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HomeMy WebLinkAboutCC Reso No 2007-160RESOLUTION NO. 2007-160 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE CANVASSING THE RESULTS OF THE SPECIAL ELECTION AELD WITHIN THE ANNEX AREA OF IMPROVEMENT AREA NO. 1 OF THE CITY OF LAI~ ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006-1 (SiTMMERLi~ WHEREAS, the City Council (the "Council") of the City of Lake Elsinore (the "City") has previously established the City of Lake Elsinore Community Facilities District No. 2006-1 (Summerly) (the "CFD") and designated areas within the CFD as Improvement Area No. l, Improvement Area No. 2 and Improvement Area No. 3, all pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"); and WHEREAS, the Council has previously conducted proceedings pertaining to the annexation of certain property (the "Annex Area") into Improvement Area No. 1, the rate and method of apportionment for the levy and collection of special taxes (the "Services Special Taac") to finance a portion of the cost of providing parks, open space and storm drain maintenance services, and the rate and method of apportionment for the levy and collection of special taxes (the "Special TaY") to pay the principal and interest on bonds issued or other debt or facilities, and the calling of an election in regard to the foregoing; and WHEREAS, on August 28, 2007, a special election was held within the Annex Area relative to the rate and method of apportionment of the Services Special Tax and the rate and method of apportionment of the Special Tax; and WHEREAS, at such special election the proposal for the rate and method of apportiorunent and manner of collection of the Services Special Tax and the proposal for the rate and method of apportionment and manner of collection of the Special Tax was approved by the requisite 2/3 of the votes cast by qualified electors of the Annex Area. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. It is hereby determined that the special election conducted within the Annex Area was duly and validly conducted. . CITY COiTNCIL RESOLUTION NO. 2007-160 PAGE 2 OF 3 SECTION 2. The Council, acting as the legislative body of the CFD, is authorized to levy the Services Special Tax, as specified in Resolution No. 2007- 136 adopted by the Council on July 24, 2007. SECTION 3. The Council, acting as the legislative body of the CFD, is authorized to levy the Special Tax, as specified in Resolution No. 2007-136 adopted by the Council on July 24, 2007. SECTION 4. The Interim City Clerk is hereby directed and authorized to record a Notice of Special T~ Lien pursuant to Section 3117.5 of the California Streets and Highways Code. SECTION 5. The Interim City Clerk is hereby directed and authorized to record a Norice of Cessation of Special Tax pursuant to Section 53330.5 of the Act extinguishing the levy of special taa~es within the Annex Area relating to Improvement Area No. 2 of the CFD. SECTION 6. This Resolution shall take effect from and after the date of its passage and adoption. PASSED, APPROVED AND ADOPTED this 28th day of August, 2007. [~~",S: ~,'Qi)NC~,M$M$ER$: Thomas Buckley, Daryl Hickman, Genie Kelley Robert Schiffner, and Mayor Robert Magee NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS:lvone ABSTAIN: COUNCILMEMBERS: CITY COUNCIL RE50LUTION NO. 2007-160 PAGE 3 OF 3 ATT ST: .I Michelle Soto, Interim City Clerk City of Lake Elsinore APPROVED AS TO FORM: ~~~ Barbara Zeid Leibold, City Attorney City of Lake Elsinore RATE AND METHOD OF APPORTIONMENT FOR CITY OF LAKE ELSINORE COMMUP~ITY FACILITIES DISTRICT No. 2006-1 IMPROVEMENT AREA No. 1 (SUMNIERL~ A Special Tas shall be levied on all Assessor's Parcels in City of Lake Elsinore Comxnunity Facilities District No. 2006-1 (Suminerly) ("CFD No. 2006-1 (IA No. 1)") and collected each Fiscal Year commencing in Fiscal Year 2006-2007, in an amount determined through the application oftlus Rate and Method of Apportionment as described below. All of the real properiy in CFD No. 2006-1 (IA No. 1), unless exempted by law or by the provisions hereof, shall be taaced far the purposes, to the extent and in the manner herein provided. A. DEFIPTITIONS The terms hereinafter set forth haue the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Pazcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. "Act" means the Mello-Roos Community Facilities Act of 1982, being Chapter 2.5, Part 1, 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. 2006-1 (IA No. 1): the costs of computing the Special Taxes and preparing the annuai Special Tax collection schedules (whether bythe 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 TaJCes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2006-1 (IA No. 1) or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2006-1(IA No. 1) or any designee thereof of complying with disclosure requirements of the City, CFD No. 2006-1 (IA No. 1) or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tas disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2006-1 (IA No. 1) 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 aduiinistration fees and third pariy expenses. Administrative Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or CFD No. 2006-1 (IA No. 1) for any other administrative purposes of CFD No. 2006-1 (IA No. 1), including City of Lake Elsinore Cammunity Faci[uies Dishict Nn. 2006-I January 16, 2006 Improvement Area No. I(Summerly) PaSe I attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tases. Ciry ofLake Elsinore Cammunity Faci[ities Dishict No. 2006-1 January 16, 2006 ImprovementArea No. 1(Summerly) Page 2 "Assessor's Parcel" means a lot or pazcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. "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 for Facilities" means the Special Taac for Facilities for each Land Use Class of Developed Property, as determined in accordance with Section C.1.(b) below. "Authorized Facilities" means those authorized improvements, as listed in an exhibit to the Resolution of Formation. "Backup Special Tax for Facilities" means the Special Taac for Facilities applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.1.(c) below. "Certificate of Occupancy means a certificate issued by the Citythat authorizes the actual occupancy of a dwelling unit for habitation by one or more residents. "CFD Administrator" means an official of the City, or designee thereof, responsible for determuiing the Special Taac Requirement for Facilities, the Special Taac Requirement for Services as deteiviined in accordance with Section I below, and providing for the levy and collection of the Special Taaces. "CFD No. 2006-1" means City of Lake Elsinore Community Facilities District No. 2006-1 (Smmnerly). "CFD No. 2006-1 (IA No. 1)" means Improvement Area No. 1 of CFD No. 2006-1. as identified on the boundary map for CFD No. 2006-1. "CFD No. 2006-1(IA No. l) 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. 2006-1 (IA No. 1) and secured solely by the Special Tax for Facilities levy on properiywithin theboundaries of CFD No. 2006-1 (IA No. 1) 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 legislarive body of CFD No. 2006-1 (IA No. 1). "County" means the County of Riverside. "Developed Property" means, with respect to the Special Tas for Facilities, for each Fiscal Year, all Tasable Properly, exclusive of Taxable Public Property and Taxable Properiy 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 on City of Lake Elsinore Communiry Facilities District No. 2006-1 January 16, 2006 Impravement Area Na. 1(Summerly) Page 3 or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Tax for Facilities is being levied. "Final Subdivision" means (i) a final map, or portion thereof, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots for which building permits may be issued, or (ii) for condominiums, a final map, or portion thereof, approved by the City and a condominium plan recorded pursuant to California Civil Code Section 1352 that creates individual lots for which building permits may be issued. "Ftiscal 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. 2006-1 (IA No. 1) Bonds aze issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Table 1 below "Maximum Special Tax for Facilities" means the maximum Special Ta~c for Facilities, deterniined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non-Residential Property" means all Assessor's Parcels ofDeveloped Property forwhich a building pernut permitting the construction of one or more non-residential units or facilities has been issued by the City. "Outstanding Bonds" means all CFD No. 2006-1(IANo. l) Bonds which are deemed to be outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year, anypropertywithin the boundaries of CFD No. 2006-1 (IA No. 1) that. was owned by a property owner association, including any master or sub-associarion, as of January 1 of the prior Fiscal Year. "Proportionately" means for Developed Property that the ratio ofthe actual Special Tas for Facilities levy to the Assigned Special Tax for Faciliries is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Taac for Facilities levy per Acre to the Maximuxn Special Taac for Facilities per Acre is equal for all Assessor's Parcels of Undeveloped Property. The term "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section D below. "Public Property" means, for each Fiscal Year, (i) any properiy witl~in the boundaries of CFD No. 2006-1 (IA No. 1) owned by, irrevocably offered or dedicated to, or over, through or under which an easement for ptuposes of public use has been granted, to the federal government, the State, the County, the City, the Lake Elsinore Unified School District; or any local government ar other public agency as of January 1 of the previous Fiscal Year, City ofLake Elsinore Communiry Faci[ities District No. 2006-I January I6, 2006 Improvement Area No. I(Summerly) p°ge 4 provided that any properiy leased by a public agency to a private entity and subject to taacation under Section 53340.1 of the Act shall be taaced and classified according to its use; or (ii) any properiy within the boundaries of CFD No. 2006-1 (IA No. 1) that was encumbered, as of January 1 of the previous