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HomeMy WebLinkAboutAgenda Packet 2006/04/04 ~~ft.. :-~- ~""'5:~~ - -~ I CllY OF CHUlA VlsrA April 4, 2006 4:00P.M. Stephen C. Padi lIa, Mayor Patricia E. Chavez, Council member David D. Rowlands, Jr., City Manager John McCann, Council member Ann Moore, City Attorney Jerry R. Rindone, Council member Susan Bigelow, City Clerk Steve Castaneda, Councilmember I declare under penalty 01 perjury lItcil I i::LIII employed by the City of Chula Vista in the Office of the City Clerk and that I posted this document on the bulletin board acc:ording to Brown Act requirements. Date~-3"....~ Slgn~ ~ Council Chambers City Hall ~ Fourth Avenue --- CALL TO ORDER ROLL CALL: Councilmembers Castaneda, Chavez, McCann, Rindone, and Mayor Padilla PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY . INTRODUCTION BY CHIEF EMERSON OF THE EMPLOYEE OF THE MONTH, BRIDGET BARAHURA, SENIOR OFFICE SPECIALIST IN THE POLICE DEPARTMENT . DID YOU KNOW...ABOUT THE CITY'S ANNUAL BIRTHDAY PARTY FOR RESIDENTS 90+ YEARS OLD AND OTHER NORMAN PARK CENTER PROGRAMS FOR SENIORS? Presented by Karen Harvell, Recreation Supervisor III. CONSENT CALENDAR (Items I through 6) The Council will enact the Consent Calendar staff recommendations by one motion, without discussion, unless a Councilmember, a member of the public, or City staff requests that an item be removed for discussion. If you wish to speak on one of these items, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. Items pulled from the Consent Calendar will be discussed immediately following the Consent Calendar. 1. APPROVAL OF MINUTES of February 21, February 23, March 7, March 10, March 14, and March 21, 2006. Staff recommendation: Council approve the minutes. .... 2. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SUBMITTAL OF TWO GRANT APPLICATIONS TO THE SAN DIEGO ASSOCIATION OF GOVERNMENTS FOR FISCAL YEAR 2006/2007 TRANSPORTATION DEVELOPMENT ACT AND TRANSNET FUNDING, FOR BICYCLE AND PEDESTRIAN CAPITAL IMPROVEMENTS The Transportation Development Act and TransNet Program provide funding support for regional bicycle and pedestrian capital improvement projects. The San Diego Association of Governments will allocate those project funds to cities in the San Diego region, based upon funding availability and project ranking. Staff has prepared funding applications for two projects. (Acting Engineering Director) Staff recommendation: Council adopt the resolution. 3 A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FINAL MAP OF CHULA VISTA TRACT NO. 03-03, BELLA LAGO. ACCEPTING THE VARIOUS STREETS AND EASEMENTS GRANTED ON SAID MAP, AND APPROVING THE ASSOCIATED SUBDIVISION IMPROVEMENT AGREEMENT AND SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT FOR THE PROJECT B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE GRANT OF EASEMENTS AND MAINTENANCE AGREEMENT FOR CHULA VISTA TRACT NO. 03-03, BELLA LAGO, BETWEEN K. HOVNANIAN AT BELLA LAGO, LLC, AND BELLA LAGO, LLC, AND THE CITY REGARDING MAINTENANCE OF PRIVATE FACILITIES WITHIN THE PUBLIC RIGHT OF WAY On April 8, 2003, the Council approved a tentative map for Bella Lago. Adoption of the resolutions approves Chula Vista Tract No. 03-03, Bella Lago. (Acting Engineering Director) Staff recommendation: Council adopt the resolutions. 4. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING CHANGE ORDERS REQUESTED BY MCMILLIN LAND DEVELOPMENT FOR THE CONSTRUCTION OF TRANSPORTATION DEVELOPMENT IMPACT FEE FACILITIES FOR THE PORTION OF LA MEDIA ROAD BETWEEN OLYMPIC P ARKW A Y AND SANTA VENETIA STREET On October I I, 2005. McMillin Land Development submitted a payment request for change order reimbursement for the construction of La Media Road between Olympic Parkway and Santa Venetia Street. Adoption of the resolution approves the change orders related to the construction of La Media Road, to be paid in cash credits. (Acting Engineering Director) Staff recommendation: Council adopt the resolution. 5. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FINAL MAP OF SUNBOW VILLAS, CHULA VISTA TRACT NO. 05-03 Page 2 - Council Agenda http://www .chulavistaca.gov April 4, 2006 On March 1, 2005, the Council approved a tentative subdivision map for Sunbow Villas, a project consisting of a condominium conversion of202 multi-family units. Adoption of the resolution, per Government Code Section 66474.1, allows the final map to record, converting the existing apartments into condominiums. (Acting Engineering Director) Staff recommendation: Council adopt the resolution. 6. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AGREEMENT WITH THE CITY OF IMPERIAL BEACH FOR ANIMAL CONTROL SERVICES Chula Vista has provided animal control services to Imperial Beach since 1999. The existing agreement expired on June 30,2005. Adoption of the resolution approves a new three-year animal control agreement with an option to extend administratively for two additional years upon mutual consent. (General Services Director) Staff recommendation: Council adopt the resolution. ITEMS REMOVED FROM THE CONSENT CALENDAR PUBLIC COMMENTS Persons speaking during Public Comments 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 general(v prohibits the Council from taking action on any issue not included on the agenda, but, if appropriate, the Council may schedule the topic for future discussion or refer the matter to staff. Comments are limited to three minutes. PUBLIC HEARINGS The following items have been advertised as public hearings as required by law. If you wish to speak on any item, please fill out a "Request to Speak" form (available in the lobby) and submit it to the City Clerk prior to the meeting. 7. CONSIDERATION OF A REVISED TENTATIVE SUBDIVISION MAP FOR OTAY RANCH VILLAGE ELEVEN LOCATED EAST OF EASTLAKE PARKWAY AND SOUTH OF OLYMPIC PARKWAY - BROOKFIELD SHEA OTAY (BSO) PROJECT LP Brookfield Shea Otay (BSO) Project LP proposes to revise the Village Eleven tentative subdivision map in order to utilize the total units authorized in the Sectional Planning Area (SPA) Plan. This tentative map revision proposes to transfer unused units /Tom various neighborhoods to a multi-family project in Neighborhood R-17. (Planning and Building Director) Staff recommendation: Council adopt the following resolution: Page 3 - Council Agenda http://www,chulavistaca,gov April 4, 2006 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A REVISED TENTATIVE SUBDIVISION MAP FOR OTAY RANCH VILLAGE ELEVEN, LOCATED EAST OF EASTLAKE PARKWAY AND SOUTH OF OLYMPIC PARKWAY - BROOKFIELD SHEA OTAY (BSO) PROJECT, LP 8. CONSIDERATION OF THE 200612007 ANNUAL ACTION PLAN, THE FIRST AMENDMENT TO THE 2005-2010 CONSOLIDATED PLAN, AND A HOUSING AND URBAN DEVELOPMENT SECTION 108 LOAN APPLICATION The City is eligible to receive $2,042,661 in Commnnity Development Block Grant (CDBG), $954,765 in Home Investment Partnership (HOME) and American Dream Down payment (ADDI), and $86,993 in Emergency Shelter Grant (ESG) entitlement funds from the U.S. Department of Housing and Urban Development (HUD) for Fiscal Year 200612007 upon submittal and approval of the Annual Action Plan. Adoption of the resolution approves the Annual Action plan, an amendment to the 2005-2010 Consolidated Plan, and a HUD Section 108 loan application, which assists the City in financing large-scale development projects. In order to receive the Section 108 loan funds, an amendment to the five-year consolidated plan is required. (Assistant City Manager/Commnnity Development Director) Staff recommendation: Council conduct the public hearing and adopt the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE ANNUAL ACTION PLAN FOR FISCAL YEAR 200612007 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG), HOME INVESTMENT PARTNERSHIP ACT (HOME), AMERICAN DREAM DOWN PAYMENT (ADDI) AND EMERGENCY SHELTER GRANT (ESG) PROGRAMS; AND APPROVING THE FIRST AMENDMENT TO THE 2005- 2010 CONSOLIDATED PLAN; AND AUTHORIZING TRANSMITTAL OF 200612007 ANNUAL ACTION PLAN AND THE FIRST AMENDMENT TO THE 2005-2010 CONSOLIDATED PLAN TO THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD); AND INSTRUCTING STAFF TO INCLUDE APPROPRIATIONS TO FUND THE ANNUAL ACTION PLAN IN THE FISCAL YEAR 2006/2007 PROPOSED BUDGET 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. 9. CONSIDERATION OF APPROVAL OF AN ACQUISITION/FINANCING AGREEMENT PERTAINING TO COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN) AND AUTHORIZATION TO ISSUE SPECIAL TAX BONDS Page 4 - Council Agenda http://www.chulavistaca.gov Community Facilities District No. l3-1 (CFD-l3-I) was formed to provide for the financing and acquisition of certain authorized public facilities. Adoption of the resolution approves the acquisition/finance agreement with Otay Project L.P, the issuance of special tax bonds of CFD l3-1 in the amount of approximately $16,505,000, and approves the form of certain documents related to the issuance of the bonds. (Acting Engineering Director) Staff recommendation: Council adopt the following resolutions: A. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FORM OF AN ACQUlSITION/FINANCING AGREEMENT PERTAINING TO COMMUNITY FACILITIES DISTRICT NO. l3-1 (OT A Y RANCH VILLAGE SEVEN) B. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. l3-1 (OTAY RANCH VILLAGE SEVEN), 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 RELATED TO THE ISSUANCE OF THE BONDS, AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS 10. CONSIDERATION OF AWARDING CONTRACTS FOR POLICE-INITIATED TOWING AND STORAGE SERVICES, AND AMENDING THE SERVICE RATE SCHEDULE (Continued ftom March 21, 2006) The Police department recently completed a Request for Proposal for Police-Initiated Towing and Impound Services. Adoption of the resolutions awards the contracts, amends the service rate schedule, and authorizes the Police Department to make annual changes to the police-initiated towing service rate schedule. (Police Chief) Staff recommendation: Council continue this item to a future date. 11. REPORT REGARDING CHULA VISTA TRANSIT'S FUNDING AND OPERATIONS At the February 22, 2005 Council meeting, Transit staff presented a report on Chula Vista's transit system (Chula Vista Transit). This report address an update on Chula Vista Transit's funding and operations. (Public Works Operations Director) Staffrecommendation: Council accept the report. OTHER BUSINESS 12. CITY MANAGER REPORTS Page 5 - Council Agenda http://www.chulavistaca.gov April 4, 2006 13. MAYOR'S REPORTS 6:00 P.M. Questions and Answers regarding the Mayor's security detail. 14. COUNCIL COMMENTS CLOSED SESSION Announcements of actions taken in Closed Session shall be made available by noon on Wednesday following the Council Meeting at the City Attorney's office in accordance with the Ralph M. Brown Act (Government Code 54957. 7). 15. CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(b) One Case ADJOURNMENT to a Workshop on April 6, 2006 at 6:00 p.m. in the Council Chambers, and thence to the Regular Meeting on April II, 2006 at 6:00 p.m. in the Council Chambers. In compliance with the AMERICANS WITH DISABILITIES ACT The City of Chula Vista requests individuals who require special accommodations to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least forty-eight hours in advance for meetings and jive days for scheduled services and activities. Please contact the City Clerk for specific information at (619) 691-5041 or Telecommunications Devices for the Deaf (TDD) at (619) 585-5655. California Relay Service is also available for the hearing impaired. Page 6 - Council Agenda http://www.chulavistaca.gov April 4, 2006 MINUTES OF A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA February 2 I, 2006 6:00 P.M. A Regular Meeting of the City Council of the City of Chula Vista was called to order at 6: 13 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: PRESENT: Councilmembers: Castaneda, Chavez, McCann, Rindone Mayor Padilla ABSENT: Councilmembers: None ALSO PRESENT: City Manager Rowlands, City Attorney Moore, and City Clerk Bigelow PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY . DID YOU KNOW...IT' S ABOUT OUR NEIGHBORHOODS? Presented by Leah Browder, Deputy Director of Engineering Deputy Director of Engineering Leah Browder discussed the City's infrastructure management program and neighborhood traffic and pedestrian safety program. Mayor Padilla announced that Closed Session Items 12 and 13, as well as Item 10, Mayor's Reports, would be taken out of order and discussed prior to the Consent Calendar. He recessed the meeting to Closed Session at 6:27 p.m. CLOSED SESSION 12. CONFERENCE WITH LEGAL COUNSEL REGARDING INITIATION OF LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(c) · Two Cases No reportable action was taken on this item. 13. CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(b) . Two Cases No reportable action was taken on this item. The Mayor reconvened the meeting at 7:00 p.m., with all members present. I A I 10. MA YOR'S REPORTS . CONSIDERATION OF ADOPTION OF A RESOLUTION APPROVING PLACEMENT ON THE JUNE 6, 2006 BALLOT OF THE CITIZENS' CHARTER PROPOSAL AS SUBMITTED Mayor Padilla explained that since the meeting of February 14, 2006, the City Attorney had issued an opinion that the City Clerk could continue accepting signatures for the petition to amend the charter. He stated that, since there was confusion around the number of signatures required to qualify, and given the City Attorney's opinion, he believed it was appropriate that the City Council recognize that, had there not been the confusion, it is likely that the measure would have qualified on its own merits. Mayor Padilla believed that the proposal should be placed on the ballot, as submitted, to provide the people of Chula Vista the opportunity to debate and vote on the issue. Greg Moser, representing Chula Vistans for Private Property Protection, stated that the Council would be doing the right thing by placing the proposed initiative on the ballot, and he added that an analysis of the initiative was submitted to the Council. Mayor Padilla acknowledged the correspondence received from Mr. Moser. Councilmember Rindone requested confirmation from Mr. Moser that, in Mr. Moser's analysis submitted to the Council, he believes the initiative is legally sound. Mr. Moser responded affirmatively. Yuri Calderon, representing Chula Vistans for Private Property Protection, thanked the City Attorney and City Clerk for reviewing and making the determination to accept the additional signatures, and the Council for considering placing the initiative on the ballot. He stated that he also submitted a letter to the Council and agreed with the analysis by the law firm. Mayor Padilla acknowledged receipt of the letter. Councilmember Rindone asked Mr. Calderon if it was his belief that the initiative did what it was reported to do and was legally sound. Mr. Calderon replied affirmatively. Jackie Lancaster urged the Council to make the right choice and allow the voters to exercise their democratic rights. Steve Haskins, Chairperson for Chula Vistans for Private Property Protection, stated that all Chula Vistans should be proud of the City Council if they move forward with what was promised. He added that the organization is ready, willing and able to discuss any issues regarding the initiative. Councilmember Rindone requested confirmation from Mr. Haskins that the initiative is what the Chula Vistans for Private Property Protection want, and that it is legally sound. Mr. Haskins responded affirmatively. Earl Jentz spoke in support of the proposed initiative, stating that it is not as restrictive as what is currently in place, and allows the people of the City to decide by vote. He believed that the proposed iniative would reduce eminent domain abuse by developers; give owners more incentive to upgrade their properties with less fear; and provide incentives for Community Development to work directly with the owners. Theresa Acerro thanked the Council for doing what the people have asked them to do. Page 2 - Council Minutes http://www.chulavistaca.gov February 21,2006 I A -:::J- MA YOR'S REPORTS (Continued) ACTION: Mayor Padilla moved to adopt Resolution No. 2006-059, heading read, text waived: RESOLUTION NO. 2006-059, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PLACING A PROPOSED CHARTER AMENDMENT ON THE BALLOT TO BE CONSIDERED BY THE ELECTORATE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, JUNE 6 Councilmember Castaneda thanked the Council for its quick action to place the item on the agenda. He stated that the matter goes beyond the issue of eminent domain and speaks to the core of our democracy and the ability of the people to decide their destiny. He felt that it bodes well of the Council to recognize the miscommunication between staff and the organizers of the initiative drive, and that the Council owned up to that responsibility. He stated that the Council would send a loud and clear message to the citizens that this Council listens to its people and values the right of the people to make decisions for themselves. Deputy Mayor McCann stated that the issue comes down to doing the right thing and being open and honest with the citizens of Chula Vista. He expressed the need to maintain public trust, to ensure transparency in local government, and to place the initiative on the ballot and allow the people to decide. Councilmember Rindone stated that there are concerns with the petition as written. He explained that the Redevelopment Agency is not ruled by the Charter, and placing the provisions in the Charter has no impact on the Redevelopment Agency. As a result, the initiative really does not do what the people think it will doing and provide that protection that they want. He stated that Councilmembers recently issued memos relating to the right of the citizens to initiate a petition and place it on the ballot. Included in his memorandum was the statement that he believed it was the responsibility of the proponents of the initiative and their legal counsel to verify that the initiative was reflective of their concerns, was legal, and would address the issue of eminent domain for the residents. ACTION: The motion carried 5-0. CONSENT CALENDAR (Items I through 3) Councilmember Castaneda requested that Item 2 be pulled from the Consent Calendar for discussion. Councilmember Rindone requested that Items 2 and 3 be pulled from the Consent Calendar for discussion. I. APPROVAL OF MINUTES of the Special Meeting and the Regular Meeting of December 20,2005. Staffrecomrnendation: Council approve the minutes. ACTION: Deputy Mayor McCann moved to approve staffs recommendation and offered Item I, heading read, text waived. The motion carried 5-0. Page 3 - Council Minutes http://www.chulavistaca.gov / 11- 3 February 21, 2006 ITEMS REMOVED FROM THE CONSENT CALENDAR 2. RESOLUTION NO. 2006-053, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE CITY'S PURCHASING AGENT TO ADD $65,000 TO AN EXISTING PURCHASE ORDER WITH ESGIL CORPORATION FOR BUILDING PLAN REVIEW SERVICES The City has a multi-year contract with Esgil Corporation to provide professional plan review services. Although the Planning and Building Department budgets $190,000 for these services each fiscal year, an initial purchase order of $125,000 is established and then amended on an as-needed basis. Staff estimates the need for the $65,000 balance through the end of the fiscal year. (Planning and Building Director) Staffrecommendation: Council adopt the resolution. Councilmember Castaneda questioned how Esgil Corporation monitors its services for the City, developers, and contractors, and how the City pays Esgil in terms of their plan check services. He expressed concern that there exists a thought in the industry that companies such as Esgil Corporation may be running up their bills with repetitive minor corrections to plans, and he suggested that the City look at quality control of these services. Assistant Director of Planning and Building/Building Official Remp responded that Esgil Corporation does not charge for additional plan checks; and he added that, in his 15 years of experience in the industry, he cannot recall a single incident where Esgil has charged for re-submittal of plan checks. Planning and Building Director Sandoval added that in terms of quality control, the City has established a high set of performance standards for City staff and Esgil Corporation in terms of turnaround time and quality review. Councilmember Rindone asked the hourly rate charged by Esgil Corporation. Mr. Remp responded that most of the plans submitted are based on a percentage of the total fee that the City would normally charge. Councilmember Rindone asked if it was staff s belief that the City has sufficient requests for plan review services that would require the need for a full-time staff position. Mr. Remp replied that there are two types of services that Esgil Corporation has provided in the past, namely accommodating staff vacancies with routine services, and infrequent projects that require a high level of expertise. He explained that the quick turnaround by Esgil Corporation for such services avoids the necessity to retain a full-time employee for an extended period of time. Planning and Building Director Sandoval added that he believes that the department is fully staffed, and that this service offers additional assistance to handle overflow, extended staff vacancies and vacations, and provides expertise on specific projects. ACTION: Councilmember Rindone moved to approve staffs recommendation and offered Resolution No. 2006-053, heading read, text waived. The motion carried 5-0. 3. RESOLUTION NO. 2006-054, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A COOPERATIVE PURCHASE AGREEMENT WITH SOFTWARE HOUSE INTERNATIONAL IN THE AMOUNT OF $174,691.71 FOR VARIOUS MICROSOFT LICENSES REQUIRED FOR CITYWIDE NETWORK AND INDIVIDUAL COMPUTER WORKSTATION APPLICATIONS; AND AUTHORIZING AN OPEN-ENDED ARRANGEMENT WITH SOFTWARE HOUSE INTERNATIONAL FOR THE PURCHASE OF ADDITIONAL MICROSOFT PRODUCTS AS NEEDED Page 4 - Council Minutes http://www .chu1avistaca.gov February 21,2006 lA-I.{- ITEMS REMOVED FROM THE CONSENT CALENDAR (Continued) Adoption of the resolution approves a cooperative purchase agreement with Software House International in order to purchase various Microsoft licenses that are needed for network and individual workstation applications; and allows the purchase of additional Microsoft products through January 2008. (Management and Information Services Director) Staff recommendation: Council adopt the resolution. Councilmember Rindone expressed concern about the open-ended agreement for software products and asked what safeguards the City has in place. Purchasing Agent Coggins responded that January 31, 2008 is the end date for the agreement, and price controls are in place. ACTION: Councilmember Rindone moved to approve staffs recommendation and offered Resolution No. 2006-054, heading read, text waived. The motion carried 5-0. Deputy Mayor McCann asked Director of Information and Management Services Vignapiano to explain the penalties associated with unlicensed software. Director Vignapiano responded that there are severe penalties associated with using unlicensed software, and the City could be audited by different organizations. PUBLIC COMMENTS There were none. PUBLIC HEARINGS 4. CONSIDERATION OF ACCEPTANCE AND APPROPRIATION OF EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT FUNDS The Police department has recently received notice of an Edward Byrne Memorial Justice Assistance Grant award in the amount of $57,305 from the Bureau of Justice Assistance. Acceptance and appropriation of these funds requires a public hearing per stipulations of the Justice Assistance Grant. (Police Chief) Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and at the time specified in the notice. Mayor Padilla opened the public hearing. There being no members of the public who wished to speak, Mayor Padilla closed the public hearing. ACTION: Deputy Mayor McCann offered Resolution No. 2006-055, heading read, text waived. Page 5 - Council Minutes http://www.chulavistaca.gov February 21,2006 J A-6 PUBLIC HEARINGS (Continued) RESOLUTION NO. 2006-055, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING $57,305 FROM THE 2006 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT AND APPROPRIATING SAID FUNDS TO THE FISCAL YEAR 2006 POLICE GRANT FUND BUDGET The motion carried 5-0. 5. CONSIDERATION OF THE CHULA VISTA 2006-2007 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM; THE HOME INVESTMENT PARTNERSHIP PROGRAM; THE EMERGENCY SHELTER GRANT PROGRAM (ESG); AND THE AMERICAN DREAM DOWNPAYMENT PROGRAM Each year, the City undertakes a process to solicit and approve programs and projects for these grant funds. The staff report addressed the review of the 2006/2007 entitlement amounts, as well as the requests for funding received from various City departments and local organizations. The purpose of the public hearing was to offer the residents, non- profit organizations and other interested parties an opportunity to provide input on the 2006-2007 proposals, as well as the funding recommendations. (Assistant City Manager/Community Development Director) Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and at the time specified in the notice. Mayor Padilla opened the public hearing. Deputy Mayor McCann announced that he is a member of the boards of the Chula Vista Veterans Home Support Foundation and the Boys and Girls Club, both of which are unpaid positions. Mayor Padilla announced that he technically holds an unpaid seat on the Veterans Home Support Foundation. Housing Manager Mills presented the 2006-2007 program. The following persons spoke in support of their programs: Gunnar Schalin Tom Kirwan Bob White Debora Munoz Michelle Castagnola Katheryn Lembo/ Tina Williams Dr. Linda Bass Antonio de los Santos Chad Blum Page 6 - Council Minutes Southwestern College, Contracting Opportunities Center Chula Vista Yacht Club Chula Vista Veterans Home Support Foundation Chula Vista Child Care Commission City ofChula Vista Recreation Department South Bay Community Services & YMCA YMCA Kinship Support Services Program Family Health Centers of San Diego San Diego Labor Council http://www.chulavistaca.gov I A - /0 February 21, 2006 PUBLIC HEARINGS (Continued) Jackie Lancaster spoke about the 211 contact number for health, human, and disaster services in San Diego County, and she requested that the number be posted on the City's website, along with a link to the services offered. There being no further members of the public who wished to speak, Mayor Padilla closed the public hearing. Deputy Mayor McCann asked why an allocation of $5,000 to the Regional Shelter Voucher Program was recommended, when it was his belief that only programs requesting $10,000 or more were considered for funding. Ms. Mills responded that the motel voucher program is an annual countywide program, with half its funding provided by local jurisdictions and the other halfby San Diego County Health and Human Services. Funding allocations are based upon the need in each jurisdiction. Deputy Mayor McCann asked if there was any duplication of services provided by the voucher program. Ms. Mills replied that South Bay Community Services administers the motel vouchers for the South Bay. Councilmember Chavez stated that the Safe and Accessible Sidewalks Program provides skills, helps the community and also saves funding for the City. She asked if there were a way for staff to work collaboratively with the program. Director of General Services Griffin responded that if someone besides the City were to construct sidewalks, the City would be required to inspect the construction and review sidewalk plans. Ms. Mills added that the City would have to adhere to labor requirements with a prevailing wage project, and insurance requirements would have to meet those of the City. Mr. Blum, representing the San Diego Labor Council, explained that the Labor Council is familiar with the rules and regulations of HUD, and the organization works closely with the City with respect to final inspections of sidewalks. Mayor Padilla stated that the program provides local apprenticeship and job opportunities, and he asked staff to re-examine the program and come back to the Council with an analysis. Councilmember Chavez concurred, stating that the program would also be giving back to the community. Councilmember Castaneda spoke about the proposed, nearly 50 percent reduction in the code enforcement program fund allocation, and asked the direct impacts this would have on the City's ability to provide code enforcement, as well as the strategies that are in place to make up for the shortfall. City Manager Rowlands responded that the General Fund will absorb the shortfall, and no programs would be affected. City Manager Rowlands recommended that $100,000 be removed from the annual sidewalk program and allocated to the Safe and Accessible Sidewalks Program to implement a pilot proj ecl. ACTION: Deputy Mayor McCann moved to approve staff s funding recommendations and direct staff to consider augmenting certain requests for Council review when the item comes back for final adoption. Councilmember Castaneda seconded the motion, and it carried 5-0. Page 7 - Council Minutes http://www.chulavistaca.gov /1t-'7 February 21, 2006 ACTION ITEMS 6. CONSIDERATION OF ADOPTION OF THE 2006 LEGISLATIVE PROGRAM (Continued from February 7, 2006) The Legislative Program represents the Council's position on items likely to be acted upon by the State Legislature, Congress, or administrative agencies. By adopting a Legislative Program at the beginning of each two-year legislative session and amending it at mid-term, Chula Vista is able to take a proactive role in sponsoring, supporting, or opposing bills related to the City's various legislative priorities. (Legislative Committee, Intergovemmental Affairs Coordinator) Councilmember Rindone requested that the Council be kept apprised of developments at the state level regarding eminent domain. Deputy Mayor McCann requested that the Council also be kept apprised of updates regarding Jessica's Law. ACTION: Deputy Mayor McCann offered Resolution No. 2006-056, heading read, text waived: RESOLUTION NO. 2006-056, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING THE 2006 LEGISLATIVE PROGRAM The motion carried 5-0. 7. CONSIDERATION OF A PILOT PROJECT FOR SPANISH INTERPRETER SERVICES FOR CITY COUNCIL, REDEVELOPMENT AGENCY, AND CHULA VISTA REDEVELOPMENT CORPORATION MEETINGS AND WORKSHOPS City Council members have expressed a desire to have Spanish interpreter services available at Council and Redevelopment Agency meetings and workshops. Adoption of the resolution approves a pilot project for those services. (Assistant City Manager Thomson, Communications Director) Assistant City Manager Thompson explained the proposed pilot program for Spanish interpreter services. Deputy Mayor McCann asked the availability of interpreter services at City events, such as the State of the City address. Assistant City Manager Thompson responded that staff would request guidance from the Council with regard to the meetings at which interpreter services would be provided. Councilmember Chavez suggested that the Council introduce interpreter services at Council workshops and build from that point. Councilmember Rindone concurred, adding that the Mayor's office could monitor additional meetings and determine the need for services. . Page 8 - Council Minutes http://www.chulavistaca.gov JA-~ February 21, 2006 ACTION ITEMS (Continued) ACTION: Councilmember Chavez offered adopt Resolution No. 2006-057, heading read, text waived: RESOLUTION NO. 2006-057, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A PILOT PROJECT FOR SPANISH INTERPRETER SERVICES AT CITY COUNCIL, REDEVELOPMENT AGENCY AND CHULA VISTA REDEVELOPMENT CORPORATION MEETINGS AND WORKSHOPS AND APPROPRIATING FUNDS THEREFOR The motion carried 5-0. 