subordinate Taxable Tax Allocation Bonds, Series 2011 (the “2011 Agency Bonds”) of which $________ are currently outstanding and the Prior
Agency’s loan obligation under the Loan Agreement, dated February 3, 2004 as supplemented by the Second Supplemental Loan Agreement, dated as
of March 1, 2011 (the “2011 Loan Obligation”) in connection with the La Quinta Financing Authority previously issued $28,850,000 Local Agency
Subordinate Taxable Revenue Bonds, 2011 Series A (the “2011 Authority Bonds”) of which $________ are currently outstanding. The 2011 Agency
Bonds and the 2011 Authority Bonds are sometimes collectively referred to herein as the “Refunded Bonds.”
The Bonds are subject to optional and mandatory sinking fund redemption prior to maturity as described under “THE BONDS”
herein.
The Bonds are being issued on a subordinate basis to the $65,600,000 Successor Agency to the La Quinta Redevelopment Agency, La Quinta
Redevelopment Project Areas No. 1 and 2, Tax Allocation Refunding Bonds, 2014 Series A (the “2014 Bonds”) of which $________ are currently
outstanding. The Agency previously issued $97,190,000 La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding
Bonds, 2013 Series A (the “2013A Bonds”) of which $________ are currently outstanding and the $23,055,000 La Quinta Redevelopment Project
Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2013 Taxable Series B (the “2013B Bonds”) of which $________ are currently
outstanding. The Bonds are being issued on a parity with the 2013A Bonds and the 2013B Bonds.
The Bonds are payable from and secured by the Pledged Tax Revenues, as defined herein, to be derived from the La Quinta Redevelopment
Project Area No. 1 and La Quinta Redevelopment Project Area No. 2 (the “Project Areas”). Taxes levied on the property within the Project Areas on
that portion of the taxable valuation over and above the taxable valuation of the base year property tax rolls deposited in the Redevelopment Property
Tax Trust Fund and, to the extent they constitute Pledged Tax Revenues, shall be deposited in the Redevelopment Obligation Retirement Fund, and
administered by the Agency and the Trustee in accordance with the Indenture (as herein defined).
[The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy to be issued
concurrently with the delivery of the Bonds by [INSURER]. See “BOND INSURANCE” and Appendix G — Specimen Municipal Bond Insurance
Policy.”]
[INSURER LOGO]
This cover page of the Official Statement contains information for quick reference only. It is not a complete summary of the Bonds.
Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision.
Attention is hereby directed to certain risk factors more fully described herein.
The Bonds are not a debt of the City of La Quinta, the State of California or any of its political subdivisions (except the Agency) and neither
said City, said State or any of its political subdivisions (except the Agency) is liable therefor. The principal of and interest on the Bonds are payable
solely from the Pledged Tax Revenues allocated to the Agency from the Project Areas (all as defined herein and in the Indenture) and other funds as set
forth in the Indenture. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.
The Bonds are offered, when, as and if issued, subject to the approval of Rutan & Tucker, LLP, Costa Mesa, California, Bond Counsel.
Certain legal matters will be passed on for the Agency by Norton Rose Fulbright US LLP, Los Angeles, California, Disclosure Counsel. Certain legal
* Preliminary; subject to change.
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matters will be passed on for the Agency by Rutan & Tucker, LLP, Costa Mesa, California, as Agency Counsel, and for the Underwriter by Best Best &
Krieger, LLP, Riverside, California, as Underwriter’s Counsel. It is anticipated that the Bonds will be available for delivery through the facilities of
DTC on or about ___________, 2016.
HilltopSecurities
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SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY
La Quinta Redevelopment Project Areas No. 1 and 2
Subordinate Tax Allocation Refunding Bonds
2016 Taxable Series A
Maturity Schedule*
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield Price CUSIP†
$_______ ____% Term Bonds due September 1, 20__ Yield: _____%, Price: _____% CUSIP† _______
* Preliminary; subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services is managed on
behalf of the American Bankers Association by S&P Global Marketing Intelligence. Copyright® 2016 CUSIP
Global Services. CUSIP® numbers are provided for convenience of reference only. Neither the Agency nor the
Underwriter takes any responsibility for the accuracy of such numbers.
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SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
LA QUINTA, CALIFORNIA
BOARD OF DIRECTORS
Linda Evans, Chair
John Peña, Vice-Chair
Kristy Franklin, Member
Lee M. Osborne, Member
Robert Radi, Member
AGENCY/CITY STAFF
Frank J. Spevacek, Executive Director/City Manager
Susan Maysels, Agency Secretary/City Clerk
_____________, Finance Director
Katherine Jenson, Agency Counsel/City Attorney
SPECIAL SERVICES
Bond Counsel
Rutan & Tucker LLP
Costa Mesa, California
Disclosure Counsel
Norton Rose Fulbright US LLP
Los Angeles, California
Trustee and Escrow Bank
U.S. Bank National Association
Los Angeles, California
Financial Advisor
Harrell & Company Advisors, LLC
Orange, California
Dissemination Agent
Willdan Financial Services
Temecula, California
Underwriter
Hilltop Securities, Inc.
Cardiff by the Sea, California
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GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person has
been authorized by the Agency to give any information or to make any representations with respect to the Bonds other than as
contained in this Official Statement, and, if given or made, such other information or representation must not be relied upon as
having been given or authorized by the Agency or the Underwriter.
For purposes of compliance with Rule 15c2-12 of the United States Securities and Exchange Commission, as amended
(“Rule 15c2-12”), this Preliminary Official Statement constitutes an “official statement” of the Agency with respect to the Bonds
that has been deemed “final” by the Agency as of its date except for the omission of no more than the information permitted by
Rule 15c2-12.
Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds described in
this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement
does not constitute a contract between any Bond owner and the Agency or the Underwriter.
Preparation of this Official Statement. The information contained in this Official Statement has been obtained from
sources that are believed to be reliable, but this information 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 under the federal securities laws as applied to
the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such
information.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure made by the Agency,
the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,”
“expect,” “intend” and similar expressions identify “forward looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ
materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably,
some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur.
Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material.
This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this
Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds
will, under any circumstances, create any implication that there has been no change in the affairs of the Agency or the other
parties described in this Official Statement, since the date of this Official Statement.
Document Summaries. All summaries of the Indenture or other documents contained in this Official Statement are
made subject to the provisions of such documents and do not purport to be complete statements of any or all such provisions. All
references in this Official Statement to the Indenture and such other documents are qualified in their entirety by reference to such
documents, which are on file with the Agency.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or a solicitation of an
offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.
No Registration with the SEC. The issuance and sale of the Bonds have not been registered under the Securities Act of
1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Sections
3(a)(2) and 3(a)(12), respectively, for the issuance and sale of municipal securities.
Public Offering Prices. The Underwriter may offer and sell the 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 of this Official Statement, and the
Underwriter may change those public offering prices from time to time.
Web Page. The City of La Quinta maintains a website. However, the information maintained on the website is not a
part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds.
[INSURER]. [INSURER]. (“Insurer”) makes no representation regarding the Bonds or the advisability of investing in
the Bonds. In addition, Insurer has not independently verified, makes no representation regarding, and does not accept any
responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or
omitted herefrom, other than with respect to the accuracy of the information regarding Insurer supplied by Insurer and presented
under the heading “BOND INSURANCE” and “Appendix H — SPECIMEN MUNICIPAL BOND INSURANCE POLICY”.
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TABLE OF CONTENTS
Page
INTRODUCTORY STATEMENT ............................................................................................................. 1
Authority and Purpose .................................................................................................................... 1
The Redevelopment Plans ............................................................................................................... 2
Tax Allocation Financing ............................................................................................................... 2
Security for the Bonds .................................................................................................................... 3
Senior Bonds ................................................................................................................................... 4
Reserve Account ............................................................................................................................. 4
Further Information ......................................................................................................................... 5
BOND INSURANCE .................................................................................................................................. 5
SOURCES AND USES OF FUNDS ........................................................................................................... 5
THE BONDS ............................................................................................................................................... 5
Authority for Issuance ..................................................................................................................... 5
Description of the Bonds ................................................................................................................ 6
Book-Entry System ......................................................................................................................... 6
Optional Redemption ...................................................................................................................... 6
Sinking Fund Redemption .............................................................................................................. 7
SECURITY FOR THE BONDS .................................................................................................................. 7
Tax Increment Financing ................................................................................................................ 9
Redevelopment Property Tax Trust Fund ..................................................................................... 10
Recognized Obligation Payment Schedule ................................................................................... 11
Parity Bonds .................................................................................................................................. 14
THE INDENTURE .................................................................................................................................... 16
Allocation of Tax Revenues .......................................................................................................... 16
Pledged Tax Revenues – Application ........................................................................................... 17
Investment of Moneys in Funds and Accounts ............................................................................. 18
Covenants of the Agency .............................................................................................................. 19
Events of Default and Remedies ................................................................................................... 22
Application of Funds Upon Acceleration ..................................................................................... 23
Amendments ................................................................................................................................. 23
THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY ....................... 24
Members and Officers ................................................................................................................... 25
Agency Powers ............................................................................................................................. 25
RISK FACTORS ....................................................................................................................................... 26
Reduction in Taxable Value .......................................................................................................... 26
Risks to Real Estate Market .......................................................................................................... 26
Reduction in Inflationary Rate ...................................................................................................... 27
Development Risks ....................................................................................................................... 27
Levy and Collection of Taxes ....................................................................................................... 27
State Budget Issues ....................................................................................................................... 28
Recognized Obligation Payment Schedule ................................................................................... 28
Bankruptcy and Foreclosure ......................................................................................................... 31
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TABLE OF CONTENTS
(Continued)
Page
ii
Estimated Revenues ...................................................................................................................... 31
Hazardous Substances ................................................................................................................... 32
Natural Disasters ........................................................................................................................... 32
Changes in the Law ....................................................................................................................... 32
Investment Risk ............................................................................................................................ 32
Additional Obligations .................................................................................................................. 33
No Validation Proceeding Undertaken ......................................................................................... 33
Insured Bonds ............................................................................................................................... 34
Secondary Market ......................................................................................................................... 35
PROPERTY TAXATION IN CALIFORNIA ........................................................................................... 35
Property Tax Collection Procedures ............................................................................................. 35
Unitary Property ........................................................................................................................... 37
Article XIIIA of the State Constitution ......................................................................................... 38
Appropriations Limitation – Article XIIIB ................................................................................... 38
Articles XIIIC and XIIID of the State Constitution ...................................................................... 39
Proposition 87 ............................................................................................................................... 39
Redevelopment Time Limits ......................................................................................................... 39
Appeals of Assessed Values ......................................................................................................... 40
Proposition 8 ................................................................................................................................. 40
Propositions 218 and 26 ................................................................................................................ 41
Future Initiatives ........................................................................................................................... 41
THE PROJECT AREAS ............................................................................................................................ 41
Project Area No. 1 – Background ................................................................................................. 41
Project Area No. 2 – Background ................................................................................................. 41
No Redevelopment Plan Limitations ............................................................................................ 42
Location and Surrounding Area .................................................................................................... 42
Pass-Through Agreements and Obligations with Various Taxing Agencies ................................ 43
Largest Local Secured Taxpayers ................................................................................................. 44
Teeter Plan and Delinquency Rates .............................................................................................. 45
PLEDGED TAX REVENUES .................................................................................................................. 46
Schedule of Historical Pledged Tax Revenues ............................................................................. 46
Annual Debt Service ..................................................................................................................... 48
Projected Taxable Valuation and Pledged Tax Revenues ............................................................. 49
Debt Service Coverage ................................................................................................................. 51
CONCLUDING INFORMATION ............................................................................................................ 52
Underwriting ................................................................................................................................. 52
Verification of Mathematical Accuracy ........................................................................................ 53
Legal Opinion ............................................................................................................................... 53
Tax Matters ................................................................................................................................... 53
Litigation ....................................................................................................................................... 53
Legality for Investment in California............................................................................................ 53
Ratings ......................................................................................................................................... 54
Continuing Disclosure .................................................................................................................. 54
Miscellaneous ............................................................................................................................... 54
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(Continued)
Page
ii
APPENDIX A DEFINITIONS ................................................................................................................ A-1
APPENDIX B FORM OF BOND COUNSEL OPINIONS .................................................................... B-1
APPENDIX C BOOK-ENTRY ONLY SYSTEM .................................................................................. C-1
APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT .......................................... D-1
APPENDIX E COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR
ENDED JUNE 30, 2015 (EXCLUDING SUPPLEMENTARY INFORMATION) ...... E-1
APPENDIX F FINANCIAL ADVISOR’S REPORT ............................................................................. F-1
APPENDIX G SUPPLEMENTAL INFORMATION – THE CITY OF LA QUINTA .......................... G-1
APPENDIX H SPECIMEN MUNICIPAL BOND INSURANCE POLICY .......................................... H-1
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OFFICIAL STATEMENT
$___________*
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
La Quinta Redevelopment Project Areas No. 1 and 2
Subordinate Tax Allocation Refunding Bonds
2016 Taxable Series A
INTRODUCTORY STATEMENT
This Official Statement, including the cover page, is provided to furnish information in
connection with the sale by the Successor Agency to the La Quinta Redevelopment Agency (the
“Agency”) of its $_________* La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax
Allocation Refunding Bonds, 2016 Taxable Series A (the “Bonds”).
Authority and Purpose
The Bonds are being issued pursuant to the Constitution and laws of the State of California (the
“State”), including Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of
Title 5 of the Government Code (the “Bond Law”) and an Indenture of Trust dated as of ________ 1,
2016 (the “Indenture”), by and between the Agency and U.S. Bank National Association, as trustee (the
“Trustee”). See “THE BONDS — Authority for Issuance.”
The Bonds are being issued by the Successor Agency to the La Quinta Redevelopment Agency
(the “Agency”) to refinance on an advance basis the La Quinta Redevelopment Agency’s (the “Prior
Agency”) previously issued $6,000,000 La Quinta Redevelopment Project Area No. 2, Subordinate
Taxable Tax Allocation Bonds, Series 2011 (the “2011 Agency Bonds”) of which $________ are
currently outstanding and the Prior Agency’s loan obligation under the Loan Agreement, dated
February 3, 2004 as supplemented by the Second Supplemental Loan Agreement, dated as of March 1,
2011 (the “2011 Loan Obligation”) in connection with the La Quinta Financing Authority (the
“Authority”) previously issued $28,850,000 Local Agency Subordinate Taxable Revenue Bonds, 2011
Series A (the “2011 Authority Bonds”) of which $________ are currently outstanding. The 2011 Agency
Bonds and the 2011 Authority Bonds are sometimes collectively referred to herein as the “Refunded
Bonds.”
The City of La Quinta (the “City”) is located 127 miles east of Los Angeles and 20 miles east of
Palm Springs in Riverside County (the “County”). The City was originally a general law city
incorporated on May 1, 1982, became a charter city in November, 1996 and provides for a Council-City
Manager form of government consisting of five Council Members elected to four-year overlapping terms.
The Mayor is directly elected by the citizens to a two year term. The City encompasses an area of
approximately 35.31 square miles. The population of the City was estimated to be 39,977 as of
January 1, 2016. See Appendix G — “SUPPLEMENTAL INFORMATION — THE CITY OF LA
QUINTA.”
The Prior Agency was established on July 5, 1983 by the City Council of the City with the
adoption of Ordinance No. 34, pursuant to the Community Redevelopment Law (Part 1, Division 25,
commencing with Section 33000 of the Health and Safety Code of the State) (the “Redevelopment Law”).
On June 29, 2011, Assembly Bill No. 26 (“ABx1 26”) was enacted as Chapter 5, Statutes of 2011,
* Preliminary; subject to change.
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together with a companion bill, Assembly Bill No. 27 (“ABx1 27”). A lawsuit was brought in the
California Supreme Court, California Redevelopment Association, et al. v. Matosantos, et al., 53 Cal. 4th
231 (Cal. Dec. 29, 2011), challenging the constitutionality of ABx1 26 and ABx1 27. The California
Supreme Court largely upheld ABx1 26, invalidated ABx1 27, and held that ABx1 26 may be severed
from ABx1 27 and enforced independently. As a result of ABx1 26 and the decision of the California
Supreme Court in the California Redevelopment Association case, as of February 1, 2012, all
redevelopment agencies in the State were dissolved, including the Prior Agency, and successor agencies
were designated as successor entities to the former redevelopment agencies to expeditiously wind down
the affairs of the former redevelopment agencies.
The primary provisions enacted by ABx1 26 relating to the dissolution and wind down of former
redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing
with Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27,
2012 by Assembly Bill No. 1484 (“AB 1484”), enacted as Chapter 26, Statutes of 2012 and as further
amended on September 22, 2015 by Senate Bill 107 (“SB 107”), enacted as Chapter 325, Statutes of 2015
(collectively, as amended from time to time, the “Dissolution Act”).
On January 3, 2012, the City Council of the City elected to serve as the Agency, pursuant to
Resolution No. 2012-002, adopted by the City as the governing body of the Agency and Section 34173 of
the Dissolution Act. Subdivision (g) of Section 34173 of the Dissolution Act, added by AB 1484,
expressly affirms that the Agency is a separate public entity from the City, that the two entities shall not
merge, and that the liabilities of the Prior Agency will not be transferred to the City nor will the assets of
the Prior Agency become assets of the City.
The Redevelopment Plans
The Redevelopment Plan for the La Quinta Redevelopment Project Area No. 1 was approved by
Ordinance No. 43 adopted by the City Council on November 29, 1983, and has been amended several
times. The La Quinta Redevelopment Project Area No. 1 (“Project Area No. 1”) encompasses
17.9 square miles (11,475 acres) of commercial, public and residential properties.
The Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2 was approved by
Ordinance No. 139 adopted by the City Council on May 16, 1989, and has also been amended several
times. The La Quinta Redevelopment Project Area No. 2 (“Project Area No. 2”) encompasses 4.9 square
miles (3,130 acres) of commercial, public and residential properties.
Project Area No. 1 and Project Area No. 2 are referred to herein as the “Project Areas,” and the
Redevelopment Plans for Project Area No. 1 and Project Area No. 2 are referred to herein as the
“Redevelopment Plans.”
Tax Allocation Financing
Prior to the enactment of ABx1 26, the Redevelopment Law authorized the financing of
redevelopment projects through the use of tax increment revenues. This method provided that the taxable
valuation of the property within a redevelopment project area on the property tax roll last equalized prior
to the effective date of the ordinance which adopts the redevelopment plan becomes the base year
valuation. Assuming the taxable valuation never drops below the base year level, the taxing agencies
thereafter received that portion of the taxes produced by applying then current tax rates to the base year
valuation, and the redevelopment agency was allocated the remaining portion produced by applying then
current tax rates to the increase in valuation over the base year. Such incremental tax revenues allocated
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to a redevelopment agency were authorized to be pledged to the payment of redevelopment agency
obligations.
The Dissolution Act authorizes refunding bonds, including the Bonds, to be secured by a pledge
of monies deposited from time to time in a Redevelopment Property Tax Trust Fund (the “Redevelopment
Property Tax Trust Fund”) held by a county auditor-controller with respect to a successor agency, which
are equivalent to the tax increment revenues that were formerly allocated under the Redevelopment Law
to the redevelopment agency and formerly authorized under the Redevelopment Law to be used for the
financing of redevelopment projects. Under the Indenture, Pledged Tax Revenues consist of the amounts
deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to and as
provided in the Dissolution Act less certain payments to taxing agencies but subject to any adjustments
thereto pursuant to Section 34183(b) of the Dissolution Act and amounts required to pay debt service on
the Senior Bonds, as defined below. See “SECURITY FOR THE BONDS — Tax Increment Financing”
herein for additional information.
Security for the Bonds
The Dissolution Act requires the County Auditor-Controller to determine the amount of property
taxes that would have been allocated to the Prior Agency had the Prior Agency not been dissolved
pursuant to the operation of ABx1 26, using current assessed values on the last equalized roll on
August 20, and to deposit that amount in the Redevelopment Property Tax Trust Fund for the Agency
established and held by the County Auditor-Controller pursuant to the Dissolution Act. The Dissolution
Act provides that any bonds authorized thereunder to be issued by the Agency will be considered
indebtedness incurred by the dissolved Prior Agency, with the same legal effect as if the bonds had been
issued prior to effective date of ABx1 26, in full conformity with the applicable provision of the
Redevelopment Law that existed prior to that date, and will be included in the Agency’s Recognized
Obligation Payment Schedule (see Appendix A — “DEFINITIONS” and “SECURITY FOR THE
BONDS — Recognized Obligation Payment Schedule”).
The Dissolution Act further provides that bonds authorized thereunder to be issued by the Agency
will be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time
in the Redevelopment Property Tax Trust Fund, and that property tax revenues pledged to any bonds
authorized under the Dissolution Act, such as the Bonds, are taxes allocated to the Agency pursuant to the
provisions of the Redevelopment Law and the State Constitution which provided for the allocation of tax
increment revenues under the Redevelopment Law, as described in the foregoing paragraph.
In accordance with the Dissolution Act, “Pledged Tax Revenues” are defined under the Indenture
as the portion of the monies deposited from time to time in the Redevelopment Property Tax Trust Fund,
as provided in paragraph (2) of subdivision (a) of Section 34183 of the Dissolution Act less the amount
required to pay debt service on the Senior Bonds, as defined below. In accordance with the Dissolution
Act, the Bonds shall be payable from and secured by the Pledged Tax Revenues. If, and to the extent, that
the provisions of Section 34172 or paragraph (2) of subdivision (a) of Section 34183 are invalidated by a
final judicial decision, then Pledged Tax Revenues shall include all tax revenues allocated to the payment
of indebtedness pursuant to Health & Safety Code Section 33670 or such other section as may be in effect
at the time providing for the allocation of tax increment revenues in accordance with Article XVI,
Section 16 of the California Constitution.
The Agency believes that pursuant to the Dissolution Act that the Subordinated Pass-Through
Amounts in Project Area No. 1 are included in the amounts pledged to the Bonds and, in certain
circumstances, would be available pursuant to Health & Safety Code Section 34183(b) to pay the Bonds.
The Financial Advisor has deducted the Subordinated Pass-Through Amounts in calculating Pledged Tax
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Revenues available to pay debt service shown in the table entitled “SUCCESSOR AGENCY
PROJECTED PLEDGED TAX REVENUES” and the tables under the heading “Debt Service Coverage”
herein.
The Bonds are payable from and secured by the Pledged Tax Revenues to be derived from the
Project Areas, all of the monies in the Redevelopment Obligation Retirement Fund established and held
by the Agency pursuant to the Dissolution Act after payment of debt service on the Senior Bonds, as
defined below, and all of the monies in the Debt Service Fund (including the Interest Account, the
Principal Account, and the Reserve Account therein) established and held by the Trustee under the
Indenture on a subordinate basis to the Senior Bonds. Taxes levied on the property within the Project
Areas on that portion of the taxable valuation over and above the taxable valuation of the applicable base
year property tax roll with respect to the various territories within the Project Areas, will be deposited in
the Redevelopment Property Tax Trust Fund for transfer by the County Auditor-Controller to the
Agency’s Redevelopment Obligation Retirement Fund on January 2 and June 1 of each year to the extent
required for payments listed in the Agency’s Recognized Obligation Payment Schedule in accordance
with the requirements of the Dissolution Act (see “SECURITY FOR THE BONDS — Recognized
Obligation Payment Schedule”). Monies deposited by the County Auditor-Controller into the Agency’s
Redevelopment Obligation Retirement Fund, after payment of the Senior Bonds, will be transferred by
the Agency to the Trustee for deposit in the Debt Service Fund established under the Indenture and
administered by the Trustee in accordance with the Indenture.
Successor agencies have no power to levy property taxes and must look specifically to the
allocation of taxes as described above. See “RISK FACTORS.”
Senior Bonds
The Bonds are being issued by the Agency on a subordinate basis to the $65,600,000 Successor
Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2,
Tax Allocation Refunding Bonds, 2014 Series A (the “2014 Bonds” or the “Senior Bonds”) of which
$________ are currently outstanding.
Reserve Account
The Indenture provides that in lieu of a cash deposit, the Agency may satisfy all or a portion of a
Reserve Requirement by means of a Reserve Account Surety Bond (see “THE INDENTURE” herein). In
order to further secure the payment of the principal of and interest on the Bonds, the Agency intends to
satisfy the Reserve Requirement for the Bonds by using a portion of the proceeds of the Bonds to
purchase a Reserve Account Surety Bond in the face amount of $_________ (see “Reserve Account
Surety Bond” below) which is equal to the Reserve Requirement of the Bonds. “Reserve Requirement”
means, as of the date of computation, an amount equal to the combined lesser of (i) Maximum Annual
Debt Service on the Bonds and any Parity Bonds, (ii) 10% of the net proceeds of the Bonds and any
Parity Bonds, or (iii) 125% of the Annual Debt Service on all Bonds and any Parity Bonds Outstanding.
Reserve Account Surety Bond. Concurrently with the issuance of the Bonds, the Insurer will
issue a Reserve Account Municipal Bond Insurance Policy (the “Reserve Account Municipal Bond
Insurance Policy”) with respect to the Bonds. The Reserve Account Municipal Bond Insurance Policy
provides that the Insurer will make payment to the Trustee on the later of the Business Day on which
principal and interest becomes due for Payment or the Business Day next following the Business Day on
which the Insurer shall have received Notice of Nonpayment, not to exceed the Policy Limit of
$_________.
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Further Information
Brief descriptions of the Bonds, the Indenture, the Agency, the Prior Agency and the City are
included in this Official Statement. Such descriptions and information do not purport to be comprehensive
or definitive. All references herein to the Indenture, the Bond Law, the Redevelopment Law, the
Dissolution Act, the Constitution and the laws of the State as well as the proceedings of the Prior Agency,
the Agency, and the City are qualified in their entirety by reference to such documents. References herein
to the Bonds are qualified in their entirety by the form thereof included in the Indenture and the
information with respect thereto included herein, copies of which are all available for inspection at the
offices of the Agency. During the period of the offering of the Bonds, copies of the forms of all
documents are available at the offices of Hilltop Securities, Inc., 2533 South Coast Hwy 101, Suite 250,
Cardiff by the Sea, California 92007, and thereafter from the City Clerk’s office, City of La Quinta, 78-
495 Calle Tampico, La Quinta, California 92253.
BOND INSURANCE
[TO COME]
SOURCES AND USES OF FUNDS
The estimated sources and uses of funds is summarized as follows:
Sources:
Principal Amount of Bonds
Underwriter’s Discount
Original Issue Premium/(Discount)
Total Sources
Uses:
Escrow Fund(1)
Costs of Issuance Fund(2)
Total Uses
(1) Amount sufficient to pay principal, redemption price and interest through and including the 2011 Agency Bonds and the
2011 Authority Bonds on [September 1, 2020].
(2) Costs of Issuance include fees and expenses for Bond Counsel, Disclosure Counsel, Financial Advisor, Trustee, printing
expenses, rating fee, bond insurance premiums, Reserve Account Surety Bond premiums and other costs.
THE BONDS
Authority for Issuance
The Bonds were authorized for issuance pursuant to the Indenture, the Bond Law, and the
Dissolution Act. The issuance of the Bonds and the Indenture were authorized by the Agency pursuant to
Resolution No. SA _______ adopted on _________, 2016 (the “Resolution”), and by the Oversight Board
for the Agency pursuant to Resolution No. OB ________adopted on _________, 2016 (the “Oversight
Board Action”).
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Written notice of the Oversight Board Resolution was provided to the California Department of
Finance (“DOF”) pursuant to the Dissolution Act on _________, 2016, and the DOF requested a review
within five business days of such written notice. On _________, 2016, which is within the time period
allotted under the Dissolution Act for the DOF to review the Oversight Board’s approving resolution, the
DOF provided a letter to the Agency stating that based on the DOF’s review and application of the law,
the Oversight Board Action approving the Bonds is approved by the DOF. The Oversight Board
subsequently adopted a new resolution approving the issuance of refunding bonds in one or more series
and gave written notice of such action to DOF as required by the Dissolution Act on _________, 2016.
DOF requested review of such action within five business days. On ___________, 2016 DOF provided a
letter stating that based on the DOF’s review and application of the law, the Oversight Board action
approving the Bonds is approved by DOF. A copy of the letter from DOF can be obtained from the
Agency.
Description of the Bonds
The Bonds will be executed and delivered as one fully-registered Bond in the denomination of
$5,000 or any integral multiple thereof for each maturity, initially in the name of Cede & Co., as nominee
for The Depository Trust Company, New York, New York (“DTC”), as registered owner of all Bonds.
See “Book-Entry System” below. The initially executed and delivered Bonds will be dated the Delivery
Date and mature on September 1 in the years and in the amounts shown on the inside cover page of this
Official Statement. Interest on the Bonds will be calculated at the rates shown on the inside cover page of
this Official Statement, payable semiannually on March 1 and September 1 in each year, commencing on
[September 1, 2016], by check mailed to the registered owners thereof or upon the request of the Owners
of $1,000,000 or more in principal amount of Bonds, by wire transfer to an account in the United States
which shall be designated in written instructions by such Owner to the Trustee on or before the Record
Date preceding the Interest Payment Date.
Book-Entry System
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may
be requested by an authorized representative of DTC. One fully-registered certificate will be issued for
each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be
deposited with DTC. See Appendix C — “BOOK-ENTRY ONLY SYSTEM.”
Optional Redemption*
Optional Redemption. The Bonds may be called before maturity and redeemed at the option of
the Agency, in whole or in part, from the proceeds of refunding bonds or other available funds, on
September 1, 20__ or on any date thereafter prior to maturity. Bonds called for redemption will be
redeemed at the following redemption price (expressed as a percentage of the principal amount of Bonds
to be redeemed) plus accrued interest to the redemption date:
Redemption Date Redemption Price
September 1, 20__ and thereafter 100%
* Preliminary; subject to change.
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Sinking Fund Redemption
The Bonds maturing on September 1, 20__, and September 1, 20__ will be subject to mandatory
redemption in part, by lot, on September 1, 202__, and September 1, 20__ and on each September 1 until
maturity, at a redemption price equal to the principal amount thereof together with accrued interest
thereon to the redemption date, without premium, from minimum sinking fund payments on hand in the
Debt Service Fund in the years and amounts as follows:
20__ TERM BONDS
Year Amount
(maturity)
20__ TERM BONDS
Year Amount
(maturity)
SECURITY FOR THE BONDS
The Dissolution Act requires the County Auditor-Controller to determine the amount of property
taxes that would have been allocated to the Prior Agency (pursuant to subdivision (b) of Section 16 of
Article XVI of the State Constitution) had the Prior Agency not been dissolved pursuant to the operation
of ABx1 26, using current assessed values on the last equalized roll on August 20, and to deposit that
amount in the Redevelopment Property Tax Trust Fund for the Agency established and held by the
County Auditor-Controller pursuant to the Dissolution Act. The Dissolution Act provides that any bonds
authorized thereunder to be issued by the Agency will be considered indebtedness incurred by the
dissolved Prior Agency, with the same legal effect as if the bonds had been issued prior to effective date
of ABx1 26, in full conformity with the applicable provision of the Redevelopment Law that existed prior
to that date, and will be included in the Agency’s Recognized Obligation Payment Schedule (see
Appendix A — “DEFINITIONS” and “SECURITY FOR THE BONDS — Recognized Obligation
Payment Schedule”).
The Dissolution Act further provides that bonds authorized thereunder to be issued by the Agency
will be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time
in the Redevelopment Property Tax Trust Fund, and that property tax revenues pledged to any bonds
authorized to be issued by the Agency under the Dissolution Act, including the Bonds, are taxes allocated
to the Agency pursuant to the subdivision (b) of Section 33670 of the Redevelopment Law and Section 16
of Article XVI of the State Constitution.
Pursuant to subdivision (b) of Section 33670 of the Redevelopment Law and Section 16 of
Article XVI of the Constitution of the State and as provided in the Redevelopment Plans, taxes levied
upon taxable property in the Project Areas each year by or for the benefit of the State, any city, county,
city and county, district, or other public corporation (herein sometimes collectively called “taxing
agencies”) after the effective date of the ordinance approving the Redevelopment Plans, or the respective
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effective dates of ordinances approving amendments to the Redevelopment Plans that added territory to
the Project Areas, as applicable, are to be divided as follows:
(a) To Taxing Agencies: That portion of the taxes which would be produced by the rate upon
which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed
value of the taxable property in the Project Areas as shown upon the assessment roll used in connection
with the taxation of such property by such taxing agency last equalized prior to the effective date of the
ordinance adopting the Redevelopment Plans, or the respective effective dates of ordinances approving
amendments to the Redevelopment Plans that added territory to the Project Areas, as applicable (each, a
“base year valuation”), will be allocated to, and when collected will be paid into, the funds of the
respective taxing agencies as taxes by or for the taxing agencies on all other property are paid; and
(b) To the Prior Agency/Agency: Except for that portion of the taxes in excess of the amount
identified in (a) above which are attributable to a tax rate levied by a taxing agency for the purpose of
producing revenues in an amount sufficient to make annual repayments of the principal of, and the
interest on, any bonded indebtedness approved by the voters of the taxing agency on or after January 1,
1989 for the acquisition or improvement of real property, which portion shall be allocated to, and when
collected shall be paid into, the fund of that taxing agency, that portion of the levied taxes each year in
excess of such amount, annually allocated within the Plan Limit following the Delivery Date, when
collected will be paid into a special fund of the Prior Agency. Section 34172 of the Dissolution Act
provides that, for purposes of Section 16 of Article XVI of the State Constitution, the Redevelopment
Property Tax Trust Fund shall be deemed to be a special fund of the Agency to pay the debt service on
indebtedness incurred by the Prior Agency or the Agency to finance or refinance the redevelopment
projects of the Prior Agency.
That portion of the levied taxes described in paragraph (b) above, less amounts deducted pursuant
to Section 34183(a) of the Dissolution Act for permitted administrative costs of the County Auditor-
Controller, constitute the amounts required under the Dissolution Act to be deposited by the County
Auditor-Controller into the Redevelopment Property Tax Trust Fund. In addition, Section 34183 of the
Dissolution Act effectively eliminates the January 1, 1989 date from paragraph (b) above.
