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2013 07 16 SAAgendas and staff reports are now available on the City's web page: www./a- quinta.org SUCCESSOR AGENCY To The La Quinta Redevelopment Agency AGENDA CITY HALL, 78 -495 Calle Tampico, La Quinta, CA REGULAR MEETING ON TUESDAY, JULY 16, 2013 AT 4:00 P.M. CALL TO ORDER CLOSED SESSION - NONE PUBLIC COMMENT At this time, members of the public may address the Successor Agency on any matter not listed on the agenda. Please complete a "request to speak" form and limit your comments to three minutes. The Successor Agency values your comments; however in accordance with State law, no action shall be taken on any item not appearing on the agenda unless it is an emergency item authorized by GC 54954.2(b). CONFIRMATION OF AGENDA PAGE NO. PRESENTATIONS — NONE WRITTEN COMMUNICATIONS — NONE APPROVAL OF MINUTES 1 . MINUTES OF JULY 2, 2013 4 CONSENT CALENDAR 1 . DEMAND REGISTER DATED JULY 16, 2013 6 2. TRESURER'S REPORT DATED MAY 31, 2013 8 3. REVENUE & EXPENDITURE REPORT DATED MAY 31, 2013 AND 10 INVESTMENT SUMMARY REPORT FOR THE QUARTER ENDING JUNE 30, 2013 SUCCESSOR AGENCY TO RDA AGENDA 1 JULY 16, 2013 DEPARTMENT REPORTS - NONE PAGE BUSINESS SESSION 1. RESOLUTION OF THE CITY OF LA QUINTA ACTING AS THE 20 SUCCESSOR AGENCY OF THE DISSOLVED LA QUINTA REDEVELOPMENT AGENCY REAPPROVING THE FORM OF THE PRELIMINARY OFFICIAL STATEMENT TO DEEM IT FINAL UNDER RULE 15C2 -12 AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH [RESOLUTION SA 2013 -0071 STUDY SESSION — NONE ADJOURNMENT ............................. ............................... ............................................................ The next regular meeting of the City as Successor Agency to the La Quinta Redevelopment Agency will be held on August 6, 2013 commencing with closed session at 3:00 p.m. and open session at 4:00 p.m. at City Hall, 78 -495 Calle Tampico, La Quinta, CA 92253. DECLARATION OF POSTING I, Susan Maysels, Agency Secretary of the City as Successor Agency to the La Quinta Redevelopment Agency, do hereby declare that the foregoing agenda was posted near the entrance to the Council Chambers at 78 -495 Calle Tampico and on the bulletin boards at the La Quinta Cove Post Office at 51 -321 Avenida Bermudas and at the Stater Brothers Supermarket at 78 -630 Highway 1 1 1 , on July 12, 2013 DATED: July 12, 2013 SUSAN MAYSELS, Agency Secretary Successor Agency to the La Quinta Redevelopment Agency Public Notices • The La Quinta City Hall is handicapped accessible. If special equipment is needed for the hearing impaired, please call the City Clerk's Office at 777 -7103, twenty -four (24) hours in advance of the meeting and accommodations will be made. • If special electronic equipment is needed to make presentations to the Successor Agency, arrangement should be made in advance by contacting the City Clerk's Office at 777- 7103. A one (1) week notice is required. SUCCESSOR AGENCY TO RDA AGENDA 2 JULY 16, 2013 • If background material is to be presented to the Successor Agency during a meeting, please be advised that eight (8) copies of all documents, exhibits, etc., must be supplied to the City Clerk for distribution. It is requested that this take place prior to the beginning of the meeting. • Any writings or documents provided to a majority of the Successor Agency regarding any item on this agenda will be made available for public inspection at the City Clerk counter at City Hall located at 78 -495 Calle Tampico, La Quinta, California, 92253, during normal business hours. SUCCESSOR AGENCY TO RDA AGENDA 3 JULY 16, 2013 SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY MINUTES TUESDAY, JULY 2, 2013 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 4:53 p.m. by Chairperson Adolph. PRESENT: Agency Members Evans, Franklin, Henderson, Osborne, Chair Adolph ABSENT: None PUBLIC COMMENT - None CLOSED SESSION - None PUBLIC COMMENT - None CONFIRMATION OF AGENDA-- Confirmed PRESENTATIONS - None WRITTEN COMMUNICATIONS - None APPROVAL OF MINUTES MOTION — A motion was made and seconded by Agency Members Franklin /Evans to approve the minutes of June 18, 2013 as submitted. Motion passed unanimously. CONSENT CALENDAR 1 . DEMAND REGISTER DATED JULY 2, 2013 MOTION — A motion was made and seconded by Agency Members Evans /Franklin to approve the Consent Calendar as recommended. Motion passed unanimously. DEPARTMENT REPORTS - None BUSINESS SESSION - None STUDY SESSION ADJOURNMENT - None There being no further business, it was moved by Agency Members Franklin /Evans to adjourn at 4:54 p.m. Motion passed unanimously. Respectfully submitted, SUSAN MAYSELS, Agency Secretary CITY AS SUCCESSOR AGENCY TO RDA 1 JULY 2, 2013 4 ë SA MEETING DATE: July 16, 2013 ITEMTITLE: DEMAND REGISTER DATED JULY 16, 2013 RECOMMENDED ACTION: AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: 1 STUDY SESSION: PUBLIC HEARING: Receive and file demand register dated July 16, 2013, of which $5,025.00 represents Successor Agency expenditures as detailed below: Vendor: Account No.: Amount: Purpose: Becky Caha 237 - 9001 - 702.32 -07 $3,525.00 PA1 Housing Program US Bank 237 - 9001 - 702.32 -07 $1,500.00 2011 PA2 Administration EXECUTIVE SUMMARY: None. FISCAL IMPACT: None. BACKGROUND /ANALYSIS: By adoption of Resolution No. 2012 -002, the City of La Quinta has affirmatively elected to be the Successor Agency of the La Quinta Redevelopment Agency. Pursuant to Health and Safety Code Section 34177(a), the Successor Agency of the La Quinta Redevelopment Agency shall continue to make payments required pursuant to an adopted enforceable obligations payment schedule. Pursuant to Health and Safety Code Section 34173(e), the liability of the Successor Agency of the La Quinta Redevelopment Agency, when acting pursuant to the powers granted under ABX126, are limited to the extent of the total sum of property tax revenues it receives pursuant to part 1.85 of ABX126 (e.g., Health and Safety Code Sections 34170 — 34190) and the value of assets transferred to it as Successor Agency for the dissolved La Quinta Redevelopment Agency. ALTERNATIVES: None. Report prepared by: Sandra Mancilla, Account Technician Report approved for submission by: Robbeyn Bird, Finance Director 7 SA MEETING DATE: July 16, 2013 ITEM TITLE: TREASURER'S REPORTS DATED MAY 31, 2013 AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: 2 STUDY SESSION: PUBLIC HEARING: RECOMMENDED ACTION: Receive and file. FISCAL IMPACT: None. BACKGROUND /ANALYSIS: Per City Investment Policy, these items are presented on a monthly basis reflecting the monthly Cash Balances, Investment Activities and the Portfolio Performance, which is presented in the City Council's Consent Item Staff Report. ALTERNATIVES: None. Report prepared by: Robbeyn Bird, Finance Director Report approved for submission by: Frank J. Spevacek, City Manager 8 ç SA MEETING DATE: July 16 2013 ITEM TITLE: REVENUE AND EXPENDITURE REPORTS DATED MAY 31, 2013 AND INVESTMENT SUMMARY REPORT FOR THE QUARTER ENDING JUNE 30, 2013 AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: 3 STUDY SESSION: PUBLIC HEARING: RECOMMENDED ACTION: Receive and file. EXECUTIVE SUMMARY: The monthly and year -to -date revenues and expenditures of the Successor Agency to the La Quinta Redevelopment Agency dated May 31, 2013 and the Investment Summary Report for the Quarter Ending June 30, 2013 are hereby submitted for the Successor Agency Board to review, receive, and file. FISCAL IMPACT: None. BACKGROUND /ANALYSIS: Revenue and expenditure reports are submitted to the Successor Agency Board monthly to review, receive, and file. Attached is the transmittal of the May 31, 2013 Statements of Revenues and Expenditures for the Successor Agency (Attachments 1 and 2). Actual revenues received and expenditures spent are $7,055,463 or 33.3% and $38,924,497 or 55.2% of the budgeted amounts, respectively. The funds budgeted are based on estimates listed on the Recognized Obligation Payment Schedule and revenues are received in January and June of each year. The City received $13.2 million in tax increment in June 2012 for the September 2012 bond interest and principal amounts. In addition, available housing funds in the amount of $18.3 which were received in previous years were transferred to the Housing Authority for total revenues of $38.6 million. The it$] expenditures represent the debt service interest and principal on the former Redevelopment Agency bonds in the amount of $ 19.3 million and the $ 18.3 of housing funds transferred to the Housing Authority for the Coral Mountain project. In addition, the Investment Summary Report is submitted quarterly and is attached (Attachment 3) for the Quarter Ending June 30, 2013 for the Board's review. ALTERNATIVES: None. Report prepared by: Robbeyn Bird, Finance Director Report approved for submission by: Frank J. Spevacek, City Manager Attachments: 1. Revenues Reports for May 31, 2013 2. Expenditure Reports for May 31, 2013 3. Investment Summary Report for the Quarter Ending June 30, 2013 is ïî ïí ïì ïë ïê ïé ïè ïç SA MEETING DATE: July 16, 2013 ITEM TITLE: RESOLUTION OF THE CITY OF LA QUINTA ACTING AS THE SUCCESSOR AGENCY OF THE DISSOLVED LA QUINTA REDEVELOPMENT AGENCY REAPPROVING THE FORM OF THE PRELIMINARY OFFICIAL STATEMENT TO DEEM IT FINAL UNDER RULE 15C2 -12 AND AUTHORIZING CERTAIN OTHER ACTIONS IN CONNECTION AGENDA CATEGORY: BUSINESS SESSION: 1 CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: RECOMMENDED ACTION: Adopt the attached Resolution deeming the Preliminary Official Statement substantially final as it relates to the issuance by the Successor Agency to the La Quinta Redevelopment Agency of Tax Allocation Refunding Bonds in the approximate amount of $197,575,000. EXECUTIVE SUMMARY: • In 1998, 2001, 2002, 2003 and 2004, the Redevelopment Agency (RDA) issued Tax Allocation Bonds (Bonds) in order to raise capital for public projects. • On June 4, 2013, the Successor Agency to the former RDA approved refinancing these Bonds in order to reduce annual bond payment costs. This may be achieved because municipal bond interest rates are lower than the Bond interest rates. • In order to market the bonds, the underwriter must provide an official statement that presents the organization that is issuing the bonds and how the annual bond payments will be secured. • The Successor Agency must determine that the Preliminary Official Statement is deemed final as part of this process. • The Department of Finance must approve this transaction before the bonds may be sold. This approval should occur on or before August 7. K11 • The bonds will not be sold if the municipal bond market yields do not generate the degree of cost savings identified in June 2013. FISCAL IMPACT: None. BACKGROUND /ANALYSIS: On June 4, 2013 the Successor Agency, in an effort to reduce the annual bond debt service payments, approved refinancing the Bonds. In order to refinance the Bonds, a Preliminary Official Statement must be deemed final by the Successor Agency. The Preliminary Official Statement contains a summary of the security for the refinancing bonds as well as descriptions of the City, Successor Agency, Project Areas and related financial information. The Securities Exchange Act allows for certain permitted omissions in the summary, such as the final bond maturities, insurance information, and certain other details not known until the bonds are actually sold. Since the bonds are not expected to be sold until August 2013, the Executive Director of the Successor Agency may be required to approve minor modifications to this summary. The annual bonds payments are funded from property tax revenue that is allocated to the Successor Agency for this purpose. Since the Bonds were sold prior to the dissolution of the RDA, current State Law allows the Successor Agency to refinance the Bonds if cost savings can be achieved. When the Successor Agency considered this item in June 2014, the projected annual cost savings was $1.2 million. Since then municipal bond market interest rates have increased. The Executive Director and the bond underwriter are monitoring the municipal bond market to determine if the projected cost savings can be achieved when the bonds are ready to be sold. If they cannot be achieved, then the bonds will not be sold. ALTERNATIVES: If the Preliminary Official Statement is not deemed final, the Bonds cannot be offered for sale; therefore, staff does not recommend any alternatives to this action. Report prepared by: Amy McCormick, Business Analyst Report approved for submission by: Frank J. Spevacek, Executive Director Attachment: 1 . Preliminary Official Statement PA Î»±´«¬·±² Ò±ò Íß îðïíó ø¼»½®·°¬·±²÷ ß¼±°¬»¼æ ø¼¿¬»÷ Ð¿¹» î ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ ÜÑÒ ßÜÑÔÐØô Ó¿§±® Ý·¬§ ±º Ô¿ Ï«·²¬¿ ß½¬·²¹ ¿ Í«½½»±® ß¹»²½§ ¬± ¬¸» Ô¿ Ï«·²¬¿ Î»¼»ª»´±°³»²¬ ß¹»²½§ ßÌÌÛÍÌæ ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ ÍËÍßÒ ÓßÇÍÛÔÍô Í»½®»¬¿®§ Ý·¬§ ±º Ô¿ Ï«·²¬¿ ß½¬·²¹ ¿ Í«½½»±® ß¹»²½§ Ì± ¬¸» Ô¿ Ï«·²¬¿ Î»¼»ª»´±°³»²¬ ß¹»²½§ øÝ×ÌÇ ÍÛßÔ÷ ßÐÐÎÑÊÛÜ ßÍ ÌÑ ÚÑÎÓæ ÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁÁ Óò ÕßÌØÛÎ×ÒÛ ÖÛÒÍÑÒô Í«½½»±® ß¹»²½§ Ý±«²»´ Ý·¬§ ±º Ô¿ Ï«·²¬¿ ß½¬·²¹ ¿ Í«½½»±® ß¹»²½§ Ì± ¬¸» Ô¿ Ï«·²¬¿ Î»¼»ª»´±°³»²¬ ß¹»²½§ îí PRELIMINARY OFFICIAL STATEMENT DATED AUGUST __, 2013 NEW ISSUE—BOOK-ENTRY Standard & Poor’s: “____” (See “Ratings” Herein) [[299,280,1665,324][9][,I,][Times New Roman]]In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial [[1626,280,2312,324][9][,I,][Times New Roman]]decisions, and assuming continuing compl [[2272,280,2480,324][9][,I,][Times New Roman]]iance with [[150,324,1161,368][9][,I,][Times New Roman]]covenants intended to preserve the exclusion from gross income [[1113,324,2113,368][9][,I,][Times New Roman]]for federal income tax purposes of interest on the Series A Bond [[2081,324,2480,368][9][,I,][Times New Roman]]s, interest on the Series [[147,367,854,411][9][,I,][Times New Roman]]A Bonds is excludable from gross income fo [[823,367,1540,411][9][,I,][Times New Roman]]r federal income tax purposes and is not an [[1500,367,1832,411][9 ][,I,][Times New Roman]]item of tax preferen [[1801,367,2154,411][9][,I,][Times New Roman]]ce for purposes of ca [[2122,367,2480,411][9][,I,][Times New Roman]]lculating the federal [[150,410,918,454][9][,I,][Times New Roman]]alternative minimum tax imposed on individual [[878,410,1541,454][9][,I,][Times New Roman]]s and corporations. In the further opini [[1502,410,2480,454][9 ][,I,][Times New Roman]]on of Bond Counsel, interest on the Series A Bonds and the [[149,453,590,497][9][,I,][Times New Roman]]Series B Bonds is exempt [[546,453,1127,497][9][,I,][Times New Roman]]from present State of California pe [[1093,453,1718,497][9][,I,][Times New Roman]]rsonal income taxes. See “TAX EXEM [[1698,453,2257,497][9][,I,][Times New Roman]]PTION” herein for a discussion o [[2218,453,2480,497][9][,I,][Times New Roman]]f the effect of [[150,496,1034,540][9][,I,][Times New Roman]]certain provisions of the Code on Owners of the Bonds. SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY La Quinta Redevelopment Project Areas No. 1 and 2 Subordinate Tax Allocation Refunding Bonds $154,625,000* $42,950,000* 2013 Series A 2013 Taxable Series B Dated: Delivery Date Due: September 1, as shown on the inside front cover The above-captioned bonds (the “Series A Bonds”, the “ Series B Bonds” or sometimes collectively referred to as 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 principal of, premium if any, and semiannual interest (due March 1 and September 1 of each year, commencing March 1, 2014) on the Bonds 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 subject to optional redemption prior to maturity, in whole or in part, on September 1, 2023 and on any day thereafter, at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date, without premium. The Bonds are subject to mandatory redemption from minimum sinking fund payments, in part by lot, as described herein. The Bonds are being issued by the Successor Agency to the La Quinta Redevelopment Agency (the “Agency”) on a subordinate basis to 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 Bonds”) of which $5,965,000 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’s (the “Authority”) previously issued $28,850,000 Local Agency Subordinate Taxable Revenue Bonds, 2011 Series A (the “2011 Series A Bonds”) currently outstanding in full. The 2011 Bonds and the 2011 Loan Obligation are sometimes referred to herein as the “Senior Bonds.” The Bonds are being issued to refinance the Prior Agency’s previously issued $15,760,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Refunding Bonds, Series 1998 (the “1998 Project Area No. 1 Bonds”) currently outstanding in full, the $6,750,000 La Quinta Redevelopment Project Area No. 2, Tax Allocation Refunding Bonds, Series 1998 (the “1998 Project Area No. 2 Bonds”) of which $5,285,000 are currently outstanding, the $48,000,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2001 (the “2001 Project Area No. 1 Bonds”) currently outstanding in full, the $40,000,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2002 (the “2002 Project Area No. 1 Bonds” of which $33,645,000 are currently outstanding, the $26,400,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Taxable Series 2003 (the “2003 Project Area No. 1 Bonds”) of which $22,215,000 are currently outstanding and the Prior Agency’s obligation under the Loan Agreement, dated February 3, 2004 as supplemented by the First Supplemental Loan Agreement, dated as of June 1, 2004 (the “2004 Loan Obligation”) in connection with the Authority’s $90,000,000 Local Agency Revenue Bonds, 2004 Series A (the “2004 Housing Bonds”) of which $77,455,000 are currently outstanding. The 1998 Project Area No. 1 Bonds, 1998 Project Area No. 2 Bonds, 2001 Project Area No. 1 Bonds, 2002 Project Area No. 1 Bonds, 2003 Project Area No. 1 Bonds and 2004 Loan Obligation are sometimes collectively referred to herein as the “Refunded 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 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 Indentures. 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 _______________________ [INSERT 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 îì solely from the Pledged Tax Revenues allocated to the Agency from the Project Areas (all as defined herein and in the Indentures) and other funds as set forth in the Indentures. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. [[300,273,1316,317][9][,I,][Times New Roman]]The Bonds are offered, when, as and if issued, subject to the a [[1280,273,2392,317][9][,I,][Times New Roman]]pproval of Rutan & Tucker, LLP, Costa Mesa, California, Bond Cou [[2360,273,2471,317][9][,I,][Times New Roman]]nsel. [[150,316,1180,360][9][,I,][Times New Roman]]Certain legal matters will be passed on for the Agency by Stradli [[1140,316,2189,360][9][,I,][Times New Roman]]ng Yocca Carlson & Rauth, a Professional Corporation, Newport [[2149,316,2481,360][9][,I,][Times New Roman]]Beach, California, [[148,359,1050,403][9][,I,][Times New Roman]]Disclosure Counsel. It is anticipated that the Bonds will [[1009,359,1555,403][9][,I,][Times New Roman]]be available for delivery through [[1514,359,2054,403][9][,I,][Times New Roman]]the facilities of DTC on or about [[2010,359,2298,403][9][,I,][Times New Roman]]August _, 2013. SOUTHWEST SECURITIES, INC. The date of this Official Statement is August _, 2013. [[150,592,428,636][9][,I,][Times New Roman]]* Preliminary, s [[393,592,691,636][9][,I,][Times New Roman]]ubject to change îë 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 Bonds Maturity Schedule [[446,689,715,733][9][B,I,][Times New Roman]]Maturity Date [[825,689,1009,733][9][B,I,][Times New Roman]]Principal [[1125,689,1295,733][9][B,I,][Times New Roman]]Interest [[1993,689,2153,733][9][B, I,][Times New Roman]]CUSIP [[448,732,714,776][9][B,I,][Times New Roman]](September 1) [[823,732,1001,776][9][B,I,][Times New Roman]]Amount* [[1149,732,1851,776][9][B,I,][Times New Roman]]Rate Yield Price [[1947,732,2200,776] [9][B,I,][Times New Roman]](Base _____) 2014 $ 5,280,000 2015 5,685,000 2016 5,865,000 2017 6,040,000 2018 6,205,000 2019 6,410,000 2020 6,625,000 2021 6,865,000 2022 7,105,000 2023 7,340,000 2024 7,645,000 2025 7,945,000 2026 8,270,000 2027 8,600,000 2028 8,935,000 2029 9,535,000 2030 10,015,000 2031 10,520,000 2032 11,390,000 2013 Taxable Series B Bonds Maturity Schedule [[446,1862,715,1906][9][B,I,][Times New Roman]]Maturity Date [[825,1862,1009,1906][9][B,I,][Times New Roman]]Principal [[1125,1862,1295,1906][9][B,I,][Times New Roman]]Interest [[1993,1862,2153,190 6][9][B,I,][Times New Roman]]CUSIP [[448,1905,714,1949][9][B,I,][Times New Roman]](September 1) [[823,1905,1001,1949][9][B,I,][Times New Roman]]Amount* [[1149,1905,1851,1949][9][B,I,][Times New Roman]]Rate Yield Price [[1947,1905,2200,1949][9][B,I,][Times New Roman]](Base _____) 2014 $1,595,000 2015 1,680,000 2016 1,695,000 2017 1,725,000 2018 1,760,000 2019 1,800,000 2020 1,845,000 2021 1,905,000 2022 1,965,000 2023 2,035,000 $6,560,000* ___% Term Bonds due September 1, 2026 Yield: ___%, Price: ___% CUSIP† $7,355,000*___% Term Bonds due September 1, 2029 Yield: ___%, Price: ___% CUSIP† $8,320,000* ___% Term Bonds due September 1, 2032 Yield: ___%, Price: ___% CUSIP† $2,710,000* ___% Term Bonds due September 1, 2034 Yield: ___%, Price: ___% CUSIP† [[300,2718,595,2762][9][,I,][Times New Roman]]* Preliminary, [[555,2718,867,2762][9][,I,][Times New Roman]]subject to change [[300,2761,961,2805][9][,I,][Times New Roman]]† CUSIP® is a registered trademark [[931,2761,2300,2805][9][,I,][Times New Roman]]of the American Bankers Association. Copyright© 1999-2013 American Bankers [[342,2804,1269,2848][9][,I,][Times New Roman]]Association. All rights reserved. CUSIP® data herein [[1234,2804,1749,2848][9][,I,][Times New Roman]]is provided by CUSIP Global [[1714,2804,2300,28 48][9][,I,][Times New Roman]]Services, managed by Standard & [[343,2848,1044,2892][9][,I,][Times New Roman]]Poor’s Financial Services LLC on behalf of [[1004,2848,1661,2892][9][,I,][Times New Roman]] the American Bankers Association. This [[1626,2848,2300,289 2][9][,I,][Times New Roman]] data is not intended to create a database [[345,2891,1366,2935][9][,I,][Times New Roman]]and does not serve in any way as a substitute for CUSIP Global [[1326,2891,2300,2935][9][,I,][Times New Roman]]Services. CUSIP® numbers are provided for convenience of [[345,2934,1239,2978][9][,I,][Times New Roman]]reference only. Neither the Agency nor the Underwriter [[1199,2934,1676,2978][9][,I,][Times New Roman]]takes any responsibility for th [[1645,2934,2114,2978][9][,I,][Times New Roman]]e accuracy of such numbers. îê SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY LA QUINTA, CALIFORNIA BOARD OF DIRECTORS Don Adolph, [[1347,656,1486,709][11][,I,][Times New Roman]]Chair Kristy Franklin, [[1326,706,1562,759][11][,I,][Times New Roman]]Vice-Chair Linda Evans, [[1321,756,1510,809][11][,I,][Times New Roman]]Member Terry B. Henderson,[[1381,806,1577,859][11][,I,][Times New Roman]] Member Lee M. Osborne,[[1348,856,1544,909][11][,I,][Times New Roman]] Member AGENCY/CITY STAFF Frank J. Spevacek, [[1144,1106,1812,1159][11][,I,][Times New Roman]]Executive Director/City Manager Susan Maysels, [[1157,1158,1715,1211][11][,I,][Times New Roman]]Agency Secretary/City Clerk Robbeyn Bird, [[1254,1209,1607,1262][11][,I,][Times New Roman]]Finance Director Katherine Jenson, [[1164,1259,1753,1312][11][,I,][Times New Roman]]Agency Counsel/City Attorney SPECIAL SERVICES Bond Counsel Rutan & Tucker LLP Costa Mesa, California Disclosure Counsel Stradling Yocca Carlson & Rauth a Professional Corporation Newport Beach, 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 Southwest Securities, Inc. Cardiff by the Sea, California îé 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 Indentures 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 Indentures 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. îè TABLE OF CONTENTS Page INTRODUCTORY STATEMENT .................................................................................................................... 