10170000 city of indio

Transcription

NEW ISSUE—BOOK-ENTRY ONLY
NOT RATED
In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel, under existing law, the interest on the Bonds is
exempt from personal income taxes of the State of California and, assuming compliance with the tax covenants described herein, interest
on the Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof for
federal income tax purposes and is not an item of preference for purposes of the federal alternative minimum tax. See ‘‘TAX MATTERS’’
herein.
STATE OF CALIFORNIA
RIVERSIDE COUNTY
$10,170,000
CITY OF INDIO
COMMUNITY FACILITIES DISTRICT NO. 2005-1 (TALAVERA)
SPECIAL TAX BONDS, SERIES 2005
(IMPROVEMENT AREA NO. 1)
Dated: Date of Delivery
Due: September 1, as shown on the inside front cover hereof
The City of Indio Community Facilities District No. 2005-1 (Talavera) Special Tax Bonds, Series 2005 (Improvement Area No. 1)
(the ‘‘Bonds’’) are being issued by the City of Indio Community Facilities District No. 2005-1 (Talavera) (the ‘‘District’’), which was
established by the City of Indio (the ‘‘City’’), pursuant to a Fiscal Agent Agreement, dated as of December 1, 2005 (the ‘‘Fiscal
Agent Agreement’’), by and between the District and Union Bank of California, N.A., as fiscal agent (the ‘‘Fiscal Agent’’), and will
be secured as described herein. The Bonds are being issued to (i) finance certain capital facilities fees relating to and public
improvements serving property within Improvement Area No. 1 of the District (‘‘Improvement Area No. 1’’), (ii) fund a reserve
account for the Bonds, (iii) fund capitalized interest through September 1, 2006, and (iv) pay the costs of issuance of the Bonds. See
‘‘THE FINANCING PLAN’’ herein.
The Bonds will be issued in denominations of $5,000 or any integral multiple thereof, shall mature on September 1 in each of the
years and in the amounts, and shall bear interest as shown on the inside front cover hereof. Interest on the Bonds shall be payable
on each March 1 and September 1, commencing March 1, 2006 (the ‘‘Interest Payment Dates’’) to the Owner thereof as of the
Record Date immediately preceding each such Interest Payment Date, by check mailed on such Interest Payment Date or by wire
transfer to an account in the United States of America made upon instructions of any Owner of $1,000,000 or more in aggregate
principal amount of Bonds. The Bonds, when issued, will be registered in the name of Cede & Co., as nominee of The Depository
Trust Company, New York, New York (‘‘DTC’’). DTC will act as securities depository of the Bonds. Individual purchases of the
Bonds will be made in book-entry form only. Principal of and interest and premium, if any, on the Bonds will be payable by DTC
through the DTC participants. See ‘‘THE BONDS—Book-Entry System’’ herein. Purchasers of the Bonds will not receive physical
delivery of the Bonds purchased by them.
The Bonds are subject to optional redemption, mandatory sinking fund redemption and special mandatory redemption from Special
Tax prepayments prior to maturity as set forth herein. See ‘‘THE BONDS—Redemption’’ herein.
The Bonds are limited obligations of the District. The Bonds are payable solely from the Net Taxes (as defined herein), comprised of
Special Taxes (as defined herein) to be levied on and collected from the owners of the taxable land within Improvement Area No. 1,
and from certain other funds pledged under the Fiscal Agent Agreement, all as further described herein. The Special Taxes are to be
levied according to a Rate and Method of Apportionment of Special Tax approved by the qualified electors within Improvement
Area No. 1 on September 21, 2005.
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT, THE CITY, THE COUNTY OF
RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE
PAYMENT OF THE BONDS EXCEPT TO THE LIMITED EXTENT DESCRIBED HEREIN. EXCEPT FOR THE NET
TAXES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE
NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT
ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES OF IMPROVEMENT AREA
NO. 1 AND AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED HEREIN.
SEE THE SECTION OF THIS OFFICIAL STATEMENT ENTITLED ‘‘SPECIAL RISK FACTORS’’ FOR A DISCUSSION OF
CERTAIN RISK FACTORS WHICH SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH
HEREIN, IN CONSIDERING THE INVESTMENT QUALITY OF THE BONDS.
This cover page contains certain 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.
The Bonds are offered when, as and if issued, subject to approval as to their legality by Fulbright & Jaworski L.L.P., Los Angeles,
California, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the City by the City Attorney and by
Fulbright & Jaworski L.L.P., Los Angeles, California, as Disclosure Counsel to the City with respect to the issuance of the Bonds. It is
anticipated that the Bonds will be available for delivery on or about December 7, 2005.
17AUG200516253196
Dated: November 15, 2005
$10,170,000
CITY OF INDIO
Maturity Dates, Principal Amounts, Interest Rates and Yields
(Base CUSIP† 455697)
$2,990,000 Serial Bonds
Maturity Date
September 1
Principal
Amount
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$150,000
170,000
175,000
180,000
190,000
195,000
205,000
215,000
220,000
235,000
245,000
255,000
270,000
285,000
Interest
Rate
3.500%
3.500
3.800
4.000
4.125
4.250
4.375
4.500
5.000
5.000
5.000
5.000
5.000
5.000
Reoffering
Yield
3.300%
3.650
3.800
4.000
4.300
4.450
4.600
4.700
4.850
4.950
5.000
5.100
5.150
5.200
CUSIP†
AU6
AV4
AW2
AX0
AY8
AZ5
BA9
BB7
BC5
BD3
BE1
BF8
BG6
BH4
$2,445,000 5.200% Term Bonds due September 1, 2027, Yield 5.250% CUSIP: 455697 BJ0
$4,735,000 5.250% Term Bonds due September 1, 2036, Yield 5.280% CUSIP: 455697 BK7
† Copyright 2005, American Bankers Association. CUSIP data herein are provided by Standard & Poor’s CUSIP Service
Bureau, a division of The McGraw-Hill Companies, Inc., for convenience of reference only. Neither the City, the Underwriter
or the Financial Advisor assumes any responsibility for the accuracy of this CUSIP data.
CITY OF INDIO, CALIFORNIA
MAYOR AND CITY COUNCIL
Melanie Fesmire, Mayor
Gene Gilbert, Mayor Pro Tem
Lupe Ramos Watson, Councilmember
Ben Godfrey, Councilmember
Michael H. Wilson, Councilmember
______________________________________________
CITY STAFF
Glenn Southard, City Manager
Michael Busch, Finance Director
Jim Smith, Director of Public Works
Cynthia Hernandez, City Clerk
______________________________________________
PROFESSIONAL SERVICES
Bond Counsel and Disclosure Counsel
Fulbright & Jaworski L.L.P.
Los Angeles, California
Financial Advisor
Harrell & Company Advisors, LLC
Orange, California
Underwriter
Southwest Securities, Inc.
Newport Beach, California
Underwriter’s Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Special Tax Consultant
MuniFinancial
Temecula, California
Appraiser
First American Commercial Real Estate Services
Santa Ana, California
Market Absorption Consultant
Market Profiles Inc.
Santa Ana, California
Fiscal Agent
Union Bank of California, N.A.
Los Angeles, California
No dealer, broker, salesperson or other person has been authorized to give any information or to
make any representations in connection with the offer or sale of the Bonds described herein, other than as
contained in this Official Statement, and if given or made, such other information or representations must
not be relied upon as having been authorized by the City, the District or the Underwriter. This Official
Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any
sale of, the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such
offer, solicitation or sale.
The information set forth herein has been obtained from the City, the District, and other sources
which are believed to be reliable but is not guaranteed as to accuracy or completeness, and is not to be
construed as a representation of such by the City, the District or the Underwriter. 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 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.
The information and expressions of opinion stated herein are subject to change without notice.
The delivery of this Official Statement shall not, under any circumstances, create any implication that
there has been no change in the affairs of the City, the District or any major property owner within the
District since the date hereof. The Official Statement is submitted in connection with the sale of Bonds
referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion,
whether or not expressly so described herein, are intended solely as such and are not to be construed as a
representation of facts.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN
DEALERS AND DEALER BANKS ACTING AS AGENTS AT PRICES LOWER THAN THE
PUBLIC OFFERING PRICES AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED
FROM TIME TO TIME BY THE UNDERWRITER.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE
BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAW OF
ANY STATE.
TABLE OF CONTENTS
Page
INTRODUCTORY STATEMENT .............................................................................................................1
General ...........................................................................................................................................1
Use of Proceeds ..............................................................................................................................1
Security for the Bonds ....................................................................................................................2
The District .....................................................................................................................................2
The Special Tax ..............................................................................................................................2
Foreclosure Covenant .....................................................................................................................2
Limited Obligations ........................................................................................................................3
Further Information.........................................................................................................................3
Forward Looking Statements..........................................................................................................3
CONTINUING DISCLOSURE...................................................................................................................4
ESTIMATED SOURCES AND USES OF FUNDS ...................................................................................4
THE FINANCING PLAN ...........................................................................................................................5
THE BONDS ...............................................................................................................................................6
Description of the Bonds ................................................................................................................6
Redemption .....................................................................................................................................6
The Fiscal Agent .............................................................................................................................9
Book-Entry System.........................................................................................................................9
Debt Service Schedule ..................................................................................................................10
SECURITY FOR THE BONDS ................................................................................................................10
General .........................................................................................................................................10
The Special Taxes .........................................................................................................................11
Special Tax Fund ..........................................................................................................................12
Reserve Account ...........................................................................................................................13
Rate and Method of Apportionment of Special Taxes..................................................................14
Covenant for Superior Court Foreclosure.....................................................................................15
No Obligation of the City Upon Delinquency ..............................................................................16
No Parity Obligations ...................................................................................................................16
Direct and Overlapping Debt ........................................................................................................16
Estimated Effective Tax Rate .......................................................................................................18
Appraisal.......................................................................................................................................18
Assigned Special Tax Coverage ...................................................................................................19
THE CITY .................................................................................................................................................21
THE DISTRICT.........................................................................................................................................21
THE DEVELOPMENT .............................................................................................................................22
General .........................................................................................................................................22
Public Facilities.............................................................................................................................23
Environmental Assessment...........................................................................................................23
Development and Financing Plans................................................................................................24
Absorption Study ..........................................................................................................................24
THE DEVELOPER ...................................................................................................................................25
SPECIAL RISK FACTORS ......................................................................................................................25
Concentration of Ownership .........................................................................................................25
Risks of Real Estate Secured Investments Generally ...................................................................26
Terrorist Attacks ...........................................................................................................................26
Land Development Costs..............................................................................................................26
Future Land Use Regulations and Growth Control Initiatives......................................................26
Failure to Develop Properties .......................................................................................................27
Disclosure to Future Homebuyers ................................................................................................28
Parity Taxes and Special Assessments..........................................................................................28
i
TABLE OF CONTENTS
(continued)
Page
Appraised Value; Land Value.......................................................................................................28
Value to Lien Ratios .....................................................................................................................29
Insufficiency of Special Taxes......................................................................................................29
Tax Delinquencies ........................................................................................................................30
Future Indebtedness ......................................................................................................................30
Natural Disasters...........................................................................................................................30
Endangered and Threatened Species.............................................................................................31
Hazardous Substances...................................................................................................................31
Bankruptcy and Foreclosure .........................................................................................................31
Property Controlled by FDIC........................................................................................................32
Billing of Special Taxes................................................................................................................33
Collection of Special Taxes ..........................................................................................................34
Maximum Special Tax Rates ........................................................................................................34
Exempt Properties.........................................................................................................................34
California Constitution Article XIIIC and Article XIIID .............................................................35
Ballot Initiatives and Legislative Measures ..................................................................................36
No Acceleration ............................................................................................................................36
Loss of Tax Exemption.................................................................................................................36
Limitations on Remedies ..............................................................................................................36
Limited Secondary Market ...........................................................................................................37
CONCLUDING INFORMATION ............................................................................................................37
Underwriting .................................................................................................................................37
Legal Opinion ...............................................................................................................................37
Tax Exemption..............................................................................................................................38
No Litigation.................................................................................................................................40
No Rating on the Bonds................................................................................................................40
Miscellaneous ...............................................................................................................................40
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
APPENDIX F
APPENDIX G
APPENDIX H
–
–
–
–
–
–
–
–
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES................ A-1
CITY OF INDIO SUPPLEMENTAL INFORMATION........................................... B-1
SUMMARY OF FISCAL AGENT AGREEMENT .................................................. C-1
APPRAISAL REPORT ............................................................................................. D-1
MARKET ABSORPTION STUDY .......................................................................... E-1
FORM OF BOND COUNSEL OPINION ..................................................................F-1
FORMS OF CONTINUING DISCLOSURE AGREEMENTS ................................ G-1
BOOK-ENTRY ONLY SYSTEM............................................................................. H-1
ii
OFFICIAL STATEMENT
$10,170,000
CITY OF INDIO
INTRODUCTORY STATEMENT
General
This Official Statement, including the cover page, the inside cover page and the Appendices
hereto, is provided to furnish certain information in connection with the issuance and sale by the City of
Indio Community Facilities District No. 2005-1 (Talavera) (the “District”) of its Special Tax Bonds,
Series 2005 (Improvement Area No. 1) (the “Bonds”) in the aggregate principal amount of $10,170,000
being issued in connection with the financing of certain capital facilities fees relating to and public
improvements serving Improvement Area No. 1 of the District (“Improvement Area No. 1”). The Bonds
will be issued pursuant to the provisions of a Fiscal Agent Agreement, dated as of December 1, 2005 (the
“Fiscal Agent Agreement”), by and between the District and Union Bank of California, N.A., as fiscal
agent (the “Fiscal Agent”), and pursuant to the Mello-Roos Community Facilities Act of 1982, as
amended (Sections 53311 et seq. of the Government Code of the State of California) (the “Act”). On or
about December 14, 2005, the District expects to issue its Community Facilities District No. 2005-1
(Talavera) Special Tax Bonds, Series 2005 (Improvement Area No. 2), the proceeds of which will be used
to finance certain capital facilities fees relating to and public improvements serving Improvement Area
No. 2 of the District (“Improvement Area No. 2”) and which, when issued, will be secured by Special
Taxes levied on taxable parcels within the Improvement Area No. 2, separate and distinct from
Improvement Area No. 1.
The Act was enacted by the California Legislature to provide an alternate method of financing
certain public facilities and services, especially in developing areas. Once duly established, a community
facilities district is a legally constituted governmental entity established for the purpose of financing
specific facilities and services within defined boundaries. Subject to approval by a two-thirds vote of the
qualified electors within a community facilities district and compliance with the provisions of the Act, a
community facilities district may issue bonds and levy and collect special taxes to repay its bonds.
The Bonds will be issued in denominations of $5,000 each or any integral multiple thereof and
will be dated and bear interest from the date of their delivery, at the rates set forth on the inside cover
page hereof. See “THE BONDS.” The Bonds, when issued, will be registered in the name of Cede &
Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as
securities depository of the Bonds. Individual purchases of the Bonds will be made in book-entry form
only. Principal of and interest and premium, if any, on the Bonds will be payable by DTC through the
DTC participants. See “THE BONDS – Book-Entry System” herein. Purchasers of the Bonds will not
receive physical delivery of the Bonds purchased by them.
Use of Proceeds
The Bonds are being issued to finance certain capital facilities fees relating to the development of
property within Improvement Area No. 1 and the acquisition and/or construction of certain public
improvements serving property within Improvement Area No. 1, to fund a reserve account for the Bonds,
to fund capitalized interest on the Bonds through September 1, 2006, and to pay the costs of issuance of
the Bonds. See “THE FINANCING PLAN” herein.
Security for the Bonds
The Bonds are secured by the pledge of Net Taxes and the other amounts in the Special Tax Fund
(other than amounts in the Administrative Expense Account therein). Net Taxes are defined as Special
Taxes minus an amount equal to the Administrative Expense Requirement. Special Taxes means the
amount of all special taxes authorized to be levied within Improvement Area No. 1, together with the
proceeds collected from the sale of property pursuant to the foreclosure provision of the Fiscal Agent
Agreement for the delinquency of such Special Taxes remaining after the payment of all the costs related
to such foreclosure actions. See “SECURITY FOR THE BONDS – General.”
The District has established a Reserve Account pursuant to the Fiscal Agent Agreement. The
Reserve Account will be funded from the proceeds of the Bonds in the initial amount of $676,075.00.
The Reserve Requirement as of any date of calculation will be an amount equal to the lowest of (1) 10%
of the original proceeds of the Bonds, less original issue discount, if any, plus original issue premium, if
any, (2) Maximum Annual Debt Service, or (3) 125% of the average Annual Debt Service of the
Outstanding Bonds. See “SECURITY FOR THE BONDS – Reserve Account.”
The District
The District consists of approximately 285 gross acres known as Talavera comprising two
Improvement Areas – Improvement Area No. 1 consists of approximately 145 acres and Improvement
Area No. 2 consists of approximately 140 acres. At buildout, it is anticipated that Improvement Area
No. 1 will contain 436 residential dwelling units and Improvement Area No. 2 will contain 384 residential
dwelling units. See “THE DEVELOPMENT” for further information regarding the Talavera housing
community. The Bonds are being issued to finance certain capital facilities fees relating to and
public improvements serving properties within Improvement Area No. 1 only and are not financing
capital facilities fees relating to and public improvements serving properties within Improvement
Area No. 2. No Special Taxes levied on property in Improvement Area No. 2 will be security for the
Bonds. See “THE FINANCING PLAN,” “SECURITY FOR THE BONDS” and “THE DISTRICT”
herein.
The Special Tax
On September 21, 2005, at an election held pursuant to the Act, the landowners who comprised
the qualified electors of the District authorized the District to incur bonded indebtedness in Improvement
Area No. 1 in an aggregate amount not to exceed $12,000,000, approved a Rate and Method of
Apportionment of Special Tax (the “Rate and Method”), approved the levy of the Special Taxes within
and for Improvement Area No. 1 to pay the principal of, and interest on, the authorized bonded
indebtedness, and approved an appropriations limit for Improvement Area No. 1 equal to the maximum
amount of bonded indebtedness authorized to be incurred for Improvement Area No. 1. See “SECURITY
FOR THE BONDS,” “THE DISTRICT” and “APPENDIX A – RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAXES.”
Foreclosure Covenant
The District has covenanted for the benefit of the owners of the Bonds that, under certain
circumstances described herein, the District will commence judicial foreclosure proceedings with respect
to delinquent Special Taxes on property within Improvement Area No. 1, and will diligently pursue such
2
proceedings to completion. See “SECURITY FOR THE BONDS – The Special Taxes” and “SECURITY
FOR THE BONDS – Covenant for Superior Court Foreclosure.”
Limited Obligations
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT, THE
CITY, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL
SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS EXCEPT TO THE
LIMITED EXTENT DESCRIBED HEREIN. EXCEPT FOR THE NET TAXES OF IMPROVEMENT
AREA NO. 1, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE
BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR
GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE
DISTRICT PAYABLE SOLELY FROM NET TAXES OF IMPROVEMENT AREA NO. 1 AND
AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED
HEREIN.
See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion
of certain risk factors which should be considered, in addition to the other matters set forth herein, in
evaluating the investment quality of the Bonds.
Further Information
Brief descriptions of the Bonds, the security for the Bonds, special risk factors, the District, the
City, the Developer (as such terms are hereinafter defined) and other information are included in this
Official Statement. Such descriptions and information do not purport to be comprehensive or definitive.
The descriptions herein of the Bonds, the Fiscal Agent Agreement, resolutions and other documents are
qualified in their entirety by reference to the forms thereof and the information with respect thereto
included in the Bonds, the Fiscal Agent Agreement, such resolutions and other documents. All such
descriptions are further qualified in their entirety by reference to laws and to principles of equity relating
to or affecting generally the enforcement of creditors’ rights. For definitions of certain capitalized terms
used herein and not otherwise defined, and a description of certain terms relating to the Bonds, see
“APPENDIX C – SUMMARY OF FISCAL AGENT AGREEMENT” hereto.
Copies of such documents may be obtained from the office of the City Manager of the City.
Forward Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute
“forward-looking statements” within the meaning of the United States Private Securities Litigation
Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and
Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally
identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or similar
words. Such forward-looking statements include, but are not limited to certain statements contained in
the information under the captions “THE DEVELOPMENT” and “THE DEVELOPER.”
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED
IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM
ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY
3
UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS
OFFICIAL STATEMENT.
CONTINUING DISCLOSURE
It is anticipated that the Improvement Area No. 1 will be developed by D.R. Horton Los Angeles
Holding Company, Inc. (the “Developer”) as further described herein under the heading “THE
DEVELOPER.” The District and the Developer have separately covenanted for the benefit of owners of
the Bonds to provide certain financial information and operating data relating to Improvement Area No. 1
(collectively, the “Annual Reports”) and to provide notices of the occurrences of certain enumerated
events, if material.
The Annual Reports will be filed with each Nationally Recognized Municipal Securities
Information Repository and with the appropriate State information depository, if any. The notices of
material events will be filed with the Municipal Securities Rulemaking Board (and with the appropriate
State information depository, if any). The specific nature of information to be contained in the Annual
Reports or the notice of material events is summarized in “APPENDIX G – FORMS OF CONTINUING
DISCLOSURE AGREEMENTS.” These covenants have been made by the District and the Developer in
order to assist the Underwriter in complying with the Rule. Neither the City nor the District has ever
failed to comply in all material respects with any previous undertakings with regards to said Rule to
provide annual reports or notices of material events. The Developer has never failed to comply in all
material respects with any previous undertakings with regard to said Rule to provide annual reports or
notices of material events.
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and used of funds relating to the issuance of the Bonds is set forth below:
Sources of Funds
Principal Amount of the Bonds ...........................................................................
Less: Original Issue Discount................................................................
Less: Underwriter’s Discount................................................................
Total Sources .............................................................................
Uses of Funds
Deposit to Acquisition and Construction Fund ...................................................
Deposit to Reserve Account ................................................................................
Deposit to Interest Account(1) ..............................................................................
Deposit to Costs of Issuance Account(2) ..............................................................
Total Uses..................................................................................
(1)
(2)
$10,170,000.00
57,730.40
177,975.00
$9,934,294.60
$8,664,452.34
676,075.00
374,767.26
219,000.00
$9,934,294.60
Capitalized interest through September 1, 2006.
Includes fees for Bond Counsel, Disclosure Counsel, Financial Consultant, the Appraiser, the Market Absorption Consultant,
legal and financial consultant costs of the Developer, the Fiscal Agent and its counsel, costs of printing the Official
Statement, and other costs of issuance of the Bonds.
4
THE FINANCING PLAN
The proceeds of the Bonds will used to finance certain capital facilities fees relating to and public
improvements serving properties within Improvement Area No. 1. Such eligible fees and improvements
and estimated costs thereof are set forth below. Any shortfall in financing these improvements are the
responsibilities of the Developer. The inability of the Developer to finance any shortfall may have an
adverse effect on the Developer’s ability to complete the development as contemplated.
The following table sets forth a description of the capital facilities fees and public improvements
eligible to be financed in Improvement Area No. 1, along with the estimated costs associated with each
item.
Description of Fees/Improvements
Estimated Cost
City of Indio Development Impact Fees:
Transportation Uniform Mitigation Fee
Bridge Crossing & Major Thoroughfares
Traffic Signal Mitigation Fee
Park & Recreation Fee
Fire Facilities Fee
Police Facilities Fee
Storm Drain Facilities Fee
Fair Share Contribution/Signals
Public Building Fee
Landscape Inspection Fee
Total City Development Impact Fees
$ 278,803
755,097
87,504
697,086
171,011
29,431
873,586
186,098
139,196
52,650
$3,270,462
Coachella Valley Water District (CVWD) Fees:
Back up Facility Charge
Service Connection and Meter
Imported Water Charge
Sanitary Capacity Charge
Subtotal
$ 552,300
87,750
2,456,223
1,234,467
$4,330,740
Total City Fees & CVWD Fees
$7,601,202
CVWD Sewer Improvements
CVWD Water Improvements
Soft Costs & Management Fee
Subtotal
$ 473,030
619,807
218,567
$1,311,404
Total CVWD Fees & Improvements
$5,642,144
Improvement Area No. 1 Total
$8,912,607(1)
________________________________
(1)
The expected Bond proceeds to be deposited in the Acquisition and Construction Fund is
$8,664,452.34, which is less than the total eligible capital facilities
fess and public improvement costs.
5
THE BONDS
Description of the Bonds
The Bonds will be issued as fully registered bonds, in denominations of $5,000 each or any
integral multiple thereof within a single maturity and will be dated and bear interest from the date of their
delivery (the “Dated Date”), at the rates set forth on the inside cover page hereof. The Bonds will be
issued in fully registered form, without coupons.
Interest on the Bonds will be paid in lawful money of the United States of America semiannually
on March 1 and September 1 of each year (each, an “Interest Payment Date”), commencing on March 1,
2006. Interest on the Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day
months. Interest on the Bonds shall be payable from the Interest Payment Date next preceding the date of
authentication thereof unless (i) such date of authentication is an Interest Payment Date in which event
interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record
Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be
payable from the Interest Payment Date immediately succeeding the date of authentication, or (iii) the
date of authentication is prior to the close of business on the first Record Date occurring after the issuance
of such Bond, in which event interest shall be payable from the dated date of such Bond; provided,
however, that if at the time of authentication of such Bond, interest is in default, interest on that Bond
shall be payable from the last Interest Payment Date to which the interest has been paid or made available
for payment or, if no interest has been paid or made available for payment on that Bond, interest on that
Bond shall be payable form its dated date.
The Bonds will mature on September 1 in the principal amounts and years as shown on the inside
cover page hereof and are subject to optional redemption, special mandatory redemption and mandatory
sinking fund redemption as described below.
Redemption
Optional Redemption
Subject to the limitations set forth below, the Bonds maturing on or after September 1, 2011 may
be redeemed, at the option of the District from any source of funds, prior to maturity on any date on or
after September 1, 2010, in whole, or in part in the order of maturity selected by the District and by lot
within a maturity, at the following redemption prices, expressed as a percentage of the principal amount
to be redeemed, together with accrued interest to the date of redemption:
Redemption Dates
Redemption Prices
September 1, 2010 through August 31, 2011
September 1, 2012 and thereafter
102.0%
101.0
100.0
In the event the District elects to redeem Bonds as provided above, the District shall give a
Written Request of the District to the Fiscal Agent of its election to so redeem, the redemption date and
the principal amount of the Bonds to be redeemed. The notice to the Fiscal Agent shall be given at least
60 but no more than 90 days prior to the redemption date, or such shorter period as shall be acceptable to
the Fiscal Agent.
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Mandatory Redemption from Special Tax Prepayments
The Bonds are subject to mandatory redemption, in whole or in part and on a pro rata basis
among maturities, on any Interest Payment Date from and to the extent of any prepayment of Special
Taxes at the following redemption prices, expressed as a percentage of the principal amount to be
redeemed, together with accrued interest to the date of redemption:
Redemption Dates
Redemption Prices
March 1, 2006 through March 1, 2010
September 1, 2012 and thereafter
103.0%
102.0
101.0
100.0
In connection with such redemption, the District may also apply amounts in the Reserve Account
which will be in excess of the Reserve Requirement as a result of such Special Tax prepayment to redeem
Bonds as set forth above.
Mandatory Sinking Fund Redemption
The Bonds maturing on September 1, 2027 and September 1, 2036 (collectively, the “Term
Bonds”) shall be called before maturity and redeemed, from the mandatory Sinking Fund Payments that
have been deposited into the Redemption Account, on September 1, 2021 and September 1, 2028,
respectively, and on each September 1 thereafter prior to maturity, in accordance with the schedule of
Sinking Fund Payments set forth below. The Bonds so called for redemption shall be selected by the
Fiscal Agent by lot and shall be redeemed at a redemption price for each redeemed Bond equal to the
principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:
Term Bonds Maturing on September 1, 2027
Redemption Date
(September 1)
Principal Amount
2021
2022
2023
2024
2025
2026
2027 (maturity)
$300,000
315,000
330,000
345,000
365,000
385,000
405,000
7
Term Bonds Maturing on September 1, 2036
Redemption Date
(September 1)
Principal Amount
2028
2029
2030
2031
2032
2033
2034
2035
2036 (final maturity)
$425,000
445,000
470,000
495,000
520,000
550,000
580,000
610,000
640,000
If during the Fiscal Year immediately preceding one of the sinking fund redemption dates
specified above the District purchases Bonds, at least 45 days prior to the redemption date, the District
shall notify the Fiscal Agent by Written Request of the District as to the principal amount purchased and
the amount of Bonds so purchased shall be credited at the time of purchase, to the extent of the full
principal amount thereof, to reduce such upcoming Sinking Fund Payment for the applicable maturity of
the Bonds. All Bonds purchased pursuant to this subsection shall be cancelled pursuant to the Fiscal
Agent Agreement.
In the event of a partial redemption of the Term Bonds pursuant to optional redemption or
mandatory redemption from Special Tax prepayments, each of the remaining Sinking Fund Payments for
such Term Bonds, as described above, will be reduced, as nearly as practicable, on a pro rata basis.
Notice of Redemption
When Bonds are due for redemption under the Fiscal Agent Agreement, the Fiscal Agent shall
give notice, in the name of the District, of the redemption of such Bonds; provided, however, that a notice
of a redemption to be made from other than from Sinking Fund Payments shall be conditioned on there
being on deposit on the redemption date sufficient money to pay the redemption price of the Bonds to be
redeemed. Such notice of redemption shall (a) specify the CUSIP numbers (if any), the bond numbers
and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds of
a maturity are subject to redemption, or all the Bonds of one maturity, are to be redeemed, the bond
numbers of such issue need not be specified; (b) state the date fixed for redemption and surrender of the
Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds are to
be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is
to be redeemed; (f) state the date of issue of the Bonds as originally issued; (g) state the rate of interest
borne by each Bond being redeemed; and (h) state any other descriptive information needed to identify
accurately the Bonds being redeemed as shall be specified by the Fiscal Agent. Such notice shall further
state that on the date fixed for redemption, there shall become due and payable on each Bond, or portion
thereof called for redemption, the principal thereof, together with any premium, and interest accrued to
the redemption date, and that from and after such date, interest thereon shall cease to accrue and be
payable. At least 30 days but no more than 60 days prior to the redemption date, the Fiscal Agent shall
mail a copy of such notice, by first class mail, postage prepaid, to the respective Owners thereof at their
addresses appearing on the Bond Register. The actual receipt by the Owner of any Bond or the original
purchaser of any Bond of notice of such redemption shall not be a condition precedent to redemption, and
neither the failure to receive nor any defect in such notice shall affect the validity of the proceedings for
the redemption of such Bonds, or the cessation of interest on the redemption date.
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Effect of Notice of Redemption
Notice of redemption having been duly given, as described above, and the amount necessary for
the redemption having been made available for that purpose and being available therefor on the date fixed
for such redemption:
(1)
The Bonds, or portions thereof, designated for redemption shall, on the date fixed for
redemption, become due and payable at the redemption price thereof as provided in the Fiscal Agent
Agreement, anything in the Fiscal Agent Agreement or in the Bonds to the contrary notwithstanding;
(2)
Upon presentation and surrender thereof at the office of the Fiscal Agent, the redemption
price of such Bonds shall be paid to the Owners thereof;
(3)
As of the redemption date the Bonds, or portions thereof so designated for redemption
shall be deemed to be no longer Outstanding and such Bonds, or portions thereof, shall cease to bear
further interest; and
(4)
As of the date fixed for redemption no Owner of any of the Bonds, or portions thereof so
designated for redemption shall be entitled to any of the benefits of this Fiscal Agent Agreement, or to
any other rights, except with respect to payment of the redemption price and interest accrued to the
redemption date from the amounts so made available.
The Fiscal Agent
Union Bank of California, N.A., has been appointed as the Fiscal Agent for all of the Bonds
under the Fiscal Agent Agreement. For a further description of the rights and obligations of the Fiscal
Agent pursuant to the Fiscal Agent Agreement, see “APPENDIX C – SUMMARY OF FISCAL AGENT
AGREEMENT” hereto.
Book-Entry System
The Depository Trust Company, New York, New York (“DTC”), will act as securities depository
for the Bonds. The Bonds will be registered in the name of Cede & Co. (DTC’s partnership nominee),
and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple
thereof, under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive
physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the
name of Cede & Co., as nominee of DTC, references herein to the Owners shall mean Cede & Co., and
shall not mean the ultimate purchasers of the Bonds. Payments of the principal of, premium, if any, and
interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Fiscal Agent, so
long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to
DTC’s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial
Owners is the responsibility of DTC’s Participants and Indirect Participants. See “APPENDIX H –
BOOK-ENTRY ONLY SYSTEM.”
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Debt Service Schedule
The following is the debt service schedule for the Bonds, assuming no redemptions other than
mandatory sinking fund redemptions.
DEBT SERVICE SCHEDULE
Year Ending
(September 1)
Principal
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
$
-0150,000
170,000
175,000
180,000
190,000
195,000
205,000
215,000
220,000
235,000
245,000
255,000
270,000
285,000
300,000
315,000
330,000
345,000
365,000
385,000
405,000
425,000
445,000
470,000
495,000
520,000
550,000
580,000
610,000
640,000
Total
Annual
Debt Service
Interest
$
$10,170,000
374,767.26
511,046.26
505,796.26
499,846.26
493,196.26
485,996.26
478,158.76
469,871.26
460,902.50
451,227.50
440,227.50
428,477.50
416,227.50
403,477.50
389,977.50
375,727.50
360,127.50
343,747.50
326,587.50
308,647.50
289,667.50
269,647.50
248,587.50
226,275.00
202,912.50
178,237.50
152,250.00
124,950.00
96,075.00
65,625.00
33,600.00
$10,411,861.08
$
374,767.26
661,046.26
675,796.26
674,846.26
673,196.26
675,996.26
673,158.76
674,871.26
675,902.50
671,227.50
675,227.50
673,477.50
671,227.50
673,477.50
674,977.50
675,727.50
675,127.50
673,747.50
671,587.50
673,647.50
674,667.50
674,647.50
673,587.50
671,275.00
672,912.50
673,237.50
672,250.00
674,950.00
676,075.00
675,625.00
673,600.00
$20,581,861.08
SECURITY FOR THE BONDS
General
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT, THE
CITY, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL
SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS EXCEPT TO THE
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LIMITED EXTENT DESCRIBED HEREIN. EXCEPT FOR THE NET TAXES OF IMPROVEMENT
AREA NO. 1, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE
BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR
GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE
DISTRICT PAYABLE SOLELY FROM NET TAXES OF IMPROVEMENT AREA NO. 1 AND
AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED
HEREIN.
The Bonds are secured by a pledge of Net Taxes of Improvement Area No. 1 and the other
amounts in the Special Tax Fund (other than amounts in the Administrative Expense Account therein).
Net Taxes are defined as Special Taxes minus an amount equal to the Administrative Expense
Requirement. Special Taxes means the amount of all special taxes (the “Special Taxes” or the “Special
Tax”) received by the District with respect to Improvement Area No. 1, together with the proceeds
collected from the sale of property pursuant to the foreclosure provision of the Fiscal Agent Agreement
for the delinquency of such Special Taxes remaining after the payment of all the costs related to such
foreclosure actions.
In the event that delinquencies occur in the receipt of the Special Taxes within
Improvement Area No. 1 in any fiscal year, the District may increase its Special Tax levy on
property within Improvement Area No. 1 in the following fiscal year up to the maximum amount
permitted under the Rate and Method. Under no circumstances, however, will Special Taxes levied
against any parcel used for private residential purposes be increased by more than 10 percent as a
consequence of delinquency or default by the owner of any other parcel or parcels within
Improvement Area No. 1. Although the Special Tax levy on property within Improvement No. 1
may be increased, Special Taxes resulting from the increase may not be available to cure any
delinquencies for a period of one year or more. In addition, an increase in the Special Tax levy may
adversely affect the ability or willingness of property owners to pay their Special Taxes. See “Rate
and Method of Apportionment of Special Taxes” below and “APPENDIX A – RATE AND
METHOD OF APPORTIONMENT OF SPECIAL TAXES” hereto for a description of the
District’s procedures for levying Special Taxes within Improvement Area No. 1, and “SPECIAL
RISK FACTORS – Insufficiency of Special Taxes.”
OWNERSHIP OF THE BONDS IS SUBJECT TO A SIGNIFICANT DEGREE OF RISK.
POTENTIAL INVESTORS ARE ADVISED TO CAREFULLY READ THE SECTION OF THIS
OFFICIAL STATEMENT ENTITLED “SPECIAL RISK FACTORS.”
The Special Taxes
The Special Taxes are to be apportioned, levied and collected according to the Rate and Method
for Improvement Area No. 1. See “– Rate and Method of Apportionment of Special Taxes” below and
“APPENDIX A – RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES” hereto.
Beginning in Fiscal Year 2006-2007 and so long as any Bonds issued under the Fiscal Agent
Agreement are Outstanding, the District has covenanted to levy the Special Tax in an amount sufficient,
together with other amounts on deposit in the Special Tax Fund and available for such purpose, to pay
(1) the principal of and interest on the Bonds when due, (2) the Administrative Expenses, and (3) any
amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement.
Subject to the maximum special tax rates, the Rate and Method is formulated to result in the levy each
year of an amount of such payment of principal and interest, replenishment of the Reserve Account and
related administrative expenses; however, see “SPECIAL RISK FACTORS” for a discussion of certain
factors affecting the actual timely collection of such Special Tax levies.
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Special Tax Fund
Pursuant to the Fiscal Agent Agreement, there is established a “Special Tax Fund” to be held and
maintained by the Fiscal Agent. In the Special Tax Fund there is further established and created an
Interest Account, a Principal Account, a Redemption Account, a Reserve Account and an Administrative
Expense Account.
The amounts on deposit in the foregoing funds and accounts will be held by the Fiscal Agent in
trust and the Fiscal Agent will invest and disburse the amounts in such funds and accounts in accordance
with the provisions of the Fiscal Agent Agreement and will disburse investment earnings thereon in
accordance with the provisions of the Fiscal Agent Agreement.
The District will, on each date on which it receives Special Taxes, transfer the Special Taxes to
the Fiscal Agent for deposit in the Special Tax Fund in accordance with the terms of the Fiscal Agent
Agreement to be held in trust. The Fiscal Agent will first deposit into the Administrative Expense
Account of the Special Tax Fund an amount equal to the Administrative Expense Requirement and shall
then transfer the amounts on deposit in the Special Tax Fund on the dates and in the amounts set forth in
the Fiscal Agent Agreement, in the following order of priority, to:
1.
The Interest Account of the Special Tax Fund;
2.
The Principal Account of the Special Tax Fund;
3.
The Redemption Account of the Special Tax Fund;
4.
The Reserve Account of the Special Tax Fund;
5.
The Administrative Expense Account of the Special Tax Fund; and
6.
The Surplus Fund.
Administrative Expense Account. The Fiscal Agent will transfer from the Special Tax Fund and
deposit in the Administrative Expense Account of the Special Tax Fund the Administrative Expense
Requirement and from time to time additional amounts necessary to make timely payment of
Administrative Expenses, which will be disbursed by the Fiscal Agent upon the Written Request of the
District. Amounts deposited in the Administrative Expense Fund are not pledged to the repayment on the
Bonds.
Interest Account and Principal Account of the Special Tax Fund. The principal of and interest
due on the Bonds until maturity, other than principal due upon redemption including sinking fund
redemption, will be paid by the Fiscal Agent from the Principal Account and the Interest Account of the
Special Tax Fund, respectively. At least five Business Days prior to each March 1 and September 1, the
Fiscal Agent will make the following transfers from the Special Tax Fund first to the Interest Account and
then to the Principal Account; provided, however, that to the extent that deposits have been made in the
Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds, or
otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if
amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency shall
be made up by an immediate transfer from the Reserve Account:
1.
To the Interest Account, an amount such that the balance in the Interest Account five
Business Days prior to each Interest Payment Date will be equal to the installment of interest due on the
Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment
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Date which remains unpaid. Moneys in the Interest Account shall be used for the payment of interest on
the Bonds as the same become due.
2.
To the Principal Account, an amount such that the balance in the Principal Account five
Business Days prior to September 1 of each year, commencing September 1, 2007 shall at least equal the
principal payment due on the Bonds maturing on such September 1 and any principal payment due on a
previous September 1 which remains unpaid. Moneys in the Principal Account will be used for the
payment of the principal of such Bonds as the same become due at maturity.
Redemption Account of the Special Tax Fund. On each September 1 on which a Sinking Fund
Payment is due, after the deposits have been made to the Interest Account and the Principal Account of
the Special Tax Fund, the Fiscal Agent will next transfer into the Redemption Account of the Special Tax
Fund from the Special Tax Fund the amount needed to make the balance in the Redemption Account five
Business Days prior to each September 1 equal to the Sinking Fund Payment due on any Outstanding
Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate
to make the foregoing transfers, then any deficiency will be made up by an immediate transfer from the
Reserve Account. Moneys so deposited in the Redemption Account will be used and applied by the
Fiscal Agent to call and redeem Term Bonds in accordance with the Sinking Fund Payment schedule set
forth in the Fiscal Agent Agreement and in any Supplemental Fiscal Agent Agreement for such Term
Bonds.
All prepayments of Special Taxes shall be deposited in the Redemption Account to be used to
redeem Bonds on the next date for which notice of redemption can timely be given.
Surplus Fund. Moneys deposited in the Surplus Fund shall be transferred by the Fiscal Agent (i)
to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay
the principal of, including mandatory Sinking Fund Payments, premium, if any, and interest on the Bonds
when due in the event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax
Fund are insufficient therefor, (ii) to the Reserve Account in order to replenish the Reserve Account to the
Reserve Requirement, and (iii) to the Administrative Expense Account of the Special Tax Fund to pay
Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account
of the Special Tax Fund are insufficient to pay Administrative Expenses or, upon the Written Request of
the District, may be disbursed to the District to be expended for any other lawful purpose of the District.
The amounts in the Surplus Fund are not pledged to the repayment of the Bonds.
Reserve Account
Moneys in the Reserve Account will be used solely for the purpose of paying the principal of,
including Sinking Fund Payments, and interest on any Bonds when due in the event that the moneys in
the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or
moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund
Payment when due. If the amounts in the Interest Account, the Principal Account or the Redemption
Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund
Payments, or interest on any Bonds when due, the Fiscal Agent will withdraw from the Reserve Account
for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax
Fund, as applicable, moneys necessary for such purposes.
Whenever moneys are withdrawn from the Reserve Account, after making the required transfers
under the Fiscal Agent Agreement, the Fiscal Agent will transfer to the Reserve Account from available
moneys in the Special Tax Fund, or from any other legally available funds which the District elects to
apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve
Requirement. Moneys in the Special Tax Fund will be deemed available for transfer to the Reserve
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Account only if the Fiscal Agent determines that such amounts will not be needed to make the deposits
required to be made to the Interest Account, the Principal Account or the Redemption Account of the
Special Tax Fund. If amounts in the Special Tax Fund or otherwise transferred to replenish the Reserve
Account are inadequate to restore the Reserve Account to the Reserve Requirement, then the District will
include the amount necessary fully to restore the Reserve Account to the Reserve Requirement in the next
annual Special Tax levy for property within Improvement Area No. 1 to the extent of the maximum
permitted Special Tax rates, however, Special Taxes on a Residential Property may not be increased more
than 10% from the prior Fiscal Year.
Anything to the contrary in the Fiscal Agent Agreement notwithstanding, the District may, at any
time, substitute an Alternate Reserve Account Security for cash in the Reserve Account.
Rate and Method of Apportionment of Special Taxes
The following is a summary of certain provisions of the Rate and Method. This summary does
not purport to be comprehensive and reference should be made to the Rate and Method attached hereto
as Appendix A. All capitalized terms not defined in this section have the meanings set forth in the Rate
and Method.
