HomeMy WebLinkAboutItem No. 08 CFD no. 2006-1 SummerlyText File
City of Lake Elsinore 130 South Main Street
Lake Elsinore, CA 92530
www.lake-elsinore.org
File Number: RES 2018-9
Agenda Date: 10/23/2018 Status: Consent AgendaVersion: 1
File Type: ResolutionIn Control: City Council / Successor Agency
Agenda Number: 8)
Page 1 City of Lake Elsinore Printed on 10/18/2018
REPORT TO CITY COUNCIL
To:Honorable Mayor and Members of the City Council
From:Grant Yates, City Manager
Prepared by: Jason Simpson, Assistant City Manager
Date:October 23, 2018
Subject: Community Facilities District No. 2006-1 (Summerly) Special Tax
Amendment
Recommendations
adopt A 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 AN AMENDMENT TO THE RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX FOR IMPROVEMENT AREA II OF CITY OF LAKE
ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
Background
The City of Lake Elsinore (City) formed the City of Lake Elsinore Community Facilities District
No. 2006-1 (Summerly) (District) in 2006 pursuant to the Mello-Roos Community Facilities
District Act of 1982. The District generally encompasses the development within the City known
as “Summerly.” McMillin Summerly, LLC, a Delaware limited liability company (Developer) is
currently the master developer of the Summerly development. Since the District was formed in
2006, the planned product mix within the various portions of the Summerly has changed. To
accommodate such changes in product mix and planned development, the Developer has
requested, and the City has undertaken proceedings relating to the reorganization of
improvement areas within the District and the tax rates within such improvement areas.
Discussion
As a result of further changes in the development plan within Improvement Area II of the
Summerly project, the City has received a petition from the Developer requesting the current
change proceedings, which if approved, will amend the current rate and method of
apportionment of special taxes for Improvement Area II with the first amended rate and method
of apportionment of special taxes (First Amended Rate and Method).
CFD No. 2006-1 (Summerly)
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If approved, the First Amended Rate and Method will reduce the special tax rates to be levied
within Improvement Area II from those currently in effect. The current special tax rates range
from $1,786.01 to $3,057.87 and will be reduced to range from $1,494.00 to $1,797.00 per
single family home.
Adoption of the resolution presented at this meeting is the first step to amend the existing rate
and method of apportionment and will call a public hearing on the levy of the special taxes in
accordance with the First Amended Rate and Method at the City Council meeting to be held on
November 27, 2018. After such public hearing, the City Council, acting as the legislative body
of the District, will formally consider the approval of the First Amended Rate and Method.
Fiscal Impact
The Developer has made a deposit to pay for the costs of the change proceedings described
above. The District will annually levy special taxes on all of the taxable property within
Improvement Area II in accordance with the First Amended Rate and Method in order to pay for
the costs of facilities, debt service on bonds, the services and administration of the District. Any
bonds issued by the District for Improvement Area II are not obligations of the City and will be
secured solely by the Special Taxes levied in Improvement Area II.
Exhibits
A - Resolution
B – Reimbursement Agreement
C – Landowner Petition
RESOLUTION NO. 2018- ________
A 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 AN AMENDMENT TO THE RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX FOR IMPROVEMENT AREA II OF CITY OF
LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
Whereas,after a public hearing, on February 28, 2006, the City Council (Council) of the City of
Lake Elsinore (City) adopted Resolution Nos. 2006-30 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 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 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 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 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 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,
CC Reso. No. 2018-
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the incurring of bonded indebtedness and the increase of the appropriations limit for the District,
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 II of the District
(“Improvement Area II”), to approve a new rate and method of apportionment for Improvement
Area II attached hereto as Attachment “A” (the “First Amended Rate and Method”); and,
Whereas, the District 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 change
proceedings described herein; and
NOW, THEREFORE, THE CITY COUNCIL, ACTING AS THE LEGISLATIVE BODY OF CITY
OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY), DOES
HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOW:
Section 1. Each of the above recitals is true and correct and is adopted by the legislative body
of the District.
Section 2. The Council, acting as the legislative body of the District, declares its intention to
conduct proceedings pursuant to the Act to consider amending and restating the rate and method
of apportionment for Improvement Area II approved in connection with the 2014 Change
Proceedings with the First Amended Rate and Method.
