HomeMy WebLinkAbout0016_2_CFD 2006-1 Formation of IA JJ and KK - Exhibit A Resolution of IntentionRESOLUTION NO. 2017-____
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,
CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE,
COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY), DECLARING ITS
INTENTION TO CONSIDER ESTABLISHING IMPROVEMENT AREAS JJ AND KK
FROM TERRITORY CURRENTLY WITHIN THE BOUNDARIES OF IMPROVEMENT
AREAS DD AND GG OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES
DISTRICT NO. 2006-1 (SUMMERLY), RESPECTIVELY, AND TO INCUR BONDED
INDEBTEDNESS WITHIN PROPOSED IMPROVEMENT AREAS JJ AND KK
Whereas,after a public hearing, on February 28, 2006, the City Council (the “City Council”) of
the City of Lake Elsinore (the “City”) adopted Resolution Nos. 2006-30 (the “Original Resolution
of Formation”) and 2006-31 which formed City of Lake Elsinore Community Facilities District No.
2006-1 (Summerly) (the “District” or “Community Facilities District No. 2006-1”) and Improvement
Area Nos. 1 through 3 therein, and called special elections on February 28, 2006 within
Improvement Area Nos. 1 through 3 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
on February 28, 2006; and,
Whereas, subsequent to the formation of the District, the District received a petition signed by
owners of the land within the boundaries of the District to dissolve Improvement Area Nos. 1
through 3 therein and to establish Improvement Areas A through F of the District, to authorize the
levy of the special tax in accordance with rates and methods of apportionment of special taxes
for Improvement Areas A through F and to authorize the District to incur bonded indebtedness for
Improvement Areas A through F; and,
Whereas, on January 25, 2011, the City Council, acting as the legislative body of the District,
adopted Resolution Nos. 2011-005 and 2011-006, dissolving Improvement Area Nos. 1 through
3 therein, establishing Improvement Areas A through F of the District and declaring the intention
to incur bonded indebtedness of the District for Improvement Areas A through F; and,
Whereas,after a public hearing, on March 8, 2011, the City Council adopted Resolution
Nos. 2011-119 and 2011-120, which called special elections on March 8, 2011 within
Improvement Areas A through F 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 on
March 8, 2011 (collectively, the “2011 Change Proceedings”); and,
Whereas,subsequent to the 2011 Change Proceedings, the District received a petition signed
by owners of the land within Improvement Areas C through F of the District to dissolve
Improvement Areas C through F and to establish Improvement Areas CC, DD, EE, FF, GG, HH
and II of the District from the areas within Improvement Areas C through F of the District; and,
Whereas, on February 25, 2014, the City Council, acting as the legislative body of the District,
adopted Resolution Nos. 2014-2010 and 2011-2011, dissolving Improvement Areas C through F
therein, establishing Improvement Areas CC, DD, EE, FF, GG, HH and II of the District and
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declaring the intention to incur bonded indebtedness of the District for Improvement Areas CC,
DD, EE, FF, GG, HH and II; and,
Whereas,after a public hearing, on April 8, 2014, the City Council adopted Resolution Nos. 2014-
016 and 2014-017, which called special elections on April 8, 2014 within Improvement Areas CC,
DD, EE, FF, GG, HH and II 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 for Improvement Areas CC, DD, EE, FF, GG, HH and II, which were approved by more
than two-thirds vote by the qualified electors on April 8, 2014 (collectively, the “2014 Change
Proceedings”); and,
Whereas, the District has received a petition signed by McMillin Summerly, LLC, a Delaware
limited liability company, (the “Owner”) which owns land within Improvement Area DD and GG of
the District, which the Owner desires to establish as Improvement Areas JJ and KK of the District,
respectively (“Proposed Improvement Area JJ” and “Proposed Improvement Area KK” and
together, the “Proposed Improvement Areas”), the boundaries of which are described herein in
Attachment “A” hereto and to approve new rates and methods of apportionment for each of
Proposed Improvement Area JJ and Proposed Improvement Area KK attached hereto as
Attachments “B” and “C,” respectively (the “Proposed Rates and Methods”); and,
Whereas, the Owner desires the District incur bonded indebtedness on behalf of the Proposed
Improvement Areas in the amount not to exceed $7,000,000 for Proposed Improvement Area JJ
and $5,700,000 for Proposed Improvement Area KK, for the purpose of financing the Facilities
and Incidental Expenses described in the Original Resolution of Formation and as further set forth
in Attachment “D” hereto;
Whereas, it is the intention of the City Council to consider financing the Facilities, the Services
and the Incidental Expenses (each as defined in Attachment “D” hereto) through the
establishment of the Proposed Improvement Areas and the issuance of bonded indebtedness in
an amount not to exceed $7,000,000 for Proposed Improvement Area JJ and $5,700,000 for
Proposed Improvement Area KK with respect to the Facilities and the Facilities Incidental
Expenses (as defined in Attachment “D”), and the levy of a special tax to pay for the Facilities (the
“Facilities Special Tax”), the Services (the “Services Special Tax”) and the Services Incidental
Expenses and to pay debt service on the bonded indebtedness, provided that the bond sale and
such special tax levy are approved at elections to be held within the boundaries of each Proposed
Improvement Area; and,
Whereas, the City desires to enter into a reimbursement agreement with the Owner, the form of
which is on file with the City Clerk (the “Reimbursement Agreement”), to provide for the
reimbursement of certain amounts advanced by the Owner in connection with the establishment
of the Proposed Improvement Areas;
Whereas, the City Council and the Owner desire that upon, and in consideration for, completion
of the formation of the Proposed Improvement Areas that the special tax obligation and lien with
respect to Improvement Area DD and GG shall be fully satisfied, a notice of cancellation shall be
recorded with respect to such property and Improvement Areas DD and GG shall be dissolved;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, ACTING HAS
THE LEGISLATIVE BODY OF CITY OF LAKE ELSINORE COMMUNITY FACILITIES
DISTRICT NO. 2006-1 (SUMMERLY) DOES HEREBY RESOLVE, DETERMINE AND ORDER
AS FOLLOWS:
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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 designation of Proposed Improvement Areas
JJ and Proposed Improvement Area KK.
