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HomeMy WebLinkAboutCC Reso No 2005-141RESOLUTION N0.2005-141 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. 2005-6 (CITY CENTER TOWNHOMES) WHEREAS, the City Council (the "Council") of the City of Lake Elsinore (the "City") has heretofore adopted Resolution No. 2005-76 ("Resolution of Intention") stating its intention to form City of Lake Elsinore Community Facilities District No. 2005-6 (City Center Townhomes) (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 incumng of bonded indebtedness with respect to the CFD; and WHEREAS, at said hearing all persons not exempt from 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. 2005-6 (City Center Townhomes)" 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 N0.2005-141 Page 2 of 6 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 65 and as Instrument No. 2005-0613690). SECTION 4. The facilifies 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 streets, streetscape, storm drain, and water and sewer facilities and fees of the Elsinore Valley Municipal Water District 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 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 CITY COUNCIL RESOLUTION NO. 2005-141 Page 3 of 6 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. 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 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, or until collection of the Special Tax by the CFD ceases. SECTION 7. The proposed Special Tax to be levied in the CFD has not been precluded by protests by owners of one-half or more of the land in the territory included in the CFD pursuant to Government Code Section 53324. SECTION 8. 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 Special Tax: A. Such Special Tax shall be levied for the specific purposes set forth herein. B. The proceeds of the levy of such 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 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 9. 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 the Special Tax levy obligations by assessor's parcel number and for estimating fixture Special Tax levies pursuant to Section 53340.1 of the Government Code. CITY COUNCIL RESOLUTION N0.2005-141 Page 4 of 6 SECTION 10. The voting procedure with respect to the imposition of the Special Tax, incurring bonded indebtedness and establishing an appropriations limit of the CFD shall be by hand delivered or mailed ballot election. SECTION 11. The City Clerk is directed to certify and attest to this Resolution and to take any and all necessary acts to call, hold, canvass and certify an election or elections on the incurring bonded indebtedness, the levy of the Special Tax, and the establishment of the appropriation limit. PASSED, APPROVED AND ADOPTED this ~~ day of '~'~`,~ : } , 2005. AYES: COUNCILMEMBERS NOES: COUNCILMEMBERS HICKMAN, KELLEY, SCHIFFNER, MAGEE NONE ABSENT: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: A EST: 7Z u7,~YC G~ Fredrick Ray, Deputy City Clerk City of Lake Elsinore BUCKLEY E IYobert E. Magee, City of Lake Elsie B~ara 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 13 day of SEPTEMB~R2005, and that it was so adopted by the following vote: AYES: COUNCILMEMBERS: HICKMAN, KELLEY, SCHIFFNER, MAGEE NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: BUCKLEY ABSTAIN: COUNCILMEMBERS: NONE FREDERICK RAY, DEPUTY CITY CLERK CITY OF LAKE ELSINORE (SEAL) EXHIBIT A RATE AND METHOD OF APPORTIONMENT. FOR COMMUNITY FACILITIES DISTRICT NO. 2005-6 OF THE CITY OF LAKE ELSINORE (CITY CENTER TOWNHOMES) The following sets forth the Rate and Method of Apportionment for the levy and collection of Special Taxes in the City of Lake Elsinore ("City") Community Facilities DistrictNo. 2005-6 (City Center Townhomes) ("CFD No. 2005-6"). An Annual Special Tax shall be levied on and collected in CFD No. 2005-6 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. 2005-6, unless exempted by taw 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 the Assessor's Parcel Map, the land area as shown on the applicable Final Map, or if the land area is not shown on the applicable Final Map, the land area shall be calculated by the City Engineer. "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 any ordinary and necessary expense incurred by the City on behalf of CFD No. 2005-6 related to the determination of the amount of the levy of Special Taxes, the collection of Special Taxes including the expenses of collecting delinquencies; the administration of Bonds, the payment of salaries and benefits of any City employee whose duties are directly related to the administration of CFD No. 2005-6, and costs otherwise incurred in order to carry out the authorized purposes of CFD No. 2005-6 relating to CFD No. 2005-6. "Annual Special Tax" means the Special Tax actually levied in any Fiscal Year on any Assessor's Parcel "Apartment Property"means all Assessor's Parcels of Residential Property onwhich 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. City of Lake Elsinore July 18, 2005 Community Facilities District No. 2005-6 Page 1 "Assessor's Parcel" means a lot or parcel of land designated on an Assessor's Parcel Map with an assigned Assessor's Parcel Number. "Assessor's Parcel Map" means an official map of the Assessor of the County designating parcels by Assessor's Parcel Numbec. "Assessor's Parcel Number" means that number assigned to an Assessor's Parcel by the County for purposes of identification. "Assigned Annual Special Tax" means the Special Tax ofthat name described in Section D below. "Backup Annual Special Tax" 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 of bonds, notes, certificates of participation, 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 within CFD No. 2005-6 have been pledged. "Building Square Footage" or "BSF" means the square footage of assessable internal living space, exclusive of garages or other structures not used as living space, as determined by reference to the building permit application for such Assessor's Parcel. "Calendar Year" means the period commencing January 1 of any year and ending the following December 31. "CFD No. 2005-6" means Community Facilities District No. 2005-6 (City. Center Townhomes) established by the City under the Act. "City Council" means the City Council of the City of Lake Elsinore, acting as the Legislative Body of CFD No. 2005-6, or its designee. "County" means the County of Riverside. "Developed Property" means all Assessor'sParcels of Taxable Property that: (i) are included in a Final Map that was recorded prior to the January Is` preceding the Fiscal Year in which the Special Tax is being levied, and (ii) a building permit was issued on or before March is` 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 may be issued without further subdivision. City of Lake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page 2 "Fiscal Year" means the period commencing on July 1 of any year and ending the following June 30. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C, that can be levied by CFD No. 2005-6 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 Annual Special Tax obligation for an Assessor's Parcel, as described in Section H. "Prepayment Amount" means the amount required to prepay the Annual Special Tax obligation in full for an Assessor's Parcel, as described in Section G. "Proportionately" means that the ratio of the Annual Special Tax levy to the applicable Assigned Annual Special Tax is equal for all applicable Assessor's Parcels. In case of Developed Property subject to the apportionment of the Annual Special Tax under step four of Section F, "Proportionately" in step four means that the quotient of (a) Annual Special Tax less the Assigned Annual Special Tax divided by (b) the Backup Annual Special Tax less the Assigned Annual Special Tax, is equal for all applicable Assessor's Parcels. "Provisional Undeveloped Property" means all Assessor's Parcels ofTaxable Propertythatwould otherwise be classified as Exempt. Property pursuant to the provisions of Section J, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all 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 byCFD No.2005-6 pursuant to the Act. "Special Tax Requirement" 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 estahlish or replenish any reserve funds established in association with the Bonds, and (v) the collection or accumulation of funds for the acquisition or construction offacilities authorized byCFD No.2005-6 provided thatthe inclusion of such amount does not cause an increase in the levy of Special Tax on Undeveloped Property as set forth in Step Three of Section F., less (vi) any amounts available to pay debt service or other periodic City of Lake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page 3 costs on the Bonds pursuant to any applicable bond indenture, fiscal agent agreement, or trust agreement. "Taxable Property" means all Assessor's Parcels within CFD No. 2005-6, which are not Exempt Property. "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 2005-06, each Assessor's Parcel within CFD No. 2005-6 shall be classified as Taxable Property or Exempt Property. In addition, each Assessor's Parcel of Taxable Property shall be further classified as Developed Property, Undeveloped Property or Provisional Undeveloped Property. In addition, each Assessor's Parcel of Developed Property shall further be classified as Residential Property or Non-Residential Property. Lastly, each Assessor's Parcel of Residential Property shall further be classified as a Single Family Properly or Apartment Property, and each Single Family Property shall be assigned to its appropriate Assigned Annual Special Tax rate based on its Building Square Footage. SECTION C MAXIMUM SPECIAL TAX 1. Developed Property The Maximum Special Tax for each Assessor's Parcel of Residential Properly or Non- Residential Property that is classified as Developed Property in any Fiscal Year shall be the greater of (i) the Assigned Annual Special Tax or (ii) the Backup Annual Special Tax. 2. Undeveloped Property and Provisional Undeveloped Property The Maximum Special Tax for each Assessor's Parcel classified as Undeveloped Property, or Provisional Undeveloped Property in any Fiscal Year shall be the Assigned Annual Special Tax. SECTION D ASSIGNED ANNUAL SPECIAL TAX 1. 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 Annual Special Tax. The Assigned City of Lake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page 4 Annual Special Tax applicable to an Assessor's Parcel ofDeveloped Property for Fiscal Year 2005-06 shall be determined pursuant to Table 1 below. TABLE 1 ASSIGNED ANNUAL SPECIAL TAX RATES FOR DEVELOPED PROPERTY FOR FISCAL YEAR 2005-06 Land Use T e Buildin S uare Foota a Rate Residential Pro e Less than 1,000 $1,182 er Unit Residential Pro e 1,000 -1,199 $1,333 er Unit Residential Property 1,200 -1,399 $1,661 per Unit Residential Pro e 1,400 - 1,499 $1,770 er Unit Residential Pro e 1,500 or greater $1,839 er Unit A artment Unit N/A $19,302 er Acre Non-Residential Pro ert N/A $19,3'02 er Acre 2. Undeveloped Property and Provisional Undeveloped Property Each Fiscal Yeac, each Assessor's Parcel of Undeveloped Property and Provisional Undeveloped Property shall be subject to an Assigned Annual Special Tax. The Assigned Annual Special Tax rate for an Assessor's Parcel classified as Undeveloped Property and Provisional Undeveloped Property for Fiscal Year 2005-06 shall be $14,302 per Acre. 3. Increase in the Assigned Annual Special Tax On each July 1, commencing July 1, 2006, the Assigned Special Tax rate for Developed Property, 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 ANNUAL SPECIAL TAX At the time a Final Map is recorded, the Backup Annual Special Tax for all Assessor's Parcels of Developed Property classified or reasonably expected to be classified as a Single Family Property within such Final Map area shall be determined by (i) summing the product of (a) the Maximum Special Tax rate for Undeveloped Property by (b) the total Acreage of Taxable Property of each Assessor's Parcel in such Final Map area, excluding Acreage classified as Provisional Undeveloped Property and any Acreage reasonably expected to be classified as Exempt Property in such Final Map area, and (ii) dividing the results in (i) by the total number of Single Family Units reasonably expected to be constructed within such Final Map area. The resulting quotient shall be the Backup Annual Special Tax for each Assessor's Parcel of Developed Property within such Final Map area. City of Lake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page 5 The Backup Annual Special Tax for all Assessor's Parcels of Developed Property classified asNon- Residential Property or Apartment Properly shall be the Maximum Special Tax rate for Undeveloped Property. If a Final Map includes Assessor's Parcels of Developed Property which are classified or reasonably expected to be classified as Single Family Property and Non-Residential Property or Apartment Properly, then the Backup Annual Special Tax for each Assessor's Parcel which is classified or reasonably expected to be classified as Single Family Property shall be computed exclusive of the allocable portion of total Acreage attributable to Assessor's Parcels classified or reasonably expected to be classified asNon-Residential Properly or Apartment Property. Notwithstanding the foregoing, if Assessor's Parcels of Developed Property which are classified or to be classified as either Single Family Property, Apartment Property orNon-Residential Property are subsequently changed of modified by recordation of a lot line adjustment or similar instrument, then the Backup Annual Special Tax shall be recalculated to equal the amount of Backup Annual Special Tax that would have been generated if such change did not take place. On each July 1, commencing July 1, 2006, the Backup Annual Special Tax 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 ANNUAL SPECIAL TAX Commencing Fiscal Year 2005-06 and-for each subsequent Fiscal Year, the City Council shall levy Annual Special Taxes on all Taxable Property in accordance with the following steps: Step One: The Annual Special Tax shall be levied Proportionately oneach Assessor's Parcel of Developed Property at up to 100% of the applicable Assigned Annual Special Tax rates in Table 1 to satisfy the Special Tax Requirement. Step Two: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Annual Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property up to 100%ofthe Assigned Annual Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement.- Step Three: If additional moneys are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the Annual Special Tax on each Assessor's Parcel of Developed Property whose Maximum Special Tax is the Backup Annual Special Tax shall be increased Proportionately from the Assigned Annual Special Tax up to 100% of the Backup Annual Special Tax as needed to satisfy the Special Tax Requirement. Step Four: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the. Annual Special Tax shall be levied City of Lake Elsinore July 18, 2005 Community Facilities District No. 2005-6 Page 6 Proportionately on each Assessor's Parcel ofProvisional Undeveloped Properly up to 100%of the Assigned Annual Special Tax applicable to each such Assessor's Parcel as needed to satisfy the Special Tax Requirement. SECTION G PREPAYMENT OF ANNUAL SPECIAL TAX The following definitions apply to this Section G: "CFD Public Facilities" means $2,400,000 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 Ciry Council as sufficient to provide the public facilities under the authorized bonding program for CFD No. 2005-6, 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 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 acquireor construct public facilities eligible under CFD No. 2005-6. "Construction Inflation Index" means the annual percentage change in the Engineering News- Record Building Cost Index for the city of Los Angeles, measured as of the calendar year which ends in the previous Fiscal Year. In the event this index ceases to be published, the Construction Inflation Index shall be another index as determined by the City that is reasonably comparable to the Engineering News-Record Building Cost Index for the. City of Los Angeles. "Future Facilities Costs" means the CFD Public Facilities minus public facility costs available to be funded through existing construction or escrow accounts or funded by the Outstanding Bonds, and minus public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment. "Outstanding Bonds" means all previously issued Bonds issued and secured by the levy of Special Taxes 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 Maximum Special Taxes. The Special Tax 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 are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax 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 Annuat Special Tax obligation shall provide the City with written notice of intent to prepay, and within 5 days of receipt of such notice, City of Lake Elsinore Community Facilities District No: 2005-6 July 18, 2005 Page 7 the City shall notify such owner of the amount of the non-refundable deposit determined to cover the cost to be incurred by CFD No. 2005-6 in calculating the proper amount of a prepayment. Within 15 days of receipt of such non-refundable deposit, the City shall notify such, owner of the Prepayment Amount of such Assessor's Parcel. The Prepayment Amount for each applicable Assessor's Parcel shall be calculated according to the following formula (capital'ized terms defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Cost plus Administrative Fee less Reserve Fund Credit equals Prepayment Amount As of the date of prepayment, the Prepayment Amount shall be calculated as follows: 1. For an Assessor's Parcel of Developed Property, compute the Assigned Annual Special Tax applicable to the Assessor's Parcel. For an Assessor's Parcel of Undeveloped Property, compute the Assigned Annual Special Tax as though is 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 Annual Special Tax for that Assessor's Parcel. 2. For each Assessor's Parcel of Developed Property, Undeveloped Property or Provisional Undeveloped.Properly to beprepaid, divide the Assigned Annual Special Tax computed pursuant to paragraph 1 for such Assessor's Parcel by the sum of the estimated Assigned Annual Special Tax applicable to all Assessor's Parcels of Taxable Property at buildout, as reasonably determined by the City. 3. Multiply the quotient computed pursuant to paragraph 2 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 quotient computed pursuant to paragraph 2 by the amount determined pursuant to paragraph 5. to determine the Future Facilities Cost to be prepaid (the "Future Facilities Amount"). City of Lake Elsinore Community Facilities District No. 2005-6 July 18; 2005 Page 8 7. Compute the amount needed to pay interest on the Bond Redemption Amount to be redeemed with the proceeds ofthe Prepayment Amount until the earliest call date for the Outstanding Bonds. 8. Estimate the amount of interest earnings to be derived from the reinvestment of the Bond Redemption Amount plus the Redemption Premium until the earliest call date for the Outstanding Bonds. 9. Subtract the amount computed pursuant to paragraph 8 from the amount computed pursuant to paragraph 7. This difference is the "Defeasance Cost." 10. 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." 11. 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. 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. 12. 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. 13. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 9, and 11 shall be deposited into the appropriate fund as established under the bond 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 pazagraph 10 shall be retained by CFD No. 2005-6. With respectto Special Tax obligation that is prepaid pursuant to this Section G, the City Council shall indicate in the records ofCFD No.2005-6 that there has been a prepayment of the Special Tax 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 obligation and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Pazcel to pay such Special Taxes shall cease. City of bake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page 9 Notwithstanding the foregoing, no prepayment will be allowed unless the amount of Special Tax 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 ANNUAL SPECIAL TAX The Special Tax 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 and Assessor's Parcel of Provisional Undeveloped Property, as calculated in this Section H. below, may be partially prepaid, provided that there are no delinquent Special Taxes, penalties, or interest charges outstanding with respect to such Assessor's Parcel at the time the Special Tax obligation would be prepaid. The Partial Prepayment Amount shall be calculated according to the following fonnula: 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 obligation. A= the Administrative Fees and Expenses calculated according to Section G. With respect to any Assessor's Parcel that is partially prepaid, the City Council shall indicate in the records of CFD No. 2005-6 that there has been a partial prepayment of the Special Tax obligation and shall cause a suitable notice to be recorded in compliance with the Act within thirty (30) days of receipt of such partial prepayment of the Special Tax obligation, to indicate the partial prepayment of the Special Tax obligation and the partial release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay such prepaid portion of the Special Tax shall cease. Notwithstanding the foregoing, no partial prepayment will be allowed unless the amount of Special Tax that may be levied on Taxable Properly 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 cunently Outstanding Bonds in each future Fiscal Year. City of Lake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page 10 SECTION I TERMINATION OF SPECIAL TAX For each Fiscal Year that any Bonds are outstanding the Special Tax for Facilities shall be levied on all Assessor's Parcels subject to the Special Tax for Facilities. The Special Tax for Facilities shall cease not later than the 2042-43 Fiscal Year, however, the Special Taxes for Facilities will cease to be levied in an earlier Fiscal Year if the CFD Administrator has determined (i) that all required interest and principal payments on the CFD No. 2005-6 Bonds have been paid; (ii) all authorized facilities ofCFD No.2005-6 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. 2005-6 have been satisfied. SECTION J EXEMPTIONS The City shall classify as Exempt Property (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 with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, (iii) other types of public uses determined by the City Council, (iv) Assessor's Parcels which are privately owned and are encumbered by or restricted solely for public uses, (v) Assessor's Parcels which are used as places of worship and aze exempt from ad valorem properly taxes because they are owned by a religious organization, or (vi) Assessor's Parcels which are owned by, irrevocably offered for dedication, encumbered by or restricted in use by a homeowners' association, provided that no such classification would reduce the sum of all Taxable Property to less than 13.19 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 13.19 Acres. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 13.19 Acres will be classified as Provisional Undeveloped Property, and will be subject to Special Taxes pursuant to Step Five in Section F. At such time an Assessor's Parcel must be classified as Provisional Developed Property, the following hierarchy shall be used to determine which Assessor's Parcel will be taxed to ensure that the Taxable Property is not less than 13.19 acres: First, an Assessor's Parcel as designated in (vi) above Second, an Assessor's Parcel as designated in (v) above Third,. an Assessor's Parcel as designated in (iv) above Fourth, an Assessor's Parcel as designated in-(iii) above Fifth, an Assessor's Parcel as designated in (ii) above Sixth, an Assessor's Parcel as designated in (i) above City of Lake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page I1 SECTION K 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 property owner, consider written and oral evidence regarding the amount of the Special Tax, and rule on the appeal. If the CFD Administrator's decision requires that the Special 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. SECTION L MANNER OF COLLECTION The Annual 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.2005-6 may collect Annual Special Taxes at a different time or in a different manner if necessary to meet its financial obligations. City of Lake Elsinore Community Facilities District No. 2005-6 July 18, 2005 Page 12