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HomeMy WebLinkAboutCC Reso No 2007-028RESOLUTION NO. 2007-28 RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, TO ANNEX CERTAIN PROPERTY INTO IMPROVEMENT AREA NO. 2 OF THE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2004-3 (ROSETTA CANYOl~ WHEREAS, the Ciry Council (the "Council") of the City of Lake Elsinore (the "City") has previously established the City of Lake Elsinare Community Facilities District No. 2004-3 (Rosetta Canyon) (the "CFD") and designated portions of the CFD as Improvement Area No. 1 and Improvement Area No. 2, all pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "AcY'); and WHEREAS, the Council has received a petition (the "Petition") requesting the institution of proceedings far annexation of certain property (the "Annexation Area") into Improvement Area No. 2; and WHEREAS, it is the intention of the Council to finance the acquisition and construction of the Facilities (as defined below) or any combination thereof through the annexation of the Annexation Area into Improvement Area No. 2. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. The Council hereby determines to institute proceedings for the annexation of the Annexation Area into Improvement Area No. 2 under the terms of the Act. The exterior boundaries of the Annexation Area are hereby specified and described to be as shown on that certain map now on file in the office of the Clerk entitled "Proposed Boundary of Community Facilities District No. 2004-3 of the City of Lake Elsinare (Rosetta Canyon)," which map indicates by a boundary line the extent of the territory included in the proposed Annexation Area and shall govern for all details as to the extent of the Annexation Area. On the original and one copy of the map of such Annexation Area, entitled "Proposed Boundary of Annexation No. 1 to Community Facilities District No. 2004-3 of the City of Lake Elsinore (Rosetta Canyon)," on file in the City Clerk's office, the City Clerk shall endorse the certificate evidencing the date and adoption of this resolution. The City Clerk shall file the original of such map in the City Clerk's office and, within fifteen (15) days after the adoption of this Resolution, the City CITY COUNCIL RESOLUTION NO. 2007-28 PAGE 2 OF 5 Clerk shall file a copy of such map so endarsed in the records of the County Recorder, County of Riverside, State of Califomia. SECTION 2. The map of the boundaries of the CFD has been recarded in the Office of the County Recorder of Riverside County, California (Book 60 of Maps of Assessment and Community Facilities District at pages 46 through 47 and as Insirument No. 2005-0006006). SECTION 3. The facilities proposed to be financed by Improvement Area No. 2, including the proposed Annexation Area, are public infrastructure facilities and other governmental faciliries with an estimated useful life of five years ar longer, which the CFD is authorized by law to construct, own, operate or finance and that are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD, including but not limited to streets, streetscape, storm drain, water and sewer facilities, fire station, fire equipment, City fees and fees of the Elsinore Valley Municipal Water District, and related costs including designs, inspections, professional fees, annexation fees, connection fees and acquisition costs (the "Facilities"). Such Facilities need not be physically located within Improvement Area No. 2. SECTION 4. Except where funds are otherwise available, it is the intention of the Council to levy annually in accordance with procedures contained in the Act a special tax (the "Special Tax") sufficient to pay for the costs of financing the acquisition and/or construction of the Facilities, including the principal of and interest on the bonds proposed to be issued to finance the Facilities and other periodic costs, the establishment and replenishment of reserve funds, the remarketing, credit enhancement and liquidity fees, the costs of administering the levy and collection of the Special Tax and all other costs of the levy of the Special Taa~ and issuance of the bonds, including any fareclosure proceedings, architectural, engineering, inspection, legal, fiscal, and financial consultant fees, discount fees, interest on bonds due and payable prior to the expiration of one year from the date of completion of facilities (but not to exceed two years), election costs and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, disclosure counsel, financing consultants and printing costs, and all other administrative costs of the tax