8. CONSIDERATION OF AN APPROPRIATION OF $125,000 FOR PARTICIPATION AT THE CALIFORNIA PUBLIC UTILITIES COMMISSION REGARDING ENERGY ISSUES Adoption of the resolution funds the costs of continuing the City's energy work before the California Public Utilities Commission through March 7, 2006 on the Renewable Portfolio Standards and other issues affecting Community Choice Aggregation and local ratepayers. (Conservation and Environmental Services Director) Councilmember Castaneda asked the status of efforts with respect to community choice aggregation. Director of Conservation and Environmental Services Meacham replied that staff would come back to the Council at a future meeting with a full report. ACTION: Councilmember Castaneda offered Resolution No. 2006-058, heading read, text waived: RESOLUTION NO. 2006-058, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $125,000 FOR PARTICIPATION AT THE CALIFORNIA PUBLIC UTILITIES COMMISSION ON ENERGY ISSUES, FROM THE AVAILABLE FUND BALANCE OF THE GENERAL FUND TO THE CONSERVATION & ENVIRONMENTAL SERVICES DEPARTMENT The motion carried 5-0. OTHER BUSINESS 9. CITY MANAGER REPORTS City Manager Rowlands suggested that the meeting of February 28, 2006 be cancelled due to the few items scheduled for consideration. ACTION: It was the consensus of Council to cancel the meeting. Page 9 - Council Minutes http://www.chulav;staca.gov /A-q February 21,2006 OTHER BUSINESS (Continued) 11. COUNCIL COMMENTS Councilmember Rindone thanked City Manager Rowlands and Assistant City Manager Smith for their prompt response to a staff referral about the status of the Urban Core Specific Plan. He reported that the final meeting of the advisory committee is anticipated for the end of March, and the formal hearing process on the Urban Core Specific Plan is set for July 2006. Councilmember Rindone stated that the installation of security cameras at trolley stations scheduled for 2005 was delayed because bids received for the project far exceeded the budget allocation. He reported that subsequent bids will be for wireless technology, and the project completion date is targeted for September 2006. Deputy Mayor McCann congratulated the proponents of Jessica's Law, who turned in over 700,000 signatures to place the proposition on the June ballot. He thanked the Council for its support of the proposition. Deputy Mayor McCann asked the status of his recent request for staff to look into drafting a local ordinance banning sexual predators from living within a certain radius of schools, parks, libraries and other places near where children live or congregate. City Attorney Moore replied that the City Attorney's Office has received a letter from the Fair Political Practices Commission determining that all Councilmembers have a conflict of interest with regard to discussing and voting on such an ordinance; therefore, staff will bring the item forward in March, and Councilmembers will draw straws to determine who will make decisions. Councilmember Chavez spoke regarding the recent accident involving a pedestrian near Harborside Elementary School and the concerns expressed by parents and the community about speeding vehicles in the area. She reported that City staff has since installed pedestrian crossing signs, with which both parents and teachers are happy. Councilmember Chavez asked that directional signs be installed behind Fire Station No. 1 to help residents find their desired destinations within the Civic Center. Councilmember Chavez asked staff the status of a referral made by Mayor Padilla regarding the formation of Neighborhood Communications Committees and requested that the subject be brought forward to the Council in a timely manner. Councilmember Rindone invited the community to participate in the first Chula Vista Redevelopment Corporation meeting on February 23, 2006, at 6:00 p.m. in the Council Chambers. CLOSED SESSION 14. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(a) . Duran v. City ofChula Vista (SDSC GIC847070) . Sanchez v. City of Chula Vista (USDC 04 0084 DMS (AJB) . Sidock v. City ofChula Vista (SDSC GIS15970) . Ray v. City ofChula Vista (USDC 03 CVl884 DMS) No reportable action was taken on this item. . Page 10 - Council Minutes http://www.chulavistaca.gov IA-JO February 21,2006 ADJOURNMENT At 10:30 p.m., Mayor Padilla adjourned the meeting to the Regular Meeting on February 28, 2006 at 6:00 p.m. in the Council Chambers. ~t~ Susan Bigelow, MMC, City Clerk Page 11 - Council Minutes http://www.chulavistaca.gov ) A-I/ February 21,2006 MINUTES OF A SPECIAL MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA February 23, 2006 6:00 P.M. A Special Meeting of the City Council of the City ofChula Vista was called to order at 7:15 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: PRESENT: Councilmembers: Castaneda, Chavez, McCann, Rindone, and Mayor Padilla ABSENT: Councilmembers: None PUBLIC COMMENTS There were none. CLOSED SESSION 1. CONFERENCE WITH LEGAL COUNSEL REGARDING INITIATION OF LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(c) . One case There was no reportable action taken on this item. 2. CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(b) . One case There was no reportable action taken on this item. ADJOURNMENT At 7:30 p.m., Mayor Padilla adjourned the meeting to the Regular Meeting on March 7, 2006 at 4:00 p.m. in the Council Chambers. Lo Anne Peoples, CMC Sen or Deputy City Clerk 16-1 MINUTES OF A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA March 7, 2006 4:00 P.M. A Regular Meeting of the City Council of the City of Chula Vista was called to order at 4: 18 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: PRESENT: Councilmembers: Castaneda, Chavez, McCann, Rindone ABSENT: Councilmembers: Mayor Padilla (excused) ALSO PRESENT: City Manager Rowlands, City Attorney Moore, and City Clerk Bigelow PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY · INTRODUCTION BY DAVE BYERS, PUBLIC WORKS OPERATIONS DIRECTOR OF THE EMPLOYEE OF THE MONTH, JULIE LINDSEY, SR. FISCAL OFFICE SPECIALIST Public Works Operations Director Byers introduced the employee of the month, Julie Lindsey. Deputy Mayor McCann read the proclamation, and Councilmember Rindone presented it to Ms. Lindsey. . PRESENTATION BY CONAN CHEUNG, DIRECTOR OF PLANNING AND PERFORMANCE MONITORING FOR THE METROPOLITAN TRANSIT SYSTEM (MTS), ON THE COMPREHENSIVE OPERATIONAL ANALYSIS FOR THE MTS AREA BUS SYSTEM Mr. Cheung made the presentation on the MTS area bus system. Councilmember Chavez expressed concern about the proposed plan to cut bus routes 706 and 706A in June 2006, stating that seniors comprise 70 percent of the current ridership. She asked staff to work with MTS to seek ways to accommodate the seniors and other residents who currently use these routes when the lines are cut. Parks Pemberton commented on the need for flexibility in bus routes to provide services to those members of the community who depend upon public transport. Elory Kehano, a resident of Sunbow II, talked about the need to ensure that the many seniors who reside in the East Palomar and Brandywine neighborhoods are given the opportunity to voice their comments. /c-/ SPECIAL ORDERS OF THE DAY (Continued) Councilmember Rindone discussed the proposed plan and stated that the plan would ultimately expand the frequency of transport services to the citizens. . PRESENTATION OF A PROCLAMATION BY MAYOR PADILLA TO DOUGLAS E. LUFFBOROUGH III, CO-FOUNDER AND EXECUTIVE DIRECTOR OF THE TURNING THE HEARTS CENTER, RECOGNIZING THE CENTER FOR ITS FIFTH ANNIVERSARY Deputy Mayor McCann read the proclamation, and Councilmember Castaneda presented it to Mr. Luffborough. . PRESENTATION BY MARY ROCHE, SOUTH BAY HOMELESS COALITION ADVOCACY, REGARDING ENDING AND PREVENTING FAMILY HOMELESSNESS Mary Jo Buettner, Director of the Chula Vista Community Collaborative, spoke about homelessness in the City and introduced Mary Roche, representing South Bay Homeless Coalition Advocacy, who gave a presentation about family homelessness in Chula Vista. She asked for the City's continued partnership with local social service organizations to ensure family stability and support. . PRESENTATION OF A PROCLAMATION BY MAYOR PADILLA RECOGNIZING THE SAN DIEGO PORT DISTRICT FOR ACHIEVING AN 83 PERCENT DIVERSIONIRECYCLING RATE, FAR EXCEEDING THE STATE MANDATED 50 PERCENT RATE FROM DEMOLITION MATERIALS IN PHASE I OF THE SOUTH CAMPUS AT GOODRICH Principal Community Development Specialist Lukes acknowledged the Port of San Diego as a key partner in the development of the bayfront. She stated that the Port significantly exceeded demolition materials recycling goals when it demolished the buildings on the south campus, which laid the groundwork for bayfront redevelopment. Conservation Coordinator France thanked the Port District for exceeding the 50% diversion requirement by accomplishing an 83% diversion/recycling rate. Deputy Mayor McCann then read the proclamation, and Councilmember Rindone presented it to Pat Lund, Capital Project Manager for the Port of San Diego. Mr. Lund spoke of the importance of the proactive recycling efforts of the City and recognized Ms. Lukes and Ms. France for their efforts with the south campus demolition. . DID YOU KNOW...THE CHULA VISTA ANIMAL CARE FACILITY HAS A NEW "CATTERY ROW"? Presented by Dr. Dorothy York, Animal Care Facility Manager, General Services Dr. Dorothy York gave a presentation on the facility's new "Cattery Row" that was created through the dedicated efforts of City staff, community volunteers, and Petco. Page 2 - Council Minutes http://www .chulavistaca.gov I C- d- March 7, 2006 CONSENT CALENDAR (Items 1 through 12) Councilmember Rindone stated that he would abstain from voting on Item 12 due to the proximity of his residence to the project. With regard to Item 1, Deputy Mayor McCann noted that the minutes for the special meeting of January 25,2006 were pulled trom the agenda. With reference to Item 10, Parks Pemberton spoke of the good work by the City with regard to the recent street improvements along Tobias Drive, trom Naples to Oxford Streets, but expressed concern that residents in the neighborhood claim that they have already paid for street improvements via a $54 million bond issue in the 1980's. He asked that City staff research to determine whether or not there actually was an improvement bond. General Services Director Griffin stated that staff also has received calls on the matter and is continuing to look for evidence of a bond issue by the County of San Diego before the area was annexed to the City. City Manager Rowlands stated that staff is working on a report regarding the Montgomery Annexation, including research on the bond matter, for presentation at the Council workshop on April 6, 2006. Councilmember Rindone requested that any preliminary information be forwarded to Mr. Pemberton prior to the workshop date. 1. APPROVAL OF MINUTES of the Regular Meetings of January 10, January 17, and January 24, the Special Meeting of January 25, the Regular Meeting of February 7, the Special Meeting of February 14, and the Regular Meeting of February 14, 2006. Staff recommendation: Council approve the minutes. 2. WRJTTEN COMMUNICATIONS Letter of resignation trom Donald E. Snider, member of the Board of Appeals and Advisors. Staff recommendation: Council accept the resignation and direct the City Clerk to post the vacancy in accordance with the Maddy Act. 3 A. RESOLUTION NO. 2006-061, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING RESOLUTION NO. 2006-047, CALLING AND GIVING NOTICE OF THE HOLDING OF A GENERAL MUNICIPAL ELECTION IN SAID CITY ON TUESDAY, JUNE 6, 2006, FOR THE PURPOSE OF ELECTING A MAYOR, ELECTING TWO MEMBERS OF THE CITY COUNCIL, AND SUBMITTING TO THE QUALIFIED ELECTORS A CITIZENS' PROPOSED CHARTER AMENDMENT B. RESOLUTION NO. 2006-062, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA REQUESTING THE BOARD OF SUPERVISORS TO PERMIT THE REGISTRAR OF VOTERS TO PERFORM SERVICES FOR THE CONDUCT OF THE GENERAL MUNICIPAL ELECTION FOR THE CITY OF CHULA VISTA TO BE CONSOLIDATED WITH THE STATEWIDE PRIMARY ELECTION TO BE HELD ON JUNE 6, 2006 Page 3 - Council Minutes http://www.chula vistaca.gov March 7, 2006 ) r..-3 CONSENT CALENDAR (Continued) C. RESOLUTION NO. 2006-063, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $27,000 FROM THE AVAILABLE BALANCE OF THE GENERAL FUND TO THE CITY CLERK SERVICES & SUPPLIES BUDGET TO FUND UNANTICIPATED SERVICES OF THE REGISTRAR OF VOTERS FOR INCLUSION ON THE BALLOT OF A CITIZENS' PROPOSED CHARTER AMENDMENT TO BE SUBMITTED TO THE ELECTORATE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON JUNE 6, 2006 The purpose of the June 6, 2006 General Municipal Election is to select a Mayor, select two members of the City Council to fill Seats I and 2, and submit a citizens' proposed Charter amendment regarding the use of eminent domain to the electorate. It is necessary at this time to adopt resolutions amending Resolution 2006-047, calling and giving notice of the election; requesting the services of the Registrar of Voters, as required by the California Elections Code; and appropriating funds to the City Clerk's supplies and services budget to cover the Registrar's estimated costs for the placement of the citizen's Charter amendment on the ballot. (City Clerk) Staffrecommendation: Council adopt the resolutions. 4. RESOLUTION NO. 2006-064, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA REJECTING APPARENT LOW BID FOR THE "ADA PEDESTRIAN RAMPS, INTERSECTION OF FIRST AVENUE AND KEARNEY STREET, IN THE CITY OF CHULA VISTA, CA" PROJECT (STL-317A) DUE TO DEFICIENCIES IN THE BID PROPOSAL SUBMITTED; ACCEPTING BIDS, A WARDING A CONTRACT FOR THE "ADA PEDESTRIAN RAMPS, INTERSECTION OF FIRST A VENUE AND KEARNEY STREET, IN THE CITY OF CHULA VISTA, CA" PROJECT (STL-317A) TO THE LOWEST RESPONSIVE BIDDER, MJC CONSTRUCTION, IN THE AMOUNT OF $55,440; AND AWARDING ADDITIVE ALTERNATE 1 TO MJC CONSTRUCTION IN THE AMOUNT OF $7,110 On February 1, 2006, the General Services Director received sealed bids for this project. The work to be done consists of the construction of Americans with Disabilities Act (ADA)-compliant pedestrian ramps at the intersection of First Avenue and Kearney Street. Other appurtenant work associated with this project includes the installation of driveways, street pavement, retaining walls, curb and gutter, cross-gutter, sidewalk, striping, and traffic control. All labor, material, equipment, and transportation necessary for the project are also included. (General Services Director) Staff recommendation: Council adopt the resolution. 5 A. RESOLUTION NO. 2006-065, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING A CAPITAL IMPROVEMENT PROJECT ENTITLED, "CMP STORM DRAIN PIPE REHABILITATION PROGRAM, PHASE III" (PROJECT DR-170) AND TRANSFERRING EXISTING FUNDS FROM CIP "WESTERN CHULA VISTA INFRASTRUCTURE" (GG-188) TO DR-I 70 FOR SAID PURPOSE Page 4 - Council Minutes http://www.chulavistaca.gov i C-4 March 7, 2006 CONSENT CALENDAR (Continued) B. RESOLUTION NO. 2006-066, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA REJECTING APPARENT LOW BID FOR "CMP STORM DRAIN PIPE REHABILITATION PROGRAM, PHASE III" (PROJECT DR-l70) DUE TO DEFICIENCIES IN THE BID PROPOSAL SUBMITTED; ACCEPTING BIDS AND AWARDING CONTRACT FOR "CMP STORM DRAIN PIPE REHABILITATION PROGRAM, PHASE III" (PROJECT DR-l70) TO THE LOWEST RESPONSIVE BIDDER, TRI-GROUP CONSTRUCTION IN THE AMOUNT OF $164,975 As part of an ongoing program to rehabilitate corrugated metal drainage pipe (CMP) throughout the City, staff has identified a number of storm drain facilities, which are deteriorated and are in need of rehabilitation. This project will allow for the removal and replacement of those drainage facilities at two locations. (General Services Director) Staff recommendation: Council adopt the resolutions. 6. RESOLUTION NO. 2006-067, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE PERFORMING AND VISUAL ARTS TASK FORCE'S SELECTION OF THE FISCAL YEAR 2006/2007 PERFORMING AND VISUAL ARTS GRANT A WARDS In 1997, the Council approved a sublease with the House of Blues Concerts, Inc. (formerly Universal Concerts) that established a process whereby a portion of ticket sales proceeds at the Coors Amphitheater would be paid to the City and utilized for a Performing and Visual Arts Fund. This fund is to be used for arts grants to the Chula Vista community for the purpose of promoting and stimulating the growth of performing and cultural arts within the City. This year, the Office of Arts & Culture received $52,500 from the House of Blues for its 2005 Concert Series, and there was a carry-over balance of an additional $2,500 from the 2005/2006 grant cycle as a result of a returned grant. (Assistant City Manager Palmer) Staff recommendation: Council adopt the resolution. 7. RESOLUTION NO. 2006-068, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING AND APPROPRIATING $108,083.58 TO THE FIRE DEPARTMENT BASED ON UNANTICIPATED REIMBURSEMENTS FROM OTHER AGENCIES FOR OVERTIME USAGE The Fire Department is a participant in automatic aid agreements with all other agencies within San Diego County and an agreement for local government fire suppression assistance to forest agencies and the Office of Emergency Services. The Department provides staff and equipment resources to these agencies on a reimbursement basis. Staff is recommending Council accept the reimbursement and appropriate the funds to the Fire Department. (Fire Chief) Staff recommendation: Council adopt the resolution. Page 5 - Council Minutes http://www.chulavistaca.gov JC-5 March 7, 2006 CONSENT CALENDAR (Continued) 8. RESOLUTION NO. 2006-069, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AGREEMENTS BETWEEN THE CITY AND (A) BOYLE ENGINEERING, (B) HARRIS & ASSOCIATES, AND (C) CVALDO CORPORATION TO PROVIDE ON-CALL GENERAL CIVIL ENGINEERING CONSULTING SERVICES REQUIRED FOR VARIOUS CAPITAL IMPROVEMENT PROJECTS (CIP) OR OTHER CITY PROJECTS AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENTS ON BEHALF OF THE CITY Due to the current number and pace ofCIP projects and the proposed large inrrastructure- financing program in western Chula Vista, the City has identified the need to enlist qualified consultants to assist City civil engineering design staff. (General Services Director) Staffrecommendation: Council adopt the resolution. 9. RESOLUTION NO. 2006-070, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A BUDGET TRANSFER FROM THE REMAINING FUNDS FROM THE EXISTING SIDEWALK SAFETY PROGRAM PROJECT (STL-296) NECESSARY TO COMPLETE PROJECT JY-065L, ACCEPTING BIDS AND A WARDING CONTRACT FOR THE "SIDEWALK REPLACEMENT AT VARIOUS LOCATIONS WITHIN THE CITY OF CHULA VISTA, CALIFORNIA" (PROJECT JY-065L) TO PORTILLO CONCRETE IN THE AMOUNT OF $74,114 . On March 1, 2006, the Director of General Services received sealed bids for this project. The project was included in the budget to remove and replace curbs, gutters, sidewalks, and driveways displaced by differential settling, tree roots, etc., on various City streets. (General Services Director) Staff recommendation: Council adopt the resolution. 10. RESOLUTION NO. 2006-071, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ESTABLISHING THE "TOBIAS DRIVE BETWEEN NAPLES STREET AND OXFORD STREET IN THE CITY OF CHULA VISTA, CALIFORNIA" CAPITAL IMPROVEMENT PROJECT (STL-30l) AND APPROVING A BUDGET TRANSFER FROM THE EXISTING SOUTHWESTERN CHULA VISTA STREET IMPROVEMENTS PROJECT (STL-306) NECESSARY TO COMPLETE THE PROJECT, ACCEPTING BIDS AND AWARDING A CONTRACT FOR THE "TOBIAS DRIVE BETWEEN NAPLES STREET AND OXFORD STREET IN THE CITY OF CHULA VISTA, CALIFORNIA" PROJECT (STL-30l) On February 22, 2006, the Director of General Services received sealed bids for this project. The work to be done consists of sidewalk improvements and related street work along Tobias Drive rrom Naples Street to Oxford Street. The work also includes all labor, material, equipment, transportation, protection and restoration of existing improvements and traffic control necessary for the project. (General Services Director) . Staffrecommendation: Council adopt the resolution. Page 6 - Council Mioutes http://www.chulavistaca.gov IC-~ March 7, 2006 CONSENT CALENDAR (Continued) II. RESOLUTION NO. 2006-072, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING CONTRACT FOR THE "ADA PEDESTRIAN RAMPS, VARIOUS LOCATIONS WITHIN THE CITY OF CHULA VISTA, CA" PROJECT (STL-317B) TO MJC CONSTRUCTION IN THE AMOUNT OF $49,790, AND AWARDING ADDITIVE ALTERNATIVE I TO MJC CONSTRUCTION IN THE AMOUNT OF $3,500 On February 22, 2006, the Director of General Services received sealed bids for this project. The work to be done consists of the construction of Americans with Disabilities Act (ADA)-compliant pedestrian ramps at five separate locations within Chula Vista. Other appurtenant work associated with this project includes the installation of street pavement, curb and gutter, cross gutter, sidewalk, striping, traffic control, and other miscellaneous improvement work. Further, all labor, material, equipment, and transportation necessary for the project are included. (General Services Director) Staff recommendation: Council adopt the resolution. 12. RESOLUTION NO. 2006-073, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING THE CONTRACT FOR THE "SIDEWALK REPLACEMENT AT VARIOUS LOCATIONS IN THE CITY OF CHULA VISTA, CALIFORNIA" PROJECT (STL-319) TO KOCH-ARMSTRONG GENERAL ENGINEERING, INC. IN THE AMOUNT OF $230,078.85 On March 1,2006, the Director of General Services received sealed bids for this project. The proj ect was included in the budget to remove and replace curbs, gutters, sidewalks, and driveways displaced by differential settling, tree roots, etc., on various streets. (General Services Director) Staff recommendation: Council adopt the resolution. ACTION: Deputy Mayor McCann moved to approve staffs recommendations and offered the Consent Calendar, headings read, texts waived, with the minutes of January 25,2006 removed from the agenda (Item I). The motion carried 4-0, except on Item 12, which carried 3-0-1 with Councilmember Rindone abstaining due to the proximity of his residence to the project. ITEMS REMOVED FROM THE CONSENT CALENDAR I. APPROVAL OF MINUTES of the Special Meeting of January 25,2006. Staff recommendation: Council approve the minutes. This item was not discussed, and no action was taken. Page 7 - Council Minutes http://www .chulavistaca. gOY I C-1 March 7, 2006 PUBLIC COMMENTS Pamela Bensoussan requested that the Chula Vista Redevelopment Corporation (CVRC) meetings be aired on streaming video in the spirit of community outreach. Deputy Mayor McCann referred the request to staff. Elroy Kihano submitted a petition ttom the residents of Sunbow II, requesting the installation of streetlights on Ingram Street in order to mitigate safety issues. Deputy Mayor McCann referred the matter to the City Manager. Patricia Aguilar, representing Crossroads II, supported the request of Ms. Bensoussan to video stream CVRC meetings and also requested that CVRC agendas be posted on the City's website. Deputy Mayor McCann referred the matter to staff. ACTION ITEM 13. CONSIDERATION OF ADOPTION OF RESOLUTIONS A) ACCEPTING GRANT FUNDS FROM THE 2002 RESOURCES BOND ACT, STATE URBAN PARKS & HEALTHY COMMUNITIES PROGRAM; B) AMENDING THE AGREEMENT WITH PCL CONSTRUCTION SERVICES TO INCREASE THE GUARANTEED MAXIMUM PRICE FOR THE DESIGN AND CONSTRUCTION OF MONTEV ALLE COMMUNITY PARK, AND APPROPRIATING FUNDS THEREFOR; AND C) NAMING THE UNIVERSALLY ACCESSIBLE PLAYGROUND AT MONTEVALLE COMMUNITY PARK, "CHERYL'S PLACE", IN HONOR OF FORMER ASSISTANT CITY MANAGER/DIRECTOR OF BUDGET AND ANALYSIS, CHERYL FRUCHTER HINDS A grant contract has been executed and the City awarded $200,180 for the 2002 Resources Bond Act, State Urban Parks & Healthy Communities Program. Adoption of the resolutions approves a) accepting the grant and amending the Fiscal Year 2006 State Recreation Grant fund in the amount of $200,180; b) approving the expenditure of grant funds by appropriation to the existing Montevalle Community Park project (PR250) and amending the guaranteed maximum price with the design builder, PCL Construction Services, Inc. as necessary for the installation of the universally accessible playground equipment; and c) naming the universally accessible playground at Montevalle Community Park, "Cheryl's Place". (General Services Director) . General Services Director Griffin talked about the steps taken in acquiring the grant; and the installation of universally accessible playground equipment, the first of its kind in the City, for use by both handicapped and non-handicapped children. Councilmember Rindone requested that staff prepare a video clip of the park dedication and specialized equipment for viewing at a future Council meeting for the benefit of the greater public. ACTION: Deputy Mayor McCann offered the following resolutions, headings read, texts waived: . Page 8 - Council Minutes http://www.chulavistaca.gov IC-CZ March 7, 2006 ACTION ITEM (Continued) A. RESOLUTION NO. 2006-074, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING STATE RECREATION GRANT FUNDS IN THE AMOUNT OF $200,180 FOR THE 2002 RESOURCES BOND ACT, STATE URBAN PARKS & HEALTHY COMMUNITIES PROGRAM, AND AMENDING THE FISCAL YEAR 2006 STATE RECREATION GRANT FUND BUDGET B. RESOLUTION NO. 2006-075, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SECOND AMENDMENT TO THE AGREEMENT WITH PCL CONSTRUCTION SERVICES, INC. WHICH WILL INCREASE THE GUARANTEED MAXIMUM PRICE (GMP) FOR THE DESIGN AND CONSTRUCTION OF MONTEVALLE COMMUNITY PARK (CIP PR250) LOCATED IN THE ROLLING HILLS RANCH SUBDIVISION OF EASTERN CHULA VISTA, AUTHORIZING THE MAYOR TO EXECUTE SAID AMENDMENT AND APPROPRIATING FUNDS THEREFOR C. RESOLUTION NO. 2006-076, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA NAMING THE UNIVERSALLY ACCESSIDLE PLAYGROUND AT MONTEVALLE COMMUNITY PARK "CHERYL'S PLACE" IN HONOR OF FORMER ASSISTANT CITY MANAGER/DIRECTOR OF BUDGET AND ANALYSIS, CHERYL FRUCHTER HINDS The motion carried 4-0. OTHER BUSINESS 14. CITY MANAGER REPORTS City Manager Rowlands requested that the meeting be adjourned to a special meeting for the purpose of a Closed Session on March 10, 2006, at 6:00 p.m. in Council Chambers. It was the consensus of the Council to schedule the meeting. IS. MA YOR'S REPORTS . Ratification of appointment of John Tessitore to the Youth Advisory Commission (Representing Bonita Vista High School) ACTION: Deputy Mayor McCann moved to ratify the appointment of John Tessitore to the Youth Advisory Commission. Councilmember Castaneda seconded the motion, and it carried 4-0. Page 9 - Council Minutes http://www.chulavistaca.gov '(i a I ._ - / March 7, 2006 OTHER BUSINESS (Continued) 16. COUNCIL COMMENTS Deputy Mayor McCann stated that the purpose of the March 10 Closed Session is to discuss the cancellation of the contract for the Mayor's bodyguard, Mr. Kanter. He reported that he received an unsolicited letter from Mr. David Saucerman on February 22, 2006 that referred to allegations regarding Mr. Kanter and Caroline Smith as well as mentioned a 30-day-out clause. To that end, Deputy Mayor McCann stated that the City Attorney had clearly recommended that there be a 30-day-out clause, which is standard for most City contracts, inserted in the Kanter contract. Councilmember Castaneda expressed the need to address the matter of a personal bodyguard for the Mayor in a public forum. Councilmember Rindone mentioned a detailed report received from staff as a result of a previous staff referral regarding the SANDAG rail study. He asked staff to contact SANDAG and officially request the City's participation on the SANDAG Regional Transportation Plan Committee. Councilmember Chavez reported that she recently visited Veterans Park and commented on the wonderful facilities and activities the park offers. She thanked all those who worked on the proj ect. She also spoke about the presentation earlier on the bus system and asked that a City staff member be assigned as a liaison to MTS, and as a contact person on the subject for the Council, and that a way be found to inform those whose routes will be changed or cut. CLOSED SESSION 17. PUBLIC EMPLOYEE APPOINTMENT PURSUANT TO GOVERNMENT CODE SECTION 54957 · Ratification of appointment of Deputy City Attorney II It was the Council consensus to ratify the appointment of the Deputy City Attorney II. 18. CONFERENCE WITH LEGAL COUNSEL REGARDING EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(a) · Angela Reyes v. City ofChula Vista [Case No. 05CV2309H(LSP)] No reportable action was taken on this item. ADJOURNMENT At 7:50 p.m., Deputy Mayor McCann adjourned the meeting to a Special Meeting on March 10, 2006 at 6:00 p.m. in the Council Chambers, and thence to the Regular Meeting on March 14, 2006 at 6:00 p.m. in the Council Chambers. , -r- ~.LC~~ Susan Bigelow, MMC, City lerk Page 10 - Council Minutes http://www.chulavistaca.gov Ie -- 10 March 7, 2006 MINUTES OF A SPECIAL MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA March 10, 2006 6:00 P.M. A Special Meeting of the City Council ofthe City ofChula Vista was called to order at 6:10 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: PRESENT: Councilmembers: Chavez, McCann, Rindone, and Mayor P adi lla ABSENT: Councilmembers: Castaneda PUBLIC COMMENTS Kevin O'Neill spoke about the Kanter contract for bodyguard services and advised the Council to terminate the contract if possible but to listen to the advice of the City Attorney. He asked the Council to waive privilege with regard to communications between the City Manager, City Attorney and City Council that occurred prior to signing the contract in order for the public to understand how the situation occurred in the first place. He also mentioned that the costs for staff for the Mayor's participation on the Coastal Commission seemed high. Mayor Padilla recessed the meeting to Closed Session at 6:20 p.m. CLOSED SESSION 1. CONFERENCE WITH LEGAL COUNSEL REGARDING INITIATION OF LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(c) . One case 2. CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(b) . One case. On March 8, 2006, an article was printed in the Union Tribune alleging that the Kanter agreement has been suspended. pending an investigation. The article states that "Kanter threatened to sue the City if an agreement on how to terminate the contract was not reached. .. No reportable action was taken on these items. The Mayor reconvened the meeting in open session at 7:40 p.m., and the City Attorney reported that the Council directed her to discuss contract options with Mr. Kanter. At 7:45 p.m., Mayor Padilla adjourned the meeting to the Regular Meeting on March 14,2006 at 6:00 p.m. in the Council Chambers. ~~3~~ Susan Bigelow, MMC, City Clerk /D-I MINUTES OF A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA March 14,2006 6:00 P.M. A Regular Meeting of the City Council of the City of Chula Vista was called to order at 6:09 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: PRESENT: Councilmembers: Chavez, McCann, Rindone, Mayor Padilla ABSENT: Councilmembers: Castaneda (excused) ALSO PRESENT: Assistant City Manager Thomson, City Attorney Moore, and City Clerk Bigelow PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY . OATH OF OFFICE: Eloy Ledesma, Youth Advisory Commission City Clerk Bigelow administered the oath to Mr. Ledesma. . PRESENTATION BY MARSI STEIRER, DEPUTY DIRECTOR, CITY OF SAN DIEGO WATER DEPARTMENT, REGARDING THE WATERRE-USE STUDY Ms. Steirer made the presentation. No action was taken by the Council. . DID YOU KNOW...ABOUT ECONOMIC DEVELOPMENT'S FOCUS ON THIRD AVENUE? Presented by Denny Stone, Economic Development Manager and Lynette A. Jones, Senior Community Development Specialist This item was continued to March 21,2006. CONSENT CALENDAR (Items I through 8) With regard to Item 1, Councilmember Rindone noted that the two meetings for which minutes are being approved each lasted four hours and were examples of time the Councilmembers have spent on the Chula Vista Redevelopment Corporation (CVRC) prior to the first official CVRC meeting. Mayor Padilla noted he would abstain trom voting on Item 2A and that the City Attorney requested that Item 5 be removed trom the agenda. Councilmember Rindone commented that approval of the impartial analysis in Item 8 does not attest to the legality of the measure, which was done by the proponents' attorneys. I F- - I CONSENT CALENDAR (Continued) I. APPROVAL OF MINUTES of the Adjourned Regular Meeting of January 19, 2006 and the Special Meeting of February 6,2006. Staff recommendation: Council approve the minutes. 2. WRITTEN COMMUNICATIONS A. Memorandum trom Mayor Padilla requesting an excused absence trom the Council meeting of March 7, 2006. Staff recommendation: Council excuse the absence. B. Memorandum trom Councilmember Castaneda requesting an excused absence trom this meeting. Staff recommendation: Council excuse the absence. 3. ORDINANCE OF THE CITY OF CHULA VISTA ESTABLISHING THE SPEED LIMIT ON STONE GATE STREET BETWEEN HUNTE PARKWAY AND ADIRONDACK PLACE AT 35 MPH (FIRST READING) On September 21, 2005, staff completed an engineering and traffic survey for Stone Gate Street. Based on the results of this speed survey, and pursuant to the authority under Chula Vista Municipal Code Section 10.48.020, the City Engineer has determined that a 35 mile-per-hour speed limit should be established on Stone Gate Street between Hunte Parkway and Adirondack Place. Signs indicating a 25 mile-per-hour speed limit when children are present are posted, as required by the Chula Vista Municipal Code, near EastIake Middle School. (City Engineer) Staff recommendation: Council place the ordinance on first reading. 4. RESOLUTION NO. 2006-078, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FINAL MAP FOR 321 RANCHO DRIVE, CHULA VISTA TRACT NO. OS-II, AND APPROVING THE ASSOCIATED SUBDIVISION IMPROVEMENT AGREEMENT AND SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT On November 23, 2004, the Council approved a tentative subdivision map for 321 Rancho Drive proposing the condominium conversion of 48 multi-family units. Approval of the final map and its associated subdivision improvement agreements will allow the applicant to have the map recorded, thus converting the existing apartments into condominiums. (City Engineer) Staff recommendation: Council adopt the resolution. Page 2 - Council Action Agenda http://www.chulavistaca.gov March 14, 2006 IE-~ CONSENT CALENDAR (Contmued) 5. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FINAL MAP OF SUNBOW VILLAS, CHULA VISTA TRACT NO. 05-03 FOR CONDOMINIUM PURPOSES, AND THE ASSOCIATED SUPPLEMENTAL AND SUBDIVISION AGREEMENT On March 1, 2005, the Council approved a tentative subdivision map for Sunbow Villas, a project consisting of a condominium conversion of 202 multi-family units. Adoption of the resolution allows the final map to record, converting the existing apartments into condominiums. (City Engineer) This item was removed from the agenda. 