PRELIMINARY OFFICIAL STATEMENT DATED MAY 29, 2018 · Tract 31553 - Zone 1 - Garden Gate T r act 3...
117
PRELIMINARY OFFICIAL STATEMENT DATED MAY 29, 2018 NEW ISSUE—BOOK-ENTRY ONLY RATING: 2035* & 2036* Maturities Only- Insured: S&P: “AA” NO RATING: (2018*- 2034* Maturities) See “RATING” herein. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS” herein. $8,095,000* COMMUNITY FACILITIES DISTRICT NO. 2006-1 OF THE ALVORD UNIFIED SCHOOL DISTRICT 2018 SPECIAL TAX REFUNDING BONDS Dated: Date of Delivery Due: September 1, as shown on inside cover Issuance. The bonds captioned above (the “Bonds”) are being issued under the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), the Resolution of Issuance (as defined herein), and a Fiscal Agent Agreement dated as of June 1, 2018 (the “Fiscal Agent Agreement”), by and between Community Facilities District No. 2006-1 of the Alvord Unified School District (the “District”), and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). The Board of Education (the “Board”) of the Alvord Unified School District (the “School District”), acting as legislative body of the District, has authorized the issuance of the Bonds at its meeting on May 17, 2018 in order to (i) defease and refund two outstanding series of special tax bonds issued by the District in 2007, (ii) generate funds for additional authorized facilities for the District, (iii) provide a debt service reserve for the Bonds, and (iv) fund costs of issuing and delivering the Bonds. See “THE BONDS – Authority for Issuance,” and “FINANCING PLAN.” Security. The Bonds are secured by a first pledge of all of the Special Tax Revenues (as defined herein), which consist of special taxes levied on property within the District according to the rate and method of apportionment approved by the Board and the registered voters in the District (the “Special Tax Formula”), and certain funds and accounts established under the Fiscal Agent Agreement. See “SECURITY FOR THE BONDS.” Redemption. The Bonds are subject to optional and mandatory redemption prior to maturity under certain circumstances, as described herein. See “THE BONDS – Redemption.” Book-Entry Only. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”). Purchasers will not receive physical certificates representing their interests in the Bonds. See “THE BONDS – Registration, Transfer and Exchange.” Payments. The Bonds are current interest bonds which accrue interest at the rates set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1 until maturity, commencing September 1, 2018. Payments of principal of and interest on the Bonds will be paid by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds. See “THE BONDS.” Bond Insurance. The scheduled payment of principal and interest represented by Bonds maturing September 1, 2035* and 2036* (the “Insured Bonds”) when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Insured Bonds by Assured Guaranty Municipal Corp. (“AGM”). The Bonds maturing September 1, 2018* through 2034* are not insured. At the time of pricing, the District will decide which maturities of the Bonds to insure. AGM will also issue a reserve fund insurance policy to be deposited in the Reserve Fund (defined herein), which will satisfy the Reserve Requirement (defined herein) for the Bonds in lieu of a cash deposit. See “BOND INSURANCE” and “SECURITY FOR THE BONDS – Reserve Fund.” THE BONDS AND THE INTEREST THEREON OF ANY OF THE BONDS ARE NOT AN INDEBTEDNESS OF THE SCHOOL DISTRICT, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE OF CALIFORNIA (THE “STATE”) OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE SCHOOL DISTRICT, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE ON THE BONDS. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE SCHOOL DISTRICT, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT) OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. OTHER THAN THE SPECIAL TAX REVENUES, NO TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT A GENERAL OBLIGATION OF THE SCHOOL DISTRICT OR THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT, PAYABLE SOLELY FROM THE SPECIAL TAX REVENUES AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT. MATURITY SCHEDULE (see inside front cover) This cover page contains information for general reference only. It is not a summary of all the provisions of the Bonds. Investors must read the entire official statement to obtain information essential in making an informed investment decision. The Bonds will be offered when, as and if issued and accepted by the Underwriter, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Jones Hall is also serving as Disclosure Counsel. Nossaman LLP, San Francisco, California, is serving as Underwriter’s Counsel. It is anticipated that the Bonds, in book- entry form, will be available for delivery through the facilities of DTC, on or about June 28, 2018. The date of this Official Statement is: June __, 2018. * Preliminary; subject to change. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
Transcript of PRELIMINARY OFFICIAL STATEMENT DATED MAY 29, 2018 · Tract 31553 - Zone 1 - Garden Gate T r act 3...
PRELIMINARY OFFICIAL STATEMENT DATED MAY 29, 2018
NEW ISSUE—BOOK-ENTRY ONLY RATING: 2035* & 2036* Maturities Only- Insured: S&P: “AA” NO RATING: (2018*- 2034* Maturities) See “RATING” herein.
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 is taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS” herein.
$8,095,000* COMMUNITY FACILITIES DISTRICT NO. 2006-1 OF THE ALVORD UNIFIED SCHOOL DISTRICT
2018 SPECIAL TAX REFUNDING BONDS Dated: Date of Delivery Due: September 1, as shown on inside cover
Issuance. The bonds captioned above (the “Bonds”) are being issued under the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), the Resolution of Issuance (as defined herein), and a Fiscal Agent Agreement dated as of June 1, 2018 (the “Fiscal Agent Agreement”), by and between Community Facilities District No. 2006-1 of the Alvord Unified School District (the “District”), and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). The Board of Education (the “Board”) of the Alvord Unified School District (the “School District”), acting as legislative body of the District, has authorized the issuance of the Bonds at its meeting on May 17, 2018 in order to (i) defease and refund two outstanding series of special tax bonds issued by the District in 2007, (ii) generate funds for additional authorized facilities for the District, (iii) provide a debt service reserve for the Bonds, and (iv) fund costs of issuing and delivering the Bonds. See “THE BONDS – Authority for Issuance,” and “FINANCING PLAN.”
Security. The Bonds are secured by a first pledge of all of the Special Tax Revenues (as defined herein), which consist of special taxes levied on property within the District according to the rate and method of apportionment approved by the Board and the registered voters in the District (the “Special Tax Formula”), and certain funds and accounts established under the Fiscal Agent Agreement. See “SECURITY FOR THE BONDS.”
Redemption. The Bonds are subject to optional and mandatory redemption prior to maturity under certain circumstances, as described herein. See “THE BONDS – Redemption.”
Book-Entry Only. The Bonds will be issued in book-entry form only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”). Purchasers will not receive physical certificates representing their interests in the Bonds. See “THE BONDS – Registration, Transfer and Exchange.”
Payments. The Bonds are current interest bonds which accrue interest at the rates set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1 until maturity, commencing September 1, 2018. Payments of principal of and interest on the Bonds will be paid by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds. See “THE BONDS.”
Bond Insurance. The scheduled payment of principal and interest represented by Bonds maturing September 1, 2035* and 2036* (the “Insured Bonds”) when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Insured Bonds by Assured Guaranty Municipal Corp. (“AGM”). The Bonds maturing September 1, 2018* through 2034* are not insured. At the time of pricing, the District will decide which maturities of the Bonds to insure. AGM will also issue a reserve fund insurance policy to be deposited in the Reserve Fund (defined herein), which will satisfy the Reserve Requirement (defined herein) for the Bonds in lieu of a cash deposit. See “BOND INSURANCE” and “SECURITY FOR THE BONDS – Reserve Fund.”
THE BONDS AND THE INTEREST THEREON OF ANY OF THE BONDS ARE NOT AN INDEBTEDNESS OF THE SCHOOL DISTRICT, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE OF CALIFORNIA (THE “STATE”) OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE SCHOOL DISTRICT, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT), THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE ON THE BONDS. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE SCHOOL DISTRICT, THE DISTRICT (EXCEPT TO THE LIMITED EXTENT DESCRIBED IN THIS OFFICIAL STATEMENT) OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. OTHER THAN THE SPECIAL TAX REVENUES, NO TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT A GENERAL OBLIGATION OF THE SCHOOL DISTRICT OR THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT, PAYABLE SOLELY FROM THE SPECIAL TAX REVENUES AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.
MATURITY SCHEDULE (see inside front cover)
This cover page contains information for general reference only. It is not a summary of all the provisions of the Bonds. Investors must read the entire official statement to obtain information essential in making an informed investment decision.
The Bonds will be offered when, as and if issued and accepted by the Underwriter, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Jones Hall is also serving as Disclosure Counsel. Nossaman LLP, San Francisco, California, is serving as Underwriter’s Counsel. It is anticipated that the Bonds, in book-entry form, will be available for delivery through the facilities of DTC, on or about June 28, 2018.
The date of this Official Statement is: June __, 2018. * Preliminary; subject to change.
This
Pre
limin
ary
Off
icia
l Sta
tem
ent a
nd th
e in
form
atio
n co
ntai
ned
here
in a
re s
ubje
ct to
com
plet
ion
or a
men
dmen
t. U
nder
no
circ
umst
ance
s sh
all t
his
Prel
imin
ary
Offi
cial
Sta
tem
ent
cons
titut
e an
offe
r to
sell
or a
sol
icita
tion
of a
n of
fer t
o bu
y no
r sha
ll th
ere
be a
ny s
ale
of th
ese
secu
ritie
s in
any
juris
dict
ion
in w
hich
suc
h of
fer s
olic
itatio
n or
sal
e w
ould
be
unla
wfu
l pr
ior t
o re
gist
ratio
n or
qua
lific
atio
n un
der
the
secu
ritie
s la
ws
of s
uch
juris
dict
ion.
MATURITY SCHEDULE*
COMMUNITY FACILITIES DISTRICT NO. 2006-1
OF THE ALVORD UNIFIED SCHOOL DISTRICT
2018 SPECIAL TAX REFUNDING BONDS
Base CUSIP†: ________
Maturity Date Principal Interest
(September 1) Amount Rate Yield CUSIP† No.
† CUSIPÒ is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Market Intelligence on behalf of The American Bankers Association. Neither the District nor the Underwriter takes any responsibility for the accuracy of the CUSIP data.
ALVORD UNIFIED SCHOOL DISTRICT COUNTY OF RIVERSIDE
STATE OF CALIFORNIA
BOARD OF EDUCATION
Julie A. Moreno, President Robert Schwandt, Vice-President
Carolyn M. Wilson, Clerk Joseph J. Barragan, Member* Art Kaspereen, Jr., Member
SCHOOL DISTRICT ADMINISTRATION
Rich Thome and Marc Ecker, Interim Superintendents** Susana Lopez, Assistant Superintendent, Business Services Kevin Emenaker, Executive Director, Administrative Services
___________________________________
PROFESSIONAL SERVICES
BOND and DISCLOSURE COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
FINANCIAL ADVISOR
Dale Scott & Company, Inc.
San Francisco, California
SPECIAL TAX CONSULTANT
Cooperative Strategies, LLC Irvine, California
FISCAL AGENT
U.S. Bank National Association,
San Francisco, California
ESCROW VERIFICATION
Causey Demgen & Moore Inc. Denver, Colorado
________________________________ * Board Member Barragan is the subject of a recall election to be held on June 5, 2018.
** Effective June 15, 2018, Allan Mucerino, Ed.D., will serve as the Superintendent of the District. Rich Thome and Marc Ecker are serving as Interim Superintendents until Dr. Mucerino commences his position as Superintendent.
Service Layer Credits: Sources: Esri, USGS,NOAA
ONTARIO
FONTANA
CHINO HILLS
REDLANDS
CHINO
SAN BERNARDINORIALTO
RANCHO CUCAMONGA
COLTONYUCAIPA
HIGHLANDUPLAND
LOMA LINDA
MONTCLAIR
GRAND TERRACE
POMONA
GLENDORAAZUSASAN DIMAS CLAREMONT
WALNUT
DIAMOND BAR
WEST COVINA
COVINA
LA VERNEDUARTE
RIVERSIDE
MENIFEE
PERRIS
MORENO VALLEY
JURUPA VALLEY
WILDOMAR
NORCO
CORONA
LAKE ELSINORE
EASTVALECALIMESA
MURRIETA
HEMET
SAN JACINTO
CANYON LAKE
BEAUMONT
IRVINE
ANAHEIM
ORANGE
BREA
SANTA ANA TUSTIN
YORBA LINDA
NEWPORT BEACH
LAKE FOREST
FULLERTON
COSTA MESA
MISSION VIEJO
PLACENTIA
RANCHO SANTA MARGARITA
LAGUNA HILLSALISO VIEJO
ALVORD UNIFIED SCHOOL DISTRICTREGIONAL LOCATION MAP
µ
0 3 6 9 121.5Miles
PacificOcean
(Riverside County, California)
§̈¦10§̈¦10
§̈¦10
§̈¦10
§̈¦15
§̈¦15
§̈¦15§̈¦5
§̈¦405
§̈¦5
!(133
!(261
!(241
!(241
!(73
!(1
!(55
!(22
!(57!(60
!(60
!(60
§̈¦210!(210 !(210
!(210
!(90
§̈¦215
§̈¦215
§̈¦215
§̈¦215
!(74
!(90
!(90
!(60
Service Layer Credits: Sources: Esri, USGS,NOAA
GRAMERCYLASIERRA
CYPRESS
LA SIERRA
TYLER
HOLE
ARLINGTON
COLLETT
WELLS
SAMPSON
VAN
BURE
N
CALIF O RNIA
MCKINLEY
RIVERWALK
BUCHANAN
VICTORIA
PROMENADE
PIERCE
WELLS
PIERCE
IND IANA
ALVORD UNIFIED SCHOOL DISTRICTCFD 2006-1 BUILT-OUT MAP
µ0 0.25 0.5 0.75 10.125Miles
May 2018
Alvord Unified School DistrictNeighboring School Districts
TractsTract 33403 - Zone 1 - Sierra ParkTract 31553 - Zone 1 - Garden GateTract 31014 - Zone 1 - Somervale IITract 32533 - Zone 1 - Georgetown SquareTract 33000 - Zone 2 - Silverhawk SummitTract 32128 - Zone 3 - Camden Place
JurisdictionsCity of CoronaCity of NorcoCity of RiversideUnincorporated County of Riverside
!(91
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Rule 15c2-12. For purposes of compliance with Rule 15c2-12(b)(5) of the United States Securities Exchange Commission Rule, as amended (the “Rule”), this Preliminary Official Statement constitutes an “Official Statement” of the District with respect to the Bonds that has been deemed “final” by the District as of its date except for the omission of no more than the information permitted to be omitted by the Rule.
Use of Official Statement. This Official Statement is submitted in connection with the 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 a contract between any Bond owner and the District, the School District or the Underwriter.
No Offering Except by This Official Statement. No dealer, broker, salesperson or other person has been authorized by the District, the School District or the Underwriter to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representation must not be relied upon as having been authorized by the District, the School District or the Underwriter.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor may 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.
Estimates and Projections. When used in this Official Statement and in any continuing disclosure by the District, in any press release and in any oral statement made with the approval of an authorized officer of the District, 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.
Information in Official Statement. The information set forth in this Official Statement has been furnished by the School District and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness.
Document Summaries. All summaries of the Fiscal Agent Agreement or other documents referred to in this Official Statement are made subject to the provisions of such documents and qualified in their entirety to reference to such documents, and do not purport to be complete statements of any or all of such provisions.
Involvement of Underwriter. The Underwriter has provided the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement pursuant to 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
No Securities Laws Registration. The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exceptions therein for the issuance and sale of municipal securities. The Bonds have not been registered or qualified under the securities laws of any state.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, give rise to any implication that there has been no change in the affairs of the District, the School District, the County, the other parties described in this Official Statement, or the condition of the property within the District since the date of this Official Statement.
Stabilization of Market Price. In connection with the offering of the Bonds, the Underwriter may over-allot or effect transactions which stabilize or maintain the market price of such Bonds at levels above those that might otherwise prevail in the open market. Such stabilization, if commenced, may be discontinued at any time.
Bond Insurance. Assured Guaranty Municipal Corp. (“AGM”) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading “Bond Insurance” and “Appendix G - Specimen Municipal Bond Insurance Policy.”
Website. The School District maintains a website. However, the information presented on the website is not a part of this Official Statement, is not incorporated herein by reference, and should not be relied upon in making an investment decision with respect to the Bonds.
Table of Contents INTRODUCTION ..............................................1FINANCING PLAN ...........................................5
Refunding Plan .............................................5Deposit to Improvement Fund .......................6Estimated Sources and Uses of Funds ..........7
THE BONDS ....................................................8Authority for Issuance ...................................8General Bond Terms .....................................8Redemption ..................................................9Registration, Transfer and Exchange .......... 11
DEBT SERVICE SCHEDULES ....................... 13Debt Service Schedule................................ 13Projected Special Tax Revenues................. 13
SECURITY FOR THE BONDS........................ 14Pledge of Special Taxes ............................. 14Limited Obligation ....................................... 15Special Taxes ............................................. 15Special Tax Formula ................................... 16Covenant to Foreclose ................................ 23Special Tax Fund ........................................ 23Bond Fund .................................................. 24Reserve Fund ............................................. 25Investment of Moneys in Funds ................... 26No Issuance of Additional Bonds Except for
Refunding ............................................... 26BOND INSURANCE ....................................... 27THE COMMUNITY FACILITIES DISTRICT ..... 30
Description and Location ............................. 30Assessed Valuations and
Value-to-Debt Ratios ............................... 30Direct and Overlapping Governmental
Obligations.............................................. 33Special Tax Collection and
Delinquency Rates................................... 34Sample Tax Bills for
Single-Family Homes ............................... 36
BOND OWNERS' RISKS ............................... 39Limited Obligation of the District to Pay Debt
Service................................................... 39Levy and Collection of the Special Tax ....... 39Property Tax Delinquencies ....................... 40Risks Related to Homeowners with High Loan
Mortgage to Value Ratios ....................... 41Payment of Special Tax Is Not a Personal
Obligation of the Property Owners .......... 41Property Values ......................................... 41Other Possible Claims Upon the Value of
Taxable Property .................................... 42Tax Cuts and Jobs Act ............................... 43Enforcement of Special Taxes on
Governmentally Owned Properties ......... 43Depletion of Reserve Fund; Draw on the
Reserve Policy ....................................... 45Bankruptcy Delays ..................................... 45Disclosure to Future Purchasers................. 46No Acceleration Provisions ......................... 46Loss of Tax Exemption ............................... 46IRS Audit of Tax-Exempt Bond Issues ........ 46Impact of Legislative Proposals, Clarifications
of Tax Code, and Court Decisions on Tax Exemption .............................................. 46
Voter Initiatives and State Constitutional Provisions .............................................. 47
Secondary Market for Bonds ...................... 48TAX MATTERS.............................................. 49VERIFICATION OF MATHEMATICAL
ACCURACY ............................................... 50CONTINUING DISCLOSURE ........................ 50CERTAIN LEGAL MATTERS ......................... 51RATING ......................................................... 52UNDERWRITING .......................................... 52ADDITIONAL INFORMATION ........................ 52EXECUTION .................................................. 53
APPENDIX A – General Information About the City of Corona, the City of Riverside, and the County of Riverside APPENDIX B – Special Tax Formula for the District APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement APPENDIX D – Form of Opinion of Bond Counsel APPENDIX E – Form of Continuing Disclosure Certificate APPENDIX F – DTC and the Book-Entry Only System APPENDIX G – Specimen Municipal Bond Insurance Policy
(Thispageintentionallyleftblank)
-1-
OFFICIAL STATEMENT
$8,095,000*
COMMUNITY FACILITIES DISTRICT NO. 2006-1
OF THE ALVORD UNIFIED SCHOOL DISTRICT
2018 SPECIAL TAX REFUNDING BONDS
INTRODUCTION
This Official Statement, which includes the cover page and appendices hereto, provides information in connection with the sale and delivery by Community Facilities District No. 2006-1 of Alvord Unified School District (the “District”) of the above-captioned special tax refunding bonds (the “Bonds”).
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, the inside cover and attached appendices, and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.
Capitalized terms used but not defined in this Official Statement have the definitions given in the
Fiscal Agent Agreement (as defined below).
The School District. The Alvord Unified School District (the “School District”) was established in 1960 as a unified successor district, tracing its original formation history to 1896. The School District currently encompasses an area of approximately 26 square miles in Riverside County (the “County”), and includes territory located both within and around the cities of Riverside and Corona. The School District provides public education services for grades K-12, and continuing education and adult education programs. The School District currently operates 14 elementary schools, four middle schools, three high schools and a continuation high school and an alternative continuation high school. Enrollment in the District in fiscal year 2017-18 is over 19,000 students. For economic and demographic information regarding the area in and around the School District, see APPENDIX A.
The District. The District was formed and established by the Board of Education of the School District (the “Board”), which acts as the legislative body of the District, under the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), pursuant to a resolution adopted by the Board following a public hearing, and an election of registered voters at which the qualified electors of the District authorized the District to incur bonded indebtedness and approved the levy of special taxes. The District encompasses approximately 49 gross acres within the boundaries of the School District, consisting of six non-contiguous areas of land that have developed into residential neighborhoods in the cities of Riverside and Corona and the unincorporated area of the County. Four of the neighborhoods are located within the City of Riverside, one neighborhood is located within the City of Corona and one neighborhood is located within the unincorporated area of the County. These six neighborhoods have been developed into 300 single-family homes, each of which is owned by individual homeowners. See “THE COMMUNITY FACILITIES DISTRICT.”
* Preliminary; subject to change.
-2-
Purpose. The Bonds are being issued in order to (i) defease and refund two outstanding series of special tax bonds issued by the District in 2007, (ii) generate funds for additional authorized facilities for the District, (iii) provide a debt service reserve for the Bonds, and (iv) fund costs of issuing and delivering the Bonds. See “FINANCING PLAN.”
Authority for Issuance of the Bonds. The Bonds are issued under the Act, certain resolutions
adopted by the Board, including the Resolution of Issuance adopted on May 17, 2018 (the “Resolution of Issuance”), and a Fiscal Agent Agreement dated as of June 1, 2018 (the “Fiscal Agent Agreement”), by and between the District and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). See “THE BONDS – Authority for Issuance.”
Security and Sources of Payment for the Bonds. The Board annually levies special taxes
(denominated Special Tax A and Special Tax B) on real property in the District in accordance with the Act, the Ordinance, the Fiscal Agent Agreement, and the rate and method of apportionment of Special Tax for the District (the “Special Tax Formula”). The Bonds are secured by a first pledge of all of the Special Tax Revenues and certain funds and accounts established under the Fiscal Agent Agreement. “Special Tax Revenues” is defined in the Fiscal Agent Agreement to mean the proceeds of the Special Taxes (defined below), including all scheduled payments and delinquent payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, less (i) the Administrative Expenses Cap (as defined herein) and (ii) administration charges of the County.
“Special Taxes” means, collectively, (i) the Allocable Share of “Annual Special Tax A” (as such
term is defined in the Special Tax Formula) and (ii) the Allocable Share of “Annual Special Tax B” (as such term is defined in the Special Tax Formula) levied within the District pursuant to the Act, the Ordinance, and the Fiscal Agent Agreement, and “Allocable Share” means (i) with respect to Annual Special Tax A, ____% of Debt Service and (ii) with respect to Annual Special Tax B, _____% of Debt Service, as set forth in the Fiscal Agent Agreement. The percentages allocable to Annual Special Tax A and Annual Special Tax B will be determined in connection with the issuance of the Bonds. The formation documents for the District authorize the Special Taxes to be levied in the District for both school facilities to be owned and operated by the School District, and public facilities to be owned and operated by other local agencies. Annual Special Tax A was designed for the initial financing of public facilities to be owned and operated by the School District, while Annual Special Tax B was designed for the initial financing of public facilities to be owned and operated by the City of Corona, the City of Riverside, and the Western Municipal Water District. Special tax bonds secured by each component of the Special Taxes were previously issued in 2007, and will be refunded by the Bonds. All 300 parcels in the District currently pay both Annual Special Tax A and Annual Special Tax B, although Annual Special Tax A and Annual Special Tax B may be separately prepaid in accordance with the Special Tax Formula.
There will be no cross-collateralization of the Allocable Share of Debt Service paid by Annual Special Tax A with the Allocable Share of Debt Service paid by Annual Special Tax B or vice-versa. See “SECURITY FOR THE BONDS.”
All 300 homes within the District are levied Special Taxes pursuant to a Special Tax Formula.
Four of the six neighborhoods (Sierra Park, Garden Gate, Somervale II and Georgetown Square) are located in the City of Riverside and levied Special Taxes within “Zone 1” per the Special Tax Formula, a fifth neighborhood (Silverhawk Summit) is located in the City of Corona and levied special taxes within “Zone 2” of the Special Tax Formula, and the sixth neighborhood (Camden Place) is located in the unincorporated area of the County and is levied special taxes within “Zone 3” of the Special Tax Formula. See “ “SECURITY FOR THE BONDS – Special Tax Formula.”
-3-
Bond Insurance. The scheduled payment of principal and interest represented by Bonds
maturing September 1, 2035* and 2036* (the “Insured Bonds”) when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the Insured Bonds by Assured Guaranty Municipal Corp. (“AGM”). The Bonds maturing September 1, 2018* through 2034* are not insured. At the time of pricing, the District will decide which maturities of the Bonds to insure. AGM will also issue a reserve fund insurance policy (the “2018 Bonds Reserve Policy”) to be deposited in the Reserve Fund (defined herein), which will satisfy the Reserve Requirement (defined herein) for the Bonds in lieu of a cash deposit. See “SECURITY FOR THE BONDS – Reserve Fund.”
Debt Service Reserve Fund; Reserve Fund Policy. On the closing date for the Bonds, AGM
will issue the 2018 Bonds Reserve Policy, and the Fiscal Agent will deposit the 2018 Bonds Reserve Policy into the 2018 Bonds Reserve Account of the Reserve Fund, thereby satisfying the Reserve Requirement (as defined herein) with respect to the Bonds. The Reserve Fund is not cross-collateralized between Special Tax A and Special Tax B. Accordingly, only the Special Tax (i.e., Special Tax A or Special Tax B) that is responsible for a draw on the Reserve Fund shall be used to replenish the Reserve Fund, and if both Special Taxes are responsible for said draw, both Special Taxes shall be used to replenish the Reserve Fund, in the same proportion as resulted in the draw. See “SECURITY FOR THE BONDS – Reserve Fund.”
Redemption. The Bonds are subject to redemption prior to maturity as described here. See “THE
BONDS – Redemption.” Covenant to Foreclose. The District has covenanted in the Fiscal Agent Agreement to cause
foreclosure proceedings to be commenced and prosecuted against certain parcels with delinquent installments of the Special Taxes. For a more detailed description of the foreclosure covenant see “SECURITY FOR THE BONDS – Covenant to Foreclose.”