Each Fiscal Year, commencing with the 2006-2007 Fiscal Year, all Parcels of Taxable Property
within Improvement Area No. 1 shall be categorized and classified as either Developed Property,
Approved Property, Undeveloped Property, Public Property and/or Property Owner’s Association
Property that is not Exempt Property and shall be subject to the levy of Special Taxes in accordance with
the Rate and Method of Apportionment. See “APPENDIX A – RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAXES.” A parcel is classified as Developed Property when a
building permit is issued with respect to such parcel. Parcels of Developed Property shall further be
classified as Residential Property or Non-Residential Property. A Parcel of Residential Property shall
further be classified as Single Family Property according to its appropriate Land Use Category based on
the Residential Floor Area of such Parcel.
Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the District shall
levy the Special Tax on all Taxable Property within Improvement Area No. 1 until the amount of Special
Taxes equals the Special Tax Requirement for Improvement Area No. 1 in accordance with the following
steps:
First: The Special Tax shall be levied Proportionately on each Parcel of Developed Property at
up to 100% of the applicable Assigned Special Tax rate as needed to satisfy the Special Tax Requirement
for Improvement Area No. 1;
Second: If additional moneys are needed to satisfy the Special Tax Requirement for
Improvement Area No. 1, after the first step has been completed, the Special Tax shall be levied
Proportionately on each Parcel of Approved Property (parcels included in a final map that has been
recorded but no building permit has been issued) within Improvement Area No. 1, at up to 100% of the
Maximum Special Tax for Approved Property; and
Third: If additional moneys are needed to satisfy the Special Tax Requirement for Improvement
Area No. 1 after the first two steps have been completed, the Special Tax shall be levied Proportionately
on each Parcel of Undeveloped Property within Improvement Area No. 1 at up to 100% of the Maximum
Special Tax for Undeveloped Property;
Fourth: If additional moneys are needed to satisfy the Special Tax Requirement for Improvement
Area No. 1 after the first three steps have been completed, the Special Tax to be levied on each Parcel of
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Developed Property within Improvement Area No. 1 whose Maximum Special Tax is derived by the
application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax
up to the Maximum Special Tax for such Parcel within Improvement Area No. 1;
Fifth: If additional money are needed to satisfy the Special Tax Requirement for Improvement
Area No. 1 after the first four steps have been completed, the Special Tax to be levied Proportionately on
each Parcel of Public Property and/or Property Owner’s Association Property within Improvement Area
No. 1 that is not Exempt Property at up to 100% of the Maximum Special Tax.
Notwithstanding the above, under no circumstances will the Special Taxes levied against any
Parcel of Residential Property within Improvement Area No. 1 be increased by more than ten percent
(10%) per Fiscal Year as a consequence of delinquency or default by the owner of any other Parcel or
Parcels within Improvement Area No. 1 of the District. Furthermore, under no circumstances will any
Special Taxes be levied against Parcels within Improvement Area No. 1 as a result of delinquencies in
Covenant for Superior Court Foreclosure
In the event of a delinquency in the payment of any installment of Special Taxes, the District is
authorized by the Act to order institution of an action in the Superior Courts of the State to foreclose any
lien therefor. In such action, the real property subject to the Special Taxes may be sold at a judicial
foreclosure sale. The ability of the District to foreclose the lien of delinquent unpaid Special Taxes may
be limited in certain instances and may require prior consent of the property owner in the event the
property is owned by or in receivership of the Federal Deposit Insurance Corporation (the “FDIC”) or
other similar federal agencies. See “SPECIAL RISK FACTORS – Bankruptcy and Foreclosure” and
“SPECIAL RISK FACTORS – Tax Delinquencies.” Such judicial foreclosure proceedings are not
mandatory. However, in the Fiscal Agent Agreement, the District has covenanted for the benefit of the
Owners of the Bonds that:
(a)
if the District determines that (i) any owner owns one or more parcels subject to a
Special Tax is delinquent in an aggregate amount of $3,000 or more, or (ii) any owner of a parcel
of Approved Property or Undeveloped Property subject to the Special Tax is delinquent in the
payment of one Installment of Special Taxes when due, then the District will send or cause to be
sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner
within 45 days of such determination, and (if the delinquency remains uncured) foreclosure
proceedings will be commenced by the District within 120 days of such determination, to the
extent permissible under applicable law. An “Installment” of Special Tax is defined as the
installment of Special Tax that becomes delinquent after any December 10 or April 10.
(b)
if the District determines that the total amount of delinquent Special Tax for the
prior Fiscal Year for Improvement Area No. 1 (including the total of delinquencies under
paragraph (A) above), exceeds 5% of the total Special Taxes due and payable for the prior Fiscal
Year, the District will notify or cause to be notified all property owners who are then delinquent
in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45
days of such determination, and will commence foreclosure proceedings within 120 days of such
determination against each parcel of land in Improvement Area No. 1 with a Special Tax
delinquency, to the extent permissible under applicable law.
There could be a default or a delay in payments to the owners of the Bonds pending prosecution
of foreclosure proceedings and receipt by the District of foreclosure sale proceeds, if any, and subsequent
transfer of those proceeds to the District. However, up to the maximum amount permitted under the
applicable Rate and Method, the District may adjust the Special Taxes levied on all property within the
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District to provide the amount required to pay debt service on the Bonds, but not more than a 10%
increase on a Residential Property from the prior Fiscal Year.
Under current law, a judgment debtor (property owner) has at least 140 days from the date of
service of the notice of levy in which to redeem the property to be sold. If a judgment debtor fails to
redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought
within 90 days of the date of sale. If, as a result of such an action a foreclosure sale is set aside, the
judgment is revived, the judgment creditor is entitled to interest on the revised judgment and any liens
extinguished by the sale are revised as if the sale had not been made (Section 701.680 of the Code of
Civil Procedure of the State of California).
No Obligation of the City Upon Delinquency
The City is under no obligation to transfer any funds of the City into the Special Tax Fund or any
other funds or accounts under the Fiscal Agent Agreement for the payment of the principal of or interest
on the Bonds if a delinquency occurs in the payment of any Special Taxes. See “SECURITY FOR THE
BONDS B Covenant for Superior Court Foreclosure” for a discussion of the District’s obligation to
foreclose Special Tax liens upon delinquencies.
No Parity Obligations
Other than refunding bonds, the District may not issue bonds, notes or other similar evidences of
indebtedness payable from the Net Taxes of Improvement Area No. 1 and other amounts deposited in the
Special Tax Fund and secured by a lien and charge upon such amounts equal to the lien and charge
securing the Bonds.
Direct and Overlapping Debt
Set forth below is the existing authorized indebtedness payable from taxes and assessments that
may be levied on property within Improvement Area No. 1. In addition, other public agencies may issue
additional indebtedness at any time, without the consent or approval of the City or the District.
16
CITY OF INDIO
DIRECT AND OVERLAPPING DEBT
2005-06 Local Secured Assessed Valuation:
$5,286,457
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
Desert Community College District
Desert Sands Unified School District
Desert Sands Unified School District Lease Tax Obligations
City of Indio Assessment District No. 90-1
City of Indio Community Facilities District No. 2005-1, I.A. No. 1
Coachella Valley Recreation and Park Reassessment District No. 01-1
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT:
Riverside County General Fund Obligations
Riverside County Board of Education Certificates of Participation
Desert Sands Unified School District Certificates of Participation
City of Indio Certificates of Participation
Coachella Valley County Water District, I.D. No. 71 Certificates of Participation
Coachella Valley Recreation and Park District Certificates of Participation
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
Less: Riverside County self-supporting obligations
TOTAL NET OVERLAPPING GENERAL FUND DEBT
0.005%
0.005
0.051
0.217
0.038
0.043
Debt 10/1/05
$ 8,293
30,133
11,406
3,213
–(2)
7,227
$60,272
$ 31,050
611
7,530
7,682
3,241
1,124
$51,238
1,027
$50,211
$111,510(3)
$110,483
GROSS COMBINED TOTAL DEBT
NET COMBINED TOTAL DEBT
(1)
(2)
(3)
% Applicable(1)
0.012%
0.022
0.051
0.183
100.
0.178
Based on 2004-05 ratios.
Excludes Mello-Roos Act bonds to be sold.
Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds
and non-bonded capital lease obligations.
Ratios to 2005-06 Assessed Valuation:
Direct Debt ..................................................................................... – %
Total Direct and Overlapping Tax and Assessment Debt . ..............1.14%
Gross Combined Total Debt ............................................................2.11%
Net Combined Total Debt ...............................................................2.09%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/05: $0
___________________________________
Source: California Municipal Statistics Inc.
17
Estimated Effective Tax Rate
Set forth below is the estimated fiscal year 2006/07 tax obligations for a sample developed
property within of Improvement Area No. 1.
ESTIMATED FISCAL YEAR 2006/07 TAX OBLIGATION
FOR A SAMPLE DEVELOPED PROPERTY
Projected Amount
Projected Sales Price (Based on a Home Size of 2,400 Square Feet)
Ad Valorem Property Taxes:
Basic Levy (1.00%)
Desert Sands Unified School District G.O. Bond
Coachella Valley Water District Debt Service
Desert Community College District Debt Service
Total General Property Taxes (1.14%)
$3,660
281
76
73
$4,090
Assessment, Special Taxes & Parcel Charges:
Coachella Valley Recreation and Park District Reassessment District No. 01-1 - Estimate
Coachella Valley Water District, Water/Sewer Standby Charges
Landscaping & Lighting District – Estimate(1)
City of Indio CFD No. 2005-1 (Improvement Area No. 1)
City of Indio CFD No. 2004-1(2)
Total Assessments & Parcel Charges
$52
40
100
1,811
375
$2,378
Projected Total Property Tax
Projected Effective Tax Rate
$6,467
1.77%
____________________
(1)
(2)
$365,990
Anticipated lighting and landscape district to service the development.
Special taxes for the City of Indio CFD No. 2004-1 (Police, Fire and Paramedic Services) increase annually by 2%.
Source: Special Tax Consultant.
Appraisal
The Bonds are secured by Special Taxes which may include amounts realized upon foreclosure
sale of delinquent parcels. Therefore, the ability of the District to meet debt service on the Bonds may
depend on the ability of delinquent parcels to generate sufficient proceeds upon foreclosure sale to pay
delinquent Special Taxes. The City has commissioned First American Commercial Real Estate Services,
Santa Ana, California (the “Appraiser”) to perform an appraisal (the “Appraisal”) of the property values
of parcels within the District. See “APPENDIX D – APPRAISAL REPORT” hereto. The Appraisal was
prepared with a date of value of September 9, 2005. In the opinion of the Appraiser, the discounted
“bulk-sale” value of the properties within Improvement Area No. 1, as of the date of value stated in the
Appraisal, is $68,000,000, which is approximately 6.7 times the aggregate principal amount of Bonds
issued, excluding any direct or overlapping debt. See “APPENDIX D – APPRAISAL REPORT” for
description of the valuation methodology. The Appraiser’s value estimates reflect certain absorption
assumptions set forth in the Appraisal including the sale of finished properties to “end users.” In addition,
the Appraiser’s estimate refers to the sale of lots to developers or investors who will ultimately sell off to
“end users.” Also, the land development costs furnished by the Developer represent the costs estimated at
18
the time of the Appraisal for developing the tract within Improvement Area No. 1. There can be no
assurance that property values set forth in the Appraisal will not decrease, or that at any time the amount
that could be realized upon sale of a particular parcel in a foreclosure sale for nonpayment of Special
Taxes will equal that parcel’s appraised value.
Assigned Special Tax Coverage
The following tables show the debt service coverage achieved on the Bonds assuming absorption
rates show in the Absorption Study, with the Special Tax levied at the Assigned Special Tax, and
excluding debt service on any overlapping debt. See “THE DEVELOPMENT – Absorption Study”
herein.
19
SPECIAL TAXES AND DEBT SERVICE
Estimated
Assigned
Special Taxes
2007
$755,520(1)
2008
769,004
2009
769,004
2010
769,004
2011
769,004
2012
769,004
2013
769,004
2014
769,004
2015
769,004
2016
769,004
2017
769,004
2018
769,004
2019
769,004
2020
769,004
2021
769,004
2022
769,004
2023
769,004
2024
769,004
2025
769,004
2026
769,004
2027
769,004
2028
769,004
2029
769,004
2030
769,004
2031
769,004
2032
769,004
2033
769,004
2034
769,004
2035
769,004
2036
769,004
____________________
Admin.
Costs
($25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
(25,000)
Estimated
Net Taxes
$730,520
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
744,004
Debt
Service
Coverage
$661,046
675,796
674,846
673,196
675,996
673,159
674,871
675,903
671,228
675,228
673,478
671,228
673,478
674,978
675,728
675,128
673,748
671,588
673,648
674,668
674,648
673,588
671,275
672,913
673,238
672,250
674,950
676,075
675,625
673,600
110.5%
110.1
110.2
110.5
110.1
110.5
110.2
110.1
110.8
110.2
110.5
110.8
110.5
110.2
110.1
110.2
110.4
110.8
110.4
110.3
110.3
110.5
110.8
110.6
110.5
110.7
110.2
110.0
110.1
110.5
(1)
Includes $307,840 of Special Tax from Undeveloped Properties.
Source: Special Tax Consultant and Underwriter.
No assurance can be given that any of the foregoing ratios can or will be maintained during the
period of time that the Bonds are Outstanding. The City and the District have no control over the amount
of additional indebtedness that may be issued in the future by other public agencies, the payment of which
is secured by the levy of a tax or an assessment, whether on a parity with or subordinate to the Special
Taxes. See “SPECIAL RISK FACTORS – Appraised Value; Land Value.” In addition, the number of
units and size of homes can change over the course of the development. The projections are based on
home sizes provided by the Developer. If smaller homes are constructed, Special Taxes may be reduced
and the Backup Special Tax may have to be levied. See “APPENDIX A – RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAXES” and “– Estimated Effective Tax Rate” above.
20
THE CITY
The City is located approximately 120 miles east of Los Angeles in the Coachella Valley,
surrounded by the San Jacinto Mountains to the east and the Santa Rosa Mountains to the south. Its
neighboring communities are La Quinta to the west, unincorporated areas of Riverside County to the
south, the City of Coachella to the east and unincorporated Riverside County land to the north. In 1893,
Indio became one of 12 townships in the County of Riverside and was incorporated as a general law city
in 1930 with a council-manager form of municipal government. The City Council is composed of a
Mayor and four members elected bi-annually at large to four-year alternating terms with the mayor
rotating on an annual basis. Positions of City Manager and City Attorney are filled by appointments of
the City Council. See “APPENDIX B – CITY OF INDIO SUPPLEMENTAL INFORMATION” herein.
THE DISTRICT
On July 6, 2005, the City Council adopted a Resolution of Intention to form a community
facilities district under the Act, to levy a special tax and to incur bonded indebtedness for the purpose of
financing the improvements. After conducting a noticed public hearing, on September 21, 2005, the City
Council adopted the Resolution of Formation, which established the District (consisting of Improvement
Area No. 1 and Improvement Area No. 2) and set forth the Rate and Method of Apportionment for the
levy and collection of Special Taxes within each improvement area.
On September 21, 2005, an election was held within Improvement Area No. 1 in which the
landowners eligible to vote unanimously approved the incurrence of bonded indebtedness in an amount
not to exceed $12,000,000 and the levy of the Special Tax within Improvement Area No. 1. The Bonds
are secured by Special Taxes payable by the property owners within Improvement Area No. 1 only and
not Improvement Area No. 2.
On or about December 14, 2005, the District expects to issue its Community Facilities District
No. 2005-1 (Talavera) Special Tax Bonds, Series 2005 (Improvement Area No. 2), the proceeds of which
will be used to finance certain capital facilities fees and public improvements in Improvement Area No. 2
and which, when issued, will be secured by Special Taxes levied on taxable parcels within the
The District consists of approximately 285 gross acres known as Talavera comprising two
Improvement Areas – Improvement Area No. 1 consists of approximately 145 acres, approximately 89
acres of which are slated for residential development and the remaining 55 acres for streets, parks and
drainage facilities, and Improvement Area No. 2 consists of approximately 140 acres, approximately 85
acres of which are slated for residential development and the remaining 55 acres for streets, parks and
drainage facilities. At buildout, it is anticipated that Improvement Area No. 1 will contain 436 residential
dwelling units and Improvement Area No. 2 will contain 384 residential dwelling units. See “THE
DEVELOPMENT” for further information regarding the Talavera housing community. The Bonds are
being issued to finance certain capital facilities fees relating to and public improvements serving
properties within Improvement Area No. 1 only and not Improvement Area No. 2. See “THE
FINANCING PLAN” herein.
21
THE DEVELOPMENT
Unpaid Special Taxes do not constitute a personal indebtedness of the Developer, their affiliates
or any subsequent owners of the parcels within Improvement Area No. 1 and the Developer has made no
enforceable commitment to pay the principal of or interest on the Bonds or to support payment of the
Bonds in any manner. There is no assurance that the Developer has or any subsequent owners will have
the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay such
taxes. An owner may elect not to pay the Special Taxes when due and cannot be legally compelled to do
so. Neither the District nor any Bondowner will have the ability at any time to seek payment from the
Developer or any subsequent owners of property within the District of any Special Tax or any principal
or interest due on the Bonds, or the ability to control who becomes a subsequent owner of any property
within the District. See “SECURITY FOR THE BONDS” and “SPECIAL RISK FACTORS” herein.
The Developer has provided the information set forth under the headings “- Environmental
Assessment,” “- Development and Financing Plans,” and “THE DEVELOPER.” No assurance can be
given that all information is complete. Although the Developer currently owns all of the property within
Improvement Area No. 1, the Developer intends to build and sell the residential properties to individual
homeowners. When such sales occur, the ownership of the land within Improvement Area No. 1 will
become more diversified. No assurance can be given that development of the property will be completed,
that it will be completed in a timely manner or that it will occur as described herein.
General
The master-planned community of Talavera is located approximately 1.5 miles north of
Interstate-10 located in the northwestern portion of the City and is bordered on the north by a certified
flood levy and canal, on the south by 38th Street and large residential lots, on the east by a date farm and
on the west by Dune Palms Road and large residential lots. In the nearby area off of Jefferson Street are
six new home subdivisions within the Shadow Hills community that are currently marketing homes. For
a further discussion of the community and the surrounding area, see “APPENDIX E – MARKET
ABSORPTION STUDY.” The Talavera project consists of a total of 820 homes on 285 acres, of which
174 are expected to be developed with homes. Sheffield-Talavera, L.P. acquired 22.64 gross developable
acres from the Developer in September of 2005 comprising 65 lots in Improvement Area No. 2.
Improvement Area No. 1 will contain 436 residential dwelling units that will be developed by the
Developer. See “THE DEVELOPER.” The subject tracts are situated within the larger area generally
known as “Shadow Hills” that is located in the northern portion of the City north of the Interstate 10
Freeway. As currently proposed, the homes that are planned for construction on the subject properties
consist of product lines that will be marketed by the Developer. The homes will offer a variety of design
configurations that will appeal to a broad mix of household types including families with children, young
married couples, move-down households, retired couples, and second home buyers.
The development of Improvement Area No. 1 comprises four separate communities of homes to
be known as “Villages,” designated “Florencia,” “Alicante,” “Genova” and “Venicia” (collectively,
Improvement Area No. 1 Villages”). Final tract maps for Improvement Area No. 1 were recorded on
July 1, 2005 and as of October 1, 2005, approximately 382 building permits had been issued. Within
each of the Improvement Area No. 1 Villages there are three distinct categories of home sizes and three
categories of home prices. As of November 15, 2005, vertical construction had begun on 336 homes. As
of October 30, 2005, 138 homes were sold and in escrow and as of November 15, 2005, the Developer
had closed on 46 of the sold homes. The Developer expects all of the Improvement Area No. 1 homes to
be completed by April 1, 2006 and the bulk of completed homes to be sold to homebuyers by July 1,
2006. The Absorption Study projects that all homes will be sold by the middle of 2007. The following
22
table sets forth the estimated home size, price range, buildout completion dates and the anticipated home
sale periods for each of the Improvement Area No. 1 Villages:
SUMMARY OF PROPOSED NEW HOMES
Village
Number
of Lots
Florencia
121
Alicante
105
Genova
110
Venicia
100
____________________
Minimum
Lot Size
(Sq. Ft.)
Home Size
Range (SF)
Home Price
Range
Est. Buildout
Date
Est. Home
Sale Period
8,000
8,000
8,000
8,000
1,855-2,380
2,493-3,099
2,848-3,267
1,576-1,947
$345K-379K
380K-410K
397K-417K
299K-339K
4/06
4/06
5/06
5/06
9/05-7/06
9/05-7/06
9/05-7/06
9/05-7/06
Source: The Developer.
Improvement Area No. 2 is being developed concurrently with Improvement Area No. 1. Home
sizes are similar to Improvement Area No. 1, as are home prices, with the exception of Village 9.
Public Facilities
Backbone Infrastructure. The Developer has completed mass grading and major backbone
infrastructure improvements for Improvement Area No. 1, except for certain additional paving which is
expected to be completed by June 30, 2006. These backbone infrastructure improvements for
Improvement Area No. 1 cost a total of approximately $8,000,000, funded from the Developer’s internal
funding source (its parent company, D.R. Horton (as defined in “THE DEVELOPER” below)), and
include widening and repaving three adjoining streets, installation of a major flood channel to receive and
control flood waters from west of the site, seven parks, installation of new water and sewer facilities to be
deeded to the local water agency, and extensive landscaping of public areas. In addition, all public
improvements required by the Conditions of Approval for Tentative Map 31649 will be provided by the
Developer and its sub consultants and sub-contractors.
In-tract Improvements. The Developer has also substantially completed all in-tract public
infrastructure improvements for Improvement Area No. 1, including sewer, water, storm drain, dry
utilities and landscaping and street improvements, at a total cost of approximately $13,000,000 initially
funded from the Developer’s internal funding sources. The Developer expects to apply approximately
$1,300,000 of Bond proceeds towards payment for these in-tract infrastructure improvements required to
serve Improvement Area No. 1.
Environmental Assessment
A Phase 1 Environmental Assessment (the “Phase I Environmental Assessment”) was undertaken
by MACTEC Engineering and Consulting, Inc. (“MACTEC”) in Phoenix, Arizona, to evaluate the
potential for the presence of soil or groundwater contamination as a result of past use, handling, storage or
disposal of hazardous materials or petroleum. Certain areas within Improvement Area No. 1 were
determined to be subject to asbestos contamination for which remediation was recommended. On
November 11, 2004, Southwest Hazard Control removed asbestos-containing transite siding, floor tile and
associated mastic from the subject work areas. In addition, lead based paint containing window frames
were also removed. Work was performed in general accordance with the “Work Procedures for the
Removal and Proper Disposal of Asbestos and Lead Based Paint Containing Materials” dated
23
November 8, 2004, prepared by MACTEC.
Following completion of certain abatement and
decontamination activities, a visual inspection of the work areas was performed by MACTEC in general
accordance with the “Standard Practice for Visual Inspection of Asbestos Abatement Projects.” On
November 12, 2004, based on the visual inspection of the subject area, the abatement work was
considered complete, and decontamination of the area was considered acceptable in a letter to the
Developer from MACTEC. See “SPECIAL RISK FACTORS – Hazardous Substances.”
Development and Financing Plans
To the extent available, costs of the public facilities with respect to Improvement Area No. 1 and
capital impact fees imposed by the City and the Coachella Valley Water District will be funded from
proceeds of the Bonds. The City makes no warranty, express or implied, that the proceeds of the Bonds
deposited and held in the applicable funds or any investment earnings thereon, will be sufficient to pay for
the applicable capital facilities fees and public improvements. Bond proceeds to be deposited in the
Acquisition and Construction Fund are expected to be less than eligible facilities and fees. To the extent
the backbone infrastructure improvements and the in-tract infrastructure improvements are not funded
from the proceeds of the Bonds, the Developer has funded such improvements from its internal funding
sources in the amount of approximately $8,000,000. There are no construction loans or Deeds of Trust
securing the financing or securing the development of Improvement Area No. 1.
Improvement Area No. 1 is expected to be developed with homes ranging in size from 1,576 to
3,267 square feet as further described above under “THE DEVELOPMENT – General.” The construction
of these homes will be funded from the Developer’s internal funding source (its parent company, D.R.
Horton).
Total in-tract development costs to develop the property in Improvement Area No. 1 are
estimated to be $13,000,000 (exclusive of any home construction costs). These costs are to pay fees and
convert the land from mass graded blue-top condition into finished pads including the construction or
installation of in-tract streets, sidewalks, curbs, gutters, sewer, water and storm drain improvements,
landscaping, and dry utilities and related soft costs.
There is no assurance that amounts necessary to finance the site development costs within
Improvement Area No. 1 or home construction costs will be available from D.R. Horton or any other
source, when needed. Neither the Developer nor D.R. Horton is under any legal obligation of any kind to
expend funds for the development of the property within Improvement Area No. 1 or for construction of
the homes. The capital facilities fees and the public improvements associated with Improvement Area
No. 2 are not being financed with the proceeds of the Bonds.
Absorption Study
A market feasibility and absorption analysis dated July, 2005 (the “Absorption Study”) has been
prepared by Market Profiles, Santa Ana, California, at the request of the City in connection with the
issuance of the Bonds. The study evaluated the depth of demand for new homes in Coachella Valley, as
well as, the competitive market demand within the local Indio marketplace. The Absorption Study
indicated that market demand is ample to support the development and sales of new homes in
Improvement Area No. 1. Competitive evaluations of the price structures that are anticipated and
projected sales absorption rates for each of the residential tracts in Improvement Area No. 1, as well as
further information regarding the Absorption Study, its assumptions and conclusions, are set forth in
“APPENDIX E – MARKET ABSORPTION STUDY.” A separate study has been prepared for
Improvement Area No. 2 (as of October 2005), which conclusions are not materially different.
24
THE DEVELOPER
D.R. Horton Los Angeles Holding Company, Inc., a California corporation (the “Developer”), is
a subsidiary of D.R. Horton, Inc. (“D.R. Horton”), a national homebuilder. The Developer acquired the
property on January 20, 2005 and proposed to develop the Talavera project over a period of two years.
D.R. Horton has no legal or contractual obligation to contribute funds to the Developer, either to
complete the Talavera project, to pay capital impact fees or to pay the Special Taxes.
D.R. Horton is traded on the New York Stock Exchange (DHI), is one of the leading residential
home builders in the United States and has developed a reputation for high quality homes with features
and amenities. D.R. Horton has grown to over $4 billion in stockholders’ equity and expects to sell about
50,000 homes in 2005 making it the top (by units) residential builder in the US, mainly building and
selling single-family homes designed for the entry-level and move-up markets. D.R. Horton’s homes
range in size from 1,000 sq. ft. to 5,000 sq. ft., with an average selling price of about $241,000, but it also
builds luxury homes that can cost up to $900,000. D.R. Horton operates more than 45 divisions, building
in 63 markets in 21 states. It also provides mortgage financing to homebuyers. More information about
D.R. Horton can be found on the company’s website, www.drhorton.com. This Internet address is
included for reference only, and the information on this Internet site is not a part of this Official
Statement or incorporated by reference into this Official Statement. No representation is made in this
Official Statement as to the accuracy or adequacy of the information contained on this Internet site.
Provided below is a listing of recent regional projects and developments undertaken and
completed by the Developer in California.
Project
Location
Skyview Ridge
Starlings Green
Orangecrest
Crystal Lane
The Colonies
Murrieta
Corona
Riverside
Chino
Upland
No. of Units
146
137
365
156
130
SPECIAL RISK FACTORS
The following is a discussion of certain risk factors which should be considered, in addition to
other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not
purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein
could adversely affect the ability or willingness of property owners in Improvement Area No. 1 to pay
their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the
District to make full and punctual payments of debt service on the Bond. In addition, the occurrence of
one or more of the events discussed herein could adversely affect the value of the property in
Concentration of Ownership
As buildout and market absorption continues within Improvement Area No. 1, property
ownership within Improvement Area No. 1 can be expected to become diversified. Lack of diversity of
ownership presents a risk to Bondowners, in that failure of a large taxpayer within Improvement Area
No. 1 to pay Special Taxes when due could result in the depletion of the Reserve Account prior to the
replenishment thereof from moneys realized upon resale of property from foreclosure or otherwise, or
delinquency redemptions after a foreclosure sale.
25
Risks of Real Estate Secured Investments Generally
The Bondowners will be subject to the risks generally incident to an investment secured by real
estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the
market value of real property in the vicinity of Improvement Area No. 1, the supply of or demand for
competitive properties in such area including development occurring in Improvement Area No. 2, and the
market value of commercial and industrial buildings and/or sites in the event of sale or foreclosure,
(ii) changes in real estate tax rate and other operating expenses, government rules (including, without
limitation, zoning laws and restrictions relating to threatened and endangered species) and fiscal policies
and (iii) natural disasters (including, without limitation, earthquakes and floods), which may result in
uninsured losses, or natural disasters elsewhere in the country or other parts of the world affecting supply
of building materials that may cause delays in construction.
Terrorist Attacks
The terrorist attacks of September 11, 2001 and subsequent military and/or terrorist activities in
this country and abroad have contributed to slowdowns of the national as well as the State’s overall
economy. None of the City, District or the Developer can predict the likelihood of future terrorist attacks
or the long-term economic impact caused by such attacks. Future terrorist attacks may result in a
slowdown of home sales and a decrease in land values within Improvement Area No. 1.
Land Development Costs
The cost of additional improvements plus the public and private in-tract, on-site and off-site
improvements would likely increase the public and private debt secured by the land within Improvement
Area No. 1. See “SECURITY FOR THE BONDS – Direct and Overlapping Debt.” This increased debt
could reduce the ability or desire of the property owners to pay the annual Special Taxes levied against
the property. See “SECURITY FOR THE BONDS – The Special Taxes” and “SECURITY FOR THE
BONDS – Appraisal.” In that event there could be a default in the payment of principal of, and interest
on, the Bonds.
Future Land Use Regulations and Growth Control Initiatives
In recent years, citizens of a number of local communities in Southern California, including
citizens of the County of Riverside, the County of Orange and the County of San Diego, have placed
measures on the ballot designed to control the rate of future growth in those areas. It is possible that
future initiatives could be enacted and become applicable to the development proposed to be conducted
within Improvement Area No. 1 (the “Development”) and could, if applied retroactively, negatively
impact the ability of the Developer to complete the proposed Development. Bondowners should assume
that any event that impacts the ability to develop land in Improvement Area No. 1 could cause the land
values within Improvement Area No. 1 to decrease and could affect the willingness and ability of the
owners of land within Improvement Area No. 1 to pay the Special Taxes when due. See “SECURITY
FOR THE BONDS – Appraisal.”
In evaluating the investment quality of the Bonds, investors should assume that the possible
enactment of more restrictive land use regulations by the City or the County of Riverside, or by voter
initiative presents a substantial risk to the timely construction and completion of development, except
with respect to units for which building permits have already been issued and substantial work and
liabilities have been incurred in good faith reliance thereon prior to the date of adoption of any such land
use regulations.
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The failure to complete the Development as planned, or substantial delays in the completion of
the Development, due to litigation or other causes may reduce the value of the property within
Improvement Area No. 1, and will increase the amount of Special Taxes to be paid by the owners of
undeveloped property and may affect the willingness and ability of the owners of land within
Improvement Area No. 1 to pay the Special Taxes when due. Depending on the nature of the
Development eventually approved and completed, the value of the land within Improvement Area No. 1
may be reduced.
Failure to Develop Properties
Land development operations are subject to comprehensive Federal, State and local regulations.
Approval is required from various agencies in connection with the layout and design of developments, the
nature and extent of improvements, construction activity, land use, zoning, school and health
requirements, as well as numerous other matters. There is always the possibility that such approvals will
not be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such
governmental requirements would adversely affect land development operations. In addition, there is the
risk that lawsuits challenging the City’s approval of the Development will be instituted.
Under current California law, it is generally accepted that proposed development is not exempt
from future land use regulations until building permits have been properly issued and substantial work has
been performed and substantial liabilities have been incurred in good faith reliance on such permits.
Development of certain portions of the land within the District is contingent upon construction or
acquisition of major public improvements such as arterial streets, water distribution facilities, sewage
collection and transmission facilities, gas, telephone and electrical facilities, as well as local in-tract
improvements including site grading. While certain of these improvements have been or are expected to
be constructed with proceeds of the Bonds, there can be no assurance that all of these improvements will
be constructed. The cost of these public and private in-tract and off-site improvements could increase the
public and private debt for which the land within Improvement Area No. 1 provides security. This
increased debt could reduce the willingness and/or ability of the property owners to pay the annual
Special Taxes levied against their property.
Moreover, there can be no assurance that the means and incentive to conduct land development
operations within Improvement Area No. 1 will not be adversely affected by a future deterioration of the
real estate market and economic conditions of future local, State and federal governmental policies
relating to real estate development, the income tax treatment of real property ownership, or the national
economy. A slowdown of the development process and the absorption rate could adversely affect land
values and reduce the ability or desire of the property owners to pay the annual Special Taxes. In that
event, there could be a default in the payment of principal of, and interest on, the Bonds.
Another risk to the Bondowners involves the value of undeveloped property. The inability or
failure to develop property due to adverse regulatory or economic conditions may reduce the value of
undeveloped property. The undeveloped property also provides less security to the Bondowners should it
be necessary for the District to foreclose on undeveloped property in Improvement Area No. 1 due to the
nonpayment of the Special Taxes. Furthermore, an inability to develop the land within Improvement
Area No. 1 as currently proposed will likely reduce the diversity of ownership of land within
Improvement Area No. 1, making the Bondowners more dependent upon timely payment of the Special
Tax levied on the undeveloped property. Because of the current concentration of ownership of the
undeveloped property in the Developer, the timely payment of the Bonds depends upon the willingness
and ability of the present owner of the undeveloped property to pay the Special Taxes levied on the
undeveloped property when due. See “SPECIAL RISK FACTORS – Concentration of Ownership”
above. A slowdown or stoppage in the continued development of Improvement Area No. 1 could reduce
27
the willingness and ability of the Developer to make Special Tax payments on undeveloped property, and
could greatly reduce the value of such property in the event it has to be foreclosed upon.
Disclosure to Future Homebuyers
Pursuant to Section 53328.3 of the Act, the District has recorded a Notice of Special Tax Lien in
the Office of the Riverside County Recorder. The sellers of property within the District are required to
give prospective buyers a Notice of Special Tax in accordance with Sections 53340.2 and 53341.5 of the
Act. While title companies normally refer to the Notice of Special Tax Lien in title reports, there can be
no guarantee that such reference will be made or the seller’s notice given or, if made and given, that a
prospective purchaser or lender will consider such Special Tax obligation in the purchase of a home or
commercial facility or the lending of money thereon. Failure to disclose the existence of the Special
Taxes may affect the willingness and ability of future owners of land within Improvement Area No. 1 to
pay the Special Taxes when due.
Parity Taxes and Special Assessments
The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of
land on which they will be annually imposed until they are paid. Such lien is on a parity with all special
taxes and special assessments levied by other agencies and is coequal to and independent of the lien for
general property taxes regardless of when they are imposed upon the same property. The Special Taxes
have priority over all existing and future private liens imposed on the property. The District, however,
has no control over the ability of other entities and districts to issue indebtedness secured by special taxes
or assessments payable from all or a portion of the property within Improvement Area No. 1. In addition,
the landowners within Improvement Area No. 1 may, without the consent or knowledge of the District,
petition other public agencies to issue public indebtedness secured by special taxes or assessments. Any
such special taxes or assessments may have a lien on such property on a parity with the Special Taxes.
See “SECURITY FOR THE BONDS – Direct and Overlapping Debt.”
Appraised Value; Land Value
The value of land within Improvement Area No. 1 is an important factor in evaluating the
investment quality of the Bonds. In the event that a property owner defaults in the payment of Special
Tax installments, the District’s only remedy is to judicially foreclose on that property. Prospective
purchasers of the Bonds should not assume that the property within Improvement Area No. 1 could be
sold for the assessed or appraised value described in the Official Statement at a foreclosure sale for
delinquent Special Tax installments or for an amount adequate to pay delinquent Special Tax
installments. Reductions in property values within Improvement Area No. 1 due to a downturn in the
economy or the real estate market, events such as earthquakes, droughts, or floods, stricter land use
regulations, threatened or endangered species or other events may adversely impact the security
underlying the Special Taxes.
The property values set forth herein are the property values determined by the Appraiser. The
Appraisal was prepared for the purpose of estimating and confirming the minimum market value of the
property in Improvement Area No. 1 as of September 9, 2005 in its as is condition on the basis of certain
assumptions. Prospective purchasers of the Bonds should not assume, however, that the land within
Improvement Area No. 1 could be sold for the appraised amount described herein at the present time or at
a foreclosure sale for delinquent Special Taxes. See the Appraisal included as Appendix D hereto for a
brief description of the analysis used and assumptions made by the Appraiser. The actual value of the
property is subject to future events that might render invalid the assumptions relied upon by the Appraiser
in determining the appraised value.
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The actual market value of the property is subject to future events such as a downturn in the
economy, and occurrences of certain acts of nature, all of which could adversely impact the value of the
land in Improvement Area No. 1 which is the security for the Bonds. As discussed herein, many factors
could adversely affect property values or prevent or delay land development within Improvement Area
No. 1. Furthermore, the estimated value-to-lien ratio of individual parcels may vary. No assurance can be
given that, should a parcel with delinquent Special Taxes be foreclosed upon and sold for the amount of
the delinquency, any bid will be received for such property or, if a bid is received, that such bid will be
sufficient to pay all delinquent Special Taxes.
Value to Lien Ratios
Value-to-lien ratios have traditionally been used in land-secured bond issues as a measure of the
“collateral” supporting the willingness of property owners to pay their special taxes and assessments (and,
in effect, their general property taxes as well). The value-to-lien ratio is mathematically a fraction, the
numerator of which is the value of the property (usually a market value as determined by an appraiser)
and the denominator of which is the “lien” of the assessments or special taxes. A value to lien ratio
should not, however, be viewed as a guarantee for credit-worthiness. Land values are more volatile in the
early stages of a development, and are especially sensitive to economic cycles. A downturn of the
economy or other market factors such as increase in building materials cost or labor cost to construct
homes may depress land values and hence the value-to-lien ratios, by increasing risk to investors and
lenders, and lengthening the absorption period for new development projects. Further, the value-to-lien
ratio cited for a bond issue is an average. Individual parcels in a community facilities district may fall
above or below the average, sometimes even below a 1:1 ratio. (With a ratio below 1:1, the land is worth
less than the debt on it.) If property ownership in a community facilities district is highly concentrated
during the early stages of development, the delinquency of a major property owner can deplete the bond’s
reserve fund and threaten the timely payment of the debt service, even though the value-to-lien ratio is
adequate. Although judicial foreclosure proceedings can be initiated rapidly, the process can take several
years to complete, and the bankruptcy courts may impede the foreclosure action. No assurance can be
given that, should a parcel with delinquent Special Taxes be foreclosed upon and sold for the amount of
the delinquency, any bid will be received for such property or, if a bid is received, that such bid will be
sufficient to pay all delinquent Special Taxes. Finally, local agencies may form overlapping community
facilities districts or assessment districts because they typically do not coordinate their bond issuances.
Debt issuance by another entity can dilute value-to-lien ratios, as set forth in the table in the section above
entitled “SECURITY FOR THE BONDS – Direct and Overlapping Debt.” See “SECURITY FOR THE
BONDS – Estimated Appraised Value-to-Lien Ratios.”
Insufficiency of Special Taxes
Under the Rate and Method, the annual amount of Special Tax to be levied on each taxable parcel
in Improvement Area No. 1 will be based primarily on whether such parcel is developed or not and, for
detached developed property on the square footage, and for undeveloped property on the acreage of the
Assessor’s Parcel. See “APPENDIX A – RATE AND METHOD OF APPORTIONMENT OF SPECIAL
TAXES” and “SECURITY FOR THE BONDS – Rate and Method of Apportionment of Special Taxes.”
Accordingly, to the extent property is not developed, collection of the Special Taxes will be dependent on
the willingness and ability of the owners of undeveloped property to pay such Special Taxes when due.
See “SPECIAL RISK FACTORS – Future Land Use Regulations and Growth Control Initiatives” and “–
Failure to Develop Properties” above for a discussion of the risks associated with undeveloped property.
The Act provides that, if any property within Improvement Area No. 1 not otherwise exempt
from the Special Tax is acquired by a public entity through a negotiated transaction, or by a gift or devise,
the Special Tax will continue to be levied on and enforceable against the public entity that acquired the
property. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public
29
entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that
property is to be treated as if it were a special assessment and be paid from the eminent domain award.
The constitutionality and operation of these provisions of the Act have not been tested in the courts.
MOREOVER, IF A SUBSTANTIAL PORTION OF LAND WITHIN IMPROVEMENT AREA NO. 1
BECAME EXEMPT FROM THE SPECIAL TAX BECAUSE OF PUBLIC OWNERSHIP, OR
OTHERWISE, THE MAXIMUM SPECIAL TAX WHICH COULD BE LEVIED UPON THE
REMAINING ACREAGE MIGHT NOT BE SUFFICIENT TO PAY PRINCIPAL OF AND INTEREST
ON THE BONDS WHEN DUE AND A DEFAULT COULD OCCUR WITH RESPECT TO THE
PAYMENT OF SUCH PRINCIPAL AND INTEREST.
Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of
principal of, and interest on, the Bonds are derived, will be billed to the properties within Improvement
Area No. 1 on the regular property tax bills sent to owners of such properties. Such Special Tax
installments are due and payable, and bear the same penalties and interest for non-payment, as do regular
property tax installments. Special Tax installment payments cannot be made to the County Tax Collector
separately from property tax payments. Therefore, the unwillingness or inability of a property owner to
pay regular property tax bills as evidenced by property tax delinquencies may also indicate an
unwillingness or inability to make regular property tax payments and Special Tax installment payments in
the future.
See “SECURITY FOR THE BONDS – Reserve Fund” and “SECURITY FOR THE BONDS –
Covenant for Superior Court Foreclosure,” for a discussion of the provisions which apply, and procedures
which the District is obligated to follow under the Fiscal Agent Agreement, in the event of delinquency in
the payment of Special Tax installments.
Future Indebtedness
At the present time part of the land within Improvement Area No. 1 has not been improved. The
cost of any additional improvements may well increase the public and private debt for which the land in
Improvement Area No. 1 provide security, and such increased debt could reduce the ability or desire of
property owners to pay the Special Taxes levied against the land in Improvement Area No. 1. In addition,
in the event any additional improvements or fees are financed pursuant to the establishment of an
assessment district or another district formed pursuant to the Act, any taxes or assessments levied to
finance such improvements way have a lien on a parity with the lien of the Special Taxes. See
“SECURITY FOR THE BONDS – Direct and Overlapping Debt.”
Natural Disasters
The District, like all California communities, may be subject to unpredictable seismic activity,
fires due to the vegetation and topography, or flooding in the event of significant rainfall. According to
the seismic safety element of the City’s General Plan, the City is located in a seismically active region.
As a result, Improvement Area No. 1 could be impacted by a major earthquake from the numerous faults
in the area. Seismic hazards encompass both potential surface rupture and ground shaking. The
occurrence of seismic activity, fires or flooding in or around the District could result in substantial
damage to properties in Improvement Area No. 1, which, in turn, could substantially reduce the value of
such properties. As a result of the occurrence of such an event, a substantial portion of the property
owners may be unable or unwilling to pay the Special Taxes when due, and the reserve fund for the
Bonds may become depleted. In addition, the value of land in Improvement Area No. 1 could be
diminished in the aftermath of such natural events, reducing the resulting proceeds of foreclosure sales in
the event of delinquencies in the payment of the Special Taxes.
