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HomeMy WebLinkAboutCC Reso No 2006-178RESOLUTION NO. 2006-178 RESOLUTION OF INTENTION OF THE CTTY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFOItNIA, TO ESTASLISH CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2006-10 (RIVERLAKE VILLAS) WHEREAS, the City Council (the "Council") of the City of Lake Elsinore (the "City") has received a petition (the "Petition") requesting the institution of proceedings far (i) formation of a community facilities district (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "AcY'), (ii) authorization of issuance of bonds for the CFD, and (iv) establishment of an appropriations limit for the CFD; and WHEREAS, the Council has deternuned that the Petition complies with the requirements of Government Code Section 53318(c) and now intends to initiate such proceedings; and WHEREAS, it is the intenrion of the Council to finance parks, open space and storm drains maintenance services that are in addition to those provided in the territory within the CFD prior to the formation of the CFD and do not supplant services already available within the territory proposed to be included in the CFD through the formation of the CFD subject to the levy of a special tax to pay for such services, being approved at an election to be held within the boundaries of the CFD; and WHEREAS, it is also the intention of the Council to finance the acquisition and construction of the Facilities (as defined below) or any combination thereof through the formation of the CFD, subject to the authorization of bonds and the levy of a special tax to pay lease payments, installment purchase payments or other payments, ar principal and interest on bonds, being approved at an election to be held within the boundaries of the CFD. NOW, THEREFORE, THE CITY COUNCIL OF THE CTTY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. The Council hereby deternunes to institute proceedings for the formation of a community facilities district under the terms of the Act. The exterior boundaries of the CFD are hereby specified and described to be as shown on that certain map now on file in the office of the Clerk entitled "Proposed CITY COUNCIL RESOLUTION NO. 2006-178 Page 2 of 6 Boundary of Community Facilities District No. 2006-10 of the City of Lake Elsinore (Riverlake Villas)," which map indicates by a boundary line the extent of the territory included in the proposed community facilities district and shall govern for all details as to the extent of the CFD. On the original and one copy of the map of such CFD on file in the City Clerk's office, the City Clerk shall endorse the certificate evidencing the date and adoption of this resolution. The City Clerk shall file the original of such map in 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 name of the proposed CFD shall be "City of Lake Elsinore Community Faciliries District No. 2006-10 (Riverlake Villas)." SECTION 3. Except where funds are otherwise available, it is the intention of the Council to levy annually in accordance with procedures contained in the Act a special tax (the "Services Special Tax") sufficient to finance a portion of the cost of providing parks, open space and storm drain maintenance services (the "Services") that are in addition to those provided in the territory within the CFD prior to the formation of the CFD and do not supplant services already available within the territory proposed to be included in the CFD, the costs of administering the levy and collection of the Services Special 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 t~ levy. The Services Special T~ will be secured by recordation of a conrinuing lien against all real properiy 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 Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 533253 of the Act. SECTION 4. The faciliries 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 consriuct, 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 capital faciliries fees and EVMWD water and sewer capital facilities fees, and related costs including designs, inspections, CITY COUNCIL RESOLUTION NO. 2006-178 Page 3 of 6 professional fees, annexation fees, connection fees and acquisition costs (the "Facilities"). Such Facilities need not be physically located within the CFD. SECTION 5. Except where funds are otherwise available, it is the intention of the Council to levy annually in accordance with procedures contained in the Act a special t~ (the "Special Tax") sufficient to pay for the costs of financing the acquisition and/or 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 replenishment of reserve funds, the remarketing, credit enhancement and liquidity fees, the costs of administering the levy and collection of the Special Taac 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 facilities (but not to exceed two years), election costs and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, disclosure counsel, financing consultants and printing costs, and all other administrative costs of the tax levy and bond issue. The Special Tax will be secured by recordation of a continuing lien against all real property in the CFD. In the first year in which such a Special Tax is levied, the levy shall include a sum sufficient to repay to the City all amounts, if any, transferred to the CFD pursuant to 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 Eachibit A attached hereto and by this reference incorporated herein. The Special T~ 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 Facilities. The Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. In