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HomeMy WebLinkAbout2013/07/09 Item 17CITY COUNCIL AGENDA-STATEMENT ~. ~ ~ . ~ ~ ~V I/ . CHULAVISTA ' JULY 9, 2013, Item ~~ ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF. THE CITY OF CHULA VISTA, CALIFORNIA, ACTING FOR ~ITSELE AND AS THE LEGISLATIVE BODY OF CERTAIN COMMUNITY . FACILITIES DISTRICTS, AUTHORIZING AND PROVIDING. - FOR THE ISSUANCE OF SEPARATE SERIES OF SPECIAL TAX REFUNDING BONDS FOR EACH SUCH COMMUNITY FACILITIES DISTRICT, APPROVING THE FORM OF A FISCAL AGENT AGREEMENT, A BOND PURCHASE AGREEMENT, AN ESCROW DEPOSIT AND ' TRUST AGREEMENT AND A PRELIMINARY OFFICIAL STATEMENT, AND AUTHORIZING OTHER ACTIONS IN CONNECTION THEREWITH RESOLUTION OF THE BOARD OF DIRECTORS OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF SPECIAL TAX • ~ REVENUE REFUNDING BONDS, SERIES 2013, APPROVING THE FORMS OF AN INDENTURE OF TRUST, BOND PURCHASE AGREEMENT; .PRELIMINARY OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT, AND AUTHORIZING OTHER ACTIONS EV CONNECTION THEREWITH - SUBMITTED BY: DIRECTOR OF FINANCE/TREASURER ~ ~1~ Ml~- .REVIEWED BY: CITY NIANAGER~ ~~rJs. ASSISTANT/DEPUTY CITY MANAGER~~ f 4/STHS VOTE: YES ~ NO ^X SUMMARY Due to lower interest rates, improved. development status, and savings derived from refunding existing debt for these districts using a ,pooled concept, approximately 6,543 property. owners will benefit from this refunding. The criteria for the refunding were set at a minimum savings of 5%. Based on a preliminary analysis, the estimated savings varies by 17-1 JULY 9, 2013, Item ~ 7 Page 2 of 4 _ district and ranges from a net present value of 5.7% to 103% based on the current interest rate environment. The projected aggregate annual savings would be approximately $724;000, and the projected net present value savings over the life of the existing debt is approximately $7.2 million. It should be noted that if the savings threshold of 5% are not met for any of the proposed individual Community Facility District refundings the financing will not proceed until the market conditions improve. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that refunding. bonds is not a "Project" ,as defined under Section 15378 of the State CEQA .Guidelines because it will not result in a physical change to the environment; therefore,, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the actions proposed are not subject to CEQA. RECOMMENDATION That Council adopts_the resolutions BOARDS/COMMISSION RECOMMENDATION Not applicable DISCUSSION The City has determined with the assistance of the City's Financial Advisor, Fieldman Rolapp & Associates and bond underwriting firms De La Rosa & Company. and Stifel, Nicolaus & Company that there are several Community Facility District (CFD) bonds (more commonly known asMello-Roos bonds) that would benefit from a refunding during this historically low interest rate environment. There are five CFD bonds that are proposed to be refunded and are known as: • CFD 06-I Improvement Area A Eastlake Woods, Vista and Land Swap • CFD 06-I Improvement Area B Eastlake Woods, Vista and Land Swap • CFD 07-I Otay Ranch Village 11 • CFD 08-I Otay Ranch Village 6 • CFD 2001-2 McMillin-0tay Ranch Village 6 Approval of the resolutions provides the authorizafion necessary for proceeding with the refunding bond issuance and approval of the bond documents. However due to the recent volatility in the market the refunding may be postponed until market conditions improve. Beginning on .June 20, 2013, spazked by Federal Reserve Bank Chairman Bernanke's comments, the bond market has experienced some dramatic increases in interest rates since the refunding was first contemplated. These increases have been chazacterized as a "correction" of longterm rates and may have been an "over-correction" in interest rates. The pricing of the bonds will not occur until the week of July 15 when the bond market may be stabilized and interest rates become more predictable. 'The financing will not proceed if interest rates have risen to a level that the refunding would not meet the minimum savings 17-2 JULY 9, 2013, Item ~ 7 Page 3 of 4 threshold of 5% for any of the proposed individual Community Facility District refundings. If that were to occur, the refunding will be brought back for Council consideration at a later date when the market allows for the minunuln 5% savings to be achieved. 'I`he table below provides the details for the estimated savings for each of the proposed refunding candidates as of June 24; 2013. Pereerttage - Approximate AVGAnnual Community Facilities District Parcels Savings Refun ded Approximate Annual Savings Per Bonds NPV Savings Savings Parcel CFD No. 06-[ Gnp Area A (EL 1,992 10.30% $ 3,414,000 $ 310,000 $ .156.00 Woods, Vistas-& Land Swap) CFD No. 06-I I~ Area B (EL 584 8.10% 549,000 - - 70,000 $ 120.00 Woods, Vistas & Land Swap) CFD No. 07-I (Otay Ranch Village - ° 11) 1,940 5 70% 1,255,000 139,000 $ 72.00 CFD No. 08-I (Otay Ranch Village 1,333 8.00% 1,474,000 135,000 $ 101.00 Six) ~ ~ ~ - CFD No. 2001-2 (McM~lut-Otay 694 6.10% 53 L,000~ 70,000 $ 101.00 Ranch-Village Six) Totals _ 6,543 $ 7,223,OOQ. $ 724.000 ~$ 111.00 Note: Savings Amount Estimated as or June 24, 2013 DECISION MAKER CONFLICT Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independeritly aware, and has not been' informed by any Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter. CURRENT YEAR FISCAL IMPACT There is no net impact to City operating funds. The refunding will save property owners in the Community Facility Districts on a net present value basis approximately $7.2 million over the life of the bonds. - The estimated costs of issuance associated with this refunding including costs for the underwriting, bond counsel and financial advisor firms are contingent upon actually selling the bonds and are payable from the bond proceeds. The rating agency fee and special tax consultant are not contingent and are estimated at $68,000. With a preliminary bond sizing of $93 million, the approximate fees for services are estimated as follows: Underwriter - $375,000, Bond Counsel - $103,000, Financial Advisor - $95,000, Disclosure Counsel - $75,000 and other fees of $27,500. The total costs of issuance are estimated to be $743,500 or approximately 0.8% of the $93 million issuance. 17-3 JULY 9, 2013, Item ~~ Page 4 of 4 ONGOING FISCAL IMPACT ' The total annual savings for all property owners are estimated at approximately $724,000 per year. ATTACHMENTS 1. Fiscal Agent Agreement 2. Bond Purchase Agreement 3. Escrow Deposit and Trust Agreement 4. Preliminary Official Statement 5. Continuing Disclosure Agreement 6. Indenture of Trust Prepared by: Phillip Davis, Assistant Director, Finance 17-4 THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM. BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL - ., ~en R. Googin City A Dated: 2 3 FISCAL AGREEMENT BETWEEN THE CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE-WOODS, VISTAS AND LAND SWAP) AND U.S. BANK NATIONAL ASSOCIATION r ?- y ATTACHMENT 1 FISCAL AGENT AGREEMENT 17-5 FISCAL AGENT AGREEMENT by and between CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE -WOODS, VISTAS AND LAND SWAP) and U.S. BANK NATIONAL ASSOCIATION as Fiscal Agent Dated as of July 1, 2013 Relating to: $~X~ City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and-Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013 09960.00000 V 9622 62.2 17-6 TABLE OF CONTENTS Page • ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Agreement .................................................................. ......... 2 Section 1.02. Agreement for Benefit of Bondowners .................................................:. ......... 2 Section 1.03. Definitions .............................................................................................:. ......... 3 ARTICLE II THE BONDS Section 2.01. Principal Amounts; Designations ..............................:............................ ..:...... 9 Section 2.02. Terms of Bonds .........................................:............................................. ....... 10 Section 2.03. Redemption ............................................................................................. ....... 11 Section 2.04. Form of Bonds ........................................................................................ ....... 14 Section 2.05.' Execution of Bonds ................................................................................. ....... 14 Section 2.06. Transfer of Bonds ................................................................................... ....... 14 Section 2.07. Exchange of Bonds ................................................................................. .......15 ' Section 2.08. Bond Register ..............:........................................................................... ....... 15 Section 2.09. Temporary Bonds ...............:......................................................:..:.......... ....... 15 Section 2.1'0. Bonds Mutilated, Lost, Destroyed or Stolen ........................................... ....... 15 Section 2.11. Type and Nature of the Bonds; Limited Obligation ............................... ....... 16 Section 2.12. Equality of Bonds and Pledge of Net Special Tax Revenues ................. .....:. 16 Section 2.13. Description of Bonds; Interest Rates ..........................................:........... ....... 17 Section 2.14. No Acceleration .....................................................................:................ ....... 17 Section 2.15. Additional Bonds .......................................:............................................ ....... 17 Section 2.16. Validity of the Bonds .............................................................................. ....... 17 ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of the Bonds ........................................................ ....... 17 Section 3.02. Application of Proceeds of Sale of the Bonds and Transfers from the Prior Special Tax Bonds ..................................................:...................... ....... 17 _ Section 3.03. Special Tax Fund ................................................................................... ........ 18 Section 3.04. Administrative Expense Fund ................................................................ ........ 20 09960.000OOV962262.Z -I- ~7-7 TABLE OF CONTENTS (continued) Page ARTICLE IV NET SPECIAL TAX REVENUES; BOND FUND Section 4.01. Pledge of Net. Special Tax Revenues ..:........................................................:. 21 Section 4.02. Bond Fund ..................................................................:................................... 21 ARTICLE V OTHER COVENANTS OF THE DISTRICT Section 5.01. Warranty ..................................................................................... ................... 22 Section 5.02. Covenants ..................................:........................:........................ ........:.......:.. 22 Section 5.03. Punctual Payment ........................................................................ ..................: 22 Section 5.04. Limited Obligation ......................................................:............... ................... 22 Section 5.05. Payment of Claims ...................................................................... ..........:........ 22 Section 5.06. Extension of Time for Payment ......................................:........... ................... 23 Section 5.07. Against Encumbrances .....................:................:........................ .................... 23 Section 5.08. Books and Records .................................................................... .................... 23 Section 5.09. Protection of Security and Rights of Owners .....................:....... ................... 23 Section 5.10. Collection of Special Tax Revenues ..............................:............ ................... 23 Section 5.11. Further Assurances ........:.........:...............:..........:.....:................. .:.................. 24 Section 5.12. Tax Covenants .......:.....................:............................................. ........:........... 24 Section 5.13: Covenant to Foreclose.: .......................:........:...........:................. .................... 25 Section 5.14. Annual Reports to CDIAC ......................................................... .................... 26 Section 5.15. Continuing Disclosure to Owners ...............:.....:...........:........:... .................... 26 Section 5.16. Public Access to Facilities ......................:.................................. .................... 26 Section 5.17: Modification of Maximum Authorized Special Tax .................. .................... 26 Section 5.18. Covenant to Defend ................................................................... .................... 26 ARTICLE VI INVESTMEN TS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE DISTRICT Section 6.01. Deposit and Investment of Moneys in Funds: ........................... .................... 27 Section 6.02. Limited Obligation ......................................................:.............. .................... 28 Section 6.03. Liability of District .................................................................... ........:.......:... 28 Section 6.04. Employment of Agents by District or the City ........................... ................... 29 09960.00000\7962262.2 -11- 17-$ TABLE OF CONTENTS (continued) Page ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS Section 7.01. Events of Default .:............................................................................. ...:........ 29 Section 7.02. Remedies of Bond O~vners ................................................................ ............ 30 Section 7.03. Application of Special Taxes and Other Funds After Default ........... ............ 30 Section 7.04. Absolute Obligation of the District .............................:...................... ............ 31 Section 7.05. Termination of Proceedings ....:...............:...................:...................... .,.......... 31 Section 7.06. Remedies Not Exclusive .................................................................... ............ 31 Section 7.07. No Waiver of Default ...........................................................:............. ............ 31 Section 7.08. Actions by Fiscal Agent as Attorney-in-Fact ..................................... ............32 ARTICLE VIII THE FISCAL AGENT Section 8.01. Appointment of Fiscal Agent ............................................................. ............ 32 Section 8.02.. Liability of Fiscal Agent .................:.................................................. ............ 33 Section 8.03. Information ........................................................................................ ............ 34 Section 8.04. Notice to Fiscal Agent ....................................................................... ............ 34 Section 8.05. Compensation, Indemnification ......................................................... ............ 35 ARTICLE IX MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section 9.01. Amendments.Permitted ..................................................................... ............:35 Section 9.02. Owners' Meetings ............................................................................. ............. 36 Section 9.03. Procedure for Amendment with Written Consent of Owners ........... ............. 36 Section 9.04. Disqualified Bonds ................................:............:...........:.................. ............. 37 Section 9.05. Effect of Supplemental Agreement ..........................:........................ ............. 37 Section 9.06. Endorsement or Replacement of Bonds Issued After Amendments . ............. 37 Section 9.07. Amendatory Endorsement of Bonds ................................................. ............. 37 Section 9.08. Notice Require~nent ......................................................:................... ............. 38 ARTICLE X DEFEASANCE Section 10.01 . Defeasance ........................................................................................ .............38 09960.00000\7962262.2 -111- 17-9 TABLE OF CONTENTS (continued) Page ARTICLE XI MISCELLANEOUS Section 11.01. Benefits of Agreement Limited to Parties ..:...................................:..:.. ......... 39 Section 11.02. Cancellation of Bonds ..............:............................................:............... .........39 Section 11.03. Successor is Deemed Included in All References to Predecessor ......... ........ 40 Section 11.04. Execution of Documents and Proof of Ownership by Owners ............. ......... 40 Section 11.05. Waiver of Personal Liability ................................................................. ......... 40 Section 11.06. Notices to and Demands on District and Fiscal Agent ......................... ......... 40 Section 11.07. Partial Invalidity ...................................................................................: .......:. 41 Section 11.08. Unclaimed Moneys :.....:.......................................................................: .........41 Section 11.09. Provisions Constitute Contract ............................................................. ......... 41 Section 11.10. Future Contracts .................................................................................... ......... 42 Section 11.11. Further Assurances ................................................................................ ......... 42 Section 11.12. Applicable Law ..................................................................................... ......... 42 Section 11.13. Conflict with Act ................................................................................... ......... 42 Section 11.14. Conclusive Evidence of Regularity ...................................................... ......... 42 Section 11.15. Payment on Business Day ..................................................................... ......... 42 Section 11.16. Counterparts .......................................................................................... ......... 42 EXHIBIT A FO RM OF BOND ...........................................................:............:................. .......A-1 EXHIBIT B PERMITTED INVESTMENTS ..................................................................... ....... B-1 09960.00000\7962262.2 -1V- 17-10 FISCAL AGENT AGREEMENT THIS FISCAL AGENT AGREEMENT (the "Agreement") is made and entered into as of July 1, 2013, by and between the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Wood's, Vistas and Zand Swap) (the "District"), a community facilities district, organized and existing under and by virtue of the laws of the State of California, and U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America, as fiscal agent (the ``Fiscal Agent"). WIT[VESSETK WHEREAS, the City Council of the City of Chula Vista (the "City") has formed the District and designated Improvement Area A therzin under the provisions of the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 of seq. of the California Government Code) (the "Act") and Resolution No. 99-5332 of the City Council adopted on November 9, 1999; WHEREAS, on November 12, 2002, the City Council adopted Resolution No. 2002-446 (the."Resolution") authorizing the issuance and sale of bonds for the District pursuant to the Bond Indenture, dated as of December 1, 2002, by and between the District and Union Bank of California, N.A., as fiscal agent (the "Prior Bond Indenture"), designated "City of Chula Vista Community Facilities District No. 06-I (Eastlake- - Woods, Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds" (the "Prior Special Tax Bonds"), for the purpose of funding the acquisition, rehabilitation and construction of certain public improvements constituting the Project (as such term is defined in the Prior Bond Indenture). within Improvement Area A of the District; , . WHEREAS, on December 1`6, 2002, the Prior Special Tax Bonds in the principal. amount of $39,000, 000 were issued; WHEREAS, on July 9, 2013, the City Council adopted Resolution No. 2013 - (the "Resolution") (a) authorizing the issuance and sale of bonds-of the District pursuant to a Fiscal Agent Agreement, dated as of July 1, 2013 (the "Fiscal Agent Agreement"), by and between the District and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent") designated "City of Chula Vista Community Facilities District No. 06-I Improvement Area A Special Tax Refunding Bonds, Series 2013" (the "Bonds"), for the purpose of financing the defeasance and refunding of the Prior Special Tax Bonds; WHEREAS, it is in the public interest and for the benefit of the City, the District, the persons responsible for the payment of special taxes and the owners of the Bonds that the District enter into this Agreement to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds, and the administration and payment of the Bonds; 09960.00000\7962262.2 ~7-~~ WHEREAS, all things necessary to cause the Bonds, when authenticated by the Fiscal Agent and issued as provided in the Act, the Resolution and' this Agreement, to be legal, valid and, binding and limited obligations in accordance with their terms, and all things necessary to cause the creation, authorization, execution. and delivery of this Agreement and the creation, authorization, execution and issuance of the Bonds, subject to the terms hereof,. have in all respects been duly authorized; ", NOW, THEREFORE, that in order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under this Agreement, according to their tenor, and to secure .the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other valuable considerations; the receipt of which is hereby acknowledged, the District does hereby covenant and:agree with the Fiscal Agent, for the benefit of the respective holders from time to time of the Bonds, as follows: ARTICLE I STATUTORY AUTHORITY AND DEFINITIONS Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Act and the Resolution. ' Section 1.02. Agreement for Benefit of Bondowners. The provisions, covenants and agreements Herein set forth to be performed by or on behalf of the City and the District shall be for the equal benefit, protection, and security of the Owners from time to time. In consideration of the acceptance of the Bonds by the Owners thereof, this Agreement shall be deemed to be and shall constitute a contract between the District and the Owners; and the covenants and agreements herein set forth to be performed by the District shall be for the equal and proportionate benefit, security, and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution, or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein: All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the Owner of any of the Bonds in its own or.any other capacity with the same rights it would have if it were not Fiscal Agent.. Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes ofthis Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All capitalized terms not otherwise defined herein shall have the meanings given to 2 09960.000OOV9622622 ~~-12 such terms in the Authority- Indenture. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words "herein," "hereof," ``hereunder" and other words of similar import refer• to' this • Agreement as a whole and not to any particular Article, Section or subdivision hereof. , "Act" means the Mello-Roos Community Facilities Act of 1982, as amended,• being Sections 53311 et seq. of the California Government Code. . - .p "Administrative Expense Fund" means the fund by that name established by Section 3.04A hereof "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal Agent (including the fees and expenses of its counsel), the expenses of the City or the .District in carrying out; its duties hereunder (including, but not limited to, the levying and, collection of the Special Taxes, including collection of delinquent Special Taxes through judicial 'foreclosure proceedings; complying with the disclosure provisions of the Act, the Continuing Disclosure Agreement and this Agreement, including those related to public inquiries regarding , the Special Tax and disclosures to Bondowners and the Original Purchaser); the costs of the City and the District or their designees related to an appeal of the Special Tax; the Proportionate Share of the Authority Administrative Expenses allocable to the Bonds; fees and ,the Proportionate Share of the salaries of City staff.directly related to.the carrying out by the City, for and on behalf of the District, of the obligations hereunder or under the Authority Indenture and a proportionate amount of City general administrative overhead related thereto allocable to the Bonds; and all other costs and expenses of the ..City, the District, and the Fiscal Agent incurred in connection with the discharge of their respective duties hereunder, and in the case of the City, in any way related to the administration of the District and all actual costs and expenses incurred in'connection with the administration of the Bonds. "Administrative Expense Requirement" means an annual amount equal to $75,000.00, or such lesser amount as may be designated by written instruction from an Authorized Officer of the District to be allocated as the first priority of Special Taxes received each Fiscal Year for the payment of Administrative Expenses allocated.to the Bonds. - ~ - "Agreement" means this Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement adopted pursuant to the provisions hereof. "Annual Debt Service" means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, and (ii) the principal amount of the _Outstanding Bonds scheduled to be paid in such Bond Year. "Auditor" means the auditor/tax collector of the County of San Diego. "Authority" means the Chula Vista Municipal Financing Authority and any successor thereto. 3 09960.00000A79622622 17-13 "Authority Bonds" means ariy bonds outstanding under the Authority Indenture, which are secured by payments to be made on the Bonds. "Authority Indenture" means that certain Indenture of Trust, dated as of July 1, 2013, by and between the Authority and the Authority Trustee, pursuant to which the Authority Bonds are issued. "Authority Trustee" means U.S. Bank National Association, or any successor thereto appointed under the Authority Indenture. "Authorized Officer" means the City Manager, Director of Finance, Assistant Director of Fihance, or City Clerk of.the City, or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer. - - "Bond Counsel"' means (i) Best Best & Krieger LLP; or (ii) any attorney or firm o£ attorneys acceptable to the District and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities: "Bond Fund" means the fund by that name established by Section 4.02A hereof. "Bond Yeaz" means the one-year period beginning on September .2 in each year and ending on September 1 in the following yeaz except thatthe first Bond Year shall begin on the Closing Date and end on September 1, 2013. "Bonds" means the City of Chula Vista Community Facilities District No. 06-I, (Eastlake - Woods, Vistas and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013, authorized by, and at any time Outstanding pursuant hereto. "Business Day" means a day which is not a Saturday, Sunday, or legal holiday on which banking institutions in the State of California, or in any state in which the Principal Office of the Fiscal Agent is located, or the New York Stock Exchange are closed. If any payment hereunder is due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day with the same effect as if made on such previous day. `"CDIAC" means the California Debt and Investment Advisory•Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto. "City" means the City of Chula Vista, California. "Closing Date" means the date upori which there is a physical delivery of the Bonds in exchange for the amount representing the purchase price of the Bonds by the Original Purchaser. ``Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, 04960.00000\7962262.2 17-14 temporary. and final regulations promulgated, and applicable official public guidance published, under the Code. "Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreementselating to the Authority Bonds, executed on the Closing Date by the District on behalf of the Authority, as originally executed and as it may be amended from time to time in accordance with the terms thereof. "County" means the County of San Diego, California. "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled daring such period which relate to principal which has been retired before the beginning of such period. "Defeasance Obligations" means those obligations described in paragraph A. of the definition of Permitted Investments and which are non-callable: "District" means the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap), formed pursuant to the Resolution of Formation. "DTC" means The Depository Tmst Company. "Escrow Bank" means U.S. Bank National Association, acting as escrow bank under the Escrow Agreement. "Escrow Agreement" means that Escrow Deposit and Trust Agreement dated as of July I, 2013 by and between the District and the Escrow Bank relating to defeasance of the Prior Special Tax Bonds. "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code; (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifcally negotiated interest rate (for example; a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code; (iii) the investment is a United States Treasury Security.-State and Local Government Series that is acquired in accordance' with applicable regulations of the United States Bureau of Public Debt; or (iv) any commingled investment fund in which the City and related parties do not own more than a'ten percent (1-0%} beneficial interest therein if the return paid by the fund is without regard to the source of the investment. 5 09960.00000\7962262.2 - , 17-15 "Fiscal Agent" means the Fiscal -Agent appointed by the District and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns; and any other corporation or association which may at any time be substituted in its place, as provided in Section 8.01. ' "Fiscal Year" means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive. "Governing Body" means the City Council of the City, acting as the legislative body of the District. "Improvement Area" means Improvement Area A of the District. ``Independent Accountant" means any nationally recognized- firm of certified public accountants or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State; appointed by the City, and who, or each of whom: (1) is in fact independent and not under domination of the Authority, the City or the Community Facilities District; (2) does not have any .substantial interest, direct or indirect, with the Authority, the City or the Community Facilities District; and (3) is not connected with the Authority, the City or the Community Facilities District as an officer or employee of the Authority, the City or the Community Facilities District, but who may be regularly retained to make reports to the Authority, the City or the Community Facilities District. "Independent Financial Consultant" means any financial consultant or firm of such financial consultants appointed by the Authority and who, or each of whom: (a) is judged by the City to have experience with respect to the financing of public capital improvement projects; (b) is in fact independent and not under the domination of the Authority, the City, or the Community Facilities District; (c) does not have any substantial interest, direct or indirect, with the Authority, the City, or the Community Facilities District; and (d) is not connected with the Authority, the City, or the Community Facilities District as an officer or employee of the Authority, the City, or the Community Facilities District, but who may be regularly retained to make reports to the Authority, the City, or the Community Facilities District. "Interest Payment Dates" means March.l and September 1 of each year, commencing September 1, 2013. 6 09960.00000\7962262.2 ~7-~6 "Investment Earnings'' means all interest earned and any gains and losses on the investment of moneys in any fund or account created by this Agreement. ``Net Special Tax Revenues" means, for each Fiscal Year, all Special Tax Revenues received by the District less an amount equal to the Administrative Expense Requirement. "Officer's Certificate" means a written certificate of the District or the City signed by an Authorized Officer of the City. ``Ordinance". means an ordinance of the City levying the Special Taxes, including Ordinance No. 2881, adopted by the Governing Body on October 22, 2002. "Original Purchaser"-means the Authority. "Outstanding," means (subject to the provisions of Section 9.04), when used as of any particular time with reference to Bonds, all Bonds except: (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of Section 10.01; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued, and delivered by the District pursuant to this Agreement or any Supplemental Agreement. "Owner" or "Bondowner" means any person who shall be the registered owner. of any Outstanding Bond. "Permitted Investments" means any of the investments listed in Exhibit B hereto. ' ``Person" means an individual, corporation, firm, association; partnership, trust, or other legal entity or group of entities, including a .governmental entity or any, agency or political subdivision thereof. "Prepayments" means Special Tax Revenues identified to the Fiscal Agent by an Authorized Officer as representing a.prepayment of the Special Tax pursuant to the RMA. "Priricipal Office" means the principal corporate trust office of the Fiscal Agent as may be designated from time to time by the Fiscal Agent in writing to the District initially set forth in Section 11.06 hereof. "Prior Bond Indenture" means the Fiscal Agent Agreement, dated as of December 1, 2002, by and between the District and the Prior Fiscal Agent. "Prior Fiscal Agent" means U.S. Bank National Association. "Prior Special Tax Bonds" means the outstanding City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds. ' 09960.00000A79622622 ~7-~7 "Proportionate Share" shall'have the meaning given such term in the Authority Indenture. "Record Date" means the fifteenth day of the month next preceding the month of the applicable Interest Payment Date, whether or not such day is a Business Day. "Resolutiorr of Formation" means Resolution No. 2002-361, adopted by the Governing Body on September 10, 2002, as now in effect or as it may hereafter be amended from time to time. "Resolution of Issuance" means Resolution No. 2013- ,adopted by the Governing Body, acting as the legislative body of the District, on July 9, 2013. ' "RMA" means the Rate and Method of Apportionment of the Special Tax for Improvement Area A approved by the qualified electors within the District at a special election held on September~l7, 2002. "Special Tax Furid" means the fund by that name established by Section 3.03A hereof. "Special Tax Refunding Bonds" shall have the meaning given such term in the Authority Indenture. "Special Tax Refunding Bonds Prepayment Reserve Fund Credit", shall have the meaning given such term in the Authority Indenture. "Special Tax Revenues" means the proceeds of the Special Taxes received by the District including any scheduled payments and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of. said lien and interest and penalties thereon. "Special Taxes" means the special taxes levied within Improvement Area A of the District pursuant to the, Act, the RMA, the Ordinance, and this Agreement. "Supplemental Agreement" means an agreement the execution of which is authorized by a resolution which has been duly adopted by the Governing Body under the Act and which agreement is amendatory of or supplemental to this Agreement, but only if and to the, extent that such agreement is specifically authorized hereunder. "Treasurer" means the person who is acting in the capacity as treasurer or finance director to the City or the designee of either such officer. ARTICLE II THE BONDS Section 2.01. Principal Amounts; Designations. Bonds in the aggregate principal amount of One Million Dollars ($[x].00) are hereby authorized to be issued by the District under s 09960.00000\7962262.2 17-18 - and subject to the°terms of the Resolution of Issuance and.this Agreement, the Act and other applicable laws of the State of California: The Bonds shall be designated "City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods, Vistas and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013." This Agreement constitutes a continuing agreement of_the District with the Owners from time to time of the Bonds to secure the full payment of the principal of, premium, if any, and interest on all such Bonds subject to the covenants, provisions, and conditions herein contained. Section 2.02. Terms of Bonds. A. Form; Denominations. The Bonds shall be issued as fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof; provided, however, one Bond from each maturity may be in an amount other than $5,000 or an integral multiple thereof.. The Bonds shall be lettered and, numbered in- a customary manner as determined by the Fiscal Agent. B. ~ Date of the Bonds. The Bonds shall be dated the Closing Date. C. Maturities, Interest Rates. The Bonds shall mature on the dates and' shall bear interest at the rates as follows: Maturity Date Principal (September I) Amount Coupon 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 9 09960.00000A7962262.2 17-19 D. Interest. The Bonds shall bear interest on each Interest Payment Date at the rates set forth above. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication; or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (iii) it is authenticated prior to the Record Date preceding the fast Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. E. Method of Payment. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable on the Interest Payment Date or on the next Business Day following the Interest Payment Date, if such Interest. Payment Date is not a Business Day, by immediately available funds, so long as the Bonds are owned by the Authority, or by check or draft of the Fiscal Agent sent by first class mail, postage pre-paid to the registered Owner thereof at such registered Owner's address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the Record Date preceding the Interest Payment Date, or by wire transfer made on such Interest Payment Date upon instructions of any Owner of $[x] or more in aggregate principal amount of Bonds. The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent. All Bonds paid by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the canceled Bonds and issue a certificate of destruction thereof to the District. Section 2.03. Redemption. A. Optional Redemntion. The Bonds maturing on or after September '1, 20 may be redeemed at the option of the District from any source of funds other than prepayment of Special Taxes, prior to their stated maturity, as a whole or in part (in integral multiples of $5,000) on any date on or after September 1, 20 ,from such maturities as are selected by the District, and by lot within a maturity, at a redemption price equal to the principal amount of the Bonds or portions thereof to be redeemed, together with accrued interest thereon to the date fixed for redemption. Notwithstanding the above, any such optional redemption of the Bonds shall occur only if the District shall first deliver to the Fiscal Agent and the Authority Trustee a certificate of an Independent Financial Consultant verifying that, following such redemption of the Bonds, the principal and interest due on the outstanding Special Tax Refunding Bonds is adequate to make 10 09960.00000 V 962262.2 77-20 the timely payment of principal, including mandatory sinking fund payments, and interest due on the Authority Bonds that will remain outstanding following the corresponding redemption of the Authority Bonds resulting from such optional redemption of the Bonds. B. Mandatory Redemption from the Prepavment of Special Taxes. The Bonds shall be subject to redemption on any Interest Payment Date, cormnencing March 1, 2014, prior to maturity, as a whole or in part from such maturities, as are selected by the District, from the prepayment of Special Taxes at the following redemption prices {expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: , Redemption Date Redemption Price March 1, 2014 through March 1, 20 10 September 1,.20_ and March 1, 20 10-% September 1, 20 and March 1, 20_ - 10 September 1, 20 and any Interest 100% Payment Date thereafter Notwithstanding the above, such mandatory redemption of the Bonds in whole or in part shall occur only if the District shall first deliver to the Fiscal Agent and the Authority Trustee a certificate of an Independent Financial Consultant verifying that, following such redemption of the Bonds, the principal' and interest due on the outstanding Special Tax Refunding Bonds is adequate to make the timely payment of principal, including mandatory sinking fund payments, and interest due on the Authority Bonds that will remain outstanding following the corresponding redemption of the Authority Bonds resulting from such mandatory redemption of the Bonds. C. Purchase In Lieu of Redemption. In lieu of redemption under Section 2.03A or 2.03B, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer's Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer's Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to -the date of purchase, unless a greater purchase price is permitted under the Act and the District determines that it will have sufficient amounts in the Bond Fund, following such purchase, to pay Debt Service on the Bonds. D. Notice to Fiscal Agent. The District shall give the Fiscal Agent written notice of its intention to redeem Bonds pursuant to Section 2.03A or 2.03B not less than-sixty (60), days prior to the applicable redemption date, unless such notice shall be waived by the Fiscal Agent, unless the Fiscal Agent agrees to a shorter period. E. Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least thirty (30) days but not more than sixty (60) days prior to the date fixed for redemption, to the respective .registered 11 09960.00000A79622622 17-21 Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds. Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the Bond numbers of the Bonds to be redeemed by giving the individual Bond'number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date. The cost of mailing any such redemption notice and any expenses incurred by the Fiscal Agent in connection therewith shall be paid by the District. Any notice of optional redemption of the Bonds delivered in accordance with this Section 2.03 may be conditional and if any condition stated in the notice of redemption shall not have been satisfied on or prior to the redemption date, said notice shall be of no force and effect and' the District shall not be required to redeem such Bonds and the redemption shall not be made and' the Fiscal Agent shall within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were'not- met and that the redemption was cancelled. The District may rescind any optional redemption and notice thereof for any reason. on any date on or prior to the date fixed for redemption by causing written notice of the rescission to be given to the owners of the Bonds so called for redemption. Any optional redemption and notice thereof shall be rescinded if for any reason on the date fixed for redemption moneys are not available in the Bond Fund or otherwise' held in trust for such purpose in an amount sufficient to pay in full on said date the principal of, interest, and any premium due on the Bonds called for redemption. Notice of rescission of redemption shall be given in the same manner in which notice of redemption was originally given. The actual receipt by the owner of any Bohd of notice of such rescission shall not be a condition precedent to rescission, and failure to receive such notice or any defect in such notice shall not affect the validity of the rescission. Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the Bond number identifying, by issue and maturity, the' Bonds being redeemed with the proceeds of such check of other transfer. j Whenever provision is made in this Agreement for the redemption of less than all of the Bond's or any given portion thereof the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof not previously called for redemption, amorig maturities as specified by the District in a written certificate delivered to the Fiscal Agent, and by lot within 12 09960.00000\7962262.2 17-22 a maturity in any manner which the District in its sole discretion shall deem appropriate and fair. In providing-such certificate, the District shall provide for the redemption of Bonds such that the remaining Debt Service payable on the Bonds shall remain level as possible. Upon surrender of Bonds redeemed in part only, the District shall execute and the Fiscal Agent shall authenticate arid deliver to the registered Owner, at the expense of the District, a new Bond or Bonds, of the same Series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds. F. Effect of Redemption. From and after the~date fixed for redemption, if funds available for the paymerit of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund, such Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice. All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. .The Fiscal Agent shall destroy the canceled Bonds and, upon written request of the District, issue a certificate of destruction thereof to the District. Section 2.04. Form of Bonds. The Bonds, the form of Fiscal Agents certificate of authentication and the form of assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement, the Resolution, and the Act. The Bonds of any other Series and the form of the certificate of authentication and assignment to appear thereon shall be in such form or forms as maybe specified in the Supplemental Agreement creating such Series of Bonds. Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the District by the manual or facsimile signatures of the Mayor and City Clerk, who are in office on the date of adoption of this Agreement or at any time thereafter. The Bonds shall then be delivered- to the Fiscal Agent for authentication. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the Owner. Any Bond may be signed and ,attested on behalf of the District by such ' persons as at the actiral date of the execution of such Bond shall be the proper officers of the District although at the nominal date of such Bond any such person shall not have been such officer of the District. Only;such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to .the benefits- of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered hereunder have been duly authenticated, registered and delivered hereunder and aze entitled to the benefits of this Agreement. 13 09960.00000\7962262.2 17-23 Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 by the person in whose name it is registered, in person or by his duly authorized attorney; upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. The cost for 'any services' rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the District.- The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Bond or Bonds shall be surrendered for transfer, the District shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount. ' ( No transfers of Bonds shall be required to be made (i) fifteen (13) days prior to the'date 1 established by the Fiscal Agent for selection of Bonds for redemption; (ii) with respect to a""Bond ' after such Bond has been selected for redemption; or (iii) between the 15th day of the month next i preceding any Interest Payment Date and such Interest Payment Date. i Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the District. The Fiscal Agent shall ~ collect from the Owner requesting such exchange any tax or other governmental charge required ~ to be paid with respect to such exchange. No exchanges of Bonds shall be required to be made (i) fifteen (15) days prior to the date i established by the Fiscal Agent for selection of Bonds for redemption; (ii) with respect to a Bond after such Bond has been selected for redemption; or (iii) between the 15th day of the month next i preceding any Interest Payment Date ahd such Interest Payment Date. ' 'Section 2.08. Bond Register. The Fiscal Agent will keep or cause to be kept, at its Principal Office sufficient books for the registration and transfer of the Bonds which books shall show the number; date,' amount, rate of interest and last known Owner of each Bond and shall at all times be open to inspection by the District or"the City during regular business hours upon reasonable notice; and, upon presentation for such purpose; the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided. The District and the Fiscal Agent will treat the Owner of any Bond whose name appears on the •Bond register as the absolute Owner of such Bond for any and all purposes, and the District and the Fiscal Agent shall not be affected by any notice to the contrary. The District and the Fiscal Agent may rely on the address of the Bond Owner as it appears in the Bond register for any and all purposes. 14 09960.00000A9962262.2 17-24 Section 2.09. Temporary Bonds. The Bond's may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery.. The temporary Bonds may be .printed,.. lithographed or typewritten, .shall be of such authorized denominations as may be determined by the District, and may contain such reference to any of the provisions of this Agreement as may be appropriate. Every temporary Bond shall be executed by the District upon the same conditions and in substantially the same manner as the definitive Bonds..If the District issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation; in exchange for the definitive Bonds " at "the Principal Office of the Fiscal Agent or at such other location as, the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary _ Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations: -Until so exchanged, the temporary bonds shall be entitled to the same benefits. under this Agreement as definitive Bonds authenticated and delivered hereunder: _ _ Section 2.10. Bonds Mntilated, Lost, Destroyed or Stolen. Tf any Bond shall become . ~ mutilated, the District, at the expense of the Owner of said Bond, shall execute, and the Fiscal Agent shall authenticate and' deliver, a new Bond of like tenor and principal amount in exchange and substitution 'for the Bond so mutilated, but only upon surtender to the Fiscal Agent of the _ ~_: Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agentshall be canceled by it and destroyed by the Fiscal Agent, who shall deliver a certificate of destruction thereof to ' - ~ the District. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or ' `_theft,may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity for the District and the Fiscal Agent satisfactory to the Fiscal Agent shall be given, the District, at the expense of the Owner, shall execute, and the Fiscal Agent, shall authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The District may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under.this Section and of the•expenses which may be incurred by the District and the Fiscal Agent for the preparation, execution, authentication and - delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost; destroyed or stolen shall constitute an original additional contractual obligation on•the part of the District whether or not the Bond so alleged to be lost, destroyed or stolen is aY any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement. ' Section 2.l 1. Type and Nature of the Bonds; Limited Obligation. Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof other than the District is pledged to the payment of .the Bonds. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds. The Bonds are mot general or .special obligations of the City nor general obligations of the District but are limited obligations of the District payable solely from Net Special Tax Revenues. The District's limited obligation to pay the principal of, premium, if any, and interest on the Bonds from the Net Special Tax Revenues is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds may compel the exercise of the taxing power by the District (except as it pertains to the Special Taxes) or the City or the 15 ~" '09960.OOOOOV9622622 . 17-25 forfeiture of any of their property. The principal of and interest on the Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions'exceptthe District within the meaning of any constitutional or statuto"ry limitation or restriction. The Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District's property, or upon any of its income, receipts or revenues, except the Net Special Tax Revenues and amounts on'deposit in the Special Tax Fund and tke Bond Fund to the extent pledged hereunder which are, under the terms of this Agreement and the Act, set aside for the payment of the Bonds and interest thereon and neither the members of the legislative body of the District nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. Section 2.12. Equality of Bonds and Pledge of Net Special Tax Revenues. Pursuant to the Act and this Agreement, the Bonds shall be equally payable from the Net Special. Tax Revenues and other amounts in the Special Tax Fund without priority for number, date of the Bonds,-date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net Special Tax Revenues and certain other amounts in the Special Tax Fund, which are hereby set aside for the payment of the Bonds. Amounts in the Special Tax Fund shall constitute a trust fund held"for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and so long as any of the Bonds or interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by this Agreement. Nothing in this Fiscal Agent Agreement shall preclude, subject to 'the limitations contained hereunder, the redemption prior to maturity of any Bonds subject to call and redemption and payment of said Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California, which shall be payable from-Net Special Tax Revenues. . Sectiort 2.13. Description of Bonds; Interest Rates. The Bonds shall be issued in fully registered form in any denomination. The Bonds shall be numbered as desired by the Fiscal Agent. . Section 2.14. No Acceleration. The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section shall in any way prohibit the prepayment or redemption of Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of this Agreement under Section 10.01 hereof. Section 2.15'. Additional Bonds. Other than for the purpose of refunding the Bonds, no additional bonds entitled to a lien on the Net Special Tax Revenues shall be issued hereunder. ~, Section 2.16. Validity of the Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any defect in any proceedings taken by the District for the issuance and sale of the Bonds and the recital contained in the Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be con_ elusive evidence of their validity and the regularity of their issuance. 16 09960.000OOV9622622 ~~-26 ARTICLE III ISSUANCE OF BONDS Section 3.01. Issuance and Delivery of the Bonds. At any time after the execution of this Agreement, the District may issue the Bonds in the aggregate principal amount set forth in Section 2.01 and deliver the Bonds to the Original Purchaser. The Authorized Officers of the District are hereby authorized and directed to deliver any and all documents and instrtupents necessary to cause the issuance of the Bonds in accordance with the provisions of the Act, the Resolution and this Agreement and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser, upon payment of the purchase price for the Bonds. Section 3.02. Application of Proceeds of Sale of the Bonds and Transfers from the Prior Special Tax Bonds. The proceeds of the purchase of the Bonds by the Original Purchaser (being $ equal to the par amount of $[x].00 [plus the net original issue premium of $ / minus net original issue discount of $ ~ minus the Original Purchaser's discount of $ shall be paid to the Fiscal Agent, who shall forthwith set aside, pay over and transfer such proceeds on the'Closing Date as follows: $ shall be transferred to the Escrow Bank for deposit into the Escrow Fund held by the Escrow Bank under the Escrow Agreement; $ shall be transferred to the Authority Trustee for deposit into the Reserve Fund held trader the Authority Indenture; and $ shall be transferred. to the Authority Trustee for deposit into the Costs of Issuance Fund held under the Authority Indenture. On the Closing Date the following funds on deposit in funds and accounts established pursuant to the Prior Bond Indenture shall be transferred by the Prior Fiscal Agent to the Fiscal Agent, who shall forthwith deposit such proceeds on such Closing Date as follows: $ - shall be deposited in the Bond Fund; $ shall be deposited in the Administrative Expense Fund.. Section 3.03. Special Tax Fund. A. Establishment of Special Tax Fund. There is hereby established as a-separate fund to be held by the Fiscal Agent; the "Special Tax Fund," to the credit of which the District or the City, on behalf of the District, shall deposit, immediately upon receipt, all Special Tax Revenue received .by the District or the City, on behalf of the District, except Special Tax Revenues representing Prepayments which shall be deposited in the Prepayment Account. Moneys in the Special Tax Fund shall be held by the Fiscal Agent for the benefit of the District 17 09960.00000A7962262.2 ~~-27 and the Owners of the Bonds, shall be disbursed as provided below and, pending any disbursement, shall be subject to a lien in favor of the Owners of the Bonds. B. Disbursements of Special Tax Revenues. The Special Tax Revenues deposited in the Special Tax Fund shall be held and, other than Special Tax Revenues representing Prepayments, subsequently transferXed to the following funds and accounts not later than the dates and ih the amounts set forth in the following paragraphs and in the following order of priority: 1. to the Administrative Expense Fund -an amount equal to the Administrative,Expense Requirement estimated to be due and payable during the Fiscal Year; 2. not later than ten (10) Business Days prior to each Interest Payment Date, to the Bond Fund: . a. the amount representing past due installments of principal, interest and premium on the Bonds (including any interest thereon pursuant to the second sentence of the second paragraph of Section 4.02B), if any, resulting from, the delinquency in the payment of such Special Taxes; and b. an amount, taking into account any amounts then on deposit in the Bond Fund (other than by reason of the preceding paragraph a.) such that the amount in the Bond Fund equals the principal, premium, if any, and interest due on the Bonds on the next Interest Payment Date; 3. no later than ten (10) Business Days prior to each Interest Payment Date, to the Authority Trustee for deposit in the Reserve Fund that amount, iri addition to the amount transferred to the Bond Fund pursuant to paragraph 2.a. above, necessary to replenish any draw on the Reserve Fund (as defined in the Authority Indenture) resulting from the delinquency in the payment of scheduled debt service on the Bonds; 4. on September 2 of each year after making the deposits and transfers required under paragraphs 1 and 2 above and the transfer, if any, authorized under paragraph 3 above, upon receipt on or before the preceding 'June 30 of written instructions from an Authorized Officer, to the Authority Trustee the amount specified in such written instructions necessary for the payment of the Proportionate Share of any rebate amount due and owing to the United States of America by the Authority on the Authority Bonds; 5. on September 2 of each year after making the .deposits and transfers required under, paragraphs 1 through 4 above, upon receipt of written instructions from an Authorized Officer; to the Administrative Expense Fund the amount specified in such written instructions necessary for payment of the estimated Administrative Expenses projected to be due and payable in the current Fiscal Year or the reimbursement of any Administrative Expenses incurred during the Fiscal Year ending on June 30 of prior Fiscal Year and not included iii any prior transfer made pursuant to paragraph 1 above; and 18 09960.00000A7962262.2 17-28 6. .after September 2 of each year, after making the deposits and transfers .made pursuant to paragraphs 1 through 5 above, moneys then on deposit in the Special Tax Fund shall remain therein and shall be subsequently deposited or transferred-pursuant to the provisions ``~° of paragraphs 1 through 5 above. C. " Transfer of Prepayments. Amounts constituting Prepayments shall be transferred by the Treasurer to the Fiscal Agent, and placed by the Fiscal Agent in a segregated account within the Bond Fund designated as "Prepayment Account" and used"to redeem Bonds pursuant to paragraph 2 of Section 2.03B. Any such transfer of Prepayments shall be accompanied by written instructions executed by the Treasurer or an Authorized Officer. directing the Fiscal Agent to place such Prepayments in the Prepayment Account, specifying the amount of the " applicable Special Tax Refunding Bonds Prepayment Reserve Fund Credit and requesting that the Authority direct the Authority Trustee to transfer such credit to the Fiscal Agent for deposit in the Prepayment Account. D. Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and - deposit shall be retained in the Special Tax Fund to be used for the purposes.thereof. Section 3.04. Administrative Expense Fund. A. Establishment of Administrative Expense Fund. There is hereby established, as a separate fund to be held by the Fiscal Agent, the "Administrative Expense Fund," and within the Administrative Expense Fund, the "Administrative Defense Account," to the credit of which deposits shall be made as required by Sections 3.02 or 3.03B hereof. Moneys in the Administrative Expense Fund shall be held by the Fiscal Agerit for the benefit of the City, the District and the Authority, and shall be disbursed as provided below. B. ' Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Fiscal Agent and paid to the City or its order upon receipt by the Fiscal Agent of an Officer's Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense and the nature of such expense. Amounts on deposit in the Administrative Expense Fund at the end of any Fiscal Year shall be retained in such fund as ari operating reserve and shall be disbursed as provided for in this paragraph B. C. Investment. Moneys in the Administrative Expense Fund"shall be invested and deposited in accordance with Section 6.01 hereof. Investment earnings on moneys in the Administrative Expense Fund shall be retained by the Fiscal Agent in the Administrative Expense Fund and used for the payment of Administrative Expenses. 19 09960.00000\79622622 ~~-29 ARTICLE IV NET SPECIAL TAX REVENUES; BOND FUND Section 4.01. Pledge of Net Special Tax Revenues. The Bonds shall be secured by a first pledge (which pledge shall'be effected in the manner and to the extent hereimprovided)'of all of the Net, Special Tax Revenues and all moneys deposited in the Bond Fund and, until disbursed as provided herein, in the Special Tax Fund. The Net Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided herein) are hereby dedicated to the payment of the principal of, and interest and any premium on, the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or until moneys or Defeasance Obligations have been set aside irrevocably for that purpose in accordance with Section 10.01. Section 4.02. Bond Fund. A: Establishment of Bond Fund. There is hereby established as a separate fund to be held by the Fiscal Agent for the "Bond Fund" and, within the Bond Fund, the "Prepayment Account" to the credit ofwhich deposits shall'be made as required by Section 3.02; paragraph 2 of Section 3:03B. and by Section 3.03C., and any other amounts required to be deposited therein by this Agreement or the Act. In addition to the foregoing deposits, the Fiscal Agent shall also deposit (a) the Special Tax Refunding Bonds Prepayment Reserve Fund Credit in the Prepayment Account of the Bond Fund upon receipt from the Authority Trustee and (b) amounts received from the District together with written instructions to utilize such amounts to optionally call the Bonds or a portion of the Bonds pursuant to Section 2.03.A. Moneys in the Bond Fund shall be held by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium'on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds. B. Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds, including any amounts due under Section 2.03A. hereof; provided, however, that available amounts in•the Borid Fund shall first be used to pay to the Owners of the Bonds any past due installments of interest, principal (including mandatory sinking payments) of and premium, if any, on the Bonds, in that order. Amounts transferred to the Bond Fund from the Special Tax Fund pursuant to paragraph 2.a. of Section 3.03B. shall immediately be paid to the Owners of the Bonds in respect of past due payments on the Bonds, and amounts transferred to the Prepayment Account pursuant to Section 3.03C. shall be used to redeem Bonds pursuant fo paragraph B. of Section 2.03B. If after the foregoing transfers, there aze insufficient funds in the Bond Fund to make the payments provided for in the first sentence of this Section 4.02B., the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal and any mandatory sinking payments due on the Bonds. Any installment of principal (including mandatory sinking payments), premium, if any, or interest on the Bonds which is not paid when 20 09960.00000\7962262.2 17-30 due shall accrue interest at the rate of interest on the Bonds until' paid, and shall be paid whenever funds in the Bond Fund are sufficient therefor. If at any time the Fiscal Agent fails to pay principal and interest due on any scheduled payment date for the Bonds, the Fiscal Agent shall notify the District and the Treasurer in writing of such failure, and the Treasurer shall notify the California Debt and Investment Advisory Commission of such failure within 10 days of the failure to make such payment,. as required by Section 53359(c)(1) of the Act. C. Investment. Moneys in the Bond Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from the investment and deposit of amounts in the Bond Fund shall be retained in the Bond Fund. ARTICLE V OTHER COVENANTS OF THE DISTRICT Section 5.01. Warranty. The District shall preserve and protect the security pledged hereunder to the Bonds against all claims and demands of all persons. Section 5.02. Covenants. So long as any of the Bonds issued hereunder axe Outstanding and unpaid, the District makes the covenants set forth herein below in this Article V with the Bondowners' under the provisions of the Act and this Fiscal Agent Agreement (to be performed by the District or the City, acting for and on behalf of the District, or its proper. officers, agents and employees), which are covenants necessary and desirable to secure the Bonds and tend to make the Bonds more marketable; provided, however, that such covenants do not require the District to expend any funds or moneys other than the Net Special Tax Revenues. Section 5.03. Punctual Payment. The District shall punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Agreement and any Supplemental Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds. Section 5.04. Limited Obligation. The Bonds are limited obligations of the District and are payable solely from and secured solely by the Net Special Tax Revenues and the amounts in the Bond Fund and the Special Tax Fund created hereunder. Section 5.05.. Payment of Claims. The District will pay and discharge any and all ' lawful claims for labor, materials, or supplies which, if unpaid, might become a lien or charge ' upon the Special Tax Revenues or which might otherwise impair the security of the Bonds then Outstanding; provided that nothing herein contained shall require the District to make any such payments so long as the District in good faith shall contest the validity of any such claims. 21 09960.00000\7962262.2 17-31 Section 5.06. Extension of Time for Payment. In order to prevent any accumulatiori of claims for interest after maturity, the District shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly; be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the District, such claim for interest so extended or funded shall not be entitled, in case of default hereunder; to the benefits bf this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have so extended or funded. Section 5.07. Against Encumbrances. The-District will not encumber, pledge or place any charge or lien upon any of the Net Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement. Section 5.08. Books and Records. The District will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Bond Fund and the Special Tax Fund and relating to the Special Tax Revenues. Section 5.09. Protection of Security and Rights of Owners. The District will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the District, the Bonds shall be incontestable by the District. ' Section 5.10: Collection of Special Tax Revenues. The District shall comply with all ' requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes. On or about July 10 of each year, the Treasurer shall communicate with the Auditor to ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year: The Treasurer shall effect the levy of the Special Taxes each Fiscal Year on the parcels within the Improvement Area in accordance with the Ordinance, such that the computation of the levy is complete before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the Improvement Area for inclusion on the next secured tax roll. Upon the completion of the computation of the amounts of the levy, the Treasurer shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as { the Auditor requires to include the levy of the Special Taxes on the next secured tax roll unless directed by the District to directly bill such Special Taxes. The Special Taxes so levied shall be payable and be collected in the same manner and at the same time and in the same installments as the general taxes on real property aze payable, and have the same priority, become delinquent at the same time and in the same proportionate amounts and bear the same proportionate z2 099b0.00000V962262.2 17-32 penalties and interest after delinquency as do the general taxes on real property, unless otherwise provided by the District. . In the event that the Treasurer determines to levy all or a portion of the Special Taxes by means.of direct billing of the property owners of the parcels within the Improvement Area,.the Treasurer shall; not less than forty-five (45) days prior to each Interest Payment Date, send bills to the owners of such real property located within the Improvement Area subject to the levy of the Special Taxes for Special Taxes in an aggregate amount necessary to meet the financial obligations of the District with respect to the Improvement Area due on the next Interest Payment Date, said bills to specify that the amounts so levied shall be due and payable not less than thirty (SO) days prior to such Interest Payment Date and shall be delinquent if not paid when due. In any event, the Treasurer shall fix and levy the amount of Special Taxes within the Improvement Area required for the payment of principal of and interest on any Outstanding Bonds becoming due and payable during the ensuing year, an amount necessary to replenish the Reserve Fund pursuant to Section 3.03B3. and an amount estimated to be sufficient to pay the Administrative Expenses during such year, all in accordance with the RMA and the Ordinance. The Special Taxes so levied shall not exceed the authorized amounts as provided in the proceedings pursuant to the Resolution of Formation. The TreasLn'er is hereby authorized to employ consultants to assist in computing. the levy of the Special Taxes hereunder and any reconciliation of amounts levied to amounts received. The fees and expenses of such consultants and the costs and expenses of the Treasurer (including a charge for City or District staff time) in conducting its duties hereunder shall be an Special Tax Refunding Bond Administrative Expense hereunder. Section 5.1 I. Further Assurances. The District shall adopt, make; execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and fox the ` better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement. Section 5.12. Tax Covenants. The District shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused any of the Authority Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Tax Code or to be "private activity bonds" within the meaning of Section 141 of the Tax Code. The District agrees to furnish. all information to, and cooperate fully with, the Authority, the Authority Trustee and their respective offtcers,_employees, agents and attorneys, in order to assure compliance with the provisions of Section 6.07 of the Authority Indenture. In the event that the Authority shall notify the District that the Authority has determined, pursuant to Section 6.07 of the Authority Indenture, that any amounts are due and payable to the United States of 23 09960.00000\7962262.2 17-33 America thereunder and that neither the Authority nor the Authority Trustee has on deposit an amount of available moneys to make such payment, the District shall promptly direct the Fiscal Agent pay to the Authority Trustee from available Net Special Tax Revenues the Proportionate Share of the amounts determined by the Authority to be due and payable to the United States of America. Section 5.13. Covenant to Foreclose. The District. will review the public records of the County of San Diego, California, in connection with the collection of the Special Taxes not later than July 1 of each year to determine the amount of the Special Tax collected in the prior Fiscal Year and will commence and diligently pursue to completion, judicial foreclosure proceedings against (i) properties under common ownership with delinquent Special Taxes in the aggregate of $5,000 or more by October 1 following the close of the Fiscal Year in which the Special Taxes were due, and (ii) against all properties with delinquent Special Taxes in the aggregate of $2,500 or more by October 1 following th'e close of ariy Fiscal Year if the amount of the Authority Reserve Fund is less than the Reserve Requirement. The City Attorney is hereby authorized to employ counsel to conduct any such foreclosure proceedings. The fees and expenses of any such counsel and costs and expenses of the City Attorney (including a charge for City or District staff time) in conducting foreclosure proceedings sha1P be an Administrative Expense hereunder: Notwithstanding any provision of the Act or other law of the State to .the contrary, in connection with any foreclosure related to delinquent Special Taxes: A. The City, or the Fiscal Agent, is hereby expressly authorized to credit bid at any foreclosure sale, without any requirement that funds be placed in the Bond Fund or otherwise be set aside in the amount of such credit bid, in the amount specified in Section 53356.5 of the Act i or such-lesser amount as determined under B. below or otherwise under Section 53356:6 of the Act. B. The City may permit property with delinquent Special Tax payments to be sold for less than the amount specified in Section b3356.5 of the Act, if it determines that such sale is in the interest of the Bond Owners. The Bond Owners, by their acceptance of the Bonds, hereby consent to such sale for such lesser amounts (as such consent is described in Section 53356.6 of the Act), and hereby release the City, its officers and its agents from any liability in connection therewith. C. The City is hereby expressly authorized to use amounts in the Administrative Expense Fund to pay costs of foreclosure of delinquent Special Taxes. D. The City may forgive all or any portion of the Special Taxes levied or to be levied on any parcel in the Improvement Area, so long as the City determines that such forgiveness is not expected to adversely affect its obligation to pay principal of and interest on the Bonds. 24 ' 09960.000OOV9622622 I 17-34 Section x.14. Annual Reports to CDIAC. Not later than October 30 of each year, commencing. October 30, 2014, and until the October 30 following the-final maturity of the. Bonds, the Treasurer shall supply the information required by Section 53359.5(b) or (c) of the Act to CDIAC (omsrich forms as CDIAC may specify) and the District. Section 5.15. Continuing Disclosure to Owners. In addition to its obligations under Section 5.14, the District hereby covenants and agrees that it will carry out all of its obligations under the Continuing Disclosure Agreement. Notwithstanding any other provision of this Agreement, failure of the District to comply with the Continuing Disclosure Agreement shall not be considered a default hereunder; however, any Underwriter (as such term is,defined in the Authority Indenture) or any holder or beneficial owner of 25% of the Authority Bonds may take such actions as may be necessary and appropriate to compel performance by the District of its obligations under this Section 5.15, including seeking mandate or specific performance by court order. . Section 5.16. Modification of Maximum Authorized Special Tax. The District, to the maximum extent that the law permits it to do so, covenants that no modification of the minimum or maximum authorized Special Tax shall be approved by-the District nor shall the District take any other action which would (i) prohibit the District from levying the Special Ta~c within the - . Improvement Area in any Fiscal Year at such a rate as would generate Net Special Tax P~evenues in such Fiscal Year at least equal to 110% of Annual Debt Service on all Bonds then Outstanding; (ii) discontinue or cause the discontinuance of such levy; or (iii) .permit the prepayment of the Special Tax except as permitted pursuant to the RMA. Section 5.17. Covenant to Defend. The District covenants, in the event that any initiative is adopted by the qualifted electors in the Improvement Area which purports to reduce the minimum or the maximum Special Tax below the levels specified in Section 5.17 above or to limit the power of the District to levy the Special Taxes within the Improvement Area for the purposes set forth in Section 5.10 above, it will commence and pursue legal action in order to preserve its ability to comply with such covenanta_ ARTICLE VI INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY ' OF THE DISTRICT Section 6.01. Deposit and Investment of Moneys in Funds. Moneys in any fund or account created or established by this Agreement and held by-the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer's Certificate ..filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments., In the absence of any such Officer's Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause B(5) of the definition thereof to the extent practicable which by their terms mature prior to the date on which such moneys 'are required to be paid out hereunder, or are held uninvested. The Treasurer shall make note of any 25 09960.00000\7962262.2 I7-35 investment of funds hereunder iri excess of the yield on the Bonds, so that appropriate actions can be taken to assure compliance with Section 5.12. In the event of any transfer by the Authority Trustee from the Revenue Fund to the Residual Account thereof pursuant to Section 5.020 of the Authority Indenture, all moneys on deposit in the Special Tax Fund and the Bond Fund shall be held imcash or invested in Permitted Investments constituting cash equivalents until the payment of the principal of and interest on the Bonds on the September 1 Interest Payment Date following such transfer. Moneys in any fund or account created or established by this Agreement and held by the Treasurer shall be invested by the Treasurer in Permitted Investments, which in any event by their Berms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts. Whenever in this Agreement any moneys are required to~be transferred by the District to the Fiscal' Agent, such transfer may be accomplished by transferring a like amount of Permitted Investments. ' The .Fiscal Agent or an affiliate or the Treasurer may act as principal or agent in the acquisition or disposition of any investment and shall be entitled to its customary fee therefor. Neither the Fiscal Agent nor the Treasurer shall incur any liability for losses arising from any investments made pursuant to this Section. For purposes of determining the amount on deposit in any fund or account held hereunder, all Permitted Investments or investments credited to such fund or account shall be valued as provided for in Exhibit B attached hereto. Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall be acquired; disposed of, and valued (as of the date that valuation is required by this Agreement.or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Code shall be valued at their present value (within the meaning of section 148 of the Code). The Fiscal Agent shall not be liable for verification of the application of such sections of the Code. Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Treasurer hereunder, provided that the Fiscal Agent or the Treasurer, as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement. The Fiscal Agent or the Treasurer, as applicable, shall sell at the highest price reasonably obtainable, or present for redemption, any investment security whenever it shall be necessary to 26 09960.00000\7962262.2 17-36 i provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Treasurer shall be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith. Section 6.02. Limited Obligation. The District's obligations hereunder are limited obligations of the District and are payable solely from and secured solely by the Net Special Tax ' Revenues and the amounts in the Special Tax Fund and the Bond Fund. Section 6.03. Liability of District. The District shall not incur any responsibility in respect of the Bonds or this Agreement other than in connection with the duties or'obligations' explicitly herein or in the Bonds assigned to or imposed upon it. The District shall not be liable in connection. with the performance of its duties hereunder, except for its own negligence. or willful default. The District shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants, or agreements of the Fiscal Agent herein or of any of the docmnents executed by the Fiscal Agent in connection with the Bonds, or as to the existence of a default or event of default thereunder. " In the absence of bad faith, the District, including the Treasurer, may conclusively rely, ~. as .to the truth of the'statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the District and conforming to the requirements of this Agreement. The District, including the Treasurer, shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. No provision of this Agreement shall require the District to expend or risk its own general funds or otherwise incur any financial liability (other than with respect to the Net Special Tax Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The District may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or, document believed by it to~be genuine and to have been signed or presented by the proper party or proper parties. The District may consult with counsel, who may be the City Attorney, with regard to. legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered.by it hereunder in good faith and in accordance therewith. The District shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.. Whenever in the administration of its duties under this Agreement the District shall deem itnecessary or desirable that a matter be proved or established prior to taking or suffering any ~~ 09960.000OOV9622622 17-37 .action hereunder, such matter (unless other evidence in respect thereof be herein specifically presdribed) may, in the absence of willful misconduct on the part of the District, be deemed to be conclusively proved and established by a certificate of the Fiscal Agent, and such certificate shall be full warrant to the District for any action taken or suffered under the provisions of thin Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the District may, in lieu thereof, accept other evidence of such matter or may require such additional ~ evidence as to it may seem reasonable. ' Section 6.04. Employment of Agents by District or the City. In order to perform their respective duties and obligations hereunder, the City, the District andfor the Treasurer may employ such persons or entities as they deem necessary or advisable. The City, the District, and/or the Treasurer shall not be liable for any of the acts or omissions of such persoris or entities employed by them in good faith hereunder, and shall be entitled to rely, and shall be fully protected in~ doing so, upon the opinions,' calculations, determinations and directions of such persons or entities. ' ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS Section 7.01. Events of Default. The following events shall be Events of Default: A. Failure to pay any installment of'principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption or otherwise. B. Failure to pay any installment of interest on any Bonds when and as the same shall become due and payable. • C. Failure by' the District to observe and perform any of the- other covenants, ,- agreements, or conditions on its part in this Agreement or in the Bonds contained, if such failure shall have continued for a period of 60 days after written notice thereof, specifying such failure and requiring the same to be remedied;shall have been given to the District by the Fiscal Agent or the Owners of not less than 25% in aggregate principal amount of the Bond's at the time Outstanding; provided, however, if in the reasonable opinion of the District~the failure stated in the notice can be corrected, but not within such 60-day period, such failure shall not constitute an Event of Default if corrective action is instituted by the District within such 60-day period and the District shall thereafter diligently and in good faith cure such failure in a reasonable period of time. D. Commencement by the District of a voluntary case under Title 11 of the' United States Code or any substitute or successor statute. 28 09960.000OOV9622622 17-38 Section 7.02. Remedies of Bond Owners. Subject to the provisions of Section 7.08, any Bond Owner shall have the right, for the equal benefit and protection of all Bond Owners similarly situated: A. by mandamus, suit, action or proceeding, to compel the District and/or the City and its officers, agents or employees, acting for and on behalf of the District, to perform each and every term,. provision and covenant contained in this Agreement acid in the Bonds, and to require the carrying out of any or all such covenants and agreements of the District and the fulfillment of all duties imposed upon it'by the Act; B. by suit, action or proceeding inequity, to enjoin any acts or things which are unlawful, or the violation of any of the Bond Owners' rights; or C. upon the happening of any Event of Default, by suit, action or proceeding in any court of competent jurisdiction, to require the District and/or the City and its officers and employees, acting for and on behalf of the District, to account as if it and they were the trustees of an express trust. Section 7.03. Application of Special Taxes and Other Funds After Default. If an Event of Default shall occur and be continuing, all Special Taxes, including any penahies, costs, fees and other charges accruing under the Act, and any other funds then held or thereafter received by the Fiscal Agent under any of the provisions of this Agreement shall be applied by the Fiscal Agent as follows and in the following order: A.. To the payment of any expenses necessary in the opinion of the Fiscal Agent to protect the interests of the Owners of the Bonds and payment of reasonable fees, charges,, and expenses of the Fiscal Agent (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Agreement; B. To the payment of the principal of and interest then due with respect to the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Agreement, as follows: First: To the payment to the Persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment- thereof ratably, according to the amounts due thereon, to the Persons entitled thereto, without any discrimination or preference; and Second: To the payment to the Persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds on the date of maturity or redemption, and, if the amount available shall not be sufficient to pay in full all the Bonds, .together with such interest, then to the payment thereof ratably, according to the amounts of ~9 09960.00000A79622622 17-39 principal due on such date to the Persons entitled thereto, without any discrimination or preference. C. Any remaining funds shall be transferred by the Fiscal Agent to the Bond Fund. Section 7.04. Absolute Obligation of the District. Nothing in Section 7.08 or in any other provision of this Agreement or in the Bonds contained shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon call= for redemption, as herein provided, but only out of the Net Special Tax Revenues and other moneys herein pledged therefor and received by the District or the Fiscal Agent, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. Section 7.05. Termination of Proceedirigs. In case any proceedings taken by any one or more Bond Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Bond Owners, then in every such case the District, and the Bond Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the City, and the Bond Owners shall continue as though no such proceedings had been taken. Section 7.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Fiscal Agent or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, apd each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. ~ ' Section 7.07. No Waiver of Default. No delay or omission of any Owner of the Bonds to exercise any right or power arising upon" the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Agreement to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient. Section 7.08. Actions by Fiscal Agent as Attorney-in-Fact. Any suit, action, or proceeding which any Owner shall have the right to bring to enforce any right or remedy hereunder may be brought by the Fiscal Agent for the equal benefit and protection of all Owners, and the Fiscal Agent is hereby appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the Owners for the purpose of bringing any such suit, action, or proceeding and to do and perform any and all acts and things for and on behalf of the Owners as a class or classes, as may be necessary or advisable in the opinion of the Fiscal Agent as such attorney-in-fact. 30 09960.0000079622622 17-40 ARTICLE VIII THE FISCAL AGENT Section 8:01. Appointment of Fiscal Agent. U.S. Bank National Association, is hereby appointed Fiscal Agent and paying agent for the Bonds. The Fiscal Agent undertakes to perform, such duties, and only such duties, as are specifically set forth in this Agreement, and-no implied covenants or obligations shall be read into this Agreement against the -Fiscal Agent. Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, ,anything herein to the contrary notwithstanding. The District may remove the Fiscal Agent initially appointed, and any successor thereto, and.may appoint a successor or successors thereto, but any such successor shall be a bank or trust company having a combined capital (exclusive of borrowed capita]) and surplus of at least~~ Seventy-Five Million Dollars ($75,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 8.01, combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most .recent report of condition so published. The Fiscal Agent may at any time resign by giving written notice to the District and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the District shall promptly appoint a successor Fiscal Agent by an instrument in .writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent. If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within forty-five (45) days after the Fiscal Agent shall have given to the District written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of competentjurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appointa,successor Fiscal Agent. If, by reason of the judgment of any court, the Fiscal Agent is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Fiscal Agent hereunder shall be assumed by and vest in the Treasurer of the City in trust for the benefit of the Owners. The District covenants for the direct benefit of the Owners that the Treasurer in such .case shall be vested with all of the rights and powers of the Fiscal Agent hereunder, and shall. 3l 09960.00000\7962262.2 17-41 assume all of the responsibilities and perform all of the duties of the Fiscal Agent hereunder, in trust for the benefit of the Owners of the Bonds. Section 8.02. Liability of Fiscal Agent. The recitals of facts, covenants, and agreements herein and in the Bonds contained shall be taken as statements, covenants, and agreements of the District,. and the Fiscal Agent assumes no responsibility for the correctness of the same, nor makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, nor shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its, duties hereunder, except for its own negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance ofthe Bonds. " In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certif cate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument. The Fiscal Agent shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants, or agreements of the City or the District herein or of any of the documents executed by the City or the District in connection with the Bonds, or as to the existence of a default or event of default thereunder. The Fiscal Agent shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. No provision of this'Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 32 09960.00000\7962262.2 17-4'2 The Fiscal Agent shall be' under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. The Fiscal Agent may become the Owner of the Bonds with the same rights it would have if it were not the Fiscal Agent. All indemnifications and releases from liability granted to the Fiscal Agent hereunder shall extend to the directors, officers, and employees of the Fiscal Agent. Section 8.03. Information. The Fiscal Agent shall provide to the District such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as .the District shall reasonably request, including, but not limited to, quarterly statements reporting funds held and transactions by the Fiscal Agent. Section 8.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith... The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed. Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may; in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the District, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. Section 8.05. Compensation, Indemnification. The District shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement,. and also all reasonable expenses, charges, counsel fees, and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent'shall not have , a lien therefor on any funds at any time held by it under this Agreement. The District further 33 09960.00000\7962262.2 17-43 agrees, to the extent permitted by applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder which aze not due to its negligence or willful misconduct. The obligation of the District under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement, but any monetary obligation of the District arising under this Section shall be limited solely to amounts on deposit in the Special Tax Refunding Bond Administrative Expense Fund. ARTICLE IX MODIFICATION OR AMENDMENT OF THIS AGREEMENT Section 9.01. Amendments Permitted. This Agreement and the rights and obligations of the District and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of the Owners, or'with the written consent without a meeting, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 9.