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HomeMy WebLinkAboutCC Reso No 2005-121RESOLUTION N0.2005-121 A RESOLUTION OF FORMATION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DETERMINING THE VALIDITY OF PRIOR PROCEEDINGS AND ESTABLISHING CITY OF LAKE ELSINORE COMMUNITY FACILITIES DISTRICT NO. 2005-4 (LAKEVIEW VILLAS) WHEREAS, the City Council (the "Council") of the City of Lake Elsinore (the "City") has heretofore adopted Resolution No. 2005-64 ("Resolution of Intention") stating its intention to form City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the "Act"); and WHEREAS, a copy of the Resolution of Intention is on file with the City Clerk and incorporated herein by reference; and WHEREAS, pursuant to the Act and in accordance with applicable laws, this Council held a public hearing on the formation of the CFD and the incurring of bonded indebtedness with respect to the CFD; and ~~ WHEREAS, at said hearing all persons not exempt from the Services Special Tax and the Special Tax desiring to be heard on all matters pertaining to the formation of the CFD were heard and a full and fair hearing was held; and WHEREAS, at said hearing evidence was presented to the Council on said matters before it, and this Council at the conclusion of said hearing is fully advised in the premises. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. Pursuant to Section 53325.1(b) of the Government Code, the Council finds and determines that the proceedings prior hereto were valid and in conformity with the requirements of the Act. SECTION 2. A community facilities district to be designated "City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas)" is hereby established pursuant to the Act. SECTION 3. The description and map of the boundaries of the CFD on file in the Clerk's office and as described in the Resolution of Intention and incorporated herein by reference, shall be the boundaries of the CFD. The map of the proposed boundaries of CITY COUNCIL RESOLUTION N0.2005-121 Page 2 of 7 the CFD has been recorded in the Office of the County Recorder of Riverside County, California (Book 63 of Maps of Assessment and Community Facilities District at page 37 and as Instrument No. 2005-0565475). SECTION 4. Except where funds are otherwise available, it is the intention of the Council to levy annually in accordance with procedures contained in the Act a special tax (the "Services Special Tax") sufficient to finance a portion of the cost of providing parks, open space and storm drain maintenance services (the "Services") that are in addition to those provided in the territory within the CFD prior to the formation of the CFD and do not supplant services already available within the territory proposed to be included in the CFD, the costs of administering the levy and collection of the Services Special Tax and all other costs of the levy of the Services Special Tax, including any foreclosure proceedings, legal, fiscal and financial consultant fees, election costs, and all other administrative costs of the tax levy. The Services Special Tax will be secured by recordation of a continuing lien against all real property in the CFD. The schedule of the rate and method of apportionment and manner of collection of the Services Special Tax is described in detail in Exhibit A attached hereto and by this reference incorporated herein. The Services are more fully described in the report presented to this Council at the public hearing (the "Report"). The Services Special Tax is apportioned to each parcel on the foregoing basis pursuant to Section 53325.3 of the Act. SECTION 5. The facilities proposed to be financed by the CFD are public infrastructure facilities and other governmental facilities with an estimated useful life of five years or longer, which the CFD is authorized by law to construct, own or operate and that are necessary to meet increased demands placed upon the City as a result of development or rehabilitation occurring within the proposed CFD, including but not limited to City and EVMWD Capital Facilities Fees, public storm drain system improvements, EVMWD sewer and water facilities, 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 6. 