levy and bond issue. The Special Tax will be secured by recordation of a continuing lien against all real property in Improvement Area No. 2. The schedule of the rate and method of apportionment and manner of collection of the Special Tax is described in detail in Exhibit A attached hereto and by this reference incorporated herein. The Special Tax is CITY COUNCIL RESOLUTION NO. 2007-28 PAGE 3 OF 5 based upon the cost of financing the Faciliries, the demand that each parcel will place on the Facilities and the benefit (direct and/ar indirect) received by each parcel from the Facilities. The Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. In the event that a portion of the property within Improvement Area No. 2 shall become for any reason exempt, wholly or partially, from the levy of the Special Tax, the Council shall, on behalf of the CFD, increase the levy to the extent necessary upon the remaining property within Improvement Area No. 2 which is not delinquent or exempt in order to yield the required payments, subject to the m~imum t~. Under no circumstances, however, shall the Special Tax levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner of any other parcel or parcels within Improvement Area No. 2 by more than 10 percent. Furthermore, the maximum special t~ authorized to be levied against any parcel used for private residential purposes shall not be increased over time in excess of 2 percent per year. SECTION 5. A public hearing (the "Hearing") on the annexation of the Annexation Area into Improvement Area No. 2 and the proposed rate and method of apportionment of the Special Tax shall be held on Apri124, 2007, at 7:00 p.m., or as soon thereafter as practicable, at the Lake Elsinore Cultural Center located at 183 North Main Street, Lake Elsinore, California 92530. SECTION 6. At the time and place set forth above far the hearing, any interested person far or against the annexation of the Annexation Area into Improvement Area No. 2 or the levying of the Special T~ within the proposed Annexation Area will be heard. SECTION 7. The City may accept advances of funds from any sources, including private persons ar private entities, and is authorized and directed to use such funds for any authorized purpose, including any cost incurred by the City in annexing the Annexation Area into Improvement Area No. 2. The City may enter into an agreement to repay all of such funds as are not expended or committed for any authorized purpose at the time of the election on the levy of the Special Tax, if the proposal to levy such tax should fail, and to repay all of such funds advanced if the levy of the Special Tax shall be approved by the qualified electars of the Annexed Area. CITY COUNCIL RESOLUTION NO. 2007-28 PAGE 4 OF 5 SECTION 8. The City Clerlc is hereby directed to publish a notice ("Notice") of the Hearing pursuant to Section 6061 of the Government Code in a newspaper of general circulation published in the area of the proposed Annexation Area. Such Notice shall contain information set forth in Section 53322 of the Act. Such publication shall be completed at least 7 days prior to the date of the Hearing. SECTION 9. The Clerk may send a copy of the Notice by first-class mail, postage prepaid, to each registered voter and to each landowner within proposed Annexation Area as shown on the last equalized assessment roll. Said mailing shall be completed not less than fifteen (15) days prior to the date of the Hearing. SECTION 10. Pursuant to Section 53344.1 of the Act, the Council hereby reserves to itself, in its sole discretion, the right and authority by subsequent resolution to allow any owner of property within the proposed Annexation Area, subject to the provisions of Section 53344.1 of the Act and those conditions as it may impose, and any applicable prepayment penalties as prescribed in the bond indenture ar comparable instrument or document, to tender to the CFD treasurer in full payment or part payment of any installment of the Special Taxes or the interest or penalties thereon which may be due ar delinquent, but for which a bill has been received, any bond or other obligation secured thereby, the bond or other obligation to be taken at par and credit to be given far the accrued interest shown thereby computed to the date of tender. SECTION 11. The voting procedure with respect to the imposition of the Special Tax shall be by hand delivered or mailed ballot election. SECTION 12. This Resolution shall take effect from and after the date of its passage and adoption. CITY COUNCIL RESOLUTION NO. 2007-28 PAGE 5 OF 5 PASSED, APPROVED AND