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Endangered and Threatened Species
On a regular basis, new species are proposed to be added to the State and federal protected
species lists. Any action by the State or federal governments to protect species located on or adjacent to
the property within the District could negatively affect the Developer’s ability to complete the
development of the properties within Improvement Area No. 1 as planned. This, in turn, could reduce the
ability or willingness of the property owners to pay the Special Taxes when due and would likely reduce
the value of the land and the potential revenues available at a foreclosure sale for delinquent Special
Taxes. All mitigation fees required to be paid with respect to endangered or threatened species in the
District have been paid.
Hazardous Substances
A serious risk in terms of the potential reduction in the value of a parcel within Improvement
Area No. 1 is a claim with regard to a hazardous substance. In general, the owners and operators of a
parcel within Improvement Area No. 1 may be required by law to remedy conditions of such parcel
relating to release or threatened releases of hazardous substances. The federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA”
or the “Superfund Act,” is the most well known and widely applicable of these laws, but California laws
with regard to hazardous substances are also similarly stringent. Under many of these laws, the owner or
operator is obligated to remedy a hazardous substance condition of the property whether or not the owner
or operator had anything to do with creating or handling the hazardous substance. The effect, therefore,
should any of the parcels within Improvement Area No. 1 be affected by a hazardous substance, will be to
reduce the marketability and value of such parcel by the costs of remedying the condition, because the
prospective purchaser, upon becoming the owner, will become obligated to remedy the condition just as
the seller is.
Further it is possible that liabilities may arise in the future with respect to any of the parcels
resulting from the current existence on the parcel of a substance currently classified as hazardous but
which has not been released or the release of which is not presently threatened, or may arise in the future
resulting from the current existence on the parcel of a substance not presently classified as hazardous but
which may in the future be so classified. Further, such liabilities may arise not simply from the existence
of a hazardous substance but from the method in which it is handled. All of these possibilities could
significantly affect the value of a parcel within Improvement Area No. 1 that is realizable upon a
delinquency.
As described in the Phase 1 Environmental Assessment, certain areas within Improvement Area
No. 1 have been excavated to remove contaminated or stained soil but no remediation has been
recommended by the Developer’s consultant, who also stated that further investigation was not warranted.
No assurance can be given by the City or the District that abatement procedures were sufficient. See
“THE DEVELOPMENT – Environmental Assessment.”
Bankruptcy and Foreclosure
The payment of property owners’ taxes and the ability of Improvement Area No. 1 to foreclose
the lien of a delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure
proceedings, may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights
or by the laws of the State relating to judicial foreclosure. See “SECURITY FOR THE BONDS –
Covenant for Superior Court Foreclosure.” In addition, the prosecution of a foreclosure could be delayed
due to many reasons, including crowded local court calendars or lengthy procedural delays.
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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 moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the
rights of creditors generally.
In addition, bankruptcy of a property owner (or a property owner’s partner or equity owner)
would likely result in a delay in procuring Superior Court foreclosure proceedings unless the bankruptcy
court consented to permit such foreclosure action to proceed. Such delay would increase the likelihood of
a delay or default in payment of the principal of, and interest on, the Bonds and the possibility of
delinquent tax installments not being paid in full.
Under 11 U.S.C. Section 362(b)(18), in the event of a bankruptcy petition filed on or after
October 22, 1994, the lien for ad valorem taxes in subsequent fiscal years will attach even if the property
is part of the bankruptcy estate. Bondowners should be aware that the potential effect of 11 U.S.C.
Section 362(b)(18) on the Special Taxes depends upon whether a court were to determine that the Special
Taxes should be treated like ad valorem taxes for this purpose.
On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a
bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem
property taxes levied by Snohomish County in the State of Washington after the date that the property
owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien
on the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy
petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be
“administrative expenses” of the bankruptcy estate, payable after all secured creditors. As a result, the
secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the
amount of the pre-petition taxes.
According to the court’s ruling, as administrative expenses, post petition taxes would be paid,
assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such
administrative expenses may be allowed to be deferred. Once the property is transferred out of the
bankruptcy estate (through foreclosure or otherwise), it would at that time become subject to current ad
valorem taxes.
The Act provides that the Special Taxes are secured by a continuing lien which is subject to the
same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how
a bankruptcy court would treat the lien for Special Taxes levied after the filing of a petition in bankruptcy.
Glasply is controlling precedent on bankruptcy courts in the State. If the Glasply precedent was applied
to the levy of the Special Taxes, the amount of Special Taxes received from parcels whose owners declare
bankruptcy could be reduced.
Property Controlled by FDIC
The District’s ability to collect interest and penalties specified by State law and to foreclose the
lien of delinquent Special Tax payments may be limited in certain respects with regard to properties in
which the Internal Revenue Service, the Drug Enforcement Agency, the Federal Deposit Insurance
Corporation (the “FDIC”) or other similar federal agencies has or obtains an interest. The District is not
aware of any such interest of a federal agency in the land within Improvement Area No. 1. On June 4,
1991 the FDIC issued a Statement of Policy Regarding the Payment of State and Local Real Property
Taxes. The 1991 Policy Statement was revised and superseded by a new Policy Statement effective
January 9,1997 (the “Policy Statement”). The Policy Statement provides that real property owned by the
FDIC is subject to state and local real property taxes only if those taxes are assessed according to the
property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than
32
property value. According to the Policy Statement, the FDIC will pay its proper tax obligations when they
become due and payable and will pay claims for delinquent property taxes as promptly as is consistent
with sound business practice arid the orderly administration of the institution’s affairs, unless
abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest
on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment
obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or
penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest)
on FDIC owned property are secured by a valid lien (in effect before the property became owned by the
FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the
FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In
addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by
foreclosure without the FDIC’s consent.
The Policy Statement states that the FDIC generally will not pay non ad valorem taxes, including
special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time
that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the
extent it purports to secure the payment of any such amounts. Special taxes imposed under the Act and a
special tax formula which determines the special tax due each year, are specifically identified in the
Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity.
The FDIC has filed claims against one California county in United States Bankruptcy Court
contending, among other things, that special taxes authorized under the Act are not ad valorem taxes and
therefore not payable by the FDIC, and seeking a refund of any special taxes previously paid by the
FDIC. The FDIC is also seeking a ruling that special taxes may not be imposed on properties while they
are in FDIC receivership. The Bankruptcy Court ruled in favor of the FDIC’s positions and, on
August 28, 2001, the United States Court of Appeals for the Ninth Circuit affirmed the decision of the
Bankruptcy Court, holding that the FDIC, as an entity of the federal government, is exempt from
post-receivership special taxes levied under the Act. This is consistent with provision in the Law that the
federal government is exempt from special taxes.
The District is unable to predict what effect the application of the Policy Statement would have in
the event of a delinquency with respect to a parcel in which the FDIC has an interest, although prohibiting
the lien of the FDIC to be foreclosed on at a judicial foreclosure sale would likely reduce the number of or
eliminate the persons willing to purchase such a parcel at a foreclosure sale. Owners of the Bonds should
assume that the District will be unable to foreclose on any parcel owned by the FDIC. Such an outcome
would cause a draw on the Reserve Fund and perhaps, ultimately, a default in payment of the Bonds. The
District has not undertaken to determine whether the FDIC or any FDIC-insured lending institution
currently has, or is likely to acquire, any interest in any of the parcels, and therefore expresses no view
concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.
Billing of Special Taxes
A special tax formula can result in a substantially heavier property tax burden being imposed
upon properties within a community facilities district than elsewhere in a city or county, and this in turn,
along with various other factors, can lead to problems in the collection of the special tax. In some
community facilities districts, taxpayers have refused to pay the special tax and have commenced
litigation challenging the special tax, the community facilities district and the bonds issued by the District.
Under provisions of the Act, the Special Taxes are billed to the properties within Improvement
Area No. 1 which were entered on the Assessment Roll of the County Assessor by January 1 of the
previous Fiscal Year on the regular property tax bills sent to owners of such properties. Such Special Tax
installments are due and payable, and bear the same penalties and interest for non-payment, as do regular
33
property tax installments. Ordinarily, these Special Tax installment payments cannot be made separately
from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular
property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or
inability to make regular property tax payments and installment payments of Special Taxes in the future.
See “SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure,” for a discussion of the
provisions which apply, and procedures which the District is obligated to follow, in the event of
delinquency in the payment of installments of Special Taxes.
Collection of Special Taxes
In order to pay debt service on the Bonds, it is necessary that the Special Tax levied against land
within Improvement Area No. 1 be paid in a timely manner. It is possible that delays in the payment of
debt service may be the result of the County processing subdivisions or by the transfer of ownership of
property within Improvement Area No. 1. The District has covenanted in the Fiscal Agent Agreement
under certain conditions to institute foreclosure proceedings against property with delinquent Special
Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were
instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount
of the delinquent Special Taxes to protect its security interest. In the event such superior court
foreclosure is necessary, there could be a delay in principal and interest payments to the owners of the
Bonds pending prosecution of the foreclosure proceedings and receipt of the proceeds of the foreclosure
sale, if any. No assurances can be given that the real property subject to foreclosure and sale at a judicial
foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any
delinquent Special Taxes installment. Although the Act authorizes the District to cause such an action to
be commenced and diligently pursued to completion, the Act does not specify the obligations of the
District with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the
foreclosure sale if there is no other purchaser at such sale. See “SECURITY FOR THE BONDS –
Covenant for Superior Court Foreclosure.”
Maximum Special Tax Rates
Within the limits of the Rate and Method, the District may adjust the Special Taxes levied on all
property within Improvement Area No. 1 to provide the amount required each year to pay annual debt
service on the Bonds and to replenish the Reserve Account to an amount equal to the Reserve
Requirement. However, the amount of Special Taxes that may be levied against particular categories of
property is subject to the maximum tax rates set forth in the applicable Rate and Method. In the event of
significant Special Tax delinquencies, there is no assurance that the maximum tax rates for property in
Improvement Area No. 1 would be sufficient to meet debt service obligations on the Bonds. See
“SECURITY FOR THE BONDS – The Special Taxes” and “APPENDIX A – RATE AND METHOD
OF APPORTIONMENT OF SPECIAL TAXES.”
Exempt Properties
So long as certain conditions are met, each Rate and Method provides that the District shall not
levy a Special Tax on Property classified as Exempt Property. Under the Rate and Method, the Board
will not levy Special Taxes on public property, Property Owner’s Association property within the District
as well as certain other parcels specified in the District. Exempt Property status will be assigned in the
chronological order in which property in the District becomes included in such categories of Exempt
Property.
In addition, the Act provides that properties or entities of the State, federal or local government
are exempt from the Special Taxes; provided, however, the property within Improvement Area No. 1
acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise
34
exempt from the Special Taxes, will continue to be subject to the Special Taxes. The Act further provides
that if property subject to the Special Taxes is acquired by a public entity through eminent domain
proceedings, the obligation to pay the Special Taxes with respect to that property is to be treated as if it
were a special assessment. The constitutionality and operation of these provisions of the Act have not
been tested. In particular, insofar as the Act requires payment of the Special Taxes by a federal entity
acquiring property within Improvement Area No. 1, it may be unconstitutional.
If for any reason property within Improvement Area No. 1 becomes exempt from taxation by
reason of its status under the Rate and Method, or by reason of its ownership by a nontaxable entity such
as the federal government or another public agency, subject to the limitation of the maximum authorized
rates, the Special Taxes will be reallocated to the remaining taxable properties within Improvement Area
No. 1. This would result in the owners of such property paying a greater amount of the Special Taxes and
could have an adverse impact upon the timely payment of the Special Taxes.
California Constitution Article XIIIC and Article XIIID
On November 5, 1996, the voters of the State approved Proposition 218, the so-called “Right to
Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which
articles contain a number of provisions affecting the ability of the District to levy and collect both existing
and future taxes, assessments, fees and charges. According to the “Official Title and Summary” of
Proposition 218 prepared by the California State Attorney General, Proposition 218 limits the “authority
of local governments to impose taxes and property-related assessments, fees and charges.” On July 1,
1997 California State Senate Bill 919 (“SB 919”) was signed into law. SB 919 enacted the
“Proposition 218 Omnibus Implementation Act,” which implements and clarifies Proposition 218 and
prescribes specific procedures and parameters for local jurisdictions in complying with Articles XIIIC and
XIIID.
Article XIIID of the State Constitution reaffirms that the proceedings for the levy of any Special
Taxes by the District under the Act must be conducted in conformity with the provisions of Section 4 of
Article XIIIA. The District has completed its proceedings for the levy of Special Taxes in accordance
with the provisions of Section 4 of Article XIIIA. Under Section 53358 of the California Government
Code, any action or proceeding to review, set aside, void, or annul the levy of a special tax or an increase
in a Special Tax (including any constitutional challenge) must be commenced within 30 days after the
Special Tax is approved by the voters.
Article XIIIC removes certain limitations on the initiative power in matters of local taxes,
assessments, fees and charges. The Act provides for a procedure, which includes notice, hearing, protest
and voting requirements, to alter the rate and method of apportionment of an existing special tax.
However, the Act prohibits a legislative body from adopting a resolution to reduce the rate of any special
tax if the proceeds of that tax are being utilized to retire any debt incurred pursuant to the Act unless such
legislative body determines that the reduction of that tax would not interfere with the timely retirement of
that debt. Although the matter is not free from doubt, it is likely that exercise by the voters of the
initiative power referred to in Article XIIIC to reduce or terminate the Special Tax is subject to the same
restrictions as are applicable to the Board, as the legislative body of the District, pursuant to the Act.
Accordingly, although the matter is not free from doubt, it is likely that Proposition 218 has not conferred
on the voters the power to repeal or reduce the Special Taxes if such repeal or reduction would interfere
with the timely retirement of the Bonds.
It may be possible, however, for voters or the Board, acting as the legislative body of the District,
to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds,
but which does reduce the maximum amount of Special Taxes that may be levied in any year below the
35
existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special
Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds.
Proposition 218 and the implementing legislation have yet to be extensively interpreted by the
courts; however, the California Court of Appeal in April 1998 upheld the constitutionality of
Proposition 218’s balloting procedures as a condition to the validity and collectibility of local
governmental assessments. A number of validation actions for and challenges to various local
governmental taxes, fees and assessments have been filed in Superior Court throughout the State, which
could result in additional interpretations of Proposition 218. The interpretation and application of
Proposition 218 will ultimately be determined by the courts with respect to a number of the matters
discussed above, and the outcome of such determination cannot be predicted at this time with any
certainty.
Ballot Initiatives and Legislative Measures
Proposition 218 was adopted pursuant to a measure qualified for the ballot pursuant to
California’s constitutional initiative process; and the State Legislature has in the past enacted legislation
which has altered the spending limitations or established minimum funding provisions for particular
activities. From time to time, other initiative measures could be adopted by California voters or
legislation enacted by the Legislature. The adoption of any such initiative or legislation might place
limitations on the ability of the State, the District or other local districts to increase revenues or to
increase appropriations or on the ability of a landowner to complete the development of property. See
“SPECIAL RISK FACTORS – Future Land Use Regulations and Growth Control Initiatives” above.
No Acceleration
The Bonds do not contain a provision allowing for their acceleration in the event of a payment
default or other default under the terms of the Bonds or the Fiscal Agent Agreement or upon any adverse
change in the tax status of interest on the Bonds. There is no provision in the Act or the Fiscal Agent
Agreement for acceleration of the Special Taxes in the event of a payment default by an owner of a parcel
within Improvement Area No. 1. Pursuant to the Fiscal Agent Agreement, a Bond Owner is given the
right for the equal benefit and protection of all Bond Owners to pursue certain remedies described in
“APPENDIX C – SUMMARY OF FISCAL AGENT AGREEMENT.”
Loss of Tax Exemption
As discussed under the caption “CONCLUDING INFORMATION – Tax Exemption,” in order to
maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds,
the District has covenanted in the Fiscal Agent Agreement not to take any action, or fail to take any
action, if such action or failure to take such action would adversely affect the exclusion from gross
income of interest on the Bonds under Section 103 of the Internal Revenue Code of 1986, as amended.
Interest on the Bonds could become includable in gross income for purposes of Federal income taxation
retroactive to the date the Bonds were issued, as a result of acts or omissions of the City or the District in
violation of the Code. Should such an event of taxability occur, the Bonds are not subject to early
redemption and will remain outstanding to maturity or until redeemed under the optional redemption or
mandatory sinking fund redemption provisions of the Fiscal Agent Agreement.
Limitations on Remedies
Remedies available to the Bond Owners may be limited by a variety of factors and may be
inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the
tax-exempt status of the Bonds. Bond Counsel has limited its opinion as to the enforceability of the
36
Bonds and of the Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting
generally the enforcement of creditor’s rights, by equitable principles and by the exercise of judicial
discretion. Additionally, the Bonds are not subject to acceleration in the event of the breach of any
covenant or duty under the Fiscal Agent Agreement. The lack of availability of certain remedies or the
limitation of remedies may entail risks of delay, limitation or modification of the rights of the Bond
Owners.
Enforceability of the rights and remedies of the Bond Owners, and the obligations incurred by the
District, may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditor’s rights
generally, now or hereafter in effect, equity principles which may limit the specific enforcement under
State law of certain remedies, the exercise by the United States of America of the powers delegated to it
by the Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police
powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a
significant and legitimate public purpose and the limitations on remedies against joint powers authorities
in the State. See “SPECIAL RISK FACTORS - Bankruptcy and Foreclosure.”
Limited Secondary Market
As stated herein, investment in the Bonds poses certain economic risks which may not be
appropriate for certain investors, and only persons with substantial financial resources who understand the
risk of investment in the Bonds should consider such investment. There can be no guarantee that there
will be a secondary market for purchase or sale of the Bonds or, if a secondary market exists, that the
Bonds can or could be sold for any particular price. No application has been made for a credit rating for
the Bonds, and it is not known whether a credit rating could be secured either now or in the future for the
Bonds.
CONCLUDING INFORMATION
Underwriting
The Underwriter purchased the Bonds at a purchase price of $9,934,294.60, representing the
principal amount of the Bonds less an Underwriter’s discount of $177,975.00 and less an Original Issue
Discount of $57,730.40. The Underwriter intends to offer the Bonds to the public initially at the prices
set forth on the inside cover page of this Official Statement, which prices may subsequently change
without any requirement of prior notice.
The Underwriter reserves the right to join with dealers and other underwriters in offering the
Bonds to the public. The Underwriter may offer and sell the Bonds to certain dealers (including dealers
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.
Legal Opinion
The legal opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, approving the validity
of the Bonds, in substantially the form set forth in APPENDIX F hereto, will be made available to
purchasers of the Bonds at the time of original delivery. A copy of the legal opinion for the Bonds will be
provided with each definitive bond. Bond Counsel has not undertaken on behalf of the Owners or the
Beneficial Owners of the Bonds to review the Official Statement and assumes no responsibility to such
Owners and Beneficial Owners for the accuracy of the information contained herein. Certain legal
37
matters will be passed upon for the City by the City Attorney and by Fulbright & Jaworski L.L.P., Los
Angeles, California, Disclosure Counsel to the City with respect to the issuance of the Bonds. Jones Hall,
A Professional Law Corporation, San Francisco, California, has acted as counsel to the Underwriter.
Tax Exemption
The Internal Revenue Code of 1986 (the “Code”), imposes certain requirements that must be met
subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded
pursuant to section 103(a) of the Code from the gross income of the owners thereof for federal income tax
purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in
the gross income of the owners thereof for federal income tax purposes retroactive to the date of issuance
of the Bonds. The District has covenanted to maintain the exclusion of the interest on the Bonds from the
gross income of the owners thereof for federal income tax purposes.
In the opinion of Fulbright & Jaworski L.L.P., Bond Counsel, under existing law, interest on the
Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the
aforementioned covenant, interest on the Bonds is excluded pursuant to section 103(a) of the Code from
the gross income of the owners thereof for federal income tax purposes. Bond Counsel is also of the
opinion that, assuming compliance with the aforementioned covenant, the Bonds are not “specified
private activity bonds” within the meaning of section 57(a)(5) of the Code and, therefore, the interest on
the Bonds will not be treated as an item of tax preference for purposes of computing the alternative
minimum tax imposed by section 55 of the Code. The receipt or accrual of interest on the Bonds owned
by a corporation may affect the computation of its alternative minimum taxable income, upon which the
alternative minimum tax is imposed, to the extent that such interest is taken into account in determining
the adjusted current earnings of that corporation (75 percent of the excess, if any, of such adjusted current
earnings over the alternative minimum taxable income being an adjustment to alternative minimum
taxable income (determined without regard to such adjustment or to the alternative tax net operating loss
deduction)).
To the extent that a purchaser of a Bond acquires that Bond at a price that exceeds the aggregate
amount of payments (other than payments of qualified stated interest within the meaning of section
1.1273-1 of the Treasury Regulations) to be made on the Bonds (determined, in the case of a callable
Bond, under the assumption described below), such excess will constitute “bond premium” under the
Code. Section 171 of the Code, and the Treasury Regulations promulgated thereunder, provide generally
that bond premium on a tax-exempt obligation must be amortized on a constant yield, economic accrual,
basis; the amount of premium so amortized will reduce the owner’s basis in such obligation for federal
income tax purposes, but such amortized premium will not be deductible for federal income tax purposes.
In the case of a purchase of a Bond that is callable, the determination whether there is amortizable bond
premium, and the computation of the accrual of that premium, must be made under the assumption that
the Bond will be called on the redemption date that would minimize the purchaser’s yield on the Bond (or
that the Bond will not be called prior to maturity if that would minimize the purchaser’s yield). The rate
and timing of the amortization of the bond premium and the corresponding basis reduction may result in
an owner realizing a taxable gain when a Bond owned by such owner is sold or disposed of for an amount
equal to or in some circumstances even less than the original cost of the Bond to the owner.
The excess, if any, of the stated redemption price at maturity of Bonds of a maturity over the
initial offering price to the public of the Bonds of that maturity set forth on the cover of this Official
Statement is “original issue discount” under the Code. Such original issue discount accruing on a Bond is
treated as interest excluded from the gross income of the owner thereof for federal income tax purposes
and exempt from California personal income tax to the same extent as would be stated interest on the
Bond. Original issue discount on any Bond purchased at such initial offering price and pursuant to such
initial offering will accrue on a semiannual basis over the term of the Bond on the basis of a constant
38
yield method and, within each semiannual period, will accrue on a ratable daily basis. The amount of
original issue discount on such a Bond accruing during each period is added to the adjusted basis of such
Bond to determine taxable gain upon disposition (including sale, redemption or payment on maturity) of
such Bond. The Code includes certain provisions relating to the accrual of original issue discount in the
case of purchasers of Bonds who purchase such Bonds other than at the initial offering price and pursuant
to the initial offering.
Any person considering purchasing a Bond at a price that includes bond premium should consult
his or her own tax advisors with respect to the amortization and treatment of such bond premium,
including, but not limited to, the calculation of gain or loss upon the sale, redemption or other disposition
of the Bond. Any person considering purchasing a Bond of a maturity having original issue discount
should consult his or her own tax advisors with respect to the tax consequences of ownership of Bonds
with original issue discount, including the treatment of purchasers who do not purchase in the original
offering and at the original offering price, the allowance of a deduction for any loss on a sale or other
disposition, and the treatment of accrued original issue discount on such Bonds under federal individual
and corporate alternative minimum taxes.
Bond Counsel has not undertaken to advise in the future whether any events after the date of
issuance of the Bonds may affect the tax status of interest on the Bonds or the tax consequences of the
ownership of the Bonds. No assurance can be given that future legislation, or amendments to the Code, if
enacted into law, will not contain provisions that could directly or indirectly reduce the benefit of the
exemption of interest on the Bonds from personal income taxation by the State of California or of the
exclusion of the interest on the Bonds from the gross income of the owners thereof for federal income tax
purposes. Furthermore, Bond Counsel expresses no opinion as to any federal, state or local tax law
consequences with respect to the Bonds, or the interest thereon, if any action is taken with respect to the
Bonds or the proceeds thereof predicated or permitted upon the advice or approval of bond counsel if
such advice or approval is given by counsel other than Bond Counsel.
Although Bond Counsel is of the opinion that interest on the Bonds is exempt from state personal
income tax and excluded from the gross income of the owners thereof for federal income tax purposes, an
owner’s federal, state or local tax liability may be otherwise affected by the ownership or disposition of
the Bonds. The nature and extent of these other tax consequences will depend upon the owner’s other
items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of
the Bonds should be aware that (i) section 265 of the Code denies a deduction for interest on indebtedness
incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion
of an owner’s interest expense allocated to interest on the Bonds, (ii) with respect to insurance companies
subject to the tax imposed by section 831 of the Code, section 832(b)(5)(B)(i) reduces the deduction for
loss reserves by 15 percent of the sum of certain items, including interest on the Bonds, (iii) interest on
the Bonds earned by certain foreign corporations doing business in the United States could be subject to a
branch profits tax imposed by section 884 of the Code, (iv) passive investment income, including interest
on the Bonds, may be subject to federal income taxation under section 1375 of the Code for Subchapter S
corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than
25% of the gross receipts of such Subchapter S corporation is passive investment income, (v) section 86
of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take
into account, in determining the taxability of such benefits, receipts or accruals of interest on the Bonds
and (vi) under section 32(i) of the Code, receipt of investment income, including interest on the Bonds,
may disqualify the recipient thereof from obtaining the earned income credit. Bond Counsel has
expressed no opinion regarding any such other tax consequences.
Bond Counsel’s opinion is not a guarantee of a result, but represents its legal judgment based
upon its review of existing statutes, regulations, published rulings and court decisions and the
representations and covenants of the City and the District described above. No ruling has been sought
39
from the Internal Revenue Service (the “Service”) with respect to the matters addressed in the opinion of
Bond Counsel, and Bond Counsel’s opinion is not binding on the Service. The Service has an ongoing
program of auditing the tax-exempt status of the interest on municipal obligations. If an audit of the
Bonds is commenced, under current procedures the Service is likely to treat the District as the “taxpayer,”
and the Owners would have no right to participate in the audit process. In responding to or defending an
audit of the tax-exempt status of the interest on the Bonds, the District may have different or conflicting
interest from the Owners. Further, the disclosure of the initiation of an audit may adversely affect the
market price of the Bonds, regardless of the final disposition of the audit.
No Litigation
A certificate of the District to the effect that no litigation is pending or threatened concerning the
validity of the Bonds will be furnished to the Underwriter at the time of the original delivery of the
Bonds. Neither the City nor the District are aware of any litigation pending or threatened which questions
the existence of the District or the City or contests the authority of the District to levy and collect the
Special Taxes or to issue the Bonds.
No Rating on the Bonds
The Bonds are not rated and the District does not anticipate applying for a rating on the Bonds.
Miscellaneous
All of the preceding summaries of the Fiscal Agent Agreement, other applicable legislation,
agreements and other documents are made subject to the provisions of such documents and do not purport
to be complete documents of any or all of such provisions. Reference is hereby made to such documents
on file with the City 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 of estimates,
whether or not so expressly stated, are set forth as such and not as representations of fact, and no
representation is made that any of the estimates will be realized.
40
The City Council of the City of Indio has duly authorized the City Manager to execute and
deliver this Official Statement on behalf of the District.
CITY OF INDIO COMMUNITY FACILITIES DISTRICT
NO. 2005-1 (TALAVERA)
By
/s/ Glenn Southard
City Manager of the City of Indio on behalf of the City of
Indio Community Facilities District No. 2005-1 (Talavera)
41
(This page has been left blank intentionally.)
APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES
A-1
RATE AND METHOD OF APPORTIONMENT
OF SPECIAL TAX FOR CITY OF INDIO
FOR IMPROVEMENT AREA NO. 1
A Special Tax (all capitalized terms are defined in Section A. Definitions below) shall be
applicable to each Parcel of Taxable Property located within Improvement Area No. 1 of
Community Facilities District No. 2005-1 (Talavera). The amount of Special Tax to be levied in
Improvement Area No. 1 in each Fiscal Year, commencing in Fiscal Year 2006-2007 on a Parcel
shall be determined by the City Council of the City of Indio, acting in its capacity as the
legislative body of the CFD by applying the appropriate Special Tax for Developed Property,
Approved Property, Undeveloped Property and Public Property and/or Property Owner’s
Association Property that is not Exempt Property as set forth in Sections B, C, and D below. All
of the real property within the CFD, unless exempted by law or by the provisions hereof in
Section E., shall be taxed for the purposes, to the extent and in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre or Acreage” means the acreage of a Parcel as indicated on the most recent Assessor’s
Parcel Map, or if the land area is not shown on the Assessor’s Parcel Map, the land area
shown on the applicable Final Map, parcel map, condominium plan, or other similar
instrument.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter
2.5, Part 1 of Division 2 of Title 5 of the California Government Code of the State of
California.
“Administrative Expenses” means all actual or reasonably estimated costs and expenses of
the City that are chargeable or allocable to Improvement Area No. 1 to carry out its duties as
the administrator of the CFD as allowed by the Act, which shall include without limitation,
all costs and expenses arising out of or resulting from the annual levy and collection of the
Special Tax, trustee fees, rebate compliance calculation fees, any litigation or other legal
services involving the CFD, continuing disclosure undertakings of the City as imposed by
applicable laws and regulations, communication with bondholders and normal administrative
expenses.
“Administrator” means an official of the City, or designee thereof, responsible for
determining the levy and collection of the Special Taxes.
“Approved Property” means all Parcels of Taxable Property: (i) that are included in a Final
Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special
Tax is being levied, and (ii) that have not been issued a building permit prior to the June 1st
preceding the Fiscal Year in which the Special Tax is being levied.
City of Indio
Community Facilities District No. 2005-1 (Talavera), IA No. 1
June 6, 2005
Page 1
“Assessor’s Parcel Map” means an official map of the Assessor of the County of Riverside
designating parcels by Assessor’s Parcel number.
“Assigned Special Tax” means the Special Tax for each Land Use Category of Developed
Property, as determined in accordance with Section C.1.a. below.
“Backup Special Tax” means the Special Tax amount set forth in Section C.1.b. below.
“Bonds” means any bonds or other indebtedness (as defined in the Act) issued by
Improvement Area No.1 of the CFD and secured by the levy of Special Taxes within
Improvement Area No.1.
“CFD” means Community Facilities District No. 2005-1 (Talavera) of the City of Indio
established pursuant to the Act.
“City” means the City of Indio.
“City Council” means the City Council of the City of Indio acting as the legislative body of
the CFD under the Act.
“County” means the County of Riverside.
“Developed Property” means all Parcels of Taxable Property, not classified as Approved
Property, Undeveloped Property, Public Property and/or Property Owner’s Association
Property that are not Exempt Property pursuant to the provisions of Section E. below: (i) that
are included in a Final Map that was recorded prior to January 1st preceding the Fiscal Year
in which the Special Tax is being levied and (ii) a building permit for new construction has
been issued prior to June 1st preceding the Fiscal Year in which the Special Tax is being
levied.
“Exempt Property” means any Parcel or portion of a Parcel, which is exempt from Special
Taxes pursuant to Section E. below.
“Final Map” means a subdivision of property by recordation of a final map, parcel map, or
lot line adjustment, pursuant to the Subdivision Map Act (California Government Code
Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil
Code 1352 that creates individual lots for which building permits may be issued without
further subdivision.
“Fiscal Year” means the period starting on July 1 and ending on the following June 30.
“Improvement Area No. 1” means the specific area identified on the boundary map as
Improvement Area 1 of the CFD.
“Indenture” means the bond indenture, fiscal agent agreement, trust agreement, resolution
or other instrument pursuant to which Improvement Area No. 1 Bonds are issued, as
modified, amended and/or supplemented from time to time, and any instrument replacing or
City of Indio
June 6, 2005
Page 2
supplementing the same.
“Land Use Category” means any of the categories listed in Table 1.
“Maximum Special Tax” means the maximum Special Tax, determined in accordance with
Section C., which can be levied in any Fiscal Year on any Parcel.
“Non-Residential Property” means all Parcels of Developed Property for which a building
permit was issued for any type of non-residential use.
“Parcel(s)” means a lot or parcel shown on an Assessor’s Parcel Map within Improvement
Area No. 1 of the CFD with an assigned parcel number as of January 1 preceding the Fiscal
Year for which the Special Tax is being levied.
“Property Owner’s Association Property” means any Parcel within the boundaries of
Improvement Area No. 1 of the CFD, which, as of January 1 of the preceding Fiscal Year for
which the Special Tax is being levied has been conveyed, dedicated to, or irrevocably
dedicated to a property owner association, including any master or sub-association.
“Proportionately” means for Developed Property that the ratio of the actual Special Tax
levy to the Assigned Special Tax or Backup Special Tax is the same for all Parcels of
Developed Property and for Approved Property, Undeveloped Property, Public Property
and/or Property Owner’s Association Property that is not Exempt Property pursuant to
Section E., that the ratio of the actual Special Tax levy per acre to the Maximum Special Tax
per acre is the same for all such Parcels.
“Public Property” means any Parcel within the boundary Improvement Area No. 1 of the
CFD which, as of January 1 of the preceding Fiscal Year for which the Special Tax is being
levied is used for rights-of-way or any other purpose and is owned by, dedicated to, or
irrevocably offered for dedication to the federal government, the State of California, the
County, City or any other local jurisdiction, provided, however, that any property leased by a
public agency to a private entity and subject to taxation under Section 53340.1 of the Act
shall be taxed and classified according to its use.
“Residential Floor Area” means all of the square footage of living area of a residential
structure, not including any carport, walkway, garage, overhang, patio, enclosed patio or
similar area on a Parcel. The determination of Residential Floor Area shall be made by
reference to the building permit(s) for the Parcel. Once such determination has been made
for a Parcel, it shall remain fixed in all future Fiscal Years.
“Residential Property” means all Parcels of Developed Property for which a building
permit has been issued for purposes of constructing one or more residential dwelling units.
“Single Family Property” means all Parcels of Residential Property, for which building
permits have been issued for detached or attached residential units.
“Special Tax(es)” means the special tax to be levied within Improvement Area No. 1 of the
CFD in each Fiscal Year on each Parcel of Taxable Property.
City of Indio
June 6, 2005
Page 3
“Special Tax Requirement” means that amount required in any Fiscal Year within
Improvement Area No. 1 of the CFD to pay: (i) annual debt service on all outstanding Bonds
due in the calendar year which commences in such Fiscal Year; (ii) periodic costs on the
Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds;
(iii) Administrative Expenses; (iv) an amount equal to any anticipated shortfall due to Special
Tax delinquency in the prior Fiscal Year; and (v) any amounts required to establish or
replenish any reserve funds for the outstanding Bonds; (vi) pay directly for acquisition or
construction of CFD No. 2005-1 facilities eligible under the Act to the extent that the
inclusion of such amount does not increase the Special Tax levy on Undeveloped Property;
less (vii) a credit for funds available to reduce the annual Special Tax levy as determined
pursuant to the Indenture.
“Taxable Property” means all Parcels within Improvement Area No. 1 which have not
prepaid pursuant to Section H., or are not exempt from the Special Tax pursuant to law or
Section E., below.
“Undeveloped Property” means all Taxable Property not classified as Developed Property,
Approved Property, Public Property and/or Property Owner’s Association Property that is not
Exempt Property pursuant to the provisions of Section E.
B. ASSIGNMENT TO LAND USE CATEGORY
Each Fiscal Year, commencing with the 2006-2007 Fiscal Year, all Parcels of Taxable
Property within Improvement Area No. 1 of the CFD shall be categorized and classified as
either Developed Property, Approved Property, Undeveloped Property, Public Property
and/or Property Owner’s Association Property that is not Exempt Property pursuant to the
provisions in Section E., and shall be subject to the levy of Special Taxes in accordance with
this Rate and Method of Apportionment as determined pursuant to Sections C. and D. below.
Parcels of Developed Property shall further be classified as Residential Property or NonResidential Property. A Parcel of Residential Property shall further be classified as Single
Family Property according to its appropriate Land Use Category based on the Residential
Floor Area of such Parcel.
C. MAXIMUM SPECIAL TAX RATE
1. Developed Property
The Maximum Special Tax for each Parcel of Residential Property within Improvement
Area No. 1 that is classified as Developed Property shall be the greater of: (i) the
applicable Assigned Special Tax described in Table 1, or (ii) the amount derived by
application of the Backup Special Tax.
The Maximum Special Tax for each Parcel of Non-Residential Property within
Improvement Area No. 1 shall be the Assigned Special Tax described in Table 1.
City of Indio
June 6, 2005
Page 4
a.
Assigned Special Tax
The Assigned Special Tax for each Parcel of Developed Property within
Improvement Area No. 1 is shown in Table 1 below.
TABLE 1
Assigned Special Taxes for Developed Property within
Improvement Area No. 1
Taxable
Unit
Residential Floor Area
Assigned
Special Tax Per
Taxable Unit
1 - Single Family Property
D/U
3,201 sq. ft. or greater
$2,097
D/U
3,001 sq. ft. to 3,200 sq. ft.
$2,032
D/U
2,801 sq. ft. to 3,000 sq. ft.
$2,000
4 – Single Family Property
D/U
2,601 sq. ft. to 2,800 sq. ft.
$1,935
D/U
2,401 sq. ft. to 2,600 sq. ft.
$1,869
D/U
2,201 sq. ft. to 2,400 sq. ft.
$1,811
D/U
2,001 sq. ft. to 2,200 sq. ft.
$1,681
D/U
1,801 sq. ft. to 2,000 sq. ft.
$1,551
D/U
1,601 sq. ft. to 1,800 sq. ft.
$1,446
D/U
1,600 sq. ft. or less
$1,290
11 - Non - Residential Property
Acre
N/A
$9,608
Land Use Category
b.
Backup Special Tax
When a Final Map is recorded, the Backup Special Tax for the Parcels of
Residential Property within such Final Map shall be determined by multiplying the
Undeveloped Property Maximum Special Tax rate per Acre of Improvement Area
No. 1 by the total Acreage of Taxable Property excluding the Acreage associated
with Public Property and/or Property Owner’s Association Property that is not
Exempt Property pursuant to Section E. in such Final Map and dividing such
amount by the number of Parcels in Improvement Area No. 1 (i.e., the number of
residential lots).
If a Final Map includes Parcels for which building permits for residential
construction and non-residential construction may be issued, then the Backup
Special Tax for each Parcel of Residential Property within Improvement Area No. 1
of the CFD shall be computed exclusive of the allocable portion of total Acreage
attributable to Parcels for which building permits for non- residential construction
may be issued.
City of Indio
June 6, 2005
Page 5
Notwithstanding the foregoing, if parcels of Residential Property are subsequently
changed of modified by recordation of a lot line adjustment or similar instrument,
then the Backup Special Tax shall be recalculated to equal the amount of Backup
Special Tax that would have been generated if such change did not take place.
2. Approved Property
The Maximum Special Tax for each Parcel of Approved Property within Improvement
Area No. 1 shall be the Backup Special Tax computed pursuant to Section C.1.b.
3. Undeveloped Property
The Maximum Special Tax for each Parcel of Undeveloped Property within
Improvement Area No. 1 shall be $9,608 per Acre for Fiscal Year 2006-2007.
4. Public Property and/or Property Owner’s Association Property that is not Exempt
Property pursuant to the provisions of Section E.
The Maximum Special Tax for each Parcel of Public Property and/or Property Owners
Association Property that is not Exempt Property pursuant to the provisions of Section E.,
within Improvement Area No. 1 shall be $9,608.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the City
Council shall levy the Special Tax on all Taxable Property in Improvement Area No. 1 until
the amount of Special Taxes equals the applicable Special Tax Requirement for Improvement
Area No. 1 in accordance with the following steps:
First: The Special Tax shall be levied Proportionately on each Parcel of Developed Property
at up to 100% of the applicable Assigned Special Tax rate as needed to satisfy the Special
Tax Requirement for Improvement Area No. 1;
Second: If additional moneys are needed to satisfy the Special Tax Requirement for
Improvement Area No. 1 after the first step has been completed, the Special Tax shall be
levied Proportionately on each Parcel of Approved Property within Improvement Area No. 1
at up to 100% of the Maximum Special Tax for Approved Property;
Third: If additional moneys are needed to satisfy the Special Tax Requirement for
Improvement Area No. 1 after the first two steps have been completed, the Special Tax shall
be levied Proportionately on each Parcel of Undeveloped Property within Improvement Area
No. 1 at up to 100% of the Maximum Special Tax for Undeveloped Property;
Fourth: If additional moneys are needed to satisfy the Special Tax Requirement for
Improvement Area No. 1 after the first three steps have been completed, the Special Tax to
be levied on each Parcel of Developed Property within Improvement Area No. 1 whose
Maximum Special Tax is derived by the application of the Backup Special Tax shall be
City of Indio
June 6, 2005
Page 6
increased Proportionately from the Assigned Special Tax up to the Maximum Special Tax for
such Parcel within Improvement Area No. 1;
Fifth: If additional moneys are needed to satisfy the Special Tax Requirement for
Improvement Area No. 1 after the first four steps have been completed, the Special Tax shall
be levied Proportionately on each Parcel of Public Property and/or Property Owner’s
Association Property within Improvement Area No. 1 that is not Exempt Property pursuant to
the provisions of Section E. at up to 100% of the Maximum Special Tax.
Notwithstanding the above, under no circumstances will the Special Taxes levied against any
Parcel of Residential Property within Improvement Area No. 1 be increased by more than ten
percent (10%) per Fiscal year as a consequence of delinquency or default by the owner of any
other Parcel within Improvement Area No. 1 of the CFD.
E. EXEMPTIONS
The Administrator shall classify the following Assessor Parcel(s) as exempt property: (i)
Public Property, (ii) Property Owner’s Association Property, and (iii) Assessor’s Parcels with
public or utility easements making impractical their utilization for other than the purposes set
forth in the easement; provided, however, that no such classification shall reduce the sum of
all Taxable Property to less than 80.04 Acres within Improvement Area No. 1.
Notwithstanding the preceding sentence, the Administrator shall not classify an Assessor’s
Parcel described in this paragraph as exempt property if such classification would reduce the
sum of all Taxable Property to less than 80.04 Acres within Improvement Area No. 1.
Assessor’s Parcels which cannot be classified as exempt property because such classification
would reduce the Acreage of all Taxable Property within Improvement Area No. 1 to less
than 80.04 Acres shall be prepaid in full pursuant to Section H. prior to the transfer or
dedication of such property. Until the Maximum Special Tax obligation is prepaid as
provided for in the preceding sentence, the Public Property and/or Property Owner’s
Association Property within the CFD shall be subject to the levy of the Special Tax as
provided for in the fifth step in Section D.
F. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary Ad
valorem property taxes and shall be subject to the same penalties, the same procedure, sale
and lien priority in the case of delinquency; provided, however, that the City may directly bill
the Special Tax, may collect Special Taxes at a different time or in a different manner if
necessary to meet its financial obligations, and may covenant to foreclose and may actually
foreclose on Parcels having delinquent Special Taxes as permitted by the Act if necessary to
meet the financial obligations of the CFD.
G. APPEALS
Any taxpayer may file a written appeal of the Special Tax on his/her Parcel(s) with the
Administrator, provided that the appellant is current in his/her payments of Special Taxes.
During pendency of an appeal, all Special Taxes previously levied must be paid on or before
the payment date established when the levy was made. The appeal must specify the reasons
City of Indio
June 6, 2005
Page 7
why the appellant claims the Special Tax is in error. The Administrator shall review
appeal, meet with the appellant if the Administrator deems necessary, and advise
appellant of its determination. If the Administrator agrees with the appellant,
Administrator shall grant a credit to eliminate or reduce future Special Taxes on
appellant’s Parcel(s). No refunds of previously paid Special Taxes shall be made.
the
the
the
the
H. PREPAYMENT OF SPECIAL TAX
The following definitions apply to this Section H:
“CFD Public Facilities” means $8,030,000 for Improvement Area No. 1 expressed in 2005
dollars, which shall increase by the Construction Inflation Index on July 1, 2006, and on each
July 1 thereafter, or such lower number as (i) shall be determined by the Administrator as
sufficient to provide the public facilities under the authorized bonding program for
Improvement Area No. 1 of the CFD, or (ii) shall be determined by the City Council
concurrently with a covenant that it will not issue any more Bonds to be supported by Special
Taxes within Improvement Area No. 1 as levied under this Rate and Method of
Apportionment.
