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Agenda Packet 2003/02/04
CITY COUNCIL AGENDA February 4, 2003 4:00 p.m. Council Chambers Public Services Building 276 Fourth Avenue, Chula Vista CHY OF CHULA VISI'A City Council City Manager Patty Davis David D. Rowlands, Jr. John McCann City Attorney Jerry R. Rindone John M. Kaheny Mary Salas City Clerk Stephen C. Padilla, Mayor 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 February 4, 2003 4:00 P.M. CALL TO ORDER ROLL CALL: Councilmembers Davis, McCann, Rindone, Salas, and Mayor Padilla PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY · INTRODUCTION BY DEPUTY CITY MANAGER PALMER OF THE EMPLOYEE OF THE MONTH, ZOE ABRAHAMS, CHILDREN'S LIBRARIAN - SOUTH CHULA VISTA LIBRARY · PRESENTATION BY DEPUTY CITY MANAGER PALMER OF THE LIBRARY'S BOOK BUG · PRESENTATION BY MAYOR PADILLA TO ASSISTANT CITY MANAGER POWELL OF A CERTIFICATE OF AWARD FROM THE CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS FOR OUTSTANDING FINANCIAL REPORTING 2000-2001 AND A CERTIFICATE OF ACHIEVEMENT FROM THE GOVERNMENT FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES AND CANADA FOR EXCELLENCE IN FINANCIAL REPORTING CONSENT CALENDAR (Items 1 through 4) 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) andsubmit 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 M1NUTES of January 21, 2003. Staff recommendation: Council approve the minutes. 2. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 08-I (OTAY RANCH VILLAGE SIX) AUTHORIZING THE LEVY OF A SPECIAL TAX IN SUCH COMMUNITY FACILITIES DISTRICT (SECOND READING AND ADOPTION) On January 14, 2003, the City held a public hearing and approved resolutions to form and establish Community Facilities District 08-I (CFD-08-I), and to declare the necessity to incur bonded indebtedness in CFD-08-I. A special election of eligible property owners was held for the purpose of voting on the formation of the CFD-08-I. Adoption of the resolution and ordinance continues the formal proceedings to establish the district and authorize the levy of special taxes within the district. (Director of Engineering) Staff recommendation: Council place the ordinance on second reading for adoption. 3. ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING SECTIONS 19.04, 19.20, 19.22, 19.24, AND 19.48; AND ADDING SECTION 19.58.022 TO THE ZONING ORDINANCE OF THE CHULA VISTA MUNICIPAL CODE TO DEF1NE AND PROVIDE LOCAL PROVISIONS FOR ACCESSORY SECOND DWELLING UNITS WITHIN THE CITY OF CHULA VISTA (SECOND READING AND ADOPTION) Adoption of the ordinance amends and adds the appropriate portions of the zoning ordinance to establish local standards for accessory second dwelling units in residential zones as mandated by State Government Code Section 65852.2. Without local standards, property owners will be able to construct these type units with only a building permit if they conform to the Government Code standards. Effective July 1, 2003 local agencies may not require any type of discretionary application. (Director of Planning and Building) Staff recommendation: Council place the ordinance on second reading for adoption. 4. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE GUARANTEED MAXIMUM PRICE (GMP) PER DESIGN BUILD AGREEMENT WITH RUDOLPH AND SLETTEN, INC., FOR THE SERVICES REQUIRED TO DESIGN AND CONSTRUCT FIRE STATION NO. 7, LOCATED AT THE SOUTHEAST CORNER OF LA MEDIA AND SANTA VENETIA IN VILLAGE 2 OF OTAY RANCH The City Council previously approved the Design Build Agreement with Rudolph and Sletten, Inc. and Capital Improvement Program project no. PS-150, which involves the constmction of a fully functional 12,000 square-foot, four-bay fire station, including the facilities and site-work required to provide fire service to the eastern territories of the City. The project is nearing the end of the design phase and is ready to start the construction phase in February. Adoption of the resolution will set the guaranteed maximum price for this project per the Design Build agreement with Rudolph and Sletten, Inc. (Director of Building and Park Construction) Staff recommendation: Council adopt the resolution. Page 2 - Council Agenda 02/04/03 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. ACTION ITEMS The items listed in this section of the agenda will be considered individually by the Council, and are expected to elicit discussion and deliberation. 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. 5. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROViNG THE MASTER PLAN FOR THE PROPOSED PUBLIC COMMUNITY PARK SITE iN THE EASTLAKE TRAILS SUBDIVISION, "SALT CREEK PARK" Adoption of the resolution approves a master plan for the development of the 24-acre public community park in EastLake Trails, and names the park "Salt Creek Park". The plan includes a 20,000 square-foot recreation center. (Director of Building and Park Construction, Director of Public Works Operations, Director of Recreation) Staff recommendation: Council adopt the resolution. 6. REPORT REGARDiNG EXISTiNG AND FUTURE TENNIS FACILITIES AND PROGRAMMiNG Council received correspondence from the City's former contract tennis professional, expressing concerns about the current state of community-sponsored tennis in Chula Vista, and his interest in the construction of a public tournament-class tennis facility in the City. The report provides Council with information about existing and plarmed tennis facilities and programs. (Director of Recreation, Director of Building and Park Construction) Staff recommendation: Council accept the report. 7. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTiNG IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2001~2 (MCMILLiN OTAY RANCH VILLAGE SIX), AUTHORIZiNG AND PROVIDING FOR THE ISSUANCE OF SPECIAL TAX 'BONDS OF THE DISTRICT, 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 02/04/03 On August 13, 2002, the City Council authorized the levy of special taxes in Community Facilities District No. 2001-2 and gave the approval to incur a bonded indebtedness secured by such special taxes. On August 27, 2002, City Council heard the election results, with one hundred percent of the votes cast in favor of forming the district, and authorized the issuance of bonds. Adoption of the resolution authorizes the issuance of special tax bonds of CFD No. 2001-2 in the amount of $13,000,000 and approves the form of certain documents related to the issuance of the bonds. (Director of Engineering) Staffrecommendation: Council adopt the resolution. ITEMS PULLED FROM THE CONSENT CALENDAR OTHER BUSINESS 8. CITY MANAGER'S REPORTS · Scheduling of meetings 9. MAYOR'S REPORTS 10. COUNCIL COMMENTS CLOSED SESSION Announcements of actions taken in Closed Session shah be made available by noon on Wednesday following the Council Meeting at the City Clerk's of/~ce in accordance with the Ralph )kL Brown Act (Government Code 54957. 7). 11. CONFERENCE WITH REAL PROPERTY NEGOTIATOR PURSUANT TO GOVERNMENT CODE SECTION 54956.8 Property: The Chula Vista Municipal Golf Course on Bonita Road and seven adjacent acres owned by the City. Negotiating Parties: City of Chula Vista (Sid Morris), American Golf Corporation (Brian Jackson). Under Negotiation: Price and terms of disp0sition and/or lease. 12. CONFERENCE WITH REAL PROPERTY NEGOTIATOR PURSUANT TO GOVERNMENT CODE SECTION 54956.8 Property: San Diego Gas & Electric Gas and Electricity Franchise (Pertaining to Public Rights of Way throughout the City of Chula Vista) Agency negotiators: David Rowlands, Sid Morris, Michael Meacham, Glen Googins Negotiating Parties: City of Chula Vista, San Diego Gas & Electricity Under Negotiation: Price and Terms of Payment Page 4 - Council Agenda 02/04/03 13. CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(b) · One Case ADJOURNMENT to the Regular Meeting of February 11, 2003, at 6:00 p.m. in the Council Chambers. Page 5 - Cotmcil Agenda 02/04/03 ORDINANCE NO. OUN ,L VISTA, CALIFORNIA, ACTING AS TI~,~ISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 08-I (OTAY RANCH VILLAGE SIX) AUTHORIZING THE LEVY OF A SPECIAL TAX IN SUCH COMMUNITY FACILITIES DISTRICT WHEREAS, the CITY COUNCIL of the CITY OF CHULA VISTA, CALIFORNIA (the "City Council"), has initiated proceedings, held a public hearing, conducted an election and received a favorable vote from the qualified electors authorizing the levy of special taxes in a community facilities district, all as authorized pursuant to the terms and provisions of the "Mello-Roos Cmm'nunity 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"). This Community Facilities District is designated as COMMUNITY FACILITIES DISTRICT NO. 08-I (OTAY RANCH VILLAGE SIX) (the "District"). The City Council of the City of Chula Vista, California, acting as the legislative body of Community Facilities District No. 08-I (Otay Ranch Village Six), does hereby ordain as follows: SECTION 1. This City Council does, by the passage of this ordinance, authorize the levy of special taxes on taxable properties located in the District pursuant to the Rate and Method of Apportionment of Special Taxes as set forth in Exhibit "A" attached hereto and incorporated herein by this reference (the "Rate and Method"). SECTION 2. This City Council, acting as the legislative body of the District, is hereby further authorized, by Resolution, to annually determine the special tax to be levied within the District for the then current tax year or future tax years; provided, however, the special tax to be . levied shall not exceed the maximum special tax authorized to be levied pursuant to the Rate and Method. SECTION 3. The special taxes herein authorized to be levied, to the extent possible, shall be collected in the same manner as ad valorem property taxes and shall be subject to the same penalties, procedure, sale and lien priority in any case of delinquency as applicable for ad valorem taxes; provided, however, the District may utilize a direct billing procedure for any special taxes that ca,mot be collected on the County tax roll or may, by resolution, elect to collect the special taxes at a differeut time or in a different manner if necessary to meet its financial obligations. SECTION 4. The special taxes authorized to be levied shall be secured by the lien imposed pursuant to Sections 3114.5 and 3115.5 of the Streets and Highways Code of the State of California, which lien shall be a continuing lien and shall secure each levy of the special tax. The lien of the special tax shall continue in force and effect until the special tax obligation is prepaid, permanently satisfied and canceled in accordance with Section 53344 of the Government Code of the State of California or until the special tax ceases to be levied by the City Council in the manner provided in Section 53330.5 of said Government Code. SECTION 5. This Ordinance shall be effective thirty (30) days after its adoption. Within fifteen (15) days after its adoption, the City Clerk shall cause this. Ordinance to be published in a newspaper of general circulation in the City pursuant to the provisions of Government Code Section 36933. ATTEST APPROVED AS TO FORM: Clifford Swanson John Kaheny v Director of Engineering City Attorney J:\Attorney\RESO\CFD 08-| Autho Special Tax.doc ORDiNANCE OF THE CITY COUNCIL OF THE _~.I~'OF CHULA VISTA AMENDING SECTIONS 19.04, 19.20, 19.22,~,.x~:24, AND 19.48 AND ADDING SECTION 19.58.022 TO DEFC~'XYAND PROVDE LOCAL PROVISIONS FOR ACCESSORY SECO~DWELLiNG UNITS WITHiN THE CITY OF CHULA VISTA WHEREAS, the California Government Code Section 65852.150 declares that second units are a valuable form of housing in California, providing housing for family members, students, elderly, in-home health care providers, the disabled, and others, at below market prices while providing homeowners who create such units with added income and an increased sense of security; and WHEREAS, the California Government Code Section 65852.2 allows local jurisdictions to adopt an ordinance, which establishes the procedure for creating second dwelling units in single-family and multi-family zones; and WHEREAS, it is a program of the Housing Element of the City's General Plan to prepare an ordinance which implements State Government Code Sections 65852.150 and 65852.2; and WHEREAS, The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the project qualifies for a statutory exemption pursuant to Section 15282 (I) of the State CEQA Guidelines; and WHEREAS, the City Council determines that, although the implementation of the State Government Code provisions for accessory second dwelling units utilizing Chapter 19 (Zoning) of the City of Chula Vista Municipal Code (CVMC) adequately fulfills state requirements, certain amendments and specific regulations would be helpful to clearly define accessory second dwelling units and their application to specific residential zones; and WHEREAS, the City Council proposes to amend Chapter 19 (Zoning) of the CVMC to provide specific regulations to accommodate accessory second dwelling units within single- family zones of Chapter 19 (Zoning) of the CVMC; and WHEREAS, the City Council finds that there are specific adverse impacts to public health, safety, and welfare, such as traffic congestion and overburdening of existing infrastructure that would result from allowing accessory second dwelling units in addition to any existing or proposed duplex and multi-family developments within R-2 and R-3 zones; and WHEREAS, due to the potential negative and adverse impacts from allowing accessory second units in the R-2 and R-3 zones, the City Council wishes to precluded that type of housing from R-2 and R-3 zoned lots; and WHEREAS, the Planning Commission held a dnly noticed public hearing on November 11, 2002 and has forwarded a recommendation to the City Council to adopt the proposed Zoning Ordinance amendments and additions. Ordinance Page 2 NOW, THEREFORE, the City Council of the City of Chula Vista does hereby ordain: SECTION I. That Section 19.04.087 is added to Chapter 19.04 of the Chula Vista Municipal Code as follows: Section 19.04.087 Dwelling~ Accessory Second Unit Accessory second dwelling units are independent living facilities of limited size that provide permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as a single-family dwelling. This includes efficiency units and manufactured homes, in conformance with the requirements for such units as defined in State Government Code Section 65852.2. SECTION II. That Chapter 19.20 (A Agricultural Zone) of the Chula Vista Municipal Code is amended to read: Section 19.20.030 -Accessory Uses and Buildings (I) -- Accessory Second Dwelling Units, subject to the provisions of Section 19.58.02?. SECTION III. That Chapter 19.22 (R-E Residential Estates Zone) of the Chula Vista Municipal Code is amended to read: Section 19.22.030 -Accessory Uses and Buildings (H) - Accessory Second D~velling Units, subject to the provisions of Section 19.58.022. SECTION IV. That Chapter 19.24 (R-1 - Single-Family Residence Zone) of the Chula Vista Municipal Code is amended to read: Section 19.24.030- Accessory Uses and Buildings (K) - Accessory Second Dwelling Units, subject to the provisions of Section 19.58.022. SECTION V. That Section 19.48.145 is added to Chapter 19.48 of the Chula Vista Municipal Code as follows: Section 19.48.145 - P-C Zone - Accessory Second Dwelling Units. Accessory Second Dwelling Units may be permitted within single-family residential areas within the Planned Community zone subject to the provisions of Section 19.5~.022 and the Ordinance Page 3 provisions of the respective general development plans and sectional planning area plans for each particular planned community. SECTION VI. That Section 19.58.022 is added to Chapter 19.58 of the Chula Vista Municipal Code as follows: Section 19.58.022 -Accessory Second Dwelling Units. A. Accessory second dwelling units are allowed in certain areas as a potential source of affordable housing and shall not be considered in any calculation of allowable density for the lot upon which it is located, and shall also be deemed consistent with the General Plan and zoning designation of the lot as provided. Accessory second dwelling units shall be subiect to the following development standards: 1. Accessory second dwelling units shall be limited to a gross floor area of up to 650 square feet, and may be attached or detached above or behind a main or primary single-family dwelling or accessory structure on the same lot 2. The accessory second unit must accompany a main or primary dwelling unit on an A, R-E, R-1 or P-C zoned single-family lot. Accessory second dwelling units are precluded from R-2 and R-3 zoned lots. 3. The accessory second unit shall conform to the underlying zoning and land use development standards of the A, R-E, R-1 or P-C zoned lot, such as height, bulk, and area regulations, with the following modifications or exceptions: a. A detached accessory second unit shall be located a minimum of six feet from a main or primary single-fmnily dwelling unit. b. An accessory second unit is subject to the same height limitation as the main or primary dwelling unit. c. A single story accessory second unit may be located within a required rear or interior side yard area, but not closer than 5 feet to .any property line. In addition, the unit and all other accessory structures shall not occupy more than thirty percent of the required rear yard. Second story accessory second units shall observe the setbacks of the primary structure unless the zoning administrator approves a reduction to not less than five feet through the approval of a conditional use permit as authorized by Section 19.14.030. d. A lot shall be a minimum 5,000-square feet in size to add an accessory second unit. Existing lots less than 5,000 square feet may develop an accessory second dwelling unit only if it can be incorporated within the existing permitted building envelope. Ordinance Page 4 e. The lot coverage including an accessory second trait shall not exceed 50 percent. Lots in planned communities that are already permitted to exceed 50 percent in lot coverage by their Sectional Planning Area General Development Plan may include an accessory second unit if the accessory second unit can be incorporated within the existing permitted lot coverage. f. Accessory second units shall be provided with one standard sized parking space in addition to the parking requirements for the main dwelling as specified in Section 19.62.170. The off-street parking space shall be on the same lot as the second unit, shall be screened from view from public streets, and shall not be located within a required front or exterior side yard setback. Tandem parking is not allowed to satisfy required parking for an accessory second unit. Lots having accessory second dwelling units must take access from a public street, alley or a recorded access easement. g: The accessory second unit shall be served by the same water and sewer service lateral connections that serve the main or primary dwelling unit. A separate electric meter and address may be provided for the accessory second unit. h. Accessory second dwellings shall be designed to be consistent in architectural style with the main house and compatible with surrounding residential properties. The Design Review Committee shall review disputes about desJ,gn and/or compatibility issues. i. Any accessory second unit that is attached to an existing residential structure shall meet the standards of Section 19.58.022, and all applicable development standards of the existing zone. SECTION VII. This Ordinance shall take effect and be in full force on the thirtieth day from and after its adoption. Submitted by Approved as to form by Robe~ A. Leiter ~ ~ohn~. Kaheny Pla~ing and Building Director ~ Attorney ~ - COUNCIL AGENDA STATEMENT Item: ~J Meeting Date: 02/04/03. ITEM TITLE: Resolution approving the Guaranteed Maximum Price (GMP) per Design Build Agreement with Rudolph and Sletten, Inc. for the services required to design and construct Fire Station No. 7, located at the southeast comer of La Media and Santa Venetia in Village 2 of Otay Ranch. SUBMITTED BY: Andy Campbell, Director of Building and Park Construction ~[. ~ ~h~/~,£. REVIEWED BY: City Manager ~ (~ ¢,~ ~r* (4/5ths Vote: Yes No X ) The City Council previously approved the Design Build Agreement with Rudolph and Sletten, Inc and CIP project #PS-150 which involves the construction of a completed and fully functional 12,000 square foot 4-bay fire station including the facilities and site-work required to provide fire service to the eastern terhtories of the City. The project is nearing the end of the design phase and ready to start the construction phase in February. This resolution will set the Guaranteed Maximum Price (GMP) for this project per the Design Build Agreement with Rudolph and Sletten, Inc. RECOMMENDATION: That the City Council approve the Guaranteed Maximum Price (GMP) of $5,239,926 for the services outlined in the Design Build Agreement with Rudolph and Sletten, Inc for Fire Station No. 7. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. BACKGROUND: On October 22, 2002, City Council approved an agreement with Rudolph and Sletten, Inc for the services required to design and construct Fire Station No. 7. As part of that agreement, a Guaranteed Maximum Price (GMP) is to be established at 90% construction documents, which would include, but not be limited to, the cost for all labor, equipment, and material to design and build Fire Station No. 7 in accordance with all applicable building codes. The Design Build Agreement set a not to exceed amount for the general conditions during the construction at $579,776. This amount has not changed and is within the total GMP. Unlike the City's previous design build projects, a total project not to exceed amount was not set in the original agreement. In light of the preliminary nature of the information available about the design of Fire Station 7 at the time of entering into the Agreement, staff was unable to fix a price for the project. The Agreement did set a design build fee of 3.75% of hard construction costs and Page 2, Item: ~ Meeting Date: 02/04/03 Page 2, Item: Meeting Date: 02/4/03 liability insurance costs at 0.8% which are incorporated into the GMP of $5,239,926 before Council this evening. Rudolph and Sletten will receive a design build fee of $156,855 for their work on this project. Over the course of the design phase of the project, staff has worked closely with Rudolph and Sletten, Inc. in an effort to incorporate all of the needed elements the Fire Department requires while maintaining the project budget. Prior to reaching the above noted GMP amount of $5,239,926, a significant amount of value engineering was undertaken to bring the GMP down to an acceptable figure. Staff believes that the GMP as proposed is a fair and reasonable amount. It should be noted that the GMP also includes the cost of constructing a temporary access road to the site and other site development related items. Unlike other City projects, this fire station is being built in an area that currently does not have public infrastructure immediately servicing it. That infrastructure will be in place when the station is complete and ready to operate on September 11, 2003, however, it is not physically present now. As the City is essentially acting as a developer in addition to a builder in this case, there are more site development related costs than are typical of a normal fire station. PROJECT SCOPE AND CONTRACTUAL REQUIREMENTS As proposed, the Design/Build Agreement with Rudolph and Sletten, Inc. will provide the City with a fully functional fire station that will provide service to the eastern territories of the City. The scope of work includes but is not limited to the following: Design and construct a completed and fully functional 12,000 square foot 4~bay fire station including the facilities and site-work required to provide fire service to the eastern territories of the City. The fire station shall include, but not be limited to all components outlined and described in the Program of Facility Requirements included in the RFP. Fire Station No. 7 is located at the southeast comer of La Media Road and Street A in Village 2 of Otay Ranch in eastern Chula Vista. CHANGE ORDERS Under the design/build process, change orders are handled differently than under the design/bid/build process. Change orders are only returned for Council approval if they exceed the approved GMP, or am for additional work requested by 'City, which results in a significant change to the original scope. Otherwise, change orders are reviewed/approved by staff and the design builder. This practice is commonplace when using the design/build construction technique. Page 3, Item: 't~ Meeting Date: 02/04/03 Page 3, Item: Meeting Date: 02/4/03 FISCAL IMPACT: Rudolph and Sletten, Inc. has proposed to set the GMP at $5,239,926 (See Attachment A). The GMP includes, but is not limited to, design services, general conditions, insurance, bonds, construction management, the cost for all labor, equipment, and material to design and build Fire Station No. 7 in accordance with all applicable building codes. With the approval of the GMP, no additional appropriations are necessary. A copy of the project budget is shown as Attachment B. J:\BPC~BPC Administration\Agenda~Firc Station GMP #7 A113.doc Attachments: A. Letler from Rudolph and Sletten, Inc. establishing the GMP B. Total Project Budget RIyD o L 1~1t ,~., ~ L E T T R iN. Sanua~y 29, 2003 Cit~ of Chula Vista Building and Park Construction Ayah: Ma~t Little, Sr. Civil ]~ngin~er 1800 Maxwell Rozd Chula Vista, Calif. 91911 Re: Fifo Stafiol~ ~/ Guaranteed Maximum Price ( OMP) Ma~t: Rudolph and SIeR~, ~. ia plead W ~ub~t ~is G~ ~ ~ Ciw of Chula Vi~ Thc G~ is b~ on ~j~t ~ngs ~d ~c~s, ~d by J~ K~ ~, ~c., ~ 1~/03, ~e ~ m~imum ~ ~ ~ ~i~ ~d ~fi~ of ~e · ~ M~nm ~" for a d~]~ b~ of ~e ~sm i~1~ in ~e ~. PI~ ~so ~iew ~e ~a-hed "Gu~t~ ~im~ ~ ~fic~s" for a list of thc incl~0~, vx~ion$, ~d ~]ow~ ~alu~ in ~ G~. Ru~lph & R~olph ~d SI~, ~c, is ~t~ m ~n c~a~on of F~ ~on ~ ~d wc look f~ to b~ng ~s ~j~ ~ yo~ team at ~c Ci~ of ~a Vis~ PI~ do n~ b~im~ m c~ ~n Re~ol& wi~ ~y qu~s- (858) 320- 53~. Sincerely, Reno Ol[vo Ban'y Choy Sr. Project Manag,rr Project Manager I~vin Reynolds Project E~irnaror Otula Vista Fire Station l',ro. 7 January 29, 2003 Chula Vista, CA Page 1 of 2 Guaranteed Ma~nm Peice The Ch-la Vista Ftre Station No. 7 includes construction of a 13:/?$ sf, single stray fire station and development a 78,800 sf site. * The GMP includes an allowance of $B$,000 for thc AV s~ to be inshalled in the u'aining mom. This includes: mat~al ~osts, insudlatio~a, th* pmj~tion r~-m~n, and associated conduit. The GMP al~o includes a $2,000 allowataco for the design of the AV system_ · The OlVl]? tncl~J4,~ the kitchen and laundry equipment li.qu~d in specification section 11450. 0E - 3 refrigm-ators, 1 range~ I hood, I dishwasher, and 1 washing machine extractor.) * This OlvlP includes m~naging h'~ installaiion of the '~Pirst-In" system by WestneC, Inc. This GMP assurao~ tha~ thc Wesmet. Inc_ contract amount will 1~ $30,856, per the wesm, t quote, dated 12/20/2002. The GIvlP includes l~int of connection of the on-sil¢ utilities at fha fire station prope~y ~ight of way. · The OlVrP inclndes a $10,000 allowanoo to tea~orarily route water collected m the st0nn drain system to the demmion b~sin at tho Woat sid~ of the proj~t sim. · The OMP includ~ excavali~ag down to formational m~tezia[ mad Rr~ompactlon at 95% under lhe bffilding slab, Per the g~otechnieal report (prepared by LawClibb, dated 7/25/02), fom~ali0nai matmial is assr!meal to be al elevation 465'. The GMP includes a $$,000 allowance to over-excavate and m-compact at the building pad if formafional material is no~ at 465' · The OlVI~ illclucles ~ $2~000 allowance for added erosion control meaanre~ not shown (if rmu~d). · The OMP doeo no[ include replacing the c0dsfing site ~ubdraln as recom~erided by the gcoteclmical repot, · The OiVIP includ~ tho ctarvod mow curb a~cllow walls a~$ociatcd with the %11 ErlontllllellL The OIVIP illclude$ an allowance of $10,000 for sandblasting words in the Chula Vista Fire Station No. 7 January 29, 2003 Chula Vista, CA Page 2 of 2 curved mow curb, $10,000 for sandblasting words in the precasr caps on the low walls, and $10,000 for miscellaneous signag~. * The GMI~ does not include a statue associated with the 9.11 monument. ~' This GMP includ~ a $10,000 allow~mee for a fire supp,=~ion system at ~he fuel , ~ GMP i~cludcs a $10,000 allowance for off-dt~ work~/f X~luire~L o Traffic ~ignals, ~n~et signage, flashing bcacor~ · Bu/Iding pea'mit and plan check fees. · Public agency fees. P~rmanem meter fees (I~ - water, irrigation, gas.) · Builder~ ripk - FF&E items (with thc exception of specification section 114~50). · Furniture. - Mm/ularFumitm~ * ~,scalafion co~t~/f thc project is delayed. · Si~e dew~g or ~ lrc~-lediation. Asbestos ab-~u~ or l~mdli~ of h~z~lous Mold abatement, ,, Te~ting & Inspe~on Thc GMP is bazcd on th~ Construction Drawings und Specifications produ~od by left Katz Arckitccune, dated 1/7/03. END OF LIST OF CIAR1PICATION$ Attachment B Fire Station No. 7 Summary of Budget Total Appropriation $7,909,082 Summary of Costs: Design/Construction (GMP) $5,239,926 Land Acquisition $310,500 Mass Grading $116,000 Fire Equipment: $1,349,200 Trucks $1,250,000 Fire Gear $87,200 Training $12,000 Furniture $341,256 Utilities $100,000 Testing $100,000 Staff Time $150,000 Sub-Total: $7,706,882 City Contigency(2.6%) $202,200 Total Project Costs: $7,909,082 Amount Remaining $0 RESOLUTION NO. 2003- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE GUARANTEED MAXIMUM PRICE (GMP) PER DESIGN BUILD AGREEMENT WITH RUDOLPH AND SLETTEN, INC. FOR THE SERVICES REQUIRED TO DESIGN AND CONSTRUCT FIRE STATION NO. 7, LOCATED AT THE SOUTEAST CORNER OF LA MEDIA AND SANTA VENETIA lN VILLAGE 2 OF OTAY RANCH WHEREAS, the City Council previously approved the Design Build Agreement with Rudolph and Sletten, Inc. and C1P Project #PS-150 which involves the construction of a cmnpleted and fully functional 12,000 square foot 4-bay fire station including the facilities and site-work required to provide fire service to the eastern territories of the City; and WHEREAS, the project is nearing the end of the design phase and ready to start the construction phase in February; and WHEREAS, as part of the Design Build Agreement, a Guaranteed Maximum Price (GMP) is to be established at 90% construction documents, which would include, but not be limited to, the cost for all labor, equipment, and material to design and build Fire Station No. 7 in accordance with all applicable building codes; and WHEREAS, the GMP is $5,239,926 for the services outlined in the Design Build Agreement with Rudolph and Sletten, Inc. for Fire Station No. 7. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve the Guaranteed Maximum Price (GMP) in the amount of $5,239,926 per Design Build Agreement with Rudolph and Sletten, Inc. for the services required to design and construct Fire Station No. 7, located at the southeaster comer of La Media and Santa Venetia in Village 2 of Otay Ranch. Presented by Approved as to form by DA:lrdecYt oC~omfPBb~lilld lng an d p ark ~oKrnaeh;r~y ~} Construction Page 1, Item: Meeting Date: 02/04/03 CITY COUNCIL AGENDA STATEMENT ITEM TITLE: Resolution 2003-XXX approving the Master Plan for the proposed public community park site in the EastLake Trails subdivision "Salt Creek Park" SUBMITTED BY: Director of Building and Park Constructio.q~ Director of Public Work~rations/~?-~ Director of Recreation/~ff,~9 REVIEWED BY: City Manage¢9~ (4/Sths Vote: Yes No X In January of 2002, City Council approved a contract for Landscape Architectural Services (retaining the firm of KTU+A) to develop a Master Plan for the 24-acre public community park site in the EastLake Trails subdivision. The following is a summary of the creative design process that has resulted in the final proposed Master Plan for the park site. STAFF RECOMMENDATION: That the City Council approve the proposed park Master Plan (not including the lighting plan) for the 24-acre public community park site in the EastLake Trails subdivision and the name of"Salt Creek Park." Additionally that Staff will conduct further review of the lighting plan for the Park and return to Council with the results of that review and a possible amendment to the Master Plan for City Council consideration after appropriate enviromnentat review. BOARDS/COMMISSIONS RECOMMENDATION: The Parks and Recreation Commission, at their regular meeting held January 16, 2003, voted unanimously to recommend approval of the park Master Plan for the 24-acre public community park site in the EastLake Trails subdivision with conditions. The conditional approval was given with 1) the addition to the plan of night lighting at the multi-purpose field; 2) further consideration to modify the windmill for safety concerns and; 3) fhrther consideration for the adjacent on-street parking. Staff will address the Commissions safety concerns with Public Works Operations staff and Traffic Engineering staff during the design development phase of the project. ENVIRONMENTAL DETERMINATION: The Environmental Review Coordinator has reviewed the proposed project, without lighting, fbr compliance with the Calitbmia Environmental Quality Act (CEQA) and determined that the proposcd projcct was adequately covered in the Enviromnental Impact Report for the EastLake Trails SPA Plan. Further environmental review of lighting within thc park is necessary. Staff will process the environmental review of lighting within the park during the design development phase of the project. Included in this review will be the Park and Recreation Commission's recommendation for lighting/bt the multi-purpose field. ,I:\BPC\BPC Administration\Agenda\Salt Ctcek Pmk'CCAgendaSllnt 02-04 03.dcc Page 2, Item: ~ Meeting Date: 12/19/02 DISCUSSION: Background Thc proposed park is located south of Otay Lakes Road between the EastLak¢ Trails Subdivision on the west and the EastLake Vistas Subdivision to the East and north of an environmental habitat restoration site created with the grading for the EastLake Trails subdivision. Also adjacent to the park site in the northwest corner is a Community Purpose Facility (CPF) site developed with four (4) Little League baseball fields. The park site is bisected by the Salt Creek. Park Development In thc Spring of 2000, the City and the EastLake Company reached agreement with the "Amended and Restated Development Agreement between the City of Chula Vista and The EastLake Company" which finalized discussions targeted at identifying the park obligations for several previous EastLake developments and also included obligations from previous development agreements. The Agreement included identi~ing a combined carryover obligation for additional park acres that would be provided with the EastLake Trails Community Park site. The EastLak¢ Trails project generated the obligation to provide and develop approximately 10.9 acres of parkland. The Agreement also restated the EastLake Company's obligations with regards to contributing approximately $800,000.00 towards the construction ora Community Center within the park site. In November of 1999, the Chula Vista City Council approved the Specific Planning Area (SPA) for EastLake Trails. The EastLake Trails master planned subdivision consisted of a predominantly residential environment, including a 24-acre (gross) community park. The SPA identified this park site to be part of a recreational opportunity within the Salt Creek corridor and to be a part of other recreational facilities including the Little League ball fields, the private Homeowners Association Swim complex which included a man-made lake and the open space corridor that contained the habitat restoration acreage. The park site was identified to be improved with trails, picnic tables and other facilities that would contribute to the conservation and enjoyment of the natural amenities of the area. The Parks and Recreation Department conducted a recreational needs analysis as a basis for the City of Chula Vista Parks & Recreation Master Plan (PRMP). The resulting recreational needs were allocated among future park sites anticipated to be built-out at year 2020, and an initial program for the 24-acre park was created. The program was then further refined with input from the local community, technical input from City staff; and the consultant Landscape Architect. J:\BPC\BPC Adnfinistmtim\Agenda\Sall Crock Pal'k CCAgcndaStm~ 02 04-03 doc Page 3, Item: ~ Meeting Date: 12/19/02 Community Input Two community workshops, facilitated by the Landscape Architectural consultants KTU+A, were held on April 16th and May 11th 2002 to gather community input into the design of the future community park and community center. The first workshop informed, educated, and oriented workshop participants about thc draft park programming, as well as, provided an opportunity for the residents to voice their ideas, needs, wants, and opinions on the park landscape and the community center. Thc second workshop focused more on the park program. The consultant presented three (3) scenarios that incorporated thc public input from thc first workshop. Those in attendance reviewed the alternatives and expressed preferences. Design Obiectives for the Park The Master Plan process identified three objectives to bc achieved: · To maximize the recreational use opportunities for community residents, · To create a unique park identity that relates to the history of the area where the park is located, and · To create a park that provides a special usc experience for the park visitors. Park Design Concepts The Early California Ranch Theme The park site is part of what was previously the .lanai Rancho land grant from Mexico in thc 1800's. The ranch was primarily used for grazing which is still reflected in thc undisturbed rolling hills and meadows in the area. The park design concept is an attempt to maintain a link to the past. The architecture and support structures will simulate thc character of thc 'Old farm buildings' by duplicating thc materials, forms and detailing. Elements within thc park would also reflect ranch themes including a windmill and grain silo. Fencing and some paving would be concrete in material (for durability) but formed to have the appearance of wood, similar to what would bc typical in an early California ranch. Thc park design concept meets thc three objectives for the Park by maximizing thc recreational usc opportunities for community residents, creating a unique park identity that relates to thc sm-rounding subdivision, and creating a park that provides a special use experience for park visitors. J:\BPC\BPC Administmtim\Agenda/S alt Creek Park'CCAgendaStlm 02-044)3.doc Page 4, Item: L~ Meeting Date: 12/19/02 Park Activities Program The proposed Preliminary Park Master Plan for the 24-acre site includes thc following program elements: · 20,000 square foot Recreation Complex - a Gymnasium, Youth-annex, and weight room with office, restrooms, lockers and other storage and support rooms. · Amphitheater-Style Seating - Adjacent to the large multi-purpose field and set into the slope will be amphitheater-style seating for approximately 115 spectators. · Basketball Courts (2) - (Lighted) Standard size courts. · Children's Play Areas and Tot Lots (2) - The play areas will have equipment suitable for children of varying age groups. The area closest to the Recreation Complex will be designed for the youngest age group of children, ages 2-5. The second play area will target children ages 5 to 12. · Circulation - The park site will include a paved pathway looping the entire park site to accommodate pedestrian and emergency vehicle circulation. The loop will also accommodate joggers and connects with the City-wide greenbelt trail. · Comfort Station - Centrally located and adjacent to tot lot and group picnic structures. · Low-maintenance Landscape Design - Where possible low water use planting will be specified. · Multi-purpose Fields (2) - One multipurpose field is 150 feet by 300 ~et, a standard that the Federation Intemationale de Football Association (FIFA) approves for soccer play as well as for lacrosse, football, etc. The second field is 150 feet by 225 feet and is intended for more informal types of recreational play and for younger aged users. · Par course Seven (7) stations for recreation department to program exercise activities. · Parking - 155 on-site spaces supplemented by 72 on-street parking spaces. Four additional spaces provide on-street for passenger loading and unloading. On-site parking is to be gated to restrict vehicle access aRer 10:00 p.m. · Picnic Areas Group-use (6) - Three (3) large and three (3) small Shelters/shade structures with varying quantities of tables will be located throughout the park. All picnic shelters are within easy access from parking areas to facilitate loading and unloading. · Picnic Facilities Individual-use (16) - Individual areas with picnic tables. · Restrooms - Two ADA accessible restrooms are available to park users as part of the Recreation Complex for use during and after the Recreation Complex hours of operation in addition to the restrooms provided adjacent to the gymnasium. Additional restrooms are provided within a separate Comfort Station in the center of the park site. · Speed Soccer (Lighted) An 80' by 200' area with artificial turf surrounded by acrylic panels and spectator seating. This facility will be lighted for nighttime use. · Storage - Park operations storage will be provided in the separate Comfort Station, Recreation storage is accommodated within the Recreation Complex and a concrete pad will be provided for soccer goal storage. · Skateboard And Roller-skate Play Area - Small area for entry-level play. · Tennis Courts (2) - (Lighted) Standard size courts with screen fencing. The proposed park plan is compliant with the Americans with Disability Act (ADA). J:',BPC\BPC Administratim\Agenda\Salt Creek Park\CCAgcndaStmt 02-04 03.d{x: Page 5, Item: ~ Meeting Date: 12/19/02 Recreation Building Complex In the same way that the park design reflects the early California ranch theme, the Recreation Complex will also reflect the early California ranch theme. The Recreation Complex will be a focal point for the park and will be highly visible as one approaches the park from the west on Otay Lakes Road. The building will be designed around a central courtyard, reminiscent of the layout of early California ranches, while providing visibility and security o£all the building's spaces. The building will be fully accessible to persons with disabilities. The building's spaces will be carefully designed to draw breezes through the structure for natural ventilation. Windows will be provided for day lighting and all equipment will be selected for energy and life cycle efficiencies. Materials will be chosen to provide durability, safety and low maintenance. Steel roofing, stucco and manufactured stone for walls and pilasters carry forward the park's early California theme, while gentle arches and wood trellises tie the building into the surrounding residential neighborhood. Specific Planning Area (SPA) Conceptual Guidelines Compliance The park plan is consistent with the general conceptual design guidelines established within the SPA, by developing the park within the Salt Creek corridor to create a recreational corridor in the area. The SPA plan has internal residential streets bordering the park site to allow for on-street parking for the park users. Much of the detailed concept development for the park site was appropriately deferred in the SPA to this Park Master Plan. The park plan locates the gymnasium building in the same approximate location off Otay Lakes Road as depicted within the SPA plan. The SPA Planned Community District regulation establishes a building height limitation of 35 feet or two stories, whichever is less. The proposed Community Center building would exceed that height limitation in order to accommodate the indoor basketball courts. A zoning variance will be processed as part of the continuing approval process for this project. Responding to the adiacenc¥ of the Community Purpose Facility (CPF} site The original SPA plan recommended a shared parking lot between the park site and the CPF site. The CPF site has been developed for Little League use and during peak use the area is heavily impacted by the need for automobile parking. In a effort to insure parking provided for park users would be used by park users and not as an overflow parking for Little League users, the park plan clusters the automobile parking around the proposed gymnasium which has easy access off Otay Lakes road and which affords a more practical use arrangement. Salt Creek A minor re-alignment of the streambed to facilitate park use was a part of the stream alteration permits and included in the habitat restoration requirements of the Environmental Agencies, the US Army Corps of Engineers and the Califbrnia Department of Fish and Game. A ten (10) foot dimension has been established within which the creek channel is to be left undisturbed. The J:\BPC\BPC Adminislratira~/Agenda~Salt Clock Pmk~CCAgcndaStmt 02-04-03 doc Page 6, Item: ~,) Meeting Date: 12/19/02 channel will be informally marked with boulders and posts located so park maintenance personnel can easily identify the channel dimension while maintaining visual continuity with the park. The stream is crossed in three locations with bridges that accommodate pedestrian and vehicle use. The storm flooding pattern of the creek, up to 100-year occurrence, has been analyzed and the elevations of the three bridges have been set to keep the bridges above any floodwaters. To eliminate any impact to the habitat downstream of the park, no non-native invasive type plant materials are proposed for the park. The site has a large concrete drainage structure with water flow from the adjacent Vistas subdivision that empties into the park. The park plan proposes construction of a silo like structure to visually hide the structure while still allowing the drainage function to continue. Boardwalk with Interpretative Signage In response to the habitat restoration on the southern border of the park site the plan proposed signage with nature information and interpretation. The circulation crosses a low-grade area so the pathway would be constructed of concrete textured to have the appearance ora wood boardwalk. Li~htin~ Recreation staff has identified the need to include lighting of the park including the speed soccer field, basketball and tennis courts, which would extend the hours of use for the facilities. The Park and Recreation Commission recommended approval of the park Master Plan only with the condition that the multi-purpose field also have night lighting. The park site has always been designated as a Community Park (which typically would have all fields lighted) and the need to maximize the use of the recreational facilities has been highlighted repeatedly. However concerns for park lighting intrusion into surrounding homes is always a staff concem. Because of the spatial relationship of this park site to the surrounding residential areas, lighting for the park will require further environmental review in order to analysis the impact on the adjacent residents. Ambient light levels at the park boundary are to be at or below 0.5-foot candles. Adequate foot candles will be maintained along all trails for public safety. Staff does not want to delay the development of the park until this review of the lighting is completed as the process could be conducted concurrently with the further development of the park project. Staff will conduct the necessary review of thc lighting plan and return to City Council with the results of the review and the possible amendment to the Master Plan for City Council consideration after appropriate environmental review. J: BPC BPC Admimstmticn/~Agenda\Salt C~eek Park\CCAgendaSImt 02-04 03.doc Page 7, Item: ~ Meeting Date: 12/19/02 Skate Area Recreation staffhas received numerous requests to address the skateboard and rollerblade activities of City residents. With the recent State reclassification of skateboarding as a hazardous sport, the liability perspective has shifted to include the participant in the responsibility for this activity. The City is responding to the request for skateboard parks and is currently working to provide facilities in several locations throughout the City. This park plan provides an area for the use of skateboards at a beginner's skill level, to practice in an approved area rather than through the inappropriate use of park furniture. The skateboard play area will be signed to identify basic safety standards including the requirement for users to wear helmets, and other appropriate protective gear. Fire and Police Fire staff and Police staff have reviewed the plan, and provided input to insure that issues regarding public health and safety have been addressed. Parking Parking has been provided to accommodate 227 cars with 155 stalls on-site and 72 stalls on-street, directly adjacent to the park site along Janal Ranch Road and North Creekside Drive. This will allow park users to leave their automobiles adjacent to the park site and stroll down the gentle slopes into the park site. In addition, there is temporary parking in four spaces to provide convenient loading and unloading for picnic shelters. Parking is restricted along Otay Lakes Road. The parking lot entrance is to be gated to restrict vehicle access after 10:00 p.m. or as Park Operations' staff deems appropriate. Staff researched other local City parking requirements for park and recreation facilities, and finds the quantity provided in this plan is consistent with other jurisdictional standards, including the City of San Diego. Park Name Park names suggested for this park site that were considered: Creekside Park (it was noted that the adjacent Home Owners Facility has the name Creekside) Rancho Janal Park (a reference to the park's historical legacy and the adjacent street name) Salt Creek Park (the name of watercourse running through the park site) The Parks and Recreation Commission recommended that the name for this park site be "Salt Creek Park" J:\BPC~BPC Adminislratim/AgendaXSalt Creek Park\CCAgcndaStmt 02-04-03 doc Prepared by Final Draft ~~l January 2 o0 3 ==::::::::,~::=:::='= City of Chula Vista Project Manager John Krizan, City of Chula Vista Design Technical Team City of Chula Vista Jack Brady, LandscapeArchitecture Division Dave Byers, Deputy Director Public Works/Operations Seekey Cacciatore, Environmental Project Manager Brian Cox, Principal Recreation Manager Lombardo Detrinidad, Civil Engineer Jerry Foncerrada, Deputy Director of Parks Ed Hall, Principal Recreation Manager Luis Hernandez, Senior Project Manager Mary Hofmockel, Principal Landscape Architect John Krizan, Landscape Architecture Division Tom Levesque, CityArborist Matt Little, Civil Engineer Buck Martin, Director of Recreation Luis Pelayo,Assistant Civil Engineer Todd Schmidt, Landscape Architecture Division Sunny Shy, Assistant Director of Recreation Jeff Steichen,Associate Planner Richard Zunxwalt,Associate Planner The EastLake Company Guy Asaro Final Draft Page 1 January 2003 ~ Consultant Team KTU+A o Landscape Architecture + Planning Kurt Carlson, Principal-in-Charge Cheri Blamer, Project Manager Penny Clews, Landscape Designer John Farley, Irrigation Designer Michael Johnston, Graphics Platt Whitelaw Architects o Architecture Sandy Gramley, Project Architect Nasland Engineering · Civil Engineering & Surveying Paul Pitman, Civil Engineer Bechard Long Associates - Lighting Design Chris Kraft, Lighting Designer Merkel & Associates Kyle Ince, Biologist Western Tree Service Alden Peterson Artist Paul Hobson Geocon Joe Vettel, Geotechnical Engineer This document includes the research, analysis and recommendations of the park master plan for Salt Creek Community Park. It may not be re- produced, photographed, or copied in any form without the express written consent of the City of Chula Vista. Page 2 City of ChulaVista ~' ~ O Building & Park Construction 1. Introduction I. 1 Setting ................................................................................. 5 1.2 History ................................................................................ 6 1.3 Purpose ............................................................................... 6 2. Site Research 2.1 Existing Conditions .......................................................... 11 2.2 Conceptual Relationship Diagram .................................... 11 3. Conxmunity Workshops 3.1 Salt Creek Community Park Workshop ............................. 15 3.2 Discussion of ParkAlternatives ......................................... 16 4. Park Master Plan 4.1 Site Status .......................................................................... 27 4.2 Public Access and Images ................................................. 27 4.3 Plant Materials .................................................................. 27 4.4 Circulation ........................................................................ 31 4.5 Recreation Building .......................................................... 31 4.6 Comfort Station ................................................................ 32 4.7 Shade Structure ................................................................ 32 ~ 4.8 Trellis ................................................................................ 40 4.9 Arbor ................................................................................ 40 4,10 Children's PlayArea .......................................................... 41 4.11 Basketball Court ............................................................... 41 4.12 Sports Fields ..................................................................... 41 4.13 Amphitheater-Style Seating ............................................... 41 4.14 Tennis Courts .................................................................... 41 4.15 Speed Soccer Field ............................................................ 42 4.16 Skate Area ......................................................................... 42 4.17 Signage .............................................................................. 42 4.18 Bridges .............................................................................. 43 4.19 Picnic Areas ...................................................................... 44 4.20 Trash Enclosure ................................................................ 44 4.21 Parking Facilities ............................................................... 45 4.22 Site Lighting ...................................................................... 45 4.23 Fencing ............................................................................. 46 4.24 Salt Creek Corridor ........................................................... 47 4.25 Wetland MitigationArea .................................................... 47 4,26 Boardwalk with Interpretive Signs ................................... 49 4.27 Drainage ........................................................................... 49 4.28 Park Maintenance ............................................................. 49 4.29 Grading ............................................................................. 50 4.30 Irrigation ........................................................................... 50 Final D~ ~3 Janua~ 2~3 ~ ~ ~ 5. Cost Estimates 5.1 Cost Estimate .................................................................... 55 Appendices Appendix A - Arborist Report ..................................................... 57 Appendix B -Workshop Minutes ............................................... 59 Appendix C- Reference ............................................................. 69 FIGURES 1. Introduction Figure 1-1 Vicinity Map .............................................................. 5 Figure 1-2 Regional History/Visual Form & Character ............... 7 Figure 1-3 Chula Vista Parks - Existing Facilities ......................... 9 Figure l~i ChulaVista Parks - Future Facilities ......................... 10 2. Site Research Figure 2-1 Site Opportunities & Constraints ............................ 13 Figure 2-2 Conceptual Bubble Diagram ................................... 14 3. Community Workshops Figure 3-1 Workshop 1 . 17 Figure 3-~ Workshop Group 1 Summary .................................. 18 Figure 3-3 Workshop Group 2 Summary .................................. 19 Figure 3~1 Workshop Group 3 Sunmmry .................................. 20 Figure 3-5 AlternativeA - Sport asTheater ............................... 21 Figure 36 AlternativeA- Sport asTheater Images .................... 22 Figure 3-7 Alternative B - RanchoTheme ................................. 23 Figure 3-8 Alternative B - Rancho Theme Images ..................... 24 Figure 3-9 Alternative C - Meadow Creek ................................. 25 Figure 3-10 Alternative C - Meadow Creek Images .................... 26 4. Park Master Plan Figure 4-1 Conceptual Landscape Master Plan ......................... 33 Figure 4-2 Entry Perspective .................................................... 34 Figure 4-3 Park Cross Sections ................................................. 35 Figure 4~i Architectural Elements - Recreation Building ...... 36-38 Figure 4-5 Comfort Station ....................................................... 39 Figure 46 Creek Sections ......................................................... 48 Figure 4-7 Grading Plan ............................................................ 51 Figure 4-8 Irrigation Plan .......................................................... 53 TABLES 1. Introduction Table 1-1 ChulaVista Parks Inventory ....................................... 8 4. Park Master Plan Table 4-1 Plant Material Legend .............................................. 28 Page 4 City of Chula Vista ~ ~ I ~ Building & Park Construction 1 * Introduction 1.1 Setting Salt Creek Park is a 24-acre multi-use community park located in the EastLakeTrails neighborhood in ChulaVista (Figure 1-1). The park program and design follows the conditions of the EastLake Trails SPA Plan, Section H.2 'Sectional Planning Area' and Section II.2.8. This park will provide a full range of active and passive park and recre- ational experiences for surrounding neighborhoods and maintain the City of Chula Vista's goal of providing a continuous greenbelt corridor as intended by the City's General Plan.There axe other recreational areas nearby including a homeowner's association swim complex, a 4.5-acre community Little League complex, a 2 acre man-made lake and a natural open space/interpretive corridor for observation and study of wildlife and nature. The process for the program and design of Salt Creek Community Park took into account the other park and recreational facilities in terms of size, amenities and their locations within the Chula Vista's city linfits (Table 1-1, Figures 1-3, 14). Figure 1-1 Vicinity Map Final Draft Page 5 January 2003 ~/~ 1.2 History The Salt Creek Community Park site occupies what was once a part of the Janal Ranch, a sprawling 4,436-acre ranch.Janal is an Indian word for "spongy ground", likely named because of underground streams that crossed the land. Henry Fenton bought Janal Ranch in 1926 and farmed its 3,000 acres, growing lima beans and barley. 1.3 Purpose Salt Creek Community Park is a unique park that will provide both ac- tive and passive recreational opportunities for both adjacent and distant users. It will be part of the City's Greenbelt trail system that ultimately forms a 28-mile loop system around the City. This park will maintain its link to the past by presenting a distinctive 'Early California Ranch' theme. The park's rolling terrain will be land- scaped with turf, shrubs, groundcovers and indigenous grasses. There will be groves of Sycamores, Cottonwoods, Eucalyptus, Peppers and Oak trees. The architecture and support structures will sinmlate the charac- ter of the 'Old farm buildings' by duplicating the materials, form and detailing. This park's program will ultimately provide the following amenities: a. A 42' tall, 20,000 s.