PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER 10, 2015 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. NEW ISSUE-FULL BOOK ENTRY NOT RATED 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 imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest 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." Dated: Date of Delivery $6,300,000* SUCCESSOR AGENCY TO THE SOUTH TAHOE REDEVELOPMENT AGENCY COMMUNITY FACILITIES DISTRICT NO. 2001-1 (PARK AVENUE PROJECT) SPECIAL TAX REFUNDING BONDS, SERIES 2015 (HEAVENLY VILLAGE) Due: October 1, as shown below The bonds captioned above (the "Bonds"), are being issued by the Successor Agency to the South Tahoe Redevelopment Agency (the "Agency") by and through its Community Facilities District No. 2001-1 (Park Avenue Project), South Tahoe Redevelopment Agency, City of South Lake Tahoe, County of El Dorado, State of California (the "District"). The Bonds are special tax obligations of the Agency with respect to the District, authorized pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being California Government Code Section 53311, et seq. (the "Act"), and are issued pursuant to a Fiscal Agent Agreement dated as of October 1, 2015 (the "Fiscal Agent Agreement") between the Agency and The Bank of New York Mellon Trust Company, N.A., as fiscal agent (the "Fiscal Agent"). The Bonds are being issued to (i) refund bonds issued by the former South Tahoe Redevelopment Agency for the District in 2007, (ii) provide for the establishment of a Reserve Account, and (iii) pay initial administration expenses and the costs of issuance of the Bonds. Interest on the Bonds is payable April 1, 2016, and thereafter semiannually on October 1 and April 1 of each year. See REFUNDING PLAN and THE BONDS. The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. See APPENDIX E THE BOOK-ENTRY SYSTEM. The Bonds are secured by and payable from a pledge of Special Tax Revenues (as defined herein) derived from Special Taxes (as defined herein) to be levied by the Agency on real property within the boundaries of the District, from the proceeds of any foreclosure actions brought following a delinquency in the payment of the Special Taxes, and from amounts held in certain funds and accounts under the Fiscal Agent Agreement, all as more fully described herein. Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within the District. In the event of delinquency, proceedings may be conducted only against the parcel of real property securing the delinquent Special Tax. There is no assurance the owners will be able to pay the Special Tax or that they will pay a Special Tax even though financially able to do so. To provide funds for payment of the Bonds and the interest thereon as a result of any delinquent Special Taxes, the Agency will establish a Reserve Account from proceeds of the Bonds, as described herein. See "SECURITY FOR THE BONDS." The District consists of 15.61 acres (10.39 acres subject to the Special Tax levy) of mixed hotel, commercial and retail property located in the eastern end of the City of South Lake Tahoe, California (the City ), at the base of the Heavenly Mountain Ski Resort. See "THE DISTRICT" and "OWNERSHIP AND VALUE OF PROPERTY IN THE DISTRICT." The Bonds are subject to optional and mandatory redemption prior to maturity as described herein. See "THE BONDS Redemption." NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE AGENCY, THE CITY, THE COUNTY OF EL DORADO, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS DO NOT CONSTITUTE A DEBT OF THE AGENCY OR THE CITY WITHIN THE MEANING OF ANY STATUTORY OR CONSTITUTIONAL DEBT LIMITATION. This cover page contains certain information for general reference only. It is not a summary of all of the provisions of the Bonds. Prospective investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Bonds. See "SPECIAL RISK FACTORS" herein for a discussion of the special risk factors that should be considered, in addition to the other matters and risk factors set forth herein, in evaluating the investment quality of the Bonds. MATURITY SCHEDULE (See inside cover) The Bonds are offered when, as and if issued, subject to approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters will also be passed on by Jones Hall, as Disclosure Counsel. Certain legal matters will be passed upon for the Agency by the City Attorney. Quint & Thimmig is serving as counsel to the Underwriter. It is anticipated that the Bonds will be available for delivery through the facilities of DTC on or about October, 2015. The date of this Official Statement is September _, 2015. * Preliminary, subject to change.
MATURITY SCHEDULE $ Serial Bonds Maturity Date (October 1) Principal Amount Interest Rate Price or Yield CUSIP ( ) $ % Term Bonds due October 1, Price: % CUSIP: $ % Term Bonds due October 1, Price: % CUSIP: CUSIP is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ.
