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HomeMy WebLinkAboutCC Reso No 2016-021 CC Reso Acting as the Legislative Body of Laker Elsinore CFD No. 2003-2RESOLUTION NO. 2016 -021 RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, ACTING AS THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003 -2 (CANYON HILLS), DECLARING ITS INTENTION TO ANNEX TERRITORY TO BE DESIGNATED AS IMPROVEMENT AREA E THEREIN AND TO INCUR BONDED INDEBTEDNESS WITHIN PROPOSED IMPROVEMENT AREA E WHEREAS, after a public hearing, on November 25, 2003, the City Council (the "City Council ") of the City of Lake Elsinore (the "City ") adopted Resolution Nos. 2004 -6 and 2004 -7, which formed City of Lake Elsinore Community Facilities District No. 2003 -2 (Canyon Hills) (the "District" or "Community Facilities District No. 2003 -2 "), established Improvement Areas A through D therein, and called a special election on January 13, 2004 within Improvement Areas A through D of the District on three propositions relating to the levying of a special tax, the incurring of bonded indebtedness and the establishment of an appropriations limit for the District, which were approved by more than two - thirds vote by the qualified electors within each improvement area on January 13, 2004; and WHEREAS, subsequent to formation, the District received a petition (the "Petition ") signed by Pardee Homes (the "Owner ") which owns certain property, the boundaries of which are described in Attachment "A" hereto and incorporated herein, to annex such property as Improvement Area E of the District ( "Improvement Area E "); WHEREAS, pursuant to the Petition, the Owner desires to establish Improvement Area E and to approve a rate and method of apportionment for Improvement Area E (the "Rate and Method ") attached hereto as Attachment "B" (the "Rate and Method "); and WHEREAS, the Owner desires the District incur bonded indebtedness on behalf of Improvement Area E in an amount not to exceed $3,000,000, for the purpose of financing the Improvements and Incidental Expenses described in Attachment "C" attached hereto; and WHEREAS, the City desires to enter into a reimbursement agreement with Pardee Homes, the form of which is on file with the City Clerk (the "Reimbursement Agreement "), to provide for the reimbursement of certain amounts advanced by Pardee Homes in connection with the formation of Improvement Area E and the annexation thereof to the District; and WHEREAS, Improvement Area E is located adjacent to Improvement Area D of Community Facilities District No. 2003 -2 ( "Improvement Area D ") and certain lots located within Improvement Area D (as set forth in Attachment "D" hereto) are slope areas and City Council Resolution No 2016 -021 Page 2 of 6 originally intended to be homeowner's association property and exempt from the special tax levy in Improvement Area D (collectively, the "HOA Lot ") is located within the proposed boundaries of Improvement Area E; and WHEREAS, the Owner and the District desire that such HOA Lot be included in Improvement Area E and desire to discharge and cancel the special tax lien on such HOA Lot of Improvement Area D and that discharge and cancellation of the special tax lien of Improvement Area D on the HOA Lot will not materially adversely impact the owners of Improvement Area D special tax bonds due to the fact that the HOA Lot was never intended to be taxed, does not contain any structures and was not factored into the sizing of the Improvement Area D special tax bonds; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE HEREBY FINDS, DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS: Section 1. Each of the above recitals is true and correct and is adopted by the legislative body of the District. Section 2. The City Council declares its intention to conduct proceedings pursuant to Article 3.5 of the Mello -Roos Community Facilities Act of 1982, as amended, commencing with Section 53311 of the Government Code (the "Act ") for the formation and annexation of Improvement Area E to the District. Section 3. The City Council hereby designates, pursuant to Sections 53350 of the Act, an area which shall be known as "Improvement Area E of Community Facilities District No. 2003 -2" and declares its intention to annex Improvement Area E to the District in accordance with Section 53339.3 of the Act. It is further proposed that the boundaries of Improvement Area E shall be the legal boundaries on the proposed amended boundary map depicted in Attachment "A" hereto. The City Clerk is hereby directed to sign the original amended boundary map of Improvement Area E and record it with all proper endorsements thereon with the County Recorder of the County of Riverside within 15 days after the adoption of this resolution, all as required by Section 3111 of the Streets and Highways Code of the State of California. Section 4. The Improvements proposed to be provided within Improvement Area E are public facilities as defined in the Act which the City and the Elsinore Valley Municipal Water District with respect to certain water and sewer facilities, are authorized by law to construct, acquire, own and operate. The Improvements and Incidental Expenses authorized to be financed by Improvement Area E are described in Attachment "C" attached hereto. The Improvements may be acquired from one or more of the property owners as completed public improvements or may be constructed from bond or special tax proceeds. All or a portion of the Improvements may be purchased with District funds, as completed public facilities and /or constructed with District funds. Any portion of the Improvements may be financed through a lease or lease- purchase arrangement if the City hereafter determines that such arrangement is of benefit to the City. City Council Resolution No 2016 -021 Page 3 of 6 Section 5. Except where funds are otherwise available, it is the intention of the City Council to levy annually in accordance with the procedures contained in the Act a special