HomeMy WebLinkAbout4/21/2004 - STAFF REPORTS (18) c y DRAFT AS OF MARCH 31,2004
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NEW ISSUE-BOOK-ENTRY ONLY RATINGS
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(See"CONCLUDING INFORMATION-Ratings on the Bonds"herein)
In the opinion ofAleshire& Wynder,LLP,Irvine, California,Bond Counsel, based on existing statutes,regulations, rulings and court
C decisions and assuming,among other matters, compliance with certain covenants,interest on the Bonds is excluded fr onz grass income
forfederal income tax purposes and is exempt from State of California personal income taxes. In the opinion of Bond Counsel, interest
n.`-. is not a specific preference item forpurposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel
E P observes that it is included in adjusted current earnings in calculating corporate alternative minimum taxable income. Bond Counsel
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expresses no opinion regarding other federal or State tax consequences relating to the ownership or disposition of, or the accrual or
'9 - o receipt of the interest on the Bonds. See "LEGAL MATTERS-Tax Matters herein.
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$63,500,000*
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Dated: Date of Delivery Due: November 1 as Shown on the Inside Front Cover.
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o � v The cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must
c read the entire Official Statement to obtain information essential to the making of an informed investment decision. See
o a "BONDHOLDERS'RISKS"herein for a discussion of special risk factors that should be considered in evaluating the investment
v > quality of the Bonds.
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Interest on the Bonds is payable on November 1,2004, and semiannually thereafter on May I and November I of each year(each a
❑ ° Payment Date)until maturity or earlier redemption(see"THE BONDS-General Provisions"and"THE BONDS-Redemption"herein).
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y ; a The scheduled payment of principal of and interest on the Bonds when due will be guaranteed wider an insurance policy to be issued
concurrently with the delivery of the Bonds by . See "SOURCES OF PAYMENT FOR THE BONDS -Municipal Bond
n y Insurance"herein.
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c e The Bonds are payable on a parity with the 1991 Bonds and the 2001 Bonds,as defined herein, from the revenues pledged under the
ro o .o Trust Agreement,as defined herein,consisting primarily of lease payments to be made by the City of Palm Springs(the"City")to the
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E , City of Palm Springs Financing Authority(the "Authority") as rental for certain City facilities(the"Facilities")pursuant to a Lease
w a G Agreement,as defined herein,and from certain funds held under the Trust Agreement and insurance or condemnation awards. The City
is required under the Lease Agreement to make payments in each fiscal year in consideration of the use and possession of the Facilities
from any source of available funds in an amount sufficient to pay the annual principal and interest due with respect to the Bonds,the
,a c 1991 Bonds and the 2001 Bonds,as defined herein,subject to abatement,as described herein(see"SOURCES OF PAYMENT FOR THE
E BONDS"and"BONDHOLDERS'RISKS"herein). It is anticipated that the Bonds, in book-entry form,will be available for delivery to
v v the Depository Trust Company in New York,New York on or about June 10,2004. See"APPENDIX D-BOOK-ENTRY ONLY SYSTEM"
E - t herein. The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Aleshire&Wynder,LLP,
v o Irvine,California,Bond Counsel. Certain legal matters will be passed on for the City and the Authority by Jones Hall,A Professional
Law Corporation,San Francisco,California,Disclosure Counsel.
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The date of the Official Statement iscl
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*Preliminary,subject to change.
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$63,500,000*
CITY OF PALM SPRINGS FINANCING AUTHORITY
LEASE REVENUE BONDS, 2004 SERIES A
(CONVENTION CENTER EXPANSION PROJECT)
MATURITY SCBEDULE
$ Serial Bonds
(Base CUSIPj-_a
Maturity Date Principal Interest Reoffering
November I Amount Rate Yield CUSIPT
*Preliminary,subject to change.
j Copyright 2003, American Bankers Association. CUSIP data herein is provided by Standard & Poor's CUSIP
Service Bureau,a division of The McGraw-Hill Companies,Inc.
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of
the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other
purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the
City or the Authority in any press release and in any oral statement made with the approval of an
authorized officer of the City or the Authority or any other entity described or referenced herein, the
words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate,"
"project," "forecast," "expect," "intend" and similar expressions identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject
to risks and uncertainties that could cause actual results to differ materially from those contemplated in
such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some
assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances
may occur. Therefore, there are likely to be differences between forecasts and actual results, and those
differences may be material.
Limit of Offering. No dealer,broker, salesperson or other person has been authorized by the Authority to
give any information or to make any representations in connection with the offer or sale of the Bonds
other than those contained herein and if given or made, such other information or representation must not
be relied upon as having been authorized by the Authority,the Financial Advisor or the Underwriter. This
Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there
be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make
such an offer, solicitation or sale.
Involvement of Undenvriter. The Underwriter has submitted the following statement for inclusion in this
Official Statement: The Underwriter has reviewed the information in this Official Statement in
accordance with, and as a part of, its responsibilities to investors under the federal securities laws as
applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the
accuracy or completeness of such information. The information and expressions of opinions herein are
subject to change without notice and neither delivery of this Official Statement nor any sale made
hereunder shall, under any circumstances, create any implication that there has been no change in the
affairs of the Authority, the City or any other entity described or referenced herein since the date hereof.
All summaries of the documents referred to in this Official Statement are made subject to the provisions
of such documents, and do not purport to be complete statements of any or all of such provisions.
Stabilization of Prices. In connection with this offering, the Underwriter may ovemllot or effect
transactions which stabilize or maintain the market price of the Bonds at a level above that which might
otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time.
The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public
offering prices set forth on the inside front cover page hereof and said 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 EXCEPTION FROM THE REGISTRATION
REQUIREMENTS CONTAINED IN SUCH ACT. THE TRUST AGREEMENT HAS NOT BEEN
QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, IN RELIANCE UPON AN
EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE
BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE.
CITY OF PALM SPRINGS FINANCING AUTHORITY
PALM SPRINGS,CALIFORNIA
CITY COUNCIL/AUTHORITY BOARD MEMBERS
Ronald Oden,Mayor
Christopher Mills,Mayor Pro-Tem
Ginny Foat, Council Member
Michael McCulloch, Council Member
Stephen Pougnet, Council Member
CITY STAFF
David H.Ready, City Manager
Troy L.Butzlaff,Assistant City Manager
Thomas M.Kanarr,Director of Finance and Treasurer
Dave Barakian,Director of Public Works/City Engineer
John S.Raymond,Director of Community&Economic Development
Patricia A. Sanders, City Clerk
PROFESSIONAL SERVICES
Bond Counsel
Aleshire&Wynder,LLP
Irvine, California
Disclosure Counsel
Jones Hall,
A Professional Law Corporation
San Francisco, California
Financial Advisor
Harrell&Company Advisors,LLC
Orange,California
Underwriter
Stone&Youngberg,LLC
Los Angeles,California
Trustee
BNY Western Trust Company
Los Angeles, California
Verification Agent
Grant Thornton LLP
Minneapolis,Minnesota
TABLE OF CONTENTS
INTRODUCTION......................................................I Direct and Overlapping Debt..................................34
The Authority.............................................................I FINANCIAL INFORMATION...............................36
TheCity.....................................................................1
............2 Budgetary Process and Administration...................36
Security and Sources of Repayment..............
Appropriations Limit...............................................36
Purpose......................................................................3 Revenues and Expenditure Trends..........................36
The Refunding Program.............................................3 Ad Valorem Property Taxes....................................38
The Bonds..................................................................4 Taxable Property and Assessed Valuation...............38
LegalMatters.............................................................5
Largest Taxpayers...................................................39
Professional Services.................................................5 State Legislative Shift of Property Tax Allocation..39
Offering of the Bonds................................................5
Other Local Taxes...................................................40
Information Concerning this Official Statement........6 Motor Vehicle License Fees....................................41
THEBONDS...............................................................7 Other Revenue Sources...........................................42
General Provisions.....................................................7 Retirement Programs...............................................42
Redemption................................................................8 Employee Relations and Collective Bargaining......42
Estimated Sources and Uses of Funds.......................9 Risk Management...................................................42
Scheduled Debt Service on the Bonds.....................10 City Investment Policy and Portfolio......................43
Aggregate Debt Service...........................................1 I Financial Statements...............................................43
THE FACILITIES....................................................12 LEGAL MATTERS.................................................47
SOURCES OF PAYMENT FOR THE BONDS.....14 Enforceability of Remedies.....................................47
Approval of Legal Proceedings...............................47
General.....................................................................14
Lease Payments........................................................14
Tax Matters.............................................................47
Capitalized Interest..................................................15
Absence of Litigation..............................................49
Reserve Account......................................................15 CONCLUDING INFORMATION..........................50
Insurance Relating to the Facilities..........................16 Ratings on the Bonds..............................................50
Parity Obligations....................................................16 Underwriting...........................................................50
The Ground Lease....................................................17 The Financial Advisor.............................................50
Reentering and Reletting..........................................17 Continuing Disclosure.............................................50
Encumbrances; Substitution of Property..................18 Verifications of Mathematical Computations..........51
Municipal Bond Insurance..................................--18 Additional Information...........................................51
BONDHOLDERS'RISKS.......................................19 References...............................................................51
The Lease Payments................................................19
Execution................................................................51
Project Costs and Completion..................................20 SUMMARY OF THE LEGAL DOCUMENTS...A-1
State of California Fiscal Issues...............................21 CITY AUDITED FINANCIAL STATEMENTS..B-1
Constitutional Limitation on Taxes and
Expenditures.........................................................21 FORM OF CONTINUING DISCLOSURE
Early Redemption Risk............................................24 AGREEMENT....................................................C-1
Loss of Tax Exemption............................................24 BOOK-ENTRY ONLY SYSTEM.........................D-1
Secondary Market....................................................24
THE CITY OF PALM SPRINGS............................25 FORM OF BOND COUNSEL OPINION............E-1
DEBT STRUCTURE................................................33 SPECIMEN BOND INSURANCE POLICY........F-1
Indebtedness of the City...........................................33
OFFICIAL STATEMENT
$63,500,000*
CITY OF PALM SPRINGS FINANCING AUTHORITY
LEASE REVENUE BONDS, 2004 SERIES A
(CONVENTION CENTER EXPANSION PROJECT)
This Official Statement, which includes the cover page and appendices (the "Official Statement"), is
provided to furnish certain information concerning the sale of the City of Palm Springs Financing
Authority Lease Revenue Bonds,2004 Series A(Convention Center Expansion Project)(the`Bonds"),in
the aggregate principal amount of$63,500,000*.
INTRODUCTION
This Introduction contains only a brief description of this issue and does not purport to be complete. The
Introduction is subject in all respects to more complete information in the entire Official Statement and
the offering of the Bonds to potential investors is made only by means of the entire Official Statement and
the documents summarized herein. Potential investors must read the entire Official Statement to obtain
information essential to the making of an informed investment decision (see `BONDHOLDERS'RISKS"
herein).
The Authority
The City of Pahn Springs Financing Authority (the "Authority") is a joint exercise of powers authority
organized and existing under and by virtue of the Joint Exercise of Powers Act, constituting Articles 1
through 4 (commencing with Section 6500)of Chapter 5, Division 7, Title 1 of the Government Code of
the State of California (the "Joint Powers Act"). The City of Palm Springs pursuant to Resolution No.
17418 adopted on February 1, 1991, and the Community Redevelopment Agency of the City of Palm
Springs pursuant to Resolution No. 749 adopted on February 1, 1991, formed the Authority by the
execution of a joint exercise of powers agreement. Pursuant to the Joint Powers Act, the Authority is
authorized to issue lease revenue bonds to provide funds to acquire or construct public capital
improvements, such revenue bonds to be repaid from the lease payments for such improvements, such as
the lease payments described herein. The members of the City Council of the City comprise the Authority
Board of Directors.
The City
The City of Palm Springs (the "City") was incorporated as a general law city on April 20, 1938. It
became a charter city on July 12, 1994. The City of Palm Springs encompasses 96.2 square miles in
Central Riverside County. The City is located 108 miles east of downtown Los Angeles and 120 miles
west of the Arizona border. Neighboring communities include Pahn Desert, Rancho Mirage, Desert Hot
Springs and Cathedral City(see"THE CITY OF PALM SPRINGS"herein).
*Preliminary,subject to change.
1
Security and Sources of Repayment
The Bonds. The Bonds are secured under a Trust Agreement dated as of April 1, 1991, as amended and
supplemented, including as amended and supplemented by a Supplemental Trust Agreement No. 3 dated
as of April 1, 2004 (collectively, the "Trust Agreement'),both by and among the Authority, the City and
BNY Western Trust Company, Los Angeles, California, as trustee (the "Trustee") (see "APPENDIX A—
SUMMARY OF THE LEGAL DOCUMENTS-THE TRUST AGREEMENT"herein).
The Bonds,together with the 1991 Bonds and the 2001 Bonds, as herein defined, are payable solely from
lease payments (the "Lease Payments") to be made by the City to the Authority as the rental for the
Facilities, as described herein, pursuant to a Lease Agreement Relating to Convention Center Facilities
dated as of April 1, 1991 (the"1991 Lease Agreement'),a Supplemental Lease Agreement No. 1 dated as
of April 1, 1991, a Supplemental Lease Agreement No. 3 dated as of August 1,2001, and a Supplemental
Lease Agreement No. 4 to be entered into as of April 1, 2004, each by and between the Authority, as
Lessor, and the City, as Lessee (Supplemental Lease Agreement No. 4 is referred to herein as the
"Supplemental Lease Agreement No. 4," and together with the 1991 Lease Agreement, Supplemental
Lease Agreement No. 1 and Supplemental Lease Agreement No. 3, as the "Lease Agreement'). The
Bonds, the 1991 Bonds and the 2001 Bonds are also payable from certain funds held under the Trust
Agreement and investment earnings thereon,and from net proceeds of insurance or condemnation awards
(collectively with the Lease Payments, the "Revenues") (see "SOURCES OF PAYMENT FOR THE
BONDS," "APPENDIX A - SUMMARY OF THE LEGAL DOCUMENTS - LEASE AGREEMENT," and
"FINANCIAL INFORMATION'herein). The Site of the Facilities is leased pursuant to a lease designated
as "Business Lease-315 Agua Caliente (Pahn Springs) Reservation," effective December 31, 1984,
between the several lessors named therein and executed by the United States Department of the Interior,
Bureau of Indian Affairs, as authorized signatory for such lessors (the "Ground Lease"). The covenants,
agreements, terms, provisions and conditions of the Ground Lease are made a part of the Lease
Agreement for the benefit of the lessors under the Ground Lease to assure that the obligations of the City
under the Ground Lease are performed (see "SOURCES OF PAYMENT FOR THE BONDS - The Ground
Lease").
In 1991, the Authority issued its Lease Revenue Bonds, 1991 Series A(Convention Center Project) (the
"1991 Bonds")pursuant to the Trust Agreement. The 1991 Bonds were issued in the principal amount of
$50,668,512, of which$2,125,539.90 initial principal amount of capital appreciation bonds are currently
outstanding.
In 1997, the Authority issued its Lease Revenue Refunding Bonds, 1997 Series B (Convention Center
Project) (the"1997 Bonds")pursuant to the Trust Agreement and a Supplemental Trust Agreement No. 1
dated as of October 1, 1997,by and among the Authority,the City and the Trustee. The 1997 Bonds were
issued in the principal amount of$12,300,000,of which$11,205,000 are currently outstanding. The 1997
Bonds were issued for the purpose of refinancing a portion of the 1991 Bonds. The 1997 Bonds will be
refunded with a portion of the proceeds of the Bonds(see"The Refunding Program"below).
In 2001, the Authority issued its Lease Revenue Refunding Bonds, 2001 Series A (Convention Center
Project) (the"2001 Bonds")pursuant to the Trust Agreement and a Supplemental Trust Agreement No.2
dated as of August 1,2001,by and among the Authority,the City and the Trustee. The 2001 Bonds were
issued in the principal amount of$28,540,000, of which$26,230,000 are currently outstanding. The 2001
Bonds were also issued for the purpose of refinancing a portion of the 1991 Bonds.
Lease Payments. In general, the City is required under the Lease Agreement to pay to the Trustee
specified amounts (the "Lease Payments") for use and possession of the Facilities, which amounts are
designed to be sufficient in both time and amount to pay, when due, the principal and interest payable
with respect to the Bonds,the 1991 Bonds and the 2001 Bonds. Lease Payments to be paid by the City to
the Authority pursuant to the Lease Agreement have been assigned by the Authority to the Trustee
pursuant to an Assignment Agreement dated as of April 1, 1991, the Second Amended Assignment
2
Agreement, dated as of August 1,2001 and the Third Amended Assignment Agreement,dated as of April
1, 2004, each by and between the Authority and the Trustee. The City is also required to pay any taxes
and assessments and the cost of maintenance and repair of the Facilities. The City has covenanted in the
Lease to take such actions as may be necessary to include all Lease Payments in its annual budget and to
make the necessary amival appropriations for all such Lease Payments subject to complete or partial
abatement of such Lease Payments resulting from a taking of the Facilities (either in whole or in part)
under the powers of eminent domain or resulting from damage or loss of all or any portion of the
Facilities. Except for the Authority's right, title and interest in and to the Lease Agreement,no funds or
properties of the Authority or the City are pledged to or otherwise liable for the obligations of the
Authority(see"BONDFOLDERS'RISKS"herein).
The Lease Agreement is, in the opinion of Bond Counsel, a valid and binding obligation of the City
enforceable against the City in accordance with its terns, except to the extent enforceability thereof may
be limited by bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights
heretofore or hereinafter enacted and may be subject to the exercise of judicial discretion in accordance
with general principles of equity which are deemed to preclude the enforcement of judgments against
foods held by a city or an authority which serve the public welfare and interest (see "BONDHOLDERS'
RISKS-Limited Recourse on Default"herein).
The Facilities. The Facilities consist of the City's Convention Center facility and certain public parking
facilities, together with additional improvements to be constructed with a portion of the proceeds of the
Bonds(see"THE FACILITIES"herein).
The Bonds are limited obligations of the Authority. The Bonds do not constitute a debt or liability
of the City,the State of California or of any political subdivision thereof,other than the Authority.
The Authority shall only be obligated to pay the principal of the Bonds, or the interest thereon,
from the funds described herein, and neither the faith and credit nor the taxing power of the City,
the State of California or any of its political subdivisions is pledged to the payment of the principal
of or the interest on the Bonds. The Authority has no taxing power.
The obligation of the City to pay Lease Payments does not constitute an obligation for which the
City is obligated to levy or pledge any form of taxation or for which the City has pledged any form
of taxation. The obligation of the City to pay Lease Payments does not constitute a debt or liability
of the City,the State of California or of any political subdivision thereof within the meaning of any
constitutional or statutory debt limitation or restriction.
Purpose
The Bonds are being issued to provide funds to finance the Authority's supplemental lease of the
Facilities for lease-back to the City pursuant to the Supplemental Lease Agreement No. 4, to fund an
additional deposit to the Reserve Accowit, to capitalize interest on the Bonds and to pay the expenses
incurred in connection with the issuance of the Bonds. The City will use the proceeds from the
Authority's supplemental lease payment to finance an expansion of the Facilities and to refinance a
portion of its existing lease of the Facilities under the Supplemental Lease Agreement No 2 and,
correspondingly, redeem the 1997 Bonds (see "THE BONDS - Estimated Sources and Uses of Funds"
herein).
The Refunding Program
On the Delivery Date, the City will irrevocably deposit a portion of the proceeds from the supplemental
lease of the Facilities to the Authority pursuant to the Supplemental Lease Agreement No. 4 with the
Trustee as escrow bank (the "Escrow Bank"), pursuant to an Escrow Deposit Agreement, dated as of
April 1, 2004 (the "Escrow Agreement") between the Authority, the City and the Escrow Bank. The
3
deposit will be in an amount sufficient to pay interest with respect to the 1997 Bonds when due on August
1,2004,and to pay the redemption price with respect to all remaining 1997 Bonds pursuant to an optional
redemption thereof on August 1,2004, as verified by Grant Thornton LLP, Certified Public Accountants.
hi the opinion of Bond Counsel,relying on the verification of Grant Thornton LLP as to the sufficiency of
the amounts deposited under the Escrow Agreement,the liens of the 1997 Bonds and the Trust Agreement
pursuant to which such 1997 Bonds were issued will be discharged, terminated and of no fiuriner force
and effect upon the deposit with the Escrow Bank of the amounts required pursuant to the Escrow
Agreement (see "THE BONDS - Estimated Sources and Uses of Funds - Proceeds Transferred to the
Escrow Bank"herein).
The Bonds
Redemption. The Bonds maturing on or after November 1,2015 are subject to optional redemption prior
to maturity, in whole or in part, in a manner determined by the Authority, on November 1, 2014, and on
any date thereafter, at a redemption price equal to the principal amount thereof, plus accrued interest to
the date of redemption, without a premium, as described herein (see "THE BONDS - Redemption -
Optional Redemption"herein).
The Bonds are subject to special mandatory redemption,in whole or in part,without premium on any date
from insurance or condemnation proceeds as described herein(see "THE BONDS -Redemption -Special
Mandatory Redemption"herein).
Denominations. The Bonds will be issued in the minimum denomination of$5,000 each or any integral
multiple thereof(see"THE BONDS-General Provisions"herein).
Registration, Transfer and Exchange. The Bonds will be issued in fully registered form without
coupons. Any Bond may, in accordance with its terms, be transferred or exchanged, pursuant to the
provisions of the Trust Agreement (see "THE BONDS - General Provisions - Transfer or Exchange of
Bonds" herein). When delivered, the Bonds will be registered in the name of The Depository Trust
Company, New York, New York("DTC"), or its nominee. DTC will act as securities depository for the
Bonds. Individual purchases of Bonds will be made in book-entry form only in the principal amount of
$5,000 or any integral multiple thereof. Purchasers of beneficial interests in the Bonds will not receive
certificates representing their ownership interests in Bonds purchased(see"APPENDIX D-BOOK-ENTRY
ONLY SYSTEM"herein).
Payment. Principal of the Bonds and any premium upon redemption will be payable as set forth herein
upon surrender of the Bond at the corporate trust office of the Trustee in Los Angeles,California. Interest
on the Bonds will be paid by check of the Trustee mailed by first class mail on the applicable Payment
Date to the person listed on the applicable Record Date as the owner thereof on the books kept by the
Trustee for such purposes, provided however that said interest may be paid to an account in the United
States of America by wire transfer as requested in writing no later than the applicable Record Date by
owners of $1,000,000 or more in aggregate principal amount of Bonds) (see "THE BONDS - General
Provisions"herein). Initially,interest on and principal of the Bonds will be payable when due by wire of
the Trustee to DTC which is obligated to remit such interest, principal to DTC Participants (as defined
herein),which are obligated in turn to remit such interest and principal to Beneficial Owners (as defined
herein)of the Bonds(see"APPENDIX D-BOOK-ENTRY ONLY SYSTEM"herein).
4
Notice. Notice of any redemption will be mailed by first class mail by the Trustee at least thirty(30)but
no more than sixty(60)days prior to the date fixed for redemption to the registered owners of any Bonds
designated for redemption and to the Securities Depositories and Information Services provided in the
Trust Agreement. Neither failure to receive such notice nor any defect in the notice so mailed will affect
the sufficiency of the proceedings for redemption of such Bonds or the cessation of accrual of interest on
the redemption date(see"THE BONDS -Redemption-Notice of Redemption"herein).
Legal Matters
All legal proceedings in connection with the issuance of the Bonds are subject to the approving opinion of
Aleshire&Wynder, LLP, Irvine, California, Bond Counsel. Such opinion, and certain tax consequences
incident to the ownership of the Bonds, including certain exceptions to the tax treatment of interest, are
described more fully under the heading"LEGAL MATTERS"herein. Certain legal matters will be passed
on for the City and the Authority by Aleslre&Wynder,LLP,Irvine, California, as City Attorney and by
Jones Hall,A Professional Law Corporation, San Francisco,California,as Disclosure Counsel.
Professional Services
BNY Western Trust Company, Los Angeles, California, serves as trustee (the "Trustee")under the Trust
Agreement. The Trustee acts on behalf of the Bondholders for the purpose of receiving all moneys
required to be paid to the Trustee, to allocate, use and apply the same, to hold, receive and disburse the
Revenues and other funds held hinder the Trust Agreement, and otherwise to hold all the offices and
perform all the functions and duties provided in the Trust Agreement to be held and performed by the
Trustee.
Harrell &Company Advisors,LLC, Orange, California,Financial Advisor, advised the Authority and the
City as to the financial structure and certain other financial matters relating to the Bonds. Fees payable to
Bond Counsel,Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery of
the Bonds.
Grant Thornton LLP,Minneapolis,Minnesota,upon delivery of the Bonds,will deliver its opinion stating
that it has verified the mathematical accuracy of the computations prepared by the Financial Advisor,
indicating that the funds deposited with the Escrow Bank, together with earnings thereon, will be
sufficient to pay, when due, the principal and interest on, and the redemption price of the Bonds (see
"CONCLUDING INFORMATION-Verifications of Mathematical Computations"herein).
The City's financial statements for the fiscal year ended June 30,2003,attached hereto as"APPENDIX B"
have been audited by Conrad&Associates, Certified Public Accountants, Irvine, California. The City's
audited financial statements are public documents and are included within this Official Statement without
the prior approval of the auditor. Accordingly,the auditor has not performed any post-audit review of the
financial condition or operation of the City.
Offering of the Bonds
Authority for Issuance. The Bonds are to be issued and secured pursuant to the Trust Agreement
authorized by a resolution of the Authority adopted on . The Bonds are also issued in accordance
with the laws of the State of California(the"State'),and particularly the Marks-Roos Local Bond Pooling
Act of 1985, as amended, constituting Article 4(commencing with Section 6584), of Chapter 5,Division
7,Title I of the Government Code of the State(the"Bond Law").
5
Offering and Delivery of the Bonds. The Bonds are offered, when, as and if issued, subject to the
approval as to their legality by Aleshire & Wynder, LLP, Irvine, California, Bond Counsel. It is
anticipated that the Bonds will be available, in book-entry form for delivery to DTC in New York, New
York on or about June 10,2004,
Information Concerning this Official Statement
This Official Statement speaks only as of its date. The information set forth herein has been obtained by
the Authority with the assistance of Harrell & Company Advisors, LLC (the "Financial Advisor") from
sources which are believed to be reliable and such information is believed to be accurate and complete but
such information is not guaranteed as to accuracy or completeness,nor has it been independently verified
and is not to be construed as a representation by the Financial Advisor, Disclosure Counsel or the
Underwriter. Statements contained in this Official Statement which involve estimates, forecasts or
matters of opinion, whether or not expressly so described herein, are intended as such and are not to be
construed as representations of fact.
Preliminary Official Statement Deemed Final. The information set forth herein is in a form deemed
final, as of its date, by the Authority for the purpose of Rule 15c2-12 under the Securities Exchange Act
of 1934, as amended (except for the omission of certain information permitted to be omitted Under the
Rule). The information herein is subject to revision, amendment and completion in a Final Official
Statement. The information and expressions of opinion herein are subject to change without notice and
the delivery of this Official Statement shall not,render any circumstances,create any implication that there
has been no change in the information or opinions set forth herein or in the affairs of the Authority since
the date hereof.
Availability of Legal Documents. The summaries and references contained herein with respect to the
Trust Agreement, the Lease Agreement, the Bonds and other statutes or documents do not purport to be
comprehensive or definitive and are qualified by reference to each such document or statute, and
references to the Bonds are qualified in their entirety by reference to the form thereof included in the
Trust Agreement. Copies of the documents described herein are available for inspection during the period
of initial offering of the Bonds at the offices of the Financial Advisor,Harrell&Company Advisors,LLC,
333 City Boulevard West, Suite 1430, Orange, California 92868, telephone (714) 939-1464. Copies of
these documents may be obtained after delivery of the Bonds at the corporate trust office of the Trustee,
BNY Western Trust Company,Los Angeles, California or from the Authority at 3200 E.Tahquitz Canyon
Way,Palm Springs,California 92262,telephone(760)323-8201.
6
THE BONDS
General Provisions
Repayment of the Bonds. Interest on the Bonds is payable on November 1, 2004, and semiannually
thereafter on May 1 and November 1 of each year (each a "Payment Date") at the rates per annum set
forth on the inside front cover page hereof. Interest on the Bonds will be computed on the basis of a year
consisting of 360 days and twelve 30-day months.
Each Bond will be dated the Date of Delivery, and interest thereon will be payable from the Interest
Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a
Record Date and on or before the following Payment Date,in which event interest thereon will be payable
from such Payment Date; or (b) it is authenticated on or before the first Record Date, in which event
interest thereon will be payable from the Date of Delivery; provided, however, that if, as of the date of
authentication of any Bond, interest on any Outstanding Bonds is in default, such interest will be payable
from the Payment Date to which interest has previously been paid or made available for payment on the
Outstanding Bonds.
Book-Entry Only System. The Depository Trust Company("DTC"), New York,New York, will act as
securities depository for the Bonds. The Bonds will be issued as fully registered securities registered in
the name of Cede & Co. (DTC's partnership nominee) or such other narne as may be requested by an
authorized representative of DTC. Interest on and principal of the Bonds will be payable when due by
wire of the Paying Agent to DTC which will in turn remit such interest and principal to DTC Participants
(as defined herein),which will in turn remit such interest and principal to Beneficial Owners (as defined
herein) of the Bonds(see"APPENDIX D-BOOK-ENTRY ONLY SYSTEM"herein). As long as DTC is the
registered owner of the Bonds and DTC's book-entry method is used for the Bonds,the Paying Agent will
send any notices to bond owners only to DTC.
Discontinuance of Book-Entry Only System. DTC may discontinue providing its services as securities
depository with respect to the Bonds at any time by giving reasonable notice to the Authority or the
Trustee. Under such circumstances, in the event that a successor securities depository is not obtained,
Bonds are required to be printed and delivered as described in the Trust Agreement. The Authority may
decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities
depository). In that event, the Bonds will be printed and delivered as described in the Trust Agreement.