1 Authority and Purpose .................................................................................................................................. 1 The Redevelopment Plans ............................................................................................................................ 2 Tax Allocation Financing ............................................................................................................................. 3 Security for the Bonds .................................................................................................................................. 3 Senior Bonds ................................................................................................................................................ 4 Reserve Account ........................................................................................................................................... 5 Further Information ...................................................................................................................................... 5 BOND INSURANCE ......................................................................................................................................... 5 SOURCES AND USES OF FUNDS .................................................................................................................. 6 THE BONDS ...................................................................................................................................................... 6 Authority for Issuance .................................................................................................................................. 6 Description of the Bonds .............................................................................................................................. 6 Book-Entry System ...................................................................................................................................... 7 Optional Redemption ................................................................................................................................... 7 Sinking Fund Redemption ............................................................................................................................ 7 SECURITY FOR THE BONDS ......................................................................................................................... 8 Tax Increment Financing ............................................................................................................................ 10 Recognized Obligation Payment Schedule................................................................................................. 12 Parity Bonds ............................................................................................................................................... 14 THE INDENTURE ........................................................................................................................................... 16 Allocation of Bond Proceeds ...................................................................................................................... 16 Pledged Tax Revenues – Application ......................................................................................................... 17 Investment of Moneys in Funds and Accounts .......................................................................................... 18 Covenants of the Agency............................................................................................................................ 19 Events of Default and Remedies ................................................................................................................ 21 Application of Funds Upon Acceleration ................................................................................................... 23 Amendments ............................................................................................................................................... 23 THE SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY .............................. 24 Members and Officers ................................................................................................................................ 24 Agency Powers ........................................................................................................................................... 25 RISK FACTORS .............................................................................................................................................. 25 Reduction in Taxable Value ....................................................................................................................... 25 Risks to Real Estate Market ....................................................................................................................... 26 Reduction in Inflationary Rate ................................................................................................................... 26 Development Risks ..................................................................................................................................... 27 Levy and Collection of Taxes ..................................................................................................................... 27 State Budget Issues ..................................................................................................................................... 27 Recognized Obligation Payment Schedule................................................................................................. 28 AB 1484 Penalty for Failure to Remit Unencumbered Funds .................................................................... 30 Bankruptcy and Foreclosure ....................................................................................................................... 30 Estimated Revenues ................................................................................................................................... 31 Hazardous Substances ................................................................................................................................ 31 Natural Disasters ........................................................................................................................................ 31 Changes in the Law .................................................................................................................................... 31 Investment Risk .......................................................................................................................................... 32 Additional Obligations ............................................................................................................................... 32 i îç TABLE OF CONTENTS (Continued) Page Secondary Market ....................................................................................................................................... 32 No Validation Proceeding Undertaken ....................................................................................................... 32 PROPERTY TAXATION IN CALIFORNIA .................................................................................................. 33 Property Tax Collection Procedures ........................................................................................................... 33 Unitary Property ......................................................................................................................................... 35 Article XIIIA of the State Constitution ...................................................................................................... 36 Appropriations Limitation – Article XIIIB ................................................................................................ 36 Articles XIIIC and XIIID of the State Constitution ................................................................................... 37 Proposition 87 ............................................................................................................................................. 37 Redevelopment Time Limits ...................................................................................................................... 37 Appeals of Assessed Values ....................................................................................................................... 38 Proposition 8 ............................................................................................................................................... 38 Propositions 218 and 26 ............................................................................................................................. 39 Future Initiatives ......................................................................................................................................... 39 THE PROJECT AREAS ................................................................................................................................... 39 Project Area No. 1 – Background ............................................................................................................... 39 Project Area No. 2 – Background ............................................................................................................... 39 Redevelopment Plan Limitations ............................................................................................................... 40 Location and Surrounding Area ................................................................................................................. 41 Controls, Land Use and Building Restrictions ........................................................................................... 41 Pass-Through Agreements and Obligations with Various Taxing Agencies ............................................. 42 Largest Local Secured Taxpayers .............................................................................................................. 43 Teeter Plan and Delinquency Rates ............................................................................................................ 44 PLEDGED TAX REVENUES ......................................................................................................................... 44 Schedule of Historical Pledged Tax Revenues ........................................................................................... 44 Projected Taxable Valuation and Pledged Tax Revenues .......................................................................... 45 Series A Bonds Annual Debt Service ......................................................................................................... 47 Series B Bonds Annual Debt Service ......................................................................................................... 48 Combined Annual Debt Service ................................................................................................................. 49 Debt Service Coverage ............................................................................................................................... 50 CONCLUDING INFORMATION ................................................................................................................... 51 Underwriting .............................................................................................................................................. 51 Verification of Mathematical Accuracy ..................................................................................................... 52 Legal Opinion ............................................................................................................................................. 52 Tax Exemption ........................................................................................................................................... 52 Litigation .................................................................................................................................................... 53 Legality for Investment in California ......................................................................................................... 55 Ratings ........................................................................................................................................................ 55 Continuing Disclosure ................................................................................................................................ 56 Miscellaneous ............................................................................................................................................. 58 ii íð TABLE OF CONTENTS (Continued) Page APPENDIX A DEFINITIONS ...................................................................................................................... A-1 APPENDIX B FORM OF BOND COUNSEL OPINION ............................................................................. 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, 2012 (EXCLUDING SUPPLEMENTARY INFORMATION) ............. E-1 APPENDIX F FINANCIAL ADVISOR’S REPORT ................................................................................... F-1 APPENDIX G STATE DEPARTMENT OF FINANCE LETTER .............................................................. G-1 APPENDIX H SUPPLEMENTAL INFORMATION – THE CITY OF LA QUINTA ................................ H-1 APPENDIX I SPECIMEN MUNICIPAL BOND INSURANCE POLICY .................................................. I-1 iii íï OFFICIAL STATEMENT SUCCESSOR AGENCY TO THE LA QUINTA REDEVELOPMENT AGENCY La Quinta Redevelopment Project Areas No. 1 and 2 Subordinate Tax Allocation Refunding Bonds * $42,950,000 $154,625,000* 2013 Series A 2013 Taxable Series B 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 $154,625,000 La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax * Allocation Refunding Bonds, 2013 Series A (the “Series A Bonds”) and $42,950,000 La Quinta Redevelopment Project Areas No. 1 and 2, Subordinate Tax Allocation Refunding Bonds, 2013 Taxable Series B (the “Series B Bonds”) sometimes collectively referred to herein as 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 June 1, 2013 (the “Indenture”) and a First Supplemental Indenture of Trust (the “First Supplemental Indenture”) dated as of June 1, 2013, and together (the “Indentures”) both 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 to refinance the previously issued $15,760,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Refunding Bonds, Series 1998 (the “1998 Project Area No. 1 Bonds”) currently outstanding in full, the $6,750,000 La Quinta Redevelopment Project Area No. 2, Tax Allocation Refunding Bonds, Series 1998 (the “1998 Project Area No. 2 Bonds”) of which $5,285,000 are currently outstanding, the $48,000,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2001 (the “2001 Project Area No. 1 Bonds”) currently outstanding in full, the $40,000,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Series 2002 (the “2002 Project Area No. 1 Bonds”) of which $33,645,000 are currently outstanding, the $26,400,000 La Quinta Redevelopment Project Area No. 1, Tax Allocation Bonds, Taxable Series 2003 (the “2003 Project Area No. 1 Bonds”) of which $22,215,000 are currently outstanding and the Prior Agency’s obligation under the Loan Agreement, dated February 3, 2004 as supplemented by the First Supplemental Loan Agreement, dated as of June 1, 2004 (the “2004 Loan Obligation”) in connection with the Authority’s $90,000,000 Local Agency Revenue Bonds, 2004 Series A (the “2004 Housing Bonds”) of which $77,455,000 are currently outstanding. The 1998 Project Area No. 1 Bonds, 1998 Project Area No. 2 Bonds, 2001 Project Area No. 1 Bonds, 2002 Project Area No. 1 Bonds, 2003 Project Area No. 1 Bonds and 2004 Housing 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 each 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 * [[325,2962,796,3000][8][,I,][Times New Roman]]Preliminary, subject to change. 1 íî Manager form of government consisting of five Council Members elected to four-year overlapping terms. The Mayor is directly elected by the citizens. The City encompasses an area of approximately 35.31 square miles. The population of the City was estimated to be 38,401 as of January 1, 2013. See Appendix H — “SUPPLEMENTAL INFORMATION — THE CITY OF LA QUINTA.” 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 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 (“AB X1 26”) was enacted as Chapter 5, Statutes of 2011, together with a companion bill, Assembly Bill No. 27 (“AB X1 27”). A lawsuit was brought in the California Supreme Court, [[1519,824,2300,877][11][,I,][Times New Roman]]California Redevelopment Association, [[300,877,824,930][11][,I,][Times New Roman]]et al. v. Matosantos, et al. [[786,877,1533,930][11][,,][Times New Roman]], 53 Cal. 4th 231 (Cal. Dec. 29, 2011) [[1498,877,2300,930][11][,,][Times New Roman]], challenging the constitutionality of AB X1 26 and AB X1 27. The California Supreme Court largely upheld AB X1 26, invalidated AB X1 27, and held that AB X1 26 may be severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the decision of the California Supreme Court in the [[1529,1035,2277,1088][11][,I,][Times New Roman]]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 AB X1 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 (as amended from time to time, the “Dissolution Act”). On January 3, 2012, the City Council of the City elected to serve as Successor Agency to the La Quinta Redevelopment Agency (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) 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 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. 2 íí Tax Allocation Financing Prior to the enactment of AB X1 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 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. Under the Indentures, 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. See “SECURITY FOR THE BONDS — Tax Increment Financing” herein for additional information. Successor agencies have no power to levy property taxes and must look specifically to the allocation of taxes as described above. See “RISK FACTORS.” 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 AB X1 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 (the “Redevelopment Property Tax Trust Fund”) 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 AB X1 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 Indentures as the portion of the monies deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section 34172 of the Dissolution Act, as provided in paragraph (2) of subdivision (a) of Section 34183 of the Dissolution Act. In accordance with the Dissolution Act, the Bonds and Parity Bonds shall be payable from and secured by, and Pledged Tax Revenues shall include, moneys deposited, from time to time, in the Redevelopment Property Tax Trust 3 íì Fund established pursuant to subdivision (c) of Health & Safety Code Section 34172, as provided in paragraph (2) of subdivision (a) of Health & Safety Code Section 34183, less the amount required to pay debt service on the Senior Bonds, as defined below. 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 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, 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 Indentures 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, to the extent they constitute Pledged Tax Revenues, as described herein, 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 established under the Indentures and administered by the Trustee in accordance with the Indentures. 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 Prior Agency’s previously issued $6,000,000 La Quinta Redevelopment Project Area No. 2, Subordinate Taxable Tax Allocation Bonds, Series 2011 (the “2011 Bonds”) of which $5,965,000 are currently outstanding and the Prior Agency’s obligation under the Loan Agreement, dated February 3, 2004 as supplements by the Second Supplemental Loan Agreement, dated as of March 1, 2011 (the “2011 Loan Obligation”) in connection with the La Quinta financing Authority’s (the “Authority”) previously issued $28,850,000 Local Agency Subordinate Taxable Revenue Bonds, 2011 Series A (the “2011 Series A Bonds”) currently outstanding in full. The 2011 Bonds and the 2011 Loan Obligation are sometimes referred to herein as the “Senior Bonds.” Pursuant to the Second Supplemental Loan Agreement, the 2011 Series A Bonds are payable from that portion of the tax revenues set aside as provided in Sections 33334.2 and 33334.3 of the Redevelopment Law for the Project Areas (the “Housing Set Aside”). Pursuant to the 2011 Bond Indenture, the 2011 Bonds are payable from the tax revenues from Project Area No. 2 less the tax revenues set aside as provided in Sections 33334.2 and 33334.3 of the Redevelopment Law and the tax revenues paid to certain taxing entities in the County pursuant to the senior pass-through obligations. Under the Dissolution Act, the Senior Bonds are payable from moneys deposited in the Redevelopment Obligation Payment Fund from the Redevelopment Property Tax Trust Fund on a senior lien basis to the Bonds. 