“Construction Fund” means an account specifically identified in the Indenture for
Improvement Area No. 1 to hold funds which are currently available for expenditure to
acquire or construct public facilities eligible under the Act.
“Construction Inflation Index” means the annual percentage change in the Engineering
News-Record Building Cost Index for the City of Los Angeles, measured as of the calendar
year which ends in the previous Fiscal Year. In the event this index ceases to be published,
the Construction Inflation Index shall be another index as determined by the Administrator
that is reasonably comparable to the Engineering News-Record Building Cost Index for the
City of Los Angeles.
“Future Facilities Costs” means for Improvement Area No. 1of the CFD Public Facilities
minus public facility costs available to be funded through existing construction or escrow
accounts or funded by the Outstanding Bonds, and minus public facility costs funded by
interest earnings on the Construction Fund actually earned prior to the date of prepayment.
“Outstanding Bonds” means all previously issued bonds issued by Improvement Area No. 1
and secured by the levy of Special Taxes within Improvement Area No. 1, which will remain
outstanding after the first interest and/or principal payment date following the current Fiscal
Year, excluding bonds to be redeemed at a later date with the proceeds of prior prepayments
of Maximum Special Taxes.
1.
Prepayment in Full
The Maximum Special Tax obligation within Improvement Area No. 1 may only be prepaid
and permanently satisfied by a Parcel of Developed Property, Approved Property and/or
Undeveloped Property for which a building permit has been issued, and Public Property
and/or Property Owner’s Association Property that is not Exempt Property pursuant to
Section E. The Maximum Special Tax obligation applicable to such Parcel may be fully
City of Indio
June 6, 2005
Page 8
prepaid and the obligation of the Parcel to pay the Special Tax permanently satisfied as
described herein; provided that a prepayment may be made only if there are no delinquent
Special Taxes with respect to such Parcel at the time of prepayment. An owner of a Parcel
intending to prepay the Maximum Special Tax obligation shall provide the Administrator
with written notice of intent to prepay, and within 5 business days of receipt of such notice,
the Administrator shall notify such owner of the amount of the non-refundable deposit
determined to cover the cost to be incurred by the CFD in calculating the proper amount of a
prepayment. Within 15 days of receipt of such non-refundable deposit, the Administrator
shall notify such owner of the prepayment amount of such Parcel. Prepayment must be
made not less than 60 days prior to any redemption date for any Bonds to be redeemed with
the proceeds of such prepaid Special Taxes.
The Prepayment Amount (defined below) shall be calculated as summarized below
(capitalized terms as defined below):
Bond Redemption Amount
plus
Redemption Premium
plus
Future Facilities Amount
plus
Defeasance Amount
plus
Administrative Fees and Expenses
less
Reserve Fund Credit
Total: equals
Prepayment Amount
As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be
calculated as follows:
1.
Confirm that no Special Tax delinquencies apply to such Parcel.
2.
For Parcels of Developed Property, compute the Maximum Special Tax for the Parcel
to be prepaid. For Parcels of Approved Property or Undeveloped Property to be
prepaid, compute the Maximum Special Tax for that Parcel as though it was already
designated as Developed Property, based upon the building permit which has already
been issued for that Parcel. For Parcels of Public Property and/or Property Owner’s
Association Property to be prepaid, compute the Maximum Special Tax for that
Parcel.
3.
Divide the Maximum Special Tax computed pursuant to paragraph 2 by the total
estimated Maximum Special Taxes within the applicable Improvement Area based on
the Developed Property Special Tax which could be charged, less any Parcels which
have been prepaid.
4.
Multiply the quotient computed pursuant to paragraph 3 by the Outstanding Bonds to
compute the amount of Outstanding Bonds to be retired and prepaid (the “Bond
Redemption Amount”).
5.
Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the
applicable redemption premium, if any, on the Outstanding Bonds to be redeemed
(the “Redemption Premium”).
City of Indio
June 6, 2005
Page 9
6.
Compute the Future Facilities Costs.
7.
Multiply the quotient computed pursuant to paragraph 3 by the amount determined
pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be
prepaid (the “Future Facilities Amount”).
8.
Compute the amount needed to pay interest on the Bond Redemption Amount from
the first bond interest and/or principal payment date following the current Fiscal Year
until the earliest redemption date for the Outstanding Bonds.
9.
Determine the Special Taxes levied on the Parcel in the current Fiscal Year which
have not yet been paid.
10.
Compute the amount the Administrator reasonably expects to derive from the
reinvestment of the Prepayment Amount less the Future Facilities Amount and the
Administrative Fees and Expenses from the date of prepayment until the redemption
date for the Outstanding Bonds to be redeemed with the prepayment.
11.
Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount
computed pursuant to paragraph 10 (the “Defeasance Amount”).
12.
Verify the administrative fees and expenses, including the costs of computation of the
prepayment, the costs to invest the prepayment proceeds, the costs of redeeming the
Outstanding Bonds, and the costs of recording any notices to evidence the
prepayment and the redemption (the “Administrative Fees and Expenses”).
13.
The reserve fund credit (the “Reserve Fund Credit”) shall equal the lesser of: (a) the
expected reduction in the reserve requirement (as defined in the Indenture), if any,
associated with the redemption of Outstanding Bonds as a result of the prepayment,
or (b) the amount derived by subtracting the new reserve requirement (as defined in
the Indenture) in effect after the redemption of Outstanding Bonds as a result of the
prepayment from the balance in the reserve fund on the prepayment date, but in no
event shall such amount be less than zero.
14.
The Maximum Special Tax prepayment is equal to the sum of the amounts computed
pursuant to paragraphs 4, 5, 7, 11 and 12, less the amount computed pursuant to
paragraph 13 (the “Prepayment Amount”).
15.
From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5,
11, and 13 shall be deposited into the appropriate fund as established under the
Indenture and be used to retire Outstanding Bonds or make debt service payments.
The amount computed pursuant to paragraph 7 shall be deposited into the
Construction Fund. The amount computed pursuant to paragraph 12 shall be retained
by the CFD.
City of Indio
June 6, 2005
Page 10
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of
Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be
retained in the appropriate fund established under the Indenture to be used with the next
prepayment of bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year’s Special Tax levy as determined under
paragraph 9 (above), the Administrator shall remove the current Fiscal Year’s Special Tax
levy for such Parcel from the County tax rolls. With respect to any Parcel that is prepaid, the
City Council shall cause a suitable notice to be recorded in compliance with the Act, to
indicate the prepayment of Special Taxes and the release of the Special Tax lien on such
Parcel, and the obligation of such Parcel to pay the Special Tax shall cease.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the
amount of Maximum Special Taxes that may be levied on Taxable Property within the
applicable Improvement Area both prior to and after the proposed prepayment is at least 1.1
times the maximum annual debt service on all Outstanding Bonds.
Tenders of Bonds in prepayment of Maximum Special Taxes may be accepted upon the
terms and conditions established by the City Council pursuant to the Act. However, the use
of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the
City Council.
2.
Prepayment in Part
The Maximum Special Tax on a Parcel of Developed Property or a Parcel of Approved
Property or Undeveloped Property for which a building permit has been issued may be
partially prepaid in increments of $2,000. The amount of the prepayment shall be calculated
as in Section H.1; except that a partial prepayment shall be calculated according to the
following formula:
PP = PE x F
These terms have the following meaning:
PP = the partial prepayment
PE = the Prepayment Amount calculated according to Section H.1
F = the percent by which the owner of the Parcel(s) is partially prepaying the
Maximum Special Tax.
The owner of a Parcel who desires to partially prepay the Maximum Special Tax shall notify
the Administrator of (i) such owner’s intent to partially prepay the Maximum Special Tax,
(ii) the amount of partial prepayment expressed in increments of $2,000, and (iii) the
company or agency that will be acting as the escrow agent, if applicable and within 5 days of
receipt of such notice, the Administrator shall notify such property owner of the amount of
the non-refundable deposit determined to cover the cost to be incurred by the CFD in
calculating the proper amount of a partial prepayment. Within 15 business days of receipt of
such non-refundable deposit, the Administrator shall notify such owner of the partial
City of Indio
June 6, 2005
Page 11
prepayment amount of such Parcel. Partial prepayment must be made not less than 60 days
prior to any redemption date for any Bonds to be redeemed with the proceeds of such prepaid
Special Taxes.
With respect to any Parcel that is partially prepaid, the Administrator shall (i) distribute the
funds remitted to it according to Paragraph 15 of Section H.1, and (ii) indicate in the records
of Improvement Area No. 1 of the CFD that there has been a partial prepayment of the
Maximum Special Tax and that a portion of the Maximum Special Tax equal to the
outstanding percentage (1.00 - F) of the remaining Maximum Special Tax shall continue to
be authorized to be levied on such Parcel pursuant to Section D.
I. TERM OF THE SPECIAL TAX
For each year that any Bonds are outstanding the Special Tax shall be levied on all Parcels
subject to the Special Tax. If any delinquent Special Taxes remain uncollected prior to or
after all Bonds are retired, the Special Tax may be levied to the extent necessary to reimburse
the CFD for uncollected Special Taxes associated with the levy of such Special Taxes, but
not later than the 2041-2042 Fiscal Year for Improvement Area No. 1.
City of Indio
June 6, 2005
Page 12
APPENDIX B
CITY OF INDIO SUPPLEMENTAL INFORMATION
The following information concerning the City of Indio is presented as general background data.
The Bonds are payable solely from unpaid Assessments as described in the Official Statement. The
Bonds are not an obligation of the City, and the taxing power of the City is not pledged to the payment of
the Bonds (except to the limited extent described herein).
General Information
In 1893, Indio became one of 12 townships in the County of Riverside and was incorporated in
1930 and encompasses 24.8 square miles. It is a general law city with a council-manager form of
municipal government. The City Council is composed of a Mayor and four members elected bi-annually
at large to four-year alternating terms with the mayor rotating on an annual basis. Positions of City
Manager and City Attorney are filled by appointments of the City Council. Indio is the geographic mid
point of both Riverside County and the Coachella Valley. It is known as both a desert resort and a major
agricultural area. Indio is about 75 miles north of the California-Baja California Mexican border and 120
miles east of the center of the Riverside metropolitan complex and 30 miles southeast of Palm Springs. It
is the halfway point for all the weekly Southern Californians who make the weekend and holiday trips to
the Colorado River and the Glamis Off Road recreational facilities. Indio’s neighboring communities are
La Quinta to the west, unincorporated areas of Riverside County to the south, the City of Coachella to the
east and unincorporated Riverside County land to the north. Home of the National Date Festival,
Shalimar Sports Center’s satellite off-track wagering facility and international polo matches, Indio
welcomes tens of thousands of visitors each year.
Governmental Services
The City provides a broad range of services to its citizens which include police protection, water
service, trash collection, street construction and maintenance, parks and recreation, planning and zoning,
housing and community development, building inspection and general and administrative support
services. It cooperates with Riverside County in the provision of fire protection and with Coachella
Valley Water District for flood control. The Indio Police Department operates from one station and has
49 sworn officers serving the community. The City maintains five parks and the Coachella Valley
Recreation District operates a 39,000 square foot comprehensive recreational facility in the City.
Transportation
Interstate 10 connects Indio with Los Angeles, San Diego and Phoenix, Arizona. State Highways
86 and 111 provide access to neighboring communities and Palm Springs.
Commercial rail service to Indio is provided by Southern Pacific Railroad.
Air cargo and passenger flight services are provided at the Palm Springs International Airport and
at nearby Bermuda Dunes and Thermal Airports.
Population
Table No. B-1 summarizes population growth between 2001 and 2005 for the City of Indio,
surrounding cities and Riverside County.
B-1
TABLE NO. B-1
CHANGE IN POPULATION
CITY OF INDIO, SURROUNDING CITIES* AND RIVERSIDE COUNTY
2001 – 2005
Year
2001
2002
2003
2004
2005
INDIO
Percentage
Population
Change
50,464
52,507
55,155
60,175
66,118
% Change Between
2001 – 2005
____________________
4.0%
5.0
9.1
9.9
SURROUNDING CITIES
Percentage
Population
Change
113,040
115,918
120,631
123,309
130,556
31.0%
2.5%
4.1
2.2
5.9
RIVERSIDE COUNTY
Percentage
Population
Change
1,590,473
1,654,220
1,726,754
1,807,858
1,877,000
15.5%
4.0%
4.4
4.7
3.8
18.0%
* Surrounding cities include Palm Springs, Palm Desert, Indian Wells and Coachella.
Source: State of California Department of Finance.
Employment and Industry
The City of Indio is located in the Riverside/San Bernardino/Ontario labor market area. Six major
job categories constitute 64.9% of the work force. They are government (15.5%), service producing
(14.4%), professional and business services (9.2%), manufacturing (8.8%), educational and health
services (8.6%) and leisure and hospitality (8.4%). The June 2005 unemployment rate in the
Riverside/San Bernardino/Ontario area was 5.2%. The State of California June 2005 unemployment rate
(unadjusted) was 5.4%.
B-2
TABLE NO. B-2
RIVERSIDE/SAN BERNARDINO/ONTARIO MSA
WAGE AND SALARY WORKERS BY INDUSTRY
(in thousands)
Industry
Government
Other Services
Leisure and Hospitality
Educational and Health Services
Professional and Business Services
Financial Activities
Information
Trade, Transportation and Utilities
Service Producing
Retail Trade
Wholesale Trade
Manufacturing
Nondurable Goods
Durable Goods
Goods Producing
Construction
Natural Resources and Mining
Total Nonfarm
Farm
Total (all industries)
____________________
2000
2001
2002
2003
2004
192.1
35.0
100.8
102.2
97.0
34.8
12.9
212.2
200.2
37.1
104.4
106.0
101.7
38.2
14.6
219.4
212.7
38.1
107.2
112.4
106.8
39.5
14.1
226.3
211.6
38.4
109.0
115.8
115.4
42.6
13.9
236.3
211.5
38.8
115.2
117.7
125.2
45.3
13.8
250.4
127.4
38.3
132.2
41.6
137.5
41.9
142.7
43.5
151.8
44.4
34.5
85.6
34.4
84.1
33.4
82.0
33.7
82.4
34.5
85.5
80.1
1.3
1,154.2
21.7
1,175.9
88.4
1.2
1,203.5
20.9
1,224.4
90.9
1.2
1,244.0
20.3
1,264.3
99.0
1.2
1,285.5
20.3
1,305.8
110.8
1.2
1,346.1
18.8
1,364.9
Source: State of California Employment Development Department.
The major employers operating within the City and their respective number of employees as of
June 30, 2005 area as follows:
Name of Employer
Number of Employees
Product/Service
900
525
445
226
142
115
100
100
100
100
Government
Casino
Medical Hospital
Government
Department Store
Physical Therapy
Grocery Store
Farm Produce
Concrete
Telephone Service
County of Riverside
Fantasy Springs Casino
John F. Kennedy Memorial Hospital
City of Indio
Sears Roebuck & Company
Desert Orthopedic Center
Super Saver Food
Dimare Company
Granite Construction
GTE
____________________
Source: City of Indio. 2004 data not yet available.
B-3
Personal Income
Personal income information for Riverside County, the State of California and the United States
are summarized in Table No. B-3.
TABLE NO. B-3
EFFECTIVE BUYING INCOME
RIVERSIDE COUNTY, CALIFORNIA AND UNITED STATES
1999 – 2003
Year
Riverside County
State of California
1999
2000
2001
2002
2003
$35,145
39,293
37,480
38,691
39,321
$39,942
44,464
43,532
42,484
42,924
Note:
United States
$37,233
39,129
38,365
38,085
38,201
Personal income data not available for smaller geographical areas such as the City of
Indio. 2004 data not yet available.
____________________
Source: Sales and Marketing Management, “Survey of Buying Power.”
Commercial Activity
The following table summarizes the volume of retail sales and taxable transactions for the City of
Indio for 1999 through 2003.
TABLE NO. B-4
CITY OF INDIO
TOTAL TAXABLE TRANSACTIONS
(in Thousands)
1999 – 2003
Year
Total Taxable
Retail Sales
Retail Sales Transactions
Issued Sales
($000's)
% Change Permits
% Change
Permits
($000's)
1999
318,955
2000
385,117
2001
444,519
2002
450,141
2003
504,197
____________________
20.7%
15.4
1.3
12.0
496
560
612
699
743
401,104
473,781
531,686
536,126
589,327
Source: State of California Board of Equalization. 2004 data not yet available.
B-4
18.1%
12.2
0.8
9.9
1,169
1,204
1,250
1,481
1,636
The following table compares taxable transactions for the City of Indio and surrounding cities.
TABLE NO. B-5
CHANGE IN TOTAL TAXABLE TRANSACTIONS
INDIO AND SURROUNDING CITIES
(in thousands)
1999 – 2003
City
1999
INDIO
Palm Springs
Palm Desert
Indian Wells
Coachella
2000
2001
2002
2003
% Change
1999 - 2003
$ 401,104 $ 473,781 $ 531,686 $ 536,126 $ 589,327
542,041
601,316
623,956
617,260
675,487
1,098,211 1,217,986 1,211,069 1,209,385 1,296,730
63,611
68,599
62,958
57,178
67,186
113,485
132,640
146,254
155,831
176,051
46.9%
35.5
40.3
10.9
79.2
____________________
Taxable transactions by type of business for the City of Indio for 1999 through 2003 are
summarized in Table No. B-6.
TABLE NO. B-6
CITY OF INDIO
TAXABLE TRANSACTIONS BY TYPE OF BUSINESS
(in thousands)
1999 – 2003
1999
Retail Stores
Apparel Stores
General Merchandise Stores
Food Stores
Eating/Drinking Places
Home Furnishings and
Appliances
Building Materials and
Farm Implements
Auto Dealers/Suppliers
Service Stations
Other retail stores
Total Retail Stores
All Other Outlets
Total All Outlets
$
6,304
48,362
30,749
37,763
2000
$
8,090
51,256
34,011
42,343
2001
$
7,651
51,293
36,761
42,707
2002
$
7,380
48,720
39,208
39,710
2003
$
7,599
50,580
43,369
43,666
9,276
22,404
27,503
30,794
35,800
46,350
95,464
24,138
20,549
318,955
46,344
130,246
29,073
21,350
385,117
43,136
185,893
27,255
22,320
444,519
40,158
191,899
27,889
24,383
450,141
54,461
206,886
33,789
28,047
504,197
82,149
88,664
87,167
85,985
85,130
$401,104
$473,781
$531,686
$536,126
$589,327
____________________
B-5
Building Activity
The following table summarizes building activity valuations for the City of Indio for the five
fiscal years from 2000 through 2004.
TABLE NO. B-7
CITY OF INDIO
BUILDING ACTIVITY AND VALUATION
(in thousands)
2000 – 2004
2000
Total Residential
Total Commercial
Total Valuation
$60,913,897
26,509,455
$90,423,352
2001
$74,439,017
16,374,150
$90,813,167
____________________
Source: City of Indio.
B-6
2002
$142,813,529
9,085,542
$151,899,071
2003
$230,927,525
9,401,352
$240,328,877
2004
$394,347,500
56,330,897
$450,678,397
APPENDIX C
SUMMARY OF FISCAL AGENT AGREEMENT
The following is a summary of certain provisions of the Fiscal Agent Agreement, and is
supplemental to the summary of other provisions of such document described elsewhere in this Official
Statement. This summary does not purport to be comprehensive or definitive, and reference should be
made to such document for full and complete statement of its provisions. All capitalized terms used but
not otherwise defined in this Appendix shall have the meanings assigned to such terms in the Fiscal Agent
Agreement.
DEFINITIONS
Unless the context requires, the following terms shall have the following meanings:
“Acquisition and Construction Fund” means the fund by such name created and established
pursuant to the Fiscal Agent Agreement.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311 et
seq. of the California Government Code.
“Administrative Expense Account” means the account by such name in the Special Tax Fund
created and established pursuant to the Fiscal Agent Agreement.
“Administrative Expense Requirement” means for any Fiscal Year, an amount necessary to pay
Administrative Expenses.
“Administrative Expenses” means the administrative costs with respect to the calculation and
collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and
expenses of the Fiscal Agent, any fees for credit enhancement for the Bonds which are not otherwise paid
as Costs of Issuance, any costs related to the District’s compliance with State and federal laws requiring
continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise
incurred by the City staff on behalf of the District in order to carry out the purposes of the District as set
forth in the Resolution of Formation and any obligation of the District under the Fiscal Agent Agreement.
“Annual Debt Service” means the principal amount of any Outstanding Bonds payable in a Bond
Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any
Outstanding Bonds in such Bond Year, if the Bonds are retired as scheduled.
“Alternate Reserve Account Security” means one or more surety bonds, bond insurance policies,
or other form of guaranty from a municipal bond insurer for the benefit of the Fiscal Agent meeting the
requirements therefor in the Fiscal Agent Agreement in substitution for or in place of all or any portion of
the Reserve Requirement.
“Authorized Investments” means any of the following which at the time of investment are legal
investments under the laws of the State for the moneys proposed to be invested therein:
(1)
Direct obligations of the United States of America (including obligations issued or held
in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or
obligations the principal of and interest on which are unconditionally guaranteed by the United States of
America (“Direct Obligations”).
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(2)
Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any
of the following federal agencies and provided such obligations are backed by the full faith and credit of
the United States of America (stripped securities are only permitted if they have been stripped by the
agency itself):
U.S. Export-Import Bank (“Eximbank”)
Direct obligations or fully guaranteed certificates of beneficial ownership
Farmers Home Administration (“FmHA”)
Certificates of beneficial ownership
Federal Financing Bank
Federal Housing Administration Debentures (“FHA”)
General Services Administration
Participation certificates
Government National Mortgage Association (“GNMA” or “Ginnie Mae”)
GNMA-guaranteed mortgage-backed bonds
GNMA-guaranteed pass-through obligations
U.S. Maritime Administration
Guaranteed Title XI financing
U.S. Department of Housing and Urban Development (HUD)
Project Notes
Local Authority Bonds
New Communities Debentures - U.S. government guaranteed debentures
U.S. Public Housing Notes and Bonds - U.S. government guaranteed
public housing notes and bonds
(3)
Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any
of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted
if they have been stripped by the agency itself:
Federal Home Loan Bank System
Senior debt obligations
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Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”)
Participation certificates
Federal National Mortgage Association (“FNMA” or “Fannie Mae”)
Mortgage-backed securities and senior debt obligations
Student Loan Marketing Association (“SLMA” or “Sallie Mae”)
Resolution Funding Corp. (“REFCORP”) obligations
Farm Credit System CM. - Consolidated system-wide bonds and notes
(4)
Money market funds registered under the Federal Investment Company Act of 1940,
whose shares are registered under the Securities Act of 1933, and having a rating by Standard & Poor’s of
“AAAm-G”, “AAAm” or “AAm”, and, if rated by Moody’s, rated “Aaa”, “Aal” or “Aa2” (including
those of the Fiscal Agent and its affiliates).
(5)
Certificates of deposit secured at all times by collateral described in (1) and/or (2) above.
Such certificates must be issued by commercial banks, savings and loan associations or mutual savings
banks. The collateral must be held by a third party and the Bondholders must have a perfected first
security interest in the collateral.
(6)
Certificates of deposit, savings accounts, deposit accounts or money market deposits
which are fully insured by FDIC or which are with a bank rated “AA” or better by Standard & Poor’s and
“Aa” or better by Moody’s (including those of the Fiscal Agent and its affiliates).
(7)
provided that
Investment Agreements with any corporation, including banking or financial institutions,
(a)
the long-term debt of the provider of any such investment agreement is rated, at
the time of investment, at least “AA” and “Aa” by the Rating Agency (without regard to
gradations of plus or minus within such category), and
(b)
any such investment agreement is collateralized with United States Treasury or
agency obligations which at least equal 102% of the principal amount invested thereunder, and
(c)
any such agreement shall include a provision to the effect that, in the event the
long-term debt rating of the provider of such agreement is downgraded below “AA-” or below
“Aa” by the applicable Rating Agency, the District has the right to withdraw or cause the Fiscal
Agent to withdraw all funds invested in such agreement and thereafter to invest such funds
(8)
Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A-1” or
better by Standard & Poor’s.
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(9)
Bonds or notes issued by any state or municipality which are rated by Moody’s and
Standard & Poor’s in one of the two highest rating categories assigned by such agencies.
(10)
Federal funds or bankers acceptances with a maximum term of one year of any bank
which has an unsecured, uninsured or unguaranteed obligation rating of “Prime - 1” or “A3” or better by
Moody’s and “A-1” or “A” or better by Standard & Poor’s.
(11)
Repurchase agreements collateralized by Direct Obligations, GNMAs, FNMAs or
FHLMCs with any registered broker/dealer subject to the Securities Investors’ Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer or bank has an uninsured,
unsecured and unguaranteed obligation rated “P-1” or “A3” or better by Moody’s, and “A-1” or “A-” by
Standard & Poor’s; provided:
(a)
a master repurchase agreement or specific written repurchase agreement governs
the transaction; and
(b)
the securities are held free and clear of any lien by the Fiscal Agent or an
independent third party acting solely as agent (“Agent”) for the Fiscal Agent, and such third party
is (i) a Federal Reserve Bank, (ii) a bank which is a member of the Federal Deposit Insurance
Corporation and which has combined capital, surplus and undivided profits of not less than $50
million, or (iii) a bank approved in writing for such purpose by Financial Guaranty Insurance
Company, and the Fiscal Agent shall have received written confirmation from such third party
that it holds such securities, free and clear of any lien, as agent for the Fiscal Agent; and
(c)
a perfected first security interest under the Uniform Commercial Code, or book
entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities
is created for the benefit of the Fiscal Agent; and
(d)
the repurchase agreement has a term of 180 days or less, and the Fiscal Agent or
the Agent will value the collateral securities no less frequently than weekly and will liquidate the
collateral securities if any deficiency in the required collateral percentage is not restored within
two business days of such valuation; and
(e)
the fair market value of the securities in relation to the amount of the repurchase
obligation, including principal and interest, is equal to at least 103%
(12)
Local Agency Investment Fund (“LAIF”) of the State of California.
(13)
Any other investment which the District is permitted by law to make.
“Authorized Representative of the District” means the Mayor, Vice Mayor, City Manager,
Finance Director, or any other person or persons designated by the City Council of the City.
“Bond Counsel” means an attorney at law or a firm of attorneys selected by the District of
nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued
by states and their political subdivisions duly admitted to the practice of law before the highest court of
any state of the United States of America or the District of Columbia.
“Bond Register” means the books which the Fiscal Agent shall keep or cause to be kept on which
the registration and transfer of the Bonds shall be recorded.
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“Bondowner” or “Owner” means the person or persons in whose name or names any Bond is
registered.
“Bond Year” means the twelve month period commencing on September 2 of each year and
ending on September 1 of the following year, except that the first Bond Year for the Bonds shall begin on
the Delivery Date and end of the first September 1 which is not more than 12 months after the Delivery
Date.
“Business Day” means a day which is not a Saturday or Sunday or a day of the year on which
banks in New York, New York, Los Angeles, California, or the city where the corporate trust office of the
Fiscal Agent is located, are not required or authorized to remain closed.
“Code” means the Internal Revenue Code of 1986 and any Regulations, rulings, judicial
decisions, and notices, announcements, and other releases of the United States Treasury Department or
Internal Revenue Service interpreting and construing it.
“Costs of Issuance” means the costs and expenses incurred in connection with the issuance and
sale of the Bonds, including the acceptance and initial annual fees and expenses of the Fiscal Agent and
its counsel, legal fees and expenses, costs of printing the Bonds and the preliminary and final official
statements for the Bonds, fees of financial consultants and all other related fees and expenses, Bonds, as
set forth in a written certificate of an Authorized Representative.
“Costs of Issuance Account” means the account by such name in the Acquisition and
Construction Fund created and established pursuant to the Fiscal Agent Agreement.
“Defeasance Securities” means any of the following:
(a)
Cash
(b)
United States Treasury Certificates, Notes and Bonds (including State and Local
Government Series -- “SLGS”)
(c)
Direct obligations of the U.S. Treasury which have been stripped by the U.S.
Treasury itself, e.g., CATS, TIGRS and similar securities.
(d)
The interest component of Resolution Funding Corp. strips which have been
stripped by request to the Federal Reserve Bank of New York and are in book-entry form.
(e)
& Poor’s.
Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by Standard
(f)
Obligations issued by the following agencies which are backed by the full faith
and credit of the United States:
U.S. Export-Import Bank - direct obligations or fully guaranteed certificates of beneficial
ownership
Farmers Home Administration - certificates of beneficial ownership
Federal Financing Bank
General Services Administration - participation certificates
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U.S. Maritime Administration - guaranteed Title XI financing
U.S. Department of Housing and Urban Development (HUD) - Project Notes, Local
Authority Bonds, New Communities Debentures - U.S. government guaranteed
debentures, U.S. Public Housing Notes and Bonds - U.S. government guaranteed public
housing notes and bonds.
“Delivery Date” means the date on which the Bonds were issued and delivered to the initial
purchasers thereof.
“Depository” shall mean The Depository Trust Company, New York, New York, and its
successors and assigns as securities depository for the Certificates, or any other securities depository
acting as Depository under the Fiscal Agent Agreement.
“District” means City of Indio Community Facilities District No. 2005-1 (Talavera) established
pursuant to the Act and the Resolution of Formation.
“Fiscal Agent” means Union Bank of California, N.A., a national banking association duly
organized and existing under and by virtue of the laws of the United States of America, at its principal
corporate trust office in Los Angeles, California, and its successors or assigns, or any other bank or trust
company which may at any time be substituted in its place as provided in the Fiscal Agent Agreement and
any successor thereto.
“Fiscal Agent Agreement” means the Fiscal Agent Agreement, together with any Supplemental
Fiscal Agent Agreement approved pursuant to the Fiscal Agent Agreement.
“Fiscal Year” means the period beginning on July 1 of each year and ending on the next
following June 30.
“Improvement Area No. 1” means Improvement Area No. 1 of the District.
“Independent Financial Consultant” means a financial consultant or special tax consultant or firm
of either such consultants generally recognized to be well qualified in the financial consulting or special
tax consulting field, appointed and paid by the District, who, or each of whom:
(1)
is, in fact, independent and not under the domination of the District;
(2)
does not have any substantial interest, direct or indirect, in the District; and
(3)
is not connected with the District as a member, officer or employee of the District, but
who may be regularly retained to make annual or other reports to the District.
“Interest Account” means the account by such name created and established in the Special Tax
Fund pursuant to the Fiscal Agent Agreement.
“Interest Payment Date” means each March 1 and September 1, commencing March 1, 2006;
provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date
will be paid on the next succeeding Business Day.
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“Investment Agreement” means one or more agreements for the investment of funds of the
District complying with the criteria therefor as set forth in Subsection (7) of the definition of Authorized
Investments.
“Maximum Annual Debt Service” means the maximum sum obtained for any Bond Year prior to
the final maturity of the Bonds by adding the following for each Bond Year:
(1)
the principal amount of all Outstanding Bonds payable in such Bond Year either at
maturity or pursuant to a Sinking Fund Payment; and
(2)
the interest payable on the aggregate principal amount of all Bonds Outstanding in such
Bond Year if the Bonds are retired as scheduled.
“Moody’s” means Moody’s Investors Service, its successors and assigns.
“Net Taxes” means Special Taxes minus an amount equal to the Administrative Expense
Requirement.
“Nominee” shall mean the nominee of the Depository, which may be the Depository, as
determined from time to time pursuant to the Fiscal Agent Agreement.
“Outstanding” or “Outstanding Bonds” means all Bonds theretofore issued by the District,
except:
(1)
Bonds theretofore cancelled or surrendered for cancellation in accordance with the Fiscal
Agent Agreement;
(2)
Bonds for payment or redemption of which monies shall have been theretofore deposited
in trust (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if
such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been
given as provided in the Fiscal Agent Agreement; and
(3)
Bonds which have been surrendered to the Fiscal Agent for transfer or exchange pursuant
to the Fiscal Agent Agreement or for which a replacement has been issued pursuant to the Fiscal Agent
Agreement.
“Participants” shall mean those broker-dealers, banks and other financial institutions from time to
time for which the Depository holds Bonds as securities depository.
“Person” means natural persons, firms, corporations, partnerships, associations, trusts, public
bodies and other entities.
“Principal Account” means the account by such name in the Special Tax Fund created and
established pursuant to the Fiscal Agent Agreement.
“Principal Office of the Fiscal Agent” means the office of the Fiscal Agent located in Los
Angeles, California or such other office or offices as the Fiscal Agent may designate from time to time, or
the office of any successor Fiscal Agent where it principally conducts its business of serving as Fiscal
Agent under indentures pursuant to which municipal or governmental obligations are issued.
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“Project” means those public facilities and/or capital fees described in the Resolution of
Formation that are to be acquired, constructed or financed within and outside of the District, including all
engineering, planning and design services and other incidental expenses related to such facilities and
other facilities, if any, authorized by the qualified electors within the District from time to time.
“Project Costs” means the amounts necessary to finance the Project, to create and replenish any
necessary reserve funds, to pay the initial and annual costs associated with the Bonds, including, but not
limited to, remarketing, credit enhancement, Fiscal Agent and other fees and expenses relating to the
issuance of the Bonds and the formation of the District, and to pay any other “incidental expenses” of the
District, as such term is defined in the Act.
“Rating Agency” means Moody’s and Standard & Poor’s, or both, as the context requires.
“Record Date” means the fifteenth day of the month preceding an Interest Payment Date,
regardless of whether such day is a Business Day.
“Redemption Account” means the account by such name created and established in the Special
Tax Fund pursuant to the Fiscal Agent Agreement.
“Regulations” means the regulations adopted or proposed by the Department of Treasury from
time to time with respect to obligations issued pursuant to section 103 of the Code.
“Representation Letter” shall mean the Blanket Letter of Representations from the District to the
Depository as described in the Fiscal Agent Agreement.
“Reserve Account” means the account by such name created and established in the Special Tax
Fund pursuant to the Fiscal Agent Agreement.
“Reserve Requirement” means, as of any date of calculation, an amount equal to the lowest of (1)
10% of the original proceeds of the Bonds, less accrued interest, if any, less original issue discount, if
any, plus original issue premium, if any, or (2) Maximum Annual Debt Service, or (3) 125% of the
average Annual Debt Service of the Outstanding Bonds. The District may originally fund the Reserve
Account with an Alternate Reserve Account Security or may at any time substitute an Alternate Reserve
Account Security for the cash on deposit in the Reserve Account to satisfy the Reserve Requirement
“Resolution of Formation” means Resolution No. 9051 adopted by the City Council of the City
on September 21, 2005, pursuant to which the City formed the District.
“Sinking Fund Payment” means the annual payment to be deposited in the Redemption Account
to redeem a portion of the Term Bonds in accordance with the schedule set forth in the Fiscal Agent
Agreement.
“Special Taxes” means the taxes authorized to be levied within Improvement Area No. 1 by the
District in accordance with the Resolution of Formation, the Act and the voter approval obtained at the
September 21, 2005 election in the District, together with prepayments thereof and the proceeds collected
from the sale of property pursuant to the foreclosure provisions of the Fiscal Agent Agreement for the
delinquency of such Special Taxes remaining after the payment of all the costs related to such foreclosure
actions, and any additional special taxes authorized to be levied by the District from time to time which
are pledged by the District to the repayment of the Bonds.
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“Special Tax Fund” means the fund by such name created and established pursuant to the Fiscal
Agent Agreement.
“Standard & Poor’s” means Standard & Poor’s, a division of McGraw-Hill, its successors and
assigns.
“Supplemental Fiscal Agent Agreement” means any supplemental fiscal agent agreement
amending or supplementing the Fiscal Agent Agreement.
“Surplus Fund” means the fund by such name created and established pursuant to the Fiscal
Agent Agreement.
“Tax Certificate” means the certificate by that name to be executed by the District on a Delivery
Date to establish certain facts and expectations and which contains certain covenants relevant to
compliance with the Code.
“Underwriter” means the institution or institutions, if any, with whom the District enters into a
purchase contract for the sale of the Bonds.
“Written Request of the District” means a request in writing executed by an Authorized
Representative.
INVESTMENTS
Moneys held in any of the funds and accounts under the Fiscal Agent Agreement shall be
invested at the Written Request of the District in accordance with the limitations set forth below only in
Authorized Investments which shall be deemed at all times to be a part of such funds and accounts. Any
loss resulting from such Authorized Investments shall be credited or charged to the fund or account from
which such investment was made, and any investment earnings on a fund or account shall be applied as
follows: (i) investment earnings on all amounts deposited in the Special Tax Fund (other than the Reserve
Account), Acquisition and Construction Fund and Surplus Fund and each Account therein shall be
deposited in those respective funds and accounts, and (ii) all other investment earnings shall be deposited
in the Interest Account of the Special Tax Fund; provided, however, investment earnings in the Reserve
Account shall be deposited in the Interest Account of the Special Tax Fund only to the extent moneys in
such Reserve Account exceed the Reserve Requirement. Moneys in the funds and accounts held under
the Fiscal Agent Agreement may be invested by the Fiscal Agent at the Written Request of the District
received at least 2 Business Days prior to the investment date, from time to time, in Authorized
Investments subject to the following restrictions:
(1)
Moneys in the Interest Account, the Principal Account and the Redemption Account of
the Special Tax Fund shall be invested only in Authorized Investments which will by their terms mature,
or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so
as to ensure the payment of principal of, premium, if any, and interest on the Bonds as the same become
due.
(2)
Moneys in the Acquisition and Construction Fund shall be invested in Authorized
Investments which will by their terms mature, or in the case of an Investment Agreement are available
without penalty, as close as practicable to the date the District estimates the moneys represented by the
particular investment will be needed for withdrawal from the Acquisition and Construction Fund.
Notwithstanding anything in the Fiscal Agent Agreement to the contrary, amounts in the Acquisition and
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Construction Fund on the Delivery Date for the Bonds shall not be invested at yields greater than those
set forth in the Tax Certificate.
(3)
One-half of the amount in the Reserve Account of the Special Tax Fund may be invested
only in Authorized Investments which mature not later than two years from their date of purchase by the
Fiscal Agent, and one-half of the amount in the Reserve Account may be invested only in Authorized
Investments which mature not more than three years from the date of purchase by the Fiscal Agent;
provided that such amounts may be invested in an Investment Agreement to the final maturity of the
Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in
accordance with the Fiscal Agent Agreement; and provided that no such Authorized Investment of
amounts in the Reserve Account shall mature later than the respective final maturity date of the Bonds.
(4)
In the absence of Written Request of the District providing investment directions, the
Fiscal Agent shall invest solely in Authorized Investments specified in clause (4) of the definition thereof.
The Fiscal Agent shall sell at the best price obtainable, or present for redemption, any Authorized
Investment whenever it may be necessary to do so in order to provide moneys to meet any payment or
transfer to such Funds and Accounts or from such Funds and Accounts. For the purpose of determining at
any given time the balance in any such Funds and Accounts, any such investments constituting a part of
such Funds and Accounts shall be valued at their cost, except that amounts in the Reserve Account shall
be valued at the fair market value thereof and marked to market at least annually. Notwithstanding
anything in the Fiscal Agent Agreement to the contrary, the Fiscal Agent shall not be responsible for any
loss from investments, sales or transfers undertaken in accordance with the provisions of the Fiscal Agent
Agreement. The Fiscal Agent may act as principal or agent in connection with the acquisition of any
Authorized Investments. Any Authorized Investments that are registrable securities shall be registered in
the name of the Fiscal Agent. The Fiscal Agent is authorized, in making or disposing of any investment
permitted by the Fiscal Agent Agreement, to deal with itself (in its individual capacity) or with any one or
more of its affiliates, whether it or such affiliate is acting as an agent of the Fiscal Agent or for any third
person or dealing as principal for its own account.
COVENANTS AND WARRANTY
Warranty. The District shall preserve and protect the security pledged under the Fiscal Agent
Agreement to the Bonds against all claims and demands of all persons.
Covenants. So long as any of the Bonds issued under the Fiscal Agent Agreement are
Outstanding and unpaid, the District makes the following covenants with the Bondowners under the
provisions of the Act and the Fiscal Agent Agreement (to be performed by the District or its proper
officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and tend
to make them more marketable; provided, however, that said covenants do not require the District to
expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax
Fund:
(1)
Punctual Payment; Against Encumbrances. The District covenants that it will receive all
Special Taxes in trust and will immediately deposit such amounts with the Fiscal Agent, and the District
shall have no beneficial right or interest in the amounts so deposited except as provided by the Fiscal
Agent Agreement. All such Special Taxes shall be disbursed, allocated and applied solely to the uses and
purposes set forth in the Fiscal Agent Agreement, and shall be accounted for separately and apart from all
other money, funds, accounts or other resources of the District.
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The District covenants that it will duly and punctually pay or cause to be paid the principal of and
interest on every Bond issued under the Fiscal Agent Agreement, together with the premium, if any,
thereon on the date, at the place and in the manner set forth in the Bonds and in accordance with the
Fiscal Agent Agreement to the extent that Net Taxes are available therefor, and that the payments into the
Funds and Accounts created under the Fiscal Agent Agreement will be made, all in strict conformity with
the terms of the Bonds and the Fiscal Agent Agreement, and that it will faithfully observe and perform all
of the conditions, covenants and requirements of the Fiscal Agent Agreement and all Supplemental Fiscal
Agent Agreements and of the Bonds issued under the Fiscal Agent Agreement.
The District will not mortgage or otherwise encumber, pledge or place any charge upon any of
the Net Taxes except as provided in the Fiscal Agent Agreement, and will not issue any obligation or
security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds. Nothing in
the Fiscal Agent Agreement shall prevent the District from issuing or incurring indebtedness which is
payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to
repay the Bonds.
(2)
Levy of Special Tax. Beginning in Fiscal Year 2006-07 and so long as any Bonds issued
under the Fiscal Agent Agreement are Outstanding, the legislative body of the District covenants to levy
the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund
and available for such purpose, to pay (1) the principal of and interest on the Bonds when due, (2) the
Administrative Expenses, and (3) any amounts required to replenish the Reserve Account of the Special
Tax Fund to the Reserve Requirement.
(3)
Commence Foreclosure Proceedings.
Owners of the Bonds that:
The District covenants for the benefit of the
(a)
if the District determines that (i) any owner owns one or more parcels subject to a
Special Tax is delinquent in an aggregate amount of $3,000 or more, or (ii) any owner of a parcel
of Undeveloped Property subject to the Special Tax is delinquent in the payment of one
Installment of Special Taxes when due, then the District will send or cause to be sent a notice of
delinquency (and a demand for immediate payment thereof) to the property owner within 45 days
of such determination, and (if the delinquency remains uncured) foreclosure proceedings will be
commenced by the District within 120 days of such determination, to the extent permissible under
applicable law. An “Installment” of Special Tax is defined as the installment of Special Tax that
becomes delinquent after any December 10 or April 10.
(b)
if the District determines that the total amount of delinquent Special Tax for the
prior Fiscal Year for Improvement Area No. 1 (including the total of delinquencies under
paragraph (A) above), exceeds 5% of the total Special Taxes due and payable for the prior Fiscal
Year, the District will notify or cause to be notified all property owners who are then delinquent
in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45
days of such determination, and will commence foreclosure proceedings within 120 days of such
determination against each parcel of land in Improvement Area No. 1 with a Special Tax
delinquency, to the extent permissible under applicable law.
The District covenants that it will deposit the proceeds of any foreclosure in the Special Tax
Fund.
