Loading...
HomeMy WebLinkAboutOrd. No. 2007-1208 ORDINANCE NO. 1208 ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE AUTHORIZING THE LEVY OF A SERVICES SPECIAL TAX AND A SPECIAL TAX WHEREAS, on December 12,2006, the City Council (the "Council") of the City of Lake Elsinore (the "City") adopted Resolution No. 2006-205 stating its intention to form the City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"), to finance a portion of the cost of providing parks, open space and storm drain maintenance services (the "Services") that are in addition to those provided in the territory within the CFD prior to the formation of the CFD, and to finance the purchase, construction, expansion or rehabilitation of certain real and other tangible property with an estimated useful life of five years or longer, including public infrastructure facilities and other governmental facilities, which the City is authorized by law to construct, own or operate (the "Facilities"); and - WHEREAS, on December 12, 2006, the Council also adopted Resolution No. 2006-206 stating its intention and the necessity to incur bonded indebtedness in the amount not to exceed $5,000,000 to be issued for the purpose of financing the purchase, construction, expansion or rehabilitation of the Facilities; and WHEREAS, notice was published as required by law relative to the intention of the Council to form the CFD and to incur bonded indebtedness in the amount not to exceed $5,000,000 within the boundaries of the CFD; and WHEREAS, on January 23, 2007, this Council held a noticed public hearing as required by law relative to the determination to proceed with the formation of the CFD, the rate and method of apportionment and manner of collection of the special tax to be levied within the CFD to pay for the Services and the rate and method of apportionment and manner of collection of the special tax to be levied within the CFD to pay the principal and interest on the proposed bonded indebtedness of the CFD, and relative to the necessity for authorizing the bonds, the purpose for which the bonds are to be issued, the amount of the proposed debt, the maximum term of the bonds and the maximum annual rate of interest to be paid; and CITY COUNCIL ORDINANCE NO. 1208 PAGE20F4 WHEREAS, at said hearing all persons desiring to be heard on all matters pertaining to the formation of the CFD and the incurring of bonded indebtedness by the CFD were heard and a full and fair hearing was held; and WHEREAS, the Council subsequent to said hearing adopted Resolution No. 2007-12 determining the validity of prior proceedings and established the CFD; and WHEREAS, the Council subsequent to said hearing adopted Resolution No. 2007-13 which called an election within the CFD for January 23, 2007 on the proposition of incurring bonded indebtedness, levying a special tax and setting an appropriations limit; and WHEREAS, on January 23,2007, an election was held within the CFD in which the eligible electors approved by more than two-thirds vote the proposition of incurring bonded indebtedness, levying a special tax, and setting an appropriations limit. THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES ORDAIN AS FOLLOWS: SECTION 1. A special tax (the "Services Special Tax") is levied within the boundaries of the CFD pursuant to the formula set forth in Exhibit "A" attached hereto and incorporated by reference in an amount necessary to pay all of the costs of providing the Services, periodic costs, and costs of the tax levy and collection, and all other costs. SECTION 2. A special tax (the "Special Tax") is levied within the boundaries of the CFD pursuant to the formulas set forth in Exhibit "A" attached hereto and incorporated by reference in an amount necessary to pay all of the costs of providing the Facilities, periodic costs, and costs of the tax levy and collection, and all other costs including amounts payable with respect to the bonded indebtedness. SECTION 3. This legislative body is hereby further authorized each year, by resolution adopted as provided in section 53340 of the Act, to determine the specific special tax rate and amount to be levied for the then current or future tax years, except that the special tax rate to be levied shall not exceed the maximum rate set forth in Exhibit "A". CITY COUNCIL ORDINANCE NO. 1208 PAGE30F4 SECTION 4. All of the collections of the Services Special Tax and Special Tax shall be used as provided for in the Act and Resolution No. 2007-12 (Resolution of Formation). SECTION 5. The above authorized Services Special Tax and the Special Tax shall be collected in the same manner as ordinary ad valorem taxes are collected and shall be subject to the same penalties and the same procedure and sale in cases of delinquency as provided for in ad valorem taxes; provided, however, the CFD may collect the Services Special Tax and the Special Tax at a different time or in a different manner if necessary to meet its financial obligations. SECTION 6. If any provision, clause, sentence or paragraph of this Ordinance or the application thereof to any person or circumstance shall be held invalid, such invalidity shall not affect the other provisions of this Ordinance and are hereby declared to be severable. SECTION 7. The Mayor shall sign this ordinance and the City Clerk shall attest to such signature. The City Clerk is directed to cause the title and summary or text of the this