4 íë Reserve Account In order to further secure the payment of the principal of and interest on the Bonds, proceeds of the Bonds will be used to purchase an Alternative Reserve Account Security to be deposited in a Reserve Account within the Debt Service Fund established pursuant to the Indentures. The amount of the Alternative Reserve Account Security will be 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. Further Information Brief descriptions of the Bonds, the Indentures, 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 Indentures, 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 Indentures 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 Southwest 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 (Information to Follow) 5 íê SOURCES AND USES OF FUNDS The estimated sources and uses of funds is summarized as follows: [[1420,506,2230,558][11][B,I,][Times New Roman]]Series A Bonds Series B Bonds Sources: Principal Amount of Bonds $ $ Refunded Bonds Released Funds Underwriter’s Discount Original Issue Premium Total Sources $ $ Uses: 1998 Project Area No. 1 Bonds Escrow Fund $ $ 2001 Project Area No. 1 Bonds Escrow Fund 2002 Project Area No. 1 Bonds Escrow Fund 2003 Project Area No. 1 Bonds Escrow Fund 1998 Project Area No. 2 Bonds Escrow Fund 2004 Housing Bonds Escrow Fund (2) Reserve Account (3) Costs of Issuance Fund Total Uses $ $ (1) Amount sufficient to pay principal, redemption price and interest on the Refunded Bonds upon redemption. (2) Funded by a Reserve Account Surety Bond issued by the Bond Insurer in an amount equal to the Reserve Requirement for the Bonds. (3) Costs of Issuance include fees and expenses for Bond Counsel, Disclosure Counsel, Financial Advisor, Trustee, printing expenses, rating fee and other costs. THE BONDS Authority for Issuance The Bonds were authorized for issuance pursuant to the Indentures, the Bond Law, and the Dissolution Act. The issuance of the Bonds and the Indentures were authorized by the Agency pursuant to Resolution No. SA 2013-004 adopted on June 4, 2013 (the “Resolution”), and by the Oversight Board for the Agency pursuant to Resolution No. OB 2013-006 adopted on June 5, 2013 (the “Oversight Board Action”). Written notice of the Oversight Board Resolution was provided to the State Department of Finance (“DOF”) pursuant to the Dissolution Act on June 5, 2013, and the DOF requested a review within five business days of such written notice. On _______, 2013, 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. See Appendix G — “STATE DEPARTMENT OF FINANCE LETTER.” 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. 6 íé 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 March 1, 2014, 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 The Depository Trust Company (“DTC”), New York, New York, 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 [[450,1343,882,1395][11][B,I,][Times New Roman]]Optional Redemption [[857,1343,2300,1396][11][,,][Times New Roman]]. The Series A 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, 2023 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: [[886,1655,1246,1707][11][B,I,][Times New Roman]]Redemption Date [[1579,1655,1969,1707][11][B,I,][Times New Roman]]Redemption Price September 1, 2023 and thereafter100% The Series B 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, 2023 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: [[885,2146,1968,2198][11][B,I,][Times New Roman]]Redemption DateRedemption Price September 1, 2023 and thereafter100% Sinking Fund Redemption The Series A Bonds maturing on September 1, 2034, will be subject to mandatory redemption in part, by lot, on September 1, 2033, and on each September 1 thereafter 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: [[925,2742,1705,2794][11][B,I,][Times New Roman]]Year Amount 2033 $4,255,000 2034 (maturity) 4,095,000 7 íè The Series B Bonds maturing on September 1, 2026, September 1, 2029, September 1, 2032 and September 1, 2034, will be subject to mandatory redemption in part, by lot, on September 1, 2024, September 1, 2027, September 1, 2030 and September 1, 2034 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: 2026 TERM [[925,769,1705,821][11][B,I,][Times New Roman]]Year Amount 2024 $2,105,000 2025 2,190,000 2026 (maturity) 2,265,000 2029 TERM [[925,1161,1705,1213][11][B,I,][Times New Roman]]Year Amount 2027 $2,355,000 2028 2,450,000 2029 (maturity) 2,550,000 2032 TERM [[925,1552,1705,1604][11][B,I,][Times New Roman]]Year Amount 2020 $2,655,000 2031 2,770,000 2032 (maturity) 2,895,000 2034 TERM [[925,1943,1705,1995][11][B,I,][Times New Roman]]Year Amount 2033 $1,325,000 2034 (maturity) 1,385,000 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 AB X1 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 AB X1 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”). 8 íç 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 Area 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 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)[[600,1085,997,1138][11][,I,][Times New Roman]]To Taxing Agencies [[965,1085,1640,1138][11][,,][Times New Roman]]: That portion of the taxes which w [[1622,1085,2301,1138][11][,,][Times New Roman]]ould 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)[[600,1557,1199,1610][11][,I,][Times New Roman]]To the Prior Agency/Agency: [[1161,1557,2300,1610][11][,,][Times New Roman]]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 Indentures as the portion of the monies deposited from time to time in the Redevelopment Property Tax Trust Fund established pursuant to subdivision (c) of Section 34172 of the Dissolution Act, 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 9 ìð 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 the Pledged Tax Revenues to be derived from the Project Areas. 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, 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 Indentures. 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, to the extent they constitute Pledged Tax Revenues, as described herein, 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 Indentures and administered by the Trustee in accordance with the Indentures. 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 AB X1 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 10 ìï 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) of the Dissolution Act for permitted administrative costs of the county auditor-controller. Under the Indentures, 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 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 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. However, with respect to the Bonds, the Prior Agency established two redevelopment project area, which are the Project Areas. Therefore, all of the Pledged Tax Revenues will derive solely from the Project Areas, and the Agency and the Prior Agency have no obligations deriving from any project area other than the Project Areas. 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 expressly provide that payments thereunder are subordinate to payments on the Prior Agency’s bonds. (See “THE PROJECT AREAS — Pass-Through Agreements”). 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 by the County Auditor-Controller from the Redevelopment Property Tax Trust Fund 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 11 ìî 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 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 may be deducted from the amounts to be distributed under Pass-Through Agreements and for Statutory Tax Sharing Amounts, 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 Dissolution Act provides for a procedure by which the Agency may make Statutory Tax Sharing Amounts subordinate to the Bonds; however, the Agency has determined not to undertake such procedure, and therefore, Statutory Tax Sharing Amounts are not subordinate to the Bonds (see “THE PROJECT AREAS — Statutory Pass- Throughs”). The Agency cannot guarantee that this 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 “— Statutory Pass-Throughs” 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 Before each six-month period, the Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency’s oversight board and the State Department of Finance for approval, a Recognized Obligation Payment Schedule (the “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. As defined in the Dissolution Act, “enforceable obligation” includes bonds, including the required debt service, reserve set-asides, 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 six-month period (see “THE INDENTURE — Covenants of the Agency”). 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 12 ìí 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 funds and accounts under the Indentures, 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. The Recognized Obligation Payment Schedule, with respect to each six-month period beginning January 1 and July 1, must 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 by 90 days before the date of the next January 2 or June 1 property tax distribution. If the Agency does not submit an Oversight Board-approved 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 Agency’s administrative cost allowance is reduced by 25% if the Agency does not submit an Oversight Board-approved Recognized th Obligation Payment Schedule by the 80 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. For additional information regarding procedures under the Dissolution Act relating to late Recognized Obligation Payment Schedules and implications thereof on the Bonds, see “RISK FACTORS — Recognized Obligation Payment Schedule.” The Dissolution Act requires the State Department of Finance to make a determination of the enforceable obligations and the amounts and funding sources of the enforceable obligations no later than 45 days after the Recognized Obligation Payment Schedule is submitted. Within five business days of the determination by the State Department of Finance, the Agency may request additional review by the department and an opportunity to meet and confer on disputed items, if any. The State Department of Finance will 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. Additionally, 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 State Department of Finance at least 60 days prior to the January 2 or June 1 date of property tax distribution, as applicable. 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 State Department of Finance 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, no later than December 1 or May 1, as applicable (i.e., by December 1, 2013 with respect to the Recognized Obligation Payment Schedule for January 2, 2014 through June 30, 2014), 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 13 ìì of pass-through obligations, for Agency enforceable obligations listed on the Recognized Obligation Payment Schedule, and for the Agency’s administrative cost allowance, the County Auditor-Controller must notify the State Controller and the State Department of Finance 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. 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 AB X1 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. Additionally, if an enforceable obligation provides for an irrevocable commitment of property tax revenue and where allocation of revenues is expected to occur over time, the Dissolution Act provides that a successor agency may petition the State Department of Finance to provide written confirmation that its determination of such enforceable obligation as approved in a Recognized Obligation Payment Schedule is final and conclusive, and reflects the department’s approval of subsequent payments made pursuant to the enforceable obligation. If the confirmation is granted by the State Department of Finance, then the State Department of Finance’s review of such payments in each future Recognized Obligation Payment Schedule will be limited to confirming that they are required by the prior enforceable obligation. The Agency has covenanted to take all actions required under the Dissolution Act to include scheduled debt service on the Senior Bonds and on the Bonds, as well as any amount required under the Indentures to replenish the Reserve Account of the Debt Service Fund, in Recognized Obligation Payment Schedules for each six-month 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 on each January 2 and June 1 amounts required for the Agency to pay principal of, and interest on, the Senior Bonds and the Bonds coming due in the respective six-month period, including listing a reserve on the Recognized Obligation Payment Schedule to the extent required by the Senior Bonds indentures and the Indentures or when the next property tax allocation is projected to be insufficient to pay all obligations due under the provisions of the Senior Bonds and the Bonds for the next payment due in the following six-month period (see “THE INDENTURE — Covenants of the Agency”). Parity Bonds Under the Indentures, 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; 14 ìë (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 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 Indentures; (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 Indentures, and (ii) the deposit of moneys 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; 15 ìê (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; (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 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 (excluding debt service with respect to any portion of the Parity Bonds deposited in an escrowed proceeds account to the extent such debt service is paid from earnings on the investment of such funds), 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 [[450,1763,2300,1816][11][,I,][Times New Roman]]The following is a summary of certain provisions of the Indentures and does not purport to be [[300,1815,1242,1868][11][,I,][Times New Roman]]complete. Reference is hereby made to the Inde [[1212,1815,2300,1868][11][,I,][Times New Roman]]nture and to APPENDIX A for the definition of certain [[300,1868,1291,1921][11][,I,][Times New Roman]]terms used herein. Copies of the Indenture are ava [[1264,1868,2300,1921][11][,I,][Times New Roman]]ilable from the Agency upon request. All capitalized [[300,1921,1300,1974][11][,I,][Times New Roman]]terms used herein and not otherwise defined will hav [[1270,1921,2152,1974][11][,I,][Times New Roman]]e the same meaning as used in the Indentures. Allocation of Bond Proceeds 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. There is established by the Indentures 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 Indentures until such time during such Bond Year as the amounts so transferred to the Debt Service Fund under the Indentures 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 Indentures and for 16 ìé deposit in such Bond Year in the funds and accounts established with respect to Parity Bonds, as provided in any Supplemental Indenture. Pledged Tax Revenues – Application There are established under the Indentures 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 Indentures, 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 Indentures). (b) Principal Account. On or before the 5th Business Day preceding September 1 in each year beginning September 1, 2014, 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 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 to become due on such September 1 on all Outstanding Bonds. Subject to the Indentures, 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 Indentures, 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 17 ìè deposit therein a sum at least equal to the Reserve Requirement. Subject to the Indentures, all money in the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of making 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. The Indenture also creates a Series 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 Series A 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 Indentures, 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 which 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 Indentures, 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 18 ìç 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 Indentures 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 Indentures. 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 Indentures or in any Bond issued under the Indentures, 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 Indentures. 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, or purport to 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 Indentures “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 all payments to the Trustee to satisfy the requirements of the Indenture, including any amounts required under the Indentures 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 19 ëð 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 Redevelopment Project and the Tax Revenues and other funds relating to the Redevelopment Project. 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 Indentures 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 Indentures, 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 Indentures 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. Tax Covenants . The Agency covenants and agrees to contest by court action or otherwise any assertion by the United States of America or any department or agency thereof that the interest received by the Series A Bondowners is includable in gross income of the recipient under federal income tax laws on the date of issuance of the Series A Bonds. In order to preserve the exclusion from gross income of interest on the Series A Bonds, and for no other reason, the Agency covenants to comply with all applicable requirements of the Internal Revenue Code of 1986, as amended (the “Code”), together with any amendments thereto or regulations promulgated thereunder necessary to preserve such tax exemption as more specifically provided in the Indenture. 20 ëï Covenant 10. Compliance with Dissolution Act . The Agency covenants that in additional to complying with the requirements of Covenant 3, it will comply with all other requirements of the Dissolution Act. Without limiting the generality of the foregoing, the Agency covenants and agrees to file all required statements and hold all public hearings required under the Dissolution Act to assure compliance by the Agency with its covenants under the Indentures. Further, the Agency will take all actions required under the Dissolution Act to include scheduled debt service on the Bonds, as well as any amount required under the Indentures to replenish the Reserve Account, in Recognized Obligation Payment Schedules for each six-month 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 on each January 2 and June 1 amounts required for the Agency to pay principal of, and interest on, the Bonds coming due in the respective six-month period. These actions will include, without limitation, placing on the periodic Recognized Obligation Payment Schedule for approval by the Oversight Board and State Department of Finance, to the extent necessary, the amounts to be held by the Agency as a reserve until the next six-month period, as contemplated by paragraph (1)(A) of subdivision (d) of Section 34171 of the Dissolution Act, that are necessary to provide for the payment of principal and interest under the Indenture when the next property tax allocation is projected to be insufficient to pay all obligations due under the Indenture for the next payment due in the following six-month period. Covenant 11. 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 12. 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 13. 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. Notwithstanding any other provision of the Indentures, 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 Indentures: (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; 21 ëî (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 Indentures 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 Indentures, 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 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 Successor Agency) and the Trustee shall be required to 22 ëí 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 Insurance 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 Indentures, 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: [[448,924,576,977][11][,I,][Times New Roman]]First [[539,924,1423,977][11][,,][Times New Roman]], to the payment of the fees, costs and expen [[1396,924,2301,977][11][,,][Times New Roman]]ses 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 [[450,1133,610,1186][11][,I,][Times New Roman]]Second [[582,1133,1414,1186][11][,,][Times New Roman]], to the payment of the whole amount then [[1377,1133,2300,1186][11][,,][Times New Roman]]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 Indentures, the Indentures 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 Indentures 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 Indentures, or in any other respect whatsoever 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 Indentures, 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 Indentures; 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 Series A Bonds, in the opinion of a nationally recognized bond counsel. 23 ëì 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 Indentures 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 Indentures 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, AB X1 26 was enacted as Chapter 5, Statutes of 2011, together with a companion bill, AB X1 27. A lawsuit was brought in the California Supreme Court, [[936,1296,1703,1349][11][,I,][Times New Roman]]California Redevelopment Association, [[1664,1296,2215,1349][11][,I,][Times New Roman]] et al. v. Matosantos, et al. [[2177,1296,2300,1349][11][,,][Times New Roman]], 53 Cal. 4th 231 (Cal. 2011), challenging the constitutionality of AB X1 26 and AB X1 27. In its December 29, 2011 decision, the California Supreme Court largely upheld AB X1 26, invalidated AB X1 27, and held that AB X1 26 may be severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the decision of the California Supreme Court in the [[1541,1507,2278,1560][11][,I,][Times New Roman]]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 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: [[855,2600,1231,2652][11][B,I,][Times New Roman]]Name and Office [[1604,2600,2022,2652][11][B,I,][Times New Roman]]Expiration of Term Don Adolph, [[757,2676,884,2729][11][,I,][Times New Roman]]Chai [[847,2676,897,2729][11][,I,][Times New Roman]]r 2014 Kristy Franklin, [[811,2728,1034,2781][11][,I,][Times New Roman]]Vice-Chai [[997,2728,1047,2781][11][,I,][Times New Roman]]r 2016 Linda Evans, [[756,2781,810,2834][11][,I,][Times New Roman]]M [[798,2781,924,2834][11][,I,][Times New Roman]]embe [[894,2781,944,2834][11][,I,][Times New Roman]]r 2014 Terry B. Henderson,[[891,2834,945,2887][11][,I,][Times New Roman]]M [[933,2834,1060,2887][11][,I,][Times New Roman]]embe [[1030,2834,1080,2887][11][,I,][Times New Roman]]r 2014 Lee M. Osborne, Member 2016 24 ëë 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 State Department of Finance. 