ADOPTED this 13th day of March, 2007. AYES: COUNCILMEMBERS: suckley, xickman, xelley Schiffner., Magee NOES: COLJNCILMEMBERS: None ABSENT: COIJNCILMEMBERS: None ABSTAIN: COLTNCILMEMBERS: None Robert E. Magee, City of Lake Elsit ATTEST: l ~~C~e,~J~~ ~~ Michelle Soto, Deputy City Clerk City of Lake Elsinore APPROVED AS TO FORM: . rbara Zei eibold, City Attorney City of Lake Elsinore ZONE MAP COMMUNITY FACILITIES DISTRICT No. 2004-3 OF THE CITY OF LAKE ELSINORE (ROSETTA CANYON) ZONE 1 COUNTY OF RIVERSIDE, (TRACT 25a7~) STATE OF CALIFORNIA scn~e: i'=soa' ~ ZONE 1 ZONE 1 (TRACT 25479) (TRACT 32503) IMPROVEMENT AREA 1 NOT A PMT zaNE 2 (TRACT 25476) ~ \ ~\ 1 IMPROVEMENT AREA 2 ~ v~~[cr ~ty`~~\ ~~ ~ r ~ ~~ harvin ra.w no scuc LECENO OISIIiILI BWNpRRT zac ammoaxr ZONE 2 (TRACT 2547B) EXHIBIT A RATE AND METHOD OF APPORTIONMENT AMENDED RATE AND METHOD OF APPORTIONMENT FOR CITY OF LAKE ELSINORE COMMiTNITY FACILITIES DISTRICT No. 2004-3 IMPROVEMENT AR~A No. 2(ROSETTA CANYON) A Special Tazc sha11 be levied on a11 Assessor's Parcels in City of Lake Elsinore Community Facilities District No. 2004-3 (Improvement Area No. 2) (Rosetta Canyon) ("CFD No. 2004-3 (IA No. 2)") and collected each Fiscal Year commencing in Fiscal Yeaz 2005-2006, in an amount determined through the application of the Rate and Method of Apportionment as described below. All of the real properry in CFD No. 2004-3 (IA No. 2), unless exempted by law or by the provisions hereof, shall be taYed for the purposes, to the extent and in the manner herein provided. A. 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 Pazcel Map, the land area shown on the applicable final map, parcel map, condomnuum plan, or other recorded County parcel map. "Act" means the Mello-Roos Community Facilities Act of 1982, being Chapter 2.5, Division 2 of Title 5 of the California Government Code. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2004-3 (IA No. 2): the costs of computing the Special Taxes and prepazing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2004-3 (IA No. 2) ar any designee thereof of complying with azbitrage rebate requirements; the costs to the City, CFD No. 2004-3 (IA No. 2) ar any designee thereof of complying with disclosure requirements of the City, CFD No. 2004-3 (IA No. 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 Taaces; the costs of the City, CFD No. 2004-3 (IA No. 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. Administrative Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or CFD No. 2004-3 (IA No. 2) for any other administrative purposes of CFD No. 2004-3 (IA No. 2), including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taafes. "Assessor's Parcel" means a lot or pazcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. City of Lake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (L4 No. 2) Page 1 "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property in each Zone, as deternuned in accordance with Section C1.b. below. "Authorized Facilities" means those authorized improvements, as listed on Exhibit "A" to the Resolution of Formation. "Backup Special Taa" means the Special Tas applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.l.d. below. "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 No. 2004-3" means City of Lake Elsinore Community Facilities District No. 2004-3 (Rosetta Canyon). "CFD No. 2004-3 (IA No. 2)" means Improvement Area No. 2 of CFD No. 2004-3, as identified on the boundary map for CFD No. 2004-3. "CFD No. 2004-3 (IA No. 2) Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 2004-3 and secured solely by Special Taxes levied on properiy within the boundaries of CFD No. 2004-3 (IA No. 2) under the Act. "City" means the City of Lake Elsinore. "City Council" means the City Council of the City ofLake Elsinore, acting as the legislative body of CFD No. 2004-3 (IA No. 2). "County" means the County of Riverside. "Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Ta~cable Public Property and Taxable Properry Owner Association Property, for which the Final Subdivision was recorded on or before January 1 of the prior Fiscal Yeaz and a building permit for new construction was issued after January 1, 2004 and on or before May 1 of the Fiscal Year preceding the Fiscal Yeaz for which the Special Tases are being levied. "Final Subdivision" means a subdivision of properry by recordation of a final map, pazcel 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 1352 that creates individual lots for which building permits may be issued without further subdivision. Ciry of Lake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) page 