tax, secured by a continuing lien against all non - exempt real property in Improvement Area E, sufficient to pay for: (i) the Improvements and Incidental Expenses for Improvement Area E and (ii) the principal and interest and other periodic costs on bonds or other indebtedness issued to finance the Improvements and Incidental Expenses, including the establishment and replenishment of any reserve funds deemed necessary by the District, and any remarketing, credit enhancement and liquidity facility fees (including such fees for instruments which serve as the basis of a reserve fund in lieu of cash) for Improvement Area E. The Rate and Method and manner of collection of the special tax for Improvement Area E is described in detail in Attachment "B" attached hereto (which attachment is incorporated herein by this reference). Attachment "B" allows each landowner within Improvement Area E to estimate the maximum amount that may be levied against each parcel. In the first year in which such special tax is levied, the levy shall include an amount sufficient to repay to the District all amounts, if any, transferred to the District pursuant to Section 53314 of the Act and interest thereon. If special taxes of the District are levied against any parcel used for private residential purposes, with respect to Improvement Area E, (i) the maximum special tax rate shall not be increased over time except that it may be increased by an amount not to exceed two percent per year to the extent permitted in the rate and method, (ii) such tax shall not be levied later than the 2056 -57 Fiscal Year and (iii) under no circumstances will such special tax be increased in any fiscal year as a consequence of delinquency or default by the owner of any other parcel or parcels within any Improvement Area by more than ten percent above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. The City Council hereby determines that the proposed Improvements are necessary to meet the increased demand placed upon the City and the existing infrastructure in the City as a result of the development of the territory within Improvement Area E. The City Council hereby determines the Rate and Method set forth in Attachment "B" to be reasonable. The special tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act; and such special tax is not on or based upon the value or ownership of real property. In the event that a portion of the property within Improvement Area E shall become for any reason exempt, wholly or partially, from the levy of the special tax specified in Attachment "B," the City Council shall, on behalf of Improvement Area E cause the levy to be increased, subject to the limitation of the maximum special tax for a parcel as set forth in Attachment "B," to the extent necessary upon the remaining property within Improvement Area E which is not exempt in order to yield the special tax revenues required for the purposes described in this Section. The obligation to pay special taxes may be prepaid as provided in the Rate and Method set forth in Attachment "B," as such Rate and Method may be amended hereafter. Section 6. It is necessary to incur bonded indebtedness within the boundaries of Improvement Area E in an amount not to exceed $3,000,000, in order to finance certain City Council Resolution No 2016 -021 Page 4 of 6 of the costs of the Improvements and Incidental Expenses, as permitted by the Act for the benefit of Improvement Area E. Section 7. The indebtedness will be incurred for the purpose of financing the costs of the Improvements and the Incidental Expenses of Improvement Area E, including, but not limited to, the funding of reserve funds for the bonds, the financing of costs associated with the issuance of the bonds and all other costs and expenses necessary to finance the Improvements and Incidental Expenses which are permitted to be financed pursuant to the Act. Section 8. It is the intent of the City Council to authorize the sale of bonds of Improvement Area E in one or more series, which bonds may be issued to fund Improvements and Incidental Expenses for Improvement Area E in the respective maximum amounts set forth in Section 6, and which bonds may bear interest at a rate not in excess of the maximum rate permitted by law at the time that the bonds are issued. The term of the bonds of each series shall be determined pursuant to a resolution of this City Council authorizing the issuance of the bonds of such series, but such term shall in no event exceed 40 years from the date of issuance of the bonds of such series, or such longer term as is then permitted by law. Section 9. A public hearing (the "Public Hearing ") on (1) the establishment of Improvement Area E within the District, (2) the levying of special taxes in Improvement Area E in accordance with the Rate and Method, and (3) the proposed issuance of bonds with respect to Improvement Area E to finance the Improvements and Incidental Expenses shall be held at 7:00 p.m., or as soon thereafter as practicable, on April 12, 2016, at the City Cultural Center, 183 North Main Street, Lake Elsinore, California. Should the City Council determine to take action to effectuate the foregoing items in (1) through (3), special elections will be held for Improvement Area E to authorize the issuance of the bonds for Improvement Area E and the levy of the special tax for Improvement Area E pursuant to the Rate and Method in accordance with the procedures contained in Government Code Section 53326. If such elections are held, the proposed voting procedure at the elections will be a landowner vote with each landowner who is the owner of record of land within Improvement Area E at the close of the Public Hearing, or the authorized representative thereof, having one vote for each acre or portion thereof owned within such Improvement Area. Ballots for the special election may be distributed by mail or by personal service. Section 10. At the time and place set forth above for the Public Hearing, the City Council