the event that a portion of the property within 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 ar exempt in order to yield the required payments, subject to the maximum tax. Under no circumstances, however, shall the Special T~ levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner of any other parcel or parcels within the CFD by more than 10 percent. Furthermore, the maximum special tax CITY COUNCIL RESOLUTION NO. 2006-178 Page 4 of 6 authorized to be levied against any parcel used for private residential purposes shall not be increased over time in excess of 2 percent per year. SECTION 6. The Council hereby finds that the proposed Facilities are necessary to meet increased demands put upon the City as a result of the new development or rehabilitation within the proposed CFI). SECTION 7. A public hearing (the "Hearing") on the establishment of the CFD and the proposed rate and method of apportionment of the Services Special Tax and the Special Tax shall be held on November 28, 2006, at 7:00 p.m., or as soon thereafter as practicable, at the Lake Elsinore Cultural Center located at 183 North Main Street, Lake Elsinore, Califomia 92530. SECTION 8. At the time and place set forth above for the hearing, any interested person, including all persons owning lands or registered to vote within the proposed CFD, may appear and be heard. SECTION 9. Each City officer who is or will be responsible for the Services and the Facilities to be financed by the CFD, if it is established, is hereby directed to study the proposed CFD and, at or before the time of the above- - mentioned Hearing, file a report with the Council, and which is to be made a part of the record of the Hearing, containing a brief description of the Services and the Facilities by type which will in his or her opinion be required to adequately meet the needs of the CFD and his or her estimate of the cost of providing the Services and the Facilities. The City Manager is directed to estimate the fair and reasonable cost of all incidental expenses, including the cost of planning and designing the Facilities to be financed pursuant to the Act, including the cost of environmental evaluations of such facilities, all costs associated with the creation of the CFD, issuance of bonds, determination of the amount of any special taxes, collection of any special t~es, or costs otherwise incurred in order to carry out the authorized purposes of the City with respect to the CFD, and any other expenses incidental to the construction, completion and inspection of the authorized work to be paid through the proposed financing. SECTION 10. The City may accept advances of funds from any sources, including private persons or private entities, and is authorized and directed to use such funds for any authorized purpose, including any cost incurred by the City in creating the CFD. The City may enter into an agreement to repay all of such funds as are not expended or committed for any authorized purpose at the time of the CITY COUNCIL RESOLUTION NO. 2006-178 Page 5 of 6 election on the levy of the Services Special T~ and the Special TaY, if the proposal to levy such t~ should fail, and to repay all of such funds advanced if the levy of the Services Special Taa~ and the Special Tax shall be approved by the qualified electors of the CFD. SECTION 11. The City Clerk is hereby directed to publish a notice ("Notice") of the Hearing pursuant to Section 6061 of the Government Code in a newspaper of general circulation published in the area of the proposed CFD. Such Notice shall contain information set forth in Section 53322 of the Act. Such publication shall be completed at least 7 days prior to the date of the Hearing. SECTION 12. The Clerk may send a copy of the Notice by first-class mail, postage prepaid, to each registered voter and to each landowner within proposed CFD as shown on the last equalized assessment roll. Said mailing shall be completed not less than fifteen (15) days prior to the date of the Hearing. SECTION 13. Pursuant to Section 53344.1 of the Act, the Council hereby reserves to itself, in its sole discretion, the right and authority by subsequent resolution to allow any owner of property within the CFD, subject to the provisions of Section 53344.1 of the Act and those conditions as it may impose, and any applicable prepayment penalries as prescribed in the bond indenture or comparable instrument or document, to tender to the CFD treasurer in full payment ar part payment of any installment of the special taxes or the interest or penalries thereon which may be due or delinquent, but for which a bill has been received, any bond or other obligation secured thereby, the bond or other obligation to be taken at par and credit to be given for the accrued interest shown thereby computed to the date of tender. SECTION 14. The voting procedure with respect to the establislunent of the CFD and the imposition of the special tax shall be by hand delivered or mailed ballot election. SECTION 15. This Resolution shall take effect from and after the date of its passage and adoprion. CITY COUNCIL RESOLUTION NO. 2006-178 Page 6 of 6 PASSED, APPROVED AND ADOPTED this 24th day of October, 2006. AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: ~ . .