ordinance, together with the vote thereon, to be published within fifteen (15) days after its passage at least once in a newspaper of general circulation published and circulated within the territorial jurisdiction of the City, and to post at the main office of the City a certified copy of the full text of the adopted ordinance along with the names of the council Members voting for and against the ordinance. SECTION 8. This Ordinance relating to the levy of the Services Special Tax and the Special Tax shall take effect thirty (30) days after the date of its final passage. The City Clerk shall certify as to adoption of this Ordinance and cause this Ordinance to be published and posted in the manner required by law. A copy of this Ordinance shall be transmitted to the Clerk of the Board of Supervisors of Riverside County, The Assessor and the Treasurer-Tax Collector of Riverside County. CITY COUNCIL ORDINANCE NO. 1208 PAGE40F4 - INTRODUCED AND APPROVED UPON FIRST READING this 23rd day of January, 2007, upon the following roll call vote: AYES: COUNCILMEMBERS: BUCKLEY, HICKMAN, KELLEY, SCHIFFNER, MAGEE NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE ABSTAIN: COUNCILMEMBERS: NONE PASSED, APPROVED AND ADOPTED UPON SECOND READING this 13th day of February, 2007, upon the following roll call vote: AYES: COUNCILMEMBERS: BUCKLEY, KELLEY, SCHIFFNER, MAGEE NOES: COUNCILMEMBERS: NONE ABSTAIN: COUNCILMEMBERS: Robert E. Magee, ayor City of Lake Els' ore ABSENT: COUNCILMEMBERS: A T!fST: ~ /\iJd~C1o ~ tit Frederick Ray, CMC, City erk City of Lake Elsinore RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT No. 2006-9 OF THE CITY OF LAKE ELSINORE (TRIESTE) A Special Tax shall be levied on all Assessor's Parcels in Community Facilities District No. 2006-9 of the City of Lake Elsinore (Trieste) ("CFD No. 2006-9") and collected each Fiscal Year commencing in Fiscal Year 2007-2008, in an amount determined through the application of this Rate and Method of Apportionment as described below. All of the real property in CFD No. 2006-9, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on or determined from the applicable Assessor's Parcel Map. Notwithstanding the foregoing, the Acreage attributable to a Condominium shall. be computed by the CFD Administrator by dividing the total Acreage for the Final Subdivision in which the Condominium is located, less the Acreage for any Property Owner Association Property and/or Public Property, by the total number of Condominiums to be constructed within such Final Subdivision as determined from the applicable Condominium Plan. "Act" means the Mello-Roos Community Facilities Act of 1982, being Chapter 2.5, Part 1, Division 2 of Title 5 of the California Government Code. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration ofCFD No. 2006-9: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2006-9 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2006-9 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2006-9 or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs ofthe City, CFD No. 2006-9 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or CFD No. 2006-9 for any other administrative purposes ofCFD No. 2006-9, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 1 "Assessor's Parcel" means a lot or parcel, including but not limited to Condominiums, to which an Assessor's parcel number is assigned as determined from an Assessor's Parcel Map or the applicable assessment roll. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax for Facilities" means the Special Tax for Facilities for each Land Use Class of Developed Property, as determined in accordance with Section C.l.(b) below. "Authorized Facilities" means those facilities eligible to be funded by CFD No. 2006-9. "Backup Special Tax for Facilities" means the Special Tax for Facilities applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.l.( c) below. "Certificate of Occupancy" means a certificate issued by the City that authorizes the actual occupancy of a dwelling unit for habitation by one or more residents. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement for Facilities, the Special Tax Requirement for Services as determined in accordance with Section I below, and providing for the levy and collection of the Special Taxes. "CFD No. 2006-9" means Community Facilities District No. 2006-9 of the City of Lake Elsinore (Trieste). "CFD No. 2006-9 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 2006-9 and secured solely by the Special Tax for Facilities levy on property within the boundaries ofCFD No. 2006-9 under the Act. "City" means the City of Lake Elsinore. "Condominium" means a unit meeting the statutory definition of a condominium contained in the California Civil Code, Section 1351, and for which a condominium plan has been recorded pursuant to California Civil Code, Section 1352. "Condominium Plan" means a condominium plan as set forth in the California Civil Code, Section 1352. "Council" means the City Council of the City of Lake Elsinore, acting as the legislative body ofCFD No. 2006-9. "County" means the County of Riverside. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7,2006 Page 2 "Developed Property" means, with respect to the Special Tax for Facilities, for each Fiscal Year, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which the Final Subdivision was recorded on or before January I of the prior Fiscal Year and a building permit for new construction was issued on or before May I ofthe Fiscal Year preceding the Fiscal Year for which the Special Tax for Facilities is being levied. "Final Subdivision" means a subdivision of property by recordation of (i) a final map, or portion thereof, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots for which building permits may be issued, or (ii) lot line adjustment approved by the City. "Fiscal Year" means the period starting July I and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which CFD No. 2006-9 Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Table I below. "Maximum Special Tax for Facilities" means the maximum Special Tax for Facilities, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non-Residential Property" means all Assessor's Parcels of Developed Property for which a building permit permitting the construction of one or more non-residential units or facilities has been issued by the City, and which is not otherwise Residential Property. "Outstanding Bonds" means all CFD No. 2006-9 Bonds which are deemed to be outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year, (i) any property within the boundaries of CFD No. 2006-9 that was owned by a property owner association, including any master or sub-association, as of January I of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May I preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (Hi) any property which, as of the May I preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed, irrevocably dedicated, or irrevocably offered to a property owner's association, including any master or sub-association, provided such conveyance, dedication, or offer is submitted to the CFD Administrator by May I preceding the Fiscal Year for which the Special Tax is being levied. Notwithstanding the preceding, Property Owner Association Property shall not include any property on which Condominiums are or will be located. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 3 "Proportionately" means for Developed Property that the ratio of the actual Special Tax for Facilities levy to the Assigned Special Tax for Facilities is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax for Facilities levy per Acre to the Maximum Special Tax for Facilities per Acre is equal for all Assessor's Parcels of Undeveloped Property. The term "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section D below. "Public Property" means property within the boundaries of CFD No. 2006-9 owned by, irrevocably offered or dedicated to, or over, through or under which an easement for purposes of public use has been granted, to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be made by reference to the building permit(s) issued for such Assessor's Parcel. Such determination shall be final following the issuance of a Certificate of Occupancy for the dwelling unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit permitting the construction thereon of one or more residential dwelling units has been issued by the City. "Special Tax" means any of the special taxes authorized to be levied by CFD No. 2006-9 pursuant to the Act. "Special Tax for Facilities" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Developed Property, Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property to fund the Special Tax Requirement for Facilities. "Special Tax Requirement for Facilities" means that amount required in any Fiscal Year for CFD No. 2006-9 to: (i) pay debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Year; (ii) pay periodic costs on the CFD No. 2006-9 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2006-9 Bonds due in the calendar year commencing in such Fiscal Year; (iii) pay a proportionate share of Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay for reasonably anticipated Special Tax for Facilities delinquencies based on the delinquency rate for the Special Tax for Facilities levy in the previous Fiscal Year; (vi) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax for Facilities levy on Undeveloped Property; less (vii) a credit for funds available to reduce City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 4 the annual Special Tax for Facilities levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries ofCFD No. 2006-9 which are not exempt from the Special Tax for Facilities pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Property Owner Association Property, or Taxable Public Property . B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2006-9 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property, and shall be subject to the Special Tax for Facilities in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. Residential Property shall be assigned to Land Use Classes 1 through 3 as listed in Table 1 below based on the Residential Floor Area for each unit. Non-Residential Property shall be assigned to Land Use Class 4. C. MAXIMUM SPECIAL TAX FOR FACILITIES Prior to the issuance ofCFD No. 2006-9 Bonds, the Assigned Special Tax for Facilities on Developed Property (set forth in Table 1), and the Backup Special Tax for Facilities attributable to a Final Subdivision, may be reduced in accordance with, and subject to the conditions set forth in this paragraph. If it is reasonably determined by the CFD Administrator that the overlapping debt burden (as defined in the Statement of Goals and Policies for