6. RESOLUTION NO. 2006-079, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING AND APPROPRIATING UNANTICIPATED GRANT FUNDS FROM THE HOMELAND SECURITY GRANT AND STATE EMERGENCY MANAGEMENT PERFORMANCE GRANT The Police and Fire Departments participated in a field exercise in November 2005 as part of a Countywide exercise plan and mutual aid agreements already in force. The state provides reimbursement for overtime spent at this exercise. It also provides funding for the Community Emergency Response Team (CERT) program on a year-to-year basis. San Diego County received $80,000 for this purpose and has allocated each jurisdiction its fair share. (Management & Information Services Director) Staff recommendation: Council adopt the resolution. 7. RESOLUTION NO. 2006-080, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING THE FISCAL YEAR 2006 RECREATION DEPARTMENT BUDGET BY APPROPRIATING $6,600 BASED ON UNANTICIPATED REVENUE FROM COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS FOR THE WIZ KIDZ PROGRAM The Recreation Department was awarded $6,600 in Community Development Block Grant (CDBG) funds for Fiscal Year 2005/2006, and is requesting appropriation of these funds to its operating budget to fund the Wiz Kidz program at the Otay Recreation Center for the fiscal year. The amount of $6,483 will be used for personnel services and $117 for supplies and services. (Recreation Director) Staff recommendation: Council adopt the resolution. 8. RESOLUTION NO. 2006-081, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE IMPARTIAL ANALYSIS OF THE CITIZEN'S MEASURE AMENDING THE CITY CHARTER TO LIMIT THE USE OF EMINENT DOMAIN IN THE CITY TO BE SUBMITTED TO THE ELECTORATE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD IN THE CITY OF CHULA VISTA ON JUNE 6, 2006 Page 3 - Council Action Agenda http://www .chulavistaca. gOY March 14, 2006 I E-3 CONSENT CALENDAR (Continued) Elections Code section 9280 provides that when a city measure qualifies for a place on the ballot, the governing body may direct the city elections official to transmit a copy of the measure to the city attorney. The city attorney shall prepare an impartial analysis of the measure showing the effect of the measure on the existing law and the operation of the measure. Adoption of the resolution approves the impartial analysis to be submitted to the electorate at the June 6, 2006 election. (City Attorney) Staff recommendation: Council adopt the resolution. ACTION: Mayor Padilla moved to approve staffs recommendations and offered Consent Calendar Items 1 through 4 and 6 through 8, headings read, texts waived, noting that Item 5 was removed from the agenda. The motion carried 4-0, except on . Item 2A, which carried 3-0-1, with Mayor Padilla abstaining. ITEMS REMOVED FROM THE CONSENT CALENDAR There were none. PUBLIC COMMENTS Kevin O'Neill discussed the Kanter contract, stating that provision of a driverlbodyguard is a policy issue that should have been discussed in open session; and since the contract has a renewal clause, it indicated a long-term rather than transitory need. He believed the true cost of the contract had been hidden from the Council and, by extension, the public, and that neither had been well served in this instance. He asked the Council to release any memos from the City Attorney's office dated prior to the signing of the contract. Mayor Padilla invited Mr. O'Neill to meet with him to discuss and hopefully resolve the concerns and issues. He stated that all public records that can be disclosed have been released to the public, and neither he nor the City Manager had slipped anything past the Council. PUBLIC HEARINGS 9. CONSIDERATION OF AN AMENDMENT TO SECTION 8.24.070 OF THE CHULA VISTA MUNICIPAL CODE TO INCLUDE THE ABATEMENT PROCESS FOR NON-FRANCHISE WASTE HAULERS' NUISANCE ROLL-OFF BOXES AND CONTAINERS PLACED WITHIN THE CITY'S BOUNDARIES, AND APPROVAL OF THE ADDITION OF A DAILY IMPOUND RATE TO THE RATE SCHEDULE OF THE AMENDED AND RESTATED SOLID WASTE FRANCHISE AGREEMENT The City experiences problems with non-franchised waste hauling companies delivering roll-off boxes and bins in franchised areas. By the time these violations are communicated to staff and code compliance processes are implemented, the jobs are completed and the containers are removed from the job site. Adoption of the ordinance amends the municipal code to address these issues, and adoption of the resolution amends the rate schedule in the amended and restated solid waste franchise agreement to include a "Daily Impound Rate." (General Services Director) Page 4 - Council Action Agenda http://www.chulavistaca.gov March 14, 2006 IE-If PUBLIC HEARINGS (Continued) Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and at the time specified in the notice. Mayor Padilla opened the public hearing; there were no members of the audience wishing to speak. ACTION: Mayor Padilla moved to continue the hearing to April 11, 2006. Deputy Mayor McCann seconded the motion, and it carried 4-0. 10. CONSIDERATION OF AN AMENDMENT TO THE CHULA VISTA MUNICIPAL CODE TO REGULATE THE BREWING AND DISTILLING OF LIQUORS IN THE LIMITED INDUSTRIAL (I-L) ZONE (APPLICANT: CITY OF CHULA VISTA) Adoption of the ordinance amends the Municipal Code to allow small scale brewing or distilling of liquors with a conditional use permit, and prohibits the brewing or distilling of liquors, except for businesses requiring a Type 23 license ITom the Department of Alcoholic Beverage Control, in the Limited Industrial zones. (Planning and Building Director) Notice of the hearing was given in accordance with legal requirements, and the hearing was held on the date and at the time specified in the notice. Mayor Padilla opened the public hearing, and Assistant Planner Catacucan presented the staff report. There were no members of the audience wishing to speak, and Mayor Padilla closed the hearing. Deputy Mayor McCann noted that the ordinance would create new jobs and dining opportunities, as well as provide safeguards to address sensitivities in surrounding areas. Councilmember Rindone commented that he did not wish to see an infusion of restaurants into the industrial zone. ACTION: Deputy Mayor McCann offered the following ordinance for first reading, heading read, text waived: ORDINANCE OF THE CITY OF CHULA VISTA ADDING SECTION 19.44.040Q TO THE CHULA VISTA MUNICIPAL CODE TO ALLOW AND REGULATE THE SMALL SCALE BREWING OR DISTILLING OF LIQUORS, AND AMENDING 19.44.050 TO PROHIBIT THE BREWING OR DISTILLING OF LIQUORS EXCEPT FOR BUSINESSES REQUIRING A TYPE 23 LICENSE FROM THE DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL WITHIN THE LIMITED INDUSTRIAL (I-L) ZONE IN THE CITY OF CHULA VISTA The motion carried 4-0. Page 5 - Council Action Agenda http://www .chulavistaca.gov I f-5 March 14, 2006 ACTION ITEMS 11. CONSIDERATION OF APPROPRlATION OF TRANSPORTATION DEVELOPMENT IMPACT FEE FUNDS AND AUTHORIZATION FOR THE PUBLIC WORKS OPERATIONS DIRECTOR TO EXECUTE CHANGE ORDERS FOR COMPLETION OF THE INTERSTATE 80S/OLYMPIC PARKWAYIEAST ORANGE AVENUE INTERCHANGE PROJECT AND THE MAIN STREET NORTHBOUND AND SOUTHBOUND ON-RAMPS IMPROVEMENTS PROJECT In July 2001, the Council directed the acceleration of traffic projects to enhance traffic flow in and out of the City. As a result, the City has undertaken five extensive transportation projects, including three interchanges and two major streets along Interstate 80S. In order to formally complete the projects, an additional $1.9S million in Transportation Development Impact Fee funds is necessary to process outstanding invoices. (City Engineer, Public Works Operations Director) Acting Director of Engineering Browder reported that notice was just received that the 1- 80S/Olympic Parkway/East Orange Avenue interchange project was awarded the outstanding engineering project of the year by the American Society of Civil Engineers. ACTION: Deputy Mayor McCann offered the following resolutions for adoption, headings read, texts waived: A. RESOLUTION NO. 2006-082, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $I,SSO,OOO TO THE INTERSTATE-80S/OLYMPIC PARKWAY/EAST ORANGE AVENUE INTERCHANGE PROJECT (STM-328) FROM THE AVAILABLE BALANCE OF THE TRANSPORTATION DEVELOPMENT IMPACT FEE (TDIF) FUND B. RESOLUTION NO. 2006-083, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROPRIATING $400,000 TO THE INTERSTATE-80S/MAIN STREET/AUTOPARK DRIVE SOUTHBOUND AND NORTHBOUND ON-RAMPS PROJECT (STM-3S1) FROM THE AVAILABLE BALANCE OF THE TRANSPORTATION DEVELOPMENT IMPACT FEE (TDIF) FUND C. RESOLUTION NO. 2006-084, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORlZING THE DIRECTOR OF PUBLIC WORKS OPERATIONS TO EXECUTE ANY AND ALL CHANGE ORDERS NECESSARY TO COMPLETE THE CONSTRUCTION CONTRACT FOR THE INTERSTATE- 80S/OLYMPIC PARKWAYIEAST ORANGE AVENUE PROJECT (STM-328), EXCLUDING CHANGE ORDERS 22 AND 23 FOR MAIN STREET SOUTHBOUND AND NORTHBOUND ON-RAMP IMPROVEMENTS Page 6 - Council Action Agenda http://www.chulavistaca.gov March 14, 2006 IE-&' ACTION ITEMS (Continued) D. RESOLUTION NO. 2006-085, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE DIRECTOR OF PUBLIC WORKS OPERATIONS TO EXECUTE FINAL CHANGE ORDER NUMBERS 22 AND 23 FOR THE MAIN STREET NORTHBOUND AND SOUTHBOUND ON-RAMPS IMPROVEMENTS (STM-35l), RESPECTIVELY The motion carried 4-0. OTHER BUSINESS 12. CITY MANAGER REPORTS Assistant City Manager Thomson reported that Councilmember Castaneda and City Manager Rowlands were attending the National League of Cities conference in Washington. 13. MAYOR'S REPORTS . Ratification of appointment of Brett Davis to the Resource Conservation Commission. ACTION: Mayor Padilla moved to ratify the above appointment. Deputy Mayor McCann seconded the motion, and it carried 4-0. Mayor Padilla asked that Council committee assignments be added to next week's agenda to fill positions previously filled by Patty Davis. 14. COUNCIL COMMENTS Councilmember Chavez reported that the Council and staff have been reading to children in various schools during the past few weeks. She also reported on the MACK project groundbreaking, which will result in affordable senior housing and afford collaboration between the resident seniors and adjoining school children. CLOSED SESSION At 7:11 p.m., Mayor Padilla recessed the meeting to Closed Session. 15. CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(b) . One Case No reportable action was taken on this item. At 7:55 p.m., Mayor Padilla adjourned the meeting to the Regular Meeting on March 21,2006 at 6:00 p.m. in the Council Chambers. ~-:tu~. ~~f~ Susan Bigelow, MMC, City Clerk Page 7 - Council Action Agenda http://www .chulavistaca. gOY \ r-:: ~ If March 14, 2006 MINUTES OF A REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA March 21, 2006 6:00 P.M. A Regular Meeting of the City Council of the City of Chu1a Vista was called to order at 6:12 p.m. in the Council Chambers, located in City Hall, 276 Fourth Avenue, Chula Vista, California. ROLL CALL: PRESENT: Councilmembers: Castaneda, Chavez, McCann, Rindone, and Padilla ABSENT: Councilmembers: None ALSO PRESENT: Assistant City Manager Thomson, City Attorney Moore, and Senior Deputy City Clerk Peoples PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE SPECIAL ORDERS OF THE DAY . OATH OF OFFICE Brett Davis - Resource Conservation Commission Deputy City Clerk Bennett administered the oath to Brett Davis, and Mayor Padilla presented him with a certificate of appointment. . DID YOU KNOW...ABOUT ECONOMIC DEVELOPMENT'S FOCUS ON THIRD AVENUE? (Continued !Tom March 14,2006) Presented by Denny Stone, Economic Development Manager and Lynette A. Jones, Senior Community Development Specialist Economic Development Manager Stone introduced Ms. Jones, who provided a presentation on the City's new proactive business retention and expansion program, Smart Business Links. CONSENT CALENDAR (Items 1 through 8) Mayor Padilla stated he would abstain on Item 4, as his home is within 500 feet of one of the subject routes. Item 7 was removed !Tom the Consent Calendar at the request of the City Attorney. Prior to taking action on the Consent Calendar, Mayor Padilla recognized the following speakers wishing to address Item 2. I F- ( CONSENT CALENDAR (Continued) Heather Lee representing the Alcohol and Other Drug Prevention Program of the South Bay YMCA, spoke in opposition to the amendment to the zoning code. Jeremy Jones, representing the Alcohol and Other Drugs (AOD) Coalition, expressed his concerns and requested, in collaboration with the Chula Vista AOD, Council consideration of steps to ensure responsible beverage services, limited access to minors, control of liquor producers, manufacturers and distillers in the community, environmental impacts in terms of normalization of alcohol as an integral part of the business community in Chula Vista, and the over inundation of alcohol availability on the west side of Chula Vista. Councilmember Rindone stated that he was preparing an editorial on this subject and presented the five major programs that the Chula Vista Police Department is using proactively to curb underage drinking: I) Minor decoy operation. 2) Shoulder tap operation. 3) Operation safe crossing. 4) Cops in shops. 5) General enforcement operations. Councilmember Chavez commended the speakers for addressing this issue before the Council and noted that this would be one of the topics under discussion at the upcoming Public Safety Committee meeting. Deputy Mayor McCann explained that this ordinance would allow for a microbrewery, such as a Carl Strauss or Gordon Biersch, to be able to have restaurants in Chula Vista. It would be a highly professional, highly monitored, upstanding restaurant. Any proposal for additional businesses like this would have to go through the Conditional Use Permit process, requiring public hearings and notification to all outlying areas; and all alcohol beverage control laws would be strictly enforced. Councilmember Chavez also noted that this particular establishment is for production only, not a place for social gatherings. The companies will be producing only a small amount for distribution to their restaurants, and there are no schools or parks nearby. Councilmember Castaneda asked staff to convey to the Planning Commission that signage should be limited under a conditional use permit to ensure that the businesses are kept low key and discrete so as not to convey the wrong message. I. APPROVAL OF MINUTES of the Special Meeting of January 25,2006. Staff recommendation: Council approve the minutes. Page 2 - Council Minutes http://www.chulavistaca.gov March 21, 2006 j F- d-- CONSENT CALENDAR (continued) 2. ORDINANCE NO. 2006-3031, ORDINANCE OF THE CITY OF CHULA VISTA AMENDING THE MUNICIPAL CODE TO ADD SECTION 19.44.040Q AND AMEND SECTION 19.44.050, RELATED TO THE BREWING AND DISTILLING OF LIQUORS IN THE LIMITED INDUSTRIAL (I-L) ZONE (SECOND READING) Adoption of the ordinance allows small scale brewing and distilling ofliquors, subject to approval of a conditional use permit and a preliminary environmental review within the City's Limited Industrial Zones. This ordinance was introduced at the meeting of March 14,2006. (Planning and Building Director) Staff recommendation: Council adopt the ordinance. 3. ORDINANCE NO. 2006-3032, ORDINANCE OF THE CITY OF CHULA VISTA ESTABLISHING A 35 MPH NEW SPEED LIMIT ON STONE GATE STREET BETWEEN HUNTE PARKWAY AND ADIRONDACK PLACE (SECOND READING) Adoption of the ordinance establishes a 35-mph speed limit on Stone Gate Street between Hunte Parkway and Adirondack Place. Signs indicating a 25-mph speed limit "when children are present" are posted as required by the Chula Vista Municipal Code near Eastlake Middle School. This ordinance was introduced at the meeting of March 14, 2006. (City Engineer) Staff recommendation: Council adopt the ordinance. 4. ORDINANCE OF THE CITY OF CHULA VISTA AMENDING CHAPTER 10.64 OF THE CHULA VISTA MUNICIPAL CODE RELATING TO TRUCK ROUTES (FIRST READING) There have been many changes to the City's circulation system since the truck routes ordinance was last modified in 1991. Recently, staff has reviewed the existing truck routes and recommends several changes in order to: 1) clarify the intended usage of existing streets throughout the City, and 2) classify some future streets depicted on the approved entitlement documents for Villages 2, 6, 7, II and Planning Area 12 ofthe Otay Ranch. Adoption of the resolution approves those revisions to the truck route ordinance. (City Engineer) Staff recommendation: Council place the ordinance on first reading. 5. RESOLUTION NO. 2006-086, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING AN AMENDED OTAY V ALLEY REGIONAL PARK JOINT EXERCISE OF POWERS AGREEMENT (JEP A) BETWEEN THE COUNTY OF SAN DIEGO AND THE CITIES OF CHULA VISTA AND SAN DIEGO CHANGING THE NUMBER OF VOTES NECESSARY FOR THE CITIZENS ADVISORY COMMITTEE OF THE OTAY VALLEY REGIONAL PARK JEPA TO TAKE ACTION, AND AUTHORIZING THE MAYOR TO SIGN THE AMENDED AGREEMENT Page 3 - Council Minutes http://www.chulavistaca.gov I F-3 March 21, 2006 CONSENT CALENDAR (continued) Adoption of the resolution approves an amendment to the Otay Valley Regional Park Joint Exercise of Powers agreement by clarifying the minimum number of votes required by the Citizen Advisory Committee to take action on an item. (Planning and Building Director) Staff recommendation: Council adopt the resolution. 6. RESOLUTION NO. 2006-087, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA DECLARING THE CITY'S INTENTION TO UNDERGROUND OVERHEAD 138 KV ELECTRICAL TRANSMISSION LINES (TIE LINE 13815) ALONG THE CHULA VISTA BAYFRONT AND SUPPORTING STRUCTURES BETWEEN TOWER 189507 AND TOWER 188701, INCLUDING TOWER 188701, AND SETTING A PUBLIC HEARING FOR THE FORMATION OF A UTILITY UNDERGROUNDING DISTRICT ON APRIL 25, 2006 AT 6:00 P.M. In order to proceed with the City's redevelopment of the Bayfront, the large 138 kV electrical transmission lines currently located west of Bay Boulevard must be installed underground and the towers removed. The terms for the performance of this work were outlined in the Memorandum of Understanding between the City and SDG&E dated October 12, 2004. (City Engineer) Staff recommendation: Council adopt the resolution. 8. RESOLUTION NO. 2006-088, RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACCEPTING BIDS AND AWARDING A CONTRACT FOR THE "SDG&E PARK LIGHTING IMPROVEMENTS (PR273)" PROJECT TO PALM ENGINEERING CONSTRUCTION COMPANY, INC. IN THE AMOUNT OF $107,800 On March 8, 2006, the Director of General Services received sealed bids for this project. The work for the project primarily includes park lighting improvements at SDG&E Park located at 1450 Hilltop. (General Services Director) Staffrecommendation: Council adopt the resolution. ACTION: Deputy Mayor McCann moved to approve staffs recommendations and offered Consent Calendar Items 1 through 6 and 8, headings read and texts waived, noting that Item 7 was deleted from the agenda at the request of the City Attorney. The motion carried 5-0 except on Item 4, which carried 4-0-1, with Mayor Padilla abstaining due to the proximity of his home to one of the subj ect routes. ITEMS REMOVED FROM THE CONSENT CALENDAR There were none. Mayor Padilla requested Item lObe considered at this time; and it was considered prior to Public Comments. Page 4 - Council Minutes http://www .chulavistaca.gov \ F- 4 March 21,2006 PUBLIC COMMENTS Pat O'Neil addressed the Council regarding ongoing issues she and her neighbors are experiencing in the Chula Vista Mobile Home Park. She stated that larger mobile homes are replacing smaller ones, resulting in the moving of lot lines and the reduction of space between new mobile homes and the older, established ones. Carolyn Easley, also of the Chula Vista Mobile Home Park, spoke regarding a park noise rule that the mobile home installers are not adhering to, and requested Council assistance for the seniors living in mobile home parks in the community. Senior Community Development Specialist Perez provided translation for the following two speakers: Paty Osuna, an active member of the Neighborhood Community Council Initiative (NCI), requested that future agenda items relating to liquor be provided to the community in Spanish. Maria Luisa Aldrete, a promoter of healthy, active children, addressed the Council on pedestrian traffic issues in western Chula Vista. She asked the Council to consider the traffic calming recommendations provided by WalkSanDiego, especially in areas around schools. ACTION ITEMS 9. CONSIDERATION OF AN AMENDMENT TO THE MUNICIPAL CODE TO REGULATE THE PROXIMITY OF SEX OFFENDERS TO SCHOOLS AND PARKS Convicted sex offenders who have committed a sexual offense against children pose a threat to the children residing or visiting in our community, and therefore, the Council desires to impose additional safety precautions to further the goal of protecting children throughout the City. (Police Chief) City Attorney Moore stated the following for the record: "The sex offender ordinance before the City Council tonight establishes a buffer zone around schools and parks within the City. All five City Councilmembers own property within 500 feet of a school or park impacted by this ordinance. The Fair Political Practices Commission has provided us with a written opinion that all five Councilmembers have a conflict of interest with respect to voting on this ordinance. In addition, the Fair Political Practices Commission does not have sufficient facts to determine if enough property owners in Chula Vista would be equally impacted, so they cannot determine if the public general exception rule applies in this case. Therefore, the City must invoke the "rule of legally required participation" in order to take action on this ordinance. This requires that all five Councilmembers' names be placed in a hat, and three names will be pulled out at random. Those will be the Councilmembers who will be allowed to participate on this item." City Attorney Moore then placed slips of paper containing the Councilmembers' names into a hat and asked Senior Deputy City Clerk Peoples to draw three names to determine the Councilmembers who would be allowed to participate, while the remaining two would be asked to leave the Council Chambers. Senior Deputy City Clerk Peoples drew the following names at random: Councilmember Rindone, Councilmember Castaneda and Councilmember Chavez. Page 5 - Council Minutes http://www.chulavistaca. gOY \'- c: I t"" - ......-' March 21, 2006 ACTION ITEMS (Continued) Mayor Padilla passed the gavel for purposes of this item to Councilmember Rindone. Mayor Padilla and Deputy Mayor McCann left the Council Chambers. Councilmember Rindone noted that no speaker slips had been received trom the public. He then called on Police Chief Emerson to provide a brief overview of the staff report and respond to questions of the Council. Chief Emerson referred to the ordinance as "distance marker legislation," which prohibits registered sex offenders whose crimes were against a minor trom residing within 500 feet of a school, grades kindergarten through eighth, or a park. The ordinance will not apply to people who established a residence within 500 feet prior to July I, 2006. Chief Emerson then responded to questions of Councilmember Castaneda, explaining the notification process to be used in the implementation of the City's new ordinance. Further, he explained that other cities in the County have adopted loitering ordinances to keep these types of people 300 feet away from schools and parks; Chula Vista's will be a residence ordinance that does not allow these types of people to live within 500 feet of a park or school. Councilmember Rindone requested a report trom staff in six months on a possible amendment to the ordinance to cover school grades rrom kindergarten through twelfth. Councilmember Castaneda asked staff to bring back an analysis to fully restrict the presence of sex offenders within sensitive areas where children congregate, such as parks and libraries. Tanya Rovira-Osterwalder, a Chula Vista resident, stated that she has a fourteen-year-old daughter and agreed with the Council that the ordinance should cover through twelfth grade. ACTION: Councilmember Castaneda offered the ordinance for first reading, heading read, text waived: ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADDING CHAPTER 9.80 TO THE CITY OF CHULA VISTA MUNICIPAL CODE TO REGULATE THE PROXIMITY OF SEX OFFENDERS TO SCHOOLS AND PARKS (FIRST READING) The motion carried 3-0-2, with Mayor Padilla and Deputy Mayor McCann abstaining trom participation and absent trom the Chambers due to the "rule of legally required participation." Mayor Padilla and Deputy Mayor McCann returned to the Council Chambers. 10. CONSIDERATION OF AWARDING CONTRACTS FOR POLICE-INITIATED TOWING AND STORAGE SERVICES, AND AMENDING THE SERVICE RATE SCHEDULE Page 6 - Council Minutes hllp:/ /www.chulavistaca.gov March 21, 2006 \,::-t:. . ,.\ ACTION ITEMS (Continued) The Police Department recently completed a request for proposals for Police-initiated towing and impound services. Adoption of the resolutions awards the contracts, amends the service rate schedule, and authorizes the Police Department to make annual changes to the police-initiated towing service rate schedule. (Police Chief) Item 10 was actually considered prior to Public Comments. Deputy Mayor McCann stated he still had questions on this item and requested that it be continued for two weeks. Mayor Padilla asked if those who turned in speaker slips for this item wished to speak this evening or wait until the item is brought back for consideration. The following people declined to speak at this time: Peter Gregorovic, attorney representing JC Towing Inc., John and Josie Clark, owners of JC Towing, Inc., and David Pudgel, representing RoadOne. ACTION: Deputy Mayor McCann then moved to continue Item 10 for two weeks. Councilmember Chavez seconded the motion, and it carried 5-0. Councilmember Rindone asked staff to contact him regarding a concern he has on the item. OTHER BUSINESS 11. CITY MANAGER REPORTS There were none. 12. MAYOR'S REPORTS Consideration of City Council committee assignments. Mayor Padilla asked that this item be continued to the meeting of March 28,2006. Mayor Padilla asked staff to provide an update on a previous referral by Councilmember Chavez for information on an ordinance requiring the registration oflobbyists within the City. 13. COUNCIL COMMENTS Councilmember Chavez congratulated the Chula Vista Elementary School District's speech contestants and requested that a list of the winners be posted on the City website. She then thanked Senator Denise Ducheney for holding the first Medicare fair in the City and providing assistance to seniors in completing their applications. She requested that the City's Communications DepartmentfWebmaster provide a link on the City website to the Channel 10 website to provide this information to our seniors. She also requested an update on the provision of translation services for meetings, noting that consideration needed to be given to agenda translation, as well. Lastly, she asked staff to arrange a summit with the school districts to assist them in making a decision on a common school calendar. Deputy Mayor McCann stated that he had raised the common calendar issue at the City/Schools Task Force meeting and suggested that Councilmember Chavez be considered for appointment to the Task Force to address this issue next week when the committee assignments are considered. He then urged those present to join the Council by voting to support the Jessica's Law initiative on the June ballot. Page 7 - Council Minutes http://www.chulavistaca.gov March 21,2006 IF-If OTHER BUSfNESS (Continued) Councilmember Rindone stated that the Taste of the Town event would be held in September this year. He then commented that the modified school calendar is a complex issue, and the City's connection is that a common calendar would assist law enforcement in enforcing truancies, which have a financial impact on the school districts. Next, he announced that possibly the final Urban Core Specific Plan meeting is being held Wednesday, March 29th, at Just Java in downtown Chula Vista, from 4:00 p.m. to 7:00 p.m. He reported on his attendance today at the unveiling of Chula Vista's original school bell. He requested a reissue of his prior staff referral on what the state legislature is doing with regard to eminent domain, asking staff to place the memorandum from Governmental Affairs Coordinator Bradley regarding state legislation on the City website, along with links to the various legislative items. Councilmember Castaneda stated that the first meeting of the Public Safety Committee is being held on March 29, 2006, at 10:00 a.m. in the Police Department Community Room, and made referrals to the City Clerk's Office to provide assistance in meeting noticing requirements and the Police Department to maintain records ofthe committee. Councilmember Rindone stated he had received a memorandum dated March 10, 2006 from the City Manager regarding Community Choice Aggregation and requested it be docketed on a future agenda. CLOSED SESSION 14. CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(b) . One Case. On March 8, 2006, an article was printed in the Union Tribune alleging that the Kanter agreement has been suspended, pending an investigation. The article states that "Kanter threatened to sue the City if an agreement on how to terminate the contract was not reached" No reportable action was taken on this item. 15. CONFERENCE WITH LEGAL COUNSEL REGARDING INITIATION OF LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(c) . One Case No reportable action was taken on this item. ADJOURNMENT At 9:15 p.m., Mayor Padilla adjourned the meeting to the Regular Meeting on March 28,2006 at 6:00 p.m. in the Council Chambers. q~~{?~ Lori Anne Peoples, CMC Senior Deputy City Clerk Page 8 - Council Minutes http://www.chulavistaca.gov \ ~-.9 March 21, 2006 . ...... COUNCIL AGENDA STATEMENT . Item J" Meeting Date 04/04/06 Resolution Approving the Submittal of TDA and TransNet Funding Applications to the San Diego Association of Governments (SANDAG) for FY 2006-07 Bicycle and Pedestrian Capital Improvement Projects, SUBMITTED BY; Acting Director ofEngineering~ REVIEWED BY; City Manager ~h YK ITEM TITLE; (4/Sth vote: Yes _ No...x.J The Transportation Development Act (TDA) and the TransNet Program provide funding support for regional bicycle and pedestrian capital improvement projects. SANDAG allocates those proj ect funds to cities in the San Diego region, based upon funding availability and proj ect ranking. Staff has prepared funding applications for two projects. RECOMMENDATION: That Council adopt the resolution and approve submittal of the applications. BOARDS/COMMISSIONS: Not applicable DISCUSSION: The City is eligible to compete for funding on an annual basis for bicycle and pedestrian projects under the following programs: Transportation Development Act (TDA): This fund provides support for the region's non-motorized transportation projects including sidewalk and bicycle lane improvements. The revenue comes from Y. % of the total 7 %% sales tax assessed in the region. Each year, SANDAG is responsible for the allocation of TDA funds in conformance with legislative and region-wide priorities. TransNet Program: In 1987, San Diego County voters approved a half-cent sales tax to finance transportation projects. County voters subsequently approved Proposition A in November 2004 which enacted a 40-year extension of TransNet. The resulting TransNet funding is combined with local, state and federal dollars to improve the region's transportation network. As with the TDA Fund, SANDAG administers this major public works program using Bicycle and Pedestrian Claim Guidelines that reflect both the agency's policy and State law (see Attachment A). City of Chula Vista Applications for FY 2006-07 Each year, the City participates in the claim process for TDA and TransNet bicycle and pedestrian project funds by submitting an updated list of projects to SANDAG. The evaluation process for TDA bicycle and pedestrian projects and TransNet bicycle projects is consistent with the way SANDAG evaluates and prioritizes other components of the transportation system such as arterial, highway, and transit projects. In addition, the selection criteria support the overall goals 2-1 Page 2, Item ..::L Meeting Date 04/04/06 and objectives SANDAG has for improving the regional transportation system and promoting smart growth in the region by giving priority to proj ects that enhance the existing transportation network as a whole. The criteria to be used in the evaluation process are specified in the Project Selection Criteria matrix for each project (see Attachment B). For FY 2006-07, the City is requesting funding for the following proposed bicycle and pedestrian improvement projects, which are further detailed in Attachment B: 1. Bav Boulevard Bike Lane between F Street and J Street: The proposed project consists of installing 5,280 feet of Class 2 bike lane on Bay Boulevard between F Street and J Street. The total estimated cost of the project is $57,000. The total application request for TDA!transNet funds is $40,000. The remaining $17,000 match will be provided from Gas Tax funds that remain available subsequent to completion of Project TF-332, Signing and Striping on East Palomar. 