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. Previously, Section 33675 of the Redevelopment Law required the Prior Agency to file not later than the first day of October of each year with the County Auditor of a statement of indebtedness certified by the chief fiscal officer of the Prior Agency for each redevelopment plan which provides for the allocation of taxes (i.e., the Redevelopment Plans). The statement of indebtedness was required to contain the date on which the bonds were delivered, the principal amount, term, purposes and interest rate of the bonds and the outstanding balance and amount due on the bonds. Similar information was required to be given for each loan, advance or indebtedness that the Prior Agency had incurred or entered into which is payable from tax increment. Section 33675 also provided that payments of tax increment revenues from the County Auditor to the Prior Agency could not exceed the amounts shown on the Prior Agency’s statement of indebtedness. The Dissolution Act eliminates this requirement and provides that, commencing on the date the first Recognized Obligation Payment Schedule is valid thereunder, the Recognized Obligation Payment Schedule supersedes the statement of indebtedness previously required under the Redevelopment Law, and commencing from such date, the statement of indebtedness will no longer be prepared nor have any effect under the Redevelopment Law (see “SECURITY FOR THE BONDS — Recognized Obligation Payment Schedule”). RISK FACTORS [[450,2184,1440,2237][11][,I,][Times New Roman]]The following information should be considered by [[1397,2184,1865,2237][11][,I,][Times New Roman]]prospective investors in [[1839,2184,2312,2237][11] [,I,][Times New Roman]] evaluating the Bonds. [[297,2237,1244,2290][11][,I,][Times New Roman]]However, the following does not purport to be [[1212,2237,2300,2290][11][,I,][Times New Roman]]an exhaustive listing of risks and other considerations [[300,2290,1345,2343][11][,I,][Times New Roman]]which may be relevant to investing in the Bonds. [[1319,2290,2300,2343][11][,I,][Times New Roman]] In addition, the order in which the following [[300,2342,1156,2395][11][,I,][Times New Roman]]information is presented is not intended to re [[1118,2342,2012,2395][11][,I,][Times New Roman]]flect 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 25 ëê 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 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 2011-12, the 26 ëé inflationary value adjustment was 0.753%, which also is below the 2 percent limitation. For Fiscal Year 2012-13, the inflationary value adjustment is 2.00%, which is the maximum permissible increase under Article XIIIA. 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. Projected 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 projected 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, delinquencies in the payment of property taxes by the owners of land in the Project 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 on the County’s “Teeter Plan” as discussed below under the heading “PROJECT AREAS — Teeter Plan and Delinquency Dates.” State Budget Issues AB X1 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[[346,2495,396,2548][11][,I,][Times New Roman]]. [[358,2495,1369,2548][11][,,][Times New Roman]]7 billion in 2011-12 associated with AB X1 27, whic [[1338,2495,2300,2548][11][,,][Times New Roman]]h 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, AB X1 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 2013-14 was enacted on June 22, 2013 and did not include any additional legislation dealing with dissolution of redevelopment agencies. There can be 27 ëè 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: [[1402,511,2140,564][11][,I,][Times New Roman]]http://www.leginfo.ca.gov/bilinfo.html [[2103,511,2153,564][11][,,][Times New Roman]]. Information about the State budget and State spending is available at various State maintained websites. Text of the 2012-13 Budget Summary, the current State budget, and other documents related to the State budget may be found at the website of the State Department of Finance, [[1877,719,2201,772][11][,I,][Times New Roman]]www.dof.ca.gov [[2172,719,2300,772][11][,,][Times New Roman]]. A nonpartisan analysis of the budget is posted by the Legislative Analyst’s Office at [[1873,772,2197,825][11][,I,][Times New Roman]]www.lao.ca.gov [[2168,772,2300,825][11][,,][Times New Roman]]. 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, [[1400,877,1836,930][11][,I,][Times New Roman]]www.treasurer.ca.gov [[1806,877,1856,930][11][,,][Times New Roman]]. [[448,980,1511,1033][11][,I,][Times New Roman]]None of the websites or webpages referenced above is [[1475,980,2300,1033][11][,I,][Times New Roman]]in any way incorporated into this Official [[300,1033,1227,1086][11][,I,][Times New Roman]]Statement. They are cited for informational [[1195,1033,1739,1086][11][,I,][Times New Roman]]purposes only. The Agen [[1712,1033,2300,1086][11][,I,] [Times New Roman]]cy makes no representation [[300,1086,939,1139][11][,I,][Times New Roman]]whatsoever as to the accuracy or [[907,1086,1999,1139][11][,I,][Times New Roman]] 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 six-month period, the Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency’s oversight board and the State Department of Finance 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 “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 a six-month 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 State Department of Finance 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 State Department of Finance 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 State Department of Finance 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 State Department of Finance. 28 ëç Typically, under the Redevelopment Property Tax Trust Fund distribution provisions of the Dissolution Act, the County Auditor-Controller is to distribute funds for each six-month period 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 and June 1, 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 State Department of Finance 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 scheduled debt service on the Bonds as well as any amount required under the Indenture to replenish the Reserve Account of the Debt Service Fund, in Recognized Obligation Payment Schedules for each six-month period and to enable the County Auditor- Controller to distribute from the Redevelopment Property Tax Trust Fund to the Agency’s Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Agency to pay principal of, and interest on, the Bonds coming due in the respective six-month period, including listing a reserve on the Recognized Obligation Payment Schedule to the extent required by the Indentures or when the next property tax allocation is projected to be insufficient to pay all obligations due under the provisions of the Bonds for the next payment due in the following six-month period (see “THE INDENTURE — Covenants of the Agency”). AB 1484 also adds new provisions to the Dissolution Act implementing certain penalties in the event the Agency does not timely submit a Recognized Obligation Payment Schedule for a six-month period. Specifically, a Recognized Obligation Payment Schedule must 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 90 days before the date of the next January 2 or June 1 property tax distribution with respect to each subsequent six-month period. If the Agency does not submit an Oversight Board-approved 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 Agency’s administrative cost allowance is reduced by 25% if the Agency does not submit an Oversight Board-approved Recognized th Obligation Payment Schedule by the 80 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. 29 êð AB 1484 Penalty for Failure to Remit Unencumbered Funds AB 1484 further implements certain provisions of ABX1 26, including establishing a process for determining the liquid assets that redevelopment agencies should have shifted to their successor agencies when they were dissolved, and the amount that should be available for remittance by the successor agencies to their respective county auditor-controllers for distribution to affected taxing entities within the project areas of the former redevelopment agencies. This determination process is required to be completed through the final step (review by the State Department of Finance) 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 State Department of Finance, or it may request a meet and confer with the State Department of Finance 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 State Department of Finance 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 AB 1484. Among such penalties and remedies, if the city that established the redevelopment agency is performing the duties of the successor agency, the State Department of Finance may order an offset to the city’s sales and use tax revenues equal to the amount the successor agency fails to remit. If the State Department of Finance does not order an offset, the county auditor-controller may reduce the property tax allocation of the city. Alternatively or in addition to the remedies discussed in the foregoing sentences, the State Department of Finance may direct the county auditor-controller to deduct the unpaid amount from future allocations of property tax to the successor agency under Section 34183 of the Dissolution Act until the amounts required to be remitted are paid. Pertinent to the Bonds, if the Agency were to fail to remit to the County Auditor-Controller the amounts of unobligated balances determined by the State Department Finance within the time frames required under AB 1484, the State Department of Finance may direct the County Auditor-Controller to deduct the unpaid amount from future allocations of Pledged Tax Revenues to the Agency under Section 34183 of the Dissolution Act until the amounts required to be remitted are paid. The Agency intends to promptly remit to the County Auditor-Controller the amounts of unobligated balances determined by the State Department Finance within the time frames required under AB 1484. However, since this procedure for remittance of unencumbered balance is new, the Agency cannot predict whether circumstances outside of the Agency’s control may introduce complications in the process that may have an adverse consequence on the Pledged Tax Revenues that secure the Bonds. 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 30 êï 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 present and 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 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. 31 êî 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. 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, 2012 (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.” Secondary Market There can be no guarantee that there will be a secondary market for the Bonds, or, if a secondary market exists, that the 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 the then prevailing circumstances. 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.” 32 êí 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 September 22, 2012. It is possible that the Syncora Lawsuit (see “LITIGATION” herein) or another 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 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 as raised in the Syncora Lawsuit. 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 the Syncora Lawsuit or any other 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. PROPERTY TAXATION IN CALIFORNIA Property Tax Collection Procedures [[450,2289,734,2341][11][B,I,][Times New Roman]]Classification [[710,2289,760,2342][11][,I,][Times New Roman]]. [[766,2289,2300,2342][11][,,][Times New Roman]]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, [[655,2761,881,2814][11][,I,][Times New Roman]]ad valorem [[864,2761,2300,2814][11][,,][Times New Roman]] 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 [[1684,2814,1913,2867][11][,I,][Times New Roman]]ad valorem [[1896,2814,2300,2867][11][,,][Times New Roman]] tax (each a taxing entity) and successor agencies eligible to receive distributions from the respective Redevelopment Property Tax Trust Fund. 33 êì [[450,300,694,352][11][B,I,][Times New Roman]]Collections [[661,300,1551,353][11][,,][Times New Roman]]. Secured and unsecured property are ente [[1521,300,2300,353][11][,,][Times New Roman]]red separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different 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. [[447,877,622,929][11][B,I,][Times New Roman]]Penalty [[592,877,1469,930][11][,,][Times New Roman]]. A 10% penalty is added to delinquent tax [[1442,877,2300,930][11][,,][Times New Roman]]es 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. [[448,1401,752,1453][11][B,I,][Times New Roman]]Delinquencies [[720,1401,2300,1454][11][,,][Times New Roman]]. 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. [[449,1662,992,1714][11][B,I,][Times New Roman]]Supplemental Assessments [[959,1662,1673,1715][11][,,][Times New Roman]]. California Revenue and Taxation [[1639,1662,2300,1715][11][,,][Times New Roman]]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. [[447,2187,1154,2239][11][B,I,][Times New Roman]]Property Tax Administrative Costs [[1121,2187,1171,2240][11][,I,][Times New Roman]]. [[1170,2187,2300,2240][11][,,][Times New Roman]]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 2012-13, the County’s administrative charge to the Agency is estimated to be $828,000. [[448,2764,1234,2816][11][B,I,][Times New Roman]]Negotiated Pass-Through Agreements [[1202,2764,1252,2817][11][,I,][Times New Roman]]. [[1268,2764,2300,2817][11][,,][Times New Roman]]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 34 êë 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 sharing agreements. The Agency agreements with affected taxing agencies are referred to herein as “Pass-Through Agreements.” See “THE PROJECT AREAS — Pass-Through Agreements”. See also “SECURITY FOR THE BONDS — Tax Increment Financing” for additional discussion of the treatment of Pass-Through Agreements under the Dissolution Act. [[449,666,971,718][11][B,I,][Times New Roman]]Statutory Pass-Throughs [[939,666,2300,719][11][,,][Times New Roman]]. 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 — Statutory Pass-Throughs” 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. [[447,1191,1281,1243][11][B,I,][Times New Roman]]Recognized Obligation Payment Schedule [[1251,1191,1301,1244][11][,I,][Times New Roman]]. [[1292,1191,2300,1244][11][,,][Times New Roman]]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 six-month period, the Dissolution Act requires successor agencies to prepare and approve, and submit to the successor agency’s oversight board and the State Department of Finance 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. 35 êê 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. 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. 36 êé 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. 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. In 2001, the California Legislature enacted SB 211, Chapter 741, Statutes 2001, effective January 1, 2002 (“SB 211”), which authorized, among other things, the deletion by ordinance of the legislative body of the AB 1290 limitation on incurring indebtedness contained in a redevelopment plan adopted prior to January 1, 1994. However, such elimination triggers statutory tax sharing with those taxing entities that do not have Pass-Through Agreements. The City adopted an ordinance, pursuant to the authorization contained in SB 211, deleting the limit on the Agency’s authority to incur loans, advances and indebtedness with respect to the Project Areas. SB 211 also prescribed additional requirements that a redevelopment agency would have to meet upon extending the time limit on the effectiveness of a redevelopment plan, including requiring an increased percentage of new and substantially rehabilitated dwelling units to be available at affordable housing cost to persons and families of low or moderate income prior to the termination of the effectiveness of the plan. 37 êè Legislation passed in 2003 (SB 1045) and 2004 (SB 1096) required redevelopment agencies to remit monies to the applicable county Educational Revenue Augmentation Fund (“ERAF”) and also permits redevelopment agencies to extend their ability to collect tax increment by one year for each payment required by such legislation to be made in 2003-04, 2004-05 and 2005-06. The extensions for 2004-05 and 2005-06 apply only to plans with existing limits on the effectiveness of the plan that are less than 20 years from the last day of the fiscal year in which the ERAF payment is made. The City adopted ordinances, pursuant to the authorization granted in SB 1045, SB 1096, extending the time limits on the effectiveness of the Redevelopment Plans and the receipt of the tax increment. See “THE PROJECT AREAS.” 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 Taxpayers” for information regarding the assessed valuations of the top ten property owners within the Project Areas. 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 38 êç 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. 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 ADVISORS 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 39 éð 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 ADVISORS REPORT” herein. Redevelopment Plan Limitations As amended, the Project Area No. 1 Redevelopment Plan terminates 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. [[1711,870,1764,922][11][B,I,][Times New Roman]]P [[1742,870,2093,922][11][B,I,][Times New Roman]]roject Area No. 1 [[1636,920,2190,972][11][B,I,][Times New Roman]]Redevelopment Plan Limit Bonded Indebtedness Cumulative Amount (principal)$200,000,000 Tax Increment Cumulative Limit* $2,000,000,000 Final Date to Collect Tax IncrementNovember 29, 2034 *$643,768,448 receivedas of June 30, 2013. As amended, the Project Area No. 2 Redevelopment Plan terminates 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. [[1711,1628,1764,1680][11][B,I,][Times New Roman]]P [[1742,1628,2093,1680][11][B,I,][Times New Roman]]roject Area No. 2 [[1636,1678,2190,1730][11][B,I,][Times New Roman]]Redevelopment Plan Limit Bonded Indebtedness Cumulative Amount (principal)$187,860,000* Tax Increment Cumulative Limit** $1,500,000,000 Final Date to Collect Tax IncrementMay 16, 2040 [[449,2130,980,2182][11][B,I,][Times New Roman]]Extension of Plan Limits [[948,2130,998,2183][11][,I,][Times New Roman]]. [[960,2130,2300,2183][11][,,][Times New Roman]] The California Legislature enacted SB211, Chapter 741, Statutes 2001, effective January 1, 2002 (“SB211”). SB211 provides, among other things, that, at anytime after its effective date, the limitation on incurring indebtedness contained in a redevelopment plan adopted prior to January 1, 1994, may be deleted by ordinance of the legislative body. However, such deletion will trigger statutory tax sharing with those taxing entities that do not have tax sharing agreements. Tax sharing will be calculated based on the increase in assessed valuation after the year in which the limitation would otherwise have become effective. See “THE PROJECT AREAS — Redevelopment Plan Limitations” describing the current limitation on the Agency’s incurring of indebtedness. SB211 also authorizes the amendment of a redevelopment plan adopted prior to January 1, 1994 to extend for not more than 10 years the effectiveness of the redevelopment plan and the time to receive tax increment revenues and to pay indebtedness. Any such extension must meet certain specified requirements, including the requirement that the redevelopment agency establish the existence of both physical and economic blight within a specified geographical area of the redevelopment project and that any additional tax increment revenues received by the redevelopment agency because of the extension be used solely within the designated blighted area. SB211 authorizes any affected taxing entity, the 40 éï Department of Finance, or the Department of Housing and Community Development to request the Attorney General to participate in the proceedings to effect such extensions. It also would authorize the Attorney General to bring a civil action to challenge the validity of the proposed extensions. SB211 also prescribes additional requirements that a redevelopment agency would have to meet upon extending the time limit on the effectiveness of a redevelopment plan, including requiring an increased percentage of new and substantially rehabilitated dwelling units to be available at affordable housing cost to persons and families of low or moderate income prior to the termination of the effectiveness of the plan. 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 corporate area of the City. Controls, Land Use and Building Restrictions All real property in the Project Areas is subject to the controls and restrictions of the Redevelopment Plans. The Redevelopment Plans require that new construction shall comply with all applicable State statutes and local laws in effect, including the City zoning ordinances and City codes for building, electrical works, heating, ventilating, housing and plumbing. The Redevelopment Plans further provide that no new improvement or addition to an existing building shall be substantially modified, altered, repaired or rehabilitated except in accordance with architectural, landscape and site plans submitted to and approved by the Agency. The Redevelopment Plans allow commercial, residential, public and institutional uses within the Project Areas but specifies the particular land use area in which such use is permitted. The Agency may permit an existing but nonconforming use to remain so long as the existing building is in good condition and is generally compatible with other surrounding development uses. The owner of such property must be willing to enter into a participation agreement and abide by any reasonable restriction deemed necessary to protect the development and use of the Project Areas. The owner-participant must receive prior authorization and approval from the Agency to make additions, repairs, alterations or other improvements to his nonconforming use structure. Within the limits, restrictions and controls established in the Redevelopment Plans, the Agency is authorized to establish heights of buildings, land coverage, setback requirements, design criteria, traffic circulation, traffic access and other development and design controls necessary for proper development of both private and public segments within the Project Areas. Under certain circumstances, the Agency is authorized to permit a variation from the limits, restrictions and controls granted which changes a basic land use or which permits other than a minor departure from the Redevelopment Plans provisions. In permitting a variation, the Agency shall impose such conditions as are necessary to protect the public health, safety or welfare and to assure compliance with the purposes of the Redevelopment Plans. Any variation permitted by the Agency shall not supersede any other approval required under City codes and ordinances. 41 éî The Agency currently has several developments under construction or plan approval process in the Project Areas. These developments are described in “ APPENDIX F—Financial Advisors Report” herein. Pass-Through Agreements and Obligations with Various Taxing Agencies Pursuant to the 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. Except as noted below, these pass-through agreements are expressly subordinated to the pledge of Pledged Tax Revenues to the payment of the Bonds. However, under the Dissolution Act the Agency must request the use of the subordinated pass-through covenants. For a description of the process required by the Dissolution Act, see the discussion under “SECURITY FOR THE BONDS — Tax Increment Financing” to the extent requested in advance by the Agency. The Agency has not requested subordination due to sufficiency of Pledged Tax Revenues: (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. Pursuant to the 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. 