will receive testimony as to whether Improvement Area E shall be established and shall consider: (a) if an ad valorem property tax is currently being levied on property within Improvement Area E for the exclusive purpose of paying principal of or interest on bonds, lease payments or other indebtedness incurred to finance construction of capital facilities; and City Council Resolution No 2016 -021 Page 5 of 6 (b) if the capital facilities to be financed and constructed by Community Facilities District No. 2003 -2 will provide the same services as were provided by the capital facilities mentioned in subsection (a); and (c) if the City Council makes the findings specified in subsections (a) and (b) above, it will consider appropriate action to determine that the total annual amount of ad valorem property tax revenue due from parcels within Improvement Area E, for purposes of paying principal and interest on the debt identified in subsection (a) above, shall not be increased after the date on which the Improvement Area E is created, or after a later date determined by the City Council with the concurrence of the legislative body which levied the property tax in question. Section 11. At the time and place set forth above for the Public Hearing, any interested person, including all persons owning lands or registered to vote within Improvement Area E may appear and be heard. Section 12. Each City officer who is or will be responsible for providing the Improvements within Improvement Area E, if established, is hereby directed to study Improvement Area E and the Rate and Method and, at or before the time of the above - mentioned Public Hearing, file a report with the City Council containing a brief description of the public improvements by type which will in his or her opinion be required to meet adequately the needs of the District and an estimate of the cost of providing those public improvements, including the cost of environmental evaluations of such improvements and an estimate of the fair and reasonable cost of any Incidental Expenses to be incurred. Section 13. The City may accept advances of funds or work -in -kind from any source, including, but not limited to, private persons or private entities, for any authorized purpose, including, but not limited to, paying any cost incurred by the City in creating Improvement Area E. The City may enter into an agreement with the person or entity advancing the funds or work -in -kind, to repay all or a portion of the funds advanced, or to reimburse the person or entity for the value, or cost, whichever is less, of the work-in - kind, as determined by the City Council, with or without interest. Section 14. The Secretary of the Board is hereby directed to publish a notice (the "Notice ") of the Public Hearing pursuant to Section 6061 of the Government Code in a newspaper of general circulation published in the area of Improvement Area E within the District. The Secretary of the Board is further directed to mail a copy of the Notice to each of the landowners within the boundaries of Improvement Area E at least 15 days prior to the Hearing. The Notice shall contain the text or a summary of this Resolution, the time and place of the Hearing, a statement that the testimony of all interested persons or taxpayers will be heard, a description of the protest rights of the registered voters and landowners in proposed Improvement Area E and a description of the proposed voting procedure for the election required by the Act. Such publication shall be completed at least seven (7) days prior to the date of the Hearing. City Council Resolution No 2016 -021 Page 6 of 6 Section 15. The reasonably expected maximum principal amount of the bonded debt (the "Obligations ") on behalf of Improvement Area E is Three Million Dollars ($3,000,000). Section 16. Except to the extent limited in any bond resolution or trust indenture 12powers set forth in Section 53344.1 of the Act (relating to tenders in full or partial payment). Section 17. The form of the Reimbursement Agreement is hereby approved. The Mayor, the City Manager, the Director of Administrative Services, or their written designees are hereby authorized and directed to execute and deliver the Reimbursement Agreement in the form on file with the City Clerk with such changes, insertions and omissions as may be approved by the officer or officers executing such agreement, said execution being conclusive evidence of such approval. Section 18. It is hereby determined that the HOA Lot was intended to be exempt from the levy of the special tax in Improvement Area D and the Director of Administrative Services is hereby directed to cause the recordation of a notice of cancellation and cessation of the special tax levy of Improvement Area D on the HOA Lot contingent uon the annexation of Improvement Area E to the District. Section 19. This Resolution shall take effect immediately upon its adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the City_Council of the City of Lake Elsinore, California, this 8t" day of March; 2016. Briakkzadale, Mayor ATTEST: r Susan M. Domen, MMC City Clerk APPROVED AS TO FORM: David H. Mann, Assistant City Attorney STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss, CITY OF LAKE ELSINORE ) I, Susan M. Domen, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2016 -021 was adopted by the City Council of the City of Lake Elsinore, California, at the regular meeting of March 8, 2016, and that the same was adopted by the following vote: AYES: Council Members Jonson and Manos, Mayor Pro Tern Magee, and Mayor Tisdale NOES: None ABSENT: Council Member Hickman ABSTAIN: None Susan M. Domen, MMC City Clerk ATTACHMENT A PROPOSED BOUNDARY MAP OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2003-2 (CANYON HILLS) (IMPROVEMENT AREA E) I` N Q M = N W J QO2 Zv }V WLL � .y rarAJXQ QOG =dN QOV7ZJ �pF - 00 dw�z } v� m0 -41-� �aa_5w way _L u 2az u..O oz o 0 U O U A -1 a LL sill � R. 1 t 711. ll A -1 a LL sill � R. 1 t 711. x � [E § O �.