Legal Matters. Issuance of the Bonds is subject to the approving opinion of Jones Hall, A
Professional Law Corporation, San Francisco, California (“Bond Counsel”), to be delivered in substantially the form attached hereto as APPENDIX D. Jones Hall, A Professional Law Corporation, San Francisco, California, is also serving as Disclosure Counsel to the District (“Disclosure Counsel”). Nossaman LLP, San Francisco, California is serving as counsel to the Underwriter (“Underwriter’s Counsel”). Payment of the fees of Bond Counsel, Disclosure Counsel and Underwriter’s Counsel is contingent upon issuance of the Bonds.
Tax Matters. Assuming compliance with certain covenants and provisions of the Internal
Revenue Code of 1986, in the opinion of Bond Counsel, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 is taken into account in determining certain income and earnings. Also, in the opinion of Bond Counsel, interest on the Bonds will be exempt from State of California personal income taxes. See “TAX MATTERS.”
* Preliminary; subject to change.
-4-
Continuing Disclosure. The District has covenanted and agreed that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate, dated the date of the Bonds and executed by the District (the “Continuing Disclosure Certificate”). The form of the Continuing Disclosure Certificate is included in APPENDIX E hereto. See “CONTINUING DISCLOSURE.”
Risk Factors Associated with Purchasing the Bonds. Investment in the Bonds involves risks
that may not be appropriate for some investors. See “BOND OWNERS’ RISKS” for a discussion of certain risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in considering the investment quality of the Bonds.
Other Information. This Official Statement speaks only as of its date, and the information
contained herein is subject to change. Copies of documents referred to herein and information concerning the Bonds are available from
the Superintendent, Alvord Unified School District, 9 KPC Parkway, Corona, California; telephone (951) 509-5000. The District may impose a charge for copying, mailing and handling.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive, and are qualified in their entireties by reference to each of such documents, statutes and constitutional provisions.
The information set forth herein has been obtained from official sources which are believed to be
reliable but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District. 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 District since the date hereof. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
END OF INTRODUCTION
-5-
FINANCING PLAN
The Bonds are being issued in order to (i) defease and refund two outstanding series of special
tax bonds issued by the District in 2007, (ii) generate funds for additional authorized facilities for the District, (iii) provide a debt service reserve for the Bonds, and (iv) fund costs of issuing and delivering the Bonds.
Refunding Plan
On March 29, 2007, the District issued its special tax bonds captioned “$4,560,000 Community
Facilities District No. 2006-1 of the Alvord Unified School District 2007 Special Tax A Bonds” (the “Special
Tax A Bonds”) and “$4,360,000 Community Facilities District No. 2006-1 of the Alvord Unified School District 2007 Special Tax B Bonds” (the “Special Tax B Bonds,” and together with the Special Tax A Bonds, the “Prior Bonds”), pursuant to the Act, a fiscal agent agreement dated December 1, 2006 for each of the Prior Bonds, and a resolution of issuance for each of the Prior Bonds adopted by the Board on December 14, 2006. The outstanding Prior Bonds, which are identified in the following tables, were issued as current interest bonds, and are subject to redemption without premium on any interest payment date on or after September 1, 2017.
Identification of Outstanding Special Tax A Bonds
Maturity Date
(Sept. 1)
CUSIP† (Base: 022556)
Principal
Amount
Redeemed
Redemption
Date
Redemption Price
(% of Par Amount
Redeemed)
2018 CD4 $105,000 Sept. 1, 2018 100% 2019 CE2 110,000 Sept. 1, 2018 100 2020 CF9 110,000 Sept. 1, 2018 100 2021 CG7 115,000 Sept. 1, 2018 100 2022 CH5 125,000 Sept. 1, 2018 100 2027T CJ1 710,000 Sept. 1, 2018 100 2036T CK8 1,805,000 Sept. 1, 2018 100 2036T CL6 690,000 Sept. 1, 2018 100 Total $3,770,000
Identification of Outstanding Special Tax B Bonds
Maturity Date
(Sept. 1)
CUSIP† (Base: 022556)
Principal
Amount
Redeemed
Redemption
Date
Redemption Price
(% of Par Amount
Redeemed)
2018 CX0 $100,000 Sept. 1, 2018 100% 2019 CY8 105,000 Sept. 1, 2018 100 2020 CZ5 110,000 Sept. 1, 2018 100 2021 DA9 115,000 Sept. 1, 2018 100 2022 DB7 120,000 Sept. 1, 2018 100 2027T DC5 680,000 Sept. 1, 2018 100 2036T DD3 1,720,000 Sept. 1, 2018 100 2036T DE1 650,000 Sept. 1, 2018 100 Total $3,600,000
†: CUSIPÒ is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by S&P Global Market Intelligence on behalf of The American Bankers Association. None of the School District, the District, or the Underwriter takes any responsibility for the accuracy of the CUSIP data. T: Term Bond.
-6-
The Prior Bonds maturing on September 1, 2018 (the “Redemption Date”) will be defeased in connection with the issuance of the Bonds, and paid as due on the Redemption Date; all other maturities of Prior Bonds will be defeased in connection with the issuance of the Bonds, and optionally redeemed on the Redemption Date. To accomplish the defeasance and optional redemption of the Prior Bonds, a portion of the net proceeds of the Bonds will be transferred to U.S. Bank National Association, as escrow agent (the “Escrow Agent”), for deposit in an escrow fund (the “Escrow Fund”) to be established under an Escrow Agreement, by and between the District and the Escrow Agent (the “Escrow Agreement”). The Escrow Agent will invest such funds in certain federal securities (“Escrow Fund Securities”) or hold funds in cash, and will apply such funds, together with interest earnings (if any) on the investment of such funds in Escrow Fund Securities, to pay the principal of and interest on the Prior Bonds, including the redemption price of the Prior Bonds, as set forth above, together with accrued interest to the Redemption Date.
Sufficiency of the deposits in the Escrow Fund for the foregoing purposes will be verified by
Causey Demgen & Moore P.C., Denver, Colorado (the “Verification Agent”). See “VERIFICATION OF MATHEMATICAL ACCURACY” herein. As a result of the deposit of funds with the Escrow Agent on the date of issuance of the Bonds, the Prior Bonds will be legally defeased and will be payable solely from amounts held for that purpose under the Escrow Agreement, and will cease to be secured by Special Taxes levied in the District.
The Escrow Fund Securities and cash held by the Escrow Agent in the Escrow Fund are pledged
solely to the payment of the Prior Bonds, and will not be available for the payment of debt service with respect to the Bonds.
Deposit to Improvement Fund
Using a portion of the savings generated by the refunding of the Prior Bonds, the District will
make a deposit to the Improvement Fund established and held by the Fiscal Agent under the Fiscal Agent Agreement. Amounts in the Improvement Fund will be used by the School District to pay for the acquisition and/or construction of “Facilities,” which are defined as facilities and improvements authorized in the Resolution of Formation adopted by the Board in connection with the formation of the District, including Administrative Expenses related thereto. The District will comply with all applicable provisions of the Act and the law in completing the acquisition and construction of the Facilities; provided that the District shall have no obligation to advance any funds to complete the Facilities in excess of the amounts available therefor in the Improvement Fund.
-7-
Estimated Sources and Uses of Funds The estimated proceeds from the sale of the Bonds will be deposited into the following funds
established under the Fiscal Agent Agreement or the Escrow Agreement, as applicable:
SOURCES Principal Amount of Bonds $ Plus: Funds related to Prior Bonds Plus/Less: [Net] Original Issue Premium/Discount Total Sources $ USES Deposit to Improvement Fund $ Deposit to Escrow Fund Deposit to Reserve Fund(1) Costs of Issuance(2) Total Uses $
(1) The District intends to satisfy the Reserve Requirement (defined herein) for the 2018 Bonds by depositing
with the Fiscal Agent the 2018 Bonds Reserve Policy. (2) Includes, among other things, the fees and expenses of Bond Counsel and Disclosure Counsel, the cost
of printing the preliminary and final Official Statements, fees and expenses of the Fiscal Agent, Escrow Agent, Financial Advisor, and Special Tax Consultant, the cost of the bond insurance policy for the Insured Bonds and for the 2018 Bonds Reserve Policy, and Underwriter’s discount.
-8-
THE BONDS
This section generally describes the terms of the Bonds contained in the Fiscal Agent Agreement,
which is summarized in more detail in APPENDIX C. Capitalized terms used but not defined in this section are defined in APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement.
Authority for Issuance
General. The Bonds are issued under the Act, the Resolution of Issuance and the Fiscal Agent
Agreement. The Board, as legislative body of the District, has covenanted in the Fiscal Agent Agreement not to issue additional special tax bonds for the District except for refunding purposes. See “SECURITY FOR THE BONDS – No Issuance of Additional Bonds Except for Refunding.”
Community Facilities District Proceedings. As required by the Act, the Board has taken
certain actions with respect to establishing the District and authorizing issuance of the Bonds. See “THE COMMUNITY FACILITIES DISTRICT – Description and Location.”
General Bond Terms
Dated Date, Maturity and Authorized Denominations. The Bonds will be dated their date of
delivery (the “Dated Date”) and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The Bonds will be issued in fully registered form in denominations of $5,000 each or any integral multiple of $5,000.
Calculation of Interest. The Bonds will bear interest at the rates set forth on the inside cover
page of this Official Statement, payable semiannually on each March 1 and September 1, commencing September 1, 2018 (each, an “Interest Payment Date”), until the principal sum of the Bonds has been paid; provided, however, that if at the maturity date of any Bond (or if the same is redeemable and is duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof in full, in accordance with the terms of the Fiscal Agent Agreement, such Bonds will then cease to bear interest.
Interest will be calculated on the basis of a 360-day year composed of twelve 30-day months and
will be payable from the Interest Payment Date next preceding the date of authentication, unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the date upon which the Bonds are delivered to the original purchaser thereof (the “Closing Date”), provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.
DTC and Book-Entry Only System. The Depository Trust Company (“DTC”) will act as
securities depository for the Bonds. The Bonds will be issued as fully registered securities registered initially in the name of Cede & Co. (DTC’s partnership nominee). See “APPENDIX F – DTC and the Book-Entry Only System.”
Payments of Interest and Principal. For so long as DTC is used as depository for the Bonds,
principal of and interest payments on the Bonds will be made solely to DTC or its nominee, Cede & Co.,
-9-
as registered owner of the Bonds, for distribution to the beneficial owners of the Bonds in accordance with the procedures adopted by DTC.
The principal of the Bonds is payable by check in lawful money of the United States of America
upon surrender of the Bonds at the Principal Office of the Fiscal Agent. Interest on the Bonds (including the final interest payment upon maturity) is payable by check of
the Fiscal Agent mailed on the Interest Payment Dates by first class mail to the registered Owner thereof at the registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date, or by wire transfer (i) to the Depository (so long as the Bonds are in book-entry form), or (ii) to an account within the United States made on such Interest Payment Date upon written instructions of any Owner of $1,000,000 or more in aggregate principal amount of Bonds, which instructions shall continue in effect until revoked in writing, or until such Bonds are transferred to a new Owner.
Record Date. The term “Record Date” is defined in the Fiscal Agent Agreement to mean the
15th day of the month (whether or not such day is a Business Day) next preceding the month of the applicable Interest Payment Date.
Redemption*
Optional Redemption. The Bonds are subject to optional redemption from any source of
available funds prior to maturity, in whole, or in part among maturities as specified by the District and by lot within a maturity, on any date at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
Any date through and including September 1, 20__ 103% September 2, 20__ through September 1, 20__ 102 September 2, 20__ through September 1, 20__ 101 September 2, 20__ and any date thereafter 100
Mandatory Redemption from Prepayments. The Bonds are subject to mandatory redemption
from Prepayments of the Special Tax by property owners, in whole or in part among maturities as specified by the District and by lot within a maturity, on any Interest Payment Date at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates Redemption Price
Interest Payment Dates through September 1, 2025 103% March 1, 2026 and September 1, 2026 102 March 1, 2027 and September 1, 2027 101 March 1, 2028 and Interest Payment Dates thereafter 100
Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ (the “Term
Bonds”), are subject to mandatory sinking payment redemption in part on September 1, 20__ and on each September 1 thereafter to maturity, by lot, at a redemption price equal to 100% of the principal
* Preliminary, subject to change.
-10-
amount thereof to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following table:
Sinking Fund
Redemption Date (September 1)
Sinking Payments $
(maturity) In the event of a partial optional or mandatory redemption of the Term Bonds, mandatory sinking
payments for the Term Bonds set forth above will be reduced pro rata at the direction of the District in order to maintain substantially level debt service, and the District will provide the Fiscal Agent with a revised sinking fund schedule giving effect to the redemption so completed.
Selection of Bonds for Redemption. Whenever provision is made for the redemption of less
than all of the Bonds of any maturity, the Fiscal Agent will select the Bonds to be redeemed, from all Bonds or such given portion thereof of such maturity by lot, in any manner which the Fiscal Agent in its sole discretion deems appropriate. Upon surrender of the Bonds redeemed in part only, the District will execute and the Fiscal Agent will authenticate and deliver to the registered Owner, at the expense of the District, a new Bond or Bonds, of the same series and maturity, of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.
Purchase in Lieu of Redemption. In lieu of any optional or mandatory redemption, moneys
deposited in an account of the Bond Fund may be used and withdrawn by the Fiscal Agent to purchase the outstanding Bonds. Purchases of outstanding Bonds may be made by the District prior to the selection of Bonds for redemption by the Fiscal Agent, at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest.
Notice of Redemption. Not less than 45 days prior to the applicable redemption date, the District
will give the Fiscal Agent notice of its intention to redeem any Bonds. At least 30 days but not more than 60 days prior to the redemption date, the Fiscal Agent will mail by first-class mail a copy of such notice, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register. The actual receipt by the Owner of any Bond of notice of such redemption will not be a condition precedent thereto, and neither failure to receive such notice nor any defect therein will affect the validity of the proceedings for the redemption of such Bond, or the cessation of interest on the redemption date.
However, while the Bonds are subject to DTC’s book-entry system, the Fiscal Agent will be
required to give notice of redemption only to DTC as provided in the letter of representations executed by the District and received and accepted by DTC. DTC and the Participants will have sole responsibility for providing any such notice of redemption to the beneficial owners of the Bonds to be redeemed. Any failure of DTC to notify any Participant, or any failure of Participants to notify the Beneficial Owner of any Bonds to be redeemed, of a notice of redemption or its content or effect will not affect the validity of the notice of redemption, or alter the effect of redemption set forth in the Fiscal Agent Agreement.
Conditional Redemption Notice and Rescission of Redemption. Any notice of optional
redemption of Bonds may be conditional. The District has the right to rescind any notice of the redemption of Bonds by written notice to the Fiscal Agent on or prior to 2 Business Days prior the date fixed for redemption. Any notice of redemption will be cancelled and annulled if for any reason funds will not be
-11-
or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an event of default. The District and the Fiscal Agent have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Fiscal Agent will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the
payment of the principal of, and interest and any premium on, the Bonds so called for redemption will have been deposited in the Bond Fund, such Bonds so called will cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date specified in such notice.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to the Fiscal Agent Agreement
will be canceled by the Fiscal Agent. The Fiscal Agent will destroy the cancelled Bonds and issue a certificate of destruction thereof to the District.
Registration, Transfer and Exchange
Registration. The Fiscal Agent will keep or cause to be kept, at its Principal Office, sufficient
books for the registration and transfer of the Bonds, which books shall show the series number, date, amount, rate of interest and last known Owner of each Bond and shall at all times be open to inspection by the District during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as provided in the Fiscal Agent Agreement.
Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books
required to be kept pursuant to the provisions of the Fiscal Agent Agreement by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the District. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer.
No transfers of Bonds will be required to be made within fifteen days prior to the date established
by the Fiscal Agent for selection of Bonds for redemption or with respect to a Bond after such Bond has been selected for redemption.
Whenever any Bond is or Bonds are surrendered for transfer, the District will execute and the
Fiscal Agent will authenticate and deliver a new Bond or Bonds, for like aggregate principal amount of authorized denominations.
Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a
like aggregate principal amount of Bonds of authorized denominations and of the same series and maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange will be paid by the District. The Fiscal Agent will collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange.
-12-
No exchanges of Bonds will be required to be made within fifteen days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or with respect to a Bond after such Bond has been selected for redemption.
The provisions set forth in APPENDIX C regarding the exchange and transfer of the Bonds apply
only during any period in which the Bonds are not subject to DTC’s book-entry system. While the Bonds are subject to DTC’s book-entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC. See “APPENDIX F – DTC and the Book-Entry Only System.”
-13-
DEBT SERVICE SCHEDULES Debt Service Schedule
The following table presents the annual debt service on the Bonds (assuming no optional
redemptions).
Year Ending September 1
Principal
Interest
Total Debt Service
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Total:
Projected Coverage on the Bonds
The District intends to levy Special Taxes each Fiscal Year sufficient to provide at least 110% debt service coverage on the Bonds. However, no assurance can be given that actual collections will provide this level of coverage. The District’s ability to increase Special Taxes levied on residential property to make up for delinquencies for prior Fiscal Years is limited by Section 53321(d) of the California Government Code, which provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults.
-14-
SECURITY FOR THE BONDS This section generally describes the security for the Bonds set forth in the Fiscal Agent
Agreement, which is summarized in more detail in APPENDIX C. Capitalized terms used but not defined in the section are defined in APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement.
Pledge of Special Taxes
General. Under the Act and the Fiscal Agent Agreement, the Bonds shall be secured by a first
pledge of all of the Special Tax Revenues and all moneys deposited in the Bond Fund and the Reserve Fund and, until disbursed as provided in the Fiscal Agent Agreement, the Special Tax Fund.
The Special Tax Revenues and all moneys deposited into said funds (except as otherwise
provided in the Fiscal Agent Agreement) are dedicated in their entirety to the payment of the principal of, including any mandatory sinking fund payments, and interest and any premium on, the Bonds as provided in the Fiscal Agent Agreement and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities (as defined herein) have been set aside irrevocably for that purpose in accordance with the Fiscal Agent Agreement.
Amounts in the Costs of Issuance Fund for a Series of Bonds and in the Improvement Fund are
not pledged to the repayment of the Bonds. The facilities acquired with the proceeds of the Prior Bonds are not in any way pledged to repayment of the Bonds. Any proceeds of condemnation, destruction or other disposition of any facilities financed with the proceeds of the Prior Bonds are not pledged to repayment of the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent Agreement.
Special Tax Revenues. The Fiscal Agent Agreement defines “Special Tax Revenues” to mean
the proceeds of the Special Taxes received by the District, including all scheduled payments and delinquent payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, less (i) the Administrative Expenses Cap and (ii) administration charges of the County. “Administrative Expenses Cap” means (i) for fiscal year 2018-19, $25,000, and (ii) for each subsequent year, an amount equal to the preceding fiscal year’s Administrative Expenses Cap, plus an additional 2% of such amount.
Special Taxes. The Fiscal Agent Agreement defines “Special Taxes” as (i) the Allocable Share
of “Annual Special Tax A” (as such term is defined in the Special Tax Formula) and (ii) the Allocable Share of “Annual Special Tax B” (as such term is defined in the Special Tax Formula), levied within the District pursuant to the Act, the Ordinance, and the Fiscal Agent Agreement. “Allocable Share” means (i) with respect to Annual Special Tax A, ____% of Debt Service and (ii) with respect to Annual Special Tax B, _____% of Debt Service, as set forth in the Fiscal Agent Agreement. The percentages allocable to Annual Special Tax A and Annual Special Tax B will be determined in connection with the issuance of the Bonds. The formation documents for the District authorize the Special Taxes to be levied in the District for both school facilities to be owned and operated by the School District, and public facilities to be owned and operated by other local agencies. Annual Special Tax A was designed for the initial financing of public facilities to be owned and operated by the School District, while Annual Special Tax B was designed for the initial financing of public facilities to be owned and operated by the City of Corona, the City of Riverside, and the Western Municipal Water District. Special tax bonds secured by each component of the Special Taxes were previously issued in 2007, and will be refunded by the Bonds. All 300 parcels in the District currently pay both Annual Special Tax A and Annual Special Tax B, although
-15-
Annual Special Tax A and Annual Special Tax B may be separately prepaid in accordance with the Special Tax Formula.
There will be no cross-collateralization of the Allocable Share of Debt Service paid by Annual
Special Tax A with the Allocable Share of Debt Service paid by Annual Special Tax B or vice-versa.
Limited Obligation
All obligations of the District under the Fiscal Agent Agreement and the Bonds are special
obligations of the District, payable solely from the Special Tax Revenues and the funds pledged therefor under the Fiscal Agent Agreement. Neither the full faith and credit nor the taxing power of the School District, the District (except to the limited extent set forth in the Fiscal Agent Agreement), or the State or any political subdivision thereof is pledged to the payment of the Bonds.
Special Taxes
Levy of Special Taxes. Under the Fiscal Agent Agreement, the District is required to comply
with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes.
The Fiscal Agent Agreement provides that, on or within five Business Days of each June 1, the
Fiscal Agent shall provide the Chief Business Officer with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund. The receipt of such notice by the Chief Business Officer shall in no way affect the obligations of the Chief Business Officer under the following two paragraphs. Upon receipt of such notice, the Chief Business Officer and the Fiscal Agent shall communicate with each other and/or their designees to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year.
In addition, the Fiscal Agent Agreement requires that the District effect the levy of the Special
Taxes each Fiscal Year in accordance with the Ordinance such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next secured real property tax roll. Upon the completion of the computation of the amounts of the levy, the District will prepare or cause to be prepared, and will transmit to the Chief Business Officer, such data as the County Auditor requires to include the levy of the Special Taxes on the next secured real property tax roll. The Chief Business Officer will transmit such data to the County Auditor before the final date on which the County Auditor will accept this data.
The Fiscal Agent Agreement further requires the District to fix and levy the amount of Special
Taxes within the District required for the payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the Reserve Fund and an amount estimated to be sufficient to pay the Administrative Expenses during such year, all in accordance with the rate and method of apportionment of the Special Taxes for the District and the Ordinance. In any event, the Special Taxes so levied will not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation.
Because the District does not participate in the “Teeter Plan” (as further described herein), no assurance can be given that, if Special Tax delinquencies occur, the receipts of Special Taxes will, in fact, be collected in sufficient amounts in any given year to pay debt service on the Bonds. See “– Covenant to Foreclose – No Teeter Plan” below.
-16-
Manner of Collection. The Special Tax will be collected in the same manner and at the same time in the same installment as the general taxes on real property are payable, and will have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Notwithstanding the foregoing, the Special Taxes may be collected in such other manner as the District will prescribe if necessary to pay the debt service on the Bonds.
Maintenance of Special Tax Revenues. The District covenants and agrees in the Fiscal Agent
Agreement to not consent to or conduct proceedings with respect to a reduction in the Special Taxes that may be levied in the District below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due and payable with respect to the Bonds in such Fiscal Year, plus 100% of the reasonable estimate of Administrative Expenses for such Fiscal Year; provided, however, that the District may at any time reduce the Special Taxes to the extent that the amount of Special Tax Revenues that would result from levying the Special Taxes at such maximum amounts would result in an amount of Special Tax Revenues in excess of the amount required to comply with this covenant.
Covenant to Defend. The District covenants in the Fiscal Agent Agreement that, in the event
that any initiative is proposed by the qualified electors in the District which purports to reduce the maximum Special Taxes below the levels specified above or to limit the power of the District to levy the Special Taxes for the purposes set forth herein, it will commence and pursue legal action in order to preserve its ability to comply with the Fiscal Agent Agreement.
Special Tax Formula
General. The Annual Special Tax A and the Annual Special Tax B are each levied and collected
according to the Special Tax Formula, which provides the means by which the Board may annually levy the Special Taxes within the District, up to the Maximum Annual Special Tax rates, and to determine the amount of the Special Taxes that will need to be collected each Fiscal Year from the “Taxable Property” within the District.
The following is a synopsis of the provisions of the Special Tax Formula, which should be read in
conjunction with the complete text of the Special Tax Formula, including its attachments, which is attached as APPENDIX B. The meaning of the defined terms used in this section are as set forth in APPENDIX B. This section provides only a summary of the Special Tax Formula, and is qualified by more complete and detailed information contained in the entire Special Tax Formula attached as APPENDIX B.
Annual Special Tax A and Annual Special Tax B. The Special Tax Formula creates two
separate special taxes within the District: “Annual Special Tax A” and “Annual Special Tax B”. Each of these special taxes is currently levied on all 300 parcels in the District. The formation documents for the District authorize the Special Taxes to be levied in the District for both school facilities to be owned and operated by the School District, and public facilities to be owned and operated by other local agencies. Annual Special Tax A was designed for the initial financing of public facilities to be owned and operated by the School District, while Annual Special Tax B was designed for the initial financing of public facilities to be owned and operated by the City of Corona, the City of Riverside, and the Western Municipal Water District. All 300 parcels in the District currently pay both Annual Special Tax A and Annual Special Tax B, although Annual Special Tax A and Annual Special Tax B may be separately prepaid in accordance with the Special Tax Formula. For additional information on the 300 parcels in the District, see “THE COMMUNITY FACILITIES DISTRICT.”
-17-
Minimum Annual Special Tax A Requirement. Annually, at the time of levying Annual Special Tax A for the District, the Board will determine the minimum amount of Annual Special Tax A to be levied on Taxable Property in the District (the “Tax A Minimum Annual Special Tax Requirement”), which will be the amount required in any Fiscal Year to pay the following:
(i) the annual debt service on the Annual Special Tax A Bonds in the Calendar Year
beginning in such Fiscal Year, (ii) other periodic costs of the Annual Special Tax A Bonds, including but not limited to, credit
enhancement fees and charges and rebate payments on the Annual Special Tax A Bonds due in the Calendar Year beginning in such Fiscal Year,
(iii) the portion of the Administrative Expenses of the District applicable to Annual Special Tax
A, (iv) any costs associated with the release of funds from an escrow account for the Annual
Special Tax A Bonds, if any (v) any amount required to establish or replenish any reserve funds established in association
with the Annual Special Tax A Bonds, less any amounts on deposit in any fund or account which are available to pay for items (i) through
(v) above under the Fiscal Agent Agreement for the Annual Special Tax A Bonds in such Calendar Year. Minimum Annual Special Tax B Requirement. Annually, at the time of levying the Special Tax
for the District, the Board will determine the minimum amount of Annual Special Tax B to be levied on Taxable Property in the District (the “Tax B Minimum Annual Special Tax Requirement”), which will be the amount required in any Fiscal Year to pay the following:
(i) the annual debt service on the Annual Special Tax B Bonds in the Calendar Year
beginning in such Fiscal Year, (ii) other periodic costs of the Annual Special Tax B Bonds, including but not limited to, credit
enhancement fees and charges and rebate payments on the Annual Special Tax B Bonds due in the Calendar Year beginning in such Fiscal Year,
(iii) the portion of the Administrative Expenses of the District applicable to Annual Special Tax
B, (iv) any costs associated with the release of funds from an escrow account for the Annual
Special Tax B Bonds, if any, (v) any amount required to establish or replenish any reserve funds established in association
with the Annual Special Tax B Bonds, less any amounts on deposit in any fund or account which are available to pay for items (i) through
(v) above under the Fiscal Agent Agreement for the Annual Special Tax B Bonds in such Calendar Year. Developed and Undeveloped Property; Exempt Property. For each Fiscal Year, beginning
with Fiscal Year 2006-07, each Assessor’s Parcel within the District has been assigned to a Zone in accordance with the Special Tax Formula at the reasonable discretion of the Board, and each Assessor's
-18-
Parcel within each Zone has been classified as Taxable Property or Exempt Property. Furthermore, each Assessor’s Parcel of Taxable Property has been classified as Developed Property or Undeveloped Property, as defined below. Developed Property within Zone 2 has been further classified based on the Building Square Footage of the Unit. The classification of Exempt Property within each Zone takes into consideration Minimum Taxable Acreage for such Zone as determined pursuant to the Special Tax Formula.