(4)
Payment of Claims. The District will pay and discharge any and all lawful claims for
labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Taxes or; other
funds in the Special Tax Fund (other than the Administrative Expense Account therein), or which might
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impair the security of the Bonds then Outstanding; provided that nothing contained in the Fiscal Agent
Agreement shall require the District to make any such payments so long as the District in good faith shall
contest the validity of any such claims.
(5)
Books and Accounts. The District will keep proper books of records and accounts,
separate from all other records and accounts of the District, in which complete and correct entries shall be
made of all transactions relating to the levy of the Special Tax and the deposits to the Special Tax Fund.
Such books of records and accounts shall at all times during business hours be subject to the inspection of
the Fiscal Agent or of the Owners of the Bonds then Outstanding or their representatives authorized in
writing.
(6)
Tax Covenants. The District covenants that it shall take all actions necessary in order
that interest on the Bonds be and remain excluded pursuant to section 103(a) of the Code from the gross
income of the owners thereof for federal income tax purposes, and that it shall not use or invest, and shall
not permit the use or investment of, and shall not omit to use or invest Gross Proceeds or any other
amounts (or any property the acquisition, construction or improvement of which is to be financed directly
or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, could cause the
interest on any Bond to fail to be excluded pursuant to section 103(a) of the Code from the gross income
of the owner thereof for federal income tax purposes.
(7)
Reduction of Maximum Special Taxes. The District finds and determines that,
historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community
facilities districts in Southern California have from time to time been at levels requiring the levy of
special taxes at the maximum authorized rates in order to make timely payment of principal of and
interest on the outstanding indebtedness of such community facilities districts. For this reason, the
District determines that a reduction in the maximum Special Tax rates authorized to be levied on parcels
in the District below the levels provided in the Fiscal Agent Agreement would interfere with the timely
retirement of the Bonds. The District determines it to be necessary in order to preserve the security for
the Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District does
covenant, that it shall not initiate proceedings to reduce the maximum Special Tax rates for the District,
unless, in connection therewith, (i) the District receives a certificate from one or more Independent
Financial Consultants which, when taken together, certify that, on the basis of the parcels of land and
improvements existing in the District as of the July 1 preceding the reduction, the maximum amount of
the Special Tax which may be levied on then existing Developed Property (as defined in the Rate and
Method of Apportionment of Special Taxes then in effect in the District) in each Bond Year for any
Bonds Outstanding will equal at least 110% of the sum on the estimated Administrative Expenses and
gross debt service in that Bond Year on all Bonds to remain Outstanding after the reduction is approved,
and (ii) the District finds that any reduction made under such conditions will not adversely affect the
interests of the Owners of the Bonds. For purposes of estimating Administrative Expenses for the
foregoing calculation, the Independent Financial Consultant shall compute the Administrative Expenses
for the current Fiscal Year and escalate that amount by two percent (2%) in each subsequent Fiscal Year.
(8)
Covenants to Defend. The District covenants that in the event that any initiative is
adopted by the qualified electors in the District which purports to reduce the maximum Special Tax below
the levels specified in the Fiscal Agent Agreement or to limit the power of the District to levy the Special
Taxes for the purposes set forth in the Fiscal Agent Agreement, it will commence and pursue legal action
in order to preserve its ability to comply with such covenants.
(9)
Limitation on Right to Tender Bonds. The District covenants that it will not adopt any
policy pursuant to Section 53341.1 of the Act permitting the tender of Bonds to the District in full
payment or partial payment of any Special Taxes.
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(10)
Continuing Disclosure. The District covenants to comply with the term of the Continuing
Disclosure Agreement executed by it with respect to the Bonds.
AMENDMENTS TO FISCAL AGENT AGREEMENT
Supplemental Fiscal Agent Agreements or Orders Not Requiring Bondowner Consent. The
District may from time to time, and at any time, without notice to or consent of any of the Bondowners,
adopt Supplemental Fiscal Agent Agreements for any of the following purposes:
(1)
to cure any ambiguity, to correct or supplement any provisions in the Fiscal Agent
Agreement which may be inconsistent with any other provision in the Fiscal Agent Agreement, or to
make any other provision with respect to matters or questions arising under the Fiscal Agent Agreement
or in any additional resolution or order, provided that such action is not materially adverse to the interests
of the Bondowners;
(2)
to add to the covenants and agreements of and the limitations and the restrictions upon
the District contained in the Fiscal Agent Agreement, other covenants, agreements, limitations and
restrictions to be observed by the District which are not contrary to or inconsistent with the Fiscal Agent
Agreement as theretofore in effect or which further secure Bond payments;
(3)
to modify, amend or supplement the Fiscal Agent Agreement in such manner as to permit
the qualification of the Fiscal Agent Agreement under the Trust Indenture Act of 1939, as amended, or
any similar federal statute hereafter in effect, or to comply with the Code or regulations issued thereunder,
and to add such other terms, conditions and provisions as may be permitted by said act or similar federal
statute, and which shall not materially adversely affect the interests of the Owners of the Bonds then
Outstanding; or
(4)
to modify, alter or amend the rate and method of apportionment of the Special Taxes in
any manner so long as such changes do not reduce the maximum Special Taxes that may be levied in each
year on property within the District to an amount which is less than that permitted under the Fiscal Agent
Agreement; or
(5)
to modify, alter, amend or supplement the Fiscal Agent Agreement in any other respect
which is not materially adverse to the Bondowners.
Supplemental Fiscal Agent Agreements or Orders Requiring Bondowner Consent.
Exclusive of the Supplemental Fiscal Agent Agreements described in the Fiscal Agent Agreement, the
Owners of not less than a majority in aggregate principal amount of the Bonds Outstanding shall have the
right to consent to and approve the adoption by the District of such Supplemental Fiscal Agent
Agreements as shall be deemed necessary or desirable by the District for the purpose of waiving,
modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions
contained in the Fiscal Agent Agreement; provided, however, that nothing in the Fiscal Agent Agreement
shall permit, or be construed as permitting, (a) an extension of the maturity date of the principal, or the
payment date of interest on, any Bond, (b) a reduction in the principal amount of, or redemption premium
on, any Bond or the rate of interest thereon, (c) a preference or priority of any Bond over any other Bond,
or (d) a reduction in the aggregate principal amount of the Bonds the Owners of which are required to
consent to such Supplemental Fiscal Agent Agreement, without the consent of the Owners of all Bonds
then Outstanding.
If at any time the District shall desire to adopt a Supplemental Fiscal Agent Agreement, which
pursuant to the terms of the Fiscal Agent Agreement shall require the consent of the Bondowners, the
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District shall so notify the Fiscal Agent and shall deliver to the Fiscal Agent a copy of the proposed
Supplemental Fiscal Agent Agreement. The Fiscal Agent shall, at the expense of the District, cause
notice of the proposed Supplemental Fiscal Agent Agreement to be mailed, by first class mail, postage
prepaid, to all Bondowners at their addresses as they appear in the Bond Register. Such notice shall
briefly set forth the nature of the proposed Supplemental Fiscal Agent Agreement and shall state that a
copy thereof is on file at the office of the Fiscal Agent for inspection by all Bondowners. The failure of
any Bondowners to receive such notice shall not affect the validity of such Supplemental Fiscal Agent
Agreement when consented to and approved by the Owners of not less than a majority in aggregate
principal amount of the Bonds Outstanding as required by the Fiscal Agent Agreement. Whenever at any
time within one year after the date of the first mailing of such notice, the Fiscal Agent shall receive an
instrument or instruments purporting to be executed by the Owners of a majority in aggregate principal
amount of the Bonds Outstanding, which instrument or instruments shall refer to the proposed
Supplemental Fiscal Agent Agreement described in such notice, and shall specifically consent to and
approve the adoption thereof by the District substantially in the form of the copy referred to in such notice
as on file with the Fiscal Agent, such proposed Supplemental Fiscal Agent Agreement, when duly
adopted by the District, shall thereafter become a part of the proceedings for the issuance of the Bonds.
In determining whether the Owners of a majority of the aggregate principal amount of the Bonds have
consented to the adoption of any Supplemental Fiscal Agent Agreement, Bonds which are owned by the
District or by any person directly or indirectly controlling or controlled by or under the direct or indirect
common control with the District shall be disregarded and shall be treated as though they were not
Outstanding for the purpose of any such determination.
Upon the adoption of any Supplemental Fiscal Agent Agreement and the receipt of consent to any
such Supplemental Fiscal Agent Agreement from the Owners of not less than a majority in aggregate
principal amount of the Outstanding Bonds in instances where such consent is required pursuant to the
provisions of the Fiscal Agent Agreement, the Fiscal Agent Agreement shall be, and shall be deemed to
be, modified and amended in accordance therewith, and the respective rights, duties and obligations under
the Fiscal Agent Agreement of the District and all Owners of Outstanding Bonds shall thereafter be
determined, exercised and enforced under the Fiscal Agent Agreement, subject in all respects to such
modifications and amendments.
Notation of Bonds; Delivery of Amended Bonds. After the effective date of any action taken as
provided in the Fiscal Agent Agreement, the District may determine that the Bonds may bear a notation,
by endorsement in form approved by the District, as to such action, and in that case upon demand of the
Owner of any Outstanding Bond at such effective date and presentation of his Bond for the purpose at the
office of the Fiscal Agent or at such additional offices as the Fiscal Agent may select and designate for
that purpose, a suitable notation as to such action shall be made on such Bonds. If the District shall so
determine, new Bonds so modified as, in the opinion of the District, shall be necessary to conform to such
action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding
Bond at such effective date such new Bonds shall be exchanged at the office of the Fiscal Agent or at
such additional offices as the Fiscal Agent may select and designate for that purpose, without cost to each
Owner of Outstanding Bonds, upon surrender of such Outstanding Bonds.
EVENTS OF DEFAULT; REMEDIES
Events of Default. Any one or more of the following events shall constitute an “event of
default”:
(a)
Default in the due and punctual payment of the principal of or redemption
premium, if any, on any Bond when and as the same shall become due and payable, whether at
maturity as therein expressed, by declaration or otherwise;
C-14
(b)
Default in the due and punctual payment of the interest on any Bond when and as
the same shall become due and payable; or
(c)
Except as described in (a) or (b), default shall be made by the District in the
observance of any of the agreements, conditions or covenants on its part contained in the Fiscal
Agent Agreement or the Bonds, and such default shall have continued for a period of 30 days
after the District shall have been given notice in writing of such default by the Fiscal Agent or the
Owners of 25% in aggregate principal amount of the Outstanding Bonds.
The District agrees to give notice to the Fiscal Agent immediately upon the occurrence of an
event of default under (a) or (b) above and within 30 days of the District’s knowledge of an event of
default under (c) above. The Fiscal Agent shall not be deemed to have knowledge of any event of default
described in (c) above unless a responsible officer shall have actual knowledge thereof or the Fiscal Agent
shall have received written notice at its Principal Office.
Remedies of Owners. Following the occurrence of an event of default, any Owner shall have the
right for the equal benefit and protection of all Owners similarly situated:
(1)
By mandamus or other suit or proceeding at law or in equity to enforce his rights against
the District and any of the members, officers and employees of the District, and to compel the District or
any such members, officers or employees to perform and carry out their duties under the Act and their
agreements with the Owners as provided in the Fiscal Agent Agreement;
(2)
By suit in equity to enjoin any actions or things which are unlawful or violate the rights
of the Owners; or
(3)
By a suit in equity to require the District and its members, officers and employees to
account as the fiscal agent of an express trust.
Nothing in the Fiscal Agent Agreement, the Bonds shall affect or impair the obligation of the
District, which is absolute and unconditional, to pay the interest on and principal of the Bonds to the
respective Owners thereof at the respective dates of maturity, as provided in the Fiscal Agent Agreement,
out of the Net Taxes and other amounts pledged for such payment, or affect or impair the right of action,
which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by
virtue of the contract embodied in the Bonds and in the Fiscal Agent Agreement.
A waiver of any default or breach of duty or contract by any Owner shall not affect any
subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent
default or breach. No delay or omission by any Owner to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver of any such default or an
acquiescence therein, and every power and remedy conferred upon the Owners by the Act or by the Fiscal
Agent Agreement may be enforced and exercised from time to time and as often as shall be deemed
expedient by the Owners.
If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or
determined adversely to the Owners, the District and the Owners shall be restored to their former
positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.
No remedy in the Fiscal Agent Agreement conferred upon or reserved to the Owners is intended
to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to
every other remedy given under the Fiscal Agent Agreement or now or hereafter existing, at law or in
C-15
equity or by statute or otherwise, and may be exercised without exhausting and without regard to any
other remedy conferred by the Act or any other law.
In case the moneys held by the Fiscal Agent after an event of default pursuant to (a) or (b) above
shall be insufficient to pay in full the whole amount so owing and unpaid upon the Outstanding Bonds,
then all available amounts shall be applied 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.
DEFEASANCE
Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the
Owner of an Outstanding Bond the interest due thereon and the principal thereof, at the times and in the
manner stipulated in the Fiscal Agent Agreement or any Supplemental Fiscal Agent Agreement, then the
Owner of such Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as set forth
below, all covenants, agreements and other obligations of the District to the Owner of such Bond under
the Fiscal Agent Agreement shall thereupon cease, terminate and become void and be discharged and
satisfied. In the event of a defeasance of all Outstanding Bonds pursuant to the Fiscal Agent Agreement,
the Fiscal Agent shall execute and deliver to the District all such instruments as may be desirable to
evidence such discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the District’s
general fund all money or securities held by it pursuant to the Fiscal Agent Agreement which are not
required for the payment of the principal of, premium, if any, and interest due on such Bonds.
Any Outstanding Bond shall be deemed to have been paid if such Bond is paid in any one or
more of the following ways:
(a)
by paying or causing to be paid the principal of, premium, if any, and interest on
such Bond, as and when the same become due and payable;
(b)
by depositing with the Fiscal Agent, in trust, at or before maturity, money which,
together with the amounts then on deposit in the Special Tax Fund (exclusive of the
Administrative Expense Account) and available for such purpose, is fully sufficient to pay the
principal of, premium, if any, and interest on such Bond, as and when the same shall become due
and payable; or
(c)
by depositing with the Fiscal Agent or another escrow bank appointed by the
District, in trust, noncallable Defeasance Securities, in which the District may lawfully invest its
money, in such amount as will be sufficient, together with the interest to accrue thereon and
moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense
Account) and available for such purpose, together with the interest to accrue thereon, to pay and
discharge the principal of, premium, if any, and interest on such Bond, as and when the same
shall become due and payable;
then, at the election of the District, and notwithstanding that any Outstanding Bonds shall not
have been surrendered for payment, all obligations of the District under the Fiscal Agent Agreement and
any Supplemental Fiscal Agent Agreement with respect to such Bond shall cease and terminate, except
for the obligation of the Fiscal Agent to pay or cause to be paid to the Owners of any such Bond not so
surrendered and paid, all sums due thereon and except for the covenants of the District contained in
certain section of the Fiscal Agent Agreement or any covenants in a Supplemental Fiscal Agent
Agreement relating to compliance with the Code. Notice of such election shall be filed with the Fiscal
Agent not less than ten days prior to the proposed defeasance date, or such shorter period of time as may
C-16
be acceptable to the Fiscal Agent. In connection with a defeasance under (b) or (c) above, there shall be
provided to the District a verification report from an independent nationally recognized certified public
accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Fiscal
Agent or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all
Outstanding Bonds to be defeased in accordance with the Fiscal Agent Agreement, as and when the same
shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the
certified public accountant) to the effect that the Bonds being defeased have been legally defeased in
accordance with the Fiscal Agent Agreement and any applicable Supplemental Fiscal Agent Agreement.
If a forward supply contract is employed in connection with an advance refunding to be effected under (c)
above, (i) such verification report shall expressly state that the adequacy of the amounts deposited with
the bank under (c) above to accomplish the refunding relies solely on the initial escrowed investments and
the maturity principal thereof and interest income thereon and does not assume performance under or
compliance with the forward supply contract, and (ii) the applicable escrow agreement executed to effect
an advance refunding in accordance with (c) above shall provide that, in the event of any discrepancy or
difference between the terms of the forward supply contract and the escrow agreement, the terms of the
escrow agreement shall be controlling.
Upon a defeasance, the Fiscal Agent, upon request of the District, shall release the rights of the
Owners of such Bonds which have been defeased under the Fiscal Agent Agreement and any
Supplemental Fiscal Agent Agreement and execute and deliver to the District all such instruments as may
be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance under the
Fiscal Agent Agreement of all Outstanding Bonds, the Fiscal Agent shall pay over or deliver to the
District any funds held by the Fiscal Agent at the time of a defeasance, which are not required for the
purpose of paying and discharging the principal of, premium, if any, or interest on the Bonds when due.
The Fiscal Agent shall, at the written direction of the District, mail, first class, postage prepaid, a notice to
the Bondowners whose Bonds have been defeased, in the form directed by the District, stating that the
defeasance has occurred.
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APPENDIX D
APPRAISAL REPORT
D-1
APPENDIX E
MARKET ABSORPTION STUDY
E-1
MARKET FEASIBILITY AND
ABSORPTION ANALYSIS
(TALAVERA)
COMMUNITY FACILITIES
DISTRICT 2005-1
IMPROVEMENT AREA 1
INDIO, CALIFORNIA
JULY 2005
Prepared for:
CITY OF INDIO
100 Civic Center Mall
Indio, California 92202
Prepared by:
MARKET PROFILES
200 North Tustin Avenue, Suite 102
Santa Ana, California 92705
Telephone Number: 714/546-3814
Facsimile Number: 714/546-0953
www.marketprofilesinc.com
Market Profiles
Real Estate Research and Consultants for over 30 years
July 19, 2005
Mr. Roy Stephenson
CITY OF INDIO
RE:
MARKET FEASIBILITY AND ABSORPTION ANALYSIS – TALAVERA
COMMUNITY FACILITIES DISTRICT 2005-1 – IMPROVEMENT AREA 1
Dear Mr. Stephenson:
This market report presents Market Profile’s evaluation of the market opportunities
relating to the new home subdivisions that compose the Talavera Community Facilities
District 2005-1 in the City of Indio. The CFD consists of 436 lots that are located in the
northwestern portion of the City of Indio. The study evaluated the depth of demand for
new homes in the Coachella Valley, as well as, the competitive conditions within the
local Indio marketplace.
Briefly, the research findings indicate that market demand is ample to support the
development and sale of the proposed new homes. Competitive evaluations of the
price structures of the homes are presented in Section I of the report, and the sales
absorption rates that are projected for each of the subject subdivisions are presented at
the end of that section.
The report has been reorganized as follows:
Section I – Summary of Findings and Conclusions
Section II -- Market Demand Analysis
Section III – Summary of Competition
We appreciate the opportunity to work with you in evaluating the opportunities for
development of new homes in the City of Indio. Please call if you have any questions.
Boyd Martin directed the study effort and David Dickey served as project manager.
Sincerely,
MARKET PROFILES
Boyd D. Martin
Chairman
David W. Dickey
Senior Economist
200 North Tustin Avenue, Suite 102, Santa Ana, Ca. 92705
(714) 546-3814 Fax (714) 546-0953
TABLE OF CONTENTS
SECTION
DESCRIPTION
PAGE NO.
I
SUMMARY OF FINDINGS AND CONCLUSIONS
Introduction ......................................................................................... I-1
Property Location and Description...................................................... I-1
Description of Subject Homes............................................................. I-2
The Market Opportunity ...................................................................... I-3
Existing New Home Competition ........................................................ I-4
Future New Home Competition........................................................... I-5
Price Positioning Analysis................................................................... I-6
Projected Sales Absorption................................................................. I-6
II
ECONOMIC BACKGROUND AND HOUSING DEMAND FORECAST
Introduction ........................................................................................ II-1
Employment Growth .......................................................................... II-1
Demographic Profile .......................................................................... II-3
Housing Profile .................................................................................. II-4
New Home Sales Trends ................................................................... II-4
Price Trends ...................................................................................... II-5
Projected New Home Demand .......................................................... II-6
III
SUMMARY OF COMPETITION
Introduction ....................................................................................... III-1
New Home Competition .................................................................... III-1
Inventory Trends ............................................................................... III-2
Sales Rates ...................................................................................... III-2
Most Competitive New Home Projects.............................................. III-2
Proposed New Home Development.................................................. III-4
i
LIST OF EXHIBITS
EXHIBIT
DESCRIPTION
SECTION I – SUMMARY OF FINDINGS AND CONCLUSIONS
I-1
Regional Site Location Map
I-2
Neighborhood Site Location Map
I-3
Projected Annual New Home Demand, Coachella Valley, 2005-2006
I-4
Summary of New Home Developments, Shadow Hills, July 2005
I-5
Price and Product Characteristics, Shadow Hills Competition
I-6
New Home Sales Rates by Price Range, Coachella Valley, First Quarter
2005
I-7
Projected Quarterly Absorption Schedule, Talavera Community Facilities
District 2005-1, City of Indio, July 2005
SECTION II – ECONOMIC BACKGROUND AND HOUSING DEMAND FORECAST
II-1
Coachella Valley Submarket Areas
II-2
Employment Growth, Riverside / San Bernardino Bi-County Region and
Southern California, 1980-2006
II-3
Hotel Room Sales, Coachella Valley, 1988-2004
II-4
Demographic Profile, Coachella Valley and Riverside County
II-5
Housing Profile, Coachella Valley and Riverside County, 2005
II-6
Housing Stock Profiles, Coachella Valley Cities, 2000
II-7
New Home Sales by Submarket Area, Coachella Valley, 1992-First
Quarter 2005
II-8
Average New Home Price, Detached Product, Coachella Valley by
Submarket Area, 1998-Third Quarter 2004
i
LIST OF EXHIBITS
EXHIBIT
DESCRIPTION
II-9
New Home Sales by Price Range, Detached Product, Coachella Valley,
2003-First Quarter 2005
II-10
New Home Sales Distributed by Price Range, Indio-Coachella Submarket
Area and Coachella Valley, First Quarter 2005
II-11
Housing Growth Summary, Riverside County and the Coachella Valley
Market Area, 1980-2009
II-12
Projected Annual New Home Demand, Coachella Valley, 2005-2006
SECTION III – SUMMARY OF COMPETITION
III-1
Summary of New Home Developments, Detached Product, Coachella
Valley, First Quarter 2005
III-2
New Home Market Summary by Submarket Area, Detached Product, First
Quarter 2005
III-3
Summary of New Home Developments, Indio-Coachella Submarket Area,
First Quarter 2005
III-4
Summary of New Home Developments, Shadow Hills, July 2005
III-5
New Home Projects Location Map
III-6
Development Status Report, City of Indio, June 2005
ii
SECTION I
SUMMARY OF FINDINGS
AND CONCLUSIONS
Market Profiles, Inc.
SECTION I
SUMMARY OF FINDINGS AND CONCLUSIONS
INTRODUCTION
This section presents a summary of the market opportunities identified with respect to
the new homes that are proposed to be constructed within the Talavera Community
Facilities District (CFD) 2005-1 in the City of Indio. The subject homes are those that
will be developed in Improvement Area I of the Talavera planned community. Based
upon the price structure of the homes, a forecast of sales absorption has been
formulated and is presented at the end of this Section I of the report (see Exhibit I-7).
PROPERTY LOCATION AND DESCRIPTION
The subject property consists of 436 residential lots that are contained within four
subdivisions that is being developed by the homebuilder DR Horton. The subject lots
compose the first of two major development phases of the Talavera community that will
ultimately include a total of 820 homes. The community is located in the northwestern
portion of the City of Indio about 1.5 miles north of the Interstate 10 Freeway. The
location of the subject property is shown from a regional viewpoint in Exhibit I-1, and
Exhibit I-2 shows the property in a local context.
The community of Talavera is situated on the south side of the All American Canal that
generally runs in a southeastward direction. The property extends southward to Avenue
38 which forms the southern boundary of the property. The residential lots that are the
subject of this analysis are within Improvement Area 1 which forms the eastern half of
the community.
The property is surrounded by undeveloped natural open space, agricultural fields, and
a few scattered homes. About one half mile west of the property is the community of
Sun City Palm Desert, and about one mile to the south the new Sun City Shadow Hills
community is under development. About two to four miles southeast of the subject
property there are eight new home subdivisions within the Shadow Hills community that
are currently marketing homes. These subdivisions are discussed below.
The primary access to the subject property is via Adams Street which connects with the
I-10 Freeway about two miles southwest of the site. And about two miles further to the
southwest there are a wide variety of good quality retail shops and services located
along Washington Boulevard including two supermarkets and drug stores. Within the
Shadow Hills community, a 500,000 square foot power center is planned for a site
located at the northwest corner of Interstate 10 and Monroe Street.
I-1
Currently, there is an elementary school located on the south side of Interstate 10 about
four miles southeast of the property. However, the Desert Sands School District has
announced plans to build a new K through 12 campus in the Shadow Hills community
north of Interstate 10 at Jefferson Street and Avenue 39, about one mile south of the
subject property. The high school is scheduled to open in 2008 and the elementary of
junior high schools the following year.
DESCRIPTION OF SUBJECT HOMES
As currently proposed, the homes that are planned for construction on the subject
properties consist of four product lines that will be marketed independently of one
another. The homebuilder, DR Horton, is highly experienced and has consistently
demonstrated the ability to construct and market quality homes in a timely and
professional manner. The four product lines are summarized in Text Table I-1 below.
Subdivision
Name
Alicante
Florencia
Genova
Venecia
Total / Range
TEXT TABLE I-1
SUMMARY OF NEW HOMES
TALAVERA CFD 2005-1
IMPROVEMENT AREA 1
Number
of Lots
% Mix
Price Range*
105
24%
$389,540-$404,990
121
28%
$330,990-$370,990
110
25%
$396,990-$416,990
100
23%
$299,990-$333,990
436
100%
$299,990-$416,990
Home Size
Range (SF)
2,493-3,099
1,855-2,380
2,848-3,267
1,576-1,947
1,576-3,267
* Prices as of early-July 2005.
Source: Market Profiles
The base sale prices shown above for the four subdivisions are the actual base prices
at which the homes in Improvement Area 1 were being offered for sale as of early-July
2005. The homes are sited on lots of 8,000 square feet (minimum) and offer a variety of
design configurations that will appeal primarily to traditional family households including
families with children, young married couples, and move-down households. A brief
description of each product line is presented below.
The Venecia homes are the smallest being offered in Talavera. They consist of 3- and
4-bedroom plans that range in size from 1,576 to 1,947 square feet with base prices
ranging from $299,999 to $333,990 ($171.54 to $190.35 per sq. ft.). Twenty-five of the
45 homes in the first phase release were sold (i.e., opened escrows) at a rate of 1.76
homes per week.
I-2
The homes in the Florencia subdivision range in size from 1,855 to 2,380 with base
prices ranging from $330,990 to $370,990 ($155.88 to $179.95 per sq. ft.). Of the 44
homes in the first phase, 26 were sold at a rate of 5.93 homes per week.
The Alicante homes consist of 3-, 4-, and 5-bedroom plans that range in size from
$389,540 to $404,990 (130.68 to $156.25 per sq. ft.). Two thirds of the 33 homes
released in the first phase have been sold at a rate of 3.61 homes per week.
The largest homes being offered in Talavera are those in the Genova subdivision. The
base prices of these homes range from $396,990 to $416,990 for 2-, 3- and 5-bedroom
plans that range in size from 2,848 to 3,280 square feet ($127.64 to $139.39 per sq. ft.).
The first 18 homes were sold at a rate of 1.9 homes per week.
In addition to the base prices, the sale prices of many of the subject homes include
additional premiums for characteristics such as larger lot size, desirable location (such
as a cul-de-sac), etc. Premiums of $1,000 to $15,000 have been successfully
commanded by new home subdivisions in Shadow Hills. Such premiums are common
among virtually all of the competitive new home subdivisions in this marketplace.
THE MARKET OPPORTUNITY
New home sales in the Coachella Valley have been strong over the past three years.
The sales volume reached 5,768 homes in 2003 and 5,851 homes were sold in 2004.
In the first quarter of 2005, sales totaled 1,331 homes. Although this is a strong sales
figure, it is below the 2,052 sales that were reported in the first quarter of 2004.
For analysis purposes, the Coachella Valley has been divided into five submarket areas.
The boundaries of the submarkets are shown in Exhibit II-1 in Section II of this report.
Each of the submarket areas has unique characteristics. The Indio-Coachella
submarket consists of the cities of Indio and Coachella and the immediately surrounding
unincorporated areas.
New home sales in the Indio-Coachella submarket area have accelerated over the past
three years. Sales increased from 241 homes in 1999 to 591 in 2001, then sales
jumped to 1,217 homes in 2002 and to 2,890 homes in 2003. Sales continued strong in
2004 with 2,596 homes sold. Moderate home prices have been a major attractor of
homebuyers to the submarket.
In the first quarter of 2005, new home sales in the Indio-Coachella submarket totaled
585 homes. This figure is below the 872 homes that were reported sold in the first
quarter of 2004.
I-3
The Indio-Coachella submarket accounted for 44 percent of all new detached homes
sold in the Coachella Valley during the first quarter of 2005. The high proportional
share captured by the submarket is due to three major factors as follows:
1. Moderate home prices.
2. Shortages of moderately priced new homes in other areas of the Valley.
3. Increasing homebuyer perceptions of Indio as a desirable residential location.
The demand for new homes in the Coachella Valley is projected to average 4,500
homes per year over the next two years (see report Section II). The projected
distribution of demand by price range is shown in Exhibit I-3.
Market demand is spread across a wide range of prices from under $300,000 to over
$1,000,000. The majority of the new homes sold to date in Indio have been purchased
by households that were seeking a moderately priced primary home. During the first
quarter of 2005, the Indio-Coachella submarket area accounted for 89 percent of all
homes sold in the Coachella Valley that were priced below $400,000. New supplies of
homes priced under $400,000 have emerged in the communities of Desert Hot Springs
and Coachella. However, the community of Indio will continue to dominate the market
for moderately priced homes. It is projected that, on a sustained basis, the IndioCoachella submarket area will capture roughly 45 percent of the total annual new home
sales in the Coachella Valley. This equates to a sales volume of about 2,000 homes
per year.
Given the continued availability of very low mortgage interest rates (i.e., near 6%), the
volume of new home sales in the Indio market area may surpass the projection of
sustained annual sales of 2,000 homes. The sustained forecast assumes that interest
rates will eventually rise by at least one half percentage point, resulting in a moderation
in new home demand within the submarket. In addition, it is assumed that the
competitive conditions within the City of Indio will intensify and that other communities in
the Coachella Valley will offer larger numbers of moderately priced new homes than
they have in recent months.
EXISTING NEW HOME COMPETITION
There were 78 new home subdivisions that were active throughout the Coachella Valley
during the first quarter of 2005. Descriptions of these projects are included in Section III
of this report. Other than the subject Talavera subdivisions, there are an additional
eight new home subdivisions currently active in the Shadow Hills area. These eight
subdivisions are most relevant to the subject properties. The eight projects are
summarized in Exhibit I-4 and the five most competitive projects are described below.
I-4
The fastest selling subdivision in Shadow Hills is Bella Tierra. The first 40 of these 3and 5-bedroom homes have been sold at a rate of 8.12 homes per week. The base
prices range from $379,990 to $419,990 for plans that range in size from 1,895 to 2,629
square feet ($159.75 to $200.52 per sq. ft.). The homes are sited on 8,000 square foot
lots (minimum).
Another fast selling subdivision is Foxstone by KB Home. All 63 homes that were
released during the first quarter were sold equating to a sales rate of 4.88 homes per
week. The project has another 182 homes remaining to be sold in subsequent phases.
The base prices of these homes range from $307,990 to $368,990 for 2- and 3bedroom plans that range in size from 1,517 to 2,526 square feet ($146.07 to $203.02
per sq. ft.). The neighborhood is gated and the minimum lot size is 8,000.
The 132-lot Sienna subdivision recently opened in Shadow Hills. The base prices of
the homes range from $394,990 to $447,990 for 3- and 4-bedroom plans that range in
size from 2,448 to 3,143 square feet ($142.54 to $161.35 per sq. ft.).
The 263-lot Shadow Ranch subdivision by Family Development sold out its first phase
of 30 homes at a rate of 3.0 homes per week. These homes range in price from
$394,990 to $489,990 for 3-, 4-, and 5-bedroom plans that range in size from 3,185 to
3,247 square feet ($150.90 to $180.77 per sq. ft.). The minimum lot size is 8,500
square feet.
The Desert Collection is a gated subdivision of 142 homes. The base prices of these
3-bedroom homes range from $364,990 to $414,990 for plans that range in size from
1,610 to 2,266 square feet ($183.13 to $226.70 per sq. ft.). The first 73 homes were
sold at a rate of 3.31 homes per week. The minimum lot size is 7,200 square feet.
FUTURE NEW HOME COMPETITION
There are approximately 7,500 new homes within more than 40 subdivisions that are
proposed for future development in the City of Indio (see report Section III). With this
scale of proposed activity, it is projected that the Indio market area will experience a
competitive environment for the next several years. However, the Indio market has
been experiencing an under supplied market condition (see Section III), and the homes
that are planned for development will be constructed in a phased manner over the next
several years. It is projected that competitive conditions over the next two years will be
more intense than those currently being experienced in the Indio marketplace, however,
generally healthy demand-supply conditions are projected to be maintained.
The majority of the new homes that will be constructed in Indio over the next few years
will be located in and around the Shadow Hills community located north of Interstate 10
I-5
Freeway. There are more than 4,000 homes that are planned for construction in the
Shadow Hills community. The majority of these homes will be constructed over the next
three to four years. There are 2,723 homes that will be part of the City of Indio
Assessment District 2004-VSD, and an additional 1,400 homes will be constructed in
the Terra Lago community which features a lake and golf course. The base prices of
the homes will generally range between $300,000 and $500,000.
PRICE POSITIONING ANALYSIS
The subject new homes that are proposed for development within Improvement Area 1
of the Talavera community will offer an assortment of designs that will appeal to a
variety of household types. The price positioning of the subject homes compared to the
existing new home projects that are located in Shadow Hills is shown in Exhibit I-5. The
home prices shown in the exhibits are base prices, exclusive of location premiums or
other upgrades.
Exhibit I-5 shows that the price structure of the subject homes (shown with solid lines)
positions them generally below the price structures of the existing new home projects in
Shadow Hills (shown with dashed lines). This is a favorable price positioning for the
subject homes.
PROJECTED SALES ABSORPTION
The sales rates among the 78 new home projects that were selling detached homes in
the Coachella Valley during the first quarter of 2005 ranged widely from 0.08 to 7.9
homes per week. The average sales rate was 1.73 homes per week per project.
The sales rates of the 12 Shadow Hills projects that are shown in Exhibit I-4 range from
0.81 to 8.12 homes per week. The average sales rate is 3.43 homes per week and the
median rate is 3.0 homes per week. The sales rates of these homes are very favorable
in part due to the fact that many of them recently opened and sales tend to be more
rapid in the initial marketing phases, then taper off in later phases.
A healthy volume of new home sales is projected to be maintained in the Indio
submarket area over the next two years. Given the sales success that has been
demonstrated by the subject new home subdivisions to date, along with the favorable
price positioning of the subject homes, it is projected that the four Talavera product lines
will generate average sales rates ranging from 1.5 to 2.0 homes per week over the
marketing lives of the subdivisions. The sales rate that is projected for each product
line is shown in Text Table I-2 below.
The sales projection for each of the product lines relates primarily to the price structure
of the homes. The subject homes that are anticipated to be offered at the lowest prices
I-6
are projected to generate the most rapid sales rates. Historical experience has
demonstrated that new homes with lower prices typically sell more rapidly than those
with higher prices. Exhibit I-6 shows that this pattern generally holds throughout the
Coachella Valley. However, the home price is not necessarily the determining factor in
TEXT TABLE I-2
PROJECTED SALES ABSORPTION RATES
TALAVERA SUBDIVISIONS
Subdivision
Name
Number
of Lots
Ave. Weekly
Sales Rate*
Alicante
105
1.5
Florencia
121
2.0
Genova
110
1.5
Venecia
100
2.0
436
the sales experience. Other factors include the specific neighborhood location within
the community, the design and construction quality of the homes, and the marketing
program of the builder.
The sales rates that are projected for the subject homes are conservative compared to
the actual experience of these new home projects to date (see Exhibit I-4). The
projected sales rates take into consideration the general market environment that is
anticipated to prevail over the marketing lives of the subject new home subdivisions,
together with the typical decline in sales rates that can be expected in future phases.
The projected sales rates are based on the assumption that market conditions will be
moderately less favorable than those that were experienced in the Indio marketplace
during the first half of 2005. The erosion of market conditions is expected to occur over
the next few months due to a moderate rise in mortgage interest rates and to a
slowdown in the resale market sector that has already occurred. As the new home
market cools, the rate of increase in home prices will slow and this will decrease the
sense of urgency that was been evident among homebuyers.
I-7
The projected moderation in new home market activity is expected to be accompanied
by an increase in the competitive intensity within the Indio marketplace. The number of
new home projects that will be active within the Shadow Hills community is projected to
increase from the current 12 projects to 15 or more projects by late-2006. However, on
balance, between eight and ten projects are expected to be marketing homes within the
community at any given time over the next three years.
A tabular summary of the projected absorption schedule for the subject homes is
presented in Exhibit I-7. The sales forecasts describe the rate of closed transactions
calculated from the date of the first closings that are anticipated for each of the new
home subdivisions. The absorption schedules assume that the sales programs will not
be interrupted by long periods when the homes are temporarily sold out due to the
construction scheduling or other delays.
The timing of the first closings for each of the subdivisions has been estimated based
on anticipated construction schedules.
I-8
EXHIBIT I-1
REGIONAL SITE LOCATION MAP
MARKET PROFILES, INC.
275811x1-1,2,3,4,5,6,7.xls
EXHIBIT I-2
NEIGHBORHOOD SITE LOCATION MAP
275811x1-1,2,3,4,5,6,7.xls
EXHIBIT I-3
PROJECTED ANNUAL NEW HOME DEMAND
COACHELLA VALLEY
2005-2006
PRICE RANGE*
AVERAGE ANNUAL SALES
% OF TOTAL
Under $300,000
$300,000-$350,000
$350,000-$400,000
$400,000-$450,000
$450,000-$500,000
$500,000-$750,000
$750,000-$1,000,000
$1,000,000 and Over
500
750
900
650
450
550
450
250
11.1%
16.7%
20.0%
14.4%
10.0%
12.2%
10.0%
5.6%
4,500
100.0%
TOTAL
COACHELLA VALLEY
2005-2006
1000
900
800
700
600
500
400
300
AVERAGE
ANNUAL
SALES
200
100
0
Under $300,000- $350,000- $400,000- $450,000- $500,000- $750,000- $1,000,000
$300,000 $350,000 $400,000 $450,000 $500,000 $750,000 $1,000,000 and Over
* Prices stated in today's dollars excluding future inflation or appreciation.
275811x1-1,2,3,4,5,6,7.xls
EXHIBIT I-4
SUMMARY OF NEW HOME DEVELOPMENTS
SHADOW HILLS
JULY 2005
Sales/Week
Ranges
Sales
LotSize/ Total Total CurQtr
Remain
Community/
Development/Developer
CurQtr Cum
Price
Sqft
$/Sqft
Start
Density Units Sold Sold Unsold ForDev
MasterPlan
ALICANTE @ TALAVERA
3.31
3.31
$389,540 2,493 $130.68 20-May-05
8,000
105
22
22
11
72
INDIO
DR HORTON
$404,990 3,099 $156.25
TALAVERA
BELLA TIERRA @ SHADOW HILLS
8.12
8.12
$379,990 1,895 $159.75 01-Jun-05
8,000
56
40
40
2
14
INDIO
FAMILY DEVELOPMENT
$419,990 2,629 $200.52
SHADOW HILLS
THE DESERT COLLECTION @ SHADOW HILLS
1.75
2.61
$375,990 1,610 $183.13 06-Nov-04
7,200
142
90
17
8
44
INDIO
REYNOLDS COMMUNITIES
$419,990 2,266 $226.70
SHADOW HILLS
THE EL DORADO COLLECTION @ SHADOW HILLS 0.17
1.49
$339,990 1,720 $152.98 22-Mar-03
6,000
198
178
2
6
14
INDIO
CENTURY VINTAGE HOMES
$424,990 2,778 $197.67
SHADOW HILLS
FLORENCIA @ TALAVERA
2.18
5.28
$330,990 1,855 $155.88 01-Jun-05
8,000
121
26
26
18
77
INDIO
DR HORTON
$370,990 2,380 $179.95
TALAVERA
FOXSTONE
3.10
4.88
$326,000 1,517 $146.07 12-Feb-05
8,000
245
100
37
0
145
INDIO
KB HOME
$387,000 2,526 $203.02
SHADOW HILLS
GENOVA @ TALAVERA
1.90
1.90
$396,990 2,848 $127.64 30-Apr-05
8,001
110
18
18
1
91
INDIO
DR HORTON
$416,990 3,267 $139.39
TALAVERA
SHADOW RANCH @ SHADOW HILLS
2.58
5.53
$414,990 2,185 $157.06 01-Feb-05
8,000
263
122
30
0
233
INDIO
FAMILY DEVELOPMENT
$509,990 3,247 $189.93
SHADOW HILLS
SIENNA @ SHADOW HILLS
2.35
2.35
$394,990 2,448 $142.54 13-Apr-05
8,000
132
28
28
24
80
INDIO
RYLAND HOMES
$447,990 3,143 $161.35
SHADOW HILLS
THE VENTANA COLLECTION @ SHADOW HILLS
0.84
0.81
$299,990 1,208 $184.47 22-Mar-03
6,000
241
97
10
2
142
INDIO
$339,990 1,843 $248.33
SHADOW HILLS
VENECIA @ TALAVERA
3.47
3.47
$299,990 1,576 $171.54 16-May-05
8,000
100
25
25
20
55
INDIO
DR HORTON
$333,990 1,947 $190.35
TALAVERA
VILLA ESTATES II @ SHADOW HILLS
1.46
1.46
$294,990 1,302 $144.42 01-Oct-03
7,200
137
134
11
3
0
INDIO
$394,990 2,735 $226.56
SHADOW HILLS
12 Total Projects
31.23 41.20
1,850 880
266
95
967
Average Per Development
2.60
3.43
PAGE 4 OF 8
275811x1-1,2,3,4,5,6,7.xls
EXHIBIT I-5
PRICE AND PRODUCT CHARACTERISTICS
SHADOW HILLS COMPETITION
$520,000
$470,000
$420,000
$370,000
$320,000
$270,000
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
2,800
2,900
3,000
3,100
3,200
3,300
SQUARE FEET
Alicante
Florencia
Genova
Venecia
Bella Tierra @ Shadow Hills, 8000 Sqft Lot, Indio
The El Dorado Collection @ Shadow Hills, 6000 Sqft Lot, Indio
Foxstone, 8000 Sqft Lot, Indio
Shadow Ranch @ Shadow Hills, 8000 Sqft Lot,Indio
Sienna @ Shadow Hills, 8000 Sqft Lot, Indio
The Desert Collection @ Shadow Hills, 7200 Sqft Lot, Indio
The Ventana Collection @ Shadow Hills, 6000 Sqft Lot, Indio
Villa Estates II @ Shadow Hills, 7200 Sqft Lot, Indio
SOURCE: RESIDENTIAL TRENDS; MARKET PROFILES
275811x1-1,2,3,4,5,6,7.xls
EXHIBIT I-6
NEW HOME SALES RATES BY PRICE RANGE
COACHELLA VALLEY
FIRST QUARTER 2005
Ave. Sales Sales/Week No. of
Price Range
Per Week*
Range*
Projects
Under $300,000
1.11
0.52 - 2.04
8
$300,000-$400,000
2.24
0.54 - 7.87
24
$400,000-$500,000
1.26
0.25 - 3.0
15
$500,000-$600,000
0.07
0.08 - 1.04
4
$600,000-$700,000
1.09
0.5 - 2.0
7
$700,000-$800,000
1.11
0.12 - 2.87
7
$800,000-$900,000
0.00
0
0
$900,000-$1,000,000
0.08
0.37 - 1.25
3
$1,000,000 & Over
0.07
0.24 - 1.63
7
* Excludes projects with sales rates over 10 homes per week.