2. Pedestrian Traffic Signal Upgrade TF-323 & TF-328: This project will be done under the City's FY2006-07 Upgrade of Pedestrian Indications Program TF-323 and FY2006-07 Audible Pedestrian Signal Modifications Program TF-328. The proposed project consists of upgrading pedestrian crossing signal facilities at fourteen (14) intersections within the public right-of-way that directly serve schools in western Chula Vista. The general scope of work is to upgrade existing pedestrian indications to "countdown" indication, and to install audible pedestrian signal crossings. The total cost of the project is $125,000. The total application request for TDA/TransNet funds is $50,000. The additional revenue will supplement the existing Traffic Signal Fund for these two projects, and will increase the number of intersections to be done by approximately six. Other sources of funding for the above listed projects are shown in the TDA Annual Grant Application for each project (see Attachment B). These two projects were selected because they closely follow the eligibility guidelines and selection criteria for TDA and TransNet funding. Applications for TDA/TransNet non-motorized claims were submitted to SANDAG by the deadline on March 3, 2006. A certified copy of the Council-adopted resolution for the funding applications must be received by SANDAG no later than April 26, 2006. FISCAL IMPACT: There is no impact to the General Fund. Potential revenue to the City from TransNet and TDA would be $90,000 for the proposed projects. The available balance from TF- 322 is sufficient to provide the matching funds for the Bay Boulevard Bike Lane project. Attachment A: SANDAG's "Bicycle and Pedestrian Claims Guidelines" Attachment B: Grant Applications for Transportation Development ActfTransNet Bicycle and Pedestrian Proj ects J:\ENGINEER\AGENDA\CAS2006\04-04~06\TDA &. TRANSNET FUNDINGT.Q.~l13.SOLO.DOC Attachment "A" BICYCLE AND PEDESTRIAN CLAIM GUIDELINES Introduction The following describes the claim process for Transportation Development Act (TDA) bicycle and pedestrian projects and TransNet bicycle projects. TDA Project Eligibility The law specifies that the money should be allocated according to the regulations adopted by SANDAG as the regional transportation planning agency. It also identifies certain categories of eligible projects. These specific project types represent neither an exhaustive list, nor are they listed as priorities (Public Utilities Code Sections 99233.3 and 99234). They are summarized below for reference. Project selection criteria, established by SANDAG Board policy, are discussed later. . Construction, including related engineering expenses, of bicycle and pedestrian facilities. Maintenance of bicycle trails provided they are closed to motorized traffic. . . Projects serving the needs of commuting bicyclists, including but not limited to, new trails serving major transportation corridors, secure bicycle parking at employment centers, park and ride lots, and transit centers where other funds are not available. . A comprehensive bicycle and pedestrian facilities plan (no more than once every five years), with an emphasis on bicycle projects intended to primarily accommodate non- recreational bicycle trips. . Up to 20 percent of the cost to restripe Class II bicycle lanes. Up to 5 percent of the amount avaiiable to a city or the county may be expended in conjunction with other funds to support bicycle safety education programs, so long as the funds are not used to fully fund the salary of anyone person. TransNet Project Eligibility TransNet bicycle funds may be expended for all purposes necessary and convenient to the design, right-of-way acquisition, and construction of facilities intended for use by bicyclists. These funds also may be used for programs that help to encourage the use of bicycles, such as secure parking facilities, bicycle promotion programs, and safety programs. Pedestrian projects are not eligible under the TransNet program. Certain costs at times associated with bicycle and pedestrian projects are not eligible when the benefit provided is not the exclusive use of bicyclists or pedestrians. These instances are listed below. 1 of 4 2-3 Attachment "A" . Curb and gutter are part of the roadway drainage system. As such, newly-installed curb and gutter cannot be considered an improvement exclusively for the benefit of the sidewalk or bike lane and are not an eligible expense. . Driveway ramps installed across sidewalks are not for the benefit of pedestrians, and in fact, degrade the pedestrian environment. Claimants may not include the cost of driveway ramps in applications for sidewalk projects. However, the distance across the driveway may be included when computing the per-square-foot cost of the sidewalk. . Where roadway design standards require a roadway shoulder width at least as wide as would be required for a standard bike lane, the cost of the shoulder construction will not be eligible. Appropriate bikeway signage is eligible. Under some circumstances, it may be necessary to remove and replace curb and gutter, driveway ramps, drainage facilities and other existing improvements in order to construct a bikeway or 'sidewalk. In such cases the cost of this work is most likely eligible, but claimants should carefully document why this is so in the claim submittal. SANDAG Claim Requirements SANDAG has the authority to establish criteria applicable to analyzing and evaluating claims for non-motorized transportation facilities (Public Utilities Code Section 99401). To be considered for funding, a claim must be submitted by a SANDAG member agency and be consistent with SANDAG's adopted non-motorized plans and meet the requirements for community support and geometric design standards as described in Categories 1 and 2 of the Project Selection Criteria. In addition, the following requirements must be met, if applicable: . If the project abuts other jurisdictions, it must be shown on the adopted plans of the adjacent jurisdictions, or a letter must be submitted from the abutting jurisdiction showing that cooperative efforts are underway. . Other sources of funding for cooperative projects must be identified. Please attach supporting documentation that shows matching funds have been secured. Clearly identify the source, amount, and commitment of matching funds in a resolution of support. The source of the matching funds must be secured at the time of the application and not contingent upon funds that may be received in the future. If the project is part of an approved bicycle or pedestrian plan, then a letter from the jurisdiction's finance department clearly specifying the source, amount, and commitment of matching funds will be required. In lieu of support documentation from the finance department, a jurisdiction may show support if it is clear that matching funds are secured in the jurisdictions capital improvements projects (CIP) list. Matching funds that have not been secured will not be considered in the matching funds section of the project scoring matrix. 20f4 2-4 Attachment "A" Application Process Applications for TDA and TransNet non-motorized claims must be received by SANDAG by March 3, 2006. To be considered for funding, the Annual Grant Application must be fully completed. In addition, please consider the following, if applicable: . For claims supporting educational or promotional programs and claims for planning projects, include a project budget and work program, including a project schedule. . No later than April 26, 2006, include a certified copy of a resolution or minute order in which the planning group, planning commission, or governing body of the claimant authorizes the claim. . Regional Housing Needs Assessment (RHNA) Memorandum - On February 25, 2005 the SANDAG Board of Directors approved the Final Regional Housing Needs Assessment (RHNA) for the San Diego region for the 2005-2010 housing element cycle. In conjunction with the approval of the Final RHNA the Board approved a memorandum signed by Escondido Mayor Lori Pfeiler, Chula Vista Mayor Steve Padilla, and San Diego Councilmember Jim Madaffer. This memorandum was proposed as an incentive-based compromise on the issue of the allocation of the RHNA numbers by income category. The general intent of the memorandum was to tie decisions about the allocation of discretionary local agency transportation funding to housing element compliance and housing production. The RHNA memorandum implementation guidelines are up for adoption by the SANDAG Board as a Board Policy in March. As currently drafted, to qualify for this (and any other) discretionary funding for which grant applications are due before January 1, 2007, each jurisdiction will need to have submitted a draft of its housing element to HCD or have self- certified its element in compliance with state law by the project submittal deadline (March 3, 2006 in the case of the TDA Article 3 funding). 30f4 2-5 Attachment "A" Evaluation Process The evaluation process for TDA bicycle and pedestrian projects and TransNet bicycle projects is consistent with the way SANDAG evaluates and prioritizes other components of the transportation system such as arterial, highway, and transit projects. Transportation project priorities are established in pianning documents like the Regional Transportation Plan (RTP), MOBILITY 2030. Priorities also are used for funding decisions that are programmed in the Regional Transportation Improvement Program (RTIP). In addition, the selection criteria supports the overall goals and objectives SANDAG has for improving the regional transportation system and promoting smart growth in the region by giving priority to projects that enhance the existing transportation network as a whole. The criteria to be used in the evaluation process are specified in the Project Selection Criteria matrix. Claimants for TDA bicycle and pedestrian projects and TransNet bicycle projects will be responsible"for accurately filling out the Annual Grant Application and the accompanying Project Selection Criteria matrix. SANDAG will be responsible for performing the GIS Analysis in Category 4 and the Cost Benefit Analysis in Category 10 of the Project Selection Criteria based on the process outlined below. SANDAG will compile the results from the Grant Applications and produce a prioritized list of projects that will be reviewed by the Bicycle-Pedestrian Working " Group (BPWG). The committee will then recommend a final priority list of projects to the SANDAG Transportation Committee, which will then be approved by the SANDAG Board of Directors. . The GIS Analysis wili be based on the following five factors: total population, total employment, population density, employment density, and number of activity centers. Using the project limits provided by the claimant, SANDAG will perform the GIS Analysis using data for population and employment forecasts for 2010. A buffer will be created around each project area. Pedestrian projects will be given a half-mile buffer and bicycle projects will be given a one-mile buffer. The buffered areas will be used along with the population and employment data to generate population and employment densities. The number of Activity Centers, as identified by SANDAG's data warehouse, will be identified and tailied. Each factor will be scored from 1 to 4 points, for a possible total of 20 points for the GIS Analysis category. Projects will be scored in each category relative to each other by taking the raw scores and distributing them from highest to lowest. The highest twenty- five percent will receive 4 points, the second highest quartile will receive 3 points, the third highest quartile will receive 2 points, and the lowest quartile will receive 1 point. . The Cost Benefit Analysis will be computed by taking the subtotal score from categories 1 through 8 on the Project Selection Criteria matrix and dividing that subtotal by the grant application amount. Projects will be scored relative to each other by taking the raw scores and distributing them from highest to lowest, with the project with the highest cost benefit ratio receiving 15 points and the project with the lowest cost benefit ratio receiving 1 point. 40f4 2-6 ATTACHMENT "B" Attachment 2 FY 2007 Annual Grant Application Transportation Development ActfTransNet Bicycle and Pedestrian Projects Applicant (Agency): Citv of Chula Vista Project Name: Bav Boulevard Bike Lane from F Street to J Street Application Amount: $40,000 Project Type: Bikewav Class 2 Project Limits: Bav Boulevard from F Street to J Street Project Description: The orooosed orolect consists of InstallinQ 5 280 feet of Class 2 bike lane on Bav Boulevard between F Street and J Street. Summary of Cost Estimates: CateQorv Feasibility Study Preiiminary Engineering Environmental Design Construction Cost . $1,500 Total Cost $4,400 $51,100 $57,000.00 Funding Sources: Revenue Source TDAlTransNet Claim Amount (Gas Tax) Signing & Striping Pict. Amount $40,000 $17,000 Total $57,000.00 Project Location Map: (attached) City of Chula Vista, Bay Boulevard Bike Lane, F Street to J ~e'lt ATTACHMENT "B" Attachment 2 Contact Person: Roberto Solorzano Title: Associate Enqineer Address 276 Fourth Avenue Chula Vista. California 91910 Phone: (619\ 409-5420 Fax: 1619\ 691-5171 E-mail: solota>cLchula-vista.ca.us Person Authorized to Submit Application: i certify that 1 have reviewed the Bicycle and Pedestrian Claims Guidelines and the infonmation submitted in this application is accurate and in accordance with these guidelines. Elizabeth Chopp Sen lor Civil Engineer Name Title 22P~ City of Chula Vista, Bay Boulevard Bike Lane, F Street to J ~tre~ ATTACHMENT "B" Attachment 2 Proiect FundinCl: Total Estimated Project Cost (Please attach a detailed project estimate based on best available engineering) $57.000 Revenues (Source and Amount): Matching Funds (Category 9 of Project Selection Criteria) Revenue Source Amount Gas Tax (Signing and Strping Pjct.) $17.000 $ Total $17,000 TDA/TransNet (Application Amount as shown in Category 10 of Project Selection Criteria) $40.000 Total Revenues $57,000 SupportinCl Materials A. Communitv SUODortJConsistencv with Communitv Plan ICateoorv 1) - The council or governing board of the applicant must authorize this grant application. Please attach a copy of the resolution or minute order documenting that action. Or, if the project is part of an approved Bicycle Plan, please attach a copy of the section that includes the project. A certified copy of the Chula Vista City Council resolution authorizing the application and certifying matching funds, will be submitted by April 26, 2006. B. Minimum Desion Standards ICateoorv 2) - If applying for construction funds, provide actual drawings or cross-sections from the project itself, not generic standard drawings. if any part of a project is substandard, clearly illustrate that and provide an explanation (and photographs, if applicabie) as to why the minimum design standard is not being met. See attached plat C. proiect Readiness (Cateoorv 3) Phase BeClin Complete Oct-2005 Aug-2006 nla Oct-2006 Feasibility Study Preliminary Engineering Environmental Document/Certification Finai Design Oct-2005 Aug-2006 nla Sep-2006 City af Chu!a Vista, Bay Boulevard Bike Lane, F Street to J ~-;e~ A 11 ACHMENT IIBII Attachment 2 Advertise for Construction Begin Construction Project Completion Nov-2006 Feb-200? Nov-2006 Feb-200? Apr-200? D. Geooraphic Factors/GIS Analvsis (Cateoorv 4) - SANDAG will perform a GIS analysis as described In the Bicycle and Pedestrian Claims Guideiines based upon a project map provided by the applicant. Briefly describe project iimits and provide a location map clearly showing the project aiignment. In addition. cleariy show and label the following elements: a. major traffic generators within the project area (within Jr.-mile for pedestrian projects and within 1-mile for bicycle projects) b. ilnkage pr connections to existing bicycle or pedestrian facilities c. linkage to any regional bikeway or pubiic transit stop The proposed bike lane will connect to an existing bike lane on Bay Boulevard south of J Street E. Geooraphic Factors/GIS Analvsis (Cateoorv 4) - List and briefly describe major traffic generators served by the project. The proposed bike lane along Bay Boulevard is located within one mile of: Feaster Elementary School Vista Square Elementary School Chula Vista Middle School Chula Vista High School Mueller Elementary School Chula Vista Learning Community Charter Elementary Chula Vista Shopping Center Transit Routes H Street Trolley Station BayfrontlE Street Trolley Station Pilgrim Evangelical Lutheran Church First Baptist Church Filipino & American Bible Baptist Church First Free Will Baptist Church Church of God of Chula Vista Calvary Chapel Church of Christ South Bay Baptist Church World Harvest Church F. Completes Connection/Linkaoe in Existino Blcvcle/Pedestrian Network ICateoorv 5) - List and briefly describe the iinkages or connections to existing bicycle or pedestrian network. Provide a map which clearly illustrates the projects relationship to existing facilities. This segment would expand the City's bicycle facilities northward and provide a safer and more consistent ride for bicyclists. Class 2 lanes are currently in place on the southern portion of this road. City af Chula VIsta, Bay Boulevard Bike Lane, F Street to .?tiliJeP A IT ACHMENT "8" Attachment 2 G. Safety Improvements (CateoorY 6) - Describe the safety issues addressed by the project. Please attach support documentation for safety and accident history. If collision data is' provided, it must be specific in pointing out which collisions are applicable to the project and why it is relevant. The proposed project will increase the traffic safety of vehicles and bicycles at the proposed location. Collision data is not available for this location. H. Innovation and Desion (CateoorY 7) - Describe any design Innovations for bicycle/pedestrian priority measures that are inciuded within the project limits. I. Connect to Reoional Transportation Corridor or Transit Linkaoe or Reoional Bikewav Map (Cateoorv 8) - Provide a map which clearly illustrates the projects relationship to existing facilities. Show the project's direct linkages to any regionai bikeway (for bicycle projects) or direct link to a local bus stop or direct link to an LRT/regionai transit station. The proposed project is included in the City of Chula Vista Bikeway Master Plan adopted by the City Council on January 25,2005 per Council Resolution No. 2005-014. The proposed project will be located within one mile of the H Street Trolley Station and the BayfrontlE Street Trolley Station. These stations serve Chula Vista Transit Routes 701, 702, 703, 704, 705, 706A, 707, 708, 709, and San Diego Metropolitan Transit System Route 932. See map attached Is this project in your agency's adopted capital improvement program (Y/N) L If the project is part of a larger capital improvement project, briefly discuss how the bicycle or pedestrian project costs were identified and a description of the other sources of funds for the overall project. City of Chula Vista, Bay Boulevard Bike Lane, F Street to J~trelt1 ATTACHMENT "B" Attachment 2 Briefly describe any other aspects of the project that is relevant to its evaluation. Bicvcle Master Plans. Pedestrian Master Plans. Education/Safetv ProQrams and Bicvcle ParkinQ Bicycle Master Plans, Education/Safety Programs and Bicycle Parking projects will each be considered in a separate category. These types of projects are encouraged and will be evaluated by SANDAG staff. Basic Guidelines Bicycle Master Plans -. Cities with population up to 75,000 will be eligible for a maximum of $75,000. Cities with population greater than 75,000 will be eligible for a maximum of $150,000. Beginning with the 2008 project application cycle, all cities will need to have a SANDAG- approved Bicycle Plan to be eligible for TDAlTransNet funds for individual projects. Pedestrian Master Plans - An agency may submit an application for a pedestrian master plan no more frequently than once every flve years. Jurisdictions with a population over 150,000 may submit applications for up to $150,000, and jurisdictions with a population under 150,000 may submit applications up to $100,000. In either case, the amount of the application must be substantiated by providing a scope of work and project budget to SANDAG. Education/Safety Programs - An agency must submit a scope of work and a proposed schedule to be evaluated by SANDAG staff. Bicycle Parking - Projects that conform to SANDAG's Bicycle Parking Guidelines and have a projected cost up to $50,000 will be eligible. . City of Chula Vista, Bay Boulevard Bike Lane, F Street to Jscr.Je2 Applicant (Agency): Project Name: ATTACHMENT "8" City of Chula Vista Bay Boulevard Bike Lane from F Street to J Street FY 2007 Bicycle Project Selection Criteria Matrix Attachment 3 Category 1. Community Support! Consistency with Community Plan 2. Minimum Design Standards 3. Project Readiness' 20 Points Maximum 4. Geographic Factors! GIS Analysis - 20 Points Maximum 5. Completes Connection! Linkage in Existing Bicycie Network - 10 Points Maximum 6. Safety Improvements - 20 Points Maximum Criteria Must have at least one of the following to qualify. Please attach supporting documentation. 1. Resolution or minutes from City Council, County Board of Supervisors, local planning group, or Planning Commission. Or 2. Project is part of a Bicycle Plan that has been approved within the last five years. Must meet the minimum geometric standards set forth in the Caltrans Highway Design manual. Design exceptions may be presented for consideration by the Bicycle-Pedestrian Working Group with the understanding that initial project proposals must include a design that meets minimum standards. Projects are eligible for points following completion of each phase. Feasibility Stud Prelimina En ineerin .. Environmental Clearance Ri ht-of-wa Ac uisition Final Design .. Factors contributing to score are: proximity to population and employment, population and employment densities, and activity centers. Provides segment of an identified and approved bic cle facili Complete connection in existing network or upgrades Class of facility. 1m roves safe within existin network. Completes connection in existing network at location with documented safety or accident history A. One to two correctable crashes involving non-motorized users within the last three ears. B. Three to four correctable crashes involving non-motorized users within the last three ears. C. Five to six correctable crashes involving non-motorized users within the last three ears. 2-Ll Potential Points Pass/Fail Pass Pass!Fail 4 4 4 4 4 o to 20 Score Pass 4 4 4 4 4 10 12 10 12 4 6 8 ATTACHMENT 118" Attachment 3 Applicant (Agency): Project Name: City of Chula Vista Bay Boulevard Bike Lane from F Street to J Street FY 2007 Bicycle Project Selection Criteria Matrix Category Criteria Potential Score Points 7. Innovation and Design - Bicycle priority measures. Dedicated bicycle 10 10 Points Maximum signal heads, queue jumpers, bike box, colored lanes, cul-de-sac connector, bike boulevard, and bike station. 8. Connect to Regional Project is a part of, or connects to, a regional 10 Transportation Corridor or bikeway corridor as identified in the Regional Transit Linkage or Regional - Transportation Plan (RTP) . Bikeway Map 10 20 Points Maximum Project provides a direct connection to local 14 transit sto . 14 Project provides a direct connection to 20 re ional transit station. 20 Subtotal 9. Matching Funds Matching funds can be from any of the [(Matching 25 Points Maximum foliowing sources: Funds x 2) I 1. Identified and approved capital (Bike funding from identified source. Portion of Piease provide proof in the form of Project a resolution or letter of approval. Cost)] x 25 15 2. Approved match rant. 10. Cost Benefit Subtotal Score I Grant Application Amount o to 15 15 Points Maximum Total Score . Previous project milestones must be met before qualifying for subsequent funding. .. Preliminary Engineering and Final Designs will be subject to design review by SANDAG. 2-14 ~II?- ~ City of Chula Vista ENGINEERING DEPARTMENT Infrastructure Services ATTACHMENT "B" 01T Of CHIJIA VISTA Project Number: TF-332 Project Title: Bay Boulevard Bike Lane from F Street to J Street Description: Installation of bike lane striping, & bike lane slgnage along Bay Boulevard from F Street to J Street. Date Prepared By: Checked By: 2-Mar-06 R Solorzano a.Chopp ~-"'I'~"C'07-,"~_ ,-,.-- ~=_"~ Item Quantity Unit Unit Price ,~" ~~ ~t7~-,'>J,"'"0~'"{; ~ '~~ ~----------- --~ -- -- ------- ~-=~ 10560 LF $1.75 $18,480.00 8 EA $100.00 $800.00 5500 LF $2.50 $13,750.00 10 EA $100.00 $1,000.00 5500 LF $1.75 $9,625.00 8 SF $100.00 $800.00 R Solorzano FYrY/ TDA Apfi! 1181 ~.Estxl. 03/02/2006 ::! i5 UJ Q == ~ ~~ Cl)0 s;1t S~ :J<: J:UJ U::';; u..~ 00 _.~a:: -Q. U:!; - -J i5 6: C3 '" '" '" '" '" '" '" '" - .. .. .. .. .. .. .. . = '" '" N > U. :- - '" '" = '" '" '" '" '" .. .. '" .. .. .. .. .. .. 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IrI 2-19 A 11 ACHMENT "B" Bay Boulevard Looking North . Bay Boulevard Looking South Project Tille: Bay Boulevard Bike Lane between F Street and J S!tm,2 0 ATTACHMENT "B" NO SCALE ~ r'" F.R. UNE RjIr ~- -.,..- ---- Rj1I' SIt:OINJ( E.4saf112..J 25' /30' /' I N01!:~ FINr.iHEJJ SlJI/fAIX CJ'I SIOllIIoLK 10 II€ lE'iEL 11111 I EXlSTJ G1/QJN/} TYPICAL SECTION STA. 432+70 TO STA. 439+75 RjIr F.R. RjIr I UNE I VM/ES -------L- IS' ----J I ~~_ VAb .- ~U-L-----f--- -~ ' TYPICAL SECTION STA. 424+34 TO STA. 426+16 NO SCALE F.R. LINE r 48' I R(W 30'~IS.-J ,!!.. v. I ES ---~-=-- . TYEICAL SECTION. STA.411+34 TO STA.411+64 (RT. SIDE) STA.411+64 TO STA.424+34 (LT. II< RT. SIDE) STA,427+34 TO STA.432+70 (LT. II< RT> SID") STA.439+75 TO STA,440+66.5 CRT.SIDE) ~1ft.. -'- --- Bay Boulevard from F Street to J Street ROADWAY C ,S-SECTIONS ~~ ATTACHMENT 11811 FY 2007 Annual Grant Application Transportation Development ActlTransNet Bicycle and Pedestrian Projects Applicant (Agency): City of Chura Vista Project Name: 14 Schools Pedestrian Improvements Application Amount: $ 50.000 Project Type: Uporadino of pedestrian facilities Project Limits: Project Description: Uporadino of pedestrian crossino sional facilities at 14 intersections within the public rioht of wav, that directlv serve schools in western Chula Vista. Uporade existino pedestrian indications to "countdown" indication. and installation of audible pedestrian sional crossino. Summary of Cost Estimates: Cateoorv Cost Feasibility Study Preliminary Engineering Environmental Design Construction nfa nfa nfa $19,500 $105,500 $125,000 Total Cost Funding Sources: Revenue Source TDAlTransNet Claim Amount Traffic Signal Fund (TF-323) Traffic Signal Fund (TF-328) Amount $50,000 $50,000 $25,000 Total $125,000.00 Project Location Map: As requested in "Supporting Documents" Section D, the attached Project Location Map shows the project alignment and other items as required. Proposed locations are: . 1 Hilltop Drive f Ped Xing, between Kingswood Drive & Jicama Way 2 Hilltop Drive and Quintard Street 3 Hilltop Drive and J Street 4 Fourth Avenue and L Street 5 Fourth Avenue and Palomar Street 6 Broadway and Flower Street 7 Hilltop Drive and I Street 8 Hilltop Drive and H Street 9 First Avenue and E Street City afChula Vista, "Westside Pedestrian ImpraveJelig.2 1 ATTACHMENT "B" 10 Fifth Avenue and E Street 11 Fourth Avenue and Anita Street 12 Second Avenue and Orange Avenue 13 Second Avenue and Palomar Street 14 Fifth Avenue and Palomar Street Contact Person: Roberto Solorzano Title: Associate Eneineer Address 276 Fourth Avenue Chule Vista. Cal1fomia 91910 Phone: 1619\409-5420 Fax: (619) 691-5171 E-mail: solo@cLchula-vista.ca.us Person Authorized to Submit Application: I certify that I have reviewed the. Bicycle and Pedestrian Claims Guidelines and the information submitted in this application is accurate and in accordance with these guidelines. Elizabeth Chopp, Senior Civil Engineer ~2 2000 City ofChula Vista, "Westside Pedestrian Impr~ts" 2 ATTACHMENT "8" Proiect FundinCl: . Total Estimated Project Cost (Please attach a detailed project estimate based on best available engineering) $125.000 Revenues (Source and Amount): Matching Funds (Category 9 of Project Selection Criteria) Revenue Source Amount Traffic SiClnal Fund ITF-323) $50.000 ------ Traffic SiClnal Fund (TF-32B) $25.000 Total $75.000 TDAlTransNet (Application Amount as shown in Category 10 of Project Selection Criteria) $50.000 Total Revenues $125.000 SupportinQ Materials A. Community sUDDorVConsistencv with Community Plan (Cateaorv 1 \ - The council or governing board of the applicant must authorize this grant application. Please attach a copy of the resolution or minute order documenting that action. Or, if the project is part of an approved Bicycle Plan, please attach a copy of the section that includes the project. A certified copy of the Chula Vista City Council resolution authorizing the application and certifying matching funds, will be submitted by April 26, 2006. B. Minimum Desian Standards (Cateoorv 2) - If applying far construction funds, provide actual drawings or cross-sections from the project itself, not generic standard drawings. If any part of a project is substandard, clearly illustrate that and provide an explanation (and photographs, if applicable) as to why the minimum design standard is not being met. This is a retrofit project to install audible pedestrian and countdown indications on existing traffic signal standards. C. Proiect Readiness (CateClorv 3\ Phase BeClin ComDlete Final Design July/2006 July/2006 n/a August/2006 July/2006 July/2006 nla Feasibility Study Preliminary Engineering Environmental Document/Certification August/2006 City ofChula Vista, "Westside Pedestrian Improvem~7~4 3 ATTACHMENT IIBn Advertise for Construction (will be done by City forces) nla n/a September/2006 October/2006 Begin Construction Project Completion September/2006 D. Geoeraehic Factors/GIS Analvsis rCateeorv 4) - SANDAG will perform a GIS analysis as described in the Bicycle and Pedestrian Claims Guidelines based upon a project map provided by the applicant. Briefly describe project limits and provide a location map clearly showing the project alignment. In addition, clE3arly show and label the following elements: a. major traffic generators within the project area (within Y:,..mile for pedestrian projects and within 1-mile for bicycle projects) b. linkage or connections to existing bicycle or pedestrian facilities c. linkage to any regional bikeway or public transit stop The proposed project will provide a safer street crossing for school children and adults. E. Geoeraehic Factors/GIS Analvsis rCateeorv 4) - List and briefly describe major traffic generators served by the project. The proposed improvements are located within half-mile buffer of: Palomar High School Lauderbach Elementary School Montgomery Elementary School Castle Park Middle School Otay Elementary School Lorna Verde Elementary School Castle Park High School Castle Park Elementary School Chula Vista Community Charter Elementary School Chula Vista High School Rice Elementary School SAILS Academy Cook Elementary School Hilltop Middle School Hilltop High School Rosebank Elementary School Feaster Elementary School F. Comeletes Connection/Linkaee in Existine Bicvcle/Pedestrian Network rCateeorv 5) - List and briefly describe the linkages or connections to existing bicycle or pedestrian network. Provide a map which clearly illustrates the projects relationship to existing facilities. The attached map illustrates the urban network of existine sidewalks, bike lanes, bike routes, and pedestrian crossing signals in the project area. The map also identifies . the intersections targeted for signal ulIQrades. and where those upgrades will enhance the safety and serviceability of the existing network. City ofChula Vista, .. Wests ide Pedestrian Improv~erfZs5 4 A IT ACHMENT "B" G. SafelY Improvements (Cateaarv 6) - Describe the safety issues addressed by the project. Please attach sup part documentation for safety and accident history. If collision data is provided, it must be specific in pointing out which collisions are applicable to the project and why it is relevant. The proposed project will provide safer facilities between destinations to schools, churches, shopping areas, and parks. In the past 3 years, there have been five (5) traffic accidents involving pedestrians within the project area. (see attached accident history). H. Innovation and Desian !Cateaorv 7) - Describe any design innovations for bicycle/pedestrian priority measures that are included within the project limits. I. Connect to Reaional Transportation Corridor or Transit Linkaae or Reaional Bikewav Map !Cateaorv 8) - Provide a map which clearly illustrates the projects relationship to existing facilities. Show the project's direct linkages to any regional bikeway (for bicycie projects) or direct link to a iocal bus stop or direct link to an LRT/regional transit station. See attached map Is this project in your agency's adopted capital improvement program (Y/N) _ Y_ If the project is part of a larger capital improvement project, briefty discuss how the bicycle or pedestrian project costs were identified and a description of the other sources of funds for the overali project. This project was included in the City's FY2006-07 Capital Improvement Program (copies attached). Installation of the traffic signal upgrades will be performed by city forces. Briefiy describe any other aspects of the project that is relevant to its evaluation. City ofChula Vista. "Westside Pedestrian Imprave~en66 5 A IT ACHMENT 11811 Bicvcle Master Plans, Pedestrian Master Plans. Education/Safetv Proqrams and Bicvcle Parkinq Bicycle Master Plans, Education/Safety Programs and Bicycle Parking projects wili each be considered in a separate category. These types of projects are encouraged and will be evaluated by SANDAG staff. Basic Guidelines Bicycle Master Plans - Cities with population up to 75,000 wili be eligible for a maximum of $75,000. Cities with population greater than 75,000 wili be eligible for a maximum of $150,000. Beginning with the 2008 project application cycle, ali cities will need to have a SANDAG- approved Bicycle Plan to be eligible for TDAlTransNet funds for individual projects. Pedestrian Master Plans - An agency may submit an application for a pedestrian master plan no more frequently than once every five years. Jurisdictions with a population over 150,000 may submit applications for up to $150,000, and jurisdictions with a population under 150,000 may submit applications up to $100,000. In either case, the amount of the application must be substantiated by providing a scope of work and project budget to SANDAG. Education/Safety Programs - An agency must submit a scope of work and a proposed schedule to be evaluated by SANDAG staff. Bicycle Parking - Projects that conform to SANDAG's Bicycle Parking Guidelines and have a projected cost up to $50,000 will be eligible. City ojChu/a Vista, "Westside Pedestrian Improve,:{"m'l:1 6 Applicant (Agency): Project Name: City of Chula Vista 14 Schools Pedestrian Improvements ATTACHMENT "B" FY 2007 Pedestrian Project Selection Criteria Matrix Attachment 4 Category 1. Community Support! Consistency with Community Plan 2. Minimum Design Standards 3. Project Readiness' 20 Points Maximum 4. Geographic Factors! GIS Analysis - 20 Points Maximum Completes Connection! Linkage in Existing Pedestrian Network- 10 Points Maximum Safety Improvements - 20 Points Maximum 5. 