the Use of the Mello-Roos Community Facilities Act of 1982 adopted by the Council, the "Goals and Policies") calculated pursuant to the Goals and Policies based upon the Assigned Special Tax for Facilities on Developed Property exceeds the City's maximum level objective set forth in such document, the Assigned Special Tax for Facilities on Developed Property, and the Backup Special Tax for Facilities attributable to a Final Subdivision, may be reduced to the amount necessary to satisfy the City's objective with respect to the maximum overlapping debt burden level with the written consent of the CFD Administrator. The reductions permitted pursuant to this paragraph shall be reflected in an City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 5 amended notice of Special Tax lien which the City shall cause to be recorded by executing a certificate in substantially the form attached hereto as Exhibit "A". 1. Developed Property (a) Maximum Special Tax for Facilities The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax for Facilities or (ii) the amount derived by application of the Backup Special Tax for Facilities. (b) Assigned Special Tax for Facilities The Assigned Special Tax for Facilities for each Land Use Class is shown below in Table 1. TABLE 1 Assigned Special Tax for Facilities for Developed Property Community Facilities District No. 2006-9 Residential Property More than 2,100 sq. ft. $3,085 per unit 2 Residential Property 1,800 - 2,100 sq. ft. $2,891 per unit 3 Residential Property Less than 1,800 sq. ft. $2,708 per unit 4 Non-Residential Property NA $30,518 per Acre (c) Backup Special Tax for Facilities The Backup Special Tax for Facilities attributable to a Final Subdivision will equal $31,966 multiplied by the Acreage of all Taxable Property, exclusive of any Taxable Property Owner Association Property and Taxable Public Property, therein. The Backup Special Tax for Facilities for each Assessor's Parcel of Residential Property shall be computed by dividing the Backup Special Tax for Facilities attributable to the applicable Final Subdivision by the number of Assessor's Parcels and/or residential units for which building permits for residential construction have or may be issued (i.e., the number or residential lots and/or units). The Backup Special Tax for Facilities for each Assessor's Parcel of Non-Residential Property therein shall equal $31,966 multiplied by the Acreage of such Assessor's Parcel. City of Lake Elsinore Community Facilities District No. 1006-9 (Trieste) November 7, 1006 Page 6 If a Final Subdivision includes Assessor's Parcels of Taxable Property for which building permits for both residential and non-residential construction may be issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for Facilities for each Assessor's Parcel of Residential Property shall be computed exclusive of the Acreage and Assessor's Parcels of property for which building permits for non-residential construction may be issued. Notwithstanding the foregoing, if all or any portion of the Final Subdivision(s) described in the preceding paragraphs is subsequently changed or modified by recordation of a lot line adjustment or similar instrument, and only if the CFD Administrator determines that such change or modification results in a decrease in the number of Assessor's Parcels of Taxable Property for which building permits for residential construction have or may be issued within such Final Subdivision, then the Backup Special Tax for Facilities for each Assessor's Parcel of Developed Property that is part of the lot line adjustment or similar instrument for such Final Subdivision shall be a rate per Acre as calculated below. The Backup Special Tax for Facilities previously determined for an Assessor's Parcel of Developed Property that is not a part of the lot line adjustment or similar instrument for such Final Subdivision shall not be recalculated. 1. Determine the total Backup Special Tax for Facilities anticipated to apply to the changed or modified portion of the Final Subdivision area prior to the change or modification. 2. The result of paragraph 1 above shall be divided by the Acreage of Taxable Property which is ultimately expected to exist in such changed or modified portion of the Final Subdivision area, as reasonably determined by the CFD Administrator. 3. The result of paragraph 2 above shall be the Backup Special Tax for Facilities per Acre which shall be applicable to Assessor's Parcels of Developed Property in such changed or modified portion ofthe Final Subdivision area for all remaining Fiscal Years in which the Special Tax for Facilities may be levied. (d) Multiple Land Use Classes In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax for Facilities levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax for Facilities for all Land Use Classes located on that Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 7 2. Taxable Property Owner Association Property. Taxable Public Property. and Undeveloped Property The Maximum Special Tax for Facilities for Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property shall be $31,966 per Acre. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES Commencing with Fiscal Year 2007-2008 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement for Facilities and levy the Special Tax for Facilities until the amount of Special Tax for Facilities levy equals the Special Tax Requirement for Facilities. The Special Tax for Facilities shall be levied each Fiscal Year as follows: First: The Special Tax for Facilities shall be levied on each Assessor's Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax for Facilities; Second: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax for Facilities for Undeveloped Property; Third: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, then the levy of the Special Tax for Facilities on each Assessor's Parcel of Developed Property whose Maximum Special Tax for Facilities is determined through the application of the Backup Special Tax for Facilities shall be increased in equal percentages from the Assigned Special Tax for Facilities up to the Maximum Special Tax for Facilities for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property and Taxable Public Property at up to 100% of the Maximum Special Tax for Facilities for Taxable Property Owner Association Property or Taxable Public Property. Notwithstanding the above, the Council may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax for Facilities in step one (above), when (i) the Council is no longer required to levy the Special Tax for Facilities pursuant to steps two through four above in order to meet the Special Tax Requirement for Facilities; (ii) all authorized CFD No. 2006-9 Bonds have already been issued or the Council has covenanted that it will not issue any additional CFD No. 2006-9 Bonds (except refunding bonds) to be supported by the Special Tax for Facilities; and (iii) all Authorized Facilities have been constructed and/or acquired and all reimbursements to the developer for the construction and/or acquisition of such facilities have been paid as permitted by law. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 8 Further notwithstanding the above, under no circumstances will the Special Tax for Facilities levied against any Assessor's Parcel of Residential Property for which a Certificate of Occupancy has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within CFD No. 2006-9. E. EXEMPTIONS No Special Tax for Facilities shall be levied on up to 2.3 Acres of Property Owner Association Property and/or Public Property in CFD No. 2006-9. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property or Public Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property or Public Property, its tax-exempt status will be revoked. Property Owner Association Property or Public Property that is not exempt from Special Tax for Facilities under this section shall be subject to the levy of the Special Tax for Facilities and shall be taxed Proportionately as part of the fourth step in Section D above, at up to 100% of the Maximum Special Tax for Facilities for Taxable Property Owner Association Property or Taxable Public Property. F. MANNER OF COLLECTION The Special Tax for Facilities shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2006-9 may directly bill the Special Tax for Facilities, may collect the Special Tax for Facilities at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act. G. PREPAYMENT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G: "Duildout" means, for CFD No. 2006-9, that all expected building permits for dwelling units to be constructed in CFD No. 2006-6 have been issued, as reasonably determined by the CFD Administrator. "CFD Public Facilities" means either $3,564,033 in 2006 dollars, which shall increase by the Construction Inflation Index on July 1,2007, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide funding for all of the Authorized Facilities, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more CFD No. 2006-9 Bonds (except refunding bonds) to be supported by the Special Tax for Facilities levy under this Rate and Method of Apportionment as described in Section D above. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 9 "Construction Inflation Index" means the annual percentage change in the Engineering News Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance the cost of Authorized Facilities. "Improvement Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are deemed to be outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. 1. Prepayment in Full Only an Assessor's Parcel of Developed Property, or Undeveloped Property for which a building permit has been issued, may be prepaid. The obligation of the Assessor's Parcel to pay the Special Tax for Facilities may be permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only ifthere are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax for Facilities obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notifY such owner ofthe prepayment amount for such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of CFD No. 2006-9 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The Special Tax for Facilities Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 10 less Total: equals Capitalized Interest Credit Special Tax for Facilities Prepayment Amount As of the proposed date of prepayment, the Special Tax for Facilities Prepayment Amount shall be calculated as follows: Parag:raph No.: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax for Facilities and Backup Special Tax for Facilities. For Assessor's Parcels of Undeveloped Property for which a building permit has been issued, compute the Assigned Special Tax for Facilities and Backup Special Tax for Facilities for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. 