“Developed Property” means, for each Fiscal Year, all Assessor’s Parcels for which Building
Permits for the construction of Units were issued on or before May 1 of the prior Fiscal Year, provided that such Assessor's Parcels were created on or before January 1 of the prior Fiscal Year and that each such Assessor's Parcel is associated with a Lot, as determined reasonably by the Board.
“Undeveloped Property” means all Assessors Parcels of Taxable Property that are not classified
as Developed Property. "Taxable Property" means all Assessor's Parcels that are not Exempt Property. “Exempt Property”: the Board will classify property as Exempt Property in the following order of
priority:
(i) Assessor's Parcels owned by the Federal Government, the State of California, the County or other local government agencies,
(ii) Assessor's Parcels which are used as places of worship and are exempt from ad
valorem property taxes because they are owned by a religious organization, (iii) Assessor's Parcels owned by a homeowners' association and not used for
residential purposes, (iv) Assessor's Parcels with public or utility easements making impractical their
utilization for other than the purposes set forth in the easement, (v) Assessor’s Parcels developed or expected to be developed exclusively for non-
residential use, including any use directly servicing any non-residential property, such as parking, as reasonably determined by the Board, and
(vi) any other Assessor’s Parcels as reasonably determined by the Board.
However, the Board may not classify an Assessor’s Parcel as Exempt Property if such
classification would reduce the sum of all Taxable Property in a given Zone to less than the “Minimum Taxable Acreage” for the Zone in which the Assessor’s Parcel is located. The Minimum Taxable Acreage for each Zone is defined as follows:
Zone 1 10.11 Acres Zone 2 5.16 Acres Zone 3 4.62 Acres
Assessor's Parcels which cannot be classified as Exempt Property because such classification
would reduce the Acreage of all Taxable Property in a given Zone to less than the Minimum Taxable Acreage for such Zone will continue to be classified as Developed Property or Undeveloped Property, as applicable, and will continue to be subject to Special Taxes accordingly.
-19-
Maximum Annual Special Tax A, Assigned Annual Special Tax A and Backup Annual
Special Tax A. The Maximum Annual Special Tax A is defined in the Special Tax Formula as follows:
Developed Property. The Maximum Annual Special Tax A for each Assessor's Parcel classified as Developed Property within a particular Zone in each Fiscal Year is the greater of (i) the application of the Assigned Annual Special Tax A for a given Final Subdivision Map for such Zone or (ii) the application of the Backup Annual Special Tax A for a given Final Subdivision Map for such Zone.
• Assigned Annual Special Tax A. The Assigned Annual Special Tax A for each Assessor’s Parcel of Developed Property is determined by reference to Tables 1, 2 and 3 in the Special Tax Formula, and is summarized as follows:
Zone Building Square Footage Assigned Annual Special Tax A
Zone 1 N/A $1,235.18 per Unit Zone 2 < 3,300 $1,235.18 per Unit Zone 2 3,300 - 3,600 $1,235.18 per Unit Zone 2 > 3,600 $1,235.18 per Unit Zone 3 N/A $1,235.18 per Unit
• Backup Annual Special Tax A. The Backup Annual Special Tax A rates for an
Assessor’s Parcel of Developed Property within a Final Subdivision Map in each Fiscal Year within a particular Zone is determined by multiplying the Assigned Annual Special Tax A per Acre of Undeveloped Property for the applicable Fiscal Year (as set forth below) by the Acreage of Taxable Property in such Final Subdivision Map at time of calculation, as determined by the Board, and dividing the result by the total number of Lots in the Final Subdivision Map at the time of calculation.
The Backup Annual Special Tax A is subject to adjustment if all or any portion of a Final Map is changed or modified, as set forth in the Special Tax Formula.
Undeveloped Property. The Maximum Annual Special Tax A is defined as the Assigned Annual Special Tax A, which is determined by reference to Table 4 in the Special Tax Formula, and is summarized as follows:
Zone Assigned Annual Special Tax A
Zone 1 $31,898.48 per Acre Zone 2 $5,984.98 per Acre Zone 3 $7,493.24 per Acre
Maximum Annual Special Tax B, Assigned Annual Special Tax B and Backup Annual
Special Tax B. The Maximum Annual Special Tax B is defined in the Special Tax Formula as follows:
Developed Property. The Maximum Annual Special Tax B for each Assessor's Parcel classified as Developed Property within a particular Zone in each Fiscal Year is the greater of (i) the application of the Assigned Annual Special Tax B for a given Final Subdivision Map for such Zone or (ii) the application of the Backup Annual Special Tax B for a given Final Subdivision Map for such Zone.
-20-
• Assigned Annual Special Tax B. The Assigned Annual Special Tax B for each Assessor’s Parcel of Developed Property is determined by reference to Tables 1, 2 and 3 in the Special Tax Formula, and is summarized as follows:
Zone Building Square Footage Assigned Annual Special Tax B
Zone 1 N/A $904.20 per Unit Zone 2 < 3,300 $3,938.20 per Unit Zone 2 3,300 - 3,600 $4,197.79 per Unit Zone 2 > 3,600 $4,376.82 per Unit Zone 3 N/A $696.97 per Unit
• Backup Annual Special Tax B. The Backup Annual Special Tax B rates for an
Assessor’s Parcel of Developed Property within a Final Subdivision Map in each Fiscal Year within a particular Zone is determined by multiplying the Assigned Annual Special Tax B per Acre of Undeveloped Property for the applicable Fiscal Year (as set forth below) by the Acreage of Taxable Property in such Final Subdivision Map at time of calculation, as determined by the Board, and dividing the result by the total number of Lots in the Final Subdivision Map at the time of calculation.
The Backup Annual Special Tax B is subject to adjustment if all or any portion of a Final Map is changed or modified, as set forth in the Special Tax Formula.
Undeveloped Property. The Maximum Annual Special Tax B is defined as the Assigned
Annual Special Tax B, which is determined by reference to Table 4 in the Special Tax Formula, and is summarized as follows:
Zone Assigned Annual Special Tax B
Zone 1 $23,350.93 per Acre Zone 2 $20,694.03 per Acre Zone 3 $4,228.18 per Acre
Method of Apportionment, Annual Special Tax A. Under the Special Tax Formula, the Board
will levy an Annual Special Tax A each Fiscal Year as follows:
Step One: The Board will levy an Annual Special Tax A on each Assessor’s Parcel of Developed Property in an amount equal to the Assigned Annual Special Tax A applicable to that Assessor’s Parcel.
Step Two: If the sum of the amounts levied in step one is insufficient to satisfy the Tax A
Minimum Annual Special Tax Requirement, then the Board will Proportionately levy an Annual Special Tax A on each Assessor’s Parcel of Undeveloped Property up to the Assigned Annual Special Tax A applicable to each Assessor’s Parcel of Undeveloped Property to satisfy the Tax A Minimum Annual Special Tax Requirement.
Step Three: If the sum of the amounts to be levied in steps one and two is insufficient to
satisfy the Tax A Minimum Annual Special Tax Requirement, then the Board will Proportionately levy an Annual Special Tax A on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax A is the Backup Annual Special Tax A from the Assigned Annual Special Tax A up to the Maximum Annual Special Tax A applicable to each such Assessor’s Parcel to satisfy the Tax A Minimum Annual Special Tax Requirement.
-21-
Method of Apportionment, Annual Special Tax B. Under the Special Tax Formula, the Board will levy an Annual Special Tax B each Fiscal Year as follows:
Step One: The Board will levy an Annual Special Tax B on each Assessor’s Parcel of
Developed Property in an amount equal to the Assigned Annual Special Tax B applicable to that Assessor’s Parcel.
Step Two: If the sum of the amounts levied in step one is insufficient to satisfy the Tax B
Minimum Annual Special Tax Requirement, then the Board will Proportionately levy an Annual Special Tax B on each Assessor’s Parcel of Undeveloped Property up to the Assigned Annual Special Tax B applicable to each Assessor’s Parcel of Undeveloped Property to satisfy the Tax B Minimum Annual Special Tax Requirement.
Step Three: If the sum of the amounts to be levied in steps one and two is insufficient to
satisfy the Tax B Minimum Annual Special Tax Requirement, then the Board will Proportionately levy an Annual Special Tax B on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax B is the Backup Annual Special Tax B from the Assigned Annual Special Tax B up to the Maximum Annual Special Tax B applicable to each such Assessor’s Parcel to satisfy the Tax B Minimum Annual Special Tax Requirement.
Full Prepayment of Annual Special Taxes. The Annual Special Tax obligations of an
Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Undeveloped Property for which a Building Permit has been issued may be prepaid. However, the Annual Special Tax A obligation of an Assessor's Parcel may be prepaid only after or concurrently with the prepayment of the Annual Special Tax B obligation for such Assessor's Parcel.
Any prepayment must satisfy the terms set forth under the Special Tax Formula, including (among
others) the following conditions:
• An owner of an Assessor's Parcel intending to prepay the Annual Special Tax A obligation and the Annual Special Tax B obligation must provide the District with written notice of intent to prepay.
• No prepayment will be allowed unless the amount of Annual Special Taxes that may be
levied on Taxable Property, net of Administrative Expenses, will be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently outstanding Bonds in each future Fiscal Year and such prepayment will not impair the security of all currently outstanding Bonds, as reasonably determined by the Board. Such determination will include identifying all Assessor's Parcels that are expected to become Exempt Property.
The Prepayment Amount is calculated as set forth in APPENDIX B, and generally will be
determined as the present value of the Annual Special Tax to be prepaid, less a credit for the parcel’s proportionate share of the debt service reserve fund, plus the amount required to prepay the parcel’s proportionate share of administrative expenses.
Partial Prepayment of Annual Special Tax B. The Annual Special Tax B obligation of an
Assessor's Parcel may be partially prepaid at the times and under the conditions set forth in the Special Tax Formula, including (among others) the following:
-22-
• There are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor’s Parcel at the time the Annual Special Tax B obligation would be prepaid, or provided that such delinquent special taxes are paid concurrently.
• The owner of no less than all the Taxable Property within a Final Subdivision Map must
elect in writing to the Board to prepay a portion of the Annual Special Tax B obligations for all the Assessor’s Parcels within that Final Subdivision Map. The partial prepayment of each Annual Special Tax B obligation will be collected for all Assessor's Parcels prior to the conveyance of the first production Unit on a lot within such Final Subdivision Map.
• No partial prepayment will be allowed unless the amount of Annual Special Taxes that
may be levied on Taxable Property after such partial prepayment, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently outstanding Bonds in each future Fiscal Year and such partial prepayment will not impair the security of all currently outstanding Bonds, as reasonably determined by the Board. Such determination shall include identifying all Assessor's Parcels that are expected to become Exempt Property.
The Partial Prepayment Amount is calculated as the Prepayment Amount determined for full
prepayment of Special Taxes, multiplied by the percent by which the owner of the Assessor’s Parcel is partially prepaying the Annual Special Tax obligation, all as set forth in further detail in APPENDIX B.
Assigned Annual Special Tax Remainder. In any Fiscal Year in which Annual Special Taxes
collected from Developed Property pursuant to Step 1 above remain after the satisfaction of the Tax A Minimum Annual Special Tax Requirement, the School District will use such amount for acquisition, construction or financing of school facilities in accordance with the Act, District proceedings and other applicable law, as determined by the Board in its discretion.
In any Fiscal Year in which Annual Special Taxes collected from Developed Property pursuant to
Step 1 above remain after the satisfaction of the Tax B Minimum Annual Special Tax Requirement, the School District will use such amount for acquisition, construction or financing of school facilities in accordance with the Act, the District proceedings and other applicable law, as determined by the Board in its discretion.
Appeals. Any property owner claiming that the amount or application of the Special Tax is not
correct may file a written appeal with the Board not later than twelve months after having paid the first installment of the Special Tax that is disputed. A representative(s) of the District (“Representative”) will promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and rule on the appeal. If the Representative's decision requires that the Special Tax for an Assessor’s Parcel be modified or changed in favor of the property owner, a cash refund will not be made (except for the last year of levy), but an adjustment shall be made to the Annual Special Tax on that Assessor’s Parcel in the subsequent Fiscal Year(s) as the Representative's decision indicates.
Duration of Special Tax Levies. The Annual Special Tax A will be levied for a term of 35 Fiscal
Years after the issuance of the last series of Annual Special Tax A Bonds by the District, but in no event may the Annual Special Tax A be levied later than Fiscal Year 2049-50.
The Annual Special Tax B will be levied for a term of 35 Fiscal Years after the issuance of the last
series of Annual Special Tax B Bonds by the District, but in no event may the Annual Special Tax B be levied later than Fiscal Year 2049-50.
-23-
Covenant to Foreclose
In the Fiscal Agent Agreement, the District covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced, and thereafter diligently prosecute an action in the superior court to foreclose the lien of any Special Taxes which have been billed, but have not been paid, pursuant to and as provided in the Act, and the conditions specified in the Fiscal Agent Agreement. Each Authorized Officer shall notify the District’s counsel of any such delinquency of which such Authorized Officer is aware, and such counsel shall commence, or cause to be commenced, such foreclosure proceedings, including collection actions preparatory to the filing of any complaint, against parcels delinquent in the payment of Special Taxes, within 90 days of any of the following determinations:
Not later than July 1 of each year:
(1) Individual Delinquencies. If the District determines that there is a delinquency of Special Taxes from any single parcel of land in the District equal to or greater than the sum of at least 4 installments of Special Taxes from that parcel, the District shall commence foreclosure proceedings against each such delinquent parcel; provided, however, that the District may elect not to go forward with foreclosure proceedings if the Reserve Fund established by the Fiscal Agent Agreement is fully funded at the Reserve Requirement and such delinquencies are not expected to result in a draw on the Reserve Fund in both the then-current and immediately following Fiscal Year.
(2) Aggregate Delinquencies. If the Authorized Officer determines that the total amount of delinquent Special Taxes in any prior Fiscal Year for the entire District, including the total subject prior year delinquencies under paragraph (1) above, exceeds 5% of the total Special Taxes due and payable for such prior Fiscal Year, the District shall commence foreclosure proceedings against all delinquent parcels in the District; provided, however that the District may elect not to commence proceedings for foreclosure proceedings for aggregate delinquencies if the balance in the Reserve Fund is equal to the Reserve Requirement and such delinquencies are not expected to result in a draw on the Reserve Fund in both the then-current and immediately following Fiscal Year.
No Teeter Plan. For certain of its tax levies, the County and the other political subdivisions within
its boundaries operate under the provisions of Sections 4701 through 4717, inclusive, of the Revenue and Taxation Code of the State, commonly referred to as the “Teeter Plan,” with respect to property tax collection and disbursement procedures. These sections provide an alternative method of apportioning secured taxes whereby agencies levying taxes through the County roll receive from the County 100% of their taxes at the time they are levied, notwithstanding any delinquencies. The County treasury’s cash position (from taxes) is insured by a special tax loss reserve fund accumulated from delinquent penalties.
However, the County does not include special taxes and special assessments in the Teeter Plan.
As a result, the District’s collection of Special Taxes will reflect actual delinquencies.
Special Tax Fund
Deposits to and Disbursements from Special Tax Fund. The Fiscal Agent Agreement
establishes, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 2006-1 Special Tax Bonds Special Tax Fund” (the “Special Tax Fund”), to the credit of which the Fiscal Agent will deposit, immediately upon receipt, all Special Tax Revenues received from, or on behalf of, the District (other than as a result of Prepayments, which shall be transferred to the Prepayment Account
-24-
of the Bond Fund held by the Fiscal Agent) and any amounts required by the Fiscal Agent Agreement to be deposited in the Special Tax Fund, and within such fund, a Surplus Account, to the credit of which the Fiscal Agent will deposit surplus Special Tax Revenues as described below. Moneys in the Special Tax Fund will be held in trust by the Fiscal Agent for the benefit of the District and the Owners of the Bonds, will be disbursed as provided below, and, pending any disbursement, will be subject to a lien in favor of the Owners of the Bonds. Notwithstanding the foregoing, the Fiscal Agent may semi-annually transfer from the Special Tax Fund to the District an amount equal to one-half of the Administrative Expenses Cap as necessary for the payment of Administrative Expenses.
From time to time as needed to pay the obligations of the District, but no later than the Business
Day before each Interest Payment Date, the Fiscal Agent shall withdraw from the Special Tax Fund and transfer the following amounts in the following order of priority:
(i) to the Bond Fund, an amount, taking into account any amounts then on deposit in the Bond Fund, such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the Bonds for such Interest Payment Date;
(ii) to the Reserve Fund an amount, taking into account amounts then on deposit in
the Reserve Fund, so that the amount in the Reserve Fund equals the Reserve Requirement; and (iii) after the foregoing transfers, the Fiscal Agent shall, on or after September 2nd of
each year, transfer to the Surplus Account the amount remaining in the Special Tax Fund, whereupon such moneys transferred will be free of the pledge for payment of the Bonds. From time to time, upon receipt of an Officer’s Certificate, the Fiscal Agent may withdraw from
the Surplus Account of the Special Tax Fund amounts needed to pay Administrative Costs in excess of the Administrative Expenses Cap, costs of the Facilities, or incidental expenses of the District authorized under the Act. Moneys in the Surplus Account may, at the District's discretion, also be used to pay the principal of, premium, if any, and interest on the Bonds or to replenish the Reserve Fund to the amount of the Reserve Requirement.
Bond Fund
Establishment. Pursuant to the Fiscal Agent Agreement, the Fiscal Agent will establish as a
separate fund to be held by the Fiscal Agent, designated as the “Community Facilities District No. 2006-1 Special Tax Bonds Bond Fund” (the “Bond Fund”), to the credit of which deposits will be made as required by the Fiscal Agent Agreement. Moneys in the Bond Fund will be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, will be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, will be subject to a lien in favor of the Owners of the Bonds.
Within the Bond Fund there is also established the “Prepayment Account,” which will be used
exclusively for the administration of any prepayments of Special Taxes to assure the timely redemption of Bonds. Monies in the Prepayment Account will be used to redeem Bonds on the redemption date specified in the notice to the Fiscal Agent given pursuant to the Fiscal Agent Agreement. In the event all of the Special Taxes are prepaid in full, the Prepayment Account will be closed.
Bond Fund Disbursements. On each Interest Payment Date, the Fiscal Agent will withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments or any redemption of the Bonds under the Fiscal Agent Agreement.
-25-
In the event that amounts in the Bond Fund are insufficient to pay regularly scheduled payments
of principal of and interest on any Series of Bonds, the Fiscal Agent will withdraw from the respective reserve account within the Reserve Fund established for such Series of Bonds to the extent of any funds therein, the amount of such insufficiency, and the Fiscal Agent will provide written notice to the Chief Business Officer of the amounts so withdrawn from the Reserve Fund. Amounts so withdrawn from the Reserve Fund will be deposited in the Bond Fund.
If, after the foregoing transfer, there are insufficient funds in the Bond Fund to make the payments
provided for to pay regularly scheduled payments of principal of and interest on the Bonds, the Fiscal Agent will apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments. Any sinking payment not made as scheduled will be added to the sinking payment to be made on the next sinking payment date.
Reserve Fund
Establishment. Pursuant to the Fiscal Agent Agreement, the Fiscal Agent will establish as a
separate fund to be held by the Fiscal Agent, designated as the “Community Facilities District No. 2006-1 Special Tax Bonds Reserve Fund” (the “Reserve Fund”), and within the Reserve Fund will be established a 2018 Bonds Reserve Account, into which the District intends to deposit the 2018 Bonds Reserve Policy in satisfaction of the Reserve Requirement (defined below) for the Bonds. For each respective series of Additional Bonds (as defined herein) covered by the Reserve Fund, the Fiscal Agent will establish a separate subaccount within the Reserve Fund for each such series. Moneys in each subaccount will be held in trust by the Fiscal Agent for the benefit of the Owners of all Outstanding Bonds covered by the Reserve Fund as a reserve for the payment of principal of, and interest on, all Outstanding Bonds covered by the Reserve Fund and will be subject to a lien in favor of the Owners of such Bonds.
Definition of Reserve Requirement. The Fiscal Agent Agreement defines “Reserve
Requirement” to mean an amount equal to the lesser of (a) Maximum Annual Debt Service on the respective Outstanding Bonds covered by the Reserve Fund, (b) 125% of the average Annual Debt Service on the respective Outstanding Bonds covered by the Reserve Fund, as calculated at the time of issuance thereof, or (c) 10% of the original principal amount of the respective Bonds covered by the Reserve Fund (or the issue price of the respective Bonds excluding accrued interest, if the net original issue discount or premium is less than 98% or more than 102% of the principal amount of the respective Bonds), as calculated by the District.
Use of Reserve Fund. Except as otherwise provided in the Fiscal Agent Agreement, all amounts
deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency within five days prior to any Interest Payment Date in the Bond Fund of the amount required for payment of the principal of, and interest on, the Bonds covered by the Reserve Fund on such Interest Payment Date.
Notwithstanding anything to the contrary in the Fiscal Agent Agreement, only the Special Tax
(i.e., Special Tax A or Special Tax B) that is responsible for a draw on the Reserve Fund shall be used to replenish the Reserve Fund, and if both Special Taxes are responsible for said draw, both Special Taxes shall be used to replenish the Reserve Fund, in the same proportion as resulted in the draw.
Transfer Due to Deficiency in Bond Fund. Whenever transfer is made from the Reserve Fund
to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent will provide written notice thereof to the Chief Business Officer.
-26-
Transfer of Excess of Required Bond Reserve. Any excess moneys remaining in the Bond
Fund following the payment of debt service on the Bonds will be transferred to the Special Tax Fund in accordance with the Fiscal Agent Agreement.
Investment of Moneys in Funds
Moneys in any fund or account created or established by the Fiscal Agent Agreement and held by the Fiscal Agent will be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to the written direction of the Chief Business Officer filed with the Fiscal Agent in accordance with the Fiscal Agent Agreement. See “APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement” for a definition of “Permitted Investments” and other restrictions on the investment of moneys in the funds and accounts held under the Fiscal Agent Agreement.
No Issuance of Additional Bonds Except for Refunding
The District may not issue or enter into bonds, notes, leases or other evidences of indebtedness
payable from Special Taxes and by the Special Tax Revenues equally and ratably with Bonds (“Additional Bonds”), except that the District may issue Additional Bonds to refund all or part of the Bonds. Nothing in the Fiscal Agent Agreement will prevent the District from issuing or entering into bonds, notes, leases or other evidences of indebtedness payable from Special Taxes and Special Tax Revenues on a subordinate basis.
-27-
BOND INSURANCE
Bond Insurance Policy. Concurrently with the issuance of the Bonds, Assured Guaranty Municipal Corp. (“AGM”) will issue its Municipal Bond Insurance Policy (the “Policy”) for certain maturities of the Bonds (the “Insured Bonds”). The Policy guarantees the scheduled payment of principal of and interest on the Insured Bonds when due as set forth in the form of the Policy included as Appendix G to this Official Statement. At the time of pricing, the District will decide which maturities of the Bonds to insure.
The Policy is not covered by any insurance security or guaranty fund established under New York,
California, Connecticut or Florida insurance law.
Assured Guaranty Municipal Corp. AGM is a New York domiciled financial guaranty insurance company and an indirect subsidiary of Assured Guaranty Ltd. (“AGL”), a Bermuda-based holding company whose shares are publicly traded and are listed on the New York Stock Exchange under the symbol “AGO”. AGL, through its operating subsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructure and structured finance markets. Neither AGL nor any of its shareholders or affiliates, other than AGM, is obligated to pay any debts of AGM or any claims under any insurance policy issued by AGM.
AGM’s financial strength is rated “AA” (stable outlook) by S&P Global Ratings, a business unit of
Standard & Poor’s Financial Services LLC (“S&P”), “AA+” (stable outlook) by Kroll Bond Rating Agency, Inc. (“KBRA”) and “A2” (stable outlook) by Moody’s Investors Service, Inc. (“Moody’s”). Each rating of AGM should be evaluated independently. An explanation of the significance of the above ratings may be obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold any security, and such ratings are subject to revision or withdrawal at any time by the rating agencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, the rating agencies may at any time change AGM’s long-term rating outlooks or place such ratings on a watch list for possible downgrade in the near term. Any downward revision or withdrawal of any of the above ratings, the assignment of a negative outlook to such ratings or the placement of such ratings on a negative watch list may have an adverse effect on the market price of any security guaranteed by AGM. AGM only guarantees scheduled principal and scheduled interest payments payable by the issuer of bonds insured by AGM on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the relevant insurance policy), and does not guarantee the market price or liquidity of the securities it insures, nor does it guarantee that the ratings on such securities will not be revised or withdrawn.
Current Financial Strength Ratings
On May 7, 2018, Moody’s announced it had affirmed AGM’s insurance financial strength rating of
“A2” (stable outlook). AGM can give no assurance as to any further ratings action that Moody’s may take.
On January 23, 2018, KBRA announced it had affirmed AGM’s insurance financial strength rating
of “AA+” (stable outlook). AGM can give no assurance as to any further ratings action that KBRA may take.
On June 26, 2017, S&P announced it had affirmed AGM’s financial strength rating of “AA” (stable
outlook). AGM can give no assurance as to any further ratings action that S&P may take.
-28-
For more information regarding AGM’s financial strength ratings and the risks relating thereto, see AGL’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
Capitalization of AGM
At March 31, 2018:
• The policyholders’ surplus of AGM was approximately $2,247 million.
• The contingency reserves of AGM and its indirect subsidiary Municipal Assurance Corp. (“MAC”) (as described below) were approximately $1,133 million. Such amount includes 100% of AGM’s contingency reserve and 60.7% of MAC’s contingency reserve.
• The net unearned premium reserves of AGM and its subsidiaries (as described below) were approximately $1,646 million. Such amount includes (i) 100% of the net unearned premium reserves of AGM and AGM’s wholly owned subsidiaries Assured Guaranty (Europe) plc, Assured Guaranty (UK) plc, CIFG Europe S.A. and Assured Guaranty (London) plc (together, the “AGM
European Subsidiaries”) and (ii) 60.7% of the net unearned premium reserve of MAC.