~/ Robert E. Magee,yPCla; City of Lake Elsinore A Frederick l~y; City Clerk City of Lake Elsinore AP ROVED AS TO FORM: ( ~ B bara Zei' Leibold, City Attorney City of Lake Elsinore EXHIBIT A RATE AND METHOD OF APPORTIONMENT RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT NO. 2006-10 OF THE CITY OF LAKE ELSINORE (Riverlake Villas) The following sets forth the Rate and Method of Apportionment for the levy and collection of Special Taxes of the City of Lake Elsinore Community Facilities District No. 2006-10 (Riverlake Villas) ("CFD No. 2006-10"). The Special Tax shall be levied on and collected each Fiscal Year, in an amount determined through the applicarion of the Rate and Method of Apportionment described below. All of the real property within CFD No. 2006-10 unless exempted by law or by the provisions hereof, shall be tased for the purposes, to the extent, and in the manner herein provided. SECTION A DEFINITIONS The terms hereinafter set forth have the foliowing meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessar'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 California. "Administrative Expenses° means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2006-10: the costs of computing the Special Taxes and preparing the Special Taa~ collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taaces (whether by the City ar otherwise); the costs of remitting the Special Tases for Facilities to the Trustee; the costs of the Trustee (including legal counsel) in the dischazge of the duties required of it under the Indenture; the costs to the City, CFD No. 2006-10 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2006-10 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2006-10 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 Taaces; the costs of the City, CFD No. 2006-10 or any designee thereofrelated to an appeal ofthe Special Tas; the costs associated with the release of funds from an escrow account; and the City's annual administration fees and third pariy expenses. Administrative Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or CFD No. 2006-10 for any other administrative purposes of CFD No. 2006-10, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taaces. City of Lake Elsinore October 3, 2006 Communiry Facilifies District No. 200G10 (Riverlake Villas) Page 1 "Apartment Property" means all Assessor's Parcels ofResidential Property on which one or more Apartrnent 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 priar to the January ls~ preceding the Fiscal Yeaz in which the Special Taac is being levied, and (ii) that ha~e not been issued a building permit on or before May lst preceding the Fiscal Year in which the Special Taac is being levied. "Assessor's Parcel" means a lot or pazcel designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number. "Assessor's Parcel Map" means an official map of the Assessor ofthe County designating parcels by Assessor's Parcel Number. "Assessor's Parcel Number" means that number assigned to an Assessar's Parcel bythe County for purposes ofidentification. "Assigned Special Tax for Facilities" means the Special Tas of that name described in Section D below. "Backup Special Tax for Facilities" means the Special Tax of that name described in Section E below. "Bonds" means any obligation to repay a sum of money, including obligations in the form ofbonds, notes, certificates ofparticipation, long-term leases, loans from government agencies, or loans from banks, other fmancial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Tases for Facilities within CFD No. 2006-10 haue been pledged. "Building Square Footage" or "BSF" means the squaze footage of assessable internal living space, exclusive of garages or other struchues not used as living space, as determined by reference to the building permit application for such Assessor's Pazcel. "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 far (i) determining the Special Taac Requirement for Facilities, (ii) determining the Special Taac Requirement for Services, as defined in Section L, as applicable, and (iii) providing for the levy and collection of the Special Taaces. "CFD No. 2006-10" means Community Facilities District No. 2006-10 (Riverlake Villas) established by the City under the Act. City of Lake Elsinore October 3, 2006 Communiry Facilities District No. 200610 (Riverlake Villas) 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. 2006-10, 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 Tas is being levied, and (ii) a building permit for new construction was issued on ar befare May lsc 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 of a final map, parcel map, or lot line adjustment, parsuant to the Subdivision Map Act (Califomia 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. "Indenture" means the indenture, fiscal agent agreement, resolurion or other inshument pursuant to which Bonds are issued, as modified, amended and/or suppiemented from time to time, and any instrwnent replacing or supplementing the same. "Land Use Type" means any of the types listed in Table 1 of Section D. 11Maximum Speclal Tax for Facilities" means the maacimum Special Taac for Facilities, determined in accordance with Section C, that can be levied by CFD No. 2006-10 in any Fiscal Year on any Assessor's Parcel. "Non-Residential Property" means all Assessor's Parcels of Developed Property for which a building permit was issued for any type of non-residential use. "Partial Prepayment Amount" means the amount required to prepay a portion of the Special Tax for Facilities obligation for an Assessor's Parcel, as described in Section H. "Prepayment Amount" means the amount required to prepay the Special Tas for Facilities obligation in full for an Assessor's Pazcel, as described in Section G. City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 3 "Proportionately" means that the ratio ofthe actual Special Tax for Facilities levyto the applicable Assigned Special Tax for Facilities is equal