HomeMy WebLinkAboutItem No. 21 Reso Consideration Change Proceeding CFD No. 2019-2 Nichols RanchCity Council Agenda Report
City of Lake Elsinore 130 South Main Street
Lake Elsinore, CA 92530
www.lake-elsinore.org
File Number: ID# 19-800
Agenda Date: 12/8/2020 Status: Approval FinalVersion: 1
File Type: Council Consent
Calendar
In Control: City Council / Successor Agency
Agenda Number: 21)
Resolution of Consideration of Change Proceedings for Community Facilities District No.
2019-2 (Nichols Ranch)
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA,
ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2019-2 OF THE
CITY OF LAKE ELSINORE (NICHOLS RANCH), DECLARING ITS INTENTION TO CONSIDER AN
AMENDMENT TO THE RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX AND TO
INCREASE THE AMOUNT OF AUTHORIZED BONDED INDEBTEDNESS TO BE INCURRED BY THE
DISTRICT.
Page 1 City of Lake Elsinore Printed on 12/3/2020
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: December 8, 2020
Subject: Resolution of Consideration of Change Proceedings for Community
Facilities District No. 2019-2 (Nichols Ranch)
Recommendation
Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,
CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES
DISTRICT NO. 2019-2 OF THE CITY OF LAKE ELSINORE (NICHOLS RANCH), DECLARING
ITS INTENTION TO CONSIDER AN AMENDMENT TO THE RATE AND METHOD OF
APPORTIONMENT OF SPECIAL TAX AND TO INCREASE THE AMOUNT OF AUTHORIZED
BONDED INDEBTEDNESS TO BE INCURRED BY THE DISTRICT.
Background
The City of Lake Elsinore (the “City”) formed the Community Facilities District No. 2019-2 of the
City of Lake Elsinore (Nichols Ranch) (the “District”) in 2019 pursuant to the Mello-Roos
Community Facilities District Act of 1982. The District is approximately 58 acres planned for 168
residential lots within the City. Such property is located to the east of Interstate 15 and is
bordered by Nichols Road to the south. Nichols Rd. Partners, LLC, is the landowner within the
District (the “Developer”).
Due to revisions in the proposed product mix within the District, the Developer has requested
that the District undertake proceedings to (i) amend the Rate and Method of Apportionment of
Special Taxes with the First Amended and Restated Rate and Method of Apportionment
attached to the Resolution of Consideration presented at this meeting (the “Amended RMA”)
and (ii) increase the amount of bonded indebtedness authorized to be incurred by the District.
Documents to be Approved
Approval of the attached Resolution is the first step in the process to effectuate the changes
discussed above. The attached Resolution declares the District’s intention to consider the
proposed changes, calls a public hearing on the proposed changes and approves the form of a
reimbursement agreement with the Developer (the “Reimbursement Agreement”) relating to the
costs of the proceedings necessary to accomplish such changes.
CFD 2019-2 Change Proceeding – Nichols Ranch
December 8, 2020
Page 2
Fiscal Impact
The Developer has made a deposit to pay for the costs of the change proceedings. The
Reimbursement Agreement provides that the Developer will be reimbursed for such costs if and
when bonds are issued for the District.
The District will annually levy special taxes on all of the taxable property within the District in
accordance with the First Amended RMA 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 are
not obligations of the City and will be secured solely by the Special Taxes levied in the District.
Exhibits
A - Resolution of Consideration
B - Reimbursement Agreement
C - Landowner Petition
RESOLUTION NO. 2020-___
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE,
CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES
DISTRICT NO. 2019-2 OF THE CITY OF LAKE ELSINORE (NICHOLS RANCH),
DECLARING ITS INTENTION TO CONSIDER AN AMENDMENT TO THE RATE AND
METHOD OF APPORTIONMENT OF SPECIAL TAX AND TO INCREASE THE
AMOUNT OF AUTHORIZED BONDED INDEBTEDNESS TO BE INCURRED BY THE
DISTRICT
Whereas, on October 22, 2019, the City Council of the City of Lake Elsinore (the “City Council”)
adopted Resolution No. 2019-083 stating its intention to form Community Facilities District No.
2019-2 of the City of Lake Elsinore (Nichols Ranch) (“Community Facilities District No. 2019-2”
or the “District”) pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being
Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California
(the “Act”); and,
Whereas, on October 22, 2019, the City Council also adopted Resolution No. 2019-084 stating
its intention to incur bonded indebtedness within the District in the amount not to exceed
$10,000,000 to finance the facilities and improvements identified in Attachment “B” to Resolution
No. 2019-083 (collectively, the “Improvements”); and the incidental expenses to be incurred in
financing the Improvements and forming and administering the District (the “Incidental
Expenses”); and,
Whereas, a notice calling a public hearing on December 10, 2019, was published as required by
law relative to the intention of the City Council to establish Community Facilities District No. 2019-
2 and to incur bonded indebtedness within Community Facilities District No. 2019-2; and,
Whereas, on December 10, 2019, the City Council conducted a noticed public hearing to
determine whether it should proceed with the establishment of Community Facilities District
No. 2019-2, issue bonds for the benefit of Community Facilities District No. 2019-2 to pay for the
Improvements and Incidental Expenses and authorize the rate and method of apportionment of
the special taxes in the form attached as Attachment “C” to Resolution No. 2019-083 (the “Rate
and Method”) to be levied within Community Facilities District No. 2019-2 for the purposes
described in Resolution No. 2019-083; and,
Whereas, at the December 10, 2019, public hearing all persons desiring to be heard on all matters
pertaining to the establishment of Community Facilities District No. 2019-2, the levy of the special
taxes in accordance with the Rate and Method and the issuance of bonds within Community
Facilities District No. 2019-2 to pay for the cost of the proposed Improvements and Incidental
Expenses were heard and a full and fair hearing was held; and,
Whereas, after the public hearing, on December 10, 2019, the City Council adopted Resolution
Nos. 2019-095 (the “Resolution of Formation”) and 2019-096 (the “Resolution to Incur Bonded
Indebtedness”) which formed the District and called a special election on December 10, 2019,
within the District on three propositions relating to the levying of the special taxes, 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 December 10, 2019; and,
Whereas, pursuant to Resolution No. 2019-097, adopted on December 10, 2019, the City
Council, acting as the legislative body of Community Facilities District No. 2019-2, declared the
CC Res. No. 2020 - _______
Page 2 of 18
results of the special election and directed the recording of a Notice of Special Tax Lien within
Community Facilities District No. 2019-2; and,
Whereas, the District has received a petition signed by Nichols Rd. Partners, LLC, a California
limited liability company (the “Owner”), which owns all of the land within Community Facilities
District No. 2019-2, the boundaries of which are described herein in Attachment “A,” which petition
meets the requirements of Section 53332 of the Act, requesting that the District initiate
proceedings to: (i) approve the new rate and method of apportionment for Community Facilities
District No. 2019-2, attached hereto as Attachment “B” (the “First Amended and Restated Rate
and Method”) and (ii) increase the amount of bonded indebtedness authorized to be incurred by
the District from $10,000,000 to $11,000,000, to finance the Improvements and the Incidental
Expenses; 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 Developer in connection with the change
proceedings described herein.
NOW, THEREFORE, THE CITY COUNCIL, ACTING AS THE LEGISLATIVE BODY OF
COMMUNITY FACILITIES DISTRICT NO. 2019-2 OF THE CITY OF LAKE ELSINORE
(NICHOLS RANCH), DOES HEREBY RESOLVE, ORDER AND DETERMINE AS FOLLOWS:
Section 1. Each of the above recitals is true and correct and is adopted by the legislative body
of the District.
Section 2. The City Council, acting as the legislative body of the District, declares its intention to
conduct proceedings pursuant to the Act to consider: (i) amending and restating the Rate and
Method with the First Amended and Restated Rate and Method; and (ii) increasing the amount of
bonded indebtedness authorized to be incurred by the District from $10,000,000 to $11,000,000
and.
Section 3. The Improvements proposed to be provided within the District are public facilities
as defined in the Act. The Improvements and Incidental Expenses authorized to be financed by
the District are described in the Resolution of Formation. The City and the Elsinore Valley
Municipal Water District, with respect to certain water and sewer facilities, are authorized by law
to construct, acquire, own and operate the Improvements for the benefit of the District.
Section 4. A public hearing (the “Hearing”) on the levy of special taxes in the District in
accordance with the First Amended and Restated Rate and Method, shall be held at 7:00 p.m.,
or as soon thereafter as practicable, on January 12, 2021, at the City Cultural Center, 183 North
Main Street, Lake Elsinore, California. Notwithstanding the foregoing, consistent with the
Governor of the State of California’s Executive Order N-29-20 or other applicable directives, the
Hearing may be held remotely with public participation via methods to be set forth in the City
Council’s agenda. Should the City Council determine to submit the proposed First Amended and
Restated Rate and Method and the proposed increase in the amount of bonded indebtedness
authorized to be issued by the District to the qualified electors of the District, a special election
will be held to authorize the First Amended and Restated Rate and Method and the increase in
the amount of bonded indebtedness authorized to be issued by the District 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 the District at the close of the Hearing, or the authorized
CC Res. No. 2020 - _______
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representative thereof, having one vote for each acre or portion thereof owned within the District.
Ballots for the special election may be distributed by mail or by personal service.