The policyholders’ surplus of AGM and the contingency reserves and net unearned premium reserves of AGM and MAC were determined in accordance with statutory accounting principles. The net unearned premium reserves of the AGM European Subsidiaries were determined in accordance with accounting principles generally accepted in the United States of America.
Incorporation of Certain Documents by Reference
Portions of the following documents filed by AGL with the Securities and Exchange Commission
(the “SEC”) that relate to AGM are incorporated by reference into this Official Statement and shall be deemed to be a part hereof:
(i) the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (filed by AGL
with the SEC on February 23, 2018); and
(ii) the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (filed by AGL with the SEC on May 4, 2018).
All consolidated financial statements of AGM and all other information relating to AGM included
in, or as exhibits to, documents filed by AGL with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, excluding Current Reports or portions thereof “furnished” under Item 2.02 or Item 7.01 of Form 8-K, after the filing of the last document referred to above and before the termination of the offering of the Bonds shall be deemed incorporated by reference into this Official Statement and to be a part hereof from the respective dates of filing such documents. Copies of materials incorporated by reference are available over the internet at the SEC’s website at http://www.sec.gov, at AGL’s website at http://www.assuredguaranty.com, or will be provided upon request to Assured Guaranty Municipal Corp.: 1633 Broadway, New York, New York 10019, Attention: Communications Department (telephone (212) 974-0100). Except for the information referred to above, no information available on or through AGL’s website shall be deemed to be part of or incorporated in this Official Statement.
Any information regarding AGM included herein under the caption “BOND INSURANCE –
Assured Guaranty Municipal Corp.” or included in a document incorporated by reference herein
-29-
(collectively, the “AGM Information”) shall be modified or superseded to the extent that any subsequently included AGM Information (either directly or through incorporation by reference) modifies or supersedes such previously included AGM Information. Any AGM Information so modified or superseded shall not constitute a part of this Official Statement, except as so modified or superseded.
Miscellaneous Matters AGM makes no representation regarding the Bonds or the advisability of investing in the Bonds.
In addition, AGM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding AGM supplied by AGM and presented under the heading “BOND INSURANCE”.
-30-
THE COMMUNITY FACILITIES DISTRICT
Description and Location
General. The District encompasses approximately 49 gross acres within the boundaries of the
School District, consisting of six non-contiguous areas of land that have developed into residential neighborhoods in the cities of Riverside and Corona and the unincorporated area of the County. Four of the neighborhoods (designated as Zone 1 in the Special Tax Formula) are located within the City of Riverside, one neighborhood (designated as Zone 2 in the Special Tax Formula) is located within the City of Corona and one neighborhood (designated as Zone 3 in the Special Tax Formula) is located within the unincorporated area of the County. These six neighborhoods have been developed into 300 single-family homes, each of which is owned by individual homeowners. See APPENDIX A for certain demographic and economic information on the City of Riverside, City of Corona and the County.
The following table shows the six different neighborhoods that comprise the land in the District,
by zone (as set forth in the Special Tax Formula), total assessed value for Fiscal Year 2017-18 and percentage share of the special tax levy for Fiscal Year 2017-18.
Community Facilities District No. 2006-1
of the Alvord Unified School District
Zone
Geographical
Location Tract
Neighborhood
No. of
Units Total Assessed
Value FY17-18
% Share of
Special Tax
Levy FY17-18 1 City of Riverside 33403 Sierra Park 62 $19,177,161.00 18.40% 1 City of Riverside 31553 Garden Gate 62 14,650,045.00 18.40 1 City of Riverside 31014 Somervale II 30 9,618,284.00 8.90 1 City of Riverside 32533 Georgetown Square 93 20,294,604.00 27.60 2 City of Corona 33000 Silverhawk Summit 25 11,930,582.00 19.19 3 County of Riverside 32128 Camden Place 28 13,841,119.00 7.50
Totals(1)
300 $89,511,795.00 100.00%
(1) Columns may not sum to totals due to rounding. Source: County of Riverside Assessor’s Roll, Cooperative Strategies, LLC.
District Entirely Developed. The taxable property in the District has been fully developed and
consists entirely of 300 single-family homes. Assessed Valuations and Value-to-Debt Ratios
Assessed Valuations; No Appraisal. The District has not commissioned an appraisal of the
300 taxable parcels in the District. Instead, all estimated property values shown in this Official Statement are based on the Fiscal Year 2017-18 tax roll of the Riverside County Assessor (the “County Assessor”), which is the most recent equalized assessor’s roll.
General Information Regarding Assessed Values. Article XIIIA of the California Constitution (“Proposition 13”) defines “full cash value” to mean “the county assessor's valuation of real property as shown on the 1975-76 bill under ‘full cash value,’ or, thereafter, the appraised value of real property when purchased or newly constructed or when a change in ownership has occurred after the 1975 assessment,” subject to exemptions in certain circumstances of property transfer or reconstruction. The “full cash value” is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors.
-31-
Because of the general limitation to 2% per year in increases in full cash value of properties that remain in the same ownership, the county tax roll does not reflect values uniformly proportional to actual market values.
In addition, assessed values can be reduced as a result of two basic types of property tax
assessment appeals under State law: (a) a base-year assessment appeal, which involves a dispute on the valuation assigned by the assessor immediately subsequent to an instance of a change in ownership or completion of new construction, and (b) a Proposition 8 appeal, which can result (as a result of a property owner’s application) if factors occur causing a decline in the market value of the property to a level below the property’s then-current assessed value. Proposition 8 reductions may also be unilaterally applied by the County assessor. While County assessors typically attempt to consider declines in value and to assess all property at the lesser of market value or factored based year each year for every parcel, when there is widespread decline in property value, the County assessor may elect to reduce assessed values without assessing individual properties, a practice known as “blanket” Proposition 8 reductions.
No assurance can be given that should a parcel with delinquent Special Taxes be foreclosed and
sold for the amount of the delinquency, that any bid will be received for such property, or if a bid is received that such bid will be sufficient to pay such delinquent Special Taxes.
Secured Assessed Valuation History. The table below presents the overall secured assessed
valuation of property in the District for fiscal years 2007 through 2018.
Table 1 Community Facilities District No. 2006-1
of the Alvord Unified School District Secured Assessed Valuation History Fiscal Years 2006-07 through 2017-18
Fiscal Year
Ending June 30
No. of Developed
Parcels
No. of Undeveloped
Parcels
Secured Assessed Value
Land
Secured Assessed Value
Improvement
Secured Assessed
Value Other
Total Secured Assessed
Value
Annual Percentage
Increase 2007 70 230 $11,837,558.00 $4,017,244.00 $0.00 $15,854,802.00 -- 2008 238 62 30,046,831.00 38,740,945.00 0.00 68,787,776.00 333.86% 2009 243 57 32,917,217.00 46,466,899.00 0.00 79,384,116.00 15.40 2010 243 57 24,132,142.00 34,111,605.00 0.00 58,243,747.00 (26.63) 2011 251 49 25,966,720.00 37,790,584.00 0.00 63,757,304.00 9.47 2012 262 38 26,801,493.00 37,014,550.00 0.00 63,816,043.00 0.09 2013 282 18 24,100,595.00 35,312,125.00 0.00 59,412,720.00 (6.90) 2014 300 0 24,267,504.00 41,903,449.00 0.00 66,170,953.00 11.38 2015 300 0 26,883,903.00 46,807,066.00 0.00 73,690,969.00 11.36 2016 300 0 28,579,316.00 52,922,786.00 0.00 81,502,102.00 10.60 2017 300 0 29,120,270.00 55,917,032.00 0.00 85,037,302.00 4.34 2018 300 0 29,551,727.00 59,960,068.00 0.00 89,511,795.00 5.26
Source: County of Riverside Assessor’s Roll.
-32-
Estimated Value-to-Debt Ratios. The tables below show the approximate value-to-debt ratio for the 300 taxable parcels in the District based on the secured assessed values reported by the County Assessor for Fiscal Year 2017-18, the amount of the Fiscal Year 2017-18 special tax levy in the District, and the proposed principal amount of the Bonds. No assurance can be given that the amounts shown in this table will conform to those ultimately realized in the event of a foreclosure action resulting from delinquency in the payment of Special Taxes.
Table 2A
Community Facilities District No. 2006-1 of the Alvord Unified School District
Secured Assessed Valuations and Value-to-Debt Ratios Allocated by Zone
Zone Tract No. of Units
2017-18 Special Tax Levy(2)
% Share of Special Tax Levy
Allocated Principal Amount
of the Bonds*(3)
Total Secured Assessed
Value(1)
Average Assessed
Value-to-Debt Ratio(4)
1 33403 62 $132,641.56 18.40% $1,488,235.82 $19,177,161.00 12.89:1 1 31553 62 132,641.56 18.40 1,488,235.82 14,650,045.00 9.84:1 1 31014 30 64,181.40 8.90 720,114.11 9,618,284.00 13.36:1 1 32533 93 198,962.34 27.60 2,232,353.74 20,294,604.00 9.09:1 2 33000 25 138,366.48 19.19 1,559,544.06 11,930,582.00 7.65:1 3 32128 28 54,099.92 7.50 606,516.45 13,841,119.00 22.82:1
Total(5) 300 $720,893.26 100.00% $8,095,000.00 $89,511,795.00 11.06:1 .* Preliminary; subject to change. (1) Fiscal Year 2017-18 Assessed Value as provided by the County of Riverside Assessor’s Roll. (2) Represents the combined amounts of both Special Tax A and Special Tax B. (3) The 2018 Special Tax Refunding Bond amounts have been allocated proportionate to each parcel's proportionate share of the Fiscal Year 2017-18 Levy for
Special Tax A and Special Tax B. (4) Average value-to-debt per lot; actual value-to-debt per lot may vary. (5) Columns may not sum to totals due to rounding. Source: County of Riverside Assessor’s Roll, Cooperative Strategies, LLC.
Table 2B Community Facilities District No. 2006-1
of the Alvord Unified School District Secured Assessed Valuations and Value-to-Debt Ratios
Allocated by Value-to-Debt Categories
Value-to-Debt Category
No. of Units
2017-18 Special Tax Levy(2)
% Share of Special Tax Levy
Allocated Principal Amount of the Bonds*(3)
Total Secured Assessed
Value(1)
Average Assessed Value-to-Debt Ratio(4)
15:1 and above 41 $82,326.34 11.42% $923,250.90 $19,089,235.00 20.68:1 10:1 to 15:1 144 307,863.48 42.71 3,454,205.22 41,154,064.00 11.91:1 7:1 to 10:1 86 239,109.98 33.17 2,687,403.92 22,935,980.00 8.53:1 5:1 to 7:1 27 87,521.94 12.14 984,474.86 6,122,325.00 6.22:1 5:1 and below 2 4,071.52 0.56 45,665.11 210,191.00 4.60:1
Total(5) 300 $720,893.26 100.00% $8,095,000.00 $89,511,795.00 11.06:1 .* Preliminary; subject to change. (1) Fiscal Year 2017-18 Assessed Value as provided by the County of Riverside Assessor’s Roll. (2) Represents the combined amounts of both Special Tax A and Special Tax B. (3) The 2018 Special Tax Refunding Bond amounts have been allocated proportionate to each parcel's proportionate share of the Fiscal Year 2017-18 Levy for
Special Tax A and Special Tax B. (4) Average value-to-debt per lot; actual value-to-debt per lot may vary. (5) Columns may not sum to totals due to rounding. Source: County of Riverside Assessor’s Roll, Cooperative Strategies, LLC.
-33-
Direct and Overlapping Governmental Obligations Contained within the boundaries of the District are certain overlapping local agencies providing public services and assessing
property taxes, assessments, special taxes and other charges on the property in the District. Many of these local agencies have outstanding debt. The direct and overlapping obligations affecting the property in the District as of April 17, 2018 are shown in the following table. The table was prepared by California Tax Data Inc. and is included for general information purposes only.
Table 3
Direct and Overlapping Governmental Obligations for Property Subject to the Special Taxes of
Community Facilities District No. 2006-1 of the Alvord Unified School District
as of April 17, 2018
I. Assessed Value 2017-2018 Secured Roll Assessed Value $89,543,403(1)
II. Land Secured Bond Indebtedness Outstanding Direct and Overlapping Bonded Debt Issued Outstanding % Applicable Parcels Amount Alvord Unified School District CFD No. 2006-1 (Tax A) $4,560,000 $3,635,000 100.00000% 300 $3,635,000 Alvord Unified School District CFD No. 2006-1 (Tax B) $4,360,000 $3,475,000 100.00000% 300 $3,475,000 TOTAL LAND SECURED BOND INDEBTEDNESS (2) $7,110,000 TOTAL OUTSTANDING LAND SECURED BOND INDEBTEDNESS (2) $7,110,000
III. General Obligation Bond Indebtedness Outstanding Direct and Overlapping Bonded Debt Issued Outstanding % Applicable Parcels Amount Alvord Unified School District GOB 1997 $57,000,000 $28,805,000 1.12516% 300 $324,103 Alvord Unified School District GOB 2007 $116,941,560 $107,340,195 1.12516% 300 $1,207,751 Alvord Unified School District GOB 2012 $78,998,673 $78,028,673 1.12516% 300 $877,949 City of Riverside GOB 2003 $2,000,000 $10,280,000 0.23801% 247 $24,468 Metropolitan Water District of Southern California GOB 1966 $850,000,000 $60,600,000 0.05177% 300 $31,373 Riverside Community College District GOB $310,003,424 $256,365,339 0.09459% 300 $242,505 TOTAL GENERAL OBLIGATION BOND INDEBTEDNESS (2) $2,708,147 TOTAL OUTSTANDING GENERAL OBLIGATION BOND INDEBTEDNESS (2) $2,708,147 TOTAL OF ALL OUTSTANDING AND OVERLAPPING TAX AND ASSESSMENT BONDED DEBT $9,818,147.33 RATIO OF ASSESSED VALUE TO ALL OUTSTANDING TAX AND ASSESSMENT BONDED DEBT 9.12:1 (1) Total 2017-18 secured roll assessed valuation includes exempt properties. (2) Additional bonded indebtedness or available bond authorization may exist but are not shown because a tax was not levied for the referenced fiscal year. Source: California Tax Data Inc.
-34-
Special Tax Collection and Delinquency Rates Overall Delinquencies. Special Taxes were first levied in the District in Fiscal Year 2006-07. The following tables present the
collections and delinquencies of Annual Special Tax A and for Annual Special Tax B, respectively, for Fiscal Years 2006-07 through 2017-18. The School District is pursuing foreclosure proceedings against the single parcel that remains delinquent for Fiscal Year 2009-10.
Table 4A
Community Facilities District No. 2006-1 of the Alvord Unified School District
Special Tax Collections and Delinquencies, Annual Special Tax A Fiscal Years 2006-07 through 2017-18
Subject Fiscal Year(1) Continuous(2)
Fiscal Year Ending June 30
Aggregate Special Tax
Total Special Taxes Collected
Parcels Levied
Parcels Delinquent
Amount Delinquent
Delinquency Rate
Remaining Parcels
Delinquent
Remaining Amount
Delinquent Remaining
Delinquency Rate 2007 $86,462.60 $79,669.11 70 7 $6,793.49 7.86% 0 $0.00 0.00% 2008 293,972.84 264,946.11 238 26 29,026.73 9.87 0 0.00 0.00 2009 300,148.74 268,651.65 243 32 31,497.09 10.49 0 0.00 0.00 2010 320,534.18 285,944.17 243 70 34,590.01 10.79 1 617.59 0.19 2011 342,653.04 335,859.55 251 6 6,793.49 1.98 0 0.00 0.00 2012 323,617.16 319,294.03 262 4 4,323.13 1.34 0 0.00 0.00 2013 348,320.76 343,997.63 282 4 4,323.13 1.24 1 1,235.18 0.35 2014 370,554.00 363,142.92 300 9 7,411.08 2.00 1 1,235.18 0.33 2015 370,554.00 364,378.10 300 7 6,175.90 1.67 4 3,705.54 1.00 2016 370,554.00 357,584.61 300 13 12,969.39 3.50 4 4,323.13 1.17 2017 370,554.00 368,083.64 300 2 2,470.36 0.67 2 2,470.36 0.67 2018(3) 185,277.00 182,189.05 300 5 3,087.95 1.67 5 3,087.95 1.67
(1) Delinquencies as reported by the Riverside County Tax Collector as of June 30th of the subject Fiscal Year. (2) Delinquencies as reported by the Riverside County Tax Collector as of June 30th, 2017. (3) Amounts shown represent Fiscal Year 2017-18 first installment delinquencies as reported by the Riverside County Tax Collector as of January 17, 2018. The total Fiscal Year 2017-18 Special Tax A levy equals
$370,554.00. Source: Riverside County Tax Collector
-35-
Table 4B Community Facilities District No. 2006-1
of the Alvord Unified School District Special Tax Collections and Delinquencies, Annual Special Tax B
Fiscal Years 2006-07 through 2017-18
Subject Fiscal Year Continuous(2)
Fiscal Year Ending June 30
Aggregate Special Tax
Total Special Taxes
Collected Parcels Levied
Parcels Delinquent
Amount Delinquent
Delinquency Rate
Remaining Parcels
Delinquent
Remaining Amount
Delinquent Remaining
Delinquency Rate 2007 $63,294.00 $58,320.90 70 7 $4,973.10 7.86% 0 $0.00 0.00% 2008 294,278.86 248,825.44 238 26 45,453.42 15.45 0 0.00 0.00 2009 298,799.86 255,449.28 243 32 43,350.58 14.51 0 0.00 0.00 2010 329,319.40 286,665.25 243 70 42,654.15 12.95 1 452.10 0.14 2011 306,033.46 301,060.36 251 6 4,973.10 1.63 0 0.00 0.00 2012 315,979.66 309,342.34 262 4 6,637.32 2.10 0 0.00 0.00 2013 334,063.66 329,162.65 282 4 4,901.01 1.47 1 904.20 0.27 2014 350,339.26 343,281.37 300 9 7,057.89 2.01 1 904.20 0.26 2015 350,339.26 346,826.08 300 5 3,513.18 1.00 4 2,608.98 0.74 2016 350,339.26 338,000.35 300 10 12,338.91 3.52 4 6,533.70 1.86 2017 350,339.26 345,265.48 300 2 5,073.78 1.45 2 5,073.78 1.45 2018 175,169.63 171,172.82 300 5 3,996.81 2.28 5 3,996.81 2.28
(1) Delinquencies as reported by the Riverside County Tax Collector as of June 30th of the subject Fiscal Year. (2) Delinquencies as reported by the Riverside County Tax Collector as of June 30th, 2017. (3) Amounts shown represent Fiscal Year 2017-18 first installment delinquencies as reported by the Riverside County Tax Collector as of January 17, 2018. The total Fiscal Year 2017-18 Special Tax B levy equals
$350,339.26. Source: Riverside County Tax Collector
-36-
Sample Tax Bills for Single-Family Homes
The following three tables present sample Fiscal Year 2017-18 tax bills for single-family homes in the three different zones (as set forth in the Special Tax Formula) within the District.
Table 5A
Community Facilities District No. 2006-1 of the Alvord Unified School District Fiscal Year 2017-18 Sample Tax Bill
Zone 1
Assessed Valuations and Property Taxes Total Assessed Value $265,500.00 Homeowner's Exemption ($7,000.00) Taxable Value [1] $258,500.00
Ad Valorem Property Taxes
Percent of Total AV
Amount
General Purposes 1.00000% $2,585.00 General Obligation Bonds Alvord Unified School District GOBs 0.15000% $387.75 City of Riverside GOBs 0.00608% $15.71 Metropolitan Water District of Southern California GOBs 0.00350% $9.04 Riverside Community College District GOBs 0.01616% $41.77 Total Ad Valorem Property Taxes 1.17573% $3,039.27 Assessments, Special Taxes and Parcel Charges City of Riverside Library Services $19.00 City of Riverside Lighting District $27.60 County of Riverside Service Area No. 152 (Water Riverside) $10.00 Metropolitan Water District of Southern California Standby Charge (West) $9.22 Alvord Unified School District CFD No. 2006-1 (Tax A) $1,235.18 Alvord Unified School District CFD No. 2006-1 (Tax B) $904.20 Total Assessments, Special Taxes and Parcel Charges $2,205.20 Total Property Taxes $5,244.47 Total Effective Tax Rate as a
Percent of Assessed Value 1.98%
_____________________ (1) Fiscal Year 2017-18 assessed valuation for a single-family detached unit containing 1,493 building square feet, selected to represent the median effective tax rate for a single family detached unit within Zone 1 of the District. Source: Cooperative Strategies, LLC.
-37-
Table 5B Community Facilities District No. 2006-1
of the Alvord Unified School District Fiscal Year 2017-18 Sample Tax Bill
Zone 2
Assessed Valuations and Property Taxes Total Assessed Value $493,260.00 Homeowner's Exemption ($7,000.00)
Taxable Value [1] $486,260.00
Ad Valorem Property Taxes
Percent of Total AV
Amount
General Purposes 1.00000% $4,862.60 General Obligation Bonds Alvord Unified School District GOBs 0.15000% $729.39 Metropolitan Water District of Southern California GOBs 0.00350% $17.01 Riverside Community College District GOBs 0.01616% $78.57 Total Ad Valorem Property Taxes 1.16966% $5,687.57 Assessments, Special Taxes and Parcel Charges City of Corona LLMD No. 84-1 $49.22 City of Corona LLMD No. 84-2, Zone 14 $250.32 County of Riverside Service Area No. 152 (Corona Water) $10.00 Metropolitan Water District of Southern California Standby Charge (West) $9.22 Riverside County Flood Control and Water Conservation District NPDES (Santa Ana) $3.80 Alvord Unified School District CFD No. 2006-1 (Tax A) $1,235.18 Alvord Unified School District CFD No. 2006-1 (Tax B) $4,376.82 Total Assessments, Special Taxes and Parcel Charges $5,934.56 Total Property Taxes $11,622.13 Total Effective Tax Rate as a
Percent of Assessed Value 2.36%
_______________________________ (1) Fiscal Year 2017-18 assessed valuation for a single-family detached unit containing 3,645 building square feet, selected to represent the median effective tax rate for a single family detached unit within Zone 2 of the District. Source: Cooperative Strategies, LLC.
-38-
Table 5C Community Facilities District No. 2006-1
of the Alvord Unified School District Fiscal Year 2017-18 Sample Tax Bill
Zone 3
Assessed Valuations and Property Taxes Total Assessed Value $509,284.00 Homeowner's Exemption ($7,000.00) Taxable Value [1] $502,284.00 Ad Valorem Property Taxes Percent of Total AV Amount General Purposes 1.00000% $5,022.84 General Obligation Bonds Alvord Unified School District GOBs 0.15000% $753.42
Metropolitan Water District of Southern California GOBs 0.00350% $17.57 Riverside Community College District GOBs 0.01616% $81.16 Total Ad Valorem Property Taxes 1.16966% $5,874.99
Assessments, Special Taxes and Parcel Charges County of Riverside CSA No. 152 (Street Sweeping) $44.14
County of Riverside LLMD No. 89-1C, Zone 15 $355.08 County of Riverside Service Area No. 132 (Street Lights) $77.46 Metropolitan Water District of Southern California Standby Charge (West) $9.22 Riverside County Flood Control and Water Conservation District NPDES (Santa Ana) $3.74 Western Municipal Water District Sewer Charges $575.06 Alvord Unified School District CFD No. 2006-1 (Tax A) $1,235.18 Alvord Unified School District CFD No. 2006-1 (Tax B) $696.96
Total Assessments, Special Taxes and Parcel Charges $2,996.84
Total Property Taxes $8,871.83 Total Effective Tax Rate as a Percent of Assessed Value 1.74%
(1) Fiscal Year 2017-18 assessed valuation for a single-family detached unit containing 3,645 building square feet, selected to
represent the median effective tax rate for a single family detached unit within Zone 3 of the District. Source: Cooperative Strategies, LLC.
-39-
BOND OWNERS' RISKS The purchase of the Bonds described in this Official Statement involves a degree of risk that may
not be appropriate for some investors. The following includes a discussion of some of the risks which should be considered before making an investment decision. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds.
Limited Obligation of the District to Pay Debt Service
The District has no obligation to pay principal of and interest on the Bonds if Special Tax
collections are delinquent or insufficient, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels for Special Tax delinquencies. Neither the School District nor the District is obligated to advance funds to pay debt service on the Bonds.
Levy and Collection of the Special Tax
General. The principal source of payment of principal of and interest on the Bonds is the
proceeds of the annual levy and collection of the Special Tax against property within the District. Limitation on Maximum Special Tax Rate. The annual levy of the Special Tax is subject to the
maximum annual Special Tax rate authorized in the Special Tax Formula. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds.
No Relationship Between Property Value and Special Tax Levy. Because the Special Tax
Formula is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels of Taxable Property and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels of Taxable Property and their proportionate share of debt service on the Bonds, and certainly not a direct relationship.
Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors
that might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected:
Property Tax Delinquencies. Failure of the owners of Taxable Property to pay property
taxes (and, consequently, the Special Taxes), or delays in the collection of or inability to collect the Special Taxes by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Taxes. See “– Property Tax Delinquencies” below. For a summary of recent property tax collection and delinquency rates in the District, see “THE COMMUNITY FACILITIES DISTRICT – Special Tax Collection and Delinquency Rates.”
Delays Following Special Tax Delinquencies and Foreclosure Sales. The Fiscal Agent Agreement generally provides that the Special Taxes will be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in “SECURITY FOR THE BONDS – Covenant to Foreclose” and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if
-40-
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.
If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the District of the proceeds of sale if the Reserve Fund is depleted. See “SECURITY FOR THE BONDS – Covenant to Foreclose.”
The ability of the District to collect interest and penalties specified by State law and to foreclose against properties having delinquent Special Tax installments may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”) has or obtains an interest. The FDIC would obtain such an interest by taking over a financial institution that has made a loan which is secured by property within the District. See “– Enforcement of Special Taxes on Governmentally Owned Properties” below.
Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of such military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.
Property Tax Delinquencies
General. Delinquencies in the payment of property taxes and, consequently, the Special Taxes,
can occur because the owners of delinquent parcels may not have received property tax bills from the County in a timely manner. Delinquencies can also reflect economic difficulties and duress by the property owner. See “THE COMMUNITY FACILITIES DISTRICT – Special Tax Collection and Delinquency Rates.”
Sustained or increased delinquencies in the payment of the Special Taxes could cause a draw
on the Reserve Fund established for the Bonds and perhaps, ultimately, a default in the payment on the Bonds.
Measures to Mitigate Consequences of Continuing Delinquencies. The District intends to
take certain actions designed to mitigate the impact of future delinquencies, including: enforcing the lien of the Special Taxes through collection procedures that will include foreclosure actions under certain circumstances (see “SECURITY FOR THE BONDS – Covenant to Foreclose”); and increasing the levy of Special Taxes against non-delinquent property owners in the District, to the extent permitted under the Special Tax Formula and the Act and to the extent the Special Taxes are not already being levied at the maximum Special Tax rate.