for all applicable Assessor's Parceis. In case of Developed Property subject to the apportionment ofthe Special Tax for Facilities under step four of Section F, "Proportionatel}~' in step four means that the quotient of (a) actual Special Tax for Facilities less the Assigned Special Taac for Facilities divided by (b) the Backup Special Taac for Facilities less the Assigned Special Taac 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 ali Taxable Property below the required minimum Acreage set forth in Section J. "Residential Property" means all Assessor's Parcels of Developed Property 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. "Single Family Unit" means a residential dwelling unit other than an Apartrnent Unit. "Special Tax" means any ofthe special tases authorized to be levied by CFD No. 2006-10 pursuant to the Act. "Special Tax for Facilities" means any of the special taxes authorized to be levied within CFD No. 2006-10 pursuant to the Act to fund the Special Taac Requirement for Facilities. "Special Tax Requirement for Facilities" means the amount required in anyFiscal 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 fixnds 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. 2006-10 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 periodic costs on the Bonds pursuant to the Indenture. "Taxable Property°' means all Assessor's Parcels within CFD No. 2006-10, which are not Exempt Property. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. °Undeveloped Property" means all Assessor's Parcels of Taacable Property which are not Developed Property, Approved Property or Provisional Undeveloped Property. City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 4 SECTION B CLASSIFICATION OF ASSESSOR'S PARCELS Each Fiscal Year, beginning with Fiscal Year 2006-07, each Assessor's Parcel within CFD No. 2006-10 shall be classified as Taa~able Properiy or Exempt Property. In addition, each Assessor's Parcel of Tasable Property shall be further classified as Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non-Residential Properry. Lastly, each Assessor's Parcel of Residential Property shall further be classified as a Single Family Property or Aparhnent Property, and each Assessor's Pazcel of Single Family 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. Develoned Propertv The Masimum Special Tax for Facilities for each Assessor's Parcel of Single Family Properiy in any Fiscal Yeaz shall be the greater of (i) the Assigned Special Taac for Facilities or (ii) the Backup Special Tax for Facilities. The Maximum Special Tax for Facilities for each Assessor's Parcel ofApartment Property or Non-Residential Property shall be the applicable Assigned Special Tax for Facilities described in Table 1 of Section D. Prior to the issuance of Bonds, the Assigned Special Taac for Facilities on Developed Property set forth in Table 1 may be reduced in accordance with, and subject to the conditions set forth in this paragraph. If it is reasonably determined by the CFD Administrator that the overlapping debt burden (as defined in the Statement of Goals and Policies for the Use of the Mello-Roos Communitv Facilities Act of 1982 adopted by the City Council, the ("Goals and Policies") calculated pursuant to the Goals and Policies exceeds the City's masimum level objective set forth in such document, the Maximum Special Tax for Facilities on Developed Property may be reduced (by modifying Table 1) to the amount necessary to satisfy the City's objective with respect to the maacimum overlapping debt burden level with the written consent of the CFD Administratar. In order to reduce the Maximum Special Tax for Facilities on Developed Property it may be necessary to reduce the Maacimum Special Taac for Facilities for Undeveloped Property. The reductions permitted pursuant to this puagraph shall be reflected in an amended Notice of Special Tax Lien which the City shall cause to be recarded by executing a certificate in substantially the form attached hereto as Exhibit "A". City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 5 2. Multiule Land Use Tvne In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Type. The Maximum Special Taac for Facilities levied on an Assessor's Parcel shall be the sum of the Maximum Special Tas for Facilities for all Land Use Types located on the Assessor's Parcel. The CFD Administrator's allocation to each type ofproperty shail be final. 3. Approved Propertv, Undeveloped Propertv and Provisional Undeveloped Property The Masimum Special Tas for Facilities for each Assessor's Parcel classified as Approved Property, Undeveloped Property, or Provisional Undeveloped Property in any Fiscal Year shall be the applicable Assigned Special Taac for Facilities. SECTION D ASSIGNED SPECIAL TAX FOR FACILITIES 1. Develoued Proaertv Each Fiscal Year, each Assessor's Parcel of Single Family Properiy, Apartment Property, or Non-Residential Properiy shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tax for Facilities applicable to an Assessor's Parcel ofDeveloped Property shall be determined pursuant to Table 1 below. TABLE 1 ASSIGNED SPECIAL TAX FOR FACILITIES RATES FOR DEVELOPED PROPERTY Land Use T e Buildin S uare Foota e Rate Single Family Property Greater than or equal to 1,551 $3,339 per Single Family Unit Single Famil Pro erty 1,301-1,550 $3,241 per Single Family Unit Single Family Property Less than or equal to 1,300 $2,850 er Single Family Unit A artment Pro erty N/A $30,000 er Acre Non Residential Pro ert N/A $30,000 per Acre City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 6 2. Approved Propertv, Undeveloped Proqertv and Provisional Undeveloped Propertv Each Fiscal Year, each Assessor's Parcel of Approved Property, Undeveloped Property and Provisional Undeveloped Property shall be subject to an Assigned Special Taac far Facilities. The Assigned Special Tax for Facilities rate for an Assessor's Parcel classified as Approved Property, Undeveloped Property and Provisional Undeveloped Property shall be $164,692 per Acre. SECTION E BACKUP SPECIAL TAX FOR FACILITIES At the time a Final Map is recorded, the Backup Special Tu~ for Facilities for all Assessor's Parcels of Developed Property classified ar reasonably expected to be classified as a Single Family Property within such Final Map area shall be determined by (i) multiplying (a) the Maximum Special Ta~c for Facilities rate for Undeveloped Property by (b) the total Acreage of Taxable Property in such Final Map azea, 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 Properry in such Fina1 Map area, and (ii) dividing the results in (i) by the total number of Single Family Units reasonably expected to be constructed within such Final Map area. The resulting quotient shall be the Backup Special Tax for Facilities far each Assessor's Parcel of Single Family Property within such Final Map area. The Backup Special Tax for Facilities shall not apply to Non-Residential Property or Apartment Property. Notwithstanding the foregoing, if Assessor's Parcels of Developed Property which aze classified or to be classified as Single Family Property are subsequenUy changed or modified by recardation of a lot line adjustment or similar instrument, then the Backup Special Tax for Facilities for the area that has been changed or modified shall be recalculated, based on the methodology above, to equal the amount of Backup Special Tax for Facilities that would have been generated if such change did not take place. SECTION F METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILTTIES 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 accardance with the following steps: Step One: The Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Special Tax for Facilities rates in Table 1 to satisfy the Special Tax Requirement for Facilities. Step Two: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Special Tax for Facilities shall be levied City of Lake Elsinore October 3, 2006 Community Facilities District No. 200610 (Riverlake Villas) Page 7 Proportionately on each Assessor's Parcel oFApproved Property at up to 100% ofthe Maacimum Special Taac for Facilities applicable to each such Assessor's Parcel as needed to sarisfy the Special Taac Requirement for Facilities. Step Three: If additional moneys are needed to satisfy the Special Ta~c Requirement far Facilities after the first two steps have been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Maximuxn Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tas Requirement for Facilities. Step Four: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, then the Special Taac for Facilities on each Assessar's Parcel ofDeveloped Property whose Maacimum Special Taac for Facilities is the Backup Special Tas 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 Tas Requirement for Facilities. Step Five: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first four steps haue been completed, the Special Ta~c for Facilities shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Property up to 100% of the Masimum Special Taac for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Taac Requirement for Faciliries. Notwithstanding the above, under no circumstances will the Special Taac for Facilities levied against any Assessor's Parcel ofResidential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by owner of any other Assessor's Pazcel within CFD No. 2006-10. SECTION G PREPAYMENT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G: "CFD Public Facilities" means $1,476,000, expressed in 2006 dollars, which shall increase by the Construction Inflation Index on July 1, 2007, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as su~cient to provide the public facilities under the authorized bonding program for CFD No. 2006-10, ar(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. Ciry of Lake Elsinore October 3, 2006 Community Facilities Disuict No. 200G10 (Riverlake Villas) Page 8 "Construction Fund" means an acwunt specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire ar construct public facilities eligible under CFD No. 2006-10. "Construction Inflation Index" means the annual percentage change in the Engineering News- Recard 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 ciry 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 eaznings 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 T~es 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 Property, or an Assessor's Parcel of Approved Property ar Undeveloped Property for which a building pemut has been issued or is expected to be issued, or an Assessor's Parcel of Provisional Undeveloped Property may be prepaid in full, provided that there aze no delinquent Special T~es, 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 Administratar shall notify such owner 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. 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 City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 9 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 of Approved Properiy or Undeveloped Property, compute the Assigned Speciai Tax for Facilities and the Backup Special Tas for Faciliries as though it was already designated as Developed Property based upon the building permit issued ar expected to be issued for that Assessor's Parcel. For an Assessor's Parcel of Provisional Undeveloped Property compute the Assigned Special Tax far Facilities for that Assessor's Parcel. 2. For each Assessor's Parcel of Developed Property, Approved Property, Undeveloped Properiy or Provisional Undeveloped Propertyto be prepaid, (a) divide the Assigned Special Taac for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Taac for Facilities applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the City, and (b) divide the Backup Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Backup Special Tax for Facilities applicable to all Assessor's Parcels ofTasable Properiy at buildout, as reasonably determined by the City. 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. 6. Multiply the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the amount determined pursuant to paragraph 5 to determine the Future Facilities Cost to be prepaid (the "Future Facilities AmounY'). 7. Compute the amount needed to pay interest on the Bond Redemption Amount to be redeemed with the proceeds of the Prepayment Amount until the earliest redemption date for the Outstanding Bonds. Ciry of Lake Elsinore October 3, 2006 Communiry FaciliGes District No. 200610 (Riverlake Villas) Page 10 8. Determine the actual Special Taac for Facilities levied on the Assessor's Parcel in the cunent 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 CrediY' as the lesser of: (a) the expected reduction in the applicable reserve requirements, if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirements in effect 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 inshlunent 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/ar principal payment following the current Fiscal Year, 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/ar principal payment. This amount is the "Capitalized Interest Credit." 14. The Prepayment Amount is equal to the suxn of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance Cost, and the Administrative Fee, less the Reserve Fund Credit and the Capitalized Interest Credit. 15. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 10, 12, and 13 shall be deposited into the appropriate fund as established under the Indenture and used to retire Outstanding Bonds or make debt City of Lake Elsinore October 3, 2006 Community FacIlities District No. 200G10 (Riverlake Villas) Page 11 service payments. The amount computed pursuant to paragraph 6 shall be deposited into the Construction Fund. The amount computed pwsuant to paragraph 11 shall be retained by CFD No. 2006-10. 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 fixnd established under the Indenture to be used with the next prepayment of Bonds or to make debt service payments. With respect to a Special Taac for Facilities obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of CFD No. 2006-10 that there has been a prepayment of the Special Tax for Facilities obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such prepayment to indicate the prepayment of the Special Taac for Facilities obligation and the release of the Special Tas 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. Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Ta~c far Facilities that may be levied on Taxabie Property, net of Administrative Expenses, shall be at least 11 tnnes 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 ar is expected to be issued, or and Assessor's Parcel of Provisional Undeveloped Properiy, as calculated in this Section H below, may be partially prepaid, provided that there are no delinquent Special Taxes, penalties, or interest chazges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obiigation would be prepaid. 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. P~ = the Prepayment Amount calculated according to Section G. F= the percent by which the owner ofthe Assessor's Parcel is partially prepaying the Special Tax for Facilities obligation. A= the Administrarive Fee calculated according to Section G. City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 12 The owner of any Assessor's Pazcel who desires such prepayment shall notify the CFD Adminislrator of such owner's intent to partially prepay the Special Taac for Facilities and the percentage by which the Special Tas 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 Taac for Facilities for an Assessor's Parcel within 30 days ofthe request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partiallyprepaid, the City Council shall (i) distribute the funds remitted to it accarding to Section G, and (ii) indicate in the records of CFD No. 2006-10 that there has been a partial prepayment ofthe 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 ofthe Special Taac for Facilities obligation to indicate the obligarion of such Assessor's Pazcel to pay such prepaid portion ofthe Special Tax for Facilities shall cease. Notwithstanding the foregoing, no partial prepayxnent will be allowed unless the amount of Special Tax for Facilities that may be levied on Tasable Properry 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 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 Tax for Facilities shall cease not later than the 2044-2045 Fiscal Year, however, the Special Taxes for Facilities will cease to be levied in an earlier Fiscal Year if the CFD Administrator has deternuned (i) that all required interest and principal payments on the CFD No. 2006-10 Bonds have been paid; (ii) all authorized facilities for CFD No. 2006-10 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 CFD No. 2006-10 have been satisfied. SECTION J EXEMPTIONS The City shall classify as Exempt Property, in order of priority, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (ii) Assessor's Parcels which are used as places ofworship and are exempt from ad valorem propertytases because they are owned by a religious organization, (iii) Assessor's Pazcels which are owned by, irrevocably offered far dedication, encumbered by ar restricted in use by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) Assessor's Parcels restricted to other types City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 13 of public uses determined by the City Council, provided that no such classification would reduce the suxn of all Tasable Property to less than 0.98 Acres. 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 Taxable Property to less than 0.98 Acres. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 0.98Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Tases pursuant to Step Five in Section F. SECTION K MANNER OF COLLECTION OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities shall be collected in the same manner and at the same time as ordinary ad valorem property tases, provided, however, that CFD No. 2006-10 may collect Special Taaces for Facilities at a different time or in a different manner ifnecessary to meet its financial obligations, and may covenant to fareclose 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 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 pernut has been issued by the City on or prior to May 1 preceding the Fiscal Year in which the Special T~ for Services is being levied. 6LMaximum Special Tax for Services" means the maximum Special Tax for Services that can be levied by CFD No. 2006-10 in any Fiscal Yeaz on any Assessor's Parcel. "Operating Fund" means a fund that shall be maintained for CFD No. 2006-10 for any Fiscal Yeaz 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. Ciry of Lake Elsinore October 3, 2006 Community FacIlities District No. 200b10 (Riverlake VIllas) Page 14 "Special Tax for Services" means any of the special taxes authorized to be levied within CFD No. 2006-10 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. 2006-10 equal to (i) the budgeted costs d'uectly 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 Year, (ii) Administrative Expenses, and (iii) anticipated delinquent Special Taxes for Services based on the delinquency rate in CFD No. 2006-10 for the previous Fiscal Year, less (iv) the Operating Fund Balance, as determined by the CFD Administrator. 1. Rate and Method of Apportionment of the Special Tax for Services Commencing Fiscal Year 2006-2007 and far each subsequent Fiscal Yeaz, 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 Tas far Services to fund the Special Taac Requirement for Services. The Maacimum Special Taac for Services for Fiscal Year 2006-2007 shall be $246.84 per Developed Single FamilyUnit, $123.42 per Developed MultifamilyUnit, and $555.90 perAcre for each Assessor's Parcel of Non-Residential Property. On each July 1, commencing July 1, 2007, the Maacimuxn 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 Suecial Tax for Services The Special Tax for Services shall be levied in perpetuity to fund the Special Taac Requirement for Services, unless no longer required as determined at the sole discrerion of the City Council. 3. Collection of the Saecial Tax for Services The Special Taac for Services shall be collected in the same manner and at the same time as ordinary ad valorem property taaces, provided, however, that CFD No. 2006-10 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 Taac 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 property owner, consider written and aral evidence City of Lake Elsinore October 3, 2006 Communiry Facilifles District No. 200G10 (Riverlake Villas) Page 15 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 ofthe properiy owner, a cash refixnd 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 Tas and any landowner or residents appeals. Any decision ofthe City Council shall be final and binding as to all persons. City of Lake Elsinore October 3, 2006 Community Facilities District No. 200G10 (Riverlake Villas) Page 16 EXHIBIT "A" CITY OF LAKE ELSINORE AND CFD NO. 2006-10 CERTIFICATE 1. Pursuant to Section C of the Rate and Method of Apportiorunent of Special Tas (the "RMA"), the City of Lake Elsinore (the "Cit}~') and Community Facilities District No. 2006-10 of the City of Lake Elsinore ("CFD No. 2006-10 ") hereby agree to a reduction in the Maacimum Special Tax for Facilities for Developed Properiy within CFD No. 2006-10: (a) The information in Table 1 relating to the M~unum 5pecial Ta~c for Facilities for Developed Property and/or Undeveloped Property within CFD No. 2006-10 shall be modified as follows: [insert Table 1 showing effective change to special tar rates and/or insert change to special tax rates for Undeveloped Property] 2. Table 1 may only be modified prior to the issuance of Bonds. Upon execution of the Certificate by the City and CFD No. 2006-10 the City shall cause an amended Notice of Special Tax Lien for CFD No. 2006-10 to be recarded reflecting the modifications set forth herein. By execution hereof, the undersigned acknowledges, on behalf of the City of Lake Elsinore and CFD No. 2006-10, receipt of this Certificate and modification of the RMA as set forth in this Certificate. CITY OF LAKE ELSINORE By: CFD Adminis4ator COMMUIVIT'I' FACILITIES DISTRICT NO. 2006-10 OF THE CITY OF LAKE ELSINORE By: Date: Date: City of Lake Elsinore October 3, 2006 Community Facilities District No. 200610 (Riverlake Villas) Page 17