SUCCESSOR AGENCY TO THE SOUTH TAHOE REDEVELOPMENT AGENCY South Lake Tahoe, California AGENCY GOVERNING BOARD AND CITY COUNCIL Hal Cole, Chairperson/Mayor Wendy David, Vice Chairperson/Mayor Pro-Tem Tom Davis, Member/Council Member Austin Sass, Member/Council Member JoAnn Conner, Member/Council Member OTHER ELECTED OFFICIALS Susan Alessi, City Clerk and Secretary David Olivo, City Treasurer and Treasurer AGENCY AND CITY STAFF Nancy Kerry, Executive Director of the Agency/City Manager Tom Watson, Agency Counsel/City Attorney Mark Carlson, Administrative Services Director Maryanne Brand, Financial Services Manager Debbie McIntyre, Financial Services Manager SPECIAL SERVICES Bond Counsel and Disclosure Counsel Jones Hall, A Professional Law Corporation San Francisco, California Fiscal Agent The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Financial Advisor Public Financial Management, Inc. San Francisco, California Special Tax Consultant and Dissemination Agent Willdan Financial Services Temecula, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT 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 to be construed as a contract with the purchasers of the Bonds. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Agency, in any press release and in any oral statement made with the approval of an authorized officer of the Agency, the words or phrases "will likely result," "are expected to", "will continue", "is anticipated", "estimate", "project," "forecast", "expect", "intend" and similar expressions identify "forward looking statements." 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. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder will, under any circumstances, give rise to any implication that there has been no change in the affairs of the Agency since the date hereof. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Agency to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Agency or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the Agency since the date hereof. All summaries of the documents referred to in this Official Statement, are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. In connection with this offering, the underwriter may overallot or effect transactions which stabilize or maintain the market price of the bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exception from the registration requirements contained in such act. The bonds have not been registered or qualified under the securities laws of any state.
TABLE OF CONTENTS Page INTRODUCTION... 1 THE BONDS... 5 Authority for Issuance... 5 Description of the Bonds... 5 Redemption... 6 Transfer or Exchange of Bonds... 9 ESTIMATED SOURCES AND USES OF FUNDS... 10 REFUNDING PLAN... 11 SECURITY FOR THE BONDS... 12 Limited Obligation... 12 Special Taxes... 12 Special Tax Methodology... 13 Special Tax Fund; Surplus Fund... 14 Parkling Facility Subordinate Obligation and Administrative Expenses... 15 Collection and Application of Special Taxes... 16 Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure... 16 Reserve Account... 18 No Additional Bonds... 18 DEBT SERVICE SCHEDULE... 19 THE DISTRICT... 20 Introduction... 20 Heavenly Village... 20 OWNERSHIP AND VALUE OF PROPERTY IN THE DISTRICT... 21 Taxable Property... 22 Special Tax Levy and Delinquencies... 24 Assessed Valuation... 25 No Teeter Plan... 26 Direct and Overlapping Debt... 26 Estimated Value to Debt Burden... 28 Debt Service Coverage... 29 SPECIAL RISK FACTORS... 30 Limited Obligation of the Agency to Pay Debt Service... 30 Concentration of Ownership... 30 Property Values... 30 Levy and Collection of Special Taxes... 32 Bankruptcy and Foreclosure Delays... 34 Enforcement of Special Taxes on Governmentally Owned Properties... 34 Parity Taxes and Special Assessments; Private Debt... 35 Tax Delinquencies... 36 No Acceleration Provisions... 36 Voter Initiatives... 37 THE AGENCY... 38 CONTINUING DISCLOSURE... 39 UNDERWRITING... 39 FINANCIAL ADVISOR... 39 LEGAL OPINION... 40 TAX MATTERS... 40 NO RATING... 41 FINANCIAL ADVISOR NO LITIGATION... 42 EXECUTION... 43 APPENDIX A - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX APPENDIX B - THE CITY OF SOUTH LAKE TAHOE APPENDIX C - FORM OF OPINION OF BOND COUNSEL APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX E - THE BOOK ENTRY SYSTEM APPENDIX F - SUMMARY OF THE FISCAL AGENT AGREEMENT -i-