275811x1-1,2,3,4,5,6,7.xls
EXHIBIT I-7
PROJECTED QUARTERLY ABSORPTION SCHEDULE
TALAVERA COMMUNITY FACILITIES DISTRICT 2005-1
CITY OF INDIO
JULY 2005
Subdivision
Name
Alicante
Florencia
Genova
Venecia
Closed Sale Transactions
Number Sales
2005
2006
2007
of Lots Rate** 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
105
1.50
6
19
19
19
19
19
1
Cumulative Closed
6
26
45
65
84
104
105
121
2.00
9
26
26
26
26
8
Cumulative Closed
9
35
61
87
113
121
110
1.50
6
19
19
19
19
19
6
Cumulative Closed
6
26
45
65
84
104
110
100
2.00
9
26
26
26
13
Cumulative Closed
9
35
61
87
100
Grand Totals: Quarterly Closed
Cumulative Closed
0
0
0
0
15
15
61
76
91
167
91
258
91
349
60
409
20
430
6
436
* Closed sale transactions.
** Average weekly sales rate over the life of the project.
275811x1-1,2,3,4,5,6,7.xls
SECTION II
ECONOMIC BACKGROUND
AND HOUSING DEMAND FORECAST
SECTION II
ECONOMIC BACKGROUND
AND HOUSING DEMAND FORECAST
INTRODUCTION
This section presents a review of the major factors that influence the demand for new
homes in the City of Indio in the Coachella Valley area of Riverside County. Factors
evaluated in the demand analysis include demographic profiles of the Coachella Valley and
of the City of Indio, employment growth, new home sales and inventory trends, and home
price trends. Based on the data analysis, a forecast of housing demand distributed by price
range has been formulated for the Coachella Valley.
The Coachella Valley includes all of the cities and communities located between Palm
Springs and Desert Hot Springs on the northwest to the cities of La Quinta and Coachella
on the southeast. The Coachella Valley is divided into five submarket areas as shown in
Exhibit II-1. The Indio submarket consists of the cities of Indio and Coachella and the
immediately surrounding unincorporated areas.
EMPLOYMENT GROWTH
The demand for new homes in the Coachella Valley is influenced by the economic vitality of
Riverside County and of all of Southern California. Tourist expenditures and second home
purchases are important elements of the Valley's economy. The strength of locally based,
primary home purchases is dependent upon the vitality of the tourism industry, which, in
turn, is dependent upon the strength of the national and Southern California economies.
Exhibit II-2 presents a historical summary of employment growth throughout Southern
California and in the Riverside/San Bernardino bi-county region. From 1997 through 2000,
employment in Southern California increased at a healthy average annual rate of 3.0
percent. During the same period, employment in Riverside and San Bernardino counties
increased at a very strong rate of 5.2 percent per year.
The rate of employment growth began to decline through the first three quarters of 2001
due to rising interest rates and a slowing national economy. Following the attack on the
World Trade Center in September, job growth came to a virtual halt in the fourth quarter of
2001. Total employment in Southern California increased by 1.2 percent for the year 2001.
The slowdown in growth that began in late-2001 carried over into 2002 and 2003.
However, total employment in the Riverside-San Bernardino bi-county region increased at
healthy rates of 3.0 percent (31,800 jobs) in 2002, and 3.5 percent (37,700 jobs) in 2003.
This is a favorable performance compared to Los Angeles and Orange counties, which both
II-1
experienced modest declines in employment during 2002 and 2003. Job growth in the
Riverside-San Bernardino region improved to 4.5 percent in 2004 (50,500 jobs). Favorable
rates of job growth are expected to be maintained through the next couple of years.
However, the pace of growth is projected to moderate to about 3.5 percent in 2005 and
2006. The projected expansion of the regional economy over the next few years will
support continued healthy demand for new residential units.
Southern California’s continuously expanding employment base will result in substantial
demand for new homes in the Coachella Valley. Locally, the Valley’s economy has
benefited from new employment opportunities relating to the approval of Proposition 1A
which authorized the establishment of Las Vegas-style casinos with slot machines on
Indian lands in California. As a result, several major casino projects have been completed
or are in various states of the development process in the Coachella Valley. These projects
are projected to add several hundred jobs to the Valley’s employment base and to attract
several thousand more visitors to the region. This growth will have a stimulating influence
on the demand for new homes in the Coachella Valley. The first major impacts of the
casino expansions were felt in 2001.
Casino and hotel projects recently completed and planned include the following:
The Augustine Casino, south of the City of Coachella, opened for business in 2004.
The casino employs approximately 300 persons.
The Morongo Band of Mission Indians recently completed construction of a $250
million casino resort hotel on a site located a few miles west of Palm Springs on the
north side of Interstate 10. The project is expected to create 4,000 new jobs over
the next five years. When completed it will be one of the largest gaming
destinations on the West Coast.
A $90 million, 125,000 square foot casino recently opened in 2004 north of Rancho
Mirage.
The Agua Caliente Band of Cahuilla Indians announced in January plans to expand
the Agua Caliente Casino by additional 65,000 square feet, add a new 14-story hotel
with 400-rooms, and add 350,000 square feet of retail space. These various projects
will be on the Agua Caliente Reservation at the corner Bob Hope Drive and Ramon
Road, which is an unincorporated area of Riverside County.
In Palm Springs, the Spa Resort Casino opened in 2004. The $95 million gaming
facility has 30 tables, 1,000 slot machines, an entertainment lounge, and four
restaurants.
II-2
Construction has begun on the first phase of a 300-acre resort and corporate
development located in Palm Springs. The Indian Oasis Resort and Corporate
Center will ultimately include a 10-story hotel, 290 condominium units, an 18-hole
golf course, a 100,000 square foot shopping center, and 500,000 square feet of
office space.
In 2003, the growth of the Coachella Valley’s economy was affected by the slowdown in
tourism that began in 2001. Exhibit II-3 shows that hotel revenues in the Valley declined by
4.8 and 3.2 percent in 2001 and 2002, respectively. This drop in visitor activity had a
dampening effect on the demand for new homes in the Valley. Despite the slowdown,
sales of new homes increased from 2001 to 2002 (see NEW HOME SALES TRENDS
below). Since 2003, however, tourism has started to rebound, with hotel room revenues
increasing by 2.4 percent in 2003 and 4.3 percent in 2004. Further improvement in hotel
revenues is projected for 2005.
The projected improvement in the health of the Southern California economy over the next
two years will strengthen the underlying demand for new homes in the Coachella Valley.
The volume of visitors to the Valley will recover and grow, while the financial state and the
confidence levels of new home buyers will improve.
DEMOGRAPHIC PROFILE
Exhibit II-4 presents population and income profiles of the Coachella Valley, the City of
Indio, and Riverside County. There are 365,648 persons residing in the Valley. The
population has grown at a strong pace of 4.1 percent per year since 2000. The Valley’s
population is projected to grow at a rate of 3.8 percent per year over the next five years.
Although the percentage rate of growth is declining, the growth rate in absolute terms is
projected to remain near recent levels.
The average household size in the Coachella Valley is 2.68 persons. This is a low figure
resulting from a large proportion of one and two person households. Nearly two thirds
(64%) of the market area's households consist of one or two persons, compared to 54
percent countywide. The large proportion of small households is partly due to a large
retired population. Nineteen percent of the population is over 65 years of age. Countywide
this age group accounts for 14 percent of the population.
The population of the City of Indio is 61,516 persons. At 3.46 persons, the average
household size in the city is much larger than that of the Coachella Valley as a whole. The
city has a much larger proportion of family households with children than do the other
communities in the Valley.
II-3
The income profile of the Valley’s households is very diverse. Households are distributed
across a broad range of annual incomes from under $25,000 (21%) to over $100,000
(20%). The median income of the Coachella Valley's household's is $44,240. This is a
modest figure that is 8.6 percent below the countywide median figure of $48,384. The
median income of households in Indio is $39,477.
HOUSING PROFILE
Exhibit II-5 shows a profile of the existing housing stock of the Coachella Valley. Single
family detached homes account for 46 percent of the Valley’s housing stock compared to a
countywide proportion of 61 percent. The median housing value in the Coachella Valley is
$238,378 (existing homes). This figure is slightly below the figure for Riverside County of
$245,354. However, the Valley's housing stock is very diverse. The Valley has a greater
than typical proportion of the least expensive homes, as well as, of the most expensive
homes. Twenty five percent of the Valley’s housing stock is valued below $150,000
compared to 22 percent countywide. However, the Valley also has a higher proportion of
homes valued over $400,000 (24% versus 18% countywide).
Exhibit II-6 shows the vacancy characteristics of the Coachella Valley housing stock by city.
Housing vacancy rates are very high in the City of Palm Desert, as well as, in the cities of
Indian Wells, La Quinta, Palm Springs, and Rancho Mirage. These high vacancy rates of
over 30, 40, and even 50 percent are to due the high incidence of second home ownership
in these cities. Assuming an underlying vacancy rate of five to ten percent, second home
ownership in these cities ranges from 20 to 45 percent of the total housing stock.
The proportion of second homes in the City of Indio is relatively low. The proportion of
second home ownership in the city is estimated to be about ten percent. However, this
proportion is projected to increase over the next five years.
NEW HOME SALES TRENDS
Exhibit II-7 presents a summary of new home sales in the Coachella Valley distributed by
submarket area. The volume of sales in the Valley declined from a peak of 3,356 in 1989
to 953 in 1993 due to the effects of the regional recession that began in mid-1990. Sales
activity remained moderate from 1993 through 1997, then accelerated to 2,226 homes sold
in 1998 and to 3,330 homes in 2000. Sales for 2001 fell to 2,510 homes due to a general
slowdown in economic growth in Southern California. Sales increased to 4,236 homes in
2002. The jump in sales in 2002 was due to several factors as discussed in PROJECTED
NEW HOME DEMAND below. Sales activity continued to increase strongly in 2003 and
2004 with 5,768 homes sold in 2003 and 5,851 homes sold in 2004.
II-4
Sales in the Coachella Valley totaled 1,331 homes in the first quarter of 2005. This is a
strong sales figure, however, it is well below the 2,052 sales that were reported in the first
quarter of 2004.
The geographic pattern of new home sales in the Coachella Valley has shifted over the
past few years. Excluding the Indio-Coachella submarket, sales activity among the other
submarket areas varied significantly from year to year. The sales fluctuations have been
due largely to supply considerations. Sales in the Palm Desert submarket dropped from
1,313 homes in 2002 to 383 homes in 2003 due to a decline in home supply. Alternatively,
home sales in the Palm Springs-Cathedral City submarket (including Desert Hot Springs)
increased from 393 homes in 2002 to 1,161 homes in 2004 due an increase in supply. The
shifting geographic pattern of sales activity is likely to continue in the future. More sales
activity is expected to emerge in Palm Desert since the city has recently ended its
moratorium on development in its northern sector.
In contrast to fluctuating sales activity in the other submarket areas of the Valley, new
home sales in the Indio-Coachella Submarket have consistently increased over the past
three years. Sales jumped from 591 homes in 1999 to 1,217 homes in 2002 and 2,890
homes in 2003. New home sales in the Indio-Coachella Submarket continued to accelerate
in 2004 with sales totaling 2,596. Moderate home prices have been a major attractor of
homebuyers to the submarket (see PRICE TRENDS below).
In the first quarter of 2005, new home sales in the Indio-Coachella Submarket totaled 585
homes. This figure is below the 872 homes that were reported sold in the first quarter of
2004.
PRICE TRENDS
Exhibit II-8 shows the average price of new homes sold each quarter in the five submarket
areas of the Coachella Valley. The average price of a detached home sold in the
Coachella Valley in the first quarter of 2005 was $487,063. The average sale price has
fluctuated from quarter to quarter due the changing mix of product offerings. Although the
prices of individual homes have risen significantly, the average sale price of all homes has
risen only moderately over the past four years due to the increase in the sales volume of
modestly priced homes located in the Indio-Coachella submarket area.
The average price of a new home sold in the Indio-Coachella submarket during the first
quarter of 2005 was $381,349. This figure is 40 percent higher than the average sale price
for the first quarter of 2004 of $272,163. However, the average sale price has not changed
significantly over the past three quarters.
II-5
Exhibit II-9 shows the quarterly pattern of new home sales in the Coachella Valley market
area distributed by price range. Sales are spread across a broad price spectrum ranging
from under $200,000 to well over $400,000. During 2004 and 2005, there is a clear pattern
of decreasing sales of lower priced homes as the price structure of new homes in the Valley
has shifted upward. In the first quarter of 2004, 50 percent of the new homes sold were
priced under $300,000. By the first quarter of 2005, that proportion had dropped to just 6.7
percent.
Exhibit II-10 shows that the Indio-Coachella submarket area dominated the sales of homes
in the Coachella Valley in first quarter 2005 that were priced under $400,000.
PROJECTED NEW HOME DEMAND
The primary factors that have contributed to strong new home sales in the Coachella Valley
the local job-creating projects outlined above, and very low mortgage interest rates.
Supported by favorable regional and national economic trends, job growth within the Valley
is projected to continue at a favorable pace. And, although mortgage interest rates are
expected to rise moderately, a healthy volume of new homes sales is projected to be
sustained within the Coachella Valley.
Based on the data analysis, it is projected that the demand for new homes in the Coachella
Valley will average 4,500 homes per year over the next five years. With 5,851 homes sold,
the 2004 sales volume surpassed the projected annual demand of 4,500 homes. However,
it is projected that the pace of sales will moderate in 2005 and 2006.
The demographic factors that underlie the housing demand forecast are summarized in
Exhibit II-11. The majority of the demand will be fueled by the primary buyer segment (i.e.,
owner occupants as opposed to second home owners), including retired households.
Second home buyers, including pre-retirement buyers, are projected to account for just
over one quarter of the demand. The great majority of the buyers that are active in the
community of Indio consist of primary home buyers consisting primary of first time buyers
and local move-up households.
The Coachella Valley new home market is diverse. Exhibit II-12 shows the projected
average annual demand for new homes distributed by price range. Market demand is
spread across a wide range of prices from under $300,000 to over $1,000,000. The
majority of the demand for new homes in the Indio-Coachella submarket emanates from
primary resident households. Primary homebuyers are responsible for the high volume of
demand below the $400,000 price level as shown in Exhibit II-12.
II-6
EXHIBIT II-1
COACHELLA VALLEY SUBMARKET AREAS
Palm Springs -Cathedral City
Palm Springs Cathedral City
Indio -Coachella
Rancho Mirage Palm Desert
Indian Wells
-- La Quinta
275811x2-1,2,3,4,5,6,7.xls
EXHIBIT II-2
EMPLOYMENT GROWTH
RIVERSIDE-SAN BERNARDINO BI-COUNTY REGION
AND SOUTHERN CALIFORNIA
1980 - 2006
Year
Riverside & San Bernardino Counties
Southern California
Total
Increase/
Percent
Total
Increase/ Percent
Employment Decrease
Change
Employment Decrease Change
2006
2005
1,252,700
1,210,700
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1,170,700
1,120,200
1,082,500
1,050,700
1,010,100
960,300
903,800
863,100
824,800
801,700
772,800
755,900
751,500
741,500
735,200
689,200
647,700
610,900
574,400
536,700
495,700
465,700
452,600
458,900
452,000
42,000
40,000
PROJECTED
50,500
37,700
31,800
40,600
49,800
56,500
40,700
38,300
23,100
28,900
16,900
4,400
10,000
6,300
46,000
41,500
36,800
36,500
37,700
41,000
30,000
13,100
(6,300)
6,900
N.A.
3.5%
3.4%
8,464,400
8,296,400
168,000
135,100
2.0%
1.7%
4.5%
3.5%
3.0%
4.0%
5.2%
6.3%
4.7%
4.6%
2.9%
3.7%
2.2%
0.6%
1.3%
0.9%
6.7%
6.4%
6.0%
6.4%
7.0%
8.3%
6.4%
2.9%
-1.4%
1.5%
N.A.
8,161,300
8,039,300
8,050,500
8,063,200
7,966,600
7,750,300
7,529,300
7,283,600
7,066,800
6,940,800
6,816,100
6,780,400
6,883,300
7,088,300
7,268,900
7,165,800
6,975,400
6,734,100
6,493,200
6,267,100
6,029,300
5,762,500
5,708,600
5,844,400
5,755,100
122,000
(11,200)
(12,700)
96,600
216,300
221,000
245,700
216,800
126,000
124,700
35,700
(102,900)
(205,000)
(180,600)
103,100
190,400
241,300
240,900
226,100
237,800
266,800
53,900
(135,800)
89,300
N.A.
1.5%
-0.1%
-0.2%
1.2%
2.8%
2.9%
3.4%
3.1%
1.8%
1.8%
0.5%
-1.5%
-2.9%
-2.5%
1.4%
2.7%
3.6%
3.7%
3.6%
3.9%
4.6%
0.9%
-2.3%
1.6%
N.A.
Source: California Employment Department, Market Profiles
275811x2-1,2,3,4,5,6,7.xls
EXHIBIT II-3
HOTEL ROOM SALES
COACHELLA VALLEY
1988 - 2004
Year
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
Room Revenue Percent
($ Millions)
Change
$362
4.2%
$347
2.4%
$339
-3.2%
$350
-4.8%
$368
6.1%
$347
11.6%
$311
8.4%
$287
8.3%
$265
8.6%
$244
5.2%
$232
5.5%
$220
-2.2%
$225
0.4%
$224
-0.9%
$226
8.1%
$209
13.0%
$185
N.A.
Revenue
Per Room
$23,352
$22,440
$22,521
$23,528
$25,126
$23,954
$21,988
$20,523
$17,545
$16,200
$15,200
$14,539
$14,306
$14,617
$15,400
$14,384
N.A.
Percent
Change
4.1%
-0.4%
-4.3%
-6.4%
4.9%
8.9%
7.1%
17.0%
8.3%
6.6%
4.5%
1.6%
-2.1%
-5.1%
7.1%
N.A.
N.A.
Source: Wheeler's Desert Letter, Market Profiles
275811x2-1,2,3,4,5,6,7.xls
EXHIBIT II-4
DEMOGRAPHIC PROFILE
COACHELLA VALLEY
AND RIVERSIDE COUNTY
CITY OF
INDIO
COACHELLA
VALLEY
RIVERSIDE
COUNTY
N.A.
61,516
49,116
37,554
N.A.
25.25%
30.79%
435,809
365,648
303,579
222,945
19.19%
20.45%
36.17%
2,155,693
1,843,493
1,545,387
1,170,413
16.94%
19.29%
32.04%
N.A.
17,532
13,871
11,003
N.A.
26.39%
26.07%
160,815
135,402
113,516
85,186
18.77%
19.28%
33.26%
694,251
597,519
506,218
402,067
16.19%
18.04%
25.90%
61,516
47.71%
2.30%
1.83%
44.21%
3.96%
365,648
67.85%
2.03%
2.47%
23.31%
3.51%
1,843,493
62.92%
6.19%
4.32%
20.69%
4.73%
78.15%
51.79%
40.14%
3.46
132,010
67.58%
32.42%
2.68
597,519
69.39%
30.61%
3.03
2005 EST. HOUSEHOLDS BY INCOME
UNDER $15,000
$15,000 TO $24,999
$25,000 TO $34,999
$35,000 TO $49,999
$50,000 TO $74,999
$75,000 TO $99,999
$100,000 TO $149,999
$150,000 TO $249,999
$250,000 TO $499,999
$500,000 AND OVER
17,532
15.31%
15.21%
13.63%
19.61%
17.69%
8.37%
7.08%
2.02%
0.75%
0.33%
132,010
9.20%
11.83%
12.36%
16.86%
19.10%
11.06%
10.58%
5.76%
2.14%
1.12%
597,519
12.86%
11.75%
11.38%
15.69%
19.36%
12.16%
11.33%
3.97%
1.08%
0.41%
2005 EST. AVERAGE HOUSEHOLD INCOME
2005 EST. MEDIAN HOUSEHOLD INCOME
2005 EST. PER CAPITA INCOME
$51,732
$39,477
$14,979
$65,569
$44,240
$24,481
$63,592
$48,384
$20,892
DESCRIPTION
POPULATION
2010 Projection
2005 Estimate
2000 Census
1990 Census
Growth 2005-2010
Growth 2000-2005
Growth 1990-2000
HOUSEHOLDS
2010 Projection
2005 Estimate
2000 Census
1990 Census
Growth 2005-2010
Growth 2000-2005
Growth 1990-2000
2005 ESTIMATED POPULATION BY RACE
WHITE
BLACK
ASIAN & PACIFIC ISLANDER
OTHER RACES
TWO OR MORE
2005 ESTIMATED POPULATION
HISPANIC ORIGIN
2005 OCCUPIED UNITS
OWNER OCCUPIED
RENTER OCCUPIED
AVERAGE PERSON PER HH
Source: Claritas, Market Profiles
275811x2-1,2,3,4,5,6,7.xls
EXHIBIT II-5
HOUSING PROFILE
COACHELLA VALLEY AND RIVERSIDE COUNTY
2005
COACHELLA
VALLEY
RIVERSIDE
COUNTY
YEAR ROUND UNITS IN STRUCTURE
SINGLE FAMILY DETACHED
SINGLE FAMILY ATTACHED
DOUBLE UNITS
3 T0 19 UNITS
20 TO 49 UNITS
50+ UNITS
MOBILE HOME OR TRAILER
ALL OTHER
189,200
45.85%
16.17%
2.18%
12.20%
2.05%
5.37%
14.07%
2.11%
689,903
61.26%
7.12%
1.38%
9.29%
1.93%
4.56%
13.30%
1.15%
OWNER OCCUPIED PROPERTY VALUES
UNDER $80,000
$80,000 TO $99,999
$100,000 TO $149,999
$150,000 TO $199,999
$200,000 TO $299,999
$300,000 TO $399,999
$400,000 TO $499,999
$500,000 TO $749,999
$750,000 TO $999,999
$1,000,000+
91,511
10.34%
2.74%
11.60%
16.36%
23.37%
12.05%
7.08%
8.72%
3.66%
4.08%
414,642
8.51%
2.36%
10.77%
15.62%
28.27%
16.72%
8.19%
6.27%
1.66%
1.71%
MEDIAN PROPERTY VALUE
$238,378
$245,354
HOUSING UNITS BY YEAR BUILT
BUILT 1999 TO PRESENT
BUILT 1995 TO 1998
BUILT 1990 TO 1994
BUILT 1980 TO 1989
BUILT 1970 TO 1979
BUILT 1960 TO 1969
BUILT 1950 TO 1959
BUILT 1940 TO 1949
BUILT 1939 OR EARLIER
189,200
19.44%
7.26%
10.13%
25.93%
19.34%
10.00%
5.61%
1.39%
0.90%
689,903
18.94%
6.84%
11.02%
25.23%
17.00%
9.84%
6.69%
2.22%
2.21%
DESCRIPTION
Source: Claritas, Market Profiles
275811x2-1,2,3,4,5,6,7.xls
EXHIBIT II-6
HOUSING STOCK PROFILES
COACHELLA VALLEY CITIES
2000
City
Cathedral City
Housing Units
Vacant Units
Percent Vacant
Coachella
Housing Units
Vacant Units
Percent Vacant
Desert Hot Springs
Housing Units
Vacant Units
Percent Vacant
Indian Wells
Housing Units
Vacant Units
Percent Vacant
Indio
Housing Units
Vacant Units
Percent Vacant
La Quinta
Housing Units
Vacant Units
Percent Vacant
Palm Desert
Housing Units
Vacant Units
Percent Vacant
Palm Springs
Housing Units
Vacant Units
Percent Vacant
Rancho Mirage
Housing Units
Vacant Units
Percent Vacant
Totals for Cities
Housing Units
Vacant Units
Percent Vacant
Riverside County
Housing Units
Vacant Units
Percent Vacant
Detached
Attached
MultiFamily
Mobile
Homes
Other
Misc.
Total
Units
8,785
763
8.7%
2,575
1,412
54.8%
3,829
608
15.9%
2,521
897
35.6%
103
61
59.2%
17,813
3,741
21.0%
3,074
104
3.4%
316
0
0.0%
1,141
49
4.3%
451
52
11.5%
0
0
0.0%
4,982
205
4.1%
3,775
523
13.9%
180
35
19.4%
2,504
330
13.2%
567
318
56.1%
0
0
0.0%
7,026
1,206
17.2%
2,436
1,195
49.1%
909
427
47.0%
597
361
60.5%
8
0
0.0%
0
0
0.0%
3,950
1,983
50.2%
7,658
602
7.9%
877
212
24.2%
5,196
662
12.7%
2,716
1,220
44.9%
452
315
69.7%
16,899
3,011
17.8%
9,471
2,496
26.4%
1,272
483
38.0%
762
314
41.2%
258
15
5.8%
0
0
0.0%
11,763
3,308
28.1%
11,120
2,530
22.8%
9,551
5,081
53.2%
6,201
947
15.3%
1,190
205
17.2%
9
9
100.0%
28,071
8,772
31.2%
10,163
2,040
20.1%
6,191
3,046
49.2%
12,379
4,617
37.3%
2,172
689
31.7%
74
47
63.5%
30,979
10,439
33.7%
4,312
1,554
36.0%
3,626
1,525
42.1%
1,735
842
48.5%
1,253
476
38.0%
717
629
87.7%
11,643
5,026
43.2%
60,794
11,807
19.4%
25,497
12,221
47.9%
34,344
8,730
25.4%
11,136
3,872
34.8%
1,355 133,126
1,061 37,691
78.3%
28.3%
356,447
29,374
8.2%
42,300
13,495
31.9%
103,066
14,881
14.4%
76,411
16,247
21.3%
6,450 584,674
4,459 78,456
69.1%
13.4%
Source: 2000 U.S. Census, Market Profiles
275811x2-1,2,3,4,5,6,7.xls
EXHIBIT II-7
NEW HOME SALES BY SUBMARKET AREA
COACHELLA VALLEY
1992 THROUGH FIRST QUARTER 2005
Submarket
SFA*
1992
SFD*
Total
SFA*
1993
SFD*
Total
SFA*
1994
SFD*
Total
SFA*
1995
SFD*
Total
SFA*
1996
SFD*
Total
SFA*
1997
SFD*
Total
SFA*
1998
SFD*
Total
Palm Springs-Cathedral City
Rancho Mirage
Palm Desert
La Quinta
13
12
65
123
154
23
85
208
167
35
150
331
4
7
145
77
263
15
110
417
267
22
255
494
32
25
130
142
155
27
122
550
187
52
252
692
16
11
44
56
133
6
223
449
149
17
267
505
39
7
144
25
73
66
426
358
112
73
570
383
39
3
117
13
53
144
646
337
92
147
763
350
46
0
10
11
53
218
1,159
520
99
218
1,169
531
Indio-Coachella
Totals
0
213
270
740
270
953
0
233
318
1,123
318
1,356
36
365
231
1,085
267
1,450
7
134
232
1,043
239
1,177
7
222
142
1,065
149
1,287
34
206
165
1,345
199
1,551
24
91
185
2,135
209
2,226
Submarket
SFA*
1999
SFD*
Total
SFA*
2000
SFD*
Total
SFA*
2001
SFD*
Total
SFA*
2002
SFD*
Total
SFA*
2003
SFD*
Total
SFA*
2004
SFD*
Total
Palm Springs-Cathedral City
Rancho Mirage
Palm Desert
La Quinta
Indio-Coachella
52
0
0
46
45
293
297
917
1,004
196
345
297
917
1,050
241
17
0
0
59
5
379
256
931
1,224
459
396
256
931
1,283
464
10
0
0
0
10
303
282
708
616
581
313
282
708
616
591
24
0
0
16
33
369
530
1,313
767
1,184
393
530
1,313
783
1,217
48
0
0
17
32
785
655
383
990
2,858
833
655
383
1,007
2,890
83
0
37
92
0
1,078
375
176
1,414
2,596
1,161
375
213
1,506
2,596
100
0
40
227
0
136
22
26
195
585
236
22
66
422
585
Totals
143
2,707
2,850
81
3,249
3,330
20
2,490
2,510
73
4,163
4,236
97
5,671
5,768
212
5,639
5,851
367
964
1,331
2005 1st Qtr
SFA* SFD* Total
* SFA = Attached Product; SFD = Detached Product
Source: Residential Trends, Market Profiles
275811x2-1,2,3,4,5,6,7.xls
Quarter
2005-1
2004-4
-3
-2
-1
2003-4
-3
-2
-1
2002-4
-3
-2
-1
2001-4
-3
-2
-1
2000-4
-3
-2
-1
1999-4
-3
-2
-1
1998-4
-3
-2
-1
Coachella
Valley
$487,063
$499,631
$457,466
$510,106
$361,324
$346,358
$313,006
$296,622
$340,765
$300,454
$281,557
$340,713
$312,116
$329,280
$255,805
$296,827
$324,701
$324,022
$287,569
$284,240
$333,048
$306,379
$277,309
$356,066
$311,993
$261,202
$244,795
$241,970
$254,635
EXHIBIT II-8
AVERAGE NEW HOME PRICE
DETACHED PRODUCT
COACHELLA VALLEY
BY SUBMARKET AREA
1998 THROUGH THIRD QUARTER 2004
Palm Springs/
Rancho
Cathedral City
Mirage
Palm Desert
$462,322
$736,646
$521,254
$360,870
$717,860
$508,513
$299,834
$658,127
$485,217
$304,485
$590,519
$535,581
$279,160
$496,667
$611,757
$305,670
$468,964
$375,655
$217,490
$448,814
$332,545
$256,104
$425,579
$337,418
$336,465
$447,426
$287,891
$238,373
$441,490
$276,209
$223,604
$454,508
$248,836
$225,636
$440,543
$292,771
$214,903
$441,411
$277,911
$201,729
$445,032
$268,632
$186,125
$452,987
$247,040
$189,472
$442,205
$256,930
$217,298
$437,138
$249,576
$194,660
$414,786
$286,109
$214,066
$412,485
$339,922
$231,023
$394,995
$270,721
$204,602
$405,141
$318,494
$168,613
$412,549
$330,832
$169,002
$358,096
$294,271
$163,783
$350,545
$290,086
$156,986
$382,024
$338,503
$142,881
$359,811
$270,587
$131,435
$398,290
$247,275
$132,544
$329,771
$238,423
$122,826
$307,834
$242,658
Indian Wells/
La Quinta
$792,518
$729,686
$724,240
$749,098
$567,776
$676,643
$505,884
$429,891
$567,382
$489,195
$477,517
$456,337
$420,302
$503,068
$363,954
$396,384
$426,394
$399,754
$317,687
$320,949
$430,968
$372,182
$310,590
$473,375
$322,317
$271,954
$254,547
$253,779
$298,036
Indio/
Coachella
$381,349
$388,340
$359,647
$411,898
$272,163
$243,005
$204,431
$218,396
$214,492
$229,710
$184,271
$204,472
$196,025
$189,480
$185,520
$202,200
$188,030
$181,196
$174,732
$159,021
$169,353
$162,632
$159,317
$164,763
$159,636
$153,273
$144,043
$142,302
$144,500
275811x2-8,9,10,11,12.xls
EXHIBIT II-9
NEW HOME SALES BY PRICE RANGE
DETACHED PRODUCT
COACHELLA VALLEY
2003 THROUGH FIRST QUARTER 2005
Price Range
2003
1st Q* 2nd Q* 3rd Q*
4th Q*
2004
1st Q* 2nd Q* 3rd Q*
4th Q*
2005
1st Q*
Under $150,000
71
112
87
74
2
4
0
0
2
$150-175,000
66
157
108
177
126
25
5
0
0
$175-200,000
73
152
94
178
215
54
10
0
0
$200-250,000
151
324
176
621
295
126
81
12
-1
$250-300,000
115
269
159
350
381
161
159
128
64
$300-400,000
176
308
100
288
499
249
412
174
451
$400,000 & Up
245
280
209
551
513
1142
530
336
448
Totals
* Q = Quarter
897
1,602
933
2,239
2,031
1,761
1,197
650
964
275811x2-8,9,10,11,12.xls
EXHIBIT II-10
NEW HOME SALES DISTRIBUTED BY PRICE RANGE
INDIO-COACHELLA SUBMARKET AREA
AND THE COACHELLA VALLEY
FIRST QUARTER 2005
Number of Homes* Sold
IndioCoachella
Price Range
Coachella
Valley
Under $200,000
2
2
$200-$250,000
0
(1)
$250-$300,000
57
64
$300-$350,000
242
264
$350-$400,000
157
187
$400,000 & Up
127
448
585
964
Totals
* Detached homes.
275811x2-8,9,10,11,12.xls
EXHIBIT II-11
HOUSING GROWTH SUMMARY
RIVERSIDE COUNTY AND THE COACHELLA VALLEY MARKET AREA
1980 - 2009
Riverside-San
Bernardino Co.s
Employment*
Year Total Jobs Incr./Yr
1990 735,200
to
2000 1,010,100
to
2005 1,210,700
to
2010 1,425,700
N.A.
Riverside
Coachella Valley
County
Annual Housing Demand
New
Households
Total
Households
Primary Housing
Second
Total
Incr./Yr Households
Per Year
Owner
Renter
Homes
N.A.
85,186
N.A.
N.A.
N.A.
N.A.
27,490
402,067
.
506,218
10,415
113,516
2,833
1,841
992
552
40,120
597,519
18,260
135,402
4,377
2,845
1,532
854
43,000
694,251
19,346
160,815
5,083
3,300
1,783
1,200
* Riverside/San Bernardino bi-county region.
Source: Calif. Employment Development Dept., Clairtas, Market Profiles
275811x2-8,9,10,11,12.xls
EXHIBIT II-12
COACHELLA VALLEY
2005-2006
PRICE RANGE*
AVERAGE ANNUAL SALES
% OF TOTAL
Under $300,000
$300,000-$350,000
$350,000-$400,000
$400,000-$450,000
$450,000-$500,000
$500,000-$750,000
$750,000-$1,000,000
$1,000,000 and Over
500
750
900
650
450
550
450
250
11.1%
16.7%
20.0%
14.4%
10.0%
12.2%
10.0%
5.6%
4,500
100.0%
TOTAL
COACHELLA VALLEY
2005-2006
1000
900
800
700
600
500
400
300
AVERAGE
ANNUAL
SALES
200
100
0
Under
$300,000
$300,000$350,000
$350,000$400,000
$400,000$450,000
$450,000$500,000
$500,000- $750,000- $1,000,000
$750,000 $1,000,000 and Over
* Prices stated in today's dollars excluding future inflation or appreciation.
275811x2-8,9,10,11,12.xls
SECTION III
SECTION III
INTRODUCTION
This section presents a review of the existing new home competition throughout the
Coachella Valley and within the community of Indio. For analysis purposes, the
Coachella Valley is divided into five submarket areas. The boundaries of the
submarkets are shown in Exhibit II-1 (report Section II). The Indio-Coachella submarket
area is composed of the cities of Indio and Coachella and the immediately surrounding
unincorporated areas.
The data that is presented in this section is based on a quarterly audit of all new home
projects that are active in the Coachella Valley. The home prices and sales data that
are presented in this market report represent the market circumstances as of the end of
the first quarter 2005 new home audit period which ended in mid-April. As of the date of
this report, the data for the second quarter of 2005 has not been published. The sale
prices of the new homes that are being marketed in the Shadow Hills area of the City of
Indio (north of the I-10 Freeway) have been updated as of early-July.
NEW HOME COMPETITION
During the first quarter of 2005, there were 78 subdivisions marketing new detached
homes in the Coachella Valley. Exhibit III-1 presents a tabular summary of the 78
projects. The projects account for a total of 15,042 homes, of which 8,213 homes have
been offered for sale and all but 559 of the homes offered have been sold. This is a low
unsold inventory level as discussed below (see INVENTORY TRENDS).
The Coachella Valley new home market is very diverse. Exhibit III-2 shows a summary
of new home activity within each of the Valley’s five submarket areas (detached
product). The Indio-Coachella and the Indian Wells-La Quinta submarkets had the
largest number of active new home subdivisions during the first quarter period with 26
and 24 projects, respectively. The Indio-Coachella submarket generated the highest
sales volume during the quarter with 585 homes sold. The sales of new homes in the
submarket were aided by the moderate prices of the homes. The average sales price
was $381,349 compared to $792,518 in the nearby La Quinta-Indian Wells submarket.
Exhibit III-3 presents a summary of the 26 projects that were active in the IndioCoachella submarket during the first quarter of 2005. The 26 projects account for 7,330
homes, of which 3,722 have been offered for sale and only 155 of those remain unsold.
Seventeen of the new home projects are located in Indio and nine are located in
Coachella. With 3,200 homes, the retirement community of Sun City in Indio (Shadow
III-1
Hills) accounts for nearly half of the homes. An additional three of the projects,
accounting for 344 homes, are located within the Indian Palms Country Club, also in
Indio. Descriptions of the most competitive new home projects are presented below
(see MOST COMPETITIVE NEW HOME PROJECTS).
INVENTORY TRENDS
The total of 559 new detached homes that remain unsold (including homes under
construction, completed, and pre-selling) throughout the Coachella Valley is a favorable
unsold inventory figure. As a rule, a balance between the unsold inventory at the end of
a quarter and the number of homes sold during the quarter is indicative of a healthy
market condition (i.e., 1:1 unsold to sold ratio). Thus, compared to the sales volume of
964 homes sold during the first quarter period, the unsold inventory of 559 homes at the
end of the first quarter of 2005 is indicative of a favorable market condition (0.58:1
unsold to sold ratio).
Exhibit III-2 shows that inventory conditions in the Indio-Coachella submarket are more
restricted than elsewhere in the Coachella Valley. At the end of the first quarter of
2005, the unsold inventory in the Indio-Coachella submarket totaled 155 homes
compared to first quarter sales of 585 homes (0.26:1 unsold to sold ratio).
SALES RATES
Exhibit III-1 shows the weekly sales rate for each of the new home projects in the
Coachella Valley. The sales rates are shown as “Cumulative” and “Current Quarter”
rates. The Cumulative sales rate describes the rate of sales generated since the date of
opening of each project, and the Current Quarter sales rate describes the rate of sale
during the first quarter period. Cumulative sales rates range widely from 0.08 to 7.9
homes per week. The average cumulative sales rate is 1.73 homes per week per
project.
The new home projects that are most similar to the subject development are those that
are located in the Shadow Hills community of north Indio. During the first quarter of
2005, there were 12 new home subdivisions active in the Shadow Hills community,
including the four subject Talavera subdivisions. These 12 projects are summarized in
Exhibit III-4. The cumulative sales rates among those subdivisions range widely from
0.81 to 8.12 homes per week. The average sales rate is 3.43 homes per week.
MOST COMPETITIVE NEW HOME PROJECTS
The new home subdivisions that are most relevant to the subject properties are those
that are located within the Shadow Hills community located north of the I-10 Freeway
(see Exhibit III-4). The projects are described below and their locations are shown in
Exhibit III-5.
III-2
The fastest selling subdivision in Shadow Hills is Bella Tierra (map #1). The first 40 of
these 3- and 5-bedroom homes have been sold at a rate of 8.12 homes per week. The
base prices range from $379,990 to $419,990 for plans that range in size from 1,895 to
2,629 square feet ($159.75 to $200.52 per sq. ft.). The homes are sited on 8,000
square foot lots (minimum).
Another fast selling subdivision is Foxstone by KB Home (map #8). All 63 homes that
were released during the first quarter were sold equating to a sales rate of 4.88 homes
per week. The project has another 182 homes remaining to be sold in subsequent
phases. The base prices of these homes range from $307,990 to $368,990 for 2- and
3-bedroom plans that range in size from 1,517 to 2,526 square feet ($146.07 to $203.02
per sq. ft.). The residents pay a homeowners fee of $100 per month, plus CFD taxes.
The neighborhood is gated and the minimum lot size is 8,000.
The 132-lot Sienna subdivision recently opened in Shadow Hills (map #7). The base
prices of the homes range from $394,990 to $447,990 for 3- and 4-bedroom plans that
range in size from 2,448 to 3,143 square feet ($142.54 to $161.35 per sq. ft.).
The 263-lot Shadow Ranch subdivision by Family Development (map #3) sold out its
first phase of 30 homes at a rate of 3.0 homes per week. These homes range in price
from $394,990 to $489,990 for 3-, 4-, and 5-bedroom plans that range in size from
3,185 to 3,247 square feet ($150.90 to $180.77 per sq. ft.). The residents pay a
homeowners fee of $95 per month for green belt maintenance. The minimum lot size is
8,500 square feet.
The Desert Collection is a gated subdivision of 142 homes (map #2). The base prices
of these 3-bedroom homes range from $364,990 to $414,990 for plans that range in
size from 1,610 to 2,266 square feet ($183.13 to $226.70 per sq. ft.). The residents pay
a homeowners fee of $75 per month. The first 73 homes were sold at a rate of 3.31
homes per week. The minimum lot size is 7,200 square feet.
There are two subdivisions still active within one private, gated neighborhood developed
by Century Vintage Homes. The three subdivisions are The Ventana Collection, The El
Dorado Collection, and Villa Estates II (map #’s 4, 5, & 6). The homeowners will pay
dues of $50 per month for maintenance of the private streets, plus an assessment
district fee. The Ventana Collection consists of 2- and 3-bedroom homes that range
in size from 1,208 to 1,843 square feet with base prices ranging from $299,990 to
$339,990 ($184.47 to $248.33 per sq. ft.). Of the 198 homes in this tract, 87 have been
sold at a rate of 0.81 homes per week.
III-3
The base prices of the homes in The El Dorado Collection range from $339,990 to
$424,990 for 2- and 3-bedroom plans that range in size from 1,720 to 2,778 square feet
($152.98 to $197.66 per sq. ft.). Of the 198 homes in this tract, 176 have been sold at a
rate of 1.64 homes per week.
The Villa Estates II homes have base prices ranging from $294,990 to $394,990.
These 3- and 4-bedroom homes range in size from 1,302 to 2,735 square feet ($144.42
to $226.56 per sq. ft.). Of the 137 homes in this subdivision, 123 have been sold at a
rate of 1.53 homes per week.
PROPOSED NEW HOME DEVELOPMENT
There are approximately 7,500 new homes within more than 40 subdivisions that are
proposed for future development in the City of Indio. These projects are summarized in
Exhibit III-6. With this scale of proposed activity, it is projected that the Indio market
area will experience a competitive environment for the next several years. However,
the market is currently undersupplied and the homes that are planned for development
will be constructed in a phased manner over the next several years. It is projected that
competitive conditions will be more intense than those currently being experienced in
the Indio marketplace, however, generally healthy demand-supply conditions are
projected to be maintained.
The majority of the new homes that will be constructed in Indio over the next few years
will be located in and around the Shadow Hills community located north of Interstate 10
Freeway. There are more than 4,000 homes that are planned for construction in the
Shadow Hills community. The majority of these homes will be constructed over the next
three to four years. A summary of the 2,723 homes that will be part of the City of Indio
Assessment District 2004-VSD is presented in Text Table III-1 on the following page.
The prices of the homes will generally range between $350,000 and $500,000. The two
subdivisions by Family Development are under construction and are actively selling
homes (see Exhibit III-4).
There are an additional 1,400-plus homes that will be developed within the Terra Lago
community. The homes that are proposed for the first phase of Terra Lago are
summarized in Text Table III-2 below. The prices of the homes will range from about
$280,000 to $500,000.