Fiscal Year, by an unmanned utility easement making impractical its utilizarion for other than the purpose set forth in the easement. "Residential Floor Area" means all of the squaze footage of living area within the perimeter of a residential shucture, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be made by reference to the building permit(s) issued for such Assessor's ParceL "Residential Properly" means all Assessor's Parcels of Developed Properiy for which a building pemut permitting the construction thereon of one or more residential dwelling units has been issued by the City. "Resolution of Formation" means the resolurion of formation for CFD No. 2006-1(IA No. 1). "Special Tax" means any of the special taaces authorized to be levied by CFD No. 2006-1 (IA No. 1) pursuant to the Act. "Special Tax for Facilities" means the special t~ to be levied in each Fiscal Year on each Assessor's Parcel of Developed Properiy, Taxable Property Owner Association Properiy, Taxable Public Properiy, and Undeveloped Properiy to fund the Special Taac Requirement for Facilities. "Special Tax Requirement for Facilities" means that amount required in any Fiscal Year for CFD No. 2006-1 (IA No. 1) to: (i) pay debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Yeaz; (ii) payperiodic costs on the CFD No. 2006- 1(IA No. 1) Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2006-1 (IA No. 1) Bonds due in the calendaz year commencing in such Fiscal Year; (iii) pay a proportionate shaze of Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay for reasonably anticipated Special Taac for Facilities delinquencies based on the delinquency rate for the Special Tax for Facilities levy in the previous Fiscal Year; (vi) pay directly for acquisition or conshucrion of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Taac for Facilities levy on Undeveloped Properry; less (vii) a credit for funds auailable to reduce the annual Special Taa{ for Facilities levy, as determined by the CFD Adininistrator pursuant to the Indenture. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2006-1 (IA No. 1) which are not exempt from the Speciai Tax for Facilities pursuant to law or Section E below. City of Lake Elsinore Community Facilities District No. 2006-1 /anuary ~ o, ~wo Improvement Area No. I(Summerly) Page 5 "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taacable Property not classified as Developed Properiy, Taacable Property Owner Association Property, or Taxable Public Properiy. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2006-1(IA No. 1) shall be classified as Developed Properiy, Taacable Public Property, Taacable Properry Owner Association Property, or Undeveloped Property, and shall be subject to Special Tases in accordance with this Rate and Method of Apportionxnent determined pursuant to Sections C and D below. Residential Property shall be assigned to Land Use Classes 1 through 7 as listed in Table 1 below based on the Residential Floor Area for each unit. Non-Residential Property shall be assigned to Land Use Class 8. With respect to Residential Properiy, the Residential Floor Area shall be determined from the most recent building pernut issued prior to the issuance of a Certificate of Occupancy for such Assessor's Parcel. C, M~HINIUM SPECIAL TAX FOR FACILITIES Prior to the issuance of CFD No. 2006-1 (IA No. 1) Bonds, the Assigned Special Tax for Facilities on Developed Properly (set forth in Table 1), and the Backup Special Ta~c for Facilities atlributable to a Final Subdivision, may be reduced in accordance with, and subject to the conditions set forth in this paragraph. If it is reasonably determined by the CFD Administrator that the overlapping debt burden (as defined in the Statement of Goals and Policies for the Use of the Mello-Roos Community Facilities Act of 1982 adopted by the City Council, the "Goals and Policies") calculated pursuant to the Goals and Policies based upon the Assigned Special Taat for Facilities on Developed Properiy exceeds the City's maximum level obj ective set forth in such document, the Assigned Special Tax for Facilities on Developed Properiy, and the Backup Special Taac for Facilities attributable to a Final Subdivision, may be reduced to the amount necessary to satisfy the City's objective with respect to the maafimutn overlapping debt burden level with the written consent of the CFD Administratar. The reductions pemutted pursuant to this paragraph shall be reflected in an amended Notice of Special Taac Lien which the City shall cause to be recorded by executing a certificate in substantially the form attached hereto as Exhibit "A". City ofLake Elsinore Community Facilities District No. 2006-1 Tanuary 16, 2006 ImprovementArea No. I(Summerly) ~ PQge 6 1. DeveloUed Proveriv (a) Maximum Special Taac for Facilities The Ma~cimum Special Taac for Facilities for each Assessor's Parcel classified as Developed Properiy shall be the greater of (i) the amount derived by application of the Assigned Special Tax for Facilities or (ii) the amount derived by application of the Backup Special Tas for Facilities. (b) Assigned