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 the District, 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. 2019-2. The City Clerk is further directed to
mail a copy of the Notice to each of the landowners within the boundaries of Community Facilities
District No. 2019-2 at least 15 days prior to the Hearing. The Notice shall contain the text or a
summary of this Resolution, the time and place of the Hearing, a statement that the testimony of
all interested persons or taxpayers will be heard, a description of the protest rights of the
registered voters and landowners in the proposed district and a description of the proposed voting
procedure for the election required by the Act. Such publication shall be completed at least seven
(7) days prior to the date of the Hearing.
Section 7. 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 8. This Resolution shall be effective upon its adoption.
Passed and Adopted on this 8th day of December, 2020.
_____________________________
Brian Tisdale, Mayor
Attest:
_____________________________
Candice Alvarez, MMC
City Clerk
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STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF LAKE ELSINORE )
I, Candice Alvarez, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that
Resolution No. 2020-______ was adopted by the City Council of the City of Lake Elsinore,
California, at the Regular meeting of December 8, 2020 and that the same was adopted by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
________________________________
Candice Alvarez, MMC
City Clerk
CC Res. No. 2020 - _______
Page 1 of 18
ATTACHMENT “A”
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
Assessor Parcel Nos. (as set forth in the County of Riverside Assessor’s Fiscal Year 2020-21
Roll):
389-200-045
389-200-047
CC Res. No. 2020 - _______
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ATTACHMENT “B”
PROPOSED FIRST AMENDED AND RESTATED
RATE AND METHOD OF APPORTIONMENT OF
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH)
A Special Tax (all capitalized terms are defined in Section A, “Definitions”, below) shall be
applicable to each Assessor’s Parcel of Taxable Property located within the boundaries of the
City of Lake Elsinore Community Facilities District No. 2019-2 (Nichols Ranch) ("CFD No. 2019-
2"). The amount of Special Tax to be levied in each Fiscal Year on an Assessor’s Parcel shall be
determined by the City Council of the City of Lake Elsinore, acting in its capacity as the legislative
body of CFD No. 2019-2, by applying the appropriate Special Tax for Developed Property,
Approved Property, Undeveloped Property, and Provisional Undeveloped Property that is not
Exempt Property as set forth below. All of the real property, unless exempted by law or by the
provisions hereof in Section F, shall be taxed for the purposes, to the extent and in the manner
herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's
Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown
on the applicable final map, parcel map, condominium plan, or other recorded County parcel map
or instrument. The square footage of an Assessor’s Parcel is equal to the Acreage multiplied by
43,560.
"Act" means the Mello-Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5
(commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code of the
State of California.
"Administrative Expenses" means the following actual or reasonably estimated costs directly
related to the administration of CFD No. 2019-2: the costs of computing the Special Taxes and
preparing the Special Tax collection schedules (whether by the City or designee thereof or both);
the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting
Special Taxes to the Trustee; the costs of the Trustee (including legal counsel) in the discharge
of the duties required of it under the Indenture; the costs to the City, CFD No. 2019 -2 or any
designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No.
2019-2 or any designee thereof of complying with disclosure requirements of the City, CFD No.
2019-2 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 t o
public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2019 -2 or any
designee thereof related to an appeal of the Special Tax; the costs associated with the release of
funds from an escrow account; and the City’s annual administration fees and third party expenses.
Administration Expenses shall also include amounts estimated by the CFD Administrator or
advanced by the City or CFD No. 2019-2 for any other administrative purposes of CFD No. 2019-
2, including attorney’s fees and other costs related to commencing and pursuing to completion
any foreclosure of delinquent Special Taxes.
"Approved Property" means all Assessor’s Parcels of Taxable Property: (i) that are included in
a Final Map that was recorded prior to the January 1st preceding the Fiscal Year in which the
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Special Tax is being levied, (ii) and has an assigned Assessor’s Parcel Number from the County
shown on an Assessor’s Parcel Map for the individual lot included on the Final Map, and (iii) 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.
"Assessor’s Parcel Map" means an official map of the Assessor of the County designating
parcels by Assessor’s Parcel Number.
"Assessor’s Parcel Number" means that number assigned to an Assessor’s Parcel by the
County for purposes of identification.
"Assigned Special Tax" means the Special Tax of that name described in Section D below.
"Backup Special Tax" means the Special Tax of that name described in Section D below.
"Boundary Map" means a recorded map of the CFD which indicates the boundaries of the CFD.
"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 of CFD No. 2019-2 have been pledged.
"Building Permit" means the first legal document issued by a local agency giving official
permission for new construction. For purposes of this definition, “Building Permit” may or may not
include any subsequent building permit document(s) authorizing new construction on an
Assessor’s Parcel that are issued or changed by the City after the first original issuance, as
determined by the CFD Administrator as necessary to fairly allocate Special Tax to the Assessor’s
Parcel, provided that following such determination the Maximum Special Tax that may be levied
on all Assessor’s Parcels of Taxable Property will be at least 1.1 times maximum annual debt
service on all outstanding Bonds plus the estimated annual Administrative Expenses.
"Building Square Footage" or "BSF" means the square footage of assessable internal living
space, exclusive of garages or other structures not used as living space, as determined by
reference to the Building Permit for such Assessor’s Parcel.
"Calendar Year" means the period commencing January 1 of any year and ending the following
December 31.
“CFD Administrator" means an official of the City, or designee thereof, responsible for
determining the Special Tax Requirement, and providing for the levy and collection of the Special
Taxes.
"CFD” or “CFD No. 2019-2" means Community Facilities District No. 2019-2 (Nichols Ranch)
established by the City under the Act.
“City” means the City of Lake Elsinore.
"City Council" means the City Council of the City of Lake Elsinore, acting as the Legislative
Body of CFD No. 2019-2.
CC Res. No. 2020 - _______
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“Condominium Plan" means a condominium plan as set forth in the California Civil Code Section
4200 et seq.
"County" means the County of Riverside.
"Developed Property" means all Assessor’s Parcels that: (i) 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) has an Assessor’s Parcel Number from the County shown on an Assessor’s Parcel
Map for the individual lot included on the Final Map, and (iii) a Building Permit for new construction
was issued on or before May 1st preceding the Fiscal Year in which the Special Tax is being
levied.
"Exempt Property" means all Assessor’s Parcels designated as being exempt from Special
Taxes as provided for in Section F.
"Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line
adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et
seq.) or recordation of a Condominium Plan pursuant to California Civil Code Section 4200 et
seq. that creates individual lots for which Building Permits may be issued without further
subdivision.
"Fiscal Year" means the period commencing on July 1st of any year and ending the following
June 30th.
“Indenture” means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to
time, and any instrument replacing or supplementing the same.
“Land Use Category” means any of the categories listed in Table 1 of Section D.
"Maximum Special Tax" means for each Assessor’s Parcel, the maximum Special Tax,
determined in accordance with Section D below, that can be levied by CFD No. 2019-2 in any
Fiscal Year on such Assessor’s Parcel.
“Multifamily Property” means all Assessor’s Parcels of Developed Property for which a Building
Permit has been issued for the purpose of constructing a building or buildings comprised of
attached Residential Units available for rental by the general public, not for sale to an end user,
and under common management, as determined by the CFD Administrator.
"Non-Residential Property" or “NR” means all Assessor's Parcels for which a building permit(s)
was issued or will be issued for a non-residential use. The CFD Administrator shall make the
determination if an Assessor’s Parcel is Non-Residential Property.
"Partial Prepayment Amount" means the amount required to prepay a portion of the Special
Tax obligation for an Assessor’s Parcel, as described in Section G.2.
"Prepayment Amount" means the amount required to prepay the Special Tax obligation in full
for an Assessor’s Parcel, as described in Section G.1.
“Proportionately” means for Taxable Property that is (i) Developed Property, that the ratio of the
actual Special Tax levy to the Assigned Special Tax is the same for all Assessor’s Parcels of
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Developed Property, (ii) Approved Property, that the ratio of the actual Special Tax levy to the
Maximum Special Tax is the same for all Assessor’s Parcels of Approved Property, and (iii)
Undeveloped Property, or Provisional Undeveloped Property, that the ratio of the actual Special
Tax levy per Acre to the Maximum Special Tax per Acre is the same for all Assessor’s Parcels of
Undeveloped Property, or Provisional Undeveloped Property, as applicable.
"Provisional Undeveloped Property" means all Assessor’s Parcels of Taxable Property that
would otherwise be classified as Exempt Property pursuant to the provisions of Section F, but
cannot be classified as Exempt Property because to do so would be reduce the Acreage of all
Taxable Property below the required minimum Acreage set forth in Sections F.
"Residential Property" means all Assessor’s Parcels of Developed Property for which a building
permit has been issued for purposes of constructing one or more Residential Units.
“Residential Unit” or "RU" means a residential unit that is used or intended to be used as a
domicile by one or more persons, as determined by the CFD Administrator.
“Single Family Residential Property” means all Assessor’s Parcels of Residential Property
other than Multifamily Property.
"Special Tax" means any of the special taxes authorized to be levied within CFD No. 2019-2
pursuant to the Act to fund the Special Tax Requirement.
"Special Tax Requirement " means the amount required in any Fiscal Year to pay: (i) the debt
service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences
in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of
funds from an escrow account, (iv) any amount required to replenish any reserve funds
established in association with the Bonds, (v) an amount equal to any anticipated shortfall due to
Special Tax delinquencies, and (vi) for the collection or accumulation of funds for the acquisition
or construction of facilities authorized by CFD No. 2019-2 or the payment of debt services on
Bonds anticipated to be issued, provided that the inclusion of such amount does not cause an
increase in the levy of Special Tax on Approved Property or Undeveloped Property as set forth in
Steps Two or Three of Section E., less (vii) any amounts available to pay debt service or other
periodic costs on the Bonds pursuant to the Indenture.
