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HomeMy WebLinkAboutCC Reso No 2007-198RESOLUTION NO. 2oo7-i9s A RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, TO ESTABLISH CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2007-5 (RED KITE) WHEREAS, the City Council (the "Council") of the City of Lake Elsinore (the "City") has received a petition (the "Petition") requesting the institution of proceedings for (i) formation of a community facilities district (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "AcY'), (ii) authorization of issuance of bonds for the CFD, and (iii) establishment of an appropriations limit for the CFD; and WHEREAS, the Council has determined that the Petition complies with the requirements of Government Code Section 53318(c) and now intends to initiate such proceedings; and WHEREAS, it is the intention of the Council to finance parks, open space and storm drain maintenance services that are in addition to those provided in the territory within the CFD prior to the formation of the CFD and do not suppiant services aiready available within the territory proposed to be included in the CFD through the formation of the CFD subject to the levy of a special tax to pay for such services, being approved at an election to be held within the boundaries of the CFD; and WHEREAS, it is also the intention of the Council to finance the acquisition and construction of the Facilities (as defined below) or any combination thereof through the formation of the CFD, subject to the authorization of bonds and the levy of a special tax to pay lease payments, installment purchase payments or other payments, or principal and interest on bonds, being approved at an election to be held within the boundaries of the CFD. NOW, THEREFORE, the City Council of the City of Lake Elsinore, California, does hereby resolve as follows: Section 1. The Council hereby determines to institute proceedings for the formation of a community facilities district under the terms of the Act. The exterior boundaries of the CFD 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. 2007-5 of the City of Lake Elsinore (Red Kite)," which map indicates by a boundary line the extent of the territory included in the proposed community facilities district and shall govern for all details as to the extent of the CFD. On the original and one copy of the map of such CFD 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 her office and, within fifteen (15) days after the adoption of this Resolution, the City Cierk shall file a copy of such map so endorsed in the records of the County Recorder, County of Riverside, State of California. 1 Section 2. The name of the proposed CFD shall be "City of Lake Elsinore Community Facilities District No. 2007-5 (Red Kite)." Section 3. 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 "Services Special Tax") sufficient to finance a portion of the cost of providing parks, open space and storm drain maintenance services (the "Services") that are in addition to those provided in the territory within the CFD prior to the formation of the CFD and do not supplant services already available within the territory proposed to be included in the CFD, the costs of administering the levy and collection of the Services Special Tax and ail other costs of the levy of the Services Special Tax, including any foreclosure proceedings, legal, fiscal, and financial consultant fees, election costs, and all other administrative costs of the tax levy. The Services Special Tax will be secured by recordation of a continuing lien against all real property in the CFD. The schedule of the rate and method of apportionment and manner of collection of the Services Special Tax is described in detail in Exhibit A attached hereto. The Services Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. Section 4. The facilities proposed to be financed by the CFD are public infrastructure facilities and other governmental facilities with an estimated useful life of five years or longer, which the CFD is authorized by law to construct, own or operate and that are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD, including, without limitations, City capital impact fees and Elsinore Valley Municipal Water District water and sewer connection fees, and related costs including design, inspections, professional fees, annexation fees, connection fees and acquisition costs (the "Facilities"). Such Facilities need not be physically located within the CFD. Section 5. 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 repienishment of reserve funds, the remarketing, credit enhancement and liquidity fees, the costs of administering the levy and collection of the Special Tax and ali other costs of the levy of the Special Tax and issuance of the bonds, including any foreclosure proceedings, architectural, engineering, inspection, legal, fiscal, and financiai consuitant 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 Speciai Tax will be secured by recordation of a continuing lien against all real property in the CFD. In the first year in which such a Special Tax is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the CFD pursuant to 2 Section 53314 of the Act and interest thereon. 