£ gymnasium that includes an office, lobby, restrooms, weight room, locker rooms, teen center and parking for 150 cars. b. Two playfields for community team sports. c. Two tot lots - one for small children (2-5 years old) and one for older children (5-12 years old). d. Picnic areas with furnishings and shade shelters (6 total). e. Theme type bridges (3 total) for linking trail system for pedestri- ans, bicycles and vehicular maintenance access. f. Loop trail system that links to Greenbelt system with measured jogging trails and par course stations. g. Sport Courts for outdoor Basketball (2 total), tennis (2 total) and speed soccer (1 total). h. Skate area i. Natural Interpretive and Wetland mitigation areas. j. Restroom facilities (3 total) that service the gymnasium, teen center and playfields. In addition to obtaining DRC approval for the recreation building and other stn~ctures within the park, the project requires approval of a Zone Variance to increase the building height from 35 feet to 42 feet. Also, approval of a tentative map "substantial conformance" from the Engineering and Plan- ning and Building Departments is required for authorizing an increase in pad elevation from 533 to 540.These processes and entitlements will be secured during the design development process and prior to final approval of the project and issuance of building permits. Page 6 City of ChulaVista ~ ~/~, Building & Park Construction Form and Character Many remnanls of the ranching and farming activities still remain. The surrounding areas still maintains some of the rich pastoral quality which made it so aitractive to eaffy settlers. SALT CREEK COMMUNITY PARK Regional History / Visual Form and Character Figurel 2 Recreation Facilities in Public Parks '- ~ '~ _ . Eas~Lake Company Private Park Invento~ ......... ~ _ Facil~ _ SALT CREEK COMMUNITY PARK Chula Vista Parks Inventory ~1~1~1 2 Site Research 2.1 Existing Conditions The following is a brief description of the natural and man-made re- sources that are currently present on the park site. This informations serves as background information for recommendations included in this master plan.This information was obtained from the City of ChulaVista, completed reports, and site surveys by the consultant team. A summary of the existing conditions are shown on Figure 2-1, Site Opportunities and Constraints. Hydrology A predominant feature incorporated into Salt Creek Community Park is the Salt Creek corridor. A 10' wide creek corridor (slightly realigned with the EastLake Trails subdivision development) that is to flow unin- terrupted through the park and ultimately connecting to the Otay River. The creek enters the park's north end through a 12'x 12' colored con- crete box culvert underneath the Otay Lakes Road. There is no signifi- cant vegetation established within the corridor at this time. Biology There are a number of large eucalyptus trees existing on the site that could be utilized or preserved if they were healthy. Unfortunately, all of these trees have been infected with the Red Lerp Physilid. There has been some analysis and recommendations for treatment of the trees, but some have already died and been removed. Another report was com- pleted by a certified arborist and the findings are included in Appendix A confirming the poor conditions of the trees. 2.2 Conceptual Relationship Diagram Refer to Figure 2-2, Bubble Diagram. Final Draft ~ * Page 11 January 2003 ~./,,~ ~.~,. { EASTLAKE / / / SANTA ANA WENDS WINDS EAS~'LAKE SALT CREEK COMMUNITY PARK Site Opportunities and Constraints Figure %1 ACTIVE RECREATION AREA OVERALL USE PASSIVE RECREATION AREA SALT CREEK COMMUNITY PARK Conceptual "Bubble Diagram" Figure2-2 Community Wor,ksho ,s 3.1 Salt Creek Community Park Workshop Workshop Process · Community Workshop Invitation (Appendix B, Figure B-l) Workshop 1 (Figure 3-1) Brainstorming (Figures 3-2, 3-3, 34 &Appendix B) Workshop 2 Presentation of Design Alternatives (Figures 3-5 through 3-10 &Appendix B Community Selected Preferred Alternative Workshop Goals and Objectives confn'mation of current park program & goals · prioritize the park elements anticipated develop a distinct park theme recognize and personalize community identity · propose possible park names · provide additional data to park design team Preliminary Park Program Considerations 19,500 square foot gymnasium with 12,O00 s.f. gym, 1,900 s.f. weight room, showers, dressing rooms, office, storage area · teen annex with dividable spaces and kitchen (2,000 s.f. w/400 occupancy) soccer fields (1-2 total, 360' length) · picnic tables (12 total) tot lots (2 total) tennis courts (2 total) basketball courts (2 total) · informal skateboard/roller blade facility restroom/conffort station Findings fields needed in community · community desires passive areas · maintain views trail linkage request for tennis courts and informal skate area not ideal site for dog area, other park sites designated by City incorporate creek into park design Final Draft Conclusions Preferred "Rancho" theme Active park with passive areas · Multipurpose fields (2), group picnic areas, play structures for different age groups, tennis courts (2), outdoor basketball courts (2), informal skate area, gymnasium Mounded lawn areas, individual picnic areas, boardwalk with scenic nodes and interpretative signs, creek 3.2 Discussion of Park Alternatives Sport as Theater (Figures 3-5 & 3-6) Active Multiple recreational activities · Grandiose - Plazas, Flags Rancho Theme (Figures 3-7 & 3-8) Passive with active areas · Incorporate Ranch history · Architecture (windmill, silo) Group areas · Individual picnic areas Meadow Creek (Figures 3-9 & 3-10) · Passive with recreational activities Mounded lawn areas Picnic areas Water elements Creek Groves Views Boulders Benches Page 16 ~ ..~)~ City of Chula Vista Building & Park Construction SALT CREEK COMMUNITY PARK Workshop I - April 6, 2002 Figure31 , .,.,,,, SALT CREEK COMMUNITY PARK Workshop Group 1 Summary Figure3-2 , 1; I ~. i SALT CREEK COMMUNITY PARK Workshop Group 2 Summary Figu~3-3 SALT CREEK COMMUNITY PARK Workshop Group 3 Summary 4 * Park Master Plan. DESIGN FACTORS AND PROGRAM ELEMENTS 4.1 Site Status The entire site is 24 acres located south of Otay Lakes Road, in the EastLake Connnunity of Chula Vista, with residential development to the east and west of the project site and wetland mitigation to the south. This park is to be dedicated as a City community park. 4.2 Public Access and Images The park has been designed as a multi-use park with large recreational fields and courts as well as passive areas for lawn play and picnicking (Figure 4-1, Site Plan; Figure 4-2, Entry Perspective; and Figure 4-3, Park Cross Sections). In addition, the park design links to the Chula Vista's Greenbelt Trail System. The park provides easy access, flexibility and a flowing relationship between all activities and facilities. The Salt Creek Corridor is a major feature that runs through the park site.The Salt Creek drainage flow enters the community park at the north- ern boundary from a culvert that runs under Otay Lakes Road and con- tinues in a southerly direction ultimately reaching the Otay River. Boul- ders and riparian plant-type material will be incorporated along the creek for enhanced accents as well as benches for rest and enjoyment. The theme of the park maintains the images of the past with an "Early California Ranch" character that integrates "pasture-like" grass areas, a pedestrian trail system, sports facilities with "ranch" style architecture. 4.3 Plant Materials All perimeter slopes and landscape areas will be planted with aestheti- Windmill image representative of cally pleasing, drought tolerant trees, shrubs and groundcovers. The plant "rallch0' theme palette will combine nativeqike and drought tolerant species in the in- formal walking and gathering areas and more traditional planting and park improvements in the organized activity areas. Cottonwood, oak and sycamore trees will be incorporated throughout the site to promote an indigenous linkage with the "ranch style"theme and continuity. Recom- mended plant materials are included in Table 4-1. Final Draft Page 27 January 2003 Table 4-1 - Salt Creek Cornmullity Park Plant Material Legend * Denotes trees which should be planted in a~l area with little or no irrigation. Do not plant in lawn or shrub areas. ** Denotes trees which shall not be planted within 25' of the creek or wetland mitigation area. LARGE BROADHEADED THEME TREES such as: (24", 36'box size) (70%-24" box, 30% 36" box) Botanical Name Common Name Gleditsia triacanthos Honey Locust Platanus acerifolia 'Bloodgood' London Plane Tree 'Bloodgood' Platanus acerifolia 'Columbia' London Plane Tree 'Columbia' Platanus racemosa California Sycamore Quercus agrifolia* coast Live Oak Schinus molle** California Pepper Tree Tipuana tipu* Tipu Tree EVERGREEN / DECIDUOUS STREET TREES such as: (24" box size) (100 % - 24" box min.) IAquidamber styraciflua American Sweet Gum Pinus canariensis Canary Island Pine Tree Pinus eldarica Mondell Pine Tree Pyrus calleryana 'Aristocrat' Ornamental Pear BROADHEADED EVERGREEN PARKING LOT TREES such as: (24'box size) (100% - 24"box min.) Cassia leptophylla Gold Medallion Tree Cupaniopsis anacardioides Carrot Wood Podocarpus gracilior Fern Pine Quereus ilex Holly Oak Ulmus parvifolia Chinese Evergreen Elm SMALL/MEDIUM TF. XTUIL~I.Iy RICH ACCENT TREES such as: (36", 48' box size) (50%-36" box, 50%48" box) Bauhinia purpurea Purple OrchidTree Cassia leptophylla Gold Medallion Tree Cercis occidentalis Western Redbud Jacaranda mimosifolia Jacaranda Tree Koelreuteria bipinnata Chinese Flame Tree Laurus nobilis Sweet Bay Page 28 city of Chula Vista ~._ :2~ Building & Fark Construction EVERGREEN/DECIDUOUS GROVE SLOPE TREE.$ such as: (15 gal, 24" box size) (30% - 15 gal, 70% - 24~ box) Botanical Name Common Name Platanus acerifolia 'Bloodgood' London Plane Tree 'Bloodgood' Platanus acerifolia 'Columbia' London Plane Tree 'Columbia' Pinus spp. Pine Trees Schinus moile** California Pepper Tree Tristania conferta Brisbane Box RIPARIAN 'THEME' TREE such as: (15 gal, 24' box size) (70% - 15 gal, 30%- 24" box) Ainus rhombifolia White Alder Geijera parvifolia Australian Willow Maytenus boaria Mayten Tree Platanus racemosa California Sycamore MEDIUM SIZE FLOWERING SHRUBS such as: (1, 5 gallon size) (70% - 1 gal, 30% - 5 gallon) Abelia grandiflora Glossy Abelia Arbutus unedo Dwarf Strawberry Arctostaphylos species Manzanita varieties Ceanothus spp. Wild Lilac varieties Cistus spp. Rockrose varieties Escallonia fradesii Escallonia Heteromeles arbutifolia Toyon Lantana species Lantana varieties Lavandula species Lavender varieties Leptospermum scoparium New Zealand Tea Tree Phormium species Flax varieties Pittosporum spp. Tobira varieties Prunus ilicifolia Hollyleaf Cherry Rhaphiolepis spp. Indian Hawthorn var. Rhamus californica 'Eve Case' Coffeeberry Ribes viburnffolium Evergreen Currant Rhus integrifolia Lemonade Berry Final Draft January 2003 G~'0 Page 29 ACCENT SHRUBS such as: (1, 5 gallon size) (70%- 1 gal, 30% - 5 gallon) Agapanthus africanus Lily of the Nile Bougainvillea'La Jolla' Bougainvillea Dietes bicolor Fortnight Lily Encella californica California Encelia Hemerocallis hybrida Daylily varieties Heuchera species Coral Bells Pelargonium pcltatum Ivy Geranium Phormium tenax spp. Flax varieties Salvia species Sage varieties Trachelospermum jasmhloides Star Jasmine EROSION CONTROL GROUNDCOVER such as: (Flat plants / seed) (50% flats, 50% seed) Artemesia californica 'Canyon Grey' Canyon Grey Sagebrush Baccharis P'Twin Peaks' Coyote Brush Hybrid Bermuda Turf Sahara Bermuda Grass Lonicera japonica Honeysuckle Myoporum pacificum 'Putah Creek' Myoporum Verbena species Verbena varieties Vinca major Periwinkle Wetland Seed Mixes Riparian Seed Mix ORNAMENTAL GRASSES such as: (1, 5 gallon size) (70% - I gal, 30% -5 gallon) Carex species Sedge Grass varieties Helictotrichon sempervirens Blue Oat Grass Miscanthus species Miscanthus Grass Var. Molina species Moor Grass Muhlenbergia species Deer Grass varieties Pennisetum setaceum 'Cupreum' Fountain Grass varieties RIPARIAN VEGETATION such as: (lgallon) (100% 1 gallon min.) Anemopsis californica Yerba Mansa Eleocharis montividensis Mexican Spike Sedge Jul~cus acutus ssp. leopoldii Southwestern Spiny Rush Salix lasiolepis b~acelinae Bracelin's W'dlow Salix gooddingii Southwestern willow Typha sp. Cattail Page 30 city of Chula Vista ~ I Buildh~g & Park Construction WETLAND HYDROSEED MIX such as: (seed) (100% seed) Artemisia douglasiana Mugwort Anemopsis californica Yerba Mansa Baccharis salicifolia Mule Fat Juncus Acutus ssp. Leopoldi Southwestern Spiny Rush Pfuchea oderata Marsh Fleabane Leymus condensatus Giant Wild Rye Rumex salicifolia Willow Dock Sisyrinchium bcllum Blue-Eyed Grass Ambrosia psilostachya NCN Plantago begelovi Plantago Eleocharis montevidensis NCN 4.4 Circulation The play and group picnic areas are located in close proximity to the recreation building and comfort station, easily accessible from the park- ing lot and adjacent on-street parking. Park maintenance personnel are provided access to ail park facilities by way of a 10-12 foot minimum wide path of either a CTB (cement treated base) in areas where vehicu- lar traffic occurs on steep gradients or a decomposed granite surface. H- 20 loading is required for the sewer trucks at the manhole access road. These pathways also serve as the foundation for a complete pedestrian/ bicycle system with periodic seating and overlook areas. Par courses are located periodically along the path with distance markers for the seri- Bike Racks ous exercise enthusiasts. Bike racks are to be provided throughout the park site. The paving adjacent to the recreation building will be a cast-in-place concrete with enhanced concrete finish within the building courtyard and vehicular entry drive. All buildings,parking areas, fields, courts, children's play areas and group picnic areas are to be fully accessible for the disabled. 4.5 Recreation Building The Recreation Building will house a gymnasium, weight room, teen annex and various support facilities (Figure 4-4, Architectural Elements - Recreation Building). This building will be the"focal point" of the park, and it will be highly visible as you approach the park from the west on Otay Lakes Road. The building will be designed around a central court- yard, reminiscent of the layout of early California ranches, while provid- ing visibility and security of all the building's spaces. The building will be flflly accessible to persons with disabilities. Final Draft January 2003 ~ ~ ~ Page 31 The building's spaces will be carefully designed to draw breezes through the structure for natural ventilation. Windows will be provided for daylighting and all equipment will be selected for energy and life-cycle efllciencies. Materials will be chosen to provide durability, safety and low mainte- nance. Steel roof'mg, stucco, and manufactured stone for walls and pilas- ters carry forward the park's theme, while gentle arches and wood trel- lises tie the building into the surrounding residential neighborhood 4.6 Comfort Station The comfort station is centrally located in the park, in close proximity to the parking lot and children's play areas. The building will provide accessible restroom facilities for men and women, to conform with the Americans with Disabilities Act (Figure 4-5, Comfort Station). Also in- cluded in the building is a small storage area for the Park and Recreation Department use. The building will be designed for natural ventilation and daylight, and materials will be selected that match the main Recre- ation Building and provide durability and low maintenance. Restroom facilities will also be located at the Recreation Building. 4.7 Shade Structure Small shade structures are located throughout the park, in close proxim- ity to courts, skate area and creek. These special features will provide semi-shade for the park users. Picnic tables will be located beneath the structures. The structures are of powder coated prefabricated steel con- struction roof lines, materials and color to blend with the recreation building. Large shade structures are lo- cated within close proximity to the recreation building,parking lot, children's play equipment and comfort station. Thc struc- tures shall be located appropri- ately to allow sufficient room for party jumps and other accept- able entertainments. Structures shall include appropriate hooks or other mechanisms to hang pi- natas off of side roofing. Materi- als and colors will be used to em- bellish the structure and blend Shade Structure with the recreation building and comfort station. Picnic tables are located underneath the structure and are nearby bar-b-que and additional picnic tables. Quick couplers will be provided in close proxinfity to shelters for cleaning purposes. Page 32 City of Chula Vista ~ ~ ~ 3 Building & Park Construction o ' ~L 42,.0- ~ 42,_0- METAL ROOFING North Elevation South Elevation Floor Plan East and West Elevation S A LT C R E E K C O M M U N I T Y P'A R K Comfort Station Figure4-5 4.8 Trellis A large shade trellis is designed in the group picnic area adjacent to the teen annex center at the recreation build- ing. A smaller trellis is located on the view patio to the south of the main building. These special features will provide semi-shade for the user with benches located underneath. The trel- Park benches under trellisstructures lis has stone veneer columns with heavy timber wood beams, rafters and lath. ~he color and materials will match the recreation building and comfort station, and be similar in design to the proposed arbors. 4.9 Arbor Wood arbors are located along the pedestrian link within the parking lot to emphasize the pedestrian connection through the parking lot to the Recreation building. Tile wood posts have stone veneer columns with heavy timber wood beams, rafters and lath to match the trellis at the Recreation Building. Wood arbor City of Chula Vista Pagc 40 ~ ~- ~ i Building & Park Construction 4.10 Children's Play Area The park design incorporates two play areas: a tot lot (ages 2-5) and a play area for older children (ages 5-12). The play areas feature large colorful play stractures, smaller play equipment and spring toys designed to appeal to varying levels of age and ability. Fibar system surface will be provided for ADA requirements. Seating areas are located nearby for adult supervision. 4.11 Basketball Court Two full-sized basketball courts will be located in close proximity to the recreation building, parking lot and street for security. An acrylic top- ping will be applied to the court surface for protection, durability and to hide joints. A small shelter and benches will be located nearby for seat- ing and shade. Play Equipment Ages 2-5 Sound can be buffered from adjacent residents by use of a sound wall at the property line and plant material. 4.12 Sports Fields The park has been designed to accommodate one large (150'x300') multipurpose field with a 45' buffer zone around the perimeter, located just south of the recreation building Amphitheater style spectator seat- ing is provided adjacent to this field. In addition, one smaller multipurpose field (150'x~225') has been de- signed at the south end of the project site for more informal (or less official) types of recreational play. 4.13 Amphitheater-Style Seating Amptfitheater style seating is provided adjacent to the large multipur- pose field. Materials include a precast concrete edge which appears Play Equipment -Age~ 5-12 wood-like with decomposed granite backfill. The amphitheater accom- modates approximately 115 spectators. .~-~..~ ~. 4.14 Tennis Courts "'~..' "~ .,t~-~,. 5~ Two fuil-sizcd tennis courts will be located in close ~ b.a ~.~ ~:~S~ ~ L{K'. " proximity to Otay Lakes Road for security. Courts are ~'.~'~'a~'~[l[l~'A also located away from residential development to ~, . ~r avoid noise and light disturbance. Perimeter tree plant- ~~ ing will assist in softening and screening the courts~ ~'$_ from adjacent properties. Courts shall be completely enclosed with 12' high fencing and 4' wide gates. In ~d ~. addition, a 110 outlet in a lockable box will be pro- - ~ ~.:, ~' vidcd in proximity of the courts. The visual impact t,,~ ~ ~- from the street will be minimal as the pad elevation ~_ for the courts is below street level. A patio with benches will be located nearby for seating and view- Amphitheate~style Seating ing. This facility will be lighted for nighttime use. Final Draft January 2003 ~ ~ ~ Page 41 4.15 Speed Soccer Field A speed soccer field is located on the west side of the park site, next to the adjacent Little League fieMs. Acrylic panels of varying heights, surround the perimeter of the field and are in- stalled on a concrete curb for ease of mainte- nance. Gates and spectator seating are provided on each side of the field. Field material inside the panels is artificial turf with quick coupling devices along the perimeter for wash down purposes. A 110 outlet will be provided in a Field Bleachers lockable box for electric power availability. This facility shall be lighted for nighttime use. 4.16 Skate Area An informal skate area for entry level individuals with curbs, ramps, mils and bowls will be provided for skaters on the west side of park site, adjacent to the existing Little League fields. This is not a skate park and will not be monitored. Nearby shade shelters and benches will be pro- vided for users. 4.17 Signage A single park monument identification sign will be located on Otay Lakes Road, off of the entry driveway into the park. The monumentation will be a two sided, reinforced CMU sign wall and pilasters with stone veneer and a rough stone cap.An arbor type feature is located on top of the sign wall with heavy timber wood beams, rafters and lath which match the arbors in the parking lot. The letters shall be Park M0numentati0n Sign 1/2' deep cast-in-letters, typeset:"Vineta BT"and i fq,'-c," i' brand logo will be of iron and securely fas- tened to thc wall. The City logo shall be of proper size mounted on ~ the monument wall. ~ Materials and colors will ~~'1 match the recreation ~ ,~"' Miscellaneous park signs will be located ~~ tbroughout thepark. Building & Park Construction Entry areas require park rules, all venues including shel- ters, courts, fields, soccer arena and skate facility require rental and usage information. Sign material will be wood- like posts with signs mounted to posts. Signs shall be designed so as not to obstruct sight visibil- ity of vehicles or pedestrians and shall not be placed within the public fight-of-way. Informational Signage Directional Si~age 4.18 Bridges Three (3) pre-fabricated wood bridges will be located along the Salt Creek Corridor to provide vehicular and pedesttqan access across the creek to various areas through and to the park site. The bridge railings will incorporate a historic cattle brand symbol that came from one of the previous ranches that once occupied the area. Salt Creek Bridge Final Draft January 2003 Page 43 4.19 Picnic Areas Picnic areas are provided throughout the park. Statldard and group bar- becue grills, hot coal and trash receptacles are situated in localized ar- eas. Groves of trees are proposed for shaded picnicking. Picnic areas shall meet ADA requirements. Drinking fountains are strategically located in close proximity to picnic areas, sports fields and children's play areas. Drinkh~g fountains shall have a pet fountain at thc base of thc pedestal. Large Barbecue Grill Small Barl~cue Grill Trash Receptacle Hot Coal Receptacle Large Picnic Table Small Picnic Table 4.20 Trash Enclosure Two (2) trash enclosures will be included on the project site. One enclo- sure will be located close to the recreation bnilding, off of thc entry drive for truck accessibility. This enclosure shall be large enough to ac- commodate bins for all solid waste, yard waste al~d rccyclables. Materi- als will be CMU with a stone veneer facing, and a wood truss overhead. Drinking Fountain Page 44 City of Chula Vista Building & Park Construction A smaller trash enclosure will be located on the southern end of the park site, in close proximity to the adjacent homeowners association facility off of North Creekside Drive. This enclosure shall accommodate a bin for solid waste and a bin for greenwaste. Materials and color shall be similar to the other trash enclosnre. 4.21 Parking Facilities The main parking area, located in the park site off of Otay Lakes Road are to accommodate park users only. There are 155 full size parking stalls (9'x20'), which includes (8) eight spaces for the physically dis- abled. Planter islands will be provided within the lot and along the pe- rimeter for shading and temperature control. A total of 72 additional on- street parking spaces will be accounted for on Old Janal Ranch Road and North Creekside Drive (36 spaces per each street),for a total of 237 spaces. In addition, 4 spaces on each street shall be provided to accom- modate for either loading/unloading or no parking areas. 4.22 Site Lighting All parking areas, recreation building, restroom facility, circulation areas, walkways and ramps are to be lighted with high pressure sodium t~LX- tures for security and pedestrian circulation. Sports field lights will be lighted with metal halide fixtures and are provided for nighttime activi- ties on the tennis and basketball courts as well as the speed soccer field in accordance with "a good neighbor policy to be turned off before 11:00 p.m. The design shall take into consideration the adjacent homeowners of the project site. The"themed'light fLXtures have been designed to keep pole heights to a minimum to eliminate light spillage onto the adjoining residential properties.The proposed fortures are shade-type ~s with 150 watt, high-pressure sodium (HPS) lamps and mounted 14q6 feet above the walkway. HPS lamps are High Intensity Discharge (HID) lamps that produce a warm white light. They have a relatively long lamp life and are one of the more efficient lamps available for security lighting. The pedestrian security light is a decorative shade cutoff type with flat lense to limit glare to area residents. The lamp, reflector and diffuser are above the rim of the fixture.The fixture is mounted at 15 feet on a hori- zontal arm offset from the pole and the post is away from the edge of the sidewalk. The lamp source is 150 watt HPS 01igh pres- sure sodium) to pro- vide best efficiency // and lamp life. The i ~!~. Path Light light source is a pink- ish white light. Final Draft January 2003 ~ ~C9~~ Page 45 The parking lot fixture is a cutoff (shoebox) type of fLxture that would line the perimeter of the parking lot(s). The design is a streamlined shoebox with a cutoff fixture mounted at 30 feet. The lamp source is 250 watt HPS. The sports fighting fixtures are also cutoff shocbox type fixtures mounted along the sides of the sports courts. Sports fighting poles will be 40 feet high for speed soccer, 30 feet high for basketball and 16-20 feet high for tennis.All f~xtures will use metal halide lamps which have a shorter lamp life but provide a whiter light, which is preferrable where color rendi- tion is important. The sports fixtures will incorporate forward throw optics that "push" the light forward when located at the sides of the Parking Lot and Court Light courts. Twin pedestrian-scale post lights similar to those mentioned above will be installed in thc main entry walkway to the front of the gymnasium building. Bollards, low 36"-40" column type fixtures with low wattage HPS lamps, will also line the entry walkway leading to the gymnasium building. Thc bollards will be located at the trellis locations adjacent to the parking areas. Ground-mounted flood lights will be incorporated, as necessary, for signage, monument, and (or) landscape lighting as more precise loca- tions become known. 4.23 Fencing A pre-cast concrete split rail type fence is proposed along the frontage Light Post Detail road of Otay Lakes Road and at the group picnic area and view deck surrounding the recreation building. The color of the fence is to be tan. Wood Entry Gate A wood-like gate is pro- posed at the front entry into the park, off of Otay Lakes Road. This gate is to close off the park to r patrons after hours. ~ remaining fencing The along the trails within the park are designed to /L i match the lodgepole ~. :'L ~ ~ fencing that has been used throughout the ' ' Chula Vista's Greenbelt ' ,: .~e,.. Trail Linkage system. Page 46 ~ ~' ~ 7 City of ChulaVista Building & Park Construction The fencing is intended to direct and encourage pedestrians to use the designated access points into the park. Special pedestrian entry design will indude removable wood-like pole bollards, boulders and planters to prevent vehicles from entering the park site but allow pedestrian and the physically impaired access. -- -- , ;.",1.-~ ~'" I ,~-'~ . · . , ~ '. ~'. Split Rail Fence with Seat Wall 4.24 Salt Creek Corridor The 10' wide Salt Creek Corridor will be demarcated on both sides of the creek to define the limits of work for park maintenance personnel. Materials to delineate boundaries are randomly placed pavers on grade between the creek and lawn areas, and boulders informally located in groundcover areas approximately 15-20' o.c. If additional demarcation is required along the corridor, the use of 4, x 4" x 2' high wood-like posts could be placed informally between the boulders. These ~)osts can be painted green to blend in with the adjacent landscape. Shrub and groundcover areas located along the corridor will consist of riparian-like plants that blend with the riparian materials within the creek corridor. In addition, the shrub beds will aid in discouraging park users fi.om eas'dy running through the creek. Creek crossings have been pro- vided at a couple locations with the random placed pavers on grade and stepping stones in the creek. (Figure 4~6, Salt Creek Sections) 4.25 Wetland Mitigation Area The wetland mitigation area located directly~to the south offs project site will be carried through into the southerly portion of the park site. This area will remain open space and incorporate the habitat within the Salt Creek Corridor. Final Draft Page 47 January 2003 _~ ~ -COLORED COLORED CONCRETE CONCRETE MOW CURB MOW CURB LAWN SHRUBS SALT CREEK BASIN SHRUBS LAWN WITH NATIVE Section D RIPARIAN BUFFER STEPPING //~-STONES ~BOULDER LAWN RANDOM SALT CREEK BASIN RANDOM LAWN WITH NATIVE PAVERS RIPARIAN BUFFER Section E MARKERS CONCRETE MOW CURB STEPPING STONES Conceptual Sketch 0 2 4 8 12 SALT CREEK COMMUNITY PARK Creek Sections ~.~.~ Figure4-6 4.26 Boardwalk with Interpretative Signs A precast concrete type walk resembling .~ ~ wood planks on a bridge will meander ~"-~ ~ ~ f' '~'~ ~5 ~ ...... through the wetland mitigation area that ~ '~,~V,~4, ~g ~=.~ 'C borders the southerly end of thc project . .a~ . ,~ ~,~,157~/~,,~ ~,'~. ~C ., site. There will be two (2) overlook decks f..~ ~ .'~ ?'~' tjX-' ~[]ff~! '~ -~.. projecting from this walkway with rail- .1~ /.~.',,~.,,.~ ~~. ~[ ii~' ~" ing and interpretative signage describing ? thewnmeand unctionsofthewe,ands. · \~*' < ~' ~4 Benches will be located on the decks for - ' I ...... ' ~....~ viewing and enjoyment. Consideration has been given for ad- equate drainage through the site.As much surface drainage as possible is directed toward Salt Creek. Catch basins arc lo- cated throughout the site to provide ad- equate drainage up to a 100 year storm. The runoff from the existing ID~41 energy dissipater will be channeled into an earth swale located in the southeast portion of the site. The dissipater slows the water down before reaching the swale to reduce any erosion and thc swale is designed to carry the 29.4 cfs of water without over- flow. The culvert will be camouflaged with a fagade reminiscent of a silo. The silo will have double doors with a 7' height for ability of maintenance crew to remove debris. Truck access is not re- quested. 4.28 Park Maintenance All planting areas will be maintained and conform to the requirements as stated by thc City of Chula Vista Parks Department. Thc areas included shall be all sport fields and courts, parking lot, slopes, strectscape, creek, hardscapc and ornamental planting around the Recreation Building and support facilities. "Di ..... spozA Scoop d~spcnsers will be located throughout thc park to en- sure that dog owner's keep the park clean. Disp0z A-Scoop Dispemer Final Draft J,'muary 2003 G~'60 Page 49 4.29 Grading The EastLake Company has previously graded this future park site, and an as-built grading report is available. There is an approximate 58'grade difference from the north end of the site to the south end.The site has three existing pads that step down with the grade change. The park master plan proposes to raise the grade at the north end of the site adjacent to Otay Lakes Road to create more efficient accessibility into and out of the park site, as well as minimize the need for retaining walls. In addition, the plan proposes to raise the central portion of the park, east of the creek, to avoid damage to the park facilities during potential 5, 10, 25 and 100 year Hoods per the results of the HEC analysis pro- vided by the EastLake Company. The EastLake Company has proposed to deliver the import soil needed for this project, as well as complete the rough grading and soil compac- tion as identified on the park conceptual plan. 4.30 Iccigation All planting areas will receive complete irrigation coverage by means of an automatically controlled, electrically operated underground state-of- the-art sprinkler system. The irrigation system will be designed for re- claimed water use.AH specified irrigation materials shall conform to the latest edition of the Water Agency Standards. Irrigation zones shall be determined and designed to achieve maximum efficiency and distribu- tion uniformity. The system will be controlled by an automatic control- ler capable of adjusting run times based on the evapotranspiration rate, as well as accommodate aH the benefits of How sensing. The master valve and flow sensor shall be provided a the point of connection to protect the system from high flows in the event of supply line breaks or head breaks. Page 50 ~'~ ~ ~ City of Chula Vista Building & F~ark Construction 5 * Cost Estimates Park ITEM DESCRIPTION QUANTITY UNIT COST TOTAL Hard Costs Demolition $20,000.00 Fencing $79,500.00 Grading & Drainage $698,808.00 Irrigation $1,000,000.00 Lighting $368,500.00 Misc. Civil $68,400.00 Paving $995,300.00 Planting $458,300.00 Play Equipment $170,000.00 Restroom & Storage $134,000.00 Signage $30,000.00 Site Amenities & Furnishing $645,200.00 Site Walls $99,750.00 Skate Area $95,000.00 Soil Preparation $276,700.00 Speed Soccer $166,400.00 Basketball Courts $43,600.00 Tennis Courts $70,000.00 Utilities $63,800.00 Maintenance $120,000.O0 Hard Cost Sub-Total $5,603,258.00 Deductive Alt. 1 - Grading Allowance $150,000.00 Deductive Alt. 2-Rec. Bldg. Diff. Cont. $936,746.00 Hard Cost Total $4,516,512.00 Soft Costs Building, Utility, Site Fees 0.09 $504,293.22 Design Fees & Constr. Admin. 0.13 $728,423.54 CM Fees 0.03 $168,097.74 City Staffing & Inspections 0.08 $448,260.64 Insurance & Bonds 0.02 $112,065.16 Soft Cost Total 0.35 $1,961,140.30 Contingency 15% 0.15 $840,488.70 Total Park Construction Costs $7,318,141.00 Draft Page 55 January 2003 157) ..~ Recreation Center Item Description Quantity Unit Cost Total Hard Costs Gym 12800 SF $120 $1,536,000.00 Meeting room 0 $0.00 Weight room 1600 SF $160 $256,000.00 Locker room 800 SF $220 $176,000.00 Kitchen 0 $0.00 Office 600 SF $160 $96,000.00 Restrooms 580 SF $220 $127,600.00 Utility room 170 SF $120 $20,400.00 Custodial 150 SF $120 $18,000.00 Teen Annex 1600 SF $160 $256,000.00 Storage 400 SF $100 $40,000.00 Lobby 700 SF $150 $105,000.00 Circulation 600 SF $110 $66,000.00 Sub-Total 20000 SF $134.85 $2,697,000.00 Site Utilities Sub-Total $221,900.00 Sitework Landscape, walks, site furnishings 69653.00 13.449 $936,746.04 Hard Costs Total $3,855,646.04 Soft Costs Building, Utility, Site Fees 0.090 Design Fees & Engineering 0.150 General Admin inc. Insur & Bonds 0.050 City Staffing & Inspections 0.050 FF&E (% building, Utilities, Site) 0.140 Soft Costs Total 0.480 $1,850,710.10 Contingency 0.15 $855,953.42 Recreation Center Total $6,562,309.56 NOTE: These costs are based on 2002 prices. They need an added escalation factor of 4% per year to project costs to the year that the project will be constructed. Page 56 City of Chula Vista ~ ~ ~ ~ Building & l~ark Construction Appendix A Arborist Report TREE SERVICE October 30, 2001 Kurt Carlson K~wasakl Theila=ker U~no ~ Associates 3916 Normal Street San Diego, CA 92103 619/294-4477 f619/294-9965 Re: Eastlake Community Park A~ Dear Kurt: I have inspected the eleven eucalyptus trees at the site of the future park at Eastlake and have observed that all trees are in decline at this time. Factors which will affect survivability in the next six to twelve months will be: 1. Installation of temporary irrigation system for the strongest five trees (Sugar gum species). 2. Improving drainage to the trees. 3. Reestablishing original grade to the trees which have had grade changes. 4. Removal of weak trees at this time (Red gum trees that are infested with Red Gum Lerp Psyllid). · 5. Pruning of remaining five trees in the next twelve months to remove dead limbs only. 6. Installation of mulch beds under the remaining trees. The largest five trees at the easternmost part of the project are Eucalyptus cladocalyx (Sugar Gum) and are the trees most likely to survive the construction process. The remaining trees are EucalYP- tus camaldulensis (Red gum) species and are in severe decline, offering little hope of survival. I recommend that all Red gum trees be removed prior to any further work in the area and that remedial grade work be done for sugar gum trees along with the installation of temporary irrigation (or manual irrigation) and further monitoring of tree health. Survival of the remaining trees depends on the level of future construction activity in proximity to the trees. In some cases of construction damage to root systems, there is no post-construction repair possible. 539 Telegraph Canyon I~d · 5ulte 1315 · Chu a %/l~ta. California g~910.6497 Telephone 619/23~8512 · 4~1-7119 · F~ 619/421-7249 I recommend careful planning at this time for all future work in the areas of trees. Please feel free to contact our o~fice if you need any additional information. Yours truly, President W.C.I.S.A. Certified Arborist No. 607 AP/dh 559 T¢le~aph Canyon f%o~d · Suite 815 * Chula Vista, California 91910-6497 Appendix B Workshop Minutes Salt Creek I Workshop Presentation: Community Park A. Introduction to 24-acre park project and consultants (John Krizan) Workshop I B. Discussed scope of work & schedule (Kurt Carlson) Revised Meeting Minutes: C. Discussed goals and objectives (Kurt Carlson) April 16, 2002 D. Presented example boards of past park projects (Kurt Carlson) Workshop Date: Saturday, April 6, 2002 E. Presented "Site Opportunities and Constraints" board (Cheri Blatner) PRESENT: City of ChulaVista: E Presented Bubble Diagram of park elements in relation to the John Krizan, Jack Brady, Brian park site Cox,Todd Schmit (Cheri Blatner) The Eastlake Company: G. Community Members Questions & Answers: Natasha Martinez 1. Will the creek have stagnant water? Will it smell? The water flows into Otay Lakes. The team took into account KTU+A DesignTeam: the concern for smelly water from the creek but did not Kurt Carlson - Principal know if that would be the case as they felt that water Cheri BIatner- Landscape Ar- would be flowing most of the year thus reducing the chitect potential for stagnant water. The. team will research. Penny Clews ~ Park Designer 2. Will there be an area for dogs? We discussed that if this was on the list of priorities it will in fact be considered. Consultant Team: The team pointed out that there are other parks within the Sandy Gramley - PlattWhitelaw ChulaVista General Plan that have been designated to & Assoc. incorporate dog areas. Paul Hobson -Artist 3. What kind of amenities can be found in the surrounding parks? The team referred to the board containing "existing and proposed parks" in the City of Chula Vista, along with their site amenities, for the community members to come up and review. 4. What is the budget? Does this include thc gymnasium? John Krizan indicated that.the budget was approximately $4 million and that did not include the gymnasium. Source of funding is being determined by City of Chula Vista for the gym. 5. What is the schedule for completion of this park? Antici- pate two years for completion of project construction from time Master Plan is approved. City requires one growing season prior to turnover. 6. Is there a multi purpose field at the Little League lot? Are the fields lit? Team needs to locate Little League field plans to determine if there is a multi-purpose field designed into the project. The fields are not lighted. KTU+A has found that there is not a multipurpose field located on tlfis site. Final Draft January 2003 ~ - -~ t Page 59 Workshop I 7. Can we drain water into Salt Creek Corridor? Will SWPPP allow reclaimed water to drain into the corridor? Team will research but do not think that this is feasible. 8. Has sewer and water been planned for this area? Yes. H CommunityWorkshop Groups: A. Participants of the workshop broke up into (3) groups (ap- proximately 10 people per group), went out to the project site and prioritized their"wish ' list: 1. Team 1 - Leaders: Kurt Carlson, Penny Clews,Todd Schmit Proposed name: 'God BlessAmerica' a. Grades remain the same. b. Main entry @Otay Lakes Road, across from future f'tre station. c. Gymnasium, parking lot and basketball courts located off of Otay Lakes Rd. (upper level) d. Provide overlook and picnic area by gym. e. Reduced soccer field dimensious. f. Included soccer field, speed soccer and small scale skate park south of gymnasium and parking lot. g. Included an amphitheater east of multipurpose field. h. Trail links along east side of park. i. Located picnic areas throughout. j. Prefers soccer field (multi purpose field) to be lighted. k. Tennis courts (4+), tot lot and restroom facility located on west side of property, between Salt Creek corridor and Little League fields. 1. Plant all Mopes with tree massings to soften ! buffer edges, yet allow for views. m. Passive area (picnic areas, tot lot, and bridges @ creek) proposed south of'active' park area and maybe locate a restroom facility here. n. Possible to add smaller multi-purpose field at south end of site. 2. Team 2 - Leaders: Cheri Blather, John Krizan,Jack Brady · Proposed name: Janal Vista Community Park · Pros: Trails, terracing, informal skate park, passive park, views Cons: Drainage headwall, noise, traffic, field lighting, speed soccer a. Terrace pads (3 levels) b. Parking lot and gym (upper leveD, off of Otay Lakes Rd. c. Include temfis courts (4) on same level as gym and parking lot, locate @ base of 'The Vistas' Mope on east side of site. d. Screen view of parking lot and gymnasium from 'Vista' residences with dense slope planting. e. Second terrace to contain basketball courts (2), a Page 60 ~ -7~ City of Chula Vista Building & Park Construction Workshop 1 pavlllion / large shade structure, and a tot lot. f. Soccer (multi-purpose) field located on lower level of park, south of second level. g. DO NOT LIGHT FIELD h. Restroom facility located between 2"d level and lower level, west of field. i. Additional parking lot west of Salt Creek Basin, adj. to Little League parking lot. j. Locate skate park in area of pump station. Vary terrain. k. Include trail linkage system around entire park for pedestrians and bicyclists. I. Suggested par courses throughout m. Prefers southern portion of park site to be passive (picnic areas, tot lot, sand volleyball court) n. Incorporate bridges to cross creek o. Screen headwall with heavy vegetation or btfffer with a restroom facility. p. Traffic control shall be implemented along North Creeksidc Drive. 3. Team 3 - Leaders: Paul Hobson, Sandy Gramley, Brian Cox Proposed name: Rancho Community Park · Pros: Streams, views Cons: Not enough trees, no bridge to cross stream Program: gymnasium, dog park (off leash), basketball and tennis co~wts, playing field, frisbee golf, tot lot, picnic, walking, volleyball court. a. Mountain views north and south east of site. b. Grades to remain the same. c. Main park entry off of Otay Lakes Road, across from 'Woods' project. d. Gym located at upper level overlooking park site to the south. Site buildings to oversee and supervise activities. e. Parking lot off of main entry, upper level. f. Tennis courts located on east side of upper level, bottom of 'Vista' project slope. g. Play field on second level with rest room facility. h. Incorporate bridges (2) to crossover stream. i. Located dog park in center of park site with an aes- thetically pleasing fence. j. "Earthworks"- sculpture earth adjacent to Salt Creek Basin to soften the creek and entice people to sit by the stream. k. Located tot lot @ south end of park. Rustic (NO McDonald's playground stcuctures). 1. Picnic area and restroom facility @ south end of project site. m. Incorporate walkways throughout. Final Draft January 2003 ~ '~ '7~.~ Page 61 Workshop 1 B. Group returned and a community member presented their groups desires for the park site C. Next workshop will be held on May ! lB @ Eastlake II, Country Club Park, 2405 Clubhouse Drive, 9:00 - 11:00 a.m. The above mentioned items of discussion axe not exhaustive. Please review and if there arc any items that need to be revised, added or de- leted let me know as soon as possible and I will incorporate them into the meeting minutes. WRITTEN BY: Cheri Blatner KTU+A Page 62 City of Chula Vista -~ ~ Building & Park Construction Salt Creek I Workshop Presentation: Community Park A. Introduction and overview of Workshop 1 (Kurt Carlson) Welcomed those who attended and introduced team Workshop 2 Briefly reviewed program, site analysis board, bubble diagram for park layout, historical board, existing and proposed park amenities Workshop Date: Discussed process of community members breaking up Saturday, May 11, 2002 into groups @ first workshop and developing park layout with objectives and priorities. PRESENT: City of ChulaVista: B. Presentation of (3) proposed alternatives (Cheri Blatner) John Krizan, Jack Brady, Sunny 1. "Sports as aTheatre" or Sports Park Shy, Todd Schmit 2. "Rancho" theme 3. "Meadow Creek" theme KTU+A DesignTeam: Kurt Carlson - Principal C. Community Members Input / Concerns: Cheri Blatner- Landscape Ar- 1. Inquired about width of planting area @ perimeter of park. chitect Requested a large enough buffer zone between street and Penny Clews - Park Designer park to screen view and noise from adjacent residences. 2. Parking is a concern of adjacent homeowner's. ConsultantTeam: Parking from the Little League field is already spilling Sandy Gramley - PlattWhitelaw into a large portion of North Creekside Drive on-street & Assoc. parking. Two future homeowner's were not aware that this site was going to be a community park. Robin (con~munity member) stated that there has been a sign posted on the project site for nine (9) months indicating that "this is the future site of a community park". City stated that the park plan has been a part of development planning all along (at least 10 years). Those present asked if the City had an overriding concern for on-street parking. The City stated that street parking offsets largc parking lot on site. Some residents concerned about pandamonium on streets. Community inquired as to quantity of events and how those events will draw more parking. A community member felt that people should be encouraged to walk to the park instead of drive. Suggested posting signs to encourage walking. Sunny Shy stated that ttfis is a City community park as opposed to a neighborhood park and the gymnasium is a City need. The park needs to be pedestrian friendly considering people drive "big" cars these days that need to be accommodated for. 3. Arc the trails interconnected for running / walking? Are trails marked for distance? Yes 4. Will fields be designated for leagues? Yes, by the City 5. Will the multipurpose field be lighted? No, only thc areas adjacent to the gym. Final Draft January 2003 ~ ~]~ Page 63 Workshop 2 6. What is the grading like @ the Salt Creek Drainage Corri- dor? The grade is at or slightly higher on each side of the creek. There may be gently mounded areas outside of the buffer zone. 7. Is the gym two story? No 8. How is the program elements for parks determined? Sunny Shy indicated that surveys are distributed to adults and young people, principals @ schools etc. to fmd demand. · Need more areas for older children to play. Play equipment is now geared for older children as well. Preferable to separate younger and older children's play areas. · Looking for informal play (i.e. skate parks) as kids need a place to go. Skateboarders will skate anywhere and many times they skate where it's unsafe. Want to give them an area that is acceptable and out of harms way. 9. Discussed amotmt of activities and amenities of the park. Concern about the amount of people the park will draw with regards to park programming. Robin (a workshop participant) pointed out the fact that other Eastlake communities have so many more private amenities (pools, parks, tennis courts) that are not available to the EastiakeTrails connntmity .This park site is their"community's"park and should provide amenities that the community can use. Someone asked if this park was only to serve Eastlake Trails Community? No, this is a City park with no barriers - 'available to all' 10. A couple participants favored the 'Meadow Creek' theme. They felt that reducing the activities to passive play @ the south end of the park, with mounded lawn and picnic areas, lent itself more to the open green space they envi- sioned for this area. It was also suggested to add the following features: Frisbee golf and skate park (remove one basketball court if necessary). 11. Question was asked if fields will be lighted. Also inquired about park hours for lighting. Lighting at multipurpose field will not occur. Court lights for basketball, tennis and speed soccer will be incorporated. Lights will be provided throughout the park for circulation and safety. Lights will be controlled by timers to be determined by the conununity's needs. The gym is usually open around 6:00- 6:30 a.m. until approximately 9:30-10:00 p.m. in other Chula Vista parks. 12. Tinge for completion - Depending on funding, the park may be built prior to thc gymnasium. Kurt "guesstimated" the park could be completed by approx, end of 2003~ beginning of 2004. Page 64 City of Chula Vista Workshop 2 13. Sunny discussed the size and park programming for a 10 acre park site in Eastlake development: "Sunset View Park" which will include (2) regulation soccer fields, roller hockey, children's play areas, basketball courts, tennis courts, etc. 14. When mentioning "Sports Park, someone indicated that passive parks are needed these days too. 15. The park commissioner "Don", expressed that in regards to field usage there is not enough fields, there is a shortage and it will only get worse. A large field can be broken down into 24 games running width-wise on the field. 16. How will park affect value of home!? Kurt Carlson felt it will most likely increase the valueof the homes substan- tially. 17. Will thc wetland area be natural? There is fencing to separate the wetland area from the park and signage indicating that this area should not be entered nor dis- turbed. 18. Is it possible to go to the City of Chula Vista to request red painted curbs (on North Creekside Drive? Yes, anyone can request a review of thc situation. 19. Those present felt that these workshops were not publi- cized enough. A couple of the new homebuyers just happened to hear about it at the last minute. They felt that there are a lot of peopte who don't live in the surrounding homes yet that may have input. Kurt explained that the process needed to be started. The park has been in the works for over 10 years now. It will still take another couple of years to be completed. Cheri stated that 6500 flyers were sent out in the mail within a 3 mile radius around the park site, the developer's were to notify the new homeowner's and it was announced in the commu- nity newsletter. 20. Robin stated that she preferred the "Rancho" theme. She requested 220 parking spaces on the site to help eliminate some of the off-street parking. She likes the amphitheater, NO on lighting field(s),YES on informal skatcpark @ pump station because of noise factor, likes trail linkage (stroller walking), good number of access points into and out of the park, (2) fields good, open field good. 21. One participant did not like the amphitheater seating in the "'Rancho" theme. He thought it was too much concrete and when explained to him that it would most likely be of wood-like risers and lawn / groundcover @ treads, he found that more acceptable. He also inquired as to how many people it would seat? It was "guesstimated~ approx. 75-100 people. 22. Where are the l?acilities on the"Rancho"Theme 0.e. restroom, shade shelters, etc.)? Can organizations use Final Draft January 2003 ~77 Page 65 Workshop 2 covered picnic areas and are there enough? Those present were assured that organizations could use the facilities as scheduled through the City. All the schemes indicate two large shade shelters with electrical hook ups, easily acces- sible to parking, tot lots and restroom facilities as well as scattered picnicking can be found throughout the park. 25. NO "McDonalds' type play structure equipment @ the childrens's play areas. D. Next workshop will be determined at a later date and commu- nity members that are on the workshop address list will be notified. The above mentioned items of discussion are not exhaustive. Please re- view and ff there are any items that need to be revised, added or deleted let me know as soon as possible and I will incorporate them into the meeting minutes. WRITFEN BY: Cheri Blather KTU+A Page 66 ~ ~)}~ City of Chula Vista Building & Park Construction Appendix C References City of Chula Vista Municipal Code - Zoning, reprint of Title 19,July 2001 Eastlake II General Development Plan, Cinti Land Planning, adopted November 16, 1999, by Resolution No. 19666. SPA areas: Eastlake SPA, Eastlake Greens SPA, Eastlake Trails SPA, Salt Creek SPA and Business Center II SPA. Eastlake m General Development Plan, Cinti Land Planning, Revised draft April 20, 2001, SPA Plan. Salt Creek Community Park Master Plan - Eastlake Trails SPA Plan, Section 11.2.8,Appendix 1,April 1998 Otay Ranch Resource Management Plan- Phase 1, Ogden &Assoc., October 1993 Otay Ranch Resource Management Plan- Phase 2,Dudek &Assoc., Brian E Smith &Assoc., Dick Jacobs Associates,June 24, 1996 Otay Ranch village II, Sectional Planning Area, Brookfield Shea Otay LLC., original adoption Oct. 9, 2001 Report of Preliminary Geotechnical Investigation Eastlake Trail, Chula Vista, California, Geotechnics Incorporated, March 20, 1998 Wetland Mitigation Plan, Salt Creek Park, P&D Environmental Ser- vices, Revised July 1999 Final Draft January 2003 ~j~7/ Page 69 Page 8, Item: ~ Meeting Date: 12/19/02 Fiscal Impacts The Park cost of $7,300,000.00 is to be funded from several sources. In conformance with the City's Parkland Acquisition and Development Ordinance the EastLake Company has contributed approximately $2,667,000.00 in park development fees and per the "Amended and Restated Development Agreement between the City of Chula Vista and The EastLake Company" will contribute another $2,123,000.00. Additionally the EastLake Company has agreed to contribute another $150,000.00 towards additional site grading costs. The balance of the monies, $2,356,000.00, would be funded with Public Facilities Development Impact Fees and from in lieu PAD fees paid to the City with the Ayres/Sunbow Agreement. The use of these funds for this project is consistent with the terms of the Agreement. The Recreation Complex cost of $6,330,000.00 is to be funded by Public Facilities Development Impact Fees. Staff has performed a review o£the preliminary estimates of probable cost for park construction, and the initial establishment/maintenance period, prepared by the design consultant team. Changes to the cost estimates are anticipated as the Park Master Plan evolves into construction drawings, and as actual park construction commences. However, staff is of the opinion that the estimates are an adequate representation of anticipated costs for the improvements proposed. After the initial turf establishment period of one year, future park maintenance costs for the public park will be paid through the City's General Fund. Attachments: A. Park Master Plan (including construction cost estimate.) B. Parks and Recreation Commission meeting minutes (relevant portion) of 01/16/03. J:\BPC\BPC Administ mtim~Agenda\Salt Creek Park\CCAgcndaStmt 024)4 03.dec City of Chula Vista Parks and Recreation Commission Minutes Thursday-6:30 p.m.Meeting , ~- / F"~'~'~~/~/~J~t 6/3]~JST'.'.'.'.'.'.'.