"Taxable Property" means all Assessor’s Parcels within CFD No. 2019-2, which are not Exempt
Property.
“Taxable Unit” means either a Residential Unit or an Acre.
"Tract(s)" means an area of land within a subdivision identified by a particular tract number on a
Final Map approved for the subdivision.
“Trustee” means the trustee, fiscal agent, or paying agent under the Indenture.
"Undeveloped Property" means all Assessor’s Parcels of Taxable Property which are not
Developed Property, Approved Property, Provisional Undeveloped Property.
B. SPECIAL TAX
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Commencing Fiscal Year 2021-2022 and for each subsequent Fiscal Year, the City Council shall
levy Special Taxes on all Taxable Property, up to the applicable Maximum Special Tax, to fund
the Special Tax Requirement.
C. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX
Each Fiscal Year, beginning with Fiscal Year 2021-2022, each Assessor’s Parcel within CFD No.
2019-2 shall be classified as Taxable Property or Exempt Property. In addition, each Assessor’s
Parcel of Taxable Property shall be further classified as Developed Property, Approved Property,
Undeveloped Property or Provisional Undeveloped Property.
Assessor’s Parcels of Developed Property shall further be classified as Residential Property or
Non-Residential Property. Each Assessor’s Parcel of Residential Property shall further be
classified as a Single-Family Residential Property, or Multifamily Property. Each Assessor’s
Parcel of Single-Family Residential Property shall be further categorized into Land Use
Categories based on its Building Square Footage and assigned to its appropriate Assigned
Special Tax rate.
In the event that an Assessor’s Parcel for which one or more Building Permits have been issued
and the County has not yet assigned final Assessor’s Parcel Number(s) to the Residential Unit(s)
(in accordance with the Final Map or Condominium Plan) on such Assessor’s Parcel, the amount
of the Special Tax levy on such Assessor’s Parcel for each Fiscal Year shall be determined as
follows: (1) the CFD Administrator shall first determine an amount of the Maximum Special Tax
levy for such Assessor’s Parcel, based on the classification of such Assessor’s Parcel as
Undeveloped Property; (2) the amount of the Special Tax levy for the Residential Units on such
Assessor’s Parcel for which Building Permits have been issued shall be determined based on the
Developed Property Special Tax rates and shall be taxed as Developed Property in accordance
with Step 1 of Section E below; and (3) the amount of the Special Tax levy on the Taxable Property
in such Assessor’s Parcel not subject to the Special Tax levy in clause (2) shall be equal to: (A)
the percentage of the Maximum Special Tax rate levied on all other Undeveloped Property
multiplied by the total of the amount determined in clause (1), less the amount determined in
clause (2).
D. MAXIMUM SPECIAL TAX
1. Developed Property
The Maximum Special Tax for each Assessor’s Parcel of Single-Family Residential Property
in any Fiscal Year shall be the greater of (i) the Assigned Special Tax or (ii) the Backup Special
Tax.
The Maximum Special Tax for each Assessor’s Parcel of Non-Residential or Multifamily
Residential Property shall be the applicable Assigned Special Tax described in Table 1 of
Section D.
a. Assigned Special Tax
Each Fiscal Year, each Assessor’s Parcel of Single-Family Residential Property, Multifamily
Property or Non-Residential shall be subject to an Assigned Special Tax. The Assigned
Special Tax applicable to an Assessor's Parcel of Developed Property shall be determined
pursuant to Table 1 below.
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TABLE 1
ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY
Land Use Category
Taxable
Unit Building Square Footage
Assigned
Special Tax
Per Taxable
Unit
1. Single Family Residential Property RU Less than 1,700 sq. ft $2,302.00
2. Single Family Residential Property RU 1,700 sq. ft to 1,900 sq. ft $2,379.00
3. Single Family Residential Property RU 1,901 sq. ft to 2,100 sq. ft $2,446.00
4. Single Family Residential Property RU 2,101 sq. ft to 2,300 sq. ft $2,523.00
5. Single Family Residential Property RU 2,301 sq. ft to 2,500 sq. ft $2,687.00
6. Single Family Residential Property RU 2,501 sq. ft to 2,700 sq. ft $2,736.00
7. Single Family Residential Property RU 2,701 sq. ft to 2,900 sq. ft $2,842.00
8. Single Family Residential Property RU Greater than 2,900 sq. ft $2,938.00
9. Multifamily Property Acre N/A $21,333.00
10. Non-Residential Property Acre N/A $21,333.00
On each July 1, commencing July 1, 2022, the Assigned Special Tax rate for Developed
Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal
Year.
b. Multiple Land Use Categories
In some instances, an Assessor’s Parcel of Developed Property may contain more than one
Land Use Type. The Maximum Special Tax levied on an Assessor’s Parcel shall be the sum
of the Maximum Special Tax for all Land Use Categories located on the Assessor’s Parcel.
The CFD Administrator’s allocation to each type of property shall be final.
c. Backup Special Tax
The Backup Special Tax for an Assessor’s Parcel within a Final Map classified or to be
classified as Single-Family Property shall calculated according to the following formula.
B = (U x A) / L
The terms above have the following meanings:
B = Backup Special Tax per Assessor’s Parcel within the Final Map
U = Maximum Special Tax per Acre of Undeveloped Property per Section D.3 below
A = Acreage of Single-Family Residential Property expected to exist in such Final Map at
the time of calculation, as determined by the Administrator
L = Number of Residential Units expected to exist in such Final Map at the time of
calculation, as determined by the Administrator.
In the event any portion of the Final Map is changed or modified, the Backup Special Tax for
all Assessor’s Parcels within such changed or modified area shall be $21,333 per Acre.
CC Res. No. 2020 - _______
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In the event any superseding Final Map is recorded as a Final Map within the Boundaries of
the CFD, the Backup Special Tax for all Assessor’s Parcels within such Final Map shall be
$21,333 per Acre. The Backup Special Tax shall not apply to Multifamily Residential Property,
or Non-Residential Property.
On each July 1, commencing July 1, 2022, the Backup Special Tax rate shall be increased by
two percent (2.00%) of the amount in effect in the prior Fiscal Year.
2. Approved Property
The Maximum Special Tax for each Assessor’s Parcel of Approved Property expected to be
classified as Single-Family Property shall be the Backup Special Tax computed pursuant to
Section D.1.c above.
The Maximum Special Tax for each Assessor’s Parcel of Approved Property expected to be
classified as Multifamily Residential Property or Non-Residential Property shall be $21,333 per
Acre.
On each July 1, commencing July 1, 2022, the Maximum Special Tax rate for Approved
Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal
Year.
3. Undeveloped Property and Provisional Undeveloped Property that is not Exempt
Property pursuant to the provisions of Section F
The Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property and
Provisional Undeveloped Property that is not Exempt Property shall be equal to the product of
$21,333 multiplied by the Acreage of such Assessor’s Parcel.
On each July 1, commencing July 1, 2022, the Maximum Special Tax rate for Undeveloped
and Provisional Undeveloped Property shall be increased by two percent (2.00%) of the
amount in effect in the prior Fiscal Year.
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing Fiscal Year 2021-2022 and for each subsequent Fiscal Year, the City
Council shall levy Special Taxes on all Taxable Property in accordance with the following steps:
Step One: The Special Tax shall be levied Proportionately on each Assessor’s Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax rates in
Table 1 to satisfy the Special Tax Requirement.
Step Two: If additional moneys are needed to satisfy the Special Tax Requirement after the
first step has been completed, the Special Tax shall be levied Proportionately on
each Assessor’s Parcel of Approved Property at up to 100% of the Maximum
Special Tax applicable to each such Assessor’s Parcel as needed to satisfy the
Special Tax Requirement.
Step Three: If additional moneys are needed to satisfy the Special Tax Requirement after the
first two steps have been completed, the Annual Special Tax shall be levied
Proportionately on each Assessor’s Parcel of Undeveloped Property up to 100%
CC Res. No. 2020 - _______
Page 8 of 18
of the Maximum Special Tax applicable to each such Assessor’s Parcel as needed
to satisfy the Special Tax Requirement.
Step Four: If additional moneys are needed to satisfy the Special Tax Requirement after the
first three steps have been completed, then the Special Tax levy on each
Assessor's Parcel of Developed Property for which the Maximum Special Tax is
the Backup Special Tax shall be increased Proportionately from the Assigned
Special Tax up to 100% of the Backup Special Tax as needed to satisfy the Special
Tax Requirement.
Step Five: If additional moneys are needed to satisfy the Special Tax Requirement after the
first four steps have been completed, the Special Tax shall be levied
Proportionately on each Assessor’s Parcel of Provisional Undeveloped Property
up to 100% of the Maximum Special Tax applicable to each such Assessor’s
Parcel as needed to satisfy the Special Tax Requirement.
Notwithstanding the above, under no circumstances will the Special Taxes levied in any Fiscal
Year against any Assessor’s Parcel of Residential Property as a result of a delinquency in the
payment of the Special Tax applicable to any other Assessor’s Parcel be increased by more than
ten percent (10%) above the amount that would have been levied in that Fiscal Year had there
never been any such delinquency or default.
F. EXEMPTIONS
The City shall classify as Exempt Property, in the following order of priority, (i) Assessor’s Parcels
which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the
State of California, Federal or other local governments, including school districts, (ii) Assessor’s
Parcels which are used as places of worship and are exempt from ad valorem property taxes
because they are owned by a religious organization, (iii) Assessor’s Parcels which are owned by,
irrevocably offered for dedication, encumbered by or restricted in use by a homeowners'
association, (iv) Assessor’s Parcels with public or utility easements making impractical their
utilization for other than the purposes set forth in the easement, (v) Assessor’s Parcels which are
privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor’s
Parcels restricted to other types of public uses determined by the City Council, provided that no
such classification would reduce the sum of all Taxable Property to less than 22.74 Acres.