“Pledged Tax Revenues” are defined under the Indenture as the portion of the monies deposited
from time to time in the Redevelopment Property Tax Trust Fund, as provided in paragraph (2) of
subdivision (a) of Section 34183 of the Dissolution Act less the amount required to pay debt service on
the Senior Bonds. If, and to the extent, that the provisions of Section 34172 or paragraph (2) of
subdivision (a) of Section 34183 are invalidated by a final judicial decision, then Pledged Tax Revenues
shall include all tax revenues allocated to the payment of indebtedness pursuant to Health & Safety Code
Section 33670 or such other section as may be in effect at the time providing for the allocation of tax
increment revenues in accordance with Article XVI, Section 16 of the California Constitution.
On a subordinate basis to the Senior Bonds (see “INTRODUCTORY STATEMENT — Senior
Bonds”) the Bonds are payable from and secured by (i) an irrevocable pledge of the Pledged Tax
Revenues to be derived from the Project Areas, (ii) an irrevocable pledge of all of the monies in the
Redevelopment Obligation Retirement Fund established and held by the Agency pursuant to the
Dissolution Act after payment of the Senior Bonds, and (iii) an irrevocable first pledge and lien on all of
the monies in the Debt Service Fund (including the Interest Account, the Principal Account and the
Reserve Account therein) established and held by the Trustee in trust for the Bondowners under the
Indenture.
Taxes levied on the property within the Project Areas on that portion of the taxable valuation over
and above the taxable valuation of the applicable base year property tax roll with respect to the various
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territories within the Project Areas, after deducting the county administration costs will be deposited in
the Redevelopment Property Tax Trust Fund for transfer by the County Auditor-Controller to the
Agency’s Redevelopment Obligation Retirement Fund on January 2 and June 1 of each year to the extent
required for payments listed in the Agency’s Recognized Obligation Payment Schedule in accordance
with the requirements of the Dissolution Act (see “SECURITY FOR THE BONDS — Recognized
Obligation Payment Schedule”). Monies deposited by the County Auditor-Controller into the Agency’s
Redevelopment Obligation Retirement Fund will be transferred by the Agency to the Trustee for deposit
in the Debt Service Fund for the Senior Bonds and then for deposit in the Debt Service Fund established
under the Indenture and administered by the Trustee in accordance with the Indenture.
The Agency has no power to levy and collect taxes, and various factors beyond its control could
affect the amount of Pledged Tax Revenues available in any six-month period to pay the principal of and
interest on the Bonds (see “SECURITY FOR THE BONDS — Tax Increment Financing” and “—
Recognized Obligation Payment Schedule” and “RISK FACTORS”).
The Bonds are not a debt of the City, the State or any of its political subdivisions (except the
Agency), and none of the City, the State or any of its political subdivisions (except the Agency) is liable
therefor. The Bonds do not constitute an indebtedness within the meaning of any constitutional or
statutory debt limitation or restriction.
Tax Increment Financing
Prior to the enactment of ABx1 26, the Redevelopment Law authorized the financing of
redevelopment projects through the use of tax increment revenues. This method provided that the taxable
valuation of the property within a redevelopment project area on the property tax roll last equalized prior
to the effective date of the ordinance which adopts the redevelopment plan becomes the base year
valuation. Assuming the taxable valuation never drops below the base year level, the taxing agencies
thereafter received that portion of the taxes produced by applying then current tax rates to the base year
valuation, and the redevelopment agency was allocated the remaining portion produced by applying then
current tax rates to the increase in valuation over the base year. Such incremental tax revenues allocated
to a redevelopment agency were authorized to be pledged to the payment of redevelopment agency
obligations.
The Dissolution Act authorizes refunding bonds, including the Bonds, to be secured by a pledge
of monies deposited from time to time in a Redevelopment Property Tax Trust Fund held by a county
auditor-controller with respect to a successor agency, which are equivalent to the tax increment revenues
that were formerly allocated under the Redevelopment Law to the redevelopment agency and formerly
authorized under the Redevelopment Law to be used for the financing of redevelopment projects, less
amounts deducted pursuant to Section 34183(a)(1) of the Dissolution Act for payments to other taxing
agencies, but subject to prior deduction from such amounts pursuant to Section 34183(b) of Subordinated
Pass-Through Amounts. Under the Indenture, Pledged Tax Revenues consist of the amounts distributed
semi-annually from the Redevelopment Property Tax Trust Fund pursuant to Section 34183(a)(2) of the
Dissolution Act after payment of the Senior Bonds (see “INTRODUCTORY STATEMENT — Senior
Bonds”). Successor agencies have no power to levy property taxes and must look specifically to the
allocation of taxes as described above. See “RISK FACTORS.”
Prior to the dissolution of redevelopment agencies, tax increment revenues from one project area
could not be used to repay indebtedness incurred for another project area. However, the Dissolution Act
has only required that county auditor-controllers establish a single Redevelopment Property Tax Trust
Fund with respect to each former redevelopment agency within the respective county. Additionally, the
Dissolution Act now requires that all revenues equivalent to the amount that would have been allocated as
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tax increment to the former redevelopment agency will be allocated to the Redevelopment Property Tax
Trust Fund of the applicable successor agency, and this requirement does not require funds derived from
separate project areas of a former redevelopment agency to be separated. In effect, in situations where a
former redevelopment agency had established more than one redevelopment project area, the Dissolution
Act combines the property tax revenues derived from all project areas into a single trust fund, the
Redevelopment Property Tax Trust Fund, to repay indebtedness of the former redevelopment agency or
the successor agency. To the extent the documents governing outstanding bonds of a redevelopment
agency have pledged revenues derived from a specific project area, the Dissolution Act states, “It is the
intent ... that pledges of revenues associated with enforceable obligations of the former redevelopment
agencies are to be honored. It is intended that the cessation of any redevelopment agency shall not affect
either the pledge, the legal existence of that pledge, or the stream of revenues available to meet the
requirements of the pledge.” The implications of these provisions of the Dissolution Act are not entirely
clear when a former redevelopment agency has established more than one redevelopment project area.
The Prior Agency established two redevelopment project areas which are referred to herein as the Project
Areas. The Pledged Tax Revenues will include tax revenues derived from the Project Areas. The
Agency will continue to administer moneys in the Redevelopment Obligation Retirement Fund in
accordance with the provisions of the Senior Bond Indenture.
Redevelopment Property Tax Trust Fund
The Redevelopment Law authorized redevelopment agencies to make payments to school
districts and other taxing agencies to alleviate any financial burden or detriments to such taxing agencies
caused by a redevelopment project. The Prior Agency entered into several agreements for this purpose
(the “Pass-Through Agreements”). Some, but not all, of the Pass-Through Agreements in Project Area
No. 1 expressly provide that payments thereunder are subordinate to payments on the Prior Agency’s
bonds. (See “THE PROJECT AREAS — Pass Through Agreements and Obligations with Various
Taxing Agencies”). Additionally, Section 33607.5 and 33607.7 of the Redevelopment Law required
mandatory tax sharing applicable to redevelopment projects adopted after January 1, 1994, or amended
thereafter in certain manners specified in such statutes (the “Statutory Pass-Through Amounts”). The
Dissolution Act requires the County Auditor-Controller to distribute from the Redevelopment Property
Tax Trust Fund amounts required to be distributed under the Pass-Through Agreements and for Statutory
Pass-Through Amounts to the taxing entities for each six-month period before amounts are distributed to
the Agency’s Redevelopment Obligation Retirement Fund each January 2 and June 1, unless (i) pass
through payment obligations have previously been made subordinate to debt service payments for the
bonded indebtedness of the Prior Agency, as succeeded by the Agency, (ii) the Agency has reported, no
later than the December 1 and May 1 preceding the January 2 or June 1 distribution date, that the total
amount available to the Agency from the Redevelopment Property Tax Trust Fund allocation to the
Agency’s Redevelopment Obligation Retirement Fund, from other funds transferred from the Prior
Agency, and from funds that have or will become available through asset sales and all redevelopment
operations is insufficient to fund the Agency’s enforceable obligations, pass-through payments, and the
Agency’s administrative cost allowance for the applicable six-month period, and (iii) the State Controller
has concurred with the Agency that there are insufficient funds for such purposes for the applicable six
month period.
If the requirements stated in clauses (i) through (iii) of the foregoing paragraph have been met,
the Dissolution Act provides for certain modifications in the distributions otherwise calculated to be
distributed for such six-month period. To provide for calculated shortages to be paid to the Agency for
enforceable obligations, the amount of the deficiency will first be deducted from the residual amount
otherwise calculated to be distributed to the taxing entities under the Dissolution Act after payment of the
Agency’s enforceable obligations, pass-through payments, and the Agency’s administrative cost
allowance. If such residual amount is exhausted, the amount of the remaining deficiency will be deducted
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from amounts available for distribution to the Agency for administrative costs for the applicable six
month period in order to fund the enforceable obligations. Finally, funds required for servicing bond
debt, in an amount not to exceed the Subordinated Pass-Through Amounts may be deducted from the
amounts to be distributed under Section 34183(a)(1) to other Taxing Agencies, in order to be paid to the
Agency for enforceable obligations, but only after the amounts described in the previous two sentences
have been exhausted. The Agency has not made any report pursuant to Section 34183(b) and therefore
has not included any Subordinated Pass-Through Amounts for the purpose of determining debt service
coverage. The Dissolution Act also provides for a procedure by which the Agency may make non
subordinated Pass-Through Agreements and Statutory Tax Sharing Amounts subordinate to the Bonds;
however, the Agency has determined not to undertake such procedure, and therefore, such non
subordinated Pass-Through Agreements and Statutory Tax Sharing Amounts are not subordinate to the
Bonds.
The Agency cannot guarantee that the process prescribed by the Dissolution Act of administering
the Pledged Tax Revenues and the subordinations provided in the Pass-Through Agreements will
effectively result in adequate Pledged Tax Revenues for the payment of principal and interest on the
Bonds when due. See “SECURITY FOR THE BONDS — Recognized Obligation Payment Schedule.”
See also “THE PROJECT AREAS — Pass Through Agreements and Obligations with Various Taxing
Agencies” for additional information regarding the Pass-Through Agreements and the Statutory Tax
Sharing Amounts applicable to the Agency and the revenues derived from the Project Areas.
Recognized Obligation Payment Schedule
ROPS Process Under the Dissolution Act – Commencing Fiscal Year 2016-
As amended by SB 107, enacted on September 22, 2015 and effective immediately upon its
enactment, the Dissolution Act requires successor agencies to prepare and submit to the successor
agency’s oversight board and the DOF for approval a Recognized Obligation Payment Schedule (the
“Recognized Obligation Payment Schedule” or “ROPS”) before each annual fiscal period covered by
such schedule (i.e., July 1 through June 30), commencing with the Recognized Obligation Payment
Schedule for the period from July 1, 2016 through June 30, 2017. Distributions from the Redevelopment
Property Tax Trust Fund are made by the County Auditor-Controller to successor agencies (and tax
sharing entities) each January 2 and June 1, within each annual Recognized Obligation Payment Schedule
period.
Pursuant to a Recognized Obligation Payment Schedule, “enforceable obligations” of the
successor agency coming due and payable in the fiscal period covered by such schedule are listed,
together with the source of funds to be used to pay for each enforceable obligation. As defined in the
Dissolution Act, “enforceable obligation” includes bonds, including the required debt service, reserve
setasides, and any other payments required under the indenture or similar documents governing the
issuance of the outstanding bonds of the former redevelopment agency, as well as other obligations such
as loans judgments or settlements against the former redevelopment agency, any legally binding and
enforceable agreement that is not otherwise void as violating the debt limit or public policy, contracts
necessary for the administration or operation of the successor agency, and amounts borrowed from the
Low and Moderate Income Housing Fund. A reserve may be included on the Recognized Obligation
Payment Schedule and held by the successor agency when required by the bond indenture or when the
next property tax allocation will be insufficient to pay all obligations due under the provisions of the bond
for the next payment due in the following half of the calendar year (see “THE INDENTURE —
Covenants of the Agency”).
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Under the Dissolution Act, the categories of sources of payments for enforceable obligations
listed on a Recognized Obligation Payment Schedule are the following: (i) the Low and Moderate Income
Housing Fund, (ii) bond proceeds, (iii) reserve balances, (iv) administrative cost allowance, (v) the
Redevelopment Property Tax Trust Fund (but only to the extent no other funding source is available or
when payment from property tax revenues is required by an enforceable obligation or otherwise required
under the Dissolution Act), or (vi) other revenue sources (including rents, concessions, asset sale
proceeds, interest earnings, and any other revenues derived from the former redevelopment agency, as
approved by the oversight board). Other than amounts deposited in the Redevelopment Property Tax
Trust Fund and amounts held in certain funds and accounts under the Indenture, the Agency does not
expect to have any other funds available to pay the Bonds.
The Dissolution Act provides that, commencing on the date the first Recognized Obligation
Payment Schedule is valid thereunder, only those payments listed in the Recognized Obligation Payment
Schedule may be made by the Agency from the funds specified in the Recognized Obligation Payment
Schedule.
Commencing with the Recognized Obligation Payment Schedule for the period from July 1, 2016
through June 30, 2017, the Agency is required to submit each annual Recognized Obligation Payment
Schedule, after approval by the Oversight Board, to the County Auditor-Controller and the DOF no later
than February 1, 2016, and each February 1 thereafter for subsequent annual Recognized Obligation
Payment Schedules. For each annual Recognized Obligation Payment Schedule, the DOF must make its
determination of the enforceable obligations and the amounts and funding sources of the enforceable
obligations no later than April 15 (commencing April 15, 2016 with the Recognized Obligation Payment
Schedule for the period from July 1, 2016 through June 30, 2017). Within five business days of the
determination by the DOF, the Agency may request additional review by the department and an
opportunity to meet and confer on disputed items, if any, except those that are the subject of litigation
disputing the department’s previous or related determination. The DOF must notify the Agency and the
County Auditor-Controller as to the outcome of its review at least 15 days before the June 1 property tax
distribution, with respect to items disputed on the originally submitted annual Recognized Obligation
Payment Schedule.
The County Auditor-Controller may review a submitted Recognized Obligation Payment
Schedule and object to the inclusion of any items that are not demonstrated to be enforceable obligations
and may object to the funding source proposed for any items, provided that the County Auditor-
Controller must provide notice of any such objections to the Agency, the Oversight Board, and the DOF
at least 60 days prior to the January 2 or June 1 date of property tax distribution, as applicable.
If the Agency does not submit an annual Recognized Obligation Payment Schedule by the
February 1 deadline, the City will be subject to a civil penalty equal to $10,000 per day for every day the
schedule is not submitted to the DOF. Additionally, the Agency’s administrative cost allowance is
reduced by 25% if the Agency does not submit an annual Recognized Obligation Payment Schedule
within 10 days after the February 1 deadline. The Agency timely submitted to the DOF its Oversight
Board-approved Recognized Obligation Payment Schedule for the first annual period of July 1, 2016
through June 30, 2017.
Once per Recognized Obligation Payment Schedule period, and no later than October 1 of the
applicable year, the Agency may submit one amendment to the annual Recognized Obligation Payment
Schedule previously approved by the DOF, if the Oversight Board makes a finding that a revision is
necessary for the payment of approved enforceable obligations during the second half of the Recognized
Obligation Payment Schedule period (i.e., during January 1 through June 30), and the Agency may only
amend the amount requested for payment of approved enforceable obligations. The DOF must notify the
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Agency and the County Auditor-Controller as to the outcome of its review of a requested amendment to
an approved annual Recognized Obligation Payment Schedule at least 15 days before the applicable
property tax distribution date.
In connection with the allocation and distribution by the County Auditor-Controller of property
tax revenues deposited in the Redevelopment Property Tax Trust Fund, under the Dissolution Act the
County Auditor-Controller must prepare estimates of the amounts of (i) property tax to be allocated and
distributed and (ii) the amounts of pass-through payments to be made in the upcoming six-month period,
and provide those estimates to the entities receiving the distributions and the DOF no later than October 1
and April 1 of each year, as applicable.
If, after receiving such estimate from the County Auditor-Controller, the Agency determines and
reports to the County Auditor-Controller, no later than December 1 or May 1, as applicable (i.e., by
December 1, 2016 with respect to the January 2, 2017 Redevelopment Property Tax Trust Fund
distribution date), that the total amount available to the Agency from the Redevelopment Property Tax
Trust Fund allocation to the Agency’s Redevelopment Obligation Retirement Fund, from other funds
transferred from the Prior Agency, and from funds that have or will become available through asset sales
and all redevelopment operations, is insufficient to fund the payment of pass-through obligations, for
Agency enforceable obligations listed on the Recognized Obligation Payment Schedule for the
corresponding six-month fiscal period and for the Agency’s administrative cost allowance, the County
Auditor-Controller must notify the State Controller and the DOF no later than 10 days from the date of
the Agency’s notification. If the State Controller concurs that there are insufficient funds to pay required
debt service, the Dissolution Act provides for certain adjustments to be made to the estimated
distributions, as described in more detail under “SECURITY FOR THE BONDS – Tax Increment
Financing” above.
ROPS Process Under the Dissolution Act – Prior to Fiscal Year 2016-17
With respect to obligations required to be paid prior to July 1, 2016, the Dissolution Act required
successor agencies to prepare and submit to the successor agency’s oversight board and the DOF for
approval a Recognized Obligation Payment Schedule before each six-month fiscal period covered by such
schedule (i.e., January 1 through June 30, or July 1 through December 31).
The Recognized Obligation Payment Schedule with respect to the six-month period of January 1,
2013 through June 30, 2013 was required to be submitted by the Agency, after approval by the Oversight
Board, to the County Administrative Officer, the County Auditor-Controller, the DOF, and the State
Controller no later than September 1, 2012. For each subsequent six-month period through the six-month
period ending June 30, 2016, the Agency was required to submit the Recognized Obligation Payment
Schedule, after approval by the Oversight Board, to the County Administrative Officer, the County
Auditor-Controller, the DOF, and the State Controller by 90 days before the date of the next January 2 or
June 1 property tax distribution. If the Agency did not submit a Recognized Obligation Payment Schedule
by such deadlines, the City would be subject to a civil penalty equal to $10,000 per day for every day the
schedule is not submitted to the DOF. Additionally, the Agency’s administrative cost allowance would be
reduced by 25% if the Agency did not submit a Recognized Obligation Payment Schedule by September
11, 2012, with respect to the Recognized Obligation Payment Schedule for the six-month period of
January 1, 2013 through June 30, 2013, or by the 80th day before the date of the next January 2 or June 1
property tax distribution, as applicable, with respect to the Recognized Obligation Payment Schedule for
subsequent six-month periods commencing with the period of July 1, 2013 through December 1, 2013.
Prior to the enactment of SB 107, the Dissolution Act required the DOF to make a determination
of the enforceable obligations and the amounts and funding sources of the enforceable obligations no later
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than 45 days after the Recognized Obligation Payment Schedule is submitted. Within five business days
of the determination by the DOF, the Agency could request additional review by the department and an
opportunity to meet and confer on disputed items, if any. The DOF would notify the Agency and the
County Auditor-Controller as to the outcome of its review at least 15 days before the January 2 or June 1
date of property tax distribution, as applicable.
Optional Last and Final ROPS
At the option of a successor agency and beginning January 1, 2016, the Dissolution Act allows a
successor agency to submit a “Last and Final ROPS” for approval by the oversight board. The following
conditions must be met: (i) the remaining debt is limited to administrative costs and payments pursuant to
enforceable obligations with defined payment schedules including, but not limited to, debt service, loan
agreements and contracts, (ii) all remaining obligations have been previously listed on a Recognized
Obligation Payment Schedule and approved by the DOF, and (iii) the successor agency is not a party to
outstanding or unresolved litigation. The DOF will have 100 days to review a Last and Final ROPS
submitted for approval. The DOF may make changes to the Last and Final ROPS with the successor
agency’s agreement or issue a letter denying the Last and Final ROPS. If the DOF approves the Last and
Final ROPS, it will establish the maximum amount of Redevelopment Property Tax Trust Fund to be
distributed to the successor agency for each remaining fiscal year until the obligations have been fully
paid. The successor agency can submit no more than two requests to amend an approved Last and Final
ROPS. The oversight board must first approve each amendment request, and the DOF will then have 100
days to approve or deny the request. After the DOF approves Last and Final ROPS, the successor agency
will no longer prepare or submit Recognized Obligation Payment Schedules, and the county auditor-
controller will make distributions from the Redevelopment Property Tax Trust Fund to the successor
agency pursuant to the Last and Final ROPS in a prescribed order of priority until the aggregate amount
of property tax allocated to the successor agency equals the total outstanding obligation approved in the
Last and Final ROPS.
See the caption “RISK FACTORS – Recognized Obligation Payment Schedule” for a discussion
of certain risks associated with the Last and Final Recognized Obligation Payment Schedule.
Parity Bonds
Under the Indenture, in addition to the Bonds, the Agency may issue or incur additional tax
allocation bonds (including, without limitation, bonds, notes, interim certificates, debentures or other
obligations) secured by a pledge and lien on Pledged Tax Revenues on a parity with the Bonds (“Parity
Bonds”) in such principal amount as shall be determined by the Agency, pursuant to a separate or
Supplemental Indenture adopted or entered into by the Agency and Trustee and for such purposes as are
permitted under the Dissolution Act, including without limitation Section 34177.5 thereof.
Section 34177.5 of the Dissolution Act presently permits successor agencies to issue bonds or
incur other indebtedness secured by property tax revenues comprised of former tax increment and
required to be deposited into the respective Redevelopment Property Tax Trust Fund for the applicable
successor agency under limited circumstances:
(i) to provide debt service savings to the successor agency;
(ii) for the purpose of financing debt service spikes, including balloon maturities;
provided, (A) the existing indebtedness is not accelerated, except to the extent necessary to
achieve substantially level debt service, and (B) the principal amount of the refunding bonds or
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the indebtedness will not exceed the amount required to defease the refunded bonds or other
indebtedness, to establish customary debt service reserves, and to pay related costs of issuance;
(iii) for the purpose of amending an existing enforceable obligation under which the
successor agency is obligated to reimburse a political subdivision of the state for the payment of
debt service on a bond or other obligation of the political subdivision or to pay all or a portion of
the debt service on the bond or other obligation of the political subdivision to provide savings to
the successor agency, when such amendment is in connection with a refunding of the bonds or
other obligations of the separate political subdivision so that the enforceable obligation will apply
to the refunding obligations of the political subdivision; or
(iv) for the purpose of making payments under an existing enforceable obligation
when the enforceable obligation includes the irrevocable pledge of property tax increment (i.e.,
formerly tax increment revenues prior to the effective date of the Dissolution Act) or other funds
and the obligation to issue bonds secured by that pledge.
When bonds are issued pursuant to the situations contemplated in clauses (i) and (iii), the following two
constraints apply to the size of the financing: (A) the total interest cost to maturity on the refunding
bonds or indebtedness plus the principal amount of the refunding bonds or other indebtedness shall not
exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus
the remaining principal of the bonds or other indebtedness to be refunded, and (B) the principal amount of
the refunding bonds or the indebtedness will not exceed the amount required to defease the refunded
bonds or other indebtedness, to establish customary debt service reserves, and to pay related costs of
issuance. If the foregoing conditions are satisfied, the initial principal amount of the refunding bonds or
indebtedness may be greater than the outstanding principal amount of the bonds or other indebtedness to
be refunded. The successor agency may pledge to the refunding bonds or other indebtedness the revenues
pledged to the bonds or other indebtedness being refunded, having the same lien priority as the pledge of
the bonds or other obligations to be refunded.
Subject to the foregoing, the Agency may issue or incur such Parity Bonds subject to the
following additional specific conditions precedent:
(a) The Agency will be in compliance with all covenants set forth in the Indenture;
(b) The Oversight Board shall have approved the issuance of Parity Bonds;
(c) The Parity Bonds will be on such terms and conditions as may be set forth in a separate
or Supplemental Indenture, which will provide for (i) bonds substantially in accordance with the
Indenture, and (ii) the deposit of moneys or Alternate Reserve Account Security into the Reserve Account
in an amount sufficient, together with the balance of the Reserve Account, to equal the Reserve
Requirement on all Bonds expected to be outstanding including the Bonds;
(d) Receipt of a certificate or opinion of an Independent Financial Consultant stating:
(i) For the current and each future Bond Year the debt service for each such Bond
Year with respect to all Bonds and other Parity Bonds reasonably expected to be outstanding following
the issuance of the Parity Bonds;
(ii) For the then current Fiscal Year, the Pledged Tax Revenues to be received by the
Agency based upon the most recently certified assessed valuation of taxable property in the Project Areas
provided by the appropriate officer of the County;
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(iii) For each future Fiscal Year, the Pledged Tax Revenues referred to in item (ii)
together with (a) the amount determined in accordance with Section 51(a) of the California Revenue and
Taxation Code (2% inflationary growth) and (b) the amount of Pledged Tax Revenues to be payable with
respect to construction completed but not yet on the tax roll, and taking into account the expiration of the
time to receive Pledged Tax Revenues with respect to any portion of the Project Areas and any amounts
to be paid pursuant to the Pass-Through Agreements and the Statutory Pass-Through Amounts; and
(iv) That for `the then current Fiscal Year, the Pledged Tax Revenues referred to in
item (ii) and for each future Fiscal Year the Pledged Tax Revenues referred to in item (iii) are at least
equal to the sum of 125% of the Maximum Annual Debt Service with respect to the amounts referred to
in item (i) above, and, for the then current Fiscal Year, 100% of Annual Debt Service with respect to any
subordinate debt and that the Agency is entitled under the Dissolution Act, the Redevelopment Law and
the Redevelopment Plans to receive taxes under Section 33670 of the Redevelopment Law in an amount
sufficient to meet expected debt service with respect to all Bonds, and other Parity Bonds.
(e) The Parity Bonds will mature on and interest will be payable on the same dates as the
Bonds (except the first interest payment may be from the date of the Parity Bonds until the next
succeeding March 1 or September l) provided, however, nothing herein shall preclude the Agency from
issuing and selling Parity Bonds which do not pay current interest.
THE INDENTURE
The following is a summary of certain provisions of the Indenture and does not purport to be
complete. Reference is hereby made to the Indenture and to Appendix A for the definition of certain terms
used herein. Copies of the Indenture are available from the Agency upon request. All capitalized terms
used herein and not otherwise defined will have the same meaning as used in the Indenture.
Allocation of Tax Revenues
Under the Dissolution Act, the Agency has previously established a special trust fund called the
Redevelopment Obligation Retirement Fund (the “Redevelopment Obligation Retirement Fund”), which
is held by the Agency and into which the County Auditor-Controller distributes property tax revenues
each January 2 and June 1 from the Redevelopment Property Tax Trust Fund for the payment by the
Agency of enforceable obligations pursuant to the Recognized Obligation Payment Schedule. From the
amounts deposited in the Redevelopment Obligation Retirement Fund, the Agency will first transfer to
the Senior Bonds Trustee accounts required to be depicted in the Special Fund established under the
Senior Bonds Indenture.
There is established by the Indenture a special trust fund known as the “Debt Service Fund,” and
the accounts therein referred to below, which will be held by the Trustee. The Agency will deposit all of
the Pledged Tax Revenues received in any Bond Year from the Redevelopment Property Tax Trust Fund
in accordance with the Dissolution Act in the Redevelopment Obligation Retirement Fund promptly upon
receipt thereof by the Agency, and promptly thereafter shall deposit amounts received therein to the Debt
Service Fund established and held under the Indenture until such time during such Bond Year as the
amounts so transferred to the Debt Service Fund under the Indenture equal the aggregate amounts
required to be transferred to the Trustee for deposit into the Interest Account, the Principal Account and
the Reserve Account of the Debt Service Fund in such Bond Year pursuant to the Indenture and for
deposit in such Bond Year in the funds and accounts established with respect to Parity Bonds, as provided
in any Supplemental Indenture.
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Pledged Tax Revenues – Application
There are established under the Indenture accounts within the Debt Service Fund as set forth
below, to be known respectively as the Interest Account, the Principal Account and the Reserve Account.
Moneys in the Redevelopment Obligation Retirement Fund will be transferred by the Agency to the
Trustee in the following amounts at the following times, for deposit by the Trustee in the following
respective accounts within the Debt Service Fund, which are continued with the Trustee, in the following
order of priority:
(a) Interest Account. On or before the 5th Business Day preceding each Interest Payment
Date, the Agency will withdraw from the Redevelopment Obligation Retirement Fund and transfer to the
Trustee for deposit in the Interest Account an amount which, when added to the amount contained in the
Interest Account on that date, will be equal to the aggregate amount of the interest becoming due and
payable on the Outstanding Bonds on such Interest Payment Date and the next following Interest Payment
Date. No such transfer and deposit need to be made to the Interest Account if the amount contained
therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon
all of the Outstanding Bonds. Subject to the Indenture, all moneys in the Interest Account will be used
and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it becomes due
and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to the
Indenture).
(b) Principal Account. On or before the 5th Business Day preceding September 1 in each
year beginning [September 1, 2017], the Agency will withdraw from the Redevelopment Obligation
Retirement Fund and transfer to the Trustee for deposit in the Principal Account an amount equal to the
principal payments and sinking account payments becoming due and payable on the Outstanding Bonds
on such September 1, to the extent monies on deposit in the Redevelopment Obligation Retirement Fund
are available therefor. No such transfer and deposit need be made to the Principal Account if the amount
contained therein is at least equal to the principal payments and sinking account payments to become due
on such September 1 on all Outstanding Bonds. Subject to the Indenture, all moneys in the Principal
Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal
payments of the Bonds as it becomes due and payable.
(c) Reserve Account. In the event that the Agency fails to deposit with the Trustee no later
than five (5) Business Days before any Interest Payment Date the full amount of the interest, principal
payments required to be deposited pursuant to the Indenture, the Trustee will, five (5) Business Days
before such Interest Payment Date, withdraw from the Reserve Account an amount equal to any such
deficiency and will notify the Agency of any such withdrawal. Promptly upon receipt of any such notice,
the Agency will withdraw from the Redevelopment Obligation Retirement Fund and transfer to the
Trustee for deposit in the Reserve Account that will be sufficient to maintain the Reserve Requirement on
deposit in the Reserve Account and the Reserve Account of any additional Parity Bonds. If there is not
sufficient moneys in the Redevelopment Obligation Retirement Fund to transfer an amount that will be
sufficient to maintain the Reserve Requirement on deposit in the Reserve Account and the Reserve
Account of any additional Parity Bonds, the Agency shall have an obligation to continue making transfers
of Pledged Tax Revenues into the Redevelopment Obligation Retirement Fund, as such revenues become
available, and thereafter, as moneys become available in the Redevelopment Obligation Retirement Fund,
shall make transfers to the Reserve Account and the Reserve Account for any additional Parity Bonds
until there is an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve
Account and the Reserve Account for any additional Parity Bonds on a combined basis. No such transfer
and deposit need be made to the Reserve Account (or any subaccount therein) so long as there is on
deposit therein a sum at least equal to the Reserve Requirement. Subject to the Indenture, all money in
the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of making
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transfers to the Interest Account and the Principal Account (and subaccounts therein, as the case may be),
in such order of priority, in the event of any deficiency at any time in any of such accounts or for the
retirement of all the Bonds then Outstanding, except that so long as the Agency is not in default, any
amount in the Reserve Account in excess of the Reserve Requirement will be withdrawn from the
Reserve Account semiannually on or before the 5th Business Day preceding March 1 and September 1 by
the Trustee and deposited in the Interest Account. The prior written consent of the Insurer shall be
condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the
Reserve Account. Notwithstanding anything to the contrary set forth in the Indenture, amounts on deposit
in the Reserve Account shall be applied solely to the payment of debt service due on the Bonds.
Reserve Account Surety Bond. The Reserve Requirement will be initially maintained in the form
of the issuance of the Reserve Account Surety Bond. Under the terms and conditions of the Reserve
Account Surety Bond, the Trustee shall deliver to the Insurer a demand for payment under the Reserve
Account Surety Bond in the required form prior to the date on which funds are required for the purposes
set forth above. The Trustee shall comply with all of the terms and provisions of the Reserve Account
Surety Bond for the purpose of assuring that funds are available thereunder when required for the
purposes of the Reserve Account, within the limits of the coverage amount provided by the Reserve
Account Surety Bond. All amounts drawn by the Trustee under the Reserve Account Surety Bond will be
deposited into the Reserve Account and applied for the purposes thereof.
The Bonds Indenture also creates a Bonds Rebate Fund for the purpose of collecting the amounts
required, if any, to be rebated to the United States in accordance with the requirements of Section 148(f)
of the Code. Section 148 of the Code requires, among other things and with certain exceptions, that any
amounts earned on nonpurpose investments in excess of the amount which would have been earned if
such investments were made at a rate equal to the yield on the Bonds be rebated to the United States. The
Indenture requires the Agency to calculate such amount and deposit it into the Rebate Fund for eventual
rebate to the United States Treasury.
Investment of Moneys in Funds and Accounts
Subject to the provisions of the Indenture, all moneys held by the Trustee in the Debt Service
Fund, the Costs of Issuance Fund, the Reserve Account or the Rebate Fund will be invested at the written
direction of the Agency only in Permitted Investments. If the Trustee receives no written directions from
the Agency as to the investment of moneys held in any Fund or Account, the Trustee shall request such
written direction from the Agency and, pending receipt of instructions, will invest such moneys only in
Permitted Investments described in subsection (5) of the definition thereof.
(a) Moneys in the Redevelopment Obligation Retirement Fund will be invested by the
Agency only in obligations permitted by the Redevelopment Law which will by their terms mature not
later than the date the Agency estimates the moneys represented by the particular investment will be
needed for withdrawal from the Redevelopment Obligation Retirement Fund.
(b) Moneys in the Interest Account and the Principal Account of the Debt Service Fund will
be invested only in obligations which will by their terms mature on such dates as to ensure that before
each interest and principal payment date there will be in such Account, from matured obligations and
other moneys already in such Account, cash equal to the principal and interest payable on such payment
date.
(c) Moneys in the Reserve Account will be invested in (i) obligations which will by their
terms mature on or before the date of the final maturity of the Bonds or five (5) years from the date of
investment, whichever is earlier or (ii) an investment agreement or Reserve Account Surety Bond which
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permits withdrawals or deposits without penalty at such time as such moneys will be needed or in order to
replenish the Reserve Account.
(d) Moneys in the Rebate Fund will be invested in Defeasance Securities which mature on or
before the date such amounts are required to be paid to the United States.