~ ~/F'~'~ ~ /jI J' J~ a~ 16, 2003 MercyBuilding/I I] I ' F Street CV 1. Roll Call/Motion to Excuse Members Present: Commissioner SaIcido, Commissioner Rude, Commissioner Ramos, Commissioner Perondi, Commissioner Rios, Commissioner Weidner, and Commissioner Strahl Staff Present: Buck Martin, Director of Recreation Ed Hail, Principal Recreation Manager Ted Nelson, Recreation Supervisor III MaP/Hofmockel, Principal Landscape Architect John Krizan, Landscape Architect Shauna Stokes, Administrative Services Manager Dave Byers, Director of Public Works Operations Larry Eliason, Acting Parks and Open Space Manager Tom Class, Acting Senior Parks Supervisor Andy Campbell, Director of Building and Park Construction Joe Cargel, Chula Vista Police Department Jeff Hobson, Chula Vista Police Department Others Present: Bill Winters, Chula Vista Youth Sports Council Jim Dunn, AY$O Chert Blatner-Pifer, KTU+A Penny, KTU+A Kurt Carlson, KTU+A Sandy ©ramley, Plaft/Whifelaw guy Asaro, EastLake Company 2. Minutes a. Approval of Minutes of December 19, 2002 - M$C (Salcido/Rude) Approve the minutes of December 19, 2003 Vote: 6-0-0-1 (Weidner late) Chair Perondi stated that the Agenda would be taken out of order in order to make introductions of new staff. MSC Rude/Salcido to move Item l0 - Other out of order (7-0-0-0). Mr. Martin (Director of Recreation) introduced Shauna Stokes who will be the new Assistant Director of Recreation beginning January 24, 2003. Mr. Byers IDirector of Public Works Operations) introduced Mr. Larry Eliason, Acting Parks and Open Space Manager, and Mr. Tom Class, Acting Senior Park Supervisor. b. Approval of Master Plan for the Community Park in EastLake Trails Mr. Krizan ILandscape Architect) talked about the public community park in EastLake Trails, and talked about the location of the park, and acreage. Mr. Krizan introduced landscape architects KTU+A, Guy Asaro of EastLake Company, and the architect for the recreation center, Platt/Whitelaw. Mr. Kurt Carlson of KTU+A gave a brief presentation of the proposed park site. The park site is a 24-acre park site located in the EastLake Trails neighbarhood south of Otay Lakes Road between the EastLake Trails Subdivision and west of the EastLake Vistas Subdivision. Mr. Carlson stated the park was designed Parks and Recreation Commission Minutes -January 16, 2003 2 as a multi-use park. In addition, Mr. Carlson talked about the Workshop Process with community; the goals and objectives of the workshops that include: developing a distinct park theme; recognizing and personalizing community identity; providing additional data to park design team, and proposing possible park names. Findings from the workshop include: fields needed in the community; community desires passive areas; maintain views; trail linkage; tennis courts and informal skate areas. Mr. Carlson talked about the architecture of the park, and structures that simulate the character of the "Old farm buildings'. The park has rolling terrain and landscaped with turf, shrubs, and groundcovers. Groves of Sycamores, Cottonwoods, and Eucalyptus will be planted. Park Activities Program for the 24-acre site includes: 20,000 s.f. gymnasium and recreation center Two playfields for community team sports. Two tot lots -one for small children (2-5) years and one for older children (,5-12) years old. Picnic areas with shade structures 16) and 12 total Theme type bridges (3} for linking trail system for pedestrians, bicycles and vehicular maintenance access Loop trail system that links to Greenbelt system with jogging trails and par course stations Sport Courts for outdoor basketball (2) Tennis Courts (2) Speed Soccer ( 1 ) Skate Area Natural Interpretive areas Comfort Station with storage Recreation Complex Activities Program Ms. Sandy Gramley, of Platf/Whitelaw talked about the Recreation Complex Activities and Program. Ms. Gramley stated that the facility is a 20,000 sq. ft recreation complex. The building will house a gymnasium, weight room, teen annex and various support facilities. In addition, the building will be the "focal point" of the park, and will designed to be highly visible in the park. This facility is designed around a central courtyard, and will provide visibility and security of all building spaces. Ms. Gramley further stated that the facility was designed fo malch the concept theme of early "California Ranch". The south side of the building faces the park, and has an overlook. Trellises were placed to accommodate the seating area. Ms. Gramley talked about the building material, and stated that the materials used are durable, and are environmentally safe. Malerials include: metal roof, stucco, stone veneer wall, gentle arches, wood trellises with posts, etc. The building will include high and Iow louvers for natural venlilation, which will minimize the days that air-conditioning would be desired. Ms. Gramley talked about the comfort station, and described the materials used for the building, which match the main facility. Louvers for natural ventilation, and skylights will also be used. The comfort station is located mid-way through the park. Ms. Chert Blather, Project Landscape Architect of KTU+A talked further about the park site, programming, and the location of the park. In addition, Ms. Blatner stated that there is an approximate 58-foot grade difference from the north side of lhe park IOtay Lakes Rd) to the south side of the park. The park is tiered to 4 different levels to accommodate the grade change. The main vehicular access is off of Otay Lakes Road, with two other entry nodes on the east side and west side. Ms. Blather talked about the circulation of the park and amenities, which include: Salt-Creek corridor (runs through park is a major feature); Shade Structures/picnic areas (located throughout the park); 3-bridges (pedestrian and vehicular access-across the creek); Active areas are at the north end of the park; 2 Basketball courts at lhe east end; 2 Tennis Courts (north C:/Documems and Settings~donnal\Loca[ Setting$1Temporary Internet Files/OLKD~Jan 16 03 rninutes dec Prepared: 1/17/03 Parks and Recreation Commission Minutes -January '16, 2003 3 side); Speed soccer; Informal Skate park; Multi-Purpose Recreation Field (lower level south of the recreation facility); Amphitheatre style seating to the east of multi-purpose field; 155 parking spaces, 8 for physically disabled; 72 on-street (Nodh Creekside Dr); 36 Oaknoll Ranch Rd. (237 total parking); Concrete Split rail fence runs dong the frontage of Otay Lakes Rd; Fencing through out the park; Swing Gate at entrance; Pedestrian Path through the park and center; Entry monument sign with arbor; Children's Play area; Various Trash enclosures; Lighting at all parking areas, recreation buildings, restroom facility, circulation areas, walkways, and ramps (150 watt); Wetland mitigation located at the south end (interpretive theme); Windmill representative of "rancho" theme; and Drinking fountains that are ADA and pet accessible Chair Perondi asked that Commissioners provide their questions on the park and recreation facility one at a time. Commissioner Strahl asked why the multi-purpose field was not lit. Mr. Krizan (Landscape Architect) responded that the response received from residents at the workshops was not to have the lighted fields. Commissioner Rude asked what was considered a passive park. Ms. Blatner responded that benches are placed throughout the park, salt creek, boardwalk, and trails on east and west sides of parks. Commissioner Weidner asked if the two restrooms attached to the recreation building were accessible when the recreation facility is closed. Ms. Gramley of Platt/Whitelaw responded that the restrooms are accessible, and locked separately. Mr. Krizan also responded that the restrooms in the facility would be open during park hours. Chair Perondi inquired about a controlled intersection at the entrance of the park. Mr. Krizan responded that yes, Otay Lakes Rd (entrance of the park) would have signal light. Commissioner Rios asked about the windmill size, and could that area be better utilized with a shade structure. The concern is that it could be used a climbing structure. Mr. Carlson responded that the windmill is not large, but is large enough to see from afar, which continues the theme. In addition, the team has looked at ways to not have this become climbing structure. Commissioner Salcido stated that he would like to see a small windmill placed on top of a shade picnic structure. Mr. Carlson responded that he thought this was a good idea. Commissioner Salcido asked about the lights at multi-sports fields and light spillage affecting surrounding homes. Is it cost effective to install underground wiring for future lighting, after planted trees (if any) could grow and shade the lighting spillage. Mr. Carlson stated that they responded to the need of the community. Commissioner Rude stated that she feels that the community wasn't well represented and wants to see the field lighted. Commissioner Ramos stated she likes the idea of placing a small windmill structure on top of shade struclure. Parks and Recreation Commission Minutes- January 16, 2003 4 Commissioner Weidner stated that if the multi-field is in a "valley", why would lights be a problem with spillage? Mr. Carlson responded that the lights are 6,5- 70 feet. Ms. Hofmockel IPrincipal Landscape ArchitectI responded that she sees that the commission has the same concerns that they had with lighting at Veteran's Park. Rather than going over the same concerns, the commission should recommend to staff to explore efforts for lighting, and develop a strategy that will accommodate issues with lighting (similar fo Veteran's Park). Commissioner Strahl would like to see the Skate area lit. Commissioner Weidner stated that she does not want to see the Skate area lit. MSC (Strahl/Weidner) (7-0-0-0) approve the Draft Master Plan for the 24-acre public community park site in the EastLake Trails subdivision as presented, and direct staff to include lights at the multi-purpose field; and include the requirement that lights are to be included (multi-purpose field) as part of the design element process. In addition, staff will need to review the parking issue and windmill as a safety issue. M$C Perondi/Salcido (7-0-0-0) to move item 4C Friendship Park Homeless Issue out order on the Agenda. 4c Friendship Park Homeless Issue - Police Agent Joe Cargel and Office Jeff Hobson talked about the homeless issue at Friendship Park. Agent Cargel stated that their department has been tracking homeless from this park and other parks. Officer Hobson stated that their department keeps statistics on homeless in the parks. They have noticed that this type of unfavorable activity has declined. Two ilems lhat could help alleviate this problem, is changing the Municipal Code to no alcohol and also implement a tot-lot in the park. Chair Perondi staled that he would like this item placed on the Agenda for February for further discussion. 2b Recommending a park name for the proposed public community park in EastLake Trails Commissioner Salcido - Rancho Chula Vista Chair Perondi- Salt Creek Park Commissioner Rude - Salt Creek Park Commissioner Weidner - SaltCreek Park M$C Rude/Weidner (7-0-0-0) to name the 24-acre public community park site in the EastLake Trails subdivision "Salt Creek Park" 2c Reconsider recommendation of park name for the 29-acre community Park in Rolling Hills Ranch from Montevalle Park to Creekside Park Mr. Krizan (Landscape Architect) slated that staff was just made aware that the HOA facility adjacent to the Salt Creek Community Park in EastLake is named Creekside. Discussion held on the name "Montevalle' and Rancho Janal. Commissioner Weidner - Monte Valle Commissioner Rios - Montevalle Commissioner Salcido - Rancho Janal Commissioner Strahl - either name is fine Commissioner Rude - would like to receive other suggestions RESOLUTION NO. 2003- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE MASTER PLAN FOR THE PROPOSED PUBLIC COMMUNITY PARK SITE IN THE EASTLAKE TRAILS SUBDIVISION "SALT CREEK PARK" WHEREAS, the City Council in January of 2002 approved a contract with the firm of KTU+A for Landscape Architectural Services for the 24-acre community park site in the EastLake Trails subdivision; and WHEREAS, staff recommends that the City Council approve the proposed park Master Plan for the 24-acre public community park site in the EastLake Trails subdivision and the name of "Salt Creek Park"; and WHEREAS, the park design concept meets the three objectives for the Park by maximizing the recreational use opportunities for community residents, creating a unique park identity that relates to the surrounding subdivision, and creating a park that provides a special use experience for park visitors; and WHEREAS, the Parks and Recreation Commission, at their regular meeting held January 16, 2003, voted unanimously to recommend approval of the park Master Plan for the 24-acre public community park site in the EastLake Trails subdivision with the following conditions: (1) the addition to the plan of night lighting at the multi-purpose field; 2) further consideration to eliminate the windmill from the plan and; 3) further consideration of alternatives for the adjacent on-street parking; and WHEREAS, the Environmental Review Coordinator has reviewed the proposed project, without lighting, for compliance with the California Environmental Quality Act (CEQA) and determined that the proposed project was adequately covered in the Envirommental Impact Report for EastLake Trails SPA Plan; thus, no further environmental review or documentation is necessary. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve the Master Plan for the proposed public community park site in the EastLake Trails subdivision "Salt Creek Park" (not including the lighting plan), attached hereto as Exhibit "A" and incorporated herein by reference as if set forth in full. BE IT FURTHER RESOLVED that staff is hereby directed to conduct further review of the Lighting Plan for Salt Creek Park and return to Council with the results of that review and possible amendment to the Master Plan after appropriate environmental review. Presentcd by Approved as to form by Andy Campbell John M. Kaheny Director of Building and Park Construction City Attorney J:\attomey\reso\Park Master Plan Salt Creek Palk COUNCIL AGENDA STATEMENT Item: ~ Meeting Date: 02/04/03 ITEM TITLE: Report: Existing and/~e Tennis Facilities and Programming 11~,1) SUBMITTED BY: Director of Recreatio~t~Sr~/ Direct°r ° f Building alxd~ark C°nsm~cti°n~)2~ ~- Ix (.~ Manager(O~ (4/Sths Vote: Yes No X_) REVIEWED BY: City ~d -- Council has received correspondence, dated January 21, 2003, from the City's former contract Tennis Professional, Frank Chaboudy, in which he expresses concerns about the current state of community sponsored tennis in Chula Vista and interest in the construction of a large, public, tournament class tennis facility in the City (letter attached). This report is in response to this letter and provides Council with information about existing and planned City tennis facilities and programs. RECOMMENDATION: That Council accepts the report. BOARDS/COMMISSIONS RECOMMENDATION: The Parks and Recreation Commission has not had the opportunity to address this subject. DISCUSSION: Current Tennis Facilities and Programs City of Chula Vista The City currently maintains 15 public tennis courts, 13 of which are lighted. These courts are situated throughout the City, with 11 of the 15 located east of 1-805, and are available free to the public for open play. Free, push-button access lights are available until 10:00 PM at all locations other than El Rancho Del Rey Neighborhood Park. Locations and number of courts are as follows: · E1 Rancho Del Rey Park 1131 Buena Vista Way 2 courts ,, Eucalyptus Park Fourth Avenue & C Street 4 courts · MacKenzie Creek Park 2275 MacKenzie Creek Rd. 2 courts · Marisol Park 916 Rancho Del Rey Parkway 2 courts · Sunbow Park 500 East Naples Street 3 courts · Terra Nova Park 450 Hidden Vista Drive 2 courts The Recreation Department has recently contracted with a tennis professional who is offering satellite tennis instruction at both MacKenzie Creek and Mat/sol Neighborhood Parks. The MacKenzie Creek program is geared to adults, who pay $40-$80 per month, with instruction occurring one night per week for one and one-half hours. This program Page 2, Item: {~ Meeting Date: 02/04/03 began in November as a result of interest expressed by residents from the neighboring community, and is currently serving 6-10 adults per month. The Marisol Park program, which just began in January, is for children ages 6-12, with participants, currently from Bonita Country Day School, paying $180 for eight weeks of instruction, one and one- half hours per week. The program is currently serving 4-6 children. The instructor is developing an interest list for consideration of expanded programming at these two parks. Sweetwater Union High School District The School District has 34 tennis courts at five high schools in the City, 16 of which are lighted, that are available to the public after school and on weekends, unless school tournaments are taking place. Eighteen of the courts are located in westem Chula Vista at Chula Vista, Hilltop, and Castle Park High Schools, eight of which are lighted. These courts are listed in the City's quarterly schedule of classes, programs, and events. Olympic Training Center The Olympic Training Center (OTC) sponsors an "Exercise the Dream" Program at its facility, currently in its eighth year. This program has involved over 68,000 children from the Chula Vista Elementary School District (CVESD) since its inception. A different group of 400 6th graders from the 39 CVESD schools visit the OTC one time each month for a basic introduction and instruction in a rotation of four sports, including, but not limited to, tennis, archery, lacrosse and track & field. The same instructor who is providing the satellite instruction through the Recreation Department is volunteering his time, along with others, with the tennis portion of the OTC program. This program yields a pool of youth participants for potential City tennis programs, as well as other sports. Southwestern College The College operates a Tennis Center with 10 courts. The College took over responsibility for the Tennis Center at the termination of the City's 30-year agreement with the College in 2002. Tennis programming has since increased in size, quality and diversity for both youth and adults. The Tennis Center currently offers the following instructional programs: · Tiny Tot Tennis Ages 4-5 $64/8 weeks · Junior Skill Development Program (Beginning, Intermediate & Advanced) Ages 6-14 $64/8 weeks · Adult Tennis Clinics Ages 18+ $64/8 weeks · Femando Mendez Tennis Academy (Beginning through Competition) Ages open $32-$96/month The City's Recreation Department currently is represented on the Advisory Board of the Southwestern College Tennis Center. We understand that the College is interested in having tournaments at the Tennis Center, which has accommodated tournaments in the past. Page 3, Item: (a Meeting Date: 02/04/03 Future Planned Tennis Facilities and Programs City of Chula Vista The Parks and Recreation Master Plan's, "Demand and Opinion of Needs Analysis" section identifies the future need for 29 additional tennis courts in east and west Chula Vista and proposes that these courts be spread over many different park sites. The Master Plan proposes that all 29 courts be lighted unless budget or environmental constraints dictate otherwise. The Master Plan's "Parks Facility Distribution" section includes information regarding goals for placement of tennis courts and other recreation facilities in future community and neighborhood parks. The Parks and Recreation Master Plan's "Community Park Recreation Facility Assignment 2000-2020" indicates a total of 15 future tennis courts to be allocated in community parks as £ollows: · Bayf~ont 5 courts · Rolling Hills Ranch 2 courts* · Eastlakc Trails 2 courts · San Miguel Ranch 2 courts · Ota¥ Ranch (70 acre park) 4 courts * Modified f~om 3 to 2 courts in specific master plan for this park The Parks and Recreation Master Plan's "Neighborhood Park Recreation Facility Assignment 2000-2020" proposes an additional 17 tennis courts to be allocated throughout nine future neighborhood parks, for a proposed total of 32 additional future tennis courts (Santa Cora Neighborhood Park's proposed two courts have been reduced to one due to budgetary constraints). In addition to the community and neighborhood parks mentioned above, the Parks Master Plan also references the potential for locating an undetermined number of tennis courts in three areas of the Otay Valley Regional Park. While the Parks Master Plan provides a goal for siting of tennis courts and other recreation amenities as mentioned above, individual master plans for each park also may include modifications based upon a variety of factors, including topography, community input and budget and environmental considerations. With this in mind, the combined number of proposed tennis courts above (32) actually exceeds projected demand, and it is anticipated that modifications specific to the individual park master plans will result in a final number of tennis courts actually constructed that more approximates the demand total of 29. With regard to future tennis programming, the Department is in the process of developing a needs assessment survey that will be distributed in mid to late February throughout the community through a variety of means, including, but not limited to, homeowner association newsletters, elementary and middle schools and direct distribution to the over / Page 4, Item: ~ Meeting Date: 02/04/03 400 CVESD students participating in the monthly "Exemise the Dream" instructional program at the OTC. Based upon anticipated results of the needs assessment survey, expansion of the satellite tennis program will likely be proposed for Summer 2003. It is planned that this satellite programming will include instruction for both youth and adults at a variety of locations throughout the City, with the intent to cover several geographic regions as long as interest is exhibited through the needs assessment survey. Fees will be charged on a cost-recovery basis. Tournament Facility The Parks and Recreation Master Plan does not anticipate a tournament class facility at this time. Because of the acreage involved, a tennis facility could only be sited in a community park, as 8-10 tennis courts are needed for such a facility. None of the parks with tennis courts proposed in the Master Plan have such a number. Any reallocation of tennis courts in order to accommodate a large public tennis center with accompanying space for support facilities such as landscaping, parking, restroom and lounge area would result in the loss of other proposed recreational amenities for that park site. It should als() be noted that while the construction of a large public tennis facility would certainly provide enhanced programming opportunities for the City, it also could potentially negatively affect the programming and viability of the Southwestern College Tennis Center, which is being planned by the College for tournament play. It should be further noted that a 1999 report entitled "CA 2020, The Future of Recreation in California", published by the School of Policy, Planning and Development of the University of Southern California, and endorsed by the California Park and Recreation Society (CPRS), tracked participation in a variety of sports and activities between 1986 and 1996 and states that "tennis is declining in popularity among all groups." The report goes on to recommend that public organizations consider re-adaptive use of existing tennis facilities to alternate use. These findings and recommendations should be seriously considered in any discussion of developing a major tennis facility at this time. FISCAL IMPACT: The cost to develop a major tournament class tennis facility has not been calculated. Attachment: January 21, 2003 Letter Copies provided to: Mayor & City Council City Manager - Frank would like to make a presentation as well. City Clerk - Please catendar for Jan 28th Council meeting. January 21, 2003 Mary galas, Councilwoman dAN 2 I ~ City of Chula Vista ; Chula Vista, California COUN¢~LOFF~¢ES CHULA VISTA. CA ]}ear ~A~ ~ · Ai~ 1~ a follo~-~ o~ ou~ ~o~e co~e~a~io~ in the ninth largest city in California which is growing ever larger. We need a public tennis center of 8 to lO tournament class lighted courts located in an area which would allow for additional courts as our city continues its anticipated growth. This complex should be l~dscaped to include parking, restrooms and a lo~ge area. I desire to present.his matte~ as a co~cil age~da ~em on~ 2003 at which time I would ~ revmew 5ne pres'eat sta~e ~f te~iS in o~ city as well as proposing the above an~ recommending items for staff study. ,~ Sincerely, Frao_k Chaboudy Item Meeting Date 2/04/03 COUNCIL AGENDA STATEMENT ITEM TITLE: Resolution Acting in its capacity as the legislative body of Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six), Authorizing and providing for the issuance of special tax bonds of the district, 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. SUBMITTED BY: Director of Engineering~ Director of Finance REVIEWED BY: City Manager ~"t~ ~)Y (4/Sths Vote: Yes No X On August 13, 2002, the City Council held the public hearing to take public testimony on the formation of Community Facilities District No. 2001-2(McMillin Otay Ranch Village Six)(CFD 2001-2) and to consider the authorization to levy special taxes and to incur a bonded indebtedness secured by such special taxes. On August 27, 2002 City Council heard the election results which declare that 100% of the votes cast, were in favor of forming the district and for the authorization to issue bonds, also the first reading of the Ordinance to authorize the Levy ora Special Tax was read. In tonight's actions, Council will consider the authorization of the issuance of special tax bonds of CFD No. 2001-2 in the amount of $13,000,000 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 authorizing the issuance of Bonds for CFD 2001-2, approving the form of the Bond Indenture, Bond Pumhase Contract and other documents for Community Facilities District No. 2001-2 and authorizing certain actions in connection therewith. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: Background On August 13, 2002, a public hearing was held which formed and established Community Facilities District No. 2001-2 (CFD No. 2001-2), and on August 27, 2002 City Council heard the election results which declared that 100% of the votes cast, were in favor. On October 1, 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 Page 2, Item Meeting Date 2/04/03 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. 2001-2 is primarily an acquisition district wherein the developer constructs the public improvements and the City acquires them upon completion with funds derived solely from the sale of bonds. On October 22, 2002 Council approved the form of the Acquisition/Finance Agreement with McMillin Otay Ranch, LLC that establishes the procedure for acquiring the improvements from the developer, which will require each individual component of the projects to be 100% completed before acquisition and reimbursement. Due to CFD No.2001-2's estimated bond construction proceeds to be $7.6 million and the cost estimate of facilities eligible for financing by CFD No. 2001-2 to be approximately $6.1 million the City gave McMillin Otay Ranch, LLC the option to finance Public Facility Development Impact Program(PFDIF) Facilities to utilize all of their bonding capacity. On January 14, 2003 a public hearing was held making certain determinations and authorizing the submittal of the proposed modifications to the facilities authorized to be financed by such Community Facilities district to the qualified electors thereof. On January 28, 2003 City Council heard the election results which declared that 100% of the votes cast, were in favor of the addition of the PFDIF facilities and approved the first amendment to the Acquisition/Finance Agreement which includes the financing of these PFDIF facilities. District Boundaries Exhibit 1 presents the boundaries of the proposed District that include all parcels located within Village Six. At buildout, Village Six will contain a total of approximately 482 Single Family Residences currently owned by McMillin Otay Ranch, LLC or an affiliate, and 212 Multifamily Residences currently owned by Cornerstone. There is one large parcel in Village Six that owned by the Roman Catholic Diocese of San Diego (approximately 53.0 acres) for a Parish Center Church and a private High School which will be exempt from the Special Tax. The Improvements The developer is proposing the financing of backbone streets and associated improvements (i.e., grading, sewer, streets, landscaping, & utilities), eligible Transportation Development Impact Fee (TD1F) and Non- TDIF improvements, as well as f~acilities to be financed by the PFDIF fee and Pedestrian Bridge Fee. Exhibit 2 shows an amended list of facilities with a total cost estimate of$16 million, it is estimated that approximately $9.2 million of bonds may be supported by this District, raising an estimated $7.6 million for project proceeds. A final priority list and cost estimate of the improvements eligible for District financing have been described within the Approved Amended Acquisition/Financing Agreement (Exhibit 3). Ultimately, as subdivision exactions, the developer will finance improvements that this District cannot finance. The proposed District lies within portions of various Development Impact Fee (DIF) benefit areas (Poggi Canyon Sewer, Trm~sportation, and the proposed Pedestrian Bridge DIFs) which Page 3, Item r~ Meeting Date 2/04/03 places a cap on the District's ability to finance these improvements. Staff will work with the developer to achieve a balance between DIF and non-DIF improvements within the District. Special Tax Report A copy of the Special Tax Report Community Facilities District No. 2001-2 for McMillin Otay Ranch Village Six 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 Apportioranent' (RMA) (previously approved by Council on May 7, 2002), that establishes the procedures for levying the special taxes in CFD No. 2001-2. City Financial Criteria At the time the special tax is levied, developed parcels are those parcels for which a building permit has been issued. This special 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 No. 2001-2 on residential parcels. It should be noted that a final test will 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. As mentioned above the final 2% test has previously been applied at the time of the close of escrow of the sale of a lot and house to the first retail buyer. By applying the test at this time, the actual sales price of the house can be incorporated into the test. 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: 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." Brace W. Hull & Associates conducted an appraisal (dated December 16, 2002) on the property. Exhibit 4 illustrates a bond sale of $9.2 million which will result in an overall lien ratio oft 1:1. All of the planning areas have a lien ratio of greater than 4:1. Page 4, Item Meeting Date 2/04/03 Resolution There are is one resolution on today's agenda that, if adopted, will accomplish the following: (A) 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 $13,000,000. 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: · The Preliminary Official Statement (Exhibit 5): describing the Community Facilities District and type of bonds, including terms and conditions thereof, for the bondholders. · The Bond Indenture {Exhibit 6): 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 7): The Bond Purchase Contract authorizes the sale of bonds to the designated Underwriter (Stone & Youngberg LLC). The underwriter's discount for this negotiated sale is not to exceed 1.75% of the total bond amount that translates into a fee not to exceed $200,000. · Continuing Disclosure Agreement: 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. 2001-2 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 additions or changes in the documents are permitted which would result in the annual interest rate on the bonds to exceed 6.75 %. Future Actions Adoptions of tonight's Resolutions will authorize the issuance of bonds, and approve the form of related documents. The issuance of the bonds is anticipated in March 2003. The acquisition of selected public improvements will be audited only after 100% of the project is deemed complete. 5, Item ~ Page Meeting Date 2/04/03 FISCAL IMPACT: The City's General Fund receives 1% of 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 recovery for staff time involved in district formation and administration activities. Staffanticipates that most of the CFD No. 2001-2 administration will be contracted out. Attachments: Exhibit 1: Recorded Boundary Map for CFD No. 2001-2 Exhibit 2: Amended List of Facilities Exhibit 3: First Amendment to the Acquisition/Financing Agreement for CFD No. 2001-2 Exhibit 4: Estimated Value to Lien Ratios Based on Appraisal Exhibit 5: Preliminary Official Statement for CFD No. 2001-2 Exhibit 6: Bond Indenture for CFD No. 2001-2 Exhibit 7: Bond Purchase Contract for CFD No. 2001-2 J:\Engineer~AGENDA\CAS 2-04-03.doc EXHIBIT 2 MCMILLIN'S VILLAGE SIX - CFD No. 2001-2 IMPROVEMENT DESCRIPTION AND ESTIMATED COSTS Improvement Improvement Description Cost Number Estimate 1 Traffic Enhancement Improvements $1,000,000 2 La Media South (East Palomar to Olympic Parkway) 1,989,596 3 La Media South Landscaping 509,754 4 Olympic Parkway 3,311,226 5 Olympic Parkway Landscaping 472,374 6 Birch Parkway onsite (Magdalena to SR- 125) 1,619,051 7 Birch Parkway Landscaping 269,200 8 Magdalena St. (Phase 1) 398,738 9 Magdalena St. (Phase 1 ) Landscaping 61,600 I0 Magdalena St. (Phase 2) 332,835 11 Magdalena St. (Phase 2) Landscaping 53,680 12 Magdalena St. (Phase 3) 187,620 13 La Media Road Onsite Landscaping (between 149,350 Olympic Parkway and Santa Venetia) 14 Santa Venetia Street Onsite Landscaping 269,200 15 La Media Offsite (between Santa Venetia and Birch 869,578 Parkway) and Landscaping 17 Birch Parkway Offsite (between La Media and 1,086,731 Magdalena) 18 Olympic Parkway Channel 207,139 Additional facilities to be financed fi.om the proceeds 415,000 of Pedestrian Bridge Development Impact Fees payable as a condition of approval of the development of property within CFD 19 Additional facilities to be financed from the proceeds 2,700,000 of Public Facilities Development Impact Fees payable as a condition of approval of the development of property within CFD Totals $15,902,672 Sources: Developer, McGitl Martin Self, Inc. FIRST AMENDMENT TO ACQUISITION/FINANCING AGREEMENT THIS FIRST AMENDMENT TO ACQUISITION/F]IqANCING AGREEMENT, dated as of January 1, 2002 (the "First Amendment"), is made and entered into among 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"), COMMUNITY FACILITiES DISTRICT NO. 2001- 2 (MCMILLIN - OTAY RANCH - VILLAGE SIX), a community facilities district formed and existing pursuant to the laws of the State of California (the "CFD No. 2001-2") and MCMILLIN OTAY RANCH, LLC, a Delaware limited liability company (the "Developer") to amend that certain Acquisition/Financing Agreement, dated as of October 22, 2003 (the "Agreement"), among the City, CFD No. 2001-2 and the Developer. WHEREAS, the City Council of the City (the "City Council") has previously undertaken proceedings to form Community Facilities District No 2001-2 (McMillin - Otay Ranch - Portions of Village Six) (the "District") and to authorize the levy of special taxes and the issuance by the District of bonds pursuant to the provisions of the Mello- Roos Community Facilities Act of 1982, as amended (Government Code Section 53311 and following) (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") to linance the acquisition of certain authorized facilities; and WHEREAS, the City, the District and the Developer entered the Agreement to provide the terms and conditions pursuant to which the District will finance the acquisition of thc authorized facilities which are identified in thc Agreement as the Improvements and arc described in Exhibit A to the Agreement; and WHEREAS, subsequent to the formation of the District and the entry by the parties into the Agreement, the Developer requested that the City Council, acting as the legislative body of the District, initiate proceedings to consider modifying the Improvements authorized to be financed by the District to add those public facilities authorized to be financed from the proceeds of the City of Chula Vista Public Facilities Development Impact Fee (the "PFDIF Facilities"); and WHEREAS, the City Council did initiate such proceedings and did approve the modification of the Improvements authorized to be financed by thc District to add the PFDIF Facilities subject to the approval by the qualified electors of the District; and WHEREAS, the qualified electors of thc District did, at a special election held on January 21, 2003, vote to approve thc modification of the Improvements to add the PFDIF Facilities; and 1 WHEREAS, the City, the District and the Developer now desire to enter into this First Amendment in order to amend the Agreement to add the PFDIF Facilities to the Improvements and to make the acquisition of the PFDIF Facilities subject to the terms and conditions of the Agreement. NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows: SECTION 1. Recitals. The above recitals are all true and correct. SECTION 2. Amendment of Exhibit A to the Agreement. Exhibit A to the Agreement is hereby amended in its entirety to read as set forth in Attachment I hereto which is incorporated herein by this reference. SECTION 3. Amendment of Section 8(h)(i). Section 8(h)(i) of the Agreement is hereby amended in its entirety to read as follows: "(i) Priority of Payment of Cost of Construction or Purchase Price 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 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 from the proceeds of the Bonds. As a result the City and Developer agree that the payment of the cost of construction or the Purchase Price, as applicable, for Improvements shall be prioritized as follows: Priority 1: Improvement No. 1 ("Traffic Enhancement Improvements") in Exhibit A. Priority 2: Improvement Nos. 2-19 in Exhibit A. 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." SECTION 4. Effect of this First Amendment on the Other Terms and Provisions of the Acquisition Agreement. All terms and provisions of the Acquisition Agreement shall remain in full force and legal effect except as expressly modified by the provisions of this First Amendment. 2 SECTION 5. General Provisions. (a) The Acquisition Agreement as amended by this First Amendment and the agreements expressly referred to herein contains all of the agreements of the parties hereto with respect to the matters contained herein and all other prior and contemporaneous agreements, representations, negotiations and understandings of the parties hereto, oral or written, are hereby superseded and merged herein. No provision of this First Amendment may be modified, waived, amended or added to except by a writing signed by the party against which the enforcement of such modification, waiver, amendment or addition is or may be sought. (b) This First Amendment has been reviewed by legal counsel for City, the District and Developer and shall be deemed for all purposes to have been jointly drafted by City, the District and Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this First Amendment. The language in all parts of this First Amendment, in all cases, shall be construed as a 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 First Amendment are for convenience only and shall not be considered or referred to in resolving questions of construction. (c) Except as expressly provided otherwise in this First Amendment, all provisions of Sections 22 through 35 of the Acquisition Agreement shall apply to this First Amendment. [Remainder of this page intentionally left blank] 1N WITNESS WHEREOF the parties hereto have executed this First Amendment on the date above written. "CITY" CITY OF CHULA VISTA MAYOR CITY OF CHULA VISTA 3 -7-10 ATTEST: APPROVED AS TO FORM: CITY CLERK JOHN KAHENY CITY OF CHULA VISTA CITY ATTORNEY CITY OF CHULA VISTA "DEVELOPER" MCMILL1N OTAY RANCH, LLC, a Delaware limited liability company By: McMillin Companies, LLC, a Delaware limited liability company Its: Manager By: Its: By: Its: 4 ATTACHMENT 1 ACQUISITION AND FINANCING AGREEMENT FOR CFD 2001-2 (MCMILLIN - OT^Y R~NCH - VILL^GE SIX) IMPROVEMENT DESCRIPTION AND ESTIMATED COSTS Improvement Improvement Description~ Cost Number Estimate2 1 Traffic Enhancement Improvements $1,000,0003 2 La Media South (East Palomar to Olympic Parkway) 1,989,596 3 La Media South Landscaping 509,754 4 Olympic Parkway 3,311,226 5 Olympic Parkrway Landscaping 472,374 6 Bimh Parkway onsite (Magdalena to SR-125) 1,619,051 7 Birch Parkway Landscaping 269,200 8 Magdalena St. (Phase 1) 398,738 9 Magdalena St. (Phase 1) Landscaping 61,600 10 Magdalena St. (Phase 2) 332,835 11 Magdalena St. (Phase 2) Landscaping 53,680 12 Magdalena St. (Phase 3) 187,620 13 Additional facilities to be financed from the proceeds of Pedestrian 415,000 Bridge Development Impact Fees payable as a condition of approval of the development of property within CFD 14 La Media Road Onsite Landscaping (between Olympic Parkway 149,350 and Santa Venetia) 15 Santa Venetia Street Onsite Landscaping 269,200 16 La Media Offsite (between Santa Venetia and Birch Parkway) and 869,578 Landscaping 17 Birch Parkway Offsite (between La Media and Magdalena) 1,086,731 18 Olympic Parkway Channel 207,139 19 Facilities to be financed from the proceeds of the Public Facilities Development Impact Fee payable as a condition of approval of the development of property within the CFD 2,700,000 Totals $15,902,672 Notes: Soumes: Developer, McGill Martin Self, Inc. 1/ The description of the Improvements set forth in this Exhibit "A" is preliminary and general. The final plans and specifications may show substitutes or modifications to the proposed Improvements and proposed Improvements may be added or deleted with the consent of Developer and the City Engineer. Components of all roadway A-1 improvements eligible for funding shall include (i) grading, including site preparation and mobilization, (ii) wet and dry utilities within the right-of-way, (iii) storm drain facilities, (iv) paving, (v) curb, gutter, sidewalk, medians, (vi) traffic signals, (vii) lighting, (viii) landscaping and (ix) all other appurtenant improvements. 2/ Cost estimates are preliminary and may be modified from time to time with the consent of Developer and the City Engineer. 3/ Cost estimate for the Traffic Enhancement Improvements constitutes the estimated amount to be reserved out of the proceeds of the Bonds equivalent to the Developer's Fair Share of the cost of construction of the Telegraph Canyon Roadway Improvements as established pursuant to the provisions of the Telegraph Canyon Traffic Enhancement Agreement. Such amount shall be subject to revision pursuant to the provisions hereof, the Telegraph Canyon Traffic Enhancement Agreement and any Future Traffic Enhancement Agreement. 7-//-/ ~,~!Bt? .L) Stradling Yocca Carlson & Rauth Draft of 1/24/03 PRELIMINARY OFFICIAL STATEMENT DATED AS OF JANUARY __, 2003 · ~ NEW ISSUE - BOOK-ENTRY-ONLY NO RATING .=~ Itt the opinion of Best Best & Krteger LLP, .... Bond Counsel, based on a a a]ys s of ex st ng laws, re latlons, rulm. gs and court dec. stons, and assuming, amon~ other matter& compl ance with certain covenanls interest on the Bonds ts excIude~tr~m ross ncome or ederal ttt¢om =~ tax ur o ~ ' ' '~ · g · fi fi e >,~ ~ p {e~ und?;~ Sec, t~n 103, of the Internql Revenue Code of 1~86 arid ts exempt from State of Cal{forma personal mcome tc~ves. In the cTurtner optnton oj nona c ounset, mterest on tt~e Bonas is not a ~pecific preference item for purposes of federal individual or corporate alternate ~ ~ minimum, taxes. ~ although Bond ..... Counsel observes that such interest is included in adjusted current earning .s in calculating fiederal cor'porate o alternattve mtntmum taxable income. Bond Counsel expresses no optmon regardtng any other federal or state tncome tax conseq ~ences relating ~ to the ownershtp or dtsposttton of, or the accrual or recetpt of interest on, the Bonds, See "T~XMATTERS' herein. CITY OF CHULA VISTA .... COMMUNITY FACILITIES DISTRICT NO. 2001-2 ~ (McMILLIN - OTAY RANCH - -~ VILLAGE SIX) E 2003 SPECIAL TAX BONDS ~ Dated: Date of Delivery Due: September 1, as shown on the inside page The City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) 2003 Special Tax Bonds := (the Bonds ) are being issued and delivered to finance various public improvements needed to develop property located within District ~ No. 2001-,~ (McMillin - Otay Ranch - -~ Village Six) (the "District"). The District has been formed by and is located in the City of Chula Vista zz (the "City ), County of San Diego, California. '-~ 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 of California), and pursuant to a Bond Indenture (the "Indenture") dated as of March 1, 2003. by an~ :~ between the District and U.S. Banka National Association, as fiscal agent (the "Fiscal Agent"). The Bonds are special obligations of the District ~and are payable solely from revenues derived from certmn annual Specml Taxes (as defined herren) to be ev ed on the taxable land w~tfun the ~District and from certain other funds p edged under the ndenture, all as further described herein The S¢ecial Taxes are to be levied accordin to ~=§ ..... . _ . . . . ,, g ._ the rate and method of apportionment approved by the City Council &the C~ty and the quahfied electors within the D~stnct. See SOURCES ~ OF PAYMENT FOR THE BONDS -- Rate and Method of Apportionment." Thc City Council &the City is the legislative body of the District. ~ The Bonds are tssuable ~n fully registered form and when issued will be registered in the name of Cede & Co as nominee of The E Depos'tory Trust Company, New York, New York ("DTC") Individual purchases may be made in principal amounts o~ $5 000 and inteeral 'E multiples thereof and wdl be In book-entry form only. Purchasers of Bonds wdl not receive ceri~ficates representing their beneficial ownership ._ of the Bonds but wdl receive credit balances on the books of their respecttve normnees The Bonds wdl not be transferable or exchangeable ~except for transfer to another nominee of DTC or as otherwise described here~n, nteres on the Bonds will be a able on Se tember 1 2003 and ...... pY . P , ~= semmnnually thereafter on each March I and September 1. Principal of and Interest on the Bonds wdl be oald bv the F~scal Aeent to DTC for ~ subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficia'l owners of the BonOds. See "THE '~ BONDS - Description of the Bonds" herein. The Bonds are subject to optional redemption, extraordinary mandatory redemption and mandatory sinking fund redemption prior to maturity as set forth here~n. See THE BONDS - Redemption &Bonds hereto. ~CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT A QU LITY OF'THE BONDS. This cover page contains certain information for general reference only. It is not intended to be a summary 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 decision. MATURITY SCHEDULE (See Inside Cover Page) The Bonds are offered when, as and f ssued and accepted by the Underwriter, subject to approval as to their legality by Best Best & Kneger LLP, Bond Counsel, and subject to certain other condamns. Certmn legal matters wdl be passed on for the C~ty and the D str ct by the ...... ~o Cay Attorney and for the Undenvr~ter by Stradhng Yocca Car son & Rauth a Profess ona Corporatmn, Newport Beach, Ca lorn a, as counse to the Underwriter. It ~s antar~pated that the Bonds m book-entry form wall be available for delivery to DTC in New York, New York, on or '~.aboutMarch ,2003. Stone & Youngberg LLC Dated: March __, 2003 Prehmmary, subjec to change, DOCSOC\O32761v5~2245.0140 -~ ~ 15 MATURITY SCHEDULE (Base CUSIP: )* Maturity Maturity Date Principal Interest Date Principal Interest (September 1) Amount Rate Yield CUSIP' (September 1) Amount Rate Yield CUSIP' $ % Term Bonds due September 1, 20__ Price: __% ~ CUSIP: __ $ % Term Bonds due September 1, 2033 Price: __% - CUSIP: __ Copy~qght 2002, Arne~can Bankers Association. CUSIP data herein is provided by Standard & Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. DOCSOC\932761 vSX22245,0140 CITY OF CHULA VISTA, CALIFORNIA CITY COUNCIL Steve C. Padilla, Mayor Jerry Rindone, Mayor Pro Tem John C. McCann, Councilmember Patty Davis, Councilmember Mary Salas, Councilmember CITY STAFF David D. Rowlands, Jr., City Manager Sid Morris, Assistant City Manager George Krempl, Assistant City Manager Robert Powell, Assistant City Manager/Director of Finance Susan Bigelow, City Clerk John Kaheny, City Attorney Clifford Swanson, Director of Engineering BOND COUNSEL Best Best & Krieger LLP San Diego, California FINANCIAL ADVISOR TO THE. CITY Fieldman Rolapp & Associates h'vine, California SPECIAL TAX CONSULTANT REAL ESTATE APPRAISER McGill Martin Self, [nc. Brace W. Hull & Associates, [nc. Chula Vista, California Ventura, California MARKET ABSORPTION CONSULTANT FISCAL AGENT The Meyers Group U.S. Bank-~ National Association Solana Beach, California Los Angeles, California DOCSOC\932761 v5~22245,0140 7 /7 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 City, 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 City, 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 fact. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with a nationally recognized municipal securities depository. 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 or the City. 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, under any circumstances, create any implication that there has been no change in the affairs of the District, the City or any other parties described herein since the date hereof. All summaries 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. Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget" 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 IN 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 STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKiNG STATEMENT SET FORTH IN THIS OFFICIAL STATEMENT. DOCSOC\932761 v5~22245.0140 IN CONNECTION WITH THE OFFERING OF THE 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 IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. DOCSOC\932761v5~22245.0140 7 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 ......................................................................................................................................... 6 Authority for Issuance ...................................................................................................................... 6 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 .................................................................................................................... 10 Effect o f Redemption ..................................................................................................................... 10 Transfer and Exchange of Bonds ................................................................................................... 11 Debt Service Schedule for the Bonds ............................................................................................ 12 SOURCES OF PAYMENT FOR THE BONDS ................................................................................. 12 Limited Obligations ....................................................................................................................... 12 Special Taxes ................................................................................................................................. 13 Reserve Fund ................................................................................................................................. 17 Issuance of Parity Bonds ................................................................................................................ 17 THE COMMUNITY FACILITIES DISTRICT ................................................................................... 17 General Description of the District ............................................................................................... 17 Description of Authorized Facilities .............................................................................................. 18 Status of Public Improvements ...................................................................................................... 20 Principal Taxpayers ....................................................................................................................... 20 Estimated Direct and Overlapping Indebtedness ........................................................................... 20 Expected Tax Burden ..................................................................................................................... 23 Estimated Value-to-Lien Ratios ..................................................................................................... 24 Permitted Land Use ........................................................................................................................ 27 THE DEVELOPMENT AND PROPERTY OWNERSHIP ................................................................ 27 General Description and Location of the District .......................................................................... 28 The Developer ................................................................................................................................ 28 Development Plan .......................................................................................................................... 29 Merchant Builders .......................................................................................................................... 30 Financing Plan ............................................................................................................................... 31 Status of Entitlement Approvals .................................................................................................... 33 Environmental Constraints ............................................................................................................. 33 Infrastructure Requirements and Construction Status ................................................................... 33 DOCSOC\932761 v5L22245.0140 -2o TABLE OF CONTENTS Page Potential Limitations on Development .......................................................................................... 34 Appraisal ........................................................................................................................................ 36 Market Absorption Study ............................................................................................................ :.. 37 SPECIAL RISK FACTORS ................................................................................................................. 37 Concentration of Ownership .......................................................................................................... 37 Limited Obligations ....................................................................................................................... 38 Insufficiency of Special Taxes ....................................................................................................... 38 Tax Delinquencies ......................................................................................................................... 38 Failure to Develop Properties ........................................................................................................ 39 Future Land Use Regulations and Growth Control Initiatives ...................................................... 40 Water Availability .......................................................................................................................... 41 Endangered Species ....................................................................................................................... 41 Natural Disasters ............................................................................................................................ 41 Hazardous Substances .................................................................................................................... 41 Parity Taxes, Special Assessments and Land Development Costs ................................................ 42 Disclosures to Future Purchasers ................................................................................................... 43 Non-Cash Payments of Special Taxes ........................................................................................... 43 Payment of the Special Tax is not a Personal Obligation of the Owners ...................................... 43 Land Values ................................................................................................................................... 44 Terrorism ........................................................................................................................................ 44 FDIC/Federal Government Interests in Properties ......................................................................... 45 Bankruptcy and Foreclosure .......................................................................................................... 45 No Acceleration Provision ............................................................................................................. 47 Loss of Tax Exemption .................................................................................................................. 47 Limitations on Remedies ............................................................................................................... 47 Limited Secondary Market ............................................................................................................ 47 Proposition 218 .............................................................................................................................. 47 Ballot Initiatives ............................................................................................................................. 48 CONTINUING DISCLOSURE ........................................................................................................... 49 TAX MATTERS .................................................................................................................................. 50 LEGAL MATTERS ............................................................................................................................. 50 LITIGATION ....................................................................................................................................... 51 NO RATING ........................................................................................................................................ 51 UNDERWRITING ............................................................................................................................... 51 FINANCIAL INTERESTS .................................................................................................................. 51 PENDING LEGISLATION ................................................................................................................. 52 ADDITIONAL INFORMATION ........................................................................................................ 52 -ii- DOCSOC\932761 v5~22245.0140 V-2d TABLE OF CONTENTS Page APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ............. A-1 APPENDIX B SUMMARY OF MARKET ABSORPTION STUDY ........................................ APPENDIX C APPRAISAL REPORT ...................................................................................... C-1 APPENDIX D iNFORMATION REGARDiNG THE CITY OF CHULA 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 SYSTEM ........................................................ I-1 -iii- DOCSOC\932761 v5~22245,0140 [DISTRICT LOCATION MAP] DOCSOC\932761 v5~22245.0140 [AERIAL PHOTO] DOCSOC\932761 v5~22245.0140 -7-2-¥ CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMILLIN - OTAY RANCH - ~- VILLAGE SIX) 2003 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 of the entire Official Statement. All capitalized terms used in this Official Statement and not defined shall have the meaning set forth in Appendix E -- "SUMMARY OF INDENTURE" 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. 2001-2 (McMillin - Otay Ranch - -~ Village Six) 2003 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 the City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - a Village Six) (the "District"), to fund the Reserve Fund securing the Bonds, to pay costs of issuance of the Bonds and to capitalize interest on the Bonds through September 1, 2003. The Bonds are authorized to be issued pursuant to the Act (as defined herein) and a Bond Indenture (the "Indenture") dated as of March 1, 2003, by and between the District and U.S. Bank-~ National Association (the "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, the Acquisition 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 Community 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 district 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 the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a Prehmtnary, subject o change. 1 DOCSOC\932761 v5~.2245.0140 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 for the purpose of financing an authorized list of facilities. 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 August 20, 2002, 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 $13,000,000 to be secured by the levy of Special Taxes (defined below) on taxable property within the District. On that same date, the landowners within the District approved the rote and method of apportionment of the Special Taxes on land within the District (the "Special 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. On January 21, 2003, a second election was held for the purpose of expanding the list of authorized facilities to be financed by the District. The facilities authorized to be financed by the District are referenced to herein as the "Facilities." See "THE COMMUNITY FACILITIES DISTRICT -- Description of Authorized Facilities." Description and Development. The District encompasses approximately 215 gross acres. The District is located approximately 2½ miles east of Interstate 805 and south of Telegraph Canyon Road at the southeast comer of La Media Road and Olympic Parkway. The District is located in the newly developing eastern portion of the City and is bounded to the north by the previous developed villages of Lomas Verdes and by The Otay Ranch to the east and west. Undeveloped land comprises the area south of the District. The land use entitlements for the District permit development in sub-areas known as "planning areas." The District has been divided into five residential planning areas. Based on current land use approvals and projections, the land within the residential planning areas is expected to be developed into 482 ~lg[eJ~amil~ detached -~ units and 212 ~ attached -~ units. As planned, the District does not contain any commercial planning areas. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Potential Limitations on Development." The grading within the District is substantially complete, and both the backbone infrastructure and the intract infrastructure is underway to a point where the landowners expect to pull initial building permits beginning in March and April, 2003. For a more detailed description of development activity within the District, see "THE COMMUNITY FACILITIES DISTRICT Status of Public Improvements." Developer. The master developer of the property in the District is McMillin Otay Ranch, LLC, a Delaware limited liability company (the "Developer"). The two members of the Developer are McMillin Companies, LLC and Merced Partners, L.P. For certain information concerning the Developer, see "THE DEVELOPMENT AND PROPERTY OWNERSHIP The Developer." The Developer purchased the land within the District in September 1997. In October, 2002, the Developer completed the sale of one planning area, consisting of approximately 12 acres planned for 212 single__filmi~ attached units, to Cornerstone Communities LLC. In November and December, 2002, the Developer sold most of the remaining residential planning areas to homebuildiug entities related to the Developer (the "McMillin Entities"). One of the McMillin Entities has an option to purchase the remaining 76 lots in planning area R-3 owned by the 2 DOCSOC\932761 v5~22245.0140 Developer. "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Development Plan" and "-- Merchant Builders." Appraisal. Brace W. Hull & Associates, Inc. (the "Appraiser") has conducted an appraisal (the "Appraisal") of land within the District and has concluded, based upon the assumptions and limiting conditions contained in the Appraisal that as of December 16, 2002, the aggregate value of such land was $65,260,000. The Meyers Group (the "Market Absorption Consultant") prepared a Market Analysis and Absorption Projection report dated September, 2002 (the "Market Absorption Study") for the purpose of developing a build-out projection for the 482 -~ ' ' units and 212 ~lgle_fami~ attached -~ units planned in the District. The Market Absorption Study concludes that the residential units within the District should be built-out in the 2003 to 2005 period assuming continued development with no stops due to unanticipated market or business factors. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Appraisal" and "-- Market Absorption Study," Appendix B -- "SUMMARY OF MARKET ABSORPTION STUDY" and Appendix C -- "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 the District pursuant to the Act and in accordance with the Rate and Method. See "SOURCES OF PAYMENT FOR THE BONDS Special Taxes" and Appendix A -- RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Under the Indenture, the District has pledged to repay the Bonds from the Special Tax Revenues and amounts on deposit in the funds and accounts established under the Indenture other than the Acquisition Fund, 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 under common ownership 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 the District 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 Special Taxes by the current or future landowners within the District. See "SPECIAL RISK 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 3 DOCSOC\932761 v5~22245.0140 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 Appendix I -- "DTC AND THE BOOK ENTRY SYSTEM." Principal of, premium, if any, and interest on the Bonds is payable by the Fiscal Agent to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of 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 am 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 existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of federal individual or corporate alternate minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings in calculating federal corporate altemafive 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~- National Association will act as Fiscal Agent under the Indenture and as the initial Dissemination Agent under the Continuing Disclosure Agreement to be entered into by the City and the Developer Continuing Disclosure Agreement to be entered into by the Developer and the McMillin Entities. 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 & Krieger 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 4 DOCSOC\932761 v5X22245.0140 Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Underwfiter's Counsel. Other professional services have been performed by McGill Martin Self, Inc. as Special Tax Consultant, Bruce W. Hull & Associates, Inc. as Appraiser, and The Meyers Group, 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 and the McMillin Entities 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 15c2-12(b)(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 by the Developer and the McMillin Entities and notices of material events to be provided by the District. Bond Owners' Risks Certain events could affect thc timely repayment of thc principal of and interest on the Bonds when duc. Sec 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 thc Bonds. The Bonds are not rated by any nationally recognized rating agency. The purchase of the Bonds involves significant risks, and the Bonds are not suitable investments for all 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 amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "project," "budget" 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 IN 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 STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. 5 DOCSOC\932761 v5~22245.0140 Other Information This Official Statement speaks only as of its date, and thc information contained herein is subject to changc. Brief descriptions of the Bonds and thc Indenture arc included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to thc Indenture, the Bonds and the constitution and laws of the State as well as the proceedings of thc City Council, acting as the legislative body of thc District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to thc Bonds, by reference to thc 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 thc 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 following table sets forth the expected uses of Bond proceeds: Sources of Funds Principal Amount of Bonds $ TOTAL SOURCES $ Uses of Funds Interest Account(1) $ -~ Project Fund Reserve Fund Cost of Issuance Fund Underwriter's Discount Administrative Expense Fund TOTAL USES $ Represents gross funded capitalized interest on the Bonds through September 1, 2003. THE BONDS Authority for Issuance The Bonds in the aggregate principal amount orS * are authorized to be issued by the Disthct under and subject to thc terms of the Indenture, the Act and other applicable laws of the State of California. · Preliminary, subject to change. 6 DOCSOC\932761 v5~22245.0140 Purpose of the Bonds Thc Bonds arc being issued to provide funds to: (i) finance the costs of constructing and acquiring certain public facilities related to the proposed development within the District (See "THE COMMUNITY FACILITIES DISTRICT -- Description of Authorized Facilities"); (ii)pay costs related to the issuance of the Bonds; (iii) fund the Reserve Fund for the Bonds in the initial amount of $ * ; and (iv) gross fund capitalized interest on the Bonds through September 1, 2003. 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 Appendix I -- "DTC AND THE BOOK ENTRY ONLY SYSTEM." 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 September 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\932761 v5~22245.0140 / Redemption of Bonds* Optional Redemption. The Bonds maturing on and after September 1, 2012 may be redeemed at thc option of the District prior to maturity as a whole, or in part on an5' Interest Payment Date on and al~cr September 1,2011, 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 thc Bonds to be redeemed), together with accrued interest to the date of redemption: Redemption Date Redemption Price September 1,2011 and March 1, 2012 102% September 1, 2012 and March 1, 2013 101 September 1, 2013 and thereafter 100 Extraordinary Mandatory Redemption from Special Tax Prepayment. The Bonds are 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 thc proceeds of thc 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 thc Bonds to be redeemed), together with accrued interest thereon to thc date of redemption: Redemption Date Redemption Price September 1, 2003 through March 1,2011 103% September 1,2011 and March 1, 2012 102 September 1, 2012 and March 1, 2013 101 September 1, 2013 and thereafter 100 See "SOURCES OF PAYMENT FOR THE BONDS -- Special Taxes Prepayment of Special Taxes" and Section __ of Appendix A for a description of how a property owner may prepay, or will be required to prepay, Special Taxes. 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 , 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 · Preliminary, subject to change. 8 DOCSOC\932761 v5~22245.0140 The Bonds maturing on September 1, 2033 am subject to mandatory sinking fund redemption, in part, by lot, on September 1 in each year commencing _, 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 In the event of a partial optional redemption or special mandatory redemption of the Bonds, each of the remaining mandatory sinking fund payments for such Bonds, as applicable, will be reduced, as nearly as practicable, on a pro rata basis. Purchase in Lieu of Redemption. In lieu of such an optional, extraordinary mandatory or mandatory sinking fund redemption, the District may elect to purchase such Bonds at public or private sale at such prices as the District 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. 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 from which such Bonds are to be redeemed and thc 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 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. 9 DOCSOC\932761 v5X22245.0140 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 thc original purchasers of the Bonds and the respective registered Owners of thc Bonds at thc addresses appearing on thc Bond registry books. Thc notice of redemption shall state: (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, thc numbers of the Bonds of such maturity need not bc stated; (d) that such Bonds must bc surrendered at thc Principal Corporate Trust Office of thc Fiscal Agent; (c)that further interest on such Bonds will not accrue from and after thc designated redemption date; (f) the date of the issue of the Bonds as originally issued; (g) thc 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 thc District shall direct. Further Notice. Further notice of redemption shall be sent at least two days before thc notice of redemption is mailed to thc Bondholders, as described above, by registered or certified mail or overnight delivery service to thc registered securities depositories and to thc national information services listed in the Indenture or, in accordance with the then-current guidelines of thc 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, thc 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 thc 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 thc Fiscal Agent on behalf of thc District. A certificate by thc Fiscal Agent that notice of call and redemption has been given to thc registered Owners of thc 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 thc 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 long as thc Bonds are held in book-entry-form, notice of redemption will be sent by thc 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. Sec Appendix I -- "DTC AND THE BOOK ENTRY SYSTEM." Effect of Redemption When notice of redemption has been given, and when the amount necessary for thc redemption of thc Bonds called for redemption is set aside for that purpose in the Redemption Fund, the Bonds designated for redemption shall become duc 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 thc Owners of such Bonds so called for redemption after such redemption date 10 DOC SOC\932761 v5~22245.0140 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 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 certain 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 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 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 Fiscal 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 required to be paid with respect to such exchange or registration or transfer. 11 DOCSOC\932761 v5~22245.0140 Schedule for the Bonds* Period Ending Princ~al Interest Total Debt Service (SepWmber 1) on Bonds on Bonds on Bonds 2003 $ $ 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 2033 SOURCES OF PAYMENT FOR THE BONDS Obligations are special, limited obligations of the District payable only from amounts pledged Indenture and from no other sources. Special Taxes are the pr/mary security for the repayment of the Bonds. Under the District has pledged to repay the Bonds from the Special Tax Revenues remaining of the annual Administrative Expense Requirement of $75,000 and from amounts and accounts under the Indenture, other than amounts held in the Acquisition Fund, and the Administrative Expense Fund. Special Tax Revenues are defined in the include the proceeds of the Special Taxes received by the District, including any payments and prepayments thereof, interest and penalties thereon, the proceeds of the delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien Special Taxes in the amount of said lien, and interest and penalties thereon. change. 12 v5~22245.0140 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 SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY 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 August 13, 2002 for the purpose of financing the acquisition, construction and installation of various public improvements to serve the District. At a special election held on August 20, 2002, the owners of the property within the District authorized the District to incur indebtedness secured by Special Taxes levied on property in the District in an amount not to exceed $13,000,000, and approved the Rate and Method which authorized the Special Tax to be levied to repay District indebtedness for the District, including the Bonds. At an election held on January 21, 2003 the landowners within the District authorized an addition to the list of facilities eligible for financing by the District. The District has covenanted in the Indenture that by July 1 of each year (or such later date as may be authorized by the Act) it will levy Special Taxes within the District 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 TAX" 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 the District is to be classified as Developed Property or Undeveloped Property and is subject to the levy of annual Special Taxes as described below. Developed Property is to be further classified as Residential Property or Non-Residential Property. The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Non-Residential Property shall be the greater of (1) the Assigned Special Tax described below or (2) the Backup Special Tax computed as described below. 13 DOCSOC\932761 v5~22245.0140 The Assigned Special Tax for each Assessor's Parcel of Developed Property is shown in the table below. Assigned Annual Special Tax for Developed Property Land Use Class Description Assigned Annual Special Tax 1 Residential Property $440 per unit plus $0.34 per square foot of Residential Floor Area 2 Non-Residential $11,365 per Acre Property When a Final Subdivision Map is recorded within the District, the Backup Special Tax for Assessor's Parcels of Developed Property classified as Residential Property or Non-Residential Property shall be determined accordin~ to the nrovisions of the Rate and Method, ~enerally at the rate of $11.365~ner acre. -~ The Maximum Annual Special Tax for each Assessor's Parcel classified as Undeveloped Property shall be $11,365 per acre. Commencing with Fiscal Year 2003-04 and for each following Fiscal Year, the City Council shall determine the Special Tax Requirement (as defined in the Rate and Method) and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at a rate up to 100% of the applicable Assigned 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 paragraphs 2 and 3 in Section E of the Rate and Method, 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 Properly 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 paragraphs 2 and 3 in Section E of 0 the Rate and Method at a rate up to 100 ~/o 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 owned be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Taxable Property. 14 DOCSOC\932761 v5~22245.0140 Prepayment of Special Taxes. There are certain events that will result in a required prepayment of Special Taxes as described in the following paragraph. In addition, under the Rate and Method, the owner of a parcel for which a building permit has been issued or the owner of any Public Property 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 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. Pursuant to the Acquisition Financing Agreement, the Developer has agreed to comply with the policy and the Developer and the City expect that the current merchant builders will also agree to comply with the policy. 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 currently does not anticipate that the total taxes and assessments, exclusive of special taxes for services, will exceed 2% of the sales price. As shown in Table 5 under the caption "THE COMMUNITY FACILITIES DISTRICT -- Expected Tax Burden," the projected tax burden (excluding taxes allocable to City maintenance community facilities districts) on a typical single family detached unit and single family attached unit, based on the weighted averages of the respective unit sizes and current prices and taxes, will be approximately -~ 1.77%. When the projected tax burden associated with Chula Vista Maintenance CFD No. 08-M is considered, the total expected tax burden rises to approximately 1.94% in the case of a single family detached unit and 1.93% in the case of a single family attached unit. The lt~!3:~ltaggJ~ single family detached -~ units is projected to rise to approximately 2.0% if a proposed rate increase ~[~)~3[o~m~ is approved. 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 or other special taxes or assessments so that following such prepayment the parcel will be in compliance with the policy. Upon the closing of the escrow, any prepayment of Special Taxes 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 are 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, but may be collected in any other manner the legislative body of the District may choose. The District has made certain covenants in the Indenture for the purpose of ensuring that the current maximum Special Tax rates 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 rates and will oppose the reduction of maximum Special Tax rates by initiative where such reduction would reduce the maximum Special Taxes payable from parcels on which a completed structure is located to less than 110% of Maximum Annual Debt Service on Outstanding Bonds and any other bonds issued on a parity with the Bonds as permitted by the Indenture. 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 a Special Tax Consultant that to accept such tender will not result in the District having insufficient Special Tax Revenues to pay the principal of and interest when due on the Bonds remaining Outstanding following such tender. See "SPECIAL RISK FACTORS -- Non-Cash Payment of Special Taxes." 15 DOCSOC\932761 v5L22245.0140 Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of such property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and other such liens could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners therein. See "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 (with the exception of Special Tax Revenues representing Prepayments) 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 Administrative Expenses of the District above the $75,000 referenced in (1) above. See Appendix E -- "SUMMARY OF iNDENTURE." Special Tax Revenues representing Prepayments shall be transferred to the Bond Service Fund as provided for in the Indenture and used to redeem Bonds. See "THE BONDS ~ Redemption of Bonds ~ Extraordinary Mandatory Redemption from Prepayment." Proceeds of Foreclosure Sales. The net proceeds received following a judicial foreclosure sale of land within the District 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 amount 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 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 of 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 16 DOCSOC\932761 vSL22245.0140 -7 ¢0 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, (ii) the maximum annual debt service of the Bonds, or (iii) one hundred twenty-five percent (125%) of the average annual debt service on the proceeds of the 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, to the extent other monies are not available therefore, (ii) redeem the Bonds in whole or in part, and (iii) pay the principal and interest due in the final year of maturity of the 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 (b) 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" herein. Issuance of Parity Bonds The District covenanted in the Indenture not to issue any other obligations payable from the Special Taxes levied on land within the District which have, or purport to have, any lien upon the Special Taxes superior to or on a parity with thc lien of thc Bonds, other than refunding bonds which satisfy the requirements below. Nothing in the Indenture prevents the D/strict from issuing and selling, pursuant to law, refunding bonds or other refunding obligations payable from and having a first lien upon thc Special Taxes on a parity with thc Outstanding Bonds so long as thc issuance of such refunding bonds or other refunding obligations results in a reduction in thc Annual Debt Service on thc Bonds and such refunding bonds or other refunding obligations taken together. THE COMMUNITY FACILITIES DISTRICT General Description of the District The District consists of approximately 215 acres and is located approximately 2½ miles east of Interstate 805 and south of Telegraph Canyon Road at the southeast comer of La Media Road and Olympic Parkway. The District is divided into five residential planning areas. As planned, the District will not contain any taxable, non-residential acreage. The Bonds will be secured by Special 17 DOCSOC\932761 v5~22245.0140 Taxes levied on property within the District. At buildout, the residential planning areas are expected to be developed into 482 ~[ngle~ulm~ detached -~ units and 212 -~ ~ units. The Developer has sold the planning area for the 212 proposed ~ attached units to Cornerstone Communities LLC. The Developer has sold substantially all of the remaining four planning areas to the McMillin Entities, which are homebuilding entities related to the Developer who will act as merchant builders for the single family detached units planned in the District. The Developer still owns 76 lots which are under option to be sold to one of the McMillin Entities. 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 the District described in Table 1 below. In addition to or in substitution for the facilities listed below, the City and the Developer may agree to finance additional or different eligible facilities. As set forth in -~ Table 1 below, the Developer expects to finance a portion of the cost of the facilities from -~ ~ lot sales and other cash on hand. See Table 9 herein. 18 DOCSOC932761v5~2245.0140 ?-92 Status of Public Improvements ~ the -~ entire project to be constructed within the District has been graded to finish grade. Olympic Parkway has been completed and tumed over to the City and is open for use by the public. La Media Road (from Olympic Parkway to Santa Venetia) has been graded with the storm drainage, water, and sewer improvements installed. Dry utilities are -~ under construction, and paving will follow dry utilities. Santa Venetia Street has been graded with storm drainage and sewer installed. Water improvements are currently under construction. Magdalena Avenue has been graded with storm drainage and sewer improvements. Water improvements are currently under construction. Birch -~ Road has just been graded to -~ its full width. For a description of development activity within certain individual planning 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 the District would pay in fiscal year 2003-04 based on a projected Special Tax levy of $786,692. TABLE 2 PROJECTED PRINCIPAL TAXPAYERS FOR FISCAL YEAR 2003-04 Fiscal Year 2003- Planning ~4rea Owner (o 2004 Special Tax® % of Total Merchant Builder Owned Planning Area R- I 0 Cornerstone Communities $110,271 14.02% McMillin Planning Areas R- 1 McMillin Mandalay 101, LLC $176,527 22.44% R-3 McMillin Sienna II, LLC $128,025 16.27% R~3 McMillin Otay Ranch, LLC $111,838 14.22% R-4 McMillin Auburn Lane II, LLC $133,079 16.92% R-a 6 McMillin Jasmine 126, LLC $126,953 16.14% Subtotal $676,421 85.98% TOTAL $786,692 100.00% (~) Ownership information fi-om Developer as of December 1, 2002. (2) Estimated Special Tax Levy for Fiscal Year 2003-04. Source: McGill Martin Self, Inc. Estimated Direct and Overlapping Indebtedness Within the District's boundaries are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds or other forms of indebtedness which are secured by taxes and assessments on the parcels within the District and others have authorized but unissued bonds which, if issued, will also be secured by taxes and assessments levied on parcels within the District. The approximate amount of the direct and overlapping debt secured by such 20 DOCSOC\932761 v5~22245.0140 7 -qq taxes and assessments on the parcels within the District for fiscal year 2002-03 is shown in Table 3 below (the "Debt Report"). The Debt Report has been derived from data assembled and reported to the District by California Municipal Statistics, Inc. Neither the District, the City nor the' Underwriter has independently verified the information in the Debt Report and do not guarantee its completeness or accuracy. 21 DOCSOC\932761 v5~22245.0140 TABLE 3 DIRECT AND OVERLAPPING DEBT SUMMARY COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMILLIN - OTAY RANCH - _a VILLAGE SlX) 2002-03 Local Secured Assessed Valuation: $14,301,905 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt l 1/1/02 Metropolitan Water District 0.001% $ 5,026 San Diego County Water Authority 0.007 115 Otay Municipal Water District, I.D. No. 27 0.136 14,470 Southwestern Community College District 0.062 24,515 Sweetwater Union High School District 0.074 26,725 Chula Vista Elementary School District 0.106 53,705 City of Chula Vista Community Facilities District No. 2001-2 100. TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $124,556 OVERLAPPING GENERAL FUND OBLIGATION DEBT: San Diego County General Fund Obligations 0.007% $ 34,606 San Diego County Pension Obligations 0.007 57,708 San Diego County Superintendent of Schools Obligations 0.007 145 Otay Municipal Water District Certificates of Participation 0.119 31,374 Southwestern Community College District General Fund Obligations 0.067 2,315 Sweetwater Union High School District Certificates of Participation 0.081 19,626 Chula Vista -~ Elementarv School District 0.112 72,055 City of Chula Vista Certificates of Participation 0.132 122,635 City of Chula Vista Pension Obligations 0. 132 17,466 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT $357,930 Less: Otay Municipal Water District Certificates of Participation 31,374 TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT $326,556 GROSS COMBINED TOTAL DEBT $482,486 (2) NET COMBINED TOTAL DEBT $451,112 (~) Excludes Mello-Roos Act bonds to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations. Ratios to 2002-03 Assessed Valuation: Direct Debt ............................................................................... - % Total Direct and Overlapping Tax and Assessment Debt ......... 0.87% Gross Combined Total Debt ..................................................... 3.37% Net Combined Total Debt ......................................................... 3.15% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/02:$0 Source: California Municipal Statistics, Inc. 22 DOCSOC\932761 v5~22245.0140 The authorized but unissued debt of existing community facilities districts with boundaries overlapping the District as of March 1, 2003 is summarized in Table 4 below. Other public agencies may from time to time form additional districts that impose special taxes or assessments payable by landowners within the District. See "SPECIAL RISK FACTORS--Parity Taxes, Special Assessments and Land Development Costs." TABLE 4 SUMMARY OF OVERLAPPING COMMUNITY FACILITIES DISTRICTS Undeveloped Developed Land Special Residential Tax Per Special Tax Authorized District Purpose Acre~z~ Per Sq. Ft. Debt Chula Vista Elementary School District CFD No. 11 o/ Elementary Schools $3,266 $ .2649 $250,000,000 Sweetwater Union High School District CFD No. 1101 High Schools $4,022 .3263OI 250,000,000 On July 1 of each year, the maximum special tax rates shall be increased prior to development of a parcel by the g~eater of (i) the annual percentage change in the Engineering News Record building cost index for the City of Los Angeles determined every May 31 for the prior 12~month period, or (ii) two percent per fiscal year, and after development of a parcel at the rate of 2% per I:l An Undeveloped Property Tax is provided for in CFD No. 11 if the debt service is not satisfied through the levy of the Special Tax on Residential Property. To date, the Chula Vista Elementary School District CFD No. 11 and the Sweetwater Union High School District CFD No. 11 have not been required to levy a Special Tax on Undeveloped Property. (3) These amounts are currently pledged to pay lease payments with respect to certain certificates of participation of the Sweetwater High School District and are also expected be pledged to lease payments with respect to a future series of certificates of participation. Source: McGill Martin Self, Inc. Expected Tax Burden It is expected that the total tax burden on residential units in the District will be slightly less than 2% of the initial base sales price of the units. Table 5 below sets forth an estimated property tax bill for a typical single family detached unit of 2,341 square feet (such square footage being the weighted average of unit sizes of single family detached units) and 1,316 square feet in the case of a typical single family attached unit (such square footage being the weighted average of unit sizes of single family attached units). The total effective tax rate for a typical single family detached unit is estimated to be 1.95% and for a single family attached unit is estimated to be 1.94%. The Developer has proposed an increase in the CFD -~ No. 08-M maintenance tax for single family detached units which, if approved, will increase the total effective tax rate on a typical single family unit to approximately 2.0% of initial base sales price. 23 DOCSOC\932761 v5~22245.0140 TABLE 5 SAMPLE PROPERTY TAX BILL PROJECTED FOR FISCAL YEAR 2003-2004 FOR A SINGLE FAMILY DETACHED UNIT AND SI~LCal.~AI~L~ ATTACHED UNIT Percent of Total Assessed Single Family Single Family Valuation Attached Unit Detached Unit House Square Footage 1,316 2,341 Base Sales Price $ 220,000.00 $ 350,907.00 Total Assessed Value $ 213,000.00 $ 343,907.00 Basic Levy 1.00000% $ 2,130.00 $ 3,439.07 MWD 0.00670 14.27 23.04 County Water Authority 0.00075 1.60 2.58 Chula Vista Elementary School District G.O. Bond 0.02645 56.34 90.96 Sweetwater High School District G.O. Bond 0.02196 46.77 75.52 Southwestern Community College G.O. Bond 0.01304 27.78 44.85 Ota¥ Water ID #27 0.01500 31.95 51.59 Total Taxes Based on Assessed Value $ 2,308.71 $ 3,727.61 Chula Vista Elementary CFD No. 11 348.61 620.13 Chula Vista Elementary CFD No. 11 G.O. Credit (56.34) (90.96) Sweetwater Union High School CFD No. 11 429.41 763.87 Sweetwater UHSD No. 11 G.O. Credit (46.77) (75.52) Chula Vista Maintenance CFD No. 08-M I~) 339.53 603.98 (Improvement Area I) Chula Vista Preserve CFD No. 97-2 16.71 29.73 City of Chula Vista CFD 2001-2 887.44 1,235.94 Mosquito/Rat Conlrol 2.29 2.29 MWD Water Standby Charge 11.50 11.50 Otay Water Availability 10.00 10.00 CWA Water Availability 10.00 10.00 Total Assessments and Parcel Charges $ 1,952.38 $ 3,120.95 Total All Property Taxes ~ 4.261.09 ~ 6.848.5~6 Total Effective Tax Rate -~ 1.94% 1.95o/~ Total Effective Tax Rate Excluding City Maintenance CFD's -~ 1.77% 1.77o/~ The rates relating to the CFD No. 08-M maintenance tax are proposed to increase for the single family detached unit. If such increase is approved a the total effective tax rate for these units will increase fi-om 1.95% (as shown above) to approximately a 2.0°/- These rates are proposed to increase in March, 2003. Source: McGill Martin Self, Inc. Estimated Value-to-Lien Ratios The value of the land within the District is significant because in the event of a delinquency in the payment of Special Taxes the District may foreclose only against delinquent parcels in the District. Table 6 summarizes the estimated appraised value-to-lien ratios for property in the District based on the expected principal amount of the Bonds. The appraised value of the land within the District as set forth in the Appraisal is $65,260,000. The estimated appraised overall value-to-lien ratio based upon land values and property ownership in the District described in the Appraisal as of December 16, 2002 is approximately -~ ~ to 1*-~. The estimated appraised value-to-lien ratio for the land owned by entities related to the Developer is approximately ,x 6.84 to 1'. -~ ~ does not · Preliminary, subject to change. 24 DOCSOC\932761 v5~22245.0140 include the overlapping debt which is payable from taxes and assessments on land within the District, which, as set forth in -~ Table 3 above is currently estimated at $124,556. If the overlapping debt were included, the estimated appraised value-to-lien ratio would be -~ 7.01 to 1'. The assessed value of the land within the District for fiscal year 2002-03 is $14,301,905. A portion of the land within the District is exempt from the levy of the Special Tax. The fiscal year 2002-03 assessed value of the portion of the property within the District which is expected to be taxed in fiscal year 2003-04 is $8,059,505. The estimated assessed value-to-lien ratio of the property within the District expected to be subject to the Special Tax levy, based on the fiscal year 2002-03 Assessor's roll and the expected principal amount of the Bonds is 0.87 to 1'. -~ Table 6 will be updated annually by the District in the Annual Report filed pursuant to the Continuing Disclosure Agreement based on the assessed value of the taxable property within the District. 25 DOCSOC\932761 v5~22245.0140 Permitted Land Use Table 7 below describes the currently approved land uses within the District. TABLE 7 LAND USE SUMMARY OF COMMUNITY FACILITIES DISTRICT Dwelling Use Acres Units Residential ~gJa~[~l~ 113.6 694 ^ · · (1) Community Purpose - Facility 51.2 Elementary -~ SchoolO) 2.8 Open Space, -~ Roads and Homeowners 47.4 (HOA?~_~) Total 215.0 694 ~ Will he exempt from the lew of the Nneei~l Source: Developer TItE 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 the District 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 the District or a development or any interest therein at any time. No assurance can be given that the proposed development within the District 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 the District will become more diversified. Although planning for the development of the District is at an advanced stage, actual construction of improvements is as described below under the caption "Infrastructure Requirements and Construction Status." No assurance can be given that development of the land within the District will continue to completion, or that it will occur in a timely manner or in the configuration or intensity described herein, or that any landowner described herein will obtain or retain ownership of any of the land within the District. The Bonds and the Special Taxes are not personal obligations of any landowners 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. As a result, other than as provided herein, no financial statements or information is, or will be, provided about the Developer or other landowners. The Bonds are secured solely by the Special Taxes and other amounts pledged under the Indenture. See "SOURCES OF PAYMENT FOR THE BONDS" and "SPECIAL RISK FACTORS." 27 DOCSOC\932761 v5X22245.0140 -5t General Description and Location of the District The District comprises approximately 215 gross acres in the City and is located east of Interstate 805. Existing residential developments in thc arco include Otay Ranch, Lomas Vcrdes, Rancho Del Rcy, Sunbow, Rolling Hills Ranch, San Migucl Ranch and Eastlak¢. Thc District is bounded to thc north by previous developed villages of Lomas Verdes and by undeveloped land -~ to the east.~ west and south a. East of thc District arc thc Upper and Lower Otay Reservoirs and unincorporated lands. Approximately 482 single family a detached units, and 212 a ~iaglL[amil~ attached units are to be constructed. The Bond proceeds and additional amounts expended and to bc expended by the Developer will be used to develop the infrastructure for 694 homes. The infrastructure will include storm drains, backbone roads including Traffic Enhancement Program improvements to Telegraph Canyon Road, La Media Road South from East Palomar to Olympic Parkway, Olympic Parkway, Birch" Road. and Magdalena Street, a sewer system, a reclaimed water system, traffic signals, street lights and landscaping. Also eligible to be financed are those facilities included in thc City's Public Facilities Development Impact Fcc program and the Pcdesthan Bridge Development Impact Fee program. A The Developer intends to complete thc land development process - within the District. To date, the Developer has sold all but 76 of thc single family lots planned within the District. The McMillin Entities have purchased all of residential planning areas R-l, R-4 and R-6, and 87 of the 163 lots in planning area R-3. One of thc McMillin Entities has an option to purchase the remaining 76 lots ~. Cornerstone Communities purchased all of planning area R-10 which is planned for 212 ~ attached units. The Developer The Developer, McMillin Otay Ranch, LLC, a Delaware limited liability company, was formed on August 14, 1998. The two members of the Developer are the McMillin Companies, LLC ("McMillin Companies") and Merced Partners LP, a Delaware limited partnership. McMillin Companies is the managing member. The Developer was formed for the purpose of owning, developing, improving, and ultimately selling the sites to merchant builders in the master planned community known as "McMillin Lomas Verdes," which includes the District and other surrounding properties being developed by McMillin Companies. A Management Committee, consisting of two representatives of each of the members is empowered to make all major and substantive decisions with respect to the Developer's day to day affairs. McMillin Companies is a privately held entity beneficially owned entirely by the McMillin family headed by Macey L. "Corky" McMillin. Corky McMillin started the McMillin organization 42 years ago as a real estate development and construction company. Today, the Corky McMillin Companies ("McMillin") operates in five areas including land development, home building, commercial, realty, and mortgage. McMillin is San Diego's largest and oldest, privately owned locally based developer of mixed-use projects. The other member of the Developer, Merced Partners LP, is an investment fund managed by EBF and Associates. EBF and Associates is an investment management firm based in Minnesota. Merced Partners LP has already invested the -~ equity that will be reauired of it to develon the nronertv initially acquired by the Developer in the Otav Ranch and all of this eouitv has beell repaid bv the Develoner. 28 DOCSOC\932761 v5~22245.0140 McMillin has developed several master planned communities in Southern California, including Scripps Ranch, Rancho Del Rey, Bonita Long Canyon, Orange Crest, Temeku Hills-~ and Calavera I. Other projects developed and completed by McMillin in the City include Bonita Long Canyon, Bonita Highlands, and Terra Nova: McMillin has maintained a strong continual presence in -~ ~LI~?,tLCmlII~ since 1960, not only in new home sales and resale marketplace, but also through its community involvement. Development Plan History of Development. ~- ~ acquired a 1,026-gross acre site, which includes the District and surrounding property, in August 1997 with General Plan approvals for approximately 5,000 dwelling units and 150 acres of commercial development. The Developer has already developed Sectional Planning -~ Arg. a_IJ. LSSPa~I~ which encompassed portions of Villages 1 and 5 in the Otay Ranch master-planned community. -~ SPA I is situated on the south side of Telegraph Canyon at the intersection of La Media Road. This SPA has an existing community facilities district in place and is known as "City of Chula Vista Community Facilities District No. 97-3" ("CFD 97- 3"). CFD No. 97-3 is built out and contains approximately 699 single-family a units, 820 multi- family -~ units, 10,000 square feet of commercial space, a community purpose facility -~("CPF"I site h~ch was sold to Calvary Chapel, a school site which has been developed with the Corky McMillin Elementary School, and a neighborhood park site which has been developed and is now known as Cottonwood Park. The remaining 733 gross acres owned by the Developer are proposed for development in -~ Sectional Planning. Areas Il through V ~II~gllgh3~. The District is located in SPA II (a portion of Village 6) which totals approximately 215 gross acres divided into five residential planning areas, a private high school site, and a community purpose site. The residential planning areas total 113.6 gross acres. These planning areas are designated for 482 single -~ family detached units and -~ 212 sinele family attached units, for a total of 694 units. The private high school and community purpose facility site has been sold to the Catholic Dioceses, which is in the planning stage for developing this property for a private high school and church. SPA III, Phases 1 and 2 (portions of Village 7) total approximately 142 acres and am proposed for 301 single-family units, 559 multi-family units, and the balance is open space and street right-of-ways. SPA IV (Freeway Commercial) consists of approximately 80 acres for automobile oriented commercial use. SPA V (Eastern Urban Center) totals approximately 255 acres and is proposed for 1,750 multi-family units, 110 acres consisting of commercial and urban center uses, and the balance is for CPF uses, an elementary school site, and a community park site. SPAs III through V are not included in the District. Residential Planning Areas. Thc approved tentative tract map applicable to the District allows for thc development of 694 dwelling units. Upon buildout, development within the District is anticipated to include 482 single a family drJ3xlx~ units and 212 -~ ~ family at/3xJle_d units, along with approximately 51 acres of community purpose property and approximately 47 acres of open space, roads and homeowner association property. As of the date of the Appraisal, the Developer had sold one planning area to Cornerstone Communities LLC and, except for 76 lots, the remaining four planning areas to the McMillin Entities. Lots were delivered to thc merchant builders as ~- blue top individual lots and certified by the civil and soils engineer with thc utilities stubbed into the tract boundary. The -~ Develoner is responsible for completing intract improvements such as sewer, water, dry utilities and street improvementsa and the merchant builders will reimburse the Develooer for these costs. The Developer is responsible for thc completion of all other improvements adjacent to the tracts including 29 DOCSOC\932761v5~22245.0140 master backbone sewer and water, storm drains, dry utilities, streets, master landscaping and trails, parks and any offsite improvements.-~ Table 8 below summarizes proposed development within the District. TABLE 8 SUMMARY OF DEVELOPMENT PROPOSED BY MERCHANT BUILDERS Number o£ Residential Pronose~d Number Planning Product Minimum Units of Units Average Projected Home Area Type Lot Si~e Merchant Builder Total Closed Home Size Price Range R4 SFD 6000 sf McMillin Mandalay 101, LLC 101 101 3,100 sf $420,000470,000 R-3 SFD 5000 sf McMillin Sienna II, LLC 163m 87 2,800 sf $375,000460,000 R4 SFD 5000 sf McMillin Auburn Lane II, LLC 92 92 3,000 sf $415,000450,000 R-6 SFD 4000 sf McMillin Jasmine 126, LLC 126 126 2,500 sf $339,000-397,000 R-10 Attached Attached Cornerstone Communities 212 212 1375-1,760 sf $200,000-300,000 m McMillin Sienna Il, LLC ha~ aemdred 87 lots and has an option to purchase the remaining 76 lots from the Developer. Source: Developer While the overall development of the District is expected to last through 2005, the infrastructure improvements within the District, inclusive of non-District financed infrastructure improvements, are expected to be substantially complete by the end of 2003. Merchant Builders There are five merchant builders in the District, four of which are the McMillin Entities who are related to the Developer. The merchant builders are summarized below. Cornerstone Communities. Cornerstone Communities was founded as a San Diego-based homebuilder with operations in Sacramento, San Diego and Riverside counties. Cornerstone was formed in 1994 with a management group which was developed, mapped, and/or constructed over 8,000 homes and/or lots in over 50 developments throughout California. Cornerstone purchased planning area R-10. The R-10 project, known as "Treviana," will comprise 212 ~ attached units with homes ranging in size from 1,175 to 1,760 square feet priced from the mid $200,000's to mid $300,000's. Cornerstone is anticipated to pull model home permits in April 2003 and building permits for its first phase in October 2003. McMillin ~ Entities. Two of the McMillin -~ ~ purchased and closed on planning areas R-1 and R-6 on November 20, 2002, and November 22, 2002, respectively. Planning ama R-1 closed under the entity name McMillin Mandalay 101, LLC. It -~ ~ 101 single-family lots and the project will be known as "Mandalay". The average home size will be approximately 3,100 square feet and priced in the $400,000 range. McMillin -~ ~ closed on planning area R-6 -~. It closed on -~ 126 single-family lots and the project will be known as "Jasmine". The average home size will be approximately 2,500 square feet and priced in the mid $300,000's. McMillin a Mandalay 101. LLC anticipates it will pull model home permits for planning area R-1 in April 2003 and building permits for the first phase in June 2003-~. McMillin Jasmine 126. LLC anticinates it will pull model home permits in May 2003 and building permits for the first phase in July 2003 for planning area R-6. McMillin -~ ~ purchased and closed on 87 of the 163 lots in planning area R-3 on November 27, 2002 a. The project will be known as "Sienna." The entity has an option to purchase the remaining 76 lots from the Developer, which expires November 27, 2003. The average 30 DOCSOC\932761 v5~22245.0140 home size will be approximately 2,800 square feet and priced in the low to mid $400,000's. McMillin -~ iSJe, anaJI,~J,~ anticipates it will pull model home permits in March 2003 and building permits for the first phase in May 2003 for the 87 lots purchased in planning area R-3. McMillin -~ Auburn Lane II. LLC purchased and closed on planning area R-4 on December 9, 2002 -~. The entity closed on -~ 92 single-family lots and the project will be known as "Auburn Lane". The average home size will be approximately 3,000 square feet and priced in the mid $400,000's. McMillin -~ 3~alll:~Lail~,I~ anticipates it will pull model home permits in April 2003 and building permits for the first phase in June 2003 for planning area R-4. Financing Plan Developer Financing Plan. The development of the District will require large expenditures of funds to -~ develop full~v the property and the required infrastructure. The development of the infrastructure and the lots -~ by the Developer requires funds in addition to the Bond proceeds. All of the funds will be spent to benefit the property within the District. -~ The cash sources outside of the Bond proceeds -~ necessary to complete development of the lots and the infrastructure-^ are exuected to come from the Develoner's cash on hand. the sale of the remainin~ 76 lots. Bond nroceeds and reimbursements that the merchant builders are contractually obli..~ated to nay to thee Developer once the Develoner comnletes additional infrastructure imnrovements in the District. The Develouer's cash on hand was derived primarily from land sales in the District. Although the Develoner is permitted to snend its cash balances reflected in Table 9 for purposes other than comnletin~ the work within the Distric~ it nlans to use the cash balances reflected in Table 9 to complete the pronosed develonment. The Develoner has no loans outstandine which are secured by property within the District and does not anticipate obtainin~ any loans for this nurnose. The merchant builders are expected to obtain loans as described below. See "Merchant Builder Financin.~.." The ultimate buildout of the District as nlanned is dependent upon a number of external factors, including thc general and local economy and thc health of thc local mai estate market and thc ability of the merchant builders to obtain the financing and all required permits to build the units. -~ Table 9 represents thc Developer's current estimate of the sources and uses of funds to complete its portion a of the work. While Table 9 represents the current estimate of thc sources and uses of funds for thc Developer's operations, there can be no assurance there will not be substantial changes to the sources and uses funds presented. The projected sources and uses of funds in -~ Table 9 has been prepared based on actual a laud sales through December 2002: and nroiected future revenues from the sale of the remainin~ 76 lots: reimbursements to the Developer: Bond nroceeds, development costs, operating costs, property taxes-~ and other items. Thc absorption estimates used for thc sources and uses of funds may differ from those derived by thc Appraiser. Thc actual -~ revenues oro.__3iected in ~ may vary -~; however, 92% of thc total SPA II land sales and reimbursements have either closed escrow, or arc under contract. Detailed construction nlans have not been annroved or develooed for all of the work which is contemplated for the nroiect. As such; there is no assurance that the actual costs will not be ?eater than projected or occur sooner than nroi.____ected. There can be no assurance that the actual revenues will not be less or the actual costs more than nroiected or occur later than nroiected bv the Develoner. To thc extent that actual revenues arc less than projected in -~ Table 9 or arc received mom slowly than projected in a ~ other a financing -~ nroiected bv thee merchant builders is not put into place, -~ ~ do not contribute funds as projected, or actual expenses arc 31 DOCSOC\932761 v5~22245.0140 greater than or occur earlier than projected above, there could be a shortfall in the cash required to complete the land development operations being undertaken by the Developer. TABLE 9 DEVELOPER'S PROJECTED SOURCES AND USES OF FUNDS a Through 2002 2003 2004 Total · SOURCES OF CASH ~- Land Sales and Reimbursements Sa 55~840 $ 14,833 $ 1,270 $ -~ 71.94~33 Net Bond Proceeds ~ 0 5,637 1,665 7,302 Im~nrovements Total Sources of Cash $-~ 55:840 $ 20,470 $ 2,935 $ a 79.24~ USES OF CASH a O) ~ (.17:882) _~ (20.044~1 ~ (463~_)~ _~ t38.389~ ~ (3.077~ ___ t2.8441 1567~ __ t6.488) Total Uses ofCash $~20.959~ _~ 122.888~ _~ ll.030__..__~ ~ 144.8771 DISTRIBIITIONS TO MEMBERS°) _~ 19.58~1 $ 11.88~2 _~ 2.90~5 _~ 34.36~8 WORKING CAPITAL ACTIVITY Sa 15.300 $ ~14.300~ $ ~1.000~ $ 0 WORKING CAPITAL BALANCE Sm 15.300 _~ 1.00~0 5; 0 Includes $8.301.125 for~istriet Facilities. Includes oeneral and administrative overhead~ taxes, management fee and leEal costs. Distributions will be made to the member entities comnrisin~ the Develoner~ Source: Developer Merchant Builder Financing. Currently, there is financing committed bv outside lenders for the four neighborhoods owned by -~ the MeMillln Entities and for Cornerstone as described below. The entity name for R-1 is McMillin Mandalay 101, LLC. The entity consists of McMillin Companies, LLC and EBF and Associates (an investment fund management firm based in Minnesota). The lender for this planning area is Comerica who has committed to provide a $10,425,000 acquisition and development loan. The entity name for R-3 is McMillin Sienna II, LLC. The entity consists of only the McMillin Companies, LLC. The lender for this planning area is Comerica who has committed to provide a $9,100,000 acquisition and development loan on the first take down of 87 lots. The entity name for R-4 is MeMillin Auburn Lane II, LLC. The -~ enti~ consists of only the McMillin Companies, LLC. The lender for this planning area is Royal Bank of Canada -~ who has committed to provide a $10,972,000 -~ acquisition and develonment loan. The entity name for R-6 is McMillin Jasmine 126, LLC. The -~ enti~ consists of McMillin Companies, LLC and EBF and Associates. The lender for this planning area is California Bank & Trust who has committed to provide a $8,455,000 acquisition and development loan. [Add Cornerstone discussion.] 32 DOCSOC\932761 v5~22245.0140 Status of Entitlement Approvals Thc District was -~ zoned Planned Community ("PC") as part of thc General Development Plan ("GDP") planning process. The PC zone required a multiqphasc planning process beginning with a GDP, followed by the preparation of a Sectional Planning Area ("SPA") Plan. The SPA Plan is to be used as a supplement to other existing City regulations, and supersedes those established in the City Zoning Ordinance. Incorporated into thc SPA Plan is the Site Utilization Plan, which dcsiguatcs the zoning on the District. Thc SPA Plan was adopted by thc City on January 22, 2002 by Resolution No. 2002-022. Per thc SPA Plan, thc District is dcsiguated for residential and commercial dcve]opmant and open space lands, park lands, two school sites, a community purpose facility site, a fire station site and both major circulation and internal streets. Thc District is covered by the Tentative Map for McMillin Otay Ranch Village Six allowing for 482 single family detached -~ lots and 212 -~ ~ family -~ alt~dred~ll~. Thc Developer believes that all discretionary approvals required for the development of thc District have been obtained. Environmental Constraints Thc ~ District has undergone extensive environmental and biological review and has received the necessary permits for the development of the entire property covered by the tentative map. The Developer believes that it has obtained all permits and approvals required by any environmental laws and regulations which are needed to complete the proposed development within the District. Infrastructure Requirements and Construction Status The infrastructure requirements for the District can be grouped into two categories as follows: Major Backbone Infrastructure. -~ Work on the backbone infrastructure imnrovement,~ for the District are either comnlete or under construction Olympic Parkway, a six lane prime arterial forms the northern boundary and La Media Road forms the western boundary of the District. Olympic Parkway has been improved to its full improvement width. La Media (from Olympic Parkway to Santa Venetia), a six lane prime arterial, has been graded to its full width, storm drainage, water and sewer improvements have been installed. Dry utilities are currently under construction, paving will follow dry utilities. Santa Venetia Street, a village promenade street, has been graded to its full width, storm drainage and sewer have been installed, water improvements am currently under construction. Magdalena Avenue, a village promenade street, has been graded to its full width, storm drainage and sewer have been installed, water improvements are currently under construction. Birch -~ Road, a six lane major mad has been graded to it full width. Intractlnfrastructure. Neighborhoods R-1 (Mandalay) and R-3 (Sienna) have been graded to finish pads, water and sewer have been installed, dry utilities are currently under construction, and paving of streets will follow. Neighborhoods R-4 (Auburn Lane) and R-6 (Jasmine) have been graded to finish pads, and sewers have been installed. Water improvements are currently under construction. Neighborhood R-10 (Cornerstone's property) has been graded to finish pads. The Catholic Diocese church and school site have been graded to finish pads. 33 DOCSOC\932761 v5~22245.0140 Potential Limitations on Development Growth Management Oversight 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 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 landowner 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 reduction. 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 guarantee that any such moratorium would exclude the District, even if the traffic congestion leading to such moratorium occurs outside of the District's area. -~ ~ of 2002; the City has been monitoring the traffic conditions on the maior east-west arterials east of 1-8o5 to o. uantif.v the imnacts of the recent openin~ of all of Olvmnic Parkway to traffic. Additional traffic analyses will be nerformed during the first auarter of 2003 and neriodicallv 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 2006) and the recent 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 -~ ~ in its 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 which would increase system capacity are interchange improvements at 1-805 and East "H" Street ~4with construction scheduled to commence in February 2003 and completion anticipated in -~ Jnne 34 DOCSOC\93276 l v5~22245,0140 2003), 1-805 and Telegraph Canyon Road a(with construction expected to commence in a June 2003 with completion anticipated in -~ October 2003), the southerly extension of Heritage Road in Otay Ranch fi.om 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 completed. It should be noted that the State Route 125 project team composed of the toll road franchise holder, the desi~,n-buiid contractor, CALTRANS staff, private consultants, and representatives of the different cities having jurisdictional interest has already been assembled in the project offices located in the City. The project team has already started some of the early construction related activities as well as the preparation of the final design plans for the proposed tollway. 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 volumcs._Tlle_Cjl~Lh~ also recently received a ~rant from the County of San Diego. Air Pollution Control District that will nrovide, financial incentives to carnool, vannool: or ride the bus: subsidies to nrovide an express bus from eastern Chula Vista to downtown San Die~o: and. subsidies to nrovide an exnress shuttle to the trolley. This ~rant is based upon nrovidin~ a local match in fundino and the maior develoners east of 1-805 have committed to nrovidin~ this local match. The ~rant becomes available in March 2003. and I~lannine and imnlementation of these Transnortation Demand Management Measures. 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 development pace does not decrease fi:om 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 and community facilities 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 and presents certain risks to the owners of the Bonds. See "SPECIAL RISK 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 fi.om time to time and no assurance can be given that its terms will not be more restrictive on development than those currently in effect. 35 DOCSOC\932761 v5X22245.0140 Appraisal The information regarding ownership of property in the District 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 the District or a development or any interest therein at any time. Development may also be abandoned at any time. The Appraiser valued the property within the District, taking into consideration the lien of the Special Taxes, based upon a number of assumptions and limiting conditions contained in the Appraisal as set forth in Appendix C. The Appraiser has valued the property owned by Cornerstone based upon a sales comparison approach to value and the remaining land owned by the McMillin Entities using a sales comparison approach coupled with a discounted cash flow analysis. Under the sales comparison approach to value, the Appraisal takes into account the development status of the residemial lots, analyzes the market for similar properties and compares these properties to the properties in the District. Under the discounted cash flow analysis, the Appraiser values the undeveloped acreage by discounting the cost of developing finished lots and the probable proceeds from the sale of the finished lots. The Appraiser first estimates the retail value of the finished lots, the costs of developing the finished lots, the estimated absorption period and the marketing, sales and carrying costs. The Appraiser then applies a discount rate to the projected cash flow that accounts for the risk associated with the development of the lots, the time value of money and a profit due to the owner of the lots. The Appraiser projects that the residential lots owned by the McMillin Entities could be sold within a one year period. Based on historical information, the Appraiser has assumed annual appreciation of 4% on land sales and 3% on development costs. A discount rate of 18% per year has been used by the Appraiser in amving at the estimate of value for the lots owned by the McMillin Entities. The Appraiser is of the opinion that the aggregate "as is" value of the land within the District as of December 16, 2002, assuming the completion of all improvements to be financed with proceeds of the Bonds was $65,260,000, with the land owned by the McMillin Entities valued at $54,040,000 and the Cornerstone property at $11,220,000. Certain land that is expected to become exempt from the levy of Special Taxes in the future was not assigned a value in the Appraisal. 