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` OFFICIAL STATEMENT $6,300,000* SUCCESSOR AGENCY TO THE SOUTH TAHOE REDEVELOPMENT AGENCY COMMUNITY FACILITIES DISTRICT NO. 2001-1 (PARK AVENUE PROJECT) SPECIAL TAX REFUNDING BONDS, SERIES 2015 (HEAVENLY VILLAGE) This Official Statement, including the cover page and all Appendices hereto, is provided to furnish certain information in connection with the issuance by the Successor Agency to the South Tahoe Redevelopment Agency (the "Agency") by and through its Community Facilities District No. 2001-1 (Park Avenue Project), South Tahoe Redevelopment Agency, City of South Lake Tahoe, County of El Dorado, State of California (the "District") of the bonds captioned above (the "Bonds"). Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Definitions of certain terms used herein and not defined herein have the meaning set forth in the Fiscal Agent Agreement (defined below). See APPENDIX F SUMMARY OF THE FISCAL AGENT AGREEMENT. INTRODUCTION 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 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. The Bonds are issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (constituting Section 53300 et seq. of the California Government Code) (the "Act") and pursuant to a Fiscal Agent Agreement dated as of October 1, 2015 (the "Fiscal Agent Agreement") between the Agency and The Bank of New York Mellon Trust Company, N.A., San Francisco, California, as fiscal agent (the "Fiscal Agent") and Resolution No. 2015-4 adopted on May 5, 2015 and Resolution No. 2015-8 adopted on August 4, 2015 (together, the "Resolution") by the Governing Board of the Agency (the "Governing Board"), which authorized the issuance of the Bonds. See APPENDIX F SUMMARY OF THE FISCAL AGENT AGREEMENT. * Preliminary, subject to change. 1
Bond Terms. The Bonds will be dated as of and bear interest from the date of delivery thereof at the respective rates set forth on the inside cover page of this Official Statement. Interest on the Bonds is payable on April 1 and October 1 of each year (each an "Interest Payment Date"), commencing April 1, 2016. The Bonds will be issued without coupons in denominations of $5,000 or any integral multiple thereof. Registration of Ownership of Bonds. The Bonds will be issued only as fully registered bonds in book-entry form, registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners will mean Cede & Co., and will not mean the ultimate purchasers of the Bonds. Payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co. so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC s Participants and Indirect Participants, as more fully described herein. See APPENDIX E THE BOOK-ENTRY SYSTEM. Use of Proceeds. Proceeds of the Bonds will be used primarily to refund the Former Agency s (as defined below) Community Facilities District No. 2001-1 (Park Avenue Project) Series 2007 Special Tax Refunding Bonds (Heavenly Village) issued on February 13, 2007 in the original principal amount of $7,200,000 and outstanding in the aggregate principal amount of $6,160,000 as of September 1, 2015 (the "Prior Bonds ). Proceeds of the Prior Bonds were primarily used to refund bonds of the Former Agency issued for the District in 2001, the proceeds of which were used to construct certain public infrastructure improvements authorized to be funded by the District. Proceeds of the Bonds will also be used to establish a separate debt service Reserve Account for the Bonds and to pay costs of issuance of the Bonds. See "REFUNDING PLAN." The Former Agency and the Agency. The South Tahoe Redevelopment Agency (the Former Agency ) was established in 1981 for the purpose of eliminating and preventing blight in designated redevelopment areas. The Former Agency formed the District in 2001 in connection with its redevelopment efforts in the City. The members of the City Council served as members of the governing board of the Former Agency. As a result of changes in California s redevelopment law, the Former Agency was dissolved on February 1, 2012. The City has elected to serve as the Agency; however, the City and the Agency are separate public entities and did not merge. Neither the liabilities nor the assets of the Former Agency are transferred to the City by the virtue of the City s election to serve as the Agency. For more information about the Former Agency and the Agency, see THE AGENCY The Bonds are not a debt of the Agency, but are being issued by the Agency for the District and are payable solely from the sources provided therefor in the Fiscal Agent Agreement. The City. The City is located along the south shore of Lake Tahoe adjacent to the Nevada state line and is approximately 150 miles northeast of San Francisco and 100 miles east of Sacramento, California. Located in El Dorado County, the City is a general law city incorporated on November 30, 1965 and functions under a Council Manager form of government made up of five council members elected to four-year, overlapping terms. The City encompasses an area of approximately nine square miles with an average elevation of 6,400 feet above sea level. For certain information with respect to the City, see APPENDIX B - THE CITY OF SOUTH LAKE TAHOE. 2