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the District to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond; or (ii) permit the creation by the District of any pledge or lien upon the Special Taxes superior to or on a pazity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or this Agreement), or reduce the percentage of Bonds required for the amendment hereof. _ Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. This Agreement and the rights and obligations of the District and of the Owners may also be modified or amended at any time by a Supplemental Agreement,,without the consent of any Owners, only to the extent permitted by law and only for any orie or more ~of the following purposes: (i) to add to the covenants and agreements of the District in this Agreement contained, other covenants 'arid agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the District; (ii) to make modifications not adversely affecting any Outstanding Bonds of the District in any material respect; (iii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting, or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the District and the Fiscal Agent may deem riecessary or desirable and not inconsistent with this Agreement, and which shall not adversely affect the rights of the Owners of the Bonds; and/or ' 34 09960.00000\7962262.2 17=44 (iv) to make such additions, deletions, or modifications as may be necessary or desirable to assure the exclusion from gross income for federal income tax purposes of interest on the Bands. Section 9.02. Owners' Meetings. The District may at any time call a meeting of the Owners. In such event the District is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting. Section 9.03. Procedure for Amendment with Written Consent of Owners. The District and the Fiscal Agent may at any time adopt a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 9.01, to take effect when and as provided in this Section. A copy of such Supplemental Agreement, together with a request to Owners for their .consent thereto, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Sectionprovided. Such Supplemental Agreement shall not become effective_unless there shall be filed with the Fiscal Agent the written consent of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 9.04 and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 11.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed. . After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the District shall mail a, notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section 9.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the District and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. 35 09960.000OOV9622622 17-45 Section 9.04. Disqualified Bonds. Bonds owned or held for the account of the City or the District, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article IX, and shall not be entitled to vote upon, consent to, or take any other action provided for ih this Article IX. Section 9.05. Effect of Supplemental Agreement. From and after the time any' Supplemental Agreement becomes effective pursuant to this Article IX, this Agreement shall be deemed to be modified and, amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the District and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such' Supplemental Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes. ' Section 9.06. Endorsement or Replacement of Bonds Issued After Amendments. The District may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article IX shall bear a notation, b'y endorsement or otherwise, in form approved by the District, as to such action. In that case, upon demand of the Owner of any Bond Outstanding of such effective date and presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the District may select and designate fot that purpose, a suitable notation shall be made on such Bond. The District may determine that new Bonds, so modified as in the opinion of the bistrict is necessary to conform to such Owners' action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agerit without cost to any'Owner, for Bonds then Outstanding, upon surrender of such Bonds. ' Section 9.07. Amendatory Endorsement of Bonds. The provisions of this Article IX shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made,oa such Bonds. Section 9.08. Notice Requirement. Not less than 15 days prior to the effective date of any amendment made pursuant to this Article IX, so long as any Bonds are owned by the Authority, the District shall mail notice of the proposed amendment and the text of the proposed amendment to the Authority and the Authority Trustee. ARTICLE X DEFEASANCE Section 10.01. Defeasance. If the District shall' pay or cause to be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Agreement, then the Owner of such Bond shall cease to be entitled to the pledge of Net Special Tax Revenues, and, other than ~ 36 09960.00000\7962262.2 ' 17-46 asset forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond under this Agreement shall thereupon cease,, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds pursuant to this Section, the' Fiscal Agent shall execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the District's general fund all money or securities held by it pursuant to this Agreement which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds. Any.Otitstanding Bond shall be deemed to have been paid within the.meaning expressed in the first paragraph of this Section if such Bond is paid in any one or more of the following ways:. .. ' (i) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond, as and when the same become due and payable; , , (ii) by depositing with the Fiscal.Agent, in trust, at or before maturity, money .which, together with the amounts then on deposit in the Special Tax Fund and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; or (iii) by depositing with the Fiscal Agent or another escrow bank appointed by the District, in trust, direct, noncallable Defeasance Obligations, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; then, at the election of the District, and notwithstanding that any Outstanding Bonds shall not have been surrendered for payment, all obligations of the District under this Agreement with respect to such Bond shall cease and terminate, except for the obligation of the Fiscal Agent to pay or cause to be paid to the Owners of any such Bond not so surrendered and paid, all sums due thereon. Notice of such election shall be filed with the Fiscal Agent not less than ten.(10) days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Fiscal Agent. In connection with a defeasance under (ii) or (iii) above, there shall be provided to the District a verification report from an Independent Accountant stating its opinion as to the sufficiency of the moneys or securities deposited .with the Fiscal Agerit or .the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, and an opinion of Bond.Counsel (which may rely upon the opinion of the certifted public accountant) to the effect that the Bonds being defeased have been legally. defeased in accordance with this Agreement. a7 09960.00000\7962262.2 17-47 ' Upon a defeasance, the Fiscal Agent, upon request of the District, shall release the rights of the Owners of such Bonds which have been defeased under this Agreement and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds, after payment of any amounts then owed to the Fiscal Agent, the Fiscal Agent shall pay over or deliver to the District any funds held by the Fiscal Agent at the time of a defeasance, which are not required for the purpose~of paying and discharging the principal of or interest on the Bonds when due. The Fiscal Agent shall, at the written direction of the District, mail, first class, postage prepaid, a notice to the Bondowners whose Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred. Notwithstanding the foregoing, so long as the Bonds are owned by the Authority, the entire indebtedness on the Bonds Outstanding shall be discharged simultaneously with and upon the discharge of the Authority Bonds pursuant to Section 10:01 of the Authority Indenture resulting from the irrevocable deposit with the Authority Trustee pursuant to Sectiori 10.01(b) of the Authority Indenture of money or Defeasance Obligations (as defined in the Authority Indenture) to pay or redeem all of the Authority Bonds then Outstanding (as defined in the Authority Indenture). The Fiscal Agent shall, upon receipt of written instructions from an Authorized Officer, transfer the moneys on deposit in the funds grid accounts established hereunder to fund the foregoing deposit with the Authority Trustee. ARTICLE XI MISCELLANEOUS Section 11.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement, expressed or implied, is intended to~give to any person other than the District, the City, the Fiscal Agent, and the Owners, any right, remedy, claim under or by reason of this Agreement. Any ' covenants, stipulations, promises, or agreements in this Agreement contained by and on behalf of the District shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent. Section 11.02. Cancellation of Bonds. All Bonds surrendered to the Fiscal Agent for payment upon maturity or for redemption shall be upon payment therefor, and any Bond i purchased by the District as authorized herein and delivered to the Fiscal Agent for such purpose shall be, cancelled forthwith and shall not be reissued. The Fiscal Agent shall destroy such Bonds, as provided by law, and furnish the District a certificate of such destruction. j Section 11.03. Successor is 'Deemed Included in All References to Predecessor. Whenever in this Agreement or any Supplemental Agreement either the District or ,the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the District or the'Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. i 38 ' 09960.OOOOOV962262.2 17-48 Section 11.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration, or, other instrument which this Agreement may require or permit to be executed by the Owners may be in one or, more instruments of similaz tenor; and shall be executed by the-Owners in person or by their attorneys appointed in writing. - Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, declaration or other instrument, or o£ such writing appointing such attorney, may be proved by the' certificate of any notary public or other officer ~~ authorized to take acknowledgments of deeds to-be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing _ acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books. Any~.request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the District or the Fiscal Agent in good faith and in accordance therewith. Section 11.05. Waiver of Personal Liability. No member; officer, agent or'employee of the District or the Ciry shall be individually or personally liable for 'the' payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law: Section 11.06. Notices to and Demands on District and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the District may be given or served by 'being deposited postage prepaid in a post office letter box addressed (until another address is filed by the District.with the, Fiscal Agent) as follows: City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) c/o City of Chula Vista Finance Department 276 Fourth Avenue . Chula Vista, CA 91910 Attention: Director of Finance c/o City of Chula Vista Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the District to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Fiscal Agent with the District) as follows: 39 09960.000OOV9622622 17-49~ U.S. Bank National Association Attn: Corporate Trust 633 West Fifth Street, 24th Floor Los Angeles, CA 90071 Reference: Section 11.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The District hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized'the issue of the Bonds pursuant thereto in•espectiv~e of the fact that any one or more Sections, paragraphs, sentences, clause's, or phrases of this Agreement may be held illegal, invalid or unenforoeable. Section 11.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two. (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys were held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the District as its absolute ,property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the District for the payment of the principal of, and interest and any premium on, such Bonds. Section 11.09. Provisions Constitute Contract. The provisions of this Agreement shall, constitute a contract between the District and the Bondowners and the provisions hereof shall be' construed in accordance with the laws ofthe State of California. In case any suit, action, or proceeding to enforce, any right or exercise any remedy shall be:brought or taken and, should said suit, action, or proceeding be abandoned, or be determined adversely to the Bondowrie"rs or the Fiscal Agent, then the District, the Fiscal Agent, and the Bondowners shall be restored to their former positions, rights and remedies as if such 'suit, action, or proceeding had not been brought or taken. After the issuance and delivery of the Bonds this Agreement shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Agreement, but to no greater extent and in no other manner. Section 11.10. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Special Tax Revenues which is subordinate to the pledge hereunder, or which is payable from taxes or any source other than the Net Special Tax Revenues and other amounts pledged hereunder. Section 11.11. Furttier Assurances. The District will adopt, make, execute, and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary 40 09960.00000V7962262.2 17-50 or proper to' carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Agreement. Section 11.12. Applicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. Section 11.13. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Agreement. Section 11:14. Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes. Section 11.15. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period after such-date. Section 11.16. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. [Remainder of this page intentionally left blank.] 41 09960.00000\7962262.2 17-51 IN WITNESS. WHEREOF, the District has caused this Agreement pertaining to the. Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013 to be executed in its name and the Fiscal. Agent has caused this Agreement to be executed in its name, all as of July 1, 2013. CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE -WOODS, VISTAS AND LAND SWAP) By: - City Manager U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent By: Authorized Officer S-1 09960.0000079622622 17 -5 2 EXIIIBIT A FORM OF BOND No. UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SAN DIEGO CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE -WOODS, VISTAS AND LAND SWAP) IMPROVEMENT AREA A SPECIAL TAX REFUNDIlVGBONDS, SERIES 2013 . INTEREST RATE MATURITY DATE DATED DATE September 1, , 2013 REGISTERED OWNER: U.S. BANK NATIONAL ASSOCIATION, as Trustee, on behalf of the Chula V ista Municipal Financing Authority PRINCIPAL AMOUNT: DOLLARS City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) (the "District"); for value received, hereby promises to pay solely from Net Special Tax Revenues (as defined in the Agreement) to be collected in Improvement Area A within the District or amounts in the funds and accounts held under the Agreement (as hereinafter defined), to the registered owner (the "Owner") named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from the Dated Date; or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually ftve (5) days prior to each September 1 and March 1, commencing September 1, 2013 (each an "Interest Payment Date"), at the interest rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the office of U.S. 'Bank National Association (the "Fiscal Agent"). Interest on this Bond shall be paid by check of the Fiscal Agent mailed five (5) days preceding each Interest Payment Date to the registered Owner hereof as of the close of business on the 15th day of the month preceding the month in which the interest payment date occurs whether or not such day is a Business Day (the "Record Date") at such registered Owner's address as it appears on the registration books maintained by the Fiscal Agent. A-1 09960.00000\7962262 2 ~ ~ 7 - rJ .3 This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $[x] pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California Government Code (the "Mello-Roos Act") and designated the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013. The Bonds have been issued for the purpose of refunding the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds (the "Prior Special Tax Bonds"). The issuance of the Bonds and the terms and conditions thereof are provided for by the Fiscal Agent Agreement, dated as of July 1, 2013 (the "Agreement"), by and between the District and the Fiscal Agent and this, reference incorporates the Agreement herein, and by acceptance hereof the Owner of this Bond assents to said terms and conditions. Pursuant to the Mello-Roos Act and the Agreement, the principal of and interest on this Bond are payable solely from Net Special Tax Revenues of the annual special tax authorized under the Mello-Roos Act to be collected within Improvement Area A of the District (the "Special Tax") and certain funds held under the Agreement. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication; or {ii) it is authenticated prior to an Interest Payment Date ~ and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall beaz interest from such Interest Payment Date; or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Dated Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. Any tax for the payment hereof shall be limited to the Special Tax, except to the extent that provision for payment has been made by the City, as may be permitted, by law. The Bonds do not constitute obligations of the City of Chula Vista for which said City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. The District has covenanted for the benefit of the Owners of the. Bonds that it will. order, and cause to be commenced as provided in the Agreement, and thereafter diligently prosecute to judgment, an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due: The Bonds maturing on or after September 1, 20_, may be redeemed at the option of the District from any source of funds other than prepayment of Special Taxes, prior to their stated maturity, as a whole or in part (in integral multiples of $5,000) on any date on.or after September 1, 20_, from such maturities as are selected by the District, and by lot within a maturity, at a redemption price equal to the principal amount of the Bonds or portions thereof to be redeemed, together with accrued interest thereon to the date fixed for redemption. A-2 ove6o.oo00o~~96zz6z.z 17-54 yM1 Notwithstanding the above, any such optional redemption of the Bonds shall occur only if the District shall first deliver to the Fiscal Agent and the Authority Trustee a certificate of an Independent Financial Consultant verifying that, following such redemption of the Bonds, the principal and interest due on the Outstanding Bonds, if any, and the other outstanding Special Tax Refunding Bonds is adequate to make the timely payment of principal, including mandatory sinking fund payments, and interest due on the Authority Bonds that will remain outstanding following the corresponding redemption of the Authority Bonds resulting from such optional redemption of the Bonds. The Bonds shall be subject to redemption on any Interest Payment Date, commencing March 1, 2014, prior to maturity, as a whole or in part from such maturities, as are selected by the District, from the prepayment of Special Taxes at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date March 1, 2014 through March 1, 20 September 1, 20 and March 1, 20 September i, 20 and March 1, 20_ September 1, 20 and any Interest Payment Date thereafter Redemption Price 10 10 10 100% Notwithstanding the above, such mandatory redemption of the Bonds in whole or in part shall occur only if the District shall first deliver to the Fiscal Agent and the Authority Trustee a certificate of an Independent Financial Consultant verifying that, following such redemption of the Bonds, the principal and interest due on the Outstanding Bonds, if any, -and the other outstanding Special Tax Refunding Bonds is adequate to make the timely payment of principal, including mandatory sinking fund payments, and interest due on the Authority Bonds that will remain outstanding following the corresponding redemption of the Authority Bonds resulting from such mandatory redemption of the Bonds. In lieu of redemption under the Fiscal Agent Agreement, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing ' with the Fiscal Agent of an Officer's Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer's Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase, unless a greater purchase price is permitted under the Act and the District determines that it will have suff cient amounts in the Bond Fund, following such purchase, to pay Debt Service on the Bonds. Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered Owners thereof, in the manner, to the extent and subject to the provisions of the Agreement. This Bond shall be registered in the name of the Owner hereof, as to both principal and interest. A-3 o99w.ooooo~~9ezzbz.z 17-55 Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon. Except as provided in the Agreement, any Bond may, in accordance with'its terms, be transferred, upon the books required to be kept pursuant to the provisions of the Agreement by, the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the District. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer. Whenever any Bond or Bonds shall be surrendered for transfer, the District shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for like aggregate principal amount. No transfers of Bonds shall be required to be made (i) fifteen (15) days prior to the date established by the Fiscal Agent for selection of Bonds for redemption; (ii) with respect to a Bond after such Bond has been selected for redemption; or (iii) between the 15th day of the month next preceding any Interest Payment Date and such Interest Payment Date. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds. of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the District. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange. No exchanges of Bonds shall be required to be made (i) fifteen (IS) days prior to the date established by the Fiscal Agent for selection of Bonds for redemption; (ii) with respect to a Bond after such Bond has been selected for redemption; or (iii) between the 15th day of the month next preceding any Interest Payment Date and such Interest Payment Date. The Fiscal Agent Agreement and the rights and obligations of the Agency thereunder may be modified or amended as set forth therein. The Fiscal Agent Agreement contains provisions permitting the District to make provision for the payment of the interest on, and the principal and premium, if any, of the Bonds so that such Bonds shall no longer be deemed to be outstanding under the terms of the Fiscal Agreement. This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Fiscal Agent. IT IS HEREBY CERTIFIED, RECITED, AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this i A-4 09960.00000\7962262.2 - - 17-56 Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond does not exceed any debt limit prescribed by the laws or Constitution of the State of California. [Remainder of this page intentionally left blank.] A-~ 09960.00000\796?2622 1 ~-57 IN WITNESS WHEREOF, the City of Chula Vista Community Facilities District 06-I (Eastlake -Woods, Vistas and Land Swap) has caused this Bond to be dated October 24, 2012, to be signed by the manual or facsimile signature of the Mayor and countersigned by the manual or facsimile signature of the City Clerk, each acting for and on behalf of such community facilities district. CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE -WOODS, VISTAS AND LAND SWAP) BY: Mayor BY: City Clerk A-6 09960.00000\7962262.2 17-58 FISCAL AGENT'S CERTIFICATE OFAIITHENTICATION This is one of the Bonds described in the Resolution and the Agreement which has been authenticated on U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent By: Authorized Oftlcer A-7 09960.0000017962262.2 ~ 7 - 5 9 ~ I ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the registration books of the Fiscal Agent, with full power of substitution in the premises. Dated: NOTICE: The signature(s) on this assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlazgement or any change whatsoever. Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. A-8 09960.00000\7962262.2 ~~-60 • EXHIBIT B PERMITTED INVESTMENTS ° "Permitted Investments" means any of the investments listed below that at the time of investment ' are legal investments under the laws of the State of California for the moneys proposed to be ` -invested therein (provided that the Fiscal Agent shall have no duty to investigate the legality of ' -any investments): A. The following obligations may be used for all purposes,. including defeasance investments: ' ~ , . Cash (insured at all times by the Federal Deposit Insurance Corporation) of collateralized ° . by Permitted Investments listed in A(2) below. _ _ Obligations of, or obligations guaranteed as to principal and interest by; the U.S. or any ' agency or instrumentality thereof, when such obligations are backed by the full faith and credit . of the U.S.including: U.S.treasury obligations, _ all direct or fully guaranteed obligations, Farmers Home Administration, General Services Administration, Guaranteed Title XI financing, ' Government National Mortgage Association (GNMA),~and State and Local Government Series. Any security used for defeasance must provide for the timely payment of principal and interest ahd cannot be callable or pre-payable prior to maturity or earlier redemption of the rated debt(excluding securities that do not:have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call.date). , , B. The following obligations may be used as for all purposes -other than defeasance investments in refunding escrow accounts: (1) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: " , Export-Import Bank, Rural Economic Community Development Administration, B--1 - 0996000OOOV9622622 ~~-61 U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration, and Federal Financing Bank. {2), Direct obligations of any_ of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations issued by the Federal National Mortgage Association,(FNMA) or Federal Home Loan Mortgage Corporation (FHLMC);, obligations of the Resolution Funding Corporation (REFCORP); or senior debt obligations of the Federal Home Loan Bank System. U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "P-1" by Moody's and "A-1" or "A-1+" by S&P and maturing not more than 360 calendar days after the date of purchase. (Ratings on holding companies are not considered as the rating ofthe bank.) Commercial paper which is rated at the time of purchase in the single .highest classification, "P-1" by Moody's and "A-1" or "A-1+" by S&P and which matures not more than 270 calendar days after the date of purchase. , Investments in a money market fund rated "AAAm" or "AAAm-G".or better by S&P including funds for which the Fiscal Agent or an affiliate provides investment advice or other services. Pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice: which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of Moody's or S&P or any successors thereto; or (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in A.(2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and (ii) which B-2 09960.000OOV9622622 17-62 a .escrow is sufficient, as verified by a nationally recognized independent certified- public accountant, to pay principal of and interest and redemption premium, if .any, on the bonds or other obligations described in this ,paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate. - Municipal obligations rated "Aaa/AAA" or general obligations of States with a rating of "A2/A" or higher by both Moody's and S&P. Investment in the Local Agency Investment Fund of~the State of California (LAIF), `provided that any investment of the type authorized pursuant to paragraphs (d), (e), (h), and (i) o£ Section 53601 of the Califomia Government Code are additionally restricted as provided in the appropriate paragraph or paragraphs above applicable to such type of investment and provided further that investments authorized pursuant to paragraphs (r) and (m) of Section 53601 of the California Government Code are not permitted. B-3 09960.00000\7962262 2 17-63 ATTACHMENT 2 BOND PURCHASE AGREEMENT 17-64 BOND PURCHASE CONTRACT CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 2013 Chula Vista Municipal Financing Authority ' City of Chula Vista, on behalf of Community Facilities District No. 06-I of the City of Chula Vista City of Chula Vista, on behalf of Community Facilities District No. 07-L of the City of Chula Vista City of Chula Vista, on behalf of Community Facilities District No. 08-I of the City of Chula Vista City of Chula Vista, onbehalf of-Community Facilities District No. 20012 of the City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Ladies and Gentlemen: E. J. De La Rosa & Co., Inc., acting not as a fiduciary or agent for you, but on behalf of ' itself and Stifel, Nicolaus & Company, Incorporated (collectively, the "Underwriter"), offers to enter into "this Bond Purchase Contract (this "Purchase Contract") with the Chula Vista Municipal Financing Authority (the ``Authority"), and with the City of Chula Vista (the "City"), with the City Council acting as the legislative body of Community Facilities District No. 06-I of the City of Chula Vista ("CFD No. 06-I"), Community Facilities District No. 07-I of the City of Chula Vista ("CFD No. 07-P'), Communiry,Facilities District No. 08-I of the City of Chula Vista ("CFD No. 08-I"), and Community Facilities District No. 2001-2 of the City of Chula Vista (`'CFD Na. 2001-2" and, collectively, the "Districts"). Upon your acceptvice of this offer, this Purchase- Contract will be binding upon the Authority, the City, the Districts and the Underwriter. Terms not otherwise defined herein have the same meanings as set forth in the Indenture of Trust described below. This offer is made subject to the acceptance by the Authority and the City of this Purchase Contract on or before 11:59 p.m. on the date first set forth above. Chula Vista JPA CFD BPA 17-65 1. Purchase and Sale of Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agrees to sell to the Underwriter, all (but not less than all) of $ aggregate principal amount of the revenue bonds captioned above (the "Bonds") at a purchase price (the `'Purchase Price") of $ (being an amount equal to the par amount of the Bonds ($ ) [les net original issue discount] [plus net original issue premium] of $ ,and less an Underwriter's discount of The Authority, the City and the Districts acknowledge and agree that: (i) the primary role of the Underwriter is to purchase securities for resale to investors in anarms-length commercial transaction between the Authority, the City and the Districts and the Underwriter and that the Underwriter has financial and other interests that differ from those of the Authority, the City and the Districts, (ii) the Underwriter is not acting as a municipal advisor, financial advisor or fiduciary to the Authority, the City and the Districts or any other person or entity and has not assumed any advisory or fiduciary responsibility to the Authority, the City and the Districts with respect to the transaction contemplated hereby and the discussions, undertakings and proceedings leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Authority, the City and the Districts on other matters), (iii) the only obligations the Underwriter has to the Authority, the City and the Districts with respect to the transaction contemplated hereby expressly are set forth in this Bond Purchase contract, except as otherwise provided by applicable rules and regulations of the SEC or the rules of the Municipal Securities Rulemaking Board (the "MSRB"), and (iv) the Authority, the City and the Districts have consulted their own legal, accounting, tax, financial and other advisors, as applicable, to the extent each has deemed appropriate in connection with the transaction contemplated herein. The Authority, the City and the Districts acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G-17 of the MSRB. 2. Authorizing Instruments; Purchase and Sale of Special Tax Refimdin Bonds. (a)' Issuance of the Bonds. The Authority is a joint exercise of powers agency organized under the joint exercise of powers act, constituting Article 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State (the "Joint Powers Act"). The Bonds will be issued by the Authority under the provisions of Article 4 of the Joint Powers Act (the "Bond Law"), a resolution adopted by the Board of Directors of the Authority (the ``Board") on 2013 (the "Resolution of Issuance"), and an Indenture of Trust dated as of July 1, 2013 (the "Indenture"), between the Authority and U.S. Bank National Association, as trustee (the "Trustee"). 2 Chula Vista JPA CFD BPA 17-66 (b) Security for the Bonds. The Bonds are payable from ``Revenues". received under the Indenture, which are generally defined as all. amounts derived from three series of special tax bonds (collectively, the "Special Tax Refunding fonds"), as described below: (i) ImprovemenfArea A ofCFD No. 06-I. Special tax bonds to be issued by CFD No. 06-I for its Improvement Area A designated "City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013" (the "CFD No. 06-I IA A Special Tax Refunding Bonds").under a resolution adopted on 2013, by the City Council of the City, acting as legislative body of CFD No. 06-I (the "CFD No. 06-I IA A Resolution"), and secured under a Fiscal Agent Agreement (the "CFD No. 06-I Fiscal Agent Agreement") dated as of July 1, 2013, by and between. CFD No. 06-I and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"). (ii) Improvement Area B of CFD No. 06-I. Special -tax bonds to be issued by CFD No. 06-I for its Improvement Area B designated "City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013" (the "CFD No..06-I L9 B Special Tax Refunding Bonds") under a resolution adopted on 2013, by the City Council of the City, acting as legislative body of CFD No. 06-I (the "CFD No. 06-I IA B Resolution" and, with the CFD No, 06-I IA A Resolution; the "CFD No. 6-I Resolutions"), and 'secured under a Fiscal Agent Agreement (the "CFD No. 06-I Fiscal Agent Agreement") dated as of-July 1, 2013, by and between CFD No. 06-I and U.S. ` Bank National Association, as fiscal agent (the "Fiscal Agent';). (iii) CFD'No. 07-I. Special tax bonds to be issued by CFD No. 07-I designated "City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series 2013" (the "CFD No. 07-I Special Tax Refunding Bonds") under a resolution adopted on , 2013, by the City Council of the City, acting as legislative body of CFD No. 07-I (the "CFD No. 07-I Resolution"), and secured under a Fiscal Agent Agreement (the "CFD No. 07-I Fiscal Agent Agreement") dated as of July 1, 2013, by and between CFD No. 07-I and the Fiscal Agent. (iv) CFD No. 08-I. Special tax bonds to be issued by CFD No. 08-I designated "City of Chula Vista Community 'Facilities District No. 08-I (Otay Ranch Village Six) Special Tax Refunding Bonds, Series 2013" (the "CFD No. 08-I Special Tax Refunding Bonds") under a resolution adopted on , 2013, by the City Council of the City, acting as legislative body of CFD No. 08-I (the "CFD No. 08-I Resolution"), and secured under a Fiscal Agerit Agreement (the "CFD No. 08-I Fiscal Agent Agreement") dated as of July 1, 2013, by and between CFD No. 08-I and the Fiscal Agent. (v) CFD No. 2001-2. Special tax bonds to be issued by CFD No: 2001-2 designated "City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch -Village Six) Special Tax Refunding Bonds, Series 2013" (the "CFD No. 2001-2 Special Tax Refunding Bonds") under a resolution adopted on ' ~ 2013; by the City Council of the City, acting as legislative body of CFD No. 2001? (the Chula Vista JPA CFD BPA ~7-6~ "CFD No. 2001-2 Resolution"), and secured under a Fiscal Agent Agreement (the "CFD No. 08-I Fiscal Agent Agreement") dated as of July 1, 2013, by and between CFD No. 2001-2 and the Fiscal Agent. ` The CFD No. 06-I Resolutions, the CFD No. 07-I Resolution, the CFD No. 08-I Resolution and the CFD No. 2001-2 Resolution are collectively referred to as the "CFD Resolutions." Each District was formed pursuant to, and the Special Tax Refunding Bonds are payable from special taxes levied under, the Mello-Roos Community Facilities Act of 1982 (constituting Sections 53311 et seq. of the California Government Code) (the "Mello-Roos Act"). (c) Purchase and Sale of the Special Tax Refunding Bonds. (i) CFD No. 06-I IA A Special Tax Refunding Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Authority hereby agrees to purchase from CFD No. 06-I, and CFD No. 06-I hereby agrees to sell to the Authority, all (but not less than all) of $ aggregate principal amount of the CFD No. 06-I IA A Special Tax Refunding Bonds at a purchase price of $ ,being an amount equal to the par amount of the CFD No. 06-I IA A Special Tax Refunding Bonds. ` (i) CFD No. 06-I IA B Special Tax Refunding Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties acid-covenants herein, the Authority hereby agrees to purchase from CFD No. 06-I, and CFD No. 06-I hereby agrees to sell to the Authority, all (but not less than all) of $ aggregate principal amount of the CFD No. 06-I IA B Special Tax Refunding Bonds at a purchase price of $ ,being an amount equal to the par amount of the CFD No. 06-I IA B Special Tax Refunding Bonds. (iii) CFD No. 07-I Special Tax Refunding Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Authority hereby agrees to purchase from CFD No. 07-I, and CFD No. 07-I hereby agrees to sell to the Authority, all (but not less than all) of $ aggregate principal amount of the CFD No. 07-I Special Tax Refunding Bonds at a purchase price of $ , being an amount equal to the par amount of the CFD No. 07-I Special Tax Refunding Bonds. (iv) CFD No. 08-7 Special Tax Refunding Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the. Authority hereby agrees to purchase from CFD No. 08-I, and CFD No. 08-I hereby agrees to sell to the Authority, all (but not less than all) of $ aggregate principal amount of the CFD No. 08-I Special Tax Refunding Bonds at a purchase price of $ ,being an amount equal to the par amount of the CFD No: 08-I Special Tax Refunding Bonds. 4 Chula Vista 7PA CFD BPA 17-68 (v) CFD. No. 2001-2 Special Tax .Refunding Bonds. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Authority hereby agrees to purchase from CFD No. 2001-2, and CFD No. 2001-2 hereby agrees to sell to the Authority, all (but not less than all) of $ aggregate principal amount of the CFD, No. 2001-2 Special Tax Refunding Bonds at a purchase price of $ ,being an amount equal to the par amount of the CFD No. 2001-2 Special Tax Refunding Bonds. 3. Terms of the Bonds. The Bonds will mature on the dates and in the principal amounts, and will bear interest at the rates, as set forth in Exhibit A hereto. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the offering prices set forth on the cover of the Final Official Statement described below. 4. Preliminar~Official Statement; Official Statement; Continuing Disclosure. (a) The Authority agrees to deliver to the Underwriter as many copies of the Official Statement dated the date of this Purchase Contract, relating to the Bonds (as supplemented and amended from time to time, the "Final Official Statement") as the Underwriter may reasonably request as necessary to. comply with paragraph (b)(4) of Rule 15c2-12 of the Securities and _ Exchange Commission under the Securities Exchange Act of 1934 ("Rule 15c2-12"). The Authority. agrees to deliver such Final Official Statements within seven (7) business days after the execution of this Purchase Contract, and in sufficient time to accompany any confirmation that requires payment from a customer. The Underwriter agrees to deposit the Final Official Statement with a qualfted national registered municipal securities information repository on or as soon as practicable after the Closing Date (as defined in Section 8 below). The Underwriter agrees to deliver a copy of the Final Official Statement to each of its customers purchasing Bonds no later than the settlement date of the transaction. (b) .The Authority has authorized and approved the Prelimhiary Official Statement dated 2013 {the "Preliminary Official Statement") and the Final Official Statement dated the date of this Purchase Contract; and consents to their distribution and use by the Underwriter and the execution and approval of the Final Official Statement by a duly authorized officer of the Authority. (c) In connection with issuance of the Bonds, and in order to assist the Underwriter with complying with the provisions of Rule 15c2-12, the Authority will execute a continuing agreement with NBS, as dissemination agent (the "Continuing Disclosure Agreement"), under which the Authority will undertake to provide certain financial and operating data as required by Rule 15c2-T2. The form of the Continuing Disclosure Agreement will be attached as an appendix to the Preliminary and Final Official Statements. 5. Representations and Warranties of the Authoritv. The Authority makes the following representations and warranties to the Underwriter. (a) Due Or>?anization and Authoritv. The Authority is duly organized and validly existing as a joint exercise of powers authority under the laws of the State of 5 Chula V ista JPA CFD BPA ~ ~ _ ~ ~ California and the Joint Exercise of Powers Agreement (the "Joint Powers Agreement"), between the City and Chula Vista Housing Authority, and has the full legal right, power and'authority, among other things, (i) upon satisfaction of the conditions in this Purchase Contract and the Resolution of Issuance, to issue the Bonds for the purposes set forth in the Preliminary Official Statement and the Indenture, and (ii) to secure the Bonds in the manner contemplated in the Resolution of Issuance and the Indenture. (b) Full Right, Power and Authority, The Authority is a joint exercise of powers agency organized under the'Joint Powers Act. The Authority has the fir11 legal right, power and authority to adopt the Resolution of Issuance, and the Authority has the full legal right, power and authority: (i) to enter into this Purchase Contract, the Continuing Disclosure Agreement and the Indenture (collectively, the "Authority Documents"); (ii) to purchase the Special Tax Refunding Borids from the Districts, as provided herein; (iii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, and ' (iv) to carry out and consummate all other transactions on its part contemplated by each of the Authority Documents and the Final Official Statement. The Authority has complied with all provisions of applicable law (including the Bond Law) and the Joint Powers Agreement, in all matters relating to the adoption of the Resolution of Issuance and the issuance of the Bonds, including the filing of all notices as required by the Joint Powers Act. (c) Authorization of Documents; Consents and. Anorovals. The Board of the Authority has duly authorized (i) the execution and delivery of the Bonds and the execution, delivery and due performance by the Authority of its obligations under the Authority Documents, (ii) the distribution acid use of the Preliminary Official Statement and execution, delivery and distribution of the Final Official Statement, and (iii) the taking of any and all such action as may be required on the part of the Authority to carry out, give effect to and consummate the transactions on its part contemplated by such instruments. Chula Vista JPA CFD BPA y~-~~ All consents or approvals necessary to be'obtained by the Authority in connection with the foregoirig have been received, and the consents or approvals so received are still in full force and effect. (d) Due Adoption of Resolution and Enforceability of Documents. -The Resolution of Issuance has been duly adopted by the Board of the Authority and is in full force and effect; and the Authority Documents, when executed and delivered by the Authority and the other respective parties thereto, will constitute legal, valid and binding obligations of the .Authority enforceable against the Authority in accordance with their 'respective terms, except as enforceability thereof may be limited by banla-uptcy, insolvency or other laws affecting creditors' rights generally. (e) - Enforceability of Bonds: When delivered to the Underwriter, the Bonds ' will have been duly authorized by the Board of the Authority and duly executed, issued and delivered by the Authority and will constitute legal, valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, and will be entitled to the benefit and security of the Resolution-of Issuance and the Indenture, (f) Preliminary and Final Official Statement. The information contained in ' - ~ - the Preliminary Official Statement relating to the Authority and its obligations under the Authority Documents is, and as of the Closirig Date such information in the Final Official Statement will be, true and correct in all material respects, and the Preliminary Official - Statement does not as of its date, and the Final Official Statement will not as of the Closing Date, contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the' circumstances under which they were made, not misleading. (g) Supplements or Amendments to Official Statement. The Authority shall promptly notify the .Underwriter in writing if, at any time prior to the earlier of {i) receipt _ of notice from the Underwriter that Final Official Statement is no longer requir"ed to be delivered under Rule 15c2-12 or (ii) the Closing Date (as described in Section 8 below), any' event known to the officers of the Authority participating in the issuance of the Bonds occurs as a result of which -the Final Official Statement as then amended or - supplemented might include an untrue statement of a material fact, or omit to state any . - material fact necessary to make the statements therein,.in light of the circumstances under which they were made, not misleading. Any information supplied by the Authority for ' inclusion in any amendments or supplements to the Final Official Statement will not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. - (h) No Conflicts. Neither the adoption of the Resolution of Issuance, the . execution and delivery of the Authority Documents, nor the consummation of the ' transactions on the part of the Authority contemplated herein or therein or the compliance 7 Chula V ista JPA CFD BPA ~~-~~ by the Authority with the provisions hereof or thereof will conflict with, or constitute on the part of the Authority a violation of, or a' breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the Authority is a party or by which it is bound, (ii) any provision of the Joint Powers Agreement, the Joint Powers Act or the State Constitution, or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the Authority (or the members of the Authority, the members of the Board of the Authority; or any'of its officers in their respective capacities as such) is subject, that would have a material adverse affect on the ability of the Authority to perform its obligations under the Authority Documents: (i) No Defaults. The Authority has never been in default at any time, as to principal of or interest on any obligation which it has issued, which default may have an adverse effect on the ability of the Authority to consummate the transactions on its part under the Authority Documents; except as specifically disclosed in the Firial' Official Statement; and other than the Bonds; the Authority has not entered"into any contract or arrangement. of any kind which might 'give rise to any lien or encumbrance on the Revenues. (j) No Litigation. Except as is specifically disclosed in-the Final Official Statement, to the best knowledge of the Authority, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the Authority has been served with process or threatened, which (i) in any way questions the powers of the Authority or the Board.of the Authority, (ii) in any way questiohs the validity' of any proceeding taken by the Board of the Authority. in connection with 'the issuance of the Bonds, (iii) wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by this Purchase Contract, (iv) which, in any way, could adversely affect the' validity or enforceability of the Authority Documents or°the' Fiscal Agent Agreements, (v) to the knowledge of the Authority, which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes, or (vi) in any other way questions ,the status of the Bonds under State tax laws or regulations. (k) Certificates of the Authority. Any certificate signed by an' official of the Authority authorized to execute such certificate and delivered to' the' Underwriter in connection with the transactions contemplated by the Authority Documents 'shall be deemed a representation and warranty by the Authority to the Underwriter as to the truth of the statements therein contained. - (1) Security for Bonds. The Bonds will be paid from Revenues (as defined in the Indenture) received'by or on behalf of the Authority. The Indenture creates a valid pledge of, and first lien upon, Revenues deposited thereunder and the moneys in certain funds and accounts established under the Indenture, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. 8 Chula Vista JPA CFD BPA ~~-72 (m) - Prior Continuing Disclosure Undertakings. Based on a review of its prior undertakings, and except as disclosed in the Official Statement, the Authority has not • failed to comply in all material respects with a continuing undertaking under Rule 15c2- .12,during the previous five years. (n) No Other Bonds. Between the date of this Bond Purchase Contract and the Closing Date, the Authority will not offer or issue any bonds, notes or other obligations of the Authority ..for borrowed money not previously disclosed to the Underwriter. 6. Representations and Warranties of the City. The City; on behalf of itself and each District, makes the following representations and warranties to the Underwriter. (a) Due Or¢anization and Authority. Each •District is duly organized and validly existing as a community facilities district under the Mello=Roos Act: ' (b) Full Right, Power and Authority. The City Council of the City, acting as ' legislative body of each District, has the full legal right, power and authority to'adopt each CFD Resolution, and the City, on behalf of each District, has the full legal right, ' power and authority:. (i) to enter into this. Purchase Contract, each respective Fiscal Agent Agreement and each respective Escrow Agreement (each an "Escrow. . Agreement," and collectively, the "Escrow Agreements"), each dated as of July 1, 2013, each by and: between the applicable District and U.S.- Bank National Association, as escrow agent (the "Escrow Agent"), (ii) to issue, sell and deliver each ~ respective series of Special Tax Refunding Bonds to the Authority as provided herein, (iii)' to secure each respective series of Special Tax Refunding Bonds in .the manner contemplated in its respective Fiscal Agent Agreement, and , (iv) to carry ,out and consummate',. all other transactions on ,its part contemplated by Purchase .Contract, each respective Fiscal Agent Agreement and ° each respective Escrow Agreement. Each District and the City Council of the City„acting as the legislative body of each District, have complied with all provisions of applicable law, including the Mello- Roos Act, in all matters relating to the adoption of the CFD Resolutions, the formation of each District, the incurrence of bonded indebtedness by each District, and'the levy of the special tax with respect to each District. 9 Chula Vista JPA CFD sea 17-73 ' (c) Authorization of Documents; Consents and Ayorovals. The City Council of the City has duly authorized: ' (i) the execution and delivery by each District of its respective Special Tax Refunding Bonds and the execution, delivery and due performance by each District`of its obligations under its respective Special' Tax Refutding Bonds and this'Purchase Contract, and .,, , (ii) the taking of any and all such action as may be required on the part of each District to carry out, give effect to and consummate the transactions on its part contemplated by its respective Special Tax Refunding Bonds and this Purchase Contract. All consents or approvals necessary to be obtained by each District in connection with the foregoing have been received, and the consents or approvals so received are still in full force and effect. (d) Due Adontion of Resolutions and Enforceability of Documents. Bach CFD 'Resolution has been duly adopted by the City Council of the City acting as the legislative body of each respective District, and is in full force and effect; and each series of Special Tax Refunding Bonds, each Fiscal Agent Agreement, each Escrow Agreement and this Purchase Contract, when executed and delivered by each District and the other • respective parties thereto, will constitute legal, valid and binding obligations of each District, enforceable against. each District in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally. (e) Preliminary and Final Official Statement. The information contained in the Preliminary Official Statement relating to the City and the Districts is, and as of the Closing Date such information in the Final Official Statement will be, true and correct in all material respects, and the Preliminary Official Statement does not as of its date, and the Final' Official Statement will not as of the Closing Date, contain any untrue or misleading statement of a material fact relating to the City and the Districts, or omit to state any material fact relating to the City and the Districts necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (f) No Conflicts.' Neither the adoption of the CFD Resolutions, the issuance of each series of Special Tax Refunding Bonds, the execution and delivery of each Fiscal Agent Agreement, each Escrow Agreement .and this Purchase Contract; nor the consummation of the transactions on the part of each District contemplated herein or therein or the compliance by each District with the provisions hereof or thereof, will conflict with, or constitute on the part of any District a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which that District is a parry or by which it is bound, (ii) any provision of the Mello-Roos Act or the State Constitution, or (iii) any existing law, vile, regulation, 10 Chula Vista JPA CFD BPA 17-74 ordinance, judgment, order or decree to which that District (or the members of the City Council of the City or any of its officers in their respective capacities as such) is subject, that would have a material adverse affect on the ability of a District to perform its respective obligations under its respective series of Special Tax Refunding Bonds, its ..respective Fiscal Agent Agreement, its respective Escrow Agreement or this Purchase Contract. (g) No Defaults. None of the Districts has ever been in default at any time, as to principal of or interest on any obligation which it has issued, which default may have an adverse effect on the ability of any District to consummate it's respective transactions contained in its series of Special Tax Refunding Bonds, its respective Fiscal Agent . Agreement, its respective Escrow Agreement or this Purchase Contract, except as specifically disclosed in the Final Official Statement; and other than its respective series of Special Tax Refunding Bonds, none of the Districts has entered into any contract or arrangement of any kind which might give rise to any lien or encumbrance on any of the Special Taxes. (h) No Litigation. Except as is specifically disclosed in the Final Official Statement; to the best knowledge of the City, there is no action, suit, proceeding, inquiry ` or im~estigation, at law or in equity, before or by any court, public board or body, pending . with respect to which the District or any District has been served with process or threatened; which (i) in any way questions the powers of the City Council of the City or .any District, (ii) in any way questions the validity of any proceeding taken by the City Council of the City in connection with the issuance of each series of Special Tax -Refunding Bonds, (iii) wherein an unfavorable decision, ruling or finding could materially .adversely affect the transactions contemplated by each Fiscal Agent . Agreement, each Escrow Agreement or this Purchase Contract, (iv) which, in any way, could adversely affect the validity or enforceability of any CFD Resolution, any series of Special Tax Refunding Bonds, any Fiscal Agent Agreement, any Escrow Agreement or this Purchase Contract, (v) to the knowledge of the City; which in any way questions the exclusion from gross income of the recipients thereo£of the interest- on any series of ' Special Tax Refunding Bonds for federal income tax purposes, or(vi) in any other way questions the status of any series of Special Tax Refunding Bonds under State tax laws or regulations. (i) Certificates of the Districts. Any certificate signed by an official of any District authorized to execute such certificate-and delivered to the Underwriter in connection with the transactions contemplated by this Purchase Contract shall be deemed a representation and warranty by 'each respective District, as applicable, to the Underwriter as to the truth of the statements therein contained. (j) Security for Special Tax Refunding Bonds. The payment of debt service on each series of .Special Tax Refunding Bonds will be paid from the Special Taxes received by the related District under the related Fiscal Agent Agreement. , v 11 Chula V ista JPA CFD BPA 1 ~ _~ b {k) Levy of Social Taxes. The Special Taxes of each District has been and. will be levied iri accordance with the Rate and Method of Apportionment of Special Taxes relating to each respective District, -and are secured by a lien on the property on which they are levied. (1) Pledge of Net Special Taxes. The Fiscal Agent Agreement for each series of Special Tax Refunding Bonds creates a valid pledge of, and first lien upon, the Special Taxes deposited thereunder and the moneys in certain funds and accounts established thereunder, subject in all cases to the provisions of each respective Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein. (m) Prior Bonded Assessment and Special Tax Liens. Except as disclosed in the' Final Official Statement, there are, to the best of the City's knowledge, after reasonable and diligent investigation of records made available by the County of San Diego, no entities with outstanding assessment or special tax liens against any of the properties within each respective District. (n) Continuing Disclosure. Based on a review of its prior undertakings; and except as disclosed in the Official Statement, the City has not failed to comply in all material respects with a continuing undertaking under Rule 15c2-12 during the previous five years. (o) Comnliance with Refundine 'Requirements. The total interest cost to maturity on each series of the Special Tax Refunding Bonds plus the principal amount of such Special Tax Refunding Bonds is less than the total remaining interest cost to maturity on the related series of Prior Bonds plus the outstanding principal amount of such Prior Bonds. 7. Blue Sky. The Authority and the City, on behalf of itself and the Districts, covenant with the Underwriter that the Authority, the City and the Districts will cooperate with the Underwriter (at the cost of the Underwriter), in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may reasonably request; provided, however, that the Authority shall not be required to consent to suit or to service of process, or to qualify'to do business, in any jurisdiction. The Authority consents to the use by the Underwriter of the Authority Documents in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds. 8. Closin At 8:00 A.M., Pacific Standard Time, on , 2013 or at such other time or date as may be mutually agreed upon by the Authority and the Underwriter (the "Closing Date"), the Authority will deliver or cause to be delivered (i) through the facilities of The Depository Trust Company, New York, New York, the Bonds in definitive form (all Bonds being in book-entry form registered in the name of Cede & Co. and having the CUSIP numbers assigned to them printed thereon), duly executed by the officers of the Authority as provided in the Indenture, and (ii) to the Underwriter, at the offices of Best Best & Krieger, LLP, San Diego, 12 Chula Vista JPA CFD BPA ~~-~6 . California, or at such other place as shall be mutually agreed upon by the Authority, the City, the. . Districts and the Underwriter, the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in immediately available cleared funds (such delivery and payment being herein referred to as the "Closing"). The Bonds will be delivered as fully registered Bonds initially in denominations of $5,000 each and any integral - multiple thereof. The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, and will'be made available for checking by the Underwriter at such place as the Underwriter and the Trustee agree not less than 24 hours prior to the Closing. 9. Termination Events. The Underwriter has the right to cancel its obligations to purchase the Bonds if between the date hereof and the Closing Date any of the fallowing events occurs: (a) the House of Representatives or the Senate of the Congress of the United States; or a committee of either, has pending before it, or passes or recommends favorably, legislation introduced previous to the date hereof, which legislation, if enacted in its form as introduced or as amended; would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the Authority or by any similar body under the Resolution of Issuance, the Indenture or the Act, or upon interest received on obligations of the general character of the Bonds, or of causing interest on obligations of the general character of the Bonds to be includable in gross income for purposes of federal income taxation, and such legislation, in the Underwriter's opinion, materially adversely affects the market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (b) a tentative decision with respect to legislation is reached by a committee of the House of Representatives or the Senate of the .Congress of the United States, or legislation is favorably reported or re-reported by such a committee or introduced, by amendment or otherwise, in or passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for. passage by the President of the United States, or enacted or a decision by a federal court of the United States or the United States Tax Court is rendered, or a ruling, release, order, regulation or official statement (tentative, proposed or final) by or on behalf of The United States Treasury Department, the Internal Revenue Service or other governmental agency is made or proposed to be made having the purpose or effect, or any other action or event occurs that has the .purpose or effect, directly or indirectly, that (i) adversely affects the federal income tax consequences of owning the Bonds, including causing interest on the Bonds to be included in gross income for purposes of federal income taxation, or (ii) imposes federal income taxation upon revenues or other income of the general character to be derived by the Authority under the Resolution of Issuance or upominterest received on obligations of the general character of the Bonds, or the Bonds, or (iii) which; in the opinion of the Underwriter, materially adversely affects the market price of or market for the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or .. 13 .Chula Vista JPA CFD BPA ~~-~~ (c) legislation is enacted, or actively considered for enactment with an effective date prior to the. Closing, or a decision by a court of the United States is rendered, the effect of which is that the Bonds, including any underlying obligations, or the Resolution of Issuance or the Indenture, as the case may be, is not exempt-from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (d) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds, including any underlying obligations, or the execution and delivery of the Indenture as contemplated hereby or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (e) any event occurs' or any information becomes known to the Underwriter that'canses the Underwriter to reasonably believe that the Final Official Statement as then amended or supplemented includes an untrue statement of a material fact, or omits to state any material 'fact necessary to make the statements therein, in light of the circumstances under which they were made; not misleading; or (f) there occurs any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or (g) there is in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or ' (h) a general banking moratorium is declared by federal, New York or State authorities; or (i) any 'proceeding is pending or threatened by the Securities and'Exchange Commission against the City, the Districts, the Board or the Authority; or (j) additional material restrictions not in force as of the date hereof are imposed upon trading in securities generally by any governmental authority or by any national securities exchange which adversely affects the Underwriter's ability to sell the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or 14 Chula Vista JPA CFD BPA ~~-~8 (k) the New York Stock Exchange or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bands, any material restrictions not now in force, or increases materially those now in.force, with respect to the extension of credit by, or the charge to the net capital requirements of, Underwriter; or (1) an amendment to the federal or State constitution is enacted or action is taken by any federal.or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the Authority, its property, income or securities (or interest thereon),. the validity or enforceability of the Special Taxes or the ability of the Authority to issue the Bonds or any of the Districts to issue its respective series of Special Tax Refunding Bonds, or the levy of any of the Special Taxes, as contemplated by the Resolution of Issuance, each Fiscal Agent Agreement, this Purchase Contract and the Final Official Statement; or - (m) the commencement of any action;. suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or-body described in Section 5(j) and 6(h). 10. Conditions to Closing. The obligations of the Underwriter to purchase the Bonds shall be subject (i) to the performance by the Authority, the City and each District of their respective obligations to be performed hereunder at and prior to the Closing, (ii) to the accuracy as of the date hereof and as of the time of the Closing of the representations and warranties of the Authority and the City herein, and (iii) to the following conditions, including the delivery by the Authority of such documents as' are enumerated herein in form and 'substance satisfactory to the Underwriter: (a) At the time of Closing, (i) the Final Official Statement, the Resolution of Issuance, the Indenture, the Continuing Disclosure Agreement, the CFD Resolutions, each Fiscal'Agent Agreement, each Escrow Agreement and this Purchase Contract shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriter, and (ii) each of the Districts shall have been duly formed and there shall be in full force and effect such resolutions as, in the opinion of Best Best & Krieger, LLP, San Diego, California ("Bond Counsel"), are necessary in connection with the transactions contemplated- hereby, including, but not limited to, the Resolution of Issuance. (b), The Underwriter shall receive the Bonds, and the Authority shall have received the Special Tax Refunding Bonds, at or prior to the Closing. The terms of the Bonds and Special Tax Refunding Bonds delivered shall in all instances be as described in Final Official Statement. 1~ Chula Vista JPA CFD BPA ~ ~_~ ~ (c) At or prior to the Closing, the Underwriter shall receive the following documents in such number of counterparts as are mutually agreeable to the Underwriter and the Authority: (i) A final approving opinion of Bond Counsel dated the Closing Date in the form attached as an appendix to the Final Official Statement. (ii) A letter or letters of Bond Counsel addressed to the Underwriter, which includes a statement to the effect that Bond Counsel's final approving opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to the Underwriter, and further provides: (A) The statements contained in the Official Statement on the cover page and under the captions "INTRODUCTION," "THE FINANCING PLAN," "THE BONDS," "SECURITY FOR THE BONDS," and "CONCLUDING INFORMATION -Tax Matters," and in 'Appendix B, Appendix C and Appendix D thereto, are accurate in all material respects, insofar as such statements purport to summarize certain provisions of the Bonds, the Special Tax Refunding Bonds, the Indenture, the Resolution of Issuance, and the Fiscal Agent Agreements; (B) the Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State, including the Joint Powers Act; (C) each District is a community facilities district duly organized and validly existing under the laws of the State, including the Mello-Roos Act; (D) the Authority has duly and validly executed and delivered the Bonds and the Authority Documents, and the Bonds and the Authority Documents constitute the legal, valid and bindirig obligations of the Authority, enforceable against the Authority in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies aze sought; (E) each District has duly and validly executed and delivered its respective Fiscal Agent Agreement, its respective Escrow Agreement, its respective Special Tax Refunding Bonds and this Purchase Contract, and each District's Fiscal Agent Agreement, Escrow Agreement and Special Tax Refunding Bonds, and this Purchase Contract constitute the legal, valid and binding obligations of each respective District, enforceable against each respective District in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, 16 Chu]a Vista JPA CFD BPA ~~-$0 moratorium and other laws affecting enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; _ (F)- " the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and (G) none of the Special Tax Refunding Bonds is subject to the registration requirements of the Securities Act of 1'933, as amended, and each Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended. (iii) Defeasance opinions, each dated the Closing Date and addressed to the Authority, the Districts, the Underwriter and the Fiscal Agent, of Bond Counsel, in the form required by the applicable bond indenture relating to the outstanding bonds issued with respect to each applicable District which are refunded through the issuance of the Bonds and the Special Tax Refunding Bonds. (iv) A letter of Stradling Yocca Carlson & Rauth, a Professional Corporation, as disclosure counsel to the Authority, addressed to the Authority and the Underwriter, to the effect that without passing upon or assuming any responsibility for the accuracy, completeness or fairness bf the statements contained in the Final Official Statement and making no representation that they : have independently verified the accuracy, completeness or fairness of any such statements, based upon the information made available to them in the course of their-participation in the preparation of the Final Official Statement, nothing has come to such counsel's attention which would lead them to believe that the Final Official Statement, as of its date or as of the Closing Date, including the cover page (but excluding therefrom the appendices thereto, financial statements and statistical data, and information regarding The Depository Trust Company and its book entry system, as to which no opinion need be expressed) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circtunstances under which they were made, not misleading. (v) An opinion, dated the Closing Date and addressed to the Underwriter, of Best Best & Krieger, LLP, San Diego, California, special counsel to the Authority, in form and substance acceptable to the Underwriter, to the following effect: (A) The Authority has full legal right, power and authority to adopt the Resolution of Issuance, to issue the Bonds and to execute the Authority Documents. 17 Chula Vista JPA CFD BPA ~ 7_8 ~ ' (B) Each District has full legal right, power and authority to adopt its - respective CFD Resolution, and to execute its respective Fiscal Agent Agreement, its respective Escrow Agreement and this Purchase Contract. (C) Except as is specifically disclosed in the Final Official Statement, and to the best of such counsel's knowledge, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the Authority has been served with process or threatened, which (i) in any way questions the powers of the Authority or the Board of the Authority, or (ii) in any way questions the validity of any. proceeding taken by the Board of the Authority in connection with the issuance of the Bonds, or (iii) wherein an unfavorable decision, ruling or finding could materially adversely affect "' the transactions contemplated by this Purchase Contract, or (iv) which, in - • any way, could adversely affect the validity or enforceability of the Authority Documents, or (v) to the knowledge of the Authority, which in any way questions the exclusion from gross income of the recipients 'thereof of the interest on the Bonds for federal income tax purposes, or (vi) in any other way questions the status of the Bonds under State tax laws or regulations. (D) Except as is specifically disclosed in the Final Official Statement, and to the best of such counsel's knowledge, there is no action, suit, proceeding, inquiry or investigation, at law or iri equity, before or by any court, public boazd or body, pending with respect to which the City or any District has been served with process or threatened, which (i) in any way questions the powers of the City Council of the City or of any District, or (ii) in any way questions the validity of. any proceeding taken by the City Council of the City in connection with the issuance of any of the Special Tax Refunding Bonds, or (iii) wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by this Purchase Coritract, or (iv) which, in any way, could adversely affect the validity or enforceability of any of the CFD Resolutions, any of the Special Tax Refunding Bonds, or this Purchase Contract, or (v) which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Special Tax Refunding Bonds for federal income tax purposes, or (vi) in any other way questions the status of the Special Tax Refunding Bonds under State tax laws or regulations. (E) Neither the adoption of the Resolution of Issuance, the execution and delivery of the Authority Documents, nor the consummation of the transactions on the part of the Authority contemplated herein or therein or the compliance by the Authority with the provisions hereof or thereof will conflict with, or constitute on the part of the Authority a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the 18 Chula Vista JPA CFD BPA ~~-82 Authority is.a party or by which it is bound, (ii) any provision of the Bond Law, the Joint Powers Agreement or the State Constitution, or "(iii) any existing law, rule, regulation, ordinance, judgment, order, or decree to which the Authority (or the members of the Authority, the members of the - Board of the Authority, or any of its officers in their respective capacities - '. as such) is subject, that would have a material adverse affect on the ability of the Authority to perform its obligations under the Authority Documents; provided, however, that no opinion need be expressed as to financial capability or lack thereof. ; (F) Neither the adoption of the CFD Resolutions, the execution and delivery of the Special Tax Refunding Bonds and tfiis Purchase Contract, ' nor the consummation of the transactions on the part of each District contemplated herein or therein or the compliance by each District with the' ' provisions hereof or thereof, will conflict with, or constitute on the part of ' any District a violation of, or a breach of or default under, (i) any material indenture, mortgage, commitment, note or other agreement or instrument to which the City or any District is a party or by which-it is bound, (ii) any provision of the Mello-Roos Act or the State Constitution or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree, to which any District (or the members of the City Council of the City or any of its officers in their respective capacities as such) is subject; that would ' have a material adverse affect on,the ability of auy District to perform its respective obligations under its respective series of Special Tax Refunding Bonds or this Purchase Contract; provided, however, that no'opinion need be expressed. as to financial capability or lack thereof. (vi) The Final Official Statement executed on behalf of the Authority by a duly authorized officer. (vii). Certified copies of the Resolution of Issuance and the CFD Resolutions. (viii). SpeeimenBonds. (ix) Evidence that Internal Revenue Service Form 8038 has been executed by the Authority and will be filed with the Internal Revenue Service. . (x) Executed copies of the Indenture, each Fiscal Agent Agreement, each Escrow Agreement, the Continuing Disclosure Agreement, and this Purchase Contract. {xi) Anon-arbitrage certificate executed by the Authority in form and substance satisfactory to Bond Counsel. 19 Chula V ista 7PA CFD BPA 17-83 (xii) In connection with printing and distribution of the Preliminary Official Statement, an executed certificate of the Authority in the form attached hereto as Exhibit B. (xiii) A closing certificate, in form and substance as set forth in Exhibit C hereto, of the Authority, dated as of the Closing Date. ` (xiv) A closing certificate, in form and substance as set forth in Exhibit D hereto, of each District, dated as of the Closing Date. (xv) A certificate in form and substance as set forth in Exhibit E hereto, dated as of the Closing Date, of NBS, Temecula, California, special tax consultant. ' (xvi) A certificate in form and substance acceptable to the Underwriter and its counsel, dated as of the Closing Date; of NBS, Temecula, California, dissemination agent in connection with the prior continuirig disclosure obligations of the City. " (xvii) A certificate"in form and substance ~as set forth in Exhibit F hereto, dated as of the Closing' Date, of the Trustee, Escrow Agent and Fiscal Agent. (xviii) An opinion of Nossaman LLP, counsel to the Underwriter, dated as of the Closing Date, in form and substance satisfactory to the Underwriter. (xvix) An opinion of counsel to the Trustee, Escrow Agent and Fiscal Agent, dated as of the Closing Date, in form and substance satisfactory to the Underwriter and Bond Counsel. (xx) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence compliance by the Authority and the Districts with legal requirements, the truth and accuracy, as of the time of Closing, of the representations of the Authority and the Districts herein contained, and the due performance or satisfaction by the Authority and the District at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Authority and the Districts. If the Authority or the Districts are unable to satisfy the conditions to the obligations of the Underwriter contained in this Purchase Contract, or, if the obligations of the Underwriter to purchase and accept delivery of the Bonds are terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter, the Autho'riry nor the' Districts shall be under further obligation hereunder; except that the respective obligations to pay expenses, as provided in Section 13 hereof shall continue in full force and effect. 20 Chula Vista JPA CFD BPA 17-84 11. Conditions to Authority's and the Districts' Oblieations. The obligations of the Authority and the Districts hereunder are subject to the performance by the Underwriter of its .obligations hereunder. 12. Survival of Representations. Warranties and Agreements. All representations, warranties and agreements of the Authority and the Districts hereunder shall remain operative arid in full force and effect, regardless of any inv_ estigations made by or on behalf of the Underwriter, and shall survive the Closing. 13. Expenses. The Authority shall pay or cause to be paid all reasonable expenses incident to the issuance of the Bonds and to the performance of. its obligations and the • ~ obligations_of the'Districts under this Purchase Contract, including, but not limited to, delivery of ' the Bonds and the Special Tax Refunding Bonds, costs of printing the 'Bonds, the Preliminary - Official Statement and the Final Official Statement, any amendment or supplement .to the Preliminary Official.Statement or Final Official Statement and this Purchase Contract, fees and disbursements of Bond Counsel and Special Counsel, any financial advisor and other ~-consultants, including the fees and expenses of the Special Tax Consultant and the Trustee, - ~~ Escrow Agent and Fiscal Agent. The Underwriter shall pay all advertising expenses in connection with the public offering - of the Bonds, and all other expenses incurred by it in connection with its public offering and distribution of the Bonds, including without limitation the fees and expenses of its counsel. 14. Notices. Any notice or other communication to be given to the Authority, the City • ~ or the Districts under this Purchase Contract may be given by delivering the same in writing at its address. set forth above, and any notice or other communication to be .given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to E. J. De La Rosa & Co., Inc., 456 Montgomery Street, 19th Floor, San Francisco, CA 94104, attention: Mr. Ralph ' Holmes. 15. Benefit. This Purchase Contract is made solely for the benefit of the Authority; the City, the Districts and the Underwriter (including the successors' or assigns of the Underwriter) and no other: person, including any purchaser of the Bonds, shall acquire or have any right hereunder or by virtue hereof. 16. Governing Law. This Purchase Contract shall be governed by and construed in accordance with the laws of the State of California. 17. Effective Date. This Purchase Contract shall become effective upon acceptance hereof by the Authority and the Districts. - 18. Counterparts. This Purchase Contract may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. 21 Chula V ista JPA CFD BPA 17-85 19. Severability. If any provision of this Purchase Contract is held invalid or unenforceable by any court of competent jurisdiction, such. Holding shall not invalidate or render unenforceable any other provision hereof. E. J. DE LA ROSA & CO., INC., as ` Representative of the Underwriter By: Managing Director Accepted and' agreed to as of the date first above written: CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Title: ~ - Time of Execution: CITY OF CHULA VISTA, on behalf of COMMUNITY FACILITIES DISTRICT NO. 06-I OF THE CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 07-I OF THE CITY OF CHULA VISTA COMMUNITY'FACILITIES DISTRICT NO. 08-I OF THE CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-2 OF THE CITY OF CHULA VISTA ' ` By: _ Title: 22 Chula Vista JPA CFD BPA 17-86 EXHIBIT A S CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 Maturity. Principal Interest Price or (September 1) Amount ~ Rate Yield *Term Bond. C=Priced to the optional redemption date of September 1, 20 A-1 17-87 EXHIBIT B CHULA VISTA MUNICIPAL FINANCING, AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 ISSUER 15c2-12 CERTIFICATE The undersigned hereby certifies. and represents that he or she is the duly appointed and acting representative of th'e Chula Vista Municipal Financing Authority (the "Authority"), and is duly authorized to execute and deliver this Certificate and further hereby' certifies and reconfirms on behalf of the Authority as follows: (1) This Certificate is delivered in connection with the offering and sale of the bonds captioned above (the "Bonds") in order to enable the underwriter of the Bonds to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule"). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds, the Authority and other matters (the "Preliminary Official Statement"). (3) As used herein, "Permitted Omissions" means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds. (4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of Rule 15c2-12, and the information therein is accurate and complete except for the Permitted Omissions. IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed as of , 2013. CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Title: B-L . 17-88 EXHIBIT C S CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 ISSUER CLOSING CERTIFICATE The undersigned hereby certifies and represents that he or she is the duly appointed and acting representative of the Chula Vista Municipal Financing Authority. (the "Authority"), and is duly authorized to execute and deliver this Certificate in connection with the offering and sale of the bonds captioned above, and further hereby certifies and reconfirms on behalf of the Authority as .follows: (1) • the representations, warranties and. covenants of the Authority contained in that certain Bond Purchase Contract by and among the Authority, the•City of Chula Vista (as legislative .body of the Districts named therein). and E. J. be La Rosa & Co., Inc., as representative of the underwriters, dated , 2013 (the "Purchase Contract") are true and correct and ih all material respects as of the date hereof as if made on the date hereof; " (2) the representations and warranties of the Authority contained in the Authority Documents-are tnie and correct in all material respects as of the date hereof as if made on the date hereof, and the Authority has complied with all agreements, covenants and conditions .to be complied with by the Authority under the Authority Documents as of the date hereof; (3) The Authority has complied with all agreements and covenants, and satisfied all conditions, on its part to be complied with or satisfied under the Purchase Contract and under the - Authority Documents at or prior to the date hereof; (4) to .the best knowledge of the Authority; no event affecting the Authority has occurred since the da_ to of the Final Official Statement which either makes untrue or incorrect in any material respect as of the date hereof the statements or information relating to the Authority ,contained in the Final Official Statement or is not reflected in the Final Official Statement but should be reflected therein in order to make such statements and information therein not misleading in any . material respect. Capitalized terms not defined herein have the same meaning as is set forth in, the Purchase Contract. ~ . " Dated: , 2013 CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: _ Title: C-1 17-89 EXHIBIT D CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 FORM OF COMMUNITY FACILITIES DISTRICT CLOSING CERTIFICATE The undersigned hereby certifies 'and represents that he or she is the duly-appointed and acting representative of the City of Chula Vista (the "City"), the City Council of-which is the legislative body for Community Facilities District No. 06-I of the City of Chula Vista ("CFD No. 06= I"), Community Facilities District No. 07-I of the City of Chula Vista ("CFD No. 07-F'), Community Facilities District No. 08-I of the City of Chula Vista ("CFD No. 08-I") and Community Facilities District No. 2001-2 of the City of Chula Vista ("CFD No. 2001-2" and, collectively, the "Districts"), which are community facilities districts duly organized and existing undef the laws of the State of California, and is authorized to execute this Certificate on behalf of each District in connection with the issuance of the bonds captioned above (the "Bonds"), and further hereby certifies and reconfirms on behalf of the City and each District as follows: (1) the representations, warranties and covenants of the City contained in that certain Bond Purchase Contract by and amorig the Authority, the City of Chula Vista (as legislative body of the Districts named therein) and E. J. De La Rosa & Co., Inc., as representative of the underwriters, dated , 2013 (the "Purchase Contract"), are-true and correct and in all material respects as of the date hereof as if made on the date hereof; ' (2) the City has complied with all agreements, covenants and conditions to be complied with by the City under each Fiscal Agent Agreement as of the date hereof; (3) The information regarding the City and the Districts in the Official Statement is true and correct and does not contain any untrue statement of a material fact or omit to state a material fact necessary to 'make the statements therein, in light of the circumstances under which they are made, not misleading; (4) to the best knowledge of the City, no event affecting the City or any Comrriunity Facilities District has occurred since the date of the Final Official Statement which either makes untrue or incorrect in any material respect as of the date hereof the statements or information relating to'the City or the Districts contained in the Final Official Statement or is not reflected in the Final Official Statement but should be reflected therein in order to make such statements and information therein not misleading in any material respect; and (5) Each Special Tax has been levied for fiscal year [2012-13] [2013-14J in accordance with the Rate and Method of Apportionment of Special Tax for each respective Community Facilities District. D-1 17-90 Capitalized terms not defined herein have the same meaning as is set forth in the Purchase Contract. Dated: ~ , 2013 CITY OF CHULA VISTA, on behalf of the Districts identified above By: Title: D-2 17-91 EXHIBIT E '" S CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 CERTIFICATE OF SPECIAL TAX CONSULTANT NBS (the "Special Tax Consultant"), Temecula, California was retained as Special Tax Consultant and has reviewed the Rate and Method of Apportionment for Community Facilities District No. 06-I of the City of Chula Vista, Community Facilities District No. 07-I of the City of Chula Vista, Community Facilities District No. 08-I of the City of Chula Vista and Community Facilities District No. 2001-2 of the City of Chula Vista (each a "Rate and Method") all as set forth in Appendix B to the Official Statement (the "Official Statement") dated , 2013, relating to the bonds captioned above (the "Bonds"), and the summaries and descriptions of each Rate and Method contained in the Official Statement. Based upon such review, the Special Tax Consultant hereby certifies as follows: (a) The Special Tax levied under each Rate and Method, if levied in the maximum amounts permitted pursuant to the special tax formula set forth in each Rate and Method on the date hereof, would be levied in a combined amount equal to at least 110% of the gross annual debt service on the Bonds, provided that the annual debt service figures in the debt service schedules contained in the Official Statement, which were relied upon by Special Tax Consultant, are substantially true and correct. Although the Special Tax, if levied in the maximum amounts pursuant to the special tax formula set forth in each Rate and Method, would be levied in a combined amount equal to at least 110% of the gross annual debt service payable with respect to the Bonds each year, no representation is made herein as to actual amounts that will be collected in future years. (b) Except as disclosed in the Final Official Statement, there are, to the best of the Special Tax Consultant's knowledge, after reasonable and diligent investigation of records made available by the County, no entities with outstanding assessment or special tax liens against any of the properties within any of the Districts. (c) All summaries of and information with respect to each Rate and Method in the Official Statement, the information in Tables _ through _, excluding Tables and _, in the Official Statement, and all other information provided by the Special Tax Consultant for inclusion in the Official Statement, are true and correct as of the date of the Official Statement and as of the date hereof. The Special Tax Consultant has the full power and authority to enter into and perform its duties as dissemination agent under the Continuing Disclosure Agreement dated as of 2013, executed by the Authority and countersigned by the Special Tax Consultant, as dissemination agent thereunder. E-1 17-92 Capitalized terms not defined herein have the same meaning as is set forth in the Official Statement: ' Dated: , 2013 NB5 By: Title: E-2 17-93 EXHIBIT F CHULA.VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 CERTIFICATE OF TRUSTEE, ESCROW AGENT AND FISCAL AGENT The undersigned hereby states and certifies that he or she is an authorized officer of U.S. Bank National Association (the "Bank"), as trustee under an Indenture of Trust dated as of July 1, 2013 (the "Indenture"), by and between the Bank and the Chula Vista Municipal Financing Authority, relating to the captioned bonds (the "Bonds"), as fiscal agent under the fiscal agent agreements (collectively, the "Fiscal Agent Agreements"), each of which is dated as of July 1, 2013, and is by and between the Bank and Community Facilities District No. 06-I of the City of Chula Vista, Commmunity Facilities District No. 07-I of the City of-Chula Vista, Community Facilities District No. 08-I of the City of Chula Vista and Community Facilities District No. 2001-2 of the City of Chula Vista, respectively and as escrow agent under the escrow agreements (collectively, the "Escrow Agreements"), each of which is dated as of July 1, 2013, and is by and between the Bank and Community Facilities District No. 06-I of the City of Chula Vista, Community Facilities District No. 07-I of the City of Chula Vista, Community Facilities District No. 08-I of the City of Chula Vista and Community Facilities District No. 2001-2 of the City of Chula Vista, respectively. As such, the undersigned is familiar with the following facts and is authorized and qualified to certify the following facts on behalf of the Bank: (1) The Bank is duly organized and existing as a national banking association under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Indenture, and to perform.its respective duties each Fiscal Agent Agreement and each Escrow Agreement. (2) The Indenture, each Fiscal Agent Agreement and each Escrow Agreement have been duly authorized, executed and delivered by the Bank. (3) To the best knowledge of the Bank, after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending against the Bank or threatened against the Bank which in the reasonable judgment of the Bank would affect the existence of the Bank or in any way contesting or affecting the validity or enforceability of the Indenture, each Fiscal Agent Agreement or each Escrow Agreement or contesting the powers of the Bank or its authority to enter into and perform its obligations under the Indenture each Fiscal Agent Agreement or each Escrow Agreement . Dated: , 2013 U.S. BANK NATIONAL ASSOCIATION, as Trustee, Escrow Agent and Fiscal Agent By Authorized Officer 17F 9 4 THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL Gl n R. G ogins City Attorn Dated: ~ ~ Z ~ ~ 3 ESCROW DEPOSIT AND TRUST AGREEMENT BETWEEN T}-IE CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I (EASTLAKE -WOODS, VISTAS AND LAND S WAP) AND U.S. BANK NATIONAL ASSOCIATION ~~- w ATTACHMENT 3 ESCROW DEPOSIT AND TRUST AGREEMENT 17-95 ESCROW DEPOSIT AND TRUST AGREEMENT by and between the CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT N0.06-I (EASTLAKE -WOODS, VISTAS AND LAND SWAP) and U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank Dated as of July 1, 2013 Related to City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds 09964.00000A7964289.1 17-96 ESCROW DEPOSIT AND TRUST AGREEMENT This ESCROW DEPOSIT AND TRUST AGREEMENT, dated as of July 1, 2013 .. (the "Escrow Agreement", by and, between the CITY OF CHULA VISTA COMMUNITY =FACILITIES DISTRICT NO. 06-L(EASTLAKE -WOODS, VISTAS AND LAND SWAP), a community facilities district organized and existing by virtue of the Constitution and laws of the State of California (the "Community Facilities District"), and U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank (the "Escrow Bank"); ~ - WITNESSETH: • WHEREAS, the Cormuuniry Facilities- District has .heretofore entered into a Bond Indenture, dated as of December 1, 2002 (the "Prior Bond Indenture"), with U.S, Bank` National Association (the "Prior Fiscal Agent") ;and WHEREAS, pursuant to the Prior Indenture the Community Facilities District issued its City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods,~Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds in the original principal amount of $39,000,000 (the "Prior Special Tax Bonds"); and ' WHEREAS, the Prior Indenture provides that in the event that the Community Facilities District deposits moneys which, together with the amounts then on deposit in the funds • established pursuant to the Prior Bond Indenture (exclusive of the Rebate Fund) and available for such purpose; is fully sufficient to pay the principal of; premium, if any, and interest on the Prior Special Tax Bonds, as and when the same shall be become due and payable, then, as the electon of the District, and notwithstanding that any Outstanding Prior Special Tax Bonds shall not have ' been surrendered for payment, all obligations of the Community Facilities District under the Prior Indenture with respect to the Prior Special Tax Bonds, shall cease and terminate, except for the obligation of the Prior Fiscal Agent to pay. or cause to be paid to the Owners of any such Prior Special Tax Bond not so surrendered and paid, all sums due thereon; and WHEREAS, the Community Facilities District has determined that it is in the best interests of the Community Facilities District at this time to refinance the Prior Special Tax Bonds and cause the redemption thereof on September 3, 2013, such date being the first,Business Day following .the scheduled Interest Payment Date of September 1, 2013 which is. not a Business Day, at a redemption price of 100% of the principal amount thereof, without premium, plus accrued interest; and WHEREAS, the Community Facilities District proposes to make the deposit of moneys and to appoint the Escrow Bank as its agent for the purpose of applying said deposit to the redemption of the Prior Special Tax Bonds in accordance with the instructions provided by this Escrow Agreement and of applying said payments to the payment and redemption of the Prior Special Tax Bonds in accordance with the Prior Indenture, and the Escrow Bank will acceptsaid appointment; and WHEREAS, to obtain moneys to make such deposit, the Community Facilities District proposes to issue its $ Community Facilities District No. 06-I (Eastlake - Woods, Vistas and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013 (the "2013 Bonds") pursuant to that certain Fiscal Agent Agreement, dated as of July 1, 2013 1 09960.00000\7964289.1 ,~ 7 _ 9 7 (the "Fiscal Agent Agreement"), by and between the Community Facilities District and the Fiscal Agent; and WHEREAS, the Community Facilities District wishes to make such a deposit with the Escrow Bank and to enter into this Escrow Agreement for the purpose of providing the terms grid conditions for the deposit and application of amounts so deposited; and WHEREAS, the Escrow Bank has full ~ powers to act with respect to the irrevocable escrow and trust created herein and to perform the duties and obligations to be undertaken pursuant to this Escrow Agreement:' NOW, THEREFORE, in consideration of the above premises and of the mutual promises and covenants herein contained and' for other valuable consideration; the parties hereto do hereby agree as follows: Section 1. Appointment of Escrow Bank. The Community Facilities District hereby appoints the Escrow Bank as escrow bank for all purposes of this Escrow Agreement and in accordance with the terms and provisions of this- Escrow Agreement, and the Escrow Sank hereby accepts such appointment. Section 2. ~ Establishment of Escrow Fund. There is hereby created by the Community Facilities District with, and to be held by, the Escrow Bank, an irrevocable escrow to be maintained in trust by the Escrow Bank on behalf of the Community Facilities District and •for the benefit of the owners of the Prior•Special Tax Bonds, said escrow to be designated the "Escrow Fund." All moneys deposited in the Escrow Fund shall be held as a special fund for the payment of the debt service payments in accordance with' the provisions of the Prior Indenture. If of any time the Escrow Bank shall receive actual knowledge that the moneys in the Escrow Fund will not be sufficient to make any payment required by Section 5 hereof, the Escrow Bank shall notify the Community Facilities District of such fact and the Community Facilities District shall immediately cure such deficiency. Section 3. Deposit into Escrow Fund: Investment of Amounts. Concurrently with delivery of the' Bond's, the Community Facilities District shall cause to be transferred to the Escrow Bank for deposit into the Escrow Fund the amount of $ ~ in immediately available funds which shall be derived as follows: $ with respect to the Prior Special Tax Bonds comprised of [$ representing funds on deposit in the Reserve Fund and $ representing funds on deposit in the Special Tax Fund] and $ to come from the proceeds of the 2013 Bonds. The Escrow Bank shall hold all moneys deposited into the Escrow Fund in cash unin"vested (the "Cash"). The Escrow Bank shall not be liable or responsible for any loss resulting from any investment or reinvestment made pursuant to this Escrow Agreement and in full compliance with the provisions hereof. Section 4. Instructions as to A lication of De osit• Authorit Retains Ri ht of Optional Redemption. The Community Facilities District hereby irrevocably directs-and instructs the Escrow Bank to redeem the outstanding Prior Special Tax- Bonds in full on 2 09960.00000 V 9642 89. I 77-98 September 3, 2013 at a prepayment price of 100% of the principal amount thereof, without premium, all as more particularly set forth in Exhibit A attached hereto and hereby made a part hereof. For such purpose of call and redemption prior to maturity of the Prior Special Tax ' Bonds, the Community Facilitie9 District hereby instructs the Escrow Bank, and the Escrow Bank hereby agrees to cause to be given a [conditional] notice of redemption of the Prior Special Tax Bonds on or before August 1, 2013, such notice of redemption to be given substantially in . the form set for in Exhibit B attached hereto and izereby made a part hereof and timely for redemption of the Prior Special Tax Bonds on September 3, 2013, in accordance with the applicable provisions of the Prior Indenture. Section 5. Application of Certain Terms of Prior Indenture. All of the terms of the Prior Indenture relating to the making of payments of principal and interest with respect to the Prior Special Tax' Bonds are incorporated in this Escrow Agreement as if set forth in full herein. The provisions of the Prior Indenture relating to the limitations from liability and _ protections afforded the Prior Fiscal Agent and the resignation and removal of the Prior Fiscal Agent aie also incorporated in this Escrow Agreement as if set forth in full herein and shall be the procedure to be followed with respect to any resignation or removal of the Escrow Bank hereunder. Section 6. Compensation to Escrow Bank. The Community Facilities District shall pay the Escrow Bank full compensation for its duties under this Escrow Agreement, including out-of-pocket costs such as publication costs, prepayment or redemption expenses, legal fees and other costs and expenses relating hereto pursuant to a separate agreement between the Community Facilities District and the Escrow Bank. Under no circumstances shall amounts, deposited in the Escrow Fund'be deemed to be available for said purposes. Section 7. Liabilities and Obligations of Escrow Bank. The Escrow Bank shall have no obligation to make any payment or disbursement of any type or incur any financial liability in the performance of its duties under this Escrow Agreement unless the Community. Facilities District shall have deposited sufficient funds with the Escrow Bank to satisfy such obligation. The Escrow Bank may rely and shall be protected in acting upon the written instructions of the Community Facilities District or its agents relating to any matter or action as Escrow Bank under this Escrow Agreement. The Escrow Bank undertakes such duties as specifically set forth herein and no implied duties or obligations shall be read into this Escrow Agreement against the Escrow Bank. The Community Facilities District hereby assumes liability for, and hereby agrees (whether or pot any of the transactions contemplated hereby are consummated) to indemnify, protect,.save and hold harmless the Escrow Bank and its respective successors, assigns, agents - and servants from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including legal fees and disbursements) of whatsoever kind and nature which maybe imposed on, incurred by, or asserted against, at any time, the Escrow Bank (whether or not also indemnified against by any other person under any other. agreement or instnunent) and in anyway relating to or arising out of the execution and delivery ofthis Escrow Agreement, the establishment of the Escrow Fund, the retention of the. moneys therein and any payment, transfer or other application of moneys or securities by the Escrow Bank in accordance with the provisions of this Escrow Agreement, or as may arise by 3 09960.ooooov96aza9.r ~ 7-99 reason of any act, omission or error-of the Escrow Bank made in good faith in the conduct of its duties; provided, however, that the Community Facilities District shall not be required to indemnify the Escrow Bank against its own negligence or misconduct. The indemnities contained in this Section 7 shall survive the termination of this Escrow Agreement and the resignation and removal of the Escrow Bank. The Escrow Bank shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. In no event shall the Escrow Bank be'liable for any special indirect or consequential damages. The Escrow Bank may consulT with counsel of its own choice and the opinion of such counsel shall be full and complete authorization to take or suffer in good faith any action hereunder in accordance with such opinion of counsel. The Escrow Bank shall not be responsible. for any of the recitals or representations contained herein. No provision of this Escrow Agreement shall require the Escrow Bank to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers. Section 8. Amendment. This Escrow Agreement may be modified or amended at any time by a supplemental agreement which shall become effective when the written consents of the owners of one hundred percent (100%) in aggregate principal. amount of the Prior Special Tax Bonds then outstanding shall have been filed with the Escrow Bank. This Escrow Agreement may be modified or amended at any time by a supplemental agreement, without the consent of any such owners, but only (1) to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power herein or therein reserved to the Community Facilities District, (2) to cure, correct or supplement any ambiguous or defective provision- contained herein, or {3) .in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which, in the opinion of counsel, shall not adversely affect the interests of the owners of the Prior Special Tax Bonds or the Bonds, and that such amendment will not cause interest on the Prior Special Tax Bonds or the Bonds to become subject to federal income taxation. Section,9. Termination; Unclaimed Monev. This Escrow Agreement shall terminate when the Prior Special Tax Bonds have been paid; provided, however, that (i) money held by the Escrow Bank pursuant to this Escrow Agreement for the payment and discharge of any of the Prior Special Tax Bonds (which shall not be payable as to interest from and after the date set for redemption) which remain unclaimed for two (2) years after such payments were due; shall be repaid by the Escrow Bank to the Community Facilities District free from the trust created by the Prior Indenture and this Escrow Agreement, and the Escrow Bank shall thereupon be released and discharged with respect thereto and hereto and all liability of the Escrow Bank with respect to such' money shall thereupon cease-and (ii) excess moneys held 'by the Escrow Bank not needed for the payment and discharge of the Prior Special Tax Bonds shall be transferred to the Bond Fund under the Fiscal Agent Agreement 4 09960.0000019964289.1 ~7-7 ~~ Section 10. Severability. If any section, paragraph, sentence, clause or. provision of this Escrow Agreement shall for any reason be held to be invalid or urienforceable, the invalidity or unenforceability of such section, paragraph, sentence, clause or provision shall not affect any of the remaining provisions of this Escrow Agreement. Section 11. Notice of Escrow Bank, Authority and Community Facilities District. Any notice to or demand upon the Escrow Bank maybe served and presented, and such ' demand may be made, at the principal corporate trust office of the Escrow Bank as specified by the Escrow Bank as Prior Trustee in accordance with the provisions of the Prior Indenture or by physical delivery with confirmation of receipt or by confirmed telecopy. Any notice to or - demand upon the Community Facilities District shall be deemed to have been sufficiently given or served for all purposes by being mailed by registered or certified mail, and deposited, postage prepaid, in a post office letter box, addressed to such party as provided in the Prior Indenture (or such other address as may have been filed in writing by the Community Facilities District with the Escrow Bank). -, - Secfion 12. Meraef or Consolidation of Escrow Bank. Any company into which the Escrow Bank may be merged or converted or with which it may be consolidated or ariy company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which. the Escrow Bank may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible to act as Trustee under the. Indenture and the Prior Indenture, shall be the successor hereunder to the Escrow Bank without - the execution or filing of any paper or any further act. Section 13. Execution in Several Counte arts. This Escrow Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed- to be an original; and all such counterparts shall constitute but one and the same instrument. 09960.000OOV964289.4 17-101 IN WITNESS WHEREOF, the CommunityFacilities District and the Escrow Bank have each caused this Escrow Deposit and Trust Agreement to be executed by their duly authorized officers all as of the date first above written. CITY OF CHULA VISTA COMMUNITY ' FACILITIES DISTRICT NO. 06-I (EASTLAKE - WOODS, VISTAS AND LAND SWAP) By: Superintendent U.S. BANK NATIONAL ASSOCIATION, as Escrow Bank By: Authorized Officer 6 09960.00000\7964289. I 17-102 EXHIBIT A PAYMENT SCHEDULE OF PRIOR SPECIAL TAX BONDS Debt Service Payment Date Principal Interest Premium Payment September 1, 2013 $ $ $0.00 $ A-1 09960.00000\7964239:1 17 -10 3 EXHIBIT B CONDITIONAL NOTICE OF REDEMPTION (SUBJECT TO THE SALE AND DELIVERY OF REFUNDING BONDS) TO THE OWNERS OF City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) 2002 Improvement Area A Special Tax Bonds Date of Notice: August _, 2013 Date of Issuance: December 17, 2002 Date of Redemption: September 3, 2013 NOTICE IS HEREBY GIVEN that pursuant to the applicable provisions of the governing documents of the above captioned bonds (the "Bonds"), $ principal of the Bonds will be redeemed on September 3, 2013 at the referenced price noted below, together with interest accrued to September 3, 2013, and further interest on the Bonds will not accrue from and after September 3, 2013. The record date is August 15, 2013. CONDITIONAL PROVISION OF NOTICE: The advancing of the maturity and redemption of the Bonds is contingent on the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods, Vistas and Land Swap) (the "Community Facilities District") completing the sale and delivery of special tax refunding bonds of such Community Facilities District (the "Refunding Bonds") to fund the redemption of the Bonds. The Refunding Bonds were priced on , 2013 and it is currently scheduled for the Community Facilities District to receive the proceeds of the sale of the Refunding Bonds on or about , 2013. However, if such Refunding Bonds are not sold and delivered prior to August 30, 2013, the Community Facilities District will not advance the maturity of and redeem the Bonds. In that event a notice will be mailed on or about August 30, 2013 to the registered owners of the Bonds advising them accordingly. If this Notice is rescinded by the Community Facilities District, such Notice shall be of no force and' effect, and none of the Bonds shall be redeemed pursuant hereto. Subject to the satisfaction of the above contingency, the following Bonds will be redeemed and paid upon presentation: B-1 09960.ooooov9vazs9.t 7 7-104 Maturity Redemption (September 1) Principal Interest Rate Price CUSIP©* Subject to the completion of the sale and delivery of the Refunding Bonds, on the date fixed for redemption there shall become due and payable on each Bond or portion thereof called for redemption, the redemption price stated above (representing the principal thereof, together with the redemption premium) and interest accrued to tiie redemption date, and from . and after such date, interest thereon shall cease to accrue and be payable. Called Bonds must be surrendered at the principal corporate trust office of U.S. Bank National Association, as Fiscal Agent, at the following address by U.S: Mail, Certified Mail, Registered Mail, Overnight Express or Delivery in Person: U.S. Bank National Association City of Chula Vista Community Facilities District No. 06-1(EastLake - Woods, V istas and Land Swap) By: U.S. Bank National Association as Fiscal Agent DATED:, August _, 2013 B-2 09960.00ooo~~e6azs9.i ~ 7-~ 0'S IMPORTANT TAX INFORMATION Under various provisions of tax related acts passed by Congress, U.S. Bank National Association, as Fiscal Agent, may be obligated to withhold a certain percentage of the interest from the payment to owners who have failed to furnish the paying agent with a valid taxpayer identification number. Owners of Bonds who wish to avoid this withholding should submit a taxpayer identification number (for individuals the Social Security Number) or an exemption certificate when presenting their Bonds for payment. * CUSIP numbers are included solely for the convenience of the owners. The Fiscal Agent and the Community Facilities District shall not be responsible for the use of the CUSIP numbers selected, nor is any representation made to their correctness indicated in the notice,or as printed on any Bond B-3 09960.000OOV 964289. ~7-~~6 TABLE OF CONTENTS Page ` SECTION 1. APPOINTMENT OF ESCROW BANK .....:................................:................ ...:....2 SECTION 2. ESTABLISHMENT OF ESCROW FUND ......................................:............ .......: 2 SECTION 3. DEPOSIT INTO ESCROW FUND; INVESTMENT OF AMOUNTS ......'.. ........ 2 SECTION 4. INSTRUCTIONS AS TO APPLICATION OF DEPOSIT; AUTHORITY ' RETAINS RIGHT OF OPTIONAL REDEMPTION ......:............................. ........ 2 SECTION 5. APPLICATION OF CERTAIN TERMS OF PRIOR INDENTURE ............ ........ 3 SECTION 6., COMPENSATION TO ESCROW BANK .:......................:........................... ........ 3 SECTION 7. LIABILITIES AND OBLIGATIONS OF ESCROW BANK ....................... ........3 SECTION 8. AMENDMENT .............................................................................................. ........ 4 SECTION 9. TERMINATION; UNCLAIMED MONEY .................................................. ........ 4 SECTION 10. SEVERABILITY ...................................:....................................................... ........ 4 SECTION 11. NOTICE OF ESCROW BANK, AUTHORITY AND COMMUNITY .FACILITIES DISTRICT ............................................................:................:. ....:... 4 ' SECTION 12. MERGER OR CONSOLIDATION OF ESCROW BANK ::......................... ....:... 5 SECTION 13. EXECUTION IN SEVERAL COUNTERPARTS .............................:.......... ........ 5' EXHIBIT A - PAYMENT SCHEDULE OF~PRIOR SPECIAL TAX BONDS ...........:....... .... A-1 EXHIBIT B - NOTICE OF REDEMPTION ........................................................................ .... B-1 09960.000OOV964289.1 -1- ~7-~07 ATTACHMENT 4 PRELIMINARY OFFICIAL STATEMENT i~-ioa ~,' ~ ~ Sh'adling Yoecu Carlson & Routh ;° ~ ~ - - ~ Oruft of 6/27/13 - ~ PRELIMINARY OFFICIAL STATEMENT DATED , 2013 _ NEW ISSUE-BOOK-ENTRY ONLY ~ UNRATED In the opinion bf Best Best & Krieger LLP, San Diego, California, Bond Counsel, subject [o certain qualifications described herein, under ° existing statutes, regulations,'ru[es and court decisions, and assuming certain represerr[ations and compliance with certain covenants and ' '~' requirements described herein, the interest we the Bonds is excluded fi'am gross income for federal income tax purposes and is not an item of tax ;, o~ preference for purposes of the federal alternative minimum tax imposed on indivaduads and corporations, although' for the purpose of campuhng ' ;~ ; the alternative minimum tax Imposed on certain corporations, such interest is taken Into account itx deterneining certain income and eanaings. In `o the further opinion of Bond Counsel, such interest is exempt from California personal income trues. See the caption "CONCLUDING c GVFORMA~TION-TazMatters." ~ , r ' ° COUNTY OF SAN DIEGO ~ STATE OE CALIFORNIA o $ _ [HULA VISTA NIUNICIPAL'FIIYANCIYG AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS ' ° ~ ~ SERIES,2013 ~~ I J ~ Dated: Date of Delivery ~ Due: September 1, as shown on the inside cover page i ' ° The Chula Vista ~MunicipaL Financing Authority Special Tax Revenue Refunding Bonds, Series 2013 (the "Bonds"), are being issued'by the ' ?~ Chula Vista Municipal` Financing Authority (the "Authorit}r~ pursuant to ao Indenture of Trust, dated as of July 1, 20]3 (the "Indenture"), by and ' ° between the Authority and U.S. Bank National Association, as trustee (the "Trustee"), and will be secured as described herein. See the caption ~.~ ".SECURITY FOR THE BONDS.'" - ' 'The Bonds arebeing issued to purchase 5ve series of special tax refunding bonds (the "Special Tax Refunding Bonds"). 1'he Special Tax - Refunding Bonds are obligations of various community facilities districts (each a "Community Facilities District", together the "Community Facilities Districts") and various improvement areas Yherein (each an "Improvement Area") pursuant to the Mello-Roos Community Facilities Act i.~ - of 1982, as amentled (Section 53311 et seq. of the Government Code of the State of California) (the "CFD Act"). Each series of Special Tax S r °o Refunding Bonds will be secured by special tax liens on taxable property within the respective Community Facilities District or improvement Area ' ° to which such Special Tax Refunding Bonds relate. The Special Tax Refunding Bonds are being issued to currently refund and redeem five series c of special tsx bonds of the Community Facilities Districts. See the captions "INTRODUCTION-Special Tax Refunding Bonds" and "THE FINANCING PLAN.". -~~ ~ The .Bonds will bz issued in book-entry form, initially registered in the name of Cede & Co, New York, New York, as nominee of The' - llepository Trust Compariy ("DTC"), New York, New York. Interest on the Bonds will be payable on March l and September 1 of each year, ` ' commencing March 1, 2014. Purchasers will not receive certificates representing their interest in the Bonds. Individual purchases of Bonds will 3 O be in principal amounts of $5,000 orin auy inCegral multiple of $5,000. Payments of principal and interest will be paid by the Trustee to D'CC for ?• ~ subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds. .Y _ _ The Bonds are subject to optional redemption, mandatory sinking fund redemption and mandatory redemption from redemption of - the Special Tax Refunding Bouds prior to maturity as set forth herein. See the caption `"TILE BONDS-Redemption:' Q"-, ~ The Bonds are special, limited obligations of the Authority, payable solely from Revenues (as defined Irereiu), consisting of debt service _ _ payments on the Special Tax Refunding Bonds received' by the Trustee, as assignee of the Authority, the owner of the Special Tax Refunding o Bonds, and amountsin certain funds and accounts pledged under the Indenture. Debt service payments on the Special Tax Refunding Bonds are ;, ' calculated to be sufficient to permit the Authority to pay debt service on the Bonds when due. The City of Chula Vista (the "City") has determined ~' that it will not obligate itself Co advance funds from its treasury to cover any delinquency on the Special Tax Refunding Bonds. See the caption ro i _ ~ o "SECURITY FOR THE BONDS:' ' ~ ~ ,The Special Tae Refunding Bonds are limited obligations of the community facilities districts. Each series of Special Tax Refunding Bonds ~~ is, payable solely from the assets pledged therefor under the respective Special Tax Refunding Bonds Fiscal Agent Agreement pursuant to which ~ = :~ such.Special Tax Refunding Bonds are issued. neither the faith and credit nor the taxing power of the City,the Chula Vista Housing Authority o g (the "CVHA"), the_Authority or the State of California, or any political subdivision thereof, is pledged to the payment of Che Special Tax - = Refunding Bonds. - ,'-OO o NELTI[ER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE CVHA, THE STATE OF CALIFORNL4 OR ~ ~ ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED "f0 THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING i ~ ~, POWB[2. EXCEPT FOR THE REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. d o o THE BONDS ARE NO"C GENERAL OBLIGATIONS OF THE COMM(7NCI'Y FACILITIES DISTRICTS, GENERAL OR SPECIAL - > OBLIGATIONS OF THE CITY OR THE CVHA OR GENERAL OBLIGATIONS OF THE AUTHORITY, BO"C ARE SPECIAL, LIMITED ~=, c OBLIGATIONS OF THE AU"CHORITY PAYABLE EXCLUSIVELY FROM REVENUES AS PROVIDED IN THE INDENTURE; AS MORE ' = FULLY DESCRIBED HEREIN. - ' ~ = o „-tl ~~ See the caption "SPECIAL RISK FACTORS" for a discussion o£certain riskfactors that should be considered N addition to the other matters ' set forth herein when evaluating the investment qualiTy of the Bonds. This cover page contains certain information for quick reference only. It B' i ~ .^ not a complete summary of the Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an _ ., informed investment decision_ ~ - - ~ ~ ~ MATURITY SCHEDULE - i ~ ~ (See inside cover) i .. _ °' ~~" Preliminary, subject to change. ° „i .~ . s ' 0 v _~ -i i v .~ _ - 17-109 ' The Bonds are offered, when, as and if issued and accepted by the Underwriter, subject to approval as to their va[iditp by Best Best & Krieger LLP, San Diego, California, Bond Counsel, and subject to certain other conditions. Certain legad matters will be passed upon for the Authority and the City by the Ciry Attorney, for the City by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Disclosure Counsel, for the Underwriters by Nossaman LLP, Irvine, California, and for the Trustee by its counsel. /t is anticipated that the Bands will..be available for delivery in book-entry form dhrough the facilities ofDTC on ar about , 20]3. E.J. DE LA ROSA & CO. INC. STIFEL ' [LOGO] ~ [LOGO] - Dated: , 2013 17-110 CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 MATURITY SCHEDULE Base CUSH'°t: - .Maturity Dade (Septen:ber I) Principal Amount Interest Rate Ydeld ' C(7SIP~r $ % $ %Term Bonds Due September t, 20_-Price , CUSIP~1 $ %Term Bonds Due September 1, 2034-Price ,CUSIP®t 'Preliminary, subject to change. ' - t CUSIP© is a registered Trademark of the American Bankers Association. Copyrighf©20I3 Standard & Poar's, a Division of The McGraw Hill Companies, Inc. CUSIP' data herein is provided by Standard & Poor's CUSIP Service Bureau. This data is not intended to create a database ' and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIPO numbers are provided for convenience of reference only. Nei[lrer the Audhority nor the Undenvrlters takes arty respansibl[iry for the accuracy of such nunbers.' None of the City, the Authority, the Conmrzmfry Facilities Districts nor the Undenmriters take arty responsibdltry for [he accuracy of such mtmbers. ~7-~~~ CITY OF CHULA VISTA CITY COUNCIL Cheryl Cox, Mayor Pamela Bensoussan, Deputy Mayor Patricia Aquilaz, Councilmember Rudy Ramirez, Councilmember Mary Salas, Councilmember CITY OFFICIALS Jim Sandoval, City Manager - - Donna Norris, City Clerk Glen R. Googins, City Attorney Maria Kachadoorian, Director of Finance Richazd A. Hopkins, City Engineer CHULA VISTA MUNICIPAL FINANCING AUTHORITY BOARD OF DIRECTORS Cheryl Cox, Chair Pamela Bensoussan, Director Patricia Aguilar, Director Rudy Ramirez, Director Mary Salas, Director Jim Sandoval, Executive Director Donna Norris, Secretary Bond Counsel Best Best & Krieger, LLP San Diego, California Disclosure Counsel Stradling Yocca Carlson & Rauth a Professional Corporation Newport Beach, Califomia Financial Advisor to the City Heldman, Rolapp & Associates Irvine, Califomia Verification Agent [TBD] Special Tax Consultant NBS Temecula, California Trustee U.S. Bank National Association Los Angeles, Califomia 17-1T2 No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations, other than as contained in this Of£cial Statement, and if given or made,` such other information or representations must not be relied upon as having been authorized by the Authority, the City, the CVHA, or the Community Facilities Districts. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Bonds by amy person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein which has been obtained from parties other than the Authority, the City,'the CVHA and the Community Facilities Districts is believed to be reliable but is not guaranteed as to accuracy or completeness by the Authority, the City, the CVHA or the Community Facilities Districts. 'The L information and expressions of opinion stated herein are subject to change without notice. The delivery of this Official Statement shall not, under any circumstances, create any hnplication that there has been no change in ' the affairs of the Authority, the City, the CVHA or the Community Facilities Districts since the date hereof. The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of its responsibilities to investors under the federal securities laws 'applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The information herein relating to the Bonds, the Authority, the Community Facilities Districts, the Improvement Areas and the City does not purport to be comprehensive or definitive. All references to the Bonds are qualified in their entirety by reference to the Indenture setting forth the terms and descriptions thereof. The summaries and references to any code, act, resolution, The Indenture or the Special Tax Refunding Bonds Fiscal Agent Agreements (as defined herein), and to other statutes and documents in this ,Official Statement do not purport to be comprehensive or definitive, and are qualified in their entirety by preference to each statute and document. - IN CONNECTION WITH THIS BOA UNDERWRITING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN TFfE MARKET PRICE OF THE BONDS DESCRIBED HEREIN AT A LEVEL ABOVE' THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended; and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate,""project," "budget," "intend" or similar words. The achievement of certain results or'other expectations contained in such forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. No assurance is given that actual results will meet the forecasts set forth herein in any way," regardless of the optimism communicated in the information, and such statements speak only as of the date of Ctris Official Statement. The City, the Community Facilities Districts, the CVHA and [he Authority disclaim any obligation or undertaking to release publicly any updates or revisions.to any forward-looking statement contained in this Official Statement to reflect any changes in the expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The City maintains a website; however, the information presented there is not part of this. Official Statement and should not be relied upon in making an investment decision with respect to the Bonds. 17-113 TABLE OF CONTENTS Page INTRODUCTION ....................:.................................... ... 1 • Summary .........................:...........:..........:............... ... I The Bonds ....................::........................................ ... 1 Special Tax Refunding Bonds :............................... ... 2 No Parity Bonds ...............................................:..... ...3 Risk Factors ............................................................ ... 3 THE FINANCING PLAN .:.......................:................... ... 3 THE BONDS ......:.......................................................... ... 8 Description of the Bonds ........................................ ... 8 Redemption ....:..............................................:..:..... ... 9 Selection of Bonds of a Maturity for Redemption . . 11 Notice of Redemption ............................................ . 1 I Effect of Redemption ............................................. . 12 Transfers and Exchange ......................................... . 12 Debt Service Schedule ........................................... . 13 Sources of Revenue .................,........................,..... . 13 SECURITY FOR THE BONDS ................................... . 15 Repayment of the Bonds ........................................ . I S Payment of the Special' Tax Refunding Bonds....... . 19 Levy and Collection of Special Taxes .................... . 21 Rates and Methods of Apportionment of Special Taxes ............................................................... . 23 No Teeter Plan.......: ................................................ . 23 Covenant 4o Foreclose .........................:.................. .24 Priority of Lien ...................:...........................:....... .25 No Obligation of the City Upon Delinquency........ .25 Prepayment of Special Taxes ................:................ . 25 THE AUTHORITY ..........................................:.:.......... . 25 THE CITY ..................................................................... . 26 THE COMMUNITY FACILITIES DISTRICTS.......... .26 The Community Facilities Districts in the Ag'n'egate ....................................,..:................ . 26 Community Facilities District No. 06-I Improvement Area No. A ................................ . 31 Community Facilities District No. 06-I Improvement Area No. B ................................ . 38 Community Facilities District No. 07-L ................. . 45 Community Facilities District No. 08-L ................. . 52 Community Facilities District No. 2001-2 ............. . 59 SPECIAL•RISK FACTORS .........................................: .66 The Bonds are Limited Obligations of the Authority .............:........................................... . 67 The Special Tax Refunding Bonds are Limited Obligations .........' ............................. ~.:.............. . 67 The Special Taxes are Not Personal Obligations of the Owners ...............................:.:........:....... . 67 Potential Early Redemptionof Bonds from Prepayments ........::.......................................... . 67 Risks of Real Estate Secured Investments Generally ......................................................... . 68 Insufficiency of Special Taxes ............................... . 68 .Risks Related to Homeowners With High Loan to Value. Ratios.or Negative Equity ................. . 68 Bankruptcy and Foreclosure Delays ....................... . 69 FDIC/Federal Government Interests in Properties. . 69 Paee Direct and Overlapphig Debt ................................ ...71 Disclosures to Future Purchasers .......................... ...71 Natural Disasters ................................................... ...72 Land Values .............................:.......:.......:............ .:.72 Hazardous Substances ....:............:......................... ...73 Cumulative Burden of Parity Taxes and Special Assessments ................................................... ...73 Loss of Tax Exemption ......................................... ...73 [RS Audit ofTax-Exempt Bond Issues ................. ...74 California Constitution Article XIIIC and Article XIIID ................................................. ...74 No Acceleration .................................................... ...75 Limited Secondary Market .............:...:................. ...75 Limitations on Remedies ...................................... ...76 CONCLUDING INFORMATION ..:........................... ...76 Underwriting ......................................................... ...76 Financial Advisor....- ..:........................................... ...76 Legal Opinion; Legal Matters .....:......................... ...77 Tax Matters ........................................................... ...77 Financial Interests ................................................. ...78 No Litigation ............:............................................ ...79 Verification of Mathematical Computations......... ...79 RATING .........................................:............................ ...79 Continuing Disclosure .......................................... ...79 Miscellaneous ...............................:.:..................... ...80 APPENDIX A-INFORMATION REGARDING THE CITY OF CHULA VISTA ................................... A-1 APPENDIX B-SUMMARY OF CERTAIN. PROVISIONS OF BOND DOCUMENTS............ B-1 APPENDIX C-FORM OF BOND COUNSEL OPINION ............................................................... C-1 APPENDIX D-FORM OF CONTINUING DISCLOSURE AGREEMENT ............................ D-1 APPENDIX E-INFORMATION CONCERNING DTC ...........................................:........................... E-1 APPENDIX F- RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS .. F-1 17-114 [AREA MAP(S)] 17-115 j $ CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAX REVENUE REFUNDING BONDS SERIES 2013 INTRODUCTION Summary This Official Statement is provided to furnish certain information in cotmection with the issuance and sale by the Chula Vista Municipal Financing Authority (the "Authority") of $ ~ aggregate principal amount of Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013 (the "Bonds"). The Bonds will be issued pursuant to the provisions of an Indenture of Trust, dated as of July 1, 2013 (the "Indenture"), by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee°'). The Bonds will be issued pursuant to the Marks-Roos Local Borid Pooling Act of 1985, as amended, constituting Article 4 of Chapter 5, Division 7, Title 1 of the California Government Code (the "Bond Law"). Capitalized undefined terms used in this Official Statement have the meanings ascribed thereto in Appendix B-"SUMMARY OF CERTAIN PROVISIONS OF BOND DOCUMENTS." The Bonds are being issued to finance the purchase of five series of special tax refunding bonds (the "Special Tax Refunding Bonds"), each issued by a community facilities district (each a "Community Facilities District", together the "Community Facilities Districts") of the City of Chula Vista. As described under the caption "THE FINANCllVG PLAN," the proceeds from the sale of the Special Tax Refunding Bonds to the Authority are being issued to current refund and defense five series of special tax bonds (collectively, the "Prior Special Tax Bonds") issued by the Community Facilifies Districts. See the captions "-Special Tax Refunding Bonds" and "THE FINANCING PLAN" for a description of the Special Tax Refunding Bonds. As the owner of the Special Tax Refunding Bonds, the Authority, under the Indenture, will pledge the payments of principal and interest that it receives on the Special Tax Refunding Bonds to pay debt service on the Borids. Such payments, together with certain other amounts as specified in the Indenture, comprise the Revenues. The Revenues will be applied to pay principal of, premium, if any, and interest on the Bonds. The Special Tax Refunding Bonds are limited obligations of the Community Facilities Districts payable from Net Special Tax Revenues (as such term is defined under the caption "SECURITY FOR THE BONDS-Payment of the Special Tax Refunding Bonds-General") pursuant to the respective Special Tax Refunding Bonds Fiscal Agent Agreements (as such term is defined below under the caption "-Special Tax Refunding Bonds"). Each series of Special Tax Refunding Bonds is a separate and distinct obligation secured by special taxes levied against certain properties within the Community Facilities District or applicable Improvement Area therein to which such Special Tax Refunding Bonds relates. See the caption "SECURITY FOR THE BONDS" for a description of the Net Special Tax Revenues and other funds securing the Special Tax Refunding Bonds. The Bonds The proceeds of the Bonds will be used to acquire the Special Tax Refunding Bonds. The Bonds are payable from and secured by the Revenues. "Revenues" is defined under the Indenture to mean: (a) all amounts derived from the Special Tax Refunding Bonds; and (b) investment income with ' Preliminary, subject to change. ~~-116 respect to the funds and accounts established under the Indenture (excepting therefrom the Rebate Fund). The principal and interest payments on the special Tax Refunding Bonds received by the Authority, as Ure owner of the Special Tax Refunding Bonds, are initially the primary source affunds to repay the Bonds. See the caption"SECURITY FOR THE BONDS.' NEITHER THE FAFI'H AND CRED[T NOR THE TAXING POWER OF~THE CITY OF CHULA VISTA (THE "CITY"), THE CHULA VISTA HOUSING AUTHORITY (THE "CVHA"), THE STATE OF CALIFORNIA (THE "STATE") OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER. EXCEPT FOR THE REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE COMMUNITY FACILITIES DISTRICTS, GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR THE CVHA OR GENERAL OBLIGATIONS OF .THE AUTHORITY, BUT ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE EXCLUSIVELY FROM REVENUES AS PROVIDED IN THE INDENTURE, AS MORE FULLY DESCRIBED HEREIN. Special Tax Refuuding Bouds The Special Tax Refunding Bonds consist of: (i) the $ ~ City of Chula~Vista Community Facilities District No. 06-I (Eastlake - Woods Vista and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013 (the "CFD No. 06-I IA A Special Tax Refunding Bonds"); (ii) the $ * City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013 (the "CFD No. 06-I IA B Special Tax Refunding Bonds"); (iii) the $ * City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series201'3 ("CFD No. 07-I Special Tax Refunding Bonds");. (iv) the $ * City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) Special Tax Refunding Bonds, Series 2013 ("CFD No. 08-I Special Tax Refunding Bonds"); and (v) the $ * City of Chula Vista Community Facilities District No. 2001-2 (McMillin- Otay Ranch - Village~Six) Special Tax Refunding Bonds, Series 2013 ~("CFD No. 2001-2 Special Tax Refurding Bonds"). The Special Tax Refunding Bonds will be issued concurrently with the Bonds pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the "CFD Act"), and separate Fiscal Agent Agreements, each dated as of July 1, 2013 (each, a "Special Tax Refunding Bonds Fiscal Agent Agreement,".. and collectively, the "Special Tax Refunding Bonds Fiscal Agent Agreements"), by and between each Community Facilities District and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"). Each series of Special Tax Refunding Bonds will be separately secured by special taxes (the "Special Tases") levied against certain taxable real property _ within the boundaries of: (i) Community Facilifies District No. 06-I Improvement Area A; (ii) Community Facilities District No. 06-I Improvement Area B; (iii) Community Facilities District No. 07-I; (iv) Community Facilities'District No. 08-I; and (v) Community Facilities District No. 2001-2 (each, a "Taxnig Jurisdiction," and collectively, the "Taxing Jurisdictions"). See the caption "SECURITY FOR THE BONDS-Payment of the Special Tax Refunding Bonds." Preliminary, subject to change. 17-117 THE SPECIAL TAX REFUNDING BONDS ARE LIMITED OBLIGATIONS OF THE COMMUNITY FACILITIES DISTRICTS. EACH SERIES OF SPECIAL TAX REFUNDING BONDS IS PAYABLE SOLELY FROM THE ASSETS PLEDGED THEREFOR IJ[vDER THE RESPECTIVE SPECIAL TAX REFUNDING BONDS FISCAL AGENT AGREEMENT PURSUANT TO WHICH SUCH SPECIAL TAX REFUNDING BONDS ARE ISSUED. NEITHER THE FAITH AND CREDCT NOR THE TAXING POWER OP THE CITY, THE' CVHA, THE AUTHORITY OR THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF; IS PLEDGED TO THE PAYMENT OF THE SPECIAL TAX REFUNDING BONDS. ' lYo Parity Bonds ' Pursuant to the Indenture, the Authority will covenant not to create, or permit the creation of, any pledge, lien, charge, or other encumbrance upon the Revenues and other assets pledged or assigned under the Indenture while any of the Bonds are outstanding, except the pledge and assignment created by the Indenture. Pursuant to each Special Tax Refunding Bonds Fiscal Agent Agreement, each Community Facilities District will covenant not to issue additional obligations entitled to a lien on the Net Special Tax Revenues of the respective Taxing Jurisdiction, other than for the purpose of refunding the Special Tax Refunding Bonds relating to such Taxing Jurisdiction and, in the case of Community Facilities District No. 07-I, for the purpose of refunding the City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) 2006 Special Tax Bonds (the "CFD 07-I Parity Bonds"). `Other than the CFD 07-I Parity Bonds, there is no other indebtedness of the Community Facilities Districts that will be outstanding on the date that the Special Tax Refunding Bonds are issued. See "THE COMMUNITY FACILITIES DISTRICTS---Community Facilities District No. 07-I" below. Risk Factors See the caption "SPECIAL RISK FACTORS" for a discussion of certain risk factors which should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds generally. Brief descriptions of the Bonds, the security for the Bonds, the Special Tax Refunding Bonds, the Taxing Jurisdictions, the Authority, the City and other information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions in this Official Statement.of the Bonds, the Special Tax Refunding Bonds, the Indenture, the Special Tax Refunding Bonds Fiscal Agent Agreements and other documents are qualified in their entirety by reference to the forms thereof and the information with respect thereto included in the Bonds, the Special Tax Refunding Bonds, the Indenture, the Special Tax Refunding Bonds Fiscal Agent Agreements and other docunents. THE FINANCING PLAN The Bonds are being issued in order to provide funds to purchase the Special Tax Refunding Bonds, which aze described in the following table. 17-118 TABLE 1 SPECIAL TAX REFUNDING BONDS Special Tax Refunding Bonds Principal Amoten( City of Chula Vista EommuniTy Facilities District No. 06-I (Eastlake -Woods Vista and ' - .. Land Swap) Improvement Area A Special 1'ax Refunding Bonds, Series 2013 - $ Ciry of Chula Vista Community Facilities District No. 06-I (Eastlake- Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013 City of Chula Vista Community Facilities District No. 07-[ (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series 20 L3 ~ ` City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) Special Tax Refunding Bonds, Series 2013 Ciry of Chula Vista Community Facilities District No. 2001-2 (McMillin- Otay Ranch- - Village Six) Special Tax Refunding Bonds, Series 2013 ~ ~ - ~ - Proceeds. from the sale of the Special Tax Refunding Bonds, together with certain available funds on :hand, including moneys held in certain funds relating to the Prior Special Tax Bonds,-will be used to refund. and defense the Prior Special Tax Bonds shown on the following table on September 3, 2013. TABLE 2 , PRIOR SPECIAL TAX BO NDS ~_ ~ _ , Original Outstanding .. Principal Principal Redemption Redemption • .Prior Special Tax Bonds Date Issued Amount Amount Price Date Ciry of Chula Vista Community Facilities District No. 06d (Eastlake - - Woods Vista and Laud Swap) 2002 . ~ " Improvement AreaA Special Tax Bonds' December l7, 2002 $ 39,000,000 $ 32,960,000 100% .September '1, 2013 ' City of Chula Visa Community Facilities District No: 06-I (Eastlake- . - WoodsVista andLand Swap)2004 " ~ Improvement Area B Special Tax Bonds. Lune 29, 2004 7,880,000 6;790,000 100 September 1, 2013 - Ci[y of Chula Vista Community - _ - Facilities District No. 07-I (Otay Ranch ' Village Eleven) 2004Special Tax Bonds ~ May 20, 2004 28,050,000 24,460,000 l0I September 1, 2013 City of Chula Vista Community .. Facilities District No..08-I (Otay Ranch VillageSix) 2003 Special Tax Bonds October 14, 2003 21,665,000 18,750,000 100 September 1, 2013 City of Chula Vista Community Facilities District No. 2001-2 (McMillin - - - Otay Rauch -Village Six) 2003 - Special Tax Bonds ~7uly 1Q, 2003 10,250,000 8,685,000 L00 September I, 2013 The Bonds are being sold in amounts that will provide sufftcieht proceeds to acquire the Special Tax Refunding Bonds: Under five separate Escrow Deposit and Trust Agreements, each dated as of July 1, 2013 Prelinvmary subJec[ [o change. 4 17-119 (each an "Escrow Agreement", collectively, the "Escrow Agreements"), by and between the applicable Community Facilities District and U.S. Bank National Association, as escrow bank (the "Escrow Bank"), the Community Facilities Districts will deliver a portion of the proceeds of the Special Tax Refunding Bonds, together with titorieys held in certain funds related to the Prior Special Tax Bonds; to the Escrow Bank for deposit in each escrow fund established under the applicable Escrow Agreement (each, an "Escrow Fund"; collectively, the "Escrow Funds"). From the inoneys on deposit in each Escrow Fund, the Escrow Bank will pay on September 3, 2013 the principal of the Prior Special Tax Bonds maturing on or after September 1, 2013, plus interest accrued to such date, without premium. The moneys in the Escrow Funds will be held in cash uninvested. Sufficiency of the deposits in the Escrow Funds for those purposes will be verified by as Verification Agent. Assuming the accuracy of such computations, as a result of the deposit and application of funds as provided in'the Escrow Agreements, the Prior Special Tax Bonds will be defeased pursuant to the provisions of the respective Bond Indentures pursuant to which the Prior Special Tax Bonds were issued, as of the date of issuance of the Bonds. See the caption "CONCLUDING INFORMATION-Verification of Mathematical Computations." , The amounts .held by the Escrow Bank in each Esexow Fund-are pledged solely to the payment of the applicable series of Prior Special Tax Bonds. The funds deposited in the Escrow Funds will not be available for the payments of principal of and interest on the Bonds. ' The proceeds from the sale of the Bonds, the Special Tax Refunding Bonds and certain moneys held in funds of the Prior Special Tax Bonds will be used as~described in the following two tables, respectively. TABLE 3 ESTIMATED SOURCES AND USES ' BONDS The estimated sources and uses of funds with respect to the Bonds and amounts transferred by the City . and the Community Facilities Districts to the Trustee are set forth in the following table: Sources afFunds Principal Amount of Bonds $ Plus/Less Net Original Issue Premium/Discount Plus Other Available Moneyslt' _ Total Sources S Uses of Funds Program Fundl'1 Costs of Issuancet3l _ Underwriter's Discount Reserve FundI4l Total Uses "' Includes moneys on deposit in funds and accounts of the Prior Special Tax Bonds. lz) Amounts in the Program Fund will be used to purchase the Special Tax Refunding Bonds togetherwith the amount credited to the Reserve Fund and amounts paid as Costs of Issuance. (s) Includes legal fees, Financial Advisor fees, printing fees, Trustee fees, Fiscal Agent fees, Escrow Bank fees, Special Tax Consultant fees, Verification Agent fees and other Costs of Issuance. ta) Represents initial Reserve Requirement. `Preliminary, subject to change 17-120 The estimated sources and uses of funds with respect to the Special Tax. Refunding Bonds and amounts transferred from the Prior Special Tax Bonds are se[ forth in the following table: ' [THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK] 6 17-121 a w C m C F 0-0 C O V3 ~ W N ti O ~ W N C C :d ~ sv v3 U H \ ~ ~ V 0 0, d `" z ;; A ~ ~ c ~~ 0 ~ 3 r~ O ti o Ca Pa o ~ j Q j {- ~ v w . A V U es v3 ~ W ~ a w ~ b ~ d O , F ~ ... ~o w Q d' d ~ a ° ~ HF z~: w ~ ~ a ~ Ce H U U ~ ss ss '~ W H v ~= ° " V 1 LL (ra ..~ ' ~ a y ~ v ~ y ~ o ~' W c Z o ~ L ~ .5 Q R o . ~ U 'r ~ v sv ~ o ~ o ~ .N U , N 7 -O 4 'O Q ~ Y ro 9 O O K a ,~ ~ m t E v - Q G E ~ 'w of vi y ~ m N y u•O N V ~ ~ C O G a ~ C ~ C F V a" C P G O O O~ W .. ~7 O V ti 0 n O ti T S o p y " > ~° . > c `~ r c a v "" n n o~~v y ~~' ~ o CCU F" ~ 0.y o ~ tad C N W W W O C J U U .6 ~ i-7 3 O ~ o m~ .~ O 0 0 0 p m a~ ~ ' ^ o v a m z ,c ~' y a y y c~ `~ ~ s o u s 4 ~7-~22 THE BONDS Description of the Bonds The Bonds will be issued in fully registered form and, when delivered, will lie registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York. DTC will act as securities depository for the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 or any integral multiple thereof. The Bonds will be dated their date of delivery, The Bonds will bear interest at the rates per aimum and will mature, subject to the redemption provisionsset forth below, on the dates and in the principal amounts, all as set forth on the inside cover page of this Official Statement. Interest on the Bond's is payable semiannually on March 1 and September 1 of each year, commencing March I, 20]4 (each, an "Interest Payment Date"), to the persons in whose names ownership of the Bonds is registered on the Bond Register at the close of business on the immediately preceding Record Date, except as provided in the Indenture. "Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar day of the month immediately preceding such Interest Payment Date, whether or not such day is a Business Day. Interest on the Bonds will be calculated on the basis of a 360-day year comprised of twelve 30-day-months. Interest on the Bonds will be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless: (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such interest Payment Date; (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Dated Date provided in the form of the Bonds; or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date will be payable to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice of which will be given to such Owner not less than 15 days prior to such Special Record Date. hrterest will be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; or by wire transfer made on such Interest Payment Date to any Owner of $1,000,000 or more in aggregate principal amount of Bonds who has requested such transfer pursuant to written notice filed with the Trustee on or before the preceding Record Date. The principal of and redemption. premium, if any, on the Bonds will be paid in lawful money of the United States of America at the Principal Office of the Trustee. Payment of principal on any Bond will be made only upon presentation and surrender of such Bond at the Principal Office of the Trustee at maturity or the prior redemption thereof. The Bonds will mahire on September l~in the principal amounts and years as shown on the inside cover page hereof and are subject to optional redemption, mandatory redemption and ° mandatory sinking fund redemption as described under the caption "-Redemption: ' The Bonds will be issued in book-entry form, initially registered in the name of Cede & Co., as nominee of DTC. Payment of interest with respect to any Bond registered as of each Record Date in the name of Cede & Co. will be made by wire transfer of same-day funds to the account of Cede & Co. See Appendix E-"INFORMATION CONCERNING DTC." 17-123 Redemption Optional Redemption. The Bonds maturing on and after September 1, 2024 are subject, at the option of the Authority, to call and redemption from any available source of funds prior to their stated maturity on any date on or aftet September 1, 2023', as a whole or in part, and by lot, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium. For purposes of the selection of Bonds for optional redemption, the Bonds will be selected for redemption among maturities by the Authority (evidenced pursuant to a Written Certificate of the Authority delivered to the Trustee at least 60 days prior to the redemption date or such later date as is acceptable to the Trustee) on such basis that the debt service on the Special Tax Refunding Bonds on each Interest Payment Date will be sufficient to pay debt service on the Bonds on such Interest Payment Date, as will be demonstrated in a report of an Independent Financial Consultant filed with the Trustee; provided, however, that no such report need be filed with the Trustee if, after such redemption, no Bonds will be Outstanding. Mandatory Redemption of the Bonds from Principal Prepayments of-the Special Tax Refunding Bonds. The Bonds aze subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part from such maturities, as are selected by the Authority, from and to the extent of Principal Prepayments with respect to the Special Tax Refunding Bonds at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Redemption Price September 1, 2013` through March 1, 20_ 10_°fo September 1, 20 and March 1, 20 ~ 10 September.], 20 and March 1, 20 10 September 1,.20 and any Interest Payment Date thereafter 10 The principal amount of the Bonds to be redeemed from Principal Prepayments of the Special Tax Refunding Bonds will be the greatest principal amount of Bonds, the redemption price of which is less than or equal to such Principal Prepayments, as specified in a Written Request of the Authority .delivered.. to the Trustee. In the event that a Fiscal Agent for any Series of the Special Tax Refunding Bonds mails notice of redemption of any such Special Tax Refunding Bonds which will produce Principal Prepayments, the Trustee will concurrently mail notice of the redemption of Bonds pursuant to the Indenture, such redemption to occur on the date fixed for redemption o£such Special Tax Refunding Bonds. On the date of such redemption of such Special Tax Refunding Bonds, the proceeds of any such redemption will be applied by the Trustee to pay the redemption price of Bonds pursuant to the Indenture. For purposes of the selection of Bonds for redemption from Principal Prepayments of the Special Tax Refunding Bonds, the Bonds will be selected for redemption among maturities by the Authority (evidenced pursuant to a Written Certificate of the Authority delivered to the Trustee at least 60 days prior to the redemption date or such later date as is acceptable to the Trustee) on such basis that the debt service on the Special. Tax Refunding Bonds on each Interest Payment Date will. be sufficient to pay debt service on the Bonds on such Interest Payment Date, as will be demonstrated in a report of an Independent Financial Consultant filed with the Trustee; provided, however, that no such report need be filed with the Trustee if, after such redemption, no Bonds will be Outstanding. Prelmtinary, subject to change. 17-124 Mandatory Sinking Fund Redemption. The Outstanding Bonds maturing on September 1, 20 are sulijeot to- mandatory' sucking fund redemption in part, on September 1, 20_ and oii each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium; as-follows: Sznking Fund Redemption Date (September I) Principal Amount 20 20 20 20 20= (maturity) ' The Outstanding Bonds maturing on September ], 20 are subject to mandatory sinking fund redemption in part, on September I, 20_ and on each September 1 Thereafter to maturity, by lot, at a 7edemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows: Sinking Fund RedempliorrDate (September I) Principal Amount 20 $ 20 20 20 20_ (maturity) If sane but not all of the Bonds maturing on September 1, 20 and September 1, 20 ~ are redeemed. pursuant to the,provisions set forth above under the caption "-Optional Redemption," the principal amount o£ the Bonds maturing on September I, 20 and September 1, 20 to be redeemed pursuant to the mandatory sinking fund redemption provisions of the Indenture on any subsequent Septemberl~wi11 be reduced, by. $5,000 or an integral multiple thereof, as designated by the Authority in a Certiftcate, of the Authority filed with the Trustee; provided, however, that the aggregate unount of such reductions .may not exceed the aggregate amount of Bonds maturing on September 1, 20 and September 1, 20_ redeemed pursuant to the provisions set forth above under the caption "-Optional Redemption." ' If some but not all of the Bonds maturing on September 1, 20 and September 1, 20 are redeemed pursuant to the provisions set forth above under the caption " Mandatory Redemption of the Bonds from Principal Prepayments of the Special Tax Refunding Bonds," the principal amount of the Bonds maturing on. September 1, 20 and September 1, 20 to be redeemed pursuant to the mandatory sinking Hurd redemption provisions of the Indenture on any subsequent September 1 will be reduced by the aggregate ptincipal amount of the Bonds maturing on September 1, 20 September 1, 20 redeemed pursuant to the provisions set forth above under the caption "-Mandatory Redemption of the Bonds from Principal Prepayments of the Special Tax Refunding Bonds," such reduction to be allocated vnong redemption dates, as determined by the Trustee, so that following such redemption the remaining principal amount of each sinking fund payment on the Bonds maturing on September 1, 20 September 1, 20 will match the principal payment on the Specia] Tax Refunding Bonds due and payable on the same date, notice of which determination will be given. by the Trustee to the Authority. Purchase in Lieu ofRedemption. In lieu of optional redemption as set forth above under t11e caption "=-Optional Redemption" or redemption fran Principal Prepayments of the Specia] Tax Refunding Bonds as 10 17-125 set forth above under the caption "-Mandatory Redemption of The Bonds from Principal Prepayments of the Special Tax Refuriding Bonds," moneys in Che Redemption Account may be used and withdrawn by the Trustee for the purchase of Outstanding Bonds, upon the filing with the Trustee of a Written Certificate of The Authority requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Written Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the dake of purchase, unless a greater purchase price is permitted under Chapter 5 of Division 7 of Title 1 of the California Government Code and the Authority determines that it will have sufficient amounts in the Revenue Fund, following such purchase, to pay the principal of and interest on the Bonds as the same become due and payable. Partial Redemption. In the event that only a portion of any Bond is called for redemption, upon surrender of such Bond the Authority will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond of Authorized Denominations equal in aggregate principal amount or maturity amount, as applicable, representing the unredeemed portion of the Bond to be redeemed. Selection of Bonds of a Maturity for Redemption Whenever provision is made in the Indenture for the redemption of less than all of the Bonds of a maturity, the Trustee will select the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption, by lot in any manner which the Authority in its sole discretion deems appropriate and fair. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 Authorized Denominations and such separate Authorized Denominations will be treated as separate Bonds which may be separately redeemed. Notice of Redemption Contents of Notice. Notice of redemption will be mailed by the Trustee, by first class mail, postage prepaid, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to the Securities Depositories and the Information Services at ]east 30 days but not more than 60 days prior to the redemption date. Neither the failure to receive such notice nor any defect in the notice so mailed will affect the sufficiency of the proceedings for redemption of such Bonds or the cessation of accrual of interest on the redemption date. Each notice of redemption will state the redemption date, the place or places of redemption, the CUSIP numbers and the Bond numbers of the Bonds to be redeemed, and in the case of Bonds to. bcredeemed in part only, the respective Authorized Denominations of the principal amount thereof to be redeemed. Each such notice will also state that on said date there will become due and payable on each of said Bands the principal amount relating thereto or of said specified portion of the principal thereof in the case of a Bond to be redeemed in part only, plus accrued interest, if any, and through which date such interest will accrue, and that from and after such date interest thereon will cease to accrue and will require that such Bonds be'then' surrendered at the Principal Office of the Trustee. Neither the failure of any Bond Owner to receive any notice so mailed nor any defect therein will affect the sufficiency of the proceedings far redemption of any Bonds nor the cessation of accrual of interest thereon. Conditional Notice of Redemption. Any notice of optional redemption of the Bonds delivered in accordance with the Indenture may be conditional and if any condition stated in the notice of redemption has not been satisfied' on or prior to the redemption date, said notice will be of no force and effect and the Authority will not be required to redeem such Bonds and the redemption will not be made and the Trustee will within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled. The Authority may rescind any optional redemption and notice thereof for any reason on any date on or prior to the date fixed far redemption hp causing written notice of the rescission to be given to the owners of the Bonds so called for redemption. Any optional redemption and notice thereof will be rescinded if for any 11 17-126 reason on the date fixed for redemption moneys are not available in the Redemption Account or otherwise held in trust for such purpose in an amount sufficient to pay in full on said date the principal of, interest, and any premium due on the Bonds called for redemption. Notice of rescission of redemption will be given in the same masher in which notice of redemption was originally given. The actual receipt by the owner ofauy Bond of notice of such rescission will not be a condition precedent to rescission, and failure to receive. such notice or any defect in such notice will not affect the validity of the rescission. Effect of Redemption Notice having been given as described under the caption "-Notice of Redemption," and moneys for the redemption (including the interest to the applicable date of redemption and including any applicable premium), having been set aside in the Redemption Fund or any of the accounts therein, the Bonds to be redeemed will become due and payable on said date of redemption, and, upon presentation and surrender thereof at the Principal Office of the Trustee, said Bonds will be paid at the redemption price thereof, together with interest, accrued and unpaid to said date of redemption and premium, if any. Tf, on said date of redemption, moneys for the redemption of the Bonds to be redeemed, together with interest to said date of redemption, are held by the Trustee so as to be available therefor on such date of redemption, and, if notice of redemption thereof has been given as aforesaid and not cancelled, then, from and after said date of redemption, interest represented by such Bonds will cease to accrue and becoihe payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds will be held in trust for the account of the Owners of the Bonds so to be redeemed without liability for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of the Indenture will be cancelled upon surrender thereof and destroyed and the Trustee will deliver a certificate of destruction of such Bonds to the Authority. Notice of the special redemption of Bonds will be given upon receipt of notice of prepayment of the Special Tax Refunding Bonds. See AppendixB-"SUMMARY OF CERTAIN PROVISIONS OF BOND DOCUMENTS:' Transfers and Exchange So long as the Bonds remain in book-entry form, transfer and exchange of any of the Bonds will be accomplished-in accordance with the provisions of such book-entry system. 1n the event of termination of such book-entry system with respect to the Bonds, the Bonds may be transferred and exchanged in accordance with the teens of the Indenture. See Appendix B-"SUMMARY OF CERTAIN PROVISIONS OF BOND DOCUMENTS" and Appendix E-"INFORMATION CONCERNING DTC." 12 17-127 i Debt Service Schedule The following is the debt service schedule for the Bonds, assuming no redemptions other than. tnaridatory sinking fund redemptions. TABLE 5 DEBT SERVICE SCHEDULE Year Ending (September 1) Principal Interest Annual Debt Service $ $ $ Total $ $ $ Source: H. J. De La Rosa & Co., Inc. and Stifel, Nicolaus & Company, Incorporated. Sources of Revenue Set forth below is the projected sources of Revenues that will be generated by the anticipated payment of debt service on each of the Special Tax Refunding Bonds while the Bonds are outstanding. Initially, Revenues will be generated from debt service from all five series of Special Tax Refunding Bonds. As shown in Table 6 below, after Bond Year 2033, Revenues will be generated only from debt service on two of the five series of Special Tax Refunding Bonds. ~Pre7imtnary, subject to change. I3 17-128 -- ~ ~ y o 0 y ~ C 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 p 0 0 0 O O p O 0 0 0 0 0 0 p 0 0 O O O ~ i ? a` 0 O ~~ ti e-4 ti ti n r eti ~ ti n .~-J U A '-+ O O O O O O C O 0 0 0 0 0O 0 0 0 0 0 0 Vl v~ ~n v~ v~ vt ul O vl O O ~ ~ O ~ O vl ~n ~n vi lp d ~' O O N 00 O o0 N vi N O O l N vi l~ vl N N [~ ~ N y ~O V'i Vi ~' c0 N 00 N W 01 N ,- ,-. O O 7 [~ W ,--~ lp l~ 01 v~ ~ ~ ~ ~; i ~p ~~o ~n ~o ~~o~~o t vt t _~~~~~e~o+v-, ~ <Y V ~ 7 Y a ~ ~ 7 ~ ~ ~ V V d d ~ V ~ vl a i o h b ~ l0 O b ~ O l0 ~ ~ ~ \O ~ ~ ~ ~ ~ l0 m \O N ,~ V M 64 C .G ~- 0 0 0 0 0 0 0 0 O o 0 o 0 0 0 0 0 0 0 0 .--~ ' ~ vl v~ v~ ~ h vi ~ O h O O vl M O ~ O ~ h ~ ~ ~ ' ~ ~ V] O ~ ~ O O N T O 00 N~ N O O [ N ~n [~ v1 N N L L~ N Q 'C ~ ; : .v~ vt d' W N GO N W ~ N ~ .--~ O O <t l~ W.-: ~ ~ O a - y ~ ~ ~ ~ b P b ~ ~ ~ ~~ N ~ ~ O ~ N ~ ~ ~ V l ` ..0 z~ ~ .d- ~ V~ d-.~Y' v 7~ 7 V V 7~ 7 V ~f ~ V~~ h ~ Uj" _ ~ ~O ~D ~O lD V' ~O ~D lp ~D ~O ~O ,~O ~O ~D ~D Vr ~O ~D ~O N ,~ ~ ti ti ~ Q Z. N y 'J ry r y N O O O O O O O O O O O O O O O O O O O O N Fy O ~ O Y ~ vl ~ ~ h Vl 'n vi vi v1 O ~ ~ ~/1 O O O O V1 O v~ C~ W - ~~ q ~ V O a' ~ b O N~~ O~~ N O O O O N~~ V' ~ O ~ N N M y M .-. lp M [ ~ vt M O ~. h,_.- lD O~ ~O ~ N O O v v v M v v v vl vl v v vl V ' 5 ~ r ~ 1 ~ ~ ) l h l t h 1 1 h t n h h ~ l V ~ 7 V V ~ a' V V d' d' ~ 7 ~ ~ 7 d' V d' d' vl h0. G Q ~ 69 Fy ~ i V _ a ~ H .~ U ti: ~ M O O O O O O O O O O O O O O O O O O O O M F^ y C O" W v~ 0 0 0 0 0 0 0 0 O ~n Vi O v1 O O vi O O C M ~. O ~ 00 V' M M G~ M v1 vl V~ O N t~ Vi X 0 0 [~ 0 0 0 l~ ~ ~ p~ C ti ~~ ~ d- M~ O N O ti n •-+ W N M l 00 N N M [ N M'.--~ 4~ 4 69 ~ w , ~ c ~ . M ~ w '~ ,r ~ No 000000000000000000 r N Z y n~ 0 u M O vl ~n v~ h v~ Vl O v~ vi O h O~~ O O v~ Vi 00 v v1 l~ t~ O N [~ v1 N O (~ (~ V'i O N W O f i N vi M M N N ~ Q ~ C [~ W O v1 <Y M .~ d' n+ n ~ ~ ~ r- O M Vl ~ Vl M ~y q y C r ~ O~ O~ G~ ~ O O G~ G\ Q~ ni ~ C~ Q~ O~ C ~ ~ G1 G~ ~ O h Vl Vt Vl ~A h Vl vl ~ Vl h M h Vl h M M h h Z y „~ ~ ~ V1 U~4yC sa _~ x. ~ ca U ~ ti .." ~ Z c~" ~ o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0~~ ~ ~+ r ~ y ~ ~ v~ O O O v~ v~ vl O O H N N O O O O O O O O v~ M Vl l~ 01 rr M M Vl vi L~ N O h O N N I~ v1 vl l~ lp L.r O O _ y ~ Fy ~ ~•". O ~ ~ N ~ ~ ,-. v~ 00 00 b M W vl ~ ~ vl W O~ l~ ~ ~ '~ ' ,. ~~~ ~ y M M M M M M'M M M M M M M M M M M M M M M 'V ~. = Oa Z .y yy'^7 ..u. 1 ~ y ` y Q i ..~ V V% ~~Qh~ ~G 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ' ~O f~ ~ ~ ~ ~ M v7 n ~ O O O O O v~ v~ vl O v~ v~ N V V~ N 7 00 V N l~ 0 0 ~n v~ vl [~ l~ N O N N .~ N '- --~ O N N '- B O O '. W N l~ 00 O M ~D CT [~ ~p ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ h ~ h N ~ b ~ ~ ~ p M M M M M M M M M M M. M- M M M M. M M M M N Sri ri ri ~i ri ri ~i ri ri of ~i rim; ri ci ~i r; ca ri '~ V 64 ` d- ~ ~ ~ 00 ~ O r- N M V ~n ~O l~ W O~ O r. N M d' `~ -+ -~ .-. ~ -~ N N N N N N N N N N M M M M M m O O O O O O O O O O O O O O O O O C O 0 0 ~~ N N N N N N N. N N N N N N N N N N N N N N N U .~ v r,' ro v w C 3 0 4 v 'o m- i O b 9 V' P ai 3 N. G 7 O U F FL Q ~. W V e 0 U a 'L` C Y d' 17-129 SECURITY FOR THE BONDS Repayment of the Bonds General. The Bonds are special, limited obligations of t/ze Authority payable solely from and secured solely by tJze Revenues and other amounts pledged therefor under the Indenture. The Bonds will not be deemed to constitute a debt or Ziabdity of the City, the CVHA, the Community Facilities Districts, the State, or any political subdivision thereof, other than the Authority. NEITHER THE FAITHAND CREDIT NOR THE TAXING POWER OF THE CITY, THE CVHA THE COMMUNITY FACILITIES DISTRICTS, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE AUTHORITYHAS NO TAXING POWER. EXCEPT FOR THE REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE COMMUNITY FACILITIES DISTRICTS, GENERAL OR SPECIAL OBLIGATIONS OF THE CITY OR THE CVHA OR GENERAL OBLIGATIONS OF THE AUTHORITY, BUT ARE SPECL4L, LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE EXCL USIVELY FROM REVENUES AS PROVIDED IN THE INDENTURE, AS MORE FULLYDESCRIBED HEREIN. Debt service payments on the Special Tax Refunding Bonds have been calculated to be sufficient to permit the Authority to pay debt service, on the Bonds when due. Subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, all of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to the Indenture (including the Reserve Fund but excluding the Residual Account and the Rebate Fund) will be pledged by the Authority to secure the full and timely payment of the principal of and interest and premium, if any, of the Bonds in accordance with their terms and the provisions of the Indenture. Such pledge constitutes a first lien on and security interest in such assets and will attach, be perfected, and'be valid and binding from and after delivery of the Bonds by the Trustee, and the Revenues and other items pledged under the Indenture will immediately be subject to the lien of such pledge without any physical delivery thereof or further act. Subject to the provisions of the Indenture, the Authority will pledge and assign to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues, all of the moneys, and securities in the funds and accounts created under the Indenture (including the Reserve Fund but excluding the Residual Account and the Rebate Fund), as their interests appear, and other amounts pledged in the Indenture, and all of the right, title, and interest of the Authority in the Special Tax Refunding Bonds. The Authority will collect and receive, or cause to be collected and received by the Trustee, all such Revenues, and Revenues collected or received by the Authority, or collected and received by the Trustee on behalf of the Authority, will be deemed to be held, and to have been collected or received, by the Authority, in trust, and will be paid to the Trustee as set forth in the Indenture. The Trustee is also entitled to and may take all steps, actions. and proceedings reasonably necessary in its judgment to enforce, either jointly with the Authority or separately, by itself, all of the rights of the Authority and all of the obligations of the Community Facilities Districts under and with respect to the Special Tax Refunding Bonds. Revenue Fund. The Authority will establish with the Trustee a special fund designated the "Revenue Fund" which the Trustee will maintain and hold in trust. Within the Revenue Fund, the Trustee will establish special accounts designated as the "Principal Account," the "Interest Account," the "Redemption Account' and the "Residual Account." Such fund and accounts will be held and maintained as sepazate and distinct funds and accounts. All Revenues, except for investment earnings on the Reserve Fund which will be applied according to the Indenmre, will be promptly transferred to the Trustee by the Authority and deposited by the Trustee upon receipt thereof in the Revenue Fund. All Revenues deposited with the Trustee will be held,- disbursed, allocated, and applied by the Trustee only as provided in the Indenture. IS 17-130 On or before each Interest Payment Date, the Trustee will transfer all Revenues (other than Revenues-. representing Principal Prepayments and Revenues .resulting from the optional redemption of Special Tax Refunding Bonds, which will be transferred as described in the Indenture) then in the Revenue Fund into the following fiords and accounts based upon the following deposit requirements and in the following order of priority, the requirements of each such account (including the making up of airy deficiencies ih any such accowrt resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any account subsequent in priority: (a)' The Trustee will deposit ih the Interest Account an amount which, together with the amounts then on deposit therein, including amounts, if any, transferred by the Trustee from the Reserve Fund pursuant' to the Indenture, is sufficient to cause the aggregate amount on deposit in the interest Account to equal the amount of interest coming due and payable on the Bonds on such Interest Payment Date and any amount of interest previously due and unpaid. ' (b) The Trustee will deposit in the Principal' Account, if necessary, an amount which, together with the amounts then on deposit therein, including amounts, if any, transferred from the Reserve Fund pursuant to the Indenture, is sufficient to cause the aggregate amount on deposit-in the Principal Account to' equal the amount of principal or mandatory sinking account payment coming due and payable on the Bonds within the Bond Year and any amount of principal previously due and unpaid. (c) The Trustee will deposit in the Reserve Fund, if necessary, an amount which is syifficienf to cause the aggregate amount on deposit in the Reserve Fund to equal the Reserve Requirement. (d) On or after any Interest Payment Date on which the amount on deposit in the Revenue Fund was inadequate to make the transfers described in clauses (a) and (b) above as a result of a default in the scheduled payment of .principal of and/or interest on the Special Tax Refunding Bonds, the ,Trustee will immediately notify the Director of Finance of the City of the amount of such payment default. In the event that the Trustee receives all or any portion of the principal of and/or i~~terest on the Bonds the payment of which is in default, the Trustee will disburse or transfer such funds in the following order of priority: (i) for deposit in the Reserve Fund such amount as is necessary to replenish the amount of any transfers from the Reserve Fund to the Interest Account and/or the Principal Account resulting from such payment default; and (ii) for deposit iii the Revenue Fund any amount remaining following the transfer Yequired pursuant to clause (i). (e)' The Trustee will deposit in the Rebate Fund,' if necessary, an amount which is sufficient to cause the aggregate amount on deposit in the Rebate Fwid to equal the amount of any payment then required to be made to the United.States. (f) On June 30, after making the deposits required under clauses (a) through (e) above for the preceding March 1 Interest Payment Date and making the determination that there are adequate revenues on deposit with the, Fiscal Agent and available to make the scheduled Debt Service payment on the Special Tax Refunding Bonds due on the following September 1 Interest Payment, Date, and on September 1 of each year, after making the deposits required under clauses (a) through (e) above for such September 1 Interest Payment Date, the Trustee will transfer all amounts remaining on deposit in the Revenue Fund to the Residual Account. The Tn~stee will deposit in the Redemption Account those Revenues representing Principal- Prepayments which are to be used for the mandatory redemption of the Bonds. The Trustee will deposit in the -Redemption Account those Revenues resulting from the optional redemption of the Special Tax Refunding Bonds, and which the Authority has directed the Trustee to use for the optional redemption of the Bonds. See Appendix B"SUMMARY OF CERTAIN PROVISIONS OF BOND DOCUMENTS ° 16 17-131 Application of Interest Account. Subject to the provisiohss of the Indenture, all amounts in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds 'as it becomes due and payable or; at the Written Request of the Authority filed with the Trustee, to apply to the payment of accrued interest on any Bonds purchased by the Authority pursuant to the Indenture in lieu o£redemption. Any amounts on deposit in the Interest Account oii September 2 of any year during the term of the Bonds will be transferred from the Interest Account to the Revenue Fund for reallocation pursuant to the Indenture. Application of principal Account. Subject to the provisions of the Indenture, all amounts in the Principal Account will be used and withdrawn by the Trustee solely to pay the principal or maturity amount, 'as applicable,'of the Bonds upon the stated maturity thereof or upon any prior redemption of the Bonds with the proceeds of mandatory sinking payments. Any amounts on deposit in the Principal Account on September 2 of any year during the term of the Bonds will be transferred from the Principal Account to the Revenue Fund for reallocation pursuant to the Indenture. Application of Residual Account. Amounts in the Residual Account will no longer be considered Revenues and are not pledged to rep''ay the Bonds. So long as the Special- Tax Refunding Bonds are outstanding under the terms of the. Special Tax Refunding Borids Fiscal Agent Agreements, on July 1 and on September 2 of each year, the remaining balance in the Residual Account will, except as provided below, be transferred to the Special Tax Fund (as such term is defined. in the Special Tax Refunding Bonds Fiscal Agent Agreements)' established and held'by the Fiscal Agent for each Series of Special Tax Refunding Bonds proportionately based on their respective Proportionate Share. "Proportionate Share" means as of the date of calculation. for any Series of the Special Tax Refunding Bonds when computing the proportionate share. allocable to such Special Tax Refunding Bonds among all Outstanding Special Tax Refunding Bonds, the ratio derived by dividing the then Outstanding principal amount of such Special Tax Refunding Bonds by the then aggregate Outstanding principal amount of all Special Tax Refunding Bonds. Notwithstanding the foregoing, in the everit that the Special Tax Refunding Bonds have been paid in full or defeased, then any amounts in the Residual Account will be paid by the Trustee to the Authority to be used for any lawful purpose. The amount of the transfer to the Special Tax Fund for a Series of Special Tax Refunding Bonds calculated pursuant to the preceding paragraph will be reduced by the amount of any outstanding deficiency, as of the date of such transfer, in the payment of debt service on such Special Tax Refunding Bonds occurring in the Bond Year ending the September 1st immediately preceding such transfer date. Establishment and Application of Redemption Account. The Authority will establishea special account within the Revenue Fund designated as the "Redemption Account," which account the Trustee will maintain and hold in trust as a separate and distinct account within such fund. The Trustee will deposit in the Redemption Account any amounts required or permitted to be applied to the redemption of Bonds pursuant to. the Indenture. ~ ' Subject to the provisions of the Indenture, all amounts deposited in the Redemption Account will be used and withdrawn by the Trustee solely for the purpose of redeeming the Bonds in the manner and upon the ~tetms and conditions specified in'the Indenture at the next succeeding date of redemption for which notice has been given and at the redemption prices then applicable. At any time prior to selection of Bonds for such notice of redemption, the Trustee may, at the Written Request of the Authority, apply amounts on deposit in the Redemption Account to the purchase of such Bonds, for cancellation, at public or private sale, as and when ahd at prices not exceeding the par amount thereof (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account). ' ' ' Establishment and Application of Reserve Fund. The Trustee will establish and maintain uid hold in trust as a separate and distinct fund designated as the "Reserve Fund." On the Closirig Date, the Trustee will deposit in the Reserve Fund the amount received from the Fiscal Agents specified in the Indenture representing the Reserve Requirement as of that date. 17 17=132 There will be maintained in the Reserve Fund an amount equal to the Reserve Requirement. "Reserve ' Requirement" means, as of any date of calculation, an amount equal to the least of: (a) 125% of the average Annual Debt Service on the Bonds for that and any subsequent Bond Year; (b) 100% of the Maximum Annual Debt Service on the Bonds for that or any subsequent Bond Year; or (c) 10% of the issue price (within the meaning of section 148 of the Tax Code) of the Bonds. Moneys in the Reserve Fund will be used solely for the purposes set forth in the Indenture. Subject to the limitations set forkh in the following paragraph, amounts in the Reserve Fund will be applied to pay the principal of, including sinking fund payments, and interest on the Bonds when due in the event that the moneys in the Interest Account and/or the Principal Account of the Revenue Fund are insufftcient therefor. If the amounts iii the Interest Account and/or the Principal Account of the Revenue Fund are insufficient to pay the _ .principal of, including sinking fund payments, or interest on the Bonds when due, the Trustee will withdraw from the Reserve Fund for deposit in the Interest Account and/or the Principal Account, as applicable, moneys necessary for such purposes. ht addition, amounts, if any, in the Reserve Fund may be applied in connectioh with am optional .redemption pursuant to the provisions set forth under the caption "THE BOFIDS-Redemptio~i-Optional :Redemption" or a mandatory redemption pursuant to the provisions set forth under the .caption "THE BONDS-Redemption-Mandatory Redemption of the Bonds from Principal Prepayments of the Special Tax Refunding Bonds" or a defeasance pursuant to the Indenture of the Bonds in whole or in part in accordance with the following sentence, or when the balance therein equals the principal and interest due on the Bonds to and including maturity to pay the principal of and interest due on the Bonds to maturity. Any amounts that would otherwise be on deposit in the Reserve Fund following airy such optional redemption, mandatory ,redemption or defeasance that will be in excess of the Reserve Requirement following such event will be applied toward such optional redemption, mandatory redemption or defeasance, as applicable. In the event that the Trustee receives a Written Request of a Community Facilities District notifying the Trustee of the Prepayment of the Special Tax obligation for any parcel within a Taxing Jurisdiction and ' requesting the transfer of the applicable Special Tax Refunding Bonds Prepayment Reserve Fund Credit to the Fiscal Agent for the Series of the Special Tax Refunding Bonds issued far such Taxing Jurisdiction, the Trustee will transfer from the Reserve Fund not less than five Business Days prior to the redemption date of the Special Tax Refunding Bonds an amount equal to the Special Tax Refunding Bonds Prepayment Reserve Fund Credit to such Fiscal Agent. The Trustee shall, pursuant to a Written Certificate of the Authority, disburse or transfer from the cash amount then on deposit in the Reserve Fund on the final maturity date of each Series of Special Tax Bonds, an amount equal to the CFD Bonds Reserve Fund Credit Amount applicable to such Series of Special~Tax 13onds, minus the amount of any transfer previously made necessitated as a result of a deficiency in the scheduled payment of principal of or interest on such Series of Special Tax Bonds which has not previously been reimbursed, and such unount shall be transferred to the Interest Account and the Principal Account as a credit against the payments due on such Series of Special Tax Bonds on such date with the amount transferred being deposited-first to the Interest Account as a credit on the interest due on such bonds on such date and the balance being deposited to the Principal Account as a credit on the principal due of such bonds on such date. On each September 2nd during the term of the Bonds, the Trustee will calculate the Reserve Requirement for the Bond Year commencing on such September 2nd. If the amount then on deposit in the Reserve Fund exceeds the Reserve Requirement as of the date of such calculation (the "Excess Reserve Fund Amount"), the Trustee will not less than five Business Days thereafter transfer the Excess Reserve. Fund Amount to the Revenue Fund. Investment earnings on the investment of money on deposit in the Reserve Fund will be deposited in ' the Reserve Fund. 18 17-133 Payment of the Special Tax Refunding Bonds ' Cen'era[. Each Series of Special Tax Refunding Bonds is secured by a first pledge (which pledge'will be effected in the manner and to the extent provided in 'each Special Tax Refunding Bonds Fiscal Agent Agreement) of all of the Net Special Tax Revenues and all moneys deposited in the Bond Fund and, until disbursed as provided in the Special Tax Refunding Bonds Fiscal Agent Agreements, in the Special Tax Fund. See the captions "THE FINANCING PLAN" and "THE COMMUNITY FACILITIES DISTRICT." With respect to the CFD No. 07-I Special Tax Refunding Bonds, such pledge will be on a parity with the pledge of Net Special Tax Revenues securing CFD 07-I Parity Bonds. "Administrative Expenses" means any or all of the following: the fees and expenses of the Fiscal Agent (including the fees and expenses of its counsel); the expenses of the City or the Community Facilities District in carrying out its duties under the applicable Special Tax Refunding Bonds Fiscal Agent Agreement (including, but not limited to, the levying and collection of the Special Taxes, including collection of delinquent Special Taxes through judicial foreclosure proceedings, complying with the disclosure provisions of the CFD Act, the Continuing Disclosure Agreement and the applicable Special Tax Refunding Bonds Fiscal Agent Agreement, including those related to public inquiries regarding the Special Tax and disclosures to Special Tax Refunding Bondowners and the Original Purchaser); the costs' of the City and the Community Facilities District or their designees related to an appeal of the Special Tax; the Proportionate Share of the Authority Administrative Expenses (as such term is defined in Appendix B) allocable to the Special Tax Refunding Bonds; applicable fees; the Proportionate Share of the salaries of City staff directly related to the carrying out by the City for and on behalf of the applicable Community Facilities District, of the obligations under the applicable Special Tax Refunding Bonds Fiscal Agent Agreement or under the Indenture and a proportionate amount of City general administrative overhead related thereto allocable to the Special Tax Refunding Bonds; and all other costs and expenses of the City, the Community Facilities Districts, and the Fiscal Agent incurred in connection with the discharge of their respective duties under the applicable Special Tax Refunding Bonds Fiscal Agent Agreement, and in the case of the City, in any way related to the adminishation of the Community Facilities District and all actual costs and expenses incurred in connection with the administration of the Special Tax Refunding Bonds. "Administrative Expense Requiremenf' means au annual amowit equal'to $75,000, or such lesser amount as may be designated by written instruction from an Authorized Officer of the applicable Cormnunity Facilities District to be allocated as the first priority of Special Taxes received each Fiscal Year for the payment of Administrative Expenses allocated to the Special Tax Refunding Bonds. "Net Special Tax Revenues" means, for each Fiscal Year, all Special Tax Revenues received for the applicable Taxing Iuxisdietion by the Community Facilities District less an amount equal to the Administrafive Expense Requirement. "Special Tax Revenues" means the proceeds_of the Special Taxes received by the Community Facilities District 'including any scheduled payments -and any prepayments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and interest and penalties thereon. The Net Special Tax Revenues and all moneys deposited into said funds (except as otherwise provided in the Special Tax Refunding Bonds Fiscal Agent Agreements) have been dedicated to the payment of the principal of, and interest and any premium on, the Bonds as provided in the Special Tax Refunding Bonds Fiscal Agent Agreements and in the CFD Act until all of the Bonds have beedpaid and retired or until moneys or Defeasance Obligations have been set aside irrevocably far that purpose in accordance with th'e Special Tax Refunding Bonds Fiscal Agent Agreements. Special Taxes. Pursuant to the CFD Act and the applicable Special Tax Refunding Bonds Fiscal Agent Agreement, the Special Tax Refunding Bonds of a Series will be equally payable from the Net Special 19 17-134 Tax Revenues for the applicable Taxing Jurisdiction and other amounts in the Special Tax Fund without priority fof number, date of the Special Tax Refunding Bonds, date of sale, date of execution, or date of delivery, a~td The payment of the interest on and principal of the Special Tax Refunding Bonds and any. premiums upon the redemption thereof, will be exclusively paid from the Net Special Tax Revenues and certain other amounts in the Special Tax Fund which have been set aside for the payment of the Special Tax Refunding Bonds. Amounts in the Special Tax Fund constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the. Special Tax Refunding Bonds and, so long as any of the Special Tax Refunding Bonds or interest thereon remain Outstanding, will not be used for any other purpose, except as permitted by the applicable Special Tax Refunding Bonds Fiscal Agent Agreement. Special Taxes caimot be levied or collected in any Taxing Jurisdiction to cover a shortfall in the collection of Special Taxes in another Taping Junsdiction. The. Special Tax Fund of one Taxing Jurisdiction is not available to cure any deficiency in the collection of The Special Taxes within any other Taxipg Jurisdiction. Other thmi the amounts on deposit in the Reserve Fund, t/zere are no~ cross-callateralization or cross- payrnent proyisions,in effect with respect to the Taxing Jurisdictions. The Species[ Tax Refunding Bonds Fiscal Agertt Agreements do not establish reserve funds in connection with the Special Tax Refunding Bonds. ~ - ` • Principal of and interest and premium, if any, on the Special Tax Refunding Bonds will be paid by the Fiscal Agent to the Tn~stee, as the registered owner of the Special Tax Refunding Bonds, on behalf of the Authority; out of the Bond Fund and Special Tax Fund established by the Special Tax Refunding Bonds Fiscal Agent Agreement to the extenT that fimds on deposit in such funds are available therefor. LimUdtinns on Species[ Tuxes. The atnount of Special Taxes that the Community Facilities Districts may levy in any year is strictly limited by the maximum rates approved by the qualified electors within the applicable Taxing Jurisdiction and by Section 5332] (d) of the CFD Act as described below under the caption `-Rates and Methods ~of Apportionment of Special Taxes." The Special Taxes of a particular Taxing Jurisdiction arepot available io pay principal of, interest on or premium on any Special Tax Refunding Bonds other than the Special Tax Refunding Bonds of the Taxing Jurisdiction in which they were levied. Optional Redemption of Species[ Tax Refunding Bonds. The Special Tax Refuuding Bonds maturing on or after September ], 2024' may be redeemed at the option of the Community Facilities Districts froirr any som~ce of funds other than prepayment of Special Taxes, prior to their stated maturity, as a whole or in part (in integral multiples of $5,000) on any date on or after September 1, 2023', from such maturities as are selected by the applicable Community Facilities District, and by lot within a maturity, at a redemption price equal to the principal ainount of the Special Tax Refunding Bonds or portions thereof to be redeemed, together with accrued interest thereon to the date fixed for redemption. Notwithstanding the above, any such optional redemption of the Special Tax Refunding Bonds will occru• only if the Community Facilities District first delivers to the Fiscal Agent and the Tn~stee a certificate of an Independent Financial Consultant verifying that, following such redemption of the Special Tax Refunding Bonds, the principal and interest due on the outstanding Special Tax Refunding Bonds, if any, and the other outstanding Series of Special Tax Refunding Bonds is adequate to make the timely payment of principal, including mandatory sinking fund payments, and interest due on the Bonds that will remain outstanding ,following the corresponding redemption of the Bonds resulting from such optional redemption of the Special Tax Refunding Bonds. Mandatory Redemption of Special Tax Refunding Bonds.- The Special Tax Refunding Bonds are subject to redemption on any Interest Payment Date, commencing March 1, 2014, prior to maturity, as a whole ~or in part from such maturates, as are selected by the applicable Community Facilities District, from the - "Preliminary, subject to change. 20 17-135 prepayment of Special Taxes at the following redemption prices (expressed as percentages of the principal amount of the Special Tax Refunding Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Redemption Price March 1, 2014' through March 1,20 10 %. September 1,, 20 and March 1, 20 10 September 1, 20 and March 1, 20 10 September 1, 20- and any Interest Payment Date thereafrer 10_ Notwithstanding the above, such mandatory redemption of the Special Tax Refunding Bonds in whole or. in part will occur only, if the Community Facilities District first delivers to the Fiscal Agent and the Trustee a certificate of an Independent Financial Consultant verifying that, following such redemption_of the Special Tax Refunding Bonds, the principal and interest due on the outstanding Special Tax Refunding Bonds, if any, and the. other outstanding Series of Special Tax Refunding Bonds is adequate to make the timely payment of principal, including mandatory sinking fund payments, and interest due on the Bonds that will remain outstanding following the corresponding redemption of the Bonds resulting from such mandatory redemption of the Special Tax Refunding Bonds. Parity Special Tax Refunding Bonds for Refunding Purposes Only. Pursuant to each Special Tax Refunding Bonds Fiscal Agent Agreement, each Community Facilities District will covenant not to issue additional obligations entitled to a lien on the Net Special Tax Revenues of the respective Taxing Jurisdiction, other than for the purpose of refunding the Special Tax Refunding Bonds relating to such Taxing,Jurisdiction or, in the case of Community Facilities District No. 07-I, the CFD 07-I Parity Bonds. Levy and Collection of Special Taxes General. The Special Taxes are ~to be levied and collected by the Treasurer-Tax Collector of the County of San Diego in the same manner and at the same time as ad valorem property taxes; provided, however, that the Community Facilities Districts may directly bill the Special Tax or collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations. Under the respective Special Tax Refunding Bonds Fiscal Agent Agreements each Taxing Jurisdiction will covenant to levy Special Taxes each year, up to the maximum amounts permitted under the rate and method of apportionment and the CFD Act, in the amount required for the payment of the principal of and interest on its outstanding Special Tax Refunding Bonds coming due and payable in the ensuing yeas, together with an amount necessazy to replenish any draw on the Reserve Fund resulting from a delinquency in the payment of .scheduled debt service on its Special Tax Refunding Bonds and an amount estimated to be sufficient to pay the AdministraTive Expenses during such year. Notwithstanding this covenant, a Taxing Jurisdiction may be unable to levy. Special Taxes at rates sufficient to produce the required amounts due to the maximwn rates in effect under the,rate and method of apportionment or due to the limitation ih the CFD Act which provides that under no circumstances shall the Special Tax levied against any puroel used for private residential purposes be increased by more than ten percent (10%) as a consequence of a delinquency or a default by an owner of any other parcel or parcels within the Taxing Jurisdiction. See "SPECIAL RISK FACTORS-Insufficiency of Special Taxes." Each Community Facilities District will make certain covenants in the respective Special Tax Refunding Bonds Fiscal Agent Agreements for the purpose of etlsuring that the current maximum Special Tax rates and method pf collection of the Special Taxes are not altered in a manner that would impair the Community Facilities Districts' ability to collect sufficient Special Taxes to pay debt service on the Special `Preliminary, subject to change 21 17-136 Tax Refunding Bonds and Administrative Expenses when due in each Taxing Jurisdiction;' First, each Community Facilities District will covenant that, to the extent it is legally permitted to do so, it will not modify the maximum Special Tax rates where such modification would: (i) prohibit the Community Facilities District from levying the Special Tax within the respective Taxing Jurisdicfion in any Fiscal Year at such a rate as would generate Net Special Tax Revetues in such Fiscal Year at least equal to-110%` of Annual Debt Service -, on all Special Tax Refimding Bonds then Outstanding in the respective Taxing Jurisdiction; (ii) discontinue or cause the discontinuance of such levy; or (iii) permit the prepayment of the Special Tax except as permitted pursuant to the respective rate and method of,apportiomnent. Second, each Community Facilities District will covenant that in the event that any initiative is adopted by the qualified electors in a Taxing Jurisdiction which purports to reduce the minimum or the maximum Special Tax below the levels specified in the respective rate and method of apportionment or to limit the power of the Community Facilities District to levy'the Special .. Taxes witlvn a Taxing Jurisdiction, it will commence and pursue legal action in order to preserve its ability to comply with such .covenants. See the caption "SPECIAL RISK FACTORS-California Constitution Article XIIIC and Article XIIID." Although the Special Taxes constitute liens on taxable parcels within the Taxing Jurisdictions, such taxes do not constitute a personal.indebteduess of the owners of such property within the Taxing Jurisdictions. Moreover,-other liens for taxes and assessments already exist on the property located the Taxing Jurisdictions " and -other such liens could come-into existence in the future ~in certain situations without the consent or . knowledge of the City or the landowners therein. See Tables 16, 23, 30, 37 and 44 under the caption `THE COMMUNITY FAC[LITIES DISTRICTS" for a description of the direct and overlapping tax and assessment. debt levied within the Taxing Jurisdictions. See also the captions "SPECIAL RISK. FACTORS-Direct and Overlapping Debt" and "SPECIAL RISK FACTORS-Cumulative Burden of Parity Taxes and Special Assessments." There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if they are financially able to do so, all as more fully described under the caption "SPECIAL RISK FACTORS-The Special Taxes are Not Personal Obligations of the Owners.' Special Tax Funds. There has been established as a separate fund to. be held by the Fiscal Agent under each Special ,Tax Refunding Bonds Fiscal Agent Agreement, a "Special Tax. Fund," to the credit of which the applicable Community Facilities District or the City on behalf of the Community Facilities District, will deposit, immediately upon receipt, all Special Tax Revenues received from the applicable Taxing Jurisdiction by the applicable Community Facilities District or ttie City on behalf of the Communit}~Facilities District, except Special TaxRevenues representing Prepayments, which will be deposited in the Prepayment ' ~ ~ Account established under each Special Tax Refunding Bonds Fiscal Agent Agreement. Moneys in each • Special Tax Fund will be held by the `Fiscal Agent for the benefit of the applicable Community Facilities District and.the Owners of the respective Special-Tax Refunding Bonds, will, be disbursed as provided below, and, pending any disburseiment, wilCbe subject to a lien in favor of the Owners of the Special Tax Refunding Bonds. Special Tax Revenues (with the exception of Special Tax Revenues representing Prepayments) are to be applied by the Fiscal Agent under the applicable Special Tax Refunding Bonds Fiscal Agent Agreement in the following order of priority: First, to the Administrative Expense Fund an amount equal to the Administrative Expense ' Requirement estimated to be due and payable during.the Fiscal Year; • Second, not later than 10 Business Days prior to each Interest Payment Date, to the Bond Fund: (a) the, amount representing past due installments of principal, interest and premium on the Special Tax Refunding Bonds (including any interest thereon pursuant to the Indenture), if any, resulting from the delinquency in the 22 17-137 payment of such Special Taxes; and (b) au amount, taking into account any amounts then on deposit in the Bond' Fund (other than by reason of the preceding clause (a)) such that the amount in the Bond Fund equals the principal, piemium, if any, and interest due on the Special Tax Refunding Bonds on the next Interest Payment Date. See Appendix B under the caption "FISCAL AGENT AGREEMENT-NET SPECIAL TAX REVENUES; BOND FUND-Bond Fund" for a description of the application of moneys in the Bond Fund to pay principal'of and interest on the Special Tax Refunding Bonds; Third, no later tharrten (10) Business Days prior to each Interest Payment Date, to the Trustee for deposit in the Reserve Fund that amount, in addition to the amount transferzed 'to the Bond Fund pursuant to clause (a) in the second order of priority, above, necessary to replenish any draw on the Reserve Fund resulting from the delinquency in the payment of scheduled debt service on the Special Tax Refunding Bonds of such Taxing Jurisdiction; Fourth; on September 2 of each year afer making the deposits and transfers required under the first two orders of priority above and the transfer, if any, authorized under the third-order of priority above, upon receipt on or before the preceding -June 30 of written instructions from an Authorized Officer, to'the Trustee the amount specified in such written instructions necessary for the payment of the Proportionate Share of any rebate amount due and owing to the United States of America by the Authority on the Bonds; Fifth, on September 2 of each year after making the deposits and transfers required under the first four orders of priority above, upon receipt of written instructions from an Authorized Officer, to the Administrative Expense Fund the amount specified in such written instructions necessary for payment of the estimated Administrative Expenses projected to be due'and payable in the current Fiscal Year or the reimbursement of any Administrative Expenses incurred during the Fiscal Year ending on June 30 of the prior Fiscal Year and not included in any prior transfer made pursuant to the first order of priority above; and Sixth, after September 2 of each year, after making the deposits and transfers pursuant to the first five orders of priority above, moneys then on deposit in the Special Tax Fund will remain therein and will be subsequently. deposited or transferred pursuant to the first five orders of priority above. ' Amounts constituting Prepayments will be transferred by the Treasurer to the Fiscal Agent and placed by the Fiscal Agent in a segregated account within the applicable Bond Fund designated as the "Prepayment Account" and used to redeem Special Tax Refunding Bonds pursuant to the applicable Special Tax Refunding Bonds Fiscal Agent Agreement. Any such transfer of Prepayments will be accompanied by written instructions executed by the Treasurer or an Authorized Officer directing the Fiscal Agent to place such Prepayments in the Prepayment Account, specifying the amount of the applicable Special Tax Refunding Bonds Prepayment Reserve Fund Credit and requesting that the Authority direct the Trustee to transfer such credit to the Fiscal Agent for deposit in the Prepayment Account. Rates and Methods of Apportionment of Special Taxes The Community Facilities Districts have adopted a rate and method of apportiomnent (each, a "Rate and Method") for each Taxing Jurisdiction following public hearings and an election conducted pursuant to the provisions of the CFD Act, The form of the Rate and Method for each Taxing Jurisdiction is set forth in full in Appendix F hereto and discussed further in "THE COMMUNITY FACILITIES DISTRICTS." No Teeter Plan The Boazd of Supervisors of the County of San Diego has approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds-(the "Teeter Plan"), as provided for in Section 4701 et seq. of the Revenue and Taxation Code of the State. As a result of 23 17-138 xhe implementation of the Teeter Plan by the CountJ~ of San Diego (the "County"), the County apportions secured property taxes and assessments on an accrual basis when due (irrespective of actual collections) to -participating local .political subdivisions for which the County acts as the levying or collecting agency. The Community Facilities Districts do not participate in the Teeter Plan. As a result, the collection of Special Taxes is subject to delinquency risk. As further described under the caption "SPECIAL RISK FACTORS- Insufficiency of Special Taxes" and "SPECIAL RISK FACTORS-Bankruptcy and Foreclosure Delays," delinquencies in the payment of Special Taxes could have an adverse effect on the Community Facilities Districts' ability to make timely debt service payments on the Special Tax Refunding Bonds, which secure the Bonds. Conversely, the Community Facilities Districts will benefit from Special Taxes generated. by penalties and interest charged on delinquent Special Taxes See Tables 15, 22, 29, 36 and 43 under the caption "THE COMMUNITY FACILITIES DISTRICT" for historical delinquency information with respect to the Taxing Jurisdictions. Covenant to Foreclose The net proceeds received following a judicial foreclosure sale of land within the Taxing Jurisdictions resulting froin a landowner's failure to pay the Special Taxes when due are included within the Special Tax Revenues pledged to the payment of principal of and interest on the Special Tax Refunding Bonds under the Special Tax Refunding Bonds Fiscal Agent Agreements. Pursuant to Section 53356.1 of the CFD Act, in the event of any delinquency in the payment of any Special Tax or receipt by the Community Facilities Districts of Special Taxes in an amount which is less than the Special Tax levied, the City Council, as the legislative body of the Community Facilities Districts, may order that Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale: Under the CFD Act, the commencement of judicial foreclosure following the nonpayment~of a Special Tax is not mandatory. However, the Community Facilities Districts will covenant in the Special Tax Refunding Bonds Fiscal Agent Agreements for the benefit of the Owners of the Bonds that they will review the public records of the County, in connection with the collection of the applicable Special Taxes not later than July 1 of each year to determine the amount of the Special Tax collected in the prior Fiscal Year and will commence and diligently pursue to completion, judicial foreclosure proceedings against (i) properties under common ownership with delinquent Special Taxes.in the aggregate of $5,000 or more by October 1 following the close of the Fiscal Year in which the Special Taxes were due, and (ii) against all properties with delinquent Special Taxes in the aggregate of $2,500 or more by October 1 following the close of any Fiscal Year if the amount ,of the Reserve Fund is less than the Reserve Requirement. If foreclosure is ,necessary and other funds (including amounts in the Reserve Fund) have been exhausted, debt service payments- on the applicable series of Special Tax Refunding Bonds could be delayed until the foreclosure proceedings have ended with the receipt of~any foreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed,by banlauptcy actions, involvement by agencies of the federal government and other factors beyond the control of the .Authority, the _ City and the Community Facilities Districts. See the caption "SPECIAL RISK FACTORS-Bankruptcy and Foreclosure Delays." Moreover, no assurances can be given that the reai .property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption "SPECIAL RISK FACTORS-Land Valuas" Although the CFD Act authorizes the Community Facilities Districts to cause such an action to be commenced and diligently pursued to completion, the CFD Act does not impose on the Community Facilities Districts, the Authority or the City any obligation tp pu?chase or acquire any lot or parcel of property sold at a~ foreclosure sale if there is no other purchaser at such sale. However, the City does have the ability to use the foreclosure judgment to purchase property by credit bid at a foreclosure sale, in 24 17-139 which case the City would have-no obligation to pay such credit bid for 24 months. The CFD Act provides that, in the case of a delinquency; the Special Tax will have the same lien priority as is provided for ad valorem taxes. Priority of Lien The Special Taxes levied within the Taxing Jurisdictions, and each installment thereof and any interest and penalties thereon, constitute a lien against each of the respective parcels within such Taxing Jurisdiction until the same aze paid. There are other liens for special taxes and the recurring lien for general property taxes on parcels within the Taxing Jurisdictions. See the captions "THE COMMUNITY FACILITIES DISTRICT': and "SPECIAL RISK FACTORS-Direct and Overlapping Debt." No Obligation of the City Upon Delinquency The City is under no obligation to transfer any funds of the City into the Redemption Account or the Special Tax Funds for the payment of the principal of or interest on the Special Tax Refunding Bonds if a delinquency occurs in the payment of any Special Taxes. See the caption "--Covenant to Foreclose" for a discussion of each Community Facilities District's obligation to foreclose Special Tax liens upon delinquencies. Prepayment of Special Taxes A property owner may prepay the Special Taxes on a parcel and thereby cause a partial redemption of the Special Tax Refunding Bonds and the Bonds. See the. captions "THE BONDS-Redemption-Mandatory Redemption of the Bonds from Principal Prepayments of the Special Tax Refunding Bonds" and "SPECIAL RISK FACTORS-Potential Early Redemption of Bonds from Prepayments." THE AUTHORITY The Chula Vista Municipal Financing Authority was established pursuant to a Joint Exercise of Powers Agreement, dated June _, 2013, by and between the City and the Chula Vista Housing Authority. The Authority was created for the purpose of financing or refinancing of public capital improvements for, and working capital requirements of, the City, the CVHA or any other local agency, including community facilities districts created by the City or the CVHA, through the construction and/or acquisition by the Authority of such public capital improvements acid/or the purchase by the Authority of bonds of the City, the CVHA or any other local agency pursuant to bond purchase agreements andfor the lending of funds by the Authority to the City, the CVHA or any other local agency. The Authority is governed by a board of five directors, which. is composed of the members of the City Council. The Executive Director of the Authority is the City Manager of the City. The Authority is specifically granted all of the powers specified in the Bond Law, including but not limited to the power to issue bonds and to sell such bonds to public or private purchasers at public or by negotiated sale. The Authority is entitled to exercise powers common to its members and necessary to accomplish the purpose for which it was formed. The Authority has no independent staff, and consequently it will be completely dependent upon the officers and employees of the City to administer its program. THE AUTHORITY IS NOT OBLIGATED TO PAY THE PRINCIPAL OF, PREMNM (IF ANY) OR INTEREST ON THE BONDS, EXCEPT FROM REVENUES RECEIVED BY THE AUTHORITY AND AMOUNTS IN THE FUNDS PLEDGED UNDER THE INDENTURE. NEITHER THE CITY, THE CVHA NOR THE COMMUNITY FACILITIES DISTRICTS HAS ANY LIABILITY WITH RESPECT TO THE PAYMENT OF THE BONDS, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE, THE CITY, THE CVHA,-THE AUTHORITY OR THE COMMUNITY FACILITIES DISTRICTS IS PLEDGED TO THE PAYMENT OF THE BONDS. THEAUTHORITY HAS NO TAXING POWER. 25 17-140 THE CITY The City of Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the U.S.-Mexico border, in the area generally known as the "South Bay." Chula Vista's city limits cover approximately 50 square miles. Chula Vista was incorporated March 17, 1911 and became a chartered city, in 1949, For more information regarding .the City, see Appendix A- "INFORMATION REGARDING THE CITY OF CHULA VISTA." THE COMMUNTTY FACILITIES DISTRICTS The Community Facilities Districts in the Aggregate Introduction. Set forth under this caption is certain information describing the Taxing Jurisdictions in the aggregate. In the following aections information is provided separately on each of the Taxing .Jurisdictions:. Although the Authority believes the information with respect to the Taxing Jurisdictions iii the aggregate is .relevant to an informed decision to purchase the Bonds, investors should be aware that the debt service on one issue of Special Tax Refunding Bonds may not be used to make ~up any shortfall in the debt service on another issue of Special Tax Refunding Bonds. Moreover, the parcels in each of the Taxing Jurisdictions are taxed according to that Taxing Jurisdiction's specific Rate and Method, and the Special Taxes may only tie applied to pay the debt service on the Special Tas Refunding Bonds of the Taxing Jurisdiction in which they are levied and not to pay debt service of any other Special Tax Refunding Bonds. Development Status. As of January 1, 2012, approximately 97% of the parcels in the Taxing Jurisdictions were classified as developed by the County. Table.7 below sets forth the development status of the Taxing Jurisdictions based on the County Assessor's records as of January 1, 2012. TABLE 7 CHULA VISTA MUNICH'AL FINANCING AUTHORITY TAE COMMUNLTY FACILITIES DISTRICTS IN AGGREGATE DEVELOPMENT STATUS Projected FY % ofProjected - 2013/14 FY 2013/14 ' - No. of Total Assessed Marimun: Special Tar Special Tnx Development Status Parcels Va[uetit Specia[Tax Levy Levy Developed CoinmerciaL 4 $ 51,237,242 $ 99,335 $ 80,383 1.20% Developed Residential-Attached 2,909 754,954,079 3,041,134 ~ 2,394',424 35.87 Devctoped Residential-Detached 3,436 1,544,305,165 5,36Q017 4,199,037 62.91 Undeveloped Commercial 3 5,017,811 214,209 _ - 0.00 Undeveloped Residential 191 47710.753 ~ 646,962 1,055 0.02 Total ~ 6,543 $ 2,403,225,050 $ 9,361,658 $ 6,674,899 100.00% Total Assessed Value per County of San Diego as of January I, 2012. Value-To-Lieu Ratios. The assessed values of all of the taxable property in the Community Facilities Districts (6,543 parcels in total), as established by the County Assessor for Fiscal Year 2012-13, was $2,403,225,050. The direct and overlapping indebtedness payable from taxes and assessments levied on the parcels within the Taxing Jurisdictions as of May 23, 2013 was approximately $175904,459. Tables 8-A and 8-B below set forth the assessed value-to-lien ratio of all the taxable property in the Taxing Jurisdictions in the aggregate and within certain ranges based on the Fiscal Year 2012-13 assessed value of each of the Taxing Jurisdictions, the principal arnounts of the Prior Special Tax Bonds and, in the case of Table 8-A, the overlapping debt payable from taxes and assessments on property within the Taxing Jurisdictions as of May 23, 2013. 26 17-141. The assessed value-to-lien ratio of property with the Taxing Jurisdictions based ou the fiscal year 2012-13 assessed values, the aggregate principal of the Special Tax Refunding Bonds and the estimated overlapping indebtedness with the Taxing Jurisdictions equals approximately 13.66 to 1' and increases to 25.18 to 1 when the overlapping debt is excluded as set forth in Table 8-B below. Potential investors should be aware that Special Taxes are levied against individual parcels withire each Taxing Jurisdiction and that certain individual parcels will have avalue-to-lien ratio less than the overall value-to-lien ratio for such Taxing Jurisdiction and less than the value-to-lien ratio of the Taxing Jurisdictions in the aggregate. ' ~ P>eliminary, subject m change. 27 17-142 TABLE 8-A CHULA VISTA MUNICIPAL FINANCING AUTHORITY THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE .ASSESSED VALUE-TO-LIEN RA TIOS INCLUDING DII2ECT AND OVERLAPPING DEBT %~ofProjected Tota[_Direct & Projected FY FY 3013/19 Overlapping Tax Estirieated Assessed No. of 2013/14 Special Special Tax Total Assessed & Assessment I'alue-to-Lie~rRaiio. Parcels TaxLevyR~ Levy Valued Debt<3j~ • 0.00 to 2.99:1 3 $ .2,270 0.03% $ 174,438 ~ $ 58,565 S.OO to 4.99:1 48 47,210 0.71 4,359,698 1,062,931 S.OOto9.99:1 252 231,896 3.47 50,176,383 5;495,188 10.00to 14.99:1 5,160 5,266,887 78.31 1,790,230,621 137,397,226. 15.00 to 19.99:1 867 1,080,457 16.19 446,967,260 27,858,643 - ~ 20.00 to 24.99:1 29 66,641 1.00 50,757,767 2;296,895 25,00'to29.99:1 8 15,096 0.23 15,40,173 562,977 30.00 to 39.99:1. 4 3,457 0.05 31,623,519 844,012. , Greater than 40a 172 985 0.01 13.530,191 328,023 Total 6,543 $ 6,674,899 100.00% $ 2,403,225,050 $, 175,904,459 f ~ Projected FY 20 13/14 Special Tax Levy based on FY 2012/13 special tax billi ng and parcel classificatio n data. ' - .. (z) Total Assessed Value~per County of San Diego as o£January 1, 2012. ~ ~ - ~? Totals per Catifo mia Municipal Statistics„(uc. Source: NBS ' [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 28 17-143 TABLE 8-B CHULA VISTA MUNICHPAL FINANCING AUTHORITY THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE ASSESSED VALUE-TO-LIEN RATIOS INCLUDING DH2ECT DEBT ONLY of Projected Projected FY FY2013/14 Totat Direct Tax Estimated Assessed No. of 2013/14 Special Special Tax Totat Assessed & Assessment Value-to-Lien Ratio Parcels TaxLevyh~ Levy Value(zf Debtt3714J 0.00 to 2.99:1 0•. N/A 0.00% N/A NIA 3.00 to 4.99:1 10 $ 7,900. 0.12 $ 652,850 $ 155,776 5.00 to 9.99:1 49 54,333 0.81 5,519,922 823,327 10.00 to 14.99:1 239 211,364 3.17 57,700,747 4,092,511 15.00 to 19.99:1 1,247 1,123,918 16.84 331,643,039 18,162,994 20.00 to 24.99:1 1,664 1,759,865 , 2637 605,490,349 26,307,968' 25.00 to 29.99:1 1,645 1,966,251 29.46 670,703,221 24,692,428 30.00 to 39.99:1 1,395 1,395,069 20.90 574,832,930 16,999,636 Greater than 40:1 174 156,199 2.34 109,99],219 1,825,359 Total 6,423 $6,674,899 100.00% $2,356,534,277 $ 93,560,000 (~) Projected FY 2013/14 Special T ax Levy based on FY 2012/13 special tax billi ng and pazcelclassification data. I'1 Tota] Assessed Va lue per County of San Diego as of Ja nuary 1, 2012. (s) Totals per Californ ia Municipal Statistics, Inc. - - ' (a) Direct debt totals vary from the overlapping debt totals due to 120 parcels that are located within the boundaries of the Taxing Jurisdictio ns that were n ot levied for Fiscal Yea r 2013-14 and therefore not attributed any debt. Source: NBS Table 9 sets forth the historical assessed values for the taxable property in the Taxing' Jurisdictions on an aggregate basis for each of the last six fiscal years. Between fiscal year 2007-08 and 2012-13, assessed values in the Taxing Jurisdictions declined by approximately 30% due to significant declines in home values beginning in 2007. TABLE 9 CHULA VISTA MUNICIPAL FINANCING AUTHORITY THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE HISTORICAL ASSESSED VALUES chnnge in Total Tota(Assessed Assessed Fiscal Year Lat:d Valuelrl Structure Value/'t Valuel'1 Value 2007-OS $1,658,094,925 $1,765,621,454 $3,423,716,379 N/A 2008-09 1,560,]96,702 1,655,361,402 3,215,558,104 -6.08% 2009-10 1,239,603,979 1,344,231,359 2,583,835,338 -19.65 2010-i] 1,157,911,148 1,334,569,977 2,492,481,125 -3.54 2011-12 1,119,338,756 1,361,591,784 2,480,930,540 -0.46 2012-13 1,046,640,579 1,356,584,471 2,403,225,050 -3.13 " Total Assessed Value per County of San Diego as of January 1, 2012. Source: AiBS. 29 17-144 Table 10 sets forth the historical Special Tax collections for the taxable property in the Taxing Jurisdictions on an aggregate basis as of June 30 for each of the last five fiscal years. TABLE 10 CHULA VISTA MUNICIPAL FINANCING AUTHORITY THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE HISTORICAL SPECIAL TAX COLLECTIONS AS OF NNE 30 EACH FISCAL YEAR No. of No. of % of Amount Amount Parcels Parcels Amount Fisca[ Yenr Levied Deli~equent Levied Delinquent Delinquend 2007-03 57,926;830 5664,630 6,006 643 8.38°e 2008-09 8,003,076 630,713 6,348 565 7.88 2009-10 7,927,311 276,245 6,385 232 3.48 2010-II 7,9 L5,919 145,072 6,420 129 1.83 2011-12 7,803,390 154,674 6,434 134 1.98 Source: NBS 30 17-145 Table 11 sets forth the remaining Special Tax delinquencies for the taxable property in the Taxing Jurisdictions as of May 2013 for fiscal years 2007-08 through 2012-13.. TABLE 11 CHULA VISTA MUNICIPAL FINANCING AUTHORITY THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE SPECIAL TAX DELINQUENCIES AS OF MAY 2013 No. of No. of % of Amount Amount Parcels Parcels Amount Fisca! Year Levied Delinquent Levied Delinquent Delinquent 2007-08 $7,926,830 $ N/A 6,006 N/A 0.00% 2008-09 8,008,076 6,989 6,348 6 0.09 2009-10 7,927,311 4,844 6,385 4 0.06 2010-I1 7,915,919 12,309 6,420 12 0.16 201[-12 7,803,390 43,642 6,434 33 0.55 2012-13 7,802,957 171,807 4,967 193 - " 2.20 Source: NBS. Table 12 below sets forth the top ten property owners in the Taxing Jurisdictions measured by the percentage share of total Special Taxes projected to be levied in fiscal year 2013-14. These top ten property owners are responsible for just under 2 percent of the Special Taxes expected to be levied in fiscal year 2013- 14. TABLE 12 CHULA VISTA MUNICIPAL FINANCING AUTHORITY THE COMMUNITY FACILITIES DISTRICTS IN AGGREGATE TOP TEN PROPERTY OWNERS nj Projected FY Projected FY 2013/!4 ?0!3/14 Special Tax Specia[Tax Parcel Owner Land VaLre rD Strncnve [value °~ Tom! Va[uer't Levy Levy Count Windingwalk Marketplace L L C $ (0,500,000 $ 11,000,000 $ 25,SOQ,000 $ 30,366 0.45% 1 Realty Income Properties 1 L L C 1,138,403 7,270,839 12,409,242 2Q585 0.31 I Pathfinder Otay Holdings L L C 3,162,000 3,366,000 6,52R,000 19,516 029 1 Otay Ranch Fourteen L L C 8,500,000 16,SOQ,000 25,000,000 18,972 0 28 l Peninsula Property Services L L C 2,500,000 4,300,000 ~ 6,800,000 9,661 0.14 I Gutierrez Oscar&Angelica 1,123,878 2,272,776 3,396,654 7,365 0.11 3 Federal National Mortgage Assn 860,000 715,000 1,575,000 6,673 0.10 7 Villalvazo Saul & Mattei Erika 434,000 !,366,000 1,800,000 5,955 0.09 I Crosthwai[e Alejandro 1 & Midred B 978,357 2,783,456 3,761,813 5,937 0.09 1 Yoon Dan 555,000 1,216,000 1,771,000 5,611 0.08 3 All Others 1.0I2.88R.94I L301J94.400 2314.683.341 6544.253 9$.04 6123 Totals $ 1,046,640,579 $ 1,356,584,471 $ 2,403,225,050 $ 6,674,899 !00.00% $6,543 ~0 Total Assessed Value per Cou nty of San Diego as of January I, 2012. Source: NBS. Community Facilities District No. 06-I Improvement Area No. A Location and Description. Community Facilities District No. 06-I Improvement Area No. A ("CFD No. 06-I IAA") consists of 1,420 single-family detached residences and 551 single-family attached residences on approximately 737 gross acres. The first building permits in CFD No. 06-I IAA were issued on Apri] 18, 2003 and the last certificates of occupancy were issued on May 15, 2012. The residences range in size from 1,216 square feet to 11,876 square feet. There are 2 parcels categorized under the Rate and Method for CFD 31 17-146 No. 06-I IAA as Undeveloped Commercial property and 19 parcels as Undeveloped Residential property. No assurance can be given that any of these remaining parcels will be developed. Table 13 sets forth the historical assessed values for the taxable property in CFD No. 06-I IAA for each of the last six fiscal years, Behveen fiscal year 2007-08 and 2012-li, assessed values in the CFD No. 06-I-IAA declined by approximately 3 I % due to significant declines in home values beginning in 2007. TABLE l3 CFD NO. 06-I IAA HISTORICAL ASSESSED VALUES change in To(a[ Structure To(n[Assesserl Delinquency Assessed Fiscal Year Lurid Vn/uet~l Vahrelrl Valuel~l Xate V<due 2007-08 $552,978,258 $762,211,361 $1,315,189,619 _ 9.42% N/A 2008-09 524,255,026 706,635,395 1,230,89Q,421 925 -6.41% 2009-10 416,139,844 566,211,450 982,351,294 3.81 -20.19 2010-I1 393,356,506 544,34Q,934 937,697,440 2.47 -4.55 201.1-12 385,174,124 533,265,7 L0 918,439,834 2.38 -2.05 2012-]3 377,359,809 524,866,686 902,226,495 N/A -L77 (0 Total Assessed Value per C ounty of San Diego as of January I, 2012 . Source: NESS. Assigned Special Taxes. Table 14 below sets forth the Assigned Special Taxes projected to be levied on the property within CFD No. 06-I IAA in fiscal year 2013-14 based on the development status within CFD No. 06-[ IAA as of May 1, 2013. The Special Taxes in CFD No. 06-I [AA may not be levied after the 2042-43 fiscal year. The final maturity of the CFD No. 06-I IAA Bonds is September 1, 2033. TABLE 1J CFD N0.06-I IAA ASSIGNED SPECIAL TAXES Projected FY o ojProjecterl 20[3/14 FY2013/]4 No. of Tota[Assessed Muxirrarm Special Tax Specinl Tnx Development Staurs Parcels Va[uel'l Special Tnx Levy Levy Developed Commercial N/A N/A N/A N/A N/A Developed Residential -Attached 551 $ 134,53Q,777 $ ~ 476,178 $ 356,437 14.47°0 Developed Residential -Detached 1,420 728,459,145 2,783,303 2,107,661 85.53 Undeveloped Commercial 2 3,711,127 136,197 - 0.00 Undeveloped Residential 19 35.475.446 404.043 - 0.00 Total 1,992 $ 902,226,495 $ 3,799,720 $2,464,143 100.00 1~l Total Assessed Value per County of San Diego as of January 1, 2012. Source: NBS. 32 17-147 The Assigned Special Tax for each Assessor's Parcel of Developed Property in CFD No. 06-I IAA is calculated as set forth below. The terms "Residential Properly", "Residential Floor Area", "Commercial Property", "Hotel Property" and "Acre" are defined in the Rate and Method for CFD No. 06-[ IAA included in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS." (a) ForZone I (Vistas) (1) For Residential Property $0.58 per square foot of Residential Floor Area. (2) For Commercial Property and Hotel Property $6,000 per Acre. (b) For Zone 2 (Woods) (1) For Residential Property $0.67 per square foot of Residential Floor Area. (2) For Commercial Property $6,000 per Acre. As shown in Table' 14 above, the projected Special Tax levy for CFD No. 06-I IAA in Fiscal Year 2013-14 is $2,464,148, which is approximately 74.86% of the Assigned Special Tax far CFD No. 06-I IAA. Delinquencies. The following table is a summary of Special Tax levies, collections and delinquency rates in CFD No. 06-[ IAA for fiscal years 2007-08 through 2011-12 and for the first installment for fiscal year 2012-13. TABLE 15 CFD NO. 06-I IAA SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES FISCAL YEARS 2007-08 TO 2012-13tH No. of No. of Amount Amount Parcels Parcels Fiscal Year Levied Delinquent Levied Delinquent Delinquent 2007-08 $2,859,741 $ N/A 1,957 N/A 0.00% 2008-09 2,913,556 3,057 1,959 2 0.10 2009-10 2,911,816 1,751 1,970 I 0:06 2010-II 2,912,259 5,844 1,970 4 0.20 2011-12 2,909,506 20,427 1,970 9 ' 0.70 2012-13 2,913,428 64,890 1,971 61 2.23 Source: NBS [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 33 17-148 Direct nnrl Overlapping Debt. The property within. CFD No. 06-I IAA is subject to taeation by a number of taxing agencies, some of which have issued debt secured by taxes and assessme nts levied on such property. The table below sets forth the direct and overlapping debt for CFD No. 06-I IAA as of May 23, 2013. TABLE 16tt1 DIRECT AND OVERLAPPING DEBT CFD N0.06-I IAA May 23, 2013 2012-13 Local Secured Assessed Valuation: $902,408,495 (Land and Improvements) ^ DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/13 Nfetropolitan Water District General Obligation Bonds 0.043% - $ 7Q,915 Otay Municipal Water District, LD. No. 27 General Obligation Bonds 9.048 564,119 Southwestern Community College District General Obligation Bonds 2.177 5,135,801 Sweewater Union High School District General Obligation Bonds 2.602 9,400,135 Chula Vista City School District General Obligation Bonds - 3.767 2,501,690 Chula Vista City Community Facilities District No. L 10.202 514,196 SweetwaterUnion High School District Community Facilities District No. I 22.826 11,038,126 City of Chula Vista Commuuity Facilities District No. 06-1, Area A 100.000 32,960,00011 TOTAL DIRECT AND OVERLAPPING TAY .AND ASSESS~9ENT DEBT $62,184,932 OVERLAPPING.GENERALFUNb DEBT San Diego County General Fund Obligations ~ 0.236% $ 943,237 San Diego County Pension Obligations 0.236 ],778,T 9 San Diego County Superintendent of Schools Obligations 0.236 41,201 Southwestern Community College District General Fund Obligations 2.177 27,107 Sweetwater Union High School District Certificates of Participation 2.602 156,886 Chula Vista City School District General Fund Obligations 3.T7 5,296,289 City of Chula Vista Certificates of Participation 4.305 5,526,537 Otay Municipal Water District Certificates of Participation 3.948 2?20572 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $15,990,563 Less: Otay Municipal Water District Certificates of Participation (100% supported) 2,220,572 TOTAL NET OVERLAPPNG GENERAL FUND DEBT $13,769,996 GROSS COMBINED TOTAL DEBT $78,175,5501 NET COMBINED TOTAL DEBT $75,954,978 Ratios to 2012-13 Assessed Valuation Direct Debt ($32,960,000) .................................................. ....3.65% Total Direct and Overlapping Tax and Assessment Debt..... ......6.89% Gross Combined Total Debt ................................................. ......8.66% Net Combined Total Debt .................................................... ......8.42% 11 Excludes refunding issue to be sold. t~1 Excludes tar and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. 34 17-149 Table 17 below sets forth an estimated property tax bill for a residential unit in one of the tax rate areas in CFD No. 06-I IAA. The estimated tax rates and amounts presented herein are based on information for fiscal year 2012-13. The actual amounts charged may vary and may increase in future years. For fiscal year 2012-13, the projected total effective tax was approximately 1.82% of assessed value and were the Special Takes levied at the full amount of the Assigned Special Tax (as defined in the Rate and Method for CFD No. 06-I IAA in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS"), the total effective tax rate would have been approximately 1.87% of assessed value. It is not expected that the maximum percentage will be reached. 3~ 17-150 TABLE 17 SAMPLE TAX BILL CFD NO. 06-I IAA TAX YEAR 2012-2013 Land Use: Residential 2012-13 Local Secured Assessed Valuation (includes $7,000 HOE): $ 493.000.00 Ad Valorem Taxes: Rate per $100 Amount 1%TAX ON NET VALUE 100% 4,930.00 VOTER APPROVED BONDS: Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998C 0.00% $ N/A Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998D 0.00 0 Gen Bond Chula Vista-Prop JJ l 1/03/1998, Ser 1998E 0.00. 0 Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998E 0.00 0 Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998G 0.00 22.58 Gen Bond Chula Vista-Prop JJ 11/03/1998, 2005 Ref 0.01- - 47.67 Gen Bond Chula Vista-Prop JJ 11/03/98, 2010 Ref 0.00 21.79 Gen Bond Chula Vista-Prop JJ 11/03/98, 2012 Ref 0.01 32.49 Hi Bond Sweetwater-Prop BB 1 1/07/2000, Ser 2000A 0.00 21.64 Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 20006 ~ 0.01 41.51 Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000C 0.02 83.32 Hi Bond Sweewater-Prop O 1 1/07/2006, Series 2007 0.03 142.53 Southwestern Comm Coll-Prop AA 1 l/07/00, Ser 2000 0.01 32.09 Southwestem Comm Coll-Prop AA l 1/07/00, Ser 2004 0.00 0 Southwestem Comm Col]-Prop AA 11/07/00, 20056 Ref 0.01 57.34 Southwestem Comm Coll-Prop R 11/04/08 Ser 2009A 0.00 8.78 Southwestern Comm Col]-Prop R 11/04/08 Ser 20096 0.01 52.21 Southwestern Comm Coll-Prop R 11/04/08 Ser 201 OC 0.01 34.61 Southwestem Comm Coll-Prop R 11/04/08 Ser 20IOD 0.00 0 Otay Water Imp Dist No 27-Debt Service (Water) 0.01 24.6 MWD D/S Remainder Of SDCWA 15019999 0.00 17.26 TOTAL ON NE1' VALUE 100.13% $ 5,570.47 FIXED CIIARGE ASSMTS: Vector Disease Ctrl $ 5.86 Mosquito Surveillant 228 Sweetwater Hi CFD#1 83952 CFD 061 Eastlk Woods 1,768.46 CFD 07M Eastlake III 425.82 MWD Wtr Standby Chrg 9 1.50 Assmt Dist 2001-1 54.18 CWA WtrAvailability 10.00 Water Availability 10.00 Chula V. Elem CFD#1 ~ 283.46 Total Direct Charges $ 3,411.08 Total Taxes $ 8,981.5 As a Percentage of the District s Total 2012-li Assessed Valuation 1.82% 36 17-151 Value-To-Lieu Ratios. The Authority has obtained the assessed values of al] of the taxable property in CFD No. 06-I IAA (1,992 parcels in total), as established by the County Assessor for Fiscal Year 2012-13, which total was $902,226,495. Upon the issuance of the Special Tax Refunding Bonds, the estimated direct and overlapping special tax and assessment indebtedness within CFD No. 06-1 IAA will be approximately $59,161,]44. The assessed value-to-lien ratio of the property within CFD No. 06-I IAA, based on the fiscal year 2012-13 assessed values, the aggregate principal amount of the CFD No. 06-1 IAA Special Tax Refunding Bonds and the estimated overlapping indebtedness within CFD No. 06-I IAA equals approximately 15.25-to-l .~ Tables 18-A and 18-B below set forth the estimated value-to-lien ratios for parcels within CFD No. 06-I IAA by various ranges based upon the principal amount of the CFD No. 06-I IAA Special Tax Refunding Bonds and, in the case of Table 18-A, the overlapping debt information included in Table 16. TABLE 18-A CFD N0.06-I IAA ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES INCLUDING DD2ECT AND OVERLAPPING DEBT of Projected Total Direct & Projected FY FY2013/14 Overlapping Tax Estimated Assessed No. of 2013/14 Special Special Tax Total Assessed & Assessment Value-to-Lien Ratio Parcels Taxlevytr~ Levy ValuelzJ Debt<'J 0.00 to 2.99:1 1 $ 756 0.03% $ 48,438 $ 16,199 3.00 to 4.99:1 1 5,588 0.23 370,478 83,308 5.00 to 9.99:1 11 20,939 0.85 3,429,442 476,782 10.00 to 14.99:1 1,255 1,518,433 61.62 499,285,460 35,537,901 15.00 to 19.99:1 689 868,026 35.23 329,608,075 20,616,895 20.00 to 24.99:1 23 31,853 1.29 22,455,910 1,023,340 25.00 to 29.99:1 8 15,096 0.61 15,405,173 562,977 30.00 to 39.99:1 4 3,457 0.14 31,623,519 844,012 Greater than 40:1 0 0.00 Total 1,992 $ 2,464,148 100.00% $ 902,226,495 $ 59,161,144 (o Projected FY 2013/14 Special T ax Levy based on FY 2012/13 special tax billin g and parcel classificatio n data. lz> Total Assessed Va lue per County of San Diego as of Ja nuary 1, 2012. (n> Totals per Californ ia Municipal Statistics, Inc. Source: NBS - (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) Preliminary, subject ro change. 37 17-152 TABLE 18-B CFD N0.06-I IAA ESTINLITED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES LNCLUDING DIRECT DEBT ONLY of Projected Projected FY FY2013/l4 Total Direct Tax Estimated Assessed No. of 2013/14 Special Special Tax Total Assessed & Assessment I~nlare-to-Lien Rntio Parcels Trcr Levytll Levy Va[ue1~1 Debt13/t4I 0.00 to 2.99:1 0 N/A 0.00% N/A N/A 3.00 to 4.99:1 1 $ 756 0.03 $ 48,438 $ 9,180 5.00 to 9.99:1 ~ 14,370 0.58 1,392,508 174,595 10.00to 14.99:1 5 11,279 0.46 1,613,965 137,047 15.00 to 19.99:1 2 5,747 0.23 1,315,361 69,827 20.OOto 24.99:1 227 412,589 16.74 118,931,624 5,013,053 25.OOto29.99:1 899 1,200,540 48.72 401,361,204 14,586,855 30.OOto 39.99:1 786 758,524 30.78 301,255,988 9,216,252 Greater than 40:1 46 60344 2.45 37,120.834 733.192 Total 1,971 $ 2,464,148 100.00% $ 863,039,922 $29,940,000 111 Projected FY 2013/14 Special Tax Levy based on FY 2012/13 special tat billing and parcel classification data. 121 "Coral Assessed Value per County of San Diego as of January 1, 2012. 01 Totals per California Municipal Statistics, Inc. Source: NI3S Top Ten Property Owners. Table 19 below sets forth the top ten property owners in CFD No. 06-I fAA based on the projected levy for fiscal year 2013-14. TABLE 19 CFD NO. 06-I IAA TOP TEN PROPERTY OWNERS Projected F}' Structure 20/3/14 Speda( Owner land I slue ro Ya/ue ro Tom] /ulue°~ E.umpt P¢[ue Tae /.avy Gutierzez Oscar&Mgelica S 1,123,8]8 S 2,272,]]6 S 3,396,654 S ],00000 S ],365 Villalvazo Saul & A(anei Erika 431,000 1,366,000 1 800,000 N/A 1,955 Crosthwaite Alejandro r & Midred B 978,35] 2,783,156 3,761,817 S/A 5,93] Yoon Don 555,000 1,216,000 I ]71,000 21,000 >,611 Limon Alejandro & Godinez Imelda 370,1]8 N/A 7]0,178 N/A 5,588 Ivlevi Brothers L L C 400,000 1 800,000 2,200,000 N/.4 4,927 Bundang Emil 300,000 850,000 1,150,000 ],000 4,869 Clark Tracy C ~. Sih3a Revocable Trust 0 176,000 1,221,000 1 69],000 ],000 4,83] C W C Regional Housing Fund 3 L L C 613,000 892,000 1,505,000 IJ,000 4,676 Caso-o Alvaro V V & Velazco Mayueth 300,000 1,200,000 1 500,000 N/A 4,188 All Others 372,622,523 511,265,454 843,88],97] 9,198,45E 2,409,903.62 Parcels NOt LcviedA Special Tax 391865]3 NIA 39186573 N/A N/A Total 5377,759,809 5524,866,686 5902,226,495 ,59,254,451 S 2,464,148 ~^ Total Assessed Value per County of San Diego as of January L 2012. Source: NBS. Community Facilities District No. 06-[Improvement Area No. B iJ Pr jeered FY 2013/14 Special Parca( Porte( Tae Lery Cuuut Come % 030% 3 0.15% 0.21 1 0.05 021 1 0.05 0.23 0.15 027 I 005 0.20 1 0.05 0.20 1 0.05 0.20 2 ' 0.10 0.19 7 0.15 O.IB l 0.05 97.80 1,951 98.09 0.00 21 I OS 100.00% 1992 100.00% Location and Descrip[fon. Community Facilities District No. 06-I Improvement Area No. B ("CFD No. 06-1 IAB") consists of 32 siligle-family detached residences and 454 single-family attached residences on approximately 135 gross acres. The first building permits in CFD No. 06-I IAB were issued on February 5, 2004 and the last certificates of occupancy were issued on September 2, 2004. The residences range in size 38 17-153 from 1,293 square feet to 2,747 square feet. There are 3 parcels categorized under the Rate and Method for CFD No. 06-I IAB as Developed CommOrcial.property and 95 parcels as Undeveloped Residential property. No assurance can be given thaf any of these remaining undeveloped parcels will be developed. Table 20 sets forth the historical assessed values for the taxable property in CFD No. 06-I IAB for each of the last six fiscal years. Between fiscal year 2007-08 and 2012-13, assessed values in the CFD No. 06- [-IAB declined by approximately 28.2% due to significant declines in home values beginning in 2007. TABLE 20 CFD N0.06-I IAB HISTORICAL ASSESSED VALUES change in Tota[ TotalASSessed Delinquency Assessed Fisca( Year Land Vn(uerrl Structure Valuefl Vn/uel'l Rnte Value 2007-08 $136,382,015 $95,533,67( $231,915,686 .8.50% N/A 2008-09 127,343,750 96,643,674 223,987,424 6.37 -3.42°/a 2009-]0 106,767,161 85,299,507 192,066,668 6.19 -14.25 2010-11 103,409,000 88,081,980 191,49Q,980 1.29 -0.30 2011-12 91,885,327 93,683,395 185,568,722 0.50 -3.09 2012-13 79,04,826 87,488,119 166,642,945 N/A -10.20 1~1 -Total Assessed Value per County of San Diego as of January 1, 2012 Source: NBS. Assigner( Special Taxes. Table 2l below sets forth the Assigned Special Taxes projected to be levied on the property within CFD No. 06-I IAB in fiscal year 2013-14 based on the development status within CFD No. 06-I IAB as of May 1, 2013. The Special Taxes in CFD No. 06-I IAB may not be levied after the 2043-44 fiscal year. The final maturity of the CFD No. 06-[ [AB Bonds is September 1, 2034. TABLE 21 CFD N0.06-I IAB ASSIGNED SPECIAL TAXE5 Projected FY % ofProjected 2013/14. FY 2073/14 No. of Tom[Assessed ~Narimum Specinl Tax Special Tae Development Status Parcels Valuet'l Specla[ Tax Lery Levy Developed Commercial 3 $ 25,737,242 $ 64,260 $ 49,765 9.37% Developed Residential -Attached 454 125,917,734 576,543 446,493 84.09 Developed Residential-Detached 32 7,786,969 44,811 34,703 654 Undeveloped Commercial N/A N/A N/A N/A N/A Undeveloped Residential 95 7.201,000 110.144 0.00 Total 584 $ 166,642,945 $795,758 $ 53Q,961 100.00% "' Total Assessed Value per County of San Diego as of January ], 2012. Source: NBS. 39 17-154 The Assigned Special Tax for each Assessor's Parcel of Dedeloped Property in CFD No. 06-I IAB is calculated as follows: (I) for Residential Property, $0.74 per square foot of Residential Floor Area, and (2) for Commercial Property, $6,000 per Acre. The. terms "Residential Property", "`Residential Floor Area", "Commercial Property" and "Acre" aze'defined in the Rate and Method for CFD No. 06-I IAB included in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS." - As shown in Table 21 above; the projected Special Tax levy for CFD No. 06-1 lAB in' Fiscal Year 2013-14 is $530,961, which is approximately 77.44% of the Assigned Special Tax for CFD No. 06-I IAB. Delinquencies. The following table is a summary of Special Tax levies, collections and delinquency rates in CFD No. 06-I IAB for fiscal years 2007-08 through 2011-12 and for the first installment for fiscal yeaz 2012-13. TABLE 22 - CFD NO. 06-I IAB SPECIAL TAX LEVIES, DELINQUENCIES AND~DELINQUENCY RATES ~- FISCAL YEARS 2007-08 TO 2012-13~~~ ' .. ~ ~ No. of No. of , ° ~ Amount Amount Pm~cels Pnrce[s %" ' ~ Fiscal Year Levied Delfnqueiit Levred - Delinquent Delinquent ~ - 2007-08 $632,808 $ N/A . 437 N/A 0.00% - ~ 2008-09 632,605 ~ N/A 454 N/A 0.00 - " - - _2009-10 636,867 N/A 472 N/A 0.00 . - " 2010-I1 635,343 ],065 472 1 0.17 2011-12 633,293 1,034 474 L 0.16 • 2012-13 635,175 74,717 485 19 2.32 Source: NBS. ~ - [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] - i 40 77-155 Direct and Overlapping Debt. The property within CFD No. 06-I IAB is subject to taxation by a number of taxing agencies, some of which have issued debt secured b'y taxes and assessments levied on such property. The table below sets forth the direct and overlapping debt for CFD No: 06-I IAB as of May 23, 2013. TABLE23(D DIRECT AND OVERLAPPING DEBT CFD N0.06-I IAB May 23, 2013 2012-13 Local Secured Assessed Valuation: $173,870,643-(Land and Improvements) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District General Obligation Bonds Otay Municipal Water District, LD. No. 27 General Obligation Bonds Southwestern Community College District General Obligation Bonds Sweetwater Union High School District General Obligation Bonds . Chula Vista City School District General Obligation Bonds Chula V ista City School District Community Facilities District No. 1 Sweetwater Union High School District Community Facilities District No. 1 City of Chula Vista Community Facilities District No. 06-I, LA. B TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT Aoolicable 0.008 0.588 0.419 0.501 0.726 3.082 6.466 100.000 OVERLAPPING GENERAL FUND DEBT: San Diego County General Fund Obligations ~ - San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Otay Municipal Water District Certificates of Participation Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District General Fund Obligations Ciry of Chula Vista Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND DEBT Less: Otay Municipal Water District Certificates of Participation (100%supported) TOTAL NET OVERLAPPING GENERAL FUND DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT 0.045% 0.045 0.045 0.760 0.419 0.501 0.726 0.829 Debt 5/1/13 13,657 36,668 989,079 1,810,326 481,788 1»,341 3,126,694 6,780,000f I $13,393,553 $ 181,653 342,559 7,935 427,649 5,220 30,214 1,019,986 1,064,329 $3,079,545 427 649 $2,651,896 $16,473,0981~1 $16,045,449 (1) Excludes refunding issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligafions. Ratios to 2012-13 Assessed Valuation Direct Debt ($6>780,000) .................................................... .....3.90% Total Direct and Overlapping Tax and Assessment Debt..... ......7.70% Gross Combined Total Debt ................................................. ......9.47% Net Combined Total Debt .................................................... ......9.23% t'~ Excludes refunding issue to be sold. 1~> Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. 41 17-1.56 Table 24 below sets forth an estimated property tax bill for a residential unit in one of the tax rate areas in CFD No. 06-I IAB. The estimated tax rates and amounts presented herein are based on information for fiscal year 2012-13. The actual amounts charged may vary and may increase in future years. For fiscal year 2012-13, the projected total effective tax was approximately 1.70% of assessed value and were the Special Taxes levied at the full amount of the Assigned Special Tas (as defined in the Rate and Method for CFD No. 06-I IAB in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS"), the total effective tax rate would have been approximately 1.72% of assessed value. It is not expected that the maximum percentage will be reached. 42 17-157 TABLE 24 SAMPLE TAX BILL CFD N0.06-I IAB TAX YEAR 2012-2013 Land Use: Residential 2012-13 Local Secured Assessed Valuation (includes $7,000 HOE): Ad Valorem Taxes: 1%TAX ON NET VALUE VOTER APPROVED BONDS: Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998C Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998D Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998E Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998F Gen Bond Chula Vista-Prop JJ l 1/03/1998, Ser 1998G Gen Bond Chula Vista-Prop JJ 11/03/1998, 2005 Ref Gen Bond Chula Vista-Prop JJ 11/03/98, 2010 Ref Gen Bond Chula Vista-Prop JJ 11/03/98, 2012 Ref Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000A Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000B Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000C Hi Bond Sweetwater-Prop O 11/07/2006, Series 2007 Southwestern Comm Coll-Prop AA 11/07/00, Ser 2000 Southwestern Comm Coll-Prop AA 11/07/00, Ser 2004 Southwestern Comm Coll-Prop AA 11/07/00, 2005B Ref Southwestern Comm Coll-Prop R 11/04/08 Ser 2009A Southwestem Comm Coll-Prop R 11/04/08 Ser 20098 Southwestern Comm Coll-Prop R 11/04/08 Ser 2010C Southwestem Comm Coll-Prop R 11/04/08 Ser 2010D Otay Water [mp Dist No 27-Debt Service (Water) MWD D/S Remainder Of SDCWA 15019999 TOTAL ON NET VALUE FIXED CHARGE ASSMTS: Vector Disease Ctrl CFD 06-I Imp Area B Water Availability Sweetwater Hi CFD#1 Mosquito Surveillanc Chula V. Elem CFD#1 CWA Wtr Availability MWD Wtr Standby Chrg CFD 07M Imp Area 2 Total Direct Charges Total Taxes As a Percentage of the District's Total 2012-13 Assessed Valuation $ 300,000.00 Rate per $100 Amount 100% 3,000.00 0.00% $ N/A 0.00 0 0.00 0 0.00 0 0.00 13.74 0.01- 29.O l 0.00 13.26 0.01 19.77 0.00 13.17 0.01 25.26 0.02 50.7 0.03 86.73 0.01 19.53 0.00 0 0.01 34.89 0.00 5.34 0.01 31.77 0.0 l 2l .06 0.00 0 0.01 15 0.00 10.5 100.13% $ 3,389.73 $ 4.10 888.48 10.00 496.36 2.28 166.34 10.00 11.50 l 14.84 $ 1,703.90 5,093.63 1.70% 43 17-158 Value-To-Lien Ratios. The Authority has obtained the assessed values of all of the taxable property in CFD No. 06-[ IAB (584 parcels in total), as established by the County Assessor for Fiscal Year 2012-13, which total was 166,642,945. Upon the issuance of the Special Tax Refunding Bonds, the estimated direct and overlapping special tas and assessment indebtedness within CFD No. 06-I lAB will be approximately $12,302,749. The assessed value-to-lien ratio of the property within CFD No. 06-I IAB, based on the fiscal year 2012-13 assessed values, the aggregate principal amount of the CFD No. 06-I IAB Special Tax Refunding Bonds and the estimated overlapping indebtedness within CFD No: 06-1 IAB equals approximately I S.dS*-to-l . Tables 25-A and 25-B below set forth the estimated value-to-lien ratios for parcels within CFD No. 06-I IAA by various ranges based upon the principal amount of the CFD No. 06-I IAA Special Tax Refunding Bards and, in the case of Table 13-A, the overlapping debt information included in Table 23. TABLF, 25-A CRD N0. 06-I IAB ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES INC LUDLNG DIi2EC T AND OVERLAPPLNG DEBT Tata! Direct & Projected FY % ojProjected FY Overlapping Tae Estinmfed Assessed No. of 2013/]4 Specin! 2013/14 Special Total Assessed & Assessment vn[ue-to-Lien Rntio Pm~eels Tac Levy l'! Tax Levy VaLre al Debt•3J 0.00 to 2.99:1 0 $ N/A 0.00% $ N/A $ N/A 3.00 to 4.99:1 15 16,337 3.08 1,253,355 294,754 5.00 to 9.99:1 6 5,867 1.1 I 686,996 115,578 10.00 to 14.99:1 414 426,539 80.33 122,141,804 9,»2,350 U.00to19.99a 50 82,218 15.48 35,056,590 2,liQ,788 20.00 to 24.99:1 0 N/A 0.00 N/A N/A 25.00 to 29.99:1 0 N/A 0.00 N/A N/A 30.00 to 39.99:1 0 N/A 0.00 N/A N/A Greater than 40:1 99 N/A 0_00 7504100 189.2 i 9 Totals 584 $ 530.961 100.00% $ 166,642,945 $ 12,302,749 (p Projected FY 2013/14 Special Tax Levy based on FY 2012/13 special tax billing and parcel classification data (z) Total Assessed Value~per County of San Diego as of January I, 2012 (3) 'totals per California ~tunieipal Statistics, Inc. Source: NBS [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Pre]Imtnary, subject to chmvge. 44 17-159 TABLE 25-B CFD NO. 06-I IAB ' ESTIMATE D ASSESSED VAL UE-TO-LIEN RATIOS BY RANGES INCLUDING DIRECT DEBT ONLY ofProjected Projected FY FY2013/14 Total Dirac[ Tax Estimated Assessed Na. of 2013/14 Special Special Tax Total Assessed & Assessment Value-to-Lien Ratio Parcels TaxLevyll~ Levy ValuetT~ Debt<jl 0.00 to 2.99:1 0 N/A 0.00% N/A N/A 3.00 to 4.99:1 0 N/A 0.00 ~ N/A N/A 5.00 to 9.99:1 15 $ 16,337 3.08 $ 1,253,355 $ 182,001 10.00 [0 14.99:1 6 5,867 1.11 686,996 65,362 15.00 to 19.99:1 15 15,284 2.88 3,303,271 170,267 20.00 to 24.99:1 192 195,573 36.83 50,024,906 2,178,722 25.00 to 29.99:1 194 193,989 36.54 57,853,316 2,161,068 30.OOto 39.99:1 61 73,661 13.87 26,807,659 820,596 Greater than 40:1 2 30,249 5.70 19,209.242 336,984 Total 485 $ 530,961 100.00% $ 159,138,745 $ 5,915,000 111 Projected FY 2013/14 Special T ax Levy based on FY 2 012/13 special tax billing and parcel classification data. 121 Total Assessed Value per County of San Diego as of Ja nuary I, 2012. ' 131 Totals per California Municipal Statistics, Inc. Source: NBS Tap Ten Praperty Owners. Table 26 below sets forth the top ten property owners in CFD No. 06-I !AB based on the projected levy for Fscal year 2013-14. TABLE 26 CFD N0.06-I IAB TOP TEN PROPERTY OWNERS of Pr jeered Rnjected FY FY 2013/16 T013/IQ S'trucrure Special Taz , Special Parcel Parcel Owner Land /ulue'D /ulue'O Toml Yalue'O Fxempr Ya(ue Lesy Taz Lary Count Caum °: Realty Income Properties 7 L L C $ 5,136,403 S 7,270,839 S 1?,409,242 S N/A S 20,58E 3.88°o I 0.17% Pathfinder Otay HoldingsL LC 3,162,000 3,366,000 6,528,000 N/A 19,516 3.68 I 0.77 Peninsula Property ServicesLLC 2,500,000 4,300,000 6,800,000 N/A 9,665 1.82 I 0.1] Anaya Arma Trust 09-26-12 528,308 583,539 1,111,847 N/A 3,927 0.71 3 OSl Veranza llLLC 7,049,300 N/A 7,049,500 N/A 3,125 0.59 93 15.92 Andorra YS LLC 343,715 N/A 343,755 N/A 3,114 0.59 3 O.SI Ne[Global lnvestLLC 229,170 447,039 6]6,209 N/A 2,826 0.53 ~2 034 A L U Investments L L C 420,132 622,659 1,042,791 N/A 2,551 0.48 0.51 Davila Ruiz Family Living Trust 09-24-01 284,000 222,000 506,000 N/A 1,891 0.36 2 0.34 Individual Taxpayer 156,100 237,649 395,749 N/A 1,574 0.30 1 0.17 All Others 59.341.558 70438394 129.779.952 18%7770 462189 8]05 474 81.16 Total $ 79,154,826 $ BJ,488,119 E166,642,945 5 1,887,J70 S 530,961 f00.00% 584 10000 % 1O Total Assessed Value per County of Sav Diego as of January 1, 2012 Source: NBS. Community Facilities District No. 07-I Location and Description. Community Facilities District No. 07-I ("CFD No. 07-I") consists of ] 058 single-family detached residences atTd 804 single-family attached residences on approximately 489 gross acres located within the boundaries of the City of Chula Vista. The first building ,permits in CFD No. 07-1 were issued on May 3, 2004 and the last certificates of occupancy were issued on July 16, 2010. The residences range in size from 1,279 squaze feet to 3,817 square feet. There is one pazce] categorized wider the Rate and 45 17-160 Method for CFD No. 07-I as Developed Commercial property and 77 parcels as Undeveloped Residential property. No assurance can be given that any of these remaining undeveloped parcels will be developed. Table 27 sets forth the historical assessed values for the taxable property in CFD No. 07-I for each of the last six fiscal years. Between fiscal year 2007-08 and 2012-13, assessed. values in the CFD No. 07-I declined by approximately ti.8% due to significant declines in home values beginning in 2007. TABLE 27 CFD NO. 07-I HISTORICAL ASSESSED VALUES c6mege ire Total Total Assessed Delinquency Assessed Fiscn[ Year Land ValeeeeeJ Structure Vnluee't Vnluele/ Rnte Value 2007-08 $528,829,975 $398;016,539 $926,846;514 7.32"/o N/A 2008-09 432,854;516 390,301.961 873,156,477 J,06 5.79% 2009-10 399,559,913 343,655,489 743?15,402 2.70 -14.83 2010-II 353,730,283 354,495,287 708,225,570 1.42 -4.71 2011-12 334,289,955 374,706,391 708,996,346 7.81 0.11 2012-13 310,622,380 377,873,093 688,495,973 N/A -2.89 (D Total Assessed Value per County of San Diego as of January 1, 2012 Source: NBS. Assigned Special Taxes. Table 28 below sets forth the Assigned Special Taxes expected to be levied on the property within CFD No. 07-[ in fiscal year 2013-14 based on the development status within CFD No. 07-I as of May 1, 2013. The Special Taxes in CFD No. 07-I may not be levied after the 2043-44 fiscal year. The final maturity of the CFD No. 07-[Bonds is September 1, 2034. TABLE 28 CFD NO. 07-I ASSIGNED SPECIAL TAXES Projected FY % of Projected 20[3/14 FY 2013/14 No. of Tnta/Assessed Maximum Special Tnx Special Tae Development Stntus Parcels Vnluel'i Specie/Tax Levy Levy Developed Commercial l $ 25,500,000 $ 35,075 ~ $ 30,617 1.9L% Uevefoped Residential -Attached 804 221,664,815 653,432 570,386 35.57 Developed Residential - Detacfied L058 436,296,851 1,147,248 1,001,454 62.45 Undeveloped Commercial N/A N/A N/A N/A N/A Undeveloped 2esidential 77 5.034.307 132.775 LO55 0.07 Total 1,940 $688,495,973 S 1,968,530 $ L603,572 100.00% t'1 Total Assessed Value per County of San Diego as of January I, 2012. Source: NBS. 46 17-161 The Assigned Special Tax for each Assessor's Parcel of Developed Property in CFD No. 07-I is calculated as set forth below. The terms "Residential Property", "Dwelling Unit", "Non Residential Property", "Mixed Use Property" and "Acre" are defined in the Rate and Method for CFD No. 07-I included in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACIL[TIES DfSTRICTS." (a) For Residential Property: (1) With 8 or less Dwelling Units per Acre: $1,67 per Dwelling Unit. (2) With more than 8 but no more than 20 Dwelling Units per Acre: $1,340 per Dwelling Unit. (3) With more than 20 Dwelling Units per Acre: $1,005 per Dwelling Unit. (b) For Non-Residential Property: $6,000 per Acre The Assigned Special Tax for each Assessor's Parcel of Mixed Use Property shall equal the total of (i) the Assigned Special Tax that would be applicable to such Assessor's Parcel if it was classified only as Residential Property and (ii) the Assigned Special Tax that would be applicable to such Assessor's Parcel if it was classified as Non-Residential Properly. As shown in Table 28 above, the projected Special Tax levy for CFD No. 07-I in Fiscal Year 2013-14 is $1,603,512, which is approximately 86.63% of the Assigned Special Tax for CFD No. 07 I. Delinquencies. The following table is a summary of Special Tax levies, collections and delinquency rates in CFD No. 07-I for fiscal years 2007-08 through 2011-12 and for the first installment for fiscal yeaz 2012-13. TABLE 29 CFD N0.07-I SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES FISCAL YEARS 2007-08 TO 2012-131[1 No. of No. of Amount Amount Parcels Parcels Fiscal Year Levied Delinquent Levied Delinquent Delinquent 2007-08 $2,063,926 $ N/A 1,734 N/A 0.00% 2008-09 2,060,674 2,7,13 2,014 3 0.13 2009-10 1,974,899 N/A 1,988 N/A 0.00 2010-11 1,959,992 2,489 1,987 4 0.13 2011-12 ],861,519 10,328 ],971 11 0.55 2012-13 ],852,144 37,844 485 53 2.04 Source: NBS [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 47 17-162 Direct and Overlapping Debt. The property within CFD No. 07-I is subject to taxation by a number of taring agencies, some of which have issued debt secured by taxes and assessments levied on such property. In addition, the CFD 07-I Parity Bonds are currently outstanding in the principal amount of $13,830,000 and are payable on a parity with the CFD No. 07-I Special Tax Refunding Bonds. The table below sets forth the direct and overlapping debt for CFD No. 07-I as of May 23, 2013. TABLE 301[1 UII2ECT AND OVERLAPPING DEBT CFD NO. 07-I May 23, 2013 2012-13 Local Secured Assessed Valuation: $694,734,163 (Land and hnprovements) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Metropolitan Water District General Obligation Bonds 0.033% Otay Municipal Water District, LD. No. 27 General Obligation Bonds 6.898 Southwestern Community College District General Obligation Bonds _ 1.660 Sweetwater Union High School District General Obligation Bonds ~ 1.984 Chula Vista City School District General Obligation Bonds 2.872 Sweetwater Union High School District Community Facilities District No. 14 95.467 City of Chula Vista Community Facilities UistrictNo. 07-1 100.000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND DEBT San Diego County General Fund Obligations 0.180% San Diego County Pension Obligations 0.180 San Diego County Superintendent of Schools Obligations 0.180 Southwestern Community College District General Fund Obligations 1:660 Sweetwater Union High School District Certificates of Participation 1.984 Chula Vista City School District General Fund Obligations 2.872 City of Chula Vista Certificates of Participation 3.282 Otay Municipal Water District Certificates of Participation 3.010 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT Less: Otay Municipal Water District Certificates of Participation ( 100% supported) TOTAL NET OVERLAPPING GENERAL FUND DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2012-13 Assessed Valuation Debt 5/i/13 $ 54,070 430,117 3,915,837 7,167,216 1,907,436 6,832,944 35,505,00011 $55,812,620 $ 719,179 1,356;215 31,414 20,668 119,619 4,038,202 4,213,757 1.693.094 $12,192,148 1.693.094 $10,499,054 $68,004,768121 $66,311,671 Direct Debt ($35,505,000) ......................................................... 5.11% Total Direct and Overlapping Tax and Assessment Debt........... 8.03% Gross Cotbined Total Debt ....................................................... 9.79% Net Combined Total Debt--__.-------._ .............._....--._...-.._.-- 954% 1'1 Excludes refunding issue to be sold and includes the CFD 07-I Parity Donds. (~1 Excludes tai and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. - Source: California Municipal Statistics, Inc. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 48 17-163 Table 31 below sets forth an estimated property tax bill for a residential unit in one of the tax rate areas in CFD No. 07-[. The estimated tax rates and amounts presented herein are based on information for fiscal year 2012-13. The actual amounts charged may vary and may increase in future years. For fiscal year 2012-13, the projected total effective tax was approximately 2.15% of assessed value. The Special Taxes for Fiscal Year 2012-13 were levied on Developed Property at the full amount of the Assigned Special Tax (as defined in the Rate and Method for CFD No. 07-I in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS"). 49 17-164 TABLE 31 SAMPLE TAX BILL ' CFD NO. 07-I TAX YEAR 2012-2013 Land~Use:lZesidential 20,12-13 Local Secured Assessed Valuation (includes $7,000 HOE}: Ad Valorem Taxes: 1% Tax Oii Net Value -. Voter Approved Bonds: Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998C Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998D Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998E Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998F Gen Bond Chula Vista-Prop' JJ 11'/03/1998, Ser 1998G Gen Bond Chula Vista-Prop JJ 11/03/1998, 2005 Ref- Gen Bond Chula Vista-Prop JJ 1]/03%98, 2010 Ref Gen Bond Chula Vista-Prop JJ 11/03/98, 2012 Ref I{i Bond Sweetwater-Prop BB 11/07/2000, Ser 2000A Hi Bond Sweetwater-Prop BB.11/OZ/2000, Ser 2000B Hi Bond Sweetwater-Prop BB T 1/07/2000; Ser 2000C Hi Bond Sweetwater-Prop 0 11/07/2006, Series 2007 Southwestern Comm Coll-Prop AA 11/07/00, Ser 2000 Southwestern Comm Coll-Prop AA 11/07/00, Ser 2004 Southwestern Comm Coll-Prop AA 11/07/00, 2005B Ref Southwestern Comm Coll-Prop R 11/04/08 Ser 2009A Southwestern Comm Coll-Prop R 11/04/08 Ser 2009B Southwestern Comm Coll-Prop R 1l/04/08 Ser 2010C SouthwestermComm Coll-Prop R 11/04/08 Ser 2010D Otay Water Imp Dist No 27-Debt Service (Water) MWD D/S Remainder Of SDCWA 15019999 .Total On Net Value FIXED CHARGE ASSMTS: Sweetwater Hi CFD#14 cFD 97-z Vector Disease Ctrl Chula V. ELemCFD#14 Mosquito Surveillanc .' MWD WtrStandby Chrg' CFD 09M Village 11 .. CWA WtrAvailability CFD 07-I O R Vlg 11B CFD 07-I O R Vlg 11 - Water Availability _- Total Direct Charges , Total Taxes As a Percentage of the District's Total 2012-13 Assessed Valuation $ 385,000.00 Rate per $100 Amouiat 100% 3,850.00 0.00% $ N/A 0.00 0 0.00 0 0.00 0 0.00 17.63 0.01- 37.23 0.00 ~ 17.02 0.01 2537 0.00 I6.9 0.01 32.42 . 0.02 65.07 0.03 111.3 0.01 ~ 25.06 0.00 0 0.01 44.78 0.00 6.85 0.01 40.77 0.01 27.03 0.00 0 0.01 19.25 0.00 13.48 100.13% $ 4,350.16 $ 913.44 15.50 5.86' 806.46 2.28 11.50 469.48 10.00 590.64 . , 1,084.36 10.00 $ 3,919.52 $ 8,269.68 2.15% ~0 17-165 Value-To-Lien Ratios. The Authority has obtained the assessed values of all of the taxable property in CFD No. 07-[ (1,940 parcels in total), as established by the County Assessor for Fiscal Year 2012-13, which total was $688,495,973. Upon the issuance ofthe Special Tax Refunding Bonds, the estimated direct and overlapping special tax and assessment indebtedness within CFD No. 07-I will be approximately $53,867,620. The assessed value-to-lien ratio of the property within CFD No. 07-I, based on the fiscal year 2012-13 assessed values, the aggregate principal amount of the CFD No. 07-I Special Tax Refunding Bohds and the estimated overlapping indebtedness within CFD No. 07-I equals approximately 12.78-to-1.~ Tables 32-A and 32-B below set forth the estimated value-to-lien ratios for parcels within CFD No. 07-I by various ranges based upon the principal amount of the CFD No. 07-I Special Tax Refunding Bonds and, in the case of Table 32-A, the overlapping debt information included in Table 30. TABLE 32-A CFD N0.07-I ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES INCLUDING DII2EC T AND OVERLAPPING DEBT. . _ Totat Direct & Projected FY % of Projected FY - _ Overlapping Tax Estin¢aterlAssessed No. of 2013/14 Special 2013/14 Speciat TotaLAssessed &Assessment Value-to-Lien Raiio Parcels Tax Lery 1'1 Tax Levy - halue (zl Debd (31 0.00 to 2.99a 2 $ 1,514 0.09% _ $ 126,000 $ 42,36 3.00 to 4.99:1 30 23,285 1.45 2,545,412 _ 642,688 5.00 to'9.99:1 106 - 84,621 5.28 ~ 23,050,231 ~ 2,497,516 10.00 to 14.99:1 1,665 1,410,997 87.99 602,380,728 ~ 47,489,389 15.OOto 19.99:1 64 51,492 3.21 30,174,295 1,941,894 20.00 to 24.99:1 1 30,617 ~ 1.91 25,500,000 1,140,636 25.00 to 29.99:1 0 N/A 0.00 N/A N/A 30.OOto39.99:1 0 N/A 0.00 N/A N/A Greater Uian 40:1 72 985 0.06 4.719,307 113.131 Totals ~' 1,940 $ 1,603,512 100.00% ~ $ 688,495.973 $ 53,867,620 (D Projected FY 2013/14.Special Tax Levy based on FY 2012/13 special tax billing and parcel classification data ~:l Total Assessed Value per County of San Diego as of January' 1, 2012. (a) Totals per California Municipal Statistics, Inc. _ ~ , Source: NBS [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Preltmittary, subject to change. 51 17-166 . TABLE 32-B CFD N0.07-I ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES INCLUDING DIRECT DEBT ONLY . % of Projected ' Projected FY FY2013/]4 Total Direct Tax Estimated Assessed No. of 2013/14 Special Special Tax. Total Assessed & Assessment Value-to-Lien Ratio Parcels Tax Levyt~t Levy Yalue~'j . Debt<jj 0.00 to 2.99: t 0 N/A 0.00% N/A N/A 3.00 to 4.99:1 9 $ 7,144 0.45 $ 604,412 $ 146,596.00 5.00 to 9.99:1. 27 2],627 1.35 2,683,606 443;751.00. .. 10.00 to 14.99:1 216 183,247 11.43. 53,548,589 3,760,009.00 15.00 to 19.99:1 659 559,396 34.89 209,609,289 11,478,li2.00 20.OO.to24.99:1 787 689,157 42.98 313,461,382 14,140,665.00 25.00 to 29.99: T 160 138,355 8.63 75,551,897.00 2,848;734.79 ' 30.00 to 39.99:1 5 3,510 _0.22 28,002,491.00 720,034.01 Greater than 40:1. 77 1,076 ~ 0.07 5,034,307 ~ 22.076.60 Total 1,940 $ 1,603,512 100.00% $ 688,495,973 $ 29,940,000:00 111 Projected CY 2013/14 Special Tax Levy based on FY 2012/]3 special tax billing and parcel classification data. 1~1 Total Assessed Value per County of San Diego as of January 1, 2012. 131 Totals per California Municipal Statistics, Inc. - - Source: NBS - Top Ten Property Owners. Table 33 below sets forth the top tell property owners in CFD No. 07-I based on the projected lery for fiscal year 2013-14. TABLE 33 ~ ' CFD N0. 07-I TOP TEN PROPERTY OWNERS -. ~ 4i - Projected FY Projected 2013/IJ FY 2013/IJ Structure Exempt Special Tae ~ Special Parcel Parcel ' Owner Land Yalae a I slue ~O l'otal /a[vet'~ Value Ge~y Tac Lery Comzt Gount ' Windingwalk lvL rkerylace LLC $ 10,100,000 $ 0,000,000 $ 25,500,000 $ N/A $ 30,366 1.89% 1 0.05% Shea Homes Limited Partnership 658,000 16],000 825,000 N/A >,251 033 ] 036 _ Brookfield-0[ay R 19 L LC - 4,509,000 N/A 4,599,000 N/A 2,4]9 0.15 13 3.16 - Bel Vue Teemce Properties LLC 43],000 485,000 922,000- 7,000 2,253 0-14 3 ~0-IS Gvuico Inc 339,902 616,904 946,806 N/A 2253 0.14 3 0:15 Lucky 4 U Invesvnevts L L C 402,925 424,422 829,34] 1,000 2,253 0.14 3 0-15 Inveslmen[a Of The B ja Califorttias L L 349,066 354,934 104,000- ],000 ~ 2,065 0.13 3 0.15 Bookfield Otay RIS/IGLLC 298,000 22],000 525,000 N/A 1,8]8 0-12 ~ 2 0.10 Escarcegv Rafael&Vanesse 362,000 358,000 ]20,000 N/A 1,6]8 0.12-__' 0-10 - Park Phil Shu & Kil Youvg Joint Living T 261,000 544,000 805,000 ],000 1 898 0.12 2 0.10 All Othea 292 425 981 359 695 833 652.121 820 8 832 365 1.550 952 96.]2 1 E41 94 0 Total ~ ~ S 310,622,880 $31'1,893,093 S 688,495,913 S 8,860,365 S 1,603,512 100,00°/ 1,940 100.00% . m Total Assessed Vxlue pu Couvry of San Diego es of lanvary 1, 2012- Source: NBS Community Facilities District No. 08-I Location and Description. Community Facilities District No. 08-I ("CFD No. 08-I") consists of 445 single-family,detached residences and 887 single-family attached residences on approximately 189 gross acres. The first building permits in CFD No. 08-I were issued on November 5, 2003 and the last certificates of occupancy"were issued on August 18, 2009. The residences range in size from 959 square feet to 3,525 square - 52 ~~-~6~ feet. There is one parcel categorized under the Rate and Method for CFD No. 08-I IAA as Undeveloped Commercial property. No assurance can be given that the remaining undeveloped parcel will be developed. Table 34 sets forth the historical assessed values for the taxable property in CFD No. 08-I on an aggregate basis for each of the last five fiscal years. Between fiscal year 2007-08 and 2012-13, assessed values in the CFD No. 08-I declined by approximately 27.6% due to significant declines in home values beginning in 2007... TABLE 34 CFD N0.08-I HISTORICAL ASSESSED VALUES change in Total Total Assessed Delinquency Assessed Flse¢I Year Land Va[ue~/ Structure Value!'/ Valuehl Rate .Value 2007-08 ~ $263,065,780 $266,462,537 $529,528,317 -7.49% N/A 2008-09 27Q,597,588 248,608,762 51$206,350 7.55 -1.95% 2009-10 205,418,170 19Q,836,465 396,254,635 3.54 -23.68 2010-11 200,699,442 19 L,632,005 392,33!,447 1.51 -0.99 2011-12 201,288,886 201,489,562 402,778,448 1.68 2.66 2012-13 174,356,564 209,120,552 383,477,116 N/A -4.79 ~~~ Total Assessed Value per County of San Diego as of January 1, 2012 Source: NSS. Assigned Special Taxes. Table 35 below sets forth the Assigned Special Taxes expected to be levied on the property within CFD No. 08-I in fiscal year 2013-14 based on the development status within CFD No. 08-I as of May 1, 2013. The Special Taxes in CFD No. 08-I may not be levied afrer the 2039-40 fiscal year. The final maturity of the CFD No. 08-I Special Tax Refunding Bonds is September 1, 2033. TABLE 35 CFD N0.08-I ASSIGNED SPECIAL TAXES Projected FY % ofProjeeted 2013/Z4 FY 2023/14 No. of Total Assessed Maximum Special Tax Specinl Tax- Deve[opment Status Parcels Value[' Special Tax Levy Levy Developed Commercial N/A N/A N/A N/A 0.00% Developed Residential -Attached 887 $ 219,636>003 $ 1,129,941 $ 865,632 - 61.86 Developed Residential -Detached 445 162,534,429 ~ 696,676 533,715 38.14 Undeveloped Commercial I 1,306,684 78,013 N/A 0.00 Undeveloped Residential N/A N/A N/A N/A 0.00 Total 1,333 $ 383,477,115 $ 1,904,630 $ 1,399,347 100.00% ~'~ Total Assessed Value per County of San Diego as of January 1, 2012 Source: NB S. The Assigned Special Tax for each Assessor's Parcel of Developed Property in CFD No. 08-I is calculated as follows: (1) for Residential Property, $800 per unit phi's $35 per square foot of Residential Floor Area, and (2) for Non-Residential Property, $6,000 per Acre. The terms "Residential Property", "Residential Floor Area", "Non-Residential Property" and "Acre" are defined in the Rate and Method for CFD No. 08-I included in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS." 53 17-168 Asahown in Table 35 above, the projected Special Tax levy for CFD No, 08-I in Fiscal Year 2013-14 ' is $1,399,347, which is approximately 76.61% of the Assigned Special Tax for CFD No. 08 L , Delinquencies. T-he following table is a summaryrof Special Tax levies, collections and delinquency rates in CFD No. 08-I for fiscal years 2007-08 through 201 L-12 and for the first installment for fiscal year '2012-L3. TABLE 36 GFD NO. 08-I SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUEN CY RATES ' FISCAL YEARS 2007-08 TO 201 2-131e1 No. of No. of _ _ ~ Amount - Amours[ Parcels Parcels Fisenl Year Levied Delinquent Levied Delinquent Delinquent 2007-OS $1,621,697 $ N/A 1,193 N/A 0.00% 2008-09 1,619.660 1,219 1,23 1 - _ 0.08 . _ ' 2009-10 1,619,286 L,803 1,269 2 O.ll .4010-11 1,622,288 2,911 1,305 3 ~ 0.18 2011-12 1,617,387 5,714 1,332 6 0.35 2012-13 1,615,535 36,463 1,332 41 2.26 ' Source: NBS. Direct and Overlapping Debt. The property within CFD No. 08-I is subject to taxation by a number of taxing agencies, some of which have issued,debt secured by taxes and assessments levied on such property. The table below sets forth the direct and overlapping debt for CFD No. 08-I as of May 23, 2013. TABLE 37te1 DIRECT AND OVERLAPPING DEBT CFD,NO. 08-I May 23, 2013 2012-13 Local Secured Assessed Valuation: $383,270,116 (Land and Improvem ents) DIRECT AND-0VERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 5/1/13 _ - Metropolitan Water District General Obligation Bonds 0.018% $ 30,100 Otay Municipal Water District, LD. No. 27 General Obligation Bonds 3.622 225,820 Southwestern Conununiry College District General Obligation Bonds_ 0.924 2,179,864 Sweetwater Union High School District General Obligation:Bonds 1.104 3,989,839 - -Chula Vista City School District General Obligation Bonds L599 1,061,830 Sweerivater Union High School District Community Facilities District No. 15 100.000 7,402,358 City of Chula Vista Community Facilities District No. OS-I ~ 100.000 18,280,000le[ ' TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $33,169,811 OVERLAPPING GENERAL FUND DEBT San Diego County General Fund Obligations 0.1 l0% $ 400,352 San Diego County Pension Obligations ~ 0.110 754,977 -San Diego County Superintendent of,Schools Obligations ~ 0.110 17,487 Otay Municipal Water District Certificates of Participation 1.676 942,5 I0 Southwestern Community College District Geneial Fund Obligations 0.924 11,505 ` Sweetwater Union High School District Certificates of Participation 1.104 66,589 _ Chula Vista City School District Certificates of Participation 1.599 2,247,983 City of Chula Vista Certificates of Participation _ 1.827 2,345.710 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $6;787,113 54 17-169 Less: Otay Municipal Water District Certificates of Participation ~ ~ 942 510 TOTAL NET OVERLAPPING GENERAL FUND DEBT $5,844,603 GROSS'COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2012-13 Assessed Valuation $39,956,924121 $39,014,414 Direct Debt ($18,280,000) .................................................... ......4.77% Total Direct and Overlapping Tax and AssessmentDebt...... ...... 8.65% Gross Combined Total Debt .................................................. .... 10.43% Net Combined Total Debt ..................................................... .... 10.18% (p Excludes refunding issue to be sold. 121 Excludes tax and revenue anticipation notes, enterprise re venue, mortgage revenue and non-bonded capital lease obligations. Source: California Municipal Statistics, Inc. 55 17-170 Table 38 below sets forth an estimated property tax bill for a residential unit in one of the tax rate - areas in CFD No. 08-I: The estimated tax rates and amounts presented herein are based on information for fiscal year 2012-13. The actual amounts charged may vary and may increase in future years. For fscal year 2012-13, the projected total effective tax was approximately 2.13% of assessed value and were the Special • _ _ Taxes levied at the full amount of the Assigned Special Tax (as defi~ied in the Rate and Method for CFD No. 08=I in Appendix F "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS"), the total effective tax rate would have been approximately 2.18% of assessed value. It is not expected that the maximum percentage will be reached. '6 17-171 TABLE 38 SAMPLE TAX BILL CFD NO. 08-I TAX YEAR 2012-2013 Land Use: Residential 2012-13 L-ocal Secured Assessed Valuation (includes $7,000 HOE): $ 365,000.00 Ad Valorem Taxes: Rate per $100 Amour:t I% Tax On Net Value 100% 3,650.00 Voter Approved Bonds: Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998C 0.00% $ N/A Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998D 0.00 0 Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998E 0.00 0 Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998F 0.00 0 Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998G 0.00 16.72 Gen Bond Chula Vista-Prop JJ 11/03/1998, 2005 Ref _0.01 35.3 Gen Bond Chula Vista-Prop JJ 17/03/98, 2010 Ref 0.00 16.13 Geu Bond Chula Vista-Prop JJ 11/03/98, 2012 Ref 0.01 24.05 Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000A 0.00 16.02 Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 20006 0.01 30.73 Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000C 0.02 61.69 Hi Bond Sweetwater-Prop O 11/07/2006, Series 2007 0.03 105.52 Southwestern Comm Coll-Prop AA 11/07/00, Ser 2000 0.01 23.76 Southwestem Comm Coll-Prop AA 11/07/00, Ser 2004 0.00 0 Southwestern Comm Coll-Prop AA 11/07/00, 20056 Ref 0.01 42.45 Southwestern Comm Coll-Prop R 11/04/08 Ser 2009A 0.00 6.5 Southwestem Comm Coll-Prop R 11/04/08 Ser 20096 0.01 38.65 Southwestern Comm Coll-Prop R 11/04/08 Ser 201OC 0.01 25.62 Southwestern Comm Coll-Prop R 11/04/08 Ser 2010D 0.00 0 Otay Water Imp Dist No 27-Debt Service (Water) 0.01 18.25 MWD D/S Remainder Of SDCWA 15019999 0.00 12.78 Total On Net Value 100.13% $ 4,]24.17 FIXED CHARGE ASSMTS: CFD 08M Imp Area 2 $ 544.52 MWD Wtr Standby Chrg 11.50 Sweetwater Hi CFD#15 855.90 CFD 08-I O R Vlg 6 1,415.50 Mosquito Surveillant 2,2g CFD 97-2 5.12 Chula V. Elem CFD#15 77g,Og CWA Wtr Availability 10.00 Water Availability 10.00 Vector Disease Ctrl 5.86 Total Direct Chazges $ 3,638.76 Total Taxes $ 7,762.93 As a Percentage of the District's Total 2012-13 Assessed Valuation 2.13% 57 17-172 Value-To-Lien Ratios. The Authority has obtained the assessed values of all of the taxable property in CFD No. 08-I (1,333 parcels in total), as established by the County Assessor for Fiscal Year 2012-13, which total was $383,477,116. Upon the issuance of the Special Tax Refunding Bonds, the estimated direct and_ overlapping special tax and assessment indebtedness within CFD No. 08-I will be approximately $31,488,868. The assessed value-to-lien ratio of the property within CFD No. 08-I, based on the fiscal year 2012-13 assessed values, the aggregate principal amount of the CFD No. 08-I Special Tax Refunding Bonds and the estimated, overlapping indebtedness within CFD No. 08-I equals approximately 12.18-to-1.~ Tables 39-A and 39-B below set forth the estimated value-to-lien ratios for parcels within CFD No. 08-I by various ranges based upon the principal amount of the CFD No. 08-I Special Tax Refunding Bonds and; in the case of Table 39-A, the overlapping debt information included in Table 37. TABLE 39-A - CPD NO. 08-I ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RAN GES INCLUDING DIRECT AND OVERLAPPING DEBT _ Taial Direcd & Projected FY % of Projected FY Over[apping Tnx Estimated Assessed No. of 1013/14 Special 2073/14 Special Total Assessed & Assessment Value-to-Lien Ratio Pnrcels Tax Levy P) Tax Levy Value RJ Debt [al 0.00 to 2.99:1 0 'N/A 0.00% N/A ~ ~ N/A 3.00 to 4.99:1 1 $ 965 0.07 $ 78,130 $ 17,616 5.00 to 9.99:1 125 117,304 8.38 22,280,620 2,327,558 10.00 to 14.99:1 1,202 1,258,587 89.94 333,472,312 - 27,606,374 15.00 to 19.99:1 . 4 22,490 1.61 - 26,339,370 1,511,707 20.00 to 24.99iI 0 N/A _ 0.00- N/A N/A ti.00 to 29.99:1 - 0 N/A 0.00 N/A N/A 30.00 to 39.99:1 0 N/A 0.00 N/A N/A Greater tban 40:J ~ 1 N/A ~ 0.00 ~ 1.306.684 25.613 Totals 1,333 $ 1,399,347 100:00% $ 383,477,116 $ 31,488,868 (0 Projected FY 2013/14 Special TaY Levy based on FY 2012/13 special tax bil ling and parcel class ification data. (z) Total Assessed VaWe per County of San Diego as of January 1', 2012. - (sl Totals perCalif omia Municipal Statistics, Inc. Totals do not include 1 parcel that is currently undeveloped and therefore no t attributed an outsta nding bond amount. Source: NBS [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK} Preliminary, subject to change. J8 17-173 TABLE 39-B CFD N0.08-I ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES INCLUDING DIRECT DEBT ONLY Projected FY % ofProjected FY Total Direct Tax Estimated Assessed No. of 2013/L4 Specia[ 2013/14 Speeia[ Tota[Assessed &ASSessment Value-to-Lien Ratio Parcels Tox Levy O) Tar Levy Value [z) Debtl3J 0.00 to 2.99:1 0 N/A 0.00% N/A ~ N/A 3.00 to 4.99:1 0 N/A 0.00% N/A N/A S.OO to 9.99a~ l $ 965 0.07 $ ~ 78,130 $ 11,450 10.00 to 14.99a 12 10,970 0.78 1;851,197 130,093 15.00 to 19.99:1 570 542,712 38.78 117,245,640 6,436,075 20.00 to 24.99a 438 448,584 32.06 119,535,958 5,319,803 25.00 to29.99:1 306 371,617 26.56 116,323,097 4,407,046 30.00 to 39.99:1 4 5,527 0.39 2,136,410 65,541 Greater than 40:1 2 18,972 1.36 26.306.684 224.992 Totals' 1,333 $ 1,399,347 100.00% $ 383,477,116 $ 16,595,000 (0 Projected FY 20 13/14 Special Tax Levy based on FY 2012/13 special tax bil ling and parcel classi 5cation data. 1z> Total Assessed Value per County of San Diego as of January 1, 2012. e31 Totals per California Municipal Statistics, Inc. ' Totals do not include 1 parcel that is curzently undeveloped and therefore not attributed an outstan ding bond amount. Source: NBS ' Top Ten Property Owners. Table 40 below sets forth the top ten property owners in CFD No. 08-I based on the projected levy for fiscal year 2013-14. TABLE 40 CPD N0.08-I TOP TEN PROPERTY OWNERS - ~ of - Projected Projected FY FY 2013/!4 2013/14 Snucrure Special Tae, Specia! Parce! Parcel Owner Land Value r1 Yalue m Tala! Paluer° Exempt /alue Lery Tux Lery Cauril Caunt °.o Otay Ranch FOUrtern LLC S 8,500,000 $ 16,500,000 $ 25,000,000 $ N/A $ 18,9]2 1.36% 1 008% Federat National Mortgage Assn 860,000 715,000 1,575,000 28,000 6,6]3 0.48 7 053 Mich DosLLC 348,612 489,7]2 838,384 7,000 3,106 0.22 3 0.23 Toby PUCk LLC 317,220 475,320 79?,540 N/A 3,106 022 3 0.23 Gnlmar Investments L L C 258,510 295,490 554,000 N/A 2,923 0.21 3 0.23 Recasas ]effrey S & Hazelle L 252,000 361 X00 613,000 7,000 2,408 0.17 2 0.15 Bank Of America 251,044 306,633 557,677' 7,000 2,025 O.I4 2 0.15 Alegria Real Estate PUnd IIILLC 224,000 244,000 468,000 14,000 2,00] 0.14 2 075 N I N Warrior L L C 194,324 2]0,980 465,304 N/A 2,005 0.14 2 0.1$ Shin lung Hyun & Lee Seung Hee 241,022 225,371 466,393 N/A 1 983 0.14 2 0.15 Al10Ners 162.909832 189236986 352.146.818 5.804.425 1354138 96.77 11=06 97.97 Total S V4,356,564 $209,120,552 $ 383,q]J,I16 $ 5,867,425 $ 1,399,347 100.00% 1,333 100.00°0 O1 Total Assessed Value per County of San Diego as of Sanuary 1, 2012 Somce: NBS. Community Facilities District No. 2001-2 Location and Description. Community Facilities District No. 2001-2 ("CFD No. 2001-2") consists of 481 single-family detached residences and 213 single-family attached residences] on approximately 215 gross acres. The first building permits in CFD No. 2001-2 were issued on September 18, 2003 and the last certificates of occupancy were issued on October 12, 2005. The residences range in size from 1,245 square feet to 3,864 square feet. There are no remaining undeveloped pazcels in CFD No. 2001-2. 59 17-174 Table 41 sets forth the historical assessed values for the taxable property in CFD Nd. 2001-2 on an aggregate for each of the last five fiscal years. Between fiscal year 2007-08 and 2012-13, assessed values in, the CFD No. 08-I declined by approximately 37.6%due to significant declines in home values beginning in 2007. ' TABLE 41 CED N0.2001-2 HISTORICAL ASSESSED VALUES _ % clmnge in Total Tota[Assessed Delinquency Assessed Fiscal Year Land Va[ueat Structure Valuel~~ ~ ' Va7uea! Rate Value 2007-08 $176,838,897 $243,397,346 $420,236,243 9.18% N/A 2008-09 ~ 155,145,822 213,171,610 368,317,432 6.78 -12.35% 2009-10 11 L718,891 08,228,448 269,947,339 1.94 -26.7] _ 2010-11 106,715,917 li6,019,771 262,735,688 158 -2.67 2011-12 -106,700,464 158,446,726 - 265,147,190 _ 2:75 0.92 2012-13 105,146,500 07,236,021 262,382,521 N/A -1.04 (p Total Assessed Value per County of San Diego as of January 1, 2012 Source: NBS.~ Assigned Special Taxes. Table 42 below sets forth the Assigned Special Taxes expected to be levied on the property within CFD No. 2001-2 in fiscal-yeaz 2013-14 based oti the development status within CFD No. 2001-2 as of May I, 2013. The Special Taxes in CFD No. 2001-2 may not be levied after the 2037-38 fiscal yeaz: The final maturity of the CFD No. 2001-2 Bonds is September 1, 2033. TABLE 42 CFD NO. 2001-2 ASSIGNED SPECIAL TAXES Projected FY % ofProjected 2013/14 FY 2013/14 No. of Tota[Assessed Maximum Special Tax Special Tox Developmend Status Parcels ValuelU Special Tax - Levy Levy Developed Commercial N/A N/A ~ N/A N/A 0.00% Developed Residential -Attached 213 $ 53,154,750 $ 205,040 $ 155,426 22.96 ' ~ Developed Residential -Detached 481 209,227,771 687,980 521,505 _ 77.04 Undeveloped Commercial N/A N/A - N/A N/A 0.00 Undeveloped Residential N/A N/A N/A N/A 0.00 Total 694 $ 262,382,521 $ 893,020 $ 676,931 ~ 100.00°/0 (D Total Assessed Value per County of San Diego as of 7atiuary 1, 2012 Source: NBS. The Assigned Special Tax for each Assessor's Parcel of Developed Property in CFD No. 2001-2 is calculated as follows: (1) for Residential Property, $440 per unit plus $.34 per squaze foot of Residential Floor Area, and (2) for Non-Residential Property, $11,365 per Acre. The terms "Residential Property", "Residential Floor Area", "Non-Residential Property" and "Acre" aze defined in the Rate and Method for CFD No. 2001-2 included in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE COMMUNITY FACILITIES DISTRICTS." As shown in Table 42 above, the projected Special Tax levy for CFD No. 2001-2 in Fiscal Year 2013- 14 is $676,931, which is approximately 75.80% of the Assigned Special Tax for CFD No. 2001-2. 60 17-175 Delinquencies. The following table is a summary of Special Tax levies, collections and delinquency rates in CFD No. 2001-2 for fiscal years 2007-08 through 2011-12 and for the first installment for fiscal year 2012-13. TABLE 43 CFD N0.2001-2 SPECIAL TAX LEVIES, DELINQUENCIES AND DELINQUENCY RATES FISCAL YEARS 2007-08 T0~2012-131~1 No. of No. of Amount Amount Parcels Parcels "Fiscal Year Levied Delinquent Levied Delinquent .Delinquent 2007-08 $748,659 $ N/A 685 N/A 0.00% 2008-09' 781,581 N/A 686 N/A 0.00 2009-10 784,443 1,290 686 -1 0.16 2010-11 786,037 N/A 686 N/A 0.00 2011-12 781,685 5,140 687 6 0.66 2012-13 786,675 17,893 694 _ 19 2.27 Source: NBS [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 61 17-176 Direct and Overlapping Debt. The property within CFD No. 2001-2 is subject to taxation by a number of taxing agencies, some of which have issued debt secured by taxes and assessments levied on such property. The table below sets forth the direct and overlapping debt for CFD No. 2001-2 as of May 23, 2013. TABLE 44tp DIRECT AND OVERLAPPING DEBT CFD N0. 2001-2 May 23, 2013 --2012-13 Local Secured Assessed Valuation: $262,382,521 (Land and Improvem ents) DIRECT AND OVERLAPPING TAX AND ASSESSMENT. DEBT: % Applicable Metropolitan Water District General Obligation Bonds 0.012% Otay Municipal Rlater District, LD. No. 27 General Obligation Bonds 2.622 Southwestern Community College District General Obligation Bonds 0.631 Sweetwater Union High School District General Obligation Bonds ' 0.754 Chula Vista City School District General Obligation Bonds 1.092 Sweetwater Union High School District Community Facilities District No. 11 40.605 City of Chula Vista Community Facilities District IVo. 2001-2 100.000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT OVERLAPPING GENERAL FUND DEBT San Diego County General Fund Obligations 0.068% San Diego County Pension Obligations 0.068 San Diego County Superintendent of Schools Obligations 0.068 . Otay Municipal Water.District Certificates of Participation 1.144 Southwestern Community College District General Fund Obligations 0.631 ` Sweetwater Union High School District Certificates of Participation 0:754 Chula Vista.City School District 1.092 City of Chula Vista Certificates of Participation _ 1.248 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT . Less: Otay Municipal Water District Certificates of Participation (10 0% supported) TOTALNET OVERLAPPING GENERAL FUND DEBT GROSS COMBINED TOTAL DEBT NET COMBINED TOTAL DEBT Ratios to 2012-13 Assessed Valuation: - Direct llebt ($8,585,000) ................................................... ........3.27% - Total Direct and Overlapping Tax and Assessment Debt.... ........ 7.67% - Gross Combined Total Debt ................................................ ........ 9.43% Net Combired-Total Debt .................................................:. ........ 9.19% Debt 5/1/13 $ 20,550 163,471, 1,488,26 L 2,723,986 724,944 6,4]2,596 8.S85.000t~1 $20,118,808 $ , 273,333 515,446 11,939 643;481 7,855 45,463 1,534,767 1.601.489 $4,633,773 643.481 $3,990,292 $24,752,581t'1 $24,109,100 (D' Excludes refunding issue to be sold. - ~'~ Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations. - Source: California Municipal Statistics, Inc. 62 17-177 Table 45 below sets forth an estimated property tax bill for a residential unit in one of the tax rate areas in CFD No. 2001-2. Tlie estimated tax rates and amounts presented herein are based on information for fiscal year 2012-13. The actual amounts charged may vary and may increase in future years. For fiscal year 2012-13, the projected total effective tax was approximately 2.23% of assessed value and were the Special Taxes levied at the full amount of the Assigned Special Tax (as defined in the Rate and Method for CFD No. 2001-1 in Appendix F - "RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR TEIE COMMUNITY FACILITIES DISTRICTS"), the total effective tax rate would have been approximately 2.27% of assessed value. It is not expected that the maximum percentage will be reached. 63 17-178 TABLE 45 SAMPLE TAX BILL CFD N0.2001-2 TAX YEAR 2012-2013 - Land Use: Residential 2012-13 Local Secured Assessed Valuation (includes $7,000 HOE): Ad Valorem Taxes: 1% Tax On Net Value Voter Approved Bonds: Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998C , Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998D Gen Bond Chula Vista-Prop JJ 1 ]/03/1998, Ser 1998E .Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998F Gen Bond Chula Vista-Prop JJ 11/03/1998, Ser 1998G Gen Bond Chula Vista-Prop JJ 11/03/1998, 2005 Ref Gen Bond Chula Vista-Prop JJ 11/03/98, 2010 Ref Gen Bond Chula Vista-Prop JJ 11/03/98, 2012 Ref Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000A Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000B Hi Bond Sweetwater-Prop BB 11/07/2000, Ser 2000C Hi Bond Sweetwater-Prop O 11/07/2006, Series 2007 Southwestem Comm Coll-Prop AA 11/07/00, Ser 2000 Southwestern Comm Coll-Prop AA 11/07/00, Ser 2004 Southwestem Comm Coll=Prop AA 11/07/00, 2005B Ref Southwestem Comm Coll-Prop R 11/04/08 Ser 2009A Southwestern Comm Coll-Prop R 11/04/08 Ser 2009B Southwestem Comm Coll-Prop R 11/04/08 Ser 2010C Southwestem Comm Coll-Prop R 11/04/08 Ser 2010D Otay Water Imp Dist No 27-Debt Service (Water) MWD D/S Remainder Of SDCWA 15019999 Total On Net Value ' FLXED CHARGF, ASSMTS: MWD Wtr Standby Chrg Mosquito Surveillanc Sweetwater Hi CFD# 1 h CFD08M OtayRch V16 Vector Disease Cfrl CFD 97-2 Water Availability CWA WtrAvailability CFD 2001-2 Metnillin - Chula V. Blem CFD#11 -Total Direct Charges Total Taxes As a Percentage of the District's Tota12012-13 Assessed Valuation 64 17-179 Rate per $100 100% 0.00% 0.00 0.00 0.00 0.00 0,01 0.00 0.01 0.00 0.01 0.02 0.03 ' 0.01 0.00 0.01 ' 0.00 0.01 0.01 0.00 0.01 0.00 100.13% $ 376,000.00 Amount 3,760.00 $ N/A 0 0 0 17.22 36.36 16.62 24.78 16.51 31.66_ 63.54 108.7 24.48 0~ '43.73 6.69 39'.82 26.4 0 18.8 13.16 $ 4,248.47 $ 11.50 2.28 978.18 1,119.90 5.86 5.98 10.00 10.00 1,184.90 '790.02 $ 4,118.62 $ 8,367.09 2.23% Value-To-Lien Ratios. The Authority has obtained the assessed values of al] of the taxable property in CFD No. 2001-2 (694 parcels in total), as established by the County Assessor for Fiscal Year 2012-13, which total was $262,383,521. Upon the issuance of the Special Tax Refunding Bonds, the estimated direct and overlapping special tax and assessment indebtedness within CFD No. 2001-2 will be approximately $19,083,808. The assessed value-to-lien ratio of the property within CFD No. 2001-2, based on the fiscal year 2012-13 assessed values, the aggregate principal amount of the CFD No. 2001-2 Special Tax Refunding Bonds and the estimated overlapping indebtedness within CFD No. 2001-2 equals approximately 13.75-to-1.~ ' Tables 4b-A and 46-B below set forth the estimated value-to-lien ratios for parcels within CFD No. 2001-2 by various ranges based upon the principal amount of the CFD No. 2001-2 Special Tax Refunding Bonds and, in the case of Table 18-A, the overlapping debt information included in Table 44. TABLE 46-A CFD N0.2001-2 ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES INCLUDING DIREC T AND OVERLAPPING DEBT Totn[ Direct & Projected FY % ofProjected FY Overlapping Tqz Estlmaled Assessed No. of 2013/14 Special 2013/14 Special Tatal Assessed & Assessment Value-to-Lien Ratto Parcels Tax Lery Pl Tox Levy Value (A Debt (31 0.00 to 2.99:1 0 , $ N/A 0.00% $ N/A $ N/A 3.00 to 4.99:1 1 1,034 0.15 112,323 24,564 5.00 to 9.99:1 4 3,165 0.47 729,094 - ~ 77,754 10.00 Yo 14.99:1 624 612,331 90.46 232,950,317 17,211,211 15.00 to 19.99a 60 56,231 8.31 25,788,930 1,637;360 20.00 to 24.99:1 5 4,170 -0.62 2,801,857 ~ 132,918 25.00 to 29.99: l 0 . N/A 0.00 N/A. N/A 30.00 to 39.99:1 0 N/A 0.00 N/A N/A Greater than 40:1 0 N/A 0.00 N/A N/A Totals ~ 694 ~ $ 676,931 100.00% $ 262,382,521 $ 19,083,808 1'1 Projected FY 2013/14 Special Tax Levy based on FY 2012/13 special tax billing and parcel classification data 1zl Total Assessed Value per County of San Diego as of 7anuary 1, 2012. ~) Totals per California Municipal Statistics, Inc. Source: NBS [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Prelim(nary, subject to change. 65 17-180 -TABLE 46-B . CFD N0.2001-2 ESTIMATED ASSESSED VALUE-TO-LIEN RATIOS BY RANGES INCLUDING DIRECT DEBT ONLY of Projected Projected FY FY2013/14 Total Direct Tax Estin¢ated Assessed No. of 2013/14 Special Special Tnx Total Assessed & Assessmznt Value-to-Lien Ratio Parcels TaxLevy~j Levy Value/2j ~ Debt<3J 0:00 to 2.99:1 0 N/A 0.00% N/A N/A ' 3.00 to 4.99:1 0 N/A 0.00 N/A N/A 5.00 to 9.99:1, 1 $ 1,034 0.15 $ 112,323 $ . 11;530 10.00 to 14.99:1 0 N/A 0.00 N/A N/A 15.00 to 19.99:1 1 779 0.12 169,478 8,693 20.00 to 24.99:1 ZO 13,962 2.06 3,536,479 155,726 25.00 to 29.99:1 86 61,751 9.12 19,613,707 688,724 30.00 to 39.99:1 539 553,847 81.82 216,630,382 6;177,213 Greater than40a 47 45.557 6.73 22,320,152 ~ 508,115 Total 694 $ $676,931 100.00% $ 262,382,521 $ 7,550,000 (o Projected FY 2013/]4 Special Tax Levy based on FY 2012/13 special tax billing and paccet classification data. I'I Total Assessed Value per County of San Diego as of January 1, 2012. , 13f Totals pecCalifomia Municipal Statistics, Inc. ' -- Source: NBS Top Ten Property Owners. Table 47 below sets forth the top ten property owners in CFD No. 2001-Z based ~on the projected levy far fiscal year 2013-14.. TABLE 47 CFD NO. 2001-2 , - TOP TEN PROPERTY OWNERS at - Projected FY Prnjec[ed ' - - ?OI3R4 FY 2013/IJ ' Stracmre Special Tax Speda(rae Parcel Pararl - Owner Land halve P1 halve m Tata( halue'O- E>'empt Value Levy - Levy Counl Count ' Chula Vistz Evcore L P S 612,000 $. 641,000 $ 1 253,000 S N/A ' $ ~ 3,39] 0.50°°/a ~ 3 0,43% ~ ' ftndoc A1nnuel V & lane[ E ~ 360,543 586,957 94"7,49a - ],000 2,267 033 2 0.29 Mvschese Massimo 263,32E 484,334 74],655 N/A 2,095 0.31 2 029 Agbayani Orlino L'& Rosie B ~ 201,000 287,000 488,000 - ' N/A 1,329 020 1 034 Avelino AolandB&GloriaD 157,000 324,000 481,000 N/.4 1,329 0.20 1 0.14 Cabral Lucia 207,000 29],000 504,000 ],000 1,329 0.20 I 0.14 Doria Salvador I & Ruby A 16],000 ~ 329,000 496,000 ],000 1,329 020 I 0.14 - Espvnol LOlital 252,000 304,000 556,000 7,000 1,329 0.20 1 .0.14 Gonzvlez RVValdoRffiindreni 200,000 2'10,000 4]0,000 7,000 1,329 0.20 I 0.14 Herrea Rogello~ L55,000 346,000 501,000 7,000 1,329 0.20 1 0.14 All Others ~ 1025'11676 153366]36 X55938.372 4V7989 _• 66>9866 9].48 _ 680 9]98 Totvl $ 105,146500 $ li7,23602t $ 262,382,521 54,169,989 $.6]6,931 100.00% 694 100.00% - 'O Total Assessed Value per Couvty of Svn Diego as of 7envary 1, 2012. Sowce: uB5= - ` SPECIAL RISK FACTORS There are certain risks associated with the purchase of the Bonds and the following in formation should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be an exhaustive listing of the risks and other considerations which may be relevant to an investment in the Bonds. In addition, the order in which the following information is presented is not intended to reflect the 66 17-181 relative importance of any such risks. If any risk factor materializes to a sufficient degree, it alone could delay or preclude payment of principal of or interest on the Bonds. The Bonds are Limited Obligations of the Authority ' . The Revenues for the payment of the principal of and the interest on the Bonds are derived from debt service payments on the Special Tax Refunding Bonds, which are derived only from annual payments of Special Taxes levied within the Taxing Jurisdictions. The amount of annual installments of Special Taxes that are collected could be insufficient to pay principal of and interest on the Special Tax Refunding Bonds due to non-payment of such Special Taxes levied or due to insufficient proceeds received from a judicial foreclosure sale of ]and within the Taxing Jurisdiction following delinquency. The Bonds are special, limited obligations of the Authority payable solely from and secured solely by the Revenues and other amounts pledged therefor under the Indenture. The only other amounts expected to be available under the Indenture are amounts in the Reserve Fund which could be depleted in the event of a significant level of Special Tax delinquencies. The Bonds cannot be accelerated in the event of any default. _ The Special Tax Refunding Bonds are Limited Obligations -_ The Special Tax Refunding Bonds are limited obligations of the Community Facilities Districts payable only from Net Special Tax Revenues. The Ciry has no liability for any payments due on the Special Tax Refunding Bonds issued by the Community Facilities Districts. In addition, there is no cross- collateralization or any applicable cross-payment provisions among the Taxing Jurisdictions. The levy of Special Taxes collected in a Taxing Jurisdiction cannot be used to make the debt service payments on the Special Tax Refunding Bonds of another Taxing Jurisdiction. Failure by owners of the parcels to pay Special Tax installments wheh due, delay in foreclosure proceedings, or the inability to sell parcels which have been subject to, judicial £oreclosure proceedings. for amounts sufficient to cover the delinquent installments of Special Taxes levied against such parcels may result in the inability of the Community Facilities Districts to make full or timely payments of debt service on the Special Tax Refunding Bonds, which may in tum result in the depletion of the Reserve Fund and the inability of the Authority to make full or timely payment on the Bonds. The Special Taxes are Not Personal Obligations of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax levied on such pazcel. Rather, the Special Tax is an obligation which is secured only by a lien against the parcel. If Special Taxes are delinquent, the only remedy that the Community Facilities Districts'have is to commence a judicial foreclosure action. If the proceeds from the sale of a delinquent parcel following foreclosure are insufficient to pay the delinquent Special Taxes, the applicable Community Facilities District has no recourse against the owner for any shortfall. Potential Early Redemption of Bonds from Prepayments Property owners within the Taxing Jurisdictions are permitted to prepay their Special Taxes at any time. Such prepayments will result in a redemption of Special Tax Refunding Bonds on the first March 1 or September 1 which is more than 30 days following the receipt of the prepayment. The proceeds of the Special Tax Refunding Bonds so redeemed will then be used to make a mandatory redemption of the Bonds. The Bonds will be called from the proceeds of the Special Tax Refunding Bonds redeemed from prepayments as set forth under the caption "THE BONDS-Redemption-Mandatory Redemption of the Bonds from Principal Prepayments of the Special Tax Refunding Bonds." 67 17-182 Risks, of ReaLEstate Secured Investments Generally The Bondowners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation (i) adverse changes in local market conditions, such has changes in the market value of real .property in the vicinity of the Taxing Jurisdictions, the supply of or demand for competitive properties in such area, and the market value of comparable residential property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expehses,,govermnent rules (including, without limitation, zoning laws and laws relating to threatened and endangered species and hazardous materials) and fiscal policies; and.(iii) natural disasters (including, without limitation, earthquakes, Gres and floods), which inay result in uninsured losses. No assurance can be given that the individual homeowners will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption "-Bankruptcy and Foreclosure Delays" for a discussion of certain limitations on the Community Facilities Districts' ability to_ pursue judicial proceedings-with respect to delinquent parcels. Insufficiency of Special Taxes Notwithstanding that the maximum Special Taxes that may be levied in each Taxing Jurisdiction exceeds debt service due on the related series of Special Tax Refunding Bonds, the Special Taxes collected could be inadequate to make timely payment of debt service either because of nonpayment or because property becomes exempt from taxation as permitted in the Rate and Method for an Taxing Jurisdiction. Moreover,. '. .under the CFD Act, and the Rate and Method for each Community Facilities District, under no circumstances will xhe Special Tax levied against any Assessor's Parcel of Residential Property be increased by more than ten ' percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Assessor's Parcel. [n the event of significant delinquencies in a Taxing Jurisdiction causing a default in payment of debt service on the related series of Special Tax Refunding Bonds and depletion of, all amounts on deposit in the Reserve Fund, there would not be sufficient Special Tax Revenues to pay the full amount of annual debt service on the Bonds until the delinquent Special Taxes were collected through foreclosure action or otherwise. See the caption "-Bankruptcy and Foreclosure Delays" for a discussion of potential delays in foreclosure actions. , The CFD Act provides that, if any property within the Taxing Jurisdictions not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the CFD Act provides that, if property subject to the_Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as i£it-were a special assessment and be paid from the eminent domain award. The constihitionality and operation of these provisions of the CFD Act have not been tested in the courts: Due to the problems of collecting taxes from- public agencies, if a substantial portion of laid within the Taxing Jurisdictions were to become owned by public agencies, collection of the Special Tax might become more difficult and could result ii7 collections of the Special Tax which might not be sufficient to pay principal of and interest on the Bonds when due, and a default could-occur with respect to the payment of suchprincipal and~interest. Risks Related to Homeowners With High Loan to Value Ratios or Negative Equity There are certain risks in the housing market associated with homeowners with little equity, no equity or negative equity in their homes. The assessed value of"the parcels within the Community Facilities Districts has declihed by approximately 30% since 200'7 and'it is likely that there are homeowners within the Community Facilities Districts with little or no equity in their homes. 68 17-183 The recent decline in home values in the Taxing Jurisdictions and any future declines could result in property owner wiwillingness or inability to pay mortgage payments, as well as ad valorem taxes and special taxes, when due: Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes. See the caption "-Bankruptcy and Foreclosure Delays." Bankruptcy and Foreclosure Delays Bankruptcy, insolvency acid other laws generally affecting creditors' rights could adversely impact the interests of owners of the Bonds in at least two ways. First, the payment of property owners' taxes and the ability of the Community Facilities Districts to foreclose the lien of delinquent unpaid Special Taxes pursuant to its covenant to pursue judicial foreclosure proceedings set forth in the Special Tax Refunding Bonds Fiscal Agent Agreements (see the caption- "SECURITY FOR THE BONDS-Covenant to Foreclose") may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure could be delayed for many reasons, including crowded local court calendars or lengthy procedural delays. Second, the United States Bankruptcy Code might prevent moneys on deposit in the Special Tax Fund from being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against a landowner and if the court found that any of such landowner had an interest in such moneys within the meaning of Section 541(a)(1) of the United StatesBarikruptcy Code. Although a bankruptcy proceeding would not cause the lien of the Special Taxes to become extinguished, the amount and priority of any Special Tax lien could be modified if the value of the property falls below the value of the lien. If the value of the property is less than the lien, such excess amount could be treated as an unsecured claim by a bankruptcy court. In addition, the bankruptcy of a property owner could result in a stay of enforcement or other delay in procuring Superior Court foreclosure proceedings or adversely affect the ability or willingness of a property owner to pay the Special Taxes. If enough parcels were involved in bankruptcy proceedings, court delays would increase the likelihood of a delay or default in payment of the principal of, and interest on, the Bonds and the possibility'of delinquent tax installments not being paid in full. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments, including the Bonds and the Special Tax Refunding Bonds, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally, by the application of equitable principles and by the exercise ofjudicial discretion in appropriate cases. ' Othetlaws generally affecting creditors' rights or relating to judicial foreclosure may'affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example,,tlre Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, asix-month period after termination of such military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if a court concludes the ability to pay such taxes or assessments is materially affected by reason of such service. FDIC/Federal Government Interests in Properties General. The ability of the Community Facilities Districts to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC"); the Drug Enforcement Agency, the Internal Revehue Service, or other federal agencies such as the Federal National Mortgage Association ("FNMA") or Freddie Mac, has or obtains an interest. 69 17-184 The supremacy clause of the United States Constitution reads as follows: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made,, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding." The foregoing is generally interpreted to mean that, unless the United States Congress bas otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the Taxing Jurisdiction but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable State and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless the United States Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the Community Facilities Districts wish to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an antount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson 597 F.2d 174 (9th Cir. 1979), the United States Court of Appeal, Ninth Circuit (the "Ninth Circuit"), held that FNMA is a federal instrumentality for purposes of this doctrine, and nova private entity; and that, as a result, an exercise of state power over a mortgage interest held. by FNMA constitutes an exercise of state power over property of the United States. For a discussion of risks associated with taxable parcels within the Taxing Jurisdictions becoming owned by the federal government, federal government entities or federal government sponsored entities, see the caption,"- Insufficiency of Special Taxes:' The Community Facilities Districts have not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within the Taxing Jurisdictions, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding. FDIC. In The event that any financial institution making any loan which is secured by real property within the Taxing Jurisdictions is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property by the FDIC, then the ability of the Community Facilities Districts to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rateprovided under state layv, to the extent that the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in.the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent that it purports to secure the payment of any such amounts. Special taxes imposed under the CFD Act and a 70 17-1.85 special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth Circuit issued a ruling on August 28, 2001 in which it determined that the FDIC, as a federal agency, is exempt from CFD Act special taxes. The Community Facilities Districts are unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the Taxing Jurisdiction in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes from being foreclosed at a judicial foreclosure sale could reduce or eliminate .the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Bonds. Direct and Overlapping Debt Neither the Authority, the City nor the Community Facilities Districts have control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the property within the Taxing Jurisdictions which may be incurred in the future by other govenunental agencies havingjurisdictioh over all or a portion of the property within the Taxing Jurisdictions. Other public agencies may issue additional indebtedness on property within the Taxing Jurisdictions at any time. Furthermore, nothing prevents the owners of property within the Taxing Jurisdictions from consenting to the issuance of additional debt by other governmental agencies which would be secured by taxes on a parity with the Special Taxes or assessments which would be subordinate to the Special Taxes. To the extent that such indebtedness is payable from assessments, other special taxes levied pursuant to the CFD Act or taxes, such assessments, special taxes and taxes will be secured by liens on the property witliin the Taxing Jurisdictions. Accordingly, the debt on the property within the Taxing Jurisdictions could increase, without any corresponding increase in the value of the property therein. The imposition of such additional indebtedness could reduce the willingness and ability of the property owners within the Taxing Jurisdictions to pay the Special Taxes when due. See the caption "-Cumulative Burden of Parity Taxes and Special Assessments." Moreover, in the event of a delinquency in the payment of Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of property with delinquent SpeciaLTaxes would be sufficient fo pay the delinquenfSpecial Taxes. See the caption "-Land Values." Disclosures to Future Purchasers The willingness or ability of an owner of a parcel to pay the Special Tax even if the value of the parcel is sufficient may be affected by whether or not the owner was given due notice of the" Special Tax authorization at the time the owner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy, and, at the time of such a 1'evy, has the ability to pay it as well as pay other expenses and obligations. The Community Facilities Districts have caused a notice of the Special Tax lien to be recorded'in the Office of the Recorder of the Counry'of San Diego against each parcel'. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or ]ender will consider such Special Tax obligation in the purchase of a property within the Taxing Jurisdictions or lending of money thereon. The CFD Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code § 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by 71 17-186 ' a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely ,, affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due. Natural Disasters . The'Community Facilities Districts, like all California communities, may be subject to unpredictable seismic activity, fires due to the vegetation and topography, or flooding in the event of mrseasonable rainfall. The occurrence of seismic activity, fires or flooding in or around the Community Facilities Districts could result in substantial damage to properties in the Taxing Jurisdictions which, in turn, could substantially reduce the value of such properties. As a result of the occurrence of such an event, a substantial portion of the ` property owners. may be unable or unwilling to pay the .Special Tax installments when due, and the Reserve Fund may eventually become depleted. In addition, the value of land in the Taxing Jurisdictions could be diminished in the aftermath of such natural events, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the. payment of the Special Tax installments. Land Values The value of land within the Taxing Jurisdictions is an important factor in evaluating the investment 'quality of the Bonder In the event that a property owner defaults in the payment of a Special Tax installment, the Community 'Facilities Districts' only remedy is to commence foreclosure proceedings on such property: Prospective purchasers of the Bonds should not asswne that the properly within the Taxing Jurisdictions could be sold for the assessed value described herein at a foreclosure sale for delinquent Special Tax installments or for an amount adequate to pay delinquent Special Tax installments. Reductions in property values within the Taxing Jurisdictions due to a downturn ih the economy or the real estate market, events such as earthquakes, wildfires, droughts, or floods, stricter land use regulations, threatened or endangered species 'or other events may adversely impact the security underlying the liens.. The property within the Taxing Jurisdictions is fully developed. The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and. generally reflect only the sales price of a parcel when acquired by its current ' ~ owner, adjusted annually by an amount deterniined by the San Diego County Assessor, generally not to exceed an increase of more than 2% per Fiscal Year as limited by Proposition 13, as amended by Proposition 8. Recently, several counties in the State„including the County of San Diego, have reassessed certain properties acquired in recent years at the peak of the real estate 'market. The Authority is aware that the County'of San Diego Assessor made reductions in Fiscal Year 2008-09 and 2009-10 assessed values within the Taxing Jurisdictions and the City generally. The Authority cannot predict whether the County of San Diego will further reduce assessed values within the Taxing Jurisdictions in future years. However; many of the homes within the Taxing Jurisdictions were purchased afrer 2004 at tha height of the San Diego real estate market. Accordingly, if the County of San Diego did decide to broadly reassess recent home transactions in the County of Sau Diego, it is possible that in future years the assessed values shown in this Official Statement could be _ .adjusted downward from the values reflected on the Fiscal Year 2012-13 Assessor's Roll. No assurance-can be given that Fiscal Year 2012-li assessed values reflect market values or that a parcel could actually be sold 'for its assessed value. The actual market value of the property is subject to future events such as a downturn in the economy, occurrences o£ certain acts of nature and the decisions of various governmental agencies as to land use, all of which could adversely impact the value of th'e land in the Taxing jurisdictions, which is the security for the Special Tax Refunding Bonds, which secure the Bonds. As discussed herein, many factors could adversely affect property values withih rthe Taxing Jurisdictions. 72 17-187 Hazardous Substances A claim with regard to a hazardous substance on a parcel of land subject to any of the Special Taxes can result in a significant potential reduction in the value of the parcel. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is well known, but'State laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels within the Taxing Jurisdictions be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition because the prospective purchaser of such a parcel will, upon becoming the owner of such parcel, become obligated to remedy the condition just as the seller of such a parcel is obligated to remedy the condition. Hazardous substance liabilities may arise in the future with respect to any of the parcels within the Taxing Jurisdictions resulting from the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently theatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise from the method of handling such substance. These possibilities could significantly affect the value of a parcel and could result in substantial delays in completing planned development on parcels that are currently undeveloped. Cumulative Burden of Parity Taxes and Special Assessments Property within the Taxing Jurisdictions is subject to taxes imposed by public agencies that also have jurisdiction over the land within the Taxing Jurisdictions. See the caption "THE COMMUNITY FACILITIES DISTRICT." The Special Taxes constitute a lien against the parcels of land on which they have been levied. Such lien is on a parity with all special taxes or assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes, regardless of 'when they are imposed upon the same property. Neither the Authority, the City nor the Community Facilities Districts have control over the ability of other entities to issue indebtedness secured, by ad valorem taxes, special taxes or assessments levied on all or a portion of the property within the Taxing Jurisdictions. In addition, the owners' of the property within the Improvements Areas may, without the consent or knowledge of the Authority, the City or the Community Facilities District, petition other public agencies to issue public indebtedness secured by ad valorem taxes, special taxes of assessments. The property within the Taxing Jurisdictions is subject to a number of overlapping tax and assessment liens, some of which secure outstanding indebtedness. See the caption "THE COMMUNITY FACILITIES DISTRICT." Loss of Tax Exemption As discussed under the caption "CONCLUDING INFORMATION-Tax Matters," in order to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, the Authority and the Community Facilities Districts' will covenant in the Indenture and the Special Taz Refunding Bonds Fiscal Agent Agreement, respectively, and the City will covenant in the Tax Certificate not to take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Bonds under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"). Interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date that the Bonds were issued, as a result of acts or omissions of 73 17-188 the Authority, the City or the.Cominunity Facilities Districts in violation of the Code. Should such an event of taxability occur, the Bonds are not subject to early redemption and will remain Outstagding to maturity or until redeemed under the optional or mandatory redemption provisions of the Indenture. Current or'future legislative proposals, if enacted into law, clarification of the Code or court decisions "may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject. to or exempted from state income taxation, or~otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. Legislative changes have been proposed in Congress, which, if enacted, would result in additional federal income tax being imposed on certain owners of tax-exempt state or local obligations, such as the Bonds. The introduction or enactment of any of the pending or future legislative proposals, clarificatiofl of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective. purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond_ Counsel expressesno opinion. , It is possible that subsequent to the issuance of the Bonds there might be federal, State, or local_ statutory changes (or judicial or regulatory interpretations of federal, State, or local law) that affect the federal, State, or local tax treahtient of the Bonds or the market value of the Bonds. No asstuauce can be given that subsequentto the issuance of the Bonds such changes or interpretations will not occur. See "CONCLUDING INFORMATION-Tax Matters" below... IRS Audit of Tax-Exempt Bond Issues The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the . Internal Revenue Service. It is also possible that the market value of The Bonds might be affected as a result of such'an audit of the Bonds (or by an audit of similar bonds). See "CONCLUDING INFORMATION-Tax. Matters" below. California Constitution Article XIIIC and Article XIIID , On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Right to Vote -- on Taxes Act." .Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which contain, among other, things, a number of provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges. Among' other things, Section 3 of Article XIII states-that "... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment,. fee or charge." ' The CFD Act provides for a procedure which includes notice, hearing, protest and voting requirements to~alter the rate and method of apportionment of an existing special tax. However, the CFD Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy ofany special tax pledged to repay any debt incurred pursuant to the CFD Act unless such legislative body determines that the reduction or termination of the special' tax would not interfere with the timely retirement of thatdebt On July, 1, 1997;.a bill was signed into law by the Gopemor of the State enacting Government Code Section 584, which states that: ~ ' "Section' 3 of Article XIIIC of the Califomia Constitution, as adopted at .the November 5, 1996, generahelection, shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after that date, assumes ' the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution." ' 74 17-189. ~Accordingly,'although the matter is not free from doubt,'it is likely that the initiative has not conferred on the voters the power to repeal or reduce Special Taxes if such reduction would interfere with the timely retirement of the Special Tax Refunding Bonds. The provisions of the initiative relating to the exercise of the initiative power have not been interpreted by the courts and no_ assurance can be given as to the outcome of any such litigation. It may be possible, however, for voters or the City Council, acting as'the legislative body of the- Comrnunity Facilities Districts, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bond's; but which does reduce the maximum amount of Special Taxes that may be levied ih any year below the existing levels. Furthermore, no assurauceban be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Therefore, no assurance can'be given with respect to the levy of Special Taxes for Adininistrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the Community Facilities Districts have covenanted that they will not initiate proceedings under the CFD Act To reduce the maximum Special Tax rates on parcels within the Taxing Jurisdictions to less than an amount equal to 110%' of maximum annual debt service on the respective Special Tax Refunding Bonds. The Community Facilities Districts have further covenanted that, in the event that a^' initiative is adopted which purports to altzr the respective Rates and Methods, the applicable Community Facilities District will commence and pursue legal action~in order to preserve its ability to comply with the foregoing covenant See the caption "SECURITY FOR THE BONDS-Levy and Collection of Special Taxes-General." However, no assurance can be given as to the enforceability of the foregoing covenants. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at the current time to predict with certainty the outcome of such determination or the timeliness of`ariy remedy afforded by the courts. Seethe caption "-Limitations on Remedies." No Acceleration Under the Indenture and the Special Tax Refunding Bonds Fiscal Agent Agreements,'neither'the Bonds nor the Special Tax Refunding Bonds, respectively, aze subject to acceleration in the event of payment default or in the event that interest on the Bonds becomes included' in gross income for federal income tax purposes. Similarly, there is no provision in the CFD Act, the Indenture or the Specia! Tax Refunding Bonds Fiscal Agent Agreements for the acceleration of the Special Taxes in the evenYof a payment default by an owner of a parcel within a Taxing Jurisdiction or otherwise, or upon any adverse change in the tax status of interest on the Bonds. Limited Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, tliat such Bonds can be sold for any particular price. Although the Community Facilities Districts have committed to provide certain financial and operating information on an annual basis, there can be no assurance that such information will be available to Bondowners on a timely basis. See the caption "CONCLUDING INFORMATION-Continuing Disclosure." The failure'to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. ' Preliminary, subject to change. 7$ 17-190 ~- Limitations on Remedies Remedies available to the Owners may be limited by a variety of factors and may be inadequate ~to assure the timely payment of principal of and interest and premium, if any, on The Bonds or to preserve the tax-exempt status of interest oh the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds, the Indenture and the Special Tax Refunding Bonds Fiscal Agent Agreements to the extent that enforceability may be limited, by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditors' rights, by equitable principles and by the exercise ofjudicial discretion. Additionally, the Bonds are not subject to acceleration in the event of the breach of airy covenant or duty under the_ Indenture. The-lack of availability of certain remedies or the limitation of remedies may entail - risks of delay in the'exercise of, or limitations on or modifications to, rthe rights of the Owners. - - Enforceability of the rights and remedies of the Owners of the Bonds, and the obligations incurred by the Community Facilities Districts, may become subject to the federal bankruptcy code and applicable .bankruptcy, insolvency, reorganization, moratoritun, or similar laws relating to oraffecting the enforcement of creditors' rights generally, now or hereafter in effect, equity principles which may limit the -specific enforcement. under State law of certain remedies, the exercise by the United States of America of the powers. delegated to it by the federal Constitution, the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental' bodies in the. interest of serving a significant and legitimate public purpose and the limitations on remedies against governmental entities in the State. See the captions Bankruptcy and Foreclosure Delays," and "- FDIC/Federal Government Interests in Properties." CONCLUDING INFORMATION Underwriting The Bonds are being purchased by E. J. De La Rosa & Co., Inc. and Stifel, Nicolaus &.Company, Incorporated (the "Underwriters") pursuant to a Bond. Purchase Agreement, dated _, 2013 (the "Purchase Agreement"), by and among the Underwriters, the Authority and the Commuuity Facilities Districts. The Underwriters have agreed to purchase the Bonds at a price of $ (being the aggregate principal amount thereof, less a net original issue discount of $ and less an Underwriter's discount of $ ). The Purchase Agreement provides that the Underwriters will purchase, all of the Bonds if any are purchased. The obligation.to make such purchase is subject to certain terms and conditions set forth in the Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions. . The Underwriters may offer and sell the Bonds to certain dealers and others at prices lowerthan the offering price stated on the cover page hereof. The offeting price may be changed from time to time by the Underwriters: E. J. De La Rosa & Co., Inc., one of the Underwriters of the Bonds, has entered into separate agreements with Credit Suisse Securities USA LLC and City National Securities, Inc. for retail distribution of ' certain municipal securities offerings, at the original issue prices. Pursuant to said agreement, if applicable to ' - the Bottds, E. J'. De La Rosa & Co., Inc. will share a portion of its :underwriting, compensation with respect to the Bonds, with Credit Suisse. Securities USA LLC o{City National Securities, Inc. ~ , Financial Advisor Fieldmaci, Rolapp & Associates, Irvine, California (the "Financial Advisor"), served as financial advisor with respect to the sale of the Bonds. The Financial Advisor will receive compensation contingent upon the sale and delivery of the Bonds. The Financial Advisor has not undertaken to make an independent 76 17-191 verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained ih this Official Statement. ' Legal Opinion; Legal Matters ' The legality of the Bonds and certain other legal matters are subject to the approval of Best Best & Krieger LLP, Bond Counsel. Bond Counsel will render an opinion with respect to the validity and enforceability of the Bonds and the Indenture, and a copy of the opinion will accompany each Bond. Such opinion will be subject to the various assumptions, exceptions and limitations stated therein. Bond Counsel also will render an opinion with respect to the validity and enforceability of the Special Tax Refunding Bonds. See Appendix C-"FORM OF BOND COUNSEL OPINION." Certain legal matteis will be passed upon for the Authority and the City by the City Attorney, for the City by Stradling Yocca Carlson & Routh, a Professional Corporation, Newport Beach, California, Disclosure Counsel, for the Underwriters by Nossaman LLP, Irvine, California, and for the Trustee by its counsel Tax Matters In the opinion of Best Best & Krieger LLP, San Diego, California, Bond Counsel, subject, however, to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the Authority, the City and the Community Facilities Districts comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Authority, the City and the Community Facilities Districts will covenantto comply with each such requirement. Failure to comply with'certain'of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bohds. Should the interest on the Bonds become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemptioh as a result of such occurrence and will remain outstanding until maturity or until otherwise redeemed in accordance with the Indenture. In the further opinion of Bond Counsel, interest on the Bouds is exempt from State of California personal income taxes. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a'particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue 77 17-192 discount, including the treatment of purchasers who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bohds purchased, whether. at original issuance or otherwise, for an amount greater than their principal amount, payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, a purchaser's basis in a Premium Bond, and under Treasury Regulations, the. amount of tax exempt interest received will be reduced by the amountof amortizable bond premium properly allocable to such purchases Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of atortizable bond premium in their particular circumstances. Current and future legislative proposals, if enacted into law, clarification of the .Code or court decisions may causeinterest on theBonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bond Owners from realizing the full current benefit of the tax status of such interest. As one example, the Obama Administration recently announced a legislative proposal which, for tax years beginning on or after January 1, 2013, generally would limit the exclusion from gross income of interest on obligations like the Bonds to some extent for taxpayers who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have been made,that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the Bonds. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect, perhaps significantly, the market price tor, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or. proposed federal or state tax legislatioh, regulations or litigation, and regarding the impact of future legislation, regulations or litigation, as to which Bond Counsel expresses no opinion:. Bond Counsel's opinion may be affected by action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such action or events are taken or do occur, or whether such actions or events may adversely affect the value or tax treatment of a Bond, and Bond Counsel expresses, no opinion with respect thereto. The Internal Revenue Service (the "IRS") has initiated an expanded program for auditing tax-exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit (or by an audit of similar bonds). Owners of the Bonds should also be aware that the ownership or disposition of, of the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. The extent of these other taX consequences will depend upon the recipient's particular tax status and other items of income or deductions. `Bond Counsel expresses no opinion regarding any federal or' state tax consequences arising with respect to the Bonds other than as expressly described above. Accordingly, all potential purchasers should. consult theirtax advisors before purchasing any of the Bonds. Financial Interests Payment of the fees and expenses of Bond Counsel, Disclosure Counsel and the Trustee is contingent upon the sale and delivery of the Bonds. Bond Counsel and Disclosure Counsel have from. time to time represented the Underwriters in connection with various matters unrelated to the Bonds or the Special Tax Refuriding Bonds. 78 17-193 No Litigation There is no action, suit, or proceeding pending or, to the best knowledge of the City, the Community Facilities Districtsand the Authority, threatened at the present time restraining orenjoining the delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any proceedings of the' City, the Community Facilities Districts or the Authority taken with respect Yo the execution ordelivery thereof. A no litigation opinion rendered by the City Attorney will be required to be delivered to the Underwriters simultaneously with the delivery of the Bonds. Verification of Mathematical Computations an independent firm of certified public accountants, will deliver to the Community Facilities Districts its reports indicating that it has examined, in accordance with standards established by the Ainerican Institute of Certified Public Accountants, the information and assertions provided by the City and its representatives. Included in the scope of its examination will be a verification of: (i) the mathematical accuracy of the mathematical computations of the adequacy of the cash deposited with the Escrow Bank to pay the interest,'principal and redemption price coming due on the Prior Special Tax-Bonds on their redemption date as described under the caption "THE FINANCING PLAN;" and (ii) the computations of yield of the Bonds which support Bond Counsel's opinion that the interest on the Bonds is excluded from gross income for federahincome tax purpose's. RATING The District received the rating of "_" on the Bonds from Standard & Poor's Rating Services, a Standard & Poor's Financial Services LLC business. Certain information was supplied by the Community Facilities Districts to the rating agency to be considered in evaluating the Bonds. The rating issued reflects only the views~of the rating agency, and any explanation of the significance of such rating should be obtained from the rating agency. There is no assurance that any rating obtained will be retained for any given period of time or that the same will not be revised ddwnward or withdrawn entirely by the rating agency if, in its judgment, circumstances so warrant. Neither the Authorty nor the Community Facilities Districts undertake any responsibility either to bring to the attention of the holders of the Bonds any downward revision or withdrawal. Any such downward revision or withdrawal of the rating obtained may have an adverse effect on the market price of the Bonds. Continuing Disclosure The Authority will covenant for the benefit of holders and beneficial owners of the Bonds: (1) to provide certain' financial information and operating data (the "Annual' Report") relating to the Taxing Jurisdictions not later than March 1 after the end of the City's Fiscal Year, commencing with the report for Fiscal Year 2012-13; and (2) to provide notices of the occurrence of certain enumerated events. The Annual Report will be filed by the Authority or a dissemination agent appointed by the Authority with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/ "("EMMA"). The notices of enumerated events will be timely filed by the Authority or a dissemination agent appointed by the Authority with EMMA. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in the Continuing Disclosure Agreement. See Appendix D-"FORM OF CONTINiJING DISCLOSURE AGREEMENT." These covenants have been made in order to assist the Underwriters in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission (the "Rule"). It should be noted that the Authority is required to file certain financial statements with~the Annual Report. This requirement has been included in the Continuing Disclosure Agreement solely to satisfy the provisions of the Rule. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the Authority or the City other than as described in This Official Statement. See the 79 17-194 ~, # -. - .. 't captions "SPECIAL RISK FACTORS-The Bonds are Limited Obligations of the Authority" and "SPECIAL RISK FACTORS-The Special Tax Refunding Bonds are Limited Obligations.". ' The Comrmmity Facilities Districts have not failed to comply in all material respects with any previous undertakings with regard to the Rule to provide annual reports or notices of enumerated events in the last five years. The Authority has not previously entered into ah undertaking with regard to the Rule: The full text of the Continuing Disclosure Agreement is set forth in Appendix D. Miscellaneous All of the preceding summaries of the Indenture, the Special Tax Refunding Bonds Fiscal 'Agent ' Agreements, applicable legislation, agreements and other documents are made subject to the provisions of such . -documents and legislation and do not purport to be complete statements of any or all of such provisions.' ' Reference is hereby made to such documents on file with the City far further information in coimection .therewith. This Official Statement does not constitute a contract with the purchasers of the Bonds. Airy statements made in this Official Statement involving matters~of opinion or ofestimates, whether oc not so expressly stated,'are set forth as such and not as representations of fact, and no representation is made _ that any of the estimates will be realized. The execution' and delivery of this Official Statement have been authorized by the members of the Board of Directors of the Authority and by the members of the City Council, as the legislative body of the' Community Facilities Districts. CI3ULA VISTA MUNICH'AL FINANCING AUTHORITY By: Executive Director APPENDIX A INFORMATION REGARDING THE CITY OF CHULA VISTA The information and expressions of opinion set forth herein have been obtained from sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness. Statements contained herein which involve estimates, forecasts, or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of facts. The dnfortnation and expressions of opinion herein are subject to change wit/zout notice, and neither delivery of this Official Statement nor any sale thereafter of the securities offered hereby shall under any circumstances create any implication that there has been no change in the affairs of the City or in any other information contained herein since the date of the Official Statement. The Bonds are not general obligations of the County of San Diego (tlze "County ), The following information is provided only to give prospective investors an overview of the general economic condition of the region surrounding the City. General Information Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in an area generally know as "South Bay." Chula Vista's city limits cover approximately 50 square miles. Neighboring communities include the City of San Diego and National City to the north and the City of Imperial Beach and the communities of San Ysidro and Otay Mesa to the south. With a January 2013 estimated population of 251,613, Chula Vista is the second largest city in the County. , Population The following table provides a comparison of population growth for the City and the County between 2009 and 2013. TABLE NO. A-1 POPULATION 2008-2012 San Diego Year Chula Vista County 2009 239,369 3,064,436 2010 243,712 ..3,091,579 2011 245,987 3,115,810 2012 249,382 3,143,429 2013 251,613 3,150,178 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State, 2001-2010, wtth 2000 and 2010 Census Counts, Sacramento, CA, August 2011 and !r4 Ciry/County Population Estimates, 2011- 2013,with 2010 Benchmark, Sacramento, CA, May 2012. A-1 17-196 Employment and Industry The following table summarizes the civilian labor force, civilian employment and civilian -unemployment figures over the period from 2008 tlurough 2012 in the City of Chula Vista, th e County of San Diego, the. State of California and the Uni ted States. TABLE NO. A-2 City of Chula V ista, County of San Diego, State of California and United States Labor Force, Employment and U nemployment Yearly Average CfvUian Labor Cdvi[ian Civilian Civilian _ Year and Area Force Employment<I~ Unemploymen~Zl Unemployment Ratet3f 2008 Chula Vista 90,400 84,100 6,400 7.0% San Diego County 1,548,200 1,455,600 92,700 6.0 Califomia ~ 18,203,100 16,890,000 1,313,100 7.2 United Statest4~ 154,287,000 145,362,000 8,924,000 5.8 2009 Chula Vista ~ 91,400 81,200 10,200 11.2% San Diego County 1,554,200 1,405,000 149,200 9.6 ~~ Califomia _ 18,208,300 16,144,500 2,063,900 11.3 United States li4,142,000 li9,877,000 14,265,000 9.3 2010 Chula Vista 92,600 81,300 l 1,300 12.3% San Diego County 1,572,600 1,407,100 165,600 10.5 ' California 18,316,400 16,051,00 2,264,900 12.4 United States 153,889,000 139,064,000 14,825,000 9.6 2011 Chula Vista 93,200 82,400 1Q800 11.6% San Diego County -1,583,800 1,426,100 157,700 .. 10.0 Califomia 18,384,900 16,226,600 2,158,300 11.7 Utiited States 153,617,000 139,869,000 13,747,000 8.9 2012 Chula Vista 93,900 84,100 9,800 I0.4% San Diego County 1,599,200 1,456,300 142,800 8.9 California 18,494,000 16,560,300 1;934,500 10.5 -United States 154,975,000 142,469,000 12,506,000 8.1 Note: Data is not seasonally adjusted. (D Includes persons involved in labor-management trade disputes. (z) Includes all persons withoutjobs who are actively seeking work. l» The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. (a) Not strictly comparable with data for prior years. Source: California Employment Development Department and U.S. Department of Labor, Bureau of Labor Statistics. A-2 17-197 The following table shows industry employment figures for the San Diego-Carlsbad-San Marcos MSA for calendar years 2008 through 2012. These figures are county-wide statistics and may not necessazily accurately reflect employment trends in the MSA. ' TABLE NO. A-3 SAN DIEGO-CARLSBAD-SAN MARCOS MSA INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE Calendar Years 2008 through 2012 2008 2009 2010 2011 2012 Civilian Labor Force 1,548,200 1,554,200 1,572,600 1,583,800 1,599,200 Civilian Employment 1,455,600 .1,405,000 1,407,100 1,426,100 . 1,456,300 Civilian Unemployment 92,700 149,200 165,500 157.700 142,800 Civilian Unemployment Rate 6.0% 9.6% 10.5% 10.0% 8.9% Total Farm 10,500 9,500 10,500 10,000 9,800 Total Nonfarm 1,298,700 1,231,400 1;222,800 1;231,200 1,258,800 Total Private 1,073,600 1,006,900 992,400 1,002,700 1,031,300 Goods Producing 179,200 156,800 148,600 148,400 150,200 Mining and Logging 400 400 400 400 400 Construction 76,100 61,100 55,300 55,200 56,300 Manufacturing 102,800 95,300 92,900 92,800 93,400 Service Providing 1,119,500 1,074,600 1,074,200 1,082,800 1,108,700 Trade, Transportation & 215,900 199,600 197,300 199,000 206,800 Utilities ' Wholesale Trade 44,900 40,600 40,100 40,700 43,500 Retail Trade 142,000 X131,600 130,700 132,200 148,100 Transportation, Warehousing 29,000 27,400 26,500 26,100 27,600 & Utilities Information 31,400 28,200 25,100 24,000 24,600 Financial Activities 75,200 69,800 67,200 66,800 69,500 Professional & Business 222,300 206,800 207,700 211,500 215,500 Services ' Educational & Health Services 137,300 144,300 145,500 149,100 154,500 Leisure and Hospitality 164,000 154,800 154,800 156,900 161,000 Other Services 48,400 46,800 46,200 47,100 49,300 Government 225.100 224,500 230,400 228.400 227.600 Total, All Industries 1.309.300 1 240.900 12 300 1.241.200 2~ 68 600 , Note: Does not include proprietors, self-employed, unpaid volunteers or fa mily workers, domestic-workers in households and persons involved in labor-management trade disputes. Employment reported by pl ace of work. Items may not add to total due to independent rounding. The "Total, All Industries" data is not directly comparable [o the employment data found in this Appendix D. Source: State of California, Employment Development Deparhnent, San Daego-Carlsbad-San Marcos MSA Industry Employment & Labor Force - by Annual Average, Mar ch 2012 Benc hmark A-3 17-198 The major employers operating within the City and their respective number of employees as of June 30, 2012 are as follows: - ~ "'Name of Company ~ Employmead Type of Buslness/Produet Sweetwater Union High School District 3,911 Education ' Chula Vista Elementary School District 2,727 Education _ Rohr DBA Goodrich Aerospace 2;167 Aerospace Manufacturing Sharp Chula Vista Medical Center 1,735 Hospital Southwestern Community College .1,716 Education City of Chula Vista 1,106 Govermnent Scripps Mercy.HospitalChula Vista 1•,109 Hospital Wal-Mart 1,239 General Merchandise Costco' 538 Retail 24 Hour Fitness - 475 Health Club Source: ,City of Chula Vista. Income • The following table summarizes per capita personal income for San Diego County, Califomia and the United States for 2007 through 201 L • TABLE NO. A-4 PER CAPITAL PERSONAL INCOME 2007 - 2011 Year San DiegoCounry State of California 2007 ~ 45,768 43,211 . 2008 47,197 44,003 2009 44,107 41,034 2010 44,951 41,893 . 2071 46,800 43,647 - Source: U.S. Department of Commerce, Bureau of Economic Analysis. United States 39,506 40,947 38,637 39,791 41,560 A-4 17-199 Commercial Activity Table No. A-5 summarizes the volume of retail sales and taxable transactions for Chula Vista for 2007 through 2011. TABLE NO. A-5 CITY OF CHULA VISTA TOTAL TAXABLE TRANSACTIONS (in Thousands) 2007 - 2011 Retail Sales Year $(000's) 2007 2,350,689 2008 2,226,573 2009 1,976,176 2010, 2,070,662 2011 2,184,654 Total Taxable Retall Sales Transackous Issued Sales Permits $(000's) Permits 2,285 2,599,523 4,277 2,353 2,476,218 4,328 2,543 2,199,592 4,005 2,649 2,303,400 4,064 2,714 2,421,666 4,095 Source: California State Boazd of Equalization, Taxable Sales in Cafifornia (Sales and Use Tax). Building Activity The following table summarizes building activity valuations for Chula Vista for the years 2007 through 2011. TABLE NO. B-6 CITY OF CFIULA VISTA BUILDING ACTIVITY AND VALUATION (in Thousands) 2007 - 2011 2007 2008 2009 2010 2011 Residential $ 122,486,454 $ 59,983,313 $ 60,719,922 $ 109,274,635 $ 140,672,439 Non-Residential 74.148,582 33,852,503 21,159,969 28.134,101 30,276,573 Total Valuation $~( 35036 $ 93,835.816 $ 81.879.891 $ ]37.408.7.36 $ 170,949.012 Total Permits 578 333 266 518 722 Source: Construction Industry Research Boazd A-5 17-200 .APPENDIX B SUMMARY OF CERTAIN PROVISIONS OF BOND DOCUMENTS [TO COME] B-1 17-201 APPENDIX C FORM OF BOND COUNSEL OPINION [TO COME] Gl 17-202 APPENDIX D FORM OF CONTINUING DISCLOSURE AGREEMENT Upon issuance of the Bonds, the Authority proposes to enter into a Continuing Disclosure Agreement in substantially the following forma THIS CONTINUING DISCLOSURE AGREEMENT ("Disclosure Agreement"), dated as of July 1, 2013;.is executed and delivered by the CHULA VISTA MUNICIPAL FINANCING AUTHORITY (the "Issuer"), and 1VBS,`as Dissemination Agent (the "Dissemination Agent") in connection with-the issuance of $ aggregate principal amount of the Chula Vista Municipal Financing Authority-Special Tax Revenue Refunding Bonds, Series 2013 (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust (the "Indenture") dated as of July 1, 2013 between the Issuer and U.S. Bank National Association (the "Trustee"). The proceeds o£the Bonds will be used to acquire the Special Tax Refunding Bonds (as defined below) and refund certain outstanding bonds of the Districts (as defined below), to fund the reserve funds securing the Bonds and to pay costs of issuance of the Bonds. The Issuer and the Dissemination Agent covenant and agree as follows: Section I. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the.Underwriters in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission. Section 2. Deftnitions. do addition to the definitions set forth in the Indenture, which. apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section;. the following ' capitalized terms shall have the'following meanings: "Amtual Report" shall mean any Annual Report provided by the Issuer pursuult to, and as described in, Section 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through ndininees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes. ' "City" shall mean the City of Chula Vista, California. "Disclosure Representative' shall mean the Executive Director of the Issuer, or his or her designee, or such other' officer oremployee as the lssuershall designate in writing to~the Dissemination Agent from time to time. "Dissemination Agent" shall mean NBS, or. any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee and the Issuer a written acceptance of such designation. ' ` "Districts" shall mean Community Facilities District No. 06-I of the City of Chula Vista, Community Facilities District No. 07-I of the City of Chula Vista; Community Facilities District No. 08-I of the City of ' _ Chula Vista, and Community Facilities District No. 2001-2 of the City of Chula Vista. "EMMA"- shall mean the Electronic Municipal Market Access system of the MSRB. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. - "Special Tax Refunding Bonds" shall mean, collectively, City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area A Special Tax Refunding D-1 17-203 Bonds, Series 2013; City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013; City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series 2013; City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) Special Tax Refunding Bonds, Series 2013; and City of.Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - Village Six) Special Tax Refunding Bonds, Series 2013. "MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. "Official Statement" means the Official Statement for the Bonds dated , 2013. "Participating Underwriters" shall mean E. J. De La Rosa & Co., Inc. and Stifel, Nicolaus & Company, Incorporated. "Owners" shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee. "Repository" shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be,made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provision of Annual Reports. (a) The Issuer shall, or upon written direction shall cause the Dissemination Agent to, not later than March 1 after the end of the Issuer's Fiscal Year (currently June 30) commencing with the report due by March 1, 2014,. provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure. Agreement. The Annual Report may be. submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer and the City, if any exist, may be submitted separately from the balance of the Amrual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the fiscal year of the Issuer or the City changes, the Issuer shall give notice of such change in the same manner as for a Listed Event under Section5(d). The dssuer shall provide a written certification with each Annual Report famished o the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be famished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report. (b) Not later than (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Issuer shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) Business Days prior to such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to inquire if the Issuer is in compliance with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repository by. the date required in subsection (a), the Dissemination Agent shall send a notice to the Repository, in the form required by the Repository. D-2 17-204 (d) The Dissemination Agent shall: (i) determine each year. prior to date for providing the Annual Report the name and address of the Repository if other than the MSRB; and (ii) file a report with the Issuer. certifying that the Annual Report has been sent to the Repository and the date it was provided. , (e) Notwithstanding any other provision of this Disclosure Agreement, all filings shall be made in accordance with the MSRB's EMMA system or in another manner approved under the Rule. Section 4. Content of Annual Reports. The Issuer's Annua] Report shall contain or include by - -reference the following: (a) Financial Statements. The audited financial statements of the Issuer and the City for the prior fiscal year, if any have been prepared and which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board; provided, however, that the Issuer and the City may, from ti~he to time, if required-by federal or state legal requirements, modify the basis upon which its financial statements are prepared: In the event that the Issuer or the City shall modify the basis upon which its financial statements are prepared, the Issuer orthe City, as applicable, shall provide the information referenced in Section 8 below. If the Issuer or the City are preparing. audited financial statements and such audited financial statements are not available by the time.the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b)` Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following: (i) the principal amount of Bonds outstanding as of the September 2 preceding the filing of the Amoral Report; (ii) the balance in each fund under the Indenhve and the Series A Reserve Requirement and the Series B Reserve Requirement as of the September 2 preceding the filing of the Annual Report; (iii) any changes to the Rates and Methods of Apportionment of the Special Taxes ' approved or submitted. to the qualified electors for approval prior to the filing of the Annual Report and adescription of any parcels for which the Special Taxes have been prepaid in the Fiscal Year for which the Annual Report is being prepared; (iv) an update of Tables 7, 8-B, 9, 10 and 11 in the Official Statement based upon the most recent Special Tax levy preceding the date of the Annual Report and oh-the assessed values of property for the current fiscal year; (vi) the petcentage of the maximmn Special Taxes levied by the Districts with respect to each series of Special Tax Refunding Bonds; (vi) the status of any foreclosure actions being pursued by the Districts with respect to delinquent Specia] Taxes; and D-3 17-205 (vii) any information not already included under (i) through (v) above that the Districts are required to file in its annual report to the California Debt and Investment Advisory Commission pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended. Any or all of The items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repository or the Securities and Exchange Commission If the document included by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference. Section 5. Reporting of Si¢nificant Events. (a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) business days after the event: principal and interest payment delinquencies; - - 2. unscheduled draws on debt service reserves reflecting financial difficulties;, 3. unscheduled draws on credit enhancements reflecting financial difficulties;- 4. substitution of credit or liquidity providers, or their failure to perform; , 5. adverse tax opinions or the issuance by the hiterna] Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701- TEB); 6. tender offers; 7. defeasances; 8. ratings changes; and 9. bankruptcy, insolvency, receivership or similar proceedings. Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in.which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confinning a plan of reorganization, arrangement or liquidation by a court or govenmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the'Bdnds, if material: unless described in paragraph 5(a)(5) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; D-4 17-206 ' 2. the consummation,of amerger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the temmination of a definitive agreement relating to any ' such actions, other than pursuant to its terms; 3: .appointment of a successor or addifional trustee or the change of the name of a trustee, ' 4, nonpayment related defaults; ~ - 5. ,modifications to the rights of Owners of the Bonds; 6. notices of redemption; and 7. release, substitution or sale of property securing repayment of the Bonds., . (c)- Whenever the Issuer obtains knowledge of the occurrence of a Listed Event under Section 5(b) above, the Issuer shall as soon as possible determine if such event would 'be material render applicable federal securities laws. (d) If the Issuer determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws„the Issuer shall file a notice of such occurrence with the Repository in a timely manner not more than 10 business days after the event. (e) -, The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the,Issuer and that the Dissemination Agent shall not be responsible for determining whether the Issuer's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. _ Section 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure ' Agreement shall terminate upon the legal defeasance, -prior redemption. or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5. SectionZ Dissemination Agent. The.ISsuer may, from-time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under Yhis Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The - Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent. The initial Dissemination.Agent shall be NBS. The Dissemination Agent may resign by peoviding thirty (30) days written notice to the Issuer and the Trustee. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agieetnent; the Issuer may amend this Disclosure Agreement, and airy provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied; (a) If the amendment or waiver related to the provisions of Sections 3(a), 4, or S;,it may only 6e made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of_ business conducted; D-5 17-207 (b) The undertaking hereunder, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the Time of the original issuance of the Bonds, afrer taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by-the Issuer. In addition, if the amendment is related to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as' for a Listed Event under Section 5(a), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the formed accounting principles. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information; using the means of dissemination set forth in this Disclosure Agreement or ariy other-means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required'by this Disclosure Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. hi the event of a failure of the Issuer to comply with any provision of this Disclosure Agreement,'the'Trustee at the written direction of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, or any Owner or Beneficial Owner of the Bonds may take such actions as maybe necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Agreement, but only to the extent funds have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or'additional charges. of the Trustee whatsoever, including, without limitation, fees and' expenses of its attorney. A default under this Disclosure'Agreement shall not be deemed an Event of Defaulf'under the Indenture, and the sole remedy under this Disclosure Agreement shall b'e an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Atent. The Dissemination Agent shall have only shcli duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses {including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Disseminatidn Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. D-6 17-208 Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:' Issuer: Chula Vista Municipal Financing Authority 276 Fourth Avenue Chula Vista, CA 91910 - Attention: Executive Director Dissemination Agent: NBS 32605 Temecula Pkwy Temecula, CA 92592 Attn: Participating Underwriters: Stifel, Nicolaus & Company, Incorporated One Ferry Building, Suite 275 San Francisco, CA 94111 Attention: ~ - - E. J. De La Rosa & Co., Inc. 10866 Wilshire Boulevard, Suite 160 Los Angeles, California 90024 Attention: Any person may, by written notice to the other persons listed above, designate a different address br telephonepumber(s) to which subsequent notice or communications should be sent. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Trustee, the Dissemination Agent, the Participating Underwriters and Owners and Beneficial Owners from time to time of the Bonds, acid shall create no rights in any other person or entity: ' Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, 'each of which shall be an original and al] of which shall constitute but one and the same instrument. CHULA VISTA MUNICIPAL FINANCING AUTHORITY By: Its: Executive Director NBS, as Disseiination Agent By: Its: Authorized Officer D-7 17-209 APPENDLY E INFORMATION CONCERNING DTC The information in dsis Appendix concerning DTC and DTC's book-entry only system has been obtained from sources that the Authority, the Community Facilities Districts, the City and the Underwriters believe to be reliable, but none of the Authority, the Community Facilities Districts, the City or the Underwriters takes any responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, If any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneftcial Owners is based solely on information provided by DTC. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative-of DTC. One fully registered bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such annual maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is alimited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and. a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certiticates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, cleazing corporations, and certain other organizations. DTC is awholly-owned. subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Puticipant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants aze on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit For the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are,. however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneftcial Owner entered into the transaction. 'Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds representing their ownership interests in the Bonds,. except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts E-1 ~~-210 such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will - remain responsible for keeping account of their holdmgs on behalf of their customers. -Conveyance of notices and other communications by DTC to Dtrect Participants, by Direct Participants to - ~ ~ Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements.among them, subject tq any statutory or regulatory requirements as may be in effect from time Yo time.- Beneficial Owners of Bonds may wish to take certain steps to augment the transtnission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registraz and request that copies of notices be provided du~ectly to them. ~ ~ , Redemption notices shall be sent to DTC. If less than all oFthe Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount o'f the interest of each Direct Participant in such 'maturity to be redeemed. Neither DTC non.Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails anOmnibus Proxy to the Authority as soon as possible after the recorddate. The Omnibus Proky assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee ~as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Authority or the -~ Trustee, on payable date'in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case ' with securities held for the accounts~of customers in beazer form or registered in "street name," and will be the ` `responsibility of such Participant and not of DTC, the Tmstee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to tune. Payment of redemption proceeds,-distributions, and dividend payments to Cede & Co.' (or such other nominee as may be requested by an authorized representative of - DTC) is the responsibility of the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and~disbursement of such payments to the Beneficial Owners will be the responsibility df Direct and Indirect Participants. A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's ~. interest in the~Bonds, on DTC's records, to the Trustee.. The requirement forphysical delivery of Bonds ih connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed 6y a book-entry ctedit of tendered Bonds to the Trustee's DTC account. ' DTC may discontinueproviding its services as depository with respect to the Bonds at any timeby giving reasonable notice Yo the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, bonds will be printed and delivered to DTC. - THE TRUSTEE, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE. E-2 17-211 APPENDLX F RATES AND METHODS OF APPORTIONMENT OF SPECIAL TAXES FOR THE TAXING JURISDICTIONS RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILTTIES DISTRICT N0.06-I IMPROVEMENT AREA A (Eastlake -Woods, Vistas and Land Swap) Property within the City of Chula Vista Community Facilities District No. 06-I, Improvement Area A ("Improvement Area A") and collected each Fiscal Year commencing in Fiscal Year 2003-2004 in an amount deternined by the City Council through the application of the appropriate Special Tax for "Developed Property," and "Undeveloped Property" as described below. All of the Taxable Property in Improvement Area A, unless exempted by law or by the provisions hereof, A Special Tax as hereinafter defined shall be levied on each Assessor's Parcel of Taxable 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 meaning: "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 Subdivision Map, pazcel map, condominium plan, record of survey, or other recorded document creating or describing the land area. If the preceding maps for a land azea are not available, the Acreage of such land area shall be determined by the City Engineer. , "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of Improvement Area A including, but not limited to, the following: the casts of computing the Special Taxes and preparing the annual Special Tax wllection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County, the City, or otherwise); the costs of remitting the Special Taxes to the Tmstee; 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-06-I, or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD-06-I, or any designee thereof of providing continuing disclosure; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD-06-I, or any designee thereof related to•any appeal of the levy. or. application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD-06-i, -for any other administrative purposes of Improvement Area A, including, but not limited to 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 Pazcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. F-I 17-212 "Assigned Special Tas" means the Special Tas for each Land Use Category of Developed Property as determined in accordance with Section C.l.a. "Available Funds" means the balance in the reserve fund established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, delinquent Special Tax payments , not required to fund the Special Tax Requirement for any preceding Fiscal Year, and Special Tax prepayments collected' to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. - "Backup Special Tax" means the Special Tax amount set forth in Section C.l.b. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued or incurred by CFD-06-I for Improvement Area A under the Act. "Bond Year" means aone-year period beginning on September 2nd in each year and ending on September 1st in the following year, unless defined otherwise in the applicable Indenture. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. ' "CFD=06-I" means City of Chula Vista Community Facilities District No. 06-I. `-`City"means the City of Chula Vista. "Commercial Property" means all Assessors' Parcels of Developed Properly, for which a building permit(s) was issued for anon-residential use, excluding Community Purpose Facility Property and Hotel Property "Community 'Purpose Facility Property" -means all Assessors' Parcels which are classified as community purpose facilities. and meet the requirements of City of Chula Vista Ordinance No. 2452. "Council" means the City Council of the City; acting as the legislative body of CFD-06-I. ~ , "County" means the County,of San Diego. "Developed Property" means, for each Fiscal Year, all Taxable Property for which a building pennif for new construction was issued prior to March 1 of the prior Fiscal Year. "Exempt Property" means property not subject to the Special Assigned Tax due to its classification as eitherPublic Property, Property Owner Association Property, Community Purpose Facility Property, public or utility easements. ' "Final Subdivision Map" means a subdivision of property, created by recordation of a Final Subdivision Map, parcel map or lot line adjustment, approved by the City 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 fot which residential building permits may be issued without further subdivision ofsuch property. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Hotel Property" means any Assessor's Parcel(s) of Commercial Property within the boundaries of CFD 06-I entitled or otherwise designated by the City to be used as a Hotel site. F-2 17-213 "Hotel" means a building or group of buildings comprising six or more individual sleeping or living units without kitchens, except as otherwise provided herein, for the accommodation of transient guests. "Improvement Area A" means Improvement Area.4 of CFD No. 06-I kiiown as the Woods, Vistas and Land Swap. "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrwhent replacing or supplementing the same. "Land Use Class" means any of the classes listed in Tables 1 and 2 of Section C. "Lot" means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. "Master Developer" means the owner of'the predominant amount of Undeveloped Property in Improvement Area A. - "Maximum Annual Special' Tax" 'means the maximum annuab Special Tax, determined in accordance with the provisions of Section C, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. ~ ' "Outstanding Bonds" means al] Bonds, which remain outstanding as defined in the Indenture. "Property Owner Association Property" means any property within the boundaries of Improvement Area A dwned by or dedicated to a property owner association, including anymaster or sub-association. "Proportionately" means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Annual Special Tax or the Backup Special Tax is equal for all Assessors' Parcels of Developed Property within Improvement Area A. For Undeveloped Property "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for al] Assessor's Parcels of Undeveloped Property within Improvement Area A. "Public Property" means any property within the boundaries of Improvement Area A that is owned by or dedicated to the federal government, the State of California, the County, the City or any other public agency. "Residential Property" means all Assessors' Pazcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "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 shalPbe made by the CFD Administrator by reference to appropriate records kept by the City's Building Department. Residential Floor Area for a residential structure will be based on the building permit(s) issued for such structure. "Special Tax" means the annual special tax to be levied in each Fiscal Year on each Assessor's Pazcel of Taxable Property to fund the Special Tax Requirement "Special Tax Requirement" means that amount of Special Tax revenue required in any Fiscal Year for Improvement Area A to: (i) pay annual debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iii) pay F-3 17-21'4 Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all ' Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of . public improvements which are authorized to.be financed by CFD-06-I provided that the inclusion.of such amount does not cause an increase. in the levy of Special Tax on the Undeveloped Property and for . Improvement Area A ;less (vi) . a credit for Available Funds. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of Improvement Area A that are not exempt from the Special Tax pursuant to law or Section E below. "Trustee" means the trustee, fiscal agent,.or paying agent under the Indenture. "Undeveloped, Property" means, for each Fiscal year, all Taxable Property not classified as DevelopedProperty. • "Zone P' means a specific geographic location known as the Vistas development area as depicted in Exhibit A attached herein. "Zone 2" means a specific geographic location known as the Woods development area as depicted in Exhibit A attached herein. B. ASSIGNMENT TO LAND USE CATEGORIES .. Bach Fiscal Year, all Assessors' Parcels of Taxable Property within .Improvement Area A shall be classified as Developed Property or Undeveloped Property and shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Developed Property shall be assigned to Zone 1 or Zone 2 azid shall be further classified as Residential Property, Commercial Property or Hotel Property. , C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property, Commercial Property or Hotel Property shall be the greater of (1) the Assigned Special Tax described in Tables 1 and 2 below or (2) the Backup Special Tax computed pursuant to b. below. a. Assigned Special Tax The Assigned Special Tax for-each Assessor's Parcel.of Developed Property is shown in Tables 1 and 2 Table 1. Zone 1 (Vistas) Assigned Annual Special Tax for Developed Property. Land Use Class Description Assigned Annual SDeeial Tax 1 Residential Property $0.58 per square foot of Residential Floor Area 2 Commercial Property $6,000 per Acre . 3 Hotel Property $6,000 per Acre F-q 17-215 Land Use CZass Table 2 ' ' Zone 2 (R'oods) Assigned Annual Special Tax for Developed Property 2 Description Residential Property Commercial Property b. Backup Special Tax AssiQnedAnnual Special Tax $0.67 per square foot of Residential Floor Area $6,000 per Acre When a Final Subdivision Map is recorded within Zone 1 and 2 of hnprovement Area A the Backup Special Tax for Assessor's Parcels of classified as Residential Property, Commercial Property or Hotel Property shall be determined as follows: ' For each Assessor's Parcel of Residential Property or-for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property upon its development within the .Final Subdivision Map azea, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: Zone 1 (Vistas) $11,037 x A B = -----------=-- . , L Zone 2 (Woods) ' $8,332 x A B = -------------- L The terms above have the following meanings: B = Backup Special Tax per Lot in each Fiscal Year. . , A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map. L= Lots in the Final Subdivision Map which are classified or to be classified as Residential Property. For each •Assessor's Parcel of Commercial Property or Hotel Property or for each Assessor's Parcel of Undeve]oped Property to be classified as Commercial Property or Hotel Property within the Final Subdivision Map azea, the Backup Special Tax shall be determined by multiplying $11,037 for Zone 1 and $8,332 for Zone 2 by the total Acreage of each Assessor's parcels of the Commercial or Hotel Property and Undeveloped Property to be classified as Commercial Property or Hotel Property within the Final Subdivision Map area. Notwithstanding the foregoing, if Assessor's Parcels of Residential Property, Commercial Property, Hotel Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Subdivision Map, then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place. F-5 ~~-216 2, _ Undeveloped Property The Maximwn Annual Special Tax for each Assessor's Parcel classified as Undeveloped Property. shall Abe $11,037 per acre for Zone ]and $8,332 per acre for Zone 2. D: METHOD OF APPORTIONMENT OF.THE SPECIAL TAX Commencing with Fiscal Year 2003-04 and for each following Fiscal Year, the Council ,shall ,determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: . First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property within Zones 1 or 2 at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special - Tax Requirement. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the SpeciaLTax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, excluding any Assessor's Pazcels classified as Undeveloped Property pursuant to Section E, at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor's Parcel of Developed Property whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Specia_ 1 Tax up to the Maximum Annual Special Tax for each such Assessor's Parcel. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel classified as Undeveloped Property pursuant to Section E at a rate up to 100% of the Maximum Annual " Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any-Assessor's Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Assessor's Parcel E. EXEMPTIONS 1. The CFD Administrator shall classify the following. Assessor Parcel(s) as Exempt Property: (i) Public Property, (ii) Property Owner Association Property, (iii) Community Purpose Facility Property, and (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided, however, that no such classification shall reduce the sum of all Taxable Property within Zone 1 (Vistas) to less than 180.03 Acres and within Zane 2 (Woods) to less than 166.23 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 for Zone 1 (Vistas) 180.03 acres and Zone 2 (Woods) 166.23 acres will be classified as Undeveloped Property and shall be taxed as such. Tax exempt status for purposes of this paragraph wi]Ybe assigned by the CFD AdministraWr in the chronological order in which property becomes Exempt Property. 2. ~ The Maximum Annual Special Tax obligatioirfor any property which would be classified as Public Property upon its transfer or dedication to a public agency but which cannot be classified as Exempt -Property as described in paragraph 1 of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property to such public agency. Until the Maximum Annual Tax F-6 17-217 obligation for airy such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Undeveloped Property. F. REVIEW/APPEAL COMMITTEE Any landowner or resident who feels that-the amount of the Special-Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred; the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of CFD-06-I a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee sfiall be final'and binding as to allpersons. G. 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-06-I, 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 Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes. Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the'use of Bond tenders shall only-be allowed on a case-by-case basis as specifically approved by the Council. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H "CFD Public Facilities" means either $34:5 million in 2002 dollars, which shall increase by the Construction Inflation Index on July 1, 2003, and on each July 1 thereafter, or such lower number as (i) shall be determined' by the CFD Administrator as sufficient to provide the public facilities under the authorized bonding program- for CFD No. 06-I Improvement Area A, or (ii) shall be determined by the 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 as described in Section D. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. "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 public facility costs available to be funded through existing construction fund, or funded by the Outstanding Bonds as defined below, minus F-7 17-21°S ' public facility costs funded by interest earnings on the Construction Fund actually earned prier to the date of prepayment, and minus public facilities costs paid directly with Special Taxes.. "Outstanding Bonds" means all previously issued Bonds 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 Annual Special Taxes. 1. Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied for'an _ Assessor's Parcel of Developed Property, Undeveloped Property for which a building permit has been issued, or Public Pioperty. The Maximum Annual Special Tax obligation applicable to such Assessor's Parcel may be ' fully prepaid and the obligation of the Assessor's Parcel to pay the Special Tax perznanently satisfied as described herein; provided, however that a prepayment may be made only if there aze no delinquent Special Taxes with respect to such Assessor's Parcel at the time of Prepayment. An owner of an Assessor's Pu~cel intending to prepay the Maximum-Annual Special Tax 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 of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this figure. The Prepayment Amount shall be calculated as summarized below (capitalized terms as defined below): Bond I plus plus plus plus less less Total: equals redemption Amount Redemption Premium Fuhue Facilifies Amount Defeasance Amount Administrative Fees and Expenses Reserve Fund Credit Capitalized Interest Credit Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated `, as follows: ' Step No.: L , For Assessor's Parcels of Developed Property, compute the Maximum Annual Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property far which a building permit has been issued to be prepaid, compute the Maximum Annua] Special Tax,for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit, issued for that Assessor's Pazcel. For Assessor's Parcels of Public Property to be prepaid, compute the Maximum. Annual 'Special Tax for that Assessor's Parcel using the Maximum. Annual Special Tax for Undeveloped Property. 2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Maximum Amoral Special Tax revenues which may be levied within Improvement Area A excluding any Assessors Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid. 3. Multiply the quotient computed pursuant to paragraph-2 by the principal amount of the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). F_g _ 17-219 4. "' Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by The applicable redemption premium on the next possible Bond call date, if any, oi~ the Outstanding Bonds to be redeemed (the "Redemption Premium "). S. If all the Bonds authorized to be issued for Improvement Areas A have not been issued,. compute the Future Facilities Costs. 6. Multiply the quotient computed pursuant to paragraph 2 by the amount if any, determined pursuant to paragraph 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor's Parcel (the "Future Facilities Amount"). - 7. 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 Outstanding Bonds. ' S. Confirn that no Special Tax delinquencies apply to such Assessor's Pazcel. 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year, which have not yet been paid. ' 10. Compute the amount the CFD 'Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount less the Administrative Fees and Expenses (including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption) from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 7 and 9 and subtract the amount computed pursuant to pazagraph 10 (the "Defeasance Amount "). 12. Determine the administrative fees and expenses of CFD-06-I, applicable prepayment totals, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the cost 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 Outstanding 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 Outstanding Bonds as a re"cult of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount b~e less than zero. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 2 by the expected balance in the capitalized interest fund after such first interest payment (the "Capitalized Interest Credit'. 15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to pazagraphs 3, 4, 6, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Prepayment Amount "). 16. From the Prepayment Amount, the amounts computed' pursuant to paragraphs 3, 4, 11, 13, and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 12 shall be F-9 1'7-220 retained.by`CFD-06. The amount computed pursuant to paragraphs shall be deposited in the Construction Fund. The Prepayment Amount may be sufficient to redeem other than a $5,000 hicrement 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 to make debt service payments. As a result of the payment of the cmrent Fiscal Year's Special Tax levy as determined under paragraph 9 above, rthe CFD Administrator shall remove the current Fiscal Year's Special Tax 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 Special Taxes and'tlie release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within- Bnprovement Area A both prior Yo and after the proposed prepayment is at least 1.1 times the maximum annual debt service on al] Outstanding Bonds. Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. 2. Prepayment in Part The Maximum Annual Special Tax on au 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 SectiomH 1; except that a partial prepayment shall be calculated according to the following formula: PP=(PExF)+A These terms have the following meaning: PP = the partial prepayment P~ = the Prepayment Amount calculated according to Section H.1, minus Administrative Expenses and Fees determined pursuant to Step 12. ' F = the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax. A= the Administrative Expenses and Fees determined pursuant to Step 12. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by which the Maximum Aimual Special Tax shall be prepaid, and (iii) the company oc agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Annual Special Tax for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. F-(0 17-221 With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Step 16 of Section H.1, and (ii) indicate in the records of CFD-06-I that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2042-2043 Fiscal Year. F-11 17-222 AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX CITY OF CHULA VISTA , COMMUNITY FACILITIES DISTRICT NO. 06-I IMPROVEMENT AREA B , (Eastlake -Woods, Vistas and Land Swap) , A Special Tax as hereinafter defhed shall be levied on each Assessor's Parcel of Taxable Property within the City of Chula Vista Coimnuuity Facilities District No. 06-I, Improvement Area B~("Improvement Area B") and collected each Fiscal Year commencing in Fiscal Year 2003-2004 in an amount determined by ' the City Council through the application of the appropriate Special Tax for "Developed Property," and "Undeveloped Property" as described below. All of the Taxable Property in Improvement Area B, wiles 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 meaning: - - "Acre or Acreage" means the land azea 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 ]and area shown on the applicable Final Subdivision Map, parcel map, condominium plan, record of survey; or other recorded document creating or describing the parcel. If the preceding maps for a land area are not available, The Acreage of such land area shall be determined by the City Engineer. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, ,being Chapter 2.5; Division 2 of Title 5 of the Government Code of the State of California. `Administrative Expenses" means the actual or reasonably estimated costs directly related to the adminisfration of Improvement Area B including, but not limited to, the following: 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 County, . - 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 h~denture; the costs to the City, CFD-06-I or any designee thereof of complying with arbitrage rebate requireme~lts; the costs to-the City, CFD-06-I or any designee thereof of providing continuing disclosure; the costs, associated with preparing Special Tax disclosure. statements .and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD-06-I or any' designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD-06-I for any other administrative purposes of improvement Area 8, including, but riot limited to attorney's fees and other costs related to commencing and pursuing to completion any foreclosure ofdelinquent Special Taxes. . "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. , "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Category of Developed Property as determined in accordance with Section C.l.a. F-I2 17-223 "Available Funds" means the balance in the reserve fund established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, delinquent Special Tax payments not required to fund the Special Tax Requirement for any preceding Fiscal Yeaz, Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. "Backup Special Tax" means the Backup Special Tax amount set forth in Section C.l.b "Bonds" means any bonds or other debt (as defined in the' Act), whether in one or more series, issued by CFD-06-I for Improvement Area B under the Act. "Bond Year" means aone-year period beginning on September 2nd in each year and' ending on September I st in the following year. Unless defined differently in the applicable Indenture. "CFD Administrator" means an official of the City, or designee thereof, responsible for. determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD 06-I" means City of Chula Vista, Community Facilities District No. 06-I "City" means the'City of Chula Vista. "Commercial Property" means all Assessors' Parcels of Developed Property, for whiclra building permit(s) was issued for anon-residential use, excluding Community Purpose Facility Property. "Community Purpose Facility Property" means all Assessors' Pazcels which aze classified as community purpose facilities and meet the'requirements of City of Chula Vista Ordinance No. 2452. "Council" means the City Council of the City, acting as the legislative body of CFD-06-L' ' "County" means the County of San Diego. "Developed Property" means, for each Fiscal Year, all Taxable Property for which a'building permit for new construction was issued prior to March 1 of the prior Fiscal Year. "Exempt Property" means property not subject to the Special Tax due to its classification as either ' Public Property, Property Owner'Association Property Community Purpose Facility Property. "Final Subdivision Map" means a subdivision of property; created by recordation of a Final Subdivision Map, parcel map or lot line adjustment, approved by the City 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 residential building permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July l and ending ~on the following June 30. "Improvement Area B" means Improvement Area B of CFD No. 06-I known as the "Land Swap". "Indenture" means the indenture, fiscal agent agreement, trust 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 Class" means any of the classes listed in Table 1 of Section C F-13 17-224 - "Lot(s)" means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construcfion has been or could be issued. - ``Master Developer" means the owner of the predominant amount of Undeveloped Property in Improvement Area B. ' ' `.`Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C, which may be levied in any Fiscal Year on any' Assessor's Parcel of Taxable Property. "Outstanding Bonds" mean all Bonds, which remain outstanding as defined in the Indenture. •"Property'Owner Association Property" means any property within the boundaries of hmprovement AreaB owned by or.dedicated to a property owner association, including any master or sub=, association. "Proportionately" meaars for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax or the Backup Special Taxis equal for all Assessors' Parcels of Developed Property within Improvement Area B. For Undeveloped Property "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal - for all Assessor's Parcels of Undeveloped Property within Improvement Area B. :`Public Property" means any property within the boundaries of Improvement Area B that is owned by or dedicated to the federal government, the State of California, the County, the City or az1y other publidagency. "Residential Property" means all Assessors' Parcels of Developed Properly for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "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 shall be made by the CFD Administrator by _ reference to appropriate records kept by the City's Building Department. Residential Floor Area for a residential structure will be based on the building permit(s) issued for such structure. "Special Tax" means the annual special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount of Special Tax revenue required in airy Fiscal Year for Improvement AreaB to: (i) pay annual debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic ~ costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to.establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of .public improvements which are authorized to be financed by CFD-06-I provided that the inclusion of such amount does. not cause an increase iii the levy of Special Tax on the Undeveloped Property for Improvement Area B; less (vi) a credit for Available Funds: "State" means the State of Califomia. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD-06-I; Improvement Area B that are not exempt from the Special Tax pursuant to law or Section E below. F-14 17-225 "Trustee" meahs the trustee, fiscal agent, or paying agent under the Indenture. ``Undeveloped Property" means, for each Fiscal year, all Taxable Property not classified as Developed Property. "Zone 3" means a specific geographic area as depicted in Exhibit A attached hereto. "Zone 4" means a specific geographic area as depicted in Exhibit A attached hereto. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Assessor's Parcels of Taxable Property within , hnprovement Area B shall be (a) categorized as being located in either Zone 3 ar Zone 4, (b) classified as Developed Property or Undeveloped Property and (c)shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Furthermore, all Developed Property shall then be classified as Residential or Commercial Property. C. MAXIMUM ANNUAL SPECIAL TAX RATE • ~ ' I. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Commercial Property shall be the greater of (1) the'Assigned~ Special Tax described in Table 1 below or (2) the Backhp Special Tax computed pursuant to b. below. a. Assigned Special Tax The Assigned Special -Tax for each Assessor's Parcel of Developed Property is shown in Table 1. TABLE' 1 ' ASSIGNED SPECIAL TAX FOR DEVELOPED PROPERTY WITHIN ZONE 3 AND ZONE 4 Land Use Class Description Assigned Special Tax 1 Residential Property $0.74 per square foot of Residential Floor Area ,_ 2 . Commercial Property $6,000 per Acre • b. Backup Special Tax When a Final Subdivision Map is recorded within Zone 3 or Zone 4, the Backup Special Tax for Assessor's Parcels of Developed Property classified as Residential Property or Commercial Property shall be determined as follows:- For each Assessor's Parcel of Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property upon its development within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following fonnu]a: F-IS 17-226 Zone 3 $20,563 x A B = ----------------------- L Zone 4 $6,667 x A B = ----------------------- L The terms above have the following meanings: ~ ~ , B ° Backup Special Tax per Lot in each Fiscal Year: A= Acreage classified or to be classified as Residential Property in such Final Subdivision Map. - L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property: For each Assessor's Parcel of Commercial Property or for each Assessor's Parcel of - Undeveloped Property to be classified as Commercial Property within the Final Subdivision Map-area, the Backup Special Tax shall be determined by multiplying $20,563 for Zone 3 and' $6,667 for Zone 4 by the total Acreage of each Assessor's Parcels of the Commercial Property and Undeveloped Property to be classified as Commercial Property within the Final Subdivision Map area. Notwithgtanding the foregoing, if Assessor's Parcels of Residential Property„Commercial Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Subdivision Map, then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place. . 2. ,Undeveloped Property The Maximum Annual.. Special Tax for each Assessor's Parcel classified, as Undeveloped Property shall be $20,563 per Acre for Zone 3 and $6,667 per Acre for Zone 4. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2003-04 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: , First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property within Zone 3 and Zone 4 at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement. Second: df additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed; the Special Tax shall be levied Proportionately on each Assessor's.Parcel of Undeveloped Property within Zone 3 and Zone 4, excluding any Assessor's Parcels classified as F-16 17-227 Undeveloped Property pursuant to Section E, at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor's Parcel of Developed Property whose Maximum Aimual Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Assessor's Parcel. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first tluee steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel classified as Undeveloped Property pursuant to Section E at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property be increased by more than ten percent per yeaz as a consequence of delinquency or default in the payment of Special Taxes by the ownei of any other Assessor's Parcel. E. EXEMPTIONS The CFD Administrator shall classify the following Assessor Parcel(s) as exempt property: (i) Public Property, (ii) Property Owner Association Property, (iii) Community Purpose Facility' Property, and (iv) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement; provided, however,~that no such classification shall reduce the sum of all Taxable Property to less than 36.50 Acres in Zone 3 and 52.00 Acres in Zone 4. Assessor's Parcels which caimot be classified as exempt property because such classification would reduce the Acreage of al] Taxable Property to less than 36.50 Acres in Zone 3 and 52.00 Acres in Zone 4 will be classified as Undeveloped Property and shall be taxed as such. Tax-exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the clu-onological order in which property becomes exempt property. 2. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which cannot be classified as exempt property as described in paragraph I of Section F shall be prepaid in full by the seller pursuant to Section I.l, prior to the transfer/dedication of such property to such public agency. Until the Maximum Annual Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Undeveloped Property. F. REVIEW/APPEAL COMMTTTEE Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error shall ftrst consult with the' CFD Administrator regarding'such error If following such consultation, the CFD Administrator determines that an error has occurred; the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of CFD-06-I and a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems hecessazy to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and F-17 17-228 Method of Apportionment and make determinations relative to the annual administration of the ` Special Tax and .any landowner or resident appeals, as herein specified.. The decision of the Review/Appeal Committee shall be final and binding as to all persons. , G. 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-06-I, Hnprovement Area B 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 Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes. Tenders of Bonds may be accepted for payment of Special Taxes upon the terms -and conditions - established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as speciftcally approved by the Council. H. PREPAYMENT OF SPECIAL TAX ~ - The following definition applies to this Section H: "CFD Public Facilities" means those public facilities authorized to be.financed by CFD-06-I .. Improvement Area B. "CFD Public Facilities Costs" means either $12.3 million, or such lower number as shall be determined either,by (a) the CFD Administrator as sufficient to finance the CFD Public Facilities, or (b) the Council concurrehtly with a covenant that it will not issue any more Bonds to be secured by • Special Taxes levied under this Rate and Method of Apportionment. "Construction Fund" means anaccount specifically identified in the Indenture to hold funds which ,are currently available for expenditure, to acquire or construct the CFD Public Facilities. "Future Facilities Costs" means the CFD Public Facilities Costs minus that (a) portion of the CFD ~- Public Facilities Costs previously funded (i) from the proceeds of all previously issued Bonds, ~~~ (ii) from interest earnings on the Construction Fund actually earned prior to the.date of prepayment and (iii) directly from Special Tax revenues and (b) the amount of the proceeds of all previously. ' issued Bonds then on deposit in the Construction Fund. "Outstanding Bonds",means all previously issued Bonds 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 Annual Special Taxes: L Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied for an Assessor's Parcel of Developed Property, Undeveloped Property for which a building permit has been - issued, or Public Property. The Maximum Annual Special Tax obligation applicable to such - Assessor's Parcel may be fully prepaid and the obligation of the Assessor's Parcel to pay the Special • Tax permanently satisfied as described herein; provided, however that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor's Pazcel at the time of , prepayment. An owner of an Assessor's Parcel intending to prepay the Maximum Annual Special Tax ' 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 F-18 77-229 Prepayment amount of such Assessor's Parcel. The CFD Achninistrator may charge a reasonab]e fee for providing this figure. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): ' Bond I plus ' plus plus plus less less ' Total: equals :edemption Amount Redemption Premium' Future Facilities Amount Defeasance Amount Prepayment Fees and Expenses Reserve Fund Credit Capitaliae'd Interest Credit Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Step No.: 1. For Assessor's Parcels of Developed Property, compute the Maximum Annual'Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property for which a building permit has been issued to be prepaid, compute the Maximum Annual Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based"upon the building permit issued for that Assessor's Parcel. For Assessor's Parcels of Public Property to be prepaid, compute the Maximum Annual'Special Tax for that Assessor's Pazcehusidg the Maximum Anhual Special Tax for Undeveloped Property. 2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of 'the total expected Maximum Annual Special Tax revenues which may be levied within Improvement Area B excluding any Assessors Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid. 3. Multiply the, quotient computed pursuant to paragraph 2 by the principal amount of the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). ' 4. 'Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption 'premium on the next possible Bond call date, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium"). ' 5. If all the Bonds authorized to be issued for Improvement Area B have not been issued, compute the Future Facilities Costs. 6. Iviultiply the quotient computed pursuant to paragraph 2 by the amount determined pursuant ~to paragraph 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor's Parcel (the "Future Facilities Amount"). 7. 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 Outstanding Bonds. 8. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. F=19 17-230 9. ~ Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year, which have not yet been paid. 10. Determine the fees and expenses of CFD-06-I, including but not limited to, the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds from the proceeds of such prepaytent, and the cost of recording any • notices to evidence the prepayment and the redemption (the , "Prepayment Fees and Expenses"). 11. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the prepayment amount less the Prepayment Fees and Expenses, as determined pursuant to step 10, frotn_the date of prepayment until the redemption date for the outstanding bonds to be redeemed with the prepayment. 12. Add the amounts computed pursuant to paragraphs 7 and 9 and subtract the amount computed pursuant to paragraph I 1 (the "Defeasance AmowzP'). 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 Outstanding Bonds as a result of the prepayment, or (b) the atnount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding 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. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time ' of the first_interest payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 2 by- the expected balance in the capitalized interest fund after such first interest payment (the "Capitalized Interest Credit"). 15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 3, 4, 6, 1Q and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "PrepaymentAmount"). 16. From the Prepayment Amount, .the unounts computed pursuant to paragraphs 3, 4, 12, li, and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments, The amount computed pursuant to paragraph 10 shall be retained by CFD-06-I. The amount computed pursuant to paragraph 6 shall be deposited in the Construction Fund. The Prepayment Amount may be sufficient to redeem other than a $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 to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 9 above, the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel fromthe 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 Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. F-20 17-231 Notwithstanding the foregoing, no Special Tax prepayment shall 'be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within Improvement Area B both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. Tenders of Bonds in prepayment of Maximum Amiual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. 2. Prepayment in Part The Maximum Annual Special Tax 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: These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.l, minus Prepayment Fees and Expenses determined pursuant to Step 10. F = the percent by which the owner of the Assessor's Pazcel(s) is partially prepaying the Maximum Aimual Special Tax. A = the Prepayment Fees and Expenses determined pursuant to Step 10. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by which the Maximum Annual Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Annual Special Tax 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 City shall (i) distribute the funds remitted to it according to Step 16 of Section H.1, and (ii) indicate in the records of CFD-06-I, Improvement Area B that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (L00 - F) of the remainn~g Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2043-2044 Fiscal Year. F-21 17-232 RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 07-I (Ofay Ranch Village Eleven) A Special Tax as hereinafter defined shall be levied on each Assessor's Parcel of Taxable Property within the. City of Chula Vista Community Facilities District No. 07-h (Otay Ranch Village, Eleven), and collected each Fiscal Year commencing in Fiscal Year 2004-2005 in an amount determined by the City Cowlcil through the application of the appropriate Special Tax for "Developed Property," "Approved Property", -"Undeveloped Property" and "Provisional Undeveloped Property" as described below. All of the Taxable Properly within CFD-07-I, 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 meaning: "`A' Map" shall mean a master final subdivision or parcel map, filed in accordance with the Subdivision Map Act and the Chula Vista Municipal Code, which subdivides the land or a portion thereof shown on a tentative map into "super block" lots corresponding to units or phasing of combination of units as shown on such tentative map and which may further show Community Purpose Facility Property, Property Owner Association Property, Public Property, open space ]of dedications, backbone street dedications and utility easements required to serve such `super block" lots. "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 Subdivisioq Map, parcel map, condominium plan,. record of survey, or other recorded document creating or describing the land area. If the preceding maps for a land area are not available, the Acreage of such land area shall be determined by the City Engineer. "Act" means the Mello-Roos Community FacilitiesAct of 1982, as amended, being Chapter 2.5,_ Division 2 of Title 5 of the Government Code of the State of California. "Administrative Fees and Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD-07-I including, but not limited to, the following: 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 County, 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 iUUnder the .Indenture; the costs to the City, CFD-07-I, or any designee thereof of complying with arbitrage rebate requirements and/or responding to any audit of The Bonds by the Internal Revenue Service; the costs to the City, CFD-07-I, or any designee thereof of providing continuing disclosure; the costs of the City, CFD-07-I or any designee thereof of preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD-07-I, or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD-OZ-I, for any otfier administrative purposes, including, but not limited to attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. F-22 17-233 "Approved Property" means all Assessor's Parcels of Taxable Property: (i) that are included in an `A' Map, excluding lettered lots thereon, or a Final. Subdivision Map, excluding lettered lots thereon, that were recorded prior to January 1st for the Fiscal Year ending July 31, 2005, and prior to March 1st for each subsequent Fiscal Year thereafter preceding the Fiscal Year in which the Special Tax is being levied, and (ii) that have not been issued a building permit prior to the March Ist preceding the Fiscal Year in which the Special Tax is being levied. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property as determined in accordance with Section C.l.a. "Available Funds" means (a) the balance in the reserve fund established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, (b) delinquent Special Tax payments not required to fund the Special Tax Requirement for any preceding Fiscal Year, (c) that portion of Special Tax prepayments allocated to the payment of interest on Bonds, and (d) other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. `Backup Special Tax" means the Special Tax as determined in accordance with Section C.l.b. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued or incurred by CFD-07-I under the Act. "Bond Year" means none-year period beginning on September 2nd in each year and ending on September 1st in the following year, unless defined otherwise in the applicable Indenture. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD-07-I" means City of Chula Vista Cormmunity Facilities District No. 07-I. "City" means the City of Chula Vista. "Community Purpose Facility Property" means all Assessor's Parcels which are (a) classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2002- 2883 as amended on November 5, 2002 or (b) designated on an "A" Map or a Final Subdivision Map as a community purpose facility. "Council" means the City Council of the City, acting as the legislative body of CFD-07-I. "County" means the County of San Diego. "Density" means for each Assessor's Parcel of Residential Property the number of Dwelling Units per gross acre determined pursuant to those provisions of Ordinance No. 2866, in effect as of January 7, 2003, that piodide for the calculation of density for purposes of calculating Transportation Development Impact Fees. F-23 17-234 "Developed Property" means all Assessor's Parcels of Taxable Property for which a building permit " hasbeen issued prior to March 1st preceding the Fiscal Year in which the Special Taxis being levied. "Dwelling Unit" means each separate residential dwelling unit that comprises an independent facility capable of conveyance or rental separate from adjacent residential dwelling units. "Exempt Property" means all Assessor's Parcels that are exempt from the.Special Tax pursuant to Section E:I. - "Final Subdivision Map" means a subdivision of property, created by recordation of a final subdivision map,, parcel map or lot line adjustment, approved by the City 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 residential building permits may be issued without further subdivision of such property, "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, frost agreement, resolution or other - instrument pursuant to which Bonds are issued, as. modi£~ed, amended and/or supplemented from tune to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Table 1 of Secton C. "Maximum Annual Special Tax" means the maximum annual Special Tax,- determined in accordance with the provisions of Section C, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Mixed Use Property" means all Assessor's Parcels that have been classified by the City to allow both Residential Property and Non-Residential Property uses on each such Assessor's Parcel. Far an Ass'essor,'s Parcel of Miued Use Property, each Land Use Class thereon is subject to, taxation pursuant to the provisions of Section C regardless of the geographic orientation of such Ladd Use Classes on such Assessor's Parcel. '. "Non-Residential Property" means all Assessor's Parcels of Developed Property, for which a building permit(s) has been issued to.allow the construction of one or more buildings or structures for - anon-residential use, excluding Community Purpose Facility Property. "Open Space" means property within the boundaries of.CFD 07-I in which prior to June lst of the preceding Fiscal Year (a) has been designated with specific boundaries and acreage on an "A' Map or Final Subdivision Map as open space, (b) is classified by the County Assessor as open space, (c) has been irrevocably offered for dedication as open space to the federal government, the State of Ca_lifomia, the County, the City,. or any other public agency or (d) is encumbered by atr easeinent or other restriction required by the City limiting the use of such property to open space. "Outstanding Bonds" means all Bonds, which remain outstanding as defined in The indenture "Property Owner Association Property""means any property within the boundaries of CFD-07-I _ " which is (a) owned by a property owner association or (b) is designated with specifid boundaries and acreage on an `A' Map pr Final Subdivision Map as property owner association property. As used in- • this definition, a property owner association includes any master or sub-association. ' " "Proportionately" means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal for all Assessors' Parcels of the Developed F-24 17-235 Property. For Approved Property, Undeveloped Property and Provisional Undeveloped Property "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor's Parcels of like classification. "Provisional Undeveloped Property" means all Assessor's Parcels of Public Property, Property Owner Association Property, Community Purpose Facility Property, Open Space or other property that would otherwise be classified as Exempt Property pursuant to the provisions of Section E, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum acreage as set forth in Section E.1 for Zone A or Zone B as applicable. "Public Property" means any property within the boundaries of CFD-07-1 which (a) is owned by a public agency, (b) has been irrevocably offered for dedication to a public agency or (c)~is designated with specific boundaries and acreage on an `A' Map or Final Subdivision Map as property which will be owned by a public agency. For purposes of this definition, a public agency includes the federal govermnent, the State of California, the County, the City or any other public agency. '"Residential Property" means all Assessor's Parcels of Developed Property for which a building permif has been issued to allow the construction of one or more buildings or stmctdres for use as residential dwelling units. "Special Tax" means the annual special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount of Special Tax revenue required in any Fiscal Year for to: (i) pay annual debt service on all Outstanding Bonds-due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payment; (iii) pay Administrative Fees and Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD-07-I provided that the inclusion of such amount does ndt cause an increase in the levy of Special Tax on the Undeveloped Praperly; less (vi) a credit for Available Funds. "State" means the State of Califomia. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD 07-I that are not exempt from the Special Tax pursuant to law or Section E below. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means, for each'. Fiscal year, all Taxable Property not classified as Developed Property,Approved Property or Provisional Undeveloped Property. "Zone A" means a specific geographic area as depicted in Exhibits A az~d B attached hereto. "Zone B" means a specific geographic area as depicted in Exhibits A and B attached hereto. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Assessors' Parcels of Taxable Property within CFD-07-I shall be (a) categorized as being located iir either Zone A or Zone B, (b) classified as Developed Property, Approved Property, Undeveloped Property or Provisional Undeveloped Property and (c) subject to the levy of annual F-25 17-236 Special Taxes determined pursuant to Sections C and D below. Developed Property shall be further classified as either Residential Property, Non-Residential Property or Mixed Use Property. The Land Use Class of each Assessor's Parcel of Residential. Property or Mixed Use Property shall be determined based on its Density. C. IVIAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel _ of Residential Property, Non- ' Residential Property or Mixed Use Property shall be the greater o£(1)the Assigned Special Tax - described in Section a, below or (2) the Backup Special Tax computed pursuant to Section b. below. ' a. Assigned Special Tax ~, , The AssignedSpecial Tax for each Land Use Class of Developed Property is shown in Table 1. TABLE 1 Assigned Special Tax for Developed Property Within Zone A and Zone B: - ' Density Land Use Class Description (DU/Acre) Assigned Special'Tax ' I Residential-Property 0 to 8 $1,675 per Dwelling Unit 2 Residential Property >8 to 20 $1,340 per Dwelling Uivt 3 Residential Property >20 $1,005 per Dwelling Unit 4 Non Residential Property N/A $6,000 per Acre The Assigned Special Tax for each Assessor's Parcel of Mixed Use Property shall equal the total of (i) the Assigned Special Tax that wohld be applicable: to such Assessor's Parce] if it was classified only as Residential Property and (ii) the Assigned Special Tax that would be ` - applicable to such Assessor's Parcel if it was classified as Non-Residential Property. . b. ~ Backup Special Tas When a Final Subdivision Map is recorded within Zone A or Zone B, the Backup Special; Tax for . Residential Property and Non-Residential Property, shall be determined as follows: For each Assessor's Parcel of Residential Property or Undeveloped Property amd Approved Property to be classified as Residential Property upon its development within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Dwelling Uuit calculated according to the following formula: Zone A $13,955 x A B = -----------------------` U - Zone B F-26 17-237 $24,218 x A B = ----------------=------ U The terms above have the following meanings: B = Backup Special Tax per Dwelling Unit in each Fiscal Year. A = Acreage classified or to be classified as Residential Properly in such Fina] Subdivision Map. iJ = Number of Dwelling Units in the Final Subdivision Map which aze classified or expected to be classified as Residential Property. For each Assessor's Parcel of Developed Property classified as Non-Residential Property or for each Assessor's Pazcel of Approved or Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $13,955 for Zone A and $24,218 for Zone B by the total Acreage of any-such Assessor's Parcel. For each Assessor's Parcel of Mixed Use Property, the Backup Special Tax shall be determined by multiplying $13,955 for Zone A and $24,218 for Zone B by the total Acreage of any such Assessor's Parcel. Notwithstanding the foregoing, if Assessor's Parcels of Residential Property, Non-Residentia] Property, Mixed Use Property, Approved Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended,Final Subdivision Map, then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place. 2. Approved Property The Maximum Annual Special Tax for each Assessor's Pazcel of Approved Property shall be $13,955 per Acre for Zone A and $24,218 per Acre for Zone B. 3. Undeveloped Property and Provisional Undeveloped Property The Maximum Special Tax for each Assessor's Parcel of Undeveloped Property and Provisional Undeveloped Property shall be $13,955 per Acre for Zone A and $24,218 per Acre for Zone B. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing. with Fiscal Year 2004-2005 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on all Developed Property at a rate up to 100% of the applicable Assigned Special. Tax to satisfy the Special Tax Requirement. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on all Approved Property at up to 100% of the Maximum Annual Special Tax for Approved Property. F-27 17-238 Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed,. the Special Tax shall be levied Proportionately on all Undeveloped Property within Zone A and Zone B, at a rate up to 100% of the Maximum Aiuiual Special .Tax for " Undeveloped Property. h1 determining the Acreage, of an Assessor's Parcel of Undeveloped. Property for purposes of determining. the annual Special Tax to be levied on such Assessor's Parcels of Undeveloped Property, the CFD Administrator shall not include. any Acreage shown on any applicable tentative subdivision map or other land use entitlement approved by the City that designates such Acreage for a use that. would be classified as Open Space, Property Owner Association Property, Community Purpose Facility or Public Property. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three .steps have been completed, the Special Tax to be levied on each Assessor's Parcel of Developed Property. whose Maximum Arumal Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Assessor's Parcel. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the Special Tax shall be levied Proportionately on all Provisional Undeveloped Property at a rate up to I00% of the Maximum Annual. Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Taxable Property. ' E. EXEMPTIONS 1. The CFD Administrator shall classify the following as Exempt Property: (i) Public Property, (ii) Property Owner Association Property, (iii) Community Purpose Facility Property, (iv) Open Space and (v) Assessor's Parcels with public or utility easements making impractical their utilization for other than the. purposes set forth in the easement; provided, however, that no such classification shall reduce the sum of all Taxable Property to less than 147.15 Acres for' Zone A and 59.04 Acres for Zone B. Assessor's Parcels which caimot be classified as Exempt Property because such classification would reduce the Acreage of all " Taxable Property to less than 147.15 Acres for Zone A and 59.04 Acres for Zone B will be classified as Provisional Undeveloped Property and shall be taxed pursuant to the fifrh step of Section D. Exempt status for purposes of this paragraph will be assigned by the -CFD Administrator in the chronological order in which property becomes Exempt Property. In the event the Taxable Property will be reduced below the minimum Acreage noted above for " ~ either Zone A or Zone B as a result of the recordation of a single "A" Map, the CFD - Administrator shall classify property within Zone A or Zone B that is shown on such "A" Map as Exempt Property up to the limits of Exempt Property applicable to such Zone or Zones in the following priority order: 1) Community Purpose Facility Property, 2) Property Owner Association Property, 3) Public Property, 4) Open Space, 5) other public or utility easements making impractical their utilization for no other such purpose. 2. The Maximum Annual .Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which is classified as Provisional Undeveloped Property pursuant to E.1 above shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property to such public agency. Until the Maximum Annual Special Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Provisional Undeveloped Property. F-28 17-239 3. If the use of an Assessor's Parcel of Exempt Property changes so that such Assessor's Parcel is no, longer classified as one of the uses set forth in paragraph 1 that would 'make such Assessor's Parcel eligible to be classified as Exempt Property, such Assessor's Parcel shall cease to be classified as Exempt Property azid shall be deemed to be Taxable Property. F. REVIEW/APPEAL COMMITTEE Airy landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel. If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of CFD-07-I a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. G. 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-07-I, 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 Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes. Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specificallyapproved by the Council. H. PREPAYMENT OF SPECIAL TAX The following definitions apply to this Section H: "CFD Public Facilities" means those public facilities authorized to be financed by CFD-07-I "CFD Public Facilities Costs" means either $35 million, or such lower number as shall be determined either by (a) the CFD Administrator as sufficient to finance the CFD Public Facilities, or (b) the Council concurrently with a covenant that it will not issue any more Bonds to be secured by Special Taxes levied under this Rate and Method of Apportiomnent: "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct the CFD Public Facilities. "Future Facilities Costs" means the CFD Public Facilities Costs minus that (a) portion of the CFD Public Facilities Costs previously funded (i) from the proceeds of all previously issued Bonds, (ii) from interest earnings on the Construction Fund actually earned prior to the date of prepayment and (iii) directly from Special Tax revenues and (b) the amount of the proceeds of all previously issued Bonds then on deposit in the Construction Fund. F-29 17-240 "Outstanding Bonds" means all previously issued Bonds 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 Annual Special' Taxes. 1. Prepayment in Full ' The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied for an. Assessor's Parcel of Developed Property, Undeveloped Property or Approved Property for which a . building permit has been issued, or Provisional Undeveloped Property. The Maximum Annual Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of . ~. the Assessor's Parcel to pay the. Special Tax permanently satisfied as described herein; provided', however that a prepayment may be made 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 Maximum Annual Special Tax obligation shall provide the CFD Administrator with ' written notice of iytent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount ofsuch Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this figure, which can be collected prior to preparing such calculation. The prepayment amount shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future.Facilities Amount . plus Defeasance Amount - `plus Prepayment Fees and Expenses less Reserve Fund Credit - less Capitalized Interest Credit ' equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as ,. _ follows: Step No.: 1. For Developed Property, compute the Maximum Annual Special Tax for the .Assessor's Parcel to be prepaid. For Assessor's Parcels of Approved Property or Undeveloped Property to be prepaid, compute the Maximu~n.Annual. Special Tax for that Assessor's Parcel as though it was already designated as Developed Property,,based upon the building permit issued for that Assessor's Parcel .For. Assessor's Parcels of Provisional Undeveloped Property to be prepaid, compute the Maximum Annual Special Tax for that Assessor's Parcel using the Maximum Annual Special Tax for Provisional Undeveloped Property. 2. Divide the Maximum Annual Special' Tax computed pursuant to step 1 by the sum of the total expected Maximum Annual Special Tax revenues which may be levied within CFD-07-I excluding any Assessors Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid 3. Multiply the quotient computed pursuant to step 2 by.the principal amount of the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond - Redemption Amount)., , F_30 , 17-241 4. Multiply the Bond Redemption Amount computed pursuant to step 3 by the applicable redemption premium(s) on the next possible'Bond°oall date, if any,'on the Outstanding Bonds to be redeemed (the "Redemption Premium"). ' 5. If all the 2004 Bonds authorized to be issued by CFD-07-I~have not been issued, then compute the Future Facilities Costs. 6. Multiply the quotient computed pursuant to step 2 by the amount if any, determined pursuant to step 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor's Parcel (the "Future Facilities Amoura"). 7. Compute the amonnt needed to pay interest on the Bond Redertiption Amount from the first bond interest and/or principal payment date following the current Fiscal Year imtil the earliest redemption date for the Outstanding Bonds. 8. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year, which have not. yet been paid. 10. Determine the fees and expenses of CFD-07-I, including but not limited to, the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds from the proceeds of such prepayment, and the cost of recording any notices to evidence the prepayment and the redemption (the "Prepayment Fee and Expenses"). 11. Compute the amount the CFD Administrator -reasonably expects to derive from the reinvestment of the prepayment amount, less the Prepayment Fees and Expenses, pursuant to step 10, from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 12. Add the amounts computed pursuant to steps 7 and. 9 and subtract the amount computed pursuant to step 11 (the "Defeasance Amount"). 13. The reserve fund credit (the "Reserve Fund Credif") 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 Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtradting'the new reserve requirement (as defined in the Indenture) in effect after the redemption of Outstanding 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. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following the current Fiscal Year, a capitalized interest credit • shall be calculated by multiplying the quotient computed pursuant to step 2 by the expected balance in the capitalized interest fund after such first interest payment (the "Capitalized Interest CrediP'). 15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to steps 3, 4, 6, 10, and 12, less the amounts computed pursuant to steps 13 and 14 '(the "PrepaymentAmount"). ' 16. From the Prepayment Amount, the aznounts computed pursuant to steps 3, 4, 12, 13 vid 14 shall be deposited into the appropriate fund as established under the Indenture and be used to F-31 17=242 .retire Outstanding Bonds or make debt service payments. The amount computed, pursuant to step 10 shall be retained by CFD-07-I. The amount computed pursuant to step 6 shall be deposited in the Construction Fund. The prepayment amount may be sufficientto redeem. other than a $5,000 increment of Bonds. In such cases, tha 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 Yo make debt service payments. ' As a-result of the payment of the current Fiscal Year's Special Tax lery as determined under step 9 above, the CFD Administrator shall remove the current Fiscal Year's Special Tax 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 Special Taxes and the release of the Special Tax lien oil such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay The Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within both .prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Annual Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Paccel of Approved Property or Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as presented in Sectidn H.1; except that a partial prepayment shall be calculated according to the following formula: PP=(PESF)+A These terms have the following meaning: PP =the partial prepayment PE =the Prepayment Amount calculated according to Section H.1, minus Prepayment Fees and Expenses determined pursuant to step 10. F = the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax. A= the Prepayment Fees and Expenses determined pursuant to step 10. The owner of an Assessor's Parcel who desires to partially prepay the Maximuin Annual Special Tax shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Annual Special' Taz, (ii) the percentage by which the Maximum Annual Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Annual Special Tax 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 City shall (i) distribute the funds remitted to it according to step 16 of Section H.l; and (ii) indicate in the records of CPD-07-I that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the F-32 17-243 Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authotized to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall.be levied commencing in Fiscal Year 2004-2005 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2043-2044 Fiscal Year. F-33 17-244 RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 08-I (Otay Ranch Village Six) A Special Tax as hereinafter defined shall be levied on each Assessor's Parcel of Taxable Property within the City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) collected each Fiscal Year cotmmencing in Fiscal Year 2003-2004 in an amount determined by the City Council through the application of the appropriate Special Tax for "Developed Property", "Undeveloped Property"; and "Provisional Undeveloped Property" as described below. All of the Taxable Property in CFD-08-I, 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 meaning: " `A" Map" shall mean a master final subdivision or parcel map, filed in accordance' with the Subdivision Map Act and the Chula Vista Municipal Code, which subdivides the land or a.portion thereof shown on a tentative map into "super block" lots correspouding to units or phasing of a combination of units as shown on such tentative map and which may further show open space lot dedications, backbone street dedications and utility easements required to serve such "super block" lots. "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 oh an Assessor's Parcel Map, the laid area shown on the applicable Final Subdivision Map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the land area. If the preceding maps for a laud area are not available, the Acreage of such land area shall be determined by the City Engineer. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Fees and Expenses" means the actual or reasonably estimated.costs.directly related to.the administration of CFD-08-I including, but not limited to, the following: 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 County, 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-08-I, or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD-08-I, or any designee thereof of providing continuing disclosure; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries . regarding the Special Taxes; the costs of the City, CFD-08-I, or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD-08-I, for any other administrative purposes of CFD-08-I, including, but not limited to attorney's fees and other costs related to commencing and pursuing to completion any foreclosure on an Assessor's Parcel with 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. F-34 17-245 "Assessor's Parcel Map" means an official map of the County Assessor designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property as determined in accordance with Section C.l.a. "Available Funds" means (a) the balance in the reserve fund established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, (b) delinquent Special Tax payments not required to fund the Special Tax Requirement for any preceding Fiscal Year,(c) that portion of Special Tax prepayments allocated to the payment of interest oh Bonds, 'and (d) other sources of funds available as a credit to the Special Tax Requirement as specifiul in such Indenture. "Backup Special Tax" means the Special Tax amount set forth in Section C.Lb. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued or incurred by CFD-08-I under the Act. "Bond Year" means aone-year period beginning on September 2nd in each year and ending on September 1st in the following year, unless defined otherwise in the applicable Indenture. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. "CFD-08-I" means City of Chula Vista Community Facilities District No. 08-I. "City" means the City of Chula Vista. "Community. Purpose Facility Property" means all Assessor's Parcels which are (a) classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2002- 2883 as amended on November 5, 2002 or (b) designated with specific boundaries and acreage on an `A' Map or Final Subdivision Map as a community purpose facility. "Council" means the City Council of the City, acting as the legislative body of CFD-08-I. "County" means the County of San Diego. "Developed Property" means, for each Fiscal Year, all Taxable Property for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year in which the Special Tax is being levied. "Exempt Property" means property not subject to the Special Tax due to its classification as either Public Property, Property Owner Association Property, Community Purpose Facility Property, public or utility easements in accordance with section E.I. "Final Subdivision Map" means a subdivision of property, created by recordation of a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Govenunent Code Section 66410 et seq:) or recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which residential building permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July 1 and ending on the following June 30 F-35 17-246 "Indenture',' means the indenture, fiscal agent agreement, trust 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-Class" means any of the classes listed in Table, 1 of Section,C.l.a. "Lot(s)" means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. "Maximum Annual Special .Tax" means the maximum a~mual Special Tax, determined in _ accordance with the provisions of Section C, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property., "Non-Residential Property" means all Assessor''s Parcels of Developed Property, for which a building permit(s) was issued for anon-residential use, excluding Coirununity Purpose Facility Property. - "Open Space"-means property within the boundaries of CFD 08-I which (a) has been designated with specifc boundaries and acreage on an `A' Map or Final Subdivision Map_as open space, (b) is classified by the County Assessor as open space (c) has been irrevocably offered .for dedication as open space, prior to June 1st of the preceding Fiscal Year, to the federal government, the State of California, the County, the City, any other public agency or (d) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space. ".Outstanding Bonds" mean all Bonds, which remain outstanding as defined in the Indenture "Property Owner Association Property" means any property within the boundaries of CFD-08-1" which is (a) owned by a property owner association or (b) is designated with specific boundaries and acreage on an `A' Map or Final Subdivision Map as property owner association property. As used in , this definition, a Property Owner Association Property includes any master orsub-association. "Proportionately" iueans for Developed Property that the ratio of the actual Special Tax levy to the Assigned Special Tax or Backup Special Tax is equal for all Assessors' Parcels of Developed Property within CFD-08-I. For Undeveloped Property or Provisional Undeveloped Property "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property and equal for all Assessor's Parcels of Provisional Undeveloped Property within CFD-08-I. "Provisional-Undeveloped Property".means all Assessor's Parcels of Public Property, Property. Owner Association Property, Community Purpose Facility Properry,•Open Space or other property that would otherwise be classified as Exempt Property pursuant to the provisions of Section E, but . cannot be classified as Exempt Property becadse to do so would reduce the Acreage of all Taxable , Property below the required minimum acreage as set forth in Section E.1 for Zone A or Zone B as applicable. "Public Property" tneans any property within the boundaries of CFD-08-1 that which (a) is owned . _ by a public agency, (b) has been irrevocably offered for dedication, prior to June 1st of the.preceding Fiscal Year, to a public agency or (c) is designated with specific boundaries and acreage on an `A' Map or Final Subdivision Map as property which will be owned by a public agency. For purposes of this deSnition, a public agency includes the federal government, the'State of California, the County, the City of any other public agency. F-36 17-247 "Residential Property" means all Assessor's Parcels of Developed Property for which. a building permit has been issued for purposes of constructing one of more residential dwelling units. "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 shall be made by the CFD Administrator by reference to appropriate records kept by the City's Building Department. Residential Floor Area for a residential structure will be based on the initial building permit(s) issued for such structure. °`Special Tax" means the amiual special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount of Special Tax revenue required in any Fiscal Year for CFD-08-I to: (i) pay annual debt service on all Outstanding Bonds due in the Bond Year beginning in such Fiscal -Year; (ii) pay other periodic costs on Outstanding Bonds; including but not limited to, credit enhancement and rebate payments; (iii) pay Administrative Fees and Expenses; (iv) pay any amounts required to establish or replenish airy reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD-08-I provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on the Undeveloped Property; (vi) less a credit for Avai]able Funds. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundariesbf CFD-OS-I that are not exempt from the Special Tax pursuant to law or Section E below. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means, for each Fiscal year, all Taxable Property not classified as Developed Property. "Zone A" means a specific geographic azea as depicted in Exhibits A and B attached hereto. "Zone B" means a specific geographic area as depicted in Exhibits A and B attached hereto. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year; all Assessor's Parcels of Taxable Property within CFD-08-I shall be (a) categorized as being located in either Zone A or Zone B, (b) classified as Developed Property, Undeveloped Property or Provisional Undeveloped Property and (c) subject to the levy of annual Special Taxes determined .pursuant to Sections C and D. Furthermore, all Developed Property shall then be classified as Residential Property or Non-Residential Property. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property -The Maximum Annual Special Tax for each Assessor's Pazcel of Residential Property or 'Non-Residential Property shall be the greater of (1) the Assigned Special Tax described in Table 1 which follows or (2) the Backup Special Tax computed pursuant to lb. which follows. F-37 17-248 a. Assigned Special Tax The Assigned Special Tax for each Assessor's Parcel of Developed Properly is shown in Table 1. TABLE 1 Assigned Special "fax for Developed Property within Zone A and Zone B: Land Use Class Description Assigned Special Tax 1 Residential Property $800 per unit plus $.35 per square foot of Residential Floor Area 2 Non-Residential $6,000 per Acre Pro erty b. Backup Special Tax When a Final Subdivision Map is recorded within Zone•A or Zane B the Backup Special Tax for Residential Property,. Non;Residential Property and Undeveloped Property shall be- determinedas follows: ' For each Assessor's Parcel of Residential Property or Undeveloped Property to be classified as Residential Property upon its development within the Final Subdivision Map area,. the Backup Special Tax'shall be the rate per Lot calculated according to the following formula: " Zone A $16,858xA - . B = ------------------------ L Zone B ' $26,445 x A S = ------------~----------- L The terms above have the following mea~sings B = Backup Special Tax per Lot in each Fiscal Year. ' A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map. L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Non-Residential Property or Undeveloped Property to be. ` classified as Non-Residential Property upon the development thereof within the Final" Subdivision Map area, the Backup Special Tax shall be determined by multiplying $16,858 for Zone A and $26,445 for Zone B by the total Acreage of allNou-Residential Property and - F-38 17-249 Undeveloped Property to be classified as Non-Residential Property upon the development thereof within the Final Subdivision Map azea. Notwithstanding the foregoing if an Assessor's Parcel of Residential Property, Non- Residential Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Subdivision Map, then the Backup Special Tax applicable to such Assessor's Parcel shall be recalculated to~equal the amount of Backup Special Tax that would have been generated if such change did not take place. 2. Undeveloped Property and Provisional Undeveloped Property The Maximum Annual Special Tax for each Assessor's Parcel' of Undeveloped Properly or Provisional Undeveloped Property shall be $16,858 per Acre for Zone A and $26,445 per Acre for Zone B. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2003-04 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows First: The Special Tax shall be levied Proportionately on all Developed Property within Zone A and Zone B at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on all Undeveloped Property within Zone A and Zone B, at a rate up to 100% of the Maximum Am~ual Special Tax for Undeveloped Property. In determining the Acreage of an Assessor's Parcel of Undeveloped Property for purposes of determining the annual Special Tax to be levied on such Assessor's Parcel, the CFD Administrator shall not include any Acreage shown on any applicable tentative subdivision map or other land use entitlement approved by the City that designates such Acreage for a use that would be classified as Open Space, Property Owner Association Property, Community Purpose Facility or Public Property. Third: If additional monies aze needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor's Parcel of Developed Property whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Developed Property.. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on all Provisional Undeveloped Property at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel. of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Taxable Property. F-39 17-250 E. EXEMPTIONS 1. The CFD Administrator shall classify the following as Exempt Property: (i) Pub]ic Property; (ii) Property Owner Association Property, (iii} Community Purpose Facility Property, (iv) Open Space and (v) Assessor's Parcels with public or utility easements making. impractical their utilization for other than the purposes set forth in the easement; provided, however, that no such classification shall reduce the sum of all Taxable Property to less than 40.98 Acres in Zone A and 42.43 Acres in Zone B. Property which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Properly to less than 40.98 Acres in Zone A and 42.43 Acres in Zone B will be classified as Provisional Undeveloped Property and sliall be taxed pursuant to the fourth step of Section D. Tax exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes Exempt Property. 2. .The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication Yo a public agency but which 'is classified as Provisional Undeveloped Property pursuant to paragraph 1 of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property to such public agency. Until the Maximum A~mual Special Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Provisional Undeveloped Property. 3. If the use of an Assessor's Parcel of Exempt Property changes so that such Assessor's Parcel is no longer classified as one of the uses set forth in paragraph 1 that would make such Assessor's Parcel eligible to be classified as Exempt Property, such Assessor's Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property. F. REVIEW/APPEAL COMMITTEE Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel.'If following such consultation and action (if any by the CFD Administrator), the landowner or resident believes such error still exists, such person may file a written notice with the Ciry Clerk- of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon thexeceipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as. part of the. proceedings and administration of CFD-08-I a special three-member RevievJ/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any. such appeal: The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to fhe annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. G. 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-08-I, 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 Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes. F-40 17-251 Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "CFD Public Facilities" means those public facilities authorized to be financed by CFD-08-I. "CFD Public Facilities Costs" means either $20 million; or such lower number as shall be determined either by (a) the CFD Administrator as sufficient to finance the CFD Publio Facilities, or (b) the Council concurrently with a covenant that it will not issue any more Bonds to lie secured by Special Taxes levied under this Amended Rate and Method of Apportionment. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct the CFD Public Facilities. "Future Facilities Costs" means the CFD Public Facilities Costs minus that (a) portion of the CFD Public Facilities Costs previously funded (i) from the proceeds of all previously issued Bonds, (ii) from interest earnings on the Construction Fund actually earned prior to the date of prepayment and (iii) directly from Special Tax revenues and (b) the amount of the proceeds of all previously issued Bonds then on deposit inthe Construction Fund. "Outstanding Bonds" means all previously issued Bonds 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 Annual Special Taxes. 1. Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and' permanently satisfied for an Assessor's Parcel of Developed Property, Undeveloped Property for which a building permit has been issued, or Provisional Undeveloped Property. The Maximum Annual Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation o£ such Assessor's Parcel to pay the Special Tax permanently satisfied as described herein; provided, however that a ptepayment may be made 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 Maximum Annual Special Tax 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 of such Assessor's Parcel: The CFD Administrator may charge a reasonable fee for providing this figure, which can be collected prior to preparing. such calculation. The prepayment amount shall be calculated as summarized below (capitalized terms as defined be]ow): ' Bond Redemption Amount plus plus plus plus less less Redemption Premium Future Facilities Amount Defeasance Amount Prepayment Fees and Expenses Reserve Fund Credit Capitalized Interest Credit Total: equals Prepayment Amount F-41 17-252 As of the -proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as fo[tows: Step No.: 1. For Developed Property, compute the. Maximum Annual Special lax for the Assessor's Parcel to be prepaid. For Undeveloped Property for which a building`permit has been issued to be, prepaid, compute the Maximum Awtual Special Tax for that Assessor's ParceP as though it was already designated-as Developed; Property, based upon the building permit, issued for that Assessor's Parcel For Provisional Undeveloped Property to be prepaid, compute the Maximum Annual Special Tax for such Assessor's Parcel using. the Maximum' Annual Special Tax for Undeveloped Property. 2. Divide the Maximum Annual Special Taxcomputed pursuant to step 1 by the sum of the total expected Maximum Annual Special Tax revenues which may be levied within CFD-08-I excludurg any Assessor's Parcels for which the Maximum Annual Special Tax obligation has been previously prepaid. - - 3. ' Multiply the quotient computed pursuant to step 2 by the principal amount of the Outstanding, Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption AmounP'). ~ , 4. Multiply the Bond Redemption Amount computed pursuant to step 3 , by the applicable redemption premiwn on the next possible Bond call date, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium"): 5. If all the Bonds authorized to be issued for CFD-08-I have not been issued, compute the Future Facilities Costs. , ~ - 6. Multiply the quotient computed pursuant to step 2 by the amount if any, determined pursuant to step 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor's Parcel (the "Future Facilities Amount"). 7. 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 Outstanding Bonds. 8. Confirm that ho Special Tax delinquencies apply. to such Assessor's Parcel. 9.~ Determine the Special Taxes levied'on the Assessor's Parcel in the current Fiscal Year, which have not yet been paid. 10. Determine the fees and expenses of CFD-08-I, including but not limited to, the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds from the proceeds of such prepayment, and the cost-of recording any notices to evidence the prepayment and the redemption (the "Prepayment Fees and Expenses") 11. Compute the amount the CFD Administrator reasonably, expects to derive from the reinvestment of the prepayment amount less the Prepayment Fees and Expenses, as determined pursuant to step 10, from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. F-42 ' . 17-253 12. Add the amounts computed pursuant to steps 7 and 9 ahd"subtract the amount computed pursuant to step I 1 (the "Defeasance Amount"). 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,0utstanding 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 Outstanding 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. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to step 2 by the expected balance in the capitalized interest fund after such' first interest payment (the "Capitalized Interest Credit"). 15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to steps 3, 4, 6, 10, and 12, less the amounts computed pursuant to steps 13 and 14 (the "PrepaymentAmount"). ' 16. Fxom the Prepayment Amount, the amounts computed pursuant to steps 3, 4, 12, 13, and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to ' step 10 shall be retained by CFD-08-I. The amount computed pursuant to step 6 shall be deposited in t$e Construction Fund. The Prepayment Amount may be sufficient to redeem other than a $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 to make debt service payments. As a result of the payment of the current Fiscal Yeaz's Special Tax levy as determined under step 9 above, the CFD Administrator shall remove the current Fiscal Year's Speeial Tax 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 Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax .prepayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within CFD-08-I, both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part ' The Maximum Annual Special Tax on an Assessor's Pazcel 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=(PExF)+A These terms have the following meaning: F-43 17-254 PP =the partial prepayment PE =the Prepayment Amount calculated according to Section H.1, minus Prepayment Fees and Expenses determined pursuant to step 10. F =the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax. A= the Prepayment Fees and Expenses determined pursuant to step 20. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Annual Special Tax .shall notify the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Annual Special Tax, (ii)'the percentage by which the Maximum Annual Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Anmtal Special Tax 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 City shall (i) distribute the funds remitted to, it according to step 16 of Section H.1, and (ii) indicate in the records of CFD-08-I that there has been_a partial prepayment of the Maxhnum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00- F) of the remaining Maximum Amoral Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2039- 2040 Fiscal Year. F-44 17-255 RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILTTIES DISTRICT N0.2001-2 (McMillin Otay Ranch Village Six) A Special Tax as hereinafter defined shall be levied on each Assessor's Parcel of Taxable Property within the City of Chula Vista Community Facilities District No. 2001-2 ("CFD No. 2001-2") and collected each Fiscal Year commencing in Fiscal Year 2002-2003 in an amount determined by the City Council through the application of the appropriate Special Tax for `developed Properly," and' "Undeveloped Property as described below. All of the Taxable Property in CFD No. 2001-2, 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 meaning "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 ]and area shown on the applicable final map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the pazcel. If the preceding maps for a land azea are not available, the Acreage of such land area shall be determined by the City Engineer. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2001-2 including, buY not limited to, the following: the casts 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 County, 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. 2001-2 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-2 or any designee thereof of providing continuing disclosure; 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. 2001-2 or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2001-2 for any other administrative purposes of CFD No. 2001- 2, including, but not limited to 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 "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Category of Developed Property as determined in accordance with the provision of Section C.l.a. below. "Available Eunds" means the balance in the reserve fund established pursuant to the terms of the Indenture in excess of the reserve requirement as defined in such Indenture, delinquent Special F-45 17-256 Tax payments not required to fund the Special Tax Requirement For any preceding Fiscal Year, the Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. "Backup Special Tax" means the Special Tax determined in accordance with the provisions of Section C.l.b below. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD No. 2001-2 under the Act. "Bond Year" means aone-year period beginning on September 2nd in each year and ending on September 1st in the following year. Unless defined differently in the applicable Indenture. "CFD Administrator" means an official of the City, or designee thereof, responsible for determining the Special Tas Requirement and providing for the levy and collection of the Special Taxes. "CFD No.2001-2" means City of Chula Vista, Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six). "City" means the City of Chula Vista. "Community Purpose Facility Property" means all Assessor's Parcels which are classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452. "Council" means the City Council of the City, acting as the legislative body of CFD No. 2001-2. "County" means the County of San Diego. "Developed Property" means, for each Fiscal Year; all Taxable Property for which a building permit for new construction was issued prior to March I of the prior Fiscal Year. "Final Subdivision Map" means a subdivision of property created by recordation of a final map, parcel map, or lot line adjustment, approved by the City 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 residential building permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July 1 and ending on the following June 30: "Indenture" means the indenture, fiscal agent agreement, trust 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 Class" means any of the classes listed in Tables 1 and 2 of Section C. "Lot(s)" means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. "Master Developer" means the owner of the predominant amount of Undeveloped Property in CFD No. 2001-2. F-46 17-257 "Maximum Annual Special Tax" means the-maximum annual Special Tax, determined in accordance with the provisions of Section C below, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non-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 non-residential structures, excluding Community Purpose Facility Property. "Occupied Residential Property" means all Assessors' Pazcels of Residential Property For which title is owned by an end user (homeowner). "Outstanding Bonds" means all Bonds which remain outstanding as defined in the Indenture. "Property Owuer Association Property" means any property within the boundaries of CFD No. 2001-2 owned by or dedicated to a property owner association, including any master or sub- association. - "Proportionately" means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Annual Special Tax or Backup Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 2001-2. For Undeveloped Property "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property within CFD No. 2001-2. "Public Property" means any property within the boundaries of CFD No. 2001-2 that is owned by or dedicated to the federal government, the State of Califomia, the County, the City or any other public agency. "Residential Property" means all Assessor's Pazcels of Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "Residential Floor Area" means all of the square footage of living azea 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 shall be made by the CFD Administrator by reference to appropriate records kept by the City's Building Department. Residential Floor Area for a residential structure will be based on the building permit(s) issued for such structure prior to it being classified as Occupied Residential Property, and shall not change as a result of additions or modifications made to such structure after such classification as Occupied Residential Property. "Special Tax" means the annual special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2001-2 to: (i) pay debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year, (ii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iii) pay Adrninistrative Expenses; (iv) pay any amounts required to establish or replenish any reserve fwrds for all Outstanding Bonds in accordance with the Indenture; (v) pay directly for acquisition and/or construction of public improvements which aze authorized to be financed by CFD No. 2001-2 provided that inclusion of such amount does not cause an increase in the levy of Special Taxes on Undeveloped Property; and (vi) less a credit for Available Funds. "State" means the State of California F-47 17-258 - "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2001-2 which are not exempt from the Special Tax pursuant to law or Section E below. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture... "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Assessor Parcels within CFD No. 2001-2 shall be classified as Taxable Property or Exempt Property. All Taxable Properly shall then be, classified as Developed Property or Undeveloped Property, and shall be-subject to the levy of annual Special Taxes determined pursuant - to Sections C and D below. Furthermore, all Developed Property shall then be classified as Residential Property of Non-Residential Property. C. MAXIMUM ANNUAL SPECIAL TAX RATE _ 1. ,Developed Property - The Maximum Annual Special Tax for each Assessor's Parce] of Residential' Property or Non-Residential Property shall be the greater of (1) the Assigned Special Tax ' ,.described in Table l below or (2) the amount derived by application of the Backup Special,. . Tax. ' a. Assigned Special Tax -The Assigned Special Tax for each Assessor's Parcel classified as Developed . Property shall be the amount shown in Table 1 below: TABLE I Assigned Special Tax for Developed Property Land Use Class Description Maximum Annua[Specia[~Tax 1 Residential Property $4 40 per unit plus $34 per square foot . of Residential Floor Area 2 - Non-Residential ~ , .$11,365 per Acre Property b. Backup Special Tax When a Final Subdivision Map is recorded within CFD No. 2001-2, the Backup Special Tax for Assessor's Parcels of Developed Property classified as Residential Property or Non-Residential Property shall be determined as follows: For each Assessor's Parcel of Developed Property classified as Residential Property or for each Assessor's Pazcel of Undeveloped Property. to be classified as Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: $11,365 x A F-48 77-259 B_ L The terms above have the following meanings B = Backup Special Tax per Lot in each Fiscal Year. A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map. L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Developed Property classified as Non-Residential ' Property or for each Assessor's Parcel of Undeveloped Property to be classified as Non- ' Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $11,365 by the total Acreage of both the Non-Residential Property and Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area. Notwithstanding the foregoing, if Assessor's Parcels of Residential Property, Non- Residential Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Subdivision Map (by art applicable Seal map, parcel map, condominium plan, record of survey, or other recorded document creating the parcels) then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change or tnodification did not take place. 2. Undeveloped Property The Maximum Annual Special Tax for each Assessor's Parcel classified, as Undeveloped Property shall be the amount shown in Table 2 below: TABLEZ Maximum Annual Special Tax for Undeveloped Pro e Land Use Class .Description MaximurnAanual Special Tax 3 Undevelo ed Pro e $11,365 erAcre D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003 and for each. following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at a rate up to 100% of the applicable Assigned SpeciaP Tax to satisfy the Special Tax Requirement. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax sliall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, excluding any Assessor's Parcels classified as Undeveloped Property pursuant to paragraphs 2 and 3 in Section E, at up to 100% of the Maximum Annual Special Tax for Undeveloped Property. F-49 17-260 Third: If additional monies are needed to satisfy the Special Tax Requirement afer the first two steps have been completed, the Special Tax to be levied on each Assessor's Parcel whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax shall be increased Proportionately from the Assigned Special Tax up to the Maximwn Annual Special Tax for each such Assessor's Parcel. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor's Parcel classified as Undeveloped Property pursuant to paragraphs 2 and 3 in Section E at up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Occupied Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Taxable Property. E. EXED'IPTIONS The CFD Administrator shall classify up to 53 Acres within Assessor Parcel number 643- 052-05 and any future subdivisions therein as property exempt from the Special Taxes provided that all or a portion of the property is planned for or is being developed or used for Community Purpose Facility Property and school land uses approved. by the City pursuant to the Tentative Map approved for McMillin Otay Ranch, Village Six on February 26, 2002. [t is possible that land use entitlements (such as parcel map, final map or any other such division of ]and) may be approved prior to January 1st of any Fiscal Year for all or any portion of such area(s) which would authorize the development or use of such area(s) for purposes not exempt from the levy of the.Special Tax pursuant to this Section E. The adjusted area(s) shall then be classified as Taxable Property in dhe next Fiscal Year as Developed Property or Undeveloped property in Step 2 of Section D, as applicable. 2. The CFD Administrator shall also classify the following Assessor Parcel(s) as exempt property: (i) Public Property, (ii) Property Owner Association Property, (iii) all Assessor's Parcels defined as Community Purpose Facility Property which are in addition to the property described in paragraph 1 above, and (iv) Assessor's Parcels with public or utility easemerits making impractical their utilization for other than the purposes set forth in the easement; provided, however, that no such classification shall reduce the sum of all Taxable Property to less than 75.48 Acres. Notwithstanding the preceding sentence, the CFD Administrator shall not classify an Assessor's Parcel described in .this paragraph as exempt property if such classification would reduce the sum of all Taxable Property to less than 75.48 Acres. Assessor's Parcels which cannot be classited as exempt property because such classification would reduce the Acreage of all Taxable Property to less than 7.48 Acres will be~classified as Undeveloped Property and shall be taxed as such. Tax-exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes exempt property. 3. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which cannot be classified as exempt property as described in paragraph 2 of Section E shall be prepaid in full by the seller pursuant to Section H.l, prior to the transfer/dedication of such property to such public agency. Until the Maximum Amoral Tax obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Special Tax as Undeveloped Property. - F-50 17-261 F. REVIEW/APPEAL COMMITTEE Any landowner or resident who pays the Special Tax and feels that the amount of the Special Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred, the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Pazcel. If following such consultation and action, if any by the CFD Administrator, the landowner or resident believes such error still exits, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of CFD No. 2001-2, a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. G. 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. 2001-2 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 Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes. Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "Outstanding Bonds" means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date following the current Bond Year, excluding Bonds to be redeemed at a'later date with the proceeds of prior prepayments of Maximum Annual Special Taxes. 1. Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied by an Assessor's Pazcel of Developed Property, Undeveloped Property for which a building permit has been issued, or Public Property. The Maximum Annual Special Tax obligation applicable to such Assessor's Parcel may be fully prepaid and the obligation of the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein; provided that a prepayment may be made 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 Maximum Annual Special Tax obligation shall provide the CFD Administratorwith written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor's Parcel. The CFD Administrator may charge a reasonable fee for providing this figure. F-51 17-262. -'.The Prepayment Amount {defined- below) shall be calculated as summarized below (capitalized terms as defined below): Bondl ..plus plus plus less less Total: equals tedemption Amount Redemption Premium Defeasance Amount. Administrative Fees and Expenses Reserve Fund Credit Capitalized Interest Credit Prepayment Amount As df'the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Paragraph No.: 1, For Assessor's Parcels of Developed Property, compute the Maximum Annual Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undeveloped Property for which a building permit has been issued to be prepaid, compute the Maximum Annual Special Tax for chat 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. For Assessor's Parcels of Public Property to be prepaid, compute [he Maximum Annual Special Tax for that Assessor's Parcel using the Maximum Annual Special Tax for Undeveloped Property. 2. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Maximum Annual Special Tax revenue excluding any Assessor's Parcels which have been prepaid. 3. Multiply the quotient computed pursuant to paragraph 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). 4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the, applicable redemption premium on the next possible Bond call date, if any, on the Outstanding Bonds fo be redeemed (the "Redemption Premium"). , 5. 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 Outstanding Bonds. 6. Confirm Chat no Special Tax delinquencies apply to such Assessor's Parcel. 7. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yefbeen paid. ~ ~ . 8. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the Prepayment Amount (less the Administrative Fees and Expenses) from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 9.. Add the amounts computed pursuant to paragraphs 5 and 7 and subtract the amount computed pursuant to paragraph 8 (the "Defeasance Amount"). ' 10. Verify the administrative fees and expenses of CFD No. 2001-2, including the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the F-52 17-.263 costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 11. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected seduction in the reserve requirement (as defined iri the Indenture), 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 requirement (as defined in the Indenture) in effect after the redemption of Outstanding 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. 12. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest and/or principal payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to paragraph 2 by the expected balance in the capitalized interest fund after such first interest and/or principal payment (the "Capitalized Interest Credit"). 13. The Maximum Annual Special Tax prepayment is equal to the sum of the_amounts computed pursuant to paragraphs 3, '4, 9, and 10, less the amounts computed pursuant to paragraphs 11 and 12 (the "PrepaymentArviount"). 14. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 9, 14; and 12 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 10 shall be retained by CFD No. ?001-2. The Prepayment Amount may be sufficient to redeem other than a $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 to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 7 above, the CFD Administrator shall remove the current Fiscal Year's Special Tax 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 Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within CFD No. 2001-2 both prior to and after the proposed prepayment is at least 1.1 times the maximum'annual debt service on all Outstanding Bonds. Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. 2. Prepayment in Part The Maximum Annual Special Tax 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: F-~3 17-264 PP = (PE x F) + A These terms have the following meaning PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H.1, minus Administrative Expenses and Fees pursuant to Step 10. F = .the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax. A = the Administrative Expenses and Fees pursuant to Step 10. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Annual Special Tax shall notify the CFD Adtninistrator of (i) such owner's intent to partially prepay the Maximum Amtual Special Tax, (ii) the percentage by which the Maximum Annua] Special Tax shall be prepaid, and (iii) company or agency that will be acting as the escrow agent, if applicable. The CFD'Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Maximum Annual Special Tax 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 City shall (i) distribute the funds remitted to it according to Paragraph 14 of Section H.I, and (ii) indicate in [he records of CFD No. 2001-2 that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2003-2004 to the extent necessary to fully satisfy the Special Tax Requirement and shall be levied for a period no longer than the 2037-2038 Fiscal Year. F-54 17-265 ATTACHMENT S CONTINUING DISCLOSURE AGREEMENT „-266 CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT ("Disclosure Agreement'), dated as of July 1, 2013, is executed and delivered by the CHiJLA VISTA MUNICIPAL FINANCING AUTHORITY (the "Issuer"), and NBS, as Dissemination Agent (the "Dissemination Agent") in com~ection with the issuance of $ aggregate principal unount of the Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 20li (the "Bonds"). The Bonds are being issued pursuant to an Indenture of Trust (the "Indenture") dated as of July 1, 2013 between the Issuer and U.S. Bank National Association (the "Trustee"). The proceeds of the Bonds will be used to acquire the Special Tax Refunding Bonds (as defined below) and refund certain outstanding bonds of the Districts (as defined below), to fund the reserve funds securing the Bonds and to pay costs of issuance of the Bonds. The Issuer and the Dissemination Agent covenant and agree as follows: Section 1. Pumose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Underwriters in complying with Rule 1 Sc2-12(b)(5) of the Securities and Exchange Commission. Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Section 3 and 4 of this Disclosure Agreement. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds far federal income purposes. City" shall mean the City of Chula Vista, Califontia "Disclosure Representative' shall mean the Executive Director.of the Issuer, or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time. "Dissemination Agent" shall mean NBS, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee and the Issuer a written acceptance of such designation. "Districts" shall mean Community Facilities District No. 06-I of the City of Chula Vista, Community Facilifies District No. 07-I of the City of Chula Vista, Community Facilities District No. 08-I of the City of Chula Vista, and Community Facilities District No. 2001-2 of the City of Chula Vista. "EMMA" shall mean the Electronic Municipal Market Access system of the MSRB. `'Listed Events'' shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "Special Tax Refunding Bonds" shall mean, collectively, City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013; City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013; City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series 2013; City of Chula Vista Community Facilities District No. 08-1 (Otay Ranch Village Six) Special Tax Refunding Bonds, 17-267 Series 2013; and City of Chula Vista Community Facilities District No. 2001,2 (McMillin - Otay Ranch - Village Six) Special Tax Refunding Bonds, Series 2013. "MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. "Official Statement" means the Official Statement for the Bonds dated , 20 L3. "Participating Underwriters" shall mean E. J. De La Rosa & Co., Inc. and Stifel, Nicolaus & Company, Incorporated. "Owners" shall mean the registered owners of the Bonds as set forth in the registration books maintained by the Trustee. "Repository" shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the EMMA website of the MSRB, currently located at http://emma.msrb.org. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provision of Annual Reports. (a) The Issuer shall, or upon written direction shall cause the Dissemination Agent to, not later than Marclt 1 after the end of the Issuer's Fiscal Year (currently June 30) commencing with the report due by Marclt 1, 2014, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer and the City, if any exist, may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date: If the fiscal year of the Issuer or the City changes, the Issuer shall give notice of such change in the same manner as for a Listed Event under Section 5(d). The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report. (b) Not later than (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Issuer shall provide the Annual Report to the Dissemination Agent. [f by fifteen (15) Business Days prior to such date, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to inquire if the Issuer is in compliance with subsection (a). (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repository by the date required in subsection (a), the Dissemination Agent shall send a notice to the Repository, in the form required by the Repository. (d) The Dissemination Agent shall: (i) determine each year prior to date for providing the Annual Report the name and address of the Repository if other than the MSRB; and 17-268 (ii) file a report with the Issuer certifying that the Annual Report has been sent to the Repository and the date it was provided. (e) Notwithstanding any other provision of this Disclosure Agreement, all filings shall be made in accordance with the MSRB's EMMA system or in another matmer approved under the Rule. Section 4. Content of Annual Reports. The Issuer's Annual Report shall contain or include by reference the following: (a) Financial Statements. The audited financial statements of the Issuer and the City for the prior fiscal year, if any have been prepared atmd which, if prepared, shall be prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Govemmental Accounting Standards Board; provided, however, that the [ssuer and the City may, from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the Issuer or the City shall modify the basis upon which its financial statements are prepared, the Issuer or the City, as applicable, shall provide the information referenced in Section 8 below. If the Issuer or the City are preparing audited financial statements and such audited-financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the wine manner as the Annual Report when they become available. (b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following: (i) the principal amount of Bonds outstanding as of the September 2 preceding the filing of the Annual Report; (ii) the balance in each fund under the Indenture and the Series A Reserve Requirement and the Series B Reserve Requirement as of the September 2 preceding the filing of the Annual Report; (iii) any changes to the Rates and Methods of.Apportionment of the Special Taxes approved or submitted to the qualified electors for approval prior to the filing of the Annua] Report and a description of any parcels for which the Special Taxes have been prepaid in the Fiscal Year for which the Annual Report is being prepared; (iv) an update of Tables 7, 8-B, 9, 10 and I 1 in the Official Statement based, upon the mast recent Special Tax levy preceding the date of the Annual Report and on the assessed values of property for the current fiscal year; (vi) the percentage of the maximwn Special Taxes levied by the Districts with respect to each series of Special Tax Refunding Bonds; (vi) the status of any foreclosure actions being pursued by the Districts with respect to delinquent Special Taxes; and (vii) any information not already included under (i) through (v) above that the Districts are required to file in its annual report to Che California Debt and Investment Advisory Commission pursuant to time provisions of the Mello-Roos Community Facilities Act of 1982, as amended. Any or all of the items listed above may be included ,by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repository or the Securities and Exchange Commission. If the document included by reference 17-269 is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference. Section 5. ReportiriQ of Significant Events. (a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the Dissemination Agent to give, notice of the occurrence of any of the following events. with respect to the Bonds in a timely manner not more than ten (10) business days after the event: 1. principal and interest payment delinquencies; 2. unscheduled draws on debt service reserves reflecting financial difficulties; 3. unscheduled draws on credit enhancements reflecting financial difficulties; 4. substitution of credit or liquidity providers, or their failure to perform; 5. adverse tax opinions or the issuance by the [ntemal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701- TEB); 6. tender offers; 7. defeasances; 8. ratings changes; and 9. bankruptcy, insolvency,receivership orsimilar proceedings. Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or govemmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing govemmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or govemmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: unless described in pazagraph 5(a)(5) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; . the consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the terntination of a definitive agreement relating to any such actions, other than pursuant to its terms; 17-270 3. appoinunent of a successor or additional trustee or the change of the name of a trustee; 4. nonpayment related defaults; 5. modifications to the rights of Owners of the Bonds; 6. notices of redemption; and 7. release, substitution or sale of property securing repayment of the Bonds. (c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event under Section 5(b) above, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) if the Issuer determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the Issuer shall file a notice of such occurrence with the Repository in a timely manner mot more than 10 business days afer the event. (e) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Issuer and that the Dissemination Agent shall not be responsible for determining whether the Issuer's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. Section 6. Termination of Reportine Obligation. The Issuer's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. [f such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5. Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing ~ successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Agreement. If at any time there is not airy other designated Dissemination Agent, the Trustee shall be the Dissemination Agent The initial Dissemination Agent shall be NBS. The Dissemination Agent may resign by providing thirty (30) days written notice to the Issuer and the Trustee. Section 8. Amendment; Waiver. "Notwithstanding any other provision of this Disclosure Agreement, the Issuer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the fallowing conditions are satisfied: (a) If the amendment or waiver related to the provisions of Sections 3(a), 4, or 5, it may only be made in coiutection with a change ih circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated persoh with respect to the Bonds, or the type of business conducted; (b) The undertaking hereunder, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counseh have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and 17-271 (c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. hi addition, if the 'amendment is related to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(a), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the formed accounting principles. Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of-dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement If the Issuer chooses to include any information in any Annual Report or.notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Agreement, the Trustee at the written direction of atiy Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, or any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Agreement, but only to the extent funds have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges of the Trustee whatsoever, including, without limitation, fees and expenses of its attorney. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement shall be an action to compel performance. Section ] ]. Duties. Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Ageut's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows: Issuer: Chula Vista Municipal Financing Authority 276 Fourth Avenue Chula Vista, CA 91910 ' Attention: Executive Director 17-272 Dissemination Agent: NBS 32605 Temecula Pkwy Temecula, CA 92592 Attn: , Participating Underwriters: Sfifel, Nicolaus & Company, Incorporated One Ferry Building, Suite 275 San Francisco, CA 9411 l Attention: E. J. De La Rosa & Co.; Ina 10866 Wilshire Boulevatd', Suite 1650 Los Angeles, California 90024, Attention: Any person may, by wrirten notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notice or communications should be sent. ' Section ]2, Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the, Trustee, the Dissemination Agent, the Participating Underwriters and 'Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights. in any other person or entity. Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts,. each of which shall be an original and all of which shall constitute but one and the same instrument: - CHULA VISTA MUNICIPAL FINANCING AUTHORITY ' By. ' Its: Executive Director NBS, as Dissemination Agent By: Its: Authorized Officer 7 17-273 ATTACHMENT 6 INDENTURE OF TRUST 17-274 INDENTURE OF TRUST By and Between ' CHULA VISTA MUNICIPAL FINANCING AUTHORITY and . U.S. BANKNATIONAL ASSOCIATION, as Trustee Dated as of July 1, 2013 Relating to $X,000,000 Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013 09960.00000\7958558.3 1 7- 2 7 5 TABLE OF CONTENTS Pale ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY Section 1.01. Definitions ..................................................................................................... ..............2 Section 1.02. Content of Certificates and Opinions .............................................................. .............$ Section 1.03. Interpretation ................................................................................................. ..............8 Section 1.04. Authorization and Purpose of Bonds ............................................................. ..............8 Section 1.05. Indenture Constitutes Contract; Equal Security ............................................. ..............8 ARTICLE H THE BONDS Section 2.01. Authorization of Bonds .................................................................................. ..............9 Section 2.02. Teens of the Bonds ............................................................:.:......................... ..............9 Section 2.03. Transfer of Bonds .......................................................................................... ............10 Section 2.04. Exchange of Bonds .:.......:.......................:..........:........................................... ............10 Section 2.05. Registration Books/Book-Entry ..................................................................... ............10 Section 2.06. Form and Execution of the Bonds ................................................................. ............12 Section 2.07. Temporary Bonds .................................................:........................................ ............12 Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen .................................................. ............13 ARTICLE III ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS Section 3.01. Issuance of the Bonds .................................................................................... ............13 Section 3.02. Application of Proceeds of the Bonds ................:.......................................... ............13 Section 3.03. Program Fund ...............................:................................................................ ............14 Section 3.04. Costs of Issuance Fund .................................................................................. ............14 Section 3.05. Additional Funds and Accounts ..................................................................... ............14 Section 3.06. Validity of Bands ........................................:.................................................. ............14 ARTICLE N REDEMPTION OF BONDS Section 4.01. Redemption; Special Mandatory Redemption ................................................... ........14 Section 4.02. Purchase in Lieu of Redemption ........................................................................ ........16 Section 4.03. Selection of Bonds of a Maturity for Redemption ............................................. ........16 Section 4.04. Notice of Redemption ........................................................................................ ........17 Section 4.05. Partial Redemption of Bonds ............................................................................. ........17 Section 4.06. Effect of Notice of Redemption ......................................................................... ........18 ARTICLE V REVENUES; FUNDS AND ACCOUNTS Section 5.01. Pledge and Assigmnent ...................................................................................... ........18 09960.000OOV998558.3 ~ 7 1276 TABLE OF CONTENTS (continued) Page Section 5.02. , Establishment of Revenue Fund; Allocation of Revenues ................................. .......19 Section 5.03. Application of Interest Account .................................:..................:..................... .......20 Section 5.04. Application of Principal Account ....................................................................... .......20 Section 5.05. Application of Residual Account ........................................................................ .......20 Section 5.06. Establishment and Application of Redemption Account .................................... .......20 Section 5.07. Establishment and Application. of Reserve Fund ................................................ .......21 Section 5.08. Establishment and Application of the Rebate Fund ............................................ .......21 Section 5.09. hivestment of Moneys ........................................................................................ .......22 ARTICLE VI PARTICULAR COVENANTS. Section 6.01. Punctual Payment ......................................................:...........................:............ .......Z3 Section 6.02.. Extension of Payment of Bonds ..................................................~...................... .......23 Section 6.03. Against Encu~nbrances ......................................:....................'........:.........'......... ........23 Section 6.04. Power to Issue Bonds and Make Pledge Assignment ..............:.......................... .::....23 Section 6.05. Accounting Records and Financial Statement .............................:..................... ........24 Section 6.06. Waiver of Laws ................................................................................................. ........24 Section 6.07. Tax Covenants .............................:..................................................................... ........24 Section 6.08. Collection of Revenues ...................................................................................... ........25 Section 6.09. Special Tax Refunding Bonds ........................................................................... ........25 Section 6.10.: Limitation on Defeasance, Sale and Refunding of Special Tax Refunding Bonds ..................................................................:........................,..................... ........25 Section b.l 1. Further Assurances :...........................:......................,........................................ .......:25 ARTICLE VIi EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS Section 7.01. Events of Default ...........................'.................................:...................: .............:........26 Section 7.02. Acceleration .....................................................:.................:................. ................::....26 Section 7.03. Remedies of Bond Owners ............................:..................................... ......:...............26 Section 7.04. Application of Revenues and other Funds After Default ..................... ......................26 Section 7.05. Trustee to Represent Bond Owners .......................................:............. ......................27 Section 7.06. Appoinhnent of Receivers ......................:............................................ ......................27 Section 7.07. Bond Owners' Direction of Proceedings ..................:........,................. ....................:.28 Section 7.08. Limitation on Bond Owners' Right to Sue .......................................... ......................28 Section 7.09. Absolute Obligation of Authority ..................:..................................... ......................28 Section 7.10. Termination of Proceedings .................................:........:...................... ........:.............28 Section 7.11. Remedies Not Exclusive .....................................:................................ ......................28 09960.000OOV958958 3 1 7 11` 7 7 TABLE OF CONTENTS (continued) Page Section 7.12. No Waiver of Default ....................:............................................................ ...............29 ARTICLE VIII THE TRUSTEE Section 8.01. Duties'and Liabilities of Trustee ...................................................:............. ...............29. Section 8.02. Merger or Consolidation ............................................................................. ...............30 Section 8.03. Liability of Trustee .................................................'.................................... ....,..........30 Section 8.04. Right to Rely on Documents ....................................................................... ...............31 Section 8.05. Preservation and Inspection of Documents .............................:.................. ...............32 Section 8.06. Compensation; Indemnification ..........:....................................................... ...............32 Section 8.07. Right of Trustee to Acquire Bonds ............................................................. ...............32 ARTICLE IX MODIFICATION OR AMENDMENT OR THE INDENTURE Section 9.01. Amendments Permitted ....................................................:...........:............. ...............32 Section 9.02. Effect of Supplemental Indenture .........................:..................................... .:.............34 Section 9.03. Endorsement of Bonds; Preparation of New Bonds ................................... ...............34 Section 9.04. Amendment of Particular Bonds ................................................................ ...............34 ARTICLE X DEFEASANCE Section 10:01. Discharge of Indenture ............................................................................... ...............34 Section 10.02. Discharge of Liability on Bonds ................................................................. ...............35 Section 10.03. Deposit of Money or Securities with Trustee ......:...................................... ...............35 ARTICLE XI MISCELLANEOUS Section 11.01. .Liability of Authority Limited to Revenues ............................................... ...............35 Section 11.02. Successor Is Deemed Included in All References to Predecessor .............. ...............36 Section 11.03. Limitation of Rights to Parties and Bond Owners ...................................... ...............36 Section 11.04. Destruction of Bonds .................................................................................. ......'.........36 Section 11.05. Severability of Invalid Provisions .............................................................. ...............36 Section 11.06. Notices ........................................................................................................ ......:........36 Section 11.07. Waiver of Notice: Requirement of Mailed Notice ........................:............. ...............37 Section 11.08. Evidence of Rights of Bond Owners ...................:.................:.................... ...............37 Section 11.09. Money Held for Particular Bonds .........................:..................................... ...............37 Section 11.10. Unclaimed Moneys ..................................................................................... ...............37: Section 11.11. Funds and Accounts ............................................:....................................... ...............38. Section 11.12. Disqualified Bonds ..................................................................................... .....:.........38 09960.OOOOOV958558.3 171178 TABLE OF CONTENTS (continued) ~.. Pate Section 11. 13. Determigation of Percentage of Bond Owners ............................ ..............................38 Section 11 .14. Payment on Non-Business Days .................................................. ..............................38 Section 11 .15. Waiver of Personal Liability ....:...........................:.................:..... ..............................38 . Section 11 .16. Execution in Several Counterparts ..........................................:... .........................:....38 Section 11 .17. 'Governing Laws .......:........:.............:.............................:............. ......................:.......39 Exhibit A FORM OF BOND ........................................................... ......................A-1 Exhibit B PERMITTED INVESTMENTS: .......................................... ......................B-1 171V279 '099b0.00000\7958558.3 INDENTURE OF TRUST THIS INDENTURE OF TRUST (the "Indenture") dated as of July 1, 2013, by and between the CHULA. VISTA MUNICIPAL FINANCING AUTHORITY, a joint exercise of powers authority organized and existing under and by virtue of the laws of the State of California (the "Authority"), and U.S. BANK NATIONAL ASSOCIATION, a natiorial banking association, organized and existing under the laws of United States of America and having a corporate trust office in Los Angeles, California, as trustee (the "Trustee"). WITNESSETH: WHEREAS, the Authority is a joint exercise of powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated June _, 2013, between the City of Chula Vista (the "City") and the Chula Vista Housing Authority (the "Housing Authority"), and under the provisions of Articles 1 through 4 (commencing with Section 6500]-of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Act"), and is authorized pursuant to Article 4 of the Act (the "Bond Law") to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing and refinancing for capital improvements of member entities of the Authority and other local agencies including, but not limited to, community facilities districts formed by either the City or the Housing Authority; and WHEREAS, the Community Facilities Districts (defined in Section 1.01 hereto), for the purpose of financing the acquisition or construction of certain public improvements, previously issued the Prior Special Tax Bonds (as defined in Section 1.01 hereto); and WHEREAS, as a result of favorable interest rate conditions in the municipal bond market the Community Facilities Districts desire to defease and refund the Prior Special Tax Bonds; and WHEREAS, the Authority, for the purpose of acquiring the Special Tax Refunding Bonds (as defined in Section 1.01 hereto) the proceeds of which will be utilized to defease and refund the Prior Special Tax Bonds, has determined to issue its Special Tax Revenue Refunding Bonds, Series 2013 in the principal amount of $X,000,000 (the "Bonds'') pursuant to and secured by this Indenture providing for the issuance of the Bonds, all in the manner provided herein; and WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and to secure the payment of the principal thereof, premium, if any, and interest thereon, the Authority has authorized the execution and delivery of this Indenture; and WHEREAS, the Authority certifies that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee, and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its teens, have been done and taken, and the execution and delivery of the Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and premium (if any) on all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of The 09960.000OOV958558.3 1 ~~-280 mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners Chereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does .hereby covenant and agree with the 'Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows: ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.01 shall, for all purposes of this Indenture and of any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. "Act" means Articles 1 throueh 4 (commencing with Section 6500) of Chapter 5, Division 7, Title I of the Government Code of the State of California. - - "Agreement" means that certain Joint Exercise of Powers Agreement, dated June _ 2013, by and between the City and the Housing Authority and as hereafrer duly amended and supplemented from time to time; creating the Authority for the purposes, among other things, of assisting the City and the Housing Authority in the financing and refinancing of Public Capital Improvements, as such term is defined in the Bond Law. "Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in any Bond Year and (b) the principal amount of the Outstanding Bonds, including mandatory sinking fund payments, scheduled to be paid in such Band Year. "Assistant Director of Finance" means the'Assistant Director of Finance of the City. "Authority" means the Chula Vista Municipal Financing Authority, a joint powers authority organized and existing under the Agreement and under and by virtue of the laws of the State of California. "Authority Administrative Expenses" means all actual costs and expenses incurred in connection with the administration of the Bonds, including but not limited to: (a) the fees and expenses payable to the Trustee, and its counsel, and other Persons for professional services rendered in connection with the administration, continuing disclosure and rebate obligations of or for the Bonds; and (b) fees and expenses of Independent Accountants for preparation of audits required by this Indenture. "Authorized Denomination" means the principal amount or maturity amount, as applicable, of $5,000 or any integral multiple thereof. "Authorized Representative" means: (a) with respect to the Authority, its Chairman, Vice Chairman, Executive Director, Secretary, Treasurer, or any other_Person designated as an Authorized Representative of the Authority by a certificate of the Authority signed by its Executive Director and tiled with the Community Facilities District, the Authority and the Trustee; (b) with respect to the City, its Mayor, Deputy Mayor, City Manager, Director of Finance,. Assistant Director of Finance or any other Person designated as an Authorized Representative of the City by a certificate signed on behalf of the City by its City Manager and filed with the Authority and the Trustee; (c) with respect to each of the Community Facilities Districts, the Authorized Representative of the City, or any other Person designated as an Authorized Representative of the City by a certificate signed on behalf of such Community Facilities District by the City Manager and filed with the Authority and the Trustee; and (d) with respect to the Trustee, the President, any Vice President, any Assistant Vice President, any Senior Authorized Officer, or any Trust Officer of the Trustee, and when used with reference to any act or document also means any other Person authorized to perform such act or sign any document by or pursuant to a ' 09960-OUOOOV9585583 ~~-281 resolution of the Board of Directors of the Trustee or the by-laws of the Trustee. An Authorized Representative may by written instrument designate any Person to act on his or her behalf. "Bond Counsel" means the law firm of Best Best & Krieger LLP, San Diego, California, and any successor firm or any other firm of nationally recognized bond counsel acceptable to the Authority. "Bond Law" means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of the Act (commencing with Section 6584), as amended from time to time. "Bond Purchase Agreement" means an agreement to purchase the Bonds by and among the Underwriter of the Bonds, the Authority, and the Community Facilities Districts. "Bond Year" means each h'velve-month period'beginnidg on September 2 of each year and ending on September 1 of the following year. With respect to the Bonds, the first such Bond Year shall begin on the Closing Date and end on September 1, 2013. "Bonds" means the $X,000,000 Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013. "Business Day" means a day which is not a Saturday, Sunday, or legal holiday on which banking institutions in the State of California; or in any state in which the Principal Office of the Trustee is located, or the New York Stock Exchange are closed. [f any payment hereunder is due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day with the same effect as if made on such previous day. "Certificate' of Authentication" means the Trustee's Certificate of Authentication, the form of which is attached hereto in Exhibit A. "CFD No. 06-I Improvement Area A" means.Improvement Area A of CFD No. 06-I. "CFD No. 06-I Improvement Area B" means Improvement Area B of CFD No. 06-I. "CFD Bonds Reserve. Fund Credit Amount" means, as to each Series of Special Tax Refunding Bonds, that amount equal to the cash deposited in [he Reserve Fund on the Closing Date multiplied by a fraction with the numerator equal to the principal of the such Series of Special Tax Bonds and the denominator equal to the aggregate principal of the Special Tax Bonds. The CFD Bond Reserve Fund Credit Amount for each Series of the Special Tax Refunding Bonds is: (a) CFD No. 06-I IA A ST Refunding Bonds ......................................$ ; (b) CFD No. 06-I IA B ST Refunding Bonds ........................:.............$ ; (c) CFD No. 07-I ST Refunding Bonds ...............................................$ ; (d) CFD No. 08-I ST Refunding Bonds ...............................................$ ;.and (e) CFD No. 2001-2 ST Refunding Bonds ..........................................$ "City" means the City of Chula Vista, a municipal corporation organized under its charter and the laws of the State. "Closing Dale" means the date on which the Bonds are delivered to the Underwriter thereof. "Community Facilities District No. 06-I" or "CFD No. 06-I" means the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap), a community facilities district formed pursuant to the Mello-Roos Act. "Community Facilities District No. 07-I" or "CFD No. 07-I" means the City of Chula Vista Community Facilities District No 07-I (Otay Ranch Village Eleven), a community facilities district formed pursuant to the Mello-Roos Act. 09960.00000\7958558.3 ~~-282 "Community Facilities District No. 08-I" or "CFD No. OS-I" means-the City of Chula Vista Community Facilities District No: 08-I (Otay Ranch Village Six), a community facilities district formed pursuant to the Mello-Roos Act. ' . "Community Facilities District No, 2001-2" or "CFD No. 2001-2" means the City of Chula a Vista Community Facilities District No. 2001-2 (MeNlillin = Otay Ranch -Village Six), a eotnmunity facilities district formed pursuant to-the Mello-Roos Act.. "Community Facilities Districts" or "CFDs" means, collectively, CFD No. 06-I, CFD No. 07-I, 'CFD No. 08-I and CFD No. 2001-2. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to he Authority relating to the authorization, issuance, sale and delivery of the Bonds and the Special Tax Refunding Bonds, including but not limited to underwriter's discount,-printing expenses, rating agency fees, filing and recording fees, initial fees, expenses and charges and first annual administrative fee of the Trustee. and fees' of its counsel, fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds and the Special Tax Refunding Bonds, and anyrother cost, charge or fee in cotlnection with the original issuance of the Bonds and the Special Tax Refunding Bonds. "I)efeasance Obligations" means those investments identified in paragraph A of the Permitted Investments, specified in Exhibit B hereto and which are non-callable. "DTC" shall have the meaning given such term in Section 2.05 hereto. "Event of Bankruptcy" means, with respect to any Person, the filing of a petition in bankruptcy or the commencement of a proceeding under the United States Bankruptcy Code or any other applicable ' law concerning insolvency, reorganization or bankruptcy by or against such Person as debtor, other than any involuntary proceeding which has been finally dismissed without entry of an order for relief or similar order as to which all appeal periods have expired. "Event of Default"means any of the events of default specified in Section 7.01. "Fiscal Agent" means U.S. Bank National Association, or its successor, as Fiscal Agent under " -the Fiscal Agent Agreement. , "Fiscal Agent Agreement" or "Fiscal Agent Agreements" means the Fiscal Agent Agreement- or Fiscal Agent Agreements, each dated as of July 1, 2013, by and between the Community Facilities. District and the Fiscal Agent as originally executed or as it or they may from time to time be supplemented, modified or amended, pertaining to any series of Specia( Tax Refunding Bonds. "Fiscal Year" means the period beginning on July d of each year and ending_on the next succeeding June 30, or any other twelve-month period hereafter selected and designated as the official' ~fisca] year period of the Authority and'certified to the Trustee in writing by an Authorized Representative of the Authority. "Housing Authority" means the Chula Vista Housing Authority "Improvement Area" means CFD No. 06-I hnprovement Area A or CFD No. 06-I improvement Area B, as applicable. "Improvement Areas" means, collectively, CFD No. 06-I Improvement Area A and CFD No. 06-I Improvement Area B. "Indenture" means this Indenture of Trust, as originally executed or as itmay from time to time be supplemented, modified or amended.. "Independent Accountant" means any nationally recognized firm of certified. public ` accountants or firm of suchaccountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by the Authority, and who, or each of whom: 09960.00000\7958558.3 4 ' 77-283 (a) is, in fact, independent and not under domination of the Authority, the City or the Community Facilities District; (b) does not have any substantial interest, direct or indirect, with the Authority, the City or the Community Facilities District; and (c) is not connected with the Authority, the City or the Community Facilities District as an officer or employee of the Authority, the City, or the Community Facilities District, but who may be regularly retained to make reports to the Authority, the City or the ,Community Facilities District. "Independent Financial Consultant" means any financial consultant or firm of such financial consultants appointed by the Authority and who, or each of whom: ,, (a) _ is judged by the Authority to.have experience with respect to the financing, of public capital improvement projects; (b) is, in fact, independent and not under the domination of the Authority, the ,City, or the Community Facilities District; (c) does not have any substantial interest, direct or indirect, with the Authority, the City, or the Community Facilities District; and (d) is not connected with the Authority, the City, or the Community Facilities'District as an offcer or employee of the Authority, the City, or the Community Facilities District, but who may be regularly retained to make reports to the Authority, the City, or the Community Facilities • .District.. "Information Services" means the Electronic Municipal Market Access System (referred to as "EMMA"), a facility of the Municipal Securities Rulemaking'Board (at htto://etmna.msrb.ora); and, in accordance with then current guidelines of the Securities and Exchange Commission, and such other addresses and/or such other services providing information with respect to called bonds as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee: "Interest Account" means the account by that name established with the Trustee with respect to the Bands pursuant to tha Indenture and to be administered as prescribed in Section 5.03. "Interest Payment Date" means March 1 and September 1, commencing September 1, 2013. "Maximum AnnuahDebt Service" means, as~o8any date of calculation, the largest Annual Debt Service, during the current or any future Bond Year. "Mello-Roos Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being California Government Code Sections 53311 et seq. "Moody's" means Moody's Investors Service, its successors and assigns. "Nominee" shall have the meaning given such term in Section 2.05 hereto. "Outstanding" when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 11.12) all Bonds theretofore, or thereupon being, authenticated and delivered by 'the Trustee under this Indenture except (a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority shall have'been discharged in accordance with Section 10.02, including particular Bonds (or portions of Bonds) described in Section 11.12; and (c) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds shall have been authenticated and delivered by the Trustee pursuant to this Indenture. When used as of any particular time with reference to 'any Series of the Special Tax Refunding Bonds, "Outstandmg" shall have the meaning given such tears' in the applicable Fiscal Agent Agreement. 09960.000OOV958i58.3 c 17-284 ~ ~ "Owner" or "Bond Owner," whenever used herein with respect to a Bond, means the Person in whose name the ownership of such Bond is registered on the Registration Books. "Permitted Investments" means any'of the investments listed in Exhibit B hereto: "Person" means an individual, corporation, firm, associatiou, partnership, trust, or other legal' entity or group of entities, including a governmental entity or any agency or political subdivision thereof. "Principal Account" means the account by that name established with the Trustee with respect to the Bonds pursuant to the Indenture and to be administered as provided in Section 5.04. ` "Principal Office" means such corporate trust office of the Trustee as may be designated from time. to time by written notice from_ the Trustee to the Authority, initially being in Los Angeles, California, except that with respect to presehtation of Bonds for payment or for registration of transfer or exchange or maintenance of the Registration Books, such teen shall mean the office of the Trustee at .which its corporate agency business shall be conducted. "Principal Prepayments" means any amounts received by the Trustee representing a prepayment of principal of any issue of Special Tax Refunding Bonds, whether at maturity of such issue of Special Tax Refunding Bonds or upon the prior redemption, prepayment or acceleration thereof. "PriorBpecial Tax Bonds" means the following: (a) $39,000,000 City of Chula Vista Cotmunity Facilities District No. 06-I (Eastlake - Woods Vista and Land Swap) 2002 hnptrovement Area A Special Tas Bonds; (b) $7,880,000 City of Chula Vista Community Facilities District No. 06-I (Eastlake Woods Vista and Land Swap) 2004 hirprovement Area B Special Tax Bonds; (c) $28,050,000 City of Chula Vista Corrununity Facilities District No. 07-I (Otay Ranch Village Eleven) 2004 Special Tax,Bonds; (d) $21,665;000 City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) 2003 Special Tax Bonds; and - (e) $10,250,000 City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch -Village Six) 2003 Special Tax-Bonds. "Proceeds" means the face amount of the $onds, plus accrued interest and original issue premium,. if any, less original issue discount, if any. "Program Fund" means the fund by that name established and held_by the Trustee-with respect to the Bonds pursuant to the Indenture and to be maintained as provided in Section 3.03. . "Proportionate Share" means, as of the date of calculation for any Series of the Special Tax Refunding Bonds when computing the proportionate share allocable to such Special Tax Refunding Bonds among all Outstanding Special Tax Refunding Bonds, the ratio derived by dividing the then .Outstanding principal amount of such Special Tax Refunding Bonds by the then aggregate Outstanding principal amount of all Special Tax Refunding Bonds. `.`Rebate Fund" means the fund by that name established with the Trustee with respect to the Bonds pursuant to the Indenture and to be administered as prescribed in Section 5.08. "Record Date" means the fifteenth (15th) day of the month (whether or not such day is a Business Day) preceding each Interest Payment Date. "Redemption Account" means the account by that name established with the Trustee with respect to the Bonds pursuant to the Indenture and to be administered as provided in Section 5.06. "Registration Books" means the records maintained by the Trustee. for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05. ~~ 09960.00000\79~3i58.3 (7 17-285` "Representation Letter" means the letter of representations from the Authority to, or other instrument or agreement of the Authority with, DTC in which the Authority, among other things, makes certain representations to such depository with respect to the Bonds, the payment thereof and delivery of notices with respect thereto. "Requisition" means a written requisition signed in the name of the Authority by its Authorized Representative. "Reserve Fund". means the fund by that name established and held by the Trustee with respect to the Bonds pursuant to the Indenture and to be administered as provided in Section 5.07. - "Reserve Requirement" means, as of any date of calculation, an amount equal to the least of (a) 125% of the average Annual Debt Service on the Bonds for that and any subsequent Bond Year; (b) 100% of the Maximum Annual Debt Service on the Bonds for that or any subsequent Bond Year; or (c) 10% of the issue price (within the meaning of section I48 of the Tax Code) of the Bonds. The Reserve Requiretent as of the Closing Date shall be $ "Residual Account" means-the account by that name established and held by the Trustee with respect to the Bonds pursuanfto the Indenture and to be administered as provided in Section 5.05. "Revenue Fund" means the fund by that name established and held by the Trustee with respect to the Bonds pursuant to the Indenture and to be administered as,provided in Section 5.01 and 5.02. "Revenues" means, with respect to the Bonds: (a) all amounts derived from the Special Tax Refunding Bonds and (b) investment income with respect to the funds and accounts established hereunder (excepting therefrom the Administrative Expense Fund (as defined in each Fiscal Agent Agreement) and the Rebate Fund). "RMA" shall have the meaning given such term in the Fiscal Agent Agreement applicable to a particular Series of Special Tax Refunding Bonds. "S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, its successors and assigns. "Securities Depositories" means The Depository Trust Company, 55 Water Street, 25th Floor, New York, N.Y. 10041-0099 Attn. Call Notification Department, Fax (212) 855-5004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority may designate in a Written Certificate of the Authority delivered to the Trustee. "Special Record Date" means the date established by the Trustee pursuant to Section 2.02 as a record date for the payment of defaulted interest on the Bonds, if any. "Special Tax Refunding Bonds" means, collectively, those series of special tax-bonds designated as: ' (a) $ City of Chula Vista Community Facilities District No. 06-I. (Eastlake - Woods Vista and Land Swap) hnprovetnent Area A Special Tax Refunding Bonds, Series 2013 (the "CFD No. 06-I IA A ST Refunding Bonds"); (b) $ City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series A (the "CFD No. 06-I IA B ST Refunding Bonds"); (c) $ City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series 2013 ("CFD No. 07-I ST Refunding Bonds"); 09960.00000\7958558.3 17-286 (d) $ City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) Special Tax Refunding Bonds, Series 2013 ("CFD No. 08-1 ST Refunding Bonds''); and (e) $ City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch -Village Six) Special Tax Refunding Bonds, Series 2013 ("CFD No. 2001-2 ST Refunding Bonds"); Each such series of Special Tax Refunding Bonds may be referred to as a "Series." "Special Tax Refunding Bouds Prepayment Reserve Fund Credit" means, as to any parcel within an Improvement Area for which the Special Tax obligation is to be prepaid pursuant to the RMA applicable thereto, the amount, if any, by which the Reserve Requirement will be reduced as a consequence of_the mandatory redemption of Bonds from Principal Prepayments that resulted from such prepayment of such Special Tax obligation. "Special Taxes" has the meaning given such term in the applicable Fiscal Agent Agreement. "Supplemental Indenture" means a Supplemental Indenture of Trust providing for any matter herein authorized, entered into by and between the Authority and the Trustee pursuant To the provisions of this Indenture. "Tax Certificate" means the certificate delivered by the Authority upon the delivery of the Bonds relating to Section I48 of the Code, or any functionally similar replacement certificate. "Tax Code" means the Internal Revenue Cade of 1986, as amended from time to time. Any reference to a provision of the Tax Code shall include the applicable Tax Regulations promulgated with respect to such provision. "Tax Regulations" means temporary and permanent regulations promulgated under Section 103 and related sections of the Tax Code. "Trustee" means U.S. Bank National. Association, or its successor, as "Trustee hereunder as provided in Section 8.01, or such other trustee as shall be named, provided such other trustee shall meet the requirements of Article Vlll hereof. "Underwriter" means [Underwriter]. "Written Certificate" and "Written Request" of the Authority or a Community Facilities District mean, respectively, a written certificate or written request signed in the name of the Authority by its Authorized Representative or in the name of such Community Facilities District by its Authorized Representative. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by Section 1.02, each such certificate or request shall include the statements provided for in Section 1.02. Section 1.02. Content of Certificates and Opinions. Any certificate or opinion made or given by an officer of the Authority or a Community Facilities District or Community Facilities Districts may be based, insofar as it relates to legal or accounting matters, upon a certificate or opinion of or representation by counsel, an accountant oc a financial consultant, unless such officer. knows,'or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel, an accountant or a financial consultant may be based, insofar as it relates to factual matters (with respect to which information is in Che possession of the Authority or a Community Facilities District or Community Facilities Districts, as the case may be) upon a certificate or opinion of or representation by an officer of the Authority or the Community Facilities 09960.00000\7958558.3 $ 17-287 District, unless such counsel, accountant or financial consultant knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which such Person's certificate or opinion or representation may be based, as aforesaid, is erroneous. The same officer of the Authority or a Community Facilities District, or the same counsel, accountant or financial consultant, as the case may be, need not certify to all of the matters required to be certified under any provision of this Indenture, but different officers, counsel, accountants or financial consultants may certify to different matters, respectively. Section 1.03. Interpretation. Unless the context otherwise indicates, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to include the neuter, masculine or feminine gender, as appropriate. Headings of articles 'and sections herein and the table of contents hereto, are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. _ All references herein to "Articles," "Sections," and other subdivisions are to the coreesponding Articles, Sections, or subdivisions of this Indenture; the words "herein,'' "hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. Section 1.04. Authorization and Purpose of Bonds. The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review,, and hereby finds and determines, that all things, conditions and acts required by law to exist, happen and/or be performed precedent to and in the issuance of the Bonds do exist,. have happened and have been performed in due time, form and manner as required by law, and the Authority is now authorized under the Agreement and the Bond Law and each and every requirement of law, to issue the Bonds in the manner and form provided in this Indenture. Accordingly, the Authority hereby authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture for the purpose of providing funds to acquire the Special Tax Refunding Bonds from the Community Facilities Districts. Section LOS. Indenture Constitutes Contract; Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract behveen the Authority and the Owners from time to time of the Bonds; and the covenants and agreements herein set forth to be performed on behalf of the Authority shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over other Bonds by reason of the number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein. ARTICLE R THE BONDS . Section 2.01. Authorization of Bonds. The Authority hereby authorizes the issuance of the Bonds hereunder and under the Bond Law, the Bonds to constitute special obligations of the Authority, for the purpose of providing moneys to finance the acquisition by the Authority of the Special Tax Refunding Bonds. The Bonds shall be issued in the principal amount of $X,000,000, are hereby ,designated the "Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013," and shall be issued for the purpose of acquiring the Special Tax Refunding Bonds. This Indenture constitutes a continuing agreement with the Owners from time to time of the Bonds to secure 09960.00000\7958558.3 . 9 17-288 the full and timely payment of the principal of and interest on all such Bonds, subject to the covenants, provisions and conditions herein. Section 2.02. Terms of [he Bonds. The Bonds shall be issued in fully registered form without coupons in any Authorized Denomination. The Bonds shall be dated the Closing Date, shall mature (subject to prior redemption) on September 1 in each of the years and in the amounts and shall bear interest of the rate or rates per amtum, calculated on the basis of a 360-day year of twelve 30-day months, set forth in the Tndenture. The Bonds shall mature on the dates and in the respective principal amounts and shall bear interest at the respective rates per annum, as follows: MaturityDate Principal Interest Rate (September 1) Amount Per Annum . Interest on the Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or. before an Interest Payment Date and afrer the close of business on the preceding Record Date, in which event it shall bear interest from such Interest Payment Date; (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Dated Date provided in the form of the Bonds; or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. htterest shall be paid on each Interest Paymeut Date to the Persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than fifteen (15) days prior to such Special Record Date. Interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Bond Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; or by wire transfer made on such Interest Payment Date to any Owner of $1,000,000 or more in 09960.00000\795858.3 T ~ ~~-289 aggregate principal amount of Bonds who shall have requested such transfer pursuant to written notice filed with the Trustee on or before the preceding Record Date. The principal of the Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof at the Principal Offtce of the Trustee. Payment of principal on any Bond shall be made only upon presentation and surrender of such Bond at the Principal Office of the Trustee. The Bonds shall be subject to redemption as provided in Article (V. Section 2.03. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred upon the Registration Books by the Person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by the Trustee. The Trustee shall not be obligated to make any transfer of Bonds during the period selected by the Trustee for the selection of Bonds for redemption, or with respect to any Bonds selected for redemption. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds for a like aggregate principal amount or maturity amount, as applicable, in an Authorized Denomination. The Trustee shall require the Bond Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. Section 2.04. Exchange of Bonds. The Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount or maturity amount, as applicable, of Bonds of Authorized Denominations and of the same maturity. The Authority may charge a reasonable sum for each new Bond issued upon any exchange (except in the case of any exchange of temporary Bonds for definitive Bonds and except in the case of the first exchange of any definitive Bond in the form in which it is originally issued) and shall require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be obligated to make any exchange of Bonds during the period selected by the Trustee for the selection of Bonds for redemption, or with respect to any Bonds selected for redemption. Section 2.05. Registration BooksBook-Entry. The Trustee will keep or cause to be kept, at the Principal Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall be open to inspection during regular business hours and upon reasonable notice by the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as hereiubefore provided. The Bonds shall be initially executed and delivered in the form of a single, fully registered Bond for each maturity (which may be typewritten). Upon initial execution and delivery, the ownership of such Bond shall be registered in the Bond Register in the name of the Nominee identified below as nominee of the Depository Trust Company, New York, New York and its successors and assigns (the `'Depository'' or "DTC"). Except as hereinafrer provided, all of the outstanding Bonds shall be registered in the Bond Register in the name of the nominee of the Depository, which may be the Depository, as determined from time to time pursuaut to this Section (the "Nominee"). With respect to the Bonds registered in the Bond Register in the name of the Nominee, neither the Authority nor the Trustee shall have any responsibility or obligation to any broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds as securities depository (the `'Participant'') or to any person on behalf of which such a Participant holds an interest in 09960.000OOV9585583 1 1 17-290 the Bonds. Without limiting the immediately preceding sentence, neither the Authority nor the Trustee shall have any responsibility or obligation (unless the Authority is at such time the Depository) with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any other person, other than an Owner of a Bond as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of prepayment; (iii) the selection by the Depository and ifs Participants of the beneficial interests in the Bonds to be prepaid in the event the Authority prepays the Bonds in part; or (iv) the payment to any Participant or any other person, other than an Owner of a Bond as shown in the Bond Register, of any amount with respect to principal of or interest on the Bonds. The Authority and the Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute Owner of such Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose of giving notices of prepayment, if applicable, and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Authority shall pay all principal of and interest on the Bonds only to or upon the order of the respective Owner of a Bond, as shown in the Bond Register, or his respective attorney dnly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Authority's obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner of a Bond, as shown in the Bond Register, shall receive a Bond evidencing the obligation of the Authority to make payments of principal and interest pursuant to this Indenture. Upon delivery by the Depository to the Owners of the Bonds, and the Authority of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Date, the word "Nominee" in this h~denture shall refer to such nominee of the Depository. In order to qualify the Bonds for the Depository's book-entry system, the Authority is executing and delivering to the Depository a Representation Letter in the form prescribed by Depository. The execution and delivery of the Representation Letter shall not in any other way limit the provisions of this Section or in any other way impose upon the Authority any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners of the Bonds, as shown on the Bond Register. In addition to the execution and delivery of the Representation Letter, the Authority shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify the Bonds for the Depository's book-entry program. hi the event (i) the Depository determines not to continue to act as securities depository for the Bonds, or (ii) the Depository shall no longer so act and gives notice to the Authority of such determination, then the Authority will discontinue the book-entty system with the Depository. If the Authority determines to replace the Depository with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate, fully registered Bond, per maturity, registered in the name of such successor or substitute qualified securities depository or its nominee. if the Authority fails to identify another qualified securities depository to replace the Depository then the Bonds shall no longer be restricted to being registered in the Bond Register in the name of the Nominee, but shall be registered in whatever name or names Owners of the Bonds transfering or exchanging Bonds shall designate, in accordance with provisions of.Sections 2.03 or 2.04, bereof, and the Authority shall prepare and deliver Bonds to the Owners thereof for such purpose. [n the event of a reduction in aggregate principal amount of Bonds outstanding or an advance refunding of part of the Bonds outstanding, DTC in its discretion, (a) may request the Authority to prepare and issue a new Bond, or (b) may make an appropriate notation on the Bond indicating the date and amounts of such reduction in principal, but in such event, the Bond Register maintained by Che Trustee shall be conclusive as to what amounts are outstanding on the Bond, except in the case of final maturity in which case the Bond must be presented to the Trustee prior to payment. 09960.OOOOOV958558.3 1 ~ ~~-291 Notwithstanding any other provisions of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, al] payments with respect to principal of and interest on such Bond, and all notices with respect to such Bond, shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository and acceptable [o the Authority. The initial Depository under this Article shall be DTC. The initial Nominee shall be Cede & Co., as Nominee of DTC. Section 2.06. Form and Execution of the Bonds. The Bonds shall be in the form set forth in Exhibit A hereto and shall otherwise comply with the requirements of this Indenture. The Bonds shall be executed in the name and on behalf of the Authority with the manual or facsimile signature of its Chairman (or any duly authorized deputy to the Chairman) attested by the manual or facsimile signature of its Secretary. The Bonds shall then be delivered to the Trustee for authentication by it do case any of the officers who shall have signed or attested any of the Bonds shall cease to be such officer or officers of the Authority before the Bonds so signed or attested shalt have beeh authenticated or delivered by [he Trustee, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though those who signed and attested the same had continued to be such officers of the Authority, and also any Bonds may be sibmed and attested on behalf of the Authority by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the Authority although at the nominal date of such Bonds any such Person shall not have been such officer of the Authority. Only such of the Bonds as shall bear thereon a Certificate of Authentication, substantially in the form set forth in Exhibit A hereto, manually executed by the Trustee, shall be valid or obligatory for any purpose or entit]ed to the benefits of this Tndenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that [he Bonds so authenticated have been duly executed; authenticated and delivered hereunder and are entitled to the benefits of this Indenture. The Bonds shall be issued substantially in the form attached hereto as "Exhibit A" with necessary or appropriate variations, omissions and insertions, as permitted or required by the Indenture. Section 2.07. Temporary Bonds. The Bonds may be issued in temporary form exchangeable for definitive Bonds when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may be determined by the Authority, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds it will execute and deliver definitive Bonds as promptly thereafter as practicable, and thereupon the temporary Bonds shall be surrendered, for cancellation, at the Principal Office of the Trustee and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount or maturity amount, as applicable, of definitive Bonds of Authorized Denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to them and indemnity satisfactory to it shall be given, 09960.OOOOOV9585>83 1 ~ 17-292 the Authority, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in replacemenC for the Bond so losC, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a replacement Bond, the, Trustee may pay the same without surrender thereof upon receipt ofihe above- mentioned indemnity). The Authority may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and oP the expenses which may be incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds secured by this indenture. ARTICLE III ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS Section 3.01. Issuance of the Bonds. Upon execution and delivery of this Indenture, the Authority shall -execute and deliver the Bonds to the Trustee for authentication and delivery to the Underwriter thereof upon the written request of the Authority. Section 3.02. Application of Proceeds of the Bonds. Upon the receipt of payment for the Bonds on the Closing Date, the Trustee shall apply the proceeds of sale thereof by depositing $ (representing.the aggregate principal amount of the Bonds of $$X,000,000 plus. the aggregate net original issue premium of $ less the aggregate Underwriter's discount of $ ) in the Program Fund. In addition, the Trustee shall deposit the following amounts received by the Trustee from the Fiscal Agents under the Fiscal Agent Agreements for the Special Tax Refunding Bonds to the following funds and accounts: (a) in the Costs of Issuance Fund $ for payment of Costs of Issuance to be received from the following sources: (i) $ from the proceeds of the CFD No. 06-[ IA A ST Refunding Bonds; (ii) $ from the proceeds of the CFD No. 06-I IA B ST Refunding Bonds; (iii) $ from the proceeds of the CFD No. 07-[ ST Refunding Bonds; (iv) $ from the proceeds of the CFD No. 08-I ST Refunding Bonds; and (v) $ from the proceeds of the CFD No. 2001-2 ST Refunding Bonds. (b) in the Reserve Fund $865,796.26 whicli is equal to the i nitial Reserve Requirement to be received from the following sources: (i) $ from the proceeds of the CFD No. 06-I IA A ST Refunding Bonds; (ii) $ from the proceeds of the CFD No. 06-I IA B ST Refunding Bonds; (iii) $ from the proceeds of the CFD No. 07-I ST Refunding Bonds; (iv) $ from the proceeds of the CFD No. 08-( ST Refunding Bonds; and 09960.000OOV 9535533 1 17-293 (v) $ from the proceeds of the CFD No. 2001-2 ST Refunding Bonds. Section 3.03. Program Fund. The Trustee shall establish and maintain a separate fund to be known as the "Program Fund" into which shall be deposited the proceeds of the sale of the Bonds pursuant to Section 3.02. The Trustee shall use the proceeds of the Bonds in the Program Fund to purchase the Special Tax Refunding Bonds'on the Closing Date as directed in writing by the Authority. The Special Tax Refunding Bonds shall, upon receipt by the Trustee, be deposited by the Trustee in the Program Fund and maintained therein until such Special Tax Refunding Bonds mature, are redeemed or otherwise disposed of pursuant to this Indenture. Section 3.04. Costs of Issuance Fund. The Trustee shall establish and maintain a separate fimd to be held by the Trustee lrnown as the "Costs of Issuance Fund" into which shall be deposited the amounts set forth in subparagraph (a) of Section 3.02. The moneys in the Costs of Issuance Fund shall be used to pay Costs of Issuance from time to time upon receipt of a Requisition of the Authority. On the date which is one hundred eighty (180) days following the Closing Date, or upon the earlier receipt by the Trustee of a Written Request of the Authority stating that all Costs of Issuance have been paid, the Trustee shall transfer all remaining amounts in the Costs of Issuance Fund to the Revenue Fund and the Trustee shall close the Costs of Issuance Fund. Section 3.05. Additional Funds and Accounts. The Trustee may establish additional accounts or subaccounts of the funds and accounts described herein as the Trustee shall deem necessary in furtherance' of its duties pursuant to this Indenture. Additionally, the Authority may request the establishment of such additional accounts as it deems necessary to meet its obligations pursuant to Article VI hereof and the Trustee shall establish such accounts. Section 3.06. Validity of Bond's. The validity of the authorization and issuance of the Bonds is not dependent on and shall not be affected in any way by any proceedings taken by the Authority or the Trustee with respect to or in connection with the acquisition of the Special Tax Refunding Bonds. The recital contained in the Bonds that the same are issued pursuant to the constitution and laws of the State of California shall be conclusive evidence of their validity and of compliance with the provisions of law in their issuance. ARTICLE IV REDEMPTION OF BONDS Section 4.01. Redemption; Special Mandatory Redemption. (a) Optional Redemption of the Bonds. The Bonds maturing on and after September I, 20 are subject, at the option of the Authority, to call and redemption from any available source of funds prior to their stated maturity on any date on or after September 1, 20 , as a whole or in part, and by lot, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium. For purposes of the selection of Bonds for redemption pursuant to this subsection (a), the Bonds shall be selected for redemption among maturities by the Authority (evidenced pursuant to a Written Certificate of the Authority delivered to the Trustee at least 60 days prior to the redemption date or such later date as shall be acceptable to the Trustee) on such basis that the debt service on the Special Tas Refunding Bonds on each Interest Payment Date will be sufficient to pay debt service on the Bonds on such Interest Payment Date, as shall be demonstrated in a report of an Independent Financial Consultant 09960.000OOV9585583 15 17-294 filed with the Trustee; provided, however, that no such report need be filed with the Trustee if after such redemption, no Bonds will be Outstanding. (b) Mandatory Redemption of the Bonds from Principal Prepayments of the Special Tax Refunding Bonds. The Bonds shall be subject to redemption on any Ltterest Payment Date, prior to maturity, as a'whole or in part from such maturities, as are selected by the Authority, from and to the extent of Principal Prepayments with respect to the Special Tax Refunding Bonds at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Dates Redemption Prices September 1, 20_ through March 1, 20_ 10_% September 1, 20_ and March 1, 20_ 10_ September 1, 20_ and March 1, 20_ ]0_' September 1, 20_ and any Interest Payment Date thereafter 10_ The principal amount of the Bonds to be redeemed pursuant to this subsection (b) from any such Principal Prepayments shall be the greatest principal amount of Bonds, the redemption price of which is less than or equal to such Principal Prepayments, as specified in a Written Request of the Authority delivered to the Trustee. In the event that a Fiscal Agent for any Series of the Special Tax Refunding Bonds shall mail notice of redemption of any such Specia] Tax Refunding Bonds which will produce Principal Prepayments, the Trustee shall concurrently mail notice of the redemption of Bonds pursuant to this subsection (b), such redemption to occur on the date fixed for redemption of such Special Tax Refunding Bonds. On the date of such redemption of such Special Tax Refunding Bonds; the proceeds of any such redemption shall be applied by the Trustee to pay the redemption price of Bonds pursuant to this subsection (b). For purposes of the selection of Bonds for redemption pursuant to this subsection (b), the Bonds shall be selected for redemption among maturities by the Authority (evidenced pursuant to a Written Certificate of the Authority delivered to the Trustee at least 60 days prior to the redemption date or such later date as shall be acceptable to the Trustee) on such basis that the debt service on the Special Tas Refunding Bonds on each Interest Payment Date will be sufficient to pay debt service on the Bonds on such Interest Payment Date, as shall be demonstrated in a report of an Independent Financial Consultant filed with the Trustee; provided, however, that no such report need be filed with the Trustee if, after such redemption, no Bonds will be Outstanding. (c) Mandatory Sinkin¢ Fund Redemption. The Outstanding Bonds maturing on September 1, 20 ,are subject to mandatory sinking fund redemption in part on~September 1, 20_, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows: Sinking Fund Redemption Date (September L) Principal AmounC 099GO.000OOV958~58.3 I6 17-295 The Outstanding Bonds maturing on September 1, 20 ,are subject to mandatory sinking fund redemption in part on September 1, 20 ,and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows: Sinking Fund Redemption Date (September 1) Principal Amount If some but not all of the Bonds maturing on September 1, 20 and September 1, 20 are redeemed pursuant to subsection (a) above, the principal amount of the Bonds maturing on September 1, 20 and September 1, 20 to be redeemed pursuant to this subsection (c) on any subsequent September 1 will be reduced, by $5,000 or an integral multiple thereof, as designated by the Authority in a Certificate of the Authority'filed with the Trustee; provided, however, that the aggregate amount of such reductions shall not exceed the aggregate amount of Bonds maturing on September 1, 20_ and September 1, 20_ redeemed pursuant to subsection (a) above. If some but not all of [he Bonds maturing on September 1, 20 and September 1, 20 are redeemed pursuant to subsection (b) above, the principal amount of the Bonds maturing on September 1, 20 and September 1, 20_ to be redeemed pursuant to the subsection (c) on any subsequent September 1 shall be reduced by the aggregate principal amount of the Bonds maturing on September 1, 20 and September I, 20 redeemed pursuant to subsection (b) above, such reduction to be allocated among redemption dates, as determined by the Trustee, so that following such redemption the remaining principal amount of each sinking fund payment on the Bonds maturing on September I, 20 and September 1, 20 will match the principal payment on the Special Tax Refunding Bonds due and payable on the same date, notice of which determination shall be given by the Trustee to the Authority. Section 4.02. Purchase in Lieu of Redemption. In lieu of redemption utider Section 4.01(a) or 4.02(b), moneys in the Redemption Account may be used and withdrawn by the Trustee for purchase of Outstanding Bonds, upon the filing with the Trustee of a Written Certificate of the Authority requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Written Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase, unless a greater purchase price is permitted under the Act and the Authority determines that it will have sufficient amounts in the Revenue Fund, following such purchase, to pay the principal of and interest on the Bonds as the same shall be due and payable. Section 4.03. Selection of Bonds of a Maturiri for Redemation. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds of a maturity, the Trustee shall select the Bonds to be redeemed from all Bonds of such maturity not previously called for redemption, by lot in any manner which the Authority in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 Authorized Denominations and such separate Authorized Denominations shall be treated as separate Bonds which may be separately redeemed. 09960.OOOOOV958558.3 17 17-296 Section 4.04. Notice of Redemption. (a) Contents of Notice. 'Notice of redemption shall be mailed by the Trustee, by first class mail, postage prepaid, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to the Securities Depositories and the Information Services at ,least 30 days but not more,than 60 days' prior to the redemption date. Neither the failure to receive such notice nor any defect iu the-notice so mailed .will affect the sufficiency of the proceedings for redemption of such Bonds or the cessation of accrual of interest on the redemption date. Each notice of redemption shall state the, redemption date, the place or places of. redetption, the CUSIP numbers and the Bond numbers of the Bonds to ,be redeemed, and in the case of Bonds to be redeemed in part only, the respective~Authorized Denominations of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there willbecome due and payable on each of said Bonds the principal amount relating thereto or of said specified portion of the principal thereof in the case of a Bond to be redeemed in part only, plus accrued hrterest, if any, and through which date such interest will.acerue, and -that from and after such date interest thereon shall cease to accrue and shall require that such-Bonds be ,then surrendered at the Principal Office of the Trustee. Neither the failure of any Bond Owner to receive any notice so mailed nor any defect therein shall affect the sufficiency of the proceedings for redemption of any Bonds nor the cessation of accrual of interest thereon. . (b) Conditional Notice of Redem tp lon. Any notice of optional redemption of the Bonds' delivered' in accordance with this Section 4.03 may be conditional and if any condition stated in the notice of redemption shall not have been satisfied on or prior to the redemption date, said notice shall be of no force and effect and the Authoriryshall not be required to redeem such Bonds and the redemption shall. not be made and the Trustee shall within a reasonable time thereafter give notice, to the persons and in the manner in which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled. The Authority may rescind any optional redemption and notice thereof for any reason on arty date on or prior to the date fixed for redemption, by causing written notice of the rescission to be given to the owners of the Bonds so called for redemption. Any optional redemption and notice thereof shall be rescinded'if for any reason on the date fixed for redemption moneys are not available in the Redemption Account or otherwise held in trust for such purpose in an amount sufficient to pay in full on said date the principal of,-interest, and any premium due on the Bonds called for redemption. Notice of rescission of redemption shall be given in the same manner in which notice of redemption was originally given. The actual receipt by the owner of env Bond of notice of such rescission shall not be a condition precedent to rescission, and failure to receive such notice or any defect in such notice shall not affect the validity of the resmsston. (c) Given On Behalf of the Authority. Notice of redemption of Bonds shall be given by the _ Trustee, at the expense of the Authority, for and on behalf of the Authority. Section 4.05. Partial Redemption of Bonds. In the event that only a portion of any Bond is called for redemption, upon surrender of such Bond the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond of Authorized Denominations equal in aggregate principal amount or maturity amount, as applicable, representing the unredeemed portion of the Bond to be redeemed. Section 4.06. Effect of Notice of Redemption. Notice having been given as aforesaid, and moneys for the redemption (including the interest to the applicable date of redemption and including any applicable premium), having been set aside in the Redemption Fund or any of the accounts therein, the Bonds to be redeemed' shall become, due and payable on said date of redemption, and, upon presentation 09960.000OOV958~583 1$ - ~ '. 17-297 =~ I and surrender thereof at the Principal Office of the Trustee, said Bonds shall be paid at the redemption price thereof, together with interest, accrued and unpaid to said date of redemption and premium, if any. If; on said date of redemption, moneys for the redemption of the Bonds to be redeemed, together with interest to said date of redemption, shall be heldby the Trustee so as to be available therefor on such date of redemption, and, if notice of redemption thereof shall have been given as aforesaid and not cancelled, then, from and after said date of redemption, interest represented by such Bonds shall cease to accrue and become payable. All moneys" held by or on behalf of the Trustee for the redemption of Bonds shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability for interest thereon. All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of this Article IV shall be cancelled upon surrender thereof and destroyed and the Trustee shall deliver a certificate of destruction of such Bonds to the Authority. Notice of the special redemption of Bonds shall be given upon receipt of notice of prepayment of the Special Tax Refunding Bonds: ARTICLE V REVENUES; FUNDS AND ACCOUNTS Section 5.01. Pledge and Assignment. (a) Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held in any fund or account established pursuant to this Indenture (including the Reserve Fund but excluding the ResiduaC Account and the Rebate Fund) are hereby pledged by the Authority to secure the full and timely payment of the principal of and interest and premium,'if any, of the Bonds in accordance with their terms and the provisions of this Indenture. Said pledge shall constitute a 5rst lien on and security interest in such assets and shall attach, be perfected, and be valid and binding from and after delivery of the Bonds by the Trustee, and the Revenues and other items pledged, hereunder shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act. (b) Subject to the provisions of this Indenture, the Authority hereby pledges and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues, all of the moneys, and securities in the funds and accounts created hereunder (including the Reserve Fund but excluding the Residual Account and the Rebate Fund), as their interests appear, and other amounts pledged in paragraph (a) above and all of the tight, title, and interest of the Authority in the Special Tax Refunding Bonds. The Authority shall collect and receive, or cause to be collected and received by the Trustee, all such Revenues, and Revenues collected or received by the Authority, or collected and received' by the Trustee on behalf of the Authority, shalt be deemed to be held, and to have been collected ' or received, by the Authority, in trust, and shall be paid to the Trustee as set forth herein. The Trustee also shall be entitled to and may take all steps, actions and proceedings reasonably necessary in its judgment to enforce, either jointly with the Authority or 'separately, by itself, all of the rights of the Authority and all of the obligations of the Community Facilities District under and with respect to the Special Tax Refunding Bonds. ' Section 5.02. Establishment of Revenue Fund: Allocation of Revenues. The Authority shall establish with the Trustee a special fund designated the "Revenue Fund" which the Trustee shall maintain and hold in trust. Within the Revenue Fund, the Trustee shall establish special accounts designated as the 09960.OOOOOV9585i8.3 19 17-298 "Principal Account," the "Interest AccounC," the `'Redemption Account," and the "Residual Account" Such fund and accounts shall. be held and maintained as separate and distinct funds and accounts. All Revenues, except for investment earnings on the Reserve Fwtd which shall be applied according to Section 5.07, shall be promptly transferted to the Trustee by die Authority and deposited by the Trustee upon receipt thereof in the Revenue Fund. All Reveuues deposited with the Trustee shall be held, disbursed, allocated, and applied by the Trustee only as provided in this Indenture. On or before each Interest Payment Date, the Trustee shall transfee all Revenues (other than Revenues representing Principal Prepayments and Revenues resulting from the optional redemption of Special Tas Refunding Bonds which shall be transferred as described below) then in the Revenue Fund into the following funds and accounts based upon the following deposit requirements and in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any account subsequent in priority: (a) The Trustee shall deposit in the Interest Account an amount which, together with, the amounts then on deposit therein, including amounts, if any, transferred by the Trustee from the Reserve Fund pursuant to Section 5.07, is sufficient to cause the aggregate amom7f on deposit in the Interest Account to equal the amount of interest coming due and payable on the Bonds on such Interest Payment Date and any amount of interest previously due and unpaid. (b) The Trustee shall deposit in the Principal Account, if necessary, an amount which, together with the amounts then on deposit therein, including amounts, if any, transferred from the Reserve Fund pursuant to Section 5.07, is sufficient to cause the aggregate amount on deposit in the Principal Account to equal the amount of principal or mandatory sinking account payment coming due and payable on the Bonds within the Bond Year and any amount of principal previously due and unpaid. (c) The Trustee shall deposit in the Reserve Fund, if necessary, an amount which. is sufficient to cause the aggregate amount on deposit in the Reserve Fund to equal the Reserve Requirement. (d) On or after any Interest Payment Date on which the amount on deposit in the Revenue Fund was inadequate to make the transfers described in (a) and (b) above as a result of a default in the scheduled payment of principal of and/or interest on the Special Tax Refunding Bonds, the Trustee shall immediately notify the Director of Finance of the amount of such payment default. In the event that the Trustee receives all or any portion of the principal of and/or interest on the Bonds the payment of which is in default, the Trustee shall disburse or transfer such funds in the following order of priority: (i) for deposit in the Reserve Fund such amount as shall be necessary to replenish the amount of any transfers from the Reserve Fund to the Interest Account or the Principal Account resulting from such payment default; and (ii) for deposit in the Revenue Fund any amount remaining following the transfer. required pursuant to (i). (e) The Trustee shall deposit in the Rebate Fund, if necessary, an amounC which is sufficient to cause the aggregate amount on deposit in the Rebate Fund to equal the amount of any payment then required to be made to the United States. (f) On June 30, after making the deposits required under subsections (a), (b), (c), (d) and (e) above for the preceding March 1 Interest Payment Date and making the determination that there are adequate revenues on deposit with the Fiscal AgenC and available to make. the scheduled Debt Service payment on the Special Tax Refunding Bonds due on the followurg September 1 Interest Payment Date, and on September 1 of each year, after making the deposits required under subsections (a), (b), (c), (d) and (e) above for such September I Interest Payment Date, the Trustee shall transfer all amounts remaining on deposit in the Revenue Fund to the Residual Account. 09960.00000\i9~8»S.i ? ~ ~~-299 " The Trustee shall deposit in the Redemption Account those Revenues representing Principal Prepayments and which are to be used for the mandatory redemption of the Bonds. The Trustee shall deposit in the Redemption Account those Revenues resulting from the optional redemption of the Special Tax Refunding Bonds, and which the Authority has directed the Trustee to use for the optional' redemption of the Bonds. Section 5.03. Application of Interest Account. Subject to the provisions of this Indenture, all amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable or, at the Written Request of the Authority filed with the Trustee, to apply to the payment of accrued interest on any Bonds purchased by the Authority pursuant to Section 5.06 in lieu of redemption pursuuit to Article IV. Any amounts on deposit in the Interest Account on September 2 of any year during the term of the Bonds shall be transferred from the Interest Account to the Revenue Fund for reallocation pursuant to Section 5.02. Section 5.04. Application of Principal Account. Subject to the provisions of this Indenture, all amounts in the Principal Account shall be used and withdrawn by the Trustee solely to pay the principal or maturity amount, as applicable, of the Bonds upon the stated maturity thereof or upon any prior redemption of the Bonds with the proceeds of mandatory sinking payments. Any amounts on deposit in the Principal Account on September 2 of any year during the term of the Bonds shall be transferred from the Principal Account to the Revenue Fund for reallocation pursuant to Section 5.02. Section 5.05. Application of Residual Account. Amounts in the Residual Account shall no longer be considered Revenues and are'not pledged to repay the Bonds. So long as the Special Tax Refunding Bonds are outstanding under 'the terms of the Fiscal Agent Agreements, on July 1 and on Septembet 2 of each year, the remaining balance in the Residual Account shall, except as provided below, be transferred to the Special Tax Fund (as such term is defined in the Fiscal Agent Agreements) established and held by the Fiscal Agent for each Series of Special Tax Refunding Bonds proportionately based on their respective Proportionate Share. Notwithstanding the foregoing, in the event that the Special Tax Refunding Bonds have been paid in full or defeased, then any amounts in the Residual Account shall be paid by the Trustee to the Authority to be used for any lawful purpose. The amount of the transfer to the Special Tax Fund for a Series of Special Tax Refuuding Bonds calculated pursuant to the preceding paragraph shall be reduced by the amount of any outstanding deficiency, as of the date of such transfer, in the payment ~of debt service on such Special Tax Refunding Bonds occurring in the Bond Year ending the September ls` immediately preceding such transfer date. Section 5.06. Establishment and Application of Redemption Account. The Authority shall establish a special account within the Revenue Fund designated as the "Redemption Account," which account the Trustee shall maintain and hold in trust as a separate and distinct account within such fund. The Trustee shall deposit in the Redemption Account any amounts required or permitted to be applied to the redemption of Bonds pursuant to Section 4.01 (a) or (b) hereunder. Subject to the provisions of this Indenture, all amounts deposited in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of redeeming the Bonds in the manner and upon the ternis and conditions specified in Section 4.01 (a) or (b) at the next succeeding date of redemption for which notice has been given and at the redemption prices then applicable. At any time prior to selection of Bonds for such notice of redemption, the Trustee may, at the Written Request of the Authority, apply amounts on deposit in the Redemption Account to the purchase of such Bonds, for cancellation, at public or private sale, as and when and at prices not exceeding the par amount thereof (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account). 09960.00000\7953158.3 2l 17-300 Secfion 5.07. Establishment and Application of Reserve Fund. The Trustee shall establish a special fund which fund the Trustee shall maintain and hold in trust as a separate and distinct fund designated as the "Reserve Fund." On the Closing Date, the Trustee shall deposit in the Reserve Fund the amount received from the Fiscal Agents specified in subparagraph (b) of Section 3.02 representing the Reserve Requirement as of that date. There shall be maintained in the Reserve Fund an amount equal to the Reserve Requirement. Moneys in the Reserve Fund shall be used solely far the purposes set forth in this Section 5.07. Subject to the limitations set forth in the following paragraph, amounts in the Reserve Fund shall be applied to pay the principal of, including sinking fiord payments, and interest on the Bonds when due in the event that the moneys in the Interest Account and/or the Principal Account of the Revenue Fund are insufficient therefor If the amounts in the Interest Account and/or the Principal Account of the Revenue Fund are insufficient to pay the principal of, including sinking fiord payments, or interest on the Bonds when due, the Trustee shall withdraw from the Reserve Fund for deposit in the Interest Account and/or the Principal Account, as applicable, moneys necessary for such purposes. _ [n addition, amounts, if any, in the Reserve Fund may be applied in connection with an optional redemption pursuant to Section 4.01(a) or a mandatory redemption pursuant to Section 4.01(6) or a defeasance pursuant to Section 10.01 hereof of the Bonds in whole or in part in accordance with the following sentence, or when the balance therein equals the principal and interest due on the Bonds to and including maturity to pay the principal of and interest due on the Bonds to maturity. Any amounts that would otherwise be on deposit in the Reserve Fund following any such optional redemption, mandatory redemption or defeasance that will be in excess of the Reserve Requirement following such event shall be applied toward such optional redemption, mandatory redemption or defeasance, as applicable. In the event that the Tnistee receives a Written Request of the Community Facilities District notifying the Trustee of the .Prepayment of the Special Tas obligation for any parcel within an hnprovement Area and requesting the transfer of the applicab]e Special Tax Refunding Bonds Prepayment Reserve Fund Credit to the Fiscal Agent for the Series of the Special Tas Refunding Bonds issued for such Improvement Area, the Trustee shall transfer from the Reserve Fund, not less than five (5) Business Days prior to the redemption date of the Special Tax Refunding Bonds, ah amount equal to the Special Tas Refunding Bonds Prepayment Reserve Fund Credit to such Fiscal Agent. The Trustee shall, pursuant to a Written Certificate of the Authority, disburse or transfer from the cash amount then on deposit in the Reserve Fund on the ftnal maturity date of each Series of Special Tax Bonds, an amount equal to the CFD Bonds Reserve Fund Credit Amount applicable to such Series of Special Tax Bonds, minus the amount of any transfer previously made necessitated as a result of a deficiency in the scheduled payment of principal of or interest on such Series of Special Tax Bonds which has not previously been reimbursed, and such amount shall be transferred to the Interest Account and the Principal Account as a credit against the payments due on such Series of Special Tax Bonds on such date with the amount transferred being deposited first to the Interest Account as a credit on the interest due on such bonds on such date and the balance being deposited to the Principal Account as a credit on the principal due of such bonds on such date. On-each September 2nd during the tens of the Bonds, the Trustee shall calculate the Reserve Requirement for the Band Year commencing on such September 2nd. If the amount then on deposit in the Reserve Fund exceeds the Reserve Requirement as of the date of such calculation (the "Excess Reserve Fund Amount"), the Trustee shall not less than five (5) Business Days thereafter transfer the Excess Reserve Fund Amount to the Revenue Fund. 09960.00000\79~85~3.3 77 17-301 Investment earnings on the investment of money on deposit iu the Reserve Fund shall be deposited in the Reserve Fund. Section 5.08. Establishment and Application of the Rebate Fund. The Trustee shall' establish and maintain a separate fund to be held by the Trustee and known as the "Rebate Fund." The Trustee shall, in accordance with written directions received from an Authorized Representative of the Authority, deposit into the Rebate Fund moneys transferred by the Fiscal Agent pursuant to the provisions of the applicable Fiscal Agent Agreement or Fiscal Agent Agreements. The Rebate Fund shall be held either uninvested or invested only in Permitted Investments described in clause B(5) of the definition thereof at the written direction of the Authority. Moneys on deposit in [he Rebate Fund shall be applied only to payments made to the United States to the extent such payments are required by the Tax Certificate. The Trustee shall, upon written request and direction of an Authorized Representative of the Authority, make such payments to the United States. The Trustee may rely conclusively upon the Authority's determinations, calculations and certifications required by this Section. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Authority's calculations hereunder The Trustee's sole responsibilities under this Section 5.08 are to follow the written instructions of the Authority pertaining hereto. The Authority shall be responsible for any fees and expenses incurred by the Trustee pursuant to Section 5.09. The Trustee shall, upon written request and direction from an Authorized Representative of the Authority, transfer to or upon the order of the Authority any moneys on deposit in the Rebate Fund in excess of the amount, if any, required to be maintained or held therein in accordance with the Tax Certificate. Secfion 5.09. Investment of Moneys. Except as othernise provided herein, all moneys in any of the funds or accounts established pursuant to the Lidenture shall be invested by the Authority solely in Permitted Investments, or, if such fund or account is held by the Trustee solely in Permitted Investments, as directed in writing by the Authority two (2) Business Days prior to the making of such investment. Such investment instructions shall certify that the investment is a Permitted Investment. Permitted Investments may be purchased at such prices as the Authority shall determine. All Permitted Investments shall be acquired subject to any restrictive instructions given to the Trustee pursuant to Section 6.07 and such additional limitations or requirements consistent with the foregoing as may be established by the Written Request of the Authority. Moneys in any funds and accounts shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in [his Indenture. Absent timely written direction from the Authority, the Trustee shall invest any funds held by it in Permitted Investments described in clause B(5) of the definition thereof. Except as provided in Section 5.07 with respect to the Reserve Fund and Section 5.08 with respect to the Rebate Fund, all interest, profits and other income received from the investment of moneys in any fund or account established pursuant to this Indenture shall be deposited in the Revenue Fund. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any Permitted Investments equal to the amount of accrued interest, if any, paid as part of the purchase price of such Permitted Investments shall be credited to the fund from which such accrued interest was paid. Permitted Investments acquired as an investment of moneys in any fund established under this indenture shall be credited to such fund. Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Code) shall 09960.00000\7918558.3 2~ 17-302 be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture or the Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under the applicable provisions of the Code shall be valued at their present value (within the meaning of section 148 of the Code). The Trustee shall not be liable for verification of the application of such sections of the Code. The Trustee or an affiliate may act as principal or agent in the making or disposing of any investment and shall be entitled to its customary fee therefor. Upon the Written Request of the Authority, or as required for the purposes of the provisions of this Indenture, the Trustee shall sell or present for redemption, any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal, or disbursement from the fund to which such Permitted Investments are credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section 5.09. Investments purchased with fiords on deposit in the Reserve Fund not payable on demand shall be restricted to maturities of five years or less. The Trustee shall furnish the Authority periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the Authority. Upon the Authority's election, such statements will be delivered via the t'rustee's online service and upon electing such service, paper statements will be provided only upon request. The Authority waives the right to receive brokerage confirmations oP security transactions effected by the Trustee as they occur, tothe extent permitted by law. The Authority further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. ARTICLE VI PARTICULAR COVENANTS Section 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid the principal, premium, if any, and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of Chis htdenture, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged for such payment as provided in this Indenture and received by the Authority or the Trustee. Section 6.02. Extension of Pavment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the mattuity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall noY be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal, of all of the Bonds then Outstanding and of all claims for interest thereon which shall noC have been so extended. Nothing in Chis Section shall be deemed to limit the right of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds. Section 6.03. Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge, or other encumbrance upon the Revenues and other assets pledged or assigned under. this Indenture while any of the Bonds are outstanding, except the pledge and assignment created by this Indenture. Subject to this ]imitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Bond Law, and reserves the right to issue other obligations for such purposes. 09960.00000\7958553.3 Z4 17-303 Section 6.04. Power to Issue Bonds and Make Pledffe Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues, the Special Tax Refunding Bonds and other assets purported to be pledged and assigned, respectively, under this Indenture in the manner and to the extent provided in this Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid, and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee, subject to the provisions of Article VIII, shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all Persons whomsoever. Section 6.05. Accountine Records and Financial Statement The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with industry standards, in which complete and accurate entries shall be made of all transactions made by it relating to the Bond proceeds, the Revenues, the Special Tax Refunding Bonds and all funds and accounts established with the Trustee pursuant to this Indenture. Such books of record and account shall be available for inspection by the Authority, the Independent Financial Consultant, the Underwriter, and the Community Facilities District, during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. The Authority shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with generally accepted accounting principles, in which complete and accurate entries shall be made of all transactions relating to the Bond proceeds, the Revenues, the Special Tax Refunding Bonds and all funds and accounts established pursuant to this Indenture (other than those records and accounts kept by the Trustee). Such books of record and account shall be available for inspection by the Trustee, the Independent Financial Consultant and the Community Facilities District, during regular business hours and upon twenty-four (24) hours, notice and under reasonable circumstances as agreed to by the Authority. Section 6.06. Waiver of Laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafrer in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Authority to the extent permitted by law. Section 6.07. Tax Covenants. The Authority will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the Authority or take or omit to take any action that would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Tax Code, or obligations which are "federally guaranteed" within the meaning of Section 149(b) of the Tax Code. The Authority will not allow five percent (5%) or more of the proceeds of the Bonds to be used in the trade or business of any non-governmental units and will not loan five percent (5%) or more of the proceeds of the Bonds to any non-governmental units. The Authority covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103 of the Tax Code. The Authority will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the Authority, or take or otnit to take any action, that would cause the Bonds to be `'arbitrage bonds" within the meaning of Section l48(a) of the Tax Code. To that end, the Authority will comply with all requirements of Section 148 of the Tax Code to the extent applicable to the Bonds. h1 the event that at any time the Authority is of the opinion that for purposes of this Section it is necessary to restrict or limit the yield on-the investment of any moneys held under this Indenture or otherwise the Authority shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. 09960.000OOV958558.3 25 17-304 W ithout limiting the generality of the foregoing, the Authority agrees that there shall be paid from time to time all amounts required to be rebaxed to the United States of America pursuant to Section 148(f) of the Tax Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds from tithe to time. This covenant shall survive payment in full or defeasance of the Bonds. Notwithstanding any provision of this Section, if the Authority shall obtain an opinion of Bond Counsel to the effect that any action required under this covenant is no longer required, or to- the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Tax Code, the Trustee may rely conclusively ou such opinion in complying with the provisions hereof, and the covenant hereunder shall be deemed to be modified to that extent. Section 6.08. Collection of Revenues. The Authority shall cause to be.collected and paid to it all Revenues payable with respect to the ,Special Tax Refunding Bonds promptly as such Revenues become due and payable, and shall vigorously enforce and cause to be enforced alf rights of the Authority and the Trustee under and with respect to the Special Tax Refunding Bonds. Upon any failure of the Authority to perform as required by this Section 6.08, the Trustee shall, subject to the provisions of Article VII[ hereof, take appropriate actions to collect and cause the Revenues to be paid to the Trustee. Section.6.09. Special Tax Refunding Bonds. The Authority; the Trustee and the Community Facilities District may at any time consent to, amend or modify any Series of the Special Tax Refunding Bonds pursuant to the terms of the applicable Fiscal Agent Agreement, (i) with the prior consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, or (ii) without the consent of any of the Owners, if such amendment or modification is for any one or more of the following purposes: (a) to add to the covenants and agreements contained in such Special Tax Refunding Bonds, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power therein reserved to or conferred upon the Community Facilities District; or (b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in such Special Tax Refunding Bonds, or in any other respect whatsoever as the Conmumity Facilities District may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not materially adversely affect the interests of the Owners of the Bonds; or (c) to amend any provision thereof to the extent necessary to comply with the Code, but only if and to the extent such amendment will not adversely affect the exclusion from gross income of the interest on any of the Bonds under the Code, in the opinion ofnationally-recognized bond counsel. Section 6.10. Limitation on Defeasance, Safe and Refunding of Special Tas Refunding Bonds. The Authority shall not consent to a sale, defeasance or optional redemption of any Special Tax Refunding Bonds unless the Authority shall provide to the Trustee a certificate of an Independent Financial Consultant or an Independent Accountant, certifying that after giving effect to the sale, defeasance or redemption, cash flows from the remaining outstanding Special Tax Refunding Bonds will be sufficient to satisfy the ongoing requirement for payment of principal of and interest on the Bonds. Section 6.11. Further Assurances. The Authority will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carryout the intention or to facilitate the performance of this [ndenture and for the better assuring and confirming unto the Owners of the Bonds of the rights and benefits provided in this Indenture. 09960 OOOOOV9~8~583 ~( 17-305 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS Section 7.01. Events of Default. The following events shall be Events of Default: ° (a) if default by the Authority shall be made in the due and punctual payment of the principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for sinking fund redemption or otherwise; (b) if default shall be made in the due and punctual payment of any installment of interest on any Bonds when and as the same shall become due and payable; (c) if default shall be made by the Authority in the observance of any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such default shall have continued for a period of thirty (30) days after written notice thereof which grace period shall not be extended beyond sixty (60) days, Trustee or the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds at the time Outstanding as determined in Section 11.12 hereof; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period; the Authority, the Trustee, and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Authority within the applicable period and diligently pursued until the default is corrected;' ' (d) the occurrence of an Event of Bankruptcy with respect to the Authority; and (e) the occurrence of a default under airy Special Tas Refunding Bond. Section 7.02. Acceleration. The Bonds are not subject to acceleration. Section 7.03. Remedies of Bond Owners. Subject to the provisions of Sections 7.07 and 7.08, any Bond Owner shall have the right, for the equal benefit and protection of all Bond Owners similarly situated: (a) by mandamus, suit, action, or proceeding, to compel the Authority and its members, officers, agents or employees to perform each and every term, provision and covenant contained in this Indenture and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the Authority and the fulfillment of all duties imposed upon it by the Bond Law; (b) by suit, action, or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Bond Owners, rights; or (c) upon the happening of any Event of Default, by suit, action, or proceeding in any court of competent jurisdiction, to require the Authority and its members and employees to account as if it and they were the trustees of an express trust. Section 7.04. Application of Revenues and other Funds After Default. If an Event of Default shall occur and be continuing, all Revenues and any other funds then held or thereafer received by the Authority shall, immediately upon receipt by the Authority, be transferred by the Authority to the Trustee and be deposited by the Trustee in the Revenue Fund and all amounts held in the Revenue Fund by the Trustee and all Revenues and any other funds then held or thereafter received by the Authority or the Trustee under any of the provisions o£this Indenture shall be applied by the Trustee as follows and in the following order: 09960.000OOV9585i83 27 17-306 (a) To the payment of any fees and expenses necessary in the opinion of the Trustee to protect the interests of the Owners of the Bonds and payment of reasonable charges and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in. and about the performance of its powers and duties under, this Indenture; (b) To the payment of the principal of and interest then due with respect Co the Bonds (upon., presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture, as follows: first To the payment to the Persons entitled thereto of all installments o£ interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the Persons entitled thereto, without any discrimination or preference; and Second: To.the paymenC to the Persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at.the rate borne by the respective Bonds on the date of maturity or redemption, and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the. payment thereof ratably, according to the amounts of principal due on such date to the Persons entitled Chereto, without any discrimination or preference. Section 7.05. Trustee to Represent Bond Owners. Subject to the provisions of Sections 7.03 and 7.07, the Trustee is hereby irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney-in-fact of rite Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to the Owners tinder the provisions of the Bonds, this Indenture, the Bond Law and applicable provisions of any other law. Upon the occun~ence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bond Owners, the Trustee in its discretion may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, as deterntined pursuant to Section l 1.12 hereof, and upon being indemnified to its satisfaction therefor, shall proceed to protect or enforce its rights or the rights of such Owners by sucfi appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee and such Owners under the Bonds, this Indenture, the applicable Supplemental Indenture, the Bond Law or any other law; and upon instituting such proceeding, the Tnistee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under this Indenture, pending such proceedings. All rights of action under this Indenture, or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be. brought in the name oPthe Trustee for the benefit and protection of the Owners of such Bonds, subject to the provisions of this Indenture. Section 7.06. Appointment. of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Owners of the Bonds under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer. 09960.000OOV 98558.3 ~ g 17-307 Section 7.07. Bond Owners' Direction of Proceedings. The Owners of a majority in aggregate principal amount of the Bonds then Outstanding, as determined pursuant to Section 11.12 hereof, shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and.upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bond Owners not parties to such direction. Section 7.08. Limitation on Bond Owners' Right to Sue. No Owner of any Bonds shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Agreement, the Bond Law or any other applicable law with respect to such Bonds, unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, as determined pursuant to Section 11.12 hereof, shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such Owner or said Owners shall have tendered to the Trustee indemnity against the costs, expenses acid liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days afrer such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, [o be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder or under law; it being understood and intended that not one or more Owners of Bonds shall have any right in ahy mamter whatever by his or their action to affect, disturb, or prejudice the security of this Indenture or the rights of any other Owner of the Bonds, or to enforce any right under the Bonds, this Indenture, the Bond Law or other applicable law, with respect to the Bonds, except in the manner herein provided, and that all proceedings at law orin equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners of the Outstanding Bonds, subject to the provisions of this hndenture. Section 7.09. Absolute Obligation of Authority. Nothing in Section 7.08 or in'any other provision of this Indenture or in the Bonds contained shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Owners of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Revenues and other assets herein pledgedtherefor and received by the Authority or the Trustee, or affect or impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds. Section 7.10. Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Bond Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Bond Owners, then in every such case the Authority, the Trustee and the Bond Owners, object to any determination in such proceedings, shall be restored to their"former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Authority, the Trustee and the Bond Owners shall continue as though no'such proceedings had been taken. Section 7.11. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition [o any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise. 09960.000OOV95R558.' 29 17-308 Section 7.12. No Waiver of Default. No delay or omission of the Trustee or of any Owner of ~Yhe Bonds to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee or to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient. ARTICLE VIII THE TRUSTEE Secfion$.Ol.-Duties and, Liabilities of Trustee. (a) The Trustee shall, .prior to an Event of Default, and after the curing or waiving of all` Events of Default which may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this hndenture. The Trustee shall, during the existence of any Event of Default which has not been cured or waived, exercise such of the rights and powers vested in iY by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) The Authority may remove the Trustee at any time unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at anytime requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, as determined pursuant to ,Section 11.12 hereof (or.their attorneys duly authorized in writing) or if at any time the Tnrstee shall cease to lie eligible in accordance with subsection (e) of this Section, or shall become .incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee and thereupon shall appoint a successor Trustee by an instrument in writing. Notwithstanding ,anything herein to the contrary, the Trustee must at all times be the same entity (at the same branch office) as the Fiscal Agent for the Special Tax Refunding Bonds. (c) The Trustee may at any time resign by giving written notice of such resignation by first class mail, postage prepaid, to the Authority and the Bond Owners at the respective addresses shown on the Registration Books. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing. The Trustee shall not be relieved of its duties until such successor Trustee has accepted appointment. (d) Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no successor Trustee shall _ have been appointed and have accepted appointment within forty-five (45) days following giving notice of removat or notice of resignation as aforesaid, the resigning Trustee or any Bond Owner (on behalf of himself and all other Bond Owners) may petition any couk of competent jurisdiction for the appoinnnent of a successor Trustee, and such court may thereupon, after. such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall-signify its acceptance of such appointment by executing and delivering to the Authority and to its predecessor Trustee a written acceptance thereof, and to the predecessor Trustee an instrument indemnifying the' predecessorTrustee for any costsor claiuis arising during the time the successor Tnistee serves as Trustee hereunder, and after payment by the Authority of all unpaid fees and expenses of the predecessor Trustee, the succe_ ssor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys,. estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the written Request of_the 09960.000OOV958558.3 j(] 17-309 Authority or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and'alt instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Tnlstee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Authority shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties, and obligations. Upon acceptance of appointment by a successor Trustee as provided for in this subsection, the Authority shall mail or cause the successor Trustee to mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to each rating agency which then maintains a rating on the Bonds and to the Bond Owners at the addresses shown on the Registration Books. If the Authority fails to mail such notice within fifteen (15) days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Authority. (e) Any Trustee appointed under the provisions of this Section 8.01 in succession to the Trustee shall be a trust company or bank in good standing located in or incorporated under the laws of the State of California, duly authorized to exercise trust powers and subject to examination by federal or state authority, having a reported combined capital and surplus of not less than seventy-five million dollars ($75,000,000). If such bank or trust company publishes a report' of condition at least annually, pursuant to law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recant report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee"shall resign immediately in the manner and with the effect specified iu this Section. (f) Notwithstanding any other provision of this Indenture, no removal, resignation or tern~ination of the Trustee shall take effect until a successor shall be appointed. Section 8.02. Mereer or Consolidation. Any bank or trust company into which the Trustee may be merged or converted or with which it may lie consolidated, or any bank or trust company resulting from any'merger, conversion or consolidation to which it shall be a party, or any bank or trust company to which the Trustee may sell or transfer all or substantially all of its corporate oust business, provided such bank or trust company shall be'eligible under subsection (e) of Section 8.01, shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. Section 8.03. Liability of Trustee. (a) Tlie recitals of facts herein and in the Bonds contained shall be taken as statements of the Authority, and the Trustee shall not assume responsibility for the correctness of the same, or make any representations as to the validity or sufficiency of this Indenture or of the Bonds or shall incur any responsibility in respectYhereof, other than as expressly stated herein in connection with the respective duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its Certificate of Authentication on the Bonds. The Trustee makes no representations as to the validity or sufficiency of the Indenture, or of any Bonds, or any Special Tax Refunding Boud or in respect of the security afforded by this Indenture and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to: (i) the issuance of the Bonds for value; (ii) the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee; or (iii) the application of any 09960.00000\7958958.3 31 17-310 moneys paid to the Authority or others in accordance with this Indenture except as the application of, any moneys paid'to the Trustee in its capacity as Trustee. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful default and the-• negligence and willful misconduct of its agents. Absent negligence or willful misconduct, the Trustee shall not be, liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by the Indenture. The Trustee may become the ' Owner of Bondswith the same rights it would have if it were not Trustee, and; to the extent permitted by ' law,.may act as depositary for and permit any of its officers or directors to act as a member of, or in any ' other capacity with respect to, any committee formed to protect the rights of Bond Owners; whether or ` not such• committee shall-represent the .Owners of a majority in principal amount of the Bonds then .Outstanding. (b) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Tmstee was negligent in ascertaining the pertinent facts. (c) The Trustee shall not 6e liable with respect to any action taken oromitted to be taken by it iti good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the Bouds as determined pursuant to Section 11.12 hereof, at the time .Outstanding • relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture. , {d) Absent negligence or willful misconduct, the Trustees shall not be liable for any action ' taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. _ (e) The Trustee shall not be deemed to have knowledge of any default or Event oPDefault • hereunder or under any Special Tax_ Refunding Bond unless and until it shall have actual knowledge ,thereof, or shall have received written notice thereof, at its Principal Office. Except as otherwise provided herein, the. Trustee shall not be bound to ascertain or inquire as to the performance or observance of any o£ the terms, conditions, covenants, or agreements herein or of any of the documents executed in connection with the Bonds, of as to the existence of an Event of Default thereunder. The Trustee shall not be responsible for the validity or effectiveness of airy collateral given to or held by it. . ,(f) The Trustee shall be under no obligation to institute any suit or, take any remedial action under this Indenture, or to enter any appearance in or in any way defend any suit in which it may be made . defendant, or to take any steps in the execution of the trust hereby created or in the exercise of airy rights or powers hereunder at the request, order, or direction of any Owners of Bonds or otherwise unless it shall be indemnified to its satisfaction against any and all reasonable costs and expenses, outlays and counsel fees and other disbursements, and against all liability not due to its negligence or willful misconduct provided, however; that if the Trustee intends to rely on this Section 8.03(f) as a basis for non-actiomit shall so inform the Owners of the Bonds and the Authority as soon as.possible. (g) The Trustee shall have no duty to expend or risk its own funds in the performance of its duties hereunder. (h) The Trustee shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum br any other disclosure material prepared or distributed with respect to the Bonds. Section 8.04. Right to Rely on Documents. The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bonds or other paper or document 09960.00000A79585583 - 32 17-311 believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, who may be Bond Counsel or other counsel of or to the Authority, with regard to legal questions, and absent negligence or willful misconduct, the opinion of such counsel shall be full~and'complete authorization and protection in respect 'of any action taken or suffered by it hereunder iri good faith and'ih accordance therewith; provided, however, the Trustee shall in no event delay ariy payment with respect to the Bonds in anticipation of any such opinion. Except as otherwise expressly provided in t]iis Indenture, the Trustee shall not be bound to recognize any Person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto is satisfactorily established, if disputed. - Whenever in the administration of the trusts imposed upon it by this Indenture the Trustee shall deem it'necessary or desirable that a matter be proved or established' prior to taking or suffering any action hereunder,-such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Written Certificate of the Authority, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem'ieasonable.' Section 8.05. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject during business hours, and upon reasonable notice, to the inspection of the Authority, the Community Facilities District and their'agents and representatives duly authorized in writing. Section 8.06. Compensation; Indemnification. The Authority shall cause to be paid to the Trustee from time to time all reasonable compensation for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of their attorneys, agents and employees, incurred in and about the performance of their powers uid duties under this Indenture. However, the Authority shall not be liable for "overhead experses" except as such expenses may be included as a component of the Trustee's stated annual fees. The Authority agrees to indemnify and save the Trustee harmless against any costs, claims, expenses, or liabilities which it may incur in the exercise and performance of its powers and duties hereunder, including, but not limited to, claims of the Owners arising from the Trustee's actions pursuant to Section 11.04 hereof, and under any related documents, including the enforcement of any remedies and the defense of any suit, and which are not due to its negligence or its willful default. The duty of the Authority to indemnify 'the Trustee hereunder shall survive the termination and discharge of this hidenture. None of4lie provisions contained in the Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. Section 8.07. Right of Trustee to Acpuire Bonds. The Trustee and its officers and directors may acquire and hold, or become the pledgee of, Bonds and otherwise deal with the Authority in the manner and to the same extent and with like effect as if it were not the Trustee hereunder. ARTICLE IX MODIFICATION OR AMENDMENT OF THE INDENTURE Section 9.01. Amendments Permitted. (a) This Indenture and the rights and obligations of the Authority and ofthe Owners of the Bonds and of the Trustee may be modified or amended from time to time and at any time by a 09960.000OOV9585583 3J 17-372 Supplemental Indenture, which the Authority and 8re Trustee may enter into with the written consent of the Owners of a majority in aggregate principal amount of all Bonds then Outstanding, as determined pursuant to Section 11.12 hereof, which shall have been-filed with the Trustee. No such modification or amendment shall (i) extend the fixed maturity of any Bonds, or reduce the amount of principal thereof, or extend the time of payment,. without the consent of the Owner of each Bond so affected; or (ii) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment; or (iii) permit the creation of any lien on the Revenues and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Owners'of the Bonds of the lien created by this Indenture on such Revenues and other assets (except as expressly provided in this Indenture) without the consent of the Owners of all of the Bonds then Outstanding. It shall not be necessary for the consent of the Bond Owners to approve the particular form of any Supplemental hidenture, but it shall be sufficient if such consent shall approve the substance thereof: 'The Trustee shall, at least fifteen (I S) days in advance of the effective date of any Supplemental Indenture, cause to be mailed a notice (the form of which shall be furnished to the Trustee by the Authority) of the proposed modification or amendment of this Indenture containing a copy of the Supplemental Indenture intended to effectuate such amendment or modification. Promptly after the execution by the Authority and the Trustee of arty Supplemental Indenture pursuant to this subsection (a), (i) the Trustee shall cause to ~be mailed a notice (the form of which shall be furnished to the Trustee by the .Authority), by-first class mail, postage prepaid, setting forth in general terms the substance of such Supplemental Indenture, to the Owners of the Bonds at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of an}~ such Supplemental Indenture. (b) This Indenture and any Supplemental Indenture and the rights and obligations of the Authority, the Trdstee, and the Owners of the Bonds may also be modified or amended from time to time and at any time by an indenture or indentures supplemental hereto, which the Authority and the Trustee may enter into without the consent of arty Bond Owners, for any one or more of the following purposes: (i) to add to the covenants and a~eements of the Authority in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority; (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision contained in this Indenture, or as to any other provisions of the Indenture as the Authority may deem necessary or desirable, in arty case which do .not have a material and adverse affect on the security for the Bonds granted hereunder; (iii) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as inay be permitted by said act or similar federal statute; (iv) to modify, amend, or supplement this Indenture in such manner as to cause interest on the Bonds to be excludable,'or remain, from gross income for- purposes of federal income taxation by the'United States of America; and (v) to modify of amend any provision of this Indentnre with any effect and to any extent whatsoever permissible by law, provided that any such modification or amendment shall apply only to the Bonds issued and delivered subsequent to 'the execution and delivery of the applicable Supplemental Indenture. 09960.ooooov9ssrs.a • 34 77-31.3 Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties, and obligations under this Indenture of the Authority, the Trustee, and all Owners of Bonds Outstanding shall thereafter be determined, exercised, and enforced hereunder subject in all respects to such modification and amendment, and all the teens and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the Authority so determines shall; bear a notation by endorsement or otherwise iu form approved by the Authority and the Trustee as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand on.the Owner of any Bonds Outstanding at the time of such execution and presentation of his Bonds for the purpose aYthe Office of the Trustee a suitable notation shall be made on such Bonds. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the Trustee, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee, and upon demand of the Owners of any Bonds then outstanding shalt be exchanged at the Offtce of the Trustee, without cost to any Bond Owner, for Bonds then'Outstanding, upon surrender for cancellation of such Botids, in equal aggregate principal amount of the same interest rate and maturity. Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Bond Owner from accepting any amendment as to the particular Bonds held by such Owner. ARTICLE X DEFEASANCE Section 10.01. Discharge of Indenture. The Bonds or any portion thereof may be paid by the Authority in any of the following ways, provided that the Authority also pays or causes to be paid any other sums payable hereunder by the Authority: (a) by paying or causing to be paid the principal of and interest and premium, if any, on the Bonds or any portion thereof, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust (pursuant to an escrow agreement), aY or before maturity, money or Defeasance Obligations in the Necessary amount (as provided. in Section 10.03) to pay or redeem all or any portion of the Bonds then Outstanding; or (c) by delivering to the Trustee, for cancellation by it, all or any portion of the Bonds then Outstanding. If the Authority shall also pay or cause to be paid all other sums payable hereunder by the Authority including without limitation any compensation or other amounts due and owing the Trustee hereunder, then and in that case, at the election of the Authority (evidenced by a Written Certificate of the Authority, filed with the Trustee, signifying the intention of the Authority to discharge all such indebtedness and this Indenture), and notwithstanding that any Bonds shall not have been surrendered for payment, this Indenture and the pledge of Revenues and other assets made under this Indenture and all covenants; agreements and other obligations of the Authority under this Indenture shall cease, terminate, become void and be completely discharged and satisfied. In such event, upon the Written Request of the Authority, and upon receipt of a Written Certificate of an Authorized Representative of the Authority and an opinion of Bond Counsel acceptable to the Trustee, each to the effect that all conditions precedent 09960.00000\7918558.3 ~ ~ 17-314 herein provided for relating to the discharge and satisfaction of the obligations of the Authority have been satisfied, the Trustee shall cause an accounting for such period or periods as may be requested by the Authority to be prepared and filed with the Authority and shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over, transfer, assign, or deliver all moneys or securities or other property held by it pursuant to this Indenture and the applicable Supplemental Indenture, which are not required for the payment or redemption of Bonds not theretofore surrendered for such payment or redemption, to the Authority. Section 10.02. Discharee of Liability on Bonds. Upon the deposit with the Trustee, in trust, at or before maCUrity, of money or securities in the necessary amount (as provided in Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Article N or provision satisfactory to the Trustee shall have been made for the giving of such notice, then all liability of the Authority in respect of such Bonds shall cease, terminate and be completely discharged, and the Owners thereof shall thereafter be entitled only to payment out of such money or securities deposited with the Trustee as aforesaid for their payment, subject, however, to the provisions of Section L0.04. The Authority may at any time surrender to the Trustee for cancellation by it any Bonds previously issued and delivered, which the Authority may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. Section 10.03. Deposit of Money or Securities with Trustee. Subject to Section 1 1.09 hereof, whenever in this Indenture it is provided or permitted that there be deposited with or held in trust by the Trustee money or securities in the necessary amount to pay or redeem any Bonds, the money or securities so Yo be deposited or held may include money or securities held by the Trustee in the funds and accounts . established pursuant to this Indenture and shall bec ' (a) Lawful money of the United States of America, in an amount equal to the principal amount of such Bonds and all unpaid interest thereon to maturity, except that, in .the case of Bonds which are to be redeemed prior to maturity and in respect of which notice of such redemptio^ shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the principal amount of such Bonds, premium, if any, and all unpaid interest thereon to the redemption date; or (b) Noncallable defeasance obligations (described in paragraph A of the definition of Permitted Lnvestments), the principal of, premium, if any, and interest on which when due will provide money sufficient to pay the principal of and all unpaid interest to maturity, or to the redemption date, as the case may be, on the Boods to be paid or redeemed, as such principal and interesC become due, provided that in the case of Bonds which are to be redeemed prior to the maCUrity thereof, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have-been made for the giving of such notice; provided, in each case, that the Trustee shall have been irrevocably instructed (by the terms of this 6identure or by. Written Request of the Authority) to apply such funds to the payment of such principal and interest with respect to such Bonds. ARTICLE XI MISCELLANEOUS Section 11.01. Liability of Authority Limited to Revenues. Notwithstanding anything in this hndenture or in the Bonds contained, neither the Authority, nor any member thereof, shall be required to 09960.000OOV958>>8.3 jO 17-315 advance any moneys derived from any source other than the Revenues and other assets pledged under this hrdenture for any of the purposes in this Indenture mentioned, whether for the payment of the principal or interest on the Bonds or for any other purpose of this Indenture. Nevertheless, the Authority may, but shall not be required to, advance for any of the purposes hereof any funds of the Authority which may be made available to it for such purposes. Section 11.02. Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either the Authority or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Authority or the Trustee shall bind and inure to'the benefit of the respective successors and assigns thereof whether so expressed or not. Section 11.03. Limitation of Rights to Parties and Bond Owners. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Authority, the Trustee, the Community Facilities District, and the Owners of the Bonds, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Authority, the Trustee, the Community Facilities District, and the Owners of the Bonds. Section 11.04. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee may, in lieu of such cancellation and delivery, destroy such Bonds as may be allowed by law, and upon the Written Request of the Authority deliver a certificate of such destruction to the Authority. Section 11.05. Severability of Invalid Provisions. If any one br more of the provisions cohtained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority hereby declares that it would have entered into this Indenture and each and every other Section, subsection, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, subsections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. Section 11.06. Notices. Any notice, request, complaint, demand or other communication under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or by telecopy or other form of telecommunication, at its number set forth below. Notice shall be effective either (a) upon transmission by telecopy or other form of telecommunication, (b) forty-eight (48) hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person or the. Trustee, upon actual receipt. The Authority, the Community Facilities District or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder. If to the Authority: Chula Vista Municipal Financing Authority 276 Fourth Avenue Chula Vista, CA 91910 Attention: Director of Finance 09960.000OOV958653.3 - 37 17-316 If to any Community Facilities District: Name of Che Community Facilities District c/o City ofChula Vista Finance Department 276 Fourth Avenue Chula Vista, CA 91910 Attention: Director of Finance If to the Trustee: U.S. Bank National Association Attn: Corporate Trust 633 West Fifth Street, 24th Floor Los Angeles, CA 90071 Reference: Section 11.07. Waiver of Notice: Requirement of Mailed Notice. Whenever in this Tndenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the Person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Whenever in this Indenture any notice shall be required to be given by mail, such requirement shall be satisfied by the deposit of such notice in the United States mail, postage prepaid, by first class mail. Section 11.08. Evidence of Rights of Bond Owners. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Bond Owners may be in any number of concun~ent instruments of substantially similar tenor and shall be signed or executed by such Bond Owners in Person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and the Authority if made in the manner provided in this Section. The fact and date of the execution by any Person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other oftcer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the Person signing such request, consent or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary,public or other officer. The ownership of registered Bonds shall be proved by the Registration Books. Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in accordance therewith or reliance thereon. Section 11.09. Money Held for Particular Bonds. The money held by the Trustee for the payment of the-interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions of Section 1 1.10 but without any liability for interest thereon. Section 11.10. Unclaimed Monevs. Anything in this Indenture to the contrary notwithstanding and subject to the escheat laws of the State, any moneys held by the_Trustee in mist for the payment and discharge of any of the Bonds which remain unclaimed for two (2) years after the date when such bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two (2) years after the date of deposit of such 09960.OOOOOV9i8558.3 ~$ 17-317 moneys if deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid by the Trustee to the Authority, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the Authority for the payment of such Bonds; provided, however, that before being required to make such payment to the Authority, the Trustee shall, at the expense of Authority, cause to be mailed to the Owners of all such Bonds, at their respective addresses appearing on the Bond Register, a notice that said moneys remain unclaimed and that, after a date in said notice, which date shall not be less than thirty (30) days after the date of mailing such notice, the balance of such moneys then unclaimed will be returned to the Authority. Section 11.11. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with industry standards to the extent practicable, and with due regard for the requirements of Section 6.05 and for the protection of the security of the Bonds and the rights of every Owner thereof. Section 11.12. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are known by the Trustee to be owned or held by or for the account of the Authority, or by any other obligor. on the Bonds, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or any other obligor on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Bonds so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall certify to the Trustee the pledgee's right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect commoh control with, the Authority or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 11.13. Determination of Percentaee of Bond Owners. Whenever in this Indenture the consent, direction or other action is required or permitted to be given or taken by a percentage of the Owners of an aggregate principal amount of Bonds Outstanding (including the owners of a majority in aggregate principal amount of the Bonds Outstanding), such percentage shall be calculated on the basis of the principal amount of the Outstanding Bonds. Section 11.14. Payment on Non-Business Days. Iri the event any payment is required to be made hereunder on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day. Section 11.15. Waiver of Personal Liability. No member, officer, agent or employee of the Authority shall be individually or personally liable for the payment of the principal of or premium or interest on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof, but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law or by this Indenture. Section 11.16. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of thetn as the Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. 09960.OOOOOV9585583 39 17-318 Section 11.17. Governing Laws. This Indenture shall be goverged by and construed in accordance with the laws of the State of California. - [The remainder of this page has been intentionally left blank.] 0996000000\79585583 4~ 17-319 IN WITNESS WHEREOF, the Chula Vista Municipal Financing Authority has caused this Indenture to be signed in its name by its Executive Director, and U.S. BANK NATIONAL ASSOCIATION, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written. Chula Vista Municipal Financing Authority By: Executive Director U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 09960.000OOV958i58.3 S-I 17-320 EXHIBIT A FORM OF BOND REGISTERED R- REGISTERED NEITHER THE PAYMENT OF THE PRINCIPAL OR ANY PART THEREOF NOR ANY INTEREST. THEREON CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE CITY OF CHULA VISTA OR THE CHULA VISTA HOUSING AUTHORITY, WHICH ARE MEMBERS OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY. UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE SECURITIES DEPOSITORY (AS DEFINED IN THE INDENTURE. OF TRUST) TO THE TRUSTEE. FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT; AND ANY, BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED 'REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY),. ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF .FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.; HAS AN INTEREST HEREIN. UNITED STATES OF AMERICA STATE OF. CALIFORNIA COUNTY OF SAN DIEGO CHULA VISTA MUNICIPAL FINANCING AUTHORITY SPECIAL TAR REVENUE REFUNDING BOND, INTEREST RATE REGISTERED OWNER: PRINCIPAL SUM: *** SERIES 2013 MATURITY DATE DATED DATE September 1,_ CEDE & CO. CUSIP DOLLARS The Chula Vista Municipal Financing Authority (the "Authority"), a joint powers authority created pursuant fo the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Titte 1 of the Government Code of the State of California (the "Act"), for value received,. hereby promises to pay (but only out of the Revenues and other assets pledged therefor as hereinafter mentioned) to the Registered Owner stated above or registered assigns (the "Owner")," on the Maturity Date stated above (subject to any right.. of prior redemption hereinafter mentioned), the Principal Sung . stated above; in lawful money of the United States of America; and to pay interest thereon in like lawful money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (unless this$ond is authenticated after a Record Date (as hereinafter. defined) and on or prior to the next succeeding Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or before February I5, 2013, in which event itshalf 09960.000OOV953558.3 ~ ~~ ~ 1 bear interest from the Dated Date stated above). until payment of such Principal Sum shall be discharged as provided in the Tndenture hereinafter mentioned, at the Interest Rate per annum stated above, payable semiannually on each March 1 and September 1 (each an "Interest Payment Date,"), commencing September 1, 2013. The principal (or redemption price) hereof is payable upon presentation and surrender of this Bond at the corporate trust office of U.S. Bank National Association, as trustee (the "Trustee"), in Los Angeles, California (or such other office desigtated by the Trustee, herein called the "Principal Office" of the Trustee). Interest hereon is payable by check of the Trustee mailed by first class mail on each Interest Payment Date to the Owner as of the fifteenth (15th) day of the month preceding each Interest Payment Date whether or not such day'is a Business Day (the "Record Date") at the address shown on the Registration Books maintained by the Trustee or, upon written request filed with the Trustee prior to the fifteenth (15th) day preceding the applicable Interest Payment Date by an Owner of at least $1,000,000 in aggregate principal amount of the Bonds, by-wire transfer in immediately available funds to an account in the United States of America designated by such Owner in such written request. This Bond is one of a duly authorized issue of bonds of the Authority designated as the "Chula Vista Municipal Financing Authority Special Tax Revenue Refunding Bonds, Series 2013 (the "Bonds"), in the aggregate principal amount of $ $X,000,000 pursuant to the provisions of the Marks-Roos Local Bond Pooling Act of 1985, being Article 4 of the Act (commencing with Section 6584) (the "Bond Law"), and pursuant to an Indenture of Trust, dated as of July 1, 2013 by and between the Authority and the Trustee (the "Indenture"), issued for the purpose of providing funds for the purchase,of the Special Tax Refunding Bonds issued to defease and refund the Prior Special Tax Bonds (as such terms are defined in the Indenture). Reference is hereby made to the Indenture (copies of which are on file at said office of the Trustee) and all indentures supplemental thereto and to the Bond Law for a description of the rights thereunder of the Owners of the Bonds, of the nature and extent of the security, of the rights, duties and immunities of the Trustee and of the rights and obligations of the Authority thereunder. The Owner of this Bond, by acceptance hereof, assents and agrees to all the provisions of the htdenture. Unless otherwise specified herein or the context requires otherwise, capitalized terms used herein shall have the meanings given to such terms in the Tndenture_ The Bonds and the interest thereon are payable from Revenues (as such term is defined in the Indenture) derived primarily from payments made by the Community Facilities Districts (as such term is defined in the Indenture) with respect to Special Tax Refunding Bonds acquired with the proceeds of the Bonds, and are secured by a pledge and assignment of said Revenues and of amounts (including proceeds of the sale of the Bonds) held in the funds and accounts established pursuant to the Tndenture (including the Reserve Fund but excluding the Residual Account and Rebate Fund, as each of these terms are defined in the Indenture), subject only to the provisions of the hidenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. The Bonds are special obligations of the Authority and are not a lien or charge upon the funds or .property of the Authority, except to the extent of the aforesaid `pledge and assignment. The Bonds are not a debt of the Community Facilities Districts, the City, the Housing Authority or the State of California and said State is not liable for the payment thereof. ,The Authority has no taxing power. The Bonds maturing on or after September 1, 20 are subject, at the option of the Authority, .to call, and redemption from any available source of funds. prior to their stated maturity on any date on or after September 1, 20_, as a whole or in part, and by lot, as described below, at a redemption price equal to the principal amount of the Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium. The. Bonds shall be subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part from such maturities, as are selected by the Authority, from and to the extent of Principal 09960.000OOV958558.3 ~~~~2 Prepayments with respect to the Special Tax Refunding Bonds at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to tfie date of redemption: Redemption Dates Redemption Prices September 1, 20_ through March 1, 20_ 10_% September 1, 20_ and March 1, 20_ 10_ September 1, 20 and March 1, 20_ 10_ September 1, 20_ and any Interest Payment Date thereafter 10_ The Outstanding Bonds maturing on September 1, 20 and September 1, 20~ are subject to mandatory sinking fund redemption, in part, on September 1, 20 and September 1, 20 ,respectively and on each September I thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, as provided in the Indenture. Notice of redemption shall be mailed by the Trustee, by first class mail, postage prepaid, to the respective Owners of any Bonds designated for redemption at their addresses appearing on the Registration Books and to the Securities Depositories and the Information Services at least 30 days but not more than 60 days prior to the redemption date. Neither the failure to receive such notice nor any detect in the notice so mailed will affect the sufficiency of the proceedings for redemption of such Bonds or the cessation of accrual of interest on the redemption date. Each notice of redemption shall state the redemption date, the place or places of redemption, the CUSIP numbers and the Bond numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part only, the respective Authorized Denominations of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Bonds the principal amount relating thereto or of said specified portion of the principal thereof in the case of a Bond to be redeemed in part only, plus accrued interest, if any, and through which date such interest will accrue, and that from and after such date interest thereon shall cease to accrue and shall require that such Bonds be then surrendered at the Principal Office of the Trustee. Neither the failure oP any Bond Owner to receive any notice so mailed nor any defect therein shall affect the sufficiency of the proceedings for redemption of any Bonds nor the cessation of accrual of interest thereon. Any notice of optional redemption of the Bonds delivered in accordance with the provisions of the Indenture may be conditional and if any condition stated in the notice of redemption shall not have been satisfied on or prior to the redemption date, said notice shall be of no force and effect and the Authority shall not be required to redeem such Bonds and the redemption shall not be made and the Trustee shall within a reasonable time thereafter give notice, to the persons and in the ritanner iu which the notice of redemption was given, that such condition or conditions were not met and that the redemption was cancelled. The Authority may rescind any optional redemption and Notice thereof for any reason on any date on or prior to the date tixed for redemption by causing written notice of the rescission to be given to the owners of the Bonds so called for redemption. Any optional redemption and notice thereof shall be rescinded if for any reason on the date filed for redemption moneys are not available in the Redemption Account or otherwise held in trust for such purpose in an amount sufficient to pay in full on said date the principal of, interest, and any premium due on the Bonds called for redemption. Notice of rescission of redemption shall be given in the same manner in which notice of redemption was originally given. 'fhe actual receipt by the owner of any Boud of notice of such rescission shall not be a condition precedent to rescission, and failure to receive such notice or any defect in such notice shall not affect the validity of the rescission. 1 ~ ~'L 3 09960.00000\79585 58.3 The Bonds are issuable as fully registered bonds in the minimum denomination of $5,000 each or any integral multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, Bonds may be exchanged, at the Principal Office of the Trustee, for a' like aggregate principal amount of Bonds of the same interest rate and of other authorized denominations. This Bond is transferable by the Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges, if any, provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer, a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. The Trustee shall not be required to register the transfer or exchange of any Bond (i) during the period established by the Trustee for selection of Bonds for redemption, or (ii) selected for redemption. The Authority and the Trustee may treat the Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. The Indenture and the rights and obligations of the Authority and of the Owners of the Bonds and of the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture;. provided that no such modification or amendment shall (i) extend the fixed maturity of this Bond, or reduce the amount of principal hereof, or reduce the rate of interest hereon, or extend the time of payment of interest hereon, or reduce any premium payable upon the redemption hereof, without the consent of the Owner hereof; or (ii) reduce the percentage of Bonds the consent of the Owners of which is required to effect any such modification or amendment; or (iii) permit the creation of any lien on the Revenues and other assets pledged as security for the Bonds prior to or on a parity with the lien created by the Indenture, or deprive the Owners of the Bonds of the lien created by the Indenture on such Revenues and other assets (except as expressly provided in the indentures), without the consent of the Owners of all Bonds then Outstanding, all as more fully set forth in the Indenture. It is hereby certified and recited by the Authority that any and all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Bond Law, and by the Constitution and laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Bond Law, or by the Constitution and laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Indenture. This Bond shall not be entitled to any benefit under the indenture, or become valid or obligatory for any purpose, until the Trustee's Certificate of Authentication hereon endorsed shall have been signed by the Trustee. 09960.000OOV953558.3 17A3 g4 IN W[TNESS WHEREOF, the Chula Vista Municipal Financing Authority has caused this Bond to be executed in its name and on its behalf by the facsimile signature of the Chair of the Authority and attested to by the facsimile signature of the Secretary of the Authority, all as of the Dated Date stated ' above. Chula Vista Municipal Financing Authority: By: ATTEST: By: Chairman Secretary 09960.00000\79i3»8.i ~ 7A3~5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within mentioned Indenture, which has been authenticated on the date set forth below. Date of Authentication: U.S. BANK NATIONAL ASSOCIATION, as Trustee: Authorized Signatory A- 09960.000OOV9585i8.3 ~ 7-.3 6 ASSIGNMENT For value received, the undersigned do(es) hereby sell, assign and transfer unto [he within mentioned registered Bond and hereby irreSocably constituCe(s) and appoint(s) ,attorney, to transfer said Bond on the books of as Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTE: Signature(s) must be guaranteed by an NOTE: The signature on this Assignment must authorized guarantor institution correspond with the name(s).as written on the face of the within Bond in every particular without alteration or enlargement or any change whatsoever 17A3~L7 09960.00000V9535>83 EXHIBIT B PERMITTED INVESTMENTS "Permitted Investments" means any of the investments listed below that at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (provided that the Trustee shall have no duty to investigate the legality of any investments): A. The following obligations may be used for all purposes, including defeasance investments: (1) Cash (insured at all times by the Federal Deposit Insurance Corporation) or collateralized by permitted investments listed in A(2) below. (2) Obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S. including: (a) U.S. treasury obligations, (b) all direct or fully guaranteed obligations, (c) Farmers Home Administration, (d) General Services Administration, (e) Guaranteed Title XI financing, (f) Government National Mortgage Association (GNMA), and (g) State and Local Government Series. Any security used for defeasance must provide for the timely payment of principal and interest and cannot be callable or pre-payable prior to maturity or earlier redemption of the rated debt (excluding securities that do no[ have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date). B. The following obligations may be used as for all purposes other than defeasance investments in refunding escrow accounts: (i) Obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: (a) (b) (c) (d) (e) 09960.00000 V 9585 5 8.3 Export-Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), ,~s~8 (f) Federal Housing Administration, and (g) Federal Financing Bank. (2) Direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: (a) senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Flome Loan Mortgage Corporation (FHLMC); (b) obligations of the Resolution Funding Corporation (REFCORP); or (c) senior debt obligations of the Federal Home Loan Bank System. (3) U.S. dollar denominated deposit accounts, federal funds and backers' acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "P-1" by Moody's and "A-1" or "A-1+" by SBcP and maturing not more than 360 calendar days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank.) (4) ,Commercial paper which is rated at the time of purchase in the sinele highest classification, "P-I" by Moody's and "A-1" or "A-1+" by S&P and which matures not more than 270 calendar days after the date of purchase. (5) Investments in a money market fund rated "AAAm" or "AAAm-G' or better by S&P including funds for which the Trustee or an affiliate provides investment advice or other services. (6) Pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are nob callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to calf on the date specified in the notice: (a) which are rated, based on an irrevocable escrow account or fund {the "escrow"), in the highest rating category of Moody's or S&P or any successors thereto; or (b) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in A.(2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on.the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions; as appropriate; and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described io this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate. (7) Municipal obligations rated "Aaa/AAA" or general obligations of States with a rating of "A2/A" or higher by both Moody's and S&P. 17$329 09960.00000 V 95 8 9 ~ 8. i (8) Investment in the Local Agency Investment Fund of the State of California (LATE), provided that any investment of the type authorized pursuant to paragraphs (d), (e), (h), and (i) of Section 53601 of the California Government Code are additionally restricted as provided in the appropriate paragraph or paragraphs above applicable to such type of investment and provided further that investments authorized pursuant to paragraphs (r) and (m) of Section 53601 of the California Government Code are not permitted. 09960.000OOV9i8558.3 ~ ~ J V RESOLUTION NO. 2013- ' RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ACTING FOR ITSELF AND AS •. THE LEGISLATIVE BODY OF CERTAIN COMMUNITY _ ~ FACILITIES DISTRICTS, AUTHORIZING AND PROVIDING .FOR THE ISSUANCE OF SEPARATE SERIES OF SPECIAL TAX REFUNDING BONDS FOR EACH SUCH COMMUNITY FACILITIES DISTRICT, APPROVING THE FORM OF A FISCAL AGENT AGREEMENT, A BOND PURCHASE AGREEMENT, AN ESCROW DEPOSIT AND TRUST AGREEMENT AND A~ ' PRELIMINARY OFFICIAL STATEMENT, AND AUTHORIZING .OTHER ACTIONS IN CONNECTION THEREWITH WHEREAS, the City has previously established the following Community Facilities Districts ' ' and, in certain instances, designated Improvement Areas thereto pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2,5, Part 1, Division 2, Title 5 ofthe Government Code of the State of California (the "Act") and the City of Chula Vista Community Facilities District Ordinance enacted pursuant tothe powers reserved by the City of Chula Vista under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California (the "Ordinance") (the Act and the Ordinance may be referred to collectively-as the "Community Facilities District Law."): a. City of Chula Vista Community Facilities District No. 06-I (Eastlake-- Woods, Vistas and Land Swap) and Improvement Area A and Improvement Area B therein; ' b. City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven); - .. c. City of Chula Vista Community Facilities DistrictNo. 08-I (Otay Ranch Village Six); and d. City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch -Village Six); (each a "Community Facilities District" and collectively, the Community Facilities Districts"); and • WHEREAS, each applicable Community.Facrlities District issued the following series bf Special Tax Bonds to finance certain public improvements to serve such Community Facilities District or Improvement Area thereto, as applicable: . • a. $39,000,OOOCityofChulaVistaCommunityFacilities~DistrictNo.06-I (Eastlake-, Woods Vista and Land Swap) 2002 Improvement Area A Special Tax Bonds, . b. $7,880,000 City of Chula Vista Community Facilities District No. 06-I (Eastlake~- Woods Vista and Land Swap) 2004 Improvement Area B Special Tax Bonds; - J:Wttomey\FINAL.RESOS AND ORDiNANCES\2013\07 09 13\RES0.FINANCE-RESO A-Resolution of Issuance of Special Tax Refunding Bonds.DOC 72/2013 3:34 PM 17-331 Resolution No. 2013 - Page 2 of 6 a $28,050,000 City of Chula V ista Community Facilities District No. 07-I (Otay Ranch Village Eleven) 2004 Special Tax Bonds; d. $21,665,OOOCityofChulaVistaCommunityFacilitiesDistrictNo.08-I(OtayRanch Village Six) 2003. Special Tax Bonds; and, e. $10,250,000 City of Chula Vista Community Facilities District No.2001-2 (McMillin - Otay Ranch -Village Six) 2003 Special Tax Bonds; (collectively, the "PriorSpecial Tax Bonds" or individually, a "Series ofPrior Special Tax Bonds"); and WHEREAS, as a result of a combination of favorable conditions in the municipal bond market and the level of development, diversity of ownership and increase in value of the properties within the Community Facilities Districts or the Improvement Areas thereof, as applicable, for which the Prior Special Tax Bonds were issued, the City Council of the City (the "City Council"), acting as the legislative body of the Community Facilities Districts, desires to issue the following special tax refunding bonds (collectively, the "Special Tax Refunding Bands" and individually, 'a "Series of Special Tax Refunding Bonds") for the purpose of defeasing and redeerriirig the Prior Special Tax Bonds prior to their scheduled maturity in order to reduce the borrowing costs on such indebtedness: a. the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $35,000,000; ~b. the City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $8,000,000; c. the City of Chula V ista Community Facilities District No. 07-I (Otay Ranch V illage Eleven) Special Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $23,000,000; d. the City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six) Special Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $19,000,000; and e. ~ the City of Chula Vista Community Facilities District No.2001-2 (McMillin - Otay Ranch- Village Six) Special Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $10,000,000; and WHEREAS, a reduction in such borrowing costs will, in turn, result in a reduction in the rate of special taxes necessary to be levied within the Community Facilities Districts or the Improvement Areas thereof, as applicable, thereby resulting in savings to the owners of the properties subject to the levy of such special taxes; and J:\Attosney\FINAL RESOS AND ORDINANCES\2013\O7 09 13\RESO-FINANCE-RESO A-Resolution of issuance of Special Tax Refunding Bonds.DOC 7Y2/2013 3:34 PM - 17-332 Resolution No. 2013 - Page 3 of 6 WHEREAS, the City Council requests that the Chula Vista Municipal FinancingAuthority issue, sell and deliver its Special Tax Revenue Refunding Bonds, Series 2013 (the "Authority Bohds") in an aggregate principal amount not to exceed $95,000;000 to provide funds in order to acquire the Special Tax Refunding Bonds and the Special Tax Refunding Bonds will provide funds to finance the defeasance and redemption of the Prior Special Tax Bonds; and WHEREAS, for the purposes of the issuance, sale and delivery ofthe Special Tax Refunding Bonds, there are now on 'file with The City Clerk copies of the forms of: A. a Fiscal Agent Agreement, by and between the Community Facilities District and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"),establishing the terms and conditions pertaining to the issuance of each series of the Special Tax Refunding Bonds (each, a "Fiscal Agent Agreement" and collectively, the "Fiscal. Agent Agreements"); B. the Bond' Purchase. Agreement, among ,the Authority, the.Community Facilities Districts and E.J. De La Rosa •& Co., Ina and Stifel, Nicolaus & Company, Incorporated, the underwriters of the Authority Bonds (collectively, the "Underwriters"), related to the purchase ofthe Authority Bonds bythe-Underwriters and the purchase of the Special Tax Refunding Bonds by the Authority (the ``Bond ,Purchase Agreement"); C. an Escrow Deposit and Trust Agreement by and between the applicable Community Facilities District and U.S. Bank National Association, as.escrow bank, to provide for the defeasance and redemption of each Series of the Prior Special Tax Bonds (each, an "Escrow Agreement"); and D. a Preliminary Official Statement containing information including but not limited to - informationregarding the Authority Bonds, the Authority; the Community Facilities' Districts, the Improvement Areas of the applicable Community Facilities Districts, and the Special Tax Refunding Bonds (the "Preliminary Official Statement"); and WHEREAS, this City Council has reviewed and considered such forms of Fiscal Agent Agreement, Bond Purchase Agreement, Escrow Agreement and Preliminary Official Statement and finds those forms of documents suitable for approval, subject to the conditions set forth in this resolution; and WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Special Tax Refunding. Bonds as .contemplated by this resolution and the documents referred to herein exist, have happened and have. been performed. or have been ordered to have been performed in due time, form and manner as required by the laws of the State of California, including the Community Facilities District Law. J:Vir[omey\FMAL RESOS AND ORDINANCES\2013\07 09 l3\RESO-FINANCErRESO A-Resolution of Issuance of Special Tax Refunding I i -Bonds.DOC 7/2/20 L3 334 PM I 17-333 ~ Resolution No. 2013 - Page 4 of 6 NOW, THEREFORE, BE IT RESOLVED AND DETF_RMINED: SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Special Tax Refundin>? Bonds Authorized. Pursuant to and subject to the satisfaction of all conditions precedent as set forth in the Act, this Resolution and the applicable Fiscal Agent Agreement, each Series of Special Tax Refunding Bonds is hereby authorized to be issued. The date, manner of payment, interest rate or rates; interest payment dates, denominations, form; registration privileges, manner of execution, place of payment, terms of redemption and other terms, covenants and conditions ofeach Series of such Special Tax Refunding Bonds shall be as provided in the applicable Fiscal Agent Agreement as finally executed. In the event that any of such conditions precedent cannot be met as to any Series of the Prior Special Tax Bonds or the applicable Series of the Special`Tax Refunding Bonds, such Series of Special Tax Refunding Bonds shall not be issued. SECTION 3. Findings. In furtherance ofthe issuance of the Special Tax Refunding Bonds, the City Council hereby makes the following findings and determinations: (i) it is prudent in the management of the fiscal affairs of each Community Facilities District to issue the applicable Series of Special Tax Refunding Bonds for the purpose, inter alia, of defeasing and redeeming the applicable Series of Prior Special Tax Bonds, (ii) as to each Series of Special Tax Refunding Bonds, the total interest cost to maturity of such Special Tax Refunding Bonds plus the principal amount of such Special Tax Refunding Bonds will not exceed the total interest cost to maturity on the applicable Series of the Prior Special Tax Bonds being defeased and redeemed from the proceeds of such Special Tax Refunding Bonds plus the principal amount of such Prior Special Tax Bonds, and (iii) the issuance ofeach Series ofthe Special Tax Refunding Bonds is incompliance with the City's Goals and Policies for Community Facilities Districts. The principal amount of each Series of Special Tax Refunding Bonds, will be less than one third of the value of the property in the applicable Community Facilities District or the Improvement Area of the applicable Community Facilities District subject to the levy of the special taxes authorized under the Community Facilities District Law securing such Special Tax Refunding Bonds, as confirmed by the aggregate assessed value of taxable parcels in such Community Facilities District or such Improvement Area. For purposes of Section 53363.2 of the Act, the City. Council hereby further finds and determines that: (i) it is expected that the purchase ofeach Series of Special Tax Refunding Bonds will occur on the Closing Date (as such term is defined in each Fiscal Agent Agreement)„ (ii) the date, denomination, maturity dates, places of payment and forth ofeach Series of such Special Tax Refunding Bonds shall be as set forth in the applicable Fiscal Agent Agreement, as executed and the latest maturity date of each Series will not exceed the latest maturity date of the applicable Series of Prior Special Tax Bonds being refunded; (iii) the place of payment for each Series of the Prior Special Tax Bonds shall be as set forth in the. applicable Bond Indenture; and (iv) the designated costs of issuing the Special Tax Refunding Bonds shall be as described in Section 53363.8(a) of the Act, and as otherwise described in the applicable Fiscal Agent Agreement, in the Official Statement for the Authority Bonds to fmance the acquisition of the Special Tax Refunding Bonds and the closing certificates for the Authority Bonds and the Special Tax Refunding Bonds, including but not limited to, a proportionate share of the Bond Counsel fees and expenses, Disclosure Counsel fees and expenses, purchaser's discount, printing costs for the Official Statement, Special Tax Consultant, S:Wttomey\FINAL RESOS AND ORDINANCES\20I3\0709 I3\RESO-FINANCE-RESO A-Resolution of Issuance of Special Tax Refunding Bands.DOC 7/2/2013 334 PM 17-334 ` ~ - Resolution No. 2013 - Page.S of 6 Financial Advisor, escrow verification costs, initial Fiscal 'Agent fees, costs of issuance of the - Authority.Bonds, and costs of City staff incurred in connection with the sale and issuance of the, Authority Bonds and the Special Tax Refunding Bonds and (v) the minimum rate of interest on the Special Tax Refunding Bonds shall be 0.5%. SECTION 4. Authorization and Conditions. The City Manager, the Director of Finance and. the Assistant Director of Finance of the City and each of their specified designees (each, an . "Authorized Officer"), acting for and on behalf of the City or the Community Facilities Districts, as _ applicable, are; and each of them is, hereby authorized and directed to execute and deliver the various documents and instruments. described in this Resolution with such changes, insertions and - omissions as the futhorized Officer executing the same may require or approve as being in the best interests of the Community Facilities Districts subject to any limiting conditions contained herein and firrther subject to the approval thereof as to form by the City Attorney or his specified designee and Best Best & Krieger LLP, bond counsel, or, Strading, Yocca, Carlson & Rauth, disclosure counsel, in the case of the Bond Purchase Agreement, Preliminary Official Statement and final Official Statement. The'approval of such additions or changes shall be conclusively evidenced by the execution and delivery of such documents or instruments by the Authorized Officer. , SECTION 5. Fiscal Agent Agreement:. The form of Fiscal Agent Agreement on file in the City Clerk's officer is hereby approved. The Authorized Representatives are each authorized to approve a Fiscal Agent :Agreement for each Series of Special. Tax Refunding Bonds and are authorized to execute such agreements in accordance with Section 4 above. SECTION 6. Sale of Special Tax Refunding Bonds; Bond Purchase Agreement. This City Council hereby authorizes and approves the sale of the Special Tax Refunding Bonds by negotiation to the Authority. The form of the Bond Purchase Agreement on file in the City Clerk's office is hereby approved. Notwithstanding the foregoing, the authorization to execute Che Bond Purchase Agreement is subject to the satisfaction ofthe following conditions precedent that: (a) all findingaset forth in Section 3 above have been_ confirmed, (b) the final maturity of the Special Tax Refunding Bonds shall not exceed the final maturity of the Prior Special Tax Bonds; and (c) that the City Manager has determined the net effective present value savings resulting from the defeasance and refunding of each such series of Prior Special Tax Bonds shall be at least five percent (5.00%) of the principal amount refunded. . SECTION 7. Escrow Agreements. The form of the Escrow Agreement on file in the_City Clerk's office is hereby approved: The Authorized Representatives are each authorized tq approve • an Escrow Agreementfor each Series of Prior Special Tax Bonds and are authorized to execute such ' agreements in accordance with Section 4 above. SECTION 8. Preliminarv Official Statement. The form of Preliminary Official Statement presented at this meeting is hereby approved. The Authorized Officers, acting for and on behalf of - each Community Facilities Districts, are, and each of them is, hereby authorized and directed to . approve such changes, insertions and omissions therein as are necessary to enable such Authorized Officer to certify on behalf of such Community Facilities Districts that the information pertaining to such Community Facilities Districts, the Improvement Areas and the Special Tax Refunding Bonds . contained in the approved Preliminary Official Statement is deemed final as of its date except-for the - ' - I;Wttorney\FINAL RESOS AND ORDEQANCES\2013\07 U9 13\RESO-FINANCE-RESO A-Resolution of Issuance of Special Tax Refunding - Bonds.DOC ' 7/2/20 L3 334 PM 17-335 ` Resolution No. 2013 - Page 6 of 6 omission of certain information as permitted by Section 240. i 5c2-12(b)(1) of Title 17 ofthe Code of Federal Regulations. The Authorized Officers, acting for and on behalfofthe Community Facilities Districts, are, and each of them is further authorized and directed to bring the Preliminary Official Statement into the form of a fmal official statement (the "Final' Official Statement") and to execute a statement that the facts contained in the Final Official Statement pertaining to the Community Facilities Districts, the Improvement Areas and the Special Tax Refunding Bonds, and any supplement or amendmenfthereto (which shall be deemed an original part thereof for the purpose of such statement) were, at the time ofsale of the Authority Bonds, true and correct in all material respects and that the Final Official Statement did not, on the date of sale of the Authority Bonds, and does not, as of the date of delivery of the Authority Bonds; contain any untrue statement of a material fact with respect to'the Community Facilities Districts, the Improvement Areas and the Special Tax Refunding Bonds or omitto state material facts with respect to the Community Facilities Districts, the Improvemerit'Areas and the Special Tax Refunding Bonds required to be stated where necessary to make any statement made therein not misleading in the light of the circumstances under which it was made. SECTION' 10. Actions. All actions heretofore taken by the officers and agents of the City, acting for and on behalf of itself and the Community Facilities Districts, as applicable, with respect to the sale and issuance of the Special Tax Refunding Bonds are hereby approved, confirmed and ratified, and the proper officers of the City, acting for and on behalf of itself or the Community Facilities Districts, as applicable, are hereby authorized and directed to do any and all things and take any and all actions and execute any and all certificates, agreements, contracts, and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and delivery of the Special Tax Refunding Bonds in' accordance with the Act, this Resolution; the Fiscal Agent Agreements, the Escrow Agreements and the Bond' Purchase Agreement and any certificate; agreement, contract, and other document described in the documents herein approved. ' SECTION 11. Effective Date. -This resolution shall take effect from and after its adoption. Maria Kachadoorian len R. ogins I Director of Finance ~ rney J:\.4ttorney\FWAL RESOS AND ORDINANCES\2013\07 09 13VtES0.FINANCE-RESO A-Resolution of Issuance of Special Taz Refunding Bonds.DOC 7/2Y2013 3:34 PM 17-336 RESOLUTION NO. MFA 2013 - RESOLUTION OF THE BOARD OF. DIRECTORS OP THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF SPECIAL TAX REVENUE REFUNDING BONDS, SERIES 2013, APPROVING THE FORMS OF AN INDENTURE' OF TRUST; BOND ,PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT AND CONTINUING DISCLOSURE AGREEMENT, AND AUTbIORIZING OTHER ACTIONS IN CONNECTION THERE WITH WHEREAS, the Chula Vista Municipal Financing Authority (the "Authority") is a public agency organized under the Joint Exercise of Powers. Law of the State of Califomia and is authorized pursuant to said law and the Joint Exercise of Powers Agreement, dated as of June 18, 2013 (the "Agreement"), by and between the City of Chula V ista (the "City") and the Housing Authority of the City of Chula Vista creating the Authority to borrow money for the purpose of providing for the financing or refinancing for the acquisition, construction and improvement of Public. Capital Improvements of any Local Agency, or for any other financing purposes authorized under the Bond Act (each such capitalized term not previously defined in this paragraph shall have the definition provided for such term in the Agreement); and WHEREAS, the Agreement defines the term "Local Agency" to include Community Facilities Districts established by the City; and WHEREAS,'the City has previously established the following Community FacilitiesDistricts and, in certain instances, designated Improvement Areas therein pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2..5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the "Act") and the City of Chula Vista Community Facilities District Ordinance enacted pursuant to the powers reserved by the City of Chula Vista under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California (the "Ordinance") (the Act and the Ordinance may be referred to collectively as the "Community .Facilities District Law"): a. City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods,. Vistas and Land Swap) and Improvement Area A and Improvement Area B therein;. b. City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven); o. City of Chula Vista Community Facilities District No. 08-I (Otay Ranch Village Six); and ' d. City of Chula Vista Community Facilities District No:2001-2 (McMillin - Otay Ranch -Village Six); Ja.4ttorney\FINAL RESOS AND ORDINANCES\2013\07 09 l3\RESO-FINANCE-RESO B- Resolution of Issuance -Chula Vista MFA ST Rev Ref Bonds Series 3013.DOC 7/2/2013 325 PM 17-337 Resolution CVMPFA No. 2013-_ Page 2 of 6 (each a "Community Facilities District" and collectively, the'"Community Facilities Districts"); and WHEREAS, each. Community Facilities District issued the following series of Special Tax Bonds to finance certain Public Capital Improvements to serve such Community Facilities District or Improvement Area thereof, as applicable: a. $39,000,000 City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) 2002 Improvement Area A Special Tax Bonds; b. $7,880,000 City of Chula Vista Community Facilities District No. 06-I (Eastlake -Woods Vista and Land Swap) 2004 Improvement Area B Special Tax Bonds; c. $28,050,000 City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) 2004 Special Tax Bonds; d. $21,665,OOOCityofChulaVistaCommunityFacilitiesDistrictNo.08-I(Otay Ranch Village Six) 2003 Special Tax Bonds; and e. $10,250,000 City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch -Village Six) 2003 Special Tax Bonds; (collectively, the "Prior Special Tax Bonds"); and WHEREAS, as a result of a combination of favorable conditions in the municipal bond market and the level of development, diversity of ownership and increase in value of the properties within the Community Facilities Districts or the Improvement Areas thereof, as applicable; for which the Prior Special Tax Bonds were issued, the City Council of the City (the "City Council"); acting as the legislative body of the Community Facilities Districts, desires to issue the following special tax refunding bonds (collectively, the "Special Tax Refunding Bonds" or individually, a "Series of Special Tax Refunding Bonds") for the purpose of defeasing and redeeming the Prior Special Tax Bonds prior to their scheduled maturity in order to reduce the borrowing costs on such indebtedness: a, the City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods Vista and Land Swap) Improvement Area A Special Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $35,000; b. the City of Chula Vista Community Facilities District No. 06-I (Eastlake - Woods Vista and Land Swap) Improvement Area B Special Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $8,000,000; c. -the City of Chula Vista Community Facilities District No. 07-I (Otay Ranch Village Eleven) Special Tax Refunding Bonds, Series 2013 in a principal amounfnot to exceed $23,000,000; d. the City of Chula Vista Community Facilities District No. 08-I (Ofay Ranch Village Six) Special Tax Refunding Bonds, Series 2013 ("CFD No. 08-I ST Refunding Bonds") in a principal amount not to exceed $19,000,000; and J:1Attorney\FINAL RESOS AND ORDINANCES\2013\07 09 13\RESO-FINANCE-RESO B- Resolution of Issuance -Chula Vista MFA ST Rev Ref Bonds Series 2013.DOC 7/2/2013 3:25 PM 17-338 Resolution CVMPFA No. 2013-_ Page 3 of 6 e.• the City of Chula Vista Community FacilitiesDistrictNo.2001-2(McMillin- Otay Ranch-Village Six) Speaial Tax Refunding Bonds, Series 2013 in a principal amount not to exceed $10,000,000; and WHEREAS; a reduction in such borrowing costs will, in turn, result in a reduction in Che rate o£special taxes necessary to be levied within the Community Facilities Districts or the Improvement Areas thereof, as applicable, thereby resulting in savings to the owners of the properties subject to the levy of suchspecial taxes; and WHEREAS, the City Council has requested that the Authority issue, sell and deliver its Special Tax Revenue Refunding Bonds, Series 2013~(the "Authority Bonds") in an aggregate principal amount not to exceed $95,000,000 to provide funds in order to acquire the Special Tax Refunding Bonds and the Special Tax Refunding Bonds will, in turn, provide ~fimds to finance the defeasance and redemption of the Prior Special Tax Bonds; and WHEREAS, the Authority Bonds are to be offered by anegotiated sale to E.J. De La Rosa & Co., Inc; and Stifel, Nicolaus & Company, Incorporated (collectively; the "Underwriters''.); and WHEREAS, there has been prepared and filed with the Secretaryry of this Board of Directors the forms of the following documents: A. . the Indenture of Trust, by and between the Authority and U.S. Bank National Association to serve as tnlstee (the "Trustee"), establishing the terms and conditions pertaining to the issuance, sale and administration of the Authority Bonds (the "Indenture of Trust"); B. the preliminary official statement describing the City, the Authority, the Community ' Facilities Districts and the Improvement Areas, the Authority Bonds and the Special Tax Refunding Bonds (the "Preliminary Official Statement"); " C. the Bond Purchase Agreement, among the Authority, the Community Facilities Districts and the Underwriters, establishing the terms and conditions relating to the purchase' of the Authority Bonds by the Underwriters and to the ,purchase of the Special Tax Refunding Bonds by the Authority (the "Bond Purchase Agreement"); and D. the Continuing Disclosure Agreement between the Authority and NBS, acting as disseminationagent, to provide continuing disclosure of certain information specified therein pertaining to the Authority Bonds, the Special Taz Refunding Bonds, the ' Community Facilities Districts and the Improvement Areas of the applicable Community Facilities Districts (the "Continuing Disclosure Agreement"}; and WHEREAS, this Board has reviewed and considered such Indenture of Trust, Preliminary Official Statement and Bond Purchase Agreement, and finds those documents suitable for approval, subject to the conditions set forth in this resolution; and J:\Attorney\FINAL RESOS AND ORDINANCES\2013\07 09 13\RESO-FINANCE-RESO B- Resolution of issuance -Chula Vista MFA ST Rev Ref Bonds Series 2013.DOC .. 7/2/2013 335 PM ' 17-339 ~ ~ Resolution CVMPFA No. 2013-_ Page 4 of 6 WHEREAS, all conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Authority Bonds as contemplated by this resolution and the documents referred to herein exist, have happened and have been performed or have been ordered to have been preformed in due time, form and manner as required by the laws of the State of California. • NOW, THEREFORE, BE IT RESOLVED, AND DETERMINED: SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Approval of Issuance and Sale of Authority Bonds. This Board of Directors hereby approves the issuance and sale of the Authority Bonds by negotiated sale to the Underwriters. The proceeds of the AuthorityBonds shall be expended to purchase the Special Tax Refunding Bonds. SECTION 3. Indenture of Trust. The form of the Indenture of Trust relating to the Authority Bonds presented at this meeting is hereby approved. The Executive Director, the Chief Financial Officer or an authorized designee of the Executive Director or the Chief Financial Officer (each, an "Authorized Officer"), acting for and on behalf of the Authority, are, and each of them is, hereby authorized and directed to execute, acknowledge and deliver the Indenture of Trust in substantially the form approved hereby, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Authority, and as approved as to form by the legal advisor to the Authority or his specified designee ("Authority General Counsel") and Best Best & Krieger LLP, as bond counsel (`Bond Counsel") or, Strading, Yocca, Carlson & Routh, disclosure counsel, in the case of the Bond Purchase Agreement, the Continuing Disclosure Agreement, the Preliminary Official Statement and the Final Official Statement, such approval to be conclusively evidenced by the execution and delivery thereof by such Authorized Officer. SECTION 4. Bond Purchase Agreement. The form of the Bond Purchase Agreement presented at this meeting and the sale of the Authority Bonds pursuant thereto is hereby approved. The Authorized Officers, acting for and on behalf of the Authority, are, and each of them is, hereby authorized and directed to evidence the Authority's acceptance of the terms and provisions of the Bond Purchase Agreement by executing and delivering the Bond Purchase Agreement,' with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Authority, and as approved as to form by the Authority General Counsel and Bond Counsel, such approval to be conclusively evidenced by the execution and delivery thereof by such Authorized Officer; provided, however, that the Authorized Officer shall execute the Bond Purchase Agreement only if (i) the aggregate principal amount of the Authority Bonds is equal to or less than $95,000,000; (ii) the City Manager shall have determined that as a result of the sale of the Authority Bonds, as to each series of the Special Tax Refunding Bonds to be defeased and refunded, (a) the total interest cost to maturity of such Special Tax Refunding Bonds plus the principal amount of such Special Tax Refunding Bonds will not exceed the total interest cost to maturity on the series of the Prior Special Tax Bonds being discharged plus the principal amotmt of such Prior Special Tax Bonds and (b) the net effective present value savings J:\.4ttorney\FINAL RESOS AND ORDINANCES\2013\07 09 13\RESO-FINANCE-RESO B- Resolution of Issuance -Chula Vista MFA ST Rev Ref Bonds Series 2013.DOC - - 7/2/2013 3:25 PM 17-340 Resolution CVMPFA No. 2013- - ". ~ Page 5 of 6 , resrilting from the defeasance and refunding of each such series of Prior Special Tax Bonds shall be at least five percent (5.00%) of the principal amount refunded; and (iii) the ftnal maturity of the Authority Bonds shall not be later than September 1, 2034. , SECTION 5. Continuing Disclosure Agreement. The form of the Continuing Disclosure ' Agreement presented at this meeting is hereby approved. The Authorized Officers, acting for and on ' behalf of the Authority, are, and each of them is, hereby authorized and directed to evidence the _ Authority's acceptance of the terms and provisions of the Continuing Disclosure Agreement by executing and delivering the Continuing Disclosure Agreement, with such changes, insertions and omissions as the Authorized Officer executing the same may require or approve as being in the best interests of the Authority, and as approved as to form by the Authority General Counsel and Disclosure Counsel, such approval to 'be conclusively evidenced by the execution and delivery - . thereof by such Authorized Officer SECTION 6. Ap-proval of Preliminary Official Statement and Final Official Statement The form of Preliminary Official Statement presented at this meeting is hereby approved. The ' .Authorized Officers, acting for and on behalf of the Authority, are, and each of them,is, hereby `. authorized and directed to approve such changes, insertions and omissions therein as are necessary to ' enable such Authorized Officer to certify on behalf of the Authority that the approved Preliminary ' Off cial Statement is deemed final as of its date except for the omission of certain information as - permitted by Section 240.15c2-12(b) (1) of Title I7 of the Code of Federal Regulations. The Authorized Officers, acting for and on behalf of the Authority, are, and each of them, is further authorized and directed to cause the Authority to bring the Preliminary Official Statement into the form of a final official statement" (the "Final Official Statement") and to execute a statement that the facts contained in the Final Official Statement, and any supplement or amendment thereto (which shall be deemed an original part thereof fox the purpose of such statement) were, at the time of sale of the Authority Bonds, true and correct in all material respects and that the Final Official Statement ` did' not, on the date ofsale of the Authority Bonds, and does not, as of the date of delivery of the - Authority Bonds, contain any untrue statement of a material fact with respect to the Authority or omit to state material facts with respect to the Authority or the Authority Bonds required be stated where necessary to make any statement made therein not misleading in the light of the circumstances under which it was made. The Underwriters are hereby authorized to distribute copies of the ' Preliminary Official Statement to persons who may be interested in the purchase of the Authority. Bonds and are directed to deliver copies of the Final Official Statement to all actual purchasers ofthe Authority Bonds. SECTION 7. ~ Official Action. The Chairperson, the Vice-Chairperson, the Executive Director, the Chief Financial Officer, the Secretary, the Authorized Officers and any and all other officers of the Authority are hereby authorized and directed, jointly and severally, for and in the - name of the Authority, to do any and all things and take any and all actions, including without limitation, the execution and delivery of any and all assignments, certificates, requisitions; agreements, notices, consents, instruments of conveyance, warrants and other documents which they, or any of them, may deem necessary and advisable in order to consummate the transactions contemplated by the documents .approved pursuant to this Resolution and any such actions J:\Attorney\F[NAL RESOS AND ORDINANCES\20li\07 09 li\RESO-FINANCE-RESO B- Resolution of ' Issuance -Chula Vista MFA ST Rev Ref Bonds Series 2013.DOC 7/2/2013 3:25 PM ~~ `' 17-341 Resolution CVMPFA No. 2013-_ Page 6 of 6 previously taken by such officers are hereby ratified and confirmed. In the event any such officer is . uriavailable or unable to execute and deliver any of the above-referenced documents, any other officer of the Authority may validly execute and deliver such document' SECTION~8. Effective Date. This Resolution shall take effect immediately upon its passage and adoption. ' ' vl 7 Maria Kachadoorian en R. Goo ins Chief Financial Officer G 1 sel ~, J:\,4ttorney\FINAL RESOS AND ORDINANCES\2013\07 09 13\RESO-FINANCE-RESO B-Resolution of Issuance -Chula Vista MFA ST Rev Ref Bonds Series 2013.DOC 7/2/2013 3:25 PM 17-342