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 the District 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 the District could be sold at the appraised values included in the Appraisal. 36 DOCSOC~32761v5~2245.0140 Market Absorption Study Thc Market Absorption Study dated September 2002 has bccn prepared by the Market Absorption Consultant. An executive summary of the Market Absorption Study dated December 17, 2002 is included herein as Appendix B. Thc Market Absorption Consultant has estimated, based upon thc analysis of relevant demographic and economic conditions in thc Chula Vista area, thc number and proportion of housing units in the Distr/ct that can bc expected to be marketed annually using the estimated absorption schedules for each of thc product types. The Market Absorption Study concludes that it will take until 2005 for the residential units within the District to be constructed and sold. The Market Absorption Study projects that, of the 694 single family and multi- family units proposed within the District, 217 will be absorbed in 2003, 362 in 2004 and 114 in 2005. The Market Absorption Study assumes that all required governmental approvals will be obtained in a timely manner and that there will be no slowdown in the issuance of permits due to the City's GMOC, 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 the District 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 Thc purchase of the Bonds involves a high degree of investment risk and, therefore, thc Bonds arc not appropriate investments for many types of investors. Thc 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 thc Bonds. This discussion does not purport to be comprehensive or definitive. Thc occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in thc District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in thc inability of the City to make full and punctual payments of debt service on the Bonds. In addition, thc occurrence of one or more of thc events discussed herein could adversely affect the value of thc property in the Dis%rict. See "Land Values" and "Limited Secondary Market" below. Concentration of Ownership As of thc date of the Appraisal, all of the taxable land within the District was owned by six landowners. Based on land use status, approximately 86% of thc projected fiscal year 2003-2004 Special Tax levy will be paid by the McMillin Entities and 14% will be paid by Cornerstone. See "THE COMMUNITY FACILITIES DISTRICT -- Principal Taxpayers." Until the completion and sale of additional parcels, the receipt of thc Special Taxes is dependent on the willingness and the ability of such landowners to pay thc Special Taxes when duc. Failure of the current landowners, or any successor, to pay the annual Special Taxes when due could result in a default in payments of thc principal of, and interest on, thc Bonds, when due. Sec" 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 District. See "-- Failure to Develop Properties" 37 DOCSOC\932761 v5~22245.0140 below. As a result, no assurance can be given that such landowners will continue to pay Special Taxes in the future or that they will be able to pay such 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 Owner of the Bonds may compel the exercise of any taxing power by the District or the City or force the forfeiture of any City or District property. The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal 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 amount of Special Tax to be levied on each taxable parcel in the District will generally be based on whether such parcel is categorized as Undeveloped Property or as Developed Property and on the 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 THE 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 75.48 acres. Moreover, if a substantial portion of land within the District 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 the District 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. 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 the District 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. 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 -~~ and Foreclosure" below, for a discussion of the policy of the Federal Deposit Insurance Corporation (the "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 Developer is not currently delinquent in the payment of any Special Taxes or assessments and has no history of such delinquency since its formation. 38 DOCSOC\932761 vSL22245.0140 Failure to Develop Properties Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to thc Bondowncrs should it bc necessary for thc District to foreclose on thc property due to thc nonpayment of Special Taxes. Thc failure to complete development of the required infrastructure for development in the District as planned, or substantial delays in thc completion of the development or thc required infrastructure for thc development duc to litigation or other causes may reduce the value of the property within the District and increase the length of time during which Special Taxes will be payable from undeveloped property, and may affect thc willingness and ability of the owners of property within the District to pay the Special Taxes when duc. 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 usc, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not bc 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, the Developer and thc merchant builders may nccd to obtain financing to complete thc 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. The future development of the vacant land within the District may be adversely affected by existing or future governmental policies, or both, restricting or controlling the development of vacant land in the District. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP -- Potential Limitations on Development" for a discussion of certain significant limitations on the ability of the Developer and merchant builders to complete the projected development of the District. Specifically, investors should consider the broad power of the City to halt or delay "B" map approval under its Growth Management Ordinance. There can be no assurance that the owners of the vacant land in the District 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 the District 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 the District would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the Special Taxes when due. 39 DOCSOC\932761 v5~22245.0140 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 the District 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 the District is currently owned by just six owners, five of which are affiliated, 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 ~"-- ~ of Ownership" above. A slowdown or stoppage in the continued development of the District 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 the District 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. 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 the District 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. In completing their analyses, both the -~ An~nraiser and the Market Absorption Consultant have assumed that there will be no delays in development due to land use regulations or growth control initiatives. Completion of construction of any proposed structures on the vacant land within the District 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 the permits. Because future development of vacant property in the District could occur over several 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 the District to decrease substantially from those in the Appraisal. 40 DOCSOC\932761 v5~22245.0140 7 g,q Water Availability The development of the land within the District is dependent upon the availability of water for the planned units. The Otay Municipal Water District (the "Water District") is the agency responsible for providing water to the DistricL The Water District receives a significant portion of its water from the Metropolitan Water District ("MWD"), which is the primary supplier of wholesale water in Southern California. On December 31, 2002, the federal government suspended the delivery of surplus water from the Colorado River to MWD as a result of the failure of certain water agencies in the State to reach agreement on the transfer of water rights from the Imperial Irrigation District to coastal San Diego County. While MWD states that it has sufficient reserves for the foreseeable future, the ultimate impact of the federal government's decision to suspend the delivery of the Colorado River surplus water to California is not yet known. The Developer and the City believe that the Water District will be able to provide water to the District to permit the construction of the planned units. No assurance can be given, however, that water service will be available at the time that building permits are applied for, and the lack of water availability could adversely affect the planned development in the District. A slowdown or stoppage in the continued development of the District 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. Endangered Species In recent years there has been an increase in activity at the State and federal levels related to the possible listing of certain plant and animal species found in the 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 the District 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 the DistricL In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. In the event of a severe earthquake, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. 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 thc District could be diminished in the aftermath of 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 A serious risk in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators ora parcel may be required by 41 DOCSOC\932761 v5~22245.0140 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 reduce the marketability and value of the parcel by the costs of remedying the condition, 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 future resulting from the existence, currently on the parcel of a substance not presently classified as. hazardous but which may in the future be so classified. 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 the District. Parity Taxes, Special Assessments and Land Development Costs Property within the District 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 pamels of land on which they will be annually imposed until they are paid. Such lien is on a party 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 the District 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 the District is security. This 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 the District. In addition, the landowners within the District may, without the consent or knowledge of the City, petition other public agencies to issue 42 DOCSOC\932761 v5~22245.0140 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 the District 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 amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a 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 parcel. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within the District 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 unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code 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 pumhaser 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 fight 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 satisfy Special Tax obligations by the tender of Bonds unless the District shall have first obtained a report of a Special Tax Consultant certifying that doing so would not result in the Disthct 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. 43 DOCSOC\932761 v5X22245.0140 Land Values The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a 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 owner, adjusted annually by an amount determined by the San Diego County Assessor, not to exceed an increase of more than 2% per fiscal yem. No assurance can be given 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 December 16, 2002 the value of the land within the District was $65,260,000. 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 the District, the listing of endangered species or the determination that habitat for endangered or threatened species exists within the District, 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 the District 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 the District 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 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 ongoing threat of terrorism and the response of the United States government thereto, 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 the District, which may include, among other effects, a slowdown in home sales and a decrease in land values in the District. 44 DOCSOC\932761 v5~22245.0140 FDIC/Federal Government Interests in Properties The ability of the District to foreclose thc lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which thc 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 the District is taken over by thc FDIC, and prior thereto or there'at~er the loan or loans go into default, then thc 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 (thc "Policy Statement') provides that property owned by thc FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to thc 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 thc orderly administration of thc institution's affairs, unless abandonment of the FDIC's interest in thc propctty is appropriate. The FDIC will pay claims for interest on delinquent property 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. Thc Policy Statement further provides that no property of thc FDIC is subject to levy, attachment, garnishment, foreclosure or sale without thc FDIC's consent. In addition, thc FDIC will not permit a lien or security interest held by thc FDIC to be eliminated by foreclosure without thc FDIC's consent. Thc Policy Statement states that thc 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 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 the District in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sate 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 two ways. First, the payment of property owners' taxes and the ability of thc District to foreclose the lien of a 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. 45 DOCSOC\932761 v5~22245.0140 Second, the Bankruptcy Code might prevent moneys on deposit in the funds and accounts created under the Indenture from being applied to pay interest on the Bonds and/or to redeem Bonds if bankruptcy proceedings were brought by or against the Developer 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 property 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 Glasplv 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 properly 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 of a state if such tax comes 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 property 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 of a 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. 46 DOCSOC~32761v5~2245.0140 "7 No Acceleration Provision The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under thc Bonds or thc 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 the Bonds may be limited 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 exercise 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. 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 certain financial and operating information on an annual basis, there can be no assurance that such information will be available to Bondowners on a timely basis. See "CONTINUING DISCLOSURE." The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current informatioh, 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 thc State of California at thc November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to thc California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes and property-related assessments, fccs and charges." Thc provisions of thc Initiative have not yet been interpreted by the courts, although several lawsuits have been filed requesting thc courts to interpret various aspects of the Initiative. Thc Initiative could potentially impact thc Special Taxes available to thc City to pay the principal of and interest on thc Bonds as described below. 47 DOCSOC\932761 v5~22245.0140 -7 / 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 rote 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 of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution." Accordingly, although the matter is not free from doubt, it is likely that the Initiative has not conferred on the voters the power to repeal or reduce 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 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 the District 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, Article XIII B and Proposition 218 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 fi:om 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 State, the City or local districts to increase revenues or to increase appropriations or on 48 DOCSOC\932761 v5~22245.0140 the ability of the landowners within the District 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, 2004, 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 arc 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 tailed 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 Underwriter in complying with Rule 15c2-12(b)(5), the Developer and the McMillin Entities (defined for the purposes of the Continuing Disclosure Agreement as, collectively, 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 August 1, 2003. The Semi-Annual Reports provided by the Developer are to contain the unaudited financial statements of the Developer and, if available, the audited financial statements, and 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' mom 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 thc 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 has not previously 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 Developer Disclosure Agreement will inure solely to the benefit of' the District, any Dissemination Agent, the Underwriter and owners or beneficial owners from time to time of the Bonds. 49 DOCSOC\932761 v5~22245.0140 TAX MATTERS In the opinion of Best Best & Kfieger 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 from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is o£the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal 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 Bond Counsel is set forth in Appendix H hereto. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 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 from 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 the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the 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 the value of, or the tax status of interest on, the 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. 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 & Krieger 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 o£ the proceedings by limitations imposed by bankruptcy, insolvency, moratoria and other similar laws affecting creditors' rights, heretofore or hereafter enacted, and by the exercise of judicial discretion in accordance with general principles of equity. 50 DOCSOC\932761 v5~22245.0140 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 of this Official Statement. Certain legal matters will be passed upon for the City and the District by the City Attorney and for the Under~vriter by its counsel, Stradling Yocca Carson & 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 authority of the 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 Bonds. UNDERWRITING The Bonds are being purchased by Stone & Youngberg LLC (the "Underwriter"). The Underwriter has agreed to purchase the Bonds at a price 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 o£ the Bonds. From time to time, 51 DOCSOC\932761 v5~22245.0140 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 District 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 o£ 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 o£ 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. 52 DOCSOC\932761v5~2245,0140 7 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. 2001-2 (McMillin - Otay Ranch - -~ Village Six) By: Director of Finance 53 DOCSOC\932761 v5~22245.0140 ] APPENDIX A RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMillin Otay Ranch Village Six) A Special Tax as hereinafter defined shall be levied on each Assessor's Parcel of Taxable Property within the City of Chula Vista Community Facilities District No. 2001-2 ("CFD No. 2001- 2") and collected each Fiscal Year commencing in Fiscal Year 2002-2003 in an amount determined by the City Council through the application of the appropriate Special Tax for "Developed Property," and "Undeveloped Property as described below. All of the Taxable Property in CFD No. 2001-2, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meaning: "Acre or Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the 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 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 CFD No. 2001-2 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. 2001-2 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2001-2 or any designee thereof of providing continuing disclosure; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2001-2 or any designee thereof related to any appeal of the levy or application of the Special Tax; and the costs associated with the release of funds from an escrow account, if any. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2001-2 for any other administrative purposes of CFD No. 2001-2, including, but not limited to attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. A-1 DOCSOC\932761 v5~22245.0140 "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Category of Developed Property as determined in accordance with the provision of Section C. 1 .a. below. "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, the Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. "Backup Special Tax" means the Special Tax determined in accordance with the provisions of Section C. 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. 2001-2 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 No. 2001-2" means City of Chula Vista, Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six). "City" means the City of Chula Vista. "Community Purpose Facility Property" means all Assessor's Parcels which are classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2452. "Council" means the City Council of the City, acting as the legislative body of CFD No. 2001-2. "County" means the County of San Diego. "Developed Property" means, for each Fiscal Year, all Taxable Property for which a building permit for new construction was issued prior to March 1 of the prior Fiscal Year. "Final Subdivision Map" means a subdivision of property created by recordation of a final map, parcel map, or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352 that creates individual lots for which residential building permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July 1 and ending on the following June 30. A-2 DOCSOC\932761 v5~22245.0140 ?-?9 "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Tables 1 and 2 of Section C. "Lot(s)" means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. "Master Developer" means the owner of the predominant amount of Undeveloped Property in CFD No. 2001-2. "Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C below, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non-Residential Property" means all Assessor's Parcels of Developed Property for which a building permit has been issued for purposes of constructing one or more non- residential structures, excluding Community Purpose Facility Property. "Occupied Residential Property" means all Assessors' Parcels of Residential Property for which title is owned by an end user (homeowner). "Outstanding Bonds" means all Bonds which remain outstanding as defined in the Indenture. "Property Owner Association Property" means any property within the boundaries of CFD No. 2001-2 owned by or dedicated to a property owner association, including any master or sub-association. "Proportionately" means for Developed Property that the ratio of the actual Special Tax levy to the Assigned Annual Special Tax or Backup Special Tax is equal for all Assessor's Parcels of Developed Property within CFD No. 2001-2. For Undeveloped Property "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Annual Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property within CFD No. 2001-2. "Public Property" means any property within the boundaries of CFD No. 2001-2 that is owned by or dedicated to the federal government, the State of 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 the CFD Administrator by reference to appropriate records kept by the City's Building Department. Residential Floor Area for a residential structure will be based on the building permit(s) issued for such structure prior to it being classified as Occupied A-3 DOCSOC\932761 v5~222 45.0140 7 -70 Residential Property, and shall not change as a result of additions or modifications made to such structure after such classification as Occupied Residential Property. "Special Tax" means the annual special tax to be levied in each Fiscal Year on each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement. "Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 2001-2 to: (i) pay debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year; (ii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iii)pay Administrative Expenses; (iv)pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; (v) pay directly for acquisition and/or construction of public improvements which are authorized to be financed by CFD No. 2001-2 provided that inclusion of such amount does not cause an increase in the levy of Special Taxes on Undeveloped Property; and (vi) less a credit for Available Funds. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2001-2 which are not exempt from the Special Tax pursuant to law or Section E below. "Trustee" means the trustee, fiscal agent, or paying agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Pmperty. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Assessor Parcels within CFD No. 2001-2 shall be classified as Taxable Property or Exempt Property. All Taxable Property shall then be classified as Developed Property or Undeveloped Property, and shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Furthermore, all Developed Property shall then be classified as Residential Property or Non-Residential Property. C. MAXIMUM ANNUAL SPECIAL TAX RATE 1. Developed Property The Maximum Annual Special Tax for each Assessor's Parcel of Residential Property or Non-Residential Property shall be the greater of (1) the Assigned Special Tax described in Table 1 below or (2) the amount derived by application o15 the Backup Special Tax. a. Assigned Special Tax The Assigned Special Tax for each Assessor's Parcel classified as Developed Property shall be the amount shown in Table 1 below: A-4 DOCSOC\932761 v5~22245.0140 TABLE 1 Assigned Special Tax for Developed Property Land Use Class Description Maximum Annual Special Tax 1 Residential $440 per unit plus $.34 p~r square Property foot of Residential Floor Area 2 Non-Residential $11,365 per Acre Property b. Backup Special Tax When a Final Subdivision Map is recorded within CFD No. 2001-2, the Backup Special Tax for Assessor's Parcels of Developed Property classified as Residential Property or Non-Residential Property shall be determined as follows: For each Assessor's Parcel of Developed Property classified as Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: $11,365 xA L The terms above have the following meanings: B = Backup Special Tax per Lot in each Fiscal Year. A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map. L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Developed Property classified as Non- Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Non-Residential Prope~y within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $11,365 by the total Acreage of both the Non-Residential Property and Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area. Notwithstanding the foregoing, if Assessor's Parcels of Residential Property, Non-Residential Property or Undeveloped Property for which the Backup Special Tax has been determined are subsequently changed or modified by recordation of a new or amended Final Subdivision Map (by an applicable final map, parcel map, condominium plan, record of survey, or other recorded document creating the parcels) then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change or modification did not take place. A-5 DOCSOC\932761 v5X22245.0140 :1-7 2 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 $11,365 per Acre D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2002-2003 and for each following Fiscal Year, thc 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 bc levied Proportionately 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 thc Special Tax Requirement after thc 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 paragraphs 2 and 3 in Section E, at up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Third: If additional monies are needed to satisfy thc Special Tax Requirement at~cr the first two steps have bccn completed, thc Special Tax to bc levied on each Assessor's Parcel whose Maximum Annual Special Tax is derived by thc application of thc Backup Special Tax shall bc increased Proportionately from thc 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 thc first three steps have been completed, then thc Special Tax shall be levied Proportionately on each Assessor's Parcel classified as UndevclopedPropcrty pursuant to paragraphs 2 and 3 in Section E at up to 100% of thc Maximum Annual Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Occupied Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Taxable Property. A-6 DOCSOC\932761 v5~22245.0140 V-73 E. EXEMPTIONS 1. The CFD Administrator shall classify up to 53 Acres within Assessor Parcel number 643-052-05 and any futura subdivisions therein as property exempt fi.om the Special Taxes provided that all or a portion of the property is planned for or is being developed or used for Community Purpose Facility Property and school land uses approved by the City pursuant to the Tentative Map approved for McMillin Otay Ranch, Village Six on February 26, 2002. It is possible that land use entitlements (such as parcel map, final map or any other such division of land) may be approved prior to January 1st of any Fiscal Year for all or any portion of such area(s) which would authorize the development or use of such area(s) for purposes not exempt fi.om the levy of the Special Tax pursuant to this Section E. The adjusted area(s) shall then be classified as Taxable Property in the next Fiscal Year as Developed Property or Undeveloped property in Step 2 of Section D, as applicable. 2. The CFD Administrator shall also classify the following Assessor Parcel(s) as exempt property: (i) Public Property, (ii)Property Owner Association Property, (iii)all Assessor's Parcels defined as Community Purpose Facility Property which are in addition to the property described in paragraph 1 above, and (iv) Assessor's Parcels with public or utility 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 75.48 Acres. Notwithstanding the preceding sentence, the CFD Administrator shall not classify an Assessor's Parcel described in this paragraph as exempt property if such classification would reduce the sum of all Taxable Property to less than 75.48 Acres. Assessor's Parcels which cannot be classified as exempt property because such classification would reduce the Acreage of all Taxable Property to less than 75.48 Acres will be classified as Undeveloped Property and shall be taxed as such. Tax- exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the chronological order in which property becomes exempt property. 3. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which cannot be classified as exempt property as described in paragraph 2 of Section E shall be prepaid in full by the seller pursuant to Section H. 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 pays the Special Tax and feels that the amount of the Special Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred, the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel. If following such consultation and action, if any by the CFD Administrator, the landowner or resident believes such error still exits, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of CFD No. 2001-2, a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, A-7 DOCSOC\932761 v5~22245.0 140 as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall interpret this Rate and Method of Apportionment and make determinations relative to the annual administration of the Special Tax and any landowner or resident appeals, as herein specified. The decision of the Review/Appeal Committee shall be final and binding as to all persons. G. MANNER OF COLLECTION The annual Special Tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2001-2 may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations, and may covenant to foreclose and may actually foreclose on Assessor's Parcels of Taxable Property that are delinquent in the payment of Special Taxes. Tenders of Bonds may be accepted for payment of Special Taxes upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "Outstanding Bonds" means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date following the current Bond Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Annual Special Taxes. 1. Prepayment in Full The Maximum Annual Special Tax obligation may only be prepaid and permanently satisfied by an Assessor's 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 Pamel 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 A-8 DOCSOC\932761 v5~22245.0140 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 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 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 revenue excluding any Assessor's Parcels which have been prepaid. 3. Multiply the quotient computed pursuant to paragraph 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). 4. Multiply the Bond Redemption Amount computed pursuant to paragraph 3 by the applicable redemption premium on the next possible Bond call date, if any, on the Outstanding Bonds 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. 2001-2, 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 A-9 DOCSOC\932761 v5~22245.0140 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"). 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. 2001-2. The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under paragraph 7 above, the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor's Parcel, and the obligation of such Assessor's Parcel to pay the Special Tax shall cease. Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within CFD No. 2001-2 both prior to and after the proposed prepayment is at least 1.1 times the maximum annual debt service on all Outstanding Bonds. Tenders of Bonds in prepayment of Maximum Annual Special Taxes may be accepted upon the terms and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. 2. Prepayment in Part The Maximum Annual Special Tax on an Assessor's Parcel of Developed Property or an Assessor's Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. The amount of the prepayment shall be calculated as in Section H. 1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE x F) + A These terms have the following meaning: A-10 DOCSOC\932761 v5~22245.0140 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) 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. 2001-2 that there has been a partial prepayment of the Maximum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF MAXIMUM ANNUAL SPECIAL TAX 'lhe 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 £or a period no longer than the 2037-2038 Fiscal Year. A-Il DOCSOC\932761v5~22245.0140 APPENDIX B SUMMARY OF MARKET ABSORPTION STUDY December 17, 2002 Mr. Robert Powell CITY OF CHULA VISTA 276 Fourth Avenue Chula Vista, California 91910 Subject: Market Analysis and Absorption Projection for CFD No. 2001-2 (McMillin Ota¥ Ranch Village 6)~ City of Chula Vista, San Diego County~ California Dear Mr. Powell: The following is an Executive Summary of the Absorption Analysis report conducted in support of the above financing. This overview examines current regional economic conditions that will affect the demand for housing within Specific Planning Area (SPA) II of Lomas Verdes (McMillin Otay Ranch Village 6) during the anticipated buitdout period and provides an overview of the residential product program proposed by the subject developers. The Absorption Analysis analysis was completed in September 2002 and is available if additional detail is needed. A. REGIONAL OVERVIEW Success in the absorption of the residential units within SPA II of Lomas Verdes will be correlated with the strength of national, regional and local economic conditions during the sales period. Economic conditions in San Diego County continue to support the development of all types of residential housing in appropriate locations and the regional economy is expected to remain healthy in the near to medium term. The peak period of product availability within SPA II will be in the next two years (2003-2004), and a review of key market indicators indicate positive growth will continue in the near term. San Diego's economy is still performing well in 2002. 28,000 new jobs were added in 2001, a slowdown from the over 40,000 jobs per year added in 1997 through 2000, but still quite healthy. In 2002, we are projecting an additional 25,000 to 30,000 new jobs will be added to the county. Compared to November 2001, total nonfarm wage and salary employment is up by over 22,000 jobs, a growth rate of 1.8%. Year-to-date job growth figures are derived from a monthly sampling of businesses. Year-end revisions to the employment counts usually indicate higher levels of job growth than the monthly sampling available at this point. The unemployment rate in San Diego County was 4.1% in November 2002, down from a revised 4.3% in October 2002. This compares with an unadjusted unemployment rate of 6.3% for California and 5.7 percent for the nation. San Diego County has been one of the strongest economies in the state and this is projected to hold true in the next few years. San Diego's economy has slowed, but it continues to expand, as evidenced by higher levels of employment. While manufacturing payrolls have declined, San Diego's service-based economy has barely skipped a beat in the past year. A healthy tourism sector and rising defense spending are providing key support for San Diego's economy and the region is the fourth-fastest growing metro B-1 DOCSOC\932761 v5~22245.0140 CITY OF CHULA VISTA CFD No. 2002-1 (McMillin Otay Ranch Village 6) December 17, 2002 Page 2 area for payroll employment in the nation. Defense spending buffers San Diego's economy from the tech and telecom downtums and should help drive the economy forward. Tourism and San Diego's continued dominance as a biotech center are also strengths. The region is expected to continue to outperform the nation and the state in the near term. Continued positive economic growth has supported the regional housing market. Despite the slowing national economy in 2001 and the disruptions in the second half of the year caused by September 1 lth, the San Diego County regional new housing market posted a very good year in 2001. There were 8,879 new units sold countywide, a 13.8% decline from 10,302 units sold in 2000. This was about the same level of sales as seen in San Diego County in 1997 through 1999. These years were considered good ones for housing, compared to the low level of sales for much of the early 1990s (5,400 to 6,000 sales per year). By all indicators, 2002 will also be a good year for housing. Through the Third Quarter, a total of 8,630 new homes were sold countywide, up 18.7% from the same period in 2001. The region is on pace for 10,000 to 11,000 new home sales in 2002, which would be the highest level in over a decade. The South County submarket where Otay Ranch is located has had 2,128 new home sales in 2002, and is on pace for 2,800 to 3,000 new home sales in 2002. This level of sales is about the same as in 2001, but could likely have been higher ifa more balanced supply of product had been available throughout the year (supply was limited at some points in 2002). With a number of new projects opening in late 2002 and 2003, sales should increase. The South County submarket of San Diego has become a more attractive area to reside in the last five years and many well-designed master planned communities have been developed. One of the main drivers of this region is its relative affordability. Countywide, the ~ detached median price reached $468,050 in Third Quarter 2002, up 34.2% from a year ago. The median ~ family detached price in South County is $430,666, up nearly 49% from the same point last year. Most of Lomas Verde's future product is targeted to the bulk of the market with prices in the under $500,000 price categories and the product program also includes for-sale condominiums priced under $300,000. Condominiums are selling well in South County as a relatively affordable alternative to increasingly expensive sinEle family detached housing. Residential growth in the southern portion of San Diego County, and specifically in the eastern Chula Vista area, will continue. New home sales will continue to remain strong in the South County submarket because of its relative affordability and large supply of developable land. B. Lomas Verdes SPA II Overview The projects that are subject to this bond offering are being developed by the Corky McMillin Companies in its next section of McMillin Lomas Verdes, located within Village 6 of the Otay Ranch master planned community in Chula Vista. The upcoming section includes 215 acres that will eventually be developed with five neighborhoods and a church and high school site for the Catholic Diocese of San Diego. The five projects total 694 units, with 212 units being ~ attached for-sale and the balance being ~ detached. The SPA II projects are all scheduled to enter the market in the second quarter of 2003 and our projection is for a sell out by mid 2005. Phase One of Lomas Verdes was the SPA I area. SPA I totaled +/-1,474 residential units, with 1,016 for-sale units and 478 rental units. Phase One at Lomas Verdes had six ,~l~..[e, Jhallli~ detached B-2 DOCSOC\932761 vSX22245.0140 "7--q o CITY OF CHULA VISTA CFD No. 2002-1 (McMillin Otay Ranch Village 6) December 17, 2002 Page 3 neighborhoods, two ~ attached for-sale condominium neighborhoods and one apartment community (Teresina). Development of SPA I began in 1999 and all but one neighborhood is now sold out. The final neighborhood in the first phase of Lomas Verdes is the Villagio mixed-use community by Cornerstone Communities, which will also include 72 attached for-sale homes, a central plaza and 10,000 square feet of commercial space. Cornerstone will also build the ~ family attached neighborhood in the SPA II area. The SPA I area also includes four parks, an elementary school and a church and associated school (Calvary Chapel). The four ~gle..fami~ detached neighborhoods in SPA II will offer one and two-story residential units in a variety of floor plans. Three to six-bedroom homes will be offered with two and three-car garages. The detached for-sale homes will range from approximately 2,000 to 3,400 square feet (plus room options). The townhome neighborhood will offer units ranging from 1,175 to 1,760 square feet. Projected December 2002 pricing is in the $200,000s for the ~lgl.t.fami~ attached units and ranges from the low $300,000s to the $400,000s for the ~ detached for-sale products. The Otay Ranch master plan is located east of the 805 Freeway in the eastern portion of the City of Chula Vista. The eastern Chula Vista area is a major area of new residential development activity. There are a number of active large-scale planned communities, including Otay Ranch, Sunbow, Rolling Hills Ranch and Eastlake. Development of the Otay Ranch master plan began in 1998. With over 22,000 residential units planned in a series of villages, Otay Ranch is the largest single piece of land available for residential and commercial development in San Diego County and is controlled by a variety of landowners, including McMillin. The initial phase of Otay Ranch was bordered on the north by Otay Lakes Road and Telegraph Canyon Road and on the south by Olympic Parkway (which is now completed to the Olympic Training Center). Development of the first increment of Otay Ranch (Villages One, Five and One-west) is now largely completed, with about 6,000 tingle,_fallti~ detached and singltlamil.y attached units developed since late 1998. Development activity is now shitting to the south of Olympic Parkway into Villages 6, 2 and 11 (WindingWalk). Village 6 includes property owned by McMillin and Otay Ranch Company and is now being graded for development starting in 2003. McMillin will develop other Otay Ranch ownerships with additional residential units and a freeway oriented commercial project. Development of the SPA ii area will take place in the near term, with about a two-year buildout projected for the 694 residential units. Grading is underway and all of the neighborhoods have been transferred to development entities. Marketing efforts will start in early 2003 for a mid-2003 grand opening for all five product lines. C. Market Positioning of the Lomas Verdes SPA II Products The development plan for McMillin Lomas Verdes SPA II is generally in-line with most other Eastern Chula Vista active master planned communities. The master plan will offer a wide array of product from entry-level ,s~lgltlatll~z attached units to upscale aiag[e,~aulli~ detached homes. B-3 DOCSOC\932761 v5~22245.0140 CITY OF CHULA VISTA CFD No. 2002-1 (McMillin Otay Ranch Village 6) December 17, 2002 Page 4 Positioning Following is a positioning analysis comparing competitive active projects with the planned units in CFD 2001-2. Projects were broken down into three categories: · ' For-Sale Product There is one parcel in Village 6 that will be developed with ~ attached for-sale townhomcs. The units will be townhomcs with base prices under $300,000. This product is positioned in-line with other active townhome projects and is positioned below entry-level ~ famil__v detached options. The subject properties have a planned absorption of S.0 homes per month, or 24 homes per quarter. Similar townhomes and entry level ~sJagl~ detached for-sale projects are selling extremely well. Tivoli Villas is being developed by D.R. Horton in the Sunbow master plan. The project will total 117 units, with 70 sold at a rate of 7.92 units per month. Homes range from 1,040 to 1,431 square feet and are priced in the high $200,000's to the mid $300,000s (for ocean view units), tX homes are being developed in Alicante by Continental Homes at San Miguel Ranch. This project has base prices from the high $200,000s and the homes range in size from 1,342 to 1,554 square feet. Alicant¢ opened on September 21 st and sold 18 of the 20 homes released in the first weekend. Additional ~ attached projects are being planned in Otay Ranch, Eastlake, the Otay Ranch Company portion of Village 6 (which will develop concu~ently with the SPA II ama) and in the Winding Walk project. The market for entry level ~ detached and more affordable ~ attached for-sale products is hot and demand for housing in San Diego County and in the South County area at this relatively affordable price level is high, and these homes should sell extremely well. Entry-Level/Initial Move-up Products (Lots Under 5~000 Square Feet) McMillin will develop one parcel with 126 lots that have an average lot size of 4,000 square feet. Projected prices are in the $300,000s. The homes will be alley loaded and range in size from 2,200 to 2,600 square feet. Them are a variety of competitive projects, but most have slightly larger lots and/or a conventional lot layout. Prior alley loaded projects in South County have generally had smaller unit sizes, but a similar product was developed with success by Brookfield at 4S Ranch (Amherst). Jasmine will offer smaller yard areas, but larger home sizes. Bella Sol by Standard Pacific is a relatively new entry-level ~ detached project on small lot sizes (under 3,000 square feet). This is the last parcel to be developed in the Sunbow master planned community. Homes are priced from the low $300,000s and range from 1,502 to 1,705 square feet. This project sold 12 homes the first weekend. Another comparable project is Sonoma in Eastlake Trails. This project has slightly larger lots (4,000 square feet) and smaller homes (1,700 to 2,160 square feet). Sonoma is selling well, with a sales pace of over 17 homes per month. B-4 DOCSOC\932761 v5~22245.0140 CITY OF CHULA VISTA CFD No. 2002-1 (McMillin Otay Ranch Village 6) December 17, 2002 Page 5 Move-up Products (Lots Over 5,000 Square Feet) ~fhis category includes three future villages of the McMillin portion of Otay Ranch (Village 6). Minimum lot sizes range from 5,000 to 6,000 square feet, and projected absorption rates range from five to six homes per month. Projected December 2002 pricing is in the high $300,000s to the $400,000s. The current competitive market consists of 23 active projects; nine are located in Otay Ranch, two in San Miguel Ranch, three in Eastlake and three in Rolling Hills Ranch. Of the 23 active projects, eight are new and just recently opened. The sales rate for the established projects range from 2.70 to over 15 homes per month. Prices start in the mid $300,000s and go up to the low $600,000s. Homebuilders include Continental Homes, Shea Homes, Trimark Pacific, RWR Development, Pacific Coast Communities and Oakwood Development. The primary buyers of this product are move up executives. There are a variety of new projects in this consumer segment. Loreto by Shea Homes is being developed in San Miguel Ranch. The homes start at 2,700 square feet and have prices starting in the high $300,000s. The overall average sales pace in over 15 homes per month. Colrich recently opened Colrich at the Woods in Eastlake. The homes am priced from the mid $500,000s and range in size from 3,200 square feet to over 4,300 square feet. A total of 18 homes sold within the first few weeks. Active New Home Market Conclusions Established Chula Vista area master plans such as Eastlake, Otay Ranch, Lomas Verdes and Rolling Hills Ranch have established the general eastern Chula Vista area as a desirable one with new homebuyers. Prices in the South Bay continue to increase as the area becomes one of the major areas for new development. All projects generally seem logically when viewed from a price positioning point of view, many of them conservatively positioned. The large lot product is setting a new level for production housing in the South Bay, but relative to other areas of San Diego the home price seems to be value oriented. The market is hot. Many projects are selling homes as soon as they enter the market (at every price level). In some instances, the lottery system is being used to select buyers. Nearly every project continues to push price upward per phase release. D. Absorption Projection A detailed buildout schedule was developed for the CFD No. 2001-2 development plan. The detailed buildout schedule is shown in Exhibits I-1 through I-3. Given thc proposed product and pricing parameters, it is our conclusion that residential units within CFD No. 2001-2 should be fully built-out in the 2003-2005 period. As projected, average sales for all the units in McMillin Lomas Verdes SPA II average +/-231 units per year. The following is a list of the recent sales per year for a few of the active master plans: · Lomas Verdes (SPA I) - 145 to 461 units/year · Eastlake - 272 to 656 units/year · Otay Ranch - 800 to 900 units/year B-5 DOCSOC\932761 v5~22245.0140 CITY OF CHULA VISTA CFD No. 2002-1 (McMillin Otay Ranch Village 6) December 17, 2002 Page 6 · Sunbow 175 to 300 units/year · Rolling Hills Ranch - 200 to 300 units/year Peak sales of up to 362 sales per year are projected for Otay Ranch Village 6 - McMillin Lomas Verdes SPA II in the first full year of development (2004). We project that at peak the community will be selling approximately five subdivisions at one time. In comparison, Otay Ranch as a whole has achieved sales of 850 to 900 sales in the past two years with six to eight active ~ detached projects. Eastlake has achieved peak sales of up to 503 sales in 2000 and 656 sales in 2001. Lomas Verdes SPA I sold 145 homes in year one of development, 461 in year two and 337 in year three. The three-year average for SPA I was 314 homes per year. Given the accelerated South County market, the recognition of the McMillin name with homebuyers and the presence of more affordable siagltlami~ attached for-sale units in the product spectrum, actual absorption could be somewhat faster than the roughly two years projected (the attached units could sell particularly well given demand for this product option). Absorption Assumptions This buildout schedule assumes a smooth schedule of approvals processing, home construction and infrastructure completion (no delays due to weather, construction worker shortages or government delays in processing final maps, reviewing plans or approving any product changes). Specifically, we assume no hold ups in construction resulting from traffic mitigation required as a condition of project approvals. This assignment was directed by Peter F. Dennehy, Managing Director. It has been a pleasure working with the Financing Team on this assignment. We are available to answer any questions you may have regarding the conclusions in this report. Very truly yours, THE MEYERS GROUP B-6 DOCSOC\932761 v5~22245.0140 EXHIBIT I-2 COMPARISON OF BUILDING PERMITS AND NEW HOME SALES San Diego County, South County and Village 6 (McMillin-Lomas Verdes Spa II) 1980-2005 B-9 DOCSOC\932761 v5~22245.0140 7--I07 7 APPENDIX C APPRAISAL REPORT C-1 DOCSOC\932761 v5~22245.0140 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 ChuIa Vista, the County of San Diego (the "County"), the State of California (the "State')) and the United States of America (the "United States ')) are included on[y 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 March 17, 1911 and became a chartered 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 2002 estimated population of 190,900, 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 1998 159,500 2,702,800 32,657,000 1999 164,200 2,751,000 33,140,000 2000 171,700 2,805,900 33,753,000 2001 181,200 2,859,000 34,385,000 2002 190,900 2,918,300 35,037,000 Source: California State Department of Finance, E-4 Revised Historical City, County and State Population Estimates, 1991- 2000, with 1990 and 2000 Census Counts and E-I City/County Population Estimates, with Annual Percent Change, January 1, 2001 and 2002. D-1 DOCSOC\932761 v5~22245.0140 7-t/ Building Activity Residential building activity for the past five calendar years for Chula Vista is shown in thc following tables. City of Chula Vista New Housing Units Building Permits 1998 1999 2000 2001 2002a; Single Family Units 1,180 1,796 1,776 2,184 1,178 Multifamily Units 166 750 864 1,341 480 Total Units 1,346 2,546 2,640 3,525 1,658 (~t Figures are through the end of the Third Quarter of 2002. Source: Construction Industry Research Board. City of Chula Vista Building Permit Valuations 1998 1999 2000 2001 2002(-9 Residential New Single Family $214,986,428 $307,653,358 $319,085,986 $433,850,821 $265,097,002 New Multifamily 11,452,036 53,470,818 74,634,324 107,731,702 44,610,575 Res. Alt. & Adds 5,391~192 5,085,049 4,862,879 7,987,049 7~240,514 Total Residential 231,829,656 366,209,225 398,583,189 549,569,572 316,948,091 Nonresidential New Commercial 17,432,322 17,213,869 17,916,085 22,139,245 19,960,883 New Industrial 5,581,655 7,909,587 17,418,207 2,139,313 737,65I New Other® 11,483,220 5,840,339 17,890,100 11,112,335 12,885,162 Alters. & Adds. 12,783,744 13~552,638 10,527,193 13,091,600 14,240,679 Total Non- Residential 47,280,852 38,516,433 63,751,585 48,482,493 47,824,375 Total All Building $279,110,508 $404,725~658 $462,334,774 $598,052,065 $364~772,466 Figures are through the end of the Third Quarter of 2002. 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 Industry Research Board. D-2 DOCSOC\932761 v5~22245.0140 7 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 California and United States Labor Force, Employment and Unemployment Yearly Average Civilian Civilian Civilian Civilian Year and Area Labor Force EmploymenttO UnemploymenttO Unemployment Rate(si 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® 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 71,300 68,980 2,320 3.3% San Diego County 1,361,600 1,319,600 42,000 3.1% California 16,596,500 15,731,700 864,800 5.2% United States{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® 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(s) 141,815,000 135,073,000 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 unrounded 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 Employment Development Department, based on March 2001 benchmark and U.S. Department of Labor, Bureau of Labor Statistics. D-3 DOCSOC\932761 v5~22245.0140 San Diego Metropolitan Statistical Area ("MSA"), which includes Chula Vista, civilian labor force and wage and salary employment figures for calendar years 1997 through 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 2001 Civilian Labor Force°) 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 thc employment data found herein. (i) Based on place of residence. {2} Based on place of work. Source: State of California, Employment Development Department, San Diego MSA Annual Average Labor Force and Industry Employment, March 2001 Benchmark. D-4 DOCSOC\932761 v5~2245.0140 7-//7 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 Center Hospital 800 Scripps Memorial Hospital Hospital 650 White Water Canyon Amusement Park 500 American Fashion Inc. Clothing Manufacturer 500 Sunrise Medical Inc. Medical Offices 450 Eco Building Systems Modular Building Manufacturer 210 American Manufacturing Concepts Clothing Manufacturer 200 Coastal Embroidery Specialty Manufacturer 200 Sharp Rees-Stealy Medical Group Medical Offices 200 Fredericka Manor Care Center Day Care 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 Electrical Manufacturer 200 Fredericka Manor Retirement Community Elderly Care Facility 171 South Bay Community Services Social Service Agency 160 Crower Cams & Equipment Inc. Motor Vehicle Part Manufacturer 160 Navcare Hospital 150 Community Health Group Medical Offices 150 Government No. of Name Type of Business Employees United States Border Pa~ol Government Agency 2,700 Southwestern Community College Community College 1,100 City of Chula Vista Municipal Government 825 Department of Social Services Social Service Agency 300 Sweetwater Union High School Dis~'ict 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 Target Stores General Merchandise 180 J c Penney Department Store 150 Vons Grocery Store 150 Fuller Ford Automotive Retailer 150 Source: City of Chula Vista DOCSOC\932761 v5~22245.0140 Effective 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 from this total am personal taxes (federal, state and local, nontax payments, fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." The following table summarizes the total effective buying income, the per capita effective buying income, the median household effective buying income and percent of households over $50,000 for Chula Vista, the County and the State between 1997 and 2001. Chula Vista, San Diego County and California Effective Buying Income°) Median Effective Per Capita Household Percent of Buying Effective Effective Households Income~2~ Buying Income Buying Income over $50,000 1997 Chula Vista $ 2,217,170 $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, l 01 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 2000 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 2001 Chula Vista $ 2,917,494 $16,128 $42,229 39.1% San Diego County 55,2 l 0,119 19,092 44,146 42.0 California 650,521,407 18,652 43,532 41.9 0) 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 sociaI 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 Vista by type of business during calendar years 1996 lin'ough 2000. As indicated below, total retail sales for Chula Vista in 1996 increased by approximately 6.5% over the 1995 level, in 1997 increased by approximately 7.1% over the 1996 level, in D-6 DOCSOC\932761 v5L22245.0140 1998 increased by approximately 8.8% over the 1997 level, in 1999 increased approximately 10.3% over the 1998 level and in 2000 increased approximately 13% over the 1998 level. A summary of historic taxable transactions for Chula Vista is shown in the following table. 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 (~) 0) ti) ,) Food Stores Group 72,388 81,503 81,006 85,662 90,487 Packaged Liquor Stores 5,948 (2) (2) (2) t2) Eating and Drinking Group 121,494 126,357 131,661 142,329 155,583 Household Group,Home Furn. 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.~2_13.~442~3 $1_~32~0~.[9~5 ~1.456.38~8 $1.608.29~0 ") Included in General Merchandise Stores. (2) Included in Eating and Drinking Group. Source: State BoardofEqualization. Education Public educational instruction from kindergarten through high school is provided by the Chula Vista Elementary School District and Sweetwater Union High School District. These districts administer twenty-six elementary schools, nine junior high schools and eight senior high schools. Southwestern College, a two year Community College, 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 in 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 doctors 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 libraries. Recreational facilities within or near Chula Vista include twenty-four parks, four community centers, six "tot lots," two ball fields, twenty-eight tennis courts, three golf courses, four municipal swimming pools, two gynmasiums 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 only 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\932761 vSX22245.0140 Transportation U.S. I~ighways 5 (along the coast) and 805 (inland) provide full freeway access from Chula Vista 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 Claula Vista provides sewer service. D-8 DOCSOC\932761 v5~22245.0140 APPENDIX E SUMMARY OF INDENTURE E-1 DOCSOC~932761 v5L22245.0140 APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT This Continuing Disclosure Agreement dated as of _, 2003 (the "Disclosure Agreement") is executed and delivered by the City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) (the "Issuer") and -~ Mltllifmancial as dissemination agent (the "Dissemination Agent"), in connection with the issuance and delivery by the Issuer of its $ 2003 Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of ~- March 1, 2003 (the "Indenture"), by and between the Issuer and the Fiscal Agent. The Issuer, the Fiscal Agent and the Dissemination 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, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income purposes. "Disclosure Representative" shall mean the Director 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, ~- Munifinancia[, 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 _, 2003 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, California 94111, Attention: Research Department. "Repository" shall mean each National Repository and each State Repository. F-1 DOCSOC\932761 v5~22245.0140 "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. "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, them is no State Repository. "Tax-exempt" shall mean that interest on the Bonds is excluded from gross income for federal 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, 2004, provide to each Repository and the Participating Underwriter 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 Report 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 fumished 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. (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 F-2 DOCSOC\932761 v5~22245.0140 (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 required 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 such 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 status 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 thc District 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 property for the current fiscal year; provided, however, that all pamels 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 Disthct upon which 5% or more of the total F-3 DOCSOC\932761vSX22245.0140 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 already 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. (6) adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds. (7) modifications to the fights of Bond Owners. (8) unscheduled redemption of any Bond. F-4 DOCSOC~932761 v5~22245.0140 (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 pursuant 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 (b) or otherwise, the Issuer shall as soon as possible determine 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 subsection (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 requirements 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 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 F-5 DOCSOC\932761 v5~22245.0140 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 -~ MulliflnaXtO~. 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 rules 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 this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in cimumstances, (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 or 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 financial 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 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 limited 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 F-6 DOCSOC\932761 v5~22245.0140 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 Underwriter 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 Indenture and the Dissemination Agent and the Fiscal Agent shall be entitled to the same protections, limitations fi.om 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 Disclosure 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 f~es 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 obligations 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. 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 F-7 DOCSOC\932761 v5~22245.0140 Dissemination Agent eL ~ Attention: Corporate Trust Department 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 instrument. CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMillin - Otay Ranch - 6 Village Six) By: Director of Finance ~ as" Dissemination Agent By: Authorized Officer F-8 DOCSOC\932761 v5~22245.0140 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) Name of Bond Issue: City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) $. 2003 Special Tax Bonds Date of Issuance: ,2003 NOTICE IS HEREBY GIVEN that the City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) located in the City of Chula Vista, California (the "District") has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement, dated as of ,2003, by and between the District and -~ Munifinancial: as -~ dissemination agent. [The District anticipates that the Annual Report will be filed by .] Dated: hlnnifmanr~ll, as Dissemination Agent cc: City of Chula Vista Stone & Youngberg LLC F-9 DOCSOC\932761 v5~22245.0140 APPENDIX G CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER This Continuing Disclosure Agreement (the "Disclosure Agreement") dated as of ,2003 is executed and delivered by McMillin Otay Ranch, LLC, McMillin Mandalay 101, LLC, McMillin Jasmine 126, LLC, McMillin Sienna II, LLC and McMillin Auburn Lane II, LLC (collectively the "Developer"), and U.S. Bank-~ National Association, 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. 200 I-2 (McMillin - Otay Ranch - -~ Village Six) (the "District") $ aggregate principal amount of its City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - a Village Six) 2003 Special Tax Bonds (the "Bonds"). The Bonds are being executed and delivered pursuant to an Indenture dated as of -~ March 1., 2003 by and between the District and U.S. Bank-~ National Association, as Fiscal Agent (the "Agreement"). The Developer covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Agreement. This 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 15c2-12(b)(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 following capitalized terms shall have the following meanings: "Affiliate" shall mean, with respect to any Person, (a) each 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-~ National Association, 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. 2001-2 (McMillin - Otay Ranch - ~- Village Six). G-1 DOCSOC~32761v5~2245.0140 "Equity Securities" of any Person shall mean (a)all common stock, preferred stock, participations, shares, general partnership interests or other equity interests in and of such person (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. "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 ,2003, 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 offering of the Bonds. "Person" shall mean any natural 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 from 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 August 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\932761 v5~22245.0140 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 am 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 providing the Semi-Annual Report the name and address of each National Repository and the State Repository, if any; and (ii) file a report with the Developer and the District certifying that the Semi- 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 Semi-Annual Report. The Developer's Semi-Annual Report shall contain or include by reference the information which is available as of January 1 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 soumes of funds to finance development relating to its property within, and whether any material defaults exist under any loan arrangement related to such financing. b. A summary of development activity within , including 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 the District 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 priva~te improvements to be made by the Developer or G-3 DOCSOC\932761 v5~22245.0140 any of its Affiliates within ~, 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 or Special Tax exemption status with respect to pamels within the District that are known to the Developer, including (i) 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, and (ii) listings of any acreage that has become exempt from the levy of Special Taxes. g. Until such time as the Developer and its Affiliates no longer own land within the District which is responsible for 20% or more of the annual Special Tax levy, unaudited financial statements of the Developer and its Affiliates owning land within the District and, if prepared, audited financial statements 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, the Developer Improvements or the development of undeveloped parcels within, or litigation which would materially adversely affect the financial condition of the Developer or its Affiliates that own property within. i. Material payment default by the Developer on any loan of the 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 document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Developer shall clearly identify each such other document so included by reference. G4 DOCSOC\932761 v5~22245.0140 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 the District 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 property within the District 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 the District 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) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities taws, the Developer shall promptly file a notice of such occurrence with the Dissemination Agent 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. SECTION6. Termination ofReporting 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 the District which is responsible for less than twenty percent (20%) of the Special Taxes levied in the Fiscal Year for which the Semi-Annual Report is being prepared, and the -~ Dislrict 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. Dissemination 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 successor Dissemination Agent. If the Dissemination Agent is not the Developer, the Dissemination G-5 DOCSOC\932761 v5~22245.0140 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-~ National Association 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 circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) This Disclosure Agreement, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel addressed to the District, the Fiscal Agent and the Participating Underwriter, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (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 this 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-Annual Report or notice of occurrence of a Listed Event. G-6 DOCSOC\932761 v5~22245.0140 SECTION 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 11. 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 against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination 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 from 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 fight to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination 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 proceeding 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. The Developer shall, in connection with any sale or transfer of ownership of land within the District 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 the District 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 finished lot condition, cause such transferee to enter into a disclosure agreement with terms substantially similar to the terms of this Disclosure Agreement, whereby such G-7 DOCSOC\932761 vSX22245.0140 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 pement of the annual Special Taxes. A memorandum regarding the Developer's obligations under this Disclosure Agreement 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 Underwriter and Bondowners and Beneficial Owners fi.om time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 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. McMILL1N OTAY RANCH, LLC By: Its: McMILLIN MANDALAY 101, LLC By: Its: McMILL1N JASMINE 126, LLC By: Its: McMILL1N SIENNA Il, LLC By:. Its: McMILLIN AUBURN LANE II, LLC By:. Its: U.S. BANK-~ NATIONAL ASSOCIATION By: Its: G-8 DOCSOC\932761 v5~22245.0140 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE SEMI-ANNUAL REPORT Name of the Issuer: City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - /` Village Six) City of Chula Vista, California Name of Bond Issue: City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch -/` Village Six) 2003 Special Tax Bonds Date of Issuance: ,2003 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 .1 Dated: U.S. BANK/` NATIONAL ASSOCIATION By: cc: City of Chula Vista, California Stone & Youngberg LLC G-9 DOCSOC\932761 v5~22245.0140 '7 APPENDIX H FORM OF OPINION OF BOND COUNSEL H-1 DOCSOC\932761 v5~22245.0140 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 o£ Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authotizcd 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 of 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 count6es 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 turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Cleating Corporation, and 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 Dealers, 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 ("Indirect 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 2003 Special Tax Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statemems 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 records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, I-1 DOCSOC\932761 v5~22245,0140 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 from 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 2003 Special Tax 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 at~er the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to thc Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the 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 govemed 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 from 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 event that a successor depository is not obtained, physical Bonds are required to be printed and delivered. I-2 DOCSOC\932761 v5~22245.0140 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 conceming 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\93276 l v5~22245.0140 ? BONDINDENTURE by and between City Of Chula Vista Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six) and U.S. Bank, N.A., As Fiscal Agent Dated as of February 1, 2003 Re: Sxx,000,000 City of Chula Vista Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six) 2003 Special Tax Bonds ? t¢ Draft 1.7.03 TABLE OF CONTENTS Page ARTICLE I. DEFINITIONS ...................................................................................................... 1 SECTION 1.01 DEFINITIONS ..................................................................................................... 1 ARTICLE II. GENERAL AUTHORIZATION AND TERMS ............................................. 13 SECTION 2.01 AMOUNT, ISSUANCE AND PURPOSE ................................................................ 13 SECTION 2.02 TYPE AND NATURE OF BOND ......................................................................... 13 SECTION 2.03 TERMS OF THE BONDS ................................................................................... 13 SECTION 2.04 DESCRIPTION OF BONDS; INTEREST RATES .................................................... 14 SECTION 2.05 PAYMENT ....................................................................................................... 14 SECTION 2.06 EXECUTION OF BONDS ................................................................................... 15 SECTION 2.07 ORDER TO PRINT AND AUTHENTICATE BONDS ...............................................15 SECTION 2.08 BOOKS OF REGISTRATION; BOOK ENTRY SYSTEM .......................................... 15 SECTION 2.09 EXCHANGE OF BONDS .................................................................................... 17 SECTION 2.10 NEGOTIABILITY, REGISTRATION AND TRANSFER OF BONDS ........................... 17 SECTION 2.11 AUTHENTICATION .......................................................................................... 17 ARTICLE III. FUNDS AND ACCOUNTS ............................................................................. 19 SECTION 3.01 ESTABLISHMENT OF SPECIAL FUNDS .............................................................. 19 SECTION 3.02 SPECIAL TAX FUND ........................................................................................ 19 SECTION 3.03 BOND SERVICE FUND ..................................................................................... 21 A. Interest Account ............................................................................................................ 21 B. Principal Account ......................................................................................................... 21 SECTION 3.04 COSTS OF ISSUANCE FUND ............................................................................. 21 SECTION 3.05 PROJECT FUND ............................................................................................... 21 SECTION 3.06 RESERVE FUND .............................................................................................. 23 SECTION 3.07 REBATE FUND ................................................................................................ 24 SECTION3.08 REDEMPTION FUND ........................................................................................ 24 SECTION 3.09 ADMINISTRATIVE EXPENSE FUND .................................................................. 25 SECTION 3.10 INVESTMENT OF FUNDS .................................................................................. 25 SECTION 3.11 DISPOSITION OF BOND PROCEEDS ................................................................. 26 ARTICLE IV. REDEMPTION ................................................................................................ 27 SECTION 4.01 NOTICE OF REDEMPTION ................................................................................ 27 A. Notice by Mail to Bondholders: .................................................................................... 27 B. Further Notice: ............................................................................................................. 27 C. Failure to Receive Notice .............................................................................................. 27 D. CertOTcate of Givin~r Notice .......................................................................................... 27 SECTION 4.02 EFFECT OF REDEMPTION ................................................................................. 28 SECTION 4.03 REDEMPTION PRICES AND TERMS .................................................................. 28 A. Optional Redemption .................................................................................................... 28 B. Extraordinary Mandatory Redemption ......................................................................... 28 C. Mandatory Sinking Fund Redemption .......................................................................... 29 E. Notice and Selection of Bonds for Redemption ............................................................. 30 ARTICLE V. SUPPLEMENTAL INDENTURES .................................................................. 31 (i) '7 1q6, Draft 1.7.03 TABLE OF CONTENTS (Continued) Page SECTION 5.01 AMENDMENTS OR SUPPLEMENTS ................................................................... 31 ARTICLE VI. MISCELLANEOUS CONDITIONS ............................................................ 33 SECTION 6.01 OWNERSHIP OF BONDS ................................................................................... 33 SECTION 6.02 MUTILATED, LOST, DESTROYED OR STOLEN BONDS ..................................... 33 SECTION6.03 CANCELLATION OF BONDS ............................................................................. 33 SECTION 6.04 COVENANTS ................................................................................................... 33 SECTION 6.05 ARBITRAGE CERTIFICATE ............................................................................... 36 SECTION 6.06 DEFEASANCE ................................................................................................. 37 SECTION 6.07 FISCAL AGENT ............................................................................................... 38 SECTION 6.08 LIABILITY OF F1SCAL AGENT .......................................................................... 39 SECTION 6.09 PROVISIONS CONSTITUTE CONTRACT ............................................................. 40 SECTION 6.10 CUSIP NUMBERS ........................................................................................... 40 SECTION 6.11 SEVERABILITY ................................................................................................ 41 SECTION 6.12 UNCLAIMED MONEY ...................................................................................... 41 SECTION 6.13 NONPRESENTMENT OF BONDS ........................................................................ 41 SECTION 6.14 CONTINUING DISCLOSURE ............................................................................. 42 ARTICLE VII: BOND FORM .................................................................................................. 44 SECTION 7.01 FORM OF BONDS ............................................................................................ 44 SECTION 7.02 TEMPORARY BONDS ...................................................................................... 44 ARTICLE VIII EVENT OF DEFAULT .................................................................................. 45 SECTION 8.01 EVENTS OF DEFAULT ...................................................................................... 45 SECTION 8.02 APPLICATION OF REVENUES AND OTHER FUNDS AFTER DEFAULT ................. 45 EXHIBIT "A" - FORM OF BOND ......................................................................................... A- 1 EXHIBIT "B" - ARBITRAGE REBATE INSTRUCTIONS ..................................................B-1 (ii) Draft 1.7.03 BOND INDENTURE This Bond Indenture dated as of February 1,2003, is entered into by and between Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six), a community facilities district organized and existing under the laws of the State, and U.S. Bank, N.A., as Fiscal Agent, to establish the terms and conditions and pertaining to the issuance of the Bonds as defined herein. ARTICLE I. DEFINITIONS SECTION 1.01 Definitions. As used in this Indenture, the following terms shall have the following meanings: "Acquisition Account" means the account by that name within the Project Fund established pursuant to Section 3.10 hereof. "Acquisition/Financing Agreement" means that certain Acquisition/Financing Agreement, dated as of November 17, 2002 by and between the City, acting on behalf of itself and the District, and McMillin Otay Ranch, LLC, a California limited liability company as such agreement may be amended from time to time. "Act" means the "Mello-Roos Community Facilities Act of 1982", as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California. "Administrative Expense Fund" means the fund by that name established pursuant to Section 3.01 hereof. "Administrative Expenses" means the expenses directly 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 schedules (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 the Special Taxes to the Fiscal Agent; the costs of the Fiscal Agent (including its legal counsel) in the discharge of the duties of the Fiscal Agent required under this Indenture; the costs of the City, the District 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, District or obligated person disclosure requirements associated with applicable federal or state securities taws 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, District 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 McMillin Otay Ranch, LLC and/or its successor). Administrative Expenses shall also include Delinquency Collection Expenses. "Administrative Expense Requirement" means an annual amount equal to $75,000, or such lesser amount as may be designated by written instruction from an Authorized Representative to the Fiscal Agent, to be allocated as the first priority of Special Taxes received each Fiscal Year for the payment of Administrative Expenses. 1 Draft 1.7.03 "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. "Assistant Director of Finance" means the Assistant Director of Finance of the City. "Assessor's Parcel" means an Assessor's Parcel as defined in the Special Tax RMA. "Authorized Representative" of the District means the City Manager, Director of Finance or Assistant Director of Finance of the City, acting on behalf of the District, 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 firm of attorneys, selected by the District, of nationally 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 Sxx,000,000, City of Chula Vista Community Facilities District 2001-2 (McMillin Otay Ranch Village Six) 2003 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 I of the succeeding calendar year, except in the case of the initial Bond Year which shalI be the period from the Delivery Date to September 1, 2003. "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 remain open. "Capitalized Interest Sub-Account" means the sub-account by that name within the Interest Account of the Bond Service Fund established pursuant to Section 3.01 hereof. "City" means the City of Chula Vista, California. "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. 2 Draft 1.7.03 "Costs of Issuance" means all of the costs of formation of the District and the costs of issuing the Bonds, including but not limited to, all printing and document preparation expenses in connection with this Indenture, the Bonds, and any and all other agreements, instruments, certificates or other documents issued in cormection 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 District. "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 pumhaser 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 Indenture, any other securities 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 District. "District" means Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six). "DTC" shall mean The Depository Trust Company, New York, New York, and its successors and assigns. "Fiscal Agent" means U.S. Bank, N.A., 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. "Government Obligations" means obligations described in Paragraph 1 of the definition of Permitted Investments. 3 "7 - I Draft 1.7.03 "Gross Proceeds" has the meaning ascribed to such term in Section 148(0(6) of the Code. "Indenture" means this Bond Indenture, as amended or supplemented pursuant to the terms hereof. "Independent Accountant" means any certified public accountant or firm of such certified public accountants 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 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 Government," 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 current 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, 2003. "investment Agreement" means any investment satisfying the requirements of Paragraph 11 of the definition of Permitted Investments. "Legislative Body" means the City Council of the City, acting as the legislative body of the District. "Maximum Annual 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. "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; 4 -7 I Draft 1.7.03 2. Bonds for the payment or redemption of which monies shall have been theretofore deposited in trust (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 shall be entitled to rely upon any written investment direction from an Authorized Representative 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 instrumentality 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 mounts) (2) Senior Debt obligations B. Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) (1) Consolidated system-wide bonds and notes 5 Draft 1.7.03 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 (SLMA) (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) (1) 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-l" by Moody's. 7. Money market funds rated "AAm- 1" 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- 1 +" by S&P and "Prime- 1" by Moody's. 6 Draft 1.7.03 C. Special Revenue Bonds (as defined 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 municipal 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 their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; B. the municipal obligations are secured by cash or United States Treasury 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 obligations ("Verification"); D. the cash or United States Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; 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 o f a foreign bank, the long term debt of which is rated at least "A" by S&P and Moody's; or (2) any 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); 7 Draft 1.7.03 B. The Fiscal Agent or a third party acting solely as agent therefor or for the District (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 transferor's books); C. The repumhase 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 in 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 "A-" 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 with a domestic or foreign bank or corporation the long-term 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 funds 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 pad passu with the obligations of the bank to its other depositors and its other unsecured and unsubordinated creditors; 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 8 Draft 1.7.03 (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 investment agreement by delivering or transferring in accordance with applicable state and federal laws (other than by means of entries 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 "A3", 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 accrued 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 automatically 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 control of the Fiscal Agent. 9 Draft 1.7.03 Whenever reference is made in this definition of Permitted Investments to "collateral," collateral shall be limited to (i) cash and securities issued or guaranteed by the United States Government, including United States Treasury obligations and any other obligations the timely payment of the principal of and interest on which are guaranteed by the United States Government, and (ii) bonds, notes, debentures, obligations or other evidences of indebtedness issued or guaranteed by the Government National Mortgage Association, Federal National Mortgage Association or Federal Home Loan Mortgage Corporation, or any other agency or instrumentality of the United States or America including but not limited to, mortgage participation certificates, mortgage pass-through certificates, and other mortgage-backed securities. "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 offices 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 tmst office of U.S. Bank, N.A. in St. Paul, Minnesota or such other address specified by the Fiscal Agent to the District in writing. "Project" means the public improvements as set forth and described in Exhibit A to the Acquisition/Financing Agreement, excluding therefrom the Traffic Enhancement Improvements (which include the Telegraph Canyon Roadway Improvements). "Project Costs" means all expenses of and incidental to the construction, acquisition, or both, of the Project. "Project Fund" means the fund by that name established pursuant to Section 3.01 hereofi "Rebate Fund" means the fund by that name established pursuant to Section 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 immediately preceding an Interest Payment Date. "Redemption Fund" means the fund by that name established pursuant to Section 3.01 hereof. "Registration Books" shall have the meaning given such term in Section 2.08 hereof. "Regulations" means the regulations promulgated under the Internal Revenue 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) 10 Draft 1.7.03 ten pement (10%) of the original principal mount of the Bonds less original issue discount, if any, plus original issue premium, if 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 District may designate in writing to the Fiscal Agent. "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 administration of special taxes levied for community facilities districts. Any such person or firm 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 District 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 districts. "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 by the District within Improvement Area A pursuant to the Special Tax RMA 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 ~, 200 , as may be modified from time to time in accordance with the Act and as permitted hereby. "Standard & Poor's" or "S&P" means Standard & Poor's Rating Services, its successors and assigns. "State" means the State of California. "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 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 authorized hereunder. 11 Draft 1.7.03 "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 in section 57(a)(5)(C) of the Code. "Telegraph Canyon Roadway Improvement Account" means the account by that name within the Project Fund established pursuant to Section 3.01 hereof. "Telegraph Canyon Roadway Improvement Costs" means the cost of the acquisition or construction of the Telegraph Canyon Roadway Improvements (as such term is defined in the Acquisition/Financing Agreement) in an amount not to exceed the Fair Share (as such term is defined in the Acquisition/Financing Agreement). "Telegraph Canyon Roadway Improvements" shall have the meaning given such term in the Acquisition/Financing Agreement. "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 District. "Traffic Enhancement Improvements" shall have the meaning given such term in the Acquisition/Financing Agreement. "Yield" has the meaning assigned to such term for purposes of Section 148(0 of the Code. Draft 1.7.03 ARTICLE II. GENERAL AUTHORIZATION AND TERMS SECTION 2.01 Amount, Issuance and Purpose. Pursuant to the provisions of the Act and the Registered Public Obligations Act of Califomia (Sections 5050 and following of the California Government Code), the Legislative Body has authorized the issuance of the Bonds in an aggregate principal amount of Sxx,000,000. The Bonds shall be designated City of Chula Vista Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six) 2003 Special Tax Bonds. The purpose of the Bonds shall be to (a) pay for the acquisition or construction of the Project, (b) fund the Reserve Fund, (c) pay capitalized interest on the Bonds and (d) pay the Costs of Issuance. SECTION 2.02 Type and Nature of Bond. The Bonds and interest thereon, together with any premium paid thereon upon redemption, are not obligations of the City, but are limited obligations of the District secured by and payable fi.om an irrevocable first lien on the Special Tax Revenues and on the monies in the funds and accounts established herein (including the investment earnings thereon) with the exception of the Project Fund, the Rebate Fund and the Administrative 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 exercise of taxing power by the District or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and premiums upon the redemption thereof, if any, are not a debt of the 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 District's property, or upon any of its income, receipts or revenues, except the amounts which are, under this Indenture 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 from any source 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 fi.om proceeds of the refunding bonds issued under the Act or under any other law of the State. SECTION 2.03 Terms of the Bonds. The Bonds shall mature on September 1 in the years, and in the respective principal amounts set forth opposite such years, and shall bear interest at the respective rates per annum, as follows: 13 Draft 1.7.03 Maturity Date Principal Interest Maturity Date Principal Interest (September 1) Amount Rate(%) (September 1) Amount Rate(%) 2004 2014 2005 2015 2006 2016 2007 2017 2008 2018 2009 2019 2010 2020 2011 2021 2012 2026 2013 2033 SECTION 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 amounts and shall bear interest at the rates set forth in this Indenture. The Bonds shall mature and be payable in the years and in the aggregate principal amounts 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, 2003 for the Bonds), until the principal sum of that Bond has been paid; provided, however, that if at the maturity 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, in full accordance with the terms of this Indenture, such Bond shall then cease to bear interest. SECTION 2.05 Payment. The principal 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 premium due upon the redemption thereof shall be payable upon presentation and sun'ender 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 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 14 Draft 1.7.03 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 of registration as required by Section 2.08 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. 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. The Bonds shall be executed manually or in facsimile by the Mayor of the City and countersigned by the City 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, delivery 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. SECTION 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. There shall be kept by the Fiscal Agent, sufficient books for the registration and transfer of the Bonds (the "Registration Books") 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 as hereinbefore provided. 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. 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 nominee of the Depository, which may be the Depository, as determined from time to time pursuant to this Section. 15 Draft 1.7.03 With respect to the Bonds registered in the name of the Nominee, neither the District nor the Fiscal Agent shall have any responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the inunediately preceding sentence, neither the District nor the Fiscal Agent shall have any responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds (ii) the delivery to any Participant or any other person, other than an Owner of a Bond as shown in the 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 Fiscal 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 applicable, and other matters with respect to such Bond for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The District shall pay all principal of and interest on the Bonds only to or upon the order of the respective Owner of a Bond, as shown in the Registration Books, or his respective attorney duly 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 obligation 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 deternfines 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 qualified securities depository, the District shall prepare or direct the preparation of a new, single, separate, fully registered Bond, per maturity, registered in the name of such successor or substitute qualified securities depository or its nominee. If the 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 name or names Owners of the Bonds transferring or exchanging Bonds shall designate, in accordance with the provisions hereof and the District shall prepare and deliver Bonds to the Owners thereof for such purpose. In the event of a reduction in aggregate principal amount of Bonds Outstanding or an advance refunding of part of the Bonds Outstanding, DTC, in its discretion, (a) may request the District 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 Registration Books maintained by the Fiscal 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 Fiscal Agent prior to payment. Draft 1.7.03 Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, alt payments of principal and interest with respect to such Bond and all 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 DTC. SECTION 2.09 Exchange of Bonds. 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 this Indenture, including the payment of certain 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. SECTION 2.10 Negotiability, Registration and Transfer of Bonds. The transfer of any Bond may be registered only upon the Registration Books upon surrender thereof to the Fiscal Agent, together with an assignment duly executed by the Owner or his attomey 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 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 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. 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 purpose or entitled to the benefits 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: 17 Draft 1.7.03 FORM OF CERT~ICATE OF AUTHENTICATION This is one of the Bonds described in the within defined Indenture. Dated: U.S. Bank, N.A., As Fiscal Agent By: Authorized Officer 18 Draft 1.7.03 ARTICLE II1. FUNDS AND ACCOUNTS SECTION 3.01 Establishment of Special Funds. The following funds and accounts identified in this Section 3.01 are hereby created and established and shall be maintained by the Fiscal Agent: A. Special Tax Fund; B. Bond Service Fund, and within the Bond Service Fund, the Interest Account, and within the Interest Account, the Capitalized Interest Sub-Account, and the Principal Account; C. Rebate Fund; D. Redemption Fund; E. Project Fund, and within the Project Fund, the Acquisition Account and the Telegraph Canyon Roadway Improvement Account; F. Reserve Fund; G. Administrative Expense Fund; and H. Costs of Issuance Fund. The District may, through written instructions from an Authorized Representative, direct the Fiscal Agent to establish such other accounts or sub-accounts, as may be necessary to carry out the administration of the Bonds and the proceeds of the Bonds. SECTION 3.02 Special Tax Fund. 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 instmctions 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 Administrative Expense Fund from the first Special Tax Revenues received by the Fiscal Agent during such Fiscal Year an amount equal to the Administrative Expense Requirement. 19 Draft 1.7.03 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 Principal Account to equal the principal amount of, and premium (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 transfer and deposits required under 1. through 3. above, the Fiscal Agent shall transfer the amount, if any, necessary to 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. through 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 transfers 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 those 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 Requirement 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, immediately 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 and as set forth in written instructions to be delivered to the Fiscal Agent by an Authorized Representative; provided, however, that any portion of a Prepayment constituting Administrative Fees and Expenses (as defined in the Special Tax RMA) shall be deposited into the Administrative Expense Fund as set forth in such written instructions. The Fiscal Agent may conclusively rely upon such instructions. 20 Draft 1.7.03 D. When there are no longer any Bonds Outstanding, any amounts 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 Bond Service Fund. A. Interest Account. All moneys in the Interest Account, including the Capitalized Interest Sub- 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 accrued interest on any Bonds redeemed prior to maturity). All funds in the Capitalized Interest Sub-Account shall be used and withdrawn to pay interest on the Bonds prior to using any other funds on deposit in the Interest Account for such purpose. 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, or (ii) paying the principal of the Term Bonds upon the mandatory sinking fund redemption thereof pursuant to this Indenture. SECTION 3.04 Costs of Issuance Fund. The Fiscal Agent shall, upon receipt of a payment request in the form set forth in Exhibit C hereto duly executed by an Authorized Representative, disburse money from the Costs of Issuance Fund, if any, on such dates and in such amounts as specified 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 o£ Issuance have been paid as stated in writing by an Authorized Representative delivered to the Fiscal Agent or six months after the Delivery Date of each series of the Bonds shall be transferred to the Project Fund. SECTION 3.05 Project Fund A. Acquisition Account. The Fiscal Agent shall, from time to time, disburse monies from the Acquisition Account to pay the Project Costs. Upon receipt of a payment request in the form set forth in Exhibit D hereto duly executed by an Authorized Representative (which payment 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 Account directly to the contractor(s) or such other person(s), corporation(s) or entity(ies) 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. After the final payment or reimbursement of all Project Costs, as certified by delivery ora written notice from an Authorized Representative to the Fiscal Agent, the Fiscal Agent shall transfer excess monies, if any, on deposit in, or subsequently deposited in, the Acquisition Account 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. Upon such transfer the Acquisition Account shall be closed. 21 Draft 1.7.03 On or after December 16, 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 proceeds of the Bonds, together with any investment earnings on such proceeds, then remaining on deposit in the Acquisition Account to fund Project Costs and directing the Fiscal Agent to transfer all such moneys to the Special Tax Fund or the Redemption Fund 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. Upon such transfer the Acquisition Account shall be closed. Notwithstanding anything herein to the contrary, if on the date which is three (3) years from the Delivery Date of the Bonds, any funds derived from the Bonds remain on deposit in the Acquisition Account, the Fiscal Agent shall, upon the receipt of written instructions from the District, immediately 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 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 the Bonds from gross income for federal income tax purposes. B. Telegraph Canyon Roadway Improvement Account. The Fiscal Agent shall, from time to time, disburse monies from the Telegraph Canyon Roadway Improvement Account to pay the Telegraph Canyon Roadway Improvement Costs. Upon receipt of a payment request in the form set forth in Exhibit E hereto duly executed by an Authorized Representative, the Fiscal Agent shall pay the Telegraph Canyon Roadway Improvement Costs from amounts in the Telegraph Canyon Roadway Improvement Account directly to the contractor(s) or such other person(s), corporation(s) or entity(ies) 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. Funds on deposit in the Telegraph Canyon Roadway Improvement Account may not be utilized to pay Project Costs. After the final payment or reimbursement of all Telegraph Canyon Roadway Improvement Costs, as certified by delivery of a written notice from an Authorized Representative to the Fiscal Agent, the Fiscal Agent shall transfer excess monies, if any, on deposit in, or subsequently deposited in, the Telegraph Canyon Roadway Improvement Account to the Acquisition Account, if such account is still open, or to the Special Tax Fund or the Redemption Fund as an Authorized Representative may direct in writing if the Acquisition Account is closed 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. On or after December 16, 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 proceeds of the Bonds, together with any investment earnings on such proceeds, then remaining on deposit in the Telegraph Canyon Roadway Improvement Account to fund Telegraph Canyon Roadway Improvement Costs and directing the Fiscal Agent to transfer all such moneys to the Acquisition Account, if account is still open, or to the Special Tax Fund or the Redemption Fund as an Authorized Representative may direct in writing if the Acquisition Account is closed and the Fiscal Agent shall apply the amount so transferred in accordance with Section 3.02 or 3.08 as directed by 22 Draft 1.7.03 the Authorized Representative. Upon such transfer the Telegraph Canyon Roadway Improvement Account shall be closed. Notwithstanding anything herein to the contrary, if on the date which is three (3) years fi.om the Delivery Date of the Bonds, any funds derived fi.om the Bonds remain on deposit in the Telegraph Canyon Roadway Improvement Account, the Fiscal Agent shall, upon receipt of written instructions from the District, immediately 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 the Bonds fi.om gross income for federal income tax purposes. C. Other Transfers Between the Accounts in the Project Fund. In addition to transfers made pursuant to subsections A. and B. above, the Fiscal Agent shall, fi.om time to time and as directed by the District by written instruction from an Authorized Representative given pursuant to the Acquisition/Financing Agreement, transfer such funds as are specified in such written instruction between the Telegraph Canyon Roadway Improvement Account and the Acquisition Account and between the Acquisition Account and the Telegraph Canyon Roadway Improvement Account. 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 amounts 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. The 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. All Authorized h~vestments 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(1) 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 fi.om 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 by the City Manager, or the designee thereof, that amounts in the Acquisition Account of the Project 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 Account of the Project Fund, and (ii) after receipt of such written certificate, transfer such excess (less the hold back of funds sufficient to pay all remaining Project Costs for which a payment request has been or is expected to be received, if applicable) 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 23 7 -I Draft 1.7.03 written instructions of the District executed by an Authorized Representative and applied to redeem Bonds. Upon receipt of written instructions from an Authorized Representative instructing the Fiscal Agent to transfer certain moneys representing a Reserve Fund credit for the prepayment ora Special Tax obligation, the Fiscal Agent shall transfer the amount specified in such instructions 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 Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, 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 Outstanding 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. The District shall calculate Excess Investment Earnings as defined in, and in accordance with, the Rebate Instructions, and shall, in writing, direct the Fiscal Agent to transfer funds to the Rebate Fund from funds furnished by the District as provided for in this Indenture and the Rebate Instructions. Notwithstanding the foregoing, the Rebate Instructions, including the method of computing Excess Investment Earnings (as defined in the Rebate Instructions) 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 directions of the District and it shall have no independent duty to review such calculations or enforce the compliance by the District with such rebate requirements. SECTION 3.08 Redemption Fund. Monies may be deposited by the District or the Fiscal Agent pursuant to the terms of Section 3.05 or 3.06 into the Redemption Fund and shall be set aside and used solely for the purpose of redeeming Bonds in accordance with Section 4.03A hereof. Following the redemption of any Bonds, if any funds remain in the Redemption Fund, such funds shall be transferred to the Special Tax Fund. 24 ? ,../?/ Draft 1.7.03 SECTION 3.09 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 time 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. Unless otherwise specified in this Indenture, monies in the Special Tax Fund, the Bond Service Fund, the Project Fund, the Reserve Fund, the Costs of Issuance Fund and Administrative 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 (including investments with the Fiscal Agent or an affiliate of the Fiscal Agent or investments for which the Fiscal Agent or an affiliate of the Fiscal Agent acts as investment advisor or provides other services so long as the investments are Permitted Investments). Monies in the Redemption Fund and the Rebate Fund shall, at the written direction of an Authorized Representative, be invested in Government Obligations. Notwithstanding anything herein to the contrary, 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 District specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent will furnish the District periodic cash transaction statements, which include detail for all investment transactions made by the Fiscal Agent hereunder. 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: (1) Monies in the Project 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 investment will be needed for withdrawal fi.om 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 25 Draft 1.7.03 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 to 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 investments made or sold by it in accordance with the provisions of this Indenture. SECTION 3.11 Disposition of Bond Proceeds. Upon the receipt of $ as the sale proceeds for the Bonds (being the par amount of Sxx,000,000 less the underwriter's discount of $ ), the Fiscal Agent shall transfer or set aside and deposit or cause to be deposited such funds as follows: $ shall be deposited in the Acquisition Account of the Project Fund; $ shall be deposited in the Telegraph Canyon Roadway Account of the Project Fund; $ shall be deposited in the Reserve Fund; $ shall be deposited into the Costs of Issuance Fund; $ shall be deposited in the Capitalized Interest Sub-Account of the Interest Account of the Bond Service Fund; and $ 75,000.00 shall be deposited in the Administrative Expense Fund. The Fiscal Agent may establish such temporary funds or accounts on its records, as it may deem appropriate to facilitate such deposits and transfers. 26 Draft 1.7.03 ARTICLE IV. REDEMPTION SECTION 4.01 Notice of Redemption. 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 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: (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 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: 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 further notice nor any failure to give all or any portion of such further 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 4.01A by registered or certified mail or overnight delivery service to the Securities Depositories and to at least one (1) lnfom~ation 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 Commission, such other services providing information on called bonds, or no such other services, as District may determine in its sole discretion. 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 fixed for redemption. 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 given to the 27 Draft 1.7.03 registered Owners of the Bonds as herein provided shall be conclusive as 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. SECTION 4.02 Effect of Redemption. When notice of redemption has been given substantially as provided for herein, and when the amount necessary for the redemption of the Bonds called for redemption is set aside for that purpose in the Bond Service Fund or 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 Bond Service Fund or 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 the Bond Service Fund or the Redemption Fund, as applicable. 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 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. SECTION 4.03 Redemption Prices and Terms. A. Optional Redemption 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% B. Extraordinary Mandatory Redemption 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 instructions 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 28 7-t75' Draft 1.7.03 pursuant to Section 3.02 C to redeem Bonds pursuant to this Section 4.03 B. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal mount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Redemption Price September 1, 2003 through March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102% September 1,20__ and March 1, 20__ 101% September 1,20 andthereaf~er 100% 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 I 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 aggregate principal amount and in the years shown on the following redemption schedule: Redemption Date Principal (September 1) Amount 20 $ 20 20 20 20__ (maturity) The Bonds maturing on September 1, 20__, are subject to mandatory sinking fund 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. Redemption Date Principal September 1) Amount 20 $ 20 20 20 20 20 20__ (maturity) 29 7-/7L Draft 1.7.03 D. Purchase in Lieu of Redemption In lieu of such an optional, extraordinary mandatory or mandatory sinking fund redemption, the District may elect to purchase such Bonds at public or private sale at such prices as the District 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 mount thereof plus accrued interest to the purchase date. E. Notice and Selection of Bonds for Redemption In the event the District shall elect to redeem Bonds as provided in this Section 4.03, the District shall give written notice to the Fiscal Agent of its election so to redeem, the redemption date, the principal amount 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 less than sixty (60) days prior to the redemption date or such shorter period as shall be acceptable to the Fiscal Agent in its sole discretion. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond ora 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. 30 Draft 1.7.03 ARTICLE V. SUPPLEMENTAL INDENTURES SECTION 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 Supplememal 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 Bondowners; (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 right 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 any 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 on, 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 lien 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 require 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 Registration Books. Such notice shall briefly set forth the nature of the proposed 31 -"? -- t Draft 1.7.03 Supplemental Indenture and shall state that a copy thereof is on file 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 first mailing of such notice, the District shall receive an instrument or instruments purporting to be executed by the Owners of not less than 60% in aggregate principal amount of the Bonds then Outstanding, which instrument 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 indirect common control with the District, shall be 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 all 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 of the Fiscal Agent. 32 Draft 1.7.03 ARTICLE VI. MISCELLANEOUS CONDITIONS SECTION 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. 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 delivered hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and replacement Bond shall be treated as one and the same. SECTION 6.03 Cancellation of Bonds. All Bonds paid or redeemed, either at or before maturity, shall be canceled upon the payment or redemption o£ 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 destruction. Draft 1.7.03 pursue to completion, judicial foreclosure proceedings against (i) properties under common ownership with delinquent Special Taxes in the aggregate of $5,000 or more by October 1 following the close of the Fiscal Year ih which the Special Taxes were due, and (ii) against all properties with delinquent Special Taxes in the aggregate of $2,500 or more by October 1 following the close of any Fiscal Year if the amount of the Reserve Fund is less than the Reserve Requirement. 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 demands 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 maturity, 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. 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 authorize& 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 parity 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 shall comply with all requirements of the Act so as to assure the timely collection of the Special Taxes. Prior to July t 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 ofthe 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 Southem 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 principal of and interest on the outstanding indebtedness of such community facilities districts. For this reason, the District has determined that, absent the certification described below, a reduction in 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 34 Draft 1.7.03 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 Special Tax RMA), 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 initiative 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 District 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 District 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 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 District, 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 comply 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 restrict 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, and the Fiscal Agent shall take such action as may be necessary in accordance with such instructions. 35 Draft 1.7.03 Without limiting the generality of the foregoing, the District agrees that there shall be paid from 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 from time to time. This covenant shall survive payment in full or defeasance of the Bonds. The District 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 Bond Counsel to the effect that any action required under this covenant is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the 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 District shall not directly or indirectly extend the maturity dates of the Bonds or the time of payment of interest with respect thereto. J. Not later than October 30th of each year, commencing October 30, 2003, and until October 30th following the final maturity of the Bonds, the District shall supply or cause to be supplied to the California Debt and Investment 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 any Special Taxes unless it first receives a certificate of a Special Tax Consultant that accepting such tender will not result in the District 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 precedent to and in the execution and delivery of such Bonds do exist, have happened and have been performed and the execution and delivery of the Bonds shall comply in all respects with the applicable laws of the State. SECTION 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. 36 Dran 1.7.03 SECTION 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 times and in the manner stipulated in the Indenture, then the Owner of such Bond shall cease to be entitled to the pledge of the Special Tax Revenues, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond under the 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, premium, 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, premium, if any, and interest on such Bond, as and when the same shall become due and payable; or (c) by depositing with the Fiscal Agent or an escrow bank appointed by the District, in trust, noncallable Permitted Investments 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 obligations 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 such election shall be filed with the Fiscal Agent not less than ten (10) days prior to the proposed defeasance date, or such shorter period of time as maybe 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 the escrow bank, 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 all 37 Draft 1.7.03 such Bonds to be defeased in accordance with the Indenture as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the Independent Accountant) to the effect that the Bonds being defeased have been legally defeased in accordance with the Indenture. To accomplish such defeasance, the District shall cause to be delivered (i) a report of the Independent Accountant 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 opinion of Bond Counsel shall be acceptable in form and substance to the District, and addressed to the District and the Fiscal Agent. SECTION 6.07 Fiscal Agent. The District hereby appoints U.S. Bank, N.A. 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 maintain the Bond Register. The Fiscal Agent is hereby authorized to pay the principal of and premium, 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. The District shall from time to time, subject to any agreement between the District and the Fiscal Agent then in fome, 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 in the exemise 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 Fiscal Agent or the Treasurer. Ifanybank 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 trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 38 Draft 1.7.03 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. 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 appointment ora successor Fiscal Agent shall become effective only upon acceptance of appointment by the successor Fiscal Agent. SECTION 6.08 Liability of Fiscal Agent. Thc recitals of fact and all promises, covenants and agreements contained herein and in thc Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Fiscal Agent assumes no responsibility for thc correctness of thc same and makes no representations as to the validity or sufficiency of this Indenture or of the Bonds, and shall incur no responsibility in respect thereof, other than in connection with its duties or obligations herein or in the Bonds or in thc certificate of anthcntication on thc Bonds. The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of thc Bonds. The Fiscal Agent shall not be liable in connection with thc performance of its duties hereunder, except for its own negligence or willful misconduct. The Fiscal Agent shall have no responsibility with respect to any information, statement or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds. Thc 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 thc 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 thc administration of its duties under this Indenture, thc Fiscal Agent shall dccm it necessary or desirable that a matter bc 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 thc part of the Fiscal Agent, be deemed to bc conclusivelyproved and established by a written certificate of the District, and such certificate shall be full warrant to thc Fiscal Agent for any action taken or suffered under thc provisions of this Indenture upon thc faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence of such matter or may require such additional evidence as to it may seem reasonable. Thc Fiscal Agent shall have no duty or obligation to enforce thc collection of funds to bc deposited with it hereunder or as to the correctness of any amounts received, and its liability shall bc limited to the proper accounting for such funds as it actually receives. No provision of this Indenture or any other document related hereto shall require thc Fiscal Agent to risk or advance its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of its rights hereunder. 39 Draft 1.7.03 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 Contract. The provisions of this Indenture shall constitute a contract between the District and the Bondowners and the provisions hereof shall be enforceable by any Bondowner for the equal benefit and protection of all Bondowners 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 rights or remedies on said subsequent default or breach. No delay or omission of any Bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any such default or acquiescence therein. Every substantive right 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 Special 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 their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. After the issuance and delivery of the Bonds, this 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 manner. SECTION 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 the Fiscal Agent, or any of the officers or agents thereof because of or on account of said numbers. 40 Draft 1.7.03 SECTION 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 cimumstance, is held to be unconstitutional, invalid or unenfomeable, 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 remain 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. SECTION 6.12 Unclaimed Money. All money which the Fiscal Agent shall have received from any source 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 remaining 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. 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 forthwith 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 hereof), 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. 41 Draft 1.7.03 SECTION 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 February 1, 2003 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. SECTION 6.15. Execution of Documents and Proof of Ownership by Owners. Any request, consent, declaration or other instrument which this Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such a request, consent, declaration or other instrument, or of a writing appointing such an attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such a notary public or other officer. Any request, consent, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the District or the Fiscal Agent in good faith and in accordance therewith. SECTION 6.16. Notices to and Demands on District and Fiscal Agent. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Fiscal Agent to or on the District may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the District with the Fiscal Agent) as follows: City of Chula Vista Finance Department 276 Fourth Avenue Chula Vista, CA 91910 Attention: Director of Finance RE: Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six) 2003 Special Tax Bonds Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the District to or on the Fiscal Agent may be given or served by being deposited postage prepaid (first class, registered or certified) in a post office letter box addressed (until another address is filed by the Fiscal Agent with the District) as follows: 42 Draft 1.7.03 U.S. Bank, N.A. Attn: Corporate Trust 550 South Hope Street, Suite 500 Los Angeles, CA 90071 Reference: Chula Vista CFD SECTION 6.17. Applicable Law. This Indenture shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. SECTION 6.18. Payment on Business Day. In any case where the date of the payment of interest on or of principal (and premium, if any) of the Bonds or the date fixed for redemption is other than a Business Day, the payment of interest or principal (and premium, if any) need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required, and no interest shall accrue for the period from and after such date. SECTION 6.19. Counterparts. This Indenture may be executed in counterparts, each of which shall be deemed an original. 43 Draft 1.7.03 ARTICLE VII. BOND FORM SECTION 7.01 Form of Bonds. The format of the Bonds as authorized and to be issued for these proceedings shall be substantially in the form as set forth in the attached, referenced and incorporated Exhibit "A". SECTION 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 temporary 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 amount of definitive 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. 44 Draft 1.7.03 ARTICLE VIII EVENT OF DEFAULT SECTION 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 Bonds contained, if 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 at 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 unless waived by the Fiscal Agent) shall not constitute an Event of Default under this Indenture if the District shall commence to cure such default within said thirty (30) day period and thereafter diligently and in good faith shall cure such default within a reasonable period of time; or (d) The filing by the District of a petition or answer seeking reorganization 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 reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court o f competent jurisdiction shall assume custody or control of the District or of the whole or any substantial part of its property. SECTION 8.02 Application of Revenues and Other Funds after Default Ifa 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; 45 Draft 1.7.03 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 amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Bonds on the date of maturity 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 the amounts of principal due on such date to the persons entitled thereto, without discrimination or preference. 46 Draft 1.7.03 IN WITNESS WHEREOF, the District and the Fiscal Agent have executed this Bond Indenture effective the date first above written. COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMillin Otay Ranch Village Six) By: ASSISTANT CITY MANAGER/DIRECTOR OF FINANCE U.S. BANK, N.A., as Fiscal Agent By: AUTHORIZED OFFICER S-1 Draft 1.7.03 EXHIBIT "A" - FORM OF BOND United States of America State of California CITY OF CItULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMillin'Otay Ranch Village Six) 2003 Special Tax Bonds Interest Rate Maturity Date Bond Date CUSIP No. ,2003 Registered Owner: Cede & Co. Principal Amount: City of Chula Vista Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six) (the "District"), situated in Chula Vista, California, for value received, hereby promises to pay, solely from Special Tax Revenues (as hereafter defined), to the registered owner named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above and to pay interest on such principal amount semiannually on each March 1 and September 1, commencing September 1,2003, (each an "Interest Payment Date") at the interest rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of and premium, if any, on this Bond are payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at maturity or redemption at the corporate trust office or agency of U.S. Bank, N.A. (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 Payment Date next preceding the date of its authentication, 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 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 fi.om 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 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 fi.om 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 first 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 fi.om a registered owner of at least $1,000,000 in aggregate principal amount of the Bonds, by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner. This Bond is one ora duly authorized issue of the "City of Chula Vista Commtmity Facilities District No. 2001-2 (McMillin Otay Ranch Village Six) 2003 Special Tax Bonds" (the "Bonds") issued in A-1 Draft 1.7.03 the aggregate principal amount of Sxx,000,000 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 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, 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 February 1, 2003, 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 meaning 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 principal 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 Indenture) levied and received by the District and the proceeds of the redemption and sale of property sold as a 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 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 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 Reserve 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 basis among maturities, from the proceeds of the prepayment of Special Taxes pursuant to the Special Tax RMA. Such extraordinary mandatory redemption of the Bonds A-2 7 Draft 1.7.03 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 September 1, 2003 through March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102% September l, 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 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. Redemption Date Principal (September 1) Amount 20 $ 20 20 20 20__ (maturity) The Bonds maturing on September 1, 20__ are subject to mandatory sinking fund 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. Redemption Date Principal September 1) Amotmt 20 $ 2O 20 2O 20 20 20__ (maturity) 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 first class mail, postage prepaid, at their addresses appearing on the Bond Register. This Bond shall be issued only in fully registered form in the denominations of $5,000 or any integral multiple thereof. No transfer hereof shall be valid for any purpose unless made by the registered A-3 Draft 1.7.03 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 registered owner or to such owner's order. Interest on this Bond shall be payable to the person whose 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 requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. The Fiscal Agent shall not be required to register, transfer or make exchanges of (i) Bonds for a period of 15 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 valid or obligatory for any purpose until the certificate of authentication hereon printed shall have been dated 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 amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California. A-4 Draft 1.7.03 IN WITNESS WHEREOF, the City of Chula Vista, for and on behalf of the City of Chula Vista Community Facilities District No. 2001-2 (McMillin Otay Ranch Village Six), has caused this Bond to be dated as of ,2003 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 Mayor, City of Chula Vista, for and on behalf of behalf of the City of Chula Vista Community the City of Chula Vista Community Facilities Facilities District No. 2001-2 (McMillin Otay District No. 2001-2 (McMillin Otay Ranch Ranch Village Six) Village Six) CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within defined Indenture. Date: U.S. Bank, N.A., as Fiscal Agent By: Authorized Officer A-5 Draft 1.7.03 ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto (Name, Address, and Tax Identification or Social Security Number of Assignee) the within-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 NOTICE: The signature on this assignment must qualified 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-6 Draft 1.7.03 EXHIBIT "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 District No. 2001-2 (McMillin Otay Ranch Village Six) (the "District") of its 2003 Special Tax Bonds in aggregate principal amount of Sxx,000,000 (the "Bonds"). The purpose of these instructions 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 regulations 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 of 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 ,2003. Excess Investment Earnings. The term "Excess Investment Earnings" means an amount equal to the sum of: (1) The excess of: (a) The aggregate amount earned from the Delivery Date of the Bonds on ail 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 Nonpurpose Investments had been equal to the Yield on the Bonds, plus (2) Any income attributable 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 eamed 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 from investing the amount received from the sale of the Bonds; B-1 Draft 1.7.03 (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 contract 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) 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 investment 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 tax- 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 to carry out the governmental purpose of the Bonds. Purchase Price. The term "Purchase Price", for thepurpose 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 in 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 later, 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. B-2 Draft 1.7.03 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 Investment or on the Bonds produces an amount equal to the Purchase Price of such NonpuIpose 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 Earnings. 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 roles: (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 price of the investment on an established market. This means that the District (or the Fiscal Agent acting at the direction of the District) will not pay a premium and will not accept a lower interest rate 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 to investment agreements. (3) Investments pursuant to an investment agreement may be regarded as being made at a fair 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 date the investment agreement is entered into, investments will not be purchased or sole at a price other than their 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 investment agreement is at least equal to the yield offered on similar contracts. (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 Nonpurpose Investment. (5) Where amounts 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 B-3 Draft 1.7.03 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 first payment to be made not later than thirty (30) days after the end 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 District 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 fi.om 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 assure that Excess Investment Earnings are not paid or disbursed except as provided in these instructions. To that end, the District shall assure that investment transactions are on an arms-length basis. In the event that Nonpurpose Investments consist of certificates of deposit or investment contracts, investment in such Nonpmpose Investments shall be made in accordance with the procedures described in applicable Regulations as fi:om time to time in effect. MAINTENANCE OF RECORDS. With respect to all 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) pumhase 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 pumhased, it shall be treated as if it were acquired at its fair market value at the time 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 ail 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 recognized bond counsel acceptable to the District, to comply with regulations, rulings, legislation or 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 B-4 Draft 1.7.03 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 Instructions. B-5 EXHIBffr~ $ CITY OF CHULA ¥[STA COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMILLIN - OTAY RANCH - -~ VILLAGE SIX) 2003 a SPECIAL TAX BONDS BOND PURCHASE AGREEMENT ,2003 Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) 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 City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) (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 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. 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 (but not less than all) of the Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) 2003 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 September 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, National Association, as Fiscal Agent (the "Fiscal Agent"), dated as of March 1, 2003, approved in Resolution No. adopted by the City Council of the City, as the legislative body of the District, on , 2003, 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. adopted by the City Council on ,2002 (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 DOCSOC\945297v3~22245.0140 Community Facilities District Ordinance ("Authorizing Ordinance" and together with the Act the "Law"), to acquire certain public improvements described in the Resolution of Formation and in a resolution adopted by the City Council on _, 2003 (the "Resolution of Change Proceedings"). The Resolution of Issuance, the Resolution of Formation, the Resolution of Change Proceedings, 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 McMillin Otay Ranch, LLC, a California limited liability company (the "Developer"), and certain related entities described therein (collectively, "McMillin"), 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 McMillin 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 ,2003 (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 permitted to have been omitted by Rule 15c2-12 and any supplements and amendments thereto as have been approved by the District as evidenced by the execution and delivery of such document by an officer of the District (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 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 ., 2003, 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 Underwriter, the other 2 DOCSOC\945297v3X22245.0140 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 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 has caused 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 McMillin, 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 deliver 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 contemplated by the Formation Documents and by the Bond 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 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 3 DOCSOC\945297v3~22245.0140 (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, 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 role or regulation of the State of California (the "State"), or of any department, 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 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 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 materially 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 other 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 cimumstances 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 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 4 DOCSOC\945297v3~22245.0140 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"; (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 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 federal income tax purposes or is not exempt from California personal income taxation; (j) The District will fumish 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 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 was, and on the Closing Date shall be, true and correct in all material 5 DOCSOC\945297v3~22245.0140 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; (n) The District shall use its best efforts to cause McMillin 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 Offficial 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 6-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board; (p) Neither the City nor thc 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 the 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 Depan':ment 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 III of the Constitution of the United States of America or by the Tax Court 6 DOCSOC\945297v3X22245.0140 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 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 or would be in violation of the federal securities laws, rules or regulations as amended and then in effect; (3) any amendment 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 of the 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. (5) any national securities exchange, the Comptroller of the Currency, or any other governmental authority, shall impose as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or (6) the declaration of a general banking moratorium by federal, New York or California authorities; (7) there shall have occurred any material outbreak or escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it impracticable, in the judgment of the Underwriter, following consultation with the City, to sell the Bonds; or (8) any proceeding shall have been commenced or be threatened in writing by the Securities and Exchange Commission against the City. 7 DOCSOC\945297v3~22245.0140 (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 hue, 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; (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 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 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 Stradling 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 8 DOCSOC\945297v3~22245.0140 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 cimumstances 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 or information regarding the book-entry system 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 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 of the Bonds or the 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 or the District 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, and the District has full legal right, power and authority to issue the Bonds and each of the City and the District has the full legal right, power and authority 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 9 DOCSOC\945297v3L22245.0140 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, from McMillin, in substantially the form attached hereto as Exhibit C, and an executed copy of the Continuing Disclosure Agreement in the form attached as Appendix G to the Official Statement; (9) An opinion dated the Closing Date and addressed to the Underwriter, the City and the District, by counsel to McMillin, substantially in the form attached hereto as Exhibit D; (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, and does not contain any untrue statement of a material fact or omit 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; (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 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 the Appraisal; (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) neither the summary nor the information regarding the projected absorption of the proposed development described in the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in 10 DOCSOC\945297v3~22245,0140 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 the Study; (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 of 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; and (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. If the District shall be unable to satisfy the conditions to the obligations of the Underwhter 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 (h) 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, thc 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 11 DOCSOC\945297v3X22245.0140 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, financial advisor to the City, 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 including reimbursements to McMillin for advances of such amounts; and (b) The District shall be under no obli. gation 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 Underwhter 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 91910, Attention: Finance Director; 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 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 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 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 California. 12 DOCSOC\945297v3X22245.0140 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: ,2003 CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMILLIN - OTAY RANCH - -~ VILLAGE SIX) By: Finance Director 13 DOCSOC\945297v3~22245.0140 EXHIBIT A MATURITY SCHEDULE COMMUNITY FACILITIES DISTRICT NO. 2001-2 (McMILLIN - OTAY RANCH - -~ VILLAGE SIX) 2003 SPECIAL TAX BONDS Maturity Date (September 1) Principal Coupon Price Par Amount Underwriter' s Discount Purchase Price A-1 DOCSOC\945297v3~22245.0140 EXHIBIT B CERTIFICATE OF REPRESENTATIONS AND WARRANTIES OF THE CITY OF CHULA VISTA ,2003 To: Stone & Youngberg LLC San Diego, California Re: City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) 2003 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. 2001-2 (McMillin - Otay Ranch - -~ Village Six) 2003 Special Tax Bonds and pursuant to the Bond Purchase Agreement, dated the date hereof (the "Purchase Contract"), by and between you and the City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) (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 was, as of the date thereof and is, as of the date hereof, true and correct in all material respects and did not, as of the date thereof, and does not, 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: Finance Director B-1 DOCSOC\945297v3~22245.0140 EXHIBIT C CERTIFICATE OF McMILLIN ,2003 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: $ City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - 6 Village Six) 2003 Special Tax Bonds (the "Bonds ") Ladies and Gentlemen: The McMillin Otay Ranch, LLC, a California limited liability company, McMillin Mandalay 101, LLC, a California limited liability company, McMillin Sienna II, LLC, a California limited liability company, McMillin Auburn Lane II, LLC, a California limited liability company, and McMillin Jasmine 126, LLC, a California limited liability company (collectively, "McMillin"), hereby certify that: 1. McMillin is the owner of certain of the land within the City of Chula Vista Community Facilities District No. 2001-2 (McMillin - Otay Ranch - -~ Village Six) (the "District"), as described in the Preliminary Official Statement of the District dated ., 2003 relating to the above-captioned Bonds (the "Preliminary Official Statement") and the Official Statement of the District dated 2003 relating to the above-captioned Bonds (the "Official Statement"). 2. McMillin covenants that, while the Bonds are outstanding, McMillin 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 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 McMillin 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. C4 DOCSOC5945297v3~22245.0140 3. Any and all information submitted by McMillin to the City, the Underwriter and Underwriter's counsel in connection with the preparation of the Preliminary Official Statement, the Official Statement, and any and all information submitted by McMillin to the Special Tax Consultant, the Appraiser and the Market Absorption Consultant, was, to the best of McMillin's knowledge, true and correct when given and remains true and correct as of the date hereof, and all information in the Preliminary Official Statement relating to McMillin 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 McMillin, its proposed development in the District, its property ownership and its contractual arrangements contained in the Preliminary Official Statement and the 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 such statements in the Preliminary Official Statement or the Official Statement become untrue, McMillin agrees to notify the City and the Underwriter immediately. 5. No proceedings are pending or, to the best of McMillin's knowledge, threatened in which McMillin 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 and 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 of McMillin'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 and the Official Statement, to the best of McMillin'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 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 McMillin'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 McMillin or any of its members is a party which would materially and adversely affect McMillin's ability to develop the property or pay Special Taxes when due. 9. McMillin Otay Ranch, LLC has duly authorized and executed the Funding Agreement and McMillin will, prior to the Closing Date, execute the Continuing Disclosure Agreement of Landowner (collectively, the "Developer Agreements"), and upon execution such Developer Agreements will be the valid obligations of the C-2 DOCSOC\945297v3~22245.0140 Developer as to the Funding Agreement and McMillin as to the Continuing Disclosure Agreement of Landowner, enforceable against the Developer and McMillin, respectively, in accordance with their respective terms, and none of the documents which govern McMillin would cause such Developer Agreements to be invalid or unenforceable against the Developer and McMillin, respectively, in accordance with their terms; and no event has occurred which, with the passage of time, would constitute a default by McMillin of any of its obligations under the Developer Agreements. 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. McMILL1N OTAY RANCH, LLC, a California limited liability company By: McMILL1N MANDALAY I0 I, LLC, a California limited liability company By: Its: McMILL1N JASMiNE 126, LLC, a California limited liability company By:. Its: McMILLIN SIENNA II, LLC, a California limited liability company By:. Its: McMILL1N AUBURN LANE II, LLC, a California limited liability company By: Its: C-3 DOCSOC\945297v3~22245.0140 EXHIBIT D OPINION OF DEVELOPER COUNSEL (1) McMillin Otay Ranch, LLC, a California limited liability company, McMillin Mandalay 101, LLC, a California limited liability company, McMillin Sienna II, LLC, a California limited liability company, McMillin Auburn Lane II, LLC, a California limited liability company, and McMillin Jasmine 126, LLC, a California limited liability company (collectively, "McMillin"), is duly formed, validly existing and in good standing as a limited liability company under the laws of the State of Califomia, and is in good standing in the State of California. (2) McMillin has the power to enter into and perform its obligations under the Continuing Disclosure Agreement dated as of ,2003 and the Developer has the power to enter into and perform its obligations under the Acquisition/Financing Agreement dated as of 1, 2002 (collectively, the "Developer Agreements"), McMillin and the Developer, respectively, have duly authorized, executed, and delivered the Developer Agreements to which they are a party, and have authorized the performance of their respective duties and obligations thereunder. (3) Each of the Developer Agreements constitutes a legally valid and binding obligation of McMillin, enforceable in accordance with its terms. (4) The execution and delivery of the Developer Agreements by McMillin, and compliance with the provisions thereof by McMillin will not result in a violation of, a breach of, or a default under the operating agreement of McMillin or, to our knowledge, of any trust agreement, mortgage, deed of trust, note, lease, commitment, agreement, or other instrument to which McMillin is a party, or, to our knowledge, any order, role or regulation of any court or other governmental body having jurisdiction over McMillin, the breach of which might have a materially adverse effect on the ability of McMillin to perform its obligations under the Developer Agreements. (5) There is no litigation pending or threatened against or affecting McMillin (a) which affects or seeks to prohibit, restrain or enjoin the development by McMillin of the property it owns within the District, or (b) in which McMillin or any of the members of McMillin 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 McMillin's debts, or (d) seeks to effect a reorganization or readjustment of McMillin's debts. (6) During the course of our representation McMillin, we have reviewed certain documents and have participated in conferences in which the contents of the Official Statement and related matters were discussed. To our knowledge, no facts have come to our attention which would cause us to believe that the statements contained in the Official Statement under the headings "THE COMMUNITY FACILITIES DISTRICT," "THE DEVELOPMENT AND PROPERTY OWNERSHIP," and "SPECIAL RISK FACTORS" relating to the District and McMillin (excluding therefrom the financial and statistical data included therein) 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 (except as to financial information contained therein, as to which no view or opinion is expressed). D~I DOCSOC\945297v3L22245.0140 RESOLUTION NO. 2003- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING 1N ITS CAPACITY AS THE LEGISLATiVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 2001-2 (MCM1LLIN OTAY RANCH VILLAGE SIX), AUTHORIZING AND PROVIDING FOR TIlE ISSUANCE OF SPECIAL TAX BONDS OF THE DISTRICT, 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 ("City Council"), did previously conduct proceedings to fom~ and did form a community facilities district 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 Califbrnia (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. 2001-2 (McMillin Otay Ranch Village Six) (the "Community Facilities District") for the purpose of financing the acquisition or construction of certain public improvements; and, WHEREAS, the City Council has previously declared its intention to issue bonds for the Community Facilities District 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 the City Council desires to set forth the general terms and conditions relating to the authorization, issuance and administration of such bonds for the Community Facilities District; and, WHEREAS, the forms of the following documents have been presented to and considered for approval by the 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 o£bonds to Stone & Youngberg LLC, the designated underwriter (the "Bond Purchase Agreement"); 1 C. Preliminary Official Statement containing infom~ation including but not limited to the Community Facilities District 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, the 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. SECTION2. 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 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 the Community Facilities District or a special assessment levied on property within the Community Facilities District (collectively, "Land Secured Bonded Indebtedness").The Act authorizes the City Council, acting as the legislative body of the 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 the Community Facilities District will be at least 4 times the amount of such Land Secured Indebtedness. The value of the property within the Community Facilities District which will be subject to the special tax to pay debt service on the Bonds will be at least 4 times the amount of the Land Secured 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 2 the Land Secured Bonded Indebtedness allocable to each such property. "B" Maps have been approved and recorded for all of the property within the Community Facilities District, therefore, there are no development areas that are subject to this valuation test. The foregoing detemfinations 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 the Community Facilities District and the relative overall lack of diversity of ownership of property therein, the private sale of the Bonds will result in a lower overall cost to the Community Facilities District. SECTION 2. Bonds Authorized. ?ursuant 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. 2001-2 (McMillin Otay Ranch Village Six) 2003 Special Tax Bonds" (the "Bonds") in an aggregate principal amount not to exceed $10,250,000 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. 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 $10,250,000, an annual interest rate on the Bonds in excess of Six and Three-Quarter percent (6-3/4%) per year and a purchase price for the Bonds not less than Ninety-Eight and One- Quarter percent (98-1/4%) 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. 3 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 detemfine 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. 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 thc Bonds are hereby approved, confirmed and ratified, and the proper officers of the City, acting for and on behalfo fthe 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 4 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 Clifford Swanson Director of Engineering ~~~ John M. Kaheny City Attorney J:\aLtorncy\n:so\Resolution ofIssuancc - 2-4-03.doc 5 ~7 .oJ'. February 3, 2003 Honorable Mayor and Council Members City of Chula Vista 276 Fourth Avenue City of Chula Vista Chula Vista, CA 91910 ....-..-..---..- d~ ~ ~ ~ ~ THE fASTLAKE COMPANY, LLC VIA HAND DELIVERY it '2003 Re: EastLake Trails Community Park "Salt Creek Park" Approval. City Council Date February 4, 2003, Item 5 Dear Mayor and Council: As part of the agenda for the February 4th meeting, the Council will be considering the adoption of a resolution approving the Master Plan for the proposed public community park located in the EastLake Trails subdivision. The master plan presented to you has been desigoed by KTU&A Landscape Architecture under the direction of the City of Chula Vista staff and with input from The EastLake Company. The proposed park is nestled between the EastLake Trails and Vista's neighborhoods and is bounded on the south by 12 acres of wetland habitat. The plan as presented combines a IIÚX of both passive and active recreational uses which uniquely fit in this area along the Salt Creek drainage. The program elements of the part<: comport with the guidelines of the recently approved Parks Master Plan and as such, have been desigoed as part of a comprehensive program to ensure that the park system as a whole, provides the needed level of facilities. On January 16, 2003, the Parks and Recreation Committee voted unanintously to recommend approval of the park with the inclusion offield lighting on the multi-purpose field. This addition oflighting was over the objections of both City staff and The EastLake Company. The two neighborhoods located to the west and east of the park site have topography that elevates generally up from the part<:, creating a tiered effect. The addition of lighting poles staoding 60-65 feet in the air and the "halo effect" of the lighting when in use would create an wunitigable impact to these residents. In addition, the impact could potentially disturb the wildlife that currently uses the wetland habitat as a nesting and foraging area. Lighting of the multi-purpose fields has never been contemplated by any plarming effort that has taken place for this park site. Lighting was not included as part of the conceptoal site plan in the Trails SPA approval nor was it evaluated in the CEQA analysis for the site. The proposed Salt Creek Park is less than 1.5 miles from the Community Park located in Rolling Hills Ranch, which has just been approved with lighting for large fields. The Rolling Hills Ranch park is isolated from residential influences, therefore more appropriate for the inclusion of lighting for its larger fields. In keeping with the intent of the Parks Master Plan these two community parks, with their close proximity, will provide a multitude of recreational opportunities both during the day and evening hours. Therefore, The EastLake Company respectfully requests that the Mayor and Council approve the resolution adopting the Master Plan without the addition of lighting for the multi -purpose fields. Sincerely, G~oA/}JAO~ Vice President cc: Dave Rowlands George Krempl Andy Campbell 900 Lone Avenue. Suite 100 Chula Visto, California 91914 Telephone (619) 421-0127 Facsimile (619) 421-1830 Presentation by Frank O1aboudy at the City Council Meeting held at the Chula VIsta Civic Center on Tuesday, February 4, 2003. Mr. Mayor and Council Members: Thank you for the opportunity to present my concerns to you. I am an advocate for community tennis. I have been involved in tennis in the South Bay area since before the aty of Chula VIsta had even one public tennis court. It was during the 1960's that the City Invested In four tennis courts at what is now General Roca Park. This facility was so sucœssful the Recreation Deparbnent had to hire a court facilitator to prevent arguments and threats over the time allotted for people to play. As time paned, 2 or 3 courts have been built in various neighbort1oods. Thœe courts helped stem the tide for a while. But now, some are used for roller hockey or unauthorized people - them to teach lessons as there Is no regulation of their _. When OIula V"1Sta had a Community Tennis Center at Southwestern College, It had a very active program. A number of junior tennis teams _re aeated and competed very sucœssfully throughout Southern California. Many of the junior players went on to earn regional rankings and some reœived college tennis scholarships. OIula VIsta had men's and women's teams competing in San DIego County. There was also a group of mostly senior players who represented OIula V"1Sta in Nevada, Arizona, MexiCXI and throughout Southern California, playing on other cities' munidpal courts. All of this was aa:omplishecl when Chula V"1Sta had a community tennis center! And It was operated at no financial cost to the City. Now Is the time to assist Mayor Padilla achieve his campaign promise of bringing our community together. One place to begin is again to establish a Chula Vista Tennis Center. We find a number of centers in our surrounding communities: Morley Field Is owned by the City of San Diego but administered by the Balboa Tennis Oub thereby costing San Diego little In financial backing. Membership is $125. a year, $85 for seniors and $35. for juniors. Mountain View in Martin Luther King Parii', also In San DIego, was built In 1975 with HUD funding and It too Is operated by a non-profit tennis dub. Fees are $60 a year, $40 for seniors and $15 for juniors. Lake Murray has a San DIego aty-owned facility that is administered by a governing board with a _ permit Issued by the City. Coronado has an 8 court city complex operated by a non-profit Coronado Tennis AssocIation for a membership fee of $30. a year. What U- cities can do OIula VIsta should be able to do better. OUr tennis players dream of an 8 to 10 court tournament complex with room to expand, with a parldng area, r.",¡buOon and lounge area. Is this too much to expect from the second largest city in San Diego COunty which Is continuing Its phenomenal growth since the building of the first tennis courts at General Roca Park? Now is the time plein _ the enthusiasm and apertise of our citizen tennis players to further a tennis program for our future and not meke us depend upon the generosity of our neighboring communities when we wish to play and compete. Thank you. my OF (HULA VISTA February 4, 2003 FROM: The Honorable Mayor C;¿City Council David D. Rowlands, Jr.~y Manager TO: SUBJECT: Trees - Fourth Avenue Renovation Project Attached is information provided to Council member Salas regarding concerns being raised with regard to the issue of trees as it relates to the Fourth Avenue renovation project. By copy of this memo, this issue is being referred to Andy Campbell and Ian Gill to verify the concerns raised by Ms. Cynthia Drake. cc: Andy Campbell Ian Gill Attachment C ¡ilL, c¡. "J ' ; °1· ~ Cynthia R. Drake Drake Consulting 972 Barrett Ave. Chula Vista, Ca. Phone (619) 427-8733 Emailolscindy@adnc.com 91911 FAX (619) 427-2738 February 1,2003 City of Chula Vista Councilwoman Mary Salas City Hall 276 Fourth Ave. Chula Vista, Ca. 91910 Dear Councilwoman Salas, It was a pleasure meeting you at my church open house on Thursday, January 30. I was pleased to meet with you after viewing the Chula Vista City Council meeting on television the night before. During this session of the city council, you raised a very important question regarding the long term viability of planting palms along 4th and F streets as part of the renovation for that area. Had I been there I could have addressed your concerns, having knowledge of Fusarium wilt disease in palms. Unfortunately, a representative from the architectural firm provided information I felt was incorrect. As a certified and consulting arborist, I find the mass planting of any Phoenix palm specie of great concern. I have enclosed several items with my letter in an attempt to provide you with information regarding palm disease and quarantine issues. Enclosed you will find a letter ITom the San Diego County Plant Pathologist, Pat Nolan regarding the strong possibility of future problems with these palms slated for the renovation project. My concerns for the project are as follows: 1. Monoculture planting (mass planting of one genus or specie of plant) has traditionally resulted in catastrophic losses when a disease or insect pest is introduced. An example would be the thousands of elm trees lost when Dutch Elm Disease wiped out street trees throughout the United States. In the event disease is introduced into your palms by pruning or soil contamination, the loss could be in the millions of dollars( original cost ,plus removal and replacement). This figure could increase if palms slated for the Broadway Renovation Project streetscape are infected as well. See exhibit # 1 and #2. 2. Phoenix palms are subject to two State Interior Quarantines # 3401 and # 3419. Ouarantine # 3401 bans the transport of palms and moist soil into San Diego County from the desert regions of San Diego, Riverside, and Imperial Counties. This ban protects our county ITom a devastating root rot pathogen found on palms in these restricted areas. Unless the palms can be certified free of Cynthia R. Drake Drake Consulting 972 Barrett Ave. Chula Vista, Ca. Phone (619) 427-8733 Emailolscindy@adnc.com 91911 FAX (619) 427-2738 disease, transportation and planting in Chula Vista would be illegal. Ouarantine # 3419 bans the transportation of palms from all counties of California into Imperial, Inyo, and Riverside Counties due to the palm disease Fusarium oxyspontm. The purpose of this ban is to protect the production of dates in these counties, as the disease is lethal to Phoenix dactyli/era. See exhibits # 3 and #4. 3. Pat Nolan, the Plant Pathologist for the County of San Diego Department of Agriculture states emphatically in her letter that the Fusarium wilt disease of palms will infect all Phoenix palm species This fact is stated in State Interior Quarantine # 3419. Ms Nolan recommends against the planting of these palms due to the possibility of plant loss from disease. See exhibit # 5. 4. I have enclosed an internet article regarding Fusarium wilt. Although it concerns palms in Florida, the artide does state that this disease infects all Phoenix species in Calitòrnia with the exception of Phoenix roebelenii, Pygmy Date Palm. Again, evidence that this disease has the potential to destroy the palms slated for this project. See exhibit # 6. 5. My last concern is for the aesthetics of the project. As I viewed the power point presentation offering various views of this palm streetscape, all I saw was a forest of telephone poles. To compensate for this sterile image, crape myrtle trees have been interplanted, however these trees ( induding the disease "resistant" varieties) are subject to a disease ( powdery mildew). The scale seems overwhelming for the site, with humans appearing as ants. I fail to see why broad-leafed or coniferous trees were not used such as Canary Island pine or Arbutus' Marina '. Palms are not true trees in the sense that the only habitat they offer is to rats, and they do not help with heat reduction due to their limited shade potential. I realize that the council has already given their approval for this project, however I would encourage a second review with these facts in hand. /1 Sincerely, [" / <--9 7° __ - Cynthia R. Drake, Certified and Consulting Arborist WC 1r641'-- Drake Consulting Cynthia R. Drake Drake Consulting 9842 Hibert St. Suite 276 San Diego, Ca. 92131 Phone (619) 427-8733 FAX (619) 427-2738 E-Mail olscindy@adnc.com Thank you for your interest in Drake Consulting. Cynthia R. Drake has offered landscape design, pest control, and arboricultural consulting to residential and commercial clients in Southern California since 1981. Drake Consulting currently offers the following services to clients: Arboricultural Consulting Hazard tree evaluations are available for scheduling tree maintenance and removal. Tree selection, planting, and pruning recommendations can be made for residential and commercial clients. Professional tree inventorying with recommendations on long range maintenance and replacement is available. Landscape Design Specializing in landscape designs that stress low maintenance and water efficiency without sacrificing color, ITagrance, and pizzazz. Commercial and residential clients are offered design plans, project supervision, and plant purchasing assistance. Projects can be as simple as patio garden design to complete re-landscaping. An emphasis is placed on supplying the client with an elegant affordable landscape project, which meets their requirements for use and leisure activities. Landscape and Horticultural Consulting Consulting assistance is available for residential and commercial clients in the areas of insect and disease diagnosis, written pest control recommendations, soil and water analysis, and landscape trouble-shooting. Homeowner associations are offered assistance in landscape inspections, contract reviews, and long range maintenance and tree care planning Expert Consultant and Witness Specializing in cases where plant loss occurs from wrongful or chemical trespass, disease presence, vandalism, and catastrophic damage. Other areas of expertise include root growth as it relates to hardscape and soil disturbance, structural damage resulting from improper placement of trees and other plants, and issues regarding trees and plants growing in the public right-of-way Insurance Appraisal Appraisals assess a monetary amount for plant loss resulting ITom catastrophic damage, required removal, and improper maintenance. Appraisals can be used to assess the value of historic or specimen trees and plants prior to damage or loss. Cynthia R. Drake Graduated: Clairemont High School, San Diego, Ca. 1974 Regional Occupational Program ( Nursery Production) , San Diego 1974 Attended : Hillsborough Community College (Fine Arts), Tampa, Florida 1974-1975 Pierce Jr. College( Ornamental Horticulture )Woodland Hills, Ca. 1975 -1976 University of Tennessee (Ornamental Horticulture) Knoxville, Tn.1976-1979 University of Ca. San Diego ( Haz. Mat. Mng.) San Diego, Ca. 1983 -1985 Certificates and Licenses California Certified Nurserywoman # 1739 Licensed Pest Control Advisor # 04021 Qualified Applicator License # 04021 ISA Certified Arborist # 647 Memberships California Association of Nurserymen 1981 - 1998 Chapter vice-president and newsletter editor Certified Nurserymen committee member Pesticide Applicator's Professional Association 1982 - 2001 Member, past board secretary and statewide training coordinator California. Agricultural Production Consultants Association 1982 - 2003 Chapter board member and regular member San Diego Association of Professional Horticulturists 1981 - 1998 Founder and past president California Women for Agriculture, San Diego Chapter 1985 - 1998 Member and past president Professional Tree Care Association 1988 - 1995 Member, past board secretary, and newsletter editor International Society of Arboriculture 1984 - 2003 Member of the Western and Utah Chapters Society of Municipal Arborists 1996-1999 Member People for Trees 1994-2001 Member American Society of Consulting Arborists Candidate Member 1997 Other Activities City of San Diego Mayor Street Tree Committee member 1997 - 2002 Involved in church callings and activities Volunteered during high school to work with mentally retarded youths Volunteered to teach adult literacy ( Project Read) 1981 - 1984 Cynthia R. Drake Drake Consulting 9842 Hibert S1. Suite 276 San Diego, Ca. 92131 _Phone (619) 427-8733 FAX (619) 427-2738 Email olscindy@adnc.com Professional Experience The Plant Nut 1973 -1974 Kitty Kerlin, Owner San Diego, Ca. J.J. Newberrv Store 1973 - 1974 John Davis, Manager San Diego, Ca. J.J. Newberry Store 1975 - 1976 Phil Larson, Manager Sun Valley, Ca. Mavo Garden Center 1976 - 1978 Walter Mayo,Jr., Owner Knoxville, TN. Trees of Knoxville 1978 - 1981 Bobbie Dearden, Owner Knoxville, TN. Petal Pusher. Inc. 1978 -1981 Bobbie Dearden,Owner Futura Nursery 1981 - 1983 John Bessone, Owner Santee, Ca. Grebar Groundcovers 1983 - 1984 Greg Masters Ramona, Ca. Interior plant shop sales and manager. Residential and commercial interior plant care. Greenhouse plant maintenance and sales. Interior plant shop sales and manager. Giftware department manager. Dried and artificial floral arrangements Interior plant shop sales and manager. Floral designs, holiday decorative basket sales Patio and garden equipment sales. Outdoor landscape nursery, seed, and sod sales. Shade and fruit tree department manager. Landscape design and consulting for clients. Garden tools and power equipment sales. Interior plant sales and shop manager. Residential and commercial interior plant care. Landscape maintenance, tree planting, tree pruning. Interior plant and dry goods gift shop manager. Interior plant care service and sales. Retail I wholesale nursery manager. Wholesale tree nursery production and sales. Landscape design and consulting for clients. Tree planting, maintenance, and pest control service technician. Propagation, sales, and distributor of groundcover and flowering plants for retail nurseries in Southern California. Research and development of new Cynthia R. Drake Drake Consulting Professional Experience W Andersen Nurserv 1984 - 1986 Walter Andersen,Owner San Diego, Ca. Retail shade tree and nursery plant sales. Pesticide and dry goods sales. Landscape design, installation, and consultation for clients. Tree planting and pruning for clients. Garden class instructor. Drake Landscape Pest Control & Consulting 1984 - 1990 Cynthia R. Drake, Owner Residential and commercial interior plant design, San Diego, Ca. sales, and maintenance. Residentia] landscape design, installation, and maintenance. Tree selection, planting, and pruning. Home orchard management. Interior and exterior landscape pest diagnosis and control. Horticultural and arboricultural consulting. NewWavLandscape 1990- ]99] Randy Newhard,Owner San Diego, Ca. Landscape pest control department manager. Liason to Ca. Dept. of Pesticide Regulation. Developed code compliance for company's SB] 98, CalOsha, Fire Department, and SARA Title III requirements. Provided employee pesticide safety training. Landscape design and consulting service for clients. Tree pruning and maintenance service. Pesticide Applicator's Professional Association 1991 - ]995 Hartley Bennett, Executive Director Seminar coordinator for non-profit educational Salinas, Ca. organization. Responsible for eighteen seminars a year throughout the state of California. Developed a statewide training matrix for seminars. Selected computer software to enhance seminar production. Provided pest management articles for organization newsletter. Lectured at seminars on shade tree and pest management topics. Directed educational goals of the organization through interaction with board members and committees. Volunteer recruitment for committees Cynthia R. Drake Professional Experience Drake Consulting 1991 - 2002 Cynthia R. Drake,Owner San Diego, Ca. People for Trees 1995 - 1998 Nancy Beckett, Executive Director San Diego, Ca. Drake Nurserv1991 - 2002 Cynthia R. Drake,Owner Cuvamaca College 1999- 2002 Brad Monroe, Department Head El Cajon, Ca, Residential and commercial landscape design and inspection. Horticultural consulting for pest diagnosis, soil testing, and maintenance specifications. Expert consultant and witness service. Insurance appraisals for plant loss and mitigation. Arboricultural consulting for pest diagnosis, hazard assessment, planting, maintenance, and pruning specifications. Special assistance to homeowner associations for tree inventory and strategic planning. Seminar producer and lecturer. Author. Project coordinator for this non-profit educational urban forestry organization. Responsible for up to 80 tree planting events a year. Interface with city mayor and board of supervisors in planning neighborhood street tree plantings. Direct volunteers, staff members, and others in proper tree planting and pruning techniques. Assist with educational meetings and training matrix for city schools. Provide stewardship program for previously planted trees. Curator of the organization's arboretum at office headquarters. Manage growing-out nursery at office headquarters. Supervise staff and volunteers in landscape maintenance of office grounds. Volunteer coordinator . ... Wholesale production of daylilies, shrubs, and shade trees. Most plant material is donated to non-profit organizations and community colleges for use in horticulture programs or landscape. Adjunct professor in the Department of Nursery and Landscape Technology. Currently teaching Annuals and Perennials during the Spring Semester and Xeriscape -Water Conservation in the Landscape during the fall semester. Conservator for the campus Annual and Perennial Flower garden Cynthia R. Drake Owens Tree Care 1998 -2002 Olsie D. Owens, Ir., Owner County of San Diego 2002-Present Department of Agriculture KatWeen Thuner, Comnùsioner San Diego, Ca. Co-owner of Owens Tree Care with my husband. Street tree maintenance and pruning. Insect detection specialist 1 Full time employee working in the plant pathology and entomology department. Prepare and assist pest samples, process paperwork, work on special projects as directed, interface with the public. Cynthia R. Drake Drake Consulting Client List The following list of clients are available to verifY the quality of my work. I ask that you contact them during normal business hours Monday through Friday. Landscaoe and Tree Comoanies Aztec Landscape Shannon's Tree Service Ray Aguilar Norm Loftstrom (619) 464-3303 (760) 439-8326 Tree of Life Jack Maloney (858) 560-6622 Arbor Care Butch Everett (858) 458-1900 Professional References Robert Bichowsky Consulting Arborist (619) 263-6181 Erica Specht Mesa College Instructor (619) 627-2600 Ryken Tree Service Pete Ryken (619) 579-1197 Hai's Landscape Hai Hong (858) 530-2955 Attorney Randall Stamen Horticultural Law Firm (909) 787-9788 Elaine Thompson Ca. Assoc. of Nurserymen (800) 748-6214 Brad Monroe Cuyamaca College Horticulture Dept. (619) 660-4000 Residential, Commercial, and Municipal Clients Attorney Stephen Brunk (619) 234-3300 City of San Diego David Wells (858) 573-1292 City of San Marcos Richard Weigan (760) 752-7550 Saul & Judy Goldstein (619) 427-7775 San Diego Housing Comm. Carlos C. deBaca (619) 231-9400 City oflmperial Beach Hank Levein (619) 423-8311 One Tripp Tree Service Steve Hooker (858) 571-3710 Second Look Landscape Paul Pate (619) 221-9109 City Farmer Nursery Bill Tall (619) 284-6358 Vincent Lazaneo Farm & Home Advisor (858) 694-2845 Laura LiMandri People for Trees (619) 234-8733 Gwen & Jerry Soderber (858) 279-1364 Cynthia Kaase (619) 224-6302 City of Chula Vista Larry Eliason (619) 691-5267 Cynthia R. Drake Drake Consulting Published Works Pet Safe Landcaping: Avoiding Poisonous Landscape Plants October 1996. C.R.Drake., Pet Smart Newsletter, Alcala Pet Care, Encinitas, Ca. How to Monitor Landscape and Nursery Pest Problems, September 1996. c.R. Drake., Landscape and Irrigation magazine, Adams Publishing Co., Cathedral City, Ca. A Trio of Troublefor Trees, March 1996. C.R. Drake., Arbor Age magazine. Adams Publishing Co., Cathedral City, Ca. Improved Weed lUanagement on Golf Courses, July/August 1995. C.R.Drake., California Fairways magazine. Adams Publishing Co., Cathedral City, Ca. New Insects Infest California, June/July 1995. C.R. Drake., Caliíòrnia Landscaping magazine, Adams Publishing Co., Cathedral City, Ca. Beating the Rot with SUBDUE 2E , December 1994. C.R.Drake., Nursery Business magazine, Brantwood Publications, Inc., Clearwater Fla. Pesticitles : Proper Storage and Disposal, Nov./Dec. 1992. C.R.Drake., California Fairways magazine, Adams Publishing Co., Cathedral City, Ca. Handling Pesticides Safely, October 1992. C.R.Drake., Arbor Age magazine, Adams Publishing Co. Cathedral City, Ca. Are Pesticides Really Needed: Part 1, V o\. 2 1987. C.R.Drake., Professional Gardening & Landscaping magazine, Mountain Publishing Co., Boulevard, Ca. Are Pesticides Really Needed: Part 2 , Vo\. 7 1988. C.R.Drake., Professional Gardening & Landscaping magazine, Exhibit 1 UNIVERSITY OF ILLINOIS EXTENSION !>yBn.!<:~ Spao9(~nhtrg E~~N1H.::.:¡¡<.~'n tdu,-¡;üür, }kr.Ht~1~\Ùn~ These articles are written to apply to the northeastern corner of Illinois. Problems and timing may not apply outside of this area. Stltoline Yard & larden - Avoid Monoculture Landscape Plantings Popular plants can be overplanted in the landscape. Planting lots of one specific plant not only gets monotonous, but also it can lead to problems. Monoculture plantings consisting of mostly or all of one species should be avoided, primarily because if a major pest or problem develops, all the planting may be wiped out. Diverse plant populations, created through mixing species and varieties (or cultivars) ofthe same species, can withstand insects, disease, and environmental problems better than a single type of plant can. Planned properly, diverse plantings are also much more attractive to view. Dutch elm disease and the decline of the American elm makes a classic example of why not to plant the same tree over and over again. Rows of American elms were planted along streets throughout the country. Along came Dutch elm disease, a fungus that kills elms very rapidly and readily spreads from tree to tree. Once the disease got started, little could be done except watch one mature elm shade tree after another die. Streets that were lined with excellent shade trees were suddenly barren. Similar disease and insect problems could occur if the same planting ideas are repeated. Plantings of various types of trees would not be subject to this devastation, as different trees are prone to different problems. Keep this in mind when planning landscapes and windbreaks. These same principles apply to lawns. Mixtures of turf grass species, such as Kentucky bluegrass with fine fescue and/or perennial ryegrass, can adapt better to varying conditions on a site. Even more important is the use of turfgrass blends. A blend is the combination of different cultivars (or varieties) of a single species. For example, most quality packaged bluegrass seed contains 3-4 cultivars. Using mixtures and blends when seeding turf areas helps assure a diverse population that withstands most problems or stresses that may occur. When planning vegetable and flower gardens, groundcovers, and other landscape plantings, keep these ideas in mind. There are significant differences in weather stress tolerance and disease http://www. urbanext. ui uc. edu/stateline/990218 .html 2/2/2003 _nn__·___ _..____ _____.___ -_._--.~--".---- v resistance in all types of plants. Click here for the full article index I Search I HrbAA f'rö¿j(~nt.~ _ Resöw'c~ ~jttw&'l http ;!twww.f.lrbanext.f.liIH .ed u I ftn¡ (("r.~¡! Xòr¡ob On¡¡o~ I)¡m b¡ Kid, 1 i'1>remif!g & 5e,Ù¡fS H;xne & Wt>o~y ¡ Mtó¡i>:X¡ 8< H~ai(h ¡ iI.\\ l\b(J~t Hi ! bWi,">lO'€n.t¡Ü Slew~f1sh¡p ($u~$lb-;wk ~ Awu! b{t~!'Hiën 1 Qffk?~ \ $Hff ~ Pf09fèWß ~ WOi-k$hop:; ~ »~\v_~ ~ tÜ)j'ma~ RÆ!p-o~t) Ij¡;\t\c'e'r'Edy Qf~Uio:~)i~Ltlf{l~ÎI)n ¡ Unh<t:f~¡~Y of m~n-l.)i$ at UÓaJ1a...CÞ&f'Opa}gn Home I Contact Us http://www.urbanext.uiuc.edulstateline/990218.html I 2/2/2003 Exhibit 2 _.~--- ----- ------- - Shade Trees Home Page I Selecting Trees for Biodiversity I Pick A Tree I Read About Biodiversity :~.:'N;"':'~";'~;-;';';<':"~:';':'~:':"<""":':';':''''¡':':';-;.;.;,.¡.;.;,,,.;.:,:,,:,,,.,;,:,...,,.,.:.;.;,,;.¡,.;.;,:«,,.;.¡.;.;.;.; .,."".¡.;,......".':.;N"":.;'.;·;.¡.;,..."·:·,·,,;.;.;,......,,,·:.;.:.;;.:,·:,';.;.;,:-:-;-;".;.¡.»:.".:.:.".¡.¡.;.;.:.;,.,.:.:.,.:,<.:.;~.;.:.;-,.:.:.;.;.:. .;.:.:.:.:.;.;,:.:.:,.:,:.:.;.¡.~.".;.:.:,.:-:,:.:.-...-.'" '," Shade Trees and Biodiversity in the Urban Environment What is Biodiversity? BIOLOGICAL DIVERSIFICATION IS STILL A MAJOR TOOL TO EMPLOY IN PROTECTING YOUR COMMUNITY'S FOREST Why we Need Biodiversity INTRODUCTION - Research has not yet quantified what the actual benefits of a more diversified urban landscape planting are. Yet it is generally acknowledged that having more different species and genera in the community forest will reduce maintenance costs. Clearly, we must protect our communities from the impact of another disease such as Dutch elm disease that destroyed a large percentage of the American elms that once lined American streets. The rapid devistation of this disease was due largely in part to the fact that the Americal Elm was over-planted, and the pathogen spread through rapidly through the urban elm monoculture. The current potential catastrophe in the midwest is the maple that, for a variety of reasons, currently comprises 80% of the mature urban forest canopy, This was noted in early tree inventories conducted by the State Urban Foresters in some of Ohio's smaller communities. Increased diversification is needed to protect an important community asset - the urban forest. How Diverse is Diverse? You may wish to aim for the 10-20-30 rule as a guide. This rule states that no more than 10% of the urban forest should be of the same species. Further, no more than 20% of the forest should be of the same genera, and a single family should not make up more than 30% of the community's tree inventory. Following these guidelines will result in a more biologically diverse planting. http://shade-trees.tripod . com/bi odi versity. html 2/2/2003 .....~~........- ....._-~ ---------. -----.1 -.. Many diseases and insect pests tend to choose trees by family. Furthermore, quasi-resistant species in the same family may continue to be sources for pathogens and insects that could affect other trees in the same family. Nowhere is this phenomenon more evident than in the American chestnut blight disaster. The pathogen for this disease continues to be harbored in other trees in the same family which comprise a significant percenentage of the forest canopy. These "carrier" trees do not succumb to the disease, but they continue to spread it to young chestnut trees, and have reduced this once dominant climax community tree to a minor understory plant. This could happen in our cities as well. Finding New Plants to Increase Your Urban Diversity Many city foresters have been frustrated in recent years in their attempt to diversify their urban forest's species mix. When a new plant is requested from a nursery producer, the common response has been "No one has ever asked for that one before." The nursery industry now produces a relatively restricted pallet of trees for sale. There is blame to share for that reduced diversity if that is your desire. Growers find it less costly to maintain a less diverse inventory. Raising a seedling is a risk, but raising a seedling for which there is no known market is a greater risk. Customers have not communicated their needs in a timely fashion. Customers forget that they requested a new plant. Cities are unwilling to take a chance on a new plant and thus fail to support the grower who does take the risk of offering a new plant. Municipal budgets also vary from year-to-year forcing unforeseen cutbacks in the annual demand for trees, etc. In order to increase diversity we must provide timely guidance to the nursery producers so that they might know what is needed and can have the trees you want in inventory at the time you need them. Advanced planning is necessary since it can take three to eight years to produce a two-inch caliper tree. Cities must do their part and make a commitment to increasing diversity, Try committing to a minimum of 10% of each year's new plantings with trees that you have not tried previously. They may cost more initially, due to the increased risks that the grower has assumed, but costs will come down as the trees move into general production. If your community is one with a heavy dependence on a limited number of species, Even larger percentages of new plants (20- 30%) should be considered, Shade Trees Home Page I Selecting Trees for Biodiversity I Pick A Tree I Read About Biodiversity T. Davis Sydnor, Ph. D. and Nick E. D'Amato Urban Forestry Department School of Natural Resources http://shade-trees.tripod . com/bi odi versi ty . html 2/2/2003 The Ohio State University 2021 Coffey Road, Columbus OH 43210 (614) 292-3865 http://shade-trees.tripod . com/bi odi versity. html 2/2/2003 Exhibit 3 CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE PLANT QUARANTINE MANUAL 409.1 03-03-99 3419. DATE PALM DISEASE State Interior Quarantine A quarantine is established against the following pest, its hosts, and possible carriers. A. Pest A form of the fungus, (Fusarium oxysporum), which inìtiates a serious disease in Canary island date palm, Phoenix canariensis. and clump palm, P. reclinata. Seedlings of the date palm, P. dactylifera, are killed when injected with, or planted in soil infested with, the pathogen. There is reasonable cause to presume that this fungus isolate will be pathogenic to mature date palms, P. dactyli/era, and other palms of the genus Phoenix. B. Area Under Quarantine. The quarantine area shall be all of California except the protected area. The protected area is: 1. Imperial County - the entire county. 2. Inyo County - Township 27 north, Range 1 east. which includes the Furnace Creek Ranch of Death Valley. 3. Riverside County - all of Riverside County east of the eastern boundary of Range 2 east. (This boundary line runs north and south just east of the Town of Cabazon in Riverside County.) C. Articles and Commodities Covered. 1. All plants and parts for propagation, including seed, of the palm genus Phoenix. 2. Saws, knives, or other tools used for trimming or pruning palms of the genus Phoenix. D. Restrictions. Articles and commodities covered are prohibited movement into the protected area, except that trimming or pruning tools will be allowed movement into the protected area when certified by a plant quarantine officer as being sterilized in an approved manner. The movement of articles and commodities covered is not restricted in any way when such movement is entirely within the area under quarantine or entirely within the protected area. E. Exceptions. 1. There are no restrictions of movement through the "protected" area as long as the commodities covered are neither in transit more than 48 hours nor off-loaded en route. 2. The Secretary may issue special permits allowing entry of commodities otherwise prohibited. The permit shall state any and ail mandatory provisions or conditions under which entry will be allowed. PALM TREE RESTRICTIONS APPENDIX A 10-17-80 There are no restrictions on the movement of palm trees in the area under quarantine. Nursery and Seed Services regulations however, would not allow movement of this pest in the nursery trade. The disease is not known to be of general distribution in California. The quarantine covers the entire state for the protection of the Southern California Date Industry, an area free of the disease. Exhibit 4 3401. OZONIUM ROOT ROT State Interior Quarantine A quarantine is established against the fo11owing pest, its hosts, and possible carriers: A. Pest. OZünium root rot (Ph.vmatotrichuJ1/ [Ozonium] omnivorllm), a fungus canied on the roots of plants and in moist :mìl. B. Area Under QUluantine. Imperial County: The entire county. Riwrside County: All that p0l1ion of Riverside County described as follows: Palo Verde Area: Beginning at the point of intersection of the north line of Township 5 South, San Bernardino Meridian, and the mid-line of the Colorado River: then running due west along said north line of Township 5 South to the west line of Range 21 East; then south on said west line of Range 21 East to the south line of Township 8 South; then east on the south line of Township 8 South to the mid-line of the Colorado River; then northerly along the mid-line of the Colorado River to the point of beginning. Coachella Valley Area: (1) Beginning 548 feet south of n0l1hwest comer of the northwest one-fow1h Section 22 in Township 5 South, Range 7 East, San Bemardino Meridian; then south 528 feet; theo east 2,625 feet; then north 528 feet; then west 2,625 feet to the point of beginning; and (2) all that portion of Riverside County described as follows: The south 50 feet of the 5-acre tract located in the northwest one-fourth of Section 22 in Township 5 South, Range 7 East, San Bernardino Meridian, described as fo11ows: Beginning 20 feet south and 427.5 feet west of tlle northeast comer of the nOl1hwest one- fow1h of Section 22 in Township 5 South, Range 7 East, San Bemardino Meridian; then west 412.5 feet; then south 528 feeL then east 412.5 feet; then north 528 feet to the point of beginning. San Diego County: All that portion of San Diego County described as follows: Jacumba Area: Sections 4,5,7,8, and 9, in Township 18 South, Range 8 East, San Bemardino Melidian. C. Articles and Commodities Covered. All soil, nursery stock, or plants with roots except as provided in subsection (D.2) are declared to be hosts or possible carriers of the pest quarantined against. D. Restrictions. 1. Certification Requirements. Except for those exemptions provided in subsection (D.2). alticles and commodities covered an: prohibited movement tì'om the area under quarantine unless accompanied by a certificate issued by the agriL:ultural commissioner. The certificate shall be issued when: {a) articles and commodities originate on premises free from ozoniwn root rot; or (b) articles and commodities originate from outside the area under quarantine and were safeguarded against infection by ozonium root rot while within the area wlder quarantine; or (c) articles and commodities were protected from infection by ozonium root rot and proper safeguard actions had been completed to the satisfaction of the commissioner. 2. Exceptions. No restrictions are placed by this regulation upon the movement of the following articles and commodities from the area under quarantine to points outside thereof: a. House plants grown in the home and not for sale. b. Smooth root vegetables such as potatoes, sweet potatoes, carrots, onions, turnips, and beets if not for planting and fì-ee from moist clods of soil, except tllat this exemption does not apply to mangels and sugar beets. http://pi.cdfa.ca.gov/pqm/manual/ 402.htm 2/2/2003 c. Sugar beets for processing, provided the beets are screened prior to or while loading to remove moist clods of soil. d. Cactus plants with roots, provided the roots are dry and free of soiL e. Aquatic plants such as water hyacinth and water lilies; dry resurrection plants; orchid plants growing in osmunda fibre, and air-layered rooted cuttings, if tì'ee from soil. httpj/pi.cdfa.ca.gov/pqm/manuaI/402.htm , 2/2/2003 Exhibit 5 KATHLEEN A. THUNER County of San Diego DEPARTMENT OF AGRICULTURE, WEIGHTS & MEASURES 5555 Overland Ave., Bldg. 3, San Diego, CA 92123-1292 AGRICULTURE (858)694-2739 FAX (858) 565-7046 WEIGHTS & MEASURES (858) 694·2778 AGRICUL rURAL COMMISSIONER SEALER OF WEIGHTS AND MEASURES 31 January 2003 Ms. Cynthia Drake Drake Consulting 972 Barrett Ave. Chula Vista, CA 91911 Dear Ms. Drake: This letter is in response to your inquiry about the plant disease called Fusarium wilt of palms. This disease was first found in San Diego County in the 1970's. It is caused by a fungus named Fusarium oxysporum which infects Phoenix canariensis (Canary Island date palm), P. reclinata (Senegal date palm), and P. dactylifera (date palm). The disease is invariably fatal to these palms and has spread throughout much of San Diego County. Once established in the soil, the fungus persists for years and is spread to healthy trees on pruning tools. For these reasons I recommend that Phoenix species palms not be planted in the ground in this county as they eventually get the disease and die. Fortunately this disease is not known to occur on other palms such as a king or queen palm, so other palms may be substituted for the date palms. Moving mature palms or other plants from one area of California to another can sometimes cross quarantined areas which are designed to prevent the spread of a disease. For example moving any plant grown in the soil, including date palms, from any part of Imperial County, the Palo Verde area and Coachella Valley of Riverside County or the J acumba area of San Diego County would be in violation of State Interior Quarantine 3401, Ozonium Root Rot. Anyone wishing to do so should check with the Agricultural Commissioner's office in the county where the plants are grown to find out the details of exactly which plants can be moved, the exact areas under quarantine and any permits that might be needed. I hope this answers your questions. My phone number is 858-694-2753 if you need further information. Sincerely, ,vd1J£ Pat Nolan Supervising Plant Pathologist/Nematologist Exhibit 6 Plant Pathology Fact Sheet PP-44 Fusarium Wilt of Canary Island Date Palms in Florida Gary W. Simone, and Geri Cashion, Respectively, Extension Plant Pathologist, Retired, Plant Pathology Department, Gainesville, FL 32611,and Horticultural Extension Agent II, Manatee County Extension Office, Palmetto, FL 34221. Florida Cooperative Extension 5eIvicel Institute of Food and Agricultural Sciences/ University of Florida/ Christine Waddill, Dean The value of ornamental palms in Florida is virtually impossible to estimate con- sidering both the nursery and landscape situa- tions as well as the effect of palms on tourism each year. In late 1994 and into 1995, a series of palm disease samples were received in the Florida Extension Plant Disease Clinic at Gainesville, from both nursery and landscape sites where Canary Island date palms (Phoenix canariensis) had declined to death. Laboratory isolations resulted in the consistent recovery of the fungus Fusarium oxyspornm Since that time, this fungus has been positively identified as F. oxyspornm f.sp. canariensis -a strain of the fun- gus that is particularly aggressive on the Ca- nary island date palms. This represents the first report of this new palm disease in Florida and only the second report of this wilt disease in this hemisphere (first report from California). Fusarium wilt disease is a true wilt dis- ease. It does not, however, produce the plant wilt symptoms familiar to most of us from ex- perience with such common Florida vegetables as tomatoes, eggplant, and watermelon. Wilt diseases affecting woody plants do not produce "droopy" plants but rather cause leaf desicca- tion to death and irregular dieback of branches or entire sterns. Fusarium wilt of P. canariensis is just this type of disease and is similar in symptoms to such diseases as Fusarium wilt of mimosa or wax mYrtle in Florida's land- scapes. Palm decline symptoms are a direct re- sult of the loss in function of the water conduct- ing cells within the plant. In other Fusarium wilt diseases, there is evidence that the fungus causes cell dysfunction through physical plug- ging, enzymatic action, and/ or the action of fungal toxins. The specific mechanism in this palm wilt disease is not fully known but is likely to involve one or more of the previously mentioned mechanisms. History Canary Island date palm wilt is one of three true wilt diseases that affect specific palm genera worldwide. The most important of these diseases is date palm wilt or "Bayoud" disease of the true date palm (fhoenix dactylifera) that was described in the late 1800' s in north Africa. This disease is caused by the fungus Fusaium oxysporum f.sp. albedinis and has caused the death of >10 million date palms in that region of the world. The pathogen can infect other Phoe- nix spp. but is less lethal on these. The second wilt disease of palms was described in 1946 from African oil palm (Elaeis guineensis) caused by Fusarium oxyspornm f.sp. elaeidis in the west central African nations of Benin, Congo, Cote d'lvoire (Ivory Coast), Nigeria and Zaire. The oil palm Fusarium is specific to this genus of palms. Neither the true date palm wilt nor the oil palm wilt are known to occur in the north- ern hemisphere. The most recent palm wilt dis- ease was described by the Italians and French in 1973. This disease was severe on Canary is- land date palms and less aggressive toward true date palms. The fungus involved was named Fusarium oxysporum f.sp. canariensis. Be- tween the years 1973-1977, this new disease was reported from Italy, France, Japan, the Canary Islands and California. First sightings in Cali- fornia were from mature 30-50 year old Canary Island date palms in landscape situations. In 1978, this disease was reported from palm nurs- eries as well. Present reported distribution of this disease in California includes: Los Ange- les, Orange, Riverside, Sacramento, San Bernar- dino, San Diego, San Mateo, and Santa Barbara counties. Distribution within Florida to date includes: Lake, Lee, Manatee, Pinellas and Sarasota counties in either nurseries or land- scape sites. Complete survey information for Florida does not exist. Symptoms Palms affected by Fusarium wilt exhibit general decline symptoms as caused by other root or stem diseases. Affected palms exhibit reduced vigor during early disease onset. Pri- mary symptoms are foliar, with lower, older fronds desiccating and dying from the lower trunk toward the bud (Fig. 1). Occasionally, the first symptomatic leaf may be in the mid- canopy and the following decline may seem one-sided on the tree. Affected fronds die in a one-sided manner, from the lower leaflets (pin- nae) and spines out to the frond tip. Dieback continu~s from the tip to the frond base on the other side of the rachis (Fig. 2). Some leaves may die from the frond tip back to the base on both sides of the rachis simultaneously (Fig. 3). A linear brown stripe develops on the lower sur- face of the frond rachis, extending a variable distance out from the frond base (Fig. 4). Some pinnae and spines may exhibit necrotic streak- ing as well. Vascular discoloration is evident in both cross and longitudinal sections of the rachis. Discrete pockets of salmon-pink to brown tissue can be observed in cross sections (Fig. 5). In longitudinal sections, similarly col- ored streaks of tissue will be apparent (Fig. 6). Some variation in symptom appearance and development is to be expected. Symptoms will be most pronounced as plants enter a pe- riod of higher temperature and greater water demand. There are also several rachis blight diseases that can cause frond death in a man- ner similar to Fusarium wilt, but do not lead to plant death. These other fungi often cause solid zones of necrotic tissue in the rachis that will be obvious in cross section. Clear symptoms of Fusarium wilt can he masked by the occurrence of two different diseases on the same plant. Where palm weevils exist in the locality with Fusarium wilt, these insects can invade the wilt stressed trees and cause more rapid palm death and obscure the symptoms of Fusarium wilt. The Pathogen The Fusarium genus represents a large group of related fungi that include both saprophytes and pathogens. There are more than 20 species of Fusarium of economic im- portance in Florida across various crops. One of these species is Fusarium oxysporum - a spe- cies which has more than two dozen biotypes or strains that are plant specific. These strains are called "forma specialis" (f. sp.) or varieties. They are all morphologically identical in the laboratory, differing in their ability to infect particular plant hosts or cultivars of a single plant species. Clinical recovery of a Fusarium sp. from a palm frond or root does not mean that the Fusarium wilt disease is present. "Fusarium" is a very nonspecific diagnosis. Similarly, the isolation of a Fusarium oxysporum from roots, fronds or bud tissues does not con- firm Fusarium wilt either. Recovery of Fusarium oxysporum from palms coupled with the key symptoms mentioned earlier, suggest Fusarium wilt disease. This fungus still needs to be clinically identified to the 'canariensis' strain. This verification involves the inoculation of a healthy plant which may take months to years to complete, or the nucleic acid finger- printing of the suspect pathogen compared to known isolates of the fungus from other areas- a matter of weeks. The University of Florida at Gainesville is offering this faster method now. Based upon available world literature, the Fusarium wilt pathogen from Canary Island date palm can infect the following palms: Phoe- nix canariensis, Phoenix reclinata, and Phoenix dnctylifera. This pathogen does not invade Phoe- nix roebelenii in California and normally only damages the offshoots on the true date palm. Unpublished data from Dr. Howard Ohr of the University of California - Davis, indicates that this fungus will also invade mature Washingtonia filitera. In California, neither Washingtonia robusta nor Archontophoenix cunninghamiana was susceptible to this patho- gen. The susceptibility of Phoenix sylvestris or the many other palm genera and species grown in Florida is presently unknown. Disease Spread Introduction of this disease into new ar- eas of Florida is primarily dependent upon the movement of infected trees or infested soil. The Fusarium pathogen does not have a widely dis- seminated, airborne spore stage. An infected plant and/ or infested soil must be introduced into a landscape or nursery for subsequent in- fection. If a Phoenix planting is disease-free at present, future development of Fusarium wilt is highly unlikely without the direct introduc- tion of the pathogen. Present scientific literature indicates that the Fusarium pathogen of oil palm in Africa is both seed-and pollen-transmitted. This does not occur in the true date palm pathogen. The abil- ity of F. oxysporum f.sp. canariensis to infect seed is unknown at this time. Local spread in an area where the fun- gus is known to exist can be directly tied. to maintenance activities. The Fusarium fungus is well distributed through the tree especially through the water conducting cells. Pruning can introduce the fungus or fungus-infested saw dust between pruning saw teeth or lop per blades. Pruning activities can spread the fun- gus among trees within a landscape or nursery or between landscapes. Disease Management The potential management of Fusarium wilt on Canary Island date palms is dependent upon rapid and accurate diagnosis in both the nursery and landscape. Failure to properly identify this disease will result in subtle but effective spread of this fungus in the immedi- ate environment. Misidentification of a palm dysfunction such as Fusarium wilt will result in the unnecessary destruction of an expensive palm. Management of this disease in the nurs- ery begins with prevention. In purchasing stock from other sources, try to inspect stock prior to purchase. Evaluate palms for key symptoms. if palms are exhibiting decline symptoms, an alternative palm supplier would be desirable. Within the nursery, palms need to be examined on a bi-weekly basis for frond symptoms as they appear - especially during the warm-to-hot sea- sons. Properly sample symptomatic palms and seek lab verification of this pathogen. Infected palms should be removed and destroyed. Avoid scattering infested soil within or among rows of palms. Clean tools used in palm re- moval with bleach or rubbing alcohol. Leave the infested site fallow or replant with a non- palm species. Since the host range of the Fusarium wilt pathogen is undefined in Florida, replanting with a palm is a risk situa- tion where infested soil exists. Restricted use of soil fumigants like methyl bromide/ chlo- ropicrin or metam sodium (Vapam') can pro- vide an added measure of fungus control in infested sites. Use of these fumigants, however, is not likely to eradicate this fungus from the site. The nursery practice of severe lower frond pruning on P. canariensis to achieve greater height of cleared trunk can result in ef- fective, rapid spread of the wilt fungus. Where this disease is known to exist in the nursery, limit pruning cycles to once a year and remove only dead lower fronds. Use several pruning saws or loppers in the pruning cycle. Use one tool on each tree. Disinfest this tool in either a 1:1 ratio of bleach in water or undiluted rub- bing alcohol. Choose the next pruning saw from the disinfestant solution to prune the next palm. In landscapes, Fusarium wilt disease can spread rapidly due to the impact of landscape maintenance activities across numerous prop- erties, neighborhoods and communities. Land- scape maintenance companies should avoid multiple pruning cycles. Prune only dead fronds to minimize the risk of fungus move- ment. Although Canary Island Date palms are severely pruned in the "hurricane cut" at the time of installation to enhance establishment, this severe pruning style should be discontin- ued once the palm is established. Maintenance personnel should be alert to the key symptoms of Fusarium wilt. Suspect palms should be sampled and submitted for wilt determination. Fusarium wilt-affected palms should be care- fully removed from the landscape. These trees should be taken to the landfill rather than com- mitted to a municipality's yard waste recycling program. It is unlikely that this fungus will be destroyéd by the chipping and piling process normally used for yard wastes. Infested sites should be replanted to non-palm species until further host range information is available. Fusarium Wilt Diagnosis Based upon experience with this disease in Florida thus far, there are four key symptoms necessary for a field diagnosis of Fusarium wilt disease: 1. Progressive frond death from oldest to neW- est canopy. 2. One-sided leaflet death on a declining frond. 3. A prominent brown stripe on the rachis base starting at the trunk and extending out a vari- able distance toward the frond tip. 4. Discolored vascular bundles in the " striped" fronds. If these symptoms are present, a diag- nosis of Fusarium wilt is likely but not abso- lute due to the presence of other rachis blights in Florida. Seek laboratory verification prior to destruction of a Fusarium wilt-suspect palm. For proper laboratory verification of Fusarium wilt of Canary Island date palm, col- lect 3-4 petiole bases from fronds exhibiting ei- ther one-sided leaflet death or tip dieback and the lower brown striping of the rachis. If only 1-2 fronds have clear symptoms, remove a symptomless lower and upper frond as well. Remove the lower 12-18 inches of each frond and remove the spines before packaging. If sev- eral trees are symptomatic, disinfest loppers or pruning saws between trees (as discussed ear- lier). Complete a Plant Disease Diagnostic Form (#2901) that is available from any county Ex- tension office in Florida. Submit the completed form, samples and remittance to the following address for Fusarium wilt verification: Florida Extension Plant Disease Clinic, Bldg. 78 Mowry Rd, University of Florida, Gainesville, FL 32611; Phone-(352) 392-1795, Fax-(352) 392-3438. Verification of Fusarium-wilt suspect samples is very important. The Gainesville lab is the only diagnostic facility in Florida and in the United States that can accurately identify this pathogen to the strain that kills Canary Is- land Date palms - in a matter of 2-3 weeks. This new diagnostic method is the result of an on- going research program directed toward accu- rate, rapid identification of this new disease in Florida for best, long-range management of this problem. Remember that there are several spe- cies of the fungus Fusarium that can be isolated from roots, leaves and buds of palms that are not causing Fusarium wilt disease. Similarly there are strains of Fusarium oxysparum recov- ered from palm tissues that do not cause Fusarium wilt. Do not destroy suspect palms needlessly. When you can, obtain a precise di- agnosis on this new plant disease in Florida. The host range of this new fungus is not de- fined among all the palm genera used in Florida. Assist the University ofFlorida, LEA.S., in mapping the distribution of this new fungus to best limit its potential spread in Florida. Nursery personnel as well as land- scape maintenance professionals' situations are urged to proceed with disease diagnosis. At first symptom appearance, proceed with proper palm sampling and submission. In this way, the distribution of this new fungus can be mapped throughout Florida for most efficient management. All records relating to palm wilt incidence in Florida are confiden- tial. Figure 1. Lower frond death caused by Fusarium wilt. Figure 2, One-sided leaflet death on Fusarium-infected palm. Copies provided to: Mayor & City Council City Manager - Frank would like to make a presentation as well. City Clerk - Please calendar for Jan 28th Council meeting. .. , [IWY if> January 21, 2003 I, 2003 t. !'!ary Salas, Councll woman City of Chula Vista Chula Vista, California Dear ¡Vjary, ...------- -- ._/ ,:) This is a rollow-up of our phone conversation of January 3, 2uUj about the deplorable state of community sponsored tennis in Ghula vista. We reside in the ninth largest city in California which is growing ever larger. We need a public tennis center of 8 to 10 tournament class lighted courts located in an area which would allow for additional courts as our city continues its anticipated growth. This complex should be landscaped to include parking, restrooms and a lounge area. I desire to presentJ<this matter as a council vJ./ agenda item on ¡¡'Q8E1:t6..Ly""ifj 2003 at which time I would ,~ r review the present state pf tennis in our city as well as proposing the above and recommending items for staff study. )þ' jqrl~ lU1W .~ Sincerely, Frank Chaboudy .~ .....~ -<:--< ~~ ~~ iAr- Sf;~ -r:;-- ~:?~ , "1, ;e o Ö w s . N - ::u T (") rr1 - < /'T1 CJ February 3, 2003 VIA HAND DELIVERY - 4 ZQQ3 .. ~ ~ ~ THE E4STLAKE COMPANY, LLC Honorable Mayor and Council Members City of Chula Vista 276 Fourth Avenue City of Chula Vista Chula Vista, CA 91910 Re: EastLake Trails Community Park "Salt Creek Park" Approval. City Council Date February 4, 2003, Item 5 Dear Mayor and Council: As part of the agenda for the February 4th meeting, the Council will be considering the adoption of a resolution approving the Master Plan for the proposed public community part<: located in the EastLake Trails subdivision. The master plan presented to you has been desigoed by KTU&A Landscape Architecture under the direction of the City of Chula Vista staff and with input from The EastLake Company. The proposed park is nestled between the EastLake Trails and Vista's neighborhoods and is bounded on the south by 12 acres of wetland habitat. The plan as presented combines a IIÚX of both passive and active recreational uses which uniquely fit in this area along the Salt Creek drainage. The program elements of the part<: comport with the guidelines of the recently approved Parks Master Plan and as such, have been desigoed as part of a comprehensive program to ensure that the park system as a whole, provides the needed level offacilities. On January 16, 2003, the Parks and Recreation Committee voted unanintously to recommend approval of the part<: with the inclusion offield lighting on the multi-purpose field. This addition oflighting was over the objections of both City staff and The EastLake Company. The two neighborhoods located to the west and east of the park site have topography that elevates generally up from the part<:, creating a tiered effect. The addition oflighting poles staoding 60-65 feet in the air and the "halo effect" of the lighting when in use would create an wunitigable impact to these residents. In addition, the impact could potentially disturb the wildlife that currently uses the wetland habitat as a uesting and foraging area. Lighting of the multi-purpose fields has never been contemplated by any plarming effort that has taken place for this park site. Lighting was not included as part of the conceptual site plan in the Trails SPA approval nor was it evaluated in the CEQA analysis for the site. The proposed Salt Creek Park is less than 1.5 miles from the Community Park located in Rolling Hills Ranch, which has just been approved with lighting for large fields. The Rolling Hills Ranch park is isolated from residential influences, therefore more appropriate for the inclusion oflighting for its larger fields. In keeping with the intent of the Parks Master Plan these two community parks, with their close proximity, will provide a multitude of recreational opportunities both during the day and evening hours. Therefore, The EastLake Company respectfully requests that the Mayor and Council approve the resolution adopting the Master Plan without the addition of lighting for the multi-purpose fields. Sincerely, G~oA/}JAO (!; Vice President cc: Dave Rowlands George Krempl Andy Campbell 900 Lane Avenue, Suite 100 Chula Visto, California 91914 Telephone (619) 421-0127 Facsimile (619) 421-1830 Presental:>on by Frank O1aboudy at the CIty Council Meeting held at the Chula Vista Civic Center on Tuesday, February 4, 2003. Mr. Mayor and Council Members: Thank you for the opportunity to present my concerns to you. I am an advocate for community tennis. I have been involved In tennis in the South Bay area since before the CIty of Chula VIsta had even one public blnnis court It was during the 1960's that the City Invested In four blnnis courts at what is now General Roca Park. This fadllty was so successful the Reaeation Deparbnent had to hire a court facilitator to prevent arguments and threats OYer the time allotted for people to play. As time la5s'!CI, 2 or 3 courts have been built In various neighborhoods. These courts helped stem the tide for a while. But now, __ are used for roller hockey or unauthorized people œe them to teach lessons as there is no regulation of their œe. When Chula VIsta had a Community Tennis Center at Southwestern College, it had a very active program. A number of junior tennis teams were aeated and competed very sua:essfully throughout Southern California. Many of the junior players went on to earn regional ranklngs and __ received college tennis scholarships. Chula VISta had men's and women's teams competing in San Diego County. There was also a group of mœtIy senior players who represented Chula VISta In Nevada, Arizona, Mexic:lo and throughout Southern California, playing on other cities' municipal courts. All of this was ac:mmpllshed when Chula VISta had a community blnnls œnterl And it was operated at no financial cost to the City. Now Is the time to assist Mayor Padilla achieve his campaign promise of bringing our community together. One plaœ to begin Is again to establish a Chula Vista Tennis Center. We find a number of centers in our sulTOUndlng communities: Mortey Field is owned by the City of San DIego but administered by the Balboa Tennis Cub thereby costing San DIego little in financial backing. Membership is $125. a year, $85 for seniors and $35. for Juniors. Mountain VIew in Martin Luther King Park, also In San Diego, was built In 1975 with HUD funding and It too Is operated by a non-profit tennis dub. Fees are $60 a year, $40 for seniors and $15 for juniors. Lake Munay has a San DIego City-owned facility that is administered by a governing board with a œe pennit issued by the CIty. Coronado has an 8 court city complex operated by a non-profit Coronado Tennis AssocIation for a membership fee of $30. a year. What these cities can do Chula YISta should be able to do better. OUr tennis players dream of an 8 to 10 court tournament complex with room to expand, with a parking area, r....buum and lounge area. Is this too much to expect from the second largest city In San Diego County which Is continuing its phenomenal growth slnœ the building of the first tennis courts at General Roca Park? Now is the time please œe the enthusiasnl and expertise of our citizen tennis players to further a blnnis program for our future and not make us depend upon the generosity of our neighboring communities when we wish to play and compete. Thank you. ( SOlrrHWES11E~N 'OllE(GE 11ENNIS 'EN11E~ ( r- f~/ ~oo~ 0 ~OO~ Southwestern College Tennis Center 900 ütay Lakes Road Chula Vista, CA. 91910 619-421-6622 February 4,2003 Tennis Director: Susan Reasons Dean of Physical Education, Health, and Athletics: Bruce Turner M ï. Mayor and City Council Members, We are here tonight to present to you this report to provide accurate details of the community tennis programs that are being provided for the public through the SWC Tennis Center. Enclosed you find: New Improvements fÌ"om the previous Directors' Tenure Recent Photos (Feb. 2, 2003) of the SWC Tennis Facilities Program Flyers of Community Classes offered Participation numbes Current projects and future projects Our Staff at the tennis center is very proud of the hard work that we have put forth in such a small amount of operation time, since Jan. 2002, and feel that many more individuals of all ages and abilities are having more opportunities to participate in the game of tennis. Sincerely, Susan Reasons, SWC Women's Tennis Coach and Director of Tennis ".- .- ¡-- Resurfaced courts # II - 14 Courts #1 - 5 I ~- Courts # 6 - 10 r- Office and relaxing area ,.- Office and new lawn area .~ 3tI . . Tennis Bushes- when grown will spell out TENNIS r r r Tennis oftice east view Tennis oftice north view Tennis office west view Tcnnis officc south vicw ADULT TENNIS CLINICS winter/spring 2003 Novice Beqinning Level: Clinics for Adults 18 and over. Beginning skill development of ground strokes, volleys, serves, and footwork. Pre-reaistration reauired. Min. 6 Max. 10 students per clinic /)Qys: Sclturday Time: 9 am - 10 am Cost: $64.001 8 weeks Session 1: Jan. 25- March 29, 2003 ( no class Feb. 15 and 22 ) Session 2: May 17-July 12, 2003 Instructor: Chery II Olivas Advanced Beginning / Intermediate Level: Play situations using groundstokes, serves, volleys, overheads, footwork, scoring and rules. Singles play and doubles play, Ball Machine practice time included, Pre-reaistration reauired. Min. 6 Max. 10 students per class Days: Tuesday Time: 6:30 pm - 7:30 pm Cost: $64 .001 8 weeks Session 1: Jan. 21 & 28. Feb. 18 and 25. Mar. 4. 18, & 25. Apr. 1. 2003 Session 2: May 6-June 24. 2003 Instructor: Chery II Olivas - SUSAN REASONS Junior Skill Development Program for Ages 6-14 AT Southwestern College Tennis Center 2 3 619-421-6622 InstNc:tors: Susan Reasons, SWC Women's Head Tennis Coach Cheryll Oliws, SWC Women's Assistant Tennis Coach Skill Dewlopment clinics for Ages 6-14: These Clinics are for first time novice beginning level through Adwnced students who learn skill development and progress through the levels at their own pace. Clinics are grouped in ages: 6-9, and 10-14. (8 -14 for the ad\Cl1ced level). Each student enterS at the beginning level and with improvement moves into the intermediate level, with more skill improvement/development the student enters the adwnœd level when prepared based upon instructor approwl. Repeating of classes till skills attained. Beginning Level: Teaches the basics of ground strokes, serves, and footwork. Intermediate Level: Builds upon the ground strokes, serves, adds net play, and introduces mini-tennis games. Advanced Level: Students begin to rally with their strokes, start games with a serve, and build upon their net game with volleys, introduction of overhead stroke. Learning about scoring and rules. Sian UN Wednesday ellflning 5 pm - 6 pm tennis office, fir cøll Sus4n før ~ti_. Min. 6 students Max. 10 students per class. Classes do fill -up, don't wait/II ,sWc -- BEGINNING LEVEL CLASSES: Ages: 6 - 9 Days: Monday Time: 4pm - 5pm Cost: $64.00/ 8 wks Session 1: Jan. 27-Mar. 24, 2003 ( no class Feb. 17 ) Session 2: April 28-June 30, 2003 ( no class June 23 ) Ages: 6 -9 Days: Wednesday Time: 4pm - 5pm Cost: $64.00/ 8 wks Session 1: Jan. 29-Mar.19, 2003 Session 2: May 7-June 25, 2003 Ages: 10 - 14 Days: Saturday Time: lOam -11am Cost: $64.00/8 wk Session 1: Jan. 25-Mar. 29, 2003 ( no class Feb. 15 and 22 ) Session 2: May. 17-July 12,2003 INTERMEDIATE LEVEL a.ASSES Ages: 6 - 9 Days: Monday Time: 5pm - 6pm Cost: $64.00/ 8 wks Session 1: Jan. 27-Mar. 24, 2003 ( no class Feb. 17 ) Session 2: April 28- June 30, 2003 ( no class June 23 ) Ages: 6 - 9 Days: Friday Time: 5pm - 6pm Cost: $64.00/ 8 wks Session 1: Jan. 31-Apri14, 2003 ( no class Feb. 7 and 21 ) Session 2: May 16-July 11, 2003 ( no class July 4 ) Ages: 10 - 14 Days: Monday Time: 6pm -7pm Cost: $64.00/8 wks Session 1: Jan. 27-Mar. 24, 2003 ( no class Feb. 17 ) Session 2: April 28-June 30, 2003 ( no class June 23 ) ADVANCED LEVEL CLASSES Ages: 8 -14 Days: Friday Time: 4pm - 5pm Cost: $64.00/ 8 wks Session 1: Jan. 31-Apri14, 2003 ( no class Feb. 7 and 21) Session 2: May 16- July 11, 2003 (no class July 4 ) ,-- ,--. .- SouthweStern COllege Tennis Center WlNTERlþPRING 2003 1'il1~ CALL 619-'#21-6622 900 ~y LaKes"RØ. Chula VlS'tð. CÅ 91911 1'Qt8 1'81111i8 ThiS 'PrOgram is designed to il11:roduce ages If 4- 5 year olds basic hand eye coordinãtiOn sKills. group learning SKills. and mo- tOr SKills thãt are "Røleval11: to the game Of tennis. Sign UP earlY. Classes fill up. COSt: $6lf.oo I 8UJeel<S Min.6 Max. 8 Student Ages: If - 5 session 1 DaYs: WednesdaYs TIme: If pm - 5 pm þ'tart: Jan. 22- March 12. 2003 DaYs: þ'ãturdaYs TIme: 9 am - 10 am þ'tart: Feb. 1 - April 5. 2003 ( no classes Feb. 15 or 21 ) session 2 DaYs: Wednesdays TIme: If pm - 5 pm 5pm -6pm þ'tart: MaY 1lf - JUlY 2. 2003 InStruCtOrs: þ'usan "Røasons 4- Cheryll Olivas ~c -- z cø ~ 0 » ~ 0 ã :5 ì6 3 ~ m m(l) <1> ¡ II> 3 (þ '" ,g", 0 a ::I 3 S' ~. ¡= -I !II r:: "" Ii ~ ~ ::I ~ 111"0 õ' i s' s' r- ii!CD ::I ~ '" "'r- ~ <1> en enm ~g: '" ~ <1> p <1>< p m CDg m »m CII tJ'''' r- ;0 "CIII (I) P ~ëa 0 CDC" ::!tm ;¡: ~. 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(1)0 m-O :s O:s oOOm a. c- O -:I' cns::: 3: :1" ~ r-m~ CD CD mz :s 1/1 a. ¡t -I CD ... ... m I~ N 3 ~ ~ ... ~ :;0 ¡ß ... ....,., 0 0 0 g ¡\j ~m 0 2- 0 0 0 0 0 om ¡;¡ 0(1) (Q CD ¡ SOUTHWESTERN COLLEGE TENNIS CENTER CLASS GROWTH JANUARY - JULY 10,2002 Junior Training Program: Ages 6 - 18 21 week: Month: Participants: Jan. 43 Feb. 38 ~. 28 Apr. 30 May 41 June 28 July 35 TOTAL: 243 Junior Skill Development Program: Ages 6 - 14 Ix week Month: Participants: Winter Jan.- Mar. 39 Spring Mar. - May 41 Summer June - July 68 TOTAL: 148 Tiny Tot Clinics: Month: Winter Jan. - Mar. Spring Apr. - May Summer June - July TOTAL: 40 Ages 4 - 5 Ix week Participants: 14 11 15 Adult Oinics: Ages 19 and over Ix week Month: Participants: Spring Mar. - May 24 Summer June - July 36 TOTAL: 60 High School Players Clinics: Ages 14 -18 Ix week Month: Participants: Summer June - July 7 TOTAL: 7 ***Summer Tennis Camps Start in July and go through August, will have the participation numbers for this program at conclusion of August 6 Month Participation: 498 enrolled in Tennis Center Classes. SOUTHWESTERN COLLEGE TENNIS CENTER CLASS GROWTH JULY, 2002 - DECEMBER 31,2002 Junior Training Program: Ages 6 - 18 2x week: Month: Participants: July 75 August 56 September 41 October 56 November 46 December 52 TOTAL: 326 Junior Skill Development Program: Ages 6 -14 Ix week Month: Particioants: Summer August-Sept. 79 Fan Oct. - Nov. 60 Winter short session - DEC 26 TOTAL: 165 Tiny Tot Clinics: Ages 4 - 5 Ix week Month: Participants: Summer Aug. - Sept 16 Fall Oct. - Nov. 10 TOTAL: 26 Adult Clinics: Ages 19 and over Ix week Month: Participants: Summer July-Aug. 38 Fall Sept - Oct. 18 Winter Nov. - Dec. 9 TOTAL: 65 Summer Camp: Month: Summer July - August TOTAL: 38 Ages 6 - 18 4x week Particioants: 38 6 Month Participation: 620 enroBed in Tennis Center Classes. SOUTHWESTERN COLLEGE TENNIS CENTER CLASS GROWTH February 2003 (Class Registrations/Current) Junior Training Program: Ages 6 - 18 2x week: Month: Particivants: February 60 TOTAL: 60 Junior Skill Development Program: Ages 6 - 14 Ix week Month: Particivants: February - March 62 TOTAL: 62 Tiny Tot Clinics: Ages 4 - 5 Ix week Month: Participants: February - March 11 TOTAL: 11 Adult Clinics: Ages 19 and over Ix week Month: Participants: February - March 16 TOTAL: 16 1st Month Participation for 2003: 149 currently enrolled in Tennis Center Classes. ~ IMPROVEMENTS: o Resurfaced courts # 11-14, ( Jan. 2003 ) previous courts used under SWC/C. V. City agreement. o New windscreens, (DEC. 2002), replaced tom screens on all 14 courts. o New lawn area by Tennis Office, (NOV. 2003) o Courts Blown off twice weekly,( all 14 courts), or more if needed, of debris and dirt. o Painted inside and outside of the Tennis Office o Redecorated inside of Tennis Office o Improved Tennis Office Bathroom (for participantslstaffuse) by installing: Wall mounted hand-soap dispenser, wall mounted paper towel dispenser, wall mounted disposal toilet seat protectors, wall mounted toilet paper dispenser, and replaced molded shower doors. o Wall mounted T. V.NCR for video-taping and match viewing. o New teaching equipment, (none of the equipment left was in usable condition), teaching carts, ball mowers, tennis tubes, jump ropes, medicine balls, tap-n-tennis, stringing machine, target cones, and practice tees. o Availability of class brochures and flyers. Display area/wall for current class flyers and info. Pertaining to each class. o Colorful flyers for each class, o Instructors photos and bios on display wall for public info. o Game area inside office for kids between classes and rest breaks. To include a ping- pong table, a soccer game table, and air-hockey table. o Class participant photo display to highlight our community players o SWC Continuing Education Brochure with Tennis Center Class info. cost, dates, descriptions etc. mailed directly to all homes in the Southbay. o Tournament info. for San Diego County posted GROWTH PLAN: 1st Year: 2002 o All items listed above, to put forth a Community Tennis Facility that the citizens ofChula Vista and the students of SWC would be proud of. o To implement programs for all ages and abilities to participate in for skill development and skill growth. o To establish a base of participation to enact 2nd year plans of additional programs. 2nd Year: 2003 o Implementing tournaments, ftee clinics, and challenge ladder boards. o Increase growth of classes and addition of more classes, with varied times and days. o Define areas of future needs through suggestion boxes. ~