The District. Pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (constituting Sections 53300 et seq. of the California Government Code) (the "Act"), the Former Agency undertook proceedings in 2001 to form the District. The District is a legally constituted separate governmental entity, with the Governing Board of the Former Agency, now the Agency, acting as the legislative body of the District. The District consists of 15.61 acres (10.39 acres subject to the Special Tax levy) of mixed hotel, commercial and retail property located in the eastern end of the City at the base of the Heavenly Mountain Ski Resort. For more information on the District, see "THE DISTRICT." Source of Payment of the Bonds. Pursuant to the Act and a Rate and Method of Apportionment of Special Tax for the District (the Rate and Method ), the District annually levies a special tax ( Special Tax ) on taxable properties in the District. The Bonds are payable from the proceeds of the Special Taxes received by the Agency, including any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon (the Special Tax Revenues ). "Special Tax Revenues" does not include any penalties collected in connection with delinquent Special Taxes or any interest in excess of the interest due on the Bonds. The Bonds are also payable from amounts held in certain funds and accounts pursuant to the Fiscal Agent Agreement, including a Reserve Account, all as more fully described herein. The Special Taxes represent liens on the parcels of land subject to a Special Tax and failure to pay the Special Taxes could result in proceedings to foreclose the delinquent property. The Special Taxes do not constitute the personal indebtedness of the owners of taxed parcels. See "SECURITY FOR THE BONDS Special Tax Methodology" and APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. Reserve Account. In the Fiscal Agent Agreement, the Agency directs the Fiscal Agent to establish a Reserve Account (the "Reserve Account") from Bond proceeds in the amount of the Reserve Requirement, which amount is available to be transferred to the Interest Account, the Principal Account and the Redemption Account of the Special Tax Fund in the event of delinquencies in the payment of the Special Taxes. The Reserve Account is required to be maintained at the Reserve Requirement from moneys available under the Fiscal Agent Agreement. See "SECURITY FOR THE BONDS Reserve Account." If there are additional delinquencies after depletion of funds in the Reserve Account, the Agency is not obligated to use its own funds to pay the Bonds or supplement the Reserve Account. No Additional Bonds. The Agency has covenanted not to issue any additional bonds secured by a pledge of the Special Tax, except for bonds to refund bonds previously issued for the District. See "SECURITY FOR THE BONDS No Additional Bonds." Subordinate Debt. Pursuant to a Parking Facility Agreement (defined herein), certain Surplus Special Tax Revenues (consisting of Special Tax Revenues remaining in any Bond Year after satisfaction of requirements of the Special Tax Fund relating to the Bonds in such Bond Year described herein) are required to be transferred to the South Tahoe Joint Powers Parking Financing Authority (the "Parking Authority") each year for payment of Parking Revenue Refunding Bonds, Series 2013 (the Subordinate Debt ) issued by the Parking Authority to finance a parking garage within the District. Such Subordinate Debt is outstanding in the outstanding aggregate principal amount of $7,530,000. The pledge of the Surplus Special Tax Revenues to the Subordinate Debt is subordinate to the pledge of Special Tax Revenues to secure the repayment of the Bonds. See SECURITY FOR THE BONDS - Parkling Facility Subordinate Obligation and Administrative Expenses. 3
Property Subject to the Special Tax. The property in the District currently contains approximately 10.39 net acres that are developed and classified as Taxable Property under the Rate and Method and includes a gondola base station, over 117,000 square feet of retail and commercial space, the Marriott Grand Residence - a 199 condominium unit timeshare ownership resort, a cinema complex, and the Marriott Timber Lodge - a 264-unit timeshare ownership resort, as more fully described herein. Related perimeter landscaping, an ice rink, open space, a parking garage, and an intermodal transportation facility are exempt from Special Taxes of the District. See "THE DISTRICT." Assessed Value of Property. Property in the District is security for the Special Tax. The Agency reports that the 2015-16 assessed valuation of property in the District is $194,299,482. It should be noted that assessed valuations may not represent the actual value of property. The assessed value of property of $194,299,482 is approximately 31* times the estimated $6,300,000* principal amount of the Bonds. See "OWNERSHIP AND VALUE OF PROPERTY IN THE DISTRICT." Risks of Investment. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of special factors that should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. Limited Obligation of the Agency. The general fund of the Agency is not liable and the full faith and credit of the Agency is not pledged for the payment of the interest on, or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Agency or any of its income or receipts, except the money in the Special Tax Fund (described herein) established under the Fiscal Agent Agreement, and neither the payment of the interest on nor principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Agency. The Bonds do not constitute an indebtedness of the Agency within the meaning of any constitutional or statutory debt limitation or restrictions and neither the Governing Board, the Agency nor any officer or employee thereof are liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds other than from the proceeds of the Special Taxes and the money in the Special Tax Fund, as provided in the Fiscal Agent Agreement. * Preliminary, subject to change. 4