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 CITY COUNCIL RESOLUTION N0.2005-121 Page 3 of 7 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 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. The Facilities are more fully described in the Report. SECTION 7. Upon recordation of a Notice of Special Tax Lien pursuant to Section 3114.5 of the Streets and Highways Code, a continuing lien to secure each levy of the Services Special Tax and the Special Tax shall attach to all real property in the CFD, and the lien with respect to the Special Tax shall continue in force and effect until the Special Tax obligation is prepaid or otherwise permanently satisfied and the lien canceled in accordance with law, and the lien with respect to the .Services Special Tax and the Special Tax shall continue in force and effect until collection of the Services Special Tax and the Special Tax by the CFD ceases. CITY COUNCIL RESOLUTION N0.2005-121 Page 4 of 7 SECTION 8. Neither the proposed Services Special Tax nor the Special Tax to be levied in the CFD has been precluded by protests by owners of one-half or more of the land in the temtory included in the CFD pursuant to Government Code Section 53324. SECTION 9. Pursuant to and in compliance with the provisions of Government Code Section 50075.1, the Council hereby establishes the following accountability measures pertaining to the levy by the CFD of the Services Special Tax and the Special Tax: A. Such Services Special Tax and the Special Tax shall be levied for the specific purposes set forth herein. B. The proceeds of the levy of such Services Special Tax and the Special Tax shall be applied only to the specific purposes set forth herein. C. The CFD shall establish an account or accounts into which the proceeds of such Services Special Tax and the Special Tax shall be deposited. D. The City Manager, or his or her designee, acting for and on behalf of the. CFD, shall annually file a report with the Council as required pursuant to Government Code Section 50075.3. SECTION 10. The City Manager, 130 S. Main Street, Lake Elsinore, California 92530, (951) 674-3124, or his designee, is designated to be responsible for preparing or causing to be prepared annually a current roll of Services Special Tax and the Special Tax levy obligations by assessor's parcel number and for estimating future Services Special Tax and the Special Tax levies pursuant to Section 53340.1 of the Government Code. SECTION 11. The voting procedure with respect to the imposition of the Services Special Tax and the Special Tax, incurring bonded indebtedness and establishing an appropriations limit of the CFD shall be by hand delivered or mailed ballot election. SECTION 12. The City Clerk is directed to certify and attest to this Resolution and to take any and all necessary acts to call, hold, canvass and certify an election or elections on the incumng bonded indebtedness, the levy of the Special Tax, and the establishment of the appropriation limit. CITY COUNCIL RESOLUTION N0.2005-121 Page 5 of 7 PASSED, APPROVED AND ADOPTED this 23 day of AUGUST > 2005. AYES: COUNCILMEMBERS: BUCKLEY, HICKMAN, KELLEY, SCNIFFNER, MAGEE NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: NONE ABSTAIN: COUNCILMEMBERS: NONE G Robert E. Magee, City of Lake Elsie A T ST: ~l ~Q.~C~ l ~1, tma~~~ oevu7v cz,v cc~- T~redrick Ray, Deputy City Clerk City of Lake Elsinore 0 B'~bara Zeid L old, City Attorney City of Lake E sinore STATE OF CALIFORNIA } COUNTY OF RIVERSIDE } SS: CITY OF LAKE ELSINORE } I, FREDERICK RAY, DEPUTY CITY CLERK OF THE CITY OF LAKE ELSINORE, DO HEREBY CERTIFY that the foregoing Resolution duly adopted by the City Council of the City of Lake Elsinore at a regular meeting of said Council on the 23 day of AUGUST , 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 FREDERICK RAY, DEPUTY CITY CLERK CITY OF LAKE ELSINORE (SEAL) EXHIBIT A RATE AND METHOD OF APPORTIONMENT FOR COMMUNITY FACILITIES DISTRICT N0.2005-4 OF THE CITY OF LAKE ELSINORE (Lakeview Villas) The following sets forth the Rate and Method of Apportionment for the levy and collection of Special Taxes in the City of hake Elsinore Community Facilities District No: 2005-4 (Lakeview Villas) ("CFD No. 2005-4"). The Special Tax shall be levied on and collected in CFD No. 2005-4 each Fiscal Year, in an amount determined through the application of the Rate and Method of Apportionment described below. All of the real property within CFD No.2005-4, unless exempted bylaw or by the provisions hereof, shall be taxed for the purposes, to the extent, and in the manner herein provided. SECTION A DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's 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. 2005-4: the costs of computing the Special Taxes and preparing the Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the City or otherwise); the costs of remitting the Special Taxes for Facilities to the Trustee; the costs of the Trustee (including legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2005-4 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2005-4 or any designee thereof of complying with disclosure requirements of the City, CFD No. 2005-4 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.2005-4 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. Administration Expenses shall also include amounts estimated bythe CFD Administrator or advanced bythe City or CFD No. 2005-4 for any other administrative purposes of CFD No. 2005-4, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. City