Section 3. The City Council hereby designates, pursuant to Section 53350 of the Act, an area
which shall be known as “Improvement Area JJ of Community Facilities District No. 2006-1”, and
an area which shall be known as “Improvement Area KK of Community Facilities District No. 2006-
1” (each individually, an “Improvement Area”, and, together with the previously established
improvement areas of the District pursuant to the 2011 Change Proceedings, and modified by the
2014 Change Proceedings, collectively, the “Improvement Areas”). It is further proposed that the
boundaries of Community Facilities District No. 2006-1 shall be the legal boundaries as described
in Attachment “A” hereto (which consist of the combined boundaries of the Improvement Areas
and which shall, upon recordation of the amended boundary map for Community Facilities District
No. 2006-1, include the entirety of any parcel subject to taxation by Community Facilities District
No. 2006-1) and as depicted on the proposed amended boundary map of Community Facilities
District No. 2006-1 which is on file with the City Clerk of the City Council. The City Clerk of the
City Councilis hereby directed to sign the amended boundary map of Community Facilities District
No. 2006-1 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 Facilities proposed to be provided within the Improvement Areas are public
facilities as defined in the Act. The Facilities and Facilities Incidental Expenses authorized to be
financed by the Improvement Areas are described in the Original Resolution of Formation and are
set forth in Attachment “D” hereto. The City is authorized by law to construct, acquire, own and
operate the City facilities to be financed by the District and Elsinore Valley Municipal Water District
(the “Water District”) is authorized by law to construct and maintain the water and sewer facilities
for the benefit of each Improvement Area. The City Council hereby finds that the proposed
Facilities are necessary to meet increased demands placed upon the City as a result of
development occurring in Community Facilities District No. 2006-1. The Facilities may be
acquired from one or more of the property owners as completed public improvements or may be
constructed from bond proceeds or proceeds of the Facilities Special Tax. All or a portion of the
Facilities may be purchased with Community Facilities District No. 2006-1 funds, as completed
public facilities and/or constructed with Community Facilities District No. 2006-1 funds. Any
portion of the Facilities may be financed through a lease or lease-purchase arrangement if the
City hereafter determines that such arrangement is of benefit to the City.
The Services proposed to be provided for the benefit of the Proposed Improvement Areas
are public services as defined in the Act, and this City Council finds and determines that the
Services to be financed are in addition to those provided in the territory of the Proposed
Improvement Areas at the present time and do not supplant services already available within the
territory of the Proposed Improvement Areas. The City Council hereby finds and determines that
the description of the Services herein is sufficiently informative to allow taxpayers within the
Proposed Improvement Areas, to understand what the funds of the District may be used to
finance. The Services Incidental Expenses expected to be incurred include the costs of planning
the Services, the costs of forming the Proposed Improvement Areas, the cost of levying and
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collecting the Services Special Tax within the Proposed Improvement Areas and the cost of
administration.
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 the Facilities Special Tax,
secured by a continuing lien against all non-exempt real property in Proposed Improvement Area
JJ and Proposed Improvement Area KK, sufficient to pay for: (i) the Facilities and Facilities
Incidental Expenses attributable to the Proposed Improvement Area JJ and Proposed
Improvement Area KK and (ii) the principal and interest and other periodic costs on bonds or other
indebtedness issued to finance the Facilities 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) attributable to the respective Proposed
Improvement Area. The Proposed Rates and Methods and manner of collection of the Facilities
Special Tax in Proposed Improvement Area JJ and Proposed Improvement Area KK are
described in detail in Attachments “B” and “C” attached hereto, respectively (which attachments
are incorporated herein by this reference). Attachments “B” and “C” allow each landowner within
Proposed Improvement Area JJ and Proposed Improvement Area KK to estimate the maximum
amount that may be levied against each parcel. In the first year in which such Facilities Special
Tax is levied, the levy shall include an amount sufficient to repay to the District all amounts, if any,
transferred to Community Facilities District No. 2006-1 pursuant to Section 53314 of the Act and
interest thereon.
The Facilities Special Tax may be increased by two percent (2%) per year, to the extent
permitted in the Rate and Method. If Facilities Special Taxes of Community Facilities District No.
2006-1 for the Proposed Improvement Areas are levied against any parcel used for private
residential purposes, (i) the maximum Facilities 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 2058-59 Fiscal
Year and (iii) under no circumstances will the Facilities Special Tax levied against any such parcel
used for private residential uses be increased in any fiscal year as a consequence of delinquency
or default by the owner or owners of any other parcel or parcels within the applicable Proposed
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 Facilities Special Tax is based on the expected demand that each parcel of real
property within Proposed Improvement Area JJ and Proposed Improvement Area KK will place
on the Facilities and on the benefit that each parcel derives from the services to be provided by
the Facilities. The City Council hereby determines that the proposed Facilities 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 Community Facilities District No. 2006-1. The City
Council hereby determines the Proposed Rates and Methods set forth in Attachments “B” and “C”
to be reasonable. The Facilities Special Tax is apportioned to each parcel on the foregoing basis
pursuant to Section 53325.3 of the Act; and such Facilities 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 Proposed
Improvement Area JJ and Proposed Improvement Area KK shall become for any reason exempt,
wholly or partially, from the levy of the Facilities Special Tax specified in Attachments “B” and “C,”
respectively, the City Council shall, on behalf of such Improvement Area cause the levy to be
increased, subject to the limitation of the maximum special tax for a parcel as set forth in
Attachments “B” and “C,” respectively to the extent necessary upon the remaining property within
such Proposed Improvement Area JJ and Proposed Improvement Area KK which is not exempt
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in order to yield the Facilities Special Tax revenues required for the purposes described in this
Section. The obligation to pay Facilities Special Taxes may be prepaid as provided in the rates
and methods of apportionment set forth in Attachments B” and “C,” respectively as such rates
and methods of apportionment may be amended hereafter.