III-4
TEXT TABLE III-1
SUMMARY OF PROPOSED HOMES
ASSESSMENT DISTRICT 2004-VSD
Project Name*/
Number
Tract #
Builder*
of Lots
Affresco
32401
Vista Laguna
32402
Paradiso
31815
Desert Trace
30643
Sandhurst
30778
32304
Shadow Ranch
32149
Haciendas
31686
31974
31975
Bella Tierra
30605
Vineyards
31562
Size Range*
(Sq. Ft.)
Rilington
Communities
D.R. Horton
275
1,900-3,100
363
2,200-3,600
Ponderosa
Lennar
Ashbrook Com’s
KB Home
Ryland Homes
J.D. Desert Dev.
185
225
111
247
132
2,700-3,500
2,000-2,600
2,176-2,902
1,512-2,513
2,520-3,130
59
123
263
1,870-2,586
2,000-3,000
Family Dev.
147
102
137
56
Alpine Group
298
1,500-2,600
Family Dev.
2,700-3,800
Beazer Homes
Total Lots:
2,723
* Preliminary data.
III-5
1,900-2,600
TEXT TABLE III-2
SUMMARY OF PROPOSED NEW HOMES
TERRA LAGO PHASE I
Minimum
Lot Size
Number
(Sq. Ft.)
of Lots
Tract #
Builder
% Mix
31601-2
Woodside Homes
178
27.7%
5,000
31601-3
Lennar Homes
128
20.3%
7,200
31601-4
Lennar Homes
86
13.6%
8,400
31601-5
Ryland Homes
110
17.4%
6,000
31601
Ashbrook Homes
133
21.0%
3,300
Total / Range
635
100.0% 3,300-8,400
Source: SunCal Properties, Market Profiles
III-6
Home Size
Range (SF)
1,658-2,407
2,092-2,660
2,595-3,120
1,987-2,591
2,100-2,500
1,658-3,120
EXHIBIT III-1
DETACHED PRODUCT
COACHELLA VALLEY
FIRST QUARTER 2005
ADOBE COLLECTION @ SANTO TOMAS
ASHBROOK COMMUNITIES
ALTA
DEVCON CONSTRUCTION
AMALFI COLLECTION @ TUSCANA
SUNRISE COMPANY
AMATISTA @ CAPRI
STONEBRIDGE DEVELOPMENT
AZURE @ MISSION SHORES
DISTINGUISHED HOMES
BELLA CANTO
RILINGTON COMMUNITIES
BELLAGIO COLLECTION @ TUSCANA
SUNRISE COMPANY
BRENNA @ CAPRI
STONEBRIDGE DEVELOPMENT
CASA BELLA @ INDIAN PALMS COUNTRY CLUB
FIRST PACIFICA DEVELOPMENT CORP.
CORAL COLLECTION @ TRILOGY
SHEA HOMES
CORTONA COLLECTION @ TUSCANA
SUNRISE COMPANY
DESERT VIEW ESTATES II @ MOUNTAIN VIEW
SIX KIDS DEVELOPMENT
DESERT WILLOWS
LTV BUILDER DEVELOPERS, INC.
EL DORADO COLLECTION @ MOUNTAINGATE I&II
ELEMENTS @ RIO DEL SOL
DAMON SISKIN
ESPANA @ RIO DEL SOL
DAMON SISKIN
ESPERANZA @ DESERT RIVER ESTATES
LENNAR HOMES
FIORE @ RENAISSANCE
TRANS WEST HOUSING
FOUR SEASONS - CANYON COLLECTION
K. HOVNANIAN/FORECAST HOMES
Sales/Week
CurQtr
Cum
0.42
1.04
1.63
1.63
1.13
0.90
0.21
1.32
0.42
0.75
1.00
1.86
0.60
0.55
0.60
0.79
0.30
0.25
0.07
1.95
0.46
0.45
0.33
1.80
-0.92
0.61
0.50
1.95
0.13
0.12
0.53
0.64
1.57
1.80
0.78
0.91
1.07
1.32
Price
$600,000
$720,000
$1,000,000
$1,000,000
$1,047,000
$1,207,000
$395,000
$515,000
$539,900
$642,900
$237,990
$327,990
$1,350,000
$1,482,000
$515,000
$690,000
$390,990
$439,990
$352,990
$441,990
$2,019,000
$2,201,000
$309,900
$345,900
$231,600
$273,000
$359,990
$463,532
$629,990
$809,990
$389,990
$434,990
$675,990
$749,990
$630,000
$690,000
$424,990
$485,990
Ranges
Sqft
2,380
2,385
3,000
3,305
2,790
3,545
1,914
2,511
1,928
2,235
1,369
2,019
3,676
4,114
2,302
3,136
1,704
2,101
1,355
1,712
4,916
5,433
1,685
1,890
1,200
1,400
1,518
2,778
2,300
3,000
1,500
1,600
3,168
4,002
2,462
2,873
2,288
2,825
$/Sqft
$252.10
$301.88
$302.57
$333.33
$340.47
$375.26
$183.19
$215.57
$273.50
$287.65
$162.45
$178.26
$360.23
$372.26
$192.16
$258.47
$209.41
$229.45
$256.03
$260.50
$405.11
$410.69
$182.07
$183.91
$193.00
$195.00
$166.85
$239.18
$269.99
$273.90
$259.99
$271.86
$187.40
$213.38
$240.16
$255.88
$150.43
$192.30
Sales
Start
1-Dec-03
LotSize/
Density
9,200
Total
Units
136
Total
Sold
73
CurQtr
Sold
6
Unsold
7
Remain
ForDev
56
15-Jan-05
14,000
67
18
18
0
49
1-Sep-03
10,000
215
77
17
0
138
16-May-03
10,000
131
130
3
1
0
3-Nov-03
7,000
99
56
6
5
38
5-Jul-03
6,600
175
172
16
3
0
1-Sep-03
12,000
221
47
9
0
174
16-May-03
10,000
124
79
9
10
35
26-Jun-04
4,500
121
10
4
3
108
24-Aug-02
4,000
400
266
1
9
125
1-Sep-03
13,000
122
39
7
0
83
1-Dec-03
7,600
153
126
5
7
20
1-Oct-03
3,600
140
48
-12
28
64
12-Jul-03
8,200
250
176
7
4
70
9-Dec-04
7,200
68
2
2
7
59
7-Dec-04
4,500
48
11
8
1
36
21-May-04
21,780
133
81
22
3
49
19-Apr-04
8,000
60
45
11
9
6
10-Dec-03
6,000
298
90
15
0
208
PAGE 1 OF 4
Community/
MasterPlan
RANCHO MIRAGE
SANTO TOMAS
PALM SPRINGS
STAND-ALONE
INDIAN WELLS
TUSCANA CC
PALM DESERT
CAPRI
RANCHO MIRAGE
MISSION SHORES
COACHELLA
STAND-ALONE
INDIAN WELLS
TUSCANA CC
PALM DESERT
CAPRI
INDIO
INDIAN PALMS COUNTRY CLUB
LA QUINTA
TRILOGY
INDIAN WELLS
TUSCANA COUNTRY CLUB
DESERT HOT SPRINGS
STAND-ALONE
DESERT HOT SPRINGS
STAND-ALONE
PALM SPRINGS
MOUNTAIN GATE
CATHEDRAL CITY
RIO DEL SOL
CATHEDRAL CITY
RIO DEL SOL
INDIO
DESERT RIVER ESTATES
LA QUINTA
STAND-ALONE
PALM SPRINGS
FOUR SEASONS
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-1
DETACHED PRODUCT
COACHELLA VALLEY
FIRST QUARTER 2005
FOUR SEASONS - PALM COLLECTION
FOXSTONE
KB HOME
HERMOSA
RYLAND HOMES
LA COLONIA
RTV DEVELOPMENT
LA MORADA
LENNAR HOMES
LA PALOMA
LA PALOMA ESTATES
LA PASADA - LIMITED EDITION
FAR WEST DEVELOPMENT
LA QUINTA DEL ORO
LENNAR HOMES
LANDAU HOMES
LANDAU DEVELOPMENT
LAS BRISAS NORTH @ RANCHO INDIO
LAS PLUMAS
LENNAR HOMES
LAS VENTANAS @ PGA WEST
CALIFORNIA COVE COMMUNITIES INC.
LEGACY ISLAND @ MISSION HILLS C. C.
SHEFFIELD HOMES
MARIPOSA @ TRILOGY
SHEA HOMES
MASTER SERIES III @ DESERT PRINCESS
LENNAR HOMES
MONTAGE @ SANTA ROSA
WESSMAN/GONZALES
MONTECITO @ RIO DEL SOL
DAMON SISKIN
MONTELENA
TRANS WEST HOUSING
MOSAIC @ ESPLANADE
PONDEROSA HOMES
MUIRFIELD @ PGA WEST
TOLL BROTHERS, INC.
Sales/Week
CurQtr
Cum
1.14
1.27
7.87
7.87
4.43
4.85
3.62
2.58
15.00
15.00
-0.37
2.34
2.50
2.50
2.90
2.90
3.00
1.46
0.00
0.54
0.14
1.61
4.75
4.75
-0.26
0.33
0.77
1.25
0.16
1.04
1.08
0.80
0.14
2.87
0.33
0.52
1.10
-0.02
0.21
0.89
1.26
0.84
Price
$361,990
$419,990
$307,990
$368,990
$297,990
$344,990
$331,990
$409,990
$342,990
$385,990
$309,990
$350,990
$328,900
$395,900
$412,400
$459,900
$468,990
$498,990
$371,000
$421,000
$189,990
$369,990
$335,990
$365,990
$1,395,000
$1,650,000
$839,900
$993,600
$458,990
$537,990
$245,990
$265,990
$714,900
$799,900
$459,990
$474,990
$789,000
$899,900
$530,900
$575,900
$936,975
$1,006,975
Ranges
Sqft
1,900
2,102
1,517
2,526
1,549
1,940
1,910
2,390
2,258
2,839
1,743
2,372
1,846
2,877
2,258
2,681
2,385
2,760
1,997
2,578
1,527
2,735
2,092
2,632
3,710
4,336
2,528
3,615
1,821
2,163
1,678
1,825
2,601
3,382
1,630
1,820
2,348
3,418
2,728
3,053
3,741
4,167
$/Sqft
$187.83
$199.80
$146.07
$203.02
$177.82
$192.37
$171.54
$173.81
$135.95
$151.89
$147.97
$177.84
$137.60
$178.16
$171.54
$182.63
$180.79
$196.64
$159.42
$185.77
$93.23
$192.75
$139.05
$160.60
$376.01
$380.53
$249.74
$348.06
$248.46
$252.05
$145.74
$149.61
$236.51
$274.85
$260.98
$282.20
$263.28
$336.03
$188.63
$194.61
$241.65
$250.46
Sales
Start
10-Dec-03
LotSize/
Density
5,000
Total
Units
200
Total
Sold
87
CurQtr
Sold
16
Unsold
0
Remain
ForDev
113
12-Feb-05
8,000
245
63
63
0
182
20-Nov-04
6,000
120
97
71
0
23
24-May-04
6,110
273
119
58
0
154
9-Apr-05
6,000
171
15
15
0
156
15-May-04
6,000
249
110
-6
5
134
15-Jan-05
6,000
165
30
30
10
125
22-Jan-05
8,820
64
32
32
0
32
21-Jun-03
8,000
147
136
42
11
0
29-May-04
9,000
41
24
0
0
17
19-Sep-02
8,000
224
215
2
9
0
12-Mar-05
6,000
87
19
19
0
68
26-May-04
11,500
26
15
-4
11
0
26-Jun-04
13,787
44
44
7
0
0
24-Aug-02
5,000
400
142
2
2
256
1-Mar-01
4,950
185
172
16
0
13
8-May-04
13,000
150
138
2
12
0
6-Nov-04
4,600
91
11
5
1
79
16-Oct-63
9,200
71
69
16
2
0
1-May-03
10,800
104
89
3
0
15
1-Sep-03
12,000
85
70
19
2
13
PAGE 2 OF 4
Community/
MasterPlan
PALM SPRINGS
FOUR SEASONS
INDIO
SHADOW HILLS
COACHELLA
STAND-ALONE
COACHELLA
STAND-ALONE
COACHELLA
STAND-ALONE
COACHELLA
STAND-ALONE
COACHELLA
STAND-ALONE
CATHEDRAL CITY
STAND-ALONE
LA QUINTA
STAND-ALONE
CATHEDRAL CITY
STAND-ALONE
INDIO
RANCHO INDIO
COACHELLA
STAND-ALONE
LA QUINTA
PGA WEST
RANCHO MIRAGE
MISSION HILLS C. C.
LA QUINTA
TRILOGY
CATHEDRAL CITY
DESERT PRINCESS
INDIO
STAND-ALONE
CATHEDRAL CITY
RIO DEL SOL
INDIAN WELLS
STAND-ALONE
LA QUINTA
ESPLANADE
LA QUINTA
PGA WEST
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-1
DETACHED PRODUCT
COACHELLA VALLEY
FIRST QUARTER 2005
NORMAN ESTATES @ PGA WEST
NORMAN ESTATES II, LLC
PALAZZO @ RIO DEL SOL
DAMON SISKIN
PARADISE SPRINGS
DORAMA LLC
PASEO VISTA
SOUTHERN SUN CONSTRUCTION
PIAZZA SERENA
POINT HAPPY RANCH
EHLINE COMPANY
PUERTA AZUL
PACIFIC SANTA FE
RHAPSODY @ INDIAN PALMS COUNTRY CLUB
RIDGE GATE @ HIDDEN CANYON
TRANS WEST HOUSING
RIDGE VIEW
DESERT COMMUNITY DEVELOPERS
RIDGE VIEW @ HIDDEN CANYON
TRANS WEST HOUSING
ROYAL VISTA @ INDIAN PALMS COUNTRY CLUB
SANDHURST COVE @ SHADOW HILLS
JEFF HAYDEN
SANTA FE COLLECTION @ SANTO TOMAS
ASHBROOK COMMUNITIES
SANTA ROSA COLLECTION @ TRILOGY
SHEA HOMES
SANTA ROSA TRAILS
G5 INCORPORATED
FAMILY DEVELOPMENT
SUN CITY SHADOW HILLS
PULTE HOMES CORPORATION
SUN CREST
BEAZER HOMES
SUNBURST
LENNAR HOMES
SUNSPRING HOMES
YEOMAN ASSOCIATES
Sales/Week
CurQtr
Cum
0.33
0.24
-0.20
0.08
0.28
1.28
1.00
1.14
2.00
2.00
0.00
0.41
0.13
1.43
1.23
0.40
0.64
1.20
0.00
0.52
0.20
0.88
0.00
0.66
0.00
1.38
-0.14
0.37
0.41
0.50
0.00
0.34
3.00
3.00
-0.57
10.46
3.06
3.52
1.28
2.47
0.00
0.72
Price
$1,175,900
$1,575,900
$539,990
$649,990
$309,990
$389,990
$465,900
$525,900
$590,990
$670,990
$639,900
$799,900
$394,990
$446,990
$378,990
$429,990
$730,000
$775,000
$197,990
$290,990
$630,000
$700,000
$387,900
$412,900
$255,900
$429,900
$895,000
$970,000
$571,990
$631,990
$655,990
$755,990
$394,990
$489,990
$275,900
$435,900
$289,990
$319,990
$284,990
$324,990
$274,990
$293,990
Ranges
Sqft
3,070
3,917
2,000
2,400
1,258
2,168
1,881
2,315
2,690
3,066
2,800
3,277
1,380
1,740
1,825
2,073
3,180
3,478
1,272
2,112
2,383
3,033
1,624
1,997
1,680
2,720
3,109
3,376
2,398
2,769
2,583
3,236
2,185
3,247
1,191
2,596
1,552
2,175
1,586
2,008
1,211
1,603
$/Sqft
$368.29
$402.32
$266.66
$270.82
$179.88
$246.41
$227.17
$251.50
$218.84
$225.96
$228.53
$244.85
$256.89
$286.22
$203.77
$207.66
$222.82
$229.55
$137.77
$166.88
$230.79
$264.37
$206.76
$238.85
$152.32
$204.14
$265.10
$302.74
$228.23
$238.52
$233.61
$253.96
$150.90
$180.77
$167.91
$244.62
$147.12
$186.84
$161.84
$179.69
$183.39
$227.07
Sales
Start
2-Dec-00
LotSize/
Density
14,025
Total
Units
58
Total
Sold
55
CurQtr
Sold
5
Unsold
3
Remain
ForDev
0
8-Oct-04
6,000
83
2
-3
5
76
15-May-04
7,000
415
59
4
8
348
30-Jul-04
4,300
65
40
14
1
24
20-Mar-05
12,000
97
6
6
4
87
1-May-04
8,355
72
20
0
0
52
11-Nov-03
3,800
127
105
2
22
0
20-Mar-04
6,800
76
22
16
14
40
23-Mar-04
10,000
85
64
9
8
13
15-Jun-02
7,200
133
77
0
0
56
23-Mar-04
10,000
84
48
3
8
28
22-Sep-01
4,750
147
123
0
12
12
1-Oct-03
8,100
132
111
0
0
21
1-Dec-03
17,000
39
26
-2
6
7
24-Aug-02
6,000
400
68
5
5
327
15-May-04
10,000
33
16
0
15
2
1-Feb-05
8,000
263
30
30
0
233
15-Oct-03
4,500
3,200
816
-9
34
2,350
1-Nov-04
6,400
139
81
49
0
58
27-Mar-04
7,500
135
131
18
0
4
15-Jul-00
7,200
208
178
0
9
21
PAGE 3 OF 4
Community/
MasterPlan
LA QUINTA
NORMAN COURSE PGA WEST
CATHEDRAL CITY
RIO DEL SOL
DESERT HOT SPRINGS
STAND-ALONE
PALM DESERT
STAND-ALONE
LA QUINTA
STAND-ALONE
LA QUINTA
STAND-ALONE
LA QUINTA
STAND-ALONE
INDIO
LA QUINTA
HIDDEN CANYON
THOUSAND PALMS
STAND-ALONE
LA QUINTA
HIDDEN CANYON
INDIO
INDIO
SHADOW HILLS
RANCHO MIRAGE
SANTO TOMAS
LA QUINTA
TRILOGY
LA QUINTA
STAND-ALONE
INDIO
SHADOW HILLS
INDIO
SUN CITY
COACHELLA
STAND-ALONE
INDIO
STAND-ALONE
DESERT HOT SPRINGS
STAND-ALONE
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-1
DETACHED PRODUCT
COACHELLA VALLEY
FIRST QUARTER 2005
TAPESTRY @ ESPLANADE
LENNAR HOMES
THE EL DORADO COLLECTION @ MOUNTAIN VIEW
THE EL DORADO COLLECTION @ SHADOW HILLS
THE ORCHARD
FAMILY DEVELOPMENT
THE PALMS OF LA QUINTA
THE VENTANA COLLECTION @ MOUNTAIN VIEW
THE VILLAS @ MOUNTAIN VIEW
TOLL BROTHERS, INC.
THE VISTAS @ LAS COLINAS
GHA COMPANIES
THE VISTAS @ MOUNTAIN VIEW
TOLL BROTHERS, INC.
TIERRA DEL SOL
INNOVATIVE RESORT COMMUNITIES
VENTANA COLLECTION @ MOUNTAINGATE I & II
VERSAILLES
REGENCY HOMES
VILLA DEL SOL @ RIO VISTA VILLAGE
SOL PACIFIC, LLC.
VISTA SANTA ROSA
THE DEVON GROUP, INC.
78 Total Projects
Sales/Week
CurQtr
Cum
2.30
1.91
2.86
3.31
0.50
1.38
0.80
1.64
2.35
1.57
0.13
0.39
0.71
2.25
0.72
0.81
0.46
1.05
0.71
1.53
0.26
0.71
3.62
2.04
0.42
1.64
0.33
1.74
0.00
0.70
1.20
1.53
-0.07
0.65
90.55
1.16
134.68
1.73
Price
$390,990
$430,990
$364,990
$414,990
$349,990
$429,990
$339,990
$424,990
$629,900
$759,900
$799,000
$1,450,000
$299,990
$334,990
$299,990
$339,990
$732,975
$784,975
$309,900
$354,900
$1,203,975
$1,293,975
$136,990
$330,990
$328,990
$363,990
$559,900
$1,249,000
$241,950
$262,950
$294,990
$394,990
$429,990
$549,990
Ranges
Sqft
1,806
2,225
1,610
2,266
1,518
2,778
1,720
2,778
2,743
3,600
2,550
4,047
1,211
1,820
1,208
1,843
2,631
3,047
1,700
2,068
3,263
4,057
1,104
1,945
1,211
1,820
2,205
5,107
1,597
1,810
1,302
2,735
1,714
2,603
$/Sqft
$193.70
$216.49
$183.13
$226.70
$154.78
$230.55
$152.98
$197.66
$211.08
$233.15
$313.33
$366.90
$184.06
$247.72
$184.47
$248.33
$257.62
$278.59
$171.61
$182.29
$318.94
$368.97
$111.86
$184.86
$199.99
$271.66
$208.52
$254.42
$145.27
$151.50
$144.42
$226.56
$211.29
$250.86
Sales
Start
11-Jun-03
LotSize/
Density
8,000
Total
Units
275
Total
Sold
180
CurQtr
Sold
30
Unsold
20
Remain
ForDev
75
6-Nov-04
7,200
142
73
43
3
66
17-Oct-03
5,000
169
105
7
9
55
22-Mar-03
6,000
198
176
12
10
12
28-Apr-04
13,000
93
77
33
3
13
5-Mar-03
11,000
53
43
2
10
0
17-Oct-03
5,000
230
171
10
21
38
22-Mar-03
6,000
198
87
11
7
104
1-Jan-03
9,000
225
125
7
71
29
4-Sep-04
7,200
184
46
10
12
126
1-Jan-03
12,750
150
85
4
41
24
1-Sep-03
7,000
173
172
58
1
0
12-Jul-03
5,600
261
148
6
4
109
15-Nov-02
8,500
275
216
5
11
48
7-Feb-04
5,200
120
42
0
0
78
1-Oct-03
7,200
137
123
18
14
0
15-Jul-03
8,300
65
59
-1
6
0
15,042
7,249
964
559
7,234
Community/
MasterPlan
LA QUINTA
ESPLANADE
INDIO
SHADOW HILLS
DESERT HOT SPRINGS
MISSION LAKES C. C.
INDIO
SHADOW HILLS
INDIO
STAND-ALONE
LA QUINTA
THE PALMS
DESERT HOT SPRINGS
MISSION LAKES C. C.
INDIO
SHADOW HILLS
LA QUINTA
MOUNTAIN VIEW
INDIO
LAS COLINAS
LA QUINTA
MOUNTAIN VIEW
COACHELLA
STAND-ALONE
PALM SPRINGS
MOUNTAIN GATE
RANCHO MIRAGE
STAND-ALONE
CATHEDRAL CITY
RIO VISTA
INDIO
SHADOW HILLS
LA QUINTA
STAND-ALONE
PAGE 4 OF 4
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-2
NEW HOME MARKET SUMMARY
BY SUBMARKET AREA
DETACHED PRODUCT
FIRST QUARTER 2005
Community
# of
Projects
Sales
Per Week
Price
Averages
Sqft
$/Sqft
Total
Units
Total CurQtr
Remain
Sold
Sold Unsold ForDev
INDIAN WELLS-LA QUINTA
24
0.88
$792,518 2,976 $266.28 3,575
1,869
195
259
1,447
INDIO-COACHELLA
26
3.18
$381,349 2,147 $177.64 7,330
3,137
585
155
4,038
PALM DESERT
4
0.94
$521,254 2,322 $224.50
326
26
12
115
PALM SPRINGS-CATHEDRAL CITY
19
1.17
$462,322 2,216 $208.64 3,091
1,502
136
104
1,485
RANCHO MIRAGE
5
1.03
$736,646 2,768 $266.15
415
22
29
149
SINGLE FAMILY DETACHED TOTAL
78
1.73
$487,063 2,341 $208.08 15,042 7,249
964
559
7,234
453
593
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-3
INDIO-COACHELLA SUBMARKET AREA
FIRST QUARTER 2005
BELLA CANTO
RILINGTON COMMUNITIES
CASA BELLA @ INDIAN PALMS COUNTRY CLUB
ESPERANZA @ DESERT RIVER ESTATES
LENNAR HOMES
FOXSTONE
KB HOME
HERMOSA
RYLAND HOMES
LA COLONIA
RTV DEVELOPMENT
LA MORADA
LENNAR HOMES
LA PALOMA
LA PALOMA ESTATES
LAS BRISAS NORTH @ RANCHO INDIO
LAS PLUMAS
LENNAR HOMES
MONTAGE @ SANTA ROSA
WESSMAN/GONZALES
RHAPSODY @ INDIAN PALMS COUNTRY CLUB
ROYAL VISTA @ INDIAN PALMS COUNTRY CLUB
SANDHURST COVE @ SHADOW HILLS
JEFF HAYDEN
FAMILY DEVELOPMENT
SUN CITY SHADOW HILLS
PULTE HOMES CORPORATION
SUN CREST
BEAZER HOMES
SUNBURST
LENNAR HOMES
THE EL DORADO COLLECTION @ SHADOW HILLS
THE ORCHARD
FAMILY DEVELOPMENT
THE VISTAS @ LAS COLINAS
GHA COMPANIES
TIERRA DEL SOL
INNOVATIVE RESORT COMMUNITIES
26 Total Projects
Sales/Week
Ranges
CurQtr Cum Price
Sqft $/Sqft
1.00 1.86 $237,990 1,369 $162.45
$327,990 2,019 $178.26
0.30 0.25 $390,990 1,704 $209.41
$439,990 2,101 $229.45
1.57 1.80 $675,990 3,168 $187.40
$749,990 4,002 $213.38
7.87 7.87 $307,990 1,517 $146.07
$368,990 2,526 $203.02
4.43 4.85 $297,990 1,549 $177.82
$344,990 1,940 $192.37
3.62 2.58 $331,990 1,910 $171.54
$409,990 2,390 $173.81
15.00 15.00 $342,990 2,258 $135.95
$385,990 2,839 $151.89
-0.37 2.34 $309,990 1,743 $147.97
$350,990 2,372 $177.84
2.50 2.50 $328,900 1,846 $137.60
$395,900 2,877 $178.16
0.14 1.61 $189,990 1,527 $93.23
$369,990 2,735 $192.75
4.75 4.75 $335,990 2,092 $139.05
$365,990 2,632 $160.60
0.14 2.87 $714,900 2,601 $236.51
$799,900 3,382 $274.85
1.23 0.40 $378,990 1,825 $203.77
$429,990 2,073 $207.66
0.00 0.66 $387,900 1,624 $206.76
$412,900 1,997 $238.85
0.00 1.38 $255,900 1,680 $152.32
$429,900 2,720 $204.14
3.00 3.00 $394,990 2,185 $150.90
$489,990 3,247 $180.77
-0.57 10.46 $275,900 1,191 $167.91
$435,900 2,596 $244.62
3.06 3.52 $289,990 1,552 $147.12
$319,990 2,175 $186.84
1.28 2.47 $284,990 1,586 $161.84
$324,990 2,008 $179.69
2.86 3.31 $364,990 1,610 $183.13
$414,990 2,266 $226.70
0.80 1.64 $339,990 1,720 $152.98
$424,990 2,778 $197.66
2.35 1.57 $629,900 2,743 $211.08
$759,900 3,600 $233.15
0.72 0.81 $299,990 1,208 $184.47
$339,990 1,843 $248.33
0.71 1.53 $309,900 1,700 $171.61
$354,900 2,068 $182.29
3.62 2.04 $136,990 1,104 $111.86
$330,990 1,945 $184.86
1.20 1.53 $294,990 1,302 $144.42
$394,990 2,735 $226.56
61.21 82.60
2.35
3.18
Sales
Remain
Start
05-Jul-03
6,600
175 172
16
3
0
26-Jun-04
4,500
121
10
4
3
108
21-May-04 21,780
133
81
22
3
49
12-Feb-05
8,000
245
63
63
0
182
20-Nov-04
6,000
120
97
71
0
24-May-04
6,110
273
119
58
0
09-Apr-05
6,000
171
15
15
0
15-May-04
6,000
249
110
-6
5
15-Jan-05
6,000
165
30
30
10
19-Sep-02
8,000
224
215
2
9
12-Mar-05
6,000
87
19
19
0
08-May-04 13,000
150
138
2
12
20-Mar-04
6,800
76
22
16
14
22-Sep-01
4,750
147
123
0
12
01-Oct-03
8,100
132
111
0
0
01-Feb-05
8,000
263
30
30
0
15-Oct-03
4,500
3,200 816
-9
34
01-Nov-04
6,400
139
81
49
0
27-Mar-04
7,500
135
131
18
0
06-Nov-04
7,200
142
73
43
3
22-Mar-03
6,000
198
176
12
10
28-Apr-04
13,000
93
77
33
3
22-Mar-03
6,000
198
87
11
7
04-Sep-04
7,200
184
46
10
12
01-Sep-03
7,000
173
172
58
1
01-Oct-03
7,200
137
123
18
14
7,330 3,137
585
155
Community/
MasterPlan
COACHELLA
STAND-ALONE
INDIO
INDIAN PALMS CC
INDIO
INDIO
SHADOW HILLS
23
COACHELLA
STAND-ALONE
154
COACHELLA
STAND-ALONE
156
COACHELLA
STAND-ALONE
134
COACHELLA
STAND-ALONE
125
COACHELLA
STAND-ALONE
0
INDIO
RANCHO INDIO
68
COACHELLA
STAND-ALONE
0
INDIO
STAND-ALONE
40
INDIO
INDIAN PALMS CC
12
INDIO
INDIAN PALMS CC
21
INDIO
SHADOW HILLS
233
INDIO
SHADOW HILLS
2,350
INDIO
SUN CITY
58
COACHELLA
STAND-ALONE
4
INDIO
STAND-ALONE
66
INDIO
SHADOW HILLS
12
INDIO
SHADOW HILLS
13
INDIO
STAND-ALONE
104
INDIO
SHADOW HILLS
126
INDIO
LAS COLINAS
0
COACHELLA
STAND-ALONE
0
INDIO
SHADOW HILLS
4,038
PAGE 1 OF 1
275811x3-1,2,3,4,5,6.xls
Map
Key
9
1
2
4
10
8
11
3
7
5
12
6
EXHIBIT III-4
SHADOW HILLS
JULY 2005
Sales/Week
Ranges
Sales
Remain
Community/
CurQtr Cum
Price
Sqft
$/Sqft
Start
MasterPlan
ALICANTE @ TALAVERA
3.31
3.31
$389,540 2,493 $130.68 20-May-05
8,000
105
22
22
11
72
INDIO
DR HORTON
$404,990 3,099 $156.25
TALAVERA
BELLA TIERRA @ SHADOW HILLS
8.12
8.12
$379,990 1,895 $159.75 01-Jun-05
8,000
56
40
40
2
14
INDIO
FAMILY DEVELOPMENT
$419,990 2,629 $200.52
SHADOW HILLS
1.75
2.61
$375,990 1,610 $183.13 06-Nov-04
7,200
142
90
17
8
44
INDIO
$419,990 2,266 $226.70
SHADOW HILLS
THE EL DORADO COLLECTION @ SHADOW HILLS 0.17
1.49
$339,990 1,720 $152.98 22-Mar-03
6,000
198
178
2
6
14
INDIO
$424,990 2,778 $197.67
SHADOW HILLS
FLORENCIA @ TALAVERA
2.18
5.28
$330,990 1,855 $155.88 01-Jun-05
8,000
121
26
26
18
77
INDIO
DR HORTON
$370,990 2,380 $179.95
TALAVERA
FOXSTONE
3.10
4.88
$326,000 1,517 $146.07 12-Feb-05
8,000
245
100
37
0
145
INDIO
KB HOME
$387,000 2,526 $203.02
SHADOW HILLS
GENOVA @ TALAVERA
1.90
1.90
$396,990 2,848 $127.64 30-Apr-05
8,001
110
18
18
1
91
INDIO
DR HORTON
$416,990 3,267 $139.39
TALAVERA
2.58
5.53
$414,990 2,185 $157.06 01-Feb-05
8,000
263
122
30
0
233
INDIO
FAMILY DEVELOPMENT
$509,990 3,247 $189.93
SHADOW HILLS
SIENNA @ SHADOW HILLS
2.35
2.35
$394,990 2,448 $142.54 13-Apr-05
8,000
132
28
28
24
80
INDIO
RYLAND HOMES
$447,990 3,143 $161.35
SHADOW HILLS
0.84
0.81
$299,990 1,208 $184.47 22-Mar-03
6,000
241
97
10
2
142
INDIO
$339,990 1,843 $248.33
SHADOW HILLS
VENECIA AT TALAVERA
3.47
3.47
$299,990 1,576 $171.54 16-May-05
8,000
100
25
25
20
55
INDIO
DR HORTON
$333,990 1,947 $190.35
TALAVERA
1.46
1.46
$294,990 1,302 $144.42 01-Oct-03
7,200
137
134
11
3
0
INDIO
$394,990 2,735 $226.56
SHADOW HILLS
12 Total Projects
31.23 41.20
1,850 880
266
95
967
2.60
3.43
PAGE 1 OF 1
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-5
NEW HOME PROJECTS LOCATION MAP
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-6
DEVELOPMENT STATUS REPORT
CITY OF INDIO
JUNE 2005
Project Name
File Name
Units Request
Location
Owner
Submitted
SINGLE FAMILY ATTACHED
RECENTLY APPROVED OR UNDER CONSTRUCTION
1 Montano De Oro
EA 05-02-425 PMP
5-3-42 CZ 5-2-631
DR 5-3-162
60
To construct 60 residential lots on
approx 11.36 acres Note: from RV
park To SFH 0 lot line homes gated
community
Southwest corner of Madison St. Madison St., LLC
& Dorothy Lane
(760) 773-9024
3/10/2005
1/2 mile east of the intersection
of Monroe and Avenue 50
Beazer Homes
5/27/2005
SINGE FAMILY DETACHED
RECENTLY APPROVED OR UNDER CONSTRUCTION
TM 32411
138
To allow the subdivision of 40.1
acres into 138 single family homes
TM 31601
110
To construct 110 single family homes
Within the Terra Lago
located within the Terra Lago
community
masterplanned community
Ryland Homes
--
4 Hacienda
Design Review 5-1157
284
Tract 31686 to subdivide 80 acres
into 284 single family lots including.
Westside of Golf Center
Parkway north of Avenue 43
Beazer Homes
(949) 285-2900
1/15/2005
5 Indio 78
TM 05-01-420 PMP
05-01-37 EA 05-0137
238
(Tract 32869) To subdivide 78.5
acres for 238 single family homes,
Avenue 40 and Jefferson St.
APN 679-110-005
SDI Communities LLC
Attn: Sam Yoo
( 951) 676-7000
1/18/2005
6 Stonefield Development
Tentative Map
32339 & 32340 TM
04-7-410 TM 04-7411 Change of
Zone 04-7-622
96
North of Avenue 50, west of
TM 32339; To subdivide 52.49 acres
Hjorth Street and south of
into 96 residential lots TM 32340;
Avenue 49
Stonefield Development
Art McCull
949-581-4663
8/31/2004
471
To construct 471 single family
residences on 160.67 acres
Generally located on the
northeast corner of Adams St.
and Ave 40.
APN 679-070-002
Regency Homes Peter
Solomon
(760) 770-7373
1/20/2005
36
To allow the construction of 36 new
single-family residneces & To allow
two story homes on 7.18 acres of
vacant land
Southwest corner of Dr. Carreon W.E.W. Construction
Blvd. and Calhoun Street
760-343-5102
2 Barcelona
3
Cortina at Terra Lago
Planning Area 5
7 Espana
DR 05-1-156
8 Rancho Verde
6/30/2004
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-6
CITY OF INDIO
JUNE 2005
Project Name
File Name
9 Fiesta de Vida
TM 33276
10 The Bridge at Jefferson
DR 04-10-139
DR 05-5-181
11
Sonora Wells
(Formerly Vista Laguna)
Units Request
Location
Owner
Submitted
Mixed use development totaling 656 located north of Ave. 38 and
acres
east of Washington St
James Taylor
(916) 257-0066
1/15/2005
124
To review architecture & landscape
Southeast corner of Avenue 48
plans to allow for the construction of
and Jefferson Street
124 single-family homes
The Bridge @ Jefferson,
LLC Ted Van -HuisenBrett 760-200-4485
10/13/2004
363
Northwest corner of Jackson St. D.R. Horton Michelle
and Ave. 41 south of the all
Kelley
on 93.3 acres (TM 32402)
(949) 442-6199
american canal
5/9/2005
275
To subdivide 80 acres of vacant land
into 275 single family lots with private
streets, and three
recreational/retention basin common
area lots.
North of I-10 freeway, between
Mickie Riley Rilington
Monrow Street and Jackson
Communities
street, north of the All American
760-471-5460
Canal
7/6/2004
South of Fred Waring Drive,
west of Clinton Street
Four Towers Development
760-333-3405
5/12/2004
North of Ave. 44, west of Golf
Center Parkway
Family Development
Rudy Hererra
(760) 900-8989
3/3/2004
APPROVED, NO RECORD OF DEVELOPMENT
12 Affresco
Tentative Map
32401 TM 04-6-408
13 Villa Di Vinci
Design Review 04-5117 TM 32425 (TM
04-5-406)
24
To subdivide 4.41 acres into 24
residential lots in the RH zone, also
To construct 24 Single family
residences
14 Buena Vista
Tentative Map
30605; 04-3-402
56
single family homes
15 Desert lake, LLC
TM 31974; 04-2400
TM 31975; 04-2401
257
TM 31974; To subdivide 29.07 acres
into 105 SFH
West Side of Golf Center
TM 31975; To subdivide 39.48 acres Parkway, north of Avenue 43
into 152 SFH
Desert Lake
Randy Reinhart
(909) 605-9456
2/4/2004
16 Regency Homes; Coronado
Tentative Map
31689 TM 04-1-398
480
To subdivide 160 acres of land into
480 single family homes
Northeast corner of Avenue 40
and Adams Street
Peter Solomon
(760) 770-7373
1/29/2004
17 Aldea at Waring
Design Review 03-995 Tentative Map
31692; 03-9-392
34
To subdivide 7.14 acres of vacant
land into 34 single family residential
lots with private streets.
South of Fred Waring, west of
Clinton Street
GHA Paloma Group, LLC
Mario Gonzales
(760) 322-3422
9/30/2003
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-6
CITY OF INDIO
JUNE 2005
Project Name
18
Indian Palms Cochran Ranch
Estates
19 Terra Lago East
20 Sandstone at Desert Trace
21 Estates at Sandhurst
22 Larry Hughes
Lupe Watson Vista Montana
23
Estates
File Name
Tentative Map
31389 03-9-391;
Specific Plan
Amendment 95-9-5
Project Master Plan
03-9-29
PMP 96-8-10 TM
32462 (04-11-417))
TM 32341 (TM 0411-416) TM 32288
(TM 04-11-415) TM
32287 (TM 04-11414)
Units Request
single-family residential lots; To
establish land use regulations,
82
development standards, and design
guidelines and To amend the land
use designation.
To allow for the development of 851
dwelling units of various density
types on 563.34 acres
527
(Deducting developments already
accounted for in this report, 527 units
remain in Terra Lago)
Location
Owner
Indian Palms Country Club
Desert Equipment T.A.
McConnell
(760) 347-8486
Submitted
9/5/2003
North of Avenue 44 between
Suncal
Golf Center Parkway and Dillion
Gary Williams
Road; Landmark Lakes Golf
(760) 775-6373
Course
11/1/2004
Review of architectural designs and
Ashbrook Communities
Southwest corner of Jackson St.
front yard landscaping for 111 singleBruce Maize
and Ave. 41
family homes within Tract 30643
(760) 200-9290
9/21/2004
123
General Plan Amendment &
Tentative Map for 40 acres for 123
single family homes
south of Ave. 42 between
Jackson St. & Van Buren St.
APN 679-310-007
11/4/2004
208
To subdivide 80 acres into 298
single family homes in a gated
community
East of Golf Center Parkway on Larry Hughes
Avenue 44.
(760) 578-0139
8/1/2003
Tentative Map
30606; TM 03-7387; Project Master
Plan 03-7-27
11
residential lots
South side of Avenue 50, west
of Jackson Street.
7/29/2003
136
General Plan
Amend 4-11-64
Tentative Map 0411-419
Tentative Map
31562; TM 03-8388
Sun Desert Homes LLC
760 775-5000
Lupe Watson
(760) 771-6237
24
Centennial Homes
Calhoun Estates
31
To construct 31 single-family
detached residences
North side of Dr. Carreon Blvd., Centennial Homes Derek
west of Calhoun Street.
Scott 415-899-1962
25
First Pacific Development;
Bellasara II
Design Review 03-784 Conditional Use
Permit; 03-7-794
53
Construction of 53 single family
homes on 7.96 acres with optional "
Casita"
located on Wayne Street in the
Indian Palms Country Club.
7/16/2003
First Pacifica
Development; Eric French;
909-841-1379
7/15/2003
PENDING
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-6
CITY OF INDIO
JUNE 2005
Project Name
26 Stonefield Development
File Name
TM 32340TM 04-7410 TM 04-7-411
Change of Zone 047-622
Units Request
Location
Owner
Submitted
36
North of Avenue 50, west of
residential lots To change the zoning
Hjorth Street and south of
designation on 99.33 acres from
Avenue 49
CEIR-1 & CEIR-2 to CEIR -1/2
2/15/2005
Stonefield Development
Art McCull
949-581-4663
8/31/2004
27 Woodside Homes
DR 05-01-158
179
Pleasant Valley
Northwest corner of Golf Center
Investments
Parkway and Avenue 43 within
on 61.27 acres
Paul Kroff
Terra Logo
(949) 848-4980
28 Whittier Ranch
TM 31473
138
To sub-divide 39 acres into 138
singlefamly homes in a gated
community
Located on northwest corner of
Avenue 48 & Jackson St.
Kevin Manning
760 404-1900
3/8/2005
29 San Milan at Paradiso
TM 31815
225
To consider the site plan and
architecture for 225 single family
homes
At the southeast corner of
Monroe Street and Avenue 40
Lennar Homes
4/7/2005
30 Bella Tierra 2
TM 33291
7
To construct 7 SFH's on 2.43 acres
approved TM 30605
Northwest corner of Ave. 44 and Rudy Herrera
Golf Center Parkway
(760) 990-8989
1/24/2005
31 Ponderosa Villas
DR 05-4-170
Ponderosa Homes II Inc
Pamela Hardey
(925) 460-8981
185
Ave 41 & Monroe St.
(TM 31815 410 Lots)
32 Polo Estates Residential
PMP 05-03-44 TM
05-3-431 EA 5-2424
774
TM 33004, To subdivide approx 214
acres into 774 lots. SF lots will range
Located at the northwest corner Jim Hildebrand
in size from 5000 sq ft to 11,000 sq ft
of Ave. 52 and Jackson St
(925) 682-4830
Cluster Product lots will range from
4,240 sq ft to 5,250 sq ft
3/15/2005
33 Avante
SP 05-3-15 TM 053-430 PMP 05-3-43
149
Mixed use project for 149 SFH and
Northwest corner of Burr St. &
office commercial on 54.47 acres TM
Varner Rd.
33239
3/10/2005
34 Aliante
TM 05-3-428 PMP
05-3-41 DR 05-3163
130
TM 33293 Development of 40 acres
North of Avenue 44, east of Golf Rudy Herrera
into 130 residential lots and a 3 acre
Center Parkway
(760) 900-8989
park/open space area.