Except as otherwise provided in the Indenture, obligations purchased as an investment of moneys
in any of the Funds or Accounts will be deemed at all times to be a part of such respective Fund or
Account, and the interest accruing thereon and any gain realized from an investment will be credited to
such Fund or Account and any loss resulting from any authorized investment will be charged to such
Fund or Account without liability to the Trustee. The Agency or the Trustee, as the case may be, will sell
or present for redemption any obligation purchased whenever it will be necessary to do so in order to
provide moneys to meet any payment or transfer from such Fund or Account as required by the Indenture
and will incur no liability for any loss realized upon such a sale. All interest earnings received on any
moneys invested in the Interest Account, Principal Account or Reserve Account, to the extent they exceed
the amount required to be in such Account, will be transferred on each Interest Payment Date to the Debt
Service Fund. All interest earnings on moneys invested in the Rebate Fund will be retained in such Fund
and applied as set forth in the Indenture.
Covenants of the Agency
As long as the Bonds are outstanding and unpaid, the Agency will (through its proper members,
officers, agents or employees) faithfully perform and abide by all of the covenants, undertakings and
provisions contained in the Indenture or in any Bond issued under the Indenture, including the following
covenants and agreements for the benefit of the Bondowners which are necessary, convenient and
desirable to secure the Bonds and will tend to make them more marketable; provided, however, that the
covenants do not require the Agency to expend any funds other than the Pledged Tax Revenues.
Covenant 1. Use of Proceeds; Management and Operation of Properties. The Agency
covenants and agrees that the proceeds of the sale of the Bonds will be deposited and used as provided in
the Indenture and that it will manage and operate all properties owned by it comprising any part of the
Project Areas in a sound and businesslike manner.
Covenant 2. No Priority. The Agency covenants and agrees that it will not issue any
obligations payable, either as to principal or interest, from the Pledged Tax Revenues which have any lien
upon the Pledged Tax Revenues prior or superior to the lien of the Bonds. Except as permitted by the
Indenture, it will not issue any obligations, payable as to principal or interest, from the Pledged Tax
Revenues, which have any lien upon the Pledged Tax Revenues on a parity with the Bonds authorized in
the Indenture. Notwithstanding the foregoing, nothing in the Indenture shall prevent the Agency (i) from
issuing and selling pursuant to law, refunding obligations payable from and having any lawful lien upon
the Pledged Tax Revenues, if such refunding obligations are issued for the purpose of, and are sufficient
for the purpose of, refunding all of the Outstanding Bonds, (ii) from issuing and selling obligations which
have, any lien upon the Pledged Tax Revenues which is junior to the Bonds, or (iii) from issuing and
selling bonds or other obligations which are payable in whole or in part from sources other than the
Pledged Tax Revenues. As used in the Indenture “obligations” includes, without limitation, bonds, notes,
interim certificates, debentures or other obligations.
Covenant 3. Punctual Payment. The Agency covenants and agrees that it will duly and
punctually pay, or cause to be paid, the principal of and interest on each of the Bonds on the date, at the
place and in the manner provided in the Bonds. Further, it will take all actions required under the
Dissolution Act to include on the Recognized Obligation Payment Schedules for each six-month period
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all payments to the Trustee to satisfy the requirements of the Indenture, including any amounts required
under the Indenture to replenish the Reserve Account of the Debt Service Fund to the full amount of the
Reserve Requirement.
Covenant 4. Payment of Taxes and Other Charges. The Agency covenants and agrees that it
will from time to time pay and discharge, or cause to be paid and discharged, all payments in lieu of
taxes, service charges, assessments or other governmental charges which may lawfully be imposed upon
the Agency or any of the properties then owned by it in the Project Areas, or upon the revenues and
income therefrom, and will pay all lawful claims for labor, materials and supplies which if unpaid might
become a lien or charge upon any of the properties, revenues or income or which might impair the
security of the Bonds or the use of Pledged Tax Revenues or other legally available funds to pay the
principal of and interest on the Bonds all to the end that the priority and security of the Bonds shall be
preserved; provided, however, that nothing in this covenant shall require the Agency to make any such
payment so long as the Agency in good faith shall contest the validity of the payment.
Covenant 5. Books and Accounts; Financial Statements. The Agency covenants and agrees
that it will at all times keep, or cause to be kept, proper and current books and accounts (separate from all
other records and accounts) in which complete and accurate entries shall be made of all transactions
relating to the Pledged Tax Revenues and other funds relating to the Agency. The Agency will prepare
within one hundred eighty (180) days, after the close of each of its Fiscal Years a complete financial
statement or statements for such year, in reasonable detail covering the Pledged Tax Revenues and other
funds, accompanied by an opinion of an Independent Certified Public Accountant appointed by the
Agency, and will furnish a copy of the statement or statements to the Trustee and any rating agency which
maintains a rating on the Bonds, and, upon written request, to any Bondowner. The Trustee shall have no
duty to review the Agency’s financial statements. The Agency’s financial statements may be included as
part of the City’s Comprehensive Annual Financial Report.
Covenant 6. Eminent Domain Proceeds. The Agency covenants and agrees that if all or any
part of the Redevelopment Project Areas should be taken from it without its consent, by eminent domain
proceedings or other proceedings authorized by law, for any public or other use under which the property
will be tax exempt, it shall take all steps necessary to adjust accordingly the base year property tax roll of
the Project Areas.
Covenant 7. Disposition of Property. The Agency covenants and agrees that it will not dispose
of more than ten percent (10%) of the land area in the Project Areas (except property shown in the
Redevelopment Plans in effect on the date the Indenture is adopted as planned for public use, or property
to be used for public streets, public off-street parking, sewage facilities, parks, easements or right-of-way
for public utilities, or other similar uses) to public bodies or other persons or entities whose property is tax
exempt, unless such disposition will not result in Pledged Tax Revenues to be less than the amount
required for the issuance of Parity Bonds as provided in the Indenture, based upon the certificate or
opinion of an Independent Financial Consultant appointed by the Agency.
Covenant 8. Protection of Security and Rights of Bondowners. The Agency covenants and
agrees to preserve and protect the security of the Bonds and the rights of the Bondowners and to contest
by court action or otherwise (a) the assertion by any officer of any government unit or any other person
whatsoever against the Agency that (i) the Redevelopment Law is unconstitutional or (ii) that the Pledged
Tax Revenues pledged under the Indenture cannot be paid to the Agency for the debt service on the
Bonds or (b) any other action affecting the validity of the Bonds or diluting the security therefor.
Covenant 9. Compliance with Dissolution Act. The Agency shall comply with all of the
requirements of the Dissolution Act. The Agency shall take all actions required under the Dissolution Act
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to prepare and file Recognized Obligation Payment Schedules so as to enable the Los Angeles Auditor
Controller to distribute from the Redevelopment Property Tax Trust Fund for deposit in the
Redevelopment Obligation Retirement Fund all amounts as shall be required to enable the Agency to pay
timely principal of, and interest on, the Bonds and all outstanding Senior Bonds coming due in such Bond
Year.
Without limiting the generality of the foregoing paragraph, the Agency will take all actions
required under the Dissolution Act to include on the Recognized Obligation Payment Schedules for each
semiannual period all payments to the Trustee to satisfy the requirements of the Senior Bonds Indentures
and the Indenture, including any amounts required to replenish the respective reserve accounts established
for the Bonds and the Senior Bonds. In addition, the Agency will take all actions required under the
Dissolution Act to include scheduled debt service on the Bonds and the Senior Bonds, as well as any
amount required to replenish the respective reserve accounts established for the Bonds and the Senior
Bonds, in Recognized Obligation Payment Schedules for each semiannual period so as to enable the
County Auditor-Controller to distribute from the Redevelopment Property Tax Trust Fund to the
Redevelopment Obligation Retirement Fund on each January 2 and June 1, the amounts required to pay
principal of and interest on the Bonds and the Senior Bonds coming due in the respective semiannual
period. These actions will include, without limitation, placing on the periodic Recognized Obligation
Payment Schedule for approval by the Oversight Board and the DOF, to the extent required, the amounts
to be held by the Agency as a reserve until the next semiannual period that are required to provide for the
payment of principal of and interest on the Bonds and the Senior Bonds. Further, to the extent that the
Subordinated Pass-Through Amounts are necessary to pay debt service on the Bonds, the Agency
covenants to comply with the requirements of Health & Safety Code Section 34183(b) to ensure that the
Subordinated Pass-Through Amounts are paid to the Agency.
With regard to each semiannual period ending on June 30 of a calendar year, the Agency shall
include in the Recognized Obligation Payment Schedule for such semiannual period an amount which is
at least equal to the sum of (a) the full amount of principal and interest on the Senior Bonds coming due
and payable on the succeeding March 1 and September 1, plus (b) the full amount of interest coming due
and payable on the Bonds and any obligations issued on a parity with the Bonds on the next succeeding
March 1.
Covenant 10. Limitation on Indebtedness. The Agency covenants and agrees that it has not
and will not incur any loans, obligations or indebtedness repayable from Pledged Tax Revenues such that
the total aggregate debt service on said loans, obligations or indebtedness incurred from and after the date
of adoption of the Redevelopment Plans, when added to the total aggregate debt service on the Bonds,
will exceed the maximum amount of Pledged Tax Revenues to be divided and allocated to the Agency
pursuant to the Redevelopment Plans. The Agency shall file annually with the Trustee on or prior to
August 1 of each year a Written Certificate of the Agency certifying that Pledged Tax Revenues received
by the Agency through the date of the certificate combined with the amount remaining to be paid on all
outstanding obligations of the Agency will not exceed the Plan Limits. To the extent it does, all Pledged
Tax Revenues will be deposited in an escrow account and applied to the payment of such outstanding
obligations.
Covenant 11. Further Assurances. The Agency covenants and agrees to adopt, make, execute
and deliver any and all such further resolutions, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of the Indenture, and for the
better assuring and confirming unto the Owners of the rights and benefits provided in the Indenture.
Covenant 12. Continuing Disclosure. The Agency covenants and agrees that it will comply
with and carry out all of the provisions of the Continuing Disclosure Agreement dated the Closing Date.
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Notwithstanding any other provision of the Indenture, failure of the Agency to comply with the
Continuing Disclosure Agreement shall not be considered an Event of Default; however, any participating
underwriter, holder or beneficial owner of the Bonds may take such actions as may be necessary and
appropriate to compel performance, including seeking mandate or specific performance by court order.
Events of Default and Remedies
The following events will constitute Events of Default under the Indenture:
(a) if default is made in the due and punctual payment of the principal of or interest on any
Bond when and as the same becomes due and payable, whether at maturity as therein expressed, by
declaration or otherwise;
(b) if default is made by the Agency in the observance of any of the covenants, agreements
(including default by the obligor on any underlying agreement) or conditions on its part in the Indenture
or in the Bonds contained, other than a default described in the preceding clause (a), and such default is
continued for a period of thirty (30) days following receipt by the Agency of written notice from the
Trustee or any Owner of the occurrence of such default; or
(c) if the Agency commences a voluntary action under Title 11 of the United States Code or
any substitute or successor statute.
If an Event of Default has occurred and is continuing, the Trustee may, or if requested in writing
by the Owners of the majority in aggregate principal amount of the Bonds then Outstanding, the Trustee
will by written notice to the Agency, (a) declare the principal of the Bonds, together with the accrued
interest thereon, to be due and payable immediately, and upon any such declaration the same will become
immediately due and payable, and (b) upon receipt of indemnity to its satisfaction exercise any other
remedies available to the Trustee and the Owners in law or at equity.
Immediately upon becoming aware of the occurrence of an Event of Default, the Trustee will give
notice of such Event of Default to the Agency by telephone confirmed in writing. Such notice will also
state whether the principal of the Bonds will have been declared to be or have immediately become due
and payable. With respect to any Event of Default described in clauses (a) or (c) above the Trustee will,
and with respect to any Event of Default described in clause (b) above the Trustee in its sole discretion
may, also give such notice to the Agency and the Owners in the manner provided for in the Indenture,
which will include the statement that interest on the Bonds will cease to accrue from and after the date, if
any, on which the Trustee has declared the Bonds to become due and payable pursuant to the preceding
paragraph (but only to the extent that principal and any accrued, but unpaid interest on the Bonds is
actually paid on such date).
This provision, however, is subject to the condition that if, at any time after the principal of the
Bonds has been so declared due and payable, and before any judgment or decree for the payment of the
moneys due has been obtained or entered, the Agency deposits with the Trustee a sum sufficient to pay all
principal on the Bonds matured prior to such declaration and all matured installments of interest (if any)
upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent
permitted by law) at the net effective rate then borne by the Outstanding Bonds, and the reasonable fees
and expenses of the Trustee, including but not limited to attorneys’ fees, and any and all other defaults
known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable
solely by reason of such declaration) has been made good or cured to the satisfaction of the Trustee or
provisions deemed by the Trustee to be adequate has been made therefor, then, and in every such case, the
Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, by written
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notice to the Agency and to the Trustee, may, on behalf of the Owners of all the Bonds, rescind and annul
such declaration and its consequences. However, no such rescission and annulment will extend to or will
affect any subsequent default, or will impair or exhaust any right or power consequent thereon.
Upon the occurrence of an event of default, the Trustee may, with the consent of a majority of the
Holders, by written notice to the Agency, declare the principal of the Bonds and Parity Bonds to be
immediately due and payable, whereupon that portion of the principal of the Bonds thereby coming due
and the interest thereon accrued to the date of payment shall, without further action, become and be
immediately due and payable, anything in the Indenture or in the Bonds to the contrary notwithstanding.
Notwithstanding the foregoing, the maturity of Bonds insured by the Insurer shall not be accelerated
without the consent of the Insurer and in the event the maturity of the Bonds is accelerated, the Insurer
may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the
date of acceleration (to the extent unpaid by the Agency) and the Trustee shall be required to accept such
amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as
provided above, the Insurer’s obligations under the Policy with respect to such Bonds shall be fully
discharged.
Application of Funds Upon Acceleration
All of the Pledged Tax Revenues and all sums in the funds and accounts established and held by
the Trustee upon the date of the declaration of acceleration as provided in the Indenture, and all sums
thereafter received by the Trustee thereunder, will be applied by the Trustee in the order following, upon
presentation of the Bonds, and the stamping thereon of the payment if only partially paid, or upon the
surrender thereof if fully paid:
First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of
Default and in exercising the rights and remedies set forth in the Indenture, including reasonable
compensation to its agents, attorneys and counsel; and
Second, to the payment of the whole amount then owing and unpaid upon the Bonds for principal
and interest, with interest on the overdue principal and installments of interest at the net effective rate then
borne by the Outstanding Bonds and Parity Bonds (to the extent that such interest on overdue installments
of principal and interest has been collected), and in case such moneys will be insufficient to pay in full the
whole amount so owing and unpaid upon the Bonds and Parity Bonds, then to the payment of such
principal and interest without preference or priority of principal over interest, or interest over principal, or
of any installment of interest over any other installment of interest, ratably to the aggregate of such
principal and interest or any Bond or Parity Bond over any other Bond or Parity Bond.
Amendments
Subject to the terms of the Indenture, the Indenture and the rights and obligations of the Agency
and of the Owners may be modified or amended at any time by a Supplemental Indenture which will
become binding upon adoption, without consent of any Owners, to the extent permitted by law and any
for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Agency in the Indenture contained, other
covenants and agreements thereafter to be observed or to limit or surrender any rights or powers therein
reserved to or conferred upon the Agency; or
(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting
or supplementing any defective provision contained in the Indenture, or in any other respect whatsoever
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as the Agency may deem necessary or desirable, provided under any circumstances that such
modifications or amendments will not materially adversely affect the interests of the Owners; or
(c) to provide the issuance of Parity Bonds pursuant to the Indenture, and to provide the
terms and conditions under which such Parity Bonds may be issued, including but not limited to the
establishment of special funds and accounts relating thereto and any other provisions relating solely
thereto, subject to and in accordance with the provisions of the Indenture; or
(d) to amend any provision thereof relating to the requirements of or compliance with the
Code to any extent whatsoever but only if and to the extent such amendment will not adversely affect the
exclusion from gross income for purposes of federal income taxation of interest on any of the Bonds, in
the opinion of a nationally recognized bond counsel.
Except as set forth in the preceding paragraph and subject to the terms of the Indenture and the
rights and obligations of the Agency and of the Owners may be modified or amended at any time by a
Supplemental Indenture which will become binding when the written consent of the Owners of a majority
in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such
modification or amendment will (a) extend the maturity of or reduce the interest rate on any Bond or
otherwise alter or impair the obligation of the Agency to pay the principal or interest at the time and place
and at the rate and in the currency provided therein or any Bond without the express written consent of
the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such
amendment or modification, or (c) without its written consent thereto, modify any of the rights or
obligations of the Trustee. Any amendment, supplement, modification to, or waiver of, the Indenture or
any other transaction document, including any underlying security agreement (each a “Related
Document”), that requires the consent of Bondowners or adversely affects the rights and interests of the
Insurer shall be subject to the prior written consent of the Insurer.
THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY
The Prior Agency was established on July 5, 1983 by the City Council of the City with the
adoption of Ordinance No. 34, pursuant to the Redevelopment Law. On June 29, 2011, ABx1 26 was
enacted as Chapter 5, Statutes of 2011, together with a companion bill, ABx1 27. A lawsuit was brought
in the California Supreme Court, California Redevelopment Association, et al. v. Matosantos, et al., 53
Cal. 4th 231 (Cal. 2011), challenging the constitutionality of ABx1 26 and ABx1 27. In its December 29,
2011 decision, the California Supreme Court largely upheld ABx1 26, invalidated ABx1 27, and held that
ABx1 26 may be severed from ABx1 27 and enforced independently. As a result of ABx1 26 and the
decision of the California Supreme Court in the California Redevelopment Association case, as of
February 1, 2012, all redevelopment agencies in the State were dissolved, including the Prior Agency, and
successor agencies were designated as successor entities to the former redevelopment agencies to
expeditiously wind down the affairs of the former redevelopment agencies.
On January 3, 2012, pursuant to Resolution No. 2012-002 and Section 34173 of the Dissolution
Act, the City Council of the City elected to serve as successor agency to the Prior Agency. Subdivision
(g) of Section 34173 of the Dissolution Act, added by AB 1484, expressly affirms that the Agency is a
separate public entity from the City, that the two entities shall not merge, and that the liabilities of the
Prior Agency will not be transferred to the City nor will the assets of the Prior Agency become assets of
the City.
The Agency is governed by a five-member Board of Directors (the “Board”) which consists of
the members of the City Council of the City of La Quinta. The Mayor acts as the Chair of the Board, the
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City Manager as its Executive Director, the City Clerk as its Secretary and the Finance Director of the
City as the Treasurer of the Agency.
Members and Officers
The members and officers of the Agency and the expiration dates of their terms are as follows:
[PLEASE CONFIRM EXPIRATION TERMS]
Name and Office
Expiration of Term
(November)
Linda Evans, Chair 2018
John Peña, Vice-Chair 2018
Kristy Franklin, Member 2016
Lee M. Osborne, Member 2016
Robert Radi, Member 2018
Agency Powers
All powers of the Agency are vested in its five-members who are elected members of the City
Council. Pursuant to the Dissolution Act, the Agency is a separate public body from the City and
succeeds to the organizational status of the Prior Agency but without any legal authority to participate in
redevelopment activities, except to complete any work related to an approved enforceable obligation. The
Agency is tasked with expeditiously winding down the affairs of the Prior Agency, pursuant to the
procedures and provisions of the Dissolution Act. Under the Dissolution Act, many Agency actions are
subject to approval by the Oversight Board, as well as review by the DOF. California has strict laws
regarding public meetings (known as the Ralph M. Brown Act) which generally make all Agency and
Oversight Board meetings open to the public in similar manner as City Council meetings.
Under a State initiative enacted in 1974, public officials are required to make extensive
disclosures regarding their financial interests by filing such disclosures as public records. As of the date
of this Official Statement, the members of the City Council and the Agency, and other City and Agency
officials have made the required filings.
Section 34179.5 of the Dissolution Act established a due diligence review process for
determining the unobligated balances that redevelopment agencies had available as of June 30, 2012 to
remit to their respective county auditor-controllers for distribution to affected taxing entities within the
project areas of the former redevelopment agencies. This determination process was required to be
completed by November 9, 2012 with respect to affordable housing funds and by April 1, 2013 with
respect to non-housing funds. Within five business days of receiving notification from the State
Department of Finance, the Agency must remit to the county auditor-controller the amount of unobligated
balances determined by the DOF, or it may request a meet and confer with the DOF to resolve any
disputes. If there is a meet and confer process, the Agency must remit the amount of unobligated
balances within five working days of receiving a subsequent notification from the DOF of the amount of
unobligated balances at the conclusion of that process.
If the Agency fails to remit the amounts determined by the State Department of Finance by the
respective deadlines, certain penalties and remedies apply under Section 34179.6 of the Dissolution Act.
The Agency has remitted to the County Auditor-Controller all of the unobligated balances as determined
by the DOF. On November 6, 2013, the Agency received its Finding of Completion from the DOF.
Receipt of the Finding of Completion allows the Agency to do several things, among them, developing a
plan for the disposition of any properties held by the Agency, reinstating loans previously made by the
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City to the Prior Agency and spending proceeds of bonds issued prior to December 31, 2010, all requiring
approval of the Oversight Board.
RISK FACTORS
The following information should be considered by prospective investors in evaluating the Bonds.
However, the following does not purport to be an exhaustive listing of risks and other considerations
which may be relevant to investing in the Bonds. In addition, the order in which the following
information is presented is not intended to reflect the relative importance of any such risks.
The various legal opinions to be delivered concurrently with the issuance of the Bonds will be
qualified as to the enforceability of the various legal instruments by limitations imposed by State and
federal laws, rulings and decisions affecting remedies, and by bankruptcy, reorganization or other laws of
general application affecting the enforcement of creditors’ rights, including equitable principles.
Reduction in Taxable Value
Pledged Tax Revenues allocated to the Redevelopment Property Tax Trust Fund are determined
by the amount of incremental taxable value in the Project Areas and the current rate or rates at which
property in the Project Areas is taxed. The reduction of taxable values of property in the Project Areas
caused by economic factors beyond the Agency’s control, such as relocation out of the Project Areas by
one or more major property owners, sale of property to a non-profit corporation exempt from property
taxation, or the complete or partial destruction of such property caused by, among other eventualities,
earthquake or other natural disaster, could cause a reduction in the Pledged Tax Revenues that provide for
the repayment of and secure the Bonds. Such reduction of Pledged Tax Revenues could have an adverse
effect on the Agency’s ability to make timely payments of principal of and interest on the Bonds.
As described in greater detail under the heading “PROPERTY TAXATION IN CALIFORNIA —
Article XIIIA of the State Constitution,” Article XIIIA provides that the full cash value base of real
property used in determining taxable value may be adjusted from year to year to reflect the inflation rate,
not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the
consumer price index, comparable local data or any reduction in the event of declining property value
caused by damage, destruction or other factors (as described above). Such measure is computed on a
calendar year basis. Any resulting reduction in the full cash value base over the term of the Bonds could
reduce Pledged Tax Revenues securing the Bonds.
In addition to the other limitations on, and required application under the Dissolution Act of
Pledged Tax Revenues on deposit in the Redevelopment Property Tax Trust Fund, described herein under
the heading “RISK FACTORS,” the State electorate or Legislature could adopt a constitutional or
legislative property tax reduction with the effect of reducing Pledged Tax Revenues allocated to the
Redevelopment Property Tax Trust Fund and available to the Agency. Although the federal and State
Constitutions include clauses generally prohibiting the Legislature’s impairment of contracts, there are
also recognized exceptions to these prohibitions. There is no assurance that the State electorate or
Legislature will not at some future time approve additional limitations that could reduce the Pledge Tax
Revenues and adversely affect the source of repayment and security of the Bonds.
Risks to Real Estate Market
The Agency’s ability to make payments on the Bonds will be dependent upon the economic
strength of the Project Areas. The general economy of the Project Areas will be subject to all of the risks
generally associated with urban real estate markets. Real estate prices and development may be adversely
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affected by changes in general economic conditions, fluctuations in the real estate market and interest
rates, unexpected increases in development costs and by other similar factors. Further, real estate
development within the Project Areas could be adversely affected by limitations of infrastructure or future
governmental policies, including governmental policies to restrict or control development. In addition, if
there is a decline in the general economy of the Project Areas, the owners of property within the Project
Areas may be less able or less willing to make timely payments of property taxes or may petition for
reduced assessed valuation causing a delay or interruption in the receipt of Pledged Tax Revenues by the
Agency from the Project Areas.
Reduction in Inflationary Rate
As described in greater detail below, Article XIIIA of the State Constitution provides that the full
cash value of real property used in determining taxable value may be adjusted from year to year to reflect
the inflationary rate, not to exceed a 2 percent increase for any given year, or may be reduced to reflect a
reduction in the consumer price index or comparable local data. Such measure is computed on a calendar
year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual
inflationary rate or 2 percent, there have been years in which the assessed values were adjusted by actual
inflationary rates, which were less than 2 percent. Since Article XIIIA was approved, the annual
adjustment for inflation has fallen below the 2 percent limitation several times but in Fiscal Year 2010-11
the inflationary value adjustment was negative for the first time at -0.237%. In Fiscal Year 2014-15 and
Fiscal Year 2015-16, the inflationary value adjustments were 0.454% and 1.019%, respectively, which are
also below the 2 percent limitation. The Agency is unable to predict if any adjustments to the full cash
value of real property within the Project Areas, whether an increase or a reduction, will be realized in the
future.
Development Risks
The general economy of the Project Areas will be subject to all the risks generally associated with
real estate development. Future development within the Project Areas may be subject to unexpected
delays, disruptions and changes. Real estate development operations may be adversely affected by
changes in general economic conditions, fluctuations in the real estate market and interest rates,
unexpected increases in development costs and by other similar factors. Further, real estate development
operations within the Project Areas could be adversely affected by future governmental policies,
including governmental policies to restrict or control development. If future development in the Project
Areas are delayed or halted, the economy of the Project Areas could be affected. If such events lead to a
decline in assessed values they could cause a reduction in Pledged Tax Revenues. In addition, if there is a
decline in the general economy of the Project Areas, the owners of property within the Project Areas may
be less able or less willing to make timely payments of property taxes causing a delay or stoppage of the
Pledged Tax Revenues received by the Agency from the Project Areas. In addition, the insolvency or
bankruptcy of one or more large owners of property within the Project Areas could delay or impair the
receipt of Pledged Tax Revenues by the Agency.
Levy and Collection of Taxes
The Agency has no independent power to levy or collect property taxes. Any reduction in the tax
rate or the implementation of any constitutional or legislative property tax decrease could reduce the
Pledged Tax Revenues, and accordingly, could have an adverse impact on the security for and the ability
of the Agency to repay the Bonds.
Likewise, if the County no longer deposits funds to the Redevelopment Property Tax Trust Fund
on first collection, delinquencies in the payment of property taxes by the owners of land in the Project
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Areas, and the impact of bankruptcy proceedings on the ability of taxing agencies to collect property
taxes, could have an adverse effect on the Agency’s ability to make timely payments on the Bonds. Any
reduction in Pledged Tax Revenues, whether for any of these reasons or any other reasons, could have an
adverse effect on the Agency’s ability to pay the principal of and interest on the Bonds. The Agency is
not on the County’s “Teeter Plan”; however, as discussed below under the heading “PROJECT AREAS
— Teeter Plan and Delinquency Rates” the deposits to the Redevelopment Property Tax Trust Fund are
payable on first collection so delinquent taxes do not impact the Agency’s tax revenue.
State Budget Issues
ABx1 26 and AB 1484 were enacted by the State Legislature and Governor as trailer bills
necessary to implement provisions of the State’s budget acts for its fiscal years 2011-12 and 2012-13,
respectively. The 2011-12 State budget included projected State savings estimated to aggregate $1.7
billion in 2011-12 associated with ABx1 27, which would have allowed redevelopment agencies to
continue in operation provided their establishing cities or counties agreed to make an aggregate $1.7
billion in payments to K-12 schools. However, ABx1 27 was found in December 2011 by the California
Supreme Court to violate the State Constitution, which altered this budgetary plan of the State.
According to the State’s Summary of the 2012-13 State budget, AB 1484 implements a framework to
transfer cash assets previously held by redevelopment agencies to cities, counties, and special districts to
fund core public services, with assets transferred to schools offsetting State general fund costs (projected
savings of $1.5 billion). [The State’s budget for fiscal year 2016-17 was enacted on June __, 2016 and did
not include any additional legislation dealing with dissolution of redevelopment agencies.] There can be
no assurance that additional legislation will not be enacted in the future to additionally implement
provisions relating to the State budget or otherwise that may affect successor agencies or Pledged Tax
Revenues. The full text of each State Assembly bill cited above may be obtained from the “Official
California Legislative Information” website maintained by the Legislative Counsel of the State of
California pursuant to State law, at the following web link: http://www.leginfo.ca.gov/bilinfo.html.
Information about the State budget and State spending is available at various State maintained
websites. Text of the 2016-17 Budget Summary, the current State budget, and other documents related to
the State budget may be found at the website of the DOF, www.dof.ca.gov. A nonpartisan analysis of the
budget is posted by the Legislative Analyst’s Office at www.lao.ca.gov. In addition, various State official
statements, many of which contain a summary of the current and past State budgets may be found at the
website of the State Treasurer, www.treasurer.ca.gov.
None of the websites or webpages referenced above is in any way incorporated into this Official
Statement. They are cited for informational purposes only. The Agency makes no representation
whatsoever as to the accuracy or completeness of any of the information on such websites.
Recognized Obligation Payment Schedule
The Dissolution Act provides that, commencing on the date the first Recognized Obligation
Payment Schedule is valid thereunder, only those payments listed in the Recognized Obligation Payment
Schedule may be made by the Agency from the funds specified in the Recognized Obligation Payment
Schedule. Before each annual period, the Dissolution Act requires successor agencies to prepare and
approve, and submit to the successor agency’s oversight board and the DOF for approval, a Recognized
Obligation Payment Schedule pursuant to which enforceable obligations (as defined in the Dissolution
Act) of the successor agency are listed, together with the source of funds to be used to pay for each
enforceable obligation. Pledged Tax Revenues will not be distributed from the Redevelopment Property
Tax Trust Fund by the County Auditor-Controller to the Agency’s Redevelopment Obligation Retirement
Fund without a duly approved and effective Recognized Obligation Payment Schedule obtained in
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sufficient time prior to the January 2 or June 1 distribution dates, as applicable. See “SECURITY FOR
THE BONDS — Recognized Obligation Payment Schedule” and “PROPERTY TAXATION IN
CALIFORNIA — Property Tax Collection Procedures — Recognized Obligation Payment Schedule.” In
the event the Agency were to fail to file a Recognized Obligation Payment Schedule with respect to an
annual period, the availability of Pledged Tax Revenues to the Agency could be adversely affected for
such period.
In the event a successor agency fails to submit to the DOF an oversight board-approved
Recognized Obligation Payment Schedule complying with the provisions of the Dissolution Act within
five business days of the date upon which the Recognized Obligation Payment Schedule is to be used to
determine the amount of property tax allocations, the DOF may determine if any amount should be
withheld by the applicable county auditor-controller for payments for enforceable obligations from
distribution to taxing entities pursuant to clause (iv) in the following paragraph, pending approval of a
Recognized Obligation Payment Schedule. Upon notice provided by the DOF to the county auditor
controller of an amount to be withheld from allocations to taxing entities, the county auditor controller
must distribute to taxing entities any monies in the Redevelopment Property Tax Trust Fund in excess of
the withholding amount set forth in the notice, and the county auditor-controller must distribute withheld
funds to the successor agency only in accordance with a Recognized Obligation Payment Schedule when
and as approved by the DOF.
Typically, under the Redevelopment Property Tax Trust Fund distribution provisions of the
Dissolution Act, the County Auditor-Controller is to distribute funds semiannually in the following order
specified in Section 34183 of the Dissolution Act: (i) first, subject to certain adjustments for
subordinations to the extent permitted under the Dissolution Act (as described above under “SECURITY
FOR THE BONDS — Tax Increment Financing”) and no later than each January 2 and June 1, to each
local agency and school entity, to the extent applicable, amounts required for pass-through payments such
entity would have received under provisions of the Redevelopment Law, as those provisions read on
January 1, 2011, including pursuant to the Pass-Through Agreements and Statutory Pass-Through
Amounts; (ii) second, on each January 2 (with respect to approved enforceable obligations payable during
January 1 through June 30) and June 1 (with respect to approved enforceable obligations payable during
July 1 through December 31), to the Agency for payments listed in its Recognized Obligation Payment
Schedule, with debt service payments scheduled to be made for tax allocation bonds having the highest
priority over payments scheduled for other debts and obligations listed on the Recognized Obligation
Payment Schedule; (iii) third, on each January 2 and June 1, to the Agency for the administrative cost
allowance, as defined in the Dissolution Act; and (iv) fourth, on each January 2 and June 1, to taxing
entities any moneys remaining in the Redevelopment Property Tax Trust Fund after the payments and
transfers authorized by clauses (i) through (iii), in an amount proportionate to such taxing entity’s share of
property tax revenues in the tax rate area in that fiscal year (without giving effect to any pass-through
obligations that were established under the Redevelopment Law).
If the Agency does not submit an Oversight-Board approved Recognized Obligation Payment
Schedule within five business days of the date upon which the Recognized Obligation Payment Schedule
is to be used to determine the amount of property tax allocations and the DOF does not provide a notice to
the County Auditor-Controller to withhold funds from distribution to taxing entities, amounts in the
Redevelopment Property Tax Trust Fund for such six-month period would be distributed to taxing entities
pursuant to clause (iv) above. However, the Agency has covenanted to take all actions required under the
Dissolution Act to include (a) scheduled debt service on the Bonds and any Parity Bonds and as well as
any amount required under the Indenture and any Supplemental Indenture to replenish the Reserve
Account of the Debt Service Fund established thereunder, and (b) amounts due to any bond insurer
(including the Insurer) in connection with an insurance or surety bond agreement, in Recognized
Obligation Payment Schedules for each annual period beginning on July 1 of any calendar year and
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ending on June 30 of the next calendar year, or such other period as provided in the Dissolution Act (a
“ROPS Period”), so as to enable the County Auditor-Controller to distribute from the Redevelopment
Property Tax Trust Fund to the Agency’s Redevelopment Obligation Retirement Fund by each June 1
amounts required for the Agency to pay principal of, and interest on, the Bonds coming due on the next
two Interest Payment Dates and to pay amounts owed to any bond insurer (including the Insurer), as well
as the other amounts set forth above. (see “THE INDENTURE — Covenants of the Agency”).