Summary of Information. Brief descriptions of certain provisions of the Fiscal Agent Agreement, the Bonds and certain other documents are included herein. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions, copies of which are available for inspection at the office of the Treasurer of the Agency. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors rights generally. Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings ascribed to such terms in the Fiscal Agent Agreement. The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement, any sale made hereunder, nor any future use of this Official Statement will, under any circumstances, create any implication that there has been no change in the affairs of the Agency or the District since the date hereof. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Authority for Issuance THE BONDS The Bonds are issued pursuant to the Fiscal Agent Agreement, approved by Resolution No. 2015-4 adopted by the Successor Agency on May 5, 2015 and Resolution No. 2015-8 adopted on August 4, 2015 (together, the "Resolution"), and the Act. On April 3, 2001, the Former Agency adopted Resolutions Nos. 2001-5 and 2001-6 (the "Resolution of Formation"), which formed the District. The District was established and authorized to incur bonded indebtedness in an aggregate principal amount not to exceed $30,000,000 at a special election in the District held on the same day. Under the provisions of the Act, the qualified electorate of the District voted to incur the indebtedness and to approve the annual levy of Special Taxes to be collected within the District, for the purpose of paying for the Improvements, including repaying any indebtedness of the District, replenishing the Reserve Account and paying the administrative expenses of the District. See "THE DISTRICT." Description of the Bonds Bond Terms. The Bonds will be dated as of and bear interest from the date of delivery thereof at the rates and mature in the amounts and years, as set forth on the inside cover page hereof. The Bonds are being issued in the denomination of $5,000 or any integral multiple thereof. Interest on the Bonds will be payable semiannually on April 1 and October 1 of each year (each an "Interest Payment Date"), commencing April 1, 2016. The principal of the Bonds and premiums due upon the redemption thereof, if any, will be payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in San Francisco, California, or such other place as designated by the Fiscal Agent, upon presentation and surrender of the Bonds; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds will be made by wire transfer, or such other method acceptable to the Fiscal Agent, to DTC. 5
Book-Entry Only System. The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to ultimate purchasers under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners will mean Cede & Co., and will not mean the ultimate purchasers of the Bonds. The Fiscal Agent will make payments of the principal, premium, if any, and interest on the Bonds directly to DTC, or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC s Participants and Indirect Participants, as more fully described herein. See APPENDIX E THE BOOK-ENTRY SYSTEM. Calculation and Payment of Interest. Interest on the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on each Interest Payment Date by first class mail to the registered Owner thereof at such 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 made on such Interest Payment Date upon written instructions received by the Fiscal Agent on or before the Record Date preceding the Interest Payment Date, of any Owner of $1,000,000 or more in aggregate principal amount of Bonds; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds will be made by wire transfer, or such other method acceptable to the Fiscal Agent, to DTC. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it will 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 will 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 will bear interest from its dated date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co. Disbursements of such payments to DTC s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC s Participants and Indirect Participants, as more fully described herein. See APPENDIX E THE BOOK-ENTRY SYSTEM. Redemption* Optional Redemption. The Bonds maturing on or after October 1,, are subject to optional redemption, from sources of funds other than prepayments of Special Taxes, prior to their stated maturity on any Interest Payment Date on or after October 1,, as a whole or in part among maturities as selected by the Agency and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the Bonds or portions to be redeemed) as set forth below, together with accrued interest thereon to the date fixed for redemption: 6