2 "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which CFD No. 2004-3 (IA No. 2) Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Table 1. "Maximum Special Tax" means the m~imum Special Ta7c, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non-Residential Property" means a11 Assessor's Pazcels of Developed Properiy for which a building permit permitting the construction of one or more non-residential units or facilities has been issued by the City. "Outstanding Bonds" means all CFD No. 2004-3 (IA No. 2) Bonds which aze deemed to be outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2004-3 (IA No. 2) that was owned by a property owner association, including any master or sub-association, as of January 1 ofthe prior Fiscal Year. "Proportionately" means for Developed Properry that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Assessar's Parcels of Developed Properry, or where the Backup Special Tax is being levied, that the ratio ofthe actual Special Tax levy to the Maximum Special Tas is equal for all Assessor's Parcels upon which a Backup Special Tax is being levied. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Taa~ per Acre is equal for all Assessor's Parcels of Undeveloped Property. The term "Proportionately" may similazly be applied to other categories of Taxable Property as listed in Section D below. "Public Property" means properry within the boundaries of CFD No. 2004-3 (IA No. 2) owned by, irrevocably offered ar dedicated to, or over, through or under which an easement for purposes of public right-of-way has been granted, to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taacation under Section 53340.1 of the Act shall be taxed and classified according to its use. "Residential Floor Area" means all of the squaze footage of living azea within the perimeter of a residential structure, not including any carport, walkway, gazage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Pazcel shall be made by reference to the building permit(s) issued for such Assessor's Pazcel. Ciry of Lake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) page 3 "Residential Property" means all Assessor's Parcels of Developed Properiy for which a building permit permitting the construction thereon of one or more residential dwelling units has been issued by the City. "Resolution of Formation" means the Resolution of Formation for CFD No. 2004-3 (IA No. 2). "Special Tax" means the special taaf to be levied in each Fiscal Year on each Assessor's Pazcel of Developed Properry, Tasable Property Owner Association Property, Taacable Public Property, and Undeveloped Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2004-3 (IA No. 2) to: (i) pay debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Yeaz; (ii) pay periodic costs on the CFD No. 2004-3 (IA No. 2) Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2004-3 (IA No. 2) Bonds due in the calendaz year commencing in such Fiscal Year; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay for reasonably anticipated Special Tas delinquencies based on the delinquency rate for the Special Tax levy in the previous Fiscal Year; (vi) pay directly for acquisition or conshuction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax levy on Undeveloped Property; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the Staze of California. "Taxable Property" means all of the Assessor's Pazcels within the boundaries of CFD No. 2004-3 (IA No. 2) which aze not exempt from the Special Tax pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Properiy Owner Association Property that are not exempt pursuant to Section E below. "Taxable Public Property" means all Assessor's Pazcels of Public Properiy that are not exempt pursuant to Section E below. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means, for each Fiscal Yeaz, all Taacable Properry not classified as Developed Property, Tasable Property Owner Association Property, or Taxable Public Property. "Zone" means Zone 1 or Zone 2, as applicable. "Zone 1" means the land geographically identified within the boundaries of zone 1 as delineated in Exhibit A to this Rate and Method of Apportionment. City of Lake Elsinore December I6, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 4 "Zone 2" means the land geographically identified within the boundaries of zone 2 as delineated in Eachibit A to this Rate and Method of Apportionment. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2004-3 (IA No. 2) shall be assigned to a Zone and further classified as Developed Property, Taxable Public Property, Taxable Properiy Owner Association Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. Residential Property shall be assigned to Land Use Classes 1 through 11 as listed in Table 1 below based on the Residential Floor Area for each unit. Non-Residential Properry shall be assigned to Land Use Class 12. C. MAXIMUM SPECIAL TAX RATE 1. Developed Property a. Maximum Special Tax The Ma~cimum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special T~ or (ii) the amount derived by application of the Backup Special Tax. b. Assi ng ed Special Tax The Assigned Special Tax for each Land Use Class is shown below in Table 1. City of Lake E(sinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 5 TABLE 1 Assigned Special Taxes for Developed Property Community Facilities District No. 2004-3 Improvement Area No. 2 Fiscal Year 2005-2006 ~~~~,E~ ~ ~d~ ~ ~~ ~ ~3 ~~~ ~~ ~ . ~ ~~~-~ ~ ~~4 ~ ~~,!~~ -',,~ , ~-~, ~ -~~~ `~ k " ~~~ ' ~~ ~ ~3 ~~ `" ~~~ d~ ~ ~~ ~ ~ ~ ~ ~ ~ ~~~~ ~-~~ ~ ~ ° ~p~~ ~ ~.~~ ~ ~-3Q~''_ ,~,,~ys' ~~ ~ ~~ ~ ~~ " e _ ~ ~~ '~ ~ a x+~(' ~'.aa""z 4~~~~~~~` M + ~~i? ~ T~',~ ~ ~ ~€~~' ~' S~? ~~-`~4-~.~.3. 4 2 ~S' ~ 'S`~~~ ~ ~'$ ~c~ ` 's-" ` ~ ~ .. s, Z'~ `~ .~+~._'.~^v,~.~iv~ ~ !~~-''~ r~4 ~-+ ~4~.~*~ 't' ~ ~~.'z'i ~ ~~~~ti.ul~L-.5 'azS~' "~''~.. ~~+• ~ - ~~~ 2 ~~~~ . ~vT~3 LY. ~ '-~p '4i : ~ ~ y~,: ~'Y1@CiY ~ ~~,.. ~_...._~_~:s ~~ ' - ~~ :~s-~ -._ - .__w~~,~~.. m`~'s~ , '~5~'.:c.; -F, .-~o. ,~,„ 'rc,~' ~y~ _., ~- __,=°~~ ~ .,'~!~,-a ,~s' ~1~~~,."~z ~m.: 1 Residential Property > 3,950 s.£ $3,271.79 per unit $3,565.47 per unit 2 Residential Property 3,701 - 3,950 s.£ $3,1~4.02 per unit $3,504.87 per unit 3 Residential Property 3,451 - 3,700 s.f. $3,076.25 per unit $3,443.77 per unit 4 Residential Properry 3,201 - 3,450 s.f. $2,978.48 per unit $3,290.64 per unit 5 Residential Property 2,951 - 3,200 s.f. $2,880.71 per unit $3,172.60 per unit 6 Residential Property 2,701 - 2,950 s.f. $2,727.85 per unit $3,055.06 per unit 7 Residential Properry 2,451 - 2,700 s.f. $2,659.26 per unit $2,975.78 per unit g Residential Property 2,201 - 2,450 s.f. $2,590.67 per unit $2,844.10 per unit 9 Residential Properry 1,951 - 2,200 s.£ $2,411.94 per unit $2,770.55 per unit 10 Residential Property 1,700 -1,950 s.£ $2,353.03 per unit $2,688.11 per unit ll Residential Property < 1,700 s.£ $2,29411 per unit $2,590.62 per unit 12 Non-Residential Property NA $17,817 per Acre $16,754 per Acre c. Increase in the Assi ng ed Special Tax The Assigned Special Taxes identified in Table 1 above sha11 be applicable for Fiscal Year 2005-2006, and shall increase thereafter, commencing on July 1, 2006 and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Assigned Special Tas for the previous Fiscal Year. d. Backun Special Tax The Fiscal Year 2005-2006 Backup Special Taac attributable to a Final Subdivision in Zone 1 or Zone 2 will equal $19,868 multiplied by the Acreage of all Tazcable Property, exclusive of any Taacable Property Owner Association Property and Taacable Public Properry, therein. The Backup Special Tas for each Assessor's Parcel of Residential Property shall be computed by dividing the Backup Special Tax attributable to the applicable Final Subdivision by the number of Assessor's Parcels for which building permits for residential construction haue or may be issued (i.e., the number or Ciry of Lake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 6 residential lots). The Backup Special Tax for each Assessor's Parcel ofNon- Residential Property therein shall equal$19,868 multiplied by the Acreage of such Assessor's Pazcel. If a Final Subdivision includes Assessor's Parcels of Taxable Properiy for which building permits for both residential and non-residential construction may be issued, exclusive of Taxable Properry Owner Association Properry and Taxable Public Property, then the Backup Special TaY for each Assessor's Pazcel of Residential Properry shall be computed exclusive of the Acreage and Assessor's Parcels of property for which building permits for non-residential construction may be issued. Notwithstanding the foregoing, if all or any portion of the Final Subdivision(s) described'm the preceding paragrapl~s is subsequently changed or modified, then the Backup Special Tax for each Assessor's Pazcel of Developed Property in such Final Subdivision area that is changed or modified shall be a rate per square foot of Acreage calculated as follows: 1. Deterxnine the total Backup Special Ta~ces anticipated to apply to the changed or modified Final Subdivision area prior to the change or modification. 2. The result of pazagraph 1 above shall be divided by the Acreage of Ta~cable Property which is ultimately expected to exist in such changed or modified Final Subdivision area, as reasonably determined by the CFD Administrator. 3. The result of paragraph 2 above shall be divided by 43,560. The result is the Backup Special Ta~c per square foot of Acreage which sha11 be applicable to Assessor's Parcels of Developed Property in such changed or modified Fina1 Subdivision area for all remaining Fiscal Years in which the Special Taac may be levied. Release of Obligation to Pay and Disclose Backup Special Tax All Assessors' Parcels within CFD No. 2004-3 (IA No. 2) will be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CFD Administrator determines that the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Taaces that may be levied against all Assessors' Parcels of Developed Properry result in 110% debt service coverage (i.e., the Assigned Special Taxes that may be levied against a11 Developed Property in each remaining Fiscal Yeaz based on then existing development in CFD No. 2004-3 (IA No. 2) is at least equal to the sum of (i) the Administrative Ciry ojLake Elsinore Decem6er 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 7 Expenses and (ii) 1.10 times maximum annual debt service, in each remaining Fiscal Year on the Outstanding Bonds). e. Increase in the Backup Special Tax On each July 1, commencing on July 1, 2006, the Backup Special Taac shall be increased by an amount equal to two percent (2%) of the Backup Special Tax for the previous Fiscal Year. f. Multiple Land Use Classes In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax levied on an Assessor's Parcel shall be the sum of the Maximum Special Ta~c for all Land Use Classes located on that Assessor's Pazcel. The CFD Administrator's allocation to each type of properiy shall be final. 2. Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property The Fiscal Year 2005-2006 Maa~imum Special Taac for Tasable Property Owner Association Property, Tasable Public Properiy, and Undeveloped Property in Zone 1 or Zone 2 shall be $19,868 per Acre, and shall increase thereafter, commencing on July 1, 2006 and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Masimum Special Tax for the previous Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Yeaz 2005-2006 and for each following Fiscal Year, the City Council shall levy the Special Taac until the amount of Special Tases levied equals the Special Taac Requirement. The Special Tax sha11 be levied each Fiscal Year as follows: First: The Special T~ shall be levied on each Assessor's Pazcel of Developed Property in Zone 1 and Zone 2 in an amount equal to 100% of the applicable Assigned Special Tax; Second: If additional monies aze needed to satisfy the Special Taac Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Properry in Zone 1 and Zone 2 at up to 100% of the applicable Maafimum Special Tas for Undeveloped Property; Third: If additional monies aze needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property in Zone 1 and Zone 2 whose Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tas up to the Maximum Special Tas for eack such Assessar's Parcel; Ciry of Lake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (L4 No. 2) page g Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax sha11 be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property and Taxable Public Properry in Zone 1 and Zone 2 at up to the applicable Maximum Special Taa~ for Taxable Property Owner Association Property or Taxable Public Properry. Notwithstanding the above the City Council may, in any Fiscal Year, lery Proportionately less than 100% of the Assigned Special Taac in step one (above), when (i) the City Council is no longer required to levy the Special Tax pursuant to steps two through four above in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2004-3 (IA No. 2) Bonds have already been issued or the City Council has covenanted that it will not issue any additional CFD No. 2004-3 (IA No. 2) Bonds (except refunding bonds) to be supported by the Special Tax. Further notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Pazcel within CFD No. 2004-3 (IA No. 2). E. EXEMPTIONS The City sha11 classify Property Owner Association Property and/or Public Properry in CFD No. 2004-3 (IA No. 2) as exempt property, provided that no such classificafion would reduce the Acreage of all Taacable Property to less than 75.86 Acres. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Properiy or Public Properiy. However, should an Assessor's Parcel no longer be classified as Property Owner Association Properiy or Public Property, its tax-exempt status will be revoked. Property Owner Association Property or Public Property that is not exempt from Special Taa~es under this section shall be subject to the levy of the Special Taac and shall be taxed Proportionately as part of the fourth step in Section D above, at up to 100% ofthe applicable Maximum Special Tax for Taxable Properry Owner Association Property or Taxable Public Property. F. MANNER OF COLLECTION The Special Tas shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2004-3 (LA No. 2) may directly bill the Special Tax, 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 Pazcels as permitted by the Act. Ciry ojLake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 9 G. APPEALS Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Pazcel is in error may submit a written appeal to CFD No. 2004-3 (IA No. 2). The CFD Administrator sha11 review the appeal and if the CFD Administrator concurs, the amount of the Special Tax levied shall be appropriately modified. The City Council may interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the City Council shall be final and binding as to all persons. H. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section H: "Buildout" means, for CFD No. 2004-3 (IA No. 2), that all expected building permits have been issued. "CFD Public Facilities" means either $27,000,000 in 2006 dollazs, which shall increase by the Construction Inflation Index on July 1, 2007, and on each July 1 thereafter, or such lower number as (i) sha11 be determined by the CFD Administrator as sufficient to provide the public facilities to be provided by CFD No. 2004-3 (IA No. 2) under the authorized bonding program for CFD No. 2004-3 (IA No. 2), or (ii) shall be determined by the City Council concurrently with a covenant that it will not issue any more CFD No. 2004-3 (IA No. 2) Bonds (except refunding bonds) to be supported by the Special Taxes levied under this Rate and Method of Apportionment as described in Section D. "Construction Inflation Index" means the annual percentage change in the Engineering News Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably compazable to the Engineering News Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs previously paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement Fund, and (iii) moneys currently on deposit in an escrow fiand that are expected to be available to finance the cost of CFD Public Facilities. "Improvement Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or constnxct CFD Public Facilities eligible under the Act. City of Lake Elsinore Decem6er 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 10 "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that aze deemed to be outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Yeaz. L Prepayment in Full Only an Assessor's Parcel of Developed Properiy, or Undeveloped Properiy for which a building permit has been issued, may be prepaid. The obligation of the Assessor's Parcel to pay any Special Ta7c may be permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only if there aze no delinquent Special Taxes with respect to such Assessor's Pazcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Ta~c obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor's Pazcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of CFD No. 2004-3 (IA No. 2) Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus plus plus plus less less Total: equals Redemption Premium Future Facilities Amount Defeasance Amount Administrative Fees and Expenses Reserve Fund Credit Capitalized Interest Credit Prepayment Amount As of the proposed date of prepayment, the Special Taac Prepayment Amount shall be calculated as follows: Paraeraph No.: Confirm that no Special Tas delinquencies apply to such Assessor's Pazcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tas. For Assessor's Parcels of Undeveloped Property for which a building permit has been issued, compute the Assigned Special Tax and Backup Special Taac for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Pazcel. Ciry of Lake Elsinore December l6, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 11 (a) Divide the Assigned Special Tas computed pursuant to paragraph 2 by the total estimated Assigned Special Ta~ces for the entire CFD No. 2004-3 (IA No. 2) based on the Developed Properry Speciai Ta~ces which could be levied in the current Fiscal Year on all expected development through Buildout of CFD No. 2004-3 (IA No. 2), excluding any Assessor's Pazcels which haue been prepaid, and (b) Divide the Backup Special Ta~c computed parsuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2004-3 (IA No. 2), excluding any Assessor's Pazcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be retired and prepaid (the "Bond Redemption Amount"). Multiply the Bon~ Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (e.g., the redemption price-100%), if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities AmounP'). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the eazliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to pazagraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2004-3 (IA No. 2) aze as calculated by the CFD Adminisirator and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2004-3 City of Lake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA No. 2) Page 12 (IA No. 2) Bonds, and the costs of recarding any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser o£ (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% ofthe reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Yeaz, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to pazagraph 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment (the "Capitalized Interest CrediP'). 15. The Special TaY prepayment is equal to the sum of the amounts computed pursuant to pazagraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount"). From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire CFD No. 2004-3 (IA No. 2) Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the Improvement Fund. The amount computed pursuant to paragraph 12 sha11 be retained by CFD No. 2004-3 (IA No. 2). The Special Tax Prepayment Amount may be insufficient to redeem a full $5,000 increment of CFD No. 2004-3 (IA No. 2) Bonds. In such cases, the increment above $5,000 ar integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of CFD No. 2004-3 (IA No. 2) Bonds or to make debt service payments. As a result of the payment ofthe current Fiscal Year's Special Tax levy as deternuned under paragraph 9(above), the CFD Administrator shall remove the current Fiscal Year's Special T~ levy for such Assessor's Pazcel from the County tax rolls. With respect to any Assessar's Parcel that is prepaid, the City Council sha11 cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Taac lien on such Assessor's Parcel, and the obligation of such Assessor's Pazcel to pay the Special Tas shall cease. City of Lake Elsino~e December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (IA Na. 2) Page I3 Notwithstanding the foregoing, no Special Taac prepayment shall be allowed unless, at the time of such proposed prepayment, the amount of Maafimum Special T~es that may be levied on Taxable Property within CFD No. 2004-3 (IA No. 2) both prior to and after the proposed prepayment is at least equal to the suxn of (i) the Administrative Expenses and (ii) 1.10 times maximum annual debt service, in each remaining Fiscal Yeaz on the Outstanding Bonds. 2. Prepayment in Part The Special Taac on an Assessor's Pazcel of Developed Properiy or an Assessor's Parcel of Undeveloped Properry for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP =[(PE - A) x F] + A These terms have the following meaning: PP = the partial prepayment. PE = the Special Tax Prepayment Amount calculated according to Section H.1. F= the percentage, expressed as a decimal, by which the owner ofthe Assessor's Parcel is partially prepaying the Special Tax. A= the Administrative Fees and Expenses calculated according to Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tas shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City Council shall (i) distribute the funds remitted to it according to Section H.1, and (ii) indicate in the records of CFD No. 2004-3 (IA No. 2) that there has been a partial prepayment of the Special Tas and that a portion of the Special Tax with respect to such Assessor's Pazcel, equal to the outstanding percentage (1.00 - F) of the remaining Maacimum Special Tax, shall continue to be levied on such Assessor's Pazcel pursuant to Section D. I. TERM OF SPECIAL TAX The Special Tax shall be levied for a period not to exceed forry yeazs commencing with Fiscal Year 2005-2006, provided however that Special Tases will cease to be levied in an eazlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2004-3 (IA No. 2) Bonds have been paid; and (ii) all Authorized Facilities have been constructed. City of Lake Elsinore December 16, 2004 (Amended May 23, 2006) CFD No. 2004-3 (L9 No. 2) Page I4 RATE AND METHOD OF APPORTIONMENT FOR CITY OF LAKE ELSINORE COMMLTNITY FACILITIES DISTRICT No. 2004-3 IMPROVEMENT AREA No. 2(ROSETTA CANYON) EXHIBIT A MAP OF ZONE 1 AND ZONE 2