Section 6.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 the Services Special Tax,
secured by recordation of a continuing lien against all nonexempt real property in the Proposed
Improvement Areas, sufficient to pay for the Services and the Services Incidental Expenses. The
rate and method of apportionment and manner of collection of the Services Special Tax are
described in detail in Attachments “B” and “C” hereto. Attachments “B” and “C” allows each
landowner within Proposed Improvement Area JJ and Proposed Improvement Area JJ,
respectively, to estimate the maximum amount of the Services Special Tax that may be levied
against each parcel therein.
The Services Special Tax may be increased by two percent (2%) per year, to the extent
permitted in the Rate and Method. The Services Special Tax may be levied for such period as
the Services are needed, as further described in Attachments “B” and “C” hereto.
The Services Special Tax is based on the expected demand that each parcel of real
property within each Proposed Improvement Area will place on the Services. The City Council
hereby determines that the proposed Services are necessary to meet the increased demand
placed upon the City and the maintenance of parks, open space and storm drain improvements
as a result of the development of the land within the Proposed Improvement Areas. The City
Council hereby determines the rate and method of apportionment of the special taxes set forth in
Attachments “B” and “C” to be reasonable. The Services Special Tax is apportioned to each
parcel on the foregoing basis pursuant to Section 53325.3 of the Act and such Services Special
Tax is not on or based upon the value or ownership of real property.
Section 7.It is necessary to incur bonded indebtedness within the boundaries of Proposed
Improvement Area JJ in an amount not to exceed $7,000,000 and within the boundaries of
Proposed Improvement Area KK in an amount not to exceed $5,700,000, in order to finance
certain of the costs of the Facilities and Facilities Incidental Expenses, as permitted by the Act for
the benefit of the respective Proposed Improvement Area.
Section 8.The indebtedness will be incurred for the purpose of financing the costs of the
Facilities and the Facilities Incidental Expenses, 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 Facilitieswhich are permitted to be financed
pursuant to the Act.
Section 9.It is the intent of the City Council to authorize the sale of bonds of each Proposed
Improvement Area in one or more series, which bonds may be issued to fund Facilities costs and
Facilities Incidental Expenses for that Proposed Improvement Area 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.
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Section 10.Combined public hearings (the “Hearing”) on the establishment of the Proposed
Improvement Areas within Community Facilities District No. 2006-1, the levying of special taxes
in each Proposed Improvement Area in accordance with the Proposed Rates and Methods and
the proposed issuance of bonds with respect to each Proposed Improvement Area to finance the
Facilities and the Facilities Incidental Expenses shall be held at 7:00 p.m., or as soon thereafter
as practicable, on February 28, 2017, at the City Cultural Center, 183 North Main Street, Lake
Elsinore, California. Should the City Council determine to establish the Proposed Improvement
Areas within Community Facilities District No. 2006-1, special elections will be held for each
Proposed Improvement Area to authorize the issuance of the bonds and the levy of the special
tax for the respective Proposed Improvement Area 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 the applicable Proposed Improvement Area at the close of the Hearing, or the authorized
representative thereof, having one vote for each acre or portion thereof owned within such
Proposed Improvement Area. Ballots for the special election may be distributed by mail or by
personal service.
Section 11.At the time and place set forth above for the Hearing, the City Council will receive
testimony as to whether each Proposed Improvement Area within Community Facilities District
No. 2006-1 shall be established and shall consider:
(a)if an ad valorem property tax is currently being levied on property within the Proposed
Improvement Areas 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
(b)if the capital facilities to be financed and constructed by Community Facilities District No.
2006-1 within the Proposed Improvement Areas 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 the Proposed Improvement Areas, 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 Proposed Improvement Areas are 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 12.At the time and place set forth above for the Hearing, any interested person,
including all persons owning lands or registered to vote within any of the Proposed Improvement
Areas, may appear and be heard.
Section 13.Each City officer who is or will be responsible for providing the Facilities and the
Services within the Proposed Improvement Areas, if established, is hereby directed to study the
Proposed Improvement Areas of Community Facilities District No. 2006-1 and the Proposed
Rates and Methods and, at or before the time of the above-mentioned Hearing, file a report with
the City Council containing a brief description of the public improvements and services by type
which will in his or her opinion be required to meet adequately the needs of Community Facilities
District No. 2006-1 and an estimate of the cost of providing those public improvements and
services, 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.
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Section 14.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 the Proposed Improvement Areas
within Community Facilities District No. 2006-1. 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 15.The City Clerk of the Board is hereby directed to publish a notice (the “Notice”) of
the Hearing pursuant to Section 6061 of the Government Code in a newspaper of general
circulation published in the area of the Proposed Improvement Areas within Community Facilities
District No. 2006-1. The City Clerk of the Board is further directed to mail a copy of the Notice to
each of the landowners within the boundaries of the Proposed Improvement Areas 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 the proposed district 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.
Section 16.The reasonably expected maximum principal amount of the bonded debt within
Proposed Improvement Area JJ is Seven Million Dollars ($7,000,000) and within Proposed
Improvement Area KK is Five Million Seven Hundred Thousand Dollars ($5,700,000).
Section 17.Except to the extent limited in any bond resolution or trust indenture related to the
issuance of bonds, the City Council hereby reserves to itself all rights and powers set forth in
Section 53344.1 of the Act (relating to tenders in full or partial payment).
Section 18.The form of the Reimbursement Agreement is hereby approved. The Mayor, the
City Manager, the Assistant City Manager, 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 19.This Resolution shall be effective upon its adoption.
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Passed and Adopted this 24th day of January, 2017.
_____________________________
Robert E. Magee, Mayor
Attest:
__________________________
Susan M. Domen, MMC
City Clerk
STATE OF CALIFORNIA)
COUNTY OF RIVERSIDE) ss.
CITY OF LAKE ELSINORE)
I, Susan M. Domen, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify
that Resolution No. 2017-______ was adopted by the City Council of the City of Lake Elsinore,
California, at the regular meeting of January 24, 2017, and that the same was adopted by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Susan M. Domen, MMC
City Clerk
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A-1
ATTACHMENT “A”
PROPOSED AMENDED BOUNDARY MAP
OF COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
OF THE CITY OF LAKE ELSINORE
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With respect to Assessor’s Parcel No. 371-270-054, the portion referenced as No. 5 in Parcel 1
and as further described in Notice of Lot Line Adjustment No. 16-416, recorded in the Official
Records of the County of Riverside as Document No. 2016-0281439 on July 7, 2016 is included
within the boundaries of Improvement Area JJ.
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B-1
ATTACHMENT “B”
PROPOSED RATE AND METHOD OF APPORTIONMENT
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
(PROPOSED IMPROVEMENT AREA JJ)
A Special Tax shall be levied on all Assessor's Parcels in City of Lake Elsinore Community
Facilities District No. 2006-1 (Summerly) Improvement Area JJ ("CFD No. 2006-1 IA JJ") and
collected each Fiscal Year commencing in Fiscal Year 2017-2018, 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. 2006-1 IA JJ, 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 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.
"Act" means the Mello-Roos Community 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 CFD No. 2006-1 IA JJ: 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. 2006-1 IA JJ or any designee thereof of complying with arbitrage rebate requirements;
the costs to the City, CFD No. 2006-1 IA JJ or any designee thereof of complying with disclosure
requirements of the City, CFD No. 2006-1 IA JJ 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, CFD No. 2006-1 IA JJ 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. 2006-1 IA JJ for any
other administrative purposes of CFD No. 2006-1 IA JJ, including attorney's fees and other costs,
and 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 May
1st 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.
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"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 for Facilities"means the Special Tax for Facilities for each Land Use
Class of Developed Property, as determined in accordance with Section C.1.(b) below.
"Authorized Facilities" means those authorize improvements, as listed in an exhibit to the
Resolution of Formation.
"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.1.(c)
below.
“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” or “CFD No. 2006-1 IA JJ"means Improvement Area JJ of CFD No. 2006-1 as identified
on the boundary map for CFD No. 2006-1.
“CFD No. 2006-1"means City of Lake Elsinore Community Facilities District No. 2006-1
(Summerly) established by the City under the Act.
"CFD No. 2006-1 IA JJ 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 for Facilities
within CFD No. 2006-1 IA JJ have been pledged.
“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. 2006-1 IA JJ, or its designee.
"County" means the County of Riverside.
"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 1 of the
prior Fiscal Year and a building permit for new construction was issued on or before May 1 of the
Fiscal Year preceding the Fiscal Year for which the Special Tax for Facilities is being levied. Once
an Assessor's Parcel has been designated Developed Property, the Maximum Special Tax for
Facilities cannot be reduced for any reason unless a prepayment in full or partial prepayment is
made pursuant to Section G.
"Final Subdivision" means (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) for condominiums, a final map, or
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portion thereof, approved by the City and a condominium plan recorded pursuant to California
Civil Code Section 1352 that creates individual lots for which building permits may be issued.
"Fiscal Year" means the period commencing on July 1st of any year and ending the following
June 30th.
"Funding Agreement" means the Funding, Construction and Acquisition Agreement entered into
by the City, on behalf of CFD No. 2006-1, as it may be amended.
“Indenture”means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which CFD No. 2006-1 IA JJ 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 1 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.
"Outstanding Bonds" means all CFD No. 2006-1 IA JJ Bonds which are deemed to be
outstanding under the Indenture.
“Property Owner’s Association Property”means, for each Fiscal Year, any property within the
boundaries of CFD No. 2006-1 IA JJ that was owned by a property owner association, including
any master or sub-association, as of January 1 of the prior Fiscal Year.
“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 , for each Fiscal Year, (i) any property within the boundaries of CFD
No. 2006-1 IA JJ 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, the Lake Elsinore Unified School District, or any local government or other
public agency as of January I of the previous Fiscal Year, 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; or (ii) any property within the boundaries of CFD No.
2006-1 IA JJ that was encumbered, as of January I of the previous Fiscal Year, by an unmanned
utility easement making impractical its utilization for other than the purpose set forth in the
easement.
"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.
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"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.
"Resolution of Formation"means the resolution of formation for CFD No. 2006-1 IA JJ.
"Special Tax(es)"means any of the special taxes authorized to be levied within CFD No. 2006-
1 IA JJ 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 for Facilities Requirement " means that amount required in any Fiscal Year for
CFD No. 2006-1 IA JJ 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- 1 IA JJ Bonds,
including but not limited to, credit enhancement and rebate payments on the CFD No. 2006-1 IA
JJ Bonds due in the calendar year commencing in such Fiscal Year; (iii) pay 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;
(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 Approved
Property and Undeveloped Property; less (vii) a credit for funds available to reduce 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 of CFD No. 2006-
1 IA JJ which are not exempt from the Special Tax for Facilities pursuant to law or Section E
below.
“Trustee”means the trustee, fiscal agent, or paying agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as
Developed Property, Approved 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. 2006-1 IA JJ shall be classified as
Developed Property, Approved Property, Taxable Public Property, Taxable Property Owner
Association Property, or Undeveloped Property, and shall be subject to Special Taxes 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 5 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 6. With respect to Residential Property, the Residential Floor Area
shall be determined from the most recent building permit issued for such Assessor's Parcel.
C. MAXIMUM SPECIAL TAX FOR FACILITIES
1.Developed Property
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(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 Fiscal Year 2017-2018 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. 2006-1 IMPROVEMENT AREA JJ
FISCAL YEAR 2017-2018
Land
Use
Class Description Residential Floor Area
Assigned Special
Tax for Facilities
1 Residential Property Less than 1,700 sq. ft $1,280 per unit
2 Residential Property 1,700 –1,999 sq. ft $1,320 per unit
3 Residential Property 2,000 –2,299 sq. ft $1,570 per unit
4 Residential Property 2,300 –2,599 sq. ft $1,580 per unit
5 Residential Property Greater than 2,599 sq. ft.$1,590 per unit
6 Non-Residential Property N/A $12,032 per Acre
(c) Backup Special Tax for Facilities
The Fiscal Year 2017-2018 Backup Special Tax for Facilities attributable to a Final Subdivision
will equal $12,032, 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 for which building permits for residential construction
have or may be issued (i.e., the number or residential lots). The Backup Special Tax for
Facilities for each Assessor's Parcel of Non-Residential Property therein shall equal $12,032
multiplied by the Acreage of such Assessor's Parcel.
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
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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 I 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 of the Final Subdivision area for all remaining Fiscal
Years in which the Special Tax for Facilities may be levied.
(d) Release of Obligation to Pay and Disclose Backup Special Tax
All Assessor's Parcels within CFD No. 2006-1 IA JJ will be relieved simultaneously and
permanently from the obligation to pay and disclose the backup Special Tax if the CFD
Administrator determines that the annual debt service required for the Outstanding Bonds,
when compared to the Assigned Special Taxes for Facilities that may be levied against all
Assessor's Parcels of Developed Property results in 110% debt service coverage (i.e., the
aggregate Assigned Special Taxes for Facilities that may be levied against all Developed
Property in each remaining Fiscal Year based on then existing development in CFD No. 2006-
1 IA JJ is at least equal to the sum of (i) the Administrative Expenses and (ii) 1.10 times
maximum annual debt service, in each remaining Fiscal Year on the Outstanding Bonds).
(e) Increase in the Assigned Special Tax for Facilities and Backup Special Tax for Facilities
The Fiscal Year 2017-2018 Assigned Special Tax for Facilities, identified in Table 1 above,
and Backup Special Tax for Facilities shall increase thereafter, commencing on July 1, 2018
and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the
amount in effect for the previous Fiscal Year.
(f) 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.
2.Approved Property. Taxable Property Owner Association Property. Taxable Public
Property. and Undeveloped Property
The Fiscal Year 2017-2018 Maximum Special Tax for Facilities for Approved Property, Taxable
Property Owner Association Property, Taxable Public Property, and Undeveloped Property shall
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be $12,032 per Acre and shall increase thereafter, commencing on July 1, 2018 and on July 1 of
each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Maximum Special Tax
for Facilities in effect for the previous Fiscal Year.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES
Commencing with Fiscal Year 2017-2018 and for each following Fiscal Year, the City
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:
Step One: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;
Step Two: 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 Approved Property at up to
100% of the Maximum Special Tax for Facilities for Approved Property;
Step Three: If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first two steps 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;
Step Four:If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first three 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;
Step Five: If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first four 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 City 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 City 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. 2006-1 IA
JJ Bonds have already been issued or the City Council has covenanted that it will not issue any
additional CFD No. 2006-1 IA JJ Bonds (except refunding bonds) to be supported by the Special
Tax for Facilities; and (iii) all Authorized Facilities have been constructed and/or acquired.
Further notwithstanding the above, under no circumstances will the Special Tax for Facilities
levied against any Assessor's Parcel of Residential Property be increased by more than ten
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percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel
within CFD No. 2006-1 IA JJ.
E.EXEMPTIONS
No Special Tax for Facilities shall be levied on up to 12.82 Acres of Property Owner Association
Property and/or Public Property in CFD No. 2006-1 IA JJ. 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. 2006-1 IA JJ may collect
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:
"Buildout"means, for CFD No. 2006-1 IA JJ, that all expected building permits have been issued.
"CFD Public Facilities Costs"means either $5,125,000 in 2017 dollars, which shall increase by
the Construction Inflation Index on July 1, 2018, and on each July I thereafter, or such lower
number as (i) shall be determined by the CFD Administrator as sufficient to fund the Authorized
Facilities to be provided by CFD No. 2006-1 IA JJ under the authorized bonding program for CFD
No. 2006-1 IA JJ, or (ii) shall be determined by the City Council concurrently with a covenant that
it will not issue any more CFD No. 2006-1 IA JJ 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.
"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 Costs minus (i) public facility costs
previously paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement
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Fund, and (iii) moneys currently on deposit in an escrow fund established pursuant to the
Indenture 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 eligible
under the Act.
"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 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 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 of the 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. 2006-1 IA JJ 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
less Capitalized Interest 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 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
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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. 2006-1 IA
JJ 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. 2006-1 IA JJ,
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-
1 IA JJ, 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-100%), 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.
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 of CFD No. 2006-1 IA JJ are as calculated
by the CFD Administrator and include the costs of computation of the prepayment, the costs
to invest the prepayment proceeds, the costs of redeeming CFD No. 2006-1 IA JJ Bonds, and
the costs of recording any notices to evidence the prepayment and the redemption (the
"Administrative Fees and Expenses").
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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% of the
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. 2006-1 IA JJ Bonds or make
debt service payments. The amount computed pursuant to paragraph 7 shall be deposited
into the Improvement Fund. The amount computed pursuant to paragraph 12 shall be retained
by CFD No. 2006-1 IA JJ.
The Special Tax for Facilities Prepayment Amount may be insufficient to redeem a full
$5,000 increment of CFD No. 2006-1 IA JJ 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. 2006-1 IA JJ 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 City Council shall cause a
suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the
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. 2006-1 IA JJ (after
excluding 12.82 Acres of Property Owner Association Property and/or Public Property in CFD
No. 2006-1 IA JJ 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.
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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.1.; 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 = Partial Prepayment Amount
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 for Facilities obligation
A = the Administrative Fees and Expenses determined pursuant to Section G.1
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 of the 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 City Council shall (i) distribute the funds remitted to it according to Section G.1, and
(ii) indicate in the records of CFD No. 2006-1 IA JJ 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 until Fiscal Year 2058-2059, 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.
2006-1 IA JJ Bonds have been paid; (ii) all Authorized Facilities have been acquired and all
reimbursements required by the Funding Agreement have been paid; and (iii) all other obligations
of CFD No. 2006-1 IA JJ have been satisfied. Bonds shall not be issued after eighteen (18)
months have elapsed following the final inspection of the last Residential Property within CFD No.
2006-1 IA JJ, except as otherwise provided in the Funding Agreement.
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
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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. 2006-1 IA JJ in any Fiscal Year on any Assessor’s Parcel.
“Operating Fund”means a fund that shall be maintained for CFD No. 2006-1 IA JJ for
any Fiscal Year to pay for the actual costs of maintenance related to the Service Area, and the
applicable Administrative Expenses.
“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. 2006-1 IA JJ 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. 2006-1 IA JJ 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) Administrative Expenses, and (iii) anticipated delinquent
Special Taxes for Services based on the delinquency rate in CFD No. 2006-1 IA JJ 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 Fiscal Year 2017-2018 and for each subsequent Fiscal Year, the City Council
shall levy Special Taxes 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 2017-2018 shall be $306.91 per
Developed Single Family Unit, $153.47 per Developed Multifamily Unit, and $691 per Acre for
each Assessor’s Parcel of Non-Residential Property.
On each July 1, commencing July 1, 2018, the Maximum Special Tax for Services shall be
increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.
J. DURATION OF SPECIAL TAX FOR SERVICES
The Special Tax for Services shall be levied in perpetuity to fund the Special Tax for Services
Requirement, unless no longer required as determined at the sole discretion of the City Council.
K. APPEALS AND INTERPRETATIONS
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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. 2006-1 IA JJ. 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 City 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 City Council shall be final
and binding as to all persons.
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ATTACHMENT “C”
PROPOSED RATE AND METHOD OF APPORTIONMENT
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
(PROPOSED IMPROVEMENT AREA KK)
A Special Tax shall be levied on all Assessor's Parcels in City of Lake Elsinore Community
Facilities District No. 2006-1 (Summerly) Improvement Area KK ("CFD No. 2006-1 IA KK") and
collected each Fiscal Year commencing in Fiscal Year 2017-2018, 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. 2006-1 IA KK, unless exempted by law or by the provisions hereof, shall
be taxed for the purposes, to the extent and in the manner herein provided.
B. 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.
"Act" means the Mello-Roos Community 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 CFD No. 2006-1 IA KK: 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. 2006-1 IA KK or any designee thereof of complying with arbitrage rebate requirements;
the costs to the City, CFD No. 2006-1 IA KK or any designee thereof of complying with disclosure
requirements of the City, CFD No. 2006-1 IA KK 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, CFD No. 2006-1 IA KK 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. 2006-1 IA KK for any
other administrative purposes of CFD No. 2006-1 IA KK, including attorney's fees and other costs,
and 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 May
1st 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.
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"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 for Facilities"means the Special Tax for Facilities for each Land Use
Class of Developed Property, as determined in accordance with Section C.1.(b) below.
"Authorized Facilities" means those authorize improvements, as listed in an exhibit to the
Resolution of Formation.
"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.1.(c)
below.
“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” or “CFD No. 2006-1 IA KK"means Improvement Area KK of CFD No. 2006-1 as identified
on the boundary map for CFD No. 2006-1.
“CFD No. 2006-1"means City of Lake Elsinore Community Facilities District No. 2006-1
(Summerly) established by the City under the Act.
"CFD No. 2006-1 IA KK 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 for Facilities
within CFD No. 2006-1 IA KK have been pledged.
“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. 2006-1 IA KK, or its designee.
"County" means the County of Riverside.
"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 1 of the
prior Fiscal Year and a building permit for new construction was issued on or before May 1 of the
Fiscal Year preceding the Fiscal Year for which the Special Tax for Facilities is being levied. Once
an Assessor's Parcel has been designated Developed Property, the Maximum Special Tax for
Facilities cannot be reduced for any reason unless a prepayment in full or partial prepayment is
made pursuant to Section G.
"Final Subdivision" means (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) for condominiums, a final map, or
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C-3
portion thereof, approved by the City and a condominium plan recorded pursuant to California
Civil Code Section 1352 that creates individual lots for which building permits may be issued.
"Fiscal Year" means the period commencing on July 1st of any year and ending the following
June 30th.
"Funding Agreement" means the Funding, Construction and Acquisition Agreement entered into
by the City, on behalf of CFD No. 2006-1, as it may be amended.
“Indenture”means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which CFD No. 2006-1 IA KK 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 1 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.
"Outstanding Bonds" means all CFD No. 2006-1 IA KK Bonds which are deemed to be
outstanding under the Indenture.
“Property Owner’s Association Property”means, for each Fiscal Year, any property within the
boundaries of CFD No. 2006-1 IA KK that was owned by a property owner association, including
any master or sub-association, as of January 1 of the prior Fiscal Year.
“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 , for each Fiscal Year, (i) any property within the boundaries of CFD
No. 2006-1 IA KK 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, the Lake Elsinore Unified School District, or any local government or other
public agency as of January I of the previous Fiscal Year, 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; or (ii) any property within the boundaries of CFD No.
2006-1 IA KK that was encumbered, as of January I of the previous Fiscal Year, by an unmanned
utility easement making impractical its utilization for other than the purpose set forth in the
easement.
"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.
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"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.
"Resolution of Formation"means the resolution of formation for CFD No. 2006-1 IA KK.
"Special Tax(es)"means any of the special taxes authorized to be levied within CFD No. 2006-
1 IA KK 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 for Facilities Requirement " means that amount required in any Fiscal Year for
CFD No. 2006-1 IA KK 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- 1 IA KK Bonds,
including but not limited to, credit enhancement and rebate payments on the CFD No. 2006-1 IA
KK Bonds due in the calendar year commencing in such Fiscal Year; (iii) pay 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;
(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 Approved
Property and Undeveloped Property; less (vii) a credit for funds available to reduce 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 of CFD No. 2006-
1 IA KK which are not exempt from the Special Tax for Facilities pursuant to law or Section E
below.
“Trustee”means the trustee, fiscal agent, or paying agent under the Indenture.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as
Developed Property, Approved 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. 2006-1 IA KK shall be classified as
Developed Property, Approved Property, Taxable Public Property, Taxable Property Owner
Association Property, or Undeveloped Property, and shall be subject to Special Taxes 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 4 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 5. With respect to Residential Property, the Residential Floor Area
shall be determined from the most recent building permit issued for such Assessor's Parcel.
C. MAXIMUM SPECIAL TAX FOR FACILITIES
1. Developed Property
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(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 Fiscal Year 2017-2018 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. 2006-1 IMPROVEMENT AREA KK
FISCAL YEAR 2017-2018
Land
Use
Class Description Residential Floor Area
Assigned Special
Tax for Facilities
1 Residential Property Less than 1,600 sq. ft $1,740 per unit
2 Residential Property 1,600 –1,799 sq. ft $1,850 per unit
3 Residential Property 1,800 –1,999 sq. ft $1,916 per unit
4 Residential Property Greater than 1,999 sq. ft.$1,990 per unit
5 Non-Residential Property N/A $15,099 per Acre
(c) Backup Special Tax for Facilities
The Fiscal Year 2017-2018 Backup Special Tax for Facilities attributable to a Final Subdivision
will equal $15,099, 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 for which building permits for residential construction
have or may be issued (i.e., the number or residential lots). The Backup Special Tax for
Facilities for each Assessor's Parcel of Non-Residential Property therein shall equal $15,099
multiplied by the Acreage of such Assessor's Parcel.
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
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C-6
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 I 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 of the Final Subdivision area for all remaining Fiscal
Years in which the Special Tax for Facilities may be levied.
(d) Release of Obligation to Pay and Disclose Backup Special Tax
All Assessor's Parcels within CFD No. 2006-1 IA KK will be relieved simultaneously and
permanently from the obligation to pay and disclose the backup Special Tax if the CFD
Administrator determines that the annual debt service required for the Outstanding Bonds,
when compared to the Assigned Special Taxes for Facilities that may be levied against all
Assessor's Parcels of Developed Property results in 110% debt service coverage (i.e., the
aggregate Assigned Special Taxes for Facilities that may be levied against all Developed
Property in each remaining Fiscal Year based on then existing development in CFD No. 2006-
1 IA KK is at least equal to the sum of (i) the Administrative Expenses and (ii) 1.10 times
maximum annual debt service, in each remaining Fiscal Year on the Outstanding Bonds).
(e) Increase in the Assigned Special Tax for Facilities and Backup Special Tax for Facilities
The Fiscal Year 2017-2018 Assigned Special Tax for Facilities, identified in Table 1 above,
and Backup Special Tax for Facilities shall increase thereafter, commencing on July 1, 2018
and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the
amount in effect for the previous Fiscal Year.
(f) 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.
2.Approved Property. Taxable Property Owner Association Property. Taxable Public
Property. and Undeveloped Property
The Fiscal Year 2017-2018 Maximum Special Tax for Facilities for Approved Property, Taxable
Property Owner Association Property, Taxable Public Property, and Undeveloped Property shall
be $15,099 per Acre and shall increase thereafter, commencing on July 1, 2018 and on July 1 of
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C-7
each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Maximum Special Tax
for Facilities in effect for the previous Fiscal Year.
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES
Commencing with Fiscal Year 2017-2018 and for each following Fiscal Year, the City
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:
Step One: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;
Step Two: 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 Approved Property at up to
100% of the Maximum Special Tax for Facilities for Approved Property;
Step Three: If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first two steps 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;
Step Four:If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first three 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;
Step Five: If additional monies are needed to satisfy the Special Tax Requirement for
Facilities after the first four 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 City 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 City 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. 2006-1 IA
KK Bonds have already been issued or the City Council has covenanted that it will not issue any
additional CFD No. 2006-1 IA KK Bonds (except refunding bonds) to be supported by the Special
Tax for Facilities; and (iii) all Authorized Facilities have been constructed and/or acquired.
Further notwithstanding the above, under no circumstances will the Special Tax for Facilities
levied against any Assessor's Parcel of Residential Property 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. 2006-1 IA KK.
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E.EXEMPTIONS
No Special Tax for Facilities shall be levied on up to 7.13 Acres of Property Owner Association
Property and/or Public Property in CFD No. 2006-1 IA KK. 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. 2006-1 IA KK may collect
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:
"Buildout"means, for CFD No. 2006-1 IA KK, that all expected building permits have been
issued.
"CFD Public Facilities Costs"means either $4,125,000 in 2017 dollars, which shall increase by
the Construction Inflation Index on July 1, 2018, and on each July I thereafter, or such lower
number as (i) shall be determined by the CFD Administrator as sufficient to fund the Authorized
Facilities to be provided by CFD No. 2006-1 IA KK under the authorized bonding program for CFD
No. 2006-1 IA KK, or (ii) shall be determined by the City Council concurrently with a covenant that
it will not issue any more CFD No. 2006-1 IA KK 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.
"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 Costs minus (i) public facility costs
previously paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement
Fund, and (iii) moneys currently on deposit in an escrow fund established pursuant to the
Indenture that are expected to be available to finance the cost of Authorized Facilities.
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C-9
"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 eligible
under the Act.
"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 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 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 of the 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. 2006-1 IA KK 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
less Capitalized Interest 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 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.
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C-10
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. 2006-1 IA
KK 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. 2006-1 IA KK,
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-
1 IA KK, 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-100%), 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.
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 of CFD No. 2006-1 IA KK are as calculated
by the CFD Administrator and include the costs of computation of the prepayment, the costs
to invest the prepayment proceeds, the costs of redeeming CFD No. 2006-1 IA KK 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
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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% of the
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. 2006-1 IA KK Bonds or make
debt service payments. The amount computed pursuant to paragraph 7 shall be deposited
into the Improvement Fund. The amount computed pursuant to paragraph 12 shall be retained
by CFD No. 2006-1 IA KK.
The Special Tax for Facilities Prepayment Amount may be insufficient to redeem a full
$5,000 increment of CFD No. 2006-1 IA KK 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. 2006-1 IA KK 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 City Council shall cause a
suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the
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. 2006-1 IA KK (after
excluding 12.85 Acres of Property Owner Association Property and/or Public Property in CFD
No. 2006-1 IA KK 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
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C-12
partially prepaid. The amount of the prepayment shall be calculated as in Section G.1.; 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 = Partial Prepayment Amount
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 for Facilities obligation
A = the Administrative Fees and Expenses determined pursuant to Section G.1
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 of the 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 City Council shall (i) distribute the funds remitted to it according to Section G.1, and
(ii) indicate in the records of CFD No. 2006-1 IA KK 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 until Fiscal Year 2058-2059, 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. 2006-1 IA KK Bonds have been paid; (ii) all Authorized Facilities have been acquired and
all reimbursements required by the Funding Agreement have been paid; and (iii) all other
obligations of CFD No. 2006-1 IA KK have been satisfied. Bonds shall not be issued after
eighteen (18) months have elapsed following the final inspection of the last Residential
Property within CFD No. 2006-1 IA KK, except as otherwise provided in the Funding
Agreement.
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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. 2006-1 IA KK in any Fiscal Year on any Assessor’s Parcel.
“Operating Fund”means a fund that shall be maintained for CFD No. 2006-1 IA KK for
any Fiscal Year to pay for the actual costs of maintenance related to the Service Area, and the
applicable Administrative Expenses.
“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. 2006-1 IA KK 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. 2006-1 IA KK 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) Administrative Expenses, and (iii) anticipated
delinquent Special Taxes for Services based on the delinquency rate in CFD No. 2006-1 IA KK
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 Fiscal Year 2017-2018 and for each subsequent Fiscal Year, the City Council shall
levy Special Taxes 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 2017-2018 shall be $306.91 per
Developed Single Family Unit, $153.47 per Developed Multifamily Unit, and $691 per Acre for
each Assessor’s Parcel of Non-Residential Property.
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On each July 1, commencing July 1, 2018, the Maximum Special Tax for Services shall be
increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year.
J. DURATION OF SPECIAL TAX FOR SERVICES
The Special Tax for Services shall be levied in perpetuity to fund the Special Tax for Services
Requirement, unless no longer required as determined at the sole discretion of the City Council.
K. 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. 2006-1 IA KK. 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 City 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 City Council shall be final
and binding as to all persons.
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D-1
ATTACHMENT “D”
AUTHORIZED IMPROVEMENTS AND INCIDENTAL EXPENSES
The facilities proposed to be financed for each of Improvement Area JJ and Improvement
Area KK are public infrastructure facilities and other governmental facilities with an estimated
useful life of five years or longer, which the District is authorized by law to construct, own or
operate and that are necessary to meet increased demands placed upon the City as a result of
development or rehabilitation occurring within the District, including but not limited to streets,
streetscape, park and recreation facilities, storm drain, other City facilities and fees, water and
sewer facilities and fees of the Elsinore Valley Municipal Water District, and related costs including
designs, inspections, professional fees, annexation fees, connection fees and acquisition costs
(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 (together the “Facilities Incidental Expenses”):
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.
Such Facilities need not be physically located within the District.
AUTHORIZED SERVICES AND INCIDENTAL EXPENSES
The services which may be funded with proceeds of the Services Special Tax, as provided
by Section 53313 of the Act, will include all costs attributable to maintaining, servicing, cleaning,
repairing and/or replacing parks, open space and storm drains (may include reserves for
replacement) (collectively, the “Services”).
In addition to payment of the cost and expense of the forgoing services, proceeds of
Services Special Tax may be expended to pay “Administrative Expenses,” as said term is defined
in the Rate and Method of Apportionment (together, the “Services Incidental Expenses”).