Special Taac for Facilities The Fiscal Year 2006-2007 Assigned Special Tax for Facilities for each Land Use Class is shown below in Table 1. TABLE 1 City of Lake Elsinore Communiry Facilities District No. 2006-1 January 16, 2006 ImprnvementArea No. I(Summerly) Page ~ Assigned Special Tax for Facilities for Developed Property Community Facilities District No. 2006-1 Fiscal Year 2006-2007 (c) Backup Special Taac for Facilities The Fiscal Yeaz 2006-2007 Backup Special Tax for Facilities atlributable to a Final Subdivision will equal $18,348, multiplied by the Acreage of all Taafable Property, exclusive of any Taarable Property Owner Association Property and Taatable Public Property, therein. The Backup Special Tax for Facilities for each Assessor's Pazcel of Residential Property shall be computed by dividing the Backup Special Taa~ for Facilities attributable to the applicable Final Subdivision by the number of Assessor's Pazcels for which building permits for residential construction have ar maybe issued (i.e., the number or residential lots). The Backup Special Tas forFacilities for each Assessor's Parcel ofNon-Residential Properiytherein shall equal $18,348, multiplied by the Acreage of such Assessor's ParceL If a Final Subdivision includes Assessor's Parcels of Taxable Property for which building permits for both residential and non-residential construction maybe issued, exclusive of Taxable Property Owner Association Property and Taacable Public Property, then the Backup Special Tax for Faciliries for each Assessor's Parcel of Residenrial Property shall be computed exclusive of the Acreage and Assessor's Parcels of properiy for which building permits for non-residential conshuction may be issued. Notwithstanding the foregoing, if all or any portion of the Final Subdivision(s) described in the preceding paragraphs is subsequently changed or modified by recordation of a lot line adjustment or similar instrument, and only if the CFD Administrator determines that such change or modification results in a decrease in the number ofAssessor's Parcels of Taxable Properiy for which building permits far residential conshuction have or may be issued within such Final Subdivision, then the Backup Special Taat for Facilities for each Assessor's Parcel of Developed Properiy that is part of the lot line adjushnent or sunilaz instnunent for such Final Subdivision shall be a rate per Acre as calculated below. The Backup Special Tas for Facilities previously deterxnined for an Assessor's Pazcel of Developed Property that is not a part of the lot line adjushnent or sunilar insirutnent for such Final Subdivision shall not be recalculated. 1. Determine the total Backup Special Tax for Facilities anticipated to apply to the changed or modified portion of the Final Subdivision area prior to the change or modification. 2. The result of paragraph 1 above shall be divided by the Acreage of Taacable Property which is ultunately expected to exist in such changed or modified portion of the Final Subdivision area, as reasonably determined by the CFD Admiuistrator. City ofLake Elsinore Community Facilities District No. 2006-1 January 16, 2006 ImprovementArea No. 1(Summerly) Page 8 3. The result of pazagraph 2 above shall be the Backup Special Tas for Facilities per Acre which shall be applicable to Assessor's Parcels of Developed Property in such changed or modified portion of the Final Subdivision area for all remaining Fiscal Years in which the Special Taac for Facilities may be levied. (d) Release of Obligation to Pay and Disclose Backup Special Tas All Assessor's Parcels within CFD No. 2006-1 (IA No. 1) will be relieved simultaneously and permanently from the obligation to pay and disclose the backup Special Taac if the CFD Administrator detennines that the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special tases that may be levied against all Assessor's Parcels of Developed Property results in 110% debt service coverage (i.e., the Assigned Special Tases that may be levied against all Developed Property in each remaining Fiscal Year based on then existing development in CFD No. 2006-1 (IA No. 1) is at least equal to the sum of (i) the Administrarive Expenses and (ii) 1.10 times maximum annual debt service, in each remaining Fiscal Year on the Outstanding Bonds). (e) Increase in the Assigned Special Tax for Facilities and Backup Special Tax for Facilities The Fiscal Year 2006-2007 Assigned Special Tax far Facilities, identified in Table 1 above, and Backup Special Tas for Facilities shall increase thereafter, comxnencing on July 1, 2007 and on July 1 of each Fiscal Yeaz thereafter, by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. (~ Multiple Land Use Ciasses In some instances an Assessor's Parcel of Developed Propertymay contain more than one Land Use Class. The Maximum Special Tax for Facilities levied on an Assessar's Parcel shall be the sum of the Maacimum Special Tas for Facilities for all Land Use Classes located on that Assessor's Parcel. The CFD Administrator's allocation to each type ofproperty shall be fmal. 2. Taxable Proneriv Owner Association Pronerlv. Taxable Public Propertv, and Undeveloned Properiv The Fiscal Yeaz 2006-2007 Maacimum Special Taac for Facilities far Ta~cable Properry Owner Association Properiy, Taacable Public Property, and Undeveloped Properiy shall be $18,348 per Acre and shall increase thereafter, commencing on July 1, 2007 and on July 1 of each Fiscal Yeaz thereafter, by an amount equal to two percent (2%) ofthe Maacimum Special Tax for Facilities in effect for the previous Fiscal Year. City of Lake Elsinore Community Facilities District No. 2006-I January 16, 2006 ImprovementArea Nn. 1(Summerly) Page 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES Commencing with Fiscal Year 2006-2007 and for each following Fiscal Year, the City Council shall determine the Special Tax Requirement for Facilities and levy the Special Taac for Faciliries until the amount of Special Tax for Facilities levy equals the Special Tas Requirement for Facilities. The Special Taac for Facilities shall be levied each Fiscal Year as follows: First: The Special Tax for Facilities shall be levied on each Assessor's Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax for Facilities; Second: If addirional monies are needed to satisfy the Special Taac Requirement for Facilities after the first step has been completed, the Special Taac for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximuxn Special Ta~c for Facilities for Undeveloped Property; Third: If additional monies are needed to sarisfy the Special Taac Requirement for Facilities after the first two steps have been compieted, then the levy of the Special Tas for Facilities on each Assessor's Pazcel of Developed Properiy whose Maximum Special Tax forFacilities is detemiined through the application of the Backup Special Tax for Facilities shall be increased in equal percentages from the Assigned Special Taac for Facilities up to the Masimum Special Tax for Facilities for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Special Taac for Facilities shall be levied Proportionately on each Assessor's Parcel of Taacable Properiy Owner Association Properiy and Taxable Public Property at up to 100% of the Maacimum Special Taac far Facilities for Taacable Property Owner Association Property or Taacable Public Property. Notwithstanding the above, the City Council may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Ta~c for Facilities in step one (above), when (i) the City Council is no longer required to levy the Special Taac for Facilities pursuant to steps two through four above in order to meet the Special Ta~c Requirement for Facilities; (ii) all authorized CFD No. 2006-1 (IA No. 1) Bonds have already been issued or the City Council has covenanted that it will not issue any additional CFD No. 2006-1 (IA No. 1) Bonds (except refunding bonds) to be supported by the Special Tax for Facilities; and (iii) all Authorized Facilities have been constructed and/or acquired. Further notwithstanding the above, under no circumstances will the Special Taac for Facilities levied against any Assessor's Parcel of Residential Properiy for which a Certificate of Occupancy 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 Parcel within CFD No. 2006-i (IA No. 1). City of Lake Elsinore Community Facilities District No. 2006-1 January 16, 2006 Improvement Area No. 1(Summerly) Page 10 E. No Special Tax for Facilities shail be levied on up to 25.1 Acres of Property Owner Association Property and/or Public Properly in CFD No. 2006-1 (IA No. 1). Taac-exempt status will be assigned by the CFD Admnustrator in the chronological order in which property becomes Property Owner Association Properly or Public Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property or Public Property, its tax-exempt status will be revoked. Property Owner Association Property or Public Propertythat is not exempt from Special Taac for Facilities under this section shail be subject to the levy of the Special Taac for Facilities and shall be taxed Proportionately as part of the fourth step in Section D above, at up to 100% of the Masimum Special Taac for Facilities for Taxable Property Owner Association Property or Taacable Public Property. F. MANNER OF COLLECTION The Special Tas for Facilities shall be collected in the saxne manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2006-1(IA No. 1) may directly bill the Special Tax for Facilities, may collect Special Taaces at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act. G. PREPAYIV~NT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G: "Buildout" means, for CFD No. 2006-1 (IA No. 1), that all expected building permits have been issued. "CFD Public Facilities" means either $18,635,000 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) shall be determined by the CFD Adininistrator as sufficient to provide the public facilities to be provided by CFD No. 2006-1 (IA No. 1) under the authorized bonding program for CFD No. 2006-1 (IA No. 1), or (ii) shall be deternuned by the City Council concurrently with a covenant that it will not issue any mare CFD No. 2006-1 (IA No. 1) Bonds (except refunding bonds) to be supported by the Special Tas for Facilities levyunder this Rate and Method of Apportionment as described in Section D above. "Construction Inflarion Index" means the annual percentage change in the Engineering News Record Building Cost Index for the City of L,os Angeles, measured as of the calendar yeaz which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparable to the Engineering News Record Building Cost Index for the City of I,os Angeles. City ofLake Elsinare Cammunity Facilities District No. 2006-1 January 16, 2006 ImprovementAreaNo.1 (Summerly) Pagell "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 fund 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 construct CFD Public Facilities eligible under the Act. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are deemed to be outstanding under the Indenture after the first interest and/or principal payxnent date following the current Fiscal Yeaz. 1. Prepayment in Full Only an Assessor's Parcel of Developed Property, or Undeveloped Property for which a building pemut has been issued, may be prepaid. The obligation of the Assessor's Parcel to pay the Special Tas far Facilities maybe permanently satisfied as described herein, provided that a prepayxnent maybe made with respect to a particulaz Assessor's Parcel only ifthere are no delinquent Special Taxes with respect to such Assessor's Pazcel at the time of prepayment. An owner of an Assessor's Pazcel intending to prepay the Special Tax for Facilities obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days ofreceipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor's Parcel. The CFD Adininistrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of CFD No. 2006-1 (IA No. 1) Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The Special Taic for Facilities Prepayment Amount (defined below) shall be calculated as suininarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less ~italized Interest Credit Total: equals Special Tax for Facilities Prepayment Amount As of the proposed date of prepayment, the Special Tas for Facilities Prepayment Amount shall be calculated as follows: Parasraph No.• Confum that no Special Tax delinquencies apply to such Assessor's Pazcel. City ofLake Elsinore Community Facilities Disdict No. 2006-1 January 16, 2006 ImprovementAreaNo.1 (Summerly) Page72 2. For Assessor's Parcels ofDeveloped Property, compute the Assigned Special Tax for Facilities and Backup Special Taac for Facilities. For Assessor's Parcels of Undeveloped Property far which a building permit has been issued, compute the Assigned Special Taac for Facilities and Backup Special Tax for Facilities for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. 3. (a) Divide the Assigned Special Tas for Facilities computed pursuant to paragraph 2 by the total estimated Assigned Special Tax for Facilities for the entire CFD No. 2006-1 (IA Na 1) based on the Developed Property Special Taac for Facilities which could be levied in the current Fiscal Year on all expected development through Buildout of CFD No. 2006-1 (IA No. 1), excluding any Assessor's Pazcels which have been prepaid, and (b) Divide the Backup Special Tax for Facilities computed pursuant to paragraph 2 by the total estimated Backup Special Taac for Facilities at Buildout for the entire CFD No. 2006-1 (IA No. 1), exciuding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be retired and prepaid (the "Bond Redemption Amount"). Multiply the Bond Redemption Amount computed pursuant to pazagraph 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. Multiply the lazger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principai payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. Detennine the Special Tax for Facilities levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Special Tas for Facilities Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayxnent. City of Lake Elsinare Community Facilities District Nn. 2006-1 ~ January l6, 2006 Improvement Area No. 1(Summerly) Page 13 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. 2006-1(IA No. l) are as calculated by the CFD Administrator and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs ofredeeming CFD No. 2006-1 (IA No. 1) Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser 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 fixnd for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of the date immediately following the first interest and/or principal payment foilowing the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fixnd or account under the Indenture after such first interest and/or principal payment (the "Capitalized Interest CrediP'). 15. The Speciai Taac for Facilities prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragaphs 13 and 14 (the "Special Tax for Facilities Prepayment Amount"). From the Special Tas for Facilities Prepayment Amount, the amounts computed pursuant to pazagraphs 4, 5, 11, 13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire CFD No. 2006-1 (IA No. 1) Bonds or make debt service payments. The amount computed pursuant to pazagraph 7 shall be deposited into the Improvement Fund. The amount computed pursuant to pazagraph 12 shall be retained by CFD No. 2006-1 (IA No. 1). The Special Taac for Facilities Prepayment Amount may be insufficient to redeem a full $5,000 increment ofCFD No. 2006-1 (IANo. 1) Bonds. In such cases, the increment above $5,000 or integral multiple thereofwill be retained in the appropriate fund established under the Indenture to be used with the next prepayment of CFD No. 2006-1(IA No. 1) Bonds or to make debt service payments. As a result of the payment of the current Fiscai Yeaz's Special Ta~c for Facilities levy as determined under paragraph 9(above), the CFD Administrator shall remove the current City of Lake Elsinore Community Facilities District No. 2006-I January 16, 2006 Improvement Area No. 1(Summerly) Page 14 Fiscal Year's Special Tax for Facilities levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Pazcel that is prepaid, the City Council shall cause a suitable norice to be recorded in compliance with the Act, to indicate the prepayment of the Special Taac for Facilities and the release of the Special Tax for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Ta~c for Facilities shall cease. Notwithstanding the foregoing, no Special Taac for Facilities prepayment shall be allowed unless, at the time of such proposed prepayment, the amount of Maacimum Speciai Tas for Facilities that may be levied on Ta~cable Property withiu CFD No. 2006-1 (IA No. 1) (after excluding 25.1 Acres ofProperiy Owner Association Property and/or Public Propertyin CFD No. 2006-1 (IA No. 1) as set forth in Secrion E) both prior to and,after the proposed prepayment is at least equal to the sum of (i) the Adtniuistrative Expenses, as defined in Section A above, and (ii) 1.10 times maacimum annual debt service, in each remaining Fiscal Year on the Outstanding Bonds. 2. Prepayment in Part The Special Taac for Facilities on an Assessor's Parcel of Developed Property or an Assessor's Parcel ofUndeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Secrion G.1; except that a partial prepayment shall be calculated according to the following formula: PP=[(PE-A)xF]+A These terms have the foliowing meaning: PP = the partial prepayment. PE = 1he Special Taac for Facilities Prepayment Amount calculated according to Section G.1. F= the percentage, expressed as a decimal, by which the owner ofthe Assessor's Pazcel is partially prepaying the Special Tas for Facilities. A= the Administrative Fees and Expenses calculated according to Section G.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Ta~c for Facilities and the percentage by which the Special Taac for Facilities shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required far the partial prepayment of the Special Taac for Facilities for an Assessor's Parcel within 30 days ofthe request and may charge a reasonable fee for providing this service. With respect to anyAssessor's Parcel that is partially prepaid, the City Council shall (i) distribute the funds remitted to it according to Section G.1, and (ii) indicate in the records of CFD No. 2006-1(IA No. 1) that there has been a partial prepayment of the Special Tax for Facilities and that a portion ofthe Special Tax for Facilities with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) ofthe remaining Maximum Special Ta~c for Facilities, shall continue to be levied on such Assessor's Parcel pursuant to Section D above. City ofLake Elsinore Community Facilities District No. 2006-1 January 16, 2006 Improvement Area No. I(Summer[y) Page IS H. TERM OF SPECIAL TAX FOR FACILITIES The Special Taac for Facilities shall be levied for a period not to exceed forty years commencing with Fiscal Year 2006-2007, provided however that the Special Tas for Facilities will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payxnents on the CFD No. 2006-1 (IA No. 1) Bonds haue been paid; (ii) all Authorized Facilities have been acquired and all reimbursements to the developer have been paid; and (iii) all other obligations of CFD No. 2006-1 (IA No. 1) have been satisfied. I. SPECIAL TAX FOR SERVICES The following additional definitions apply to this Section I "Developed Multifamily Unit" means a residential dweliing unit within a building in which each of the individual dwelling units has or shall have at least one common wall with another dwelling unit and a building permit has been issued by the City for such dwelling unit on or prior to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied. "Developed Single Family Unit" means a residential dweliing unit other than a Developed Multifamily Unit on an Assessor's Parcel For which a building permit has been issued by the City on or prior to May 1 preceding the Fiscal Year in which the Special Ta~c for Services is being levied. "Maximum Special Tax for Services" means the maxunum Special Tax for Services that can be levied by CFD No. 2006-1 (IA No. 1) in any Fiscal Year on any Assessor's Parcel. "Operating Fund" means a fund that shall be maintained for CFD No. 2006-1 (IA No. 1) for any Fiscal Year to pay for the actual costs of maintenance related to the Service Area, and the applicable Administrative Expenses. "Operating Fund Balance" means the amount of funds in the Operating Fund at the end of the preceding Fiscal Year. "Service Area" means pazks, open space, and storm drains. "Special Tax for Services" means any of the special ta~ces authorized to be levied within CFD No. 2006-1 (IA No. 1) pursuant to the Act to fund the Special Tax Requirement for Services. "Speciai Tax Requirement for Services" means the amount deterinined in anyFiscal Year for CFD No. 2006-1 (IA No. 1) equal to (i) the budgeted costs directly related to the Service Area, including maintenance, repair and replacement of certain components of the Service Area which haue been accepted and maintained or are reasonably expected to be accepted and maintained during the current Fiscal Year, (ii) pay a proportionate share of Administrative Expenses, and (iii) anticipated Special Taac for Services delinquencies based City ofLake Elsinore Community Facilities District No. 2006-I January 16, 2006 ImprovementArea No. 1(Summerly) Page 16 on the delinquency rate for the Special Tax for Services levy in CFD No. 2006-1 (IA No. 1) for the previous Fiscal Year, less (iv) the Operating Fund Balance, as detemvned by the CFD Administrator. 1. Rate and Method of Apportionment of the Special Tax for Services Commencing with Fiscal Year 2006-2007 and for each subsequent Fiscal Year, the City Council shall levy the Special Tax for Services on (i) all Assessor's Parcels containing a Developed Single Family Unit or Developed Multifamily Unit and (ii) all Assessor's Parcels ofNon-Residential Properiy, up to the applicable Maxiinum Special Tax for Services to fixnd the Special Tax Requirement for Services. The Maximum Special Taac for Services for Fiscal Year 2006-2007 shall be $246.84 per Developed Single Family Unit, $123.42 per Developed Multifamily Unit, and $555.90 per Acre for each Assessor's Parcel ofNon-Residential Properry. On each July 1, commencing July 1, 2007, the Maximuxn Special Tax for Services shali be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. 2. Duration of the Special Tax for Services The Special Taac for Services shall be levied in perpehxity to fund the Special Tax Requirement for Services, unless no longer required as determined at the sole discretion of the City Council. 3. Collection of the Special Tax for Services The Special Taac for Services shall be collected in the same manner and at the same tune as ordinary ad valorem property taaces, provided, however, that CFD No. 2006-1(IA No. 1) may collect the Speciai Taac for Services at a different time or in a different manner if necessaryto meet its funding requirements. J. APPEALS AND INTERPRETATIONS Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in errormay submit awritten appeal to CFD No. 2006-1 (IANo. 1). The CFD Administrator shall review the appeal and if the CFD Administrator concurs, the amount of the Special Tas levied shall be appropriately modified. The City Council may interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make detemunations relative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the City Council shall be fmal and binding as to all persons. City ofLake Elsinore Community Facilities District No. 2006-1 January 16, 2006 Improvement Area No. l(Summerly) PaBe 1 ~ EXHIBIT A CERTIFICATE TO AlVIEND SPECIAL TAX FOR FACILITIES CITY OF LAKE ELSINORE AND CFD No. 2006-1 (IA No. 1) CERTIFICATE Pursuant to Section C of the Rate and Method of Apportionment, the City of Lake Elsinore and CityofLakeElsinoreCommunityFacilitiesDistrictNo.2006-1 ("CFDNo.2006-1 (IANo. 1)") hereby agree to a reduction in the Assigned Special Tax for Facilities for Developed Properiy, and the Backup Special Tas for Facilities attributable to a Final Subdivision within CFD No. 2006-1 (IA No. 1): (a) The information in Table 1 relating to the Assigned Special Taac for Facilities for Developed Property within CFD No. 2006-1 (IA No. 1) shall be modified as follows: (c) The Ma7cimum Special Tas for Facilities for Taxabie Property Owner Association Property, Taxable Public Property, and Undeveloped Property within CFD No. 2006-1 (IA No. 1), as stated in Section C.2, shall be reduced from $18,348 per Acre to $ per Acre. 2. The Special Taac for Facilities may only be modified prior to the first issuance of CFD No. 2006- 1 (IA No. 1) Bonds. 3. Upon execution of the Certificate by the City of Lake Elsinore and landowner(s), the City shall cause an amended notice of Special Tax lien for CFD No. 2006-1 (IA No. 1) to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned aclrnowledges, on behalf ofthe City of Lake Elsinore and CFD No. 2006-1 (IA No. 1), receipt of this Certificate and modification of the Rate and Method of Apportionxnent as set forth in this Certificate. CITY OF LAKE ELSINORE By: CFD Admiuistrator Landowner(s) By: Date: (b) The Backup Speciai Tasc for Facilities attributable to a Final Subdivision within CFD No. 2006-1 (IA No. 1), as stated in Section C.1.(c), shall be reduced from $18,348 per Acre to $ per Acre.