In addition, the following provisions shall apply: interest with respect to the Bonds will be payable by
check of the Trustee mailed by first class mail on the applicable Payment Date to the Owners thereof
provided that in the case of an Owner of$1,000,000 or greater in principal amount of Outstanding Bonds,
such payment may,at such Owner's option,be made by wire transfer in immediately available funds to an
account in the United States of America in accordance with written instructions provided prior to the
applicable Record Date to the Trustee by such Owner. The Owners of the Bonds shown on the
Registration Books on the Record Date for the Payment Date will be deemed to be the Owners of the
Bonds on said Payment Date for the purpose of the paying of interest. Principal of the Bonds will be
payable upon presentation and surrender thereof,at the office of the Trustee in Los Angeles, California.
Transfer or Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred or
exchanged, pursuant to the provisions of the Trust Agreement, upon surrender of such Bond for
cancellation at the corporate bust office of the Trustee. Whenever any Bond or Bonds shall be
surrendered for transfer or exchange, the Authority shall execute and the Trustee shall authenticate and
deliver a new Bond or Bonds for like aggregate principal amount in authorized denominations and of like
maturity. The Trustee will require the Bondholder requesting such transfer or exchange to pay any tax or
other governmental charge required to be paid with respect to such transfer or exchange. The Trustee is
not required to transfer or exchange(a)any Bonds or portions thereof dining the period established by the
Trustee for selection of Bonds for redemption, or(b) any Bonds selected for redemption.
7
Redemption
Optional Redemption. The Bonds maturing on or after November 1, 2015 are subject to redemption
prior to maturity on any date on or after November 1,2014, as a whole or in part,in a manner detennined
by the Authority, from prepayments of Lease Payments made at the option of the City pursuant to the
Lease Agreement at a redemption price equal to the principal amount thereof to be redeemed, without
premium, together with accrued interest thereon to the date fixed for redemption.
Special Mandatory Redemption. The Bonds, the 1991 Bonds, and the 2001 Bonds are subject to
mandatory redemption as a whole or in part, pro-rata, on any date, from net hazard or title insurance
proceeds not used to repair or replace any portion of the Facilities which are damaged or destroyed, or
from condemnation proceeds received with respect to any portion of the Facilities and elected by the City
to be used for such purpose, from such maturities as the Authority shall designate, at a redemption price
equal to the principal amount of the Bonds, the 1991 Bonds, and the 2001 Bonds to be redeemed, plus
accrued interest thereon to the date fixed for redemption, without premium. There can be no assurance
that such proceeds will be adequate to redeem all of the Bonds(see"BONDHOLDERS'RISKS—The Lease
Payments-Insurance"herein).
Mandatory Sinking Fund Redemption. The Bonds maturing November 1, _, November 1,
and November 1, _ (the "Tenn Bonds") are subject to mandatory redemption, in part by lot, on
November 1, in each year commencing November 1, _ with respect to the Term Bonds maturing
November 1,_, commencing November 1, with respect to the Tenn Bonds maturing November
1,_and commencing November 1,_with respect to the Tenn Bonds maturing November 1,_
from mandatory sinking fund payments at a redemption price equal to the principal amount thereof to be
redeemed, without prerniurn, plus accrued interest thereon to the date fixed for redemption in the
aggregate respective principal amounts and on November 1 in the respective years as set forth in the
following schedule provided,however,that if some but not all of the Bonds have been redeemed pursuant
to the optional redemption or special mandatory redemption provisions described above,the total amount
of sirnkiug fiord payments to be made subsequent to such redemption will be reduced in an amount equal
to the principal amount of the Term Bonds so redeemed, by reducing each such future sinking fund
payment in integral multiples of$5,000 in a manner designated by the Authority.
SCHEDULE OF MANDATORY SINKING FUND REDEMPTIONS
TERM BONDS MATURING NOVEMBER 1,
November 1 Principal
Year Amount
Notice of Redemption. When redemption is authorized or required, the Trustee is required to give
written notice to the respective Bondholders of any Bonds designated for redemption at their addresses
appearing on the bond registration books, to the Securities Depositories, and to at least one Information
Service, all as provided in the Trust Agreement, by first class mail, postage prepaid, no less than thirty
(30)nor more than sixty(60) days prior to the date fixed for redemption. Neither failure to receive such
notice nor any defect in the notice so mailed will affect the sufficiency of the proceedings for redemption
of such Bonds or the cessation of accrual of interest from and after the redemption date.
8
Effect of Redemption. Interest on Bonds(or portions thereof)called for redemption will cease to accrue
on the date fixed for redemption and such Bonds (or portions thereof) will cease to be entitled to any
benefit or security under the Trust Agreement and the Owners of such Bonds will have no rights in
respect thereof except to receive payment of the redemption price thereof. The Trust Agreement contains
no provisions requiring any publication of notice of redemption, and Bondholders must maintain a current
address on file with the Trustee to receive any notices of redemption.
Partial Redemption. In the event only a portion of any Bond is called for redemption, then upon
surrender of such Bond the Authority will execute and the Trustee will authenticate and deliver to the
Owner thereof, at the expense of the Authority, a new Bond or Bonds of authorized denominations equal
in an aggregate principal amount to the unredeemed portion of the Bond surrendered and of the same
interest rate and maturity.
Estimated Sources and Uses of Funds
Proceeds from the sale of the Bonds will be used to finance the Authority's supplemental lease of the
Facilities in the aggregate principal amounts indicated below. Under the provisions of the Supplemental
Lease Agreement No. 4, the Trustee will receive the proceeds from the sale of the Bonds and other
amounts and will apply them as follows:
Sources of Funds
Principal Amount of Bonds
Original Issue Discount
Funds held under the Trust Agreement
Available Funds
Uses of Funds
Transfer to the Escrow Bank
Construction Fund
Reserve Account(o
Lease Payment Account tzl
Underwriter's Discount
Costs of Issuance Fund(3)
(D An amount necessary to fund the Reserve Requirement allocated to the issuance of the Bonds (see "SOURCES
OF PAYMENT FOR TBE BONDS-Reserve Account"herein).
(2) Interest on the Bonds issued to fiord construction of the Project is capitalized to May 1, 2006 (see "THE
FACILITIES"herein).
ts) Expenses include fees of Bond Counsel, Disclosure Counsel, the Financial Advisor, the Trustee, rating fees,
bond insurance premiums,costs of printing the Official Statement,and other costs of issuance of the Bonds.
Proceeds Deposited in the Construction Fund. Proceeds deposited in the Construction Fund will be
used by the City to construct a 115,000 square foot expansion to the existing Pahn Springs Convention
Center, including 36,000 square feet of new exhibit hall space and 15,000 square feet of new meeting
room space(see"THE FACILITIES").
Proceeds Transferred to the Escrow Bank. Amounts transferred to the Escrow Bank will be sufficient
to pay the interest coming due on the 1997 Bonds through and including August 1, 2004 and to pay the
optional redemption price of the 1997 Bonds on August 1,2004.
9
Scheduled Debt Service on the Bonds
The following is the scheduled Annual Debt Service on the Bonds.
Annual
Bond Year Endine Principal Interest Debt Service
November 1,2004
November 1,2005
November 1,2006
November 1,2007
November 1,2008
November 1,2009
November 1,2010
November 1,2011
November 1,2012
November 1,2013
November 1,2014
November 1,2015
November 1,2016
November 1,2017
November 1,2018
November 1,2019
November 1,2020
November 1,2021
November 1,2022
November 1,2023
November 1,2024
November 1,2025
November 1,2026
November 1,2027
November 1,2028
November 1,2029 -
November 1,2030
November 1,2031
November 1,2032
November 1,2033
November 1,2034
10
Aggregate Debt Service
The following table summarizes the annual aggregate debt service requirements on the Bonds,the 1991
Bonds and the 2001 Bonds,on a fiscal year basis.
2001
Fiscal Year Outstanding 2004
Ending 1991 Outstanding Bonds Bonds Bonds Total Annual
June 30 Debt Service Debt Service Debt Service Debt Service
2004 - $2,471,675.00
2005 $1,210,000.00 1,281,200.00
2006 1,210,000.00 1,281,200.00
2007 1,215,000.00 1,281,200.00
2008 1,215,000.00 1,281,200.00
2009 1,290,000.00 1,281,200.00
2010 - 2,124,000.00
2011 - 2,123,900.00
2012 - 2,127,300.00
2013 - 2,124,200.00
2014 - 2,141,625.00
2015 - 2,106,018.75
2016 - 2,129,056.25
2017 - 2,133,287.50
2018 - 2,129,23T50
2019 - 2,126,906.25
2020 - 2,130,900.00
2021 - 2,127,912.50
2022 - 2,128,037.50
2023 - 3,094,537.50
2024 - 3,094,456.25
2025 - 3,092,750.00
2026 - 3,095,500.00
2027 - -
2028 - -
2029 - -
2030 - -
2031 - -
2032 - -
2033 - -
2034
Total $6,140,000.00 $48,907,300.00
11
THE FACILITIES
The Facilities consist of the City's convention center and land and improvements relating thereto,
including related public parking facilities and the land upon which such convention center,improvements
and parking facilities are located. The Convention Center facilities are located in the center of the City of
Palm Springs in close proximity to the central business district of the City and along a major corridor of
transportation between the airport and the core of the retail shopping areas. The Facilities are adjacent to
a 410 guest room headquarters hotel (the Wyndham Hotel) which was formally opened in November
1987 and is currently fully operational offering food and beverage facilities, meetings and banquet
facilities and recreational amenities. The convention center was completed and dedicated December 31,
1987 and contained approximately 110,000 square feet. In 1992,the City completed a 47,000 square foot
expansion to the facilities. Currently, approximately 66,000 square feet is exhibit and convention space,
approximately 16,000 square feet is utilized for meeting and function rooms, approximately 20,000
square feet is service and support space, approximately 7,500 square feet is used for food service and the
remaining approximately 32,000 square provides building circulation. In addition,there is approximately
20,000 square feet of outdoor function area. Phase 1 of the expansion, completed in May of 2003,
converted the Springs Lecture Hall and Sales offices to six additional meeting rooms for a total of 15
possible meeting rooms plus the board room. The site of the convention center contains approximately
9.26 acres of land and provides parking for 491 cars.
The City's objective in building the convention center was to support and enhance the tourist and
convention business, which is the City's most important industry. The hotel, retail, entertainment and
other businesses which serve the needs of tourist and convention center attendees generate significant
revenues to the City in the form of transient occupancy taxes, sales taxes and property taxes. See
"FINANCIAL INFORMATION" herein for additional information. There are over 160 hotels and 6,500
hotel rooms in the Palm Springs area.
In 2001, the City commissioned a study to determine what opportunities existed to compete more
effectively for conventions and meetings. The study concluded that if the City could expand certain
aspects of the existing facility (primarily exhibit hall space and meeting rooms), that the Convention
Center could accommodate 73% of all groups that bring their meetings to California, as opposed to the
current 58% of all groups that the space will currently accommodate. Based on this study the City
determined that an expansion of the convention center was feasible. In November 2001 and again in
November 2003, voters in Palm Springs approved a ballot measure to increase the City's transient
occupancy tax rate for the purpose of generating fords to pay for the expansion. These ballot measures
were supported by the hotel owners. The City expects the increases to generate $2,300,000 in additional
transient occupancy tax annually (see "FINANCIAL INFORMATION — Other Local Taxes — Transient
Occupancy Taxes"herein).
The Convention Center Expansion (the "Project") was designed by Fentress Bradbum Architects, Ltd,
Denver, Colorado, and will add an additional 115,000 square feet of space to the existing Facilities, for a
total building area of 250,000 square feet. The space in the Facility before and after the expansion is
summarized as follows.
Existine After Expansion
Exhibit/Convention Space 64,000 sf 100,000 sf
Meeting/Function Rooms 16,000 sf 31,000 sf
Food Service 8,000 sf 10,000 sf
Support/Circulation 69 000 sf 109,000 sf
Total(excluding outdoor function area) 157,000 sf 250,000 sf
12
The City estimates that the total cost to construct the Project will be $40.85 million. The City has
contracted with Turner Construction Company to serve as Construction Manager for the Project. All
trade contracts are to be bid, awarded and held by the City. Bids representing _% of the Project costs
(site and structures) were awarded by the City on March 24, 2004 and are summarized below. Primary
construction will commence in April 2004 and the City expects construction to be complete by September
2005. The existing Convention Center facilities and parking will remain open during construction.
Project Costs
Sitework $ 3,556,796
Structures 27,703,754
Contingency for Land Acquisition 1,250,000
Architectural&Other 4,317,085
Construction Management Services 1,806,597
Pre-Opening Marketing 400,000
Contingency 3,766,183
Buyout Contingency 800,000
North Parking Lot 575,000
General Conditions 901,205
FF&E 400,000
Total Project Costs $45,476,620
Earnings During Construction (616,620)
Deposit to Construction Fund $44,860,000
The Facilities are managed by SMC3 a professional management and operating company. SMG
specializes in the management of convention centers and currently operates 98% of the publicly owned
exhibition space in North America operated by private companies.
The 48 convention and exhibition facilities currently managed by SMG include more than 9 million
square feet of space and range in size from 30,000 square foot exhibit halls, with adjacent active sports
arenas,to the 1,000,000 plus square feet of Reliant Astrohall in Houston and The National Trade Center in
Toronto.
Over 16 million people attended more than 4,500 convention and exhibition events at SMG managed
facilities last year. These included consumer shows, trade shows, conventions, corporate meetings,
product launches and other special events.
In 2002, the Facilities were booked for 90 events with over 133,000 attendees. In 2003, the Facilities
were booked for 86 events with over 101,000 attendees. The largest bookings included the Aircraft
Owners &Pilots Association (11,700), California Teachers of English (5,100), Palm Springs Exotic Car
Auction(5,000),Valleywide Employment Expo(5,000)and California Mathematics Council. Actual and
tentative bookings though the end of the year for 2004 (during the construction period) are estimated to
total 81,000 attendees over 49 events. Largest bookings include Palm Springs Modern Show (3,000),
Computer Using Educators (4,000), Palm Springs Home Show (5,000), JS Enterprise (5,000), and
Valleywide Employment Expo(5,000). There are 38 events already booked for 2005 (with construction
scheduled through September of 2005) with estimated attendees of 55,975, 32 events in 2006 and 22
events in 2007. Many future bookings are a result of repeat visitors. However, the City expects that
bookings as a result of the completed expansion will increase average annual attendees figures to exceed
186,000 as soon as 2007.
13
Interest on a portion of the Bonds is capitalized through May 1, 2006. Should the Project not be
completed and available for use by the City on or before May 1, 2006, the Lease Payments due under
Supplemental Lease Agreement No. 4 and allocable to the Bonds issued to fiord the Project (but not the
refunding of the 1997 Bonds) will be completely or partially abated in accordance with the terms of the
Lease Agreement until the Project, or the undelivered portion thereof, are made available to the City.
However,if the fair rental value of the Facilities is sufficient to provide for the Lease Payments related to
the undelivered portion of the Project, abatement may be avoided or the amount of abatement reduced.
[Discuss Liquidated Damages clause in contracts to be awarded].
The City has the right under the Lease Agreement, however, to delete or substitute for portions of the
Facilities with alternate Facilities subject to the satisfaction of certain requirements (see "APPENDIX A—
SUMMARY OF THE LEGAL DOCUMENTS—LEASE AGREEMENT"herein).
SOURCES OF PAYMENT FOR THE BONDS
General
As provided therein,the Bonds will be secured(on a parity with the 1991 Bonds, the 2001 Bonds and all
other Additional Bonds issued under the Trust Agreement) by a first pledge of, security interest in and
lien on all of the Lease Payments and other assets referred to therein, including insurance or
condemnation Net Proceeds received in respect to the Facilities to the extent that such Net Proceeds are
not used for repair or replacement, interest or other income derived from the investment of the fimds held
by the Trustee, or, in certain instances, from the Reserve Account. The Authority has assigned all of its
rights under the Lease Agreement including its rights to receive Lease Payments from the City and its
remedies under the Lease Agreement to the Trustee for the benefit of the Owners of the Bonds, the 1991
Bonds, and the 2001 Bonds. The Lease Payments are calculated to be sufficient to pay, when due, the
amoral principal of and interest on the Bonds,the 1991 Bonds and the 2001 Bonds.
The obligation of the City to pay Lease Payments does not constitute an indebtedness of the City for
which the City is obligated to levy or pledge any form of taxation or for which the City has levied or
pledged any form of taxation. Neither the Bonds nor the obligation of the City to pay Lease
Payments constitutes an indebtedness of the Authority,the City,the State of California,or any of its
political subdivisions within the meaning of any constitutional or statutory debt limitation or
restriction.
Lease Payments
The City is required to pay to the Authority specified amounts for use of the Facilities ("Lease
Payments"), which are equal to the principal and interest due with respect to the Bonds, the 1991 Bonds
and the 2001 Bonds. The Lease requires the City to pay Lease Payments to the Authority fifteen days
preceding each Payment Date. Lease Payments to be paid by the City are assigned and are to be
transmitted directly to the Trustee.
The Trust Agreement requires that the Lease Payments be deposited in the Lease Payment Account and
applied to make principal and interest payments when due with respect to the Bonds the 1991 Bonds and
the 2001 Bonds. The City shall receive a credit against the Lease Payments due equal to the amount on
deposit in the Lease Payment Account.
The City covenants in the Lease Agreement to take such action as may be necessary to include all Lease
Payments in its annual budget and to make annual appropriations for all such Lease Payments. The Lease
provides that the several actions required by such covenants are deemed to be and shall be construed to be
ministerial duties imposed by law and that it is the duty of each and every public official of the City to
take such action and do such things as are required by law in the performance of the official duty of such
14
official to enable the City to carry out and perform the covenants in the Lease Agreement agreed to be
carried out and performed by the City.
The Lease Agreement provides that Lease Payments for any portion of the Facilities will be abated during
any period in which there is substantial interference with the City's use of such portions of the Facilities
because of damage, destruction or condemnation of such portions. The amount of such abatement shall
be an amount agreed upon by the City and the Authority such that the resulting Lease Payments
represents fair consideration for the use and occupancy of the portions of the Facilities not taken,
damaged or destroyed. Such abatement shall continue for the period commencing with such taking,
damage or destruction and ending with the substantial completion of the work of replacement, repair or
reconstruction. In the event of any such damage or destruction,the Lease shall continue in full force and
effect and the City waives any right to terminate the Lease by virtue of such damage and destruction.
Notwithstanding the foregoing, there shall be no abatement of Lease Payments under the Lease
Agreement to the extent that the proceeds of rental intemiption insurance, amounts in the Lease Payment
Account and Reserve Account or other amounts legally available to the City are available to pay Lease
Payments which would otherwise be abated wider the Lease Agreement.
Doming any period of abatement of Lease Payments, the Trustee may pay principal and interest with
respect to the Bonds,the 1991 Bonds and the 2001 Bonds allocable to such portions of the Facilities from
moneys on deposit in the Reserve Account, and, if available, proceeds of insurance or condemnation
award, on a pro-rata basis. The City's reduced Lease Payments will constitute the total Lease Payments.
The reduced Lease Payments may not be sufficient to pay principal and interest with respect to the Bonds,
the 1991 Bonds and the 2001 Bonds in the amounts and at the rates set forth therein. The failure to make
such payment of principal and interest will not constitute a default by the Authority or the City under the
Trust Agreement,the Lease Agreement or otherwise.
Capitalized Interest
There will be an initial deposit by the City to the Lease Payment Account from proceeds of the Bonds. It
is expected that construction of the Facilities will be substantially completed and be ready for occupancy
and use by the City by September 2005. The amount deposited equals the interest payment on a portion
of the Bonds through and including May 1, 2006. Such amounts represent advance Lease Payments due
under Supplemental Lease Agreement No.4(see"THE FACILITIES"herein).
Reserve Account
A Reserve Account has been established wider the Trust Agreement to be held by the Trustee to further
secure the timely payment of principal and interest on the Bonds, the 1991 Bonds and the 2001 Bonds.
The amount to be maintained in the Reserve Account is an amount equal to the least of maximum annual
Lease Payments, including Lease Payments payable pursuant to Supplemental Lease Agreement No. 4,
10%of the aggregate principal amount of the Bonds,the 1991 Bonds and the 2001 Bonds, or 125%of the
average atmual Lease Payments (the "Reserve Requirement"). In the event that the City fails to deposit
with the Trustee the full amount required by the Lease Agreement to pay principal and interest due on the
Bonds, the 1991 Bonds and the 2001 Bonds, the Trustee will withdraw, pro-rata, from the Reserve
Account, the difference between the amount required to be on deposit and the amount available on such
date.
Amounts in excess of the Reserve Requirement will be transferred to the Lease Payment Account to be
applied as a credit against the next succeeding Lease Payments.
15
Insurance Relating to the Facilities
The Lease Agreement requires the City to maintain or cause to be maintained with respect to the
Facilities, comprehensive general public liability and property damage insurance and fire insurance with
extended coverage. The City is also required to maintain rental interruption insurance covering loss of
the use of any part of the Facilities in an amount equal to the maximum total Lease Payments payable by
the City on any three consecutive Lease Payment Dates. The City is required to maintain earthquake
insurance only with respect to structures and only to the extent available at reasonable cost from reputable
insurers (see "APPENDIX A— SUMMARY OF THE LEGAL DOCUMENTS - THE LEASE AGREEMENT -
Insurance" and"BONDHOLDERS' RISKS—The Lease Payments—Insurance"herein). Although the City
currently maintains earthquake insurance with respect to the Facilities, damage from earthquakes may not
be covered in future years. In the event the Facilities are damaged or destroyed, the City may apply the
net proceeds of any insurance award (except that included for the purposes of rental interruption) to
replace, repair, restore, modify or improve (collectively, `repair") the Facilities, or if repairing the
Facilities is not economically feasible, or in the best interest of the City, to redeem the Bonds, the 1991
Bonds and the 2001 Bonds. In the event the Facilities have been damaged or destroyed and the City
directs the Trustee to apply insurance proceeds arising from such damage or destruction to the payment or
prepayment of Lease Payments, then the Trustee shall apply such proceeds to the redemption of Bonds,
the 1991 Bonds and the 2001 Bonds as described under the caption"THE BONDS—Redemption-Special
Mandatory Redemption"herein. The amount of the Lease Payments will be adjusted or abated(but only
after all available moneys have been depleted) during any period in which damage or destruction to the
Facilities or condemnation of the Facilities substantially interferes with the City's use and possession
thereof.
If there are not sufficient insurance proceeds to complete repair of the Facilities,the Lease Payment
schedule will be proportionally reduced in accordance with the Lease Agreement. Such reduced
Lease Payments may not be sufficient to pay principal and interest with respect to the Bonds, the
1991 Bonds and the 2001 Bonds. Such reduction would not constitute a default under either the
Trust Agreement or the Lease Agreement.
Parity Obligations
The Bonds, the 1991 Bonds and the 2001 Bonds are parity obligations of the Authority and the revenues
pledged to the Bonds, the 1991 Bonds and the 2001 Bonds consist primarily of the Lease Payments. In
the event that the City did not or was unable to pay the full amount of the Lease Payments when due,the
effect would be a shortfall of Lease Payments to pay the Bonds,the 1991 Bonds and the 2001 Bonds.
The Trust Agreement permits the Authority to issue Additional Bonds,notes or other indebtedness which
are payable out of Lease Payments, in whole or in part, subject to the conditions set forth in the Trust
Agreement,including the following:
(a) Additional Bonds may only be issued for the purpose of expanding, modifying, or otherwise
improving the Facilities.
(b) The Authority must be in compliance with all covenants set forth in the Trust Agreement and all
agreements supplemental thereto.
(c) Interest on such Additional Bonds must be payable on May 1 and November 1 and principal must
be payable on November I in any year in which principal is payable.
(d) The Authority and the City must amend the Lease Agreement to provide for additional Lease
Payments sufficient to pay the principal of and interest on such Additional Bonds in full, when
and as the same become due and payable.
16
(e) The Authority must deliver to the Trustee a written certificate of the Authority certifying that the
conditions precedent to the issuance of such Additional Bonds set forth in subsections(a), (b), (c)
and (d) above have been satisfied and that an amount equal to the Reserve Requirement is on
deposit on the Reserve Account.
The Ground Lease
The Site of the Facilities is leased pursuant to a lease designated as `Business Lease-315 Agua Caliente
(Palm Springs) Reservation," effective December 31, 1984, between the several lessors named therein
and executed by the United States Department of the Interior, Bureau of Indian Affairs, as authorized
signatory for such lessors. The term of the Ground Lease is for a period of 74 years,with an option of the
lessee to extend for an additional 25 years. The Ground Lease was entered into pursuant to an Option to
Lease dated February 28, 1984. Pursuant to an Assignment, dated September 29, 1989, the City became
the successor to the interest of Senca Patin Springs Inc.,as lessee under the Ground Lease.
The Lease Agreement provides that covenants, agreements, terms, provisions and conditions of the
Ground Lease are made a part of and incorporated into the Lease Agreement as if recited therein in full
for the benefit of the lessors under the Ground Lease so that the lessor's benefit under the Ground Lease
will be preserved and maintained, and to insure that the obligations of the City under the Ground Lease
will be performed. In the event of a conflict, the terms of the Ground Lease shall prevail over the terms
of the Lease Agreement.
The Ground Lease is made a part of the Lease Agreement and, accordingly, the covenants of the City in
the Lease Agreement to faithfully observe and perform all the covenants, conditions and requirements of
the Lease Agreement, and to not suffer or permit any default to occur thereunder and to not do or permit
anything to be done, or omit or refrain from doing anything, in any case where any such act done or
permitted to be done, or any such omission of or refraining from action, would or might be a ground for
cancellation or termination of the Lease Agreement, applies with equal force and effect to the City's
obligations under the Ground Lease. However, all of the rights and remedies in the event of a default by
the City under the Lease Agreement will apply only to the City's interests as lessee under the Lease
Agreement and the Ground Lease, and, in the event of a conflict between the terms of the Lease
Agreement and the Ground Lease,the terms of the Ground Lease shall control.
One of the provisions of the Ground Lease requires the Bureau of Indian Affairs, as the authorized
representative of the Secretary of the Interior, to approve subleases of the premises leased pursuant to the
Ground Lease. The Bureau of Indian Affairs approved the Lease Agreement, upon its initial execution
and all Supplements thereto previously entered into,and the City will obtain such approval with respect to
the Supplemental Lease Agreement No. 4 prior to the delivery of the Bonds.
Reentering and Reletting
If the City defaults in performance of its obligations under the Lease Agreement,the Trustee, as assignee
of the Authority,may re-enter and relet the Facilities and may enforce the Lease Agreement and hold the
City liable for all Lease Payments on an annual basis while re-entering and reletting the Facilities. Such
re-entry and reletting shall not effect a surrender of the Lease Agreement. The City, in the event of
default, waives all rights to any rentals received by the Trustee through referring of the Facilities. The
City agrees to pay all costs,loss or damage howsoever occurring.
17
Encumbrances; Substitution of Property
The City and the Authority may not create any mortgage, pledge, lien, charge or encumbrance upon the
Facilities other than "Permitted Encumbrances." The City has the right under the Lease Agreement,
however,to delete or substitute for portions of the Facilities,alternate Facilities, subject to the satisfaction
of certain requirements. Such requirements for substitution of property under the Lease include the
requirements that[to be completed].
Municipal Bond Insurance
[to be completed]
18
BONDHOLDERS' RISKS
The purchase of the Bonds involves investment risk. If a risk factor materializes to a sufficient degree, it
could delay or prevent payment of principal of and/or interest on the Bonds. Such risk factors include,
but are not limited to, the following matters and should be considered, along with other information in
this Official Statement, by potential investors.
The Lease Payments
City's Lease Payments and Other Payments. The City's Lease Payments and other payments due
under the Lease Agreement(including the costs of improvement,repair and maintenance of the Facilities
and taxes, other governmental charges and assessments levied against the Facilities) are not secured by
any pledge of taxes or other revenues of the City but are payable from yearly appropriations of any fiords
lawfully available to the City. In the event the City's revenue sources are less than its total obligations,
the City could choose to fund other services before making Lease Payments and other payments due
under the Lease Agreement. The same result could occur if, because of State Constitutional limits on
expenditures,. the City is not permitted to appropriate and spend all of its available revenues (see
"Constitutional Limitation on Taxes and Expenditures" below). To the extent these types of events or
other events adversely affecting the fiords available to the City occur in any year, the finds available to
make Lease Payments may be decreased.
The City has the capacity to enter into other obligations which may constitute additional charges against
its revenues. To the extent that additional obligations are incurred by the City, the funds available to the
City to make Lease Payments may be decreased.
Abatement. The amount of Lease Payments due under the Lease Agreement will be adjusted or abated
during any period in which by reason of damage or destruction to the Facilities or eminent domain
proceedings there is substantial interference with the use and possession of the Facilities. In addition,the
discovery of toxic or other environmentally hazardous materials could result in substantial interference
with the use of the Facilities, although the City has no reason to believe there are any hazardous
environmental conditions at the site. Notwithstanding the provisions of the Lease Agreement and the
Trust Agreement specifying the extent of abatement in the event of the City's failure to have use and
possession of the Facilities, such provisions may be superseded by operation of law, and, in such event,
the resulting Lease Payments of the City may not be sufficient to pay all of that portion of the remaining
principal and interest represented by the Bonds,the 1991 Bonds,and the 2001 Bonds.
Earthquake Risk. According to the Seismic Safety Element of the City's General Plan, the City is
located in a seismically active region and the Facilities could,be impacted by a major earthquake
originating from the numerous faults in the area. Seismic hazards encompass both potential surface
rupture and ground shaking. The Pahn Springs planning area has numerous fault traces that are part of
the larger San Andreas Fault Zone. Of primary concern are the Banning Fault, the Pahn Canyon Fault
and the San Jacinto Fault.
Ground rupture occurred along the Banning Fault Zone as a result of a magnitude 5.9 earthquake on July
8, 1986. Only minor damage was sustained by any structures within the City. The San Jacinto Fault
approaches within 6.5 miles of the City and is considered to be one of the major branches of the San
Andreas Fault system, extending from Cajon Pass (near San Bernardino) into Mexico. The San Jacinto
Fault Zone is considered to be the most seismically active fault zone in southern California. The Palm
Canyon Fault is exposed in the bedrock in the southeastern portion of the City and has been inferred by
researchers as extending northward beneath the City under the alluviun. No evidence is available as to
the existence or precise location of the Palm Canyon Fault within the alluvium or regarding its potential
activity.
19
This hazard could result in damage to the Facilities, and possibly, abatement of all or a portion of Lease
Payments.