To accomplish the foregoing, on or before each February 1 (or at such earlier time as may be
required by the Dissolution Act), for so long as any Bonds or Parity Bonds are outstanding, the Agency
shall submit an Oversight Board-approved Recognized Obligation Payment Schedule to the State
Department of Finance and to the Auditor-Controller of the County of Los Angeles that shall include a
request that the Agency receive on the following June 1 ROPS distribution date (i) all debt service due on
the Bonds and the Parity Bonds coming due during the subsequent ROPS Period as well as all amounts
due and owing to any bond insurer, and (ii) any amount required to cure any deficiency in the Reserve
Account pursuant to the Indenture or any Supplemental Indenture (including any amounts due and owing
to the Insurer under the Indenture).
In the event the provisions set forth in the Dissolution Act as of the Closing Date of the Bonds
that relate to the filing of Recognized Obligation Payment Schedules are amended or modified in any
manner, the Agency agrees in the Indenture to take all such actions as are necessary to comply with such
amended or modified provisions so as to ensure the timely payment of debt service on the Bonds and the
Parity Bonds and, if the timing of distributions of the Redevelopment Property Tax Trust Fund is
changed, the receipt of all debt service due during each calendar year on all Outstanding Bonds and Parity
Bonds on or prior to June 1 of such calendar year.
The Dissolution Act, as amended by AB 1484, also provides for certain penalties in the event the
Agency does not timely submit a Recognized Obligation Payment Schedule for an annual period.
Specifically, a Recognized Obligation Payment Schedule is required to be submitted by the Agency, after
approval by the Oversight Board, to the County Administrative Officer, the County Auditor-Controller,
the State Department of Finance, and the State Controller no later than each February 1 (commencing
with the Recognized Obligation Payment Schedule for the period from July 1, 2016 through June 30,
2017). If the Agency does not submit a Recognized Obligation Payment Schedule by such deadlines, the
City will be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted
to the State Department of Finance. Additionally, the Dissolution Act provides that the Agency’s
administrative cost allowance is reduced by 25% if the Agency does not submit an annual Recognized
Obligation Payment Schedule within 10 days after the February 1 deadline.
Last and Final Recognized Obligation Payment Schedule
SB 107 amended the Dissolution Act to permit certain successor agencies with limited remaining
obligations to submit a voluntary and optional Last and Final ROPS for approval by the oversight board
and DOF. The Last and Final ROPS must list the remaining enforceable obligations of the successor
agency, including the total outstanding obligation amount and a schedule of remaining payments for each
enforceable obligation to be funded from the Redevelopment Property Tax Trust Fund, bond proceeds, or
other legally or contractually dedicated or restricted funding sources. The Last and Final ROPS will also
establish the maximum amount of Redevelopment Property Tax Trust Fund to be distributed to the
successor agency for each remaining fiscal year until all obligations have been fully paid.
Any revenues, interest, and earnings of the successor agency that are not authorized for use
pursuant to the approved Last and Final ROPS shall be remitted to the county auditor-controller for
distribution to the affected taxing entities. Notwithstanding provisions in the Dissolution Act concerning
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disposition of real property pursuant to a successor agency’s long-range property management plan,
proceeds from the disposition of real property subsequent to the approval of the Last and Final ROPS that
are not necessary for the payment of an enforceable obligation shall be remitted to the county auditor
controller for distribution to the affected taxing entities. A successor agency may not expend more than
the amount approved for each enforceable obligation listed on the approved Last and Final ROPS, and
once the successor agency has received Redevelopment Property Tax Trust Fund moneys equal to the
amount of the total outstanding obligations approved in the Last and Final ROPS, the county auditor
controller will not allocate further Redevelopment Property Tax Trust Fund moneys to the successor
agency’s Redevelopment Property Tax Trust Fund.
Successor agencies may only amend an approved Last and Final ROPS twice. If the Agency
receives insufficient funds in any given period after a Last and Final ROPS has been approved, the
Dissolution Act provides that the County treasurer may loan, and the City may loan or grant, funds to the
Agency for the payment of enforceable obligations. Any such loans may not include an interest
component and must be repaid from the source of funds approved for payment of the underlying
enforceable obligation once sufficient funds become available. The Dissolution Act further provides that
any such loan may not increase the total amount of Redevelopment Property Tax Trust Fund received by
the Agency as approved on the Last and Final ROPS. In any event, if the Agency prepares and obtains
DOF approval of a Last and Final ROPS and subsequently amends the Last and Final ROPS two times,
the Agency may be unable to make unexpected or unscheduled reserve deposits or payments due to any
the Insurer of Bonds or insurer of Parity Bonds. [The Agency has covenanted in the Indenture not to
submit a Last and Final Recognized Obligation Payment Schedule without the prior written consent of the
Insurer.]
There can be no assurance that the Agency would elect to submit a Last and Final Recognized
Obligation Payment Schedule. Further, there can be no assurance that additional legislation will not be
enacted in the future that may affect successor agencies or tax increment revenues, including Pledged Tax
Revenues.
Bankruptcy and Foreclosure
The payment of the property taxes from which Pledged Tax Revenues are derived and the ability
of the County to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency,
or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial
foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds
(including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the
various legal instruments by bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial
discretion in appropriate cases.
Although bankruptcy proceedings would not cause the liens to become extinguished, bankruptcy
of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Such
delay would increase the possibility of delinquent tax installments not being paid in full and thereby
increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds.
Estimated Revenues
In estimating that Pledged Tax Revenues will be sufficient to pay debt service on the Bonds after
payment of the Senior Bonds, the Agency has made certain assumptions with regard to, among other
things, future assessed valuation in the Project Areas, future tax rates and percentage of taxes collected.
The Agency believes these assumptions to be reasonable, but there is no assurance these assumptions will
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be realized and to the extent that the assessed valuation and the tax rates are less than expected, the
Pledged Tax Revenues available to pay debt service on the Bonds will be less than those projected and
such reduced Pledged Tax Revenues may be insufficient to provide for the payment of principal of,
premium (if any) and interest on the Bonds.
Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed value of
property would be the discovery of a hazardous substance that would limit the beneficial use of taxable
property within the Project Areas. In general, the owners and operators of property may be required by
law to remedy conditions of the property relating to releases or threatened releases of hazardous
substances. The owner or operator may be required to remedy a hazardous substance condition of
property whether or not the owner or operator has anything to do with creating or handling the hazardous
substance. The effect, therefore, should any of the property within the Project Areas be affected by a
hazardous substance, could be to reduce the marketability and value of the property by the costs of
remedying the condition.
Natural Disasters
The value of the property in the Project Areas in the future can be adversely affected by a variety
of additional factors, particularly those which may affect infrastructure and other public improvements
and private improvements on property and the continued habitability and enjoyment of such private
improvements. Such additional factors include, without limitation, geologic conditions such as
earthquakes, topographic conditions such as earth movements, landslides and floods and climatic
conditions such as droughts. In the event that one or more of such conditions occur, such occurrence
could cause damages of varying seriousness to the land and improvements and the value of property in
the Project Areas could be diminished in the aftermath of such events. A substantial reduction of the
value of such properties and could affect the ability or willingness of the property owners to pay the
property taxes.
The City, like most communities in California, is an area of unpredictable seismic activity, and
therefore, is subject to potentially destructive earthquakes. Numerous active and inactive fault lines pass
through or near the City. The occurrence of severe seismic activity in the City could result in substantial
damage to property located in the Project Areas, and could lead to successful appeals for reduction in
assessed values of such property. Such a reduction could result in a decrease in Pledged Tax Revenues.
Changes in the Law
There can be no assurance that the California electorate will not at some future time adopt
initiatives or that the Legislature will not enact legislation that will amend the Dissolution Act, the
Redevelopment Law or other laws or the Constitution of the State resulting in a reduction of Pledged Tax
Revenues, which could have an adverse effect on the Agency’s ability to pay debt service on the Bonds.
Investment Risk
Funds held under the Indenture are required to be invested in Permitted Investments as provided
under the Indenture. See Appendix A attached hereto for a summary of the definition of Permitted
Investments. The funds and accounts of the Agency, into which a portion of the proceeds of the Bonds
will be deposited and into which Pledged Tax Revenues are deposited, may be invested by the Agency in
any investment authorized by law. All investments, including the Permitted Investments and those
authorized by law from time to time for investments by municipalities, contain a certain degree of risk.
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Such risks include, but are not limited to, a lower rate of return than expected and loss or delayed receipt
of principal.
Further, the Agency cannot predict the effects on the receipt of Pledged Tax Revenues if the
County were to suffer significant losses in its portfolio of investments or if the County or the City were to
become insolvent or declare bankruptcy. See Appendix E — “COMPREHENSIVE ANNUAL
FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2015 (EXCLUDING
SUPPLEMENTARY INFORMATION)” regarding the City’s finances. See also “RISK FACTORS —
Bankruptcy and Foreclosure.”
Additional Obligations
The potential for the issuance of Parity Bonds could, in certain circumstances, increase the risks
associated with the Agency’s payment of debt service on the Bonds in the event of a decrease in the
Agency’s collection of Pledged Tax Revenues. However, Section 34177.5 of the Dissolution Act
provides limited authority for successor agencies to issue bonds, and the Agency’s ability to issue Parity
Bonds is subject to the requirements of the Dissolution Act as in effect from time to time. For additional
information, see described “SECURITY FOR THE BONDS — Parity Bonds.”
No Validation Proceeding Undertaken
California Code of Civil Procedure Section 860 authorizes public agencies to institute a process,
otherwise known as a “validation proceeding,” for purposes of determining the validity of a resolution or
any action taken pursuant thereto. Section 860 authorizes a public agency to institute validation
proceedings in cases where another statute authorizes its use. Relevant to the Bonds, California
Government Code Section 53511 authorizes a local agency to “bring an action to determine the validity of
its bonds, warrants, contracts, obligations or evidences of indebtedness.” Pursuant to Code of Civil
Procedure Section 870, a final favorable judgment issued in a validation proceeding shall,
notwithstanding any other provision of law, be forever binding and conclusive, as to all matters herein
adjudicated or which could have been adjudicated, against all persons: “The judgment shall permanently
enjoin the institution by any person of any action or proceeding raising any issue as to which the
judgment is binding and conclusive.”
The Agency has not undertaken or endeavored to undertake any validation proceeding in
connection with the issuance of the Bonds. The Agency and Bond Counsel have relied on the provisions
of AB 1484 authorizing the issuance of the Bonds and specifying the related deadline for any challenge to
the Bonds to be brought. Specifically, Section 34177.5(e) of the Dissolution Act provides that
notwithstanding any other law, an action to challenge the issuance of bonds (such as the Bonds), the
incurrence of indebtedness, the amendment of an enforceable obligation, or the execution of a financing
agreement authorized under Section 34177.5, must be brought within thirty (30) days after the date on
which the oversight board approves the resolution of the successor agency approving the such financing.
Such challenge period expired with respect to the Bonds and the Oversight Board Resolution on
_________, 2016.
It is possible a lawsuit challenging the Dissolution Act or specific provisions thereof could be
successful and that the mechanisms currently provided for under the Dissolution Act to provide for
distribution of Pledged Tax Revenues to the Agency for payment on the Bonds could be impeded and
result in a delinquency or default in the timely payment of principal of, and interest on, the Bonds.
However, the Indenture additionally provides that if, and to the extent, that the provisions of
Section 34172 or paragraph (2) of subdivision (a) of Section 34183 of the Dissolution Act (upon which
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the distribution of Pledged Tax Revenues to the Agency rely) are invalidated by a final judicial decision,
then Pledged Tax Revenues shall include all tax revenues allocated to the payment of indebtedness
pursuant to Health & Safety Code Section 33670 or such other section as may be in effect at the time
providing for the allocation of tax increment revenues in accordance with Article XVI, Section 16 of the
California Constitution. Additionally, any action by a court to invalidate provisions of the Dissolution
Act required for the timely payment of principal of, and interest on, the Bonds could be subject to the
same issues regarding unconstitutional impairment of contracts and unconstitutional taking without just
compensation. The Agency believes that the aforementioned considerations would provide some
protections against the adverse consequences upon the Agency and the availability of Pledged Tax
Revenues for the payment of debt service on the Bonds in the event of successful challenges to the
Dissolution Act or portions thereof. However, the Agency does not guarantee that any lawsuit
challenging the Dissolution Act or portions thereof will not result in an outcome that may have a
detrimental effect on the Agency’s ability to timely pay debt service on the Bonds.
Insured Bonds
In the event that the Agency fails to provide funds to make payment of the principal of and
interest with respect to the Bonds when the same shall become due, any owner of such Bonds shall have a
claim on the Policy for such payments. However, in the event of any acceleration of the due date of such
principal by reason of mandatory or optional redemption or acceleration resulting from default or
otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the
payments guaranteed under the Policy shall be made in such amounts and at such times as such payments
of principal would have been due had there not been any such acceleration. The Policy does not insure
the payment of any redemption premium payable upon the optional redemption of the Bonds.
Purchasers of the Bonds should also note that, while the Policy will insure payment of the
principal amount (but not any premium) paid to any owner of the Bonds in connection with the
mandatory or optional prepayment of any Bond which is recovered from such owner as a voidable
preference under applicable bankruptcy law, such amounts will be repaid by the Insurer to the Owner
only at the times and in the amounts as would have been due absent such prepayment unless the Insurer
chooses to pay such amount at an earlier date or dates.
Under no circumstances, including the situation in which the interest with respect to the Bonds
becomes subject to federal taxation for any reason, can the maturities of the Bonds be accelerated without
the consent of the Insurer, so long as the Insurer performs its obligations under the Policy. Furthermore,
so long as the Insurer performs its obligations under the Policy, the Insurer shall be deemed to be the sole
holder of the Bonds insured by it for the purpose of exercising any voting right or privilege or giving any
consent of direction or taking any other action that the Owners of such Bonds are entitled to take pursuant
to the Indenture pertaining to defaults and remedies, and the duties and obligations of the Trustee.
In the event that the Insurer is unable to make payments of principal of and interest on the Bonds
as such payments become due, the Bonds are payable solely from moneys received by the Trustee
pursuant to the Indenture.
In the event that the Insurer is required to pay principal of or interest with respect to the Bonds,
no representation or assurance is given or can be made that such event will not adversely affect the market
price for or marketability of the Bonds.
The long-term rating on the Bonds is dependent, in part, on the claims paying ability or financial
strength ratings, as applicable, of the Insurer. The Insurer’s current claims paying ability or financial
strength ratings are predicated upon a number of factors which could change over time and could result in
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downgrading of the ratings on the Bonds insured by the Insurer. Such a downgrade could adversely affect
the market price for, and marketability of, the Bonds. The Insurer is not contractually bound to maintain
its present claims paying ability or financial strength ratings in the future. See “CONCLUDING
INFORMATION — Ratings” herein.
Creditworthiness of the Insurer. The Insurer’s obligation under the Policy is a general
obligation of the Insurer. Default by the Insurer may result in insufficient funds being available to pay the
principal of and interest on the Insured Bonds. In such event, the remedies available to the applicable
Trustee may be limited by, among other things, certain risks related to bankruptcy proceedings, and may
also have been altered prior to a default by the Insurer, which has the right, acting with the Trustee,
without Owner consent, to amend the applicable provisions of the Indenture governing defaults and
remedies and to direct the Trustee to direct remedies with respect to such Obligation. The Policy does not
insure the payment of redemption premiums.
When making an investment decision on the Insured Bonds a prospective Owner should look to
the ability of the Agency to pay principal and interest on the Bonds and not solely to the Insurer’s ability
to pay claims under the Policy. No review of the business or affairs of the Insurer has been conducted by
the Agency in connection with the offering of the Bonds. No assurance can be given by the Agency as to
the Insurer’s ability to pay claims under the Policy. See “BOND INSURANCE” herein and Appendix H
hereto for further information concerning the Insurer and the Policy, including instructions for obtaining
certain financial information concerning the Insurer.
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary
market exists, that such Bonds can be sold for any particular price. Occasionally, because of general
market conditions or because of adverse history or economic prospects connected with a particular issue,
secondary marketing practices in connection with a particular issue are suspended or terminated.
Additionally, prices of issues for which a market is being made will depend upon then prevailing
circumstances. Such prices could be substantially different from the original purchase price.
PROPERTY TAXATION IN CALIFORNIA
Property Tax Collection Procedures
Classification. In the State, property which is subject to ad valorem taxes is classified as
“secured” or “unsecured.” Secured and unsecured property are entered on separate parts of the
assessment roll maintained by the County assessor. The secured classification includes property on which
any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property
does not become a lien against the taxed unsecured property, but may become a lien on certain other
property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all
other liens on the secured property arising pursuant to State law, regardless of the time of the creation of
other liens.
Generally, ad valorem taxes are collected by a county (the “Taxing Authority”) for the benefit of
the various entities (cities, schools and special districts) that share in the ad valorem tax (each a taxing
entity) and successor agencies eligible to receive distributions from the respective Redevelopment
Property Tax Trust Fund.
Collections. Secured and unsecured property are entered separately on the assessment roll
maintained by the county assessor. The method of collecting delinquent taxes is substantially different
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for the two classifications of property. The taxing authority has four ways of collecting unsecured
personal property taxes: (i) initiating a civil action against the taxpayer, (ii) filing a certificate in the
office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of
the taxpayer, (iii) filing a certificate of delinquency for record in the county recorder’s office to obtain a
lien on certain property of the taxpayer, and (iv) seizing and selling personal property, improvements or
possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment
of delinquent taxes with respect to property on the secured roll is the sale of the property securing the
taxes to the State for the amount of taxes which are delinquent.
Penalty. A 10% penalty is added to delinquent taxes which have been levied with respect to
property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is
declared in default by operation of law and declaration of the tax collector on or about June 30 of each
fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a
delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption. If taxes are
unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by
the county tax collector. A 10% penalty also applies to delinquent taxes with respect to property on the
unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such taxes
beginning on varying dates related to the tax bill mailing date.
Delinquencies. The valuation of property is determined as of the January 1 lien date as equalized
in August of each year and equal installments of taxes levied upon secured property become delinquent
on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become
delinquent August 31.
Supplemental Assessments. California Revenue and Taxation Code Section 75.70 provides for
the supplemental assessment and taxation of property as of the occurrence of a change of ownership or
completion of new construction. Prior to the enactment of this law, the assessment of such changes was
permitted only as of the next tax lien date following the change, and this delayed the realization of
increased property taxes from the new assessments for up to 14 months. This statute provides increased
revenue to the Redevelopment Property Tax Trust Fund to the extent that supplemental assessments of
new construction or changes of ownership occur within the boundaries of redevelopment projects
subsequent to the January 1 lien date. To the extent such supplemental assessments occur within the
Project Areas, Pledged Tax Revenues may increase.
Property Tax Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466,
Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating
property tax revenues to local government jurisdictions in proportion to the tax-derived revenues
allocated to each. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopment agencies
among the jurisdictions which are subject to such charges. In addition, Sections 34182(e) and 34183(a) of
the Dissolution Act allow administrative costs of the County Auditor-Controller for the cost of
administering the provisions of the Dissolution Act, as well as the foregoing SB 1559 amounts, to be
deducted from property tax revenues before monies are deposited into the Redevelopment Property Tax
Trust Fund. For Fiscal Year 2015-16, the County’s administrative charge to the Agency was
$_________.
Negotiated Pass-Through Agreements. Prior to 1994, under the Redevelopment Law, a
redevelopment agency could enter into an agreement to pay increment revenues to any taxing agency that
has territory located within a redevelopment project in an amount which in the agency’s determination is
appropriate to alleviate any financial burden or detriment caused by the redevelopment project. These
agreements normally provide for payment or pass-through of tax increment revenue directed to the
affected taxing agency, and, therefore, are commonly referred to as pass-through agreements or tax
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sharing agreements. The Agency agreements with affected taxing agencies are referred to herein as
“Pass-Through Agreements.” See “THE PROJECT AREAS — Pass Through Agreements and
Obligations with Various Taxing Agencies.” See also “SECURITY FOR THE BONDS — Tax
Increment Financing” for additional discussion of the treatment of Pass-Through Agreements under the
Dissolution Act.
Statutory Pass-Throughs. The payment of Statutory Pass-Through Amounts (defined in
Appendix A) results from (i) plan amendments which add territory in existing project areas on or after
January 1, 1994 and (ii) from plan amendments which eliminates one or more limitations within a
redevelopment plan (such as the removal of the time limit on the establishment of loans, advances and
indebtedness). The calculation of the amount due affected taxing entities is described in Sections 33607.5
and 33607.7 of the Redevelopment Law. See “THE PROJECT AREAS — Pass-Throughs Agreements
and Obligations with Various Taxing Agencies” and “SECURITY FOR THE BONDS — Tax Increment
Financing” for further information regarding the applicability of the statutory pass-through provisions of
the Redevelopment Law and the Dissolution Act to the various sub-areas of the Project Areas.
Recognized Obligation Payment Schedule. The Dissolution Act provides that, commencing on
the date the first Recognized Obligation Payment Schedule is valid thereunder, only those payments listed
in the Recognized Obligation Payment Schedule may be made by the Agency from the funds specified in
the Recognized Obligation Payment Schedule. Annually by each February 1, the Dissolution Act requires
successor agencies to prepare and approve, and submit to the successor agency’s oversight board and the
DOF for approval, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations
(as defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to
be used to pay for each enforceable obligation. Pledged Tax Revenues will not be distributed from the
Redevelopment Property Tax Trust Fund by the County Auditor-Controller to the Agency’s
Redevelopment Obligation Retirement Fund without a duly approved and effective Recognized
Obligation Payment Schedule obtained in sufficient time prior to the January 2 or June 1 distribution
dates, as applicable. See “SECURITY FOR THE BONDS — Recognized Obligation Payment Schedule”
and “RISK FACTORS — Recognized Obligation Payment Schedule.”
Unitary Property
Assembly Bill (“AB”) 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with
fiscal year 1988-89, assessed value derived from State-assessed unitary property (consisting mostly of
operational property owned by utility companies) is to be allocated county-wide as follows: (i) each tax
rate area will receive that same amount from each assessed utility received in the previous fiscal year
unless the applicable county-wide values are insufficient to do so, in which case values will be allocated
to each tax rate area on a pro-rata basis; and (ii) if values to be allocated are greater than in the previous
fiscal year, each tax rate area will receive a pro-rata share of the increase from each assessed utility
according to a specified formula. Additionally, the lien date on State-assessed property is changed from
March 1 to January 1.
AB 454 (Statutes of 1987, Chapter 921) further modifies chapter 1457 regarding the distribution
of tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provides
for the consolidation of all State-assessed property, except for regulated railroad property, into a single
tax rate area in each county. Chapter 921 further provides for a new method of establishing tax rates on
State-assessed property and distribution of property tax revenue derived from State-assessed property to
taxing jurisdictions within each county in accordance with a new formula. Railroads will continue to be
assessed and revenues allocated to all tax rate areas where railroad property is sited.
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Article XIIIA of the State Constitution
Article XIIIA limits the amount of ad valorem taxes on real property to 1% of “full cash value” of
such property, as determined by the county assessor. Article XIIIA defines “full cash value” to mean “the
County Assessor’s valuation of real property as shown on the 1975-76 tax bill under ‘full cash value,’ or,
thereafter, the appraised value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment.” Furthermore, the “full cash value” of all real
property may be increased to reflect the rate of inflation, as shown by the consumer price index, not to
exceed 2% per year, or may be reduced. (See “RISK FACTORS — Reduction in Inflationary Rate.”)
Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in
the event of declining property values caused by substantial damage, destruction or other factors, and to
provide that there would be no increase in the “full cash value” base in the event of reconstruction of
property damaged or destroyed in a disaster and in other special circumstances.
Article XIIIA (i) exempts from the 1% tax limitation taxes to pay debt service on (a) indebtedness
approved by the voters prior to July 1, 1978 or (b) bonded indebtedness for the acquisition or
improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the
voters voting on the proposition; (ii) requires a vote of two-thirds of the qualified electorate to impose
special taxes, or certain additional ad valorem taxes; and (iii) requires the approval of two-thirds of all
members of the State Legislature to change any State tax laws resulting in increased tax revenues.
The validity of Article XIIIA has been upheld by both the California Supreme Court and the
United States Supreme Court.
In the general election held November 4, 1986, voters of the State approved two measures,
Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended Article XIIIA to
provide that the terms “purchase” and “change of ownership,” for the purposes of determining full cash
value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between
spouses and (2) the principal residence and the first $1,000,000 of other property between parents and
children. This amendment to Article XIIIA may reduce the rate of growth of local property tax revenues.
Proposition 60 amended Article XIIIA to permit the Legislature to allow persons over the age of
55 who sell their residence and buy or build another of equal or lesser value within two years in the same
county, to transfer the old residence assessed value to the new residence. As a result of the Legislature’s
action, the growth of property tax revenues may decline.
Legislation enacted by the Legislature to implement Article XIIIA provides that all taxable
property is shown at full assessed value as described above. In conformity with this procedure, all taxable
property value included in this Official Statement is shown at 100% of assessed value and all general tax
rates reflect the $1 per $100 of taxable value (except as noted). Tax rates for voter-approved bonded
indebtedness and pension liabilities are also applied to 100% of assessed value.
Appropriations Limitation – Article XIIIB
Article XIIIB limits the annual appropriations of the State and its political subdivisions to the
level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population
and services rendered by the government entity. The “base year” for establishing such appropriations
limit is the 1978/79 fiscal year, and the limit is to be adjusted annually to reflect changes in population,
consumer prices and certain increases in the cost of services provided by these public agencies.
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Section 33678 of the Redevelopment Law provides that the allocation of taxes to a redevelopment
agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness shall not be
deemed the receipt by an agency of proceeds of taxes levied by or on behalf of an agency within the
meaning of Article XIIIB, nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an
appropriation subject to the limitation of, any other public body within the meaning or for the purpose of
the Constitution and laws of the State, including Section 33678 of the Redevelopment Law. The
constitutionality of Section 33678 has been upheld in two California appellate court decisions. On the
basis of these decisions, the Agency has not adopted an appropriations limit.
Articles XIIIC and XIIID of the State Constitution
At the election held on November 5, 1996, Proposition 218 was passed by the voters of
California. The initiative added Articles XIIIC and XIIID to the State Constitution. Provisions in the two
articles affect the ability of local government to raise revenues. The Bonds are secured by sources of
revenues that are not subject to limitation by Proposition 218. See also “— Propositions 218 and 26”
below.
Proposition 87
On November 8, 1988, the voters of the State approved Proposition 87, which amended
Article XVI, Section 16 of the State Constitution to provide that property tax revenue attributable to the
imposition of taxes on property within a redevelopment project area for the purpose of paying debt
service on certain bonded indebtedness issued by a taxing entity (not the Prior Agency or the Agency) and
approved by the voters of the taxing entity after January 1, 1989 will be allocated solely to the payment of
such indebtedness and not to redevelopment agencies. SB 107 amended Section 34183(a)(1) of the
Dissolution Act to provide that such debt service override revenues approved by the voters for the
purpose of supporting pension programs, capital projects, or programs related to the State Water Project
that are not pledged to or not needed for debt service on successor agency obligations will be allocated
and paid to the entity that levies the override.
Redevelopment Time Limits
In 1993, the State legislature passed AB 1290, which, among other things, required
redevelopment agencies to adopt time limits in each redevelopment plan specifying: 1) the last date to
incur debt for a redevelopment project; 2) the last date to undertake redevelopment activity within a
project area; and 3) the last date to collect tax increment revenue from a project area to repay debt.
Pursuant to AB 1290, which took effect January 1, 1994, the City Council adopted ordinances amending
the Redevelopment Plans in the Project Areas to impose limits on plan activity in each area, as well as a
date past which tax increment revenue could not be collected.
SB 107 amended the Dissolution Act to provide that the time limits for receiving property tax
revenues and the limitation on the maximum amount of property tax revenues that may be received by the
Agency for the Project Areas are not effective for purposes of paying the Agency’s enforceable
obligations. As a result, the time and amount limits with respect to property tax revenues described under
the caption “THE PROJECT AREAS” will be disregarded to the extent that property tax revenues are
required to pay debt service on the Bonds.
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Appeals of Assessed Values
Pursuant to California law, a property owner may apply for a reduction of the property tax
assessment for such owner’s property by filing a written application, in a form prescribed by the State
Board of Equalization, with the appropriate county board of equalization or assessment appeals board.
In the County, a property owner desiring to reduce the assessed value of such owner’s property in
any one year must submit an application to the County Assessment Appeals Board (the “Appeals
Board”). Applications for any tax year must be submitted by September 15 of such tax year. Following a
review of each application by the staff of the County Assessor’s Office, the staff makes a
recommendation to the Appeals Board on each application which has not been rejected for
incompleteness or untimeliness or withdrawn. The Appeals Board holds a hearing and either reduces the
assessment or confirms the assessment. The Appeals Board generally is required to determine the
outcome of appeals within two years of each appeal’s filing date. Any reduction in the assessment
ultimately granted applies only to the year for which application is made and during which the written
application is filed. The assessed value increases to its pre-reduction level for fiscal years following the
year for which the reduction application is filed. However, if the taxpayer establishes through proof of
comparable values that the property continues to be overvalued (known as “ongoing hardship”), the
Assessor has the power to grant a reduction not only for the year for which application was originally
made, but also for the then current year as well. Appeals for reduction in the “base year” value of an
assessment, which generally must be made within three years of the date of change in ownership or
completion of new construction that determined the base year, if successful, reduce the assessment for the
year in which the appeal is taken and prospectively thereafter. Moreover, in the case of any reduction in
any one year of assessed value granted for “ongoing hardship” in the then current year, and also in any
cases involving stipulated appeals for prior years relating to base year and personal property assessments,
the property tax revenues from which Pledged Tax Revenues are derived attributable to such properties
will be reduced in the then current year. In practice, such a reduced assessment may remain in effect
beyond the year in which it is granted. See “THE PROJECT AREAS — Largest Local Secured
Taxpayers” for information regarding the assessed valuations of the top ten property owners within the
Project Areas. (See “Appendix F — FINANCIAL ADVISOR’S REPORT” herein for a discussion of
pending appeals.)
Proposition 8
Proposition 8, approved in 1978 (California Revenue and Taxation Code Section 51(b)), provides
for the assessment of real property at the lesser of its originally determined (base year) full cash value
compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account
reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market
value. Reductions under this code section may be initiated by the County Assessor or requested by the
property owner.
After a roll reduction is granted under this code section, the property is reviewed on an annual
basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further
reductions or in value increases. Such increases must be in accordance with the full cash value of the
property and may exceed the maximum annual inflationary growth rate allowed on other properties under
Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for
inflation, it once again is subject to the annual inflationary factor growth rate allowed under
Article XIIIA.
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Propositions 218 and 26
On November 5, 1996, California voters approved Proposition 218—Voter Approval for Local
Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional
Amendment. Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain
vote requirements and other limitations on the imposition of new or increased taxes, assessments and
property-related fees and charges. On November 2, 2010, California voters approved Proposition 26, the
“Supermajority Vote to Pass New Taxes and Fees Act.” Proposition 26 amended Article XIIIC of the
California Constitution by adding an expansive definition for the term “tax,” which previously was not
defined under the California Constitution. Pledged Tax Revenues securing the Bonds are derived from
property taxes which are outside the scope of taxes, assessments and property-related fees and charges
which are limited by Proposition 218 and outside of the scope of taxes which are limited by Proposition
26.
Future Initiatives
Article XIIIA, Article XIIIB, Article XIIIC and Article XIIID and certain other propositions
affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to
California’s initiative process. From time to time other initiative measures could be adopted, further
affecting Agency revenues or the Agency’s ability to expend revenues.
THE PROJECT AREAS
Project Area No. 1 – Background
On November 29, 1983, following requisite studies and hearing by the Planning Commission and
the Agency, the City Council passed Ordinance No. 43 which approved and adopted the Redevelopment
Plan for Project Area No. 1. The Ordinance became effective December 29, 1983. The Project Area
No. 1 Redevelopment Plan provides for the elimination of blight and deterioration which were found to
exist in Project Area No. 1. In December, 1994 and March, 1995, the Prior Agency amended the Project
Area No. 1 Redevelopment Plan in order to better address infrastructure and economic development
needs within Project Area No. 1. The Plan Amendment (a) increased the aggregate tax increment limit
for the Project Area No. 1 to $2 billion and the outstanding bonded indebtedness limit to $200 million,
(b) expanded the list of infrastructure and public facility projects the Agency may fund with tax increment
revenues and (c) established new time frames within which the Agency may incur indebtedness for
Project Area No. 1, use eminent domain for property acquisition and undertake redevelopment projects,
and receive tax increment revenue. For additional Project Area No. 1 information, see Appendix F —
“FINANCIAL ADVISOR’S REPORT” herein.
Project Area No. 2 – Background
On May 16, 1989, following requisite studies and hearing by the Planning Commission and the
Prior Agency, the City Council passed Ordinance No. 139 which approved and adopted the
Redevelopment Plan for Project Area No. 2. The Ordinance became effective June 15, 1989. The Project
Area No. 2 Redevelopment Plan was amended on March 16, 2004 to increase the tax increment limit
from $400,000,000 to $1,500,000,000. The Project Area No. 2 Redevelopment Plan provides for the
elimination of physical blight and economic obsolescence which was found to exist in Project Area No. 2.
For additional Project Area No. 2 information, see Appendix F — “FINANCIAL ADVISOR’S
REPORT” herein.
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No Redevelopment Plan Limitations
The Redevelopment Plans set forth various limitations that are no longer operative with the
passage of SB 107. SB 107, which became effective September 22, 2015, amended the Dissolution Act
to provide that the time limits for receiving property tax revenues and the limitation on the amount of
property tax revenues that may be received by the Prior Agency and the Agency set forth in the
Redevelopment Plans are not effective for purposes of paying the Agency’s enforceable obligations.
Accordingly, the projections set forth in this Official Statement were prepared without regard to the time
and financial limitations set forth in the Redevelopment Plans described below.