6. Potential Points Must have at least one of the following to Pass/Fail Pass qualify. Please attach supporting documentation. 1. Resolution or minutes from City Council, County Board of Supervisors, local planning group, or Planning Commission. Or 2. Project is part of a Non-Motorized Plan that has been approved within the last five years. Criteria Must meet the minimum geometric standards set forth in the SANDAG Plannino and Desionino for Pedestrians manual and the Americans with Disabilities Act. Design exceptions may be presented for consideration by the Bicycle-Pedestrian Working Group with the understanding that initial project proposais must include a design that meets minimum standards. Projects are eligible for points following com letion of each hase. Feasibili Study Prelimina En ineerin .. Environmental Clearance Ri ht-of-wa Ac uisition Final Design - Factors contributing to score are: proximity to population and employment, population and employment densities, and activity centers. Completes or improves connection in existing network 1m roves safe within existin network. Completes connection in existing network at location with documented safety or accident history A. One to two correctable crashes involving non-motorized users within the last three ears. B. Three to four correctable crashes involving non-motorized users within the last three ears. C. Five to six correctable crashes involving non-motorized users within thE2taS!&lree ears. Score Pass!Fail Pass 4 4 4 4 4 o to 20 4 4 4 4 10 10 12 12 4 6 8 8 ATTACHMENT "B" Attachment 4 Applicant (Agency): Project Name: City of Chula Vista 14 Schools Pedestrian Improvements FY 2007 Pedestrian Project Selection Criteria Matrix . Category Criteria Potential Score Points 7. Innovation and Design - Pedestrian priority measures such as 10 Points Maximum pedestrian-controlled signals, bulb-outs, raised crosswalks, signal lead time, etc. A. Animated eye indicators, countdown 4 4 pedestrian signal, accessible push- button signal, flashing crosswalk B. Early pedestrian release interval, 6 6 passive pedestrian detection, audible pedestrian signal C. Raised crosswalk, speed table, raised 8 intersection, pedestrian refuge island D. Pedestrian bulb-out, cul-de-sac 10 connector 8. Connect to Regional Project is a part of, or connects to, a regional 10 Transportation Corridorl corridor as identified in the Regional Transit Linkage - Transportation Plan (RTP) . 20 Points Maximum Project provides a direct connection to local 14 transit sto . 14 Project provides a direct connection to 20 re ional transit station. Subtotal 9. Matching Funds Matching funds can be from any of the [(Matching 25 Points Maximum following sources: Funds x 2) I 25 1. Identified and approved capital (Bike funding from identified source. Portion of Please provide proof in the form of Project a resolution or letter of approval. Cost)] x 25 2. Approved match grant. 3. In-kind services. Please provide ade uate su ort documentation. 10. Cost Benefit Subtotal Score I Grant Application Amount o to 15 15 Points Maximum Total Score . Previous project milestones must be met before qualifying for subsequent funding. .. Preliminary Engineering and Final Designs will be subject to design review by SANDAG. 2-29 ~(l?- -,,-:: ~ ClfYo. , CHUL:\ \/ISTA City of Chula Vista ENGINEERING DEPARTMENT ATTACHMENT "B" Infrastructure Services Project Number: TF-323; TF-328 Project Title: Pedestrian Traffic Signal Upgrade Description: Upgrade existing pedestrian Indications to "countdown" indication, and installation of audible pedestrian signal crossing. Date Prepared By: Checked By: 24-Feb-06 Roberto Solorzano Beth Chopp 1 Audible Pad SI nats 2 ADA Pedestrian Push Buttons 3 LED Countdown S Ie PED Module 5" x 7" Pedestrian Push Button rame Assembly w 4- 4 part PPB sign 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 96 EA $50.00 $4,800,00 R Solorzano 2-30 :::! ;::: LLI Q ~ ~ ;:(!) mO -0: >Q.. :S~ ~~ u:!; u.g; 00 >- 0:' !::c.. U~ - .oJ ;::: a: ;) co '" '" '" '" '" '" '" '" ~ .. ... .. .. .. .. .. .. .;. '" co N ~ '" '" co .. '" '" '" '" "" .. .. .. <;> .. .. .. .. .. " co '" '" N .. >- '" '. ... !oS u ~ .~ " '" 0 '" u "E " '" '" '" '" '" '" '" '" S u .. CO .. .. .. .. .. .. .. .. 0 .0 ,.:. '" '", 0 ;:: 0 a CO CO '" "' "" N >- ... Q ILl Oi ...J '" '" ::;) ILl '" 0> '" 0> 0> '" .. '" 0> 0 " .... .. .. .. '" 0> '" 0> ILl -< <;> '" '" ~- on :z: '" z " .; on '" '" u z -< '" N .... .. .. ., ILl :; CO .. .. N >- :; I- >- ...J I- U ... ...J I< ILl -< -< ., ;: 0. 0 ~ ILl I< 0 0. 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" M N ~ ~ ~ - IJ 0= "2 > '" 0 u..", <(<( '" ...J <: "' "' 'C 0 " N N II) 'in E Q:j .;,: 1::= i= - o 0 '" c.U 0 "' II)~ " N 0 0:0 - N ;:: - '" 25 ~ II) " 0 co ",.Q 0 I: E <C '" 0 '" :I ~ '" <C N o:z '" ... ii; 11)- 0 '" '" N - '" Co .... ;; 2-35 N ",- " '" o~ I>: ~ N 0 RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE SUBMITTAL OF TWO GRANT APPLICATIONS TO THE SAN DIEGO ASSOCIATION OF GOVER.NMENTS (SANDAG) FOR FISCAL YEAR 2006/2007 TRANSPORTATION DEVELOPMENT ACT AND TRANSNET FUNDING FOR BICYCLE AND PEDESTRIAN CAPITAL IMPROVEMENTS WHEREAS, the City annually participates in the claim process for Transportation Development Act (TDA) and Transportation Sales Tax (TransNet) bicycle and pedestrian project funds by submitting an updated list of proj ects to the San Diego Association of Governments (SANDAG); and WHEREAS, SANDAG regulations require that official applications be submitted to SANDAG in order for projects to be considered by its Board of Directors for funding; and WHEREAS, in order for the application to be official, the City Council must approve a resolution authorizing submittal of the Fiscal Year 2006/2007 project applications; and WHEREAS, for Fiscal Year 2006/2007, the City is requesting funds for the following improvement projects: 1. Bay Boulevard Bike Lane between F Street and J Street 2. Pedestrian Traffic Signal Upgrade at 14 intersections that directly serve Schools WHEREAS, these two projects were selected because they closely follow the eligibility guidelines for TDA and TransNet funding; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista approves the submittal of two grant applications to the San Diego Association of Governments (SANDAG) for Fiscal Year 2006/2007 Transportation Development Act and TransNet funding for bicycle and pedestrian capital improvements. Presented by Approved as to form by Leah Browder Acting Director of Engineering ~tL ~,~~ Ann Moore City Attorney H:\ENGINEER\RESOS\RESOS2006\04-04-06\RESO FOR SUBMmAL OF TDA APPUCATION.DOC 2-36 COUNCIL AGENDA STATEMENT Item 3 Meeting Date 04/04/06 ITEM TITLE: Resolution Approving the Final Map ofChula Vista Tract No. 00-03, Bella Lago, accepting the various streets and easements granted on said map, and approving the associated Subdivision Improvement Agreement and Supplemental Subdivision Improvement Agreement for the project. Resolution Approving the Grant of Easements and Maintenance Agreement for Chula Vista Tract No. 00-03, Bella Lago, between K. Rovnanian at Bella Lago, LLC, and Bella Lago, LLC, and the City regarding maintenance of private facilities within the public right-of-way. SUBMITTED BY: Acting Director ofEngineering~ City Manager f ~ ]Jf\ (4/5ths Vote: Yes_NoX) REVIEWED BY: On April 8, 2003 by Resolution No. 2003-143, the City approved Tentative Map No. 00-03 for Bella Lago. Tonight, City Council will consider the approval of Chula Vista Tract No. 00-03, Bella Lago. RECOMMENDATION: That Council adopt the following: 1. Resolution approving the Final Map, the Subdivision Improvement Agreement, and the Supplemental Subdivision Improvement Agreement. 2. Resolution approving the Grant of Easements and Maintenance Agreement. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable DISCUSSION: The area is generally located north of Proctor Valley Road, and east of SR -125. The final map for Bella Lago consists of 139 numbered lots (Single-Family Detached units) and seven lettered lots, totaling a gross area of 179.45 acres (see Exhibit 1). This map is the only final map for the Bella Lago Project. The final map has been reviewed by the Engineering and Public Works Departments and found to be in substantial conformance with the approved Tentative Map. Approval of this map constitutes acceptance by the City of all assignable and irrevocable general utility and access easements, open space, sidewalk, and landscape and irrigation easement, tree planting and maintenance easements, water sewer, storm drain, and sidewalk easement, sight visibility easements, and brush managements easement within the subdivision. K. Rovnanian at Bella Lago, LLC, and Bella Lago, LLC, as subsequent and current owner of Bella Lago has executed the appropriate Subdivision Improvement Agreement, providing bonds to secure the construction of onsite facilities within the subdivision and Supplemental Subdivision Improvement Agreement, which address several outstanding conditions ofthe tentative map. ;:;? 1 J- I Page 2, Item -=s Meeting Date 04/04/06 Affordable Honsine The Developer has satisfied the Affordable Housing Program obligation for Bella Lago. Parks All PAD fees were paid through a cash payment to the City in the amount of $2,313,516.00. Grant of Easements and Maintenance Aereement There is no maintenance Community Facilities District for Bella Lago, therefore Bella Lago Home Owners Association (HOA) is responsible for all maintenance. The Maintenance Agreement establishes specific obligations and responsibilities of the Developer, which will later be transferred to the HOA, regarding the maintenance of private open space and facilities within the right-of- way. This Agreement also grants non-City crews permission to maintain parkways and water quality facilities in the public right-of-way. FISCAL IMPACT: None to the City. The Developer has paid all costs associated with the proposed Final Map and Agreement. Attachments and Exhibits: . Attachment I: Plat - Bella Lago, Chula Vista Tract 00-03, location map. . Attachment 2: Developer's Disclosure Statements. Exhibit A: The Subdivision Improvement Agreement Exhibit B: The Supplemental Subdivision Improvement Agreement Exhibit C: The Grant of Easements and Maintenance Agreement J:\Engineer\AGENDA\CAS2006\04-04-06\A113 for BeIJa Lago B Map.doc 3~Z .,. RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FINAL MAP OF CHULA VISTA TRACT NO. 00-03, BELLA LAGO, ACCEPTING THE VARIOUS STREETS AND EASEMENTS GRANTED ON SAID MAP, AND APPROVING THE ASSOCIATED SUBDIVISION IMPROVEMENT AGREEMENT AND SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT FOR THE PROJECT. WHEREAS, the developer, K. HOVNANIAN AT BELLA LAGO, LLC, and BELLA LAGO, LLC have submitted a [mal map for Bella Lago (K. Hovnanian at Bella Lago, LLC and Bella Lago LLC, are collectively referred to herein as "Developer"); and WHEREAS, the developer has executed Subdivision hnprovement Agreement to install public facilities associated with the projects; and WHEREAS, the developer has executed Supplemental Subdivision hnprovement Agreement to satisfy remaining conditions of City Council Resolutions No. 2003-143. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista hereby finds that certain map survey entitled Chula Vista Tract 00-03, Bella Lago, and more particularly described as follows: Being a subdivision of the southeast quarter of the northeast quarter, the west half of the southeast quarter and the southeast quarter of the northwest quarter of the northwest quarter, all in section 24, in the City of Chula Vista and the northwest quarter of the northwest quarter of the northeast quarter of section 25, and the north three and one-half acres of the southwest quarter of the northwest quarter of the northeast quarter of section 25, and the north three quarters of the southwest quarter of the northwest quarter of the northeast quarter of section 25, all in township 17 south, range I west, San Bernardino base and meridian, in the County of San Diego, State of California. Area: 179.45 Acres Numbered Lots: 139 No. of Lots: 146 Lettered Lots: 7 is made in the manner and fonn prescribed by law and confonns to the surrounding surveys; and that said map and subdivision ofland shown thereon is hereby approved and accepted. BE IT FURTHER RESOLVED, the City Council hereby accepts on behalf of the City of Chula Vista the various easements, all as granted on said map within this subdivision, subject to the conditions set forth thereon. BE IT FURTHER RESOLVED that the City Clerk of the City of Chula Vista is hereby authorized and directed to endorse upon said map the action of said Council; that said Council has approved said subdivision map, and that those certain easements, as granted thereon and shown on said map within said subdivision, are accepted on behalf of the City of Chula Vista as herein above stated. 3-3 Resolution 2006- Page 2 BE IT FURTHER RESOLVED that City Clerk is hereby directed to transmit said map to the Clerk of the Board of Supervisors ofthe County of San Diego. BE IT FURTHER RESOLVED that that the Subdivision Improvement Agreement for the completion of improvements in said subdivision, copy of which shall be kept on file in the office of the City Clerk, is hereby approved. BE IT FURTHER RESOLVED that that certain Supplemental Subdivision Improvement Agreement for addressing on-going conditions of approval that will remain in effect and run with the land for the map, copy of which is on file in the Office of the City Clerk is hereby approved; BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized and directed to execute said agreements on behalf of the City of Chula Vista. Presented by . Approved as to form by Leah Browder Acting Director of Engineering 3~1f RESOLUTION NO.2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ClillLA VISTA APPROVING THE GRANT OF EASEMENTS AND MAINTENANCE AGREEMENT FOR ClillLA VISTA TRACT NO. 00-03, BELLA LAGO, BETWEEN K. HOVNANIAN AT BELLA LAGO, LLC, AND BELLA LAGO, LLC, AND THE CITY REGARDING MAINTENANCE OF PRIVATE FACILITIES WITHIN THE PUBLIC RIGHT OF WAY. WHEREAS, the Grant of Easements and Maintenance Agreement ("Agreement") for Bella Lago, sets forth the developer's obligation to maintain landscaping in the public right-of-way; and WHEREAS, pursuant to the terms of the Agreement, the maintenance obligations may be assigned to the homeowner's association (HOA) after the landscaping has been established and turned over to the HOA to maintain; and NOW, THEREFORE, BE IT RESOLVED the City Council of the City ofChula Vista does hereby approve the Grant of Easements and Maintenance Agreement for the grant of easements and maintenance for Chula Vista Tract No. 00-03, Bella Lago, a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to execute said Agreement on behalf of the City of Chula Vista. Presented by Approved as to form by Leah Browder Acting Director of Engineering Ann -&l1:ity Attorney H:\ENGINEER\RESOS\Resos2006\03-14-06\Reso for Grants of Easements for Bel1a Lago.doc) 3-5 lJ&!;INC SAN DIEGO, CA N.r.s. 1--- -- ---- ------- - - -----1 , " B II L I: e a ago , CITY OF CHULA VISTA TRACT NO. 03-03 , r , , L PRIVA TE OPEN SPACE LOTG --------- --I ( ROLLING HllJ.3 RANCH ':"'0' .-.)".- I_:-~,,- '>-J;;; :::" - -~'- .. -../ I I --___-.J LEGEND ~;'Q."I Private c:=:::J Pub I ie -'- ATTACHMENT I :2._1 ::.-; ,.0 ATTACHMENT 2 I City of Chu]a Vista Disclosure Statement Pursuant to Council Policy 101-01, prior to any action upon matters which will require discretionary action by the Council, Planning Commission and all other official bodies of the City, a statement of disclosure of certain ownership or financial interests, payments, or campaign contributions for a City ofChula Vista election must be filed. The following information must be disclosed: 1. List the names of aU persons having a financial interest in the property that is the subject of the application or the contract, e.g., owner, applicant, contractor, subcontractor, material supplier. p( " p~UA ~~. L.LC- 2. If any person" identified pursuant to (1) above is a corporation or partnership, list the names of all individuals with a $1000 investment in the business (corporation/partnership) entity. -;;;, rJ //1-'1 }wt...5aA./ 3. If any person" identified pursuant to (1) above is a non-profit organization or trust, list the names of any person serving as director of the non-profit organization or as h'ustee or beneficiary or trustor ofthe trust. 4. Please identify every person, including any agents, employees, consultants, or independent contractors you have assigned to represent you before the City in this matter? 1:.. /!rV;)/-11Clt'AN UiJ1j7AA!;'{f"<7 tJPdiJ(/~;t.1 C/f!lfd~#iA-, //l./C; I Ie, 1-!N,II/A#i/l7(J ,;trr $Q/A~tfI/ /f~d~/?(///1- ~/41//"#ZJ k'A'7J1/.t/..rV UVt-f ;.:J/17V;7' 5. Has any person" associated with this contract had any financial dealings with an official" of the City of Chula Vista as it relates to this contract within the pa~t 12 months. Yes_ NoL 3-7 City of Chula Vista Disclosure Statement lfYes, briefly describe the nature of the financial interest the official"'" may have in this contract? 6. Have you made a contribution of more than $250 within the past twelve (12) months to a current member of the Chula Vista City Council? No ~ Yes _ If yes, which Council member? 7. Have you Qr any member of your governing board (i.e. Corporate Board of Directors/Executives, non-profit Board of Directors made contributions totaling more than $1,000 over the past fom (4) years to a current member of the Chu]a Vista City Council? Yes_ No~ If Yes, which Council member? 8. Have you provided more than $300 (or an item of equivalent value) to an officiai" of the City ofChula Vista in the past twelve (12) months? (This includes being a source of income, money to retire a legal debt, gift, loan, etc.) Yes _ No l lfYes, which official"" and what was the nature ofitem provided? Date: /-1-&16 " Signature of ontractor/Applicant 7/uoT#Y jr/j?50U Print or type name of Contractor/Applicant (,/hFU"If ~ ~~C) Person is defined as: any individual, firm, co-partnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, receiver, syndicate, any other county, city, municipality, district, or other political subdivision, -or any other group or combination acting as a unit. .. Official includes, but is not limited to: Mayor, Council member, Planning Commissioner, Member of a board, commission, or committee of the City, employee, or staff members. J:IENGINEER\LANDDEVIFORMS.QFFIClAL\MJSC\DISCLOSURE STATEMENT.DOC 3-2 - . THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL Ann Moore City Attorney ]/7/r;/ Dated: Subdivision Improvement Agreement between City of Chula Vista, K. Hovanian at Bella Lago, LLC, and Bella Lago, LLC for Bella Lago (CVT 03-03) ? G: :'-';--f ~"'L; '0 '- ^ -- ..~ 1-\ Recording Requested by: CITY CLERK When Recorded, Mail to: CITY OF CHULA VISTA 276 Fourth Avenue Chula Vista, CA 91910 No traosfer tax is due as this is a conveyaoce to a public agency of less thao a fee interest for which no cash consideration has been paid or received. Dec1araot SUBDIVISION IMPROVEJ\1ENT AGREEJ\1ENT TillS AGREEMENT, made aod entered into this day of . 2005, by aod between THE CITY OF CHULA VISTA, a municipal corporation, hereinafter called "City", K. Hovnaniao at Bella Lago, LLC a California Limited Liability Compaoy, aod Bella Lago LLC, a California Limited Liability Compaoy, 380 Stevens Avenue, Suite 211, Solaoa Beach, CA 92075, aod 5566 Valerio Trail, Sao Diego, CA 92130 hereinafter called "Subdivider" with reference to the facts set forth below, which Recitais constitute a part of this Agreement; RECITALS: WHEREAS, Subdivider is about to present to the City Council of the City of Chula Vista for approval aod recordation, a [mal subdivision map of a proposed subdivision, to be known as Bella Lago, (CVT 03-03) pursuaot to the provisions of the Subdivision Map Act of the State of California, aod in compliaoce with the provisions of Title 18 of the Chula Vista Municipal Code relating to the filing, approval aod recordation of subdivision map; aod WHEREAS, the Code provides that before said map is [mally approved by the Council of the City of Chula Vista, Subdivider must have either installed aod completed all of the improvements aodlor land development work required by the Code to be installed in subdivisions before fmal maps of subdivisions are approved by the Council for purpose of recording in the Office of the County Recorder of Sao Diego County, or, as ao altemative thereto, Subdivider shall enter into ao agreement with City, secured by ao approved improvement security to insure the performaoce of said work pursuaot to the requirements of Title 18 of the Chu1a Vista Municipal Code, agreeing to install aod complete, free of liens at Subdivider's own expense, all of the improvements andlor land development work required in said subdivision within a definite period of time prescribed by said Council; and WHEREAS, Subdivider is willing in consideration of the approval and recordation of said map by the Council, to enter into this agreement wherein it is provided that Subdivider will -1- 3-10 install and complete, at Subdivider's own expense, all the improvement work required by City in connection with the proposed subdivision and will deliver to City improvement securities as approv~d by the City Attorney; and WHEREAS, a tentative map of said subdivision has heretofore been approved, subject to certain requirements and conditions, as contained in Resolution No. 2003-143, approved on the 8th day of April, 2003 (''Tentative Map Resolution"); and WHEREAS, complete plans and specifications for the construction, installation and completion of said improvement work have been prepared and submitted to the City Engineer, as shown on Drawing Sets 04100, inclusive on file in the office of the City Engineer; and WHEREAS, an estimate of the cost of constructing said improvements according to said plans and specifications has been submitted and approved by the City in the amount of FOUR MIlLIONS, SEVENTY FOUR THOUSANDS, SIX HUNDREDS AND SEVEN, AND NO CENTS ($4,074,607.00). NOW, THEREFORE, IT IS MUTUALLY UNDERSTOOD AND AGREED AS FOLLOWS: 1. Subdivider, for itself and his successors in interest, an obligation the burden of which encumbers and runs with the land, agrees to comply with all of the te=s, conditions and requirements of the Tentative Map Resolution; to do and perfo= or cause to be done and perfo=ed, at its own expense, without cost to City, in a good and workmanlike manner, under the direction and to the satisfaction and approval of the City Engineer, all of the improvement andJor land development work required to be done in and adjoining said subdivision, including the improvements described in the above Recitals ("Improvement Work"); and will furnish the necessary materials therefore, all in strict conformity and in accordance with the plans and specifications, which documents have heretofore been filed in the Office of the City Engineer and as described in the above Recitals this reference are incorporated herein and made a part hereof. 2. It is expressly understood and agreed that all monuments have been or will be installed within thirty (30) days after the completion and acceptance of the Improvement Work, and that Subdivider has installed or will install temporary street name signs if permanent street name signs have not been installed. 3. It is expressly understood and agreed that Subdivider will cause all necessary materials to be furnished and all Improvement Work required under the provisions of this contract to be done on or before the second anniversary date of Council approval of the Subdivision Improvement Agreement. 4. It is understood and agreed that Subdivider will perfo= said Improvement Work as set forth hereinabove, or that portion of said Improvement Work serving any buildings or Structures ready for occupancy in said subdivision, prior to the issuance of any certificate of -2- 3-11 .- clearance for utility connections for said buildings or structures in said subdivision, and such certificate shall not be issued until the City Engineer has certified in writing the completion of said improvements or the portion thereof serving said building or structures approved by the City; provided, however, that the improvement security shall not be required to cover the provisions of this paragraph. 5. It is expressly understood and agreed to by Subdivider that, in the perfo=ance of said Improvement Work, Subdivider will confo= to and abide by all of the provisions of the ordinances of the City of Chula Vista, and the laws of the State of California applicable to said work. 6. Subdivider further agrees to furnish and deliver to the City of Chula Vista, simultaneously with the execution of this agreement, an approved improvement security from a sufficient surety, whose sufficiency has been approved by the City in the sum of FOUR :MILLIONS, SEVENTY FOUR THOUSANDS, SIX HUNDREDS AND SEVEN, AND NO CENTS ($4,074,607.00), which security shall guarantee the faithful perfo=ance of this contract by Subdivider and is attached hereto, marked Exhibit "A" and made a part hereof. 7. Subdivider further agrees to furnish and deliver to the City of Chula Vista, simultaneously with the execution of this agreement, an approved improvement security from a sufficient surety, whose sufficiency has been approved by the City in the sum of FOUR :MILLIONS, SEVENTY FOUR THOUSANDS, SIX HUNDREDS AND SEVEN, AND NO CENTS ($4,074,607.00), to secure the payment of material and labor in connection with the installation of said improvements, which security is attached hereto, marked Exhibit "B" and made a part hereof and the bond amounts as contained in Exhibit "B", and made a part hereof. 8. Subdivider further agrees to furnish and deliver to the City of Chula Vista, simultaneously with the execution of this agreement, an approved improvement security from Ii sufficient surety, whose sufficiency has been approved by the City in the sum of FORTY EIGHT THOUSANDS, AND NO CENTS ($48,000.00) to secure the installation of monuments, which security is attached hereto, marked Exhibit "C" and made a part hereof. 9. It is further agreed that if the Improvement Work is not completed within the time agreed herein, the sums provided by said improvement securities may be used by City for the completion of the Improvement Work within said subdivision in accordance with such specifications herein contained or referred, or at the option of the City, as are approved by the City Council at the time of engaging the work to be performed. Upon certification of completion by the City Engineer and acceptance of said work by City, and after certification by the Director of Finance that all costs hereof are fully paid, the whole amount, or any part thereof not required for payment thereof, may be released to Subdivider or its successors in interest, pursuant to the terms of the improvement security. Subdivider agrees to pay to the City any difference between the total costs incurred to perform the work, including design and administration of construction (including a reasonable allocation of overhead)" and any proceeds from the improvement security. 10. It is also expressly agreed and understood by the parties hereto that in no case will -3- -, I) 6.... i__ the City of Chula Vista, or any department, board or officer thereof, be liable for any portion of the costs and expenses of the work aforesaid, nor shall any officer, his sureties or bondsmen, be liable for the payment -of any sum or sums for said work or any materials furnished therefore, except to the limits established by the approved improvement security in accordance with the requirements of the State Subdivision Map Act and the provisions of Title 18 of the Chula Vista Municipal Code. 11. It is further understood and agreed by Subdivider that any engineering costs (including plan checking, inspection, materials furnished and other incidental expenses) incurred by City in connection with the approval of the Improvement Work plans and installation of Improvement Work hereinabove provided for, and the cost of street signs and street trees as required by City and approved by the City Engineer shall be paid by Subdivider, and that Subdivider shall deposit, prior to recordation of the Final Map, with City a sum of money sufficient to cover said cost. 12. It is understood and agreed that until such time as all Improvement Work is fully completed and accepted by City, Subdivider will be responsible for the care, maintenance of, and any damage to, the streets, alleys, easements, water and sewer lines within the proposed subdivision. It is further understood and agreed that Subdivider shall guarantee all improvements for a period of one year from date of final acceptance and correct any and all defects or deficiencies arising during said period as a result of the acts or omission of Subdivider, its agents or employees in the performance of this agreement, and that upon acceptance of the work by City, Subdivider shall grant to City, by appropriate conveyance, the improvements constructed pursuant to this agreement; provided, however, that said acceptance shall not constitute a waiver of defects by City as set forth hereinabove. 13. It is understood and agreed that City, as indemnitee, or any officer or employee thereof, shall not be liable for any injury to person or property occasioned by reason of the acts or omissions of Subdivider, its agents or employees, or indemnitee, related to this agreement. Subdivider further agrees to protect and hold the City, its officers and employees, harmless from any and all claims, demands, causes of action, liability or loss of any sort, because of or arising out of acts or omissions of Subdivider, its agents or employees, or indemnitee, related to this agreement; provided, however, that the approved improvement security shall not be required to cover the provisions of this paragraph. Such indemnification and agreement to hold harmless shall extend to damages to adjacent or downstream properties or the taking of property from owners of such adjacent or downstream properties as a result of the construction of said subdivision and the improvements as provided herein. It shall also extend to damages resulting from diversion of waters, change in the volume of flow, modification of the velocity of the water, erosion or siltation, or the modification of the point of discharge as the result of the construction and maintenance of drainage systems. The approval of plans providing for any or all of these conditions shall not constitute the assumption by City of any responsibility for such damage or taking, nor shall City, by said approval, be an insurer or surety for the construction of the subdivision pursuant to said approved improvement plans. The provisions of this paragraph shall become effective upon the execution of this agreement and shall remain in full force and effect for ten (10) years following the acceptance by the City of the improvements. 3-13 -4- 14. Subdivider agrees to defend, indeDJ..Di:fy, and hold harmless the City or its agents, officers, and employees from any claim, action, or proceeding against the City or its agents, officers, or employees to attack, set aside, void, or annul, an approval of the City, advisory agency, appeal board, or legislative body concerning a subdivision, which action is brought within the time period provided for in Section 66499.37 of the Gove=ent Code of the State of California. 