Insurance. The Lease Agreement obligates the City to obtain and keep in force various forms of
insurance, to assure repair or replacement of the Facilities in the event of damage or destruction to the
Facilities (see "APPENDIX A— SUMMARY OF THE LEGAL DOCUMENTS - THE LEASE AGREEMENT -
Insurance" herein). The City makes no representation as to the ability of any insurer to fulfill its
obligations under any insurance policy provided for in the Lease Agreement. In addition, the City is not
required under the Lease Agreement to obtain earthquake and flood insurance. Although the City
currently maintains earthquake insurance with respect to the Facilities,damage from earthquakes may not
be covered by such insurance in future years.
In the event the Facilities are partially or completely damaged or destroyed due to any uninsured or
umderinsured event,it is likely that Lease Payments will be partially or completely abated. Apart from the
proceeds of insurance,the City and the Authority will have no obligation to expend any funds to repair or
replace such damaged or destroyed property. If any leased property so damaged or destroyed is not
repaired or replaced within the period during which the proceeds of rental interruption insurance or
amounts in the Reserve Account are available, any such abatement could prevent the City from making
timely Lease Payments.
Discovery of a Hazardous Substance That Would Limit the Beneficial Use of the Facilities. In
general, the owners and lessees of a parcel may be required by law to remedy conditions of the property
relating to the releases or threatened releases of hazardous substances. The federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as CERCLA or
the Superfund Act, is the most well known and widely applicable of these laws but California laws with
regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or
lessee) is obligated to remedy a hazardous substance condition of property whether or not the owner(or
lessee) had any involvement in creating or handling the hazardous substance. The effect, therefore,
should the Facilities be affected by a hazardous substance might be to limit the beneficial use of the
Facilities upon discovery and during remediation.
Limited Recourse on Default. If the City defaults on its obligations to make Lease Payments with
respect to the Facilities or any portion thereof,the Trustee may have limited ability to relet the Facilities
or portions of the Facilities to provide a source of payments sufficient to meet principal and interest
payments with respect to the Bonds and preserve the tax-exempt nature of the interest component of the
Lease Payments and the Bonds, the 1991 Bonds and the 2001 Bonds. Due to the specialized
governmental purposes served by the Facilities, the Trustee's ability to re-let the Facilities is uncertain.
No assurance can be given that the Trustee will be able to relet the Facilities or portions thereof so as to
provide Lease Payments sufficient to pay principal of and interest on the Bonds in a timely manner. In
the event of a default, there is no remedy of acceleration of the total Lease Payments due over the
term of the Lease Agreement. The City,while it is lessee,will only be liable for Lease Payments on an
annual basis, and the Trustee would be required to seek a separate judgment each year for that year's
defaulted Lease Payments. Any such suit for money damages would be subject to limitations on legal
remedies against public entities in California, including a limitation on enforcement of judgments against
funds needed to serve the public welfare and interest.
Project Costs and Completion
Project Costs. There can be no assurance that the Project will be completed for the costs and within the
time described in this Official Statement. A delay in the completion or damage to the Project during
construction could have an adverse effect on the costs of the Project. Contractor and subcontractor
performance and integrity, availability and cost of labor, equipment and materials, and weather
conditions,among other unexpected factors,could cause such a failure of timely on-budget construction.
20
Project Completion. The City is not obligated to pay the Lease Payments under Supplemental Lease
Agreement No. 4 allocable to funding of the Project, other than from proceeds of the Bonds (capitalized
interest) deposited in the Lease Payment Account, until the Project is delivered and installed. This
represents approximately 80%of the Lease Payments payable pursuant to Supplemental Lease Agreement
No.4. If the Project is not delivered and installed by May 1,2006,and if there are no amounts on deposit
in the Lease Payment Account and the Reserve Account,Supplemental Lease Agreement No.4 remains in
effect, but the Supplemental Lease Agreement No. 4 Lease Payments are abated in proportion to the
widelivered portion of the Project, until the Project or portion thereof is completed. If the Project or
portions thereof are not delivered or installed by the date that the advance Lease Payments have been
depleted,the combination of the unabated Lease Payments plus the Reserve Account and other funds held
by the Trustee may not be sufficient to pay the full amount of principal and interest due with respect to
the Bonds.
State of California Fiscal Issues
[to be updated]
Constitutional Limitation on Taxes and Expenditures
Article XI11A. Article XIIIA of the California Constitution limits the taxing powers of California public
agencies. Article XIIIA provides that the maximum ad valorem tax on real property cannot exceed one
percent of the "full cash value" of the property, and effectively prohibits the levying of any other ad
valorem property tax except for taxes above that level required to pay debt service on voter-approved
general obligation bonds. "Full cash value" is defined as "the County assessor's valuation of real
property as shown on the 1975/76 tax bill under `fuill cash value' or,thereafter,the appraised value of real
property when purchased, newly constructed, or a change in ownership has occurred after the 1975
assessment." The full cash value is subject to annual adjustment to reflect inflation at a rate not to exceed
two percent or a reduction in the consumer price index or comparable local data. Article XIIIA has
subsequently been amended to permit reduction of the fall cash value base in the event of declining
property values caused by substantial damage, destruction or other factors, and to provide that there
would be no increase in the full cash value base in the event of reconstruction of property damaged or
destroyed in a disaster and in other special circumstances.
The foregoing limitation does not apply to ad valorem taxes or special assessments to pay the interest and
redemption charges on any indebtedness approved by the voters before July 1, 1978 or any bonded
indebtedness for the acquisition or improvement of real property approved by two-thirds of votes cast by
the voters voting on the proposition.
In the general election held November 4, 1986, voters of the State of California approved two measures,
Propositions 58 and 60, which further amend the terms "purchase" and "change of ownership," for
proposes of determining fall cash value of property under Article XIIIA, to not include the purchase or
transfer of(1) real property between spouses and (2) the principal residence and the first $1,000,000 of
other property between parents and children. Proposition 60 amends Article XIIIA to permit the
Legislature to allow persons over age 55 who sell their residence and buy or build another of equal or
lesser value within two years in the same city, to transfer the old residence's assessed value to the new
residence. In the March 26, 1996 general election, voters approved Proposition 193, which extends the
parents-children exception to the reappraisal of assessed value. Proposition 193 amended Article XIIIA
so that grandparents may transfer to their grandchildren whose parents are deceased, their principal
residences,and the first$1,000,000 of other property without a re-appraisal of assessed value.
Comity of Orange v Orange County Assessment Appeals Board No 3. In a ruling issued on December
27, 2001, in County of Orange v. Orange County Assessment Appeals Board No. 3, Case No.
00CC03385, the Orange County Superior Court held that the Orange County assessor violated the 2%
21
annual inflation adjustment provision of Article XIIIA when the assessor tried to "recapture"the taxable
value of a single family residential property by increasing its assessed value by approximately 4% in a
single year. The assessor had not increased the assessed value of the property during a year in which the
market value of the property was detemnined by the assessor to have declined below its taxable value
pursuant to Article XIIIA. In the following year,the assessor established the taxable value of the property
by determining that its then-current market value was greater than if the 2% annual inflation adjustment
had been applied in the previous year. The assessor enrolled the property at a taxable value that
recaptured the foregone 2% inflation adjustment from the previous year, resulting in a one-year increase
of approximately 4%. The State Board of Equalization has approved this methodology for increasing
assessed value in similar circumstances.
The case had been certified as a class action with all affected County residents as class members. In
2002, two local courts(Los Angeles and San Diego)ruled differently on the"recapture"issue. Therefore
the issues of uniformity and equal protection for each taxpayer statewide must be addressed. When local
courts differ, the subject matter is often subject to a uniformity review. On June 12, 2003, the Orange
County Assessor and the Orange County Tax Collector, in conjunction with Orange County,filed a notice
to appeal the Superior Court ruling to State Court of Appeal, Fourth District. The Appellate Court heard
oral arguments in the case on January 7, 2004 and ruled in favor of the Orange County Assessor.
However, the Appellate Court ruling can be further appealed to the California Supreme Court and the
appellate process could take years to conclude. The City is unable to predict the outcome of this litigation
or to determine what impact, if any, this case may ultimately have on the City's property tax revenues.
Property tax revenues to be received by the City could be reduced if the Superior Court decision is
upheld, which in tun could reduce the amount of available general fund moneys to make timely Lease
Payments(see"FINANCIAL INFORMATION—Tax Revenues"herein).
Article XMB. On October 6, 1979, California voters approved Proposition 4, or the Gahm Initiative,
which added Article X11113 to the California Constitution. The principal thrust of Article XIIIB is to limit
the annual appropriations of the State and any city, county, city and county, school district, authority or
other political subdivision of the State. The "base year" for establishing such appropriations limit is the
1978/79 fiscal year, and the limit is to be adjusted annually to reflect changes in population, consumer
prices and certain increases in the cost of services provided by public agencies.
Appropriations subject to Article XIIIB include generally the proceeds of taxes levied by or for the entity
and the proceeds of certain State subventions, refunds of taxes, benefit payments from retirement,
unemployment insurance and disability insurance funds. "Proceeds of taxes"include,but are not limited
to, all tax revenues, certain State subventions, and the proceeds to an entity of government, from (1)
regulatory licenses, user charges and user fees, to the extent that such charges and fees exceed the costs
reasonably borne in providing the regulation,product or service, and(2)the investment of tax revenues.
Article X11IB includes a requirement that if an entity's revenues in any year exceed the amounts permitted
to be spent, the excess would have to be returned by revising tax rates or fee schedules over the
subsequent two years.
In the June 1990 election, the voters approved Proposition I I I amending the method of calculation of
State and local appropriations limits. Proposition I I I made several changes to Article XIIIB. First, the
term "change in the cost of living" was redefined as the change in the California per capita personal
income ("CPCPI") for the preceding year. Previously, the lower of the CPCPI or the United States
Consumer Price Index was used. Second, the appropriations limit for the fiscal year was recomputed by
adjusting the 1986/87 limit by the CPCPI for the three subsequent years. Third and lastly,Proposition 111
excluded appropriations for"qualified capital outlay for fiscal 1990/91 as defined by the legislature"from
proceeds of taxes.
Proposition 62 and Proposition 218. Under the California Constitution, the power of initiative is
reserved to the voters for the purpose of enacting statutes and constitutional amendments. Over the past
18 years, the voters have exercised this power through the adoption of Proposition 13 ("Article XIIW')
22
and similar measures, the most recent of which was approved as Proposition 218 in the general election
held on November 5, 1996. Proposition 62, also discussed below, was adopted in the November 1986
general election.
Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies
such as the City. Subject to overriding federal constitutional principles, such collection may be materially
and adversely affected by voter-approved initiatives,possibly to the extent of creating cash flow problems
in the payment of outstanding obligations such as the Lease.
Proposition 62 was a statutory initiative adding Sections 53720 to 53730, inclusive, to the California
Government Code. It confirmed the distinction between a general tax and special tax, established by the
State Supreme Court in 1982 in City and County of San Francisco a Farrell,by defming a general tax as
one imposed for general governmental purposes and a special tax as one imposed for specific purposes.
Proposition 62 farther provided that no local government or district may impose(i) a general tax without
prior approval of the electorate by majority vote or(ii) a special tax without such prior approval by two-
thirds vote. It further provided that if any such tax is imposed without such prior written approval, the
amount thereof must be withheld from the levying entity's allocation of annual property taxes for each
year that the tax is collected. By its terms, Proposition 62 applies only to general and special taxes
imposed on or after November 1, 1985. Proposition 62 was generally upheld in Santa Clara County
Local Transportation Authority a Cruardino, a California Supreme Court decision filed September 28,
1995.
On November 5, 1996, California voters approved Proposition 218 - Voter Approval for Local
Government Taxes - Limitation on Fees, Assessments, and Charges - Initiative Constitutional
Amendment. Proposition 218 added Articles X1IIC and XIIID to the California Constitution, imposing
certain voter requirements and other limitations on the imposition of new or increased taxes, assessments
and property-related fees and charges. Proposition 218 states that all taxes imposed by local governments
shall be deemed to be either general taxes or special taxes. Special purpose districts, including school
districts, have no power to levy general taxes. No local government may impose, extend or increase any
general tax unless and until such tax is submitted to the electorate and approved by a majority vote. No
local government may impose, extend or increase any special tax unless and until such tax is submitted to
the electorate and approved by a two-thirds vote.
Proposition 218 also provides that no tax,assessment,fee or charge shall be assessed by any agency upon
any parcel of property or upon any person as an incident of property ownership except: (i)the ad valorem
property tax imposed pursuant to Article XIII and Article XIIIA of the California Constitution, (ii) any
special tax receiving a two-thirds vote pursuant to the California Constitution, and(iii) assessments, fees
and charges for property related services as provided in Proposition 218. Proposition 218 then goes on to
add voter requirements for assessments and fees and charges imposed as an incident of property
ownership, other than fees and charges for sewer, water, and refuse collection services. In addition, all
assessments and fees and charges imposed as an incident of property ownership, including certain sewer,
water, and refuse collection services,are subjected to various additional procedures, such as hearings and
stricter and more individualized benefit requirements and findings. The effect of such new provisions
will presumably be to increase the difficulty a local agency will have in imposing,increasing or extending
such assessments, fees and charges.
Proposition 218 also extended the initiative power to reducing or repealing any local taxes, assessments,
fees and charges. This extension of the initiative power is not limited to taxes imposed on or after
November 6, 1996, the effective date of Proposition 218, and could result in retroactive repeal or
reduction in any existing taxes, assessments, fees and charges, subject to overriding federal constitutional
principles relating to the impairments of contracts.
23
Proposition 218 provides that, effective July 1, 1997, fees that are charged "as an incident of property
ownership"may not"exceed the funds required to provide the property related services"and may only be
charged for services that are"immediately available to the owner of the property."
The foregoing discussion of Proposition 62 and Proposition 218 should not be considered an exhaustive
or authoritative treatment of the issues. The City does not expect to be in a position to control the
consideration or disposition of these issues and cannot predict the timing or outcome of any judicial or
legislative activity in this regard. Interim rulings, final decisions, legislative proposals and legislative
enactments may all affect the impact of Proposition 218 on the Bonds as well as the market for the Bonds.
Legislative and court calendar delays and other factors may prolong any uncertainty regarding the effects
of Proposition 218.
Like its antecedents, Proposition 218 is likely to undergo both judicial and legislative scrutiny before its
impact on the City and its obligations can be determined. Certain provisions of Proposition 218 may be
examined by the courts for their constitutionality under both State and federal constitutional law. The
City is not able to predict the outcome of any such examination.
Future Initiatives. Articles XIIIA, XIIIB,XIHC and XIIID were adopted as measures that qualified for
the ballot pursuant to Califonria's Constitutional initiative process. From time to time other initiative
measures could be adopted, affecting the ability of the City to increase revenues and to increase
appropriations.
Early Redemption Risk
Early prepayment of the Lease Payments and redemption of the Bonds may occur in whole or in part
without premium, on any date if the Facilities or a portion thereof is lost, destroyed or damaged beyond
repair or taken by eminent domain, or on any date on or after November 1, 2014, without a premium, if
the City exercises its right to prepay Lease Payments in whole or in part pursuant to the provisions of the
Lease Agreement and the Trust Agreement.
Loss of Tax Exemption
As discussed under the caption "LEGAL MATTERS - Tax Matters" herein, 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 future acts or omissions of the Authority or the City in violation of their
covenants contained in the Trust Agreement and the Lease Agreement. Should such an event of taxability
occur, the Bonds are not subject to special redemption or any increase in interest rate and will remain
outstanding until maturity or until redeemed under one of the redemption provisions contained in the
Trust Agreement.
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market
exists, that such Bonds can be sold for any particular price. Occasionally, because of general market
conditions or because of adverse history or economic prospects connected with a particular issue,
secondary marketing practices in connection with a particular issue are suspended or terminated.
Additionally, prices of issues for which a market is being made will depend upon then prevailing
circumstances. Such prices could be substantially different from the original purchase price.
24
THE CITY OF PALM SPRINGS
General Information
The City of Palm Springs encompasses 96.2 square miles in Central Riverside County, including
approximately 13.5 square miles annexed in 1994. The City is located 108 miles east of downtown Los
Angeles and 120 miles west of the Arizona border. Neighboring communities include Palm Desert,
Rancho Mirage,Desert Hot Springs and Cathedral City.
A major Southern California resort destination, Palm Springs attracts both local vacationers, distant
"snowbirds" and permanent retirees. Palm Springs is very much an event-oriented city. The Palm
Springs International Film Festival held for the first time in 1990 and hosted by then-Mayor Sonny Bono,
has become an annual event. With premieres, parties, conferences and celebrations, this festival
epitomizes the Palm Springs lifestyle.
Palm Springs area is well known for its championship golf courses. The Bob Hope Chrysler Classic,the
Kraft Nabisco Championship, and the Frank Sinatra Celebrity Invitational Golf Tournament are three
well-publicized celebrity events. With over 80 golf courses in the Pahn Springs area, the Professional
Golf Association(PGA)holds tournaments in the area several times throughout its annual tour.
There are over 160 hotels and inns within the Palm Springs area offering 6,500 rooms. Accommodating
vacationers and visitors plays a major role in the City's economy, providing a significant amount of
transient occupancy tax and sales tax.
Government Organization
The City of Palm Springs was incorporated as a general law city on April 20, 1938, and, operates under
the council/manager form of government. It became a charter city on July 12, 1994. The City is
governed by a five-member council consisting of four members and a Mayor, each elected at large for
four-year alternating terms. Positions of City Manager and City Attorney are filled by appointments of
the Council. The City of Palm Springs currently employs approximately 445 staff members including
sworn officers and fire personnel. The members of the City Council, the expiration dates of their terms
and key administrative personnel are set forth in the charts below.
CITY COUNCIL
Council Member Term Expires
Ronald Oden,Mayor November 2007
Christopher Mills,Mayor Pro-Tem November 2005
Ginny Foat November 2005
Michael McCulloch November 2007
Stephen Pougnet November 2007
CHIEF ADMINISTRATIVE PERSONNEL
David H. Ready, City Manager
Troy L.Butzlaff,Assistant City Manager
Thomas M. Kanarr,Director offinance and Treasurer
Dave Barakian,Director of Public Works/City Engineer
John S.Raymond,Director of Community&Economic Development
Patricia A. Sanders, City Clerk
25
Governmental Services
Public Safety and Welfare
The City of Palm Springs Police Department consists of 135 sworn police officers and non-sworn
personnel providing patrol,traffic,animal control and investigations. There are five fire stations located
in and operated by the City, staffed by 62 fire personnel. The City also provides parking control in the
downtown business district.
Public Services
Water is supplied to Palm Springs by the Desert Water Agency. Sewer service is provided by the City.
Although the City operates two cogeneration facilities which provide electricity to certain municipally
owned facilities, Southern California Edison provides electricity to the citizens of the City of Palm
Springs. The City owns and operates the Palm Springs Regional Airport, with 5 major airlines and 3
commuter airlines servicing over 1.3 million passengers in 2003.
Community Services
Other services provided by the City include building permit and inspection, planning and zoning,
landscape and public infrastructure maintenance, street cleaning, traffic signal maintenance, municipal
code compliance and rent control.
Parks and Recreation
The City operates the Library Center, a 33,000 square foot facility with over 150,000 volumes available,
as well as extensive computer links. The Village Green, located in the heart of downtown Palm Springs,
includes the Historical Society Museum, die Cornelia White historical site and Ruddy's General Store
Museum. The Palm Springs Department of Parks and Recreation provides citizens with a variety of park
and recreational services on a year round basis. Facilities include two community centers, seven parks,
totaling 142 developed acres, an Olympic community pool, twelve tennis courts, the 18-hole Tahquitz
Creek golf course and the 18-hole City golf course, a 30,000 square feet skate park and five playgrounds,
as well as biking and hiking trails. lu addition, the City also owns Frances Stevens Park,which is home
to Palm Canyon Theatre,a regional Actors Equity theatre,and an art/festival center.
Community Facilities and Services
The Coachella Valley has two large school districts and five smaller districts. The City of Palm Springs is
served by the Palm Springs Unified School District, with 14 elementary schools, 3 comprehensive high
schools, 2 continuation high schools, 1 independent study program, 7 State preschools, 10 Head Start
programs, 3 daycare programs, and an extensive adult education program serving the City. in addition,
higher education within the Coachella Valley includes the College of the Desert, a local accredited junior
college, located 10 miles southeast of Palm Springs, within the City of Palm Desert. Also in the City of
Palm Desert, a satellite campus of California State University, San Bernardino (CSUSB) offers
curriculum towards a B.A.in various disciplines as well as Bachelor of vocational education;special B.A.
in paralegal administration, and 6 masters degree programs, including education and public
administration. Teaching credentials are also available. In addition, CSUSB is currently working with
local government agencies to select a site for a permanent independent campus in the Coachella Valley.
A variety of health services from dentists, physicians and surgeons, chiropractors, and optometrists are
available to serve Palm Springs and its adjacent communities. Also available are clinics, medical and
dental groups. The Desert Regional Medical Center is located in Palm Springs and contains a total bed
capacity of 350 beds.
26
Serving Palm Springs are one main library, twelve theaters and such attractions as the Palm Springs
Desert Museum, the Palm Springs Historical Museum, the Living Desert Reserve, Moorten's Botanical
Gardens, and the Palm Springs Aerial Tramway. Rising 8,516 feet to a mountain station, the Aerial
Tramway is the longest double funicular tramway in the world. Once at the top, hiking, camping, cross-
coimtty skiing and picnicking are available.
Transportation
Interstate 10 runs adjacent to Palm Spring's northern City limits. This route provides access to the
Southern California freeway system to the west, as well as Arizona to the east. Rail freight service is
available from South Pacific Transportation. Bus services are provided by Continental Trailways,
Greyhound Bus Lines and Srmline System, both local and distant. Palm Springs International Airport,
expanded in 1999, is the only commercial airport in Riverside Comity and is served by most major
airlines.
Population
The following table provides a comparison of population growth for the City of Palm Springs,
surrounding cities and Riverside County between 1999 and 2003.
TABLE NO.I
CHANGE IN POPULATION
CITY OF PALM SPRINGS,SURROUNDING CITIES AND RIVERSIDE COUNTY
1999—2003
PALM SPRINGS SURROUNDING CITIES RIVERSIDE COUNTY
Percentage Percentage Percentage
Year Population Change Population Change Population Change
1999 43,100 100,450 1,481,200
2000 43,200 0.2% 114,650 14.1% 1,557,800 5.2%
2001 43,250 0.1% 116,300 1.4% 1,583,600 1.7%
2002 43,750 1.2% 119,600 2.8% 1,645,300 3.9%
2003 44,000 0.6% 123,350 3.1% 1,705,500 3.7%
%Change Between
1999-2003 2.1% 22.8% 15.1%
Surrounding cities include Cathedral City,Desert Hot Springs,Palm Desert and Rancho Mirage.
Source: State of California Department of Finance,Population Research Unit, Population Estimates for California
Cities and Counties."
27
Employment and Industry
The City of Palm Springs is located in the Riverside-San Bernardino Metropolitan Statistical Area
(MSA). As of December 2003, six major job categories constitute 76.7% of the work force. They are
government(19.2%), service producing(17.51/o),manufacturing(10.3%), educational and health services
(10.3%), leisure and hospitality (9.8%), and professional and business services (9.6%). The December
2003 unemployment rate in the Riverside-San Bernardino MSA was 5.2%. The State of California
December 2003 unemployment rate(unadjusted)was 6.1%.
TABLE NO.2
RIVERSIDEISAN BERNARDINO MSA
WAGE AND SALARY WORKERS BY INDUSTRY o)
(in thousands)
Industry 1999 2000 2001 2002 2003
Government 187.7 198.1 208.8 216.4 213.1
Other Services 35.3 35.5 37.6 39.0 40.1
Leisure and Hospitality 100.3 102.9 106 105.8 108.6
Educational and Health Services 102.8 103.9 109.9 112.0 114.2
Professional and Business Services 94.8 99.2 102.5 106.4 106.7
Financial Activities 35.7 35.2 38.8 40.6 41.5
Information 13.0 12.9 14.7 13.8 14.1
Transportation,Warehousing and Utilities 48.0 46.4 47.1 45.8 45.6
Service Producing
Retail Trade 133.8 137.7 140.5 147.8 152.8
Wholesale Trade 35.8 39.1 40.1 40.3 42.2
Manufacturing
Nondurable Goods 33.9 34.8 33.6 32.9 33.8
Durable Goods 84.4 86.5 81.3 80.7 80.7
Goods Producing
Construction 76.6 84.5 89.6 93.0 95.8
Natural Resources and Mining 1.3 1.2 1.2 1.1 1.2
Total Nonfarm 983.4 1,017.9 1,051.7 1,075.6 1,090.4
Farm 19.6 21.3 21.2 21.1 21.6
Total(all industries) J o�n 1 Q3 2 IAU-9 L 111
tun Annually,as of December.
Source: State of California,Employment Development Department,Labor Market Information Division.
28
The major employers operating within the City and their respective number of employees as of June 30,
2003 are as follows:
TABLE NO.3
CITY OF PALM SPRINGS
LARGEST EMPLOYERS
Name of Employer Number of Employees Product/Service
Hotels 2,741 Lodging/Restaurants
Agua Caliente Band of Cahullla Indians 1,950 Gaming/Entertainment
Palm Springs Unified School District 1,709 Public School System
Desert Regional Medical Facility 1,391 Medical Facility
City of Palm Springs 467 Municipal Government
Desert Sun Publishing 321 Newspaper
Viasys Corporation 227 Medical Supplies and Equipment
13 Banks&Savings and Loans 178 Financial Services
County of Riverside 145 Municipal Government
Source: City of Palm Springs.
Personal Income
Personal income information for Palm Sprigs, Riverside County, the State of California and the United
States is summarized in the following table.
TABLE NO.4
PERSONAL INCOME
CITY OF PALM SPRINGS,RIVERSIDE COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
1998—2002
Year Palm Springs Riverside County State of California United States
1998 $27,836 $33,089 $37,091 $35,377
1999 28,123 35,145 39,942 37,238
2000 32,610 39,293 44,464 39,129
2001 27,271 37,480 43,352 38,365
2002 32,689 38,691 42,484 38,035
Source: Sales and Marketing Management, "Survey of Buying Power."
29
Commercial Activity
Taxable Transactions by type of business for the City of Palm Springs for 1998 through 2002 are
strmmarized in Table No. 5.
TABLE NO.5
CITY OF PALM SPRINGS
TAXABLE TRANSACTIONS BY TYPE OF BUSINESS
(in thousands)
1998-2002
1998 1999 2000 2001 2002
Retail Stores
Apparel Stores $ 23,694 $ 20,189 $ 19,289 $ 17,021 $ 17,079
General Merchandise Stores 34,890 36,456 41,339 41,323 41,199
Food Stores 55,507 55,808 59,979 55,844 43,548
Eating/Drinking Places 93,085 105,217 115,976 120,171 116,811
Home Furnishings and
Appliances 8,877 9,802 11,867 12,217 12,191
Building Materials and
Farm Implements 12,024 17,286 22,997 51,947 70,215
Auto Dealers/Suppliers 63,138 66,789 74,409 78,645 65,871
Service Stations 20,489 27,755 40,596 40,189 50,631
Other retail stores 57,315 60,883 6 7746 63,839 66,284
Total Retail Stores 369,019 400,185 454,198 491,196 483,829
All Other Outlets 129,500 141856 147,118 142,760 133,431
Total All Outlets $42$5I5I 1542. �626 $61Z2f�
Source: State Board of Equalization,"Taxable Sales in California."
30
TABLE NO,6
CITY OF PALM SPRINGS
TOTAL TAXABLE TRANSACTIONS
(in thousands)
1998—2002
Total Taxable
Retail Sales Retail Sales Transactions Issued Sales
Year ($000's) %Change Permits ($000's) % Change Permits
1998 $369,019 829 $498,519 1,919
1999 400,185 8.5% 918 542,041 8.7% 1,970
2000 454,198 13.5% 1,038 601,316 10.9% 2,077
2001 481,196 5.9% 1,079 623,956 3.8% 2,116
2002 483,829 0.6% 1,101 617,260 (1.1)% 2,155
Source: State Board of Equalization,"Taxable Sales in California."
The following table summarizes the change in taxable transactions for the City of Palm Springs and
surrounding cities.
TABLE NO.7
CITY OF PALM SPRINGS AND SURROUNDING CITIES
CHANGE IN TOTAL TAXABLE TRANSACTIONS
(in thousands)
1998—2002
%Change from
City 1998 1999 2000 2001 2002 1998-2002
PALM SPRINGS $ 498,519 $ 542,041 $ 601,316 $ 623,956 $ 617,260 23.8%
Cathedral City 507,167 609,829 680,502 707,465 761,564 50.2%
Palm Desert 923,979 1,098,211 1,217,986 1,211,069 1,209,385 30.9%
Source: State Board of Equalization,"Taxable Sales in California."
31
Building Activity
The following table summarizes building activity valuations for the City of Palm Springs for the five
fiscal years 1999 through 2003.
TABLE NO.8
CITY OF PALM SPRINGS
BUILDING ACTIVITY AND VALUATION
(in thousands)
1999-2003
1999 2000 2001 2002 2003
Total Residential $28,432 $60,147 $53,128 $50,492 $52,623
Total Commercial 10,374 16,509 15,033 16.517 21,201
Total Valuation $38 SOl $7S $t$LPL SUM $11,B24
Source: City of Palm Springs.
32
DEBT STRUCTURE
Indebtedness of the City
The City had the following outstanding indebtedness as of June 30, 2003 payable from General Fund
revenues, exclusive of obligations to be paid from specifically pledged revenues, such as airport revenue
bonds, tax allocation bonds and assessment district bonds. The City has not incurred any additional
General Fund debt since Jame 30,2003.
Original Amount Final
Category of Indebtedness Issue Outstanding Maturity
(1) 1989 Certificates of Participation $18,073,402 $2,220,000 2003
(2) 1991 Lease Revenue Bonds 50,668,512 2,125,540 2008
(3) 1996 Certificates of Participation 24,135,000 21,390,000 2026
(4) 1997 Lease Revenue Bonds 12,300,000 11,585,000 2021
(5) 1998 Certificates of Participation 3,065,000 2,645,000 2014
(6) 1998 Limited Obligation Bonds, Series B 1,375,000 840,000 2009
(7) 2001 Lease Revenue Bonds 28,540,000 27,400,000 2026
(8) 2002 Certificates of Participation 8,000,000 8,000,000 2027
(9) Capital Lease-Computers 964,882 107,530 2003
(10) Capital Leases-Vehicles 3,187,758 1,766,873 2010
(11) Compensated Absences 4,594,862 4,594,862 2025
(1) In 1989, the City entered into a lease agreement with the City of Palm Springs Public Facilities
Corporation to refinance certain debt relating to the City's Wastewater Treatment Plant. A portion
of these Certificates were refunded by the 1998 Certificates. The remaining 1989 Certificates
outstanding were capital appreciation certificates with an accreted value as of June 30, 2003 of
$2,220,000. Annual lease payments were approximately $2,200,000 and were charged back to
the Wastewater Treatment Plant Fund. The 1989 Certificates were paid in full on September 1,
2003.