As amended, the Project Area No. 1 Redevelopment Plan was scheduled to terminate on
November 29, 2024, with the Agency collecting tax increment revenues through November 29, 2034 in
compliance with Section 33333.6 of the Redevelopment Law.
Project Area No. 1
Redevelopment Plan Limit
Bonded Indebtedness
Cumulative Amount (principal) $ 200,000,000
Tax Increment
Cumulative Limit $ 2,000,000,000(1)
Final Date to Collect Tax Increment November 29, 2034(1)
(1) Pursuant to SB 107, this limit is no longer effective for purposes of paying the Bonds.
As amended, the Project Area No. 2 Redevelopment Plan was scheduled to terminate on May 16,
2030, with the Agency collecting tax increment revenues through May 16, 2040 in compliance with
Section 33333.6 of the Redevelopment Law.
Project Area No. 2
Redevelopment Plan Limit
Bonded Indebtedness
Cumulative Amount (principal) $ 187,860,000
Tax Increment
Cumulative Limit $ 1,500,000,000(1)
Final Date to Collect Tax Increment May 16, 2040(1)
(1) Pursuant to SB 107, this limit is no longer effective for purposes of paying the Bonds.
Location and Surrounding Area
Project Area No. 1 encompasses approximately 17.9 square miles (11,475 acres) accounting for
approximately fifty percent (50%) of the total current corporate area of the City.
Project Area No. 2 encompasses approximately 4.9 square miles (3,130 acres) accounting for
approximately fourteen percent (14%) of the total current corporate area of the City.
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Pass-Through Agreements and Obligations with Various Taxing Agencies
Project Area No. 1. Pursuant to the Redevelopment Law, the Prior Agency entered into tax
sharing agreements or is required to make statutory pass-through payments with affected taxing agencies
in Project Area No. 1. Although some of these pass-through agreements are expressly subordinated to the
pledge of Pledged Tax Revenues to the payment of the Bonds, the Agency may receive such amounts
only upon satisfaction of conditions set forth in the Dissolution Act as described under the heading
“SECURITY FOR THE BONDS — Tax Increment Financing” and such payments are excluded from the
calculation of Pledged Tax Revenues shown in the table “SUCCESSOR AGENCY PROJECTED
PLEDGED TAX REVENUES” and under shown under the heading “Debt Service Coverage” below.
(1) Coachella Valley Unified School District***;
(2) Coachella Valley Mosquito and Vector Control District**;
(3) Coachella Valley Water District**;
(4) County of Riverside;
(5) Desert Sands Unified School District;
(6) Desert Community College District;
(7) County Superintendent of Schools/Office of Education*;
(8) Coachella Valley Public Cemetery District*;
(9) Desert Recreation District*;
(10) Coachella Valley Resource Conservation District*; and
(11) City of La Quinta*.
* Statutory, See Appendix F for anticipated start dates.
** Not subordinate.
*** Obligation paid in full.
Project Area No. 2. Pursuant to the Redevelopment Law, the Prior Agency entered into tax
sharing agreements or is required to make statutory pass-through payments with affected taxing agencies
in Project Area No. 2. These pass-through agreements are not subordinated to the pledge of Pledged Tax
Revenues to the payment of the Bonds.
(1) County of Riverside;
(2) Desert Community College District;
(3) Riverside County Superintendent of Schools/Office of Education;
(4) Coachella Valley Water District;
(5) Desert Recreation District;
(6) Desert Sands Unified School District;
(7) Coachella Valley Mosquito and Vector Control District;
(8) Coachella Valley Resource Conservation District*;
(9) Coachella Valley Public Cemetery District*; and
(10) City of La Quinta*.
* Statutory, See Appendix F for anticipated start dates.
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Largest Local Secured Taxpayers
Set forth below are the ten largest secured property taxpayers in Project Area No. 1 based on the
2015-16 secured assessed value. These taxpayers represent approximately ___% of the 2015-16 secured
assessed value in Project Area No. 1. [TO BE UPDATED]
Property Owner Land Use Secured Value
% of
Total
KSL Desert Resort, et al. Hotel/Golf Course
Sunrise Desert Partners Residential Properties
MSR Resort Golf Course Golf Course/Country Club
Lands LP Apartments
Village Resort Hotel
Nadador LLC Timeshare Property
Quarry at La Quinta, et al. Hotel
LQ Investment Commercial
Tradition Golf Course Country Club
Old Town La Quinta LLC Commercial
Total
Source: California Municipal Statistics Inc.
The following provides a description of the five largest taxpayers in Project Area No. 1.
[KSL Desert Resort, et.al, owner. This property is known as the La Quinta Resort & Club, a
Waldorf Astoria resort. The resort includes 796 guest rooms situated in Spanish-style casitas, suites and
villas, nine golf courses and five clubhouses.
Sunrise Desert Partners, owner. The properties owned by this owner consist of residential
acreage in the PGA West, a 2,000 acre golf and lifestyle community.
MSR Resort Golf Course, owner. This property is comprised of the three PGA West clubhouses
and 109 holes of championship golf designed by Arnold Palmer, Tom Weiskopf, Pete Dye, Greg Norman,
and Jack Nicklaus.
Lands LP, owner. This 10-acre property is developed with the Silverhawk apartments.
Village Resort, owner. This property is 6.8 acres, developed with an Embassy Suites hotel
offering 146 guest rooms.]
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Set forth below are the ten largest secured property taxpayers in Project Area No. 2 based on the
2015-16 secured assessed value. These taxpayers represent approximately ____% of the 2015-16 secured
assessed value in Project Area No. 2. [TO BE UPDATED]
Property Owner Land Use Secured Value
% of
Total
Inland America La Quinta Pavillion Commercial
Wal Mart Real Estate Business Trust Commercial
Aventine Development Apartments
One Eleven La Quinta Commercial
P6K Portfolio KDP Commercial
TD Desert Dev LP Country Club
Washington 111 Ltd Apartments
Costco Wholesale Corp. Commercial
Target Corp. Commercial
Eagle Hardware & Garden Inc. Commercial
Total
Source: California Municipal Statistics Inc.
The following provides a description of the five largest taxpayers in Project Area No. 2.
[Inland American La Quinta Pavilion, owner. This 18-acre property is developed with a
commercial center, with Best Buy, DSW and Sprouts as anchor tenants.
Wal Mart Real Estate Business Trust, owner. This Wal Mart center is 830,000 square feet and
located on 19 acres.
Aventine Development, owner. This property is developed with 200 low-rise apartments on a 14
acre site.
One Eleven La Quinta, owner. This commercial center includes Ross Dress for Less, Big 5
Sporting Goods and Stater Brothers as anchor tenants.
P6K Portfolio KDP, owner. This commercial center, known as the Komar Desert Center, was
developed in 2008. The center contains a Costco (separately owned) and surrounding food and smaller
retail uses, including BevMo!]
Teeter Plan and Delinquency Rates
The Riverside County property tax delinquency rate has ranged from approximately 8% in 2009-
10 decreasing to ___% in 201____. According to the County Auditor-Controller, the delinquency rate
Countywide in Fiscal Year 2014-15 was ____%.
The County participates in the “Teeter Plan,” which stabilizes property tax payments at 100
percent of anticipated receipts although deposits to the RPTTF are not part of the Teeter Plan. These
deposits are payable based on first collection so consequently, delinquent property taxes do not impact the
Agency’s tax increment revenues.
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PLEDGED TAX REVENUES
Pledged Tax Revenues (as described in the section “SECURITY FOR THE BONDS” herein) are
to be deposited in the Redevelopment Obligation Retirement Fund, and after transfers have been made by
the Agency to the Debt Service Fund, administered by the Trustee and applied to the payment of the
principal of and interest on the Bonds.
Schedule of Historical Pledged Tax Revenues
The following tables are a schedule of the taxable valuations for Fiscal Years 2011-12 through
2015-16 and Pledged Tax Revenues in the Project Areas for the Fiscal Years 2011-12 through 2015-16.
PROJECT AREA NO. 1
HISTORICAL ASSESSED VALUATIONS AND GROSS TAX INCREMENT REVENUES
2011-12 2012-13 2013-14 2014-15 2015-16
Secured Assessed Value $4,248,567,040 $4,220,927,365 $4,376,573,490
Unsecured Assessed Value 31,665,376 33,872,601 29,894,413
Total Assessed Valuation(1) 4,280,232,416 4,254,799,966 4,406,467,903
Base Year Valuation (199,398,233) (199,398,233) (199,398,233)
Incremental Valuation $4,080,834,183 $4,055,401,733 $4,207,069,670
1% Tax Rate 1.000% 1.000% 1.000%
Tax Increment Revenues (2) 40,808,342 40,554,017 42,070,697
Unitary Revenue 496,731 468,931 470,000
Gross Tax Revenues $ 41,305,073 $ 41,022,948 $ 42,540,697
Actual Tax Revenues $ 41,157,343 $ 41,220,251
(1) Taxable Valuation as of August 20 equalized roll.
(2) Commencing with Fiscal Year 2015-16, the property tax revenues available to the Agency to pay enforceable obligations is based on a tax
rate of 1.0%. In prior years the tax rate for the Project Area No. 1 was greater than 1.0, most recently [____] percent. This change resulted
from the enactment of SB 107.
Source: Harrell & Company Advisors LLC.
Actual Tax Increment Collections and deductions from Tax Increment Revenues for Project Area
No. 1 are shown below:
PROJECT AREA NO. 1
HISTORICAL TAX REVENUES
2011-12 2012-13 2013-14 2014-15 2015-16
Actual Tax Revenues $ 41,157,343 $ 41,220,251
Housing Set-Aside - -
Housing Obligations (1) (5,480,234) (5,555,434)
Senior Tax Sharing (1,661,527) (1,382,643)
Available for Debt Service $ 34,015,582 $ 34,282,174
Subordinate Tax Sharing (16,702,023) (16,671,443)
Net Available $ 17,313,559 $ 17,610,731
(1) Prorata share of the 2004 Loan and the 2011 Loan based on amounts from each Project Area that would have been required to be set aside
for Low and Moderate Income Housing.
Source: Harrell & Company Advisors LLC.
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PROJECT AREA NO. 2
HISTORICAL ASSESSED VALUATIONS AND GROSS TAX INCREMENT REVENUES
2011-12 2012-13 2013-14 2014-15 2015-16
Secured Assessed Value $2,360,463,457 $2,318,312,944 $2,426,052,754
Unsecured Assessed Value 57,899,939 62,055,089 67,195,981
Total Assessed Valuation(1) 2,418,363,396 2,380,368,033 2,493,248,735
Base Year Valuation (95,182,755) (95,182,755) (95,182,755)
Incremental Valuation $2,323,180,641 $2,285,185,278 $2,398,065,980
Basic Tax Rate/$100 1.000% 1.000% 1.000%
Tax Increment Revenues(2) 23,231,806 22,851,853 23,980,660
Unitary Revenue 181,183 174,162 175,000
Gross Tax Revenues $ 23,412,989 $ 23,026,015 $ 24,155,660
Actual Tax Revenues $ 23,513,859 $ 22,893,004
(1) Taxable Valuation as of August 20 equalized roll.
(2) Commencing with Fiscal Year 2015-16, the property tax revenues available to the Agency to pay enforceable obligations is based on a tax
rate of 1.0%. In prior years the tax rate for the Project Area No. 2 was greater than 1.0, most recently [____] percent. This change resulted
from the enactment of SB 107.
Source: Harrell & Company Advisors LLC.
Actual Tax Increment collections and deductions from Tax Increment Revenues for Project Area
No. 2 are shown below:
PROJECT AREA NO. 2
HISTORICAL TAX REVENUES
2011-12 2012-13 2013-14 2014-15 2015-16
Actual Tax Revenues $ 23,513,859 $ 22,893,004
Housing Set-Aside - -
Housing Obligations (1) (3,130,947) (3,055,747)
Senior Tax Sharing (15,854,843) (15,684,399)
Available for Debt Service $ 4,528,069 $ 4,152,858
(1) Prorata share of the 2004 Loan and the 2011 Loan based on amounts from each Project Area that would have been required to be set aside
for Low and Moderate Income Housing.
Source: Harrell & Company Advisors LLC.
In Fiscal Year 2006-07 through Fiscal Year 2014-15 the tax rate for the Project Areas was
[____]%, which included the 1.0% rate, and __________ at [____]% and no other eligible debt service
rates.
Starting with Fiscal Year 2015-16, the County is depositing property tax revenues for the Agency
into the Redevelopment Property Tax Trust Fund based on a 1.0% tax rate, in accordance with SB 107,
which was enacted in 2015. SB 107, among other things, amended Section 34183(a)(1)(B) to provide
that “[n]otwithstanding subdivision (b) of Section 33670, that portion of the taxes in excess of the
identified in subdivision (a) of Section 33670, which are attributable to a property tax approved by the
voters of a city . . . to make payments in support of pension programs or . . . , and levied in addition to the
property tax rate limited by [Proposition 13] shall be allocated to and when collected shall be paid into the
fund of that taxing entity, unless the amounts in question are pledged as security for the payment of any
indebtedness obligation, as defined in subdivision (e) of Section 34171, and needed for payment thereof.”
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Annual Debt Service
Set forth below is the annualized debt service for the term of the Bonds.
Maturity Date
September 1 of Principal Interest Debt Service
Total
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Set forth below is the combined annualized debt service for the term of the Senior Bonds, Parity
Bonds, and Bonds.
Maturity Date
September 1
Senior
Bonds 2013A Bonds 2013B Bonds Bonds
Combined
Debt Service
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
Total
Projected Taxable Valuation and Pledged Tax Revenues
The Agency has retained Harrell & Company Advisors LLC of Orange, California to provide
projections of taxable valuation and Pledged Tax Revenues from developments in the Project Areas. The
Agency believes the assumptions (set forth in the footnotes below and Appendix F — “FINANCIAL
ADVISOR’S REPORT”) upon which the projections are based are reasonable; however, some
assumptions may not materialize and unanticipated events and circumstances may occur (see “RISK
FACTORS”). Therefore, the actual Pledged Tax Revenues received during the forecast period may vary
from the projections and the variations may be material. The projected Pledged Tax Revenues are as
follows:
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SUCCESSOR AGENCY PROJECTED PLEDGED TAX REVENUES
Fiscal
Year
Project No. 1
Tax Revenues(1)
Project No. 2
Tax Revenues
Tax Revenues
Before
Senior Bonds Senior Bonds
Pledged
Tax Revenues
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
(1) All Subordinated Pass-Through Amounts have been deducted.
Source: Harrell & Company Advisors LLC.
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Debt Service Coverage
Set forth below is the estimated debt service coverage of the Bonds and the Senior Bonds using
Pledged Tax Revenues based on Fiscal Year 2015-16 assessed value without additional inflationary
growth or new construction.
Bond Year Ending
September 1
No Growth
Tax Revenues Before
Senior Bonds (1)
Combined Annual
Debt Service(2)
Combined Debt
Service Coverage
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
(1) Tax Revenues before Senior Bonds include No Growth Pledged Tax Revenues without netting 2014 Bond Payments. All
Subordinated Pass-Through Amounts have been deducted.
(2) Includes the 2014 Bonds, 2013A Bonds, 2013B Bonds and Bonds.
Source: The Financial Advisor and the Underwriter.
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Set forth below is the estimated debt service coverage of the Bonds and the Senior Bonds using
Pledged Tax Revenues based on Fiscal Year 2015-16 assessed value and 2% annual inflationary growth
thereafter through maturity.
Bond Year Ending
September 1
Tax Revenues Before
Senior Bonds (1)
Combined Annual
Debt Service(2)
Combined Debt
Service Coverage
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
(1) Tax Revenues before Senior Bonds include No Growth Pledged Tax Revenues without netting 2014 Bond Payments. All
Subordinated Pass-Through Amounts have been deducted.
(2) Includes the 2014 Bonds, 2013A Bonds, 2013B Bonds and Bonds.
Source: The Financial Advisor and the Underwriter.
CONCLUDING INFORMATION
Underwriting
Hilltop Securities Inc. (the “Underwriter”), has agreed, subject to certain customary conditions
precedent to closing, to purchase the Bonds from the Agency at a price equal to $[_________] (which
equals the par amount of the Bonds, less an underwriting discount of $[_________], and [plus/less] a net
original issue [premium/discount] of $[_______]). The Underwriter intends to offer the Bonds to the
public initially at the prices set forth on the inside cover page of this Official Statement, plus accrued
interest from the dated date of the Bonds to their date of delivery, which prices may subsequently change
without any requirement of prior notice.
The Underwriter reserves the right to join with dealers and other underwriters in offering the
Bonds to the public. The Underwriter may offer and sell the Bonds to certain dealers (including dealers
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depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers
may reallow any such discounts on sales to other dealers.
Verification of Mathematical Accuracy
[VERIFICATION AGENT], an independent accountant, upon delivery of the Bonds, will deliver
a report on the mathematical accuracy of certain computations, contained in schedules provided to them
that were prepared by the Underwriter, relating to the sufficiency of moneys deposited into the Escrow
Fund created under the Escrow Agreement, to pay, when due, the principal, whether at maturity or upon
prior redemption, interest and redemption premium requirements with respect to the Refunded Bonds.
The report of [VERIFICATION AGENT] will include the statement that the scope of its
engagement is limited to verifying the mathematical accuracy of the computations contained in such
schedules provided to it, and that it has no obligation to update its report because of events occurring, or
date or information coming to its attention, subsequent to the date of its report.
Legal Opinion
The opinion of Rutan & Tucker LLP, Costa Mesa, California, Bond Counsel, approving the
validity of the Bonds and stating that interest on the Bonds is excluded from personal income taxes of the
State of California under present State income tax laws, will be furnished to the purchaser at the time of
delivery of the Bonds at the expense of the Agency. Compensation for Bond Counsel’s services is
entirely contingent upon the sale and delivery of the Bonds.
A copy of the proposed form of Bond Counsel’s final approving opinion with respect to the
Bonds is attached hereto as Appendix B. The legal opinion is only as to legality and is not intended to be
nor is it to be interpreted or relied upon as a disclosure document or an express or implied
recommendation as to the investment quality of the Bonds.
In addition, certain legal matters will be passed on by Norton Rose Fulbright US LLP, Los
Angeles, California, as Disclosure Counsel.
Tax Matters
[TO COME]
Litigation
[There is no action, suit or proceeding known to the Agency to be pending and notice of which
has been served upon and received by the Agency, or threatened, restraining or enjoining the execution or
delivery of the Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing
or any proceedings of the Agency taken with respect to any of the foregoing.] [CONFIRM]
Legality for Investment in California
The Redevelopment Law provides that obligations authorized and issued under the
Redevelopment Law will be legal investments for all banks, trust companies and savings banks, insurance
companies, and various other financial institutions, as well as for trust funds. The Bonds are also
authorized security for public deposits under the Redevelopment Law.
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The Superintendent of Banks of the State of California has previously ruled that obligations of a
redevelopment agency are eligible for savings bank investment in California.
Ratings
S&P Global Ratings (“S&P”) is expected to assign a rating of “___” to the Bonds with the
understanding that upon delivery of the Bonds, a municipal bond insurance policy insuring the payment
of principal of and interest on the Bonds when due will be issued by [INSURER]. See “BOND
INSURANCE.” In addition, S&P has assigned its underlying municipal bond rating of “___” on the
Bonds without giving effect to the above-described municipal bond insurance policy.
These ratings reflect the view of S&P as to the credit quality of the Bonds. The ratings reflect
only the view of S&P, and explanation of the significance of the ratings may be obtained from S&P
Global Ratings, 55 Water Street, New York, New York 10041 (212) 438-2124. There is no assurance
that the ratings will continue for any given period of time or that they will not be revised downward or
withdrawn entirely by S&P, if in the judgment of S&P, circumstances so warrant. Any such downward
revision or withdrawal of the ratings may have an adverse effect on the market price of the Bonds.
A securities rating is not a recommendation to buy, sell or hold securities and may be subject to
withdrawal or revision at any time.
Continuing Disclosure
Pursuant to a Continuing Disclosure Agreement with Willdan Financial Services, as
Dissemination Agent (the “Disclosure Agreement”), the Agency has agreed to provide, or cause to be
provided, to the Municipal Securities Rulemaking Board (“MSRB”) certain annual financial information
and operating data relating to the Agency (the “Annual Report”) no later than March 31 of each year,
commencing March 31, 2017, and to provide notices of the occurrence of certain enumerated events. The
Annual Report and the notices of enumerated events will be filed by the Agency or its Dissemination
Agent with the Municipal Securities Rulemaking Board through the Electronic Municipal Marketplace
Access (“EMMA”) website. The specific nature of the information to be contained in the Annual Report
and the notice of material events is set forth in “APPENDIX D – FORM OF CONTINUING
DISCLOSURE AGREEMENT” herein.
[PRIOR UNDERTAKING COMPLIANCE TO COME]
Miscellaneous
All of the preceding summaries of the Indenture, the Bond Law, the Dissolution Act, the
Redevelopment Law, other applicable legislation, the Redevelopment Plans for the Project Areas,
agreements and other documents are made subject to the provisions of such documents respectively and
do not purport to be complete statements of any or all of such provisions. Reference is hereby made to
such documents on file with the Agency for further information in connection therewith.
This Official Statement does not constitute a contract with the purchasers of the Bonds. Any
statements made in this Official Statement involving matters of opinion or estimates, whether or not so
expressly stated, are set forth as such and not as representations of fact, and no representation is made that
any of the estimates will be realized.
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The execution and delivery of this Official Statement by its Executive Director has been duly
authorized by the Agency.
SUCCESSOR AGENCY TO THE LA QUINTA
REDEVELOPMENT AGENCY
By:
Executive Director
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APPENDIX A
DEFINITIONS
The following are definitions of certain terms contained in the Indenture and used in this Official
Statement.
[TO COME]
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APPENDIX B
FORM OF BOND COUNSEL OPINIONS
Upon issuance of the Bonds, Rutan & Tucker LLP, Bond Counsel, proposes to render its final
approving opinions in substantially the following form:
__________, 2016
Successor Agency to the La Quinta Redevelopment Agency
La Quinta, California
Re: $___________ Successor Agency to the La Quinta Redevelopment Agency, La Quinta
Redevelopment Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds,
2016 Taxable Series A
Honorable Members of the Agency:
We have examined certified copies of proceedings of the Successor Agency to the La Quinta
Redevelopment Agency (the “Successor Agency”), the Oversight Board to the Successor Agency (the
“Oversight Board”), the Department of Finance of the State of California (“DOF”) and other information
and documents submitted to us relative to the issuance and sale by the Successor Agency of its Successor
Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2,
Subordinate Tax Allocation Refunding Bonds, 2016 Taxable Series A in the aggregate principal amount
of $___________ (the “Bonds”) and such other information and documents as we consider necessary to
render this opinion. In rendering this opinion, we also have relied upon certain representations of fact and
certifications made by the Successor Agency, the Trustee, the Underwriter of the Bonds and others. We
have not undertaken to verify through independent investigation the accuracy of the representations and
certifications relied upon by us.
The Bonds have been issued pursuant to the Constitution and laws of the State of California (the
“State”), including Article 11 of Chapter 3 (commencing with Section 53580) of Part 1 of Division 2 of
Title 5 of the California Government Code (the “Bond Law”), the provisions of Health & Safety Code
Section 34177.5, a resolution of the Successor Agency adopted on _________, 2016 (the “Successor
Agency Resolution”) and resolutions of the Oversight Board adopted on _________, 2016 and
_________, 2016 (the “Oversight Board Resolutions”), which action was approved by the DOF on
_________, 2016, and in accordance with the terms and conditions of an Indenture of Trust, dated as of
________ 1, 2016 (the “Indenture”), by and between the Successor Agency and U.S. Bank National
Association (the “Trustee”). All terms not defined herein have the meanings ascribed to those terms in the
Indenture.
The Bonds are dated the date of delivery, and mature on the dates and bear interest at the rates per
annum set forth in the Indenture. The Bonds are registered Bonds in the form set forth in the Indenture,
redeemable in the amounts, at the times and in the manner provided for in the Indenture.
Based upon our examination of all of the foregoing, and in reliance thereon, and on all matters of
fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of
the opinion that:
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1. The Bonds have been duly and validly authorized by the Successor Agency, constitute
valid and binding special obligations of the Successor Agency, and are being issued by the Successor
Agency to the La Quinta Redevelopment Agency (the “Agency”) on a subordinate basis to the Successor
Agency to the La Quinta Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2,
Tax Allocation Refunding Bonds, 2014 Series A (the “Senior Bonds”). The Bonds are enforceable in
accordance with their terms and the terms of the Indenture, except to the extent that enforceability may be
limited by moratorium, bankruptcy, reorganization, fraudulent conveyance or transfer, insolvency or other
similar laws affecting creditors’ rights to the application of equitable principles if equitable remedies are
sought, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies
against public agencies in the State of California. The Bonds are special obligations of the Successor
Agency but are not a debt of the City of La Quinta, the State of California or any other political
subdivisions thereof within the meaning of any constitutional or statutory limitation, and neither the City
of La Quinta, the State of California, nor any other of its political subdivisions, except the Successor
Agency, is liable for the payment thereof.
2. The Indenture has been duly authorized by the Successor Agency, is valid and binding
upon the Successor Agency and is enforceable in accordance with its terms, except to the extent that
enforceability may be limited by moratorium, bankruptcy, reorganization, fraudulent conveyance or
transfer, insolvency or other similar laws affecting creditors’ rights to the application of equitable
principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and
to the limitations on legal remedies against public agencies in the State of California.
3. The Indenture creates a valid pledge of that which the Indenture purports to pledge,
including, without limitation, the Pledged Tax Revenues and subject to the provisions of the Indenture,
except to the extent that such pledge may be limited by moratorium, bankruptcy, reorganization,
fraudulent conveyance or transfer, insolvency or other similar laws affecting creditors’ rights to the
application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in
appropriate cases and to the limitations on legal remedies against public agencies in the State of
California.
4. Interest on the Bonds (including any original issue discount) is excluded from State of
California personal income tax.
5. The difference between the issue price of a Bond (the first price at which a substantial
amount of the Bonds of a maturity are to be sold to the public) and the stated redemption price at maturity
with respect to such Bond constitutes original issue discount. Original issue discount accrues under a
constant yield method, and original issue discount will accrue to a Bond owner before receipt of cash
attributable to such excludable income. The amount of original issue discount deemed received by a Bond
owner will increase the Bond owner’s basis in the applicable Bond. Original issue discount that accrues to
the Bond owner is exempt from State of California personal income tax.
The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings
and judicial decisions and cover certain matters not directly addressed by such authorities. Such opinions
may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date
hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events
are taken or do occur. Such actions or events may adversely affect the value or tax treatment of the Bonds
and we express no opinion with respect thereto.
We call attention to the fact that the rights and obligations under the Indenture and the Bonds are
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought,
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to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against
public agencies in the State of California.
Our opinion is limited to matters governed by the laws of the State of California and federal law.
We assume no responsibility with respect to the applicability or the effect of the laws of any other
jurisdiction.
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official
Statement relating to the Bonds or other offering material relating to the Bonds and purchasers of the
Bonds should not assume that we have reviewed the Official Statement on their behalf.
Respectfully submitted,
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APPENDIX C
BOOK-ENTRY ONLY SYSTEM
The information in this Appendix C concerning The Depository Trust Company (“DTC”), New
York, New York, and DTC’s book-entry system has been obtained from DTC and the Agency takes no
responsibility for the completeness or accuracy thereof. The Agency cannot and does not give any
assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners
(a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates
representing ownership interest in or other confirmation or ownership interest in the Bonds, or
(c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the
Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect
Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC
are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be
followed in dealing with DTC Participants are on file with DTC.
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the
Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co.
(DTC’s partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate
principal amount of such maturity, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized
under the New York Banking Law, a “banking organization” within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of
the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over
3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money
market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with
DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other
securities transactions in deposited securities, through electronic computerized book-entry transfers and
pledges between Direct Participants’ accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company
for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which
are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the
DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a S&P Global
Ratings rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual
purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
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Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership
interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are
registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be
requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration
in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be
the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain
steps to augment the transmission to them of notices of significant events with respect to the Bonds, such
as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example,
Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may
wish to provide their names and addresses to the registrar and request that copies of notices be provided
directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being
redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in
such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to
whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Principal, premium (if any), and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to
credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information
from the Agency or the Trustee, on payable date in accordance with their respective holdings shown on
DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee,
or the Agency, subject to any statutory or regulatory requirements as may be in effect from time to time.
Principal, premium (if any), and interest payments with respect to the Bonds to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency
or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC,
and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a
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successor depository is not obtained, certificates representing the Bonds are required to be printed and
delivered.
The Agency may decide to discontinue use of the system of book-entry-only transfers through
DTC (or a successor securities depository). In that event, representing the Bonds will be printed and
delivered to DTC in accordance with the provisions of the Indenture.
The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the
accuracy thereof.
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APPENDIX D
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated as of __________,
2016, is executed and delivered by the Successor Agency to the La Quinta Redevelopment Agency (the
“Successor Agency”) and Willdan Financial Services as dissemination agent (the “Dissemination
Agent”), in connection with the issuance of the $__________ Successor Agency to the La Quinta
Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax
Allocation Refunding Bonds, 2016 Taxable Series A (the “Bonds”). The Bonds are being issued pursuant
to provisions of an Indenture of Trust, dated as of ________ 1, 2016 (the “Indenture”), by and between
the Successor Agency and U.S. Bank National Association, as trustee (the “Trustee”). The Successor
Agency and the Dissemination Agent covenant and agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Successor Agency and the Dissemination Agent for the benefit of the
Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with
S.E.C. Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to
any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report or any addendum thereto provided by the
Successor Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for
federal income tax purposes.
“Disclosure Representative” shall mean the City Manager of the City or his or her designee, or
such other officer or employee as the City shall designate in writing to the Trustee and Dissemination
Agent from time to time.
“Dissemination Agent” shall mean Willdan Financial Services, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the
Successor Agency and which has filed with the Trustee a written acceptance of such designation.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board established pursuant to
Section 15B(b)(1) of the Securities Exchange Act of 1934 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 Marketplace Access (EMMA) website of the MSRB, currently
located at http://emma.msrb.org.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
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“Rule” shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of
1934, as the same may be amended from time to time.
“SEC” shall mean the United States Securities and Exchange Commission.
“State” shall mean the State of California.
SECTION 3. Provision of Annual Reports.
(a) The Successor Agency shall, or shall cause the Dissemination Agent to, not later
than March 31 of each year, commencing March 31, 2017, provide to the MSRB and the Participating
Underwriter an Annual Report which is consistent with the requirements of Section 4 of this Disclosure
Agreement. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 4 of this
Disclosure Agreement.
(b) Not later than fifteen days prior to the date specified in subsection (a) for
providing the Annual Report to the MSRB, the Successor Agency shall provide the Annual Report to the
Dissemination Agent. If by such date, the Dissemination Agent has not received a copy of the Annual
Report, the Dissemination Agent shall notify the Successor Agency of such failure to receive the Annual
Report. The Successor Agency shall provide a written certification with each Annual Report furnished to
the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to
be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of
the Successor Agency and shall have no duty or obligation to review such Annual Report.
(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), the Dissemination Agent shall send a notice
to the MSRB in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall, to the extent information is known to it, file a
report with the Successor Agency and (if the Dissemination Agent is not the Trustee) the Trustee
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the
date it was provided.
SECTION 4. Content of Annual Reports. The Successor Agency’s Annual Report shall contain
or include by reference the following (unless otherwise stated, such information shall be as of the end of
the most recent Fiscal Year and shall be with respect to the Successor Agency):
(i) A postaudit of the financial transactions and records of the Successor
Agency for the Fiscal Year to be made by an Independent Certified Public Accountant appointed by the
Successor Agency 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 Successor Agency’s postaudit is not available by the time the Annual Report is required to be filed
pursuant to Section 3(a), the Annual Report shall contain an unaudited statement of financial transactions
and records of the Successor Agency in a format required by Section 34177(n) of the Dissolution Act, and
the postaudit shall be filed in the same manner as the Annual Report when they become available.
(ii) Financial information and operating data relating to the Project Areas
contained in the Official Statement for the Bonds under the headings “THE PROJECT AREAS – Largest
Local Secured Taxpayers,” and “PLEDGED TAX REVENUES – Schedule of Historical Pledged Tax
Revenues.”
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(iii) An update of the debt service coverage table shown in the Official
Statement using the most recent Fiscal Year.
(iv) A listing of the amount of each distribution from the Riverside County
Auditor-Controller of property tax revenues from the Redevelopment Property Tax Trust Fund received
by the Successor Agency for its enforceable obligations for the most recent Fiscal Year, as reasonably
available 15 days prior to the due date of each Annual Report.
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 Successor Agency or related public entities, which are
available to the public on the MSRB’s EMMA Website or filed with the SEC.
SECTION 5. Reporting of Listed Events.
(a) Pursuant to the provisions of this section, upon the occurrence of any of the
following events (in each case to the extent applicable) with respect to the Bonds, the Successor Agency
shall give, or cause to be given by so notifying the Dissemination Agent in writing and instructing the
Dissemination Agent to give, notice of the occurrence of such event, in each case, pursuant to
Section 5(c) hereof:
1. principal or interest payment delinquencies;
2. non-payment related defaults, if material;
3. modifications to the rights of the Bondholders, if material;
4. optional, contingent or unscheduled calls, if material, and tender offers;
5. defeasances;
6. rating changes;
7. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax status of the Bonds or other
material events affecting the tax status of the Bonds;
8. unscheduled draws on the debt service reserves reflecting financial difficulties;
9. unscheduled draws on the credit enhancements reflecting financial difficulties;
10. substitution of the credit or liquidity providers or their failure to perform;
11. release, substitution or sale of property securing repayment of the Bonds, if material;
12. bankruptcy, insolvency, receivership or similar proceedings of the Successor Agency,
which shall occur as described below;
13. appointment of a successor or additional trustee or the change of name of a trustee, if
material, or;
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14. the consummation of a merger, consolidation, or acquisition involving the Successor
Agency or the sale of all or substantially all of the assets of the Successor Agency other
than in the ordinary course of business, the entry into a definitive agreement to undertake
such an action or the termination of a definitive agreement relating to any such actions,
other than pursuant to its terms, if material.
For these purposes, any event described in item 12 of this Section 5(a) is considered to
occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar
officer for the Successor Agency in a proceeding under the United States Bankruptcy Code or in
any other proceeding under state or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or business of the Agency, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or
business of the Successor Agency.
(b) Upon receipt of notice from the Successor Agency and instruction by the
Successor Agency to report the occurrence of any Listed Event, the Dissemination Agent shall provide
notice thereof to the MSRB in accordance with Section 5(c) hereof. In the event the Dissemination Agent
shall obtain actual knowledge of the occurrence of any of the Listed Events, the Dissemination Agent
shall, immediately after obtaining such knowledge, contact the Disclosure Representative, inform such
person of the event, and request that the Successor Agency promptly notify the Dissemination Agent in
writing whether or not to report the event pursuant to Section 5(c). For purposes of this Disclosure
Agreement, “actual knowledge” of the occurrence of such Listed Event shall mean actual knowledge by
the Dissemination Agent, if other than the Trustee, and if the Dissemination Agent is the Trustee, then by
the officer at the corporate trust office of the Trustee with regular responsibility for the administration of
matters related to the Indenture. The Dissemination Agent shall have no responsibility to determine the
materiality, if applicable, of any of the Listed Events.
(c) The Successor Agency, or the Dissemination Agent, if the Dissemination Agent
has been instructed by the Successor Agency to report the occurrence of a Listed Event, shall file a notice
of such occurrence with the MSRB in a timely manner not more than ten business days after the
occurrence of the event.
SECTION 6. Termination of Reporting Obligation. The Successor Agency’s obligations under
this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full
of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Successor
Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
SECTION 7. Dissemination Agent. The Successor Agency 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 shall not be responsible in any manner for the content of any notice or
report prepared by the Successor Agency pursuant to this Disclosure Agreement. The initial
Dissemination Agent shall be Willdan Financial Services. The Dissemination Agent may resign by
providing thirty days’ written notice to the Successor Agency and the Trustee. The Dissemination Agent
shall not be responsible for the content of any report or notice prepared by the Successor Agency. The
Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination
Agent be responsible for filing any report not provided to it by the Successor Agency in a timely manner
and in a form suitable for filing.
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SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Successor Agency and the Dissemination Agent may amend this Disclosure Agreement
(and the Dissemination Agent shall agree to any amendment so requested by the Successor Agency)
provided, the Dissemination Agent shall not be obligated to enter into any such amendment that modifies
or increases its duties or obligations hereunder, and any provision of this Disclosure Agreement may be
waived, provided that in the opinion of nationally recognized bond counsel, such amendment or waiver is
permitted by the Rule. In the event of any amendment or waiver of a provision of this Disclosure
Agreement, the Successor Agency shall describe such amendment 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 Successor Agency.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Successor Agency from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or including
any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that
which is required by this Disclosure Agreement. If the Successor Agency chooses to include any
information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is
specifically required by this Disclosure Agreement, the Successor Agency 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.
SECTION 10. Filings with the MSRB. All financial information, operating data, financial
statements, notices, and other documents provided to the MSRB in accordance with this Disclosure
Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied
by identifying information as prescribed by the MSRB.
SECTION 11. Default. In the event of a failure of the Successor Agency to comply with any
provision of this Disclosure Agreement, the Trustee (at the written request of any Participating
Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but
only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been
otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of
the Trustee whatsoever, including, without limitation, fees and expenses of its attorneys), or any holder or
Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to cause the Successor Agency 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
Successor Agency or the Dissemination Agent to comply with this Disclosure Agreement shall be an
action to compel performance.
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SECTION 12. Duties, Immunities and Liabilities of Trustee and Dissemination Agent.
Article VIII of the Indenture pertaining to the Trustee is hereby made applicable to this Disclosure
Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture and
the Trustee and Dissemination Agent shall be entitled to the protections, limitations from liability and
indemnities afforded the Trustee thereunder. The Dissemination Agent and the Trustee shall have only
such duties as are specifically set forth in this Disclosure Agreement, and the Successor Agency agrees to
indemnify and save the Dissemination Agent and Trustee, their officers, directors, employees and agents,
harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorneys’
fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s
or Trustee’s respective negligence or willful misconduct. The Dissemination Agent shall be paid
compensation by the Successor Agency for its services provided hereunder in accordance with its
schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred
by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the
Trustee shall have no duty or obligation to review any information provided to them hereunder and shall
not be deemed to be acting in any fiduciary capacity for the Successor Agency, the Bondholders, or any
other party. Neither the Trustee nor the Dissemination Agent shall have any liability to the Bondholders
or any other party for any monetary damages or financial liability of any kind whatsoever related to or
arising from this Disclosure Agreement. The obligations of the Successor Agency under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
SECTION 13. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
To the Successor Agency: Successor Agency to the La Quinta
Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
Phone: (760) 777-7030
To the Dissemination Agent: Willdan Financial Services
27368 Via Industria, Suite 110
Temecula, California 92590
Attn: Disclosure Group
Phone: (951) 587-3500
To the Trustee: U.S. Bank, National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Corporate Trust Services
Phone: (213) 615-6047
Any person may, by written notice to the other persons listed above, designate a different address or
telephone number(s) to which subsequent notices or communications should be sent.
SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Successor Agency, the Trustee, the Dissemination Agent, the Participating Underwriter and holders and
Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
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SECTION 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
instrument.
SUCCESSOR AGENCY TO THE LA QUINTA
REDEVELOPMENT AGENCY
By
Executive Director
WILLDAN FINANCIAL SERVICES,
as Dissemination Agent
By
Authorized Representative
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EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: Successor Agency to La Quinta Redevelopment Agency
Name of Bond Issue: Successor Agency to La Quinta Redevelopment Agency, Redevelopment
Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds,
2016 Taxable Series A
Date of Issuance: __________, 2016
NOTICE IS HEREBY GIVEN that the Successor Agency has not provided an Annual Report
with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of
[Closing Date], 2016, with respect to the Bonds. [The Successor Agency anticipates that the Annual
Report will be filed by ___________________________.]
Dated:
WILLDAN FINANCIAL SERVICES., on behalf of the
Successor Agency
cc: Successor Agency
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APPENDIX E
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR
FISCAL YEAR ENDED JUNE 30, 2015 (EXCLUDING SUPPLEMENTARY INFORMATION)
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APPENDIX F
FINANCIAL ADVISOR’S REPORT
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APPENDIX G
SUPPLEMENTAL INFORMATION — THE CITY OF LA QUINTA
The following information concerning the City of La Quinta (the “City”) and surrounding areas
is included only for the purpose of supplying general information regarding the community. The Bonds
are not a debt of the City, the State or any of its political subdivisions, and neither the City, the State nor
any of its political subdivisions is liable therefor.
General Background
For centuries before Columbus discovered America, the area which is now La Quinta was the
winter home of the Cahuilla Indians. The history of modern La Quinta began with the construction of the
La Quinta Hotel in 1926, and La Quinta became a retreat for discriminating seclusion-seekers from
Hollywood and around the world. It was incorporated as a City in 1982 encompassing an area of 18.36
square miles and a population of approximately 4,500, and today encompasses an area of approximately
35.31 square miles, with a population of approximately 39,977. Surrounded by the Santa Rosa
Mountains, La Quinta is home to the PGA West Golf Resort. The Coachella Valley attracts a high-end
market of over 2 million tourists each year. As a year-round multi-recreational resort community, it
attracts golf and tennis enthusiasts from all over the world.
Population
The following table sets forth population estimates for the City of La Quinta, the County of
Riverside and the State of California for the past seven years:
CITY OF LA QUINTA
ESTIMATED POPULATION
(As of January 1)
Year
(January 1)
City of
La Quinta
Riverside
County
State of
California
2010(1) 37,467 2,189,641 37,253,956
2011 37,784 2,212,874 37,536,835
2012 38,100 2,239,715 37,881,357
2013 38,156 2,266,549 38,239,207
2014 38,720 2,291,093 38,567,459
2015 39,311 2,317,924 38,907,642
2016 39,977 2,347,828 39,255,883
Source: State of California Department of Finance, 2010 Benchmark
(1) As of April 1, 2010
Location
Located in the eastern portion of the County known as the Coachella Valley, La Quinta is 20
miles from Palm Springs and 127 miles from Los Angeles. The City motto is “The Gem of the Desert.”
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Climate
CITY OF LA QUINTA
Climate
Average Temperature
Period Min. Max. Precipitation
January 44.6 71.9 0.56
February 48.0 75.3 0.64
March 54.8 81.3 0.43
April 60.7 87.5 0.05
May 67.7 95.7 0.07
June 74.2 103.1 0.01
July 80.3 107.3 0.10
August 80.3 106.6 0.54
September 74.0 102.0 0.04
October 63.7 91.9 0.26
November 51.8 79.6 0.18
December 44.2 71.0 0.62
Annual 62.1 89.5 3.44
Source: ncdc.noaa.gov
City Government and Administration
The City of La Quinta was originally incorporated on May 1, 1982 and became a charter city in
November, 1996 with a Council/Manager form of government. The City Council is comprised of a
Mayor and four Council Members. The Mayor is elected for a two-year term and the Council Members
are elected for four-year terms.
Budgetary Policies
The City Manager submits a preliminary budget to the City Council before each fiscal year. A
public meeting is then held prior to July 1 to receive public comment. A budget is required to be adopted
before the beginning of the fiscal year. Amendments to the budget or budget transfers between funds
require Council approval. Budget transfers within funds require City Manager approval. The City also
maintains an encumbrance system as one budget technique. All fiscal year end appropriations and
encumbrances lapse at year end unless specifically approved by the Council for inclusion in the following
year’s appropriations.
Each Department receives a monthly budget-to-actual expenditure report. In addition, each
department can access on-line budgetary data from the financial information system available throughout
the City-wide computer network.
The City Council is also given an Executive level Summary of Revenues and Expenditures on a
monthly basis and also reviews the Capital Improvement Program each April.
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Economic Growth and Trends
La Quinta includes the La Quinta Resort, several world class golf resorts, quality neighborhoods
of single family and multi-dwelling homes and light commercial industries. Outdoor recreation activities
such as hiking and camping are also enjoyed in the area. Community and neighborhood parks offer
swimming, picnicking, sports fields, tot lots, recreation programs, and community events. There are
several hiking trails leading into the majestic Santa Rosa Mountains. La Quinta’s active arts community
plays host to the renowned annual La Quinta Arts Festival, which was ranked number 1 in the nation for
2013, 2014, and 2015 and was ranked number 3 in 2016 by Greg Lawler’s Art Fair SourceBook.
Major retail developments continue to diversify and enhance La Quinta’s economic base. The
Centre at La Quinta is a retail facility hosting the Walmart Super Center, Marshalls, PetSmart along with
numerous other shops and restaurants. Washington Park, located along the Washington Street corridor is
home to Target, Lowe’s, Cost Plus World Market, Trader Joe’s, Bouchee Fine Foods – who serve as the
shopping center’s larger tenants, along with Chase Bank and Steinmart. The Pavilion at La Quinta is a
retail outlet for Bed Bath & Beyond, Henry’s Market, Best Buy, Office Max and DSW Shoe Warehouse
along with restaurants which include Coffee Bean & Tea Leaf, Panera Bread, and Chipotle. La Quinta
Court is a spot for specialty shopping with fine restaurants and a gourmet food market. The La Quinta
Professional Plaza, is home to Bank of Southern California as well as medical and professional offices.
Jefferson Plaza is anchored by Home Depot, Smart & Final, I-Hop, Jack in the Box and the 99¢ Stores.
One-Eleven Center is home to Stater Brothers, AAA, Kohl’s, Petco, Ross, and Staples. In addition to its
retail outlets, the One-Eleven Center maintains restaurants and an Am/Pm service station. Point Happy
Shopping Center is home to Bank of America, Fans Plus Blinds and various restaurants. Old Town La
Quinta, a 140,000 square foot commercial/retail center in the Village area and once anchored by the
Hog’s Breath Inn, now plays host to several locally owned dining establishments.
Centre Point, which expanded the economic diversity of the City, is a mixed-use complex, with a
Homewood Suites by Hilton and Applebee’s Restaurant, the Eisenhower George and Julia Argyros
Health Center and a neighborhood dog park (Pioneer Park).
Tourism
La Quinta is well known for its numerous championship golf courses. The City houses more than
20 championship courses with several in planning or development stages. In addition to quantity, La
Quinta has some of the highest rated courses in the world of golf. Various golf tournaments, including
the prestigious Humana Challenge in Partnership with the Clinton Foundation, show La Quinta
internationally as a quality destination and golf resort area.
The City acquired 525 acres of previously undeveloped property adjacent to Jefferson Street and
Avenue 52. SilverRock Resort is a 525-acre parcel of land situated at the base of the majestic Santa Rosa
Mountains. Often referred to as “the last great piece of land in the Coachella Valley,” SilverRock Resort
was a former working cattle ranch and vacation retreat of Home Savings and Loan founder, Howard
Ahmanson. In 2002, the Prior Agency purchased the land to create a tournament golf course, which is
open to the public, and a luxury resort/retail venue that would generate long-term, recurring revenue for
the City. Two years of intense master planning, design, and construction resulted in the Arnold Palmer
designed “Arnold Palmer Classic Course at SilverRock Resort.” The course was voted among the “The
Top Ten New Golf Courses That You Can Play” by Golf Magazine, and has been a home course of the
Bob Hope Classic since 2008.
The nationally recognized La Quinta Arts Festival attracts many visitors from around the country
each year to the City of La Quinta and the Coachella Valley.
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Capital Improvements
The City plans to spend $7.3 million in capital improvements during fiscal year 2016-17. With
13 identified projects planned or taking place, the traffic signals and street maintenance projects make up
the largest portion of expenditures, costing an estimated $3.4 million and $2.0 million respectively. One
major project budgeted for construction in fiscal year 2018-19 includes the Dune Palms Road Bridge,
which is intended to replace the existing low-water crossing at the Coachella Valley Storm Water
Channel with an all-weather access. This will enable emergency vehicles, motorists, pedestrians, and
bicyclists to travel the corridor on a reliable route.
The City’s Capital Improvement Program (CIP) continues to meet the demands of growth. This
major commitment in infrastructure will continue to provide for both the current and future growth that
the City has experienced.
Commercial Activity
The following table demonstrates the growth in the number of business permits and taxable
transactions in the City of La Quinta:
CITY OF LA QUINTA
TAXABLE TRANSACTIONS
(in thousands)
Retail Stores Total Outlets
Year
Number of
Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2002 246 309,182 531 372,039
2003 277 376,866 580 447,877
2004 336 510,913 670 584,039
2005 403 603,110 755 683,476
2006 448 667,010 862 754,063
2007 507 735,647 1,070 826,488
2008 561 644,113 1,151 731,831
2009 789 552,468 1,106 623,012
2010 831 563,456 1,161 633,545
2011 891 609,077 1,228 680,382
2012 937 638,047 1,294 710,127
2013 920 654,275 1,254 731,325
2014(1) 933 132,802 1,274 143,443
(1) Through third quarter of 2014.
Source: State Board of Equalization.
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Building Activity
The following presents the residential building permit valuations for the City of La Quinta for the
calendar years 2011 through 2015:
RESIDENTIAL BUILDING PERMIT VALUATIONS
CITY OF LA QUINTA
(Valuation in 000)
2011 2012 2013 2014 2015
Residential
Single Unit $ 15,480,731 $ 21,623,018 $ 30,038,430 $ 58,222,010 $43,498,590
Multiple Units 0 11,948,060 0 6,166,376 2,710,074
Total
Residential
$ 15,480,731 $ 33,571,078 $ 30,038,430 $ 64,388,386 $ 46,208,664
No. of New
Dwelling Units
Single Unit 41 67 117 177 155
Multiple Units 0 176 0 103 21
Total Units 41 243 117 280 176
Source: Construction Industry Research Board (CIRB).
City’s Taxable Valuation
Taxable valuation within the City is established by the Riverside County Assessor, except for
utility and other unitary property, which is assessed by the State Board of Equalization. Article XIII A of
the State Constitution provides that, beginning with the 1978-79 fiscal year, property taxes in California
are limited to one percent of full cash value, except for taxes to pay debt service on indebtedness
approved by the voters prior to July 1, 1978. Article XIII A defines full cash value as the County
Assessor’s valuation of real property as shown on the 1975-76 tax bill (“base year”), except in the case of
newly-constructed property or property which undergoes a change in ownership. Yearly taxable value
increases following the base year are limited to the growth in the consumer price index, but may not
exceed two percent annually.
For assessment and collection purposes, property is classified either as “secured” or “unsecured”,
and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the
assessment roll containing State assessed property and property the taxes on which are a lien on real
property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property
is assessed on the “unsecured roll”.
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The assessed valuation of property within the City since fiscal year 2004-05 is summarized
below.
CITY OF LA QUINTA
ASSESSED VALUATIONS
Fiscal Year Secured Unsecured
Less:
Exemptions
Taxable
Assessed Value
2004-05 5,412,382,710 40,940,877 (95,420,075) 5,357,903,512
2005-06 6,289,493,552 44,014,548 (113,037,003) 6,220,471,097
2006-07 7,856,383,375 72,554,357 (115,071,146) 7,813,866,586
2007-08 9,986,151,525 88,740,840 (99,245,721) 9,975,646,644
2008-09 11,854,669,637 101,433,002 (89,688,505) 11,866,414,134
2009-10 12,410,626,893 113,185,065 (107,777,195) 12,416,034,763
2010-11 11,742,665,902 121,272,880 (110,752,890) 11,753,185,892
2011-12 10,913,083,169 118,972,704 (161,265,140) 10,870,790,733
2012-13 10,400,897,792 107,421,771 (176,887,605) 10,331,431,958
2013-14 10,345,371,473 108,971,608 (179,344,969) 10,274,998,112
2014-15 10,796,022,466 111,330,270 (180,600,133) 10,726,752,603
2015-16 11,454,574,255 108,773,942 (194,001,905) 11,369,346,292
Source: City of La Quinta Comprehensive Annual Financial Report for Year Ended June 30, 2015.
General Plan/Zoning
The land within the City of La Quinta is approximately zoned as follows:
Industrial: 0 acres
Institutional: 120 acres
Commercial: 1,240 acres
Residential: 12,320 acres
Industry
La Quinta is home to the first Wal-Mart Supercenter in California. Additionally, the City’s
downtown district, known as “The Village,” includes developments such as Old Town and Plaza calle
Tampico. Additionally, The Village contains many professional offices, the City museum, boutique
stores, and several restaurants.
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G-7
Labor Force
The following listing sets forth the top employers in the City as of June 30, 2015:
CITY OF LA QUINTA
Major Employers and Number of Employees
Employer
Approximate
No. of Employees Type of Business
Desert Sands Unified School District 1,400 School District
La Quinta Resort & Club 1,233 Hotel & Golf Resort
PGA West 1,214 Golf Resort
Wal-Mart Super Center 360 Retail
Costco 246 Retail
Home Depot 181 Retail
Lowe’s Home Improvement 152 Retail
Imperial Irrigation District 142 Utility Company
Rancho La Quinta 128 Golf Resort
Stater Brothers 120 Grocery Store
Source: City of La Quinta.
Employment and Industry
Employment data is not separately reported on an annual basis for the City but is compiled for the
Riverside-San Bernardino-Ontario Metropolitan Statistical Area, which includes Riverside and San
Bernardino Counties. Set forth in the table on the following page is the employment data for the
Riverside-San Bernardino-Ontario Metropolitan Statistical Area for 2011 to 2015.
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G-8
Riverside-San Bernardino-Ontario Metropolitan Statistical Area
Industry Employment & Labor Force - By Annual Average*
2011 2012 2013 2014 2015
Total Farm 14,900 15,000 14,500 14,400 15,100
Total Nonfarm 1,154,500 1,185,200 1,233,300 1,289,300 1,347,400
Total Private 927,000 960,600 1,008,100 1,060,500 1,114,000
Goods Producing 145,200 150,500 158,600 170,200 182,100
Mining, Logging, and Construction 60,100 63,800 71,200 78,900 86,600
Manufacturing 85,100 86,700 87,300 91,300 95,600
Service Providing 1,009,300 1,034,700 1,074,700 1,119,100 1,165,200
Trade, Transportation & Utilities 275,600 287,600 299,700 314,900 332,500
Transportation, Warehousing &
Utilities
67,900 73,000 78,400 86,600 97,300
Information 12,200 11,700 11,500 11,300 11,300
Financial Activities 39,500 40,200 41,300 42,300 43,200
Professional & Business Services 126,000 127,500 132,400 139,300 144,400
Professional & Business Services 126,000 127,500 132,400 139,300 144,400
Educational & Health Services 165,400 173,600 187,600 194,800 205,000
Leisure & Hospitality 124,000 129,400 135,900 144,800 151,500
Other Services 39,100 40,100 41,100 43,000 44,000
Government 227,500 224,600 225,200 228,800 233,400
Total, All Industries 1,169,400 1,200,200 1,247,800 1,303,700 1,362,400
Total Civilian Labor Force 1,866,200 1,882,900 1,897,000 1,919,900 1,961,800
Total Unemployment 243,100 217,300 186,500 156,600 129,500
Unemployment Rate 13.0% 11.5% 9.8% 8.2% 6.6%
________________
*Using a March 2015 Benchmark
Source: State of California Employment Development Department, Labor Market Information Division.
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G-9
Direct and Overlapping Debt
[TO BE UPDATED]
A statement of the City’s direct and overlapping debt is as follows:
2014-15 Assessed Valuation: $11,369,346,292
OVERLAPPING TAX AND ASSESSMENT DEBT:
Total Debt
Outstanding
6/30/15 % Applicable(1)
City’s Share of
Debt 6/30/15
Desert Community College District $308,619,492 16.791% $ 51,820,299
Coachella Valley Unified School District 178,113,759 53.135 94,640,746
Desert Sands Unified School District 267,444,474 20.229 54,101,343
Desert Sands Unified School District Community Facilities District No. 1 1,295,000 88.912 1,151,410
City of La Quinta 1915 Act Bonds 170,000 100.000 170,000
Coachella Valley Water District Assessment District No. 68 1,620,000 86.122 1,395,176
TOTAL OVERLAPPING DEBT REPAID WITH PROPERTY TAXES $757,262,725 $ 203,278,974
OVERLAPPING OTHER DEBT INCLUDING CERTIFICATES OF
PARTICIPATION (COP)
Riverside County General Fund Obligations $961,952,082 5.062% $ 48,694,014
Riverside County Pension Obligations 320,470,000 5.062 16,222,191
Riverside County Board of Education Certificates of Participation 1,835,000 5.062 92,888
Coachella Valley Unified School District Certificates of Participation 42,435,000 53.135 22,547,837
Coachella Valley Unified School District Certificates of Participation ² 61,360,000 20.229 12,412,514
Coachella Valley Recreation and Park District Certificates of Participation 1,652,264 26.552 438,709
City of La Quinta General Fund Obligations 4,545,146 100.000 4,545,146
TOTAL DIRECT AND OVERLAPPING DEBT $ 308,232,273
TOTAL DIRECT DEBT $ 4,545,146
TOTAL OVERLAPPING OTHER DEBT OUTSTANDING $1,389,704,346
TOTAL OVERLAPPING DEBT $ 303,687,127
Ratios to 2012-13 Assessed Valuation:
Total Overlapping Tax and Assessment Debt ................... 1.79%
Total Direct Debt ($4,545,146) ....................................... 0.04%
Total Direct and Overlapping Debt .................................... 2.70%
Total Overlapping Debt ...................................................... 2.67%
(1) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property
values. Applicable percentages were estimated by determining the portion of another governmental unit’s taxable assessed value
that is within the city’s boundaries and dividing it by each unit’s total taxable assessed value.
Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule
estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of
the City. This process recognizes that, when considering the City’s ability to issue and repay long-term debt, the entire debt
burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a
resident, and therefore responsible for repaying the debt of each overlapping government.
Source: City of La Quinta Comprehensive Annual Financial Report for Year Ended June 30, 2015.
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G-10
Utilities
The main utility providers in the City are as follows:
Electricity: Imperial Irrigation District
Gas: Sempra Energy
Telephone: Verizon
Water: Coachella Valley Water District
Sewer Service: Coachella Valley Water District
Transportation
Access to job opportunities in Riverside County, San Bernardino County, Orange County and Los
Angeles County has been one of the major factors in Riverside County’s employment and population
growth. Several major freeways and highways provide access between Riverside County and all parts of
Southern California. U.S. Highways 10 and 60 extend in an east-west direction through the northern
portion of the County, Intrastate Highway 91 extends in an east-west direction through the central portion
of the county until connecting with U.S. Highway 15, and U.S. Highways 15 and 215 extend in a north-
south direction through the central portion of the County, each linking the major cities in the County to
other parts of the County and to the Los Angeles, San Bernardino and Orange metropolitan areas and to
San Diego County.
Local bus service is provided by Sunline Transit and by Greyhound Bus Lines. Passenger service
is also provided by AMTRAK, which makes train trips daily each way through the County. Southern
Pacific Railroad and Santa Fe Railway handle most of the freight movement in the County.
The County seat in the City of Riverside is within a 1-hour drive of La Quinta. It is a 1-1/2 hour
drive to the Ontario Airport and a 3 hour drive to LAX and Orange County.
Numerous major truck lines serve the City of La Quinta, making available overnight delivery
service to major California cities.
Education
The educational needs of La Quinta are met by four elementary schools, three middle schools,
one high school, and one alternative school, all a part of the Desert Sands Unified School District.
Additionally, the Coachella Valley Unified School District provides schools at all levels for other areas of
La Quinta. Post-secondary education is served by College of the Desert, Chapman University, and
California State University, San Bernardino Extension.
Community Services
La Quinta has two Immediate Care facilities, including the Eisenhower George and Julia Argyros
Health Center and a senior citizens’ center within the City limits, with approved plans for expanding
medical services to the City. Other nearby hospitals are located in Rancho Mirage, Indio and Palm
Springs.
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G-11
The City is served by several churches, numerous radio stations and local TV channels, one TV
cable system, and a variety of full-service banks. Recreational facilities include major resort hotels,
several country clubs, several golf courses and Lake Cahuilla Regional Park. The La Quinta Arts Festival
is held annually in March. The Bob Hope Classic is a nationally acclaimed golfing event which is held
yearly in the City.
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H-1
APPENDIX H
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
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ATTACHMENT 3
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated as of __________,
2016, is executed and delivered by the Successor Agency to the La Quinta Redevelopment Agency (the
“Successor Agency”) and Willdan Financial Services as dissemination agent (the “Dissemination
Agent”), in connection with the issuance of the $__________ Successor Agency to the La Quinta
Redevelopment Agency, La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax
Allocation Refunding Bonds, 2016 Taxable Series A (the “Bonds”). The Bonds are being issued pursuant
to provisions of an Indenture of Trust, dated as of ________ 1, 2016 (the “Indenture”), by and between
the Successor Agency and U.S. Bank National Association, as trustee (the “Trustee”). The Successor
Agency and the Dissemination Agent covenant and agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Successor Agency and the Dissemination Agent for the benefit of the
Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with
S.E.C. Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to
any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report or any addendum thereto provided by the
Successor Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote
or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds
through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for
federal income tax purposes.
“Disclosure Representative” shall mean the City Manager of the City or his or her designee, or
such other officer or employee as the City shall designate in writing to the Trustee and Dissemination
Agent from time to time.
“Dissemination Agent” shall mean Willdan Financial Services, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the
Successor Agency and which has filed with the Trustee a written acceptance of such designation.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board established pursuant to
Section 15B(b)(1) of the Securities Exchange Act of 1934 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
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made through the Electronic Municipal Marketplace Access (EMMA) website of the MSRB, currently
located at http://emma.msrb.org.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering of the Bonds.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of
1934, as the same may be amended from time to time.
“SEC” shall mean the United States Securities and Exchange Commission.
“State” shall mean the State of California.
SECTION 3. Provision of Annual Reports.
(a) The Successor Agency shall, or shall cause the Dissemination Agent to, not later
than March 31 of each year, commencing March 31, 2017, provide to the MSRB and the Participating
Underwriter an Annual Report which is consistent with the requirements of Section 4 of this Disclosure
Agreement. The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 4 of this
Disclosure Agreement.
(b) Not later than fifteen days prior to the date specified in subsection (a) for
providing the Annual Report to the MSRB, the Successor Agency shall provide the Annual Report to the
Dissemination Agent. If by such date, the Dissemination Agent has not received a copy of the Annual
Report, the Dissemination Agent shall notify the Successor Agency of such failure to receive the Annual
Report. The Successor Agency shall provide a written certification with each Annual Report furnished to
the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to
be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of
the Successor Agency and shall have no duty or obligation to review such Annual Report.
(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), the Dissemination Agent shall send a notice
to the MSRB in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall, to the extent information is known to it, file a
report with the Successor Agency and (if the Dissemination Agent is not the Trustee) the Trustee
certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the
date it was provided.
SECTION 4. Content of Annual Reports. The Successor Agency’s Annual Report shall contain
or include by reference the following (unless otherwise stated, such information shall be as of the end of
the most recent Fiscal Year and shall be with respect to the Successor Agency):
(i) A postaudit of the financial transactions and records of the Successor
Agency for the Fiscal Year to be made by an Independent Certified Public Accountant appointed by the
Successor Agency 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 Successor Agency’s postaudit is not available by the time the Annual Report is required to be filed
pursuant to Section 3(a), the Annual Report shall contain an unaudited statement of financial transactions
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and records of the Successor Agency in a format required by Section 34177(n) of the Dissolution Act, and
the postaudit shall be filed in the same manner as the Annual Report when they become available.
(ii) Financial information and operating data relating to the Project Areas
contained in the Official Statement for the Bonds under the headings “THE PROJECT AREAS – Largest
Local Secured Taxpayers,” and “PLEDGED TAX REVENUES – Schedule of Historical Pledged Tax
Revenues.”
(iii) An update of the debt service coverage table shown in the Official
Statement using the most recent Fiscal Year.
(iv) A listing of the amount of each distribution from the Riverside County
Auditor-Controller of property tax revenues from the Redevelopment Property Tax Trust Fund received
by the Successor Agency for its enforceable obligations for the most recent Fiscal Year, as reasonably
available 15 days prior to the due date of each Annual Report.
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 Successor Agency or related public entities, which are
available to the public on the MSRB’s EMMA Website or filed with the SEC.
SECTION 5. Reporting of Listed Events.
(a) Pursuant to the provisions of this section, upon the occurrence of any of the
following events (in each case to the extent applicable) with respect to the Bonds, the Successor Agency
shall give, or cause to be given by so notifying the Dissemination Agent in writing and instructing the
Dissemination Agent to give, notice of the occurrence of such event, in each case, pursuant to
Section 5(c) hereof:
1. principal or interest payment delinquencies;
2. non-payment related defaults, if material;
3. modifications to the rights of the Bondholders, if material;
4. optional, contingent or unscheduled calls, if material, and tender offers;
5. defeasances;
6. rating changes;
7. adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax status of the Bonds or other
material events affecting the tax status of the Bonds;
8. unscheduled draws on the debt service reserves reflecting financial difficulties;
9. unscheduled draws on the credit enhancements reflecting financial difficulties;
10. substitution of the credit or liquidity providers or their failure to perform;
11. release, substitution or sale of property securing repayment of the Bonds, if material;
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12. bankruptcy, insolvency, receivership or similar proceedings of the Successor Agency,
which shall occur as described below;
13. appointment of a successor or additional trustee or the change of name of a trustee, if
material, or;
14. the consummation of a merger, consolidation, or acquisition involving the Successor
Agency or the sale of all or substantially all of the assets of the Successor Agency other
than in the ordinary course of business, the entry into a definitive agreement to undertake
such an action or the termination of a definitive agreement relating to any such actions,
other than pursuant to its terms, if material.
For these purposes, any event described in item 12 of this Section 5(a) is considered to
occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar
officer for the Successor Agency in a proceeding under the United States Bankruptcy Code or in
any other proceeding under state or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or business of the Agency, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or
business of the Successor Agency.
(b) Upon receipt of notice from the Successor Agency and instruction by the
Successor Agency to report the occurrence of any Listed Event, the Dissemination Agent shall provide
notice thereof to the MSRB in accordance with Section 5(c) hereof. In the event the Dissemination Agent
shall obtain actual knowledge of the occurrence of any of the Listed Events, the Dissemination Agent
shall, immediately after obtaining such knowledge, contact the Disclosure Representative, inform such
person of the event, and request that the Successor Agency promptly notify the Dissemination Agent in
writing whether or not to report the event pursuant to Section 5(c). For purposes of this Disclosure
Agreement, “actual knowledge” of the occurrence of such Listed Event shall mean actual knowledge by
the Dissemination Agent, if other than the Trustee, and if the Dissemination Agent is the Trustee, then by
the officer at the corporate trust office of the Trustee with regular responsibility for the administration of
matters related to the Indenture. The Dissemination Agent shall have no responsibility to determine the
materiality, if applicable, of any of the Listed Events.
(c) The Successor Agency, or the Dissemination Agent, if the Dissemination Agent
has been instructed by the Successor Agency to report the occurrence of a Listed Event, shall file a notice
of such occurrence with the MSRB in a timely manner not more than ten business days after the
occurrence of the event.
SECTION 6. Termination of Reporting Obligation. The Successor Agency’s obligations under
this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full
of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Successor
Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
SECTION 7. Dissemination Agent. The Successor Agency 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 shall not be responsible in any manner for the content of any notice or
report prepared by the Successor Agency pursuant to this Disclosure Agreement. The initial
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Dissemination Agent shall be Willdan Financial Services. The Dissemination Agent may resign by
providing thirty days’ written notice to the Successor Agency and the Trustee. The Dissemination Agent
shall not be responsible for the content of any report or notice prepared by the Successor Agency. The
Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination
Agent be responsible for filing any report not provided to it by the Successor Agency in a timely manner
and in a form suitable for filing.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Successor Agency and the Dissemination Agent may amend this Disclosure Agreement
(and the Dissemination Agent shall agree to any amendment so requested by the Successor Agency)
provided, the Dissemination Agent shall not be obligated to enter into any such amendment that modifies
or increases its duties or obligations hereunder, and any provision of this Disclosure Agreement may be
waived, provided that in the opinion of nationally recognized bond counsel, such amendment or waiver is
permitted by the Rule. In the event of any amendment or waiver of a provision of this Disclosure
Agreement, the Successor Agency shall describe such amendment 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 Successor Agency.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to
prevent the Successor Agency from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or including
any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that
which is required by this Disclosure Agreement. If the Successor Agency chooses to include any
information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is
specifically required by this Disclosure Agreement, the Successor Agency 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.
SECTION 10. Filings with the MSRB. All financial information, operating data, financial
statements, notices, and other documents provided to the MSRB in accordance with this Disclosure
Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied
by identifying information as prescribed by the MSRB.
SECTION 11. Default. In the event of a failure of the Successor Agency to comply with any
provision of this Disclosure Agreement, the Trustee (at the written request of any Participating
Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall, but
only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been
otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of
the Trustee whatsoever, including, without limitation, fees and expenses of its attorneys), or any holder or
Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including
seeking mandate or specific performance by court order, to cause the Successor Agency 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
Successor Agency or the Dissemination Agent to comply with this Disclosure Agreement shall be an
action to compel performance.
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SECTION 12. Duties, Immunities and Liabilities of Trustee and Dissemination Agent.
Article VIII of the Indenture pertaining to the Trustee is hereby made applicable to this Disclosure
Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture and
the Trustee and Dissemination Agent shall be entitled to the protections, limitations from liability and
indemnities afforded the Trustee thereunder. The Dissemination Agent and the Trustee shall have only
such duties as are specifically set forth in this Disclosure Agreement, and the Successor Agency agrees to
indemnify and save the Dissemination Agent and Trustee, their officers, directors, employees and agents,
harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or
performance of its powers and duties hereunder, including the costs and expenses (including attorneys’
fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s
or Trustee’s respective negligence or willful misconduct. The Dissemination Agent shall be paid
compensation by the Successor Agency for its services provided hereunder in accordance with its
schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred
by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the
Trustee shall have no duty or obligation to review any information provided to them hereunder and shall
not be deemed to be acting in any fiduciary capacity for the Successor Agency, the Bondholders, or any
other party. Neither the Trustee nor the Dissemination Agent shall have any liability to the Bondholders
or any other party for any monetary damages or financial liability of any kind whatsoever related to or
arising from this Disclosure Agreement. The obligations of the Successor Agency under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
SECTION 13. Notices. Any notices or communications to or among any of the parties to this
Disclosure Agreement may be given as follows:
To the Successor Agency: Successor Agency to the La Quinta
Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
Attn: Executive Director
Phone: (760) 777-7030
To the Dissemination Agent: Willdan Financial Services
27368 Via Industria, Suite 110
Temecula, California 92590
Attn: Disclosure Group
Phone: (951) 587-3500
To the Trustee: U.S. Bank, National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Corporate Trust Services
Phone: (213) 615-6047
Any person may, by written notice to the other persons listed above, designate a different address or
telephone number(s) to which subsequent notices or communications should be sent.
SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Successor Agency, the Trustee, the Dissemination Agent, the Participating Underwriter and holders and
Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
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SECTION 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
instrument.
SUCCESSOR AGENCY TO THE LA QUINTA
REDEVELOPMENT AGENCY
By
Executive Director
WILLDAN FINANCIAL SERVICES,
as Dissemination Agent
By
Authorized Representative
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EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party: Successor Agency to La Quinta Redevelopment Agency
Name of Bond Issue: Successor Agency to La Quinta Redevelopment Agency, Redevelopment
Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds,
2016 Taxable Series A
Date of Issuance: __________, 2016
NOTICE IS HEREBY GIVEN that the Successor Agency has not provided an Annual Report
with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of
[Closing Date], 2016, with respect to the Bonds. [The Successor Agency anticipates that the Annual
Report will be filed by ___________________________.]
Dated:
WILLDAN FINANCIAL SERVICES., on behalf of the
Successor Agency
cc: Successor Agency
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124/015610-0147
9740658.1 a06/29/16
Attachment 4
FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of June 1, 2016 (this “Agreement”), is by and
among the Successor Agency to the La Quinta Redevelopment Agency (the “Successor
Agency”), the La Quinta Financing Authority (the “Authority”) and U.S. Bank National
Association, acting in its capacity as escrow bank (the “Escrow Bank”) pursuant to this
Agreement;
W I T N E S S E T H:
WHEREAS, the La Quinta Redevelopment Agency (the “Prior Agency”) was a public
body, corporate and politic, duly created, established and authorized to transact business and
exercise its powers under and pursuant to the provisions of the Community Redevelopment Law
(Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the
State of California) (the “Law”), and the powers of the La Quinta Redevelopment Agency
included the power to issue Bonds for any of its corporate purposes; and
WHEREAS, a Redevelopment Plan for a redevelopment project known and designated as
the “La Quinta Redevelopment Project Area No. 1” has been adopted and approved by
Ordinance No. 43 of the City of La Quinta on November 29, 1983, and all requirements of the
Law for and precedent to the adoption and approval of the Project Area No. 1 Redevelopment
Plan, as amended, have been duly complied with; and
WHEREAS, a Redevelopment Plan for a redevelopment project known and designated as
the “La Quinta Redevelopment Project No. Area 2” has been adopted and approved by
Ordinance No. 139 of the City of La Quinta on May 16, 1989, and all requirements of the Law
for and precedent to the adoption and approval of the Project Area No. 2 Redevelopment Plan, as
amended, have been duly complied with; and
WHEREAS, the Prior Agency has previously issued $6,000,000 La Quinta
Redevelopment Agency, La Quinta Redevelopment Project Area No. 2 Subordinate Taxable Tax
Allocation Bonds, Series 2011 (the “2011 Project Area No. 2 Taxable Bonds”); and
WHEREAS, the Authority on behalf of the Prior Agency has previously issued
$28,850,000 La Quinta Financing Authority, Local Agency Subordinate Taxable Revenue
Bonds, 2011 Series A (the “2011 Taxable Housing Bonds”) and loaned the proceeds to the Prior
Agency pursuant to the terms of a loan agreement dated February 3, 2004 and a Second
Supplemental Indenture, dated as of March 1, 2011 (the “2011 Loan Obligation”); and
WHEREAS, the Successor Agency has determined that it is cost effective and efficient to
refund and defease, in their entirety, the 2011 Project Area No. 2 Taxable Bonds and the 2011
Taxable Housing Bonds, (collectively, the “Refunded Bonds”) on a subordinate basis to the
$65,600,000 Successor Agency to the Las Quinta Redevelopment Agency, La Quinta
Redevelopment Project Areas Nos. 1 and 2, Tax Allocation Refunding Bonds, 2014 Series A
(the “2014 Bonds “Bonds” or the “Senior Bonds”) and on a parity basis with the $97,190,000
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Successor Agency to the La Quinta Redevelopment Agency La Quinta Redevelopment Project
Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2013 Series A (the “2013
Series A Bonds”) and the $23,055,000 Successor Agency to the La Quinta Redevelopment
Agency, La Quinta Redevelopment Project Areas Nos. 1 and 2, Subordinate Tax Allocation
Refunding Bonds, 2013 Taxable Series B (the “2013 Series B Bonds”) (collectively, the “2013
Series A Bonds and the 2013 Series B Bonds, the “2013 Bonds” or the “Parity Bonds”); and
WHEREAS, the Successor Agency deems it necessary and proper to also issue taxable
tax allocation refunding bonds to refund and defease the Refunded Bonds; and
WHEREAS, for the corporate purposes of the Successor Agency, the Successor Agency
deems it necessary to issue at this time tax allocation refunding bonds in a principal amount of
not to exceed _________ million dollars ($_________) (the “Bonds”), and to irrevocably set
aside a portion of the proceeds of such Bonds in a separate segregated trust fund which will be
used to refund the outstanding Refunded Bonds of the Prior Agency, to pay costs in connection
with the issuance of the Bonds, and to make certain other deposits as required by the Indenture
(defined herein); and
WHEREAS, Assembly Bill AB X1 26, effective June 29, 2011, together with Assembly
Bill 1484 (“AB 1484”) (collectively, the “Dissolution Act”) resulted in the La Quinta
Redevelopment Agency being dissolved as of February 1, 2012; and
WHEREAS, the authority, rights, powers, assets, duties and obligations of the Prior
Agency were transferred on February 1, 2012 to the Successor Agency; and
WHEREAS, AB1484 specifically authorizes the issuance of refunding bonds by the
Successor Agency to refund the bonds or other indebtedness of the Prior Agency to provide
savings to the Successor Agency, provided that (A) the total interest cost to maturity on the
refunding bonds plus the principal amount of the refunding bonds shall not exceed the total
remaining interest cost to maturity on the bonds to be refunded plus the remaining principal of
the bonds to be refunded, and (B) the principal amount of the refunding bonds shall not exceed
the amount required to defease the refunded bonds, to establish customary debt service reserves,
and to pay related costs of issuance; and
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 and interest and redemption premium
(if any) thereon, the Successor Agency wishes to approve the issuance of the Bonds and
authorize the execution and delivery of the Second Supplemental Indenture of Trust; and
WHEREAS, pursuant to Section 34179 of the Law, an oversight board (the “Oversight
Board”) has been established for the Successor Agency and the Successor Agency has requested
that the Oversight Board approve the issuance of the Bonds by the Successor Agency, as
authorized by Section 34177.5(f) of the Law; and
WHEREAS, the Successor Agency hereby certifies that all acts and proceedings required
by law necessary to make the Bonds, when executed by the Successor Agency, and authenticated
and delivered by the Trustee, the valid, binding and legal special obligations of the Successor
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Agency, and to constitute the Indenture a valid and binding agreement for the uses and purposes
herein set forth in accordance with its terms, have been done or taken;
WHEREAS, the Successor Agency now desires pursuant to this Second Supplemental
Indenture, to issue its La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax
Allocation Refunding Bonds, 2016 Taxable Series A (the “Series A Bonds”) for the purpose of
refunding the Refunded Taxable Bonds, to fund a reserve account and pay costs of issuance; and
WHEREAS, in order to provide for the authentication and delivery of the Series A
Bonds, to establish and declare the terms and conditions upon which the Series A Bonds are to
be issued and secured and to secure the payment of the principal thereof and interest and
redemption premium (if any) thereon, the Successor Agency and the Trustee have duly
authorized the execution and delivery of this Second Supplemental Indenture; and
WHEREAS, the Successor Agency hereby certifies that all acts and proceedings required
by law necessary to make the Series A Bonds, when executed by the Successor Agency, and
authenticated and delivered by the Trustee, the valid, binding and legal special obligations of the
Successor Agency, and to constitute the Indenture a valid and binding agreement for the uses and
purposes herein set forth in accordance with its terms, have been done or taken.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Successor Agency, the Authority and the Escrow Bank agree as follows:
SECTION 1. Deposit of Moneys.
(a) The Successor Agency hereby deposits with the Escrow Bank $________
of Bond Proceeds and $__________ from the Refunded Bonds Funds and Accounts to be held in
irrevocable escrow by the Escrow Bank separate and apart from other funds of the Successor
Agency and the Escrow Bank in a fund hereby created and established and to be known as the
“Escrow Fund”, and to be applied solely as provided in this Agreement. Such moneys shall be
invested in State and Local Government Series as provided in Schedule C herein.
(b) The Escrow Bank hereby acknowledges receipt of the written opinion of
______________, a firm of independent public accountants, dated _______, 2016, relating to the
sufficiency of the cash deposited pursuant hereto to defease the Refunded Bonds (the
“Verification Report”), and the opinion of Rutan & Tucker, LLP, dated _________, 2016,
relating to this Agreement.
SECTION 2. Use and Investment of Moneys. The Escrow Bank acknowledges
receipt of the moneys described in Section 1 and agrees:
(a) such moneys in an amount equal to $_________ in SLGS Time Deposits
shall be held for the purpose of defeasing the Refunded Bonds; and
(b) to make the payments required under Section 3(a) hereof at the times set
forth in Section 3(a) hereof.
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SECTION 3. Payment of Refunded Bonds.
(a) Payment. The Escrow Bank shall transfer from the Escrow Fund to the
paying agent for the Refunded Bonds (the “Paying Agent”) amounts sufficient to pay the interest
on the Refunded Bonds due on September 1, 2016 and the redemption of the Refunded Bonds on
September 1, 2016 as shown on Schedule A. Such transfers shall constitute the respective
payments of the principal of and interest on the Refunded Bonds and redemption price due from
the Successor Agency.
(b) Unclaimed Moneys. Any moneys which remain unclaimed for two years
after the date such moneys have become due and payable hereunder shall be repaid by the
Escrow Bank to the Successor Agency and deposited by the Successor Agency in the Debt
Service Fund relating to the Refunded Bonds. Any moneys remaining in the Escrow Fund
established hereunder after September 2, 2016 (aside from unclaimed monies) of the Refunded
Bonds which are in excess of the amount needed to pay owners of the Refunded Bonds payments
of principal and interest and redemption premium, if any, with respect to the Refunded Bonds or
to pay any amounts owed to the Escrow Bank shall be immediately transferred by the Escrow
Bank to the Successor Agency and deposited by the Successor Agency in the Debt Service Fund
relating to the Bonds.
(c) Priority of Payments. The holders of the Refunded Bonds shall have a
first lien on the moneys in the Escrow Fund which are allowable and sufficient to pay the
Refunded Bonds until such moneys are used and applied as provided in this Agreement, as
verified by the Verification Report. Any cash or securities held in the Escrow Fund are
irrevocably pledged only to the holders of the Refunded Bonds.
(d) Termination of Obligation. Upon deposit of the moneys set forth in
Section 1 hereof with the Escrow Bank pursuant to the provisions of Section 1 hereof, all
obligations of the Successor Agency with respect to the Refunded Bonds shall cease and
terminate, except only the obligation to make payments therefor from the moneys provided for
hereunder, and the owners of the Refunded Bonds shall cease to be entitled to the lien, benefit or
security under the Indenture of Trust relating to the Refunded Bonds.
SECTION 4. Performance of Duties. The Escrow Bank agrees to perform the duties
set forth herein.
SECTION 5. Reinvestment. Upon written direction of the Successor Agency, the
Escrow Bank may reinvest any uninvested amounts held as cash under this Agreement in
noncallable nonprepayable obligations which are direct obligations issued by the United States
Treasury or obligations which are unconditionally guaranteed as to full and timely payment by
the United States of America provided (i) the amounts of and dates on which the anticipated
transfers from the Escrow Fund to the Paying Agent for the payment of the principal of,
redemption price of, and interest on the Refunded Bonds will not be diminished or postponed
thereby, (ii) the Escrow Bank shall receive the unqualified opinion of nationally recognized
municipal bond counsel to the effect that such reinvestment will not adversely affect the
exclusion from gross income for federal income tax purposes of interest on the Bonds or the
Refunded Bonds, (iii) the Escrow Bank shall receive from a firm of independent certified public
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accountants a certification that, immediately after such reinvestment, the principal of and interest
on obligations in the Escrow Fund will, together with other cash on deposit in the Escrow Fund
available for such purposes, be sufficient without reinvestment to pay, when due, the principal or
redemption price of and interest on the Refunded Bonds; and (iv) the Escrow Bank shall receive
an opinion of nationally recognized bond counsel that such reinvestment is permissible under
this Agreement.
SECTION 6. Indemnity. The Successor Agency hereby assumes liability for, and
hereby agrees (whether or not any of the transactions contemplated hereby are consummated) to
indemnify, protect, save and keep harmless the Escrow Bank and its respective successors,
assigns, agents, employees and servants, from and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including
reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed
on, incurred by, or asserted against, the Escrow Bank at any time (whether or not also
indemnified against the same by the Successor Agency or any other person under any other
agreement or instrument, but without double indemnity) in any way relating to or arising out of
the execution, delivery and performance of its Agreement, the establishment hereunder of the
Escrow Fund, the acceptance of the funds and securities deposited therein, and any payment,
transfer or other application of moneys or securities by the Escrow Bank in accordance with the
provisions of this Agreement; provided, however, that the Successor Agency shall not be
required to indemnify the Escrow Bank against the Escrow Bank’s own negligence or willful
misconduct or the negligent or willful misconduct of the Escrow Bank’s respective successors,
assigns, agents and employees or the breach by the Escrow Bank of the terms of this Agreement.
In no event shall the Successor Agency or the Escrow Bank be liable to any person by reason of
the transactions contemplated hereby other than to each other as set forth in this section. The
indemnities contained in this section shall survive the termination of this Agreement.
SECTION 7. Responsibilities of the Escrow Bank. The Escrow Bank and its
respective successors, assigns, agents and servants shall not be held to any personal liability
whatsoever, in tort, contract or otherwise, in connection with the execution and delivery of this
Agreement, the establishment of the Escrow Fund, the acceptance of the moneys or securities
deposited therein, to accomplish the refunding and defeasance of the Refunded Bonds or any
payment, transfer or other application of moneys or obligations by the Escrow Bank in
accordance with the provisions of this Agreement or by reason of any non-negligent act, non-
negligent omission or non-negligent error of the Escrow Bank made in good faith in the conduct
of its duties. The recitals of fact contained in the “whereas” clauses herein shall be taken as the
statements of the Successor Agency and the Escrow Bank assumes no responsibility for the
correctness thereof. The Escrow Bank makes no representation as to the sufficiency of the
monies deposited to accomplish the refunding and defeasance of the Refunded Bonds or to the
validity of this Agreement as to the Successor Agency and, except as otherwise provided herein,
the Escrow Bank shall incur no liability with respect thereto. The Escrow Bank shall not be
liable in connection with the performance of its duties under this Agreement except for its own
negligence, willful misconduct or default, and the duties and obligations of the Escrow Bank
shall be determined by the express provisions of this Agreement. The Escrow Bank may consult
with counsel, who may or may not be counsel to the Successor Agency, and in reliance upon the
written opinion of such counsel shall have full and complete authorization and protection with
respect to any action taken, suffered or omitted by it in good faith in accordance therewith.
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Whenever the Escrow Bank shall deem it necessary or desirable that a matter be proved or
established prior to taking, suffering, or omitting any action under this Agreement, such matter
may be deemed to be conclusively established by a certificate signed by an authorized officer of
the Successor Agency. The Successor Agency acknowledges that to the extent regulations of the
Comptroller of the Currency or other applicable regulatory entity grant the Successor Agency the
right to receive brokerage confirmations of security transactions as they occur, the Successor
Agency specifically waives receipt of such confirmations to the extent permitted by law. The
Escrow Bank will furnish the Successor Agency periodic cash transaction statements which
include detail for all investment transactions made by the Escrow Bank hereunder.
SECTION 8. [Reserved].
SECTION 9. Irrevocable Instructions as to Notice. The Escrow Bank hereby
acknowledges that upon the funding of the Escrow Fund as provided in this Agreement, the
receipt of the opinions described in Section 1(b) of this Agreement and the giving of irrevocable
instructions to provide notice as provided in the Irrevocable Instructions and Request to Escrow
Bank attached hereto as Schedule B (constituting all of the conditions precedent to the
defeasance of the Refunded Bonds), the Refunded Bonds shall be paid in accordance with the
terms of the Indenture and all obligations of the Successor Agency with respect to the Refunded
Bonds shall cease and terminate.
SECTION 10. Amendments. This Agreement is made for the benefit of the Successor
Agency and the holders from time to time of the Refunded Bonds and it shall not be repealed,
revoked, altered or amended without the written consent of all such holders, the Escrow Bank
and the Successor Agency; provided, however, but only after the receipt by the Escrow Bank of
an opinion of nationally recognized bond counsel that the exclusion from gross income of
interest on the Bonds and the Refunded Bonds will not be adversely affected for federal income
tax purposes, that the Successor Agency and the Escrow Bank may, without the consent of, or
notice to, such holders, amend this Agreement or enter into such agreements supplemental to this
Agreement as shall not adversely affect the rights of such holders and as shall not be inconsistent
with the terms and provisions of this Agreement for any one or more of the following purposes:
(i) to cure any ambiguity or formal defect or omission in this Agreement; (ii) to grant to, or
confer upon, the Escrow Bank for the benefit of the holders of the Refunded Bonds any
additional rights, remedies, powers or authority that may lawfully be granted to, or conferred
upon, such holders or the Escrow Bank; and (iii) to include under this Agreement additional
funds, securities or properties. The Escrow Bank shall be entitled to rely conclusively upon an
unqualified opinion of nationally recognized municipal bond attorneys with respect to
compliance with this Section 10, including the extent, if any, to which any change, modification,
addition or elimination affects the rights of the holders of the Refunded Bonds or that any
instrument executed hereunder complies with the conditions and provisions of this Section 10.
In the event of any conflict with respect to the provisions of this Agreement, this Agreement
shall prevail and be binding.
SECTION 11. Term. This Agreement shall commence upon its execution and
delivery and shall terminate on the later to occur of either (i) the date upon which the Refunded
Bonds have been paid in accordance with this Agreement or (ii) the date upon which no
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unclaimed moneys remain on deposit with the Escrow Bank pursuant to Section 3(b) of this
Agreement.
SECTION 12. Compensation. The Escrow Bank shall receive its reasonable fees and
expenses as previously agreed to; provided, however, that under no circumstances shall the
Escrow Bank be entitled to any lien nor will it assert a lien whatsoever on any moneys or
obligations in the Escrow Fund for the payment of fees and expenses for services rendered by the
Escrow Bank under this Agreement.
SECTION 13. Severability. If any one or more of the covenants or agreements
provided in this Agreement on the part of the Successor Agency or the Escrow Bank to be
performed should be determined by a court of competent jurisdiction to be contrary to law, such
covenants or agreements shall be null and void and shall be deemed separate from the remaining
covenants and agreements herein contained and shall in no way affect the validity of the
remaining provisions of this Agreement.
SECTION 14. Counterparts. This Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as one original and shall
constitute and be but one and the same instrument.
SECTION 15. Governing Law. This Agreement shall be construed under the internal
laws of the State of California.
SECTION 16. Holidays. If the date for making any payment or the last date for
performance of any act or the exercising of any right, as provided in this Agreement, shall be a
legal holiday or a day on which banking institutions in the city in which is located the principal
office of the Escrow Bank are authorized by law to remain closed, such payment may be made or
act performed or right exercised on the next succeeding day not a legal holiday or a day on which
such banking institutions are authorized by law to remain closed, with the same force and effect
as if done on the nominal date provided in this Agreement, and no interest shall accrue for the
period from and after such nominal date.
SECTION 17. Assignment. This Agreement shall not be assigned by the Escrow
Bank or any successor thereto without the prior written consent of the Successor Agency.
SECTION 18. Standard & Poor’s. The Successor Agency agrees to provide Standard
& Poor’s, a Division of the McGraw-Hill Companies, 55 Water Street, 45th Floor, New York,
New York 10041, prior notice of each amendment entered into pursuant to Section 10 hereof and
a copy of such proposed amendment, and to forward a copy (as soon as possible) of (i) each
amendment hereto entered into pursuant to Section 10 hereof, and (ii) any action relating to
severability or contemplated by Section 13 hereof.
SECTION 19. Reorganization of Escrow Bank. Notwithstanding anything to the
contrary contained in this Agreement, any company into which the Escrow Bank may be merged
or converted or with which it may be consolidated or any company resulting from any merger,
conversion or consolidation to which the Escrow Bank is a party, or any company to which the
Escrow Bank may sell or transfer all or substantially all of its corporate trust business shall be
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the successor to the Escrow Bank without execution or filing of any paper or any paper or further
act, if such company is eligible to serve as Escrow Bank.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers this 1st day of June, 2016.
SUCCESSOR AGENCY TO THE LA
QUINTA REDEVELOPMENT AGENCY
By:
Executive Director
ATTEST:
Secretary
U.S. BANK NATIONAL ASSOCIATION, as
Escrow Bank
By:
Authorized Officer
LA QUINTA FINANCING AUTHORITY
By:
Executive Director
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SCHEDULE A
Redemption of Refunded Bonds
Redemption Date Principal Redeemed Interest Total
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SCHEDULE B
IRREVOCABLE INSTRUCTIONS AND REQUEST
TO REFUNDED BONDS TRUSTEE AND ESCROW BANK
WRITTEN REQUEST OF THE LA QUINTA FINANCING AUTHORITY
TO U.S. BANK NATIONAL ASSOCIATION,
REGARDING REDEMPTION NOTICE
1. Successor Agency Certifications
In connection with the submission of this written request to U.S. Bank National
Association (the “Trustee”), pursuant to the Second Supplemental Indenture of Trust dated as of
June 1, 2016 (the “Refunded Bonds Indenture”), by and between the La Quinta Financing
Authority (the “Authority”) and U.S. Bank National Association, the undersigned, a duly
appointed officer of the Authority, hereby certifies that I have reviewed the Refunded Bonds
Indenture and the sections thereof relating to the refunding and redemption of the Refunded
Bonds and I have made an examination of the provisions of the Refunded Bonds Indenture and
of related facts as is necessary in my opinion in connection with the submission of this written
request.
2. Written Request
On behalf of the Authority, I hereby inform you that the Authority has irrevocably
elected and directed the Refunded Bonds Trustee to redeem on September 1, 2016 the Refunded
Bonds, under the terms and conditions set forth in the Refunded Bonds Indenture, and that, upon
deposit of the obligations and moneys required to be deposited by the Authority with U.S. Bank
National Association (the “Escrow Bank”) pursuant to that certain Escrow Agreement dated as
of June 1, 2016, among the Successor Agency to the La Quinta Redevelopment Agency (the
“Successor Agency”), the Authority and the Escrow Bank and satisfaction of the requirements of
the Refunded Bonds Indenture which is occurring on the date hereof, the pledge of the Pledged
Tax Revenues and all other obligations of the Authority to the owners of the Refunded Bonds
shall cease and terminate as provided in the Refunded Bonds Indenture. I further irrevocably
instruct the Refunded Bonds Trustee, to do as follows with respect to the Refunded Bonds:
(a) To send, postage prepaid, via first class United States mail, not less than
30 nor more than 45 days prior to September 1, 2016, with respect to the Refunded Bonds, a
notice of redemption to the owners of the Refunded Bonds.
(b) To send, via registered or certified mail or overnight delivery service, not
less than 30 nor more than 45 days prior to September 1, 2016, with respect to the Refunded
Bonds, a notice of redemption of the applicable issue of Refunded Bonds, to The Depository
Trust Company, 55 Water Street, New York, New York 10041, in the form and as required by
the Refunded Bonds Indenture.
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LA QUINTA FINANCING AUTHORITY
By:
Executive Director
Receipt acknowledged and consented to: U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
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ATTACHMENT 5
SECOND SUPPLEMENTAL INDENTURE OF TRUST
Dated as of June 1, 2016
by and between the
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
and
U.S. BANK NATIONAL ASSOCIATION
as Trustee
Relating to
$____________
Successor Agency to the
La Quinta Redevelopment Agency
La Quinta Redevelopment Project Areas No. 1 and 2
Subordinate Tax Allocation Refunding Bonds, 2016 Taxable Series A
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TABLE OF CONTENTS
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ARTICLE XI DETERMINATIONS; DEFINITIONS .......................................................... 3
Section 11.1 Findings and Determinations ................................................................. 3
Section 11.2 Definitions.............................................................................................. 3
Section 11.3 Rules of Construction ............................................................................ 4
ARTICLE XII AUTHORIZATION AND TERMS OF SERIES A BONDS ......................... 4
Section 12.1 Authorization of Series A Bonds ........................................................... 4
Section 12.2 Term of Series A Bonds ......................................................................... 5
Section 12.3 Redemption of Bonds ............................................................................ 6
Section 12.4 Form of Series A Bonds ......................................................................... 7
Section 12.5 Execution of Series A Bonds ................................................................. 7
ARTICLE XIII DEPOSIT AND APPLICATION OF PROCEEDS OF SERIES A
BONDS; PARITY DEBT ............................................................................... 8
Section 13.1 Issuance of Series A Bonds.................................................................... 8
Section 13.2 Application of Proceeds of Series A Bonds ........................................... 8
ARTICLE XIV SUPPLEMENTAL NATURE OF SECOND SUPPLEMENTAL
INDENTURE .................................................................................................. 8
Section 14.1 Modification of Indenture ...................................................................... 9
EXHIBIT A BOND FORM .................................................................................................. A-1
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SECOND SUPPLEMENTAL INDENTURE OF TRUST
THIS SECOND SUPPLEMENTAL INDENTURE OF TRUST (this “Second
Supplemental Indenture”) is dated as of June 1, 2016, by and between the SUCCESSOR
AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and
politic, duly organized and existing under the laws of the State of California (the “Successor
Agency”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America, as trustee (the “Trustee”);
WITNESSETH:
WHEREAS, the La Quinta Redevelopment Agency (the “Prior Agency”) was a public
body, corporate and politic, duly created, established and authorized to transact business and
exercise its powers under and pursuant to the provisions of the Community Redevelopment Law
(Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the
State of California) (the “Law”), and the powers of the La Quinta Redevelopment Agency
included the power to issue Bonds for any of its corporate purposes; and
WHEREAS, a Redevelopment Plan for a redevelopment project known and designated as
the “La Quinta Redevelopment Project Area No. 1” has been adopted and approved by
Ordinance No. 43 of the City of La Quinta on November 29, 1983, and all requirements of the
Law for and precedent to the adoption and approval of the Project Area No. 1 Redevelopment
Plan, as amended, have been duly complied with; and
WHEREAS, a Redevelopment Plan for a redevelopment project known and designated as
the “La Quinta Redevelopment Project No. Area 2” has been adopted and approved by
Ordinance No. 139 of the City of La Quinta on May 16, 1989, and all requirements of the Law
for and precedent to the adoption and approval of the Project Area No. 2 Redevelopment Plan, as
amended, have been duly complied with; and
WHEREAS, the Prior Agency has previously issued $6,000,000 La Quinta
Redevelopment Agency, La Quinta Redevelopment Project Area No. 2 Subordinate Taxable Tax
Allocation Bonds, Series 2011 (the “2011 Project Area No. 2 Taxable Bonds”); and
WHEREAS, the Authority on behalf of the Prior Agency has previously issued
$28,850,000 La Quinta Financing Authority, Local Agency Subordinate Taxable Revenue
Bonds, 2011 Series A (the “2011 Taxable Housing Bonds”) and loaned the proceeds to the Prior
Agency pursuant to the terms of a loan agreement dated February 3, 2004 and a Second
Supplemental Indenture, dated as of March 1, 2011 (the “2011 Loan Obligation”); and
WHEREAS, the Successor Agency has determined that it is cost effective and efficient to
refund and defease, in their entirety, the 2011 Project Area No. 2 Taxable Bonds and the 2011
Taxable Housing Bonds, (collectively, the “Refunded Bonds”) on a subordinate basis to the
$65,600,000 Successor Agency to the Las Quinta Redevelopment Agency, La Quinta
Redevelopment Project Areas Nos. 1 and 2, Tax Allocation Refunding Bonds, 2014 Series A
(the “2014 Bonds “Bonds” or the “Senior Bonds”) and on a parity basis with the $97,190,000
Successor Agency to the La Quinta Redevelopment Agency La Quinta Redevelopment Project
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Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2013 Series A (the “2013
Series A Bonds”) and the $23,055,000 Successor Agency to the La Quinta Redevelopment
Agency, La Quinta Redevelopment Project Areas Nos. 1 and 2, Subordinate Tax Allocation
Refunding Bonds, 2013 Taxable Series B (the “2013 Series B Bonds”) (collectively, the “2013
Series A Bonds and the 2013 Series B Bonds, the “2013 Bonds” or the “Parity Bonds”); and
WHEREAS, the Successor Agency deems it necessary and proper to also issue taxable
tax allocation refunding bonds to refund and defease the Refunded Bonds; and
WHEREAS, for the corporate purposes of the Successor Agency, the Successor Agency
deems it necessary to issue at this time tax allocation refunding bonds in a principal amount of
not to exceed _________ million dollars ($_________) (the “Bonds”), and to irrevocably set
aside a portion of the proceeds of such Bonds in a separate segregated trust fund which will be
used to refund the outstanding Refunded Bonds of the Prior Agency, to pay costs in connection
with the issuance of the Bonds, and to make certain other deposits as required by the Indenture
(defined herein); and
WHEREAS, Assembly Bill AB X1 26, effective June 29, 2011, together with Assembly
Bill 1484 (“AB 1484”) (collectively, the “Dissolution Act”) resulted in the La Quinta
Redevelopment Agency being dissolved as of February 1, 2012; and
WHEREAS, the authority, rights, powers, assets, duties and obligations of the Prior
Agency were transferred on February 1, 2012 to the Successor Agency; and
WHEREAS, AB1484 specifically authorizes the issuance of refunding bonds by the
Successor Agency to refund the bonds or other indebtedness of the Prior Agency to provide
savings to the Successor Agency, provided that (A) the total interest cost to maturity on the
refunding bonds plus the principal amount of the refunding bonds shall not exceed the total
remaining interest cost to maturity on the bonds to be refunded plus the remaining principal of
the bonds to be refunded, and (B) the principal amount of the refunding bonds shall not exceed
the amount required to defease the refunded bonds, to establish customary debt service reserves,
and to pay related costs of issuance; and
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 and interest and redemption premium
(if any) thereon, the Successor Agency wishes to approve the issuance of the Bonds and
authorize the execution and delivery of the Second Supplemental Indenture of Trust; and
WHEREAS, pursuant to Section 34179 of the Law, an oversight board (the “Oversight
Board”) has been established for the Successor Agency and the Successor Agency has requested
that the Oversight Board approve the issuance of the Bonds by the Successor Agency, as
authorized by Section 34177.5(f) of the Law; and
WHEREAS, the Successor Agency hereby certifies that all acts and proceedings required
by law necessary to make the Bonds, when executed by the Successor Agency, and authenticated
and delivered by the Trustee, the valid, binding and legal special obligations of the Successor
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Agency, and to constitute the Indenture a valid and binding agreement for the uses and purposes
herein set forth in accordance with its terms, have been done or taken;
WHEREAS, the Successor Agency now desires pursuant to this Second Supplemental
Indenture, to issue its La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax
Allocation Refunding Bonds, 2016 Taxable Series A (the “Series A Bonds”) for the purpose of
refunding the Refunded Taxable Bonds, to fund a reserve account and pay costs of issuance; and
WHEREAS, in order to provide for the authentication and delivery of the Series A
Bonds, to establish and declare the terms and conditions upon which the Series A Bonds are to
be issued and secured and to secure the payment of the principal thereof and interest and
redemption premium (if any) thereon, the Successor Agency and the Trustee have duly
authorized the execution and delivery of this Second Supplemental Indenture; and
WHEREAS, the Successor Agency hereby certifies that all acts and proceedings required
by law necessary to make the Series A Bonds, when executed by the Successor Agency, and
authenticated and delivered by the Trustee, the valid, binding and legal special obligations of the
Successor Agency, and to constitute the Indenture a valid and binding agreement for the uses and
purposes herein set forth in accordance with its terms, have been done or taken.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE
WITNESSETH, that in order to secure the payment of the principal of and the interest and
redemption premium (if any) on all the Series A Bonds issued and Outstanding under the
Indenture, according to their tenor, and to secure the performance and observance of all the
covenants and conditions therein and herein set forth, and to declare the terms and conditions
upon and subject to which the Series A Bonds are to be issued and received, and in consideration
of the premises and of the mutual covenants herein contained and of the purchase and acceptance
of the Series A Bonds by the Owners thereof, and for other valuable considerations, the receipt
of which is hereby acknowledged, the Successor Agency and the Trustee do hereby covenant and
agree with one another, for the benefit of the respective Owners from time to time of the Series
A Bonds, as follows:
ARTICLE XVI
DETERMINATIONS; DEFINITIONS
Section 16.1 Findings and Determinations. The Successor Agency has reviewed all
proceedings heretofore taken and has found, as a result of such review, and hereby finds and
determines that all things, conditions and acts required by law to exist, happen or be performed
precedent to and in connection with the issuance of the Series A Bonds do exist, have happened
and have been performed in due time, form and manner as required by law, and the Successor
Agency is now duly empowered, pursuant to each and every requirement of law, to issue the
Series A Bonds in the manner and form provided in this Second Supplemental Indenture.