15. Assignability. Upon request of the Subdivider, any or all on-site duties and obligations set forth herein may be assigned to Subdivider's successor in interest if the City Manager in hislher sole discretion determines that such an assignment will not adversely affect the City's interest. The City Manager in his/her sole discretion may, if such assignment is requested, permit a substitution of securities by the successor in interest in place and stead of the original securities described herein so long as such substituted securities meet the criteria for security as set forth elsewhere in this Agreement. Such assignment will be in a form approved by the City Attorney. ~-/Lf -5- SIGNATURE PAGE ONE OF TWO SUBDIVISION IMPROVEMENT AGREEMENT BELLA LAGO (CVT 03-03) IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed the day and year [JIst hereinabove set forth. THE CITY OF CHULA VISTA Stephen C. Padilla Mayor ATTEST: Susan Bigelow City Clerk Approved as to fo= by Ann Moore City Attorney "-") Ie:::" ?-jj -6-: SIGNATURE PAGE TWO OF TWO SUBDMSION IMPROVEMENT AGREEMENT BELLA LAGO (CVT 03-03) DEVELOPERS/OWNERS: K. Hovnaman at Bella Lago, LLC BY:~ ~ ~~ ~~'~c.,'" Bella Lago, LLC By ~ P&--- (Attach Notary Acknowledgment) 3-(~ -7- LIST OF EXHIBITS Exhibit "A" Improvement Security - Faithful Perfo=ance Fo=: Bond Amount: $4,095,342.00 Exhibit "B" Improvement Security - Material and Labor: Fo=: Bond Amount: $4,095,342.00 Exhibit "C" Improvement Security - Monuments: Fo=: Bond Amount: $48,000.00 Securities approved as to fo= and amount by City Attorney Improvement Completion Date: Two (2) years from date of City Council approval of the Subdivision Improvement Agreement. C:\Documc:nts and Scttings\rimat\My Docwncnts\projects relat~an Miguel Ranch Pbase IIl\SIA for K SMR.doc 3-/7 -8- CALIFORNIA ALL.PURPOSE ACKNOWLEDGMENT State of Califomia County of ~ .. , 1],/:1 bit .on }ss. On ;)11>1..: lULl 17 'Uti.' bil1ll . personally appeared 1\ FY\ tJ-\--G\ ( before me, JI/ n .. ",0 '\ ISif1", NamllamjT1~lIafOmCllr[a.;.,.Jan.Do.. NamII(I)arSlgnllr(l) o personally known to me ~ proved to me on the basis of satisfactory evidence i) MOON R. WATERBURY - Comml5.slon # 1471653 ~ -,.; Notary Public. Callfomia ~ ... San Diego County - f- J My Camm. Expires Feb 22, 2008 - - - - - - - - - - to be the person\S) whose name\8j is/ara subscribed to the within instrument and acknowiedged to me that he/oReAAey executed the same in his~r authorized capacity(iee), and thet by his/~ir signature(~ on the instrument the person($), or the entity upon behalf of which the personjSi acted, executed the instrument. WITNESS my hand and official seal. <~ if. J1X~-:3 SlgnatuntalNotaryF'ubnc OPT/ONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: o individuai o Corporate Officer - Titie(s): o Partner - 0 Limited 0 General o Attorney-in-Fact o Trustee o Guardian or Conservator o Other. Tcp of thumb here Signer 15 Representing: Cl19S9NIlllcrmJNOIalyAlaadallon .g35IJ DI SotaAw.. P.O. Bax2402.. Chatawortt, CA91313-24Q2._.nationlllnalary.afg ProIiNo.S907 FlltOrd.:CalrTaiI-F,"'.a~7 6-IZ . . THE ATTACHED AGREEMENT HAS BEEN REVIE"WED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL oore City Attorney Dated: 3/) /V7 I Supplemental Subdivision Improvement Agreement between the City of Chula Vista and K. Hovnanian at Bella Lago, LLC for Bella Lago Final Map 3-1'1 &-\\~: . , (--..', ----. RECORDIN"G REQUEST BY: City Clerk ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Above Space for Recorder's Use WHEN RECORDED MAIL TCY: CITY OF CHULA VISTA 276 Fourth Avenue Chula Vista,CA 91910 No transfer tax is due as this is a conveyance to a public agency ofless than a fee interest for which no cash consideration has been paid or received. BE-002F BELLA LAGO FIN"AL MAP SUPPLEMENTAL SUBDMSION IMPROVEMENT AGREEMENT (Conditions 1,2,3,4,7,8,13,14,17,20,21,23,33,41,52,53,66,72,76, 81, 84,96,97,98, 99,100,101, 102, 103, 105, 106, 107, 108, 110, 112, 115, 119, 121, 123, 124, 125, 126, 127, 128,129,130,131,133,134,136,138,139,140,141,148,149,150, and 151) This Supplemental Subdivision Improvement Agreement ("Agreement") is made this day of-> 2006, by and between THE CITY OF CHULA VISTA, California ("City" for recording purposes only) and K. Hovnanian at Bella Lago, LLC a California Limited Liability Company, and Bella Lago LLC, a California Limited Liability Company, ("Developer" or "Owner"), as owner with reference to the facts set forth below, which recitals constitute a part of this Agreementl RECITALS A. This Agreement concerns and affects certain real property located in Chula Vista, 1 K. Hovnanian at Bella Lago, LLC and Bella Lago LLC, are collectively refecred to herein as "Developer" ~ ,', '" Q-~J California, more particUlarly described on Exhibit "A" attached hereto and incorporated herein ("Property"). The Property is within approved Tentative Subdivision Map Chula Vista Tract 03- 03, which project is co=only known as Bella Lago. For purposes of this Agreement the term "Project" shall also mean "Property". . B. Developer and/or Developers predecessor in interest has applied for and the City has approved Tentative Subdivision Map co=only referred to as Chula Vista Tract 03-03 ("Tentative Subdivision Map") for the subdivision of the Property. C. The City has adopted Resolution No. 2003-143 ("Resolution") pursuant to which it has approved the Tentative Subdivision Map subject to certain conditions as more particularly described in the Resolution and thereafter amended said conditions pursuant to City Council Resolution No. 2003-143 (colle~tively hereinafter refer to as "Resolution"). D. The Developer has applied for and the City Engineer and Planning Director have approved a second substantial conformance request for Bella Lago, dated 2/8/06. The substantial confo=ance changed half the private streets back to public while keeping the drainage syst= for the whole project privately maintained. E. The Developer has requested the approval of a final map for the proj ect. Certain conditions of approval of the Tentative Subdivision Map required the Developer to enter into an agreement with the City prior to approval of the Final Map for the proj ect. F. City is willing, on the premises, security, te=s and conditions herein contained to approve the final map for which Developer has applied as being in substantial confo=ance with the Tentative Subdivision Map described in this Agreement. G. The following defined terms shall have the meaning set forth herein, unless otherwise specifically indicated: a) "Owner or Developer" means the person, persons or entity having a legal or an equitable interest in the property or parts thereof and includes Owner's successors-in-interest and assigns any property within the boundaries of the Property. This includes K. Hovnanian at Bella Lago, LLC a California Limited Liability Company, and Bella Lago LLC, a California Limited Liability Company, and any and all owners of real property within the boundaries of the Property, and all signatories to this Agreement. b) "Guest Builder" means those entities obtaining any interest in the Property or a portion of the Property, after the final map has been recorded. NOW, TIIEREFORE, in exchange for the mutual covenants, terms and conditions herein contained, the parties agree as set forth below. 2 ?> -2J 1. Agreement Applicable to Subsequent Owners. a. Agreement Binding Upon Successors. This Agreement shall be binding upon and inure to the benefit of the successors, assigns and interests of the parties as to any or all of the Property as described on Exhibit "A" until released by the mutual consent of the parties. b. Agreement Runs with the Land. The burden of the covenants contained in this Agreement ("Burden") is for the benefit of the Property and the City, its successors and assigns and any successor in interest thereto. City is deemed the beneficiary of such covenants for and in its own right and for the purposes of protecting the interest of the community and other parties public or private, in whose favor and for whose benefit of such covenants running with the land have been provided without regard to whether City has been, remained or are owners of any . particular land or interest therein. If such covenants are breached, the City shall have the right to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breach to which it or any other beneficiaries of this agreement and the covenants may be entitled. c. Developer Release on Guest Builder Assignments. If Developer assigns any portion of the Project to a Guest Builder, Developer may request to be released from Developer's obligations under this Agreement, that are expressly assumed by the Guest Builder, provided Developer obtains the prior written consent of the City to such release. Such assignment to the Guest Builder shall, however, be subject to this Agreement and the Burden of this Agreement shall remain a covenant running with the land. The City shall not withhold its consent to any such request for a release so long as the assignee acknowledges that the Burden of the Agreement runs with the land, assumes the obligations of the Developer under this Agreement, and demonstrates, to the satisfaction of the City, its ability to perfo= its obligations under this Agreement as it relates to the portion of the Proj ect which is being acquired by the Assignee. d. Partial Release of Developer's Assignees. If Developer assigns any portion of the Project subject to the Burden of this Agreement, upon request by the Developer or its assignee, the City shall release the assignee of the Burden Qf this Agreement as to such assigned portion if such portion has complied with the requirements of this Agreement to the satisfaction of the City and such partial release will not, in the sole discretion of the City, jeopardize the likelihood that the remainder of the Burden will not be completed. e. Release of Individual Lots. Upon the occurrence of any of the following events, Developer shall, upon receipt of the prior written consent of the City Manager (or Manager's designee), have the right to release any lot(s) from Developer's obligation under this Agreement: 1. The execution of a purchase agreement for the sale of a residential lot to a buyer of an individual housing unit; 11. The conveyance of a lot to a Homeowner's Association; 3 3- 2'2- The City shall not witbb:old its consent to such release so long as the City finds in good faith that such release will not jeopardize the City's assurance that the obligations set forth in this Agreement will be perfo=ed. At the request of the Developer, the City Manager (or Manager's designee) shall execute an instrument drafted by Developer in a recordable fo= acceptable to the City Manager (or Manager's designee), which coDfums the release of such lot or parcel :trom the encumbrance of this Agreement N otwifustanding the foregoing, at the close of an individual homeowner's escrow on any lot or parcel encumbered by this Agreement, such lot or parcel shall be automatically released :trom the encumbrance hereof. 1. Condition A. - "Project Site is Improved with Project" (GeneraIlPreliminary) The Developer, .or its successors-in~interest, shall improve the Project Site with the project as described in the Tentative Subdivision Map, Chula Vista Tract 03-03, FEIR 02-05, as amended by Precise Plan and Tentative Map Substantial Confo=ance Exhibit dated 2/23/06, except as modified by Resolution 2003-143. 2. Condition No.1 - (General Preliminary). In satisfaction of Condition 1 of the Resolution, Developer hereby agrees to comply with all Tentative Map Conditions and all provisions of the Chula Vista Municipal Code. 3. Condition No.2 - (General Preliminary). In satisfaction of Condition No.2 of the Resolution, the Developer hereby agrees that all of the terms, covenants and conditions contained herein shall be binding upon and inure to the benefit of the heirs, successors, assigns and representatives of the Developer as to any or all of the Property. 4. Condition No. 3 - (Requirements and Guide Lines). In satisfaction of Condition No.3 of the Resolution, the Developer hereby agrees to comply with all requirements and guidelines of the City of Chula Vista General Plan; the City's Growth Management Ordinance; Chula Vista Landscape Manual, Chula Vista Design Plan, Subdivision Manual, Municipal Permit Order #2001-01, Affordable Housing Program, Bella Lago Precise Plan, Bella Lago Property Development Standards and FEIR 02-05; all as may be amended :trom time to time, unless specifically modified by the appropriate department head, with the approval of the City Manager. These plans may be subject to minor modifications by the appropriate department head, with the approval of the City Manager, however, any material modifications shall be subj ect to approval by the City Council. S. Condition No. 4 - (City's Right to Revoke or Mo~i:fy Approvals). In satisfaction of Condition No.4 of the Resolution, the Developer hereby agrees that if any of the te=s, covenants or conditions contained herein shall fail to occur or if they are, by their te=s, to be implemented and maintained over time, if any of such conditions fail to be so implemented and maintained according to their terms, the City shall have the right to revoke or modify all approvals herein granted including issuance of building permits, deny, or further condition the subsequent approvals that are derived :&om the approvals herein granted, institute and prosecute litigation to compel their compliance with said conditions or seek damages for their violation. 4 3~23 The Developer shall be notified-l 0 days in advance prior to any of the above actions being taken by the City and shall be given the opportunity to remedy any deficiencies identified by the City. 6. Conditions No.7 & 8 - (Street Improvements). In partial satisfaction of Conditions No.7 & 8 of the Resolution, the Developer hereby agrees to construct all street improvements as required by City Engineer, for each particular development phase, as may be amended from time to time. The Developer also agrees to construct the improvements and provide security satisfactory to the City Engineer and City Attorney. The Developer has provided the city with improvement security from a sufficient surety, whose sufficiency has been approved by the City Engineer and City Attorney in the sums as set forth on Exhibit "B", which security shall guarantee the faitbful perfo=ance in connection with the installation of the Improv=ents as shown on Exhibit "B". 7 Condition No. 13 - (Landscape and Irrigation Plans) In satisfaction of Condition No. 13 of the Resolution, the Developer agrees to design landscape and irrigation plans such that street tree placement is not in conflict with the sight visibility of any traffic signage. The Developer shall be responsible for the removal of any obstructions within the sight visibility of said traffic signs to the satisfaction ofthe City Engineer (as shown on exhibit "B"). 8. Condition No. 14 - (Street Improvements) In partial satisfaction of Condition No.14 of the Resolution, the Developer agrees to construct the following improvements as secured in exhibit "B": a. Off Site Streets Southerly Access: Obtain right of way, secure and agree to construct all streets and necessary drainage / water quality improvements as determined by the City Engineer from the existing paved portion of Proctor Valley Road to Proj ect' s southerly access point as shown on Tentative Map 92-02, as amended, including: Proctor Valley Road easterly from existing to Agua Vista Dr., Proctor Valley Road to Rancho Estate Place. Rancho Estate Place, Agua Vista Dr. to westerly Proj ect boundary. Northerly Access: Obtain right of way, secure and agree to construct all streets and necess~ drainage / water quality improvements as determined by the City Engineer containing the 69 dwelling unit, from the existing portion of Proctor Valley Road to both Project access points as shown on Tentative Map 92-02, as amended, including: Proctor Valley Road easterly from existing to Agua Vista Dr. ,Proctor Valley Road to Ranch Lakes Way (northerly access point). Ranch Lakes Way, Agua Vista Dr. to Westerly Project boundary. Rancho Estate Place (southerly access point), Agua Vista Dr. to westerly project boundary. 9. Condition No. 17 - (Street Improvements) In satisfaction of Condition No. 17 of the Resolution, the Developer agrees to construct a temporary 1mnaround or street improvements, upon the request of and as determined necessary by the City Engineer and Fire Marshal, at the end of temporarily stubbed streets greater than 150 ft. in length (as measured from the nearest street centerline intersection). 5 ~-24 10. Condition No. 20 - (ADA) In satisfaction of Condition No. 20 of the Resolution, the Developer agrees to construct sidewalks and construct pedestrian ramps on all Walkways to meet "Americans with Disabilities Act" (ADA) standards and subject to approval of the City Engineer. In the event the Federal Government adopts ADA standards for street rights-of-way, which are in conflict with the standards and approvals contained herein, all such approvals conflicting with those standards shall be updated to reflect those standards. Unless otherwise required by federal law, City ADA standards may be considered vested, as determined by Federal regulations, only after construction has Co=enced. . 11. Condition No. 23 - (Street Name Signs) In satisfaction of Condition No. 23 of the Resolution, the Developer agrees to install pe=anent street name signs, and shall install such signs prior to the issuance of the first building permit for the applicable final map. 12. Condition No. 33 - (private Drainage) In satisfaction of Condition No. 33 of the Resolution, the Developer agrees to comply with the City of San Diego's Watershed Management Plan, as approved fi:om time to time. 13. Condition No. 41 - (private Drainage). In satisfaction of Condition No. 41 of the Resolution, the Developer agrees that sto= drain systems that collect water fi:om private and public property shall be designated private on grading and drainage and/or improvement plans to the point of connection with a public system off site. 14. Condition No. 52 - (BMP's). In satisfaction of Condition No. 52 of the Resolution, the Developer agrees to construct the sto= drains and other drainage facilities to include Best Management Practices (BMP's) to minimi7e non-point source pollution, as shown in the Water Quality Technical Report for Bella Lago dated 6/16/04,and revised 2/3/05, and the Addendum to Water Quality Technical Report for Bella Lago dated 4/19/2005, satisfactory to the City Engineer and shall seek the concurrence of the City of S an Diego Water Utilities Director for any changes thereto. a. The Development shall comply with all applicable regulations established by the United States Environmental Protection Agency (USEPA), as set forth in the National Pollutant Discharge Elimination System (NPDES), permit requirements for urban runoff and sto= water discharge, the Clean Water Act, and any regulations adopted by the City of Chula Vista, pursuant to the NPDES regulations or requirements. Further, the Developer shall file a Notice of Intent with the State Water Resources Control Board to obtain coverage under the NPDES General Permit for Sto= Water Discharges Associated with Construction Activity and shall implement a Sto= Water Pollution Prevention Plan (SWPPP) concurrent with the co=encement of grading activities. The SWPPP shall include both construction and post construction pollution prevention and pollution control measures and shall identify funding mechanisms for post construction control measures. . b. The developer agrees to comply with all the provisions of the NPDES Permit during and after all phases of the development process, including, e; '6~26 but not liinited to, mass grading, rough grading, construction of street and landscaping improvements, and construction of dwelling units. The Developer shall incorporate in the project design water quality and watershed protection principal and post construction Best Management Practices (BMP's) selected for the project, in compliance with the NPDES Permit, to the satisfaction of the City Engineer. c. The Developer agrees not to protest the fo=ation of a facilities benefit district or any other fimding mechanism approved by the City to finance the operation, maintenance, inspection, and monitoring of NPDES facilities. This agreement to not protest shall not be deemed a waiver of the right to challenge the amount of any assessment, which may be imposed due to the addition of these improvements and shall not interfere with the right of any person to vote in a secret ballot election. The above noted agreement shall run with the entire land contained within the Proj ect. d. The Developer agrees to submit and obtain approval from the City Engineer of a maintenance program for the proposed post-construction BMP's. The maintenance program shall include, but not be limited to: 1) a manual describing the maintenance activities of said facilities, 2) an estimate of the cost of such maintenance schedule and activities, and 3) a fimding mechani= for financing the maintenance program. In addition, the Developer has entered'into a Maintenance Agreement with the City to ensure the maintenance and operation of said facilities. e. The Developer agrees to d=onstrate to the satisfaction of the City Engineer compliance with all of the applicable provisions of the municipal code, the City of Chula Vista Sto= water Management Standards Requirement Manual (including the Regional Water Quality Control Board Municipal Permit 2001-01) and the City of Chula Vista Standard Urban Sto= Water Mitigation Plan (SUSMP). The Developer agrees to incorporate into the project planning and design effective post construction BMP's and provide all necessary studies and reports demonstrating compliance with the applicable regulations and standards. BMP's shall be identified and implemented that specifically prevent pollution of sto= drain systems to the Maximum Extent Practicable (MEP) from certain project feature, land use, areas and activities. f. The Developer agrees to incorporate in the proj ect design water quality and watershed protection principal and all post construction Best Manag=ent Practices,(BMP's) selected for the Project, in compliance with the NPDES Permit. g. The Developer agrees to defend, Indemnify, and hold harmless the City, it selected and appointed officers and employees, from and against all fines, costs, and expenses arising out of non-compliance with the requir=ents of the NPDES regulations, in connection with the execution of any construction and/or grading work for the Project, whether the non- compliance results from any action by the Developer, any agent or 7 -" .-,~ ""'" /" .-'-- employee-,. subcontractors, or others. The Developer's indemnmcation shall include any and all costs, expenses, attorney's fees and liability incurred by the City. h. The Developer agrees to not protest the fo=ation of a facilities benefit district or any other funding mechanism approved by the City to finance the operation, maintenance, inspection, and monitoring of NPDES facilities. This agreement to not protest shaH not be de=ed a waiver of the right to challenge the amount of any assessment, which may be imposed due to the addition of these improvements and shall not interfere with the right of any person to vote in a secret bal10t election. 15. C.ondition No. 53 - (Guardrail). In satisfaction of Condition No. 53 of the' Resolution, the Developer agrees to construct and secure any required guardrail Improvements in conjunction with the associated grading andlor construction permit as determined by and to the satisfaction of the City Engineer. The guardrail shall be instal1ed per Caltrans Traffic Manual and Roadside Design Guide requirements to the satisfaction of the City Engineer. 16. Condition No. 66 - (FEMA). In satisfaction of Condition No. 66 of the Resolution, the Developer agrees to obtain approval from al1 applicable permitting agencies, inc-1uding but not limited to Federal Emergency Management Agency (FEMA), prior to any work within each of the agencies jurisdiction. All mitigation requirements will be the responsibility of the Developer. The Developer further agrees to process a letter of map revision with FEMA for any changes to the flood plain. 17. Condition No. 72 - (Sewer Facilities). In satisfaction of Condition No. 72 of the Resolution, the Developer agrees to construct, in accordance with Section 18.16.220 of the Municipal Code, al1 off-site and on-site sewer facilities shown on Drawings #'s 04100-01 thru 04100-18. Additionally, the Developer agrees to indemnify the City for any sewer spills from the Project into the Otay Lakes Basin arising out of the design or construction of the sewer facilities. 18. Condition No. 76 - (pumped Sewer). In satisfaction of Condition No. 76 of the Resolution, the Developer agrees to accomplish the foHowing: a. Provide the necessary funding, in the amount determined by the City Engineer, for updating a Pumped Sewer Development Impact Fee or any other funding mechanism as determined by the City Engineer. Said Development Impact Fee, or funding mechanism shall be prepared, as directed by the City Engineer, and subject to approval of Council. b. Provide the necessary funding for implementing a sewer trunk-monitoring program, as determined by the City Engineer. 19. Condition No. 81 - (Sewer Facilities). In satisfaction of Condition No. 81 of the Resolution, the Developer agrees to construct at its own cost and expense all off-site and on-site sewer facilities as required by the City Engineer to serve the Project. 8 ? ')7 :J--?- 20. Condition No. 84 - (Water Services) Irfpartial satisfaction of Condition No. 84 of the Resolution, the Developer agrees to phase and install water system improvements as requITed by the Otay Water District. 21. Condition No. 96 - (Indemnification) In satisfaction of Condition No. 96 of the Resolution, the Developer agrees to defend, indemnify, protect, and hold the City harmless from and against any and all claims, liabilities and costs, including attorney's fees, arising from challenges to the Environmental Impact Report and subsequent environmental review for the Proj ect and any or all entitlements and approvals issued by the City in connection with the Proj ect. 22. Condition No. 97 - (Agreement) In satisfaction of Condition No. 97 of the Resolution, any and all agreements that the Developer is requITed to enter into hereunder shall be in a fo= subject to approval of the City Attorney. 23. Condition No. 98 - (Agreement) In satisfaction of Condition No. 98 of the Resolution, the Developer agrees to the following: a. That the City may withhold building permits for the subject subdivision if the regional development threshold limits set by the Chula Vista Transportation Phasing Plan, as amended from time to time, have been reached or in order to have the Project comply with the Growth Management Program, as may be amended from time to. time. Traffic volumes, levels of service, public utilities and/or services either exceed the adopted City threshold standards or fail to comply with the then effective Growth Management Ordinance, and Growth Management Program and any amendments thereto. Public utilities shall include, bilt not be limited to, air quality, drainage, sewer and water. b. To defend, indemnify and hold harmless the City and its agents, officers and =ployees, from any claim, action or proceeding against the City, or its agents, officers or employees, to attack, set aside, void or annul any approval by the City, including approval by its Planning CommissioI), City Councilor any approval by its agents, officers, or employees with regard to this subdivision pursuant to Section 66499.37 of the State Map Act provided the City promptly nOMes the Developer of any claim, action or proceeding and on the further condition that the City fully cooperates in the defense. c. To ensure that all franchised cable television companies ("Cable Company") are permitted equal opportunity to place conduit and provide cable television service to each lot within the subdivision. Developer agrees that the City of Chula Vista may grant access to cable companies franchised by the City of Chula Vista to place conduit within the City's easement si\Wited within the Proj ect. Developer shall restrict access to the conduit to only those franchised cable television companies who are, and remain in compliance with, all other rules, regulations, ordinances and procedures regulating and affecting the operation of. cable television 9 3-;;:Z' . , companies as same may have been, or may from time to time be issued by the City of Chula Vista. d. That the City may withhold the issuance of building pe=its for the Project, should the Developer be det=.ined by the City to be in breach of any of the terms of the Tentative'Map Conditions or any Supplemental Agreement. The City shall provide the Developer of notice of such determination and allow the Developer reasonable time to cure said breach. a. Defend, indemnify, and hold the City and its agent and employees harmless from any liability for erosion, siltation or increaseflow of drainage resulting from this Proj ect. 24. Condition No. 99 - (Agreement) In satisfaction of Condition No. 99 of the Resolution, the Developer agrees to the following: b. To participate, on a fair share basis, in any deficiency plan or financial program adopted by San Diego Association of Governments (SANDAG) to comply with the Congestion Management Program (CMF). c. To not protest the fo=ation of any future regional impact fee program or facilities benefit district to finance the construction of regional facilities. 25. Condition No. 100 - (Street Sweeping) In satisfaction of Condition No. 100 of the Resolution, the Developer agrees to contract with the City's current street sweeping franchisee, or other server approved by the City Engineer to provide public street sweeping, if any, for each phase of development on a frequency and level of service comparable to that provided for sin:ill.ar areas of the City. The Developer agrees to cause street sweeping to co=ence immediately after the final residence, in each phase, is occupied and shall continue sweeping until such time that the City has accepted the street or 60 days after the completion of all punch list items, whichever is shorter. The Developer further agrees to provide the City Special Operations Manager with a copy of the memo requesting street sweeping service, which memo shall include a map of areas to be swept and the date the sweeping will begin. 26. Condition No. 101 - (Regional Impact) In partial satisfaction of Condition No. 101 of the Resolution, the Developer agrees to equitably participate in any future regional impact fee program for regional facilities should the region enact such a fee program to assist in the construction of such facilities. The Developer also agrees not to protest the fo=ation of any potential future regional benefit assessment district fo=ed to finance regional facilities. 27. Condition No. 102 - (Interim Facilities) In satisfaction of Condition No. 102 of the Resolution, the Developer understands and agrees that the maintenance and demolition of all interim facilities (public facilities, utilities and improvements) is the Developer's responsibility, and that construction and d=olition bonds will be required to the satisfaction of the City Engineer. 10 3-2-q 28. Conditions No; 7, 103 & 121 - (Open Landscape Improvements). In satisfaction of Conditions No.7, 103 & 121 of the Resolution, the Developer agrees to install all improvements in accordance with approved plans to the satisfaction of the Director of General Services and the City Engineer. The Developer also agrees to construct and secure open space landscape improvements within the map area. All landscape improvements shall be secured in amounts as determined by the Director of General Services and approved in fo= by the City Attorney. The Developer also agrees to install landscape and irrigation slope erosion control in accordance with approved plans no later than six months from the date of issuance of the grading permit. If the work cannot be completed within the specified time, the Developer may request an extension, which may be granted at the discretion of the Director of Planning & Building. Such a request shall be submitted for approval in writing to the Planning & Building Department sufficiently in advance of the end of the six-month timeframe to allow processing of the extension. Notwithstanding the time of installation of landscape and irrigation slope erosion control, Appficant agrees to remain in compliance with NPDES. 29. Condition No. 105 - (Streets Maintenance) - In satisfaction of Condition No. 105 of the Resolution, the Developer agrees that all drainage facilities within Public and Private streets are privately maintained per the Bella Lago Basin Maintenance, Grading Mitigation, and Erosion, Sedimentation and NPDES Compliance Agreement. The Developer further agrees that all landscaped areas within the tentative map boundaries shall be privately maintained in a' manner acceptable to the Director of General Services. The Developer further agrees that all Private streets North of Via Ponte Tresa shall be privately maintained in a manner acceptable to the City Engineer. 