Section 3. The improvements proposed to be financed by the District (the “Improvements”)
are public facilities as defined in the Act. The Improvements and incidental expenses authorized
to be financed by the District are described in Resolution Nos. 2014-010, 2014-011 and 2014-016
adopted by the Council, acting as the legislative body of the District. The City and the Elsinore
Valley Municipal Water District, with respect to certain water and sewer facilities, are authorized
by law to construct, acquire, own and operate such Improvements for the benefit of the District.
The services proposed to be provided within Improvement Area II (the “Services”) are public
services as defined in the Act, The Services authorized to be financed by the District are described
in the Resolution Nos. 2014-010 and 2014-016 adopted by the Council, acting as the legislative
body of the District.
Section 4.A public hearing (the “Hearing”) on the levy of special taxes in Improvement Area
II in accordance with the First Amended Rate and Method shall be held at 7:00 p.m., or as soon
thereafter as practicable, on November 27, 2018, at the City Cultural Center, 183 North Main
Street, Lake Elsinore, California. Should the City Council determine to submit the proposed First
Amended Rate and Method to the qualified electors of Improvement Area II, a special election
will be held to authorize the First Amended Rate and Method in accordance with the procedures
contained in Government Code Section 53326. If such election is held, the proposed voting
procedure at the elections will be a landowner vote with each landowner who is the owner of
record of land within Improvement Area II at the close of the Hearing, or the authorized
representative thereof, having one vote for each acre or portion thereof owned within
Improvement Area II. Ballots for the special election may be distributed by mail or by personal
service.
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Section 5.At the time and place set forth above for the Hearing, any interested person,
including all persons owning lands or registered to vote within Improvement Area II, may appear
and be heard.
Section 6.The City Clerk 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 within Community Facilities District No. 2006-1. The City Clerk is further directed to
mail a copy of the Notice to each of the landowners within the boundaries of Improvement Area
II 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, if
any, and landowners in Improvement Area II 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 8.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 9.This Resolution shall be effective upon its adoption.
Passed and Adopted on this 23rd day of October, 2018.
_____________________________
Natasha Johnson, Mayor
Attest:
_____________________________
Susan M. Domen, MMC
City Clerk
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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. 2018-______ was adopted by the City Council of the City of Lake Elsinore,
California, at the Regular meeting of October 23, 2018, and that the same was adopted by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
___________________________
Susan M. Domen, MMC
City Clerk
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ATTACHMENT “A”
PROPOSED FIRST AMENDED AND RESTATED
RATE AND METHOD OF APPORTIONMENT
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
(IMPROVEMENT AREA II)
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 II ("CFD No. 2006-1 IA II") and
collected each Fiscal Year commencing in Fiscal Year 2019-2020, 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 II, 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 II: 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 II or any designee thereof of complying with arbitrage rebate requirements;
the costs to the City, CFD No. 2006-1 IA II or any designee thereof of complying with disclosure
requirements of the City, CFD No. 2006-1 IA II 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 II 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 II for any other
administrative purposes of CFD No. 2006-1 IA II, 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 authorized 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 II"means Improvement Area II 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 II 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 II 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 II, 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
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individual lots for which building permits may be issued, or (ii) for condominiums, a final map, or
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 II 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 II 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 II 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 II 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 II 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,
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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.
"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 II.
"Special Tax(es)"means any of the special taxes authorized to be levied within CFD No. 2006-
1 IA II 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 II 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 II Bonds,
including but not limited to, credit enhancement and rebate payments on the CFD No. 2006-1 IA
II 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 II 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 II 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
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1.Developed Property
(a) Maximum Special Tax for Facilities
The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Developed
Property shall be the greater of (i) the amount derived by application of the Assigned Special
Tax for Facilities or (ii) the amount derived by application of the Backup Special Tax for
Facilities.