(2) The City entered into the Lease Agreement in 1991 to secure the payment of the 1991 Bonds.
Currently, $2,125,539.90 of initial principal amount of capital appreciation bonds remain
outstanding. See"THE BONDS—Aggregate Debt Service"herein.
(3) In 1996, the City entered into a lease agreement with the Authority to refinance certain debt
relating to the City's police building, its Co-generation plant and its 18-hole municipal golf
course. Annual lease payments are approximately $1,730,000 through 2012 and $1,550,000
thereafter. Of these amounts, 89.5%are charged back to the Cogeneration Plant Ford or the Golf
Course Fund.
(4) In 1997,the City refinanced a portion of the lease payments due under the 1991 Lease Agreement
and entered into a Supplemental Lease Agreement No. 2 with respect to the Facilities securing
payment of the 1997 Bonds. Supplemental Lease Agreement No.2 and the 1997 Bonds are being
redeemed with a portion of the proceeds of the Bonds. See "INTRODUCTION—The Refunding
Program"herein.
33
(5) In 1998, the City entered into a lease agreement with the Authority to refinance certain debt
relating to the City's Wastewater Treatment Plant. Annual lease payments are approximately
$300,000 and are charged back to the Wastewater Treatment Plant Fund.
(6) In 1998, the City entered into a lease agreement with the Authority to pay lease payments
securing the Authority's 1998 Limited Tax Obligation Revenue Bonds, Series B. Annual lease
payments are approximately$140,000 annually.
(7) In 2001,the City refinanced a portion of the lease payments due trader the 1991 Lease Agreement
and entered into a Supplemental Lease Agreement No. 3 with respect to the Facilities securing
payment of the 2001 Bonds. See"THE BONDS—Aggregate Debt Service"herein.
(8) In 2002, the City entered into a lease agreement with the Authority to pay rental payments
securing the Authority's Taxable Variable Rate Demand Certificates of Participation, 2002 Series
A. Interest is payable at a variable rate of interest. The annual lease payments, including credit
fees, are currently paid from capitalized interest. The annual lease payments, including credit
fees are estimated to be $250,000 in fiscal year 2004/05, based on current interest rates and
$400,000 thereafter until 2009/10, using an assumed interest rate of 4%. There are no principal
payments due on the 2002 Certificates until August 1, 2010. Thereafter, the annual lease
payments, including credit fees, are estimated to increase to $700,000 using an assumed interest
rate of 4%
(9) In 1999,the City entered into a lease agreement with the CaLease Public Funding Corporation to
finance the acquisition of computer hardware and software. Annual lease payments are
approximately $220,000. Payments under this lease agreement were paid in fill in December
2003.
(10) Between 1998 and 2000,the City entered into lease agreements with the CaLease Public Funding
Corporation to finance the acquisition of fire and police vehicles. Annual lease payments are
approximately $632,000 in 2002 and are reduced over time as certain leases are paid off. Such
lease payments are paid from the Motor Vehicle Replacement Fund.
(11) Represents that portion of compensated absences not expected to be paid during the current fiscal
year.
Source: City of Palm Springs Finance Department.
Direct and Overlapping Debt
Set forth below is a direct and overlapping debt report (the "Debt Report") prepared by California
Municipal Statistics, Inc., as of February 1, 2004. The Debt Report is included for general information
purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no
representations in connection therewith. Any inquiries concerning the scope and methodology of
procedures carried out to compile the information presented should be directed to California Municipal
Statistics,Inc.,Oakland,California.
The Debt Report generally includes long-term obligations sold in the public credit markets by public
agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term
obligations are not payable from the City's General Fund nor are they necessarily obligations secured by
property within the City. In many cases,long-term obligations issued by a public agency are payable only
from the general fund or other revenues of such public agency.
34
TABLE NO.9
CITY OF PALM SPRINGS
DIRECT AND OVERLAPPING DEBT
2003104 Assessed Valuation: $5,891,836,287
Redevelopment Incremental Valuation: 606,439 476
Adjusted Assessed Valuation: $5,285,396,811
OVERLAPPING TAX AND ASSESSMENT DEBT: %Ap licable Debt 2/l/04
Riverside County Flood Control and Water Conservation District,Zone No.6 77.435% $ 491,712
Banning Unified School District 0.341 27,279
Palm Springs Unified School District 60.217 71,305,961
City of Palm Springs 1915 Act Bonds 100. 4,845 000
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $ 76,669,952
DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT:
Riverside County General Fund Obligations 5.874% $ 38,365,132
Riverside County Board of Education Certificates of Participation 5.874 773,018
Mt.San Jacinto Community College District General Fund Obligations 0.010 800
City of Patio Springs General Fund Obligations 100. 71,596,000 (1)
San Gorgonio Hospital District Authority 0.132 2,739
Coachella Valley County Water District Storm Water Unit Certificates of Participation 0.408 42,779
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $110,780,468
Less: Riverside County self-supporting obligations 1,282,092
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND OBLIGATION DEBT $109,498,376
GROSS COMBINED TOTAL DEBT $187,450,420 (2)
NET COMBINED TOTAL DEBT $186,168,328
(1) Excludes lease revenue bonds to be sold.
(2) Excludes tax and revenue anticipation notes,enterprise revenue,mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations.
Ratios to 2003/04 Assessed Valuation
Total Overlapping Tax and Assessment Debt....................1.30%
Ratios to Adjusted Assessed Valuation:
Combined Direct Debt ($71,596,000)...........................1.35%
Gross Combined Total Debt..............................................3.55%
Net Combined Total Debt.................................................3.52%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/03: $0
Source: California Municipal Statistics
35
FINANCIAL INFORMATION
Budgetary Process and Administration
Resolution No. 14757 was approved by the City Council of the City of Palm Springs on October 19,
1983. This resolution sets forth policies and procedures with respect to budget adoption and adjustment.
The adopted budget of the City consists of a resolution specifying the total appropriation for each
departmental activity. Total appropriations for each fund may only be increased or decreased by the City
Council by passage of a resolution amending the budget, with the exception of budget adjustments which
involve offsetting revenues and expenditures. In cases involving offsetting revenues and expenditures,
the Finance Director is authorized to increase or decrease an appropriation for a specific purpose where
said appropriation is offset by unbudgeted revenue which is designated for said specific purpose.
The City Manager has authority to adjust the amounts appropriated between the departments and
activities of a fund, objects within each departmental activity, and between accounts within the objects,
provided,however,that the total appropriations for each find may not exceed the amounts provided in the
budget resolution. Said adjustments can be made only upon written justification by the department head
responsible for the activity or activities involved. Budget adjustments between activities within a fimd are
subject to review by the Finance Chairman of the City Council. The level on which expenditures may not
legally exceed appropriations is the fund level. All appropriations lapse at fiscal year-end unless City
Council takes formal action in the form of a resolution to continue the appropriation into the following
fiscal year.
Appropriations Limit
Section 7910 of the Government Code of the State of California requires the City to adopt a formal
appropriations limit for each fiscal year. The City's appropriations limit for fiscal year 2003/04 is
$92,158,601.The City's actual appropriations subject to the limit are less than half that amount.
Revenues and Expenditure Trends
The City General Fund Budget includes programs which are provided on a largely city-wide basis. The
programs and services are financed primarily by the City's share of property taxes, transient occupancy
taxes,revenues from the State and/or federal government,and charges for services provided.
Property taxes and transient occupancy taxes provide the major source of revenues to the General Fund,
comprising approximately 22% and 25%, respectively, of the City's 2003/04 General Find Budget. A
large portion of the transient occupancy tax is deposited in the City's Community Promotions Fund. The
Community Promotions Fund was set up by policy of the City Council and moneys deposited to this fund,
while not legally restricted, are used for the Convention Visitor's Bureau,the City's Tourism Division and
Convention Center. However, since the revenues of the Community Promotions Fund are available for
purposes of the General Fund, and to a large extent,pay a portion of General Fund expenditures for the
Convention Center, the revenues and expenditures of the Community Promotions Fund have been
combined with the General Fund for the purposes of this presentation of General Fund finances.
Other significant 2003/04 General Fund budgeted revenue sources are sales taxes, 13% and the utility
users tax, 11%.
Public safety represents the major use of General Fund moneys, accounting for approximately 46% of
total expenditures of the 2003/04 General Fund Budget.
36
Table No. 10 compares the General Fund Budget actual revenue and expenditures for 2002/03, with the
approved budget for 2003/04.
TABLE NO.10
CITY OF PALM SPRINGS
GENERAL FUND REVENUES AND EXPENDITURES
2003/04
2002/03 Amended Change
Actual Budget Amount %
Beginning Adjusted Cash Balance $ 8,120,490 $ 7,791,196
Funding Sources
Property taxes $ 11,122,094 $ 12,000,000 $ 877,906 7.9%
Sales taxes 6,328,288 7,000,000 671,712 10.6%
Transient occupancy taxes 12,420,344 12,915,000 494,656 4.0%
Franchise fees 2,537,910 2,600,000 62,090 2.4%
Utility users tax 5,764,379 5,900,000 135,621 2.4%
Motor vehicle in-lien 2,527,710 1,900,000 (627,710) (24.8)%
Administration charges 923,500 903,724 (19,776) (2.1)%
Business licenses 770,442 780,000 9,558 1.2%
All other revenues 7,821,728 8,724,000 902,272 11.5%
Transfers In:
Gas Tax 600,000 600,000 - 0.0%
Risk Management 400,000 - (400,000) 100.0%
Facilities Maintenance - 200,000 200,000 100.0%
Airport 148,000 148,000 -
PERS 850,000 100,000 (750,000) (88.2)%
Capital Projects and Other 50,000 100,000 %000 100.0%
Total Revenues $52,264,395 $53,870,724 $ 1,606,329 3.1%
Requirements
General government $ 8,868,493 $ 10,380,736 $ 1,512,243 17.1%
Public safety 21,710,615 24,612,256 2,901,641 13.4%
Public works and streets 5,756,243 3,031,091 (2,725,152) (47.3)%
Library 2,083,320 2,165,562 82,242 3.9%
Parks and recreation 4,456,525 3,401,454 (1,055,071) (23.7)%
Community Promotion 3,606,146 5,097,822 1,491,676 41.4%
Capital Outlay 46,673 - (46,673) (100.0)%
Unbudgeted savings - (1,300,000) (1,300,000) 0.0%
Transfers Out 6,065 674 6. 997.088 331.414 10.4%
Total Requirements $52,593,689 $54,086,009 $ 1,492,320 2.8%
Estimated Ending Cash Balance $ 7,791,196 $ 7,575,911
Source: City of Palm Springs.
37
Ad Valorem Property Taxes
Taxes are levied for each fiscal year on taxable real and personal property which is situated in the City as
of the preceding January 1. For assessment and collection purposes, property is classified either as
"secured"or"unsecured,"and is listed accordingly on separate parts of the assessment roll. The"secured
roll" is that part of the assessment roll containing State assessed property and real property having a tax
lien which is sufficient, in the opinion of the assessor, to secure payment of the taxes. Other property is
assessed on the"unsecured roll."
Property taxes on the secured roll are due in two installments,on November 1 and February 1 of the fiscal
year. If impaid, such taxes become delinquent on December 10 and April 10, respectively, and a 10%
penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to
which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may
thereafter be redeemed by payment of the delinquent taxes and the delinquency penalty,plus a redemption
penalty of P/z% per month to the time of redemption. If taxes are unpaid for a period of five years or
more,the property is deeded to the State and then is subject to sale by the County Tax Collector.
Property taxes on the unsecured roll are due as of the January 1 lien date and become delinquent, if
unpaid on August 31. A 10%penalty attaches to delinquent taxes on property on the unsecured roll, and
an additional penalty of P/z%per month begins to accrue on November 1 of the fiscal year. The City has
four ways of collecting unsecured personal property taxes: (1) a civil action against the taxpayer; (2)
filing a certificate in the office of the City Clerk specifying certain facts in order to obtain a judgment lien
on certain property of the taxpayer; (3)filing a certificate of delinquency for record in the City Recorder's
Office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal
property,improvements or possessory interests belonging or assessed to the assessee.
Taxable Property and Assessed Valuation
The California Redevelopment Law authorizes the redevelopment agency of any city or county to receive
an allocation of tax revenues resulting from increases in assessed values of properties within designated
redevelopment project areas(the"incremental value") occurring after the year the project area is formed.
In effect, local taxing authorities, such as the City,realize tax revenues only on the assessed value of such
property at the time the redevelopment project is created for the duration of such redevelopment project.
There have been 10 redevelopment projects formed in the City.
Set forth in Table No. 11 are assessed valuation for secured and unsecured property within the City of
Pahn Springs. Table No. 12 sets forth redevelopment agency incremental values and net taxable values
for the City.
TABLE NO.11
CITY OF PALM SPRINGS
GROSS ASSESSED VALUE OF ALL TAXABLE PROPERTY
Fiscal Year Secured Unsecured Total
1999/00 $3,875,030,944 $359,445,300 $4,234,476,244
2000/01 4,169,053,128 453,651,500 4,622,704,628
2001/02 4,648,042,493 447,931,870 5,095,974,363
2002/03 4,946,125,204 456,132,661 5,402,257,865
2003/04 5,416,016,052 475,820,235 5,891,836,287
Source: County of Riverside Auditor-Controller.
38
TABLE NO.12
CITY OF PALM SPRINGS
TOTAL AND NET PROPERTY TAX VALUATIONS
Total Redevelopment
Fiscal Assessed Agency Net Percent
Year Valuation Incremental Value Value Change
1999/00 $4,234,476,244 $338,832,477 $3,895,643,767
2000/01 4,622,704,628 417,342,515 4,205,362,113 8.0%
2001/02 5,095,974,363 516,604,618 4,579,369,745 8.9%
2002/03 5,402,257,865 536,324,476 4,865,933,389 6.3%
2003/04 5,891,836,287 580,845,008 5,310,991,279 9.1%
Source: County of Riverside Auditor-Controller.
Largest Taxpayers
The principal taxpayers as of June 30,2003 are as shown in Table No. 13.
TABLE NO.13
CITY OF PALM SPRINGS
LARGEST TAXPAYERS
Taxpayers Type of Business
Walter Hotel Corp. (Hilton) Hotel and Retail
Patens Springs Marquis Hotel Hotel and Retail
AP APH Pahn Springs(Wyndham Hotel) Hotel and Retail
Desert Regional Medical Center—Tenet Corporation Medical Services
Desert Surf Publishing Company Newspaper
PHS Holdings(Hyatt) Hotel and Retail
Wessman Development Retail Development
Pacific Monarch Resorts,Inc. Hotel and Retail
RPS Resort Corporation Hotel and Retail
San Gorgonio Westwinds II Inc. Energy(Windmills)
Lowe's Hardware Retail
Source: City of Palm Springs
State Legislative Shift of Property Tax Allocation
Beginning in 1992/93,the State has required that local agencies remit a portion of property taxes received
to augment school funding. The City's property tax reduction for fiscal years since 1993/94 has been
approximately $ annually. However, certain provisions in the State budget may result in a
realignment of property tax revenues in future years. See "BONDHOLDERS' RISKS — The Lease
Payments — State of California Fiscal Issues" herein and "Other Local Taxes - Sales and Use Taxes"
below.
39
Other Local Taxes
In addition to ad valorem taxes on real property,the City receives the following local taxes:
Sales and Use Taxes. Sales tax is collected and distributed by the State Board of Equalization. Each
local jurisdiction receives an amount equal to one percent of taxable sales within their jurisdiction. In
addition, the City receives a portion of a %z cent sales tax increase approved by voters in 1993. Sales tax
generated by this increase is used to offset certain expenses for public safety.
[Update after March 21
As a part of the overall legislation to enact a budget for the State in the 2003/04 fiscal year, the State
Senate adopted a bill,AB 7X,which establishes a mechanism through which the State will be able to fiord
the accumulated budget deficit and the parameters under which bonds could be sold, creating the
California Fiscal Recovery Fund as the special fund dedicated to repaying deficit bonds. The State Senate
then adopted a bill,AB 1766,which would allow the State to keep '/z cent of the Bradley-Burns sales tax
currently allocated to local agencies,and transfer a similar dollar amount of property tax back to the local
agencies,so that the State could utilize the sales tax in its deficit funding program. AB 1766 will become
effective for the 2004/05 fiscal year. However, plaintiffs have challenged the legality of the deficit
reduction bonds and,further, a Superior Court in Sacramento recently held that the State's plan to finance
approximately $1.9 billion of contributions to its pension fiords was unconstitutional. If these legal
challenges are ultimately successfid or result in delays beyond the current fiscal year,the State could take
other actions to balance the budget in the 2003/04 fiscal year that would have an adverse financial impact
on the City. See "BONDHOLDERS' RISKS — The Lease Payments — State of California Fiscal Issues"
herein.
Franchise Taxes. The City levies a franchise tax on its cable television, trash collection and utility
franchises.
Business License Taxes. The City levies a business license tax based on the number of employees.
Transient Occupancy Taxes. The City levies a transient occupancy tax on hotel and motel bills. Rates
are different for"group meeting hotels" (over 125 rooms)than for other hotels and motels. In November
2001,voters in the City approved an increase of the tax. The tax rate for group meeting hotels was raised
from 10.8%to 12.5%, and the tax rate for all other hotels from 10%to 11.5%. This rate increase added
an additional $1.7 million per year in transient occupancy tax. In November 2003, voters in the City
approved an additional increase of the tax rate for group meeting hotels, which is currently 13.5%. This
rate increase is expected to add an additional $600,000 per year in transient occupancy tax by 2007.
While not specifically allocated to a particular project,the City intends to use the new money to fund the
Lease Payments associated with expansion of the Convention Center. Average annualized hotel
occupancy rates are currently_°/o and the average daily hotel room rate in the City is currently$ .
Utility Users Taxes. A 5% utility users tax is levied on gas, electric and telephone services. In
November, 1999, the voters of Patin Springs approved an advisory ballot measure that increased the tax
rate to 5% from 4.5%. Subject to annual City Council appropriation of the funds, $400,000 of the
additional revenue is dedicated to capital projects in the Library or Parks and Recreation Funds. The
utility users tax represents approximately 11%of General Fluid revenues (see "BONDHOLDERS'RISKS -
The Base Rental Payments-Proposition 62 and Proposition 218"herein.
Property Transfer Taxes. A documentary stamp tax is assessed for recordation of real property
transfers.
40
TABLE NO. 14
CITY OF PALM SPRINGS
TAX REVENUES BY SOURCE
Amended
Budget
Source 1999/00 2000/01 2001102 2002/03 2003/04
Sales and Use Taxes(c r only) $ 5,773,627 $ 6,186,120 $ 6,142,681 $ 6,328,288 $ 7,000,000
Franchise Taxes 2,057,129 2,206,391 2,456,645 2,537,910 2,600,000
Transient Occupancy Taxes 11,742,588 11,681,444 12,095,019 12,421,094 12,915,000
Utility Users Taxes 3,973,509 4,854,177 5,683,965 5,764,379 5,900,000
Transfer Taxes 322,467 370,678 350,469 411,399 500,000
Property Taxes 9,390,163 9.394.820 10,327,710 11,122,094 12,000,000
Total Tax Revenues 533.259.4R3 P34.fi93_fi30 537 Sfi.4R9 �3R.SR4.1fi4 �40.915.000
Source: City of Palm Springs.
Motor Vehicle License Fees
A significant revenue source of the City is State of California payments in-lieu of taxes. The City
receives a portion of Department of Motor Vehicles license fees ("VLF") collected statewide. Payments
of VLF to the City are estimated to be $2,700,000 or 5% of the total General Fund Budget for 2003/04.
Payment of State assistance depends on the adoption by the State of its budget, including the
appropriations therein providing for local assistance. These revenues are shown in the accompanying
financial statements as"intergovernmental revenues."
Several years ago, the state-wide VLF was reduced by approximately two-thirds. However, the State
continued to remitto cities and counties the same amount that those local agencies would have received if
the VLF had not been reduced, known as the "VLF backfill." On June 19, 2003 the State triggered an
increase in VLF to be effective beginning October 1, 2003. However, the State Legislature adopted AB
1768 which would defer payment to local agencies of the amount of the VLF backfill that relates to the
period from June 20, 2003 to September 30, 2003 when the higher VLF went into effect, until August
2006. This VLF"gap"or"loan"is approximately$825 million statewide. The City's share of the"loan"
is $800,000.
The Governor signed an executive order on November 17, 2003 to reduce the VLF, reversing the
triggered increase. On December 17, 2003 the Govemor issued another executive order, this time
appropriating $2.625 billion to provide backfill funding for city VLF funding. The state Department of
Finance estimates the$2.625 billion will fully cover the backfill except for the"backfill gap."
The City's budgeted VLF amount of$2.7 million for Fiscal Year 2003/04 is based on 100% of projected
amounts and assumed 100% State VLF backfill. The City's revised estimate of VLF, based on most
recent information available, is $1.9 million for 2003/04. Additionally, the VLF is continuously
appropriated, meaning, barring further legislative action, the VLF backfill will be fully paid in fature
years. See"BONDHOLDERS'RISKS—The Lease Payments—State of California Fiscal Issues"herein.
41
Other Revenue Sources
Licenses and Permits. These revenues consist primarily of building construction permit fees and
business license fees.
Fines,Forfeitures and Penalties. These revenues include parking citations,municipal court fines,asset
seizure proceeds and other fines for municipal code violations.
Use of Money and Property. These revenues consist primarily of investment earnings and
rental/concession income.
Charges for Services. The City charges recording fees,booking fees, court filing fees, fees for dispatch
services,plan checking,building inspection and other municipal services.
Retirement Programs
The City contributes to the California Public Employees' Retirement System(PERS), an agent multiple-
employer public employee retirement system that acts as a common investment and administrative agent
for participating public entities within the State of California. All full-time and part-time employees are
eligible to participate in the PERS. Benefits for employees vary based upon final yearly compensation,
safety or non-safety status and age at retirement. PERS also provides death and disability benefits.
City employees contribution rates are 8% of(non-safety) earnings or 9% (safety). However, the plan is
fully funded by the City. The City contributes the total amount necessary to fund the benefits for its
members using the actuarial basis recommended by PERS. The PERS contribution for 2003/04 will be
approximately$4,000.000.
The latest actuarial valuation, as of June 30, 2002, projected net assets available for benefits to be $19
million less than fat-Lire benefits for current and retired City employees. Based on this, the City expects
the PERS contribution for 2004/05 to increase by 87%from the amount of the 2003 contribution.
Employee Relations and Collective Bargaining
City employees are represented by 6 labor unions and associations. Currently 96%of all City employees
are covered by negotiated agreements.
Bar¢ainin2Unit #of Employees Contract ExMires
Management and Professional 86 6/30/05
General 196.5 6/30/05
Police Management 5 6/30104
Police Safety 82 6/30/04
Fire Management 12 6/30/04
Fire Safety 45 6/30/04
Risk Management
The City has established a Risk Management Fluid(an internal service fund)to finance uninsured red risks of
loss. Prior to June 30, 1996 the City was a participating member of the Coachella Valley Joint Powers
Insurance Authority (CVJPIA), a risk-management pool for general liability claims. Currently, the City
purchases commercial insurance from the Insurance Company of the State of Pennsylvania for general
liability claims and from Employers Reinsurance Corp. for Workers' Compensation. Both policies have
self-insured retentions of$250,000.
42
TABLE NO. 14
CITY OF PALM SPRINGS
TAX REVENUES BY SOURCE
Amended
Budget
Source 1999/00 2000/01 2001/02 2002/03 2003/04
Sales and Use Taxes(c e.omy) $ 5,773,627 $ 6,186,120 $ 6,142,681 $ 6,328,288 $ 7,000,000
Franchise Taxes 2,057,129 2,206,391 2,456,645 2,537,910 2,600,000
Transient Occupancy Taxes 11,742,588 11,681,444 12,095,019 12,421,094 12,915,000
Utility Users Taxes 3,973,509 4,854,177 5,683,965 5,764,379 5,900,000
Transfer Taxes 322,467 370,678 350,469 411,399 500,000
Property Taxes 9,390,163 9,394,820 10,327,710 11,122,094 12,000,000
Total Tax Revenues S13.259AR3 &34.691.630 $37ASfi.4R9 S3R.SR5.lfi4 $40.91.5.000
Source: City of Palm Springs.
Motor Vehicle License Fees
A significant revenue source of the City is State of California payments in-lieu of taxes. The City
receives a portion of Department of Motor Vehicles license fees ("VLF")collected statewide. Payments
of VLF to the City are estimated to be $2,700,000 or 5% of the total General Fund Budget for 2003/04.
Payment of State assistance depends on the adoption by the State of its budget, including the
appropriations therein providing for local assistance. These revenues are shown in the accompanying
fmancial statements as"intergovernmental revenues."
Several years ago, the state-wide VLF was reduced by approximately two-thirds. However, the State
continued to remit to cities and counties the same amount that those local agencies would have received if
the VLF had not been reduced, known as the "VLF backfill." On June 19, 2003 the State triggered an
increase in VLF to be effective beginning October 1, 2003. However, the State Legislature adopted AB
1768 which would defer payment to local agencies of the amount of the VLF backfill that relates to the
period from June 20, 2003 to September 30, 2003 when the higher VLF went into effect, until August
2006. This VLF"gap"or"loan"is approximately$825 million statewide. The City's share of the"loan"
is $800,000.
The Governor signed an executive order on November 17, 2003 to reduce the VLF, reversing the
triggered increase. On December 17, 2003 the Governor issued another executive order, this time
appropriating$2.625 billion to provide backfill funding for city VLF funding. The state Department of
Finance estimates the$2.625 billion will fully cover the backfill except for the"backfill gap."
The City's budgeted VLF amount of$2.7 million for Fiscal Year 2003/04 is based on 100%of projected
amounts and assumed 100% State VLF backfill. The City's revised estimate of VLF, based on most
recent information available, is $1.9 million for 2003/04. Additionally, the VLF is continuously
appropriated, meaning, baring further legislative action, the VLF backfill will be fully paid in future
years. See"BONDHOLDERS'RISKS—The Lease Payments—State of California Fiscal Issues"herein.
41
Operating revenues are primarily user charges to other funds and are planned to match estimated
payments resulting from operating expenses, insurance premiums and payment of self-insured
deductibles. The fund accrues the estimated liability for claims when such amounts are reasonably
determinable and when the liability is probable. Further,the fiord sets up a cash reserve for these claims
as well as for the estimated liability for such claims filed or expected to be filed for incidents which had
occurred as of the end of the fiscal year.
City Investment Policy and Portfolio
The City administers a pooled investment program, except for assets held by fiscal agents (which are
administered separately under bond indentures). This program enables the City to combine available cash
from all finds and to invest cash that exceeds current needs. The most recently revised Investment Policy
for the City was adopted in November,2001. Under the City's Investment Policy and in accordance with
the Government Code,the City may invest in the following types of investments: bankers acceptances to
a maximum term of 180 days; commercial paper with a maximum term of 180 days and rated in the
highest rating category; negotiable certificates of deposit; obligations of the United States Treasury;
obligations issued by agencies or instrumentalities of the U.S.; mutual funds rated in the highest rating
category; medium term notes of U.S. corporations rated "A" or better with a maximum maturity of 5
years; collateralized repurchase agreements with a maximum maturity of 1 year and otherwise meeting
the requirements of Section 853601.i of the Government Code; obligations of local agencies within the
State of California, including the Local Agency Investment Fund(LAIF)managed by the State Treasurer
or other pooled investment accounts sponsored by the County Treasurer, and investment agreements
permitted under bond indentures.
Financial Statements
The City's accounting policies conform to generally accepted accounting principles and reporting
standards set forth by the State Controller. The audited financial statements also conform to the principles
and standards for public financial reporting established by the National Council of Government
Accounting and the Governmental Accounting Standards Board.
GASB No. 34. The Governmental Accounting Standards Board(GASB)published its Statement No. 34
"Basic Financial Statements - and Management's Discussion and Analysis - for State and Local
Governments" on June 30, 1999. Statement No. 34 provides guidelines to auditors, comptrollers, and
financial officers on requirements for financial reporting for all governmental agencies in the United
States. Retroactive reporting is required four years after the effective date on the basic provisions for all
major general infrastructure assets that were acquired or significantly reconstructed, or that received
significant improvements,in fiscal years ending after June 30, 1980. The City was required to implement
the provision of GASB 34 for the fiscal year ending June 30,2003.
Basis of Accounting and Financial Statement Presentation. The government-wide financial statements
are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are
recognized as revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements unposed by the provider have been met.
Governmental fund financial statements are reported using the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable and available. Revenues are considered to
be available when they are collectible within the current period or soon enough thereafter to pay liabilities
of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However,debt service expenditures are recorded only when payment is due.
43
The City retained the firm of Conrad &Associates, Certified Public Accountants, Irvine, California, to
examine the general purpose financial statements of the City as of and for the year ended June 30, 2003.
The audited financial statements for fiscal year ended June 30, 2003 are attached hereto as "APPENDIX
B." The City is the recipient of the Certificate of Achievement for Excellence in Financial Reporting for
the fiscal year ended June 30,2003. The following tables summarize the Balance Sheet and Statement of
Revenues, Expenditures and Changes in Fund Balance of the City's General Fund for the last four fiscal
years and the Community Promotion Fund for the last four fiscal years. The Community Promotions
Fund was set up by policy of the City Council and moneys deposited to this fund, while not legally
restricted, are used for the Convention Visitor's Bureau, the City's Tourism Division and Convention
Center. However, the revenues of the Community Promotions Fund are available for purposes of the
General Fund, and to a large extent, pay a portion of General Fund expenditures for the Convention
Center.
TABLE NO.15
CITY OF PALM SPRINGS
GENERAL FUND BALANCE SHEET
As of June 30
Source: City of Palm Springs Financial Statements.