Limitations on Increases in Special Tax Levy. If owners are delinquent in the payment of the
Special Tax, the District may not increase Special Tax levies to make up for delinquencies for prior fiscal years above the maximum Special Tax rates specified in the Special Tax Formula.
In addition, the District’s ability to increase Special Tax levies on residential property to make up
for delinquencies for prior Fiscal Years is limited by Section 53321(d) of the California Government Code, which provides that the special tax levied against any parcel for which an occupancy permit for private
-41-
residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults.
In cases of significant delinquency, these factors may result in defaults in the payment of principal
of and interest on the Bonds. Risks Related to Homeowners with High Loan Mortgage to Value Ratios
Any future decline in home values in the District could result in property owner unwillingness or
inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes, when due. Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes.
It is possible that laws could be enacted in the future to assist homeowners in default in the
payment of mortgages and property taxes. It is further possible that federal laws could be enacted that would adversely impact the ability of the District to foreclose on parcels with delinquent Special Taxes. No assurance can be given that any such laws will be enacted, or if enacted will be effective in assisting affected homeowners.
Payment of Special Tax Is Not a Personal Obligation of the Property Owners
An owner of Taxable Property is not personally obligated to pay the Special Taxes. Rather, the
Special Taxes are an obligation running only against the parcels of Taxable Property. If, after a default in the payment of the Special Tax and a foreclosure sale by the District, the resulting proceeds are insufficient, taking into account other obligations also constituting a lien against the affected parcels of Taxable Property, the District will not have any recourse against the owner. Property Values
The value of Taxable Property within the District is a critical factor in determining the investment
quality of the Bonds. If a property owner defaults in the payment of Special Taxes, the District’s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. Property values could be adversely affected by economic and other factors beyond the District’s control, such as a general economic downturn, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, destruction of property caused by earthquake, flood, landslides, wildfires, or other natural disasters, environmental pollution or contamination, or unfavorable economic conditions.
The following is a discussion of specific risk factors that could affect the value of property in the
District. Natural Disasters. The value of the Taxable Property in the future can be adversely affected by
a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the Taxable Property and the continued habitability and enjoyment of such private improvements. The areas in and surrounding the District, like those in much of California, may be subject to unpredictable seismic activity, including earthquakes and landslides.
Other natural disasters could include, without limitation, floods, landslides, wildfires, droughts or
tornadoes. One or more natural disasters could occur and could result in damage to improvements of
-42-
varying seriousness. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the Taxable Property may well depreciate or disappear.
Legal Requirements. Other events that may affect the value of Taxable Property include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures.
Hazardous Substances. One of the most serious risks in terms of the potential reduction in the
value of Taxable Property is a claim with regard to a hazardous substance. In general, the owners and operators of Taxable Property may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 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 operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
The property values set forth in this Official Statement do not take into account the possible
reduction in marketability and value of any of the Taxable Property by reason of the possible liability of the owner or operator for the remedy of a hazardous substance condition of the parcel. Although the District is not aware that the owner or operator of any of the Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible that such liabilities do currently exist and that the District is not aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the Taxable
Property resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but that has not been released or the release of which is not presently threatened; or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but that may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of Taxable Property that is realizable upon a delinquency.
Other Possible Claims Upon the Value of Taxable Property
While the Special Taxes are secured by the 300 parcels of Taxable Property in the District, the
security only extends to the value of such Taxable Property that is not subject to priority and parity liens and similar claims.
The table in the section entitled “THE COMMUNITY FACILITIES DISTRICT – Direct and
Overlapping Governmental Obligations” shows the presently outstanding amount of governmental obligations (with stated exclusions), the tax or assessment for which is or may become an obligation of one or more of the parcels of Taxable Property. The table also states the additional amount of general obligation bonds the tax for which, if and when issued, may become an obligation of one or more of the
-43-
parcels of Taxable Property. The table does not specifically identify which of the governmental obligations are secured by liens on one or more of the parcels of Taxable Property.
In addition, other governmental obligations may be authorized and undertaken or issued in the
future, the tax, assessment or charge for which may become an obligation of one or more of the parcels of Taxable Property and may be secured by a lien on a parity with the lien of the Special Tax securing the Bonds.
In general, as long as the Special Taxes are collected on the County tax roll, the Special Taxes
and all other taxes, assessments and charges also collected on the tax roll are on a parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. In the event of proceedings to foreclose for delinquency of Special Taxes securing the Bonds, the Special Taxes will be subordinate only to existing prior governmental liens, if any. Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be on a parity with the other taxes, assessments and charges, and will share the proceeds of such foreclosure proceedings on a pro-rata basis. Although the Special Taxes will generally have priority over non-governmental liens on a parcel of Taxable Property, regardless of whether the non-governmental liens were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of bankruptcy. See “– Bankruptcy Delays” below.
Tax Cuts and Jobs Act
The “Tax Cuts and Jobs Act” was enacted into law on December 22, 2017 (the “Tax Act”). The
Tax Act makes significant changes to many aspects of the Internal Revenue Code of 1986, as amended (the “Code”). For example, the Tax Act reduces the amount of mortgage interest expense and state and local income tax and property tax expense that individuals may deduct from their gross income for federal income tax purposes, which could increase the cost of home ownership within the District. This increase in the cost of home ownership could, in turn, have an adverse effect on the price of homes in the District, or the ability or willingness of homeowners to pay Special Taxes or property taxes.
Enforcement of Special Taxes on Governmentally Owned Properties
General. The ability of the District to foreclose the lien of delinquent unpaid Special Tax
installments may be limited with regard to properties in which the FDIC, the Drug Enforcement Agency, the Internal Revenue Service (the “IRS”), or other federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States Constitution,
in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest.
The supremacy clause of the United States Constitution reads as follows: “This Constitution, and
the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
This means that, unless Congress has otherwise provided, if a federal governmental entity owns
a parcel that is subject to Special Taxes within the District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
-44-
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage
interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
The District has not undertaken to determine whether any federal governmental entity currently
has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within the District. No assurance can be given as to the likelihood that the risks described above will materialize while the Bonds are outstanding.
FDIC. If any financial institution making any loan secured by real property within the District is
taken over by the FDIC, and prior thereto or thereafter the loan (or loans) goes into default, resulting in ownership of the property by the FDIC, then the ability of the District to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.
The FDIC’s policy statement regarding the payment of state and local real property taxes (the
“Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.
The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including
special taxes and assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Act and a special tax formula, which determines the special tax due each year, are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC’s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes.
Prohibiting the lien of the Special Taxes to be foreclosed out at a judicial foreclosure sale could
reduce or eliminate the number of persons willing to purchase a delinquent parcel at a foreclosure sale. Exemptions and Reductions Under Special Tax Formula and the Act. Certain properties are
exempt from the Special Taxes in accordance with the Special Tax Formula and the Act, which provides
-45-
that properties or entities of the state, federal or local government are exempt from the Special Taxes; provided, however, that property within the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Taxes, will continue to be subject to the Special Taxes.
In addition, although the Act provides that if property subject to the Special Taxes is acquired by
a public entity through eminent domain proceedings, the obligation to pay the Special Taxes with respect to that property is to be treated as if it were a special assessment, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Taxes.
Depletion of Reserve Fund; Draw on the Reserve Policy
The Reserve Fund is to be maintained at an amount equal to the Reserve Requirement. See
“SECURITY FOR THE BONDS – Reserve Fund.” The District intends to deposit the 2018 Bonds Reserve Policy in the Reserve Fund to satisfy the Reserve Requirement with respect to the Bonds. Draws on the Policy and amounts, if any, in the Reserve Fund, will be used to pay principal of and interest on the Bonds if insufficient funds are available from the proceeds of the levy and collection of the Special Tax against property within the District. If the Reserve Fund is depleted, it can be replenished from the proceeds of the levy and collection of the Special Taxes that exceed the amounts to be paid to the Bond Owners under the Fiscal Agent Agreement. However, because the Special Tax levy is limited to the maximum annual Special Tax rates, it is possible that no replenishment would be possible if the Special Tax proceeds, together with other available funds, remain insufficient to pay all such amounts. Thus, it is possible that the Reserve Fund will be depleted and not be replenished by the levy and collection of the Special Taxes.
The Reserve Fund is not cross-collateralized between Special Tax A and Special Tax B.
Accordingly, only the Special Tax (i.e., Special Tax A or Special Tax B) that is responsible for a draw on the Reserve Fund shall be used to replenish the Reserve Fund, and if both Special Taxes are responsible for said draw, both Special Taxes shall be used to replenish the Reserve Fund, in the same proportion as resulted in the draw.
Bankruptcy Delays
The payment of the Special Tax and the ability of the District to foreclose the lien of a delinquent
unpaid Special Tax, as discussed in “SECURITY FOR THE BONDS,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become extinguished,
bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could result in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds.
In addition, the amount of any lien on property securing the payment of delinquent Special Taxes
could be reduced if the value of the property were determined by the bankruptcy court to have become
-46-
less than the amount of the lien, and the amount of the delinquent Special Taxes in excess of the reduced lien could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien for the Special Tax, or any such delay or non-payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent Special Taxes not being paid in full.
Disclosure to Future Purchasers
The District has recorded a notice of the lien of the Special Taxes in the Office of the County
Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such special tax obligation in the purchase of a parcel of land or a home in the District or the lending of money secured by property in the District. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with these requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax lien, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Taxes when due. No Acceleration Provisions
The Bonds do not contain a provision allowing for their acceleration in the event of a payment
default or other default under the terms of the Bonds or the Fiscal Agent Agreement. Under the Fiscal Agent Agreement, a Bond Owner is given the right for the equal benefit and protection of all Bond Owners similarly situated to pursue certain remedies. See “APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement.” So long as the Bonds are in book-entry form, DTC will be the sole holder and will be entitled to exercise all rights and remedies of Bondholders. Loss of Tax Exemption
As discussed under the caption “TAX MATTERS,” interest on the Bonds might 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 District in violation of its covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to become includable in gross income for purposes of federal income taxation, the Bonds would continue to remain outstanding until maturity.
IRS Audit of Tax-Exempt Bond Issues
The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including
both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of such Bonds might be affected as a result of such an audit of such Bonds (or by an audit of similar bonds or securities).
Impact of Legislative Proposals, Clarifications of Tax Code, and Court Decisions on Tax Exemption
Future legislative proposals, if enacted into law, clarification of the Tax Code, or court decisions
may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be
-47-
subject to or exempted from state income taxation, or otherwise prevent Bondowners from realizing the full current benefit of the tax status of such interest.
The introduction or enactment of any such legislative proposals, clarification of applicable law, or
court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation.
Voter Initiatives and State Constitutional Provisions
Under the California Constitution, the power of initiative is reserved to the voters for the purpose
of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.
Proposition 218. Proposition 218—Voter Approval for Local Government Taxes—
Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Among other things, Section 3 of Article XIIIC states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless the legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt.
Proposition 26. On November 2, 2010, California voters approved Proposition 26,
entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature.
Article XIIIC requires that all new local taxes be submitted to the electorate before they become
effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote. The Special Taxes and the Bonds were each authorized by not less than a two-thirds vote of the registered voters within the District who constituted the qualified electors at the time of such voted authorization, and the statute of limitations period for any challenges to the formation of the District and the levy of the Special Taxes has expired. The District believes, therefore, that issuance of the Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.
Like their antecedents, Proposition 218 and Proposition 26 have undergone, and are likely to
undergo, both judicial and legislative scrutiny. For example, in August 2014, in City of San Diego. v. Melvin Shapiro, an Appellate Court
invalidated an election held by the City of San Diego to authorize the levying of special taxes on hotels City-wide pursuant to a City charter ordinance creating a convention center facilities district which specifically defined the electorate to consist solely of (1) the owners of real property in the City on which
-48-
a hotel is located, and (2) the lessees of real property owned by a governmental entity on which a hotel is located. The court held that such landowners and lessees are neither “qualified electors” of the City for purposes of Articles XIII A, Section 4 of the California Constitution, nor a proper “electorate” under Article XIIIC, Section 2(d) of the California Constitution. The court specifically noted that the decision did not require the court to consider the distinct question of whether landowner voting to impose special taxes under Section 53326(b) of the Act (which was the nature of the voter approval through which the District was formed) violates the California Constitution in districts that lack sufficient registered voters to conduct an election among registered voters. Accordingly, this case should have no effect on the levy of the Special Taxes by the District.
The District cannot predict the ultimate outcome or effect of any such judicial scrutiny, legislative
actions, or future initiatives. These initiatives, and any future initiatives, may affect the collection of fees, taxes and other types of revenue by local agencies such as the District. 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 Bonds.
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary
market exists, that any Bonds can be sold for any particular price. Prices of bond 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.
No assurance can be given that the market price for the Bonds will not be affected by the
introduction or enactment of any future legislation (including without limitation amendments to the Code), or changes in interpretation of the Code, or any action of the IRS, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the Bonds for audit examination, or the course or result of any IRS audit or examination of the Bonds or obligations that present similar tax issues as the Bonds.
-49-
TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 is taken into account in determining certain income and earnings.
The opinions set forth in the preceding paragraph are subject to the condition that the District
comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Tax Code") relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The District has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public
at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium are disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross
income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Bonds under federal individual alternative minimum taxes.
Under the Tax Code, original issue premium is amortized on an annual basis over the term of the
Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Bonds.
-50-
California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is exempt
from California personal income taxes. Other Tax Considerations. Current and future legislative proposals, if enacted into law,
clarification of the Tax Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and regulations as
interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.
Form of Opinion. A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX D.
VERIFICATION OF MATHEMATICAL ACCURACY The Verification Agent, upon delivery of the Bonds, will deliver a report of the mathematical
accuracy of certain computations, contained in schedules provided to them on behalf of the District, relating to (a) the sufficiency of the anticipated amount of proceeds of the Bonds and other funds available to pay upon prior redemption, interest and redemption premium requirements of the Prior Bonds described under the heading “FINANCING PLAN – Refunding Plan” and (b) the “yields” on the amount of proceeds held and invested prior to redemption of the Prior Bonds and on the Bonds considered by Bond Counsel in connection with the opinion rendered by Bond Counsel that the Bonds are not “arbitrage bonds” within the meaning of Section 148 of the Tax Code.
The report of the Verification Agent will include the statement that the scope of their engagement
is limited to verifying mathematical accuracy, of the computations contained in such schedules provided to them, and that they have no obligation to update their report because of events occurring, or data or information coming to their attention, subsequent to the date of their report.
CONTINUING DISCLOSURE The District has covenanted for the benefit of holders and beneficial owners of the Bonds to
provide certain financial information and operating data relating to the District and the Bonds by not later
-51-
than 9 months following the end of the District’s fiscal year (which currently would be by March 31 each year based upon the June 30 end of the District’s fiscal year), commencing March 31, 2019, with the report for the 2017-18 Fiscal Year (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. The Annual Report and any event notices will be filed by the District with the Municipal Securities Rulemaking Board (the “MSRB”). The specific nature of the information to be contained in an Annual Report or other notices is set forth below under the caption “APPENDIX E – Form of Continuing Disclosure Certificate.” These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5) (the “Rule”).
The School District has made prior undertakings under the Rule in connection with long-term
obligations issued by the School District. In addition, Community Facilities District No. 2001-1 of the Alvord Unified School District, Community Facilities District No. 2002-1 of the Alvord Unified School District, and the District have made prior undertakings under the Rule in connection with the issuance of special tax bonds, compliance with which has been undertaken by School District staff on behalf of the community facilities districts. A review of said prior undertakings and all filings made by the School District, for itself and on behalf of the community facilities districts (including the District), in the previous five years has been undertaken and has found instances of non-compliance with the undertakings and the Rule, including (a) annual reports for certain years were filed in a timely fashion but did not include reference to all affected CUSIP numbers, and (b) filings to reflect rating upgrades were either not made or were filed late.
In order to assist it in complying with its disclosure undertakings for the Bonds, the District expects
to engage Cooperative Strategies, LLC to serve as dissemination agent for the Bonds. Cooperative Strategies, LLC also serves as dissemination agent for special tax bonds issued by Community Facilities District No. 2001-1 of the Alvord Unified School District and Community Facilities District No. 2002-1 of the Alvord Unified School District. Dale Scott & Company, Inc. serves as dissemination agent for each of the undertakings entered into by the School District for general obligation bonds pursuant to the Rule.
CERTAIN LEGAL MATTERS At the time of delivery of the Bonds, the District will certify that there is no action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the District has been served with process or threatened:
• that in any way questions the powers of the Board or the District, or • that in any way questions the validity of any proceeding taken by the Board in
connection with the issuance of the Bonds, or • wherein an unfavorable decision, ruling or finding could materially adversely affect
the transactions contemplated by the purchase contract with respect to the Bonds, or • that, in any way, could adversely affect the validity or enforceability of the
resolutions of the Board adopted in connection with the formation of the District or the issuance of the Bonds, the Fiscal Agent Agreement, the Continuing Disclosure Certificate or the purchase contract with respect to the Bonds, or
• to the knowledge of an authorized officer of the District, that in any way questions
the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes, or
-52-
• that in any other way questions the status of the Bonds under State tax laws or
regulations.
RATING
S&P Global Ratings, a Standard & Poor’s Financial Services LLC Business (“S&P”) is expected to assign a rating of “AA” to the Bonds maturing September 1, 2035* and 2036* (the “Insured Bonds”), based on the understanding that AGM will deliver the Policy upon delivery of the Insured Bonds. The District has not requested, and S&P has not assigned, an underlying rating to the Insured Bonds. The Bonds maturing September 1, 2018* through 2036* are not insured or rated. The rating on the Insured Bonds reflects only the view of S&P, and an explanation of the significance of the rating, and any outlook assigned to or associated with the rating, should be obtained from S&P.
The District and/or AGM provided certain information and materials to S&P (some of which does
not appear in this Official Statement) in connection with the rating on the Insured Bonds. Generally, a rating agency bases its rating on the information and materials furnished to it, as well as investigations, studies and assumptions of its own.
There is no assurance that the rating on the Insured Bonds will continue for any given period of
time or that the ratings will not be revised downward or withdrawn entirely by S&P, if in its judgment, circumstances so warrant. Any such downward revision or withdrawal of any rating on the Insured Bonds may have an adverse effect on the market price or marketability of the Insured Bonds.
UNDERWRITING
The Bonds are being sold to Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), pursuant to a bond purchase agreement for the Bonds. The Underwriter has agreed to purchase the Bonds at a price of $___________, representing the principal amount of the Bonds, plus/less [net] original issue premium/discount of $________ and less Underwriter’s discount of $___________. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering prices may be changed by the Underwriter.
ADDITIONAL INFORMATION The reference herein to the Fiscal Agent Agreement, the Escrow Agreement and the Continuing
Disclosure Certificate are brief outlines of certain provisions thereof. Such outlines do not purport to be complete and for full and complete statements of such provisions reference is made to said documents. Copies of the documents mentioned under this heading are available from the Underwriter and following delivery of the Bonds will be on file at the offices of the Fiscal Agent.
References are also made herein to certain documents and reports relating to the District and the
School District; such references are brief summaries and do not purport to be complete or definitive. Copies of such documents are available from upon written request to the School District.
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
-53-
construed as a contract or agreement between the District and the purchasers or Owners of any of the Bonds.
EXECUTION The execution and delivery of this Official Statement by the Alvord Unified School District
Community Facilities District No. 2006-1 have been duly authorized by its Board of Education.
COMMUNITY FACILITIES DISTRICT NO. 2006-1 OF THE ALVORD UNIFIED SCHOOL DISTRICT
By: Assistant Superintendent, Business Services
A-1
APPENDIX A
GENERAL INFORMATION ABOUT THE CITY OF CORONA, THE CITY OF RIVERSIDE, AND THE COUNTY OF RIVERSIDE The following information concerning the City of Corona (the “City of Corona”), the City of
Riverside (the “City of Riverside”), and Riverside County (the “County”) is included only for the purpose of supplying general information regarding the area of the District. The Bonds are not a debt of the City of Corona, the City of Riverside, the County, the State of California (the “State”) or any of its political subdivisions (other than the District), and none of the City of Corona, the City of Riverside, the County, the State or any of its political subdivisions (other than the District) is liable therefor.
The City of Corona. The City of Corona is located in the western portion of the County,
approximately 45 miles southeast of Los Angeles along State Route 91 and Interstate 15. The City encompasses an area of 39.3 square miles.
Incorporated in 1896, the City of Corona operates as a general law city with a council-manager
form of government. The five City Council members are elected at large for staggered four-year terms. The City Council elects one of the City Council members as Mayor. The City of Corona provides police protection, fire protection, animal control, building safety regulation and inspection, street lighting, beautification, water and wastewater service, land use planning and zoning, housing and community services, maintenance and improvement of streets and related structures, traffic safety maintenance and improvement and recreational and cultural programs for citizen participation.
The City of Riverside. The City of Riverside is located in the western portion of the County. About
60 miles east of downtown Los Angeles, and approximately 90 miles north of San Diego. The City encompasses an area of 81.4 square miles. Founded in 1870, the City of Riverside operates as a general law city. The City Council is comprised of seven elected members each representing the City of Riverside’s seven Wards; each member serves a four-year term. The Mayor is elected at large for four-year terms.
The County. The County, which encompasses 7,177 square miles, was organized in 1893 from
territory in San Bernardino and San Diego counties. Located in the southeastern portion of California, the County is bordered on the north by San Bernardino County, on the east by the State of Arizona, on the South by San Diego and Imperial counties and on the west by Orange and Los Angeles counties. There are 28 incorporated cities in the County.
The County's varying topology includes desert, valley and mountain areas as well as gently rolling
terrain. Three distinct geographical areas characterize the County: the western valley area, the higher elevations of the mountains, and the deserts. The western valley, the San Jacinto mountains and the Cleveland National Forest experience the mild climate typical of Southern California. The eastern desert areas experience warmer and dryer weather conditions. Riverside County is the site of famous resorts, such as those in Palm Springs, and is a leading area for inland water recreation. Nearly 20 lakes in the County are open to the public. The dry summers and moderate to cool winters make it possible to enjoy these and other recreational and cultural facilities on a year-round basis. Population
The largest cities in the County are the cities of Riverside, Moreno Valley, Corona, Menifee, Indio,
Murrieta, Temecula and Jurupa Valley. The areas of most rapid population growth continue to be those
A-2
more populated and industrialized cities in the western and central regions of the County and the southwestern unincorporated region of the County between Sun City and Temecula.
The following table sets forth annual population figures, as of January 1, for the City of Corona,
the City of Riverside, the County, and the State, for each of the years listed:
CITY OF CORONA, COUNTY OF RIVERSIDE, AND STATE OF CALIFORNIA
2014 through 2018 Population Estimates Year State of
(January 1) City of Corona City of Riverside Riverside County California 2014 160,955 315,129 2,291,262 38,568,628 2015 162,396 317,890 2,317,895 38,912,464 2016 163,341 320,226 2,346,717 39,179,627 2017 166,819 323,190 2,382,640 39,500,973 2018 168,574 325,860 2,415,955 39,809,693
Source: State of California Department of Finance, Demographic Research Unit.
[Remainder of Page Intentionally Left Blank.]
A-3
Employment The County is a part of the Riverside-San Bernardino-Ontario Metropolitan Statistical Area (the
“MSA”). The unemployment rate in the Riverside-San Bernardino-Ontario MSA was 4.4% in February 2018, down from a revised 4.6% in January 2018, and below the year-ago estimate of 5.6%. This compares with an unadjusted unemployment rate of 4.5% for California and 4.4% for the nation during the same period. The unemployment rate was 4.6% in Riverside County, and 4.3% in San Bernardino County.
The following table summarizes the civilian labor force, employment and unemployment in the
County for the calendar years 2013 through 2017. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in the City of Corona or the City of Riverside.
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA
(Riverside and San Bernardino Counties) Civilian Labor Force, Employment and Unemployment
(Annual Averages) March 2017 Benchmark
2013 2014 2015 2016 2017
Civilian Labor Force (1) 1,897,000 1,919,900 1,956,600 1,987,400 2,022,100 Employment 1,710,500 1,763,300 1,828,400 1,870,200 1,918,600 Unemployment 186,500 156,600 128,200 117,200 103,600 Unemployment Rate 9.8% 8.2% 6.6% 5.9% 5.1% Wage and Salary Employment: (2) Agriculture 14,500 14,300 14,800 14,700 14,400 Mining and Logging 1,200 1,300 1,300 900 900 Construction 70,000 77,000 85,700 92,500 14,700 Manufacturing 87,300 90,200 96,100 98,900 98,700 Wholesale Trade 56,400 59,000 61,600 62,900 63,700 Retail Trade 164,800 168,700 174,300 179,000 182,100 Transportation, Warehousing and Utilities 79,400 87,300 97,400 104,400 120,200 Information 11,500 11,200 11,400 11,600 11,300 Finance and Insurance 26,500 26,500 26,900 27,300 26,200 Real Estate and Rental and Leasing 15,600 16,200 17,000 18,000 18,200 Professional and Business Services 132,400 137,800 147,400 145,800 147,200 Educational and Health Services 184,500 193,600 205,100 214,300 224,800 Leisure and Hospitality 135,900 144,300 151,700 159,700 165,700 Other Services 41,100 43,200 44,000 45,100 45,600 Federal Government 20,300 20,200 20,300 20,500 20,600 State Government 27,800 28,200 28,700 29,700 30,700 Local Government 177,100 180,400 184,400 190,400 198,600 Total All Industries(3) 1,246,400 1,299,500 1,367,900 1,415,400 1,466,000
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Columns may not sum to totals due to rounding. Source: State of California Employment Development Department.
A-4
Largest Employers
The following table lists in descending order the top eleven employers within the City of Corona:
CITY OF CORONA Major Employers
(As of June 30, 2017)
Employer Name No. of Employees Corona-Norco Unified School District 5,399 Corona Regional Medical Center 1,113 Kaiser Permanente 995 All American Asphalt 840 City of Corona 805 Fender Guitar 650 Monster Energy 607 TWR Framing Enterprises 600 Thermal Structures 500 Veg Fresh Farms 425 CoreMark International 421
Source: City of Corona Comprehensive Audited Financial Statement, fiscal year 2016-17.
The following table lists in descending order the top ten employers within the City of Riverside:
CITY OF RIVERSIDE Major Employers
(As of June 30, 2017)
Employer Name No. of Employees County of Riverside 11,865 University of California 8,686 Riverside Unified School District 4,000 Kaiser 3,484 City of Riverside 2,429 California Baptist University 2,285 Riverside Community Hospital 2,200 Alvord Unified School District 1,800 UTC Aerospace Systems 1,200 Parkview Community Hospital 897
Source: City of Riverside Comprehensive Audited Financial Statement, fiscal year 2016-17.