42 éí Largest Local Secured Taxpayers Set forth below are the ten largest local secured taxpayers in Project Area No. 1 based on the 2012-13 secured property tax roll. These taxpayers represent approximately 9.4% of the total secured valuation in Project Area No. 1 of $5,245,952,426. [[1989,611,2129,658][10][B,I,][Times New Roman]]% of [[561,659,887,706][10][B,I,][Times New Roman]]Property Owner [[1188,659,1404,706][10][B,I,][Times New Roman]]Land Use [[1628,659,1929,706][10][B,I,][Times New Roman]]Secured Value [[1984,659,2124,706][10][B,I,][Times New Roman]]Total KSL Desert Resort, et al. Hotel/Golf Course/Vacant Land $151,797,451 3.6% Sunrise Desert Partners Condominiums/Vacant Land 70,490,223 1.7 MSR Resort Golf Course Golf Course 49,009,939 1.2 Village Resort Hotel/Golf Course/Vacant Land 24,486,681 0.6 Lands LP Apartments 20,553,610 0.5 Nadador LLC Timeshare Property 18,584,114 0.4 CNL Desert Resort LP Hotel 18,234,484 0.4 Quarry at La Quinta, et al. Golf Course 15,240,254 0.4 LQ Investment Commercial 13,776,608 0.3 Old Town La Quinta LLC Commercial 12,607,588 0.3 Total $394,780,952 9.4% (1) Taxpayers with similar names and matching mailing addresses on the County Assessor’s tax roll are counted as a single taxpayer. (2) Includes the KSL Desert Resort, KSL La Quinta Corp., KSL Land Corp., KSL Land III Corp., KSL PGA, KSL Landmark Corp., KSL Recreation Cr., and KSL Hotel Land. (3) Includes the Quarry at La Quinta Inc. and the Quarry La Quinta Homeowners Assn. Source: Harrell & Company Advisors LLC. Set forth below are the ten largest local secured taxpayers in Project Area No. 2 based on the 2012-13 secured property tax roll. These taxpayers represent approximately 10.4% of the total secured valuation in Project Area No. 2 of $2,804,622,207. [[2003,1829,2133,1876][10][B,I,][Times New Roman]]% of [[676,1877,1002,1924][10][B,I,][Times New Roman]]Property Owner [[1315,1877,1949,1924][10][B,I,][Times New Roman]]Land Use Secured Value [[1998,1877,2138,1924][10][B,I,][Times New Roman]]Total Inland America La Quinta Pavillion Commercial $ 43,399,514 1.9% Wal Mart Real Estate Business Trust Commercial 26,668,169 1.2 TD Desert Dev LP Commercial 25,120,550 1.1 Aventine Development Commercial 23,840,59 1.0 Washington 111 Ltd Apartments 22,872,277 1.0 Costco Wholesale Corp. Commercial 22,650,603 1.0 One Eleven La Quinta Commercial 20,987,206 0.9 Komar Desert Properties Commercial 20,737,366 0.9 Target Corp. Commercial 16,555,317 0.7 0.7 Eagle Hardware & Garden Inc. Commercial 15,387,518 Total $240,218,579 10.4% (1) Taxpayers with similar names and matching mailing addresses on the County Assessor’s tax roll are counted as a single taxpayer. (2) Includes TD Desert Dev LTD Partnership, TD Desert Dev LTD, and Desert Dev LTD. (3) Includes Wal Mart Real Estate Business Trust, Wal Mart Stores Inc., and Wal Mart Stores East LP. (4) Includes Eagle Hardware and Garden Inc., and Lowes HIW Inc. Both taxpayers are listed on the same parcel. Lowes is identified as the taxpayer for fixtures. Source: Harrell & Company Advisors LLC 43 éì Teeter Plan and Delinquency Rates The Riverside County property tax delinquency rate has ranged from approximately 8 percent in 2009-10 decreasing to 7.5% in 2011-12. According to the County Auditor-Controller, the delinquency rate Countywide in Fiscal Year 2012-13 to date was 5.8 percent. 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. 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 thereafter 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 table is a schedule of the taxable valuations and resulting Pledged Tax Revenues in the Project Areas for the Fiscal Years 2008-09 through 2012-13. PROJECT AREA NO. 1 HISTORICAL ASSESSED VALUATIONS AND GROSS TAX INCREMENT REVENUES [[838,1648,2261,1692][9][B,I,][Times New Roman]]2008-09 2009-10 2010-11 2011-12 2012-13 Secured Assessed Value $ 5,245,952,426 $ 4,913,325,225 $ 4,517,918,665 $ 4,248,567,040 $ 4,220,927,365 Unsecured Assessed Value 35,019,471 36,007,022 35,791,524 31,665,376 33,872,601 (1) Total Assessed Valuation 5,280,971,897 4,949,332,247 4,553,710,189 4,280,232,416 4,254,799,966 Base Year Valuation (199,398,233) (199,398,233) (199,398,233) (199,398,233) (199,398,233) Incremental Valuation $ 5,081,573,664 $ 4,749,934,014 $ 4,354,311,956 $ 4,080,834,183 $ 4,055,401,733 1% Tax Rate 1.000% 1.000% 1.000% 1.000% 1.000% Tax Increment Revenues 50,815,737 47,499,340 43,543,120 40,808,342 40,554,017 Unitary Revenue 374,356 344,906 364,775 496,731 468,931 Gross Tax Revenues $ 51,190,093 $ 47,844,246 $ 43,907,895 $ 41,305,073 $ 41,022,948 Actual Tax Revenues $ 50,649,225 $ 48,147,236 $ 43,990,589 $ 41,157,343 $ 41,220,251 (1) Taxable Valuation as of August 20 equalized roll. Source: Harrell & Company Advisors LLC. 44 éë 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 [[869,610,2257,654][9][B,I,][Times New Roman]]2008-09 2009-10 2010-11 2011-12 2012-13 Actual Tax Revenues $ 50,649,225 $ 48,147,236 $ 43,990,589 $ 41,157,343 $ 41,220,251 Housing Set-Aside (10,129,845) (9,629,447) (8,798,118) - - (1) Housing Obligations - - - (5,480,234) (5,555,434) Senior Tax Sharing (1,956,012) (1,913,631) (1,833,512) (1,661,527) (1,382,643) Available for Debt Service $ 38,563,368 $ 36,604,158 $ 33,358,959 $ 34,015,582 $ 34,282,174 (19,699,214) (17,915,090) (16,702,023) (16,671,443) Subordinate Tax Sharing (20,597,697) Net Available $ 17,965,671 $ 16,904,944 $ 15,443,869 $ 17,313,559 $ 17,610,731 (1) Prorata share of 2011 Loan based on amounts from each Project Area that would have been required to be set aside for Low and Moderate Income Housing. 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. A summary of the projected taxable valuation and Pledged Tax Revenues is as follows: 45 éê SUCCESSOR AGENCY PROJECTED PLEDGED TAX REVENUES (In $ Thousands) [[914,456,1192,503][10][B,I,][Times New Roman]]Project No. 1 [[1387,456,1665,503][10][B,I,][Times New Roman]]Project No. 2 [[568,461,725,508][10][B,I,][Times New Roman]]Fiscal [[1848,461,2037,508][10][B,I,][Times New Roman]]Pledged [[1138,498,1212,531][7][B,I,][Times New Roman]](1) [[1611,498,1685,531][7][B,I,][Times New Roman]](1) [[886,508,1178,555][10][B,I,][Times New Roman]]Tax Revenues [[1358,508,1650,555][10][B,I,][Times New Roman]]Tax Revenues [[581,509,712,556][10][B,I,][Times New Roman]]Year [[1798,509,2090,556][10][B,I,][Times New Roman]]Tax Revenues 2014 $20,864 $ 5,665 $26,529 2015 21,639 5,812 27,451 2016 22,089 5,976 28,065 2017 21,792 6,117 27,909 2018 22,244 6,275 28,519 2019 22,709 6,433 29,142 2020 23,178 6,587 29,765 2021 23,656 6,743 30,399 2022 24,150 6,910 31,060 2023 24,651 7,072 31,723 2024 25,160 7,240 32,400 2025 25,677 7,403 33,080 2026 26,207 7,565 33,772 2027 26,751 7,738 34,489 2028 27,303 7,915 35,218 2029 27,864 8,090 35,954 2030 28,438 8,268 36,706 2031 29,028 8,454 37,482 2032 29,626 8,642 38,268 2033 30,233 8,833 39,066 2034 30,854 8,608 39,462 2035 - 7,080 7,080 2036 - 7,279 7,279 2037 - 10,179 10,179 2038 - 10,389 10,389 2039 - 10,606 10,606 2040 - 11,757 11,757 (1) Net of 2011 Loan Payments. Source: Harrell & Company Advisors LLC. 46 éé Series A Bonds Annual Debt Service Set forth below is the annualized debt service for the term of the Series A Bonds. [[527,506,845,558][11][B,I,][Times New Roman]]Maturity Date [[902,506,1241,558][11][B,I,][Times New Roman]]Series A Bonds [[1296,506,1635,558][11][B,I,][Times New Roman]]Series A Bonds [[1713,506,2052,558][11][B,I,][Times New Roman]]Series A Bonds [[519,558,853,610][11][B,I,][Times New Roman]]September 1 of [[945,558,1197,610][11][B,I,][Times New Roman]]Principal* [[1355,558,1575,610][11][B,I,][Times New Roman]]Interest* [[1725,558,2038,610 ][11][B,I,][Times New Roman]]Debt Service* 2014 $ 5,280,000.00 $ 6,591,085.77 $ 11,871,085.77 2015 5,685,000.00 6,188,275.00 11,873,275.00 2016 5,865,000.00 6,017,725.00 11,882,725.00 2017 6,040,000.00 5,841,775.00 11,881,775.00 2018 6,205,000.00 5,660,575.00 11,865,575.00 2019 6,410,000.00 5,474,425.00 11,884,425.00 2020 6,625,000.00 5,250,075.00 11,875,075.00 2021 6,865,000.00 5,018,200.00 11,883,200.00 2022 7,105,000.00 4,777,925.00 11,882,925.00 2023 7,340,000.00 4,529,250.00 11,869,250.00 2024 7,645,000.00 4,235,650.00 11,880,650.00 2025 7,945,000.00 3,929,850.00 11,874,850.00 2026 8,270,000.00 3,612,050.00 11,882,050.00 2027 8,600,000.00 3,281,250.00 11,881,250.00 2028 8,935,000.00 2,937,250.00 11,872,250.00 2029 9,535,000.00 2,490,500.00 12,025,500.00 2030 10,015,000.00 2,013,750.00 12,028,750.00 2031 10,520,000.00 1,513,000.00 12,033,000.00 2032 11,390,000.00 987,000.00 12,377,000.00 2033 4,255,000.00 417,500.00 4,672,500.00 2034 4,095,000.00 204,750.00 4,299,750.00 Total $ 154,625,000.00 $ 80,971,860.77 $ 235,596,860.77 [[373,1847,897,1891][9][,I,][Times New Roman]]Preliminary, subject to change. * 47 éè Series B Bonds Annual Debt Service Set forth below is the annualized debt service for the term of the Series B Bonds. [[538,506,856,558][11][B,I,][Times New Roman]]Maturity Date [[923,506,1262,558][11][B,I,][Times New Roman]]Series B Bonds [[1321,506,1660,558][11][B,I,][Times New Roman]]Series B Bonds [[1722,506,2061,558][11][B,I,][Times New Roman]]Series B Bonds [[531,558,865,610][11][B,I,][Times New Roman]]September 1 of [[965,558,1217,610][11][B,I,][Times New Roman]]Principal* [[1380,558,1600,610][11][B,I,][Times New Roman]]Interest* [[1734,558,2047,610 ][11][B,I,][Times New Roman]]Debt Service* 2014 $ 1,595,000.00 $ 1,556,592.38 $ 3,151,592.38 2015 1,680,000.00 1,468,728.62 3,148,728.62 2016 1,695,000.00 1,447,594.22 3,142,594.22 2017 1,725,000.00 1,421,389.52 3,146,389.52 2018 1,760,000.00 1,387,424.26 3,147,424.26 2019 1,800,000.00 1,348,369.86 3,148,369.86 2020 1,845,000.00 1,300,903.86 3,145,903.86 2021 1,905,000.00 1,247,638.70 3,152,638.70 2022 1,965,000.00 1,185,459.50 3,150,459.50 2023 2,035,000.00 1,117,391.90 3,152,391.90 2024 2,105,000.00 1,042,829.50 3,147,829.50 2025 2,190,000.00 964,523.50 3,154,523.50 2026 2,265,000.00 883,055.50 3,148,055.50 2027 2,355,000.00 798,797.50 3,153,797.50 2028 2,450,000.00 702,007.00 3,152,007.00 2029 2,550,000.00 601,312.00 3,151,312.00 2030 2,655,000.00 496,507.00 3,151,507.00 2031 2,770,000.00 378,625.00 3,148,625.00 2032 2,895,000.00 255,637.00 3,150,637.00 2033 1,325,000.00 127,099.00 1,452,099.00 2034 1,385,000.00 64,956.50 1,449,956.50 Total $ 42,950,000.00 $ 19,796,842.32 $ 62,746,842.32 [[373,1847,888,1891][9][,I,][Times New Roman]]Preliminary, subject to change. * 48 éç Combined Annual Debt Service Set forth below is the combined annualized debt service for the term of the Senior Bonds, Series A Bonds and Series B Bonds. [[1368,559,1560,606][10][B,I,][Times New Roman]]Series A [[319,563,613,610][10][B,I,][Times New Roman]]Maturity Date [[731,563,864,610][10][B,I,][Times New Roman]]2011 [[1014,563,1248,610][10][B,I,][Times New Roman]]2011 Loan [[1701,563,1893,610][10][B, I,][Times New Roman]]Series B [[2018,563,2244,610][10][B,I,][Times New Roman]]Combined [[1486,606,1536,644][8][B,I,][Times New Roman]]* [[1706,611,1888,658][10][B,I,][Times New Roman]]Bonds* [[1985,611,2274,658][10][B,I,][Times New Roman]]Debt Service* [[313,612,620,659][10][B,I,][Times New Roman]]September 1 of [[717,612,878,659][10][B,I,][Times New Roman]]Bonds [[1015,612,1248,659][10][B,I,][Times New Roman]]Obligation [[1375,612,1520,659][10] [B,I,][Times New Roman]]Bonds 2014 $ 515,005.00 $ 2,692,267.26 $ 11,871,085.77 $ 3,151,592.38 $ 18,229,950.41 2015 512,855.00 2,692,967.26 11,873,275.00 3,148,728.62 18,227,825.88 2016 510,705.00 2,689,717.26 11,882,725.00 3,142,594.22 18,225,741.48 2017 518,555.00 2,691,677.26 11,881,775.00 3,146,389.52 18,238,396.78 2018 514,992.50 2,693,396.00 11,865,575.00 3,147,424.26 18,221,387.76 2019 516,430.00 2,690,171.00 11,884,425.00 3,148,369.86 18,239,395.86 2020 517,511.26 2,692,231.00 11,875,075.00 3,145,903.86 18,230,721.12 2021 518,236.26 2,694,381.00 11,883,200.00 3,152,638.70 18,248,455.96 2022 513,605.00 2,691,061.00 11,882,925.00 3,150,459.50 18,238,050.50 2023 513,665.00 2,690,321.00 11,869,250.00 3,152,391.90 18,225,627.90 2024 513,345.00 2,689,641.00 11,880,650.00 3,147,829.50 18,231,465.50 2025 512,645.00 2,693,641.00 11,874,850.00 3,154,523.50 18,235,659.50 2026 516,565.00 2,691,561.00 11,882,050.00 3,148,055.50 18,238,231.50 2027 514,725.00 2,693,401.00 11,881,250.00 3,153,797.50 18,243,173.50 2028 511,982.50 2,689,651.00 11,872,250.00 3,152,007.00 18,225,890.50 2029 513,832.50 2,693,396.00 12,025,500.00 3,151,312.00 18,384,040.50 2030 514,867.50 2,693,451.00 12,028,750.00 3,151,507.00 18,388,575.50 2031 515,087.50 2,689,421.00 12,033,000.00 3,148,625.00 18,386,133.50 2032 514,492.50 2,690,911.00 12,377,000.00 3,150,637.00 18,733,040.50 2033 513,082.50 2,693,633.50 4,672,500.00 1,452,099.00 9,331,315.00 2034 935,857.50 2,694,251.00 4,299,750.00 1,449,956.50 9,379,815.00 2035 933,180.00 2,691,956.50 3,625,136.50 2036 936,835.00 2,690,943.00 3,627,778.00 2037 936,007.50 936,007.50 2038 935,697.50 935,697.50 2039 935,497.50 935,497.50 Total $ 15,905,260.02 $ 61,914,048.04 $ 235,596,860.77 $ 62,746,842.32 $ 376,163,011.15 * [[331,2962,811,3000][8][,I,][Times New Roman]]Preliminary, subject to change. 49 èð Debt Service Coverage Set forth below is the estimated debt service coverage of the Bonds and the Senior Bonds using Fiscal Year 2012-13 Pledged Tax Revenues without additional growth through maturity. [[857,558,1281,610][11][B,I,][Times New Roman]]No Growth Pledged [[1311,558,1709,610][11][B,I,][Times New Roman]]Combined Annual [[1766,558,2110,610][11][B,I,][Times New Roman]]Combined Debt [[431,562,837,614][11][B,I,][Times New Roman]]Bond Year Ending [[912,611,1228,663][11][B,I,][Times New Roman]]Tax Revenues [[1353,611,1666,663][11][B,I,][Times New Roman]]Debt Service* [[1737,611,2138,663][11][B,I,][Times New Roman]]Service Coverage* [[492,612,776,664][11][B,I,][Times New Roman]]September 1 2013 $29,736,000.00 $19,460,697.30 1.53x 2014 29,736,000.00 18,229,950.41 1.63x 2015 29,736,000.00 18,227,825.88 1.63x 2016 29,736,000.00 18,225,741.48 1.63x 2017 29,736,000.00 18,238,396.78 1.63x 2018 29,736,000.00 18,221,387.76 1.63x 2019 29,736,000.00 18,239,395.86 1.63x 2020 29,736,000.00 18,230,721.12 1.63x 2021 29,736,000.00 18,248,455.96 1.63x 2022 29,736,000.00 18,238,050.50 1.63x 2023 29,736,000.00 18,225,627.90 1.63x 2024 29,736,000.00 18,231,465.50 1.63x 2025 29,736,000.00 18,235,659.50 1.63x 2026 29,736,000.00 18,238,231.50 1.63x 2027 29,736,000.00 18,243,173.50 1.63x 2028 29,736,000.00 18,225,890.50 1.63x 2029 29,736,000.00 18,384,040.50 1.62x 2030 29,736,000.00 18,388,575.50 1.62x 2031 29,736,000.00 18,386,133.50 1.62x 2032 29,736,000.00 18,733,040.50 1.59x 2033 29,736,000.00 9,331,315.00 3.19x 2034 29,736,000.00 9,379,815.00 3.17x 2035 7,145,000.00 3,625,136.50 1.97x 2036 7,145,000.00 3,627,778.00 1.97x 2037 7,145,000.00 936,007.50 7.63x 2038 7,145,000.00 935,697.50 7.64x 2039 7,145,000.00 935,497.50 7.64x [[373,2163,897,2207][9][,I,][Times New Roman]]Preliminary, subject to change. * Source: The Financial Advisor and the Underwriter. 50 èï Set forth below is the estimated debt service coverage of the Bonds and the Senior Bonds using Fiscal Year 2012-13 Pledged Tax Revenues and a 2% annual growth scenario thereafter through maturity. [[967,456,1256,508][11][B,I,][Times New Roman]]Pledged Tax [[1332,456,1730,508][11][B,I,][Times New Roman]]Combined Annual [[1772,456,2116,508][11][B,I,][Times New Roman]]Combined Debt [[454,459,860,511][11][B,I,][Times New Roman]]Bond Year Ending [[515,509,799,561][11][B,I,][Times New Roman]]September 1 [[994,509,1228,561][11][B,I,][Times New Roman]]Revenues [[1373,509,1686,561][11][B,I,][Times New Roman]]Debt Service* [[1743,509,2144,561] [11][B,I,][Times New Roman]]Service Coverage* 2013 $29,736,000.00 $19,460,697.30 1.53x 2014 29,736,000.00 18,229,950.41 1.63x 2015 30,656,000.00 18,227,825.88 1.68x 2016 31,266,000.00 18,225,741.48 1.72x 2017 31,120,000.00 18,238,396.78 1.71x 2018 31,727,000.00 18,221,387.76 1.74x 2019 32,349,000.00 18,239,395.86 1.77x 2020 32,975,000.00 18,230,721.12 1.81x 2021 33,612,000.00 18,248,455.96 1.84x 2022 34,265,000.00 18,238,050.50 1.88x 2023 34,927,000.00 18,225,627.90 1.92x 2024 35,602,000.00 18,231,465.50 1.95x 2025 36,287,000.00 18,235,659.50 1.99x 2026 36,981,000.00 18,238,231.50 2.03x 2027 37,697,000.00 18,243,173.50 2.07x 2028 38,420,000.00 18,225,890.50 2.11x 2029 39,161,000.00 18,384,040.50 2.13x 2030 39,915,000.00 18,388,575.50 2.17x 2031 40,686,000.00 18,386,133.50 2.21x 2032 41,473,000.00 18,733,040.50 2.21x 2033 42,272,000.00 9,331,315.00 4.53x 2034 43,092,000.00 9,379,815.00 4.59x 2035 10,705,000.00 3,625,136.50 2.95x 2036 10,907,000.00 3,627,778.00 3.01x 2037 11,115,000.00 936,007.50 11.87x 2038 11,325,000.00 935,697.50 12.10x 2039 11,541,000.00 935,497.50 12.34x [[326,2058,630,2102][9][,I,][Times New Roman]]Preliminary, subj [[591,2058,850,2102][9][,I,][Times New Roman]]ect to change. * Source: The Financial Advisor and the Underwriter. CONCLUDING INFORMATION Underwriting The Bonds have been sold at a net interest cost of ______% for the Series A Bonds and ______% for the Series B Bonds. The original purchase price (including the reoffering premium) to be paid for the Bonds is $_________________ for the Series A Bonds and $______________ for the Series B Bonds. The Underwriter intends to offer the Bonds to the public initially at the yield set forth on the cover page of this Official Statement, which yield 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 Bonds to certain dealers (including dealers 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. 51 èî Verification of Mathematical Accuracy Grant Thornton, LLP, Minneapolis, Minnesota, 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 respective Escrow Funds 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 Grant Thornton, LLP 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 Series A Bonds is excluded from gross income for federal income tax purposes and interest on the Series A Bonds and the Series B Bonds is exempt 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 forms of Bond Counsel’s final approving opinions 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 Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. Tax Exemption In the opinion of Rutan & Tucker LLP, Costa Mesa, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Series A Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Series A Bonds and the Series B Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations. In addition, the amount by which a Series A Bondholder’s original basis for determining loss on sale or exchange in the applicable Series A Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Series A Bond premium, which must be amortized under Section 171 of the Code; such amortizable Series A Bond premium reduces the Series A Bondholder’s basis in the applicable Series A Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Series A Bond premium may result in a Series A Bondholder realizing a taxable gain 52 èí when a Series A Bond is sold by the holder for an amount equal to or less (under certain circumstances) than the original cost of the Series A Bond to the holder. Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest on the Series A Bonds is based upon certain representations of fact and certifications made by the City, the Agency and others and is subject to the condition that the City and the Agency comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the delivery of the Series A Bonds to assure that interest on the Series A Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements might cause interest on the Series A Bonds to be included in gross income for federal income tax purposes retroactive to the date of delivery of the Series A Bonds. The Agency has covenanted to comply with all such requirements. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring after the date of delivery of the Series A Bonds may affect the tax status of the interest on the Series A Bonds. Bond Counsel’s opinion may be affected by action taken (or not taken) or events occurring (or not occurring) after the date hereof. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions taken or events are taken or do occur. Although Bond Counsel has rendered an opinion that interest on the Series A Bonds is excluded from gross income for income tax purposes provided that the Agency continues to comply with certain requirements of the Code, the ownership of and the accrual or receipt of interest with respect to the Series A Bonds may otherwise affect the tax liability of the recipient.Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors before purchasing any of the Bonds. 