Notwithstanding the above, the City Council shall not classify an Assessor’s Parcel as Exempt
Property if such classification would reduce the sum of all Taxable Property to less than 22.74
Acres. Assessor's Parcels which cannot be classified as Exempt Property because such
classification would reduce the Acreage of all Taxable Property to less than 22.74 Acres will be
classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to
Step Five in Section E.
G. PREPAYMENT OF SPECIAL TAX
The following additional definitions apply to this Section G:
“CFD Public Facilities” means $8,000,000 expressed in 2021 dollars, which shall increase by
the Construction Inflation Index on July 1, 2022, and on each July 1 thereafter, or such lower
amount (i) determined by the City Council as sufficient to provide the public facilities under the
authorized bonding program for CFD No. 2019-2, or (ii) determined by the City Council
CC Res. No. 2020 - _______
Page 9 of 18
concurrently with a covenant that it will not issue any more Bonds to be supported by Special Tax
levied under this Rate and Method of Apportionment.
“Construction Fund” means an account specifically identified in the Indenture or functionally
equivalent to hold funds, which are currently available for expenditure to acquire or construct
public facilities eligible to be financed by CFD No. 2019-2.
“Construction Inflation Index” means the annual percentage change in the Engineering News-
Record Building Cost Index for the Riverside-San Bernardino-Ontario area, measured as of the
Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to b e
published, the Construction Inflation Index shall be another index as determined by the City that
is reasonably comparable to the Engineering News-Record Building Cost Index for the Riverside-
San Bernardino-Ontario area.
“Future Facilities Costs” means the CFD Public Facilities minus public facility costs available
to be funded through existing construction or escrow accounts funded by the Outstanding Bonds,
and minus public facility costs funded by interest earnings on the Construction Fund actually
earned prior to the date of prepayment.
“Outstanding Bonds” means all previously issued Bonds issued and secured by the levy of
Special Tax which will remain outstanding after the first interest and/or principal payment date
following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the
proceeds of prior prepayments of Special Tax.
1. Prepayment in Full
The Maximum Special Tax obligation may be prepaid and permanently satisfied for (i)
Assessor’s Parcels of Developed Property, (ii) Assessor’s Parcels of Approved Property or
Undeveloped Property for which a Building Permit has been issued, (iii) Approved Property or
Undeveloped Property for which a Building Permit has not been issued and (iv) Assessor’s
Parcels of Public Property or Property Owner’s Association Property, or Provisional Undeveloped
Property that are not Exempt Property pursuant to Section F. The Maximum Special Tax
obligation applicable to an Assessor’s Parcel may be fully prepaid and the obligation to pay the
Special Tax for such Assessor’s Parcel permanently satisfied as described herein; provided that
a prepayment may be made only if there are no delinquent Special Taxes with respect to such
Assessor’s Parcel at the time of prepayment. An owner of an Assessor’s Parcel intending to
prepay the Maximum Special Tax obligation for such Assessor’s Parcel shall provide the CFD
Administrator with written notice of intent to prepay, and within 5 business days of receipt of such
notice, the CFD Administrator shall notify such owner of the amount of the non-refundable deposit
determined to cover the cost to be incurred by the CFD in calculating the Prepayment Amount
(as defined below) for the Assessor’s Parcel. Within 15 days of receipt of such non-refundable
deposit, the CFD Administrator shall notify such owner of the Prepayment Amount for the
Assessor’s Parcel. Prepayment must be made not less than 60 days prior to the redemption date
for any Bonds to be redeemed with the proceeds of such prepaid Special Taxes.
The Prepayment Amount (defined below) shall be calculated as follows (capitalized terms
are defined below):
CC Res. No. 2020 - _______
Page 10 of 18
Bond Redemption Amount
plus Redemption Premium
plus Future Facilities Amount
plus Defeasance Amount
plus Administrative Fees and Expenses
less Reserve Fund Credit
Equals: Prepayment Amount
The Prepayment Amount shall be determined as of the proposed prepayment date as
follows:
1. Confirm that no Special Tax delinquencies apply to such Assessor’s Parcel.
2. For an Assessor’s Parcel of Developed Property, compute the Maximum Special
Tax for the Assessor’s Parcel. For an Assessor’s Parcel of Approved Property or Undeveloped
Property for which a Building Permit has been issued, compute the Maximum Special Tax for
the Assessor’s Parcel as though it was already designated as Developed Property, based
upon the Building Permit which has been issued for the Assessor’s Parcel. For an Assessor’s
Parcel of Approved Property or Undeveloped Property for which a Building Permit has not
been issued, Public Property, Property Owner’s Association Property, or Provisional
Undeveloped Property to be prepaid compute the Maximum Special Tax for the Assessor’s
Parcel.
3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the total
amount of Special Taxes that could be levied at the Maximum Special Tax at build out of all
Assessor’s Parcels of Taxable Property based on the applicable Maximum Special Tax for
Assessor’s Parcels of Developed Property not including any Assessor’s Parcels for which the
Special Tax obligation has been previously prepaid.
4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of
the Outstanding Bonds to determine the amount of Outstanding Bonds to be redeemed with
the Prepayment Amount (the “Bond Redemption Amount”).
5. Multiply the Bond Redemption Amount by the applicable redemption premium, if
any, on the Outstanding Bonds to be redeemed (the “Redemption Premium”).
6. Determine the Future Facilities Costs.
7. Multiply the quotient derived pursuant to paragraph 3 by the amount determined
pursuant to paragraph 6 to determine the amount of Future Facilities Costs for the Assessor’s
Parcel (the “Future Facilities Amount”).
8. Determine the amount needed to pay interest on the Bond Redemption Amount
from the first bond interest and/or principal payment date following the current Fiscal Year
until the earliest redemption date for the Outstanding Bonds on which Bonds can be redeemed
from Special Tax prepayments.
9. Determine the Special Taxes levied on the Assessor’s Parcel in the current Fiscal
Year which have not yet been paid.
CC Res. No. 2020 - _______
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10. Determine the amount the CFD Administrator reasonably expects to derive from
the investment of the Bond Redemption Amount and the Redemption Premium from the date
of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the
Prepayment Amount.
11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the amount
derived pursuant to paragraph 10 (the “Defeasance Amount”).
12. Verify the administrative fees and expenses of the CFD, including the cost of
computation of the Prepayment Amount, the cost to invest the Prepayment Amount, the cost
of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the
prepayment of the Maximum Special Tax obligation for the Assessor’s Parcel and the
redemption of Outstanding Bonds (the “Administrative Fees and Expenses”).
13. The reserve fund credit (the “Reserve Fund Credit”) shall equal the lesser of: (a)
the expected reduction in the reserve requirement (as defined in the Indenture), if any,
associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b)
the amount derived by subtracting the new reserve requirement (as defined in the Indenture)
in effect after the redemption of Outstanding Bonds as a result of the prepayment from the
balance in the reserve fund on the prepayment date, but in no event shall such amount be
less than zero.
14. The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the
Redemption Premium, the Future Facilities Amount, the Defeasance Amount and the
Administrative Fees and Expenses, less the Reserve Fund Credit.
15. From the Prepayment Amount, the Bond Redemption Amount, the Redemption
Premium, and Defeasance Amount shall be deposited into the appropriate fund as established
under the Indenture and be used to redeem Outstanding Bonds or make debt service
payments. The Future Facilities Amount shall be deposited into the Construction Fund. The
Administrative Fees and Expenses shall be retained by the CFD.
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds.
In such event, the increment above $5,000 or an integral multiple thereof will be retained in the
appropriate fund established under the Indenture to be used with the next redemption from other
Special Tax prepayments of Outstanding Bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year’s Special Tax levy as determined pursuant
to paragraph 9 above, the CFD Administrator shall remove the current Fiscal Year’s Special Tax
levy for the Assessor’s Parcel from the County tax roll. With respect to any Assessor’s Parcel for
which the Maximum Special Tax obligation is prepaid, the City Council shall cause a suitable
notice to be recorded in compliance with the Act, to indicate the prepayment of Maximum Special
Tax obligation and the release of the Special Tax lien for the Assessor’s Parcel, and the obligation
to pay the Special Tax for such Assessor’s Parcel shall cease.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of
Maximum Special Tax that may be levied on all Assessor’s Parcels of Taxable Property after the
proposed prepayment will be at least 1.1 times maximum annual debt service on the Bonds that
will remain outstanding after the prepayment plus the estimated annual Administrative Expenses.
CC Res. No. 2020 - _______
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Tenders of Bonds in prepayment of the Maximum Special Tax obligation may be accepted
upon the terms and conditions established by the City Council pursuant to the Act. However, the
use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by
the City Council.