44
TABLE NO.16
CITY OF PALM SPRINGS
GENERALFUND
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE
For the year ended June 30
Source: City of Palm Springs Financial Statements.
45
TABLE NO.17
CITY OF PALM SPRINGS
COMMUNITY PROMOTIONS FUND
BALANCESHEET
For the year ended June 30
Source: City of Palm Springs Financial Statements.
TABLE NO.18
CITY OF PALM SPRINGS
COMMUNITY PROMOTIONS FUND
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE
For the year ended June 30
Source: City of Palm Springs Financial Statements.
46
LEGAL MATTERS
Enforceability of Remedies
The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the
Trust Agreement, the Lease Agreement or any other document described herein are in many respects
dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under
existing law and judicial decisions,the remedies provided for under such documents may not be readily
available or may be limited. The various legal opinions to be delivered concurrently with the delivery of
the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Trust
Agreement and the Lease Agreement is subject to limitations imposed by bankruptcy, reorganization,
insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and
proceedings generally.
Approval of Legal Proceedings
Aleshire & Wyader, LLP, Irvine, California, as Bond Counsel, will render an opinion which states that
the Bonds and the Lease Agreement are valid and binding obligations of the Authority and the City and
are enforceable in accordance with their terms. The legal opinion of Bond Counsel will be subject to the
effect of bankruptcy,insolvency,moratorium and other similar laws affecting creditors' rights and to the
exercise of judicial discretion in accordance with general principles of equity.
Neither the Authority nor the City have any knowledge of any fact or other information which would
indicate that the Trust Agreement or the Lease Agreement are not so enforceable against the Authority or
the City, as applicable, except to the extent such enforcement is limited by principles of equity and by
state and federal laws relating to bankruptcy,reorganization,moratorium or creditors'rights generally.
Certain legal matters will be passed on for the Authority and the City by Aleshire & Wynder, LLP, as
City Attorney. In addition, certain legal matters will be passed on for the Authority and the City by Jones
Hall,A Professional Law Corporation, San Francisco, California, as Disclosure Counsel. Fees payable to
Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds.
Tax Matters
In the opinion of Aleshire&Wynder,LLP,Bond Counsel,based on existing statutes,regulations,rulings
and court decisions,interest on the Bonds is excluded from gross income for federal income tax purposes
and is exempt from State of California personal income taxes. A copy of the proposed opinion of Bond
Counsel is set forth in"APPENDIX E"hereto.
The Internal Revenue Code of 1986 (the "Code"), imposes various restrictions, conditions and
requirements relating to the exclusion from gross income for federal income tax purposes of interest on
obligations such as the Bonds. The Authority has covenanted to comply with certain restrictions designed
to assure that interest on the Bonds will not be included in federal gross income. Failure to comply with
these covenants may result in interest on the Bonds being included in federal gross income,possibly from
the date of issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these
covenants. Bond Counsel has not undertaken to determine(or to inform any person)whether any actions
taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may
affect the value of or the tax status of interest on the Bonds. Further, no assurance can be� given that
pending or future legislation or amendments to the Code,wiII not adversely affect the value of,or the tax
status of interest on, the Bonds. Prospective owners are urged to consult their own tax advisors with
respect to proposals to restructure the federal income tax.
47
Bond Counsel is further of the opinion that interest on the Bonds is not a specific preference item for
purposes of the federal individual or corporate alternative minimum taxes. Bond Counsel observes,
however, that interest on the Bonds is included in adjusted current earnings in calculating corporate
alternative minimum taxable income.
Prospective purchasers of the Bonds should be aware that(i)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 with respect to the Bonds,(ii)Bonds
interest with respect to 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, (iii) passive
investment income, including interest with respect to the Bonds, may be subject to federal income
taxation under Section 1375 of the Code for subchapter S corporations having subchapter C earnings and
profits at the close of the taxable year and gross receipts more than 25% of which constitute passive
investment income, and (iv) Section 86 of the Code requires recipients of certain Social Security and
certain Railroad Retirement benefits to take into account, in determining gross income, receipts or
accruals of interest on the Bonds.
Bond Counsel is fiuher of the opinion that the difference between the principal amount of the Bonds
maturing on (the"Discount Bonds")and the initial offering price to the public(excluding bond
houses,brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers)
at which price a substantial amount of such Discount Bonds was sold (excluding amounts stated to be
interest and payable at least annually over the term of such Discount Bonds) constitutes original issue
discount which is excluded from gross income for federal income tax purposes to the same extent as
interest on the Bonds. Further, such original issue discount accrues actuarially on a constant interest rate
basis over the term of each Discount Bond and the basis of such Discount Bond acquired at such initial
offering price by an initial purchaser of each Discount Bond will be increased by the amount of such
accrued discount.
The Code contains certain provisions relating to the accrual of original issue discount or premium in the
case of purchasers of the Discount Bonds who purchase such Discount Bonds after the initial offering of a
substantial amount thereof. Owners who do not purchase such Discount Bonds in the initial offering at
the initial offering prices should consult their own tax advisors with respect to the tax consequences of
ownership of such Discount Bonds. All holders of the Discount Bonds should consult their own tax
advisors with respect to the allowance of a deduction for any loss on a sale or other disposition to the
extent that calculation of such loss is based on accrued original issue discount.
Certain of the Bonds may be purchased in the initial offering for an amount greater than their principal
amount payable at maturity (hereinafter, the "Premiwn Bonds"). The excess of the tax basis of a
purchaser of a Premium Bond(other than a purchaser who holds a Premium Bond as hrventory, stock in
trade or for sale to customers in the ordinary course of business) over the principal amount of such
Premium Bond is"bond premium." Bond premium is amortized for federal income tax purposes over the
term of a Premium Bond based on the purchaser's yield to maturity in the Premium Bonds, except that in
the case of a Premium Bond callable prior to its stated maturity,the amortization period and the yield may
be required to be determined on the basis of an earlier call date that results in the lowest yield on such
Premium Bond. A purchaser of a Premium Bond is required to decrease his or her adjusted basis in such
Premium Bond by the amount of bond premium attributable to each taxable year in which such purchaser
holds such Premium Bond. The amount of bond premium attributable to a taxable year is not deductible
for federal income tax purposes. Purchasers of Premium Bonds should consult their tax advisors with
respect to the precise determination for federal income tax purposes of the amount of bond premium
attributable to each taxable year and the effect of bond premium on the sale or other disposition of a
Premium Bond, and with respect to the state and local tax consequences of owning and disposing of a
Premium Bond.
48
Certain agreements, requirements and procedures contained or referred to in the Trust Agreement and
other relevant documents may be changed and certain actions may be taken or omitted under the
circumstances and subject to the terms and conditions set forth in those documents, upon the advice or
with the approving opinion of nationally recognized bond counsel. Bond Counsel expresses no opinion
as to any Bond or the interest payable with respect thereto if any change occurs or action is taken or
omitted upon the advice or approval of counsel other than Bond Counsel.
Although Bond Counsel has rendered an opinion that interest on the Bonds is excluded from federal gross
income,and is exempt from State of California personal income taxes,the ownership or disposition of the
Bonds, and the accrual or receipt of interest on the Bonds may otherwise affect an Owner's state or
federal tax liability. The nature and extent of these other tax consequences will depend upon each
Owner's particular tax status and the Owner's other items of income or deduction. Bond Counsel
expresses no opinion regarding any such other tax consequences.
The legal opinion to be delivered may vary from that text shown in"APPENDIX E" as discussed below.
The United States Treasury Department has proposed amendments to its Circular 230,which governs the
practice of tax advisers, including attorneys, before the Internal Revenue Service. Those amendments
would extend the requirements of Circular 230,which is applicable to opinions concerning tax shelters,to
legal opinions of bond counsel regarding the tax-exempt status of interest on state and local government
obligations. The proposed regulations, if adopted in their current form, would require certain
modifications to the Bond Counsel opinion, including, without limitation, a discussion of "material
federal tax issues"relating to the opinion,if any,and if there are such issues, (i)notice that such opinion
may not be sufficient to avoid the imposition of penalties on a Bondholder if interest on the Bonds is
determined to be includable in gross income for federal tax purposes and (R) a recommendation that
Bondholders seek the advice of their own counsel with respect to such issues. If the proposed
amendments are adopted slid become effective before the Bonds are issued,Bond Counsel will modify its
legal opinion to conform to the requirements of Circular 230.
Although the amendments to Circular 230, as currently proposed,could result in extensive modifications
to the text of the opinion attached as "APPENDIX E,"Bond Counsel will continue to opine that, as set
forth in "APPENDIX E" and described herein under "LEGAL MATTERS - Tax Matters," interest on the
Bonds is excluded from gross income of holders thereof for federal income tax purposes and is exempt
from State of California personal income taxes. It is not possible to predict: (1) the final form and the
effective date of any amendments to Circular 230, (2) whether any modifications to the form of Bond
Counsel's legal opinion will be required and(3) any possible adverse effect on the market value of the
Bonds of the adoption of any such amendments or of any modifications to the opinion.
Absence of Litigation
The Authority and the City will each furnish a certificate dated as of the date of delivery of the Bonds that
there is not now known to be pending or threatened any litigation restraining or enjoining the execution or
delivery of the Trust Agreement, the Lease Agreement or the sale or delivery of the Bonds or in any
manmer questioning the proceedings and authority under which the Trust Agreement and the Lease
Agreement are to be executed or delivered or the Bonds are to be delivered or affecting the validity
thereof.
i
49
CONCLUDING INFORMATION
Ratings on the Bonds
Standard & Poor's and Moody's have assigned their ratings of "_" and " " respectively, to the
Bonds with the understanding that a municipal bond insurance policy insuring payment when due of the
principal of and interest on the Bonds will be issued on the closing date by . Such rating
reflects only the views of the rating agency and any desired explanation of the significance of such rating
should be obtained from the rating agency. Generally, a rating agency bases its rating on the information
and materials furnished to it and on investigations, studies and assumptions of its own. There is no
assurance such rating will continue for any given period of time or that such rating will not be revised
downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency,
circumstances so warrant. Any such downward revision or withdrawal of such rating may have an
adverse effect on the market price of the Bonds.
Underwriting
The Bonds were sold to Stone&Youngberg LLC,who is offering the Bonds at the prices set forth on the
inside front cover page hereof. The initial offering prices may be changed from time to time and
concessions from the offering prices may be allowed to dealers, banks and others. The Underwriter has
purchased the Bonds at a price equal to$ which amount represents the principal amount of the
Bonds, less an original issue discount of$ and less an Underwriter's discount of$
The Underwriter will pay certain of its expenses relating to the offering.
The Financial Advisor
The material contained in this Official Statement was prepared by the Authority with the assistance of the
Financial Advisor who advised the Authority and the City as to the financial structure and certain other
financial matters relating to the Bonds. The information set forth herein has been obtained from sources,
which are believed to be reliable,but such information is not guaranteed by the Financial Advisor as to
accuracy or completeness,nor has it been independently verified. Fees paid to the Financial Advisor are
contingent upon the sale and delivery of the Bonds.
Continuing Disclosure
The City will covenant to provide annually certain financial information and operating data relating to the
City by not later than nine months after the end of the City's fiscal year,each year commencing March 31,
2005 and to provide the audited General Purpose Financial Statements of the City for the fiscal year
ending June 30, 2004 and for each subsequent fiscal year when they are available (together,the"Annual
Report"), and to provide notices of the occurrence of certain other enumerated events if deemed by the
City to be material. The Annual Report will be filed by the Trustee on behalf of the City with each
Nationally Recognized Municipal Securities Information Repository certified by the Securities and
Exchange Commission(the"Repositories") and a State repository,if any, and may also be obtained from
the Trustee. The notices of material events will be timely fled by the City with the Municipal Securities
Rulemaking Board and the State repository,if any. The specific nature of the information to be contained
in the Annual Report or the notices of material events and certain other terms of the continuing disclosure
obligation are set forth in"APPENDIX C-FORM OF CONTINUING DISCLOSURE CERTIFICATE,"
The City has never failed to comply timely with undertaking 1 provide any required continuing disclosure.
i
' 50
Verifications of Mathematical Computations
Grant Thornton LLP, Minneapolis, Minnesota, will verify from the information provided to them the
mathematical accuracy as of the date of the closing on the 1997 Bonds the computations contained in the
provided schedules to determine that the anticipated receipts from the securities and cash deposits listed
in the schedules prepared by the Financial Advisor to be held in escrow, will be sufficient to pay, when
due, the principal, redemption premium and interest requirements of the 1997 Bonds to the redemption
date, and (2) the computations of yield on both the securities and the Bonds contained in the provided
schedules used by Bond Counsel in its determination that the interest with respect to the Bonds is exempt
from taxation. Grant Thornton LLP will express no opinion on the asswuptions provided to them,nor as
to the exemption from taxation of the interest with respect to the Bonds.
Additional Information
The summaries and references contained herein with respect to the Trust Agreement, the Lease
Agreement, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive
and are qualified by reference to each such document or statute and references to the Bonds are qualified
in their entirety by reference to the form hereof included in the Trust Agreement. Copies of the Trust
Agreement and the Lease Agreement are available for inspection during the period of initial offering on
the Bonds at the offices of the Financial Advisor or the Underwriter. Copies of these documents may be
obtained after delivery of the Bonds from the Authority through the Executive Director, 1444 West
Garvey Avenue,Palm Springs, California 91790.
References
Any statements in this Official Statement involving matters of opinion,whether or not expressly so stated,
are intended as such and not as representations of fact. This Official Statement is not to be construed as a
contract or agreement between the Authority and the purchasers or Owners of any of the Bonds.
Execution
The execution of this Official Statement by the Executive Director has been duly authorized by the City
of Palm Springs Financing Authority.
CITY OF PALM SPRINGS FINANCINGAUT14ORNY
By: /a/
Executive Director
' S1
APPENDIX C
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the
City of Palm Springs(the "City")in connection with the issuance by the City of Palm Springs Financing
Authority (the "Issuer") of $63,500,000* Lease Revenue Bonds, 2004 Series A, (Convention Center
Expansion Project)(the`Bonds"). The Bonds are being issued pursuant to a Trust Agreement dated as of
April 1, 1991 and as supplemented by Supplemental Trust Agreement No. 3, dated as of March 1, 2004
(collectively, the "Trust Agreement") between the Issuer and BNY Western Trust Company as successor
to First Interstate Bank of California(the"Trustee"). The City covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed
and delivered by the City for the benefit of the Bond Owners and in order to assist the Participating
Underwriters in complying with S.E.C.Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement,which
apply to any capitalized term issued in this Disclosure Certificate unless otherwise defined in this Section,
the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
"Dissemination Agent" shall mean the Trustee, or any successor Dissemination Agent designated
in writing by the City and which has filed with the City a written acceptance of such designation.
"Listed Events"shall mean any of the events listed in Section 5(a)of this Disclosure Certificate.
"National Repository" shall mean any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. Information on the National Repositories as of a particular date is
available on the Internet at www.see.gov/consrunerhumsir.htm.
"Official Statement' shall mean the final Official Statement dated 2004, relating to
the Bonds.
"Participating Underwriter"shall mean any of the original underwriters of the Bonds required to
comply with the Rule in connection with offering 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 Repository"shall mean any public or private repository or entity designated by the State of
California 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 Disclosure Certificate,there is no State Repository.
*Preliminary,subject to change.
C-1
SECTION 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to,not later than February 15
of each year, commencing February 15, 2005, provide to each Repository an Annual Report
which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later
than fifteen (15) days prior to said date, the City shall provide the Annual Report to the
Dissemination Agent. The Annual Report may be submitted as a single document or as separate
documents comprising a package, and may cross-reference other information as provided in
Section 4 of this Disclosure Certificate;provide d that the audited financial statements of the City
may be submitted separately from the balance of the Annual Report.
(b) If the City is unable to provide to the Repositories an Annual Report by the date
required in subsection (a), the City shall send a notice to each Repository or to the Municipal
Securities Rulemaking Board 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 each State
Repository, if any; and(ii) file a report with the City certifying that the Annual Report has been
provided pursuant to this Disclosure Certificate,stating the date it was provided and listing all the
Repositories to which it was provided.
SECTION 4. Content of Annual Reports. The Annual Report of the City shall contain or cross-
reference the following:
(a) Audited Financial Statements of the City prepared in accordance with generally
accepted accounting principles as promulgated to apply to governmental entities from time to
time by the Governmental Accounting Standards Board. If such audited financial statements are
not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available.
(b) Unless otherwise provided in the audited financial statements filed on or prior to
the annual filing deadline for the Annual Reports provided for in Section 3 above, financial
information and operating data with respect to the City for the preceding fiscal year, substantially
similar to that provided in the following corresponding tables in the Official Statement:
Table No. 15 - General Fund Balance Sheet; Table No. 16 - General Fund Statement of
Revenues, Expenditures and Changes in Fund Balance; Table No. 17 - Community Promotions
Fund Balance Sheet; Table No. 18 - Community Promotions Fund Statement of Revenues,
Expenditures and Changes in Fund Balance.
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 City shall clearly identify each
such other document so included by reference.
(c) In addition to any of the information expressly required to be provided under
paragraph (a) of this Section, the City shall provide such further information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under
which they are made,not misleading.
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SECTION 5. Reporting of Sigrruficant Events.
(a) Pursuant to the provisions of this Section 5, the City 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) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
(6) Adverse tax opinions or events affecting the tax-exempt status of the security.
(7) Modifications to rights of security holders.
(8) Contingent or unscheduled bond calls.
(9) Defeasances.
(10) Release,substitution, or sale of property securing repayment of the securities.
(11) Rating changes.
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the
City shall as soon as possible determine if such event would be material under applicable Federal
securities law.
(c) If the City determines that knowledge of the occurrence of a Listed Event would
be material under applicable Federal securities law, the City shall promptly file a notice of such
occurrence with the Municipal Securities Rulemaking Board and each State Repository.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9)
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 Trust Agreement.
SECTION 6. Termination of Reporting Obli ag tion. The City's obligations under this Disclosure
Certificate 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 City shall give notice of
such termination in the same manner as for a Listed Event under Section 5(c).
SECTION 7. Dissemination Agent. The City may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out their obligations under this Disclosure Certificate, and
may discharge any such Dissemination Agent, with or without appointing a successor Dissemination
Agent. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the
Dissemination Agent. The Dissemination Agent may resign by providing thirty days' written notice to the
City and the Trustee. Upon receiving notice of such resignation, the City shall promptly appoint a
successor Dissemination Agent by an instrument in writing. Any resignation or removal of the
Dissemination Agent shall become effective upon acceptance of appointment by the successor
Dissemination Agent.
If no appointment of a successor Dissemination Agent shall be made pursuant to the foregoing
provisions of this Section within forty-five (45) days after the Dissemination Agent shall have given to
the Issuer written notice or after a vacancy in the office of the Dissemination Agent shall have occurred
by reason of its inability to act, the Dissemination Agent or any beneficial owner may apply to any court
C-3
of competent jurisdiction to appoint a successor Dissemination Agent. Said court may thereupon, after
such notice,if any,a such court may deem proper, appoint a successor Dissemination Agent.
If, by reason of the judgment of any court, or reasonable agency, the Dissemination Agent is
rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the
Dissemination Agent hereunder shall be assumed by and vest in the City in trust for the benefit of the
beneficial owners. The City covenants for the direct benefit of the beneficial owners that its Treasurer in
such case shall be vested with all of the rights and powers of the Dissemination Agent hereunder, and
shall assume all of the responsibilities and perform all of the duties of the Dissemination Agent hereunder,
in trust for the benefit of the beneficial owners of the Bonds. In such event,the Treasurer may designate a
successor Dissemination Agent qualified to act as Dissemination Agent hereunder.
SECTION S. Amendment: Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure
Certificate may be waived, provided that the following conditions are satisfied (provided however, no
amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made
without the consent of the Dissemination Agent):
(a) if the amendment or waiver relates to the provisions of Sections 3(a),4 or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature, or status of an obligated person
with respect to the Bonds,or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule
at the time of the primary offering of the Bonds, after taking into account any amendments or
interpretations of the Rule,as well as any change in circumstances; and
(c) the proposed amendment or waiver either(i)is approved by holders of the Bonds
in the manner provided in the Trust Agreement for amendments to the Trust 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.
If the annual financial information or operating data to be provided in the Annual Report is
amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto
containing the amended operating data or financial information shall explain, in narrative form, the
reasons for the amendment and the impact of the change in the type of operating data or financial
information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed
in preparing financial statements, the annual financial information for the year in which the change is
made shall present a comparison between the financial statements or information prepared on the basis of
the new accounting principles and those prepared on the basis of the former accounting principles. The
comparison shall include a qualitative discussion of the differences in the accounting principles and the
impact of the change in the accounting principles on the presentation of the financial information,in order
to provide information to investors to enable them to evaluate the ability of the City to meet its
obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the
change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed
Event under Section 5(c).
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SECTION 9, Additional Information. Nothing in this Disclosure Certificate shall be deemed to
prevent the City from disseminating any other information, using the means of dissemination set forth in
this Disclosure Certificate or any other means of communication, or including any other information in
any Annual Report or notice of occurrence of a Listed Event,in addition to that which is required by this
Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of
occurrence of a Listed Event in addition to that which is specifically required by this Disclosure
Certificate, the City shall have no obligation under this Disclosure Certificate to update such information
or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the City to comply with any provision of this
Disclosure Certificate, any Participating Underwriter or any holder or beneficial owner of the Bonds may
take such actions as may be necessary and appropriate, including seeking mandate or specific
performance by court order, to cause the City to comply with its obligations under this Disclosure
Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the
Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the
City to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 11. Duties Immunities and Liabilities of Dissem nation Agent. The Dissemination
Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City
agrees to indemnify, and save the Dissemination Agent (if other than the City), its officers, directors,
employees and agents,harmless against any loss,expense and liabilities which it 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 City for its services provided hereunder in accordance with its schedule of fees as
amended from time to time and all expenses, legal fees and advances made or incurred by the
Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the
Trustee shall have no duty or obligation to review any information provided to it hereunder and shall not
be deemed to be acting in any fiduciary capacity for the City, the Bond Owners, or any other party. The
obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent
and payment of the Bonds.
SECTION 12. Cormterp . This Disclosure Certificate may be executed in counterpart, each of
which shall constitute an original signature page thereof.
SECTION 13. Beneficiaries, This Disclosure Certificate shall inure solely to the benefit of the
City, the Dissemination Agent, any 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.
Date:
CITY OF PALM SPRINGS
By:
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EXIIIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Palm Springs Financing Authority
Naive of Bond Issue: Lease Revenue Bonds,2004 Series A
(Convention Center Expansion Project)
Date of Issuance: ,2004
NOTICE IS HEREBY GIVEN that the City of Palm Springs, California(the "City")has not provided an
Annual Report with respect to the above-named Bonds as required by that certain Trust Agreement,dated
as of April 1, 1991 and a Supplemental Trust Agreement No. 3 dated as of March 1, 2004 between the
City and BNY Western Trust Company, as trustee. The City anticipates that the Annual Report will be
filed by
Dated:
CITY OF PALM SPRINGS
By
cc:Trustee
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APPENDIX D
BOOK-ENTRY ONLY SYSTEM
The following description of the procedures and record keeping with respect to beneficial ownership
interests in the Bonds,payment ofprincipal of and interest on the Bonds to Direct Participants, Indirect
Participants or Beneficial Owners (as such terms are defined below) of the Bonds, confirmation and
transfer of beneficial ownership interests in the Bonds and other Bond-related transactions by and
between DTC, Direct Participants, Indirect Participants and Beneficial Owners of the Bonds is based
solely on information furnished by DTC to the Authority which the Authority believes to be reliable, but
the Authority and the Underwriter do not and cannot make any independent representations concerning
these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC,
Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing
information with respect to such matters, but should instead confirm the same with DTC or the DTC
Participants, as the case may be.
The Depository Trust Company ("DTC"),New York,New York, will act as securities depository for the
Bonds. The Bonds will be issued as fully registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized representative of
DTC. One fully registered Bond will be issued for each maturity of the Bonds, each in the aggregate
principal amount of such maturity and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a"clearing corporation"within the meaning of the New York Uniform Commercial Code, and a
"clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity
issues, corporate and mmricipal debt issues and money market instruments from over 85 countries that
DTC's participants (the "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 U.S. and non-U.S. securities brokers and dealers, banks, trust
companies and clearing corporations that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly(the"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.dtce.com.
D-1
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(the `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 then 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.
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 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 charge 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 or Indirect Participants will remain responsible for keeping account of their holdings on behalf
of their customers.
Conveyance of notices and other communications by DTC to Direct Participants,by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the
transmissions to them of notices of significant events with respect to the Bonds, such as redemptions,
tenders,defaults, and proposed amendments to the Bonds 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 Paying Agent 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 are being redeemed, DTC's
practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be
redeemed.
Neither DTC nor Cede & Co. (nor such 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 the Authority 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).
Payments of principal and redemption price of and interest 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 Authority or the Paying Agent, on a payment 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 the nominee), the Paying Agent or the Authority, subject to any statutory and regulatory
requirements as may be in effect from time to time. Payment of principal and interest to Cede &Co. (or
such other nominee as may be requested by an authorized representative of DTC)is the responsibility of
the Paying 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.
D-2
DTC may discontinue providing its service as depository with respect to the Bonds at any time by giving
reasonable notice to the Authority and the Paying Agent. Under such circumstances, in the event that a
successor depository is not obtained, Bond certificates are required to be printed and delivered as
described in the Resolution.
The Authority 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 as
described in the Resolution.
The information in this section concerning DTC and DTC's book-entry system has been obtained from
sources that the Authority believes to be reliable, but the Authority takes no responsibility for the
accuracy thereof.
The Authority and the Paying Agent do not have any responsibility or obligation to DTC Participants, to
the persons for whom they act as nominees, to Beneficial Owners, or to any other person who is not
shown on the registration books as being an owner of the Bonds, with respect to (i) the accuracy of any
records maintained by DTC or any DTC Participants; (ii) the payment by DTC or any DTC Participant of
any amount in respect of the principal of, redemption price of or interest on the Bonds; (iii)the delivery of
any notice which is permitted or required to be given to registered owners under the Resolution; (tv) the
selection by DTC or any DTC Participant of any person to receive payment in the event of a partial
redemption of the Bonds; (v)any consent given or other action taken by DTC as registered owner; or(vi)
any other matter arising with respect to the Bonds or the Resolution. The Authority and the Paying Agent
cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of
principal of or interest on the Bonds paid to DTC or its nominee, as the registered owner, or any notices
to the Beneficial Owners or that they will do so on a timely basis or will serve and act in a manner
described in this Official Statement. The Authority and the Paying Agent are not responsible or liable for
the failure of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner
in respect to the Bonds or any error or delay relating thereto.
D-3
ESCROW DEPOSIT AGREEMENT
Dated as of April 1, 2004
by and among
THE CITY OF PALM SPRINGS,
THE CITY OF PALM SPRINGS FINANCING AUTHORITY
AND
BNY WESTERN TRUST COMPANY
1003/064/29975.01
THIS ESCROW DEPOSIT AGREEMENT made and entered into as of the Ist
day of April, 2004 (this "Agreement") by and among BNY WESTERN TRUST
COMPANY (the "Escrow Bank"), a state banking corporation having its principal
corporate trust office in Los Angeles, California, and successor-in-interest to First
Interstate Bank of California, Ltd. (the "1997 Trustee") as trustee for the Series B Bonds
(as hereinafter defined), and Trustee for the Bonds (as herein defined), the CITY OF
PALM SPRINGS, a municipal corporation, duly organized and existing under and by
virtue of the laws of the State of California (herein called "City"), and THE CITY OF
PALM SPRINGS FINANCING AUTHORITY, a joint powers authority("Authority");
WITNES SETH:
WHEREAS, the City and the Authority have determined to refund (the
"Refunding") all of the Authority's outstanding City of Palm Springs Financing
Authority Lease Revenue Bonds, 1997 Series B (the"Series B Bonds"); and
WHEREAS, in order to provide funds for and toward the Refunding, the
Authority has authorized the issuance of the Bonds; and
WHEREAS, the parties hereto desire to enter into this Agreement to provide for
the taking of certain actions so as to accomplish the Refunding; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound, covenant
and agree as follows:
Section 1. Definitions. hl this Agreement, unless a different meaning clearly
appears from the context:
"1991 Trustee", "1997 Trustee" and "Trustee" means BNY Western Trust
Company, in its capacity as successor trustee to First Interstate Bank, Ltd. under the 1991
Trust Agreement.
"1997 Bonds" means the $ aggregate principal amount outstanding of
City of Palm Springs Financing Authority Lease Revenue Bonds, 2004 Series A
(Convention Center Expansion Project).
"1991 Trust Agreement" means the Trust Agreement Relating to Convention
Center Facilities dated as of April 1, 1991 by and among the 1991 Trustee, the Authority
and the City.
"1997 Trust Agreement" means the 1991 Trust Agreement, as amended by
Supplemental Trust Agreement No. 1, dated as of October 1, 1997, by and among the
City, the Authority and the Trustee.
1003/064/29975.01
"2001 Trust Agreement" means the 1991 Trust Agreement, as amended by that
Supplemental Trust Agreement No. 2 by and among the City, the Authority and the
Trustee, dated as of August 1, 2001.
"2004 Series A Bonds" means the City of Palm Springs Financing Authority
Lease Revenues Bonds (Convention Center Expansion Project) issued pursuant to the
2004 Trust Agreement.
"2004 Trust Agreement" means that 1991 Trust Agreement, as supplemented by
Trust Agreement No. 3, among the City, the Authority and the Trustee.
"Defeasance Securities" means cash or U.S. Treasury Certificates, Notes and
Bonds (including State and Local Government Series -- "SLGSs"), direct obligations of
the Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar
securities and obligations issued by the following agencies:
1. U.S. Export-hnport Bank
Direct obligations or fully guaranteed certificates of beneficial ownership.
2. Fanners Home Administration
Certificates of beneficial ownership
3. Federal Financing Bank
4. Federal Housing Administration Debentures
5. General Services Administration
Participation certificates
6. U.S. Maritime Administration
Guaranteed Title XI financing
7. New Communities Debentures
U. S. Government guaranteed debentures
8. U.S. Public Housing Notes and Bonds
U.S. government guaranteed public housing notes and bonds
9. U.S. Department of Housing and Urban Development
Project Notes Local Authority Bonds
10. Prerefunded municipal bonds must be rated "Aaa" by Moody's or "AAA"
by S&P. If the issue is only rated by S&P (i.e., there is no Moody's rating), then the
prerefanded bonds must have been prerefunded with cash, direct U.S. or U.S. guaranteed
obligations, or AAA-rated prerefunded municipals that satisfy this condition.