of Lake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 1 "Apartment Property" means all Assessor's Pazcels of Residential Property on which one or more Apartment Units are constructed. "Apartment Unit" means a dwelling unit within a building comprised of attached residential units available for rental by the general public, not for sale to an end user, and under common management. "Assessor's Parcel" means a lot or parcel of land designated on an Assessor's Pazcel Map with an assigned Assessor's Parcel Number. "Assessor's Parcel Map" means an official map ofthe Assessor ofthe County designating parcels by Assessor's Parcel Number. "Assessor's Parcel Number" means that number assigned to an Assessor's Parcel by the County for purposes of identification. "Assigned Special Tax for Facilities" means the Special Tax of that name described in Section D below. "Backup Special Tax for Facilities" means the Special Tax of that name described in Section E below. "Bonds" means any 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 financial institutions, private businesses, or individuals, or long-term contracts, or any refunding thereof, to which Special Taxes for Facilities within CFD No. 2005-4 have been pledged. "Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of gazages or other structures 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 for (i) determining the Special Tax Requirement for Facilities, (ii) determining the Special Tax Requirement for Services, as defined in Section L, as applicable, and (iii) providing for the levy and collection of the Special Taxes. "CFD No.2005-4" means Community Facilities District No.2005-4 (Lakeview Villas) established by the City under the Act. "City" means the City of Lake Elsinore. "City Council" means the City Council of the City of Lake Elsinore, acting as the Legislative Body of CFD No. 2005-4, or its designee. City of Lake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 2 "County" means the County of Riverside. "Developed Property" means all Assessor's Parcels of Taxable Property for which a building permit for new construction was issued on or before May ls` preceding the Fiscal Year in which the Special Tax is being levied. "Exempt Property" means all. Assessor's Parcels designated as being exempt from Special Taxes as provided for in Section J. "Final Map" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which building permits maybe issued without further subdivision. "Fiscal Year" means the period commencing on July 1 of any year and ending the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Type" means any of the types listed in Table 1 of Section D. G`Lot" means an Assessor's Parcel for which a building permit has or may be issued for the purposes of constructing a Single Family Unit. "Maximum Special Tax for Facilities" means the maximum Special Tax for Facilities, determined in accordance with Section C, that can be levied by CFD No. 2005-4 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 ofnon-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 Tax for Facilities obligation in full for an Assessor's Parcel, as described in Section G. "Proportionately" means that the ratio of the actual Special Tax for Facilities levy to the applicable Assigned Special Tax for Facilities is equal for all applicable Assessor's Parcels. In case of Developed Property subject to the apportionment of the Special Tax for Facilites under step three of Section F, "Proportionatel}~' in step three means that the quofient of (a) actual Special Tax for Facilities less the Assigned Special Tax for Facilities divided by (b) the Backup Special Tax for Facilities less the Assigned Special Tax for Facilities, is equal for all applicable Assessor's Parcels. "Provisional Undeveloped Property" means all Assessor's Parcels ofTaxable Propertythat would otherwise be classified as Exempt Property pursuant to the provisions of Section J, but cannot be City of Lake Elsinore June 29, 2005 Cornmunity Facilities District No. 2005-4 (Lakeview Villas) Page 3 classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum Acreage set forth in Section J as applicable. "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 Apartment Unit. "Special Tax" means any of the special taxes authorized to be levied by CFD No. 2005-4 pursuant to the Act. "Special Tax for Facilities" means any of the special taxes authorized to be levied by CFD No. 2005-4 pursuant to the Act to fund the Special Tax Requirement for Facilities. "Special Tax Requirement for Facilities" means the amount required in any Fiscal Year to pay: (i) the debt service or the periodic costs on all outstanding Bonds due in the Calendar Year that commences in such Fiscal Year, (ii) Administrative Expenses, (iii) the costs associated with the release of funds from an escrow account, (iv) any amount required to establish or replenish any reserve funds established in association with the Bonds, (v) an amount equal to any anticipated shortfall due to Special Tax for Facilities delinquencies in the prior Fiscal Year, and (vi) the collection or accumulation of funds for the acquisition or constnrctiori of facilities authorized by CFD No. 2005-4 provided that the inclusion of such amount does not cause an increase in the lery of Special Tax for Facilities on Undeveloped Property as set forth in Step Two 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. 2005-4, 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 Taxable Property which are not Developed Property, or Provisional Undeveloped Property. SECTION B CLASSIFICATION OF ASSESSOR'S PARCELS Each Fiscal Year, beginning with Fiscal Year 2006-07, each Assessor's Parcel within CFD No. 2005-4 shall be classified as Taxable Property or Exempt Property. Iu addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Property, Undeveloped Property City of Lake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 4 or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non-Residential Property. Lastly, each Assessor's Parcel of Residential Property shall further be classified as a Single Family Property or Apartment Property, and each 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 Developed Properly The Maximum Special Tax for Facilities for each Assessor's Parcel of Single Family Property in any Fiscal Year shall be the greater of (i) the Assigned Special Tax for Facilities or (ii) the Backup Special Tax for Facilities. The Maximum Special Tax for Facilities for each Assessor's Parcel 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 Tax for Facilities on Developed Property set forth in Table 1 may be reduced in accordance with, and subject to the. conditions set forth in this paragraph. If it is reasonably determined by the CFD Administrator that the overlapping'debt burden (as defined in the StatemenT of Goals and Policies for the Use of the Mello-Roos Community Facilities Act of 1982 adopted by the City Council,. the "Goals and Policies")calculated pursuant to the Goals and Policies exceeds the City's maximum level objective set forth in such document, the 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 maximum overlapping debt burden level with the written consent of the CFD Administrator. . Tn order to reduce the Maximum Special Tax for Facilities on Developed Property it may be necessary to reduce the Maximum Special Tax for Facilities for Undeveloped Property. The reductions permitted pursuant to this paragraph shall be reflected in an amended Notice of Special Tax Lien which the City. shall cause to be recorded by executing a certificate in substantially the form attached hereto as Exhibit "A". 2. Undeveloped Property and Provisional Undeveloped Property The Maximum Special Tax for Facilities for each Assessor's Parcel classified as Undeveloped Properly, or Provisional Undeveloped Property in any Fiscal Year shall be the .Assigned Special Tax for Facilities. City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) June 29, 2005 Page 5 SECTION D ASSIGNED SPECIAL TAX FOR FACILITIES Developed Property Each Fiscal Year, each Assessor's Parcel of Single Family Property, Apartment Property, or Non-Residential Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tax for Facilities applicable to an Assessor's Parcel of Developed Property for Fiscal Year 2006-07 shall be determined pursuant to Table 1 below. TABLE I ASSIGNED SPECIAL TAX FOR FACILITIES RATES FOR DEVELOPED PROPERTY FOR FISCAL YEAR 2006-07 Land Use T e Buildin S uare Foota a Rate Sin le Famil Pro e Less than 1,250 $2,546 er Sin le Famil Unit Sin le Famil Pro a 1,250 -1,750 $2,901 er Sin le Family Unit Sin le Family Pro e Greater than 1,750 $3,117 er Sin le Famil Unit A artment Pro erty N/A $17,750 er Acre Non-Residential Property N/A $17,750 per Acre 2. Undeveloped Property and Provisional Undeveloped Property Each Fiscal Year, .each Assessor's Parcel of Undeveloped Property and Provisional Undeveloped Property shall be subject to an Assigned Special Tax for Facilities. The Assigned Special Tax for Facilities rate for an Assessor's Pazcel classified as Undeveloped Property and Provisional Undeveloped Property for Fiscal Yeaz 2006-07 shall be $127,440 per Acre. 3. Increase in the Assigned Special Tax for Facilities On each July 1, commencing July 1, 2007, the Assigned Special Tax for Facilities rate for Developed Properly, Undeveloped Property and Provisional Undeveloped Property shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. .SECTION E BACKUP SPECIAL TAX FOR FACILITIES At the time a Final Map is recorded for Single Family Property, the Backup Special Tax for Facilities for all Lots within such Final Map area shall be determined by dividing (a) the product City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) June 29,-2005 Page 6 of the Maximum Special Tax for Facilities rate for Undeveloped Property and the total Acreage of all Lots in such Final Map area, by (b) the total number of Lots within such Final Map area. The resulting quotient shall be the Backup Special Tax for Facilities for each Lot within such Final Map area. The Backup Special Tax for Facilities shall not apply to Non-Residential Property or Apartment Property. If a Final Map includes Assessor's Parcels of Developed Properly which are classified or reasonably expected to be classified as Single Family Property and Non-Residential Property or Single Family Property and Apartment Property, then the Backup Special Tax for Facilities for each Lot shall be computed exclusive of the allocable portion of total Acreage attributable to Assessor's Parcels classified or reasonably expected to be classified as Non-Residential Property or Apartment Property. Notwithstanding the foregoing, if one or more Lots are subsequently chatiged or modified by recordation of a lot line adjustment or similar instrument, then the Backup Special Tax for Facilities for the area that has been changed or modified shall be recalculated, based on the methodology above, to equal the amount of Backup Special Tax for Facilities that would have been generated if such change did not take place. On each July 1, commencing July 1, 2007, the Backup Special Tax for Facilities rate shall be increased by two percent (2.00%) of the amount in effect in the prior Fiscal Year. SECTION F METHOD OF APPORTIONMENT OF THE SPECIAL TAX FOR FACILITIES Commencing Fiscal Year 2006-07 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Facilities on all Taxable Property in accordance with the following steps: Step One: The Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel 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 Proportionately on each Assessor's Parcel of Undeveloped Property up to 100% of the Assigned Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities. Step Three: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first two steps have been completed, then the Special Tax for Facilities on each Assessor's Parcel of Developed Property whose Maximum Special Tax for Facilities is the Backup Special Tax for Facilities .shall be increased Proportionately from the Assigned Special Tax for Facilities up to 100% of the Backup Special Tax for Facilities as needed to satisfythe Special Tax Requirement for Facilities. City of bake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 7 Step Four: If additional moneys are needed to satisfy the Special Tax Requirement for Facilities after the first three steps have been completed, the Special Tax for Facilities shall be levied Proportionately on each Assessor's Parcel of Provisional Undeveloped Property up to 100% of the Assigned Special Tax for Facilities applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement for Facilities. Notwithstanding the above, under no circumstances will the Special Tax for Facilities levied against any Assessor's Parcel of Residential Property for which an occupancy permit for private residential use has been issued be increased by more than ten percent as a wnsequence of delinquency or default by owner of any other Assessor's Parcel within CFD No. 2005-4. SECTION G PREPAYMENT OF SPECIAL TAX FOR FACILITIES The following additional definitions apply to this Section G "CFD Public Facilities" means $6,500,000 expressed in 2005 dollars, which shall increase by the Construction Inflation Index on July 1, 2006, and on each July 1 thereafter, or such lower amount (i) determined by the City Council as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2005-4 , or (ii) determined by the City Council concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes for. Facilities levied under this Rate and Method of Apportionment. "Construction Fund" means an account specifically identified in the Indenture or functionally equivalent to hold funds, which are currently available for expenditure to acquire or construct public facilities eligible under CFD No. 2005-4. "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 Yeaz which. ends in the previous Fiscal Yeaz. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News-Record Building Cost Index for the city of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment. "Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Taxes for Facilities which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Special Taxes for Facilities. City of Lake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 8 The Special Tax for Facilities obligation of an Assessor's Parcel of Developed Property, or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued or is expected to be issued, or an Assessor's Parcel of Provisional Undeveloped Property may be prepaid in full, provided that there aze no delinquent Special Taxes, penalties, or interest chazges outstanding with respect to such- Assessor's Pazcel at the time the Special Tax for Facilities obligation would be prepaid. The Prepayment Amount for an Assessor's Parcel eligible for prepayment shall be determined as described below. An owner of an Assessor's Parcel intending to prepay the Special Tax for Facilities obligation shall provide the CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such notice the CFD Administrator shall notify such owner of the Prepayment Amount of such Assessor's Pazcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. 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 plus plus plus less less equals Redemption Premium Future Facilities Amount Defeasance Cost Administrative Fee Reserve Fund Credit Capitalized Interest Credit 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 Tax for Facilities and Backup Special Tax for Facilities, if any, applicable to the Assessor's Pazcel. For an Assessor's Pazcel ofUndeveloped Property, compute the Assigned Special Tax for Facilities as though it was already designated as Developed Property based upon the building permit issued or expected to be issued for that Assessor's Parcel. For an Assessor's Parcel. of Provisional Undeveloped Property compute the Assigned Special Tax for Facilities for that Assessor's Pazcel. 2. For each Assessor's Parcel ofDeveloped Properly, Undeveloped Property or Provisional Undeveloped Property to be prepaid, (a) divide the Assigned Special Tax for Facilities computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Special Tax for Facilities applicable to all Assessor's Parcels ofTaxable Property at buildout, as reasonably determined by the City, and (b) divide the Backup Special Tax for Facilities computed pursuant to paragraph l for such Assessor's Parcel by City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) June 29, 2005 Page 9 the sum of the estimated Backup Special Tax for Facilities applicable to all Assessor's Parcels ofTaxable Property at buildout, as reasonably detemuned 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 Amount". 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 Amount"). Compute the amount needed to pay interest on the Bond Redemption Amount to be redeemed with the proceeds of the Prepayment Amount until the earliest redemption date for the Outstanding Bonds. 8. Determine the actual Special Tax for Facilities levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 9. Estimate the amount of interest earnings to be derived from the reinvestment of the Bond Redemption Amount plus the Redemption Premium until the earliest redemption date for the Outstanding Bonds. 10. Add the amounts computed pursuant to paragraph 7 and 8 and subtract the amount computed pursuant to paragraph 9. This difference is the "Defeasance Cost." 11. Estimate the administrative fees and expenses associated with the prepayment, including the costs of computation of the Prepayment Amount, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption. This amount is the "Administrative Fee." 12. Calculate the "Reserve Fund Credit" as the lesser 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. City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) June 29, 2005 Page 10 Notwithstanding the foregoing; if the reserve fund requirement is satisfied by a surety bond or other instrument at the time of the prepayment, then no Reserve Fund Credit shall be given. Notwithstanding the foregoing, the Reserve Fund Credit shall in no event be less than 0. 13. If any capitalized interest for the Outstanding Bonds will not have been expended as of the date immediately following the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the larger quotient computed pursuant to paragraph 2(a) or 2(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment. This amount is the "Capitalized Interest Credit " 14: The Prepayment Amount is equal to the sum of the Bond Redemption Amount, the Redemption Premium, the Future Facilities Amount, the Defeasance, and the Administrative Fee, less the Reserve Fund Credit and the Capitalized Interest Credit. 15. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4,10, 12, and 13 shall be deposited into the appropriate fund as established under the Indenture and used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 6 shall be deposited into the Construction Fund. The amount computed pursuant to paragraph 11 shall be retained by CFD No. 2005-4. The Special Tax for Facilities prepayment amount may be in"sufficient to redeem a full $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of Bonds or fo make debt service payments: With respect to a Special Tax for Facilities obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records of CFD No. 20051 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 Tax for Facilities obligation and the release of the Special Tax for Facilities lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay such Special Taxes for Facilities shall cease. Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property, net of Administrative Expenses, shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Year. SECTION H PARTIAL PREPAYMENT OF SPECIAL TAX FOR FACILITIES Ciry of Lake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 11 The Special Tax for Facilities obligation of an Assessor's Pazcel of Developed Property, or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued or is expected to be issued, or and Assessor's Parcel of Provisional Undeveloped Property, as calculated in this Section H below, may be partially prepaid, provided that there aze no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax for Facilities obligation would be prepaid. The Partial Prepayment Amount shall be calculated according to the following formula: The terms above have the following meanings: PP = the Partial Prepayment Amount. Po = the Prepayment Amount calculated according to Section G. F = the percent by which the owner of the Assessor's Parcel is partially prepaying the Special Tax for Facilities obligation. A= the Administrative Fees and Expenses calculated according to Section G. The owner of any Assessor's Parcel who desires such prepayment shall notify the CFD Administrator of such owner's intent to partially prepay the Special Tax for Facilities and the percentage by which the Special Tax for Facilities shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for Facilities for an Assessor's Pazcel within 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Pazcel that is partially prepaid, the City Council shall (i) distribute the funds remitted to it according to Section G, and (ii) indicate in the records of CFD No. 2005-4 that there has been apartial prepayment ofthe Special Tax for Facilities obligation and shall cause a suitable notice to be recorded incompliance with the Act within thirty (30) days of receipt of such partial prepayment of the Special Tax for Facilities obligation, to indicate the obligation of such Assessor's Pazcel to pay such prepaid portion of the Special Tax for Facilities shall cease. Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tax for Facilities that may be levied on Taxable Property after such partial prepayment, net of Administrative Expenses,. shall be at least 1.1 times the regularly scheduled annual interest and principal payments on all currently Outstanding Bonds in each future Fiscal Yeaz. SECTION I TER1VIiNATION OF SPECIAL TAX For each Fiscal Year that any Bonds are outstanding the Special Tax for Facilities shall be levied on all Assessor's Pazcels subject to the Special Tax for Facilities. The Special Tax for Facilities shall cease not later than the 2041-42 Fiscal Year, however, the Special Taxes for Facilities will -cease to be levied in an eazlier Fiscal Yeaz if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2005-4 Bonds have been paid; (ii) all authorized facilities of CFD No. 2005-4 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. 2005-4 have been satisfied: City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) June 29, 2005 Page 12 SECTION J EXEMPTIONS The City shall classify as Exempt Property, in order of priority, (i) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by the State of California, Federal or other local governments, including school districts, (ii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iii) Assessor's Parcels which are owned by, hrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (v) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, or (vi) other types of public uses determined by the City Council, provided that no such classification would reduce the sum of all Taxable Property to less than 3.5 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 3.5 Acres. Assessor's Parcels which cannot be classified as Exempt Propertybecause such classification would reduce the Acreage of all Taxable Property to less than 3.5 Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Taxes for Facilities pursuant to Step Four in Section E SECTION K MANNER OF COLLECTION OF SPECIAL TAX FOR FACILITIES The Special Tax for Facilities shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2005-4 may collect Annual Special Taxes. for Facilities at a different time or in a different manner if necessary to meet its financial obligations and may covenant to foreclose and may actually 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 permit has been issued by the City Ciry of Lake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 13 on or prior to May 1 preceding the Fiscal Year in which the Special Tax for Services is being levied. "Maximum Special Tax for Services" means the maximum Special Tax for Services that can be levied by CFD No. 2005-4 in any Fiscal Year on any Assessor's Pazcel. "Operating Fund" means a fund that shall be maintained for CFD No. 2005-4 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 pazks, open space, and storm drains. "Special Tax for Services" means any of the special taxes authorized to be levied within CFD No. 2005-4 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. 2005-4 equal to (i) the budgeted costs directly related to the Service Area, including maintenance, repair and replacement of certain components of the. Service Area which have been accepted and maintained or are reasonably expected to be accepted and maintained during .the current Fiscal Year, (ii) Administrative Expenses, and (iii) anticipated delinquent Special Taxes for Services based on the delinquency rate in CFD No. 2005-4 for the previous Fiscal Yeaz, .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 2005-2006 and for each subsequent Fiscal Year, the City Council shall levy Special Taxes for Services on (i) all Assessor's Parcels containing a Developed Single Family Unit or Developed Multifamily Unit and (ii)-all Assessor's Parcels ofNon-Residential Property, up to the applicable Maximum Special Tax for Services to fund the Special Tax Requirement for Services. The Maximum Special Tax for Services for Fiscal Year 2005-2006 shall be $242 per Developed Single Family. Unit, $121 per Developed Multifamily Unit, and $545 per Acre for each Assessor's Parcel ofNon-Residential Property. On each July 1, commencing July 1, 2006, the Maximum Special Tax for Services shall be increased by two. percent (2.00%) of the amount in effect in the prior Fiscal Year. 2. Duration of the Special Tax for Services The Special Tax for Services shall be levied in perpetuity to fund the Special Tax Requirement for Services, unless no longer required as deternned at the sole discretion of the City Council. City of lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) June 29, 2005 Page 14 . 3. Collection of the Special Tax for Services The Special Tax for Services shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that CFD No. 2005-4 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 Tax is not correct may file a written notice of appeal with the CFD Administrator not later than twelve months after having paid the first installment of the Special Tax that is disputed. The CFD Administrator shall promptly review the appeal, and if necessary, meet with the properly owner, consider writken and oral evidence regarding the amount of the Special Tax, and rule on the appeal.- If the CFD Administrator's decision requires that the Special Tax for an Assessor's Parcel be modified or changed in favor ofthe property owner, a cash refund shall not be made (except for the last year of levy), but an adjustment shall be made to the Special Tax on that Assessor's Parcel in the subsequent Fiscal Year(s). The City Council may interpret this Rate and Method of Apportionment for purposes of clarifying any ambiguity and make determinations relative to the annual administration of the Special Tax and any landowner or residents appeals. Any decision of the City Council shall be final and binding as to all persons. City of Lake Elsinore June 29, 2005 Community Facilities District No. 2005-4 (Lakeview Villas) Page 15 EXHIBIT "A" CITY OF LAKE ELSINORE AND CFD N0.2005-X CERTIFICATE 1. Pursuant to Section of the Rate and Method of Apportionment of Special Tax (the "RMA"), the City of Lake Elsinore (the "Cit}~') and Community Facilities District No. 2005- X ofthe City of Lake Elsinore ("CFD No. 2005-X") hereby agree to a reduction in the Maximum Special Tax for Facilities for Developed Property [within such Improvement Areal: (a) The information in Table 1 relating to the Maximum Special Tax for Facilities for Developed Property andlor Undeveloped Property within [Improvement Area X or CFD No. 2005-XJ shall be modified as follows: [insert Table I showing effective change to special tax 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. 3. Upon execution of the Certificate by the City and CFD No. 2005-X the City shall cause an amended Notice of Special Tax Lien [for the Improvement Area) to be recorded reflecting the modifications set forth herein. By execution hereof, the undersigned acknowledges, on behalf of the City of Lake Elsinore and CFD No. 2005-X, receipt of this Certificate and modification of the RMA as set forth in this Certificate. CITY OF LAKE ELSINORE By: CFD Administrator COMMUNITY FACILITIES DISTRICT N0.2005-X OF THE CITY OF LAKE ELSINORE By: CFD Administrator City of Lake Elsinore Community Facilities District No. 2005-4 (Lakeview Villas) Date: Date: June 29, 2005 Page 16