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. The Special Tax is apportioned to each parcel pursuant to Section 53325.3 of the Act. In the event that a portion of the property within the CFD 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 the CFD which is not delinquent or exempt in order to yield the required payments, subject to the maximum tax. Under no circumstances, however, shali 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 the CFD by more tnan 10 percent. Furthermore, the maximum special tax 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 6. The Council hereby finds that the proposed Facilities are necessary to meet increased demands put upon the City as a result of the new development or rehabilitation within the proposed CFD. Section 7. A public hearing (the "Hearing") on the establishment of the CFD and the proposed rate and method of apportionment of the Services Special Tax and the Special Tax shall be held on January 8, 2008, at 7:00 p.m., or as soon thereafter as practicabie, at the Lake Elsinore Cultural Center located at 183 North Main Street, Lake Elsinore, California 92530. Section 8. At the time and place set forth above for the hearing, any interested person, inciuding all persons owning lands or registered to vote within the proposed CFD, may appear and be heard.. Section 9. Each City officer who is or will be responsible for the Services and the Facilities to be financed by the CFD, if it is established, is hereby directed to study the proposed CFD and, at or before the time of the above-mentioned Hearing, file a report with the Council, and which is to be made a part of the record of the Hearing, containing a brief description of the Services and the Facilities by type which will in his or her opinion be required to adequately meet the needs of the CFD and his or her estimate of the cost of providing the Services and the Facilities. The City Manager is directed to estimate the fair and reasonabie cost of all incidental expenses, including the cost of planning and designing the Facilities to be financed pursuant to the Act, including the cost of environmental evaluations of such facilities, ail costs associated with the creation of the CFD, issuance of bonds, determination of the amount of any special taxes, collection of any special taxes, or costs otherwise incurred in order to carry out the authorized purposes of the City with respect to the CFD, and any other expenses incidentai to the construction, completion and inspection of the authorized work to be paid through the proposed financing. 3 Section 10. The City may accept advances of funds from any sources, including private persons or private entities, and is authorized and directed to use such funds for any authorized purpose, including any cost incurred by the City in creating the CFD. 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 Services Special Tax and 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 Services Special Tax and the Special Tax shall be approved by the qualified electors of the CFD. Section 11. The City Clerk is hereby directed to publish a notice ("Notice") of the Hearing pursuant to Section 6061 of the Government Code in a newspaper of generai circulation published in the area of the proposed CFD. 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 12. The City Clerk may send a copy of the Notice by first-class mail, postage prepaid, to each registered voter and to each landowner within proposed CFD 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 13. Pursuant to Section 53344.1 of the Act, the Council hereby reserves to itself, in its sole disccetion, the right and authority by subseqaent resolution to allow any owner of property within fhe CFD, 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 or 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 or delinquent, but for which a bili 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 for the accrued interest shown thereby computed to the date of tender. Section 14. The voting procedure with respect to the establishment of the CFD and the imposition of the special tax shall be by hand delivered or mailed ballot election. Section 15. This Resolution shall take effect from and after the date of its passage and adoption. 4 PASSED, APPROVED AND ADOPTE of the City of Lake Elsinore, California, th~ f~BERT MAYOR ATTEST: N,.. ~I~w IVIAN M. MUNSON CITY CLERK APP OVED AS TO F RBARA Z D LEIBOLD CITY ATTORNEY CITY OF LAKE ELSINORE EE meeting of the City Council r~tber 2007. 5 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE )ss. CITY OF LAKE ELSINORE ) I, VIVIAN M. MUNSON, City Clerk of the City of Lake Elsinore, California, hereby certify that Resolution No. zoo~-i9s was adopted by the City Council of the City of Lake Elsinore, California, at a regular meeting held on the 27th day of November 2007, and that the same was adopted by the following vote: AYES: COUNCILMEMBER THOMAS BUCKLEY, MAYOR PRO TEM DARYL HICKMAN, COUNCILMEMBER GENIE KELLEY, MAYOR ROBERT E. MAGEE NOES: NONE ABSENT: COUNCILMEMAER ROBERT SCHIFFNER ABSTAIN: rrorrE ~. VIVIAN M. MUNSON CITY CLERK 6 EXHIBIT A RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT NO. 2007-5 OF THE CITY OF LAKE ELSINORE (RED KITE) The following sets forth the Rate and Method of Apportionment for the levy and collection of Special Taxes of the City of Lake Elsinore Community Facilities District No. 2007-5 (Red Kite) ("CFD No. 2007-5"). The Special Tax shall be levied on and collected each Fiscal Year, in an amount determined through the application of the Rate and Method of Apportionment described below. All of the real property within CFD No. 2007-5 unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided. SECTION A DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcei Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable Finai