Redemption Date October 1, and April 1, October 1, and April 1, October 1, and any date thereafter Redemption Price Extraordinary Mandatory Redemption From Prepayments. All of the Bonds are subject to redemption prior to their stated maturities, on any Interest Payment Date, from the proceeds of the Prepayment of Special Taxes, in whole or in part among maturities on a pro rata basis and by lot within a maturity, at a redemption price (expressed as a percentage of the principal amount of the Bonds or portions to be redeemed) as set forth below, together with accrued interest thereon to the date fixed for redemption: Redemption Date October 1, through April 1, October 1, and April 1, October 1, and April 1, October 1, and thereafter Redemption Price Mandatory Sinking Fund Redemption. The Bonds maturing October 1, are subject to mandatory sinking payment redemption in part on October 1, and on each October 1 thereafter to maturity, by lot, at a redemption price equal to 100% of their principal amount to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium, in the aggregate respective principal amounts as set forth in the following table: Mandatory Redemption Date (October 1) Sinking Fund Payment * Preliminary; subject ot change. Selection of Bonds for Redemption. If fewer than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds for redemption, the Agency will notify the Fiscal Agent of Bonds to be called for redemption and will provide the Fiscal Agent with a revised sinking fund schedule giving effect to the redemption so completed. Within each maturity, the Fiscal Agent will select Bonds for retirement by lot. Purchase In Lieu of Redemption. Moneys deposited in the Redemption Account, other than Prepayments, may be used to purchase Outstanding Bonds in the manner provided in the Fiscal Agent Agreement. Purchases of Outstanding Bonds may be made by the Agency 7
at public or private sale as and when and at such prices as the Agency may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest. Any accrued interest payable upon the purchase of Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date. Redemption Procedure by Fiscal Agent. When Bonds are due for redemption, the Fiscal Agent will give notice, in the name of the Agency, of the redemption of such Bonds. The Agency may instruct the Fiscal Agent to specify in the redemption notice that such redemption may be subject to receipt of funds sufficient to accomplish the redemption. Such notice of redemption will (a) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds are subject to redemption, or all the Bonds of one maturity, are to be redeemed, the bond numbers of such issue need not be specified; (b) state the date fixed for redemption and surrender of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed; (f) state the date of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds being redeemed as will be specified by the Fiscal Agent. Such notice will further state that on the date fixed for redemption, there will become due and payable on each Bond or portion thereof called for redemption, the principal thereof, and interest accrued to the redemption date, and that from and after such date, interest thereon will cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Fiscal Agent will mail a copy of such notice, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register. The actual receipt by the Owner of any Bond of notice of such redemption will not be a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the Fiscal Agent that notice of such redemption has been given as herein provided will be conclusive as against all parties and the Owner will not be entitled to show that he or she failed to receive notice of such redemption. Any such redemption notice may specify that redemption on the specified date will be subject to receipt by the Agency of moneys sufficient to cause such redemption, and neither the Agency nor the Fiscal Agent will have any liability to the Owners or any other party as a result of its failure to redeem the Bonds as a result of insufficient moneys. Effect of Redemption. Notice of redemption having been duly given and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (a) The Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Fiscal Agent Agreement, anything in this Fiscal Agent Agreement or in the Bonds to the contrary notwithstanding; (b) Upon presentation and surrender thereof at the office of the Fiscal Agent, the redemption price of such Bonds will be paid to the Owners thereof; 8
(c) As of the redemption date the Bonds, or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds, or portions thereof, will cease to bear further interest; and (d) As of the date fixed for redemption no Owner of any of the Bonds, or portions thereof so designated for redemption will be entitled to any of the benefits of this Fiscal Agent Agreement or any Supplemental Agreement, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. Transfer or Exchange of Bonds So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Bonds will be made in accordance with DTC procedures. See APPENDIX E THE BOOK-ENTRY SYSTEM. Subject to the limitations described below, the registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the Fiscal Agent, accompanied by delivery of written instrument of transfer in a form acceptable to the Fiscal Agent and duly executed by the Bondowner or his or her duly authorized attorney. Bonds may be exchanged at the office of the Fiscal Agent for a like aggregate principal amount of Bonds for other authorized denominations of the same maturity and issue. The Fiscal Agent will not collect from the Owner any charge for any new Bond issued upon any exchange or transfer, but will require the Bondowner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds will be surrendered for registration of transfer or exchange, the Agency will execute and the Fiscal Agent will authenticate and deliver a new Bond or Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Fiscal Agent will not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. For a summary of certain additional provisions of the Fiscal Agent Agreement, see APPENDIX F SUMMARY OF THE FISCAL AGENT AGREEMENT. 9
ESTIMATED SOURCES AND USES OF FUNDS A summary of the estimated sources and uses of funds associated with the sale of the Bonds follows: Estimated Sources of Funds: Principal Amount of Bonds Less [Plus] Original Issue Discount [Premium] Total Estimated Uses of Funds: Deposit to Escrow Fund Deposit to Reserve Account Costs of Issuance (1) Total (1) Includes fees of bond and disclosure counsel, initial fees, expenses and charges of the Fiscal Agent, costs of printing the Official Statement, administrative fees of the Agency, special tax consultant, appraiser, Underwriter s discount, financial advisory fees, and other costs of issuance. 10
REFUNDING PLAN The District was formed for the purpose of financing a portion of the costs of acquiring and constructing certain public infrastructure improvements (the "Improvements") authorized to be financed by the District. The Improvements included street improvements, the acquisition of land for a public parking garage and acquisition of land for an intermodal transit center and public open space, and other public facilities necessary to meet development requirements for property in the District. A portion of the proceeds of the Bonds will be used to refund the Former Agency s Community Facilities District No. 2001-1 (Park Avenue Project) 2007 Special Tax Refunding Bonds (Heavenly Village) outstandng in the principal amount of $6,160,000 (the "Prior Bonds ). The proceeds of the Prior Bonds were used primarily to refund bonds issued for the District in 2001 which financed Improvements in the District and to finance some additional Improvements in the District. The outstanding Prior Bonds will be redeemed in full on October 1, 2015, at a redemption price equal to 102% of their principal amount, together with interest thereon to the Redemption Date. A portion of the proceeds of the Bonds will be transferred to The Bank of New York Mellon Trust Company, N.A., as trustee for the Prior Bonds and as escrow agent (the Escrow Agent ) under an Escrow Deposit and Trust Agreement dated as of the date of issuance of the Bonds (the Escrow Agreement ), between the Agency and the Escrow Agent. The amounts deposited from the proceeds of the Bonds will be held by the Escrow Agent under the Escrow Agreement, in cash uninvested. These funds, together with any remaining amounts held in cash by the Escrow Agent, will be sufficient to pay and redeem the Prior Bonds in full on the date of issuance of the Bonds. The moneys held by the Escrow Agent in the Escrow Fund are pledged to the payment of the Prior Bonds and will not be available for the payment of the Bonds. 11
SECURITY FOR THE BONDS Limited Obligation The Bonds are limited obligations of the Agency for the District payable solely from the proceeds of the Special Tax and certain funds held under the Fiscal Agent Agreement. The general fund of the Agency is not liable and the full faith and credit of the Agency is not pledged for the payment of the interest on, or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Agency or any of its income or receipts, except the money in the Special Tax Fund (described herein) established under the Fiscal Agent Agreement, and neither the payment of the interest on nor principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Agency. The Bonds do not constitute an indebtedness of the Agency within the meaning of any constitutional or statutory debt limitation or restrictions and neither the Governing Board, the Agency nor any officer or employee thereof are liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds other than from the proceeds of the Special Taxes and the money in the Special Tax Fund, as provided in the Fiscal Agent Agreement. Special Taxes The Bonds are payable from and secured by the proceeds of the Special Taxes received by the Agency, including any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest thereon (the "Special Tax Revenues"). "Special Tax Revenues" do not include any penalties collected in connection with delinquent Special Taxes or any interest in excess of the interest due on the Bonds. All of the Special Tax Revenues and all moneys deposited in the Special Tax Fund are pledged to secure the repayment of the Bonds. Such pledge constitutes a first lien on the Special Tax Revenues and said amounts. The Special Tax Revenues and all moneys deposited into the Special Tax Fund (except as otherwise provided in the Fiscal Agent Agreement) are dedicated 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 defeased in accordance with the Fiscal Agent Agreement. A Special Tax applicable to each taxable parcel in the District will be levied and collected according to the tax amount determined by the Agency pursuant to the Act through the application of the Rate and Method of Apportionment of Special Tax (the "Rate and Method") approved by the qualified voters on June 18, 2002. See "- Special Tax Methodology" below and APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. The amount of Special Taxes that the District may levy in any year, and from which principal and interest on the Bonds is to be paid, is strictly limited by the maximum rates approved by the qualified electors within the District which are set forth as the annual "Maximum Special Tax" in the Rate and Method. Under the Rate and Method, Special Taxes for the purpose of making payments on the Bonds will be levied annually in an amount, not in excess of the Maximum Special Tax. The Special Taxes and any interest earned on the Special Taxes constitute the source of revenues for the principal of and interest on the Bonds pursuant to the Fiscal Agent Agreement and, so long as the principal of and interest on these obligations 12
remains unpaid, the Special Taxes and investment earnings thereon will not be used for any other purpose, except as permitted by the Fiscal Agent Agreement, and will be held for the benefit of the owners thereof and will be applied pursuant to the Fiscal Agent Agreement. The Rate and Method apportions the Special Tax Requirement (as defined in the Rate and Method and described below) among the taxable parcels of real property within the District according to the methodology set forth in the Rate and Method. See "- Special Tax Methodology" below. See also APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. Because each annual Special Tax levy is limited to the Maximum Special Tax rates authorized as set forth in the Rate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the amount of the Special Tax Requirement (which includes the annual amount of the scheduled debt service on the Bonds) will in fact be collected in any given year. See "SPECIAL RISK FACTORS Tax Delinquencies." Special Tax Methodology General. The Special Tax will be levied on and collected from each parcel in the District subject to the Special Tax as set forth in the Rate and Method, the complete text of which is contained in APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. All capitalized terms used in this section will have the meaning set forth in Appendix A. Taxable Property. The property in the District currently contains approximately 10.39 net acres that are developed and classified as Taxable Property under the Rate and Method. The Taxable Property consists of two tax zones, referred to as Zone A and Zone B. Taxable Property in Zone A consists of the Gondola Base Station, the Marriott Grand Residence residential units and 37 commercial suites, and the Cinema Annex cinema and retail space. Taxable Property in Zone B consists of the Marriott Timber Lodge residential units, Cecil s Market and retail spaces. Perimeter landscaping, an ice rink, open space, a parking garage, and an intermodal transportation facility are exempt from Special Taxes of the District. See THE DISTRICT for more information. Property adjacent to the District identified in the District Boundary Map as Zone C was originally designated for possible future annexation into the District. However, Zone C was not annexed into the District and the Agency has no expectation that it will be annexed into the District in the future. Categories of Special Taxes. Taxable Property within the District is subject to (i) a Non Contingent Special Tax; (ii) a Revenue Neutrality Special Tax; (iii) a possible Contingent Special Tax if property tax increment received by the Agency and transient occupancy taxes received by the City, from development within the District do not reach certain levels; and (iv) a Backup Special Tax that would be levied if there is any change in expected land use of a parcel within the District. The Contingent Special Tax and the Backup Special Tax have not been levied in the District, and it is not expected that the Contingent Special Tax or Backup Special Tax will be levied in the future. The Non Contingent Special Tax and Revenue Neutrality Special Tax are levied at the Maximum Special Tax Rates. See APPENDIX A - RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. 13