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 Indentures 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. However, the lawsuits described below relate to issues that may affect the distribution of property tax revenues or other monies to the Agency under the Dissolution Act. Syncora Lawsuit – Challenge to Dissolution Act With respect to California successor agencies and the Dissolution Act in general, on August 1, 2012, Syncora Guarantee Inc. and Syncora Capital Assurance Inc. (collectively, “Syncora”) filed a lawsuit against the State, the State Controller, the State Director of Finance, and the Auditor-Controller of Riverside County on his own behalf and as the representative of all other County Auditors in the State (Superior Court of the State of California, County of Sacramento, Case No. 34-2012-80001215) (the “Syncora Lawsuit”). Syncora are monoline financial guaranty insurers domiciled in the State of New York, and as such, provide credit enhancement on bonds issued by state and local governments and do not sell other kinds of insurance such as life, health, or property insurance. Syncora provided bond insurance and other related insurance policies for bonds issued by former California redevelopment agencies. The complaint alleges that the Dissolution Act, and specifically the “Redistribution Provisions” thereof (i.e., California Health and Safety Code Sections 34172(d), 34174, 34177(d), 34183(a)(4), and 34188) violate the “contract clauses” of the United States and California Constitutions (U.S. Const. art. 1, § 10, cl.1; Cal. Const. art. 1, § 9) because they unconstitutionally impair the contracts among the former redevelopment agencies, bondholders and Syncora. The complaint also alleges that the Redistribution 53 èì Provisions violate the “Takings Clauses” of the United States and California Constitutions (U.S. Const. amend. V; Cal Const. art. 1 § 19) because they unconstitutionally take and appropriate bondholders’ and Syncora’s contractual right to critical security mechanisms without just compensation. Specifically, the complaint alleges that the security mechanism created by the irrevocable pledge of tax increment revenues to repay the redevelopment agency debts was a critical feature of the redevelopment bonds’ marketability in at least three manners: (i) tax increment revenues which have been previously irrevocably pledged are now subject to restrictive terms such as periodic Recognized Obligation Payment Schedules, Oversight Board approval, and State Department of Finance approval, that unconstitutionally impair the contract providing for such pledge; (ii) excess tax increment revenues previously could be held by a redevelopment agency in reserve to protect against potential future shortfalls (in contrast to the provisions under the Dissolution Act that require the County Auditor-Controller to distribute surplus monies from the Redevelopment Property Tax Trust Fund amounts to taxing entities each six-month period); and (iii) the former Redevelopment Law and bond indentures or trust agreements governing redevelopment bonds typically included requirements and covenants for the redevelopment agency to use surplus tax increment revenues received in excess of amounts required for debt service on redevelopment activities, which were calculated under the Redevelopment Act to stimulate growth and general increases in assessed valuation, and therefore increase additional security for the bonds, and such covenants have been substantially and unconstitutionally impaired by the Dissolution Act, AB 1484, and in particular the Redistribution Provisions thereof. The Syncora Lawsuit has been brought as a petition for writ of mandate, complaint for declaratory relief, inverse condemnation, injunctive relief. The injunctive relief sought includes an injunction enjoining the respondents from implementing enforcing, and/or carrying out the Redistribution Provisions, ordering respondents to immediately return all money remitted by successor agencies to local taxing agencies pursuant to the Redistribution Provisions, and ordering respondents to hold all future tax increment revenues in the Redevelopment Property Tax Trust Fund, or a similar fund, for the exclusive benefit of, and distribution to, the bondholders, until such a time when the bondholders are completely repaid. The hearing on the writ of mandate occurred on May 3, 2013 before Judge Kenny in Sacramento. The Court issued its decision on May 29, 2013. The Court concluded that Syncora’s impairment claim was premature. The Court also concluded that to extent that Syncora’s takings claim was based on actual losses it was not necessarily premature and has directed the parties to meet and confer to develop a schedule for discovery and setting a date for trial. No trial date has been set for the causes of action of the complaint, and such trial date is not expected to be set until after the parties have met and developed a mutually agreeable schedule for proceeding to trial. If Syncora were to be successful in obtaining the injunctive relief or writ of mandate sought or if the court in the Syncora Lawsuit were to determine that the Dissolution Act or the Redistribution Provisions or other provisions thereof unconstitutionally impaired the contracts between the former redevelopment agencies and the holders of interests in bonds issued by such agencies, it is possible 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. As provided under the Dissolution Act, the Pledged Tax Revenues rely on subdivision (c) of Section 34172 of the Dissolution Act, as provided in paragraph (2) of subdivision (a) of Section 34183 of the Dissolution Act. However, as discussed above, 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 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. Further, 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 54 èë 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 March 5, 2013. Finally, 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 as raised in the Syncora Lawsuit. Although the Agency cannot predict the outcome or end result of the Syncora Lawsuit on the Dissolution Act or any of the provisions thereof, 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. However, the Agency does not guarantee that the Syncora Lawsuit 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. City Lawsuit [[450,1138,1486,1191][11][,I,][Times New Roman]]City of La Quinta, et al. v. Ana J. Matosantos, et al. [[1447,1138,2285,1191][11][,,][Times New Roman]], Sacramento Superior Court Case No. 34- 2013-80001485. In this case, the City of La Quinta and the Successor Agency to the Dissolved Redevelopment Agency of the City of La Quinta have filed a petition for writ of mandate to compel the Department of Finance to reverse its position that approximately $41 million that the former Redevelopment Agency repaid to the City in February and March of 2011 for the then outstanding principal loaned, in accordance with redevelopment and other California law, by the City to the former Redevelopment Agency must be turned over the Riverside County Auditor-Controller for distribution to various taxing entities that had territorial boundaries within the former redevelopment project area. The repayment occurred prior to the adoption of ABx1 26. 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. 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 Standard & Poor’s Ratings Group is expected to assign a rating of “ “ (stable outlook) 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 _______________ . See “BOND INSURANCE.” In addition, Standard & Poor’s 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 Standard & Poor’s as to the credit quality of the Bonds. The ratings reflect only the view of Standard & Poor’s, and explanation of the significance of the ratings may be obtained from Standard & Poor’s Ratings Group, 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 Standard & Poor’s, if in the judgment of 55 èê Standard & Poor’s, circumstances so warrant. Any such downward revision or withdrawal of the ratings may have an adverse effect on the market price of the Bonds. 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, including its postaudit of the financial transactions and records of the Successor Agency for the applicable fiscal year pursuant to Section 34177(n) of the Dissolution Act and information of the type set forth in this Official Statement under the heading “PLEDGED TAX REVENUES — Schedule of Historical Pledged Tax Revenues.” In addition, the Agency has agreed to provide, or cause to be provided, to the MSRB in a timely manner, not in excess of ten business days after the occurrence of any such event, notice of the following “Listed Events”: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (7) modifications to rights of security holders, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the securities, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Obligated Person (as defined in Appendix D — “FORM OF CONTINUING DISCLOSURE AGREEMENT”); (13) the consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) appointment of a successor or additional trustee or the change of name of a trustee, if material. These covenants have been made in order to assist the Underwriter in complying with SEC Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission. As previously described herein, the Prior Agency was statutorily dissolved on February 1, 2012, and the Agency commenced operations as of the same date. Therefore, the Prior Agency operated for only seven months in fiscal year ended June 30, 2012, and the Agency operated for the last five months of fiscal year ended June 30, 2012. Commencing with the Comprehensive Annual Financial Report (i.e., audited financial statements) of the City for the fiscal year ended June 30, 2012, the activities of the Agency will be reported as a fiduciary trust fund as part of the City’s Comprehensive Annual Financial Report, which is in accordance with guidance issued by the State Department of Finance and available on its website as of February 4, 2013, interpreting Section 34177(n) of the California Health and Safety Code concerning certain successor agency postaudit obligations. The final seven months of activity of the Prior Agency prior to its February 1, 2012 dissolution was reported in the governmental funds of the City in the Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012. Pursuant to the Dissolution Act, the housing assets, housing obligations, and housing activities of the Prior Agency have been transferred to the La Quinta Housing Authority after the dissolution date and have been reported in a special fund in the Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012. 56 èé See Appendix E — “COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2012 (EXCLUDING SUPPLEMENTARY INFORMATION),” and in particular Note 23 therein regarding “Successor Agency Trust for Assets of Former Redevelopment Agency.” A complete copy of the City’s Comprehensive Annual Financial Report for fiscal year ended June 30, 2012 can be obtained from the City’s Finance Department. In accordance with accounting principles generally accepted in the United States of America which provide guidance for determining which governmental activities, organizations and functions should be included in the reporting entity, the Comprehensive Annual Financial Report presents information on the activities of the reporting entity, which includes the City (the primary government) and related but separate legal entities such as the La Quinta Financing Authority, the Prior Agency, the Agency, and the La Quinta Financing Authority. Such accounting presentation, however, does not change the separate legal status of the entities. With regard to the Agency in particular, as set forth in Section 34173(g) of the Dissolution Act, “A successor agency is a separate public entity from the public agency that provides for its governance and the two entities shall not merge.” A failure by the Agency to comply with the provisions of the Disclosure Agreement is not an event of default under the Indenture (although the holders and beneficial owners of the Bonds do have remedies at law and in equity). However, a failure to comply with the provisions of the Disclosure Agreement must be reported in accordance with the SEC Rule 15c2-12(b)(5) and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds. Therefore, a failure by the Agency to comply with the provisions of the Disclosure Agreement may adversely affect the marketability of the Bonds on the secondary market. The Agency may amend the Disclosure Agreement, and waive any provision thereof, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law (including rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of the Agency or the type of business conducted thereby; (2) the Disclosure Agreement as so amended would have complied with the requirements of Rule 15c2-12 as of the date of the Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (3) the Agency shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the Agency and the Dissemination Agent, to the same effect as set forth in clause (2) above; (4) the Agency shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the Agency, to the effect that the amendment does not materially impair the interests of the Owners; and (5) the Agency shall have delivered copies of such opinion and amendment to the MSRB. In addition, the Agency’s obligations under the Disclosure Agreement shall terminate upon the defeasance or payment in full of all of the Bonds. The provisions of the Disclosure Agreement are intended to be for the benefit of the Owners and shall be enforceable by the Trustee on behalf of such Owners, provided that any enforcement action by any such person shall be limited to a right to obtain specific enforcement of the Agency’s obligations under the Disclosure Agreement and any failure by the Agency to comply with the provisions thereof shall not be an event of default under the Indenture. See Appendix D — “FORM OF CONTINUING DISCLOSURE AGREEMENT.” [[450,2764,1466,2817][11][,I,][Times New Roman]]The State Department of Finance’s website is not [[1436,2764,2299,2817][11][,I,][Times New Roman]]in any way incorporated into this Official [[300,2817,1311,2870][11][,I,][Times New Roman]]Statement, and the Agency cannot take any responsib [[1284,2817,2300,2870][11][,I,][Times New Roman]]ility for, nor make any representation whatsoever as [[300,2869,1344,2922][11][,I,][Times New Roman]]to, the continued accuracy of the Internet address [[1318,2869,2300,2922][11][,I,][Times New Roman]]or the accuracy, completeness, or timeliness of 57 èè [[300,300,1298,353][11][,I,][Times New Roman]]information posted there. In addition, from time to [[1270,300,2299,353][11][,I,][Times New Roman]] time, the State Department of Finance changes its [[299,353,802,406][11][,I,][Times New Roman]]guidance without notice. Miscellaneous All of the preceding summaries of the Indentures, 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. 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 58 èç APPENDIX A DEFINITIONS [[450,556,1447,609][11][,I,][Times New Roman]]The following are definitions of certain terms contai [[1409,556,2300,609][11][,I,][Times New Roman]]ned in the Indentures and used in this Official [[300,608,531,661][11][,I,][Times New Roman]]Statement. A-1 çð APPENDIX B FORM OF BOND COUNSEL OPINIONS [[450,556,1462,609][11][,I,][Times New Roman]]Upon issuance of the Bonds, Rutan & Tucker LLP, [[1424,556,2300,609][11][,I,][Times New Roman]] Bond Counsel, proposes to render its final [[300,608,1348,661][11][,I,][Times New Roman]]approving opinion in substantially the following form: B-1 çï APPENDIX C BOOK-ENTRY ONLY SYSTEM [[450,556,1335,609][11][,I,][Times New Roman]]The information in this Appendix C concerni [[1298,556,2300,609][11][,I,][Times New Roman]]ng The Depository Trust Company (“DTC”), New [[300,608,1340,661][11][,I,][Times New Roman]]York, New York, and DTC’s book-entry system has b [[1313,608,2300,661][11][,I,][Times New Roman]]een obtained from DTC and the Agency takes no [[300,661,1016,714][11][,I,][Times New Roman]]responsibility for the completeness [[987,661,1589,714][11][,I,][Times New Roman]]or accuracy thereof. The Ag [[1562,661,2300,714][11][,I,][Times New Roman]]ency cannot and does not give any [[300,714,1311,767][11][,I,][Times New Roman]]assurances that DTC, DTC Participants or Indirect [[1273,714,2300,767][11][,I,][Times New Roman]]Participants will distribute to the Beneficial Owners [[300,767,1291,820][11][,I,][Times New Roman]](a) payments of interest, principal or premium, [[1265,767,2300,820][11][,I,][Times New Roman]]if any, with respect to the Bonds, (b) certificates [[300,819,1055,872][11][,I,][Times New Roman]]representing ownership interest in or [[1022,819,2299,872][11][,I,][Times New Roman]] other confirmation or ownership interest in the Bonds, or (c) [[300,872,1360,925][11][,I,][Times New Roman]]redemption or other notices sent to DTC or Cede & [[1328,872,2300,925][11][,I,][Times New Roman]]Co., its nominee, as the registered owner of the [[298,925,1323,978][11][,I,][Times New Roman]]Bonds, or that they will so do on a timely basis, [[1294,925,2300,978][11][,I,][Times New Roman]]or that DTC, DTC Participants or DTC Indirect [[298,977,1274,1030][11][,I,][Times New Roman]]Participants will act in the manner described in th [[1246,977,2299,1030][11][,I,][Times New Roman]]is Appendix. The current “Rules” applicable to DTC [[300,1030,2300,1083][11][,I,][Times New Roman]]are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be [[292,1083,1535,1136][11][,I,][Times New Roman]]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 Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and www.dtcc.com Exchange Commission. More information about DTC can be found at . 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 C-1 çî 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 C-2 çí 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. C-3 çì APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT D-1 çë APPENDIX E COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2012 (EXCLUDING SUPPLEMENTARY INFORMATION) E-1 çê APPPENDIX F FIINANCIAL AADVISOR’SS REPORT SUCCESSOOR AGENCYY TO THE LLA QUINTA REDEVELOOPMENT AGGENCY OFTTHE CITY OOF LA QUINNTA REDEVVELOPMENNT PROJECTT AREA NO. 1 AND LA QQUINTA REEDEVELOPMMENT PROOJECT AREAA NO. 2 PPROJECTEED TAX REVVENUES Dissolutioon Act OOn June 29, 22011, Assembbly Bill No. 226 (“AB X1 26”) was ennacted as Chaapter 5, Statuutes of 2011, togeether with a ccompanion biill, Assembly Bill No. 27 ((“AB X1 27”)). A lawsuit was brought in the Californiaa Supreme Coourt,[[790,1502,968,1555][11][,I,][Times New Roman]] Califor [[935,1502,985,1555][11][,I,][Times New Roman]]n [[935,1502,985,1555][11][,I,][Times New Roman]]n [[958,1502,1201,15 55][11][,I,][Times New Roman]]ia Redevelo [[1169,1502,1224,1555][11][,I,][Times New Roman]]p [[1169,1502,1224,1555][11][,I,][Times New Roman]]p [[1197,1502,1456,1555][11][,I,][Times New Roman]]ment Associ [[1419,1502,1469,1555][11][,I,][Times New Roman]]a [[1420,1502,1470,1555][11][,I,][Times New Roman]]a [[1443,1502,1695,1555][11][,I,][Times New Roman]]tion, et al. v [[1665,1502,1715,1555][11][,I,][Times New Roman]]. [[1666,1502,1937,1555][11][,I,][Times New Roman]]. Matosantos [[1904,1502,1954,1555][11][,I,][Times New Roman]], [[1905,1502,1955,1555][11][,I ,][Times New Roman]], [[1916,1502,2061,1555][11][,I,][Times New Roman]] et al. [[2022,1502,2155,1555][11][,,][Times New Roman]], 53 C [[2136,1502,2186,1555][11][,,][Times New Roman]]a [[2136,1502,2186,1555][11][,,][Times New Roman]]a [[2157,1502,2302,1555][11][,,][Times New Roman]]l. 4th 231 (Cal. Dec. 29, 20111), challengiing the constiitutionality off AB X1 26 aand AB X1 227. The Califfornia SupremeCourt largelyy upheld AB XX1 26, invaliddated AB X1 27, and heldd that AB X1 26 may be seevered from AB X1 27 and ennforced indeppendently. As a result of AAB X1 26 annd the decisioon of the Califfornia SupremeCourt in thhe[[785,1713,991,1766][11][,I,][Times New Roman]]Californi [[953,1713,1202,1766][11][,I,][Times New Roman]]a Redevelo [[1170,1713,1225,1766][11][,I,][Times New Roman]]p [[1170,1713,1225,1766][11][,I,][Times New Roman]]p [[1197,1713,1454,1766][11][,I,][Times New Roman]]ment Assoc [[1425,1713,1475,1766][11][,I,][Times New Roman]]i [[1426,1713,1476,1766][11][,I,][Times New Roman]]i [[1439,1713,1561,1766][11][,I,][Times New Roman]]ation [[1534,1713,1706,1766][11][,,][Times New Roman]] case, [[1688,1713,1923,1766][11][,,][Times New Roman]]as of Feb [[1897,1713,1947,1766][11][,,][Times New Roman]]r [[1897,1713,1947,1766][11][,,][Times New Roman]]r [[1912,1713,2167,1766][11][,,][Times New Roman]]uary 1, 201 [[2140,1713,2190,1766][11][,,][Times New Roman]]2 [[2140,1713,2190,1766][11][,,][Times New Roman]]2 [[2163,1713,2302,1766][11][,,][Times New Roman]], all redeveloppment agenciees in the Statee were dissollved, includinng the Prior AAgency, and successor ageencies were desiignated as succcessor entities to the formmer redeveloppment agenciies to expedittiously wind down the affairss of the formeer redevelopmment agencies. TThe AB X1 266 was amendeed on June 277, 2012 by Asssembly Bill NNo. 1484 (“AAB 1484”), ennacted as Chapteer 26, Statutess of 2012 (as aamended fromm time to timee, the “Dissollution Act”). Inn accordance with the Disssolution Actt, as of Februuary 1, 2012, nnta Redeveloppment the La Qui Agency (tthe “Prior Aggency”) was ddissolved and the City Couuncil of the CCity serves as Successor Aggency to the La Quinta Redevvelopment Aggency (the “AAgency”) purssuant Section34173 of thee Dissolution AAct. Tax Alloccation Financing Prrior to the eenactment offAB X1 26,, the Redeveelopment Laww authorizedd the financi ng of redeveloppment projectts through thee use of tax iincrement revvenues. Firstt, the assesseed valuation oof the taxable prroperty in a project area, as last equaalized prior too adoption oof the redevellopment plann, was establisheed and becamme the base roll. Thereaafter, except for any periiod during wwhich the asssessed valuationdrops beloww the base yeaar level, the taxing agenccies, on behallf of which taxes are leviied on property wwithin the prooject area, recceive the taxees produced bby the levy oof the then cuurrent tax ratee upon the base rroll. Taxes ccollected upoon any increase in the asseessed valuation of the taxxable propertyy in a project arrea over the levy upon tthe base rolll could be ppledged by a redevelopment agency tto the repaymennt of any indebbtedness incuurred in financcing the redevvelopment prroject. Redevvelopment ageencies themselvees have no autthority to levyy taxes on prooperty. F-1 çé The Dissolution Act now 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 AB X1 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 (the “Redevelopment Property Tax Trust Fund”) 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 AB X1 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 Tax Increment Revenues As provided in each of the Redevelopment Plans for the La Quinta Redevelopment Project Area No. 1 (“Project Area No. 1”) and the La Quinta Redevelopment Project Area No. 2 (“Project Area No. 2”), and pursuant to Article 6 of Chapter 6 of the Redevelopment Law, and Section 16 of Article XVI of the Constitution of the State, taxes levied upon taxable property in the respective Project Area each year by or for the benefit of the State, for cities, counties, districts or other public corporations (collectively, the “Taxing Agencies”) for fiscal years beginning after the effective date of the respective Redevelopment Plan, will be divided as follows: 1. 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 2. 