"Escrow Account" means the Escrow Account established pursuant to Section 2
hereof.
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1003/064/29975.01
"Series B Bonds" means the $ City of Palm Springs Financing
Authority Lease Revenue Refunding Bonds, 1997 Series B (Convention Center Project).
All undefined terms shall have the same meaning as defined in the 1997 Trust
Agreement.
Section 2. Creation of Escrow Account. There is hereby created and
established with the Escrow Bank a special and irrevocable trust fluid designated the
"City of Palm Springs Financing Authority 1997 Refunding Escrow Account" (the
"Escrow Account"), to be held in the custody of the Escrow Bank as a trust fiord solely
for the benefit of the owners of the Refunded Bonds. The Escrow Account shall be held
by the Escrow Barak separate and apart from other funds of the City, the Authority, or the
Escrow Barak and the Escrow Bank hereby waives any right it may have to set off any
obligations of the City or any other person against moneys in the Escrow Account or to
apply such moneys as collateral for any such obligations.
Section 3. Deposits Into Escrow Account; Application of Funds.
(a) The Escrow Bank shall deposit in the Escrow Account
immediately upon receipt thereof, cash as described below, which shall be delivered to
the Escrow Barak as follows: from the Trustee the sum of$ representing
a portion of the proceeds of the sale of the 2004 Series A Bonds and from the Trustee the
sum of$ , representing a portion of the Lease Payment Account held Under
the 1997 Trust Agreement and the sum of$ representing a portion of the
Reserve Account held Under the 1997 Trust Agreement.
(b) The total amount of the foregoing deposit, namely the sum of
$ shall be held Uninvested by the Escrow Barak unless and until used, in
whole or in part, to purchase Defeasance Securities pursuant to Section 4.
(c) The City represents that the foregoing deposit in the sum of
$ is and will be available and sufficient to pay when due:
(i) The interest due on the Series B Bonds to their maturity or
early redemption on ; and
(ii) The principal of, and premium on, if any, the Series B
Bonds to their maturity or early redemption on
Section 4. Purchase of Defeasance Securities. From time to time and at any
time, the City may, direct the Escrow Bank in writing, to purchase Defeasance Securities,
as may be specified by the City,provided that:
(a) Such direction shall:
(i) Specify the Defeasance Securities to be purchased and the
date or dates on which, and the price or prices at which, they shall be purchased; and
-4-
1003/064/29975.01
(ii) Specify the application to which receipts of maturing
principal of or interest on the Defeasance Securities are to be put; and
(b) There shall be delivered to the Escrow Bank, simultaneously with
the aforesaid direction, an opinion of nationally recognized bond counsel to the effect that
the purchase of Defeasance Securities is pennitted under the 1997 Trust Agreement and
this Escrow Agreement and the purchase of the Defeasance Securities has no adverse
effect on the tax-exempt nature of the Bonds or the Refunded Bonds; and
Section 5. Pre payment of Refunded Bonds. (a) The cash (if any) and the
maturing principal of, and interest on, the Defeasance Securities, if any, shall be applied
by the Escrow Bank, as 1997 Trustee, as follows:
(i) On the Escrow Bank shall pay
scheduled interest and principal payments on the Series B Bonds, which becomes due on
said date, as set forth in Exhibit A;
(ii) Subject to and in accordance with the 1997 Trust
Agreement, the 1997 Trustee shall call for redemption on , of all of the then
outstanding Series B Bonds; and
(iii) the Escrow Bank shall pay the
principal of and redemption premium on the Series B Bonds so called for redemption, as
set forth in Exhibit A.
(b) After application of moneys in the Escrow Account in accordance
with the provisions of this Section 5, there may remain in the Escrow Account certain
unexpended balances. On or after such balances shall be transferred to
the Lease Payment Account held under the 2004 Trust Agreement.
Section 6. Prepayment Notices.
(a) The 1997 Trustee has mailed a copy of a notice of prepayment,
postage prepaid, to the registered owners of the Refunded Bonds at their last addresses, if
any, appearing upon the registry books for such Refunded Bonds, not less than thirty(30)
days nor more than sixty(60) days prior to as specified in Section 5
above, and shall send all notices required by Section 616 of the 1997 Trust Agreement.
(b) The 1997 Trustee agrees to call the Series B Bonds for prepayment
as instructed and has given the aforesaid notices as instructed.
Section 7. Fees of Escrow Bank; hidemnification.
(a) hi consideration of the services rendered or to be rendered by the
Escrow Bank under this Agreement, the City will pay an agreed upon fee to said Escrow
Bank. In addition, the City agrees to and shall pay to the Escrow Bank its expenses,
including legal fees (including, without limitation, all expenses associated with the giving
of the notices described in Section 6 above) from any moneys of the City lawfully
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available therefor and the Escrow Bank shall not have any lien whatsoever upon any of
the moneys in the Escrow Account for the payment of the aforesaid fees and expenses.
(b) The City hereby agrees (whether or not any of the transactions
contemplated hereby are consummated) to indemnify, protect, save and keep harmless
the Escrow Bank and any successors, assigns, agents and servants thereof, from and
against, any and all liabilities, obligations, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements (including legal fees and disbursements) of
whatsoever kind and nature which may be imposed on, incurred by, or asserted against, at
any time, the Escrow Bank) and in any way relating to or arising out of the execution and
delivery of this Agreement, the establishment of the Escrow Account, the acceptance of
the moneys and securities deposited therein, the purchase of the Defeasance Securities, or
any Substitute Securities or the proceeds thereof, and any payment, transfer or other
application of moneys or securities by the Escrow Bank in accordance with the
provisions of this Agreement. In no event shall the City be liable to any person by reason
of the transactions contemplated hereby other than to the Escrow Bank as set forth in this
Section 7. The indemnities contained in this Section shall survive the termination of this
Agreement.
(c) The Escrow Bank shall be entitled to indemnification from the
moneys and securities from time to time deposited in the Escrow Account, subject to the
superior lien thereon in favor of holders of the Refunded Bonds, for any liability,
obligation, loss, darnage, penalty, claim, action, suit, cost, expense or disbursement
indemnified against pursuant to this Section 7, to the extent not reimbursed by the City or
any other person, but without releasing any of there from their respective agreements of
reimbursement; and to secure the same, the Escrow Bank shall have a lien on the moneys
and securities from time to time deposited in the Escrow Account, subject to the superior
lien thereon in favor of holders of the Refunded Bonds.
(d) The Escrow Bank and its respective successors, assigns, agents and
employees shall not be held to any personal liability whatsoever in tort, contract or
otherwise, in connection with the execution and delivery of this Agreement, the
establishment of the Escrow Account, the acceptance of the moneys deposited therein,
the purchase of the Defeasance Securities, or any Substitute Securities, the retention of
the Defeasance Securities, or any Substitute Securities or the proceeds thereof or any
payment, transfer or other application of moneys or securities by the Escrow Bank or the
1991 Trustee in accordance with the provisions of this Agreement or by reason of any
act, omission, or error of the Escrow Bank made in good faith in the conduct of their
respective duties.
(e) The Escrow Bank may act upon any instrument or other writing
believed by them in good faith to be genuine and to be signed or presented by the proper
person; and shall be under no obligation to institute or defend any action, suit or legal
proceeding in connection herewith or to take any other action likely to involve them in
expense unless fast indemnified to their satisfaction.
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1003/064/29975 01
(f) The Escrow Bank undertakes to perform only such duties as are
expressly and specifically set forth in this Escrow Agreement and no implied duties or
obligations shall be read into this Escrow Agreement against the Escrow Bank.
(g) The Escrow Bank shall not have any liability hereunder except to
the extent of its own negligence or willful misconduct.
(h) The Escrow Bank may consult with counsel of its own choice and
the opinion of such counsel shall be full and complete authorization to take or suffer in
good faith any action hereunder in accordance with such opinion of counsel.
(i) The Escrow Bak may at any time resign by giving written notice
to the City and Authority of such resignation. The City or Authority shall promptly
appoint a successor Escrow Bank by the resignation date. Resignation of the Escrow
Bank will be effective upon acceptance of appointment by a successor Escrow Bank. If
the city or Authority does not appoint a successor, the Escrow Bank may petition any
court of competent jurisdiction for the appointment of a successor Escrow Bank, which
court may thereupon, after such notice, if any, as it may deem proper and prescribe and as
may be required by law, appoint a successor Escrow Bank.
0) Any company into which the Escrow Bank may be merged or
converted or with which it may be consolidated or any company resulting fi-om any
merger, conversation or consolidation to which it shall be a party or any company to
which the Escrow Bank may sell or transfer all or substantially all of its corporate trust
business shall be the successor to the Escrow Bank without the execution or filing of any
paper or further act, anything herein to the contrary notwithstanding.
(k) The liability of the Escrow Bank to make the payments required by
this Section 8 shall be limited to the moneys and securities in the escrow fund.'
(1) The Escrow Bank shall not be liable for the accuracy of any
calculations provided as to the sufficiency of the moneys or securities deposited with it to
pay the principal, interest, or premiums, if any, on the Refunded Bonds.
(in) The Escrow Bank shall have no liability or responsibility for any
loss resulting from any investment made in accordance with the provisions of this Escrow
Agreement.
(n) The Escrow Bank's rights to indemnification hereunder shall
survive its resignation or removal and the termination of the Agreement.
(o) No provision of this Agreement shall require the Escrow Bank to
expend or risk its own funds or otherwise incur any financial liability in the performance
or exercise of any of its duties hereunder, or in the exercise of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
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Section S. Termination of Agreement. This Agreement shall terminate when
all of the Series B Bonds have been paid and discharged in accordance with the 1997
Trust Agreement, at which time any remaining moneys and any Defeasance Securities, or
Substitute Securities in the Escrow Account, shall be transferred to the Trustee for
deposit in the Lease Payment Account.
Section 9. Provisions of 1997 Trust Agreement. All applicable provisions of
the 1997 Trust Agreement pertaining to the payment of the principal of, and the interest
with respect to, the Series B Bonds and the registration, transfer, exchange and
replacement of such Series B Bonds shall be continued in force until the Series B Bonds
have been fully paid on the prepayment dates or the maturity dates thereof. In all other
respects the 1997 Trust Agreement, and the lien imposed thereby, shall be deemed to be
discharged and defeased.
Section 10. Payment Dates. If the date for any payment fiom the Escrow Bank
to the 1997 Trustee as described in Section 5 hereof shall be a Saturday, Sunday, legal
holiday or a day on which banking institutions in the cities where the principal corporate
trust offices of the Escrow Bank or the 1997 Trustee are located are authorized by law or
executive order to close, then the date for such payment shall be the next succeeding day
which is not a Saturday, Sunday, legal holiday or a day on which the banking institutions
in any such cities are authorized to close, and payment on such date shall have the same
force and effect as if made on the nominal date for payment.
Section 11. Headings. The headings to the various Sections of this Agreement
have been inserted for convenient reference only and shall not modify, amend or change
the express terns and provisions of this Agreement.
Section 12. Severability of Provisions. If any one or more of the covenants or
agreements provided in this Agreement on the part of the City, the Escrow Bank or the
Trustees to be performed should be determined by a court of competent jurisdiction to be
contrary to law, such covenant or agreement shall be deemed and construed to be
severable fi-om the remaining covenants and agreements herein contained and shall in no
way affect the validity of the remaining provisions of this Agreement.
Section 13. Counterparts. This Agreement may be executed in several
counterparts, all or any of which shall be regarded for all purposes as an original, but
such counterparts together shall constitute and be but one and the same instrument.
Section 14. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns.
Section 15. Amendment. This Agreement may be amended only by written
agreement of the parties hereto; provided that no amendment may be made which would
adversely affect the interests of the owners of the Refunded Bonds, or any of there,
without the consent of the owners of all of such Refunded Bonds then outstanding.
Section 16. Governing Law. This Agreement shall be construed and governed
in accordance with the internal laws of the State of California.
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1003/064/29975.Ot
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be executed by their duly authorized officers and attested as of the date first written
above.
BNY WESTERN TRUST
COMPANY, as Escrow Bank
By:
Its: Vice President
CITY OF PALM SPRINGS
By:
Its: Director of Finance & Treasurer
CITY OF PALM SPRINGS
FINANCING AUTHORITY
By:
Its: Treasurer
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EXHIBIT "A"
REFUNDED BONDS
Payment Date Principal Interest Called Principal Redemption Prer Total Payment
A-1
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RECORDING REQUESTED BY:
City of Pallas Springs
AND WHEN RECORDED MAIL TO:
Urban J. Schreiner
Aleshire & Wynder, LLP
18881 Von Karman Avenue, Suite 400
Irvine, CA 92612
SPACE ABOVE THIS LINE FOR RECORDER'S USE
THIS DOCUMENT IS RECORDED FOR THE BENEFIT OF THE CITY OF PALM
SPRINGS AND RECORDING IS FEE-EXEMPT UNDER § 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
THIRD AMENDED ASSIGNMENT AGREEMENT
by and between
THE CITY OF PALM SPRINGS
FINANCING AUTHORITY
and
BNY WESTERN TRUST COMPANY, as Trustee
Dated as of April 1, 2004
THIRD AMENDED ASSIGNMENT AGREEMENT RELATING TO
CONVENTION CENTER FACILITIES
This Third Amended Assigmnent Agreement, made and entered into as of the 1 st day of
April, 2004 (the "Third Amended Assigmnent Agreement'), by and between THE CITY OF
PALM SPRINGS FINANCING AUTHORITY, (herein called "Authority"), a joint powers
authority duly organized and existing under the laws of the State of California, and BNY
WESTERN TRUST COMPANY, a state banking corporation duly organized and existing under
and by virtue of the laws of the State of California (hereinafter called the "Trustee");
WITNESSETH:
In the joint and mutual exercise of their powers, in consideration of the mutual covenants
herein contained, and for other valuable consideration, the parties hereto recite and agree as
follows:
Section 1. Recitals.
(a) Authority and the City of Palm Springs (the "City") have entered into a
Lease Agreement Relating to Convention Center Facilities by and between Authority and City
dated as of April 1, 1991 (the "Lease Agreement'), whereby Authority has agreed to lease to
City, and City has agreed to lease from Authority certain sites and the improvements thereon (the
"Site"), which Site is more particularly described in Exhibit A attached hereto and by this
reference incorporated herein and which Site is subject to the Lease Agreement, in the manner
and on the terms set forth in the Lease Agreement.
(b) Pursuant to the Lease Agreement, upon execution and delivery of it,
Authority was required to deposit or cause to be deposited with the Trustee certain suns of
money to be credited, held and applied in accordance with a Trust Agreement Relating to
Convention Center Facilities by and among Trustee, Authority and City (the 1991 Trust
Agreement") whereby the Authority issued $50,668,212.10 aggregate amount of City of Palm
Springs Financing Authority Lease Revenue Bonds, 1991 Series A (the "1991 Bonds").
(c) Upon delivery of the Lease Agreement and the deposit of moneys by
Authority with respect thereto, City was obligated to pay certain Lease Payments to Authority or
its assignee. For the purpose of obtaining the moneys required to be deposited with the Trustee,
Authority was willing to assign and transfer its rights and interests under the Lease Agreement to
the Trustee for the benefit of the Owners of the 1991 Bonds and Additional Bonds to be executed
and delivered under the 1991 Trust Agreement.
(d) The City determined to advance refund a portion of the 1991 Bonds
through the issuance of the City of Palm Springs Financing Authority Lease Revenue Refunding
Bonds, 1997 Series B (Convention Center Project) (the "1997 Bonds") .
(e) In order to facilitate issuance of the 1997 Bonds, the City and the
Authority entered into a Supplemental Lease Agreement No. 2., dated as of October 1, 1997 (the
"Supplemental Lease Agreement No. 2").
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(f) In order to facilitate issuance of the 1997 Bonds, the City, the Authority
and the Trustee, as successor-in-interest to First Interstate Bank, Ltd. (the "1991 Trustee")
entered into the Supplemental Trust Agreement No. 1, dated as of October 1, 1997 (the
"Supplemental Trust Agreement No. 1").
(g) For the purpose of assigning certain of the Authority's interests in the
Supplemental Lease Agreement No. 2 and the Supplemental Trust Agreement No. 1 to the
Trustee, the Authority and the Trustee, as successor-in-interest to the 1991 Trustee, amended the
Assignment Agreement, dated as of April 1, 1991, by and between the Authority and the 1991
Trustee (the"Assignment Agreement").
(h) The City determined to currently refund a portion of the outstanding 1991
Bonds through the issuance of the City of Palm Springs Financing Authority Lease Revenue
Refunding Bonds, 2001 Series A Bonds (Convention Center Project) (the "2001 Bonds").
(i) In order to facilitate issuance of the Bonds, the City and the Authority
entered into a Supplemental Lease Agreement No. 3, dated as of August 1, 2001 (the
"Supplemental Lease Agreement No. 3").
0) In order to facilitate issuance of the 2001 Bonds, the City, the Authority
and the Trustee, as successor-in-interest to the 1991 Trustee entered into the Supplemental Trust
Agreement No. 2, dated as of August 1, 2001 (the "Supplemental Trust Agreement No. 2").
(k) For the purpose of assigning certain of the Authority interests in
Supplemental Lease Agreement No. 3 and Supplemental Trust Agreement No. 1 to the Trustee,
the Authority and the Trustee entered into the Second Amended Assignment Agreement, dated
as of August 1, 2001.
(1) The City has determined to currently refund the outstanding 1997 Bonds
and to expand the Convention Center facilities through the issuance of City of Palm Springs
Financing Authority Lease Revenue Bonds, 2004 Series A (Convention Center Expansion
Project) (the "2004 Bonds").
(m) hi order to facilitate the issuance of the 2004 Bonds, the City and the
Authority have entered into a Supplemental Lease Agreement No. 4 ("Supplemental Lease
Agreement No. 4"), dated as of April 1, 2004, among the City, the Authority and the Trustee.
(n) In order to facilitate the issuance of the 2004 Bonds, the City, the
Authority and the Trustee have entered into Supplement Trust Agreement No. 3, dated as of
April 1, 2004 (the "Supplemental Trust Agreement No. 3").
(o) The Authority and the Trustee now desire to amend the Assignment
Agreement to assign certain of the Authority's interests in the Supplemental Lease Agreement
No. 4 and the Supplemental Trust Agreement No. 3 to the Trustee.
(p) Each of the parties have authority to enter into this Third Amended
Assignment Agreement, and has taken all actions necessary to authorize its officers to enter into
it.
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(q) The terns capitalized in this Second Amended Assignment Agreement but
not defined herein shall have the meanings given to them in the 1991 Trust Agreement, and the
Supplemental Trust Agreement No. 3.
Section 2. Assignment. Authority, for One Dollar ($1.00) and other good and
valuable consideration in hand received, does hereby irrevocably sell, assign and transfer to the
Trustee, for the benefit of the Owners of the Bonds and any Additional Bonds executed and
delivered under the Supplemental Trust Agreement No. 3, all of its rights, title and interest in the
Lease Agreement, the Supplemental Lease Agreement No. 1, the Supplemental Lease Agreement
No. 2, the Supplemental Lease Agreement No. 3, Supplemental Lease Agreement No. 4, the Site
Lease, and any Supplemental Site Lease between the City and the Authority, recorded prior to or
concurrently herewith, including its rights to receive Lease Payments from City under the Lease
Agreement, the Supplemental Lease Agreement No. 2, the Supplemental Lease Agreement
No. 3, the Supplemental Lease Agreement No. 4 and the right to exercise such rights and
remedies as are conferred on Authority by the Lease Agreement, the Supplemental Lease
Agreement No. 2, Supplemental Lease Agreement No. 3 and the Supplemental Lease Agreement
No 4, as may be necessary to enforce payment of such Lease Payments when due or otherwise to
protect its interests in the event of a default by City(but not including the right to be indemnified
under the Lease Agreement, the Supplemental Lease Agreement No. 2, the Supplemental Lease
Agreement No. 3 and the Supplemental Lease Agreement No. 4 and the right of the Authority to
receive notices thereunder) as to the Site described on Exhibit A. The Lease Payments shall be
applied, and the rights so assigned shall be exercised, by the Trustee as provided in the 1991
Trust Agreement, the Supplemental Trust Agreement No. 1, the Supplemental Trust Agreement
No. 2 and the Supplemental Lease Agreement No. 3.
Section 3. Acceptance. The Trustee hereby accepts such assigranent in trust for the
purpose of securing such payments and rights to the Owners of the Bonds and any Additional
Bonds delivered pursuant to the Trust Agreement and the Supplemental Trust Agreement No. 3,
and subject to the provisions of the Trust Agreement or any Supplemental Trust Agreements.
Section 4. Conditions. This Third Amended Assignment Agreement shall confer no
rights and impose no duties upon the Trustee beyond those expressly provided in the Trust
Agreement and the Supplemental Trust Agreement No. 3.
Section 5. Site and Facilities Amendment. The Site and Facilities which are the
subject of this Third Amended Assignment Agreement shall be deemed amended, without
further action of the parties, to reflect any land added or deleted pursuant to an amendment to the
Lease Agreement, the Supplemental Lease Agreement No. 1, the Partial Discharge of
Supplemental Lease Agreement No. 1, Partial Discharge of Supplemental Site Lease No. 1, the
Supplemental Lease Agreement No. 2, the Supplemental Lease Agreement No. 3, Supplemental
Lease Agreement No. 4 or any amendment or modification to the Site and/or Facilities made
pursuant to an amendment to the Lease Agreement and/or any Supplemental Site Lease.
Section 6. Amendment or Supplement. This Third Amended Assignment Agreement
may be amended or supplemented, without the consent of the Bond Owners, through the
adoption of an amendment thereof.
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1003/064/29916.01
Section 7. Counterparts. This Third Amended Assigmnent 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.
IN WITNESS WHEREOF, the parties have executed this Second Amended Assigmnent
Agreement by their officers thereunto duly authorized as of the day and year first written above.
ATTEST: CITY OF PALM SPRINGS FINANCING
AUTHORITY
By:
Its:
BNY WESTERN TRUST COMPANY
By:
Its:
Vice President
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EXHIBIT "A"
DESCRIPTION OF SITE
Parcel 1:
LOT 2 AND LETTERED LOT A OF TRACT NO. 20485, IN THE CITY OF PALM
SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS PEP, AMENDED MAP
RECORDED IN BOOK 200, PAGES 47 AND 48 OF MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
Parcel 2:
BLOCKS 103, 105 AND 106 IN SECTION 14, TOWNSHIP 4 SOUTH, RANGE 4 EAST, SAN
BERNARDINO MERIDIAN, IN THE CITY OF PALM SPRINGS, COUNTY OF RIVERSIDE,
STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
A-1
1003/064/29916.01
SUPPLEMENTAL TRUST AGREEMENT NO. 3
Dated as of April 1, 2004
by and among
BNY WESTERN TRUST COMPANY,
as trustee,
CITY OF PALM SPRINGS FINANCING AUTHORITY
and
CITY OF PALM SPRINGS
City of Palm Springs Financing Authority
Lease Revenue Bonds, 2004 Series A
(Convention Center Expansion Project)
1003/064/29956.01
SUPPLEMENTAL TRUST AGREEMENT NO. 3
THIS SUPPLEMENTAL TRUST AGREEMENT NO. 3 (the "Second Supplement"),
made and entered into as of April 1, 2004, is by and among the CITY OF PALM SPRINGS
FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under
the laws of the State of California (the "Authority"), BNY WESTERN TRUST COMPANY, a
banking corporation organized and existing under the laws of the State of California with a
principal corporate trust office in Los Angeles, California, as successor to First Interstate Bank,
LTD. (the "Trustee"), and the CITY OF PALM SPRINGS, a chartered city and municipal
corporation duly organized and existing under the laws of the State of California (the "City");
WITNESSETH:
WHEREAS, the Authority is a joint exercise of powers authority duly organized and
existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated as of
February 6, 1991, by and between the City and the Redevelopment Agency of the City of Palm
Springs (the "Agency"), and under the provisions of Articles 1 through 4 (commencing with
section 6500) of Chapter 5 of Division 7 of Title I of the California Govennnent Code (the
"Act"), and is authorized pursuant to Article 4 (commencing with section 6584) of the Act (the
"Bond Law") to borrow money for the purpose of providing financing and refinancing for public
capital improvements of the City and the Agency;
WHEREAS, for the purpose of providing financing for the Convention Center Project
more particularly described in the hereinafter defined Lease Agreement (the "Facilities"), the
authority has previously issued its City of Palm Springs Financing Authority Lease Revenue
Bonds 1991 Series A (Convention Center Project), in the aggregate principal amount of
$50,668,512.10 (the "Series A Bonds"), all pursuant to and secured by a Trust Agreement
Relating to Convention Center Facilities, dated as of April 1, 1991, by and among the Trustee,
the City and the Authority(the "Trust Agreement");
WHEREAS, for the purpose of advance refunding a portion of the Series A Bonds, the
Authority has previously issued its City of Palm Springs Financing Authority Lease Revenue
Bonds 1997 Series B (Convention Center Project), in the aggregate principal amount of
$12,300,000 (the "Series B Bonds"), all pursuant to and secured by the Trust Agreement as
amended by a Supplemental Trust Agreement No. 1, dated as of October 1, 1997, by and amount
the Trustee, the City and the Authority(the"First Supplement");
WHEREAS, for the purpose of currently refunding a portion of the Series A Bonds the
Authority has previously issued its City of Palm Springs Financing Authority Lease Revenue
Bonds, 2001 Series A (Convention Center Project) in the aggregate principal amount of
$28,540,000 (the "2001 Series A Bonds"), all pursuant to and secured by the Trust Agreement,
as amended by Supplemental Trust Agreement No. 2, dated as of August 1, 2001, among the
Authority, the City and the Trustee (the"Second Supplement");
WHEREAS, the City and the Authority have determined that substantial savings would
result from currently refunding the Series B Bonds;
1003/064/29956.01
WHEREAS, Section 7.14 of the Trust Agreement permits the Agency to issue Additional
Bonds (as therein defined) on a parity with the Series A Bonds and 2001 Series A Bonds to
modify the Facilities pursuant to a Supplemental Indenture (as therein defined) such as this
"Third Supplement;
WHEREAS, the Facilities were leased by the Authority to the City pursuant to a Lease
Agreement Relating to Convention Center Facilities, dated as of April 1, 1991, by and between
the Authority and the City (the "Lease Agreement'), as amended by Supplemental Lease
Agreement No. 1, dated as of April 1, 1991, Supplemental Lease Agreement No. 2, dated as of
October 1, 1997 and Supplemental Lease Agreement No. 3, dated as of August 1, 2001, each
between the Authority and the City, and said Section 7.14 of the Trust Agreement requires that,
in implementation of the issuance of Additional Bonds, the Lease Agreement shall be amended
pursuant to a Supplemental Lease Agreement (as defined therein) to provide supplernental Lease
Payments sufficient to pay principal and interest on the Additional Bonds;
WHEREAS, the Authority will refinance the Series B Bonds and finance the expansion of
the Facilities by the issuance of Additional Bonds pursuant to this Third Supplement in the
aggregate principal amount of$ (the "2004 Series A Bonds") and the Authority
will pay the principal of and interest on the 2004 Series A Bonds with the amounts of the
Supplemental Lease Payments to be paid by the City pursuant to Supplemental Lease Agreement
No. 4, dated as of April 1, 2004 by and between the Authority and the City; and
WHEREAS, the Authority, the City and the Trustee wish at this time to enter into this
Third Supplement for the purpose of prescribing the terns and conditions applicable to the 2004
Series A Bonds and for the purposes of further amending and supplementing the Trust
Agreement;
NOW, THEREFORE, THIS SECOND SUPPLEMENT WITNESSETH, that in order to
secure the payment of the principal of and the interest and premium (if any) on all Bonds at any
time issued and outstanding under this Indenture and any and all obligations of the authority to
the Insurer, according to their tenor, and to secure the performance and observance of all the
covenants and conditions therein and herein set forth, and to declare the ternis and conditions
upon and subject to which the Bonds are to be issued and received, and in consideration of the
premises and of the mutual covenants herein contained and of the purchase and acceptance of the
bonds by the owners thereof, and for other valuable considerations, the receipt whereof is hereby
acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of
the respective owners from time to time of the Bonds and the Insurer, as follows:
Section 1. Supplement to Trust Agreement. In accordance with the provisions of
Section 7.14 of the Trust Agreement, the Trust Agreement is hereby amended by adding a
supplement thereto consisting of a new article to be designated as Article XI. Such Article XI
shall read in its entirety as follows:
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ARTICLE XI
2004 Series A Bonds
Section 1101. Definitions. Unless the context otherwise requires, the terns defined in
this Section 1101 shall, for all purposes of this Article XI but not for any other proposes of this
Trust Agreement, have the respective meanings specified in this Section 1101. All terns defined
in Exhibit A of the Trust Agreement and not otherwise defined in this Section 1101 shall, when
used in this Article XI, have the meanings given to such terns in Exhibit A of the Trust
Agreement.
"Article XI" means this Article XI which has been incorporated in and made a part of this
Trust Agreement pursuant to the Supplemental Trust Agreement NO. 3, dated as of April 1,
2004, by and among the Authority, the City and the Trustee, together with all amendments of
and supplements to this Article XI entered into pursuant to the provisions of this Trust
Agreement.
"Closing Date" means the date on which the 2004 Series A Bonds are delivered to the
Original Purchaser.
"Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate
relating to the 2004 Series A Bonds executed by the Authority and dated the date of issuance and
delivery of the 2004 Series A Bonds, as originally executed and as it may be amended from time
to time in accordance with the teens thereof.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the authority relating to the authorization, issuance, sale and delivery of the 2004
Series A Bonds, including but not limited to printing expenses, rating agency fees, municipal
bond insurance premiums, filing and recording fees, initial fees, expenses and charges of the
Trustee, and its counsel, including the Trustee's first annual administrative fee, fees, charges and
disbursements of attorneys, financial advisors, accounting firms, consultants and other
professionals, fees and charges for preparation, execution and safekeeping of the 2004 Series A
Bonds and any other cost, charge or fee in connection with the original issuance of the 2004
Series A Bonds.