The following table lists in descending order the top ten employers within the County:
COUNTY OF RIVERSIDE Major Employers
(As of June 30, 2017)
Employer Name No. of Employees County of Riverside 22,538 University of California, Riverside 8,686 March Air Reserve Base 8,500 Amazon 7,500 Kaiser Permanente Riverside Medical Center 5,739 Corona-Norco Unified School District 5,399 Riverside Unified School District 4,236 Pechanga Resort & Casino 4,000 Riverside University Health Systems - Medical Center 3,876 Eisenhower Medical Center 3,665
Source: County of Riverside Comprehensive Annual Financial Report, fiscal year 2016-17.
A-5
Effective Buying Income "Effective Buying Income" is defined as personal income less personal tax and nontax payments,
a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income."
CITY OF CORONA, CITY OF RIVERSIDE, COUNTY OF RIVERSIDE,
STATE OF CALIFORNIA, AND UNITED STATES Median Household Effective Buying Income
For Calendar Years 2013 through 2017
2013 2014 2015 2016 2017 City of Corona $59,001 $59,473 $62,962 $64,527 $67,037 City of Riverside 43,916 44,724 47,791 49,179 53,659 County of Riverside 44,784 45,576 48,674 50,287 54,014 State of California 48,340 50,072 53,589 55,681 59,646 United States 43,715 45,448 46,738 48,043 50,735
Source: The Nielsen Company (US), Inc.
Construction Trends
Provided below are the building permits and valuations for the City of Corona for calendar years
2012 through 2016. Figures for calendar year 2017 are not yet available.
CITY OF CORONA Total Building Permit Valuations
(Valuation in Thousands of Dollars)
2012 2013 2014 2015 2016 Permit Valuation New Single-family $21,202.6 $8,992.4 $7,927.1 $9,009.4 $16,889.5 New Multi-family 0.0 22,692.2 64,550.9 37,113.1 0.0 Res. Alterations/Additions 2,770.6 2,193.2 4,946.9 6,412.2 6,441.7
Total Residential 23,973.2 33,877.8 77,424.9 52,534.7 23,331.2 New Commercial 1,968.1 6,114.4 10,275.7 11,192.8 14,692.8 New Industrial 18,665.9 28,326.2 36,795.6 31,275.2 31,078.3 New Other 0.0 674.2 15,515.3 2,023.1 3,093.5 Com. Alterations/Additions 26,486.9 60,219.2 1,833.2 45,090.2 34,595.9
Total Nonresidential 47,120.9 95,334.0 64,419.8 89,581.3 83,460.5 New Dwelling Units Single Family 78 39 30 28 66 Multiple Family 0 237 626 533 0 TOTAL 78 276 656 565 66
Source: Construction Industry Research Board, Building Permit Summary.
A-6
Provided below are the building permits and valuations for the City of Riverside for calendar years 2012 through 2016. Figures for calendar year 2017 are not yet available.
CITY OF RIVERSIDE
Total Building Permit Valuations (Valuation in Thousands of Dollars)
2012 2013 2014 2015 2016 Permit Valuation New Single-family $48,826.2 $18,687.0 $61,236.1 $53,785.4 $48,458.9 New Multi-family 15,419.0 4,442.2 9,418.6 20,520.4 19,427.8 Res. Alterations/Additions 9,099.8 7,516.9 9,712.7 11,860.1 12,335.4
Total Residential 73,345 30,826.1 80,367.4 86,165.9 80,222.1 New Commercial 8,275.3 55,296.4 518.4 43,050.4 19,859.8 New Industrial 1,541.5 1,638.3 38,361.0 1,419.3 3,943.6 New Other 329.5 56.0 16,363.0 30,392.4 78,521.9 Com. Alterations/Additions 44,862.4 59,540.4 14,803.9 49,391.9 67,779.7
Total Nonresidential 55,008.7 116,531.1 70,046.3 124,254.0 170,104.0 New Dwelling Units Single Family 193 70 230 222 219 Multiple Family 168 51 85 224 254 TOTAL 361 121 315 446 473
Source: Construction Industry Research Board, Building Permit Summary.
Provided below are the building permits and valuations for the County for calendar years 2012
through 2016. Figures for calendar year 2017 are not yet available.
COUNTY OF RIVERSIDE Total Building Permit Valuations
(Valuation in Thousands of Dollars)
2012 2013 2014 2015 2016 Permit Valuation New Single-family $904,156.2 $1,138,738.1 $1,296,552.8 $1,313,084.2 $1,526,767.8 New Multi-family 87,878.6 138,636.0 178,116.7 110,458.4 106,291.8 Res. Alterations/Additions 87,370.5 98,219.3 147,081.2 113,120.0 126,475.0
Total Residential 1,079,405.3 1,375,593.4 1,621,750.7 1,536,742.6 1,759,534.6 New Commercial 508,192.8 263,837.7 197,674.9 211,785.1 583,023.5 New Industrial 26,432.5 141,184.4 161,321.1 180,521.3 59,439.2 New Other 11,115.5 109,795.2 128,666.9 204,554.1 583,002.7 Com. Alterations/Additions 171,263.2 369,502.4 327,327.1 314,604.2 371,216.4
Total Nonresidential 717,004.0 884,319.7 814,990.0 911,464.7 1,596,681.8 New Dwelling Units Single Family 3,720 4,716 5,007 5,007 5,662 Multiple Family 909 1,427 1,931 1,189 1,039 TOTAL 4,629 6,143 6,938 6,196 6,701
Source: Construction Industry Research Board, Building Permit Summary.
A-7
Commercial Activity Commercial activity is an important factor in the County’s economy. Much of the County’s
commercial activity is concentrated in central business districts or small neighborhood commercial centers in cities. There are eight regional shopping malls in the County: Moreno Valley Mall (in Moreno Valley), Main Street Pedestrian Mall (in Riverside), Galleria at Tyler (in Riverside), Westfield Palm Desert (in Palm Desert), Gardens on El Paseo (in Palm Desert), Canyon Crest Towne Center (in Riverside), the Promenade in Temecula, and The River (in Rancho Mirage). There are also two factory outlet malls (Desert Hills Premium Outlets and Lake Elsinore Outlet Center) and over 200 area centers in the County.
A summary of historic taxable sales within the City of Corona during the past five years in which
data are available is shown in the following table. Total taxable sales during calendar year 2016 in the City of Corona were reported to be $3.4 billion, a 2.3% increase over the total taxable sales of $3.3 billion reported during calendar year 2015. Annual figures for calendar year 2017 are not yet available.
CITY OF CORONA
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets Number
of Permits Taxable
Transactions Number
of Permits Taxable
Transactions 2012 2,617 $1,773,853 4,077 $2,855,833 2013 2,517 1,849,050 4,004 3,111,998 2014 2,558 1,917,343 4,057 3,231,208 2015(1) 2,532 1,922,580 4,416 3,320,557 2016 2,534 1,934,927 4,489 3,396,905
(1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these reports including the
number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).
A summary of historic taxable sales within the City of Riverside during the past five years in which
data are available is shown in the following table. Total taxable sales during calendar year 2016 in the City of Riverside were reported to be $5.5 billion, a 2.5% increase over the total taxable sales of $5.4 billion reported during calendar year 2015. Annual figures for calendar year 2017 are not yet available.
CITY OF RIVERSIDE
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets Number
of Permits Taxable
Transactions Number
of Permits Taxable
Transactions 2012 6,196 $3,348,220 8,484 $4,238,975 2013 5,436 3,580,926 7,673 4,612,948 2014 5,782 3,893,497 8,051 5,072,694 2015(1) 6,471 4,028,227 9,466 5,371,364 2016 6,592 4,091,744 9,735 5,507,805
(1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these reports including the
number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers. Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).
A-8
A summary of historic taxable sales within the County during the past five years in which data are available is shown in the following table. Total taxable sales during calendar year 2016 in the County were reported to be $34.2 billion, a 4.0% increase over the total taxable sales of $32.9 billion reported during calendar year 2015. Annual figures for calendar year 2017 are not yet available.
COUNTY OF RIVERSIDE
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets Number
of Permits on August 1
Taxable
Transactions
Number of Permits
on August 1
Taxable
Transactions 2012 34,683 $20,016,668 48,316 $28,096,009 2013 33,391 21,306,774 46,805 30,065,467 2014 34,910 22,646,343 48,453 32,035,687 2015 (1) 18,662 23,281,724 56,846 32,910,910 2016 N/A 24,022,136 N/A 34,231,144
(1) Permit figures for calendar year 2015 are not comparable to that of prior years due to outlet counts in these reports including the
number of outlets that were active during the reporting period. Retailers that operate part-time are now tabulated with store retailers.
Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax). Agriculture
Agriculture remains a leading source of income in the County. Principal agricultural products are
milk, eggs, table grapes, grapefruit, nursery, alfalfa, dates, lemons and avocados. Four areas in the County account for the major portion of agricultural activity: the Riverside/Corona and San Jacinto/Temecula Valley areas in the western portion of the County, the Coachella Valley in the central portion and the Palo Verde Valley near the County’s eastern border.
Transportation
Easy access to job opportunities in the County and nearby Los Angeles, Orange and San Diego
Counties is important to the County’s employment. Several major freeways and highways provide access between Riverside County and all parts of Southern California. The Riverside Freeway (State Route 91) extends southwest through the City and connects with the Orange County freeway network in Fullerton. Interstate 10 traverses the width of the County, the western-most portion of which links up with major cities and freeways in the eastern part of Los Angeles County and the southern part of San Bernardino County. Interstate 15 and 215 extend north and then east to Las Vegas, and south to San Diego. The Moreno Valley Freeway (U.S. 60) provides an alternate (to Interstate 10) as an east-west link to Los Angeles County.
Currently, Metrolink provides commuter rail service to Los Angeles and Orange Counties from
several stations in the County. Transcontinental passenger rail service is provided by Amtrak with a stop in Cabazon. Freight service to major west coast and national markets is provided by two transcontinental railroads – Burlington Northern/Santa Fe and Union Pacific. Truck service is provided by several common carriers, making available overnight delivery service to major California cities.
Transcontinental bus service is provided by Greyhound Lines. Intercounty, intercity and local bus
service is provided by the Riverside Transit Agency to western County cities and communities. The SunLine Transit Agency provides local bus service throughout the Coachella Valley. The City of Banning also operates a local bus system.
A-9
The County seat, located in the City of Riverside, is within 20 miles of the Ontario International
Airport. This airport is operated by the Los Angeles Department of Airports. Four major airlines schedule commercial flight service at Ontario International Airport. County-operated general aviation airports include those in Thermal, Blythe and French Valley. The cities of Riverside, Corona and Banning also operate general aviation airports. There is a military base at March Air Force Base, which converted from an active duty base to a reserve-only base on April 1, 1996. Plans for joint military and civilian use of the base thereafter are presently being formulated by the March AFB Joint Powers Authority, comprised of the County and the cities of Riverside, Moreno Valley and Perris.
B-1
APPENDIX B
SPECIAL TAX FORMULA FOR THE DISTRICT
FINAL Page 1 of 14 January 9, 2006
RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT NO. 2006-1 OF THE ALVORD UNIFIED SCHOOL DISTRICT
Annual Special Taxes shall be levied on and collected in Community Facilities District No. 2006-1 of the Alvord Unified School District ("CFD No. 2006-1") in each Fiscal Year, in an amount determined through the application of this rate and method of apportionment (“RMA”) as described below. All of the real property in CFD No. 2006-1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided.
SECTION A DEFINITIONS
The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable Final Subdivision Map, parcel map, condominium plan, or other recorded County parcel map, that creates the boundaries of each Assessor's Parcel Number. "Act" means the Mello-Roos Community Facilities Act of 1982, being Chapter 2.5, Division 2 of Title 5 of the California Government Code. "Administrative Expenses" means any ordinary and necessary expense incurred by the School District on behalf of CFD No. 2006-1 related to the determination of the amount of the levy of Special Taxes, the collection of Special Taxes including the reasonable expenses of collecting delinquencies, the administration of Bonds, the pro-rata payment of salaries and benefits of any School District employee whose duties are directly related to the administration of CFD No. 2006-1, and reasonable costs otherwise incurred in order to carry out the authorized purposes of CFD No. 2006-1. "Annual Special Tax" means the Annual Special Tax A or Annual Special Tax B. "Annual Special Tax A" means the Special Tax levied in each Fiscal Year on an Assessor's Parcel as set forth in Section F. "Annual Special Tax B" means the Special Tax levied in each Fiscal Year on an Assessor's Parcel as set forth in Section G. "Assessor's Parcel" means a lot or parcel of land in CFD No. 2006-1 which is designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number. "Assessor's Parcel Number" means that number assigned to an Assessor's Parcel by the County Assessor for purposes of identification.
FINAL Page 2 of 14 January 9, 2006
"Assigned Annual Special Tax" means the Assigned Annual Special Tax A or Assigned Annual Special Tax B. "Assigned Annual Special Tax A" means the Special Tax of that name as set forth in Section D. "Assigned Annual Special Tax B" means the Special Tax of that name as set forth in Section D. "Backup Annual Special Tax" means the Backup Annual Special Tax A or Backup Annual Special Tax B. "Backup Annual Special Tax A" means the Special Tax of that name described in Section E. "Backup Annual Special Tax B" means the Special Tax of that name described in Section E. "Board" means the Board of Education of Alvord Unified School District or its designee, acting as the legislative body of CFD No. 2006-1. "Bonds" means the Tax A Bonds or Tax B Bonds. "Bond Index" means the National Bond Buyer Revenue Index, commonly referenced as the 25-Bond Revenue Index. In the event the Bond Index ceases to be published, the index used shall be based on a comparable index for revenue bonds maturing in 30 years with an average rating equivalent to Moody's A1 and S&P's A-plus, as reasonably determined by the Board. "Bond Yield" means the yield on the last series of Bonds issued by or on behalf of CFD No. 2006-1, as calculated at the time such Bonds are issued, pursuant to Section 148 of the Internal Revenue Code of 1986, as amended, for the purpose of the non-arbitrage certificate or other similar bond issuance document. "Building Permit" means a permit for the construction of one or more Units issued by the County or one of the Cities, or another public agency in the event the County or one of the Cities no longer issues permits for the construction of Units within CFD No. 2006-1. For purposes of this definition, "Building Permit" shall not include permits for construction or installation of commercial/industrial structures, parking structures, retaining walls, utility improvements, or other such improvements not intended for human habitation. "Building Square Footage" or "BSF" means the square footage of assessable internal living space of a Unit, exclusive of any carports, walkways, garages, overhangs, patios, enclosed patios, detached accessory structure, other structures not used as living space, or any other square footage excluded under Government Code Section 65995 as determined by reference to the Building Permit for such Unit. "Calendar Year" means any period commencing on January 1 and ending on the following December 31. "Cities" means the Cities of Riverside and Corona. "County" means the County of Riverside.
FINAL Page 3 of 14 January 9, 2006
"Developed Property" means, for each Fiscal Year, all Assessor’s Parcels for which Building Permits for the construction of Units were issued on or before May 1 of the prior Fiscal Year, provided that such Assessor's Parcels were created on or before January 1 of the prior Fiscal Year and that each such Assessor's Parcel is associated with a Lot, as determined reasonably by the Board. "Exempt Property" means the property designated as Exempt Property in Section L. "Final Subdivision Map" means a final tract map, parcel map, condominium plan lot line adjustment, or functionally equivalent map or instrument that creates individual Lots, recorded in the Office of the Recorder of the County. "Fiscal Year" means the period commencing on July 1 of any year and ending the following June 30. “Homeowner” means any owner of a completed Unit constructed and sold within CFD No. 2006-1. "Indenture" means the bond indenture, master trust agreement, fiscal agent agreement, or similar document, regardless of title, pursuant to which Tax A Bonds or Tax B Bonds are issued and which establishes the terms and conditions for the payment of principal and interest on such Tax A Bonds or Tax B Bonds, as modified, amended and/or supplemented from time to time in accordance with its terms. "Lot" means an individual legal lot created by a Final Subdivision Map for which a Building Permit for a Unit has been or could be issued, provided that land for which one or more Building Permit(s) have been or could be issued for the construction of one or more model Units shall not be construed as a Lot until such land has been subdivided by a Final Subdivision Map. "Maximum Annual Special Tax" means the Maximum Annual Special Tax A or the Maximum Annual Special Tax B. "Maximum Annual Special Tax A" means for each Assessor’s Parcel and for each Fiscal Year the maximum Annual Special Tax A determined in accordance with Section C that can be levied on such Assessor’s Parcel by CFD No. 2006-1 in such Fiscal Year. "Maximum Annual Special Tax B" means for each Assessor’s Parcel and for each Fiscal Year the maximum Annual Special Tax B determined in accordance with Section C that can be levied on such Assessor’s Parcel by CFD No. 2006-1 in such Fiscal Year. "Minimum Taxable Acreage" means the applicable Acreage listed in Table 5 set forth in Section L. "Net Taxable Acreage" means the total Acreage of all Taxable Property expected to exist in CFD No. 2006-1 after all Final Subdivision Maps are recorded. "Prepayment Amount" means the Tax A Prepayment Amount or Tax B Prepayment Amount. "Proportionately" means that the ratio of the actual Annual Special Tax levy to the applicable Assigned Annual Special Tax is equal for all applicable Assessor's Parcels. "School District" means the Alvord Unified School District or any successor school district.
FINAL Page 4 of 14 January 9, 2006
"Special Tax" means any of the special taxes authorized to be levied in CFD No. 2006-1 under the Act and this RMA. "Tax A Bonds" means any obligation to pay or repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, payable from Annual Special Tax A revenues. "Tax A Minimum Annual Special Tax Requirement" means the amount required in any Fiscal Year to pay: (i) the annual debt service on the Tax A Bonds in the Calendar Year beginning in such Fiscal Year, (ii) other periodic costs of the Tax A Bonds, including but not limited to, credit enhancement fees and charges and rebate payments on the Tax A Bonds due in the Calendar Year beginning in such Fiscal Year, (iii) the portion of the Administrative Expenses of CFD No. 2006-1 applicable to Annual Special Tax A, (iv) any costs associated with the release of funds from an escrow account for the Tax A Bonds, (v) any amount required to establish or replenish any reserve funds established in association with the Tax A Bonds, less (vi) any amounts on deposit in any fund or account which are available to pay for items (i) through (v) above pursuant to any applicable Indenture in such Calendar Year. "Tax A Prepayment Amount" means the amount required to prepay all of Annual Special Tax A obligation on any Assessor's Parcel determined pursuant to Section H. "Tax A Present Value of Taxes" means the present value of Annual Special Tax A applicable to such Assessor's Parcel in the current Fiscal Year not yet received by the School District for CFD No. 2006-1, plus the expected Annual Special Tax A applicable to such Assessor's Parcel in each remaining Fiscal Year until the termination date specified in Section K using as the discount rate the (i) Bond Yield after Bond issuance or (ii) the most recently published Bond Index prior to the Bond issuance. "Tax B Bonds" means any obligation to pay or repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, payable from Annual Special Tax B revenues. "Tax B Minimum Annual Special Tax Requirement" means the amount required in any Fiscal Year to pay: (i) the annual debt service on the Tax B Bonds in the Calendar Year beginning in such Fiscal Year, (ii) other periodic costs on the Tax B Bonds, including but not limited to, credit enhancement fees and charges and rebate payments on the Tax B Bonds due in the Calendar Year beginning in such Fiscal Year, (iii) the portion of the Administrative Expenses of CFD No. 2006-1 attributable to Annual Special Tax B, (iv) any costs associated with the release of funds from an escrow account for the Tax B Bonds, (v) any amount required to establish or replenish any reserve funds established in association with the Tax B Bonds, less (vi) any amounts on deposit in any fund or account which are available to pay for items (i) through (v) above pursuant to any applicable Indenture in such Calendar Year. "Tax B Partial Prepayment Amount" means that amount required to prepay a portion of the Annual Special Tax B obligation for an Assessor's Parcel as described in Section I.
FINAL Page 5 of 14 January 9, 2006
"Tax B Prepayment Amount" means the amount required to prepay all of Annual Special Tax B obligation on any Assessor's Parcel determined pursuant to Section H. "Tax B Present Value of Taxes" means the present value of Annual Special Tax B applicable to such Assessor's Parcel in the current Fiscal Year not yet received by the School District for CFD No. 2006-1, plus the expected Annual Special Tax B applicable to such Assessor's Parcel in each remaining Fiscal Year until the termination date specified in Section K using as the discount rate the (i) Bond Yield after Bond issuance or (ii) the most recently published Bond Index prior to the Bond issuance. "Taxable Property" means all Assessor’s Parcels which are not Exempt Property. "Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not Developed Property. "Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance separate from adjacent residential dwelling units. "Zone" means the areas identified as a Zone of CFD No. 2006-1 as in Section O of this Rate and Method of Apportionment. "Zone 1" means all property located within the area identified as Zone 1 of CFD No. 2006-1 as in Section O, subject to interpretation by the Board as described in Section B. "Zone 2" means all property located within the area identified as Zone 2 of CFD No. 2006-1 as in Section O, subject to interpretation by the Board as described in Section B. "Zone 3" means all property located within the area identified as Zone 3 of CFD No. 2006-1 as in Section O, subject to interpretation by the Board as described in Section B.
FINAL Page 6 of 14 January 9, 2006
SECTION B ASSIGNMENT OF ASSESSOR’S PARCELS
For each Fiscal Year, beginning with Fiscal Year 2006-07, each Assessor’s Parcel within CFD No. 2006-1 shall be assigned to a Zone in accordance with Section O at the reasonable discretion of the Board and each Assessor's Parcel within each Zone shall be classified as Taxable Property or Exempt Property. Furthermore, each Assessor’s Parcel of Taxable Property shall be classified as Developed Property or Undeveloped Property. Developed Property within Zone 2 shall be further classified based on the Building Square Footage of the Unit. The classification of Exempt Property within each Zone shall take into consideration Minimum Taxable Acreage for such Zone as determined pursuant to Section L.
SECTION C MAXIMUM ANNUAL SPECIAL TAX
1. Developed Property
The Maximum Annual Special Tax A for each Assessor's Parcel classified as Developed Property within a particular Zone in each Fiscal Year shall be the greater of (i) the application of the Assigned Annual Special Tax A for a given Final Subdivision Map for such Zone or (ii) the application of the Backup Annual Special Tax A for a given Final Subdivision Map for such Zone. The Maximum Annual Special Tax B for each Assessor's Parcel classified as Developed Property within a particular Zone in each Fiscal Year shall be the greater of (i) the application of the Assigned Annual Special Tax B for a given Final Subdivision Map for such Zone or (ii) the application of the Backup Annual Special Tax B for a given Final Subdivision Map for such Zone.
2. Undeveloped Property
The Maximum Annual Special Tax A for each Assessor's Parcel classified as Undeveloped Property within a particular Zone in each Fiscal Year shall be the amount determined by the application of the Assigned Annual Special Tax A for such Zone. The Maximum Annual Special Tax B for each Assessor's Parcel classified as Undeveloped Property within a particular Zone in each Fiscal Year shall be the amount determined by the application of the Assigned Annual Special Tax B for such Zone.
SECTION D
ASSIGNED ANNUAL SPECIAL TAXES Each Fiscal Year all Taxable Property shall be subject to both Assigned Annual Special Tax A for such Zone and Assigned Annual Special Tax B for such Zone. 1. Developed Property
The Assigned Annual Special Tax A and Assigned Annual Special Tax B for each Assessor's Parcel of Developed Property within a particular Zone in each Fiscal Year shall be the amount determined by reference to Tables 1, 2 and 3 for such Zone.
FINAL Page 7 of 14 January 9, 2006
TABLE 1
ASSIGNED ANNUAL SPECIAL TAXES FOR DEVELOPED PROPERTY IN ZONE 1
Building Square Footage Assigned Annual
Special Tax A Assigned Annual
Special Tax B NA $1,235.18 per Unit $904.20 per Unit
TABLE 2
ASSIGNED ANNUAL SPECIAL TAXES FOR
DEVELOPED PROPERTY IN Z0NE 2
Building Square Footage Assigned Annual
Special Tax A Assigned Annual
Special Tax B < 3,300 $1,235.18 per Unit $3,938.20 per Unit
3,300 – 3,600 $1,235.18 per Unit $4,197.79 per Unit
> 3,600 $1,235.18 per Unit $4,376.82 per Unit
TABLE 3
ASSIGNED ANNUAL SPECIAL TAXES FOR DEVELOPED PROPERTY IN ZONE 3
Building Square Footage Assigned Annual
Special Tax A Assigned Annual
Special Tax B NA $1,235.18 per Unit $696.97 per Unit
2. Undeveloped Property
The Assigned Annual Special Tax A and the Assigned Annual Special Tax B per Acre for an Assessor's Parcel of Undeveloped Property each Fiscal Year shall be the amount determined by reference to Table 4 according to the Zone within which the Assessor's Parcel is located.
TABLE 4
ASSIGNED ANNUAL SPECIAL TAX FOR UNDEVELOPED PROPERTY
Location Assigned Annual
Special Tax A Assigned Annual
Special Tax B Zone 1 $31,898.48 per Acre $23,350.93 per Acre
Zone 2 $5,984.98 per Acre $20,694.03 per Acre
Zone 3 $7,493.24 per Acre $4,228.18 per Acre
FINAL Page 8 of 14 January 9, 2006
SECTION E BACKUP ANNUAL SPECIAL TAX
Each Fiscal Year, each Assessor’s Parcel of Developed Property within a particular Zone shall be subject to both a Backup Annual Special Tax A and Backup Annual Special Tax B. The Backup Annual Special Tax A and Backup Annual Special Tax B rates for an Assessor’s Parcel of Developed Property within a Final Subdivision Map in each Fiscal Year within a particular Zone shall be the rate per Lot calculated according to the following formula in Fiscal Year 2006-07 or such later Fiscal Year in which such Final Subdivision Map is created:
BA = (ZA x A) / L
BB = (ZB x A) / L
The terms above have the following meanings:
BA = Backup Annual Special Tax A per Lot for the applicable Fiscal Year
BB = Backup Annual Special Tax B per Lot for the applicable Fiscal Year
ZA = Assigned Annual Special Tax A per Acre of Undeveloped Property for the applicable Fiscal Year
ZB = Assigned Annual Special Tax B per Acre of Undeveloped Property for the applicable Fiscal Year
A = Acreage of Taxable Property in such Final Subdivision Map, at time of calculation, as determined by the Board pursuant to Section L
L = Number of Lots in the applicable Final Subdivision Map, at time of calculation
Notwithstanding the foregoing, if all or any portion of the Final Subdivision Map(s) described in the preceding paragraph is changed or modified subsequent to the calculation above, then the Backup Annual Special Tax A and the Backup Annual Special Tax B for each Assessor’s Parcel of Developed Property in such Final Subdivision Map area that is changed or modified shall be a rate per square foot of Acreage calculated as follows:
1. Determine the total Backup Annual Special Tax A and the total Backup Annual Special Tax B revenue anticipated to apply to the changed or modified area of the Final Subdivision Map prior to the change or modification.