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, 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. F-2 çè The amounts calculated in accordance with the provisions described above are referred to herein as “Tax Increment Revenues.” Redevelopment Plans The City Council approved and adopted the Redevelopment Plan for Project Area No. 1 on November 29, 1983, pursuant to Ordinance No. 43. It was subsequently amended on December 20, 1994 pursuant to Ordinance No. 258 to add limitations prescribed by AB 1290, again on March 21, 1995 pursuant to Ordinance No. 264 to amend financial limits and time to initiate eminent domain actions, on August 19, 2003 pursuant to Ordinance No. 388 to eliminate the time limit to incur debt as authorized by SB 211 and again on March 16, 2004 pursuant to Ordinance No. 402 to extend the Redevelopment Plan duration by one year as authorized by SB 1045. The City Council approved and adopted the Redevelopment Plan for Project Area No. 2 on May 16, 1989, pursuant to Ordinance No. 139. It was subsequently amended on December 20, 1994 pursuant to Ordinance No. 259 to add limitations prescribed by AB 1290, again on February 3, 2004 pursuant to Ordinance No. 399 to amend financial limits, on March 16, 2004 pursuant to Ordinance Nos. 403 and 404 to eliminate the time limit to incur debt as authorized by SB 211 and to extend the Redevelopment Plan duration by one year as authorized by SB 1045, and again on February 1, 2011 pursuant to Ordinance No. 485 to add territory for purposes of affordable housing. Plan Limitations The Redevelopment Plans for the Project Areas impose certain limitations on the amount of Tax Increment Revenues that the Agency may be allocated from the Project Areas, the amount of bonded indebtedness that may be incurred by the Project Areas and the time limit for receiving Tax Increment Revenues. The limitations imposed by the respective Redevelopment Plans are as follows: [[1064,1863,1294,1910][10][B,I,][Times New Roman]]Maximum [[1382,1863,1641,1910][10][B,I,][Times New Roman]]Last Date to [[1743,1863,1974,1910][10][B,I,][Times New Roman]]Maximum [[780,1911,890,1958][10][B,I,][Times New Roman]]Plan [[1027,1911,1333,1958][10][B,I,][Times New Roman]]Tax Increment [[1389,1911,1637,1958][10][B,I,][Times New Roman]]Collect Tax [[1766,1911,1950,1 958][10][B,I,][Times New Roman]]Bonded [[2055,1911,2314,1958][10][B,I,][Times New Roman]]Last Date to [[357,1959,626,2006][10][B,I,][Times New Roman]]Project Area [[683,1959,1010,2006][10][B,I,][Times New Roman]]Expiration Date [[1072,1959,1287,2006][10][B,I,][Times New Roman]]Revenues [[1396,1959,1626,2006][10][B,I,][Times New Roman]]Increment [[1720,1959,1997,2006][10][B,I,][Times New Roman]]Indebtedness [[2064,1959,2305,2006][10][B,I,][Times New Roman]]Incur Debt Project Area No. 1 Nov. 29, 2024 $2 billion Nov. 29, 2034 $200 million None (1) Project Area No. 2 May 16, 2030 $1.5 billion May 16, 2040 $187.86 million None (1) As of May 2013; the limitation is $100,000,000 adjusted annually for CPI, to a maximum of $200,000,000. As of June 30, 2013, the Agency had received Tax Increment Revenues of $643,768,448 with respect to the Project No. Area 1 and $298,352,329 with respect to Project Area No. 2. Since the Dissolution Act, the County has distributed $9,427,835 in residual Tax Increment Revenues to the Taxing Agencies, and not to the Agency. While this suggests that such residual distribution should not be included in the cumulative tax increment totals, the Agency has no method of allocating this residual between the Project Areas. Low and Moderate Income Housing Pledge with Respect to 2011 Loan Prior to the Dissolution Act, not less than 20% of Tax Increment Revenues was required to be set aside annually for the purpose of increasing and improving the community’s supply of low and moderate income housing available at affordable housing costs to persons and families of very low, low or F-3 çç moderate income households. Under the Redevelopment Law, the portion of Tax Increment Revenues which were required to be deposited in the Prior Agency’s Low and Moderate Income Housing Fund could be pledged to pay the portion of debt service on any obligations to the extent the proceeds thereof were expended for qualifying low- and moderate-income housing projects. A portion of the proceeds from 2011 Loan entered into by the Prior Agency were set aside in the Prior Agency’s Low and Moderate Income Housing Fund. The annual loan payments on the 2011 Loan continue to be paid from these amounts pledged prior to the Dissolution Act. Historical Assessed Value and Tax Increment Revenues Historical assessed value and gross Tax Increment Revenues for Project Area No. 1 based on the equalized tax rolls and actual Tax Increment Revenues paid to the Prior Agency, or Available to the Agency are shown below. TABLE NO. 1 PROJECT AREA NO. 1 HISTORICAL ASSESSED VALUATIONS AND GROSS TAX INCREMENT REVENUES [[864,1237,2237,1278][9][B,I,][Times New Roman]]2008-09 2009-10 2010-11 2011-12 2012-13 Secured Assessed Value $ 5,245,952,426 $ 4,913,325,225 $ 4,517,918,665 $ 4,248,567,040 $4,220,927,365 Unsecured Assessed Value 35,019,471 36,007,022 35,791,524 31,665,376 33,872,601 (1) Total Assessed Valuation 5,280,971,897 4,949,332,247 4,553,710,189 4,280,232,416 4,254,799,966 Base Year Valuation (199,398,233) (199,398,233) (199,398,233) (199,398,233) (199,398,233) Incremental Valuation $ 5,081,573,664 $ 4,749,934,014 $ 4,354,311,956 $ 4,080,834,183 $4,055,401,733 1% Tax Rate 1.000% 1.000% 1.000% 1.000% 1.000% Tax Increment Revenues 50,815,737 47,499,340 43,543,120 40,808,342 40,554,017 Unitary Revenue 374,356 344,906 364,775 496,731 468,931 Gross Tax Revenues $ 51,190,093 $ 47,844,246 $ 43,907,895 $ 41,305,073 $41,022,948 Actual Tax Revenues $ 50,649,225 $ 48,147,236 $ 43,990,589 $ 41,157,343 $41,220,251 (1) Taxable Valuation as of August 20 equalized roll. Source: Riverside County Auditor-Controller Actual Tax Increment Collections and deductions from Tax Increment Revenues for Project Area No. 1 are shown below: TABLE NO. 2 PROJECT AREA NO. 1 HISTORICAL TAX REVENUES [[828,2294,2192,2338][9][B,I,][Times New Roman]]2008-09 2009-10 2010-11 2011-12 2012-13 Actual Tax Revenues $ 50,649,225 $ 48,147,236 $ 43,990,589 $ 41,157,343 $ 41,220,251 Housing Set-Aside (10,129,845) (9,629,447) (8,798,118) - - (1) Housing Obligations - - - (5,480,234) (5,555,434) Senior Tax Sharing (1,956,012) (1,913,631) (1,833,512) (1,661,527) (1,382,643) Available for Debt Service $ 38,563,368 $ 36,604,158 $ 33,358,959 $ 34,015,582 $ 34,282,174 Subordinate Tax Sharing (20,597,697) (19,699,214) (17,915,090) (16,702,023) (16,671,443) Net Available $ 17,965,671 $ 16,904,944 $ 15,443,869 $ 17,313,559 $ 17,610,731 (1) Prorata share of 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: Prior Agency audited financial statements and Riverside County Auditor-Controller. F-4 ïðð Historical assessed value and gross Tax Increment Revenues for Project Area No. 2 based on the equalized tax rolls and actual Tax Increment Revenues paid to the Prior Agency, or Available to the Agency are shown below. TABLE NO. 3 PROJECT AREA NO. 2 HISTORICAL ASSESSED VALUATIONS AND GROSS TAX INCREMENT REVENUES [[841,716,2266,757][9][B,I,][Times New Roman]]2008-09 2009-10 2010-11 2011-12 2012-13 Secured Assessed Value $ 2,804,622,207 $ 2,599,130,531 $ 2,424,915,500 $ 2,360,463,457 $ 2,318,312,944 Unsecured Assessed Value 62,385,290 65,575,780 60,334,289 57,899,939 62,055,089 (1) 2,867,007,497 2,664,706,311 2,485,249,789 2,418,363,396 2,380,368,033 Total Assessed Valuation Base Year Valuation (95,182,755) (95,182,755) (95,182,755) (95,182,755) (95,182,755) Incremental Valuation $ 2,771,824,742 $ 2,569,523,556 $ 2,390,067,034 $ 2,323,180,641 $ 2,285,185,278 Basic Tax Rate/$100 1.000% 1.000% 1.000% 1.000% 1.000% Tax Increment Revenues 27,718,247 25,695,236 23,900,670 23,231,806 22,851,853 Unitary Revenues 114,911 106,080 115,199 181,183 174,162 Gross Tax Revenues $ 27,833,158 $ 25,801,316 $ 24,015,869 $ 23,412,989 $ 23,026,015 Actual Tax Revenues $ 28,479,642 $ 25,953,975 $ 24,186,295 $ 23,513,859 $ 22,893,004 (1) Taxable Valuation as of August 20 equalized roll. Source: Riverside County Auditor-Controller Actual Tax Increment Collections and deductions from Tax Increment Revenues for Project Area No. 2 are shown below: TABLE NO. 4 PROJECT AREA NO. 2 HISTORICAL TAX REVENUES [[872,1773,2186,1811][8][B,I,][Times New Roman]]2008-09 2009-10 2010-11 2011-12 2012-13 Actual Tax Revenues $ 28,479,642 $ 25,953,975 $ 24,186,295 $ 23,513,859 $ 22,893,004 Housing Set-Aside (5,695,928) (5,190,795) (4,837,259) - - (1) Housing Obligations - - - (3,130,947) (3,055,747) (16,376,233) (16,297,224) (15,854,843) (15,684,399) Senior Tax Sharing (17,934,244) Available for Debt Service $ 4,849,470 $ 4,386,947 $ 3,051,812 $ 4,528,069 $ 4,152,858 (1) Prorata share of 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: Prior Agency audited financial statements and Riverside County Auditor-Controller. F-5 ïðï Major Taxpayers The ten largest secured property taxpayers represent 9.4% of the 2012-13 secured assessed value of the Project Area No. 1. TABLE NO. 5 PROJECT AREA NO. 1 TEN LARGEST TAXPAYERS AS A PERCENT OF 2012-13 ASSESSED VALUE [[421,767,747,814][10][B,I,][Times New Roman]]Property Owner [[1112,767,1328,814][10][B,I,][Times New Roman]]Land Use [[1620,767,2237,814][10][B,I,][Times New Roman]]Secured Value % of Total KSL Desert Resort, et al. Hotel/Golf Course/Vacant Land $151,797,451 3.6% Sunrise Desert Partners Condominiums/Vacant Land 70,490,223 1.7 MSR Resort Golf Course Golf Course 49,009,939 1.2 Village Resort Hotel/Golf Course/Vacant Land 24,486,681 0.6 Lands LP Apartments 20,553,610 0.5 Nadador LLC Timeshare Property 18,584,114 0.4 CNL Desert Resort LP Hotel 18,234,484 0.4 Quarry at La Quinta, et al. Golf Course 15,240,254 0.4 LQ Investment Commercial 13,776,608 0.3 0.3 Old Town La Quinta LLC Commercial 12,607,588 Total $394,780,952 9.4% The ten largest secured property taxpayers represent 10.4% of the 2012-13 secured assessed value of the Project Area No. 2. TABLE NO. 6 PROJECT AREA NO. 2 TEN LARGEST TAXPAYERS AS A PERCENT OF 2012-13 ASSESSED VALUE [[515,1783,841,1830][10][B,I,][Times New Roman]]Property Owner [[1144,1783,1360,1830][10][B,I,][Times New Roman]]Land Use [[1496,1783,2146,1830][10][B,I,][Times New Roman]]Secured Value % of Total Inland America La Quinta Pavillion Commercial $ 43,399,514 1.9% Wal Mart Real Estate Business Trust Commercial 26,668,169 1.2 TD Desert Dev LP Commercial 25,120,550 1.1 Aventine Development Commercial 23,840,59 1.0 Washington 111 Ltd Apartments 22,872,277 1.0 Costco Wholesale Corp. Commercial 22,650,603 1.0 One Eleven La Quinta Commercial 20,987,206 0.9 Komar Desert Properties Commercial 20,737,366 0.9 Target Corp. Commercial 16,555,317 0.7 Eagle Hardware & Garden Inc. Commercial 15,387,518 0.7 Total $240,218,579 10.4% Assessment Appeals Project Area No. 1 As of April 2013 there are appeals pending on 276 separate parcels within the Project Area No. 1, of which 122 relate to property values assessed on the 2012-13 tax roll and 137 relate to the 2011-12 tax roll. The remaining 17 pending appeals relate to prior years’ tax rolls. The 2012-13 tax roll value under appeal is $253,486,114 (6.0% of assessed value). This includes an appeal by KSL Desert Resort of the $112,800,000 value of its hotel. The owner is requesting a F-6 ïðî reduction in value of this parcel to $38,500,000, a 65% reduction. The average value reduction requested for the other appeals filed in 2012-13 is 37%. The 2011-12 tax roll value under appeal is $248,096,806 (5.8% of assessed value). This also includes an appeal by KSL Desert Resort of the $99,000,000 value of its hotel. The owner is requesting a reduction in value of this parcel to $49,000,000, a 50% reduction. The average value reduction requested for the other appeals filed in 2011-12 is 41%. The value of parcels under appeal for prior years is $18,523,480. Historically, the average value reduction when an appeal has been granted is 15.8%, and of those appeals that have been resolved, the average percentage of appeals that are successful is 31%. If all pending appeals are granted at historical averages, and assuming the hotel owned by KSL is granted a 15.8% reduction, the estimated loss in annual Tax Increment Revenues is not estimated to be more than $350,000 in future years. However, if any of these appeals are granted in the future, it will result in a refund to the taxpayer and such refunds will be deducted from Tax Increment Revenues in the year that the refund is paid. Project Area No. 2 As of April 2013 there are appeals pending on 186 separate parcels within the Project Area No. 2, of which 74 relate to property values assessed on the 2012-13 tax roll and 85 relate to the 2011-12 tax roll. The remaining 27 pending appeals relate to prior years’ tax rolls. The 2012-13 tax roll value under appeal is $237,710,754 (10.0% of assessed value). This includes an appeal by Inland American La Quinta Pavilion of the $43,399,514 value of its properties. The owner is requesting a reduction in value of this parcel to $21,550,000, a 50% reduction. The average value reduction requested for the other appeals filed in 2012-13 is 48%. The 2011-12 tax roll value under appeal is $227,032,463 (9.4% of assessed value). This also includes an appeal by Inland American La Quinta Pavilion of the $42,548,545 value of its properties. The owner is requesting a reduction in value of this parcel to $18,950,000, a 55% reduction. The average value reduction requested for the other appeals filed in 2011-12 is also 48%. The value of parcels under appeal for prior years is $151,733,817, and includes an additional appeal by Inland American La Quinta Pavilion of the $42,230,554 2010-11 value of its properties. Historically, the average value reduction when an appeal has been granted is 23.1%, and of those appeals that have been resolved, the average percentage of appeals that are successful is 20%. If all pending appeals are granted at historical averages, the estimated loss in annual Tax Increment Revenues is not estimated to be more than $200,000 in future years. However, if any of these appeals are granted in the future, it will result in a refund to the taxpayer and such refunds will be deducted from Tax Increment Revenues in the year that the refund is paid. Tax Sharing Agreements Pursuant to prior Section 33401(b) of the Redevelopment Law, a redevelopment agency could enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project to alleviate any financial burden or detriment caused by the redevelopment project. These agreements are commonly referred to as “tax sharing agreements” or “pass F-7 ïðí through agreements.” The following describes the agreements entered into with respect to Project Area No. 1 and Project Area No. 2. Project Area No. 1 [[300,558,1267,611][11][,I,][Times New Roman]]County General Fund, Library, and Fire Districts Pursuant to the "Replacement Cooperation Agreement Between the County of Riverside and the City of La Quinta and the La Quinta Redevelopment Agency" executed on December 21, 1993, the County General Fund, Library District, and Fire District are to receive their full 100 percent share of the gross (before housing fund deposits) tax increment. The County General Fund tax levy within the Project Area is 24.62 percent, while the Library and Fire District tax levies are 2.76 percent and 5.94 percent, respectively. The Replacement Cooperation Agreement provides that the payment of County tax increment revenue is subordinate to debt service for existing Project bond debt, and any future bonds issued in connection with La Quinta Project No. 1. However, the Agreement required the Prior Agency to size new bond issuances in such a way that sufficient funds are projected to be available to satisfy its obligations to the County pursuant to the Agreement without subordination. [[300,1341,1104,1394][11][,I,][Times New Roman]]Coachella Valley Unified School District The Prior Agency’s agreement with the Coachella Valley Unified School District provided for a fixed series of payments to be made by the Prior Agency to the Coachella Valley Unified School District, with the final payment due July 1, 2012. Their obligations under this agreement have been paid in full. [[298,1652,1030,1705][11][,I,][Times New Roman]]Desert Sands Unified School District The Prior Agency’s agreement with the Desert Sands Unified School District ("DSUSD") requires that the Agency deposit a portion of the DSUSD's revenues into a capital fund to be used for the purpose of financing various capital projects that benefit both DSUSD and the Project Area. The payments were contingent upon the Prior Agency reaching a $300 million tax increment threshold, which occurred in 2004-05. Annually, during the first ten years following the year in which the Prior Agency's cumulative tax increment exceeded $300 million, the Agency must deposit an amount equal to 20 percent of the DSUSD’s 27.91 percent share. Beginning in the eleventh year (2015-16) and continuing for the Redevelopment Plan's duration, the Agency will deposit 25 percent of the DSUSD's share of tax increment. The Agreement provides that payments to the DSUSD do not constitute an “express pledge” within the meaning of Redevelopment Law Section 33671.5, and therefore, payments to the District are subordinate to all bond debt service. [[298,2487,849,2540][11][,I,][Times New Roman]]Desert Community College The Prior Agency’s agreement with Desert Community College District requires the Agency to pay 20 percent of the Desert Community College District's share to the District The payments were contingent upon the Prior Agency reaching a $300 million tax increment threshold. Beginning in the eleventh year following the $300 million threshold event (2015-16) and continuing thereafter, the Agency is required pay 25 percent of the Desert Community College District’s share. The Agreement provides that payments to the District do not constitute an “express pledge” within the meaning of Redevelopment Law Section 33671.5, and therefore, payments to the District are subordinate to all bond debt service. F-8 ïðì [[300,300,1219,353][11][,I,][Times New Roman]]Coachella Valley Mosquito and Vector Control The Prior Agency’s agreement with the Coachella Valley Mosquito and Vector Control District, requires the Agency to pay the District its full 100 percent share of the gross tax increment net of the 20 percent contribution to the Housing Fund, of the District's 1.39 percent levy of the net tax increment (net of housing fund deposits). The levy shall not exceed 1.43 percent and it is currently 1.39 percent. This pass-through obligation is senior to all bond debt service payments and is excluded from the pledge of nonhousing revenues for the bond financing. The Dissolution Act specifically allows the payments under tax sharing agreements that were calculated “net of housing fund deposits” to continue to be calculated as if the housing fund deposits continued to be made. [[300,977,942,1030][11][,I,][Times New Roman]]Coachella Valley Water District The Prior Agency’s agreement with the Coachella Valley Water District requires that the Agency pay to the Coachella Valley Water District ("CVWD") a portion of the CVWD share of the gross tax increment, equal to 1.2 percent. The Agreement includes those payments to CVWD, CVWD Improvement District, and CVWD Storm Water Unit, and provides that such payments shall not be subordinate to all debt service other than that previously issued to finance flood control improvements. Therefore, these payments are not subordinate to existing and new bond debt service payments. Project Area No. 2 [[298,1549,1224,1602][11][,I,][Times New Roman]]Desert Community College District (Formerly th [[1197,1549,2139,1602][11][,I,][Times New Roman]]e Coachella Valley Community College District) The Prior Agency’s agreement with the Desert Community College District provides that the College District will receive 50 percent of the tax increment revenue generated by the College District’s 7.73 percent property tax levy. [[300,1860,1371,1913][11][,I,][Times New Roman]]Coachella Valley Mosquito and Vector Control District The Prior Agency’s agreement with the Coachella Valley Mosquito and Vector Control District provides for payment to the District of 100 percent of the tax increment revenue generated by the District’s 1.41 percent share of property tax levy. [[298,2171,848,2224][11][,I,][Times New Roman]]Desert Recreation District The Prior Agency’s agreement with the Desert Recreation District provides for payment to the District of 25 percent of the tax increment revenue generated by the District’s 2.13 percent property tax levy. [[300,2481,942,2534][11][,I,][Times New Roman]]Coachella Valley Water District The Prior Agency’s agreement with the Water District provides for payment to the Water District of 100 percent of the tax increment revenue generated by the Water District’s 7.67 percent property tax levy, inclusive of the Coachella Valley Water District, the CVWD Improvement District, and the CVWD Storm Water Unit. F-9 ïðë [[300,300,714,353][11][,I,][Times New Roman]]County of Riverside The Prior Agency’s agreement with the County of Riverside provides for full payment of the tax increment revenue generated by the County General Fund (24.43%), Library District (2.80%), and Fire District (6.03%) property tax levies. Additionally, the Agency is paying the County $1.2 million over the next 5 years to reimburse the County for tax increment revenue generated by the County’s General Fund property tax levy the Agency retained during the initial years of the Redevelopment Plan. [[298,717,1471,770][11][,I,][Times New Roman]]Riverside County Superintendent/County Office of Education This Prior Agency’s agreement with the Riverside County Superintendent/Office of Education provides that the Office shall receive 50% of the tax increment revenue generated by their 4.20% share of the property tax levy. [[298,1027,1030,1080][11][,I,][Times New Roman]]Desert Sands Unified School District The Prior Agency’s agreement with DSUSD provides that the Agency will retain 50 percent of the tax increment revenue generated by the DSUSD’s 37.19 percent share of the property tax levy. The remaining 50 percent is paid to DSUSD. Tax Sharing Statutes Certain provisions were added to the Redevelopment Law by the adoption of AB 1290 in 1994. If a project area was created after 1994, or if new territory was added to a project area, under Section 33607.5 of the Redevelopment Law, any affected taxing entity would share in the Tax Increment Revenues generated by such added area pursuant to a statutory formula (“Statutory Tax Sharing”). In addition, pursuant to Section 33333.6(e)(2) of the Redevelopment Law, if the Agency amended or deleted the time limit to incur indebtedness in a project area or increased the total amount of Tax Increment Revenues to be allocated to the project area or increased the duration of the redevelopment plan for a project area and the period for receipt of Tax Increment Revenues, Statutory Tax Sharing is also be required under Section 33607.7 of the Redevelopment Law with all affected taxing agencies not already a party to a tax sharing agreement, once the original limitations have been reached. In general, the amounts to be paid pursuant to Statutory Tax Sharing are as follows: (a) commencing in the first fiscal year after the limitation has been reached, an amount equal to 25% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; (b) in addition to amounts payable as described in (a) above, commencing in the 11th fiscal year after the limitation has been reached, an amount equal to 21% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding 10th fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; and (c) in addition to amounts payable as described in (a) and (b) above, commencing in the 31st fiscal year after the limitation has been reached, an amount equal to 14% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed F-10 ïðê valuation in the preceding 30th fiscal year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (d) The City may elect to receive a portion of the tax increment generated in (a) above, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted. (e) The Agency may subordinate the amount required to be paid to an affected taxing entity to any indebtedness after receiving the consent of the taxing entity. With respect to a taxing entity that is a party to a tax sharing agreement, tax sharing payments would continue pursuant to the Tax Sharing Agreement after the original limitations in the Redevelopment Plan were passed. The Agency eliminated the January 1, 2004 time limit to incur debt for Project Area No. 1 and payments to certain taxing entities pursuant to Section 33607.7 commenced in fiscal year 2004/05. The Agency also eliminated the May 16, 2009 time limit to incur debt for Project Area No. 2, and payments to certain taxing entities pursuant to Section 33607.7 commenced in fiscal year 2009/10. As noted above, with the consent of the Taxing Entity, the payments under the Tax Sharing Statutes may be subordinated to certain Agency obligations. No payments to Taxing Entities with respect to Statutory Tax Sharing have been subordinated. Projected Tax Revenues Deposit of projected Tax Revenues in the Redevelopment Property Tax Trust Fund in the amounts and at the times projected by the Agency depends on the realization of certain assumptions relating to the Tax Increment Revenues. The projections of Tax Increment Revenues and the corresponding Tax Revenues from the Project Areas shown on the following tables were based on the assumptions shown below. The Agency believes the assumptions upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circumstances may occur. (a) The 2013/14 secured roll was assumed to be equal to the 2012/13 secured roll, and increase 2% annually for inflation in future years. (b) For the purposes of the projections, it was assumed that no additional assessed value would be added to the tax rolls as a result of new construction. (c) The values of unsecured personal property and state assessed utility property and the amount of unitary revenues have been maintained throughout the projections at their 2010/11 values. (d) No additional Proposition 8 adjustments are reflected in the projections. (e) A tax rate of $1.00 per $100 of assessed value applied to the taxable property in the Project Areas was used to determine Tax Increment Revenues. (f) Projected Tax Revenues do not reflect delinquencies or supplemental property taxes. F-11 ïðé (g) Projected Tax Revenues include a deduction for administrative costs charged by Riverside County. These fees, while deducted from the Redevelopment Property Tax Trust Fund (RPTTF) deposit, have been prorated between the Project Areas for purposes of the projections. (h) Amounts required to pay an allocable share of the 2011 Loan which had been deposited in the Agency’s Low and Moderate Income Housing Fund have been deducted. (i) Projected Tax Revenues include a deduction for payments due to taxing agencies under Tax Sharing Agreements or applicable Tax Sharing Statutes. TABLE NO. 7 SUCCESSOR AGENCY PROJECTED PLEDGED TAX REVENUES (In $ Thousands) [[898,1027,1199,1079][11][B,I,][Times New Roman]]Project No. 1 [[1397,1028,1698,1080][11][B,I,][Times New Roman]]Project No. 2 [[1940,1028,2143,1080][11][B,I,][Times New Roman]]Pledged| [[1147,1074,1221,1107][7][B,I,][Times New Roman]](1) [[1646,1074,1720,1107][7][B,I,][Times New Roman]](1) [[418,1080,686,1132][11][B,I,][Times New Roman]]Fiscal Year [[870,1080,1186,1132][11][B,I,][Times New Roman]]Tax Revenues [[1369,1080,1685,1132][11][B,I,][Times New Roman]]Tax Revenues [[1890,1080,2206,1132][11][B,I,][Times New Roman]]Tax Revenues 2014 $20,864 $5,665 $26,529 2015 21,639 5,812 27,451 2016 22,089 5,976 28,065 2017 21,792 6,117 27,909 2018 22,244 6,275 28,519 2019 22,709 6,433 29,142 2020 23,178 6,587 29,765 2021 23,656 6,743 30,399 2022 24,150 6,910 31,060 2023 24,651 7,072 31,723 2024 25,160 7,240 32,400 2025 25,677 7,403 33,080 2026 26,207 7,565 33,772 2027 26,751 7,738 34,489 2028 27,303 7,915 35,218 2029 27,864 8,090 35,954 2030 28,438 8,268 36,706 2031 29,028 8,454 37,482 2032 29,626 8,642 38,268 2033 30,233 8,833 39,066 2034 30,854 8,608 39,462 2035 - 7,080 7,080 2036 - 7,279 7,279 2037 - 10,179 10,179 2038 - 10,389 10,389 2039 - 10,606 10,606 2040 - 11,757 11,757 (1) Net of 2011 Loan Payments, see Table No. 8 and 9. F-12 ïðè [[730,251,774,451][9][B,I,][Times New Roman]]Revenues $(1,128) $(2,428) $(2,282) $ (622) $(1,727) $20,864 (1,128) (2,428) (2,282) (622) (1,727) 21,639 (1,151) (2,479) (2,329) (635) (1,726) 22,089 (1,175) (2,530) (2,971) (811) (1,727) 21,792 (1,199) (2,582) (3,032) (827) (1,728) 22,244 (1,224) (2,635) (3,095) (844) (1,727) 22,709 (1,249) (2,689) (3,159) (862) (1,728) 23,178 (1,275) (2,745) (3,224) (879) (1,730) 23,656 (1,301) (2,801) (3,290) (898) (1,728) 24,150 (1,328) (2,859) (3,358) (916) (1,727) 24,651 (1,355) (2,918) (3,427) (935) (1,727) 25,160 (1,383) (2,978) (3,497) (954) (1,730) 25,677 (1,412) (3,039) (3,569) (974) (1,729) 26,207 (1,441) (3,101) (3,642) (994) (1,730) 26,751 (1,470) (3,165) (3,717) (1,014) (1,728) 27,303 (1,500) (3,230) (3,793) (1,035) (1,730) 27,864 (1,531) (3,296) (3,871) (1,056) (1,731) 28,438 (1,562) (3,363) (3,950) (1,078) (1,728) 29,028 (1,594) (3,432) (4,031) (1,100) (1,729) 29,626 (1,627) (3,502) (4,113) (1,122) (1,731) 30,233 (1,660) (3,574) (4,197) (1,145) (1,732) 30,854 ïðç [[687,308,731,404][9][B,I,][Times New Roman]]Net [[600,448,644,648][9][B,I,][Times New Roman]]Allocable [[644,476,688,619][9][B,I,][Times New Roman]]Share [[730,501,774,613][9][B,I,][Times New Roman]]Loan [[687,502,731,609][9][B,I,][Times New Roman]]2011 [[687,658,731,874][9][B,I,][Times New Roman]]Community [[730,674,774,842][9][B,I,][Times New Roman]]College [[644,682,688,834][9][B,I,][Times New Roman]]Desert [[600,891,644,1043][9][B,I,][Times New Roman]]Desert [[730,898,774,1046][9][B,I,][Times New Roman]]School [[687,901,731,1050][9][B,I,][Times New Roman]]Unified [[644,908,688,1039][9][B,I,][Times New Roman]]Sands [[508,936,552,1382][9][B,I,][Times New Roman]]Subordinate Tax Sharing PROJECT AREA NO. 1 PROJECTED TAX REVENUES [[687,1076,731,1239][9][B,I,][Times New Roman]]County [[730,1115,774,1216][9][B,I,][Times New Roman]]Fire [[687,1284,731,1447][9][B,I,][Times New Roman]]County [[730,1298,774,1450][9][B,I,][Times New Roman]]Library (In $ Thousands) TABLE NO. 8 2014 $40,874 $(531) $(453) $(490) $ (285) $39,115 $(10,064) 2015 41,718 (542) (462) (501) (323) 39,890 (10,064) 2016 42,579 (554) (472) (511) (361) 40,681 (10,272) 2017 43,458 (565) (482) (521) (400) 41,490 (10,484) 2018 44,353 (577) (492) (532) (440) 42,312 (10,700) 2019 45,267 (588) (502) (543) (480) 43,154 (10,920) 2020 46,199 (601) (512) (554) (522) 44,010 (11,145) 2021 47,150 (613) (523) (566) (564) 44,884 (11,375) 2022 48,120 (626) (533) (577) (607) 45,777 (11,609) 2023 49,109 (638) (544) (589) (651) 46,687 (11,848) 2024 50,118 (652) (556) (601) (696) 47,613 (12,091) 2025 51,147 (665) (567) (614) (742) 48,559 (12,340) 2026 52,196 (679) (579) (626) (789) 49,523 (12,593) 2027 53,267 (692) (590) (639) (836) 50,510 (12,851) 2028 54,359 (707) (603) (652) (885) 51,512 (13,115) 2029 55,473 (721) (615) (666) (935) 52,536 (13,384) 2030 56,609 (736) (628) (679) (985) 53,581 (13,658) 2031 57,768 (751) (640) (693) (1,037) 54,647 (13,938) 2032 58,950 (766) (653) (707) (1,089) 55,735 (14,223) 2033 60,156 (782) (667) (722) (1,143) 56,842 (14,514) 2034 61,386 (798) (680) (737) (1,198) 57,973 (14,811) [[687,1495,731,1658][9][B,I,][Times New Roman]]County [[730,1498,774,1664][9][B,I,][Times New Roman]]General F-13 [[730,1671,774,1871][9][B,I,][Times New Roman]]Revenues [[687,1734,731,1827][9][B,I,][Times New Roman]]Tax [[644,1868,688,2062][9][B,I,][Times New Roman]]Statutory [[730,1877,774,2054][9][B,I,][Times New Roman]]Sharing [[687,1928,731,2021][9][B,I,][Times New Roman]]Tax [[508,2072,552,2430][9][B,I,][Times New Roman]]Senior Tax Sharing [[730,2072,774,2239][9][B,I,][Times New Roman]]District [[687,2082,731,2227][9][B,I,][Times New Roman]]Water [[644,2129,688,2205][9][B,I,][Times New Roman]]CV [[687,2268,731,2421][9][B,I,][Times New Roman]]Vector [[600,2270,644,2439][9][B,I,][Times New Roman]]Mosquto [[730,2270,774,2429][9][B,I,][Times New Roman]]Control [[644,2308,688,2399][9][B,I,][Times New Roman]]and [[557,2319,601,2395][9][B,I,][Times New Roman]]CV [[644,2453,688,2616][9][B,I,][Times New Roman]]County [[730,2472,774,2596][9][B,I,][Times New Roman]]Fees [[687,2477,731,2614][9][B,I,][Times New Roman]]Admin [[730,2636,774,2807][9][B,I,][Times New Roman]]RPTTF [[687,2666,731,2792][9][B,I,][Times New Roman]]Gross [[687,2844,731,2981][9][B,I,][Times New Roman]]Fiscal [[730,2860,774,2969][9][B,I,][Times New Roman]]Year [[760,241,798,425][8][B,I,][Times New Roman]]Revenues 2014 $22,852 $(297) $(5,583) $ (640) $(1,378) $(4,249) $ (883) $(322) $(480) $(122) $(1,753) $ - $ (965) $(515) $ 5,665 2015 23,316 (303) (5,696) (653) (1,406) (4,336) (901) (329) (490) (124) (1,788) - (965) (513) 5,812 2016 23,788 (297) (5,811) (666) (1,434) (4,423) (919) (335) (500) (127) (1,825) - (964) (511) 5,976 2017 24,271 (303) (5,929) (680) (1,464) (4,513) (938) (342) (510) (129) (1,862) - (965) (519) 6,117 2018 24,763 (310) (6,050) (693) (1,493) (4,605) (957) (349) (520) (132) (1,899) - (965) (515) 6,275 2019 25,265 (316) (6,172) (707) (1,523) (4,698) (976) (356) (531) (135) (1,938) - (964) (516) 6,433 2020 25,777 (322) (6,297) (722) (1,554) (4,793) (996) (363) (541) (137) (1,977) (6) (964) (518) 6,587 2021 26,299 (329) (6,425) (736) (1,586) (4,890) (1,016) (371) (552) (140) (2,017) (11) (965) (518) 6,743 2022 26,831 (335) (6,555) (751) (1,618) (4,989) (1,037) (378) (563) (143) (2,058) (17) (963) (514) 6,910 2023 27,375 (342) (6,688) (767) (1,651) (5,090) (1,058) (386) (575) (146) (2,100) (23) (963) (514) 7,072 2024 27,929 (349) (6,823) (782) (1,684) (5,193) (1,079) (394) (587) (149) (2,142) (32) (962) (513) 7,240 2025 28,494 (356) (6,961) (798) (1,718) (5,298) (1,101) (402) (598) (152) (2,185) (45) (964) (513) 7,403 2026 29,071 (363) (7,102) (814) (1,753) (5,406) (1,124) (410) (610) (155) (2,230) (59) (963) (517) 7,565 2027 29,659 (371) (7,246) (830) (1,788) (5,515) (1,146) (418) (623) (158) (2,275) (73) (963) (515) 7,738 2028 30,258 (378) (7,392) (847) (1,825) (5,626) (1,169) (427) (635) (161) (2,321) (88) (962) (512) 7,915 2029 30,870 (386) (7,542) (864) (1,861) (5,740) (1,193) (435) (648) (164) (2,368) (102) (963) (514) 8,090 2030 31,494 (394) (7,694) (882) (1,899) (5,856) (1,217) (444) (661) (168) (2,416) (117) (963) (515) 8,268 2031 32,131 (402) (7,850) (900) (1,937) (5,975) (1,242) (453) (675) (171) (2,464) (132) (961) (515) 8,454 2032 32,780 (410) (8,008) (918) (1,977) (6,095) (1,267) (462) (688) (175) (2,514) (148) (962) (514) 8,642 2033 33,442 (418) (8,170) (936) (2,017) (6,219) (1,293) (472) (702) (178) (2,565) (164) (962) (513) 8,833 2034 34,118 (426) (8,335) (955) (2,057) (6,344) (1,319) (481) (716) (182) (2,617) (180) (962) (936) 8,608 2035 34,807 (435) (8,503) (975) (2,099) (6,472) (1,345) (491) (731) (185) (2,670) (196) (2,692) (933) 7,080 2036 35,509 (444) (8,675) (994) (2,141) (6,603) (1,372) (501) (746) (189) (2,724) (213) (2,691) (937) 7,279 2037 36,226 (453) (8,850) (1,014) (2,184) (6,736) (1,400) (511) (761) (193) (2,779) (230) - (936) 10,179 2038 36,957 (462) (9,029) (1,035) (2,229) (6,872) (1,428) (521) (776) (197) (2,835) (248) - (936) 10,389 2039 37,703 (471) (9,211) (1,056) (2,273) (7,011) (1,457) (532) (792) (201) (2,892) (266) - (935) 10,606 2040 38,464 (481) (9,397) (1,077) (2,319) (7,152) (1,487) (542) (808) (205) (2,950) (289) - - 11,757 ïïð [[721,280,759,385][8][B,I,][Times New Roman]]Tax [[760,426,798,578][8][B,I,][Times New Roman]]Service [[721,453,759,560][8][B,I,][Times New Roman]]Debt [[683,455,721,565][8][B,I,][Times New Roman]]Bond [[645,459,683,560][8][B,I,][Times New Roman]]2011 [[645,593,683,761][8][B,I,][Times New Roman]]Allocable [[760,607,798,731][8][B,I,][Times New Roman]]Loan [[683,617,721,736][8][B,I,][Times New Roman]]Share [[721,627,759,728][8][B,I,][Times New Roman]]2011 [[683,768,721,931][8][B,I,][Times New Roman]]Statutory [[760,777,798,924][8][B,I,][Times New Roman]]Sharing [[721,789,759,894][8][B,I,][Times New Roman]]Tax [[760,942,798,1087][8][B,I,][Times New Roman]]District [[721,943,759,1077][8][B,I,][Times New Roman]]Water [[683,963,721,1058][8][B,I,][Times New Roman]]CV PROJECT AREA NO. 2 PROJECTED TAX REVENUES [[721,1109,759,1292][8][B,I,][Times New Roman]]Recreation [[760,1123,798,1268][8][B,I,][Times New Roman]]District [[683,1131,721,1262][8][B,I,][Times New Roman]]Desert [[760,1285,798,1479][8][B,I,][Times New Roman]]Education [[721,1296,759,1468][8][B,I,][Times New Roman]]Office of [[683,1322,721,1458][8][B,I,][Times New Roman]]County (In $ Thousands) TABLE NO. 9 [[645,1474,683,1647][8][B,I,][Times New Roman]]Mosquto [[760,1481,798,1638][8][B,I,][Times New Roman]]Control [[721,1489,759,1631][8][B,I,][Times New Roman]]Vector [[606,1513,644,1608][8][B,I,][Times New Roman]]CV [[683,1525,721,1611][8][B,I,][Times New Roman]]and F-14 [[562,1613,600,1837][8][B,I,][Times New Roman]]Tax Sharing [[721,1646,759,1858][8][B,I,][Times New Roman]]Community [[760,1689,798,1829][8][B,I,][Times New Roman]]College [[683,1691,721,1822][8][B,I,][Times New Roman]]Desert [[760,1879,798,2016][8][B,I,][Times New Roman]]School [[721,1881,759,2019][8][B,I,][Times New Roman]]Unified [[645,1882,683,2013][8][B,I,][Times New Roman]]Desert [[683,1888,721,2010][8][B,I,][Times New Roman]]Sands [[721,2049,759,2185][8][B,I,][Times New Roman]]County [[760,2069,798,2164][8][B,I,][Times New Roman]]Fire [[760,2198,798,2354][8][B,I,][Times New Roman]]Library [[721,2215,759,2351][8][B,I,][Times New Roman]]County [[760,2368,798,2521][8][B,I,][Times New Roman]]General [[721,2379,759,2515][8][B,I,][Times New Roman]]County [[721,2531,759,2676][8][B,I,][Times New Roman]]Admin [[683,2542,721,2678][8][B,I,][Times New Roman]]County [[760,2557,798,2660][8][B,I,][Times New Roman]]Fees [[760,2685,798,2843][8][B,I,][Times New Roman]]RPTTF [[721,2712,759,2830][8][B,I,][Times New Roman]]Gross [[721,2863,759,2990][8][B,I,][Times New Roman]]Fiscal [[760,2864,798,2980][8][B,I,][Times New Roman]]Year APPENDIX G STATE DEPARTMENT OF FINANCE LETTER G-1 ïïï APPENDIX H SUPPLEMENTAL INFORMATION — THE CITY OF LA QUINTA [[450,556,1403,609][11][,I,][Times New Roman]]The following information concerning the City of [[1366,556,2300,609][11][,I,][Times New Roman]] La Quinta (the “City”) and surrounding areas [[300,608,1249,661][11][,I,][Times New Roman]]is included only for the purpose of supplying gen [[1222,608,2300,661][11][,I,][Times New Roman]]eral information regarding the community. The Bonds [[300,661,1239,714][11][,I,][Times New Roman]]are not a debt of the City, the State or any of its [[1197,661,2300,714][11][,I,][Times New Roman]]political subdivisions, and neither the City, the State nor [[300,714,1249,767][11][,I,][Times New Roman]]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 44,421. La Quinta is one of California’s fastest growing cities. 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, all with substantial disposable income and the time to shop. 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 ten years: CITY OF LA QUINTA ESTIMATED POPULATION [[780,1897,919,1949][11][B,I,][Times New Roman]]Year [[1062,1897,1200,1949][11][B,I,][Times New Roman]]City o [[1165,1897,1223,1949][11][B,I,][Times New Roman]]f [[1334,1897,1542,1949][11][B,I,][Tim es New Roman]]Riverside [[1652,1897,1703,1949][11][B,I,][Times New Roman]]S [[1678,1897,1808,1949][11][B,I,][Times New Roman]]tate o [[1774,1897,1832,1949][11][B,I,][Times New Roman]]f [[714,1947,987,1999][11][B,I,][Times New Roman]](January 1) [[1026,1947,1273,1999][11][B,I,][Times New Roman]]La Quinta [[1356,1947,1523,1999][11][B,I,][Times New Roman]]County [[1627,1947,1850,199 9][11][B,I,][Times New Roman]]California 2004 30,1101,814,48535,570,847 2005 32,5581,895,69535,869,173 2006 33,9871,975,91336,116,202 2007 35,7922,049,90236,399,676 2008 36,7442,102,74136,704,375 2009 37,1162,140,62636,966,713 2010 37,0442,179,69237,223,900 2011 37,6882,205,73137,427,946 2012 38,1902,234,19337,668,804 2013 38,4012,255,05937,966,471 Source: State of California Department of Finance, January 1 estimates. In addition to the City’s permanent population, the City sees an influx of seasonal residents. For calendar year 2012, that population was _____*. The seasonal residents usually spend fall, winter and spring in La Quinta. *Source: City of La Quinta H-1 ïïî 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.” Climate CITY OF LA QUINTA Climate [[863,809,1308,861][11][B,I,][Times New Roman]]Average Temperature [[1563,840,1682,892][11][B,I,][Times New Roman]]Rain [[1874,840,2104,892][11][B,I,][Times New Roman]]Humidity [[497,890,652,942][11][B,I,][Times New Roman]]Period [[785,890,1400,942][11][B,I,][Times New Roman]]Min. MeanMax. [[1547,890,1726,942][11][B,I,][Times New Roman]]Inches [[1829,890,2150,942][11][B,I, ][Times New Roman]]Daily Average January 37.8 54.170.40.5038 April 57.0 72.387.50.1032 July 76.9 92.1107.20.1237 October 58.7 75.592.20.2337 Annual 57.2 73.189.03.3836 Prevailing winds: Northwest 7 mph. Source: National Weather Service. 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. 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 H-2 ïïí 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. 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 Pavillion 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 is anchored by the Hog’s Breath Inn, and several locally owned dining establishments. Centre Point, which expanded the economic diversity of the City, is a mixed-use complex, with a Homewood Suites and Applebee’s Restaurant, the Eisenhower Argyros Medical Center and a neighborhood dog park (Pioneer Park). Quality residential communities, including PGA West, Rancho La Quinta and the Traditions have increased the assessed valuation of the City. Tourism La Quinta is well known for its many championship golf courses. The City is home to 21 championship courses, and more are in the 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 Bob Hope Classic, are exposing 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 La Quinta Redevelopment 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. H-3 ïïì Hotel room sales in La Quinta enjoyed continued success with revenues estimated at $35.3 million in 2009. The La Quinta Resort and Spa, the largest destination resort in the Coachella Valley, was the largest contributor to this increase. Capital Improvements The City spent $14.6 million in capital improvements during fiscal year 2009-10. Projects completed or nearing completion include the Phase 2 Pedestrian Crossing Enhancements, decorative pedestrian crosswalks at the intersections of Calle Tampico with Avenida Bermudas and with Desert Club Drive. Monroe Street Pavement Rehab Project, repair of northbound and southbound lanes. Washington Street Widening Project, widening of the northbound side of Washington Street and creating a continuous stretch of 3 lanes of through traffic. And, the Laguna De La Paz Sound Wall Project, the work included the construction of an 8 foot sound barrier on the west side of Washington Street between Eisenhower Drive and Avenue 48 adjacent to the Laguna de La Paz residential subdivision to mitigate traffic related noise from the Washington Street Corridor. The City’s Capital Improvement Program (CIP) continues to increase to meet the demands of growth, and totals 6.3 million for 2010-11. 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) [[906,1805,1200,1857][11][B,I,][Times New Roman]]Retail Stores [[1735,1805,2031,1857][11][B,I,][Times New Roman]]Total Outlets [[718,1876,986,1928][11][B,I,][Times New Roman]]Number of [[1160,1876,1343,1928][11][B,I,][Times New Roman]]Taxable [[1547,1876,1815,1928][11][B,I,][Times New Roman]]Number of [[1988,1876,2171,19 28][11][B,I,][Times New Roman]]Taxable [[402,1929,541,1981][11][B,I,][Times New Roman]]Year [[746,1929,944,1981][11][B,I,][Times New Roman]]Permits [[1113,1929,1392,1981][11][B,I,][Times New Roman]]Transactions [[1575,1929,1773,1981][11 ][B,I,][Times New Roman]]Permits [[1942,1929,2221,1981][11][B,I,][Times New Roman]]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 Source: State Board of Equalization. H-4 ïïë Building Activity The following presents the residential building permit valuations for the City of La Quinta for the calendar years 2008 through 2012: RESIDENTIAL BUILDING PERMIT VALUATIONS CITY OF LA QUINTA (Valuation in 000) [[952,765,2168,812][10][B,I,][Times New Roman]]2008 2009 2010 2011 2012 Residential Single Unit $ 63,166,758 $ 24,300,022 $ 20,792,686 $ 15,480,731 $ 20,686,325 0 0 0 11,948,060 Multiple Units 20,413,648 Total Residential $ 83,580,406 $ 24,300,022 $ 20,792,686 $ 15,480,731 $ 32,634,385 No. of New Dwelling Units Single Unit 237 109 79 41 55 0 0 0 176 Multiple Units 217 Total Units 454 109 79 41 231 Source: U.S. Census Bureau. 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”. H-5 ïïê The assessed valuation of property within the City since fiscal year 2003-04 is summarized below. CITY OF LA QUINTA ASSESSED VALUATIONS [[1898,611,2277,663][11][B,I,][Times New Roman]]Taxable Assessed [[435,664,1860,716][11][B,I,][Times New Roman]] Secured Unsecured Less: Exemptions [[2007,664,2149,716][11][B,I,][Times New Roman]]Value 2003-04 $ 3,789,678,041 $ 32,607,713 $ (54,726,303) $ 3,767,559,451 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 Source: City of La Quinta Comprehensive Annual Financial Report for Year Ended June 30, 2012. 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 contains two major commercial areas. It is currently creating master development plans for the first, a 100-acre downtown area. Approximately 50% of this area has yet to undergo actual development. Additionally there remains approximately 680 undeveloped acres of commercial property on Highway 111 between Palm Springs and Indio. H-6 ïïé Labor Force The following listing sets forth the top employers in the City: CITY OF LA QUINTA| Major Employers and Number of Employees [[1202,658,1480,710][11][B,I,][Times New Roman]]Approximate [[656,711,872,763][11][B,I,][Times New Roman]]Employer [[1160,711,2064,763][11][B,I,][Times New Roman]]No. of Employees Type of Business La Quinta Resort and Club Hotel & Golf Resort 1,211 Desert Sands Unified Government 968 Wal-Mart Super CenterRetailer 367 CostcoRetailer 234 The Home DepotRetailer 165 Rancho La Quinta Golf Resort 152 Lowes Home ImprovementRetailer 145 Hideaway Golf Resort 122 Tradition Golf Club Golf Resort 101 City of La Quinta Government 89 Source: City of La Quinta Comprehensive Annual Financial Report for Year Ended June 30, 2012. H-7 ïïè 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 below is the employment data for the Riverside-San Bernardino-Ontario Metropolitan Statistical Area for 2009 to 2012. Riverside-San Bernardino-Ontario Metropolitan Statistical Area (Riverside and San Bernardino Counties) [[1136,831,2214,878][10][B,I,][Times New Roman]]2009 2010 2011 2012 Agriculture 14,900 15,000 14,800 15,100 Mining and Logging 1,100 1,000 1,100 1,200 Construction 67,900 59,700 59,100 61,200 Manufacturing 88,800 85,100 85,500 86,500 Trade, Transportation and Utilities 271,900 270,800 281,000 283,800 Information 14,100 14,000 11,700 11,600 Financial Activities 42,500 41,000 40,400 40,800 Professional and Business Services 125,100 123,400 126,600 126,800 Educational and Health Services 133,600 133,800 143,100 145,500 Leisure and Hospitality 123,800 122,800 128,200 129,500 Other Services 37,300 38,200 40,100 40,400 Government 235,200 234,300 225,200 224,500 (1) Total, All Industries1,156,400 1,139,000 1,156,900 1,166,700 (2) Total Civilian Labor Force1,775,700 1,799,900 1,795,000 1,805,400 Total Unemployment 233,800 258,200 243,500 218,600 Unemployment Rate 13.2% 14.3% 13.6% 12.1% (1) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers and workers on strike. (2) Civilian labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers and workers on strike. Source: State Employment Development Department, Labor Market Information Division. Direct and Overlapping Debt A statement of the City’s direct and overlapping debt is as follows: [TO COME] 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 H-8 ïïç 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 three public elementary schools, two junior high schools and one high school, all a part of the Desert Sands Unified School District and the Coachella Valley Unified School District. Post-secondary education is served by College of the Desert, Chapman University, California State University, San Bernardino Extension, Ambition Computer Technology, Propper College and Professional Career College. 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. The City is served by four churches, numerous radio stations, three local TV channels, one TV cable system, one savings and loan bank and six 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. H-9 ïîð APPENDIX I SPECIMEN MUNICIPAL BOND INSURANCE POLICY I-1 ïîï