30. Condition No. 106 - (CC&R's). In satisfaction of Condition No. 106 of the Resolution, the Developer agrees to the following within 60 Days of approval of the Final Map: a. Submit evidence, acceptable to the City Engineer and the Director of Planning and Building of the fo=ation of a Homeowner's Association (HOA), The HOA shall be responsible for the maintenance of all landscaping improvements. The HOA shall be structured to allow annexation of future tentative map areas in the event the City Engineer and Director of Planning and Building require such annexation of future tentative map areas. The HOA fo=ation documents shall be subject to the approval of the City Attorney; and b. The Developer agrees to submit for City's approval the CC&R's, grant of easements and maintenance standards and responsibility of the HOA's for the Open Space Areas within the Proj ect area. Developer agrees to acknowledge that the HOA's maintenance of public open space, trails, etc. may expose the City to liability. Developer agrees to establish an HOA that will defend, indemnify, and hold the City and it eplployees and agents harmless from any actions of the HOA in the maintenance of such areas; and c. Submit and obtain approval of the City Engineer and the Director of Planning and Building of a list of all HOA facilities and other items to be 11. 3-30 . . -- maintained by the proposed district. Separate lists shall be submitted for the improvements and facilities to be maintained by the Open Space District and those to be maintained by a Homeowner's Association. Include a description, quantity and cost per year for the perpetual maintenance of said improvements. These lists shall include but are not limited to all facilities located on open space lots to include but not be limited to: walls, fences, water fountains, lighting structures, paths, trails, access roads, drainage structures and landscaping. Each open space lot shall also be broken down by the number of acres of: 1) turf, 2) irrigated, and 3) non-irrigated open space to aid in the estimation of a maintenance budget thereof. 31. Conditions No. 21, 107 & 110 -'(CC&R's). In satisfaction of Conditions No. 21, 107 & 11 0 of the Resolution, the Developer agrees that an HOA shall be responsible for and include within the Proj ect' s CC&R' s maintenance and monitoring of all elements of the Project's Fuel Modification Zone Plan (FMZP) installed pursuant to the Project's FMZP. The Developer also agrees that the CC&R's shall include the following obligations of the Homeowners Association: a. A requirement that the HOA shall maintain comprehensive general liability insurance against liability incident to ownership or use of the following areas: i. All open space lots that shall remain private, ii. Other Association maintained property. b. Before any revisions to provisions of the CC&R's that may particularly affect the City can become effective, said revisions shall be subj ect to approval of the City. The HOA shall not seek approval from the City of said revisions without the prior consent of 100 percent of the holders of :first mortgages or property owners within the HOA. c. The HOA shall indemnify and hold the City harmless from any claims, d=ands, causes of action liability or loss related to or arlsing from the maintenance activities of the HOA. d. The HOA shall not seek to be released by the City from the maintenance obligations described herein without the prior consent of the City and 100 percent of the holders of :first mortgages or property owners within the HOA. e. The HOA is required to procure and maintain a policy of comprehensive general liability insurance written on a per occurrence basis in an amount not less than one mi1lion dollars combined single limit. The policy shall be acceptable to the City, name the City as additionally insured to the satisfaction of the City Attorney, and shall not contain a cross party exclusion clause. 12 3-3/ - - f The CC&R's shall incorporate restrictions for each lot -adjoining open space lots containing walls maintained by the open space district to ensure that the property owners know that the walls may not be modified or supplemented nor may they encroach on City property. g. The CC&R's shall include provisions assuring maintenance of all streets, driveways, drainage and sewage systems which are private. h. The CC&R's shall include provisions assuring HOA membership in an advance notice such as the USA Dig Alert Service in perpetuity. 1. The CC&R's shall include provisions that provide the City has the right but not the obligation to enforce the CC&R provisions the same as any owner in the Proj ect. J. The CC&R provisions setting forth restrictions in these Tentative map conditions may not be revised at any time without prior written permission of the City. k. The HOA shall not seek to dedicate or convey for public streets, land used for private streets without approval of 100% of all ~e HOA members or holder offust mortgages within the HOA. 1. The CC&R's shall prohibit "speed bumps" on private streets. The CC&R's shall also include language which states that any proposal by the HOA to allow "speed bumps" in the future shall require prior written approval of 100% of all the Homeowners Association members. m. The CC&R's shall contain provisions assuring the implementation of post construction BMF' s. n. The CC&R's shall improve provision that prohibits the use of on untreated (EMF's) slopes that flow into the Otay Lakes fertilizer Basin. o. The Developer agrees not to install privately owned water, or other utilities crossing any public street. The installation of sleeves for future construction of privately owned facilities may be allowed subject to the review and approval of the City Engineer if the following is accomplished: a. The Developer agrees to: i. Apply for an encroachment permit for installation of the private facilities within the public right-of-way; and ii. Maintain membership in an advance notice such as the USA Dig Alert Service; and iii. Mark out any private facilities owned by the Developer whenever work is performed in the area; and 1.3 3--32 iv. The te=s of this agreement shall be binding upon the successors and assigns of the Developer. . b. The Developer agrees to: i. Shutoff devices as determined by the City Engineer are provided at those locations where private facilities traverse public streets 32. Condition No. 108 - (HOA) In satisfaction of Condition No. 108 of the Resolution, the Developer agrees that future property owners shall be notified during escrow, by a document to be initialed by the owners, of the maintenance responsibilities of the ROA and their estimated annual cost. The Developer also agrees that future property owners shall be notified during escrow, by a document to be initialed by the owners, of the home owner manual which outlines development parameters and design criteria for structures and landscaping encroaching into the 50' Perimeter Fuel Modification Zone. The homeowners manual shall also address landscaping and maintenance. The homeowners manual shall address all items found in the Proj ect' s Fuel Modification Zone Plan including but not limited to: 1) Allowable uses within the 50' Perimeter Fuel Modification Zone, Fire wise landscaping design, Fire wise construction, fencing, permitted accessory structures, including decks, retaining walls, and any other development standards. Developer agrees to submit the document and obtain the approval of the City Engineer and Director of Planning and Building prior to distribution through escrow. 33. Condition No. 112 - (Street Trees) In satisfaction of Condition No. 112 of the Resolution, the Developer agrees to install all street trees in accordance with Section 18.28.10 of the Chula Vista Municipal Code. All street trees shall be planted in parkways, or as otherwise approved by the Director of General Services. The Developer will maintain street tree identification stakes in location as shown on approved preliminary plans until all dry utilities are in place. The Developer agrees to provide root control methods per the requirements of the Director of General Services, and provide a deep watering irrigation system for the trees. a. Complete preliminary street improvement plans that show the location of all future street trees, which will be subj ect to the review and approval of the Director of General Services and the Director of Planning & Building. b. Place wood stakes on site prior to utility installation according to approved preliminary street tree plans and shall be painted a bright color and labeled as future street tree location. c. Provide the City documentation, acceptable by the Director of General Services and the Director of Planning and Building, that all utility companies have been given notice that no dry utility line shall be located within five feet of the wood stake in any direction. d. Maintain street tree identification stakes in location as shown on approved pre1im;"~ry plans until all dry utilities are in place. 14 -:J :;;>? ?-.-'-'" Submit final street tree improvement plans, including mailbox locations, for review and subject to the approval of the Director of Planning and Building and the City Engineer prior to or concurrent with the second submittal of street improvement plans within the subdivision. Approval of the street tree improvement plans shall constitute final approval of the selection of street trees for the street parkways. 34. Condition No. 115 - (Perimeter Walls) - In satisfaction of Condition No. 115 of the Resolution, the Developer hereby acknowledges and agrees to have future property owners of lots adjacent to open space lots sign a statement at the time of property purchase, indicating that they are aware and acknowledge that the perimeter walls within open space lots are the property of the HOA, and that they may not modify or supplement the wall, or encroach onto Open Space property. These restrictions shall also be reflected in the CC&R's that are recorded against each property. 35. Condition No. 119 - (Master Landscape Plans) - In satisfaction of Condition No. 119 of the Resolution, the Developer hereby agrees and acknowledges that upon request of the Director of General Services, the Developer agrees to update the Project's Landscape Master Plan to conform to any substantial changes made subsequent to the initial approval of the Plan. 36. Condition No. 123 - (Take Permit) - In satisfaction of Condition No. 123 of the Resolution, the developer agrees comply with the take permit/authorization from the U.S. Fish and Wildlife Service and California Department of Fish and Game, or comply with the approved City of Chula Vista MSCP Sub-area Plan whichever is applicable to the Project. 37. Condition No. 124 - (MSCP) - In partial satisfaction of Condition No. 124 of the Resolution, Developer has irrevocably offered the MSCP Preserve lots D, E, and F (Lot D, and E formerly lot 141, and lot F formerly lot 143) of the Final Map ("Preserve Lots"), to the City. Developer further agrees to designate a preserve manager acceptable to the Director of Planning and Building for the perpetual maintenance in compliance with the Area-Specific Management Directives Dated 2/2003 (ASMDs) for the Preserve Lots within one year of this Agreement. Developer further agrees to provide clear title for any preserve lot prior to the acceptance of the lot by a preserve manager and to fund the perpetual maintenance of the Preserve Lots. A conservation easement or other similar restriction, acceptable to the Director of Planning and Building, shall be provided that precludes the use of lots D, E, and F (formerly lots 141, and 143), and for any use other than preserve, as set forth in the MSCP Sub area Plan, unless agreed to by the City and the Wildlife Agencies. The Developer further agrees to convey Open Space lot G (formerly lot 144) to the San Diego National Wild Life Refuge within 4 months of the effective date of this agreement. The Developer agrees to maintain the biological values of the open space mitigation lands including lots D, E, F and G (formerly lots 141, 143, and 144) in accordance with the City's MSCP Sub area Plan and the Project's ASMDs until such time as a management entity has assumed management obligations as approved in writing by the City's Director of Planning and Building. The Developer's obligation to maintain the biological values of these open space mitigation lands shall continue to be binding, notwithstanding any releases that may be granted by the City pursuant to section 1 of this Agreement. 15 '9- I "7 Lf "::\ 38. Condition No. 125 - (Offsite Mitigation). In satisfaction of Condition No. 125 of the Resolution, the Developer acknowledges and agrees to provide off site mitigation to include preservation of 2.5 acres, which brings the total conservation for the Project to 89 acres (on-site and off- site). The off-site 2.5 acres shall contain a minimum of 210 Otay tarplants. Off-site conservation shall be in a location within the MSCP Subregional Preserve subject to the approval of the Director of Planning & Building. A conservation easement or other appropriate mechanisms, as approved by the City Attorney, shall be placed on the 2.5 acres to ensure preservation in perpetuity. Prior to the issuance of the first grading permit for the Project, the Developer agrees to provide funding for long-term management, in an amount and form acceptable to the City. The Developer agrees to maintain the biological values of the open space mitigation lands including the off-site 2.5 acres parcel in accordance with the city's MSCP Subarea Plan and the Project's ASMD's until such time as a management entity has assumed management obligations as approved by the city. 39. Condition No. 126- (Law Violations) In satisfaction of Condition No. 126, the Developer agrees that the approval of this map by the City of Chula Vista does not authorize the applicant to violate any Federal, State or City laws, ordinances, regulations or policies, including but not limited to the Federal Endangered Species Act of 1973 and any amendments thereto (16 U.S.C. Section 1531 et seq.). 40. Condition No. 127 - (MSCP). In satisfaction of Condition No. 127 of the Resolution, the Developer agrees that in accordance with authorization granted to the City of Chula Vista from the U.S. Fish & Wildlife Service (USFWS) pursuant to Section 10(a) of the ESA and by the California Department of Fish & Game (CDFG) pursuant to Fish & Game Code Section 2835 as part of the Multiple Species Conservation Program (MSCP), the City of Chula Vista through the approval/issuance of this map/permit hereby confers upon permittee the status of Third Party Beneficiary as provided for in Section 17 of the City of Chula Vista Implementing Agreement (IA) to be approved by the City Council on May 13th, 2003. Third Party Beneficiary status is conferred upon permittee by the City: (1) to grant permittee the legal standing and legal right to utilize the authorization granted to the City of Chula Vista pursuant to the MSCP in accordance with those limitations imposed under this permit and the lA, and (2) to assure permittee that no existing mitigation obligation imposed by the City of Chula Vista pursuant to this permit shall be altered in the future by the City of Chula Vista, USFWS, or CDFG, except in the circumstances described in the IA. If mitigation lands are identified but not yet accepted by the City or other designated management entity or preserved in perpetuity, maintenance and continued recognition of Third Party Beneficiary status by the City is contingent upon permittee maintaining the biological values of any and all lands committed for mitigation pursuant to this permit and of full satisfaction by permittee of mitigation obligations required by this permit, as described in accordance with the IA. 41. Condition No. 128 - (ASMD's). In satisfaction of Condition No. 128 of the Resolution, the Developer agrees that Area Specific Management Directives (ASMD's) for the MSCP Preserve lots D, E, F, and G (formerly lots 141, 143 and 144) shall be approved by the 16 /7 r') ...." ~/ ",-ry . .~.- ~' ;') ) .,' ,., MSCP Preserve lots D, E, F, and G (fo=erly lots 141, 143 and 144) shall be 'approved by the Director of Planning and Building. Prior to the issuance of the first grading permit for the Proj ect, the Developer agrees to provide funding, in an !!mount and fo= approved by the Director of Planning and Building, for implementation of the ASl\IID's. 42. Condition No. 129 - (Fencing Plan). In satisfaction of Condition No. 129 of the Resolution, the Developer agrees to prepare a fencing plan and obtain the. approval of the Director of Planning and Building, the Director of General Services, and the City Engineer. The fencing plan shall include, as the City determines necessary, interim and permanent fencing pursuant to the Project's Precise Plan Figure 5-3, Fence and Wall Plan. In addition, the Developer agrees to the following: a. Prior to the co=encement of initial grading adjacent to the MSCP preserve Lots F and G (fo=erly lots 143, and 144), install interim fencing adjacent to Lots F and G and shall be maintained by the Developer in its original condition at all times; b. Install permanent fencing concurrent with the initial rough grading of the Project. Fencing shall be installed adjacent to the MSCP Preserve Lots F and G to control access into the MSCP Preserve to the satisfaction of the Director of Planning and Building. An alternative to permanent fencing would be the planting of native barrier plants subject to the approval of the Director of Planning and Building at his/her sole discretion; c. Concurrent with the initial rough grading of the Project, install a six-foot solid block masonry wall at the rear of Lots 1 and 2, and Lots 9 and 10 (see Precise Plan, Figure 5-3; Fence and Wall Plan) for the protection of populations of Otay tarplant. The block wall shall not be located closer than twenty-five feet :5:om the nearest Otay tarplant and no developed area shall be closer than twenty-five feet :5:om the nearest Otay tarplant; and d. Indicate on aU affected grading plans that all fencing and/or walls shall be constructed entirely within the HOA-maintained open space lots irrevocably offered to the City of Chula Vista. Perpetual maintenance of the fence and/or walls shall be provided by the HOA. 43. Condition No. 130 - (Fire Department's Codes). In satisfaction of Condition No. 130 of the Resolution, the Developer agrees to comply with the Fire Department's codes and policies for Fire Prevention, as may be !!mended :5:om time to time. Prior to the issuance of any building perm1t(s) for the Project, the Developer agrees to provide the following items prior to delivery of combustible materials on any construction site on the Project: a. Water supply consisting of fire hydrants as approved and indicated by the Fire Department during plan check to the satisfaction of the Fire Department. Any temporary water supply source is subject to prior approval by the Fire Marshal. b. Emergency vehicle access consisting of a minimum first layer of hard asphalt surface or concrete surface, with a miT1;mum standard width of2o feet or acceptable alternative subj ect to approval of the Fire Marshall and in compliance with Chula Vista Fire Department's Policy 2916.00 and the California Fire Code (200led). c. Street signs installed to the satisfaction of the Department of Public Works. Temporary street signs shall be Subject to the approval of the Department of Public Works and Fire Department. Locations and identification of temporary street signs shall be subject to review and 17 ~>- ~ " approval by the Department of Public Works and Fire Department. 44. Condition No. 131 - (Fire Marshal's approval). In satisfaction of Condition No. 131 of the Resolution, the Developer agrees to obtaiD the approval of the City's Fire Marshal for the timing of construction of all internal streets in the Proj ect. 45. Condition No. 133 - (Fuel Modification Zone Plan). In satisfaction of Condition No. 133 of the Resolution, the Developer agrees to comply with the Project's Fuel Modification Zone Plan dated December 20, 2002 and as may be amended from time to time. 46. Condition No. 134 - (private Streets Entrance). In partial satisfaction of Condition No. 134 of the Resolution, the Developer agrees to construct or provide to the specifications or satisfaction of the City Engineer -the following features to all areas bound by private streets with controlled access devices, such as gates: a. Gates located to provide . sufficient room to queue up without interrupting traffic. b. Turnarounds at the gates. c. Delineation of border between public streets and private streets by enhanced pavement. No enhanced pavement shall be located within the public right-of -way. d. Emergency vehicle access. e. Omnicom, r1id('-tn_FT1t~~ ~y.t~m, or other access devices required by the City Fire Marshal and Police Department. The Developer further agrees and acknowledges that any proposed entry monumentation and signage, should be included in the wall and fencing plans for the project", the Developer further agrees to obtaiD building permits to construct the entry gates in conjunction with the construction of the project's Co=on area walls and fencing. 47. . Condition No. 136 - (Compliance). In satisfaction of Condition No. 136 of the Resolution, the Developer agrees to comply with all applicable sections of the Chula Vista Municipal Code. Preparation of the Final Map for the Project and all plans shall be in accordance with the provisions of the Subdivision Map Act and the City of Chula Vista Subdivision Ordinance and Subdivision Manual. Underground all utilities within the subdivision in accordance with Municipal Code requirements. 48. Condition No. 138 - (Approval of Landscaping Plans for Lot M-B). In satisfaction of Condition No. 138 of the Resolution, the Developer agrees to comply with all relevant Federal, State, and Local regulations, including the Clean Water Act. The Developer agrees to be responsible for providing all required testing and documentation to demonstrate said compliance as required by the City Engineer. 18 3-37 49. Condition No. 139 (Special Tax and ASsessments). In satisfaction of Condition No. 139 of the Resolution, Developer agrees to ensure that prospective purchasers sign a "Notice of Special Taxes and Assessments" pursuant to Mwricipal Code Section 5.46.020 regarding proj ected taxes and assessments. 50. Condition No. 140 (Council Policy Compliance). In satisfaction of Condition No. 140 of the Resolution, the Developer agrees to comply with Council Policy No. 522-02 regarding maintenance of natural channels within open spaces, if any. 51. Condition No. 141 (Good Faith Effort Coordination). In satisfaction of Condition No. 141 of the Resolution, the Developer agrees to make a good-faith effort to coordinate development and implementation of the Bella Lago project. with all other developers/applicants including, but not limited to the Rolling Hills Ranch Sub area ill development including phasing, grading, infrastructure, improvements, and dedications of right- of-way. 52. Condition No. 148 (AQIP). In satisfaction of Condition No. 148 of the Resolution, the Developer agrees to comply with all provisions of the Project's Air Quality Improvement Plan (AQIP). The Developer hereby agrees to implement all. AQIP measures as approved by the City Council, and to comply and remain in compliance with the AQIP. 53. Condition No. 149 (AQIP) In satisfaction of Condition No. 149 of the Resolution, the Developer acknowledges and agrees that the City Council may from time to time modify air quality improvement and energy conservation measures related to new development as various technologies and/or programs change or become available. The Developer agrees to be required to modify the Air Quality Improvement Plan (AQIP) to incorporate those new measures, which are in effect at the time, prior to or concurrent with each Final Map approval within the Proj ect. The new measures shall apply, as applicable, to development within all future Final Map areas, but shall not be retroactive to those areas, which received Final Map approval prior to effect of the subj ect new measures. 54. Condition No. 150 (WCP). In satisfaction of Condition No. 150 of the Resolution, the Developer agrees to comply with all provisions of the Project's Water Conservation Plan (WCP). The Developer hereby agrees to implement all. WCP measures as approved by the City Council, and to comply and remain in compliance with the WCP. 55. Condition No. 151 (WCP). In satisfaction of Condition No. 151 of the Resolution, the Developer acknowledges and agrees that the City Council may from time to time modify water conservation measures related to new development as various technologies and/or programs change or become available. The Developer agrees to be required to modify the Water Conservation Plan (WCP) to incorporate those new measures, which are in effect at the time, prior to or concurrent with each Final Map approval within the Project. The new measures shall apply to development within all future Final Map areas, but shall not be retroactive to those areas, which received Final Map approval prior to effect of the subject new measures. 19 3--3E 56. Satisfaction of Conditions. City agrees that the execution of this Agreement constitutes satisfaction or partial satisfaction of Developer's obligation of Conditions 1,2,3,4,7, 8, 13, 14, 17,20,21,23,33,41,52,53,66,72,76,81,84,96,97,98, 99, 100, 101, 102, 103, 105,106, 107, 10~ 11~ 112, 11~ 119, 121, 123, 124,125, 126, 127, 12~ 129, 130,131, 133, 134,136, 138, 139, 140, 141, 148, 149, 150, and 151 of the Resolution. Developer further understands and agrees that some of the provisions herein may be required to be perfo=ed or accomplished prior to the approval of other fina1 maps for the Project, as may be appropriate. 57. Unfulfilled Conditions. Developer hereby agrees, unless otherwise conditioned, that Developer agrees to comply with all unfu1:filled conditions of approval of the Tentative Map, established by Resolution No. 2000-068 and agrees to remain in compliance with and implement the te=s, conditions and provisions therein. 58. Previous Agreements. The Developer acknowledges that nothing in this Agreement shall supersede, nullify or otherwise negatively impact the terms of the Agreement far Monitoring Building Permits approved by Cauncil Resolution 2003-166, and the Bella Lago Basin Maintenance, Grading Mitigation, and Erosion, Sedimentation and NPDES Compliance Agreement. The Developer agrees to comply with all previous agreements with the City affecting the Property including the "Bella Lago Basin Maintenance, Grading Mitigation, and Erosion, Sedimentation and NPDES Compliance Agreement", of the Tentative Map 03-03 conditions applicable specifically to the Final Map for the Property, and the Agreement far Monitoring Building Permits 59. Recording. This Agreement, or an abstract hereof shall be recorded simultaneously with the rec;ordation of the Final Map. 60. Building Permits. Developer and Guest Builders acknowledge and agree that the City may withhold the issuance of bujlding permits for the Project, should the Developer be determined by the City to be in breach of any of the terms of this Agreement. The City shall provide the Developer of notice of such determination and allow the Developer with reasonable time to cure said breach. . 60. Assignablity. Upon. request af the developer, any or all on-site duties and obligations set forth herein may be assigned ta developer's successor in interest if the City manager in hislher sole discretion determines that such an assignment will not adversely affect the City's interest. The City Manager in hislher sole discretion may, if such assignment is requested, permit a substitution of securities by the successor in interest in place and stead of the original securities described herein so long as such substituted securities meet the criteria for security as set forth elsewhere in this agreement. Such assignment will be in a fo= approved by the City Attorney. 61. Delay in Performance. City agrees that should Developer be delayed in Performing any obligations under this Agreement primarily as a result of a "Permitted Excuse" (as hereunder defined). Developer shall be allowed a reasonable extension of time ta perfa= said obligation, and such reasonable time shall be determined by the City, but in na 20 3-39 circumstances shall be "less than the length of the delay resulting from the Permitted Excuse. As used herein, the te= "Permitted Excuse" shall mean any of the following: (i) the City's actions, omissions or inaction which result in a delay of perfo=ance by Developer or (ii) labor disputes, acts of God, war, riots, insurrections, civil co=otions, moratorium (other that those imposed by the City pursuant to Growth Management Ordinance, as may be amended from time to time) litigation (other than any litigation brought by or on behalf of Developer or Developer's successors-in-interests, assignees or agents against the City) inability to obtain labor or materials or reasonable substitutes for either, fire, unusual delay in transportation, adverse weather, conditions not no=ally anticipated in a project of this type or casualties beyond the reasonable control of Developer, Permitted Excuse shall not include delays due to a party's own negligence or financial inability to perfo=. 62. Miscellaneous. a. Notices. Unless otherwise provided in this Agreement or by law, any and all notices required or permitted by this Agreement or by law to be served on or delivered to either party shall be in writing and shall be deemed duly served, delivered, and received when personally delivered to the party to whom it is directed, or in lieu thereof, when three (3) business days have elapsed following deposit in the U.S. mail, certified or registered mail, return receipt requested, first-class postage prepaid, addressed to the address indicated in this Agreement. A party may change such address for the purpose of this paragraph by giving written notice of such change to the other party. CITY OF CHULA VISTA " Department of Public WorkslEngineering Division 276 Fourth Avenue Chula Vista, CA 91910 Attn.: City Engineer K. Hovnanian at Bella Lago, LLC 380 Stevens Avenue, Suite 211 Solana Beach, CA 92075 Attn.: Steve Codraro, Co=unity Manager Bella Lago, LLC 5566 Valerio Trail San Diego, CA 92130 Attn.: Timothy Wilson, President A party may change such address for the purpose of this paragraph by giving written notice of such change to the other party in the manner provided in this paragraph. b. Captions. Captions in this Agreement are inserted for convenience of reference and do not define, describe or limit the scope or intent of this Agreement or any of its terms. c. Entire Agreement. This Agreement contains the entire agre=ent between 21 3-L( 0 the parties regaxding 'the subject matter hereof. AJiy prior oral or written' representations, agreements, understandings, and/or statements shall be of no force and effect. This Agreement is not intended to supersede or amend any other agre=ent between the parties unless expressly noted. d. Preparation of Agreement. No inference, ass=ption or pres=ption shall be drawn :5:om the fact that a paxty or his attorney prepaxed and/or drafted this Agreement. It shall be conclusively presumed that both paxties paxticipated equally in the prepaxation and/or drafting this Agreement. e. Recitals; Attachments. Any recitals set forth above and exhibits attached hereto axe incorporated by reference into this Agreement. ,f. Attorneys' Fees. If either paxty co=ences litigation for the judicial interpretation, 'refo=ation, enforcement or rescission hereof, the prevailing paxty will be entitled to a judgment against the other for an amount equal to reasonable attorney's fees and court costs incurred. The "prevailing paxty" shall be deemed to be the paxty who is awaxded substantially the relief sought. [NEXT PAGE IS PAGE ONE OF TWO SIGNATURE PAGES] 22 3- Lf I [pAGE ONE OF TWO SIGNATuRE PAGES TO SUPPLEMENTAL SUBDIVISION IMPROVEMENT AGREEMENT FOR BELLA LAGO FINAL MAP] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year fust hereinabove set forth. CITY OF CHULA VISTA Stephen C. Padilla Mayor of the City ofChula Vista Attest: Susan Bigelow . City Clerk Ann Moore City Attorney [NEXT PAGE IS PAGE TWO OF SIGNATURE PAGES] 23 " 112 ~-/ -- [pAGE TWO OF TWO SIGNATURE PAGES TO SUPPLEMENTAL SUBDMSION IMPROVEMENT AGREEMENT FOR BELLA LAGO FINAL MAP] K. Hovnanian at Bella Lago, LLC BY 1?c--~ J NA1v.rE: 13' . ~ "-'vv-.-I,..I c.. ( TITLE ~rc "~~o?€-'7 BY NA1v.rE: TITLE Applicant: Bella Lago, LLC BY: BEL.LAGIO CAPITAL, INC. Its: ~gMem~er BY~~ NA1v.rE: 1/,,1,1-1 7J-I-'I h? w()/ij TITLE fJrzu duel 24 ::;; L.;~ .:.,..;- 1":"-; CALll'ORNIA ALL-PURPOSE CERTIFICATE OF ACKNOWLEDGMENT State of California County of ~/).rI t>/.<40 I I On '7 - ~ - 00 before me, ;J~II.4D ;/;,.Ig,; ;' ate Name, ?tle - e.g., Jo n Uoe, Notary l~bl1c personally appeared 'P., D0A"h< CufY1M 1,0(.., S !.....,-; tv1 o-r1-k.t tJ, ~<<,();J Name{s) oYlIgners(s) J o Personally known to me OR pj Proved to me on the basis of J '1(7! ,'09 / (( 010 (}<((P Typoond # afID ' I c.JIri-l~iLJ<I(~ J. /-.. to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that J1eIstre1they executed the same in lJ.j~,q,eritheir authorized capacity(ies), and that by..hi-sfhfi/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. r" NEHAD HINDI r ~ .!:-,. .:} CDMM.#1451299-1 8 ;-";:-.' NOTARY PUBLIC. CALIFORNIA Ot) f- 1*. RIVERSIDE COUNTY I . .. MY COMM. EXPIRES NOV. 16, 2007"\ . ~e~ . ~,I?/ :; Signature of NOlary /e-J.." ,/',-, Q.\vPIt.$rDt> do...; It., '/..Per Print Notary's Name, Count-Y in which Commis.mmcd, and Commission Explrftinn Dall' OPTIONAL The data below is not required by law, however it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. SIGNATURE AUTHORITY OF SIGNER: o INDIVIDUAL o CORPORATE OFFICER(S) DESCRIPTION OF ATTACHED DOCUMENT TItJc{s) o PARTNER o LIMITED o GENERAL o ATTORNEY-IN-FACT . 