2. The result of paragraph 1 above shall be divided by the Acreage of Taxable Property of the Final Subdivision Map that is anticipated to be changed or modified, as reasonably determined by the Board
FINAL Page 9 of 14 January 9, 2006
3. The result of paragraph 2 above shall be divided by 43,560. The result is the Backup Annual Special Tax A per square foot of Acreage and Backup Annual Special Tax B per square foot of Acreage that shall be applicable to Assessor's Parcels of Developed Property in such changed or modified area of the Final Subdivision Map for all remaining Fiscal Years in which the Special Tax may be levied.
SECTION F
METHOD OF APPORTIONMENT OF THE ANNUAL SPECIAL TAX A Commencing Fiscal Year 2006-07, and for each subsequent Fiscal Year, the Board shall levy an Annual Special Tax A as follows: Step One: The Board shall levy an Annual Special Tax A on each Assessor’s Parcel of
Developed Property in an amount equal to the Assigned Annual Special Tax A applicable to each such Assessor’s Parcel.
Step Two: If the sum of the amounts to be levied in step one is insufficient to satisfy the Tax A
Minimum Annual Special Tax Requirement, then the Board shall Proportionately levy an Annual Special Tax A on each Assessor’s Parcel of Undeveloped Property up to the Assigned Annual Special Tax A applicable to each such Assessor’s Parcel to satisfy the Tax A Minimum Annual Special Tax Requirement.
Step Three: If the sum of the amounts to be levied in steps one and two is insufficient to satisfy
the Tax A Minimum Annual Special Tax Requirement, then the Board shall Proportionately levy an Annual Special Tax A on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax A is the Backup Annual Special Tax A from the Assigned Annual Special Tax A up to the Maximum Annual Special Tax A applicable to each such Assessor’s Parcel to satisfy the Tax A Minimum Annual Special Tax Requirement.
SECTION G
METHOD OF APPORTIONMENT OF THE ANNUAL SPECIAL TAX B
Commencing Fiscal Year 2006-07, and for each subsequent Fiscal Year, the Board shall levy an Annual Special Tax B as follows: Step One: The Board shall levy an Annual Special Tax B on each Assessor’s Parcel of
Developed Property in an amount equal to the Assigned Annual Special Tax B applicable to each such Assessor’s Parcel.
Step Two: If the sum of the amounts to be levied in step one is insufficient to satisfy the Tax B
Minimum Annual Special Tax Requirement, then the Board shall Proportionately levy an Annual Special Tax B on each Assessor’s Parcel of Undeveloped Property up to the Assigned Annual Special Tax B applicable to each such Assessor’s Parcel to satisfy the Tax B Minimum Annual Special Tax Requirement.
FINAL Page 10 of 14 January 9, 2006
Step Three: If the sum of the amounts to be levied in steps one and two is insufficient to satisfy the Tax B Minimum Annual Special Tax Requirement, then the Board shall Proportionately levy an Annual Special Tax B on each Assessor’s Parcel of Developed Property whose Maximum Annual Special Tax B is the Backup Annual Special Tax B from the Assigned Annual Special Tax B up to the Maximum Annual Special Tax B applicable to each such Assessor’s Parcel to satisfy the Tax B Minimum Annual Special Tax Requirement.
SECTION H
PREPAYMENT OF ANNUAL SPECIAL TAXES The Annual Special Tax obligations of an Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Undeveloped Property for which a Building Permit has been issued may be prepaid. However, the Annual Special Tax A obligation of an Assessor's Parcel may be prepaid only after or concurrently with the prepayment of the Annual Special Tax B obligation for such Assessor's Parcel. An owner of an Assessor's Parcel intending to prepay the Annual Special Tax A and Annual Special Tax B obligation shall provide CFD No. 2006-1 with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the Board shall reasonably determine the prepayment amount of such Assessor's Parcel and shall notify such owner of such Prepayment Amount. The Prepayment Amount shall be calculated according to the following formula:
AP = APVT–RFC + PAF
BP = BPVT –RFC + PAF
The terms above have the following meanings:
AP = Tax A Prepayment Amount BP = Tax B Prepayment Amount APVT = Tax A Present Value of Taxes BPVT = Tax B Present Value of Taxes RFC = Reserve Fund Credit PAF = Prepayment Administrative Fees
Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Annual Special Taxes that may be levied on Taxable Property, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently outstanding Bonds in each future Fiscal Year and such prepayment will not impair the security of all currently outstanding Bonds, as reasonably determined by the Board. Such determination shall include identifying all Assessor's Parcels that are expected to become Exempt Property. With respect to any Assessor's Parcel for which the Annual Special Tax has been prepaid, the Board shall indicate in the records of CFD No. 2006-1 that there has been a prepayment of the Annual Special Tax obligation and shall cause a suitable notice to be recorded in compliance with the Act to indicate the prepayment of the Annual Special Tax obligation and the release of the Annual Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay such Annual Special Tax shall cease.
FINAL Page 11 of 14 January 9, 2006
SECTION I PARTIAL PREPAYMENT OF ANNUAL SPECIAL TAX B
The Annual Special Tax B obligation of an Assessor's Parcel may be partially prepaid at the times and under the conditions set forth in this section, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor’s Parcel at the time the Annual Special Tax B obligation would be prepaid, or provided that such delinquent special taxes are paid concurrently. 1. Partial Prepayment Times and Conditions
Prior to the conveyance of the first production Unit on a Lot within a Final Subdivision Map, the owner of no less than all the Taxable Property within such Final Subdivision Map may elect in writing to the Board to prepay a portion of the Annual Special Tax B obligations for all the Assessor’s Parcels within such Final Subdivision Map, as calculated in Section I.2. below. The partial prepayment of each Annual Special Tax B obligation shall be collected for all Assessor's Parcels prior to the conveyance of the first production Unit on a lot within such Final Subdivision Map.
2. Partial Prepayment Amount
The Partial Prepayment Amount shall be calculated according to the following formula:
PP = PG x F
The terms above have the following meanings:
PP = the Partial Prepayment Amount PG = the Prepayment Amount calculated according to Section H F = the percent by which the owner of the Assessor’s Parcel is partially
prepaying the Annual Special Tax B obligation
3. Partial Prepayment Procedures and Limitations
With respect to any Assessor’s Parcel for which the Annual Special Tax B has been partially prepaid, the Board shall indicate in the records of CFD No. 2006-1 that there has been a partial prepayment of the Annual Special Tax B obligation and shall cause a suitable notice to be recorded in compliance with the Act to indicate the partial prepayment of the Annual Special Tax B obligation and the partial release of the Annual Special Tax B lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay such prepaid portion of the Annual Special Tax B shall cease. Additionally, the notice shall indicate that the Assigned Annual Special Tax B and the Backup Annual Special Tax B for the Assessor's Parcel has been reduced by an amount equal to the percentage which was partially prepaid.
FINAL Page 12 of 14 January 9, 2006
Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Annual Special Taxes that may be levied on Taxable Property after such partial prepayment, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently outstanding Bonds in each future Fiscal Year and such partial prepayment will not impair the security of all currently outstanding Bonds, as reasonably determined by the Board. Such determination shall include identifying all Assessor's Parcels that are expected to become Exempt Property.
SECTION J ASSIGNED ANNUAL SPECIAL TAX REMAINDER
In any Fiscal Year in which Annual Special Taxes collected from Developed Property pursuant to Step 1 of Section F remain after the satisfaction of the Tax A Minimum Annual Special Tax Requirement, the School District shall use such amount for acquisition, construction or financing of school facilities in accordance with the Act, CFD No. 2006-1 proceedings and other applicable law, as determined by the Board in its discretion. In any Fiscal Year in which Annual Special Taxes collected from Developed Property pursuant to Step 1 of Section G remain after the satisfaction of the Tax B Minimum Annual Special Tax Requirement, the School District shall use such amount for acquisition, construction or financing of school facilities in accordance with the Act, CFD No. 2006-1 proceedings and other applicable law, as determined by the Board in its discretion.
SECTION K
TERMINATION OF SPECIAL TAX The Annual Special Tax A shall be levied for a term of thirty-five (35) Fiscal Years after the issuance of the last series of Tax A Bonds by CFD No. 2006-1, but in no event shall the Annual Special Tax A be levied later than Fiscal Year 2049-50. The Annual Special Tax B shall be levied for a term of thirty-five (35) Fiscal Years after the issuance of the last series of Tax B Bonds, by CFD No. 2006-1, but in no event shall the Annual Special Tax B be levied later than Fiscal Year 2049-50.
FINAL Page 13 of 14 January 9, 2006
SECTION L EXEMPTIONS
The Board shall classify as Exempt Property (i) Assessor’s Parcels owned by the State of California, Federal or other local governments, (ii) Assessor’s Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor’s Parcels owned by a homeowners' association and not used for residential purposes, (iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor’s Parcels developed or expected to be developed exclusively for non-residential use, including any use directly servicing any non-residential property, such as parking, as reasonably determined by the Board, and (vi) any other Assessor’s Parcels as reasonably determined by the Board, provided that no such determination would reduce the Net Taxable Acreage within a given Zone to less than the Minimum Taxable Acreage for such Zone. Notwithstanding the above, the Board shall not classify an Assessor’s Parcel as Exempt Property if such classification would reduce the sum of all Taxable Property in a given Zone to less than the Minimum Taxable Acreage for such Zone. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property in a given Zone to less than the Minimum Taxable Acreage for such Zone will continue to be classified as Developed Property or Undeveloped Property, as applicable, and will continue to be subject to Special Taxes accordingly.
TABLE 5
MINIMUM TAXABLE ACREAGE
Location Minimum Taxable
Acreage
Zone 1 10.11 Acres
Zone 2 5.16 Acres
Zone 3 4.62 Acres
FINAL Page 14 of 14 January 9, 2006
SECTION M APPEALS
Any property owner claiming that the amount or application of the Special Tax is not correct may file a written appeal with the Board not later than twelve months after having paid the first installment of the Special Tax that is disputed. In order to be considered sufficient, an appeal must: (i) specifically identify the property by address and Assessor's Parcel Number; (ii) state the amount in dispute and whether it is the whole amount or any a portion of the Special Tax; (iii) state all grounds on which the property owner is disputing the amount or application of the Special Tax, including a reasonably detailed explanation as to why the amount or application of such Special Tax is incorrect; (iv) include all documentation, if any, in support of the claim; and (v) be verified under penalty of perjury by the person who paid the Special Tax or his or her guardian, executor or administrator. A representative(s) of CFD No. 2006-1 ("Representative") shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and rule on the appeal. If the Representative's decision requires that the Special Tax for an Assessor’s Parcel be modified or changed in favor of the property owner, a cash refund shall not be made (except for the last year of levy), but an adjustment shall be made to the Annual Special Tax on that Assessor’s Parcel in the subsequent Fiscal Year(s) as the Representative's decision shall indicate.
SECTION N
MANNER OF COLLECTION The Annual Special Tax A and the Annual Special Tax B shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2006-1 may collect Annual Special Tax A and/or Annual Special Tax B at a different time or in a different manner if necessary to meet its financial obligations.
SECTION O MAP OF ZONES
K:\CLIENTS2\ALVORD.USD\MELLO\2006-1\Final\ RMA_FINAL.doc
C-1
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT
Certain definitions and provisions of the Fiscal Agent Agreement not otherwise defined or summarized in the main body of the Official Statement are set forth below. This summary of certain provisions of the Fiscal Agent Agreement is a summary only and does not purport to be a complete statement of the contents thereof. Reference is made to the Fiscal Agent Agreement, available at the Principal Office of the Fiscal Agent, for the complete terms thereof. Definitions
“Additional Bonds” means any series of bonds other than the 2018 Bonds issued pursuant to
the Agreement. "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal
Agent (including any fees or expenses of its counsel), the expenses of the Board, the School District or the District, in carrying out any duties hereunder (including, but not limited to, the levying and collection of the Special Taxes, and the foreclosure of the liens of delinquent Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of School District staff directly related thereto and a proportionate amount of School District general administrative overhead related thereto, any amounts paid by the School District from its general funds pursuant to the Agreement, and all other costs and expenses of the School District, the District, or the Fiscal Agent incurred in connection with the issuance and administration of the Bonds and/or the discharge of their respective duties hereunder (including, but not limited to, the calculation of the levy of the Special Taxes, foreclosures with respect to delinquent taxes, and the calculation of amounts subject to rebate to the United States) and, in the case of the School District, in any way related to the administration of the District. Administrative Expenses shall include any such expenses incurred in prior years but not yet paid, and any advances of funds by the School District under the Agreement.
“Administrative Expenses Cap” means [(i) for fiscal year 2018-19, $25,000, and (ii) for each
subsequent year, an amount equal to the preceding fiscal year’s Administrative Expenses Cap, plus an additional 2% of such amount].
"Agreement" means the Fiscal Agent Agreement, dated as of June 1, 2018, related to the Bonds,
as it may be amended or supplemented from time to time by any Supplemental Agreement. “Allocable Share” means (i) with respect to “Annual Special Tax A” (as such term is defined in
the Special Tax Formula), ____% of Debt Service and (ii) with respect to “Annual Special Tax B” (as such term is defined in the Special Tax Formula), _____% of Debt Service, as set forth on Exhibit C attached hereto and by this reference incorporated herein. There shall be no cross-collateralization of the Allocable Share of Debt Service paid by Annual Special Tax A with the Allocable Share of Debt Service paid by Annual Special Tax B or vice-versa.
"Annual Debt Service" means, for each Bond Year and each Series of Outstanding Bonds, the
sum of (i) the interest due on the respective Series of Outstanding Bonds in such Bond Year, assuming that such Outstanding Bonds are retired as scheduled, and (ii) the principal amount of the respective Series of Outstanding Bonds, including any mandatory sinking fund payments, due in such Bond Year.
C-2
"Authorized Officer" means the School District’s Superintendent or Chief Business Officer, or any other officer or employee authorized by the Board or by an Authorized Officer to undertake the action referenced in the Agreement as required to be undertaken by an Authorized Officer.
"Bond Counsel" means (i) Jones Hall, A Professional Law Corporation or (ii) any attorney or firm
of attorneys acceptable to the District and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.
"Bond Fund" means the fund by that name established pursuant to the Agreement. "Bond Year" means each twelve-month period beginning on September 2 in any year and
extending to the next succeeding September 1, both dates inclusive; except that the first Bond Year shall begin on the Closing Date and end on September 1, 2018.
“Bonds” means the 2018 Bonds and any Additional Bonds. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which
banking institutions in the state in which the Principal Office of the Fiscal Agent is located are authorized or obligated by law or executive order to be closed.
"CDIAC" means the California Debt and Investment Advisory Commission of the office of the
State Treasurer of the State of California or any successor agency or bureau thereto. "Chief Business Officer" means the Chief Business Officer of the School District or such other
officer of the School District designated to manage the fiscal affairs of the District. "Closing Date" means June 28, 2018, the date upon which there is a physical delivery of the
2018 Bonds in exchange for the amount representing the purchase price of the 2018 Bonds by the Original Purchaser.
"Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the
Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
"Continuing Disclosure Certificate" means the Continuing Disclosure Agreement, dated as of the
Closing Date, by and between the District and Cooperative Strategies, LLC, in its capacity as Dissemination Agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof.
"Cost of Issuance" means items of expense payable or reimbursable directly or indirectly by the
School District or the District, and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees, expenses and charges of the Fiscal Agent, including its first annual administration fee, and expenses and fees of counsel to the Fiscal Agent, expenses incurred by the School District or the District in connection with the issuance of the Bonds, financial advisor fees, Bond (underwriter's) discount or underwriting fee, legal fees and charges, including bond counsel, charges for execution, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing.
"Costs of Issuance Fund" means the fund by that name established pursuant to the Agreement.
C-3
“County” means Riverside County, California. "DTC" means the Depository Trust Company, and its successors and assigns. "Debt Service" means the scheduled amount of interest and amortization of principal payable on
the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period.
"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as
Depository pursuant to the Agreement. "District" means the Community Facilities District 2006-1 of the Alvord Unified School District,
which was formed pursuant to the Resolution of Formation.
"Facilities" means the facilities and improvements authorized in the Resolution of Formation, including Administrative Expenses related thereto.
"Fair Market Value" means the price at which a willing buyer would purchase the investment
from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security—State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California, but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States.
"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 for funds held by the Fiscal Agent (the Fiscal Agent entitled to rely upon investment direction in an Officer’s Certificate as a certification that such investment constitutes a legal investment).
(i) Direct general obligations of the United States of America (including obligations issued
or held in book-entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as "stripped" obligations and coupons; or
(ii) Any of the following obligations of the following agencies of the United States of America:
(a) direct obligations of the Export-Import Bank, (b) certificates of beneficial ownership issued by the Farmers Home Administration, (c) participation certificates issued by the General Services Administration, (d) mortgage-backed bonds or passthrough obligations issued and guaranteed by the Government National Mortgage Association, (e) project notes issued by the United States Department of Housing and Urban Development, and (f) public housing notes and bonds guaranteed by the United States of America.
C-4
"Fiscal Agent" means the Fiscal Agent appointed by the District and acting as an independent
fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in the Agreement.
"Fiscal Year" means the twelve-month period extending from July 1 in a calendar year to June 30
of the succeeding year, both dates inclusive. "Improvement Fund" means the fund by that name established pursuant to the Agreement. "Information Services" means “EMMA” or the “Electronic Municipal Market Access” system of
the Municipal Securities Rulemaking Board; or, in accordance with then-current guidelines of the Securities and Exchange Commission, such other services providing information with respect to called bonds designated in an Officer's Certificate delivered to the Fiscal Agent.
"Maximum Annual Debt Service" means, for each Series of Outstanding Bonds, the largest
Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of the respective Series of Outstanding Bonds.
"Officer's Certificate" means a written certificate of the District signed by an Authorized Officer. "Ordinance" means any ordinance, or authorizing instrument, of the Board levying the Special
Taxes. "Original Purchaser" means the first purchaser of the Bonds from the District, being Stifel,
Nicolaus & Company, Incorporated, with respect to the 2018 Bonds. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to
the provisions of the Agreement) all Bonds except (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of the Agreement; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the District pursuant to the Agreement or any Supplemental Agreement.
"Owner" or "Bondowner" means any person who shall be the registered owner of any
Outstanding Bond. "Participating Underwriter" shall have the meaning ascribed thereto in the Continuing Disclosure
Certificate. "Permitted Investments" means any of the following, to the extent that they are lawful
investments for School District funds at the time of investment, and are acquired at Fair Market Value (the Fiscal Agent is entitled to rely upon investment direction from an Authorized Officer as a certification that such investment constitutes a legal investment):
(i) Federal Securities;
C-5
(ii) any of following obligations of federal agencies not guaranteed by the United States of America: (a) debentures issued by the Federal Housing Administration; (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks or Banks for Cooperatives); (c) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act, bonds of any federal home loan bank established under said act and stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation; and (d) bonds, notes or other obligations issued or assumed by the International Bank for Reconstruction and Development;
(iii) interest-bearing demand or time deposits (including certificates of deposit) in federal or
State of California chartered banks (including the Fiscal Agent and its affiliates), provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in one of the top two rating categories (without regard to gradations) by a nationally recognized rating service, and (b) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in one of the top two rating categories (without regard to gradations) by a nationally recognized rating service;
(iv) repurchase agreements with a registered broker/dealer subject to the Securities
Investors Protection Corporation Liquidation in the event of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such bank shall be rated in one of the top two rating categories (without regard to gradations) by a nationally recognized rating service, or such bank shall be the lead bank of a banking holding company whose unsecured obligations are rated in one of the top two rating categories (without regard to gradations) by a nationally recognized rating service; (b) the most recent reported combined capital, surplus an undivided profits of such bank shall be not less than $100 million; (c) the repurchase obligation under any such repurchase obligation shall be required to be performed in not more than thirty (30) days; (d) the entity holding such securities as described in clause (c) shall have a pledged first security interest therein for the benefit of the Fiscal Agent under the California Commercial Code or pursuant to the book-entry procedures described by 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. and are rated in one of the top two rating categories (without regard to gradations) by a nationally recognized rating service;
(v) bankers acceptances endorsed and guaranteed by banks described in clause (iv) above; (vi) obligations, the interest on which is exempt from federal income taxation under
Section 103 of the Code and which are rated in the one of the top two rating categories (without regard to gradations) by a nationally recognized rating service;
(vii) money market funds which invest solely in Federal Securities or in obligations described
in the preceding clause (ii) of this definition, or money market funds which are rated in the highest rating category by S&P Global Ratings or Moody's Investor Service, including such funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory or other management services or for which the Fiscal Agent or an affiliate of the Fiscal Agent serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Fiscal Agent or an affiliate of the Fiscal Agent receives and retains a fee for services provided to the fund, (b) the Fiscal Agent collects fees for services rendered pursuant to the Agreement, which fees are separate from the fees received from such funds, and (c) services performed for such funds and pursuant to the
C-6
Agreement may at times duplicate those provided to such funds by the Fiscal Agent or an affiliate of the Fiscal Agent;
(viii) units of a taxable government money market portfolio comprised solely of obligations
listed in (i) and (iv) above, such funds for which the Fiscal Agent, its affiliates or subsidiaries provide investment advisory or other management services or for which the Fiscal Agent or an affiliate of the Fiscal Agent serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (a) the Fiscal Agent or an affiliate of the Fiscal Agent receives and retains a fee for services provided to the fund, (b) the Fiscal Agent collects fees for services rendered pursuant to the Agreement, which fees are separate from the fees received from such funds, and (c) services performed for such funds and pursuant to the Agreement may at times duplicate those provided to such funds by the Fiscal Agent or an affiliate of the Fiscal Agent;
(ix) any investment which is a legal investment for proceeds of the Bonds at the time of the
execution of such agreement, and which investment is made pursuant to an agreement between the District or the Fiscal Agent or any successor Fiscal Agent and a financial institution or governmental body whose long term debt obligations are rated in one of the top two rating categories (without regard to gradations) by a nationally recognized rating service;
(x) commercial paper which at the time of purchase is of "prime" quality of the highest
ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, or S&P Global Ratings, 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 Moody's Investors Service or S&P Global Ratings, and provided that purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation;
(xi) any general obligation of a bank or insurance company whose long term debt obligations
are rated in one of the top two rating categories (without regard to gradations) of a national rating service;
(xii) shares in a common law trust established pursuant to Title 1, Division 7, Charter 5 of the
Government Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended;
(xiii) shares in the California Asset Management Program; or (xiii) the Local Agency Investment Fund established pursuant to Section 16429.1 of the
Government Code of the State of California, provided, however, that the Fiscal Agent shall be permitted to make investments and withdrawals in its own name and the Fiscal Agent may restrict investments in the such fund if necessary to keep moneys available for the purposes of this Fiscal Agent Agreement.
(xiv) any other lawful investment for School District funds. “Prepayment” means moneys received by the District from the prepayment of Special Taxes as
provided in the Special Tax Formula. “Prepayment Account” means the account within the Bond Fund by that name established
pursuant to the Agreement.
C-7
"Principal Office" means the corporate trust office of the Fiscal Agent set forth in the Agreement, or such other or additional offices as may be designated by the Fiscal Agent.
"Qualified Reserve Fund Credit Instrument" means an irrevocable standby or direct-pay letter of
credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent pursuant to the Agreement, provided that all of the following requirements are met: (a) the long-term credit rating of such bank or insurance company is rated in the "AA" category (without regard to modifier) or higher by S&P Global Ratings or Moody's Investor Services at the time of issuance; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to the Agreement; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Bond Fund for the purpose of making payments required pursuant to the Agreement.
"Record Date" means the 15th day of the month next preceding the month of the applicable
Interest Payment Date whether or not such day is a Business Day. "Regulations" means temporary and permanent regulations promulgated under the Code. "Reserve Fund" means the fund by that name established pursuant to the Agreement. "Reserve Requirement" means an amount equal to the lesser of (a) Maximum Annual Debt
Service on the respective Outstanding Bonds covered by the Reserve Fund, (b) 125% of the average Annual Debt Service on the respective Outstanding Bonds covered by the Reserve Fund, as calculated at the time of issuance thereof, or (c) 10% of the original principal amount of the respective Bonds covered by the Reserve Fund (or the issue price of the respective Bonds excluding accrued interest, if the net original issue discount or premium is less than 98% or more than 102% of the principal amount of the respective Bonds), as calculated by the District.
"Resolution of Formation" means Resolution No. 35, adopted by the Board on February 6, 2006,
establishing the District for the purpose of providing for the financing of certain public facilities in and for such District.
"School District" means the Alvord Unified School District, a unified school district, and any
successor thereto. "Securities Depositories" means The Depository Trust Company; and, in accordance with then
current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as may be designated in an Officer's Certificate delivered to the Fiscal Agent.
"Series" means a series of Bonds issued under this Fiscal Agent Agreement. "Special Tax Formula" means the "Rate and Method of Apportionment" for the District, adopted
pursuant to the Resolution of Formation, as may be modified or amended in accordance with the Act. "Special Tax Fund" means the fund by that name established by the Agreement. "Special Tax Revenues" means the proceeds of the Special Taxes, including all scheduled
payments and delinquent payments thereof, interest and penalties thereon and proceeds of the
C-8
redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, less (i) the Administrative Expenses Cap and (ii) administration charges of the County.
"Special Taxes" means, collectively, (i)the Allocable Share of “Annual Special Tax A” (as such
term is defined in the Special Tax Formula) and (ii) the Allocable Share of “Annual Special Tax B” (as such term is defined in the Special Tax Formula), levied within the District pursuant to the Act, the Ordinance and the Agreement.
"Supplemental Agreement" means an agreement the execution of which is authorized by a
resolution which has been duly adopted by the District under the Act and which agreement is amendatory of or supplemental to the Agreement, but only if and to the extent that such agreement is specifically authorized hereunder.
"2018 Bonds" means the Community Facilities District 2006-1 of the Alvord Unified School
District 2018 Special Tax Refunding Bonds. Costs of Issuance Fund
Establishment of Costs of Issuance Fund. There is established under the Agreement as a
separate fund to be held by the Fiscal Agent, the Community Facilities 2006-1 Special Tax Bonds Costs of Issuance Fund, to the credit of which a deposit will be made as required by the Agreement. Moneys in the Costs of Issuance Fund will be held in trust by the Fiscal Agent and will be disbursed as provided in the Agreement for the payment or reimbursement of Costs of Issuance of the 2018 Bonds.
Disbursements. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to
pay Costs of Issuance, as set forth in an Officer's Certificate containing respective amounts to be paid to the designated payees, signed by an Authorized Officer or a designee thereof and delivered to the Fiscal Agent. The Fiscal Agent shall pay all Costs of Issuance of the Bonds upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such Officer's Certificate, or upon receipt of an Officer's Certificate requesting payment of a Cost of Issuance not listed on the initial Officer's Certificate delivered to the Fiscal Agent on the Closing Date of the Bonds. Each such Officer’s Certificate shall be sufficient evidence to the Fiscal Agent of the facts stated therein and the Fiscal Agent shall have no duty to confirm the accuracy of such facts. The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of 6 months, from the Closing Date of the Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Special Tax Fund. Thereafter, every invoice received for Costs of Issuance shall be submitted to the Fiscal Agent for payment from amounts on deposit in the Special Tax Fund.
Investment. Moneys in the Costs of Issuance Fund will be invested and deposited in accordance
with the Agreement. Interest earnings and profits resulting from said investment will be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund. Certain Covenants of the City
Punctual Payment. The District will punctually pay or cause to be paid the principal of, and interest
and any premium on, the Bonds when and as due in strict conformity with the terms of the Agreement, and it will faithfully observe and perform all of the conditions covenants and requirements of the Agreement and all Supplemental Agreements and of the Bonds.
C-9
Limited Obligation. The Bonds are limited obligations of the District on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in certain funds created hereunder as, and to the extent, set forth in the Agreement.
Extension of Time for Payment. In order to prevent any accumulation of claims for interest after
maturity, the District shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the District, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of the Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.
Against Encumbrances. The District will not encumber, pledge or place any charge or lien upon
any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by the Agreement.
Books and Accounts. The District will keep, or cause to be kept, proper books of record and
accounts, separate from all other records and accounts of the District, in which complete and correct entries will be made of all transactions relating to the Special Tax Revenues. Such books of record and accounts will at all times during business hours be subject to the inspection of the Fiscal Agent and the Owners of not less than 10% of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
Protection of Security and Rights of Owners. The District will preserve and protect the security of
the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the District, the Bonds will be incontestable by the District.
Compliance with Law; Completion of Facilities. The District will comply with all applicable
provisions of the Act and the law in completing the acquisition and construction of the Facilities; provided that the District shall have no obligation to advance any funds to complete the Facilities in excess of the amounts available therefor in the Improvement Fund.
Private Activity Bond Limitation. The District will assure that the proceeds of the Bonds are not
so used as to cause the Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.
Federal Guarantee Prohibition. The District will not take any action or permit or suffer any action
to be taken if the result of the same would be to cause any of the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code.
Collection of Special Tax Revenues; Maintenance Thereof. The District shall comply with all
requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. On or within 5 Business Days of each June 1, the Fiscal Agent shall provide the Chief Business Officer with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund. The receipt of such notice by the Chief Business Officer shall in no way affect the obligations of the Chief Business Officer under the following two paragraphs. Upon receipt of such notice, the Chief Business Officer and the Fiscal Agent shall communicate with each other
C-10
and/or their designees to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year.
The District shall effect the levy of the Special Taxes each Fiscal Year in accordance with the
Ordinance such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for inclusion on the next secured real property tax roll. Upon the completion of the computation of the amounts of the levy, the District shall prepare or cause to be prepared, and shall transmit to the Chief Business Officer, such data as the County Auditor requires to include the levy of the Special Taxes on the next secured real property tax roll. The Chief Business Officer will transmit such data to the County Auditor before the final date on which the County Auditor will accept this data.
The District shall fix and levy the amount of Special Taxes within the District required for the
payment of principal of and interest on any outstanding Bonds of the District becoming due and payable during the ensuing Bond Year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year, all in accordance with the rate and method of apportionment of the Special Taxes for the District and the Ordinance. In any event, the Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation.
The Special Taxes shall be payable and be collected in the same manner and at the same time
and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Notwithstanding the foregoing, the Special Taxes may be collected in such other manner as the District shall prescribe if necessary to pay the debt service on the Bonds.
The District covenants and agrees to not consent to or conduct proceedings with respect to a
reduction in the Special Taxes that may be levied in the District below an amount, for any Fiscal Year, equal to 110% of the aggregate of the debt service due and payable with respect to the Bonds in such Fiscal Year, plus 100% of the reasonable estimate of Administrative Expenses for such Fiscal Year; provided, however, that the District may at any time reduce the Special Taxes to the extent that the amount of Special Tax Revenues that would result from levying the Special Taxes at such maximum amounts would result in an amount of Special Tax Revenues in excess of the amount required to comply with the Agreement.
The District covenants that, in the event that any initiative is proposed by the qualified electors in
the District which purports to reduce the maximum Special Taxes below the levels specified in the Agreement or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Agreement, it will commence and pursue legal action in order to preserve its ability to comply with the Agreement.
No Arbitrage. The District shall not take, or permit or suffer to be taken by the Fiscal Agent or
otherwise, any action with respect to the gross proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and Regulations.
Maintenance of Tax-Exemption. The District will take all actions necessary to assure the
exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent
C-11
as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds.
Investments; Disposition of Investment Proceeds
Deposit and Investment of Moneys in Funds. Subject in all respects to the provisions of the
Agreement, moneys in any fund or account created or established by the Agreement and held by the Fiscal Agent, shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer's Certificate filed with the Fiscal Agent at least 2 Business Days in advance of the making of such investments. In the absence of any such Officer's Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause (vii) of the definition thereof which by their terms mature prior to the date on which such moneys are required to be paid out hereunder provided, however, that any such investment shall be made by the Fiscal Agent only if, prior to the date on which such investment is to be made, the Fiscal Agent shall have received an Officer’s Certificate specifying a specific money market fund and, if no such Officer’s Certificate is so received, the Fiscal Agent shall hold such moneys uninvested and notify the Chief Business Officer that it is doing so until further direction is received from the Chief Business Officer. Subject in all respects to the provisions of the Agreement, moneys in any fund or account created or established by the Agreement and held by the Chief Business Officer shall be invested by the Chief Business Officer in any lawful investments that the School District may make, which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of the Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts.
The Fiscal Agent or Chief Business Officer may act as principal or agent in the acquisition or
disposition of any investment. Neither the Fiscal Agent nor Chief Business Officer shall incur any liability for losses arising from any investments made pursuant to this section. Any losses arising from any investments made pursuant to this section shall be offset against interest earnings and profits retained in the same fund.
Except as otherwise provided in the next sentence, all investments of amounts deposited in any
fund or account created by or pursuant to the Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Code), shall be acquired, disposed of, and valued (as of the date that valuation is required by the Agreement or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in the Reserve Fund shall be valued by the District at their present value (within the meaning of Section 148 of the Code). For purposes of any Fair Market Value determination hereunder, the Fiscal Agent shall be entitled to conclusively rely on an Officer's Certificate and shall be fully protected in relying thereon.
Investments in any and all funds and accounts may be commingled in a separate fund or funds
for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Chief Business Officer hereunder, provided that the Fiscal Agent or the Chief Business Officer, as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in the Agreement.
The Fiscal Agent or the Chief Business Officer, as applicable, shall sell or present for redemption,
any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is
C-12
credited and neither the Fiscal Agent nor the Chief Business Officer shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith.
The District acknowledges that to the extent regulations of the Comptroller of the Currency or
other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions as they occur, the District specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent will furnish the District periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent hereunder.
Rebate of Excess Investment Earnings to the United States. The District covenants to calculate
and rebate to the federal government, in accordance with the Regulations, excess investment earnings to the extent required by Section 148(f) of the Code. The District shall notify the Fiscal Agent of any amounts determined to be due to the federal government, and the Fiscal Agent shall, upon receipt of an Officer's Certificate, withdraw such amounts from the Reserve Fund pursuant to the Agreement, and pay such amounts to the federal government as required by the Code and the Regulations. In the event of any shortfall in amounts available to make such payments under the Agreement, the Fiscal Agent shall notify the Chief Business Officer in writing of the amount of the shortfall and the Fiscal Agent shall make such payment from any amounts available in the Special Tax Fund. Any fees or expenses incurred under or pursuant to this provision shall be Administrative Expenses. The Fiscal Agent may rely conclusively upon the District’s determinations, calculations and certifications required by this section. The Fiscal Agent shall have no responsibility to independently make any calculation or determination or to review the District’s calculations hereunder. In order to provide for the administration of this provision, the District may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the District may deem appropriate.
Limited Obligation. The District's obligations under the Agreement are limited obligations of the
District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund created thereunder, as and to the extent set forth herein.
The Fiscal Agent
Appointment, Removal and Resignation of Fiscal Agent. U.S. National Bank Association, at its
Principal Office, is appointed Fiscal Agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in the Agreement, and no implied covenants or obligations will be read into the Agreement against the Fiscal Agent.
The District may remove the Fiscal Agent initially appointed, and any successor thereto, and may
appoint a successor or successors thereto, but any such successor will be a bank, national banking association or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, including, for such purpose, the combined capital and surplus of any parent holding company, and subject to supervision or examination by federal or state authority.
The Fiscal Agent may at any time resign by giving written notice to the District and by giving to
the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the District will promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent will become effective upon acceptance of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent has been made within 30 days after the Fiscal
Agent has given to the District written notice or after a vacancy in the office of the Fiscal Agent will have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of
C-13
competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
Liability of Fiscal Agent. The recitals of facts, covenants and agreements in the Agreement and
in the Bonds contained will be taken as statements, covenants and agreements of the District, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of the Agreement or of the Bonds, or will incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent will not be liable in connection with the performance of its duties under the Agreement, except for its own negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. The Fiscal Agent has no liability regarding the use of the proceeds from the purchase of the Bonds deposited in funds held by the District.
Discharge of Agreement
If the District shall pay and discharge the entire indebtedness on all or any portion of the Bonds
Outstanding in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent or other fiduciary, at or before maturity, money which, together with (in the event that all of the Bonds are to be defeased) the amounts then on deposit in the funds and accounts provided for in the Agreement, is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or
(C) by irrevocably depositing with the Fiscal Agent or other fiduciary, cash and Federal Securities in such amount as the District shall determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and (in the event that all of the Bonds are to be defeased) moneys then on deposit in the fund and accounts provided for in the Agreement, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates;
and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in the Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the District, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in the Agreement and all other obligations of the District under the Agreement with respect to such Bonds Outstanding shall cease and terminate, except only the obligations of the District (i) related to maintenance of tax-exemption and (ii) to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Fiscal Agent pursuant to the Agreement; and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent. Any funds thereafter held by the Fiscal Agent upon payments of all fees and expenses of the Fiscal Agent, which are not required for said purpose, shall be paid over to the District.
Amendments
C-14
Amendments Permitted. The Agreement and the rights and obligations of the District and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least 60% in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Agreement. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the District to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the District of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or the Agreement), or reduce the percentage of Bonds required for the amendment hereof. No such amendment may modify any of the rights or obligations of the Fiscal Agent without its written consent.
The Agreement and the rights and obligations of the District and of the Owners may also be
modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(A) to add to the covenants and agreements of the District in the Agreement
contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the District;
(B) to make modifications not adversely affecting any outstanding series of Bonds of the District in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Agreement, or in regard to questions arising under the Agreement, as the District and the Fiscal Agent may deem necessary or desirable, and which shall not adversely affect the rights of the Owners of the Bonds;
(D) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess investment earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations. No such amendment may modify any of the rights or obligations of the Fiscal Agent without its
written consent. Owners' Meetings. The District may at any time call a meeting of the Owners. In such event
the District is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of said meeting.
Procedure for Amendment with Written Consent of Owners. The District and the Fiscal Agent
may at any time enter into a Supplemental Agreement amending the provisions of the Bonds or of the Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by the Agreement, to take effect when and as provided in the Agreement. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, if such consent is required under the Agreement, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in the Agreement provided.
C-15
If consent of the Owners is required under the Agreement, such Supplemental Agreement shall
not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least 60% in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in the Agreement) and a notice shall have been mailed as hereinafter in the Agreement provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by the Agreement. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in the Agreement provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to the
Supplemental Agreement, the District shall mail a notice to the Owners in the manner hereinbefore provided in the Agreement for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in the Agreement (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by the Agreement to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise herein above specifically provided in this Article) upon the District and the Owners of all Bonds at the expiration of 60 days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. Miscellaneous
Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other
instrument, which the Agreement may require or permit to be executed by Owners, may be in one or more instruments of similar tenor, and will be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise expressly provided in the Agreement, the fact and date of the execution by any Owner or his or her attorney of such request, consent, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he or she purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him or her the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Except as otherwise expressly provided in the Agreement, the ownership of registered Bonds and the amount, maturity, number and date of holding the same will be proved by the registry books. Any request, consent, declaration or other instrument or writing of the Owner of any Bond will bind all future Owners of such Bond in respect of anything done or suffered to be done by the District or the Fiscal Agent in good faith and in accordance therewith.
Waiver of Personal Liability. No member, officer, agent or employee of the District will be
individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained will relieve any such member, officer, agent or employee from the performance of any official duty provided by law.
C-16
Unclaimed Moneys. Anything contained in the Agreement to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, will be repaid by the Fiscal Agent to the District as its absolute property free from any trust, and the Fiscal Agent will thereupon be released and discharged with respect thereto and the Bond Owners will look only to the District for the payment of the principal of, and interest and any premium on, such Bonds.
Conclusive Evidence of Regularity. Bonds issued pursuant to the Agreement will constitute
conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.
Payment on Business Day. In any case where the date of the maturity of interest or of principal
(and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to the Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest will accrue for the period from and after such date.
D-1
APPENDIX D
FORM OF OPINION OF BOND COUNSEL
________, 2018 Community Facilities District No. 2006-1 of the Alvord Unified School District 9 KPC Parkway Corona, California 92879 OPINION: $________ Community Facilities District No. 2006-1 of the Alvord Unified School District 2018 Special Tax Refunding Bonds Ladies and Gentlemen:
We have acted as bond counsel to Alvord Unified School District (the “School District”), the Board of Education (the “Board”) of which acts as the legislative body of Community Facilities District No. 2006-1 of the Alvord Unified School District (the “Community Facilities District”), in connection with the issuance by the Community Facilities District of the special tax bonds captioned above, dated the date hereof (the "Bonds"). In such capacity, we have examined such law and such certified proceedings, certifications and other documents as we have deemed necessary to render this opinion.
The Bonds are issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended,
being sections 53311 et seq. of the California Government Code (the “Act”), a resolution of the Board adopted on May 17, 2018 (the “Resolution”), and a Fiscal Agent Agreement dated as of June 1, 2018 (the “Fiscal Agent Agreement”), between the Community Facilities District and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). Under the Fiscal Agent Agreement, the Community Facilities District has pledged certain revenues (“Special Tax Revenues”) for the payment of principal and interest on the Bonds when due.
Regarding questions of fact material to our opinion, we have relied on representations of the
Board and the Community Facilities District contained in the Resolution and in the Fiscal Agent Agreement, and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law: 1. The Community Facilities District is a community facilities district duly created and validly
existing under the Constitution and the laws of the State of California with the power to enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein, and issue the Bonds.
2. The Fiscal Agent Agreement has been duly authorized, executed and delivered by the
Community Facilities District, and constitutes a valid and binding obligation of the Community Facilities District, enforceable against the Community Facilities District in accordance with its terms.
4. The Fiscal Agent Agreement creates a valid lien on the Special Tax Revenues and other
funds pledged by the Fiscal Agent Agreement for the security of the Bonds.
D-2
5. The Bonds have been duly authorized and executed by the Community Facilities District and are valid and binding limited obligations of the Community Facilities District, payable solely from the Special Tax Revenues and other funds provided therefor in the Fiscal Agent Agreement.
6. The interest on the Bonds is excluded from gross income for federal income tax purposes
and is not an item of tax preference for purposes of the federal alternative minimum tax, although, in the case of tax years beginning prior to January 1, 2018, for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest earned by a corporation prior to the end of its tax year in 2018 is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the Community Facilities District comply with all requirements of the Internal Revenue Code of 1986, as amended, relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Community Facilities District has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.
7. Interest on the Bonds is exempt from personal income taxation imposed by the State of
California. We express no opinion regarding any other tax consequences arising with respect to the
ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds. The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal Agent
Agreement are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement
this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof.
Respectfully submitted, A Professional Law Corporation
E-1
APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
CONTINUING DISCLOSURE CERTIFICATE
$__________ COMMUNITY FACILITIES DISTRICT NO. 2006-1 OF THE ALVORD UNIFIED SCHOOL DISTRICT
2018 SPECIAL TAX REFUNDING BONDS This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by
Community Facilities District No. 2006-1 of the Alvord Unified School District (the “District”) in connection with the issuance of the bonds captioned above (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement dated as of June 1, 2018 (the “Fiscal Agent Agreement”), by and between the District and U.S. Bank National Association as fiscal agent (the “Fiscal Agent”). The District hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed
and delivered by the District for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent
Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the District pursuant to, and as described
in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means the date that is 9 months after the end of the District’s fiscal year
(currently March 31 based on the District’s fiscal year end of June 30). “Dissemination Agent” means Cooperative Strategies, LLC, or any successor Dissemination
Agent designated in writing by the District and which has filed with the District a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the
Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule.
“Official Statement” means the final official statement dated ______________, 2018, executed by
the District in connection with the issuance of the Bonds. “Participating Underwriter” means Stifel, Nicolaus & Company, Incorporated, the original
underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as it may be amended from time to time.
E-2
Section 3. Provision of Annual Reports. (a) The District shall, or shall cause the Dissemination Agent to, not later than the Annual
Report Date, commencing March 31, 2019, with the report for the 2017-18 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the District shall provide the Annual Report to the Dissemination Agent (if other than the District). If by the Annual Report Date, the Dissemination Agent (if other than the District) has not received a copy of the Annual Report, the Dissemination Agent shall contact the District to determine if the District is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that if the audited financial statements of the School District are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements, and the audited financial statements of the School District may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, when they become available. The audited financial statements of the District may be included within or constitute a portion of the audited financial statements of the School District. If the District's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c).
(b) If the District does not provide, or cause the Dissemination Agent to provide, an Annual
Report by the Annual Report Date as required in subsection (a) above, the Dissemination Agent, in a timely manner, shall provide to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A.
(c) The Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the District, file a report with the District
and the Participating Underwriter certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The District's Annual Report shall contain or incorporate
by reference the following documents and information: (a) The School District's audited financial statements for the most recently completed fiscal
year, 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, together with the following statement:
THE SCHOOL DISTRICT'S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY
TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF’S INTERPRETATION OF RULE 15c2-12. NO FUNDS OR ASSETS OF THE SCHOOL DISTRICT OR THE DISTRICT, OTHER THAN SPECIAL TAX REVENUES, ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS, AND NEITHER THE SCHOOL DISTRICT NOR THE DISTRICT IS OBLIGATED TO ADVANCE AVAILABLE FUNDS TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF
E-3
THE SCHOOL DISTRICT OR THE DISTRICT IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS. (b) To the extent not included in the audited financial statements, the following information:
(i) Principal amount of the Bonds outstanding. (ii) Balance in the Reserve Fund and a statement of the Reserve Requirement, as of
September 30 preceding the Annual Report Date. (iii) Total assessed value per the secured roll of all properties subject to the annual tax
levy within the District for the most recent fiscal year available substantially in the form of Table 1 in the Official Statement.
(iv) Total assessed value and value-to-debt ratios (for direct indebtedness of the District
only), substantially in the form of Table 2A and Table 2B in the Official Statement.
(v) Tax levy delinquency rate information for the most recent fiscal year available, including the following:
• number of such properties, • dollar amount of total delinquency, and • whether the District has fulfilled its covenants to pursue foreclosure
proceedings upon such properties.
(vii) The most recent annual information required to be provided to the California Debt and Investment Advisory Commission (CDIAC) for the District.
(c) 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 District or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The District shall clearly identify each such other document so included by reference.
Section 5. Reporting of Listed Events. (a) The District shall give, or cause to be given, notice of the occurrence of any of the following
Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-
E-4
TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds.
(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities, if
material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the District. (13) The consummation of a merger, consolidation, or acquisition involving the District,
or the sale of all or substantially all of the assets of the District (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional Fiscal Agent or the change of name of
the Fiscal Agent, if material.
(b) Upon the occurrence of a Listed Event, the District shall, or shall cause the Dissemination Agent (if not the District) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(8) above 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 under the Fiscal Agent Agreement.
(c) The District acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if
the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier "material" with respect to certain notices, determinations or other events affecting the tax status of the Bonds. The District shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Upon occurrence of any of these Listed Events, the District will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the District will cause a notice to be filed as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is
considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the District in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District.
E-5
Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB
under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The District'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 District shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).
Section 8. Dissemination Agent. The District may, from time to time, appoint or engage a
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Cooperative Strategies, LLC.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only
be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or 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 Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of the Fiscal Agent or 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 District 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 filed in the same manner as for a Listed Event under Section 5(c).
E-6
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District 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 District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the District 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 11. Default. In the event of a failure of the District to comply with any provision of this
Disclosure Certificate, the 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 District 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 Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent
shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which 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 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 District, the Fiscal Agent, the Bond owners or any other party. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
District, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several
counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Date: __________, 2018
COMMUNITY FACILITIES DISTRICT NO. 2006-1 OF THE ALVORD UNIFIED SCHOOL DISTRICT
By: Assistant Superintendent, Business Services
E-7
AGREED AND ACCEPTED: COOPERATIVE STRATEGIES, LLC, as Dissemination Agent By: Name: Title:
E-8
EXHIBIT A
NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Community Facilities District No. 2006-1 of the Alvord Unified School District (the “District”)
Name of Bond Issue: Community Facilities District No. 2006-1 of the Alvord Unified School
District 2018 Special Tax Refunding Bonds Date of Issuance: ________, 2018
NOTICE IS HEREBY GIVEN that the District has not provided an Annual Report with respect to
the above-named Bonds as required by the Continuing Disclosure Certificate dated __________, 2018 executed by the District and countersigned by Cooperative Strategies, LLC, as dissemination agent. The District anticipates that the Annual Report will be filed by _____________.
Dated:
DISSEMINATION AGENT: _______________________ By: Its:
F-1
APPENDIX F
DTC AND THE BOOK-ENTRY ONLY SYSTEM The following description of The Depository Trust Company (“DTC”), the procedures and record
keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds (herein, the “Securities”) to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Securities and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC 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.
Neither the issuer of the Securities (the “Issuer”) nor the trustee, fiscal agent or paying agent
appointed with respect to the Securities (the “Agent”) takes any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to
the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Securities, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Securities, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Securities, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. DTC will act as securities depository for the Securities. The Securities 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 Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized
under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,
F-2
banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities 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 Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are
registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are
being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to
Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s
F-3
practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or 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.
9. DTC may discontinue providing its services as depository with respect to the Securities at any
time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC
(or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information in this section concerning DTC and DTC’s book-entry system has been
obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
G-1
APPENDIX G
SPECIMEN MUNICIPAL BOND INSURANCE POLICY
MUNICIPAL BONDINSURANCE POLICY
ISSUER:
BONDS: $ in aggregate principal amount of
Policy No: -N
Effective Date:
Premium: $
ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), for consideration received, herebyUNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the"Paying Agent") (as set forth in the documentation providing for the issuance of and securing the Bonds) forthe Bonds, for the benefit of the Owners or, at the election of AGM, directly to each Owner, subject only tothe terms of this Policy (which includes each endorsement hereto), that portion of the principal of andinterest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment bythe Issuer.
On the later of the day on which such principal and interest becomes Due for Payment or theBusiness Day next following the Business Day on which AGM shall have received Notice of Nonpayment,AGM will disburse to or for the benefit of each Owner of a Bond the face amount of principal of and intereston the Bond that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, butonly upon receipt by AGM, in a form reasonably satisfactory to it, of (a) evidence of the Owner's right toreceive payment of the principal or interest then Due for Payment and (b) evidence, including anyappropriate instruments of assignment, that all of the Owner's rights with respect to payment of suchprincipal or interest that is Due for Payment shall thereupon vest in AGM. A Notice of Nonpayment will bedeemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on suchBusiness Day; otherwise, it will be deemed received on the next Business Day. If any Notice ofNonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM forpurposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent orOwner, as appropriate, who may submit an amended Notice of Nonpayment. Upon disbursement inrespect of a Bond, AGM shall become the owner of the Bond, any appurtenant coupon to the Bond or rightto receipt of payment of principal of or interest on the Bond and shall be fully subrogated to the rights of theOwner, including the Owner's right to receive payments under the Bond, to the extent of any payment byAGM hereunder. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, tothe extent thereof, discharge the obligation of AGM under this Policy.
Except to the extent expressly modified by an endorsement hereto, the following terms shall havethe meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) aSaturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer'sFiscal Agent are authorized or required by law or executive order to remain closed. "Due for Payment"means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the dateon which the same shall have been duly called for mandatory sinking fund redemption and does not refer toany earlier date on which payment is due by reason of call for redemption (other than by mandatory sinkingfund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its solediscretion, to pay such principal due upon such acceleration together with any accrued interest to the dateof acceleration and (b) when referring to interest on a Bond, payable on the stated date for payment ofinterest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficientfunds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal andinterest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, anypayment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuerwhich has been recovered from such Owner pursuant to the
Page 2 of 2 Policy No. -N
United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable orderof a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequentlyconfirmed in a signed writing, or written notice by registered or certified mail, from an Owner, the Trustee orthe Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the PolicyNumber, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner"means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under theterms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person orentity whose direct or indirect obligation constitutes the underlying security for the Bonds.
AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy bygiving written notice to the Trustee and the Paying Agent specifying the name and notice address of theInsurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the PayingAgent, (a) copies of all notices required to be delivered to AGM pursuant to this Policy shall besimultaneously delivered to the Insurer's Fiscal Agent and to AGM and shall not be deemed received untilreceived by both and (b) all payments required to be made by AGM under this Policy may be made directlyby AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurer's Fiscal Agent is the agent of AGMonly and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's FiscalAgent or any failure of AGM to deposit or cause to be deposited sufficient funds to make payments dueunder this Policy.
To the fullest extent permitted by applicable law, AGM agrees not to assert, and hereby waives,only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses(including, without limitation, the defense of fraud), whether acquired by subrogation, assignment orotherwise, to the extent that such rights and defenses may be available to AGM to avoid payment of itsobligations under this Policy in accordance with the express provisions of this Policy.
This Policy sets forth in full the undertaking of AGM, and shall not be modified, altered oraffected by any other agreement or instrument, including any modification or amendment thereto. Except tothe extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy isnonrefundable for any reason whatsoever, including payment, or provision being made for payment, of theBonds prior to maturity and (b) this Policy may not be canceled or revoked. THIS POLICY IS NOTCOVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76OF THE NEW YORK INSURANCE LAW.
In witness whereof, ASSURED GUARANTY MUNICIPAL CORP. has caused this Policy to beexecuted on its behalf by its Authorized Officer.
ASSURED GUARANTY MUNICIPAL CORP.
ByAuthorized Officer
A subsidiary of Assured Guaranty Municipal Holdings Inc.1633 Broadway, New York, N.Y. 10019(212) 974-0100
Form 500NY (5/90)