2. Prepayment in Part
The Maximum Special Tax obligation for an Assessor’s Parcel of Developed Property,
Approved Property or Undeveloped Property may be partially prepaid. For purposes of
determining the partial prepayment amount, the provisions of Section G.1 shall be modified as
provided by the following formula:
PP = ((PE – A) x F) + A
These terms have the following meaning:
PP = Partial Prepayment 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 obligation
A = the Administrative Fees and Expenses determined pursuant to Section G.1
The owner of an Assessor’s Parcel who desires to partially prepay the Maximum Special Tax
obligation for the Assessor’s Parcel shall notify the CFD Administrator of (i) such owner’s intent
to partially prepay the Maximum Special Tax obligation, (ii) the percentage of the Maximum
Special Tax obligation such owner wishes to prepay, and (iii) the company or agency that will be
acting as the escrow agent, if any. Within 5 days of receipt of such notice, the CFD Administrator
shall notify such property owner of the amount of the non-refundable deposit determined to cover
the cost to be incurred by the CFD in calculating the amount of a partial prepayment. Within 15
business days of receipt of such non-refundable deposit, the CFD Administrator shall notify such
owner of the amount of the Partial Prepayment Amount for the Assessor’s Parcel. A Partial
Prepayment Amount must be made not less than 60 days prior to the redemption date for the
Outstanding Bonds to be redeemed with the proceeds of the Partial Prepayment Amount.
With respect to any Assessor’s Parcel for which the Maximum Special Tax obligation is partially
prepaid, the CFD Administrator shall (i) distribute the Part ial Prepayment Amount as provided in
Paragraph 15 of Section G.1, and (ii) indicate in the records of the CFD that there has been a
Partial Prepayment for the Assessor’s Parcel and that a portion of the Maximum Special Tax
obligation equal to the remaining percentage (1.00 - F) of the Maximum Special Tax obligation
will continue to be levied on the Assessor’s Parcel pursuant to Section E.
H. TERMINATION OF SPECIAL TAX
For each Fiscal Year that any Bonds are outstanding the Special Tax shall be levied on all
Assessor’s Parcels subject to the Special Tax. The Special Tax shall cease not later than the
2060-2061 Fiscal Year, however, Special Tax will cease to be levied in an earlier Fiscal Year if
the CFD Administrator has determined (i) that all the required interest and principal payments on
the CFD No. 2019-2 Bonds have been paid; (ii) all authorized facilities of CFD No. 2019-2 have
been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special
Tax remain uncollected and (iv) all other obligations of CFD No. 2019-2 have been satisfied.
I. MANNER OF COLLECTION
CC Res. No. 2020 - _______
Page 13 of 18
The Special Tax shall be collected in the same manner and at the same tim e as ordinary ad
valorem property taxes, provided, however, that CFD No. 2019-2 may collect Special Taxes 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.
J. APPEALS OF SPECIAL TAXES
Any taxpayer may file a written appeal of the Special Taxes on his/her Assessor’s Parcel(s) with
the CFD Administrator, provided that the appellant is current in his/her payments of Special
Taxes. During pendency of an appeal, all Special Taxes previously levied must be paid on or
before the payment date established when the levy was made. The appeal must specify the
reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall review
the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the
appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD
Administrator shall grant a credit to eliminate or reduce future Special Taxes on the appellant’s
Assessor’s Parcel(s). No refunds of previously paid Special Taxes shall be made.
The CFD Administrator shall interpret this Rate and Method of Apportionment and make
determinations relative to the annual levy and administration of the Special Taxes and any
taxpayer who appeals, as herein specified.
4834-3062-7281v4/022042-0026
REIMBURSEMENT AGREEMENT
COMMUNITY FACILITIES DISTRICT NO. 2019-2
OF THE CITY OF LAKE ELSINORE (NICHOLS RANCH)
CHANGE PROCEEDINGS
THIS REIMBURSEMENT AGREEMENT (this “Agreement”) dated as of December 1,
2020 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 Nichols Rd.
Partners, LLC, a California limited liability company (the “Owner”).
R E C I T A L S :
A. The Owner owns approximately 58.19 acres of land described in Exhibit A
attached hereto, which land is included within Community Facilities District No. 2019-2 of the City
of Lake Elsinore (Nichols Ranch) (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 the District pursuant to the Act and to increase the amount of bonded indebtedness authorized
to be issued by the District (such proceedings referred to herein as the “Change Proceedings”).
C. 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, 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 and Issuance of Bonds.
(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 and issuance of bonds, including an engineer, special tax
consultant, municipal 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 and the issuance of bonds 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. In addition to this Change Proceedings
deposit, the Owner has advanced to the City a sum totaling $50,000 for the formation of the
District. 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 and/or issuing bonds. In the event the Owner does not deliver the requested
2
4834-3062-7281v4/022042-0026
amount to the City within such 15-day period, the City will have no obligation to proceed with the
analysis or bond issue 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 or the issuance of bonds. 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 or the issuance of bonds, the City
may, in its sole discretion, elect to proceed with the Change Proceedings and/or the issuance of
bonds 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 or the issuance of bonds.
(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 Nichols Rd. Partners, LLC
25555 Maitri Road
Corona, CA 92883
Attention: Mr. Eric L. Werner
Telephone: (951) 227-3900
Email: ewerner@wernercorp.net
City: City of Lake Elsinore
130 South Main Street
Lake Elsinore, CA 92530
3
4834-3062-7281v4/022042-0026
Attn: City Manager
Telephone: (951) 674-3124
Email: gyates@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@stradlinglaw.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 Owner may 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 December 31, 2030 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
4834-3062-7281v4/022042-0026
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:
Candice Alvarez, MMC, City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY
By:
Barbara Z. Leibold, City Attorney
Nichols Rd. Partners, LLC,
A California limited liability company
By: ____________
Eric L. Werner, Member and Manager
By: ____________
Patrick Broyles, Member and Manager
A-1
4834-3062-7281v4/022042-0026
EXHIBIT A
DESCRIPTION OF PROPERTY
Real property in the City of Lake Elsinore, County of Riverside, State of California, described as
follows:
Assessor Parcel Nos. (as set forth in the County of Riverside Assessor’s Fiscal Year 2020-21
Roll):
389-200-045
389-200-047
PETITION TO THE CITY COUNCIL OF THE CITY OF LAKE
ELSINORE REQUESTING INSTITUTION OF CHANGE
PROCEEDINGS FOR COMMUNITY FACILITIES DISTRICT NO. 2019-
2 OF THE CITY OF LAKE ELSINORE (NICHOLS RANCH)
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 Community Facilities District No. 2019-2 of the City of Lake Elsinore (Nichols
Ranch) (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: (i) approve the new rate and method of
apportionment for the District, attached hereto as Exhibit B (the "First Amended and Restated
Rate and Method"); and (ii) increase the amount of bonded indebtedness authorized to be
incurred by the District from $10,000,000 to $11,000,000, to finance certain improvements (the
"Facilities") and incidental expenses of the District previously authorized in connection with the
formation of the District.
3. The Owner further requests that the City Council authorize the levy of special
taxes in accordance with the First Amended and Restated Rate and Method in the District to
pay the costs of the Facilities and the incidental expenses and to pay principal of, interest and
premium, if any, on the bonds in order to contribute to the financing of the Facilities and the
incidental expenses.
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
the District 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 the District, 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 the District. 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.
4935-2820-8849r4-022042-0026
Dated: November 2020
Nichols Rd. Partners, LLC,
A California limited liability company
By: Ak
Eric L. Werner, Member and Manager
By:
Patric Broyles, Membekand Manager
4835-2820-8849v4r022042-0026
EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of lake Elsinore, County of Riverside, State of California, described as
follows:
Assessor Parcel Nos. (as set forth in the County of Riverside Assessor's Fiscal Year 2020-21
Roll):
389-200-045
389-200-047
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4835-2820-8849v4;'022042-0026
EXHIBIT B
PROPOSED FIRST AMENDED AND RESTATED
RATE AND METHOD OF APPORTIONMENT OF
CITY OF LAKE ELSINORE
COMMUNITY FACILITIES DISTRICT NO. 2019-2 (NICHOLS RANCH)
A Special Tax (all capitalized terms are defined in Section A, "Definitions", below) shall be
applicable to each Assessor's Parcel of Taxable Property located within the boundaries of the
City of Lake Elsinore Community Facilities District No. 2019-2 (Nichols Ranch) ("CFD No. 2019-
2"). The amount of Special Tax to be levied in each Fiscal Year on an Assessor's Parcel shall
be determined by the City Council of the City of Lake Elsinore, acting in its capacity as the
legislative body of CFD No. 2019-2, by applying the appropriate Special Tax for Developed
Property, Approved Property, Undeveloped Property, and Provisional Undeveloped Property
that is not Exempt Property as set forth below. All of the real property, unless exempted by law
or by the provisions hereof in Section F, shall be taxed for the purposes, to the extent and in the
manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's
Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown
on the applicable final map, parcel map, condominium plan, or other recorded County parcel
map or instrument. The square footage of an Assessor's Parcel is equal to the Acreage
multiplied by 43,560.
"Act" means the Mello -Roos Communities Facilities Act of 1982, as amended, being Chapter
2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code
of the State of California.
"Administrative Expenses" means the following actual or reasonably estimated costs directly
related to the administration of CFD No. 2019-2: the costs of computing the Special Taxes and
preparing the Special Tax collection schedules (whether by the City or designee thereof or
both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of
remitting Special Taxes to the Trustee; the costs of the Trustee (including legal counsel) in the
discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2019-2
or any designee thereof of complying with arbitrage rebate requirements; the costs to the City,
CFD No. 2019-2 or any designee thereof of complying with disclosure requirements of the City,
CFD No. 2019-2 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. 2019-
2 or any designee thereof related to an appeal of the Special Tax: the costs associated with the
release of funds from an escrow account; and the City's annual administration fees and third
party expenses. Administration Expenses shall also include amounts estimated by the CFD
Administrator or advanced by the City or CFD No. 2019-2 for any other administrative purposes
of CFD No. 2019-2, including attorney's fees and other costs related to commencing and
pursuing to completion any foreclosure of delinquent Special Taxes.
"Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in
a Final Map that was recorded prior to the January 15t preceding the Fiscal Year in which the
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4835-2820-8849v4:'022042-0026
Special Tax is being levied, (ii) and has an assigned Assessor's Parcel Number from the County
shown on an Assessor's Parcel Map for the individual lot included on the Final Map, and (iii) that
have not been issued a building permit on or before May 151 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.
"Assessor's Parcel Map" means an official map of the Assessor of the County designating
parcels by Assessor's Parcel Number.
"Assessor's Parcel Number" means that number assigned to an Assessor's Parcel by the
County for purposes of identification.
"Assigned Special Tax" means the Special Tax of that name described in Section 0 below.
"Backup Special Tax" means the Special Tax of that name described in Section D below.
"Boundary Map" means a recorded map of the CFD which indicates the boundaries of the
CFD.
"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 of CFD No. 2019-2 have been
pledged.
"Building Permit" means the first legal document issued by a local agency giving official
permission for new construction. For purposes of this definition, "Building Permit" may or may
not include any subsequent building permit document(s) authorizing new construction on an
Assessor's Parcel that are issued or changed by the City after the first original issuance, as
determined by the CFD Administrator as necessary to fairly allocate Special Tax to the
Assessor's Parcel, provided that following such determination the Maximum Special Tax that
may be levied on all Assessor's Parcels of Taxable Property will be at least 1.1 times maximum
annual debt service on all outstanding Bonds plus the estimated annual Administrative
Expenses.
"Building Square Footage" or "BSF" means the square footage of assessable internal living
space, exclusive of garages or other structures not used as living space, as determined by
reference to the Building Permit for such Assessor's Parcel_
"Calendar Year" means the period commencing January 1 of any year and ending the
following December 31.
"CFD Administrator" means an official of the City, or designee thereof, responsible for
determining the Special Tax Requirement, and providing for the levy and collection of the
Special Taxes.
"CFD" or "CFD No. 2019-2" means Community Facilities District No. 2019-2 (Nichols Ranch)
established by the City under the Act.
"City" means the City of Lake Elsinore,
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4835-2820-8849v4:022042-0026
"City Council" means the City Council of the City of Lake Elsinore, acting as the Legislative
Body of CFD No. 2019-2.
"Condominium Plan" means a condominium plan as set forth in the California Civil Code
Section 4200 et seq.
"County" means the County of Riverside.
"Developed Property" means all Assessor's Parcels that: (i) are included in a Final Map that
was recorded prior to the January 15' preceding the Fiscal Year in which the Special Tax is
being levied, and (ii) has an Assessor's Parcel Number from the County shown on an
Assessor's Parcel Map for the individual lot included on the Final Map, and (iii) a Building Permit
for new construction was issued on or before May 15' preceding the Fiscal Year in which the
Special Tax is being levied.
"Exempt Property" means all Assessor's Parcels designated as being exempt from Special
Taxes as provided for in Section F.
"Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot
line adjustment, pursuant to the Subdivision Map Act (California Government Code Section
66410 et seq.) or recordation of a Condominium Plan pursuant to California Civil Code Section
4200 et seq. that creates individual lots for which Building Permits may be issued without further
subdivision.
"Fiscal Year" means the period commencing on July 15t of any year and ending the following
June 30'h.
"Indenture" means the indenture, fiscal agent agreement, resolution or other instrument
pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to
time, and any instrument replacing or supplementing the same.
"Land Use Category" means any of the categories listed in Table 1 of Section D.
"Maximum Special Tax" means for each Assessor's Parcel, the maximum Special Tax,
determined in accordance with Section D below, that can be levied by CFD No. 2019-2 in any
Fiscal Year on such Assessor's Parcel_
"Multifamily Property" means all Assessor's Parcels of Developed Property for which a
Building Permit has been issued for the purpose of constructing a building or buildings
comprised of attached Residential Units available for rental by the general public, not for sale to
an end user, and under common management, as determined by the CFD Administrator.
"Non -Residential Property" or "NR" means all Assessor's Parcels for which a building
permit(s) was issued or will be issued for a non-residential use_ The CFD Administrator shall
make the determination if an Assessor's Parcel is Non -Residential Property.
"Partial Prepayment Amount" means the amount required to prepay a portion of the Special
Tax obligation for an Assessor's Parcel, as described in Section G.2.
"Prepayment Amount" means the amount required to prepay the Special Tax obligation in full
for an Assessor's Parcel, as described in Section G.1.
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4835-2820-8849v4.:022042-0026
"Proportionately" means for Taxable Property that is (i) Developed Property, that the ratio of
the actual Special Tax levy to the Assigned Special Tax is the same for all Assessor's Parcels of
Developed Property, (ii) Approved Property, that the ratio of the actual Special Tax levy to the
Maximum Special Tax is the same for all Assessor's Parcels of Approved Property, and (iii)
Undeveloped Property, or Provisional Undeveloped Property, that the ratio of the actual Special
Tax levy per Acre to the Maximum Special Tax per Acre is the same for all Assessor's Parcels
of Undeveloped Property, or Provisional Undeveloped Property, as applicable.
"Provisional Undeveloped Property" means all Assessor's Parcels of Taxable Property that
would otherwise be classified as Exempt Property pursuant to the provisions of Section F, but
cannot be classified as Exempt Property because to do so would be reduce the Acreage of all
Taxable Property below the required minimum Acreage set forth in Sections F.
"Residential Property" means all Assessor's Parcels of Developed Property for which a
building permit has been issued for purposes of constructing one or more Residential Units.
"Residential Unit" or "RU" means a residential unit that is used or intended to be used as a
domicile by one or more persons, as determined by the CFD Administrator.
"Single Family Residential Property" means all Assessor's Parcels of Residential Property
other than Multifamily Property.
"Special Tax" means any of the special taxes authorized to be levied within CFD No. 2019-2
pursuant to the Act to fund the Special Tax Requirement.
"Special Tax Requirement " means the amount required in any Fiscal Year to pay: (i) the debt
service or the periodic costs on all outstanding Bonds due in the Calendar Year that
commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the
release of funds from an escrow account, (iv) any amount required to replenish any reserve
funds established in association with the Bonds, (v) an amount equal to any anticipated shortfall
due to Special Tax delinquencies, and (vi) for the collection or accumulation of funds for the
acquisition or construction of facilities authorized by CFD No. 2019-2 or the payment of debt
services on Bonds anticipated to be issued, provided that the inclusion of such amount does not
cause an increase in the levy of Special Tax on Approved Property or Undeveloped Property as
set forth in Steps Two or Three of Section E., less (vii) any amounts available to pay debt
service or other periodic costs on the Bonds pursuant to the Indenture.
"Taxable Property" means all Assessor's Parcels within CFD No. 2019-2, which are not
Exempt Property.
"Taxable Unit" means either a Residential Unit or an Acre.
"Tract(s)" means an area of land within a subdivision identified by a particular tract number on
a Final Map approved for the subdivision.
"Trustee" means the trustee, fiscal agent, or paying agent under the Indenture.
"Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not
Developed Property, Approved Property, Provisional Undeveloped Property.
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4835-2820-8849v4.022042-0026
B. SPECIAL TAX
Commencing Fiscal Year 2021-2022 and for each subsequent Fiscal Year, the City Council
shall levy Special Taxes on all Taxable Property, up to the applicable Maximum Special Tax, to
fund the Special Tax Requirement.
C. ASSIGNMENT TO LAND USE CATEGORY FOR SPECIAL TAX
Each Fiscal Year, beginning with Fiscal Year 2021-2022, each Assessor's Parcel within CFD
No. 2019-2 shall be classified as Taxable Property or Exempt Property. In addition, each
Assessor's Parcel of Taxable Property shall be further classified as Developed Property,
Approved Property, Undeveloped Property or Provisional Undeveloped Property.
Assessor's Parcels of Developed Property shall further be classified as Residential Property or
Non -Residential Property. Each Assessor's Parcel of Residential Property shall further be
classified as a Single Family Residential Property, or Multifamily Property. Each Assessor's
Parcel of Single Family Residential Property shall be further categorized into Land Use
Categories based on its Building Square Footage and assigned to its appropriate Assigned
Special Tax rate.
In the event that an Assessor's Parcel for which one or more Building Permits have been issued
and the County has not yet assigned final Assessor's Parcel Number(s) to the Residential
Unit(s) (in accordance with the Final Map or Condominium Plan) on such Assessor's Parcel, the
amount of the Special Tax levy on such Assessor's Parcel for each Fiscal Year shall be
determined as follows: (1) the CFD Administrator shall first determine an amount of the
Maximum Special Tax levy for such Assessor's Parcel, based on the classification of such
Assessor's Parcel as Undeveloped Property; (2) the amount of the Special Tax levy for the
Residential Units on such Assessor's Parcel for which Building Permits have been issued shall
be determined based on the Developed Property Special Tax rates and shall be taxed as
Developed Property in accordance with Step 1 of Section E below; and (3) the amount of the
Special Tax levy on the Taxable Property in such Assessor's Parcel not subject to the Special
Tax levy in clause (2) shall be equal to: (A) the percentage of the Maximum Special Tax rate
levied on all other Undeveloped Property multiplied by the total of the amount determined in
clause (1), less the amount determined in clause (2).
D. MAXIMUM SPECIAL TAX
1. Developed Property
The Maximum Special Tax for each Assessor's Parcel of Single Family Residential Property
in any Fiscal Year shall be the greater of (i) the Assigned Special Tax or (ii) the Backup
Special Tax_
The Maximum Special Tax for each Assessor's Parcel of Non -Residential or Multifamily
Residential Property shall be the applicable Assigned Special Tax described in Table 1 of
Section D.
a. Assigned Special Tax
Each Fiscal Year, each Assessor's Parcel of Single Family Residential Property, Multifamily
Property or Non -Residential shall be subject to an Assigned Special Tax. The Assigned
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4835-2820-8849v4'022042-0026
Special Tax applicable to an Assessor's Parcel of Developed Property shall be determined
pursuant to Table 1 below.
TABLE 1
ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY
Land Use Cate v
Taxable
Unit
Building Square Footage
Assigned
Special Tax
Per Taxable
Unit
1. Single
Family
Residential Property
RU
Less than 1,700 s . ft
$2,302,00
2. Single
Family
Residential Property
RU
1,700 s . ft to 1,900 s . ft
$2,379.00
3. Single
Family
Residential Property
RU
1,901 s . ft to 2,100 s . ft
$2,446.00
4. Single
Family
Residential Property
RU
2,101 s . ft to 2,300 s . ft
$2,523.00
5. Single
Family
Residential Property
RU
2,301 s . ft to 2,500 s . ft
$2,687.00
6. Single
Family
Residential Property
RU
2,501 s . ft to 2,700 s . ft
$2,736.00
7. Single
Family
Residential Property
RU
2,701 s . ft to 2,900 s . ft
$2,842.00
8. Single
Family
Residential Property
RU
Greater than 2,900 s . ft
$2,938.00
9. Multifamily Property
Acre
NIA
$21,333.00
10. Non -Residential Property
Acre
NIA
$21,333.00
On each July 1, commencing July 1, 2022, the Assigned Special Tax rate for Developed
Property shall be increased by two percent (2„00%) of the amount in effect in the prior Fiscal
Year.
b_ Multiple Land Use Categories
In some instances an Assessor's Parcel of Developed Property may contain more than one
Land Use Type The Maximum Special Tax levied on an Assessor's Parcel shall be the sum
of the Maximum Special Tax for all Land Use Categories located on the Assessor's Parcel.
The CFD Administrator's allocation to each type of property shall be final.
c. Backup Special Tax
The Backup Special Tax for an Assessor's Parcel within a Final Map classified or to be
classified as Single Family Property shall calculated according to the following formula.
B=(UxA)IL
The terms above have the following meanings:
B = Backup Special Tax per per Assessor's Parcel within the Final Map
U = Maximum Special Tax per Acre of Undeveloped Property per Section D.3 below
A = Acreage of Single Family Residential Property expected to exist in such Final Map at
the time of calculation, as determined by the Administrator
L = Number of Residential Units expected to exist in such Final Map at the time of
calculation, as determined by the Administrator.
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4835-2820-8849v4.-022042-0026
In the event any portion of the Final Map is changed or modified, the Backup Special Tax for
all Assessor's Parcels within such changed or modified area shall be $21,333 per Acre.
In the event any superseding Final Map is recorded as a Final Map within the Boundaries of
the CFD, the Backup Special Tax for all Assessor's Parcels within such Final Map shall be
$21,333 per Acre. The Backup Special Tax shall not apply to Multifamily Residential
Property, or Non -Residential Property.
On each July 1, commencing July 1, 2022, the Backup Special Tax rate shall be increased by
two percent (2.00%) of the amount in effect in the prior Fiscal Year.
2. Approved Property
The Maximum Special Tax for each Assessor's Parcel of Approved Property expected to be
classified as Single Family Property shall be the Backup Special Tax computed pursuant to
Section D.1.c above.
The Maximum Special Tax for each Assessor's Parcel of Approved Property expected to be
classified as Multifamily Residential Property or Non -Residential Property shall be $21,333
per Acre.
On each July 1, commencing July 1, 2022, the Maximum Special Tax rate for Approved
Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal
Year.
3. Undeveloped Proverty and Provisional Undevelnned Prnnprhr fhnf not Pvaamnt
The Maximum Special Tax for each Assessor's Parcel of Undeveloped Property and
Provisional Undeveloped Property that is not Exempt Property shall be equal to the product
of $21,333 multiplied by the Acreage of such Assessor's Parcel.
On each July 1, commencing July 1, 2022, the Maximum Special Tax rate for Undeveloped
and Provisional Undeveloped Property shall be increased by two percent (2.00%) of the
amount in effect in the prior Fiscal Year.
E. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing Fiscal Year 2021-2022 and for each subsequent Fiscal Year, the City
Council shall levy Special Taxes on all Taxable Property in accordance with the following steps:
Step One: The Special Tax shall be levied Proportionately on each Assessor's Parcel of
Developed Property at up to 100% of the applicable Assigned Special Tax rates
in Table 1 to satisfy the Special Tax Requirement.
Step Two: If additional moneys are needed to satisfy the Special Tax Requirement after the
first step has been completed, the Special Tax shall be levied Proportionately on
each Assessor's Parcel of Approved Property at up to 100% of the Maximum
Special Tax applicable to each such Assessor's Parcel as needed to satisfy the
Special Tax Requirement,
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4835-2820-8849v4::022042-0026
Step Three: If additional moneys are needed to satisfy the Special Tax Requirement after the
first two steps have been completed, the Annual Special Tax shall be levied
Proportionately on each Assessor's Parcel of Undeveloped Property up to 100%
of the Maximum Special Tax applicable to each such Assessor's Parcel as
needed to satisfy the Special Tax Requirement.
Step Four: If additional moneys are needed to satisfy the Special Tax Requirement after the
first three steps have been completed, then the Special Tax levy on each
Assessor's Parcel of Developed Property for which the Maximum Special Tax is
the Backup Special Tax shall be increased Proportionately from the Assigned
Special Tax up to 100% of the Backup Special Tax as needed to satisfy the
Special Tax Requirement.
Step Five: If additional moneys are needed to satisfy the Special Tax Requirement after the
first four steps have been completed, the Special Tax shall be levied
Proportionately on each Assessor's Parcel of Provisional Undeveloped Property
up to 100% of the Maximum Special Tax applicable to each such Assessor's
Parcel as needed to satisfy the Special Tax Requirement.
Notwithstanding the above, under no circumstances will the Special Taxes levied in any Fiscal
Year against any Assessor's Parcel of Residential Property as a result of a delinquency in the
payment of the Special Tax applicable to any other Assessor's Parcel be increased by more
than ten percent (10%) above the amount that would have been levied in that Fiscal Year had
there never been any such delinquency or default.
F. EXEMPTIONS
The City shall classify as Exempt Property, in the following order of priority, (i) Assessor's
Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in
use by the State of California, Federal or other local governments, including school districts, (ii)
Assessor's Parcels which are used as places of worship and are exempt from ad valorem
property taxes because they are owned by a religious organization, (iii) Assessor's Parcels
which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a
homeowners' association, (iv) Assessor's Parcels with public or utility easements making
impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's
Parcels which are privately owned and are encumbered by or restricted solely for public uses, or
(vi) Assessor's Parcels restricted to other types of public uses determined by the City Council,
provided that no such classification would reduce the sum of all Taxable Property to less than
22.74 Acres.
Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt
Property if such classification would reduce the sum of all Taxable Property to less than 22.74
Acres. Assessor's Parcels which cannot be classified as Exempt Property because such
classification would reduce the Acreage of all Taxable Property to less than 22.74 Acres will be
classified as Provisional Undeveloped Property, and will be subject to Special Tax pursuant to
Step Five in Section E.
G. PREPAYMENT OF SPECIAL TAX
The following additional definitions apply to this Section G:
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4 83 5-2820-8849 4:02 204 2-002 b
"CFD Public Facilities" means $8,000,000 expressed in 2021 dollars, which shall increase by
the Construction Inflation Index on July 1, 2022, and on each July 1 thereafter, or such lower
amount (i) determined by the City Council as sufficient to provide the public facilities under the
authorized bonding program for CFD No. 2019-2, or (ii) determined by the City Council
concurrently with a covenant that it will not issue any more Bonds to be supported by Special
Tax levied under this Rate and Method of Apportionment.
"Construction Fund" means an account specifically identified in the Indenture or functionally
equivalent to hold funds, which are currently available for expenditure to acquire or construct
public facilities eligible to be financed by CFD No. 2019-2.
"Construction Inflation Index" means the annual percentage change in the Engineering
News -Record Building Cost Index for the Riverside -San Bernardino -Ontario area, measured as
of the Calendar Year which ends in the previous Fiscal Year. In the event this index ceases to
be published, the Construction Inflation index shall be another index as determined by the City
that is reasonably comparable to the Engineering News -Record Building Cost Index for the
Riverside -San Bernardino -Ontario area.
"Future Facilities Costs" means the CFD Public Facilities minus public facility costs available
to be funded through existing construction or escrow accounts funded by the Outstanding
Bonds, and minus public facility costs funded by interest earnings on the Construction Fund
actually earned prior to the date of prepayment.
"Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of
Special Tax which will remain outstanding after the first interest and/or principal payment date
following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the
proceeds of prior prepayments of Special Tax.