3/8/2005
DR 05-3-161
86
Design review to construct 86 single
Golf Center Parkway and
story, single family homes Tract
Avenue 44 Tract 31601-4
31601
3/8/2005
35
Marquesa at Terra Lago
Planning Area 3
Rilington Communities
(760) 779-0705
Lennar Homes
(760) 325-3791
3/24/2005
275811x3-1,2,3,4,5,6.xls
EXHIBIT III-6
CITY OF INDIO
JUNE 2005
Project Name
File Name
Units Request
Location
Owner
Submitted
Golf Center Parkway and
Avenue 44 Tract 31601-3
Lennar Homes
(760) 325-3791
2/15/2005
36 Cordoba at Terra Lago
CUP 05-03-829 DR
05-3-160
128
Design review to construct 128
single family homes
37 Villa La Jolla
TM 05-02-425 Tract
33014 GPA 05-2-68
DR 05-2-161
14
To construct 14 residential homes on South of John Noblesand West
3.3 acres
of Arabia
4 Towers development
Guy Etziony
760-333-3405
2/14/2005
38 Indian Springs CC
Design Review 05-2160 Tentative Tract
Map 33165
27
single-family residential
Roger Snellenberger
(760) 784-5097
1/24/2005
4
Land division of 9.6 Acres in the
Indio Ranchos Country Estates area West side of Monroe, between
into four (4) two acre single-family
49th Ave. & 50th Avenue
residential lots
Patricia Aiken
(760) 347-0778
10/4/2004
56
To constuct 56 one-story and twostory single family residential units
on 16.35 acres
Patricia Aiken; Indio Ranchos Tentative Parcel
39
Country Estates Area
Map 04-10-332
40 Buena Tierra
Design Review 0410-142 Conditional
Use Permit 04-10823
41 Las Bougainvilleas, LLC
Change of Zone 0411-626 PMP 04-1136 Tentative Map
33012; 04-11-418
42 Windsong at Desert Trace
130
25
residential lots and 15 lettered lots
for street, landscaping and retention,
also To change the zoning from
CEIR-2 To CEIR-1/2
To construct 247 single-family
homes on 80.26 acres of agricultural
land within TTM 30643
Northeast corner of Jefferson
Street & Westward Ho
Rudy and Raymond
1/8 mile north of Avenue 44 and
Herrera
west of Golf Center Parkway
(760) 900-8989
North of Avenue 50, east of
Jefferson Street
Las Bougainvilleas LLC
Judane Clark/Dennis
Freeman
760-773-9024
KB Home Coastal Inc.
Northeast corner of Monroe and
Tim Lokkesmoe
Avenue 41
909-587-3308
11/16/2004
7/27/2004
--
SOURCE: City of Indio, Market Profiles
275811x3-1,2,3,4,5,6.xls
APPENDIX F
FORM OF BOND COUNSEL OPINION
[Dated the Date of Closing]
City of Indio
$10,170,000
City of Indio
Community Facilities District No. 2005-1 (Talavera)
Special Tax Bonds, Series 2005
(Improvement Area No. 1)
Members of the Board of Trustees:
We have acted as bond counsel to the City of Indio (the “City”) in connection with the issuance
of the $10,170,000 aggregate principal amount of City of Indio Community Facilities District No. 2005-1
(Talavera) Special Tax Bonds, Series 2005 (Improvement Area No. 1) (the “Bonds”), pursuant to the
provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1,
Division 2, Title 5, or the Government Code of the State of California (the “Act”) and pursuant to a Fiscal
Agent Agreement, dated as of December 1, 2005 (the “Fiscal Agent Agreement”), by and between the
City of Indio Community Facilities District No. 2005-1 (Talavera) (the “District”) and Union Bank of
California, N.A., as fiscal agent (the “Fiscal Agent”). We have examined the Act and such certified
proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the District
contained in the Fiscal Agent Agreement and in the certified proceedings and certifications of public
officials and others furnished to us, without undertaking to verify the same by independent investigation.
Based upon the foregoing we are of the opinion, under existing law, as follows:
1.
The Fiscal Agent Agreement has been duly and validly authorized, executed and
delivered by the District and, assuming such Fiscal Agent Agreement constitutes the
legally valid and binding obligation of the Fiscal Agent, constitutes the legally valid and
binding obligation of the District, enforceable against the District in accordance with its
terms.
2.
The Bonds constitute valid and binding limited obligations of the District as
provided in the Fiscal Agent Agreement, and are entitled to the benefits of the Fiscal
Agent Agreement.
3.
The Bonds are secured by a valid pledge of the Special Taxes and all moneys in
the funds and accounts under the Fiscal Agent Agreement, including all amounts derived
F-1
from the investment of such moneys, subject to the application thereof on the terms and
conditions as set forth in the Fiscal Agent Agreement.
4.
The Internal Revenue Code of 1986 (the “Code”) sets forth certain requirements
that must be met subsequent to the issuance and delivery of the Bonds for interest thereon
to be and remain excluded from the gross income of the owners thereof for federal
income tax purposes. Noncompliance with such requirements could cause the interest on
the Bonds to be included in gross income retroactive to the date of issue of the Bonds.
The District has covenanted in the Fiscal Agent Agreement to maintain the exclusion of
interest on the Bonds from the gross income of the owners thereof for federal income tax
purposes.
In our opinion, under existing law, interest on the Bonds is exempt from personal
income taxation of the State of California and, assuming compliance with the
aforementioned covenant, interest on the Bonds is excluded pursuant to section 103(a) of
the Code from the gross income of the owners thereof for federal income tax purposes.
We are further of the opinion that under existing statutes, regulations, rulings and
court decisions, the Bonds are not “specified private activity bonds” within the meaning
of section 57(a)(5) of the Code and, therefore, the interest on the Bonds will not be
treated as an item of tax preference for purposes of computing the alternative minimum
tax imposed by section 55 of the Code. The receipt or accrual of interest on Bonds
owned by a corporation may affect the computation of the alternative minimum taxable
income, upon which the alternative minimum tax is imposed, to the extent that such
interest is taken into account in determining the adjusted current earnings of that
corporation (75 percent of the excess, if any, of such adjusted current earnings over the
alternative minimum taxable income being an adjustment to alternative minimum taxable
income (determined without regard to such adjustment or to the alternative tax net
operating loss deduction)).
Except as stated in the preceding three paragraphs, we express no opinion as to
any federal or state tax consequences of the ownership or disposition of the Bonds.
Furthermore, we express no opinion as to any federal, state or local tax law consequences
with respect to the Bonds, or the interest thereon, if any action is taken with respect to the
Bonds or the proceeds thereof predicated or permitted upon the advice or approval of
other bond counsel.
No opinion is expressed herein on the accuracy, completeness or sufficiency of the Official
Statement or other offering materials relating to the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal Agent
Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors’ rights heretofore or hereafter enacted and may also be subject to the exercise of
judicial discretion in appropriate cases. The enforceability of the Bonds and the Fiscal Agent Agreement
is subject to the effect of general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, to the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a proceeding in equity or at law, and
to the limitations on legal remedies against governmental entities in California.
F-2
Our opinions are based on existing law, which is subject to change. Such opinions are further
based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our
opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any
changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a
guarantee of result and are not binding on the Internal Revenue Service; rather, such opinions represent
our legal judgment based upon our review of existing law that we deem relevant to such opinions and in
reliance upon the representations and covenants referenced above.
Respectfully submitted,
F-3
APPENDIX G
FORMS OF CONTINUING DISCLOSURE AGREEMENTS
CONTINUING DISCLOSURE AGREEMENT
(City of Indio Community Facilities District No. 2005-1 (Talavera))
This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated as of
December 1, 2005, is executed and delivered by the City of Indio Community Facilities District
No. 2005-1 (Talavera) (the “District”) and Union Bank of California, N.A., as dissemination
agent (the “Dissemination Agent”) hereunder, in connection with the issuance of the
$10,170,000 City of Indio Community Facilities District No. 2005-1 (Talavera) Special Tax
Bonds, Series 2005 (Improvement Area No. 1) (the “Bonds”). The Bonds are being issued
pursuant to provisions of a Fiscal Agent Agreement, dated as of December 1, 2005 (the “Fiscal
Agent Agreement”), by and between the District and Union Bank of California, N.A., as fiscal
agent (the “Fiscal Agent”). The District and the Dissemination Agent covenant and agree as
follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the District and the Fiscal Agent for the benefit of the Beneficial
Owners of the Bonds and in order to assist the Participating Underwriter in complying with
S.E.C. Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent
Agreement, which apply to any capitalized term used in this Disclosure Agreement unless
otherwise defined in this Section, the following capitalized terms shall have the following
meanings:
“Annual Report” shall mean any Annual Report or any addendum thereto provided by the
District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the
owner of any Bonds for federal income tax purposes.
“City” shall mean City of Indio, California.
“Disclosure Representative” shall mean the City Manager of the City or his or her
designee, or such other officer or employee as the City shall designate in writing to the Fiscal
Agent and Dissemination Agent from time to time.
“Dissemination Agent” shall mean the Fiscal Agent, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by
the District and which has filed with the Fiscal Agent a written acceptance of such designation.
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“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure
Agreement.
“National Repository” shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. The National Repositories currently approved
by the Securities and Exchange Commission are set forth in the SEC website located at
http://www.sec.gov.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
“Repository” shall mean each National Repository and each State Repository.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time
to time.
“State” shall mean the State of California.
“State Repository” shall mean any public or private repository or entity designated by the
State as a state repository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission. As of the date of this Agreement, there is no State Repository.
SECTION 3. Provision of Annual Reports.
(a)
The District shall, or shall cause the Dissemination Agent to, not later than
February 15 of each year, commencing February 15, 2006, provide to each Repository and the
Participating Underwriter an Annual Report which is consistent with the requirements of
Section 4 of this Disclosure Agreement. The Annual Reports may be provided in electronic
format to each Repository and may be provided through the services of a “Central Post Office”
approved by the Securities and Exchange Commission. The Annual Report may be submitted as
a single document or as separate documents comprising a package, and may include by reference
other information as provided in Section 4 of this Disclosure Agreement. If the District’s fiscal
year changes, it shall give notice of such change in the same manner as for a Listed Event under
Section 5(f). Furthermore, upon receipt of a written request of any Beneficiary Owner, the
Dissemination Agent shall provide a copy of the Annual Report to such Beneficial Owner.
(b)
Not later than fifteen (15) Business Days prior to the date specified in
subsection (a) for providing the Annual Report to Repositories, the District shall provide the
Annual Report to the Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the
Dissemination Agent). If by such date, the Dissemination Agent has not received a copy of the
Annual Report, the Dissemination Agent shall notify the District and the Fiscal Agent of such
failure to receive the Annual Report. The District shall provide a written certification with each
Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such
Annual Report constitutes the Annual Report required to be furnished by it hereunder. The
Dissemination Agent and Fiscal Agent may conclusively rely upon such certification of the
District and shall have no duty or obligation to review such Annual Report.
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(c)
If the Dissemination Agent is unable to verify that an Annual Report has
been provided to Repositories by the date required in subsection (a), the Dissemination Agent
shall send a notice to each Repository or to the Municipal Securities Rulemaking Board and the
State Repository, if any in substantially the form attached as Exhibit A.
(d)
The Dissemination Agent shall:
(i)
determine each year prior to the date for providing the Annual Report the name
and address of each National Repository and the State Repository, if any; and
(ii)
to the extent information is known to it, file a report with the District and (if the
Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the Annual
Report has been provided pursuant to this Disclosure Agreement, stating the date it was
provided and listing all the Repositories to which it was provided.
SECTION 4. Content of Annual Reports. The District’s Annual Report shall contain or
include by reference the following:
(i)
The audited financial statements of the City, prepared in accordance with
generally accepted accounting principles in effect from time to time. If the City’s audited
financial statements are not available by the time the Annual Report is required to be filed
pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a
format similar to the financial statements contained in the Official Statement, and the audited
financial statements shall be filed in the same manner as the Annual Report when they become
available.
(ii)
Agreement.
The balance in the Acquisition and Construction Fund held under the Fiscal Agent
(iii) Total assessed valuation (per the Riverside County Assessor records) of all
parcels currently subject to the Special Tax within Improvement Area No. 1 of the District,
showing the total assessed valuation for all land and the total assessed valuation for all
improvements within Improvement Area No. 1 of the District and distinguishing between the
assessed value of developed property and undeveloped property.
(iv)
Identification of each parcel for which any Special Tax payment is delinquent,
together with the following information respecting each such parcel: (A) the amount delinquent;
(B) the date of each delinquency; (C) in the event a foreclosure complaint has been filed
respecting such delinquent parcel and such complaint has not yet been dismissed, the date on
which the complaint was filed; and (D) in the event a foreclosure sale has occurred respecting
such delinquent parcel, a summary of the results of such foreclosure sale.
(v)
The number of certificates of occupancy issued by the City and the principal
amount of prepayments of the Special Tax with respect to Improvement Area No. 1 of the
District for the prior Fiscal Year.
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(vi)
A land ownership summary listing property owners responsible for more than five
percent (5%) of the annual Special Tax levy, as shown on the Riverside County Assessor’s last
equalized tax roll prior to the September next preceding the Annual Report date.
(vii) The principal amount of the Bonds outstanding and the balance in the Reserve
Account (along with a statement of the Reserve Requirement) as of the September 30 next
preceding the Annual Report date.
(viii) A description of the status of the facilities being constructed with proceeds of the
Bonds as of the date of the Annual Report (but only so long as such facilities are not completed),
and the balance in the Acquisition and Construction Fund as of the September 30 next preceding
the Annual Report date (but only until such fund is closed).
(ix)
The number of building permits issued in Improvement Area No. 1 of the District
during the prior Fiscal Year.
(x)
The amount of Special Taxes generated by the developed parcels and
undeveloped parcels within Improvement Area No. 1 of the District.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the City or related public entities, which have been
submitted to each of the Repositories or the Securities and Exchange Commission. If the
document included by reference is a final official statement, it must be available from the
Municipal Securities Rulemaking Board. The District shall clearly identify each such other
document so included by reference.
SECTION 5. Reporting of Significant Events.
(a)
Pursuant to the provisions of this Section 5, the District shall give, or
cause to be given, notice of the occurrence of any of the following events with respect to the
Bonds, if material:
1.
principal and interest payment delinquencies;
2.
non-payment related defaults;
3.
modifications to rights of Bondholders;
4.
optional, contingent or unscheduled bond calls;
5.
defeasances;
6.
rating changes;
7.
adverse tax opinions or events adversely affecting the tax-exempt status of
the Bonds;
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8.
unscheduled draws on the debt service reserves reflecting financial
difficulties;
9.
unscheduled
difficulties;
10.
substitution of credit or liquidity providers, or their failure to perform;
11.
release, substitution or sale of property securing repayment of the Bonds.
draws
on
credit
enhancements
reflecting
financial
(b)
The Dissemination Agent shall, within one (1) Business Day of obtaining
actual knowledge of the occurrence of any of the Listed Events, or as soon as reasonably
practicable thereafter, contact the Disclosure Representative, inform such person of the event,
and request that the District promptly notify the Dissemination Agent in writing whether or not
to report the event pursuant to subsection (f) and promptly direct the Fiscal Agent whether or not
to report such event to the Bondholders. In the absence of such direction the Dissemination
Agent shall not report such event unless otherwise required to be reported by the Fiscal Agent to
the Bondholders under the Fiscal Agent Agreement. The Dissemination Agent may conclusively
rely upon such direction (or lack thereof). For purposes of this Disclosure Agreement, “actual
knowledge” of the occurrence of such Listed Events shall mean actual knowledge by the officer
at the corporate trust office of the Fiscal Agent or the Dissemination Agent with regular
responsibility for the administration of matters related to the Fiscal Agent Agreement. Neither
the Fiscal Agent nor the Dissemination Agent shall have any responsibility to determine the
materiality of any of the Listed Events.
(c)
Whenever the District obtains knowledge of the occurrence of a Listed
Event, whether because of a notice from the Dissemination Agent pursuant to subsection (b) or
otherwise, the District shall as soon as possible determine if such event would be material under
applicable federal securities laws.
(d)
If the District has determined that knowledge of the occurrence of a Listed
Event would be material under applicable federal securities laws, the District shall promptly
notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to
report the occurrence pursuant to subsection (f).
(e)
If in response to a request under subsection (b), the District determines
that the Listed Event would not be material under applicable federal securities laws, the District
shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to
report the occurrence pursuant to subsection (f).
(f)
If the Dissemination Agent has been instructed by the District to report the
occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with
the Municipal Securities Rulemaking Board and the State Repository or the Repositories.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5)
need not be given under this subsection any earlier than the notice (if any) of the underlying
event is given to Holders of affected Bonds pursuant to the Fiscal Agent Agreement.
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SECTION 6. Termination of Reporting Obligation. The District’s obligations under this
Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the
District shall give notice of such termination in the same manner as for a Listed Event under
Section 5(f).
SECTION 7. Dissemination Agent. The District may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Agreement, and may discharge any such Dissemination Agent, with or without appointing a
successor Dissemination Agent. The Dissemination Agent shall not be responsible in any
manner for the content of any notice or report prepared by the District pursuant to this Disclosure
Agreement. The initial Dissemination Agent shall be Union Bank of California, N.A. The
Dissemination Agent may resign by providing thirty days written notice to the District and the
Fiscal Agent. The Dissemination Agent shall have no duty to prepare any information report nor
shall the Dissemination Agent be responsible for filing any report not provided to it by the
District in a timely manner and in a form suitable for filing.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Agreement, the District, Dissemination Agent and the Fiscal Agent may amend this
Disclosure Agreement (and the Fiscal Agent and Dissemination Agent shall agree to any
amendment so requested by the District) provided, neither the Fiscal Agent nor the
Dissemination Agent shall be obligated to enter into any such amendment that modifies or
increases its duties or obligations hereunder, and any provision of this Disclosure Agreement
may be waived, provided that the following conditions are satisfied:
(a)
If the amendment or waiver relates to the provisions of Sections 3(a), 4, or
5(a), it may only be made in connection with a change in circumstances that arises from a change
in legal requirements, change in law, or change in the identity, nature or status of an obligated
person with respect to the Bonds, or the type of business conducted;
(b)
The undertaking, as amended or taking into account such waiver, would,
in the opinion of nationally recognized bond counsel, have complied with the requirements of the
Rule at the time of the original issuance of the Bonds, after taking into account any amendments
or interpretations of the Rule, as well as any change in circumstances; and
(c)
The amendment or waiver either (i) is approved by the Holders of the
Bonds in the same manner as provided in the Fiscal Agent Agreement for amendments to the
Fiscal Agent Agreement with the consent of Holders, or (ii) does not, in the opinion of nationally
recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of
the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the
District shall describe such amendment in the next Annual Report, and shall include, as
applicable, a narrative explanation of the reason for the amendment or waiver and its impact on
the type (or, in the case of a change of accounting principles, on the presentation) of financial
information or operating data being presented by the District.
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SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the District from disseminating any other information, using the means of
dissemination set forth in this Disclosure Agreement or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Agreement. If the District chooses to
include any information in any Annual Report or notice of occurrence of a Listed Event in
addition to that which is specifically required by this Disclosure Agreement, the District shall
have no obligation under this Agreement to update such information or include it in any future
Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the District or the Fiscal Agent to
comply with any provision of this Disclosure Agreement, the Fiscal Agent (at the written request
of any Participating Underwriter or the Holders of at least 25% aggregate principal amount of
Outstanding Bonds, shall but only to the extent funds in an amount satisfactory to the Fiscal
Agent have been provided to it or it has been otherwise indemnified to its satisfaction from any
cost, liability, expense or additional charges and fees of the Fiscal Agent whatsoever, including,
without limitation, fees and expenses of its attorneys), or any Holder or Beneficial Owner of the
Bonds may take such actions as may be necessary and appropriate, including seeking mandate or
specific performance by court order, to cause the District or Fiscal Agent, as the case may be, to
comply with its obligations under this Disclosure Agreement. A default under this Disclosure
Agreement shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the
sole remedy under this Disclosure Agreement in the event of any failure of the District or the
Fiscal Agent to comply with this Disclosure Agreement shall be an action to compel
performance.
SECTION 11. Duties, Immunities and Liabilities of Fiscal Agent and Dissemination
Agent. Article VII of the Fiscal Agent Agreement pertaining to the Fiscal Agent is hereby made
applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this
purpose) contained in the Fiscal Agent Agreement and the Fiscal Agent and Dissemination
Agent shall be entitled to the protections, limitations from liability and indemnities afforded the
Fiscal Agent thereunder. The Dissemination Agent shall have only such duties as are
specifically set forth in this Disclosure Agreement, and the District agrees to indemnify and save
the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss,
expense and liabilities which they may incur arising out of or in the exercise or performance of
its powers and duties hereunder, including the costs and expenses (including attorneys fees) of
defending against any claim of liability, but excluding liabilities due to the Dissemination
Agent’s negligence or willful misconduct. The Dissemination Agent shall be paid compensation
by the District for its services provided hereunder in accordance with its schedule of fees as
amended from time to time and all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall
have no duty or obligation to review any information provided to them hereunder and shall not
be deemed to be acting in any fiduciary capacity for the District, the Bondholders, or any other
party. The Dissemination Agent shall have no liability to the Bondholders or any other party for
any monetary damages or financial liability of any kind whatsoever related to or arising from this
Agreement. The obligations of the District under this Section shall survive resignation or
removal of the Dissemination Agent and payment of the Bonds.
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SECTION 12. Notices. Any notices or communications to or among any of the parties
to this Disclosure Agreement may be given as follows:
To the District:
City of Indio Community Facilities District No. 2005-1
(Talavera)
c/o City of Indio
Attn: City Manager
Phone: (760) 342-6580
Fax: (760) 342-6597
To the Fiscal Agent: Union Bank of California, N.A.
120 South San Pedro Street, Suite 400
Los Angeles, California 90012
Attn: Corporation Trust Department
Phone: (213) 972-5674
Fax: (213) 972-5694
Any person may, by written notice to the other persons listed above, designate a different address
or telephone number(s) to which subsequent notices or communications should be sent.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the District, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and
Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any
other person or entity.
SECTION 14. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
CITY OF INDIO COMMUNITY FACILITIES
DISTRICT NO. 2005-1 (TALAVERA)
By _____________________________
City Manager of the City of Indio
UNION BANK OF CALIFORNIA, N.A., as
Dissemination Agent
By _____________________________
Authorized Representative
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EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party:
(Talavera)
Name of Bond Issue:
(Talavera) Special Tax Bonds, Series 2005
(Improvement Area No. 1)
Date of Issuance:
December 7, 2005
NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with
respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as
of December 1, 2005, with respect to the Bonds. [The District anticipates that the Annual Report
will be filed by _____________.]
Dated:_______________
UNION BANK OF CALIFORNIA, N.A.,
on behalf of District
cc: Issuer
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DEVELOPER CONTINUING DISCLOSURE AGREEMENT
([NAME OF PROPERTY OWNER])
This Developer Continuing Disclosure Agreement (the “Disclosure Agreement”), dated
as of December 1, 2005, is executed and delivered by _______________, [type of entity] (the
“Property Owner”) and Union Bank of California, N.A., as fiscal agent (the “Fiscal Agent”) and
acting in its capacity as Dissemination Agent hereunder, in connection with the issuance of the
$10,170,000 City of Indio Community Facilities District No. 2005-1 (Talavera) Special Tax
Bonds, Series 2005 (Improvement Area No. 1) (the “Bonds”). The Bonds are being issued
pursuant to provisions of a Fiscal Agent Agreement, dated as of December 1, 2005 (the “Fiscal
Agent Agreement”), by and between the City of Indio Community Facilities District No. 2005-1
(Talavera) (the “Issuer”) and the Fiscal Agent. The Property Owner, the Dissemination Agent
and the Fiscal Agent covenant and agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being
executed and delivered by the Property Owner, the Dissemination Agent and the Fiscal Agent for
the benefit of the Beneficial Owners of the Bonds and in order to assist the Participating
Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent
Agreement, which apply to any capitalized term used in this Disclosure Agreement unless
otherwise defined in this Section, the following capitalized terms shall have the following
meanings:
“Affiliate” of another Person means (a) a Person directly or indirectly owning,
controlling, or holding with power to vote, five percent (5%) or more of the outstanding voting
securities of such other Person, (b) any Person whose outstanding voting securities of five
percent (5%) or more are directly or indirectly owned, controlled, or held with power to vote, by
such other Person, and (c) any Person directly or indirectly controlling , controlled by, or under
common control with, such other Person; for purposes hereof, control means the power to
exercise a controlling influence over the management or policies of a Person, unless such power
is solely the result of an official position with such Person.
“Annual Report” shall mean any Annual Report or its addendum provided by the
Property Owner pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Assumption Agreement” means an undertaking of a Major Owner, or an Affiliate
thereof, for the benefit of the holders and beneficial owners of the Bonds containing terms
substantially similar to this Disclosure Agreement (as modified for such Major Owner’s
development and financing plans with respect to Improvement Area No. 1 of the District),
whereby such Major Owner or Affiliate agrees to provide annual reports and notices of
significant events, setting forth the information described in sections 4 and 5 hereof, respectively,
with respect to the portion of the property in Improvement Area No. 1 of the District owned by
such Major Owner and its Affiliates and, at the option of the Property Owner or such Major
Owner, agrees to indemnify the Dissemination Agent pursuant to a provision substantially in the
form of Section 11 hereof.
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“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the
owner of any Bonds for federal income tax purposes.
“Disclosure Representative” shall mean the _____________ of the Property Owner or his
or her designee, or such other officer or employee as the Property Owner shall designate in
writing to the Fiscal Agent and Dissemination Agent from time to time.
“Dissemination Agent” shall mean the Fiscal Agent, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by
the Property Owner and which has filed with the Fiscal Agent a written acceptance of such
designation.
“District” shall mean City of Indio Community Facilities District No. 2005-1 (Talavera).
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure
Agreement.
“Major Owner” shall mean an owner (including all Affiliates of such owner) of land in
Improvement Area No. 1 of the District responsible in the aggregate for 20% or more of the
annual special taxes levied in Improvement Area No. 1 of the District.
“National Repository” shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. The National Repositories currently approved
by the Securities and Exchange Commission are set forth in the SEC website located at
http://www.sec.gov.
“Participating Underwriter” shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
“Person” means an individual, a corporation, a partnership, an association, a joint stock
company, a trust, any unincorporated organization or a government or political subdivision
thereof.
“Repository” shall mean each National Repository and each State Repository.
“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time
to time.
“Special Taxes” shall mean the special taxes to be levied on the property owned by the
Property Owner within Improvement Area No. 1 of the District.
“State” shall mean the State of California.
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“State Repository” shall mean any public or private repository or entity designated by the
State as a state repository for the purpose of the Rule and recognized as such by the Securities
and Exchange Commission. As of the date of this Agreement, there is no State Repository.
SECTION 3. Provision of Annual Reports.
(a)
Property Owner shall, or, upon written direction, shall cause the
Dissemination Agent to, not later than February 15 of each year, commencing February 15,
2006, provide to each Repository and the Participating Underwriter an Annual Report which is
consistent with the requirements of Section 4 of this Disclosure Agreement with a copy to the
Fiscal Agent and the Issuer. Not later than fifteen (15) Business Days prior to said date, Property
Owner shall provide the Annual Report to the Dissemination Agent. Property Owner shall
provide a written certification with each Annual Report furnished to the Dissemination Agent
and the Fiscal Agent and the Issuer to the effect that such Annual Report constitutes the Annual
Report required to be furnished by it hereunder. The Dissemination Agent, the Issuer and the
Fiscal Agent may conclusively rely upon such certification of Property Owner and shall have no
duty or obligation to review such Annual Report. The Annual Report may be provided in
electronic format to each Repository and may be provided through the services of a “Central Post
Office” approved by the Securities and Exchange Commission. The Annual Report may be
submitted as a single document or as separate documents comprising a package, and may include
by reference other information as provided in Section 4 of this Disclosure Agreement. If
Property Owner’s fiscal year changes, it shall give notice of such change in the same manner as
for a Listed Event under Section 5(f).
(b)
If the Fiscal Agent is unable to verify that an Annual Report has been
provided to Repositories by the date required in subsection (a), the Fiscal Agent shall send a
notice to each Repository or to the Municipal Securities Rulemaking Board and the State
Repository, if any in substantially the form attached as Exhibit A.
(c)
The Dissemination Agent shall:
(i)
determine each year prior to the date for providing the Annual Report the name
and address of each National Repository and the State Repository, if any; and
(ii)
to the extent information is known to it, file a report with the Issuer, the Property
Owner and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent
certifying that the Annual Report has been provided pursuant to this Disclosure
Agreement, stating the date it was provided and listing all the Repositories to which it
was provided.
SECTION 4. Content of Annual Reports. The Property Owner’s Annual Report shall
contain or include by reference the following:
(i)
Relating to all property owned by Property Owner within Improvement Area No.
1 of the District (the “Property”), a summary of the Property Owner’s development activity on
the Property during the Property Owner’s last fiscal year: (A) number of acres/lots owned by the
Property Owner or its Affiliates as of the end of the applicable fiscal year or a more recent date,
(B) progress of construction activities on the Property as of the end of the applicable fiscal year
G-12
or more recent date, and (C) number of acres/lots sold by Property Owner or its Affiliates to end
users or builders as of the end of the applicable fiscal year or a more recent date.
(ii)
Any material changes in the information relating to the Property Owner and/or the
Property contained in the Official Statement under the caption “THE DISTRICT” and “THE
DEVELOPMENT.”
(iii) A description of the status of any land purchase contracts with regard to the
Property (other than sales to individual homebuyers).
(iv)
A description of any change in the legal structure of the Property Owner and/or
the financial condition of the Property Owner that would materially interfere with its ability to
complete the development plan described in the Official Statement under the caption “THE
DEVELOPMENT” and “THE DEVELOPER” (the “Development Plan”) or to pay its Special
Taxes.
(v)
A description of any material changes in the Development Plan.
(vi)
A pro forma financing statement relating to the Development Plan detailing (A)
amount spent to date, (B) the remaining costs to complete the Development Plan including
timing of such disbursements and (C) the source of financing for such remaining development
costs.
(vii) A description of any previously undisclosed material amendment to the land use
entitlements for the Property.
(viii) An update of the status of any previously reported Listed Event described in
Section 5 hereof.
(ix)
A statement as to whether or not the Property Owner and all of its Affiliates paid,
prior to their becoming delinquent, all special taxes levied on the property owned by the Property
Owner and such Affiliates within Improvement Area No. 1 and if such Property Owner or any of
such Affiliates is delinquent in the payment of such special taxes, a statement identifying each
entity that is so delinquent, specifying the amount of each such delinquency and describing any
plans to resolve such delinquency.
(x)
A description of any material changes in the financing plan of the Property Owner
for the Development Plan described in the Official Statement under the caption “THE
DEVELOPMENT – Development and Financing Plans” (the “Financing Plan”) and the causes or
rationale for such changes.
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the Property Owner or related entities, which have
been submitted to each of the Repositories or the Securities and Exchange Commission. If the
document included by reference is a final official statement, it must be available from the
Municipal Securities Rulemaking Board. The Property Owner shall clearly identify each such
other document so included by reference.
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SECTION 5. Reporting of Significant Events.
(a)
Pursuant to the provisions of this Section 5, the Property Owner shall give,
or cause to be given, notice of the occurrence of any of the following events with respect to the
Bonds, if material:
1.
bankruptcy or insolvency proceedings commenced by or against Property
Owner or a partner or Affiliate thereof that would materially interfere with its ability to
complete the Development Plan or to pay its Special Taxes;
2.
failure to pay any taxes, special taxes or assessments due with respect to
the Property;
3.
filing of a lawsuit against Property Owner or, to the Property Owner’s
actual knowledge, a partner or Affiliate thereof seeking damages, or a judgment in a
lawsuit against Property Owner or, to the Property Owner’s actual knowledge, a partner
or Affiliate thereof, which could have a significant impact on the Property Owner’s
ability to pay Special Taxes or to sell or develop the Property;
4.
any conveyance by the Property Owner of property to an entity that is not
an Affiliate of such Property Owner, the result of which conveyance is to cause the
transferee to become a Major Owner;
5.
any denial or termination of credit, any denial or termination of, or default
under, any line of credit or loan or any other loss of a source of funds that could have a
material adverse affect on the Property Owner’s most recently disclosed Financing Plan
or the ability of the Property Owner or any Affiliate to pay Special Taxes when due;
6.
any significant amendments to land use entitlement for the Property
Owner’s property;
7.
any previously undisclosed governmentally-imposed preconditions to
commencement or continuation of development of the Property;
8.
any previously undisclosed legislative, administrative or judicial
challenges to development of the Property;
9.
any material change in the alignment, design or likelihood of completion
of significant public improvement being constructed by the Property Owner affecting the
Property, including major thoroughfares, sewers, water conveyance systems and similar
facilities; and
10.
The assumption of any obligation by a Major Owner pursuant to Section
6.
(b)
The Fiscal Agent shall, within one (1) Business Day of obtaining actual
knowledge of the occurrence of any of the Listed Events, or as soon as reasonably practicable
thereafter, contact the Disclosure Representative, inform such person of the event, and request
G-14
that the Property Owner promptly notify the Dissemination Agent in writing whether or not to
report the event pursuant to subsection (f) and promptly direct the Fiscal Agent whether or not to
report such event to the Bondholders. In the absence of such direction the Fiscal Agent shall not
report such event unless otherwise required to be reported by the Fiscal Agent to the
Bondholders under the Fiscal Agent Agreement. The Fiscal Agent may conclusively rely upon
such direction (or lack thereof). For purposes of this Disclosure Agreement, “actual knowledge”
of the occurrence of such Listed Events shall mean actual knowledge by the officer at the
corporate trust office of the Fiscal Agent with regular responsibility for the administration of
matters related to the Fiscal Agent Agreement. The Fiscal Agent shall have no responsibility to
determine the materiality of any of the Listed Events.
(c)
Whenever the Property Owner obtains knowledge of the occurrence of a
Listed Event, whether because of a notice from the Fiscal Agent pursuant to subsection (b) or
otherwise, the Property Owner shall as soon as possible determine if such event would be
material under applicable federal securities laws.
(d)
If the Property Owner has determined that knowledge of the occurrence of
a Listed Event would be material under applicable federal securities laws, the Property Owner
shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the
Dissemination Agent to report the occurrence pursuant to subsection (f).
(e)
If in response to a request under subsection (b), the Property Owner
determines that the Listed Event would not be material under applicable federal securities laws,
the Property Owner shall so notify the Dissemination Agent in writing and instruct the
Dissemination Agent not to report the occurrence pursuant to subsection (f).
(f)
If the Dissemination Agent has been instructed by the Property Owner to
report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such
occurrence with the Municipal Securities Rulemaking Board and the State Repository or the
Repositories.
(a) All of the Property Owner’s
SECTION 6. Duration of Reporting Obligation.
obligations hereunder shall commence on such date as property owned by the Property Owner is
responsible for payment of 20% or more of the special taxes in Improvement Area No. 1 and
shall terminate (except as provided in Section 11) upon (i) the legal defeasance, prior redemption
or payment in full of all the Bonds or (ii) so long as the Bonds are outstanding, at such time as
property owned by the Property Owner is no longer responsible for payment of 20% or more of
the special taxes in Improvement Area No. 1. Upon the occurrence of any such termination or
suspension prior to the final maturity of the Bonds, the Property Owner shall give notice of such
termination or suspension in the same manner as for a Listed event under Section 5.
(b)
If a portion of the property in Improvement Area No. 1 of the District
owned by the Property Owner, or any Affiliate of Property Owner, is conveyed to a Person that,
upon such conveyance, will be a Major Owner, the obligations of Property Owner hereunder
with respect to such property owned by such Major Owner and its Affiliates shall be assumed by
such Major Owner or by an Affiliate thereof and the Property Owner obligations hereunder will
be terminated. In order to effect such an assumption, such Major Owner or Affiliate shall enter
G-15
into an Assumption Agreement. The entering into an Assumption Agreement by such Major
Owner or Affiliate shall be a condition precedent to the conveyance of such property and the
Property Owner shall provide a copy of the executed Assumption Agreement to the Fiscal Agent
and the Issuer prior to such conveyance.
SECTION 7. Dissemination Agent. The Property Owner may, from time to time,
appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this
Disclosure Agreement, and may discharge any such Dissemination Agent, with or without
appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible
in any manner for the content of any notice or report prepared by the Property Owner pursuant to
this Disclosure Agreement. The initial Dissemination Agent shall be Union Bank of California,
N.A. The Dissemination Agent may resign by providing thirty days written notice to the
Property Owner, the Issuer and the Fiscal Agent. The Dissemination Agent shall have no duty to
prepare any information report nor shall the Dissemination Agent be responsible for filing any
report not provided to it by the Property Owner in a timely manner and in a form suitable for
filing.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Agreement, the Property Owner, Dissemination Agent and the Fiscal Agent may
amend this Disclosure Agreement (and the Fiscal Agent and Dissemination Agent shall agree to
any amendment so requested by the Property Owner) provided, neither the Fiscal Agent nor the
Dissemination Agent shall be obligated to enter into any such amendment that modifies or
increases its duties or obligations hereunder, and any provision of this Disclosure Agreement
may be waived, provided that the following conditions are satisfied:
(a)
If the amendment or waiver relates to the provisions of Sections 3(a), 4, or
5(a), it may only be made in connection with a change in circumstances that arises from a
change in legal requirements, change in law, or change in the identity, nature or status of
an obligated person with respect to the Bonds, or the type of business conducted;
(b)
The undertaking, as amended or taking into account such waiver, would,
in the opinion of nationally recognized bond counsel, have complied with the
requirements of the Rule at the time of the original issuance of the Bonds, after taking
into account any amendments or interpretations of the Rule, as well as any change in
circumstances; and
(c)
The amendment or waiver either (i) is approved by the Holders of the
Bonds in the same manner as provided in the Fiscal Agent Agreement for amendments to
the Fiscal Agent Agreement with the consent of Holders, or (ii) does not, in the opinion
of nationally recognized bond counsel, materially impair the interests of the Holders or
Beneficial Owners of the Bonds.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the
Property Owner shall describe such amendment in the next Annual Report, and shall include, as
applicable, a narrative explanation of the reason for the amendment or waiver and its impact on
the type (or, in the case of a change of accounting principles, on the presentation) of financial
information or operating data being presented by the Property Owner.
G-16
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be
deemed to prevent the Property Owner from disseminating any other information, using the
means of dissemination set forth in this Disclosure Agreement or any other means of
communication, or including any other information in any Annual Report or notice of occurrence
of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the
Property Owner chooses to include any information in any Annual Report or notice of
occurrence of a Listed Event in addition to that which is specifically required by this Disclosure
Agreement, the Property Owner shall have no obligation under this Agreement to update such
information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the Property Owner or the Fiscal
Agent to comply with any provision of this Disclosure Agreement, the Fiscal Agent (at the
written request of any Participating Underwriter or the Holders of at least 25% aggregate
principal amount of Outstanding Bonds, shall but only to the extent funds in an amount
satisfactory to the Fiscal Agent have been provided to it or it has been otherwise indemnified to
its satisfaction from any cost, liability, expense or additional charges and fees of the Fiscal Agent
whatsoever, including, without limitation, fees and expenses of its attorneys), or any Holder or
Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the Property Owner
or Fiscal Agent, as the case may be, to comply with its obligations under this Disclosure
Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default
under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Agreement in the
event of any failure of the Property Owner or the Fiscal Agent to comply with this Disclosure
Agreement shall be an action to compel performance.
SECTION 11. Duties, Immunities and Liabilities of Fiscal Agent and Dissemination
Agent. Article VII of the Fiscal Agent Agreement pertaining to the Fiscal Agent is hereby made
applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this
purpose) contained in the Fiscal Agent Agreement and the Fiscal Agent and Dissemination
Agent shall be entitled to the protections, limitations from liability and indemnities afforded the
Fiscal Agent thereunder. The Dissemination Agent and the Fiscal Agent shall have only such
duties as are specifically set forth in this Disclosure Agreement, and the Property Owner agrees
to indemnify and save the Dissemination Agent and Fiscal Agent, their officers, directors,
employees and agents (the “Indemnified Party”), harmless against any loss, expense and
liabilities which they may incur arising out of or in the reasonable exercise or performance of its
powers and duties hereunder, including the reasonable costs and expenses (including attorneys
fees) of defending against any claim of liability, but excluding losses, expenses or liabilities due
to any Indemnified Party’s respective negligence or willful misconduct. The Dissemination
Agent shall be paid compensation by the Property Owner for its services provided hereunder in
accordance with its schedule of fees as amended from time to time and all reasonable expenses,
legal fees and advances made or incurred by the Dissemination Agent in the performance of its
duties hereunder. The Dissemination Agent and the Fiscal Agent shall have no duty or
obligation to review any information provided to them hereunder and shall not be deemed to be
acting in any fiduciary capacity for the Property Owner, the Bondholders, or any other party.
Neither the Fiscal Agent or the Dissemination Agent shall have any liability to the Bondholders
or any other party for any monetary damages or financial liability of any kind whatsoever related
G-17
to or arising from this Agreement. The obligations of the Property Owner under this Section
shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
SECTION 12. Notices. Any notices or communications to or among any of the parties
to this Disclosure Agreement may be given as follows:
To the Issuer:
(Talavera)
c/o City of Indio
Attn: City Manager
Telephone: (760) 342-6580
Facsimile: (760) 342-6597
To the Fiscal Agent:
Union Bank of California, N.A.
120 S. San Pedro Street, 4th Floor
Telephone: (213) 972-5676
Facsimile: (213) 972-5694
To the Dissemination Agent: Union Bank of California, N.A.
120 S. San Pedro Street, 4th Floor
Telephone: (213) 972-5676
Facsimile: (213) 972-5694
To the Property Owner:
____________________
____________________
____________________
Attn: ________________
Telephone: _______________
Facsimile: ______________
Any person may, by written notice to the other persons listed above, designate a different address
or telephone number(s) to which subsequent notices or communications should be sent.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the Issuer, the Property Owner, the Fiscal Agent, the Dissemination Agent, the Participating
Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create
no rights in any other person or entity.
G-18
SECTION 14. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
[PROPERTY OWNER], [type of entity]
By
Name:
Title:
as Dissemination Agent and Fiscal Agent
By
Authorized Officer
G-19
EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Party:
_____________
Name of Bond Issue:
City of Indio Community Facilities District No.
2005-1 (Talavera) Special Tax Bonds,
Series 2005 (Improvement Area No. 1)
Date of Issuance:
December 7, 2005
NOTICE IS HEREBY GIVEN that the Property Owner has not provided an Annual
Report with respect to the above-named Bonds as required by the Developer Continuing
Disclosure Agreement, dated as of December 1, 2005, with respect to the Bonds. [The Property
Owner anticipates that the Annual Report will be filed by _____________.]
Dated:_______________
on behalf of Property Owner
______________________________
cc: Issuer
Property Owner
G-20
APPENDIX H
BOOK-ENTRY ONLY SYSTEM
The information in this section concerning DTC; and DTC’s book-entry system has been obtained
from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy
thereof.
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 the each issue of the Bonds, each in the aggregate
principal amount of such issue, and will be deposited with DTC.
DTC, the world’s largest 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 die provisions of Section 17A
of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues
of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments
from over 85 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, in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation, Government
Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing
Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New
York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and nonU.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 Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its
Participants are on file with the Securities and Exchange Commission. More information about DTC can
be found at www.dtcc.com.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual
purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of
the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the
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 the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
H-1
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 well 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 an issue are being
redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
the Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose
accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend 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 Issuer or Agent, on payable date in accordance with their respective holdings shown
on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for the accounts of customers in
bearer form or registered in “street name,” and will be the responsibility of such Participant and not of
DTC nor its nominee, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede
& Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the City or the Fiscal Agent, disbursement of such payments to Direct Participants will
be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time
by giving reasonable notice to the City or the Fiscal Agent. Under such circumstances, in the event that a
successor depository is not obtained, Bond certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, Bond certificates will be printed and delivered.
H-2

10170000 city of indio

Transcription

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