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a
EDWARD

COUNSEL

Z. KOIKIN

ELIZABETH

L. MARTYN RANDY S. SNYDER

PARALEGAL

C. HOPE ERFURT

September 15, 2005

Southwest Securities, Inc. 620 Newport Center Drive, Suite 300 Newport Beach, California 92660

Re:

$26,330,000 City of Indio Community Facilities District No. 2004-3 (Terra Lago) Special Tax Bonds, Series 2005 (Improvement Area No. 1)

Ladies and Gentlemen: We have acted as Special Counsel to the City of Indio (the "City") and City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "District") in connection with the issuance and delivery of $26,330,000 principal amount of City of Indio Community Facilities District No. 2004-3 (Terra Lago) Special Tax Bonds, Series 2005 (Improvement Area No. 1) (the "Bonds"). Terms not defined herein shall be as defined in the Purchase Contract dated September 7, 2005 between the District and Southwest Securities, Inc. (the "Purchase Contract"). Based on the foregoing, we are of the opinion that: 1. The City is a general law city duly organized and validly existing under the Constitution and laws of the State of California; and 2. To the best of such counsel's knowledge, without independent investigation, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened against the City or the District affecting the existence of the City or the District or the title of their officers to their respective offices, or which would materially adversely affect the ability of the District to perform its obligations hereunder or under the Bonds or the Basic Documents or seeking to restrain or to enjoin the development of property within the District, the issuance, sale, or delivery of the Bonds or the exclusion from gross income for federal income tax purposes or State personal income taxes of interest on the Bonds, or the application of the proceeds thereof as described in the Official Statement, or the collection or application of the Special Tax to pay the principal of

EXHIBIT E1

September 12, 2005 Southwest Securities, Inc. Page 2 of 3

and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds or the Basic Documents or any action of the District contemplated by any of said documents or the accuracy or completeness of the Preliminary Official Statement or the Official Statement. Very truly yours, KOTKIN & ASSOCIATES, APLC

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Elizabelth L. Martyr, Esq. Assistant City Attorney City of Indio

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EXHIBIT E2