1. Prepayment in Full
The Maximum Special Tax obligation may be prepaid and permanently satisfied for (i)
Assessor's Parcels of Developed Property, (ii) Assessor's Parcels of Approved Property or
Undeveloped Property for which a Building Permit has been issued, (iii) Approved Property or
Undeveloped Property for which a Building Permit has not been issued and (iv) Assessor's
Parcels of Public Property or Property Owner's Association Property, or Provisional
Undeveloped Property that are not Exempt Property pursuant to Section F. The Maximum
Special Tax obligation applicable to an Assessor's Parcel may be fully prepaid and the
obligation to pay the Special Tax for such Assessor's Parcel permanently satisfied as described
herein; provided that a prepayment may be made only if there are no delinquent Special Taxes
with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's
Parcel intending to prepay the Maximum Special Tax obligation for such Assessor's Parcel shall
provide the CFD Administrator with written notice of intent to prepay, and within 5 business days
of receipt of such notice, the CFD Administrator shall notify such owner of the amount of the
non-refundable deposit determined to cover the cost to be incurred by the CFD in calculating
the Prepayment Amount (as defined below) for the Assessor's Parcel. Within 15 days of receipt
of such non-refundable deposit, the CFD Administrator shall notify such owner of the
Prepayment Amount for the Assessor's Parcel. Prepayment must be made not less than 60
days prior to the redemption date for any Bonds to be redeemed with the proceeds of such
prepaid Special Taxes,
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4835-2820-8849v4::022042-0026
The Prepayment Amount (defined below) shall be calculated as follows (capitalized
terms are defined below):
Bond Redemption Amount
plus
Redemption Premium
plus
Future Facilities Amount
plus
Defeasance Amount
plus
Administrative Fees and Expenses
less
Reserve Fund Credit
Equals:
Prepayment Amount
The Prepayment Amount shall be determined as of the proposed prepayment date as
follows:
1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel.
2. For an Assessor's Parcel of Developed Property, compute the Maximum Special
Tax for the Assessor's Parcel. For an Assessor's Parcel of Approved Property or
Undeveloped Property for which a Building Permit has been issued, compute the Maximum
Special Tax for the Assessor's Parcel as though it was already designated as Developed
Property, based upon the Building Permit which has been issued for the Assessor's Parcel.
For an Assessor's Parcel of Approved Property or Undeveloped Property for which a
Building Permit has not been issued, Public Property, Property Owner's Association
Property, or Provisional Undeveloped Property to be prepaid compute the Maximum
Special Tax for the Assessor's Parcel.
3. Divide the Maximum Special Tax derived pursuant to paragraph 2 by the total
amount of Special Taxes that could be levied at the Maximum Special Tax at build out of all
Assessor's Parcels of Taxable Property based on the applicable Maximum Special Tax for
Assessor's Parcels of Developed Property not including any Assessor's Parcels for which
the Special Tax obligation has been previously prepaid.
4. Multiply the quotient derived pursuant to paragraph 3 by the principal amount of
the Outstanding Bonds to determine the amount of Outstanding Bonds to be redeemed with
the Prepayment Amount (the Bond Redemption Amount").
5. Multiply the Bond Redemption Amount by the applicable redemption premium, if
any, on the Outstanding Bonds to be redeemed (the "Redemption Premium").
6_ Determine the Future Facilities Costs.
7_ Multiply the quotient derived pursuant to paragraph 3 by the amount determined
pursuant to paragraph 6 to determine the amount of Future Facilities Costs for the
Assessors Parcel (the "Future Facilities Amount").
8. Determine the amount needed to pay interest on the Bond Redemption Amount
from the first bond interest and/or principal payment date following the current Fiscal Year
until the earliest redemption date for the Outstanding Bonds on which Bonds can be
redeemed from Special Tax prepayments.
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9. Determine the Special Taxes levied on the Assessor's Parcel in the current
Fiscal Year which have not yet been paid.
10. Determine the amount the CFD Administrator reasonably expects to derive from
the investment of the Bond Redemption Amount and the Redemption Premium from the
date of prepayment until the redemption date for the Outstanding Bonds to be redeemed
with the Prepayment Amount.
11. Add the amounts derived pursuant to paragraphs 8 and 9 and subtract the
amount derived pursuant to paragraph 10 (the "Defeasance Amount").
12. Verify the administrative fees and expenses of the CFD, including the cost of
computation of the Prepayment Amount, the cost to invest the Prepayment Amount, the cost
of redeeming the Outstanding Bonds, and the cost of recording notices to evidence the
prepayment of the Maximum Special Tax obligation for the Assessor's Parcel and the
redemption of Outstanding Bonds (the "Administrative Fees and Expenses").
13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a)
the expected reduction in the reserve requirement (as defined in the Indenture), if any,
associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b)
the amount derived by subtracting the new reserve requirement (as defined in the Indenture)
in effect after the redemption of Outstanding Bonds as a result of the prepayment from the
balance in the reserve fund on the prepayment date, but in no event shall such amount be
less than zero.
14. The Prepayment Amount is equal to the sum of the Bond Redemption Amount,
the Redemption Premium, the Future Facilities Amount, the Defeasance Amount and the
Administrative Fees and Expenses, less the Reserve Fund Credit.
15. From the Prepayment Amount, the Bond Redemption Amount, the Redemption
Premium, and Defeasance Amount shall be deposited into the appropriate fund as
established under the Indenture and be used to redeem Outstanding Bonds or make debt
service payments. The Future Facilities Amount shall be deposited into the Construction
Fund. The Administrative Fees and Expenses shall be retained by the CFD.
The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds.
In such event, the increment above $5,000 or an integral multiple thereof will be retained in the
appropriate fund established under the Indenture to be used with the next redemption from
other Special Tax prepayments of Outstanding Bonds or to make debt service payments.
As a result of the payment of the current Fiscal Year's Special Tax levy as determined pursuant
to paragraph 9 above, the CFD Administrator shall remove the current Fiscal Year's Special Tax
levy for the Assessor's Parcel from the County tax roll. With respect to any Assessor's Parcel for
which the Maximum Special Tax obligation is prepaid, the City Council shall cause a suitable
notice to be recorded in compliance with the Act, to indicate the prepayment of Maximum
Special Tax obligation and the release of the Special Tax lien for the Assessor's Parcel, and the
obligation to pay the Special Tax for such Assessor's Parcel shall cease.
Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount
of Maximum Special Tax that may be levied on all Assessor's Parcels of Taxable Property after
the proposed prepayment will be at least 1.1 times maximum annual debt service on the Bonds
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that will remain outstanding after the prepayment plus the estimated annual Administrative
Expenses.
Tenders of Bonds in prepayment of the Maximum Special Tax obligation may be
accepted upon the terms and conditions established by the City Council pursuant to the Act.
However, the use of Bond tenders shall only be allowed on a case -by -case basis as specifically
approved by the City Council.
2. Prepayment in Part
The Maximum Special Tax obligation for an Assessor's Parcel of Developed Property,
Approved Property or Undeveloped Property may be partially prepaid. For purposes of
determining the partial prepayment amount, the provisions of Section GA shall be modified as
provided by 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 obligation
A = the Administrative Fees and Expenses determined pursuant to Section G.1
The owner of an Assessor's Parcel who desires to partially prepay the Maximum Special Tax
obligation for the Assessor's Parcel shall notify the CFD Administrator of (i) such owner's intent
to partially prepay the Maximum Special Tax obligation, (ii) the percentage of the Maximum
Special Tax obligation such owner wishes to prepay, and (iii) the company or agency that will be
acting as the escrow agent, if any. Within 5 days of receipt of such notice, the CFD
Administrator shall notify such property owner of the amount of the non-refundable deposit
determined to cover the cost to be incurred by the CFD in calculating the amount of a partial
prepayment. Within 15 business days of receipt of such non-refundable deposit, the CFD
Administrator shall notify such owner of the amount of the Partial Prepayment Amount for the
Assessor's Parcel. A Partial Prepayment Amount must be made not less than 60 days prior to
the redemption date for the Outstanding Bonds to be redeemed with the proceeds of the Partial
Prepayment Amount.
With respect to any Assessor's Parcel for which the Maximum Special Tax obligation is partially
prepaid, the CFD Administrator shall (i) distribute the Partial Prepayment Amount as provided in
Paragraph 15 of Section G.1, and (ii) indicate in the records of the CFD that there has been a
Partial Prepayment for the Assessor's Parcel and that a portion of the Maximum Special Tax
obligation equal to the remaining percentage (1.00 - F) of the Maximum Special Tax obligation
will continue to be levied on the Assessor's Parcel pursuant to Section E.
H. TERMINATION OF SPECIAL TAX
For each Fiscal Year that any Bonds are outstanding the Special Tax shall be levied on all
Assessor's Parcels subject to the Special Tax. The Special Tax shall cease not later than the
2060-2061 Fiscal Year, however, Special Tax will cease to be levied in an earlier Fiscal Year if
the CFD Administrator has determined (i) that all the required interest and principal payments
on the CFD No. 2019-2 Bonds have been paid; (ii) all authorized facilities of CFD No. 2019-2
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have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent
Special Tax remain uncollected and (iv) all other obligations of CFD No. 2019-2 have been
satisfied.
I. MANNER OF COLLECTION
The Special Tax shall be collected in the same manner and at the same time as ordinary ad
valorem property taxes, provided, however, that CFD No. 2019-2 may collect Special Taxes 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.
J. APPEALS OF SPECIAL TAXES
Any taxpayer may file a written appeal of the Special Taxes on his/her Assessor's Parcel(s) with
the CFD Administrator, provided that the appellant is current in his/her payments of Special
Taxes. During pendency of an appeal, all Special Taxes previously levied must be paid on or
before the payment date established when the levy was made. The appeal must specify the
reasons why the appellant claims the Special Tax is in error. The CFD Administrator shall
review the appeal, meet with the appellant if the CFD Administrator deems necessary, and
advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the
CFD Administrator shall grant a credit to eliminate or reduce future Special Taxes on the
appellant's Assessor's Parcel(s). No refunds of previously paid Special Taxes shall be made.
The CFD Administrator shall interpret thi
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