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HomeMy WebLinkAboutCC Reso No 2006-063RESOLUTION NO. 2006-63 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING AN ANIENDED BOUNDARY MAP FOR THE CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2005-2 (ALBERHILL RANCI~ AND AN AMENDMENT TO THE RATE AND METHOD OF APPORTIONMENT WITH RESPECT TO IMPROVEMENT AREA B AND IMPROVEMENT AREA C OF SUCH COMMUNITY FACILITIES DISTRICT; AND AUTHORIZING THE RECORDING OF AN AMENDMENT NO. 1 TO NOTICE OF SPECIAL TAX LIEN RELATING THERETO WHEREAS, on July 12, 2005, the City Council (the "Council") of the City of Lalce Elsinore (the "City") adopted Resolution No. 2005-62 stating its intention to form the City of Lake Elsinare Community Facilities District No. 2005-2 (Alberhill Ranch) (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "AcY'), to finance a portion of the cost of providing parks, open space and storm drains 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 to finance the purchase, construction, expansion or rehabilitation of certain real and other tangible property with an estimated useful life of five years ar longer, including public infrastructure facilities and other governmental facilities, which the city is authorized by law to construct, own ar operate (the "Facilities"), and designating parrions of the CFD as Improvement Area A, Improvement Area B and Improvement Area C; and WHEREAS, on July 12, 2005, the Council also adopted Resolution No. 2005-63 stating its intention and the necessity to incur bonded indebtedness in the amount of not to exceed $28,000,000, $36,000,000 and $26,000,000 for Improvement Area A, Improvement Area B and Improvement Area C, respectively, to be issued far the purpose of financing the purchase, construction, expansion ar rehabilitation of the Facilities; and WHEREAS, notice was published as required by law relative to the intention of the Council to form the CFD and to incur bonded indebtedness in the amount not to exceed $28,000,000, $36,000,000 and $26,000;000 within the boundaries of Improvement Area A, Improvement Area B and Improvement Area C, respectively, of the CFD; and CITY COUNCIL RESOLUTION NO. 2006-63 Page 2 of 4 WHEREAS, on August 23, 2005, which was then continued to September 13, 2005, this Council held a noticed public hearing as required by law relative to the determination to proceed with the formation of the CFD, the rate and method of apportionment and manner of collection of the special ta~ to be levied within the CFD to pay for the Services and the rate and method of apportionment and manner of collection of the special tax to be levied within each Improvement Area to pay the principal and interest on the proposed bonded indebtedness of each Improvement Area of the CFD, and relative to the necessity far authorizing the bonds, the purpose for which the bonds are to be issued, the amount of the proposed debt, the m~imum term of the bonds and the maximum annual rate of interest to be paid; and WHEREAS, at said hearing all persons desiring to be heard on all matters pertaining to the formation of the CFD and the incurring of bonded indebtedness by each of the Improvement Areas of the CFD were heard and a full and fair hearing was held; and WHEREAS, the Council subsequent to said hearing adopted Resolution No. 2005-138 deternuning the validity of prior proceedings and established the CFD; and WHEREAS, the Council subsequent to said hearing adopted Resolution No. 2005-139 which called an election within the CFD for September 13, 2005 on the proposition of incurring bonded indebtedness, levying a special tax and setting an appropriations limit; and WHEREAS, on September 13, 2005, an election was held within the CFD in which the eligible electars approved by more than two-thirds vote the proposition of incurring bonded indebtedness, levying a special t~, and setting an appropriations limit; and WHEREAS, change in the development plan within Improvement Area B and Improvement Area C necessitates an amendment to the boundaries of Improvement Area B and Improvement Area C and an amendment to the rate and method of apportionment and manner of collection of special tax (the "Rate and Method") with respect to Improvement Area B and Improvement Area C; and CITY COiTNCIL RESOLUTION NO. 2006-63 Page 3 of 4 WHEREAS, no additional property is being added to the existing boundary of Improvement Area B and Improvement Area C as a result of the amendment to the boundaries of Improvement Area B and Improvement Area C; and WHEREAS, there will be no increase in the maximum special tax with respect to any parcel within Improvement Area B or Improvement Area C as a result of the amendment to the Rate and Method with respect to Improvement Area B and Improvement Area C. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. The Council hereby approves the amended exterior boundaries of Improvement Area B and Improvement Area C as specified and described on that certain map now on file in the office of the Clerk entitled "Amended Boundary of Improvement Areas B and C of Community Facilities District No. 2005-2 of the City of Lake Elsinore (Alberhill Ranch)," which map indicates by a boundary line the extent of the territory included in Improvement Area B and Improvement Area C of the CFD 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 endarse the certificate evidencing the date and adoption of this resolution. The City Clerk shall file the original of such map in his office and, within fifteen (15) days after the adoption of this Resolution, the City Clerk shall file a copy of such map so endorsed in the records of the County Recorder, County of Riverside, State of California. SECTION 2. The Council hereby approves the amended schedule of the rate and method of apportionment and manner of collection of the special tax with respect to Improvement Area B and Improvement Area C as described in detail in Exhibit A attached hereto and by this reference incorporated herein. SECTION 3. The City Clerk is hereby directed to record or cause the recardation of Amendment No. 1 to Notice of Special Tax Lien substantially in the form attached hereto as Exhibit B. SECTION 4. This Resolurion shall take effect from and after the date of its passage and adoption. CITY COUNCIL RESOLUTION NO. 2006-63 Page 4 of 4 PASSED, APPROVED AND ADOPTED this 9th day of May, 2006, by the following vote: AYES: COUNCILMEMBERS: KELLEY, SCHIFFNER, MAGEE NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: BUCKLEY, HICKMAN ABSTAIN: COUNCILMEMBERS: NONE ATTES . ~/ Frederic ay, City Clerk City of Lake Elsinore City of Lake ~rbara Zeid ~eibold, City Attorney City of Lake Elsinore EXHIBIT A RATE AND METHOD OF APPORTIONMENT AMENDED RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT NO. 2005-2 OF THE CITY OF LAKE ELSINORE (Alberhill Ranch) (IMPROVEMENT AREA B) The following sets forth the Rate and Method of Apportionment for the levy and collection of Special Taxes in Improvement Area B of the City of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) ("CFD No. 2005-2"). The Special Tas shall be levied on and collected in Improvement Area B of CFD No. 2005-2 each Fiscal Year, in an amount determined through the application of the Rate and Method of Apportionment described below. All of the real properry within Improvement Area B, 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 DEFIIVITION5 The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map or instrument. The square footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560. "Act" means the Mello-Roos Communities Facilities Act of 1982, as amended, being Chapter 2.5, Part 1 of Division 2 of Title 5 of the Government Code of the State of Califomia. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of Improvement Area B: the costs ofcomputing the Special TaYes and preparing the Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Tases for Facilities to the Trustee; the costs of the Trustee (including legal counsel) in the discharge ofthe duties required of it under the Indenture; the costs to the City, Improvement Area B or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, Improvement Area B or any designee thereofof complying with disclosure requirements ofthe City, Improvement Area B or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Tases; the costs ofthe City, Improvement Area B or any designee thereof related to an appeal of the Special Taac; the costs associated with the release of funds from an escrow account; and the City's annual administration fees and third party expenses. Administration Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or Improvement Area B for any other administrative purposes of Improvement Area B, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. Ciry of Lake Elsinore June 22, 2005 Community Facilities Dishic[ No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B ~ Page 1 "Apartment Property" means all Assessor's Parcels ofResidential Property on which one or more Apartment Units are constructed. "Apartment Unit" means a dwelling unit within 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 ls~ preceding the Fiscal Year in which the Special Tas is being levied, and (ii) that have not been issued a building permit on or before May 151 preceding the Fiscal Year in which the Special Tax is being levied. "Assessor's Parcel" means a lot or parcel of land designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number. "Assessor's Parcel Map" means an official map ofthe Assessor ofthe 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 Tas ofthat 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 obligation to repay a sum ofmoney, including obligations in the form ofbonds, notes, certificates ofparticipation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Taxes for Facilities within Improvement Area B have been pledged. "Building Square Footage" ar "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the building permit application for such Assessor's Parcel. "Calendar Year" means the period commencing January 1 of any year and ending the following December 31. "CFD Administrator" means an official of the City, or designee thereof, responsible for (i) determining the Special Tax Requirement for Facilities, (ii) determining the Special Tvc Requirement for Services, as defined in Section L, as applicable and (iii) providing for the levy and collection of the Special Taxes. "CFD No. 2005-2" means Community Facilities District No. 2005-2 (Alberhill Ranch) established by the City under the Act. CiTy of Lake Elsinore ~ June 22, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 2 "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. 2005-2, or its designee. "County" means the County of Riverside. "Developed Property" means all Assessor's Parcels of Taxable Property that: (i) are included in a Final Map that was recorded prior to the January lst preceding the Fiscal Year in which the Special Taac is being levied, and (ii) a building permit for new construction was issued on or before May ls~ preceding the Fiscal Year in which the Special Tax is being levied. "Exempt Property" means all Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section J. "Final Map" means a subdivision ofproperty by recordation ofa final map, parcel map, or lot line adjushnent, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recardation of a condominium plan pursuant to Califomia Civil Code 1352 that creates individual lots for which building 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. "Improvement Area B" means Improvement Area B of CFD No. 2005-2, as identified on the most recent boundary map for CFD No. 2005-2 on file with the County of Riverside Recorder's Office. "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 and/or Table 2 of Section D. "Maximum Special Tax for Facilities" means the masunum Special Taac for Facilities, determined in accordance with Section C, that can be levied by CFD No. 2005-2 within Improvement Area B in any Fiscal Year on any Assessor's Parcel. "Multifamily Property" means all Assessor's Parcels ofResidential Property on which one or more Multifamily Units are constructed. "Multifamily Unit" means a dwelling unit within a building comprised of attached residential units available for sale to an end user. "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 Amount" means the amount required to prepay a portion ofthe Special Tax for Facilities obligation for an Assessor's Parcel, as described in Section H. City of Lake Elsinore June 22, 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 3 "Prepayment Amount" means the amount required to prepay the Special Tas for Facilities obligation in full far an Assessor's Parcel, as described in Section G. "Proportionately" means that the ratio ofthe 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 subject to the apportionment of the Special Tax for Facilities under step four of Section F, "Proportionately" in step four means that the quotient of (a) Special 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 Assessor's Parcels. "Provisional Undeveloped Property" means all Assessor's Pazcels ofTaxable 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 Tasable Property below the required minimum Acreage set forth in Section J for Zone 1 or Zone 2 as applicable. "Residential Property" means all Assessor's Parcels of Developed Properiy for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Single Family Property" means all Assessor's Parcels, of Residential Property other than Apartment Property and Multifamily Property. "Single Family Unit" means a residential dwelling unit other than an Apariment Unit or Multifamily Unit. "Special Tax" means any of the special taYes authorized to be levied within Improvement Area B by CFD No. 2005-2 pursuant to the Act. "Special Tax for Facilities" means any of the special tases authorized to be levied within Improvement Area B by CFD No. 2005-2 pursuant to the Act to fund the Special Tas 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 Calendaz Yeaz 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 Tas for Facilities delinquencies in the prior Fiscal Year, and (vi) the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2005-2 provided that the inclusion of such amount does not cause an increase in the levy of Special Taac for Facilities on Undeveloped Property as set forth in Step Three of Section F., less (vii) any amounts available to pay debt service or other periodic costs on the Bonds pursuant to the Indenture. "Taxable Property" means all Assessor's Parcels within Improvement Area B, which are not Exempt Property. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. City of Lake Elsinore June 22, 2005 Community Facilities District No. 2005-2 (Alberhill Rarich) Amended May 9, 2006 Improvement Area B Page 4 "Undeveloped Property" means all Assessor's Parcels of Ta~cable Property which are not Developed Property, Approved Property or Provisional Undeveloped Property. "Zone" means Zone 1 or Zone 2. "Zone 1" means a specific geographic azea within Improvement Area B as depicted in E~ibit B attached hereto. "Zone 2" means a specific geographic area within Improvement Area B as depicted in E~ibit B attached hereto. SECTION B CLASSIFICATION OF ASSESSOR'S PARCELS Each Fiscal Year, beginning with Fiscal Year 2006-07 , each Assessor's Parcel within Improvement Area B shall be assigned to Zone 1 or Zone 2 and shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Pazcel of Taxable Property shall be further classified as Developed Property, Approved Properiy, Undeveloped Properiy or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Properiy 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, Multifamily Property, or Apariment Property, and each Assessor's Parcel of Single Family Properry and Multifamily Property shall be assigned to its appropriate Assigned Special Tax for Facilities rate based on its Building Square Footage. SECTION C MAXIMUM SPECIAL TAX FOR FACILITIES 1. Developed Prooertv The Mazimum Special Tax for each Assessor's Parcel of Single Family Property and Multifamily Property in any Fiscal Yeaz shall be the greater of (i) the Assigned Annual Special Tax or (ii) the Backup Annual Special Taac. The Maacimum Special Tax for Facilities for each Assessor's Parcel of Apartment Properry or Non-Residential Property shall be the applicable Assigned Special Taac for Facilities described in Table 1 or Table 2 of Section D Prior to the issuance of Bonds, the Assigned Special Tax for Facilities on Developed Property set forth in Table 1 and/or Table 2 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 Communitv Facilities Act of 1982 adopted by the City Council and in effect at the time of initial CFD formation, the "Goals and Policies") calculated pursuant to the Goals and Policies exceeds the City's maximum level objective set Ciry of Lake Elsinore ' June 22, 2005 Communiry Facilities Distric[ No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 5 forth in such document, the MaYimum Special Taac for Facilities on Developed Property may be reduced (by modifying Table 1 and/or Table 2) to the amount necessary to satisfy the City's objective with respect to the masimum overlapping debt burden level with the written consent of the CFD Administrator. In order to reduce the Masimum 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 pazagraph 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". 2. 3. Multiple Land Use Tvne In some instances an Assessor's Parcel 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 ofthe Maximum Special Taac for Facilities for all Land Use Types located on the Assessor's Parcel. The CFD Administrator's allocation to each type ofproperty shall be final. Approved Propertv Undeveloped Propertv and Pravisional Undeveloued Propertv The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Approved Property, Undeveloped Property, or Provisional Und"eveloped Property in any Fiscal Year shall be the applicable Assigned Special Taac for Facilities. SECTION D ASSIGNED SPECIAL TAX FOR FACILITIES 1. Developed Propertv Each Fiscal Year, each Assessor's Parcel of Single Family Properiy, Multifamily Property, Apartment Property, or Non-Residential Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Taac for Facilities applicable to an Assessor's Parcel of Developed Property for Fiscal Year 2006-07 shal I be determined pursuant to Table 1 and Table 2 below Ciry of Lake Elsinore June 22, 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B ~ Page 6 TABLE 1 ASSIGNED SPECIAL FOR FACILITIES TAX RATES FOR DEVELOPED PROPERTY WITHIN ZONE 1 FOR FISCAL YEAR 2006-07 Land Use e Buildin S uare Foota e Rate Sin le Famil Pro e Greater than 4,250 $4,938 er Sin le Famil Unit Sin le Famil Pro e 3,951- 4,250 $4,661 er Sin le Famil Unit Sin le Famil Pro e 3,651 - 3,950 $4,356 er Sin le Famil Unit Sin le Famil Pro e 3,351- 3,650 $4,280 er Sin le Famil Unit Sin le Famil Pro e 3,051 - 3,350 $3,564 er Sin le Famil Unit Sin le Famil Pro e 2,551- 3,050 $3,373 er Sin le Famil Unit Sin le Famil Pro e 2,051- 2,550 $3,220 er Sin le Famil Unit Sin le Famil Pro e 1,851 - 2,050 $2,896 er Sin le Famil Unit Sin le Famil Pro e Less than or e ual to 1,850 $2,753 er Sin le Famil Unit Multifamil Pro e Greater than 1,600 $2,292 er Multifamil Unit Multifamil Pro e 1,401-1,600 $2,148 er Multifamil Unit Multifamil Pro e 1,201-1,400 $2,005 er Multifamil Unit Multifamil Pro e Less than or e ual to 1,200 $1,862 er Multifamil Unit A arhnent Pro e N/A $20,167 er Acre Non-Residential Pro e N/A $20,167 er Acre TABLE 2 ASSIGNED SPECIAL FOR FACILITIES TAX RATES FOR DEVELOPED PROPERTY WITHIN ZONE 2 FOR FISCAL YEAR 2006-07 Land Use T e Buildin S uare Foota e Rate Sin le Famil Pro e Greater than 4,250 $4,938 er Sin le Famil Unit Sin le Famil Pro e 3,951- 4,250 $4,661 er Sin le Famil Unit Sin le Famil Pro e 3,651 - 3,950 $ 4,356 er Sin le Famil Unit Sin le Famil Pro e 3,351 - 3,650 $ 4,280 er Sin le Famil Unit Sin le Famil Pro e 3,051- 3,350 $ 3,564 er Sin le Famil Unit Sin le Famil Pro e 2,551 - 3,050 $ 3,373 er Sin le Famil Unit Sin le Famil Pro e 2,051 - 2,550 $ 3,220 er Sin le Famil Unit Sin le Famil Pro e 1,851- 2,050 $ 2,896 er Sin le Famil Unit Sin le Famil Pro e Less than or e ual to 1,850 $ 2,753 er Sin le Famil Unit Multifamil Pro e Greater than 1,600 $2,292 er Multifamil Unit Multifamil Pro e 1,401-1,600 $2,148 er Multifamil Unit Multifamil Pro e 1,201 -1,400 $2,005 er Multifamil Unit Multifamil Pro e Less than or e ual to 1,200. $1,862 er Multifamil Unit A arhnent Pro e N/A $600 er A artment Unit Non-Residential Pro e N/A $5,000 er Acre Ciry of Lake Elsinore June 22, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B ~ Page 7 2. Approved Propertv, Undeveloaed Proaertv and Provisional Undeveloaed Proaertv Each Fiscal Year, each Assessor's Parcel ofApproved Property, Undeveloped Properiy and Provisional Undeveloped Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tas for Facilities rate for an Assessor's Pazcel classified as Approved Property, Undeveloped Property and Provisional Undeveloped Property for Fiscal Year 2006-07 shall be $20,167 per Acre for Zone 1 and $43,978 per Acre for Zone 2. 3. Increase in the Assiened Special Tax for Facilities On each July 1, commencing July 1, 2007, the Assigned Special Tax for Facilities rate for Developed Property, Approved Properiy, Undeveloped Property and Provisional Undeveloped Properry shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. SECTION E BACKUP ANNUAL SPECIAL TAX FOR FACILITIES At the time a Final Map is recorded, the Backup Special Tax for Facilities for all Assessor's Parcels ofDeveloped Property classified or reasonably expected to be classified as a Single Family Property or Multifamily Property within such Final Map area shall be determined by (i) multiplying (a) the Maacimum 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 or Multifamily 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 Parcel of Single Family Property or Multifamily Property within such Final Map area. The Maacimum Special Taac for Facilities rate(s) applied in (i) above shall be the applicable Undeveloped Property rate for the Zone in which each Assessor's Parcel is located; provided, however, if an Assessor's Parcel is located in rivo Zones, the Maximum Special Tax for Facilities rate applied shall be the lower of the two Masimum Special Tax for Facilities rates. The Backup Special Tax for Facilities shall not apply to Non-Residential Property or Aparhnent Properiy. Notwithstanding the foregoing, if Assessor's Parcels of Developed Property which are classified or to be classified as either Single Family Property or Multifamily Properly are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Taac for Facilities for the area that has been changed or modified shall be recalculated, based on the methodology above, to equal the amount ofBackup Special Tax for Facilities that would have been generated if such change did not take place. On each July 1, commencing July 1, 2007, the Backup Special Tax for Facilities rate shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. City of Lake Elsinore June 22, 2005 Community Facilities Dis[rict No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvemen[ Area B Page 8 . .. _ ..___. __... .. _. . . SECTION F METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES Commencing Fiscal Year 2006-07 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Facilities on all Taxable Property in accordance with the following steps: Step One: The Special Tax for Facilities shall be levied Froportionately on each Assessor's Parcel ofDeveloped Properry at up to 100% ofthe applicable Assigned Special TaY for Facilities rates in Table 1 and Table 2 to satisfy the Special Tax Requirement for Facilities. Step Two: If additional moneys are needed to satisfy the Special Tas Requirement for Facilities after the first step has been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Approved Property at up to 100% ofthe Masimum Special Tas for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tas Requirement for Facilities. Step Three: If additional moneys are needed to satisfy the Special Tas Requuement for Facilities after the first two steps have been completed, the Annual Special Tas for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Maximum Special Taac for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Specia] Tax Requirement for Facilities. Step Four: If additional moneys are needed to satisfy the Special Taac Requirement for Facilities after the first three steps have been completed, then the Special Tax for Facilities on each Assessor's Parcel of Developed Froperty 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 Tas for Facilities as needed to satisfy the Special Tax Requirement for Facilities. Step Five: If additional moneys are needed to satisfy the Special Ta~c 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 Properiy up to 100% of the Maximum Special Tas 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 will the Special Tax for Facilities levied against any Assessor's Parcel ofResidential Properry for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by owner of any other Assessor's Parcel within Improvement Area B. Ciry of Lake Elsinore June 22, 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 9 SECTION G PREPAYMENT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G: "CFD Public Facilities" means $29,OOQ000 expressed in 2005 dollars, which shall increase by the Construction Inflation Index on July 1, 2006, 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 Improvement Area B, or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Tases for Facilities levied under this Rate and Method of Apportionment. "Construction Fund" means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible under CFD No. 2005-2. "Construction Inflation Index" means the annual percentage change in the Engineering News- Record Building Cost Index for the city of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Conshuction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News-Record Building Cost Index for the city of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus public facility wsts available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds, and minus public faciliTy costs fixnded by interest earnings on the Construction Fund actually eamed prior to the date of prepayment. , "Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Ta~ces 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 Tases for Facilities. The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Properiy, or an Assessor's Parcel of Approved Property ar Undeveloped Property for which a building permit has been issued or is expected to be issued, or an Assessor's Parcel ofProvisional Undeveloped Properry may be prepaid in full, provided that there are no delinquent Special Tases, 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 obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days ofreceipt of such notice, the CFD Administrator shall notify such owne'r of the Prepayment Amount of such Assessor's Parcel. The CFD Administrator may chazge 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 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. City of Lake Elsinore June 22, 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page ]0 The Prepayment Amount for each applicable Assessor's Parcel shall be calculated according to the following formula (capitalized terms defined below): Bond Redemption Amount plus Redemption Premium plus 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 follows: For an Assessor's Parcel of Developed Properry, compute the Assigned Special Tas for Facilities and Backup Special Tas for Facilities, if any, applicable to the Assessor's Pazcel. 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 Properiy based upon the building permit issued or expected to be issued for that Assessor's Parcel. For an Assessor's Pazcel of Provisional Undeveloped Property compute the Assigned Special Ta~c 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 ofthe estimated Assigned Special Ta7c for Facilities applicable to all Assessor's Parcels of Tasable Property at buildout, as reasonably determined by the City, and (b) divide the Backup Special Tas for Facilities computed pursuant to pazagraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax for Facilities applicable to all Assessor's Parcels ofTasable Properiy 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 shall 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. City of Lake Elsinore June 22, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 11 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 AmounP'). 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 for the Outstanding Bonds. Determine the actual Special Tax for Facilities levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 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 for the 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 ofthe 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 "Administrative Fee." 12. Calculate the "Reserve Fund Credit" 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 after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the applicable reserve fiands on the prepayment date. Notwithstanding the foregoing, ifthe 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 Yeaz, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the expected balance in the capitalized interest fund or account under the 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 of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the City of Lake Elsinore June 22, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 12 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 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by Improvement Area B. The Special Tax for Facilities prepayment amount may be insufficient to redeem a full $5,000 increment of 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 Bonds or to make debt service payments. With respect to a Special Tax for Facilities obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of Improvement Area B that there has been a prepayment of the Special Tas 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 Special 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 Tases for Facilities shall cease. Norivithstanding the foregoing, no prepayment will be allowed unless the amount of Special Ta~c for Facilities that may be levied on Taacable Property, net of Administrative Expenses, shall be at least 1.1 times the regulazly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year. SECTION H PARTIAL PREPAYNIENT OF SPECIAL TAX FOR FACILITIES The Special Taac for Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor's Pazcel of Approved Properry or Undeveloped Property for which a building permit has been issued ar is expected to be issued, or and Assessor's Parcel of Provisional Undeveloped Property, as calculated in this Section H below, may be partially prepaid, 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. City of Lake Elsinore June 22, 2005 Community Facilities Distric[ No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 13 The Partial Prepayment Amount shall be calculated according to the following formula: PP=(PG-A)xF+A The terms above have the following meanings: PP = the Partial Prepayment Amount. PG = the Prepayment Amount calculated according to Section G. F= the percent by which the owner of the Assessor's Pazcel is partially prepaying the Special Taac for Facilities obligation. A= the Administration Fee calculated according to Section G. The owner of any Assessor's Parcel who desues such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Taac 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 Pazcel within 30 days ofthe request and may chazge a reasonable fee for providing this service. With respect to any Assessor's Pazcel that is partially prepaid, the City Council shall (i) distribute the funds remitted to it according to Section G, and (ii) shall indicate in the records of CFD No. 2005-2 that there has been a partial 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 partial prepayment of the Special Taac for Facilities obligation to indicate the partial prepayment of the Special Tax for Facilities obligation and the partial release ofthe Special Taz for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay such prepaid portion of the Special Taac for Facilities shall cease. Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tas 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 I 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 T~ for Facilities shall cease not later than the 2043-44 Fiscal Year, however, the Special Tases for Facilities will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2005-2 Bonds have been paid; (ii) all authorized facilities of CFD No. 2005-2 have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special Taxes for Facilities remain uncollected and (iv) all other obligations of Improvement Area B have been satisfied. City of Lake Elsinore June 22, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 14 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 by the State of California, Federal or other local governments, including school districts, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor's Pazcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor's Pazcels with public or utility easements making impractical their utilization for otfier 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 rio such classification would reduce the sum of all Taxable Properly to less than 91.89 Acres for Zone 1 and 6.80 Acres for Zone 2. Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the sum ofall Taacable Property to less than 91.89Acres for Zone 1 and 6.80 Acres for Zone 2. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 91.89 Acres for Zone 1 and 6.80 Acres for Zone 2 will be classified as Provisional Undeveloped Properry, and will be subject to Special Taxes for Facilities pursuant to Step Five in Section F. SECTION K MANNER OF COLLECTION The Special Tax for Facilities shall be collected in the same manner and at the same time as ordinary ad valorem property taaces, provided, however, that Improvement Area B may collect Special Tases for Facilities at a different time or in a different manner ifnecessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose 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 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 UniY' means a residential dwelling unit other than a Developed Multifamily Unit on an Assessor's Parcel for which a building permit has been issued by the City on or prior to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied. City of Lake Elsinore June 22, 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 15 "Maximum Special Tax for Services" means the maYimum Special Taac for Services that can be levied by Improvement Area B in any Fiscal Year on any Assessor's Parcel. "Operating Fund" means a fund that shall be maintained for Improvement Area B for any Fiscal Year to pay far 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 parks, open space, and storm drains. "Special Tax for Services" means any of the special tases authorized to be levied within CFD No. 2005-2 pursuant to the Act to fund the Special Taz Requirement for Services. "Special Tax Requirement for Services" means the amount determined in any Fiscal Yeaz for Improvement Area B equal to (i) the budgeted costs directly related to the Service Area, including maintenance, repair and replacement of certain components nf the Service Area which have been accepted and maintained or are reasonably expected to be accepted and maintained during the current Fiscal Year, (ii) Administrative Expenses, and (iii) anticipated delinquent Special Taaces for Services based on the delinquency rate in CFD No. 2005-2 for the previous Fiscal Year, less (iv) the Operating Fund Balance, as determined by the CFD Administrator. 1. Rate and Method of Aoportionment of the Soecial T~ for Services Commencing Fiscal Year 2005-06 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Services on (i) all Assessor's Parcels containing a Developed Single Family Unit or Developed Multifamily Unit and (ii) all Assessor's Parcels of Non-Residential Property, up to the applicable Maximum Special Tax for Services to fund the Special Tax Requirement for Services. The Maacimum Special Tax for Services for Fiscal Year 2005-06 shall be $242 per Developed Single Family Unit, $121 per Developed Multifamily Unit, and $545 per Acre for each Assessor's Pazcel of Non-Residential Properiy. ' On each July 1, commencing July l, 2006, the Maacimum Special Tax for Services shall be increased by rivo percent (2.00%) of the amount in effect in the prior Fiscal Year. 2. Duration of the Suecial 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 Council. Ciry of Lake Elsinore June 22, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvemen[ Area B Page 16 3. Collection of the Saecial 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 tases, provided, however, that Improvement Area B may collect the Special Tas 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 of the Special Tax is not correct may file a written notice of appeal with the CFD Administrator not later than twelve months after having paid the first installment ofthe Special Tas 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 T~, 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 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 of the Special Tax and any landowner or residents appeals. Any decision of the City Council shall be final and binding as to all persons. City of Lake Elsinore June 22, 2005 CommuniTy Facilities Distric[ No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 17 EXHIBTT "A" CITY OF LAKE ELSINORE AND CFD NO. 2005-X CERTIFICAT'E Pursuant to Section of the Rate and Method of Apportionment of Special Taac (the "RMA"), the City of Lake Elsinore (the "City") and Community Facilities District No. 2005- X of the City of Lake Elsinore ("CFD No. 2005-X") hereby agree to a reduction in the Maximum Special Tax for Facilities for Developed Property [within such Improvement AreaJ: (a) The information in the RMA relating to the Masimum Special Tax for Facilities for Developed Property and/or Undeveloped Properiy within (Improvement Area X or CFD No. 2005 XJ shall be modified as follows: [insert Table 1 and/or Tabde 2 showing effectfve change to special tax rates and/or irrsert change to special tax rates for Undeveloped PropertyJ 2. Table 1 and/or Table 2 and special tax rates for Undeveloped Property may only be modified prior to the issuance of Bonds. 3. Upon execution of the Certificate by the City and CFD No. 2005-X the City shall cause an amended Notice of Special Tax Lien [for the ImprovementAreaJ to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned aclmowledges, on behalf ofthe City ofLake Elsinore and CFD No. 2005-X, receipt of this Certificate and modification of the RMA as set forth in this Certificate. CITY OF LAKE ELSINORE By: Date: CFD Administrator COMMLINITY FACILITIES DISTRICT NO. 2005-X OF THE CITY OF LAKE ELSINORE By: Date: City of Lake Elsinore June 22, 2005 CommuniTy Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B Page 18 EXFIIBIT "B" ZONE MAP a~. .s;:~~.[ City of Lake Elsinore June 22, 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area B , Page 19 AMENDED RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT NO. 2005-2 OF THE CITY OF LAKE ELSINORE (Alberhill Ranch) (IMPROVEMENT AREA C) The following sets forth the Rate and Method of Apportionment for the levy and collection of Special Taxes in Improvement Area C of the City of Lake Elsinore Community Facilities District No. 2005-2 (Alberhill Ranch) ("CFD No. 2005-2"). The Special Tax shall be levied on and collected in Improvement Area C of CFD No. 2005-2 each Fiscal Year, in an amount determined through the application ofthe Rate and Method ofApportionment described below. All ofthe real property within Improvement Area C, unless exempted by law or by the provisions hereof, shall be taaced 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 Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map or instrument. The square footage of an Assessor's Parcel is equal to the Acreage multiplied by 43,560. "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 Govemment Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of Improvement Area C: the costs of computing the Special Tases and prepazing the Special Taac collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes for Facilities to the Trustee; the costs of the Trustee (including legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, Improvement Area C or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, Improvement Area C or any designee thereofofcomplying with disclosure requirements ofthe City, Improvement Area C 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 Tarces; the costs ofthe City, Improvement Area C or any designee thereof related to an appeal of the Special Taac; the costs associated with the release of funds from an escrow account; and the City's annual administration fees and third party expenses. Administration Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or Improvement Area C for any other administrative purposes of Improvement Area C, including attomey's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. Ciry of Lake Elsinore June 3Q 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 1 "Apartment Property" means all Assessor's Parcels ofResidential Property on which one or more Apartment Units are constructed. "Apartmeat Unit" means a dwelling unit within 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 s~ preceding the Fiscal Year in which the Special Taac is being levied, and (ii) that have not been issued a building permit on or before May ls` preceding the Fiscal Year in which the Special Tax is being levied. "Assessor's Parcel" means a lot or parcel of land designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number. "Assessor's Parcel Map" means an official map ofthe Assessor ofthe 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. "Assigaed Special Tax for Facilities" means the Special Tax ofthat 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 obligation to repay a sum ofmoney, including obligarions in the form ofbonds, notes, certificates ofparticipation, long-term leases, loans from government agencies, or loans from banks, other financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Taxes for Facilities within Improvement Area C have been pledged. "Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the building permit application for such Assessor's Parcel. "Calendar Year" means the period commencing January 1 of any year and ending the following December 31. "CFD Administrator" means an official of the City, or designee thereof, responsible for (i) determining the Special Taz 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 collection ofthe Special Taxes. "CFD No. 2005-2" means Community Facilities DistrictNo. 2005-2 (Alberhill Ranch) established by the City under the Act. Ciry of Lake Elsinore June 30, 2005 CommuniTy Facilities Dis[rict No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvemen[ Area C Page 2 "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. 2005-2, or its designee. "County" means the County of Riverside. "Developed Property" means all Assessor's Parcels ofTaxable Property that: (i) are included in a Final Map that was recorded prior to the January ls` preceding the Fiscal Year in which the Special Tax is being levied, and (ii) a building permit for new constniction was issued on or before May ls` preceding the Fiscal Year in which the Special Tax is being levied. "Exempt Property" means all Assessor's Pazcels designated as being exempt from Special Taaces as provided for in Section J. "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 building 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. "Improvement Area C" means Improvement Area C ofCFD No. 2005-2, as identified on the most recent boundary map for CFD No. 2005-2 on file with the County of Riverside Recorder's Office. "Indenture" means the indenture, fiscal agent agreement, resolution or other inshvment 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 and/or Table 2 of Section D. "Ma~mum Special Tax for Facilities" means the maximum Special Taac for Facilities, determined in accordance with Section C, that can be levied by CFD No. 2005-2 within Improvement Area C in any Fiscal Year on any Assessor's Parcel. "Multifamily Property" means all Assessor's Parcels of Residential Property on which one or more Multifamily Units are constructed. "Multifamily Unit" means a dwelling unit within a building comprised ofattached residential units available for sale to an end user. "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 Amount" means the amount required to prepay a portion ofthe Special Tax for Facilities obligation for an Assessor's Parcel, as described in Section H. Ciry of Lake Elsinore June 30, 2005 Community Facilities Distric[ No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C ~ Page 3 "Prepayment AmounY' means the amount required to prepay the Special Tax for Facilities obligation in full for an Assessor's Parcel, as described in Section G. "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 subject to the apportionment ofthe Special Tax for Facilities under step four of Section F, "Proportionately" in step four means that the quotient of (a) Special Tax for Facilities less the Assigned Special Tax for Facilities divided by (b) the Backup Special Tas for Facilities less the Assigned Special Tax for Facilities, is equal for all applicable Assessor's Parcels. "Provisional Undeveloped Property" means all Assessor's Parcels ofTasable Properiy that would otherwise be classified as Exempt Properiy pursuant to the provisions of Section J, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Ta~ble Properiy below the required minimum Acreage set forth in Section J for Zone 1 or Zone 2 as applicable. "Residential Property" means all Assessor's Parcels of Developed Properry for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Single Family Property" means all Assessor's Parcels of Residential Property other than Apartment Property and Multifamily Property. "Single Family Unit" means a residential dwelling unit other than an Apartment Unit or Multifamily Unit. "Special Tax" means any of the special taxes authorized to be levied within Improvement Area C by CFD No. 2005-2 pursuant to the Act. "Special Tax for Facilities" means any of the special taxes authorized to be levied within Improvement Area C by CFD No. 2005-2 pursuant to the Act to fund the Special Tas 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 in the prior Fiscal Year, and (vi) the collection or accumulation of funds for the acquisition or construction of facilities authorized by CFD No. 2005-2 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., less (vii) any amounts available to pay debt service or other periodib costs on the Bonds pursuant to the Indenture. "Taxable Property" means all Assessor's Parcels within Improvement Area C, which are not Exempt Property. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. CiTy of Lake Elsinore June 30, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 4 "Undeveloped Property" means all Assessor's Parcels of Taxable Property which are not Developed Property, Approved Property or Provisional Undeveloped Property. "Zone" means Zone 1 or Zone 2. "Zone 1" means a specific geographic area within Improvement Area C as depicted in Exhibit B attached hereto. "Zone 2" means a specific geographic area within Improvement Area C as depicted in E~ibit B attached hereto. SECTION B CLASSIFICATION OF ASSESSOR'S PARCELS Each Fiscal Year, beginning with Fiscal Year 2006-07 , each Assessor's Pazcel within Improvement Area C shall be assigned to Zone 1 or Zone 2 and shall be classified as Taacable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Properiy, Approved Property, Undeveloped Property or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Properry 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, Multifamily Property, or Apartment Property, and each Assessor's Parcel of Single Family Properiy and Multifamily Properiy shall be assigned to its appropriate Assigned Special Tax for Facilities rate based on its Building Square Footage. SECTION C MAXIMUM SPECIAL TAX FOR FACILITIES 1. Develoned Proaertv The Maximum Special Tax for each Assessor's Parcel of Single Family Property and Multifamily Property in any Fiscal Year shall be the greater of (i) the Assigned Annual Special Taac or (ii) the Backup Annual Special Taac. The Masimum Special Tas for Facilities for each Assessor's Parcel of Apartment Property or Non-Residential Properry shall be the applicable Assigned Special Tax for Facilities described in Table 1 or Table 2 of Section D Prior to the issuance of Bonds, the Assigned Special Tas for Facilities on Developed Property set forth in Table 1 and/or Table 2 may be reduced in accordance with, and subject to the conditions set forth in this pazagraph. 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 Communitv Facilities Act of 1982 adopted by the City Council and in effect at the time of initial CFD formation, the "Goals and Policies") calculated pursuant to the Goals and Policies exceeds the City's maximum level objective set forth in such document, the MaYimum Special Tax for Facilities on Developed Property may CiTy of Lake Elsinore June 30, 2005 Community Facili[ies Disfrict No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 5 be reduced (by modifying Table 1 and/or Table 2) tq 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 M~imum Special Taz for Facilities on Developed Property it may be necessary to reduce the Maximum Special Taac for Facilities for Undeveloped Property. The reductions permitted pursuant to this paragraph shall be reflected in an amended Notice of Special Tas Lien which the City shall cause to be recorded by executing a certificate in substantially the form attached hereto as Exhibit "A". 2. 3. Multiule Land Use Tvpe In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Type. The Masimum 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. Approved Proaertv, Undeveloped Prooertv and P,rovisional Undeveloped Pronertv The Maacimum Special Tas for Facilities for each Assessor's Parcel classified as Approved Properry, 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 1. Develoaed Proaertv Each Fiscal Year, each Assessor's Parcel of Single Family Property, Multifamily Properiy, Apartment Property, or Non-Residential Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Taac for Facilities applicable to an Assessor's Parcel ofDeveloped Property for Fiscal Year 2006-07 shall be determined pursuant to Table 1 and Table 2 below. City of Lake Elsinore June 30, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvemen[ Area C • Page 6 TABLE 1 ASSIGNED SPECIAL FOR FACILITIES TAX RATES FOR DEVELOPED PROPERTY WITHIlV ZONE 1 FOR FISCAL YEAR 2006-07 Land Use T e Buildin S uare Foota e' Rate Sin le Famil Pro e Greater than 4,250 $4,938 er Sin le Famil Unit Sin le Famil Pro e 3,951 - 4,250 $4,661 er Sin le Famil Unit Sin le Famil Pro e 3,651- 3,950 $4,356 er Sin le Famil Unit Sin le Famil Pro e 3,051- 3,650 $4,000 er Sin le Famil Unit Sin le Famil Pro e 2,751- 3,050 $3,659 er Sin le Famil Unit Sin le Famil Pro e 2,451- 2,750 $3,507 er Sin le Famil Unit Sin le Famil Pro e Less than or e ual to 2,450 $3,373 er Sin le Famil Unit MulYifamil Pro e Greater than 1,600 $2,292 er Multifamil Unit Multifamil Pro e 1,401-1,600 $2,148 er Multifamil Unit Multifamil Pro e 1,201-1,400 $2,005 er Multifamil Unit Multifamil Pro e Less than or e ual to 1,200 $1,862 er Multifamil Unit A arhnent Pro e N/A $24,110 er Acre Non-Residential Pro e N/A $24,110 er Acre TABLE 2 ASSIGNED SPECIAL FOR FACILITIES TAX RATES FOR DEVELOPED PROPERTY WITHIN ZONE 2 FOR FISCAL YEAR 2006-07 Land Use e Buildin S uare Foota e Rate Sin le Famil Pro e Greater than 4,250 $4,938 er Sin le Famil Unit Sin le Famil Pro e 3,951- 4,250 $4,661 er Sin le Famil Unit Sin le Famil Pro e 3,651- 3,950 $4,356 er Sin le Famil Unit Sin le Famil Pro e 3,051- 3,650 $4,000 er Sin le Famil Unit Sin le Famil Pro e 2,751 - 3,050 $3,659 er Sin le Famil Unit Sin le Famil Pro e 2,451- 2,750 $3,507 er Sin le Famil Unit Sin le Famil Pro e Less than or e ual to 2,450 $3,373 er Sin le Famil Unit Multifamil Pro e Greater than 1,600 $2,292 er Multifamil Unit Multifamil Pro e 1,401- 1,600 $2>148 er Multifamil Unit Multifamil Pro e 1,201- 1,400 $2,005 er Multifamil Unit Multifamil Pro e Less than or e ual to 1,200 $1,862 er Multifamil Unit A arhnent Pro e N/A $600 er A artment Unit Non-Residential Pro e N/A $5,000 er Acre City of Lake Elsinore June 30, 2005 Community Facilities Distric[ No. 2005-2 (Alberhi(( Ranch) Amended May 9, 2006 Improvement Area C Page 7 2. Aaaroved Propertv, Undevelooed Proaertv and Provisional Undeveloaed Proaertv Each Fiscal Year, each Assessor's Parcel ofApproved Froperty, Undeveloped Property and Provisional Undeveloped Property shall be subject to an Assigied 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 2006-07 shall be $24,110 per Acre for Zone 1 and $49,562 per Acre for Zone 2. 3. Increase in the Assi¢ned Special Tax for Facilities On each July 1, commencing July 1, 2007, the Assigned Special Tax for Facilities rate for Developed Property, Approved Property, Undeyeloped Property and Provisional Undeveloped Property shall be increased by two percent (2.00%) ofthe amount in effect in the prior Fiscal Year. SECTION E BACKUP ANNUAL SPECIAL TAX FOR FACILITIES At the time a Final Map is recorded, the Backup Special Tas for Facilities for all Assessor's Parcels ofDeveloped Property classified or reasonably expected to be classified as a Single Family Properry or Multifamily Property within such Fina1 Map area shall be determined by (i) multiplying (a) the Maximum Special Tax for Facilities rate far Undeveloped Property by (b) the total Acreage of Taacable Property in such Final Map area, excluding Acreage classified as Provisional Undeveloped Properiy, 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 or Multifamily Units reasonably expected to be constructed within such Final Map area. The resulting quotient shall be the Backup Special Tas for Facilities for each Assessor's Parcel of Single Family Properiy or Multifamily Property within such Final Map area. The Maacimum Special Tax for Facilities rate(s) applied in (i) above shall be the applicable Undeveloped Properry rate for the Zone in which each Assessor's Parcel is located; provided, however, if an Assessor's Parcel is located in two Zones, the Maximum Special TaY for Facilities rate applied shall be the lower of the two Maacimum Special Tax for Facilities rates. The Backup Special Tax for Facilities shall not apply to Non-Residential Property or Aparhnent Property. Notwithstanding the foregoing, if Assessor's Parcels ofDeveloped Property which are classified or to be classified as either Single Family Property or Multifamily Property are subsequently changed or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tas for Facilities for the area that has been changed or modified shall be recalculated, based on the methodology above, to equal the amount ofBackup Special Tax for Facilities that would have been generated if such change did not take place. On each July 1, commencing July 1, 2007, the Backup Special Tax for Facilities rate shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. City of Lake Elsinore June 3Q 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 8 SECTION F METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES Commencing Fiscal Year 2006-07 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Facilities on all Taxable Property in accordance with the following steps: Step One: The Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel ofDeveloped Property at up to 100% ofthe applicable Assigned Special Taac for Facilities rates in Table 1 and Table 2 to satisfy the Special Tax Requirement for Facilities. Step Two: If additional moneys are needed to satisfy the Special Taac Requirement for Facilities after the first step has been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel ofApproved Property at up to 100% ofthe Maacimum Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities. Step Three: If additional moneys are needed to satisfy the Special Tax Requuement for Facilities after the first two steps have been completed, the Annual Special Taac for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Maximum Special Tas for 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 Taac Requuement for Facilities after the first three steps have been completed, then the Special Tas for Facilities on each Assessor's Parcel of Developed Property whose Masimum 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 Ta~c for Facilities as needed to satisfy the Special Tax Requirement for Facilities. Step Five: If additional moneys are needed to satisfy the Special Tas Requirement for Facilities after the first four steps have been completed, the Special TaY for Facilities shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Properry up to 100% of the Maacimum Special Ta~c 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 will the Special Taac for Facilities levied against any Assessor's Parcel ofResidential Properiy for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by owner of any other Assessor's Parcel within Improvement Area C. City of Lake Elsinore June 30, 2005 CommuniTy Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C ~ Page 9 SECTION G PREPAYMENT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G: "CFD Public Facilities" means $20,000,000 expressed in 2005 dollars, which shall increase by the Construction Inflation Index on July 1, 2006, 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 Improvement Area C, 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 functionally equivalent to hold funds, which are currently available for expendihve to acquire or construct public facilities eligible under CFD No. 2005-2. "Construction Inflation Index" means the annual percentage change in the Engineering News- Record Building Cost Index for the city of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News-Record Building Cost Index for the city of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities 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 Tases for Facilities. The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Properiy, 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 ofProvisional Undeveloped Property may be prepaid in full, provided that there are no delinquent Special Tases, 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 obligation 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 providing 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. City of Lake Elsinore June 3Q 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 10 The Prepayment Amount for each applicable Assessor's Parcel shall be calculated according to the following formula (capitalized terms defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Cost plus Administrative Fee less Reserve Fund Credit less Cauitalized Interest Credit equals Prepayment Amount As of the date of prepayment, the Prepayment Amount shall be calculated as follows: 1. For an Assessor's Parcel of Developed Property, compute the Assigned Special Taac for Facilities and Backup Special Tax for Facilities, if any, applicable to the Assessor's Parcel. For an Assessor's Parcel ofApproved Property or Undeveloped Properiy, compute the Assigned Special Tax for Facilities and the Backup Special Tax for Facilities as though it was already designated as Developed Properiy based upon the building permit issued or expected to be issued far that Assessor's Parcel. For an Assessor's Parcel of Provisional Undeveloped Properly 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 ofthe estimated Assigned Special Tax for Facilities applicable to all Assessor's Parcels of Taacable Properiy at buildout, as reasonably determined by the City, and (b) divide the Backup Special Taac 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 ofTaacable Properiy 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 shall 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. City of Lake Elsinore ~ June 30, 2005 Community Facilities Dis[rict No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 11 6. Multiply the larger quotient computed'pursuant to pazagraph 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 AmounP'). 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 for the 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. 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 for the 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 "Administrative Fee." 12. Calculate the "Reserve Fund Credit" as the lesser o£ (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 after the 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 Yeaz, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the expected balance in the capitalized interest fund or account under the 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 of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the City of Lake Elsinore 7une 30, 2005 Community Facili[ies Dis[rict No. 2005-2 (Alberhill Ranch) , Amended May 9, 2006 Improvemen[ Area C Page 12 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 pazagraphs 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 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by Improvement Area C. The Special Tax for Facilities prepayment amount may be insufficient to redeem a full $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 under the Indenture to be used with the next prepayment of Bonds or to make debt service payments. With respect to a Special Tax for Facilities obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of Improvement Area C 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 thirry (30) days of receipt of such prepayment to indicate the prepayment of the Special 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 Taaces 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 Taacable 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 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 and Assessor's Parcel of Provisional Undeveloped Property, as calculated in this Section H below, may be partially prepaid, 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. Ciry of Lake Elsinore June 30, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 13 The Partial 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. PG = 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 Administration 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 Taac 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 ofthe request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City Council shall (i) distribute the funds remitted to it according to Section G, and (ii) shall indicate in the records of CFD No. 2005-2 that there has been a partial 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 partial prepayment of the Special Tax for Facilities obligation to indicate the partial prepayment of the Special Tax for Facilities obligation and the partial release ofthe Special Tax for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay such prepaid portion of the Special Tas for Facilities shall cease. Norivithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special T~ for Facilities that may be levied on Taxable Properiy after such partial prepayment, net of Administrative Expenses, shall be at least 1.1 times the regulazly scheduled annual interest and principal payments on all currently Outstanding Bonds in each fixture Fiscal Year. SECTION I 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 Tas for Facilities shall cease not later than the 2043-44 Fiscal Year, however, the Special Taaces for Facilities will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2005-2 Bonds have been paid; (ii) all authorized facilities of CFD No. 2005-2 have been acquired and all reimbursements to the developer have been paid, (iii) no delinquent Special Taxes for Facilities remain uncollected and (iv) all other obligations of Improvement Area C have been satisfied. City of Lake Elsinore June 30, 2005 Community Facili[ies District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 14 SECTION J EXEMPTIONS The City shall classify as Exempt Properiy, in order of priority, (i) Assessor's Parcels which aze owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (ii) Assessor's Parcels which are used as places of worship and aze exempt from ad valorem property tases because they are owned by a religious organization, (iii) Assessor's Parcels which are owned by, inevocably 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 utilizarion 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 Taacable Property to less than 42.48 Acres for Zone 1 and 9.60 Acres for Zone 2. Notwithstanding the above, the City Council shall not classify an Assessor's Parcel as Exempt Property if such classification would reduce the sum of all Tasable Property to less than 42.48 Acres for Zone 1 and 9.60 Acres for Zone 2. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taacable Property to less than 42.48 Acres for Zone 1 and 9.60 Acres for Zone 2 will be classified as Provisional Undeveloped Property, and will be subject to Special Tases for Facilities pursuant to Step Five in Section F. SECTION K MANNER OF COLLECTION The Special Tax for Facilities shall be collected in the same manner and at the same time as ordinary ad valorem property tases, provided, however, that Improvement Area C may collect Special Tases for Facilities at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels as permitted by the Act. SECTION L SPECIAL TAX FOR SERVICES The following additional definitions apply to this Section L: "Developed Multifamily Unit" means a residential dwelling unit within a building in which each of the individual dwelling units has or shall haue 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 Ta~c for Services is being levied. "Developed Single Family Unit" means a residential dwelling unit other than a Developed Multifamily Unit on an Assessor's Parcel for which a building permit has been issued by the City on or prior to May 1 preceding the Fiscal Year in which the Special Taac for Services is being levied. Ciry of Lake Elsinore June 3Q 2005 Community Facili[ies District No. 2005-2 (Alberhill Ranch) . Amended May 9, 2006 Improvement Area C Page 15 "Maximum Special Tax for Services" means the maximum Special Tax for Services that can be levied by Improvement Area C in any Fiscal Year on any Assessor's Parcel. "Operating Fund" means a fund that shall be maintained for Improvement Area C 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 parks, open space, and storm drains. "Special Tax for Services" means any of the special tases authorized to be levied within CFD No. 2005-2 pursuant to the Act to fund the Special Tax Requirement for Services. "Special Tax Requirement for Services" means the amount determined in any Fiscal Year for Improvement Area C 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 have been accepted and maintained or are reasonably expected to be accepted and maintained during the current Fiscal Yeaz, (ii) Administrative Expenses, and (iii) anticipated delinquent Special Taaces for Services based on the delinquency rate in CFD No. 2005-2 for the previous Fiscal Yeaz, less (iv) the Operating Fund Balance, as determined by the CFD Administrator. 1. Rate and Method of Aaaortionment of the Saecial Tax for Services Commencing Fiscal Year 2005-06 and for each subsequent Fisca] Year, the City Council shall levy Special Taxes for Services on (i) all Assessor's Parcels containing a Developed Single Family Unit or Developed Multifamily Unit and (ii) all Assessor's Parcels of Non-Residential Properry, up to the applicable Maximum Special Tax for Services to fund the Special Tax Requirement for Services. The Maximum Special Tas for Services for Fiscal Year 2005-06 shall be $242 per Developed Single Family Unit, $121 per Developed Multifamily Unit, and $545 per Acre for each Assessor's Parcel ofNon-Residential Property. On each July 1, commencing July 1, 2006, the Maacimum Special Tax for Services shall 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 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 Council. City of Lake Elsinore June 30, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 16 3. Collectian of the Saecial Tax for Services The Special Tas for Services shall be collected in the same manner and at the same time as ordinary ad valorem property tases, provided, however, that Improvement Area C 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 of the Special Tas is not correct may file a written notice of appeal with the CFD Administrator not later than twelve months after having paid the first installment of the Special Tas that is disputed. The CFD Administrator shall promptly review the appeal, and if necessary, meet with the properiy 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 Tas for an Assessor's Parcel be modified or changed in favor of the property owner, a cash refund 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 ofthe Special Tax and any landowner or residents appeals. Any decision of the City Council shall be final and binding as to all persons. Ciry of Lake Elsinore June 30, 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C Page 17 EXHIBIT "A" C1TY OF LAKE ELSINORE AND CFD NO. 2005-X 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. 2005- X of the City of Lake Elsinore ("CFD No. 2005-X") hereby agree to a reduction in the Maximum Special Tax for Facilities for Developed Property [within such Improvement AreaJ: (a) The information in the RMA relating to the Maacimum Special Taac for Facilities for Developed Property and/or Undeveloped Properiy within [Improvement Area X or CFD No. 2005-XJ shall be modified as follows: [insert Table 1 and/or Table 2 showing effective change to special tax rates and/or insert change to special tctt rates for Undeveloped PropertyJ 2. Table 1 and/or Table 2 and special taac rates for Undeveloped Property may only be modified prior to the issuance of Bonds. 3. Upon execution of the Certificate by the City and CFD No. 2005-X the City shall cause an amended Notice of Special Taac Lien [for the Improvement AreaJ to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned aclrnowledges, on behalf ofthe City ofLake Elsinore and CFD No. 2005-X, receipt of this Certificate and modification of the RMA as set forth in this Certificate. CITY OF LAKE ELSINORE By: CFD Administrator COMMUNITY FACILITIES DISTRICT NO. 2005-X OF TI-IE CITY OF LAKE ELSINORE By: Date: Date: CiTy of Lake Elsinore June 3Q 2005 Communiry Facilities District No. 2005-2 (Alberhill Ranch) ' Amended May 9, 2006 Improvement Area C Page 18 EXI~PI' "B" ZONE MAP City of Lake Elsinore June 30, 2005 Community Facilities District No. 2005-2 (Alberhill Ranch) Amended May 9, 2006 Improvement Area C ~ Page 19 EXHIBIT B AMENDMENT NO.1 TO NOTICE OF SPECIAL TAX LIEN