(b) Assigned Special Tax for Facilities
The Fiscal Year 2019-2020 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 II
FISCAL YEAR 2019-2020
Land
Use
Class Description Residential Floor Area
Assigned Special
Tax for Facilities
1 Residential Property Less than 1,500 sq. ft $1,494 per unit
2 Residential Property 1,500 –1,599 sq. ft $1,613 per unit
3 Residential Property 1,600 –1,699 sq. ft $1,640 per unit
4 Residential Property 1,700 –1,799 sq. ft $1,689 per unit
5 Residential Property Greater than 1,799 sq. ft.$1,797 per unit
6 Non-Residential Property N/A $18,467 per Acre
(c) Backup Special Tax for Facilities
The Fiscal Year 2019-2020 Backup Special Tax for Facilities attributableto a Final Subdivision
will equal $18,467, 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 $18,467
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 Facilitiesfor 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
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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 II 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 II 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 2019-2020 Assigned Special Tax for Facilities, identified in Table 1 above,
and Backup Special Tax for Facilities shall increase, commencing on July 1, 2020 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 2019-2020 Maximum Special Tax for Facilities for Approved Property, Taxable
Property Owner Association Property, Taxable Public Property, and Undeveloped Property shall
be $18,467 per Acre and shall increase thereafter, commencing on July 1, 2020 and on July 1 of
CC Reso. No. 2018-
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A-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 2019-2020 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
II Bonds have already been issued or the City Council has covenanted that it will not issue any
additional CFD No. 2006-1 IA II 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 II.
CC Reso. No. 2018-
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E.EXEMPTIONS
No Special Tax for Facilities shall be levied on up to 11.94 Acres of Property Owner Association
Property and/or Public Property in CFD No. 2006-1 IA II. 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 II 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 II, that all expected building permits have been issued.
"CFD Public Facilities Costs"means either $6,000,000 in 2019 dollars, which shall increase by
the Construction Inflation Index on July 1, 2020, 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 II under the authorized bonding program for CFD
No. 2006-1 IA II, 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 II 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.
CC Reso. No. 2018-
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A-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 II 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.
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
II based on the Developed Property Special Tax for Facilities which could be levied in the
CC Reso. No. 2018-
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A-10
current Fiscal Year on all expected development through Buildout of CFD No. 2006-1 IA II,
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 II, 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 II 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 II Bonds, and
the costs of recording any notices to evidence the prepayment and the redemption (the
"Administrative Fees and Expenses").
13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a)
the expected reduction in the reserve requirement (as defined in the Indenture), if any,
associated with the redemption of Previously Issued Bonds as a result of the prepayment, or
(b) the amount derived by subtracting the new reserve requirement (as defined in the
Indenture) in effect after the redemption of Previously Issued Bonds as a result of the
prepayment from the balance in the reserve fund on the prepayment date, but in no event
shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount
CC Reso. No. 2018-
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A-11
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 II 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 II.
The Special Tax for Facilities Prepayment Amount may be insufficient to redeem a full
$5,000 increment of CFD No. 2006-1 IA II 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 II 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 II (after
excluding 11.94 Acres of Property Owner Association Property and/or Public Property in CFD
No. 2006-1 IA II as set forth in Section E) both prior to and after the proposed prepayment is
at least equal to the sum of (i) the Administrative Expenses, as defined in Section A above,
and (ii) 1.10 times maximum annual debt service, in each remaining Fiscal Year on the
Outstanding Bonds.
2.Prepayment in Part
The Special Tax for Facilities on an Assessor's Parcel of Developed Property or an
Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be
partially prepaid. The amount of the prepayment shall be calculated as in Section G.1.; except
that a partial prepayment shall be calculated according to the following formula:
CC Reso. No. 2018-
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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 II 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 2059-2060, 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 II 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 II have been satisfied.
I. SPECIAL TAX FOR SERVICES
The following additional definitions apply to this Section I:
“Developed Multifamily Unit” means a residential dwelling unit within a building in which
each of the individual dwelling units has or shall have at least one common wall with another
dwelling unit and a building permit has been issued by the City for such dwelling unit on or prior
to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied.
“Developed Single Family Unit”means a residential dwelling unit other than a
Developed Multifamily Unit on an Assessor’s Parcel for which a building permit has been issued
by the City on or prior to May 1 preceding the Fiscal Year in which the Special Tax for Services
is being levied.
“Maximum Special Tax for Services”means the maximum Special Tax for Services
that can be levied by CFD No. 2006-1 IA II in any Fiscal Year on any Assessor’s Parcel.
“Operating Fund”means a fund that shall be maintained for CFD No. 2006-1 IA II for
any Fiscal Year to pay for the actual costs of maintenance related to the Services, and the
applicable Administrative Expenses.
CC Reso. No. 2018-
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“Operating Fund Balance”means the amount of funds in the Operating Fund at the end
of the preceding Fiscal Year.
“Services” means maintenance services including but not limited to (i) maintenance and
lighting of parks, (ii) maintenance of open space, (iii) maintenance and operation of water quality
improvements, and (iv) fund an operating reserve for the costs of such services as determined by
the CFD Administrator.
“Special Tax for Services”means any of the special taxes authorized to be levied within
CFD No. 2006-1 IA II 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 II equal to (i) the budgeted costs directly related to the Services,
including maintenance, repair and replacement of certain components of the Services 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 II 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 2019-2020 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 2019-2020 shall be $319.31 per
Developed Single Family Unit, $159.67 per Developed Multifamily Unit, and $719 per Acre for
each Assessor’s Parcel of Non-Residential Property.
On each July 1, commencing July 1, 2020, 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 II. 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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A-14
REIMBURSEMENT AGREEMENT
CITY OF LAKE ELSINORE (SUMMERLY)
COMMUNITY FACILITIES DISTRICT NO. 2006-1
IMPROVEMENT AREA II
CHANGE PROCEEDINGS
THIS REIMBURSEMENT AGREEMENT (this “Agreement”) dated as of October 1, 2016 is
entered into by and between the City of Lake Elsinore, a general law city organized and existing under
the laws and constitution of the State of California (the “City”), and McMillin Summerly, LLC, a
Delaware limited liability company (the “Owner”).
R E C I T A L S :
A.The Owner owns approximately 33 acres of land described in Exhibit A attached
hereto, which land is included within Improvement Area II (“Improvement Area II”) of City of Lake
Elsinore Community Facilities District No. 2006-1 (Summerly) (the “District”) previously formed by
the City pursuant to the Mello-Roos Community Facilities Act of 1982 (Government Code
Section 53311 et seq.) (the “Act”);
B.The Owner desires to amend the rate and method of apportionment of special tax for
Improvement Area II pursuant to the Act (such proceedings referred to herein as the “Change
Proceedings”).
B.The City and the Owner are desirous of entering into this Agreement in order to provide
a mechanism by which the Owner may advance certain funds related to the cost of the Change
Proceedings, such costs to be reimbursed to the Owner for the amounts advanced hereunder, from
proceeds of bonds issued by the District for Improvement Area II, if any.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein,
the parties hereto agree as follows:
1.Recitals. Each of the above recitals is incorporated herein and is true and correct.
2.Change Proceedings.
(a)At the request of the Owner, the City will undertake to complete the Change
Proceedings. The City will retain, at the Owner’s expense, the necessary consultants to analyze the
proposed Change Proceedings, including an engineer, special tax consultant, financial advisor, bond
counsel, market absorption consultant, appraiser and other consultants deemed necessary by the City.
In addition, City staff time spent in connection with the Change Proceedings shall be at Owner’s
expense.
(b)In order to begin the process of analyzing the Change Proceedings, the Owner
has advanced to the City a sum totaling $35,000. From time to time, the Owner shall make additional
advances to the City within 15 days following receipt from the City of a request for an additional
advance to cover the costs of the Change Proceedings. In the event the Owner does not deliver the
requested amount to the City within such 15-day period, the City will have no obligation to proceed
2
with the analysis unless and until such additional advance is received. The Owner shall have the right
to notify the City at any time, in writing, of its intention to abandon the Change Proceedings. Upon
receipt of such notice, the City shall instruct its consultants to cease work as soon as practicable. The
Owner shall be responsible to pay all costs and expenses incurred by the City or any City consultant
or advisor prior to the date on which the City’s consultants are notified of the Owner’s notice of
abandonment. Notwithstanding a decision of the Owner to abandon the Change Proceedings, the City
may, in its sole discretion, elect to proceed with the Change Proceedings with funds other than those
of the Owner; provided, however, that, in executing this Agreement, the Owner shall not be deemed to
have waived their right to object to the Change Proceedings.
(c)The City will provide to the Owner on request a summary of how the advances
have been spent and the unexpended balance remaining. The amounts advanced by the Owner will be
reimbursable to the Owner, without interest, from the proceeds of bonds issued by the District, if any.
In the event that bonds are not issued to provide a source of reimbursement to the Owner, the City shall
have no liability to the Owner to reimburse them for any of amounts previously advanced by the Owner
and expended by the City in accordance with this Agreement.
3.Reimbursement Procedure. The City shall return any funds which have been advanced
by the Owner which are not expended on the purposes set forth in Section 2 above. Such returned
funds shall be without interest.
4.Abandonment of Change Proceedings. The Owner understands that the undertaking
of the Change Proceedings shall be in the sole discretion of the City. No provision of this Agreement
shall be construed as a promise, warranty or agreement by the City to undertake the Change
Proceedings or to issue any bonds. The City shall have no liability to Owner for its decision not to
undertake the Change Proceedings or issue bonds.
5.Indemnification and Hold Harmless. The Owner hereby assumes the defense of, and
indemnifies and saves harmless, jointly and severally, the City and each of its officers, directors,
employees and agents, from and against all actions, damages, claims, losses or expenses of every type
and description to which they may be subjected or put, by reason of, or arising out of any acts or
omissions taken by the Owner or any of the Owner’s officers, employees, contractors and agents with
respect to the Change Proceedings.
6.Notices. Any notice to be provided pursuant to this Agreement shall be delivered to
the following addresses:
Owner McMillin Summerly, LLC
4343 Von Karman Avenue
Newport Beach, CA 92660
Attention: Brian Milich
Telephone: (949) 955-0984
Email: bmilich@pacv.com
City:City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
3
Attn: Assistant City Manager
Telephone: (951) 674-3124
Email: jsimpson@lake-elsinore.org
With a copy to:Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Attention: Brian Forbath, Esq.
Telephone: (949) 725-4193
Email: bforbath@sycr.com
Each party may change its address for delivery of notice by delivering written notice of such
change of address to the other party.
7.Assignment. The Ownermay not assign its interest in this Agreement without the prior
written consent of the City.
8.Severability. If any part of this Agreement is held to be illegal or unenforceable by a
court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest
extent permitted by law.
9.Entire Agreement. This Agreement contains the entire agreement between the parties
with respect to the matters provided for herein.
10.Amendments. This Agreement may be amended or modified only by written
instrument signed by all parties.
11.Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original.
12.Governing Law. This Agreement and any dispute arising hereunder shall be governed
by and interpreted in accordance with the laws of the State of California.
13.No Third Party Beneficiaries. No person or entity shall be deemed to be a third party
beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer
upon any person or entity, other than the City and the Owner, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
14.Singular and Plural; Gender. As used herein, the singular of any word includes the
plural, and terms in the masculine gender shall include the feminine.
15.Termination. This Agreement shall terminate and be of no further force and effect on
October 1, 2023 unless expressly amended by the parties; provided, however, that the Owner’s
obligations under Section 5 shall survive the termination and the City’s obligation to provide
reimbursement in accordance with Section 3 for expenses incurred prior to the termination date shall
also survive termination.
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first
above written.
CITY OF LAKE ELSINORE, a political subdivision
of the State of California
By:
Assistant City Manager
ATTEST:
By:
Susan M. Domen, MMC, City Clerk
MCMILLIN SUMMERLY, LLC, a Delaware limited
liability company
By: PV Development Management LLC, a Delaware
limited liability company, as property manager
By: Pacific Ventures Management LLC, a Delaware
limited liability company, its Manager
By:
Name:
Title:
APPROVED AS TO FORM:
CITY ATTORNEY
By:
Barbara Z. Leibold, City Attorney
A-1
EXHIBIT A
DESCRIPTION OF PROPERTY
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
Assessor’s Parcel Nos:
371-040-014
371-040-017
371-040-018
371-040-038
1
PETITION TO THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE
REQUESTING INSTITUTION OF CHANGE PROCEEDINGS FOR
IMPROVEMENT AREA II OF CITY OF LAKE ELSINORE COMMUNITY
FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
1.The undersigned (the “Owner”) is the owner of more than 10% of the land described
in Exhibit A hereto (the “Property”), which land is all of the land included within the boundaries of
Improvement Area II (“Improvement Area II”) of City of Lake Elsinore Community Facilities
District No. 2006-1 (Summerly) (the “District”). The Property is located within the City of Lake
Elsinore (the “City”) in the County of Riverside.
2.The Owner requests, pursuant to Chapter 2.5 (commencing with Section 53311),
Part 1, Division 2, Title 5, of the Government Code of the State of California, commonly known as
the “Mello-Roos Community Facilities Act of 1982” (the “Act”), that the City Council of the City
(the “City Council”) institute proceedings to approve the new rate and method of apportionment for
Improvement Area II, attached hereto as Exhibit B (the “First Amended Rate and Method”);.
3.The Owner further requests that the City Council authorize the levy of special taxes
in accordance with the First Amended Rate and Method in Improvement Area II to pay the costs of
the facilities (the “Facilities”) and the services and the incidental costs authorized to be financed by
the District and to pay principal of, interest and premium, if any, on the bonds in order to contribute
to the financing of such facilities and costs.
4.The Owner further requests that, upon the sale of bonds, the City Council, as
legislative body of the District, annually levy special taxes for the Facilities on the property within
Improvement Area II for the construction, acquisition and rehabilitation of the Facilities, for the
payment of the aggregate amount of principal of and interest owing on the bonds in each fiscal year,
including the maintenance of reserves therefor, and for the payment of administrative expenses of the
District.
5.The Owner has advanced to the City the amounts necessary to pay for the costs
related to the change proceedings for Improvement Area II, which amounts will be reimbursed,
without interest, from the proceeds of the first sale of the bonds, if any. The reimbursement of such
amounts is expected to be governed by the terms of that certain Reimbursement Agreement to be
entered into by and between the City and the Owner relating to Improvement Area II. If bonds are
not sold, the City will have no obligation to reimburse amounts expended for costs incurred but will
reimburse any unexpended amounts advanced by the Owner as set forth in the Reimbursement
Agreement.
2
Dated: October __, 2018
MCMILLIN SUMMERLY, LLC, a Delaware limited
liability company
By: PV Development Management LLC, a Delaware
limited liability company, as property manager
By: Pacific Ventures Management LLC, a Delaware
limited liability company, its Manager
By:
Name:
Title:
A-1
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
Assessor’s Parcel Nos:
371-040-014
371-040-017
371-040-018
371-040-038
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EXHIBIT B
PROPOSED AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT
OF IMPROVEMENT AREA II OF CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SUMMERLY)
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 II ("CFD No. 2006-1 IA II") and collected each
Fiscal Year commencing in Fiscal Year 2019-2020, 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 II, 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 II: 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 II or any designee thereof of
complying with arbitrage rebate requirements; the costs to the City, CFD No. 2006-1 IA II or any
designee thereof of complying with disclosure requirements of the City, CFD No. 2006-1 IA II 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 II 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 II for any
other administrative purposes of CFD No. 2006-1 IA II, 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 authorized 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 II"means Improvement Area II 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 II 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 II 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 II, 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 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.
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"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 II 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 II 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 II 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 II 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 II 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.
"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 II.
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"Special Tax(es)"means any of the special taxes authorized to be levied within CFD No. 2006-1 IA II
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 II 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 II Bonds, including but not limited
to, credit enhancement and rebate payments on the CFD No. 2006-1 IA II 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 II
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 II 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
(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
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The Fiscal Year 2019-2020 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 II
FISCAL YEAR 2019-2020
Land Use
Class Description Residential Floor Area
Assigned Special Tax
for Facilities
1 Residential Property Less than 1,500 sq. ft $1,494 per unit
2 Residential Property 1,500 –1,599 sq. ft $1,613 per unit
3 Residential Property 1,600 –1,699 sq. ft $1,640 per unit
4 Residential Property 1,700 –1,799 sq. ft $1,689 per unit
5 Residential Property Greater than 1,799 sq. ft.$1,797 per unit
6 Non-Residential Property N/A $18,467 per Acre
(c) Backup Special Tax for Facilities
The Fiscal Year 2019-2020 Backup Special Tax for Facilities attributable to a Final Subdivision will
equal $18,467, 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 $18,467 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 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.
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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 II 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 II 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 2019-2020 Assigned Special Tax for Facilities, identified in Table 1 above, and
Backup Special Tax for Facilities shall increase, commencing on July 1, 2020 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 2019-2020 Maximum Special Tax for Facilities for Approved Property, Taxable Property
Owner Association Property, Taxable Public Property, and Undeveloped Property shall be $18,467 per
Acre and shall increase thereafter, commencing on July 1, 2020 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 2019-2020 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:
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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 II Bonds have
already been issued or the City Council has covenanted that it will not issue any additional CFD No.
2006-1 IA II 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 II.
E.EXEMPTIONS
No Special Tax for Facilities shall be levied on up to 11.94 Acres of Property Owner Association
Property and/or Public Property in CFD No. 2006-1 IA II. 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.
B-8
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 II 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 II, that all expected building permits have been issued.
"CFD Public Facilities Costs"means either $6,000,000 in 2019 dollars, which shall increase by the
Construction Inflation Index on July 1, 2020, 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 II under the authorized bonding program for CFD No. 2006-1 IA II, 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 II 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.
"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
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occurring date that notice of redemption of CFD No. 2006-1 IA II 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.
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 II 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 II, 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 II,
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").
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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 II 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 II Bonds, and the costs of recording
any notices to evidence the prepayment and the redemption (the "Administrative Fees and
Expenses").
13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the
expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the
redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by
subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of
Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the
prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall
be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below
100% 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 II 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 II.
The Special Tax for Facilities Prepayment Amount may be insufficient to redeem a full
$5,000 increment of CFD No. 2006-1 IA II 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 II Bonds or to make debt service payments.
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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 II (after excluding 11.94 Acres of
Property Owner Association Property and/or Public Property in CFD No. 2006-1 IA II as set forth in
Section E) both prior to and after the proposed prepayment is at least equal to the sum of (i) the
Administrative Expenses, as defined in Section A above, and (ii) 1.10 times maximum annual debt
service, in each remaining Fiscal Year on the Outstanding Bonds.
2.Prepayment in Part
The Special Tax for Facilities on an Assessor's Parcel of Developed Property or an Assessor's
Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid.
The amount of the prepayment shall be calculated as in Section G.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 II
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 2059-2060, 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 II
Bonds have been paid; (ii) all Authorized Facilities have been acquired and all reimbursements
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required by the Funding Agreement have been paid; and (iii) all other obligations of CFD No. 2006-1
IA II have been satisfied.
I. SPECIAL TAX FOR SERVICES
The following additional definitions apply to this Section I:
“Developed Multifamily Unit” means a residential dwelling unit within a building in which
each of the individual dwelling units has or shall have at least one common wall with another dwelling
unit and a building permit has been issued by the City for such dwelling unit on or prior to May 1
preceding the Fiscal Year in which the Special Tax for Services is being levied.
“Developed Single Family Unit”means a residential dwelling unit other than a Developed
Multifamily Unit on an Assessor’s Parcel for which a building permit has been issued by the City on or
prior to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied.
“Maximum Special Tax for Services”means the maximum Special Tax for Services that can be
levied by CFD No. 2006-1 IA II in any Fiscal Year on any Assessor’s Parcel.
“Operating Fund”means a fund that shall be maintained for CFD No. 2006-1 IA II for any
Fiscal Year to pay for the actual costs of maintenance related to the Services, 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.
“Services” means maintenance services including but not limited to (i) maintenance and lighting
of parks, (ii) maintenance of open space, (iii) maintenance and operation of water quality improvements,
and (iv) fund an operating reserve for the costs of such services as determined by the CFD Administrator.
“Special Tax for Services”means any of the special taxes authorized to be levied within CFD
No. 2006-1 IA II 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 II equal to (i) the budgeted costs directly related to the Services, including
maintenance, repair and replacement of certain components of the Services 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 II 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 2019-2020 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.
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The Maximum Special Tax for Services for Fiscal Year 2019-2020 shall be $319.31 per Developed
Single Family Unit, $159.67 per Developed Multifamily Unit, and $719 per Acre for each Assessor’s
Parcel of Non-Residential Property.
On each July 1, commencing July 1, 2020, 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 II. 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.