Section 16.2 Definitions. The terms of this Second Supplemental Indenture, of any
further Supplemental Indenture, and of any certificate, opinion or other document herein
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mentioned, shall have the meanings set forth in that Indenture of Trust, dated as of December 1,
2013, by and between the Successor Agency and the Trustee (the “Indenture”).
Section 16.3 Rules of Construction. All references herein to “Articles,” “Sections” and
other subdivisions are to the corresponding Articles, Sections or subdivisions of this Second
Supplemental Indenture, and the words “herein”, “hereof,” “hereunder” and other words of
similar import refer to this Second Supplemental Indenture as a whole and not to any particular
Article, Section or subdivision hereof.
ARTICLE XVII
AUTHORIZATION AND TERMS OF SERIES A BONDS
Section 17.1 Authorization of Series A Bonds. Series A Bonds in the aggregate
principal amount of ___________ Million Dollars ($___________) are hereby authorized to be
issued by the Successor Agency under and subject to the terms of this Second Supplemental
Indenture and the Act. The Indenture, as modified by the First Supplemental Indenture and the
Second Supplemental Indenture constitutes a continuing agreement with the Trustee for the
benefit of the Owners of all of the Series A Bonds issued or to be issued hereunder and then
Outstanding to secure the full and final payment of principal and redemption premiums (if any)
and the interest on all Series A Bonds which may from time to time be executed and delivered
hereunder, subject to the covenants, agreements, provisions and conditions herein contained.
The Series A Bonds shall be designated the “Successor Agency to the La Quinta Redevelopment
Agency, La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax Allocation
Refunding Bonds, 2016 Taxable Series A.”
(a) The Series A Bonds shall be and are special obligations of the Successor
Agency and are secured by an irrevocable pledge of, and are payable as to principal,
interest and premium, if any, subordinate to the 2014 Bonds and on parity with the 2-13
Bonds. The Series A Bonds, interest and premium, if any, thereon are not a debt of the
City, the State or any of its political subdivisions (except the Successor Agency), and
none of the City, the State nor any of its political subdivisions (except the Successor
Agency) is liable on them. In no event shall the Series A Bonds, interest thereon and
premium, if any, be payable out of any funds or properties other than those of the
Successor Agency as set forth in this Second Supplemental Indenture. The Series A
Bonds do not constitute an indebtedness within the meaning of any constitutional or
statutory debt limitation or restriction. Neither the members of the Successor Agency nor
any persons executing the Series A Bonds are liable personally on the Series A Bonds by
reason of their issuance.
The Series A Bonds shall be and are equally secured together with any Parity Bonds, by
an irrevocable pledge of the Pledged Tax Revenues and other funds as hereinafter provided,
without priority for number, maturity, date of sale, date of execution or date of delivery, except
as expressly provided herein.
Nothing in this Second Supplemental Indenture shall preclude: (a) the payment of the
Series A Bonds from the proceeds of refunding bonds issued pursuant to the Law, or (b) the
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payment of the Series A Bonds from any legally available funds. Nothing in this Second
Supplemental Indenture shall prevent the Successor Agency from making advances of its own
funds, however derived, to any of the uses and purposes mentioned in this Second Supplemental
Indenture.
The Successor Agency shall have the right to defease the Series A Bonds and be
discharged from the lien of this Second Supplemental Indenture in accordance with the provision
of Section 9.3 hereof. If the Successor Agency shall cause to be paid, or shall have made
provision to pay upon maturity or upon redemption prior to maturity, to the Bondowners the
principal of, premium, if any, and interest to become due on the Series A Bonds, through setting
aside trust funds or setting apart in a reserve fund or special trust account created pursuant to this
Second Supplemental Indenture or otherwise, or through the irrevocable segregation for that
purpose in some sinking fund or other fund or trust account with a fiscal agent or otherwise,
moneys sufficient therefor, including, but not limited to, interest earned or to be earned on the
investment of such funds, then the lien of this Second Supplemental Indenture, including,
without limitation, the pledge of the Pledged Tax Revenues, and all other rights granted hereby,
shall cease, terminate and become void and be discharged and satisfied, and the principal of,
premium, if any, and interest on the Series A Bonds shall no longer be deemed to be outstanding
and unpaid; provided, however, that nothing in this Second Supplemental Indenture shall require
the deposit of more than such amount as may be sufficient, taking into account both the principal
amount of such funds and the interest to become due on the investment thereof, to implement
any refunding of the Series A Bonds.
Section 17.2 Term of Series A Bonds. The Series A Bonds shall be issued in fully
registered form without coupons in denominations of $5,000 or any integral multiple thereof and
the Series A Bonds shall mature on September 1, in the years and in the amounts and shall bear
interest at the rate per annum as follows:
Maturity Date Principal Amount Interest Rate
Interest on the Series A Bonds shall be payable on each Interest Payment Date to the
person whose name appears on the Registration Books as the Owner thereof as of the Regular
Record Date immediately preceding each such Interest Payment Date, such interest to be paid by
check or draft of the Trustee mailed on the Interest Payment Date by first class mail to such
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Owner at the address of such Owner as it appears on the Registration Books; provided, however,
that upon the written request of any Owner of at least $1,000,000 in principal amount of Series A
Bonds received by the Trustee at least fifteen (15) days prior to such Regular Record Date,
payment shall be made by wire transfer in immediately available funds to an account in the
United States designated by such Owner. Principal of and redemption premium (if any) on any
Bond shall be paid upon presentation and surrender thereof, at maturity or redemption, at the
Trust Office of the Trustee. Both the principal of and interest and premium (if any) on the Series
A Bonds shall be payable in lawful money of the United States of America Interest shall be
calculated based upon a 360-day year of twelve thirty-day months.
Each Series A Bond shall be initially dated as of the Delivery Date and shall bear interest
from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is
authenticated after a Regular Record Date and on or before the following Interest Payment Date,
in which event it shall bear interest from such Interest Payment Date; or (b) a Series A Bond is
authenticated on or before ____________, in which event it shall bear interest from the Delivery
Date; provided, however, that if, as of the date of authentication of any Series A Bond, interest
thereon is in default, such Bond shall bear interest from the Interest Payment Date to which
interest has previously been paid or made available for payment thereon.
Section 17.3 Redemption of Series A Bonds.
(a) Optional Redemption. The Series A Bonds may be called before maturity
and redeemed at the option of the Successor Agency, in whole or in part, from the
proceeds of refunding bonds or other available funds, on September 1, 20__ or on any
date thereafter prior to maturity. Bonds called for redemption will be redeemed at the
following redemption price (expressed as a percentage of the principal amount of Series
A Bonds to be redeemed) plus accrued interest to the redemption date:
Redemption Date Redemption Price
September 1,20__ and thereafter 100%
(b) Mandatory Sinking Account Redemption. The Series A Bonds maturing
on September 1, 20__, September 1, 20__ and September 1, 20__ will be subject to
mandatory redemption in part, by lot, on September 1, 20__, September 1, 20__ and
September 1, 20__ and on each September 1 until maturity, at a redemption price equal to
the principal amount thereof together with accrued interest thereon to the redemption
date, without premium, from minimum sinking fund payments on hand in the Debt
Service Fund in the years and amounts as follows:
Term Bonds Maturing September 1, 20__
Maturity Date Principal Amount
Term Bonds Maturing September 1, 20__
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Maturity Date Principal Amount
Term Bonds Maturing September 1, 20__
Maturity Date Principal Amount
(c) Purchase In Lieu of Redemption. In lieu of optional or sinking account
redemption of Series A Bonds, amounts on deposit in the Redevelopment Obligation
Retirement Fund (to the extent not required to be transferred to the Trustee during the
current Bond Year) may also be used and withdrawn by the Successor Agency at any
time for the purchase of the Series A Bonds at public or private sale as and when and at
such prices (including brokerage and other charges and including accrued interest) as the
Successor Agency may in its discretion determine. The par amount of any of the Series
A Bonds so purchased by the Successor Agency and surrendered to the Trustee for
cancellation in any twelve-month period ending on August 15, in any year will be
credited towards and will reduce the principal amount of the Series A Bonds otherwise
required to be redeemed on the following September 1 pursuant to this Second
Supplemental Indenture. The prior written approval of the Insurer if any Bond so
purchased is not cancelled upon purchase.
Section 17.4 Form of Series A Bonds. The Series A Bonds, the form of Trustee’s
certificate of authentication, and the form of assignment to appear thereon, shall be substantially
in the form set forth in Exhibit C attached hereto and by this reference incorporated herein, with
necessary or appropriate variations, omissions and insertions, as permitted or required by this
Second Supplemental Indenture.
Section 17.5 Execution of Series A Bonds. The Series A Bonds shall be executed on
behalf of the Successor Agency by the signature of its Executive Director and the signature of its
Secretary who are in office on the date of execution and delivery of this Second Supplemental
Indenture or at any time thereafter. Either or both of such signatures may be made manually or
may be affixed by facsimile thereof. If any officer whose signature appears on any Bond ceases
to be such officer before delivery of the Series A Bonds to the purchaser, such signature shall
nevertheless be as effective as if the officer had remained in office until the delivery of the Series
A Bonds to the purchaser. Any Series A Bond may be signed and attested on behalf of the
Successor Agency by such persons as at the actual date of the execution of such Series A Bond
shall be the proper officers of the Successor Agency although on the date of such Series A Bond
any such person shall not have been such officer of the Successor Agency.
Only such of the Series A Bonds as shall bear thereon a certificate of
authentication in the form set forth in Exhibit B hereto, manually executed and dated by and in
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the name of the Trustee by the Trustee, shall be valid or obligatory for any purpose or entitled to
the benefits of this Second Supplemental Indenture, and such certificate of the Trustee shall be
conclusive evidence that such Series A Bonds have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Second Supplemental Indenture. In the event
temporary Series A Bonds are issued pursuant to the Indenture, the temporary Series A Bonds
shall bear thereon a certificate of authentication manually executed and dated by the Trustee,
shall be initially registered by the Trustee, and, until so exchanged as provided under Section 2.9
of the Indenture, the temporary Series A Bonds shall be entitled to the same benefits pursuant to
this Second Supplemental Indenture as definitive Series A Bonds authenticated and delivered
hereunder.
ARTICLE XVIII
DEPOSIT AND APPLICATION OF PROCEEDS
OF SERIES A BONDS; PARITY DEBT
Section 18.1 Issuance of Series A Bonds. Upon the execution and delivery of this
Second Supplemental Indenture and receipt by the Successor Agency of evidence satisfactory to
it of satisfaction of the conditions precedent to issuance of the Series A Bonds, the Successor
Agency shall execute and deliver Series A Bonds in the aggregate principal amount of
_____________ Million Dollars ($_______) to the Trustee and the Trustee shall authenticate and
deliver the Series A Bonds upon the Written Request of the Successor Agency.
Section 18.2 Application of Proceeds of Series A Bonds. (a) On the Delivery Date the
proceeds of sale of the Series A Bonds shall be paid to the Trustee and said amount together with
moneys transferred from the Funds and Accounts held in connection with the Refunded Tax
Exempt Bonds shall be applied as follows:
(i) The Trustee shall transfer the amount of $__________ to the
Escrow Bank for deposit in the Escrow Fund pursuant to each of the Escrow
Agreements relating to each of the issues of Refunded Taxable Bonds;
(ii) The Trustee shall deposit the amount of $________ from Bond
proceeds into the Costs of Issuance Fund.
The Trustee may establish a temporary fund or account in its records to facilitate and
record such deposits and transfers.
Moneys deposited in the Escrow Bank and Escrow Funds pursuant to Section 18.2(a)
hereof shall be held by the Escrow Bank, and used to pay the principal of and interest on the
Refunded Taxable Bonds in accordance with the provisions of the Escrow Agreements.
ARTICLE XIX
SUPPLEMENTAL NATURE OF SECOND SUPPLEMENTAL INDENTURE
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Section 19.1 Modification of Indenture.
This Second Supplemental Indenture modifies and amends the Indenture as it relates to
the Series A Bonds. All provisions of the Indenture not expressly modified or amended by the
Second Supplemental Indenture, including, without limitation, those provisions relating to the
Insurance Policy and the Reserve Policy, shall apply to Series A Bonds.
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IN WITNESS WHEREOF, the SUCCESSOR AGENCY TO THE LA QUINTA
REDEVELOPMENT AGENCY, has caused this Second Supplemental Indenture of Trust to be
signed in its name by its Chair and attested by its Secretary, and U.S. BANK NATIONAL
ASSOCIATION, in token of its acceptance of the trusts created hereunder, has caused this
Second Supplemental Indenture to be signed in its corporate name by its officer hereunto duly
authorized, all as of the day and year first above written.
SUCCESSOR AGENCY TO THE LA
QUINTA REDEVELOPMENT AGENCY
By:
Its: Chair
ATTEST:
By:
Secretary
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Its: Authorized Officer
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EXHIBIT C
(FORM OF BOND)
No. R-__ $__________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
(COUNTY OF RIVERSIDE)
SUCCESSOR AGENCY TO THE
LA QUINTA REDEVELOPMENT AGENCY
LA QUINTA REDEVELOPMENT PROJECT AREAS NO. 1 AND 2
SUBORDINATE TAX ALLOCATION REFUNDING BONDS 2016 TAXABLE SERIES A
INTEREST RATE MATURITY DATE DATED DATE CUSIP
____% September 1, 20__ ________, 2016 _________
REGISTERED OWNER: CEDE & CO.
PRINCIPAL SUM: DOLLARS
The SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY, a
public body, corporate and politic, duly organized and existing under and by virtue of the laws of
the State of California (the “Successor Agency”), for value received hereby promises to pay to
the Registered Owner stated above, or registered assigns, on the Maturity Date stated above
(subject to any right of prior redemption hereinafter provided for), the Principal Sum stated
above, in lawful money of the United States of America, and to pay interest thereon in like
lawful money from the interest payment date next preceding the date of authentication of this
Bond, unless (i) this Bond is authenticated on an interest payment date, in which event it shall
bear interest from such date of authentication, or (ii) this Bond is authenticated prior to an
interest payment date and after the close of business on the fifteenth calendar day of the month
preceding such interest payment date (a “Record Date”), in which event it shall bear interest
from such interest payment date, or (iii) this Bond is authenticated on or before _________,
2016, in which event it shall bear interest from the Dated Date stated 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 has previously been paid or
made available for payment on this Bond, until payment of such Principal Sum in full, at the rate
per annum stated above, payable semiannually on March 1 and September 1 in each year (each
an “interest payment date”), commencing September 1, 20__, calculated on the basis of a 360-
day year composed of twelve 30-day months. Principal hereof and premium, if any, upon early
redemption hereof are payable upon presentation and surrender of this Bond at the corporate trust
office of U.S. Bank National Association, as trustee (the “Trustee”). Interest hereon (including
the final interest payment upon maturity or earlier redemption) is payable by check of the
Trustee mailed on the interest payment date by first class mail to the Registered Owner hereof at
the Registered Owner’s address as it appears on the registration books maintained by the Trustee
at the close of business on the Record Date next preceding such interest payment date; provided,
however, that upon the written request of any Registered Owner of at least $1,000,000 in
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principal amount of Bonds received by the Trustee at least fifteen (15) days prior to such Record
Date, payment shall be made by wire transfer in immediately available funds to an account in the
United States designated by such Owner.
This Bond is one of a duly authorized issue of Bonds of the Successor Agency designated
as “Successor Agency to the La Quinta Redevelopment Agency La Quinta Redevelopment
Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2016 Taxable Series
A” (the “Bonds”), in an aggregate principal amount of ____________Dollars ($__________), all
of like tenor and date (except for such variation, if any, as may be required to designate varying
series, numbers, maturities, interest rates or redemption and other provisions) and all issued
pursuant to the provisions of the Refunding Bond Act, being Article II (commencing with
Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the
State of California (the “Act”), and pursuant to a resolution of the Successor Agency adopted
__________, 2016, and a resolution adopted by the Oversight Board on __________, 2016, and
an Indenture of Trust, dated as of December 1, 2013, entered into by and between the Successor
Agency and the Trustee (the “Indenture”), as amended by the First Supplemental Indenture of
Trust dated as of December 1, 2013 and the Second Supplemental Indenture of Trust, dated as of
June 1, 2016, both by and between the same parties, authorizing the issuance of the Series A
Bonds. Additional bonds, notes or other obligations may be issued on a parity with the Series A
Bonds, but only subject to the terms of the Indenture. Reference is hereby made to the Indenture
(copies of which are on file at the office of the Successor Agency) and all indentures
supplemental thereto and to the Law for a description of the terms on which the Series A Bonds
are issued, the provisions with regard to the nature and extent of the Pledged Tax Revenues, as
that term is defined in the Indenture, and the rights thereunder of the registered owners of the
Series A Bonds and the rights, duties and immunities of the Trustee and the rights and
obligations of the Successor Agency thereunder, to all of the provisions of which Indenture the
Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds are special obligations of the Successor Agency and are payable from, and are
secured by a pledge of and lien on the Pledged Tax Revenues derived by the Successor Agency
from the Project Area (as that term is defined in the Indenture), on a subordinate basis to the
Senior Bonds.
There has been created and will be maintained by the Successor Agency the
Redevelopment Obligation Retirement Fund (as defined in the Indenture) into which Pledged
Tax Revenues shall be deposited and transferred to the Trustee for deposit into the Debt Service
Fund (as defined in the Indenture) from which the Trustee shall pay the principal of and the
interest and redemption premium, if any, on the Bonds when due. As and to the extent set forth
in the Indenture, all such Pledged Tax Revenues are exclusively and irrevocably pledged to and
constitute a trust fund for, in accordance with the terms hereof and the provisions of the
Indenture and the Law, the security and payment or redemption of, including any premium upon
early redemption, and for the security and payment of interest on, the Bonds, any additional
bonds, notes or other obligations, authorized by the Indenture to be issued on a parity therewith.
In addition, the Bonds (and, if the indenture authorizing any loans, advances or indebtedness
issued on a parity with the Bonds shall so provide, any such loan, advance or indebtedness) shall
be additionally secured at all times by a first and exclusive pledge of and lien upon all of the
moneys in the Debt Service Fund, the Bonds Interest Account, the Bonds Principal Account, the
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Bonds Reserve Account and the Bonds Redemption Account (as such terms are defined in the
Indenture). Except for the Pledged Tax Revenues and such moneys, no funds or properties of the
Successor Agency shall be pledged to, or otherwise liable for, the payment of principal of or
interest or redemption premium, if any, on the Bonds.
The Bonds may be called before maturity and redeemed at the option of the Agency, in
whole or in part from the proceeds of refunding bonds or other available funds, on September 1,
20__ or on any date thereafter prior to maturity. Bonds called for redemption will be redeemed
at the following redemption price (expressed as a percentage of the principal amount of Bonds to
be redeemed) plus accrued interest to the redemption date:
Redemption Date Redemption Price
September 1,20__ and thereafter 100%
The Series A Bonds maturing on September 1, 20__, September 1, 20__ and September
1, 20__ will be subject to mandatory redemption in part, by lot, on September 1, 20__,
September 1, 20__ and September 1, 20__ and on each September 1 until maturity, at a
redemption price equal to the principal amount thereof together with the accrued interest thereon
to the redemption date, without premium, from minimum sinking fund payments on hand in the
Debt Service Fund in the years and amounts as follows:
Term Bonds Maturing September 1, 20__
Maturity Date Principal Amount
Term Bonds Maturing September 1, 20__
Maturity Date Principal Amount
Term Bonds Maturing September 1, 20__
Maturity Date Principal Amount
If an Event of Default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect provided
in the Indenture, but such declaration and its consequences may be rescinded and annulled as
further provided in the Indenture.
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The Bonds are issuable as fully registered Bonds without coupons in denominations of
$5,000 each and any integral multiple thereof. Subject to the limitations and conditions and
upon payment of the charges, if any, as provided in the Indenture, Bonds may be exchanged for a
like aggregate principal amount of Bonds of other authorized denominations and of the same
maturity.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at the corporate trust office of the Trustee, but only in the manner and
subject to the limitations provided in the Indenture, and upon surrender and cancellation of this
Bond. Upon registration of such transfer a new fully registered Bond or 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 Successor Agency and the Trustee may treat the Registered Owner hereof as the
absolute owner hereof for all purposes, and the Successor Agency and the Trustee shall not be
affected by any notice to the contrary.
The rights and obligations of the Successor Agency and the registered owners of the
Bonds may be modified or amended at any time in the manner, to the extent and upon the terms
provided in the Indenture, but no such modification or amendment shall extend the maturity of or
reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Successor
Agency to pay the principal, interest or redemption premiums (if any) at the time and place and
at the rate and in the currency provided herein of any Bond without the express written consent
of the registered owner of such Bond, reduce the percentage of Bonds required for the written
consent to any such amendment or modification or, without its written consent thereto, modify
any of the rights or obligations of the Trustee.
This Bond is not a debt of the City of La Quinta, the State of California, or any of its
political subdivisions (except the Successor Agency), and none of said City, said State, nor any
of its political subdivisions (except the Successor Agency) is liable hereon, nor in any event shall
this Bond be payable out of any funds or properties other than those of the Successor Agency as
set forth in the Indenture. The Bonds do not constitute an indebtedness within the meaning of
any constitutional or statutory debt limitation or restriction.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist, have
happened or have been performed in due and regular time and manner as required by the Law
and the laws of the State of California, and that the amount of this Bond, together with all other
indebtedness of the Successor Agency, does not exceed any limit prescribed by the Law or any
laws of the State of California, and is not in excess of the amount of Bonds permitted to be
issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the Trustee’s Certificate of Authentication hereon shall have
been manually signed by the Trustee.
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124/015610-0147
9650083.1 a06/29/16 C-5
IN WITNESS WHEREOF, the Successor Agency to the La Quinta Redevelopment
Agency has caused this Bond to be executed in its name and on its behalf with the facsimile
signatures of its Executive Director and its Secretary [and its seal to be reproduced hereon], all as
of the Delivery Date.
SUCCESSOR AGENCY TO THE LA QUINTA
REDEVELOPMENT AGENCY
B y :
Executive Director
B y :
Secretary
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124/015610-0147
9650083.1 a06/29/16 C-6
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Indenture.
Authentication Date: ______________, 2016
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Officer
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124/015610-0147
9650083.1 a06/29/16 C-7
(FORM OF ASSIGNMENT)
For value received the undersigned hereby sells, assigns and transfers unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within-registered Bond and hereby irrevocably constitute(s) and appoint(s)
_________________ ___________________________________________________attorney, to
transfer the same on the bond register of the Trustee with full power of substitution in the
premises.
Dated:
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.
Signature Guaranteed:
Note: Signature(s) must be guaranteed by
an “eligible guarantor institution.”
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ATTACHMENT 6
Summary of 2016 Refinancing
Successor Agency to the La Quinta Redevelopment Agency/La Quinta Oversight Board
In December, 2013, the Successor Agency completed the refinancing of its 1998, 2001, 2002 and
2003 Tax Allocation financings issued by the former Redevelopment Agency. Issued in a tax‐exempt
and a taxable series, this refinancing program resulted in annual debt service savings in excess of
$555,000 and overall savings of more than $10,650,000 over the remaining life of the refinanced
Bonds. In July, 2014, the Successor Agency completed the refinancing of its 2014 Tax Allocation
financing issue by the Financing Authority. Issued in a tax‐exempt series, this refinancing resulted in
annual debt service savings in excess of $680,000 and overall savings of more than $13,700,000 over
the remaining life of the refinanced Bonds. These debt service savings result in excess revenues to
various taxing agencies as well as increased residual revenues to the City.
There is now an opportunity to refinance the Agency’s last two financings issued prior to
redevelopment dissolution, for economic savings. The financings consist of $6,000,000 La Quinta
Redevelopment Project Area No. 2, Subordinate Taxable Tax Allocation Bonds, Series 2011 of which
$5,850,000 are currently outstanding and $28,850,000 Local Agency Subordinate Taxable Revenue
Bonds, 2011 Series A of which $27,225,000 are currently outstanding. These Bonds were issued just
prior to dissolution in June, 2011 and carry extremely high interest rates ranging from 5.375% to
8.15% on a taxable basis.
Following the issuance of the 2016 Bonds, the Agency would have its final debt in place and is
expected to be as follows:
Savings Analysis
Original Outstanding Final Interest Rate
Principal Principal Maturity Range
Project Areas 1 and 2
2013 Tax Exempt Bonds 97,190,000$ 89,095,000$ 2033 3.00% to 5.00%
2013 Taxable Bonds 23,055,000 21,010,000 2032 0.76% to 5.82%
2014 Tax Exempt Bonds 65,600,000 63,875,000 2034 2.00% to 5.00%
2016 Taxable Bonds * 35,280,000 35,280,000 2039 1.50% ‐ 4.50%
* 2016 Taxable Bonds assumptions are all estimates.
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The 2011 Bonds to be refinanced will be payable on the same dates (March 1 and September 1) and
will mature on their regularly scheduled date without extension (September 1, 2039).
Refunding numbers on the 2011 Bonds show that based on current interest rates and yields, the
Successor Agency can achieve annual debt service savings of approximately $614,000 from 2017
through 2035 and $285,000 from 2036 through 2039 with overall savings of $12,822,000 over the
remaining life of the 2011 Bonds. At this time, the refunding of the 2011 Bonds results in present
value savings of about 16.25%. The overall estimated savings are after ALL costs associated with the
financing have been paid.
The following sets forth the detailed annual savings:
Since the reduced debt service after refunding will reduce the amount of property taxes deposited in
the Redevelopment Property Tax Trust Fund required to be paid to the Successor Agency, there will
be additional “residual” property tax that can be distributed to taxing agencies that overlap the
boundaries of the Redevelopment Project Areas in accordance with their share of the general
property tax levy shown below. The City may be able to use up to 50% of the additional residual
Total Total
Bond Year Current Proposed
Ending Debt Service Debt Service Savings
9/1/2017 18,217,372.76$ 17,602,829.90$ 614,542.86$
9/1/2018 18,213,679.00 17,599,194.26 614,484.74
9/1/2019 18,220,271.50 17,604,211.76 616,059.74
9/1/2020 18,218,892.76 17,604,204.26 614,688.50
9/1/2021 18,226,867.76 17,614,554.26 612,313.50
9/1/2022 18,220,804.00 17,607,116.76 613,687.24
9/1/2023 18,214,156.00 17,602,348.76 611,807.24
9/1/2024 18,214,888.00 17,602,049.50 612,838.50
9/1/2025 18,213,618.00 17,597,104.50 616,513.50
9/1/2026 18,217,494.00 17,603,140.50 614,353.50
9/1/2027 18,219,624.00 17,608,850.50 610,773.50
9/1/2028 18,212,696.50 17,597,865.50 614,831.00
9/1/2029 18,209,594.00 17,594,748.00 614,846.00
9/1/2030 18,218,324.00 17,603,188.00 615,136.00
9/1/2031 18,216,853.00 17,603,327.00 613,526.00
9/1/2032 18,217,267.00 17,605,641.00 611,626.00
9/1/2033 8,858,778.50 8,243,060.00 615,718.50
9/1/2034 8,895,858.50 8,284,310.00 611,548.50
9/1/2035 3,625,136.50 3,007,675.00 617,461.50
9/1/2036 933,397.00 646,675.00 286,722.00
9/1/2037 936,007.50 646,250.00 289,757.50
9/1/2038 935,697.50 644,700.00 290,997.50
9/1/2039 335,497.50 47,025.00 288,472.50
Total 315,992,775.28$ 303,170,069.46$ 12,822,705.82$
Present Value Savings %16.25%
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generated by the refunding first to repay certain City advances to the former Agency, and if so, the
taxing agencies will receive their percentage of the remaining residual after such payment estimated
as follows.
School Districts: 62.50%
Riverside County: 22.18%
Water District: 7.21%
City of La Quinta: 5.29%
Recreation and Parks: 2.82%
The following table sets forth the estimated Costs associated with the 2016 financing.
Underwriter’s discount estimated at 0.750%, costs of issuance estimated at 0.60%, bond insurance
estimated at 0.31% and a debt service reserve surety bond fee of 0.14% for all in costs of 1.80%
which is in line with the percentage of costs associated with the refunding programs. As previously
mentioned, the savings discussed above are after all costs of issuance associated with the financing.
The Financing Team expects the Bonds to be rated “A+” by Standard and Poor’s. Purchasing
insurance will bring the bond rating up to “AA” although based on the current market, insurance will
not be necessary for all maturities. The increase in rating should offset the insurance premium
through reduced interest rates and yields on the refunding bonds. The Financing Team will prepare
a stress test at the time the refunding bonds are marketed to determine the actual savings
generated by using bond insurance. If the insurance premium isn’t justified by savings, bond
insurance will not be utilized.
Estimated 2016
Bonds
Costs of
Issuance
Rutan & Tucker, Bond Counsel 75,000.00$
Stradling Yocca Carlson & Rauth, Disclosure Counsel 42,000.00
Harrell & Company, Financial Advisor 40,000.00
Standard & Poor’s Ratings Group, Rating Services 30,000.00
Grant Thornton, Verification Consultant 2,500.00
US Bank National Association, Trustee and Escrow Bank 4,500.00
Avia Communications, Financial Printing 2,500.00
Miscellaneous 3,500.00
Subtotal Costs of I ssuance 200,000.00$
Underwriter's Discount 264,600.00
Bond Insurance Provider 171,635.00
Total Costs of Issuance 636,235.00
Percentage of Bond Financing 1.80%
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The Prior Agency’s Bonds all carry a reserve fund surety bond in lieu of cash for the reserve funds.
Using cash at this point would greatly increase the amount of refunding bonds required to be issued
in order to cash fund the new reserve funds. The use of a reserve fund surety bond will be required
in order to achieve the reported savings.
Underwriter’s Discount will be based in part on the rating of the refunding bonds. If bond insurance
is utilized the underwriter’s discount would be reduced over a standalone rating only. This is
predominately due to the amount of takedown (commission) necessary to pay salespeople to sell
the bonds. The higher the rating, the less takedown required.
Cash Contributions
As part of the 2016 Bonds refunding program, the Financing Team has included approximately
$2,800,000 of unspent proceeds remaining with US Bank as Trustee for the Project Area No. 2 2011
Bonds, initially issued in the amount of $6,000,000. These moneys have been designated by DOF as
available for two purposes: 1) purchasing Agency bonds on the open market or 2) reducing bonded
debt amounts in a refinancing. Over the past 24 months, there has been less than $100,000 of these
PA 2 Bonds available on the open market (bonds being offered for sale to the general public). It has
therefore been determined that the best use of these moneys is in the refinancing process. The
unspent proceeds will be transferred to the Escrow Bank and deposited in the Project No. 2
refunding escrow which in turn reduces the amount of bonds necessary to be issued for said
refunding.
In addition, certain cash reserves are currently on deposit with the 2011 Bonds Trustee. These
moneys have also been used to reduce the principal amount of bonds necessary to be issued for the
refunding. As previously discussed, the Agency will purchase a reserve surety policy to satisfy its
debt service reserve requirements.
2011 Bonds Escrow Accounts
Proceeds from the financing will be held in an escrow that will pay regularly scheduled principal and
interest on the prior 2011 Bonds until their first optional call date of September 1, 2020. The escrow
fund will also hold funds to redeem all remaining maturities on September 1, 2020. The proceeds
held in the escrow will be invested in either State and Local Government Securities or Open Market
Securities, whichever are more efficient. The prior 2011 Bonds will be considered fully defeased on
the date the 2016 Bonds are issued.
Conclusion
There is no way of knowing if the municipal market will maintain current interest rates and yields
long enough for the Successor Agency to complete the approval and DOF review process estimated
to require 60 to 75 days. We believe your Financing Team should be able to steer the refinancing
thru the approval process at little or no cost to the Successor Agency, should the refunding bonds
not be economically feasible following the approval and review process. In addition, prior to the
issuance of refunding bonds, the Financing Team will return to the Successor Agency Board for the
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approval of a substantially final Preliminary Official Statement and to provide an update of refunding
numbers and financing costs at that time.
Timeline
The following is a general timeline for the proposed refinancing. This schedule will be updated
based on DOF approval actions and market conditions.
Scheduled Event Date to Complete
Successor Agency Board adopts Resolution approving Financing Documents May 3
Oversight Board adopts Resolution approving Financing Documents
Submit Revised OB Resolution and Documents to DOF May 4
DOF Approval of Financing July 5
Submit Documents to Rating Agency/Insurer July 6
Receive Rating/Insurance July 27
Successor Agency Board adopts Resolution deeming Preliminary Official Statement
Substantially Final August 2
Bond Sale ‐ Successor Agency signs Purchase Contract August 24
Bond Closing September 14
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