Map, parcel map, condominium pian, or other recorded County parcel map or similar instrument. The square footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560. "AcY' means the Mello-Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5, Part 1 of Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2007-5: the costs of computing the Special Taxes and preparing the Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Speciai Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes for Facilities to the Trustee; the costs of the Trustee (inciuding legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2007-5 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD ~lo. 2007-5 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2007-5 or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disciosure statements and responding to public inquiries regarding the Speciai Taxes; the costs of the City, CFD No. 2007-5 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. 2007-5 for any other administrative purposes of CFD No. 2007-5, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. City of Lake Elsinore November 15, 2007 Community Facilities Distric[ No. 2007-5 (Red Kite) Page 1 "Apartment Property" means all Assessor's Parcels of Residential Property on which one or more Apartment Units are constructed. "Apartment UniY' means a dwelling unitwithin a building comprised of attached residential units available for rental by the general public, not for sale to an end user, and under common management. "Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in a Final Map that was recorded prior to the January 1 St preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a building permit on or before May 1 S~ preceding the Fiscal Year in which the Special Tax is being levied. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel Number valid at the time the Special Tax is enrolled for the Fiscal Year for which the Special Tax is being levied. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Number. "Assessor's Parcel Number" means that number assigned to an Assessor's Parcel by the County for purposes of identification. "Assigned Special Tax for Facilities" means the Special Tax of that name described in Section D below. "Backup Special Tax for Facilities" means the Special Tax of that name described in Section E below. "Bonds" means any obiigation to repay a sum of money, including obligations in the form of bonds, notes, certificates of participation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuais, or long-term contracts, or any refunding thereof, to which Special Taxes for Facilities within CFD No. 2007-5 have been piedged. "Building Square Footage" or "BSF" means the squ.are footage of living area of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio or similar area on an Assesso~'s Parcel. The determination of Building Square Footage shall be made by reference o the building permit(s) for the Assessor's Parcel or similar official document means selected by the CFD Administrator. Once such determination has been made for an Assessor's Parcel, it shall remain fixed in all Future Years. "Calendar Year" means the period commencing January 1 of any year and ending the foilowing December 31. "CFD Administrator" means an official of the City, or designee thereof, responsible for (i) determining the Special Tax Requirement for Facilities, (ii) determining the Special Tax Requirement for Services, as defined in Section L, as applicable, and (iii) providing for the levy and coilection of the Special Taxes. City of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Red Kite) Page 2 "CFD No. 2007-5" means Community Facilities District No. 2007-5 (Red Kite) established by the City under the Act. "City" means the City of Lake Elsinore. "City Council" means the City Council of the City of Lake Elsinore, acting as the Legislative Body of CFD No. 2007-5, or its designee. "County" means the County of Riverside. "Developed Property" means all Assessor's Parcels of Taxable Property, not ciassified as Approved Property, Undeveloped Property, Provisional Undeveloped Propertythatare not Exempt Property pursuant to the provisions of Section J. below :(i) that are included in a Final Map that was recorded priorto the January 15` preceding the Fiscal Year in which the Special Tax is being levied, and (ii) a building permit for new construction has been issued on or before May 1S` preceding the Fiscal Year in which the Special Tax is being levied. "Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes pursuant to Section J., below. "Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which buiiding permits may be issued without further subdivision. "Fiscal Year" means the period commencing on July 1 of any year and ending the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Type" means any of the types listed in Table 1 of Section D. "Maximum Special Tax for Facilities" means the maximum Special Tax for Facilities, determined in accordance with Section C, that can be levied by CFD No. 2007-5 in any Fiscal Year on any Assessor's Parcel. "Non-Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for any type of non-residential use. "Partial Prepayment AmounY' means the amount required to prepay a portion of the Special Tax for Facilities obligation for an Assessor's Parcel, as described in Section H. "Prepayment AmounY' means the amount required to prepay the Special Tax for Facilities obligation in fuil for an Assessor's Parcel, as described in Section G. City of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Red Kite) Page 3 "Proportionately" means that the ratio of the actual Special Tax for Facilities levy to the applicable Assigned Special Tax for Facilities is equal for all applicable Assessor's Parcels. In case of Developed Property subjectto the apportionment ofthe Special Taxfor Facilities under step four of Section F, "Proportionately" in step four means that the quotient of (a) actual Speoial Tax for Facilities less the Assigned Special Tax for Facilities divided by (b) the Backup Special Tax for Facilities less the Assigned Special Tax for Facilities, is equal for all applicable Assesso~'s Parcels. "Provisional Undeveloped Property" means all Assessor's Parcels of Taxable Property that would otherwise be classified as Exempt Property pursuant to the provisions of Section J, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage set forth in Section J. "Residential Property" means all Parceis of Developed Property for which a buiiding permit has been issued for purposes of constructing one or more residential dwelling units. "Single Family Property" means all Parcels of Residential Property, otherthan Apartment Property, forwhich building permits have been issued fordetached orattached residential units. "Single Family UniY' means a residential dwelling unit other than an Apartment Unit. "Special Tax" means any of the special taxes authorized to be levied by CFD No. 2007-5 pursuant to the Act. "Special Tax for Facilities" means any of the special taxes authorized to be levied within CFD No. 2007-5 pursuant to the Act to fund the Special Tax Requirement for Facilities. "Special Tax Requirement for Facilities" means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established in association with the Bonds, (v) an amount equal to any anticipated shortfall due to Special Tax for Facilities delinquencies, and (vi) the collection or accumulatiori nf funds for the acquisition or construction of facilities authorized by CFD No. 2007-5 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax for Facilities on Undeveloped Property as set forth in Step Three of Section F., (vii) any amount required to establish or replenish any delinquency management funds established in association with the Special Taxes, less (viii) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to the Indenture. "Taxable Property" means all Assessor's Parcels within the boundaries of CFD No. 2007- 5, which have not prepaid the Speciai Tax for Facilities obligation in full pursuant to Section G or are not Exempt Property. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. Ciry of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Red Kite) Page 4 "Undeveloped Property" means all Assessor's Parcels of Taxable Propertywhich are not Developed Property, Approved Property or Provisional Undeveloped Property. SECTION B CLASSIFICATION OF ASSESSOR'S PARCELS Each Fiscal Year, beginning with Fiscal Year 2008-09, each Assessor's Parcel within CFD No. 2007-5 shail be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non-Residential Property. Lastly, each Assessor's Parcel of Residential Property shall further be classified as a Single Family Property or Apartment Property, and each Assessor's Parcel of Single Family Property shall be assigned to its appropriate Assigned Special Tax for Facilities rate based on the Building Square Footage for such Assessor's Parcel. SECTION C MAXIMUM SPECIAL TAX FOR FACILITIES Developed Propertv The Maximum Special Tax for Facilities for each Assessor's Parcel of Single Family Property in any Fiscal Year shall be the greater of (i) the Assigned Special Tax for Facilities or (ii) the Backup Special Tax for Facilities. The Maximum Special Tax for Facilities for each Assessor's Parcel of Apartment Property or Non-Residential Property shall be the applicable Assigned Special Tax for Facilities described in Table 1 of Section D. Prior to the issuance of Bonds, the Assigned Special Tax for Facilities on Developed Property set forth in Table 1 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 Goais and Policies for the Use of the Mello-Roos Communitv Facilities Act of 1982 adopted by the City Council, the "Goals and Policies") calculated pursuant to the Goals and Policies exceeds the City's maximum level objective set forth in such document, the Assigned Special Tax for Facilities on Developed Property may be reduced (by modifying Table 1) to the amount necessary to satisfy the City's objective with respect to the maximum overlapping debt burden level with the written consent of the CFD Administrator. In order to reduce the Maximum Special Tax for Facilities on Developed Property it may be necessary to reduce the Maximum Special Tax for Facilities for Undeveloped Property. The reductions permitted pursuant to this paragraph shall be reflected in an amended Notice of Special Tax Lien which the City shall cause to be recorded by executing a certificate in substantially the form attached hereto as Exhibit "A". City of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Red Kite) Page 5 2. Multiple Land Use Tvpe In some instances an Assessor's Parcei of Developed Property may contain more than one Land Use Type. The Maximum Special Tax for Facilities levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax for Facilities for all Land Use Types located on the Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final. 3. Approved Propertv Undeveloped Propertv and Provisional Undeveloped Propertv The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Approved Property, Undeveloped Property, or Provisional Undeveloped Property in any Fiscal Year shall be the applicable Assigned Special Tax for Facilities. SECTION D ASSIGNED SPECIAL TAX FOR FACILITIES Developed Propertv Each Fiscal Year, each Assessor's Parcel of Single Family Property, Apartment Property, or Non-Residential Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tax for Facilities applicable to an Assessor's Parcel of Developed Property for Fiscal Year 2008-09 shall be determined pursuant to Table 1 below. TABLE 1 ASSIGNED SPECIAL TAX FOR FACILITIES RATES FOR DEVELOPED PRQPERTY FOR FISCAL YEAR 2008-09 Land Use Type Building Square Foota e Rate Sin le Family Propert Less than 2,101 $2,528 er Single Family Unit Single Family Property 2,201-2,300 $2,619 per Single Family Unit Singie Family Property Greater than 2,300 $3,672 per Single Family Unit Apartment Property N/A $22,530 per Acre Non Residential Property N/A $22,530 per Acre 2. Approved Propertv Undeveloped Propertv and Provisional Undeveloped Property Each Fiscal Year, each Assessors Parcel of Approved Property, Undeveloped Property and Provisional Undeveloped Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tax for Facilities rate for an Assessor's Parcel classified as Approved Property, Undeveloped Property and Provisional Undeveloped Property for Fiscal Year 2008-09 shali be $22,530 perAcre. City of Lake Elsinore Community Facili[ies District No. 2007-5 (Red Kite) November 15, 2007 Page 6 SECTION E BACKUP SPECIAL TAX FOR FACILITIES At the time a Final Map is recorded, the Backup Special Tax for Facilities for all Assessors Parcels of Developed Property classified or reasonably expected to be classified as a Single Family Property within such Finai Map area shall be determined by (i) multiplying (a) the Maximum Special Tax for Facilities rate for Undeveloped Property by (b) the total Acreage of Taxable Property in such Final Map area, excluding Acreage classified as Provisional Undeveloped Property, Acreage classified or reasonably expected to be classified as Apartment Property or Non-Residential Property, and any Acreage reasonably expected to be classified as Exempt Property in such Final Map area, and (ii) dividing the results in (i) by the total number of Single Family Units reasonably expected to be constructed within such Final Map area. The resulting quotient shall be the Backup Special Tax for Facilities for each Assessor's Parcei of Single Family Property within such Final Map area. The Backup Speciai Tax for Facilities shall not apply to Non-Residential Property or Apartment Property. Notwithstanding the foregoing, if Assessor's Parcels of Developed Property which are classified or to be classified as Single Family Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax for Facilities for the area that has been changed or modified shall be recalculated, based on the methodology above, to equal the amount of Backup Special Tax for Facilities that would have been generated if such change did not take piace. SECTION F METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES Commencing Fiscal Year 2008-09 and for each subsequent Fiscai Year, the City Councii shall levy Special Taxes for Facilities on all Taxable Property in accordance with the following steps: Step One: The Special Tax for Facilities shail be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax for Facilities rates in Table 1 to satisfy the Speciai Tax Requirement for Facilities. Step Two: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Approved Propeity at up to 100% of the Maximum Special Tax for Facilities appiicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities. City of L,ake Elsinore Communiry Facilities District No. 2007-5 (Red Kite) November 15, 2007 Page 7 Step Three: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first tWO steps have been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Maximum Special Taxfor Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities. Step Four: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Special Tax for Facilities on each Assessor's Parcel of Developed Property whose Maximum Special Tax for Facilities is the Backup Special Tax for Facilities shall be increased Proportionately from the Assigned Special Tax for Facilities up to 100% of the Backup Special Tax for Facilities as needed to satisfy the Special Tax Requirement for Facilities. Step Five: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first four steps have been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Property up to 100% of the Maximum Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities. Notwithstanding the above, under no circumstances wiil the Special Taxfor Facilities 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 ordefauit by ownerof any otherAssessor's Parcel within CFD No. 2007-5. SECTION G PREPAYMENT OF SPECIAL TAX FOR FACILITIES The foliowing additional definitions apply to this Section G "CFD Public Facilities" means, $1,379,734, expressed in 2007 dollars, which shall increase by the Construction Inflation Index on July 1, 2008, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2007-5, or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes for Facilities levied under this Rate and Method of Apportionment. "Construction Fund" means an account specifically identified in the indenture or functionaliy equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible under CFD No. 2007-5. "Construction Inflation Index" means the annual percentage change in the Engineering News-Record Building Cost Index forthe city of Los Angeles, measured as of the Calendar City of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Red Kite) Page S 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 bythe City that is reasonably comparable to the Engineering News-Record Building Cost Index forthe city of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment. "Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Taxes for Facilities which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Taxes for Facilities. The Speciai Tax for Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Approved Property or Undeveloped Property for which a building permit has been issued or is expected to be issued, or an Assessor's Parcel of Provisional Undeveloped Property may be prepaid in full, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obligation would be prepaid. The Prepayment Amount for an Assessor's Parcel eligible for prepayment shall be determined as described below. An owner of an Assessor's Parcel intending to prepay the Special Tax for Facilities obiigation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such notice the CFD Administrator shall notify such owner of the Prepayment Amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for p~oviding this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The Prepayment Amount for each appiicable Assessor's Parcel shall be calculated according to the following formula (capitalized terms defined below): Bond Redemption Amount plus Redemption Premium pius Future Facilities Amount plus Defeasance Cost plus Administrative Fee less Reserve Fund Credit less Capitalized Interest Credit equals Prepayment Amount As of the date of prepayment, the Prepayment Amount shall be calculated as foilows: City of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Red Kite) Page 9 For an Assessor's Parcel of Developed Property, compute the Assigned Special Tax for Facilities and Backup Special Tax for Facilities, if any, applicable to the Assessor's Parcel. For an Assessor's Parcel of Approved Property or Undeveloped Property, compute the Assigned Special Tax for Facilities and the Backup Special Tax for Facilities as though it was already designated as Developed Property based upon the building permit issued or expected to be issued for that Assessor's Parcel. For an Assessor's Parcel of Provisional Undeveloped Property compute the Assigned Special Tax for Facilities for that Assessor's Parcel. 2. For each Assessor's Parcel of Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property to be prepaid, (a) divide the Assigned Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax for Facilities applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the City, and (b) divide the Backup Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax for Facilities applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the City. 3. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the Outstanding Bonds. The product shail be the "Bond Redemption AmounY'. 4. Multiply the Bond Redemption Amount by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed with the proceeds of the Bond Redemption Amount. This product is the "Redemption Premium." 5. Compute the Future Facilities Cost. 6. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the amount determined pursuant to paragraph 5 to determine the Future Facilities Cost to be prepaid (the "Future Facilities AmounY'). 7. Compute the amount needed to pay interest on the Bond Redemption Amount to be redeemed with the proceeds of the Prepayment Amount until the earliest redemption date forthe Outstanding Bonds. 8. Determine the actual Special Tax for Facilities levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. City of Lake Elsinore Community Facilities District No. 2007-5 (Red Kite) November 15, 2007 Page 10 9. Estimate the amount of interest earnings to be derived from the reinvestment of the Bond Redemption Amount plus the Redemption Premium until the earliest redemption date forthe Outstanding Bonds. 10. Add the amounts computed pursuant to paragraph 7 and 8 and subtract the amount computed pursuant to paragraph 9. This difference is the "Defeasance Cost." 11. Estimate the administrative fees and expenses associated with the prepayment, including the costs of computation of the Prepayment Amount, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption. This amount is the "Atlministrative Fee." 12. Calculate the "Reserve Fund CrediY' as the lesser of: (a) the expected reduction in the applicable reserve requirements, if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirements in effect afterthe redemption of Outstanding Bonds as a result of the prepayment from the balance in the applicable reserve funds on the prepayment date. Notwithstanding the foregoing, if the reserve fund requirement is satisfied by a surety bond or other instrument at the time of the prepayment, then no Reserve Fund Credit shall be given. Notwithstanding the foregoing, the Reserve Fund Credit shall in no event be less than 0. 13. If any capitalized interest for the Outstanding Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuantto paragraph 2(a) or2(b) bythe expected balance in the capitalized interest fund or account underthe Indenture after such first interest and/or principal payment. This amount is the "Capitalized Interest Credit." 14. The Prepayment Amount is equal to the sum ofthe Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Cost, and the Administrative Fee, less the Reserve Fund Credit and the Capitalized Interest Credit. 15. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 10, 12, and 13 shall be deposited into the appropriate fund as established under the Indenture and used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 6 shail be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by CFD No. 2007-5. City of Lake Elsinore Community Facilities District No. 2007-5 (Red Kite) November 15, 2007 Page 11 The Special Tax for Facilities prepayment amount may be insufficient to redeem a fuli $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established underthe Indenture to be used with the next prepayment of Bonds or to make debt service payments. With respect to a Special Tax for Facilities obiigation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of CFD No. 2007-5 that there has been a prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such prepayment to indicate the prepayment of the Speciai Tax for Facilities obligation 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 such Special Taxes for Facilities shall cease. Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxabie Property, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year. SECTION H PARTIAL PREPAYMENT OF SPECIAL TAX FOR FACILITIES The Special Taxfor Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Approved Property or Undeveloped Property for which a building permit has been issued or is expected to be issued, or and Assessor's Parcei of Provisional Undeveloped Property, as calculated in this Section H below, may be partiaily prepaid, provided that there are no delinquent Special Taxes, penaities, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obiigation would be prepaid. The Partiai Prepayment Amount shall be calculated according to the following formula: PP=(P~-A)xF+A The terms above have the following meanings PP = the Partial Prepayment Amount. P~ = the Prepayment Amount calculated according to Section G. F= the percent by which the owner of the Assessor's Parcel is partially prepaying the Special Tax for Facilities obligation. A= the Administrative Fee calculated according to Section G. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax for Facilities and the percentage by which the Special Tax for Facilities shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for Facilities for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. W ith respect to City of Lake Elsinore Community Facilities District No. 2007-5 (Red Kite) November 15, 2007 Page 12 any Assessor's Parcel that is partially prepaid, the City Council shall (i) distribute the funds remitted to it according to Section G, and (ii) indicate in the records of CFD No. 2007-5 that there has been a partial prepayment of the Special Tax for Facilities obiigation and shall cause a suitable notice to be recorded in compiiance with the Act within thirty (30) days of receipt of such partial prepayment of the Special Taxfor Facilities obligation to indicatethe obligation of such Assessor's Parcel to pay such prepaid portion of the Special Tax for Facilities shall cease. Notwithstanding the foregoing, no partial prepayment will be aliowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property after such partial prepayment, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year. SECTION 1 TERMINATION OF SPECIAL TAX For each Fiscal Year that any Bonds are outstanding the Special Tax for Facilities shall be levied on all Assessor's Parcels subject to the Special Tax for Facilities. The Special Tax for Facilities shall cease not later than the 2047-2048 Fiscal Year, however, the Special Taxes for Facilities wili cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2007-5 Bonds have been paid; (ii) all authorized facilities for CFD No. 2007-5 have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special Taxes for Facilities remain uncoilected and (iv) ail other obligations of CFD No. 2007-5 have been satisfied. SECTION J EXEMPTIONS The City shall classify as Exempt Property, in order of priority, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use bythe State of California, Federal or other local governments, including school districts, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessors Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor's Parcels restricted to other types of public uses determined by the City Council, provided that no such classification would reduce the sum of all Taxable Property to less than 5.55 Acres. Notwithstanding the above, the City Council shall not ciassify an Assessor's Parcel as Exempt Property if such classification would reduce the sum of all Taxable Propertyto less than 5.55 Acres. Assessor's Parcels which cannot be classified as Exempt Property City of Lake Elsinore November 15, 2007 Community Facili[ies District No. 2007-5 (Red Kite) Page 13 because such classification would reduce the Acreage of all Taxable Property to less than 5.55 Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Taxes pursuant to Step Five in Section F. SECTION K MANNER OF COLLECTION OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2007-5 may collect Special Taxes for Facilities at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreciose on delinquent Assessor's Parcels as permitted by the Act. SECTION L SPECIAL TAX FOR SERVICES The following additional definitions apply to this Section L: "Developed Multifamily UniY' means a residential dwelling unit within a building in which each of the individual dwelling units has or shall have at least one common wail with another dweiling 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 UniY' means a residential dwelling unit otherthan a Developed Multifamily Unit on an Assessor's Parcel forwhich a building permit has been issued bythe City on or prior to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied. "Maximum Special Tax for Services" means the maximum Special TaxforServices that can be levied by CFD No. 2007-5 in any Fiscal Year on any Assessor's Parcel. "Operating Fund" means a fund that shail be maintained for CFD No. 2007-5 for any Fiscal Year to pay for the actual costs of maintenance related to the Service Area, and the applicable Administrative Expenses. "Operating Fund Baiance" means the amount of funds in the Operating Fund at the end of the preceding Fiscal Year. "Service Area" means parks, open space, and storm drains. "Special Tax for Services" means any of the special taxes authorized to be levied within CFD No. 2007-5 pursuant to the Act to fund the Special Tax Requirement for Services. City of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Red Kite) Page 14 "Special Tax Requirement for Services" means the amount determined in any Fiscal Year for CFD No. 2007-5 equal to (i) the budgeted costs directly related to the Service Area, including maintenance, repair and replacement of certain components ofthe Service Area which have been accepted and maintained or are reasonabiy expected to be accepted and maintained during the current Fiscal Year, (ii) Administrative Expenses, and (iii) anticipated delinquent Special Taxes for Services based on the delinquency rate in CFD No. 2007-5 for the previous Fiscal Year, less (iv) the Operating Fund Balance, as determined by the CFD Administrator. 1. Rate and Method of Apportionment of the Special Tax for Services Commencing Fiscal Year 2008-2009 and for each subsequent Fiscal Year, the City Council shall levy Speciai Taxes for Services on (i) ail Assessor's Parceis containing a Developed Single Family Unit or Developed Multifamily Unit and (ii) all Assessor's Parcels of Non-Residential Property, up to the applicable Maximum Special Tax for Services to fund the Special Tax Requirement for Services. The Maximum Speciai Taxfor Services.for Fiscal Year 2008-2009 shall be $256.81 per Developed Single Family Unit, $128.41 per Developed Multifamily Unit, and $578.36 per Acre for each Assessor's Parcel of Non-Residential Property. On each July 1, commencing July 1, 2009, the Maximum Special Tax for Services shall be increased by two percent (2.00°/a) of the amount in effect in the prior Fiscal Year. 2. Duration of the Special Tax for Services The Special Tax for Services shall be levied in perpetuity to fund the Special Tax Requirement for Services, unless no longer required as determined at the sole discretion of the City Councii. 3. Collection of the Special Tax for Services The Special Tax for Services shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2007-5 may collect the Special Tax for Services at a different time or in a different manner if necessary to meet its funding requirements. SECTION M APPEALS Any property owner claiming that the amount or application ofthe Special Tax is not correct may file a written notice of appeai with the CFD Administrator not later than twelve months after having paid the first instailment of the Special Tax that is disputed. The CFD Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, and rule on the appeal. If the CFD Administrator's decision requires that the Special Tax for an Assessor's Parcel be modified or changed in favor of the property owner, a cash refund Ciry of Lake Elsinore November 15, 2007 Community Facilities District No. 2007-5 (Ited Kite) Page 15 shall not be made (except for the last year of levy), but an adjustment shall be made to the Special Tax on that Assessor's Parcel in the subsequent Fiscal Year(s). 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 and levy of the Special Taxes and any landowner or resident's appeals. Any decision of the City Council shall be final and binding as to all persons. City of Lake Elsinore Community Facilities District No. 2007-5 (Red Kite) November 15, 2007 Page 16 EXHIBIT "A" CITY OF LAKE ELSINORE AND CFD NO. 2007-5 CERTIFICATE 1. Pursuant to Section of the Rate and Method of Apportionment of Special Tax (the "RMA"), the City of Lake Elsinore (the "City") and Community Facilities District No. 2007-5 of the City of Lake Elsinore ("CFD No. 2007-5 ") hereby agree to a reduction in the Maximum Special Tax for Facilities for Developed Property (within CFD No. 2007-5]: (a) The information in Table 1 relating to the Maximum Special Tax for Facilities for Developed Property and/or Undeveloped Property within (CFD No. 2007-5] shall be modified as follows: (insert Table 1 showing effecfive change to special tax rates and/orinsert change to specia/ tax rates for Undeveloped P~operty] 2. Table 1 may oniy be modified prior to the issuance of Bonds. 3. Upon execution of the Certificate by the City and CFD No. 2007-5 the City shall cause an amended Notice of Special Tax Lien (for the CFD No. 2007-5j to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned acknowledges, on behalf of the Ci1ty of Lake Elsinore and CFD No. 2007-5, receipt of this Certificate and modification ofthe RMA as set forth in this Certificate. CITY OF LAKE ELSINORE By: Date: CFD Administrator COMMUNITY FACILITIES DISTRICT NO. 2007-5 OF THE CITY OF LAKE ELSINORE By: Date: City of Lake Elsinore Community Facilities District No. 2007-5 (Red Kite) November 15, 2007 Page 17