�LL. �L z0IL) 5 o■LL zJo w lz \ kt \/ , mo �or�oLou O Lu �■���WW Q IL to > aw LUX� � �-LL �CL §§ § U o L) « __ .. .- k 7 z __w � . b z a kk&| > ■ ( � ®� } ) ■■ § §| . y l A- } k •�- , ; , | | } | � a� %§ z a kk&| > ■ ( � ®� } ) ■■ § §| . y l ATTACHMENT B RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES FOR COMMUNITY FACILITIES DISTRICT NO. 2003 -2 IA E (CANYON HILLS) OF THE CITY OF LAKE ELSINORE A Special Tax (all capitalized terms are defined in Section A, "Definitions ", below) shall be applicable to each Assessor's Parcel of Taxable Property located within the boundaries of the City of Lake Elsinore Community F-a-ctlities-District- Nu.--2003 =2- Improvement Area -ET (Canyon - Hills- )- ( "C-FD -No. 2003-2-IA-E "). The -amount of Special Tax to be levied in each Fiscal Year, on an Assessor's Parcel, shall be determined by the City Council of the City of Lake Elsinore, acting in its capacity as the legislative body of Improvement Area E of CFD No. 2003- 2 by applying the appropriate Special Tax for Developed Property, Approved Property, Undeveloped Property, Public Property and /or Property Owner's Association Property that is not Exempt Property as set forth below. All of the real property, unless exempted by law or by the provisions hereof in Section F, 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 an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map or instrument. The square footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560. "Act" means the Mello -Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of Improvement Area E: the costs of computing the Special Taxes and preparing the 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 Special Taxes to the Trustee; the costs of the Trustee (including legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, Improvement Area E or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, Improvement Area E or any designee thereof of complying with disclosure requirements of the City, Improvement Area E 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 of the City, Improvement Area E 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. Administration Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or Improvement Area E for any other administrative purposes of CFD No. 2003 -2 for Improvement Area E, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a building permit on or before March 11t preceding the Fiscal Year in which the Special Tax is being levied. "Assessor's Parcel" means a lot or parcel of land designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 1 "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number. "Assessor's Parcel Number" means that number assigned to an Assessor's Parcel by the County for purposes of identification. "Assigned Special Tax" means the Special Tax of that name described in Section D below. "Backup Special Tax" means the Special Tax of that name described in Section D below. "Boundary Map" means a recorded map of Improvement Area E of CFD No. 2003 -2 which indicates the boundaries of Improvement Area E. "Bonds" means any obligation to repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long -term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long -term contracts, or any refunding thereof, to which Special Tax within Improvement Area E of CFD No. 2003 -2 have been pledged. "Building Permit" means the first legal document issued by a local agency giving official permission for new construction. For purposes of this definition, "Building Permit" may include any subsequent building document(s) authorizing new construction on an Assessor's Parcel that are issued or changed by the City after the original issuance, as determined by the CFD Administrator as necessaryto fairly allocate the Special Tax to the Assessor's Parcel, provided that following such determination the Maximum Special Tax that may be levied on all Assessor's Parcels of Taxable Property will be at least 1.1 times maximum annual debt service on all outstanding Bonds plus the estimated annual Administrative Expenses. "Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the Building Permitfor such Assessor's Parcel. "Calendar Year" means the period commencing January 1 of any year and ending the following December 31. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD" or "CFD No. 2003 -2" means Community Facilities District No. 2003 -2 (Canyon Hills) established bythe City under the Act. "City" means the City of Lake Elsinore. "City Council" means the City Council of the City of Lake Elsinore, acting as the Legislative Body of CFD No. 2003 -2 IA E, or its designee. "Condominium Plan" means a condominium plan as set forth in the California Civil Code, Section 1352. "County" means the County of Riverside. "Developed Property" means all Assessor's Parcels of Taxable Property that: (i) are included in a Final Map that was recorded prior to the January 11t preceding the Fiscal Year in which the Special Tax is being levied, and (ii) a Building Permit for new construction was issued on or before March 1St preceding the Fiscal Year in which the Special Tax is being levied. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 2 "Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section F. "Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of Condominium Plan pursuantto California Civil Code Section 1352thatcreates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period commencing on July 1" of any year and ending the following June 30th. "Improvement Area E" means Improvement Area E of CFD No. 2003 -2, as identified on the boundary map for CFD No. 2003 -2 on file with the County of Riverside Recorder's Office. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuantto which Bonds are issued, as modified, amended and /or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Category" means any of the categories listed in Table 1 of Section D. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section D below, that can be levied by CFD No. 2003 -2 within Improvement Area E in any Fiscal Year on any Assessor's Parcel. "Multifamily Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued for the purpose of constructing a building or buildings comprised of attached Residential Units available for rental by the general public, not for sale to an end user, and under common management, as determined by the Administrator. "Non- Residential Property" or "NR" means all Assessor's Parcels of Taxable Property for which a building permit(s) was issued for a non - residential use. The Administrator shall make the determination if an Assessor's Parcel is Non - Residential Property. "Partial Prepayment Amount" means the amount required to prepay a portion of the Special Tax obligation for an Assessor's Parcel, as described in Section H. "Prepayment Amount" means the amount required to prepay the Special Tax obligation in full for an Assessor's Parcel, as described in Section G. "Proportionately" means for Taxable Property for Special Tax that is (i) Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is the same for all Assessor's Parcels of Developed Property, (ii) Approved Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is the same for all Assessor's Parcels of Approved Property, and (iii) Undeveloped Propertythat the ratio ofthe actual Special Tax levy per Acre to the Maximum Special Tax per Acre is the same for all Assessor's Parcels of Undeveloped Property. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more Residential Units. "Residential Unit" or "RU" means a residential unit that is used or intended to be used as a domicile by one or more persons, as determined by the Administrator. "Single Family Residential Property" means all Assessor's Parcels of Residential Property other than Multifamily Property on an Assessor's Parcel. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 3 "Special Tax(es)" means any of the special taxes authorized to be levied within Improvement Area E of CFD No. 2003 -2 pursuant to the Act. "Special Tax" means any of the special taxes authorized to be levied within Improvement Area E of CFD No. 2003 -2 pursuant to the Act to fund the Special Tax Requirement. "Special Tax Requirement" means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established in association with the Bonds, (v) an amount equal to any anticipated shortfall due to Special Tax delinquencies, and (vi) the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2003 -2 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on Undeveloped Property as set forth in Step Three of Section E., less (vii) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to the Indenture. "Taxable Property" means all Assessor's Parcels within Improvement Area E of CFD No. 2003 -2, which are not Exempt Property. "Taxable Unit" means either a Residential Unit or an Acre. "Tract(s)" means an area of land within a subdivision identified by a particular tract number on a Final Map approved for the subdivision. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not Developed Property, Approved Property. B. SPECIAL TAX Commencing Fiscal Year 2016 -2017 and for each subsequent Fiscal Year, the City Council shall levy the Special Tax on all Taxable Property, up to the applicable Maximum Special Tax to fund the Special Tax Requirement. C. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX Each Fiscal Year, beginning with Fiscal Year 2016 -2017, each Assessor's Parcel within Improvement Area E of CFD No. 2003 -2 shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Property, Approved Property, or Undeveloped Property. Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non - Residential Property. Each Assessor's Parcel of Residential Property shall further be classified as a Single Family Residential Property or Multifamily Property. Each Assessor's Parcel of Single Family Residential Property shall be further categorized into Land Use Categories based on its Building Square Footage and assigned to its appropriate Assigned Special Tax rate. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 4 City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 5 D. MAXIMUM SPECIAL TAX Developed Property The Maximum Special Tax for each Assessor's Parcel of Single Family Residential Property in any Fiscal Year shall be the greater of (i) the Assigned Special Tax or (ii) the Backup Special Tax. The Maximum Special Tax for each Assessor's Parcel of Non - Residential Property or Multifamily Residential Property shall be the applicable Assigned Special Tax described in Table 1 of Section D. a. Assigned Special Tax Each Fiscal Year, each Assessor's Parcel of Single Family Residential Property, Multifamily Property, or Non - Residential Property shall be subject to an Assigned Special Tax. The Assigned Special Tax applicable to an Assessor's Parcel of Developed Property for Fiscal Year 2016 -2017 shall be determined pursuantto Table 1 below. TABLE 1 ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY Land Use Category Taxable Unit Building Square Footage Assigned Special Tax Per Taxable Unit 1. Single Family Residential Property RU Less than 2,200 sq. ft $1,755 2. Single Family Residential Property RU 2,201 sq. ft to 2,600 sq. ft $1,831 3. Single Family Residential Property RU 2,601 sq. ft to 3,000 sq. ft $1,970 4. Single Family Residential Property RU 3,001 sq. ft to 3,400 sq. ft $2,140 5. Single Family Residential Property RU 3,401 sq. ft to 3,800 sq. ft $2,455 6. Single Family Residential Property RU Greater than 3,801 $2,757 7. Multifamily Property Acres N/A $12,625 8. Non - Residential Property Acres N/A $12,625 On each July 1, commencing July 1, 2017, the Assigned Special Tax rate for Developed Property shall be increased by one percent (1.00%) of the amount in effect in the prior Fiscal Year. b. Multiple Land Use Categories In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Type. The Maximum Special Tax levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax for all Land Use Categories located on the Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final. c. Backup S ai cci"zI Tax The Backup Special Tax for an Assessor's Parcel within a Final Map classified or to be classified as Single Family Property shall be $2,470 per unit. This Backup Special Tax has been established based on the land use configurations shown on the Final Map. In the event any portion of the Final Map is changed or modified, the Backup Special Tax for all Assessor's Parcels within such changed or modified area shall be $12,625 per Acre. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 6 In the event any superseding Final Map is recorded as a Final Map within the Boundaries of the Improvement Area E of CFD No. 2003 -2, the Backup Special Tax for all Assessor's Parcels within such Final Map shall be $12,625 per Acre. The Backup Special Tax shall not apply to Multifamily Residential Property, Non - Residential Property, Public Property, or Property Owners' Association Property. On each July 1, commencing July 1, 2017, the Backup Special Tax rate shall be increased by one percent (1.00 %) of the amount in effect in the prior Fiscal Year. 2. Approved Propert y The Maximum Special Tax for each Assessor's Parcel of Approved Property expected to be classified as Single Family Property shall be the Backup Special Tax computed pursuant to Section D.1.c above. The Maximum Special Tax for each Assessor's Parcel of Approved Property expected to be classified as Multifamily Residential Property or Non - Residential Property shall be $12,625 per Acre. On each July 1, commencing July 1, 2017, the Maximum Special Tax rate for Approved Property shall be increased by one percent (1.00 %) of the amount in effect in the prior Fiscal Year. 3. Undeveloped Property, Public Property, and Property Owner's Association Property that is not Exempt Property pursuant to the provisions of Section F The Maximum Special Tax for each Assessor's Parcel of Undeveloped Property, shall be equal to the product of $12,625 multiplied by the Acreage of such Assessor's Parcel. On each July 1, commencing July 1, 2017, the Maximum Special Tax rate for Undeveloped, shall be increased by one percent (1.00 %) of the amount in effect in the prior Fiscal Year. E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing Fiscal Year 2016 -2017 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes on all Taxable Property in accordance with the following steps: Step One: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax rates in Table 1 to satisfy the Special Tax Requirement. Step Two: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Approved Property at up to 100% of the Maximum Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement. Step Three: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Annual Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Maximum Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement. Step Four: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is the Backup Special Tax shall be increased City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 7 Proportionately from the Assigned Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special Tax Requirement. Notwithstanding the above, under no circumstances will the Special Taxes levied in any Fiscal Year against any Assessor's Parcel of Residential Property as a result of a delinquency in the payment of the Special Tax applicable to any other Assessor's Parcel be increased by more than ten percent (10 %) above the amount that would have been levied in that Fiscal Year had there never been any such delinquency or default. F. EXEMPTIONS The City shall classify as Exempt Property, in order of priority, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor's Parcels restricted to other types of public uses determined by the City Council, provided that no such classification would reduce the sum of all Taxable Property to less than 13.03 Acres. Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the sum of all Taxable Property to less than 13.03 Acres. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 13.03 Acres will be classified as Undeveloped Property, and will be subject to Special Tax pursuant to Step Three in Section E. G. PREPAYMENT OF SPECIAL TAX The following additional definitions apply to this Section G: "CFD Public Facilities" means $2,835,000 expressed in 2016 dollars, which shall increase bythe Construction Inflation Index on July 1, 2017, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as sufficient to provide the public facilities under the authorized bonding program for Improvement Area E, or (ii) determined by the City Council concurrently with a covenantthat itwill not issue any more Bonds to be supported by Special Tax levied under this Rate and Method of Apportionment. "Construction Fund" means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible under Improvement Area E. "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 City 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 public facility costs available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 8 "Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Tax which will remain outstanding after the first interest and /or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Tax. 1. Prepayment in Full The Maximum Special Tax obligation may be prepaid and permanently satisfied for (i) Assessor's Parcels of Developed Property, (ii) Assessor's Parcels of Approved Property or Undeveloped Property for which a Building Permit has been issued, and (iii) Approved or Undeveloped Property for which a Building Permit has not been issued. The Maximum Special Tax obligation applicable to an Assessor's Parcel may be fully prepaid and the obligation to pay the Special Tax for such Assessor's Parcel permanently satisfied as described herein; provided that a prepayment may be made only if there 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 Maximum Special Tax obligation for such Assessor's Parcel shall provide the CFD Administrator with written notice of intent to prepay, and within 5 business days of receipt of such notice, the CFD Administrator shall notify such owner of the amount of the non - refundable deposit determined to coverthe cost to be incurred by Improvement Area E in calculating the Prepayment Amount (as defined below) for the Assessor's Parcel. Within 15 days of receipt of such non - refundable deposit, the CFD Administrator shall notify such owner of the Prepayment Amount for the Assessor's Parcel. Prepayment must be made not less than 60 days prior to the redemption date for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount (defined below) shall be calculated as follows (capitalized terms are defined below): The Prepayment Amount shall be determined as of the proposed prepayment date as follows: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For an Assessor's Parcel of Developed Property, compute the Maximum Special Tax for the Assessor's Parcel. For an Assessor's Parcel of Approved Property or Undeveloped Property for which a Building Permit has been issued, compute the Maximum Special Tax for the Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has been issued for the Assessor's Parcel. For an Assessor's Parcel of Approved Property or Undeveloped Property for which a Building Permit has not been issued, compute the Maximum Special Tax for the Assessor's Parcel. 3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the total amount of Special Taxes that could be levied at the Maximum Special Tax at build out of all Assessor's Parcels of Taxable Property based on the applicable Maximum Special Tax for Assessor's Parcels of Developed Property not including any Assessor's Parcels for which the Special Tax obligation has been previously prepaid. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 9 Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit Equals: Prepayment Amount The Prepayment Amount shall be determined as of the proposed prepayment date as follows: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For an Assessor's Parcel of Developed Property, compute the Maximum Special Tax for the Assessor's Parcel. For an Assessor's Parcel of Approved Property or Undeveloped Property for which a Building Permit has been issued, compute the Maximum Special Tax for the Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has been issued for the Assessor's Parcel. For an Assessor's Parcel of Approved Property or Undeveloped Property for which a Building Permit has not been issued, compute the Maximum Special Tax for the Assessor's Parcel. 3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the total amount of Special Taxes that could be levied at the Maximum Special Tax at build out of all Assessor's Parcels of Taxable Property based on the applicable Maximum Special Tax for Assessor's Parcels of Developed Property not including any Assessor's Parcels for which the Special Tax obligation has been previously prepaid. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 9 4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of the Outstanding Bonds to determine the amount of Outstanding Bonds to be redeemed with the Prepayment Amount (the "Bond Redemption Amount "). 5. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium "). 6. Determine the Future Facilities Costs. 7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined pursuant to paragraph 6 to determine the amount of Future Facilities Costs for the Assessor's Parcel (the "Future Facilities Amount "). 8. Determine 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 Outstanding Bonds on which Bonds can be redeemed from Special Tax prepayments. 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid. 10. Determine the amount the CFD Administrator reasonably expects to derive from the investment of the Bond Redemption Amount and the Redemption Premium from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the Prepayment Amount. 11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the amount derived pursuant to paragraph 10 (the "Defeasance Amount "). 12. Verify the administrative fees and expenses of the Improvement Area E, including the cost of computation of the Prepayment Amount, the cost to invest the Prepayment Amount, the cost of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the prepayment of the Maximum Special Tax obligation for the Assessor's Parcel and the redemption of Outstanding Bonds (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 Outstanding 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 Outstanding 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. 14. The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Amount and the Administrative Fees and Expenses, less the Reserve Fund Credit. 15. From the Prepayment Amount, the Bond Redemption Amount, the Redemption Premium, and Defeasance Amount shall be deposited into the appropriate fund as established underthe Indenture and be used to redeem Outstanding Bonds or make debt service payments. The Future Facilities Amount shall be deposited into the Construction Fund. The Administrative Fees and Expenses shall be retained by Improvement Area E. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 10 The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such event, the increment above $5,000 or an integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next redemption from other Special Tax prepayments of Outstanding Bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined pursuant to paragraph 9 above, the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for the Assessor's Parcel from the County tax roll. With respect to any Assessor's Parcel for which the Maximum Special Tax obligation is prepaid, the City Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Maximum Special Tax obligation and the release of the Special Tax lien for the Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Special Tax that may be levied on all Assessor's Parcels of Taxable Property after the proposed prepayment will be at least 1.1 times maximum annual debt service on the Bonds that will remain outstanding after the prepayment plus the estimated annual Administrative Expenses. Tenders of Bonds in prepayment of the Maximum Special Tax obligation may be accepted upon the terms and conditions established by the City Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case -by -case basis as specifically approved by the City Council. 