"Escrow Agreement" means the Escrow Deposit and Trust Agreement, dated as of
April 1, 2004 by and among the City, the Authority and the Escrow Bank.
"Federal Securities" means any of the following which are non-callable and which at the
time of investment are legal investments under the laws of the State of California, as shall be
certified in writing by the Authority to the Trustee, for the moneys proposed to be invested
therein:
(a) 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) or
obligations, the payment of principal of and interest on which are unconditionally
guaranteed by the United States of America; and
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1003/064/29956.01
(b) obligations of any of the following federal agencies of the United States of
America the timely payment of principal of and interest on which are fully guaranteed by
the United States of America (i) certificates of beneficial ownership of the Fanners Home
Administration, (ii) debentures of the Federal Housing Administration, (iii) participation
certificates of the General Services Administration, (iv) guaranteed mortgage backed
bonds or participation certificates of the Governmental National Mortgage Association,
(v) bonds, notes or other evidence of indebtedness issued or guaranteed by the U.S.
Maritime Administration, or (vi) project notes and local authority bonds of the U.S.
Department of Housing and Urban Development.
"Insurer" means its successors and assigns, as the issuer of municipal bond
insurance policy with respect to the 2004 Series A Bonds.
"Original Purchaser" means Stone & Youngberg, LLC as the first purchaser of the 2004
Series A Bonds.
"Participating Underwriter" means ascribed thereto in the Continuing Disclosure
Certificate.
"Payment Date"means November 1, 2004, and each November 1 and May 1 in each year
thereafter so long as any of the 2004 Series A Bonds remain Outstanding and with respect to the
prepayment of Lease Payments to pay the 2004 Series A Bonds in whole on or after
November 1,_, Payment Date means any date on or after November 1,
["Permitted Investments"means any of the following which at the time of investment are
legal investments under the laws of the State of California for the moneys proposed to be
invested therein:
(a) Federal Securities;
(b) 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):
(1) Federal Home Loan Bank System
Senior debt obligations (Consolidated debt obligations)
(2) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie
Mad')
Participation Certificates (Mortgage-backed securities)
Senior debt obligations
(3) Federal National Mortgage Association (FNMA or"Fannie Mae")
Mortgage-backed securities and senior debt obligations (excluded
are stripped mortgage securities which are valued greater than par
on the portion of unpaid principal.)
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(4) Student Loan Marketing Association (SLMA or"Sallie Mae")
Senior debt obligations
(5) Resolution Funding Corp. (REFCORP) Only the interest
component of REFCORP strips which have been stripped by
request to the Federal Reserve Bank of New York in book entry
form are acceptable.
(6) Farm Credit S, stem
Consolidated systemwide bonds and notes
(c) Money market fiends registered under the Federal Investment Company
Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a
rating by S&P of AAArn-G; AAAm; or AA-m and if rated by Moody's rated Aaa, Aal or Aa2,
including those of the Trustee, its parent, affiliates, and subsidiaries.
(d) Certificates of deposit ("CD's") secured at all times by Federal Securities.
CD's must have a one year or less maturity. Such certificates must be issued by cornmercial
banks including those of the Trustee, its parent, affiliates, and subsidiaries, savings and loan
associations or mutual savings banks whose short term obligations are rated "A-1+" or better by
S&P and "Prime-I"by Moody's.
The collateral must be held by a third party and the Trustee on behalf of the bondholders
must have a perfected first security interest in the collateral.
(e) Certificates of deposit, savings accounts, deposit accounts or money
market deposits which are full insured by FDIC, including BIF, SAIF and those of the Trustee
and its affiliates.
(f) Investment Agreements, including GIC's, acceptable to the Insurer.
(g) Commercial paper of "prime" quality of the highest ranking or of the
highest letter and numerical rating as provided for by Standard &Poor's and Moody's, of issuing
corporations that are organized and operating within the United States and having total assets in
excess of five hundred million dollars ($500,000,000) and having an "AA" or higher rating for
the issuer's debentures, other than commercial paper, as provided for by Standard & Poor's and
Moody's, and provided that purchases of eligible cormnercial paper may not exceed 180 days'
rnaturity nor represent more than 10 percent of the outstanding paper of an issuing corporation.
(h) Bonds or notes issued by any state or mmiicipality which are rated by
Moody's and S&P in one of the two highest long-term rating categories assigned by such
agencies.
(i) Federal funds or bankers acceptances with a maximum tern of one year of
any bank which has an unsecured, uninsured and unguaranteed obligation rating of"Prime —l"
or"A3" or better by Moody's and "A-1+"by S&P.
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0) Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by
S&P. If, however, the issue is only rated by S&P (i.e., there is no Moody's rating), then the pre-
refunded bonds must have been pre-refiinded with cash, direct U.S. or U.S. guaranteed
obligations, or AAA rated pre-refunded municipals to satisfy this condition.]
"Series A Bonds" means the Bonds which are authorized and issued under Section 601 of
the Trust Agreement,
"Series B Bonds"means the Bonds which are authorized and issued under Section 902 of
the Trust Agreement, as amended by the First Supplement.
"Supplemental Lease Agreement" means the Supplemental Lease Agreement No. 4,
dated as of April 1, 2004, by and between the Authority and the City, providing, among other
things for the Supplemental Lease Payments.
"Third Supplement" means this Supplemental Trust Agreement No. 3 dated as of April 1,
2004, by and among the City, the Authority and the Trustee, as the sarne may be amended from
time to time in accordance with the terns of the Trust Agreement.
"Written Request of the Authority" means a request in writing signed by an Authorized
Officer.
"2001 Series A Bonds" means the Bonds which are authorized and issued under Section
1002 of the Trust Agreement, as amended by the Second Supplement.
"2004 Acquisition and Construction Account" means the account by that name created
pursuant to Section 1108 of the Trust Agreement.
"2004 Series A Bonds" means the Bonds which are authorized and issued under Section
1002 of the Trust Agreement, as amended by Second Supplement.
"2004 Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 1107.
"2004 Series A Bonds" means the Bonds which are authorized and issued under Section
1102.
Section 1102. Authorization of 2004 Series A Bonds. The 2004 Series A Bonds shall be
issued as Additional Bonds in the aggregate principal amount of ($_ ,
under and subject to the terns of this Trust Agreement and the Law, for the purpose of providing
funds to expand the Facilities and refinance a portion of the costs of the Facilities. This Trust
Agreement constitutes a continuing agreement with the owners of all of the 2004 Series A Bonds
issued hereunder and then Outstanding to secure the firll and final payment of principal of and
premium, if any, and interest on all 2004 Series A Bonds which may from time to time be
executed and delivered hereunder, subject to the covenants, agreements, provisions and
conditions herein contained. The 2004 Series A Bonds shall be designated the "City of Palm
Springs Financing Authority Lease Revenue Bonds, 2004 Series A (Convention Center
Expansion Project)".
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]003/O64/29956.0]
Section 1103. Terms of 2004 Series A Bonds. The 2004 Series A Bonds shall be dated
as of 2004, and shall be issued in fully registered form without coupons in
denominations of$5,000 or any integral multiple thereof. The 2004 Series A Bonds shall mature
on November 1 in each of the years and in the respective principal amounts, and shall bear
interest which is payable on each Payment Date in the respective amounts, as set forth in the
following table:
Maturity Date Principal Interest
(November 1) Amount Rate
In the event that the 2004 Series A Bonds shall be redeemed in part but not in whole
pursuant to Section 1104(b), the foregoing schedule of principal of the 2004 Series A Bonds
coming due and payable on any date shall be reduced by the aggregate principal amount of 2004
Series A Bonds (if any) maturing on such date which have been so redeemed, as set forth in
written notice given by the Authority to the Trustee and the hisurer.
Interest on the 2004 Series A Bonds shall be payable from the Payment Date next
preceding the date of authentication thereof unless (i) a 2004 Series A Bond is authenticated on
or before an Payment Date and after the close of business on the preceding Record Date, in
which event it shall bear interest fiom such Payment Date, (ii) a 2004 Series A Bond is
authenticated on or before the first Record Date, in which event interest thereon shall be payable
from the Closing Date, or (iii) interest on any 2004 Series A Bond is in default as of the date of
authentication thereof, in which event interest thereon shall be payable from the date to which
interest has been paid in full, payable on each Payment Date. Interest shall be paid on each
Payment Date to the persons in whose names the ownership of the 2004 Series A Bonds is
registered on the Registration Books at the close of business on the irmnediately preceding
Record Date.
Section 1104. Redem ttiion. Except as provided in this Section 1104 to the contrary, the
2004 Series A Bonds shall be subject to redemption as provided in Article VI and the other
applicable provisions of this Trust Agreement.
(a) Sinking Fund Redemption. The 2004 Series A Bonds are subject to
mandatory redemption in accordance with Section 404 and the following schedules:
(i) The 2004 Series A Bonds maturing on , shall be subject to
redemption, in part by lot, on November 1 in each year, commencing November 1, _, as set
forth in the following table, from sinking fund payments made by the Authority, at a redemption
price equal to the principal amount thereof to be redeemed together with accrued interest thereon
to the redemption date, without premium.
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1003/064/29956.01
Tenn Bonds due November 1,
Mandatory
Redemption Date
(November 1) Amount
(ii) The 2004 Series A Bonds maturing on November 1, , shall be
subject to redemption, in part by lot, on November 1, , as set forth in the following table,
froin sinking fund payments made by the Authority, at a redemption price equal to the principal
amount thereof to be redeemed together with accrued interest thereon to the redemption date,
without premium.
Mandatory
Redemption Date
(November 1) Amount
(iii) The 2004 Series A Bonds maturing on November 1, _, shall be
subject to redemption, in part by lot, on November 1 in each year, commencing November 1,
, as set forth in the following table, fi-om sinking fund payments made by the Authority, at a
redemption price equal to the principal amount thereof to be redeemed together with accrued
interest thereon to the redemption date, without premium.
Mandatory
Redemption Date
(November 1) Amount
(iv) If some but not all of the Bonds have been redeemed pursuant to
the optional redemption or special mandatory redemption provisions described in subsections (b)
and (c), the total amount of sinking fluid payments to be made subsequent to such redemption
will be reduced in an amount equal to the principal amount of the Term Bonds so redeemed, by
reducing each such future sinking fund payment in integral multiples of $5,000 in a manner
designated by the Authority.
(b) Optional Redemption, The Bonds maturing on or after November 1, 2015,
shall be subject to redemption prior to maturity on any date on or after November 1, 2014, as a
whole or in part, in a manner determined by the Authority, from prepayments of Lease Payments
made at the option of the City pursuant to the Lease Agreement at a redemption price equal to
the principal amount thereof to be redeemed, without premium, together with accrued interest
thereon to the date fixed for redemption.
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(c) Special Mandatory Redemption. The 2004 Series A Bonds shall be
subject to special mandatory redemption pro rata with the Series A Bonds and the Series B
Bonds as provided in Section 614(c)a.
(d) The provisions of Sections 615 through 619 shall apply to the 2004 Series
A Bonds.
Section 1105. Form and Execution of 2004 Series A Bonds, CUSIP Numbers. The 2004
Series A Bonds, the form of Trustee's Certificate of Authentication, and the form of Assignment
to appear thereon, shall be substantially in the respective forms set forth in Exhibit A attached
hereto and by this reference incorporated herein, with necessary or appropriate variations,
omissions and insertions, as permitted or required by this Trust Agreement.
The 2004 Series A Bonds shall be executed on behalf of the Authority by the signature of
its Chairman and the signature of its Secretary who are in office on the date of execution and
delivery of this Third Supplement or at any time thereafter, and the seal of the Authority shall be
impressed, imprinted or reproduced by facsimile signature thereon. Either or both of such
signatures may be made manually or may be affixed by facsimile thereof. If arty officer whose
signature appears on any 2004 Series A Bond ceases to be such officer before delivery of the
2004 Series A Bonds to the purchaser, such signature shall nevertheless be as effective as if the
officer had remained in office until the delivery of the 2004 Series A Bonds to the purchaser.
Any 2004 Series A Bond may be signed and attested on behalf of the Authority by such persons
as at the actual date of the execution of such 2004 Series A Bond shall be the proper officers of
the Authority although on the date of such 2004 Series A Bond any such person shall not have
been such officer of the Authority.
Only such of the 2004 Series A Bonds as shall bear thereon a Certificate of
Authentication in the form set forth in Exhibit A hereto, executed and dated by the Trustee, shall
be valid or obligatory for any purpose or entitled to the benefits of this Trust Agreement, and
such Certificate of the Trustee shall be conclusive evidence that such 2004 Series A Bonds have
been duly authenticated and delivered hereunder and are entitled to the benefits of this Trust
Agreement.
The Trustee and the Authority shall not be liable for any omission, defect or inaccuracy
in the CUSIP number that appears on any 2004 Series A Bond or in any redemption notice. The
Trustee may, in its discretion, include in any redemption notice a statement to the effect that the
CUSIP numbers on the 2004 Series A Bonds have been assigned by an independent service and
are included in such notice solely for the convenience of the Owners and that neither the Trustee
nor the Authority shall be liable for any inaccuracies in such numbers.
Section 1106. Application of Proceeds of Sale of 2004 Series A Bonds. Upon the receipt
of payment for the 2004 Series A Bonds on the Closing Date, the proceeds thereof shall be paid
to the Trustee and deposited in a special fund established by the Trustee for such purpose, all of
the amounts on deposit in which shall be transferred on the Closing Date as follows:
(a) The Trustee shall deposit in the 2004 Costs of Issuance Fund the amount
of$
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(b) The Trustee shall deposit in a separate sub-account within the Reserve
Account the amount of $ , representing the amount required to cause the balance in the
Reserve Account to equal the full amount of the Reserve Requirement.
(c) The Trustee shall deposit the amount of $ in the 2004
Acquisition and Construction Account.
(d) The Trustee shall transfer the remaining amount of proceeds, namely
$ to BNY Western Trust Company, as Escrow Bank to be applied to the refunding and
defeasance of the Series B Bonds, as provided in the Escrow Agreement.
Section 1107. 2004 Costs of Issuance Fund. There is hereby established a separate fund
to be known as the "2004 Costs of Issuance Fund", which shall be held by the Trustee in trust.
The moneys in the 2004 Costs of Issuance Fund shall be used and withdrawn by the Trustee
from time to time to pay the Costs of Issuance upon submission of a Written Request of the
Authority stating (a) the person to whom payment is to be made, (b) the amount to be paid, (c)
the purpose for which the obligation was incurred, (d) that such payment is a proper charge
against the 2004 Costs of Issuance Fund, and (e) that such amounts have not been the subject of
a prior Written Request of the Authority; in each case together with a statement or invoice for
each amount requested thereunder. On the earlier of , 2004, or the date of receipt by the
Trustee of a Written Request of the Authority therefor, all amounts (if any) remaining in the
2004 Costs of Issuance Fund shall be withdrawn therefrom by the Trustee and deposited by the
Trustee in the Lease Payment Account.
Section 1108. 2004 Acquisition and Construction Fund. There is hereby established
within the Convention Center Facilities Trust Fund a separate account designated as the "2004
Acquisition and Construction Account' to be held in trust by the Trustee. The Trustee shall keep
the 2004 Acquisition and Construction Account separate and apart form all other funds held by it
and shall administer it as provided in this Section.
Amounts in the 2004 Acquisition and Construction Account shall be disbursed for Project
Costs. Disbursements from the 2004 Acquisition and Construction Account shall be made by
the Trustee upon receipt of a certificate requesting disbursement by an Authorized Officer of the
City. Such certificate shall be in the form of Appendix B hereto stating (1) the amounts to be
disbursed for payment or reimbursement of previous payments of Project Costs and the persons
or persons to whom said amounts are to be disbursed, (2) state that the amounts constitute
Project Costs and that said amounts are required to be disbursed by the City, as agent of the
Authority pursuant to the Agency Agreement, and were necessarily and reasonably incurred; and
that said amounts are not being paid in advance of time, if any, fixed for payment or that said
amounts have been prior expended upon the Project by the City or Authority, and are now
subject to reimbursement, (3) no amount set forth in the certificate was included in any
certificate requesting disbursement previously filed with the Trustee pursuant to this Section, and
(4) that the amount remaining in the 2004 Acquisition and Constriction Account, together with
interest earnings thereon, will, after payment of the amount set forth in the certificate requesting
disbursement,be sufficient to pay all remaining Project Costs, as then estimated.
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Any amounts remaining in the 2004 Acquisition and Constriction Account, upon written
notification to the Trustee from the City of provision having been made for the payment of the
entire Project Costs or other costs incurred by the City to acquire and construct other
improvements and property to be used for the municipal purpose of the City or that no further
disbursement will be made, shall be deposited, at the City's written direction to the Trustee, by
the Trustee into the Lease Payment Account or the Prepayment Account as the City shall direct
and the 2004 Acquisition and Construction Account shall be closed. Upon deposit of said
amounts into the Lease Payment Account or the Prepayment Account, said amounts shall be
applied, at the written direction of the City, as a credit against the next subsequent Lease
Payments due from the City and/or to specially call Bonds without premium.
Section 1109. Security for 2004 Series A Bonds. The 2004 Series A Bonds shall be
Additional Bonds which shall be secured in the manner and to the extent set forth in this Trust
Agreement. As provided in Section 411, the 2004 Series A Bonds shall be secured (on a parity
with all other Bonds issued under this Trust Agreement) by a first pledge of, security interest in
and lien on all of the Lease Payments and other assets referred to therein, including moneys in
the Reserve Account.
Section 1110. Continuing Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Trust Agreement, failure of the City to comply with
the Continuing Disclosure Certificate shall not be considered an Event of Default; however, any
Participating Underwriter or any holder or beneficial owner of the 2004 Series A Bonds may
take such actions as may be necessary and appropriate, including seeking specific performance
by court order, to cause the City to comply with its obligations under this Section 1109.
Section I I11. Effect of this Article XI. Except as in this Article XI expressly provided
or except to the extent inconsistent with any provision of this Article XI, the 2004 Series A
Bonds shall be deemed to be Bonds under and within the meaning of the teen "Bonds" in
Exhibit A hereto, and every term and condition contained in the foregoing provisions of this
Trust Agreement shall apply to the 2004 Series A Bonds with full force and effect, with such
omissions, variations and modifications thereof as may be appropriate to make the same conform
to this Article X.
Section 1112. Remedies Upon Event of Default. If any Event of Default shall occur, the
[Insurer][Tristee] shall have the right to direct the method of conducting all remedial
proceedings taken by the Trustee hereunder and under the Lease Agreement and any amendment
thereto. In the event the Insurer is not timely honoring its obligations with respect to the Bond
Insurance Policy, then, and in each and every such case during the continuance of such Event of
Default, the Trustee may, and at the written direction of the Owners of not less than a majority in
aggregate principal amount of the bonds at the time Outstanding, shall declare the interest and
principal to be due and payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in the Trust Agreement or this
Second Supplement, or in the Bonds contained to the contrary notwithstanding.]
Section It 13. hnsurer's Direction of Proceedings. Anything in the Trust Agreement or
this Third Supplement to the contrary notwithstanding, the Insurer shall have the right, by an
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1003/064/29956.01
instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon
indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting
all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not
be otherwise than in accordance with the law and the provisions of the Trustee Agreement or this
Third Supplement. With respect to any security interest in any revenues or collateral, present or
future, granted to the Owners of any Bonds, the Insurer is expressly granted the same interest
therein subject only to that of the Owners.]
Section 1114. [Reserve Account Investments. [Investments made as part of the Reserve
Account may not have a maturity extending beyond five (5) years, unless the prior written
consent of the Insurer has been obtained. Reserve Account investments shall be valued at market
value and marked to market annually.]
Section 1115. Notice to Insurer of Amendments. [The Insurer must receive advance
written notice of any amendment contemplated in Section 8.01 of the Trust Agreement and shall
provide, as a condition of any amendment, its written consent, which consent shall not be
unreasonably withheld.]
Section 2. Amendment of Trust Agreement. The Trust Agreement is hereby further
amended as set forth in this Section 2:
(a) Section 1.01 of the Trust Agreement is hereby amended by adding thereto the
following new defined tern and, in the case of the following defined term which is currently
contained in said Exhibit A, by amending such to read in their entirety as follows:
"Bonds" the tern `Bonds" means collectively the Series A Bonds, Series 2001 Bonds,
the 2004 Series A Bonds and any other Additional Bonds authorized by and at any time
Outstanding pursuant to this Trust Agreement and any Supplemental Trust Agreement.
"2004 Series A Bonds" means the Bonds which are authorized pursuant to Section 1102
and at any time Outstanding under this Trust Agreement.
"Facilities"means
"Project"means
(b) Section 404(c) of the Trust Agreement is hereby amended to read in its entirety as
follows:
"(c) All amounts in the Lease Payment Account shall be used and withdrawn by the
Trustee for the purpose of paying the principal of and interest and premium, if any, on the Bonds
as the same shall become due and payable, in accordance with the provisions of Article VI,
Article IX, Article X and Article XI."
Section 3. Attachment of Exhibit I. The Trust Agreement is also hereby further
amended by attaching thereto and incorporating therein an Exhibit I setting forth the form of the
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1 003/064/2 9956 01
2004 Series A Bonds, which shall read in their entirety as set forth in Exhibit A which is attached
hereto and by this reference incorporated herein.
Section 4. Partial Invaliditv. If any Section, paragraph, sentence, clause or phrase of
this Third Supplement shall for any reason be held illegal, invalid or unenforceable, such holding
shall not affect the validity of the remaining portions of this Third Supplement, The Authority
hereby declares that it would have entered into this Third Supplement and each and every other
section, paragraph, sentence, clause or phrase hereof and authorized the issue of the 2004 Series
A Bonds pursuant hereto irrespective of the fact that any one or more Sections, paragraphs,
sentences, clauses, or phrases of this Second Supplement may be held illegal, invalid or
unenforceable.
Section 5. Execution in Counterparts. This Third Supplement may be executed in
several counterparts, each of which shall be air original and all of which shall constitute but one
and the same instrument.
Section 6. Governing Law. This Third Supplement shall be construed and governed
in accordance with the internal laws of the State of California.
Section 7. [hisurer's Approval. This Third Supplement and the provisions hereof,
including, without limitation, the provisions for the issuance of the 2004 Series A Bonds and the
provisions for amendment of the Trust Agreement shall be of no force and effect unless and until
the Insurer shall provide its approval of this Third Supplement, as required by Section 801 of the
Trust Agreement. Release by the Insurer of its Bond Insurance Policy Relating to the Bonds
shall signify its consent to this Third Supplement and the concurrent amendment of the Trust
Agreement pursuant to the Terms of the Third Supplement.]
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IN WITNESS WHEREOF, the parties hereto have each caused this Supplemental Trust
Agreement No. 3 to be executed by their duly authorized officers and attested as of the date first
written above.
BNY WESTERN TRUST COMPANY,
as Trustee
By:
Its: Vice President
CITY OF PALM SPRINGS
By:
Its:
CITY OF PALM SPRINGS FINANCING
AUTHORITY
By:
Its:
A-1
1003/064/29956.01
TABLE OF CONTENTS
Page
Section 1. Supplement to Trust Agreement...........................................................................2
Section 2. Amendment of Trust Agreement........................................................................12
Section 3. Attachment of Exhibit I ......................................................................................12
Section 4. Partial Invalidity..................................................................................................13
Section 5. Execution in Counterparts...................................................................................13
Section 6. Governing Law ...................................................................................................13
Section 7. Insurer's Approval.............................................................................................13
Exhibit A Fonn of 2004 Series A Bond
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1003/064/29956.01
RECORDING REQUESTED BY:
City of Palm Springs
AND WHEN RECORDED MAIL TO:
Urban J. Schreiner, Esq.
Aleshire &Wynder, LLP
18881 Von Kannan Avenue, Suite 400
Irvine, CA 92612
SPACE ABOVE THIS LINE FOR RECORDER'S USE
THIS DOCUMENT IS RECORDED FOR THE BENEFIT OF THE CITY OF PALM
SPRINGS AND RECORDING IS FEE-EXEMPT UNDER § 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
SUPPLEMENTAL LEASE AGREEMENT NO. 4
RELATING TO CONVENTION CENTER
FACILITIES
by and between
CITY OF PALM SPRINGS
FINANCING AUTHORITY, as Lessor
and
CITY OF PALM SPRINGS, as Lessee
Dated as of April 1, 2004
SUPPLEMENTAL LEASE AGREEMENT NO. 4
RELATING TO CONVENTION CENTER
FACILITIES
THIS SUPPLEMENTAL LEASE AGREEMENT NO. 4 RELATING TO
CONVENTION CENTER FACILITIES ("Supplemental Lease Agreement" or
"Agreement"), made and entered into as of April 1, 2004, by and between the CITY OF
PALM SPRINGS FINANCING AUTHORITY, (herein called "Authority"), a joint
powers authority duly organized and existing under the laws of the State of California
and the CITY OF PALM SPRINGS, a municipal corporation, duly organized and
existing under and by virtue of the laws of the State of California (herein called "City")
supplements and amends the Lease Agreement, dated as of April 1, 1991, by and between
the Authority and the City (the "Lease Agreement") for the purpose of issuing the
Authority's Lease Revenue Bonds, 2004 Series A (Convention Center Expansion Project)
(the "2004 Series A Bonds");
WITNESSETH:
In consideration of the mutual covenants hereinafter contained and for other
valuable consideration, the parties hereto do hereby agree as follows:
ARTICLE I
RECITALS
101. Status and Powers of Authority. Authority is a joint powers authority
organized under the Act for public purposes, including the following: to render
assistance to the City by acquiring and constructing public facilities, including, the
acquisition of land and related facilities for the use, benefit and enjoyment of the public.
102. Status and Powers of City. City is a municipal corporation organized and
operating pursuant to the constitution and laws of the State of California and is authorized
by Government Code Section 37350 to acquire, lease and dispose of property for the
common benefit and in furtherance of its public purposes.
103. Purpose of Supplemental Lease Agreement. In fiutherance of its public
purposes of providing for convention facilities and places of public assembly and in
furtherance of its govermnental and proprietary purposes, City desires to supplement the
Lease Agreement. Authority is able and willing, for adequate consideration, to
supplement the lease of said property to City
104. Related Agreements. The parties hereto acknowledge the following
agreements and hereby approve of, and consent to, the terms of:
1003/064/29911.013 _1
(a) the Assignment Agreement, the First Amended Assigrunent Agreement
the Second Amended Assignment Agreement and the Third Amended Assignment
Agreement pursuant to which the Authority assigns all of its rights and interest in this
Supplemental Lease Agreement and the Lease Agreement to the Trustee;
(b) the Trust Agreement, Supplemental Trust Agreement No. 1,
Supplemental Trust Agreement No. 2 and Supplemental Trust Agreement No. 3 pursuant
to which the Trustee, Authority and City agree to implement the Assignment Agreement,
as amended, by providing for the delivery of the Bonds, for the administration of funds,
and for the exercise of rights and remedies;
(c) the Agency Agreement pursuant to which Authority appoints the City as
its agent for the purposes of acquisition, construction and installation of the Facilities;
and
(d) the Site Lease pursuant to which Authority leases the Facilities from
City.
(e) the Supplemental Site Lease No. 1 pursuant to which the Site Lease was
amended to add certain property to the Site.
(f) the Partial Discharge of Supplemental Site Lease No. 1 pursuant to
which the Site Lease was amended to delete certain property from the Site.
(g) the Supplemental Lease Agreement No. 1 pursuant to which the Lease
Agreement was amended to add certain property to the Site.
(h) the Partial Discharge of Supplemental Lease Agreement No. 1 pursuant
to which the Lease Agreement was amended to delete certain property from the Site.
(i) the Supplemental Lease Agreement No. 2 pursuant to which the Lease
Agreement was amended and supplemented.
0) the Supplemental Lease Agreement No. 3 pursuant to which the Lease
Agreement was amended and supplemented.
(k) the Lease Agreement pursuant to which City leases the Site and
Facilities fiom the Authority.
(1) this Supplemental Lease Agreement No. 4 pursuant to which the Lease
Agreement is amended and supplemented.
105. Construction of This Agreement. For all purposes of this Agreement,
reference to the "assignee" of Authority means the Trustee acting on behalf of the
Owners of the Bonds delivered pursuant to the Trust Agreement and Supplemental Trust
Agreement No. 3. So long as the Assignment Agreement, as amended, shall be in effect,
references herein to Authority or its assignee shall be deemed to refer to the Trustee as
assignee of Authority.
1003/064/29911 013 _2_
106. Su2plemental Lease Agreement. This Supplemental Lease Agreement is
entered into pursuant to Section 604 of the Lease Agreement.
ARTICLE II
DEFINITIONS AND GENERAL PROVISIONS
201. Definitions in General. The terms contained herein have the meanings
ascribed to them in Exhibit A to the Trust Agreement, dated as of April 1, 1991 (the
"Trust Agreement'), by and among the Authority, the City, and BNY Western Trust
Company, as successor to First Interstate Bank Ltd. (the "Trustee") and the Supplemental
Trust Agreement No. 3, dated as of April 1, 2004, by and among the Authority, the City,
and BNY Western Trust Company, as Trustee (the "Supplemental Trust Agreement
No. 3").
202. Supplemental Lease I'Miients. Pursuant to Sections 403 and 604 of the
Lease Agreement, the following Schedule of aggregate Lease Payments is attached as
Exhibit A and is hereby adopted and the City shall make such Lease Payments. A
schedule of Supplemental Lease Payments relating to the 2004 Series A Bonds is
attached hereto as Exhibit B.
203. Effect of Supplemental Lease Agreement. Upon joint execution of this
Supplemental Lease Agreement, its terns shall merge into, and be incorporated within
the Lease Agreement.
204. 2004 Series A Bonds. All references to the Series A Bonds, the 2001
Bonds or the Bonds, in the Lease Agreement shall be amended to include the City of
Palm Springs Financing Authority Lease Revenue Bonds, 2004 Series A Bonds
(Convention Center Expansion Project) (the "2004 Series A Bonds") as parity bonds
thereto and all rights, obligations and duties of any party shall apply and inure to the
benefit of the 2004 Series A Bonds and the Bond Owners.
205. The Site. The Site which is the subject of this Supplemental Lease shall
be as described in Exhibit C.
ARTICLE III
LEASE OF FACILITIES; LEASE PAYMENTS
301, Tenn of Agreement. The term of this Agreement shall commence as of
the date hereof and shall end on November 1, _, unless such terns is extended or sooner
terminated as hereinafter provided. If, on November 2, _, the Trust Agreement or the
Third Supplement shall not have been discharged in accordance with its terns, or if any
of the Supplemental Lease Payments payable under the terms of this Agreement shall
have been abated at any time, or if for any reason any portion of the principal of or
interest on any outstanding 2004 Series A Bond has not been paid in accordance with the
terns of such 2004 Series A Bond, then the term of the Lease Agreement and this
Agreement shall be extended for at least ten (10) years or until the Trust Agreement or
1003/064/29911 013 _3_
the Third Supplement has been discharged in accordance with its terms or until all such
principal or interest on such 2004 Series A Bond shall have been paid [and all payments
required to be made by the City or Authority to the Insurer have been satisfied]. Any
extension of the term of this Agreement shall also automatically, without farther action of
the parties, extend the tern of the Lease Agreement and this Agreement so as the Lease
Agreement and this Agreement shall expire on the same date.
302. Option to Prepay. Subject to the terns and conditions of this Section,
Authority hereby grants an option to City to prepay the Supplemental Lease Payments, as
amended or supplemented, relating to the 2004 Series A Bonds in whole or in full. Said
option shall be exercised by City depositing sufficient moneys with the Trustee to prepay
all Supplemental Lease Payments, as set forth below and by concurrently giving written
notice to Authority and Trustee of the exercise of such option at least forty-five (45) days
prior to said Payment Date. Such option shall be exercised in the event of prepayment in
full, by depositing with said notice cash and/or Defeasance Securities in the amount
sufficient to prepay all Supplemental Lease Payments relating to the 2004 Series A
Bonds on said Payment Date together with any Supplemental Lease Payments relating to
the 2004 Series A Bonds then due but unpaid, or, in the event of prepayment in part, by
depositing with said notice cash and/or Defeasance Securities in any amount equal to the
amount divisible by $5,000 desired to be prepaid together with any Supplemental Lease
Payments then due but unpaid. In any event, said deposit shall be accompanied by an
amount equal to the following amount constituting a prepayment premium:
Prepayment Periods Prepayment Prices
In the event of prepayment in part, the partial prepayment shall be applied by the
Trustee against maturities in a manner determined by the Authority and by lot within a
maturity, and Authority shall cause to be provided to the City a revised schedule of Lease
Payments reflecting said partial payment.
303. Special MandatoLy Prepa. vent. Section 4.07 of the Lease Agreement
shall apply to the Supplemental Lease Payments described herein.
304. Covenant to Budget and Appropriate. City covenants to take such action
as may be necessary to include and maintain all Supplemental Lease Payments due
hereunder in its annual budgets and annually to appropriate an amount necessary to make
such Supplemental Lease Payments coming due and payable during the period covered
by each such budget. During the term of this Agreement, City will (i) furnish to the
Trustee and the Insurer copies of each annual budget of City within twenty (20) days
after it is printed, and (ii) provide written notice to the Trustee and the Insurer in the
event the City fails to appropriate the Supplemental Lease Payments due in any fiscal
year by September 1 st of any such fiscal year. The covenants on the part of City herein
contained shall be deemed to be and shall be construed to be ministerial duties imposed
by law and it shall be the duty of each and every public official of City to take such
action and do such things as are required by law in the performance of the official duty of
1003/064/29911.013 _4_
such official to enable City to carry out and perform the covenants and agreements agreed
to be carried out and performed by City.
ARTICLE IV
CONSTRUCTION OF FACILITIES
401. Construction of the Project. The City shall provide for acquisition,
construction and installation of the Project as agent of Authority and under contracts let
pursuant to competitive bid or pursuant to such method as City deems reasonable.
Authority agrees that it will assure that the Project will be acquired, constructed
and installed in accordance with final plans and specifications approved by the City. No
changes or modifications which require an amendment to a preexisting building permit
shall be made in or to said final plans and specifications unless such changes or
modifications are approved in writing by the City. Before approving any such changes to
be undertaken by City, City shall assure that there has been deposited in said 2004
Acquisition and Construction Account moneys sufficient to pay any increases costs
resulting from such changes or modifications.
402. Pavrnent of Project Costs and Costs of Issuance. Payment of Project Costs
shall be made from moneys deposited with the Trustee in the Acquisition and
Construction Account and payment of Costs of Issuance shall be made from moneys
deposited with the Trustee in the Costs of Issuance Account. Project Costs and Costs of
Issuance shall be disbursed in accordance with, and upon compliance with, Sections 402
and 403 of the Trust Agreement, respectively.
403. Unexpended Moneys. Authority and City acknowledge that the 2004
Acquisition and Construction Account and the Costs of Issuance Account have been
created for the benefit of City. Authority agrees that unexpended moneys remaining in
the Costs of Issuance Account, shall, upon payment in full of Costs of Issuance, be
deposited in the 2004 Acquisition and Construction Account and that unexpended
moneys, if any, remaining in the Acquisition and Construction Account shall, upon
delivery to the Trustee of the written directions of a City's Authorized Officer that (1) no
further moneys will be disbursed upon the Project; or (2) remaining moneys, or a portion
thereof, will be expended upon an alternative project to be selected by City; any
remaining moneys shall be deposited in the Lease Payment Account and applies as a
credit against Lease Payments; or at the written direction of City to the Trustee be
deposited into the Prepayment Account to specially call Bonds without premium.
ARTICLE V
COVENANTS
501. Rental Interruption Insurance. City shall maintain or cause to be
maintained, through the term of the Lease Agreement and this Agreement, rental
interruption insurance in an arnount not less than the maximum total Lease Payments,
1003/064/29911 013 _5_
payable by the City on any four consecutive Payment Dates, to insure against 24 months
loss of Lease Payments to Authority or its assignee caused by perils covered by the
insurance required by Section 505 of the Lease Agreement. Proceeds shall be expended
as provided in Section 508 (c) of the Lease Agreement.
[Additional Insurance Provisions]
ARTICLE VI
DISCLAIMER OF WARRANTIES; ASSIGNMENT;
SUBLEASING; ACCESS; AMENDMENT
601. Substitution of Site and Facilities. The City has the option at any time and
from time to time during the Term to substitute other land, facilities or improvements or
to provide for deletion of one or more portions of the Site and Facilities (a "Substitute
Project') for portions of the Site and Facilities (the "Former Project') provided that the
City has obtained the prior written consent of the Insurer and has provided prior written
notice to S&P and has satisfied all of the following requirements which are conditions
precedent to such substitution:
(a) The City shall file with the Authority and the Trustee an amended
exhibit to the Lease Agreement which adds thereto a description of such Substitution
Project and deletes therefrom the description of the Former Project;
(b) The City shall have delivered to the Authority and the Trustee an
appraisal report, prepared by an MAI appraiser, demonstrating that the market value of
the Substitute Project is not less than the market value of the Former Project (as
determined prior to the Closing Date or as thereafter determined pursuant to the Lease
Agreement);
(c) The City shall certify in writing to the Authority and the Trustee that
such Substitute Project serves the municipal purposes of the City, constitutes property
which the City is permitted to lease and lease back under the laws of the State and
constitutes a public capital improvement within the meaning of the bond Law as defined
in the Trust Agreement and First Supplement;
(d) The City shall certify in writing to the Authority and the Trustee that
such Substitute Project constitutes property. for which the Participants are pennitted to
pay Use Payments therefor;
(e) The City shall certify in writing to the Authority and the Trustee that the
estimated useful life of such Substitute Project is as long as the Fonner Project or at least
exceeds the remaining term of the Bonds and that real property has been substituted for
real property;
(f) The City shall certify in writing to the Authority and the Trustee that
substitution of the Substitute Project shall not cause the City to violate any of its
covenants, representations and warranties made in the Agreement;
1003/064/29911 013 _6_
(g) The City delivers to the Trustee an opinion of Bond counsel to the effect
that the substitution will not adversely affect the exclusion from gross income for
purposes of federal income taxation of the interest on the Bonds;
(h) The City certifies in writing to the Authority and the Trustee that the
essentiality of the Substitute Project is comparable to the Former Project;
(i) The Substitute Project is subject to no prior liens except permitted
encumbrances;
0) The City obtains a title policy for the Substitute Project meeting the
requirements of the Lease Agreement and provides evidence to the hrsurer that the title
policy relating to that portion of the Prior Project which has not been modified is still
valid.
1003/064/29911.013 -7-
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Lease Agreement No. 4 to be executed in their respective names by their duly Authorized
Officers as of the date first above written.
ATTEST: CITY OF PALM SPRINGS, as Lessee
By:
City Clerk Its:
ATTEST: CITY OF PALM SPRINGS FINANCING
AUTHORITY, as Lessor
By:
Secretary Its:
1003/064/29911.013 -8-
EXHIBIT "C"
DESCRIPTION OF SITE
Parcel 1:
LOT 2 AND LETTERED LOT A OF THE TRACT NO. 20485, IN THE CITY
OF PALM SPRINGS, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS PER
AMENDED MAP RECORDED IN BOOK 200, PAGES 47 AND 48 OF MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
Parcel 2:
BLOCKS 103, 105 AND 106 IN SECTION 14, TOWNSHIP 4 SOUTH, RANGE
4 EAST, SAN BERNARDINO MERIDIAN, IN THE CITY OF PALM SPRINGS,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, ACCORDING TO THE
OFFICIAL PLAT THEREOF.
1003/064/29911.01 C_1
CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Supplemental Lease
Agreement No. 4 Relating to the Convention Center Facilities, dated as of April 1, 2004, by and
between the City of Palm Springs Financing Authority, as Lessor, to the City of Palm Springs, as
Lessee, is hereby accepted by the undersigned officer on behalf of the City of Palm Springs,
pursuant to authority conferred by Ordinance No. _ of the City Council of the City of Palm
Springs, adopted on , and the lessee consents to recordation thereof by its duly authorized
officer.
Dated: CITY OF PALM SPRINGS
By:
Thomas M. Kanarr, Treasurer
1003/064/29911.01
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AMENDING THE ZONING
ORDINANCE IN REGARD TO CHAPTER 94.00, SECTION
94.04.00, ARCHITECTURAL REVIEW, TO REVISE THE PERMIT
PROCESS FOR ARCHITECTURAL APPROVAL APPLICATIONS
AND CHAPTER 93.00, SECTION 93.13.00, HILLSIDE
DEVELOPMENTS, TO REVISE THE PERMIT PROCESSING
PROCEDURES FOR HILLSIDE DEVELOPMENT
APPLICATIONS AND TO ESTABLISH ALTERNATIVE STREET
STANDARDS FOR HILLSIDE AREAS, CITYWIDE.
THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA DOES ORDAIN AS
FOLLOWS:
SECTION 1. Section 94.04.00 is amended to read as follows:
94.04.00 Architectural review.
A. Legislative Intent.
1. It is declared that the City of Palm Springs is a city with unique characteristics,
internationally well known for its spectacular topography, the respect for natural features in man-
made structures, and ideal climate conditions. These characteristics have caused a significant
number of visitors to come to Palm Springs with many visitors eventually becoming permanent
residents, participating in both active and retired community life.
2. All of these factors constitute an important economic base for the city, both for those
who earn their living here and for those who view the city as their most precious physical
possession. To protect the economic welfare of the community, it is the policy of the city council
of the city of Palm Springs to reaffirm its determination to protect, maintain and enhance the
social and economic values created by past and present investments in the community by
requiring all future development to respect these traditions and require that all buildings and
structures placed on the land respect the natural land forms, and become a compatible part of
the total community environment, both in the local neighborhood and in the city as a whole.
3. The city council finds that there exist in the city conditions which promote disharmony
and reduce land and property values, and that the lack of appropriate guidelines for the design
of new buildings and design of structures on the city' s main streets contributes to these
conditions, and it further finds desirable the provisions of such guidelines for the protection and
enhancement of land and property values, for the promotion of health, safety and general
welfare in the community.
4. The City General Plan includes a Community Design Statement Relationship to Physical
Setting Element which provides objectives and policies for design of public buildings, private
buildings, streetscapes, landscapes, and exterior lighting.
B. Purpose. The purpose of this section is to:
1. Recognize the interdependence of land values and aesthetics, and to provide a method
by which the city may implement this interdependence to its benefit;
2. Encourage development of private and public property in harmony with the desired
character of the city and in conformance with the guidelines herein provided with due regard to
the public and private interests involved;
3. Foster attainment of those sections of the city' s general plan which specifically refer to
the preservation and enhancement of the particular character of this city and its harmonious
development, through encouraging private interests to assist in their implementation; and
k5 1\
assure that the public benefits derived from expenditures of public funds for improvement and
beautification of streets and other public structures and spaces shall be protected by the
exercise of reasonable controls over the character and design of private buildings, public
buildings, street scapes, and open spaces.
C. Planning Commission Architectural Advisory Committee — There is hereby established a
planning commission architectural advisory committee which shall be a committee responsible
to and appointed by the planning commission. The planning commission architectural advisory
committee shall consist of one planning commissioner who shall be responsible for acting as a
liaison to the planning commission architectural advisory committee. The planning commission
shall appoint technical advisors to assist in reviewing detailed plans pursuant to this chapter.
Technical advisors shall include three California licensed architects, one California licensed
landscape architect, one other design professional, and additional technical members for a total
of seven members. The planning commission shall also appoint up to two alternate members to
ensure adequate representation at planning commission architectural advisory committee
meetings. The planning commission architectural advisory committee shall meet on a regular
basis as established by resolution and shall provide written recommendations to the director of
planning services and the planning commission. The planning commission architectural
advisory committee shall designate a chairman and vice-chairman. The planning commission
architectural advisory committee shall be an advisory commission of the City, subject to the
Brown Act, and may adopt rules and procedures by resolution.
D. Planning commission architectural advisory committee Review Guidelines. The planning
commission architectural advisory committee shall examine the material submitted with the
architectural approval application and specific aspects of design shall be examined to determine
whether the proposed development will provide desirable environment for its occupants as well
as being compatible with the character of adjacent and surrounding developments, and whether
aesthetically it is of good composition, materials, textures and colors. Conformance will be
evaluated, based on consideration of the following:
1. Site layout, orientation, location of structures and relationship to one another and to
open spaces and topography. Definition of pedestrian and vehicular areas; i.e., sidewalks as
distinct from parking lot areas;
2. Harmonious relationship with existing and proposed adjoining developments and in the
context of the immediate neighborhood/community, avoiding both excessive variety and
monotonous repetition, but allowing similarity of style, if warranted;
3. Maximum height, area, setbacks and overall mass, as well as parts of any structure
(buildings, walls, screens, towers or signs) and effective concealment of all mechanical
equipment;
4. Building design, materials and colors to be sympathetic with desert surroundings;
5. Harmony of materials, colors and composition of those elements of a structure, including
overhangs, roofs, and substructures which are visible simultaneously;
6. Consistency of composition and treatment;
7. Location and type of planting, with regard for desert climate conditions. Preservation of
specimen and landmark trees upon a site, with proper irrigation to insure maintenance of all
plant materials;
8. Signs and graphics, as understood in architectural design including materials and colors.
9. The planning architectural advisory committee may develop specific written guidelines to
supplement the design criteria and carry out the purposes of this chapter.
E. Procedures.
1. Architectural review shall be required for the following:
a. All industrial, commercial, professional and residential structures and related landscape
areas, except for single-family residences not located on major thoroughfares;
b. Hillside developments, including all structures, grading, landscaping, and exterior
lighting, in accordance with Section 93.13.00 (Hillside developments), which may require public
hearings before the planning commission.
c. Churches, governmental buildings and hospital and health facilities;
d. Mobilehome parks and recreational vehicle parks (architectural approval shall not be
required for individual mobile home or recreational vehicle sites);
e. Tennis courts in all zones;
f. Designated historic sites, upon referral by the historic site preservation board, and
properties within designated historic districts not otherwise subject to Section 94.04.00;
g. Entrance features and gates above the height allowed in front and side front setback
areas subject to the findings that the limited height extension is architecturally acceptable,
creates no interference with sight clearance or corner cut-off, and will cause no detrimental
effects to adjacent properties in the vicinity.
2. Before any building or structure or landscape area described in subsection E of this
section is erected, constructed, altered, moved, remodeled or repainted a color different than
that existing, an application for architectural approval shall be submitted to the department of
planning and zoning. An application for new construction and additions shall include a
preliminary landscape plan and drawings showing the exterior elevation of sides of a proposed
building or structure, the types of materials and colors to be used, and the signs to be displayed.
The director of planning services may authorize staff approval of minor architectural approval
applications, non-hillside single family homes, and sign programs and permits. Review and
approval is as follows:
a. Staff-level approvals -- Minor architectural applications which are acted upon by the
director of planning services, or designee, shall include repaints, reroofs, walls, fences, entry
features, signs, sign programs, landscaping plans, minor grading plans, exterior lighting plans,
and additions which do not increase existing floor area by 40% for single family residential and
25% for all other development subject to this section. The director of planning services may
consult with the planning commission architectural advisory committee in review of minor
architectural applications.
b. Staff Action Appeals -- The action of the director of planning services shall be final
unless appealed to the planning commission within 10 working days. The appeal shall be in
writing and, upon receipt and filing of appropriate appeal fee, the director of planning services
shall schedule the item at the next regular meeting of the planning commission. The action of
the planning commission shall be final unless appealed to the city council in the manner
provided by Chapter 2.05 of the Palm Springs Municipal Code.
c. Planning Commission Approvals — All other projects subject to this section shall be
subject to planning commission review and approval after review by the planning commission
architectural advisory committee without the need for appeal. Architectural applications may be
placed on the planning commission consent calendar unless other discretionary actions are
required.
3. The planning commission architectural advisory committee shall recommend approval,
conditional approval, or denial to the director of planning services or planning commission.
Applications shall be reviewed by the planning commission architectural advisory committee at
the earliest stages of application review.
4. All applications submitted for architectural review for uses permitted by-right-of-zone
applications that are exempt from the California Environmental Quality Act (CEQA) shall be
scheduled for planning commission review within 45 days after it has been accepted as
complete by the department of planning and zoning. All by-right-of-zone applications
referenced herein shall be placed on the planning commission's next available agenda as a
consent approval item unless a public hearing is required.
�� R 3
5. A. All architectural applications for projects which are not uses permitted by-right-of-
zone including but not limited to conditional use permits, planned development districts,
subdivision maps, and projects that are not exempt from CEQA shall require a public hearing in
accordance with existing procedures in place for the type of land use noted above. Architectural
review applications which do not require any other discretionary applications shall be subject to
the public hearing requirements in Section 94.02.00 for Conditional Use Permit.
5, B. Applications for architectural approval which require environmental assessments,
environmental impact reports, and/or which also involve an application which requires a public
hearing shall be submitted to the planning commission along with the recommendations of the
planning commission architectural advisory committee. The planning commission shall review
and consider the staff report, environmental documents, public written and oral testimony prior
to taking action in accordance with appropriate city codes and ordinances. The decision of the
planning commission is final unless appealed to the city council in accordance with Section 2.05
of the Palm Springs Municipal Code. For those applications which require city council approval,
the recommendation of the planning commission shall be submitted to the city council in
accordance with the appropriate city codes and ordinances.
6. Before an occupancy permit is issued, there must be full compliance with all
requirements and conditions as approved by the city council, planning commission, planning
commission architectural advisory committee, development committee or the director of
planning services, public works director, and/or the building and safety manager. If for any valid
reason full compliance cannot be made, a cash bond shall be posted for the work to be
completed within a reasonable period of time as determined by the director of planning services,
public works director, and/or building and safety manager.
7. Planning commission and planning commission architectural advisory committee
agendas shall be provided to designated neighborhood representatives in addition to any
person who requests such notice. Persons who request agendas on a regular basis shall pay
appropriate fees established by city council resolution.
8. Properties subject to architectural approval shall be maintained in a good, first-class
condition consistent with the approval of the planning commission, planning commission
architectural advisory committee, or the director of planning services. Such maintenance shall
include, but not be limited to, the exterior of the building and grounds, including landscaping,
parking and walking areas, exterior lighting and signing and all other features reviewed by the
commission or the director of planning services. The director may, in appropriate circumstances,
require the recordation of enforceable covenants containing maintenance requirements. Failure
to maintain such property consistent with such standards shall constitute a public nuisance.
F. Effective Date. An architectural approval shall become effective after an elapsed period
of fifteen (15) days from the date of the decision by the planning commission or city council.
G. Time Limit for Development. Unless otherwise stated by the planning commission or city
council, the time limit for commencement of construction under an architectural approval shall
be two (2) years from the effective date of approval.
H. Extensions of Time. Extensions of time may be granted by the planning commission
upon demonstration of good cause. Such extension shall be requested in writing and received
prior to expiration of original approval. Retroactive time extensions submitted within six months
of the original expiration date may be granted for good cause. Extension of time granted for
companion cases such as conditional use permits, tentative maps or planned development
district will also extend the architectural approval unless otherwise provided. Fees may be
charged to process an extension request. (Ord. 1551 (part), 1995; Ord. 1500 (part), 1995; Ord.
1418 (part), 1992; Ord. 1347 (part), 1990; Ord. 1294 (part), 1988).
�5 R
SECTION 2. Section 93.13.00 is amended to read as follows:
93.13.00 Hillside developments.
This section of the Zoning Code is intended to provide for the safe, orderly and aesthetically
appealing development of hillside area.
A. Definitions. For the purposes of this Zoning Code, the term "hillside area" is defined as
any parcel of land within the city of Palm Springs which contains any portion thereof with a
grade of ten (10) percent or more.
B. Site Plan Approval
1. Applications for hillside development shall be processed as follows:
a. Applications shall be prepared and submitted pursuant to Section 94.04.00 Architectural
Review.
b. Upon receipt of application, a written notice shall be mailed to all adjacent property
owners informing property owners that an application for hillside development has been filed
and that said application and associated plans are available for public inspection at the
Department of Planning and Zoning.
c. The Planning Commission shall hold at least one public meeting to review and consider
the proposed application. At least 10 days prior to this meeting, a public meeting notice shall be
mailed to all adjacent property owners and any members of the public who request notification.
d. If the Planning Commission believes that it is merited, it may, at its discretion, require
and set a public hearing date for consideration of the subject application. Such public hearing
will require the payment of applicable fees for such hearings as established by City Council.
The director of planning services may determine that a public hearing is required and forgo Item
C above.
e. Appeals — the procedure for appeal of hillside development decisions shall be pursuant
to Chapter 2.05 of the Palm Springs Municipal Code.
2. Applications for remodel or minor additions to hillside development shall be processed
as follows:
a. Applications shall be prepared and submitted pursuant to Section 94.04.00 Architectural
Review.
b. Minor remodels and/or additions to the exterior of a building, site plan, grading,
landscape, exterior lighting are additions which do not exceed 400 square feet, do not increase
building height, do not involve substantial new grading, and do not substantially alter the
appearance of the subject property. Minor remodels and additions may be approved by the
director of planning services or designee. Notice to adjacent properties may be required
pursuant to Section 93.13.00(B)(1)(b) above.
c. Appeal of director of planning services decisions. The action of the director of planning
services shall be final unless appealed to the planning commission within 15 working days. The
appeal shall be in writing and, upon receipt and filing of appropriate appeal fee, the director of
planning services shall schedule the application for the next regular meeting of the planning
commission. The action of the planning commission shall be final unless appealed to the city
council in the manner provided by Chapter 2.05 of the Palm Springs Municipal Code.
3. Applicant may submit preliminary plans, including accurate topographical maps and
grading plans pursuant to Section 94.04.00, to the planning commission for approval before
detailed engineering and architectural plans are prepared. Such plans shall deviate a maximum
of one (1) foot above or below final grade.
4. In approving final plans, the planning commission may require conditions which in their
opinion are necessary to protect the public health, safety and general welfare, and may include
the following:
a. Architectural approval as governed by Section 94.04.00 of the Zoning Code. Such
architectural approval shall consider, but shall not be limited to, the following:
i. Rock and soil exposure,
ii. Size of building pads,
iii. Design considerations, such as supporting stilts, colors and building arrangement,
iv. Screening of parking areas,
v. Landscaping plans,
vi. Continuity with surrounding development,
vii. Sensitivity to existing view corridors;
b. Sewerage (Deleted by Ord. 1553);
c. And such other conditions that will make possible the development of the city in an
orderly and efficient manner in conformity with the intent and purposes set forth in this Zoning
Code.
C. Density.
1. The density and lot dimensions of the zone in which the property is located shall apply.
2. The area of both public and private streets shall be excluded in calculating net area of
the site.
3. Any area of the site having a degree of slope of thirty (30) percent or more shall be
excluded from the allowable area that may be allowed in computing total density. Such area
shall be retained as open space.
4. In order to insure permanent retention of the open space, a covenant approved by the
city attorney shall be recorded dedicating all building rights to the city of Palm Springs and
insuring that such open space shall remain as shown on plans approved by the city of Palm
Springs.
D. Street Improvements.
1. Hillside Collector Streets (Streets Serving More Than Four (4) Lots). Maximum grade is
twenty (20) percent: provided, all grades over fifteen (15) percent shall be improved with six (6)
inches of PCC pavement. Streets with grades in excess of fifteen (15) percent shall only be
allowed for short distances.
a. Improvements.
i. Minimum right-of-way shall be forty (40) feet; however, all fill slopes must be contained
within the right-of-way.
ii. Curb to curb width shall be thirty-six (36) feet. A thirty-two (32) foot pavement width shall
be allowed where lots exist along only one side.
iii. Minimum radius shall be one hundred (100) feet.
iv. Cul-de-sacs shall not exceed five hundred (500) feet in length. Minimum radius shall be
forty (40)feet to property line.
v. For exceptions to required improvements in subsection (D)(1) of this section, see
Exceptions, Section 93.13.00(I).
2. Minor Hillside Streets (Streets Serving Four Lots or Less). Maximum grade is twenty (20)
percent: provided, all grades over fifteen (15) percent shall be improved with six (6) inches of
PCC pavement.
a. Improvements.
i. Minimum right-of-way shall be forty (40) feet; however, all slopes must be contained
within the right-of-way.
ii. Curb to curb width shall be thirty-two (32) feet. A twenty-eight (28) foot pavement width
shall be allowed where lots exist along only one (1) side.
iii. Minimum radius shall be eight (8)feet.
iv. Cul-de-sacs shall not exceed five hundred (500) feet in length. Minimum radius shall be
forty (40)feet to the property line.
v. For exceptions to required improvements in subsection (D)(2) of this section, see
Exceptions, Section 93.13.00(I).
`5 pub
3. Curbs and gutters shall be six (6) inch PCC in accordance with city standards. An eight
(8) inch curb shall be required when necessary to convey storm drainage.
E. Drainage. No building site shall be approved for construction which does not have
provisions for conducting water drainage from the site to a natural drainage course, a drainage
channel or a public street in accordance with good engineering practice and in a manner
approved by the city engineer.
F. Sewerage Treatment. All building sites must be connected to the city's sewer system,
unless exempted by the city council.
G. Excavations.
1. The following requirement shall supplement (and supersede to the extend of any
inconsistencies) the requirements of Chapter 70, (Excavation and Grading) of the Uniform
Building Code, the grading ordinance of the city of Palm Springs currently in effect at the time of
permit issuance.
a. No excavation shall be permitted on any hillside prior to the approval of a site plan and a
grading plan.
b. A grading plan shall be submitted as a part of the application for site plan approval for
hillside development. A preliminary grading plan shall be filed in compliance with the procedure
set forth in Chapter 9.64 of the Palm Springs Municipal Code.
c. No dirt or rock shall be allowed to be used for fill except in those locations approved by
the excavation plan. Excess dirt or rock shall be carried to a disposal area designated on the
grading plan or to an approved off-site location.
2. Blasting, in conjunction with an approved excavation plan, shall require approval by the
director of public works and the fire department.
H. Fire Protection.
1. In areas where there will be a fire hazard, in the opinion of the fire chief of the city of
Palm Springs, unobstructed fire protection equipment access easements shall be required. The
fire chief shall recommend to the planning commission where such easements are needed.
2. The fire department may recommend to the planning commission that fire-resistant
building and landscape materials be used in hazardous areas.
3. Water mains and water systems shall be sized to provide sufficient water to meet the fire
fighting requirements of the area involved. The fire chief shall review proposed systems in
relation to the insurance services office standards for water systems and make
recommendations to the planning commission. (Ord. 1553 (part), 1998; Ord. 1551 (part), 1998;
Ord. 1347 (part), 1990; Ord. 1294 (part), 1988)
I. Exceptions.
1. The Planning Commission or City Council may approve alternative street designs which
could include reduced curb-to-curb widths, modified curb and gutter improvements, and any
other such standard plan criteria provided the following criteria are met:
a. That a minimum 24-foot travel way is provided. Additional improvements such as
passing lanes, turning lanes, and traffic calming devices may be required. Alternative street
sections may be considered provided adequate access and maneuvering area is provided for
emergency response vehicles and waste disposal vehicles.
b. That adequate sight distance (both horizontal and vertical) is provided.
c. That the street section can adequately convey storm drainage or that alternative storm
drainage facilities are provided to adequately convey storm drainage. Curbs and gutters, or
alternative facilities to convey storm flows may be required. Edge of pavement, where curb and
gutter is not required, shall be protected by a flat curb section to be approved by the Director of
Public Works. Where curb and gutter are required to convey storm drainage, the City may
consider wedge curbs, six-inch PCC curbs, eight-inch PCC curbs, or alternative designs which
ensure that the public health, safety, and welfare is protected.
l5 Al
d. That adequate street parking and/or off-street parking is available and that such parking
will not interfere with the required travel way.
e. Areas designated and approved for parking shall be improved to provide a dust-free
condition and adequately compacted to allow for emergency vehicle parking.
f. That parkways, parking areas, and other improvements are adequately improved and
maintained to ensure that the public health, safety, and welfare are ensured for the life of the
project.
g. That roadways shall provide adequate access for emergency equipment and that the
Fire Department may require upgraded fire protection systems both on and offsite to ensure the
public health, safety, and welfare.
SECTION 3. EFFECTIVE DATE. This Ordinance shall be in full force and effect thirty (30)
days after passage.
SECTION 4. PUBLICATION. The City Clerk is hereby ordered to and directed to certify to the
passage of this Ordinance, and to cause the same or summary thereof or a display
advertisement, duly prepared according to law, to be published in accordance with law.
ADOPTED THIS day of 2004.
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By:
City Clerk Mayor
REVIEWED &APPROVED AS TO FORM: