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HomeMy WebLinkAboutAgenda Packet 2002/07/23 CITY COUNCIL AGENDA July 23, 2002 6:00 p.m. Council Chambers Public Services Building 276 Fourth Avenue, Chula Vista ~ {ft.. ~ ".--- -- -- -- -- --- ----- ~ --- --- -- ----- CllY OF CHULA VISTA City Council Patty Davis Stephen C. Padilla Jerry R. Rindone Mary Salas Shirley A. Horton, Mayor City Manager David D. Rowlands, Jr. City Attorney John M. Kaheny City Clerk Susan Bigelow ********** The City Council meets regularly on the first calendar Tuesday at 4:00 p.m. and on the second, third and fourth calendar Tuesdays at 6:00 p.m. Regular meetings may be viewed at 7:00 p.m. on Wednesdays on Cox Cable Channel 24 or Chula Vista Cable Channel 68 ********** AGENDA July 23, 2002 6:00 P.M. CALL TO ORDER ROLL CALL: Councilmembers Davis, Padilla, Rindone, Salas, and Mayor Horton. PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY · OATHS OF OFFICE: BOBBY PRICE - VETERANS ADVISORY COMMISSION PETER MORLON - DESIGN REVIEW COMMISSION VICKI MADRID AND DAN HOM - PLANNING COMMISSION · PRESENTATION OF A PROCLAMATION PROCLAIMING JULY AS PARKS AND RECREATION MONTH TO SHARON WAYLAND, OPEN SPACE INSPECTOR; AGNES BERNARDO, PARKS SUPERVISOR; TONY RAMOS, RECREATION SUPERVISOR; MARY HOFMOCKEL, PRINCIPAL LANDSCAPE ARCHITECT; KEITH QUIGLEY, DASH COORDINATOR; AND LINETTE NOVAK, STRETCH COORDINATOR · PRESENTATION OF A PROCLAMATION PROCLAIMING THE WEEK OF JULY 14, 2002 AS NATIONAL AQUATIC WEEK TO MARK BASNIGHT, AQUATICS COORDINATOR · PRESENTATION OF A PROCLAMATION COMMENDING SERGEANT TORRANCE CARRINGTON, OFFICER JAMES SIFUENTES, SOUTHWESTERN COLLEGE NURSE ALICIA PEREGRINO AND STUDENT KRISTINA KINGSBURY FOR SAVING THE LIFE OF MARK LEONELLI, SOUTHWESTERN COLLEGE STUDENT · PRESENTATION OF A PROCLAMATION COMMENDING WILLIAM AND KAREN WOODWARD, DISPATCHER GUY IMPASTATO, AND PARAMEDICS CARLOS FLORES AND LAURA ELLIOTT FOR SAVING MALIK WOODS FROM DROWNING ON APRIL 5, 2002 · PRESENTATION BY THELLA BOWENS, INTERIM EXECUTIVE DIRECTOR OF THE SAN DIEGO COUNTY REGIONAL AIRPORT AUTHORITY, REGARDING THE PROGRESS OF THE AIR TRANSPORTATION ACTION PROGRAM CONSENT CALENDAR (Items 1 through 10) The Council will enact the staff recommendations regarding the following items listed under the Consent Calendar by one motion, without discussion, unless a Councilmember, a member of the public, or City staff requests that an item be removed for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed after Action Items. Items pulled by the public will be the first items of business. 1. APPROVAL OF MINUTES of July 9 and July 11,2002. Staff recommendation: Council approve the minutes. 2. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A 25-MPH SPEED LIMIT ON SILVERADO DRIVE, BETWEEN CLUBHOUSE DRIVE AND SOUTH GREENSVIEW DRIVE, AND ADDING THIS ROADWAY SEGMENT TO SCHEDULE X OF A REGISTER MAINTAINED BY THE OFFICE OF THE CITY ENGINEER (SECOND READING AND ADOPTION) Based on the provisions of Division 11, Chapter 7, Article 1 and Division 17, Chapter 3, Article 1 of the California Vehicle Code, and pursuant to authority under Chula Vista Municipal Code Section 10.48.020, titIed "Established Speed Limits In Certain Zones," the City Engineer has determined that, in the interest of minimizing traffic hazards and for the promotion of public safety, the speed limit on Silverado Drive, between Clubhouse Drive and South Greensview Drive, should be established at 25-mph. This speed limit will be added to Schedule X of the register maintained in the office of the City Engineer. (Director of Public Works) Staff recommendation: Council place the ordinance on second reading for adoption. 3. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SUBMITTAL TO THE CALIFORNIA DEPARTMENT OF TRANSPORTATION OF FIVE APPLICATIONS FOR THE "SAFE ROUTES TO SCHOOL" PROGRAM GRANTS - THIRD CYCLE The City has submitted five applications to the California Department of Transportation (CalTrans) for the Safe Routes to School Program. This program uses federal transportation funds for the construction of bicycle and pedestrian safety and traffic calming projects. Projects are chosen and then approved for funding after the applications have been evaluated and assigned a priority by CalTrans. (Director of Public Works) Staff recommendation: Council adopt the resolution. Page 2 - Council Agenda 07/23/02 4. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SUBMITTAL OF THE BATTERY BACKUP SYSTEM (BBS) GRANT APPLICATION RELATING TO THE PURCHASE OF UNINTERRUPTffiLE POWER SYSTEMS FOR TRAFFIC SIGNALS (PROJECT TF-293) The California Energy Commission has an incentive program that offers a partial rebate to public agencies for the installation of traffic signal uninterruptible power supply (UPS) systems. In order to qualify for the rebate, the proposed UPS must be installed at traffic signals that are already equipped with light emitting diode (LED) lamps. The City is in a position to receive a rebate of up to $327,778.50 as a result of submitting the subject grant application. The purchase of the equipment is the final step of the City's overall planned project to retrofit existing traffic signals with UPS equipment. (Director of Public Works) Staffrecommendation: Council adopt the resolution. 5. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE AGREEMENT WITH SAN DIEGO EXPRESSWAY LIMITED PARTNERSHIP (SDELP), TRIMARK SAN MIGUEL RANCH, LLC, AND THE CITY OF CHULA VISTA, REGARDING THE CONSENT TO TRANSFER OF RIGHT OF WAY FOR THE CONSTRUCTION AND OPERATION OF STATE ROUTE 125 SOUTH TOLL ROAD, APPROVING THE MEMORANDUM OF UNDERSTANDING, AND AUTHORIZING THE MAYOR TO SIGN THE AGREEMENTS San Diego Expressway Limited Partnership, as assignee of California Transportation Ventures, Inc., has been negotiating an agreement with the City and Trimark San Miguel Ranch, LLC for the consent to transfer right-of-way necessary for the construction and operation of the SR-125 south toll road through San Miguel Ranch. The proposed resolution approves the agreement and memorandum of understanding. (Director of Public Works) Staff recommendation: Council adopt the resolution. 6 A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FORM OF AN ACQUISITIONIFINANCING AGREEMENT PERTAINING TO IMPROVEMENT AREA A IN COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH), AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF SPECIAL TAX BONDS OF THE DISTRICT FOR IMPROVEMENT AREA A THEREOF, APPROVING THE FORM OF BOND INDENTURE, BOND PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT AND OTHER DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS Page 3 - Council Agenda 07/23/02 Adoption of the proposed resolutions approves the acquisition/financing agreement with NNP-Trimark San Miguel Ranch, LLC, establishing the procedure for acquiring the improvements rrom the developer, which will require each of the projects to be completed before acquisition and reimbursement. In addition, adoption of the resolutions authorizes the issuance of special tax bonds of Community Facilities District No. 2001-1 in the amount of $14,100,000, and approves the form of certain documents related to the issuance of the bonds, including a Bond Indenture, Bond Purchase Contract and Preliminary Official Statement. (Director of Public Works) Staff recommendation: Council adopt the resolutions. 7. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE EXPENDITURE OF FUNDS FOR THE "EMERGENCY STORM DRAIN REPAIR SOUTH OF EAST PALOMAR, WEST OF NAClON" PROJECT AND THE "EMERGENCY STORM DRAIN REPAIR, EAST RIENSTRA STREET, WEST OF MARL COURT" PROJECT BY THE DIRECTOR OF PUBLIC WORKS AND APPROPRIATING $214,715 FOR SAID EMERGENCY PROJECTS FROM THE UNAPPROPRIATED BALANCE OF THE RESIDENTIAL CONSTRUCTION TAX FUND (4/5THS VOTE REQUIRED) On January 10 and January 11, 2002, corrugated metal pipe (CMP) failures occurred at two roadway crossings, East Palomar Street west of Nacion Avenue, and East Rienstra Street between Melrose Avenue and Marl Court. Both of these CMP failures, if not repaired, would have resulted in the failure of the roadways that they cross. Therefore, staff undertook emergency measures, as provided in Section 1009 of the City Charter, to repair the pipes in order to protect the roadway and the general public. Now that the repairs have been completed and final costs are known, staffrecommends that $214,715 be appropriated rrom the unappropriated balance of the residential construction tax fund to reimburse these projects. (Director of Public Works) Staff recommendation: Council adopt the resolution. 8 A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING A BOUNDARY MAP SHOWING THE BOUNDARIES OF THE TERRITORY PROPOSED TO BE INCLUDED IN PROPOSED COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE-III - WOODS, VISTAS AND LAND SWAP) B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA DECLARING ITS INTENTION TO ESTABLISH COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE-III - WOODS, VISTAS AND LAND SWAP) AND DESIGNATE TWO IMPROVEMENT AREAS THEREIN AND TO AUTHORIZE THE LEVY OF A SPECIAL TAX THEREIN TO FINANCE THE ACQUISITION OR CONSTRUCTION OF CERTAIN PUBLIC FACILITIES C. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING AND DIRECTING THE PREPARATION OF A REPORT FOR PROPOSED COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) Page 4 - Council Agenda 07/23/02 D. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA DECLARING ITS INTENTION TO ISSUE BONDS FOR COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) FOR IMPROVEMENT AREA A AND IMPROVEMENT AREA B THEREOF TO BE SECURED BY SPECIAL TAXES LEVIED WITHIN EACH RESPECTIVE IMPROVEMENT AREA TO PAY FOR THE ACQUISITION OR CONSTRUCTION OF CERTAIN FACILITIES The EastLake Company, LLC has requested that the City initiate proceedings to form Community Facilities District No. 06-1 (EastLake III --Woods, Vistas and Land Swap parcel) and designate two improvement areas for the purpose of financing the acquisition or construction of public facilities serving the properties within EastLake ownership. Adoption of the proposed resolutions approves a boundary map of CFD No. 06-1 and each improvement area; declares the intent of the City Council to form CFD No. 06-1 and designates the improvements therein; describes the improvements authorized to be financed by CFD No. 06-1; declares the intention of the City Council to authorize the levy of special taxes within each improvement area pursuant to separate rates and methods of apportionment of such special taxes for each improvement area to finance such improvements; declares the intention of the City Council to authorize CFD No. 06-1 to incur a bonded indebtedness for each improvement area; directs the special tax consultant to prepare the Special Tax Report; and sets the public hearing for this Community Facilities District for September 10,2002. (Director of Public Works) Staff recommendation: Council adopt the resolution. 9. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A DESIGN BUILD AGREEMENT WITH MELHORN CONSTRUCTION TO DESIGN AND CONSTRUCT THE DAVID A. WERGELAND SHARK AND RAY EXPERIENCE EXHIBIT, AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT, AND APPROPRIATING $688,841 TO CAPITAL IMPROVEMENT PROGRAM PROJECT NO. GG-176 FROM THE AVAILABLE FUND BALANCE IN THE GENERAL FUND (4/5THS VOTE REQUIRED) Capital Improvement Program Project No. GG-176 involves the demolition and reconstruction of the Nature Center's popular shark and ray exhibit. Following an aggressive capital campaign and preliminary design period for a new state-of-the-art exhibit, the project has been bid and is ready to begin the final design and construction phase. Adoption of the resolution awards a design-build agreement to Melhorn Construction for the new exhibit and appropriates the necessary funds. (Director of Building and Park Construction) Staff recommendation: Council adopt the resolution. 10. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY AND TRISTAR RISK MANAGEMENT FOR THIRD-PARTY ADMINISTRATION (TPA) OF THE CITY'S WORKERS' COMPENSATION CLAIMS AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT Page. 5 - Council Agenda 07/23102 Since August 1995, the City has contracted for third-party administration of its workers' compensation claims with Tristar Risk Management via a joint purchase agreement through the City's insurance pool, the San Diego Pooled Insurance Authority. In order to ascertain that the City is receiving the best value, a Request for Proposal for third-party administration services was issued. As a result of this process, Staff determined that it is in the City's best interest to contract for third-party administrative services, versus bringing this function in-house; and that it is more beneficial to the City to contract for these services as opposed to using the current joint purchase arrangement. (Director of Human Resources) Staff recommendation: Council adopt the resolution. ORAL COMMUNICATIONS Persons speaking during Oral Communications may address the Council on any subject matter within the Council's jurisdiction that is not listed as an item on the agenda. State law generally prohibits the Council from taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff. Comments are limited to three minutes. PUBLIC HEARINGS The following items have been advertised as public hearings as required by law. If you wish to speak on any item, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. 11. CONSIDERATION OF TESTIMONY REGARDING THE FISCAL YEAR 2002/2003 LEVY AND COLLECTION OF ASSESSMENTS FOR CITY OPEN SPACE DISTRICTS 1 THROUGH 9, 15, 17, 18, 20, 23, 24, 26, 31 AND 33, BAY BOULEVARD MAINTENANCE DISTRICT AND EASTLAKE MAINTENANCE DISTRICT NO.1 The City administers approximately 25 open space districts established over the last thirty years. The districts provide the mechanism to finance the maintenance of common open space areas (canyons, trails, medians, etc.) associated with and benefiting rrom that particular development. As part of this process, a levy of an annual assessment is necessary to enable the City to collect funds for ongoing and proposed open space maintenance. Adoption of the proposed resolution continues the process for Fiscal Year 200212003. The City Engineer has prepared and filed reports on assessments for all existing open space districts. On June 11, 2002, the Council approved the reports and set a public hearing, as required by law, for 6:00 p.m. on this date to take testimony on the proposed assessments. (Director of Public Works) Staff recommendation: Council conduct the public hearing and adopt the following resolutions: Page 6 - Council Agenda 07/23/02 A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED; APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS, AND LEVYING THE ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE DISTRICTS 1 THROUGH 9, 15, 17, 18, 20, 23, 24, 26, 31, 33, BAY BOULEVARD MAINTENANCE DISTRICT, AND EASTLAKE MAINTENANCE DISTRICT NO.1 B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING THE FISCAL YEAR 2002/2003 BUDGET BY APPROPRIATING $5,259 FROM THE UNAPPROPRIATED FUND BALANCE OF OPEN SPACE DISTRICT 23 FOR INCREASED COSTS IN CONTRACTUAL SERVICES FOR MAINTENANCE 12. CONSIDERATION OF TESTIMONY REGARDING THE FISCAL YEAR 2002/2003 LEVY AND COLLECTION OF ASSESSMENTS FOR CITY OPEN SPACE DISTRICT 10 This is one of three companion items to agenda item 11, which gives all the background information and details on open space districts in general applicable to this item, but does not include specific information on Open Space Districts 10, 11 and 14. Based upon the advice of the City Attorney, agenda items 12, 13 and 14 have been separated rrom agenda item II due to conflict of interest concerns. One Councilmember owns property subject to the proposed assessment in this District. (Director of Public Works) Staff recommendation: Council conduct the public hearing and adopt the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED, APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS AND LEVYING ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE DISTRICT 10 13. CONSIDERATION OF TESTIMONY REGARDING THE FISCAL YEAR 200212003 LEVY AND COLLECTION OF ASSESSMENTS FOR CITY OPEN SPACE DISTRICT 11 This is one of three companion items to agenda item 11, which gives all the background information and details on open space districts in general applicable to this item, but does not include specific information on Open Space Districts 10, 11 and 14. Based upon the advice of the City Attorney, agenda items 12, 13 and 14 have been separated rrom agenda item 11 due to conflict of interest concerns. One Councilmember owns property subject to the proposed assessment in this District. (Director of Public Works) Page 7 - Council Agenda 07/23/02 Staff recommendation: Council conduct the public hearing and adopt the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED, APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS AND LEVYING ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE DISTRICT 11 14. CONSIDERATION OF TESTIMONY REGARDING THE FISCAL YEAR 2002/2003 LEVY AND COLLECTION OF ASSESSMENTS FOR CITY OPEN SPACE DISTRICT 14 This is one of three companion items to agenda item 11, which gives all the background infonnation and details on open space districts in general applicable to this item, but does not include specific information on Open Space Districts 10, 11 and 14. Based upon the advice of the City Attorney, agenda items 12, 13 and 14 have been separated rrom agenda item 11 due to conflict of interest concerns. One Councilmember owns property subject to the proposed assessment in this District. (Director of Public Works) Staff recommendation: Council conduct the public hearing and adopt the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED, APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS AND LEVYING ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE DISTRICT 14 15. CONSIDERATION OF APPROVAL OF THE PROPOSED ASSESSMENT OF CERTAIN DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER-OCCUPIED PARCELS OF LAND AND PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL FOR COLLECTION Chula Vista Municipal Code Section 13.14.150 allows delinquent sewer service charges to be assessed as liens upon the affected properties and ultimately placed on the property tax bills for collection. (Assistant City Manager Powell) Staff recommendation: Council conduct the public hearing and adopt the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER-OCCUPIED PARCELS OF LAND AND APPROVING PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL Page 8 - Council Agenda 07/23/02 16. CONSIDERATION OF APPROVAL OF (1) GPA 02-07, AN APPLICATION TO AMEND THE GENERAL PLAN TO CHANGE THE LAND USE DESIGNATION OF APPROXIMATELY 16.4 ACRES AT THE SOUTHEAST CORNER OF EASTLAKE PARKWAY AND SR-125 FREEWAY FUTURE ALIGNMENT; AND (2) PCM 01-15, AN APPLICATION TO AMEND THE EASTLAKE II GENERAL DEVELOPMENT PLAN AND EASTLAKE II PLANNED COMMUNITY DISTRICTS REGULATIONS AND LAND USE DISTRICTS MAP AND ADOPT A NEW SECTIONAL PLANNING AREA (SPA) PLAN AND ASSOCIATED REGULATORY DOCUMENTS FOR THE 68.1 ACRES TO BE KNOWN AS THE "VILLAGE CENTER NORTH SUPPLEMENTAL SPA" The applicant, EastLake Development Company, submitted applications to: I) amend the City's General Plan to change the land use designation of approximately 16.4 acres at the southeast corner of EastLake Parkway and the future State Route 125 rreeway from Retail Commercial to Research and Limited Manufacturing; 2) amend the EastLake II General Development Plan to change the land use designation of 16.4 acres at the southeast corner of EastLake Parkway and State Route 125 rreeway (future alignment) rrom Public/Quasi-Public to Research and Limited Manufacturing; 14.2 acres on the west side of EastLake Parkway from Public/Quasi-Public to Commercial Retail; and 2.0 acres at the southeast corner of Fenton Street and EastLake Parkway rrom Research and Limited Manufacturing to Professional & Administrative Commercial; and 3) amend the EastLake II Planned Community District Regulations to accommodate the changes in land use. The applicant is also requesting approval of a new Sectional Planning Area plan and associated regulatory documents for the 68.1 acres to be known as the Village Center North Supplemental SPA. The new SPA contains Design Guidelines, Public Facilities Finance Plan, Water Conservation and Air Quality Improvement Plans. (Director of Planning and Building) Staff recommendation: Council conduct the public hearing, place the following ordinance on first reading and adopt the following resolution: A. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AMENDMENTS TO THE EASTLAKE II PLANNED COMMUNITY DISTRICT REGULATIONS AND LAND USE DISTRICTS MAP B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE MITIGATED NEGATIVE DECLARATION AND MITIGATION MONITORING AND REPORTING PROGRAM IS-OI-042; APPROVING AMENDMENTS TO THE CITY'S GENERAL PLAN, EASTLAKE II GENERAL DEVELOPMENT PLAN, EASTLAKE II PLANNED COMMUNITY DISTRICT REGULATIONS AND LAND USE DISTRICTS MAP; AND ADOPTING A NEW SECTIONAL PLANNING AREA PLAN AND ASSOCIATED REGULATORY DOCUMENTS FOR 68.1 ACRES AT THE NORTHEAST AND NORTHWEST CORNERS OF OTAY LAKES ROAD AND EASTLAKE P ARKW A Y Page 9 - Council Agenda 07/23/02 ITEMS PULLED FROM THE CONSENT CALENDAR OTHER BUSINESS 17. CITY MANAGER'S REPORTS A. Scheduling of meetings. 18. MAYOR'S REPORTS A. Ratification of appointment of John Chavez to the Resource Conservation Commission B. Ratification of appointment of John Liken as the Sweetwater/Bonita representative to the Growth Management Oversight Commission 19. COUNCIL COMMENTS CLOSED SESSION Announcements of actions taken in Closed Session shall be made available by noon on Wednesday following the Council Meeting at the City Clerk's office in accordance with the Ralph M. Brown Act (Government Code 54957.7). 20. CONFERENCE WITH LEGAL COUNSEL REGARDING ANTICIPATED LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(B) . One case ADJOURNMENT to the Regular Meeting of August 6, 2002, at 4:00 p.m. in the Council Chambers. Page 10 - Council Agenda 07123102 þ.:ùO?\\O~ ?~\)\~G þ..~\) AN ORDINANCE OF THE CITY ~C~LA VISTA ESTABLISHING A 25 MPH SPEED LIMIT ON SILVERADO DRIVE BETWEEN CLUBHOUSE DRIVE AND SOUTH GREENS VIEW DRIVE AND ADDING THIS ROADWAY SEGMENT TO SCHEDULE X OF A REGISTER MAINTAINED BY THE OFFICE OF THE CITY ENGINEER ORDINANCE NO. WHEREAS, based on the provisions of Division II-Chapter 7- Article 1 and Division l7-Chapter 3-Artic1e 1 of the California Vehicle Code, and pursuant to authority under Chula Vista Municipal Code Section 10.48.020, the city Engineer has determined that, in the interest of minimizing traffic hazards and for the promotion of public safety, the speed limit on silverado Drive between Clubhouse Drive and South Greensview Drive be established at 25 MPH. NOW, THEREFORE, the City Council of the City of Chula Vista does ordain as follows: SECTION I: That Schedule X of a Register of Schedules maintained by the City Engineer as provided in Section 10.48.020 of the Chula Vista Municipal Code, Established Speed Limits in Certain Zones _ Designated, is hereby amended to include the following changes: Chu1a Vista MunicIpal Code Section 10.48.020 - SCHEDULE X ESTABLISHED SPEED LIMITS IN CERTAIN ZONES Name of Street Beginning At Ending At Proposed Speed Limit Silverado Drive South Greensview 25 MPH Clubhouse Drive Drive SECTION II: This ordinance shall take effect and be in full force on the thirtieth day from and after its adoption. Presented by Approved as to form by M. Kaheny Attorney John P. Lippitt Director of Public Works J;\attorney/ordinance\SPEED.EST =?-/ COUNCIL AGENDA STATEMENT :) Item Meeting Date 07/23/02 ITEM TITLE: Resolution Approving the submittal to California Department of Transportation of five (5) applications for the "Safe Routes to School" Program grants - Third Cycle. SUBMITTED BY: Director of Public work;øf City Manager (9 !c;'¡V j-tl'/ (4/5ths Vote: Yes_No~ REVIEWED BY: The City of Chula Vista has submitted five (5) applications to the California Department of Transportation (Caltrans) for the Safe Routes to School (SR2S) Program. This "Safe Routes to School Construction Program" uses federal transportation funds for construction of bicycle and pedestrian safety and traffic calming projects. Projects are chosen and then approved for funding after the applications have been evaluated and assigned a priority by CalTrans. RECOMMENDATION: That Council approve the submittal of five (5) applications to CalTrans for the "Safe Routes to School" Program - Third Cycle BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: The Safe Route to School (SR2S) Program is a two-year federal program that resulted from the passage and signing of Assembly Bill (AB)1475. This bill calls for CaITrans to establish and administer a "Safe Routes to School Construction Program" and to "use federal transportation funds for construction of bicycle and pedestrian safety and traffic calming projects." Current regulations require that official applications be submitted in order for projects to be considered for funding. Projects are chosen and then approved for funding after the applications have been evaluated and assigned a priority by CalTrans. The success of any project application being approved for funding will depend largely on the applicants' ability to develop a comprehensive and unified approach to improving the safety of pedestrian and/or bicycle routes to and rrom schools within the jurisdictional areas of responsibility. As established by AB 1475, a "Construction Program" bill, all construction improvements must be made on public property. Other programs or activities related to "encouragement", "enforcement" or "education" are not eligible unless they can be shown as incidental to the overall cost ofthe project. The bill goes on to say that CalTrans "shall make grants available to local governmental agencies under the program based on the results of a statewide competition that requires the submission of proposals for funding." 3-/ -) Page 2, Item :> Meeting Date 07/23102 The SR2S project criteria will be based on the following factors: 1. Demonstrated needs of the applicant. 2. Potential for reducing child injuries and fatalities. 3. Potential for encouraging increased walking and bicycling among students. 4. Identification of bicycle and/or pedestrian safety hazards. 5. Identification of current and potential walking and bicycling routes to school. 6. Consultation and support for projects by school-based associations, local traffic engineers, local elected officials, law enforcement agencies, and school officials. The SR2S program is a 'reimbursement' program. The project reimbursement ratio will be 90 percent (maximum) with the local agency providing a 10 percent (minimum) local match. The maximum reimbursement amount for any single project is $450,000. The following list describes the proposed project applications that were submitted to the California Department of Transportation for the Safe Route to School Program for the second cycle. All ofthe projects submitted are directly related to school area improvements: Project 1 - Traffic Signal Installation at the Intersection of EastLake Parkway and Clubhouse Drive in the Vicinity of EastLake High School. This proposed fully-actuated (8 phase) signal is ranked number 4 on the "2001 Intersection Evaluation List- Traffic Signal Warrant." Project 2 - Replacement of all Existing School Zone signing with new Fluorescent Green High Intensity signs. This involves the replacement of school signs at forty three (43) elementary, middle and high school locations. Project 3 - Installation of Missing Public/Safety Improvements in the Vicinity of Lauderbach Elementary School. This involves the construction of missing street/sidewalk improvements along Fourth A venue, Palomar Street and Orsett Street, all are within the quarter-mile radius area fTom the elementary school grounds. Project 4 - Traffic Signal Installation at the Intersection of Hilltop Drive and Oxford Street in the Vicinity of Castle Park Elementary School. This proposed fully-actuated (8 phase) signal is ranked number 8 on the attached "2001 Intersection Evaluation List- Traffic Signal Warrant." Project 5 - Installation of Missing Public/Safety Improvements in the Vicinity of Castle Park Elementary School. This involves the construction of missing street/sidewalk improvements along Naples Street and Tobias Drive south of Oxford Street as well as missing pedestrian ramps, all are within the quarter-mile radius area rrom the elementary school grounds. 3-~ .. Page 3, Item j Meeting Date 07/23/02 The following table shows the total cost for each project: Proj ect Requested Required Total Number SR2 Funds City Funds Project Cost Project 1 $ 145,890.00 $ 14,589.00 $ 160,479.00 Project 2 $ 118,720.80 $ 13,191.20 $ 131,912.00 Project 3 $ 185,796 $ 18,579.60 $ 204,375.60 Project 4 $ 176,168.00 $ 19,574.00 $ 195,742.00 Project 5 $ 86,625.00 $ 9,625.00 $ 96,250.00 TOTAL $ 713,199.80 $ 75,558.80 $ 788,758.60 Project costs include preliminary engineering, right-of-way, environmental, construction engineering, and construction. All ofthe project elements and construction improvements must be eligible to obtain federal reimbursements. Construction improvements must be made on public property. Federal funds are considered "allocated" to each project phase when the Office of Local Programs (OLP) Area Engineer at CalTrans authorizes the work through the Federal Highway Administration (FHW A) delegated authorization process. These funds are reserved for the project, but the local agency will not be reimbursed for any phase until after the contract is awarded. City staff submitted the aforementioned application package to Caltrans prior to the deadline submittal date of May 31, 2002. A copy of the application package is located in the City Clerk's Office for Council's review. 3-3 Page 4, Item 3, Meeting Date 07/2a/02 FISCAL IMPACT: This resolution approves the submittal of the applications but does not formally approve the implementation of the projects. These projects will be submitted for approval for future CIP years. Potential total revenue to the City is $713,199.80. The actual amount is dependent upon which of the projects CalTrans approves, and the amount that they approve. It is proposed that matching funds come rrom the Gas Tax Fund or Traffic Signal Fund as appropriate. Based on the City's matching requirement of 10%, and if all projects are approved, the estimated City share would be $75,558.80. Project #1, the traffic signal at EastLake Parkway and Clubhouse Drive, is in the FY 02/03 CIP budget. If this project is approved for grant funding, the City CIP funds will be available to use on another unfunded traffic signal project. Attachments: Area Plats (5) File No.: 0740-75-KY026 Prepared By: Jeff Moneda J:IEngineerlAGENDA ISRTS 3rd cycle.jcm.doc -3-,-/- "- ~ o :r: .><:: .2 ro~ Q) ro D.. "- ,I- e o Z I' ;i. ~~~,¡- i¿,?,4f,«I?: '6 ~ ~. \,'"\.. . ,:t. ..... ~"' ~ . , 1\ l'i$ . .. . '""' \ ... ".. \. ""-'l~D "\."". t I 1',,,"5 If '" ~' § I i ", "", ~ \ '. '0 ~ "'. " ~. ~ ;~4,-,t - _,!k. .,,3'0'" 1~'1t ;,~l~~ Y"Á'W1I"8~"O~S'{] ~ &'ii 1 ,o..U'i.~ ~tI,~, '\. \ "* 7', "~., ~.r' / / /;$:/ / , ~/Ij¡'O/MO( 'JVl~^à':I ~ . \~U""IIl: '".-.... . 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J -~- ~ ~ \,-A ." \~ .. \--s:;\ \'2:,'_ ~\ ~~~~__~\J__ _ '-j...., \!/)( ~ e~~, ~ "" ,,, £'..\.-w..",\I \ \ \ - 2 ° c: ~ ° (1)0..c: E~~ (1).- >"0 ~ OCO 5. cr -E E ~ (1) -.- E .~ ~ (1) :QL()W a..::J ~ ~ 01- O)c:co c: .- a.. . _ ..c: CJ):t: (1) .~ S en ~ co () ¡ ~I '~II ~Jj6~ I RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SUBMITTAL TO CALIFORNIA DEPARTMENT OF TRANSPORTATION OF FIVE (5) APPLICATIONS FOR THE "SAFE ROUTES TO SCHOOL" PROGRAM GRANTS - THIRD CYCLE WHEREAS, the City of Chula vista has submitted five (5) applications to the California Department of Transportation (Caltrans) for the Safe Routes to School (SR2S) Program; and WHEREAS, the "Safe Routes to School Construction Program" uses federal transportation funds for construction of bicycle and pedestrian safety and traffic calming projects; and WHEREAS, proj ects are chosen and then approved for funding after the applications have been evaluated and assigned a priority by CalTrans. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula vista does hereby approve the submittal to California Department of Transportation of five (5) applications for the "Safe Routes to School" Program grants - Third Cycle. Presented by Approved as to form by John P. Lippitt Director of Public Works ~~n~~T ./ city Attorney '____ J:\Attorney\RESO\GRANT SR2S .3 -/1 COUNCIL AGENDA STATEMENT J! Item ',t Meeting Date 7/23/02 ITEM TITLE: Resolution approving the submittal of the Battery Backup System (BBS) Grant application relating to the "Purchase of Un interruptible Power Systems (UPS) for Traffic Signals" project (TF-293). Director of Public W orks ~ City Manager &!& í)Î" (4/5ths Vote: Yes _ Nol) Þ SUBMITTED BY: REVIEWED BY: The California Energy Commission (CEC) has an incentive program which offers a partial rebate to public agencies for the installation of traffic signal Uninterruptible Power Supply (UPS) systems. In order to qualify for the rebate, the proposed UPS must be installed at traffic signals that are already retrofitted with Light Emitting Diode (LED) lamps. The City is in a position to receive a rebate of up to $327,778.50 as a result of submitting the subject grant application. The purchase of said equipment is the final step of the City's overall planned project to retrofit existing traffic signals with UPS equipment. RECOMMENDATION: That Council adopt the resolution approving the submittal of Battery Backup Systems (BBS) Grant application relating to the "Purchase of Un interruptible Power Systems (UPS) for Traffic Signals" project (TF-293). BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: Based upon last summer's power outages, Council approved a CIP project, "Purchase of UninteITuptible Power Systems (UPS) for Traffic Signals" project (TF-293) which would provide a battery backup system for the traffic signals at 55 high priority intersections. In order to install an effective battery backup system, the CIP project also included retrofitting those 55 traffic signals with light-emitting diode (LED) amber and pedestrian indications because the LED's are much more energy efficient and the operation of the signals under battery power would be significantIy better. Subsequently, due to an unanticipated grant to retrofit existing pedestrian indications to LED indications for all signals city-wide, this project was divided into two phases: The first phase included retrofitting pedestrian LED indications at all 158 intersections with such indications. This phase was completed on March 27, 2002. The second phase involve!> retrofitting exiting traffic signals with UPS systems and amber LED vehicle indications. However, after completing phase I, the remainder of available funds is only adequate to retrofit 40 traffic signals with amber indications and UPS equipment. i-I Page 2, Item tf Meeting Date 7/23/02 Recently, several rebate incentive programs, including the Battery Backup System (BBS) Grant, have surfaced to allow for additional savings for equipment installations. The BBS Grant was initiated with the passage of California legislation, which authorized the California Energy Commission (CEC), in consultation with local governments, to develop and implement a matching grant program to provide UPS systems for traffic control signals already retrofitted with LEDs. The program was established to encourage the installation of UPS Systems by public agencies in order to improve motorist safety during random blackouts induced for peak energy load reductions. The highlight of the program was that the CEC offered a rebate of up to $3,092.25 for every UPS installed at signalized intersections retrofitted with LED lamps. Staff submitted an application for the 106 intersections which meet CEC's criteria prior to the June 21, 2002 deadline. The CEC has advised staff that we should know how much funding is approved sometime during the month of August, 2002. If the application is successful, the City and CEC must then enter into a formal agreement. Any funding approved will only be received as a rebate subsequent to the installation of the UPS equipment and final review by the CEC and the City must rront all costs to complete the work. As mentioned earlier, having disbursed a portion of the funding available for the project to retrofit all of the existing traffic signals in the City with needed LED pedestrian modules, the current funding will only allow for 40 intersections to be upgraded with the UPS equipment and necessary amber LED vehicle indications. Depending upon how much grant funding is approved, the City may be required to appropriate additional Traffic Signal funds for both City's matching share and to rront the actual construction costs. Once the results ofthe application are known, staff will return to Council with an agreement with the CEC and a request to appropriate the required additional funding. Fiscal Impact: If the maximum rebate of $3,092.25 per intersection for all 106 intersections is approved, staff estimates that an additional $540,000 in Traffic Signal Funds would need to be appropriated in order to complete the construction. Ifthis maximum rebate amount is approved, approximately $327,800 would be returned to the Traffic Signal Fund following completion all construction. Also, if this maximum rebate amount is approved and the City does all 106 of the locations, the estimated net cost to the City's Traffic Signal Fund would be approximately $712,200 for both phases of the project. As indicated above, staff will return to the Council with an agreement with the CEC and a request to appropriate the required additional funding. Attachments: Grant Application PREPARED BY: PATRICK MONEDA & MAJED AL-GHAFRY J :\Engineer\AGENDA \ TF293 lIb_cIs. DOC ~~.1- "._._..,._____._____n.__.___~.__._,...... ___ ..,_"." APPLICATION TO THE CALIFORNIA ENERGY COMMSSION FOR NEW INSTAllATIONS FOR BATTERY BACKUP SYSTEM (BBS) GRANT 1. ~PLlCANTlNFORMATIO~. Applicant: City of Chula Vista Mailing Address: 276 Fourth Avenue Federal Employer ID No. nla Chula Vista City County: nla 91910 Zip Contact Person: Maied AI-Ghafrv Title: Civil Enaineer Telephone: /619\ 691-5237 Fax: /619\ 691-5171 E-mail address:malahafrv@ci.chula-vista.ca.us 2. · PR()JECTDESCRIPTION\ a. Indicate the total number of affected intersections for which you are requesting grant funding (this information should match the information in Exhibit A): 106 . b. Indicate the Total Number of New BBS installations for which you are requesting funding: ~. c. Indicate the specifications you plan to use (e.g., California Department of Transportation). Please include a copy, if known: "Uninterruptible Power Supply (UPS) System" - City of Chula Vista Specification 3> NI;~fBBS:INSTAl:.I..:ATJO.NS '.. Indicate project start date: October 8. 2002 (Assume 45.days after grant application submittal) Indicate estimated project completion date: December 17. 2002 4. . PROJECT BUDGET:AND' FUNDING REQUEST "~ ' ,.,,»..,' :7" ~:<;1.iS;¡!;·)·;i·:· ,...,.... :::i.:;..~;. . From Exhibit B, indicate: Grant Amount Requested': $327,778.50 Total Project Cost (Grant Amount and Your Cost): Approximately $850,000 . Eligible material cost inciudes the BBS and cabinet. Instailation and labor costs are not eligibie for reimbursement. 5. PROJEÇ'l: WORK STATEMENT Complete Exhibit C. Battery Backup System Grant Application-New ~-3 Page App 9 6. SIGNATURE To the best of my knowledge and belief, data in this application are correct and complete and the BBS will be installed only on intersections with LED traffic signals. Name of Authorized Representative: Ralph R. Levva Title: Senior Civil En ineer Signature of Authorized Representative: Telephone: (619) 691-5116 Fax: (619) 691-5171 E-mail address:rlevva@cLchula-vista.ca.us Note: The Authorized Representative is the person designated in the Governing Body resolution, order, motion, or ordinance of the local governing body which has the authority to enter into the funding agreement. An exampie resolution is contained in Exhibit D. Battery Backup System Granl Application-New 'i-tf Page App 10 Table A-2: New Traffic Signal Intersection List L/-S- ~ W I- en >- en Q. :J ~ U <C m >- c::: W I- ~ m 3: w z U w U I I I I . 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Submit executed governing body resolution 7/19/02 (Exhibit D) to the Enerav Commission 2. Release bid documents for materials and labor · Product: Provide the Energy Commission staff 7122/02 with a copy of the bid specifications for the BBS and cabinet, if applicable, within 10 days of bid release. 3. Select Battery Backup System vendor andlor contractor Product: Provide the Energy Commission staff 9/3/02 · with a copy of the winning proposal within 10 days after vendor selection. 4. Battery Backup System installed and operating 12/17102 · Product: Notify the Energy Commission staff when complete. 5. Prepare progress reports . Progress reports due quarterly (the first report · Product: Submit progress report. is due 3 months after grant agreement is executed) 6. Prepare final report and invoice with payment . Due within 60 days after request BBS installed and operating · Product: Submit final report and invoice. Battery Backup System Granl Application-New 4-~ Page App 13 Exhibit D-2 - Governing Body Resolution Battery Backup System Shall be submitted to Chula Vista City Council for approval on July 16, 2002. Executed Governing Body Resolution shall be submitted to the Energy Commission on July 19, 2002. Battery Backup System Grant Applicalion-New ¥ -;¿/ Page App 14 Specifications for BBS and cabinet ¥-if-À Un interruptible Power Supply (UPS) System City of Chula Vista Specification Include a battery back -up system. The system shall be a CLARY CORPORATION SP Series 1000 Traffic UPS or approved equal. The Traffic UPS must be a true on-line power conditioner and battery back-up/uninterruptible power system and shall consist of three (3) major components: · the Electronics Module, · the power interface module, and · the battery system consisting of6 OutPost OPB-1241 batteries. The batteries shall mount as part of an anodized aluminum Type III Meter Pedestal, as part of a separate stand-alone anodized aluminum cabinet or as part of an anodized aluminum cabinet "piggybacked" to the side of a model 332 control cabinet. The piggybacked" cabinet shall be weather-tight, with a lockable door and shall mount to the side of the control cabinet identified by City staff. External cabinets shall be ventilated through the use oflouvered vents, filters, and a thermostatically controlled fan (s). When a new meter pedestal is install as part of the project, the meter service shall be Type III, Myers MEUG 35-PB-MI00TS. The system shall be capable of operating a full 8-phase intersection ill full normal operation mode (all LED indications) for a minimum of two (2) hours. The system shall include a timing circuit allowing automatic switching rrom full operation to all red flash at a selectable time interval. The UPS shall have two (2), continuously conditioned, true on-line, 5-15 receptacles for connecting the controller and other sensitive electronic equipment. The UPS shall include two (2) front panel LCD displays: One to count the number of times the UPS operates on battery and one to count the total elapsed time in battery mode. J:\Engineer\TRAFFIC\SUSANM\TF296\UPS Spec New.doc 6/18/02 4-,)3 ~ ----c----- . N , '$~\ I I ... HCIIS .. - \ V - Ð 0 ~ A K II - Ð <> ... Ð .., tA - I ADAPTœ BASE \.(.00 /ADAPTOR 'BASE'. 1 : I ADAI'1OR BASE , . Ii L--;5.5~ I : I I: I 17.25 I rX #.56 I ~~ II IL ----. 11 I rr 0 rr - 9.50 14r J 0 ~ Ir ~ I \ ¡ ~X Ð.56 I ----3 I ' lB.7ó I I H Eta..t'SI.e'Emmh.l ADAPl'OR QIS[ ~ PAD IOJIIII>t; PAmRN PAD IroIJUNlINC PATTERN [\</0 JI)I?lUR BASE) (WITH ADN'TOR B'Sÿ . . EXTERIOR OPENING PAD MOUNTING PATTER" REAR MOUNTING PATTERN A B C D E F G H J K L M N HOLE QTY 42" 26" 14" 36.5" 23.75" 23" 10" 25.75" 15.50" 33" 11" 6" 23" 8 PROJECT FILE ¡TF29J SCALE: TITLE: CITY OF CHULA VISTA PREPARED BY: NOT TO SCALE PCM DATE: I¡SHEET UNINTERRUPllBLE POWER SUPPLY SYSTEMS APPROVED BY: 4/18/02 OF SHTS. MAA 4 ----JL/- .. RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SUBMITTAL OF THE BATTERY BACKUP SYSTEM (BBS) GRANT APPLICATION RELATING TO THE "PURCHASE OF UNINTERRUPTIBLE POWER SYSTEMS (UPS) FOR TRAFFIC SIGNALS" PROJECT (TF-293) WHEREAS, the California Energy Commission (CEC) has an incentive program which offers a partial rebate to public agencies for the installation of traffic signal Uninterruptible Power Supply (UPS) systems; and WHEREAS, in order to qualify for the rebate, the proposed UPS must be installed at traffic signals that are already retrofitted with Light Emitting Diode (LED) lamps; and WHEREAS, the City is in a position to receive a rebate of up to $327,778.50 as a result of submitting the subject grant application; and WHEREAS, the purchase of said equipment is the final step of the City's overall planned project to retrofit existing traffic signals with UPS equipment. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve the submittal of the Battery Backup System (BBS) Grant application relating to the "Purchase of Uninterruptible Power Systems (UPS) for Traffic Signals" project (TF-293). Presented by Approved as to form by D~ "2. rf-r,..~ John M. Kaheny City Attorney ~ John P. Lippitt Director of Public Works J:\attomey\reso\ BSS Grant /f-£ COUNCIL AGENDA STATEMENT Item ¿¡- Meeting Date 7/23/02 ITEM TITLE: Resolution Approving the agreement with San Diego Expressway Limited Partnership (SDELP), Trimark San Miguel Ranch, LLC, and the City of Chula Vista, regarding the consent to transfer right of way for construction and operation of SR-125 South Toll Road, Approving the Memorandum of Understanding, and authorizing the Mayor to sign the Agreements SUBMITTED BY: Director of Public Works City Manager 1~ oJ í' ,rtzI REVIEWED BY: (4/5ths Vote: _ No ~ San Diego Expressway Limited Partnership (SDELP), as assignee of California Transportation Ventures, Inc. (CTV), has been negotiating an agreement with The City and Trimark San Miguel Ranch LLC. ("Agreement") for the consent to transfer Right of Way necessary for the construction and operation of SR-125 South Toll Road through San Miguel Ranch herein called "Dedicated Property". The agreement is now ready for Council approval. RECOMMÈ"NDATlON: Council approve the agreement with San Diego Expressway Limited Partnership (SDELP), Trimark San Miguel Ranch, LLC, and the City of Chula Vista, regarding the consent to transfer right of way for construction and operation of SR-125 South To ] Road, approving the Memorandum of Understanding, and authorize the Mayor to sign the Agreements. BOARDS/COMMISSION: Not applicable. DISCUSSION: The SR-125 To ] Road is a major part of Chula Vista's Circulation element in our General Plan. It is crucial for the development of eastern Chula Vista that this facility be constructed in the next few years. Due to lack ofregional funding, it is necessary that this rreeway be constructed by a private entity and operate as a toll road. The facility will be constructed between the connector at San Miguel Road in Bonita to the SR-905 interchange in Otay Mesa. The connector between San Miguel Road and SR-54 will be paid for by SANDAG. The total cost for the toll road is $390 million. The connector and gap on SR-54, to be built by SDELP for SANDAG, will cost another $140 million. The business plan of SDELP is based on the contribution of right-of-way through Chula Vista by the City and/or developers. The City and SDELP have entered into a Toll Road Agreement dated April 16, 2002 and recorded on April 29, 2002 as Document Number 2002-03587617 in the Recorder's Office of Sand Diego County (the "Toll Road Agreement") regarding certain real property either currently owned by The City or offered for dedication (including the Dedicated Property). The Agreement presented tonight provides, 5..../ Page 2, Item _ Meeting Date 7/23/02 among other things, that, upon close of the Toll Road Financing and satisfaction (or waiver in writing by the City) of the other conditions to close of escrow thereunder, the City will (i) accept title to the Dedicated Property that has been irrevocably offered for dedication to the City, and (ii) grant its fee title in Dedicate Property to Caltrans. As of the date of this Agreement, the City has not accepted the Offer, however, the City desires to accept the Offer and to transfer its fee title in the Dedicated Property to Caltrans pursuant to the terms of the Toll Road Agreement and this Agreement. The parties desire to enter into this Agreement to set forth the terms and conditions pursuant to which Trimark will consent to the City's transfer of the Dedicated Property to Caltrans for development of the Toll Road. Chula Vista, SDELP and Trimark San Miguel Ranch, LLC are signatures to the Agreement. The Agreement is very important to Chula Vista, SDELP, CALTRANS,the developers, and for traffic in the South Bay. The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. HIGHLIGHTS OF THE AGREEMENT Trimark's Consent. This Agreement sets forth conditions to Trimark's consent to the Close of Escrow t9 traÌ1sfer the Dedicated Property (Article 5): · Escrow open with Chicago TitIe Insurance Company upon execution of this Agreement · Escrow Instructions are also listed in Exhibit C · Escrow shall terminate without closing if each of the conditions to the Close of Escrow has not been satisfied or waived on or before December 31, 2002, unless the Parties agree to extend such date. · Close of Escrow shall occur within two business days after the close of Toll Road Financing subject to the following: The City shall provide to the Escrow Holder the following: a) Fully executed copy of the Toll Road Agreement. b) The Certificate of Acceptance. c) The Deed (Caltrans shall have provided a written consent to the recordation of the Deed). · Trimark shall provide to the Escrow Holder the following: a) An executed Temporary Construction Easement. · Prior to the Close of Escrow, Trimark shall deliver to City and SDELP a Phase I environmental report covering the Dedicated Property prepared by a party reasonably acceptable to the City. The City must also review and approve said report. · SDELP shall provide to the Escrow Holder the following: a) A certificate executed by a duly authorized officer of SDELP to the effect that Toll Road Financing has closed and that SDELP is prepared to issue a notice to proceed to the Contractor. b) A statement of Fair Market Value of the Dedicated Property. c) Executed counterpart of the Temporary Construction Easement. The TitIe Policy shall name the City, or its nominee, as the owner of good, marketable and indefeasible fee title to the Dedicated Property. All taxes, payments on general and special ~LJ- -1 Page 3, Item _ Meeting Date 7/23/02 bonds and assessments shall be prorated based on the latest tax information and shall be as of II :59 p.m. the day of the Close of Escrow. Any taxes, special bonds or assessments that will not be removed as a lien against the Dedicated property until next tax year shall be paid in full for the entire year by Trimark. The Costs of Escrow shall be paid entirely by SDELP. SDELP's Covenant to Construct Overpass and Ramps. SDELP agrees, at its cost, to cause the construction of the Mount Miguel Road overpass and ramps to be completed in accordance with the Toll Road Agreement and this Agreement. SDELP's Covenant to Pave the South Ramps. SDELP agrees, at its cost, after financial feasibility is determined, to cause the paving of the south bound entrance ramp for Mount Miguel Road in accordance with this Agreement. SDELP's and Trimark's Covenants Regarding the Sound Walls. SDELP agrees to take into account the development of all of the San Miguel Ranch Property in performing its final traffic sound study and will use the same standards as were required for Trimark's traffic sound study in connection with the approval of development by the City for the San Miguel Ranch Property. If the results of SDELP's fmal traffic sound study indicate that the Sound Walls are not required for mitigation of the San Miguel Ranch Property, City hereby agrees it will not require such sound walls to be constructed as a condition of mitigation to development of the San Miguel Ranch Property. If the results of such study require the construction ofthe Sound Walls, SDELP agrees to cause the construction of the sound walls to be completed. The temporary and perpetual maintenance"is discussed. In no event will the City be obligated to maintain the sound walls at any time. . Condition of Title. The parties have reviewed the Preliminary Title Report for the Dedicated Property together with full and complete copies of all documents referenced therein. Exhibit B sets forth title matters hereby disapproved by both SDELP and the City. Trimark shall use commercially reasonable efforts to remove all disapproved matters rrom the record titIe prior to transfer of the Dedicated Property. Adjustment of Toll Road Right-of-Way Requirements. Due to the design-build nature of SR- 125 the final Right of Way cannot be known at this time. If the final design decreases the size of the toll road Right of Way, Trimark will be able to reacquire the Excess Dedicated Property. SDELP and Caltrans shall be obligated to retain title to any of the Excess Dedicated Property for one year. After said period neither SDELP nor Caltrans shall be obligated to retain titIe to such property. Temporary Construction Easement. Two business days following the execution of this agreement, Trimark and SDELP agree to execute in counterpart and deliver to the Escrow Holder a Temporary Construction Easement. This temporary easement shall grant non-exclusive construction privileges through that area of the San Miguel Ranch Property adjacent to the Dedicate Property necessary for the construction of SR-125 described in the actual easement document. At the same time, Trimark shall reserve the right to perform construction activities in connection with development of the San Miguel Ranch Property. Temporary Construction Easement nor the Slope Easement, shall include any real property which is part of a preserve or $3 Page 4, Item _ Meeting Date 7/23/02 open space area as described in that certain Annexation Agreement Concerning the Conservation and Biological Mitigation Program for the Implementation of San Miguel Ranch Sectional Planning Area Plan and Tentative Tract Map, recorded on December 22, 2000 as File/Page 2000- 07(¡2132 Slope Easement. Upon completion of the design and engineering work required for the Initial Project Trimark and Caltrans shall each deliver their executed counterpart of the Slope Easement into Escrow. The Slope Easement shaIJ reserve to Trimark, the right to landscape the slope. Other Rights. If any other Temporary Construction and Access Rights are requested by Trimark of SDELP, both parties shall cooperate in good faith negotiations of Temporary Construction and Access Rights, as each party may request in connection with grading or construction of improvements. Schedule. Upon execution of this Agreement, the parties shall open an escrow. The Close of Escrow shall occur within two (2) business days after the close of Toll Road Financing subject to the satisfaction of the conditions to Close of Escrow or on a date after the financing is approved agreed by all parties. No cost of escrow shall be paid by the City. Memorandum Of Understanding regarding SR-125 south (MOU) This MOU oonstitutes a guide to the respective intentions between the State of California, Department of Transportation, District 11 ("Caltrans") and the City of Chula Vista ("City"). It is not intended to authorize funding or project effort nor is it a legally binding commitment. However, it does contain the essential principles for processing Encroachment Permits through Ca]trans. Caltrans acknowledges that the Subject Property to be conveyed by City to Caltrans is located in an area of City that is undergoing development concurrent with Project construction. It is necessary to obtain Caltrans' cooperation in the coordination of certain future activities and uses of the Subject Property. Upon issuance of an Encroachment Permit and subject to the terms and conditions set forth in such permit, Caltrans agrees to the following: · Utilities The City and the Private Landowners shall have the right to install, operate and maintain transverse electric, telephone, communication, cable, television, water, gas, sanitary sewer lines, drainage facilities or other utilities at reasonable locations across the Subject Property necessary to serve their adjacent development. · Crossing for Construction Purposes The City and the Private Landowners shall have the ability to move equipment, machinery and vehicles for hauling and construction purposes or emergency and fire access, over, under and across the Subject Property. · Right to Remove Slopes Private Landowners may remove the top of cut slopes by lowering the grade of adjacent development or to place embankment against the bottom offill slopes by raising the grade of adjacent development, and that Caltrans may thereupon quitclaim to the Private Landowners any increased area at the top or bottom of the slopes resulting from such change of adjacent grade, consistent with Caltrans' policies and procedures ,Ç-7L Page 5, Item _ Meeting Date 7/23/02 · Maintenance of Sound Attenuation Structures The City and the Private Landowners shall have the right to enter upon the Subject Property at locations approved by Caltrans, for the purpose of maintaining sound attenuation structures that are built by the Private Landowner at the property line boundary between such Private Landowner's private property and the Subject Property. · Future City Cross Streets Subject to City having appropriate environmental clearance and any other applicable approvals, City shall have the right to construct and operate future public streets across the Subject Property; provided that each such crossing shall be via a bridge over or an underpass under the Project improvements. · Future Transit (MTDB) Caltrans acknowledges that City and the Metropolitan Transit Development Board ("MTDB") are considering development of a trolley route that will necessitate a future transit crossing of the Project between Olympic Parkway and Birch Parkway. Caltrans agrees that if such future transit crossing becomes necessary, Caltrans will reasonably consider and cooperate in granting to MTDB such rights in the Subject Property that may be needed by MTDB for transit construction and operations. · Potential Interim SR 125 Improvements The parties acknowledge that City's General Plan provides for the development of highway improvements within the general location of the Subject Property as a result of plannè'd growth within the City ofChula Vista. If the conditions described in Section 5.1 of the Toll Road Agreement occur, City may desire to construct the "Interim SR 125 Improvements" described in Section 5.2 of the Toll Road Agreement. Upon issuance of an Encroachment Permit in accordance with Article 2, Caltrans agrees that, in such event and subject to City obtaining all necessary enyironmental approvals, and other approvals or agreements as may be required by Caltrans, City may be allowed to construct and use the Interim SR 125 Improvements in the Subject Property. Caltrans agrees to process Encroachment Permits in accordance with the provisions set forth in California Streets and Highway Code Section 660 et ~ and to cooperate with City to final a cooperative agreement within 150 days of execution of the MOD. FISCAL IMPACT: There is minimal impact for the construction of the toll road. However, if the project is not constructed or greatly delayed, there will be major fiscal impacts on the developers and City funds. In addition, although very remote, the City may be forced to construct an interim facility should the project stop after financing is obtained. Attachments: A) Agreement regarding the consent to transfer of right of way for the construction and operation ofSR-125 south toll wad B) Memorandum of Understanding, regarding State Route 125 south J:\EngineerILANDDEV\PwjectslsrI25\SDELP agreement for SRl25.doc $-S- RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE AGREEMENT WITH SAN DIEGO EXPRESSWAY LIMITED PARTNERSHIP (SDELP), TRIMARK SAN MIGUEL RANCH, LLC, AND THE CITY OF CHULA VISTA, REGARDING THE CONSENT TO TRANSFER RIGHT OF WAY FOR CONSTRUCTION AND OPERATION OF STATE ROUTE 125 SOUTH TOLL ROAD, APPROVING THE MEMORANDUM OF UNDERSTANDING, AND AUTHORIZING THE MAYOR TO SIGN THE AGREEMENTS WHEREAS, San Diego Expressway Limited Partnership (SDELP), as assignee of Cali fomi a Transportation Ventures, Inc. (CTV), has been negotiating an agreement with The City and Trimark San Miguel Ranch LLC. ("Agreement") for the consent to transfer Right of Way necessary for the construction and operation ofSR-125 South Toll Road through San Miguel Ranch herein called "Dedicated Property"; and WHEREAS, the Memorandum Of Understanding regarding SR -125 south (MOU) constitutes a guide to the respective intentions between the State of California, Department of Transportation, District 11 ("Caltrans") and the City ofChula Vista ("City") and is not intended to authorize funding or project effort; and WHEREAS, the agreements are now ready for Council approval. NOW, THEREFORE, BE IT RESOLVED the City Council ofthe City ofChula Vista does hereby approve the Agreement with San Diego Expressway Limited Partnership, Trimark San Miguel Ranch, LLC and the City ofChula Vista, regarding the consent to transfer right of way for the construction and operation of State Route 125 South Toll Road, in substantially the form presented with such minor modifications as may be required or approved by the City Attorney, the final copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the City Council ofthe City ofChula Vista does hereby approve the Memorandum of Understanding regarding State Route 125 South, a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized and directed to execute said Agreements on behalf of the City. Presented by Approved as to form by CL r\t~ ~ John M. Kaheny City Attorney John P. Lippitt Director of Public Works (J:\Attomey\RESO\SR 125 Trimark MOU (July 16, 2002 (4:13PM)] $'-~ AGREEMENT REGARDING CONSENT TO TRANSFER OF RIGHT-OF-WAY FOR CONSTRUCTION AND OPERATION OF THE STATE ROUTE 125 SOUTH TOLL ROAD THIS AGREEMENT REGARDING CONSENT TO TRANSFER OF RIGHT-OF-WAY FOR CONSTRUCTION AND OPERATION OF THE STATE ROUTE 125 SOUTH TOLL ROAD ("Agreement") is made and entered into effective as of the day of ,2002 ("Effective Date"), by and between NNP- Trimark San Miguel Ranch, LLC, a Delaware limited liability company ("Trimark"), San Diego Expressway Limited Partnership, a California limited partnership ("SDELP"), through California Transportation Ventures, Inc., its general partner ("CTV"), and the City ofChula Vista, a municipal corporation (the "City"), with reference to the following: RECITALS A. SDELP, as assignee ofCTV, has entered into that certain Development Franchise Agreement dated January 6, 1991 (the "Development Franchise Agreement"), between CTV and the State of California, Department of Transportation ("Caltrans") to plan, develop, acquire, design, finance, install, construct and operate an approximately fifteen kilometer long, divided, limited access toll road in San Diego, California (the "Toll Road") to be incorporated when completed into the California Highway System as part of State Route 125. The Toll Road is depicted in Exhibit A attached hereto. B. SDELP has entered into that certain State Route 125 South Toll Road Design-Build Contract with Washington Group International, Inc., an Ohio corporation, effective as of June 26, 200 I ("Contractor"), setting forth the terms and conditions pursuant to which Contractor is to design and construct the Toll Road (the "Design Build Contract"). C. SDELP is in the process of arranging financing for the design and construction of the Toll Road and the Interchange Improvements (the "Toll Road Financing"). SDELP cannot proceed with design and construction of the Toll Road and the Interchange Improvements until the necessary financing has been secured. SDELP's ability to secure financing is, in pertinent part, dependent upon SDELP's ability to secure access to all real property necessary for construction of the Toll Road, including the Dedicated Property. D. The City and SDELP have entered into that certain City ofChula Vista Toll Road Agreement with San Diego Expressway Limited Partnership and Agreement Affecting Real Property dated as of April 16, 2002 and recorded on April 29,2002 as Document Number 2002-0358671 in the Recorder's Office of San Diego WORD-SD\DAS\51236297.9 -1- .s·7 County (the "Toll Road Agreement") regarding certain real property owned by, offered for dedication (including the Dedicated Property), or to be offered for dedication to the City. The Toll Road Agreement provides, among other things, that, upon Close of the T oil Road Financing and satisfaction (or waiver in writing by the party benefited by such condition) of the other conditions to close of escrow thereunder, the City will (i) accept title to such real property that has been irrevocably offered for dedication to the City, and (ii) grant its fee title in such real property to Caltrans. E. The Toll Road Agreement also defines certain obligations of SDELP and City related to the design and construction of the Toll Road and the Interchange Improvements. F. Trimark and certain merchant builders are the fee owners of certain parcels of real property situated in the City of Chula Vista, County of San Diego, State of Cali fomi a, commonly known as San Miguel Ranch (the "San Miguel Ranch Property"). The San Miguel Ranch Property is currently being developed as approximately seven hundred forty (740) acre master planned, mixed use, real estate development consisting of eight hundred twenty (820) single family residential lots, four (4) residential super pads with capacity for an aggregate of five hundred seventy- four (574) dwelling units, one (I) commercial center lot, nine (9) open space lots, two (2) park lots, one (I) school site lot, two (2) community purpose facility lots, and various special lots. In connection with development of the San Miguel Ranch Property, Trimark desires completion of the Interchange Improvements. G. A condition of approval of the tentative map for that certain Final Map No. 14261 filed in the Office of the County Recorder of San Diego County on August 21,2001 (the "Final Map") required Trimark to irrevocably offer to dedicate to the City ("Offer") that portion of the Toll Road right-of-way that lies within the San Miguel Ranch Property (the "Dedicated Property") in order to ensure an adequate transportation element for Trimark's planned development of the Property. The Final Map includes a dedication of the Dedicated Property by Trimark in favor of the City. The Dedicated Property is described as Lot "P" of Chula Vista Tract No. 99-04, San Miguel Ranch Phases 1,2 and 4 "A" Map No. I, in the City ofChula Vista, County of San Diego, State of California, according to the Final Map. H. As of the date of this Agreement, the City has not accepted the Offer, however, the City desires to accept the Offer and to transfer its fee title in the Dedicated Property to Caltrans pursuant to the terms of the Toll Road Agreement and this Agreement. Trimark's consent is required for the City's transfer of the Dedicated Property to Caltrans. The parties desire to enter into this Agreement to set forth the terms and conditions pursuant to which Trimark will consent to the City's transfer of the Dedicated Property to Caltrans for development of the Toll Road. WORD-SDIDASI51236297.9 -2- $-<Ý. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants, promises and undertakings set forth herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Article 1. Defined Terms. This Agreement is made with reference to the following defined terms: 1.1 Acknowledgment Letter. The term "Acknowledgment Letter" shall mean a written letter executed by Caltrans acknowledging the terms and conditions of this Agreement, in form and content acceptable to Trimark. 1.2 Approved Plans. The term "Approved Plans" shall mean those certain plans and specifications for construction of the Interchange Improvements to be prepared by Contractor and approved by Caltrans. 1.3 Approved Sound Wall Plans. The term" Approved Sound Wall Plans" means plans and specifications for the construction of the Sound Walls to be prepared by SDELP and approved by Trimark and the City in writing prior to obtaining bids or entering into a contract to build the Sound Walls, subject to the terms of Section 2.5. 1.4 Approved Sound Wall Cost Estimate. The term "Approved Sound Wall Cost Estimate" means the cost estimate for the design and construction of the Sound Walls to be prepared by SDELP and approved by Trimark in writing prior to the commencement of any construction of the Sound Walls, subject to the terms of Section 2.5. 1.5 Caltrans. The term "Caltrans" shall mean the State of Cali fomi a, Department of Transportation. 1.6 Certificate of Acceptance. The term "Certificate of Acceptance" means a certificate in the form attached hereto as Exhibit D, duly executed by an authorized officer of the City, confirming the City's acceptance of the Offer and assumption of the fee title to the Dedicated Property. 1.7 Close of Escrow. The term "Close of Escrow" has the meaning set forth in Section 5.3. 1.8 Close of Toll Road Financing. The term "Close of Toll Road Financing" means the execution and delivery of all operative documents necessary to create binding obligations for the financing of the design and construction of the Initial Project and acquisition of all Facilities. WORD-SDIDASI51236297.9 -3- ~? 1.9 Contractor. The term "Contractor" shall mean Washington Group International, Inc., or its assignee. 1.10 Dedicated Property, The term "Dedicated Property" shall mean the area within the San Miguel Ranch Property described in Recital G. 1.11 Deed. The term "Deed" shall mean a grant deed in the form attached hereto as Exhibit E, duly executed by an authorized officer of the City, transferring its fee title in the Dedicated Property to CaItrans. 1.12 Design Build Contract. The term "Design Build Contract" has the meaning set forth in Recital B, 1.13 Development Franchise Agreement. The term "Development Franchise Agreement" has the meaning set forth in Recital A. 1.14 Disapproved Matters. The term "Disapproved Matters" has the meaning set forth in Section 3.1. 1.15 Effective Date. The term "Effective Date" has the meaning provided in the preamble to this Agreement. 1.16 Escrow. The term "Escrow" has the meaning set forth in Section 5.1. 1.17 Escrow Holder. The term "Escrow Holder" means Chicago Title Insurance Company, in its capacity as the holder of the Escrow. 1.18 Excess Dedicated Property, The term "Excess Dedicated Property" has the meaning set forth in Section 6.3. 1.19 Excess Dedicated Property Notice. The term "Excess Dedicated Property Notice" has the meaning set forth in Section 6.3. 1.20 Exhibits. The term "Exhibits" shall mean Exhibits A through E attached hereto and incorporated herein by reference, as follows: A. Toll Road Map B. List of Disapproved Matters C. General Provisions of Escrow Holder D. Form of Certificate of Acceptance E. Form of Deed WORD-SDlDAS\51236297.9 -4- s/o 1.21 Facilities. The term "Facilities" shall mean all real or personal property located in, on, under, or over, the Initial Project, such as structures, improvements, fixtures, installed equipment and other properties. 1.22 Fair Market Value. The term "Fair Market Value" shall mean the value ofland as defined by Code of Civil Procedure Section 1263.320. Recital G. 1.23 Final Map. The term "Final Map" has the meaning set forth in 1.24 Final Project E1R/EIS, The term "Final Project EIRlEIS" shall mean the Final Environmental Impact Statement/Report State Route 125 South certified for the Project in January 2000, consisting of the July 1996 Draft Environmental Impact Statement/Report State Route 125 South with Technical Appendices, the April 1999 Supplernental Environmental Impact Statement/Report State Route 125 South, and the January 2000 Responses to Comments on the foregoing draft and supplement. 1.25 General Provisions. The term "General Provisions" has the meaning set forth in Section 5.2. 1.26 HOA. The term "HOA" shall mean one or more homeowner's associations for the applicable portion of San Miguel Ranch Property. 1.27 Interchange Improvements. The term "Interchange Improvements" shall mean collectively the Overpass and Ramps together with the paving of the South Ramps, and if required to be constructed pursuant to the provisions herein, the Sound Walls. 1.28 Initial Maintenance Funding Amount. The term "Initial Maintenance Funding Amount" has the meaning set forth in Section 2.5(b)(i). 1.29 Initial Project. The term "Initial Project" means the four lanes of the Toll Road approved for construction by the Final Project EIRlEIS, including the Overpass and Ramps and other interchanges listed in Section 3.2.1 of the Toll Road Agreernent, with capacity for expansion to six or eight lanes depending on the location, plus two (2) high occupancy vehicle lanes, 1.30 Maintenance Fund. The term "Maintenance Fund" shall mean an escrow, endowment or other manner of holding and investing the Initial Maintenance Funding Amount as agreed to by SDELP and Trimark in the event Section 2.5(b) is applicable. 1.31 Intentionally Omitted. WORD-SDlDAS\51236297.9 -5- S-~ 1.32 Mount Miguel Road Plans. The term "Mount Miguel Road Plans" shall mean those certain engineering and improvement plans for that portion of Mount Miguel Road located East of the Toll Road dated as of ,_ prepared by and such future engineering and improvement plans for the remaining portion of Mount Miguel Road in substantial conformance with the applicable tentative and final maps. 1.33 Offer. The term "Offer" has the rneaning set forth in Recital G. 1.34 Overpass and Ramps. The term "Overpass and Ramps" shall mean the following improvements, all as more particularly described and shown in the Project Report: (a) an overpass for Mount Miguel Road over the Toll Road ("Overpass"); (b) grading and paving of both a Northbound entrance ramp from Mount Miguel Road to the Toll Road and a Southbound exit ramp trom the Toll Road to Mount Miguel Road ("North Ramps"); (c) grading only of both a Southbound entrance ramp trom Mount Miguel Road to the Toll Road and a Northbound exit rarnp rrom the Toll Road to Mount Miguel Road ("South Ramps"). 1.35 Parties. The term "Parties" shall mean Trimark, SDELP and City, collectively, and the term Party shall mean Trimark, SDELP or City, individually, as the context requires. 1.36 Permitted Title Exceptions. The term "Permitted Title Exceptions" has the meaning set forth in Section 3.1. 1.37 Preliminary Title Report. The term "Preliminary Title Report" has the meaning set forth in Section 3.1. 1.38 Project Report. The term "Project Report" shall mean that certain Project Report dated May 1999 which includes preliminary plans for construction of the Initial Project as approved May 1999 by CaItrans. 1.39 Remaining Initial Funding Amount. The term "Remaining Initial Funding Amount has the meaning set forth in Section 2.5(b)(ii). 1.40 Intentionally Omitted. WORD-SDlDAS\51236297.9 -6- 5/L 1.41 San Miguel Ranch Property. The term "San Miguel Ranch Property" shall mean the real property belonging to Trimark and certain merchant builders, described in Recital F. 1.42 SDELP Sound Wall Maintenance Period. The term "SDELP Sound Wall Maintenance Period" shall mean the period commencing on the completion of the Sound Walls and ending thirty-five (35) calendar years thereafter. 1.43 Slope Easement. The term "Slope Easement" shall mean a slope easernent in a form to be agreed upon prior to the Close of Escrow and duly executed by Trimark, as grantor, and Caltrans, as grantee. 1.44 Sound Walls. The term "Sound Walls" shall mean noise attenuation structures to be constructed between the Toll Road and the San Miguel Ranch Property in accordance with the Approved Sound Wall Plans, subject to the terms of Section 2.5. 1.45 Sound Wall Reimbursable Costs. The term "Sound Wall Reimbursable Costs" has the meaning set forth in Section 2.5. 1.46 South Ramps Financial Test. The term "South Ramps Financial Test" has the meaning set forth in Section 2.4. 1.47 Temporary Construction Easement. The term "Temporary Construction Easement" shall mean a temporary construction easement in a form to be agreed upon prior to the Close of Escrow and duly executed by Trimark, as grantor, and SDELP, as grantee in accordance with Section 9.1. 1.48 Title Company. The term "Title Cornpany" shall mean Lawyers Title Insurance Company, in its capacity as the issuer of the Title Policy, or such other company as may be appointed by SDELP to serve in such capacity rrom time to time with respect to any particular parcel. 1.49 Title Policy, The term "Title Policy" has the meaning set forth in Section 5.6. 1.50 Toll Road. The term "Toll Road" has the meaning set forth in Recital A. 1.51 Toll Road Agreement. The term "Toll Road Agreement" has the meaning set forth in Recital D. 1.52 Toll Road Financing. The term "Toll Road Financing" has the meaning set forth in Recital C. WORD-SD\DAS\51236297.9 -7- ':;:-8 ] .53 Toll Road Schedule. The term "Toll Road Schedule" shall mean a critical path method schedule addressing the planning, design, construction, development and completion of the Toll Road to be prepared by the Contractor and approved by SDELP in accordance with Article 4 of the Design Build Contract, including all milestone completion deadJines specified in the Design Build Contract. 1.54 Total Maintenance Fund Amount. The term "Total Maintenance Fund Amount" has the meaning set forth in Section 2.5(b)(i). 1.55 Trimark Parties. The term "Trimark Parties" shall have the meaning set forth in Section 2.5(c). Article 2. Obligations of Parties. 2.1 Trimark's Consent. Subject to the terms of this Agreement, Trimark hereby consents to the City's transfer by the Deed of the Dedicated Property to Caltrans; provided, however, that the effectiveness of such consent is conditioned upon the satisfaction (or waiver in writing by the appropriate party) of all conditions to the Close of Escrow under the terms of this Agreement, including without limitation the conditions set forth in Sections 5.4.1, 5.4.2, 5.4.3, 5.4.4, 5.4.7 and 5.4.9. 2.2 City's Delivery of Certificate of Acceptance and Deed. City hereby agrees to execute and deliver the Certificate of Acceptance and the Deed into the Escrow established pursuant to Article 5 of this Agreernent within thirty (30) business days following execution of this Agreement; provided, however, that the effectiveness of any transfer of the Dedicated Property to Caltrans shall be conditioned upon the satisfaction (or waiver in writing by the appropriate party) of all conditions to the Close of Escrow under the terms of this Agreement; provided further, however, that the City may elect to instruct the Escrow Holder to record the Certificate of Acceptance in the Recorder's Office of the County of San Diego upon Escrow Holder's receipt of the Certificate of Acceptance prior to the Close of Escrow in which case the Certificate of Acceptance shall be effective upon such recording and Escrow Holder shall deliver a conformed copy of the recorded Certificate of Acceptance to SDELP, the City and Trimark. Nothing contained in this Agreement shall Jimit or restrict City's right to execute the Certificate of Acceptance to the Dedicated Property. 2.3 SDELP's Covenant to Construct Overpass and Ramps. SDELP hereby agrees, at its cost, to cause the construction of the Overpass and Ramps to be completed in accordance with the Toll Road Schedule as part of the Initial Project in a good and workmanlike manner and in accordance with the Approved Plans. Additionally, SDELP shall cause the alignment, location and height of the Overpass and Ramps as constructed to conform to the graded conditions of the Dedicated Property and adjacent San Miguel Ranch Property and in conformance with the Mount Miguel Road Plans. WORD-SDlDAS\5] 236297.9 -8- $/4 2.4 SDELP's Covenant to Pave the South Ramps. SDELP hereby agrees, at its cost, to cause the paving of the South Rarnps to be completed within 12 months after the feasibility criteria set forth below in this Section have been satisfied, in a good and workmanlike manner and in accordance with the Approved Plans. SDELP shall be obligated to pave the South Ramps when requested by Trimark if an independent financial advisor selected by SDELP and approved by Trimark determines that the net increased annual revenues resulting from the total number of vehicles entering and existing at the South Ramps (which shall be calculated taking into account expected adjustments in revenues at the other Initial Project interchanges resulting from the paving of the South Ramps) are a minimum of 118.5% of the sum of (i) the incremental operating and maintenance costs for the South Ramps, and (ii) the debt service on the cost of funds to pave the South Ramps and incorporate the South Ramps into the Initial Project, including installation of all necessary electronic equipment (assuming 100% debt financing of such costs and reasonable and customary soft costs, design, engineering, financing and legal costs to be incurred in connection with the South Ramps) in each year that the debt financing for the South Ramps will be outstanding (the "South Ramps Financial Test"), provided that such obligation shall be subject to SDELP's obtaining any necessary Caltrans' approval, which it shall in good faith request at its own cost in a prompt and diligent manner. After the Toll Road has been opened to the public, Trimark may request that SDELP perform the South Ramps Financial Test as many times as Trimark deems appropriate, provided that SDELP shall not be required to reperform the South Ramps Financial Test sooner than two years from the date of Trimark's last request. SDELP shall promptly deliver to Trimark copies of all documents evidencing the performance of each South Rarnps Financial Test and the results thereof. 2.5 SDELP's and Trimark's Covenants Regarding the Sound Walls. SDELP hereby agrees to take into account the development of all of the San Miguel Ranch Property in performing its final traffic sound study and will use the same standards as were required for Trimark's traffic sound study in connection with the approval of development by the City for the San Miguel Ranch Property. If the results of SDELP's final traffic sound study indicate that the Sound Walls are not required for mitigation of the San Miguel Ranch Property, City hereby agrees it will not require such Sound Walls to be constructed as a condition of mitigation to development of the San Miguel Ranch Property. To the extent Sound Walls are required by the results of such study, SDELP hereby agrees to cause the construction of any such Sound Walls to be completed prior to the paving of that segment of the Toll Road that is located north of Mount Miguel Road. Such construction shall be completed in a good and workmanlike manner and in accordance with the Approved Sound Wall Plans, subject to the terms of subsections (a) or (b) below, as applicable, and subsection (c) below. Upon completion of the Sound Walls, Trimark shall reimburse SDELP its actual, incurred costs for design and construction of the Sound Walls (not to exceed the Approved Sound Wall Cost Estimate) ("Sound Wall Reimbursable Costs"), and less WORD-SDlDAS\51236297.9 -9- $/3 the amount of the Initial Maintenance Funding Amount in subsection (b) below, if applicable, and less any savings, if any, realized by SDELP under the Design Build Contract as a result of not having to build fencing adjacent to the Toll Road because of the Sound Walls construction. Such reimbursement shall be made within thirty (30) days after receipt of an invoice together with documentation reasonably satisfactory to Trimark evidencing such costs and valid completion. In no event will the City or Trimark be obligated to maintain the Sound Walls at any time; provided however that Trimark shall require the applicable HOA to assume the obligation to maintain the Sound Walls, subject to the tenns hereof. In the event that the Sound Walls are constructed within the Dedicated Property pursuant to subsection (a) below, Trimark shall be responsible for reimbursing SDELP for the entire amount of the Sound Wall Reimbursable Costs with no offset or credit for Sound Wall maintenance, as contemplated in subsection (b) below. Only in the event that the Sound Walls are constructed within the San Miguel Ranch Property shall Trimark be entitled to offset or credit for the Sound Wall maintenance, as contemplated in subsection (b) below, towards the cost of Sound Wall construction. (a) Construction and Maintenance of Sound Walls Within Dedicated Property. SDELP shall use commercially reasonable efforts to cause Caltrans to pennit SDELP to construct the Sound Walls within the Dedicated Property. If SDELP obtains such pennission, SDELP shall cause construction of the Sound Walls on a portion of the Dedicated Property in a location to be designated by SDELP and approved by Trimark and the City, subject to the tenns of this Section 2.5. Upon completion of the Sound Walls, SDELP agrees, at its cost, to maintain the Sound Walls in good condition and repair during the SDELP Sound Wall Maintenance Period. SDELP's obligations to maintain the Sound Walls shall tenninate upon the expiration of the SDELP Sound Wall Maintenance Period, provided that after the expiration of the SDELP Sound Wall Maintenance Period, Caltrans is legally obligated to maintain, at Caltrans' cost, the Sound Walls in good condition and repair after the expiration of the SDELP Sound Wall Maintenance Period and in perpetuity. Notwithstanding the foregoing, during the SDELP Sound Wall Maintenance Period and in perpetuity thereafter, the applicable HOA shall be responsible for removal of graffiti from the side of the Sound Walls facing the San Miguel Ranch Property, provided that, if required by applicable laws, Caltrans issues an encroachment pennit granting the HOA the rights necessary to access the Sound Walls and perfonn such work. (b) Construction and Maintenance of Sound Walls Within the San Miguel Ranch Property. If despite SDELP's commercially reasonable efforts, Caltrans does not pennit SDELP to construct the Sound Walls in the Dedicated Property, SDELP shall cause construction of the Sound Walls on a portion of the San Miguel Ranch Property adjacent to the Dedicated Property in a location to be approved by Trimark, SDELP and the City, subject to the tenns of this Section 2.5, and subject WORD-SDlDAS\51236297.9 -10- s-/~ to the tenns and conditions of an easement agreement acceptable to Trimark and SDELP. Upon completion of the Sound Walls as verified by certificates rrom the applicable contractors and engineers, SDELP agrees to rnaintain the Sound Walls in good condition and repair during the SDELP Sound Wall Maintenance Period, except that during the Sound Wall Maintenance Period, the applicable HOA shall be responsible for removal of graffiti from the side of the Sound Walls facing the San Miguel Ranch Property. SDELP's obligations to maintain the Sound Walls shall tenninate upon the expiration of the SDELP Sound Wall Maintenance Period. Prior to the City's approval of any final map for portions of the San Miguel Ranch Property upon which any Sound Walls are located, Trimark shall require the applicable HOA to be responsible for the maintenance of the Sound Walls after the expiration of the SDELP Maintenance Period and in perpetuity by providing such requirement in the HOA's recorded covenants, conditions and restrictions in a fonn reasonably approved by the City. In addition, Trimark shall provide for the applicable HOA to show such future maintenance costs as a separate line item on its annual budgets. (i) Maintenance Fund. Upon completion of the Approved Sound Wall Plans, SDELP shall provide to Trimark for Trimark's approval, the following: (I) the estimated cost of maintenance of the Sound Walls on a per year and per foot basis, (2) the initial arnount of funds ("Initial Maintenance Funding Amount") which, if invested during the SDELP Sound Wall Maintenance Period at rates to be agreed upon by the City, Trimark and SDELP, would generate enough funds to pay the total maintenance costs for the Sound Walls after the expiration of the SDELP Sound Walls Maintenance Period and in perpetuity ("Total Maintenance Fund Amount"), (3) the Total Maintenance Fund Amount, and (4) evidence reasonably satisfactory to Trimark supporting the detennination of the amounts provided in this subsection. (ii) Initial Maintenance Funding Amount. Upon completion of construction of the Sound Walls, if the Initial Maintenance Funding Amount is less than or equal to the Sound Wall Reimbursable Costs, Trimark shall be entitled to the offset against the Sound Wall Reimbursable Costs described above in Section 2.5. If the Initial Maintenance Funding Amount is greater than the Sound Wall Reimbursable Costs, SDELP shall pay to Trimark within thirty (30) days after completion of the Sound Walls the difference between the amount of the Sound Wall Reimbursable Costs and the Initial Maintenance Funding Amount. WORD-SD\DAS\51236297.9 -11- $~/7 (c) SDELP Indemnity and Insurance. SDELP shall provide insurance and indemnity with respect to the construction of the Sound Walls pursuant to the terms of the Temporary Construction Easement. 2.6 SDELP's Covenants Regarding Slopes. In the event SDELP grades the portions of the Initial Project adjacent to the San Miguel Ranch Property prior to Trimark's grading of the San Miguel Ranch Property, SDELP hereby agrees, at its cost, to cause the slopes adjacent to the San Miguel Ranch Property to be constructed (including without limitation grading and compaction) in accordance with residential standards, as required by the City and in accordance with the applicable Uniform Building Codes. Article 3. Title. 3.1 Condition of Title. The parties have reviewed that certain Preliminary Report (Order No. 295600-05) (the "Preliminary Title Report") dated as of July 1,2002, as issued by Lawyers Title Insurance Company (the "Title Company") for the Dedicated Property, together with full and complete copies of all documents referenced therein as exceptions. SDELP and City hereby approve all matters set forth in Schedule B, Part II of the Preliminary Title Report except those matters set forth in Exhibit B (collectively, the "Disapproved Matters"). The approved matters are hereinafter referred to as the "Permitted Title Exceptions." SDELP will not approve any title matters without first obtaining Caltrans' approval of such matters. 3.2 Covenants as to Title. Trimark shall use commercially reasonable efforts to remove all Disapproved Matters from the record title to the Dedicated Property so that it may be transferred to City rree and clear of any liens, encumbrances or restrictions on use except as are approved in advance by City and SDELP; provided, however, that Trimark shall have no monetary obligation with respect to such matters except as hereinafter provided. Trimark will cause to be removed any deeds of trust, mortgages or similar rnatters and shall pay its pro rata share of any taxes or assessrnents due as of the Close of Escrow in accordance with Section 5.7. The Deed shall include a waiver of all abutter's rights and rights to compensation in form and substance acceptable to Caltrans provided City obtains the same waiver from Trimark. Nothing set forth herein shall alter, limit, expand or otherwise affect in any manner any of Trimark's obligations to the City with respect to the condition of title of the Dedicated Property as such obligations existed prior to the Parties entering into this Agreement. Article 4. Representations and Warranties. 4.1 Representations and Warranties True and Correct. In addition to any other representations and warranties of Trimark, SDELP and the City contained herein, Trimark, SDELP and the City each represent and warrant to the other that the WORD-SDlDAS\51236297.9 -12- s-/þ -----.,..----- following facts as they pertain to each of them are true and correct as of the date hereof. The continued truth and accuracy of the following representations and warranties shall constitute a condition precedent to the obligation of the Party benefited to close the Escrow. These representations and warranties shall survive the Close of Escrow and the recording ofthe Certificate of Acceptance and Deed. (a) Authorization of Agreement. Trimark, SDELP and the City each have the requisite right, power, legal capacity and authority, to enter into this Agreement, to perform their respective obligations hereunder and to consummate the transactions contemplated hereby. Trimark, SDELP and the City each have obtained all approvals, authorizations and consents necessary in connection with the execution of this Agreement and their respective performance of obligation under this Agreement. This Agreement constitutes the legally valid and binding agreement of Trimark, SDELP and the City and is enforceable in accordance with its terms against Trimark, SDELP and the City except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles affecting or limiting the rights of contracting parties generally. Neither this Agreement nor anything provided to be done hereunder violates or shall violate any contract, docurnent, understanding, agreement or instrument to which SDELP, City or Trirnark is a party or by which SDELP, City or Trimark may be bound. (b) Sole Reliance. SDELP is relying solely upon its own inspection, investigation and analyses of the Dedicated Property in planning for and constructing the Initial Project and other Interchange Improvements on the Dedicated Property, including without limitation the physical condition of the Dedicated Property, the square footage of the real property and any improvements thereon, hazardous materials review, present and future laws, statutes, rules, regulations, permits, ordinances, limitations, restrictions and requirements concerning the zoning, use, density, location, suitability or any other aspect of the Dedicated Property or any existing or proposed development thereof, and except for Trimark's location, elevation and design of Mount Miguel Road and Trimark's representations and warranties in Section 4.I(a) or any disclosure, if any, made pursuant to Section 4.I(c) below, is not relying in any way upon any representations, statements, agreements, warranties, studies, reports, descriptions or any other information or material furnished by Trimark or its representatives, whether oral or written, express or implied, of any nature whatsoever. (c) Phase I Report. Prior to the Close of Escrow, Trimark shall deliver to City and SDELP a Phase I environmental report covering the Dedicated Property prepared by a party reasonably acceptable to the City, Such Phase I report may consist of an update to a previously performed environmental report done with respect to the Dedicated Property. If at the time of the delivery of such Phase I report or prior to the Close of Escrow, Trimark has current, actual knowledge that WORD-SDlDAS\51236297.9 -13- 5/7 there is a material inaccuracy or omission in such report, Trimark shall disclose in writing to City and SDELP any such inaccuracy or omission. Except as set forth in the preceding sentence, Trimark makes no representations or warranties whatsoever, express or implied, with respect to the environmental condition or any other aspect of the Dedicated Property. The tenn "current actual knowledge of Trimark" shall mean, for purposes of this subsection (c), only such knowledge as is then currently, actually known to Stephen E. Hester (and not imputed or constructive notice). City and SDELP acknowledge and agree that Stephen E. Hester has not and will not be required to review any records or make any other inquiry or independent investigation in connection with the disclosure required under this subsection (c). Article 5. Escrow. 5.1 Opening of Escrow, Upon execution of this Agreement, the Parties shall open an escrow (the "Escrow") with Chicago Title Insurance Company, 925 B Street, San Diego, California 92101 ("Escrow Holder") by the delivery to Escrow Holder of a completely executed copy of this Agreement. 5.2 Escrow Instructions. This Agreement, together with the General Provisions of Escrow Holder attached hereto as Exhibit C (the "General Provisions") collectively shall constitute escrow instructions, and a copy hereof shall be deposited with Escrow Holder for the purposes of enabling Escrow Holder to record the Certificate of Acceptance and the Deed. In the event of any inconsistency between the tenns of the General Provisions and this Agreement, the provisions of this Agreement shall prevail to the extent of such inconsistency. 5.3 Close of Escrow. "Close of Escrow" shall occur when both the Certificate of Acceptance and the Deed have been recorded. The Close of Escrow shall occur within two (2) business days after the close of Toll Road Financing subject to the satisfaction of the conditions set forth below in Section 5.4. The Escrow shall tenninate without closing if each of the conditions to the Close of Escrow has not been satisfied or waived on or before December 31, 2002, unless the Parties agree to extend such date. 5.4 Conditions to Close of Escrow. The Close of Escrow shall not occur until each of the following conditions has been satisfied or waived by the Party for whose benefit the condition exists: 5.4.1 SDELP and the City shall have deposited with Escrow Holder a fully executed copy of the Toll Road Agreement. 5.4.2 The City shall have deposited with Escrow Holder the Certificate of Acceptance. WORD-SDlDAS\5] 236297.9 -14- .5~ 5.4.3 The City shall have deposited with Escrow Holder the Deed and Caltrans shall have provided a written consent to the recordation of the Deed. 5.4.4 SDELP shall have deposited with Escrow Holder a certificate executed by a duly authorized officer of SDELP to the effect that the Toll Road Financing has closed and that SDELP is prepared to issue a notice to proceed to the Contractor as soon as pennissible under the tenns of the Toll Road Financing. 5.4.5 SDELP shall have deposited with Escrow Holder a statement of the Fair Market Value of the Dedicated Property for purposes of detennining the amount of insurance to be provided by the Title Policy. 5.4.6 Trimark shall have deposited with Escrow Holder Trimark's executed counterpart of the Temporary Construction Easement. 5.4.7 SDELP shall have deposited with Escrow SDELP's executed counterpart of the Temporary Construction Easernent. 5.4.8 Escrow Holder stands ready to issue the Title Policy. 5.4.9 Escrow Holder shall have received all other sums and documents reasonably required by Escrow Holder to be deposited to the Escrow. 5.4.10 The City has reviewed and approved the Phase I report described above in Section 4.1 (c). 5.5 Recordation of Documents. Upon receipt of the documents and sums described in Section 5.4, and upon satisfaction or waiver of the contingencies specified in Section 5.4, Escrow Holder shall cause the Certificate of Acceptance (unless the Certificate of Acceptance has already been recorded pursuant to Section 2.2), Deed, and Temporary Construction Easement to be recorded in the office of the County Recorder of San Diego County, and shall deliver a confonned copy of each of such recorded documents to Trimark, SDELP and the City. 5.6 Title Policy. Escrow Holder is hereby instructed to deliver to City, or its nominee, CLTA standard Owner's binder policy of title insurance with regional exceptions dated the date and time of the Close of Escrow with liability in the Fair Market Value of the Dedicated Property (the "Title Policy"). The Title Policy shall name the City, or its nominee, as the owner of good, marketable and indefeasible fee title to the Dedicated Property subject only to (i) the standard printed Title Company exceptions, (ii) the Pennitted Title Exceptions, and (iii) matters approved in writing by SDELP or the City or otherwise pennitted by this Agreement. WORD-SD\DAS\51236297.9 -15- $-_¿/ 5.7 Prorations. (a) All prorations shall be as of 11:59 p.m. on the day preceding the Close of Escrow. (b) Real property taxes and all payments on general and special bonds, taxes and assessments shall be prorated based on the latest available tax information. If it is determined after the Closing that the actual arnount of taxes levied is different than the amount used for proration purposes, Trimark and SDELP shall make an appropriate adjustment in cash outside of Escrow within five (5) business days after receipt of notice by either Party that any amount is due. This provision shall survive the Closing. 5.8 Costs of Escrow. SDELP shall pay all costs of the Escrow, including without limitation the Escrow fee, the premium for the Title Policy and any endorsements requested by SDELP or the City and all recording fees or documentary transfer taxes, if any. Trimark and City shall not be required to pay any cost of Escrow or Close of Escrow. 5.9 Closing Statement; Withholding Requirements. At least two (2) business days prior to Close of Escrow, Escrow Holder shall prepare and submit for approval to Trimark, SDELP and City, a closing staternent setting forth any prorations required under the terms of this Agreement. For purposes of complying with Section 6045 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereto, Escrow Holder shall be the "person responsible for closing the transaction." Escrow Holder shall be responsible for obtaining the information necessary to file and shall file within the statutorily prescribed time Form 1099-S entitled "Statement for Recipients of Proceeds rrom Real Estate, Broker and Barter Exchange Transactions" with the Internal Revenue Service. Article 6. Covenants and Other Agreements. 6.1 SDELP's Obligations With Respect to Construction of the Toll Road. SDELP shall keep Trimark apprised of its plans for construction in the vicinity of the Dedicated Property, and shall cause the Contractor to coordinate its plans with Trimark to the extent it may do so without affecting the Toll Road Schedule. SDELP shall in good faith diligently pursue to completion the design and construction of the Initial Project and other Interchange Improvements from and after the Close of Escrow. 6.2 Reimbursement of Costs. Except as may be specifically provided to the contrary herein, if any costs are due hereunder, the Party required to pay such cost at the time due hereunder, or within thirty (30) days of receipt of an invoice if an invoice is required hereunder. Amounts not paid when due shall accrue interest WORD-SDlDAS\51236297.9 -16- ~ ,}.--2- computed on a monthly basis at the average prime rate published by the Federal Reserve Bank of San Francisco for loans to its member banks during such month, plus 2%, compounded daily. 6.3 Adjustment of Toll Road Right-of-Way Requirements. Trimark acknowledges that the final Toll Road design and right-of-way requirements cannot be precisely known at this time due to the design-build nature of the Toll Road construction process. If the final design decreases the size ofthe Toll Road right-of- way requirements within the Property, SDELP shall provide Trimark with written notice ("Excess Dedicated Property Notice") of such determination, including the legal description of any portion of the Dedicated Property that is not within the final Toll Road right-of-way limits (the "Excess Dedicated Property). Trimark may at any time thereafter provide SDELP with written notice that Trimark wishes to reacquire all or any portion of the Excess Dedicated Property, identifying the property that it wishes to reacquire. SDELP shall deliver to Trimark a fully executed deed, in recordable form, of any such Excess Dedicated Property owned by Caltrans or SDELP within such thirty (30) days following SDELP's receipt of Trimark's notice. All such reacquisitions shall be at no cost or expense to Trimark. Notwithstanding the foregoing, except for any reacquisition by Trimark hereunder, SDELP and Caltrans shall be obligated to retain title to any of the Excess Dedicated Property for one (1) year after the date of delivery of the Excess Dedicated Property Notice to Trimark, and after such one (I) year period neither SDELP nor Caltrans shall be obligated to retain title to such property. After such one (1) year period, and upon receipt of written request rrom Trimark, SDELP shall advise Trimark regarding any portions of the Excess Dedicated Property still owned by SDELP or Caltrans or remaining within their control, and Trimark will continue to have the right to reacquire any such property under the terms ofthis Section. Any such reacquisitions hereunder shall be free and clear of any exceptions to title other than those existing upon the Close of Escrow hereunder, and shall be in at least as good physical condition as existed at the time of the Close of Escrow hereunder. Article 7. Default and Termination. 7.1 Default. If either Party (the "Defaulting Party") fails to deposit any item into Escrow when due, or to perform any other act when required hereunder, then the other Party (the "Nondefaulting Party") shall deliver written notice of such default to the Defaulting Party and Escrow Holder. The Defaulting Party shall cure any such default within fifteen (15) days after receipt ofthe Nondefaulting Party's notice, or if such default cannot be cured within such cure period, shall cornmence such cure within fifteen (15) days and diligently pursue such cure to completion, 7.2 SDELP and City Remedies. If the Defaulting Party is Trimark, and Trimark fails to cure such default as set forth in Section 7.1 above, then subject to the terms of section 7.7 below, the Nondefaulting Parties shall have all rights and WORD-SDlDAS\51236297.9 -17- 5-d3 remedies which they may have at law or in equity, including without limitation the right to (i) terminate this Agreement by written notice to the Defaulting Party and the Escrow Holder, or (ii) seek specific performance of this Agreement. 7.3 Trimark Remedies. If the Defaulting Party is SDELP or the City, and SDELP or the City as applicable fails to cure such default as set forth in section 7.1 above, then subject to the terms of section 7.7 below, the Nondefaulting Party shall have all rights and remedies which it may have at law or in equity, including without limitation the right to (i) terminate this Agreement by written notice to the Defaulting Party and the Escrow Holder, or (ii) seek specific performance of this Agreement. 7.4 Intentionally Omitted. 7.5 Default Under Toll Road Agreement. If either SDELP or City deliver a dispute notice under section 6.1 of the Toll Road Agreement or any other default notice under the Toll Road Agreement, such Party shall deliver a copy of such notice to Trimark. 7.6 Termination. In the case of any termination of this Agreement and cancellation of the Escrow, (i) all documents and funds (together with any interest accrued thereon) previously deposited into Escrow shall be promptly returned to the depositing Party by the Escrow Holder, and (ii) the Defaulting Party shall be liable for all Escrow cancellation charges. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree that the City's execution of the Certificate of Acceptance shall remain effective after termination, for any reason, of this Agreement. 7.7 Waiver of Consequential Damages, Except with respect to the indemnity obligations set forth in Section 2.5(c), SDELP, the City, Trimark and any of Trimark Parties shall not be liable to any Party hereunder (or any person or entity clairning by, through or under such other Party) for, and each Party hereby waives any claims with respect to, any consequential or special or indirect damages in connection with any default under the terms of this Agreement. Article 8. Intentionally Omitted, Article 9. Temporary Construction and Slope Easement. 9.1 Temporary Construction Easement. Trimark and SDELP hereby agree to execute in counterpart and deliver their respective counterparts of the Temporary Construction Easement to the Escrow established pursuant to Article 3 of this Agreement within five (5) business days following execution of this Agreement. The Temporary Construction Easement shall include Trimark's grant of a non- exclusive temporary construction easement to SDELP on, under, over, across and WORD-SDlDAS\51236297.9 -18- 5- d.tI- through that area of the residential portion of the San Miguel Ranch Property adjacent to the Dedicated Property and within the access limits that SDELP is obligated to deliver to the Contractor pursuant to the Design Build Contract as approved by Trimark and more particularly described in the Temporary Construction Easement, provided, however, that neither the Temporary Construction Easement nor the Slope Easement, shall include any real property which is part of a preserve or open space area as described in that certain Annexation Agreement Concerning the Conservation and Biological Mitigation Program for the Implementation of San Miguel Ranch Sectional Planning Area Plan and Tentative Tract Map, recorded on December 22, 2000 as File/Page 2000-0702132. The Temporary Construction Easement shall reserve rights for Trirnark, and its successors and assigns, to perform construction activities in connection with development of the San Miguel Ranch Property including without lirnitation the grading and compaction of residential lots. 9.2 Slope Easernent. Upon completion of the design and engineering work required for the Initial Project and a legal description as provided by SDELP and approved by Trimark, Trimark and Caltrans shall each deliver their executed counterpart of the Slope Easement into the Escrow. The Slope Easement shall reserve to Trimark, and its successors and assigns, the right to landscape the slope. The Escrow Holder shall upon receipt of both executed counterparts of the Slope Easement, record the Slope Easernent in the office the County Recorder of San Diego County, and shall deliver a conformed copy of such recorded document to Trimark and Caltrans. 9.3 Other Rights. In the event any other Temporary Construction and Access Rights are requested by Trimark or SDELP, Trimark and SDELP shall cooperate with one another in the good faith negotiation of Temporary Construction and Access Rights, as each Party may request in connection with grading or construction of improvements on its respective property, including without limitation SDELP shall cooperate in processing and obtaining any Construction and Access Rights requested by Trimark rrom Caltrans. Such Temporary Construction and Access Rights shall be granted at no cost to the grantee, provided, however, that the use and enjoyment of the Temporary Construction and Access Rights by the grantee shall not interfere with the grantor's own construction activities. Trirnark acknowledges that any other Temporary Construction and Access Rights that it may seek with respect to the Dedicated Property shall be subject to receipt of an encroachment permit from Caltrans, and SDELP acknowledges and agrees that any other Temporary Construction and Access Rights that it may seek with respect to the San Miguel Ranch Property shall be subject to the same terms and conditions. Article 10. Intentionally Omitted. Article II. Miscellaneous. WORD-SDIDASI51236297.9 -19- ~J5 (a) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns. (b) Authorization. Each Party shall deliver to the other Party evidence of such Party's authorization to execute, deliver and perform its obligations as provided in this Agreement in a form reasonably acceptable to the other Party. (c) Estoppel Certificates. Each Party shall, promptly upon request of the other Party, provide a duly executed and delivered estoppel certificate representing that this Agreement is in full force and effect without any defaults by the other Party, or setting forth any default such Party believes to have occurred and be continuing. (d) Time. Time is of the essence of this Agreement and each and every provision hereof. (e) Notices. Any notice, demand, request, covenant, approval, or other communication to be given by one Party to the other shall be given by personal service, or Express Mail, Federal Express, UPS, DHL or any other similar form of airborne/overnight delivery service, by facsimile with proof of delivery, or by mailing in the United States mail, postage prepaid, certified and return receipt requested, addressed to the parties at their respective addresses as follows: To Trimark: NNP- Trimark San Miguel Ranch, LLC c/o Trimark Pacific Homes, L.P. 85 Argonaut, Suite 205 Aliso Viejo, CA 92656 Attention: Mr. Stephen E. Hester Telephone: (949) 465-1655 Fax: (949) 465-1660 NNP- Trimark San Miguel Ranch, LLC c/o Newland Communities 9404 Genesee Avenue, Suite 230 La Jolla, CA 92037 Attention: Mr. Derek Thomas and General Counsel Telephone: (858) 455-7503 Fax: (858) 455-5379 WORD·SDlDAS\51236297.9 -20- $-4 with a copy to: Sheppard Mullin Richter & Hampton LLP 12544 High Bluff Drive, Suite 300 San Diego, CA 92130-3051 Attention: Domenic C. Drago, Esq. Telephone: (858) 720-8989 Fax: (858) 509-3691 To SDELP: San Diego Expressway Limited Partnership c/o California Transportation Ventures, Inc. 707 Broadway, Suite 1700 San Diego, California 92101 Attention: Kent A. Olsen, President Telephone: (619) 338-8385 Facsimile: (619) 338-8123 E-mail: olsenk@pbworld.com with a copy to: Nossaman, Guthner, Knox & Elliott, LLP 18101 Von Karman Avenue, Suite 1800 Irvine, California 92612-0177 Attention: Geoffrey S. Yarema Telephone: (213) 612-7800 Facsimile: (213) 612-7801 E-mail: gyarema(å)nossaman.com To City: City ofChula Vista 276 Fourth Street Chula Vista, CA 91910 Attention: David D. Rowlands, City Manager Telephone: (619) 691-5031 Facsimile: (619) 409-5884 WORD·SDlDAS\51236297.9 -21- ..á -'..{ 7 with a copy to: City of Chula Vista Office of the City Attorney 276 Fourth Avenue Chula Vista, CA 91910 Attention: Ann y, Moore, Esq., Senior Assistant City Attorney Telephone: (619) 691-5037 Facsimile: (619) 409-5823 Any such notice shall be deemed to have been given upon delivery or 48 hours after deposit in the mail as aforesaid. Either Party may change the address at which it desires to receive notice upon giving written notice of such request to the other Party. (f) Governing Law. This instrument shall be governed by and interpreted in accordance with the laws ofthe State of California. (g) Construction. Headings at the beginning of any article, section, paragraph and subparagraph are solely for the convenience of the parties and are not a part of this instrument. Any reference to an article includes all sections thereof, and any reference to a paragraph includes all subparagraphs thereof. This instrument shall not be construed as if it has been prepared by either Party, but rather as if both Parties had prepared the sarne. (h) Entire Agreement; Modification. This Agreement contains all of the agreements of the Parties hereto with respect to the matters contained herein and no prior or contemporaneous agreernent or understanding, oral or written, pertaining to any such matters shall be effective for any purpose. Any modification of any provision of this instrument shall be effective only ifin writing, signed by Trimark, SDELP and the City. Any waiver of any rights under this instrument shall be effective only ifin writing, signed by the waiving Party. As between Trimark, SDELP and the City, to the extent of any inconsistencies between the Development Franchise Agreement, the Toll Road Agreement, and the terms of this Agreement, the terms of this Agreement shall control. (i) Severability. If any provision of this instrument, or the application thereof to any person or circumstances, is found to be invalid, the remainder of the provisions of this instrument, or the application of such provision to persons or circumstances other than those as to which it is found to be invalid, as the case rnay be, shall not be affected thereby. (j) Attorneys' Fees. In any legal proceeding between the Parties hereto seeking enforcernent of or attempting to construe any of the terms and WORD-SDlDAS\51236297.9 -22- $& provisions of this instrument, including, without limitation, any proceeding seeking legal, declaratory or other relief, the prevailing Party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses and reasonable attorneys' fees. (k) Further Assurances. Trimark and SDELP each agree to do such further acts and things and to execute and deliver such additional agreements and instruments as the other may reasonably require to consummate, evidence or confirm the agreements contained herein in the manner contemplated hereby. (I) Survival of Terms. All warranties, representation, terms, agreements, covenants and conditions contained herein shall survive the Close of Escrow. (m) Force Majeure. Except with respect to any obligation to pay money when due, neither Party shall be held liable for any loss or damage due to delay or failure in performance of any part of this Agreement from any cause beyond its control and without its fault or negligence; such causes may include acts of God, acts of civil or military authority, government regulations, embargoes, epidemics, war, terrorist acts, riots, insurrections, fires, explosions, earthquakes, nuclear accidents, floods, strikes, power blackouts of duration exceeding forty-eight (48) hours, volcanic action, other major environmental disturbances or unusually severe weather conditions (collectively, "Force Majeure"). In the event of a Force Majeure likely to cause any such delay or failure, the Party suffering such Force Majeure shall give notice to the other Party hereto, stating the particulars of such Force Majeure and shall to the extent it is capable of doing so, remove such cause with all reasonable dispatch, except that no Party shall be required to settle any strike, walkout, labor dispute or disturbance by acceding to the demands of the opposing Party when such course is deemed inadvisable by such Party. (n) Third Party Beneficiaries. Caltrans, as the ultimate holder of the fee title to the Dedicated Property, is intended to be a third party beneficiary of this Agreement with respect to matters related to the title to and condition of the Dedicated Property. Except for Caltrans, the Parties do not intend to create any third party beneficiaries hereunder, or to authorize anyone not a Party hereto to maintain any cause of action pursuant to the terms or provisions hereof. WORD·SDlDAS\51236297.9 -23- .Þ-...2j J~~I ~'. LV~ ~~~~~\M TRl~;~':.MU WIVIMUIU 11 [0 I'V. VU ¡ F', 1..1 u - .:..~ ,.. : .~". '" I;;¡'~" ',_/_ . . . ~ ~'~:< . \~.J-_ : J¡;S-' IN 'WlTNBSS \fIHEREOF, the parties have exec:uted this Agreement as , '."'" d.a: ""- . b ~,' '.; ", of the Ie uiSt wnttcn a Qve. ,;" ., "Trimark" NNP -1'rimarl< San Miguel Ranch, LLC a Delaware' "ted liabili any By: By: H. Mclennan VIœ President and Chief Flnl'l!'loial Officef "SDELP" SAN DIEGO EXPRESSWAY LIMITED PARTNERSHIP, a CalifoIDÏa limited partnership By: CAI.JFORNIA TRANSPORTATION VENTt.1RES, me. its ,general partner By: Name: Title: Date: "CITY" City of Chula Vista, a munic:ipal cotpondion S/S'd ·24- ~-.3-fJ ~~~WI~l W~20:01 20, 81 lnr \IIORt>~ )\D,r.NI23~-S IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. "Trimark" NNP - Trimark San Miguel Ranch, LLC a Delaware limited liability company By: By: "SDELP" SAN DIEGO EXPRESSWAY LIMITED PARTNERSHIP, a California limited partnership By: CÀLIFORNIA TRANSPORTATION VENTURES, INC. its general partner By: Name: Title: Date: "CITY" City of Chula Vista, a municipal corporation WORD-SDlDAS\51236297.9 -24- .,5-c-3! Exhibit A Toll Road Map EXHIBIT A SPRING VALLEY "'./ . ~\...~'/ , JAMACHA '. ., *.--' ., ., ., SWEETWATER RESERVOIR Initial Construction: _ 4 lanes: SR-90S to SR-S4 Ultimate Construction: 6 lanes: SR-905 to Olympic Pkwy 8 lanes: Olympic Pkwy to SR-54 ,,-0 Ii; ~ ~ § '?-'" /.,. /0 ,<>0'" UPPER OTAY RESERVOIR MAJNST. ,?-'" , '" \1P '" ..~ ; \;> 1]< ,~ ¡q) ,0 ¡ CHULA " VISTA ; ; t ¡ , ,~ , -<{ , ;,"'~ '0 ,;; 1~ I \ , , ; , LOWER FUTURE , OTAY BIRCH PKWY ¡ RESERVOIR INTERCHANGE I I I I EAST H 81 ; '" ~Þ--{ ; h-l' - ç~' o\...,/tlIP\C TWO FUTURE INTERCHANGES· , , FUTURE LONE STAR RD INTERCHANGE . , , , - - .. \ \ , , . INTERCHANGES INITIAL CONSTRUCTION ~ ~ 'b '" ;> p BROWN FIELD ~==:J FUTURE ROADS _ _ _ FUTURE HIGHWAY'S . . . .. UNDER CONSTRUCTION OTAY ~~ ....---- MESA RD. .. . . '......~ FUTUAE INTEACHANGES OTAY MESA , , :.~a ------~;-t AIRWAY RD ,~m .mz ". <1'5 00 USA :II .__ ._, . -' 'MÉXICO J~tt. NO SCALE SJEMPRE VIVA RD. .-..-.- MAV2ØOQ ,..;;,¡{f:¿i#:i.>i,¡:m k".~ .. - ROUTE 125 SOUTH PROJECT CONSTRUCTION PHASES WORD-SDlDAS\51236297.9 Exhibit A .,þ-:3.J- Exhibit B List of Disapproved Matters Exceptions 6, 7, 8, 9,10,15,16,18,19 and 20 of Schedule B of the Preliminary Title Report, as defined in Section 3.1 of the Agreement. WORD-SDlDAS\51236297.9 Exhibit B á-::H Exhibit C General Provisions of Escrow Holder ESCROW HOLDER'S GENERAL CONDITIONS GENERAL PROVISIONS TO: CHICAGO TITLE COMPANY Escrow Number: Date: 1. Time is of the essence of these instructions. If this escrow is not in a condition to close by the TIME LIMIT DATE as provided for herein and written demand for cancellation is received by you from any principal to this escrow after said date, you shall act in accordance with paragraph 7 of the General Provisions. If no conflicting instruction or demand for cancellation is made, you will proceed to close this escrow when the principals have complied with the escrow instructions. In the event one or more of the General Provisions are held to be invalid in judicial proceedings, those remaining will continue to be operative. Any amendments of or supplements to any instructions affecting escrow must be in writing. You are authorized to order demands for, and pay at the close of escrow any encumbrances of record necessary to place title in the condition called for without further authorization. You are further authorized, prior to the close of escrow, to pay from funds on deposit any fees necessary to obtain any demand and/or report as may be required in this escrow and at the close of escrow charge the parties as appropriate. The principals will hand you any funds and instruments required from each respectively to complete this escrow. Interest on any new financing may begin to accrue on the date loan funds/proceeds are disbursed by the new lender, and borrower agrees to pay same in accordance with lender's instructions. 2. You are instructed to deliver and/or record all documents and disburse all funds when you can comply with these instructions and issue any title insurance policy as called for herein. These instructions, together with any amendments and/or supplements, may be executed in counterparts and together shall constitute one and the same document. If these instructions relate to a sale, buyer agrees to buy and seller agrees to sell upon the terms and conditions hereof. All documents, balances and statements due the undersigned are to be mailed to the respective addresses shown herein, unless otherwise directed. In the event that any party to this escrow utilizes facsimile transmitted signed documents, all parties hereby agree to accept and hereby instruct the escrow holder to rely upon such documents as if they bore original signatures. Buyer and seller further acknowledge that any documents to be recorded bearing non original (facsimile) signatures will not be accepted for recording by the county recorder. 3. The phrase "close of escrow" (or COE) as used in this escrow means the date on which documents are recorded, unless otherwise specified. 4. Assume a 30 day month in any proration herein provided, and unless otherwise instructed, you are to use the information contained in the latest available tax statement, including any supplemental taxes of record, rental statement as provided by seller and beneficiary's or association statements delivered into escrow for proration purposes. 5. Upon close of escrow you are instructed to charge our respective accounts the costs attributable to each, including but not limited to costs as provided for herein and/or in accordance with our respective estimated statements attached hereto and made a part hereof. 6. Recordation of any instruments delivered through this escrow, if necessary or proper for the issuance of the policy of title insurance called for, is authorized. No examination or insurance as to the amount or payment of personal property taxes is required unless specifically requested. 7. If demand to cancel is submitted after the Time Limit Date, any principal so requesting you to cancel this escrow shall file notice of demand to cancel in your office in writing. You shall within three (3) working days thereafter mail by certified mail one copy of such notice to each of the other principals at the address stated in this escrow. Unless written objection thereto is filed in your office by a principal within fifteen (15) calendar days after date of such mailing, you are instructed to cancel this escrow. If this is a sale escrow, you may return lender's papers and/or funds upon lender's demand. 8. In the event that this escrow is canceled, any fees or charges due Chicago Title Company including cancellation fees and any expenditures incurred or authorized shall be paid from funds on deposit unless otherwise specifically agreed to or determined by a court of competent jurisdiction. Upon payment thereof, return documents and moneys to the respective parties depositing same, or as ordered by the court, and void any executed instruments. 9. If there is no written activity by a principal to this escrow within any six-month period after the Time Limit Date set forth herein, Chicago Title Company may, at its option, terminate its agency obligation and cancel the escrow, returning WORD·SDIDASI51236297.9 Exhibit C .:;-- :3 f all documents, moneys or other items held, to the respective parties entitled thereto, less any fees and charges as provided herein. Chicago Title Company General Provisions - Page 2 10. If, for any reason, funds are retained or remain in escrow after the closing date, you may deduct therefrom a reasonable monthly charge as custodian, of not less that $25.00 per month, unless otherwise specified. II. In the event that you should receive or become aware of conflicting demands or claims with respect to this escrow, or the rights of any of the parties hereto, or any money or property deposited herein, you shall have the absolute right at your option to discontinue any or all further acts until such conflict is resolved to your satisfaction. 12. In the event that any Offer to Purchase, Deposit Receipt, or any other form of Purchase Agreement is deposited in this escrow, it is understood that such document is effective only as among the parties signing said document. You, as escrow holder, are not to be concerned with the terms of such document and are relieved of all responsibility in connection therewith. The foregoing is not applicable in any transaction in which Chicago Title has specifically agreed to accept an Offer to Purchase, Deposit Receipt or other form of Purchase Agreement as escrow instructions. In any event, you are not to be concerned or liable for items designated as "memoranda" in these escrow instructions nor with any other agreement or contract between the parties. 13. The parties hereto, by execution of these instructions acknowledge that the escrow holder assumes no responsibility or liability whatsoever for the supervision of any act or the performance of any condition which is a condition subsequent to the closing of this escrow. 14. In the absence of instructions to the contrary, you are hereby authorized to utilize wire services, overnight, next day, or other expedited delivery services (as opposed to the regular U.S. Mail) and to charge the respective party's account accordingly. IS. Concerning any real property involved in this transaction, you are released from and shall have no liability, obligation or responsibility with respect to (a) withholding of funds pursuant to Section 1445 of the Internal Revenue Code of 1986 as amended, and to Sections 18662 and 18668 of the California Revenue and Taxation Code, (b) advising the parties as to the requirements of said Section 1445, (c) determining whether the transferor is a foreign person or a non·resident under such Section, nor (d) obtaining a non foreign affidavit or other exemption from withholding under said Sections nor otherwise making any inquiry concerning compliance with such Sections by any party to the transaction. 16. If you pay a demand to pay in full a revolving line of credit or equityline loan, you are hereby instructed on my behalf and for my benefit, to request that the lender issuing said demand cancel said revolving lin~ or equity line of credit. 17. You are authorized to furnish to any affiliate of Chicago Title Company, any attorney, broker or lender identified with this transaction or anyone acting on behalf of such lender any information, instructions, amendments, statements, or notices of cancellation given in connection with this escrow. If any check submitted to escrow is dishonored when presented for payment, you are authorized to notify all principals and/or their respective agents of such non payment. 18. All notices, change of instructions, communications and documents are to be delivered in writing to the office of Chicago Title Company, as set forth herein, in a timely manner. 19. All funds received in this escrow shall be deposited with other escrow funds in one or more escrow (demand) accounts of Chicago Title Company in any state or national bank. The parties to this escrow understand that the escrow accounts you maintain with the depository institutions contribute to your value as a customer of these institutions which, in turn, may make available to Chicago Title Company an array of bank services, accommodations or other benefits. You shall have no obligation to account for the value realized by Chicago Title Company from these services, accommodations or other benefits. All disbursements shall be made by your check, unless otherwise instructed. You shall not be responsible for any delay in closing if funds received by escrow are not available for immediate withdrawal. Chicago Title Company may, at its option, require concurrent instructions from all principals prior to release of any funds on deposit in this escrow. 20. You are authorized to destroy or otherwise dispose of any and all documents, papers, instructions, correspondence and other material pertaining to this escrow at the expiration of six (6) years from the close of escrow or cancellation thereof, without liability and without further notice WORD-SDlDAS\51236297.9 Exhibit C 5~ ::J S- Chicago Title Company General Provisions - Page 3 IMPORTANT NOTICE Except for wire transfers, funds remitted to this escrow are subject to availability requirements imposed by Section 12413.1 of the California Insutance Code. CASHIER'S, CERTIFIED Ot TELLER'S checks, payable to CHICAGO TITLE COMPANY are generally available for disbursement on the next business day following the date of deposit. Other forms of payment may cause extended delays in the closing of your transaction pursuant to the requirements imposed by State Law. (Wire transfer information available upon request) ALL PARTIES TO THIS ESCROW ACKNOWLEDGE THAT CHICAGO TITLE COMPANY DOES NOT PROVIDE LEGAL ADVICE NOR HAS IT MADE ANY INVESTIGATION, REPRESENTATIONS OR ASSURANCES WHATSOEVER REGARDING THE LEGAL ASPECTS OR COMPLIANCE OF THIS TRANSACTION WITH ANY TAX, SECURITIES OR ANY OTHER STATE OR FEDERAL LAWS. IT IS RECOMMENDED THAT THE PARTIES .OBTAIN INDEPENDENT LEGAL COUNSEL AS TO SUCH MATTERS. THE FOREGOING ESCROW INSTRUCTIONS AND GENERAL PROVISIONS HAVE BEEN READ AND ARE UNDERSTOOD AND AGREED TO BY EACH OF THE UNDERSIGNED, BUYER SELLER By: By: Current Address: Current Address: Telephone: Telephone: WORD-SDlDAS\51236297.9 Exhibit C ~-- 30 Exhibit D Form of Certificate of Acceptance Recording Requested by and Please Return to: City Clerk City of Chula Vista P.O. Box 1087 Chula Vista, CA 91912 This Instrument Benefits City Only. No fee is required This Space for Recorder's Use Only APN(s) N/A C.V. File No. ACCEPTANCE OF DEDICATION OF RIGHT-OF-WAY FOR , AS SHOWN AND OFFERED FOR DEDICATION TO THE CITY OF CHULA VISTA WITHIN CHULA VISTA TRACT NO. , PER MAP NO. RECORDED ON , 20 IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY. The City Council of City of Chula Vista by Resolution No. dated , 20_ rejected this Offer of Dedication. Pursuant to Section 66477.2(a) of the Subdivision Map Act of the State of California and by Resolution No. of said City Council, said offer may be accepted at any time by the City Clerk of the City of Chula Vista, upon the advance written approval of the City Manager and/or his designee and the City Attorney. This is to certify that the interest in real property offered herein to the City of Chula Vista, a governmental agency, is hereby accepted by the undersigned, City Clerk, on behalf of the Chula Vista City Council pursuant to authority conferred by Resolution No. of the Chula Vista City Council adopted on , and the grantee(s) consent(s) to the recordation thereof by its duly authorized officer. SUSAN BIGELOW CITY CLERK By: Dated: Page D-1 J:\Attorney\ANN\CTV\ROW\Ex. 0 Cert of Acceptance.doc .s- :3 7 Exhibit E Form of Deed SPACE ABOVE THIS LINE FOR RECORDER'S USE District County Route Post Number GRANT DEED (CORPORATION) THE CITY OF CHULA VISTA, a municipal corporation organized and existing under and by virtue of the laws of the State of California ("Grantor") does hereby GRANT to the STATE OF CALIFORNIA ("Grantee") all that real property in the City of Chula Vista, County of San Diego, State of California, described as: WORD·SD\DAS\51236297.9 Exhibit E .;>-- .:i? ~ Grantor hereby releases and relinquishes any and all abutter's rights in and to the property hereby granted to the Grantee, including access rights, which may be appurtenant to other properties owned by Grantor. Number Grantor further understands that the present intention of the Grantee is to construct and maintain a public highway on the lands hereby conveyed in fee and Grantor, for itself, its successors and assigns, hereby waives any claims for any and all damages to Grantor's remaining property contiguous to the property hereby conveyed by reason of the location, construction, landscaping or maintenance of said highway. IN WITNESS WHEREOF, Grantor has caused its name to be hereunto subscribed and its seal to be affixed hereto, this day of , 2002. THE CITY OF CHULA VISTA By , Mayor APPROVED AS TO FORM AND LEGALITY: By: Title: [MUNICIPAL SEAL] PERSONAL ACKNOWLEDGEMENT State of California County of On this _ day of ) )ss ) , in the year of 2002, before me personally appeared Notary Public Name(s) of Signer(s) personally known to me proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) islare subscribed to the within instrument and acknowledged to me that helshelthey executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on this instrument the person(s), or the entity upon behalf of which the persons acted, executed the instrument. WITNESS my hand and official seal. WORD-SD\DAS\51236297.9 Exhibit E .:;;-: ::3 tj (Notary Public's signature in and for said County and State) (for notary seal or stamp) SEAL OR STAMP) (FOR NOTARY THIS IS TO CERTIFY, That the State of California, acting by and throngh the Department of Transportation (pnrsuant to Government Code Section 27281), hereby accepts for public purposes the real property described in the within deed and consents to the recordation thereof. IN WITNESS WHEREOF, I have hereunto set my hand this day of , 2002, Director of Transportation By Attorney in Fact WORD-SDlDAS\51236297.9 Exhibit E 5-YO THE A TT ACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORM ALL Y SIGNED UPON APPROVAL BY THE CITY COUNCIL ~'l1t~ ~~ John M. Kaheny City Attorney Dated:i)L-j ./? qJ/d¿ s-0' MEMORANDUM OF UNDERSTANDING REGARDING STATE ROUTE 125 SOUTH THIS MEMORANDUM OF UNDERSTANDING REGARDING STATE ROUTE 125 SOUTH ("MOU") constitutes a guide to the respective intentions between the State of California, Department of Transportation, District 11 ("Caltrans") and the City ofChula Vista ("City"). RECITALS A. Caltrans has entered into a Development Franchise Agreement dated January 6, 1991 (the "Development Franchise Agreement") with California Transportation Ventures, Inc., a California corporation ("CTV"), and assigned by CTV to San Diego Expressway Limited Partnership, a California limited partnership ("SDELP") for the development and operation of a divided limited access toll road, approximately 15 kilometers long (the "Project") to be incorporated when completed into the California Highway System as part of State Route 125 ("SR 125"). B. Attached hereto as Exhibit "A" is a map depicting the Project as presentIy configured, and identifying the real property interests that the Parties currently anticipate will be necessary for ownership and operation of the Project (the "Anticipated Project Right-of-Way"). Portions of the Project will pass through the City, and will pass in, on, under, over or along streets, highways, bridges and other pubic rights of way of City. The City owns the fee title to some of the Anticipated Project Right-of- Way, and has received and anticipates receiving from certain private landowners (collectively referred to herein as "Private Landowners") irrevocable offers of dedication of the fee titIe to certain other parcels (collectively referred to herein as the "Subject Property"). C. City has entered into that certain City of Chula Vista Toll Road Agreement with San Diego Expressway Limited Partnership and Agreement Affecting Real Property with SDELP, setting forth the terms and conditions upon which City has agreed to grant to Caltrans the Subject Property that City owns or will acquire by its acceptance of irrevocable offers of dedication from private landowners (the "Toll Road Agreement"). Certain matters described in the Toll Road Agreement relate to Caltrans' future ownership of the Subject Property. D. City and Caltrans desire to enter into this MOU to set forth their mutual intention with respect to the issuance or approval of permits identified herein, from Caltrans for the Subject Property. It is not intended to authorize funding or project effort nor is it a legally binding commitment. However, it does contain the essential principles for processing said permits. NOW, THEREFORE, the Parties agree to the following provisions: ""'--Ù'J "=" -<-- ARTICLE I COORDINATION OF FUTURE ACTIVITIES IN SUBJECT PROPERTY. 1.1 Future Development. CaItrans acknowledges that the Subject Property to be conveyed by City to Caltrans is located in an area of City that is undergoing development concurrent with Project construction. It is necessary to obtain Caltrans' cooperation in the coordination of certain future activities and uses of the Subject Property, including with respect to the location of transverse utility lines, construction easements, maintenance of sound attenuation structures, City cross streets and potential future transit lines. Caltrans agrees to reasonably accommodate City and Private Landowners needs with respect to the Subject Property, subject to Caltrans' issuance of an encroachment permit in accordance with the terms and conditions set forth in Article 2, below (hereto "Encroachment Permit"). Caltrans further agrees that the following uses may be accommodated within the Subject Property, provided that an Encroachment Permit or other approval is obtained from Caltrans. 1.1.1 Utilities. Upon issuance of an Encroachment Permit and subject to the terms and conditions set forth in such permit, Caltrans agrees that City and the Private Landowners shall have the right to install, operate and maintain transverse electric, telephone, communication, cable, television, water, gas, sanitary sewer lines, drainage facilities or other utilities at reasonable locations across the Subject Property necessary to serve their adjacent development. 1.1.2 Crossings for Construction Purposes. Upon issuance of an Encroachment Permit and subject to the terms and conditions set forth in said permit, Caltrans agrees that the City and the Private Landowners shall have the ability to move equipment, machinery and vehicles for hauling and construction purposes or emergency and fire access, over, under and across the Suþject Property at locations approved by Caltrans. 1.1.3 Right to Remove Slopes. Upon issuance of an encroachment permit or such other approval by Caltrans, CaItrans agrees that Private Landowners may remove the top of cut slopes by lowering the grade of adjacent development or to place embankment against the bottom of fill slopes by raising the grade of adj acent development, and that Caltrans may thereupon quitclaim to the Private Landowners any increased area at the top or bottom of the slopes resulting from such change of adjacent grade, consistent with Caltrans' policies and procedures including those outlined in Chapter 6 of the Caltrans Right of Way Manual. To the extent that any Private Landowner has not already offered to dedicate Subject Property to the City for Toll Road purposes and is not legally obligated to do so, upon request of such Private Landowner, Caltrans agrees to consider accepting title to slope easements for the slope portion of the Subject Right of Way owned by such Private Landowner. 1.1.4 Maintenance of Sound Attenuation Structures. Upon issuance of an Encroachment Permit in accordance with Article 2 and subject to the terms and conditions set forth in said permit, Caltrans agrees that City and the Private Landowners 2 ~--ß shall have the right to enter upon the Subject Property at locations approved by Caltrans, for the purpose of maintaining sound attenuation structures that are built by the Private Landowner at the property line boundary between such Private Landowner's private property and the Subject Property. 1.1.5 Future City Cross-Streets. Upon issuance of an Encroachment Permit in accordance with Article 2, and subject to the terms and conditions set forth in said permit, and subject to City having appropriate environmental clearance and any other applicable approvals, City shall have the right to construct and operate future public streets across the Subject Property; provided that each such crossing shall be via a bridge over or an underpass under the Project improvements. Caltrans further agrees that if City desires to construct any crossings over or under the Subject Property at any other locations in the future, Caltrans shall cooperate in good faith with City in reviewing such requests. 1.1.6 Future Transit. Caltrans acknowledges that City and the Metropolitan Transit Development Board ("MTDB") are considering development of a trolley route that will necessitate a future transit crossing of the Project between Olympic Parkway and Birch Parkway. Caltrans agrees that if such future transit crossing becomes necessary, Caltrans will reasonably consider and cooperate in granting to MTDB such rights in the Subject Property that may be needed by MTDB for transit construction and operations. 1.1.7 Accommodation oflnterim SR 125 Improvements. The parties acknowledge that City's General Plan provides for the development of highway improvements within the general location of the Subject Property as a result of planned growth within the City of Chula Vista. If the conditions described in Section 5.1 of the Toll Road Agreement occur, City may desire to construct the "Interim SR 125 Improvements" described in Section 5.2 of the Toll Road Agreement. Upon issuance of an Encroachment Permit in accordance with ¿,rticle 2, Caltrans agrees that, in such event and subject to City obtaining all necessary environmental approvals, and other approvals or agreements as may be required by Caltrans, City may be allowed to construct and use the Interim SR 125 Improvements in the S~ject Property. ARTICLE 2 PERMITS AND APPROVALS FOR USE OF SUBJECT PROPERTY 2.1 Terms and Conditions for Issuance of Permits and Approvals. The parties acknowledge and agree that the issuance of an Encroachment permit or other approval from Caltrans is required prior to the exercise of the activities described in Article 1 above. Caltrans shall process Encroachment Permits in accordance with the provisions set forth in California Streets and Highway Code Section 660 et seq. Caltrans agrees to act with reasonable diligence to either approve or deny an application for an encroachment permit within 45 days of receiving a complete application as determined by Caltrans. Caltrans shall not unreasonably withhold or delay its action with respect to the issuance of any permit or approval requested by City or a Private Landowner 3 $--;£-'1 pertaining to the matters described in Article 1. A request for any such permit or approval shall be deemed to be a "Complete Application" when it satisfies the requirements of Streets & Highways Code section 671.5(a). Notwithstanding the foregoing, Caltrans shall provide its comments within 20 Business Days of the applicant's submittal of plans, specifications or engineering drawings submitted as part of an application for an encroachment pennit. For extensive, extremely complex and/or multiple submittals that cannot reasonably be reviewed within such 20 Business Days period, Caltrans will provide comments in such additional time as may be mutually agreed for that submittal. If, during the review period, Caltrans raises any issues with respect to the submittals, the parties shall work together in good faith to resolve the issue(s) raised by Caltrans. 2.2 Procedure for Issuance of Permits and Approvals. Caltrans will provide appropriate personnel to consult with any party requesting a permit or approval in connection with the activities described pursuant to Articles I above, within 10 calendar days of such party's request. The personnel identified in Exhibit "B" hereto shall be Caltrans' designated contacts for assuring that the proper Caltrans personnel are engaged in such consultation and review in a timely manner. Caltrans may amend the list of contacts in Exhibit B from time to time by providing written notice to City. In order to facilitate the processing of an application for such permit, Caltrans shall endeavor to make the proper Caltrans personnel accessible to the applicant by scheduling regular meetings whenever necessary to facilitate the timely processing of such applications. 2.3 Permit Approval. Caltrans will use its reasonable best efforts in its final determination with respect to any Complete Application for an encroachment permit. In determining whether to approve or deny an encroachment permit, Caltrans shall exercise reasonable judgment exercised in good faith, and in accordance with Streets and Highway Code Section 660, et seq. and Caltrans' standards and policies. In the event that Caltrans denies an application for a permit or approval, Caltrans shall promptly provide the requesting party with written documentation of the reasons for the denial. 2.4 Fee for Processing Permit or Approval. Caltrans may charge the party requesting an encroachment permit a reasoI1able fee as reimbursement of Caltrans' actual costs for processing any such application or permit, not to exceed Caltrans' standard hourly rates charged to other applicants for processing encroachment permit applications. 2.5 Discretion of Caltrans. City understands and agrees that Caltrans reserves the right to exercise its discretion as to all matters which Caltrans is by law entitled or required to exercise its discretion with respect to applications for the Encroachment Permits. Nothing herein shall be construed as to restrict Caltrans' ability to exercise its discretion. 2.6 Future Permits. Caltrans agrees that City and Private Landowners may apply for Encroachment Permits for the uses identified in Article 1 or such other uses within the Subject Property prior to Caltrans' acceptance offee title to the Subject Property. Caltrans agrees to cooperate in processing such applications in accordance with the provisions of Article 2. 4 $-.ys- ARTICLE 3 NOTICES Any notice, demand, request, covenant, approval, or other communication to be given by one party to the other shall be given by personal service, telegram, or Express Mail, Federal Express, DHL, UPS or any other similar form of airborne/overnight delivery service, or mailing in the United States mail, postage prepaid, certified and return receipt requested, addressed to the parties at their respective addresses as follows: Ifto City: City ofChula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attention: John Lippett, Director of Public Works Telephone: (619) 691-5021 Facsimile: (619) 691-5171 With a Copy to: City of Chula Vista Office of the City Attorney 276 Fourth Avenue Chula Vista, CA 91910 Attention: Ann Y. Moore, Esq., Senior Assistant City Attorney (619) 691-5037 (619) 4<39-5823 Telephone: Facsimile: If to Caltrans: State of California DrPartment of Transportation District 11, Mail Station 35 P. O. Box 85406 San Diego, California 92186 Attention: Laurie Berman Telephone: (619) 688-3631 Facsimile: (619) 688-2587 With a copy to: State of California Department of Transportation Legal Division 610 West Ash Street, Suite 1005 San Diego, CA 92101-3346 Attention: John Frederick Smith 5 .s=9t Telephone: Facsimile: (619) 645-2412 (619) 645-2420 Notice shall be deemed given upon receipt. Notice by telecopy shall be confirmed by telecopy machine confirmation. Either Party may change its addressee(s) for notice by providing written notice of such change in accordance with the requirements of this Article 5. ARTICLE 4 MISCELLANEOUS 4.1 Further Assurances. The Parties agree to negotiate in good faith the terms and conditions of a Cooperative Agreement for execution within 150 days of the date of this MOU. It is anticipated that the cooperative Agreement will consider the issues of the disposition of excess property and the transfer of portions of the Subject Property for the accommodation of potential Interim SR-125 improvements. The Parties further agree to execute such further documents, agreements, instruments and notices as may be reasonably necessary or appropriate to effectuate the transactions contemplated by this MOU. 4.2 Time of Essence. In performing all obligations required under this MOU, time is of the essence. 4.3 Incorporation of Exhibits. Every exhibit to which reference is made in this MOU is hereby incorporated in this MOU by reference. 4.4 Counterpart Originals. This MOU may be executed in any number of counterparts, each of which shall be deemed to be the original, and all of which together shall constitute one and the same instrument.~ 4.5 Authority of Signatories. Each signatory and party hereto hereby warrants and represents to the other Party that it has the legal authority and capacity and direction rrom its principal to enter into this MOU, tIiat all resolutions and/or other actions have been taken so as to enable it to enter into this MOU, however, execution of this MOU it shall not be legally binding with respect to such Party. Exhibits. This MOU includes the following Exhibits, each of which is incorporated herein by reference: Exhibit A - Map of Project Exhibit B - Designated Caltrans Personnel IN WITNESS WHEREOF, City and Caltrans have caused this MOU to be executed as of the date first above set forth. [NEXT PAGE IS SIGNATURE PAGE] 6 5--/7 "City" CITY OF CHULA VISTA By: Name: Title: APPROVED AS TO FORM AND LEGALITY: By: Name: Title: A TrEST: By: Name: Title: City Clerk Date: ,2002 "State" STATE OF CALIFORNIA Department of Transportation y: S4 Pedro Orso-Delgado District Director APPROVED AS TO FORM AND PROCEDURE By: .; 7 ~-.Lr? Item Meeting Date 7/23/02 COUNCIL AGENDA STATEMENT ITEM TITLE: A) Resolution of the City Council of the City of Chula Vista, California, approving an Acquisition/Financing Agreement pertaining to Improvement Area A in Community Facilities District No. 2001-1(San Miguel Ranch) B) Resolution of the City Council of the City of Chula Vista, acting in its capacity as the legislative body of Community Facilities District No. 2001-1 (San Miguel Ranch) for Improvement Area A, Authorizing and providing for the issuance of special tax bonds of the district, Approving the form of Bond Indenture, Bond Purchase Contract and other documents and authorizing certain actions in connection therewith. SUBMITTED BY: Director of Public W%ks/~ Director of Finance t~/ REVIEWED BY: City Manager 90 (4/Sths Vote: Yes No X ) On December 4, 2001 the City Council held the public hearing forming and establishing Improvement Area A in Community Facilities District No. 2001 -I(CFD No. 2001-1). The District was formed for the purpose of providing for the financing and acquisition for certain authorized public facilities including a significant portion ofMotmt Miguel Road. On December 17, 2001 City Council heard the election results which declared that 100% of the votes cast, were in favor for the authorization to issue bonds of the District for Improvement Area A and B, also the first reading of the Ordinance to authorize the Levy of a Special Tax in Improvement Area A and B was read. Tonight, Council will consider approving the Acquisition/Finance Agreement with NNP-Trimark San Miguel Ranch, LLC that establishes the procedure for acquiring the improvements fi.om the developer, which will require each individual component of the projects to be 100% completed before acquisition and reimbursement. In addition, Council will consider the authorization of the issuance of special tax bonds of CFD No. 2001-1 in the amount of $14,100,000 and the approval of the form of certain documents related to the issuance of the bonds including a Bond Indenture, Bond Purchase Contract and Preliminary Official Statement. RECOMMENDATION: That Council: · Approve the Resolution (A) approving the Acquisition/Financing Agreement that (i) establishes the terms and conditions pursuant to which the City will acquire the authorized public improvements, (ii) esl~ablishes the terms and conditions pursuant to which the District will agree to issue special tax bonds to finance the acquisition of such improvements and (iii) , Page 2, Item- Meeting Date 7/23/02 establishes the procedure for acquiring the improvements from the developer within Community Facilities District No. 2001- 1, and · Approve the Resolution (B) authorizing the issuance of Bonds, approving the form of the Bond Indenture, Bond Purchase Contract and other documents for Community Facilities District No. 2001-1 and authorizing certain actions in connection therewith. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: Background On December 4, 2001, a public hearing was held which formed and established Community Facilities District No. 2001-1 (CFD No. 2001-1), and on December 17, 2001 City Council heard the election results which declared that 100% of the votes cast, were in favor. On January 15,2002 Council heard the second reading of the Ordinance authorizing the Levy of a Special Tax. The Mello-Roos Community Facilities Act of 1982 is a financing mechanism for funding the acquisition or construction of public infrastructure improvements from the proceeds of Community Facilities Districts bonds, which are repaid from an annual special tax collected from the property owners within the district. There is no direct cost to the City. CFD No. 2001-1 is primarily an acquisition district wherein the developer constructs the public improvements and the City acquires them upon completion with funds derived solely rrom the sale of bonds. District Boundaries Exhibit 1 (attached) represents the recorded boundaries ofCFD No. 2001-1 that include all parcels located within San Miguel Ranch. Exhibit A also depicts the boundaries of each of the Improvement Areas A & B designated within CFD No. 2001-1. The site is bordered on the north by the existing, unincorporated residential area of Sunnyside, and SDG&E's Miguel Substation and transmission line right-of-way. The western boundary is the vacant Bonita Meadows site; while to the south are the existing Estancia single-family subdivision, the Mackenzie Creek neighborhood park, and the Thurgood Marshall Elementary School. The eastern boundary is the developing single-family neighborhoods within Rolling Hills Ranch and the Auld Golf Course. At this time, the development at buildout within Improvement Area A as described within the Appraisa1 will contain - 713 single family detached residences, 348 attached residences, 9.87 commercial acres, 5.1 acres of community facilities, and 13 acres for an elementary school site. Currently in Improvement Area A the ownership is as follows: · Continental Residential Inc. owns 13.17 acres with plans to build 11 0 single-family units. . Pardee Construction Compåny owns 22.40 acres with plans to build 107 single-family units. · Buie Communities owns 9.17 acres with plans to build 68 single-family units. . Shea Homes owns 33.2 acres with plans to build 131 single-family units. to - 2.. u __.....__.._. .,___ '__" 3 l Page , Itemr; Meeting Date 7/23/02 . Trimark Pacific- Belerosa, LLC (subsidiary to Trimark) owns 31. 7 acres with plans to build 105 Single-family detached units. . The remainder of the land is owned by NNP -Trimark San Miguel Ranch, LLC. The Improvements The master developer (NNP - Trimark San Miguel Ranch, LLC) has requested that CFD No. 2001-1 sell only the bonds for Improvement Area A at this time. The bonds for Improvement Area B will be sold at a later date, given certain City of Chula Vista threshold requirements and other facilities constraints. Preliminary estimates show that the maximum tax revenue (using the proposed taxes) from all the taxable properties within only Improvement Area A would support a total bonded indebtedness of approximately $14.1 million (assuming a 6.4% interest rate and a 30-year term on the bonds). This borrowing will finance approximately $12.5 million in facilities (i.e. grading, landscaping, streets, utilities, drainage, sewer, etc). The developer is proposing the financing of backbone and associated improvements (i.e. grading, sewer, streets, dry utilities, etc.) as described below. CFD policy requires a determination of the priority for the acquisition of improvements by a CFD. Staff, consultants, and land developers have prioritized the developer's list ofprojects as follows: A. Priority Items: · Traffic Enhancement Improvements · Mount Miguel Road(East) · Proctor Valley Road(East) · Calle La Marina · Paseo Vera Cruz · Calle La Quinta · Backbone Street Landscaping Special Tax Report Attached as Exhibit 2, is a copy of the Special Tax Report Community Facilities District No. 2001-1 for San Miguel Ranch prepared by the Special Tax Consultant, McGill Martin Self, Inc., is on file, and available for public review in the City Clerk's Office. Said report incorporates the "Rate and Method of Apportionment" (RMA) for Improvement Area A (previously approved by Council on September 25,2001), that establishes the procedures for levying the special taxes in CFD No. 2001- 1. City Financial Criteria Value to Lien Ratio: The City's Statement of Goals and Policies for Community Facilities Districts ("CFD policy") requires a minimum value to lien ratio of 4: 1. In addition, the policy establishes the following criteria: 0-3 / Page 4, Item (/1 . Meeting Date 7/23/02 The required value-to-debt ratio shall be determined with respect to all taxable property within the community facilities district in the aggregate and with respect to each development area for which no final subdivision map has been filed. A community facilities district with a value-to-debt ratio of less than 4: 1 but equal to or greater than 3: 1 may be approved, in the sole discretion of the City Council, upon a determination by the City Manager, after consultation with the finance director, the bond counsel, the underwriter and the financial advisor, that a value to debt ratio of less than 4: 1 is financially prudent under the circumstances of the particular community facilities district. " Bruce W. Hull & Associates conducted an appraisal (dated March 27, 2002) on the property. Exhibit 3 illustrates only Improvement Area A bond sale of $14.1 million which will result in an overall lien ratio of3.8:1. Within Improvement Area A, three of the planning areas have a lien ratio of greater than 4:1 and the other planning areas have a lien ratios of 3.39:1,3.30:1 and 2.27:1. On June 27, 2002 NNP-Trimark San Miguel Ranch, LLC submitted a letter (Exhibit 5) requesting approval of a lien ratio ofless than 4: 1 but greater than 3: I. Staff and consultants have reviewed this request and determined that approving a lesser lien ratio for Continental Residential Inc., Pardee Construction Co., and Trimark's remaining developable parcels within CFD No. 2001-1 is financially prudent. Staff recommends that Council approve the developer's request based on the following: 1. The merchant builders noted above have a consistent history of tax responsibility, i.e., the timely payment of ad valorem taxes, assessments, and special taxes. Demonstrating ability and willingness to pay taxes, assessments, and special taxes on time over an extended period of time is critical to the City finance team on recommending a lien ratio of less than 4:1. 2. Property ownership and special tax obligations within CFD No. 2001-1 are diversified. The merchant homebuilders currently are responsible for approximately 47 % of the special tax obligations ofthe district. Diversification of special tax obligation is perceived by the City finance team to assist in mitigating the risk to the bondholders. 3. Development is underway. Model homes permits have been issued for three of the neighborhoods. Home sales have or will be starting very soon. The status of development indicates that further diversification of ownership should continue and that the value within the CFD should continue to increase. 4. Inrrastructure .construction is advanced within the District. The completion of significant levels of inrrastructure necessary to serve the district helps to mitigate the risk to the bondholders. 5. Mapping process is underway. Final maps have been recorded for 304 EDU's. Trimark anticipates processing maps for the remaining 757 EDU's during 2002. The status of physical development indicates financial commitment to the project and leads to anticipation of finalizing construction. 6. The market absorption study concludes that the district will reach buildout by the year 2003. This short absorption period indicates that the developer should be responsible for special tax payment for a limited time. 0-1 / Page 5, Item "," Meeting Date 7/23/02 7. The appraisal was completed on March 15,2002. The appraiser visited the Continental Residential site on July 13, 2002, visually inspected the project and determined that, had the appraisal been done today, the project would hav been at leat a 3: I value to lien. Resolution There are two resolutions on today's agenda that, if adopted, will accomplish the following: (A) The RESOLUTION APPROVING AN ACQUISITION/FINANCING AGREEMENT for Community Facilities District No. 2001-1 (San Miguel Ranch) is the formal action approving the Acquisition/Finance Agreement, (Exhibit 4) that establishes the procedure for acquiring the improvements from the developer requiring the project be fully completed and accepted by the City prior to acquisition. · The agreement provides that the City may reimburse 75% of the total cost of the grading, drainage, paving, utilities, and landscaping improvements upon the determination by the City Engineer that those improvements have been installed per approved plans with required City Inspection. Those facilities may not be functional at that time, and certain activities (i.e. testing, completion of punch list, preparation of as-built drawings) may still be pending. The 25% final payment may be made once all projects within a phase are fully complete and accepted by the City. · The agreement also conditions the purchase of said improvements to developer's compliance with all the applicable conditions and obligations imposed on the property within CFD No. 2001-1 pursuant to the land use entitlements approved by the City, including but not limited to, payment of all applicable fees, dedication of right -of-ways or other property (i.e. parks, open space, etc), payment of assessments installments or special taxes, and construction of all applicable public improvements. · Staff has reviewed the proposed agreement and believes that 1) the 25% payment retention, and 2) the condition requires compliance with approved land use entitlement will provide enough security to guarantee completion of the improvements while ensuring the financial health ofCFD No. 2001-1. · The City retained the firm of Best, Best and Krieger, LLP as Bond Counsel for CFD No. 2001-1. Bond Counsel drafted this agreement for and on behalf of the City with input and review by City staff, developer legal council, developer and financial team. (B) THE RESOLUTION AUTHORIZING THE ISSUANCE OF BONDS AND APPROVING THE FORM OF CERTAIN RELATED DOCUMENTS" authorizes the issuance of limited obligation bonds, pursuant to the Mello-Roos Act in a principal amount not to exceed $15,000,000. The final bond sale amount will be known once the interest on the bonds is determined at bond sale. In addition, the resolution approves the form of the following documents: 0-~ Page 6, Item ~ Meeting Date 7/23/02 · The Preliminary Official Statement (Exhibit 6): describing the Community Facilities District and type of bonds, including terms and conditions thereof, for the bondholders. · The Bond Indenture(Exhibit 7): between the City and the Fiscal Agent, US Bank Trust National Association, that sets forth the terms and conditions relating to the issuance and sale of the bonds. The Indenture also establishes the Escrow Account and the conditions to be met for releasing the funds deposited in said Escrow Account. · The Bond Purchase Contract (Exhibit 8): The Bond Purchase Contract authorizes the sale of bonds to the designated Underwriter (Stone & Youngberg LLC). The underwfiter's discount for this negotiated sale is not to exceed 1.5% of the total bond amount that translates into a fee not to exceed $211,575. · Continuing Disclosure Agremnent: between the City and U.S. Bank Trust National Association, as dissemination agent, pursuant to which the City is required to disclose certain financial information on an annual basis regarding the Community Facilities District and certain significant events. These disclosures include but are not limited to: Special tax delinquencies Bond calls Events reducing density or causing modifications Other events reflecting financial difficulties of CFD No. 2001-1 It should be noted that Council would only be approving the form of the aforementioned documents. The proposed resolution authorizes the Director of Finance to approve the final form and to execute such documents on behalf of the City following review by and consultation with the City Attorney, Bond Counsel, and Financial Consultant. No additiqns or changes in the documents are permitted which would result in the annual interest rate on the bonds to exceed 6.5 %. Notice A notice was published in the San Diego Daily Transcript or any other adjudicated newspaper in general circulation. Future Actions The Developer has proposed a future modification to the district to create a separate improvement area for the commercial parcel. The modification may be brought for Council's consideration at a later date. Adoptions of tonight's Resolutions will approve the Acquisition/Financing Agreement for CFD No. 2001-1 and authorize the issuance of bonds, and approve the form of related documents. The issuance of the bonds is anticipated in July 2002. The acquisition of selected public improvements will be audited only after t00% of the project is deemed complete. P g 7 Ite t Meeting Date 7/23/02 FISCAL IMPACT: The City's General Fund receives 1% o£the bond sale amount in accordance with the CFD Policy for the use of the City's bonding capacity. The developer will pay all formation costs and has deposited money to fund initial consultant costs, and City costs in accordance with the approved Reimbursement Agreement. The City will receive the benefit of the full cost recovexy for staff time involved in district formation and administration activities. Staff anticipates that most of the CFD No. 2001-1 administration will be contracted out. Attachments: Exhibit 1: Recorded Boundary Map for CFD No. 2001-1 . Exhibit 2: Special Tax Repo~ for CFD No. 2001-1 Exhibit 3: Est/mated Value to Lien Ratios Based on Appraisal Exhibit 4: Acquisition and Financing Agreement for CFD No. 2001-1 Exhibit 5: Letter from NNP-Trimark San Miguel Ranch, LLC, dated June 27, 2002 addressing Value to Lien Ratio Exhibit 6: Preliminary Official Statement for CFD No. 2001-1 Exhibit 7: Bond Indenture for CFD No. 2001-1 Exhibit 8: Bond Purchase Contract for CFD No. 2001-1 J:\engmeer\ageagla\CAS 7-16-02.doc Exhibit 1 Recorded Boundary Map for CFD No. 2001-1 Exhibit 2 Special Tax Report for CFD No. 2001-1 COMMUNITY FACILITIES DISTRICT MELLO-ROOS COMMUNITY FACILITIES ACT 1982 SPECIAL TAX REPORT COMMUNITY FACILITIES DISTRICT NO. 2001-1 IMPROVEMENT AREAS.A AND B SAN MIGUEL RANCH For the City of Chula Vista 276 Fourth Avenue Chula Vista, Califomia 91910 CI1Y OF CHUIA VISTA Prepared by McGill Martin Self, Inc. 344 F Street Suite 100 Chula Vista, California 91910 November 6, 2001 TABLE OF CONTENTS Page I. INTRODUCTION ................................................................................. 1 II. PROJECT DESCmPTION ......................................................................... 2-3 II1. DESCRIPTION AND ESTIMATED COST OF PROPOSED FACILITIES ........................ 3 A. Description of Proposed Public Improvements ................................... 3-4 B. Estimated Cost of Proposed Public Improvements .............................. 4-5 IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES .................................... 6 A. Projected Bond Sales ............................................................... 6 B. Incidental Bond Issuance Expenses to be Included in the Proposed Bonded Indebtedness ......................................................................... 6 C. Incidental Expenses to be Included in the Annual Levy of Special Taxes .. 6 V. RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX ..................... 7 A. Explanation for Special Tax Apportionment .................................... 7-8 B. Maximum Annual Special Tax Rates ............................................ 8 C. Backup Special Tax ................................................................ 8 D. Accuracy of Information ........................................................... 9 VI. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT .................................. 9 VII. GENERAL TERMS AND CONDITIONS ....................................................... 9 &. Substitution Facilities ..............................................................9 B. Interim Transportation Facilities .................................................. 9 C. Appeals ..............................................................................9 EXHIBITS Exhibit A Recorded Boundary Map Exhibit B-1 Rate and Method of Apportionment - Improvement Area A Exhibit B-2 Rate and Method of Apportionment - Improvement Area B Exhibit C Assigned Maximum Special Tax Rates 1. INTRODUCTION WHEREAS, the City of Chula Vista did, pursuant to the provision of the Mello-Roos Community Facilities Act of 1982, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (hereinafter referred to as the "Act"), and specifically Section 53321.5 thereof, expressly order the filing of a written "Report" with the legislative body of the proposed Community Facilities District. This Community Facilities District being Community Facilities District No. 2001-1 (San Miguel Ranch) shall hereinafter be referred to as: "CFD No. 2001-1"; and WHEREAS, the Resolution Ordering and Directing the Preparation of a Report for Proposed Community Facilities District No. 2001-1 (San Miguet Ranch) did direct that said Report generally contain the following: FACILITIES: A full and complete description of the public facilities the acquisition of which are proposed to be financed through the CFD. COST ESTIMATE: A general cost estimate setting forth costs of acquiring such facilities. SPECIAL TAX: Further particulars and documentation regarding the rate and method of · ; apportionment for the authorized special tax. NOW, THEREFORE, I, John Lippitt P.E., the Director of Public Works of the City of Chula Vista, and the appointed responsible officer directed to prepare this Special Tax Report or cause the Report to be prepared pursuant to the provisions of the Act, do hereby submit this Report. Community Facilities District No. 2001-1 Page l ~;an Miguel Ranch November 2001 II. PROJECT DESCRIPTION CFD No. 2001-1 encompasses approximately 782.98 gross acres of land located in the portion of the south San Diego City of Chula Vista known as "San Migue] Ranch". Refer to Exhibit A - for a reduced copy of the Recorded Boundary Map. Of this acreage, approximately 257.38 acres is expected to be developed by several merchant builders for residential and commercial development, 43 acres for Community Facilities and 13 acres for an Elementary school site. This Community Facilities District (CFD No. 200I-1) is divided by SR 125 into two separate areas, Improvement Area A and Improvement Area B. Improvement Area A Improvement Area A consists of approximately 474.86 gross acres of land to the east of SR 125 in CFD No. 2001-1. Of this acreage, approximately 125.61 acres is designated for residential housing. Currently Continental Residential Inc., Pardee Construction Company and Trimark Pacific Homes have purchased Planning Areas. Continental Residential Inc. has purchased Planning Area C and will build approximately 110 single-family attached units. Pardee Construction Company has purchased Planning Area D and will build approximately 107 single- family detached homes. Both of these areas, lots will have a minimum size of 4,000 square feet. Trimark Pacific Homes (related entity to NNP-Trimark San Miguel, LLC) have purchased Planning Area I and will build approximately 105 single-family homes. These lots will have a minimum size of 6,000 square feet. The remaining 348 single-family attached product will be built as part of Planning Areas A and B, and the remaining 496 single-family detached homes will be built as part of Planning Area E, F, G, H and I. These lots will be built out as other merchant builders purchase units and/or NNP- Trimark San Miguel, LLC proceeds with conslruction. At build-out, it is expected that Improvement Area A will consist of approximately 603 Single Family Detached Units, 458 Single Family Attached Units, 9.87 acres for commercial development, 43 acres for Community Facilities and 13 acres for an Elementary school site as shown on the approved master Map No. CVT 99-04. The Single Family Uses are anticipated to generate approximately 2,101,125 square feet of residential building square footage. The total exempt acreage for this improvement area including the 10% contingency factor is 352.93 acres. Special taxes for CFD No. 2001-1 (San Miguel Ranch) Improvement Area A shall be levied to Taxable Property to satisfy the Special Tax Requirement as follows: · First, to Developed Property up to the Maximum Annual Special Tax; · Second, if necessary, to Undeveloped Property up to the Maximum Annual Special Tax for Undeveloped Property; · Third, if necessary, Maximum Annual Special Tax derived by the application of the Backup Special Tax increased proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax and Community Facilities District No. 2001-1 Page 2 San Miguel Ranch November 2001 · Fourth, if necessary, Special Tax increased proportionately, to Undeveloped Property pursuant to Section E of Exhibit B-1 up to the Maximum Annual Special Tax for Undeveloped Property. Improvement Area B Improvement Area B consists of approximately 308.12 gross acres of land to the west of SR 125 in CFD No. 2001-1. Of this acreage, approximately 121.90 acres is designated for residential estate housing. Lots in Planning Area J range from 7,000 square feet to 12,500 square feet and lots in planning Area K and L range from 15,000 to 27,000 square feet for these Estate residences. At build-out it is expected that there will be approximately 285 Single Family Estate Residences as shown on the approved Master Map No. CVT 99-04. The Single Family Uses are anticipated to generate approximately 1,059,432 square feet of residential building square footage. The total exempt acreage for this improvement area including the 15% contingency factor is 204.5 acres. Special taxes for CFD No. 2001-1 (San Miguel Ranch) Improvement Area B shall be levied to Taxable Property to satisfy the Special Tax Requirement as follows: · First, to Developed Property up to the Maximum Annual Special Tax; · Second, if necessary, to Undeveloped Property up to the Maximum Annual Special Tax for Undeveloped Property; · Third, if necessary, Maximum Annual Special Tax derived by the application of the Backup Special Tax increased proportionately from the Assigned Special Tax up to the Maximum Annual Special Tax and · Fourth, if necessary, Special Tax increased proportionately, to Undeveloped Property pursuant to Section E of Exhibit B-2 up tb the Maximum Annual Special Tax for Undeveloped Property. III. DESCRIPTION AND ESTIMATED COST OF PROPOSED I~ACILITIES ~ A. Description of Proposed Public Improvements A community facilities district may provide for the purchase, construction, expansion, or rehabilitation of any real or tangible property, including public facilities and infrastructure improvements with an estimated useful life of five (5) years or longer, which is necessary to meet increased demands placed upon local agencies as a result of development or rehabilitation occurring within the community facilities district. In addition, a community facilities district may pay in full all amounts necessary to eliminate any fixed special assessment liens or to pay, repay, or defease any obligation to pay or any indebtedness secured by any tax, fee, charge, or assessment levied within the area of the community facil, ities district. Community Facilities District No. 2001-1 ~°age 3 San Miguel Ranch November 2001 The facilities described in this Report are all facilities which the legislative body creating CFD No. 200I-1 is authorized to own, construct, or finance, and which are required, in part, to adequately meet the needs of CFD No. 200t-1. In addition, the facilities meet the criteria for authorized public facilities set forth in the City's Statement of Goals and Policies regarding the establishment of Community Facilities Districts. The actual facilities described herein are those currently expected to be required to adequately meet, in part, the needs of CFD No. 2001-1. Because the actual needs of CFD No. 2001-1 arising as development progresses therein may differ from those currently anticipated, CFD No. 2001-1 reserves the right to modify the actual facilities proposed herein to the extent CFD No. 2001-1 deems necessary, in its sole discretion to meet those needs. The Special Taxes required to pay for the construction or financing of said facilities will be apportioned as described in the Rate and Method of Apportionment (RMA) of the Special Tax for CFD No. 2001-1 Improvement Area A (Exhibit B-l) and CFD No. 2001- 1 Improvement Area B (Exhibit B-2). Proceeds of the proposed bonded indebtedness of CFD No. 2001-1 will be used to finance backbone streets and associated improvements (i.e., grading, sewer, streets, landscaping, utilities, etc.), public facilities DIF Improvements and interim transportation facilities. Following is a general description of the proposed facilities: Improvement Area A -h · Mount Miguel Road East · Proctor Valley Road East · Calle La Marina · Pasco Vera Cruz · Calle La Quinta · Those Facilities to be financed from the Proceeds of Public Facilities Development Impact Fees payable as a condition of development of property within CFD 2001-1 Improvement Area B · Mount Miguel Road West · Proctor Valley Road West · Those Facilities to be financed from the Proceeds of Public Facilities Development Impact Fees payable as a condition of development of property within CFD No. 2001-1 In addition to the above improvements, this CFD's bonding capacity maybe used for certain SR-125 interim transportation facilities within the greater eastern territories of Chula Vista. These transportation facilities will be traffic capacity adding improvemertts and could include the following projects: Community Facilities District No. 2001-1 Page 4 ~an Miguel Ranch November 2001 · Interim SR-125 · 1-805/East "H" Street an additional on-ramp lane to 1-805 B. Estimated Cost of Proposed Public Improvements The facilities and the estimated costs herein are subject to review and confirmation. The costs listed in Table 1, are estimates only, based upon current construction and land costs and actual costs may differ from those estimates herein. Based on the current CFD No. 2001-1 cost estimates of approximately $19.4 million, with $I 1.2 million set aside for reimbursement of eligible costs for Improvement Area A and $4.1 million set aside for reimbursement of eligible costs for Improvement Area B to bc financed with CFD bond proceeds, the balance will be born by the developers. TABLE 1 IMPROVEMENT AREA A Facilities Improvements Estimated Cost · Mount Miguel Road East $5,710,906 · Proctor Valley Road East $459,153 · Calle La Marina $3,661,229 · Pasco Vera Cruz $717,259 · Calle La Quinta $974,186 · Those Facilities to be financed from the Proceeds of Public Facilities Development Impact Fees payable as a condition of development of property within CFD No. 2001-1 Community Facilities District No. 2001-1 Page 5 San Miguel Ranch November 2001 -/7 IMPROVEMENT AREA B Facilities Improvements Estimated Cost * Mount Miguel Road West $3,824,396 · Proctor Valley Road West $1,375,454 · Those Facilities to be financed from the Proceeds of Public Facilities Development Impact Fees payable as a condition of development of property within CFD No. 2001-1 IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES A. Proiect Bond Sale For CFD No. 2001-1 there will be two separate issuance of bonds. One for Improvement Area A and one for Improvement Area B each with its own accounting, processing, and specifies to its obligated improvements within the CFD No. 2001-1. The bond mount for GFD No. 2001-1 Improvement Area A will be $14.1 million, which will finance approximately $11.2 million in facilities. The bonds issued by CFD No. 2001ol Improvement Area B will be $5.3 million, which will finance approximately $4.1 million in facilities. The bonds issued by CFD No. 2001-1 Improvement Areas A and B will meet the terms and conditions of special tax bonds set forth in the City's Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts. B. Incidental Bond Issuance Expenses to be Included in the Proposed Bonded Indebtedness for Improvement Areas A and B Pursuant to Section 53345.3 of the Act, bonded indebtedness may include all costs and estimated costs incidental to, or connected with, the accomplishment of the purpose for which the proposed debt is to be incurred, including, but not limited to, the costs of legal, fiscal, and financial consultant fees; bond and other reserve funds; discount fees; interest on any bonds of the district due and payable prior to the expiration of one year from the date of completion of the facilities, not to exceed two years; election costs; and all costs of issuance of the bonds, including, but not limited to, fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs. The reserve fund is estimated to be the maximum allowable under Federal Tax Law. All other incidental bond issuance expenses are estimated at 4 percent of the face amount of the bonds. Community Facilities District No. 2001-1 Page 6 gan Miguel Ranch November 2001 C. Incidental Expenses to be Included in the Annual Levy of Special Taxes for Improvement Areas A and B Pursuant to Section 53340 of the Act, the proceeds of any special tax may only be used to pay, in whole or part, the cost of providing public facilities, services and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the cost of planning and designing public facilities to be financed, including the cost of environmental evaluations of those facilities; the costs associated with the creation of the district, issuance of bonds, determination of the amount of taxes, collection of taxes, payment of taxes, or costs otherwise incurred in order to carry out the authorized purposes of the district; any other expenses incidental to the construction, completion, and inspection of the authorized work; and the retirement of existing bonded indebtedness. While the actual cost of administering CFD No. 2001-1 may vary, it is anticipated that the amount of special taxes, which can be collected, will be sufficient to fund at least $75,000 in annual administrative expenses prior to build-out of the project. V. RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX All of the property located within CFD No. 2001-1, unless exempted by law, shall be taxed for the purpose of providing necessary facilities to serve CFD No. 2001-1. Pursuant to Section 53325.3 of the Act, the tax imposed "is a Special Tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property." The Special Tax "may be based on benefit received by parcels of real p,roperty, the cost of making facilities or authorized services available to each parcel or other reasonable basis as determined by the legislative body," although the Special Tax may not be apportioned on an ad valorem basis pursuant to Article XIIIA of the California Constitution. As shown in Exhibit B-1 and B-2, for Improvement Area A and Improvement Area B respectively, the amended Rate and Method of Apportionment provides information sufficient to allow each property owner within CFD No. 2001-1 to estimate the maximum annual Special Tax he or she will be required to pay. Sections A through C, below, provide additional information : on the Rate and Method of Apportionment of the Special Tax for CFD No. 2001-1. A. Explanation for Special Tax Apportionment When a community facilities district is formed, a Special Tax may be levied on each parcel of taxable property within the CFD to pay for the construction, acquisition and rehabilitation of public facilities, to pay for authorized services or to repay bonded indebtedness or other related expenses incurred by CFD No. 2001-1. This Special Tax must be apportioned in a reasonable manner; however, the tax may not be apportioned on an ad valorem basis. When more than one type of land use is present within a community facilities district, several criteria may be coxisidered when apportioning the Special Tax. Generally, criteria based on building square footage, acreage, and land uses are selected, and categories Community Facilitie~ District No. 2001-1 Page 7 San Miguel Ranch November 2001 based on such criteria are established to differentiate between parcels of property. These categories are a direct result of the developer's projected product mix, and are reflective of the proposed land use types within that community facilities district. Specific Special Tax levels are assigned to each land use class, with all parcels within a land use class assigned the same Special Tax rate. The Act does not require the Special Taxes to be apportioned to individual parcels based on benefit received. However, in order to insure fairness and equity, benefit principles have been incorporated in establishing the Special Tax rates for CFD No. 2001-1. The major assumption inherent in the Special Taxes rates set forth in the Rate and Method of Apportionment is that the level of benefit received from the proposed public improvements is a function of land use. This assumption is borne out through an examination of commonly accepted statistical measures. For example, in measuring average weekday vehicle trip-ends, the Institute of Transportation Engineer's 1995 Trip Generation report identifies land use as the primary determinant of trip-end magnitude. Commercial land uses typically generate more trip- ends than do single family residential land use. Similarly, larger single family detached dwellings typically generate a greater number of trip-ends than do smaller single family detached homes, and therefore, will tend to receive more benefit from road grading, road landscaping and road improvements. Drainage and flood control requirements generally vary with the amount of impervious ground cover per parcel. It follows that larger h6mes which have more impervious ground cover will create relatively more drainage flow than smaller homes. Special taxes for CFD No. 2001-1 Improvement Areas A and B (San Miguel Ranch) shall be levied to Taxable Property to satisfy the Special Tax Requirement as outlined in the CFD No. 2001-1 Improvement Area A and B RMA's. The Land Use Class Categories of Taxation have been established for CFD No. 2001-1. The categories are defined as follows: ~' Residential Developed Parcels (single and multi-family residences) are taxed on the square footage of the building; > Undeveloped Parcels are taxed based on acreage of the parcel; and Based on the types of public facilities that are proposed for CFD No. 2001-1 and the factors described above, the Special Taxes assigned to specific land uses are generally proportionate to the relative benefits received by them, and, accordingly, the Special Taxes in CFD No. 2001-1 can be considered fair and reasonable. Community Facilities District No. 2001-1 Page 8 San Miguel Ranch November 2001 B. Maximum Annual Special Tax Rates Exhibit C lists the Maximum Annual Special Tax rates that may be levied against Developed Property, and Undeveloped Property within CFD No. 2001-1. Exhibit C also lists the Backup Special Tax (described later). The City Council will annually determine the actual amount of the Special Tax levy based on the method described in RMA and subject to the maximum Special Tax rates contained in Exhibit C. The City will levy a Special Tax to the extent necessary, sufficient to meet the Special Tax Requirement. C. Backup Special Tax When a Final Map is recorded within each Improvement Area, the Backup Special Tax for Assessors Parcels of Developed Property classified as Residential Property or Commercial Property will be determined pursuant to section c.l.b of Exhibit B-1 for Improvement Area A and c. 1.b of Exhibit B-2 for Improvement Area B. D. AccuracY of Information In order to establish the Maximum Annual Special Tax rates and the Backup Special Tax as s~ forth in the Rate and Method of Apportionment for CFD No. 2001-1, McGill Mart~in Self, Inc. has relied on information including, but not limited to absorption, land- use types, building square footage, and net taxable acreage which were provided to McGill Martin Self, Inc. by others. McGill Martin Self, Inc. has not independently verified such data and disclaims responsibility for the impact of inaccurate data provided by others, if any, on the Rate and Method of Apportionment for CFD No. 2001-1, including the inability to meet the financial obligations of CFD No. 2001-1. VI. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT The boundaries of CFD No. 2001-1 include all land on which the Special Taxes may be levied. The Recorded Map of the area included within CFD No. 2001-1 is provided as Exhibit A. VH. GENERAL TERMS AND CONDITIONS A. Substitution Facilities The description of the public facilities, as set forth herein, are general in their nature. The final nature and location of improvements and facilities will be determined upon the preparation of final plans .and specifications. The final plans may show substitutes, in lieu or modifications to the proposed work in order to accomplish the work of improvement, and any such substitution shall not be a change or modification in the Community FactTi~ies District No. 2001-1 Page 9 San Miguel Ranch November 2001 proceedings as long as the facilities provide a service and are of a type substantially similar to that as set forth in this Report. B. Interim Transportation Facilities The City may, in its sole discretion, elect to authorize and make the proceeds of any subsequent series of bonds available to pay the cost of construction or the purchase price for the acquisition of Improvements for Interim Transportation Facilities. This could result in the revision of the facilities priority structure for the utilization of such proceeds. C. Appeals Any landowner who feels that the amount of the Special Tax is in error may file a notice with the City Administrator, appealing the levy of the Special Tax pursuant to the procedure specified in Exhibit B-1 and B-2. As appropriate the City Administrator will then review the appeal and, if necessary, meet with the applicant. If the findings of the representative verify that the amount of the Special Tax should be modified or changed, then, as appropriate, the Special Tax levy shall be corrected. Community Facilities District No. 2001-1 Page 10 San Miguel Ranch November 2001 EXHIBIT A CITY OF CHULA VISTA COMMUNITY FACILITIES DISTR~CT NO. ;'001-1 (San Miguel Ranch) RECORDED BOUNDARY MAP Community Facilities District No. 2001-1 Page l l San Miguel Ranch November 2001 EXHIBIT B-1 CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 (San Miguel Ranch) RATE AND METHOD OF APPORTIONMENT IMPROVEMENT AREA A Community Facilities District No. 200]-J Page 12 San Miguel Ranch November 2001 RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1, IMPROVEMENT AREA A (San Miguel Ranch) A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of Taxable Property within the City of Chula Vista Community Facilities District No. 2001-1 ("CFD No. 2001-1, Improvement Area A") and collected each Fiscal Year commencing in Fiscal Year 2002-03, 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 real property in CFD No. 2001-1, Improvement Area A, unless exempted by law or by the provisions hereo~ shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of`an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps are not availab]'e, the Acreage 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 foil&wing actual or reasonably estimated costs directly related to the administration of CFD No. 2001-1, Improvement Area A 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 No. 2001~1, Improvement Area A or any designee thereof of' complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-1, Improvement Area A or any designee thereof of' complying with City, CFD No. 2001-1, Improvement Area A or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2001-1, Improvement Area A or any designee thereof related to an appeal 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. 2001-1, Improvement Area A for any other administrative purposes of CFD No. 2001-1, Improvement Area A, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown on 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. 1.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, 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 amount set forth in Section C.1 .b. below. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD No. 2001-1, Improvement Area A under the Act. "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 No. 2001-1, Improvement Area A." means City of Chula Vista, Community Facilities District No. 2001-1, Improvement Area A (San Mignel Ranch). "City" means the City of Chula Vista. "Commercial 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. "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. 2001-1, Improvement Area A. "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. "Final Map" means a subdivision of property created by recordation of a final map, parcel map, or lot line adjustment, approved by thc City pursuant to the Subdivision Map Act (Califomia Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which 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, mended and/or supplemented fi.om 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 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 jn CFD No. 2001-1, Improvement Area A. "Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C below, that may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Occupied Residential Property" means all Assessor's Parcels of Residential Property which have closed escrow to an end user. "Outstanding Bonds" means all Bonds which remain outstanding. "Property Owner Association Property" means any property within the boundaries of CFD No. 2001-1, Improvement Area A 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 Special Tax or Backup Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 2001-1, 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 all Assessor's Parcels of Undeveloped Property within CFD No. 2001-1, Improvement Area A. "Public Property" means any property within the boundaries of CFD No. 2001-1, Improvement Area A that is- used for rights-of-way or any other purpose and 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 Assessor's Parcels 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 shall be made by reference to appropriate records kept by the City's Building Department. Residential Floor Area will be based on the building permit(s) issued for each dwelling unit prior to it being classified as Occupied Residential Property, and shall not change as a result of additions or modifications made 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. 2001-1, Improvement Area A to: (i) pay annual debt service on all Outstanding Bonds as defined in Section A.; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the 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; (v) and pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD No. 2001-1, Improvement Area A; (vi) less a credit for Available Funds. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2001-1, Improvement Area A 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 Taxable Property within CFD No. 2001-1, Improvement Area A shall be classified as Developed Property or Undeveloped Properly and shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Furthermore, Developed Property shall be classified as Residential ProperVy or Commercial Property. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Commercial Property that is classified as Developed Property shall be the greater of (1) the Assigned Special Tax described in Table 1 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 of Developed Property is shown in Table 1. ~" TABLE 1 Assigned Special Tax for Developtd Property Land Use Class Description Assigned Special Tax Residential Property $475.00 per unit plus $0.34 per 1 square foot of Residential Floor Area 2 Commercial Property $5,091 per Acre of Commercial Property b. Backup Special Tax When a Final Map is recorded within Improvement Area A, 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 Developed Property classified as Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property within the Fihal Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: A-5 $10,376 x A 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 Map. L = Lots in the Final Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Developed Property classified as Commercial Property or for each Assessor's Parcel of Undeveloped Property to be classified as Commercial Property within the Final Map area, the Backup Special Tax shall be determined by multiplying $10,376 by the total Acreage of the Commercial Property and Undeveloped Property to be classified as Commercial Property within the Final Map area. Notwithstanding 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 ,~r amended Final 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 the amount shown in Table 2 below: TABLE 2 Maximum Annual Special Tax for Undeveloped Property Land Use Class Description Maximum Annual Special Tax 3 Undeveloped Property $10,376 per Acre D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-03 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 on each Assessor's Parcel of 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 each Assessor's Parcel of Undeveloped Property, excluding any Assessor's Parcels classified as Undeveloped Property pursuant to Section E, at 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 ,~hose 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 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 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 Assessor's Parcel of CFD No. 2001-1, Improvement Area A. E. EXEMPTIONS The CFD Administrator shall classify as exempt property (i) Assessor's Parcels defined as Public Property, (ii) Assessor's Parcels defined as Property Owner Association Property, (iii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iv) Assessor's Parcels defined as Community Purpose Facility Property or (v) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, provided that no such classification would reduce the sum of all A-7 Taxable Property to less than 121.93 Acres. Notwithstanding the above, the CFD Administrator shall not classify an Assessor's Pamel as exempt property if such classification would reduce the sum of all Taxable Property to less than 121.93 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 121.93 Acres will be classified as Undeveloped Property and shall be taxed as a part of the fourth step in Section D. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes exempt property. The Maximum Annual Special Tax obligation for any Public Property which cannot be classified as exempt property as described in the first paragraph of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property. 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 Undeveloped Property pursuant to the fourth step in Section D. F. REVIEW/APPEAL COMMITTEE The Council shall establish as part of the proceedings and administration of CFD No. 2001- 1, Improvement Area A a special three-member Review/Appeal Committee. Any landoxgner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error may file a written notice with the Review/Appeal Committee appealing the amount of the Special Tax levied 'on such Assessor's Parcel. 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. 2001-1, Improvement Area A 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 which 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. A-8 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 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 by 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 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 intent to prepay. Within 30 days of receipt of such w~itten notice the CFD Administrator shall notify such owner of the prepayment amount of such Assessor s Parcel. The CFD Adm~mstrator may charge a reasonable fee for providing this figure. The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of 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-to be prepaid, compute the Maximum Annual Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, A-9 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 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 Annual Special Tax revenues 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, if any, on the Outstanding Bonds to 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 that 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 yet been 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. 2001-1, Improvement Area A, 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 (the "Administrative Fees and Expenses"). 11. 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 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 ftrst 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 "Prepayment Amount':). 14. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 9, 11, 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. 2001- 1, Improvement Area A. The Prepayment Amount may be insufficient 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 fi, om the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Board 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. 2001-1, Improvement Area A 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 II.l; except that a partial prepayment shall be calculated according to the following formula: PP = (Ps x F) +A These terms have the following meaning: PP = the partial prepayment Ps -- the Prepayment Amount calculated according to gection 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 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 Paragraph 14 of Section H.1, and (ii) indicate in the records of CFD No. 2001-1, Improvement Area A 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 2002-03 to the extent necessary to fully satisfy the Special Tax Requirement for a period no longer than 2037-38. EXHIBIT B-2 CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 (San Miguel Ranch) RATE AND METHOD OF APPORTIONMENT IMPROVEMENT AREA B Community Facilities District No. 200]-] Page 13 San Miguel Ranch November 2001 RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1, IMPROVEMENT AREA B (San Miguel Ranch) A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of Taxable Property within the City of Chula Vista Community Facilities District No. 2001-1 ("CFD No. 2001-I, Improvement Area B") and collected each Fiscal Year commencing in Fiscal Year 2002-03, 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 rea] property in CFD No. 2001-1, Improvement Area B, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or i£ the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps are not availal0~c, the Acreage 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 following actual or reasonably estimated costs directly related to the administration of CFD No. 2001-l, 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 Indenture; the costs to the City, CFD No. 2001-1, Improvement Area B or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-1, Improvement Area B or any designee thereof of complying with City, CFD No. 2001-1, Improvement Area B or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2001-1, Improvement Area B or any designee thereof related to an appeal 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. 2001-1, Improvement Area B £or any other administrative purposes of' CFD No. 2001-1, Improvement Area B, B-1 including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Pamel 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. 1.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,, 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 amount set forth in 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. 2001-1, Improvement Area B under the Act. "CFI) '.&dministrator" 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 No. 2001-1, Improvement Area B'? means City of Chula Vista, Community Facilities District No. 2001-1, Improvement Area B (San Miguel Ranch). "City" means the City of Chula Vista. "Commercial 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. "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. 2001-1, Improvement Area B. "County" means the County of San Diego. B~2 "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. "Final Map" means a subdivision of property created by recordation ora 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 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 jn CFD No. 2001-1, Improvement Area B. "Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C below, th'it may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Occupied Residential Property" means all Assessor's Parcels of Residential Property which have closed escrow to an end user. "Outstanding Bonds" means all Bonds which remain outstanding. "Property Owner Association Property" means any property within the boundaries of CFD No. 2001-1, Improvement Area B 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 Special Tax or Backup Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 2001-1, 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 CFD No. 2001-1, Improvement Area B. "Public Property" means any property within the boundaries of CFD No. 2001-1, Improvement Area B that is used for rights-of-way or any other purpose and 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 Assessor's Parcels 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 shall be made by reference to appropriate records kept by the City's Building Department. Residential Floor Area will be based on the building permit(s) issued for each dwelling unit prior to it being classified as Occupied Residential Property, and shall not change as a result of additions or modifications made 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. 2001-1, Improvement Area B to: (i) pay annual debt service on all Outstanding Bonds as defined in Section A.; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the 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; '(v) and pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD No. 2001-1, Improvement Area B; (vi) less a credit for Available Funds. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2001-1, Improvement Area B 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 Taxable Property within CFD No. 2001-1, Improvement Area B 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. Furthermore, Developed Property shall be classified as Residential Property or Commercial Property. B-4 C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Commercial Property that is classified as Developed Property shall be the greater of (1) the Assigned Special Tax described in Table 1 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 of Developed Property is shown in Table 1. TABLE 1 Assigned Special Tax ~'or Developed Property Land Use Class Description Assigned Special Tax 1 Residential Property $475.00 per unit plus $0.32 per square foot of Residential Floor Area 2 Commercial Property $2,263 per Acre of Commercial Property b. Backup SpeciaITax When a Final Map is recorded within Improvement Area B, the Backup Special Tax for Assessor's Parcels of Developed Properly classified as Residential Property or Commercial Property shall be determined as follows: For each Assessor's Parcel of Developed Property classified as Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property within the Final Map area, the Backup Special Tax shall be the rate per Lot calculated accorchng to the following formula: $4,578 x A L Thc terms above have the following meanings: B = Backup Special Tax per Lot in each Fiscal Year. A = Acre~tge classified or to be classified as Residential Property in such Final Map. B-5 L = Lots in the Final Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Developed Property classified as Commercial Property or for each Assessor's Parcel of Undeveloped Property to be classified as Commercial Property within the Final Map area, the Backup Special Tax shall be determined by multiplying $4,578 by the total Acreage of the Commercial Property and Undeveloped Property to be classified as Commercial Property within the Final Map area. Notwithstanding 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 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 the amount shown in Table 2 below: TABLE 2 Maximum Annual Special Tax for Undeveloped Property Land Use , Class Description Maximum Annual Special Tax 3 Undeveloped Property $4,578 per Acre D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-03 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 on each Assessor's Parcel of 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 each Assessor's Parcel of Undeveloped Property, excluding any Assessor's Parcels classified as B-6 Undeveloped Property pursuant to Section E, at up to 100% of the Maximum Annual Special Tax for Undeveloped Properly. 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 whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax and 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 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 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 Assessor's Parcel of CFD No. 2001-1, Improvement Area B. E. EXEMPTIONS The CF, D Administrator shall classify as exempt property (i) Assessor's Parcels defined as Public Property, (ii) Assessor's Parcels defined as Property Owner Association Property, (iii)' Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iv) Assessor's Parcels defined as Connnunity Purpose Facility Property or (v) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, provided that no such classification would reduce the sum of all Taxable Property to less than 103.61 Acres. Notwithstanding the above, the CFD Administrator shall not classify an Assessor's Parcel as exempt property if such classification would reduce the sum of all Taxable Property to less than 103.61 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 103.61 Acres will be classified as Undeveloped Property and shall be taxed as a part of the fourth step in Section D. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes exempt property. The Maximum Annual Special Tax obligation for any Public Property which cannot be classified as exempt property as described in the first paragraph of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property. 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 Undeveloped Property pursuant to the fourth step in Section D.. B-7 F. REVIEW/APPEAL COMMITTEE The Council shall establish as part of the proceedings and administration of CFD No. 2001- 1, Improvement Area B a special three-member R. eview/Appeal Committee. Any landowner or resident who feels that the amount o£ the Special Tax levied on their Assessor's Parcel is in error may file a written notice with the Review/Appeal Committee appealing the amount o£ the Special Tax levied on such Assessor's Parcel. 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. 2001-1, Improvement 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 coyenant to foreclose and may actually foreclose on Assessor's Parcels which 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 thc 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 Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annua! Specia! Taxes. 1. Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied by 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 B-8 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 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 (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of 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 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 which has already been 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 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 revenues 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, if any, on the Outstanding Bonds to 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 that 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 yet been 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. 2001-1, Improvement Area B, 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 (the "Administrative Fees and Expenses"). 11. ~e 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 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 "Prepayment Amount"). I4. From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 9, 11, 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. 2001- 1, Improvement Area B. The Prepayment Amount may be insufficient 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 undex 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 Board 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. 2001-1, Improvement Area B both pr/or 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 builcVmg permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP-- (PE xF)+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 Administrator of(i) such owner's intent to partially B-II 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 Paragraph 14 of Section 1.1, and (ii) indicate in the records of CFD No. 2001-1, 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 (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 2002-03 to the extent necessary to fully satisfy the Special Tax Requirement for a period no longer than 2039-40. B-12 EXHIBIT C CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 IMPROVEMENT AREAS A AND B (San Miguel Ranch) MAXIMUM SPECIAL TAX RATES FOR DEVELOPED PROPERTY AND UNDEVELOPED PROPERTY Maximum Annual Special Tax for Developed Property in Land Use Class 1 Community Facilities District No. 2001-1 Residential Developed Parcels Maximum Annual Special Tax Land Use Class 1 - Improvement Area A $475.00 per unit plus $.34 per square foot o£ Residential Floor Area $475.00 per unit plus $.32 per square foot of Land Use Class 1 - Improvement Area B Residential Floor Area Maximum Annual Special Tax for Developed property in Land Use Class 2 Community Facilities District No. 2001-1 Commercial Developed Parcels Maximum Annual Special Tax I Land Use Class 2 - Improvement Area A $5,091 per acre of Commercial Property Land Use Class 2 - Improvement Area B $5,091 per acre of Commercial Property Maximum Annual Special Tax for Undeveloped Property in Land Use Class 3 Community Facilities District No. 2001-1 Undeveloped Property Maximum Annual Special Tax Land Use Class 3 - Improvement Area A $10,376 per acre of Undeveloped Property Land Use Class 3 - Improvement Area B $4,578 per acre of Undeveloped Property Community Facilities District No. 2001-] Page 14 San Miguel Ranch November 2001 Exhibit 3 Estimated Value to Lien Ratios Based on Appraisal Exhibit 4 Acquisition and Financing Agreement for CFD No. 2001-1 ACQUISITION/FINANCING AGREEMENT THIS AGREEMENT is made and entered into this day of 2002, by and between the CITY OF CHULA VISTA, a charter city duly organized and validly existing under the Constitution and laws of the State of California, (the "City") acting for and on behalf of itself and COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH), and NNP- TR1MARK SAN MIGUEL RANCH, LLC, a Delaware limited liability company (the "Developer"). WHEREAS, City has formed a community £acilities district and designated two improvement areas therein under the terms and conditions of the "Mello-Roos Community Facilities Act of 1982," as amended (Government Code Section 53311 and fullowing) (the "Act"), for the acquisition of certain public improvements, .together With appurtenances and appurtenant work within the jurisdictional limits of said City, said community £acilities dislyict known and designated as COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) (the "Community Facilities District") and such improvement areas designated as IMPROVEMENT AREA A and IMPROVEMENT AREA B (each, an "Improvement Area" and together, the "Improvement Areas"); and, WHEREAS, Developer, in order to proceed in a timely way with development of its property known as the San Mignel Ranch (the "Development"), desires to construct certain public improvements that are, following the completion of the construction thereof, to be acquired, owned, operated and maintained by or located within right-of-way or an easement granted or dedicated to the City (each an "Improvement" and, collectively, the "Improvements"); and, WHEREAS, the City and Developer agree that the Improvements may, upon the completion o£ the construction thereo£, be acquired by the City through financing provided by the Cormnunity Facilities Distr~ct at prices determined pursuant to and in accordance with the provisions of this Agreement; and, WHEREAS, the City and the Developer further agree that payment by the City for the acquisition of the Improvements shall be funded solely fi.om the proceeds of separate bond issues which shall be issued by the Commtmity Facilities District for each Improvement Area and which shall be secured by the levy of special taxes within each such Improvement Area; and, WHEREAS, the City and the Developer further agree that the proceeds of each series of such bonds authorized and eligible to be utilized to make such payments shall be designated to fund such payments for certain specific Improvements; and WHEREAS, it is the intent of this Agreement that Developer shall be entitled pursuant to the provisions o£ this Agreement to be paid for the Improvements at the prices as determ'med by the City pursuant to this Agreement upon: (i) the completion of the construction of the Improvements as required herein,'and (ii) the sale and delivery of that series of bonds by the t Community Facilities District the proceeds of which shall be authorized and designated to make the payments to acquire such Improvements; and, WHEREAS, the City is willing to acquire the Improvements fi.om Developer subject to the requirements of the Act, the City of Chula Vista Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts adopted by the City Council (the "Goals and Policies") and this Agreement and Developer desires that the City so acquire such Improvements. NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows: SECTION 1. Recitals. The above recitals are all tree and correct. SECTION 2. Plans and Specifications. All plans, specifications and bid documents for the Improvements (the "Plans and Specifications") and all changes in the Plans and Specifications necessitated by change orders shall be prepared by the Developer at the Developer's initial expense, subject to City approval. The costs of acquisition of such Improvements shall include costs of the preparation of the Plans and Specifications and all related documentation as set forth in Section 7 below. Developer shall not award bids for construction, commence construction or cause commencement of construction of an Improvement until the Plans and Specifications for such Improvement have been approved by the City. SECTION 3. Design, Bid and Construction of Improvements. Developer covenants and agrees that each Improvement to be acquired fi.om Developer pursuant to this Agreement shall be designed, bid and constructed (a) in substantial compliance with the approved Plans and Specifications for such Improvement; (b) in a good and workmanlike manner by well-trained adequately supervised workers; (c) in strict compliance with all governmental and quasi-governmental rules, regulations, laws, building codes and all requirements of Developer's insurers and lenders; (d) free of any known design flaws and defects; and (e) in compliance with the requirements of Exhibit C hereto which is incorporated herein by this reference. SECTION 4. Inspection and Acceptance of the Improvements. The construction activities relating to the Improvements shall be subject at all reasonable times to inspection by authorized representatives of City. Once an Improvement to be acquired by City is substantially completed 2 in accordance with the approved Plans and Specifications, then such Improvement shall be eligible for payment of the Base Increment of the Purchase Price (as defined in Section 7 below) therefor. Prior to acceptance of any Improvement by City for purposes of paying the Retained Increment (as defined in Section 7 below) of the Purchase Price, the Developer shall provide to the City Engineer of the City, or his or her designee (the "City Engineer"), the documentation set forth in this Section 4 and Section 7(c)(ii) below and obtain approval of as-built drawings for the Improvement in accordance with the process described below in this Section 4. The engineer of record for the Improvement ("Engineer of Record") shall file form PW-E~106 (Request for Release of Bonds) with the City Engineer. Within 20 working days of such filing, the field inspector of the City ("Field Inspector") or designee shall issue and transmit to the Engineer of Record a letter requesting (i) as-built drawings and soils reports (when applicable) and (ii) a punchlist of work to be completed or corrections to work to be completed before the Improvement will be eligible for payment of the Retained Increment. Within 20 working days of receipt of the Field Inspector's letter, the Engineer of Record shall prepare redline as-built drawings and submit them, together with any necessary soils reports, to the Field Inspector and the Developer shall complete the items of work and/or corrections specified in the punchlist. Within 10 working days of the Engineer of Record's submittal of the red lined as-built drawings, the Field Inspector shall review such drawings and provide comments. The Engineer of Record shall revise the redline as-built drawings per the Field Inspector's comments and resubmit within 10 working days. The Field Inspector shall make his final review within 5 working days of the Engineer ofl~ecord's resubmittal and notify the Engineer of Record to prepare mylar as-built drawings 'and a microfiche copy and submit both to the Public Works Director or his designee and notify the Developer of any punchlist items which remain to be completed. The City and Developer shall make best efforts to perform within the time periods described above. The inability of City or Developer to perform within .each time period, notwithstanding its best efforts, shall not constitute a breach of this Agreement. SECTION 5. Warranty of Improvements. At all times prior to the City's acceptance of an Improvement, the Developer shall be responsible for maintaining the Improvement at the Developer's expense. The Developer shall be obligated for the period of twelve (12) months immediately following the City's acceptance of an Improvement to repair or replace, at Developer's expense, any defects or failures resulting from the work of Developer, its contractors or agents. Upon the expiration of such twelve (12) month period, Developer shall assign to City and the Community Facilities District its fights in and to any warranties, guarantees or other evidence of contingent obligations of third persons with respect to such Improvement. As a condition precedent to the payment of the Retained Increment (as defined in Section 7 below) of the Purchase Price, Developer shall post a maintenance bond in a form reasonably approved by the City, cause such a maintenance bond to be posted, or assign Developer's fights under such a maintenance bond naming City and/or the Community Facilities District as beneficiary in an amount equal to fifteen percent (15%) of the Purchase Price of the Improvement in order to secure Developer's obligations pu_rsuant to this Section. Upon post'mg of such maintenance bond, the City shall release any performance, labor and material bonds for such Improvement. 3 SECTION 6. Notice of Completion and Lien Releases. Upon completion of the construction of an Improvement, Developer shall notify the City Engineer in writing of such completion and shall prepare and execute a Notice of Completion for such Improvement in the form prescribed by Section 3093 of the California Civil Code and shall record such notice in the Official Records of the County of San Diego. Developer shall cause its contractors to provide unconditional lien releases for such Improvement in accordance with Section 3262 of the Civil Code. Notwithstanding the foregoing, City may waive thc requirement for a Notice of Completion and lien releases if City determines that as of the date of payment of the Retained Increment of the Purchase Price for an Improvement, title to such Improvement or portion thereof satisfies the requirements for Acceptable Title (as hereinafter defined). SECTION 7. Payment of Purchase Price. (a) Amount of Purchase Price. The amount to bc paid by City for the Improvements to be acquired from Developer (the "Purchase Price") shall, as to each such Improvement, (i) be determined by City in accordance with the provisions of this Section 7, (ii) equal the lesser of the cost or the value thereof, (iii) include the reasonable cost or value of eligible appurtenant public facilities, (iv) include the costs of thc title insurance policy described in Section 9 (a), and (v) include ail other costs of construction and incidental costs eligible under the Act and thc Goals and Policies as a part of thc cost of thc Improvements, including the following: (i) Usual and customary design and engineering costs not to exceed the following percd~tages: a. Civil engineering - 7.5% of the cost of thc construction of the Improvement for which thc service was performed. b. Soils engineering - 15% of the cost of the grading for the Improvement. c. Landscape architecture - 10% of thc cost of applicable landscaping and irrigation relating to the Improvement. d. Survey and construction staking - 2% of the combined cost of the construction and grading for the Improvement. e. Utility engineering/coordination - 3% of the cost of the construction of the applicable dry utilities. (ii) Construction administration and supervision not to exceed, in aggregate, 1.75% of the total construction cost of the Improvement. (iii) Special engineering studies related to "collector" or "transmission" facilities as reviewed and approved by .the Public Works Director. (iv) Plan check and inspection fees (less any refunds). 4 (v) Capacity or connection fees related solely to the Improvement. (vi) Costs of acquisition of off-site rights-of-way and/or easements including the following: a. Appraisal and title insurance costs. b. Costs of preparing acquisition plats. c. The appraised value or actual cost of right-of-way or easement, whichever is less. d. Legal fees and costs related to eminent domain proceedings approved by the City Attorney. (vii) Costs of environmental review, permitting and mitigation related to the Improvement. In no event shall the cost or value of the construction of the Improvements be deemed to exceed the construction contract prices set forth in the contracts and change orders approved by City ("Approv6d Change Orders") pursuant to the applicable provisions of Exhibit "C" hereto, which is in'~orporated herein by this reference, or otherwise authorized pursuant to this Agreement. Notwithstanding the foregoing, the aggregate Purchase Price of the acquisition of all new utilities to be owned by a public utility or public utilities may not exceed 5% of the proceeds of the series of the Bonds to be utilized to pay such Purchase Price less that portion of the reserve fund, costs of issuance and other incidental costs allocable to such amount. Co) Incremental Payment of Purchase Price. The Purchase Price for an Improvement shall be payable in not to exceed two increments: the "Base Increment" which shall be an amount not to exceed 75% of the Purchase Price for such Improvement and the "Retained Increment" which shall be an amount not to exceed the remaining, unpaid portion of the Purchase Price for such Improvement determined pursuant to the provisions of (a) above. (c) Requisition for Incremental Payment of Purchase Price. (i) Base Increment. The Developer may submit a written request to the City Engineer for the payment of the Base Increment for an Improvement upon the substantial completion of the construction of such Improvement in accordance with the approved Plans and Specifications. The criteria for determining "substantial completion" of each Improvement is described in Exhibit B and shall mean generally that construction, or work with respect to the Improvement has progressed to the point where it is sufficiently complete so that the Imp.rovement can be utilized for the purpose for which it was intended. Substantial completion of an Improvement shall also mean that all components of such Improvement are substantially complete, e.g., in the case of a roadway 5 Improvement, the components are described in footnote 1 to Exhibit A below, Each Base Increment payment request must be in the form attached hereto as Exhibit D - 1, which is incorporated herein by this reference, and conform to the requirements of(d) below. Each request for payment of the Base Increment for an Improvement shall be accompanied by a copy of the following documents related to the construction of such Improvement: (1) each construction contract, (2) each change order, (3) each invoice submitted pursuant to such construction contracts, (4) evidence of payment of each invoice such as cancelled checks, and (5) written conditional lien releases executed by each applicable contractor, subcontractor and materialman in a form satisfactory to the City Attorney of the City (the "City Attorney") for the Improvement. (ii) Retained Increment. The Developer may submit a written request to the City Engineer for the payment of the Retained Increment ~for an Improvement in the form attached hereto as Exhibit D - 2, which is incorporated herein by this reference, upon the submission to the City Engineer of (1) as-built drawings or other equivalent plans and specifications for such Improvement ina form reasonably acceptable to the City, (2) evidence that the Developer has posted a maintenance bond for such Improvement as required by Section 5 hereinabove, (3) evidence of the satisfaction of the requirements of Section 9, hereinbelow directly related to such Improvement and (4) written unconditional lien releases from all contractors, subcontractors and materialmen satisfactory to the City Attorney for the Improvement. (d) DocUmentation. Any payment request submitted by Developer shall be properly executed and shall include copies of all supporting documents required by subsection (c)(i) or (c)(ii), as applicable. (e) Review of Payment Request. The City Engineer or his designee shall review each payment request and the supporting documentation accompanying such payment request. If the City Engineer finds that any such payment request is incomplete, improper or otherwise not suitable for approval, the City Engineer shall inform Developer in writing within twenty (20) working days after receipt thereof, the reasons for his finding. Developer shall have the right to respond to this finding by submitting further documentation and/or to resubmit the payment request within thirty (30) days after receipt of the denial. The City Engineer shall review any further documentation received from the Developer in support of a payment request and inform Developer of his approval or denial of the payment request as supplemented in accordance with this Section within ten (10) working days after receipt of the supplemental documentation. A resubmittal of a payment request shall be deemed a new payment request for purposes of this Section. Costs incurred under a construction contract for an Improvement entered into pursuant to the requirements of this Agreement and Approved Change Orders shall be deemed to be reasonable and, subject to the other provisions of this Agreement, shall be included in the Purchase Price for such Improveme_nt. 6 The City Engineer shall, after the sale of the series of Bonds defined in Section 18 below) pursuant to Section 18 the proceeds of which are intended to be used to acquire the subject Improvements and after his or her approval of a payment request, immediately forward a request to the Director of Finance of the City notifying the Director of Finance of his or her approval of the payment request and requesting that such payment be made to the appropriate payee. The Director of Finance shall process any such request of the City Engineer pursuant to the applicable procedures of the Finance Department and shall make or authorize such payment pursuant to such procedures and subsection (f) below. (f) Payment. (i) Priority of Payment for Improvements. The City and the Developer acknowledge and agree that the cost of acquisition or 'construction of all Improvements may exceed the aggregate amount of the Bond proceeds fi.om each series of Bonds which will be available for the payment of that portion of cost of construction or the Purchase Price, as applicable, for all of such Improvements eligible to be paid fi.om the proceeds of each such series of Bonds. As a result the City and Developer agree that the funding of the cost of construction or the Purchase Price, as applicable, for Improvements shall be prioritized as follows: a. Payments fi.om the Bonds issued for Improvement Area A (the , "Improvement Area A Bonds"). The proceeds of the Improvement Area A Bonds authorized and available to pay the cost of construction or the Purchase Price for the acquisition of Improvements, as applicable, shall be utilized in the following order of priority: (1) Priority 1: Improvement No. 1 in Exhibit A. (2) Priority 2: Improvement Nos. 2-7 and 11 in Exhibit A. b. Payments fi.om the Bonds issued for Improvement Area B (the "Improvement Area B Bonds"). (1) Priority 1: ' Improvement Nos. 8, 9, 10 and 12 in Exhibit A. (2) Priority 2: None The cost of construction or Purchase Price for any lower priority Improvement shall not be paid until the cost of construction or Purchase Price for all higher priority Improvements has been paid or if sufficient proceeds of the Bonds are reasonably determined to be available to fully fund the cost of construction or Purchase Price of the higher priority Improvements, based upon the estimates of the cost of construction or the estimates or approved Purchase Prices, as applicable, for such higher priority Improvements on Exhibit A. 7 (ii) Timing of the Payment of the Purchase Price for an Improvement. Subject to the limitations contained in (i) above and (iii) and (iv) below, the increment of the Purchase Price for each Improvement shall be paid to Developer within thirty (30) days after the date of the City Engineer's approval of the payment request for any such increment; provided, however, no Retained Increment may be paid earlier than thirty-five (35) days after the recording ora Notice of Completion for the Improvement. (iii) Source of Payment. Except as provided in the following paragraph, the Purchase Price or any increment thereof for an Improvement shall be payable to the Developer solely from those proceeds of the sale of that series of Bonds as provided in Section 18 hereof authorized and designated for the payment for such Improvement, after all costs of formation of the Community Facilities District and all costs of issuance of such Bonds have been paid and deposits of accrued and capitalized interest to the redemption fund and the initial deposit to the reserve fund have been made. (iv) }Yithholding of Paymena In.addition to the foregoing, the City shall have the right to withhold payment of the Purchase Price or any increment thereof of any Improvement if (a) the Developer is delinquent in the payment of any assessment installments or special taxes levied by the City or a cormnunity facilities district established by the City on properties then owned by the Developer within the Community Facilities District, (b) the City Engineer reasonably determines that the Developer is not then in substantial compliance with all applicable conditions and obligations imposed upon'-'~the Developer hereunder or upon the Development pursuant to the land use entitlements approved by the City for the Development, including but not limited to, payment of all applicable fees, dedication of all applicable rights-of-way or other property and construction of all applicable public improvements. The City Engineer shall provide written notice to the Developer of the decision to withhold any such payment and shall specify the reason for such decision. If the payment is withheld as a result of the delinquency in the payment of assessment installments or special taxes, the notice shall identify the delinquent parcels and the amount of such delinquency. If the payment is withheld as a result of substantial non-compliance with a condition or obligation, the notice shall specify such condition or obligation and what action will be necessa~ by the Developer to substantially comply with such condition or obligation. Upon receipt by the City Engineer of evidence reasonab!y satisfactory to the City Engineer of the payment of the delinquent special taxes or assessments or upon the determination by the City Engineer that the Developer has substantially complied with the subject condition or obligation, the City shall forthwith make any payment which has been withheld pursuant to the provisions of this paragraph. SECTION 8. Financing the Construction or Acquisition of Traffic Enhancement Program Improvements. A portion of the proceeds of the Bonds in an amount not to exceed $1,000,000 (the "Traffic Enhancement Program S~taside Amount") shall be deposited in a separate account (the "Traffic Enhancement Program Improvement Account") to be established pursuant to the bond 8 indenture setting forth the terms and conditions pursuant to which the Bonds shall be issued and sold (the "Bond Indenture"). Pursuant to the requirements of this Section 8, the City may from time to time authorize the disbursement of funds on deposit in the Traffic Enhancement Program Improvement Account to pay for the acquisition or construction of the Improvement No. 1 as identified and described in Exhibit A hereto (the "Traffic Enhancement Program Improvements") in accordance with the provision of Sections 4 through 8 hereof. Except as provided below, the funds on deposit in the Traffic Enhancement Program Improvement Account shall not be available for the cost of construction or the Purchase Price of any other Improvement. Notwithstanding any other provision herein to the contrary, the City may, in its sole discretion, elect to (a) cause the construction of Traffic Enhancement Program Improvements pursuant to a public works contract awarded by the City (the "Public. Works Contract"), (b) acquire Traffic Enhancement Program Improvements from the Developer pursuant to the terms and conditions of this Agreement or another agreement entered into by the City and Developer that conforms to the applicable requirements of the Mello Roos Community Facilities Act of 1982, or (c) acquire Traffic Enhancement Program Improvements fi.om a third party or otherwise reimburse such a third party for the costs incurred by such third party to construct such Traffic Enhancement Program Improvements pursuant to terms and conditions of a separate agreement with such third party ("Third Party Acquisition or Reimbursement Agreement") as the terms are mutually agreed upon by the City and the third party and in conformance with the applicable requirements of the Mello Roos Community Facilities Act of 1982. It is contemplated at the time of execution of this Agreement that said Third Party Acquisition and Reimbursement Agreement '~']11 be in the form of a Traffic Enhancement Program Agreement to be entered into by the City, Developer and the third party. If the City elects to cause the construction of Traffic Enhancement Program Improvements or any portion thereof pursuant to a Pnblic Works Contract, the City may disburse funds from the Traffic Enhancement Program Improvement Account fi.om time to time to make payments pursuant to such Public Works Contract. If the City elects to acquire the Traffic Enhancement Program Improvements or reimburse a third party for the costs incurred by such third party to construct such Traffic Enhancement Program Improvements pursuant to a Third Party Acquisition or Reimbursement Agreement, the City may disburse funds fi.om the Traffic Enhancement Program Improvement Account from time to time to acquire Traffic Enhancement Program Improvements or reimburse such third party pursuant to such agreement. The aggregate disbursements from the Traffic Enhancement Program Improvement Account shall not exceed the lesser of (a) the Traffic Enhancement Program Set Aside Amount or (b) the fair share of the cost of construction of the Traffic Enhancement Program Improvements allocable to the development of the property within the District (the "Fair Share"). The Fair Share is currently estimated to be equal to 40% of the cost of construction of the Traffic Enhancement Program Improvements. Upon the request of the D.eveloper made prior to the completion of the construction or acquisition of the Traffic Enhancement Program Improvements, the Traffic Enhancement Program Set Aside Amount shall be reduced from time to time if and to the extent the City 9 Manager, or his designee (the "City Manager") determines in his sole discretion that the Fair Share is less than the Traffic Enhancement Program Set Aside Amount. The amount of any such reduction shall be equal to the difference between the Traffic Enhancement Program Set Aside Amount and the Fair Share and funds in an amount equal to the amount of any such reduction shall be released from the Traffic Enhancement Program Improvement Account and made available to pay the Purchase Price for other Improvements. The City shall also release all or any portion of the Traffic Enhancement Program Set Aside Amount from the Traffic Enhancement Program Improvement Account and such funds shall be made available to fund the Purchase Price of other Improvements if Developer provides a cash deposit or letter of credit (the "Security") in a form and from a financial institution approved by the City Manager and the City Attorney in substitution for such funds; provided, however, a letter of credit may be provided for in an amount not to exceed fifty percent (50%) of the Traffic Enhancement Program Set Aside Amount. The amount of the funds released shall equal the amount of any Security provided by the Developer. Any such Security shall be drawn on if and to the extent (a) Developer fails to perform its obligation to pay its Fair Share or to construct the Traffic Enhancement Program Improvements or (b) the City determines that such funds are necessary to finance the completion of the construction of the Traffic Erahancement Program Improvements by the City or by a third party. The Security shall be reduced upon, and in the amount of, each payment by Developer toward the cost of the construction or acquisition of the Traffic Enhancement Program Improvements and shall be released in total upon Developer's full satisfaction of its obligation to pay its Fair Share. If funds remain on deposit in the Traffic EnhancemeNt Program Improvements Fund upon completion of the construction or acquisition of Traffic Enhancement Program Improvements and payment of the Fair Share of the cost of such construction or acquisition, such funds shall be released from the reservation established pursuant to this Section 8 and such funds shall be made available to pay the Purchase Price of other Improvements. In the event that the City elects not to require the construction or acquisition of Traffic Enhancement Program Improvements, the funds on deposit in the Traffic Enhancement Program Improvement Account shall be released from the Traffic Enhancement Program Improvement Account and such funds shall be made available to pay the Purchase Price of other Improvements. The Bond Indenture shall provide that all funds on deposit in the Traffic Enhancement Program Improvement Account shall be invested in such permitted inveslrnents as may be established by the terms of the Bond Indenture. All earnings on such investments shall be deposited in the improvement fund established by the Bond Indenture and shall be available to pay for the acquisition or construction of the Improvements pursuant to the terms of such Bond Indenture and this Agreement. SECTION 9. Audit. The authori_'zed representatives of City shall have the right, upon two (2) days prior written notice to Developer and during normal business hours, to review all books and 10 records of Developer pertaining to costs and expenses incurred by Developer in construction of the Improvements. SECTION t0. Ownership and Transfer of Improvements. The conveyance of the Improvements by Developer to City shall be in accordance with the following procedures: (a) Improvements Constructed on Land not Owned by City. As a condition to the payment of the Retained Increment of the Purchase Price, Developer shall cause an irrevocable offer of dedication to be made to City or an outfight grant of a fee interest or easement interest as approphate, in the sole discretion of the City of the appropriate right, title and interest in and to the portion of the applicable property owned by the Developer related to the applicable Improvement, including any temporary construction or access easements. Developer, whether or not it is the entity conslructing the Improvements, agrees to execute and deliver to the City the documents required to complete the transfer of Acceptable Title for property owned by the Developer upon or within which such Improvements are to be located. For purposes of this Agreement, the term "Acceptable Title" shall mean title to the portion of the property to be conveyed fi:ce and clear of all taxes, liens, encumbrances, assessments, easements, leases, whether any such item is recorded or unrecorded, except (i) non-delinquent taxes and assessments and (ii) those non-monetary encumbrances and easements which are reasonably determined by the City not to interfere with the intended use of the portion of the property. As a further condition to the payment of the Retained Increment of the Purchase Price for any ImprOvement, Developer at its sole initial cost and expense, subject to reimbursement pursuant to Section 7, shall cause to be issued a policy of title insurance for such portion of the property in an amount not to exceed the Purchase Price and in the form normally required by City in connection with the dedication of land for subdivision improvements and containing such title endorsements as may be reasonably requested by City. City's final acceptance of the portion of the property and the Improvements constructed thereon shall not be unreasonably withheld or delayed. (b) Improvements Constructed on Land Owned by City. If Developer is authorized to construct an Improvement on land owned in fee by City or on land over which the City owns an easement Developer shall obtain the necessary encroachment permits to enter such land for purposes of constructing such Lmprovement. City shall cooperate with Developer in issuing such encroachment permits. The Improvements shall be inspected by City on an ongoing basis. SECTION 11. Grading and Subdivision Improvement Bonds. Except as provided below, Developer shall be required to post or cause the posting of bonds or other security acceptable to the City to guarantee completion of the Improvements in accordance with City's standard subdivision requirements and conditions of approval of the Development (the "Conditions of Approval"). Labor and materials bonds shall also be required to be provided by the Developer's contractor for all Improvements to. be constructed under this agreement. Such bonds shall name the City of Chula Vista as additional obligee and shall remain in effect until the final acceptance 11 of the Improvements by the City Engineer. The presence of Bond proceeds shall not relieve the Developer of requiring this obligation of the Developer's contractor. Performance and labor and material bonds for specific Improvements shall not be required or may be released if: (1) such Improvements constitute a portion of the required subdivision improvements, (2) Bond proceeds equal to 125% of the estimated cost to construct or acquire such Improvements are available and set aside for such purpose, and (3) the Improvements are to be constructed or acquired entirely with the proceeds of the Bonds. Provided that conditions (1) and (2) are satisfied, if an Improvement is to be constructed or acquired only in pan with the proceeds of the Bonds, performance and labor and material bonds shall not be required for that portion of the Improvements to be so constructed or acquired except with respect to the portion that will not be acquired or constructed with Bond proceeds. In the event that the Bond proceeds that are available and may be set aside to fund the cost to construct or acquire an Improvement are less than 125% of the estimated cost thereof, the Developer shall be required to provide a performance and labor and material bond or other security satisfactory to the City Engineer and the City Attorney in the mount of such deficiency. City will cooperate with Developer in the termination or exoneration of any performance and labor and material bonds assuring completion of Improvements for which bonds have been sold. The City Engineer shall be the sole judge of determining release of such bonds. SECTION 12~ Indemnification by Developer. Developer shall defend, indemmfy and hold harmless City, its officers, directors, employees and agents, and the Community Facilities District, its o'fficers, directors, employees and agents from and against any and all claims, losses, liabilities,'damages, including court costs and reasonable attorneys' fees by reason of, or resulting from, or arising out of the design, engineering and construction of the Improvements; provided that any claims which relate to the Improvements shall be limited to those ar/sing out of personal injury or property damage caused by actions or omissions by Developer or Developer's employees, agents, independent contractors or representatives which occurred during the per/od prior to the transfer of title to the Improvements by City, whether or not a claim is filed prior to the date of acceptance of the Improvements. Nothing in this Section 12 shall limit in any manner the rights of the City and/or the Community Facilities District against any of the architects, engineers, contractors or other consultants employed by the Developer which has performed work in connection with construction or financing of the Improvements. Notwithstanding the foregoing, Developer shall have no obligation to defend, indemnify or hold harmless the City, its officers, directors, employees and agents, the Community Facilities District, its officers, directors, employees and agents, from and against any claims, liabilities, losses or damages (including court costs and attorneys' fees) which result from or arise out of the sole neghgence or willful misconduct of the City, its officers, directors, employees, or agents, or the Community Facilities District, its officers, directors, employees, or agents. - Except as set forth in this Section 12, no provision of this Agreement shall in any way limit the extent of the responsibility of Developer for payment of damages resulting from the operations of the Developer, its agents, employees or contractors. 12 SECTION 13. Obligation of City. Neither the City nor the Community Facilities District has a legal or financial obligation to construct or finance the actual construction of the Improvements. All costs incurred for actual construction of the Improvements, including all incidentals thereto, shall be borne by Developer, and the obligations of the City and Community Facilities District are limited to the acquisition of the Improvements pursuant to the provisions of this Agreement. SECTION 14. Failure by Developer to Construct Improvements. At any time following commencement of the construction of any Improvements by Developer, City determines that such construction is not progressing within a reasonable time in accordance with the Conditions of Approval or the Developer fails to demonstrate a continuing ability to complete the construction of such Improvement in accordance with the Conditions of Approval, the City may give written notice of such failure of performance to the Developer. Developer shall have sixty (60) days fi.om the date of receipt of such notice to either (i) cure such failure of performance by demonstrating to the satisfaction of the City during such cure per/od reasonable progress in the construction of the Improvement and a continuing ability to complete the construction of such Improvement in accordance with the Conditions of Approval or (ii) reasonably demonstrate that such failure of performance is due to circumstances or conditions beyond Developer's reasonable control ("Force Majeure") including, without limitation, the City's actions, omissions or inaction which result in a delay of performance by Developer, labor disputes, acts of God, war, riots, insurrections, civil commotions, moratoriums, inability to obtain labor or materials or reasonable substitutes for either, fire, unusual delay in transportation, and adverse weather conditions. Should DevelOper fail to reasonably demonstrate such reasonable progress or such continuing ability to coi~plete the construction of such Improvement or Force Majeure, the obligation of the City to pay the Purchase Price for the acquisition of such Improvement pursuant to this agreement may be terminated by the City by providing ten (10) days written notice to the Developer. Upon termination, the City may in its sole discretion then proceed to advertise and bid the balance of the construction of such Improvement, and there will be no further obligation on the part of the City for payment of the Purchase Price for such Improvement due to Developer pursuant to this Agreement. In the event that the City chooses not to advertise and bid the balance of the construction , of any such Improvement following such a termination, any monies remaining in the improvement fund for the Community Facilities District and set aside for the acquisition of such Improvement shall be transferred to the redemption fund for the Community Facilities District and used to call outstanding Bonds. SECTION 15. Agreement Contingent. As a precondition to the sale of each series of the Bonds of the Community Facilities District, Developer shall pay in cash to City an origination charge of 1.0% of the amount of the principal amount of such series of the Bonds ("Origination Payment"). Each such Origination Payment shall be at Developer's own expense and not recoverable from the proceeds of the special taxes or fi-om the proceeds of the Bonds. In the event that any series of the Bonds are, for any reason, not sold, the amount of the Origination Payment made for such series of the Bonds shall be returned to the Developer. 13 This Agreement is contingent upon the formation of the Community Facilities District, the authorization by the qualified electors of the Community Facilities District to levy special taxes within each Improvement Area and incur bonded indebtedness for each Improvement Area and the successful sale of Bonds, and it shall be null and void if the first series of Bonds are not sold within a three (3) year period following the date of this Agreement, or any mutually agreed extension; however, this time can be extended by request of the Developer and concurrence of the legislative body. The City may, at its option, suspend the performance of its obligations under this Agreement if, during the 30-day statute of limitations period following the formation of the Community Facilities District, any legal challenge is filed relating to the validity or enforceability of this Agreement, the Community Facilities District proceedings or the issuance of the Bonds. The obligations of the City hereunder shall be reinstated upon the entry of a final judgment in any such proceedings upholding the validity and enforceability of the Agreement, the Community Facilities District proceedings and the issuance of the Bonds. In the event that a final judgment or other final and non-appealable resolution is entered invalidating or declaring unenforceable this Agreement, the Community Facilities District proceedings or the issuance of the Bonds, the City may, at its option, terminate this Agreement. SECTION 16. Notice of Special Tax. Developer, or the successor or assigns of the Developer, shall provide written notice to all potential purchasers of lots in the form required pursuant to Government Code Section 53341.5 and/or such additional requirements as may be established by the City so ~t:lvising the potential owner of the fact of the proposed or confirmed Community Facilities'District, with said document being executed by the potential purchaser. Such notice shall be provided to the potential purchaser a reasonable time before the potential purchaser becomes contractually comrmtted to purchase the lot so that the potential purchaser may knowingly consider the impact of the special tax in the decision to purchase the lot. A copy of all such notices executed by actual purchasers shall be sent to the City Engineer. SECTION 17. Limitation of Aggregate Taxes and Assessments. Developer acknowledges that Developer has included in all existing agreements to sell all or any portion of the property to any person or entity for the purpose of constructing and marketing owner-occupied residential dwelling units (a "Builder"), and Developer agrees that Developer shall include in any future agreement to sell all or any portion of the property to any such Builder, provisions requiring the inclusion of the following "escrow instructions" in all sales by such Builder to residential home owners: (a). At or prior to the close of each such escrow with a residential homeowner, the escrow company shall apply a "calculation formula" previously approved by the City Engineer and deposited with the escrow company by the Builder to determine the aggregate of all annual ad valorem property taxes, all special taxes authorized to be levied to finance the construction or acquisition of public facilities and all assessment installments authorized to be levied to finance the construction or acquisition of public facilities (the "Total Annual Taxes and Assessments") applicable to the parcel subject to such escrow (the "Applicable Parcel"). 14 (b). If the Total Annual Taxes and Assessments exceed 2% of the sales price of the Applicable Parcel, the Escrow Company will make immediate written demand upon the Builder for deposit into the escrow of the funds necessary to partially prepay the special tax obligation for the Community Facilities District or any other community facilities district so that the Total Annual Taxes and Assessments will thereafter be equal to or less than 2% of the sales price of the Applicable Parcel. Such funds must be received by the escrow company prior to the close of escrow of the sale of the Applicable Parcel. The calculation of this prepayment amount shall be in accordance with the method of prepayment of special tax as set forth in the rate and method of apportionment of special taxes approved by the qualified electors of the Community Facilities District. Upon closing of such escrow, the amount so deposited by the Builder pursuant to this escrow instruction shall be sent by the escrow company to the Director of Finance, together with written instructions that such amount is to be used to partially prepay the special tax obligation of the Applicable Parcel for the Community Facilities District or shall be sent to the community facilities district for which the special tax obligation has been prepaid with similar written instructions. In addition to any other remedy provided for by law or in equity, the City may enforce the provisions of this Section 16 by an action for specific performance or injunctive relief or both. SECTION 18. Relationship to Public Works. This Agreement is for the construction and acquisition of certain Improvements by City and the sale of the Bonds for the payment of construction and acquisition costs for such Improvements and such other amounts as are herein provided, and~is not intended to be a public works contract. In performing its obligations under this Agreement, Developer is an independent contractor and not the agent of City. City shall have no responsibility for payment to any contractor or supplier of Developer. Notwithstanding the foregoing, Developer may be subject to certain public contract requirements as provided in Section 3 of this Agreement. SECTION 19. Sale of Bonds. If and when the Community Facilities District is successfully formed, and authorization for the levy of special taxes approved by the qualified electors of each Improvement Area, the City shall proceed with the issuance and sale of bonds for each Improvement Area secured by the levy of special taxes within such improvement Area (the "Bonds") to be issued pursuant to the Act. Each series of Bonds shall be sized so that as of the date of issuance of such series of Bonds the aggregate appraised value of all taxable properties within the Improvement Area for which the Bonds are being issued shall be at least 4 times the Land Secured Debt (defined below) allocable to such properties, (ii) the appraised value of each property to be developed for which a final subdivision map has not been recorded shall be at least four (4) times the Land Secured Debt allocable to each such property and (iii) the appraised value of each taxable property within such Improvement Area shall be at least three (3) times the Land Secured Debt allocable to each such property. "Land Secured Debt" means as to any taxable property, the principal amount of all outstanding Bonds allocable to such property, together with the principal amount of any other indebtedness of any other community facilities district secured by the levy of spe.cial taxes which is allocable to such parcel and the principal amount of any fixed lien assessment levied against such property. The appraised value of taxable property for purposes of this paragraph shall be determined by an independent appraisal 15 undertaken for the City utilizing appraisal assumptions approved by the City and, as to each subsequenl series of the Bonds, consistent with the applicable parity bonds requirements. The City may, in its sole discretion, accept a lower ratio of appraised value to Land Secured Debt or accept a form or forms of credit enhancement such as a letter of credit, cash deposit, Bond insurance or the escrow of Bond proceeds to offset a deficiency in the required value-to-debt ratio. The proceeds of each series of the Bonds shall be used in the following priority to (i) fund a reserve fund for the payment of principal and interest with respect to the Bonds; (ii) fund capitalized interest on the Bonds in an amount not to exceed the amount required to pay interest on such series of the Bonds until sufficient special taxes of the applicable Improvement Area may be placed on the tax roll to pay the scheduled debt service on such series of the Bonds; (iii) pay for costs of issuance of such series of the Bonds including, without limitation, underwriter's discount, bond counsel fees, printing, and paying agent fees; (iv) pay for that portion of the costs of forming the Community Facilities District allocable to the Improvement Area for which the Bonds have been issued, including reimbursement of advances of funds to the City by Developer and the Developer's legal, engineering and financial consulting expenses incurred relating to the formation of the Community Facilities District and issuance of the Bonds; and (v) pay the portion of the costs of the construction or acquisition of the Improvements allocable to the Improvement Area for which the Bonds have been issued pursuant to the provisions of this Agreement and consistent with the priorities set forth herein. The tfi~ning of the issuance and sale of each series of the Bonds shall be determined solely by the City. Additionally, the terms and conditions upon which each series of the Bonds shall be issued and sold, the method of sale of each series of the Bonds and the pricing thereof shall be determined solely by the City and shall conform to the Goals and Policies and this Agreement. The sale of each series of the Bonds shall be subject, to receipt by the City of a competitively bid or negotiated bond purchase agreement which is acceptable to the City. The amount of each series of the Bonds to be issued shall be determined in accordance with the Goals and Policies such that the maximum projected annual special tax revenues securing such series of the Bonds equals at least 110% of the projected annual gross debt service on all of the outstanding Bonds of such series. Developer agrees to provide all information regarding the development of the property within the Improvement Area for which a series of Bonds is proposed to be issued, including the financing plan for such development, which are necessary to ensure that the official statement for such Bonds complies with the requirements of Rule 15c2-12 of the Securities and Exchange Commission (the "Rule") and all other applicable federal and state securities laws. Additionally, Developer agrees to enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to the Community Facilities District, the development thereof and the Developer as necessary to ensure ongoing compliance with the continuing disclosure requirements of the Rule. Finally, .Developer agrees to cause its counsel to provide an opinion of such counsel in a form satisfactory to the underwriter of such series of the Bonds and underwriter's counsel or disclosure counsel, as applicable. 16 SECTION20. Development Impact Fee Credit, Payment and Reimbursement. The Improvements include public facilities that are included in several City development impact fee programs (each, a "DIF Program"), as indicated in the attached referenced and incorporated Exhibit E. Credits against the applicable DIF Program fees shall be granted in accordance with the applicable City ordinances, regulations and policies. SECTION21. Conflict with Other Agreements. Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer from any condition of development or requirement imposed by any other agreement with City. SECTION 22. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval, discretion or acceptance of any party hereto or any of their respective employees, officers or agents shall be deemed to require that such consent, approval or acceptance not be unreasonably withheld or delayed, unless such provision expressly incorporates a different standard. SECTION 23. Entire Agreement; Amendment. This Agreement and the agreements expressly referred to herein contains all of the agreements of the parties hereto with respect to the matters contained herein and no prior or contemporaneous agreement or understandings, oral or written, pertaining to any such matters shall be effective for any pm-pose. No provision of this Agreement may be modified, waiver, amended or added to except by a writing signed by the party agains~:~which the enforcement of such modification, waiver, amendment or addition is or may be sought. SECTION 24. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: Developer: NNP-Trimark San Mignel Ranch, LLC 85 Argonaut, Suite 205 Alison Viejo, CA 92656 Attn: Steve Hester and NNP-Trimark San Miguel Ranch, LLC c/o Newland Corrrmunities 9404 Genesee Avenue, Suite 230 La Jolla, CA 92037 Attn: Derek Thomas and General Counsel 17 City: City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: City Manager Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party. SECTION 25. Severability. If any provision of this Agreement is held to be illegal or unenfomeable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. SECTION 26. Successors and Assigns. This Agreement shall-be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Developer may not assign its rights or obligations hereunder except upon written notice to City within ten (10) days of the date of such assignment indicating the name and address of the assignee. Upon such notice and the assumption by the assignee of the rights, duties and obligations of the Developer arising under or from tkis Agreement, Developer shall be released by City from all future duties or obligations rising under or from this Agreement. Notwithstanding the preceding sentence, Developer may assign its rights and obligations hereunder as security to lenders for the purpose of obtaining loans to finance development within the Community Facilities District, but no such assignment shall .release Developer from its obligations hereunder to City. ,..~ SECTION 27. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the !aws of the State of Cal, ifomia~ Additionally, this Agreement and the construction of the Improvements shall be subject to all City ordinances and regulations relating to the requirement of,improvement agreements, land division, improvement security or other applicable development requirements. SECTION 28. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by any other party, or the failure by a party to exercise its rights under the default of any other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by any other party with the terms o£this Agreement thereafter. SECTION 29. Singular and Plural; Gender. As used herein, the singular of any work includes the plural, and terms in the masculine gender shall include the feminine. SECTION 30. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. SECTION 31. Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and the Developer and shall be deemed for all purposes to have been jointly drafted by the City and the Dev_eloper. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. The language in all parts of this Agreement, in all cases, shall be construed as a 18 whole and in accordance with its fair meaning and not strictly for or against any party and consistent with the provisions hereof, in order to achieve the objectives of the parties hereunder. The captions of the sections and subsections of this Agreement are for convenience only and shall not be considered or referred to in resolving questions of construction. SECTION 32. Recitals; Exhibits. Any recitals set forth above and any attached exhibits are incorporated by reference into this Agreement. SECTION 33. Authority of Signatories. Each signatory and party hereto hereby represents and warrants to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions and/or other actions have been taken so as to enable such party to enter into this Agreement. [End of page. Next page is signature page.] 19 JUL. ID, ~UU./ ~;~fID~tD/~DIF. fC~.MIND ~Urfll~Ullll I IF,D, ~ ...... : , , ..F-- ~u. '..'U2~ = 2' J/ u MAY01~ AV~F, OV~ AS TO 7.11.02 EXHIBIT B SUBSTANTIAL COMPLETION CRITERIA General: 1. Substantial completion of an Improvement for purposes of determiinng the eligibility of such Improvement for the payment of the "Base Increment" (75% of the Purchase Price) therefore shall mean that the construction or work with respect to such Improvement, including each component of such Improvement, has progressed to the point where it is sufficiently complete so that it can be utilized for the purpose for which it was intended. Substantial completion criteria for each Improvement or component of an Improvement is further described below. 2. Payment for the remaining 25% ("Retained Increment") of the Purchase Price for an Improvement shall be in accordance with Section 7, paragraph (c)(ii) and shall be made after submittal of: a payment request form, as-built plans, posting of maintenance bonds, and submittal of lien release evidence. Substantial Completion Criteria: A. Grading:.-Grading shall be deemed to be complete upon (1) completion of all preliminary grading work (mobilization, site clearing, remedial gradin~g, overexcavation, installation of subdrainage systems) (2) certification of compaction by the geotechrfical engineer, quantity verification by the civil engineer, and confirmation by the City inspector and (3) installation of all surface grading improvements (brow ditch~s, retaining wails, slope protection and similar improvements) and the certification thereof by the geotechnical engineer and confirmation by the City inspector. B. Sewer: Sewer construction shall be deemed substantially complete upon the installation, flushing, and testing of sewer main line, laterals, cleanouts, manholes, and all other appurtenances of the sewer system as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and the verification of such installation by the civil engineer and confirmation of such installation by the City inspector. C. Storm Drain: Box culverts and headwall structures shall be deemed substantially complete upon installation as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and verification of such installation by the civil engineer, and confirmation of such installation by the City inspector. D. Drainage Facilities: Drainage structures including energy dissipation devices (rip-rap, drop structures, cut-off walls, etc), drainage diversion structures, facilities required as part of the envirormaental mitigation measures, and other drainage channel appurtenances including drainage pipes connecting the brow ditches to the channel, shall be deemed substantially B-1 7.11.02 complete for payment of the Base Increment upon the installation thereof as shown on the approved plans and specifications therefore and in accordance with City standard plans and specifications and the verification of such installation by the civil engineer and confirmation of such installation by the City inspector. E. Dry Utility Backbone System: Dry utilities (electric, gas, telephone, CATV) shall be deemed substantially complete upon the installation of the conduits, junction boxes, payment of utility fees, and written acceptance of the facilities by the utility companies. F. Roadway Pavement and Roadway Drainage System: Roadway pavement and drainage improvements shall be deemed substantially complete upon the installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector of all storm drain pipes, catch basins, drainage inlets and cleanouts for the roadway storm drain system, installation of roadway base material, concrete curb and gutter, and AC pavement including the preparation of the subgrade and base material. G. Other Street Surface Improvements: Street surface improvements including street lights, traffic signals and conduits, signal interconnect, street name signs, roadway signing and striping, and appurtenances shall be deemed substantially complete when installed as shown on the improvement plans and in accordance with City standard plans and specifications and upon confirmation of such installation by the City inspector. H. Street Landscape Irrigation and Planting: Parkway landscaping within the roadway fight of way including planting, irrigation, concrete sidewalks, median maintenance strip, pedestrian ramps, channel maintenance roads and all associated subgrade and base material preparation shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector. I. Slope Landscaping: Landscape planting and irrigation improvements for the slopes outside of the roadway and channel fight of way and the regional trail (DG) and fencing shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector. B-2 7.11.02 EXHIBIT "C" DESIGN, BID, CONTRACT AND CHANGE ORDER REQUIREMENTS 1. General These requirements shall be applied to all improvements proposed to be acquired through the Community Facilities District. Any deviation from these requirements must be approved by the Public Works Director. References to the Public Works Director means the Public Works Director, City Engineer or their designee. The City reserves the right to make the final determination of cost of the Improvements to be acquired in accordance with this Agreement. 2. Design Phase A. Only design costs directly related to the public improvements to be acquired are eligible for inclusion. B. Bidding Documents. Two complete sets of bidding documents, including ~, improvement plans, general provisions, and bid proposal forms shall be submitted to the Engineering Division for review and approval within 15 working days of submittal. Advertising for bids shall not take place until the bidding documents are approved in writing by the City. This procedure shall be followed for each contract proposed to be advertised. Unless otherwise noted, the bidding documents shall conform to the following minimum requirements: 1. Unless impractical due to the nature of the improvement, the bid proposal shall be unit priced rather than lump sum. A.C. pavement, base and sub-base shall be bid on a square foot per inch thickness basis. 2. The bidding documents shall require the bidder/contractor to provide the following bonds: a. Bid Bond - 10% of the amount of the bid. b. Material and Labor Bond - 100% of the contract mount. c. Performance Bond - 100% of the contract amount. The Contractor shall post performance and labor and material bonds for all improvements as pai-t of the bid. The City of Chula Vista shall be named as additional obligee with the right to call such bonds if needed. Such bonds shall C-1 7.11.02 remain in effect until such time as all improvements are completed and accepted by the City Engineer. The City Engineer shall be the sole judge in determining the release of such bonds. 3. The bidding documents shall require the successful bidder to provide evidence of comprehensive or commercial general public liability insurance in the amount of at least $1,000,000 prior to the award of the contract. 4. The bidding documents shall provide for monthly progress payments to the contractor. 5. Unless otherwise required by the City, the contractor is not required to pay prevailing wages. 6. The bidding documents must clearly state the time, date, and place where bids are to be submitted and opened. 7. The bidding documents shall clearly state the amount of time to complete the work. The time allowed must be reasonable for the amount of work. Accelerated construction time allowances must be supplementally bid, and are not eligible for public finance unless previously approved by the City Engineer. 3. Bidding Phase A. The Notice inviting Sealed Bids shall be published in the Chula Vista Star News and the San Diego Daily Transcript. The notice inviting bids shall state where bidding documents are available. B. The bidding period following the advertisement of the Notice Inviting Sealed Bids shall be a minimum of 14 calendar days. C. Developer shall provide complete sets of bidding documents to all contractom, subcontractors, or suppliers requesting them. A reasonable price may be charged for bidding documents. D. Developer shall keep a log of all persons obtaining bidding documents, and their mailing address. E. Addenda shall be mailed by first class mail to all bidding document holders and the Public Works Director. If an addendum is required within five working days of the noticed bid opening date, the bid opening date shall be extended. F. Submitted bids shall be in sealed envelopes. G. Bids shall not be accepted after the stated time for submission. C-2 7.11.02 H. Bid opening shall be conducted by the Developer at the Developer's place of business or other site mutually acceptable to the Developer and Public Works Director. I. Sealed bids shall be opened and read aloud immediately following the submission time. A City representative shall be invited to attend the bid opening. J. Conditioned bids, unless the bid proposal lists them for all to bid on, shall not be accepted. K. The bid proposals shall conform to all state and local laws governing the listing of subcontractors and suppliers. L. The arithmetic of the two lowest bid proposals received shall immediately be checked for errors. M. A tabulation of all bids received shall be provided to the Public Works Director within five working days of the bid opening. N. Award shall be made to the lowest responsible bidder within a reasonable period of time following approval by the Public Works Director. O: A preconstmction meeting shall be held with the contractor prior to begirming the work. A City representative shall be invited to attend the meeting. P. The Notice to Proceed shall be issued~ within a reasonable period of time following the contract execution. 4. Construction Phase A. The City shall be provided a copy of the construction schedule. B. Developer shall require the contractor to conduct weekly construction status meetings to which a City representative shall be invited. C. Any additional costs incurred for the benefit of the Developer, such as accelerating the construction schedule, shall not be eligible for public financing unless previously approved by the City Engineer. D. Any additional construction costs incurred due solely to delays caused by the Developer shall not be eligible for public financing. E. All contracts and cc;nstruction related records shall be available to the City as and when required for the final determination of eligible costs for the public financing. C-3 7.1 ] .02 This shall include trip tickets and other confirmations of material delivered to the Improvement. 5. Change Orders A. Change orders shall be fully documented and be in a format consistent and be in a format consistent with the original bid items (i.e., show units, unit costs, extensions and total costs). The City Engineer, in his/her sole discretion shall determine the eligibility of each change order for inclusion in the Purchase Price for an Improvement. B. No single change order for a TDIF Improvement shall be eligible for inclusion in the Purchase Price for an Improvement which increases or decreases the original contract amount by more than $50,000 without City Council approval. C. The aggregate of all change orders for TDIF Improvements, includ'mg those for differences between estimated and actual quantities shall not increase the contract amount by more than the amount specified below without City Council approval: Original Contract Range Maximum Aggregate Increase Up to $100,000 10% ,\ $100,001 to $I,000,000 $10,000 plus .7% o£ amount over $10,000 More than $1,000,000 $73,000 plus 5% of amount over $1,000,000 The aggregate of all change orders for any non-TDIF Improvement shall not increase the Purchase Price thereof so as to cause such Purchase Price to exceed the cost estimate for such Improvement as set forth in Exhibit A by more than 25% without City Council approval. D. All change orders involving changes in scope of the project, or increases of contract amounts greater than outlined in C. above shall be submitted to the City Council for approval after the construction of the Improvement is completed, but before the payment of any portion of the Purchase Price for such Improvement is authorized by the City Engineer. Change orders that the Developer does not wish to include in the Purchase Price for an Improvement do not need to go to City Council for approval. E. Negotiated set price change orders are acceptable where most of the items of work in the change order have unit prices from the bids. Where change orders are for work that does not h~ave urfit prices for a substantial portion of the work contained within the bids, time and materials change orders are preferred. C-4 7.11.02 EXHIBIT "D-1" BASE INCREMENT PAYMENT REQUEST NO. __ The undersigned (the "Developer") hereby requests payment in the total mount of $ for the Base Increment of the Purchase Price of the Improvements (as defined in the Acquisition/Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: He(she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. The Improvements that are the subject of this Payment Request have been substantially completed in accordance with Exhibits A and B. The Purchase Price for the Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs:~as permitted in the Agreement) and have not been inflated in any respect. The BaSe Increment for wkich payment is requested has not been the subject of any prior payment request paid by the City. All items have been clearly delineated as DIF/Non-DIF eligible (all DIF's) and detailed backup and cost breakdown is provided supporting each item. Supporting documentation (such as third party invoices, change orders and checks) is attached with respect to each cost for which payment is requested. The Improvements for which payment is requested were constructed in accordance with the requirements of the Agreement. Developer is in compliance with the terms and provisions of the Agreement. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after due inquiry, will attach to the Improvements. A copy of a letter of conditional lien release for the Improvements for which payment is requested is included this request. In addition, a letter from the contractor(s) stating that have been paid in full by_the Developer for the Improvements for which payment is requested is also included in this request. D-l-1 7.11.02 ] hereby declare under penalty of perjury that the above r~resentations and warranties are tree and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance Public Works Director Dated: D-1-2 7.11.02 ATTACHMENT SUMMARY OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. __ Improvement Purchase Price Base Increment Disbursement Requested [List here all Improvements for which payment is requested, and attach supporting documentation] 7.11.02 EXHIBIT "D - 2" RETAINED INCREMENT PAYMENT REQUEST NO. __ The undersigned (the "Developer") hereby requests payment in the total mount of $ for the Retained Increment of the Purchase Price of the Improvements (as defined in the Acquisition/Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: 1. He(she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. 2. Developer has submitted or submits herein to the City, if applicable, as- built drawings or similar plans and specifications for the Improvements and such drawings or plans and specifications, as applicable, are true, correct and complete. 3. The Purchase Price for the Improvements has been calculated in conformance~with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Retained Increment for which payment is requested has not been the subject of any prior payment request paid by the City. 4. Supporting documentation (such as third party invoices, change orders, lien releases and checks) is attached with respect to each cost for which payment is requested. 5. The Improvements for which payment is requested were constructed in accordance with the requirements of the Agreement. 6. Developer is in compliance with the terms and provisions of the Agreement. 7. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after one inquiry, will attach to the Improvements. 7.11.02 I hereby declare under penalty of perjury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance Public Works Director Dated: D-2-2 .02 ATTACHMENT 1 SUMMARY OF iMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. __ Improvement Purchase Price Base Increment Retained Disbursement Increment Requested [List here all Improvements for which payment is requested, and attach supporting documentation] D-2-3 Exhibit 5 Letter from NNP-Trimark San Miguel Ranch, LLC, dated June 27, 2002 addressing Value to Lien Ratio EXHIBIT Yrimark Pacific Home_ ..................................... June27,2002 George Krempl D~-'puty City Mm~ager City of Chula Vista 276 4t~ Avenue ChulaVista, CA 91910 Re: Cily of Chula Vista CFI) No. 2001-1 (Sau Miguel Ranch) -- Waiver of4:1 Value-to-Lien Requirement Dear Mr. The Ci~s Policy for Land-Seemed Financing ("Policy") states that the value-tm lien ratio f~r any ~ bond issue must be at least 4:1 unless the City Council authorizes a lower ~alt,'e-~-lien ratio for a pa~auJa.r bond issue based on various facts and circumstances. The City is ~g with a bomt ½ssue for CFD No. 200I-! (San Miguel Kaneb.) £or which it a~pears the value-to-lien ratio may be approximately 3.80:1. ! am writing to request that the CiTy Council authorize the bond issue with an overall value-to-lien ratio of less than 4.00: ! based on the ~actors ct~scribed below in this letter. 1. The Valoe-t~-Lie~t t~tio of the Property has Increased Since the 15~ 2002 Valuation Date and is now more titan 4:1, The al~praised value of the land within /u~F~ovement Are.~ A was determined ~s of Match 15, 2002. Since that date, the ma~ter flc'~Iop~, HlqP-T.r~.ark Sas lv[igaO. Ranch LLG ("Trimartc") and the four unaffiiimed mm'chant builders currently deve]op~g within ~e L. nprovement Alea have spe.=t approximately $~,115,000 i~ attflitiolxal improvements Va the land before bonds are issued and soid m Yuiy 2002. If the Appr~sal were upelaled to reflect thes~ additional expenditur~ the value-to-lien ratio would be over 4.00:1. 2. There is Significant Diversit? of Ownership in the Imorovement Area. Continental Homes, Purdue Homes, Buie Communities and Shea Homes currently own apprc~__i__m_~tely 416 lots within the Improvement Area. Those entities each represent 10% to 1 oftt~ ~sfimated annual ~ecial tax levy. w/thin the Improvement Area. Trimark Pacific Homes, ~,'~U~ch i~ ordinated ~th Trmn.~-k, own. s m~. add~.t~.ona) 105 lots upon wh_~ch it intent]s to constnact mgic firnit7 &tachcd 3, The Bull; of the CFI) Improvemeuts Will Be Comuleted Before the Bond Is~ The vast majority of the improvements to be fianded with the CFD bond proceeds are expected to be substantially complete by the time the CFD bonds are issued. In addition, 85 4rgun;lu~, ~ullc 205. Ahso V~cit,. California 92656 949 465 1655 I.A,X 949 4f~5.1660 $1,O00,OOO o£l.hc CFD bor, d procee, ds will be reserved to fund San Miguel Ranch's share of thc import,~t Ea~ 'TI" Strt~t ~id~n½ug project. Thc diversity of ownership in the Improvement Area, the additional and continuing improvements to the land since the Appraisars March I 5 valuation da~e and the s~atus o~' comptmio:n of thc CiD impro'eements alt justify a waivcl' of the 4: ! value-to-lien ratio requirement u~der the Policy. Thank you for your consideration of this request. Div/~ion Pr~id~nt SH cc: l~lizabeth Chopp Wacr¢n Div~ Tom John~en John Lippitt Greg Mattson Anne Moore Dave ~owlands Cliff Swanson Exhibit 6 Preliminary Official Statement for CFD No. 2001-1 Stradling Yocca Carlson & Rauth ~ Draft of 07/02/02 ~ PRELIMINARY OFFICIAL STATEMENT DATED AS OF JULY __, 2002 r_ NEW ISSUE - BOOK-ENTRY-ONLY NO RATING '~' In t~ e of n on of Best Best & Krieger LLP Bond Counsel based on an analysts of ex~st ng laws, regulat ons rulings and court decisions = and assumtng, among other matters, comphance wtth certam covenants, tnterest on the Bonds ts excluded from gross ~ncomeforfederal mcome ~, tar purposes under Section/03 of the Internal Revenue Code of 1986 and is exempt fr_om State of California personal income tares. In the ~' further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of fed~eral iddividual or corporate alternate ~. minimum ta~es, although Bond Counsel observes that such interest is included in adjusted current earnings in calculating federal corporate c~ ahernative minimum taxable income. Bond Counsel expresses no opinion regardinR any other federal or state income tax consequences relatinft ~ to the ownership or disposition of or the accrual or receipt of interest on, the Bo. naFs. See "TAXMATTERS" herein. - CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) 2002 IMPROVEMENT AREA A SPECIAL TAX BONDS Dated: Date of Delivery Due: September 1, as shown on the inside page ,Th.e City of Chula Vista Community Facilities District No. 2001-I (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds ~ (the "Bonds ) are being issued and delivered to finance various public improvements needed to develop property located within Improvement Area A of Community Facilities District No. 2001-1 (San Migue] Ranch) (the "District"). The Dis~ct has been formed by and is located in the City of Chula Vista (the "City"), County of San Diego, Califurnia~ The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et sea. of the Government Code of the State ,o,f Califomia),,,and pu,.rsuant to a,,Bond Indenture dated as of Jaly 1, 2002, by and between the Distri~ and U.S. Bank, N.A., as fiscal agent (the Fiscal Agent ) (the Indenture ). The Bonds are special obligations of the District and are payable solely from revenues derived from certain annual Special Taxes (as defined herein) to be levied on and collected from the owners of the taxable land within Improvement Area A of the District and from certain other funds pledged under the Indenture, all as further described herein. The ~ Special Taxes are to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. See "SOURCES OF PAYMENT FOR THE BONDS - Rate and Method of Apportionment." The City Council of the City is the legislative body of the District. The Bonds are ~ssuable in fully registered form ,a,,n,d when msued wall be regmtered m the name of Cede & Co., as nominee &Tine Depository Trust Company, New York, New York ("DTC). Individual purchases may be made in principal amounts of $5,000 and integraI multiples thereof and will be in book-entry form only. Purchasers of Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable '[ except for transfer to another nominee of DTC or as otherwise descr/bed herein. Interest on the Bonds will be payable on March 1, 2003 and semiannually thereafter on each March 1 and September 1. Pnnmpal of and interest on the Bonds will be prod by the Fmcal Agent to DTC for subsequent disbursemeg4 to DTC Participants who are obligated to remit such payments to the beneficial owners of the Bonds. See "THE BONDS - Description ~the Bonds" end" - Book-Entry-Only System" herein. Neither the faith and credit nor the taxing power of the City, the County of San Diego, the State of California or any political subdivision thereof is ..... pledged to the payment of the Bonds Except for the Special Taxes. no other taxes are pledged to the pya ment o~f the Bonds. The Bonds are spectal tax obhgattons of the Dtstrtct payable solely from Spectal Taxes and other amounts held under the Indenture as more fully The Bonds are subject to optional redemption, extraordinary maqdatory redemption and mandatory sinking fund redemption prior to ' See "THE BONDS - Redemption" herein. maturity as set forth hereto. CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE DISTRICT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS WHEN DUE. THE PURCHASE OF THE BONDS INVOLVES SIGNIFICANT RISKS, AND THE BONDS ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS. SEE THE SECTION OF THIS OFFICIAL STATEMENT ENTITLED "SPECIAL RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INWESTMENT QUALITY OF THE BONDS. This cover page contains certain information for general refemmce only. It is not intended to be a suramary of the security or terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment MATURITY SCHEDULE (See Inside Cover Page) The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Best Best & Krieger LLP, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the Dish'ict by the City Attorney and for the Underwriter by Stradling Yocca Carlson & Rauth a Professional Corporation, Newport Beach California, as counsel to the Underwriter. It ~s antm~pated that the Bonds ~n book-entry form wdl be avadable for dehvery to DTC m New York, New York, on or about July__, 2002. STONE & YOUNGBERG LLC Dated: July__, 2002 'P. liminary ubj hang DOCSOC\852423v7~22245.0134 MATURITY SCHEDULE (Base CUSIP: )1 Maturity Maturity Date Principal Interest Date Principal Interest CUSIP (September 1) Amount Rate Yield CUSIP-'- (September 1) Amount Rate Yield -~-'- $ __% Term Bonds due September 1, 20__ Price: % - CUSEP: __ $ % Term Bonds due September 1, "2032 Price: % - CUSIP: __ ' Copyright 2002, American Bankers Association. CUSIP data herein is provided by Standard & Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. DOCSOC\852423v7~22245.0134 b -7¢ CITY OF CHULA VISTA, CALIFORNIA CITY COUNCIL Shirley Horton, Mayor Party Davis, Councilmember Steve Padilla, Councilmember Mary Salas, Councilmember Jerry Rindone, Councilmember CITY STAFF David D. Rowlands, Jr., City Manager Sid Morris, Assistant City Manager George Krempl, Assistant City Manager Robert Powell, Assistant City Manager Susan Bigelow, City Clerk John Kaheny, City Attorney John Lippitt, Public Works Director BOND COUNSEL Best Best & Krieger LLP San Diego, California FINANCIAL ADVISOR TO THE CITY Fieldman Rolapp & Associates Irvine, California SPECIAL TAX CONSULTANT REAL ESTATE APPRAISER McGill Mm-tm Self, Inc. Brace W. Hull & Associates, Inc. Chula Vista, California Irvine, California MARKET ABSORPTION CONSULTANT FISCAL AGENT The Meyers Group U.S. Bank, N.A. Solana Beach, California Los Angeles, California DOCSOC\852423v7X22245.0134 Except where otherwise indicated, all information contained in this Official Statement has been provided by the District. No dealer, broker, salesperson or other person has been authorized by the District, the Fiscal Agent or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by the District, the Fiscal Agent or the Underwriter. 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 a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement 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 faet. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with a nationally recognized municipal securities depositor. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information set forth herein which has been obtained from third party sources is believed to be reliable ,But is not guaranteed as to accuracy or completeness by the District. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, uhder any circumstances, create any implication that there has been no change in the affairs of the District or any other parties described herein since the date hereof. All surnmaries of the Indenture or other documents are made subject to the provisions of such documents respectively 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 District for further information in connection therewith. IN CONNECTION WITH THE OFFERING OF TI-IF, BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED lin SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. DOCSOC\852423v7~22245.0134 TABLE OF CONTENTS Page INTRODUCTION .................................................................................................................................. 1 General ............................................................................................................................................. 1 The District ...................................................................................................................................... 1 Sources of Payment for the Bonds ................................................................................................... 3 Description of the Bonds ................................................................................................................. 4 Tax Matters ...................................................................................................................................... 4 Professionals Involved in the Offering ............................................................................................ 4 Continuing Disclosure ..................................................................................................................... 5 Bond Owners' Risks ........................................................................................................................ 5 Forward Looking Statements ........................................................................................................... 5 Other Information ............................................................................................................................ 6 ESTIMATED SOURCES AND USES OF FUNDS .............................................................................. 6 THE BONDS ......................................................................................................................................... 7 Authority for Issuance ...................................................................................................................... 7 Purpose of the Bonds ........................................ : .............................................................................. 7 Description of the Bonds ................................................................................................................. 7 Redemption of Bonds ...................................................................................................................... 8 Notice and Selection of Bonds for Redemption ............................................................................... 9 Notice of Redemption ...................................................................................................................... 9 Effect of Redemption ..................................................................................................................... 10 Transfer and Exchange of Bonds ................................................................................................... 11 Debt Servi,qe Schedule for the Bonds ............................................................................................ 12 SOURCES OF PAYMENT FOR THE BONDS ........................... ~ ..................................................... 12 Limited Obligations ....................................................................................................................... 12 Special Taxes ................................................................................................................................. 13 Reserve Fund ............................................................................................................................. 2.. 17 Issuance of Parity Bonds ................................................................................................................ 18 THE COMMUNITY FACILITIES DISTRICT ................................................................................... 18 General Description of the District and Improvement Area A ...................................................... 18 Description of Authorized Facilities .............................................................................................. 18 Status ora Public Improvements ................................................................................................. 19 Principal Taxpayers ....................................................................................................................... 19 Estimated Direct and Overlapping Indebtedness ........................................................................... 20 Expected Tax Burden ..................................................................................................................... 22 Estimated Value-to-Lien Ratios ..................................................................................................... 23 Permitted Land Use ........................................................................................................................ 31 Certain Taxable Acreage Not Valued In Appraisal .................................................................. 31 THE DEVELOPMENT AND PROPERTY OWNERSHIP ................................................................ 33 General Description of Improvement Area A ................................................................................ 33 The Developer ................................................................................................................................ 33 Development Plan .......................................................................................................................... 35 Merchant Builders ....................... .-. ................................................................................................. 37 Financing Plan ............................................................................................................................... 41 Status of Entitlement Approvals .................................................................................................... 43 Environmental Constraints ............................................................................................................. 43 DOCSOCX852423v7~22245.0134 TABLE OF CONTENTS Page Infrastructure Requirements and Construction Status ................................................................... 44 Affordable Housing ....................................................................................................................... 44 Potential Limitations on Development .......................................................................................... 44 Appraisal ........................................................................................................................................ 46 Market Absorption Study ............................................................................................................... 47 SPECIAL RISK FACTORS ................................................................................................................. 47 Concentration of Ownership .......................................................................................................... 48 Limited Obligations ....................................................................................................................... 48 Insufficiency of Special Taxes ....................................................................................................... 48 lax Delinquencies ......................................................................................................................... 49 Failure to Develop Properties ........................................................................................................ 49 Future Land Use Regulations and Growth Control Initiatives ...................................................... 50 Endangered Species ....................................................................................................................... 51 Natural Disasters ............................................................................................................................ 51 Hazardous Substances .................................................................................................................... 52 Parity Taxes, Special Assessments and Land Development Costs ................................................ 52 Disclosures to Future Purchasers ................................................................................................... 53 Non-Cash Payments of Special Taxes ........................................................................................... 53 Payment of the Special Tax is not a Personal Obligation of the Owners ...................................... 54 Land Value_ s .................................................................................................................................. 54 Terroris~ ...................................................................................................................................... 55 FDIC/Federal Government Interests in Properties ................. ~ ....................................................... 55 Bankruptcy and Foreclosure .......................................................................................................... 56 No Acceleration Provision ............................................................................................................. 57 Loss of Tax Exemption ............................................................................................................. :.... 57 Limitations on Remedies ........................................ : ...................................................................... 57 Limited Secondary Market ............................................................................................................ 58 Proposition 218 .............................................................................................................................. 58 Ballot Initiatives ............................................................................................................................. 59 CONTINUING DISCLOSURE ........................................................................................................... 59 TAX MATTERS .................................................................................................................................. 60 LEGAL MATTERS ............................................................................................................................. 61 LITIGATION ....................................................................................................................................... 61 NO RATING ........................................................................................................................................ 61 UNDERWRITiNG ............................................................................................................................... 62 FiNANCIAL INTERESTS .................................................................................................................. 62 PENDiNG LEGISLATION ............. 7 ................................................................................................... 62 ADDITIONAL INFORMATION ........................................................................................................ 62 -ii- DOCSOC\852423v7k22245.0134 T.4BLE OF CONTENTS Page APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ............. A-1 APPENDIX B SUMMARY OF MARKET ABSORPTION STUDY ........................................ B-1 APPENDIX C APPRAISAL REPORT ...................................................................................... C-1 APPENDIX D INFORMATION REGARDING THE CITY OF CHI/LA VISTA ................... D-1 APPENDIX E SUMMARY OF iNDENTURE .......................................................................... E- 1 APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT .............. F-1 APPENDIX G CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER ......... G-1 APPENDIX H FORM OF OPiNION OF BOND COUNSEL .................................................... H-1 APPENDIX I DTC AND THE BOOK ENTRY SYSTE~ ..................................................... I-1 -iii- DOCSOC~852423v7~22245.0134 CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) 2002 IMPROVEMENT AREA A SPECIAL TAX BONDS INTRODUCTION General This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The sale and delivery of Bonds to potential investors is made only by means o£the entire Official Statement. All capitalized teixas used in this Official Statement and not defined shall have the meaning set forth in Appendix E -- "SUMMARY OF THE INDENTURE -- Certain Definitions" herein. The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the "Official Statement"), is to provide certain information concerning the issuance of the $ ' City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch), 2002 Improvement Area A Special Tax Bonds (the "Bonds"). The proceeds of the Bonds will be used to construct and acquire various public improvements needed with respect to the proposed development within Improvement Area A ("Improvement Area A") of the City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) (the "District"), to~und the Reserve Fund securing the Bonds, to pay costs of issuance of the Bonds and to capitalize interest on the Bonds through September 1, 2002. The Bonds are authorized to be issued pursuant to the Act (as defined herein) and a Bond Indenture (the "Indenture") dated as of July 1, 2002,,by and between the District and U.S. Bank, N.A. (thc "Fiscal Agent"). The Bonds are secured under the Indenture by a pledge of and lien upon Special Tax Revenues (as defined herein) and all moneys in the funds and accounts under the Indenture other than the Rebate Fund and the Administrative Expense Fund. The District Formation Proceedings. The District has been formed by the City of Chula Vista (the "City") pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act"), and the City of Chula Vista CommtmiW Facilities District Ordinance. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities dislyict to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of thc votes cast at an election and compliance with the other provisions of the Ac.t, a legislative body of a local agency may issue bonds for a . Preliminary, subject to change. 1 DOCSOC~852423v7~22245.0134 community facilities district and may levy and collect a special tax within such district to repay such indebtedness. The City Council of the City acts as the legislative body of the District. Pursuant to the Act, the City Council adopted the necessary resolutions stating its intent to establish the District, to authorize the levy of Special Taxes on taxable property within the boundaries of the District, and to have the District incur bonded indebtedness. Following public hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions establishing the District and calling special elections to submit the levy of the Special Taxes and the incurring of bonded indebtedness to the qualified voters of the District. On December 12, 2001, at an election held pursuant to the Act, the landowners who comprised the qualified voters of the District, authorized the District to incur bonded indebtedness in the aggregate principal amount not to exceed $21,000,000. The landowners approved the rate and method of apportionment of the Special Taxes -~ on land within Improvement Area A of the District (the "Snecial Taxes") to pay the principal of and interest on the bonds of the District (the "Rate and Method") which is set forth in Appendix A hereto. Description and Development. The District encompasses/` 73~8 acres and is located east of Interstate 805 approximately seven miles southeast of downtown San Diego. The District is divided into two Improvement Areas: Improvement Area A which consists of approximately -~ 47~5 gross acres and Improvement Area B which consists of the balance of the acreage within the District. The Bonds will be secured by -~ Special Taxes levied on properly within Improvement Area A only. -~ By December 2002, a 9.9 acre commercial parcel located within the physical boundaries of Improvement Area A -~ is expected to be removed fi.om Improvement Area A-~ and transferred to Improvement Area B, all as described under "THE COMMIYNITY FACILITIES, DISTRICT -- General Description of the District and Imt~rovement Area A." Upon such transfer, Special Taxes will no longer be levied on land comprising such commercial parcel ^ The land use entitlements for Improvement Area A permit development in sub-areas known as "planning areas." Based on current land use approvals and projections, the land Within Improvement Area A is expected to be developed into 603 detached residential units and 458 multifamily residential units. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Potential Limitations on Development." As of June 1, 2002, grading of the land within Improvement Area A was complete and road work and landscaping activity had commenced. Model homes within certain -~ nlannin~ area~s of Improvement Area A are expected to be in place by the end of July 2002 with the sale of homes to commence shortly thereafter. For a more .detailed description of development activity within Improvement ArenA, see "THE COMMUNITY FACILITIES DISTRICT -- Status of Development." Improvement Area B is authorized to issue bonds secured by special taxes levied on property within such improvement area. Improvement Area B consists of/` annroximatelv 263 cross acres and is located adjacent to Improvement Area A to the west. Significant development of Improvement Area B has not yet begun. The Bonds will not be payable from any future special taxes or assessments levied on land within Improvement Area B. Developer. The master developer of the property in Improvement Area A is NNP - Trimark San Miguel Ranch, LLC, a -~ Delawar~e limited liability company (the "Developer"). For certain information concerning the Developer, see "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- The Developer." 2 DOCSOC\852423v7~22245.0134 The Developer currently owns five planning areas consisting of -~ ~ 67 develonabl~e acres within Improvement Area A. a Over the nast seven months, the Developer has completed sales of five planning areas consisting of-~ annroximatelv 101 deveionable acres to various merchant builders, all as described under "THE DEVELOPIVIENT AND PROPERTY OV~NERSHIP -- Deveionment Plan" and "-- Merchant Builders." One such planning area was sold to an entity affiliated with the Developer. The Developer plans to develop the remaining acres that it owns in Improvement Area A over a period of two to three years, a Appraisal. Brace W. Hull & Associates, Inc. (the "Appraiser") has conducted an appraisal (the "Appraisal") of-~ land within Improvement Area A and has concluded, based upon the assumptions and limiting conditions contained in the Appraisal that as of March 15, 2002, the aggregate value of suc___~h land a was $53,585,000. The Meyers Group (the "Market Absorption Consultant") has prepared a Market Analysis and Absorption Projection report (the "Market Absorption Study") for the purpose of developing a build-out projection for the 603 for-sale residential units and 458 multifamily rental units planned, but no~ yet sold, in Improvement Area A as of March 15, 2002. The Market Absorption Study concludes that the residential units with the Disthct should be a built-out in the 2002-2005 period assuming continued development ~vith no stops due to unanticipated market or business factors. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Appraisal" and "-- Market AbSorption Study," Appendix B -- "SLrMMARY OF MARKET ABSORPTION STUDY" and Appendix C -- "SUMMARY APPRAISAL REPORT." Sources of Payment for the Bonds Special Taxes. As used in this Official Statement, the term "Special Tax" is that tax which has been authorized pursuant to the Act to be levied against certain land within Improvement Area A pursuant to th~ Act and in accordance with the Rate and Method. See "SOURCES OF PAYIvlENT OF THE~. BONDS -- Special Taxes" and Appendix A - "RATE AND Ivl~ETHOD OF APPORTIONIVIENT OF SPECIAL TAXES." Under the Indentm'e, the District has pledged to repay the Bonds from the Special Tax Revenues and amounts on deposit in the Fund and Accounts established under the Indenture other than the Rebate Fund and the Administrative Expense Fund. Special Tax Revenues are defined in the Indenture to include the proceeds of the Special Taxes received by the District, including any scheduled payments and prepayments thereof, interest and penalties thereon and the proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the delinquent Special Taxes in the amount of said lien and interest and penalties thereon. The Special Taxes are the primary security for the repayment of the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal' Agent, including amounts held in the Reserve Fund. See "SOURCES OF PAYMENT FOR THE BONDS -- Reserve Fund." Foreclosure Proceeds. The District has covenanted for the benefit of the owners of the Bonds that it will commence, and diligently pursue to completion, judicial foreclosure proceedings against Assessor's parcels under common ownership with delinquent Special Taxes in the aggregate in excess of $5,000 by the October 1 following the close of the fiscal year in which such Special Taxes were due, and it will commence and diligently pursue to completion judicial foreclosure proceedings against all Assessor's parcels with delinquent Special Taxes in the aggregate in excess of $2,500 by the October 1 following the close of any fiscal year if the amount in the Reserve Fund is less than the Reserve Requirement. See "SOURCES OF PAYMENT FOR THE BONDS -- Proceeds of Foreclosure Sales" herein. There is no assurance that the property within Improvement Area A can be sold for the appraised value or assessed values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of 3 DOCSOCX852423v7X22245.0134 Special Taxes by the current or future landox~mers within Improvement Area A. See "SPECIAL PdSK FACTORS -- Land Values" and Appendix C -- "SUMMARY APPRAISAL REPORT" herein. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM SPECIAL TAXES AND AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN. Description of the Bonds The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New york, New York ("DTC"), and will be available to actual purchasers of the Bonds (the "Beneficial Owners") in the denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book- entry-only system described herein is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accordance with the Indenture. See "THE BONDS -- Book-Entry-Only System" herein. Principal of, premium, if any, and interest on the Bonds is payable by the Fiscal Agent to DTC. Disbursement of such paymems to DTC Participants is the responsibility of DTC and disbursemenk~>f such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry-only system is no longer used with respect to the Bonds, the Beneficial Owners will become the registered owners of the Bonds and will be paid principal and interest by the Fiscal Agent, all as described herein. See "BOOK-ENTRY-ONLY SYSTEM" herein. The Bonds are subject to optional redemption, extraordinary mandatory redemption and mandatory sinking fund redemption as described herein. For a more complete descriptions of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see "THE BONDS" and Appendix E -- "SUMMARY OF INDENTURE" herein. Tax Matters In the opinion of Bond Counsel, based on an analysis of exishng laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded fi:om gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt fi:6m State of California personal income taxes. In ~he further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of federal individual or corporate alternate mJn~mum taxes, although Bond Counsel observes that such imerest is included in adjusted current earnings in calculating federal corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other federal or state income tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See "TAX MATTERS" herein. Professionals Involved in the Offering U.S. Bank, N.A. will act as Fiscal Agent under the Indenture and as the initial Dissemination Agent under the Continuing Disclosure Agreement and the Developer Continuing Disclosure 4 DOCSOC~852423v7~22245.0134 Agreement. See Appendices F and G. Stone & Youngberg LLC is the Underwriter of the Bonds. All proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Best Best & Ka'ieger LLP, San Diego, Bond Counsel. Fieldman Rolapp & Associates is acting as Financial Advisor to the City in connection with the Bonds. Certain legal matters will be passed on for the City and the District by the City Attorney, and for the Underwriter by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Underwriter's Counsel. Other professional services have been performed by McGill Martin Self~ Inc. as Special Tax Consultant, Brace W. Hull & Associates, Inc. as Appraiser, and The Meyers Group, Solana Beach, California, as Market Absorption Consultant. For information concerning the respects in which certain of the above-mentioned professionals, advisors, counsel and agents may have a financial or other interest in the offering of the Bonds, see "FiNANCIAL INTERESTS" herein. Continuing Disclosure Each of the District and the Developer has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2~12(b)(5) adopted by the Securities and Exchange Commission certain financial information and operating data. The District has further agreed to provide notice of certain material events. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12Co)(5). See "CONTINUING DISCLOSURE" herein, Appendix F and Appendix G hereto for a description of the specific nature of the reports to be filed by the District and the Developer and notices of material events to be provided by the District. Bond Owners' Risks Certain events could affect the timely repayment of the principal of and interest on the Bonds when due. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The Bonds are not rated by any nationally recognized rating agency. The purchase of the Bonds involves significant risks, and the Bonds may not be appropriate investments for some investors. See "SPECIAL RISK FACTORS" herein. Forward Looking Statements 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 mended, 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" or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption "THE COMMUNITY FACILITIES DISTRICT" and "THE DEVELOPMENT AND PROPERTY OWNERSHIP." THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED 1N SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING 5 DOCSOCk852423v7X22245.0134 STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. Other Information This Official Statement speaks only as of its date, and the information contained herein is subject to change. Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the constitution and laws of the State as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. Copies of the Indenture and other documents and information referred to herein are available for inspection and (upon request and payment to the City of a charge for copying, mailing and handling) for delivery from the City at 276 Fourth Avenue, Chula Vista, CA 91910, Attention: Director of Finance. ESTIMATED SOURCES AND USES OF FUNDS' The fo, llowing table sets forth the expected uses of Bond proceeds: Sources of Funds Principal Amount of Bonds $ TOTAL SOURCES $ Uses of Funds Interest Account(~) $ Acquisition and Construction Fund Reserve Fund Cost of Issuance Fund Underwriter's Discount TOTAL USES $ (~) Represents net funded capitalized interest on the Bonds through September 1, 2002. · Preliminary, subject to change. 6 DOCSOC\852423v7~22245.0134 THE BONDS Authority for Issuance The Bonds in the aggregate principal amount of $ ' arc authorized to bc issued by the District under and subject to thc terms of the Indenture, thc Act and other applicable laws of the State of California. Purpose of the Bonds The Bonds are being issued to provide funds to: (i) finance thc costs of constructing and acquiring certain public facilities related to thc proposed development within Improvement Area A; (ii) pay costs related to the issuan, ce of the Bonds; (iii) fund the Reserve Fund for the Bonds in the initial amount of $ ; and (iv)net fund capitalized interest on the Bonds through September 1, 2002. See "ESTIMATED SOURCES AND USES OF FUNDS." Description of the Bonds The Bonds will be issued as fully registered bonds without coupons in denominations of $5,000 and any integral multiple thereof and shall be dated the date of delivery thereof. The Bonds will be issued in book-entry only form and The Depository Trust Company, New York, New York ("DTC") will act as securities depository for the Bonds. So long as the Bonds are held in book-entry only form, principal of, premium, if any, and interest on the Bonds will be paid directly to DTC for distribution to the beneficial owners of the Bonds in accordance with the procedures adopted by DTC. See "THE BONDS -- Book-Entry-Only System" herein. The Bonds will mature on September 1, in, the principal amounts and years, and bearing rates of interest, as shown on the inside cover of this Official Statement. Interest on the Bonds will be payable semiannually on March 1 and September 1 of each year, commencing March 1, 2003 (each, an "Interest Payment Date") and will be computed on the basis of a 360-day year comprised of twelve 30-day months. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication, thereof, unless (i) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the date of the Bonds; provided, however, that if at the time of authentication of a Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment. Interest on any Bond shall be paid to the person whose name shall appear in the books of registration as the owner of such Bond as of the close of business on the Record Date immediately preceding such Interest Payment Date. Such interest shall be paid by check of the Fiscal Agent mailed to such Bondowner at his or her address as it appears on the books of registration or, upon the request in writing prior to the Record Date of a Bondowner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account in the United States designated by such Owner. 7 DOCSOC\852423v7L22245.0134 Redemption of Bonds' Optional Redemption. The Bonds maturing on and a~er September1, 2011 may be redeemed at the option of the Dislyict prior to maturity as a who].e, or in part on any Interest Payment Date on and after September 1, 2010, from such malurities as are selected by the District, and by lot within a maturity, from any source of funds, at thc following redemption prices (expressed as percentages of thc principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Price September 1, 2010 and March 1,2011 102% September 1,2011 and March 1, 2012 101 September 1, 2012 and thereafter 100 £xtraordinary Mandatory Redemption from Special Tax ~repayment. The Bonds are subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part on a pro va~a basis among maturities from thc proceeds of the prepayment of Special Taxes pursuant to the Rate and Method. Such extraordinary mandatory redemption of the Bonds shall be 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 ofredernption: Redemption Date Redemption Price -~ March 1, ± 200~3 through March 1, 2010 103% September 1, 2010 and March 1,2011 102 ,:~September 1,2011 and March 1, 2012 101 September 1, 2012 and thereafter 100 Sec "SOURCES OF PAYMENT FOR THE BONDS -- Special Taxes --Prepayment of Special Taxes" and Section I of Appendix A for a description of how a property owner may prepay, or will bc required to prepay, Special Taxes. Mandatory Sinking Fund Redemption. Thc Bonds maturing on September 1, 20__ are subject to mandatory sinking fund redemption, in part, by lot, on September I in each year conunencing September 1, 20__, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown on the following redemption schedule. Redemption Date Principal (September 1) Amount The Bonds maturing on September 1, 2032 are subject to mandatory sinking fund redemption, in part, by lot, on September 1 in each year commencing September 1, 20__, at a . ' Preliminary, subject to change. 8 DOCSOC\852423v7~22245.0134 redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown on the following redemption schedule. Redemption Date Principal (September 1) Amount Purchase in Lieu of Redemption. tn lieu of such an optional, extraordinary mandatory or mandatory si~king fund redemption, the District may elect to purchase such Bonds at public or private sale at such prices as the District may in its discreti ,on determine; provided, that, unless otherwise authorized by law, the purchase price (including brokerage and other charges) thereof shall not exceed the principal amount thereof plus accrued interest to the purchase date. Notice and Selection of Bonds for Redemption In the event the District shall elect to redeem Bonds as provided in the Indenture, the District shall give written notice to the Fiscal Agent of its election to so redeem, the redemption date, the principal amount of the Bonds to be redeemed, the maturities fi.om which such Bonds are to be redeemed and the principal amount of the Bonds to be redeemed fi.om each such maturity, the Bonds or portions thereof to be selected for redemption. The notice to the Fiscal Agent shall be given not less than 60 days prior to the redemption date or such shorter period as shall be acceptable to the Fiscal Agent. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the District shall treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000. Notice of Redemption Notice by Mail to Registered-Owners. The Fiscal Agent shall mail, at least 30 days but not more than 45 days prior to the date of redemption, notice of intended redemption, by first-class mail, postage prepaid, to the original purchasers of the Bonds and the respective registered Owners of the Bonds at the addresses appearing on the Bond registry books. The notice of redemption shall state: 9 DOCSOC\852423v7L22245.0134 (a) the redemption date; (b) the redemption price; (c) the bond registration numbers, dates of maturity and CUSIP numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part, the respective principal portions to be redeemed; provided, however, that whenever any call includes all Bonds of a maturity, the numbers of the Bonds of such maturity need not be stated; (d) that such Bonds must be surrendered at the Principal Corporate Trust Office of the Fiscal Agent; (e)that further interest on such Bonds will not accrue from and after the designated redemption date; (f) the date of the issue of the Bonds as originally issued; (g) the rate of interest borne by each Bond being redeemed; and (h)that any other descriptive information needed to identify accurately the Bonds being redeemed as the District shall direct. Further Notice. Further notice of redemption shall be sent at least two days before the notice of redemption is mailed to the Bondholders, as described above, by registered or certified mail or overnight delivery service to the registered securities depositories and to the national information services listed in the Indenture or, in accordance with the then-current guidelines of the Securities and Exchange Commission, such other securities depositories and. services providing information on called bonds, or such other securities depositories and services, as the District may determine in its sole discretion. Failure to Receive Notice. So long as notice by first class mail has been provided as set forth above, the actual receipt by the Owner of any Bond of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for redemption of such Bonds or the cessation of interest on the date fixed for redemption. Certificate of Giving Notice. The notice or notices described above shall be given by the Fiscal Agent on behalf of the District. A certificate by the Fiscal Agent that notice of call and redempnon has been gnven to the registered Owners of the Bonds as herein provided shall be conclusive 'against all parties, and no Owner whose Bond is called for redemption may object thereto, or object to cessation of interest on the redemption date, by any claim or showing that he failed to receive actual notice of call and redemption. Notice from DTC to Beneficial Owners. So lohg as the Bonds are held in book-entry-form, notice of redemption will be sent by the Fiscal Agent only to DTC or its nominee. Conveyance of redemption notice by DTC to Beneficial Owners is determined by DTC and its participants and is not the responsibility of the District. See Appendix I -- "DTC AND THE BOOK ENTRY SYSTEM." Effect of Redemption When notice of redemption has been given, and when the amount necessary for the redemption of the Bonds called for redemption is set aside for that purpose in the Redemption Fund, the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and upon presentation and surrender of said Bonds at the place specified in the notice of redemption, with the form of assignment endorsed thereon executed in blank, said Bonds shall be redeemed and paid at the redemption price out of the Redemption Fund and no interest will accrue on such Bonds or portions of Bonds called for redemption from and after the redemption date specified in said notice, and the Owners of such Bonds so called for redemption after such redemption date shall look for the payment of principal and premium, if any, of such Bonds or portions of Bonds only to said Redemption Fund. All Bonds redeemed shall be canceled forthwith by the Fiscal Agent and shall not be reissued. Upon surrender of Bonds redeemed in part, a new Bond or Bonds of the same maturity shall be registered, authenticated and delivered to the registered Owner at the expense of the District, 10 DOCSOC\852423v7X22245.0134 in the aggregate principal amount of the unredeemed portion. All unpaid interest payable at or prior to the date fixed for redemption shall continue to be payable to the respective registered owners of such Bonds or their order, but without interest thereon. Transfer and Exchange of Bonds There shall be kept by the Fiscal Agent, sufficient books for the registration and transfer of the Bonds 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 register, Bonds. The ownership of the Bonds shall be established by the Bond registration books held by the Fiscal Agent. Whenever any Bond or Bonds shall be surrendered for registration of transfer or exchange, the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of the same maturity, for a like aggregate principal amount of authorized denominations; provided that the Fiscal Agent shall not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preceding the date of any selection of the Bonds ,to be redeemed, or (ii) any Bonds chosen for redemption. Bonds may be exchanged at the Principal Corporate Trust Office, for a like aggregate principal amount of Bonds of authorized denominations, interest rate and maturity, subject to the terms and conditions of the Indenture, including the payment of ce~'m charges, if any, upon surrender and cancellation of a Bond. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same maturity and for the same aggregate principal amount will be issued to the transferee in exchange therefor. The transfer of any Bond may be registered only upon such books of registration upon surrender theKqof to the Fiscal Agent, together with an assignment duly executed by the Owner or his attorney or legal representative, in satisfactory form. Upon any such registration of transfer, a new Bond or Bonds shall be authenticated and delivered in exchange for such Bond, in the name of the transferee, of any denomination or denominations authorized by the Indenture, and in an aggregate principal amount equal to the principal amount of such Bond or Bonds so surrendered. In all cases in which Bonds shall be exchanged or transferred, the ~iscal Agent shall authenticate the Bonds in accordance with the provisions of the Indenture. All Bonds surrendered in such exchange or transfer shall forthwith be canceled. The Fiscal Agent may make a charge for every such exchange or registration of transfer of Bonds sufficient to reimburse it for any tax or other governmental charge reqtfired to be paid with respect to such exchange or registration or transfer. ll DOCSOC~852423v7~22245.0134 Schedule for the Bonds' Period Ending Principal Interest Total Debt Service (September 1) on Bonds on Bonds on Bonds -~ 200~3 $ $ ~ $ a 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 from proceeds o£ the Bonds deposited in the Interest Account. SOURCES OF PAYMENT FOR THE BONDS Obligations are special, limited obligations of the District payable only from amounts pledged and from no other sources. Taxes are the primary security for the repayment of the Bonds. Special Taxes do amounts received by the District with respect to property within Improvement the Indenture, the District has pledged to repay the Bonds from the Special Tax remaining after the payment of the annual Administrative Expense Requirement of amounts held in the funds and accounts under the Indenture, other than amounts Fund and the Administrative Expense Fund. Special Tax Revenues are defined in include the proceeds of the Special Taxes received by the District, including any payments and prepayments thereof, interest and penalties thereon, the proceeds of thc subject to change. 12 DOCSOC\852423v7~22245.0134 redemption of delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien of delinquent Special Taxes in the amount of said lien, and interest and penalties thereon. In the event that the Special Tax Revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal Agent, including amounts held in the Reserve Fund, for the exclusive benefit of the Owners of the Bonds. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF SAN DIEGO, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDMSION THEREOF IS PLEDGED TO TIlE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE ClTY BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN. Special Taxes Authorization and Pledge. In accordance with the provisions of the Act, the City Council established the District on December4, 2001 for the purpose of financing the acquisition, construction and installation of various public improvements to serve the District. At a special election held on December 12, 2001, the owners of the property within the District authorized the District to incur indebtedness in an amount not to exceed $21,000,000, and approved the Rate and Method which ± authorized the Special Tax to be levied to repay District indebtedness, including the Bonds. Of the $21,000,000 of Bonds authorized to be issued by the District, $15,000,000 may be Bonds seeur~ by Special Taxes levied on property within Improvement Area A. The District has covenanted in the Indenture that by July) I of each year (or such later date as may be authorized by the Act) it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in the amount required for the payment of principal of and interest on any Outstanding Bonds becoming due and payable during the ensuing calendar year, including any necessary replenishment or expenditure of the Reserve Fund and the amount estimated to be sufficient to pay the Administrative Expenses during such calendar year. The Special Taxes levied in any fiscal year may not exceed the maximum rates authorized pursuant to the Rate and Method. See Appendix A -- "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES" hereto. There is no assurance that the Special Tax proceeds will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See "SPECIAL RISK FACTORS -- Insufficiency of Special Taxes" herein. Rate and Method. Under the Rate and Method, all Taxable Property within Improvement Area A shall be classified as Developed Property or Undeveloped Property and shall be subject to the levy of armual Special Taxes determined pursuant to the Rate and Method. Furthermore, Developed Property shall be classified as Residential Property or Commercial Property. The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Commercial Property that is classified as Developed Property shall be the greater of(l) the Assigned Special Tax described in the table below or (2) the amount derived by application of the Backup Special Tax. The Assigned Special Tax for each Assessor's Parcel of Developed Property is shown below. 13 DOCSOC\852423v7L22245.0134 Land Use Class Description Assigned Special Tax 1 Residential Proper~y $475.00 per unit plus $0.34 per square foot of Residential Floor Area 2 Commercial Property $5,091 per Acre of Commercial Property When a Final Map is recorded within Improvement Area A, the Backup Special Tax for Assessor's Parcels of Developed Properly classified as Residential Property or Commereial Property shall be determined as follows: For each Assessor's Parcel of Developed Property classified as Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property within the Final Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: $10,376 x A 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 Map. L = Lots in the Final Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Developed Prol~erty classified as Commercial Property or for each Assessor's Parcel of Undeveloped Property to be classified as Commercial Property within the Final Map area, the Backup Special Tax shall be determined by multiplying $10,376 by the total Acreage of the Commemial Property and Undeveloped Property to be classified as Commercial Property within the Final Map area. Notwithstanding the foregoing, if Assessor's Parcels of Residential Property, Commercial Property or Undeveloped Property for whic2t the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Map, then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the mount of Backup Special Tax that would have been generated if such change did not take place. The Maximum Annual Special Tax for each Assessor's Parcel classified as Undeveloped Property shall be the amount shown below. 14 DOCSOC\852423v7~22245·0134 Land Use Class Description Maximum Annual Special Tax 3 Undeveloped Property $10,376 per Acre Commencing with Fiscal Year 2002-03 and for each following Fiscal Year, the City 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 on each Assessor's Parcel of 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 Proportiofiately on each Assessor's Parcel of Undeveloped Property, excluding any Assessor's Parcels exempted pursuant to the Rate and Method, at 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 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 Assessor's Parcel. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps ~-~47e been completed, then the Special Tax shall be levied Proportionately on each Assessor's'Parcel classified as Undeveloped Property at up to 100% of the Maximum Armnal 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 Assessor's Parcel of the District, Improvement Area A. Prepayment of Special Taxes. There are certain events that will result in a required prepayment of Special Taxes. In addition, under the Rate and Method, the owner of a parcel for which a building permit has been issued may prepay the Special Tax obligation for a parcel in whole or in part. Any required or voluntary prepayment of Special Taxes will result in an extraordinary redemption of Bonds. See "THE BONDS -- Redemption -- Extraordinary Mandatory Redemption from Special Tax Prepayment." A required prepayment of Special Taxes will also occur on a parcel to the extent necessary to comply with the City's policy that the total annual taxes and assessments on a parcel, exclusive of special taxes for services, will not exceed two percent (2%) of the sales price of a parcel to a residential homeowner. The Developer has agreed with the City to require all merchant builders to comply with this policy. Based on estimated retail home sales prices, the Developer does not anticipate that the total special taxes, exclusive of special taxes for services, will exceed 2% of the sales price. Under the policy, prior to the closing of an escrow for the sale of a residential unit, the merchant builder is to deposit into escrow the amount needed to partially prepay the Special Taxes so 15 DOCSOC~852423v7~22245.0134 that following such prepayment the parcel will be in compliance with the policy. Upon the closing of the escrow, the required pre-payment will be paid to the Director of Finance of the City and will be sent to the Fiscal Agent to redeem Bonds. Collection and Application of Special Taxes. The Special Taxes am levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes. The District has made certain covenants in the Indenture for the purpose of ensuring that the current maximum Special Tax rotes and method of collection of the Special Taxes are not altered in a manner that would impair the District's ability to collect sufficient Special Taxes to pay debt service on the Bonds and Administrative Expenses when due. First, the District has covenanted that, to the extent it is legally permitted to do so, it will not reduce the maximum Special Tax rotes and will oppose the reduction of maximum Special Tax rotes by initiative where such reduction would reduce the maximum Special Taxes payable from pamels on which a completed structure is located to less than 110% of Maximum Annual Debt Service on Outstanding Bonds and Parity Bonds. See "SPECIAL RISK FACTORS -- Proposition 218." Second, the District has covenanted not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the District having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds and any Parity Bonds remaining Outstanding following such tender. See "SPECIAL RISK FACTORS -- Non- Cash Payment of Special Taxes." Although the Special Taxes constitute liens on taxed parcels within Improvement Area A, they do not constitute a personal indebtedness of the owners of property within Improvement Area A. Moreover, o~er liens for taxes and assessments already exist on the property located within Improvement Area A and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners therein. See "SPECIAL RISK FACTORS -- Parity Taxes, Special Assessments and Land Development Costs" herein. 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 financially able to do so, all as more fully described in the section of this Official Statement entitled "SPECIAL RISK FACTORS." Under the terms of the Indenture, not later than the tenth Business Day after receipt, all Special Tax Revenues received by the District are to be deposited in the Special Tax Fund. Special Tax Revenues are to be applied by the Fiscal Agent under the Indenture in the following order of : priority: (1) to deposit annually up to $75,000 to the Administrative Expense Fund, (2) to pay the principal of and interest on the Bonds when due, (3) to replenish the Reserve Fund to the Reserve Requirement, (4) to make any required transfers to the Rebate Fund and (5) to pay Adminislrative Expenses of the District above the $75,000 referenced in (1) above. See AppendixE -- "SUMMARY OF INDENTURE." Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of land within Improvement Area A resulting from 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 Bonds under the Indenture. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an mount which is less than the Special Tax levied, the City Council, as the legislative body of the District, 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 16 DOCSOC\g52423v7~22245.0134 -/,.5- sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. However, the District has covenanted for the benefit &the owners of the Bonds that it 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 the October 1 following the close of the Fiscal Year in which such Special Taxes were due, and (ii) against all properties with delinquent Special Taxes in the aggregate of $2,500 or more by the October 1 following the close of any fiscal year if the amount in the Reserve Fund is less than the Reserve Requirement. See Appendix E -- "SUMMARY OF INDENTURE -- Other Covenants of the District" herein. If foreclosure is necessary and other funds (including amounts in the Reserve Fund) have been exhausted, debt service payments on the 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 bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See "SPECIAL RISK FACTORS -- Bankruptcy and Foreclosure" herein. Moreover, no assurances can be given that the real 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 "SPECIAL RISK FACTORS -- Land Values" herein. Although the Act authorizes the District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the City any obligation to purchase 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 which case the City would have no obligation to pay such credit bid for 24 months. The 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. Reserve Fund In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the Bonds, to deposit in the Reserve Fund and thereafter to maintain the Reserve Fund at an amount equal to the Reserve Requirement. The Indenture provides that the amount in the Reserve Fund shall, as of any date of calculation, equal the lesser of(i) 10% of the sale proceeds of the Bonds and any Parity Bonds, (ii) the maximum annual debt service of the Bonds and any Parity Bonds, or (iii) one hundred twenty-five percent (125%) &the average annual debt service on the proceeds of the Bonds and any Parity Bonds (the "Reserve Requirement"). Subject to the limits on the maximum annual Special Tax which may be levied within the District, as described in Appendix A, the District has covenanted to levy Special Taxes In an amount that is anticipated to be sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Fund at the Reserve Requirement. Amounts in the Reserve Fund are to be applied to (i)pay debt service on the Bonds and any Parity Bonds, to the extent other monies are not available therefore, (ii) redeem the Bonds and any Parity Bonds in whole or in part, and (iii) pay the principal and interest due in the final year of maturity of the Bonds and any Parity Bonds. In the event of a prepayment of Special Taxes, under certain circumstances, a portion of the Reserve Fund will be added to the amount being prepaid. As described in the Rate and Method, the Reserve Fund Credit will be equal to the lesser of: (a) the expected reduction in the Reserve Requirement, if any, as a result of prepayment, or Co) the amount derived by subtracting the new Reserve Requirement in effect after the redemption from the balance in the Reserve Fund, but in no event shall such amount be less than zero. See Appendix E -- "SUMMARY OF INDENTURE -- Reserve Fund" herein. 17 DOCSOC~52423v7~22245.0134 Issuance of Parity Bonds The District covenanted in the Indenture not to issue any other obligations payable, principal or interest, from the Special Taxes levied on land within Imnrovement Area A which have, or purport to have, any lien upon the Special Taxes superior to or on a parity with the lien of the Bonds herein authorized. Nothing in the Indenture prevents the District from issuing and selling, pursuant to law, refunding bonds or other refunding obligations payable from and having a first lien upon the Special Taxes on a parity with the Outstanding Bonds so long as the issuance of suer refunding bonds or other refunding obligations results in a reduction in the Annual Debt Service on the Bonds and such refunding bonds or other refunding obligations taken together. THE COMMUNITY FACILITIES DISTRICT General Description of the District and Improvement Area A The District consists of a 73~8 acres and is located in the easterly portion of the City, approximately seven miles southeast of downtown San Diego. The District is divided into two Improvement Areas: Improvement Area A and Improvement Area B. The Bonds will be secured by Special Taxes levied on property within Improvement Area A only. Improvement Area A consists of approximately a 475 gross acres, and is expected to bc developed into 603 detached residehtial units, 458 multifamily residential units, a school site, -~ a community facilities -~ sit~e and two park sites. By December 2002, a 9.9 acre commercial oarcel (the "Commercial Parcel"} located within the physical boundaries of Improvement Area A is expected to be removed from Improvement Area A and transferred to Improvement Area B. Such transfer will be accomplished by the filing of a notice of special tax cessation in the land records of the County of San Dieeo. Unon such ~ine. Soecml Taxes will no longer be levied on land comprising the Commercial Parcel. The Developer is currently the owner of five planning areas within Improvement Area A, has sold four planning areas to various merchant builders and has sold one planning area to an affiliate of the Developer. See "THE DEVELOPMENT AND ,PROPERTY OWNERSHIP -- Development Plan." Description of Authorized Facilities The facilities authorized to be acquired or constructed by the District with the proceeds of the Bonds consist of various public improvements to serve property within Improvement Area A described in Table 1 below. In addition to the facilities listed below, the City and the Develooer may atlree to finance additional eliRible facilities. 18 DOCSOC~852423v7~22245.0134 -//7 TABLE 1 ESTIMATED COSTS OF PROJECTS* Projects Mount Miguel Road Easta $ 5,710,906 -~ Proctor Valley Road East -~ 459,153 Calle La Marina a 3,661,229 Pasco Vera Cruz a 717,259 Calle La Quinta a 974,186 Backbone Street Landscaping 1,249,420 H Street "Traffic Enhancement Improvement" 1,000,000 a TOTALS $ 13,772,153 (~) ± Costs shown may not represent total cost of improvement and soft costs. "To the extent costs described above exceed Bond oroceeds, the Develooer exnects to nay the over~e frour nroceeds of lot ~ales * Prelim/nary, subject to change. Sources: Developer and McGill Martin Self, Inc. Status of" Public Imoroveruents Grading is completed in Improvc~rnent Area A and utilities are currently being installed. Installation of backbone landscaping has also began. Curb and gutter work necessary to construct Mount Miguel Road is complete. Sewer, water and storru drain facilities have been installed. Paving of Mount Miguel Road has commenced with corupletion anticipated by -~ Aueus~t 2002. -~ For a description of development activity within individual -~ nlannine areas, see "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Merchant Builders.' Principal Taxpayers Table 2 below sets forth the percentage of the Special Taxes that the property owners in Improvement Area A would pay in fiscal year 2002-(}3 based on a projected Special Tax levy of $1,218,358. TABLE 2 PROJECTED PRINCIPAL TAXPAYERS FOR FISCAL YEAR 2002-03 Fiscal Year % of Area Owner°~ 2002-03 Special Taxt2) Total Merchant Builders Plannino. Area C Continental $ -~ 75,221 6.17°/_o Plannin~ Area D Pardee 127,029 10.4~3 Plannin~ Area E-1 Bui~e 68,95~3 5.6~6 Planning, Area H Shea Horues 141,895 11.6~5 Planning. Area I Triruark (3) 163 549 13.4~2 Subtotal $ 576.647 47.33% 19 DOCSOC~852423v7~22245.0134 Developer Owned(4) Planning Area A Developer $ 41,371 3.40~ Plannin£ Area B Develooe_~_____xr 58.41~0 4.7~9 Planning Area E-2 Developer 81.03~3 6.6~5 Planning Area F Develooe~r 73.11____~2 6.0.__~0 Planning Area G ~ 92.601 7.6{) School Sit~ ® ~ 75.220 6.1~7 Park Soace (6) Develooer 128,787 10.57 Commun~ Developer 34,76~1 2.85 Commercial Site (s) Developer 56A1~6 4.6~3 Subtotal $ 641.71_______~1 52.67°/9 TOTAL ~ 100.00% Ownership information ± nrovided bv Develoner and is current as of July 1, 2002. Estimated Special Tax Levy for Fiscal Year 2002-03 based on Undeveloped Property Special Tax. Trimark is affiliated with the Developer. Consists of acres of oven soace owned bv the Deveiooer intersnersed amonn all the Develoner owned nlanning areas. Such onen snace was not assigned a value in the Anoralsal and is exnected to be transferred to a homeowners association by 2004 and thergnoon become ~T~mnt from the levy of Snecial Taxes. all as described under "- Certain Taxable Acreage Not Valued In The Annralsal.' Consists of a 13.2 acre school site owned by the Develooer. Such site was not assigned a value in the Annraisal and are exoected to be transferred at a future date to Chula Vista Elementary School District gnd;thereuoon become exemnt from the lew of Soecial Taxes. all as described ~nder "- Certain Taxable Acreage Not Valued In Anoraisal.' Consists bY a 19.1 acre oark site and a 3.5 acre hark site. both owned by the Develooer. Such sites were not aSsigfied a value in the Aovraisal and is exnected to be transferred to a homeowners association by 2004 and thereunon become exempt from the lew of Snecial Taxes. all as described un~ier "- Certain Taxable Acreage Not Valued In The Annraisal.' ~ Consists of a 6.1 acre community nurnose site owned by the Develgner. Such site was not assigned a value in the Anoraisal and is exnected to be transferred by 2004 to an exemnt entity and thereupon become exemnt from the lew of Soecial Taxes? all as described under "-- Certain Taxable Acreage Not Valued In Appraisal. Consists of a 9.9 acre commercial site owned by the Develoner. Such site was not assion~d a value in the Annraisal and is exuected to be transferred to Imurovement Area B by December 2004 and thereunon no longer be subiect to the lew of Special Taxes. all as described under "-- Certain Taxable Acreage Not Valued In ADoraisal.' Source: McGill Martin Self, Inc. Estimated Direct and Overlapping Indebtedness Within the Improvement Area A's boundaries are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds which are secured by taxes and assessments on thc parcels within Improvement Area A and others have authorized but unissued bonds which, if issued, will be secured by taxes and assessments levied on parcels within Improvement Area A. The approximate amount of the direct and overlapping debt secured by such taxes and assessments on thc parcels within Improvement Area A for fiscal year 2001-02 is shown in Table 3 below (the "Debt Report"). Thc Debt Report has been derived fi.om data assembled and reported to the District by California Municipal Statistics, Inc. Neither thc District, the City nor the Underwriter has independently verified thc information in the Debt Report and do not guarantee its completeness or ac.curacy. 20 DOCSOC\852423v7~22245.0134 TABLE 3 DIRECT AND OVERLAPPING DEBT SUMMARY IMPROVEMENT AREA A OF CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 2001-02 Local Secured Assessed Valuation: -~ DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt ± 6/14/0~2 San Diego County Water Authority n 0.011% $ a 354 Metropolitan Water District -~ O~O03 10.06~2 Otay Municipal Water District, I.D. No. 27 0,036 3,946 Southwestern Community College Dislrict a ~ 38,400 Sweetwater Union High School District ± 0.115 43,700 Chula Vista City School District ± 0.166 85.747 City of Chula Vista Community Facilities District No. 2001-1, LA. A 100. - TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT a $182209 OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations a 0.010% $52.462 San Diego County Pension Obligations a 0.010 28.290 San Diego County Superintendent of Schools Obligations ± 0.010 21~2 Otay Mtmicipal Water District Certificates of Participation a 0.192 51.19'/ Southwestern Community College Dismict a 0.10~3 3.93~5 Sweetwater Union High School District a 0.1~ 3030~6 Chula Vista City School District ± 0.175 114,54~6 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT a $280.94~8 Less: Otay Mumcipal Water District Certificates of Participation a 51,197 TOTAL NET ~3VERLAPP1NG GENERAL FUND OBLIGATION DEBT ~ $229,751 GROSS COMBINED TOTAL DEBT -~ $463.157 (2) NET COMBINED TOTAL DEBT -~ $411~960 ~ E_xcludes Melio-Roos Act bonds to be sold. Excludes tax and revenue anticipation notes, revenue, mort~,aee revenue and tax allocation bonds and non-bonded capital lease oblieations. Ratios to 2001-02 Assessed Valuation: Direct Debt .............................................................................. - % Total Direct and Overlapping Tax and Assessment Debt ........ ± 0.9.. 1% Gross Combined Total Debt .................................................... - 2.,32 ~/o Net Combined Total Debt ........................................................ - 2.07 Vo STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/01:$0 (1) Excludes Bonds to be sold. (2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non- bonded capital lease obligations. Source: California Municipal Statistics, Inc. Some or all of the parcels within Improvement Area A are within the boundaries of other community facilities districts formed by two school districts. Chula Vista Elementary School District CFD No. 13 and Sweetwater High School District CFD No. 13 (collectively, the "School District CFDs") were formed to finance school facilities needed within the San Miguel Ranch area. Table 3 above does not reflect the future overlapping debt that may be incurred by the School District CFDs. Each of the School District CFDs is authorized to incur debt in the amount of $20,000,000. 21 DOCSOC~852423v7X22245.0134 For a description of the direct and overlapping tax and assessment debt, as well as the overlapping general fund obligation debt of the school districts underlying the School District CFDs, see Table 3 above. The authorized but unissued debt of the existing School District CFDs as of July 1, 2002 is summarized in Table 4 below. In addition, landowners within Improvement Area A may form other community facilities districts. TABLE 4 SUMMARY OF OVERLAPPING COMMUNITY FACILITIES DISTRICTS Final Map Non- Property Developed Residential Undeveloped Special Residential Special Tax Land Special Tax Per Special Tax Per Acre Anthoriz~l District Purpose Tax Per Acre Acre ' Per Sq. FL Debt Chula Visla Elementary CFD No. 13It) Elementary Schools $ N/A $ 0.1948 $ 20,000,000 Sweetwater High School CFD No. 130) High Schools N/A 0.2504111 20,000,000 lli On July 1 of each year. the maximum special tax rates shall be increased prior to development of a pm-eel by the greater of (i) the annual percemage change in the Engineering News Record building cost index for the City of Los A~gelcs determined every May 31 for the prior 12-month period, or (ii) two percent per fiscal year, and at, er development of a parcel at the rate of 2% per These amounts are currently oledeed to lease oaYment with resoect to certain certificates of oarficinafion of the Sweetwater Hieh School District and will also be oledeed to lease oavments with respect to a future series of certificates of Darticinafion anficinated to be issued in Source: McGill Martin Self, Inc. Expected Tax'Burden It is expected that the total tax burden on residential units in Improvement Area A will be slightly less than 2% of the initial sales price of the units. The estimated total effective tax rate for a typical single family detached unit is estimated to be a 1.79405%. Table 5 below sets forth an estimated property tax bill for a single family detached unit of 2,504 square feet in Improvement Area A. 22 DOCSOC\852423v7~22245.0134 TABLE 5 SAMPLE PROPERTY TAX BILL PROJECTED FOR FISCAL YEAR 2002-03 FOR A SINGLE FAMILY DETACHED UNIT Percent of Total ,4ssessed Single Family Valuation Detached Unit House Square Footage -~ 2,504.00 Sales Price $ 330,532.00 Total Assessed Value 323,532.00 Basic Levy 1.00000% $ 3,235.32 MWD 0.00770 24.91 County Water Authority 0.00083 2.69 Chula Vista Elementary G.O. Bond -C0239~6 77.5~1 Sweetwater High School District G.O. Bond .02527 81.76 Southwestern Community College G.O. Bond .01544 49.95 Otay Water ID #27 0.02000 64.71 -~ Total Taxes Based on Assessed Value $ 3,536.8~5 Chula Vista Elementary CFD No. 13 $ 487.75 Sweetwater Lknion High School CFD No. 13 626.96 Sweetwater Union Hie~h School G.O. Credit <81.76> City of Chula Vista CFD No. 2001-1 1,326.31 Mosquito/Rat Control 2.29 MW-D Water Standby Charge 11.50 Otay Water Availability 10.00 CWA Water Availabilit~ 10.00 Total Assessments and Parcel Charges $ ± 2,393.0~5 Total, All Property Taxes $ -~ 5~929.89 Total Effective Tax Rate 1.79405% ~- Source: McGill Martin Self, Inc. Estimated Value-to-Lien Ratios The value of the land within Improvement Area A is significant because in the event of a delinquency in the payment of Special Taxes the District may foreclose only against delinquent parcels in hnprovement Area A. ~- Table 6A below summarizes the existing direct and overlapping debt payable from taxes and assessments levied on property within Improvement Area A and the appraised value-to-lien ratios for property in Improvement Area A. The assessed value of the land within Improvement Area A for fiscal year 2001-02 which is expected to be taxed in fiscal year 2002-03 was a $19,922,430. The estimated assessed value-to-lien ratio of the property within Improvement Area A following the issuance of the Bonds based on the fiscal year 2001-02 23 DOCSOC\852423v7~22245.0134 Assessor's roll is ± 1.4~11'. The appraised value of the land within Improvement Area A as set forth in the Appraisal is $53,585,000. The estimated appraised value-to-lien ratios based upon land values and property ownership in Improvement Area A described in the Appraisal as of March 15, 2001 is -~ 3.8~0~ to 1.' · Preliminary, subject to change. 24 DOCSOC~852423v7~22245.0134 As described under the caption "-- Certain Taxable Acreage Not Valued in Appraisal," gertain Develooer owned orooert~ consisting of open space, a school site~ two park sites, a community purpose site and the Commercial Parcel will be initially subiect to the Special Tax lebv but were not assigned a value in the A~oraisal. It is exoected that such properties will become exemot from the Soecial Tax few in the future. Table 6B below summarizes the aouraised value-to-lien ratios for orooertv in Imorovement Area A that would result if such ~rooertv was currently exemot from the Soecial Tax lew. There can be no guarantee when such orooertv will become exemot or that the ratios described in Table 6B below will result thereuoon. 26 DOCSOC\852423v7~22245.0134 Permitted Land Use Table 7 below describes the currently approved land uses within Improvement Area A. TABLE 7 LAND USE SUMMARY IMPROVEMENT AREA A OF COMMUNITY FACILITIES DISTRICT NO. 2001-1 Dwelling Use ~4cres Units a Residential a 161.9 1,061 a Co___mmercial0) 9.~9 Parks -~ 22.~5 Community Purpose Facilities -~ 6.1 School -~ 13.2 Open Space and Roads ,x 261.___~2 Tota~i 474.8 1.06__,_!1 To be removed from lmorovement Area A as described under "THE COMMUNITY FACILITIES DIS~TRICT." Source: City and Developer Certain Taxa~ble Acreage Not Valued In Aonraisal Certain propert~ within Imurovement Area A which will initially be subiect to the lew of Special Taxes was not assigned a value in the Appraisal. Such nronertv consists of open space, a school site, two park sites, a communit~ purpose site and the Commercial Parcel, all owned by the Developer. Over time, all such propertw is expected to be transferred bv the Developer and, thereupon, became exempt from the Special Tax levv nursuant to the Rate and Method. If, in any fiscal year, all or part of the Special Taxes levied on such properties were not paid to the District, moneys in the Reserve Fund would be drawdown to make up such shortfall and pay debt service on the Bonds. If such event were to occur, the lew of Special Taxes on other property within Improvement Area A would be adjusted in the subseauent fiscal year to replenish the Reserve Fund to the Reserve Reauirement and to uav debt service on the Bonds. Developer Owned Open Spac~ The Developer owns approximately acres of non- contiguous open space within Improvement Area A interspersed among all the planning areas owned by the Developer (the "Taxable Open Space"). The Taxable Onen Snace is currently subiect to the lew of Special Taxes pursuant to the Rate and Method but was not assiened a value in the Appraisal. The Developer expects to transfer the Taxable Open Space to a homeowners association bv 2004. Upon such transfer, the Taxable Open Space will become exempt from the Special Tax lew. SchoolSite. The Developer~owns a 13.2 acre site within Imurovement Area A which the Developer intends to sell as a school site (the "Taxable School Site"). The Taxable School Site is currently subject to the lew of Special Taxes but was not assigned a value in the AnDraisal. The Developer and the Chula Vista Elementary School District ("CVESD") have entered into 31 DOCSOC~852423v7~22245.0134 _a~reement whereby CVESD has the option to purchase the Taxable School Site for a purchase price of $200,000 per acre. Such ourchase orice is subject to increase on June 1 of each year, commencine June 1.2002. by the annual oercenta~,e chanoe in the cost index for the City of Los 3ngeles as set forth in the En£ineerine News Record, or 2°/0, whichever is greater. CVESD's purchase ootion exoires on Aoril 1.2015 and there is no euarantee that CVESD will exercise its ourchase ootion before that time. If CVESD ourchases the all or part of the Taxable School Site. such orooertv will become exemot from the Special Tax levy~ Park Sites. The Develooer owns a 3.5 acre oark site and a 19.1 acre park site within lmorovement Area A (the "Taxable Park Site']. The Taxable Park Site is currently subiect to the lew of Soecial Taxes oursuant to the Rate and Method but was not assP, ned a value in the Aooraisal. The Develoner exoects to transfer the Taxable Ooen Space go a homeowners association by 2004. Uoon such transfer, the Taxable Ooen Soace will become exempt from the S~oecial Tax lewd. Comrnunitv Puroose Site~ The Develooer owns a 6.1 acre community purpose site within Imorovement Area A (the "Taxable Community Site"). The Taxable Community Site is currently subiect to the lew of Soecial Taxes pursuant to the Rate and Method but was not assiened a value in the Aooraisai. The Developer expects to transfer the Taxable Community Site to an exempt entity bv . Uoon such transfer, the Taxable Community Site will become exempt from the Special Tax iew. Commercial Parcel. The Develooer owns the Commercial Parcel. The Commercial Parcel is currently subject to the levy of Special Taxes pursuant to the Rate and Method but was not assigned a value in the Aooraisal. The Develooer exoects remove the Commercial Parcel from,, Imorovement Area A by December 2002, all as described under "THE~ COMMUNITY FACILITIES DISTRICT -- General Description of the District and Improvement Area A. Upon such removal, the Commercial' Parcel will no longer be subiect to the Special Tax lew. 32 DOCSOC~52423v7~22245.0134 THE DEVELOPMENT AND PROPERTY OWNERSHIP Except for the information under the captions "Appraisal" and "Market Absorption Study," the Developer has provided the information in this section. The information herein regarding ownership of property in Improvement Area A has been included because it is considered relevant to an informed evaluation of the Bonds. The inclusion in this Official Statement of information related to existing owners of property should not be construed to suggest that the Bonds, or the Special Taxes that will be used to pay the Bonds, are recourse obligations of the property owners. A property owner may sell or otherwise dispose of land within Improvement Area A or a development or any interest therein at any time. No assurance can be given that the proposed development within Improvement Area .4 will occur as described below. As the proposed land development progresses and parcels are sold, it is expected that the ownership of the land within Improvement ./lrefa .4 will become more diversified. Although planning for the development of Improvement Area A is at an advanced stage, actual construction of improvements are as described below under the caption "Infrastructure Requirements and Construction Status. ' No assurance can be given that development of the land within Improvement Area A will occur, or that it will occur in a timely manner or in the configuration or intensity described herein, or that any landowner described herein or the Developer will obtain or retain ownership of any of the land within Improvement Area A. The Bonds and the Special Taxes are not personal obligations of any landowners or the Developer and, in the event that a landowner defaults in the payment of the Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any landowner..ds a result, other than as provided here(~, no financial statements or information is, or will be, provided about the Developer or other landowners. The Bonds are secured solely by the SpeciM Taxes and other amounts pledged under the Indenture. See "SECURITY FOR THE BONDS" and "SPECIAL RISK FACTORS." General Description of Improvement Area A Improvement Area A comprises approximately 475 gross acres in thc City of Chula Vista. Improvement Area A is located east of Interstate 805, along the north side of H Street at Mount Miguel Road. Improvem6nt Area A was recently annexed into the City. Current residential developments in the area include Otay Ranch, Lomas Verdes, Rancho Del Rey, Sunbow, Eastlake, Rolling Hills Ranch and San Miguel Ranch. Improvement Area A is bounded to the north by generally undeveloped lands and the area known as Bonita in unincorporated San Diego County, beyond which is Sweetwater Park and the Sweetwater Reservoir. East of Improvement Area A is the master-planned community of Rolling Hills -Ranch in the City, beyond which are undeveloped unincorporated County lands. South of Improvement Area A is the master planned communities of Eastlake and Rancho Del Ray, beyond which is Otay Ranch and Lomas Verdes. To the west is existing housing on unincorporated County land also in Bonita. The Developer The Developer is NNP-Trimark San Miguel Ranch, LLC, a Delaware limited liability company, which currently is the owner of five planning areas within Improvement Area A. An additional planning area is owned by Trimark Pacific Homes, an affiliate of the Developer. The primary business of the Developer is. to own, develop and sell the a acreaee that it acquired in the D/strict. The Developer purchased the property on July 2000. The Developer was formed by Trimark Ventures, its affiliate Trimark Pacific Homes, L.P., and American Newland, LLC, for the sole purpose of acqu'n'ing the property in the District and participating in its development. Newland 33 DOCSOC~852423v7X2.2245.0134 National Panners, L.P., an affiliate of American Newland, LLC, is the managing member of the Developer. Pursuant to a management agreement, Trimark Pacific Homes, L.P. will manage the development of property in Improvement Area A on behalf of the Developer. Trimark Venture and Trimark Pacific Homes, together with certain affiliates, are collectively referred to herein as "Trimark.' Trimark focuses on two business lines: production home building and land development. The company was started in 1992 as Trimark Development Company, operating as a full service homebuilding subsidiary of Weyerhaeuser Company. Between 1993 and 1996 the company completed over 900 single-family homes. The projects were located in Southern and Northern California and ranged in size from less than 20 units to over 190 units. As a separate product line in coastal Southern California, Trimark also developed high end semi-custom housing ranging from $800,000 to $1,500,000. In addition to its single-family activity, Trimark acquired, refurbished and sold over 200 condominium units. In 1996 the company was the 9th largest Los Angeles County based builder as reported by Los Angeles Business Journal as well as being in the top 25 residential builders in Southern California as ranked by the Los Angeles Times Annual Survey. Trimark Pacific Homes started operations as an independent entity in June of 1997 when Trimark principals formed TPH LLC ("TPH") and its building subsidiary Trimark Pacific Homes. TPH is co-owned by Trimark Ventures and Cargill Financial Services, a subsidiary of Cargill, the largest privately owned company in the United States, with annual revenues over $45.0 -~ billion. Since September of 1997, Trimark Pacific has closed on approximately 4,200 residential lots, including three master-planned communities. The company is currently active in -~ nine housing projects and plans to open several new communities in the year 2002. As reported in April -~ 200~2 issue of Pro£~ssional Builder Magazine, Trimark's home building operation is in the top 300 nationally. The company's projected sales volume for fiscal 2002 is in excess of-~ $108.500.00~0. Over the next three to four years, TPH plans to achieve a production volume approaching 1,000 units per year. The company currently has offices in Los Angeles, Orange County, San Diego County and Kona, Hawaii. In addition to San Miguel Ranch, Trimark is involved with a number of other communities, including Corona Farms. This project, to be located in Riverside County, California, will include 1240 +/- residential units, 10 acres of commercial/retail space, an elementary school and community park The property is located within the boundaries of the Eastvale Specific Plan and is within 5-10 minutes of three major freeways.-~ Indian Hills. This property is located in the eastern portion of Ventura County in the City of Simi. The property is within 5-6 miles of the employment centers of San Femando Valley and within 25 miles of downtown Los Angeles and Century City.-^ The subject lots are a minimum of 6,000 square feet but average in excess of 9,200 square feet with pads exceeding 8,000 feet.-~ The project is being marketed via two product lines consisting of six floor plans ranging from 2,950 to 4,200 square feet. The product will be designed to appeal to families interested in move-up product. The homes are currently priced between $370,000 to $460,000. Cantilena. This property is approximately 10.4 acres located in the West Hills area of the northwestern Los Angeles City limits. The majority of the subject property has recently been farmed with a produce stand operating along the Sherman Way frontage. The development is ~ 34 DOCSOC\852423~ 7L22245.0134 consist of single-family homes on minimum lot sizes of 5,000 square feet. The project will be marketed utilizing three single-family home products ranging in size from 2,746 square feet to 3,241 square feet. The project will be designed to appeal to families interested in a move-up producta an~d is currently priced between $385,000 to $420,000. Pasco Del Sol. This property is ± in the City of Temecula. -~ Trimark's product within the ~ community-^ ranges between 2,400 to 2,800 square feet, with prices in the low $200,000's. Otay Ranch. The lots in this projects are located in Village One of the Otay Ranch Master Plan in the City of Chula Vista. The Village is comprised of 1,314 units and when built out will include schools, shopping, parks and extensive open space areas. The project is located less than 10 miles from Improvement Area A, downtown San Diego, the Port of San Diego and the international border with Mexico. La Jolla and The University of California, San Diego and the science community of Torrey Pines are approximately 20 miles to the no .r~. a The project is consistent with the competitive market in the Chula Vista area. Along with one newly developed floor plan, Trimark will utilize two of the plans from the currently developed Hunter's Ridge product. The product size ranges between 2,000 to 2,600 square feet, with projected prices in the mid $200,000's. Development Plan The approved tentative tract map applicable to Improvement Area A allows for the development of 1,061 dwelling units. The Developer expects that some of the sites within Improvement Area A will undergo site plan rev/ew by the City a. Upon buildout, development within Improvement Area A is anticipated to include 603 single-family units~ and 438 multi-family units -~, along ..,with a 6.1 acres of community purpose property, a 22.5 acres of parks and a-~ 13.2 acre elementary s~ool site. -- As of March 15, 2002, the Developer had sold four planning areas to various merchant builders. Planning Area C, which is expected to include 110 condo/townhome units at buildout, was sold to Continental Residential Inc. for a purchase prige of $4,650,000. Planning Area D, which is expected to include 107 detached homes at buildout, was sold to Pardee Construction Company for a purchase price of $6,900,000. Planning Area H, which is expected to include 131 detached homes at buildout, was sold to Shea Homes Limited Partnership for a purchase price of $11,946,021. Planning Area E-l, which is expected to include 68 detached homes at buildout, was sold to Buie Communities LLC ("Buie") for a purchase price of $7,140,000. Planning Area I, which is expected to include 105 detached homes at buildout, was sold to Trimark Pacific Homes, an entity affiliated with the Developer, as an internal transaction.-~ Lots were delivered to the memhant builders as rough graded individual lots and certified by the civil and soils engineer with the utilities stubbed into the tract boundary. The individual merchant builders are responsible for completing intract improvements such as sewer, water, dry utilities and street improvements. Tracts that require a site plan by the City were delivered as a rough graded super-pad and certified by a civil and soils engineer. The Developer is responsible for the completion of all other improvements adjacent to the tracts including master backbone sewer and water, storm drains, dry utilities, streets, master landscaping and trails, parks and any offsite improvements. The Developer is continuing, to market other lots within Improvement Area A, but does not expect to release any for sale until -~ 2003. The table below suramarizes proposed development within Improvement Area A. 35 DOCSOC~852423vT~22245.0134 TABLE 8 SUMMARY OF PROPOSED MERCHANT BUILDERS Product Proposed Number Proposed Square Projected planning Area Type Lot Size Merchant Builder of Lots Footage Range(~) Home Prices(2) A Aparlraenls To Be Determined 129 850 - 1,250 N/A B Town homes To Be Determined 219 1,150 - 1,450 $195,000 - $211,000 C Attached Continental 110 1,300 - 1,800 $214,000 - $243,000 D 4,000 sq.ft. Pardee 107 t,700- 2,100 $257,000 - $279,000 E-I 4,500 sq.ft. Buie 68 2,000 - 2,500 $303,000 - $332,000 E-2 4,500 sq.ft. To Be Determined 75 2,000 - 2,500 $303,000 - $332,000 F 5,000 sq.fr. To Be Determined 46 2,400 - 2,800 $350,000 - $371,000 G 5,000 sq.ft. To Be Determined 71 2,400 - 2,800 $350,000 - $371,000 H 5,000 sq.ft. Shea Homes 131 2,400 - 3,000 $348,000 - $379,000 I 6,000 sq.ft. Tnmark a 105 2,700 - 3,600 $402,000 - $449,000 (~1 Square footage ranges do not include some room options that may be off~red by some merchant builders which add 150 square feet to the upper bound of the range. (2) Prices are from preliminary market studies and include lot premiums but do not include options and upgrades. Source: Developer In Aueust 2002, the Developer expects to ouen an information center in Improvement Area A. The information center will offer to the public residential development and marketing, information with respect to all of the various housing, nroiects within San Miguel Ranch. While the overall development of Improvement Area A is expected to last through 2005, the infrastructure improvements witkin Improvement Area A, inclusive of non-District financed ~mprovements,' are expected to be substantially complete by the end of 2002. 36 DOCSOC\852423v7~22245.0134 Merchant Builders The memhant builders within Improvement Area A that are expected to be responsible for at least 10% of the projected fiscal year 2002-03 Special Tax levy are discussed in greater detail below. The Developer intends to complete the land development process and sell all of the developable land within Improvement Area A to merchant builders, some or all of whom may be affiliated with the Developer. Continental. Planning Area C is owned by Continental Residential, Inc., a California corporation ("Continental"). Continental is a wholly owned subsidiary of D.R. Horton, Inc. ("D.R. Horton"), a national homebuilder that constructs and sells single-family homes through its subsidiaries in metropolitan areas of the mid-Atlantic, midwest, -~ sontheas____.__~t, southwest and western regions of the United States. In April 1998 D.R. Horton acquired Continental Homes Holding Corp. through a merger of Continental Homes Holding in D.R. Horton. D.P~ Horton builds and sells homes under the -~ variou.._____~s names, including: D.R. Horton, Arappco, Cambridge, Continental, Dobson, Mareli, Milburn, Regency, SGSa an~d Torrey -~. D.R. Horton is listed on the New York Stock Exchange under the symbol "DHI". Grading is currently underway within Planning Area C. Construction of model homes is expected to commence in August 2002 with homes being offered for sale shortly thereafter. At buildout, Planning Area C is expected to consist of 110 attached residential units. Such units are expected to range in size from 1,300 square feet to 1,800 square feet and range in price from $214,000 to $243,000. Pardee. ± Plannin~ Area D is owned by Pardee Construction Company ("Pardee"). Pardee has developed master-planned communities in Southern California and Nevada. In California, ]/~rdee has been active in the cities of Los Angeles, Santa Clarita, Palmdale` Camarillo; Moorpark, Oxnard, Agoura, Valencia. San Dieeo'~ Oceanside. and in the counties of Ventura, Riverside and Los Aneeles. In Nevada. Pardee has built in the cities of Las Veeas. North Las Vegas, Henderson, and numerous other communities in Clark County. To date, Pardee has sold over 60,000 homes and is currentiv in various stages of development on 13 master-planned communities. Their communities total over 9,000 acres consisting of some 44,000 home sites and over 200 acres of commercial and business park property plus other related uses. Within these communities, the company has in process 42 active housing projects and 6 commercial centers, plus 339 rental units held for their own account. Pardee is one of the lareest home builders in San Dieeo and Las Veeas. A site plan for Planning Area D has been approved by the City. Construction of model homes -~ is expected to commence in November, 2002. Shortly thereafter homes will be offered for sale. At buildout, Planning Area D is expected to consist of 107 detached residential units on 4,000 square foot lots. Such units are expected to range in size from 1,700 square feet to 2,100 square feet and range in price from $257,000 to $279,000. Shea. Shea Homes Limited Parmership, a California limited parmership ("Shea Homes"), is the owner of Planning Area H. J.F. Shea Co., Inc., a Nevada corporation, is the general partner of Shea Homes. Shea Homes and related entities have six operating divisions throughout California, Phoenix, Denver and North Carolina. Shea Homes and related entities construct condominiums, townhouses, detached houses and also develop master planned communities. Shea Homes and its related entities are privately held and have been operating for over 100 years. Management is directed by members of the Shea family. Total home closings for Fiscal Year 2001 exceeded __ units and total revenues for Shea Homes and related entities exceeded $ billion for Fiscal Year 2001. 37 DOCSOCX852423v7~22245.0134 Three phases within Planning Area H are currently under construction. Construction of model homes is expected to be complete by the end of July 2002 with homes being offered for sate shortly thereat:ter. At buildout, Planning Area H is expected to consist of 131 detached residential units on 5,000 square foot lots. Such units are expected to range in size from 2,400 square feet to 3,000 square feet and range in price from $348,000 to $379,000. Trirnark. Trimark Pacific Homes is the owner of the land within Planning Area I. One phase within Planning Area I is currently under construction. Construction of model homes is expected to be complete by the end of July 2002 with homes being offered for sale shortly thereafter. At buildout, Planning Area I is expected to consist of 105 detached residential units on 6,000 square foot lots. Such units are expected to range in size from 2,700 square feet to 3,600 square feet and range in price from $402,000 to $449,000. 38 DOCSOC\852423v7X22245.0134 ~PLANNING.AREA MAP] 39 DOCSOC~852423v7~22245.0134 [AERIAL PHOTO] 40 DOCSOC~852423v7L22245.0134 Financing Plan The development of San Miguel Ranch will require a large expenditure of funds to fully develop the properly and all of the attendant infrastructure. Roughly 98% of the total development funds indicated in the table below will be spent within the District boundaries. All of the funds will be spent to benefit the District property. While the necessary debt and equity sources outside of the Bond proceeds are in place or expected to be in place, the desire and the ability of the Developer to develop the entire project is dependent upon a number of external factors, including the general and local economy and the health of the local real estate market. While the table below represents the Developer's current estimate of the sources and uses of funds there can be no assurance there will not be substantial changes to the sources and uses of funds. As of March 31, 2002, $61,400,000 of total anticipated project costs of $108,039,000 have been expended, including $26,957,000 of land acquisition costs. While the property is not subject to third party debt or equity, the repayment of debt, payment of interest and return of equity will be paid out of excess sources over uses. Beginning in 2002, the Developer expects that the debt and equity balances will decrease over a given year, and that while loan proceeds and equity will be used for project costs during a given year, the year to year debt and equity balances will decline. To the extent that actual revenues are less than projected in Table 9 or are received more slowly than projected in Table 9, other needed financing mechanisms are not put into place, other property owners do not contribute funds as projected, or actual expenses are greater than or occur earlier than projected above, there could be a shortfall in the cash required to complete the development as projected above. See "~ Certain Limitations on Development Phasing" below. 41 DOCSOC\852423v7X22245.0134 7 TABLE 9 DEVELOPER'S PROJECTED SOURCES AND USES OF ~-~NDS' Distric~t Total (Amounts in Thousands as of March 31, 2002) Year 2000 Year 2001 Year 2002 Year 2003 Year 2004 Total Sources of Funds: Net Land Sale Proceeds Imp. Area A $ 0 $26,307 $ 33,393 $ 17,165 $ 0 $76,865 Net La~ Sale Proceeds Imp. Area B 0 0 0 0 36,168 36,168 Subtotal Net Land Sales $ 0 $26,307 $ 33,393 $ 17,165 $ 36,168 $113,033 Net Bond Proceeds Imp. Area A $ 0 $ 0 $ ~- 12.5230~) 0 $ 0 $ 11,186 Net Bond Proceeds Imp. Area B 0 0 0 0 4,640 4,640 Subtotal Net Bond Proceeds $ 0 $ 0 $ a 12.523 $ 0 $ 4,640 $ 15,826 Equity Imp. Area A $ 8,837 $ 0 $ 0 $ 0 $ 0 $ 8,837 Equity Imp. Area B 5,190 718 1,554 1,716 0 9,178 Subtotal Equity $ 14,027 $ 718 $ 1,554 $ 1,716 $ 0 $ 18,015 Third Party Debt Imp. Area A $ 9,679 $ 0 $ 0 $ 0 $ 0 $ 9,679 Third Party Debt Imp. Area B 5,769 1,076 2,330 2,573 0 11,748 Subtotal Third Party Debt $ 15,448 $ 1,076 $ 2,330 $ 2,573 $ 0 $ 21,427 Marketing Reimbursement Imp. Area A $ 0 $ 428 $ 886 $ 615 $ 0 $ 1,929 Marketing Reimbursement Imp. Area B 0 0 0 0 934 934 Subtotal Marketing Reimbursement $ 0 $ 428 $ 886 $ 615 $ 934 $ 2,863 Total Sources $ 29,475 $ 28,529 $ ~- $0.68~66 $ 22,069 $ 41,742 Sa 172.50~1 Uses of Funds: ;'i ~-Facililieslmp. AreaA $ 0 $ 3,691 $ 7,495 $ 0 $ 0 $ 11,186 -~ Facilities imp. Area B 0 0 0. 459 4,181 4,640 Subtotal a Facilities $ 0 $ 3,691 $ 7,495 $ 459 $ 4,181 $ 15,826 Other Project Costs lmp. AreaA $ 18,142 $16,596 $ 13,532 $ 4,051 $ 1,515 $ 53,836 Other Project Costs Imp. Area B 10,730 1,455 3,534 3,260 10,643 29,622 SubtotalProjectCosts $ 28,872 $18,051 $ 17,066 $ 7,311 $12,158 $ 83,458 Member Management Fees Imp. Area A $ 374 $ 1,581 $ 1,934 $ 1,016 $ 549 $ 5,454 Member Management Fees Imp. Area B 229 339 350 570 1,813 3,301 Subtotal Member Mang. Fees $ 603 $ 1,920 $ 2,284 $ 1,586 $ 2,362 $ 8,755 Total Uses $ 29,475 $ 23,662 $ 26,845 $ 9,356 $18,701 $108,039 Sources in Excess of Uses $ 0 $ 4,867 $ -~ 23,841 $ 12,713 $ 23,041 Sa 64.46~2 Cumulaxive Sources over Uses $ 0 $ 4,867 $ -~ 28.708 5; 41,421 $ 64.46~22 ~ Exnected to be naid to the Develoner in 2002 as reimbursement for urevionslv exnendetl ¢ogts. Excess funds are used to repay equity ($18,015) and 3rd party debt ($21,427) and incremental equity and debt invested during the course ora given year, for return on equity, interest expense on debt and last as distribution of profits. Source: Developer The projected sources and uses of funds in the table above has been prepared based on the assumptions of future sales revenues, development costs, operating costs, property taxes, public facilities financing and other items. While contracts have been signed with the builders mentioned above no other contracts have been negotiated with merchant builders and there can be no assurance that the sales in escrow will close or that future sales will occur or when they will occur. The , Prelnnmary, subject to change· 42 DOCSOC~52423v7~22245.0134 absorption estimates used for the sources and uses of funds may differ from those dehved by the -~ A=~nraiser. The project's actual sources and uses of funds may vary from the table above. Therefore, there can be no assurance that the actual revenues will not be less than projected or occur later than projected by the ~- Developer. Detailed construction plans have not been approved or developed for all of the work which is contemplated for the project. As such, there is no assurance that the actual costs will not be grater than projected or occur sooner than projected. There can be no assurance that any of the projections in the above table will occur or that other matters that affect the development costs and or timing will not occur and have an adverse impact on the cash available to the developer for the construction of the necessary improvements. There can assurance that projected revenues will, in fact, be available as projected by the -~ Developer. To the extent that actual revenues are less than projected in the above table or are received more slowly than projected, other needed financing mechanisms are not put into place or actual expenses are greater than or occur earlier than projected above, there could be a shortfall in the cash required to complete the development Status of Entitlement Approvals The SPA plan and the final EIR, FSEIR-97-02, for San Miguel Ranch were approved on October 19, 1999. Tentative Map 99-04 for San Miguel Ranch which includes Improvement Area A and Improvement Area B was approved by the City Council on February 29, 2000. The tentative map allows for the development ora total of 1,394 dwelling units of which 140 will be required to be affordable units,,a -~ commercial site, an elementary school site, over 20 acres of parks and associated open space areas. In the course of the approvals for San Miguel Ranch conslruction was limited to no more than 892 dwelling units prior to the construction of State Route 125 ~"SR125'~, a toll road that transverses a portion of South San Diego County, or th6 construction of other interim road segments that provide additional traffic capacity. The City and the Developer have executed a non-bindine letter of intent in which the City aereed to use its best efforts to increase the allowable dwelling units beyond 892 should interim facilities be completed. [IS MOU SIGNED?l This development is to occur in the area of San Miguel Ranch, which is east of the SR125 fight-of-way and conterminous with the boundaries of Improvement Area A. Because of this, the sale of the Bonds will be limited initially to Improvement Area A which encompasses a total of no more then 1,075 dwelling units. The current plans for the construction of SR125 and other interim improvements should allow the Developer to proceed with the construction of all of the anticipated units in Improvement Area A without delay. The sale of bonds in Improvement Area B will occur as soon as the Developer is in a position to start developing the portion of San Miguel Ranch which is west of the SR125 fight-of-way. This area is generally coterminous with the boundaries of Improvement Area B. The processing of the grading plan for Improvement Area A began upon the approval of the tentative map. The grading permit for Improvement Area A was received on December 22, '2000. The Developer believes that all discretionary approvals required for the development of ~' Improvement Area A have been obtained. Environmental Constraints San Miguel Ranch has undergone extensive environmental and biological review and has received thc necessary permits for the dcvelopmen~ of the entire property covered by the tentative map. These include take authorizations from the United States Fish and Wildlife and the California Department of Fish and Game for.endangered species, and all applicable wetland permits from the 43 DOCSOC~852423v7~22245.0134 Army Corp of Engineers and California Department of Fish and Game. As a result of the receipt of the take authorizations, the Developer agreed to give up the development of 34 lots in Planning Areas J and K which are included within Improvement Area B. Infrastructure Requirements and Construction Status The infrastructure requirements for San Miguel Ranch can be broken into three categories as follows: M~jor Backbone Infrastructure. The major road which forms the primary access to the community is Mount Miguel Road which is a four lane Class I collector road located within a 94-foot right-of-way. The road is 74 feet wide and includes a ten foot painted and/or landscaped median. The road will begin at its current terminus at the intersection with Proctor Valley Road at the east end of San Miguel Ranch and will extend through the community to rejoin Proctor Valley Road at the west end of San Miguel Ranch. Also included in this infrastructure category are the backbone sewer and storm drain facilities, dry utility systems, traffic signals, a community park and a private neighborhood park and major slope landscaping. Bond proceeds are expected to be used to acquire Mount Miguel Road, the storm drain system and the sewer system. The water system will be owned by the Otay Water District, the community park will be owned by the City of Chula Vista and the neighborhood park will become the property of the San Miguel Ranch Homeowners Association. Minor Backbone Infrastructure. The secondary backbone infzastmcture consists of Calle La Marina, Calle La Quinta and Pasco Vera Cruz. These roads transverse the community and take access off of Mount Miguel Road. Each of these roads provides access to several neighborhoods. Also included in this category are portions of Proctor Valley Road which facilitates access to the community arc, the boundaries of San Miguel Ranch. In addition to the roads are sewer, water and storm drain facilities and associated slope landscaping. The roads and the storm drain and sewer facilities are expected to be acquired by the District. Intract Infrastructure. Single-lots in the community are planned to be dehvered to merchant builders rough graded and blue-topped with the intmct.streets undercut. Multi-family pads and small single-family lots (less than 4,000 square feet) will be delivered as rough graded blue-topped super pads. Wet and dry utilities will be stubbed to the tract boundaries. The merchant builders will be responsible for completing intract street improvements, utilities and slope landscaping. Affordable Housing 140 of thc residential units within Improvement Area A will be set aside as affordable housing split equally between moderate-income units and low-income units. Low income units arc defined as those which can be afforded by a family whose income does not exceed 80% of thc area median income (adjusted annually) based on household size. Moderate income units arc defined as those which can be afforded by a family income between 80% and 120% of the area median income. Potential Limitations on Development Growth Management Over~ight Commission ("GMOC"). The City has established a Threshold Standards Policy (the "Threshold Policy") through the adoption of a Growth Management Ordinance, which established eleven public facility and service area "quality of life" measures. The DOCSOC\852423v7~22245.0134 eleven public facility and service thresholds include police, fire and emergency medical services, traffic, schools, parks and recreation, libraries, sewer, drainage, fiscal impact, air quality and water. The Threshold Policy established goals, objectives, standards or thresholds and applicable implementation measures for the eleven services. The GMOC was created to provide an annual independent review for compliance with the Threshold Policy. The GMOC review for compliance occurs on a fiscal year cycle. The Threshold Policy calls for preparation of short-range, 12 to 18 month, and mid-range, five to seven year, development forecasts. These forecasts are utilized by City staff and external service agencies to evaluate projected service levels, identify any potential threshold problems and address implementation measures to avoid level of service problems. As a condition to developing property within the District, a developer must, prior to final map approval for a parcel, enter into an agreement with the City acknowledging that building permits may be withheld if any of the required development threshold limits set in the City transportation planning phase are exceeded. The tentative map conditions for the land within the District subject the land to the provisions of the GMOC. The Threshold Policy includes traffic thresholds which require that level of service "C" be maintained on the arterial street system except level of service "D" can occur for no more than two hours of the day. The level of service is a descriptive and qualitative measure of the degree of traffic congestion experienced by motorists. There are six levels of congestion, assigned letters 'A' through 'F.' Levels of service 'A' Through 'D' represent generally acceptable levels of service with level of service 'A' corresponding to no congestion and level of service 'C' represents a range in which the ability of vehicles to maneuver is affected by the presence of other vehicles and speeds begin to show some reductio~ Level of service 'D' is approaching roadway capacity with the ability to maneuver being severely restricted and traffic is subject to speed reductions. Level of service 'E' is at roadway capacity with unstable speeds. Level of service 'F' occurs when roadway capacity is exceeded, excessive delays are experienced and stop-and-go traffic conditions exist. -~ Should the traffic threshold standard be exceeded, the "Growth Management Ordinance calls for a building permit moratorium to be considered by the City Council until the threshold problem can be mitigated. There can be no I~uarantee that any such moratorium would exclude San Mieuel Ranch. even if the traffic congestion leading to such moratorium occurs outside of the San Miguel Ranch area. To avoid the possibility of a moratorium, the City is working with the development community to identify additional roadways that can be constructed should State Route 125 be delayed (currently expected to be completed by 2005) and the rapid pace of development be sustained. One such roadway that could increase capacity is an interim facility within portions of the State Route 125 corridor. So far, the City has collected $9 million in its a interim State__Route 125 development impact fee program for the interim State Route 125 facility, the first phase of which is estimated to cost $12.4 million. Other transportation improvements that are being studied in the next year which would increase system capacity are interchange improvements at 1-805 and East "H" Street, 1-805 and Telegraph Canyon Road, the southerly extension of Pasco Ranchero in Otay Ranch from Telegraph Canyon Road to Main Street, and the extension of Mt. Miguel Road in San Miguel Ranch westerly to Proctor Valley Road. These are all possible improvements to allow for continued development until State Route 125 can be compleled and the City estimates that -~ somme should be under construction by the end of 2002. 45 DOCSOC\852423v7~2245.0134 The City also is exploring ways to lower traffic congestion generally by taking vehicles off the road during peak times. Considerations include offering City employers incentives to promote carpooling or asking that they adjust schedules to stagger times when people are traveling to and from work. Concurrently, on the supply side, the City is exploring Transportation Demand Management Measures to reduce the peak hour traffic demand. Surveys are being prepared for major employers and residents living east of 1-805 to explore the level of interest in techniques such as staggered work hours, van pooling and carpooling to alleviate the peak a.m. and p.m. traffic volumes. In sum, the City is continuing to monitor development activity, conducting additional traffic studies, studying various absorption models, pursuing how the interim facility within the State Route 125 corridor might be constructed and looking at other roadway improvements to enhance capacity. If the traffic forecasts prove accurate, and if the developm,ent pace does not decrease from the levels projected by property owners, and if State Route 125 is delayed significantly, and if no additional roadway capacity can be delivered in the interim, the City may impose a development slowdown (i.e. a metering of permits) in lieu of ever having to impose a moratorium on the issuance of building permits. The City would consider whether such a planned slowdown should acknowledge and give priority to marketing studies and baseline development that was projected in connection with the issuance of bonds by assessment districts formed by the City. No assurance can be given that such priority will be established. A development slowdown or moratorium on development could adversely impact the rate of development in ~Improvement Area A and presents certain risks to the owners of the Bonds. See "SPECIAL R~K FACTORS - Failure to Develop Properties" and "- Future Land Use Regulations and Growth Control Initiatives." Investors should note that, in particular, the City may amend its Growth Management Ordinance from time to time and no assurance can be given that its terms will not be more restrictive on development than those currently in effect. liS THE MOU EXECUTED?I Appraisal The following information regarding ownership of property in Improvement Area A included in the Appraisal has been included because it is considered relevant to an informed evaluation of the Bonds. The inclusion in this Official Statement of information related to existing owners of property should not be construed to suggest that the Bonds, or the Special Taxes that will be used to pay the Bonds, are recourse obligations of the property owners. A property owner may sell or otherwise dispose of land within Improvement Area A or a development or any interest therein at any time. Development may also be abandoned at any time. The Appraiser valued the property within Improvement Area A primarily based upon a sales comparison approach to value and based upon a number of assumptions and limiting conditions contained in the Appraisal as set forth in Appendix C. Under the sales comparison approach to value, the Appraisal takes into account the development status of the residential lots and the commercial land in Improvement Area A, analyzes the market for similar properties and compares these properties to the properties in Improvement Area A. The Appraiser is of the opinion that the aggregate "as is" value of the land within Improvement Area A as of March 15, 2002, assuming the completion of all improvements to be financed with proceeds of the Bonds was $53,585,000. 46 DOCSOC\852423v7~22245.0134 In arriving at its statement of value, the Appraiser assumes that there are no hidden or unapparent conditions of the property or subsoil that render it more or less valuable, that all required licenses, certificates of occupancy or other legislative or administrative authorizations from governmental agencies or private entities or organizations have been or can be obtained, that no hazardous waste and/or toxic materials are located on the property within Improvement Area A that would affect the development process, that the improvements to be funded with the Bonds are completed and that the proposed development is constructed in a timely manner with no adverse delays (i.e., construction will proceed as proposed with no limitations on development occurring). See "- Potential Limitations on Development" above. No assurance can be given that the assumptions made by the Appraiser will, in fact, be realized, and, as a result, no assurance can be given that the property within Improvement Area A could be sold at the appraised values included in the Appraisal. Market Absorption Study The Market Absorption Study dated March 15, 2002 for Improvement Area A has been prepared by the Market Absorption Consultant. A synopsis and summary of the Market Absorption Study is included herein as Appendix B. The Market Absorption Consultant has estimated, based upon the analysis of relevant demographic and economic conditions in the Chula Vista area, the number and proportion of housing units in Improvement Area A that can be expected to be marketed annually using the estimated absorption schedules for each of the product types. The Market Absorption Study concludes that it will take four years for the residential units within Improvement Area A to be constructed and sold, with final absorption occurring in 2005. The Market Absorption Study projects that, of the 1,061 single family and multi-family units within Improvement Area A, 184 will be all,orbed in 2002, 401 in 2003, 363 in 2004 and 113 in 2005. The Market Absorption Study assumes that all requi/'ed governmental approvals will be obtained, that there are no physical impediments to construction such as earthquakes and hazardous waste, that the public infrastructure necessary to develop will be provided in a timely manner, that the developers and merchant builders in Improvement Area A will respond to market conditions with products that are competitively priced and have the features and amenities desired by purchasers, that the developers and merchant builders and their lenders have sufficient financial strength to fund adequately the projects and that they have sufficient cash flow reserves to supplement their cash flow positions in the event that adverse economic or market conditions occur. The actual absorption of units could be adversely affected if one or more of the foregoing assumptions is not realized. See Appendix B - "SUMMARY OF MARKET ABSORPTION STUDY." SPECIAL RISK FACTORS The purchase of the Bonds involves a high degree of investment risk and, therefore, the Bonds are not appropriate investments for many types of investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in Improvement Area A to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the City to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in Improvement Area A. See "Land Values" and "Limited Secondary Market" below. 47 DOCSOC\852423v7~22245.0134 Concentration of Ownership As ora J~, ali of the taxable land within the District was owned by six landowners, two of which are under common control. Based on land use status, as of June 1, 2003, approximately -~ 52.67% of the projected fiscal year 2002-2003 Special Tax levy will be paid by the Developer or entities aff~liated with the Developer, a 11.65% will be paid by Shea Homes, -~ 10.43% will be paid by Pardee, -~ 6.17% will be paid by Continental and a 5.66% will be paid by Buie. See "THE COMMUNITY FACILITIES DISTRICT -- Principal Taxpayers." Until the completion and sale of additional parcels, the receipt of the Special Taxes is dependent on the willingness and the ability of such landowners to pay the Special Taxes when due. Failure of the current landowners, or any successor, to pay the annual Special Taxes when due could result in a default in payments of the principal of, and interest on, the Bonds, when due. See "- Failure to Develop Properties" below. No assurance can be made that such landowners, or their successors, will complete the intended construction and development in the Improvement Amft A. See "-- Failure to Develop Properties" below. As a result, no assurance can be giveri that such landowners will continue to pay Special Taxes in the future or that they will be able to pay suer Special Taxes on a timely basis. See "-- Bankruptcy and Foreclosure" below, for a discussion of certain limitations on the District's ability to pursue judicial proceedings with respect to delinquent parcels. Limited Obligations The Bonds and interest thereon are not payable from the general funds of the City. Except with respect to the Special Taxes, neither the credit nor the taxing power of the District or the City is pledged for the ~ payment of the Bonds or the interest thereon, and, except as provided in the Indenture, no ~wner of the Bonds may compel the exercise of any taxing power by the District or the City or for~e the forfeiture of any City or Improvement Area A property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a 16gal or equitable pledge, charge, lien or encumbrance upon any of the City's or the District's property or upon any of the City's or the District's income, receipts or revenues, except the Special Taxes and other amounts pledged under the Indenture. Insufficiency of Special Taxes Under the Rate and Method, the annual mount of Special Tax to be levied on each taxable parcel in Improvement Area A will generally be based on whether such parcel is categorized as Undeveloped Property or as Developed Property and on the zone and land use class to which a parcel of Developed Property is assigned. See Appendix A -- "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAXES" and "SOURCES OF PAYMENT FOR TI-IE BONDS -- Method of Apportionment of Special Tax." The Rate and Method governing the levy of the Special Tax expressly exempts property owned by public agencies or a property owners association provided that no such exemption shall reduce the sum of all taxable property to less than a 121.93 acres. Moreover, if a substantial portion of land within Improvement Area A became exempt from the Special Tax because of public ownership, or otherwise, the maximum Special Tax which could be levied upon the remaining property within Improvement Area A 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 such principal and interest. 48 DOCSOC~852423v7~22245.0134 Tax Delinquencies -~ Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, are customarily billed to the properties within Improvement Area A on the ad valorem property tax bills sent to owners of such properties. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments, a See "SOURCES OF PAYMENT FOR THE BONDS -- Special Taxes," for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Fiscal Agent Agreement, in the event of delinquencies in the payment of Special Taxes. See "- Bankruptcy and Foreclosure" below, for a discussion of the policy of the Federal Deposit Insurance Corporation (thc "FDIC") regarding the payment of special taxes and assessment and limitations on the District's ability to foreclosure on the lien of the Special Taxes in certain circumstances. The Deveiooer is not currently delinquent in the oavment of any Snecial Taxes or assessments and has no history of such delinauencv since its formation. Failure to Develop Properties Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Bondowners should it be necessary for the District to foreclose on the property due to the nonpayment of Special Taxes. The failure to complete development of the required infrastructure for development in Improvement Area A as planned, or substantial delays in the completion of the development or the required infrastructure for the development due to litigation or other causes may reduce the value of the properly within Improvement Area A and increase the length of tim~, dur/ng which Special Taxes will be payable from undeveloped property, and may affect the yeillingness and ability of the owners of property within Improvement Area A to pay the Special Taxes when due. ' Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with, the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency approval or satisfy such governmental requirements would adversely affect planned land development. Finally, development of land is subject to economic considerations. Additionally, merchant builders may need to obtain financing to complete the development of the units that they are developing. No assurance can be given that the required funding will be secured or that the proposed development will be partially or fully completed, and it is possible that cost overruns will be incurred which will require additional funding beyond what the Developer has projected, which may or may not be available. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Finance Plan" herein. 49 DOCSOC~852423vTX22245.0134 The future development of the vacant land within Improvement Area A may be adversely affected by existing or future governmental policies, or both, restricting or controlling the development of vacant land in Improvement Area A. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Finance Plan" and "- Certain Limitations on Development Phasing" for a discussion of certain significant limitations on the ability of the Developer and merchant builders to complete the projected development of Improvement Area A. Specifically, investors should consider the broad power of the City to halt or delay "B" map approval under its Growth Management Ordinance and the Roadway Improvements Agreement. There can be no assurance that the owners of the vacant land in Improvement Area A will be able to secure the necessary discretionary approvals if they choose to develop their properties. See also "- Future Land Use Regulations and Growth Control Initiatives" below. There can be no assurance that land development operations within Improvement Area A will not be adversely affected by a future deterioration of the real estate market and economic conditions or future local, State and federal governmental policies relating to real estate development, the income tax treatment of real property ownership, or the national economy, or the direct or indirect consequences of military and/or terrorist activities in this country or abroad. A slowdown of the development process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special Taxes. In that event, there could be a default in the payment of principal of, and interest on, the Bonds when due. Bondowners should assume that any event that significantly impacts the ability to develop land in Improvement Area A would cause the property values within Improvement Area A to decrease substantially fi.om those estimated by the Appraiser and could affect the willingness and ability of the owners of land within Improvement Area A to pay the Special Taxes when due. The payment of principal of and interest on the Bonds depends upon the receipt of Special Taxes levied on undeveloped property. Undeveloped property is less valuable per unit of area than developed land, especially if there are no plans to develop such land or if there are severe restrictions on the development of such land. The undeveloped property also provides less security to the Bondowners should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of the Special Taxes. Furthermore, an inability to develop the land within Improvement Area A as currently proposed will make the Bondowners dependent upon timely payment of the Special Taxes levied on undeveloped property for a longer period of time than projected. Because all of the land within Improvement Area A is currently owned by just eight owners, several of which are affihated, the timely payment of the Bonds depends upon the willingness and ability of such owners to pay the Special Taxes levied on the undeveloped property when due. See "- Concentration of Ownership" above. A slowdown or stoppage in the continued development of Improvement Area A could reduce the willingness and ability of such owners to make Special Tax payments on undeveloped property and could greatly reduce the value of such property in the event it has to be foreclosed upon. See "-Land Values" below. Future Land Use Regulations and Growth Control Initiatives It is possible that future growth control initiatives could be enacted by the voters or future local, state or federal land use regulations could be adopted by governmental agencies and be made applicable to the development of the vacant land within Improvement Area A with the effect of negatively impacting the ability of the owners of such land to complete the development of such land if they should desire to develop it. Development could also be delayed or prohibited under the City's existing Growth Management Ordinance. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP - Certain Limitations on Development Phasing" for a discussion of some of the risks to the timely completion of needed infrastructure to serve Improvement Area A and surrounding 50 DOCSOC\852423v7~22245.0134 properties. See also "--Endangered Species" below. This possibility presents a risk to prospective purchasers of the Bonds in that an inability to complete desired development increases the risk that the Bonds will not be repaid when due. The owners of the Bonds should assume that any reduction in the permitted density, significant increase in the cost of development of the vacant land or substantial delay in development caused by growth and building permit restrictions or more restrictive land use regulations would cause the values of such vacant land within Improvement Area A to decrease. A reduction in land values increases the likelihood that in the event of a delinquency in payment of Special Taxes a foreclosure action will result in inadequate funds to repay the Bonds when due. Completion of construction of any proposed structures on the vacant land within Improvement Area A is subject to the receipt of approvals from a number of public agencies concerning the layout and design of such structures, land use, health and safety requirements and other matters. The failure to obtain any such approval could adversely affect the planned development of such land. Under current State law, it is generally accepted that proposed development is not exempt from future land use regulations until building permits have been issued and substantial work has been performed and substantial liabilities have been incurred in good faith reliance on th~/permits. There is no case law precedent on the issue of whether a statutory development agreement will ex,rapt development within Improvement Area A from future land use regulations. Because future development of vacant property in Improvement Area A could occur over many years, if at all, the application of future land use regulations to the development of the vacant land could cause significant delays and cost increases not currently anticipated, thereby reducing the development potential of the Vacant property and the ability or willingness of owners of such land to pay Special Taxes when due or causing land values of such land within Improvement Area A to decrease substantially from those in the Appraisal. Endangered Species In recent years there has been an increase in activity at thc State and federal levels related to the possible listing of certain plant and animal species found in thc southern San Diego County area as endangered species. An increase in the number of endangered species could curtail development in the southern San Diego County area. Any action by the State or federal governments to protect species located on or adjacent to the property within Improvement Area A could negatively impact the ability of the owners of that land to develop it. This, in turn, could reduce the likelihood of timely payment of the Special Taxes levied against such that land and would likely reduce the value of such land and the potential revenues available at the foreclosure sale for delinquent Special Taxes. See "- Failure to Develop Land" above. Natural Disasters The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads, bridges and property within Improvement Area A. In addition, land susceptible to seismic activity may be subject to liquefaction during thc occurrence of such event. In the event of a severe e~thquake, fire, flood or other natural disaster, there may be significant damage to both properW and infrastructure in Improvement Area A. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in Improvement Area A could be diminished in the aftermath of 51 DOCSOC\852423v7~22245.0134 such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes. Hazardous Substances One of the most serious risks in terms of the potential reduction in the value of a parcel is a claim with regard to a ba?ardous substance. In general, the owners and operators ora parcel may be required by law to remedy conditions of the parcel 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 the most well- known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to re.duce the marketability and value of thc parcel by the costs of remedying the eondition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. Further, it is possible that liabilities may arise in the future with respect to any of the parcels resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the furore 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. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel that is realizable upon a delinquency. Neither the City nor the Developer has knowledge of any hazardous substances being located on the prOPerty within Improvement Area A. ; Parity Taxes, Special Assessments and Land Development Costs Property within Improvement Area A is subject to the lien of several overlapping districts. See "THE COMMUNITY FACILITIES DISTRICT Estimated Direct and Overlapping Indebtedness." The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and special assessments levied by the City and other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed. The Special Taxes have priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See" Bankruptcy and Foreclosure" below. Development of land within Improvement Area A is contingent upon construction or acquisition of major public improvements such as arterial streets, water distribution facilities, sewage collection and transmission facilities, drainage and flood protection facilities, gas, telephone and electrical facilities, schools, parks and street lighting, as well as local in-tract improvements and on- site grading and related improvements. Certain of these improvements have been acquired and/or completed; however, there can be no. assurance that the remaining Improvements will be constructed or will be constructed in time for development to proceed as currently expected. The cost of these additional improvements plus the public and private in-tract, on-site and off-site improvements could increase the public and private debt for which the land within Improvement Area A is security. This 52 DOCSOC~852423v7~22245.0134 increased debt could reduce the ability or desire of the property owners to pay the annual Special Taxes levied against the property. In that event there could be a default in the payment of principal of, and interest on, the Bonds when due. Neither the City nor the District has control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property within Improvement Area A. In addition, the landowners within the District may, without the consent or knowledge of the City, petition other public agencies to issue public indebtedness secured by special taxes or assessments. Any such special taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated value-to-lien ratios for property within Improvement Area A described herein. 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 mount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rote and the risk of such a levy and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The City has caused a notice of the Special Tax lien to be recorded in the Office of the Recorder for the County against each pamel. 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 lender will consider such Special Tax obligation in the purchase of a property within Improvement Area A or lending of money thereon. The 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 imit 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 Section 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 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. Non-Cash Payments of Special Taxes Under the Act, the City Council as the legislative body of the District may reserve to itself the right and authority to allow the owner of any taxable parcel to tender a Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the Special Taxes applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the District to make payments with respect to other Bonds then outstanding; and, unless the practice was limited by the District, the Special Taxes paid in cash could be insufficient to pay the debt service due with respect to such other Bonds. In order to provide some protection against the potential adverse impact on cash flows which might be caused by the tender of Bonds in payment of Special Taxes, the Indenture includes a covenant pursuant to which the District will not authorize owners of taxable parcels to 53 DOCSOC\852423v7X22245.0134 satisfy Special Tax obligations by the tender of Bonds unless the District shall have first obtained a report of an Independent Financial Consultant certifying that doing so would not result in the District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds and any Parity Bonds when due. Payment of the Special Tax is not a Personal Obligation of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the District has no recourse against the owner. Land Values The value of the property within Improvement Area A is a critical factor in determining the investment quality of the Bonds. Ifa property owner is delinquent in the payment of Special Taxes, the District's only remedy is to commence foreclosure proceedings in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, the direct or indirect consequences of military and/or terrorist actions in this country or abroad, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See "THE COMMUNITY FACILITIES DISTRICT -- Estimated Value-to-Lien Ratios" herein. 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 ow~,, r, adjusted annually by an amount determined by the San Diego County Assessor, not 0 to exceed an ~ncrease of more than 2 ~ per fiscal year. No assurance can be gqven that a parcel could actually be 'sold for its assessed value. The Appraiser has estimated, on the basis of certain definitions, assumptions and limiting conditions contained in the Appraisal, that as of Ma, rch 15, 2002 the value of the land within Improvement Area A was $53,585,000. The Appraisal is based on the assumptions as stated in Appendix C --- "APPRAISAL REPORT." The Appraisal does not reflect any possible negative impact which could occur by reason of future slow or no growth voter initiatives, any potential limitations on development occurring due to time delays, an inability of the Developer to obtain any needed development approval or permit, the presence of hazardous substances within Improvement Area A, the listing of endangered species or the determination that habitat for endangered or threatened species exists within Improvement Area A, or other similar situations. The Appraiser has conditioned the Appraisal on a specific condition in addition to the typical list of assumptions and limiting conditions which is that there are no environmental issues which would slow or thwart development of Improvement Area A to its highest and best use. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP ~ Potential Limitations on Development. Prospective purchasers of the Bonds should not assume that the land within Improvement Area A could be sold for the appraised amount described above at a foreclosure sale for delinquent Special Taxes. In arriving at the estimates of value, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a foreclosure sale. See Appendix C for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all 54 DOCSOC\852423v7k22245.0134 delinquent Special Taxes. See "SOURCES OF PAYMENT FOR THE BONDS ^ Special Tax ^ Proceeds of Foreclosure Sales." ^ Terrorism Neither the City nor the Developer can predict the economic effect of the -~ ~ of terr0ri,m and the response of the United States government theret~o~ though impacts could be significant. No assurance can be given that the direct and indirect consequences of military and/or terrorist activities in this country or abroad will not have an effect on the District, the Developer or the property owners in Improvement Area A, which may include, among other effects, a slowdown in home sales and a decrease in land values in Improvement Area A. FDIC/Federal Government Interests in Properties The ability of the District 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") has an interest. In the event that any financial institution making any loan which is secured by real property within Improvement Area A is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the District 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 Statem~ ent") provides that property owned by the FDIC is subject to state and local real property taxes only ~f those taxes are assessed according to the property's value, and that the FDIC is immune fi:Om 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 properly taxes owed at the rate provided under state law, to the extent 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 it purports to secure the payment of any such amounts. Special taxes imposed under the Mello-Roos Act and a 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 FDIC has filed claims against the County of Orange, California in the United States Banl~uptcy Court and in Federal District Court contending, among other things, that special taxes are not ad valorem taxes, and therefore not payable by the FDIC, and any special taxes previously paid 55 DOCSOC\852423v7X22245.0134 by the FDIC must be refunded. The FDIC is also seeking a ruling that special taxes may not be imposed on properties while they are in FDIC receivership. The Bankruptcy Court ruled in favor of the FDIC's positions and, on March 22, 1999, the United States Bankruptcy Appellate Panel of the Ninth Circuit affirmed the decision of the Bankruptcy Court. In August, 2001, the United States Court of Appeals for the Ninth Circuit affirmed the Bankruptcy Appellate Panel decision. The FDIC does not currently own any of the property in Improvement Area A nor have any FDIC-insured institutions made loans on property in Improvement Area A. The District is 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 Improvement Area A in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out 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 Account and perhaps, ultimately, a default in payment on the Bonds· Bankruptcy and Foreclosure Bankruptcy, insolvency and other laws generally affecting creditors rights could adversely impact the interests of owners of the Bonds in at least mo ways. First, the payment of property owners' taxes and the ability of the District to foreclose the lien ora delinquent unpaid Special Tax pursuant to its covenant to pursue judicial foreclosure proceedings 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 due to many reasons, including crowded local court calendars or lengthy procedural delays. Second, the Bankruptcy Code might prevent moneys on deposit in thc funds and accounts created under h~e Indenture from being apphed to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against the Devcqoper and if the court found that the Developer had an interest in such moneys within the meaning of Section 541(a)(1) of the Bankruptcy Code. Although a bankruptcy proceeding would not cause the Special Taxes to become extinguished, the amount 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 the bankruptcy court. In addition, bankruptcy of a properly owner could result in a delay in prosecuting Superior Court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of delinquent Special Tax installments and the possibility of delinquent Special Tax installments not being paid in full On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed after the filing of the bankruptcy petition were declared to be "administrative expenses" of the bankruptcy estate, payable after all secured creditors. As a result, the secured creditor was able to foreclose on the property and retain all the proceeds of the sale except the amount of the pre-petition taxes. The Bankruptcy Reform Act of 1994 (the "Bankruptcy Reform Act") included a provision which excepts from the Bankruptcy Code's automatic stay provisions, "the creation of a statutory lien for an ad valorem property tax imposed by... a political subdivision ora state if such tax comes 56 DOCSOC\g52423v7~22245.0134 due after the filing of the petition [by a debtor in bankruptcy court]." This amendment effectively makes the Glasply holding inoperative as it relates to ad valorem real property taxes. However, it is possible that the original rationale of the Glasply ruling could still result in the treatment of post- petition special taxes as "administrative expenses," rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings. According to the court's ruling, as administrative expenses, post petition taxes would be paid, assuming that the debtor had sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be allowed to be deferred. Once the properly is transferred out of the bankruptcy estate (through foreclosure or otherwise), it would at that time become subject to current ad valorem taxes. The Act provides that the Special Taxes are secured by a continuing lien which is subject to the same lien priority in the case of delinquency as ad valorem taxes. No case law exists with respect to how a bankruptcy court would treat the lien for Special Taxes levied after the filing ora petition in bankruptcy. Glasply is controlling precedent on bankruptcy courts in the State. If the Glasply precedent was applied to the levy of the Special Taxes, the amount of Special Taxes received from parcels whose owners declare bankruptcy could be reduced. 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, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. No Acceleration Provision The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event ora payment default or other default under the Bonds or the Indenture. Loss of Tax Exemption As discussed under the caption "TAX MATTERS," the interest on the Bonds could become includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds as a result of a failure of the District to comply with certain provisions of the Internal Revenue Code of 1986, as amended. Should such an event of taxability occur, the Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the optional redemption provisions of the Indenture. Limitations on Remedies Remedies available to the owners of thc Bonds may bc lirmted by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture 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 exemise of judicial discretion. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the owners of the Bonds. 57 DOCSOC~852423v7X22245.0134 Limited Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the District and the Developer have committed to provide eertain financial and operating information on an annual basis, there can be no assurance that such information will be available to Bundowners on a timely basis. See "CONTRqUING 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. Proposition 218 An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the "Title and Sunnnary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes and property-related assessments, fees and charges." The provisions of the Initiative have not yet been interpreted by the courts, although several lawsuits have been filed requesting the courts to interpret various aspects of the Initiative. The Initiative could potentially impact the Special Taxes available to the City to pay the principal of and interest on the Bonds as described below. 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 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 Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On July 1, 1997, a bill was signed into law by the Governor of the State enacting Government Code Section 5854, which states that: "Section 3 of Article XIIIC of the California Constitution, as adopted at the November 5, 1996, general election, shall not be construed to mean that any owner or beneficial owner ora 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." Accordingly, although the matter is not free fiom doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes if such reduction would interfere with the timely retirement of the Bonds. It may be possible, however, for voters or the City Council acting as the legislative body of the District to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Furthermore, no assurance can 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 58 DOCSOCX852423v7X22245.0134 Taxes for Administrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the District has covenanted that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates on parcels within Improvement Area A to less than an amount equal to 110% of Maximum Annual Debt Service on the Outstanding Bonds and Parity Bonds. In connection with the foregoing covenant, the District has made a legislative finding and determination that any elimination or reduction of Special Taxes below the foregoing level would interfere with the timely retirement of the Bonds. The District also has covenanted that, in the event an initiative is adopted which purports to alter the Rate and Method of Apportionment of Special Tax, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants. The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS - Limitations on Remedies." Ballot Initiatives Article XIII A, ArficleXIIIB and Proposition218 were adopted pursuant to measures qualified for the ballot pursuant to California's constitutional initiative process. On March 6, 1995 in the case of Rossi v. Brown, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the Stale, the City or local disthcts to increase revenues or to increase appropriations or on the ability off,the landowners within Improvement Area A to complete the remaining proposed development. See "SPECIAL RISK FACTORS - Failure to Develop Properties" herein. CONTINUING DISCLOSURE Pursuant to a Continuing Disclosure Agreement with the Fiscal Agent, as dissemination agent (the "Disclosure Agreement"), the District, has agreed to provide, or cause to be provided, to each nationally recognized municipal securities information repository and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission (each, a "Repository") certain annual financial information and operating data concerning the District. The Annual Report to be filed by the District is to be filed not later than February 1 of each year, beginning February 1, 2003, and is to include audited financial statements of the City. The requirement that the City file its audited financial statements as a part of the Annual Report has been included in the Disclosure Agreement solely to satisfy the provisions of Rule 15c2-12. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the City other than as described hereinabove. See "SOURCES OF PAYMENT FOR THE BONDS" and "SPECIAL RISK FACTORS - Limited Obligations." The City has never failed to comply in all material respects with any previous undertakings with regard to Rule 15c2-12 to provide annual reports or notices of material events. The full text of the Disclosure Agreement is set forth in Appendix G. To assist the Underwhter in complying with Rule 15c2-12(b)(5), the Developer will enter into a certain Continuing Disclosure Agreement (the "Developer Disclosure Agreement") covenanting to provide Semi-Annual Reports not later than February 1 and August 1 of each year beginning February 1, 2003. The Semi-Annual Reports provided by the Developer are to contain the unaudited financial statements of the Developer and, if available, audited financial statements, and 59 DOCSOC\852423v7X22245.0134 the additional financial and operating data outlined in Section 4 of the Developer Disclosure Agreement attached in Appendix G. The Developer's obligations under the Developer Disclosure Agreement will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the Bonds; (b)the date on which the Developer and all affiliates of the Developer are no longer responsible for the payment of more than 20 percent of the annual Special Tax levy; or (c) the date on which the Developer delivers to the City an opinion of nationally-recognized bond counsel to the effect that the continuing disclosure is no longer required under the Rule. The Developer has also agreed that if it sells or transfers an ownership interest in any property in the District which will result in the transferee becoming responsible for the payment of 20 percent of the annual Special Tax levy in the fiscal year following such transfer, the Developer will cause any such transferee to enter into a disclosure agreement described in Section 12 of the Developer Disclosure Agreement attached hereto in Appendix G. The Developer Disclosure Agreement will inure solely to the benefit of the District, any Dissemination Agent, the Underwriter and owners or beneficial owners fi.om time to time of the Bonds. TAX MATTERS In the opinion of Best Best & Krieger LLP ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded fi.om gross income for federal income tax pg~rposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt fi.qm ~tate of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for p/~rposes of the fudeml individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating federal corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of B0nd Counsel is set forth in Appendix H hereto. The Code imposes various restrictions, conditions and requirements relating to the exclusion fi.om gross income for federal income tax purposes of interest on obligations such as thc Bonds. The City has covenanted to comply with certain restrictions designed to insure that interest on the Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Bonds being included in federal gross income, possibly fi.om the date of original issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after/he date of issuance of/he Bonds may adversely affect/he value of, or the tax status of interest on,/he Bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, if enacted into law, or any proposed legislation or amendments to the Code, will not adversely affect/he value of, or the tax status of interest on,/he Bonds. Prospective Bondholders are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate, and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of Bond Counsel other than itself. 60 DOCSOC~852423v7~22245.0134 Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a bondholder's federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder's other items of income or deduction, and Bond Counsel expresses no opinion regarding any such other tax consequences. LEGAL MATTERS Certain legal matters incident to the issuance of the Bonds are subject to the approving legal opinion of Best Best & Kteger LLP, San Diego, California ("Bond Counsel"). A copy of the proposed form of opinion of Bond Counsel is set forth in Appendix H hereto. The opinion of Bond Counsel will be qualified as to the enforceability of certain of the proceedings by limitations imposed by bankruptcy, insolvency, moratoria and other similar laws affec¼ing creditors' fights, heretofore or hereafter enacted, and by the exercise of judicial discretion in accordance with general principles of equity. Bond Counsel has reviewed the cover page of this Official Statement and the portions hereof under the captions "INTRODUCTION," "THE BONDS," "SOURCES OF PAYMENT FOR THE BONDS" "TAX MATTERS" and in Appendices E and H, insofar as such portions purport to summarize certain provisions of the Bonds, the Indenture, the legal procedures required for the authorization of the Bonds, and the opinion of Bond Counsel concerning the exclusion of interest on the Bonds from gross income, but Bond Counsel has not assisted in the preparation of or reviewed the remainder of this Official Statement, and accordingly Bond Counsel expresses no opinion as to the accuracy or sufficiency of any statements, material or financial information contained in the remainder 6f this Official Statement. Certain legal matters will be passed upon for the City and the District by the City Attorney and for the Underwriter by its counsel, Stradling Yocca.Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Stradling"). Although it serves as counsel to the Underwriter in connection with the issuance and sale of the Bonds, Stradling represents the City in connection with other financings. LITIGATION No litigation is pending or threatened concerning the validity of the Bonds or the pledge of Special Taxes to repay the Bonds and a certificate of the District to that effect will be furnished to the Underwriter at the time of the original delivery of the Bonds. The District is not aware of any litigation pending or threatened which questions the existence of the District or contests the authori~ oft, he District to levy and collect the Special Taxes or to issue and retire the Bonds. NO RATING The District has not made and does not contemplate making application to any rating agency for the assignment of a rating of the B. onds. 61 DOCSOC~52423v7~22245.0134 UNDERWRITING The Bonds are being purchased by Stone & Youngberg LLC (the "Underwriter"). The underwriter has agreed to purchase the Bonds at a pr/ce of $ (being $ aggregate principal amount thereof, less Underwriter's discount of $ .). The purchase agreement relating to the Bonds provides that the Underwriter 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 such purchase agreement, the approval of certain legal matters by counsel and certain other conditions. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the offering price stated on the cover page hereof. The offering price may be changed from time to time by the Underwriter. FINANCIAL INTERESTS ' The fees being paid to the Underwriter, Underwriter's Counsel and Bond Counsel are contingent upon the issuance and delivery of the Bonds. The fees being paid to the Financial Advisor are partially contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel represents the Underwriter on matters unrelated to the Bonds and Underwriter's Counsel represents the City on matters unrelated to the Bonds. PENDING LEGISLATION The D~strict is not aware of any significant pending legislation which would have material adverse consequences on the Bonds or the ability of the District to pay the principal of and interest on the Bonds when due. ADDITIONAL INFORMATION The purpose of this Official Statement is to supply information to prospective buyers of the Bonds. Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions. The execution and delivery of this Official Statement by the Director of Finance of the City has been duly authorized by the City Council acting in its capacity as the legislative body of the District. CITY OF CHULA VISTA COMMUNITY FACILITiES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) By: Director of Finance 62 DOCSOC\852423v7L22245.0134 APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1, IMPROVEMENT AREA A (San Miguel Ranch) A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of Taxable Property within the City of Chula Vista Community Facilities District No. 2001-1 ("CFD No. 2001- 1, Improvement Area A') and collected each Fiscal Year commencing in Fiscal Year 2002-03, 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 real property in CFD No. 2001-1, Improvement Area A, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessoffs Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps are not available, the Acreage 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 ofTitte 5 of the Government Code of the State of California. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2001-1, Improvement Area A 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 reqtfired of it under the Indenture; the costs to the City, CFD No. 2001-1, Improvement Area A or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-1, Improvement Area A or any designee thereof of complying with City, CFD No. 2001-1, Improvement Area A or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2001-1, Improvement Area A or any designee thereof related to an appeal 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. 2001-1, Improvement Area A for any other administrative purposes of CFD No. 2001-1, Improvement Area A, including attorney's fees and other costs A-1 DOCSOC\852423v7~22245.0134 relaled to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Pamel 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. 1.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, the Special Tax prepa ~yments collected to pay interest on Bonds, and other soumes 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. below. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD No. 2001-1, Improvement Area A under the Act. "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 Specie! Taxes. "CFD No. 2001-1, Improvement Area A" means City of Chula Vista, Community Facilities District No. 2001-1, Improvement Area A (San Miguel Ranch). "City" means the City of Chula Vista. ' "Commercial 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. "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. 2001-1, Improvement Area A. "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. "Final 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 (Califomia Government Code Section 66410 et seq.) or recordation of a condominium plan A-2 DOCSOC\852423v7~22245.0134 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 fi.om 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 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. 2001-1, Improvement Area A. "Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C below, that may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Occupied Residential Property" means all Assessor's Parcels of Residential Property wh/ch have closed escrow to an end user. "Outstanding Bonds" means all Bonds which remain outstanding. ¢~"Property Owner Association Property" means any property within the boundaries of..CFD No. 2001-1, Improvement Area A owned by.. or dedicated to a property owner association, including any master or sub-association. "Proportionately" means for Developed Property that the ratio 0fthe actual Special Tax levy to the Assigned Special Tax or Backup Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 2001-1, 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 all Assessor's Parcels of Undeveloped Property within CFD No. 2001-1, Improvement Area A. "Public Property" means any property within the boundaries of CFD No. 2001-1, Improvement Area A that is used for rights-of-way or any other purpose and 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 Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more resident/al 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 reference to appropriate records kept by the City's Building Department. Residential Floor Area will be based on the building permit(s) issued for each dwelling unit A-3 DOCSOC~852423v7~22245.0134 prior to it being classified as Occupied Residential Property, and shall not change as a result of additions or modifications made 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 Properly to fund the Special Tax Requirement "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2001-I, Improvement Area A to: (i) pay annual debt service on all Outstanding Bonds as defined in Section A.; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the 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; (v)and pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD No. 2001-1, Improvement Area A; (vi) less a credit for Available Funds. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2001-I, Improvement Area A which are not exempt fi.om 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, ali Taxable Property within CFD No. 2001-1, 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. Furthermore, Developed Property shall be classified as Residential Property or Commercial Property. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Commercial Property that is classified as Developed Propcm~y shall be the greater of (1) the Assigned Special Tax described in Table 1 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 of Developed Property is shown in Table 1. A-4 DOCSOC\852423v7~22245.0134 TABLE 1 Assigned Special Tax for Developed Property Land Use Class Description Assigned Special Tax 1 Residential Property $475.00 per unit plus $0.34 per square foot of Residential Floor Area 2 Commercial Property $5,091 per Acre of Commercial Property b. Backup Special Tax When a Final Map is recorded within Improvement Area A, 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 Developed Property classified as 'Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property within the Final Map area, the Backup Special Tax shall be the rote per Lot calculated according to the following formula: $10,376 x A L ,~ The terms above have the following meanings: B = Backup Special Tax per I~ot in each Fiscal Year. A = Acreage classified or to be classified as Residential Property in such Final Map. L = Lots in the Final' Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Developed Property classified as Commercial Property or for each Assessor's Parcel of Undeveloped Property to be classified as Commercial Property within the Final Map area, the Backup Special Tax shall be determined by multiplying $10,376 by the total Acreage of the Commercial Property and Undeveloped Property to be classified as Commercial Property within the Final Map area. Notwithstanding 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 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 the mount shown in Table 2 below: TABLE 2 A-5 DOCSOCX852423v7L22245.0134 Maximum Annual Special Tax for Undeveloped Property Land Use Class Description Maximum Annual Special Tax 3 Undeveloped Property $10,376 per Acre D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-03 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 thc Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied on each Assessor's Parcel of 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 each Assessor's Parcel of Undeveloped Proper:y, excluding any Assessor's Parcels classified as Undeveloped Property pursuant to Section E, at 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,)~vhose 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 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 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 Assessor's Parcel of CFD No. 2001-1, Improvement Area A. E. EXEMPTIONS The CFD Administrator shall classify as exempt property (i) Assessor's Parcels defined as Public Property, (ii) Assessor's Parcels defined as Property Owner Association Property, (iii) Assessor's Parcels which are used as places of worship and are exempt from ad valorem property taxes because they are owned by a religious organization, (iv) Assessor's Parcels defined as Community Purpose Facility Property or (v) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, provided that no such classification would reduce the sum of all Taxable Property to less than 121.93 Acres. Notwithstanding the above, the CFD Administrator shall not classify an Assessor's Parcel as exempt property if such classification would reduce the sum of all Taxable Property to less than 121.93 Acres. Assessor's Parcels A-6 DOCSOC~852423v7~22245.0134 which cannot be classified as exempt property because such classification would reduce the Acreage of all Taxable Property to less than 121.93 Acres will be classified as Undeveloped Property and shall be taxed as a part of the fourth step in Section D. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which properly becomes exempt property. The Maximum Annual Special Tax obligation for any Public Property which cannot be classified as exempt property as described in the first paragraph of Section E shall be prepaid in full by the seller pursuant to Section H.1, prior to the transfer/dedication of such property. 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 Undeveloped Property pursuant to the fourth step in Section D. F. REVIEW/APPEAL COMMITTEE The Council shall establish as part of the proceedings and administration of CFD No. 2001-1, Improvement Area A a special three-member 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 may file a written notice with the Review/Appeal Committee appealing the amount of the Special Tax levied on such Assessor's Parcel. 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 annnal 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. 2001-1, Improvement Area A 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 which 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 Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes. Prepayment in Full _ The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied by an Assessor's Parcel of Developed Property, Undeveloped Property for which a A-7 DOCSOC~852423v7~22245.0134 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 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 (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: A-8 DOCSOC\852423v7~22245.0134 Paragraph No.: For Assessor's Parcels of Developed Propcrvy, compute the Maximum Annual Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Undcveinped Property to bc prepaid, compute thc Maximum Annual Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the building permit which has already been issued for that Assessor's Parcel. For Assessor's Parcels of Public Property to be prepaid, compute the Maximum Annual Special Tax for ~tat Assessor's Parcel using the Maximum Annual Special Tax for Undeveloped Property. Divide the Maximum Annual Special Tax computed pursuant to paragraph 1 by the sum of the total expected Maximum Annual Special Tax revenues excluding any Assessor's Parcels which have been prepaid. 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 Amounf'). Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption prumium, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium"). 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. Confirm that no Special Tax delinquencies apply:to such Assessor's Parcel. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year which have not yet been paid. 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. Add the amounts computed pursuant to paragraphs 5 and 7 and subtract the amount computed pursuant to paragraph 8 (the "Defeasance Amount"). Verify the administrative fees and expenses of CFD No. 2001-1, Improvement Area A, 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 (the "Administrative Fees and Expenses"). 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 result of the A-9 DOCSOC~852423v7~22245.0134 prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. lfany 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 "Capitalizedlnterest Credif'). 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 "Prepayment Amounf'). From the Prepayment Amount, the amounts computed pursuant to paragraphs 3, 4, 9, 11, 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. 2001- 1, Improvement Area A. The Prepayment Amount may be insufficient 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 Board 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. 2001-1, Improvement Area A 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 PameI of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H. 1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE x F) + A A-10 DOCSOC\852423v7~22245.0134 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 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 prepaymer~t 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 ?arcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Paragraph 14 of Section H. 1, and (ii) indicate in the records of CFD No. 2001-1, Improvement Area A 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 author/zed to be levied on such Assessor';s Parcel pursuant to Section D. I. TERI~~ OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall be levied commencing in Fiscal Year 2002- 03 to the extent necessary to fully satisfy the Special Tax Requirement for a period no longer than 2037-38. A-Il DOCSOC\852423v7~22245.0134 APPENDIX B SUMMARY OF MARKET ABSORPTION STUDY B-1 DOCSOC~852423v7X22245.0134 ~' ~/7~ APPENDIX C APPRAISAL REPORT C-1 DOCSOC~52423v~2245.0134 APPENDIX D INFORMATION REGARDING THE CITY OF CHULA VISTA GENERAL INFORMATION This appendix sets forth general information about the City of Chula Vista ("Chula Vista ".) including information with respect to its finances. The following information concerning Chula Vista, the County of San Diego (the "County"), the State of California (the "State") and the United States of .dmerica (the "United States ") are included only for general background purposes. General Description 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 the area generally known as "South Bay." Chula Vista's city limits cover approximately 50 square miles. Chula Vista was incorporated Ivlarch 17, 1911 and became a c~d city in 1949. Chula Vista operates under a Council-Manager'form of government and provides the following services: public safety, community services, engineering services, planning services, public works, general administrative services and capital improvements. With a January 2001 estimated population of 183300, Chula Vista is the second largest city in the County. Population The historic population of Chula Vista, the County and the State is shown below. City of Chula Vista, County of San Diego and State of California Population Estimates Year~ City of Chula Vista County of San Diego State of California 199'7 154,500 ~ 92,207,000 199~8 159,500 2,702.80~0 32,657.000 199~9 164,200 2,751,000 33,140,00~0 2001} 171.700 2,805,90~0 33.753.00~0 200~1 181,200 2.859.00~0 34,385,00~0 200~2 190,900 2,918,300 35.037.00~0 Source: California State Department 0fFinance, E-4 Revised Historical a Ci Coun te Population Estimates~ 1991- 2000, with 1990 and 2000 Census Counts and E-I City/County Population Estimates, with Annual Percent Change, January 1, a 2001 and 2002. D-1 DOCSOC~852423v7~22245.0134 Building Activity Residential building activity for the past five calendar years for Chula Vista is shown in the following tables. City of Chula Vista New Housing Units Building Permits 1996 1997 1998 1999 2000 2001 Single Family Units 871 927 1,180 1,796 1,776 2,184 Multifamily Units 77 123 166 750 864 1,341 Total Units 948 1,050 1,346 2,546 2,640 3,525 Source: Construction Industry Research Board. City of Chula Vista Building Permit Valuations (Dollar Volume in O00's) 1996 1997 1998 1999 2000 2001 Residential New Single Family $145,991 $155,849 $214,986 $307,653 $319,086 $433,851 New Multifamily 7,093 I 1,075 11,452 53,470 74,634 107,732 Res. Alt. & Adds 5,744 6,439 5,391 5,085 4,863 7,987 Total Residential 158,829 173,364 231,829 366,209 398,583 549,570 Nonresidential New Commercial $ 747 $ 10,954 $ 17,432 $ tl,213 $ I7,916 $ 22,139 New Industrial 142 0 5,581 7,909 17,418 2,139 New Other® 2,165 6,104 11,483 5,840 17,890 11,112 Alters. & Adds. 7,868 9,036 12,783 13,552 10,527 13,092 Total Non- 10,923 26,095 47.280 38,516 63,752 48,482 Residential Total All Building $169,753 $199,459 $279,110 $404,725 $462,335 $598,052 Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and no-residential alterations and additions. Note: "Total All Building" is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sums because of independent rounding. Source: Construction induslry Research Board. D-2 DOCSOC~852423v7~22245.0134 --/7,3 Employment The following table summarizes the labor force, employment and unemployment figures over the period 1997 through 2001 for Chula Vista, the County, the State and the United States. Chula Vista, San Diego County, State of Callfornia and United States Labor Force, Employment and Unemployment Yearly Average Civilian Civilian Civilian Civilian Year and Area Labor Force Employment{il Unemploymentm Unemployment Rate°1 1996 Chula Vista 65,090 61,470 3,620 5.6% San Diego County 1,241,300 1,175,900 65,400 5.3% Call fornia 15,511,600 14,391,500 1,120,100 7.2% United States 133,943,000 126,708,000 7,236,000 5.4% 1997 Chula Vista 67,340 64,340 3,010 4.5% San Diego County 1,285,100 1,230,800 54,300 4.2% California 15,947,200 14,942,500 1,004,700 6.3 % United States(4) 136,297,000 129,558,000 6,739,000 5.0% 1998 Chula Vista 69,200 66,630 2,570 3.7% San Diego County 1,321,000 1,274,600 46,400 3.5% California 16,336,500 15,367,500 969,000 5.9% United States® 137,673,000 131,463,000 6,210,000 4.5% 1999 Chula Vista 7] ,300 68,980 2,320 3.3% San Diego C~ ounty 1,361,600 1,319,600 42,000 3.1% California 16,596,500 15,731,700 864,800 5.2% United Sw2at es(4) 139,368,000 133,488,000 5,580,000 4.2% 2000 Chula Vista 73,410 71,080 2,330 3.2% San Diego County 1,401,900 1,359,900 42,000 3.0% California 17,090,800 16,245,600 845,200 4.9% United States<4) 140,863,000 135,208,000 5,655,000 4.0% 2001 Chula Vista 74,620 72,090 2,530 3.4% San Diego County 1,424,900 1,379,200 45,700 3.2% California 17,362,200 16,435,200 927,100 5.3% United States(5) 14 ],815,000 135,073,000 6,742,000 4.8% (~) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unfounded data; therefore, it may differ from rates computed from rounded figures in this table. (4) Not strictly comparable with data for prior years. Source: California Ernployment Development Department, based on March 2001 benchmark and U.S. Department of Labor, Bureau of Labor Statistics. D-3 DOCSOC\852423v7X22245.0134 San Diego Metropolitan Statistical Area ("MSA"), which includes Chula Vista, civilian labor force and wage and salary employment figures for calendar years 1997 fl~rough 2001 are shown in the following table. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in Chula Vista. San Diego MSA Civilian Labor Force, Employment and Unemployment Annual Averages, March 2001 Benchmark 1997 1998 1999 2000 200I Civilian Labor ForceI~) 1,285,100 1,321,100 1,361,600 1,401,900 1,424,800 Employment 1,230,800 1,274,700 1,319,600 1,359,900 1,379,200 Unemployment 54,300 46,400 42,000 42,000 45,700 Unemployment Rate 4.2% 3.5% 3.1% 3.0% 3.2% Wage & Salary Employment(2) Total, All Industries 1,065,000 1,116~100 1,164,100 1,205,200 1,232,600 Agricultural, Forestry, and 10,800 10,600 11,200 11,400 11,000 Fisheries Non-Agricultural 1,054,200 1,105,500 1,152,900 1,193,800 1,221,600 Mining 400 300 300 400 300 Construction 53,000 61,800 67,000 70,000 73,400 Manufacturing 123,100 127,600 128,100 129,200 130,600 Transportation & public utilities 41,600 47,000 51,300 50,800 52,000 Wholesale trade 45,600 48,300 50,300 51,000 50,300 Retail trade 198,400 201,100 206,100 217,100 220,800 Finance, insurance & real estate 60,900 65,300 68,700 69,500 70,800 Services 339,300 359,600 381,700 399,200 409,500 Government 192,000 194,500 199,300 206,600 213,900 Note: The "Total, All Industries" data is not directly comparable to the employment data found herein. (~1 Based on place of residence. ~/ Based on place of work. Source: State of California, Employment Development Department, San Diego MSA Annual Average Labor Force and lndusrry Employment, March 2001 Benchmark. D-4 DOCSOC\852423v 7L22245.0134 The following listings set forth Chula Vista's Major Employers by Business Industrial/Office, Government and Retail based industries: Chula Vista's Major Employers (Businesses with 150 or more Employees) Business Industrial/Office No. of Name Type of Business Employees BF Goodrich Aerospace Aerostructures Group Aerospace Manufacturer 2,075 Sharp Chula Vista Medical Canter Hospital 800 Scripps Memorial Hospital Hospital 650 White Water Canyon Amusement Perk 500 American Fashion Inc. Clothing Manufacturer 500 Sunrise Medical Inc. Medical Offices 450 Eco Building Systems Moduler Building Manufacturer 210 American Manufacturing Concepts Clothing Manufacturer 200 Coastal Embroidery Specialty Manufacturer 200 Sharp Rans-Stealy Medical Group Medical Offices 200 Predericka Manor Care Center Day Cere Service 200 MDI Interviewing Services Inc. Management Consulting Service 200 Pacific Waste Services Inc. Sanitary Waste Service 200 Hyspan Precision Products Inc. Fabricated Metal Manufacturer 200 Raytheon Systems Elec~cal Manufacturer 200 Fredericka Manor Retirement Community Elderly Care Facility 171 South Bay Community Services Social Service Agancy 160 Crower Cams & Equipment Inc. Motor Vehicle Part Manufacturer 160 Navcere Hospital 150 Community Health Group Medical Offices 150 Government G No. of Name Type of Business Employees United States Border Patrol Government Agency 2,700 Southwestern Community College Community College 1,100 City of Chula Vista Municipal Government 825 Departmant of Social Services Social Service Agency 300 Sweetwater Union High School D/strict Secondary School District 260 United States Postal Service Government Agency 150 Feaster Edison Charter School Elementary School 150 Chula Vista Elementary School District Elementary School District 150 Retail No. of Name Type of Business Employees Sears Department Store 360 Price Costco General Merchandise 250 Macy's Department Store 250 Big Kmart General Merchandise 200 Fuller Honda Automotive Retailer 200 Terget Stores General Merchandise 180 J C Penney Department Store 150 Vons Grocery Store 150 Fuller Ford Automotive Retailer 150 Source: City of Chula Vista D-5 DOCSOC~852423v7~22245.0134 Effectb.,e Buying Income "Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other than labor-related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as Pensions and welfare assistance). Deducted bom this total are personal taxes (federal, state and local, nontax payments, f'mes, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant ftgure is commonly known as "disposable personal income." Chula Vista, San Diego County and California Effective Buying Income(Il Median Effective Per Capita Household Percent of Bu34ng Effective Effective Households income® Buying Income Buying Income over $50~000 1996 Chula Vista $ 2,092,373 $13,201 $32,128 26.9 San Diego County 40,913,543 14,975 34,445 29.9 California 492,516,991 15,068 35,216 31.7 1997 Chula Vista $ 2,217,I70 $13,762 $33,267 28.9 San Diego County 43,212,824 15,619 35,725 31.7 California 524,439,600 15,797 36,483 33.5 1998 Chula Vista $ 2,408,888 $14,187 $33,911 30.1 San Diego County 46,056,143 16,101 36,296 32.8 California 551,999,317 16,299 37,091 34.6 1999 Chula Vista $ 2,629,899 $15,776 $37,725 35.4 San Diego County 49,907,828 17,270 39,213 37.4 California 590,376.663 17,245 39,492 38.3 200O Chula Vista $ 2,959,674 $17,268 $42,550 41.6 San Diego County 54,337,662 19,150 44,292 43.7 California 652,190,282 19,081 44,464 44.3 i~) Not comparable with prior years. Effective Buying Income is now based on money income (which does not take into account sale of property, taxes and social security paid, receipt of food stamps, etc.) versus personal income. (2) Dollars in thousands. Source: "Survey of Buying Power," Sales & Marketing Management Magazine, dated 1997, 1998, 1999, 2000 and 2001. Sales Taxes The following table shows taxable transactions in Chula ¥ista by type of business during calendar years 1996 through 2000. As indicated below, total retail sales for Chuta Vista in 1996 increased by approximately 6.5% over the i995 level, in 1997 increased by approximately 7.1% over the 1996 level, in 1998 increased by approximately 8.8% over the 1997 level, in 1999 increased appro~(unately 10.3% over the 1998 level and in 2000 increased approxiinately 13% over the 1998 level. A sununm~ of kistoric taxable transactions for Chula Vista is shown in the following table. D-6 DOCSOC\852423vT~22245.0134 City of Chula Vista Taxable Transactions (Dollars in thousands) 1996 1997 1998 1999 2000 Apparel Stores Group $ 61,487 $ 64,979 $ 63,414 $ 61,758 $ 66,598 General Merchandise Stores 287,235 337,230 382,944 439,731 495,679 Drug Stores 23,220 Food Stores Group 72,388 81,503 81,006 85,662 90,487 Packaged Liquor Stores 5,948 Eating and Drinking Group 121,494 126,357 131,661 142,329 155,583 Household Group/Home Fum. Appli. 43,600 47,004 55,856 61,923 66,365 Building Material Group 68,119 70,930 75,812 87,902 102,370 Automotive Group 92,235 89,986 107,808 126,304 145,923 Service Stations 101,821 103,994 88,570 95,546 121,244 Other Retail Stores 109~664 120,212 133,463 139~837 157~ 152 Retail Stores Total $ 987,211 $1,042,195 $1,120,534 $1,240,992 $1,401,401 All Other Outlets 145,881 171 ~228 199,661 215~396 206~889 Total All Outlets $1.133.09~2 ~ $1.320A9~5 ~ $1.608.29~0 O) lneluded in General Merchandise Stores. ce) Included in Eating and Drinking Group. Source: State Board of Equalization. Education Public educational instruction from kindergarten through high school is provided by the Chula Vista Elementary Schoo1 District and Sweetwatcr Union High School District. These districts administer twenty-six elementary schools, nme junior high schools and eight senior high schools. Southwestern College, a two year Community Co~/ege, has an enrollment of more than 15,000. There are also four adult education schools and twelve private schools. There are seven universities or colleges within 30 minutes commuting distance from Chula Vista m the San Diego Metropolitan Area. Chula Vista has proposed a University of California campus in Chula Vista, to be located on a 400 acre site adjoining the Olympic Training Center. Community Facilities There are two acute-care hospitals, two psychiatric hospitals and three convalescent hospitals, and more than 400 medical doetnrs and allied professionals in Chula Vista. There are two daily, one weekly and one semi-weekly newspapers published and circulated in Chula Vista.. Chula Vista has one main public library and two branch hbraries. Recreational facilities within or near Clmla Vista mchide twenty-fonr parks, four community centers, six "tot lots," two ball fields, twenty-eight tenms courts, three golf courses, four municipal swimming pools, two gymnasiums and boat launching facilities. Chula Vista's bayfront area contains a marina which houses 552 boats and miles of public beaches. Chula Vista also provides many trails for bicycling, hiking and jogging. Chula Vista is also the home of the United States Olympic Training Center. This is the third such training center in the nation and the ouly year round training facility. The center is located on a 150-acre site donated by EastLake Development Company adjacent to the Otay Lake reservoir. Chula Vista has more than sixty churches and nearly 100 service, fraternal and civic organizations. D-7 DOCSOC~852423v%22245.0134 /7o Transportation U.S. Highways 5 (along the coast) and 805 (inland) provide full freeway access from Chula Visla north to San Diego and south to the Mexican boarder. Commuter rail service is provided by the San Diego Trolley, a light rail system started in 1981 and eleven bus routes serve Chula Vista. Daily bus connections serve Chula Vista, and Southern Pacific Railway and San Diego's Lindbergh International Airport are fifteen minutes to the north of Chula Vista. Utilities Electric power and natural gas are provided by San Diego Gas and Electric. Pacific Bell provides telephone service to the area. Otay Water District and Sweetwater Water District provide water service and Chula Vista provides sewer service. D-8 DOCSOC\852423v7~22245.0134 APPENDIX E SUMMARY OF INDENTURE E-1 DOCSOC~852423v7X22245.0134 APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT This Continuing Disclosure Agreement dated as of July 1, 2002 (the "Disclosure Agreement") is executed and delivered by the City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) (the "Issuer") and U.S. Bank, N.A., as fiscal agent (the "Fiscal Agent") and as dissemination agent (the "Dissemination Agent"), in connection with the issuance and delivery by the Issuer of its $ 2002 Improvement Area A Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of July 1, 2002 (the "Indenture"), by and between the Issuer and the Fiscal Agent. The Issuer, the Fiscal Agent and the Dissernination Agent covenant as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer, the Fiscal Agent and the Dissemination Agent, for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. 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, Sections 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, ar/y Bonds (including persons holding Bonds through nominees, depositories or other imermediaries), or (b) is treated as the owner of any Bonds for federal income purposes. "Disclosure Representative" shall mean the Dir&ctor of Finance of the City of Chula Vista 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, initially, U.S. Bank, N.A., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designed in writing by the Issuer and which has been filed with the then current Dissemination Agent a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purpose of the Rule. "Official Statement" shall mean the Official Statement, dated July __, 2002 relating to the Bonds. "Participating Underwriter"-shall mean Stone & Youngberg LLC, whose address for purposes of this Agreement is 50 California Street, Suite 3500, San Francisco, Califomia 94111, Attention: Research Departmc~nt. F-1 DOCSOC~852423v7~22245.0134 "Repository" shall mean each National Repository and each State Repository. "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. "State Repository" shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. "Tax-exempt" shall mean that interest on the Bonds is excluded from gross income for fedm'al income tax purposes, whether or not such interest is includable as an item of tax preferences or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax. SECTION 3. Provision of Annual Reports. (a) The Issuer shall, or shall cause the Dissemination Agent by written direction to such Dissemination Agent to, not later than February 1 after the end of the Issuer's fiscal year (which currently ends on June 30), commencing with the report due by February 1, 2002, provide to each Repository and the Participating Undem~riter 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 may be submitted separately from and later than the balance of the Annual Repo~ if they are not available by the date required above for the filing of the Annual Report. An Annual Report shall be provided at least annually notwithstanding any fiscal year longer than 12 calendar months. The Issuer's fiscal year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The Issuer will promptly notify each Repository or the Municipal Securities Rulemaking Board and, in either case, the Fiscal Agent and the Dissemination Agent ora change in the fiscal year dates. (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Issuer shall provide the Annual Report to the Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the Dissemination Agent). If by fifteen (15) Business Days prior to such date the Fiscal Agent has not received a copy of the Annual Report, the Fiscal Agent shall contact the Issuer and the Dissemination Agent to determine if the Issuer is in compliance with subsection (a). The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Fiscal Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository, in substantially the form attached as Exhibit A. F-2 DOCSOC~852423v7X22245.0134 (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and (ii) promptly after receipt of the Annual Report, file a report with the Issuer and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. SECTION 4. Content of Annual Reports. The initial Annual Report due by February 1, 2003 shall include only a copy of the Official Statement and the audited financial statements of the Issuer described in Section 4(a) below. Thereafter, the Issuer's Annual Report shall contain or include by reference: (a) Financial Statements. The audited financial statements of the Issuer for the most recent fiscal year of the Issuer then ended. If the Issuer prepares audited financial statement and if the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the Issuer in a format similar to the financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. Audited financial statements of the Issuer shall be audited by such auditor as shall then be required or permitted by State law or the Indenture. Audited financial statements, if prepared by the Issuer, shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that the Issuer may from time to time, if requi[,ed by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the Issuer shall modify the basis upon which its financial statements are prepared, the Issuer shall provide a notice of st~ch modification to each Repository, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis. (b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following information: (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 Reserve Requirement as of the September 2 preceding the filing of the Annual Report; (iii) an update on the statas of construction of the public improvements to be constructed with the proceeds of the Bonds, which shall Include an update of Table 1 in the Official Statement; (iv) any changes to the Rate and Method of Apportionment of the Special Taxes approved or submitted to the qualified electors for approval prior to the filing of the Annual 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; (v) an update of'the estimated assessed value-to-lien ratios within the Disthct substantially in the form of Table 6 in the Official Statement based upon the most recent Special Tax levy preceding the date of the Annual Report and on the assessed values of F-3 DOCSOC\852423v7~22245.0134 property for the current fiscal year; provided, however, that all parcels which constitute Developed Property may be grouped as a single category; (vi) an update of Table 2 in the Official Statement, including a list of all taxpayers within the District which own property in the District upon which 5% or more of the total Special Taxes for the current fiscal year have been levied, and a statement as to whether any of such taxpayers is delinquent in the payment of Special Taxes; (vii) any event known to the Issuer which reduces or slows the number of residential units permitted to be constructed within the District or which results in a moratorium on future building within the District; (viii) the status of any foreclosure actions being pursued by the Issuer with respect to delinquent Special Taxes; (ix) the total Special Taxes levied and the total Special Taxes collected for the prior fiscal year and the total Special Taxes that remain unpaid for each prior fiscal year in which Special Taxes were levied; and (x) any information not akeady included under (i) through (ix) above that the Issuer is 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. (c) Any or all of the items listed in (a) or (b) 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 Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events.' (a) 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: (1) principal and interest payment delinquencies. (2) an event of default under the Indenture other than as described in (1) above. (3) unscheduled draws on the Reserve Fund reflecting financial difficulties. (4) unscheduled draws on any credit enhancements securing the Bonds reflecting financial difficulties. (5) any change in the provider of any letter of credit or any municipal bond insurance policy securing the Bonds or any failure by the providers of such letters of credit or municipal bond insurance policies to perform on the letter of credit or municipal bond insurance policy. F-4 DOCSOC\852423vT~22245.0134 (6) adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds. (7) modifications to the rights of Bond Owners. (8) unscheduled redemption of any Bond. (9) defeasances. (10) any release, substitution, or sale of property securing repayment of the Bonds. (11) rating changes. (b) The Fiscal Agent shall, promptly upon the obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Issuer pursfiant to the Indenture, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f). For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by the officer at the corporate trust office of the Fiscal Agent with regular responsibility for the administration of matters related to the Indenture. (c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Fiscal Agent pursuant to subsection Co) or othera4se, the Issuer shall as soon as possible ~etermine if such event would be material under applicable federal securities laws. (d) "~ If the Issuer has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f). (e) If in response to a request under subsedtion (b), the Issuer determines that the Listed Event would not be material under applicable federal securities laws, the Issuer shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f). (f) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with (i) the Municipal Securities Rulemaking Board or (ii) each National Repository, and in either case, to each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture. In each case of the Listed Event, the Dissemination Agent shall not be obligated to file a notice as required in this subsection (f) prior to the occurrence of such Listed Event. (g) The Issuer hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the Issuer and that the Fiscal Agent or 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 requireme.nts of the Rule. SECTION 6. Termination of Reporting Obligation. The obligation of the Issuer, the Fiscal Agent and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal F-5 DOCSOC\852423v7522245,0134 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. 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 the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Fiscal Agent shall be the Dissemination Agent. The initial Dissemination Agent shall be U.S. Bank, N.A.. The Dissemination Agent may resign by providing (i)thirty days written notice to the Issuer and the Fiscal Agent and (ii) upon appointment of a new Dissemination Agent hereunder. SECTION 8. Amendment. (a) This Disclosure Amendment may be amended, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law (including roles or regulations) or in interpretations thereof, or a change in the identity, nature or status of the Issuer or the type of business conducted thereby, (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of thi's Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (3) the Issuer shall have delivered to the Fiscal Agent an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the Issuer and the Fiscal Agent, to the same effect as set forth in clause (2) above, (4) the Issuer shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the~ Issuer, to the effect that the amendment does not materially impair the interests of the Owners o~Beneficial Owners, and (5) the Issuer shall have delivered copies of such opinion and amendment to each Repository. (b) This Disclosure Agreement may be amended, by written agreement of the parties, upon obtaining consent of Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of the Owners of the Bonds, provided that the conditions set forth in Section 8(a)(1), (2) and (3) have been satisfied. (c) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change. (d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the f'mancial information. 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 ora Listed Event in addition to that which F-6 DOCSOC~852423v 7x22245.0134 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 if occurrence of a Listed Event. The Issuer acknowledges and understands that other state and federal laws, including but not limiwxl to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Issuer under such laws. SECTION 10. Default. In the event ora failure of the Issuer or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Participating Unde~vriter 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. 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 in the event of any failure of the Issuer or the Fiscal Agent to comply with this Disclosure Agreement shall be an action to compel performance. SECTION 11. Duties, Immunities and Liabilities of Fiscal Agent and DissemInation Agent. Article VII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indantum and the Dissemination Agent and the Fiscal Agent shall be entitled to the same protections, limitations from liability and indemnification hereunder as are afforded the Fiscal Agent thereunder. The Dissemination Agent and the Fiscal Agent shall have only such duties as are specifically set forth in this Disclosur~Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and the Fiscal Agent and their respective officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their 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 Agent's or the Fiscal Agent's respective negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Fiscal Agent shall have no duty or obligation to review any information provided to them hereunder. The obhgations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and Fiscal Agent and payment of the Bonds. No person shall have any right to commence any action against the Fiscal Agent or the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent and the Fiscal Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Agreement. SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. F-7 DOCSOC~g52423vTX22245.0134 SECTION 13. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing. Disclosure Representative: Director of Finance City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Dissemination Agent: Fiscal Agent: SECTION 14. 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 instmment. CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) By: Director of Finance U.S. BANK, N.A., as Fiscal Agent and Dissemination Agent By: Authorized Officer F-8 DOCSOC~852423v%22245.0134 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) Name of Bond Issue: City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) $ 2002 Improvement Area A Special Tax Bonds Date of Issuance: July __, 2002 NOTICE IS HEREBY GIVEN that the City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) located in the City of Chula Vista, California (the "District") has not provided an Annual Report with respect to the above-named Boflds as required by Section 3 of the Continuing Disclosure Agreement, dated as of July 1, 2002, by and between the District and U.S. Bank, N.A., as fiscal agent and dissemination agent. [The District anticipates that the Annual Report will be filed by .] Dated: U.S. Bank, N.A., as Dissemination Agent cc: City of Chula Vista Stone & Youngberg LLC F-9 DOCSOCX852423v7~22245.0134 APPENDIX G CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER This Continuing Disclosure Agreement (the "Disclosure Agreement") dated as of July 1, 2002 is executed and delivered by NND -- Trimark San Miguel Ranch, LLC (the "Developer"), and U.S. Bank, N.A., as fiscal agent (the "Fiscal Agent") and as dissemination agent (the "Dissemination Agent"), in connection with the execution and delivery by City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) (the "District") $ aggregate principal amount of its City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds (the "Bonds"). The Bonds are being executed and delivered pursuant to an Indenture dated as of July 1, 2002 by and between the District and U.S. Bank, N.A., as Fiscal Agent (the "Agreement"). The Developer covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Agreement. T~is Disclosure Agreement is being executed and delivered by the Developer for the benefit of the Bondowners and Beneficial Owners and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12C0)(5).-~ This Disclosure Agreement does not address additional undertakings, if any, by or with respect to persons other than the Developer who may be considered obligated persons or purposes of the Rule, which additional undertakings, if any, may be required for the Participating Underwriter to comply with the Rule. SECTION 2. Definitions. In addition to the definitions set forth in the Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the f~lowing capitalized terms shall have the following meanings: "Affiliate" shall mean, with respect to any Person, (a) e~ich Person that, directly or indirectly, owns or controls, whether beneficially or as an agent, guardian or other fiduciary, twenty-five percent (25%) or more of any class of Equity Securities of such Person, (b) each Person that controls, is controlled by or is under common control with such Person, or (c) each of such Person's executive officers, directors, joint venturers and general partners; provided, however, that in no case shall the District be deemed to be an Affiliate of the Developer for purposes of this Agreement. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Dissemination Agent" shall mean U.S. Bank, N.A., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Developer and which has filed with the Developer and the City a written acceptance of such designation. "District" shall mean City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch). "Equity Securities" of any- Person shall mean (a)all common stock, preferred stock, participations, shares, general parmership interests or other equity interests in and of such person G-1 DOCSOC~852423v7~22245.0134 (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing. "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30. "Government Authority" shall mean any national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Improvement Area A" means Improvement Area A of the District. "Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. "Official Statement" shall mean the Official Statement, dated July __, 2002, relating to the Bonds. "Participating Underwriter" shall mean Stone & Youngberg LLC, the original underwriter of the Bonds, whose address for purposes of this Agreement is 50 California Street, Suite 3500, San Francisco, California 94111, Attention: Research Department, and any other underwriting firm that provides written 'notice to the Developer that it is required to comply with the Rule in connection with the offeriOg of the Bonds. "Person" shall mean any natumI person, corporation, limited liability company, partnership, firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity. "Repository" shall mean each National Repository and the State Repository. "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 fi.om time to time. "Semi-Annual Report" shall mean any Semi-Annual Report provided by the Developer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "State" shall mean the State of California. "State Repository" shall mean any public or private repository or entity designed by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. SECTION 3. Provision of Annual Reports. (a) The Developer shall, or shall cause the Dissemination Agent to, not later than February 1 and August 1 of each year-, commencing -~ February 1, 2003, provide to each Repository, the District and to Stone & Youngberg LLC a Semi-Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Semi-Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference G-2 DOCSOC~852423v7~2245.0134 other information as provided in Section 4 of this Disclosure Agreement provided that the audited financial statements, if any, of the Developer may be submitted separately from the balance of the Semi-Annual Report and later than the date required for the filing of the Semi-Annual Report if they are not available by that date. (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Semi-Annual Report to Repositories, the Developer shall provide the Semi-Annual Report to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Developer is preparing, or causing to be prepared, the Semi-Annual Report and the date which the Semi-Annual Report is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Semi-Annual Report or notification as described in the preceding sentence, the Dissemination Agent shall contact the Developer to determine if the Developer is in compliance with the first sentence of this subsection (b). (c) If the Dissemination Agent is unable to provide a Semi-Annual Report to Repositories by the date required in subsection (a) or to verify that a Semi-Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for provid'mg the Semi-Annual Report the name and address of each National Repository and the Slate Repository, if any; and (!i) file a report with the Developer and the District certifying that the Semi- Annua~l Report has been provided pursuant to this Disclosure Agreement, stating the date it was p~'bvided and listing all the Repositories to which it was provided. SECTION 4. Content of Semi-Annual Report. The Developer's Semi-Annual Report shall contain or include by reference the information which is available as of January I and July 1 of each year, as applicable, relating to the following: a. An update to the section in the Official Statement entitled "THE DEVELOPMENT AND PROPERTY OWNERSHIP" (excluding the subsections entitled "Appraisal" and "Market Absorption Study") including an update of the tables therein and a discussion of the sources of funds to finance development relating to its property within -~ Improvement Area A, and whether any material defaults exist under any loan arrangement related to such financing. b. A summary of development activity witkin ~ Iml~rovement Area A, inclucYmg the number of parcels for which building permits have been issued, the number of parcels for which certificates of occupancy have been issued, the number of parcels for which sales have closed, and land or lot sales including the amount of land or lots sold and the name of the purchaser of lots to be developed. c. Status of any material governmentally-imposed preconditions for commencement or continuation of development of the undeveloped parcels within -~ Iml~rovement Area A known to the Developer. d. Status of any material legislative, administrative and judicial challenges known to the Developer to or affecting the construction of the development or the time for construction of any public or private improvements to be made by the Developer or G-3 DOCSOC~852423v7~22245.0134 any of its Affiliates within -~ _Improvement Area A, other than the public improvements described in (e) below (the "Developer Improvements"). e. Status of completion of the public improvements financed by the Bonds and any material legislative, administrative and judicial challenges known to the Developer to or affecting the construction of such public improvements (the "District Improvements"). f. Any material amendments to land use entitlements with respect to undeveloped parcels within -~ Improvement Area A that are known to the Developer, including an update of the total acres subject to the levy of Special Taxes if the amendment affects the total number of acres subject to the levy of the Special Taxes. g. Until such time as the Developer and its Affiliates no longer own land within -~ Improvement Area A which is responsible for 20% or more of the annual Special Tax levy, unaudited financial statements of the Developer and its Affiliates owniw, land within Improvement Area A and, if prepared, audited financial st_at_~om~ts of each of such entities for its most recently completed fiscal year (which currently ends on each December 31), prepared in accordance with generally accepted accounting principles as promulgated to apply to private entities from time to time by the Financial Accounting Standards Board. If the Developer has audited financial statements prepared and the audited financial statements are not available by the time the Semi-Annual Report is required to be filed pursuant to Section 3(a), the Semi- Annual Report shall contain unaudited financial statements in a format similar to the financial statements for the preceding year, and the audited financial statements shall , be filed in the same manner as the Semi-Annual Report when they become available. The Developer need only provide audited or unaudited data once per year. h. The filing of any lawsuit against the Developer or otherwise known to the Developer which will materially adversely affect the completion of the District Improvements, thc Developer Improvements or the development of undeveloped parcels within -~ Improvement Area A, or litigation which would materially adversely affect the financial condition of the Developer or its Affiliates that own property within -~ Improvement Area A. i. Material payment default by the Developer on any loan of thc Developer (whether or not such loan is secured by property within the District) which is beyond any applicable cure period in such loan. Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the doctunent included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Developer shall clearly identif~v each such other document so included by reference. G-4 DOCSOC~852423v7L22245.0134 SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Developer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material under clauses (b) and (c): 1. Failure to pay any real property taxes, special taxes or assessments (including any assessment installment) levied within -~ I~ on a parcel owned by the Developer or any of its Affiliates; 2. Material payment default by the Developer or any Affiliate on any loan secured by properly within -~ ImDrove~ment Area A owned by the Developer or any of its Affiliates which is beyond any applicable cure period in such loan; 3. The filing of any proceedings with respect to the Developer or any of its Affiliates, in which the Developer or any of its Affiliates that own property within -~ Improvement Area A may be adjudicated as bankrupt or discharged from any or all of their respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts; and (b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) It the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Developer shall promptly file a notice of such occu/fence with the Dissemination Agorot which shall then distribute such notice to the Municipal "Securities Rulemaking Board and each State Repository, with a copy to the District and the Participating Underwriter. SECTION 6. Termination of Reporting Obligation. The Developer's obligations under this Disclosure Agreement shall terminate upon any of the following events: (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, (b) if as of the date for filing the Semi-Annual Report the Developer and its Affiliates own property within -~ I_m~rovement Area A which is responsible for less than twenty pement (20%) of the Special Taxes levied in the Fiscal Year for which the Semi-Annual Report is being prepared, and the Developer Improvements and any District Improvements to be constructed by the Developer have been completed, or (c) upon the delivery by the Developer to the District and the Participating Underwriter of an opinion of nationally recognized bond counsel to the effect that the information required by this Disclosure Agreement is no longer required. Such opinion shall be based on information publicly provided by the Securities and Exchange Commission or a private letter ruling obtained by the Developer or a private letter ruling obtained by a similar entity to the Developer. If such termination occurs prior to the final maturity of the Bonds, the Developer shall give notice of such termination in the same manner as for a Semi-Annual Report hereunder. SECTION 7. Disseminatiori Agent. The Developer 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 a G-5 DOCSOCX852423v7L22245.0134 successor Dissemination Agent. If the Dissemination Agent is not the Developer, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Developer pursuant to this Disclosure Agreement. The Developer has initially appointed U.S. Bank, N.A. as the Dissemination Agent hereunder. SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Developer may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in cimumstances 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; (b) This Disclosure Agreement, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel addressed t6 the District, the Fiscal Agent and the Participating Underwriter, have complied with the requirements of the Rnle 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; (c) The amendment or waiver either (i)is approved by the Bondowners in the same manner as provided in the Agreement for amendments to the Agreement with the consent of Bondowners, or (ii) does not, in the opinion of nationally recognized bond.counsel addressed to the City and the Fiscal Agent, materially impair the interests of the Bondowners or Beneficial Owners of the Bonds; and (d) '~The Developer, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (b) and (c) above. ~ In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Developer shall describe such amendment in the next Semi-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 Developer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given to the Municipal Securities Rulemaking Board, the State Repository, if any, and the Repositories, and (ii)the Semi-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 former accounting principles. The comparison of financial data described in clause (ii) of the preceding sentence shall be provided at the time financial statements, if any, are filed under Section 4(g) hereof. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Developer 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 Semi-Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by tiffs Disclosure Agreement. If the Developer chooses to include any information in any Semi-Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Developer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Semi-Annnal Report or notice of occurrence of a Listed Event. G-6 DOCSOC\852423vTL?.2245.0134 SECT1ON 10. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Agreement, any Participating Underwriter or any Bondowner 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 Developer or the Dissemination Agent to comply with its obligations under this Disclosure Agreement. 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 in the event of any failure of the Developer to comply with this Disclosure Agreement shall be an action to compel specific performance. SECTION I1. 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 Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of theirs powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending .aga'mst any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissenfmation Agent shall not be deemed to be acting in any fiduciary capacity for the Developer, the Participating Underwriter, Bondowners or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining fi'om acting upon a direction from the Developer or an opinion of nationally recognized bond counsel. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The I.~.'ssemination Agent will not, without the Developer's prior written consent, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceecgmg in respect of which indemnification may be sought hereunder unless such settlement, compromise or consent includes an unconditional release of the Developer and its controlling persons from all liability arising out of such claim, action or proceedings. Ifa claim, action or proceeding is settled with the consent of the Developer or if there is,a final judgment (other than a stipulated final judgment without the approval of the Developer) for the plaintiff in any such claim, action or proceeding, with or without the consent of the Developer, the Developer agrees to indemnify and hold harmless the Dissemination Agent to the extent described herein. SECTION 12. Reporting Obligation of Developer's Transferees; Covenant Running With Land. The Developer shall, in connection with any sale or transfer of ownership of land within a Iml~rovement Area A which will result in the transferee (which term shall include any successors and assigns of the Developer) becoming responsible (i) for the payment of more than 20 percent of the Special Taxes levied on property within -~ Improvement Area A in the Fiscal Year following such transfer and (ii) for the construction and/or installation of some or all of the improvements needed to bring such sold or transferred land to finished lot condition, cause such transferee and any Affiliate of the transferee to enter into a disclosure agreement with terms substantially similar to the terms of this Disclosure Agreement, whereby such transferee agrees to be bound by the obligations of the Developer under this Disclosure Agreement as an additional obligated party. Additionally, the Developer shall, in connection with any sale or transfer of ownership of land within the District which will result in the transferee and any Affiliate of the transferee becoming responsible for the payment of more than 20 percent of the Special Taxes levied on property within the District in the Fiscal Year following such transfer, which sale or transfer occurs before such sold or transferred land is in finished lot condition, and the transferee is not responsible for the construction or installation of some or all of the infrastructure needed to bring such land to fin/shed lot condition, cause such transferee to enter into a disclosure agreement with terms substantially similar to the terms of this G-7 DOCSOC~852423v7k22245.0134 Disclosure Agreement, whereby such transferee agrees to provide the information of the type described in Section 4(b), (c), (d) and (f) of this Disclosure Agreement with respect to its property; provided that such transferee's obligations under such disclosure agreement shall terminate upon the transferee and any Affiliate of the transferee becoming responsible for the payment of less than 20 percent of the annual Special Taxes. The Developer agrees that its obligations pursuant to this Disclosure Agreement shall be a covenant running with the land owned by the Developer within the District such that its obligations pursuant to this Disclosure Agreement shall be binding upon all such transferees described above as though the obligations of the Developer and such transferees were expressly set forth in the grant deeds whereby such transferees obtain title to or an estate in such land from the Developer as provided in Sections 1460 through 1470 of the Civil Code of the State of California. A memorandum regarding the Developer's obligations under this Disclosure Agreement and of the covenant running with the land created hereby shall be recorded in the Official Records in the office of the County Recorder of the County of San Diego. SECTION 13. Developer as Independent Contractor. In. performing under this Disclosure Agreement, it is understood that the Developer is an independent contractor and not an agent of the City of Chula Vista or the District. SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Developer, the City, the Dissemination Agent, the Participating Undenvriter and Bondowners and Beneficial Owners from time to time of the Bonds, and shall create no fights in any other person or enhty. SECT1ON 15. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. ,:, TRIMARK SAN MIGUEL RANCH, LLC By:. Its: U.S. BANK, N.A. By: Its: : G-8 DOCSOC~852423v7X22245.0134 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE SEMI-ANNUAL REPORT Name of the Issuer: City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) City of Chula Vista, California Name of Bond Issue: City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds Date of Issuance: July __, 2002 NOTICE IS HEREBY GIVEN that has not provided a Semi- Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement. [The Developer anticipates that such Semi-Annual Report will be filed not later than Dated: U.S. BANK, N.A. By: cc: City o£Clmla Vista, California Stone& Youngberg LLC G-9 DOCSOC\852423v7~22245.0134 APPENDIX H FORM OF OPINION OF BOND COUNSEL H-1 DOCSOC~52423v7~2245.0134 ~.~ APPENDIX I DTC AND THE BOOK ENTRY SYSTEM 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 maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited-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 o£ the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S, equity issues, corporate and municipal debt issues, and money market instruments from over 85 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 certificates. Direct Participants include both U.S. and non-U.S, securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in mm, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, .aod Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealtrs, Inc. 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 Participant, either directly or indirectly ("Indireot Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. 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 Series 2002A Bond ("Beneficial Owner") is in tum 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 Beneficial 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 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 I-1 DOCSOC~852423v7k22245.0134 -Aoo records reflect only the identity of the Direct Participants to whose accounts 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 holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct 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 to any statutory or regulatory requirements as may be in effect fxom time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Series 2002A 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 registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all 'of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor 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 Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting fights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemptxon proceeds, distributions, and dividend payments on the Bonds will be made to Cede & C6., 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 District or the Fiscal Agent, on payment 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 bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in effect fi.om time to time. 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 Fiscal Agent, 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 of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Fiscal Agent, 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 Fiscal Agent. The requirement for physical delivery of Bonds in 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 by a book-entry credit of tendered Bonds to the Fiscal Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Fiscal Agent. Under such circumstances, in the 1-2 DOCSOC\852423v7~22245.0134 $ event that a successor dc'pos/toW is not obtained, physical Bonds are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, physical Bonds will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. 1-3 DOCSOC\852423v7k22245.0134 Exhibit 7 Bond Indenture for CFD No. 2001-1 Draft 11.26.01 BOND INDENTURE by and between City Of Chula Vista Community Facilities District No. 2001~1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds and U.S. Bank Trust National Association, As Fiscal Agent Dated as of January 1, 2002 Re: $ City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds Draft 11.16.01 TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS .................................................................................................................................... 1 SECTION 1.01 DEEINITIONS ................................................................................................................................ ARTICLE II. GENERAL AUTHORIZATION AND TERMS ............................................................................. 9 SECTION 2.01 AMOUNT, ISSUANCE AND PUP. POSE ............................................................................................. 9 SECTION 2.02 TYPE AND NATUre OF BOND ...................................................................................................... 9 SECTION 2.03 TERMS OF THE BONDS ................................................................................................................ 9 SECTION 2.04 DESCRIPTION OF BONDS; INTEREST RATES ............................................................................... 10 SECTION 2.05 PAYMENT .................................................................................................................................. 10 SECTION 2.06 EXECUTION oPBONDS .............................................................................................................. 10 SECTION 2.07 ORDER TO PENT AND AUTHENTICATE BONDS .......................................................................... 11 SECTION 2.08 BOOKS OF P-.EGISTRAT1ON; BOOK ENTRY SYSTEM .................................................................... 11 SECTION 2.09 EXCHANGE OF BONDS ............................................................................................................... 12 SECTION 2.10 NEGOTIABILITY, REGISTRATION AND TRANSFER OF BONDS ..................................................... 12 SECTION 2.11 AUTHENTICATION ..................................................................................................................... 12 ARTICLE m. FUNDS AND ACCOUNTS ........................................................................................................... 13 SECTION 3.01 ESTABLISHMENT OF SPEC1AL FUNDS ......................................................................................... 13 SECTION 3.02 SPECLqL TAX FUND ................................................................................................................... 13 SECTION 3.03 BOND SERVICE FUND ................................................................................................................ 14 A. Interest Account ....................................................................................................................................... 14 B. Principal Account .................................................................................................................................... 14 SECTION 3.04 COSTS OF ISSUANCE FUND ........................................................................................................ 14 SECTION 3.05 ACQUISITION FUND ................................................................................................................... 14 SECTION 3.~)'6 RESERVE FUND ......................................................................................................................... 15 SECTION 3.07 REBATE FUND ........................................................................................................................... 16 SECTION 3.08 REDEMPTION FUND ................................................................................................................... 16 SECTION 3.09 ADMINISTRATIVE EXPENSE FUND ............................................................................................. 16 SECTION 3.10 1NVESTMENT OF FUNDS ............................................................................................................. 16 SECTION 3.11 DISPOSITION OF BOND PROCEEDS ....................................................................................... ~.... 17 ARTICLE IV. REDEMPTION .............................................................................................................................. 17 SECTION 4.01 NOTICE OF REDEMPTION ........................................................................................................... 17 A. Notice by Mail to Bondholders: ............................................................................................................... 17 B. Further Notice: ........................................................................................................................................ 18 C Failure to Receive Notice ........................................................................................................................ 18 D Certificate of Giving Notice ..................................................................................................................... 18 SECTION 4.02 EFFECT OF REDEMPTION ........................................................................................................ 18 SECTION 4.03 REDEMPTION PmCES AND TERMS ............................................................................................. ] 8 A. Optional Redemption ............................................................................................................................... 18 B. Extraordinary Mandatol? Redemption .................................................................................................... 19 C Mandatory Sinlang Fund Redemption ..................................................................................................... 19 E. Notice and Selection of Bonds for Redemption ........................................................................................ 20 ARTICLE V. SUPPLEMENTAL INDENTURES .................................................................................................20 SECTION 5.01 AMENDMENTS OR SUPPLEMENTS .............................................................................................. 20 - ARTICLE VI. MISCELLANEOUS CONDITIONS .......................................................................................... 22 SECTION 6.0 ] OWNERSHIP OF BONDS .............................................................................................................. 22 SECTION 6.02 MUTILATED, LOST, DESTROYED OR STOLEN BONDS ................................................................ 22 SECTION 6.03 CANCELLATION OF BONDS ........................................................................................................ 22 SECTION 6.04 COVENANTS .............................................................................................................................. 22 SECTION 6.05 ARBITRAGE CERTIFICATE ......................................................................................................... 24 · SECTION 6.06 DEFEASANCE ............................................................................................................................. 24 SECTION 6.07 FISCAL AGENT .......................................................................................................................... 25 (i) Draft 11.16.01 TABLE OF CONTENTS (Continued) Page SECTION 6.08 LIABILITY OF FISCAL AGENT .................................................................................................... 26 SECTION 6.09 PROVISIONS CONSTITUTE CONTRACT ....................................................................................... 27 SECTION 6.10 CUSIP NUMBERS ...................................................................................................................... 27 SECTION 6.11 SEVERAB1LITY ........................................................................................................................... 27 SECTION 6.12 UNCLAIMED MONEY ................................................................................................................. 28 SECTION 6.13 NONPRESENTMENT OF BONDS ................................................................................................... 28 SECTION 6.14 CONTINUING DISCLOSURE ........................................................................................................ 28 ARTICLE VII. BOND FORM ................................................................................................................................ 28 SECTION 7.01 FORM OF BONDS ....................................................................................................................... 28 SECTION 7.02 TEMPORARY BONDS .................................................................................................................. 29 ARTICLE VIII EVENT OF DEFAULT ................................................................................................................ 29 SECTION 8.01 EVENTS OF DEFAULT ................................................................................................................ 29 SECTION 8.02 APPLICATION OF REVENUES AND OTHER FUNDS AFTER DEFAULT ........................................... 29 EXHIBIT "A" - FORM OF BOND ..................................................................................................................... A-1 EXHIBIT "B" - ARBITRAGE REBATE INSTRUCTIONS ............................................................................... B-1 (ii) Draft 11.16.01 BOND INDENTURE This Bond Indenture dated as of January 1, 2002, is entered into by and between Community Facilities District No. 2001-1 (San Migucl Ranch), a community facilities district organized and existing under the laws of the State, and U.S. Bank Trust National Association, as Fiscal Agent, to establish the terms and conditions and pertaining to the issuance of thc Bonds as defined herein. ARTICLE I. DEFINITIONS{tc ~l 0 "1ARTICLE I. DEFINITIONS"} SECTION 1.01 Definitions.{tc ~1 0 "2SECTION 1.01 Definitions."} AS used in this Indenture, the following terms shall have the following meanings: "Acquisition Fund" means the fund by that nme established pursuant to Section 3.01 hereof. "Acquisifion/'Fmancing Agreement" means that certain AcquisitiondFinanci~g Agreement made and entered into on the day of ,2002 by and between the City, acting on behalf of itself and the District, and NNP-Tnmark San Mignel Ranch, LLC, a Delaware limited hability company as such agreement may be amended from time to time. "Acf' means the "Mello-Roos Community Facilities Act of 1982', as mended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California. "Admin.istrative Expense Fund" means the fund by that name established pursuant to Section 3.01 hereof. "Administrative Expenses" means the expenses cFLrecfly related to the administration of the District, including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax collection sched~es (whether by the City or a designee thereof or both); the costs of collecting the Special Taxes (whether by.the County, the City or otherwise); the costs of remitting ~e Special Taxes to the Fiscal Agent; the costs of the Fiscal Agent (including its legal counsel) m the discharge of the duties of the Fiscal Agent required under this Indenture; the costs of the City, the Dislrict or any designee thereof of complying with the arbitrage rebate requirements; the costs of the City, the District, or any designee thereof of complying with City, Dislrict or obligated person disclosure requirements associated with apph,cable federal or state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, Disthct or any designee thereof related to an appeal of the Special Tax; and the costs of any credit enhancement obtained by the City or the District (but excluding the costs of any credit enhancement required to be provided by NNP-Tnmark San Mignel Ranch, LLC and/or its successor). Administrative Expenses shall also include Delinquency Collection Expenses. "Administxative Expense Requirement" means an annual amount equal to $35,000 to be allocated as a first priority of Special Taxes calculated each FiscaI Year for the payment of Administrative Expenses. "Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year, including from mandatory sinking fund payments. "Appraisal" means an appraisal prepared by the Appraiser or an MAI appraiser who is also a state cecdfied appraiser, as defmed in Californ/a Business and Professions Code Section 11340(c) appointed and retained by the CiD' or the District. Such appraisal shall be substantially based upon the then apphcable assumptions of and subject to the then applicable qualifications and limitations contained m the appraisal prepared by the Appraiser and dated · 200~. "Appraiser" means Brace W. Hull & Associates, Inc. "Assistant Director of Finance" means the Assistant Director of Finance of the City. "Assessor's Parcel" means an Assessor's Parcel as de£med in the Special Tax RMA. 1 -o o 7 Draft 11.16.01 "Authorized Representative" of the District means the City Manager, Assistant City Manager/Director of Finance or Assistant Director of Finance of the City, acting on behalf of the Dis~ict, or any other person designated by the City Council and authorized to act on behalf of the District under or with respect to this Indenture and all other agreements related hereto. "Average Annual Debt Service" means the average annual debt service on the Bonds based upon a Bond Year during the term of the Bonds. "Bond Counsel" means an attorney or £wrn of attorneys, selected by the Dish'ict, of natioually recognized standing in matters pertaining to the tax treatment of interest on bonds issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of the State. "Bondowner' or "Owner", or any similar term, means any person who shall be the registered owner or his duly authorized attorney, trustee, representative or assign of any Outstanding Bond which shall at the time be registered. "Bonds" means the $ , City of Chula Vista Commtm/ty Facilities District 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds issued pursuant to this Indenture. "Bond Service Fund" means the fund created and established pursuant to Section 3.01 hereof. "Bond Year" means each twelve-month period extending from September 2 in one calendar year to September 1 of the succeeding calendar year, except in the case of the initial Bond Year which shall be the period from the Delivery Date lo September 1, 2002. "Business Day" means a day that is not a Saturday or a Sunday or a day of the year on which banks in New York, New York and Los Angeles, California, or where the Principal Corporate Trust Office is located, are not required or authorized to rem, ain open. C~ty means the C~ty of Chula V~sta, Caltforma. "City Manager" means the City Manager of the City, acting for and on behalf of the District. "Code" means the Internal Revenue Code of 1986, as amended.. "Costs of Issuance" means, as to the Bonds, all of the costs of formation of the District and the costs of issuing the Bonds, including but not I/mired to, all printing and document preparation expenses in connection with this Indenture and any Supplemental Indenture, the Bonds, and any and all other agreements, instruments, certificates or other documents issued in connection therewith; any computer and other expenses incurred in connection with the Bonds; the initial fees and expenses of the Fiscal Agent (including without limitation, acceptance fees and first annual fees payable in advance); and other fees and expenses incurred in connection with the issuance of the Bonds, to the extent such fees and expenses are approved by the Dislrict. "Costs of Issuance Fund" means the fund by that name established pursuant to Section 3.01 hereof. "Comptroller of the Currency" shall mean the Comptroller of the Currency of the United States. "Delinquency Collection Expenses" means those fees and expenses of the District incurred by or on behalf of the District in or related to the collection of delinquent Special Taxes. "Delinquency Proceeds" means the amounts collected from the redemption of delinquent Special Taxes including the penalties and interest thereon and from the sale of property sold as a result of the foreclosure of the lien of the Special Tax resulting from the delinquency in the payment of Special Taxes due and payable on such property. "Delivery Date" means the date on which the Bonds are issued and delivered to the initial purchaser thereof. "Depository" shall mean DTC and its successors and assigns or if (a) the then Depository resigns from its functions as securities depository of the Bonds, or (b) the District discontinues use of the Depository pursuant to this 2 5-.2o£ Draft 11.16.01 Indenture, any other secur/ties depository which agrees to follow procedures required to be followed by a securities depository in connection with the Bonds and which is selected by the Treasurer. "Director of Finance" means the Assistant City Manager/Director of Finance of the City, acting for and on behalf of the Dis~ct. "Dislrict" means Community Facilities Dis~ct No. 2001-1 (San Miguel Ranch). "DTC" shall mean The Depository Trust Company, New York, NeW York, and its successors and assigns. "Fiscal Agent" means U.S. Bank Trust National Association, and any successor thereto. "Fiscal Year" means the 12 month period beginning July 1 of each year and terminating on June 30 of the following year, or any other annual accounting period hereinafter selected and designated by the District as its fiscal year in accordance with applicable law. "Gov*rnment Obligations" means obligations described in Paragraph 1 of the definition of Permitted Invesmaents. "Gross Proceeds" has the meaning ascribed to such term in Sectiun 148(0(6) of the Code. "hrtp~'ovement Area A" means Improvement Area A of the District. "Indenture" means this Bond Indenture, as mended or supplemented pursuant to the terms hereof. "Indc"pendent Accountant" means any certified public accountant or f'mn of such certified public accountants appointed and paid ~y the District, and who, or each of whom - 1. ~ ~s m fact independent and not under domination of the D~stnct or the City; 2. does not have any substantial interest, d/rect or indirect, in the District or the City; and 3. is not an officer or employee of the District or the City, but who may be regularly retained to make annual or other audits of the books of or reports to the City or the District. "Information Services" means Financial Information, Inc's., "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's Investors Service "Municipal and Govemmem," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; Standard and Poor's Corporation "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then currc-nt guidelines of the Securities and Exchange Commission, such other addressees providing information with respect to called bonds as the District may designate in writing to the Fiscal Agent. "Interest Payment Date" means March 1 and September 1 of each year, commencing September 1, 2002. "Investment Agreement" means any inveslament satisfy/rig the requirements of Paragraph 11 of the defhiition of Permitted Investments. "Legislative Body" means the City Council of the City, acting as the legislative body of the District. "Maximum Armual Debt Service" means, as of the date of any calculation, the largest Annual Debt Service during the current or any future Bond Year. "Moody's" means Moody's Investors Service, its successors and assigns. '~Nominee" shall mean the nominee of the Depository which may be the Depository, as determined from time to time by the Depository. 3 Draft 11.16.01 "Outstanding" means as to the Bonds, all of the Bonds, except: 1. Bonds theretofore canceled or surrendered for cancellation in accordance with Section 6.03 hereof; 2. Bonds for the payment or redemption of which monies shall have been theretofore deposited in n'ust (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 the maturity thereof, notice of such redemption shall have been given as provided in this Indenture or any applicable Supplemental Indenture. "Participant" shall mean a member of or participant in the Depository. "Permitted Investments" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein (the Fiscal. Agent shah be entitled to rely upon any written investment direction from ~.'~ two Authorized ~P. eFresenmeve" Representatives of the District as a certification to the Fiscal Agent that such investment constitutes a Permitted Investment): 1. A. Direct obligations (other than an obligation subject to variation in principal payment) of the United States of America ("United States Treasury Obligations"); B. Obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America; C. Obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or insWamentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or D. Evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or,to whom the custodian may be obligated, 2. Federal Housing Administration debentures. 3. The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America: A. Federal Home Loan Mortgage Corporation (FHLMC) (1) Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) (2) Senior Debt obligations B. Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) (I) Consolidated system-wide bonds and notes C. Federal Home Loan Banks (FHL Banks) _ (1) Consolidated debt obligations D. Federal National Mortgage Association (FNMA) (1) Senior. debt obligations (2) Mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) E. Student Loan Marketing Association (SLM_A) 4 Draft 11.16.01 (1) Senior debt obligations (excluded are 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) F.Financing Corporation (FICO) (t) Debt obligations G.Resolution Funding Corporation (REFCORP) (1) Debt obligations 4. Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 30 days) of any bank the short-term obligations of which are rated "A-I" or better by S&P. 5. Deposits the aggregate amount of which are ,fully insured by the Federal Deposit Insurance Corporation (FDIC), in banks which have capital and surplus of at least $5 million. 6. Commercial paper (having original maturities of not more than 270 days rated "A-1" by S&P and "Prime-1" by Moody's. 7. Money market funds rated "AAm-I" or "AAm-G" by S&P, or better. 8. State Obligations, which means: A. Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated "A3" by Moody's and "A" by S&P, or better, or ¢~ any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated. B. Direct general short-term obligations of any state agency or subdivision or agency thereof described in (A) above and rated "A-l+" by S&P and "Prime-l" by Moody's. C. Special Revenue Bonds (as def'med in the United States Bankruptcy Code) of any state, state agency or subdivision described in (A) above and rated "AA" or better by S&P and "AA" or better by Moody's. 9. Pre-refunded mtmicipal obligations rated "AAA" by S & P and "AAA" by Moody's meeting the following requirements: A. the municipal obligations are (1) not subject to redemption prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable instructions concerning theft' call end redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such insmactions; B. the municipal obligations are secured by cash or United States Treas~y Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations; C. the principal of and interest on the United States Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on .the municipal obhgations ("Verification"); D. the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or txustee in mt for owners of the municipal obligations; 5 Draft 11.16.01 E. no substitution of a United States Treasury Obligation shall be permitted except with another United States Treasury Obligation and upon delivery of a new Verification; and F. the cash or United States Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent. 10. Repurchase agreements: With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt of which is rated at least "A" by S&P and Moody's; or (2) arty broker-dealer with "retail customers" or a related affiliate thereof which broker-dealer has, or the parent company (which guarantees the provider) of which has, long-term debt rated at least "A" by S&P and Moody's, which broker- dealer falls under the jurisdiction of the Securities Investors Protection Corporation, or (3) any other entity rated "A" or better by S&P and Moody's, provided that: A. The market value of the collateral is maintained at levels and upon such conditions as would be acceptable to S & P and Moody's to maintain an "A" rating in an "A" rated structured financing (with a market value approach); B. The Fiscal Agent or a third party acting solely as agent therefor or for the Dislrict (the "Holder of the Collateral") has possession of the collateral or the collateral has been transferred to the Holder of the Collateral in accordance with applicable state and federal laws (other than by means of entries on the mmsferor's boole); C. The repurchase agreement shall state and an opinion of counsel shall be rendered at the time such collateral is delivered that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all " proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is m possession); D. The repurchase agreement shall provide that if during its term the provider's rating by either Moody's or S&P is withdrawn or suspended or falls below "by S&P or "A3" by Moody's, as appropriate, the provider must, at the direction of the District or the Fiscal Agent, within 10 days of receipt of such direction, repurchase all collateral and terminate the agreement, with no penalty or premium to the District or Fiscal Agent. Notwithstanding the above, collateral levels need not be as specified in "A' above, so long as such collateral levels are 103% or better and the provider is rated at least "A" by S&P and Moody's, respectively. 11. Investment agreements w/th a domestic or foreign bank or corpomtiun the long-tcrm debt or financial strength of which, it or its guarantor is rated at least "AA-" by S&P and "Aa3" by Moody's; provided that, by the terms of the investment agreement: A. the invested funds are available for withdrawal without penalty or premium, upon not more than seven days' prior notice; the District and the Fiscal Agent hereby agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive lands thereunder with no penalty or premium paid; B. the investment agreement shall state that it is the unconditional and general obligation of, and is not subordinated to any other obligation of, the provider thereof; or, in the case of a bank, that the.obligation of the bank to make payments under the agreement ranks pari passu with the obligations of the bank to its other depositors and its other unsecured and uusubordinated creditors; Draft 11.16.01 C. the District and the Fiscal Agent receives the opinion of domestic counsel that such investment agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable); D. the investment agreement shall provide that if during its term (1) the provider's rating by either S&P or Moody's falls below "AA-" or "Aa3", respectively, the provider shall, at its option, within 10 days of receipt of pubLication of such downgrade, either (a) collateralize the inveslmem agreement by delivering or transfen'ing in accordance with applicable state and federal laws (other than by means of cna'les on the provider's books) to the District, the Fiscal Agent or a Holder of the Collateral free and clear of any third-party liens or claims the market value of which collateral is maintained at levels and upon such conditions as would be acceptable to S & P and Moody's to maintain an "A" rating in an "A" rated structured financing (with a market value approach); or (b) transfer and assign the investment agreement to a then qualifying counterparty with ratings specified above; and (2) the provider's rating by either S&P or Moody's is withdrawn or suspended or falls below "A-" or "AY', respectively, the provider must, at the direction of the District or the Fiscal Agent, within 10 days of receipt of such direction, repay the principal of and accmed but unpaid interest on the investment; E. The investment agreement shall state and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the terms of the investment agreement, at the time such collateral is delivered, that the Holder of the "' Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is in possession); F. the investment agreement must provide that if during its term (1) the provider shall default in its payment obligations, the provider's obligations under the investment agreement shall, at the direction of the District or the Fiscal Agent, be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the District or Fiscal Agent, as appropriate, and (2) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("Event of Insolvency"), the provider's obligations shall automafcally be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the District or Fiscal Agent, as appropriate. 12. The Local Agency Investment Fund (LAIF) administered by the treasurer of the State to the extent such deposits remain in the name of and contzol of the Fiscal Agent. "Prepayments" means Special Tax Receipts identified to the Fiscal Agent by an Authorized Representative as representing a prepayment of the Special Tax. "Principal Corporate Trust Office" means the office of the Fiscal Agent at 550 South Hope Street, Suite 500, Los Angeles, California 90071 or such other o.~ces as may be specified to the District by the Fiscal Agent in writing; provided, however for transfer, registration, exchange, payment and surrender of Bonds means care of the corporate trust office of U.S. Bank Trust National Association in St. Paul, Minnesota or such other address specified by the Fiscal Agent to the District in writing. 7 Draft 11.16.01 "Project" means the public improvements as set forth and described in Exhibit A to the Acquisition/Financing Agreement. "Project Costs" means all expenses of and incidental to the consmaction, acquisition, or both, of the Project. "Rebate Fund" means the fund by that name established pursuant to Seefiun 3.01 hereof. "Rebate Instructions' means the Rebate Instructions attached as Exhibit B hereto. "Record Date" shall mean the fifteenth (15th) calendar day of the month mediately preceding an Interest Payment Date. "Redemption Fund" means the fund by that name established pursuant to Section 3.01 hereof. "Regulations" means the regulations promulgated under the Internal Revenu~ Code of 1986, as amended. "Reserve Fund" means the fund by that name established pursuant to Section 3.01 hereof. "Reserve Requirement" means an amount initially equal to $ which amount shall, as of any date of calculation, be equal to the lesser of (i) Maximum Annual Debt Service for the Bonds, (ii) one hundred twenty-five percent (125%) of Average Annual Debt Service for the Bonds, or (iii) ten percent (10%) of the original principal amount of the Bonds less original issue discount, if any, plus original issue premium, ff any, applicable to the Bonds. "Securities Depository" means, as of the Closing Date, The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530 and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addressees providing depository services with respect to bonds as the Authority may designate in writing to the Trustee. "Special Tax" means the Special Tax authorized to be levied in Improvement Area A pursuant to the Act and the Special Tax RMA. "Special Tax Consultant" means any person or firm possessing demonstrated experience and expertise in the preparation of special tax formulas and/or the administratio!~ of special taxes levied for community facilities districts. Any such person or fnma shall be appointed and paid by the District and who, or each of whom - 1. is in fact independent and not under domination of the District or the City; 2. does not have any substantial interest, direct or indirect, in the District or the City; and 3. is not an officer or employee of the Dislxict or the City, but who may be regularly retained by the City or other community facilities districts formed by the City to administer the levy of special taxes within such community facilities dislricts. "Special Tax Fund" means the fund by that name established pursuant to Section 3.01 hereof. "Special Tax Revenues" means (a) the proceeds of the Special Tax levied and received by the District, and (b) the Delinquency Proceeds. "Special Tax RMA' means the rate and method of apportionment of the Special Tax authorized to be levied on property, within Improvement Area A as approved at the special election held in the District on December 11, 2001, as may be modified from time to time in accordance with the Act. "Standard & Poor's" or "S&P' means Standard & Poor's Rating Services, its successors and assigns. "State" means the State of Califorula. "Supplemental Indenture" means any bond indenture then In full force and effect which has been duly approved by resolution of the Legislative Body under and pursuant to the Act at a meeting of the Legislative Body duly convened 8 Draft 11.16.01 and held, at which a quorum was present and acted thereon, amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Indenture is specifically author/zed hereunder. "Tax Exempt" means, with reference to a Permitted Investment, a Permitted Investment the interest earnings on which are excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Code, other than one described ia section 57(a)(5)(C) of the Code. "Term Bonds" means the Bonds maturing on September 1, 20~ and the Bonds maturing on September 1, 20~. "Treasurer" means the Treasurer of the City acting for and on behalf of the Distxict. "Yield" has the meaning assigned to such term for purposes of Section 148(f) of the Code. ARTICLE II. GENERAL AUTHORIZATION AND TERMS{tc ~10 "IARTICLE II. GENERAL AUTHORIZATION AND TERMS','} SECTION 2,01 Amount, Issuance and Purpose.{tc ~l 0 "2SECTION 2.01 Amount, Issuance and Purpose."} Pursuant to the provisions of the Act and the Registered Public Obligations Act of California (Sections 5050 and following of the California Government Code), the Legislative Body has authorized the issuance of the Bonds ia an aggregate principal mount of $ . The Bonds shall be designated City of Chula Vista Coum~anity Facilities District No. 2001-I (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds. The put, se of the Bonds shall be to (a) pay for the acquisition of the Project, Co) fund the Reserve Fund, and (c) pay the Costs of Issuance. SECTION 2.02 Type and Nature of Bond.{tc Xl 0 "2SECTION 2.02 Type and Nature of Bond."} The Bonds and interest thereon, together with any premium paid thereon upon redemption, are not obligaUons of the City, but are limited obligations of the District secured by and payable from an irrevocable first lien on the Special Tax Revenues and on the monies ia the funds and accounts established herein (iaclucYmg the investment earnings thereon) with the exception of the Rebate, Fund, the Acquisition Fund and the Adminislxative Expense Fund. Except for the Special Tax Revenues, neither the credit nor the taxing power of the District or the City is pledged for the payment of the Bonds or the interest thereon, and no Owner of the Bonds may compel the exemise of taxing power by the District or the City or the forfeituxe of uny of their properly. The principal of and interest on the Bonds and premiums upon the redemption thereof, if any, are not a debt of the District or the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds are not a legal or equitable pledge, charge, lien or encumbrance, upon any of the DistaSct's property, or upon any of its income, receipts or revenues, except the amounts which are, under this Indenlxtre and the Act, set aside for the payment of the Bonds and interest thereon and neither the members of the Legislative Body, the City Council of the City, nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. Notwithstanding anything contained in this Indenture, the District shall not be required to advance any money derived firom any some of income other than the Special Tax Revenue for the payment of the interest on or the principal of the Bonds or for the performance of any covenants herein contained. Nothing in this Indenture or in any Supplemental Indenture shall preclude the redemption prior to maturity of any Bonds subject to call and redemption or the payment of the Bonds from proceeds of the refunding bonds issued under the Act or under any other law of the State. SECTION 2.03 Terms of the Bonds.{tc ~1 0 "2SECTION 2.03 Terms of the Bonds."} The Bonds shall mature on September 1 in the years, and ia the respective principal amounts set forth opposite such years, and shall bear interest at the respective rates per annum, as follows: , Maturity Date Principal Interest Maturity Date Principal Interest 9 Draft 11.16.01 (September 1) Amount Rate(%) (September 1) Amount Rate(%) SECTION 2.04 Description of Bonds; Interest Rates.{tc ~1 0 "2SECTION 2.04 Description of Bonds; Interest Rates."} The Bonds of each series shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof within a single maturity and shall be numbered as desired by the Fiscal Agent. The Bonds of each series shall be dated as of the Delivery Date of such series, and shall mature and be payable on September 1 in the years and in the aggregate principal mounts and shall bear interest at the rates set forth in this Indenture or the Supplemental Indenture providing for the issuance of such series of Bonds. The Bonds shall mature and be payable in the years and m the aggregate principal mounts and shall bear interest at the rates set forth in Section 2.03. Interest shall be payable with respect to each Bond on each Interest Payment Date (commencing September 1, 2002 for the Bonds), until the principal sam oft. hat Bond has been paid; provided, however, that if at the mat~-ity date of any Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof, ia full accordance with the terms of this Indenture, such Bond shall then cease to bear interest. SECTION 2.05 Payment.{tc \l 0 "2SECTION 2.05 Payment."} The prir~cipal of and interest on the Bonds shall be payable in lawful money of the United States of America. The principal of the Bonds and any premiam due upon the redemption thereof shall be payable upon presentation'and surrender thereof at maturity or the earlier redemption thereof at the Principal Corporate Trust Office of the Fiscal Agent. Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such date of authentiaation is an Interest Payment Date, in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the mediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication or (iii) the date of authentication is prior to the close of business on the fa:st Record Date, in wh/ch event interest shall be payable from the date of the Bonds; provided, however, that if at the time of authentication of a Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment. Interest on any Bond shall be paid to the person whose name shall appear hi the books of registration as required by Section 2.08 as the owner of such Bond as of the close of busIness on the Record Date immediately preceding such Interest Payment Date. Such interest shall be paid by check of the Fiscal Agent mailed to such Bondowner at his or her address as it appears on the books o£registration as required by Section 2.08 or, upon the request in writing prior to the Record Date o£a Bondowner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer m immediately available funds to an account in the United States designated by such Owner. Interest with respect to each Bond shall be computed using a year of 360 days comprised of twelve 30-day months. SECTION 2.06 Execution of Bonds.{tc ~l 0 "2SECTION 2.06 Execution of Bonds."} _ The Bonds shall be executed manually or in facsimile by the Mayor of the City and countersigned by the CiD' Clerk of the City, acting on behalf of the District. The Bonds shall then be delivered to the Fiscal Agent, for authentication and registration. In case an officer who shall have signed or attested to any of the Bonds by facsimile or otherwise shall cease to be such officer before the authentication, del/very and issuance of the Bonds, such Bonds nevertheless may be authenticated, delivered and issued, and upon such authentication, delivery and issue, shall be as binding as though those who signed and attested the same had remained in office. 10 Draft 11.16.01 SECTION 2.07 Order to Print and Authenticate Bonds.{tc ~1 0 "2SECTION 2.07 Order to Print and Authenticate Bonds."} The Director of Finance is hereby instructed to cause Bonds in the form as set forth herein, to be printed, and to proceed to cause said Bonds to be authenticated and delivered to an authorized representative of the purchaser, upon payment of the purchase price as set forth in the purchase contract for the sale of the Bonds. SECTION 2.08 Books of Registration; Book Entry System.{tc ~i 0 "2SECTION 2.08 Books of Registration."} There shall be kept by the Fiscal Agent, sufficient books for the registration and transfer of the Bonds 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 mmsferred, on said register, Bonds as hereinbefore provided. The ownership of the Bonds shall be established by the Bond registxafion books held by the Fiscal Agent. Whenever any Bond or Bonds shall be surrendered for registration of U'ansfer or exchang% the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of the same maturity, for a like aggregate principal amount of authorized deaommafions; provided that the Fiscal Agent shall not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preceding the date of any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. The Bonds shall be initially issued in the form of a single, fully registered Bond for each maturity (which may be typewritten). Upon initial issuance, the ownership of such Bonds shall be registered in the name of the Nominee identified below as nominee of the Depository. Except as hereinafter provided, all of the Outstanding Bonds shall be registered in the name of the nomLuee of the Depository, which may be the Depository, as determined from time to time pursuant to this Section. With respect to the Bonds registered in the name of the Nominee, neither the District nor the Paying Agent shall have any r~ponsthfiity or obliganon to Part~mpant or to any person on behalf of which such a ParUmpant holds an interest in the Bonds. Without limiting the immediately preceding sentence, neither the District nor the Paying Agent shall have any responsibility or obligation (unless the District 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 th the Bonds (ii) the delivery to any Participant or any other person, other thau un Owner of a Bond as shown m the Registration Books, of any notice with respect to, the Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event the District redeems the Bonds in part, or (iv) the payment to any Participant or any other person, other than an Owner ora Bond as shown in the Registration Books, of any amount with respect to principal of or interest on the Bonds. The District and the Paying Agent may treat and consider the person in whose name each Bond is registered 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 or prepayment if apphcable, 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 District shah pay all principal of and interest on the Bonds only to or upon the order of the respectfive Owner of a Bond, as shown in the Registration Books, or his .respective attorney duty authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the District'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 Registration Books, shall receive a Bond evidencing the obhgafion of the District to make payments of principal and interest pursuant to this Indenture. Upon delivery by the Depository to the Owners of the Bond, and the District 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 Dates, the word Nominee in this Indenture shall refer to such nominee of the Depository. In 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 District of such determination, then the District will discontinue the book-entry system with the Depository. If the District determines to replace the Depository with another quahfied securities depository, th4 District shall prepare or direct the preparation of a new, single, separate, fully registered Bond, per maturity, registered hi the name of such successor or substitute qualified securities depository or its nominee. If the District fails to identify another qualified securities depository to replace the Depository, then the Bonds shall no longer be restricted to being registered in the register in the name of the Nominee, but shall be registered in whatever nme or naraes Owners of the Bonds Ix~ansferring or exchanging Bonds 11 Draft 11.16.01 shall designate, m accordance with the provisions hereof and the District shall prepare and deliver Bonds to the Owners thereof for such purpose. In the event ora 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 Disndct 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 District records maintained by the Paying Agent 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 Paying Agent prior to payment. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments of principal and interest with respect to such Bond and ali notice with respect to such Bonds shall be made and given respectively, as instructed by the Depository and acceptable to the District. The initial Nominee shall be Cede & Co., as Nominee of I~TC. SECTION 2.09 Exchange of Bonds.{te Xl 0 "2SECTION 2.09 Exchange of Bonds."} Bonds may be exchanged at the Principal Corporate Trust Office, for a tike aggregate principal amount of Bonds of authorized denominations, interest rote and maturity, subject to the terms and conditions of this Indenture, including the payment of certain charges, if any, upon surrender and cancellation ora Bond. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same maturity and for the same aggregate principal amount will be issued to the transferee in exchange therefor. SECTION 2.10 Negotiabili~, Registration and Transfer of Bonds.{tc kl 0 "nSECTION 2.10 Negotiabiiity, Registration and Transfer of Bonds." } The transfer of any Bond may be registered only upon such books of registration upon surrender thereof to the Fiscal Agent, together with an assignment duly executed by the Owner or his attorney or legal representative, in satisfactory form. Upon any such registration of transfer, a new Bond or Bonds shall be authenticated and delivered in exchange for such Bond, in the name of the transferee, of any denomination or denominations authorized by this Indenture, and m an aggregate principal amount equal to ,the principal amount of such Bond or Bonds so surrendered, in all cases in which Bonds shall be exchanged or transferred, the Fiscal Agent shall authenticate the Bonds in accordance with the provisions of this Indenture. All Bonds surrendered in such exchange or transfer shall forthwith be canceled. The Fiscal Agent may make a charge for every such exchange or registration of transfer of Bonds sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration or transfer. SECTION 2.11 Authentication.{tc ~1 0 "2SECTION 2.11 Authentication."} Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form below, manually executed by the Fiscal Agent, shall be valid or obligatory for any pm'pose or entitled to the bgnefits of this Indenture, and such certificate of the Fiscal Agent shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder, and are entitled to the benefits of this indenture: FORM OF CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within defined Indenture. Dated: U.S. Bank Trust National Association, As Fiscal Agent By: Authorized Officer 12 Draft 11.16.01 ARTICLE III. FUNDS AND ACCOUNTS{tc ~l 0 "IARTICLE HI. FUNDS AND ACCOUNTS"} SECTION 3.01 Establishment of Special Funds.{tc ~1 0 "2SECTION 3.01 Establishment of Special Fund~."} The following funds and accounts identified in this Section 3.01 are hereby erea~ed and es~tblished and shall be maintained by the Fiscal Agent: A. Special Tax Fund: B. Bond Service Fun& and within the Bond Service Fund, the Interest Account and the Principal Account; C. Rebate Fund; D. Redemption Fund; E. Acquisition Fund; F. Reserve Fund; G. Administrative Expense Fund; and H. Costs of Issuance Fund. SECTION 3.02 Special Tax Fund.{tc ~1 0 "2"SECTION3.02SpecialTaxFund."} A. The District shall, no later than the tenth (10th) Business Day after which Special Tax Revenues have been received by the District and in any event not later than February 15th and August 15th of each year, transfer such Special Tax Revenues to the Fiscal Agent and, except as set forth in the following sentence, such amounts shall be deposited in the Special Tax Fund. Special Tax Revenues representing Prepayments shall be deposited into the Bond Service Fund and the Administrative Expense Fund as set, forth in written instructions from an Authorized Representative. B. With the exception of Special Tax Revenues representing Prepayments which shall be transferred pursuant to the provisions of Section 3.02C below, the Special Tax Revenues deposited in the Special Tax Fund shall be held in trust and deposited in the following accounts of the Special Tax Fund or transferred to the following other funds and accounts on the dates and in the amounts set forth in the following paragraphs and in the following order of priority: 1. The Fiscal Agent shall each Fiscal Year transfer to the Adrni~i~Ixafive Expense Fund from the ftrst Special Tax Revenues received by the Fiscal Agent during such Fiscal Year an amount equal to the Administrative Expense Requirement. 2. The Fiscal Agent shall deposit in the Interest Account of the Bond Service Fund, on each Interest Payment Date and date for redemption of the Bonds, an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest due or becoming due and payable on such Interest Payment Date on all Outstanding Bonds or to be paid on the Bonds being redeemed on such date. 3. The Fiscal Agent shall deposit in the Principal Account of the Bond Service Fund, on each Interest Payment Date and redemption date on which the principal of the Bonds shall be payable, an amount required to cause the aggregate amount on deposit in the Prthcipal Account to equal the principal amount of, and'preminm (if any) on, the Bonds coming due and payable on such Interest Payment Date, or required to be redeemed on such date pursuant to this Indenture. 4. On or after March 2 and September 2 of each year after making the mmsfer and deposits required under 1. through 3. above, the Fiscal Agent shall transfer the amount, ffany; necessary to 13 Draft 11.16.01 replenish the amount then on deposit in the Reserve Fund to an amount equal to the Reserve Requirement. 5. On or after September 2 of each year after making the deposits and transfers required under 1. lhrough 4. above, upon receipt of written instructions from an Authorized Representative, the Fiscal Agent shall transfer from the Special Tax Fund to the Rebate Fund the amount specified in such request. 6. On or after September 2 of each year after making the deposits and l~ansfers required under 1. through 5. above, upon receipt of a written request of an Authorized Representative, the Fiscal Agent shall transfer from the Special Tax Fund to the Administrative Expense Fund the amounts specified in such request to pay thobe Administrative Expenses which the District reasonably expects (a) will become due and payable during such Fiscal Year or the cost of which Administrative Expenses have previously been incurred and paid by the District from funds other than the Administrative Expense Fund and (b) the cost of.which Administrative Expenses will be in excess of the Administrative Expense Keqinrcment for such Fiscal Year. 7. If, on or after September 2 of each year, after making the deposits and transfers required under 1. through 6. above, monies remain in the Special Tax Fund, such monies shall remain on deposit in the Special Tax Fund and shall be subsequently deposited or transferred pursuant to the provisions of 1. through 6. above. C. The Fiscal Agent shall, upon receipt of Special Tax Revenues representing Prepayments, mediately transfer Prepayments to the Bond Service Fund for credit and deposit into the Interest Account and the Principal Account and utilize such funds to redeem Bonds pursuant to Section 4.03 B(1) and as set forth in written instructions lo be delivered to the Fiscal Agent by an Author/zed Representative; provided, however, that any portion of a Prepayment constituting Administrative Fees and Expenses (as defined in the Special Tax RMA) shall be deposited intb~ the Administrative Expense Fund as set forth in such written instructions. The Fiscal Agent may conclusively.rely upon such instructions. D. When there are no longer any Bonds Outstanding, any mounts then remaining on deposit in the Special Tax Fund shall be transferred to the District and used for any lawful purpose under the Act. SECTION 3.03 {tc kl 0 "2SECTION 3.03"}Bond Service Fund.{tc ~1 0 "2Bond Service Fund."} A. Interest Account.{tc kl 0 "3(a) Interest Account."} All moneys in the Interest Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accmed interest on any Bonds redeemed prior to maturity). B. Principal Account. {tc ~1 0 "3(b) Principal Account."}All moneys in the Principal Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of (i) paying the principal of the Bonds at the maturity thereof, (ii) paying the principal of the Term Bonds upon the mandatory sinking fund redemption thereof pursuant to this Indenture, or (iii) paying the principal of and premium (if any) on any Bonds upon the optional or extraordinary mandatory redemption thereof pursuant to Section 4.03A and B(I) of this Indenture. SECTION 3.04 Costs of Issuance Fund. The Fiscal Agent shall, upon the written requisition executed by an Authorized Representative, disburse money fi.om the Costs of Issunnce Fund, if any, on such dates and in such amounts as spec/fled in such requisition to pay the Costs of Issuance related to each series of the Bonds. Any amounts remaining on deposit in the Costs of Issuance Fund on the earlier of the date on which all Costs of Issuance have been paid as stated in writing by an Authorized Representative del/vered to the Fiscal Agent or six months after the Delivery Date of each series of the Bonds shah be transferred to the Acquisition Fund. SECTION 3.05 Acquisition Fund A. The Fiscal Agent shall, from time to time, disburse monies from the Acquisition Fund to pay the Prbject Costs. Upon receipt of a payment request duly executed by an Authorized Representative (which payment 14 Draft 11.16.01 request shall not exceed the corresponding payment request provided to the City under the Acquisition/Financing Agreement), the Fiscal Agent shall pay the Project Costs from amounts in the Acquisition Fund directly to the conttactor or such other person, corporation or entity specified in the payment request (including reimbursements, if any, to the District). The Fiscal Agent may rely on an executed payment request as complete authorization for said payments. B. After the final payment or reimbursement of all Project Costs as certified by delivery of a written notice from an Authorized Representative to the Fiscal Agent, the Fiscal Agent shall tmusfer excess monies, if any, on deposit in, or subsequently deposited in, the Acquisition Fund to the Special Tax Fund or the Redemption Fund as an Authorized Representative may direct in writing and the Fiscal Agent shall apply the amount so transferred in accordance with Section 3.02 or 3.08 as directed by the Authorized Representative. C. On or after 1, 2005, the District may deliver to the Fiscal Agent a written certificate executed by an Authorized Representative certifying that the District, in its sole and absolute discretion, has determined that it will not be necessary for the District to utilize the proqeeds of the Bonds, together with any investment earnings on such proceeds, then remaining on deposit in the Acquisition Fund to fund Project Costs and directing the Fiscal Agent to mmsfer all such moneys to the Redemption Fund for the purpose of redeemlng Bonds prior to maturity pursuant to Section 4.03B(2). Upon receipt of such certificate, the Fiscal Agent shall transfer such moneys to the Redemption Fund as so directed. D. Notwithstanding anything herein to the contrary, if on the date which is three (3) years from the Delivery Date of any series of the Bonds, any funds derived from such series of the Bonds remain on deposit in the Acquisition Fund, the Fiscal Agent shall mmaediately restrict the Yield on such amounts so that the Yield earned on the investment of such amounts is not in excess of the Yield on such series of the Bonds, unless in the written opinion of Bond Counsel delivered to the Fiscal Agent such restriction is not necessary to prevent an impairment of the exclusion of interest on such series of the Bonds from gross income for federal income tax purposes. SECTION 3.06'¢* Reserve Fund Moneys on deposit in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds as such amotmts shall become due and payable in the event that the moneys in the Special Tax Fund and the Bond Service Fund for such purpose are insufficient therefor or redeeming Bonds as described below. ~ae Fiscal Agent shall, when and to the extent necessary, withdraw money from the Reserve Fund and transfer such money to the Bond Service Fund or the Redemption Fund for such purpose. Ail Authorized hivesmaents in the Reserve Fund shall be valued at their fair market value at least semi- annually on March 1 and September 1. On any date after the transfers required by Section 3.02B(I) and (2) have been made for any Bond Year, if the amount on deposit in the Reserve Fund is less than the Reserve Requirement, the Fiscal Agent shall transfer to the Reserve Fund from the first available monies in the Special Tax Fund an amount necessary to increase the balance therein to the Reserve Requirement. If on September 1, or the first Business Day thereafter if September 1 is not a Business Day, of each year, the amount on deposit in the Reserve Fund is in excess of the Reserve Requirement, the. Fiscal Agent shall, as directed in writing by an Authorized Representative, (i) prior to the final payment or reimbursement of all Project Costs or a determination that amounts in the Acquisition Fund are sufficient to pay all remaining Project Costs for which a payment request has been or is expected to be submitted, as evidenced by a written certificate of an Authorized Representative, transfer such excess to the Acquisition Fund, and (ii) after receipt of such written certification, transfer such excess to the Special Tax Fund. In connection with any optional or extraordinary mandatory redemption of Bonds, amounts in the Reserve Fund in excess of the Reserve Requirement following such redemption shall be transferred to the Principal Account or the Interest Account of the Bond Service Fund, as applicable, pursuant to written instructions of the District executed by an Authorized Representative and applied to redeem Bonds. Upon receipt of written instructions from an Authorized Representative ins~ucting the Fiscal Agent to u'ansfer certain moneys representing a Reserve Fund credit for the prepayment of a Special Tax obligation, the Fiscal Agent shall transfer the amount specified in such insmactious from the Reserve Fund to the Redemption Fund for the purpose of redeeming Bonds pursuant to such instructions. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Btnds, including interest accrued to the date of payment or redemption and premium> if any; due upon redemption, Draft 11.16.01 the Fiscal Agent shall transfer the amount in the Reserve Fund to the Redemption Fund to be applied, on the next succeeding interest payment date, to the payment and redemption, in accordance with Section 4.03 of all of the Outstanffmg Bonds. In the event that the amount so transferred from the Reserve Fund to the Redemption Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund shall be transferred to the District to be used for any lawful purpose of the District as set forth in the Act. SECTION 3.07 Rebate Fund.{tc ~l 0 "2SECTION 3.07 Rebate Fund."} The District shall calculate Excess Investment Earnings as defined in, and in accurdanee with, the Rebate Instructions, and shall, in writing, direct the Fiscal Agent to transfer funds to the Rebate Fund from funds furnished by the Distric! as provided for in this Indenture and the Rebate Instructiuns. Notwithstanding the foregoing, the Rebate Instructions, including the method of computing Excess Investment Earnings (as defined in the Rebate Inslrucfious) may be modified, in whole or in part, without the consent of the Owners of the Bonds, upon receipt by the District of an opinion of Bond Counsel to the effect that such modification shall not adversely affect the exclusion from gross income of interest on the Bonds then Outstanding for federal income tax purposes. The Fiscal Agent shall not be responsible for calculating rebate amounts or for the adequacy or correctness of any rebate report or rebate calculations. The Fiscal Agent shall be deemed conclusively to have complied with the provisions of this Indenture regarding calculation and payment of rebate if it follows the direcfious of the District and it shall have no independent duty to review such calculations or enforce the cumpliance by the District with such rebate requirements. SECTION 3.08 Redemption Fund.{tc ~l 0 "2SECTION 3.09 Redemption Fund."} Monies ,may be deposited by the District or the Fiscal Agent pursuant to the terms of Section 3.05 B or 3.06 into the Redemp'~tun Fund and shall be set aside and used solely for the purpose of redeerning Bonds in accordance with Section. 4.03 B(2) hereof. Following the redemption of any Bonds~ if any funds remare in the Redemption Fund, such funds shall be transferred to the Special Tax Fund. SECT/ON 3.09 Administrative Expense Fund.{tc kl 0 "2SECTION 3.10 Administrative Expense Fund."} The Fiscal Agent shall deposit from time to time the amounts authorized for deposit therein pursuant to Section 3.02. The moneys in the Administrative Expense Fund shall be used to pay Administrative Expenses from th'ne to time upon receipt by the Fiscal Agent of a written request executed by an Authorized Representative specifying the name and address of the payee and the amount of the Administrative Expense and a description thereof and further stating that such request has not formed the basis of any prior request for payment. SECTION 3.10 Investment of Funds. {tc kl 0 "2SECTION 3.11Investment of Funds."} Unless otherwise specified in this Indenture, monies in the Special Tax Fund, the Bond Service Fund, the Acquisition Fund, the Reserve Fund, the Costs of Issuance Fund and Athn~istrative Expense Fund shall, at the written direction of an Authorized Representative given at least two (2) days prior, be invested and reinvested in Permitted Investments (includ'mg investments with the Fiscal Agent or an affilkate of the Fiscal Agent or invesUnents for which the Fiscal Agent or an affiliate of the Fiscal Agent acts as investment advisor or provides other services so long as the invesanents are Permitted hivesUnents). Monies in the Redemption Fund and the Rebate Fund shall, at the written direction of two Authorized Representatives, be invested in Govermnent Obligations. Notwithstanding anything herein to the contras, in the absence of written investment instructions, the Fiscal Agent shall invest solely in investments identified in paragraph 7 of the definition of Permitted Investments. The District acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions as they occur, the DisU'ict specifically waives receipt of such confmnafions to the extent permitted by law. The Fiscal Agent will furnish the DisUSct periodic cash transaction statements, which include detail for all investment Iransacfions made by the Fiscal Agent hereunder. 16 Draft 11.16.01 Obligations purchased as investments of monies in any fund or account shall be deemed at all times to be a part of such fund or account. Any income realized on or losses resulting from investments in any fund or account shall be credited or charged to such fund or account. Subject to the restrictions set forth herein and/or any written investment instructions received by Fiscal Agent pursuant to this Section 3.10, monies in said funds and accounts may be from time to time invested by the Fiscal Agent in any manner so long as: (I) Monies in the Acquisition Fund, Administrative Expense Fund and Rebate Fund shall be invested in obligations which will by their terms mature as close as practicable to the date the District estimates the monies represented by the particular invesmaent wilt be needed for withdrawal from such Fund; and (2) Monies in the Special Tax Fund, the Bond Service Fund, the Redemption Fund and the Reserve Fund shall be invested only in obligations which will by their terms either mature or allow for withdrawals at par on such dates so as to ensure the payment of principal and interest on the Bonds as the same become due; provided, however, that except for investment agreements as described in paragraph 11 of the definition of Permitted Investments which permit withdrawal at par, investment of monies on deposit in the Reserve Fund shall have an average aggregate weighted term not greater that five (5) years. The Fiscal Agent shall sell or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide monies m meet any payment or transfer for such funds and accounts or from such funds and accounts. The Fiscal Agent shall not be liable for any loss from any investtnents made or sold by it in accordance with the provisions of this Indenture. SECTION 3.11 Disposition of Bond Proceeds.{te ~1 0 "2SECTION 3.12 Disposition of Bond Proceeds and Other Deposits."} Upon th[ receipt of $ as sale proceeds for the Bonds (being the par amount of $ less the underwnter's discount ors ), the Fiscal Agent shall mmsfer or set aside and deposit or cause to be deposited such funds as follows: $ shall be deposited in the Acquisition Fund; $ shall be deposited in the Reserve Fund; $ shall be deposited into the Costs of Issuance Fund; and [$ __ shall be deposited in the Administrative Expense Fund.] The Fiscal Agent may estabhsh such temporary funds or accounts on its records, as it may deem appropriate to facilitate such deposits and transfers. ARTICLE IV. REDEMPTION{tc ~1 0 "IARTICLE IV. REDEM[PTION"} SECTION 4.01 Notice of Redemption.{te ~1 0 "2SECTION 4.01 Notice of Redemption."} A. Noticc by Mail to Bondholders{tc \1 0 "3(a) Notice by Mail to Bondholders"}: The Fiscal Agent shall mail, at least thirty (30) days but not more than forty-five (45) days prior to the date of redemption, notice of intended redemption, by fzrst-class mail, postage prepaid, to the original purchasers of the Bonds and the respective registered Owners of the Bonds at the addresses appearing on the Bond registry books. The notice of redemption shall: (a) state the redemption date; (b) state the redemption price; (c) state the bond registration numbers, dates of maturity and CUSIP numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part, the respective principal portions to be redeemed; provided, however, that whenever any call includes all Bonds of a maturity, the numbers of the Bonds of such maturity need not be stated; (d) state that such Bonds must be surrendered at the principal corporate trust office of the Fiscal Agent; (e) state that further interest on such Bonds will not accrue from and after the designated redemption date; (f) state the date of the issue of the Bonds 17 Draft 11.16.01 as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state that any other descriptive information needed to identify accurately the Bonds being redeemed as the District shall direct. B. Further Notice:{tc \1 0 "3(b) Further Notice:"} In addition to the notice of redemption given pursuant to Section 4.01A above, further notice shall be given as set out below, but no defect in said ftuther notice nor any failure to give all or any portion of such fu~er notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption shall be sent at least 2 days before the notice of redemption is mailed to the Bondholders pursuant to Section 4.0lA by registered or certified mail or overnight delivery service to the Securities Depositories and to at least one (1) Information Services that disseminate notice of redemption of obligations similar to the Bonds or, in accordance with the then-current guidelines of the Securities and Exchange comrmssion, such other services providmg information on called bonds, or no such other services, as District may determine in its sole discretion. C. Failure to Receive Nofice{tc ~1 0 "3(c) Failure to Receive Notice:"} So long as notice by first class mail has been provided as set forth in Section 4.01 A above, the actual receipt by the Owner of any Bond of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for redemption of such Bonds or the cessation of interest on the date f'Lxed for redemption. D. Certificate of Giving Notice {tc \1 0 "3(d)Certificate of Giving Notice: "}The notice or notices required by this Section shall be given by the Fiscal Agent on behalf of the District. A certificate by the Fiscal Agent that notice of call and redemption has been g/yen to tl~ registered Owners of the Bonds as herein provided shall be conclusive as against all parties, and no Owner who~e Bond is called for redemption may object thereto, or object to cessation of interest on the redemption date, by any claim or showing that he failed to receive actual notice of call and redemption. SECTION 4.02 Effect of Redemption.{tc ~I 0 "2SECTION 4.02 Effect of Redemption."} When notice of redemption has been given substantially as provided for herein, and when the mount necessary for the redemption of the Bonds called for redemption is set aside for that purpose in the Redemption Fund, as provided for herein, the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and upon presentation and surrender of said Bonds at the place specified in the notice of redemption, said Bonds shall be redeemed and paid at the redemption price out of the Redemption Fund and no inter~t will accrue on such Bonds or portions of Bonds called for redemption from and after the redemption date specified in said notice, and the Owners of such Bonds so called for redemption afier such redemption date shall look for the payment of principal and premium, if any, of such Bonds or portions of Bonds only to said Redemption Fund. All Bonds redeemed shall be canceled forthwith by the Fiscal Agent and shall not be reissued. Upon surrender of Bonds redeemed in part, a new Bond or Bonds of the same maturity shall be registered, authenticated and delivered to the registered Owner at the expense of the District, in the aggregate principal mount of the unredeemed portion. All unpaid interest payable at or prior to the date fixed for redem.ption shall continue to be payable to the respective registered owners of such Bonds or their order, but without interest thereon. SECTION 4.03 Redem.ption Prices and Term.s.{tc ~1 0 "2SECTION 4.03 Redem.ption Prices and Terms."} A. Optional Redemption{tc \1 0 "3(a) Optional Redemption:"} Thc Bonds maturing on and afier September 1, 20 may be redeemed at the option of the District prior to maturity as a whole, or in part on any Interest Payment Date on and afier September 1, 20 , from such mamriiles as are selected by the District, and by lot within a maturity, from any source of funds, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption: 18 Draft 11.16.01 Redemption Date Redemption Price On or prior to March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102% September 1, 20..__ and March 1, 20 101% September 1, 20~ and ther~fter 100% B. Extraordinary Mandatory Redemption.{tc \10 "3Co) Extraordinary Mandatory Redemption."} (1) Redemption From Proceeds of Special Tax Prepaymen~ The Bonds shall be subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part on a pro rata basis among maturities from the prepayment of Special Taxes pursuant to the Special Tax RMA. An Authorized Representative shall deliver written instructious to the Fiscal Agent not less than 60 days prior to the redemption date directing the Fiscal Agent to utilize the Special Tax Revenues transferred to the Principal Account of the Bond Service Fund pursuant to Section 3.02 C to redeem Bonds pursuant to tiffs Section 4.03 B(1). Such extraordinary mandatory redemption of the Bonds shall be 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 On or prior to March I, 20__ 103% September 1, 20 and March 1, 20 102% September 1, 20 and March 1, 20 101% September 1, 20 and thereafter 100% (2),. Redemption from Unexpended Proceeds in the Acquisition Fund. The Bonds shall be '~ubject to redemption prior to maturity, on September 1, 2005, or any Interest Payment Date thereafter in part on a pro mtn basis among maturities, from funds transferred from the Acquisition Fund to the Redemption Fund pursuant to Section 3.05. Such extraordinary mandatory redemption of the Bonds shall be at a redemption price equal to the principal amount of the Bonds to be redeemed, without premium, together with accrued interest thereon to the date of redemption. C. Mandatory Sinking Fund Redemption The Bonds maturing on September 1, 20 are subject to mandatory sinking fund redemption, in part by lot, on September 1 in each year commencing September 1, 20 , at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggxegate principal amount and in the years shown on the following redemption schedule: Redemption Date Principal (September i) Amount The Bonds maturing on September 1, 20~, are subject to mandatory sinking fired redemption, in part, by lot, on September 1 of each year commencing September 1, 20__, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown in the following redemption schedule. Redemptipn Date Principal September 1) Amount 19 Draft 11.16.01 D. Purchase in Lieu of Redemption{tc \1 0 "3(c) Purchase in Lieu of Redemption:"} In lieu of such an optional, extraordinary mandatory or mandatory sinking fund redeiaiJfion, the District may elect to purchase such Bonds at public or private sale at sUch prices as the Dislriet may in its discretion determine; provided, that, unless otherwise authorized by law, the purchase price (including brokerage and other charges) thereof shall not exceed the principal amount thereof plus accrued interest to the purchase date. E. Notice and Selection of Bonds for Redemption {tc ~1 0 "3(d)Notice and Selection of Bonds for Redemption: "}In the event the District shall elect to redeem Bonds as provided in tlfis Section 4.03, the District shall give written notic~ to the Fiscal Agent of its election so to redeem, the redemption date, the principal mount of the Bonds to be redeemed, the maturities from which such Bonds are to be redeemed and the principal amount of the Bonds to be redeemed from each such maturity, the Bonds or portions thereof to be selected for redemption. The notice to the Fiscal Agent shall be given not tess than sixty (60) days prior to the redemption date or such shorter period as shall be acceptable to the Fiscal Agent. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the District shall treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amoun, t of such Bond to be redeemed in part by $5,000. ARTICLE V. SUPPLEMENTAL INDENTURES{to ~1 0 "IARTICLE V. SUPPLEMENTAL INDENTURES"} SECTION 5.01 Amendments or Supplements.{tc 'il 0 "2SECTION 5.01 Amendments or Supplements."} The Legislative Body may, by adoption of a resolution from time to time, and at any time but without notice to or consent of any of the Bondholders, approve a Supplemental Indenture hereto for any of the following purposes: (a) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Indenture or in any Supplemental Indenture, provided that such action shall not be materially adverse to the interests of the Bundowners; (b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in this Indenture, other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with this Indenture as theretofore in effect; (c) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the interests of the Bondowners; and (d) to amend any provision of this Indenture relating to the Code as may be necessary or appropriate to assure compliance with the Code and the exclusion from gross income of interest on the Bonds. Exclusive of the Supplemental Indentures hereto provided for in the first paragraph of this Section 5.01, the Owners of not less than 60% in aggregate principal amount of the Bonds then Outstanding shall have the fight to consent to and approve the adoption by the District of such Supplemental Indentures as shall be deemed necessary or-desirable by the District for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in 2O Draft 11.16.01 an)' particular, any of the terms or provisions contained in this Indenture; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an extension of the maturity date of the principal of, or the payment date of interest on, any Bond, or (b) a reduction in the principal amount of, or redemption premium o~ any Bond or the rate of interest thereon without the consent of the affected Bondowner(s), or permit, or be construed as permitting, (x) a preference or priority of any Bond or Bonds over any other Bond or Bonds, (y) a reduction in the aggregate principal amount of the Bonds the Owners of which are required to consent to such Supplemental Indenture, or (z) creating of a pledge of or Hen or charge upon the Special Tax Revenues superior to the pledge provided for in Section 2.02 hereof, without the consent of the Owners of all Bonds then Outstanding. If at any time the District shall desire to approve a Supplemental Indenture, which pursuant to the terms of this Section 5.01 shall requh'e the consent of the Bondowners, the District shall so notify the Fiscal Agent and shall deliver to the Fiscal Agent a copy of the proposed Supplemental Indenture. The District shall, at the expense of the District, cause notice of the proposed Supplemental Indenture to be mailed, postage prepaid, to all Bondowners at their addresses as they appear in the bond register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on ftc at .the principal office of the District for inspection by all Bondowners. The failure of any Bondowner to receive such notice shall not affect the validity of such Supplemental Indenture when consented to and approved as in this Section 5.01 provided. Whenever at any time within one year after the date of the frost mailing of such notice, the District shall receive an insmn'nent or inslnnnents purporting to be executed by the Owners of not less than 60% .in aggregate principal amount of the Bonds then Outstanding, which insmunent or instruments shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent to the approval thereof by the Legislative Body substantially in the form of the copy thereof referred to in such Notice as on file with the District, such proposed Supplemental Indenture, when duly approved by the Legislative Body, shall thereafter become a part of the proceedings for the issuance of the Bonds. In determining whether the Owners of 60% of the aggregate principal amount of the Bonds have consented to the approval of any Supplemental Indenture, Bonds which are owned by the District or by any person directly or indirectly controlling or controlled by or under the direct or redirect common control with the District, shall b~disregarded and shall be treated as though they were not outstanding for the purpose of any such determination. Upon the approval of any Supplemental Indenture hereto and the receipt of consent to any such Supplemental Indenture from the Owners of the appropriate aggregate principal amount of Bonds in instances where such consent is required pursuant to the provisions of this Section 5.01, this Indenture shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the District and ali Owners of Bonds then Outstanding shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments. Notwithstanding anything herein to the contrary, no Supplemental Indenture shall be entered into which would modify the duties of the Fiscal Agent hereunder, without the prior written consent o£the Fiscal Agent. 21 Draft 11.16.01 ARTICLE VI. MISCELLANEOUS CONDITIONS{tc \1 0 "IARTICLE VI. MISCELLANEOUS CONDITIONS" } SECTION 6.01 Ownership of Bonds.{tc \l 0 "2SECTION 6.01 Ownership of Bonds."} The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute Owner thereof for all purpOSeS, and payment of or on account of the principal and redemption premium, if any, of any such Bond, and the interest on any such Bond, shall be made only to or upon the order of the registered Owner thereof or his legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond, including the redemption premium, if any, and interest thereon, to the extent of the sum or sums so paid. SECTION 6.02 Mutilated, Lost, Destroyed or Stolen Bonds{te \1 0 "2SECTION 6.02 Mutilated, Lost, Destroyed or Stolen Bonds"}. If any Bond shall become mutilated, the Fiscal Agent shall authenticate and deliver a new Bond of like tenor, date and maturity in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled. 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 is satisfactory to the Fiscal Agent and, if an indemnity satisfactory to the Fiscal Agent shall be given, the Fiscal Agent shall authenticate and deliver a new Bond of like tenor and maturity, numbered and dated as the Fiscal Agent shall determine in lieu of and in substitution for the Bond so lost, destroyed or stolen. Any Bond issued under the provisions of this Section 6.02 in lieu of any Bond alleged to have been lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Bonds secured hereby. The Fiscal Agent shall not treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be executed, authenticated and dehvered hereunder or for ,the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement"~Bund shall be treated as one and the same. SECTION 6.03 Cancellation of Bonds.{tc 'd 0 "2SECTION 6.03 Cancellation of Bonds."} All Bonds paid or redeemed, either at or before maturity, shall be canceled upon the payment or redemption of such Bonds, and shall be delivered to the Fiscal Agent when such payment or redemption is made. All Bonds canceled under any of the provisions of this indenture shall be destroyed by the Fiscal Agent, which shall execute and provide the District with a certificate of deslrdctiun. SECTION 6.04 Covenants.{tc \1 0 "2SECTION 6.04 Covenants."} As long as the Bonds are Outstanding and unpaid, the District, acting on behalf of the Dislxict, shall (through its proper members, officers, agents or employees) faithfully perform and abide by all of the covenants and agreements set forth in this Section 6.04; provided, however, that said covenants do not require the District to expend any funds other than the Special Tax Revenues. A. 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 I following the close of the Fiscal Year in which the Special Taxes were due, and (ii) against aL! 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 amoum of the Reserve Fund is less than the Reserve Requirement. B. The District shall preserve and protect the security of the Bonds and the rights of the Bondowners and defend their rights against all claims and d. emands of all persons. Until such time as an amount has been set aside sufficient to pay Outstanding Bonds at maturity or to the date of redemption if redeemed prior to matarity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the District will faithfully perform and abide by all of the covenants, undertakings and provisions contained in this indenture or in any Bond issued hereunder. 22 Draft 11.16.01 C. The District will not issue any other obligations payable, principal or interest, from the Special Taxes which have, or purport to have, any lien upon the Special Taxes superior to or on a parity with the lien of the Bonds herein authorized. Nothing in this Indenture shall prevent the District from issuing and selling, pursuant to law, refunding bonds or other refunding obligations payable from and having a first lien upon the Special Taxes on a panty with the Outstanding Bonds so long as the issuance of such refunding bonds or other refunding obligations results in a reduction in the Annual Debt Service on the Bonds and such refunding bonds or other refunding obligations taken together. D. The District will duly and punctually pay or cause to be paid the principal of and interest on each of the Bonds issued hereunder on the date, at the place and in the manner provided in said Bonds, but only out of Special Tax Revenues and such other funds as may be herein provided. E. The District shalI comply with all requirements of the Act so as to assure the timely collection of the Special Taxes. Prior to July 1 of each year, the District shall ascertain the parcels on which the Special Taxes are to be levied in the following Fiscal Year, taking into account any subdivisions of. parcels during the current Fiscal Year. The District shall effect the levy of the Special Tax in accordance with the Special Tax RMA and the Act each Fiscal Year so that the computation of such levy is complete and transmitted to the Auditor of the County of San Diego before the final date on which the Auditor of the County of San Diego will accept the transmission of the Special Tax for the parcels within Improvement Area A for inclusion on the next real property tax roll. Upon completion of the computation of the amount of the Special Tax levy, the District shall prepare or cause to be prepared, and shall transmit or cause to be transmitted to the Auditor of the County of San Diego, such data as such Auditor requires to include the levy of the Special Tax on the next real property tax roll. The District finds and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in Southern California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of prmcapal of and interest on the outstanding indebtedness of such commumty faciht~es districts. For this reason, the District has deteflnined that, absent the certification described below, a reduction hi the Maximum Annual Special Tax (as such term is defined in the Special Tax RMA) authorized to be, levied below the levels provided would interfere with the timely retirement of the Bonds. The District has determined it to be necessary in order to preserve the security for the Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District does covenant, that it shall not initiate proceedings to reduce the Maximum Special Tax Rates (as such term is defined in the Rate and Method of Apportionment), unless, in connection.therewith, (i) the District receives a certificate from one or more Special Tax Consultants which, when taken together, certify that, on the basis of the parcels of land and improvements existing in Improvement Area A as of the July 1 preceding the reduction, the Maximum Annual Special Tax which may be levied on all Assessor's Parcels (as such term is defined in the Special Tax RMA) of taxable property on which a completed structure is located in each Fiscal Year will equal at least 110% of the gross debt service on all Bonds to remain Outstanding after the reduction is approved and will not reduce the Maximum Annual Special Tax payable from parcels on which a completed structure is located to less than 110% of Maximum Annual Debt Service, and (ii) the City Council, acting as the legislative body of the District, finds pursuant to this Indenture that any reduction made under such conditions will not adversely affect the interests of the Owners of the Bonds. Any reduction in the Maximum Annual Special Tax approved pursuant to the preceding sentence may be approved without the consent of the Owners of the Bonds. The District covenants that, in the event that any in/tiative is adopted by the qualified electors which purports to reduce the Maximum Annual Special Tax below the levels authorized pursuant to the Special Tax RMA or to limit the power or authority of the DisWict to levy Special Taxes pursuant to the Special Tax RMA, the District shall , from funds available hereunder, commence and pursue legal action in order to preserve the authority and power of the District to levy Special Taxes pursuant to the Special Tax RMA. F. The District will at all times keep, or cause to be kept, proper and current books and accounts (separate from all other records and accounts) in which complete and accurate entries shall be made of all transactions relating to the Special Tax Revenues and other funds herein provided for. G. The Dislrict will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the District 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 Code, or obligations which are "federally guaranteed" within the meaning of Section 149(b) of the Code. The District will not allow five percent (5%) or more of the proceeds of the Bonds to be used in 23 Draft 11.16.01 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. H. The District 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 Code. The District will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the Diswiet, or take or omit to take any action, that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. To that end, the District will cumply with all requirements of Section 148 of the Code to the extent applicable to the Bonds. In the event that at any time the District is of the opinion that for purposes of this Section it is necessary to resa'ict or limit the yield on the investment of any monies held under this Indenture or otherwise the District shall so instruct the Fiscal Agent in writing, end the Fiscal Agent shall take such action as may be necessary in accordance with such insmacfious. Without limiting the generality of the foregoing, the District agrees that there shall be paid fi.om time to time all amounts required to be rebated to the United States of America pursuant to Section 148(0 of the Code and any temporary, proposed or final Treasury Regulations as may be applicable to the Bonds fi.om time to time. This covenant shall survive payment in full or defeasance of the Bonds. The Dish-itt specifically covenants to pay or cause to be paid to the United States of America at the times and in the amounts determined under Section 3.07. Notwithstanding any provision of this Section, if the District shall obtain an opinion of Bund 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 Code, the Fiscal Agent may rely conclusively on such opinion in complying with the provisions hereof, and the covenant hereunder shall be deemed to be modified to that extent. I. The Dis~ct shall not directly or indirectly extend the maturity dates of the Bonds or the time of payment of interest with respect thereto. J. Not late? than October 30a' of each year, commencing October 30, 2002, and until October 30t~ following the final maturity of the Bonds, the District shall supply or cause to be supplied to the California Debt and Invesmaent Advisory Commission by mail, postage prepaid, the information, if any, then required by Government Code Section 53359.5 to be submitted to such agency. K. The District covenants that it will not adopt any policy pursuant to Section 53341.1 of the Act permitting tender of Bonds in full payment or partial payment of eny Special Taxes unless it first receives a certificate of a Special Tax Consultant that accepting such tender will not result in the Dis~ct having insufficient Special Tax Revenues to pay the principal of and interest on the Bonds when due. L. The District shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the District under the provisions of this Indenture. The District warrants that upon the date of execution and delivery of the Bonds, the conditions, acts and things required by law and this Indenture to exist, to have happened and to have been performed pi'ecedant to and in the execution and delivery of such Bonds do exist, have happened and have been performed and the execution end delivery of the Bonds shall comply in all respects with the applicable laws of the State. SECTION 6.05 Arbitrage Certificate.{tc kl 0 "2SECTION 6.05 Arbitrage Certificate."} On the basis of the facts, estimates and circumstances now in existence and in existence on the date of issue of the Bonds, as determined by the Treasurer, said Treasurer is hereby authorized to certify that it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be arbitrage bonds. Such certification shall be delivered to the purchaser together with the Bonds. SECTION 6.06 Defeasance.{tc Al 0 "2SECTION 6.06 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 fmcs and in the manner stipulated in the Indenture, th~n the Owner of such Bond shall cease to be entitled to the pledge of the Special Tax Revenues, and, other ~ as set forth below, all covenants, agreements and other obligations of the Distxict to the Owner of such Bond under the Draft 11.16.01 Indenture shall thereupon cease, terminate and become void and discharged and satisfied. In the event of the defeasance of all Outstanding Bonds, the Fiscal Agent shall pay over or deliver to the District all money or securities held by it pursuant to the Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds. Any Outstanding Bond shall be deemed to have been paid within the meaning expressed in the preceding paragraph if such Bond is paid in any one or more of the following ways: (a) by paying or causing to be paid the principal of, preimum, if any, and interest on such Bond, as and when the same shall become due and payable; (b) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the funds established pursuant to the Indenture (exclusive of the Rebate Fund) and available for such purpose, is fully sufficient to pay the principal of, premiurr~ if any, and interest on such Bond, as and when the same shall.become due and payable; or (c) by depositing with an escrow bank appointed by the Dislrict, in trust, noncallable Permitted Investraents of the type described in subparagraph 1 of the definition thereof, in such amount as an Independent Accountant shall determine (as set forth in a verification report from such Independent Accountant) will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the funds established under the Indenture (exclusive of the Rebate 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 obllgafions of the District under the Indenture 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 and except for the covenants of the District to preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Notice of suer 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 (b) or (c) above, there shall be provided to the Fiscal Agent a certificate of an Independent Accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Fiscal Agent or th[ escrow bank, together with the interest to accme thereon and moneys then on deposit in the funds established under the Indenture (exclusive of the Rebate 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 all such Bonds to be released in accordance with the Indenture as and when the same shall become due and payable, and an opimon of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds being defeased have been legally defeased in accordance with the indentm-e. To accomplish such defeasance, the Dislric[ shall cause to be delivered (i) a report of the Independent Acconntam verifying the determination made pursuant to paragraph (c) above (the "Verification Report") and (ii) an opinion of Bond Counsel to the effect that the Bonds are no longer Outstanding. The Verification Report and opm/on of Bond Counsel shall be acceptable in form and substance, and addressed to the District and the Fiscal Agent. SECTION 6.07 Fiscal Agent.{tc ~l 0 "2SECTION 6.07 Fiscal Agent."} The District hereby appoints U.S. Bank Trust National Association as Fiscal Agent for the Bonds. The Fiscal Agent is hereby authorized to and shall mail or otherwise provide for the payment of interest payments to the Bondholders, and upon written instruction of the District shall select Bonds for redemption, give notice of redemption of Bonds and matintain the Bond Register. The Fiscal Agent is hereby authorized to pay the principal of and preunum, if any, on the Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds presented to it for such purposes, to provide for the cancellation of Bonds all as provided in this Indenture, and to provide for the authentication of Bonds, and shall perform all other duties assigned to or imposed on it as provided in this Indenture. The Fiscal Agent shall keep accurate records of all Bonds paid and discharged by it. 25 Draft 11.16.01 The District shall from time to time, subject to any agreement between the District and the Fiscal Agent then in force, pay to the Fiscal Agent compensation for its services, reimburse the Fiscal Agent for all its advances and expenditures, including, but not limited to, advances to and fees and expenses of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and indemnify and hold the Fiscal Agent, its officers, directors, agents and employees, harmless from and against losses, claims, expenses and liabilities not arising from its own negligence or willful misconduct which it may incur ia the exercise and performance of its powers and duties hereunder. Such obligations shall survive the termination or discharge of this Indenture. The District may at any time at its sole discretion remove the Fiscal Agent initially appointed, and any successor thereto, by delivering to the Fiscal Agent a written notice of its decision to remove the Fiscal Agent and may appoint a successor or successors thereto, provided that any such successor, other than the Treasurer, shall be a bank or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000), and subject to supervision or examination by Federal or State authority. Any removal shall become effective only upon acceptance of appointment by the successor Fis~aI Agent or the Treasurer. If any bank or trust company appointed as a successor 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 the combined capital and surplus of such bank or Ixust 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 of such resignation, which notice shall be mailed to the Owners at their addresses appearing in the registration books in the office of the Fiscal Agent. Upon receiving such notice of resignation, the District shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent and appoinlment of a successor Fiscal Agent shall become effective only upon acceptance of appointment by the successor Fiscal Agent. SECTION 6,08 Liability of Fiscal Agent.{tc 'd 0 "2SECTION 6.08 Liability of Fiscal Agent."} The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Fiscal Agent assumes no responsibility for the correcmess of the same and makes no representations as to the validity or sufficiency of this Indenture or of the Bonds, and shall incur no responsibility ih respect thereof, other than in connection with its duties or obhgations herein or in the Bonds or in the certificate of authentication on the Bonds. The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of the Bonds. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negldgence or willful rnlscunduct. The Fiscal Agent shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Fiscal Agent may consult with counsel, who may be counsel to the District, 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 hereunder in good faith and in accordance therewith. Whenever in the administration of its duties under this Indenture, 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 bad faith on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a written 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 Indenture upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matmr or may require such additional evidence of such matter or may require such additional evidence as to it may seem reasonable. The Fiscal Agent shall have no duty or obligation to enforce the collection of funds to be deposited with it hereunder or as to the correctness of any amounts received, and its t/ability shall be limited to the proper accounting for such funds as it actually receives. 26 Draft 11.16.01 No provision of this Indenture or any other document related hereto shall require the Fiscal Agent to risk or advance its own funds or otherwise incur any financial liability in the performance of its duties or the exercise nfits fights hereunder. The permissive right of the Fiscal Agent to do things enumerated in this Indenture shall not be construed as a duty. The Fiscal Agent may execute any of the duties of the Fiscal Agent or powers hereof and perform any of its duties through attorneys, agents and receivers and shall not be answerable for the conduct of the same if appointed by it with reasonable care. The Fiscal Agent shall be responsible for only those duties expressly set forth in this Indenture and no implied duties or obligations shall be read into this Indenture against the Fiscal Agent. SECTION 6.09 Provisions Constitute Contraet.{te ~10 "2SECTION 6.09 Provisions Constitute Contract."} The provisions of this Indenture shall constitute a contract between the Dis~'ict and the Bundowners and the provisions hereof shall be enforceable by any Bondowner for the equal benefit and protection of all Bondovoaers similarly situated by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State in any court of competent jurisdiction. Said contract is made under and is to be construed in accordance with the laws of the State. No remedy conferred hereby upon any Bondowner is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law of the State. No waiver of any default or breach of duty or contract by any Bondowner shall affect any subsequent default or breach of duty or contract or shall impair any/¢ghts or remedies on said subsequent default or breach. No delay or omission of any Bondowner to exercise any fight or power accruing upon any default shall mipair any such~ right or power or shall be consmaed as a waiver of any such default or acquiescence therein. Every substantive fight and every remedy conferred upon the Bondowners may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and the Bondowner shall prevail, said Bondowner shall be entitled to receive from the Specia, l Tax Fund reimbursement for reasonable costs, expenses, outlays and attorney's fees, and should said suit, action or proceeding be abandoned or be determined adversely to the Bondowners then, and in every such case, the District and the Bondowners shall be restored to theix 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, th/s Indenture shall be irrevocable, but shall be subject to modification to the extent and in the manner provided in this Indenture, but to no greater extent and in no other SECTION 6.10 CUSIP Numbers.{tc ~1 0 "2SECTION 6.10 CUSIP Numbers."} CUSIP identification numbers, if available, will be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and no liability shall hereafter attach to the District, or any of the officers or agents thereof because of or on account of said numbers. SECTION 6.11 Severability.{tc ~10 "2SECTION 6.11 Severability."} If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional invalid or unenforceable, the remainder of this Indenture and the application of any such covenant, agreement or provision, or portion thereof, to any other persons or circumstances, shall be deemed severable and shall not be affected, and this Indenture and the Bonds issued pursuant hereto shall remafn valid and the Bondholder shall retain all valid rights and benefits accorded to them under this Indenture and the Constitution and laws of the State of California. If the provisions relating to the appointment and duties of a Fiscal Agent are held to be unconstitutional invalid or unenforceable, said duties shall be performed by the Treasurer. 27 Draft 11.16.01 SECTION 6.12 Unclaimed Money.{Ic ~1 0 "2SECTION 6.12 Unclaimed Money."} All money which the Fiscal Agent shall have received from any sour.~e and set aside for the purpose of paying or redeeming any of the Bonds shall be held in trust for the respective owners of such Bonds, but any money which shall be so set aside or deposited by the Fiscal Agent and which shall remain unclaimed by the Owners of such Bonds for a period of one year after the date on which any payment or redemption with respect to such Bonds shall have become due and payable shall be transferred to the General Fund of the District; provided, however, that the Fiscal Agent, before making such payment, shall cause notice to be mailed to the Owners of such Bonds, by first-class mail, postage prepaid, not less than 90 days prior to the date of such payment to the effect that said money has not been claimed and that after a date named therein any unclaimed balance of said money then remaimng will be transferred to the General Fund of the District. Thereafter, the Owners of such Bonds shall look only to the General Fund of the District for payment and then only to the extent of the amount so received without any interest thereon. SECTION 6.13 Nonpresentment of Bonds.{tc ~1 0 "2SECTION 6.13 Nonpresentment of Bonds."} Except as otherwise provided in Section 6.12 hereof, in the event any Bonds shall not be presented for payment when the principal thereof becomes due, if funds sufficient to pay such Bonds shall be held by the Fiscal Agent for the benefit of the Owners thereof, all liability of the District to the Owners thereof shall forthw/th cease and be completely discharged and thereupon it shall be the duty of the Fiscal Agent to hold such funds (subject to Section 6.12 hereo~), without liability for interest thereon, for the benefit of the Owners of such Bonds, who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on, or with respect to, such Bonds. SECTION 6.14 Continuing Disclosure{tc ~1 0 "2SECTION 6.14 Continuing Disclosure"}. The District hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Continuing Disclosure Agreement dated as of January 1, 2002 between the District and the Fiscal Agent (the "Continuing Disclosure Agreement"). Notwithstanding any other provision of this Indenture, failure of the District to comply with the Continuing Disclosure Agreement shall not be considered an breach of the provisions of this Indenture; however, upon the written direction of the owners o,f at least 25% aggregate principal amount of the Bonds Outstanding, the Fiscal Agent shall, or any Bond owner may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obhgations under this Section. ARTICLE VII. BOND FORM{tc ~1 0 "IARTICLE VII. BOND FORM"} SECTION 7.01 Form ofBonds.{tc ~1 0 "2SECTION 7.01 Form of Bonds."} The format of the Bonds as author/zed and to be issued for thase proceedings shall be substantially in the form as set forth in the attached, refermaced and incorporated Exhibit "A". 28 Draft 11.16.01 SECTION 7.02 Temporary Bonds.{tc ~l 0 "2SECTION 7.02 Temporary Bonds."} Any Bonds issued under this Indenture may be initially issued in temporary form exchangeable for definitive bonds. The Bonds may be issued as one temporary bond with an attached maturity schedule and interest rate schedule to represent all Bonds. The temporary bond may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the District and may contain such references to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the District in substantially the same manner as provided in Section 2.06 hereof. If the District issues one or more temporary Bonds, it will execute and furnish definitive Bonds without delay upon the request of any Owner and thereupon the temporaD, bonds may be surrendered for cancellation at the Principal Corporate Trust Office of the Fiscal Agent, and the District shall deliver in exchange for such temporary bonds an equal aggregate principal mount of defnfitive Bonds of the same interest rates and maturities. Until so exchanged, the temporary bonds shall be entitled to the same benefits under this Indenture as definitive Bonds issued hereunder. ARTICLE VIH EVENT OF DEFAULT SECTION 8.01 Events of Default.{tc ~1 0 "2SECTION 8.01 Events of Default."} The followIng events shall be Events of Default under this Indenture. (a) Default in the due and punctual payment of the principal of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise. (b) Default in the due and punctual payment of interest on any Bond when and as such interest shall become due and payable. (c) ~'*Default by the District In the observance of any of the other covenants, agreements or conditions on its part In this Indenture or in the Bourls contaIned, ff such default shall have continued for a period of thirty (30) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the District by the Fiscal Agent or to the District and the Fiscal Agent by the Owners of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds a,t the time Outstanding; provided that such default (other than a default arising from nonpayment of the Fiscal Agent's fees and expenses, which must be cured within such 30-day period tmless waived by the Fiscal Agent) shah not constitute an Event of Default under this Indenture ff the District shah commence to cure such default within said thirty (30) day period and thereafter diligently and in good faith shah cure such default within a reasonable period of time; or (d) The filing by the District of a petition or answer seeking reorganiTafion or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the District, seeking reorgamzation under the federal bankruptcy laws or any other applicable law of the Uinted States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the District or of the whole or any substantial part of its properly. SECTION 8.02 Application of Revenues and Other Funds After Default If a default in the payment of the Bonds shall occur and be continuing, all revenues and any other funds then held or thereafter received under any of the provisions of this Indenture shall be applied as follows and in the following order: A. To the payment of any expenses necessary in the opinion of the District to protect the interest of the owners of the Bonds and payment of reasonable 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 Indenture; 29 Draft 11.16.01 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 Indenture, 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 mount 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 mounts 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 of 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 ~e mounts of principal due on such date to the persons entitled thereto, without discrimination or preference. 3O Draft 11.16.01 IN' WITNESS WHEREOF, the District and the Fiscal Agent have executed this Bond Indenture effective the date first above written. COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) By: ASS1STNANT CITY MANAGER/DIRECTOR OF FINANCE U.S. BANK TRUST NATIONAJ~ ASSOCIATION, as Fiscal Agent By: AUTHORIZED OFFICER Draft 11.16.01 EXHIBIT "A' - FORM OF BOND United States of America State of California CITY OF CHULA VISTA COMMLrNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) 2002 IMPROVEMENT AREA A SPECIAL TAX BONDS Registered Owner: Cede & Co. Principal Amount: City of Chula Vista Community Facilities Dislxict No. 2001-1 (San Miguel Ranch) (the "District"), situated in Chula Vista, California, for value received, hereby promises to pay, solely from Special Tax Revenues (as hereafter def-med), to the registered owner named above, or registered assigns, on the maturity date set forth above, unless principal amount semiannually on each March 1 and September 1, commencing September 1, 2002, (each an "Interest Payment Date") at the interest rote set forth above, until the principal amount hereof is paid or made available for payment. The principal of and premium, if any, on this Bond are payable to the registered owner hereof in lawful money of the United States of Ama-ica upon presentation and surrender of this Bond at maturity or redemption at the corporate trust office or agency of U.S. Bank Trust National Association (the "Fiscal Agent") in St. Paul, Minnesota (or such other office designated by the Fiscal Agent). Interest on this Bond is payable from the Interest Paymen~Date next preceding the date of its authentication, unless ti) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after the 15th calendar day of the month preceding the Interest Payment Date (the "Record Date") but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date wnmediately succeeding the date of authentication or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the Bond Date above; provided, however, that if at the time of authentication of this Bond, interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment. Interest on this Bond shall be payable by check of the Fiscal Agent mailed in'st class, postage prepaid, to the registered owner hereof at such registered owner's address as it appears on the registration books maintained by the Fiscal Agent as of the close of business on the Record Date preceding the Interest Payment Date or, upon request in writing prior to the Record Date received from a registered owner of at least $1,000,000 in aggregate principal amount of the Bonds, by wire transfer m immediately available funds to an account in the United States of America designated by such registered owner. Tb/s Bond is one of a duly authorized issue of the "City of Chula Vista Community Facihties District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds" (the "Bonds") issued in the aggregate principal amount of $ pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Sections 53311, et seq. of the California Government Code, as amended (the "Act") and the City of Chula Vista Community Facil/fies 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, for the purpose of financing certain public improvements including street and road facilities in and for the District. The creation of the Bonds and the terms and conditions thereof are provided for by a Bond Indenture (the "Indenture") dated as of January 1, 2002, and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. All capitalized terms used herein shall have the same mean/ng as set forth in the Indenture unless otherwise specified herein. The Indenture_ is authorized under, this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Act and the Indenture, the prmcipai of, premium, if any, and interest on this Bond are payable solely from, and shall be secured by a pledge of and lien upon, the proceeds of the Special Tax (as defined in the Inc~enmre) levied and received by the District and the proceeds of the redemption and sale of property sold as a A-1 Draft 1LI6.0! result of foreclosure of the lien of the Special Tax to the amount of such lien and penalties thereon (together, the '~Special Tax Revenues") and certain funds held under the Indenture. The Bonds are not general obligations of the City of Chula Vista or the District, but are special, limited obligations of the District, and neither the faith and credit nor the taxing power of the District, the City of Chula Vista, the State of California, or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Special Tax Revenues, no other revenues or taxes are pledged to the payment of the Bonds. The District will review the public records of the County of San Diego, California, in connection with the collection of the Special Taxes and will commence and diligently pursue t0 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 in the Reserve Fund is less than the Resep~'e Requirement. The Bonds maturing on and after September 1, 20 may be redeemed at the option of the District prior to maturity as a whole, or in part on any Interest Payment Date on and after September 1, 20__, from such maturities as are selected by the District, and by lot within a maturity, from any source of funds, at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Price September 1, 20__ and March 1, 20 102% September 1, 20__ and March 1, 20__ 101% September 1, 20__ and thereafter 100% The Bonds are subject to redemption on any Interest Payment Date, prior to maturity, as a whole or in part on a pro rata bas~s among maturities, from the proceeds of the prepayment of Special Taxes pursuant to the Special Tax RMA. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be r~deemed), together with accrued interest thereon to the date ofredemptiun: Redemption Date Rerlempnon Price On or prior to March 1, 20__ 103% September 1, 20 and March 1, 20 102% September 1, 20 and March 1, 20 101% September 1, 20 and thereafter 100% The Bonds maturing on September 1, 20__ are subject to mandatory sinking fund redemption, in part, by lot, on September I of each year commencing September 1, 20__, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown in the following redemption schedule. Redemption Date Principal (September 1) Amount The Bonds maturing on September 1, 20 are subject to mandatory sinking fund redamption, in part, by lot, on September I of each year commencing September 1, 20 , at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accmed.and unpaid interest thereon to the date £med for redemption, without premium, in the aggregate principal amounts and in the years shown in the following redemption schedule. Redemption Date Principal (September 1) Amount A~2 Draft 11.16.01 Notice of redemption with respect to the Bonds to be redeemed shall be given by the Fiscal Agent to the registered owner thereof at least 30 days but not more than 45 days prior to the redemption date, by fn-st class mail, postage prepaid, at their addresses appearing on the Bond Register. This Bond shall be issued only in fully registered form in the denominatinns of $5,000 or any integral multiple thereof. No transfer hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment printed hereon, and authenticated as herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the regisU~red owner or to such owner's order. Interest on this Bond shall be payable to the person whos,e name appears upon the Bond Register as the registered owner hereof as of the close of business on the Record Date or to such person's order. The Fiscal Agent shall require the registered owner requesdug ~ransfer or exchange to pay any tax or other governmental charge requt~ed ~o be paid with respect to such transfer or exchange. The Fiscal Agent shall not be required to register, mmsfer or make exchanges of (i) Bonds for a period of l 5 days next preceding the date of any selection of Bonds to be redeemed or (ii) any Bonds chosen for redemption. This Bond shall not become vahd or obligatory for any purpose until the certificate of authentication hereon printed shall have been .doted and manually 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 Bond have existed, happened and been performed in due time, form and manner as required by law, and that the mount of this Bond, together with all off:er kudebte~-.xez: cf ~e Dis~zt, dc_es n~t ex:::~ mu3' dzbt !L'rZt presz~bed by ~: ~v.'z cr C~nzfi.~-'~c.n cf .*he State of Cahfomia. rN WITNESS WHEREOF, the City of Chula Vista, for and on behalf of the City of (2hula Vista Community Facilities DisU-ict No. 2001-1 (San Mignel Ranch), has caused tlxis Bond to be dated as of ,2002 and to be signed by the Mayor of the City of Chula Vista by her manual signature and attested by the City Clerk by her manual signature. City Clerk, City of Chula Vista, for and on behalf of the Mayor, City of Chula Vista, for and on behalf of the City of Chula Vista Community Facilities District No. City of Chula Vista Community Facilities District No. 2001-1 (San Miguel Ranch) 2001-1 (San Miguel Ranch) CERTII:ICATE OF AIYlIqENTICATiON This is one of the Bonds described in the within defined Indenture. Date: U.S. Bank Trust National Association, as Fiscal Agent By: Authorized Officer A-3 Draft 11.16.01 ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and la'ansfer unto (Name, Address, and Tax Identification or Social Security Number of Assignee) the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s), attorney, to transfer the same on the books of the Fiscal Agent with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature must be guaranteed by a qualified NOTICE: The signature on this assignment must guarantor, correspond with the name as it appears on the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever A-4 Draft 11.16.01 EXHIBIT "B' - ARBITRAGE REBATE 1NSTRUCTIONS{tc ~1 0 "IEXHIBIT B ARBITRAGE REBATE INSTRUCTIONS" } This document sets forth instructions regarding the investment and disposition of monies deposited in various funds and accounts established in connection with the issuance by the Community Facilities Dislxict No. 2001-1 (San Migael Ranch) (the "Dislrict") of its Special Tax Bonds in aggregate principal amount of $ (the "Bonds"). The purpose of these instxuefions is to provide the District with information necessary to ensure that the investment of the monies in the funds and accounts described herein will comply with the arbitrage requirements imposed by the Internal Revenue Code of 1986 and the regulatiuns issued thereunder. DEFINITIONS For purposes of these instructions, the following terms shall have the meanings set forth below: Bond Year. The term "Bond Year" means each 12-month period (or shorter period from the date o£ issuance) that ends at the close of business on a date selected by the District pursuant to the Code. Code. The term "Code" means the Internal Revenue Code of 1986, as amended. Delivery Date. The term "Delivery Date" means ,2002. Excess Investment Earnings. The term "Excess Investment Earnings" means an amount equal to the sam o£: (1) The excess of: (a) The aggregate amount earned from the Dehvery Date of the Bonds on all Nonpurpose Investments in which Gross Proceeds of the Bonds are invested, over (b) The amount that would have been earned if the Yield on such Nunpurpose InvesUments had been equal to the Yield on the Bonds, plu~ (2) Any income atwibutable to the excess described in paragraph (1). In determining Excess Investment Earnings, (i) any gain or loss on the disposition of a Nonpurpose Investment shall be taken into account and (ii) any amount earned on a bona fide debt service fund shall not be taken into account. Gross Proceeds. The term "Gross Proceeds" means the following: (1) Original proceeds, i.e.. the amount received by the Fiscal Agent as a result of the sale of the Bonds and any amounts actually or constructively received fi-om investing the mount received fi-om the sale of the Bonds; (2) Amounts, other than original proceeds, in the Reserve Fund and in any other fund established as a reasonably required reserve or replacement fund; (3) Amounts, other than as specified above, that are reasonably expected to be or are used to pay debt service with respect to the Bonds; and, (4) Amounts received as a result of investing amounts described above. Investment Property, The term "Investment Property" means any security, obligation, annuity corm'act or investment-type property in which Gross Proceeds are invested, excluding, however, the following: (a) United States Treasury - State and Local Government Series, Demand Deposit securities, and B-1 Draft 11.16.01 (b) Tax-exempt obligations. For purposes of these Instructions, the term "tax-exempt obligations" shall include only obligations the interest on which is (i) excludable from gross income for federal income tax purposes and (ii) not treated as an item of tax preference under Section 57(a)(5) of the Code. The term "tax-exempt obligation" shall, however, also include stock in a "qualified regulated inveslment company," which is a corporation that (i) is a regulated investment company within the meaning of Section 851(a) of the Code and meets the requirements of Section 852(a) of the Code for the taxable year; (ii) has only one class of stock authorized and outstanding; (iii) invests all of its assets in mx-exempt obligations (as defined above) to the extent practicable; and (iv) has at least 98% of its gross income derived from interest on, or gain from the sale or other disposition of, tax-exempt obligations, or the weighted average value of its assets is represented by investments in tax-exempt obligations. Nonpurpose Investment. The term "Nonpurpose Investment" means any Investment Property that is acquired with the Gross Proceeds of the Bonds and is not acquired in order t9 carry out the governmental purpose of the Bonds. Purchase Price. Tt~e term "Purchase Price", for the purpose of computation of the Yield of the Bonds, has the same meaning as the term "Issue Price" in Sections 1273(b) and 1274 of the Code, and, in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations acting th the capacity of underwriters or wholesalers) at which price a substantial amount of each maturity (at least 10 percent) of the Bonds was sold. The term "Purchase Price", for the purpose of computation of Yield of Nonpurpose Investments means the fair market value of the Nonpurpose Investment on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if late[, on the date that Investment Property constituting a Nonpurpose Investment becomes a Nonpurpose Investment of the Bonds. Regulations. The term "Regulations" means temporary and permanent Regulations promulgated under Section 148 of the Code. Yield. The term "Yield" means that discount rate which, present value of all payments of principal and interest case of Nonpurpose Investments which require paYments in principal and interest) on a Nonpurpose Invesmaent or on the Bonds produces an amount equal to the Purchase Price of such Nonpurpose Investment or the Bonds, all computed as prescribed in applicable Regulations. The yield on Nonpurpose Investments must be computed by the use of the same frequency interval of compounding interest as is used with respect to the Bonds. REBATE REQUIREMENT Calculation of Excess Investment Earrfi.ngs. No later than the last day of the fifth Bond Year, each succeeding fifth Bond Year and on the date the last Bond is discharged, the District shall calculate or cause to be calculated the Excess Investment Earnings pursuant to the Code and Regulations and deposit or cause to be deposited into the Rebate Fund the amount calculated to be Excess Investment Earnings. This calculation shall be made or cause to be made by the District in accordance with the following rules: (1) For purposes or calculation of the yield on any investment as required under these Instructions, the purchase price of the investment will be the fair market pr/ce of the investment on an established market. This means that the D/strict (or the Fiscal Agent acting at the direction of the District) will not pay a premium and will not accept a lower interest rote than is usually paid to adjust the yield on an investment. (2) The market price of certificates of deposit issued by a commercial bank may be regarded as being at a fair market price if they are determined by reference to the bona fide bid price quoted by a dealer who maintains an active secondary market in such certificates, or, if no secondary market exists, by satisfying subparagraph (3) below relating t6 investment agreements. (3) Investments pursuant to an investment agreement may be regarded as being made at a fak market price if (i) at least three (3) bids are received on the investment contract from persons without an interest in the Bonds; (ii) the winning bidder provides a certificate that, based on its reasonable expectations on the B-2 Draft 11.16.01 date the investment agreement is entered into, investments will not be purchased or sole at a price other than theft' fair market value; (iii) the yield on the investment agreement is at least equal to the yield offered under the highest bid received from a non-interested party; and (iv) the yield on the inveslment agreement is at least equal to the yield offered on similar con~'acts. (4) For other investments traded on an established market, the fair market price shall be the mean between the bid and offered prices for such obligations on the date of purchase or, if subsequent thereto, the date the investment becomes a Nonpuxpose Investment. (5) Where mounts must be restricted to a certain yield and Investments cannot be purchased on an established market or a bona fide fair market price cannot be established at a yield that does not exceed the maximum permissible yield, the District may acquire or hold, or cause the Fiscal Agent to acquire or hold, tax-exempt securities, currency or United States Treasury Certificates of Indebtedness, Notes and Certificates - State and Local Government Series ("SLGs") that yield no more than the maximum permissible yield. SLGs are available at the Federal Reserve Bank. Payment to United States. The District shall direct the Fiscal Agent in writing to pay fi'om the Rebate Fund an amount equal to Excess Investment Earnings (after application of any available credits) to the United States Treasury in installments with the ftrst payment to be made not later than thirty (30) days after the and of the fifth Bond Year, and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The District shall assure that each such installment is In an amount equal to at least ninety percent (90%) of the Excess Investment Earnings with respect to the Bonds as of the close of the computation period. Not later than sixty (60) days after the retirement of the Bonds, the District shall pay from the Rebate Fund to the United States Treasury one hundred percent (100%) of the theretofore unpaid Excess Investment Earnings of the Bonds. In the event that there are any amounts remaining in the Rebate Fund following the payment required by the preceding sentence, the D/strict shall use such amount for any lawful purpose of the District. The District shall cause payments to the United States at the ~address prescribed by the Regulations as the same may be from time to time in effect with such reports and statements as may be prescribed by such Regulations. In the event that, for any reason, amounts in the Rebate Fund~are insufficient to make the payments to the United States Treasury which are required hereunder, the District shall assure that such payments are made to the United States Treasury on a timely basis from any funds lawfully available therefor. Further obligation of District. The District shall assu[e that Excess Investment Earnings are not paid or disbursed except as provided in these instructious. To that end, the District shall assure that investment transactions are on an arms-length basis. In the event that Nonpmpose Invesmaents consist of certificates of deposit or investment contracts, investment in such Nonpnspose Investments shall be made in accordance with the procedures described in applicable Regulations as from time to time in effect. MAINTENANCE OF RECORDS. With respect to ali Nonpurpose Investments acquired in a fund or account established and held by the District or the Fiscal Agent, the District or the Fiscal Agent shall record or cause to be recorded the following information: (i) purchase date, (ii) purchase price, (iii) information establishing that the purchase price is the fair market value as of such date (e.g., the published quoted bid by a dealer in such an Investment on the date of purchase), (iv) any accrued interest paid, (v) face amount, (vi) coupon rate, (vii) periodicity of Interest payments, (viii) disposition price, (ix) any accrued interest received, and (x) disposition date. To the extent any investment becomes a Nonpurpose Investment by becoming Gross Proceeds after it was originally purchased, it shall be treated as if it were acquired at its fair market value at the th-ne it becomes a Nonpurpose Investment. The District shall keep and retain for a period of six (6) years followIng the retirement of the Bonds, records of all determinations made pursuant to these Instructions. AMENDMENT. In order to comply with the covenants in the Bond Indenture regarding compliance with the requirements of the Code and the continued exclusion from gross income for purposes of federal income taxation of interest paid on the Bonds, the procedures described in these Instructions may be modified as necessary, without the consent of Bond owners, and based on the opinion of nationally reco~tLmi?~ed bond counsel acceptable to the District, to comply with regulations, rulings, legislation ur judicial decisions as may be applicable to the Bonds. Neither the Fiscal Agent nor any of its members, agents, officers or employees shall be liable for any action taken or for its failure to take any action in connection with these Instructions. The District may rely conclusively on the advice of its Bond Counsel with respect to the requirements of these Insmmtions. B-3 Draft 11.16.01 ................. COMPARISON OF HEADERS .................. -HEADER 1- Draft 11.26.01 -HEADER 2- Execution Copy -HEADER 3- Draft 11.16.01 TABLE OF CONTENm/'S (Continued) Page -HEADER 4- Draft 11.16.01 -HEADER 5- Draft 11.16.01 -HEADER 6- Draft I1.16.01 -HEADER 7- Draft 11.I6.01 .......... COMPARISON OF FOOTERS .................. -FOOTER 1- -FOOTER 2- -FOOTER 3- (i) T -FOOTER 4- ~22>2 B -FOOTER 5- S-I I . B-4 Draft 11.16.01 -FOOTER 6- A - ~lz~ 5 E -FOOTER 7- B - "5" 1 E ThLs redlined draft, generated by CompareRite (TM) - The Instant Redliner, shows the differences between - original document : S:\172~EMAIL'~BOND INDENTURE 11.16.01 .DOC and revised document: S:\172~EMAIL~BOND INDENTURE 11.16.01.2ND.DOC CompareRite found 78 change(s) in the text CompareRite found 3 change(s) m the notes Deletions appear as Overstrike text surrounded by <> Additions appear as Bold+Dbl Underline text B-5 $ CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) 2002 IMPROVEMENT AREA A SPECIAL TAX BONDS BOND PURCHASE AGREEMENT July ~, 2002 Community Facilities Dis~ct No. 2001-1 (San Miguel Ranch) City of Chula Vista Chula Vista, California Ladies and Gentlemen: Stone & Youngberg LLC (the "Underwriter"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement with Community Facilities District No. 2001-1 (San Miguel Ranch) (the "Districf'), which was formed by the City of Chula Vista (the "City"), which, upon acceptance, will be binding upon the District and upon the Underwriter. This offer is made subject to acceptance of it by the District on the date hereof, and if not accepted will be subject to withdrawal by the Underwriter upon notice delivered to the District at any time prior to the acceptance hereof by the District. ,3 1. Purchase, Sale and Delive~ of the Bonds. (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter agrees to purchase fxom the District, and the District agrees to sell to the Underwriter, all (but not less than all) of the Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvernent Area A Special Tax Bonds (the "Bonds") in the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated the Closing Date (hereinafter defined), and bear interest (payable semiannually on March 1 and September 1 in each year, commencing March 1, 2003) at the rates per annum and maturing on the dates and in the amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be the amount specified as such in Exhibit A hereto. The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, the Bond Indenture (the "Bond Indenture") by and between the District and U.S. Bank, N.A., as Fiscal Agent (the "Fiscal Agent"), dated as of July 1, 2002, approved in Resolution No. 2002- adopted by the City Council of the City, as the legislative body of the District, on July ~, 2002, respectively (the "Resolution of Issuance"). The Bonds and interest thereon will be payable from a special tax (the "Special Tax") levied and collected on the taxable land within the District in accordance with Resolution No. 2001- adopted by the City Council on December 4, 2001 (the "Resolution of Formation"). Proceeds of the sale of the Bonds will be used in accordance with the Bond Indenture and the Mello- Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act") and the City of Chula Vista Community Facilities District Ordinance ("Authorizing Ordinance" and together with the Act the "Law"), to acquire DOCSOC~899793v2~22245.0134 certain public improvements described in the Resolution of Formation. The Resolution of Issuance, the Resolution of Formation, the Authorizing Ordinance, Ordinance No.__ and all other resolutions adopted with respect to the formation of the District and the issuance of the Bonds are collectively referred to herein as the "District Resolutions." (b) At or prior to the acceptance hereof by the District, the District shall cause to be delivered to the Underwriter (i) a Certificate of Representations and Warranties of the City, dated as of the date of this Purchase Agreement (the "City Certificate"), in substantially the form attached hereto as Exhibit B, with only such changes therein as shall have been accepted by the Underwriter, and (ii) a certificate executed by NNP - Trimark San Miguel Ranch LLC, a California limited liability company (the "Developer") dated on or prior to the date of this Purchase Agreement and addressed to the Underwriter and the District deeming the information in the Preliminary Official Statement (as defined in (c) below) relating to the Developer final and accurate as of its date. (c) Subsequent to its receipt of a certificate from the District deeming the Preliminary Official Statement for the Bonds, dated July __, 2002 (which Preliminary Official Statement, together with the cover page and all appendices thereto, is herein collectively referred to as the "Preliminary Official Statement" and which, as amended with the prior approval of the Underwriter and executed by the District, will be referred to herein as the "Official Statement"), final for purposes of Rule 15c2-12 of the Securities and Exchange Commission ("Rule 15c2-12"), the Underwriter has distributed copies of the Preliminary Official Statement. The District hereby ratifies the use by the Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and distribute the final Official Statement dated the date hereof (including all information previously per~, itted to have been omitted by Rule 15c2-12 and any supplements and amendments thereto as have been approved by the City as evidenced by the execution and delivery of such document by an officer of the City (the "Official Statement"), the Bond Indenture, the Continuing Disclosure Agreement of the District (the "District Disclosure Agreement"), this Bond Purchase Agreement, any other documents or contracts to which City or the District is a party, and all information contained therein, and all other documents, certificates and statements furnished by the City and the District to the Underwriter in connection with the transactions contemplated by this Bond Purchase Agreement, in connection with the offer and sale of the Bonds by the Underwriter. The Undenvriter hereby agrees to deliver a copy of the Official Statement to a national repository on or before the Closing Date (as hereinafter defined) and to each investor that purchases any of the Bonds prior to the "end of the underwriting period" (as such term is defined in Section 2(g) below) and otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. (d) At 8:00 A.M., Pacific Daylight Time, on July __, 2002, or at such earlier time or date as shall be agreed upon by the Underwriter and the District (such time and date being herein referred to as the "Closing Date"), the District will deliver (i) to The Depository Trust Company in 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 District as provided in the Bond Indenture, and (ii) to the Underwriter, at the offices of Best Best & Krieger LLP, Bond Counsel in San Diego, California, or at such other place as shall be mutually agreed upon by the District and the Undera, riter, the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in Los Angeles clearinghouse fimds (such delivery and payment being herein referred to as the "Closing"). Notwithstanding the foregoing, the Underwriter may, in its discretion, accept delivery of 2 DOCSOCX899793v2~22245.0134 the Bonds in temporary form upon making arrangements with the District which are satisfactory to the Underarriter relating to the delivery of the Bonds in definitive form. 2. Representations, Warranties and Agreements of the District. The District represents, warrants and covenants to and agrees with the Underwriter that: (a) The City is duly organized and validly existing as a charter city duly organized and validly existing under the Constitution and laws of the State of California and has duly authorized the formation of the District pursuant to the Resolution of Formation and the Law. The City Council as the legislative body of the City and the District has duly adopted the District Resolutions, and will cause to be recorded in the real property records of the County of San Diego a Notice of Special Tax Lien (the "Notice of Special Tax Lien") (such District Resolutions and Notice of Special Tax Lien being collectively referred to herein as the "Formation Documents"). Each of the Formation Documents remains in full fome and effect as of'the date hereof and has not been amended. The District is duly organized and validly existing as a community facilities district under the laws of the State of California. The City has, and at the Closing Date will have, as the case may be, full legal fight, power and authority to execute, deliver and perform on behalf of itself and the District its obligations under that certain Acquisition/Financing Agreement between the City and the Developer, together with all amendments thereto (the "Funding Agreement") and to carry out all transactions contemplated by the Funding Agreement. The District has, and at the Closing Date will have, as the case may be, full legal fight, power and authority (i) to execute, deliver and perform its obligations under this Bond Purchase Agreement, the District Disclosure Agreement, and the Bond Indenture, and to carry out all transactions contemplated by each of such agreements, (ii) to issue, sell and deliv~qr the Bonds to the Underwriter pursuant to the Resolution of Issuance and Bond Indenture as provided herein, and (iii) to carry out, give effect to and consummate the transactions contem[,lated by the Formation Documents and by the Bohd Indenture, this Bond Purchase Agreement, the District Disclosure Agreement and the Funding Agreement (collectively, the "District Documents") and the Official Statement; Co) The District and the City, as applicable, each has complied, and will at the Closing Date be in compliance, in all material respects with the Formation Documents and the District Documents, and any immaterial noncompliance by the District and the City, if any, will not impair the ability of the District and the City, as applicable, to carry out, give effect to or constnnmate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the District will continue to comply with the covenants of the District contained in the District Documents; (c) The City Council has duly and validly: (i) adopted the D/strict Resolutions, (ii) called, held and conducted in accordance with all requirements of the Law the election within the District to approve the levy of the Special Tax and the issuance of the Bonds and recorded the Notice of Special Tax Lien which established a continuing lien on the land within the District securing the Special Tax, (ii/) authorized and approved the execution and delivery of the Bonds and the District Documents, (iv) authorized the preparation and delivery of the Preliminary Official Statement and the Official Statement. and (v) authorized and approved the performance by the District of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by, each of the District Documents (including, without limitation, the collection of the Special Tax), and at the Closing Date the Formation Documents will be in full force and effect and the District Documents and the Bonds will constitute the valid, legal and binding obligations of the District and (assuming due authorization, 3 DOCSOC~899793v2~22245.0134 execution and del/very by other parties thereto, where necessary) will be enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enfomement of creditors' tights in general and to the application of equitable principles if equitable remedies are sought; (d) To the best of the District's knowledge, neither the District nor the City is in breach of or default under any applicable law or administrative role or regulation of the State of California (the "State"), or of any depa~hnent, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, bond indenture, contract, agreement or other instrument to which the District or the City is a patay or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the District of its obligations under the Bonds, the Formation Documents or the District Documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or admlnistrative rule or regulation of the State, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or a material breach of or default under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the District or the City, as the case may be, is a party or is otherwise subject or bound; (e) Except for compliance with the blue sky or other states securities law filings, as to which the District makes no representations, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would ~aterially adversely affect, the performance by the District of its obligations hereunder, or under the Formation Documents or the D~stnct Documents, have been obtained and are ~n full force and effect; (f) The Special Tax constituting the security for the Bonds has been duly and lawfully author/zed and may be levied under the Law a~nd the Constitution and the applicable laws of the State of California, and such Special Tax, when levied, will constitute a valid and legally binding continuing lien on the properties on which it has been levied; (g) Until the date which is twenty-five (25) days after the "end of the underwriting period" (as hereinafter defined), if any event shall occur of which the District is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements in the Official Statement, in light of the circumstances existing at such time, not misleading, the District shall forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter's opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the District shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term "end of the underwriting period" means the later of such t/me as (i) the District delivers the Bonds to the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an underanfting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the "end of the underwriting period" shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the District at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the "end of the underwriting period"; 4 DOCSOC\899793v2~22245.0134 - (h) The Bond Indenture creates a valid pledge of the Special Taxes and the moneys in the Special Tax Fund, the Bond Fund and the Reserve Fund established pursuant to the Bond Indenture, including the investments thereof, subject in all cases to the provisions of the Bond Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein; (i) Except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or inveStigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or, to the best knowledge of the District, threatened (i) which would materially adversely affect the ability of either the City or the District to perform its obligations under the Bonds, the Formation Documents or the District Documents, or (ii) seeking to restrain or to enjoin the development of the land within the District, the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Bond Indenture or the Funding Agreement, or the collection or application of the Special Tax pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the Formation Documents, the District Documents, the land use approvals granted by the City with respect to the land within the District, any other instruments relating to the development of any of the property within the District, or any action contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official Statement or the powers or authority of the District with respect to the Bonds, the Formation Documents, the District Documents, or any action of the District contemplated by any of said documents; nor is there any action pending or, to the best knowledge of the District, threatened against the City or the District which alleges that interest on the Bonds is not excludable from gross income for fed..~ral income tax purposes or is not exempt from California personal income taxation; (j) The District will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sale under the "Blue Sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; provided, however, the District shall not be required to register as a dealer or a broker of securities or to consent to service of process in connection with any blue sky filing; (k) Any certificate signed by any author/zed official of the City and the District authorized to do so shall be deemed a representation and warranty to the Underwriter as to the statements made therein; (1) The District will apply the proceeds of the Bonds in accordance with the Bond Indenture and as described in the Official Statement; (m) The information contained in the Preliminary Official Statement (other than information under the caption "THE BONDS - Book-Entry-Only System," as to which no view is expressed) was as of the date thereofi and the information contained in the Official Statement (other than information under the caption "THE BONDS - Book-Entry-Only System," as to which no view is expressed) as of its date and on the Closing Date shall be, true and correct in all material respects and such information does not and shall 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 light of the circumstances under which they were made, not misleading; 5 DOCSOC\899793v2~22245.0134 (n) The District shall use its best efforts to cause the Developer to cooperate with the Underwriter in the preparation of the Official Statement; provided, however, that such efforts shall not include the expenditure of funds by the District; (o) The Preliminary Official Statm'nent heretofore delivered to the Underwriter was deemed final by the District as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph Co)(1) of Rule 15c2-12. The District hereby covenants and agrees that, within seven (7) business days from the date hereof, the District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwhter and the District so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board: (p) Neither the City nor the District is in default with respect to any reporting obligation that it has undertaken under Rule 15c2-12 for any indebtedness issued by it. 3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the District contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City and the District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by Ihe District of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions: (a) At the Closing Date, the Formation Documents and the District Documents 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 there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated thereby and by this Bond Purchase Agreement, all such actions as, in the opinion of Best, Best & Krieger LLP, Bond Counsel for the District, and Stradling Yocca Carlson & Rauth, a Professional Corporation, counsel to the Underwriter, shall be necessary and appropriate; (b) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: (1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article HI of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued, or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or 6 DOCSOC\899793v2~22245.0134 indirectly, of imposing federal income taxation upon the interest as would be received by the holders of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; (2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Bond Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of the Bonds, including any or all underwriting arrangements, as contemplated hereby or by the Official Statement or otherwise is o~' would be in violation of the federal securities laws, roles or regulations as amended and then in effect; (3) any amendment to the federal or California Constitution or action by any federal or Califomia court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the District, its property, income, securities (or interest thereon), the validity or enforceability of the Special Tax or the ability of the City or the District to construct or acquire the improvements as contemplated by the Formation Documents, the District Documents or the Official Statement; or .~., (4) any event occurring, or information becoming known, which, in the judgment of th~ Underwriter, makes untrue in any material respect any statement or information contained in the official statement, or results in the Official Statement containing any untrue statement ora material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) On the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Unde~riter: (1) The Formation Documents and the District Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that each Formation Document is a true, correct and complete copy of the one duly adopted by the City Council; (2) The Official Statement; (3) An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Best Best & Krieger LLP, Bond Counsel for the District, in the form attached to the Preliminary Official Statement as Appendix H, and an unqualified opinion of such counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such approving opinion addressed to the District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it; 7 DOCSOC\899793v2~22245.0134 (4) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Best Best & Krieger LLP, Bond Counsel for the District, to the effect that (i) the District Documents have been duly authorized, executed and delivered by the City or the District, as applicable, and, assuming such agreements constitute valid and binding obligations of the other parties thereto, constitute the legally valid and binding agreements of the City or the District, as applicable, enfomeable in accordance with their terms, except as enforcement may be limited by bankruptcy, moratorium, insolvency or other laws affecting creditor's rights or remedies and is subject to general principles of equity (regardless of whether such enforceability is considered in equity, or at law); (ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; (iii) the information contained in the Official Statement on the cover and under the captions "iNTRODUCTION," "THE BONDS," "SOURCES OF PAYMENT FOR THE BONDS," "THE COMMUNITY FACILITIES DISTRICT," "SPECIAL RISK FACTORS - Proposition 218," "TAX MATTERS" and Appendices E and H thereof, insofar as it purports to summarize certain provisions of the Law, the Formation Documents, the Bonds and the Bond indenture and the exclusion from gross income for federal income tax purposes and exemption from State of California personal income taxes of interest on the Bonds, present a fair and accurate summary of such provisions; and (iv) the Special Tax has been duly and validly authorized in accordance with the provisions of the Law and, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enfomement of creditors' rights, by equitable principles and by the exercise of judicial discretion in appropriate cases, a lien to secure payment of the Special Taxes has been imposed on all nonexempt property in the District; (5) An opinion, dated the Closing Date and addressed to the Undenvriter, of Stmdling Yocca Carlson & Rauth, a Professional Corporation,~counsel for the Underwriter, to the effect that (i) the Bonds are exempt from the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (ii) without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the City, Bond Counsel, representatives of the Underwriter and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Official Statement as of its date and as of the Closing Date contained any untrue statement ora material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as any financial or statistical data, appraisals, assessed values or projections contained in the Official Statement); (6) A certificate, dated the Closing Date and signed by an authorized representative of the District, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds; and certifying that (i) the representations and warranties of the District contained in Section 2 hereof are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the purposeg for which it is to be used in order to make the statements and information contained in the Official Statement not misleading in any material respect, and the Bonds, the Formation Documents and the District Documents conform as to form and tenor to the 8 DOCSOC\899793v2~22245.0134 descriptions thereof contained in the Official Statement; (iii) the District has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Formation Documents, the District Documents and the Official Statement at or prior to the Closing Date; and (iv) the representations and warranties of the City contained in the City Certificate are true and correct in all material respects on and as of the Closing Date, with the same effect as if made on the Closing Date, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Official Statement; (7) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, to the effect that (i) to the best of his or her knowledge and except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened which would materially adversely affect the ability of the District to perform its obligations under the Bonds, the Formation Documents or the District Documents, or seeking to restrain or to enjoin the development of property within the District, the issuance, sale, delivery or exclusion from gross income for federal income tax purposes or State of California personal income taxes of interest on the Bonds, or the application of the proceeds thereof in accordance with the Bond Indenture, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Formation Documents or the District Documents or the accuracy of the Official Statement, or any action of the City contemplated by any of said documents; (ii) the City is duly organized and validly existing as a charter city under the Constitution and laws of the State of California and the District is duly organized and validly existing as a community facilities district under the laws of the State of California, anq~the District has full legal right, power and authority to issue the Bonds and to perform all of its obligations under the Formation Documents and the District Documents; (iii) the City and the District have obtained all approvals, consents, authorizations,~ elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Special Tax, the issuance of the Bonds or the performance by the District of its obligations thereunder or under the Bond Indenture, except that no opinion need be expressed regarding compliance with blue sky or other securities laws or regulations, whatsoever; (iv) the City Council has duly and validly adopted the District Resolutions at meetings of the City Council which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the District Resolutions are now in full force and effect and have not been amended; and (v) each of the City and the District has duly authorized, executed and delivered the District Documents to which it is a party and the Bonds and has duly authorized the preparation and delivery of the Official Statement, and the District Documents and the Bonds constitute legal, valid and binding agreements of the District and the City, as applicable, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought and to the limitations on legal remedies against cities in the State of California; (8) A certificate dated the Closing Date and addressed to the Underwriter, the City and the District, fi.om the Developer in substantially the form attached hereto as Exhibit C; (9) An opinion dated the Closing Date and addressed to the Underwriter, the City and the District, by counsel to the Developer, substantially in the form attached hereto as Exhibit D; 9 DOCSOC\899793v2~22245,0134 (10) A certificate dated the Closing Date from McGill, Martin Self, Inc. addressed to the City, the District and the Underwriter to the effect that (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Rate and Method of Apportionment of Special Taxes as of the Closing Date would generate at least 110% of the maximum annual debt service payable with respect to the Bonds, based on such assumptions and qualifications as shall be acceptable to the Underwriter, and (ii) all information supplied by it for use in the Official Statement is true and correct as of the date of the Official Statement and as of the Closing Date; (11) A letter dated the Closing Date from Brace W. Hull & Associates, Inc. (the "Appraiser") addressed to the Underwriter, the District and the City to the effect that it has prepared the appraisal report (the "Appraisal") with respect to the property located within the District and that (a) the Appraisal, in the form set forth in Appendix C to the Official Statement, may be included in the Preliminary Official Statement and the Official Stat. ement, (b) neither the Appraisal included in Appendix C nor the information in the Official Statement referring to the Appraisal contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (c) no events or occurrences have been ascertained by it or have come to its attention that would materially change the opinion set forth in its report; (12) A letter from The Meyers Group dated the Closing Date addressed to the Underwriter, the City and the District to the effect that it has prepared the market absorption study (the "Study") referred to in the Official Statement and that (a) the summary o£the Study in Appendix B thereto may be included in the Preliminary Official Statement and the Official Statement, (b}.~either the summary nor the reformation regarding the projected absorption of the proposed development described in the Official Statement contains any untrue statement of a mater/al fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (c) no events or occurrences have been ascertained by it or have come to its attention that would materially change the opinion set forth in its report; (13) A certificate of the District dated the Closing Date, in a form acceptable to Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (14) A certificate to the Fiscal Agent and an opinion of counsel to the Fiscal Agent dated the Closing Date and addressed to the City, the District and the Underwriter to the effect that it has duly authorized the execution and delivery of the Bond Indenture and that the Bond Indenture is a valid and binding obligation of the Fiscal Agent enforceable in accordance with its terms; (15) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the troth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in the Preliminary Official Statement and the Official Statement, of the District's representations and warranties contained herein and the due performance or satisfaction by the District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the District in connection with the transactions contemplated hereby and by the Official Statement; and 10 DOCSOC\899793v2~22245.0134 If the District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Undenvriter nor the District shall be under any further obligation hereunder, except that the respective obligations of the District and the Underwriter set forth in Section 5 and Section 6 hereof shall continue in full force and effect. 4. Conditions of the District's Obligations. The District's obligations hereunder are subject to the Underwriter's performance of its obligations hereunder, and are also subject to the following conditions: (a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the District executing the certifie&e referred to in Section 3(c)(6) hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the Formation Documents, the District Documents or the existence or powers of the City or the District; and (b) As of the Closing Date, the District shall receive the approving opinions of Bond Counsel referred to in Section 3(c)(3) and (4) hereof, dated as of the Closing Date, addressed to the City, the District and the Underwriter. 5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth herein: (a) The Underwriter shall be under no obligation to pay, and the District shall pay or cause to be paid (out of any legally available funds of the District) all expenses incident to the performance of the District's obligations hereunder, including, but not limited to, the cost of printing and delivering the Bonds to the Underwriter, the cost of preparation, printing, distribution and delivery of the Bond Indenture, the Preliminary Official Statement, the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Fiscal Agent for the Bonds, Bond Counsel, counsel to the Underwriter in the amount of $10,000, and any accountants, engineers or any other experts or consultants the District has retained in connection with the Bonds; and Co) The District shall be under no obligation to pay, and the Underwriter shall pay, any fees of the California Debt and Investment Advisory Commission, the cost of preparation of any "blue sky" or legal investment memoranda and this Bond Purchase Agreement; expenses to qualify the Bonds for sale under any "blue sky" or other state securities laws; and all other expenses incurred by the Underwriter in connection w/th its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel and any advertising expenses. 6. Notices. Any notice or other communication to be given to the City under this Bond Purchase Agreement may be given by delivering the same in writing to the City at 276 Fourth Avenue, Chula Vista, California 919.10, Attention: Director of Finance; and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Stone & Youngberg, 4350 La Jolla Village Drive, Suite 140, San 11 DOCSOC\899793v2~22245.0134 Diego, California 92122, Attention: L. William Huck, and to 50 California Street, 35th Floor, San Francisco, California 94111, Attention: Public Finance. 7. Parties in Interest. This Purchase Agreement is made solely for the benefit of the District and the Underwriter (including their successors or assigns), and no other person shall acquire or have any right hereunder or by viaue hereof. 8. Survival of Representations and Warranties. The representations and warranties of the District and the City set forth in or made pursuant to this Bond Purchase Agreement and any certificates delivered hereunder shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Bond Purchase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the District and the City and regardless of delivery of and payment for the Bonds. 9. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the District and shall be valid and enforceable as of the time of such acceptance. 10. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds for the District. 11. .Governing Law. This Bond Purchase Agreement shall be governed by the laws of the State of Ca'llfornia. 12 DOCSOC~899793v2~22245.0134 12. Counterparts. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Very truly yours, STONE & YOUNGBERG LLC By: Managing Director ACCEPTED: July ~_, 2002 COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) By: Director of Finance 13 DOCSOC~899793v2L22245.0134 EXHIBIT A MATURITY SCHEDULE COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) 2002 IMPROVEMENT AREA A SPECIAL TAX BONDS Maturity Date (September 1) Principal Coupon Par Amount Underwriter's Discount Purchase Price A-1 DOCSOC~,899793v2~22245.0134 {0 -.2~ o EXHIBIT B CERTIFICATE OF REPRESENTATIONS AND WARRANTIES OF THE CITY OF CHULA VISTA July __, 2002 To: Stone & Youngberg LLC San Diego, California Re: Community Facilities District No. 200]-] (San Miguel Ranch) 2002 Improvement Area A Special ]'ax Bonds Ladies and Gentlemen: We are delivering to you this certificate in connection with the issuance and sale of $ aggregate principal amount of the Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds and pursuant to the Bond Purchase Agreement, dated the date h~reof (the "Purchase Contract"), by and between you and Community Facilities District No. 2001-I (San Miguel Ranch) (the "District"). All capitalized terms used herein without definition shall have the meanings assigned to such terms in the Purchase Contract. The undersigned, in his capacity as an officer of the City and not in his individual capacity, on behalf of the City, represents and warrants to you that: (1) The City is duly organized and validly existing as a charter city under the Constitution and laws of the State of California and the City Council of the City, as the legislative body of the District, has duly and validly adopted each of the District Resolutions and authorized the formation of the District pursuant to the Law. (2) The information contained in the Preliminary Official Statement is, as of the date thereof and as of the date hereof, tree and correct in alt material respects and does not, as of the date thereof and as of the date hereof, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. CITY OF CHULA VISTA By: Director of Finance B~I DOCSOC\899793v2~22245.0134 EXHIBIT C CERTIFICATE OF DEVELOPER OF LAND WITHIN THE DISTRICT July __, 2002 Stone & Youngberg LLC 4350 La Jolla Village Drive, Suite 840 San Diego, California 92122 City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Re:$ Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds (the "Bonds ") Ladies and Gentlemen: (the "Developer"), hereby certifies that: I. The Developer is the owner of certain of the land within Community Facilities District No. 2001-1 (San Miguel Ranch) (the "District"), as described in the Preliminary Official Statement of the District dated July __, 2002 relating to the above-captioned Bonds (the "Preliminary Official Statement"). 2. The Developer covenants that, while the Bonds are outstanding, the Developer will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body which in any way seeks to challenge or overturn the District, the levy of the Special Tax in accordance with the rate and method of apportionment contained in the Notice of Special Tax Lien to be recorded in the real property records of the County of San Diego (the "Rate and Method of Apportionment") or the validity of the Bonds or the proceedings leading up to their issuance. The foregoing covenant shall not prevent the Developer from bringing an action or suit contending that the Special Tax has not been levied in accordance with the methodology contained in the Rate and Method of Apportionment. 3. Any and all information submitted by the Developer to the City and the Underwhter in connection with the preparation of the Preliminary Official Statement, and any and all information submitted by the Developer to the Special Tax Consultant, the Appraiser and the Market Absorption Consultant, was, to the best of the Developer's knowledge, true and ~orrect when given and remains tree and correct as of the date hereof, and all information in the Preliminary Official Statement relating to the C-I DOCSOC ~899793v2L22245.0134 Developer and the development of its land within the District was final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934. 4. The statements relating to the Developer, its proposed development in the District, its property ownership and its contractual arrangements contained in the Preliminary Official Statement do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the cimumstances under which they were made, not misleading. If at any time subsequent hereto and within 25 days after the Closing Date any statement in the Preliminary Official Statement or the Official Statement becomes untrue or if any material fact is omitted, the Developer agrees to notify the City and the Underwriter immediately. 5. No proceedings are pending or, to the best of the Developer's knowledge, threatened in which the Developer or any of its members may be adjudicated as bankrupt or discharged from any or all of their debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts. 6. Except as disclosed in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or, to the best of the Developer's knowledge, threatened, in any way seeking to restrain or enjoin the development of the property within the District or in any way seeking to invalidate or set aside any '~nal or vesting tentative maps on land in the District. 7. Except as disclosed in the Preliminary Official Statement, to the best of the Developer's knowledge, no other public debt secured by a tax or assessment on the land in the Disthct is in the process ofb,eing authorized and no assessment districts or community facilities districts have been or are in the process of being formed which include any portion of the land within the District. 8. Except as disclosed in writing to the Underwriter and the City, to the best of the Developer's knowledge, based upon due inquiry, there are no events of monetary default or events which with the passage of time would constitute a monetary default under any loan or similar credit arrangement to which the Developer or any of its members is a party or to which any of its properties are subject. 9. The Developer has duly authorized and executed the Funding Agreement and will, prior to the Closing Date, execute the Continuing Disclosure Agreement (collectively, the "Developer Agreements"), and upon execution such Developer Agreements will be the valid obligations of the Developer, enforceable against the Developer in accordance with their respective terms, and none of the documents which govern the Developer would cause such Developer Agreements to be invalid or unenfomeable against the Developer in accordance with their terms; and no event has occurred which, with the passage of time, would constitute a default by the Developer of any of its obligations under the Developer Agreements. C-2 DOCSOC~899793v2L22245.0134 10. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Bond Purchase Agreement to be entered into between the District and Stone & Youngberg LLC relating to the sale of the Bonds. NNP - TRIMARK SAN MIGUEL RANCH LLC, a California limited liability company By:. C-3 DOCSOC~899793v2~22245.0134 EXHIBIT D OPINION OF DEVELOPER COUNSEL (1) The Developer is duly organized and validly existing and in good standing as a limited liability company under the laws of the State of California, and is qualified to do business in the State of California. (2) The Developer has full power and authority to execute, deliver, and perform its obligations under the Continuing Disclosure Agreement dated as of July 1, 2002 and the Acquisition Agreement dated as of July 1, 2002 (collectively, the "Landowner Agreements"), has duly authorized, executed, and delivered the Developer Agreements, and has authorized the performance of its respective duties and obligations thereunder. (3) Each of the Developer Agreements constitutes the valid, legal, and binding agreement of the Developer, enforceable in accordance with its terms. (4) The execution and delivery of the each of the Developer Agreements by the Developer, and compliance with the provisions thereof by the Developer will not result in a violation of, a breach of, or a default under the operating agreement of the Developer or, to our knowledge, of any trust agreement, mortgage, deed of trust, note, lease, commitment, agreement, or other instrument to which the Developer is a party, or, to our knowledge, any order, role or regulation of any court or othbr governmental body having jurisdiction over the Developer, the breach of which might have a':materially adverse effect on the ability of the Developer to perform its obligations under the Developer Agreements. (5) There is no litigation pending or threatened against or affecting the Developer (a) which affects or seeks to prohibit, restrain or enjoin the development by the Developer of Improvement Area A, or (b) in which the Developer or any of the members of the Developer may be adjudicated as bankrupt or discharged from any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, or (c) which seeks to grant an extension of time to pay the Developer's debts, or (d) seeks to effect a reorganization or readjustment of the Developer's debts. (6) During the course of our representation the Developer, we have reviewed certain documents and have participated in conferences in which the contents of the Official Statement and related matters were discussed. To the best of our knowledge, the statements contained in the Official Statement under the headings "THE COMMUNITY FACILITIES DISTRICT," "THE DEVELOPMENT AND PROPERTY OWNERSH~," and "SPECIAL RISK FACTORS" relating to Improvement Area A and the Developer (excluding therefrom the financial and statistical data included therein) are accurate in all material respects (except as to financial information contained therein, as to which no view or opinion is expressed). D-1 DOCSOC~899793v2~22245.0134 Exhibit 8 Bond Purchase Contract for CFD No. 2001-1 $ CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) 2002 IMPROVEMENT AREA A SPECIAL TAX BONDS BOND PURCHASE AGREEMENT July __, 2002 Community Facilities District No. 2001-1 (San Miguel Ranch) City of Chula Vista Chula Vista, California Ladies and Gentlemen: Stone & Youngberg LLC (the "Underwriter"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement with Community Facilities District No. 2001-1 (San Miguel Ranch) (the "District"), which was formed by the City of Chula Vista (the "City"), which, upon acceptance, will be binding upon the District and upon the Undemmiter. This offer is made subject to acceptance of it by the District on the date hereof, and if not accepted wil! be subject to withdrawal by the Underwriter upon notice delivered to the District at any time prior to the acceptance hereof by the District. 1. Purchase, Sale and Delivery of the Bonds. (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter agrees to purchase from the District, and the District agrees to sell to the Underwriter, all (hut not less than all) of the Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds (the "Bonds") in the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated the Closing Date (hereinafter defined), and bear'interest (payable semiannually on March t and September 1 in each year, commencing March 1, 2003) at the rotes per annum and maturing on the dates and in the amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be the amount specified as such in Exhibit A hereto. The Bonds shall be substantially in th~ form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, the Bond Indenture (the "Bond Indenture") by and between the District and U.S. Bank, N.A., as Fiscal Agent (the "Fiscal Agent"), dated as of July 1, 2002, approved in Resolution No. 2002- adopted by the City Council of the City, as the legislative body of the District, on July _, 2002, respectively (the "Resolution of Issuance"). The Bonds and interest thereon will be payable fi-om a special mx (the "Special Tax") levied and collected on the taxable land within the District in aceordance with Resolution - No. 2001- adopted by the City Council on December 4, 2001 (the "Resolution of Formation"). Proceeds of the sale of the Bonds will be used in accordance with the Bond Indenture and the Mello- Roos Community Facilities Act of _1982, as amended (Sections 53311 et se.~_q, of the Govenunent Code of the State of California) (the "Act") and the City of Chula Vista Community Facilities District Ordinance ("Authorizing Ordinance" and together with the Act the "Law"), to acquire DOCSOC\899793v2~22245.0134 certain public improvements described in the Resolution of Formation. The Resolution of Issuance, the Resolution of Formation, the Authorizing Ordinance, Ordinance No.__ and all other resolutions adopted with respect to the formation of the District and the issuance of the Bonds are collectively referred to herein as the "District Resolutions." (b) At or prior to the acceptance hereof by the District, the District shall cause to be delivered to the Underwriter (i) a Certificate of Representations and Warranties of the City, dated as of the date of this Purchase Agreement (the "City Certificate"), in substantially the form attached hereto as Exhibit B, with only such changes therein as shall have been accepted by the Underwriter, and (ii) a certificate executed by NNP - Trimark San Miguel Ranch LLC, a California limited liability company (the "Developer") dated on or prior to the date of this Purchase Agreement and addressed to the Underwriter and the District deeming the information in the Preliminary Official Statement (as defined in (c) below) relating to the Developer final and accurate as of its date. (c) Subsequent to its receipt of a certificate from the District deeming the Preliminary Official Statement for the Bonds, dated July __, 2002 (which Preliminary Official Statement, together with the cover page and all appendices thereto, is herein collectively referred to as the "Preliminary Official Statement" and which, as amended with the prior approval of the Underwriter and executed by the District, will be referred to herein as the "Official Statement"), final for purposes of Rule 15c2-12 of the Securities and Exchange Commission ("Rule 15c2-12"), the Underwriter has distributed copies of the Preliminary Official Statement. The District hereby ratifies the use by the Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and distribute the final 'Official Statement dated the date hereof (including all information previously pe.r/[nitted to have been omitted by Rule 15c2-12 and any supplements and amendments thereto as have been approved by the City as evidenced by the execution and delivery of such document by an officer of the City (the "Official Statement"), the Bond Indenture, the Continuing Disclosure Agreement of the District (the "District Disclosure Agreement"), this Bond Purchase Agreement, any other documents or contracts to which City or the District is a party, and all information contained therein, and all other documents, certificates and statements famished by the City and the District to the Underwriter in connection with the transactions contemplated by this Bond Purchase Agreement, in connection with the offer and sale of the Bonds by the Undemrriter. The Underwriter hereby agrees to deliver a copy of the Official Statement to a national repository on or before the Closing Date (as hereinafter defined) and to each investor that purchases any of the Bonds prior to the "end of the underwriting period" (as such term is defined in Section 2(g) below) and otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. (d) At 8:00 A.M., Pacific Daylight Time, on July __, 2002, or at such earlier time or date as shall be agreed upon by the Underwriter and the District (such time and date being herein referred to as the "Closing Date"), the Disthct will deliver (i) to The Depository Trust Company in 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 District as provided in the Bond Indenture, and (ii) to the Underwriter, - at the offices of Best Best & Krieger LLP, Bond Counsel in San Diego, California, or at such other place as shall be mutually agreed upon by the District and the Underwriter, the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in Los Angeles clearinghouse-funds (such delivery and payment being herein referred to as the "Closing"). Notwithstanding the foregoing, the Underwriter may, in its discretion, accept delivery of 2 DOCSOC\899793v2~22245.0134 the Bonds in temporary form upon making arrangements with the District which are satisfactory to the Underwriter relating to the delivery of the Bonds in definitive form. 2. Representations, Warranties and Agreements of the District. The District represents, warrants and covenants to and agrees with the Underwriter that: (a) The City is duly organized and validly existing as a charter city duly organized and validly existing under the Constitution and laws of the State of California and has duly authorized the formation of the District pursuant to the Resolution of Formation and the Law. The City Council as the legislative body of the City and the District has duly adopted the District Resolutions, and will cause to be recorded in the real property records of the County of San Diego a Notice of Special Tax Lien (the "Notice of Special Tax Lien") (such District Resolutions and Notice of Special Tax Lien being collectively referred to herein as the "Formation Documents"). Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The District is duly organized and validly existing as a community facilities district under the laws of the State of California. The City has, and at the Closing Date will have, as the case may be, full legal right, power and authority to execute, deliver and perform on behalf of itself and the District its obligations under that certain Acquisition/Financing Agreement between the City and the Developer, together with all amendments thereto (the "Funding Agreement") and to carry out all transactions contemplated by the Funding Agreement. The District has, and at the Closing Date will have, as the case may be, full legal right, power and authority (i) to execute, deliver and perform its obligations under this Bond Purchase Agreement, the District Disclosure Agreement, and the Bond Indenture, and to carry out all transactions contemplated by each of such agreements, (ii) to issue, sell and deliv,.~r the Bonds to the Undemmiter pursuant to the Resolution of Issuance and Bond Indenture as provided herein, and (iii) to carry out, give effect ,to and consummate the transactions contemplated by the Formation Documents and by the Btnd Indenture, this Bond Purchase Agreement, the District Disclosure Agreement and the Funding Agreement (collectively, the "District Documents") and the Official Statement; (b) The District and the City, as applicable, each has complied, and will at the Closing Date be in compliance, in all material respects with the Formation Documents and the District Documents, and any immaterial noncompliance by the District and the City, if any, will not impair the ability of the District and the City, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of the Bonds, the District will continue to comply with the covenants of the District contained in the District Documents; (c) The City Council has duly and validly: (i) adopted the District Resolutions, (ii) called, held and conducted in accordance with all requirements of the Law the election within the District to approve the levy of the Special Tax and the issuance of the Bonds and recorded the Notice of Special Tax Lien which established a continuing lien on the land within the District securing the Special Tax, (iii) authorized and approved the execution and dehvery of the Bonds and the District Documents, (iv) authorized the preparation and delivery of the Preliminary Official Statement and the Official Statement, and (v) authorized and approved the performance by the District of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions contemplated by, each of the District Documents (including, without limitation, the collection of the Special Tax), and at the Closing Date the Formation Documents will be in full force and effect and the District Documents and the Bonds will constitute the valid, legal and binding obligations of the District and (assuming due authorization, 3 DOCSOCX899793v2~22245.0134 execution and delivery by other parties thereto, where necessary) will be enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; (d) To the best of the District's knowledge, neither the District nor the City is in breach of or default under any applicable law or administrative rule or regulation of the State of California (the "State"), or of any department, division, agency or insmnnentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, bond indenture, contract, agreement or other instrument to which the District or the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the District of its obligations under the Bonds, the Formation Documents or the District Documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or a material breach of or default under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the District or the City, - as the case may be, is a party or is otherwise subject or bound; (e) Except for compliance with the blue sky or other states securities law fihngs, as to which the District makes no representations, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would ~aterially adversely affect, the performance by the District of its obligations hereunder, or under the Formation Documents or the District Documents!. have been obtained and are in full force and effect; (f) The Special Tax constituting the security for the Bonds has been duly and lawfully authorized and may be levied under the Law and the Constitution and the applicable laws of the State of California, and such Special Tax, when levied, will constitute a valid and legally binding continuing lien on the properties on which it has been levied; (g) Until the date which is twenty-five (25) days after the "end of the underwriting period" (as hereinafter defined), if any event shall occur of which the District is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements in the Official Statement, in light of the circumstances existing at such time, not misleading, the District shall forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter's opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such t/me and the District shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term "end of the underwriting period" means the later of such time as (i) the District delivers the Bonds to the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the "end of the underwriting period" shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the District at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the "end of the underwriting per/od"; 4 DOCSOC\899793v2L22245.0134 70 (h) The Bond Indenture creates a valid pledge of the Special Taxes and the moneys in the Special Tax Fund, the Bond Fund and the Reserve Fund established pursuant to the Bond Indenture, including the investments thereof, subject in all cases to the provisions of the Bond Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein; (i) Except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or, to the best knowledge of the District, threatened (i) which would materially adversely affect the ability of either the City or the District to perform its obligations under the Bonds, the Formation Documents or the District Documents, or (ii) seeking to restrain or to enjoin the development of the land within the District, the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the ,Bond Indenture or the Funding Agreement, or the collection or application of the Special Tax pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the Formation Documents, the District Documents, the land use approvals granted by the City with respect to the land within the District, any other instruments relating to the development of any of the property within the District, or any action contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official Statement or the powers or authority of the District with respect to the Bonds, the Formation Documents, the District Documents, or any action of the District contemplated by any of said documents; nor is there any action pending or, to the best knowledge of the District, threatened against the City or the District which alleges that interest on the Bonds is not excludable from gross income for festal income tax purposes or is not exempt from California personal income taxation; (j) The District will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sale under the "Blue Sky" or other securities laws and regulations of such states and other jursdicfions of the United States as the Underwriter may designate; provided, however, the District shall not be required to register as a dealer or a broker of securities or to consent to service of process in connection with any blue sky (k) Any certificate signed by any authorized official of the City and the District authorized to do so shall be deemed a representation and warranty to the Underwriter as to the statements made therein; (1) The District will apply the proceeds of the Bonds in accordance with the Bond Indenture and as described in the Official Statement; (m) The information contained in the Preliminary Official Statement (other than information under the caption "THE BONDS - Book-Entry-Only System," as to which no view is expressed) was as of the date thereof, and the information contained in the Official Statement (other than information under the caption "THE BONDS - Book-Entry-Only System," as to which no view is expressed) as of its date and on the Closing Date shall be, tree and correct in all material respects and such information does not and shall 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 light of the circumstances under which they were made, not misleading; 5 DOCSOC~899793v2X22245.0134 (n) The District shall use its best efforts to cause the Developer to cooperate with the Underwriter in the preparation of the Official Statement; provided, however, that such efforts shall not include the expenditure of funds by the District; (o) The Preliminary Official Statement heretofore delivered to the Underwriter was deemed final by the District as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of Rule 15c2-12. The District hereby covenants and agrees that, within seven (7) business days from the date hereof, the District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the District so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board; (p) Neither the City nor the District is in default with respect to any reporting obligation that it has undertaken under Rule 15c2-12 for any indebtedness issued by it. 3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the District contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City and the District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by I-he District of its obligations to be performed hereunder at or prior to the Closing Date and to th,.~ following additional conditions: (a) At the Closing Date, the Formation Documents and the District Documents 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 there shall have been taken in connection therewith, with the issuance of the Bonds ar.~d with the transactions contemplated thereby and by this Bond Purchase Agreement, all such actions as, in the opinion of Best, Best & Krieger LLP, Bond Counsel for the District, and Stradling Yocca Carlson & Rauttr, a Professional Corporation, counsel to the Underwriter, shall be necessary and appropriate; (b) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: (1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article HI of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued, or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or 6 DOCSOC~899793v2~22245.0134 indirectly, of imposing federal income taxation upon the interest as would be received by the holders of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; (2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Bond Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of the Bonds, including any or all uncle ,rFriting arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws, rules or regulations as amended and then in effect; (3) any emendmem to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the District, its property, income, securities (or interest thereon), the validity or enforceability of the Special Tax or the ability of the City or the District to construct or acquire the improvements as contemplated by the Formation Documents, the District Documents or the Official Statement; or ~ (4) any event occurring, or information becoming known, which, in the judgment 0fthe Underwriter, makes untrue ~n any material respect any statement or mfonnauon contained ;n the Official Statement, or results in the Official Stat~ement containing any untrue statement ora material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) On the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter: (1) The Formation Documents and the District Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that each Formation Document is a tree, correct and complete copy.of the one duly adopted by the City Council; (2) The Official Statement; (3) An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Best Best & Krieger LLP, Bond Counsel for the District, in the form attached to the Preliminary Official Statement as Appendix H, and an unqualified opinion of such counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such approving opinion addressed to the District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it; 7 DOCSOC~899793v2~2245.0134 (4) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Best Best & Krieger LLP, Bond Counsel for the District, to the effect that (i) the District Documents have been duly authorized, executed and delivered by the City or the District, as applicable, and, assuming such agreements constitute valid and binding obligations of the other parties thereto, constitute the legally valid and binding agreements of the City or the District, as applicable, enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, moratorium, insolvency or other laws affecting creditor's fights or remedies and is subject to general principles of equity (regardless of whether such enforceability is considered in equity or at law); (ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; (iii) the information contained in the Official Statement on the cover and under the captions "INTRODUCTION," "THE BONDS," "SOURCES OF PAYMENT FOR THE BONDS," "THE COMMUNITY FACILITIES DISTRICT," "SPE~2IAL RISK FACTORS - Proposition 218,' "TAX MATTERS" and Appendices E and H thereof, insofar as it purports to summarize certain provisions of the Law, the Formation Documents, the Bonds and the Bond Indenture and the exclusion from gross income for federal income tax purposes and exemption from State of California personal income taxes of interest on the Bonds, present a fair and accurate summary of such provisions; and (iv) the Special Tax has been duly and validly authorized in accordance with the provisions of the Law and, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights, by equitable principles and by the exercise of judicial discretion in appropriate cases, a lien to secure payment of the Special Taxes has been imposed on all nonexempt property in the District; (5) An opinion, dated the Closing Date and addressed to the Underwriter, of Stradiing Yocca Carlson & Rauth, a Professional Corporation,~' counsel for the Underwriter, to the effect that (i) the Bonds are exempt from the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (ii) without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the City, Bond Counsel, representatives of the Underwriter and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Official Statement as of its date and as of the Closing Date contained any 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 light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as any financial or statistical data, appraisals, assessed values or projections contained in the Official Statement); (6) A certificate, dated the Closing Date and signed by an authorized representative of the District, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds; and certifying that (i) the representations and warranties of the District contained in Section 2 hereof are tree and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make the statements and information contained in the Official Statement not misleading in any material respect, and the Bonds, the Formation Documents and the District Documents conform as to form and tenor to the 8 DOCSOC~899793v2~22245,0134 desmSptions thereof contained in the Official Statement; (iii) the District has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Formation Documents, the District Documents and the Official Statement at or prior to the Closing Date; and (iv) the representations and warranties of the City contained in the City Certificate are tree and correct in all material respects on and as of the Closing Date, with the same effect as if made on the Closing Date, except that all references therein to the Preliminary Official Statement shall be deemed to be references to the Official Statement; (7) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, to the effect that (i) to the best of his or her knowledge and except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened which would materially adversely affect the ability of the District to perfo, rm its obligations under the Bonds, the Formation Documents or the District Documents, or seeking to restrain or to enjoin the develop,~ent of property within the District, the issuanee, sale, delivery or exclusion from gross income for federal income tax purposes or State of California personal income taxes of interest on the Bonds, or the application of the proceeds thereof in accordance with the Bond Indenture, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Formation Documents or the District Documents or the accuracy of the Official Statement, or any action of the City contemplated by any of said documents; (ii) the City is duly organized and validly existing as a charter city under the Constitution and laws of the State of California and the District is duly organized and validly existing as a community facilities district under the laws of the State of California, an~the District has full legal right, power and authority to issue the Bonds and to perform all of its ol21igations under the Formation Documents and the District Documents; (iii) the City and the District have obtained all approvals, consents, authorizations; elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Special Tax, the issuance of the Bonds or the performance by the District of its obligations thereunder or under the Bond Indenture, except that no opinion need be expressed regarding compliance with blue sky or other securities laws or regulations, whatsoever; (iv) the City Council has duly and validly adopted the District Resolutions at meetings of the City Council which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the District Resolutions are now in full force and effect and have not been amended; and (v) each of the City and the District has duly authorized, executed and delivered the District Documents to which it is a party and the Bonds and has duly authorized the preparation and delivery of the Official Statement, and the District Documents and the Bonds constitute l~gal, valid and binding agreements of the District and the City, as applicable, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought and to the limitations on legal remedies against cities in the State of California; (8) A certificate dated the Closing Date and addressed to the Underwriter, _ the City and the District, fi.om the Developer in substantially the form attached hereto as Exhibit C; (9) An opinion dated the Closing Date and addressed to the Underwriter, the City and the District, by counsel to the Developer, substantially in the form attached hereto as Exhibit D; 9 DOCSOC~99793v2~22245.0134 (10) A certificate dated the Closing Date from MeGill, Martin Self, Inc. addressed to the City, the District and the Underwriter to the effect that (i) the Special Tax if collected in the maximum amounts permitted pursuant to the Kate and Method of Apportionment of Special Taxes as of the Closing Date would generate at least 110% of the maximum annual debt service payable with respect to the Bonds, based on such assumptions and qualifications as shall be acceptable to the Underwriter, and (ii) all information supplied by it for use in the Official Statement is tree and correct as of the date of the Official Statement and as of the Closing Date; (11) A letter dated the Closing Date from Bruce W. Hull & Associates, Inc. (the "Appraiser") addressed to the Underwriter, the District and the City to the effect that it has prepared the appraisal report (the "Appraisal") with respect to the property located within the District and that (a) the Appraisal, in the form set forth in Appendix C to the Official Statement, may be included in the Preliminary Official Statement and the Official Statement, (b) neither the Appraisal included in Appendix C nor the information in the Official Statem6nt referring to the Appraisal contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (c) no events or occurrences have been ascertained by it or have come to its attention that would materially change the opinion set forth in its report; (12) A letter from The Meyers Group dated the Closing Date addressed to the Underwriter, the City and the District to the effect that it has prepared the market absorption study (the "Study") referred to in the Official Statement and that (a) the summary of the Study in Appendix B thereto may be included in the Preliminary Official Statement and the Official Statement, (b). ~either the summary nor the information regarding the projected absorption of the proposed deve~lopment descnbed m the Officml Statement contmns any untrue statement of a material fabt or omits to state a material fact necessary in order tO make the statements therein, in light of the circumstances under which they were made, not misleading, and (c) no events or occurrences have been ascertained by it or have come to its attention that would materially change the opinion set forth in its report; (13) A certificate of the District dated the Closing Date, in a form acceptable to Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (14) A certificate to the Fiscal Agent and an opinion of counsel to the Fiscal Agent dated the Closing Date and addressed to the City, the District and the Underwriter to the effect that it has duly authorized the execution and delivery of the Bond Indenture and that the Bond Indenture is a valid and binding obligation of the Fiscal Agent enforceable in accordance with its ternus; (15) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in the Preliminary Official Statement and the Official Statement, of the District's representations and warranties contained herein and the due performance or satisfaction by the District at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the District in connection with the transactions contemplated hereby and by the Official Statement; and 10 DOCSOC~899793v2L22245,0134 If the District shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the District shall be under any further obligation hereunder, except that the respective obligations of the District and the Underwriter set forth in Section 5 and Section 6 hereof shall continue in full force and effect. 4. Conditions of the District's Obligations. The District's obligations hereunder are subject to the Underwriter's performance of its obligations hereunder, and are also subject to the following conditions: (a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the District executing the certificate referred to in Section 3(c)(6) hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the Formation Documents, the District Documents or the existence or powers of the City or the District; and (b) As of the Closing Date, the District shall receive the approving opinions of Bond Counsel referred to in Section 3(c)(3) and (4) hereof, dated as of the Closing Date, addressed to the City, the District and the Underwriter. 5. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth herein: (a) The Underwriter shall be under no obli.gation to pay, and the District shall pay or cause to be paid (out of any legally available funds of the District) all expenses incident to the performance of the District's obligations hereunder, including, but not limited to, the cost of printing and delivering the Bonds to the Underwhter, the cost of preparation, printing, distribution and delivery of the Bond Indenture, the Preliminary OffiCial Statement, the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Fiscal Agent for the Bonds, Bond Counsel, counsel to the Underwriter in the amount of $10,000, and any accountants, engineers or any other experts or consultants the District has retained in connection with the Bonds; and (b) The District shall be under no obligation to pay, and the Underwriter shall pay, any fees of the California Debt and Investment Advisory Commission, the cost of preparation of any "blue sky" or legal investment memoranda and this Bond Purchase Agreement; expenses to qualify the Bonds for sale under any "blue sky" or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel and any advertising expenses. 6. Notices. Any notice or other communication to be given to the City under this Bond Purchase Agreement may be given by delivering the same in writing to the City at 276 Fourth Avenue, Chula Vista, California 91.910, Attention: Director of Finance; and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Stone & Youngberg, 4350 La Jolla Village Drive, Suite 140, San 11 DOCSOCX899793v2~22245.0134 /o Diego, California 92122, Attention: L. William Huck, and to 50 California Street, 35t~ Floor, San Francisco, California 94111, Attention: Public Finance. 7. Parties in Interest. This Purchase Agreement is made solely for the benefit of the District and the Underwriter (including their successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. 8. Survival of Representations and Warranties. The representations and warranties of the District and the City set forth in or made pursuant to this Bond Purchase Agreement and any certificates delivered hereunder shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Bond Pumhase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the Dislrict and the City and regardless of delivery of and payment for the Bonds. 9. Effective. This Pumhase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the District and shall be valid and enforceable as of the time of such acceptance. 10. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds for the District. 11. Governing Law. This Bond Pumhase Agreement shall be governed by the laws of the State of Ch'lifomia. DOCSOCX899793v2~22245.0134 12. Counterparts. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Very truly yours, STONE & YOUNGBERG LLC By: Managing Director ACCEPTED: July.__, 2002 COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) By: Director of Finance 13 DOCSOC~899793v2X22245.0134 EXHIBIT A MATURITY SCHEDULE COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) 2002 IMPROVEMENT AREA A SPECIAL TAX BONDS Maturity Date (September 1) Principal Coupon Par Amount Underwfiter's Discount Purchase Price A-1 DOCSOC\899793v2~22245.0134 EXHIBIT B CERTIFICATE OF REPRESENTATIONS AND WARRANTIES OF THE CITY OF CHULA VISTA July __, 2002 To: Stone & Youngberg LLC San Diego, California Re: Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds Ladies and Gentlemen: We are delivering to you this certificate in connection with the issuance and sale of $ aggregate principal amount of the Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds and pursuant to the Bond Purchase Agreement, dated the date hereof (the "Purchase Contract"), by and between you and Community Facilities District No. 2001-1 (San Miguel Ranch) (the "District"). All capitalized terms used herein without definition shall have the meanings assigned to such terms in the Pumhase Contract. The undersigned, in his capacity as an officer of the City and not in his individual capacity, on behalf of the City, represents and warrants to you that: (1) The City is duly organized and validly existing as a charter city under the Constitution and laws of the State of California and the City Council of the City, as the legislative body of the District, has duly and validly adopted each of the District Resolutions and authorized the formation of the District pursuant to the Law. (2) The information contained in the Preliminary Official Statement is, as of the date thereof and as of the date hereof, true and correct in all material respects and does not, as of the date thereof and as of the date hereof, contain any untrue statement ora material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. CITY OF CHULA VISTA By: Director of Finance B-1 DOCSOC\899793v2k22245.0134 EXHIBIT C CERTIFICATE OF DEVELOPER OF LAND WITHIN THE DISTRICT July __, 2002 Stone & Youngberg LLC 4350 La Jolla Village Drive, Suite 840 San Diego, California 92122 City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Re:$ Community Facilities District No. 2001-1 (San Miguel Ranch) 2002 Improvement Area A Special Tax Bonds (the "Bonds ") Ladies and Gentlemen: (the "Developer"), hereby certifies that: ¢, 1. The Developer is the owner of certain of th6 land within Community Facilities District No. 2001-1 (San Miguel Ranch) (the "District"), as described in the Preliminary Official Statement of the District dated July __, 2002 relating to the above-captioned Bonds (the "Preliminary Official Statement"). 2. The Developer covenants that, while the Bonds are outstanding, the Developer will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body which in any way seeks to challenge or overturn the District, the levy of the Special Tax in accordance with the rate and method of apportionment contained in the Notice of Special Tax Lien to be recorded in the real property records of the County of San Diego (the "Rate and Method of Apportionment") or the validity of the Bonds or the proceedings leading up to their issuance. The foregoing covenant shall not prevent the Developer from bringing an action or suit contending that the Special Tax has not been levied in accordance with the methodology contained in the Rate and Method of Apportionment. 3. Any and all information submitted by the Developer to the City and the Underwriter - in connection with the preparation of the Preliminary Official Statement, and any and all information submitted by the Developer to the Special Tax Consultant, the Appraiser and the Market Absorption Consultant, was, to the best of the Developer's knowledge, tree and Correct when given and remains true and correct as of the date hereof, and all information in the Preliminary Official Statement relating to the C-1 DOCSOC\899793v2X22245.0134 Developer and the development of its land within the District was final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934. 4. The statements relating to the Developer, its proposed development in the District, its property ownership and its contractual arrangements contained in the Preliminary Official Statement do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time subsequent hereto and within 25 days after the Closing Date any statement in the Preliminary Official Statement or the Official Statement becomes untrue or if any material fact is omitted, the Developer agrees to notify the City and the Underwriter immediately. 5. No proceedings are pending or, to the best of the Developer's knowledge, threatened in which the Developer or any of its members may be adjudicated as bankrupt or discharged from any or all of their debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts. 6. Except as disclosed in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or, to the best of the Developer's knowledge, threatened, in any way seeking to restrain or enjoin the development of the property within the District or in any way seeking to invalidate or set aside any ':'final or vesting tentative maps on land in the District. 7. Except as disclosed in the Preliminary Official Statement, to the best of the Developer's knowledge, no other public debt secured by a tax or assessment on the land in the District is in the process of being authorized and no assessment districts or community facilities districts have beeii or are in the process of being formed which include any portion of the land within the District. 8. Except as disclosed in writing to the Underwriter and the City, to the best of the Developer's knowledge, based upon due inquiry, there are no events of monetary default or events which with the passage of time would constitute a monetary default under any loan or similar credit arrangement to which the Developer or any of its members is a party or to which any of its properties are subject. 9. The Developer has duly authorized and executed the Funding Agreement and will, prior to the Closing Date, execute the Continuing Disclosure Agreement (collectively, the "Developer Agreements"), and upon execution such Developer Agreements will be the valid obligations of the Developer, enforceable against the Developer in accordance with their respective terms, and none of the documents which govern the Developer would cause such Developer Agreements to be invalid or unenforceable against the Developer in accordance with their terms; and no event has occurred which, with the passage of time, would constitute a default by the Developer of any of its obligations under the Developer Agreements. C-2 DOCSOC\899793v2~22245.0134 10. All capitalized terms not otherwise defined herein shall have the meaning set forth in the Bond Purchase Agreement to be entered into between the District and Stone & Youngberg LLC relating to the sate of the Bonds. NNP - TRIMARK SAN MIGUEL RANCH LLC, a California limited liability company By: C-3 DOCSOC~899793v2~22.245.0134 EXHIBIT D OPINION OF DEVELOPER COUNSEL (I) The Developer is duly organized and validly existing and in good standing as a limited liability company under the laws of the State of California, and is qualified to do business in the State of California. (2) The Developer has full power and authority to execute, deliver, and perfonn its obligations under the Continuing Disclosure Agreement dated as of July 1,2002 and the Acquisition Agreement dated as of July I, 2002 (collectively, the "Landowner Agreements"), has duly authorized, executed, and delivered the Developer Agreements, and has authorized the performance of its respective duties and obligations thereunder. (3) Each of the Developer Agreements constitutes the valid, legal, and binding agreement of the Developer, enforceable in accordance with its terms. (4) The execution and delivery of the each of the Developer Agreements by the Developer, and compliance with the provisions thereof by the Developer will not result in a violation of, a breach of, or a default under the operating agreement of the Developer or, to our knowledge, of any trust agreement, mortgage, deed of trust, note, lease, commitment, agreement, or other instrument to which the Developer is a party, or, to our knowledge, any order, rule or regulation of any court or other governmental body having jurisdiction over the Developer, the breach of which might have a\materially adverse effect on the ability of the Developer to perfonn its obligations under the Developer Agreements. (5) There is no litigation pending or threatened against or affecting the Developer (a) which affects or seeks to prohibit, restrain or enjoin the development by the Developer of Improvement Area A, or (b) in which the DeveJoper or any of the members of the Developer may be adjudicated as bankrupt or discharged rrom any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, or (c) which seeks to grant an extension of time to pay the Developer's debts, or (d) seeks to effect a reorganization or readjustment ofthe Developer's debts. (6) During the course of our representation the Developer, we have reviewed certain docwnents and have participated in conferences in which the contents of the Official Statement and related matters were discussed. To the best of our knowledge, the statements contained in the Official Statement under the headings "THE COMMUNITY FACILITIES DISTRlCT," "THE DEVELOPMENT AND PROPERTY OWNERSIDP," and "SPECIAL RISK FACTORS" relating to Improvement Area A and the Developer (excluding thererrom the financial and statistical data included therein) are accurate in all material respects (except as to fmancial infonnation contained therein, as to which no view or opinion is expressed). D-I DOCSOC\899793v2\22245.0134 ¿ -;,.¿f.c RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, APPROVING THE FORM OF AN ACQUISITION/FINANCING AGREEMENT PERTAINING TO COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA (the "City Council"), has held and conducted proceedings relating to the levy of special taxes within two improvement areas of a community facilities district and the issuance of bonds of the community facilities district for each such improvement area to finance the acquisition or construction of certain public improvements, as authorized pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", being Chapter 2.5. Part I, 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"). Such community facilities district is designated as COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH) (the "District"); and, WHEREAS, the District was formed for the purpose of financing the acquisition of such public improvements from NNP-Trimark San Miguel Ranch, LLC, the master developer of the property within the District (the "Developer"); and, WHEREAS, the City and the Developer have negotiated the terms and conditions pursuant to which the public improvements are to be acquired by the City and bonds are to be issued to finance the acquisition of such public improvements and such terms and conditions have been memorialized in an Acquisition/Financing Agreement by and between the City and the Developer (the "Acquisition/Financing Agreement"), the form of which has been presented to this City Council for its consideration and approval. NOW, THEREFORE, IT IS HEREBY RESOLVED: SECTION 1. The above recitals are all true and correct. SECTION 2. The form of Acquisition/Financing Agreement, herewith submitted, is approved substantially in the form submitted. The City Manager or an Assistant City Manager are each hereby authorized to execute the final form of such agreement on behalf of the City. The City Manager or an Assistant City Manager, subject to the review of the City Attorney and Best Best & Krieger LLP, Bond Counsel, are each authorized to approve changes in such agreement deemed to be in the best interests of the City, approval of such changes to be evidenced by the execution of such agreement. ? -.)..f¿ Presented by: Approved as to form by: (~~.Ar4- John M. aheny v City Attorney John P. Lippitt Director of Public Works J: \attorney\reso\Res Approving Acquisition Agreement 7-16-02.doc t, -~l RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2001-1 (SAN MIGUEL RANCH), AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF SPECIAL TAX BONDS OF THE DISTRICT FOR IMPROVEMENT AREA A THEREOF, APPROVING THE FORM OF BOND INDENTURE, BOND PURCHASE AGREEMENT, PRELIMINARY OFFICIAL STATEMENT AND OTHER DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE OF SUCH BONDS WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA (this "City Council"), did previously conduct proceedings to form and did form a community facilities district and designate improvement areas therein pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", 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"), such Community Facilities District designated as COMMUNITY FACILITIES NO. 2001-1 (SAN MIGUEL RANCH) (the "Community Facilities District") and such improvement areas designated as IMPROVEMENT AREA A and IMPROVEMENT AREA B, for the purpose of financing the acquisition or construction of certain public improvements; and, WHEREAS, this City Council has previously declared its intention to issue bonds for each of the improvement areas to finance the acquisition or construction of such improvements, such bonds be issued pursuant to the terms and provisions of the Act and the City of Chula Vista Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts, as amended to date (the "Goals and Policies"); and, WHEREAS, at this time this City Council desires to set forth the general terms and conditions relating to the authorization, issuance and administration of such bonds for Improvement Area A; and, WHEREAS, the forms of the following documents have been presented to and considered for approval by this City Council: A. Bond Indenture by and between the Community Facilities District and U.S. Bank, N.A., as fiscal agent (the "Fiscal Agent") setting forth the terms and conditions relating to the issuance and sale of bonds (the "Bond Indenture"); B. Bond Purchase Agreement authorizing the sale of bonds to Stone & Youngberg LLC, the designated underwriter (the "Bond Purchase Agreement"); 1 0- .).ff C. Preliminary Official Statement containing information including but not limited to the Community Facilities District, Improvement Area A and the bonds, including the terms and conditions thereof (the "Preliminary Official Statement"); and D. Continuing Disclosure Agreement by and between the Community Facilities District and U.S. Bank, N.A., as dissemination agent (the "Dissemination Agent"), pursuant to which the Community Facilities District will be obligated to provide ongoing annual disclosure relating to the bonds (the "Continuing Disclosure Agreement"); and WHEREAS, this City Council, with the aid of City staff, has reviewed and considered the Bond Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement and the Preliminary Official Statement and finds those 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 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, including the Act and the applicable policies and regulations of the City of Chula Vista. NOW, THEREFORE, IT IS HEREBY RESOLVED AS FOLLOWS: SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Determinations. This legislative body hereby makes the following determinations pertaining to the proposed issuance of the Bonds: (a) The Goals and Policies generally require that the full cash value of the properties within Improvement Area A of the Community Facilities District subject to the levy of the special taxes must be at least 4 times the principal amount of the Bonds (as defined below) and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act on property within Improvement Area A or a special assessment levied on property within Improvement Area A (collectively, "Land Secured Bonded Indebtedness").The Act authorizes the City Council, acting as the legislative body ofthe Community Facilities District, to sell the Bonds only if the City Council has determined prior to the award of the sale of the Bonds that the value of such properties within Improvement Area A will be at least 3 times the amount of such Land Secured Indebtedness. The value of the property within Improvement Area A of the Community Facilities District which will be subject to the special tax to pay debt service on the Bonds will be at least 3.80 times but less than 4 times the amount of the Land Secured 2 f,-~ Bonded Indebtedness. The Goals and Policies further provide that the full cash value of each development area for which no final subdivision map has been filed must also be at least 4 times the Land Secured Bonded Indebtedness allocable to each such property. The value of each such development area will be less than 4 times the Land Secured Indebtedness allocable to one or more of such areas. The Goals and Policies do, however, provide that a bond issue for a community facilities district with a value-to-debt ratio ofless than 4: I but equal to or greater than 3: 1 may be approved, in the sole discretion ofthe City Council, upon a detennination by the City Manager, after consultation with the Director of Finance, bond counsel, the underwriter and the financial advisor (collectively, the "City's Financing Team"), that a value-to-debt ratio of less than 4: I is financially prudent under the circumstances of the particular community facilities district. The City Manager has consulted with the City's Financing Team regarding the value-to-debt ratios within Improvement Area A as a whole and within the development areas within Improvement Area A. Based upon the review, findings and determination of the City Manager as set forth in the staff report related to this matter which is incorporated herein by this reference, this City Council finds that the issuance of the Bonds is financially prudent under the existing facts and circumstances and approves the issuance of the Bonds. The foregoing determinations are based upon the full cash value of such properties and development areas as shown upon an appraisal of the subject properties prepared by Bruce W. Hull & Associates, a state certified real estate appraiser, as defined in Business and Professions Code Section 11340(c). Such determination was made in a manner consistent with the Goals and Policies. (b) The terms and conditions of the Bonds as contained in the Bond Indenture are consistent with and conform to the Goals and Policies. (c) As a result of the current status of development of the property within Improvement Area A and the relative overall lack of diversity of ownership of property within Improvement Area A, the private sale of the Bonds will result in a lower overall cost to the Community Facilities District. SECTION 2. Bonds Authorized. Pursuant to the Community Facilities District Law, this Resolution and the Bond Indenture, special tax bonds of the Community Facilities District designated as "City of Chula Vista Community Facilities District No. 2001-1 (San Migueal Ranch) 2002 Improvement Area A Special Tax Bonds" (the "Bonds") in an aggregate principal amount not to exceed $15,000,000 are 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 of the Bonds shall be as provided in the Bond Indenture as finally executed. 3 ¿, - ,;2-90 SECTION 3. Authorization and Conditions. An Assistant City Manager, the Director of Finance and such other official or officials of the City as may be designated by this City Council (each, an" Authorized Officer") are each hereby authorized and directed to execute and deliver the final form of the various documents and instruments described in this Resolution, with such additions thereto or changes therein as such Authorized Officer may deem necessary and advisable provided that no additions or changes shall authorize an aggregate principal amount of Bonds in excess of $15,000,000, an annual interest rate on the Bonds in excess of six and seventy five hundredths percent (6.750%) per year and a purchase price for the Bonds not less than ninety eight percent (98 %) of the par amount of the Bonds (excluding original issue discount, if any). The approval of such additions or changes shall be conclusively evidenced by the execution and delivery of such documents or instruments by an Authorized Officer, upon consultation with and review by the City Attorney and Best Best & Krieger LLP, the Community Facilities District's bond counsel. SECTION 4. Bond Indenture. The form of Bond Indenture by and between the Community Facilities District and the Fiscal Agent, with respect to the Bonds as presented to this City Council and on file with the City Clerk is hereby approved. An Authorized Officer is hereby authorized and directed to cause the same to be completed and executed on behalf of the Community Facilities District, subject to the provisions of Section 3 above. SECTION 5. Official Statement and Continuing Disclosure Agreement. The City Council hereby approves the form of the Preliminary Official Statement as presented to this City Council and on file with the City Clerk, together with any changes therein or additions thereto deemed advisable by the Director of Finance or, in the absence of the Director of Finance, another Authorized Officer. Pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") the Director of Finance or, in the absence of the Director of Finance, another Authorized Officer is authorized to determine when the Preliminary Official Statement is deemed final, and the Director of Finance or such other Authorized Official is hereby authorized and directed to provide written certification thereof. The execution of the final Official Statement, which shall include such changes and additions thereto deemed advisable by the Director of Finance or, in the absence of the Director of Finance, another Authorized Officer pursuant to the Rule, shall be conclusive evidence of the approval of the final Official Statement by the Community Facilities District. The City Council hereby authorizes the distribution of the final Official Statement by the Underwriter as the initial purchaser of the Bonds. The form of Continuing Disclosure Agreement by and between the Community Facilities District and the Dissemination Agent as presented to this City Council and on file with the City Clerk is hereby approved. An Authorized Officer is hereby authorized and directed to cause the same to be completed and executed on behalf of the Community Facilities District, subject to the provisions of Section 3 above. 4 0-~/ SECTION 6. Sale of Bonds. This City Council hereby authorizes and approves the negotiated sale of the Bonds to Stone & Youngberg LLC (the "Underwriter"). The form of the Bond Purchase Agreement is hereby approved and an Authorized Officer is hereby authorized and directed to execute the Bond Purchase Agreement on behalf of the Community Facilities District upon the execution thereof by the Underwriter, subject to the provisions of Section 3 above. SECTION 7. Bonds Prepared and Delivered. Upon the execution of the Bond Purchase Agreement, the Bonds shall be prepared, authenticated and delivered, all in accordance with the applicable terms of the Community Facilities District Law and the Bond Indenture, and any Authorized Officer and other responsible City officials, acting for and on behalf of the Community Facilities District, are hereby authorized and directed to take such actions as are required under the Bond Purchase Agreement and the Bond Indenture to complete all actions required to evidence the delivery of the Bonds upon the receipt of the purchase price thereof from the Underwriter. SECTION 8. Actions. All actions heretofore taken by the officers and agents of the City with respect to the establishment of the Community Facilities District and the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the proper officers of the City, acting for and on behalf of the Community Facilities District, 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 Bonds in accordance with the Community Facilities District Law, this Resolution, the Bond Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement, and any certificate, agreement, contract, and other document described in the documents herein approved. SECTION 9. Effective Date. This resolution shall take effect from and after its adoption. Presented by Approved as to form by G-- ~k~v- John M. Kaheny City Attorney John P. Lippitt Director of Public Works J :\anorney\reso\resolution of issuance 7.16.02 5 ~ -,,)-7.1-. COUNCIL AGENDA STATEMENT y,' Item Meeting Date: 7/23/02 ITEM TITLE: Resolution Approving the Expenditure of Funds for the "Emergency Storm Drain Repair South of East Palomar, West of Nacion" project and the "Emergency Storm Drain Repair, East Rienstra Street, West of Marl Court" project by the Director of Public Works and Appropriating $214,715 for Said Emergency Projects from the Unappropriated Balance of the Residential Construction Tax Fund. SUBMITTED BY: Director of Public wor~~ REVIEWED BY: City Manager CIL if" (4/Sths Vote: Yes K...No --.l ,fr' On January 10,2002 and January 11,2002, corrugated metal pipe (CMP) failures occurred at two roadway crossings. These failures occurred at (I) East Palomar Street, west of Nacion Avenue, and (2) on East Rienstra Street, between Melrose Avenue and Marl Court. Both of these CMP failures, if not repaired, would have resulted in the failure of the roadways that they cross. Therefore, staff undertook emergency measures, as provided in Section 1009 of the City Charter, to repair the pipes in order to protect the roadway and the general public. In order for the emergency repairs to be made expeditiously, staff utilized funds appropriated to the Salt Creek Sewer CIP project (SW-219) as a temporary funding source for construction and staff time charges. Also, staff utilized funds appropriated to the Corrugated Metal Pipe Replacement project (DR-152) was utilized as an additional temporary funding source for staff time charges. Now that the work has been completed and final costs, including City staff costs, are koown, staff recommends that $2 I 4,715 be appropriated from the unappropriated balance of the Residential Construction Tax Fund (RCT) Fund to reimburse these projects as follows: Reimbursement to SW-219 Reimbursement to DR-152 - $199,395 $ 15,320. RECOMMENDATION: That Council approve the Resolution (I) Approving the Expenditure of Funds for the "Emergency Storm Drain Repair South of East Palomar, West of Nacion" project and the "Emergency Storm Drain Repair, East Rienstra Street, West of Marl Court" project by the Director of Public Works and (2) Appropriating $214,715 for Said Emergency Projects from the Unappropriated Balance of the Residential Construction Tax Fund BOARDS/COMMISSIONS RECOMMENDATION: Not Applicable. 7 -/ Page 2, ltem '~ Meeting Date 7/23/02 BOARDS/COMMISSIONS RECOMMENDATION: Not Applicable. DISCUSSION: On January 10, 2002 and January 11, 2002, corrugated metal pipe (CMP) failures occurred at (1) East Palomar Street, west of Nacion Avenue, and (2) on East Rienstra Street, between Melrose Avenue and Marl Court. In order to protect the roadway and the general public, staff undertook emergency measures, as provided in Section 1009 of the City Charter, to repair the pipes. Section 1009 of The City Charter regarding emergency contract work reads as follows: ... Contracts may likewise be let without advertising for bids if such work shall be deemed by the City Council to be of urgent necessity for the preservation of life, health or property, and shall be authorized by resolution, passed by at least four affirmative votes of the Council and containing a declaration of the facts constituting such urgency; provided, however, that nothing in this section shall prevent the City Manager from taking any and all means necessary to make emergency repairs in the event of immediate need arising from any calamity or disaster.... The first emergency was due to the failure of a 48" CMP at East Palomar Street, west of Nacion Avenue. This failure occurred primarily outside of the right-of way and caused some damage to an embankment, to the sidewalk, and to a portion of the street. Under emergency authorization, the Director of Public Works received a bid for $66,500 from MJC Construction and directed the contractor to complete the necessary repair work. The second emergency was due to the failure of one of three 54" CMPs crossing East Rienstra Street, between Melrose Avenue and Marl Court. Public Works staff was notified of the failure by a nearby resident. When Public Works staff investigated the failure, one of three 54" diameter CMP pipes crossing the roadway had already failed and portions of the roadway and sidewalk had been undermined and in danger of collapse. The roadway was immediately closed in order to assure the safety of the general public. Although one CMP failed at this location, the other two CMPs were beginning to fail. All three pipes were repaired to assure that further failure does not occur. Under emergency authorization, the Director of Public Works received a bid for $132,000 from MJC Construction and directed the contractor to complete the necessary repair work. In order for the emergency repairs to be made expeditiously, staff utilized funds appropriated to the Salt Creek Sewer CIP project (SW-219) and the Corrugated Metal Pipe Replacement project (DR-152) as temporary funding sources. Now that the work has been completed and final costs, including City staff costs, are known, staff recommends that $214,715 be appropriated from the unappropriated balance of the Residential Construction Tax Fund (RCT) Fund to reimburse these projects. There are sufficient reserves within the RCT Fund to pay for the necessary emergency repairs and this is an appropriate use of those funds. The RCT Page 3, Item Meeting Date 7/23/02 Funds should be appropriated to SW-219 in the amount of $199,395 and appropriated to DR- 152 in the amount of $15,320 to reimburse them properly. The contracts were executed by the City Manager under the emergency provision of the City Charter. Disclosure Statement Attachment "A" is a copy of the contractor's Disclosure Statement. Environmental Status The Environmental Review Coordinator has reviewed the projects for compliance with the California Environmental Quality Act and has determined that the projects are exempt from CEQA pursuant to Section 15301, Class 1 (Existing Facilities: repair or replacement and involves negligible or no expansion of an existing use). Wage Statement The source of funding for this project is the unappropriated balance of the Residential Construction Tax Fund. Contractors bidding this project were not required to pay prevailing wages to persons employed by them for the work under this project. Financial Statement FUNDS REQUIRED FOR CONSTRUCTION A. Contract Amount (East Palomar Street) $ 66,500 B. Contract Amount (East Rienstra Street) $132,000 C. Staff' Costs (Design & Inspection, actual) $16,215 TOTAL FUNDS REQUIRED FOR CONSTRUCTION $214,715 FUNDS AVAILABLE FOR CONSTRUCTION A. Unappropriated balance of RCT Fund $214,715 TOTAL FUNDS AVAILABLE FOR CONSTRUCTION $214,715 Upon completion of the project, the improvements will require only routine City street maintenance. Attachments: A - Contractor's Disclosure Statement J:\engineer\agenda\CMP Emergency. 113.doc 7-_5 o4,'16'2002 10:23 FAX 16193976250 CITY OF CV ~ ENGINEERING 9002 THE Url'Y OF CHULA VISTA DISCLOSURE STATEMENT P~rsuant to Council Policy 1014)1~ prior to any action upon matters which will require discrctionar7 action by the Council, Planning Commission and all other official bodies of the City, a stamment 0£ disclosure of certain ownership or financial interests, payments, or campaign contributions for a City of Chula V~sta election must bc file& The following information must be disclosed: 1. List the names of all persons having a £mancial interest in the prop~n-~ that is thc subject of thc application or the contract, c.g., outner, applicant, contractor, subcontractor, material supplier. 2. If any person" identified pursuant to ( 1 ) above is a corporation or partnership, list the names of all individuals with a $1000 investment in the business (corporation/partnership) entity. If any person* identified pursuant to (1) above is a non-profit orgimization or trust, list the names of any person serving as director of the non-profit organization or as trustee or beneficiary or trustor of the trust, / 4. Please identify every person, including any agents, employees, consultants, or independent contractors you have assigned to represent you before the City in this m/tier. C:\My Doc~mcntskRicnslra.$D. do¢ FAX 1~19397§~50 CITY OF CV -~ ENGINEERING [~003 5. Has any person* associated with this contract had any financial dealings with an official** of City of Chula Vista as it r~lates to this contract within thc past 12 months? Yes No If Yes, briefly describe the nature of the financial interest tl~ official** may have in this contract. 6. Have you made a contribution of more than $250 within ~e.~ast twelve (12) months to a current member of the Chula Vista City Council? Yes No ~ If Yes, which Council member? 7. Have you or any member of your goverrang board (i.e. Corporate Board of Directors/Executives, non-profit Board of Directors made contributions totaling more than $1,000 over the past four (4) years to a current member of the Chula Vista City Council? Yes No ~,, If Yes, wbhch Council member? 8. Have you provided more than $300 (or an item of equivalent ,ralue) to an official** of the City of Chula Vista in the past twelve (12) months? (This il~cl~udes being a source of income, money to retire a legal debt, gift, loan, etc.) Yes No ~ If'Yes, which official** and what was the nature of item provided? ',Signature of Contractor/Applicant ~ - Prim or type name of Contractor/Applicant * Person is defined as: any individual, firm, co-partn~rshi!o, joint venture, associ~tiun, social club, fraternal organization, corporation, estate, trust, rec¢i~,~r, syndicate, any othnr county, city, mumeipality, district, or other political subdivision, -or any other group or combination acting as a trait. Official includes, but is not limited to: Mayor, Council member, Planning Commissioner, Member ora board, commission, or committee of the City, employee, or staffmernbers_ 14 C:hMy Documcnts~Odenstra. SD.doc 114,'16,'2oo2 10:23 FAX 16193976250 CITY OF CV ~ ENGINEERING ~0o4 THE CITY OF ~JldtlLA VISTA DISCLOSURE STATEMENT Pursuant to Council Policy lOl-O1, prior to any action upon matters which will require discretionary action by thc Council, Planning Corrumssion and all other official bodies of the Civy, a statement of disclosure of certain ownership or ilnancial interests, payments, or campaig~ contributions for a City of Chula Vista election must be filed. The following information must be d/sclosed: 1. List the names of all persons having a financial intcre, st in thc properly that is the subject of the appli~atmn or the contract, _e.g. owner, applieanL conlractor, subcontractor, material supplier. 2. If any person* identified pursuant to (1) above is a corporation or parmership, list *.he name's of all individuals with a $1000 investment in the business (corporation/partnership) entiW. 3. If any person* identified pursuant to (1) above is a non-profit organization or trust, list the names of any person serving as director of the non-profit organization or as trus'eee or b~'neficiary or trustor of the trust_ / 4. Please identify every person, including any agents, employees, consul~nts, or independent con,ratters you have assigned to represent you before thc City in this matter. D, .' 16.' 2002 10: 24 FAX 16193976250 CITY OF CV ... ENGINEERING I4J 005 5. Has any person' associated with this contract had any fmancial dealings with an official** of the City of Chula Vista as it relates to this contract within the past 12 months? Yes_No X If Yes, briefly describe the nature of the financial interest the official" may have in this contract. 6. Have you made a contribution of more than $250 within the past twelve (12) months to a current member ofthe Chula Vista City Council? Yes No X If Yes, which Council member? 7. Have you or any member of your governing board (i.e. Corporate Board of Directors/Executives, non-profit Board of Directors made contributions totaling more than $1,000 over the past four (4) years to a current member of the Chula Vista City Council? Yes_No If Yes, which Council member? 8. Have you provided more than $300 (or an item of equivalent value) to an official'''' of the City of Chula Vista in the past twelve (12) months? (Thi~Udes being a source of income, money to retire a legal debt, gift, loan, etc.) Yes _ No If Yes. which official" and what was the nature of item provided? Date: i _/I-1J'V G;:'¿~on~2~ant J;M';" Ji""'~-¿7~ Print Or type name of Contractorl Applicant . Person is defmed as: any individual, firm, co-partnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, receiver, syndicate, any other county, city, m1J11icipality, district, or other political subdivision, -or any other group or combination acting as a unit. .. Official includes. but is not limited to: Mayor, Council member, Planning Member of a board, conunission, or committee of the City, employee, or staff members. Commissioner, - C:\My DOCUTllCnt5\E-Palomar..SD.dot 14 7-7 RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE EXPENDITURE OF FUNDS FOR THE "EMERGENCY STORM DRAIN REPAIR SOUTH OF EAST PALOMAR, WEST OF NACION" PROJECT AND THE "EMERGENCY STORM DRAIN REPAIR, EAST RIENSTRA STREET, WEST OF MARL COURT" PROJECT BY THE DIRECTOR OF PUBLIC WORKS AND APPROPRIATING $214,715 FOR SAID EMERGENCY PROJECTS FROM THE UNAPPROPRIATED BALANCE OF THE RESIDENTIAL CONSTRUCTION TAX FUND WHEREAS, on January 10, 2002 and January II, 2002, corrugated metal pipe (CMP) failures occurred at two roadway crossings: (1) East Palomar Street, west of Nacion Avenue, and (2) on East Rienstra Street, between Melrose Avenue and Marl Court; and WHEREAS, both of these CMP failures, if not repaired, would have resulted in the failure of the roadways that they cross, therefore, staff undertook emergency measures, as provided in Section 1009 of the City Charter, to repair the pipes in order to protect the roadway and the general public; and WHEREAS, in order for the emergency repairs to be made expeditiously, staff utilized funds appropriated to the Salt Creek Sewer CIP project (SW-219) as a temporary funding source for construction and staff time charges; and WHEREAS, staff utilized funds appropriated to the Corrugated Metal Pipe Replacement project (DR-152) as an additional temporary funding source for staff time charges; and WHEREAS, since the work has been completed and final costs, including City staff costs, are known, staff recommends that $214,715 be appropriated from the unappropriated balance of the Residential Construction Tax Fund (RCT) Fund to reimburse these projects as follows: Reimbursement to SW-219 - Reimbursement to DR-152 $199,395 $ 15,320 WHEREAS, the Environmental Review Coordinator has reviewed the projects for compliance with the California Environmental Quality Act and has determined that the projects are exempt from CEQA pursuant to Section 15301, Class 1 (Existing Facilities: repair or replacement and involves negligible or no expansion of an existing use). NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve the expenditure of funds for the "Emergency Storm Drain Repair South of East Palomar, West of Nacion" project and the "Emergency Storm Drain Repair, East Rienstra Street, West of Marl Court" project by the Director of Public Works. 7-'6 BE IT FURTHER RESOLVED that the amount of $214,7154 for said emergency projects is hereby appropriated from the unappropriated balance of the Residential Construction Tax Fund to reimburse SW-219 in the amount of $199,395 and DR-152 in the amount of $15,320. Presented by: Approved as to form by: .Dc- 7. ~ ,...... John P. Lippitt Director of Public Works John M. Kaheny City Attorney J:\Attorney\Reso\emergency storm drain 2 7-'9 Page 1, Item Meeting Date 7/23/02 COUNCIL AGENDA STATEMENT ITEM TITLE: A. Resolution of the City Council of the City of Chula Vista, California adopting a boundary map showing the boundaries of the territory proposed for the inclusion in proposed Community Facilities District No. 06-1 (EastLake-Woods, Vistas and Land Swap) and the boundaries of the Improvement Areas proposed to be designated therein. B. Resolution of the City Council of the City of Chula Vista, California declaring its inteni/on to establish Community Facilities District No. 06-I (EastLake- Woods, Vistas and Land Swap) and designate two Improvement Areas therein and to authorize the levy ora special tax within each Improvement Area to finance the acquisition or construction of certain facilities. C. Resolution of the City Council of the City of Chula Vista, California ordering and directing the preparation of a report for proposed Community Facilities District No. 06-I (EastLake- Woods, Vistas and Land Swap) D. Resolution of the City Council of the City of Chula Vista, California, declaring its intention to issue bonds of Community Facilities District No. 06-I (EastLake III - Woods, Vistas and Land Swap) for Improvemen,t Area A and Improvement Area B thereof to be secured by special taxes within each respective area to pay for the acquisition or construction of certain facilities. SUBMITTED BY: Director of Public Works ~ REX~EWED BY: City Manager d ~ (4/5ths Vote: Yes No X ) The EastLake Company, LLC has requested the City to initiate proceedings to form Community Facilities District No. 06-I (EastLak¢-Woods, Vistas and "Land Swap") (CFD No. 06-1) and designate two improvement areas (Improvement Areas A and B) for the purpose of financing the acquisition or construction of public facilities serving their properties within EastLake ownership. Tonight's action will approve a boundary map of CFD No. 06-I and each Improvement Area, declare the intent of the City Council to form CFD No. 06-1 and to designate the Improvements there/n, describe the improvements authorized to be financed by CFD No. 06-1, declare the intention of the City Council to authorize the levy of special taxes within each Improvement Area pursuant to separate rates and methods of apportionment of such special taxes for each Improvement Area to finance such improvements, declare the intention of the City Council to authorize CFD N_o. 06-I to incur a bonded indebtedness for each Improvement Area, direct the special tax consultant to prepare the Special Tax Report and set the public hearing for this Community Facilities District for September I 0, 2002. Page 2, Item ~9 Meeting Date 7/23/02 RECOMMENDATION: That Council: 1 ) Approve the Resolution adopting the boundary map for CFD No. 06-1, 2) Approve the Resolution declaring the intention to establish CFD No. 06-I and to levy special taxes within each Improvement Area of CFD No. 06-I to finance certain facilities, 3 ) Approve the Resolution ordering and directing the preparation of the "Special Tax Report" for CFD No. 06-1. 4) Approve the Resolution declaring intention of issuing bonds of CFD No. 6 for each Improvement Area therein for the purpose of financing the acquisition or construction of facilities in CFD No. 06-I. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: The EastLake Company, LLC has formally petitioned the City to form Community Facilities District No. 06-I (EastLake-Woods, Vistas, and "Land Swap") pursuant to the Mello~Roos Act of 1982 for financing the construction and/or acquisition of certain public improvements serving the EastLake project, as well as selected "Traffic Enhancement" facilities within the greater eastern territories of Chula Vista. This application was received and accepted by the City Council action on April 16, 2002. Community F~cilities Districts provide the necessary funding for the acquisition or construction of public improvements by levying an annual "special tax", which is collected fi.om the property owners in conjunction with the property taxes, and by issuing bonds of such community facilities district secured by such special taxes. There is no direct cost to the City. All expenses related to the administration ora community facilities district (including levying and collecting the special taxes) are to be funded by such district from the proceeds of special taxes. The ultimate security for the bonds are the properties located within the community facilities disthct, not the City's General Fund or its ability to tax property within its jurisdiction. CFD No. 06-1 will be formed in conformance with the "City of Chula Vista statement of goals and policies regarding the establishment of Community Facilities Districts" (CFD Policy). District Boundaries Exhibit 1 presents the boundaries of the proposed CFD 06-1 which includes parcels located within EastLake's Woods (394 gross acres), Vistas (343 gross acres), and"Land Swap" (143 gross acres) owned by either The EastLake Company, LLC or a m~rchant builder. The Woods and Vistas will comprise Improvement Area A and the "Land Swap" will comprise Improvement Area B. The Woods area is bounded on the south by Otay Lakes Road with Hunte Parkway meandering north almost bisecting the area. The Vistas is bounded by Otay Lakes Road to the north, Olympic Parkway to the south and Wueste to the east. The "Land Swap" is actually two non-adjacent areas; 1) the northernmost area being a triangular shaped west of EastLake Parkway bound by Otay Lakes Road to the north, and 2) the southernmost area is bounded on the south by Olympic Parkway with EastLake Parkway projecting north just west of the center of the area. At buildout, for Improvement Area A (Vistas and Woods) there will be 1,500 single-family detached residential units, 116 single-family attached units, 397 multifamily units, a 10 acre commercial site and a 19 acre hotel site. The Woods development area will be comprised of 663 single-family residential lots. 6fthis total, several merchant builders have purchased subdivision tracts, including Colrich with 64 units, Page 3, Item Meeting Date 7/23/02 Continental with 57 units, and Cornerstone with 255 units, while the remaining 287 units are currently owned by EastLake. The Vistas will be comprised of 934 single-family residential lots, 116 single-family attached lots, 300 multifamily apartment units, one ten acre commercial lot, and one 19 acre commercial lot. Of this total, Davidson owns 116 units, RWR owns 85 units, Fieldstone owns 93 units, William Lyons owns 162 units and EastLake owns the remaining 481 units. Within the Vistas, Western Pacific also owns the 116 single-family attached units and EastLake owns 300 multifamily apartment units, and the two commercial lots. At buildout, for Improvement Area B ("Land Swap") EastLake proposes to develop 705 single-family dwelling units with a mixture of detached and attached units, along with two commemial sites totaling 58 acres. These 705 lots are all currently owned by EastLake Company. The Improvements The special tax consultant has prepared a preliminary "2% maximum tax" analysis based on estimated house sizes and prices (see Exhibit 2). The applicant is proposing to divide the CFD No. 06-1 into two distinct Improvement Areas (A & B) as described above and in further detail later within this staffreport. It is the request of the applicant that CFD No. 06-1 be authorized to sell a separate series of bonds for each Improvement Area to be secured by the special taxes levied within each such Improvement Area. The size of the proposed bond authorization for each Improvement Area will depend upon the facilities requirements and special taxing capacity for each such Improvement Area. Each Improvement Area will have its own rate and method of apportionment of special taxes (RMA) based upon its own characteristics including proposed unit mix, unit pricing and facilities requirements. The 2% tax analysis sets the amount of the maximum special tax that may be levied by CFD No. 06-I within each Improvement Area. The proposed taxes for each Improvement Area are discussed below in the section "Proposed Special Taxes". Calculations show that the maximum special tax reventle (using the proposed special taxes) fi.om all the properties within Improvement Area A would support a total bond indebtedness for Improvement Area A of approximately $39 million (assuming a 6.5% interest rate and a 30-year term on the bonds). Abond sale amount of $39 million will finance approximately $31 million in facilities (i.e. grading, landscaping, streets, utilities, drainage, sewer, etc). Calculations further show that the maximum special tax revenue (using the proposed special taxes) fi.om all properties within Improvement Area B would support a total bond indebtedness for Improvement Area B of approximately $11 million (assuming a 6.5 % interest rate and a 30 year term on the bonds). A bond sale amount of$11 will finance approximately $8.8 million in facilities (these facilities would be similar to those listed for Improvement Area A). The balance of the proceeds of the bonds proposed to be issued for each Improvement Area would provide for a reserve fund, capitalized interest and payment of district formation and bond issuance costs. As noted previously, CFD No. 06-I will be selling bonds for Improvement Area B in the future and the amount of bond proceeds, interest rates, and other pertinent requirements may change or be revised. These modifications will be discussed in greater detail and brought to City Council, as this bond sale for Improvement Area B is initiated. The developer is proposing the financing by CFD No. 06-1 of backbone streets and associated improvements (i.e., grading, sewer, streets, landscaping, and utilities), TDIF Facilities, the "Traffic Enhancement Program" and water quality treatment equipment. Exhibit 3 shows a preliminary list of Page 4, Item o Meeting Date 7/23/02 facilities by Improvement Area, as well as the "Traffic Enhancement" facilities with a total cost estimate of $39 million. Tonight, Council would only be approving the general nature of the improvements to be financed by CFD No. 06-I. A final priority list and cost estimates for each of the eligible improvements for CFD No. 06-I will be brought later to Council in conjunction with the City Council's consideration of the approval of an Acquisition/Financing Agreement between the City and EastLake and other bond documents. Ultimately, as subdivision exactions, the developer will finance required improvements that CFD No. 06- 1 cannot finance. In addition, CFD No. 06-I lies within the City of Chula Vista's Transportation Development Impact Fee (TDIF) benefit area that places a cap on the ability of CFD No. 06-I to finance certain improvements. It should be noted that the debt placed by the proposed tax rates is not identical to the TDIF obligation of each particular land use within the district. For residential use, the TDIF obligation is based on the Equivalent Dwelling Unit ("EDU") designation for each residential type, while the tax rate is based on building square footage. Also, the proposed tax rates relationship between commercial and residential uses is not identical to the TDIF formula, which makes commercial uses payment of their TDIF obligation, through CFD tax-based debt burden, smaller than the otherwise TDIF cash payment and residential tax rates higher than otherwise cash payments. However, residential rates including all other taxes would still be below the Council Policy of 2% of market value of the house per year. This in turn would enhance the financial viability of developing the commercial land. Notwithstanding how the debt is apportioned by the RMA, the generated TDIF credits will be allocated, within the CFD and between commercial and residential uses, proportionate to the TDIF obligation for these uses and assigned to each use. The actual amount to be financed by each of the Improvement Areas within CFD No. 06-1 would depend upon a number of factors including final interest rate on the bonds and value to lien ratio of the taxable properties within the Improvement Area for which the bonds are issued and may be higher or less than the potential bond costs mentioned above. Thus, staffrecommends that tonight, Council declare its intention to authorize CFD No. 06-1 to incur a proposed bonded'indebtedness for Improvement Area A of not to exceed $40 million and for Improvement Area B of not to exceed $12 million. These bond authorizations are specified in the "Resolution of Intention to Issue Bonds" that is before Council tonight. The developer concurs with staff's recommendation. Proposed Special Taxes Tonight, Council would be declaring its intention to authorize the levy of special taxes pursuant to two separate "Rate and Method of Apportionment's" ("RMA"), one for each Improvement Area A and Improvement Area B, that establish the procedure for levying the special taxes within each Improvement Area for CFD No. 06-1. (Refer to Exhibits 4 and 5) · Improvement Area A encompasses the land uses within both the Vistas (Zone 1) and Woods (Zone 2). · Improvement Area B encompasses land uses in the "Land Swap" Area. Residential Developed Properties (single and multi family residences) are taxed based on the square footage of the building. Developed.Properties are those parcels for which a building permit has been issued. This tax rate has been determined by a preliminary "2% maximum tax" analysis. Said analysis, which is based on estimated house sizes and prices, sets the amount of the maximum special tax that may be levied by CFD 06-I on residential parcels. It should be noted that a final test would be required at escrow closing using actual house sale prices. If the 2% limit is exceeded, the developer is required to buy down the lien to an amount sufficient to meet the 2% criteria. Page 5, Item ~ Meeting Date 7/23/02 The proposed Developed Property Special Tax rates are as follows: Improvement Area A Zone 1 (Vistas) Tax Rate Area Maximum Annual Tax Rate Residential Property $0.58 per square foot of Residential Floor Area Commercial Property $6,000 per acre of Commercial Property Hotel Property $6,000 per acre of Hotel Property For example, within Improvement Area A - a typical 2,600 square foot detached residential unit would have an annual special tax of approximately $1,508. Zone 20Voods) Tax Rate Area Maximum Annual Tax Rate Residential Property $0.67 per square foot of Residential Floor Area ~, Commercial Property $6,000 per acre of Commercial Property For example, within Improvement Area A - a typical 3,500 square foot detached residential unit would have an annual special tax of approximately $2,345. Improvement'Area B ("Land Swap") Tax Rate Area Proposed Tax Rate $0.74 per square foot Residential Property of Residential Floor Area Commercial Property $6,000 per acre of Commercial Property For example, within Improvement Area B - a typical 3,350 square foot detached residential unit would have an annual special tax of approximately $2,479. The proposed Undeveloped Property is taxed based on the acreage of the parcel. The RMA proposes the following special tax rotes for both Improvement Areas: Tax Rate Area Undeveloped Property Rate Improvement Area A (Z. one 1) $11,037 per Acre Improvement Area A (Zone 2) $8,332 per Acre Improvement Area B $11,501 per Acre Page 6, Item J> Meeting Date 7/23/02 The Undeveloped Property category includes all the parcels for which a building permit has not been issued. The tax on Undeveloped Property is based on the total acreage of the parcel (Refer to table above). During buildout, the collection from developed properties alone will not be enough to cover the annual debt service and the Undeveloped Property special taxes will cover the difference. The City Administrator will determine whether an Undeveloped Property tax is needed to meet the annual debt service requirement and cost of administration of CFD No. 06-1. Even if no development occurs and the whole property remains undeveloped, the proposed RMA for each Improvement Area will nevertheless authorize the levy of sufficient special taxes to cover the debt service on the bonds and pay for costs of administration of CFD No. 06-1. The Assigned Special Tax Rate for Commercial Property within Improvement Areas A and B has been set at $6,000/acre. This $6,000/acre rate will be re-evai, uated upon the completion of the Appraisal report prepared for Improvement Area A prior to the scheduled public hearing. At that time the City and their consultants will compare the Appraisal values assigned to the Commercial Property against the City's 4:1 value to lien guidelines. If the appraised value for the Commercial Property in Improvement Area A can not support the $6,000Jacre Special Tax then the City staff may recommend to the City Council at the public heating that the Special Tax rate for Commercial Property in Improvement Area A be reduced to a level which is supported by the appraised value and the 4:1 ratio. This adjustment to the Commercial Property rate will also cause the corresponding reductions in the bond sizing for Improvement Area A and the Undeveloped Property Rates for Improvement Area A. The special tax rate for Commercial Property in Improvement Area B will be re-evaluated early next ye.a3-, upon the processing the Appraisal and Bond documents for that Improvement Area. The RMA for each Improvement Area provides that no special tax shall be levied on (i) Public Property, (ii) Property Owner Association Property, (iii) all Assessor's Parcels defined as 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 exempt classification shall reduce the sum o fall Taxable Property within Improvement Area A Zone 1 (Vistas) to less than 180.03 acres and within Zone 2 (Woods) to less than 166.23 acres and for Improvement Area B to less than 88.70 acres. These acreages include all the parcels to be conveyed to a Property Owner Association or dedicated to the City. Any dedication or other transfer of property to a public agency that would cause the aggregate exempt acreage to exceed the maximum limit would require a prepayment of the special tax obligation for such public property such that no public lands would be taxed. Each RMA provides that Assessor's Parcels (other than Public Property), which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less then the previously stated quantities, will be classified as Undeveloped Property and shall be taxed as such. These categories were created to provide additional assurance to prospective bond purchasers that the collectible tax will always cover the annual debt service. In addition, the special tax rates reflected in each RMA would enable CFD No. 06-I to finance a variety of public facilities as described within the City's DIF program. The estimated costs for these eligible DIF facilities have been assembled, aggregated, and allocated to various types of land uses within the district through the RMA's according to Exhibit 3 (i.e. residential, commercial, etc.). The method of allocation by land use category (which is a common way of allocating special tax) takes into account many variables, such as the City's 2% maximum tax level, a minimum 4:1 value to lien ratio for bonds, market conditions, appraised value, and other agency special taxes or assessments that maybe levied upon p$operty within this CFD No. 06-I. Given these variables, each land use then, has been assigned a special tax rote on a per square foot or acreage basis. Not withstanding the RMA, the generated Transportation Page 7, Item ~ Meeting Date 7/23/02 Development Impact Fee TDIF credits will be allocated, within the development and between commercial and residential use, proportionate to the TDIF obligation for these uses and assigned to each For CFD No. 06-I, the projected aggregate rate of tax and assessments (including ad valorem taxation and special taxes and assessments for facilities) has an annual percentage of less than 1.85% for the projected sales price of the residential properties. EastLake has a range of housing prices from $229,000 (attached) to $935,000 (detached). The overall value to lien ratio for Improvement Area A will be determined upon the completion of the appraisal, which is slated to be done by September. Collection of Taxes Commencing with Fiscal Year 2003-04 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement for each Improvement Area, i.e., that amount of special tax revenue required to pay scheduled debt service for bonds issued for such Improvement Area, to replenish the reserve fund established for such bonds, to pay administrative expenses and to pay directly for authorized facilities, and shall levy the Special Tax within each such Improvement Area until the amount of Special Tax equals the Special Tax Requirement. The Special Tax shall be levied within each Improvement Area each Fiscal Year as follows: First, the maximum special taxes will first be levied on the Developed Property. Second, if this pool of funds is not enough to meet the annual debt service, as may be the case in the early years of development, the City Administrator will levy a tax on the Undeveloped Property. Third, if additional monies are needed after the first two steps have been completed, the special tax shall be levied proportionately on each parcel from the Assigned Special Tax to the Maximum Ammal Special Tax by the application of the Backup Special Tax. If after these three steps are exhausted and there is still a need for additional monies, then the special tax shall be levied proportionately on each parcel for the Assigned Special Tax to the Maximum Annual Special Tax. After buildout, if determined by the City Administrator that the annual tax need is less than the collectible tax from the Developed Parcels, the special taxes to be levied in that specific year will be reduced proportionally. Since the special tax rates for each Improvement Area are based on the square footage of the home or commercial/hotel property the bondholders require protection in the event that the developer builds less than projected. Each RMA includes a Backup Special Tax where when each Final Map is recorded within an Improvement Area the Backup Special Tax will be applied or modified based on the Developed Property, Commercial or Hotel Properties. The Backup Special Tax formula includes the Assigned Special Tax times the acreage (Final Subdivision Map), divided by the number of lots (Final Subdivision Map). The two proposed RMA's also include provisions for the full or partial prepayment of the special taxes in the event the developer or a future property owner decides to do so. Value to Lien Ratio Policy Council policy requires a minimum 4:1 value-to-lien ratio. A ratio of less than 4:1, but equal to or greater than 3:1, may be approved, in the sole discretion of Council, when it is determined that a ratio of less than 4:1 is financially prudent under the c. ircumstances of a particular CFD. A final appraisal and lien ratio analysis will be available for Council consideration prior to the sale of bonds for each h-nprovement Area. The bond sale for Improvement Area A is planned for late 2002. If the final analysis shows parcels which fail to meet the 4:1 or 3:1 ratio, one or more of the following actions would be required: Page 8, Item Meeting Date 7/23/02 The Developer could provide cash or letters of credit to maintain the lien ratio within the City criteria; or, The principal amount of the bonds to be issued for CFD No. 06-I will be reduced to comply with City policy; or, The Developer may provide sufficient information to convince Council that a lesser lien ratio is still prudent. Maximum Tax Policy Council Policy establishes that the maximum annual CFD special taxes applicable to any newly developed residential property shall be no more than 1% of the sale price of the house. In addition, the aggregate of all annual taxes and assessments is limited to 2% of the sale price of the house. A preliminary calculation of the maximum tax, using estimated house prices, has been completed and all homes fall within the 2% limit (see Exhibit 3). A final test will be performed at escrow closing using the actual sale price of the house. Council Policy requires that at or prior to each closing of escrow, the escrow company shall apply a "calculation formula" previously approved by the City Engineer to determine the aggregate of regular County taxes, special taxes and assessment installments. If the 2% limit were exceeded, the developer would be required to provide cash to buy down the lien to an amount sufficient to meet the 2% tax ceiling. Compliance with this procedure would ensure that the aggregate special tax to be paid by the initial purchaser of the house meets the City's criteria, since the 2% limit is a City policy and the limit itself is not included in the rate and method of the district. Resolutions '~ There are four resolutions on today's agenda that, if adopted, will accomplish the following: The RESOLUTION ADOPTiNG THE BOUNDARY MAP is the formal action adopting the map and setting forth the boundaries of the proposed CFD 06-I. The RESOLUTION OF iNTENTION is the jurisdictional resolution declaring the intention on the City Council to establish CFD No. 06-I, designate two Improvement Areas and authorize the levy of special taxes within each such Improvement Area, and set the time and place for the public hearing for September 10, 2002. The RESOLUTION ORDERING THE "REPORT" is the formal action of the City Council directing the preparation of a detailed report containing a description of the facilities and its estimated cost. The RESOLUTION DECLARING INTENTION TO ISSUE BONDS is the formal declaration of the City Council determining that the public convenience and necessity requires that a bond indebtedness of CFD No. 06 -I for each Improvement Area be incurred to finance certain public facilities proposed by CFD No. 06-1. The proposed maximum bond indebtedness for Improvement Area A is $40 million and Improvement Area B $12 million. The actual amount of the bond sale will depend upon a number of factors including interest rate on the bonds and compliance with the value-to-lien ratio criteria. Future Actions Adoptions of tonight's resolutions will set the district's public hearing for September 10, 2002. There will be an election following the public hearing for the landowners to vote on the authorization to levy special taxes in each Improvement Area, the authorization to incur a bonded indebtedness of CFD No. 06- I for each Improvement Area and to establish an appropriations limit for CFD No. 06-1. Once the votes Page 9, Item Meeting Date 7/23/02 are cast, Council will be requested to certify the election and, if the ballot measures are approved by 2/3 of the qualified electors voting on the measures, CFD No. 06-I will be authorized to levy such special taxes and incur such bonded indebtedness. Fiscal Impacts None, the developer will pay all costs and has deposited money to fund initial consultant costs, and City costs in accordance with the approved Reimbursement Agreement. The City will receive the benefit of the full cost recovery for stafftime involved in district formation and administration activities. Staff anticipates that most of the CFD No. 06-1 administration will be contracted out. The CFD administration cost is estimated at $75,000 annually. In accordance with the CFD Policy, as consideration for the City'~ agreement to use the City's bonding capacity to provide the financing mechanism for the construction of the proposed improvements, the developer will pay one pement (1%) of the total bond authorization. Said requirement will be memorialized in the Acquisition/Financing Agreement that will be brought to Council for approval at a later date. Based on the total aggregate proposed indebtedness of $52 million (Improvement Area A $40 million and Improvement Area B $12 million), said monetary compensation would be approximately $400,000 and $120,000 for the first and second bond sale respectively. Said amount shall be paid prior to each bond sale based on the principal amount of each such sale and will be deposited into the General Fund. The CFD Policy also stipulates that said compensation is not eligible for financing by CFD No. 06-I. Attachments: ~ Exhibit 1: Proposed Boundary Map - CFD No. 06-1 Exhibit 2: 2% Maximum tax analysis Exhibit 3: List of facilities - Improvement Areas A and B Exhibit 4: Rate and Method of Apportionment - Improvement Area A (See Resolution Exhibit B) Exhibit 5: Rate and Method of Apportionment - Improvement Area B (See Resolution Exhibit B) J:~Engineer~AGENDA\CAS for 7-23-02 CLEAN 7-12-02-1 .doc 7/15/02 2:26:18 PM EXHIBIT 2(Sheet I of 2) CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE) 2% Maximum Tax Analysis The developer is proposing the two distinct Improvement Areas for Community Facilities District No. 06-I, each will stand on its own merits related to the house units, square footages, home prices, annual tax obligation, and annual tax percentages. Below is a summary of those differences for these elements: Improvement Area A: Zone 1-Vistas Planning Land Use # Units or Ave. House Projected Total Annual Tax Area Acres Square Feet Home Price Annual Tax Rate % VR-1 SFD 56 3,793 $507,500 $8,979 1.77 VR-2 SFD 68 3,128 $498,324 $8,493 1.70 VR-3 SFD 116 3,301 $445,000 $8,010 1.80 VR-4 SFD 82 2,927 $405,299 $7,359 1.82 VR-5 SFD 93 2,759 $357,333 $6,738 1.89 VR-6 SFD 93 2,759 $367,333 $6,847 1.86 VR-7 SFD 96 2,317 $358,100 $6,490 1.81 VR-8 SFD 168 1,902 $332,500 $5,782 1.74 VR-9 SFD 65 1,496 $260;231 $4,510 1.73 VR-10 SFA 111 1,542, $229,990 $4,113 1.79 VR-11 MF 97 1,492 $260,000 $4,412 1.70 VR-12 MF 300 1,100 $195,000 $3,380 1.73 SHOPPING COMM 10 ACRES N/A N/A N/A N/A HOTEL COMM 19 ACRES N/A N/A N/A N/A Zone 2-Woods Planning Land Use # Units orAve. House Projected Total Annual Tax Area Acres Square Feet Home Price Annual Tax Rate % WR-1 SFD 64 5,016 $935,938 $14,788 1.58 WR-2 SFD 57 4,100 $553,333 $9,992 1.81 WR-3 SFD 77 3,773 $491,429 $9,096 1.85 WR4(1st) SFD 73 3,138 $472,055 $8,459 1.79 WR4(2~r~) SFD 66 3,116 $485,379 $8,590 1.77 WR-5 SFD 71 3,458 $528,732 $9,293 1.76 WR-6 SFD 136 2,318 $350,159 $6,577 1.88 WR-7 SFD 11'9 1,904 $317,584 $5,757 1.81 'See Next Page for Improvement Area B Exhibit 2) EXHIBIT 2(Sheet 2 of 2) Improvement Area B: Planning Land Use # Units or Ave. House Projected Total Annual Tax Area Acres Square Feet Home Price Annual Tax Rate % LS-3 SFA 80 1,200 $245,000 $4,530 1.85 LS-3 SFA 80 1,525 $260,000 $4,688 1.80 LS-3 SFA 80 1,750 $275,000 $5,018 1.82 LS-4 SFA 105 1,062 $230,000 $3,924 1.71 LS-4 SFA 105 1,231 $248,000 $4,246 1.71 LS-4 SFA 105 1,376 $255,000 $4,430 1.74 LS-4 MF 150 1,100 $195,000 $3,570 1.83 COMM COMM 44 ACRES N/A N/A N/A N/A COMM COMM 20 ACRES N/A N/A N/A N/A EXHIBIT 3 CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE) LIST OF PROPOSED FACILITIES The developer is proposing the fInancing of backbone streets and associated improvements (i.e., grading, sewer, streets, landscaping, utilities), and certain "Traffic Enhancement" facilities. Following is a general description of the proposed facilities: Improvement Area A · East Olympic Parkway · West Olympic Parkway (Portion) · Otay Lakes Road · ., Proctor Valley Road Improvement Area B · West Olympic Parkway (Portion) · EastLake Parkway In addition to the above improvements, this CFD's bonding capacity maybe used for certain "Traffic Enhancement "facilities within the greater eastern territories of Chula Vista. These transportation facilities will be traffic capacity adding improvements and could include the following projects: · 1-805/East "H" Street an additional on-ramp lane to 1-805 · I-80S/Telegraph Canyon Road an additional on-ramp lane to I-80S In addition to the above physical improvements, this CFD's bonding capacity maybe used for the purchase certain tangible maintenance equipment that has a useful life of fIve (5) years or more necessary to provided storm water discharge maintenance within each Improvement Area. J :\Engineer\AGENDA \Attachments\CAS EXHIBIT 3 - List of Facilities 7-23-02.doc ç~ß RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ADOPTING A BOUNDARY MAP SHOWING THE BOUNDARIES OF THE TERRITORY PROPOSED TO BE INCLUDED IN PROPOSED COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III- WOODS, VISTAS AND LAND SWAP) WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA ("City Council"), desires to initiate proceedings to create a Community Facilities District and to designate two improvement areas therein pursuant to the tenns and provisions of the "Mello-Roos Community Facilities Act of1982", being Chapter 2.5, Part I, Division 2, Title 5 ofthe Government Code of the State of California (the "Act") and the City ofChula 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 Cali fomi a (the "Ordinance") (the Act and the Ordinance may be referred to collectively as the "Community Facilities District Law"). This Community Facilities District shall hereinafter be designated as COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) (the "District"); and, WHEREAS, there has been submitted a map showing the boundaries of the territory proposed for inclusion in the District including properties and parcels ofland proposed to be located within each improvement area therein and to be subject to the levy of a special tax by the District for each such improvement area. NOW, THEREFORE, IT IS HEREBY RESOLVED: SECTION 1. The above recitals are all true and correct. SECTION 2. The map designated as "BOUNDARIES OF COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP)" showing the boundaries of the territory proposed for inclusion in the District including the parcels of land proposed to be located within each improvement area therein and to be subject to the levy of a special tax by the District for each such improvement area is hereby approved and adopted. SECTION 3. A certificate shall be endorsed on the original and on at least one (I) copy of the map ofthe District, evidencing the date and adoption of this Resolution, and within fifteen (IS) days after the adoption ofthe Resolution fixing the time and place ofthe hearing on the fonnation or extent of such District, a copy of such map shall be filed with the correct and proper endorsements thereon with the County Recorder, all in the manner and fonn provided for in Sections 3110 and 3111 ofthe Streets and Highways Code of the State of California. I £-1'1 Presented by: Approved as to fonn by: C _ ìV\ ()~",Q ~ John M. Kaheny City Attorney John P. Lippitt Director of Public Works J:\Attomey\eso\Res Approve Map CFD 06-I.doc 2 ,F-¡S- RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, DECLARING ITS INTENTION TO ESTABLISH COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) AND DESIGNATE TWO IMPROVEMENT AREAS THEREIN AND TO AUTHORIZE THE LEVY A SPECIAL TAX THEREIN TO FINANCE THE ACQUISITION OR CONSTRUCTION OF CERTAIN PUBLIC FACILITIES WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA (the "City Council"), at this time desires to initiate proceedings to create a Community Facilities District and to designate two improvement areas therein pursuant to the tenns and provisions ofthe "Mello- Roos Community Facilities Act of 1982", being Chapter 2.5, Part I, Division 2, Title 5 of the Government Code of the State of California (the "Act") and the City ofChula 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"). This Commw1Íty Facilities District shall hereinafter be referred to as Community Facilities District No. 06-1 (EastLake III - Woods, Vistas and Land Swap) (the "District")' and , , WHEREAS, this City Council desires to proceed to adopt its Resolution of Intention to initiate the proceedings to consider the establishment of such District, to set forth the proposed boundaries for such District and the improvement areas therein, to indicate the type of public facilities proposed to be financed by such District, to indicate the proposed rate and apportionment of a special tax for each improvement area sufficient to finance the acquisition of such facilities and the administration of the District and any indebtedness incurred by the District for each such improvement area, to set a time and place for a public hearing relating to the establishment of such District and the designation of the improvement areas therein; and WHEREAS, the Community Facilities District Law provides that the City Council may initiate proceedings to establish a community facilities district only if it has fIrst considered and adopted local goals and policies concerning the use ofthe Community Facilities District Law; and WHEREAS, this City Council has adopted local goals and policies as required pursuant to the Community Facilities District Law; and WHEREAS, the Community Facilities District Law pennits the City Council to designate a portion or portions of the proposed District as one or more improvement areas for the purpose of financing of, or contributing to the financing of, specified public facilities; and WHEREAS, this City Council desires to designate two improvement areas within the proposed District for the purpose of contributing to the financing of the facilities specified herein. 1 Ç~/0 NOW, THEREFORE, IT IS HEREBY RESOLVED: RECITALS SECTION I. The above recitals are all true and correct. INITIATION OF PROCEEDINGS SECTION 2. These proceedings are initiated by this City Council pursuant to the authorization of the Community Facilities District Law. BOUNDARIES OF DISTRICT AND IMPROVEMENT AREAS SECTION 3. It is the intention of this City Council to establish the boundaries of the proposed District and the proposed improvement areas therein. A description of the proposed boundaries of the territory to be included in the District including the properties and parcels ofland proposed to be located within each improvement area therein and to be subject to the levy of a special tax by the District for each such improvement area is as follows: All that property as shown on a map as previously approved by this City Council, such map designated by the name of this District, a copy of which is on file in the Office of the City Clerk and shall remain open for public inspection. NAME OF DISTRICT AND IMROVEMENT AREAS SECTION 4. The name of the proposed District t shall be Community Facilities District No. 06-1 (EastLake III - Woods, Vistas and Land Swap). The improvement areas proposed to be designated within the District shall be known as "Improvement Area A" and Improvement Area B" (individually, an "Improvement Area" or collectively, the "Improvement Areas") DESCRIPTION OF FACILITIES SECTION 5. It is the intention of this City Council to finance the acquisition of certain facilities authorized to be acquired pursuant to the provisions of the Community Facilities District Law. A general description of the type of facilities proposed to be authorized to be acquired is set forth in Exhibit A attached hereto and incorporated herein by this reference (the "Facilities"). The Facilities are facilities which this legislative body is authorized by law to contribute revenue to or to construct, own or operate. It is hereby further detennined that the proposed Facilities are necessary to meet increased demands and needs placed upon the City as a result of development within the District. 2 ,j-I? The cost of acquiring the Facilities includes Incidental Expenses as such tenn is defined in Government Code Section 53317(e) and may include, but not be limited to, the costs of planning and designing the facilities; all costs associated with the establishment of the District and the designation of the Improvement Areas, the issuance and administration of bonds to be issued for each Improvement Area, including the payment of any rebate obligation due and owing to the federal government, the detennination ofthe amount of any special taxes to be levied, the costs of collecting any special taxes, and costs otherwise incurred in order to carry out the authorized purposes of the District, together with any other expenses incidental to the acquisition, construction, completion and inspection of the Facilities. SPECIAL TAX SECTION 6. It is hereby further proposed that, except where funds are otherwise available, a separate special tax sufficient to pay for such Facilities and related Incidental Expenses authorized by the Community Facilities District Law, secured by recordation of a continuing lien against all non- exempt real property in each Improvement Area of the District, will be levied annually within the boundaries of each such Improvement Area. Under no circumstances will the special tax levied against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner of any other parcel or parcels within the same Improvement Area of the District by more than 10 percent. For further particulars as to the rate and method of apportionment ofthe proposed special tax (the "Rates and Methods of Apportionment") for each Improvement Area reference is made to the attached and incorporated Exhibit B, which sets forth in sufficient detail the method of apportionment to allow each landowner or resident within each Improvement Area of the proposed District to clearly estimate the maximum amount that such person will have to pay. The Rates and Methods of Apportionment also set forth the tax year after which no further special tax shall be levied or collected against any parcel used for private residential purposes within each Improvement Area. A parcel shall be considered "used for private residential purposes" not later than the date on which an occupancy pennit or the equivalent for private residential use is issued for such parcel. The special taxes herein proposed, to the extent possible, shall be collected in the same manner as ad valorem property taxes or in such other manner at this City Council shall detennine, including without limitation, direct billing ofthe affected property owners, and shall be subject to the same penalties, procedure, sale and lien priority in any case of delinquency as applicable for ad valorem taxes. Any special taxes that may not be collected on the County tax roll shall be collected through a direct billing procedure by the Treasurer ofthe City ofChula Vista (the "City"), acting for and on behalf of the District. The special tax obligation for any parcel may be prepaid and pennanently satisfied in whole or in part pursuant to the provisions therefor contained in the applicable Rate and Method of Apportionment. 3 í' .~ ,r -( ¿/ PUBLIC HEARING SECTION 7. NOTICE IS GIVEN THAT ON SEPTEMBER 10, 2002, AT THE HOUR OF 6:00 O'CLOCK P.M., IN THE REGULAR MEETING PLACE OF THE CITY COUNCIL BEING THE COUNCIL CHAMBERS, CITY HALL, LOCATED AT 276 FOURTH STREET, CHULA VISTA, CALIFORNIA, A PUBLIC HEARING WILL BE HELD WHERE THIS CITY COUNCIL WILL CONSIDER THE ESTABLISHMENT OF THE PROPOSED DISTRICT, THE DESIGNATION OF THE PROPOSED IMPROVEMENT AREAS, THE RATE AND METHOD OF APPORTIONMENT OF THE SPECIAL TAX PROPOSED TO BE LEVIED WITHIN EACH IMPROVEMENT AREA, AND ALL OTHER MATTERS AS SET FORTH IN THIS RESOLUTION OF INTENTION. AT THE ABOVE-MENTIONED TIME AND PLACE FOR PUBLIC HEARING ANY PERSONS INTERESTED, INCLUDING T AXP AYERS AND PROPERTY OWNERS MAY APPEAR AND BE HEARD. THE TESTIMONY OF ALL INTERESTED PERSONS FOR OR AGAINST THE ESTABLISHMENT OF THE DISTRICT, THE EXTENT OF THE DISTRICT, THE DESIGNATION OF THE IMPROVEMENT AREAS OR THE FINANCING OF THE FACILITIES, WILL BE HEARD AND CONSIDERED. ANY PROTESTS MAY BE MADE ORALLY OR IN WRITING, HOWEVER, ANY PROTESTS PERTAINING TO THE REGULARITY OR SUFFICIENCY OF THE PROCEEDINGS SHALL BE IN WRITING AND CLEARLY SET FORTH THE IRREGULARITIES AND DEFECTS TO WHICH THE OBJECTION IS MADE. ALL WRITTEN PROTESTS SHALL BE FILED WITH THE CITY CLERK OF THE CITY ON OR BEFORE THE TIME FIXED FOR THE PUBLIC HEARING. WRITTEN PROTESTS MAY BE WITHDRAWN IN WRITING AT ANY TIME BEFORE THE CONCLUSION OF THE PUBLIC HEARING. IF A WRITTEN MAJORITY PROTEST AGAINST THE ESTABLISHMENT OF THE DISTRICT IS FILED, THE PROCEEDINGS SHALL BE ABANDONED. IF SUCH MAJORITY PROTEST IS LIMITED TO CERTAIN FACILITIES OR PORTIONS OF THE SPECIAL TAX, THOSE FACILITIES OR THAT PORTION OF THE SPECIAL TAX SHALL BE ELIMINATED BY THE CITY COUNCIL. ELECTION SECTION 8. If, following the public hearing described in the Section above, the City Council detennines to establish the District and to designate the Improvement Areas and proposes to levy a special tax within each such Improvement Area, the City Council shall then submit the levy of the special taxes to the qualified electors of each Improvement Area. If at least twelve (12) persons, who need not necessarily be the same twelve (12) persons, have been registered to vote within an Improvement Area for each ofthe ninety (90) days preceding the close ofthe public hearing, the vote shall be by registered voters of the Improvement Area, with each voter having one (I) vote. Otherwise, the vote shall be by the landowners of each Improvement Area who were the owners of record at the close ofthe subject hearing, with each such landowner or the authorized representative thereof, having one (I) vote for each acre or portion of an acre of land owned within such Improvement Area. 4 " ¡- y. "1 c;, I , NOTICE SECTION 9. Notice ofthe time and place of the public hearing shall be given by the City Clerk by causing the publication of a Notice of Public Hearing in the legally designated newspaper of general circulation, such publication pursuant to Section 6061 of the Government Code, with such publication to be completed at least seven (7) days prior to the date set for the public hearing. The City Clerk shall also cause notice to be given by fIrst-class mail to each registered voter, if any, and to each landowner as defIned in the Community Facilities District Law within the proposed boundaries of the District. Such notice shall be mailed at least 15 days before the public hearing and shall contain the same infonnation as is required to be contained in the notice published pursuant to the preceding paragraph. RESERVATION OF RIGHTS TO AUTHORIZE TENDER OF BONDS SECTION 10. The City Council reserves to itself, in its capacity as the legislative body of the District if fonned, the right and authority to allow any interested owner of property within the District, subject to the provisions of Government Code Section 53344.1 and to such conditions as this City Council may impose, and any applicable prepayment penalties as may be described in the bond indenture or comparable instrument or document, to tender to the Treasurer, acting for and on behalf of the District, in full payment or part payment of any installment of the special taxes or the interest or penalties thereon which may be due or delinquent, but for which a bill has been received, any bond or other obligation secured thereby, the bond or other obligation to be taken at par and credit to be given for the accrued interest shown thereby computed to the date of tender. ADVANCES OF FUNDS OR WORK-IN-KIND SECTION 11. At any time either before or after the fonnation of the District, the City Council may accept advances of funds or work-in-kind from any source, including, but not limited to, private persons or private entities and may provide, by resolution, for the use of those funds or that work-in- kind for any authorized purpose, including, but not limited to, paying any cost incurred by the City in creating the District. The City may enter into an agreement, by resolution, with the person or entity advancing the funds or work-in-kind, to repay all or a portion of the funds so advanced, or to reimburse the person or entity for the value, or cost, whichever is less, of the work-in-kind, as detennined by the City Council. The City has entered into a Community Facilities District Reimbursement Agreement with EastLake Company, LLC (the "Corporation") to provide for such advances for the payment of all initial consulting and administration costs and expenses related to the proceedings to consider the fonnation ofthe District and to subsequently authorize, issue and sell bonds for the District. Such advances are subject to reimbursement pursuant to the tenns of such agreement. No such agreement shall constitute a debt or liability of the City. 5 f- .2.0 In addition, it is proposed that the City enter into an agreement with the Corporation pursuant to which the Corporation shall construct and install the Facilities and the District shall repay the funds expended by the Corporation for such purpose or value or cost of the work in-kind, whichever is less. Presented by: Approved as to fonn by: (A..-- ~I\~ John M. Kaheny City Attorney t<~ John P. Lippitt Director of Public Works J:\Attomey\Reso\Res Intent Form CFO 06-I.doc 6 /, . l /0· -'·)i (. ."....; EXHIBIT A DESCRIPTION OF TYPES OF FACILITIES The types of public facilities authorized to be financed by the lew of special taxes within each Improvement Area shall include streets, landscaping within public rights-of-way, sewers and public utilities and tangible personal property with a useful life of five (5) years or more necessary to provide storm water discharge maintenance within each Improvement Area, as may be authorized by the goals and policies of the City Council pertaining to the use of the Community Facilities District Law. A-1 EXHIBIT B RATES AND METHODS OF APPORTION OF SPECIAL TAXES [attach a copy of the Rate and Method for each Improvement Area] B-1 RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I IMPROVEMENT AREA A (Eastlake - Woods and Vistas) Property within the City of Chula Vista Community Facilities District No. 06-1, Improvement Area A ("Improvement Area A") 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 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, parcel map, condominium plan, record of survey, or other recorded document creating or describing the land area. If the preceding maps fgr 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 Cali£ornia. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the adrrfinistration of Improvement Area A 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 (includ'mg 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 prepahng 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 fi.om 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. cJo, of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake - Woods and Vistas Page "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. 1 .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 mount set forth in Section C. 1.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 a one-year period beginning on September 2"d 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. 06-1. "City" means the City of Chula Vista. "Commercial Property" means all Assessors' Parcels of Developed Property, for which a building permit(s) was issued for a non-residential use, excluding Community Purpose Facility Property and Hotel Property. "Commnnity 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. City of Chula Vista Community Facilities District No. 06-1, Improvement ,4rea .4 Eastlake - Woods and Vistas Page 2 "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 Assigned Tax due to its classification as either Public 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 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. "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. "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 acconmaodation of transient guests. "Improvement Area A" means Improvement Area A of CFD No. 06-1 known as the Woods and Vistas. "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" 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 maximmn 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" means all Bonds, which remain outstanding as defined in the Indenture. C~ty of Chula ~'ista Community Facilities District No. 06-I, Improvement Area A Eastlake - Woods and Vistas Page 3 "Property Owner Association Property" means any property within the boundaries of Improvement Area A 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 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 all 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' Parcels 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 shall be made ~by the CFD Administrator by reference to appropriate records kept by the City's Buildi.Bg Department. Residential Floor Area roi: 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 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 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- 06-1 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 ali 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. City of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake - Woods and Vistas Page 4 "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 1" 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 d&velopment area as depicted in Exhibit A attached herein. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Assessors' Parcels of Taxable Prol~erty 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 and shall be further classified as Residential Property, Commercial Property or Hotel Property. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property Thc 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 Special 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 City of Chula Vista Community Facilities District No. 06-I, Improvement ~4rea ~4 Eastlake - Woods and Vistas Page 5 TABLE 2 Zone 2 (Woods) Assigned Annual Special Tax £or Developed Property Land Use Class Description Maximum Annual Special Tax 1 Residential Property $0.67 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 1 and 2 of Improvement Area A the Backup Special Tax for Assessor's Parcels of classified as Residential Property, Commercial PropexW 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 area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: Zone 1 (Vistas) $11,037 x A L Zone 2(Woods) $8,332 x A 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 Undeveloped Property to be classified as Commercial Property or Hotel Property wi .tl3in the Final Subdivision Map area, 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 City, of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake - Woods and Vistas Page 6 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. 2. Undeveloped Property The Maximum Annual Special Tax for each. Assessor's Parcel classified as Undeveloped Property shall be $11,037 per acre for Zone 1 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 eaoh 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 Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, excluding any Assessor's Parcels 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 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 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, trader 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 City of Chula Vista Community Facilities District No. 06-1, Improvement Area .4 Eastlake - Floods and Vistas Page 7 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 Zone 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 loss 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 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 properly 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 obligation for any such Public Property is prepaid, the property shall continue to be subject to the levy of the Specill Tax as Undeveloped Properly. 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 Comrnittee 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 Conunittee shall be final and binding as to all persons. City of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake- Woods and Vistas Page 8 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 £mancial 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 wilI not iss~ 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 fimds 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 tiffs 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 ava/lable to be funded through existing construction fund, or funded by the Outstanding Bonds as defined below, minus public facility costs funded by interest earnings on the Construction Fund actaally earned prior 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 redeenaed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes. C~ty of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake - Woods and Vistas Page 9 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 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 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 Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount ,, plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals 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 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 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. City of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake - Woods and Vistas Page I O 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 Areas A have not been issued, compute the Future Facilities Costs. 6. Multiply the quotient computed pursuant to paragraph 2 by the mount 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'5. 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. 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 re.asonably expects to derive fi.om 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 paragraph 8 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 result of the ~ity of Chula Vista Community Facilities District No. 06-1. Improvement Area A Eastlake - Woods and Vistas Page 11 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, 11, and 12, less the mounts 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 retained by CFD-06. The amount computed pursuant to paragraph 5 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 prepayn~ent 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 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 Improvement Area A 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 Chy of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake- Woods and Vistas Page 12 may be partially prepaid. The amount of the prepayment shall be calculated as in Section H 1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE 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 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 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 fur/ds 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 o£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 pursuan[ to Section D. 1. 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. J:\EngineerXAGENDA~Attachments\CFD No, 06-I RMA Imp. A 7-12-02.doc Ci~ of Chula Vista Community Facilities District No. 06-1, Improvement Area A Eastlake - Woods and Vistas Page 13 RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 06-I IMPROVEMENT AREA B (EastLake - "Land Swap") 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. 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, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the mann~ 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 i¢lap, or if the land area is not shown on an Assessor's Parcel Map, the land 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 administration 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 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 B, including, but not limited to ~o, of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page ] 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 Section C. 1 .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 Backup Special Tax amount set forth in Section C. 1 .b. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, is~sued by CFD-06-I for Improvement Area B under the Act. "Bond Year" means a one-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 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. 06-1. "City" means the City of Chula Vista. "Commercial Property" means all Assessors' Parcels of Developed Property, for which a building permit(s) was issued for a non-residential use, excluding Community Purpose Facility Property. "Community Purpose Facility Property" means all Assessors' Parcels which are classified as conununity purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452. "Council" means the City Canncil of the City, acting as the legislative body of CFD-06-I. City of Chula Vista Community Facilities District No. 06-1, Improvement ~4rea B EastLake - Land Swap Page 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 1 of the prior Fiscal Year. "Exempt Property" means property not subject to the Special Assigned Tax due to its classification as either Public Property, Property Owner Association Property Community Purpose Facility Property, Public or public 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 Califorriia 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. "Improvement Area B" means Improvement Area B of CFD No. 06-1 known as the "Land Swap". "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other in6tmment pursuant to which Bonds are issued, as modified, amended and/or supplemented fi.om 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 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 Improvement Area B owned by or dedicated to a property owner association, including any master or sub-association. "Proportionately" means fo3 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 C~ty of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 3 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 any other public agency. "Residential Property" means all Assessors' Parcels 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 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 any Fiscal Year for Improvement Area B to: (i) pay armual 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 Oufstanding 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- 06-1 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 B; 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 CFD-06-I, Improvement Area B 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, alt Taxable Property not classified as Developed Property. City of Chula t/ista Community Facilities District No. 06-I, Improvement Area B EastLake - Land Swap Page 4 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Assessor's Parcels of Taxable Property within, Improvement Area B shall be classified a Developed Property or Undeveloped Property and shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Commercial Property shall be the greater of (!) the Assigned Special Tax described in Table 1 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 Table 1. TABLE 1 Assigned Annual Special Tax for Developed Property Land Use Class Description Assigned Annual 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 Improvement Area B, 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 as 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 formula: $11,501 xA L The terms above hax~e the following meanings: City of Chula Vista Community Facilities District No. 06-1, Improvement ~4rea B EastLake - Land Swap .~ Page 5 B = Backup Special Tax per Lot in each Fiscal Year. A = Acreage classified or to be classified as Residential Property m 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 as 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 $11,501 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. Notwithstanding 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 Propert~ The Maximum Annual Special Tax for each Assessor's Parcel classified, as Undeveloped Property shall be $11,501 per acre. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2003-04 and f6r 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: Thc Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at a rate up to 100% of the applicable Assigned Special Tax to satisfy thc 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 each Assessor's Parcel of Undeveloped Property, excluding any Assessor's Parcels classified as Undeveloped Property pursuant to Section E, at a rate up to 100% o£thc 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 Cfty of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 6 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 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 to less than 88.70 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 88.70 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. 2. The Maximum Annual Special Tax 6bligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but wkich cannot be classified as exempt property as described in paragraph 1 of Section F shall be prepaid in full by the seller pursuant to Section 1.1, 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 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 ~ty of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 7 file a whtten 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 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-06-I, Improvement 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 specifically approved by the Council. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section'H: "CFD Public Facilities" means either $12.3 million in 2004 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. 06-1 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 Indentm'e to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act. "Construction Inflation Index" means the armual 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 Ihdex shall be another index as determined by the CFD C}ty of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 8 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 public facility costs funded by interest earnings on the Construction Fund actually earned prior to the date of prepayment, and minus public facilities costs paid directly with Special Taxesl "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. Prepaymeut in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied by 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 descr/bed herein; provided, however that a prepayment may be made only if there are no delinquent Special Taxes wilh 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. The Prepayment Amount (defined below) 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 Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Total: equals Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Step No.: City of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 9 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 paid 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 p~rmit 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 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 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. Multiply 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'S). 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. 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 reinvestrnent 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 (the "Administrative Fees and Expenses")) from the date of prepayment until the redemption date for the Outstanding Bonds to fie redeemed with the prepayment. C¥ of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 10 11. Add the amounts computed pursuant to paragraphs 7 and 9 and subtract the amount computed pursuant to paragraph-g 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 of invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses". 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of 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 mount 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 js equal to the sum of the amounts computed pursuant to paragraphs 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 retained by CFD-06-I. The amount computed pursuant to paragraph 5 shall be deposited in the Constn~ction 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 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 Ass&ssor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. ~ity of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 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 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 pm'mit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H 1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE 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 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 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 (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. C~ty of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 12 I. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Tax shall be levied commencing in FiscaJ Year 2004-2005 to the extent necessary to fully satisf'y the Special Tax Requirement and shall be levied for a period no longer than the 2044-2045 Fiscal Year. J:\Engineer\AGENDA\At1achments\CFD No. 06-1 RMA Jmp. 8 7·23-02.doc " City of Chula Vista Community Facilities District No. 06-1, Improvement Area B EastLake - Land Swap Page 13 f-/Á RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, ORDERING AND DIRECTING THE PREPARATION OF A REPORT FOR PROPOSED COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA (the "City Council"), has declared its intention to initiate proceedings to create a Community Facilities District and to designate two improvement areas therein pursuant to the terms and provisions ofthe "Mello-Roos Community Facilities Act of 1982", being Chapter 2.5, Part I, Division 2, Title 5 ofthe Government Code of the State of California (the "Act") and the City ofChula 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"). This Community Facilities District shall hereinafter be designated as COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) (the "District"); and, WHEREAS, this City Council directs, pursuant to the provisions of Section 53321.5 of the Government Code of the State of California, the preparation of a report to provide more detailed information relating to the proposed District and the improvement areas proposed to be designated therein, the proposed facilities to be financed through the District, and estimate of the cost of providing such facilities (the "Community Facilities District Report"). NOW, THEREFORE IT IS HEREBY RESOLVED: SECTION I. The above recitals are all true and correct. SECTION 2. The Director of Public Works is hereby directed and ordered to prepare or cause to be prepared the Community Facilities District Report to be presented to this City Council, generally setting forth and containing the following: FACILITIES: A full and complete description ofthe public facilities the acquisition or construction of which are proposed to be financed through the District. COST ESTIMATE: A general cost estimate setting forth costs of acqumng or constructing such facilities. SPECIAL TAX: Further particulars and documentation regarding the rates and methods of apportionment of the special taxes proposed to be levied within each improvement area designated within the District. I F5D SECTION 3. The Community Facilities District Report, upon its preparation, shall be submitted to this City Council for review, and such report shall be made a part ofthe record ofthe public hearing on the Resolution ofIntention to establish such District. Presented by: Approved as to form by: John P. Lippitt Director of Public Works k- ~~~ John M. Kaheny City Attorney J:\AttomeyResos\Res Ordering Report - CFD 06-Ldoc 2 £-57 RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA, CALIFORNIA, DECLARING ITS INTENTION TO ISSUE BONDS OF COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) FOR IMPROVEMENT AREA A AND IMPROVEMENT AREA B THEREOF TO BE SECURED BY SPECIAL TAXES LEVIED WITHIN EACH RESPECTIVE IMPROVEMENT AREA TO PAY FOR THE ACQUISITION OR CONSTRUCTION OF CERTAIN FACILITIES WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA (the "City Council"), has initiated proceedings to create a Community Facilities District and to designate two improvement areas therein pursuant to the terms and provisions ofthe "Mello-Roos Community Facilities Act of I 982", being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code ofthe State of California (the "Act") and the City ofChula 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 ofthe State of California (the "Ordinance") (the Act and the Ordinance may be referred to collectively as the "Community Facilities District Law") to finance the acquisition of certain authorized facilities. This Community Facilities District shall hereinafter be referred to as COMMUNITY FACILITIES DISTRICT NO. 06-1 (EASTLAKE III - WOODS, VISTAS AND LAND SWAP) (the "District"); and, WHEREAS, this City Council intends to designate two improvement areas within the District pursuant to the provisions ofthe Community Facilities District Law for the purpose of contributing to the financing of such authorized facilities, such improvement areas to be known as Improvement Area A and Improvement Area B (individually, an "Improvement Area" or collectively, the "Improvement Areas"); and, WHEREAS, it is the intention of this legislative body to finance the acquisition of all or a portion of such facilities through the issuance of bonds to be issued for each Improvement Area, such bonds to be secured by special taxes to be levied on taxable property within each such Improvement Area, all as authorized pursuant to the Community Facilities District Law. NOW THEREFORE IT IS HEREBY RESOLVED: SECTION I. The above recitals are all true and correct. SECTION 2. This City Council declares that the public convenience and necessity requires that a bonded indebtedness be incurred by the District for each Improvement Area therein to contribute to the financing of all or a portion of the authorized facilities. SECTION 3. The purpose for the proposed debt ofthe District for each Improvement Area is to contribute to the financing ofthe acquisition or construction of authorized facilities consisting I J·~À ofthe types of public facilities described in Exhibit A attached hereto and incorporated herein by this reference (the "Facilities"). SECTION 4. The amount of the bonded indebtedness for each Improvement Area may include all costs and estimated costs incidental to, or connected with, the accomplislunent of the purpose for which the indebtedness is proposed to be incurred as authorized pursuant to the Community Facilities District Law. The amount of the indebtedness proposed to be authorized for each Improvement Area is: Improvement Area A - $39,000,000 Improvement Area B - $1 1,000,000. SECTION 5. NOTICE IS GIVEN THAT ON SEPTEMBER 10,2002, AT THE HOUR OF 6:00 O'CLOCK P.M. IN THE REGULAR MEETING PLACE OF THE LEGISLATIVE BODY, BEING THE COUNCIL CHAMBERS, CITY HALL, LOCATED AT 276 FOURTH STREET, CHULA VISTA, CALIFORNIA, A HEARING WILL BE HELD ON THE INTENTION OF THIS LEGISLATIVE BODY TO INCUR A SEPARATE BONDED INDEBTEDNESS OF THE DISTRICT FOR EACH IMPROVEMENT AREA THEREIN TO CONTRIBUTE TO THE FINANCING OF THE FACILITIES, EACH SUCH INDEBTEDNESS TO BE SECURED BY THE LEVY OF SPECIAL TAXES WITHIN EACH SUCH IMPROVEMENT AREA. AT THE TIME AND PLACE FIXED FOR SAID PUBLIC HEARING ANY PERSONS INTERESTED, INCLUDING PERSONS OWNING PROPERTY WITHIN EITHER OF THE IMPROVEMENT AREAS, MAY APPEAR AND PRESENT ANY MATTERS RELATING TO THE PROPOSED INTENTION AND NECESSITY FOR INCURRING A SEPARATE BONDED INDEBTEDNESS OF THE DISTRICT FOR EACH IMPROVEMENT AREA THEREIN, EACH SUCH INDEBTEDNESS WHICH WILL CONTRIBUTE TO THE FINANCING OF ALL OR A PORTION OF THE FACILITIES AND WHICH WILL BE SECURED BY A SPECIAL TAX TO BE LEVIED WITHIN EACH SUCH IMPROVEMENT AREA. SECTION 6. Notice of the time and place of the public hearing shall be given by the City Clerk by publishing a Notice of Public Hearing in a legally designated newspaper of general circulation, said publication pursuant to Section 6061 ofthe Government Code, with said publication to be completed at least seven (7) days prior to the date set for the public hearing. Presented by: Approved as to form by: c. ~-}~ John M. Kaheny City Attorney John P. Lippitt Director of Public Works J:\Attomey\Reso\Res Intent Issue Bonds CFO 06-l.doc 2 }-53 EXHIBIT A DESCRIPTION OF TYPES OF FACILITIES The types of public facilities authorized to be financed by the levy of special taxes within each Improvement Area shall include streets, landscaping within public rights-of-way, sewers and public utilities and tangible personal property with a useful life of five (5) years or more necessary to provide storm water discharge maintenance with/n each Improvement Area, as may be authorized by the goals and policies of the City Council pertaining to the use of the Community Facilities District Law. J:xEngineer\AGENDA\Resos\Res Intent Issue Bonds CFD 06-I.doc COUNCIL AGENDA STATEMENT Item: Meeting Date: 7/23/02' ITEM TITLE: Resolution approving a Design Build agreement with Melhorn Construction to design and construct the David A. Wergeland Shark and Ray Experience exhibit, authorizing the Mayor to execute said agreement and appropriating $688,841 to CIP Project No. GG-176 from the available fund balance in the General Fund SUBMITTED BY: Andy Campbell, Director of Building and Park Construction REVIEWED BY: City Manager ~9~ (4/5ths Vote: Yes X No ) Since 1987, the Shark and Ray Exhibit has been one of the most popular exhibits at the Nature Center. Over the past 15 years, system and safety issues have become apparent which led to an effort to replace it with a new state of the art exhibit. The City Council approved CIP project #GG-176 which involves the demolition and reconstruction of the shark and ray exhibit. Following an aggressive capital campaign and preliminary design period, an RFP was issued and the project is ready to begin the final design and construction phase. The resolution before council this evening will award to Melhorn Construction a Design Build Agreement for the final design and construction of the new exhibit and appropriate the necessary funds. RECOMMENDATION: That the City Council approve a Design Build Agreement with Melhorn Construction to design and construct the David A. Wergeland Shark and Ray Experience exhibit, authorize the Mayor to execute said agreement and appropriate $688,841 to CIP Project No. GG-176 from the available fund balance in the General Fund. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. BACKGROUND: On February 1, 2002, the Department of Building and Park Construction issued an RFP for Design Build Services (D/B) to design and construct the David A. Wergeland Shark and Ray Experience Exhibit based upon previously prepared preliminary design drawings. On February 26, 2002, the City received three proposals in response to the RFP and subsequently interviewed the three firms. The three respondents were Hankins Corporation, Melhom Construction Company, and I.E. Pacific Inc. A selection committee, appointed by the City Manager, Page 2, Item: (5~ Meeting Date: 7/23/02 comprised of Dave Cecil, Highland Partnership, Inc.; Elizabeth Wagner Hull, Deputy City Attorney; Samir Nuhaily, Senior Civil Engineer; Charles Gailband, Nature Center Avian Specialist; and Dan Beintema, Nature Center Director, reviewed and evaluated the proposals and conducted interviews with all three firms. The interview process and evaluation was based on twenty categories of evaluation. After review of the proposals and interviews, all 3 proposals were found to be responsive and firms were well qualified. Hankins was selected unanimously as the respondent with the proposal best meeting the quality, time, and monetary requirements of the Project. During negotiations with Hankins Corporation, they withdrew their proposal; the City then contacted Melhom Construction which had been designated as the second most qualified and responsive bidder. The three bid proposals were as follows: Hankins Corporation $652,046 Melhom Construction $770,204 I.E. Pacific, Inc. $771,000 PROJECT SCOPE AND CONTRACTUAL REQUIREMENTS Staff is recommending the City enter into an agreement with Melhom Construction to design and construct the David A. Wergeland Shark and Ray Experience exhibit. This will be the City's second utilization of the design/build process as a project delivery system. The Police Building xvas the first Design/Build project undertaken by the City. ]'he Design/Build Agreement with Melhom will provide the City with a fully-functional shark and ray exhibit. The scope of work includes but is not limited to the following: Design and build a 20-foot by 40-foot by 4-foot deep (average) seawater exhibit including ancillary facilities and site work to accommodate sharks, rays, and other marine life native to San Diego bay and wetland habitats. The exhibit shall include a new exhibit pool, permanent cover, life support system, mini-amphitheater seating, hand-washing station and storage buildings. New construction shall closely conform to existing Nature Center in appearance. Melhorn proposed to design and construct the new exhibit for a Guaranteed Maximum Price (GMP) of $770,204. After discussions with staff regarding the preliminary drawings, the GMP has been reduced to $750,233. This price includes all soft and hard costs necessary to provide a fully-completed and functional facility including, but not limited to, the costs of labor, equipment and material, and design/builder fee. Any costs in excess of the GMP shall be borne by the Design/Builder unless otherwise approved by the City. FUNDING Beyond the design and construction costs associated with the Melhom agreement, the project includes a number of items intended to enhance the marine environment for the sharks and rays and the educational experience of the visitors to the Nature Center. Specifically, Council Page 3, Item: ~ Meeting Date: 7/23/02 is being asked to appropriate sufficient funds to procure a photovoltaic system ($42,000) and the interpretative signage elements, such as animal identification signage and educational messages ($83,000). The agreements necessary to implement these two aspects of the project will be processed separately. The total projected costs for the shark and ray exhibit are: GMP $750,233 Photovoltaic System $ 42,000 Interpretative Signage $ 83,000 City Contingency (10%) $ 87,500 Total $962,733 Through previous actions, the Council has appropriated $273,892. Consequently, tonight staff is requesting an appropriation of $688,841 from the available fund balance in the General Fund. On July 1,2002, the Nature Center became a department of the City funded through the General Fund. When that action occurred, all funds within the Nature Center accounts that had been raised through grants and donations specifically for this project were placed into the General Fund. As of July I, 2002, Nature Center staff and volunteers had successfully raised $329,534 ($269,534 in donations and $60,000 in grants) for the design and construction of the new shark and ray exhibit. As a result of this action, the amount of General Funds being requested, $688,841, includes those funds placed into the General Fund from the Nature Center/Shark and Ray account on July 1, 2002 ($329,534). Outside of the donations and grants received to date, staff is requesting $359,307 of General Funds. Grants/Donations placed in GF on 7/1/02 $329,534 Add'l funds necessary for project $359,307 Total from General Fund $688,841 In an attempt to offset the impact to the General Fund, the staff and volunteers at the Nature Center have been aggressively pursuing additional grants. Currently, this project has been recommended to receive a grant from the State of California in the amount of $115,000. This amount has been approved by the State Department of Parks and Recreation and is merely awaiting confirmation by the legislature. Additionally, the San Diego Unified Port District staff has reviewed this project and is likely to be awarded a $25,000 grant. It is anticipated that the Port District will act upon this recommendation at the July 23, 2002, meeting. The Nature Center has also been soliciting cash and in-kind donations. The Nature Center has received commitments from Hanson Aggregates for an in-kind donation of the concrete necessary for the construction of the new facility. This donation is valued at $12,000 - $15,000. Melhorn Construction has agreed to the processing of deductive change orders equivalent to the material costs associated with this, and any other, in-kind donations received. Finally, Highland Partnership Inc, a local design/builder, has pledged $5000 to this project. Page 4, Item: Meeting Date: q 7f2.3/02 As a result, staff estimates there is approximately $157,000 in potential grants and donations that may be received to offset the General Fund cost to this project. FISCAL IMPACT: The total project cost for the new shark and ray exhibit is $962,733. Council has appropriated $273,892 which is available for this project. Approval of this resolution will authorize the appropriation of$688,841 from the available fund balance of the General Fund. As previously noted, this $688,841 includes $329,534 of grants and donations received for this project which were placed in the General Fund as result of the reorganization creating the Nature Center as a department of the City effective July 1,2002. Approval of this item will result in a maximum expenditure for this project from the available fund balance in the general fund of $688,84 I, which may be partially offset by future donations, pending grants, etc. It is expected that this offset may amount to as much as $157,000. Attachments: Attachment I - Agreement q-Lf ,---_...---~,,~._~..-.---- ._-~._-_..~,._..,._...'--"--' ..-..- ..,-- RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A DESIGN BUILD AGREEMENT WITH MELHORN CONSTRUCTION TO DESIGN AND CONSTRUCT THE DAVID A. WERGELAND SHARK AND RAY EXPERIENCE EXHIBIT, AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT AND APPROPRIATING $688,841 TO CIP PROJECT NO. GG-176 FROM THE AVAILABLE FUND BALANCE IN THE GENERAL FUND WHEREAS, since 1987 the Shark and Ray Exhibit has been one of the most popular exhibits at the Nature Center; and WHEREAS, over the past 15 years, system and safety issues have become apparent which led to an effort to replace the Shark and Ray Exhibit with a new state-of-the-art exhibit; and WHEREAS, the City Council previously approved CIP Project No. GG-176 which involves the demolition and reconstruction of the existing shark and ray exhibit; and WHEREAS, following an aggressive capital campaign and preliminary design period for a new exhibit, the project has been bid and is ready to begin the final design and construction phase; and WHEREAS, staff recommends awarding to Melhom Construction a Design Build Agreement for the new exhibit and appropriating the necessary funds therefore. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve a Design Build Agreement with Melhorn Construction to design and construct the David A. Wergeland Shark and Ray Experience Exhibit, a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to execute said Agreement on behalf of the City ofChula Vista. BE IT FURTHER RESOLVED that the sum of$688,841 is hereby appropriated to CIP Project No. GG-176 from the available fund balance in the General Fund. Presented by Approved as to form by ~dÞ~jþø? Jo . Kaheny C" y Attorney Andy Campbell Director of Building and Park Construction J:\attomey\reso\Design Build Melhorn q-6 THE A TT ACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALL Y SIGNED UPON APPROVAL BY THE CITY COUNCIL Dated: 7/;O/Ó:.L I I q-6 DESIGN/BUILD AGREEMENT This Agreement is made and entered into this day of , 2002, by and between THE CITY OF CHULA VISTA (herein "City"), a municipal corporation, and MELHORN CONSTRUCTION CO. ("Design Builder or D/B"). City and DIB are sometimes hereinafter referred to as Parties ("Parties"). RECITALS WHEREAS, The Chula Vista Nature Center has been in existence since 1987 and included a small, yet popular, shark and ray exhibit; and WHEREAS, the Nature Center staff and Bayfront Conservancy Trust in consultation with the City decided to expand this popular attraction and bring it into compliance with local statutes and the Americans with Disabilities Act; and WHEREAS, on February 1, 2001 an RFP (Exhibit 1) was circulated for a design builder to design and build the expanded shark and ray experience based upon preliminary designs which had been previously prepared; and WHEREAS, on February 26,2001 the City received 3 bids in response to the RFP; and WHEREAS, all three respondents were interviewed and based upon the RFP response (Exhibit 4) and interview, Design Builder was selected as the respondent Who best met the design, monetary and time criteria of the project with whom City could negotiate an agreement; and NOW THEREFORE, in consideration of the mutual promises and covenants contained herein: THE PARTIES AGREE: Section 1: General Scope of Work to Be Performed by DIB 1.1 In accordance with the terms set forth in this Agreement and the RFP for ~he Shark & Ray Experience project, D/B shall design and construct for the City: a comple~ed and fully functional seawater exhibit including ancillary facilities and site-work . to accommodate sharks, rays, and other marine life native to South Bay. The exhibit shall include, but not be limited to a new exhibit pool, roof structure, life support system, miini- amphitheater, hand-washing station and storage buildings (referred to hereafter as "Project"). J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc q-7 1.2 The services to be provided by D/B are generally to be performed in 3 "Phases"; the services to be provided in each Phase are specified elsewhere in this Agreement. 1.3 The D/B shall: 1.3.1 Perform all services, work and obligations as described herein ~or the notto exceed Guaranteed Maximum Price ("GMP") of$750,~33 which shall include Design Services and all Hard Construction COßts necessary to provide a fully completed and functional Projßct including, but not limited to, the cost for all labor, equipmant, material, and the D/B Fixed Fee which includes fees and expenses of any type, including all expenses under this Agreem~nt, associated with completing the Project, whether on-site or off-site, any reimbursable cost (as defined in §11). Any costs incurred Iby D/B in excess of said GMP shall be the sole responsibility of ~he D/B, unless a Change Order is approved by the City pursuant to Sections 7 and 12 of this Agreement. 1.3.2 Achieve "Final Completion" (as defined in §14.2) no later than 1¡25 calendar days from receipt of notice to proceed with Phase II services. Section 2: General Obliqations of City 2.1 City shall be obligated as follows: 2.1.1 Designate a representative (or representatives) who is authorize~to act on behalf of City with respect to the Project, except as to tho~e decisions specified herein or by law that require authorization by the Chula Vista City Council; 2.1.2 Make decisions with reasonable promptness to avoid delay in the orderly progress of D/B's services per the Project Schedule attach~d as Exhibit 2; 2.1.3 Pay for and cause to be completed all necessary environmental studies and obtain environmental approvals and/or permits with reasonable promptness to avoid delay to the orderly progress lof D/B's performance per the Project Schedule attached as Exhibit 12; 2.1.4 At the request of D/B, City will use its best efforts to provide D/B with any available information about the Project Site geotechnical sbil conditions; it will, however, be the responsibility of DIB to take all 2 J:\AttorneyIEHuIlIShark & RaylMelhorn Design Build Agrnt Final.doc q-'F reasonable steps to verify all such information as it deems necess~ry to perform its services under this Agreement. City does not warra~ty to D/B the accuracy or completeness of any such information. . 2.1.5 Cooperate with DIB in identifying, processing and securing requirþd permits, licenses and inspections in a timely fashion; however, tlhis , duty to cooperate does not relieve D/B of its primary obligationsi to identify, apply for and secure all necessary permits (except ias provided in 2.1.3), licenses and inspections in a timely manner. 2.1.6 Make payments to D/B in the amounts and in accordance with the terms set forth below. 2.1.7 Issue Certificate of Substantial Completion when City reasonaþly determines the Project has achieved Substantial Completion ¡as defined below in Section 14.1. 2.1.8 Issue a Notice of Acceptance when City reasonably determines ~e Project has achieved Final Completion as defined in Section 14.2. 2.2 City Review Process. City shall review Design Development Drawinigs (DD's), 50% Construction Drawings (CD's) and 100% Construction Drawings (CD's) which shall allow construction of Project in conformity with the RFP for Project. For each Q/S submission, City shall have 5 working days to review, approve, conditionally approve or deny. Section 3: General Obliqations of D/B 3.1 D/B shall be obligated as follows: 3.1.1 At all times in performing its services under this Agreement to design and deliver the best possible Project consistent with standard of care in Section 3.3 that satisfies the time, monetary, quality and design parameters set forth in this Agreement; 3.1.2 Design and construct the Project on time, consistent with time frames set forth in the Project Schedule, Exhibit 2, and in such a manner that the GMP or Contract Time of the Project shall not þe exceeded, but if D/B reasonably believes that any action, inactiqn, decision or direction being made by City or agent for the City will likely result in the GMP or Contract Time being exceeded or the Project being completed late, D/B will notify City at Project Team meeting and in writing within five (5) calendar days of discovering such action, inaction, decision, or direction. Included in such notice 3 J:\Attorney\EHull\Shark & Ray\Melhom Design Build Agmt Final.doc q-Cj will be an estimate of the rough order of magnitude and time impact resulting from such action, inaction, decision or direction. DIB shall provide complete and accurate pricing within 10 days of said discovery. 3.1.3 Perform, or obtain the prior written consent of the City to subcontrflct all design services for the Project utilizing qualified, licensed and sufficiently experienced architects, engineers and other professionals (herein jointly "Design Consultants") as identified in Exhibit 4. D/B shall not be permitted to substitute any Design Consultant unless authorized by City. The fact that the City approves the subcontracting of any such services will in no way relieve the D/B of any of its obligations or responsibilities under the Agreement; 3.1.4 Perform all construction on the Project utilizing Subcontractors appropriately licensed by the California Contractors State License Board or other required agency; 3.1.5 Perform all services as expeditiously as is consistent with reasonable skill and care and shall complete the services within each and all of the time periods set forth in this Agreement; 3.1.6 Comply with the California Fair Employment and Housing Act and all other State, Federal and local laws including, but not limited to, those prohibiting discrimination, on account of race, color, national origin, religion, age, sex or handicap; 3.1.7 Study all applicable laws, codes, ordinances, rules, orders, regulations, and statutes affecting the Project, including but not limited to, zoning, environmental, building, fire and safety codes and coverage, density and density ratios and lien laws, and comply with them in performance of its services. D/B shall ensure that within the established GMP that the Project conforms to all applicable federal, state and local laws, statutes, ordinances, rules, regulations, orders or other legal requirements, (collectively "Governmental Requirements") existing as of the date of this Agreement. However, the City recognizes that Governmental Requirements and their interpretations by governmental officials ("Code Authority") are often subject to change at any time, even after issuance of a building permit. If, after the date of this Agreement, modifications to the Project are required because of a change in Governmental Requirements or their interpretation by a Code Authority which had not previously been given, or which if given, was different than a prior interpretation of a Code Authority, DIB shall make the required 4 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Flnal.doc Cf-IO modifications to comply with the same. However, in the event of such an occurrence, the GMP and Contract Time may be subject to an adjustment in accordance with Section 12. Nothing contained in this paragraph shall relieve D/B of its obligations to modify the Project at its own expense where DIB has failed to construct the Project in compliance with Governmental Requirements applicable as of the date of this Agreement. 3.1.8 Take all reasonable steps during the course of the Project so as not to interfere with the ongoing operation of the Nature Center, including but not limited to the following: 3.1.8.1 Control dust and noise in accordance with the provisions in Section 7-8.1 of the 2000 Edition of the Standard Specifications for Public Works Construction, City Ordinances and this Agreement; 3.1.9 Use reasonable care to avoid damaging existing buildings, equipment and vegetation adjacentto the Project Site. IfD/B causes damage to any of this property, D/B shall replace or repair said property at no expense to City and shall not be a basis for seeking an adjustment to the GMP or Contract Time. The Project Site is located on a National Wildlife Refuge. DIB acknowledges and agrees to remain within the boundaries of the Project Site (as described in Exhibit 6) and that any activity outside the Project Site may result in substantial fines and penalties being imposed by USFWS. D/B agrees to indemnify City for any and all fines, penalties, liabilities, cost imposed upon City, Chula Vista Nature Center, its officers, employees and agents as a result ofthis Project. 3.1.10 To obtain all permits necessary to complete the Project. City shall pay cost of permits. D/B shall be responsible for obtaining and paying for all permits normally obtained by the trades or subcontractors. 3.1.11 Conform its design to the requirements of the Americans With Disabilities Act Accessibility Guidelines ("ADAAG") and the Americans With Disabilities Act ("ADA"). 3.1.12 Seek and obtain written approval from the City of the drawings for each of the following phases: (1) design development (2) 50% construction drawings and (3) 100% construction drawings. Said approval shall be evidenced by written notice to proceed with the subsequent phase. 5 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agrnt Final.doc q-I/ 3.1.13 Provide cost estimating and value engineering services which take into consideration long-range maintenance costs, energy efficiency, and impact on operation of the Project. ProYide cost estimate to the City with 100% Construction Documents. 3.1.14 Review soils and geotechnical reports relating to the Project Site; and determine and advise City if any further subsurface investigations are warranted. If such further investigations are authorized by City, D/B shall perform said investigations. The costs of said investigations are Reimbursable Costs to be paid by the City without markup, pursuant to Section 11.2. 3.2 D/B agrees to fully assume all risks, and costs associated with such risks, in performing the services and meeting the obligations under this Agreement. 3.2.1 Unanticipated subsurface site conditions 3.2.1.1 City assumes risks for unanticipated subsurface site conditions provided D/B notifies City in writing within 5 days of discovery if D/B believes it has uncovered or revealed a condition which: 3.2.1.1.1 differs materially from that indicated in the soils and geotechnical reports furnished by City, or 3.2.1.1.2 is of an unusual nature and differs materially from conditions ordinarily encountered and generally recognized as inherent in the work required by Agreement. 3.2.1.2 Upon receipt of written notice, City shall promptly investigate and if it determines the conditions do materially differ, requiring a change in the Work, City shall commence the processing of a change order pursuant to Section 12. If City determines there is no bona fide Work scope change or is a minor change, which does not impact GMP or Contract Time, City shall notify D/B within 10 days. 3.2.1.3 D/B shall not be entitled to an adjustment in the GMP or Contract Time if D/B knew or should have known of the existence of such conditions at the time D/B submitted and agreed to GMP or Contract Time; or the existence of such condition could reasonably have been discovered as a result of D/B's obligations pursuant to Section 3.1.17. 6 J:\Attorney\EHuJl\Shark & Ray\Melhorn Design Build Agmt Final.doc Cj-/2 3.2.2 Third party litigation arising from the Project for which DIB is not responsible. 3.3 D/B shall perform in a manner consistent with that level of care and skill ordinarily exercised by members of the profession currently practicing under similar conditions and in similar locations. Compliance with this section by D/B shall not in any way excuse or limit D/B's obligations to fully comply with all other terms in this Agreement. 3.4 D/B warrants that at least one member of the D/B team shall be licensed by the California Contractor's State License Board as a General Building Contractor. D/B is to provide a list of the responsible people within their organizations performing services, which shall include their qualifications and their function, for approval by the City prior to start of construction. City and D/B shall establish "key personnel" who shall remain on the Project until Final Completion. If any such "key personnel" leave the employment of DIB, City shall have the right to approve the replacement personnel. D/B shall comply with all licensing requirements of the State of California, County of San Diego, and City of Chula Vista. 3.5 D/B shall cooperate with City in obtaining Environmental approvals and/or permits. 3.6 D/B agrees and acknowledges that the City Representative is the only person with authority to approve additions or modifications to Project. Any costs or delays resulting from or associated with additions or modifications implemented without the written authorization of City Representative shall be borne exclusively by D/B and not be grounds for an increase in GMP or Contract Time unless necessary to protect public health, safety or property. 3.7 D/B agrees and acknowledges that City is actively soliciting in-kind gifts and donations of material and supplies for the Project. D/B agrees that a deductive change order shall be issued for the fair market value of any materials and supplies received through donation or in-kind gift and reasonably estimated savings in labor costs. City understands and agrees there will be no deduction for overhead and profit associated with any deductive change order resulting from receipt of an in-kind gift or donation. Section 4: Desiqn Phase Services - Phase I 4.1.1 D/B shall Develop and Implement Project Management Plan and Procedures including: 4.1.1.1 Project status reports 4.1.1.2 Coordination/interface with the City and its other consu Itants/ contractors 7 J:\Attorney\EHulJ\Shark & Ray\Melhorn Design Build Agmt Final.doc q-/3 4.1.1.2.1 Initial Design kickoff meeting to be held within 5 days of the Effective Date of Agreement. 4.1.1.3 Biweekly Progress meetings 4.1.1.4 Interface and communications with other agencies 4.1.1.5 Vendors and subcontractors management 4.1.1.6 Document control 4.1.1.7 Schedule and budget control 4.1.1.8 Quality assurance and quality control 4.1.1.9 Throughout the design phase, the Consultant will be required to provide scheduling and cost control reports monthly. 4.1.2 Utilizing the 1997 Edition of the Standard Specifications for Public Works Construction, 1997 Edition of the Chula Vista Standard Special Provisions, 1997 Edition of the Regional Standards, 1997 Edition of the Chula Vista Construction Standard, the City's facility program, performance and design criteria, concept drawings, and reports attached to the RFP and incorporated herein by reference, DB shall: 4.1.2.1 Prepare construction drawings and specifications suitable for obtaining City-approved permits and to allow construction. Packaging of the Project into several construction contracts, may be appropriate. Preparation of technical materials and equipment specifications for pre- purchase will be the responsibility of the DB. 4.1.2.2 Complete the design for all elements of the Project, including, but not limited to: civil, structural, architectural, mechanical, electrical, landscape, and specialty consulting areas. 4.1.2.3 Evaluate alternative structural and construction approaches to ensure economical designs, which optimize constructability yet meet all codes, architectural concepts, schematic designs, and standard specifications of the Project. Design and construction shall also meet all ADA requirements. 8 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc c¡ -/'1 4.1.2.4 Provide additional site surveys and geotechnical investigations to the extent the DB determines they are necessary for final design. The survey information provided by the City is preliminary in nature and may not have sufficient accuracy or scope to support final design. 4.1.2.6 Furnish support to a City constructability review team at the 80 percent design completion stage. Incorporate the results of this review into the design. 4.1.2.7 Provide updated construction cost estimates monthly during the design to support VE and constructability reviews. 4.1.2.8 Prepare draft Operations Manual to serve as the basis for preparing the final Operations Manual during the construction phase. Section 5: Construction Phase Services - Phase II: The DB shall construct the facility in accordance with City-approved plans and specifications prepared by the DB to meet or exceed all requirements of the City provided program, schematic design and the performance criteria. The DB shall: 5.1.1 Conduct contractor meetings, as necessary, to provide technical input. 5.1.2 Provide interpretation of technical specifications and drawings. 5.1.3 When appropriate, witness testing and review materials and equipment testing results and provide comments regarding conformance with specification requirements. 5.1.4 Provide list of required shop drawing submittals. Review shop drawing submittals for technical compliance and forward copy to City for review. 5.1.5 Assist during final acceptance process by furnishing final walk- through(s) and comments. 5.1.6 The DB shall be responsible for complete management, supervision, and reporting of all aspects of the construction of this Project. 5.1.7 The DB shall provide resident management and contract administration, including specialists necessary for the functional, safe, on-budget and on-schedule completion of the Project, starting 9 J:\AttorneyIEHuIlIShark & RaylMelhorn Design Build Agrnt Final.doc ðf -15 with the issuance of a Notice to Proceed from the City and extending through issuance of Notice of Completion and Acceptance. City staff will perform inspections to verify compliance with the plans, specifications and contract documents. The DB resident staff shall ensure construction compliance with applicable local, state, and federal codes, building and environmental permit requirements, construction mitigation documents and enforcement of the Contract Documents. 5.1.8 The DB is responsible for the design, construction and all contract administration services during the construction of the Project in accordance with all applicable laws, regulations, and codes, including, but not limited to, the 1990 Americans with Disabilities Act [ADA] and Title 24 California Code of Regulations [Building Code] as defined in Section 18910 of California Health and Safety Code [Title 24]. The DB is responsible as a designer, employer, and City representative to comply with all portions of Title 24 and the ADA. 5.1.9 5.1.9The DB shall provide surveying, and other contracted services as required to complete project construction inspection and testing tasks. The City will provide special inspection services and periodic building inspections. DB is responsible for scheduling and coordinating all inspections and paying for all re-inspections. 5.1.10 The DB shall be responsible for preparing the Critical Path Method (CPM) schedule utilized during the project construction and startup activities. Use Microsoft Project scheduling software consistent with the City reporting system. 5.1.11 The DB shall develop a project-specific Plan for defining, tracking and reporting cash flow activity requirements and submit such plan to the City for review and approval prior to implementation 5.1.12 The DB shall implement and maintain an internal records management and document control system as required to support project operations. The DB shall provide records management and document control information in a manner consistent with the City's reporting system. 5.1.13 The DB shall administer and coordinate the project contract closeout process and shall resolve any warranty provision issues. The DB shall report progress of project contract closeout to the City in a manner consistent with the City's reporting system. 10 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agrnt Final.doc Cj-/b 5.1.14 The DB shall administer and enforce the Environmental Mitigation Monitoring and Reporting Plan for the Project, if any. The DB shall report a record of environmental issues to the City in a manner consistent with the City's reporting system Section 6: Operation/Startup Phase Services - Phase III 6.1.1 The DB shall prepare, submit for City review and written approval, and implement a Project Startup and Testing Plan for the Project. 6.1.2 The DB shall conduct Operator Training Sessions for facilities. 6.1.3 The DB shall supervise, manage, and coordinate all project startup and testing activities for life support safety and other mechanical systems within the provisions of the project Contract Documents. 6.1.4 The DB shall report progress of project startup and testing to the City in a manner consistent with the City's reporting system. 6.1.5 The DB shall report to the City all guarantee/warranty disputes. The DB shall proceed to resolve such disputes after having submitted to the City for review and approval the DB's approach for obtaining resolution for the dispute. 6.2 Unless the D/B receives the City's prior approval to substitute equal or better quality materials, the D/B warrants to City that material and equipment incorporated in the Project will be new, unless otherwise specified, and that the Project will be of good quality, free from faults and defects, and in strict conformance with the Construction Documents and in accordance with Section 20. Section 7: Additional Services 7.1 City will have the right to direct D/B to perform Additional Services beyond those specified in this Agreement. D/B may provide Additional Services only if authorized in writing, in advance, by City and after complying with Section 7.3. The City may propose changes to the Work of a subcontractor after the bid has been awarded. In the event of a change of this nature, D/B will estimate the cost of the Change Order, assist City in developing drawings and specifications as necessary, solicit a revised bid, negotiate with the subcontractor, present a recommendation for a Change Order to City, and implement construction as approved by City. 7.2 For Additional Services which increase the Hard Construction Costs, design costs, or other reasonably necessary costs of the Project, D/B shall be paid 3% of such costs as the D/B Fee. 11 J:\Attomey\EHuIl\Shark & Ray\Melhom Design Build Agmt Final.doc q-/7 For additional services, which result in an extension of the Substantial Completion date, DIB shall be paid a fee equal to the number of working days the Substantial Completion date is extended multiplied by the daily proration of the general conditions fee included within the GMP. 7.3 If at any time DIB contends that it is being asked to perform Additional Services, it shall give City written notice 5 days prior to performing said services indicating that D/B intends to seek additional compensation beyond the DIB Fixed Fee. Furnishing advance written notice shall be a condition precedent to being able to seek additional compensation from City. Section 8: Bonds 8.1 D/B shall furnish performance and payment bonds with the names of the obligees designated as the City in the amount set forth below, as security for the faithful performance and payment of all D/B's obligations under the Agreement. These bonds shall remain in effect at least until thirty (30) days after the filing date of Notice of Completion, except as otherwise provided by law or regulation or by this Agreement. D/B shall also furnish such other bonds as are required by this Agreement. 8.1.1 The performance bond shall be in the amount of 100% of the GMP. 8.1.2 The payment bond shall be in the an amount of 100% of the Hard Construction Costs. 8.2 All bonds shall be in the form prescribed by City and by such sureties which are admitted insurers in the State of California and are subject to regulation by the Department of Insurance, and which also satisfy the requirements stated in Section 995.660 of the Code of Civil Procedure, except as provided otherwise by laws or regulations. All bonds signed by an agent must be accompanied by a certified copy of such agent's authority to act. Surety companies must be duly licensed or authorized in the jurisdiction in which the Project is located to issue bonds for the limits so required. 8.3 If the surety on any bond furnished by D/B is declared bankrupt or becomes insolvent or its right to do business is terminated in any state where any part of the Project is located, D/B shall within seven (7) days thereafter substitute another bond and surety, which must be acceptable to City. 8.4 Bond premiums are a Reimbursable Cost for which the D/B will be reimbursed, without markup, pursuant to Section 14.2. 12 J:\Attorney\EHutl\Shark & Ray\Melhorn Design Build Agmt Final.doc c¡ ~/i' Section 9: Insurance 9.1 The insurance provisions herein shall not be construed to limit D/B's indemnity obligations contained in this Agreement. 9.2 DIB shall procure and maintain for the duration of the contract, insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the work hereunder by the D/B, his agents, repres¡:mtatives, employees or subconsultants. All subconsultants shall be required to comply with the applicable insurance provisions. The maintenance of proper coverage is a material element of the contract and that failure to maintain or renew coverage orto provide evidence of renewal may be treated by the City as a material breach of contract. 9.3 Minimum Scope of Insurance 9.3.1 Coverage shall be at least as broad as: 9.3.1.1 Insurance Services Office Commercial General Liability coverage (occurrence Form CG 0001). 9.3.1.2 Insurance Services Office Form (G0009 11 88 Owners and Contractors Protective Liability Coverage Form- Coverage for Operations of Designated Contractor). 9.3.1.3 Insurance Services Officer Form Number CA 0001 covering Automobile Liability, Code 1 (any auto). 9.3.1.4 Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance. 9.3.1.5 Errors and Omissions. 9.4. Minimum Limits of Insurance 9.4.1 Contractor or appropriate subconsultant shall maintain limits no less than: 13 J:\Attorney\EHull\Shark & Ray\Melhom Design Build Agmt Final.doc q -Ic) 9.4.1.1 General $1,000,000 per occurrence for bodily Liability: injury, personal injury and property damage. If (Including Commercial General operations, Liability Insurance or other products and completed form with a general operations.) aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. 9.4.1.2 Automobile $1,000,000 per accident for bodily injury Liability: and property damage. 9.4.1.3 Employer's $1,000,000 per accident for bodily injury Liability: or disease. 9.4.1.4 Errors and Omissions: $1,000,000 per occurrence 9.5 Deductibles and Self-Insured Retentions 9.5.1 Any deductible or self-insured retentions must be declared to and approved by the City. At the option of the City, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees and volunteers; or the D/B shall provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related investigations, claim administration and defense expenses. 9.6 Other Insurance Provisions 9.6.1 The general liability policyshall contain, or be endorsed to contain, the following provisions: 9.6.1.1 The City, its officers, officials, employees, and volunteers are to be covered as insureds with respect to liability arising out of automobiles owned, leased, hired or borrowed by or on behalf of the contractor; and with 14 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc 9-ztJ respect to liability arising out of work or operations performed by or on behalf of the DIB including materials, parts or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the D/B's insurance, or as a separate owner's policy. 9.6.1.2 For any claims related to this project the DIB's insurance coverage shall be primary insurance as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the D/B's insurance and shall not contribute with it. 9.6.1.3 Coverage shall not extend to any indemnity coverage for the active negligence of the additional insured in any case where an agreement to indemnify the additional insured would be invalid under Subdivision (b) of Sections 2782 of the Civil Code. 9.7 Verification of Coverage 9.7.1 Contractor shall furnish the City with original certificates and amendatory endorsements effecting coverage required by this clause. The endorsements should be on forms provided by the City or on other than the City's forms, provided those endorsements or policies conform to the requirements. All certificates and endorsements are to be received and approved by the City before work commences. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications at any time. 9.8 Subcontractors 9.8.1 All coverages for subcontractors or subconsultants shall be subject to all of the requirements stated herein. Subcontractors and Subconsultants shall be protected against risk of loss by maintaining insurance in the categories and at the limits required herein. Subcontractors and Subconsultants shall name City and D/B as insureds under its policies. 15 J:\Attomey\EHuIl\Shark & Ray\Melhorn Design Build Agmt Final.doc q-z/ 9.9 Cooperation. The D/B and its Contractors shall cooperate fully with and provide any information or records requested by the City or regarding all aspects of the insurance and project, including but not limited to claims, audit, payroll, insurance records and safety. Delays in reporting information to the City may result in delays in progress payments to the D/B. 9.10 Prior to beginning Work under the Agreement, each and every Contractor of any tier shall furnish Certificates of Insurance satisfactory to the City. All such Certificates will contain at least the following provisions: 9.10.1 Thirty (30) days written notice to the City prior to any cancellation, non-renewal or material reduction in coverage. 9.10.2 The words "will endeavor" and "but failure to mail such notice shall impose no such obligation or liability of any kind upon the company, its agents or representatives" will be deleted from the Certificates. 9.10.3 Throughout the life of the Agreement, each and every Contractor of any tier shall pay for and maintain in full force and effect, with a carrier or carriers authorized by the California Insurance Commissioner to do business in the State of California, any policies required by this Agreement. 9.10.4 Any insurance provided for this project shall be written through an insurer with an A.M. Best Rating of not less than AV. Any exceptions are at the sole discretion of the City and subject to written approval of the City. 9.11 Questions concerning the insurance requirements ofthis Agreement shall be directed to the City Representative. Section 10: Inspection 10.1 City shall be responsible for City inspection and material testing and inspections, with reimbursement to be required by D/B for any reinspections. The City shall either perform said inspection services with its own forces or contract with third parties. It shall be the responsibility of D/B, however, to call for, coordinate and schedule all inspections. 10.2 City, its consultants, subcontractors, independent testing laboratories as well as other governmental agencies with jurisdictional interests will have access at reasonable times for this observation, inspecting and testing. D/B shall provide them proper and safe conditions for such access and advise them of D/B's safety procedures and programs so that they may comply. 16 J:\Attomey\EHuIl\Shark & Ray\Melhorn Design Build Agmt FinaLdoc q -22- 10.3 City will make, or have made, such inspections and tests as the City deems necessary to see that the Work is being accomplished in accordance with the requirements of the Construction Documents. Unless otherwise specified, the cost of such inspection and testing will be borne by the City. In the event such inspections or tests reveal non- compliance with the requirements of the Construction Documents, D/B shall bear the cost of corrective measures deemed necessary by City, as well as the cost of subsequent re- inspection and re-testing. Neither observations by the City nor inspections, tests, or approvals by others shall relieve DIB from DIB's obligations to perform the Work in accordance with the Construction Documents. D/B shall give City timely notice of readiness of the Work for all required on and off-site inspections, tests, or approvals and shall cooperate with inspection and testing personnel to facilitate required inspections or tests. D/B shall give at least 24 hours notice for on-site inspection and five (5) days notice for off-site inspection. 10.4 City has the right to stop or suspend Work activities which will conceal or cover up DIB Work product which is to be inspected or tested, or which will interfere with the inspection or testing activities, for a reasonable time and D/B will have no right to additional cost or time it may incur as a result of the Work stoppage. Section 11: DIB GMP for Services and Reimbursements 11.1 Except as otherwise expressly provided in this Agreement, as full and complete compensation for performance of all services and obligations under this Agreement, DIB shall be compensated ("D/B GMP") $750,233. That portion of the DIB GMP earned with each Phase of the services is listed in Exhibit 3. Unless otherwise expressly provided in this Agreement, D/B GMP shall include full compensation for all costs of any type incurred by D/B in performing all services and obligations under this Agreement, including but not limited to the following: 11.1.1 All Design Consultants, including but not limited to architectural, structural, civil, mechanical, electrical, communications, graphics and art consultants, landscape architects, and acoustical, audio visual, lighting, and security consultants. 11.1.2 Estimating, value engineering and construction management; 11.1.3 Construction supervision and project management personnel, including but not limited to superintendents, Project managers, Project secretaries, Project engineers, Project accountants, and all other DIB personnel wherever located; 17 J:\Attorney\EHull\Shark & Ray\Melhom Design Build Agmt Final.doc q-23 11.1.4 All on-site and off-site equipment, supplies and facilities, including but not limited to, computers, estimating, dictating, communication and accounting equipment, office space, trailers, field equipment and storage facilities; 11.1.4.1 In no case shall the cumulatiye monthly rental charges to the Project for equipment and Small Tools used by the D/B exceed 90% of the fair market value of anyone piece of equipment or Small Tools. At City's option, the full price for equipment or Small Tools may be paid, and City may take possession upon completion of the Work. 11.1.5 All home-office and field overhead costs of any type including document control and retention; 11.1.6 All business license costs; 11.1.7 All profit D/B intends to earn under this Agreement. 11.1.8 All direct and incidental costs incurred by D/B, except for those specifically identified in Section 11.2. 11.2 D/B shall be reimbursed, without markup and only as specified in this Agreement for the following "Reimbursable Costs." 11.2.1 Reimbursable Bond Premiums; 11.2.2 Reimbursable Subsurface Investigation Costs; 11.2.3 Any other reimbursable cost expressly provided for elsewhere in this Agreement. 11.3 D/B agrees and acknowledges the City retains its full and complete discretion for all legislative action~, including any future appropriations necessary to complete this Project or fund this Agreement. As more fully provided in Section 24, the City may terminate this Agreement for any reason, including but not limited to, if City Council fails to appropriate sufficient funds or is unsuccessful at obtaining long term financing. Section 12: ChanQe in GMP and Contract Time 12.1 The GMP and Contract Time may only be changed by written Change Order. Change Orders shall be issued only under the following circumstances: 18 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc c¡ -2-'1 12.1.1 The City directs D/B to perform Additional Services or City Changes as provided in Section 7. 12.1.2 For reasons expressly provided elsewhere in this Agreement. 12.2 The following procedure shall be followed for the issuance of Change Orders: 12.2.1 Upon the occurrence of any event that gives rise to a Change Order, D/B shall give the City notice of the same with 5 days. D/B shall not proceed with any such services or work until such notice has been given to the City except if such services or work are necessary to protect public health, safety or property. 12.2.2 Unless otherwise directed by the City Representative in writing, before proceeding with any Change Order work DIB shall promptly provide the City with a detailed and complete estimate of cost impact associated with the Change Order, including all appropriate direct and indirect costs and credits. All such costs and credits shall be accurately categorized into D/B Fixed Fee, Reimbursable Costs or Hard Construction Costs. D/B shall also provide City with a realistic estimate of the impact, if any, the Change Order will have on the Contract Time. 12.2.3 Upon submission of the detailed estimates by the D/B, the Parties will attempt to negotiate an appropriate adjustment in GMP and Contract Time. If an agreement is reached, a Change Order reflecting the agreement will be executed by the Parties. If an agreement is not reached, the City shall have the option to direct the D/B to proceed with the subject services and/or work, during which time the D/B shall contemporaneously maintain accurate and complete records of all labor, material and equipment utilized in performing the. subject services and/or work. These records shall be submitted to the City and shall become the basis for continued negotiations between the Parties for an equitable adjustment to the GMP and/or Contract Time. 12.2.4 In the event there is any disagreement or dispute between the Parties as to whether the D/B is entitled to a Change Order or the amount of the Change Order, the matter shall be resolved in accordance with Section 31. D/B shall not have the right to stop or delay in the prosecution of any services or work, including services or work that is the subject of the Change Order, pending this resolution process. Instead, D/B shall continue diligently prosecuting all such services and work. 19 J:\Attorney\EHull\Shark & Ray\MeJhorn Design Build Agmt Final.doc C¡ -2£ 12.2.5 City may, in its sole discretion, adjust the GMP or Contract Time for any undisputed amount or time associated with the Change Order or Additional Services. Section 13: Payment Terms 13.1 D/B shall submit certificate and application for payment to the City for Phase I services as follows: 13.1.1 $12,000 upon completion of one-half of the Phase I Services as determined by the City. 13.1.2 $12,000 upon completion of all Phase I Services as determined by the City. 13.1.3 $4,000 Upon completion of Phase II Services for contract administration. 13.1.4 In the event City solicits and/or approves Design Documents that materially differ from the Designs called for in the RFP, compensation shall be set pursuant to provision for additional services set forth in Sections 7 and 12. 13.2 D/B shall provide all Phase II and III services for the Phase II and III GMP. DIB shall submit certificate and application for payment to City on or before the 5th day of each calendar month for Phase II and III services. The monthly payment application shall be based upon the percentage of completion of the Schedule of Values plus any Reimbursable Costs, less any payments previously made by the City and subject to the receipt of unconditional lien releases for all prior payments and if the invoiced amount is not disputed by City, it shall pay D/B ninety percent (90%) of payment application based upon the percentage complete of the Schedule of Values and 100% of the reimbursable costs within thirty (30) days after receipt of the fully documented invoice. City will withhold the remaining 10% as security for D/B's full performance. 13.3 D/B shall develop and maintain an accurate system for tracking all Reimbursable Costs. Utilizing this system, D/B shall include with each month payment application an itemization of all such Reimbursable Costs actually incurred by D/B, during the previous month. If requested by the City, D/B shall provide all backup documentation supporting such Reimbursable Costs. 13.4 D/B shall develop and maintain an accurate system for tracking all Hard Construction Costs it incurs on the Project. Utilizing this system, DIB shall include with 20 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc t;-2b each monthly application for payment an itemization of all Hard Construction Costs actually incurred by DIB during the previous month. 13.5 D/B shall separately submit to City certificate and application for payment on a monthly basis for any authorized Additional Services performed by D/B. Subject to the receipt of unconditional lien releases for all prior payments and if Additional Services are not disputed by City, City shall pay ninety percent (90%) of the invoiced amount within thirty (30) days of receipt of fully complete invoice. City will withhold the remaining 10% as security for D/B's full performance. 13.6 Subject to Sections 13.8, City shall pay D/B the ten percent (10%) retention being withheld pursuant to Sections 13.2, and 13.5 as part of the "Final Payment" to D/B. Final Payment will be made thirty-five (35) days after Final Completion. 13.7 The City Manager will consider the release of the entire retention for subcontractors upon completion of the subcontractors' work and execution of a disclaimer and unconditional final lien release by the subcontractor. 13.8 In lieu of withholding retention under this Agreement, at the election of D/B, City will deposit retention amounts into escrow and/or the substitution of securities for money as provided in California Public Contract Code Section 22300. Section 14: Proiect Completion 14.1 Substantial Completion shall be that stage in the progress ofthe construction when all Work on the Project is sufficiently complete in accordance with the Construction Documents so that City can fully utilize entire Project; Substantial Completion shall further mean that all goods, services and systems to be provided under the terms and conditions of the Construction Documents are in place and have been initially tested, and are operationally functional, subject only to final testing, balancing and adjustments and normal Final Completion punchlist Work. 14.2 Final Completion shall be deemed to occur on the last of the following events: (1) recordation of a Notice of Completion for the Project; (2) acceptance of the Project by the City; (3) issuance of a final Certificate of Occupancy for the Project; (4) submission of all documents required to be supplied by D/B to City under this Agreement, including but not limited to As-Built Drawings, warranties, and operating manuals; (5) and delivery to City of a Certificate of Completion (Exhibit 5) duly verified by D/B. 14.3 D/B shall provide City with a Certificate of Completion, certifying to City under penalty of perjury that the Project has been completed in accordance with the Construction Documents, all applicable building codes and regulations, all permits, licenses, and certificates of inspection, use and occupancy, and ordinances relating to the Project. 21 J:\AttorneyIEHuIlIShark & RaylMelhorn Design Build Agrnt Final.doc Q-Z7 14.4 D/B shall provide five sets of City final record drawing documents at the end of construction and one copy in electronic format ("As-Built Drawings") and one copy of reproducible drawings. As-Built Drawings are to be accurate and legible records showing exact location by dimensions, and the exact depth by elevation of underground lines, valves, plugged tees, wiring and utilities. 14.5 D/B shallØrovide a copy of, or make available before destruction, all records (which includes all writings as defined in Evidence Code Section 250) to the City upon receipt or generation, which shall include a copy of D/B's filing protocol. Section 15: Contract Time 15.1 The "Contract Time" shall be the number of calendar days stated in Section 1.3.2 for D/B to achieve Substantial Completion. 15.2 "Time is of the essence" with regard to Contract Time and all milestones listed in the Project Schedule (Exhibit 2). 15.3 The Contract Time may only be changed by a Change Order as set forth in Section 12. Further, an extension in Contract Time will not be granted unless D/B can demonstrate through an analysis of the Project Schedule that the increases in the time to perform or complete the Project, or specified part of the Project, beyond the corresponding Contract Time arise from unforeseeable causes beyond the control and without the fault or negligence of D/B, its Design Consultants, and subcontractors or suppliers, and that such causes in fact lead to performance or completion of the Project, or specified part in question, beyond the corresponding Contract Time, despite D/B's reasonable and diligent actions to guard against those effects. 15.4 D/B carries the burden of proving an entitlement to an increase in the Contract Time. Delays attributable to and within the control of Design Consultants, or subcontractor or supplier shall be deemed to be delays within the control of D/B. No time extension will be allowed for such delays. An increase in Contract Time does not necessarily mean that D/B is due an increase in the GMP. Section 16: Late Completion 16.1 City and D/B recognize that time is of the essence in this Agreement and that City will suffer financial loss if the Project is not completed within the Contract Time, plus any extensions thereof allowed in accordance with Section 15.3. They also recognize the delays, expense, and difficulties involved in proving in a legal proceeding the actual loss suffered by City if the Project is not completed on time. Accordingly, instead of requiring any such proof, City and D/B agree that D/B shall pay as liquidated damages (but not as a 22 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc Ý-2$ penalty) for each calendar day of delay beyond the time specified for Substantial Completion of the Project plus 30 calendar days, the following amounts which D/B expressly agrees are "not unreasonable under the circumstances" as defined in California Civil Code §1671(b): $100 for each calendar day. Liquidated Damages shall not be assessed after the date on which Substantial Completion is achieved pursuant to Section 14. Section 17: Riqht to Modify Work 17.1 Without invalidating the Agreement and without notice to any surety, City may at any time or from time to time, order additions, deletions, or revisions in the Project; these will be authorized by a written Change Order prepared and issued by City. Upon receipt of any such document, D/B shall promptly proceed with the Work involved which will be performed under the applicable conditions of the Construction Documents (except as otherwise specifically provided). 17.2 When City desires a change in the Project, City may issue a Request for Proposal to D/B. D/B will be required to respond within the time indicated by City. Section 18: Intentionally Omitted Section 19: Work By Others 19.1 City may perform other work related to the Project atthe Project Site by City's own forces, or let other direct contracts ("City Contractor"). The City will give D/B reasonable notice of its intent to do such other work. D/B's work shall take priority over the City Contractors; but the Parties will use their best efforts to coordinate their work so as to minimize the disruption to each other's work and to allow City Contractor to proceed expeditiously. The work to be coordinated shall include, but may not be limited to, work by the Natural History Museum and the stocking of the pool. 19.2 If the proper execution or results of any part of D/B's work depends upon the work by the City or City Contractor, D/B shall promptly inspect and report to City in writing any apparent delays, defects, or deficiencies in the City's work that render it unavailable or unsuitable for such proper execution and results. D/B's failure to promptly report such delays, defects, or deficiencies in writing before commencement of the affected work, will constitute an acceptance of the City's work as fit and timely for integration with D/B's Work except for latent defects and deficiencies in the City's work for which D/B will not be responsible. 19.3 If DIB or any person or entity working for D/B causes damage to the City's or City Contractor's work, property, or person, or if any claim arising out of D/B's performance of the Project by any other contractor is made against D/B, by City, any other contractor, or any other person, D/B shall promptly repair and/or resolve said claim at no cost to City. 23 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc 1-2ßi Section 20: Warranties and Guarantees 20.1 D/B warrants and guarantees to City that materials and equipment incorporated into the Project will be new unless otherwise specified and that all work will be in strict accordance with the Construction Documents and will not be defective. Prompt notice of defects known to City shall be given to D/B. All Defective Work, whether or not in place, may be rejected, corrected, or accepted as reasonably directed by City, provided D/B shall not be entitled to an extension in Contract Time or increase in GMP because of any delay or increase in cost attributable to the rejection, correction or acceptance of said work. Defective work may be rejected even if approved by prior inspection. 20.2 The warranty period shall commence when the Certificate of Final Completion is issued (irrespective of beneficial use by City prior to Final Completion) and extend one (1) year after that date or whatever longer period may be prescribed by laws or regulations or by the terms of any applicable special guarantee or specific provision of the Construction Documents. 20.2.1 D/B is to provide any extra material for maintenance at the completion of the Project, including items such as carpeting, base, floor tile, ceiling tile, paint, and filters. 20.2.2 DIB is to provide City one (1) set of operating and maintenance data manuals, fully bound and indexed, warranties, guarantees, and bonds. 20.3 Correction of Defective Work - If within the designated warranty period, or such longer period as may be required by laws or regulations, the Project or any part of the Project, is discovered to contain defective work, DIB shall promptly, without any reimbursement or adjustment in the GMP, and in accordance with City's written instructions, either correct that defective work, or if it has been rejected by City remove it from the Project and replace it with work which is not defective. If circumstances warrant it, including but not limited to, in an emergency, City or D/B may have the defective work corrected or the defective work removed and replaced. In that event, D/B shall not be allowed to recover any associated costs, and D/B shall reimburse City for all direct, and indirect costs of City, and City shall be entitled to an appropriate decrease in the GMP, to withhold a setoff against amount recommended for payment, or make a claim on DIB's bond if DIB has been paid in full. 20.4 With respect to all warranties, express or implied, from subcontractors, manufacturers, or suppliers for Work performed and materials furnished under this Agreement, the D/B shall: 24 J:\Attomey\EHuU\Shark & Ray\Melhom Design Build Agmt Final.doc 1-30 20.5.1 Obtain all warranties that would be given in normal commercial practice and as required by the City; 20.5.2 Require all warranties to be executed, in writing, for the benefit of City; 20.5.3 Enforce all warranties for the benefit of City, if directed by City; 20.5.4 In the event DIB's warranty under section 20.2 has expired, City may bring suit at its expense to enforce a subcontractor's, manufacturer's, or supplier's warranty; 20.5.5 D/B shall assign all subcontractor, supplier and manufacturer warranties including maintenance contracts from the installer for specialized equipment, such as elevators, escalators, movable partitions, equipment etc., to cover the limited warranty period to City at the expiration of the one year warranty; and Section 21: Use and Possession Prior to Completion 21.1 City shall have the right to take possession of or use any completed or partially completed part of the Work if mutually agreed upon by the parties. Before taking possession of or using any Work, City shall furnish D/B a list of items of Work remaining to be performed or corrected on those portions of the Work that City intends to take possession of or use. However, failure of City to list any item of Work shall not relieve D/B of responsibility for complying with the terms of this Agreement. City's possession or use shall not be deemed an acceptance of any Work under this Agreement, nor relieve the D/B of any of its obligations under this Agreement. 21.2 While City has such possession or use, D/B shall be relieved of the responsibility for the loss of or damage to the Work resulting from City's possession or use. If prior possession or use by City delays the progress of the Work or causes additional expense to D/B, an equitable adjustment shall be made in the GMP or the Contract Time, and the Agreement shall be modified in writing accordingly. Section 22: Personal Services and Non-Assiqnability 22.1 This is a personal services Agreement and, therefore, D/B shall not alter the key employees or Design Consultants nor assign or transfer, voluntarily or involuntarily, any of its rights, duties or obligations under this Agreement except upon the prior written consent of City. Any such change, assignment or transfer without the prior written consent of the City shall be deemed null and void and constitute a material breach under this Agreement. 25 J:\Attorney\EHuIl\Shark & Ray\Melhorn Design Build Agmt Final.doc q -:3/ Section 23: Indemnification 23.1 To the fullest extent permitted by the law, D/B shall indemnify, defend, protect and hold harmless City, its elected and appointed officers, agents, employees, consultants, (collectively herein the "Indemnitees"), from and against all claims, demands, causes of action, damages, injuries, liabilities, losses and expenses (including, without limitation, reasonable attomeys' and consultants' fees and expenses) of any kind whatsoever, arising in whole or in part out of or resulting from D/B's performance of this Agreement, D/B's breach of this Agreement, or the alleged negligent acts or omissions of D/B, its architects, engineers, other professionals and consultants, Contractors, suppliers or anyone directly or indirectly employed by any of them or anyone for whose acts they may be liable. The obligations of the D/B under this paragraph for errors or omissions, including those of the design professional subcontractors, which includes the Design Subcontractors, consultants, agents and employees thereof ("Design Subcontractors"), which arise from (1) the preparation or approval of maps, drawings, opinions, reports, surveys, designs or specifications, or (2) the giving of or the failure to give directions or instructions shall not be limited to the amount of coverage provided for in the professional liability insurance policy. If City is fully reimbursed by DB's insurance for any loss covered by this paragraph, D/B shall have no further obligation for such loss. 23.2 D/B's obligation to indemnify under section 23.1 shall not extend to such claims, demands, causes of action, damages, injuries, liabilities, losses and expenses, to the extent that such is the result of the active negligence or the willful misconduct of an Indemnitee. D/B's obligation to defend under section 23.1, if not covered by the insurance to be provided on the Project, shall not extend to such claims, demands, causes of action, damages, injuries, liabilities, losses and expenses, or causes of actions, to the extent that such are caused by the active negligence or the willful misconduct of the Indemnitee, and from no other cause. 23.3 The D/B agrees, notwithstanding the above to the fullest extent permitted by law, to indemnify, defend, and hold harmless the City, its elected and appointed officers, employees, agents and consultants from and against any and all claims, suits, demands, liabilities, losses, or costs, including reasonable attorney's fees and defense costs, resulting or accruing to any and all persons, firms, and any other legal entity, caused by, arising out of or in any way connected with the detection, presence, handling, removal, abatement, capping, subsequent migration of, or disposal of any asbestos or hazardous or toxic substances, products or materials that exist on, about or adjacent to the jobsite, whether liability arises under breach of contract or warranty, tort, including negligence, strict liability or statutory liability or any other cause of action. D/B's obligation regarding asbestos or hazardous or toxic substances, products or materials shall be limited to the proper removal within the Project boundaries and the proper disposal of such materials. Section 24: Riqht to Terminate and Suspend Work 26 J:\AttorneyIEHuIlIShark & RaylMelhorn Design Build Agrnt Final.doc q-32 24.1 Archaeolooical and Paleontolooical Discoveries. If a discovery is made of an archaeological or paleontological interest, DIB shall immediately cease operations in the area of the discovery and shall not continue until ordered by City. When resumed, operations within the area of the discoyery shall be as directed by City. 24.1.1 Discoveries which may be encountered may include, but are not be limited to, dwelling sites, stone implements or other artifacts, animal bones, human bones, fossils or any item with cultural significance. 24.1.2 D/B shall be entitled to an extension of time and compensation in accordance with the provisions of this Agreement. 24.2 Termination of Aoreement by City for Cause. If, through any cause, D/B shall fail to fulfill in a timely and proper manner D/B's obligations under this Agreement, or if D/B shall violate any of the covenants, agreements or stipulations of this Agreement, City shall have the right to terminate this Agreement by giving written notice to D/B of such termination and specifying the effective date thereof at least five (5) days before the effective date of such termination. All finished or unfinished documents, data, studies, drawings, maps, plans, specifications, reports and other materials prepared by D/B, or any of its agents, Design Consultants or Subcontractors, shall, at the option of the City, become the property of the City, and D/B shall be entitled to receive just and equitable compensation for any work satisfactorily completed on such documents and other materials up to the effective date of Notice of Termination, not to exceed amounts payable hereunder, and less any damages caused by DIB's breach. 24.2.1 In the event the Agreement is terminated in accordance with this Section, City may take possession of the Project and may complete the Project by whatever method or means City may select. 24.2.2 If the cost to complete the Project exceeds the balance which would have been due, D/B shall pay the excess amount to City. 24.2.3 Riohts of City Preserved. Where D/B's services have been so terminated by City, the termination will not affect any rights or remedies of City against D/B then existing or which may thereafter accrue. Any retention or payment of moneys due D/B by City will not release D/B from liability. It is agreed that termination hereafter will not in any way release, waiver, or abridge any rights the City has against D/B's performance bond surety. 24.2.4 Any dispute as to the amount due or owed to D/B upon termination under this section, shall be resolved in accordance with Section 33. 27 J:\AttorneyIEHuIlIShark & RaylMelhorn Design Build Agmt Final.doc 1-33 24.3 Termination for Convenience by City. City may terminate this Agreement at any time and for any reason, by giving specific written notice to DIB of such termination and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. In that event, all finished and unfinished documents and other materials described hereinabove shall, at the option of the City, become City's sole and exclusive property. If the Agreement is terminated by City as provided in this paragraph, D/B shall be entitled to receive just and equitable compensation for any satisfactory Work completed to the effective date of such termination. DIB hereby expressly waives any and all claims for damages or compensation arising under this Agreement except as set forth herein. 24.3.1 Records and Documents Relatinq to Termination. Unless otherwise provided in the Agreement or by statute, DIB shall maintain all records and documents relating to the terminated portion of this Agreement for three (3) years after final settlement. This includes all books and other evidence bearing on DIB's costs and expenses under this Agreement. D/B shall make these records and documents available to City, at D/B's office, at all reasonable times, without any direct charge. If approved by the City Manager, photographs, electronic files, microphotographs, or other authentic reproductions may be maintained instead of original records and documents. Section 25: Independent Contractor 25.1 DIB and any Design Consultant, Contractor, Subcontractor, agent or employee of D/B, shall act as an independent contractor and not as an agent, officer or employee of City. Except as expressly provided in this Agreement, City assumes no liability for D/B's actions and performance; in particular, but without limitation, City assumes no responsibility for paying any taxes, bonds, payments or other commitments, implied or explicit, by or for D/B. D/B acknowledges that it is aware that because it is an independent contractor, City is making no deductions from the fees for services being paid to D/B and that City is not contributing to any fund on the behalf of D/B. D/B disclaims the right to any type of additional fee or benefits. Section 26: Independent Judqment 26.1 Unless otherwise directed in writing by City, D/B shall, in providing the professional services required by this Agreement, arrive at conclusions with respect to the rendition of information, advice and recommendations, independent of the control and direction of City, other than normal contract monitoring; DIB, however, shall possess no authority with respect to any City decision beyond rendition of such information, advice and recommendations. D/B shall not have the authority to act as an agent on behalf of City unless specifically authorized to do so by City in writing. 28 J:\AttarneylEHulllShark & RaylMelharn Design Build Agmt Final.dac If -3':¡- Section 27: Maintenance of Records and Accountinq 27.1 DIB shall maintain, during the Project and for a period of three (3) years after completion of the Project, accurate and organized records of all costs of any type and all services performed under this Agreement. City will have the right at any time, including during the performance of all Phases of the Project to audit and copy all such records. Section 28: Ownership of Documents 28.1 All reports, studies, information, data, statistics, forms, designs, plans, procedures, systems and any other materials or properties produced under this Agreement shall be the sole and exclusive property of City. No such materials or properties produced in whole or in part under this Agreement shall be subject to private use, copyrights or patent rights by Consultant in the United States or in any other country without the express written consent of City. City shall have unrestricted authority to publish, disclose (except as may be limited by the provisions of the Public Records Act), distribute, and otherwise use, copyright or patent, in whole or in part, any such reports, studies, data, statistics, forms or other materials or properties produced under this Agreement. Section 29: Force Maieure 29.1 Any party to this Agreement may be excused for any delay or failure to perform its duties and obligations under this Agreement, except for obligations to pay money, but only to the extent that such failure or delay is caused by an Event of Force Majeure as set forth in section 29.2. If an Event of Force Majeure set forth in section 29.2 causes a delay or failure in performance of only a portion of the obligations of a Party under this Agreement, then only that portion of performance which was delayed or prevented by such cause shall be deemed excused, and the performance of all other obligations of a Party not so delayed shall not be excused by an Event of Force Majeure. Delay or failure in performance of all other obligations of a Party not so delayed shall not be excused by such Event of Force Majeure. Delay or failure in performance by a Party which is the result of an Event of Force Majeure set forth in section 29.2 shall be deemed excused for a period no longer than the delay or failure in performance caused by such Event. 29.2 An Event of Force Majeure means an occurrence beyond the control and without the fault or negligence of a Party, including but not limited to unusually severe weather, flood, earthquake, fire, lightning, and other natural catastrophes, acts of God or the public enemy, war, terrorist act, riot, insurrection, civil disturbance or disobedience, strike or labor dispute for which D/B is not responsible, expropriation or confiscation of facilities, changes of applicable law, or sabotage of facilities, so long as such Party makes good faith and reasonable efforts to remedy the delays or failures in performance caused thereby. However, D/B, in developing the GMP and Project Schedule, has incorporated three (3) days for anticipated adverse weather days that may disrupt work on the Project; 29 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt FinaLdoc 1-35 D/B shall be entitled to relief under this Section for adverse weather only to the extent adverse weather days exceed this amount of days. 29.3 A Party shall give written notice to the other Party as soon after becoming aware of the delay or failure in performance caused by an Event of Force Majeure as is reasonably possible, but in any event within five (5) working days after Party becomes aware of such delay or failure. 29A No Event of Force Majeure shall be a basis for monetary adjustment to the GMP. Costs incurred by the D/B as a result of a Force Majeure Event will be reimbursed according to the terms of this Agreement from the Contingency Fund. Section 30: Hazardous Materials 30.1 It is acknowledged by both Parties that the D/B's scope of services does include services related to removal of any existing asbestos or hazardous or toxic materials. In the event the D/B or any other party encounters additional asbestos or hazardous or toxic materials at the Project Site, or should it become known in any way that such materials may be present at the Project Site or any adjacent areas that may affect the performance ofthe D/B's services, the D/B may, at his or her option and without liability for consequential or any other damages, suspend performance of seNices on the Project until the City retains appropriate specialist consultant(s) or contractor(s) to identify, abate andlor remove the hazardous or toxic materials, and warrant that the Project Site is in full compliance with applicable laws and regulations. Section 31: Disputes 31.1 All claims, counterclaims, disputes, and other matters in question arising under, or relating to, the Agreement or the breach thereof shall be processed in accordance with the provisions of this Section, unless specifically addressed by another provision of this Agreement. 31.2 D/B shall submit its written request for a Change Order to City pursuant to Section 13. City shall make a determination on D/B's request in writing within 7 days of receipt of request and all supporting data. Said Change Order shall be made in good faith and accurately reflect the adjustment in GMP or Contract Time for which DIB believes City is liable, and covers all costs and delays to which D/B believes it is entitled as a result of the occurrence of the claimed event. All requests for adjustment in Contract Time shall include an analysis of the Master Construction Schedule and the impact of the claimed work on specific activities on the Master Construction Schedule. 31.3 If DIB disagrees with City's determination, D/B shall file a claim in writing in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are 30 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc q-~b incorporated by this reference as if fully set forth herein, and such policies and procedures used by the City in the implementation of the same. 31.4 Pending final resolution of any claim, including litigation, D/B shall proceed diligently with performance of the Project, and comply with any direction of City. Section 32: Notices 32.1 All notices, demands or other communications hereunder shall be given or made in writing and shall be delivered personally or sent by courier or registered or certified mail, return receipt requested, postage prepaid, addressed to the Party to whom they are directed at the following addresses, or at such other addresses as may be designated by notice from such Party: (i) To CITY: City Attorney 276 Fourth Avenue Chula Vista, CA 91910 Tel: (619) 691-5037 Fax: (619) 409-5823 Building and Park Construction 1800 Maxwell Road Chula Vista, CA 91911 Tel: (619) 397-6070 Fax: 619) 397-6250 (ii) To D/B: Melhorn Construction Co. Jerry McHenry, President 2147 San Diego Avenue San Diego, CA 92138 Tel: (619) 296-2117 Fax: (619) 296-7850 Any notice, demand or other communication given or made solely by mail in the manner prescribed in this Section shall be deemed to have been given and to be effective three (3) days after the date of such mailing; provided, however, that any notice, demand or other communication which would otherwise be deemed to have been given on a day which is not a working day shall be deemed to have been given on the next subsequent working day. 31 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc ((-37 Section 33: Miscellaneous Terms 33.1 Representations: Each Party hereto declares and represents that in entering into this Agreement it has relied and is relying solely upon its own judgment, belief and knowledge ofthe nature, extent, effect and consequence relating thereto. Each Party further declares and represents that this Agreement is being made without reliance upon any statement' or representation of any other Party not contained herein, or any representative, agent or attorney of any other Party. 33.2 Severability: If any term or condition of this Agreement is held to any extent to be invalid or unenforceable, all the remaining terms and conditions shall be enforceable to the fullest extent permitted by law. 33.3 Entire Aqreement: This Agreement contains the entire agreement, between the Parties and supersedes all prior negotiations, discussions, obligations and rights ofthe Parties in respect of each other regarding the subject matter of this Agreement. There is no other written or oral understanding between the Parties. No modification, amendment or alteration of this Agreement shall be valid unless it is in writing and signed by the Parties hereto. 33.4 Draftinq Ambiquities: The Parties agree that they are aware that they have the right to be advised by counsel with respect to the negotiations, terms and conditions of this Agreement, and that the decision of whether or not to seek the advice of counsel with respect to this Agreement is a decision which is the sole responsibility of each of the Parties hereto. This Agreement shall not be construed in favor of or against either Party by reason of the extent to which each Party participated in the drafting of the Agreement. 33.5 Applicable Law: The formation, interpretation and performance of this Agreement shall be governed by the laws of the State of California. Venue for mediation, arbitration and/or actions arising out of this Agreement shall be in the City of Chula Vista, California. 33.6 Waiver: Unless otherwise expressly provided herein, no delay or omission by the Parties hereto in exercising any right or remedy provided for herein shall constitute a waiver of such right or remedy, nor shall it be construed as a bar to or a waiver of any such right or remedy on any future occasion. 33.7 Effect of Headinqs: Headings appearing in this Agreement are inserted for convenience of reference only, and shall in no way be construed to be interpretations of the provisions hereof. 33.8 Amendments: This Agreement may be modified, amended or supplemented only by the mutual written agreement of the Parties hereto. 32 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt FinaJ.doc q-3g 33.9 Authorization and Compliance: Each Party represents that it is duly authorized to execute and carry out the provisions of this Agreement. 33.10 Further Assurances: The Parties agree to do such further acts and things and execute and deliver such additional agreements and instruments as the other may reasonably require to consummate, evidence or confirm the agreements contained herein in the manner contemplated hereby. 33.11 Counterparts: This Agreement may be executed by the Parties in one or more counterparts, all of which taken together shall constitute one and the same instrument. The facsimile signatures of the Parties shall be deemed to constitute original signatures, and facsimile copies hereof shall be deemed to constitute duplicate original counterparts. 33.12 Exhibits and Glossary of Terms: All Exhibits and Glossary of Terms are incorporated herein by reference into this Agreement. 33.13 Third Party Beneficiary: Nothing within this Agreement shall create a contractual relationship between the City and any third party. [NEXT PAGE IS SIGNATURE PAGE] 33 J:lAtlorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc q-31 SIGNATURE PAGE TO DESIGN/BUILD AGREEMENT CITY OF CHULA VISTA MELHORN CONSTRUCTION CO. By: Shirley Horton, Mayor nt ATTEST: Susan Bigelow, City Clerk Approved as to form by John M. Kaheny, City Attorney 34 J:\Attorney\EHuIl\Shark & Ray\Melhorn Design Build Agrnt Final.doc q-'(} EXHIBIT LIST Exhibit I Exhibit 2 Exhibit 3 Exhibit 4 Exhibit 5 Exhibit 6 RFP Project Schedule GMP Summary Design Consultants Certificate of Completion Project Site 35 J:\Attorney\EHull\Shark & Ray\Melhorn Design Build Agmt Final.doc q -L( / COUNCIL AGENDA STATEMENT Item /O Meeting Date 7123102 TI'EM TTrLE: Resolution Approving an agreement between the City and Tristar Risk Management for Third-party Administration (TPA) of the City's workers' compensation claims and authorizing the Mayor to execute the agreement. SUBIR~ i / ED BY: Director of Human Resource~ REVIEWED BY: City Manager ~ 9,~ (415ths Vote: Yes.__ No ~ Since August 1995, the City has contracted for Third-party Administration of its workers' compensaUon claims with Tristar Risk Management, via a joint purchase agreement through our insurance pool, the San Diego Pooled Tnsurance Authority, SANDPIPA. Tn order tO ascertain that the City is receiving the best value and service for our money, a Request for Proposal (RFP) for TPA services was issued. As a result of this process it has been determined that it is: 1:) in the Oty's best inter~st to contract for TPA services, versus bringing this function in house, and 2) that it is more beneficial to the City to contract for these services on our own, versus via the current group purchase arrangement. RECOMMENDA'r~ON: That Council adopt the resolution. BOARDS/COMMISSIONS RECOMMENDATTONS: Not applicable, Di~SCUSSION: Self-insured for workers' compensation, the City's claims are administered contractually by a "third-party administrator". For the past 17 years the City has participated in a group purchase of claims adjusting services with a number of the other San Diego Pooled Insurance Authority (SANDPTPA) member cities. Chula Vista's claims represent approximately 50% of the claims of the participating cities. Although the City has the majority of the claims, we have only 1/5~ of the say in contractual matters. Consideration has been given to bringing the claims administration function in- house. However, due tO the staffing and resource requirements it is more cost effective to continue tO provide these services on a contractual basis. Meeting Date 7/23~02 Because of the City's position within the group purchase, and the fact that an analysis of options available had not been explored in several years, it was determined that the best course of action was to issue a Request for Proposal (RFP). Six proposals were received. Two firms, Tristar Risk Management and Haselrigg Risk Management, were invited to an oral interview in front of a committee comprised of workers' compensation claims and risk management professionals. Criteria used in evaluating the firms included: experience and qualifications, responsiveness to communication needs, service, and cost. Based on these criteria the Committee scored both firms within 5.6 points of each other (Hazelrigg 91.8, Tristar 86.2), placing both within the "highly recommended" category. When start-up and transition costs were taken into consideration both firms were comparably priced. The final determining factor was the potential impact that changing providers would have on our currently injured employees (268 open claims), versus the benefits changing providers might afford. Staff also looked at whether there would be any advantage if the City were to contract on its own, versus continuing the current group purchase arrangement with the SANDPTPA member clues. Based on this analysis it is recommended that the City continue with our current TPA, Tristar Risk Management for service and economic reasons. Tt is also recommended that the City contract for these services on our own, versus group purchase, for economic and contract control purposes. FZSCAL IMPACT: The annual cost of the contract is $175,000. This is $14,000 less than what the City would have paid for the same services as part of the group purchase arrangement. Tn order tO bring the contract to a fiscal year basis the "first year" contract for the period of August 1, 2002-.lune 30, 2003, will cost approximately $160,500. There are sufficient funds in the FY 2002-2003 budget to cover these costs. This is a one-year agreement with five one-year options to renew. Renewal year cost increases will be based on the CPT for San Diego County. ATrACHMENTS: Agreement between the City of Chula Vista and Tristar Risk Management. RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT BETWEEN THE CITY AND TRISTAR RISK MANAGEMENT FOR THIRD-PARTY ADMINISTRATION (TPA) OF THE CITY'S WORKERS' COMPENSATION CLAIMS AND AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT WHEREAS, since August 1995, the City has contracted for Third-Party Administration (TPA) of its workers' compensation claims with Tristar Risk Management, via a joint purchase agreement through our insurance pool, the San Diego Pooled Insurance Authority, SANDPIPA; and WHEREAS, in order to ascertain that the City is receiving the best value and service for our money, a Request for Proposal (RFP) for TP A services was issued; and WHEREAS, as a result of this process, it has been determined that it is: I) not the City's best interest to contract for TP A services, versus bringing this function in house, and 2) that it is more beneficial to the City to contract for these services on our own, versus via the current group purchase agreement. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve an Agreement between the City of Chula Vista and Tristar Risk Management for Third-Party Administration of the City's workers' compensation claims, a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to execute said Agreement for and on behalf of the City ofChula Vista. Presented by Approved as to form by Candy Emerson Director of Human Resources John M. Kaheny City Attorney J:\attomey\reso\Tristar 10 -3 Contract Agreement Page 1 of 24 ATTACHMENT A Parties and Recital Page(s) Agreement between City of Chula Vista and TRISTAR Risk Management For Third-Party Administration of Workers' Compensation Claims This agreement ("Agreement"), dated July 23, 2002, for the purposes of reference only, and effective as of the date last executed unless another date is otherwise specified in Exhibit A, Paragraph 1 is between the City-related entity as is indicated on Exhibit A, paragraph 2, as such ("City"), whose business form is set forth on Exhibit A, paragraph 3, and the entity indicated on the attached Exhibit A, paragraph 4, as Service Company, whose business form is set forth on Exhibit A, paragraph 5, and whose place of business and telephone numbers are set forth on Exhibit A, paragraph 6 ("Service Company"), and is made with reference to the following facts: Recitals Whereas, City requested the Service Company to provide professional services; and Whereas, the Service Company is willing to perform such services; and Whereas, Service Company warrants and represents that they are experienced and staffed in a manner such that they are and can prepare and deliver the services required of Service Company to the City within the time frames herein provided all in accordance with the terms and conditions of this Agreement. Obligatory Provisions Pages Contract Agreement Page 2 of 24 NOW, THEREFORE, BE IT RESOLVED that the City and Service Company do hereby mutually agree as follows: 1. Third Party Administrator's Duties A. General Duties Service Company shall perform all of the services described on the attached Exhibit A, Paragraph 7, entitled "General Duties"; and, B. Scope of Work and Schedule In the process of performing and delivering said "General Duties", Service Company shall also perform all of the services described in Exhibit A, Paragraph 8, entitled "Scope of Work and Schedule", not inconsistent with the General Duties, according to, and within the time frames set forth in Exhibit A, Paragraph 8, and deliver to City such Deliverables as are identified in Exhibit A, Paragraph 8, within the time frames set forth therein, time being of the essence of this agreement. The General Duties and the work and deliverables required in the Scope of Work and Schedule shall be herein referred to as the "Defined Services". Failure to complete the Defined Services by the times indicated does not, except at the option of the City, operate to terminate this Agreement. C. Reductions in Scope of Work City may independently, or upon request from Service Company, from time to time reduce the Defined Services to be performed by the Service Company under this Agreement. Upon doing so, City and Service Company agree to meet in good faith and confer for the purpose of negotiating a corresponding reduction in the compensation associated with said reduction. D. Additional Services In addition to performing the Defined Services herein set forth, City may require Service Company to perform additional consulting services related to the Defined Services ("Additional Services"), and upon doing so in writing, if they are within the scope of services offered by Service Company, Service Company shall perform same on a time and materials basis at the rates set forth in the "Rate Schedule" in Exhibit A, Paragraph 11, unless a separate fixed fee is otherwise agreed upon. All compensation for Additional Services shall be paid monthly as billed. Contract Agreement Page 3 of 24 E. Standard of Care Service Company, in performing any Services under this agreement, whether Defined Services or Additional Services, shall perform in a manner consistent with that level of care and skill ordinarily exercised by members of the profession currently practicing under similar conditions and in similar locations. F. Insurance Service Company represents that it and its agents, staff and subconsultants employed by it in connection with the Services required to be rendered, are protected against the risk of loss by the following insurance coverages, in the following categories, and to the limits specified, policies of which are issued by Insurance Companies that have a Best's Rating of "A, Class V" or better, or shall meet with the approval of the City: Statutory Worker's Compensation Insurance and Employer's Liability Insurance coverage in the amount set forth in the attached Exhibit A, Paragraph 9. Commercial General Liability Insurance including Business Automobile Insurance coverage in the amount set forth in Exhibit A, Paragraph 9, combined single limit applied separately to each project away from premises owned or rented by Service Company, which names City as an Additional Insured, and which is primary to any policy which the City may otherwise carry ("Primary Coverage"), and which treats the employees of the City in the same manner as members of the general public ("Cross-liability Coverage"). Errors and Omissions insurance, in the amount set forth in Exhibit A, Paragraph 9, unless Errors and Omissions coverage is included in the General Liability policy. G. Proof of Insurance Coverage. (1) Certificates of Insurance. Service Company shall demonstrate proof of coverage herein required, prior to the commencement of services required under this Agreement, by delivery of Certificates of Insurance demonstrating same, and further indicating that the policies may not be canceled without at least thirty (30) days written notice to the Additional Insured. (2) Policy Endorsements Required. Contract Agreement Page 4 of 24 In order to demonstrate tl~e Additional Insured Coverage, Primary Coverage and Cross-liability Coverage required under Service Company's Commercial General Liability Insurance Policy, Service Company shall deliver a policy endorsement to the City demonstrating same, which shall be reviewed and approved by the Risk Manager. H. Security for Performance. (1) Performance Bond. In the event that Exhibit A, at Paragraph 19, indicates the need for Service Company to provide a Performance Bond (indicated by a check mark in the parenthetical space immediately preceding the subparagraph entitled "Performance Bond"), then Service Company shall provide to the City a performance bond by a surety and in a form and amount satisfactory to the Risk Manager or City Attorney which amount is indicated in the space adjacent to the term, "Performance Bond", in said Paragraph 19, Exhibit A. (2) Letter of Credit. In the event that Exhibit A, at Paragraph 19, indicates the need for Service Company to provide a Letter of Credit (indicated by a check mark in the parenthetical space immediately preceding the subparagraph entitled "Letter of Credit"), then Service Company shall provide to the City an irrevocable letter of credit callable by the City at their unfettered discretion by submitting to the bank a letter, signed by the City Manager, stating that the Service Company is in breach of the terms of this Agreement. The letter of credit shall be issued by a bank, and be in a form and amount satisfactory to the Risk Manager or City Attorney which amount is indicated in the space adjacent to the term, "Letter of Credit", in said Paragraph 19, Exhibit A. (3) Other Security In the event that Exhibit A, at Paragraph 19, indicates the need for Service Company to provide security other than a Performance Bond or a Letter of Credit (indicated by a check mark in the parenthetical space immediately preceding the subparagraph entitled "Other Security"), then Service Company shall provide to the City such other security therein listed in a form and amount satisfactory to the Risk Manager or City Attorney. I. Business License Service Company agrees to obtain a business license from the City and to otherwise comply with Title 5 of the Chula Vista Municipal Code. Contract Agreement Page 5 of 24 2. Duties of the City A. Consultation and Cooperation City shall regularly consult the Service Company for the purpose of reviewing the progress of the Defined Services and Schedule therein contained, and to provide direction and guidance to achieve the objectives of this agreement. The City shall permit access to its office facilities, files and records by Service Company throughout the term of the agreement. In addition thereto, City agrees to provide the information, data, items and materials set forth on Exhibit A, Paragraph 10, and with the further understanding that delay in the provision of these materials beyond 30 days after authorization to proceed, shall constitute a basis for the justifiable delay in the Service Company's performance of this agreement. B. Compensation Upon receipt of a propedy prepared billing from Service Company submitted to the City periodically as indicated in Exhibit A, Paragraph 18, but in no event more frequently than monthly, on the day of the period indicated in Exhibit A, Paragraph 18, City shall compensate Service Company for all services rendered by Service Company according to the terms and conditions set forth in Exhibit A, Paragraph 11, adjacent to the governing compensation relationship indicated by a "checkmark" next to the appropriate arrangement, subject to the requirements for retention set fo[th in paragraph 19 of Exhibit A, and shall compensate Service Company for Out of pocket expenses as provided in Exhibit A, Paragraph 12. All billings submitted by Service Company shall contain sufficient information as to the propriety of the billing to permit the City to evaluate that the amount due and payable thereunder is proper, and shall specifically contain the City's account number indicated on Exhibit A, Paragraph 18 (C) to be charged upon making such payment. 3. Administration of Contract Each party designates the individuals ("Contract Administrators") indicated on Exhibit A, Paragraph 13, as said party's contract administrator who is authorized by said party to represent them in the routine administration of this agreement. 4. Term This Agreement shall terminate when the Parties have complied with all executory provisions hereof. Contract Agreement Page 6 of 24 5. Liquidated Damages The provisions of this section apply if a Liquidated Damages Rate is provided in Exhibit A, Paragraph 14. It is acknowledged by both parties that time is of the essence in the completion of this Agreement. It is difficult to estimate the amount of damages resulting from delay in performance. The parties have used their judgment to arrive at a reasonable amount to compensate for delay. Failure to complete the Defined Services within the allotted time pedod specified in this Agreement shall result in the following penalty: For each consecutive calendar day in excess of the time specified for the completion of the respective work assignment or Deliverable, the Service Company shall pay to the City, or have withheld from monies due, the sum of Liquidated Damages Rate provided in Exhibit A, Paragraph 14 ("Liquidated Damages Rate"). Time extensions for delays beyond the Service Company's control, other than delays caused by the City, shall be requested in writing to the City's Contract Administrator, or designee, prior to the expiration of the specified time. Extensions of time, when granted, will be based upon the effect of delays to the work and will not be granted for delays to minor portions of work unless it can be shown that such delays did or will delay the progress of the work. 6. Financial Interests of Service Company A. Service Company is Designated as a Fair Political Practices Commission (FPPC) Filer. If Service Company is designated on Exhibit A, Paragraph 15, as an "FPPC filer", Service Company is deemed to be a "Service Company" for the purposes of the Political Reform Act conflict of interest and disclosure provisions, and shall report economic interests to the City Clerk on the required Statement of Economic Interests in such reporting categories as are specified in Paragraph 15 of Exhibit A, or if none are specified, then as determined by the City Attorney. B. Decline to Participate. Regardless of whether Service Company is designated as an FPPC Filer, Service Company shall not make, or participate in making or in any way attempt to use Service Company's position to influence a governmental decision in which Service Company knows or has reason to know Service Company has a financial interest other than the compensation promised by this Agreement. Contract Agreement Page 7 of 24 C. Search to Determine Economic Interests. Regardless of whether Service Company is designated as an FPPC Filer, Service Company warrants and represents that Service Company has diligently conducted a search and inventory of Service Company's economic interests, as the term is used in the regulations promulgated by the Fair Political Practices Commission, and has determined that Service Company does not, to the best of Service Company's knowledge, have an economic interest which would conflict with Service Company's duties under this agreement. D. Promise Not to Acquire Conflicting Interests. Regardless of whether Service Company is designated as an FPPC Filer, Service Company further warrants and represents that Service Company will not acquire, obtain, or assume an economic interest during the term of this Agreement which would constitute a conflict of interest as prohibited by the Fair Political Practices Act. E. Duty to Advise of Conflicting Interests. Regardless of whether Service Company is designated as an FPPC Filer, Service Company further warrants and represents that Service Company will immediately advise the City Attorney of City if Service Company learns of an economic interest of Service Company's, which may result in a conflict of interest for the purpose of the Fair Political Practices Act, and regulations promulgated thereunder. F. Specific Warranties Against Economic Interests. Service Company warrants and represents that neither Service Company, nor Service Company's immediate family members, nor Service Company's employees or agents ("Service Company Associates") presently have any interest, directly or indirectly, whatsoever in any property which may be the subject matter of the Defined Services, or in any property within 2 radial miles from the exterior boundaries of any property which may be the subject matter of the Defined Services, ("Prohibited Interest"), other than as listed in Exhibit A, Paragraph 15. Service Company further warrants and represents that no promise of future employment, remuneration, consideration, gratuity or other reward or gain has been made to Service Company or Service Company Associates in connection with Service Company's performance of this Agreement. Service Company promises to advise City of any such promise that may be made during the Term of this Agreement, or for 12 months thereafter. Service Company agrees that Service Company Associates shall not acquire any such Prohibited Interest within the Term of this Agreement, or for 12 months after the expiration of this Agreement, except with the written permission of City. Contract Agreement page 8 of 24 Service Company may not conduct or solicit any business for any party to this Agreement, or for any third party, which may be in conflict with Service Company's responsibilities under this Agreement, except with the written permission of City. 7. Hold Harmless Service Company shall defend, indemnity, protect and hold harmless the City, its elected and appointed officers and employees, from and against all claims for damages, liability, cost and expense (including without limitation attorneys fees) arising out of or alleged by third parties to be the result of the negligent acts, errors or omissions or the willful misconduct of the Service Company, and Service Company's employees, subcontractors or other persons, agencies or firms for whom Service Company is legally responsible in connection with the execution of the work covered by this Agreement, except only for those claims, damages, liability, costs and expenses (including without limitations, attorneys fees) arising from the sole negligence or sole willful misconduct of the City, its officers, employees. Also covered is liability arising from, connected with, caused by or claimed to be caused by the active or passive negligent acts or omissions of the City, its agents, officers, or employees which may be in combination with the active or passive negligent acts or omissions of the Service Company, its employees, agents or officers, or any third party. With respect to losses arising from Service Company's professional errors or omissions, Service Company shall defend, indemnity, protect and hold harmless the City, its elected and appointed officers and employees, from and against all claims for damages, liability, cost and expense (including without limitation attorneys fees) except for those claims arising from the negligence or willful misconduct of City, its officers or employees. Service Company's indemnification shall include any and all costs, expenses, attorneys fees and liability incurred by the City, its officers, agents or employees in defending against such claims, whether the same proceed to judgment or not. Service Company's obligations under this Section shall not be limited by any prior or subsequent declaration by the Service Company. Service Company's obligations under this Section shall survive the termination of this Agreement. For those professionals who are required to be licensed by the state (e.g. architects and engineers), the following indemnification provisions should be utilized: 1. Indemnification and Hold Harmless Agreement. With respect to any liability, including but not limited to claims asserted or costs, losses, attorney fees, or payments for injury to any person or property caused or claimed to be caused by the acts or omissions of the Service Company, or Service Company's employees, agents, and officers, arising out of any services performed involving this .project, except liability for Professional Services covered under Contract Agreement Page 9 of 24 Section 7.2, the Service Company agrees to defend, indemnify, protect, and hold harmless the City, its agents, officers, or employees from and against all liability. Also covered is liability arising from, connected with, caused by, or claimed to be caused by the active or passive negligent acts or omissions of the City, its agents, officers, or employees which may be in combination with the active or passive negligent acts or omissions of the Service Company, its employees, agents or officers, or any third party. The Service Company's duty to indemnify, protect and hold harmless shall not include any claims or liabilities arising from the sole negligence or sole willful misconduct of the City, its agents, officers or employees. This section in no way alters, affects or modifies the Service Company's obligation and duties under Section Exhibit A to this Agreement. 2. Indemnification for Professional Services. As to the Service Company's professional obligation, work or services involving this Project, the Service Company agrees to indemnify, defend and hold harmless the City, its agents, officers and employees from and against any and all liability, claims, costs, and damages, including but not limited to, attorneys fees, losses or payments for injury to any person or property, caused directly or indirectly from the negligent acts, errors or omissions of the Service Company or Service Company's employees, agents or officers; provided, however, that the Service Company's duty to indemnify shall not include any claims or liability arising from the negligence or willful misconduct of the City, its agents, officers and employees. 8. Termination of Agreement for Cause If, through any cause, Service Company shall fail to fulfill in a timely and proper manner Service Company's obligations under this Agreement, or if Service Company shall violate any of the covenants, agreements or stipulations of this Agreement, City shall have the right to terminate this Agreement by giving written notice to Service Company of such termination and specifying the effective date thereof at least five (5) days before the effective date of such termination. In that event, all finished or unfinished documents, data, studies, surveys, drawings, maps, reports and other materials prepared by Service Company shall, at the option of the City, become the property of the City, and Service Company shall be entitled to receive just and equitable compensation for any work satisfactorily completed on such documents and other materials up to the effective date of Notice of Termination, not to exceed the amounts payable hereunder, and less any damages caused to the City by the Service Company's breach. 9. Errors and Omissions In the event that the City Administrator determines that the Service Company's negligence, errors, or omissions in the performance of work under this Agreement has resulted in expense to City greater than would have resulted if there were no such negligence, errors, omissions, Service Company shall reimburse City for any Contract Agreement Page 10 of 24 additional expenses incurred by the City. Nothing herein is intended to limit City's rights under other provisions of this agreement. 10. Termination of Agreement for Convenience of City City may terminate this Agreement at any time and for any reason, by giving specific written notice to Service Company of such termination and specifying the effective date thereof, at least thirty (30) days before the effective date of such termination. In that event, all finished and unfinished documents and other materials described hereinabove shall, at the option of the City, become City's sole and exclusive property. If the Agreement is terminated by City as provided in this paragraph, Service Company shall be entitled to receive just and equitable compensation for any satisfactory work completed on such documents and other materials to the effective date of such termination. Service Company hereby expressly waives any and all claims for damages or compensation arising under this Agreement except as set forth herein. 11. Assignability The services of Service Company are personal to the City, and Service Company shall not assign any interest in this Agreement, and shall not transfer any interest in the same (whether by assignment or novation), without prior written consent of City. City hereby consents to the assignment of the portions of the Defined Services identified in Exhibit A, Paragraph 17 to the subconsultants is identified thereat as "Permitted subconsultants". 12. Ownership, Publication, Reproduction and Use of Material All reports, studies, information, data, statistics, forms, designs, plans, procedures, systems and any other materials or properties produced under this Agreement shall be the sole and exclusive property of the City. No such materials or properties produced in whole or in part under this Agreement shall be subject to private use, copyrights or patent rights by Service Company in the United States or in any other country without the express written consent of the City. City shall have unrestricted authority to publish, disclose (except as may be limited by the provisions of the Public Records Act), distribute, and otherwise use, copyright or patent, in whole or in part, any such reports, studies, data, statistics, forms or other materials or properties produced under this Agreement. 13. Confidential Information "Confidential Information" shall mean that information disclosed to the Service Company by the City in connection with, and during the term of this Agreement in connection with the services to be performed hereunder. All Confidential Information disclosed to the Service Company during the term or in anticipation of Contract Agreement Page 11 of 24 this Agreement shall be deemed to be in connection with this Agreement. The term, Confidential Information, shall not mean any information that is previously known to the Service Company without obligation of confidence, or without breach of this Agreement; is publicly disclosed by either prior or subsequent to the Service Company's receipt of such information; or is rightfully received from a third party without obligation of confidence. The Service Company agrees to hold all Confidential Information in trust and confidence and not to use such Confidential Information other than for the benefit of the City during the term of this Agreement. Except as may be authorized in writing by the City, the Service Company agrees not to disclose any such Confidential Information, by publication or otherwise, to any person other than those who have a need to know for purposes of carrying out services in connection with this Agreement. The Service Company may make a reasonable number of copies of documents or other media containing Confidential Information for purposes of performing the services under this Agreement. Upon termination or expiration of this Agreement, the Service Company will prepare and make available to the City all written or descriptive matter of other documents, tapes or any other media, which contain any such Confidential Information. 14. Independent Contractor City is interested only in the results obtained and Service Company shall perform as an independent contractor with sole control of the manner and means of performing the services required under this Agreement. City maintains the dght only to reject or accept Service Company's work products. Service Company and any of the Service Company's agents, employees or representatives are, for all purposes under this Agreement, an independent contractor and shall not be deemed to be an employee of City, and none of them shall be entitled to any benefits to which City employees are entitled including but not limited to, overtime, retirement benefits, worker's compensation benefits, injury leave or other leave benefits. Therefore, City will not withhold state or federal income tax, social security tax or any other payroll tax, and Service Company shall be solely responsible for the payment of same and shall hold the City harmless with regard thereto. 15. Administrative Claims Requirements and Procedures No suit or arbitration shall be brought arising out of this agreement, against the City unless a claim has first been presented in writing and filed with the City and acted upon by the City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by the City in the implementation of same. Upon request by City, Service Company shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. Contract Agreement Page 12 of 24 16. Attorney's Fees Should a dispute adsing out of this Agreement result in litigation, it is agreed that the prevailing party shall be entitled to a judgment against the other for an amount equal to reasonable attomey's fees and court costs incurred. The "prevailing party" shall be deemed to be the party who is awarded substantially the relief sought. 17. Statement of Costs In the event that Service Company prepares a report or document, or participates in the preparation of a report or document in perl:orming the Defined Services, Service Company shall include, or cause the inclusion of, in said report or document, a statement of the numbers and cost in dollar amounts of all contracts and subcontracts relating to the preparation of the report or document. 18. Miscellaneous A. Service Company not authorized to Represent City Unless specifically authorized in writing by City, Service Company shall have no authority to act as City's agent to bind City to any contractual agreements whatsoever. B. Service Company is Real Estate Broker and/or Salesman If the box on Exhibit A, Paragraph 16 is marked, the Service Company and/or their principals is/are licensed with the State of California or some other state as a licensed real estate broker or salesperson. Otherwise, Service Company represents that neither Service Company, nor their principals are licensed real estate brokers or salespersons. C. Notices All notices, demands or requests provided for or permitted to be given pursuant to ~ . this Agreement must be in writing. All notices, demands and requests to be sent to any party shall be deemed to have been properly given or served if personally served or deposited in the United States mail, addressed to such party, postage prepaid, registered or certified, with return receipt requested, at the addresses identified herein as the places of business for each of the designated parties. D. Entire Agreement This Agreement, together with any other written document referred to or contemplated herein, embody the entire Agreement and understanding between the parties relating to the subject matter hereof. Neither this Agreement nor any provision hereof may be amended, modified, waived or discharged except by an Contract Agreement Page 13 of 24 instrument in writing executed by the party against which enfomement of such amendment, waiver or discharge is sought. E. Capacity of Parties Each signatory and party hereto hereby warrants and represents to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions or other actions have been taken so as to enable it to enter into this Agreement. F. Governing LawNenue This Agreement shall be governed by and construed in accordance with the laws of the State of California. Any action arising under or relating to this Agreement shall be brought only in the federal or state courts located in San Diego County, State of California, and if applicable, the City of Chula Vista, or as close thereto as possible. Venue for this Agreement, and performance hereunder, shall be the City of Chula Vista. Contract Agreement Page 14 of 14 Signature Page to Agreement between City of Chula Vista and TRISTAR Risk Management For Third Party Administrator Services IN WITNESS WHEREOF, City and Service Company have executed this Agreement thereby indicating that they have read and understood same, and indicate their full and complete consent to its terms: Dated: ,2002 City of Chula Vista By: Shirley Horton Attest: Mayor Susan Bigelow, City Clerk Approved as to form: Ooh~aheny, ~3ity Attorney~_~) Dated: July /'~, 2002 TR. STA~ent~. Contract Agreement Page 15 of 24 Exhibit List to Agreement (X) ExhibitA. Contract Agreement Page 16 of 24 Exhibit A to Agreement between City of Chula Vista and TRISTAR Risk Management 1. Effective Date of Agreement: August 1, 2002 2. City-Related Entity: (X) City of Chula Vista, a municipal chartered corporation of the State of California ( ) Redevelopment Agency of the City of Chula Vista, a political subdivision of the State of California () Industrial Development Authority of the City of Chula Vista, a ( ) Other: 3. Place of Business for City: City of Chula Vista, 276 Fourth Avenue, Chula Vista, CA 91910 4. Service Company: TRISTAR Risk Management 5. Business Form of Service Company: (X) Sole Proprietorship ( ) Partnership ( ) Corporation 6. Place of Business, Telephone and Fax Number of Service Company: Corporate Headquarters TRISTAR Risk Management 100 Oceangate Suite 700 Long Beach, CA 90802 Main (562-495-6600 Fax (562) 432-8619 Servicing Location Contract Agreement Page 17 of 24 TRISTAR Risk Management 8665 Gibbs Drive, Suite 200 San Diego, CA 92123 Main (858) 715-8800 Fax (858) 715-8801 7. General Duties: To perform for the City Third Party Administration services as described in Paragraph 8, Scope of Work and Schedule below. 8. Scope of Work and Schedule: A. Detailed Scope of Work: Administrative Services: (1) Forms. Provide all required statutory forms and brochures customized for the City of Chula Vista. (2) Process Claims. Review and process all reported industrial injury and occupational disease claims in accordance with State requirements. (3) Compensability Determinations. Determine compensability of injury or illness claims in accordance with all rules and regulations governing the administration of self-insurance pursuant to Section 3700 of the California Labor Code and California administrative regulations. Denial of claims shall be made only after prior discussion with the City. (4) Medical Treatment. Determine eligibility for and authorize appropriate medical treatment for injured employees, including arranging appointments. Monitor all medical reports and statements of charges to ensure that treatment and charges are compatible with injuries reported. (5) Reviews: Periodically review program progress with City personnel, identifying problem areas and recommending a plan of remedial action. This shall include projections of cash flow and actual projections of annual incurred costs, as requested. (6) Index Use. Utilize the Index Bureau on all new indemnity cases and re-index cases every 6 months or when deemed necessary and agreed upon by the Service Company and the City. (7) File Maintenance. Maintain claims files, case logs, check disbursement copies and all other records, files and data as may be required by California law, statute and rules and regulations of the City's self-insurance plan, on each reported claim, which shall be available to the City during normal business hours. (8) Approve Payments. Determine extent and degree of all disability and death benefits payable to injured employees in accordance with Contract Agreement Page 18 of 24 acceptable and standard practices. Authorize payments in accordance with Findings and Awards of the Workers' Compensation Appeals Board (WCAB) or approved Compromise and Release Settlements, acting or recommending action to preclude unnecessary litigation to the extent that acceptable claims practice permits. (9) Reserves. Establish, maintain and revise individual claim file reserves as the situation at any given time may warrant, and as payments are made. Reserve levels shall be reviewed at least quarterly on active claims. (10) Investiqations. Subject to prior approval of the City, arrange for field investigation of questionable cases, as well as surveillance on behalf of the City. The expense for such investigation or surveillance is understood to be an "Allocated Loss Expense" as otherwise defined in this Agreement. (11) EDP Services. Provide at least monthly, computerized loss runs in such formats and at such times as may be reasonable required and mutually agreed upon. Loss runs to be furnished within fifteen (15) days following the end of the month in which the claim is reported. On line computer access will be available to the City. (12) Filinq Reports. Prepare and file on time, all reports of self-insured employers as may be required by the Department of Industrial Relations or other Divisions of the State of California. A copy of the annual report will be prepared and filed with the Risk Manger of the City not later than 30 days prior to the filing date established by the State. (13) Litigation and Subroqation. Service Company shall be responsible for the following tasks in connection with litigated and third party claims: a. File and serve medical reports to all interbsted parties on behalf of the City. b. Arrange all medical/legal evaluations, with copies of the medical records and a cover letter setting forth the issues of the case. This applies to agreed medical evaluations as well. c. Arrange for and control outside photocopy costs by sharing with all interested parties medical or personnel records when feasible. d. Make Workers' Compensation Appeals Board appearances on behalf of the City on those cases that involve issues of permanent disability or future medical treatment as they may be required in Service Company's capacity as a claim handler. e. Assign complex issues, including but not limited to questions of apportionment, AOE/COE, 132(a), serious & willful conduct ecl to legal counsel with prior knowledge and consent of the City. However, Service Company will still continue to monitor and assist with the earliest resolution of the case. The City /0 Contract Agreement Page 19 of 24 retains the right to terminate legal counsel considered unsatisfactory to the City. f. Monitor all cases for potential subrogation, wdte correspondence to effect recovery, take all necessary action, including timely notification to the City, assist in recovering through third party subrogation and recommend retaining counsel where litigation is necessary to effect recovery. g. Provide a written summary of all pending litigated and subrogated cases on a semi-annual basis, if requested. (14) Rehabilitation. Subject to pdor review with the City, initiate, coordinate, monitor and reports all vocational rehabilitation activities as required by statue. Prepare all necessary reports for the Rehabilitation Unit of the Division of Industrial Relations. Arrange for the timely examining and testing of applicable injured employees. Supervise long-range or extensive vocational rehabilitation programs approved by the State to ensure optimum results, and maintain control over costs. (15) Consult with Employees. Claims personnel of Service Company will, if requested, consult with designated employee groups and safety committees of the City regarding specific areas of interest. Warrants: (1) Assiqned Staff; Certification; Hours of Work. Service Company warrants that it shall maintain a claim office in San Diego County to handle the City's claims. The claims office must maintain office hours of 8:00 a.m. to 5:00 p.m., Monday through Friday, excepting those Service Company holidays (not to exceed 12 days per calendar year) of which the City are given not less than 14 days notice. Service Company will commit qualified state certified supervisory staff with at least three to five years of claims administration experience, preferably including Labor Code Section 4850 experience to the City. One DEDICATED State certified claims examiner, preferably with Labor Code 4850 experience, and one-half (¼) of a full time assistant will be assigned to the City's claims. The examiner and the assistant shall normally be available to the City during Service Company working hours understanding that the Service Company's workday consists of 7.5 hours; in any event an examiner or supervisor with knowledge of the claims of the City shall be available during working hours. Wdtten notice shall be provided to the City of any change in the work schedule of the examiner. In the event Service Company replaces the current claims examiner temporarily for a period of more than 10 consecutive working days, the replacement shall also be of the same caliber. (2) Notification of Personnel Changes; Assiqnment of Claims. Service Company shall notify the City prior to any change in claims examiner, Contract Agreement Page 20 of 24 within 3 working days of the change, including temporary changes. Service Company shall deliver to the City, by the 15th day of the month, a written report for the examiner handling the City's claims under this agreement, showing the total number of open indemnity claims assigned to the examiner during the prior month. Service Company expressly warrants that the examiner shall not at any time have a caseload which exceeds 175 open active indemnity files. (3) Settlement Authority. Service Company also warrants that it will confer with a duly appointed representative in accordance with the written instructions of the City, or in the absence of any written instructions, on all claims which may require any payment or which may result in a denial of benefits. All claims will require a duplicate case file as permitted by law to be provided to the City. (4) Payments. Service Company shall prepare and draft all checks necessary for payment of claims and claims expenses on behalf of the City. (5) Audit. Service Company agrees to accept an independent audit of its work performance whenever requested by the City. Files on all claims are the property of the City and Service Company agrees to provide access to such files at the request of the City and in the event of termination of this contract Service Company agrees to prepare and make available all files on claims hereunder to the City within five (5) working days of such request. (6) San Die.qo Office. Service Company agrees that during the term of this Agreement, it will establish and maintain a centrally located office in San Diego County, California, from which the majority of all claims activity will be conducted, including storage of the City's claim files. (7) Attendance at Meetinqs. Upon request of the City, Service Company shall attend meetings called by the City with reasonable notice, to discuss issues arising under this agreement. (8) Claims Handlinq. In the performance of its obligations under this contract, work shall be assigned only to persons who are specially trained, experienced and competent in the administration of municipal workers' compensation claims. The City shall have the right to direct Service Company to not use a person who, in the opinion of the City, is not so specially trained, experienced, and competent to render the required services. In addition, the City may at its own expense assign claims over six months old to an alternate administrator selected by the City. (9) Status Report. Service Company shall review all open indemnity claims within 60 days of the commencement of work under this contract to determine their status and necessary action, as appropriate, and provide a brief written report to the City on the results of that review within two (2) weeks of completion. Contract Agreement Page 21 of 24 Excess Policies The City agrees to provide a complete copy of Excess Workers' Compensation insurance policies to Service Company. Service Company agrees to notify the Excess Workers' Compensation insurer of claims as required under the policies. Penalties The par[les acknowledge that any untimely payment of temporary and permanent disability benefits may result in the imposition of automatic penalties. Penalties imposed as a result of the failure of Service Company to properly perform its duties under this agreement shall be and remain the responsibility of Service Company. Written notice of such penalties must be provided to the City within two (2) weeks of being identified, and reimbursement shall be provided to the City within 60 days of being identified. However, where the City unreasonably delays notification to Service Company of an injury, and Service Company has no opportunity to make provision for timely payment, and so advises the City upon being notified, any penalty resulting from late payment shall not be the responsibility of Service Company, but shall be the responsibility of the City. Notification by the City to the Service Company within 5 working days after the City's knowledge of an injury to an employee shall not be considered an unreasonable delay. B. Date for Commencement of Third Party Administration Services: (X) Same as Effective Date of Agreement ( ) Other: C. Dates or Time Limits for Delivery of Deliverables: N/A Deliverable No. 1: Deliverable No. 2: Deliverable No. 3: Contract Agreement Page 22 of 24 D. Date for completion of al! Third Party Administration services: For a one-year period with five one-year options to renew, or until this Agreement is terminated in accordance with Section 8, Termination of Agreement for Cause and Section 10, Termination of Agreement for Convenience of City. 9. Insurance Requirements: (X) Statutory Worker's Compensation Insurance: $1,000,000. (X) Employer's Liability Insurance coverage: $1,000,000. (X) Commercial General Liability Insurance: $1,000,000. (X) Errors and Omissions Insurance: $1,000,000 (included in Commercial General Liability coverage). ( ) Errors and Omissions Insurance: $25,000 (not included in Commercial General Liability coverage). 10. Materials Required to be Supplied by City to Service Company: u Third Party Administration Agreement between City and [Name of Firm]. u All available documents related to the administration of the City's workers' compensation program including related City policies and procedures. 11. Compensation: A. (X) Single Fixed Fee Arrangement For performance of all of the Defined Services by Service Company as herein required, the Service Company shall be compensated for the all the Defined Services by a fiat annual fee of $175,000.00. For the initial period of August 1, 2002 through June 30, 2003 the annual fee will be pro-rated in the amount of $160,416.00 Subsequent renewals will be based on the fiat annual fee for the expidng base year plus CPI for San Diego County. 1/12of the annual fee will be paid monthly in arrears, thirty (30) days following month end and presentation to the City of an itemized invoice. Allocated Loss Expenses will also be paid by the City. Any costs (including check costs) associated with the trust account will be paid by the Service Company as part of the administrative fee. 12. Materials Reimbursement Arrangement For the cost of out of pocket expenses incurred by Service Company in the performance of services herein required, City shall pay Service Company at the rates or amounts set forth below: (X) None, the compensation includes all costs. 13. Contract Administrators: Contract Agreement Page 23 of 24 City: Kim Stevens Disability Manager Human Resources Department Risk Management Division Third Party Administrator: Thomas J. Veale President TRISTAR Risk Management Corporate Headquarters 14. Liquidated Damages Rate: N/A ( ) $ per day. ( ) Other: 15. Statement of Economic Interests, Service Company Reporting Categories, per Conflict of Interest Code: (x) Not Applicable. Not an FPPC Filer. ( ) FPPC Filer Category No. 1. Investments and sources of income. Category No. 2. Interests in real property. Category No. 3. Investments, interest in real property and sources of income subject to the regulatory, permit or licensing authority of the department. Category No. 4. Investments in business entities and sources of income, which engage in land development, construction or the acquisition or sale of real property. Category No. 5. Investments in business entities and sources of income of the type which, within the past two years, have contracted with the City of Chula Vista (Redevelopment Agency) to provide services, supplies, materials, machinery or equipment. Category No. 6. Investments in business entities and sources of income of the type which, within the past two years, have contracted with the designated employee's department to provide services, supplies, materials, machinery or equipment. Category No. 7. Business positions. Contract Agreement page 24 of 24 ( ) List "Service Company Associates" interests in real property within 2 radial miles of Project Property, if any: 16. ( ) Service Company is Real Estate Broker and/or Salesman 17. Permitted Subconsultants: None 16. Bill Processing: A. Service Company's Billing to be submitted for the following period of time: (X) Monthly ( ) Quarterly ( ) Other: B. Day of the Period for submission of Service Company's Billing: ( ) First of the Month ( ) 15th Day of each Month (X) End of the Month ( ) Other: C. City's Account Number: 17. Security for Performance N/A Performance Bond, $ Letter of Credit, $ Other Security: Type: Amount: $ Retention. If this space is checked, then notwithstanding other provisions to the contrary requiring the payment of compensation to the Service Company sooner, the City shall be entitled to retain, at their option, either the following "Retention Percentage" or "Retention Amount" until the City determines that the Retention Release Event, listed below, has occurred: ( ) Retention Percentage: % ( ) Retention Amount: $ Retention Release Event: ( ) Completion of All Service Company Services ( ) Other: COUNCIL AGENDA STATEMENT Item // Meeting Date 7/23/02 ITEM TITLE: Public Hearing to consider testimony of the FY 2002/2003 levy and collection of assessments for City Open Space Districts 1 through 9, 15, 17, 18, 20, 23, 24, 26, 31 and 33, Bay Boulevard Maintenance District and Easttake Maintenance District No. 1 Resolution Ordering certain Open Space and maintenance facilities to be maintained, approving modifications to the Engineer's Reports for FY 2002/2003 and levying assessments for Open Space Districts 1 through 9, 15, 17, 18, 20, 23, 24, 26, 31 and 33, Bay Boulevard Maintenance District and Eastlake Maintenance District No. 1. Resolution Amending the FY 02/03 budget by appropriating $5,259 from the un-appropriated fund balance of Open Space District 23 for increased costs in contractual services for maintenance / SUBMITTED BY: Director of Public Works D~ REVIEWED BY: City Manager Fa Vi (4/Sths Vote: Yes_No~ The City administers approximately 25 Open Space Districts established over the last thirty years. The Districts provide the mechanism to finance the maintenance of common Open Space areas (canyons, trails, medians, etc.) associated with and benefiting from that particular development. As part of this process, a levy of an am~ual assessment is necessary to enable the City to collect funds for ongoing and proposed Open Space maintenance. Tonight's action continues the process for FY 2002/2003. The City Engineer has prepared and filed reports on assessments for all existing Open Space Districts. On June 11,2002 Council approved the reports and set a public heating as required by law for tonight at 6:00 p.m. to take testimony on the proposed assessments. RECOMMENDATION: That Council: 1) Open the heating, take testimony, and close the hearing; 2) Direct staff to tally all protests; 3) Adopt the resolution to approve modifications to the Engineer's Report and levy assessments for FY 2002/2003; 4) Amend the FY 02/03 budget by appropriating $5,259 from the un-appropriated fund balance of Open Space District 23 for increased costs in contractual services for maintenance; and 5) Authorize staffto determine assessments for FY 2003/2004. BOARDS/COMMISSIONS RECOMMENDATION: N/A ×/ Page 2, Item /J Meeting Date 7/23/02 DISCUSSION: This agenda statement is the yearly resolution of intention to assess property owners for Open Space maintenance within the City. Table 1 contains the names and locations of the Districts. Table 2 relates the present year's assessments to the proposed assessments and collectibles for FY 2002/2003 for all of the Districts. Following Table 2, there is general information that applies to all Districts. Each District is then analyzed individually. That is followed by a description of the noticing that is required. a final note, Council should be advised that three individual agenda items contain the same information Open Space Districts 10, 11 and 14, which were separated from this agenda item due to conflict of interest concerns relating to three Council Members. Background Pursuant to Article 4, Chapter 1, Part 2 of Division 15 of the California Streets and Highways Code, also known as the "Landscaping and Lighting Act of 1972" and the City of Chula Vista Municipal Code, Chapter 17.07--Open Space Districts, the City Engineer has prepared and filed annual reports for all existing Open Space Districts. The name and location of each Open Space District is shown in the following table. TABLE 1 Open Space Districts Within the City of Chula Vista OSD# Na~ne Location I El Rancho del Roy Units 1-4 Bet. East H Street & Telegraph Canyon Road, East of Pasco Ranchero 2 Lark Haven South and East of Loma Verde Park 3 Rancho Robinhood Units I & 2 South of Allen School Lane 4 Bonita Ridge Camino Elevado North of Otay Lakes Road 5 Southbay Villas North end of Crest Drive South ore Street 6 Hilltop Vista Camino Vista Real North of Telegraph Canyon Road 7 Zenith Units 2, 3, and 4 North & South of Palomar, East of 1-805 8 Rancho RobLnhood Unit 3 Surrey Drive Southwest of Otay Lakes Road 9 El Rancho del Rey Paseo del Rey, North of Telegraph Canyon Road 10 El Rancho del Rey 6, Casa del Rey West of Pasco Ranchero - H & J Streets 11 Hidden Vista Village East H Street, East of 1-805 14 Bonita Long Canyon North of East H Street - Otay Lakes Road & Corral Canyon Road 15 Bonita Haciendas Canyon Drive, East of Otay Lakes Road 17 Bel Air Ridge Northeast ofPaseo Ladera & East J Street 18 Rancho del Sur East end of East Naples Street 20 Rancho del Rey North of East H Street, West of Otay Lakes Road 23 Otay Rio Business Park West of Heritage/Otay Valley Road, South of Otay Rio Road 24 Canyon View Homes Rutgers Avenue, South of East H Street 26 Park Bonita West of the intersection of E Street & Bonita Road 31 Telegraph Canyon Estates North of Otay Lakes Road, West of SR-125 33 Broadway Business Home Village West side of Broadway - J & K Streets Bay Boulevard Maintenance District Bay Blvd. - E & F Streets Eastlake Maintenance District # 1 Along East H Street and Otay Lakes Road, adjacent to SR- 125 Page 3, Item fj Meeting Date 7/23/02 These reports were prepared by the City Engineer or under his direction and are presented to Council for approval in order to proceed with the public hearing set for tonight at 6:00 p.m. in accordance with the Landscaping and Lighting Act of 1972. The reports cover Districts listed in Table 1. Staff proposes for FY 2002/2003 that the assessment be kept within that amount previously approved, adjusting the FY 2001/2002 assessment by an inflation factor. In every case, staff has set the collectible equal to or lower than the proposed assessment for each District. The language in the Engineer's Reports adopted by the City for the Open Space Districts and Section 17.07.035 of the Chula Vista Municipal Code states that the Maximum Assessment shall be increased or decreased each Fiscal Year by the lesser of (a) the annual percentage change in the San Diego Area Consumer Price Index (CPI) or (b) the change in the estimated California Fourth Quarter Per Capita Personal Income as contained in the Governor's budget published in January. The purpose of this provision is to provide a mechanism to adjust the Maximum Assessments by a factor that reflects the changes in the cost of doing business in the San Diego area in an attempt to insure that assessment revenues can keep pace with changes in the cost of providing the maintenance services financed ['rom such revenues. During the year 2001, the CPI increased by approximately 3.6 percent, while the Per Capita Personal Income decreased by approximately 3.01 percent. According to the State of California Department of Finance, this decrease in Per Capita Personal Income was due to, and reflects the use of, stock options as a portion o fpersonal income in certain industries, particularly high technology corporations, and the drop in value of technology stocks during 2001. Staff used the Califomia fourth quarter personal income index, which produced the lower figures. Assessment increases equal to or less than the appropriate inflation factor (IF) are not subject to majority protest. Only assessment increases over the IF are subject to majority protest. For FY 2001/2002 an inflation factor of 6.8%, reflecting the San Diego Metropolitan Area All Urban Consumer Price Index (CPI) increase between the second half of 1999 and the second half of 2000, was included as one of the parameters, although due to a clerical error only 6% was actually computed which resulted in a minimal difference. The assessment rates are corrected to accurately reflect 6.8% for FY 2002/2003, ~vith amounts equal to the 0.8% difference included along with the FY 2002/2003 inflation factor. The assessment and collectible amounts for each Open Space District given herein for Fy 2000/2001 are rates stated in the agenda statements dated June 19, 2001 and July 24, 2001 and in Resolutions 2001-233, 2001-234 and 2001-235, adopted by the Council on July 24, 200 I. Subsequent to the City Council meeting of June 11, updated figures for the projected Estimated Maintenance Cost for FY 2002/2003 were obtained from Public Works Operations. These figures reflect changes primarily in amounts charged for City staffservices and transfers to the Corporate Yard Debt Service fund. These changes are generally minimal and are reflected in our spreadsheets. For Districts where the Estimated Maintenance Cost is higher than originally projected, the reserve pementage was changed in order to avoid increasing the collection amount above the amount stated in the previous agenda statement, except where the reserve percentage would have to be set at below 50% of Estimated Maintenance Cost. Assessments & Collectibles Chula Vista Municipal Code Section 17.07.035 also made the distinction between the assessment and the amount that the City may collect against the assessment (collectible). The assessments for FY 2002/2003 are proposed at FY 2001/2002 amounts adjusted by the inflation factor (IF). The collectibles, on the other hand, are equal to or less than the proposed assessments based on the budget, reserve requirement, savings Page 4, Item // Meeting Date 7/23/02 balances, including interest earnings and prior years' savings. Under staffs recommendation, none increases on the Open Space Districts are subject to a majority protest. proposed assessments and collectibles for FY 2002/2003 are as follows: TABLE 2 Prior FY's vs. FY 2002/2003 Assessments/Coilectibles FY 02/03 Proposed Proposed FY00/01 FY 01/02 FY01/02 CAP: FY02/03 FY 02/03 FY02/03 OSD#/Zone Assmnt/ Collection/ Assmnff FY01/02 Assmntd Collection/ Revenue EDU EDU EDU Assmnt+IF121 EDU EDU 1 $96.25 $96.00 $102.03 99.70 99.70 $97.00 $64,194 2 44.66 47.00 47.34 46.26 46.26 46.00 11,454 3 305.67 290.00 324.01 316.63 316.63 299.00 37,973 4 322.86 304.00 342.23 334.44 334.44 321.00 67,410 5 314.84 280.00 333.73 326.13 326.13 285.00 34,770 6 155.69 110.00 165.03 161.27 161.27 110.00 I7,820 7 108.76 96.00 115.29 112.66 112.66 97.00 10,088 8 496.86 416.00 526.67 514.67 514.67 444.00 48,840 9 140.81 149.00 149.26 145.86 145.86 143.00 54,912 15 296.56 277.00 314.35 307.19 307.19 276.00 I5,732 17 141.96 40.00 150.48 147.05 147.05 53.00 2,438 18 335.45 266.00 355.58 347.48 347.48 266.00 115,710 20 (See below) 832,129 Desilting Basin 51.84 16.92 54.95 53.70 53.70 21.74 Rice Canyon 3.94 4.15 4.18 4.08 4.08 4.07 Street 5.61 4.35 5.95 5.81 5.81 3.81 Business Centre 20.88 20.59 22.13 21.63 21.63 17.75 SPA I 315.00 310.32 333.90 326.29 326.29 275.27 (31 SPA I1 242.03 153.78 256.55 250.71 250.71 134.73 SPA Ill 149.40 149.10 158.36 154.76 154.76 127.00. North Desilting Basin 34.44 36.50 36.51 35.67 35.67 35.67 Telegraph Canyon Channel ! 27.35 28.88 28.99 28.33 28.33 20.68! (3) 23 383.53 170.00 406.54 397.28 397.28 216.00 19,261 24 574.72 470.00 609.20 595.33 595.33 480.00 19,200 26 451.07 367.00 478.13 467.24 467.24 363.00 6,897 31 465~95 357.00 493.91 482.66 482.6{ 362.00 124,890 33 1,151.55 0.00 1,220.64 1,192.84 1,192.84 0.00 0 Bay Boulevard {41 845.07 878.40 895.77 875.37 875.37 874.49 5,588 Eastlake No. l (See below) 145,18i Eastlake I 10.67 4.03 11.31 $11.05 $11.05 $6.31 Eastlake Greens 17.44 5.18 18.49 18.07 18.07 7.91 Olympic Training Center 144.47 1.39 153.14 149.65 149.65 2.61 Salt Creek 192.68 159.93 204.24 199.59 199.59 119.58 (5: Telegraph Canyon Channel 27.47 18.11 29.12 28.45 28.45 18.63 Is: :~/Represented average residential assessment in SPA I. 2002/2003 assessment may be set at or below this cap without being subject to a majority protest. for all zones included in overall District 20 amount. Boulevard rates based on acres for FY 1999/2000, 2000/2001, 2001/2002 and 2002/2003. for all zones included in overall Eastlake Maintenance District amount. Page 5, Item JJ Meeting Date 7/23/02 In general, most budgets have increased due to adjustments in utilities and contract services. The increase in utilities is due to projected rate increases and the increase in contract services is due to a cost of living clause on contracts. Savings from prior years are proposed to be used to supplement the property owners' collections to provide the revenue needed for FY 2002/2003 maintenance while retaining reserves between 50%-65% (Municipal Code allows reserves between 50%-100%). The City typically does not retain reserves above 65% in consideration of property owners' requests to return as much excess funds as practical. However, where maintaining a 65% reserve could result in future steep rate increases and/or the need to ballot property owners for an increase in the assessment amount (i.e., the budget is higher than the collectible), staff recommends maintaining a higher reserve. For those Districts where the reserve still exceeds 50-65%, staff recommends using the savings to offset some of the assessments to give lower collectibles. This practice should help avoid reserves in excess of 100% in future years, thereby avoiding processing refund checks. Following are summaries of major changes for each District. Pursuant to the ordinance, them is a distinction between the assessment and collectible amount; the assessment, estimated cost and collection will become the same number whenever an assessment increase is necessary. The proposed assessment per Equivalent Dwelling Unit (EDU) for FY 2002/2003 represents, in all cases, the prior year's assessment with the current factor of 3.01% as stipulated in the Municipal Code and stated earlier in this narrative. The assessment per EDU is the figure to be mailed to the property owners; the collectible is the amount to be collected, which is affected by reserves, savings, etc. The collectible per EDU reflects impacts of reserve requirements, ending fund balances and savings. For a detailed outline, see Attachment B. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 I OSD 1 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF12~ EDU EDU El Rancho del Rey Units 1-4 $96.25 $96.00 $102.03 $99.70 $99.70 $97.00 $64,194 Staffrecommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $97.00 per Equivalent Dwelling Unit (EDU), which is less than the assessment of $99.70 per EDU. The budget for this District is $84.35 per EDU. The reserve under this recommendation will be 55%. The General Fund will be reimbursed $9,471 for staffservices from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of $64,124 and a total of 661.79 EDU's, as shown in Attachment B. FY 02/03 Proposed Proposed FY00/01 FY01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 2 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF121 EDU EDU [.ark Haven $44.66 $47.00 $47.34 $46.26 $46.26 $46.00 $11,454 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $46.00 per EDU, which is less than the assessment of $46.26 per EDU. Since the budget per EDU of $47.26 exceeds the assessment Page 6, Item // Meeting Date 7/23/02 and collectible amounts, staffrecommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 73%. The General Fund will be reimbursed $2,010 for staffservices from the OSD fund for FY 2002/2003. These figures were calculated on the basis ora net assessment orS 11,462 and a total of 249.00 EDU's, as shown in Attachment B. Because the budget exceeds the proposed assessment, Public Works (including Open Space staff) will review the District's budget and reserve in future years in an attempt to lower the budget and determine whether there are additional savings. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 3 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF(2~ EDU EDU Rancho Robinhood Units I & 2 $305.67 $290.00 $324.01 $316.63 $316.63 $299.00 $37,973 Staffrecommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staffalso recommends a collectible of $299.00 per EDU, which is less than the assessment of $316.63 per EDU. Since the budget per EDU of $357.58 exceeds the assessment and collectible amounts, staff recommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 58%. The General Fund will be reimbursed $7,726 for staffservices from the OSD fund for FY 2002/2003. These figures were calculated on the basis ora net assessment of $37,996 and a total of 127.00 EDU's, as shown in Attachment B. Due to a revision in this year's Estimated Maintenance Cost from $45,059 to $45,413, the reserve percentage was lowered from 60% to 58% in order to avoid any increase in the collectible amount above the figure of $302.00 per EDU indicated in the previous Agenda Statement. Because the budget exceeds the proposed assessment, Public Works (including Open Space staff) will reviexv the District's budget and reserve in futura years in an attempt to lower the budget and determine whether there am additional savings. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD4 Assmnt/ Collectible/ Assmnt/ FY01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF12) EDU EDU Bonita Ridge $322.86 $304.00 $342.23 $334.44 $334.44 $321.00 $67,410 Staffrecommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staffalso recommends a collectible of $321.00 per EDU, which is less than the assessment of $334.44 per EDU. The budget for this District is $314.26 per EDU. The reserve under this recommendation will be 50%. The General Fund will be reimbursed $I 1,270 for staffservices from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of $67,452 and a total of 210.00 EDU's as shown in Attachment B. There has been a revision in this year's Estimated Maintenance Cost for this District, from $65,478 to $65,994. In order to maintain a reserve Page 7, Item // Meeting Date 7/23/02 percentage of 50%, which is the minimum percentage allowed by the Municipal Code, the collectible was increased from $318.00 to $321.00. FY 02/03 Proposed Proposed FY00/01 FY01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY02/03 OSD 5 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+iF/~) EDU EDU Southbay Villas $314.84 $280.00 $333.73 $326.13 $326.13 $285.00 $34,770 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staffalso recommends a collectible of $285.00 per EDU, which is less than the assessment of$326.13 per EDU. Since the budget per EDU of $286.82 exceeds the collectible amount, staffrecommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 50%. The General Fund will be reimbursed $5,956 for staffservices from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of $34,814 and a total of 122.00 EDU's, as shown in Attachment B. There has been a revision in this year's Estimated Maintenance Cost for this District, from $34,719 to $34,814. In order to maintain a reserve percentage of 50%, which is the minimum percentage allowed by the Municipal Code, the collectible was increased from $282.00 to $285.00. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 6 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnff Collectible/ Revenue EDU EDU EDU Assmnt+lF(2) EDU EDU Hilltop Vista $155.69 $110.00 $165.03 $161.27 $161.27 $110.00 $17,820 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of$110.00 per EDU, which is less than the assessment of $161.27 per EDU. The budget for this District is $105.46 per EDU. The reserve under this recommendation will be 67%. The General Fund will be reimbursed $2,905 for staff services from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of $17,856 and a total of 162.00 EDU's, as shown in Attactunent B. FY 02/03 Proposed Proposed FY 00/O1 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 7 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF121 EDU EDU Zenith Units 2, 3, & 4 $108.76 $96.00 $115.29 $112.66 $112.66 $97.00 $10,088 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $97.00 per EDU, which is less than the assessment orS 112.66 per EDU. Since the budget per EDU of$106.52 exceeds the collectible atnount, staff recommends utilizing the fund balance to make up the difference. Funds am available to do Page 8, Item JJ Meeting Date 7/23/02 this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 71%. The General Fund ~vill be reimbursed $1,881 for staff services from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of$10,114 and a total of 104.00 EDU's, as shown in Attachment B. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 8 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF/2) EDU EDU Rancho Robix~hood Unit 3 $496.86 $416.00 $526.67 $514.67 $514.67 $444.00 $48,840 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $444.00 per EDU, which is less than the assessment of $514.67 per EDU. Since the budget per EDU of $449.36 exceeds the collectible amount, staff recommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 50%. The General Fund will be reimbursed $8,421 for staff services from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of $48,799 and a total of 110.00 EDU's, as shown in Attachment B. There has been a revision in this year's Estimated Maintenance Cost for this District, from $49,044 to $49,430. In order to maintain a reserve percentage of 50%, which is the minimum percentage allowed by the Municipal Code, the collectible was increased from $438.00 to $444.00. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD9 Assmnt/ Collectible/ Assmnt/ FY01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+lF(~) EDU EDU E1Rancho del Rey Units $I40.81 $149.00 $149.26 $145.86 $145.86 $143.00 $54,912 Staffrecommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible orS 143.00 per EDU, which is less than the assessment of$145.86perEDU. SincethebudgetperEDUof$171.31 exceeds the assessment and collectible amounts, staff recommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 60%. The General Fund will be reimbursed $11,184 for staff services from the OSD fund for FY 2002/2003. These figures were calculated on the basis ora net assessment of $54,882 and a total of 384.00 EDU's, as shown in Attachment B. Due to a revision in this year's Estimated Maintenance Cost from $65,271 to $65,783, the reserve percentage was lowered from 62% to 60% in order to avoid any increase in the collectible amount above the figure of $144.00 per EDU indicated in the previous Agenda Statement. Because the budget exceeds the proposed assessment, Public Works (including Open Space staff) will review the District's budget and reserve in future years in an attempt to lower the budget and determine whether there are additional savings. Page 9, Item // Meeting Date 7/23/02 FY 02/03 Proposed Proposed FY 00/01 FY01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 15 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assrant/ Collectible/ Revenue EDU EDU EDU Assmnt+lF(21 EDU EDU Bonita Haciendas $296.56 $277.00 $314.35 $307.19 $307.19 $276.00 $15,732 Staffrecommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $276.00 per EDU, wlfich is less than the assessment of$307.19 per EDU. Since the budget per EDU of $302.68 exceeds the collectible amount, staffrecommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 73%. The General Fund will be reimbursed $2,931 for staffservices from the OSD fund for FY 2002/2003. These figures were calculated on the basis ora net assessment ors 15,744 and a total of 57.00 EDU's, as shown in Attachment B. Due to a revision in this year's Estimated Maintenance Cost from $17,119 to $17,253, the reserve percentage was lowered from 75% to 73% in order to avoid any increase in the collectible amount above the figure of $278.00 per EDU indicated in the previous Agenda Statement. FY 02/03 Proposed Proposed FY00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD17 Assmnt/ Collectible/ Assmnt/ FY01/02 Assrant/ Collectible/ Revenue EDU EDU EDU Assnmt+IFI~l EDU EDU Bel Air Ridge $141.96 $40.00 $150.48 $147.05 $147.05 $53.00 $2,438 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $53.00 per EDU, which is less than the assessment of$147.05 per EDU. Since the budget per EDU of $83.80 exceeds the collectible amount, staff recommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 54%. The General Fund will be reimbursed $665 for staff services from the OSD fund for FY 2002/2003. These figures were calculated based on a net assessment of $2,449 and a total of 46.00 EDU's, as shown in Attachment B. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD18 Assmnt/ Collectible/ Assmnt/ FY01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assrnnt+IFt2~ EDU EDU Rancho del Sur $335.45 $266.00 $355.58 $347.48 $347.48 $266.00 $115,710 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staffalso recommends a collectible of $266.00 per EDU, which is less than the assessment of $347.48 per EDU. Since the budget per EDU of $282.39 exceeds the collectible amount, staffrecommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 69%. The General Fund will be reimbursed $I7,320 for staff services from the Page 10, Item // Meeting Date 7/23/02 OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of $115,571 and a total of 435.00 EDU's, as shown in Attachment B. Due to a revision in this year's Estimated Maintenance Cost from $122,042 to $122,840, the reserve percentage was lowered from 71% to 69% in order to avoid any increase in the collectible amount above the figure of $268.00 per EDU indicated in the previous Agenda Statement. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD20 Assmnt/ Collectible/ Assmnt/ FY01/02 Assmnt/ Collectible/; Revenue EDU EDU EDU Assmnt+CP1121 EDU EDU Zone 1 - Desilt Basin 51.84 $16.92 $54.95 $53.70 $53.70 $21.74 Zone 2 - Rice Canyon 3.94 4.15 4.18 4.08 4.08 4.07 Zone 3 - H St. 5.61 4.35 5.95 5.81 5.81 3.81 Zone 4 - Business Centre 20.88 20.59 22.13 21.63 21.63 17.75 Zone 5 - SPA ! 315.00 310.32 333.90 326.29 326.29 275.27 Zone 6 - SPA Il 242.03 153.78 256.55 250.71 250.71 134.73 Zone 7 - SPA III 149.40 149.10 158.36 154.76 154.76 127.00 PI Zone 8 - North Desilting Basin 34.44 36.50 36.51 35.67 35.67 35.67 Zone 9 - Telegraph Canyon Channel 27.35 28.88 28.99 28.33 28.33 20.68 I13/Revenue f°r all z°nes included in °verall District 20 am°unt' I T°tal Revenue=$832'129 I Rancho del Rey is a phased development of three Sectional Planning Areas (SPA). This District was established in 1989 encompassing all three areas with the understanding that the Open Space improvements would be constructed in phases. Because this is a large District and not all of the items to be maintained have a benefit to the entire District, OSD 20 is made up of nine Zones as indicated above. Every property within the District is in more than one Zone. TABLE 3 OSD 20 Typical Combined Assessment (FY2002/2003) SPA I (Zones I or 8, 2, 3, & 5) $345 SPA II (Zones 1 or 8, 2, 3, & 6) $315 SPA III (Zones I or 9, 3, & 7) $172 Business Centre (Zones 1, 2, 3, & 4) * · indus~ial (per acre) $978 · Commercial (per acre) $1,230 Staffrecommends that the assessments remain the same for each Zone as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. In each of these Zones, staff recommends a collectible which is equal to or below the proposed assessment. The reserves for each Zone vary depending upon the budgets, reserves and amortized costs (see Attachment B--Budget Worksheet). The reserve requirement for this District is acceptable, pursuant to City Municipal Code. The General Fund will be reimbursed $190,518 for staff services from the OSD fund for FY 2002/2003. Zone 8 was established in July 1994 for the maintenance ofa desilting basin and access road located at the downstream end of the Bonita Drainage Basin. Maintenance work included replacement of the access road every eight years. The developer was required to maintain the basin for five years, after which the City Page 11, Item // Meeting Date 7/23/02 would maintain the basin using funds collected through this Zone. Although the City has not yet accepted this facility, the road needs to be rebuilt. Staff recommends that the City charge the maximum rate in this Zone in order to build up a reserve to pay for this work. Construction ora gabion structure in this Zone has recently been completed by the developer. It is estimated that this structure will be turned over to the City by the end of FY 2002/2003 or the beginning of FY 2003/2004. If this structure will be turned over to the City by the end of FY 2002/2003, staff will propose a budget amendment for this District. During FY 2001/2002 the Telegraph Canyon Channel was accepted for maintenance by the City after all required approvals were maintained. These costs are included in both Open Space District 20, Zone 9, Open Space District 31 and Eastlake Maintenance District 1 Zone E. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 23 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF® EDU EDU Otay Rio Business Park $383.53 $170.00 $406.54 $397.28 $397.28 $216.00 $19,261 On June 18, 2002 Council adopted Resolution No. 2002-210, which initiated the proceedings to an~end Open Space District 23 to include the 2800-foot long median strip on Main Street. The public hearing has been scheduled for August 6, 2002, at which the assessment ballots will be tabulated. The above rates will be adopted if the ballot process fails. These rates include maintenance for only those open space areas within the existing District. Because the maintenance contract for OSD 23 needed to be renegotiated, contractual costs have increased. The budget to maintain existing improvements in this district therefore needs to be increased from the $13,605.00 approved during the June 2002 budget process to $18,864.00. Thus staff is requesting that Council act to amend the FY 2002/03 budget by appropriating $5259 from the un-appropriated balance of the Open Space District reserve for increase costs in contractual services for maintenance. Additional appropriations required per expenditure account are shown on Attachment C. The above rates are based on the increased budget. FY 02/03 Proposed Proposed FY00/01 FY01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 24 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF(~) EDU EDU Canyon View Homes $574.72 $470.00 $609.20 $595.33 $595.33 $480.00 $19,200 Note: OSD 24 consists of only 40 townhomes sharing in the cost of large, landscaped slopes adjacent to the townhomes. Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $480.00 per EDU, which is less than the assessment of $595.33 per EDU. SincethebudgetperEDUof$580.28 exceeds the collectible amount, staff recommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 58%. The General Fund will be reimbursed $3,944 for staff services from the OSD fund for FY 2002/2003. These figures were calculated on the basis ora net assessment ors 19,215 and a total Page 12, Item Meeting Date 7/23/02 of 40.00 EDU's, as shown in Attachment B. Due to a revision in this year's Estimated Maintenance Cost from $23,030 to $23,211, the reserve percentage was lowered from 60% to 58% in order to avoid any increase in the collectible amount above the figure of $485.00 per EDU indicated in the previous Agenda Statement. FY 02/03 Proposed ' Proposed FY 00/01 FY 01/02 FY01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 26 Assmnld Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF12) EDU EDU 'ParkBonita $451.07 $367.00 $478.13 $467.24 $467.24 $363.00 $6,897 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $363.00 per EDU, which is less than the assessment of $467.24 per EDU. The budget for this District is $356.05 per EDU. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 70%. The General Fund will be reimbursed $1,155 for staff services from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment of $6,889 and a total of 19.00 EDU's, as shown in Attachment B. Due to a revision in this year's Estimated Maintenance Cost from $6,712 to $6,765, the reserve percentage was lowered from 72% to 70% in order to avoid any increase in the collectible amount above the figure of $365.00 per EDU indicated in the previous Agenda Statement. FY 02/03 Proposed Proposed FY 00/0I FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD 31 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+lF(2~ EDU EDU TelegraphCanyonEstates $465.95 $357.00 $493.91 $482.66 $482.66 $362.00 $124,890 Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staff also recommends a collectible of $362.00 per EDU, which is less than the assessment of $482.66 per EDU. The budget for this District is $339.23 per EDU. The reserve under this recommendation will be 50%. Staff recommends an increase to a minimum 50% reserve over a two-year period. The General Fund will be reimbursed $19,932 for staffservices from the OSD fund for FY 2002/2003. These figures were calculated on the basis of a net assessment ors 124,902 and a total of 345.00 EDU's, as shown in Attachment B. From FY 1994/1995 through FY 1999/2000, a minimal amount of improvements were turned over to the City for maintenance. For FY 1994/1995 through FY 2000/2001, the City collected a minimal amount per EDU due to an excess of available funds. However, in October 2000 a group of tennis courts was turned over to the City for maintenance. Additionally, a portion of Telegraph Canyon Channel maintenance was added for FY 2001/2002. After being large enough in the past to more than offset any expenditures, for FY 2001/2002 the fund balance shrunk to a much smaller figure ($30,091). Thus, for FY 2001/2002 staff requested the collectible of $357.00 per EDU, which only provided a 36% reserve. In light of a projected fund balance of $50,652, this year staff is requesting a collectible amount sufficient to maintain a 50% reserve. Page 13, Item // Meeting Date 7/23/02 There has been a revision in this year's Estimated Maintenance Cost for this District, from $116,124 to $117,035. In order to maintain a reserve percentage of 50%, which is the minimum pementage allowed by the Municipal Code, the collectible was increased from $358.00 to $362.00. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY02/03 FY 02/03 OSD 33 Assmnff Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+IF{21 EDU EDU Broadway Business Home Village $1,155.55 $0.00 $1,220.64 $1,192.84 $1,192.84 $0.00 $0 No funds collected since inception. Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. The budget per EDU is $0.00; therefore, staff recommends a collectible orS0.00 per EDU. The reserve under this recommendation will be zero, since no construction is anticipated to be completed during FY 2002/2003. Community Development has requested, since FY 1996/1997, that no funds be collected because no construction has been done on this project. Staff is currently in negotiations with a new developer who plans to construct a multi-use multiple family and commercial development in this area. Staff may recommend collecting revenue for FY 2003/2004 or later if funds will be needed to do required Open Space maintenance. FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue Bay Boulcvard EDU EDU EDU Assmnt+l?(2> EDU EDU Maintenance District $845.07 $878.40 $895.77 $875.37 $875.37 $874.49 $5,588 This District was reestablished in FY 1999/2000 on the basis of acreage. Staff recommends that the assessment remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staffalso recommends a collectible of $874.49 per acre, which is less than the assessment of $875.37 per acre. Since the budget of $2,469.80 per acre exceeds the assessment and collectible amounts, staff recommends utilizing the fund balance to make up the difference. Funds are available because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 49.4%. The General Fund will be reimbursed $9,380 for staff services from the OSD fund forFY 2002/2003. These figures were calculated on the basis of a net assessment of $5,588 and a total acreage amount of 6.39, as shown in Attactunent B. Due to a revision in this year's Estimated Maintenance Cost from $15,363 to $15,782, the reserve percentage was lowered from 53.5% to 49.4% in order to maintain the collectible amount at a figure lower than the assessment amount of $875.37 per EDU, as required by the Municipal Code. Since the budget amount exceeds the proposed assessment, staff will review the District's budget and reserve in futura years in an attempt to lower the budget and to determine whether there are additional savings. There is also a possibility that staff may consider conducting a ballot process next year to increase the assessment amount. Page 14, Item // Meeting Date 7/23/02 FY 02/03 Proposed Proposed Eastlake Maintenance FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 Distr~ct#1 Assmnt/ Collectible/ Assnmt/ FY01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt+lF(2~ EDU EDU Otay Lakes Road(~) (31 Zone A -Eastlake 1 $10,67 $4.03 $11.31 $11.05 $11.05 $6.31 (3) Zone B - Eastlake Greens 17.44 5.18 18.49 18.07 18.07 7,91 (3) Zone C - Olympic Training Center 144.47 1.39 153.14 149.65 149.65 2.61 ~3) Zone D - Salt Creek I 192.68 159.93 204.24 199.59 199.59 119.58 (3~ Zone E - Telegraph Canyon Channel 27.47 18.11 29.12 28.45 28.45 18.63 (3) ~2> {~) All areas share in the cost of Otay Lakes Road medians and off-site parkways. Total Revenue=$145,181 (2) Portions of Eastlake 1 BC and Eastlake Greens are in benefit area. t3) Revenue for all Zones included in overall Eastlake Maintenance District amount. Costs vary by parcel due to the various zones, land uses and attributed traffic generation factors within ELMD 1. Staffrecommends that the assessment for each of the areas remain the same as FY 2001/2002 plus a decrease as set forth in the Municipal Code and as explained herein. Staffrecommends an annual collectible, as shown in Table 1, which is below the assessment amount for each zone. The reserve for Zone E is at approximately 65%. A reserve between 80% and 100% was used for Zones A, B, C and D to minimize future increases. A reserve of $41,086 has been built up starting with FY 1994-95 to minimize the financial burden on property owners once the City had accepted the Telegraph Canyon Channel. Staffproposed, and Council accepted, that 10% of the reserve be used during FY 2001/2002, reducing the rate to $18.11 per EDU. Staff is proposing that another 10% of the reserve be used during Fiscal Year 2002/2003, setting the collectible rate for Zone E at $18.63 per EDU. Staff is currently preparing a Council Agenda Statement requesting annexation ofAPN#595-070-49, a 24.7- acre parcel south of Otay Lakes Road west of Eastlake Parkway, into Eastlake Maintenance District #1 in order to more fairly allocate the cost associated with Zone E. Olympic Training Center On December 17, 1996, City Council, by Resolution 18528, approved an agreement to allow the ARCO Olympic Training Center to continue maintenance of Wueste Road landscape improvements. Incorporated in this agreement are safeguards to ensure maintenance is performed to City standards. There are indemnity provisions for both parties for use of paths along Wueste Road. However, OTC turned over to the City maintenance of a median on Olympic Parkway. Staff recommends setting the collectible for Zone C at $2.61 per EDU. OTC is currently maintaining Wueste Road slopes through a landscape maintenance firm that performs services within the Training Center at a price lower than a typical City solicited price. Landscape maintenance firms sometimes subsidize the maintenance of high visibility areas to take advantage of publicity opportunities such sites can provide. The proposed assessment was developed on the basis of the City maintaining all Wueste Road landscape improvements. //- Page 15, Item// Meeting Date 7/23/02 Maintenance of an infiltration basin located at Wueste Road and Olympic Parkway is also included in Zone C. According to the January 16, 1996 maintenance agreement signed by the Cities of Chula Vista and San Diego, the U. S. Olympic Committee, and Eastlake, the maintenance costs of this basin would be included in Zone C after a three-year maintenance period by Eastlake and acceptance by the City. The maintenance period has expired without any action taken by Eastlake to maintain the basin; additionally, flows from the Eastlake Woods and Vistas developments also discharge into this basin. Since it would not be appropriate to have Zone C pay all maintenance costs under these circumstances, the City has deferred acceptance of the basin until a new special district has been formed for Eastlake Woods and Vistas which would include a portion of these costs and the basin has been brought up to City standards. Notice The public hearings were noticed pursuant to applicable Government Code sections. Assessment rolls are on file in the Public Works/Engineering office. FISCAL IMPACT: Public Works (including Open Space staff), Data Processing and Finance generate staff costs associated with the Open Space program. Contractual costs ($782,673) are outlined in Attachment B. These costs are recovered through the OSD collectible, causing no net fiscal impact. The total General Fund reimbursement for City staffservices from the above listed OSD fimds for FY 2002/2003 is estimated to be $356,335. An increase of $5259 in the budget for OSD23 is being proposed. Since the rates for property owners in this district have been set based on the increased amount, this change will have no effect on the City's General Fund. Attachments: A. District Maps B. Cost Summary C. Budget Revisions for OSD 23 J:\ENGINEER~AGENDA\OSDistsA2 FY02-033a.doc File: 0725-30-OSD 00 7/17/02 10:36:44 AM AYM33~:I gOB-1 //~/7 O0 ~ oo~o°~°°° oo o = ~ 88°° oo8 88 8 8 ~ oo8°° ~ oooooooo oo o o ~.~ oooo ~ '~0~ oooo oo o o o 0 z ~ ~ Z~ ~ 0 ~ e o Rancho del Rey Open Space District No. 20 Amortized Costs Amount Accumulated for zonsr Description FY: 90-9t throu~lh 0t-02 r FY 024)3 IWork descriptionAmount I Desilting Basin $134,818.0(3 $6.00 Desilting basin maintenance (every 5 years) at East H Street $33,500.0(3 $0.00 Stabilization structures maintenance (every 3 years) $3,649.0(3 Miscellaneous 2 Rice Canyon $0,00 $0.00 Staging Area - A.C. overlay and stripe (every 5 years) Trail area $1,041.00 $6.00 Staging area maintenance (30 year period) $6.00 $6.00 Miscellaneous 3 East H Street $0.00 $0.0C 4 SPA 1 Phase 1 $48,024.00 $4,002.0£ Monumentation replacement (30 year period) Business Center) 5 SPA 1 Phases 2-6 $431,444.00 $34,617.0{; Theme wall and monument replacement (30 year) 6 SPA 2 $0.00 $0.0(3 7 SPA 3 $0.00 $0.0(3 8 Desilting Basin $4,540.00 $4,431.85 Access Road/gabion structure not yet accepted by City at Glen Abbey 9 Telegraph Cyn Channel $3,392.00 $0.00 $940,00 from amortized amount used for SPA 3 area) current maintenance in FY 200112002 $660,408.00 $43,050.85 1. Zone 1 ~ $26,320 (5 yrs) & $6,700 (# yrs) for desilting basin & stabilization structures not collected beyond 5 yrs per Code; Zone 2 - $813 (5 yrs) for AC not collected. 2. Zone 2 & 3 - Amortized cost for walls not determined. 3. Zones 6 & 7 - Theme wall/monumentation to be added. 4. Zone 8 - New gabion structure and access road are to be periodically maintained. Reserves are to be accumulated prior to anticipated acceptance in FY 2002/2003 or later. 5. Zone 9 - See TC spreadsheet for cost breakdown on channel. h:~home~engineer\agenda\OSD 20 amortized costs.xls ATTACHMENT C BUDGET REVISIONS FOR OSD 23 Account Proposed Approved Additional No. Cateeory Budeet Budeet (6/02) ADDropriation 6572 Utility Charges $120.00 $120.00 6573 Trash Collection & Disposal Fees 280.00 280.00 6574 Water Charges 4,900.00 4,896.00 $4.00 6621 Services to maintain structures, grounds 250.00 250.00 7003 City Staff Services 3,680.00 2,311.00 1,369.00 6401 Contract Services 7,150.00 3,899.00 3,251.00 6814 Landscape Supplies 210.00 210.00 6911 Materials to maintain structures, grounds 900.00 900.00 6301 Professional Services 400.00 400.00 6501 Supplementals 40.00 40.00 8448 Transfer: Corporate Yard Debt Service 380.00 299.00 81.00 6301 Special Maintenance Fund (MSCP) 554.00 554.00 TOTAL BUDGET $18,864.00 $13,605.00 $5,259.00 J:/ENGINEERJOPENSPACIOSD 23 Budget Rcvisions.doc //-</~ RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED, APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS, AND LEVYING THE ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE MAINTENANCE DISTRICTS 1-9, 15, 17, 18, 20, 23, 24, 26, 31, 33, BAY BOULEVARD MAINTENANCE DISTRICT, AND EASTLAKE MAINTENANCE DISTRICT NO. 1 WHEREAS, prior to the adoption of this resolution, the City Council has caused the formation of various districts under and pursuant to either the Chula vista Open Space District Procedural Ordinance ("Procedural Ordinance"), as contained in Chapter 17.07 (adopting in substantial part the 1972 Lighting and Landscaping Act ("Act") as contained in Streets and Highways Code Section 22500, et seg., or pursuant to the Act itself designated as follows: 1. Open Space District Nos. 1-9, 15, 17, 18, 20, 23, 24, 26, 31 and 33. 2. Bay Boulevard Maintenance District and Eastlake Maintenance District NO.1. WHEREAS, in accordance with the Procedural Ordinance, the City Engineer has prepared a report on the spread of assessments for said Open Space and Maintenance Districts ("Engineer's Report"); and, WHEREAS, on Engineer's Reports hearing; and, June 11, 2002, and set July 23, the City Council approved the 2002 as the date for the public WHEREAS, the proposed individual assessments for Fiscal Year 2002-2003 as they compare to the last year are shown below: 1 //-~ TABLE 2 Prior FY's vs. FY 2002/2003 Assessments/Collectibles FY 02/03 Proposed Proposed FY 00/01 FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 OSD#/Zone AssmntJ Collection! AssmntJ FY 01/02 AssmntJ Collection! Revenue EDU EDU EDU Assmnt+IF(2) EDU EDU 1 $96.25 $96.00 $102.03 99.70 99.70 $97.00 $64,194 2 44.66 47.00 47.34 46.26 46.26 46.00 11,454 3 305.67 290.00 324.01 316.63 316.63 299.00 37,973 4 322.86 304.00 342.23 334.44 334.44 321.00 67,410 5 314.84 280.00 333.73 326.13 326.13 285.00 34,770 6 155.69 110.00 165.03 161.27 161.27 110.00 17,820 7 108.76 96.00 115.29 112.66 112.66 97.00 10,088 8 496.86 416.00 526.67 514.67 514.67 444.00 48,840 9 140.81 149.00 149.26 145.86 145.86 143.00 54,912 15 296.56 277.00 314.35 307.19 307.19 276.00 15,732 17 141.96 40.00 150.48 147.05 147.05 53.00 2,438 18 335.45 266.00 355.58 347.48 347.48 266.00 115,710 20 (See below) - - - - - - 832,129 Zone 1 - Desilting Basin 51.84 16.92 54.95 53.70 53.70 21.74 (3) Zone 2 - Rice Canyon 3.94 4.15 4.18 4.08 4.08 4.07 (3) Zone 3 - H Street 5.61 4.35 5.95 5.81 5.81 3.81 (3) Zone 4 - Business Centre 20.88 20.59 22.13 21.63 21.63 17.75 (3) Zone 5 - SPA I 315.00 310.32 333.90 326.29 326.29 275.27 (3) Zone 6 - SPA II 242.03 153.78 256.55 250.71 250.71 134.73 (3) Zone 7 - SPA III 149.40 149.10 158.36 154.76 154.76 127.00 (3) Zone 8 - North Desilting Basin 34.44 36.50 36.51 35.67 35.67 35.67 (3) Zone 9 - Telegraph Canyon Channel 27.35 28.88 28.99 28.33 28.33 20.68 (3) 23 383.53 170.00 406.54 397.28 397.28 216.00 19,261 24 574.72 470.00 609.20 595.33 595.33 480.00 19,200 26 451.07 367.00 478.13 467.24 467.24 363.00 6,897 31 465.95 357.00 493.91 482.66 482.66 362.00 124,890 33 1,15155 0.00 1,220.64 1,192.84 1,192.84 0.00 0 Bay Boulevard (4) 845.07 878.40 895.77 875.37 875.37 874.49 5,588 EastIake No.1 (See below) - - - - - - 145,181 Zone A - EastIake I 10.67 4.03 11.31 $11.05 $11.05 $6.31 " Zone B - Eastlake Greens 17.44 5.18 18.49 18.07 18.07 7.91 ,s Zone C - Olympic Training Center 144.47 1.39 153.14 149.65 149.65 2.61 (S Zone D - Salt Creek 192.68 159.93 204.24 199.59 199.59 119.58 (5) Zone E - Telegraph Canyon Channel 27.47 18.11 29.12 28.45 28.45 18.63 ,S) {1}Represented average residential assessment in SPA I. (2)FY 2002/2003 assessment may be set at or below this cap without being subject to a majority protest. (3)Revenue for all zones included in overall District 20 amount. (4)Bay Boulevard rates based on acres for FY 1999/2000, 2000/2001, 2001/2002 and 2002/2003. (5)Revenue for all zones included in overall Eastlake Maintenance District amount. 2 //-~7 NOW, THEREFORE, BE IT RESOLVED as to all Open Space and Maintenance Districts herein referenced that the City Council of the City of Chula Vista does hereby find that written protests against the proposed assessment adjustment has not been made by owners representing more than one-half of the area of the land to be assessed from the improvement and confirms the diagram and assessment contained in the modified Engineer's Report, and orders the open space and maintenance facilities to be maintained. The adoption of this resolution shall constitute the levy of the assessments as proposed in the modified Engineer I s Report for the 2002-03 fiscal year and set forth hereinabove for Open Space Districts 1-9, 15, 17, 18, 20, 23, 24, 26, 31, 33, Bay Boulevard Maintenance District, and Eastlake Maintenance District No. 1. Presented by Approved as to form by John P. Lippit t Director of Public Works ~ M. Kaheny I Attorney J:\attorney\reso\Open Space All Districts Levy 3 // -r(? RESOLUTION NO. 2002- RESOLUTION OF THE CITY OF CHULA VISTA AMENDING THE FY 02/03 BUDGET BY APPROPRIATING $5,259 FROM THE UNAPPROPRIATED FUND BALANCE OF OPEN SPACE DISTRICT 23 FOR INCREASED COSTS IN CONTRACTUAL SERVICES FOR MAINTENANCE WHEREAS, because the maintenance contract for Open Space District 23 needed to be renegotiated, contractual costs have increased; and WHEREAS, the budget to maintain existing improvements in this district therefore needs to be increased from the $13,605,00 approved during the June 2002 budget process to $18,864.00; and WHEREAS, staff is requesting that Council amend the FY 2002/03 budget by appropriating $5259 from the unappropriated balance of the Open Space District reserve for increased costs in contractual services for maintenance. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby amend the FY02/03 budget by appropriating $5,259 from the unappropriated fund balance of Open Space 23 for increased costs in contractual services for maintenance. Presented by Approved as to fonn by John P. Lippitt Director of Public Works J!:~~~ City Attorney J:/attorney/reso/appropriation osd 23 //-49 COUNCIL AGENDA STATEMENT Item .' Meeting Date 7/23/02 ITEM TITLE: Public Hearing to consider testimony of the FY 2002/2003 levy and collection of assessments for City Open Space District 10 Resolution Ordering certain Open Space and maintenance facilities to be maintained, approving modifications to the Engineer's Reports for FY 2002/2003 and levying assessments for Open Space District 10 SUBMITTED BY: Director of Public worksf r REVIEWED BY: City Managert'l/¡V (4/5ths Vote: Yes_NoX) This is one of three companion agenda items to agenda item , which gives all background infol11lation and details on Open Space Districts in general which is applicable to this item, but does not include specific infol11lation on Open Space Districts 10, 11 and 14. Based upon the advice of the City Attorney, agenda items and have been separated from agenda item due to conflict of interest concerns. RECOMMENDATION: That Council: 1) Open the hearing, take testimony, close the hearing; 2) Direct staff to tally all protests; 3) Adopt the resolution to approve the modifications to the Engineer's Report and levying the assessments for FY 2002/2003; and 4) Authorize staff to begin the process of detel11lining assessments for FY 2003/2004. DISCUSSION: This agenda item is the yearly resolution to assess for Open Space maintenance within Open Space District 10, located along East J Street west of Pas eo Ranchero (see Attachment A). Table 1 relates the present year's assessment to the proposed assessment for Fiscal Year 2002/2003, Agenda item of tonight's agenda contains all the general infol11lation regarding Open Space Districts. TABLE! Prior FY's vs. FY 2002/2003 Assessment/Collectible FY 02/03 Proposed Proposed FY 00101 FY 01/02 FY 01/02 CAP: FY 02/03 FY02/03 FY 02/03 OSD 10 Assmntl Collcctiblel AssmntJ FY 01/02 Assmntl Collectiblel Revenue EDU EDU EDU Assmnt +IF(I) EDU EDU EI Rancho del Rev 6 & Casa del Rey $95.02 $94.00 $100.72 $98.43 $98.43 $94.00 $61,887 ({)FY 2001/2002 assessment may be set at or below this cap without being subject to a majority protest. Staff proposes for FY 2002/2003 that the assessment be kept within that amount previously approved, adjusting the FY 2001/2002 figure by a factor of -3.01% and a previous year's adjustment of 0.8% as /-< - I Page 2, Item /.~L Meeting Date 7/23/02 calculated in the manner set forth in the Municipal Code and explained in the narrative for agenda item of tonight's agenda. Staff also recommends a collectible of $94.00 per Equivalent Dwelling Unit (EDU), which is less than the assessment of $98.43 per EDU. Note that the collectible in FY 2002/2003 will be the same as in FY 2001/2002. Since the budget per EDU of $101.28 exceeds the assessment and collectible amounts, staff recommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 69%. These figures were calculated on the basis of a net assessment of $62,031 and a total of 658.37 EDU's, as shown in Attachment B. Because the budget exceeds the proposed assessment, Public Works (including Open Space staff) will review the District's budget and reserve in future years in an attempt to lower the budget and determine whether there are additional savings. This District was formed as a result of a 100% petition by the landowners and the assessment is not being · increased. FISCAL IMPACT: Staff costs associated with the Open Space program are generated by Public Works (including Open Space staff), Data Processing and Finance. Contractual costs are $30,920, as shown in Attachment B. These costs are recovered through the Open Space District collectible, causing no net fiscal impact. The General Fund will be reimbursed $11,375 from the Open Space District fund for City staff services for FY 2002/2003. Attachments: A District Map B Estimate of Cost J :\ENGIN EERXAGENDA\OS Dist 10A2 FY02-03.TOM.doc 0725-30 OSD 10 qfc ~ S o z ~ ~ ~ w .~ w m RESOLUTION NO.2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED, APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS AND LEVYING ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE DISTRICT NO. 10 WHEREAS, prior to the adoption of this resolution, the City Council has caused the formation of various districts under and pursuant to either the Chula Vista Open Space District Procedural Ordinance (" Procedural Ordinance"), as contained in Chapter 17.07 (adopting in substantial part the 1972 Lighting and Landscaping Act ("Act") as contained in Streets and Highways Code Section 22500, et seq., or pursuant to the Act itself designated as Open Space District No. 10; and WHEREAS, in accordance with the Procedural the City Engineer has prepared a report on the assessments for said Open Space and Maintenance ("Engineer's Report"); and, Ordinance, spread of Districts WHEREAS, on June 11, 2002, the City Council approved the Engineer's Report and set July 23,2002 as the date for the public hearing, and, WHEREAS, the proposed individual assessment for Open Space District 10 for FY 2002/2003 is shown below: PRIOR FY'S VS. FY 2002/2003 ASSESSMENT/COLLECTIBLE FY 02/03 Proposed Proposed FyoolOI FY 01102 FY 01/02 CAP: FY02/03 FY02/03 FY02/03 Assmt/ Collection! Assmt/ FY 01/02 Assmt/ Collection/ Revenue Open Space District No. 10 EDU EDU EDU Assmt + IF']) EDU EDU El Rancho del Rey 6 & $95.02 $94.00 $100.72 $98.43 $98.43 $94.00 $61,887 Casa del Rey (I) FY 2001/2002 assessment may be set at or below this cap without being subject to a majority protest. NOW, THEREFORE, Maintenance District No. Chula Vista does hereby BE IT RESOLVED as to 10, that the City Council of find that written protests Open Space the City of against the 1 /..2. - 5" proposed assessment adjustment has not been made by owners representing more than one-half of the area of the land to be assessed for the improvement and confirms the diagram and assessment contained in the modified Engineer's Reports, and orders the open space and maintenance facilities to be maintained. The adoption of this resolution shall constitute the levy of the assessment as proposed in the modified Engineer's Reports for the 2002/2003 fiscal year and set forth hereinabove for Open Space Maintenance District No. 10. Presented by Approved as to form by John P. Lippitt Director of Public Works J:\attorney\reso\Open Space 10 Levy 2 /2-b COUNCIL AGENDA STATEMENT . 0 Item / ~') Meeting Date 7/23/02 ITEM TITLE: Public Hearing to consider testimony of the FY 2002/2003 levy and collection of assessments for City Open Space District II Resolution Ordering certain Open Space and maintenance facilities to be maintained, approving modifications to the Engineer's Reports for FY 2002/2003 and levying assessments for Open Space District II SU8MIl'TED 8V, Di='", of""blio W"''''pi qr/ REVIEWED BY: City Manager~ 9r (4/5ths Vote: Yes_NoX) This is one of three companion agenda items to agenda item , which gives all background information and details on Open Space Districts in general which is applicable to this item, but does not include specific information on Open Space Districts 10, II and 14. Based upon the advice of the City Attorney, agenda items and have been separated fi-om agenda item due to conflict of interest concerns. RECOMMENDATION: That Council: I) Open the hearing, take testimony, close the hearing; 2) Direct staff to tally all protests; 3) Adopt the resolution to approve the modifications to the Engineer's Report and levying the assessments for FY 2002/2003; and 4) Authorize staff to begin the process of determining assessments for FY 2003/2004. DISCUSSION: This agenda item is the yearly resolution to assess for Open Space maintenance within Open Space District II, located along East H Street between 1-805 Freeway and Del Rey Boulevard (see Attachment A). Table I relates the present year's assessment to the proposed assessment for Fiscal Year 2002/2003. Agenda item of tonight's agenda contains all the general information regarding Open Space Districts. TABLE 1 Prior FY's vs. FY 2002/2003 Assessment/Collectible FY 02/03 Proposed Proposed FY 0010 I FY 01/02 FY 01/02 CAP: FY 02/03 FY02/03 FY 02/03 OSD 11 AssmntJ Collectlblel Assmntl FY 01/02 Assmntl Collectiblel Revenue EDU EDU EDU Assmnt + IF') EDU EDU Hidden Vista Village $96.16 $101.00 $101.93 $99.61 $99.61 $99.00 $130,782 (I)FY 2001/2002 assessmen1 may be set at or below this cap without being subject to a majority protest. - Staff proposes for FY 2002/2003 that the assessment be kept within that amount previously approved, adjusting the FY 2001/2002 figure by a factor of -3.01 % and a previous year's adjustment of 0.8% as calculated in the manner set forth in the Municipal Code and explained in the narrative for agenda item /3-1 Page 2, Item Meeting Date 7/23/02 of tonight's agenda. Staff also recommends a collectible of $99.00 per Equivalent Dwelling Unit (EDU), which is less than the assessment of $99.61 per EDU. The budget for this district is $98.39 per EDU. The reserve under this recommendation will be 54%. These figures were calculated on the basis of a net assessment of $131,067 and a total of 1,321.03 EDU's, as shown in Attachment B This District was formed as a result of a 100% petition by the landowners and the assessment is not being increased. FISCAL IMPACT: Staff costs associated with the Open Space program arc generated by Public Works (including Open Space staff), Data Processing and Finance. Contractual costs arc $44,331, as shown in Attachment B. These costs arc recovered through the Open Space District collectible, causing no net fiscal impact. The General Fund will be reimbursed $22,161 from the Open Space District fund for City staff services for FY 2002/2003. Attachments: A District Map B Estimate of Cost J:\ENGINEER~AGENDA\OSDistl lA2 FY02-03. l'OM.doc 0725-30 OSD I 1 u.. o w <.'J « "- (D ~ z w :2 I o ~ o o !::! o o o "N 0> ,5g '-N >0 ",0 ..--1;)~ ...-::;(; ,,0 "N :g ico o o !::! N o o N co o o !::! N o o N >- u.. 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"'........ ~;tt <h <h m'#. oo... <ri '" <h <h ë " E >- .. c. ~ Õ "0 C m > " E .g " ~ C " > m '" ~ " ~ ii: o o -co -ca5œ " 0 " -~::> OJ"-' E"-- :¡::¡œQ Jì2~ .!!.~B c: " " ,,0:: .. E"'- " <I> OJ ~O'" 'SO"C ,,"Q)C Q)u.2co a:::C:-cQ) œcoQ)>- 2:c+->-c Q)2rou (h.5 E ~ tDro:¡::¡- a:::~LTI'õ ~ §: ¡,; " õ z RESOLUTION NO.2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED, APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS AND LEVYING ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE DISTRICT NO. 11 WHEREAS, prior to the adoption of this resolution, the City Council has caused the formation of various districts under and pursuant to either the Chula vista Open Space District Procedural Ordinance ( "Procedural Ordinance"), as contained in Chapter 17.07 (adopting in substantial part the 1972 Lighting and Landscaping Act ("Act") as contained in Streets and Highways Code Section 22500, et seq., or pursuant to the Act itself designated as Open Space District No. 11; and WHEREAS, in accordance with the Procedural the city Engineer has prepared a report on the assessments for said Open Space and Maintenance ("Engineer's Report"); and, Ordinance, spread of Districts WHEREAS, on June 11, 2002, the city Council approved the Engineer's Report and set July 23, 2002 as the date for the public hearing; and, WHEREAS, the proposed individual assessment for Open Space District 11 for FY 2002/2003 is shown below: PRIOR FY'S VS. FY 2002/2003 ASSESSMENT/COLLECTIBLE FY 02/03 Proposed Proposed FYOO/OI FY 01/02 FY 01/02 CAP: FY02/03 FY02/03 FY02/03 Assmt/ Collection/ Assmt/ FY 01/02 Assmt/ Collection/ Revenue Open Space District No. II EDU EDU EDU Assmt + IF'I) EDU EDU Hidden Vista Village $96.16 $101.00 $101.93 $99.61 $99.61 $99.00 $130,782 (1) FY 2001/2002 assessment may be set at or below this cap without being subject to a majority protest. NOW, THEREFORE, Maintenance District No. Chula Vista does hereby BE IT RESOLVED as to 11, that the City Council of find that written protests Open Space the City of against the 1 /-3 -;;;,- proposed assessment adjustment has not been made by owners representing more than one-half of the area of the land to be assessed for the improvement and confirms the diagram and assessment contained in the modified Engineer's Reports, and orders the open space and maintenance facilities to be maintained. The adoption of this resolution shall constitute the levy of the assessment as proposed in the modified Engineer's Reports for the 2002/2003 fiscal year and set forth hereinabove for Open Space Maintenance District No. 11. Presented by Approved as to form by John P. Lippitt Director of Public Works a: 4-, Kc-J2 ~ohn M. Kaheny ~ 'City Attorney J:\attorney\reso\Open Space 11 Levy 2 /:3-~ -- COUNCIL AGENDA STATEMENT Item Meeting Date 7/23/02 ITEM TITLE: Public Hearing to consider testimony of the FY 2002/2003 levy and collection of assessments for City Open Space District 14 Resolution Ordering certain Open Space and maintenance facilities to be maintained, approving modifications to the Engineer's Reports for FY 2002/2003 and levying assessments for Open Space District 14 SUBMITTED BY: Director of Public Workst~) REVIEWED BY: City Manager u~,~01'~ (4/SthsVote: Yes NoX) This is one of three companion agenda items to agenda item , which gives all background information and details on open Space Districts in general which is applicable to this item, but does not include specific information on Open Space Districts 10, 11 and 14. Based upon the advice of the City Attorney, agenda items and have been separated from agenda item due to conflict of interest concems. RECOMMENDATION: That Council: 1 ) Open the heating, take testimony, close the heating; 2) Direct staff to tally all protests; 3) Adopt the resolution to approve the modifications to the Engineer's Report and levying the assessments for FY 2002/2003; and 4) Authorize staff to begin the process of determining assessments for Fy 2003/2004. DISCUSSION: This agenda item is the yearly resolution to assess for open space maintenance within Open Space District 14, located along the north and south of Country Vistas Lane (see Attachment A). Table 1 relates the present year's assessment to the proposed assessment for Fiscal Year 2002/2003. Agenda item of tonight's agenda contains all the general information regarding Open Space Districts. TABLE 1 Prior FY's vs. FY 2002/2003 Assessment/Collectible FY 02/03 Proposed Proposed FY00/01 FY 01/02 FY 01/02 CAP: FY02/03 FY 02/03 FY 02/03 OSD 14 Assmnt/ Collectible/ Assmnt/ FY 01/02 Assmnt/ Collectible/ Revenue EDU EDU EDU Assmnt + IF(~) EDU EDU Bonita Long Canyon $309.11 $281.00 $327.66 $320.19 $320.19 $279.00 $243,667 (~)FY 2001/2002 assessment may be set at or below this cap without being subject to a majority protest. Staff proposes for FY 2002/2003 that the assessment be kept within that amount previously approved, adjusting the FY 2001/2002 figure by a factor of-3.01% and the previous year's adjustment of 0.8% as calculated in the manner set forth in the Municipal Code and explained in the narrative for agenda item /¥-I Page 2, Item // Meeting Date 7/23/02 of tonight's agenda. Staff also recommends a collectible of $279.00 per Equivalent Dwelling Unit (EDU), which is less than the assessment of $320.19 per EDU. Since thc budget per EDU of $334.33 exceeds the collectible amount, staff recommends utilizing the fund balance to make up the difference. Funds are available to do this because of prior years' savings and by adjusting the reserve balance. The reserve under this recommendation will be 66%. These figures were calculated on the basis of a net assessment of $244,012 and a total of 873.36 EDU's, as shown in Attachment B. Due to a revision in this year's Estimated Maintenance Cost from $289,716 to $291,991, the reserve percentage was lowered from 68% to 66% in order to avoid any increase in the collectible amount above the figure of $282.00 per EDU indicated in the previous Agenda Statement. Because the budget exceeds the proposed assessment, Public Works (including Open Space staff) will review the District's budget and reserve in future years in an attempt to lower the budget and determine whether there are additional savings. This District was formed as a result of a 100% petition by the landowners and the assessment is not being increased. FISCAL IMPACT: Staff costs associated with the Open Space program are generated by Public Works (including Open Space staff), Data Processing and Finance. Contractual costs are $115,130, as shown in Attachment B. These costs are recovered through the Open Space District collectible, causing no net fiscal impact. The General Fund will be reimbursed $49,685 from the Open Space District fund £or City staff services for FY 2002/2003. Attachments: A District Map B Estimate of Cost J:\ENGINEER~AGENDA\OS Dist 14A2 FY02-03.TOM.doc 0725-30 OSD 14 RESOLUTION NO. 2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ORDERING CERTAIN OPEN SPACE AND MAINTENANCE FACILITIES TO BE MAINTAINED, APPROVING MODIFICATIONS TO THE ENGINEER'S REPORTS AND LEVYING ASSESSMENTS FOR FISCAL YEAR 2002/2003 FOR OPEN SPACE DISTRICT NO. 14 WHEREAS, prior to the adoption of this resolution, the City Council has caused the formation of various districts under and pursuant to either the Chula vista Open Space District Procedural Ordinance ( "Procedural Ordinance"), as contained in Chapter 17.07 (adopting in substantial part the 1972 Lighting and Landscaping Act ("Act") as contained in Streets and Highways Code Section 22500, et seq., or pursuant to the Act itself designated as Open Space District No. 14; and WHEREAS, in accordance with the Procedural the City Engineer has prepared a report on the assessments for said Open Space and Maintenance ( "Engineer's Report"); and, Ordinance, spread of Districts WHEREAS, on June 11, 2002, the City Council approved the Engineer's Report and set July 23, 2002 as the date for the public hearings; and, WHEREAS, the proposed indi vidual assessment for Open Space District 14 for Fiscal Year 2002-03 is shown below: PRIOR FY'S VS. FY 2002/2003 ASSESSMENT/COLLECTIBLE FY 02/03 Proposed Proposed FYOO/Ol FY 01/02 FY 01/02 CAP: FY 02/03 FY 02/03 FY 02/03 Open Space Assmt! Collection! Assmt/ FY 01/02 Assmt/ Collection/ Revenue District No. 14 EDU EDU EDU Assmt + 1F(I) EDU EDU Bonita Long Canyon $309.11 $281.00 $327.66 $320.19 $320.19 $279.00 $243,667 (1) FY 2002/2003 assessment may be set at or below this cap without being subject to a majority protest. NOW, THEREFORE, BE IT RESOLVED as to Open Space District No. 14, that the city Council of the city of Chula Vista does hereby find that written protests against the proposed assessment adjustment has not been made by owners representing more than one- 1 /1/- :s- half of the area of the land to be assessed for the improvement and confirms the diagram and assessment contained in the modified Engineer's Reports, and orders the open space and maintenance facilities to be maintained. The adoption of this resolution shall constitute the levy of the assessment as proposed in the modified Engineer's Reports for the 2002-2003 fiscal year and set forth hereinabove for Open Space District No. 14. Presented by Approved as to form by k!- John P. Lippitt Director of Public Works J:\attorney\reso\Open Space 14 Levy 2 /~-& COUNCIL AGENDA STATEMENT Item Meeting Date ~Jub/~_3,-2OD2 ITEM TITLE: PUBLIC HEARING: Regarding the Proposed Assessment of Certain Delinquent Sewer Service Charges as Recorded Liens Upon the Respective Owner Occupied Parcels of Land and Placement of Delinquent Charges on the Next Regular Tax Bill for Collection RESOLUTION No. Assessing Delinquent Sewer Service Charges as Recorded Liens Upon the Respective Owner Occupied Parcels of Land and Approving Placement of Delinquent Charges on the Next Regular Tax Bill SUBMITTED BY: Assistant City Manager Powell REVIEWED BY: City Manager ,~0 (4/5ths Vote: Yes __No X ) In order to adequately protect the City's interest in delinquent sewer service charges and insure that collection efforts are directed towards the responsible property owner in the event of a change in ownership, staff is recommending approval for liens against affected properties as a preliminary action to placing the delinquencies on the property tax rolls if they remain unpaid. Adoption of this resolution will enhance the collection process for delinquent sewer service charges by ensuring that the correct property owners are charged and that payment be received on a more timely basis. This is the identical process approved by City Council since August 1998. RECOMMENDATION: That Council open the public hearing to consider all testimony, and adopt the resolution overruling all protests and assessing delinquents sewer service charges as recorded liens upon the respective owner occupied parcels of land and placement. BOARDS/COMMISSIONS RECOMMENDATIONS: Not applicable. DISCUSSION: The Chula Vista Municipal Code Section 13.14.150 allows delinquent sewer service charges to be assessed as recorded liens upon the affected properties and ultimately placed on the property tax bills for collection. The ordinance states that upon notification of the property owners, a public hearing is set for sewer service accounts which are over sixty days delinquent. At the hearing the City Council considers the delinquent accounts together with any objections or protests by interested parties. IS- Page 2, Item_ Meeting Date .July 7=3. 7002 At the conclusion of the hearing, the City Council, may either approve the delinquency and amount owed on the accounts as submitted or as modified or corrected by the City Council. Lastly, the City Council adopts a resolution assessing such amounts as recorded liens upon the respective parcels of land, and the amounts are charged to the property owners on the next regular property tax bill. Last year a California Supreme Court ruling removed our ability to lien properties for tenant delinquencies. Therefore, this request includes only owner occupied properties. We are continuing to analyze the fiscal impact of the court ruling on the City's sewer service revenues and changing our current in-house billing and collection methods to enhance or at least preserve the collection of these revenues in the future. In January 2002, City Council approved midyear liens for 169 delinquent sewer service accounts valued at $46,915 to be forwarded to the County for collection on the next regular property tax bill. Staff has currently identified 293 owner occupied accounts totaling $102.746 as being over 60 days delinquent (listing available at the City Clerk's office). Many of these property owners have gone through this lien process previously as they continue to leave their sewer service accounts unpaid. These property owners have been notified of their delinquencies, and two weeks ago, they were notified of the public hearing and were asked to pay their delinquent sewer service charges prior to this public hearing to avoid a lien being placed on their property. Payment arrangements will be set up as needed, and staff will continue to update this list as payments are received and accounts are cleared. A final list will be submitted to the City Council for consideration as soon as all payments are recorded. Staff is recommending that the City Council approve the final list of delinquent sewer accounts as submitted, and that these charges be forwarded to the County and assessed as recorded liens on the respective owner occupied parcels of land and ultimately placed on the next regular tax bill for collection. FISCAL IMPACT: By placing delinquent sewer service charges on the property owner's regular tax bill, over $52,000 in additional sewer fund revenues have been recovered for FY 00-01. For FY 01-02, an estimated $49,000 in additional sewer fund revenues should be recognized from these collection methods. Losing our ability to place liens for tenant delinquencies has had a significant impact this year as 152 tenant occupied active accounts valued at over $80,000 will not be collected through this process. Staff is currently using other means to pursue these delinquent accounts such as legal action in small claims court, and may consider using the services of an outside collection agency in the future. /5-.2.., RESOLUTION NO.2002- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ASSESSING DELINQUENT SEWER SERVICE CHARGES AS RECORDED LIENS UPON THE RESPECTIVE OWNER OCCUPIED PARCELS OF LAND AND APPROVING PLACEMENT OF DELINQUENT CHARGES ON THE NEXT REGULAR TAX BILL WHEREAS, on June 23, 1998, the City Council approved Ordinance No. 2736 amending Section 13.14.150 of the Chula Vista Municipal Code to allow delinquent sewer service charges to be assessed as liens and placed on the property tax bill for collection; and WHEREAS, property owners, accounts which are the ordinance states upon notification of the a pUblic hearing is set for sewer service over sixty days delinquent; and WHEREAS, at the hearing, the City Council is to consider the delinquent accounts together with any objections or protests by interested parties; and WHEREAS, at the conclusion of the hearing, the City Council may either approve the delinquency and amount owed on the accounts as submitted or as modified or corrected by the City Council; and WHEREAS, a public hearing on delinquent assessments was properly noticed for July 23, 2002, at which all protests or objections presented were considered by the City Council; and WHEREAS, staff is recommending that the City Council approve the final listing of delinquent sewer service accounts as submitted and that these charges be forwarded to the County for recordation as a lien and placement on the next regular tax bill for collection; and WHEREAS, any delinquent accounts prior to August 5, 2002 will be removed from the submittal of these charges to the County. that are cleared the list prior to City of protests approve, by staff NOW, THEREFORE, BE IT RESOLVED the City Council of the Chula Vista does hereby (1) overrule any and all or objections presented at the public hearing and (2) with respect to the delinquent account list presented and on file in the office of the City Clerk, assessing /S-3 delinquent sewer service charges as respective owner occupied parcels of such delinquent charges on the next bill unless cleared prior to August 5, recorded liens upon the land and the placement of corresponding regular tax 2002. Presented by Approved as to form by Robert Powell Assistant City Manager J:\attorney\reso\sewer.del /s--t' -- CITY COUNCIL AGENDA STATEMENT ItemNo.: / ¢ Meeting Date: 07/23/02 ITEM TITLE: Public Heating: Consideration of the following applications filed by The EastLake Company for 68.1 acres at the northwest and northeast comers of Otay Lakes Road and EastLake Parkway within the EastLake II Planned Community: a) GPA 02-07: Amendment to the City of Chula Vista General Plan to change the land use designation of approximately 16.4 acres at southeast comer of EastLake Parkway and SR-125 freeway futura alignment. b) PCM 01-15: Amendments to the EastLake I! General Development Plan and EastLake 1I Planned Community Districts Regulations and Land Use Districts Map. Also, adopt a new Sectional Planning Area (SPA) plan and associated regulatory documents for the 68.1 acres to be known as the "Village Center North Supplemental SPA". Resolution of the City of Chula Vista City Council recommending that the City Council adopt the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-01-042); approve amendments to the City's General Plan, Eastlake II General Development Plan, Eastlake II Planned Community District Regulations and Land Use Districts Map. Also, adopt a new Sectional Planning Area (SPA) plan and associated regulatory documents for 68.1 acres at the northeast and northwest comers of Otay Lakes Road and Eastlake Parkway. Ordinance of the City Council of the City of Chula Vista approving amendments to the Eastlake 1I Planned Community District Regulations and Land Use Districts Map. SUBMITTED BY: Director of Plarming and Building /~/ REVIEWED BY: City Manager(~ ~P' ~ (4/Sths Vote: Yes No X ) The applicant, EastLake Development Company, has submitted applications to: 1) amend the City's General Plan to change the land use designation of approximately 16.4 acres at southeast comer of EastLake Parkway and the future SR-125 freeway from Retail Commemial to Research and Limited Manufacturing; 2) amend the EastLake II General Development Plan to change the land use designation of 16.4 acres at the southeast comer of EastLake Parkway and SR-125 freeway (future alignment) from Public Quasi-public to Research and Limited Manufacturing; 14.2 acres on the west side of Eastlake Parkway from Public/Quasi-public to Commemial Retail; and 2.0 acres at the southeast comer of Fenton Street and EastLake Parkway from Research and Limited Manufacturing Page 2, Item No.: /~ Meeting Date: 07/23/02 to Professional & Administrative Commercial; and 3) amend the EastLake II Planned Community District Regulations to accommodate the changes in land use. The applicant is also requesting approval of a new Sectional Planning Area (SPA) plan and associated regulatory documents for the 68.1 acres to be known as the Village Center North Supplemental SPA. The new SPA contains Design Guidelines, Public Facilities Finance Plan, Water Conservation and Air Quality Improvement Plans. The Environmental Review Coordinator has determined that, although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because mitigation measures have been incorporated and agreed to by the project proponent. A Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program were prepared, which must be considered by the City Council prior to a decision on the project (Attachment 3). RECOMMENDATION: 1. Adopt the at~ached Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-01-042) issued for the Project. 2. Adopt attached Resolution GPA 02-07/PCM 01-15 approving the proposed amendments to the General Plan and EastLake II General Development Plan and Planned Community District Regulations and Land Use Districts Map. Also, adopt the new Sectional Planning Area (SPA) plan to be known as the EastLake Village Center North Supplemental SPA. BOARDS AND COMMISSION RECOMMENDATION: On June 17, 2002, the Resource Conservation Commission (RCC) considered the Mitigated Negative Declaration and Mitigation and Monitoring Program (IS 01-042), and after hearing staff's presentation, recommended adoption of the Mitigated Negative Declaration by the Planning Commission and the City Council. On July 10, 2002, the Planning Commission considered the GPA, GDP and SPA amendments, and the Mitigated Negative Declaration for the EastLake Village Center North project. Commissioners O'Neill and Willett inquired about traffic impacts on Otay Lakes Road and EastLake Parkway, between EastLake Parkway and future SR-125 on-ramp. Alex AI-Agha, Senior Civil Engineer and Marni Borg, Environmental Projects Manager, responded that improvements to Otay Lakes Road and EastLake Park~vay include: an additional westbound lane on Otay Lakes Road from EastLake Parkway to SR-125 on-ramp, expanded intersection geometrics, and enhanced signalization to accommodate traffic generated by the commercial center (see Attachment 3, Figure 27). Staff also indicated that EastLake Parkway would include an additional southbound right mm lane on to Otay Lakes Road. These improvements listed within the MND as mitigation measures would reduce traffic impacts associated with the EastLake Village Center North project to below significance. After staff' s response and discussion, the Planning Commission voted to recommend City Council approval of the project (5-0-2) with Commissioners Hall and Thomas absent. Page 3, Item No.: /~ Meeting Date: 07/23/02 DISCUSSION: In 1992, the City Council approved amendments to the EastLake II General Development Plan and EastLake I Sectional Planning Area (SPA) plan to accommodate a 485,000 sq. ft. medical center complex at the northwest comer of Otay Lakes Road and Fenton Street within a planning area of EastLake known as the "EastLake I Activity Center." This Activity Center, which replaced the original commercial/msidential mixed-use concept envisioned in the original SPA, incorporates three major components: 1) a neighborhood shopping center (south of Otay Lakes Road); 2) a mixed-use entertainment and service oriented village center (east and west side of EastLake Parkway); and 3) a major hospital/medical center (see Figure 1). The neighborhood commercial center, which existed at that time, is within the EastLake Greens SPA, and, consequently, developed and administered under that SPA. Although this component of the Activity Center was approved under separate design guidelines, its functional and aesthetic relationship to the northern Activity Center components was significant. This component of the Activity Center was used as an existing urban design reference. To properly guide the Activity Center development, in 1992, the City Council also approved the "EastLake I Activity Center Precise Plan Guidelines" for the above mentioned medical center mixed- use concept. These design guidelines established specific urban design, landscaping and functional goals and objectives to insure the integration of all aspects of the Activity Center into the surrounding industrial and the overall EastLake planned community. The Kaiser medical center project was never built and the property was re-acquired by The EastLake Company which is proposing to re-define the northern portion of the Activity Center (north of Otay Lakes Road) into three separate and independent parcels tied together with other surrounding properties/uses by urban design features and amenities. The new concept is outlined more specifically in a new supplemental Sectional Planning Ama (SPA) plan and associated regulatory documents prepared for this planning area. This new Supplemental SPA plan, which includes specific design guidelines for each parcel, will replace the previously adopted Activity Center Precise Plan Guidelines and all other associated regulatory documents. Existing Site Characteristics The Project involves 68.1 acres in two separate sites: a 54.5-acre site located at the northwest comer of EastLake Parkway and Otay Lakes Road, hereafter referred to as the Western Parcel, and 13.6 acres at the northeast comer of EastLake Parkway and Otay Lakes Road, hereafter referred to as the Eastern Parcel (see Locator). Western Parcel The western parcel is presently vacant and has been mass graded in conjunction with the EastLake I mass-grading program, and recently m-graded under an approved remedial grading permit. After the most recent grading, the site is divided into two level building pads with an elevation difference of approximately 20 ft. The lower pad, which is approximately 38.1 acres, drains from the northeast to southwest to an existing detention basin located at the southwest corner of the site. The northerly Page 2, Item No.: [~c> Meeting Date: 07/23/02 to Professional & Administrative Commercial; and 3) amend the EastLake II Planned Community District Regulations to accommodate the changes in land use. The applicant is also requesting approval or' a new Sectional Planning Area (SPA) plan and associated regulatory documents £or the 68.1 acres to be known as the Village Center North Supplemental SPA. The new SPA contains Design Guidelines, Public Facilities Finance Plan, Water Conservation and Air Quality Improvement Plans. The Environmental Review Coordinator has determined that, although the proposed project could have a significant e£fect on the environment, there will not be a significant effect in this case because mitigation measures have been incorporated and agreed to by the project proponent. A Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program were prepared, which must be considered by the City Council prior to a decision on the project (Attachment 3). RECOMMENDATION: 1. Adopt the attached Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-01-042) issued £or the Project. 2. Adopt attached Resolution GPA 02-07/PCM 01-15 approving the proposed amendments to the General Plan and EastLake II General Development Plan and Planned Community District Regulations and Land Use Districts Map. Also, adopt the new Sectional Planning Area (SPA) plan to be known as the EastLake Village Center North Supplemental SPA. BOARDS AND COMMISSION RECOMMENDATION: On June 17, 2002, the Resource Conservation Commission (RCC) considered the Mitigated Negative Declaration and Mitigation and Monitoring Program (IS 01-042), and after hearing staff's presentation, recommended adoption of the Mitigated Negative Declaration by the Planning Commission and the City Council. On July 10, 2002, the Planning Commission considered the GPA, GDP and SPA amendments, and the Mitigated Negative Declaration for the EastLake Village Center North project. Commissioners O'Neill and Willett inquired about traffic impacts on Otay Lakes Road and EastLake Parkway, between EastLake Parkway and future SR-125 on-ramp. Alex A1-Agha, Senior Civil Engineer and Marni Borg, Environmental Projects Manager, responded that improvements to Otay Lakes Road and EastLake Parkway include: an additional westbound lane on Otay Lakes Road from EastLake Parkway to SR-125 on-ramp, expanded intersection geometrics, and enhanced signalization to accommodate traffic generated by the commercial center (see Attachment 3, Figure 27). Staffalso indicated that EastLake Parkway would include an additional southbound right turn lane on to Otay L'~es Road. These improvements listed within the MND as mitigation measures would reduce traffic impacts associated with the EastLake Village Center North project to below significance. After sta£f's response and discussion, the Planning Commission voted to recommend City Council approval o£th¢ project (5-0-2) with Commissioners Hall and Thomas absent. Page 3, Item No.: ~ Meeting Date: 07/23/02 DISCUSSION: In 1992, the City Council approved amendments to the EastLake II General Development Plan and EastLake I Sectional Planning Area (SPA) plan to accommodate a 485,000 sq. ft. medical center complex at the northwest comer of Otay Lakes Road and Fenton Street within a planning area of EastLake kmown as the "EastLake I Activity Center." This Activity Center, which replaced the original commercial/residential mixed-use concept envisioned in the original SPA, incorporates three major components: 1) a neighborhood shopping center (south of Otay Lakes Road); 2) a mixed-use entertainment and service oriented village center (east and west side of EastLake Parkway); and 3) a major hospital/medical center (see Figure 1). The neighborhood commercial center, which existed at that time, is within the EastLake Greens SPA, and, consequently, developed and administered under that SPA. Although this component of the Activity Center was approved under separate design guidelines, its functional and aesthetic relationship to the northern Activity Center components was significant. This component of the Activity Center was used as an existing urban design reference. To properly guide the Activity Center development, in 1992, the City Council also approved the "EastLake I Activity Center Precise Plan Guidelines" for the above mentioned medical center mixed- use concept. These design guidelines established specific urban design, landscaping and functional goals and objectives to insure the integration of all aspects of the Activity Center into the surrounding industrial and the overall EastLake planned community. The Kaiser medical center project was never built and the property was re-acquired by The EastLake Company which is proposing to re-define the northern portion of the Activity Center (north of Otay Lakes Road) into three separate and independent parcels tied together with other surrounding properties/uses by urban design features and amenities. The new concept is outlined more specifically in a new supplemental Sectional Planning Area (SPA) plan and associated regulatory documents prepared for this planning area. This new Supplemental SPA plan, which includes specific design guidelines for each parcel, will replace the previously adopted Activity Center Precise Plan Guidelines and all other associated regulatory documents. Existing Site Characteristics The Project involves 68.1 acres in two separate sites: a 54.5-acre site located at the northwest corner of EastLake Parkway and Otay Lakes Road, hereafter referred to as the Western Parcel, and 13.6 acres at the northeast comer of EastLake Parkway and Otay Lakes Road, hereafter referred to as the Eastern Parcel (see Locator). Western Parcel The western parcel is presently vacant and has been mass graded in conjunction with the EastLake I mass-grading program, and recently re-graded under an approved remedial grading permit. After the most recent grading, the site is divided into two level building pads with an elevation difference of approximately 20 ft. The lower pad, which is approximately 38.1 acres, drains from the northeast to southwest to an existing detention basin located at the southwest comer of the site. The northerly Page 4, Item No.: / ~ Meeting Date: 07/23/02 16.4 acres drains west to a catch basin located at the southwest, then piped to the above mentioned detention basin. The surrounding land uses include: 1) the future SR-125 freeway alignment to the west; 2) the Business Center I to the north and east across EastLake Parkway; and 3) the Von's Shopping Center to the south across Otay Lakes Road. Access to this site is provided along all sutrounding streets (see Locator). Eastern Parcel The Eastern Pamel is located on the east side of EastLake Parkway between Otay Lakes Road and Fenton Street. This site is approximately 13.6 acres, inclusive of an existing 4.0-acre church at the east end. As with the Western Parcel, this site was graded as part of the original EastLake I mass grading program. The chumh site is approximately 5 feet above the remainder site and has direct access from Otay Lakes Road to the south. The site is surrounded by Fenton Street and industrial uses to the north, EastLake Parkway to the west, Otay Lakes Road to the south and Research and Limited Manufacturing uses to the east. Access to the site is provided along all surrounding streets (see Locator). General Plan, SPA Land Use Designations and Land Use General Plan CV Municipal Code PC District Land Use Existing Land Use Zoning Designation Western Parcel Site Coramercial Retail PC, Planned Village Center Vacant Community North IndustrialResearch& PC, Planned Business Center Industrial, EastLake Manufacturing Connnunity Parkway South Commercial Retail & PC, Plaaned Open Space, Village Otay Lakes Road, Open Space Community Center Von's commercial center East Industrial Research & PC, Planned Business Center, Vacant, EastLake Manufacturing, Community Village Center Parkway Residential Low- Medium West Open Space PC, Planned Open Space Vacant, Future SR- Community 125 Freeway Eastern Parcel Site Commercial PC, Planned Village Center, Vacant Professional & Conummity Business Center, Administrative Open Space North IndustrialResearch& PC, Planned Business Center, lndustrial, Fenton Manufacturing Community Open Space Street Page 5, Item No.: /~' Meeting Date: 07/23/02 South Residential Low- PC, Planned Residential Residential, Otay Medium Community Condominium Lakes Road East Commercial PC, Planned Business Center Vacant, Industrial Professional & Community Administrative West Commercial Retail PC, Planned Village Center Vacant, East]Lake Community Parkway Proiect Description The proposed project includes amendments to the City's General Plan, the EastLake II General Development Plan, EastLake I Sectional Planning Area Plan, and the EastLake II Planned Community District Regulations and Land Use Districts Map. The proposed amendments are more specifically described in the following paragraphs by individual parcel. General Plan Amendments: Western Parcel Change 16.4 acres at the northerly portion of the site from Commercial Retail to Research and Limited Manufacturing (See Figure 2). Eastern Parcel No General Plan Amendments are proposed for this site. EastLake 1I General Development Plan Amendments: Western Parcel: Change 16.4 acres at the northerly portion from PQ, Public/Quasi-public to IR, Research and Limited Manufacturing (see Figure 3). Eastern Parcel Change the northerly 2.0 acres from BC-1, Business Center and OS-7, Open Space to VC-2, Village Center Land Use designation (See Figure 3). EastLake 1I Planned District Regulations - Land Use Districts Map Amendments: Western Parcel Change the northerly 16.4 acres from VC- 1, Village Center to BC-3, Business Center Core District land use designation (see Figure 4). Eastern Parcel Change 2 acres at the southeast comer of EastLake Parkway and Fenton Street from BC-1, Business Center Manufacturing District to VC-2, Village Center (Professional and Administrative/Limited Retail), and 2 acres along the eastern edge of the subject site from) OS-2, Open Space, to Village Center (Professional and Administrative/Limited Retail) (see Figure 4). Page 6, Item No.: Meeting Date: 07/23/02 EastLake II Planned District Regulations ~ Text Amendments: In addition to various, minor clean-up type amendments, the project includes the following text amendments: Section III, Permitted Uses - Village Center and Business Center Replace the definitions of the permitted, not permitted, CUP, etc symbols in Sections III. 1, Permitted Uses Village Center and Section III.4; Permitted uses- Commemial Districts and Section IV. 1 Permitted and Conditional Uses Business Center. The new definitions clarify the required planning process for land uses listed in the Permitted Uses Table. Change the eating and drinking establishments permitted land use to allow restaurants, coffee shops and delicatessens with outdoor seating, subject to Site Plan and Architectural review. Include Bank/Financial Institution with drive-thru as an allowable use; and delete the size requirement for Furniture and Hardware stores from (<I0,000 sf), to allow any size. Redefine the permitted land uses in VC-2 to promote a Professional and Administrative land use with limited commercial uses. Section III .2, Property Development Standards - Village Center District Incorporate Property development standards, including building setbacks, building height for the VC-1 and VC-2 Land Use Districts. Section IV Business Districts introduce a new BC-3 land use district with its corresponding land use district intent section, list of pemfitted and conditional uses permitted, and corresponding Property Development Standards. Section(s) 1.3.A Special Purpose Land Use Districts and V.2 Permitted and Conditional uses: Quasi- Public Facilities (PQ) Delete the future urban column from the permitted land use table. Section VIII.2 Schedule of Off-street Parking Requirements Modify the off-street parking requirements for Planned shopping centers to allow for outdoor garden related retail areas and restaurant outdoor seating without providing additional parking (see Attachment 5, PC Regulations tab). EastLake ! Sectional Planning Area Plan (SPA) - Site Utilization Plan Amendments Western Parcel Merge the southern 14.2 acres of the 30.6-acre parcel identified as MC-lin the Site Utilization Plan into the southerly adjacent VC-1 parcel. Also, create a new parcel identified as E-10 with the remaining 16.4 acres of the MC-1 parcel (see Figure 5). Eastern Parcel Merge 2-acres at the southeast comer of EastLake Parkway and Fenton Street (identified in the adopted Site utilization plan as E-10) and 2- acres along the eastern edge of the subject property Page 7, Item No.: I A~ Meeting Date: 07/23/02 (identified in the adopted Site Utilization Plan as OS-12, Open Space) into the southerly adjacent VC-2 parcel (See Figure 5) to expand the existing VC-2 parcel from 10 to 13.6 acres (According to the previous calculations, it would be 14.1 acres, but the new figure is based on more precise measuring of the existing parcels). EastLake I Sectional Planning Area SPA plan - Text Amendments The proposed amendments reflect the change in urban design concept for the portion of the EastLake [ Activity Center known as the Village Center North. In order to simplify the amendment to the adopted EastLake I SPA, the proposed SPA plan amendments are reflected in a separate supplemental document to be known as the EastLake I, Village Center North Supplemental SPA (see Attachment 4). The new SPA plan contains Design Guidelines, Public Facilities Financing Plan (PFFP), Air Quality Improvement Plan (AQIP), Water Conservation Plan (WCP), which are supplemental to the ones found in the EastLake I SPA plan. Analysis General Plan Amendment The proposed amendments to the General Plan consist primarily of changing the previously adopted land use designation associated with the Kaiser Medical Center project to accommodate the new Village Center concept proposed by the EastLake Company. As indicated above, the requested General Plan amendment consist of changing 16.4 acres at the northern portion of the site from Commercial Retail to Research and Limited Manufacturing. The topographical difference of approximately 20 feet with the southerly adjacent portion of the site and the parcel orientation towards the business center to the north, are the basis to support the requested amendment. The proposed land use change will provide an additional 16.4 acres of Industrial Research and Limited Manufacturing for employment type uses within the EastLake Community. EastLake II General Development Plan Amendment Western Parcel The proposed amendments to the General Development Plan consist of changing the previously adopted land use designation associated with the Kaiser Medical Center project to accommodate the new Village Center concept proposed by the EastLake Company. As mentioned above, the orientation and configuration of the northerly 16.4 acres is substantially more suitable for employment land use and therefore more compatible with the EastLake Business Center to the north and east. The remaining 14.4 acres currently designated for Public Quasi-public and proposed to be changed to Commercial Retail, will be added to the Commercial Retail parcel directly to the south to create a 38.1-acre commercial retail site. The combined acreage will allow the site to be developed as a major commercial center to serve EastLake residents and the city as a whole. Page 8, Item No.: '~ Meeting Date: 07/23/02 Eastern Parcel The requested GDP amendment for this site involves changing the northerly 2 acres land use designation from Research and limited Manufacturing to Professional and Administrative Commercial. The land use change provides additional land area to accommodate a cohesive office commercial development envisioned for this parcel in the new Supplemental SPA. With the conversion of the 16.4 acres on the western Parcel to Research and Limited Manufacturing, the acreage designated for employment in the EastLake Planned Community, will increase by 14.4 acres. This added acreage will contribute substantially to achieve the city's economic development goals and objectives. EastLake 1 Supplemental EastLake Village Center North SPA Plan EastLake I SPA Plan The EastLake Village Center North, which is referred to as the EastLake I Activity Center in the adopted SPA plan, is located within the EastLake I SPA and functions as the town center for the EastLake Planned Conununity, intended to serve the business center within the SPA and the EastLake Planned Community as a whole. This Activity Center concept features three major components: 1) a neighborhood shopping center; 2) a mixed-use entertainment and service oriented village center; and 3) a major hospital/medical center (see Figure 1). This Activity Center replaced the original commemial/residential mixed-use concept envisioned in the original EastLake I SPA. To properly guide the above-mentioned EastLake I Activity Center development, in 1992, the City Council approved the "EastLake I Activity Center Precise Plan Guidelines". The Design Guidelines established specific urban design parameters, land use features and landscaping and functional goals to insure the integration of all aspects of the Activity Center into the EastLake I SPA and the overall planned community (see Figure 6). However, this concept, which was based on the Kaiser Medical Center project as the major anchor, was never built due to Kaiser Permanente Medical Group's decision not to build an additional hospital in San Diego County. Thus, the property was re-acquired by the EastLake Company which is proposing to redefine the northern portion of the Activity Center (north of Otay Lakes Road) into three separate and independent parcels tied together by their relationship and interface with other surrounding properties and uses. This new concept is an integral part of the overall EastLake Planned Community and it should be, to a large extent, a continuation of the existing development in design and policy regulations. The new concept is more specifically outlined in a new Supplemental SPA plan. This new Supplemental SPA defines the development parameters, including the land use designation, Urban Design Criteria Circulation, public facilities, Water Conservation Plan, Air Quality Improvement Plan and other necessary components to ensure the proper integration of the Village Center North into the existing surrounding Residential, conmaercial and industrial uses. The following paragraphs describe in more detail some of the EastLake Village Center North Supplemental SPA plan components. Page 9, Item No.: Meeting Date: 07/23/02 Land Use Under the adopted EastLake II General Development Plan, PQ, Public Quasi-public, the EastLake Village Center North was envisioned to contain a major medical center complex with a support commercial, entertainment and civic uses, which resulted in a well integrated mixed-use project illustrated in the latter adopted precise plan for the subject property. The new land use composition is intended to create three separate parcels, each with a distinctive target land use designation, but tied together by common urban design features and urban design guidelines. The land uses have been crafted to provide independent development parameters and guidelines, but complementing each other as the area is fully developed. Circulation The EastLake Village Center North will be served by two major sheets: EastLake Parkway and Otay Lakes Road. The western parcel's main access is along Otay Lakes Road with secondary access points along EastLake Parkway. Otay Lakes Road, which is a 6-lane Prime Arterial road will be widened to seven lanes to accommodate a queuing lane for the future SR- 125 fxeeway on-ramp and acceleration and de-acceleration lanes for the commemial center site (Western Parcel) EastLake Parkway will also be widened to five lanes to accommodate the required turning lanes at the intersection with Otay Lakes Road (see Attachment 5, SPA Plan tab). Regional access will be provided primarily by 1-805 located approximately 5 miles to the west, and eventually by the future SR-125, immediately adjacent to the west. Required improvements installation timing and financing mechanism are discussed in the Village Center North Public Facilities Finance Plan (see Figure 7). Design Guidelines The EastLake Village Center Design Guidelines reflect the physical appearance for the type of development envisioned such as a research and manufacturing facility within the northerly 16.4 acres (E- 10), a commercial center within the southerly 38.1 acres (VC- 1), and a professional administrative complex with minor retail uses within the easterly 13.6 acres (VC-2). The Design Guidelines stipulate design parameters that pertain to site planning, landscape architecture, architecture and signage for the 68.1-acre project site- westerly and easterly parcels, and serve to provide appropriate design criteria in the review of proposed developments for the respective areas of the project. In addition, the EastLake Village Center Design Guidelines feature design elements such as trail nodes along the EastLake Parkway Thematic Con-idor Trail System, which consists of textured paving, seating/rest areas and canopy trees. The proposed trail system also considers the potential for future transit facilities. These elements are intended to promote pedestrian activity. The urban design elements presented in the EastLake Village Center Design Guidelines promote a well- designed commercial center, which will serve as a landmark "Gateway" to the EastLake Planned Community. The EastLake Village Center Design Guidelines replaces the EastLake I Activity Center Precise Plan Guidelines. However, applicable elements of the Precise Plan, such as a Park & Ride facility, pedestrian oriented trail system, landscaping and signage, water features and community open space areas such as courtyards, patios, pergolas, and trellises to encourage pedestrian interaction have been retained and incorporated within the EastLake Village Center Design Guidelines. Page 10, Item No.: Meeting Date: 07/23/02 The Design Guidelines contain illustrations and guidelines to implement the design ideas presented therein. Some of the urban design guidelines include land use diversity, site development character and conceptual building/parking/open space relationships within the project. Because of the importance of unifying themes and designs over an extended period of time until full build out, the Design Guidelines will be utilized to ensure overall consistency while allowing for flexibility on the part of the Design Review Committee at the detailed site plan level. Village Center North Supplemental Public Facilities Finance Plan The proposed Public Facilities Financing Plan (PFFP) has been prepared by City consultants based on water, sewer, traffic, drainage, biology and other technical studies. As required by the City's Growth Management Ordinance, the proposed EastLake Village Center North Supplemental PFFP analyzes the impact of the project on public facilities and services and identifies the required public facilities and services needed to serve the project to maintain consistency with the City's Quality of Life Threshold Standards. The PFFP describes in detail the cost, financing mechanism and timing for constructing public facilities. The public facilities needed to serve the project will be guaranteed by placing conditions of approval on the tentative parcel map, payment of DIF fees at the building permit stage, and/or utilizing Community Facilities Districts to finance or maintain the public facilities. Transportation The City's Traffic Threshold Standard specifies that a Level of Service (LOS) of C or better, as measured by average travel speeds on the arterial roads, shall be maintained with an exception that during peak hours LOS D can occur for no more than two hours of the day or LOS E for one hour. The EastLake Village Center North project is calculated to generate a total of 36,356 daily project trips. Since no specific development is proposed on parcel E~ 10 or VC-2 at this time, an assumption by the traffic consultant was made as to future traffic generation for these parcels and included in the traffic model. Street improvements required to serve the project include a new westbound lane on Otay Lakes Road from EastLake Parkway to SR-125 and traffic signals and intersection widening at driveway entrances to the shopping center and at street intersections such as EastLake Parkway and Otay Lakes Road and EastLake Parkway and Fenton Street and Miller Drive. The applicant will also be conditioned to provide fair share funding for cumulative impacts that will necessitate the future widening of Olympic Parkway from SR-125 to EastLake Parkway and Otay Lakes Road from Telegraph Canyon Road to "H' Street. With the construction of the project level street improvements and the cumulative level street improvements, the City's Quality of Life Threshold Standards will be maintained at a Level of Service of C in the morning peak hour and at a Level of Service of B in the evcming peak hour. Based on the Traffic Impact Analysis prepared for the EastLake Village Center North project by the City's traffic consultant, Linscott, Law & Greenspan, dated May 8, 2002, threshold compliance will be maintained with implementation of the street improvements identified in the report and with the Page 11, Item No.: r~ Meeting Date: 07/23/02 payment of transportation DIF fees listed above. The EastLake Village Center North project will be conditioned to pay Transportation DIF fees ($6,240 per EDU), Interim SR-125 fees ($820 per EDU) and Traffic Signal Fees ($23.00 per vehicle trip generated per day) at the rate in effect at the time building permits are issued for the project. Drainage The 68.1-acre site lies within the Telegraph Canyon Drainage Basin. This basin is served by improved concrete drainage channels that mn parallel to Telegraph Canyon Road. On-site runoffis contained on-site within a detention basin to reduce the impact of a 100-year flood on downstream facilities. The project will be conditioned to provide for the conveyance of storm water flows in accordance with City standards, policies and requirements. Sedimentation basins, on-site erosion protection, urban runoff treatment, and ongoing maintenance will be provided as a condition of the project. Water The Otay Water District will provide water service for EastLake Village Center North project. Annexation into Improvement District 22 will be required prior to water service being provided. The Otay Water District has facilities in the vicinity of the project that can provide water service. The District will also provide recycled water to the project for landscape irrigation and other uses. The total projected potable water demand for the Village Center North project is approximately 0.114 million gallons per day. The commercial fire flow is 5,000-gpm flow for 5 hours, which meets the City's requirements. The necessary area-wide water improvements to serve the project have been constructed. Sufficient water capacity and infrastructure exist to serve the EastLake Village Center North project. Sewer Sewer service to the project site is provided by the City of Chula Vista. The project will connect to the existing 15-inch diameter Telegraph Canyon Trunk Sewer in Otay Lakes Road either directly or via a sewer line located in EastLake Parkway. The tnmk sewer facilities will accommodate sewage flows from the project and other uses in the basin. The City holds capacity rights of 19.843 mgd in the San Diego Metropolitan Sewerage System and has 5.581 mgd remaining available capacity in the Metro Sewer System. The sewer service charges for this development will be assessed based on the quantity and quality of effluent that will be generated from the site. The sewer analysis determined that the land uses of the proposed project would result in a reduction in sewage flow from those planned in previous studies. Because of the reduction in flows, the planned improvements to the Telegraph Canyon Trunk Sewer will accommodate project flows. Fire Development of the EastLake Village Center North project is not anticipated to change the need for fire service in the area. Interim Fire Station #6, located at 975 Lane Avenue in EastLake Business Center I would be the primary station to serve the project. The long-term plan is for Fire Station #6 Page 12, Item No.: / ~ Meeting Date: 07/23/02 to be relocated to East "H" Street and Mount Miguel Road and Fire Station//8 to be constructed in EastLake Woods. Schools, Libraries and Parks The proposed project will not generate an increase in dwelling units or population in the project area. Therefore, the development will not result in a need for new schools, libraries or parks. However, the applicant will have to pay school fees at the rate in effect at the time building permits are issued. Fiscal The Fiscal Impact Analysis for the 68.1-acre project site focused on the City's general fund account for City services. The estimated revenues were from property taxes (secured and unsecured), property transfer tax, sales & use tax, franchise fees, Transient Occupancy Tax (TOT), business licenses, utility taxes, parking citations, gas tax, etc. Estimated expenditures were from police, fire, administration, public works, planning, parks and recreation. Fiscal revenues would range from $406,300 in the first year and increase to $620,500 per year when fully developed. Fiscal expenditures associated with the EastLake Village Commercial Center Project are estimated to be $345,600 in 2003 and $514,100 at build-out. Base on the proceeding estimates, the net fiscal impact from developing the EastLake Village Commercial Center would be positive ($60,700) in the beginning and would remain so throughout development finishing with an annual estimate of $106,400 surplus. EastLake I1 Planned Community District Regulations Amendments The EastLake II Planned Community District Regulations function as the zoning regulations for the project. The PC District Regulations provide standards and regulations to guide the development of the project. These regulations are applied in conjunction with the EastLake Village Center North Design Guidelines to ensure the uses within the project are compatible and well designed. The EastLake II Planned Community District Regulations adopted originally in 1985 and amended in 1992 to allow the Kaiser medical center project, cover all of EastLake Hills, Shores, Business Center and the Greens and Trails. This amendment only affects the commercial and industrial uses, which occur in the EastLake Village Center North portion of the EastLake project. The amendments essentially consist of fine-tuning the allowable uses in the Village Center North parcels to reflect the proposed uses for the shopping center and professional and commercial development on VC-2. Since BC-3 is being created as a new land use district (formerly part of VC- 1) allowable land uses are being added to the regulations to reflect the City's intent to encourage medical facilities and uses on BC-3. In addition, the property development standards have been improved to reflect setbacks from Otay Lakes Road and EastLake Parkway as well as future SR-125. New property development standards have been included for BC-3. The off-site parking requirements for planned shopping centers of five spaces per 1,000 square feet of building area for all uses except for outdoor garden areas and dining patios has been added to regulations. The remaining provisions of the EastLake II Planned Community District Regulations remain tmchanged. Page 13, Item No.: / ~ Meeting Date: 07/23/02 Water Conservation Plan The City's Growth Management Ordinance requires the preparation ora Water Conservation Plan for all projects. Thc reduction in water usage from the previously approved Kaiser Hospital project (.421 mgd) as compared to the proposed EastLakc Village Center North project (. 122 mgd), equates to .299 mgd savings, which is approximately 71%. Numerous features have been included in the proposed project to minimize the usc of water during the construction and operation of thc project. The estimate potable water consumption with conservation measures is .067 mgd or a 45% savings as compared to no conservation. The water conservation measures incorporated into the project are mandated fixtures and devices such as showerheads, lavatory faucets, sink faucets, metering faucets in public restrooms, flushometer valves, commercial water closets, urinals and irrigation of landscaping with recycled water. Non-mandated measures include hot water pipe insulation and pressure reducing valves. The EastLake Village Center North Water Conservation Plan demonstrates the value in incorporating all feasible water conservation measures in the buildings and irrigation systems for commercial development. The implementation of these measures will contribute to preserving a valuable natural resource. Air Quality Improvement Plan (AQIP) An Air Quality Improvement Plan was prepared for the project in accordance with Federal and State requirements and the City's General Plan Growth Management Element (GME) to meet Federal and State air quality standards. To implement the GME, the City's Growth Management Program requires that major commercial/industrial projects prepare Air Quality Improvement Plans for all Sectional Planning Area (SPA) Plans. The AQIP includes an assessment of how the project has been designed to reduce emissions as well as identify appropriate mitigation measures. The design concepts described and implemented in this AIQP for the Village Center North SPA are essentially the same as those identified in a pilot study recently conducted by the city to develop meaning ful air quality improvement measures. Numerous features have been included in the proj eot and surrounding EastLake Community to minimize air quality impacts from construction and operation of the EastLake Village Center North Supplemental SPA Plan. The AQIP outlines project- level features that will assist in reducing air quality impacts (see Attachment 5, SPA Binder Tab). Conclusion For the reasons mentioned above, staff recommends approval of the project based on the findings and subject to the conditions listed in the attached City Council Resolution and Ordinance. FISCAL IMPACT Fiscal expenditures associated with the EastLake Village Commercial Center Project are estimated to be $345,600 in 2003 and $514,100 at build-out. Base on the proceeding estimates, the net fiscal impact from developing the EastLake Village Commercial Center would be positive ($60,700) in the beginning and would remain so throughout development finishing with an annual estimate of $106,400 surplus. / Page 14, Item No.: k~ Meeting Date: 07/23/02 In addition, the applicant has paid for all cost associated with the processing of the GPA and SPA amendment and will be responsible for paying corresponding Development Impact fees and other applicable development and processing fees, as they may be amended fi~om time-to-time. Attachments: 1. Planning Commission Resolution 2. Figures 3. Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (MMRP) 4. EastLake Village Center North Supplemental SPA-Binder 5. Ownership Disclosure Statement J:\Planning\StanD\Eastlake~Agenda Statements\EL Village Center North CC Agenda 23 July 02.doc Page 4, Item No.: / ~:~ Meeting Date: 07/23/02 16.4 acres drains west to a catch basin located at the southwest, then piped to the above mentioned detention basin. The surrounding land uses include: 1) the future SR-125 freeway alignment to the west; 2) the Business Center I to the north and east across EastLake Parkway; and 3) the Von's Shopping Center to the south across Otay Lakes Road. Access to this site is provided along all surrounding streets (see Locator). Eastern Parcel ']?he Eastern Parcel is located on the east side of EastLake Parkway between Otay Lakes Road and Fenton Street. This site is approximately 13.6 acres, inclusive of an existing 4.0-acre church at the east end. As with the Western Parcel, this site was graded as part of the original EastLake I mass grading program. The church site is approximately 5 feet above the remainder site and has direct access from Otay Lakes Road to the south. The site is surrounded by Fenton Street and industrial uses to the north, EastLake Parkway to the west, Otay Lakes Road to the south and Research and Limited Manufacturing uses to the east. Access to the site is provided along all surrounding streets (see Locator). Page 5, Item No.: //t9 Meeting Date: 07/23/02 General Plan, SPA Land Use Designations and Land Use General Plan CV Municipal Code PC District Land Use Existing Land Use Zoning Designation Western Parcel Site Commercial Retail PC, Planned Village Center Vacant Community North Industrial Research & PC, Planned Business Center Industrial, EastLake Manufacturing Community Parkway South Commercial Retail & PC, Planned Open Space, Village Otay Lakes Road, Open Space Community Center Von's commercial center East Industrial Research & PC, Planned Business Center, Vacant, EastLake Manufacturing, Community Village Center Parkway Residential Low- Medium West Open Space PC, Planned Open Space Vacant, Future SR- Community 125 Freeway Eastern Parcel Site Commercial PC, Planned Village Center, Vacant Professional & Community Business Center, Administrative Open Space North industrial Research & PC, Planned Business Center, Industrial, Fenton Manufacturing Community Open Space Street South Residential Low- PC, Planned Residential Residential, Otay Medium Community Condominium Lakes Road East Commercial PC, Planned Business Center Vacant, Industrial Professional & Community Administrative West Commercial Retail PC, Planned Village Center Vacant, EastLake Community Parkway Proiect Description The proposed project includes an~endments to the City's General Plan, the EastLake II Oeneral Development Plan, EastLake I Sectional Planning Area Plan, and the EastLake II Planned Community District Regulations and Land Use Districts Map. The proposed mnendments are more specifically described in the following paragraphs by individual parcel. General Plan Amendments: Page 6, Item No.: ,/(9 Meeting Date: 07/23/02 Western Parcel Change 16.4 acres at the northerly portion of the site from Commercial Retail to Research and Limited Manufacturing (See Figure 2). Eastern Parcel No General Plan Amendments are proposed for this site. EastLake H General Development Plan Amendments: Western Parcel: Change 16.4 acres at the northerly portion from PQ, Public/Quasi-public to IR, Research and Limited Manufacturing (see Figure 3). Eastern Parcel Change the northerly 2.0 acres from BC-1, Business Center and OS-7, Open Space to VC-2, Village Center Land Use designation (See Figure 3). EastLake II Planned District Regulations - Land Use Districts Map Amendments: Western Parcel Change the northerly 16.4 acres from VC~ 1, Village Center to BC-3, Business Center- Corn District land use designation (see Figure 4). Eastern Parcel Change 2 acres at the southeast corner of EastLake Parkway and Fenton Street from BC- 1, Business Center- Manufacturing District to VC-2, Village Center (Professional and Administrative/Limited Retail), and 2 acres along the eastern edge of the subject site from) OS-2, Open Space, to Village Center (Professional and Administrative/Limited Retail) (see Figure 4). EastLake II Planned District Regulations - Text Amendments: In addition to various, minor clean-up type amendments, the project includes the following text amendments: Section III, Permitted Uses - Village Center and Business Center Replace the definitions of the permitted, not permitted, CUP, etc symbols in Sections III. 1, Permitted Uses - Village Center and Section III.4; Permitted uses- Commercial Districts and Section IV. l Permitted and Conditional Uses Business Center. The new definitions clarify the required planning process for land uses listed in the Permitted Uses Table. Change the eating and drinking establishments permitted land use to allow restaurants, coffee shops and delicatessens with outdoor seating, subject to Site Plan and Architectural review. Page 7, Item No.: Meeting Date: 07/23/02 Include Bank/Financial Institution with drive-thru as an allowable use; and delete the size requirement for Furniture and Hardware stores from (<10,000 sO, to allow any size. Redefine the permitted land uses in VC-2 to promote a Professional and Administrative land use with limited commercial uses. Section Ili .2, Property Development Standards - Village Center District Incorporate Property development standards, including building setbacks, building height for the VC-I and VC-2 Land Use Districts. Section IV Business Districts Introduce a new BC-3 land use district with its corresponding land use district intent section, list of permitted and conditional uses permitted, and corresponding Property Development Standards. Section(s) 1.3.A Special Purpose Land Use Districts and V.2 Permitted and Conditional uses: Quasi- Public Facilities (PQ) Delete the future urban column from the permitted land use table. Section VIII.2 Schedule of Off-street Parking Requirements Modify the oft:street parking requirements for Planned shopping centers to allow for outdoor garden related retail areas and restaurant outdoor seating without providing additional parking (see Attachment 5, PC Regulations tab). EastLake I Sectional Planning Area Plan figPA) Site Utilization Plan Amendments Western Parcel Merge the southern 14.2 acres of the 30.6-acre parcel identified as MC-lin the Site Utilization Plan into the southerly adjacent VC-1 parcel. Also, create a new parcel identified as E-10 with the remaining 16.4 acres of the MC-1 parcel (see Figure 5). Eastern Parcel Merge 2-acres at the southeast comer of EastLake Parkway and Fenton Street (identified in the adopted Site utilization plan as E-10) and 2- acres along the eastern edge of the subject property (identified in the adopted Site Utilization Plan as OS-12, Open Space) into the southerly adjacent VC-2 parcel (See Figure 5) to expand the existing VC-2 parcel from 10 to 13.6 acres (According to the previous calculations, it would be 14.1 acres, but the new figure is based on more precise measuring of the existing parcels). EastLake I Sectional Planning Area SPA plan - Text Amendments The proposed amendments reflect the change in urban design concept for the portion of the EastLake I Activity Center known as the Village Center North. In order to simplify the amendment to the adopted EastLake I SPA, the proposed SPA plan amendments are reflected in a separate supplemental document to be known as the EastLake I, Village Center North Supplemental SPA (see Attachment 4). The new SPA plan contains Design Guidelines, Public Facilities Financing Plan /6-20 Page 8, Item No.: Meeting Date: 07/23/02 (PFFP), Air Quality Improvement Plan (AQIP), Water Conservation Plan (WCP), which are supplemental to the ones found in the EastLake I SPA plan. Analysis General Plan Amendment The proposed amendments to the General Plan consist primarily of changing the previously adopted land use designation associated with the Kaiser Medical Center project to accommodate the new Village Center concept proposed by the EastLake Company. As indicated above, the requested General Plan amendment consist of changing 16.4 acres at the northern portion of the site from Commercial Retail to Research and Limited Manufacturing. The topographical difference of approximately 20 feet with the southerly adjacent portion of the site and the parcel orientation towards the business center to the north, are the basis to support the requested amendment. The proposed land use change will provide an additional 16.4 acres of Industrial Research and Limited Manufacturing for employment type uses within the EastLake Community. EastLake II General Development Plan Amendment Western Parcel The proposed amendments to the General Development Plan consist of changing the previously adopted land use designation associated with the Kaiser Medical Center project to accommodate the new Village Center concept proposed by the EastLake Company. As mentioned above, the orientation and configuration of the northerly 16.4 acres is substantially mom suitable for employment land use and therefore more compatible with the EastLake Business Center to the north and east. The remaining 14.4 acres currently designated for Public Quasi-public and proposed to be changed to Commercial Retail, will be added to the Commercial Retail parcel directly to the south to create a 38.1-acre commercial retail site. The combined acreage will allow the site to be developed as a major commercial center to serve EastLake residents and the city as a whole. Eastern Parcel The requested GDP amendment for this site involves changing the northerly 2 acres land use designation from Research and limited Manufacturing to Professional and Administrative Commercial. The land use change provides additional land area to accommodate a cohesive office commercial development envisioned for this parcel in the new Supplemental SPA. With the conversion of the 16.4 acres on the western Parcel to Research and Limited Manufacturing, the acreage designated for employment in the EastLake Planned Community, will increase by 14.4 acres. This added acreage will contribute substantially to achieve the city's economic development goals and objectives. Page 9, Item No.: //~ Meeting Date: 07/23/02 EastLake I Supplemental EastLake Village Center North SPA Plan The EastLake Village Center North, which is referred to as the EastLake I Activity Center in the adopted SPA plan, is located within the EastLake I SPA and functions as the town center for the EastLake Planned Community, intended to serve the business center within the SPA and the EastLake Planned Community as a whole. This Activity Center concept features three major components: 1) a neighborhood shopping center; 2) a mixed-use entertainment and service oriented village center; and 3) a major hospital/medical center (see Figure 1). This Activity Center replaced the original con'anercial/residential mixed-use concept envisioned in the original EastLake I SPA. To properly guide the above-mentioned EastLake I Activity Center development, in 1992, the City Council approved the "EastLake I Activity Center Precise Plan Guidelines". The Design Guidelines established specific urban design parameters, land use features and landscaping and functional goals to insure the integration of all aspects of the Activity Center into the EastLake I SPA and the overall planned community (see Figure 6). However, this concept, which was based on the Kaiser Medical Center project as the major anchor, was never built due to Kaiser Permanente Medical Group's decision not to build an additional hospital in San Diego County. Thus, the property was re-acquired by the EastLake Company which is proposing to redefine the northern portion of the Activity Center (north of Otay Lakes Road) into three separate and independent parcels tied together by their relationship and interface with other surrounding properties and uses. This new concept is an integral part of the overall EastLake Planned Community and it should be, to a large extent, a continuation of the existing development in design and policy regulations. The new concept is more specifically outlined in a new Supplemental SPA plan. This new Supplemental SPA defines the development parameters, including the land use designation, Urban Design Criteria Circulation, public facilities, Water Conservation Plan, Air Quality Improvement Plan and other necessary components to ensure the proper integration of the Village Center North into the existing surrounding Residential, commercial and industrial uses. The following paragraphs describe in more detail some of the EastLake Village Center North Supplemental SPA plan components. Land Use Under the adopted EastLake II General Development Plan, PQ, Public Quasi-public, the EastLake Village Center North was envisioned to contain a major medical center complex with a support commercial, entertainment and civic uses, which resulted in a well integrated mixed-use project illustrated in the latter adopted precise plan for the subject property. The new land use composition is intended to create three separate parcels, each with a distinctive target land use designation, but tied together by common urban design features and urban design guidelines. The land uses have been crafted to provide independent development parameters and guidelines, but complementing each other as the area is fully developed. Page 10, Item No.: //D Meeting Date: 07/23/02 Circulation The EastLake Village Center North will be served by two major streets: EastLake Parkway and Otay Lakes Road. The western parcel's main access is along Otay Lakes Road with secondary access points along EastLake Parkway. Otay Lakes Road, which is a 6-lane Prime Arterial road will be widened to seven lanes to accommodate a queuing lane for the future SR-125 freeway on-ramp and acceleration and de-acceleration lanes for the commercial center site (Western Parcel) EastLake Parkway will also be widened to five lanes to accommodate the required turning lanes at the intersection with Otay Lakes Road (see Attachment 5, SPA Plan tab). Regional access will be provided primarily by 1-805 located approximately $ miles to the west, and eventually by the future SR-125, immediately adjacent to the west. Required improvements installation timing and financing mechanism are discussed in the Village Center North Public Facilities Finance Plan (see Figure 7). Design Guidelines The EastLake Village Center Design Guidelines reflect the physical appearance for the type of development envisioned such as a research and manufacturing facility within the northerly 16.4 acres (E- I 0), a commercial center within the southerly 38.1 acres (VC- 1 ), and a professional administrative complex with minor retail uses within the easterly 13.6 acres (VC-2). The Design Guidelines stipulate design parameters tha{ pertain to site planning, landscape architecture, architecture and signage fbr the 68.1-acre project site- westerly and easterly parcels, and serve to provide appropriate design criteria in the review of proposed developments for the respective areas of the project. In addition, the EastLake Village Center Design Guidelines feature design elements such as trail nodes along the EastLake Parkway Thematic Corridor Trail System, which consists of textured paving, seating/rest areas and canopy trees. The proposed trail system also considers the potential for future transit facilities. These elements are intended to promote pedestrian activity. The urban design elements presented in the EastLake Village Center Design Guidelines promote a well- designed commercial center, which will serve as a landmark "Gateway" to the EastLake Planned Community. The EastLake Village Center Design Guidelines replaces the EastLake i Activity Center Precise Plan Guidelines. However, applicable elements of the Precise Plan, such as a Park & Ride facility, pedestrian oriented trail system, landscaping and signage, water features and community open space areas such as courtyards, patios, pergolas, and trellises to encourage pedestrian interaction have been retained and incorporated within the EastLake Village Center Design Guidelines. The Design Guidelines contain illustrations and guidelines to implement the design ideas presented therein. Some of the urban design guidelines include land use diversity, site development character and conceptual building/parking/open space relationships within the project. Because of the importance of unifying themes and designs over an extended period of time until full build out, the Design Guidelines will be utilized to ensure overall consistency while allowing for flexibility on the part of the Design Review Committee at the detailed site plan level. Page 11, Item No.: //o Meeting Date: 07/23/02 Village Center North Supplemental Public Facilities Finance Plan The proposed Public Facilities Financing Plan (PFFP) has been prepared by City consultants based on water, sewer, traffic, drainage, biology and other technical studies. As required by the City's Growth Management Ordinance, the proposed EastLake Village Center North Supplemental PFFP analyzes the impact of the project on public facilities and services and identifies the required public facilities and services needed to serve the project to maintain consistency with the City's Quality of Life Threshold Standards. The PFFP describes in detail the cost, financing mechanism and timing for constructing public facilities. The public facilities needed to serve the project will be guaranteed by placing conditions of approval on the tentative parcel map, payment of DIF fees at the building permit stage, and/or utilizing Community Facilities Districts to finance or maintain the public facilities. Transportation The City's Traffic Threshold Standard specifies that a Level of Service (LOS) of C or better, as measured by average travel speeds on the arterial roads, shall be maintained with an exception that during peak hours LOS D can occur for no more than two hours of the day or LOS E for one hour. The EastLake Village Center North project is calculated to generate a total of 36,356 daily project trips. Since no specific development is proposed on parcel E- 10 or VC-2 at this time, an assumption by the traffic consultant was made as to future traffic generation for these parcels and included in the traffic model. Street improvements required to serve the project include a new westbound lane on Otay Lakes Road from EastLake Parkway to SR-125 and traffic signals and intersection widening at driveway entrances to the shopping center and at street intersections such as EastLake Parkway and Otay Lakes Road and EastLake Parkway and Fenton Street and Miller Drive. The applicant will also be conditioned to provide fair share funding for cumulative impacts that will necessitate the future widening of Olympic Parkway from SR-125 to EastLake Parkway and Otay Lakes Road from Telegraph Canyon Road to "H" Street. With the construction of the project level street improvements and the cumulative level street improvements, the City's Quality of Life Threshold Standards will be maintained at a Level of Service of C in the morning peak hour and at a Level of Service orB in the evening peak hour. Based on the Traffic Impact Analysis prepared for the EastLake Village Center North project by the City's traffic consultant, Linscott, Law & Greenspan, dated May 8, 2002, threshold compliance will be maintained with implementation of the street improvements identified in the report and with the payment of transportation DIF fees listed above. The EastLake Village Center North project will be conditioned to pay Transportation DIF fees ($6,240 per EDU), Interim SR-125 fees ($820 per EDU) and Traffic Signal Fees ($23.00 per vehicle trip generated per day) at the rate in effect at the time building permits are issued for the project. Page 12, Item No.: I ~0 Meeting Date: 07/23/02 Drainage The 68.1-acre site lies within the Telegraph Canyon Drainage Basin. This basin is served by improved concrete drainage channels that mn parallel to Telegraph Canyon Road. On-site runoff is contained on-site within a detention basin to reduce the impact of a 100-year flood on downstream facilities. The project will be conditioned to provide for the conveyance of storm water flows in accordance with City standards, policies and requirements. Sedimentation basins, on-site erosion protection, urban runoff treatment, and ongoing maintenance will be provided as a condition of the project. Water The Otay Water District wilt provide water service for EastLake Village Center North project. Annexation into Improvement District 22 will be required prior to water service being provided. The Otay Water District has facilities in the vicinity of the project that can provide water service. The District will also provide recycled water to the project for landscape irrigation and other uses. The total projected potable water demand for the Village Center North project is approximately 0.114 million gallons per day. The commercial fire flow is 5,000-gpm flow for 5 hours, which meets the City's requirements. The necessary area-wide water improvements to serve the project have been constructed. Sufficient water capacity and infrastructure exist to serve the EastLake Village Center North project. Sewer Sewer service to the project site is provided by the City of Chula Vista. The project will connect to the existing 15-inch diameter Telegraph Canyon Trunk Sewer in Otay Lakes Road either directly or via a sewer line located in EastLake Parkway. The trunk sewer facilities will accommodate sewage flows from the project and other uses in the basin. The City holds capacity rights of 19.843 mgd in the San Diego Metropolitan Sewerage System and has 5.581 mgd remaining available capacity in the Metro Sewer System. The sewer service charges for this development will be assessed based on the quantity and quality of effluent that will be generated from the site. The sewer analysis determined that the land uses of the proposed project would result in a reduction in sewage flow from those planned in previous studies. Because of the reduction in flows, the planned improvements to the Telegraph Canyon Trunk Sewer will accommodate project flows. Page 13, Item No.: ~ Meeting Date: 07/23/02 Fire Development of the EastLake Village Center North project is not anticipated to change the need for fire service in the area. Interim Fire Station #6, located at 975 Lane Avenue in EastLake Business Center I would be the primary station to serve the project. The long-term plan is for Fire Station #6 to be relocated to East "H" Street and Mount Miguel Road and Fire Station #8 to be constructed in EastLake Woods. Schools, Libraries and Parks The proposed project will not generate an increase in dwelling units or population in the project area. Therefore, the development will not result in a need for new schools, libraries or parks. However, the applicant will have to pay school fees at the rate in effect at the time building permits are issued. Fiscal The Fiscal Impact Analysis for the 68.1-acre project site focused on the City's general fund account for City services. The estimated revenues were from property taxes (secured and unsecured), property transfer tax, sales & use tax, franchise fees, Transient Occupancy Tax (TOT), business licenses, utility taxes, parking citations, gas tax, etc. Estimated expenditures were from police, fire, administration, public works, planning, parks and recreation. Fiscal revenues would range from $406,300 in the first year and increase to $620,500 per year when fully developed. Fiscal expenditures associated with the EastLake Village Commercial Center Project are estimated to be $345,600 in 2003 and $514,100 at build-out. Base on the proceeding estimates, the net fiscal impact from developing the EastLake Village Conunercial Center would be positive ($60,700) in the beginning and would remain so throughout development finishing with an annual estimate of $106,400 surplus. EastLake II Planned Community District Regulations Amendments The EastLake II Planned Conununity District Regulations function as the zoning regulations for the project. The PC District Regulations provide standards and regulations to guide the development of the project. These regulations are applied in conjunction with the EastLake Village Center North Design Guidelines to ensure the uses within the project are compatible and well designed. The EastLake II Plarmed Community District Regulations adopted originally in 1985 and amended in 1992 to allow the Kaiser medical center project, cover all of EastLake Hills, Shores, Business Center and the Greens and Trails. This amendment only affects the commercial and industrial uses, which occur in the EastLake Village Center North portion of the EastLake project. The amendments essentially consist of fine-tuning the allowable uses in the Village Center North parcels to reflect the proposed uses for the shopping center and professional and commercial development on VC-2. Since BC-3 is being created as a new land use district (formerly part of VC- 1) allowable land uses are being added to the regulations to reflect the City's intent to encourage medical facilities and uses on BC-3. In addition, the property development standards have been improved to reflect setbacks from Otay Lakes Road and EastLake Parkway as well as future SR-125. New property development standards have been included for BC-3. The off-site parking Page 14, Item No.: /~ Meeting Date: 07/23/02 requirements for planned shopping centers of five spaces per 1,000 square feet of building area for all uses except for outdoor garden areas and dining patios has been added to regulations. The remaining provisions of the EastLake II Planned Community District Regulations rema'm unchanged. Water Conservation Plan The City's Growth Management Ordinance requires the preparation of a Water Conservation Plan lbr all projects. The reduction in water usage from the previously approved Kaiser Hospital project (.421 mgd) as compared to the proposed EastLake Village Center North project (. 122 mgd), equates to .299 mgd savings, which is approximately 71%. Numerous features have been included in the proposed project to minimize the use of water during the construction and operation of the project. The estimate potable water consumption with conservation measures is .067 mgd or a 45% savings as compared to no conservation. The water conservation measures incorporated into the project are mandated fixtures and devices such as showerheads, lavatory faucets, sink faucets, metering faucets in public restrooms, fl ushometer valves, commercial water closets, urinals and irrigation of landscaping with recycled water. Non-mandated measures include hot water pipe insulation and pressure reducing valves. The EastLake Village Center North Water Conservation Plan demonstrates the value in incorporating all feasible water conservation measures in the buildings and irrigation systems for commercial development. The implementation of these measures will contribute to preserving a valuable natural resource. Air Quality Improvement Plan (AQIP) An Air Quality Improvement Plan was prepared for the project in accordance with Federal and State requirements and the City's General Plan Growth Management Element (GME) to meet Federal and State air quality standards. To implement the GME, the City's Growth Management Program requires that major commercial/industrial projects prepare Air Quality Improvement Plans for all Sectional Planning Area (SPA) Plans. The AQIP includes an assessment of how the project has been designed to reduce emissions as well as identify appropriate mitigation measures. The design concepts described and implemented in this A1QP for the Village Center North SPA are essentially the same as those identified in a pilot study recently conducted by the city to develop meaningful air quality improvement measures. Numerous features have been included in the project and surrounding EastLake Community to minimize air quality impacts from construction and operation of the EastLake Village Center North Supplemental SPA Plan. The AQIP outlines project- level features that will assist in reducing air quality impacts (see Attachment 5, SPA Binder Tab). Conclusion For the reasons mentioned above, staff recommends approval of the project based on the findings and subject to the conditions listed in the attached City Council Resolution and Ordinance. Page 15, Item No.: /~ Meeting Date: 07/23/02 FISCAL IMPACT Fiscal revenues would range from $406,300 in the first year and increase to $620,500 per year when fully developed. Fiscal expenditures associated with the EastLake Village Commercial Center Project are estimated to be $345,600 in 2003 and $514,100 at build-out. Base on the proceeding estimates, the net fiscal impact from developing the EastLake Village Commercial Center would be positive ($60,700) in the beginning and would remain so throughout development finishing with an annual estimate of $106,400 surplus. In addition, the applicant has paid for all cost associated with the processing of the GPA and SPA amendment and will be responsible for paying corresponding Development Impact fees and other applicable development and processing fees, as they may be amended from time-to-time. Attachments: 1. Planning Commission Resolution 2. Figures 3. Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (MMRP) 4. EastLake Village Center North Supplemental SPA-Binder 5. Ownership Disclosure Statement J:\Planning\StanD\Eastlak¢\Agenda Statements\EL Village Center North CC Agenda 23 July 02.doc PROJECT CHULA VISTA PLANNING AND BUILDING DEPARTMENT LOCATOR PROJECT PROJECT DESCRIPTION:  APPLICANT: EASTLAKE DEVELOPMENT CO. PROJECT NortheastandNorthwestCornerof VILLAGE CENTER NORTH ADDRESS: Otay Lakes Road and Eastlake Parkway SCALE: FILE NUMBER: Related Case: IS-01-042, DRC-02-47 · NORTH No Scale GDP-02-07, PCM-01-15 C:\DAIFILE\Iocators\GDP0207, PCM0115.cdr 05/29/02 RESOLUTION NO. GPA-02-07/PCM-01-15 RESOLUTION OF THE CITY OF CHULA VISTA PLANNING COMMISSION RECOMMENDiNG THAT THE CITY COUNCIL ADOPT THE MITIGATED NEGATIVE DECLARATION IS-01-042 AND MITIGATION MONITORING AND REPORTING PROGRAM, APPROVE AMENDMENTS TO THE CITY'S GENERAL PLAN, EASTLAKE II GENERAL DEVELOPMENT PLAN, EASTLAKE II PLANNED COMMUNITY DISTRICT REGULATIONS AND LAND USE DISTRICTS MAP. ALSO, ADOPT A NEW SECTIONAL PLANNING AREA SPA PLAN AND ASSOCIATE REGULATORY DOCUMENT S FOR 68.1 ACRES AT THE NORTHEAST AND NORTHWEST CORNER OF OTAY LAKES ROAD AND EASTLAKE PARKWAY. WHEREAS, on February 23, 2001, a duly verified application was filed with the City of Chula Vista Planning Department by The EastLake Company ("Developer"), requesting approval of amendments to the City's General Plan, EastLake II General Development plan and EastLake II Planned Community District Regulations. The Developer also requested approval ora new Sectional Planning Area (SPA) plan and associated regulatory documents, including design guidelines, public Facilities Finance Plan, Air Quality Improvement plan and Water Conservation plan for 68.1 acres located at the northeast and northwest comer of Otay Lakes Road and EastLake Parkway ("Project); and, WHEREAS, the area of land which is subject matter of this Resolution is diagrammatically represented in Exhibit "A" and commonly known as portion of the Eastlake I Activity Center, and tbr the purpose of general description herein consists of approximately 68.1 acres located at the northeast and northwest comers of Otay Lakes Road and EastLake Parkway within the EastLake Plmmed Community ("Project Site"); and, WHEREAS, the Environmental Review Coordinator determined that, although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because mitigation measures have been incorporated and agreed to by the project proponent. A Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program were prepared which must be considered by the Planning Commission prior to a decision on the project; and, WHEREAS, the Planning Commission finds that the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-01-042) has been prepared in accordance with the requirements of the California Environmental Quality Act (CEQA), and the Environmental Review Procedures of the City of Chula Vista; and, WHEREAS, the Planning Commission finds that the Project environmental impacts will be mitigated by adoption of the Mitigation Measures described in the Mitigated Negative Declaration, and contained in the Mitigation Monitoring and Reporting Program, and that the Mitigation Monitoring and Reporting Program is designed to ensure that during Project implementation, the pemfittee/Project applicant, and any other responsible parties implement the project components and comply with the mitigation Monitoring Program; and, WHEREAS the Planning Commission having received certain evidence on July 10, 2002, as set forth in the record of its proceedings herein by reference as is set forth in full, made certain findings, as set forth in their recommending Resolution GPA 02-07/PCM-01-15 herein, and recomanended that the City Council approve the Project based on certain terms and conditions; and, WHEREAS, the Planning Director set the time and place for a hearing on the Project, and notice of said hearing, together with its purpose, was given by its publication in a newspaper of general circulation in the city and it mailing to property owners and within 500 feet of the exterior boundaries of the property, at least 10 days prior to the heating; an.d, WHEREAS, the heating was held at the time and place as advertised, namely 6:00 p.m., June 7, 2000, in the Council Chambers, 276 Fourth Avenue, before the Planning Commission and said hearing was thereafter closed. " NOW, THEREFORE, BE IT RESOLVED THAT THE PLANNING COMMISSION recommends that the City Council adopt the attached Draft City Council Resolution and Ordinance approving the Project in accordance with the findings and subject to the conditions contained therein. BE IT FURTHER RESOLVED THAT a copy of this resolution be transmitted to the City Council. PASSED AND APPROVED BY THE PLANNING COMMISSION OF THE CITY OF CHULA VISTA, CALIFORNIA, this 10m day of July, 2002, by the following vote, to-wit: AYES: O'Neill, Castaneda, Cortes, McCann, Willett NOES: ABSENT: lh0mas, Hall Kevin O'Neil, Chairperson ATTEST: o 0 Diana Var=as, Secretary JAPlanning\LUIS\Village Ch-. North\VILLAGE CTR REPORTS AND RESOSh°CM-01-15 PCRESO.doc A~ACHMENT2 EASTLAKE I ACTIVITY CENTER /HOSPITAL/ ~ MEDI~ ~R ~ ~L~GE CE~ER ~ ~' CENTER = ~T ] - ~GH~O~O0~ CEN~R ~ ~ / ~T~ (~STING) ~ j, GREYS FIGURE 1 EASTLAKE II LAND USE DISTRICTS MAP (PROPOSED) RE-3 Change 2.0 acres from ~'~ 1~2 (BC-1) Business Center RS-5 and (O$-7') Open Space to (VC-2) V'fllag~ Center. RC-22 BC-1 RP~B Chang~ 16.4 acres ~rom vc-$ (VC-I) V'dl .age Center to (BCo3) Business Center. J os4 I,L II t · RESIDENTIAL ~s-s . m ResJcle~ Estates Reeiden'~l ~ Famay FO R~ ~ ~ ~ ~C~ P~ R~ ~F~ ~GE CE~ER & CO~RC~ ~ ~ ~~ ~ (Pmf Admin ~td. Retail) ~~ ~ ~~ ~ (Retail) ~ ~ ~~~-~p~ J ~ I~~F~ u~-~ IBusiness Center - Core District FIGURE 4 EASTI.AKE I SPA PlAN (PROPOSED) Change 2.0 acres from (E-10) Village Center Employment and (OS-12) Open Space to Village Center. Parcel I Lend Use i Acres Number EMPLOYMENT (Business Center I) E-I Employment 32.1 E-2 Employment 16.6 E-3 Employment 8.6 E-4 Employment 17.6 E-5 Employment 13.~ E-6 Employment 6.2 Cha~ 16.4 from E-7 Employment 12..~ (MC-l) Medical Center E~ Employment 4.6 to (E-10) center E-9 Employment 14.6 Employment. Total 126.1 ACTIVlTYCENTER (North) Village Center 38.1 Village Center 13.6 Cha~ 14.2 ac. ca from ViL Ctr. Employment 16.4 (MC-l) Medical center to Total 68. t [OPEN SPACE/PARKS [ (VC-I) Villag~ Center. OS-10 Open Space 3.4 ~Open Space 0.7 O~Open Space 0.5 [ P-4 IPark 9.1 Location SALT CREEK I Parcel I Density I Target IPermRtedl l N"=berl Land Use ) Acres I .a. e I0en,' l 0u I ~ Residential - Detached 43.6 0-5 3.9 169 ~ Residential - Attached 20.0 5-15 119 237 I R-18 ~Residential~Attached 8.5 15-25 16.9 144 Sub-total 72.1 7.6 550 ~Open Space 6.5 ~_~J Open Space 1.0 ~.~_~Open Space 1.0 OpenSpace 3.2 Open Space 7.2 Sub-total 18.9 Total 91.0 Note: T/as legend is for the EastLake Bus,ness Center I. EestLake ~/glage Ceuter (~o~h) and Salt Creek I only. The East Lake I SPA also includes EaslLake Shores. EastLake Hills. and East Lake Business Center Il. Viltage Center (south) is within the East Lake Greens SPA. FIGURE 5 EASTLAKE I ACTIVITY CENTER CONCEPT (Al)OPTED) FIGURE 6 REGIONAl. MAP San Miguel Ranch EastLake II , Hills and Shores Salt Creek a,~,, c~-,, EastLake III GDP Lakes Road EastLake II ~ Greens & Trails Otay Ranch II Village Center II II FIGURE 7 ATTAC~4ENT 3 Mitigated Negative Declaration PROJECT NAME: EastLake Village Center North PROJECT LOCATION: Northwest and northeast of the EastLake Parkway/Otay Lakes Road intersection ASSESSOR'S PARCEL NO.: 595-070-27, 28; 595-232-22, 23 PROJECT APPLICANT: The EastLake Company CASE NO.: Case No. IS-01~042 DATE: June 11, 2002 A. Project Setting The proposed EastLake Village Center North project (hereinafter referred to as "the proposed project") involves approximately 68.1 acres (ac) located at the northwest and northeast comers of EastLake Parkway and Otay Lakes Road in the City of Chula Vista. Adjacent uses include: future SR-125 to the west; the retail/commercial "Vons" center to the south; vacant land and developed parcels within the EastLake Business Center I to the east and north. Single-family hmnes (EastLake Shores) are localed to the west of future SR-125. Townhomes within EastLake Greens are located to thc southeast of the site, south of Otay Lakes Road (Figures I and 2). The site has been previously graded in accordance with the approved master grading plan for the EastLake I Sectional Plmming Area (SPA). Approximately 54.5 acres of the site (designated as VC-1 (38.1 ac) and E-10/BC-3 (16.4 ac) is located ~vest and south of EastLake Parkway and is currently being graded under an approved remedial grading permit (see Section C below). The elevation of this portion of the site has been altered due to the current grading operations. Gencrally, the site slopes from thc northeast to the southwest toward an existing, onsite detention basin. Disturbed land covers the majority of the site. Non-native grassland and ornamental landscaping also occur onsite. The EastLake 11 General Develop~nent Plan (GDP) designates the ~pproximate southern half of the site for Retail Commercial (RC) use, and designates the approximate northern half of the site for Public/Quasi-Public Use (PQ) (Figure 3). The EastLake I SPA currently designates the approximate southern half of the site for Village Center uses (i.e., retail, restaurants, offices, open space, public facility, etc.) aud the approximate northern half of the site for medical center usc (Figure 4). The project site also includes approximately 13.6 ac. east of EastLake Parkway (designated as VC-2). The western approximately ten acres of this site is vacant, and an existing church occupies the remaining acreage within VC 2. The VC-2 site has also been previously graded ureter the aforementioned master grading plan. This portion of thc project site also drains from 06/11/02 the northeast to the southwest. Non-native grassland and omamental landscaping occurs on this portion of the site. The EastLake II General Development Plan (GDP) designates the southern approximately 11 acres of this portion of the site as Professional and Administrative and approximately two acres of the site as Research & Limited Manufacturing. The EastLake I SPA currently designates the southern approximately 11 acres of the site for Village Center uses and the remainder of the site for Employment uses. B. Project Description The proposed project encompasses three separate land use districts (Figure 5): · Village Center-1 (VC-1): 38.t-acres at the northwest comer of Otay Lakes Road and EastLake Parkway intended for retail/conunercial use; · Business Center-Core District (BC-3): 16.4-acres north of VC-1 and west of EastLake Parkway intended as a extension of the EastLake Business Center District to the north; and · Village Center-2 (VC-2): 13.6-acres at the northeast comer of Otay Lakes Road and EastLake Parkway intended for professional administrative and limited retail uses. The majority of the proposed project addresses the future development of VC-1. Specifically, the proposed project involves the development of an approximately 380,000 square foot (SF) shopping center on the VC-t portion of the project site. The site would be divided into approximately 12 parcels. Two of the parcels would include "big box" users, potentially Target and Lowe's, with the reinainder of the parcels providing a variety of retail, commercial, restaurant uses. Under the proposed amended EastLake II Planned Community (PC) District Regulations, two uses currently being proposed for the shopping center would require a Conditional Use Permit (CUP). These uses are a car xvash/gasoline station and a drive-thru restaurant. Several discrctionary actions are required to implement the shopping center within the VC-1 district. These include: · EastLake II GDP Amendment to: change 16.4 acres of Public/Quasi-Public Use to Research & Limited Manufacturing and 2.0 acres located at the northeast comer of EastLake Parkway and Fenton Street from Research & Limited Manufacturing to Professional & Administrative · EastLake I SPA Amendment (Supplemental SPA Plan) to: © change 30.6 acres of Medical Center-I (MC-l) use to 16.4 acres of Village Center Employment (E-10) and 14.2 acres of Village Center-I (VC-1); o change permitted land uses and property development standards for VC-1 (PC District Regulations); o repeal the Precise Plan and adopt new Design Guidelines; o replace the existing Air Quality Improvement Plan and Water Conservation Plan; and o preparc a Supplemental Public Facilities Financing Plan that addresses the proposed project. · Design Review; 2 06/11/02 · Parcel Map to subdivide the VC-1 site into approximately 12 separate lots for sale or lease; and · CUP pursuant to Section III.1 of the proposed EastLake II Planned Community District Regulations for the proposed gas station/car wash and drive4hru restaurant. The Applicant is also requesting the following discretionary actions that would affect future development of the BC-3 and VC-2 parcels of the project: BC-3 · General Plan Amendment (GPA) to change 16.4 acres of Conmmercial Retail designation to Industrial Research & Limited Manufacturing; · EastLake 11 GDP Amendment to change 16.4 acres of Public/Quasi-Public use to Industrial Research & Limited Manufacturing; · EastLake I SPA 3anendment (Supplemental SPA Plan) to: o change 30.6 acres of Medical Center-1 (MC-l) use to 16.4 acres to Village Center Employment (E-10) and t4.2 acres of Village Center-1 (VC-1); o change 16.4 acres from VC-1 to BC-3 and change permitted land uses for BC-3 (PC District Regulations); o repeal the Precise Plan and adopt new Design Guidelines; o replace thc existing Air Quality Improvement Plan and Water Conservation Plan; and o prepare a Supplemental Public Facilities Financing Plan that addresses the proposed project. · Land Use District Map Amendment lo change 16.4 acres of Village Center 1 (VC-1) to Business Center Core District. No site plan is being proposed for the BC-3 parcel at this time. See Section E below for a discussion of future enviromnental evaluation pertaining to future development of this parcel. VC-2 · EastLake II GDP Amendment to change two acres of Research & Limited Manufacturing to Professional & Administrative; · EastLake I SPA Plan Amendment to: o change two acres of Employment designation to Village Center-2 (VC-2); o change two acres from Business Center-Manufacturing Park District (BCd) and Open Space (OS-7) to Village Center-2 (VC-2) and change thc permitted uses and property development standards for VC-2 (PC District Regulations); o repeal the Precise Plan and adopt new Design Guidelines; and o replace the existing Air Quality Improvement Plan and Water Conservation Plan; and o prepare a Supplemental Public Facilities Financing Plan that addresses the proposed project. No site plan is being proposed for thc VC-2 parcel at this time. See Section E below for a discussion of future environmental evaluation pertaining to future development of this parcel. 3 06/11/02 C. Prior Approvals and Environmental Documentation EastLake Master EIR A Master EIR (EIR 81-03) was completed for the 3,073-acre EastLake community in February 1982. This Master EIR considered the impacts associated with the annexation of the project site from the County of San Diego to the City of Chula Vista, as well as the potential impacts associated with the implementation of a General Plan Amendment, prezoning and General Development Plan for the future EastLake Development. EastLake I SPA Plan Supplemental EIR Subsequently in 1984, a Sectional Planning Area (SPA) Plan was developed for approximately 1,268 acres of the 3,073-acre EastLake conmaunity. This SPA plan, referred to as EastLake I, was prepared as a refinement and implementation framework for the Planned Community zoning previously applied to the site in 1982. A Supplemental EIR (EIR 84-01) was certified in February 1985 that addressed the EastLake I SPA Plan and two accompanying Tentative Subdivision Maps, one of which included the subject EastLake Village Center. EastLake [ SPA Plan Amendlnent/Kaiser Pern~anente Chala Vista Medical Center Supplemental EIR In June 1992, a Supplemental EIR (EIR 92-01) was certified for the EastLake I SPA Plan Amendment/Kaiser Permanente Chula Vista Medical Center. EIR 92-01 specifically addressed the subject Village Center site. The EIR addressed an amendment to the EastLake I General Development Plan and SPA Plan in order to: 1) convert the adopted land uses in the northern portion of tile site to medical center uses; 2) delete the adopted residential land use within the site and expand the acreage allocated for office/retail uses; and 3) eliminate 2.0 acres from the site in order to create additional employment uses with the EastLake Business Center. The SPA plan amendment required the approval of the EastLake I Public Facilities Finance Plan (PFFP) Update and the approval of an Air Quality Improvement Plan (AQIP) and Water Conservation Plan (WCP) pursuant to the City's Growth Management Program. EIR 92-01 also addressed a Conditional Use Permit/Precise Plan for the phased construction.of.the Kaiser Permanente Chula Vista Medical Center on the northern 30.6 acres of the subject site. The EastLake 1 GDP and SPA Amendment was approved by Resolution No 16702 on June 30, 1992 and provided for the following entitlements: · 785,000 SF, 439-bed (full buildout) Medical Center, 485,000 SF of medical and administrative offices, 35,000 SF central plant, three parking structures to accommodate 4,271 cars, and surface parking for an additional 148 cars on northern 30.6 acres of site; 4 06/11/02 · 17.3 acres retail commercial (village center use) and 11.9 acres of open space/public facility; and · 6 acres of office/commercial, 4 acres of community purpose facility and 2 acres of employment. While GDP and SPA amendments and a CUP for the hospital were approved, no development has occurred on the site to date. O~1 ~m_pic Parkway Disposal Sites MND In December 2001, a Mitigated Negative Declaration (IS-02-009) was prepared for the Olympic Parkway Disposal Sites. This MND addressed the temporary disposal of up to 250,000 cubic yards of material from the grading of Olympic Parkway at the EastLake Village Center site. A grading permit was issued for the disposal of the material on the site. These grading activities are ongoing. D. Compliance with Zoning and Plans The proposed project site is within a Planned Community (PC) District. The EastLake II PC District Regulations are proposed to be amended as part of this project to change permitted land uses and property development standards for the Village Center-I (VC-1), Business Center-Core District (BC-3) and Village Center-2 (VC-2) land use districts. Amendments to the General Plan, EastLake li General Development Plan and EastLake I SPA Plan are also required for the proposed project to comply xvith regulating plans. E. Subsequent Environmental Review for VC-2 and BC-3 As staled in Section B above, the focus of this analysis is the commercial development proposed for VOl. No site plans are being proposed for the VC-2 and BC-3 parcels at this time. Future development of these parcels would be governed by the proposed Planned Community District Regulations and Design Guidelines. Specifically, thc PC District Regulations set forth the development and land use standards for all property within the EastLake II General Development Plan area by establishing: setbacks; building heights; parking requirements; landscape requirements; use restrictions; animal regulations; density of development; lot size, width and depth; fencing requirements; and signing regulations. Sections III and IV of the PC District Regulations specify the types of uses that are permitted, conditionally permitted and not pemfitted within VC-2 and BC-3 districts, respectively. 5 06/11/02 Future site plans for the VC-2 and BC-3 parcels will be evaluated against the adopted PC District Regulations and Design Guidelines specific to these parcels. In addition, an enviromnental evaluation of issues related to the proposed land uses, such as but not limited to land use compatibility with adjacent uses, noise, and aesthetics would need to be conducted at the time a future site plan is proposed. In addition, the need for any new, or expansion of, a public service specifically related to a proposed use (such as emergency services and disposal of medical/toxic waste related to hospital or other medical facility, disposal of biotectmical waste related to biotechnical research facilities, etc.) would need to be evaluated for environmental considerations. On the other hand, physical features of these parcels, including geology, biology, cultural and paleontological resources and drainage, have been addressed in current technical studies or prior enviromnental docmnentation, and therefore would not need further analysis. With respect to traffic, a worst-case traffic analysis has been prepared that assumed the highest trip-generating land uses allowed on these parcels. As long as the total trip generation for the three parcels (VC- 1, VC-2 and BC-3) does not exceed that projected in the 2002 LLG traffic study for the EastLake Village Center North project (i.e., 36,356 average daily trips), no further traffic analysis would be required. Si~nilarly, a worsbcase sewage generation and water demand analysis was conducted. Provided that the ultimate development that is proposed for the VC-2 and BC-3 parcels is in conformance with the PC District Regulations and Design Guidelines, no additional water or sexver analyses would be required. F. Identification of Environmental Effects The City of Chula Vista determined that the proposed project will have significant environmental effects other than what has been previously identified in prior environmental documentation. These effects have been mitigated. The preparation of an Environmental Impact Report will not be required. This Mitigated Negative Declaration has been prepared in accordance with Section 15070 of thc State CEQA Guidelines. _T_r_a_psportation and Circulation The Transportation and Circulation analysis contained in SEIR 92-01 has been updated with a traffic study specific to the proposed project. This study, entitled "Traffic Impact Analysis, EastLake Village Center North" prepared by Linscott, Law & Greenspan and dated May 8, 2002, addressed the traffic impacts of a 420,000 SF regional shoppitgg .center and 50 park and ride spaces on the VC-1 parcel, 4.30 acres of retail, 2.3 acres of restaurant use, 2.74 acres of medical offices on the VC-2 parcel, and a 125-bed hospital and 78,000 SF of medical offices on the BC-3 parcel. While a site plan and regional shopping center on VC-I are currently being considered and are the primary subject of this analysis, no site plan has been proposed for VC-2 or BC-3 at this time. However, in order to analyze a worst-case future traffic condition, the highest traffic- generating allowable uses on these parcels was assumed. Thc albrementioned land uses would generate 36,356 average daily trips (ADT). This is 13,084 less average daily trips than the traffic volume calculated for the development currently entitled for the site (Kaiser Pennanente Medical Center, VC-2, E-10, VC~I and OS-16; see Section C). 6 06/11/02 Accounting for pass-by trips (trips attracted to the site from traffic already on the street system and passing near the site while going from one location to another), the PM peak hour trip generation would be 3,050 trips. Only the PM peak hour time frame was analyzed since this represents the worst-case scenario. Of the PM peak hour trips, 1,558 trips (51%) ~vould be attributed to the proposed regional shopping center on the VC-1 parcel, 850 trips (28%) would be attributed to the worst-case development of the VC-2 parcel, and 642 trips (21%) would be attributed to the worst-case development of the BC-3 parcel. Intersection (PM peak hour) and street segment operations (ADT) xvithin the study area were analyzed for the follo~ving scenarios: · Existing plus Project (near term) · Year 2005 without SR-125 (short term, approximate opening year of the project) · Year 2005 with SR-125 (short term, approximate opening year of the project) · Buildout (complete buildout of planned developments and the street network in the Eastern Territories) Intersection Analysis Table 1 shows the PM peak hour signalized and unsignalized intersection operations for the Existing plus Project, Year 2005 ~vithout SR-125 and Year 2005 with SR-125 scenarios. All signalized intersections are calculated to operate at LOS D or better with project traffic. Based on thc City of Chula Vista's Significance Criteria, two unsignalized intersections (EastLake Parkway/Miller Drive and EastLake Parkway/Fenton Slreet) are calculated to operate at LOS F during the Existing plus Project, Year 2005 without SR-125 and Year 2005 with SR-125 scenarios. The proposed project would result in direct, but mitigable impacts on these intersections in the near and short-tenn scenarios. Table 2 shows the peak hour intersection operations at key study area signalized and unsignalized intersections xvith project traffic at buildout. With buildout traffic, all signalized intersections are calculated to operate at LOS D or better except the Otay Lakes Road/Main Entrance (Vons Driveway) which is calculated to operate at LOS E. AM and PM peak hour analyses were conducted at Otay Lakes Road/EastLake Parkway intersection. This intersection was calculated to operate at LOS D in the PM peak hour and LOS E in the AM peak hour. The unsignalized intersections of EastLake Park~vay/Miller Drive and EastLake Parkway/Fenton Street continue to operate at LOS F in thc buildout condition. The proposed project would result in direct, but mitigable impacts on these intersections at buildout. Street Segments Table 3 shows the daily street segment operations for the Existing plus Project, Year 2005 without SR-125 and Year 2005 with SR-125 scenarios. In the Existing plus Project scenario, all key study area segmeuts are calcnlatcd to operate at LOS C or better with project traffic except the segment of Telegraph Canyon Road between Paseo Ranchero and Otay Lakes Road and EastLake Parkway north of Miller Drive which are calculated to operate at LOS D. For Year 7 06/11/02 2005 with project traffic and without SR-125, all key study area segments are calculated to operate at LOS C or better except Otay Lakes Road north of East H Street (LOS F) and Otay Lakes Road between East H Street and Telegraph Canyon Road (LOS F). These same two segments are calculated to operate at an unacceptable LOS in the Year 2005 with SR-125 scenario. Otay Lakes Road North of East H Street would operate at LOS D, and Otay Lakes Road between East H Street and Telegraph Canyon Road would operate at LOS E. A near-term analysis of Telegraph Canyon Road and Otay Lakes Road segments was conducted based on the City of Chula Vista's Growth Management Oversight Committee (GMOC) Traffic Monitoring Program (TMP) methodology. Only these segments were analyzed because the City's significance criteria dictates that if planning analysis (volume/capacity) indicates LOS D, E or F, the GMOC method shall be utilized in the short-term (0-4 years). These segments are the only roadways located within GMOC arterial street segments that are calculated to operate at LOS D or worse. While EastLake Parkway north of Miller Road would operate at LOS D in the near term, it is not a GMOC arterial. The GMOC analysis concluded that the decrease in speeds on the subjcct segments of Telegraph Canyon Road and Otay Lakes Road were not sufficient to reduce the levels of service below C, and there would be adequate arterial level of service on these segments in the near term. Based on the GMOC threshold, the proposed project would not result in significant impacts on these segments of Telegraph Canyon Road and Otay Lakes Road. Table 4 shows the daily street segment operations with project traffic at buildout. With buildout traffic, all street segments are calculated to operate at LOS C or better except the following: · Otay Lakes Road, north of East H Street (LOS E), Otay Lakes Road, East H Street to Telegraph Canyon Road (LOS F), · Otay Lakes Road, SR-125 to the Vons driveway (LOS F), · Otay Lakes Road, Vons driveway to EastLake Parkway (LOS E), · EastLake Parkway, south of Olympic Parkway (LOS D), and · Olympic Parkway, SR-125 to EastLake Parkway (LOS F). Thc proposed project would result in direct impacts on Otay Lakes Road between SR-125 and the Vons driveway and between the Vons driveway and EastLake Parkway. The proposed project would result in cumulative, but mitigable impacts on Otay Lakes Road north of H Street and between H Street and Telegraph Canyon Road, as well as Olympic Parkway from SR-125 to EastLake Parkway. The traffic impact is considered cumulative because these three segments are not adjacent to the project. The segment of EastLake Parkway south of Olympic Parkway would operate at LOS D, however the adjacent intersections are calculated to operate at an acceptable level. Therefore, the proposed project would not result in a significant impact on this intersection. Ire LLG traffic analysis also addressed site circulation including track access, lelt-tum storage lengths, and intersection geometry at project driveways for VC-2 and BC-3 parcels and storage lengths of turn lanes. Potential impacts lhat were identified internal to the site do not represent i~npacts to public streets, and therefore do not require mitigation. Based on the site circulation/access analysis, the current storage provided in the eastbound, northbound and southbound left-turn lanes at the Otay Lakes Road/EastLake Parkway intersection may not be 8 06/11/02 adequate to accommodate buildout traffic volumes. Similarly, at the EastLake Parkway/Fenton intersection, the southbound, westbound, and northbound left-turn lane lengths may not be adequate to accommodate buildout traffic volumes based on existing left-turn lengths. At the EastLake Parkway/Miller Drive intersection, the westbound and northbound left-turn lengths may not be adequate to accommodate buildout traffic volumes based on the existing left-turn lane lengths. Additional storage length can be provided at these three intersections to mitigate these cumulative impacts. _Air Quality The proposed project ~vould contribute to ambient air quality during the construction and operation phases of the projcct. The air quality analyses in SEIR 92-01 and the Olympic Parkway Disposal Sites MND (IS-02-009) address temporary construction-related emissions pertaining to the grading of the site. These analyses are incorporated by reference and snmmarized herein. Grading and site improvements would generate sufficient emissions and fugitive dust to result in a short-term significant, but mitigable, impact on air quality. Mitigation measures from SEIR 92-01 pertaining to compliance with the project's Air Quality Improvement Plan (AQIP) and dust control during grading are applicable to the proposed project. Geophysical The geologic features of the project site were analyzed in SEIR 92-01 and updated by the "Revised Supplemental Geotechuical Investigation for EastLake Village Center North Commercial Center" by Pacific Soils Engineering, Inc. dated Mamh 5, 2002. The 2002 study confim~ed that the majority of the site has been graded in the past. Onsite elevations range from 496 feet to 596 above mean sea level (MSL). Existing slope gradients average between 2:1 and 50:1 (horizontal to vertical). Site drainage is by sheet flow to the south;vest comer of the project. The site is underlain by Tertiary sediments consisting of Oligocene-age Otay Formation consisting of silty sandstone to sandy siltstone. It is moderately hard to hard and well graded. Relatively thick topsoil occurs on remaining natural slopes within the southwest portions of VC- 1. fhey consist of dark brown, clayey sand and silty sand. Alluvium is also present in VC-1 primarily in the site drainages. Alluvial soils range in depth from one to 32 feet and consist of interbedded sands, clayey sands, sandy silts, and sandy clays. Undocumented, uncompacted artificial fill is located within the desilting basin and along the northeast comer of VC-1. These fills are estimated to range from one to 40 feet in thickness and-consist of brown, loose to moderately dense silty sand and clayey sand. Compacted artificial fills are found throughout the site. The presence of these fills trace back to several previous grading activities, including the lnass grading of Otay Lakes Road and EastLake Village Center, the disposal of soils generated f?om adjacent areas and construction of temporary drainage, construction of a fill for Bretnn Communities, and regrading of the building pads east of EastLake Parkway. Faulting is not known to be present onsite. The nearest known fault is the La Nacion Fault zone, which is classified as potentially active (the last movement occurred prior to 11,000 years ago). This fault zone is located approximately four miles west of the EastLake Village Center North 9 06/11/02 project site. Based on the considerable distance from the site and the lack of Recent (Holocene) activity, the La Nacion Fault is not anticipated to significantly impact the site. The closest active fault zone is Rose Canyon, which is located eleven miles west of the site. Notwithstanding, the project site is located in a seismically active area. Proposed development will be required to comply with the current and applicable Uniform Building Code (1997) and City parameters pertaining to seismic design. Minor seepage and/or groundwater was observed in numerous borings onsite. Dewatering will likely be required to effectively grade the site. Highly compressible and expansive soils also occur onsite. Remedial grading will be required to remove deleterious materials prior to site preparation. Susceptibility of the site to liquefaction, seiches and seismically-induced landslides is considered low. Water Quality A "Water Quality Tectmical Report for EastLake Village Center" dated March 5, 2002 was prepared by Rick Engineering Company. According to the Rick Engineering study, the typical storu~ water pollutants that may be anticipated frmn a commercial development such as the proposed development include, but are not limited to oil and grease, heavy metals, and trash and debris. A home improvelnent center and retail facility, such as Lowe's and Target, may potentially generate pollutants not core,non to most commercial developments, including synthetic organics (e.g., pesticides, herbicides, etc.), nutrients (e.g., nitrogen and phosphorus fertilizers), and oxygen-demanding substances (e.g., decaying vegetation, animal waste). The project site is not expected to generate a large amount of sediment once buildout has been completed and landscaping has been established. However, some sediment would be tracked in by cars and a small amount may be generated on the site. This sediment is defined as a pollutant and may contain attached pollutants such as heavy metals. The majority of these typical pollutants would be transported by low flows occurring during the initial stage ofa stom~ event. The aforementioned pollutants could enter receiving waters. The receiving water of each discharge point from the proposed project is Telegraph Canyon Creek. Telegraph Canyon Creek is not listed on the 1998 Clean Water Act Section 303(d) list of impaired water bodies. Discharge into an impaired water body would require e~fiaanced Best Management Practices (BMPs). Since the pollutants of concern would not directly di_sclaarge into an impaired water body as identified on the Clean Water Act Section 303(d) list, the proposed project will be required to install and implement standard BMPs. During the construction phase, the project is subject to the requirements of the State Water Resources Control Board (SWRCB) Order No. 99-08-DWQ National Pollutant Discharge Elimination System (NPDES) General Permit No. CA S000002 (General Construction Permit) adopted on August 19, 1999 and the modifications to the General Construction Permit Order No. 2001-046 adopted by the SWRCB on April 26, 2001. For coverage by the General Construction Permit, the project Applicant is required to submit to the SWRCB a Notice of Intent (NOD to comply with the Permit, and develop a Storm Water Pollution Prevention Plan (SWPPP) 10 06/11/02 describing BMPs to be used during and after construction to prevent the discharge of sediment and other pollutants in storm water runoff fi.om the site. The site inspection requirements and site-specific Storm Water Sampling and Analysis Strategy (SWSAS) required in the SWPPP will provide recommendations for storm water testing to evaluate the effectiveness of the BMPs. Adjustments to the BMPs will be made as necessary to maintain or improve their effectiveness. In order to terminate coverage under the General Construction Permit, the Applicant/developer must submit a Notice of Termination form (NOT) and a Post-Construction Storm Water Operation and Management Plan (PCSWOMP). The PCSWOMP requires permanent BMPs be establlshed to prevent the discharge of sediment or other pollutants in storm water runoff from the completed project. BMPs shall be implemented that specifically prevent pollution of storm drain systems from the gas station, car wash; restaurants, parking lots, and trash collection areas. Post construction, the project is also subject to the requirements of the Municipal Storm Water Permit (Mmficipal Permit) adopted by the California Regional Water Quality Control Board, San Diego Region Order No. 2001-01, National Pollutant Discharge Elimination System (NPDES) No. CA S0108758. The Municipal Permit requires new developments to comply with the Model Standard Urban Storm Water Mitigation Plan (SUSMP) and to consider water quality and ~vatershed protections principles and policies in planning and design. The SUSMP requires that four types of BMPs be i~nplemented: site design (i.e., minimizing i~npervious areas and directly connected impervious areas, increasing rainfall infiltration, maximizing rainfall interception, and protecting slopes and channels), source control (i.e., public education, CC&Rs, providing covered outdoor material and trash storage areas to prevent exposure to rainfall, and street and parking lot sweeping), category specific (i.e., for parking lots incorporate landscape areas into the drainage design and construct overflow parking with permeable paving), arid treatment control (i.e., biofilters, detention basins, infiltration basins, drainage inserts, filtration). In general, site design, source control, and category specific BMPs are non-structural; the treatment control BMPs are structural. In this case, the Applicant will be required to provide and implement BMPs that specifically prevent pollution of storm drain systems from thc gas station, car wash, restaurants, parking lots, and trash collection areas. Based on the requirements outlined in the Model SUSMP, a BMP maintenance program will be required for the proposed project once detailed locations and treatment devices are sized during final design of each phase of the proposed project (VC-1, VC-2 and BC-3). When developed, the ~naintenance program will include an operation and maintenance (O&M) plan, an estimate of maintenance costs, a funding mechanism for financing the program, and an access/easement agreement. In addition, a Maintenance Agreement between the City and the developer will ensure the O&M of the structural BMPs. Paleontolog!cal Resources According to the "Revised Supplemental Geotectmical Investigation for EastLake Village North Commercial Center" (March 5, 2002), the Otay Formation underlies the project site. Compacted artificial fill, undocumented artificial fiI1, topsoil and alluvium overlie portions of the bedrock. The Otay Formation exhibits high paleontological resource sensitivity. Fossils potentially buried in the underlying formation could be impacted during site preparation. The occurrence of fossils 11 06/11/02 ~vithin the covered bedrock cannot be evaluated prior to exposure. Destruction of the paleontological resources would be a significant, but mitigable, impact. Noise Site plans for the VC-2 and BC-3 components of the site are not being proposed at this time. The noise level generated by the uses in these locations would vary depending upon the specific type of use developed at the site. If the noise level at outdoor use areas exceeds the City's noise standards, the noise impact would be considered significant. When specific land uses and site plans are prepared, an acoustical analysis will be required to assure that noise levels on- and off- site do not exceed City standards. Therefore, noise impacts associated with the VC-2 and BC-3 parcels would be potentially significant but mitigable. G. Mitigation Necessary to Avoid Significant Impacts Project-specific nfitigation measures are required to reduce potential environmental impacts identified in this Mitigated Negative Declaration to a less than significant level. These mitigation measures are listed below and included in the Mitigation Monitoring and Reporting Program (MMRP) included as Attachment A to this MND. Traffic and Circulation (Direct Impacts) 1. Prior to approval of the Parcel Map for VC-I, the Applicant shall construct and secure the north leg of Otay Lakes Road/Project Driveway/Vons driveway intersection and provide one lefi4um lane, one througtffright lane, one fight-turu lane, and. dual eastbound left-turn lanes and corresponding signal improvements (see Figure 27 from the project traffic report attached to the MMRP). 2. Prior to approval of the Parcel Map for VC-1, the Applicant shall construct and secure the extension of the existing southbound right-turn lane on EastLake Parkway from Otay Lakes Road to the right-in/right-out driveway accessing VC-I. The Applicant shall also provide a fourth westbound tl~rough lane on Otay Lakes Road from EastLake Parkxvay to the project driveway such that the southbound right-turn ~novement is free and shall provide an island to direct the flow of traffic unless other~vise approved by the City Engineer (see Figure 27 from the project traffic report attached to the MMRP). 3. Prior to approval of the Parcel Map for VC-1, the Applicant shall construct and secure the necessary improvements for providing a fully activated traffic signal at the Otay Lakes Road/EastLake Parkxvay intersection, including interconnect wiring, mast arms, signal heads and associated equipment, underground improvements, standards and luminaries. 4. Prior to approval of the Parcel Map for VC-1, the Applicant shall construct and secure a fully activated traffic signal at the Fenton Street/EastLake Parkxvay intersection, including interconnect wiring, mast arms, signal heads and associated equipment, underground improvements, standards and luminaries and provide the following intersection geometry (see Figure 27 from the project traffic report attached to the MMRP). 12 06/11/02 Northbound Two left-mm lanes, one through lane and one shared through/right lane. Eastbound - One shared through/left and one right-turn lane. Southbound Two left-turn lanes, one through lane and one shared through/right lane. Westbound -- Two left-turn lanes and one shared through/right lane. In addition, the Applicant shall provide for 200 feet of storage for the planned dual southbound left-turn lanes. If only one lane is provided, a storage length of 350 feet would be necessary. 5. Prior to approval of the Parcel Map for VC-1, the Applicant shall construct and secure a fourth westbound lane from the project driveway to the SR-125 northbound on-ramp. 6. Prior to issuance of the first Building Permit for development within BC-3 (E-10) and as determined by the City Engineer, the Applicant shall construct and secure a fully activated traffic signal at the Miller Drive/EastLake Parkway intersection including interconnect xviring, mast arms, signal heads and associated equipment, underground improvements, standards and luminaries and provide the following intersection geometry (see Figure 27 from the project traffic report attached to the MMRP): Northbound One left-turu lane, one through lane and one shared through/fight lane. Eastbound One shared left/through/right lane and one right-turn lane. Southbound One left-turn lane, one through lane and one shared through/right lane. Westbound One left-turn lane and one shared through/right lane. 7. Prior to the applicable Building Pennit for development within the BC-3 and VC-2 parcels as determined by the City Engineer, the Applicant shall construct and secure the applicable intersections at the project access driveways as shown in Figure 27 from the project traffic report (attached to the MMRP). 8. Prior to issuance of the first Building Permit for development within BC-3 (E-10) and as determined by the City Engineer, the Applicant shall construct and secure a 250-foot long northbound left-turn lane at the Miller Drive/EastLake Parkway intersection. Trqffic and Circulation (Cumulative Impacts) 9. As a condition of approval of the EastLake I SPA Plan Amendment, the City of Chula Vista shall initiate and direct a General Plan Amendment to designate Olympic Par~vay from SR- 125 to EastLake Parkway as an Enhanced Prime Arterial with eight lanes. The Applicant shall contribute a fair share toward the construction of the two additional lanes. 10. As a condition of approval of the EastLake 1 SPA Plan Amendment, the City of Chula Vista shall initiate and direct a General Plan Amendment to designate Otay Lakes Road from SR- 125 to Eastkake Parkway as an Enhanced Prime Arterial with seven lanes. The Applicant shall contribute a fair share toxvard the construction of the additional lane. t 3 06/11/02' 11. Prior to issuance of Building Permits for development within VC-1, VC-2 and BC-3, the Applicant shall contribute a fair share toward widening of Otay Lakes Road fi.om H Street to Telegraph Canyon Road to six lanes or toward intersection improvements, which provides additional capacity along Otay Lakes Road. 12. Prior to issuance of Building Permits for development within VC-1, VC-2 and BC-3, the Applicant shall contribute a fair share toward the widening of Otay Lakes Road from Bonita Rohd to H Street to six lanes or toward an intersection improvement, ~vhich provides additional capacity along Otay Lakes Road. 13. Prior to approval of the Parcel Map for VC-I, the Applicant shall construct and secure a second southbound left-turn lane at the Eastlake Parkway/Otay Lakes Road intersection to provide the necessary left-turn storage length required. Minimum storage to be 250 feet in a single lane or in dual lanes combined (see Figure 27 from the project traffic report attached to this MMRP) Noise 14. Prior to approval of the Final Map, Parcel Map, or Site Plan for BC-3 and VC-2 (whichever occurs first), an acoustical analysis of the proposed land uses shall be prepared and approved to determine conformance with City standards. Paleontology 15. Prior to approval of any grading permit for VC-I, BC-3 and/or VC-2, the Applicant shall incorporate into grading plans, to the satisfaction of the City Engineer and Enviromnental Review Coordinator, the following: a) Prior to approval of the grading permit, the Applicant shall confirm to the City of Chula Vista that a qualified paleontologist has been retained to carry out the following mitigation program. (A qualified paleontologist is defined as an individual with a M.S. or Ph.D. in paleontology or geology who is familiar with paleontological procedures and techniques.) The paleontologist shall attend pregrade meetings to consult with grading and excavation contractors. b) During grading operations, a paleontological monitor shall be on-site at all times during the original cutting of previously undisturbed sediments of highly sensitive geologic formations (i.e., Otay Formation) to inspect cuts for contained fossils. (A paleontological tnonitor is defined as an individual who has experience in the collection and salvage of fossil materials.) The paleontological monitor shall work under the direction of a qualified paleontologist. The monitor shall periodically (every several weeks) inspect original cuts in deposits with mff. nown resource sensitivity (alluvium). 14 06/11/02 ]n the event that fossils are discovered in unknown sensitive formations, it may be necessary to increase the per-day field monitoring time. Conversely, if fossils are not discovered, the monitoring effort may be reduced. c) When fossils are discovered, the paleontologist (or paleontological monitor) shall recover them. In instances where recovery requires an extended salvage time, the paleontologist (or paleontological monitor) shall be allowed to direct, divert, or halt grading to allow recovery of fossil remains. Where deemed appropriate by the paleontologist (or paleontological monitor), a screen washing operation for small fossil remains shall be set up. d) Prepared fossils, along with copies of all pertinent field notes, photographs, and maps, shall be deposited in a scientific institution with paleontological collections such as the San Diego Natural History Museum. A final summary report shall be completed which outlines the results of the mitigation program. This report shall include discussion of the methods used, stratigraphy exposed, fossils collected, and significance of recovered fossils. Geology 16. Prior to approval of any grading permit for VC-1, BC-3 and/or VC-2, the grading plans shall incorporate, to the satisfaction of the City Engineer, the geotechnical recommendations in the "Supplemental Geotechnical Investigation for EastLake Village Center North Commercial Center" prepared by Pacific Soils Engineering, Inc. dated March 5, 2002, including but not limited Io site preparation and removals, slope stability and remediation, temporary backcut stability, over excavation of hnilding pads, subsurface drainage, construction staking and survey, settlement monitoring, earthwork aud design considerations, and slope maintenance. 17. Prior to approval of the improvement plans and building permits for all phases of the project, all improvements shall be in compliance with seismic design standards of the Uniform Building Code and requirements of local governing agencies. Water Quality 18. Prior to approval of grading/construction plans for VC-1, BC-3 and/or VC-2, the Applicant shall obtain either (a) General Construction Activity Storm-Water Permit (NPDES Permit No. CA 0108758) from the SWRCB or (b) a municipal permit from the City of Chula Vista that is in effect at the time of issuance of constmctionJgrading permits. Such permits are required for specific (or a series of related) construction activities which exceed five acres in size and include provisions to eliminate or reduce off-site discharges through implementation of the SWPPP. Specific SWPPP provisions include requirements for erosion and sediment control, as well as monitoring requirements both during and after construction. Pollution control measures also require the ase of best available technology, best conventional pollutant control technology, and/or best management practices to prevent or reduce pollutant discharge (pursuant to SYVRCB definitions and direction). 15 06/11/02 The SWPPP also includes specified vehicle fueling and maintenance procedures and hazardous materials storage areas to preclude the discharge of hazardous materials used during construction (e.g., fuels, lubricants, and solvents) and specific measures to preclude spills or contain hazardous materials, including proper handling and disposal techniques and use of temporary impervious liners to prevent soil and water contamination. 19. Prior to approval of grading/construction plans, site plans, and/or building permits for VC-1, BC-3 and/or VC-2, the Applicant shall demonstrate to the satisfaction of the City Engineer compliance with all of the applicable provisions of the Municipal Code, Model SUSMP for the San Diego Region, and the City of Chula Vista SUSMP as may be adopted in the future. The Applicant shall incorporate into the project planning and design effective post- construction BMPs and provide all necessary studies and reports demonstrating compliance with the applicable regulations and standards. BMPs shall be identified and implemented that specifically prevent pollution of storm drain systems from the gas station, car wash, restaurants, parking lots, and trash collection areas. 20. Prior to approval of final or parcel map, and/or building permits for VC-I, BC-3 and/or VC- 2 (as determined by the City Engineer), the Applicant shall submit and obtain approval from the City Engineer of a maintenance program for the proposed post-construction BMPs. The maintenance program shall include, but not be limited to: 1) a manual describing the maintenance activities of said facilities, 2) an estimate of the cost of such maintenance activities, and 3) a funding mechanism for financing the maintenance program. In addition, the Developer shall enter into a Maintenance Agreement with the City to ensure the maintenance and operation of said facilities. Air Quality 21. Prior to approval of building permits for each phase of the project, the Applicant shall demonstrate that air quality control measures outlined in the EastLake I Supplemental Air Quality Improvement Plan pertaining to the design, construction and operational phases of the project have been implemented. 22. Prior to approval of any grading permit fur VC-1, BC 3 and/or VC-2, the following measures shall be placed as notes on all grading plans and implemented during grading of each phase of the project: a) Minimize simultaneous operation of multiple construction equipment units; b) Use low pollutant-emitting equipment; c) Use catalytic reduction for gasoline-powered equipment; d) Use injection timing retard for diesel-powered equipment; e) Water the grading areas a minimum of twice daily to minimize fugitive dust; F) Stabilize graded areas as quickly as possible to minimize fugitive dust; g) Apply chemical stabilizer or pave the last 100 feet of internal travel path within the construction site prior to public road entry; h) lnstall wheel washers adjacent to a paved apron prior to vehicle entry on public roads; 16 06/11/02 i) Remove any visible track-out into traveled public streets withir/ 30 minutes of occurrence; j) Wet wash the construction access point at the end of each workday if any vehicle travel on unpaved surfaces has occurred; k) Provide sufficient perimeter erosion control to prevent washout of silty material onto public roads; l) Cover haul trucks or maintain at least 12 inches of freeboard to reduce blow-off during hauling; m) Suspend all soil disturbance and travel on unpaved surface~ if winds exceed 25 mph; n) Cover/water onsite stockpiles of excavated material; and o) Enforce a 20 mile-per-hour speed limit on unpaved I agree to implement the mitigation measures required as stated in this Section G of this Mitigated Negative Declaration. Name, Title Date Name, Title Date H. Consultation 1. City ofChula Vista: Alex AI-Algha, Senior Civil Engineer Lombardo DeTrinidad, Civil Engineer Jim Newton, Civil Engineer Luis Hemandez, Principal Planner Stan Dorm, Associate Plmmer Mary Venables, Project Plmmer Applicant's Agent_.' Bud Gray and Associates, Bud Gray, Principal Cinli and Associates, Gary Cinti, Principal _Village Ccnter Marketplace Developer: Colton Sudberry, Sudberry Properties Inc. t7 06/11/02 2. Documents: · EastLake Master EIR (EIR 81-03), February 1982. · EastLake I SPA Plan Supplemental EIR (EIR 84-01) January 1985. · EastLake I SPA Plan Amendment/Kaiser Permanente Chula Vista Medical Center Supplemental EIR (EIR 92-01), June 12, 1992. · Olympic Parkway Disposal Sites MND (IS-02-009), December 6, 2001. · City Council Resolution No. 16702, June 30, 1992. · City Ordinance No. 2522, July 6, 1922. · Draft EastLake II General Development Plan Amendment, May 1, 2002. · Draft Supplemental Sectional Planning Area Plan for EastLake Village Center North, May 20, 2002. · Draft EastLake II Planned Community District Regulations Amendment, May 1, 2002 · Draft Design Guidelines for the EastLake Village Center Supplemental Sectional Planning Area, May 20, 2002. · Draft EastLake Village Center North Public Facilities Finance Plan, prepared by Burkett & Wong, May 17, 2002. · Revised Supplemental Geotechnical Investigation for EastLake Village Center North Commercial Center, Pacific Soils Engineering, Inc. March 5, 2002. · Water Quality Tectmical Report for EastLake Village Center, Rick Engineering Company, March 5, 2002. · Detention Basin Analysis for EastLake Village Center North, Hunsaker & Associates, March 4, 2002. · Traffic hnpact Analysis for EastLake Village Center North, Linscott, Law & Greenspan, May 8, 2002. · EastLake Village Center Project Enviromnental Noise Assessment, Dudek & Associates, Inc. April 29, 2002. · Draft EastLake I Supplemental Water Conservation Plan, Jay I<h~iep Land Planning, May 10, 2002. · Draft EastLake I Supple~nental Air Quality Improvement Plan, Jay Kniep Land Planning, May I0, 2002. · EastLake Village Center North Water Analysis, PBS&J, February 2002. · EastLake Village Center North Sewer Analysis, PBS&J, March 2002. · Phase I Environmental Site Assessment, LD Romine and Associates, January 7, 2002. · Biological Resources Tectmical Report & Impact Analysis-for EastLake Village Center Project, Dudek & Associates, April 2002. I. Environmental Delermination I find that although the proposed project could have a significant effect on the environment, there ,,viii not be a significant effect in this case because the mitigation measures described in this document and the MMRP (Attactm~ent A) have been added to the project or agreed to by the Applicant prior to release of this document for public review. Such mitigation ~neasures would avoid or reduce the enviromnental effects of the proposed project to below significance. This Mitigated Negative Declaration has been prepared in accordance with Section 15070 of the 18 06/11/02 Guidelines for the California Environmental Quality Act (CEQA) as amended December 2001. This report reflects the independent judgment of the City of Chula Vista. Further information regarding the envirorm~ental review of this project is available from the Chula Vista Planning Department, 276 Fourth Avenue, Chula Vista, CA 91910. Marilyn R. F. Ponseggi Enviromnental Review Coordinator 19 06/11/02 WARNER FIGURE 1 Regional Location San Miguel Ranch EastLake II Hills and Shores Salt Creek EastLake III GDP 'Lakes Road Telegraph Canyon EastLake II Olay RarlchGreens & Trails ~ North FIGURE 2 Vicinity Map '-'o ~ ~ ~-10 PROJE~I' LOCATION ~ SPA Key Map FIGURE 4 Adopted SPA Plan /~/ I ~SIDE~ ~ ~ ~s ~ ~ ~ ~ F~ FC ~L~GE CE~ER & ~RC~ ~ ~ ~ ~~ ~ (Prot Admin ~fd Retail) ~ ~ ~ BUSINE~ C~R ~ ~ ~ ~ ~~-~P~ I ~ I uc-3 IBusiness Center-Co~ Dist6ct 9~, ~,,~. . ~ Proposed Amendment Lo~tion FIGURE 5 Proposed Land Use Districts E-4 E-4 E-7 E-2 P-4 E-3 E-10 E-6 E-5 VC-2~ ,,,,,,... VC-1 ~-~ ~,-- SPA I "--..~i~ Key Map ocatlon ~ I Parcel Land Use I Acres I I VC-1 Village Center 38.1 ~ · · ~= SPA I Boundary VC-2 Village Center 13.6 Supplemental Village E-10 Vii. Ctr. Employment 16.4 ~ · · ~ Center North SPA Boundary Total 68.1 Note: This exhibit and statisbcs are for the Village Center North Supplemental SPA Planning Area only. Refer to the Eas~_ake I Site Utilization Plan for total SPA Plan sta~stics. FIGURE 8 Proposed Site Utilization Plan TABLE 1 PM Peak Hour Intersection Operations INTERSECTION EXISTING EXISTING + YEAR 2005 YEAR 2005 PROJECT WITHOUT WITH SR 125 SR 125 I~I~A~ILOS~ DEL~A~r-'~OS~ DELAY' LOS '~ ~ LOS Telegraph Canyon Rd/Dray Lakes Rd. 34.0 C 40.0 D 54.2 D 41.9 D Otay Lakes Rd JRutgers Ave. i 3 4 B 14 3 B 20.8 C 16.0 B Dray Lakes Rd/SR 125 SB Ramps DNE DNE DNE DNE DNE DNE 40.4 D Otay Lakes Rd/SR 125 NB Ramps DNE DNE DNE DNE DNE DNE 10.6 B Dray Lakes Rd./Main Entrance 13.0 B 430 D 46 0 D 49 5 D Dray Lakes Rd/Eastlake Pkwy. 30 9 C 38.0 D 47 2 D 51.6 D Fastlake Pkwy/ M¢lerDr.3 WBL'EBLn 161s C5 ~~ ~ ~i~~ ~ , Eastlake Hkvvy / Fenton St :~ WBL4 16.2 C ' EBL 4 5 5 ~ i Olym[)ic Pkwy/E ~stlake Pkv¢/ 6 6 6 ~ 34.3 C 52 5 D Ot~y Iakes Rd/Lane Ave 19 9 B 200 C 26.8 C 27 6 C Otay lakes Rd/Hurde Pkwy 31 1 C 33 2 C 28 9 C 33.9 C Notes: 1 Delay Average delay per vehicle in seconds; LOS Level of Service 2 DNE Does not exist 3 Unsignalized intersection 4 WBL Westbound left-turn movement; EBL - Easlbound left turn movernent; 5 7his movemerlt does not exist currently 6 Currently not an intersection as only Nye legs of the intersection are built 7 (OS E and F shown in Bold and Italics. UNSIGNALIZED INTERSECTIONS SIGNALIZED INTERSECTIONS AVERAGE CONTROL DELAY LEVEL OF PER VEtDCLE SERVICE AVERAGE CONTROL DELAY LEVEL OF PER VEHICI. E SERVICE 00 < 100 A 101 to 15.0 B o0 < 100 A 15.1 to 250 C 10 1 to 200 B 25.1 to 35.0 D 21.1 to 35 0 C 35 1 to 50.0 E 35 1 to 550 D > 50 0 F 55 1 to 80.0 E > 800 TABLE 2 Buildout Peak Hour Intersection Operations INTERSECTION PEAK DELAY LOS HOUR Telegraph Canyon Rd./Otay Lakes Rd PM 52 I D Otay Lakes Rd/Rutgers Ave. PM 23 2 C Otay Lakes Rd/SR 125 SB Ramps PM 49.6 D Otay Lakes Rd/SR 125 NB Ramps PM 16.0 B Otay Lakes Rd/Main Entrance (Vons Dwy.) PM ~~ ~ Otay Lakes Rd/Eastlake Pkwy. AM ~ ~ PM 44.8 D Eastlake Pkwy/Miller Dr. ~ wBRWBL a, ~~~ ...=,~-- - . ,~ Eastlake Pkwy/Fenton St ~ WBL 3 Olympic Pkwy/Eastlake Pkwy PM 51 5 D Otay Lakes Rd/Lane Ave. PM 29.0 C Otay Lakes Rd/Hunte Pkwy' PM 52 0 D 'qotes: 1 Delay Average delay per vehicle in seconds; tog Level of Service 2 Unsignalized inlemection 3 WBL -- Westbouad left-turn movement; EBL- Eastbound left turn movement; LOS E and F shown in shaded cells in Bold and Italics Mitigated L OS and Delay shown in BOLD. UNSIGNALIZED INTERSECTIONS SIGNALIZED INTERSECTIONS AVERAGE CONTROL DEr_AY LEVEL OF AVEPda. GE CONTROL DELAY LEVEL OF PER VEHICLE SERVICE PER VEHICLE SERVICE 0.0 < 100 A 0.0 < 10.0 A 10.1 {~ 150 B 10.1 to 200 B 15.1 ~o 250 C 21 I to 35.0 C 251 to 35.0 D 351 to 550 D 35 1 to 50.0 E 55 I 1o 80 0 E > 500 F > 80.0 F TABLE 4 Buildout Daily Segment Operations CAPACITY I3UILDOUT ~ STREET SEGMENT ROADWAY CLASS AT LOS C Volume f LOS TELEGRAPH CANYON ROAD Paseo Ranchero to Otay Lakes Rd prime Arterial 50,000 34,000 A OTAY LAKES ROAD North of East "H" St Major Aderial (4L) 30,000 ~~ East "H" St to ~ elegraph Canyon Rd Major Arterial (4L) 30,000 Telegraph Canyon Rd. to Rutgers Rd. Prime Aderial 50,000 33,000 B Rutgers Rd to SR 125 Prime Arterial 50,000 41,000 B SR 125 to Vons Dwy. ~rime Arterial 50,000 ~ Vons Dw7 to Eastlake Pkwy. Prime Aderial 50,000 EasSake Pkwy to Lane Ave Prime Aded;Jl 50,000 42,000 B Lane Ave to IIunte Pkwy. Prime Adedal 50,000 33,000 A FENTON STREET East of Eastlake Pkw./. ~ 17,000 14,000 C LA MEDIA ROAD Fe[eg~c~ph Canyon Rd to PMomar St Prime Artelial 50,000 28,000 A EASTLAKE PARKWAY N/O Milte~ Dr Class I Collector 22,000 6,000 A Miller Dr to Fenton St. Major Artedal (4L) 30,000 8,000 A Fenton St to Otay I. akes Rd Major Arterial (4[) 30,000 25,000 ~3 Otay Lakes [Road Io Olympic Pkwy. Prime Arterial 50,000 26,000 A SoL, th of Olympic Pkwy. Major Adedal (6L) 40,000 ~;.~.~,~_,~~ ~ ~)~ OLYMPIC PARKWAY .DR 125 to Eastlake Pkwy. Prime Arterial 50,000 Eastlake Pkwy to Hunte Pk~/y Plime Arterial 50,000 40,000 C Notes: 1 Eastlake III Traffic Impact Analysis, March 2001 (and includes project traffic) 2 [:;uilt to neilher Class I Collector nor Class II Collector standards. Mid point LOS C capacity between the roadway classifications assumed. Levels of service E), E and F indicated in bold with shading. ATTACHMENT "A" Mitigation Monitoring Reporting Program IS-01-042 This Mitigation Monitoring Reporting Program (MMRP) is prepared for the City of Chula Vista in conjunction with the proposed EastLake Village Center North (IS-01-042) project. The proposed project has been evaluated in a Mitigated Negative Declaration (MND) prepared in accordance with the California Environmental Quality Act (CEQA) and City/State CEQA Guidelines. The legislation requires public agencies to ensure that adequate mitigation measures are implemented and monitored on Mitigated Negative Declarations, such as IS-01-042. The MMRP for this project ensures adequate implementation of mitigation for the following potential impacts: 1. Water Quality As discussed in the EastLake Village Center North MND, grading, construction and operation of the proposed project xvould increase the potential for erosion and impacts on water quality from runoff that contains silt, oils, fuel residues, etc. 2. Air Quality As discussed in the EastLake Village Center MND, the proposed grading of the site would generate construction equipment emissions and airborne particulates. In addition, particulates associatcd xvith grading equipment (particulates from haul trucks, dirt on the truck tires, and dirt ou unimproved portions of haul routes) would become airborne during hauling operations. The incremental increase in mobile emissions from site improvement xvould contribute to existing air quality violatious ou a short-term basis. 3. Geology As discussed in the EastLake Village Center North MND, grading of site would impact unsuitable geologic conditions. 4. Transportation As discnssed in the EastLake Village Center North MND, the project would generate sufficient volume of traffic to reduce levels of service on segments of EastLake Parkway and Otay Lakes Road, as well as several intersections on Otay Lakes Road and EastLake Parkway to unacceptable levels. 5. Paleontological Resources As discussed in the EastLake Village Center North MND, the grading of the site may impact the Otay Foruration, which has high paleontological resource potential. 6. Noise Site plans for the VC-2 and BC-3 parcels are not being proposed at this time. If the noise level at outdoor use areas in the parcels exceeds the City's noise standards, the noise impact would be considered significant. Due to the nature of the environmental issues identified, the Mitigation Compliance Coordinator shall be the Environmental Review Coordinator for the Cit~ o£ Chula Vista. It shall be the responsibility of the applicant to ensure that the conditions of the Mitigation Monitoring Reporting Program are met to the satisfaction of the Environmental Review Coordinator. Evidence in xvritten form confirming compliance with the mitigation measures specified in the EastLake Village Center North MHD (IS-01-042) shall be provided by the applicant to the Enviromnental Review Coordinator. The Environmental Review Coordinator will thus provide the ultimate verification that the mitigation ~neasures have been accomplished. 6/11/2002 2 0 o._O 0 Z ~ ~-a~ ~ ~ o 0.9 ~ o VONS - DR~AY LEGEND (~)- TFmFfic S~gnml -u-- STOP Sign v FREE- FFee Righ~-i:um REV, 0.5/06/02 NO SCALE FI02627-- 1114.DWG Figure 27 RECOMMENDED INTERSECTION GEOMETRY -70 u n ~ N ~ [ ~ ~ F~qCfl hk~F VII I ~lFi. F eFNFFFP KIF~PTH ATTACHMENT 4 Figures EASTLAKE I ACTMTY CENTER / / i / / Busmmss ~~ // ~ ~ ~ ~L~GE CEN~R ~ ~T ~ E~ERT~N~ / SER~CE ~ ~ ' I ~ ~ I CHURCH --,.,....._.,..._..__., SHOPPING ~ ~ /' ~T~ CENTER ~ L~ / GREFNS FIGURE 1 EASTLAKE II LAND USE DISTRICTS MAP (PROPOSED) ~, Change 2.0 acres fi'om BC-2 BC-2 .o~ (BC-1) Busines~ ~nter R~5 ~d (OS-~ O~n Spa~ RESIDENTIAL RS-S . ~ Reaidential Estates ~~F~ FC ~~t R~ R~ ~C~ PU~ ~L~GE CE~ER & CO~ERC~ ~~ ~ ~~ ~ fPro~ Admin.~td. Retail) ~~ ~ BUSINE~ C~TER ~~ ~ ~ I uc-3 IBusiness Center- Core District FIGURE 4 EASTLAKE I SPA PI.AN (PROPOSED) Change 2.0 acres from (E-lO) Village Center Employment and (OSo12) Open Space to (VCo2) Village Center. EMPLOYMENT {Business Center I) E-I Employment 32.1 E-2 Employment 16.6 E-3 Employment 80 E.4 Employment 17.6 E-5 Employment 13.9 [ Chang~ 16.4 acres from E-6 Employment 6.2 (MC-l) Medical Center E-7 Employment 12.5 E-6 Employment 4.6 to (E-10) V~a~ Center E-9 Employment 14.6 Employment. Total 126.1 ]ACTIVITY CENTER {North) I 0S-12 VC-1 Village Center 38.1 ~Village Center 13.6 Cha~ 14.2 acres £rom I E-10 ]Vii. Ctr. Employment 16.4 (MC-l) Medical Center to Total 68 1 IOPEN SPACE/PARKS ] (~C-1) V't[lag~ Center. OS~10 Open Space 3.4 ~Open Space 0 7 O~_~ O p e n Space 0.5 I P-4 IPark 9.1 Location Number Land Use Acres Rankle Density DU R-16 Residential - Detached 43.6 0-5 3.9 169 Residential - Attached 20.0 5-15 11.9 237 , Residential - Attached 8.5 15-25 16.9 144 c~ ~lUlL _/( il h\~ Sub-total 72 1 7.6 550 [~Open Space 6.5 OpenSpace 1.0 ~ Open Space 1.0 O~ Open Space 3.2 I OS-19 ~OpenSpace 7.2 Sub-total 18.9 Total 91.0 Note: 'mis legend is for the EastLake Business Center I, EastLake ~liage Cenler (nodh) and Sat~ Creek I onty. The East Lake I SPA also includes EastLake Shores, EastLake Hills, and EastLake Business Center II. Village Center (south) Is wffhin the EastLake Greens SPA, FIGURE 5 EASTLAKE I ACTIVITY CENTER CONCEPT (ADOPTED) FIGURE 6 REGIONAL MAP San Miguel Ranch EastLake II , Hills and Shores pSalt Creek EastLake III GDP EastLake II ~ Greens & Trails !! Village II Center North II II FIGURE 7 ATTACHMENT 5 Village Center North Supplemental SPA (See attached binder) THE CITY l ':;HULA VISTA DISCLOSURE STATE,. -,NT A=ACHMENT 6 You are required to file a Statement of Disclosure of certain ownership or financial interests, payments, or campaign contributions, on all matters which will require discretionary action on the part of the City Council, Planning Commission, and all other official bodies. The following information must be disclosed: 1. List the names of all persons having financial interest in the property which is the subject of the application or the contract, e.g., owner applicant, contractor, subcontractor, material supplier. -r¡'¡'LEA<;TLA~E (OMf'AÑY 5. k. 'ßoc,WF-LL LÞ-.NÞ CoMPAfJ'{ 2. If any person* identified pursuant to (1) above is a corporation or partnership. list the names of all individuals owning more than 10% of the shares in the corporation or owning any partnership interest in the partnership. .T ~ . ~05.""EU_ 3. If any person* identified pursuant to (1) above is non-profit organization or a trust, list the names of any person serving as director of the non-profit organization or as trustee or beneficiary or trustor of the trust. 4. Have you had more than $250 worth of business transacted with any member of the City staff, Boards, Commissions, Committees, and Council within the past twelve months? Yes No ¡...--.. If yes, please indicate person(s): 5. Please identify each and every person, including any agents, employees, consultants, or independent contractors who you have assigned to represent you before the City in this matter. _7:>.\ Ll CDS-w'EM. 13l-\D (;,(Z.A'I G,U'( Äçþ.,(1..0 GÞ.RY C, ~TI ~\LL ~I'BF,IN 6. Have you and/or your officers or agents, in the aggregate, contributed more than $1,000 to a Councilmember in the current or preceding election period? Yes _ No .,/' If yes, state which Councilmember(s): Date: i- Z-Z'l-ð/ .¡ / (NOTE: ATTACH ADDITIONAL PAGES AS NECESSAR SI Guý ASAf?-O Print or type name of contractor/applicant * Person is defined 0.\" "Any individual. firm, co-partncrshljJ, joint venture, association, socia! club, /rea/ernal organization, corporation, estale, trust, receiver, syndicate. this and any other county, city and country, city municipality, district, or other political subdivision, or any other group or combination acting as a unil " I&'~·c¡f. ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AMENDMENTS TO THE EASTLAKE II PLANNED COMMUNITY DISTRICT REGULATION AND LAND USE DISTRICT MAP. L RECITALS A. Project Site WHEREAS, the areas of land which are the subject of this Ordinance Amendment are diagrammatically represented in Exhibit A and hereto incorporated herein as Exhibit A; and for the purpose of General description herein consist of 68.1 acres at the northwest and northeast comers ofOtay Lakes Road (Project Site); and, B. Project; Application for Discretionary Approval WHEREAS, on February 23,2001, The Eastlake Company ("Developer") filed an application requesting approval of amendments to the EastLake II Planned Community District Regulation and Land Use District Map; and, C. Prior Discretionary Approvals WHEREAS, prior discretionary action of the development of the EastLake I portion of the Project Site has been the subject matter of prior General Development Plan and Sectional Planning Area (SPA) plan, EastLake II General Development Plan, Planned Community District Regulation and Land Use District Map amendments, resulting in the current land use designations, all previously approved by City Council Resolution No, 16702 and Ordinance No, 2522 on June 30,1992; 2) a prior Development Agreement Between the City of Chula Vista and the Kaiser Foundation Hospitals previously approved by City Council Ordinance 2522 on July 6, 1992 ; and, D, Planning Commission Record on Applications WHEREAS, the Planning Commission held an advertised public hearing on said project on July 10,2002, and voted to recommend that the City Council approve the amendments to the EastLake II Planned Community District Regulations and Land Use Districts Map in accordance with the findings listed below. The proceedings and all evidence introduced before the Planning Commission at their public hearing on this Project held on July 10, 2002, and the minutes and resolutions resulting therefrom, are hereby incorporated into the record of this proceeding. E, City Council Record on Applications /'- - 1~ WHEREAS, a duly called and noticed public hearing was held before the City Council of the City of Chula Vista on July 23, 2002 on the Discretionary Approval Application, and to receive the recommendations of the Planning Commission, and to hear public testimony with regard to same; and, F. Discretionary Approvals Resolution and Ordinance WHEREAS, at the same City Council meeting at which this Ordinance was introduced for first reading on July 23,2002, the City Council of the City ofChula Vista approved Resolution No, by which it adopted the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-OI-042) and imposed amendments on EastLake II General Development Plan, and adopted a new Supplemental Sectional Planning Area (SPA) for 68, I acres to be known as the Village Center North Supplemental SPA, including Design Guidelines, Public Facilities Financing Plan, Supplemental Public Facilities Finance Plan, Air Quality and Water Conservation Plans. II NOW, THEREFORE, the City of Chula Vista does hereby find, determine and ordain as follows: A. FINDINGS FOR APPROVAL OF P-C PLANNED COMMUNITY ZONE The City Council hereby finds that the proposed Amendments to the Planned Community District Regulation and Land Use District Map are consistent with the City of Chula Vista General Plan, as amended, and public necessity, convenience, the general welfare and good zoning practice support the amendments. B, APPROVAL OF PLANNED COMMUNITY ZONE The City Council does hereby approve the Planned Community District Regulation and Land Use District Map as represented in Exhibit C, III. !NY ALIDITY; AUTOMATIC REVOCATION It is the intention of the City Council that its adoption of this Ordinance is dependent upon the enforceability of each and every term, provision and condition herein stated; and that in the event that anyone or more terms, provisions or conditions are detennined by a Court of competent jurisdiction to be invalid, illegal or unenforceable, this resolution shall be deemed to be automatically revoked and of no further force and effect ab initio, IV, EFFECTIVE DATE This ordinance shall take effect and be in full force on the thirtieth day ffom and after its adoption, /~-?¿ Presented by: Approved as to fonn by: G "- 7VlÁ~ ~ John Kaheny City Attorney Robert A. Leiter Director of Planning H:\attomey\loraine\PCM-OI-15 CCORD.doc /(.- 9' 7 RESOLUTION 2002- RESOLUTION OF THE CITY OF CHULA VISTA CITY COUNCIL RECOMMENDING THAT THE CITY COUNCIL ADOPT THE MITIGATED NEGATIVE DECLARATION AND MITIGATION MONITORING AND REPORTING PROGRAM IS-Ol-042; APPROVE AMENDMENTS TO THE CITY'S GENERAL PLAN, EASTLAKE II GENERAL DEVELOPMENT PLAN, EASTLAKE II PLANNED COMMUNITY DISTRICT REGULATIONS AND LAND USE DISTRICTS MAP, ALSO, ADOPT A NEW SECTIONAL PLANNING AREA SPA PLAN AND ASSOCIATED REGULATORY DOCUMENTS FOR 68,1 ACRES AT THE NORTHEAST AND NORTHWEST CORNERS OF OT A Y LAKE ROAD AND EASTLAKE P ARKW A Y. I RECITALS A Project Site WHEREAS, the areas ofland which are the subject of this Resolution are diagrammatically represented in Exhibit A and hereto incorporated herein by this Resolution, and commonly known as EastLake I Activity Center, and for the purpose of general description herein consist of 54,5 acres at the northwest corner and 13,6 acres at the northeast corner of Otay Lakes Road and EastLake Parkway within the EastLake Planned Community ("Project Site")' and , , B. Project; Application for Discretionary Approvals WHEREAS, duly verified application was filed with the City of Chula Vista Planning Department on February 23, 2001 by The Eastlake Company ("Developer") requesting amendments to the City's General Plan, EastLake II General Development plan, Eastlake II Planned Community District Regulations, The Developer also requested approval of a new Sectional Planning Area (SPA) plan and associated regulatory documents, including design guidelines, Public Facilities Finance Plan, Air Quality Improvement Plan and Water Conservation Plan for 68, I acres located at the northeast and northwest corner of Otay Lakes Road and EastLake Parkway ("Project); and, C Prior Discretionary Approvals WHEREAS, prior discretionary action of the development of the EastLake I portion of the Project Site has been the subject matter of prior General Development Plan and Sectional Planning Area (SPA) plan, EastLake II General Development Plan, Planned Community District Regulations and Land Use District Map amendments, EastLake II Planned Community District Regulations, resulting in the current land use designations, all previously approved by City Council Resolution No, 16702 and Ordinance No. 2522 on July 6,1992; 2) a prior Development Agreement Between the City ofChula Vista and the /~ - 91' Kaiser Foundation Hospitals previously approved by City Council Ordinance 2522 on July 6, 1992; and, D, Planning Commission Record of Application WHEREAS, the Planning Commission held an advertised public hearing on the Project on July 10, 2002 and voted 5-0-2 to forward a recommendation to the City Council on the Project; and, WHEREAS, the proceedings and all evidence introduce before the Planning Commission at the public hearing on this project held on July 10, 2002 and the minutes and resolution resulting there from, are hereby incorporated into the record of this proceedings; and, E. City Council Record of Application WHEREAS, the City Clerk set the time and place for the hearing on the Project application and notices of said hearings, together with its purposes given by its publication in a newspaper of general circulation in the city, and its mailing to property owners within 500 ft, ofthe exterior boundaries of the Project Sites at least ten days prior to the hearing, NOW THEREFORE BE IT RESOLVED that the City Council hereby find, determine and resolve as follows: II. CERTIFICATION OF COMPLIANCE WITH CEQA The City Council does hereby find that the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-Ol-042) has been prepared in accordance with requirements of the California Environmental Quality Act (CEQA), the State CEQA Guidelines and the Environmental Review Procedures of the City of Chula Vista, and hereby adopts the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-Ol-042), III. INDEPENDENT JUDGMENT OF CITY COUNCIL The City Council does hereby find that in the exercise of their independent review and judgment, the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Program (IS-Ol-042) in the form presented has been prepared in accordance with requirements of the California Environmental Quality Act and the Environmental Review Procedures of the City ofChula Vista and hereby adopt same. IV. APPROVAL OF GENERAL PLAN AMENDMENT The Chula Vista General Plan Land Use Diagram is hereby amended as set forth and diagrammatically represented in Exhibit "B," a copy of which shall be kept on file in the 2 / h - C¡9 office of the City Clerk, to change the land use designation of 16.4 acres at the northeast comer of EastLake Parkway and the future SR-125 freeway from Commercial Retail to Research and Limited Manufacturing, V. GENERAL PLAN INTERNAL CONSISTENCY The City Council hereby finds and determines that the General Plan consistency is internally consistent and shall remain internally consistent following the amendments thereon in this Resolution. VI. GENERAL DEVELOPMENT PLAN FINDINGS THE PROPOSED DEVELOPMENT AS DESCRIBED BY THE GENERAL DEVELOPMENT PLAN IS IN CONFORMITY WITH THE PROVISIONS OF THE CHULA VISTA GENERAL PLAN, AS AMENDED. The proposed amendments to the EastLake II General Development Plan reflects the land use, circulation system and public facilities that are consistent with the City's General Plan as proposed to be amended. PLANNED COMMUNITY CAN BE INITIATED BY ESTABLISHMENT OF SPECIFIC USES OR SECTIONAL PLANNING AREA PLANS WITHIN TWO YEARS OF THE ESTABLISHMENT OF THE PLANNED COMMUNITY ZONE. A sectional Planning Area Plan has been previously established for the Project Site, and a new Supplemental Sectional Planning Area plan, which is a continuation of the EastLake I SPA plan policies and development regulations, is included with the proposed project. IN THE CASE OF PROPOSED RESIDENTIAL DEVELOPMENT, THAT SUCH DEVELOPMENT WILL CONSTITUTE A RESIDENTIAL ENVIRONMENT OF SUSTAINED DESIRABLITY AND STABILITY; AND THAT IT WILL BE IN HARMONY WITH OR PROVIDE COMPATffiLE VARIETY TO THE CHARACTER OF THE SURROUNDING AREA; AND THAT THE SITES PROPOSED FOR PUBLIC FACILITIES, SUCH AS SCHOOLS, PLAYGROUNDS AND PARKS ARE ADEQUATE TO SERVE THE ANTICIPATED POLPULATION AND APPEAR ACCEPTABLE TO THE PUBLIC AUTHORITIES HAVING JURISDICTION THEREOF. The project does not involve residential development. VII. ADOPTION OF AMENDED GENERAL DEVELOPMENT PLAN In light of the findings above, the amended EastLake II General Development Plan is hereby approved and adopted in the form presented to the City Council and on file in the office of the City Clerk. 3 /b- /OJ VIII. SPA FINDINGS! APPROVAL A. THE SECTIONAL PLANNING AREA (SPA) PLANS (AS AMENDED) ARE IN CONFORMITY WITH THE EASTLAKE II GENERAL DEVELOPMENT PLAN AND THE CHULA VISTA GENERAL PLAN. The new Village Center North SPA Plan reflect the land use, circulation system and public facilities that are consistent with the EastLake II General Development Plan and the City of Chula Vista General Plan as proposed to be amended. B, THE SECTIONAL PLANNING AREA PLANS WILL PROMOTE THE ORDERLY SEQUENTIALIZED DEVELOPMENT OF THE INVOLVED SECTIONAL PLANNING AREAS. The new SPA plan includes a Supplemental Public Facilities Finance Plan that outlines the required infÌaslnicture to serve the Project, the timing of installation and the financing mechanisms to promote the orderly sequentialized development of the Project. C. THE EASTLAKE SECTIONAL PLANNING AREA (SPA) PLANS, AS AMENDED, WILL NOT ADVERSELY AFFECT ADJACENT LAND USE, RESIDENTIAL ENJOYMENT, CIRCULATION OR ENVIRONMENTAL QUALITY The Land uses within the EastLake I Village Center Supplemental SPA plan represent the circulation system and overall land use intent as previously envisioned in the EastLake II General Development Plan. Thus, the new SPA will not adversely affect the adjacent land uses, residential enjoyment, circulation or environmental quality of the surrounding uses. D, IN THE CASE OF PROPOSED INDUSTRIAL AND RESEARCH USES, THAT SUCH DEVELOPMENT WILL BE APPROPRIATE IN AREA, LOCATION, AND OVERALL DESIGN AND DEVELOPMENT STANDARDS ARE SUCH AS TO CREATE A RESEARCH OR INDUSTRIAL ENVIRONMENT OF SUSTAINED DESIRABILITY AND STABILITY; AND, THAT SUCH DEVELOPMENT WILL MEET PERFORMANCE STANDARDS ESTABLISHED BY THIS TITLE. The orientation and configuration of the northerly 16.4 acres is substantially more suitable for employment land use and more compatible with the EastLake Business Center to the north and east. Thus, changing the previously adopted land use designation fÌom Public Quasi-Public to Research and Limited Manufacturing is appropriate in area, and will not affect the surrounding areas, This added 4 /?- /0/ acreage will contribute substantially to achieve the city's economic development goals and objectives. E, IN THE CASE OF INSTITUTIONAL, RECREATIONAL, AND OTHER SIMILAR NONRESIDENTIAL USES, THAT SUCH DEVELOPMENT WILL BE APPROPRIATE IN AREA, LOCATION AND OVER-ALL PLANNING TO THE PURPOSE PROPOSED, AND THAT SURROUNDING AREAS ARE PROTECTED FROM ANY ADVERSE EFFECTS FROM SUCH DEVELOPMENT. The orientation and configuration of the northerly 16.4 acres is substantially more suitable for employment land use and more compatible with the EastLake Business Center to the north and east. Thus, changing the previously adopted land use designation from Public Quasi- public to Research and Limited Manufacturing is appropriate in area, and will not affect the surrounding areas. This added acreage will contribute substantially to achieve the city's economic development goals and objectives, F. THE STREET AND THOROUGHFARES PROPOSED ARE SUITABLE AND ADEQUATE TO CARRY THE ANTICIPATED TRAFFIC THEREON, The Project Site will be served by two major streets: EastLake Parkway and Otay Lakes Road. The western parcel's main access is along Otay Lakes Road with secondary access points along EastLake Parkway, Otay Lakes Road, which is a 6- lane Prime Arterial road will be widened to seven lanes to accommodate a queuing lane for the future SR -125 fÌeeway on-ramp and acceleration and de- acceleration lanes for the commercial center site (Western Parcel), EastLake Parkway will also be widened to five lanes to accommodate the required turning lanes at the intersection with Otay Lakes Road, Regional access will be provided primarily by I-805 located approximately 5 miles to the west, and eventually by the future SR-125, immediately adjacent to the west. Required improvements installation timing and financing mechanism are discussed in the Village Center North Public Facilities Finance Plan. Thus, the streets proposed to serve the Project Site are suitable and adequate to carry the anticipated traffic thereon, G, ANY PROPOSED COMMERCIAL DEVELOPMENT CAN BE JUSTIFIED ECONOMICALLY AT THE LOCATION (S) PROPOSED AND WILL PROVIDE ADEQUATE COMMERCIAL FACILITIES OF THE TYPES NEEDED AT SUCH PROPOSED LOCATION (S), The proposed amendments increase the acreage designated Commercial Retail to allow for a major commercial center development to provide needed commercial 5 / (; -;0).. facilities, such as a major department store, and facilities, including restaurants and other similar uses, to complement the existing neighborhood serving commercial center. H. THE AREA SURROUNDING SAID DEVELOPMENT CAN BE PLANNED AND ZONED IN COORDINATION AND SUBSTANTIAL COMPATIBILITY WITH SAID DEVELOPMENT. The proposed amendments are consistent with the previously approved plans and regulations applicable to surrounding areas, and therefore said development can be planned and zoned in coordination and substantial compatibility with said development. BE IT FURTHER RESOLVED that in light of the findings above, the City Council does hereby approve the EastLake Greens and EastLake Trails SPA amendments and adopts the new EastLake II Sectional Planning Area SPA plan and the Design Guidelines, Public Facilities Financing Plan, Supplemental Public Facilities Finance Plan, Air Quality and Water Conservation Plans, all as presented in Exhibit C subject to the conditions set forth below: IX. SPA PLAN CONDITIONS OF APPROVAL 1. Provide a 50-space park and ride facility within the Western Parcel and a IO-space facility in the Eastern Parcel. The exact location, configuration, maintenance responsibility and ownership of the facility shall be defined as part of the precise plan (DRC) for each individual Parcel. 2. The EastLake Company shall design and construct a bus stop, shelter, trash receptacle and bench at the location designated by the City's Transit Coordinator on Otay Lakes Road. 3. Implement the Federal and State mandated conservation measures outlined III the EastLake I Supplemental Water Conservation Plan. 4. Implement the non-mandated water conservation measures, which include I) Hot Water Pipe Insulation 2) Pressure Reducing Valves, and 3) Water EfficientlDrought Tolerant Landscaping, 5, Prior to approval of building permits for each phase of the project, the applicant shall demonstrate that air quality control measures outlined in the EastLake I Supplemental Air Quality Improvement Plan pertaining to the design, construction and operational phases of the project have been incorporated in the project design, 6, Trash collection areas shall be covered, bermed or other approved method as approved by 6 16-/0.3 the City Engineer to prevent runoff of polluted water across paved areas into the stonn drainage systems. X. CONSEQUENCE OF FAILURE OF CONDITIONS If any of the forgoing conditions fail to occur, or if they are, by their tenns, to be implemented and maintained over time, and any of such conditions fail to be so implemented and maintained according to the their tenns, the City shall have the right to revoke or modify all approvals herein granted, deny or further condition issuance of shall future building pennits, deny, revoke or further condition all certificates of occupancy issued under the authority of approvals herein granted, instituted and prosecute litigate or compel their compliance or seek damages for their violations, No vested rights are gained by Developer or successor in interest by the City approval of this Resolution. XI. INVALIDITY; AUTOMATIC REVOCATION It is the intention of the City Council that its adoption of this Resolution is dependent upon enforceability of each and every tenn provision and condition herein stated; and that in the event that anyone or more tenns, provisions or conditions are detennined by the Court of competent jurisdiction to be invalid, illegal or unenforceable, if the city so detennines in its sole discretion, this resolution shall be deemed to be revoked and no further in force or in effect. Presented By: Approved as to fonn by: Robert A Leiter Director of Planning CÀ_ ìì/\ ~. ,~ John Kaheny City Attorney H:\Attomey\loraine\pcm-OI-15CC reso 7 /b-/rH