2. Prepayment in Part The Maximum Special Tax obligation for an Assessor's Parcel of Developed Property, Approved Property or Undeveloped Property may be partially prepaid. For purposes of determining the partial prepayment amount, the provisions of Section G.1 shall be modified as provided by the following formula: PP = ((PE —A) x F) +A These terms have the following meaning: PP = Partial Prepayment PE = the Prepayment Amount calculated according to Section G.1 F = the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Special Tax obligation A = the Administrative Fees and Expenses determined pursuant to Section G.1 The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax obligation for the Assessor's Parcel shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Special Tax obligation, (ii) the percentage of the Maximum Special Tax obligation such owner wishes to prepay, and (iii) the company or agency that will be acting as the escrow agent, if any. Within 5 days of receipt of such notice, the CFD Administrator shall notify such property owner of the amount of the non - refundable deposit determined to cover the cost to be incurred by the Improvement Area E in calculating the amount of a partial prepayment. Within 15 business days of receipt of such non - refundable deposit, the CFD Administrator shall notify such owner of the amount of the Partial Prepayment for the Assessor's Parcel. A Partial Prepayment must be made not less than 60 days prior to the redemption date for the Outstanding Bonds to be redeemed with the proceeds of the Partial Prepayment. With respect to any Assessor's Parcel for which the Maximum Special Tax obligation is partially prepaid, the CFD Administrator shall (i) distribute the Partial Prepayment as provided in Paragraph 15 of Section G.1, and (ii) indicate in the records of the Improvement Area E that there has been a Partial Prepayment for the Assessor's Parcel and that a portion of the Special Tax obligation equal to the remaining percentage (1.00- F) City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 11 of Special Tax obligation will continue on the Assessor's Parcel pursuant to Section E. I. TERMINATION OF SPECIAL TAX For each Fiscal Year that any Bonds are outstanding the Special Tax shall be levied on all Assessor's Parcels subject to the Special Tax. The Special Tax shall cease not later than the 2057 -58 Fiscal Year, however, the Special Tax 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 Improvement Area E Bonds have been paid; (ii) all authorized facilities of Improvement Area E have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special Tax remain uncollected and (iv) all other obligations of Improvement Area E have been satisfied. J. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that Improvement Area E may collect Special Tax 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. K. APPEALS OF SPECIAL TAXES Any taxpayer may file a written appeal of the Special Taxes on his /her Assessor's Parcel(s) with the CFD Administrator, provided that the appellant is current in his /her payments of Special Taxes. During pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant's Assessor's Parcel(s). No refunds of previously paid Special Taxes shall be made. The CFD Administrator shall interpret this Rate and Method of Apportionment and make determinations relative to the annual levy and administration of the Special Taxes and any taxpayer who appeals, as herein specified. City of Lake Elsinore Community Facilities District No. 2003 -2 IA E (Canyon Hills) Page 12 ATTACHMENT C Types of Facilities To Be Financed By City of Lake Elsinore Community Facilities District No. 2003 -2 (Canyon Hills) (Improvement Area E) The proposed types of public facilities and expenses to be financed by the District include: The construction, purchase, modification. expansion, rehabilitation and /or improvement of (i) drainage, library, park, roadway and other public facilities of the City, including the foregoing public facilities which are included in the City's fee programs with respect to such facilities and authorized to be financed under the Mello -Roos Community Facilities Act of 1982, as amended (the "City Facilities ") and (ii) water and sewer facilities including the acquisition of capacity in the sewer system and /or water system of the Elsinore Valley Municipal Water District which are included in Elsinore Valley Municipal Water District's water and sewer capacity and connection fee programs (the "Water District Facilities" and together, with the City Facilities, the "Facilities "), and all appurtenances and appurtenant work in connection with the foregoing Facilities, including the cost of engineering, planning, designing, materials testing, coordination, construction staking, construction management and supervision for such Facilities, and to finance the incidental expenses to be incurred, including: a. The cost of engineering, planning and designing the Facilities; b. All costs, including costs of the property owner petitioning to form the District, associated with the creation of the District, the issuance of the bonds, the determination of the amount of special taxes to be levied and costs otherwise incurred in order to carry out the authorized purposes of the District; and C. Any other expenses incidental to the construction, acquisition, modification, rehabilitation, completion and inspection of the Facilities. C -1 ATTACHMENT D DESCRIPTION OF HOA LOT Assessor Parcel Nos. 358 -591 -008 358- 600 -034