3. (a) Divide the Assigned Special Tax for Facilities computed pursuant to paragraph 2 by the total estimated Assigned Special Tax for Facilities for the entire CFD No. 2006-9 based on the Developed Property Special Tax for Facilities which could be levied in the current Fiscal Year on all expected development through Buildout of CFD No. 2006-9, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax for Facilities computed pursuant to paragraph 2 by the total estimated Backup Special Tax for Facilities at Buildout for the entire CFD No. 2006-9, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be retired and prepaid (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (e.g., the redemption price-IOO%), if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 11 9. Determine the Special Tax for Facilities levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Special Tax for Facilities Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses ofCFD No. 2006-9 are as calculated by the CFD Administrator and include the costs of computation ofthe prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2006-9 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% ofthe reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment (the "Capitalized Interest Credit"). 15. The Special Tax for Facilities prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax for Facilities Prepayment Amount"). From the Special Tax for Facilities Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire CFD No. 2006-9 Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 12 Improvement Fund. The amount computed pursuant to paragraph 12 shall be retained by CFDNo.2006-9. The Special Tax for Facilities Prepayment Amount may be insufficient to redeem a full $5,000 increment ofCFD No. 2006-9 Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of CFD No. 2006-9 Bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax for Facilities levy as determined under paragraph 9 ( above), the CFD Administrator shall remove the current Fiscal Year's Special Tax for Facilities levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment ofthe Special Tax for Facilities and the release of the Special Tax for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax for Facilities shall cease. Notwithstanding the foregoing, no Special Tax for Facilities prepayment shall be allowed unless, at the time of such proposed prepayment, the amount of Maximum Special Tax for Facilities that may be levied on Taxable Property within CFD No. 2006-9 (after excluding 2.3 Acres of Property Owner Association Property and/or Public Property in CFD No. 2006- 9 as set forth in Section E) both prior to and after the proposed prepayment is at least equal to the sum of (i) the Administrative Expenses, as defined in Section A above, and (ii) 1.10 times maximum annual debt service, in each remaining Fiscal Year on the Outstanding Bonds. 2. Prepayment in Part The Special Tax for Facilities on 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 partially prepaid. The amount of the prepayment shall be calculated as in Section G.l; except that a partial prepayment shall be calculated according to the following formula: PP = [(PE - A) x F] + A These terms have the following meaning: PP = the partial prepayment. PE = the Special Tax for Facilities Prepayment Amount calculated according to Section G.1. F = the percentage, expressed as a decimal, by which the owner of the Assessor's Parcel is partially prepaying the Special Tax for Facilities. A = the Administrative Fees and Expenses calculated according to Section G.l. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 13 The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax for Facilities and the percentage by which the Special Tax for Facilities shall be prepaid. The CFD Administrator shall provide the owner with a statement ofthe amount required for the partial prepayment of the Special Tax for Facilities for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the Council shall (i) distribute the funds remitted to it according to Section G.l, and (ii) indicate in the records ofCFD No. 2006-9 that there has been a partial prepayment of the Special Tax for Facilities and that a portion of the Special Tax for Facilities with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00- F) of the remaining Maximum Special Tax for Facilities, shall continue to be levied on such Assessor's Parcel pursuant to Section D above. H. TERM OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities shall be levied for a period not to exceed forty years commencing with Fiscal Year 2007-2008, provided however that the Special Tax for Facilities will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2006-9 Bonds have been paid; (ii) all Authorized Facilities have been constructed and/or acquired and all reimbursements to the developer for the construction and/or acquisition of such facilities have been paid as permitted by law; and (iii) all other obligations ofCFD No. 2006- 9 have been satisfied. I. SPECIAL TAX FOR SERVICES The following additional definitions apply to this Section I: "Developed Multifamily Unit" means a residential dwelling unit within a building in which each of the individual dwelling units has or shall have at least one common wall with another dwelling unit and a building permit has been issued by the City for such dwelling unit on or prior to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied. "Developed Single Family Unit" means a residential dwelling unit other than a Developed Multifamily Unit on an Assessor's Parcel for which a building permit has been issued by the City on or prior to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied. "Maximum Special Tax for Services" means the maximum Special Tax for Services that can be levied by CFD No. 2006-9 in any Fiscal Year on any Assessor's Parcel. "Operating Fund" means a fund that shall be maintained for CFD No. 2006-9 for any Fiscal Year to pay for the actual costs of maintenance related to the Service Area, and the applicable Administrative Expenses. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 14 "Operating Fund Balance" means the amount of funds in the Operating Fund at the end of the preceding Fiscal Year. "Service Area" means parks, open space, and storm drains. "Special Tax for Services" means any of the special taxes authorized to be levied within CFD No. 2006-9 pursuant to the Act to fund the Special Tax Requirement for Services. "Special Tax Requirement for Services" means the amount determined in any Fiscal Year for CFD No. 2006-9 equal to (i) the budgeted costs directly related to the Service Area, including maintenance, repair and replacement of certain components of the Service Area which have been accepted and maintained or are reasonably expected to be accepted and maintained during the current Fiscal Year, (ii) pay a proportionate share of Administrative Expenses, and (iii) anticipated Special Tax for Services delinquencies based on the delinquency rate for the Special Tax for Services levy in CFD No. 2006-9 for the previous Fiscal Year, less (iv) the Operating Fund Balance, as determined by the CFD Administrator. 1. Rate and Method of Apportionment of the Special Tax for Services Commencing with Fiscal Year 2007-2008 and for each subsequent Fiscal Year, the Council shall levy the Special Tax for Services on (i) all Assessor's Parcels containing a Developed Single Family Unit or Developed Multifamily Unit and (ii) all Assessor's Parcels of Non- Residential Property, up to the applicable Maximum Special Tax for Services to fund the Special Tax Requirement for Services. The Maximum Special Tax for Services for Fiscal Year 2007-2008 shall be $251.78 per Developed Single Family Unit, $125.89 per Developed Multifamily Unit, and $567.02 per Acre for each Assessor's Parcel of Non-Residential Property. On each July 1, commencing July 1,2008, the Maximum Special Tax for Services shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. 2. Duration of the Special Tax for Services The Special Tax for Services shall be levied in perpetuity to fund the Special Tax Requirement for Services, unless no longer required as determined at the sole discretion of the Council. 3. Collection of the Special Tax for Services The Special Tax for Services shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2006-9 may collect the Special Tax for Services at a different time or in a different manner if necessary to meet its funding requirements. City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 15 J. APPEALS AND INTERPRETATIONS Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error may submit a written appeal to CFD No. 2006-9. The CFD Administrator shall review the appeal and if the CFD Administrator concurs, the amount of the Special Tax levied shall be appropriately modified. The Council may interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the Council shall be final and binding as to all persons. K:\CLIENTS2\ShopojjGroup.TriesteIRMA\Trieste CFD RMA Draft 2. doe Revised: 2/28/07 City of Lake Elsinore Community Facilities District No. 2006-9 (Trieste) November 7, 2006 Page 16 CITY OF LAKE ELSINORE AND CFD No. 2006-9 CERTIFICATE 1. Pursuant to Section C of the Rate and Method of Apportionment, the City of Lake Elsinore ("City") and Community Facilities District No. 2006-9 ofthe City of Lake Elsinore ("CFD No. 2006-9") hereby agree to a reduction in the Assigned Special Tax for Facilities for Developed Property, and the Backup Special Tax for Facilities attributable to a Final Subdivision within CFD No. 2006-9: (a) The information in Table 1 relating to the Assigned Special Tax for Facilities for Developed Property within CFD No. 2006-9 shall be modified as follows: Residential Property More than 2,100 sq. ft. $_perunit 2 Residential Property 1,800 - 2,100 sq. ft. $ _ per unit 3 Residential Property Less than 1,800 sq. ft. $ _ per unit 4 Non-Residential Property NA $ _ per Acre (b) The Backup Special Tax for Facilities attributable to a Final Subdivision within CFD No. 2006-9, as stated in Section C.l.(c), shall be reduced from $31,966 per Acre to $_ per Acre. 2. The Special Tax for Facilities may only be modified prior to the first issuance ofCFD No. 2006- 9 Bonds. 3. Upon execution of the Certificate by the City and CFD No. 2006-9, the City shall cause an amended notice of Special Tax lien for CFD No. 2006-9 to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned acknowledges, on behalf of the City and CFD No. 2006-9, receipt ofthis Certificate and modification of the Rate and Method of Apportionment as set forth in this Certificate. CITY OF LAKE ELSINORE By: Date: CFD Administrator COMMUNITY FACILITIES DISTRICT NO. 2006-9 OF THE CITY OF LAKE ELSINORE By: Date: