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HomeMy WebLinkAboutCC Reso No 2006-133RESOLUTION NO. 2006-133 RESOLUTION OF FORMATION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, DETERMINING THE VALIDITY OF PRIOR PROCEEDINGS AND ESTABLISHING CITY OF LAKE ELSINORE COMMiJNITY FACILITIES DISTRICT NO. 2006-6 (TESSERA) WHEREAS, the City Council (the "Council") of the City of Lake Elsinore (the "City") has heretofore adopted Resolution No. 2006-95 ("Resolution of Intention") stating its intention to form City of Lake Elsinare Community Facilities District No. 2006-6 (Tessera) (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"); and WHEREAS, a copy of the Resolution of Intention is on file with the City Clerk and incorporated herein by reference; and WHEREAS, pursuant to the Act and in accordance with applicable laws, this Council held a public hearing on the formation of the CFD and the incurring of bonded indebtedness with respect to the CFD; and WHEREAS, at said hearing all persons not exempt from the Services Special Tax and the Special Tu~ desiring to be heard on all matters pertaining to the formation of the CFD were heard and a full and fair hearing was held; and WHEREAS, at said hearing evidence was presented to the Council on said matters before it, and this Council at the conclusion of said hearing is fully advised in the premises. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. Pursuant to Section 53325.1(b) of the Govemment Code, the Council finds and deternunes that the proceedings priar hereto were valid and in conformity with the requirements of the Act. SECTION 2. A community facilities district to be designated "City of Lake Elsinore Community Facilities District No. 2006-6 (Tessera)" is hereby established pursuant to the Act. CITY COUNCIL RESOLUTION NO. 2006-133 Page 2 of 6 SECTION 3. The description and map of the boundaries of the CFD on file in the Clerk's office and as described in the Resolution of Intention and incorporated herein by reference, shall be the boundaries of the CFD. The map of the proposed boundaries of the CFD has been recorded in the Office of the County Recorder of Riverside County, California (Book 67 of Maps of Assessment and Community Facilities District at page 31 and as Instrument No. 2006-0523594). SECTION 4. Except where funds are otherwise available, it is the intention of the Council to levy annually in accordance with procedures contained in the Act a special tax (the "Services Special Tax") sufficient 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 do not supplant services already available within the territory proposed to be included in the CFD, the costs of administering the levy and collection of the Services Special Taa~ and all other costs of the levy of the Services Special Tax, including any foreclosure proceedings, legal, fiscal and financial consultant fees, election costs, and all other administrative costs of the tax levy. The Services Special Tax will be secured by recordation of a continuing lien against all real property in the CFD. The schedule of the rate and method of apportionment and manner of collection of the Services Special Tax is described in detail in Exhibit A attached hereto and by this reference incorporated herein. The Services are more fully described in the report presented to this Council at the public hearing (the "Report"). The Services Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. SECTION 5. The facilities proposed to be financed by the CFD are public infrastructure facilities and other governmental facilities with an estimated useful life of five years or longer, which the CFD is authorized by law to construct, own or operate and that are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD, including but not limited to City street and storm drain improvements, EVMWD water and sewer facilities, City capital facilities fees, EVMWD water and sewer capital facilities fees, and related costs including designs, inspections, professional fees, annexation fees, connection fees and acquisition costs (the "Facilities"). Such CITY COUNCIL RESOLUTION NO. 2006-133 Page 3 of 6 Facilities need not be physically located within the CFD. The Facilities are more fully described in the Report. SECTION 6. Except where funds are otherwise available, it is the intenrion of the Council to levy annually in accordance with procedures contained in the Act a special tax (the "Special T~") sufficient to pay for the costs of financing the acquisition and/ar construction of the Facilities, induding the principal of and interest on the bonds proposed to be issued to finance the Facilities and other periodic costs, the establishment and replenisl~ment of reserve funds, the remarketing, credit enhancement and liquidity fees, the costs of administering the levy and collection of the Special Tax and all other costs of the levy of the Special Tax and issuance of the bonds, including any foreclosure proceedings, architectural, engineering, inspection, legal, fiscal, and financial consultant fees, discount fees, interest on bonds due and payable prior to the expiration of one year from the date of completion of faciliries (but not to exceed two years), election costs and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, disclosure counsel, financing consultants and printing costs, and all other administrative costs of the tax levy and bond issue. The Special T~ will be secured by recordation of a continuing lien against all real property in the CFD. In the first year in which such a Special T~ is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the CFD pursuant to Section 53314 of the Act and interest thereon. The schedule of the rate and method of apportionment and manner of collection of the Special Tax is described in detail in Exhibit A attached hereto and by this reference incorparated herein. The Special Tax is based upon the cost of financing the Facilities in the CFD, the demand that each parcel will place on the Facilities and the benefit (direct and/or indirect) received by each parcel from the Faciliries. The Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. In the event that a portion of the property within the CFD shall become for any reason exempt, wholly or partially, from the levy of the Special Tax, the Council shall, on behalf of the CFD, increase the levy to the extent necessary upon the remaining property within the CFD which is not delinquent or exempt in order to yield the required payments, subject to the m~imum tax. Under no circumstances, however, shall the Special Tax levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner of any other parcel or parcels ^ CTTY COLTNCIL RESOLUTION NO. 2006-133 Page 4 of 6 within the CFD by more than 10 percent. Furthermare, the maximum special taa~ authorized to be levied against any parcel used for private residential purposes shall not be increased over time in excess of 2 percent per year. SECTION 7. Upon recordation of a Notice of Special Tax Lien pursuant to Section 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the Services Special Tax and the Special TaY shall attach to all real property in the CFD, and the lien with respect to the Special Tax shall continue in farce and effect until the Special T~ obligation is prepaid or otherwise permanently satisfied and the lien canceled in accordance with law, and the lien with respect to the Services Special Tax and the Special Tax sha11 continue in force and effect until collection of the Services Special Tax and the Special Tax by the CFD ceases. SECTION 8. Neither the proposed Services Special Tax nor the Special T~ to be levied in the CFD has been precluded by protests by owners of one-half or more of the land in the territory included in the CFD pursuant to Government Code Section 53324. SECTION 9. Pursuant to and in compliance with the provisions of Government Code Section 50075.1, the Council hereby establishes the following accountability measures pertaining to the levy by the CFD of the Services Special TaY and the Special Tax: (a) Such Services Special Tax and the Special Tax shall be levied for the specific purposes set forth herein. (b) The proceeds of the levy of such Services Special T~ and the Special T~ shall be applied only to the specific purposes set forth herein. (c) The CFD shall establish an account ar accounts into which the proceeds of such Services Special Tax and the Special Taac shall be deposited. (d) The City Manager, or his ar her designee, acting for and on behalf of the CFD, shall annually file a report with the Council as required pursuant to Government Code Section 500753. CITY COUNCIL RESOLUTION NO. 2006-133 Page 5 of 6 SECTION 10. The City Manager, 130 S. Main Street, Lake Elsinore, California 92530, (951) 674-3124, or his designee, is designated to be responsible for preparing or causing to be prepared annually a current roll of Services Special Tax and the Special Taa~ levy obligations by assessor's parcel number and for estimating future Services Special Tax and the Special Tax levies pursuant to Section 53340.1 of the Government Code. SECTION 11. The voting procedure with respect to the imposition of the Services Special Tax and the Special Tax, incurring bonded indebtedness and establishing an appropriations limit of the CFD shall be by hand delivered or mailed ballot election. SECTION 12. The City Clerk is directed to certify and attest to this Resolution and to take any and all necessary acts to call, hold, canvass and certify an election or elections on the incurring bonded indebtedness, the levy of the Special Tax, and the establishment of the appropriation limit. SECTION 13. This Resolution shall take effect from and after the date of its passage and adoption. CITY COUNCIL RESOLUTION NO. 2006-133 Page 6 of 6 PASSED, APPROVED AND ADOPTED this 8th day of August 2006, by the following vote: AYES: COUNCILMEMBERS: BUCKLEY, HICKMAN, KELLEY, SCHIFFNER, MAGEE NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE ABSTAIN: COUNCILMEMBERS: NONE ~ Robert E. M~ City of Lake ATTES : rederick ay, City Clerk City of Lake Elsinore AP ROVED AS O F RM• , ,~~ ~~~ arbara Zeid eibold, City Attorney City of Lake Elsinore EXHIBIT A RATE AND METHOD OF APPORTIONMENT RATE AND METHOD OF APPORTIONMENT FOR CITY OF LAKE ELSINORE COMMiJNITY FACILITIES DISTRICT No. 20066 (TESSERA) A Special Tax shall be levied on all Assessor's Parcels in City of Lake Elsinore CommunityFacilitiesDistrictNo. 2006-6 (Tessera) ("CFDNo. 2006-6") and collected each Fiscal Year commencing in Fiscal Year 2006-2007, in an amount determined through the application of this Rate and Method of Apportionment as described below. All of the real property in CFD No. 2006-6, unless exempted by law or by the provisions hereof, shall be taxed for the purposes,• to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on or determined from the applicable Assessor's Parcel Map. Notwithstanding the foregoing, the Acreage attributableto a Condominium shall be computed by the CFD Administrator by dividing the total Acreage for the Final Subdivision in which the Condominiiun is located, less the Acreage for any Property Owner Association Properiy and/or Public Properiy, by the total number of Condominiumsto be constructedwithin suchFinal Subdivisionas determined from the applicable Condominium Plan. "Act" means the Mello-Roos CommunityFacilities Act of 1982, being Chapter 2.5, Part 1, Division 2 of Title 5 of the California Government Code. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2006-6: the costs of computing the Special T~es and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collectingthe Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taaces to the Trustee; the costs of the Trustee (including its legal counsel) in the dischargeof the duties required of it under the Indenture; the costs to the City, CFD No. 2006-6 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2006-6 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2006-6 or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax Ciry of Lake Elsinore June 6, 2006 Community Facilities District No. 2006-6 (Tessera) Page 1 disclosure statements andresponding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2006-6 or any designee thereof related to an appeal of the Special Tax; the costs associatedwith the release of funds from an escrow account; and the City's annual administration fees and third party expenses. AdministrativeExpenses shall also include amounts estimated by the CFD Administrator or advanced by the City ar CFD No. 20066 for any other administrative purposes of CFD No. 2006-6, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel, including but not limited to Condominiums, to which an Assessor's parcel number is assigned as determined from an Assessor's Parcel Map or the applicable assessment roll. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parc~ number. "Assigned Special Tax for Facilities" mean's the Special Tax for Facilities for each Land Use Class of Developed Property, as determined in accardance with Section C.1.(b) below. "Authorized Facilities" means those facilities eligible to be funded by CFD No. 2006-6. "Backup Special Tax for Facilities" means the Special Tax for Facilities applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.1.(c) below. "Certificate of Occupancy" means a certificate issued by the City that authorizes the actual occupancy of a dwelling unit for habitatian by one or more residents. "CFD Administrator" means an official of the City, ar designee thereof, responsible for determining the Special Tax Requirement for Facilities, the Special Tax Requirementfor Services as determined in accordance with Section I below, and providing for the levy and collection of the Special Taxes. "CFD No. 2006-6" means City of Lake Elsinore CommunityFacilities District No. 2006-6 (Tessera). City of Lake Elsinore June 6, 2006 Community Facilities District No. 2006-6 (Tessera) Page 2 "CFD No. 2006-6 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 2006-6 and secured solely by the Special Tax for Facilities levy on property within the boundaries ofCFD No. 2006-6 under the Act. "City" means the City of Lake Elsinore. "Condominium" means a unit meeting the statutory definition of a condominium contained in the California Civil Code, Section 1351, and far which a condominiumplan has been recorded pursuant to California Civil Code, Section 1352. "Condominium Plan" means a condominium plan as set forth in the California Civil Code, Section 1352. "Council" means the City Council of the City of Lake Elsinore, acting as the legislative body of CFD No. 2006-6. "County" means the County of Riverside. "Developed Property" means, with respect to the Special Tax for Facilities, for each Fiscal Year, all Taxable Property, exclusive of Taxable Public Property and Taxable Property Owner Association Property, for which the Final Subdivision was recorded on or before January 1 of the prior Fiscal Year and a building permit for new construction was issued on or before May 1 of the Fiscal Year precedingthe Fiscal Year for which the Special Tax for Facilities is being levied. "Final Subdivision" means a subdivision of properiy by recordation of (i) a final map, or portion thereof, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots for which building permits,may be issued, or (ii) lot line adjustment approved by the City. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to whichCFD No. 2006=6 Bonds are issued, as modified, City of Lake Elsinore June 6, 2006 Community Facilities Disbict No. 2006-6 (Tessera) Page 3 amended and/or supplemented from time to time, and any instrumentreplacing or supplementing the same. "Land Use Class" means any of the classes listed in Table 1 below. "Maximum Special Tax for Facilities" means the maximum Special T~ for Facilities, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Non-Residential Property" means all Assessor's Parcels of Developed Property far which a buildingpermit permittingthe construction of one or more non-residential units or facilities has been issued by the City. "Outstanding Bonds" means all CFD No. 2006-6 Bonds which are deemedto be outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year, (i) any property within the boundaries of CFD No. 2006-6 that was owned by a property owner association, including any master or sub-association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 preceding the Fiscal Year far which the Special Tax is being levied, has been conveyed, irrevocably dedicated, ar irrevocably offered to a property owner's association, including any master or sub-association, provided such eonveyance, dedication, or offer is submitted to the CFD Administrator by May 1 preceding the Fiscal Year far which the Special Tax is being levied. Notwithstanding the preceding, Property Owner Association Properiy shall not include any property on which Condominiums are or will be located. "Proportionately" means for Developed Property that the ratio of the actual Special Tax for Facilities levy to the Assignecl Special Tax for Facilities is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax for Facilities levy per Acre to the Maximum Special Tax for Facilities per Acras equal for all Assessor's Parcels of Undeveloped Property. The term "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section D below. City af Lake Elsinore June 6, 2006 Community Faciluies Dist~ict No. 2006-6 (Tessera) Page 4 "Public Property" means property within the boundaries of CFD No. 2006-6 owned by, irrevocably offered or dedicatedto, or over, through or under which an easement for purposes of public use has been granted, to the federal government, the State, the County, the City, or any local government or other public agency, provided that any properiy leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taaced and classified according to its use. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be made by reference to the building permit(s) issued for such Assessor's Parcel. "Residential Property" means all Assessor's Parcels of Developed Property for which a building permit permittingthe construction thereon of one or more residential dwelling units has been issued by the City. "Special Tax" means any of the special taxes authorized to be levied by CFD No. 2006-6 pursuant to the Act. "Special Tax for Facilities" means the special ta~c to be levied in each Fiscal Year on each Assessar's Parcel of Developed Property, Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Properiy to fund the Special Tax Requirement for Facilities. "Special Tax Requirement for Facilities" means that amount required in any Fiscal Year for CFD No. 2006-6 to: (i) pay' debt service on all Outstanding Bonds due in the calendar year commencing in such Fiscal Year; (ii) pay periodic costs on the CFD No. 2006-6 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2006-6 Bonds due in the calendar year commencing in such Fiscal Year~, (iii) pay a proportionate share of Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all OutstandingBonds; (v) pay for reasonably anticipated Special Taac for Facilities delinquencies based on the delinquency rate for the Special Tax for Facilities levy in the previous Fiscal Year; (vi) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax for Facilities levy on Undeveloped Property; less (vii) a creditfor funds available to reduce City of Lake E(sinore June 6, 2006 Communiry FacilUies Districi No. 2006-6 (Tessera) Page S the annual Special Tax for Facilities levy, as determined by the CFD Administrator pursuant to the Indenture. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels withinthe boundaries of CFD No. 2006-6 which are not exempt from the Special Tax for Facilities pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Properiy that are not exempt pursuant to Section E below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Properiy not classified as Developed Properiy, Taxable Properiy Owner Association Property, or Taxable Public Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2006-6 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner AssociationProperiy, or UndevelopedProperiy, and shall be subjectto the Special Tax for Facilities in accordance with this Rate and Method of Apportionm~t determined pursuant to Sections C and D below. Residential Property shall be assigned to Land Use Classes 1 through 3 as listed in Table 1 below based on the Residential Floor Area for each unit. Non-Residential Property shall be assigned to Land Use Class 4. With respect to Residential Property, the Residential Floor Area shall be determined from thanost recent building permit issued prior to the issuance of a Certificate of Occupancy for such Assessor's Parcel. C. MAXIMUM SPECIAL TAX FOR FACILITIES Prior to the issuance of CFDNo. 2006-6 Bonds, the Assigned Special Tax for Facilities on Developed Property (set forth in Table 1), and the Backup Special City of Lake Elsinore June 6, 2006 Community Facilities District No. 2006-6 (Tessera) Page 6 Tax for Facilities attributable to a Final Subdivision, may be reduced in accordance with, and subject to the conditions set forth in this paragraph. If it is reasonably determined by the CFD Administrator that the overlapping debt burden (as defined in the Statement of Goals and Policies for the Use of the Mello-Roos Community Facilities Act of 1982 adopted by the Council, the "Goals and Policies") calculatedpursuant to the Goals and Policies based upon the Assigned Special Tax far Facilities on Developed Property exceeds the City's maximum level objective set forth in such document, the Assigned Special Tax for Facilities on Developed Property, and the Backup Special Tax for Facilities attributable to a Final Subdivisibn, may be reduced to the amount necessary to satisfy the City's objective with respect to the maximum overlapping debt burden level with the written consent of the CFD Administrator. The reductions permitted pursuant to this paragraph shall be reflected in an amended notice of Special Taac lien which the City shall cause to be recorded by executing a certificate in substantially the form attached hereto as Eachibit "A". 1. Develo~ed Propertv (a) Maximum Special Tax for Facilities The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Developed Properiy shall be the greater of (i) the amount derived by application of the Assigned Special Tax for Facilities or (ii) the amount derived by application of the Backup Special Tax for Facilities. (b) Assigned Special Tax for Facilities The Fiscal Year 2006-2007 Assigned Special Tax for Facilities for each Land Use Class is shown below in Table l. Ciry of Lake Elsinare June 6, 2006 Comneuniry Facilities Disbict No. 2006-6 (Tessera) page ~ TABLE 1 Assigned Special Tax for Facilities for Developed Property Community Facilities District No. 20066 Fiscal Year 2006-2007 (c) Backup SpecialTax for Facilities The Fiscal Year 2006-2007 Backup Special T~ for Facilities attributable to a Final Subdivisionwill equal $48,640 multiplied by the Acreage of all Taxable Property, exclusive of any T~able Property Owner Association Property and Taxable Public Property, therein. The Backup Special Tax for Facilities for each Assessor's Parcel of ResidentialProperty shall be computed by dividing the Backup Special Tax for Facilities attributable to the applicable Final Subdivision by the number of Assessor's Parcels and/or residential units for which building permits for residential construction have or may be issued (i.e., the number or residential lots and/or units). The Backup Special Tax for Facilities for each Assessor's Parcel of Non-Residential Property therein shall equal $48,640 multiplied by the Acreage of such Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of T~able Property for which building permits for both residential and non-residential construction may be issued, exclusive of T~able Property Owner Association Property and Taxable Public Properly, then the Backup Special Tax for Facilities for each t~ssessor's Parcel of Residential Property shall be computed exclusive of the Acreage and Assessor's Ciry of Lake Elsinore June 6, 2006 Community Facilities District No. 2006-6 (Tessera) Page 8 Parcels of property for which building permits for non-residential construction may be issued. Notwithstanding the foregoing, if all or any portion of the Final Subdivision(s) described in the preceding paragraphs is subsequently changed or modified by recordation of a lot line adjustment or similar instrument, and only if the CFD Administrator determines that such change or modification results in a decrease in the number of Assessor's Parcels of Taxable Property for which building permits for residential construction have or may be issued within such Final Subdivision, then the Backup Special Tax for Facilities for each Assessor's Parcel of Developed Property that is part of the lot line adjustment or similar instrument for such Final Subdivision shall be a rate per Acre as calculated below. The Backup Special Tax for Facilities previously determined far an Assessor's Parcel of Developed Property that is not a part of the lot line adjustment or similar instrument for such Final Subdivision shall not be recalculated. 1. Determine the total Backup Special Tax for Facilities anticipated to apply to the changed or modified portion of the Final Subdivision area prior to the change or modification. 2. The result of paragraph 1 above shall be divided by the Acreage of Taxable Property which is ultimately expected to exist in such changed or modified portion of the Final Subdivision area, as reasonably determined by the CFD Administrator. 3. The result of paragraph 2 above shall be the Backup Special Tax for Facilities per Acre which shall be applicable to Assessor's Parcels of Developed Property in such changed or modified portion of the Final Subdivision area for all remaining Fiscal Years in which the Special Tax for Facilities may be levied. City of Lake Elsinore June 6, 2006 Communiry Facilities District No. 2006-6 (Tessera) PaBe 9 (d) Increase in the Assigned Special. Tax for Facilities and Backup Special Tax for Facilities The Fiscal Year 2006-2007 Assigned Special Taa~ for Facilities, identified in Table 1 above, and Backup Special Taac for Facilities shall increase thereafter, commencing on July 1, 2007 and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. (e) Multiple Land Use Classes In some instances an Assessor's Parcel of Developed Property may contain more than one LandUse Class. The Maximum Special Tax for Facilities levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax for Facilities for all Land Use Classes located on thatAssessor'sParcel. TheCFDAdministrator'sallocationtoeachtype of property shall be final. 2. TaxablePropertyOwnerAssociationProperty TaacablePublicPropertv, and Undeveloped Propertv The Fiscal Year 2006-2007 Maximum Special TaY for Facilities for Taxable Property Owner AssociationProperty, Taxable Public Property, and Undeveloped Property shall be $49,527 per Acre and shall increase thereafter, commencing on July 1, 2007 and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Maacimum Special Tax for Facilities in effect for theprevious Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES Commencingwith Fiscal Year 2006-2007 and far each following Fiscal Year, the Council shall determine the Special Tax Requirement for Facilities and levy the Special Tax for Facilities until the amount of Special Tax for Facilities levy equals the Special Tax Requirement for Facilities. The Special Tax for Facilities shall be levied each Fiscal Year as follows: First: The Special Tax for Facilities shall be levied on each Assessor's Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax for Facilities; Ciry oflake Elsinore June 6, 2006 Cammunity Facilities District No. 2006-6 (Tessera) Page 10 Second: If additional monies are needed to satisfy the Special TaY Requirement for Facilities after the first step has been completed, the Special Ta~c for Facilities shall be levied Proportionately on each Assessor's Parcel of UndevelopedProperty at up to 100% of the Maximutn Special TaY for Facilities for Undeveloped Property; Third: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, then the levy of the Special Tax for Facilities on each Assessor's Parcel of Developed Property whose Maximum Special Tax for Facilities is determined through the application of the Backup Special Tax for Facilities shall be increased in equal percentages from the Assigned Special Tax for Facilities up to the Maximum Special Tax for Facilities for each such Assessor's Parcel; Fourth: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner AssociationProperty and Taxable Public Property at up to 100% of the Maximum Special Tax for Facilities for Taxable Property Owner Association Property ar Taxable Public Property. Notwithstanding the above, the Council may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax for Facilities in step one (above), when (i) the Council is no longer required to levy the Special Tax for Facilities pursuant to steps two through four above in order to meet the Special Tax Requirement for Facilities; (ii) all authorized CFD No. 2006-6 Bonds have already been issued or the Council has covenanted that it will not issue any additional CFD No. 2006-6 Bonds (except refunding bonds) to be supported by the Special Tax for Facilities; and (iii) all Authorized Facilities have been constructed andlor acquired and all reimbursementsto the developer for the construction and/or acquisition of such facilities have been paid as permitted by law. Further notwithstandingthe above, under no circumstances will the Special Tax for Facilities levied against any Assessor's Parcel of Residential Property for which a Certificate of Occupancy has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within CFD No.2006-6. Ciry of Lake Elsinore June 6, 2006 Community Facilities D'utrict No. 2006-6 (Tessera) Page I Z E. EXEMPTIONS No Special Tax for Facilities shall be levied on up to 3.1 Acres of Property Owner Association Property and/or Public Properiy in CFD No. 2006-6. Tax- exempt status will be assigned bythe CFD Administrator in the chronological order in which properiy becomes Property Owner Association Property or Public Property. However, should an Assessor's Parcel no longer be classified as Property Owner Association Property or Public Property, its tax-exempt status will be revoked. Properiy Owner Association Properiy ar Public Properiy that is not exempt from Special Tax for Facilities under this section shall be subject to the levy of the Special Taac for Facilities and shall be taxed Proportionately as part of the fourth step in Section D above, at up to 100% of the Ma~mum Special Taac for Facilities for Taxable Property Owner Association Property or Taxable Public Properiy. F. 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 CFD No. 2006-6 may directly bill the Special Tax for Facilities, may collect the Special Tax 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. G. PREPAYMENT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G: "Buildout" means, for CFD No. 2006-6, that all expected building permits have been issued, as reasonably determined by the CFD Administrator. "CFD Public Facilities" means either $3,485,000 in 2006 dollars, which shall increase by the ConstructionInflation Index on July 1, 2007, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide funding for all of the Authorized Facilities, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more CFD No. 2006-6 Bonds (except refunding bonds) to be supported by the Special Tax for Facilities levy under this Rate and Method of Apportionment as described in Section D above. City of Lake E/sinore June 6, 2006 Communiry Facilities District No. 2006-6 (Tessera) Page 12 "Construction Inflation Index" means the annual percentage change in the Engineering News Record Building Cost Index for the City of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the CFD Administrator that is reasonably comparableto the Engineering News Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus(i) costs of Authorized Facilities previously paid from the ImprovementFund, (ii) moneys currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance thecost of Authorized Facilities. "Improvement Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditureto acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, a11 Outstanding Bonds that are deemed to be outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. 1. Prepayment in Full Only an Assessor's Parcel of DevelopedProperty, or UndevelopedProperty for which a building permit has been issued, may be prepaid. The obligation of the Assessor's Parcel to pay the Special Tax for Facilities may be permanently satisfied as described herein, provided that a prepayment may be made with respect to a particular Assessor's Parcel only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intendingto prepay the Special Tax for Facilities obligation shall provide the CFD Administratorwith written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount for such Assessor's Parcel. The CFD Administrator may charge a reasonable fee far providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of CFD No. 2006-6 Bonds from the proceeds of such prepaymentmay be given by the Trustee pursuantto the Indenture. Ciry oJLake Elsinore June 6, 2006 Community Facrlities D'utrict No. 2006-6 (Tessera) Page 13 The Special Tax for Facilities Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Special Tax for Facilities Prepayment Amount As of the proposed date of prepayment, the Special Tax for Facilities Prepayment Amount shallbe calculated as follows: Paragraqh No.• Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. Far Assessar's Parcels of Developed Property, compute the Assigned Special Tax for Facilities and Backup Special Tax for Facilities. For Assessor's Parcels of UndevelopedProperty for which a building permit has been issued, compute the Assigned Special Tax for Facilities and Backup Special Tax for Facilities far that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. 3. (a) Divide the Assigned Special Tax for Facilities computed pursuant to paragraph 2 by the total estimated Assigned Special Tax for Facilities for the entire CFD No. 2006-6 based on the DevelopedProperty Special Tax for Facilities which could be levied in the current Fiscal Year on all expected development through Buildout of CFD No. 2006-6, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax for Facilities computed pursuant to paragraph 2 by the total estimated Backup Special Tax for Facilities at Buildout for the entire CFD No. 2006-6, excluding any Assessor's Parcels which have been prepaid. Ciry of Lake E/sinore June 6, 2006 Communiry Facilities District No. 2006-6 (Tessera) Page 19 4. Multiply the larger quotient computedpursuantto paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be retired and prepaid (the "Bond Redemption Amount"). Multiply the Bond RedemptionAmount computedpursuant to paragraph 4 by the applicable redemption premium (e.g., the redemption price- 100%), if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. 7. Multiply the larger quotient computedpursuant to paragraph 3(a) or 3(b) by the amount determinedpursuant to paragraph 6 to compute the amount ofFuture Facilities Costs to be prepaid (the "FutureFacilitiesAmount"). Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax for Facilities levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CFD Administratar reasonably expects to derive from the reinvestment of the Special Tax for Facilities Prepayment Amount less the Future Facilities Amount and the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance AmounP'). 12. The administrative fees and expenses of CFD No. 2006-6 are as calculated by the CFD Administrator and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No.2006-6 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). City of Lake Elsinore June 6, 2006 Community Facilities District No. 2006-6 (Tessera) Page I S 13. The reserve fund credit (the "ReserveFund CrediP') shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepaymentdate, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by,multiplying the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment (the 'Capitalized Interest Credit'). 15. The Special Tax for Facilities prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11 and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax for Facilities Prepayment Amount'). From the Special Tax for Facilities Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5,11,13 and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire CFD No. 20066 Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the Improvement Fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 20066. The Special Taac for Facilities Prepayment Amount may be insufficient to redeem a full $5,000 increment of CFD No.2006-6 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 CFD No. 20066 Bonds or to make debt service payments. City of Lake Elsinore June 6, 2006 Community Facilities District No. 2006-6 (Tessera) Page 16 As a result of the payment of the current Fiscal Year's Special Tax for Facilities levy as determined under paragraph 9(above), the CFD Administratar shall remove the current Fiscal Year's Special Tax for Facilities levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax for Facilities and the release of the Special Tax for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax for Facilities shall cease. Notwithstanding the foregoing, no Special Tax for Facilities prepayment shall be allowed unless, at the time of such proposed prepayment, the amount of Maximum Special Tax for Facilities that may be levied on Taxable Property within CFD No. 2006-6 (after excluding 3.1 Acres of Property Owner Association Property and/or Public Properiy in CFD No. 2006-6 as set forth in Section E) both prior to and after the proposed prepayment is at least equal to the sum of (i) the Administrative Expenses, as defined in Section A above, and (ii) 1.10 times maximum annual debt service,'in each remaining Fiscal Year on the Outstanding Bonds. 2. Prepayment in Part The Special Tax for Facilities on an Assessor's Parcel of Developed Properiy or an Assessor's Parcel of Undeveloped Property for which a building pertnit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section G.1; except that a partial prepayment shall be calculated according to the following formula: PP =[(PE - A) x F] + A These terms have the following meaning: PP = the partial prepayment. PE = the Special Tax for Facilities Prepayment Amount calculated according to Section G.1. F= the percentage, expressed as a decimal, by which the owner of the Assessor's Parcel is partially prepaying the Special Taac for Facilities. A= the Administrative Fees and Expenses calculated according to Section G.1. Ciry of Lake Elsinore June 6, 2006 Community Facilities District No. 2006-6 (Tessera) Page 17 The owner of any Assessor'sParcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax for Facilities and the percentage by which the Special Tax for Facilities shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for Facilities for an Assessor's Parcel withiri 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the Council shall (i) distribute the funds remitted to it accarding to Section G.1, and (ii) indicate in the records of CFD No. 2006-6 that there has been a partial prepayment of the Special Tax for Facilities and that a portion of the Special Tax for Facilities with respectto such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax for Facilities, shall continue to be levied on such Assessor's Parcel pursuant to Section D above. H. TERM OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities shall be levied for a period not to exceed forty years commencing with Fiscal Year 2006-2007, provided however that the Special Tax 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. 2006-6 Bonds have been paid; (ii) all Authorized Facilities have been constructed and/or acquired and all reimbursements to the developer for the construction and/or acquisition of such facilities have been paid as permitted by law; and (iii) all other obligations of CFD No. 2006-6 have been satisfied. I. SPECIAL TAX FOR SERVICES The following additional definitions apply to this Section I: "Developed Multifamily Unit" 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 Unit" means a residential dwelling unit other than a Developed Multifamily Unit on an Assessor's Parcel for which a building City of Lake Elsinore June 6, 2006 Communiry Facilities District No. 2006-6 (Tessera) Page I8 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. "Maximum Special Tax for Services" means the maximum Special Tax for Services that can be levied by CFD No. 2006-6 in any Fiscal Year on any Assessor's Parcel. "Operating Fund" means a fund that shall be maintained for CFD No. 2006-6 for any Fiscal Year to pay for the actual costs of maintenance related to the Service Area, and the applicable Administrative E~penses. "Operating Fund Balance" means the amount of funds in the OperatingFund 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 taYes authorized to be levied within CFD No. 2006-6 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 CFD No. 2006-6 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 expectedto be accepted and maintainedduring the current Fiscal Year, (ii) pay a proportionate share of Administrative Expenses, and (iii) anticipated Special Tax for Services delinquencies based on the delinquency rate for the Special Tax for Services levy in CFD No. 2006-6 for the previous Fiscal Year, less (iv) the Operating Fund Balance, as determined by the CFD Administrator. 1. Rate and Method of Apportionment of the Special Tax for Services Commencingwith Fiscal Year 2006-2007 and for each subsequentFiscal Year, the Council shall levy the Special Tax for Services on (i) all Assessor's Parcels containing a Developed Single Family Unit or Developed Multifamily Unit and (ii) all Assessor's Parcels of Non-Residential Property, up to the applicable Maximum Special Tax for Services to fund the Special Tax Requirement for Services. , City of Lake Elsinore June 6, 2006 Community Faci[ities District No. 2006-6 (Tessera) Page 19 The Maximum Special Tax for Services for Fiscal Year 2006-2007 shall be $246.84 per Developed Single Family Unit, $123.42 per Developed Multifamily Unit, and $555.90 per Acre for each Assessor's Parcel of Non-Residential Property. On each July 1, commencing July 1, 2007, the Maximum Special Tax far 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 Council. 3. Collection of the Special Tax for Services The Special Tax for Services shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2006-6 may collect the Special Tax for Services at a different timeor in a different manner if necessary to meet its funding requirements. J. APPEALS AND INTERPRETATIONS Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error may submit a written appeal to CFD No. 2006-6. The CFD Administrator shall review the appeal and if the CFD Administrator concurs, the amount of the Special Tax levied shall be appropriately modified. The Council may interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals. Any decision of the Council shall be final and binding as to all persons. City ofLake Elsinore June 6, 2006 Communiry Facilities District No. 2006-6 (Tessera) Page 20 EXHIBIT A CERTIFICATE TO AMEND SPECIAL TAX FOR FACILITIES CITY OF LAKE ELSINORE AND CFD No. 20066 CERTIFICATE Pursuant to Section C of the Rate and Method of Apportionment, the City of Lake Elsinore ("City") and City of Lake Elsinore Community Facilities District No. 2006-6 ("CFD No. 2006-6") hereby agree to a reduction in the Assigned Special Tax for Facilities for Developed Property, and the Backup Special Tax for Facilities attributable to a Final Subdivisionwithin CFD No. 2006-6: (a) The information in Table 1 relating to the Assigned Special Tax for Facilities for Developed Properiy within CFD No. 20066 shall be modified as follows: Acre to $ per Acre. 2. The Special Tax for Facilities may only be modified prior to the first issuance of CFD No. 2006-6 Bonds. 3. Upon execution of the Certificate by the City and CFD No. 2006-6, the City shall cause an amended notice of Special Taac lien for CFD No. 2006-6 to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned acknowledges, on behalf of the City and CFD No. 2006-6, receipt of this Certificate and modification of the Rate and Method of Apportionment as set forth in this Certificate. (b) The Backup Special Tax for Facilities attributableto a Final Subdivision within CFD No. 2006-6, as stated in Section C.1.(c), shall be reduced from $48,640 per CITY OF LAKE ELSINORE By: CFD Administrator Date: COMNIUNITY FACILITIES DISTRICT NO. 2006-6 OF THE CITY OF LAKE ELSINORE By: Date:_