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HomeMy WebLinkAboutCC Reso No 2005-054 RESOLUTION NO. 2005 - 54 RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE TO ESTABLISH CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2005-5 (VILLAGES AT WASSON CANYON) WHEREAS, the City Council (the "Council") of the City of Lake Elsinore (the "City") has received a petition (the "Petition") requesting the institution of proceedings for (i) formation of a community facilities district (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"), (ii) authorization of issuance of bonds for the CFD, and (iv) establishment of an appropriations limit for the CFD; and WHEREAS, the Council has determined that the Petition complies with the requirements of Government Code Section 53318( c) and now intends to initiate such proceedings; and WHEREAS, it is the intention of the Council to finance parks, open space and storm drains maintenance services that are in addition to those provided in the telTitory within the CFD prior to the formation of the CFD and do not supplant services already available within the telTitory proposed to be included in the CFD through the formation of the CFD subject to the levy of a special tax to pay for such services, being approved at an election to be held within the boundaries of the CFD; and WHEREAS, it is also the intention of the Council to finance the acquisition and construction of the Facilities (as defined below) or any combination thereof through the formation of the CFD, subject to the authorization of bonds and the levy of a special tax to pay lease payments, installment purchase payments or other payments, or principal and interest on bonds, being approved at an election to be held within the boundaries of the CFD; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The Council hereby determines to institute proceedings for the formation of a community facilities district under the terms of the Act. The exterior boundaries of the CFD are hereby specified and described to be as shown on that certain map now on file in the office of the Clerk entitled "Proposed 45619645.1 Boundaries of City of Lake Elsinore Community Facilities District No. 2005-5 (Villages at Wasson Canyon)," which map indicates by a boundary line the extent of the territory included in the proposed community facilities district and shall govern for all details as to the extent of the CFD. On the original and one copy of the map of such CFD on file in the City Clerk's office, the City Clerk shall endorse the certificate evidencing the date and adoption of this resolution. The City Clerk shall file the original of such map in her office and, within fifteen (15) days after the adoption of this Resolution, the City 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 Facilities District No. 2005-5 (Villages at Wasson Canyon)." 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 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 Tax 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 non-exempt undeveloped 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 Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. Section 4. The facilities proposed to be financed by the CFD are public infrastnlcture 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 and EVMWD Capital Facilities Fees, public street and storm drain system improvements, and related costs including designs, inspections, professional fees, annexation fees, connection fees and acquisition costs (the "Facilities"). Such Facilities need not be physically located within the CFD. Section 5. Except where funds are otherwise available, it is the intention of the Council to levy annually in accordance with procedures contained in the Act a special tax (the "Special Tax") sufficient to pay for the costs of financing the acquisition and/or construction of the Facilities, including the principal of and interest on the bonds proposed to be issued to finance the Facilities and other periodic costs, the establishment and replenishment 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 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 non-exempt 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 Exhibit A attached hereto and by this reference incorporated 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 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 or exempt in order to yield the required payments, subject to the maximum 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 within the CFD by more than 10 percent. Furthermore, the maximum special tax authorized to be levied against any parcel used for private residential purposes shall not be increased over time in excess of 2 percent per year. Section 6. The Council hereby finds that the proposed Facilities are necessary to meet increased demands put upon the City as a result of the new development or rehabilitation within the proposed CFD. Section 7. A public hearing (the "Hearing") on the establishment of the CFD and the proposed rate and method of apportionment of the Services Special Tax and the Special Tax shall be held on August 9, 2005, at 7:00 p.m., or as soon thereafter as practicable, at the chambers of the Council, 130 S. Main Street, Lake Elsinore, California 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 taxes, or costs otherwise incurred in order to carry out the authorized purposes of the City with respect to the CFD, and any other expenses 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 election on the levy of the Services Special Tax and the Special Tax, if the proposal to levy such tax should fail, and to repay all of such funds advanced if the levy of the Services Special Tax and the Special Tax shall be approved by the qualified electors of the CFD. Section 11. The City Clerk is hereby directed to publish a notice ("Notice") of the Hearing pursuant to Section 6061 of the Government Code in a newspaper of 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 penalties as prescribed in the bond indenture or comparable instrument or document, to tender to the CFD treasurer in full payment or part payment of any installment of the special taxes or the interest or penalties thereon which may be due or delinquent, but for which a 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 establishment of the CFD and the imposition of the special tax shall be by hand delivered or mailed ballot election. PASSED, APPROVED AND ADOPTED this 28 day of June, 2005. By: Title: Mayor ATTEST: APPROVED AS TO FORM: -~~~ Barbara Leibold, City Attorney vZ- STATE OF CALIFORNIA) ) ss. COUNTY OF RIVERSIDE) I, Frederick Ray, Deputy City Clerk of the City of Lake Elsinore, do hereby certify that the foregoing Resolution was duly adopted by the City Council of said City at a regular meeting thereof held on the day of 2005, and that it was so adopted by the following vote: AYES: COUNCILMEMBERS: Buckley, Hickman, Kelley, Schiffner, Magee NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None ABSTAIN: COUNCILMEMBERS: None By: City Clerk of the City of Lake Elsinore EXHIBIT A RATE AND METHOD OF APPORTIONMENT FOR CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT No. 2005-5 (VILLAGES AT WASSON CANYON) A Special Tax shall be levied on all Assessor's Parcels in City of Lake Elsinore Community Facilities District No. 2005-5 (Villages at Wasson Canyon) ("CFD No. 2005-5") and collected each Fiscal Year commencing in Fiscal Year 2005-2006, 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. 2005-5, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. "Act" means the Mello-Roos Community Facilities Act of 1982, being Chapter 2.5, Part 1, Division 2 of Title 5 of the California Government Code. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2005-5: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2005-5 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2005-5 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2005-5 or obligated persons associated with applicable federal and state securities laws and the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2005-5 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the City's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated by the CFD Administrator or advanced by the City or CFD No. 2005- 5 for any other administrative purposes of CFD No. 2005-5, 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 shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 8 "Assessor's Parcel Map" means an official map of the County Assessor of the County (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 9 designating parcels by Assessor's Parcel number. "Assigned Special Tax A" means the Special Tax A for each Land Use Class of Developed Property, as determined in accordance with Section C.1.a.(2) below. "Authorized Facilities" means those authorized improvements, as listed on Exhibit "A" to the Resolution of Formation. "Backup Special Tax A" means the Special Tax A applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.1.a.(3) below. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement for Facilities and the Special Tax Requirement for Services and providing for the levy and collection of the Special Taxes. "CFD No. 2005-5" means City of Lake Elsinore Community Facilities District No. 2005-5 (Villages at Wasson Canyon). "CFD No. 2005-5 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. 2005-5 and secured solely by Special Tax A levy on property within the boundaries of CFD No. 2005-5 under the Act. "City" means the City of Lake Elsinore. "Council" means the City Council of the City of Lake Elsinore, acting as the legislative body ofCFD No. 2005-5. "County" means the County of Riverside. "Developed Property" means, 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 after January 1, 2005 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. "Final Subdivision" means (i) a final map, or portion thereof, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots for which building permits may be issued, or (ii) for condominiums, a final map, or portion thereof, approved by the City and a condominium plan recorded pursuant to California Civil Code Section 1352 that creates individual lots for which building permits may be issued. "Fiscal Year" means the period starting July 1 and ending on the following June 30. (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 10 "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which CFD No. 2005-5 Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Table 1 or Table 2 below. "Maximum Special Tax" means the Maximum Special Tax A and/or Maximum Special Tax B, as applicable. "Maximum Special Tax A" means the maximum Special Tax A, determined in accordance with Section C below, that can be levied in any Fiscal Year on any Assessor's Parcel. "Maximum Special Tax B" means the maximum Special Tax B, 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 for which a building permit permitting the construction of one or more non-residential units or facilities has been issued by the City. "Outstanding Bonds" means all CFD No. 2005-5 Bonds which are deemed to be outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2005-5 that was owned by a property owner association, including any master or sub-association, as of January 1 of the prior Fiscal Year. "Proportionately" means for Developed Property that the ratio of the actual Special Tax A levy to the Assigned Special Tax A is equal for all Assessor's Parcels of Developed Property and that the ratio of the actual Special Tax B levy to the Maximum Special Tax B is equal for all Assessor's Parcels of Developed Property. For Undeveloped Property, "Proportionately" means that the ratio of the actual Special Tax A levy per Acre to the Maximum Special Tax A per Acre is equal for all Assessor's Parcels of Undeveloped Property. The term "Proportionately" may similarly be applied to other categories of Taxable Property as listed in Section D below. "Public Property" means property within the boundaries of CFD No. 2005-5 owned by, irrevocably offered or dedicated to, or over, through or under which an easement for purposes of public right-of-way has been granted, to the federal government, the State, the County, the City, or any local government or other public agency, provided that any (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 11 property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed 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 permitting the construction thereon of one or more residential dwelling units has been issued by the City. "Resolution of Formation" means the resolution of formation for CFD No. 2005-5. "Special Tax" means the Special Tax A and/or Special Tax B, as applicable. "Special Tax A" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Developed Property, Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property to fund the Special Tax Requirement for Facilities. "Special Tax B" means the special tax to be levied in each Fiscal Year on each Assessor's Parcel of Developed Property to fund the Special Tax Requirement for Services. "Special Tax Requirement for Facilities" means that amount required in any Fiscal Year for CFD No. 2005-5 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. 2005-5 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2005-5 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 Outstanding Bonds; (v) pay for reasonably anticipated Special Tax A delinquencies based on the delinquency rate for the Special Tax A 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 A levy on Undeveloped Property; less (vii) a credit for funds available to reduce the annual Special Tax A levy, as determined by the CFD Administrator pursuant to the Indenture. "Special Tax Requirement for Services" means that amount required in any Fiscal Year for CFD No. 2005-5 to (i) pay the costs associated with the maintenance of parks, open space and storm drains; (ii) pay a proportionate share of Administrative Expenses; (iii) pay for reasonably anticipated Special Tax B delinquencies based on the delinquency rate for the Special Tax B levy in the previous Fiscal Year; less (iv) a credit for funds (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 12 available to reduce the annual Special Tax B levy, as determined by the CFD Administrator. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2005-5 which are not exempt from the Special Tax pursuant to law or Section E below. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E below. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Property Owner Association Property, or Taxable Public Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2005-5 shall be classified as Developed Property, Taxable Public Property, Taxable Property Owner Association Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE 1. Special Tax A Residential Property shall be assigned to Land Use Classes 1 through 6 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 7. Prior to the issuance of CFD No. 2005-5 Bonds, the Assigned Special Tax A on Developed Property (set forth in Table 1), and the Backup Special Tax A 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") calculated pursuant to the Goals and Policies exceeds the City's maximum level objective set forth in such document, the Assigned Special Tax A on Developed Property, and the Backup Special Tax A attributable to a Final Subdivision, may be reduced to the amount necessary to satisfy the City's objective with respect to the maximum overlapping debt burden level (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Pagel3 with the written consent of the CFD Administrator. The reductions permitted pursuant to this paragraph shall be reflected in an amended Notice of Special Tax Lien which the City shall cause to be recorded. a. Developed Property (1) Maximum Special Tax A The Maximum Special Tax A for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax A or (ii) the amount derived by application of the Backup Special Tax A. (2) Assigned Special Tax A The Fiscal Year 2005-2006 Assigned Special Tax A for each Land Use Class is shown below in Table 1. TABLE 1 Section 15. Assigned Special Tax A for Developed Property Section 16. Community Facilities District No. 2005-5 Fiscal Year 2005-2006 1 Residential Property => 3,600 sq. ft. $2,633 per unit 2 Residential Property 3,475 - 3,599 sq. ft. $2,614 per unit 3 Residential Property 3,350 - 3,474 sq. ft. $2,475 per unit 4 Residential Property 3,225 - 3,349 sq. ft. $2,400 per unit 5 Residential Property 3,100 - 3,224 sq. ft. $2,369 per unit 6 Residential Property < 3,100 sq. ft. $2,260 per unit 7 Non-Residential Property NA $15,615 per Acre (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 14 (3) Backup Special Tax A The Fiscal Year 2005-2006 Backup Special Tax A attributable to a Final Subdivision will equal $15,615 multiplied by the Acreage of all Taxable Property, exclusive of any Taxable Property Owner Association Property and Taxable Public Property, therein. The Backup Special Tax A for each Assessor's Parcel of Residential Property shall be computed by dividing the Backup Special Tax A attributable to the applicable Final Subdivision by the number of Assessor's Parcels for which building permits for residential construction have or may be issued (i.e., the number or residential lots). The Backup Special Tax A for each Assessor's Parcel of Non-Residential Property therein shall equal $15,615 multiplied by the Acreage of such Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which building permits for both residential and non-residential construction may be issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax A for each Assessor's Parcel of Residential Property shall be computed exclusive of the Acreage and Assessor's 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 A 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 A previously determined for 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 A anticipated to apply to the changed or modified 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 Final Subdivision area, as reasonably determined by the CFD Administrator. (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 15 3. The result of paragraph 2 above shall be divided by 43,560. The result is the Backup Special Tax A per square foot of Acreage which shall be applicable to Assessor's Parcels of Developed Property in such changed or modified Final Subdivision area for all remaining Fiscal Years in which the Special Tax may be levied. (4) Increase in the Assigned Special Tax A and Backup Special Tax A The Fiscal Year 2005-2006 Assigned Special Tax A, identified in Table 1 above, and Backup Special Tax A shall increase thereafter, commencing on July 1, 2006 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. (5) Multiple Land Use Classes In some instances an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Maximum Special Tax A levied on an Assessor's Parcel shall be the sum of the Maximum Special Tax A for all Land Use Classes located on that Assessor's Parcel. The CFD Administrator's allocation to each type of property shall be final. b. Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property The Fiscal Year 2005-2006 Maximum Special Tax A for Taxable Property Owner Association Property, Taxable Public Property, and Undeveloped Property shall be $15,960 per Acre or portion thereof, and shall increase thereafter, commencing on July 1, 2006 and on July 1 of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the Maximum Special Tax A for the previous Fiscal Year. 2. Special Tax B Residential Property shall be assigned to Land Use Class 1 and Non-Residential Property shall be assigned to Land Use Class 2. a. Developed Property (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 16 The Fiscal Year 2005-2006 Maximum Special Tax B for each Land Use Class of Developed Property is shown below in Table 2. TABLE 2 Section 17. Maximum Special Tax B for Developed Property Section 18. Community Facilities District No. 2005-5 Section 19. Fiscal Year 2005-2006 Section 20. 1 2 Residential Property Non-Residential Property $242 per unit $545 per Acre b. Increase in the Special Tax B The Fiscal Year 2005-2006 Maximum Special Tax B, identified in Table 2 above, shall increase thereafter, commencing on July 1, 2006 and on July I of each Fiscal Year thereafter, by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX 1. Special Tax A Commencing with Fiscal Year 2005-2006 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement for Facilities and levy the Special Tax A until the amount of Special Tax A levy equals the Special Tax Requirement for Facilities. The Special Tax A shall be levied each Fiscal Year as follows: First: The Special Tax A shall be levied on each Assessor's Parcel of Developed Property in an amount equal to 100% of the applicable Assigned Special Tax A; Second: If additional monies are needed to satisfy the Special Tax Requirement for Facilities after the first step has been completed, the Special Tax A shall be levied (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 17 Proportionately on each Assessor's Parcel of Undeveloped Property at up to 100% of the Maximum Special Tax A 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 A on each Assessor's Parcel of Developed Property whose Maximum Special Tax A is determined through the application of the Backup Special Tax A shall be increased in equal percentages from the Assigned Special Tax A up to the Maximum Special Tax A 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 A shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property and Taxable Public Property at up to 100% of the Maximum Special Tax A for Taxable Property Owner Association Property or Taxable Public Property. Notwithstanding the above, the Council may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax A in step one (above), when (i) the Council is no longer required to levy the Special Tax A pursuant to steps two through four above in order to meet the Special Tax Requirement for Facilities; (ii) all authorized CFD No. 2005-5 Bonds have already been issued or the Council has covenanted that it will not issue any additional CFD No. 2005-5 Bonds (except refunding bonds) to be supported by the Special Tax A; and (iii) all Authorized Facilities have been constructed and/or acquired. Further notwithstanding the above, under no circumstances will the Special Tax A levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a consequence of delinquency or default by the owner of any other Assessor's Parcel within CFO No. 2005-5. 2. Special Tax B Commencing with Fiscal Year 2005-2006 and for each following Fiscal Year, the Council shall levy the Special Tax B until the total Special Tax B levy equals the Special Tax Requirement for Services. The Special Tax B shall be levied Proportionately each Fiscal Year on each Assessor's Parcel of Developed Property at up to 100% of the applicable Maximum Special Tax B as needed to satisfy the Special Tax Requirement for Services. E. EXEMPTIONS 1. Special Tax A No Special Tax A shall be levied on up to 24.4 Acres of Property Owner Association Property and/or Public Property in CFD No. 2005-5. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Property Owner Association Property or Public Property. However, should an Assessor's Parcel (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 18 no longer be classified as Property Owner Association Property or Public Property, its tax-exempt status will be revoked. Property Owner Association Property or Public Property that is not exempt from Special Tax A under this section shall be subject to the levy of the Special Tax A and shall be taxed Proportionately as part of the fourth step in Section D.1 above, at up to 100% of the Maximum Special Tax A for Taxable Property Owner Association Property or Taxable Public Property. 2. Special Tax B No Special Tax B shall be levied on Undeveloped Property, Public Property and Property Owner Association Property in CFD No. 2005-5. F. MANNER OF COLLECTION The Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2005-5 may directly bill the Special Tax, may collect Special Taxes 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. 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. 2005-5. 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. H. PREPAYMENT OF SPECIAL TAXA The following additional definitions apply to this Section H: "Buildout" means, for CFD No. 2005-5, that all expected building permits have been issued. "CFD Public Facilities" means either $5,665,750 in 2005 dollars, which shall increase by the Construction Inflation Index on July 1, 2006, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 19 provide the public facilities to be provided by CFD No. 2005-5 under the authorized bonding program for CFD No. 2005-5, or (ii) shall be determined by the Council concurrently with a covenant that it will not issue any more CFD No. 2005-5 Bonds (except refunding bonds) to be supported by the Special Tax A levy under this Rate and Method of Apportionment as described in Section D.l. "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 comparable to the Engineering News Record Building Cost Index for the City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus (i) public facility costs previously paid from the Improvement Fund, (ii) moneys currently on deposit in the Improvement Fund, and (iii) moneys currently on deposit in an escrow fund that are expected to be available to finance the cost of CFD Public Facilities. "Improvement Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct CFD Public Facilities eligible under the Act. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are deemed to be outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. 1. Prepayment in Full Only an Assessor's Parcel of Developed Property, or Undeveloped Property for which a building permit has been issued, may be prepaid. The obligation of the Assessor's Parcel to pay the Special Tax A 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 intending to prepay the Special Tax A obligation shall provide the CFD Administrator with 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 for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of CFD No. 2005-5 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The Special Tax B may not be prepaid for Assessor's Parcels in CFD No. 2005-5. (a) City of Lake Elsinore CFD No. 2005-5 June 7,2005 (Villages at Wasson Canyon) Page 20 The Special Tax A Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus plus plus plus less less Total: equals Redemption Premium Future Facilities Amount Defeasance Amount Administrative Fees and Expenses Reserve Fund Credit Capitalized Interest Credit Special Tax A Prepayment Amount As of the proposed date of prepayment, the Special Tax A Prepayment Amount shall be calculated as follows: Para2:raph No.: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax A and Backup Special Tax A. For Assessor's Parcels of Undeveloped Property for which a building permit has been issued, compute the Assigned Special Tax A and Backup Special Tax A for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. 3. (a) Divide the Assigned Special Tax A computed pursuant to paragraph 2 by the total estimated Assigned Special Tax A for the entire CFD No. 2005-5 based on the Developed Property Special Tax A which could be levied in the current Fiscal Year on all expected development through Buildout of CFD No. 2005-5, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax A computed pursuant to paragraph 2 by the total estimated Backup Special Tax A at Buildout for the entire CFD No. 2005-5, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be retired and prepaid (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium (e.g., the redemption price-lOO%), if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 21 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax A levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CFD Administrator reasonably expects to derive from the reinvestment of the Special Tax A 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 Amount"). 12. The administrative fees and expenses of CFD No. 2005-5 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. 2005-5 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser 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 prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve 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"). (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 22 15. The Special Tax A 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 A Prepayment Amount"). From the Special Tax A 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. 2005-5 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. 2005-5. The Special Tax A Prepayment Amount may be insufficient to redeem a full $5,000 increment of CFD No. 2005-5 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. 2005-5 Bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax A levy as determined under paragraph 9 ( above), the CFD Administrator shall remove the current Fiscal Year's Special Tax A 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 A and the release of the Special Tax A lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax A shall cease. Notwithstanding the foregoing, no Special Tax A prepayment shall be allowed unless, at the time of such proposed prepayment, the amount of Maximum Special Tax A that may be levied on Taxable Property within CFD No. 2005-5 (after excluding 24.4 Acres of Property Owner Association Property and/or Public Property in CFD No. 2005-5 as set forth in Section E.l) 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 A on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.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: (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 23 PP = the partial prepayment. PE = the Special Tax A Prepayment Amount calculated according to Section H.I. F = the percentage, expressed as a decimal, by which the owner of the Assessor's Parcel is partially prepaying the Special Tax A. A = the Administrative Fees and Expenses calculated according to Section H.I. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax A and the percentage by which the Special Tax A 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 A for an Assessor's Parcel within 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 according to Section H.I, and (ii) indicate in the records of CFD No. 2005-5 that there has been a partial prepayment of the Special Tax A and that a portion of the Special Tax A with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax A, shall continue to be levied on such Assessor's Parcel pursuant to Section D.I. I. TERM OF SPECIAL TAX The Special Tax A shall be levied for a period not to exceed forty years commencing with Fiscal Year 2005-2006, provided however that the Special Tax A will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2005-5 Bonds have been paid; (ii) all Authorized Facilities have been acquired and all reimbursements to the developer have been paid; and (iii) all other obligations of CFD 2005-5 have been satisfied. The Special Tax B shall be levied in perpetuity so long as necessary to meet the Special Tax Requirement for Services. K: ICI ients2 IShopojJGroup\ Wasson Canyon IRMA IFinalRMA _7. doc Revised: 6/29/05 (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 24 EXHIBIT A CERTIFICATE TO AMEND SPECIAL TAXES (a) 45619645.1 (b) CITY OF LAKE ELSINORE AND CFD No. 2005-5 CERTIFICATE 1. 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. 2005-5 ("CFD No. 2005-5") hereby agree to a reduction in the Assigned Special Tax A for Developed Property, and the Backup Special Tax A attributable to a Final Subdivision within CFD No. 2005-5: (a) The information in Table 1 relating to the Assigned Special Tax A for Developed Property within CFD No. 2005-5 shall be modified as follows: 1 Residential Property => 3,600 sq. ft. $ _ per unit 2 Residential Property 3,475 - 3,599 sq. ft. $_ per unit 3 Residential Property 3,350 - 3,474 sq. ft. $ _per unit 4 Residential Property 3,225 - 3,349 sq. ft. $ _ per unit 5 Residential Property 3,100 - 3,224 sq. ft. $_perunit 6 Residential Property < 3,100 sq. ft. $ _ per unit 7 Non-Residential Property NA $ _ per Acre (b) The Backup Special Tax A attributable to a Final Subdivision within CFD No. 2005-5, as stated in Section C.1.a.(3), shall be reduced from $15,615 Per Acre to $_ Per Acre. 2. Special Taxes may only be modified prior to the first issuance of CFD No. 2005-5 Bonds. 3. Upon execution of the Certificate by the City and CFD No. 2005-5, the City shall cause an amended notice of Special Tax lien for CFD No. 2005-5 to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned acknowledges, on behalf of the City and CFD No. 2005-5, receipt of this Certificate and modification of the Rate and Method of Apportionment as set forth in this Certificate. CITY OF LAKE ELSINORE (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 26 By: Date: CFD Administrator COMMUNITY FACILITIES DISTRICT NO. 2005-5 OF THE CITY OF LAKE ELSINORE By: Date: (a) City of Lake Elsinore CFD No. 2005-5 June 7, 2005 (Villages at Wasson Canyon) Page 27