0 TRUSTEE( S) o GUARDIAN/CONSERVATOR o OTHER: TITLE OR TYPE OF DOCUMENT NUMBER OF PAGES DATE OF DOCUMENT SIGNER(S) OTHER THAN NAMED ABOVE: NAME(S) OF PERSON(S) OR EN1TTY(IES) SIGNER IS REPRESENTING: [[ '-j_l(Lf List of Exhibits Exhibit "A" Exhibit "Bn Legal Description of Property Perfo=ance Bonds' 3-tfs Exhibit "A" LEGAL DESCRIPTION OF PROPERTY BEING A SUBDMSION OF TIffi SOUTHEAST QUARTER OF THE NORTHEAST QUARTER, TIffi WEST HALF OF THE SOUTHEAST QUARTER AND THE SOUTIffiAST QUARTER OF TIffi NORrnWEST QUARTER OF THE NORTHWEST QUARTER, ALL IN SECTION 24, IN TIffi CITY OF CHULA VISTA AND THE NORTHWEST QUARTER OF TIffi . NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF SECTION 25, AND THE NORTH THREE AND ONE-HALF ACRES OF THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER OF TIffi NORTHEAST QUARTER OF SECTION 25, AND TIffi NORTH THREE QUARTERS OF THE SOUTIfWEST QUARTER OF THE NORTHWEST QUARTER OF TIffi NORTHEAST QUARTER OF SECTION 25, ALL ill' TOWNSHIP 17 SOUTH, RANGE 1 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. .-.' '11_ ..::...- '"':( ICJ EXHIBIT "B" PERFORMANCEBO~TIS CHULA VISTA TRACT NO. 03-03 Bella Lago CYWONo Description Bond Amount Bonding Company Name Bond number mrawina #) 1 0504 Landscpe $7,346,691.00 Arch Insurance Company SU-5015519 Improvement Bonds 2 0504 Landscpe $3,785,258.00 Arch Insurance Company SU-5015518 Improv=ent Bonds .' ~ 0504 Grading Bonds $3,504,023.00 Fidelity and Deposit Co. 8734471 .) of Maryland 4 04100 Faithful Perfo=ance $4,074,607.00 Safeco Insurance 6300180 Bond Company of America 5 04100 Material and Labor $4,074,607.00 S afeco Insurance 6300180 Bond Company of America 6 Work Order # Monurnentation Bond $48,000.00 Safeco Insurance 6300181 BEOO2F Company of America C:\Documents and SettingslrimatlMy Documents\projects relatedlBella LagolSSIA for Bella Lago B Map.doc C;~Lf7 RESOLUTION NO.2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE GRANT OF EASEMENTS AND MAINTENANCE AGREEMENT FOR CHULA VISTA TRACT NO. 00-03, BELLA LAGO, BETWEENK. HOVNANIAN AT BELLA LAGO, LLC, AND BELLA LAGO, LLC, AND THE CITY REGARDING MAl},'TENANCE OF PRIVATE FACILITIES WITHIN THE PUBLIC RIGHT OF WAY. WHEREAS, the Grant of Easements and Maintenance Agreement ("Agreemenf') for Bella Lago, sets forth the developer's obligation to maintain landscaping in the public right-of-way; and WHEREAS, pursuant to the terms of the Agreement, the maintenance obligations may be assigned to the homeowner's association (HOA) after the landscaping has been established and turned over to the HOA to maintain; and NOW, THEREFORE, BE IT RESOLVED the City Council of the City ofChula Vista does hereby approve the Grant of Easements and Maintenance Agreement for the grant of easements and maintenance for Chula Vista Tract No. 00-03, Bella Lago, a copy of which shall be kept on file in the office of the City Clerk. BE IT FURTHER RESOLVED that the Mayor of the City of Chula Vista is hereby authorized to execute said Agreement on behalf of the City of Chula Vista. Presented by Approved as to form by ;1ue Leah Browder Acting Director of Engineering --- H:\ENO!NEER\RESOS\Resos2006\OJ~14-06\Reso for Grants of Easements tor 8e!I0l Lago.doc) 'd- L/- f - - THE ATTACHED AGREEl\1ENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL ~F Ann Moore City Attorney Dated: j I 7 I D 10 I Grant of Easements, License and Maintenance Agreement between City of Chula Vista, K. Hovanian at Bella Lago, LLC, and Bella Lago, LLC for Chula Vista Tract No. 03-03 Bella Lago -- j.'''''''' ;::.c. <-('--/ , '~,~"J 1':;;', \~.,~- """-... '\ ~ GRANT OF EASEMENTS, UCENSE AND MAINTENANCE AGREEMENT CHULA VISTA TRACT NO. 03"'03 BELLA LAGO (DEDICATED EASEMENTS) This GRANT OF EASEMENTS, UCENSE AND MAINTENANCE AGREEMENT ("Agreement") is made as of this _ day of . 200-, by and between the CITY OF CHULA VISTA, a municipal corporation ("City"), and K. HOVNANIAN AT BELLA LAGO, LLC, a California limited liability company ("KHBL"). RECITALS A. This Agreement concerns and affects certain improvements with portions of the real property located in Chula Vista, California, more particularly described in Exhibit "A" attached hereto and incorporated herein ("Property"). The Property is part of a planned residential development project commonly known as "Bella Lago", ChuJa Vista Tract No. 03-03, being the subject of the City Council Resolution No. (the "City Resolution"). For purposes of this Agreement, the temn "Project" shali refer to the overall Bella Lago project, including, but not limited to the "Property." B. KHBL is the owner of the Property and the Declarant under that certain Declaration of Conditions, Covenants,. Restrictions and Easements of Bella Lago filed for record in the Official Records of San Diego County, Califomia (the "CC&Rs"). The CC&Rs provides for BELLA LAGO COMMUNTIY ASSOCIATION, INC., a California Nonprofit Mutual Benefit Corporation ("HOA") to maintain certain areas in the Project. C. The Property is or will become covered by that the certain final map(s) (the "Rnal Maps") described on Exhibit" A" attached hereto and referenced in the title to this Agreement. D. In order for KHBL to obtain the Final Maps and for the City to have assurance that the maintenance of certain areas within the Project would be provided for, the City and KHBL entered into a Supplemental Subdivision Improvement Agreement pursuant to the City Resolution, in which KHBL agreed that maintenance of such areas shall be accomplished by the creation of a homeowners association. The Parcels shown on Exhibit "B" attached hereto describe those particular areas which were dedicated to the public on one or more of the Final Maps but which include landscaping improvements to be maintained by the HOA. The public areas to be maintained by the HOA are collectively referred to as the "HOA Maintained Public Areas." E. The City desires to grant to KHBL easements for landscape maintenance purposes upon, over and across the HOA Maintained Public Areas as shown on Exhibit "B," in order to faciiitate the obligations of KHBL as set forth in Supplementai Subdivision Improvement Agreement, adopted pursuant to the City Resolution. 3- C:;( NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties agree as set forth below 1. Grant of Easements. The City hereby grants to KHBL and its agents, successors and assigns, non-exclusive easements and rights-of-way over and across the HOA Maintained Public Areas for the purpose of maintaining, repairing and repiacing landscaping improvements located thereon. These grants are made without any warranties of any kind, express or implied, other than the warranty stated in Paragraph 14(f) below. 2. Maintenance Obliaations. . (a) KHBL to Initially Maintain. KHBL hereby covenants and agrees, at its sole cost and "expense, to maintain, repair and replace, or cause to be maintained, repaired or replaced, those improvements within the HOA Maintained Public Areas which are described on Exhibit "C" attached hereto, at a level equal to or better than the level of maintenance which is acceptable to the Director of Public Works Operations, at his/her discretion and equivalent to City or Community Facilities District maintained right-of-way facilities. For purposes of this Agreement, the term "Maintenance" or "Maintain" shall mean the maintenance, repair, the provision of water and replacement obligations described herein and on Exhibit "C" attached hereto and shall also include repair and replacement at no cost to the City of any City owned property that is damaged during performance of the maintenance responsibilities pursuant to this Agreement. Exhibit "c" also refers to the maintenance responsibilities of the City, (b) Transfer to HOA. Upon KHBL transfer of maintenance obligations to the HOA, (i) the HOA shall become obligated to perform the obligations so transferred, and (Ii) subject to the City determining that the requirements of Paragraph 3 below have been satisfied, KHBL shall be released from such obligation. Transfer of maintenance obligations to the HOA ma'f be phased (that is, there may be multiple transfers). KHBL represents to City that it intends to, and has the authority to, unilaterally transfer said maintenance obligations either (i) to the HOA and that such transfer has been provided for In the CC&Rs, and that such document(s) include the provisions described in Paragraph 3(a) below. 3. Assianment bv KHBL and Release of KHBL (a) Assignment. Upon KHBL's transfer of the Maintenance obligations to the HOA, it is intended by the parties that the HOA shall perform the Maintenance obligations either itself or by contractors. Such transfer will reiease KHBL from its obligations only if all of the following occur: (I) HOA Acceots Oblioation. The HOA has unconditionaliy accepted and assumed all of KHBL's obligations under this Agreement in writing, such assignment provides that the burden of this Agreement remains a covenant running with the land, and the assignee expressly assumes the obligations of KHBL under this Agreement. The assignment shall also have been approved by the appropriate governing body of the HOA by resolution or similar procedural method and approved as to form and content by the :;;.':'-:; I ::....r- ../ i Bella Lace Grant of Easeml!nts City AttDrney. The City shall nDt unreasDnably withhDld its CDnsent tD such assignment (Ii) HOA's CC&Rs. The City has confirmed that there have been nD mDdifications tD the recorded CC&Rs previously approved by City, tD any of the fDIIDwing prDvisions: the HOA shall be responsible for the maintenance of the HOA Maintained Public Areas, the HOA shall indemnify City fDr all claims, demands, causes Df actiDn, liability Dr IDss related tD Dr arising from the maintenance activities, and the HOA shall nDt seek to be released by City frDm the maintenance Dbligations Df this Agreement, withDut the priDr CDnsent Df City and Dne hundred percent (100%) Df the hDlders Df first mDrtgages or owners of the Property. (Iii) HOA Insurance. The HOA procures and formally resDlves tD maintain at . its sDle CDSt and expense, cDmmencing no later than the City's release of all Df KHBL's landscape maintenance bDnds, a policy Df public liability insurance which at least meets the requirements Df SectiDn 3.15 of the CC&Rs, which shall contain the fDIIDwing prDvisions: (1) The City of Chula Vista shall be named as an additiDnally insured party to such Insurance pursuant tD the City's requirements the Master AssociatiDn dD so; (2) The policy shall not cDntain a cross-suit exclusion clause which wDuld abrogate cDverage shDuld IitigatiDn ensue between insureds; (3) The pDlicy shall cDntain the fDIIDwing severability clause (Dr language which is substantiaily the same): "The cDverage shall apply separately to each insured except with respect to the limits Df liability." (4) This Section 3.15 may nDt be amended withDut the written cDnsent Df the City Planning DirectDr or City AttDrney. The HOA shall prDvide the City with a Certificate Df Insurance upon prDcurement Df the. policy as set fDrth abDve. (b) Release. When all conditions precedent in Paragraph 3(a) are fulfilled, KHBL shall be released frDm its Dbligations under this Agreement, including its security and insurance requirements. KHBL acknowledges that it has a cDntractual obligatiDn tD perfDrm the terms and cDnditions Df this Agreement until and unless reieased by the City from this Agreement. At least sixty (60) days prior tD such transfer, KHBL shall give a notice to the City Df KHBL's intent to transfer its Maintenance obligatiDns herein and prDvide the City with the apprDpriate documents listed In Paragraph 3(a). 4. fReserved', 5. KHBL's Insurance. Until such time as the HOA has obtained the general liability insurance required by SectiDn 3.15 Df the CC&Rs, KHBL agrees tD procure and fDrmally resDlves tD maintain at its :;., c:: 2 ..-J""- -" Bella Lago Grant of Easements 3 sole cost and expense, commencing no later than the date that the landscape architect of record has submitted a letter of substantial conformance pertaining to work being completed to the General Services Department and the General Services Department Director or his designee has deemed the work complete and satisfactory, a policy of public liability insurance that would include, but is not limited to the following: General Uabilitv Insurance. KHBL shall obtain a comprehensive general liability and property damage insurance policy insuring KHBL against liability incident to ownership or use of the Property. The limits of such insurance shall not be less than $3 Million covering all claims for death, personal injury and property damage arising out of a single occurrence. The insurer issuing such insurance shall have rating by A.M. Best "A, Class V" or better with modified occurrences and as admitted by Best's Insurance Guide. Such insurance shall include the following additional provisions provided they are available on a commercially reasonable basis: (I) The City of Chula Vista shall be named as an additionally insured party to -such insurance pursuant to the City's requirements KHBL do so; (ii) The policy shall not contain a cross-suit exclusion clause which would abrogate coverage should litigation ensue between insureds and; (iii) The policy shall contain the following severability clause (or language which is substantially the same): "The coverage shall apply separately to each insured except with respect to the limits of liability." KHBL shall provide the City with a Certificate of Insurance upon procurement of the policy as set forth above. 6. Indemnity. KHBL shall defend, indemnify and hold hanmless the City, its officers, agents and employees, from any and all actions, suits, claims, damages to persons or property, costs including attorney's fees, penalties, obligations, errors, omissions, demands, liability, or loss of any sort (herein "claims or liabilities"), that may be asserted or claimed by any person, firm, or entity because of or arising out of or in connection with the use, maintenance, or repair of the HOA Maintained Public Areas. KHBL shall not have any liability under this section by reason of the Transferee's failure to maintain. 7. Indemnity if Transferee. The document whereby KHBL transfers a Maintenance obligation to a Transferee shall be signed by both KHBL and the Transferee and shall set forth an express assumption of Maintenance and other obligations hereunder and shall include the following indemnification provision: Indemnitv. The Transferee shall defend, indemnify, and hold hanmless the City, its officers, agents and employees, from any and all actions, suits, claims, damages to persons or property, costs including attorney's fees, penalties, obligations, errors, omissions, demands, liability, or loss of any sort (herein "claims or liabilities"), which resuit from the Transferee's failure to comply with the requirements of the obligations transferred hereby to Transferee. Transferee shall not have any liability under this Indemnity by reason of another party's failure to maintain. It is specifically intended that the City shall have the right to enforce this Indemnity. This Indemnity may not be '-:;)--03 Sella Lago Grant of Easements 4 amended without the written consent of the City Director of Planning and Building or City Attorney. 8. AQreement BindinQ UDon Anv Successive Parties. This Agreement shall be binding upon KHBL and any successive Declarant under the CC&Rs. This Agreement shall be binding upon HOA and any Transferees upon transfer of maintenance obligations to the HOA or Transferee, respectively. This Agreement shall inure to the benefit of the successors, assigns and interests of the parties as to any or all of the Property. 9. AQreement Runs With the land. The burden of the covenants contained in this Agreement ("Burden") is for the benefit of the Property and the City; its successors and assigns, and any successor-in-interest thereto. The City is deemed the beneficiary of such covenants for and in its own right and for the purposes of protecting the interest of the community and other parties, public or private, in whose favor and for whose benefit such covenants nunning with the land have been provided, without regard to whether the City has been, remained or are owners of any particular land or interest therein. If such covenants are breached, the City shall have the right to exercise all rights and remedies and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breach to which it or any other beneficiaries of this Agreement and the covenants may be entitled. 10. GoverninQ law. This Agreement shall be governed and construed in accordance with the laws of the State of California. 11. Effective Date. The terms and conditions of this Agreement shall be effective as of the date this Agreement is recorded in the Official Records of the San Diego County Recorder's Office. 12. CounterDarts. This Agreement maybe executed in any number of counterparts, each of which shall be original and all of which shall constitute one and the same document. 13. RecQrdinQ. The parties shall cause this Agreement to be recorded in the Official Records of the San Diego County Recorder's Office within thirty (30) days after this Agreement has been approved by the City Council. 14. Miscellaneous Provisions. (a) Notices. Unless otherwise provided in this Agreement or by law, any and all notices required or permitted by this Agreement or by iaw to be served on or delivered to either party shail be in writing and shall be deemed duly served, delivered and received when personally delivered to the party to whom it is directed or, in lieu thereof, when three (3) business days have elapsed following deposit in the United States mail, certified or registered mail, return receipt requested, first-class postage prepaid, addressed to the address indicated in this Agreement. A party may change such address for the purpose of this Paragraph by giving written notice of such change to the other party. , r-tf ......}o>>-J ...-" Bella Lago Grant of Easements 5 If to City: OTY OF CHULA VISTA Department of Public Works/Engineering Division 276 Fcurth Avenue Chula Vista, CA 91910 Attn: City Engineer If to KHBL: K. HOVNANIAN AT BELLA LAGO, LLC 420 Stevens Avenue/ Suite 170 Solano Beach/ CA 92075 Attn: Bob Cummings, Area President With a Copy to: K. HOVNANIAN HOMES 2525 Campus Drive Irvine, CA 92612 Attn: Die90 Santana, Esq. (b) Captions. Captions in this Agreement are inserted for convenience of reference and do not define, describe or limit the scope or intent of this Agreement or any of its terms. (c) Entire Agreement. This Agreement, together with any other written document referred to herein, embody the entire agreement and understanding between the parties regarding the subject matter hereof, and any and all prior or contemporaneous oral or written representations, agreements/ understandings and/or statements shall be of no force and effect. This Agreement is not intended to supersede or amend any other agreement between the parties unless expressly noted. (d) Recitals; Exhibits. Any recitals set forth above and any attached exhibits are incorporated by reference into this Agreement (e) Compliance With Laws. In the perfomnance of its obligations under this Agreement, KHBL, its agents and employees, shall comply with any and all applicable federal, state and local rules/ regulations/ ordinances, policies/ permits and approvals. (f) Authority of Signatories. Each signatory and party hereto hereby warrants and represents to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions and/or other actions have been taken so as to enable said signatory to enter into this Agreement (g) Modification. This Agreement may not be modified, terminated or rescinded/ in whole or in part, except by written instrument duly executed and acknowledged by the parties hereto/ their successors or assigns, and duly recorded in the Official Records of the San Diego =:;"~5 Bella LaQa Grant of Easements . County Recorder's Office. (h) Severability. If any term, covenant or condition of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, covenant or condition to person or circumstance, shall not be affected thereby and each term, covenant or condition shall be valid and be enforced to the fullest extent permitted by law. (I) Preparation of Agreement. No inference, assumption or presumption shall be drawn from the fact that a party or its attorney prepared and/or drafted this Agreement. It shali be conclusively presumed that both parties participated equally in the preparation and/or drafting of this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] .'- -' ........,,, "- J! ~.. 'C Bella Lago Grant af Easements 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first set forth above. "City"; CITY OF CHULA VISTA, a municipal corporation By: Stephen G. Pad ilia, Mayor Attest: Susan Bigelow, City Clerk APPROVED AS TO FORM: By: Ann Moore, City Attorney "KHBL": K. HOVNANIAN AT BELLA LAGO, LLC, a California limited liabiiity company By: ~~ ~ Robert Cummings Its: Autho'rized Agent '"";J C:7 "OJ"" ./ J Sella LaQa Grant of Easements o STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On ~ 2006 before me, H. Doose. Notary Public appeared_12.I!\oen- ())mm1iqr; . personally personally known to me or X proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in hislher/their authorized capacity(ies), and that by hislher/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal H. DOOSE Commission # 1378507 z Notary Public - California ~ Son Diego County My Camm. Expires Oct 6. 2006 If*- -~R _ SIGNATURE OF NOTARY PUBLIC (S E A L) '.'-'- ",.., -,/.~ !.,;Z - - STATE OF CAllFORNIA ) ) ss. COUNTY OF ) On . 200-, before me, Notary Public in and for said State, personally appeared personally known to me ( or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) Is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her authorized capacity(ies), and that by his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the Instrument. WITNESS my hand and official seal Signature (Seal) STATE OF CAllFORNIA COUNTY OF ) ) ss. ) On . 200-, before me, Notary Public in and for said State, personally appeared personally known to me ( or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her authorized capacitYCies), and that by his/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of which the person(s) acted, executed the Instrument. WITNESS my hand and officiai seal Signature (Seal) 3-59 Sella lago Grant of Easements o EXHIBIT" A . leQal DescriDtion .,,,,, I 0 :J--t::' Bella Lago Grant of Easements 10 Bella Laoo Grant of Easements EXHIBIT "B" Plats Showing Public Areas To Be Privately Maintained -" /' I -..r- it' " , "E' " I I , 'I f ! I EXHIBIT -........... I , i .---l ft..AKCEt'-., irI-9 , \ \ \ ,f / - ! ... - .~_.---~' PPlRCfl A+7 I .' /' ! i , i _. .---1- _ PARf;fl A~ SHEET 1 OF 2 I , I I t. ! VIA PONTE: TRESA i I i I '. ; . I I ! j I' flNE '8' --.... ! I I ! f --....... 1 . pARcEL A::z. rD'"''--__'__1 ! __.-~ --1__--..- . /' / r 1- /'-'-r- f / I I I ! I I ! ! I : I I I PARe 1\-12 COR;-; i ! I I I i CARLAZZO LINE 'a' f ' i ! I i,\ "" - L,..-! i , ! \ "'\. PARkL A_i---1r ~- -~----\---1-'-'-"-~' / I I i I I PARCEL ! i , I I I , ! I ! : ! , r I VIA VlGANELLO UNE 'c' t " f I PARCEL A-a I I I. . Ii, I r J j , : I , --~---L_L_L_~__ _ L _ _.SCAlE '"-200' I j I I r .- -- -...----,. --- ~--. - .._.... ....-1 >At?CtL A~ 11 , !!i , f I I 'ARCEL A-4 '~ '...- .~'" , , , , f I i I , Ii !jj - .. .~ """. !::IT; GROuP.sAN DIEGO , . '8(8)505~0435 -,,-,. /"'7 --.,..,,;;;~ I 2_~ B " .' EXHIBIT " SHEET 2 or ~ -. ,91, "0:: ~ :&:' ~ :s: - -- .. I I I i I " i f- ,o- J , I L -----.- LINE 'F' " -- ....~-----..-..-~. \ \ \ \ , \ \ , , I" I " .~_-1 ~1~20f)' ~ ,-;.t;,r GRQUP SAN DIEGO ,': .(~8) ,5Q5':'P-~5 >J 1';::< ,...,....-.-'1(0;:"" ___ 2) ~ it. I I EXHIBIT "C" Maintenance ResDonsibilities Area Parkways within those portions of those public roads hown on Exhibit "B" HOA Maintenance Landscaping in the parkways including irrigation, trimming ~nd pruning of trees, and maintenance and irrigation of urf areas, and maintenance of any project signage or imiiar project monumentation. City of Chula Vista Maintenance Maintenance of curb, gutter, idewalks and pavement. Be!la Lago Grant of Easements '., " l.1- ~'^"~1 17 [...l Page 1, item Meeting Date 04/04/06 COUNCIL AGENDA STATEMENT Resolution Approving change orders requested by McMillin Land Development for the construction of Transportation Development Impact Fee (TDIF) facilities for the portion of La Media Road between Olympic Parkway and Santa Venetia Street. SUBMITTED BY: Acting Director of Engineering +!1 REVIEWED BY: City Manager f J~ 7R. ITEM TITLE: (4/5ths Vote: Yes_No X) On October 11, 2005, McMillin Land Development submitted a payment request for change order reimbursement for the construction of La Media Road between Olympic Parkway and Santa Venetia Street. The change orders totaling $61,066.50 are above the $50,000 limit and therefore require Council approval. Tonight, Council will consider approving the change orders related to the construction of La Media Road, which in turn will be paid in cash credits. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. RECOMMENDATION: That Council: Approve the Resolution approving the change orders requested by McMillin Land Development. DISCUSSION: Backl!round As noted above, McMillin Land Development submitted a payment request for reimbursement for change orders for the construction of La Media Road between Olympic Parkway and Santa Venetia Street. The city had already credited McMillin Land Development for the majority of the construction ofthis project since it was a TDIF eligible facility. Contained within this request were eligible change orders for erosion control, balancing the finished grades, removing unsuitable material, and miscellaneous development costs construction changes that were above $50,000. The City's Directives and Procedures for TDIF Reimbursement/Credit denotes that any single change order or cumulative change orders which increase( s) the original contract amount by more than $50,000 must be approved by the City Council. The following change orders were necessary due to the varying field conditions of the project. Pacific Erosion Control Change Orders (Exhibit 1) These change orders were for pre-storm preventative erosion control measures and post-storm clean-up in accordance with the project's Stormwater Pollution Prevention Plan (SWPPP) and 4-1 Page 2, Item +- Meeting Date 04/04/06 were subcontracted to Pacific Erosion Control for an amount totaling $6,956.50 for the following items: AMOUNT DESCRIPTION $ 450.00 Cleaning out brow ditch along Olympic Parkway, re-bagging off inlets (inside brow ditch), and cleaning inside inlets $1,290.00 Delivering piles stack of gravel bags to Olympic Parkway and La Media and removing old bags alon" inlets and Dlacin" 15 feet chevrons above each inlet $ 712.50 Furnishing rocks at La Media and Olympic Parkway $ 414.00 Pumping out and draining street entrance and inlet water build up trom Friday and Saturday rain $2,560.00 Installing waddle above brow ditch slope at La Media and cleaning trash and dirt from brow ditch $1,530.00 .Installing waddle above brow ditch all the way to the top of La Media, and cleaning brow ditch off La Media & and Olympic Parkway Southwestern Equipment Change Orders (Exhibit 2) These change orders were subcontracted to Southwestern Equipment for an amount totaling $31,540.00 for the following items: AMOUNT $4,103.00 $5,170.00 $5,449.00 $5,170.00 $2,858.00 $2,887.00 $2,858.00 $3,045.00 Marathon General. Inc. Change Orders (Exhibit 3) These changes order were subcontracted to Marathon General, Inc. for an amount totaling $22,570.00 for the following items: AMOUNT $15,558.00 Removing unsuitable areas of subgrade as per soil technician and per City's inspector recommendations. Removing materials to a depth of 6" to 12" and placing fabric and base into the holes Removin extra material from unsuitable soft areas and re lacin it with fabric and base Credit for deductin I 35-feet of as halt concrete berm trom the a roved contract $ 7,687.00 ($ 675.00 These change orders are all TDIF-eligible. A more detailed breakdown of these change orders is included in Exhibits 1,2 and 3. This will close out the TDIF credit for the project. 4-2 Page 3, Item 4. Meeting Date 04/04/06 La Media Road Chane:e Order History 1) Original TDIF estimate: $2,858,732.00 2) Contract bid cost: $2,380,158.56 3) Original reimbursement ofTDIF credit: $ 1,238,758.42 4) Additional storm drain credit: $371,593.00 5) Previously approved credit as of September 22, 2005: $1,610,351.42 6) Current change order requests per this Resolution: $61,066.50 7) Total TDIF credit for the project: $1,671,417.92 8) Variance from the original estimate: -41 % The total of all change orders amounts to 2.57% of the total contract bid costs. The Resolution There is one Resolution for this item on today's agenda, which, if adopted, will accomplish the following: Approve the three TDIF change orders for the construction of La Media Road between Olympic Parkway and Santa Venetia Street. . Award $61,066.50 in cash credits to McMillin Land Development FISCAL IMPACT There will be no direct fiscal impact to the City. Costs associated with this processing will be borne by the Developer. Attachments: Exhibit 1: Exhibit 2: Exhibit 3: Pacific Erosion Control Change Orders Southwestern Equipment Change Orders Marathon General, Inc. Change Orders J:\Engineer\AGENDA\CAS2006\03-21-D6\Agenda for La Media Change Orders approval.doc 4-3 Pacific Erosion Control Change Orders (Exhibit 1) 4-4 Pacific Erosion Control . 5520 Wellesley St., 5te. 100 La Mesa, CA 91942 (619) 589.9042 (619) 469-1327 fax ~~~~~*~~ Douw@o@@ N~ 41 77 TO: .JOB iI: Description of work: ta~4t C~:(r~1;t~) ~~? (~~]:~ ~~~; ~:~ EauIDment Qtv Hrs Rate Amount CAT 926 Loader w/Op. CAT 950 Loader w/Op. CAT D.5 Dozer w/Op. CAT D-4 Dozer w/Op. bCat w/Op. ..ater Truck w/Op. 1 Ton Flat Bed w/Op. Semi-End Dump w/Op. Skip loader w/Op. Truck & Transfer w/Op. Bobtail Dump w/Op. 10-Wheel Dump w/Op. 3" Trash Pump 2" Trash Pump Street Sweeper w/Op. Total -0 Labor Qtv Hrs Rate Amount Foreman wlPick Up I ~ I c.r,. 06 li'<:;C>.N, Operator Laborer c::::- Ie- I?~,OO L"IIJD.M Total ~ 45/J,('J{) Materials Qtv Rate Amount r;.. ~- ... 1 I"" ~ .. 100 - --..:::3- .~v,,_~ -_I 'I .... , , Total -e-- Total Material Total Labor Total E ui ment 6.116 o Total Amount Due Signature: 4-5 Pacific Erosion Control 5520 Wellesley St., Ste. 100 La Mesa, CA 91942 (619) 589.9042 (619) 469.1327 fax ~~~I~~lQ) O[]iJ\:!7@O@@ N~ _ 4662 Ct TO: JOB #: Description of work: DATE: P.O. #: I~i\~;~~~\qi~;t~~ cfhA~~ ~ ;T~(~~~~~/~t<I~~L ~vQ.. ~ ll/\-\~. _ Equipment Qtv Hrs Rate Amount CAT 926 Loader w/Op. CAT 950 Loader w/Op. CAT D.5 Dozer w/Op. CAT D.4 Dozer w/Op. '>Cat w/Op. ....:lter Truck w/Op. 1 Ton Flat Bed w/Op. Semi-End Dump w/Op. Skiploader w/Op. Truck & Transfer w/Op. Bobtail Dump w/Op. 10.Wheel Dump w/Op. 3" Trash Pump 2" Trash Pump Street Sweeper w/Op. Total '"-D Labor Qtv Hrs Rate Amount Foreman wlPick Up \ I 5:).00 ~.LY\ Operator Laborer ~ g Lb.~ LJ6 -66 ., Total 'P ""16./V\ Rate ,20 Amount ',20"'.00 Total Z=.G:C! Total Material Total Labor Total E ui ment Total Amount Due /,2'10.00 Signature: 4-6 P~cific Erosion Control 5520 Wellesley St., Ste. 100 La Mesa, CA 91942 (619) 589-9042 (619) 469-1327 fax ~~(g~G\':7~itJ !'1- JI...-J.,z \10 ~..~ o 0l]\'!7@ tJ(~@ .4668- N~ TO: Description of work: t ~ffi\~,^<2.J ~ ~Lt JOB t: P.O. t: oJ- CrA VV\erlhrl\. ~ Ol7 ,l:tL-/. Equipment Qtv Hrs Rate Amount CAT 926 Loader w/Op. CAT 950 Loader w/Op. CAT D.5 Dozer w/Op. CAT D-4 Dozer w/Op. '>Cat w/Op. ..ater Truck w/Op. 1 Ton Flat Bed w/Op. Semi.End Dump w/Op. Skip loader w/Op. Truck & Transfer w/Op. Bobtail Dump w/Op. 10.Wheel Dump w/Op. 3" Trash Pump 2" Trash Pump Street Sweeper w/Op. Total ~- Labor Qtv Hrs Rate Amount Foreman w/Pick Up Operator Laborer Total Materials Qt Rate Amount .25" . 0 Total il2.. I -$0 -6- ---Q-. Total Material Total Labor Total E ui ment Total Amount Due 11 "-,SO Signature: 4-7 Pacific Erosion Control 5520 Wellesley St., Ste. 100 ... La Mesa, CA 91942 (619) 589-9042 (619) 469-1327 fax OIJ1)\V@O@@ ('5)~rg~Q.&.~1r\\ !f"'UIJI-I4-<>l. J' 1tlJ; N~ ;~76 W TO: JOB #: Description of work: Enuinment Qtv Hrs Rate Amount CAT 926 Loader w/Op. CAT 950 Loader w/Op. CAT D.5 Dozer w/Op. CAT D.4 Dozer w/Op. '>Cat w/Op. hater Truck w/Op. 1 Ton Flat Bed w/Op. Semi. End Dump w/Op. Skiploader w/Op. Truck & Transfer w/Op. Bobtail Dump w/Op. 1 a-Wheel Dump w/Op. 3" Trash Pump 2" Trash Pump Street Sweeper w/Op. Total t}-- DATE: P.O. #: Labor Foreman w/Pick Up Operator Laborer 'co Total Materials Qtv Rate Amount Total .A- Total Material Total Labor Total E ui ment Total Amount Due Signature: 4-8 ~acific Erosion Control 5520 Wellesley St., 5te. 100 La Mesa, CA 91942 (619) 589.9042 (619) 469.1327 fax riS)~(g~U~~~ ~l 1/- fLHJ; o ~) 001J'\V@O@@ N:: 4678 TO: JOB iI: - 'W--\.\\\ "'-- Description of work: DATE: P.O. iI: Equipment Qty Hrs Rate Amount CAT 926 Loader w/Op. CAT 950 Loader w/Op. CAT D.5 Dozer w/Op. CAT D.4 Dozer w/Op. 'bCat w/Op. ..ater Truck w/Op. 1 Ton Flat Bed w/Op. Semi.End Dump w/Op. Skiploader w/Op. Truck & Transfer w/Op. Bobtail Dump w/Op. 10.Wheel Dump w/Op. 3" Trash Pump 2" Trash Pump Street Sweeper w/Op. Total Labor Foreman wlPick Up Operator Laborer Total Total /fO, ()() Total Material Total Labor Total E ui ment Total Amount Due Signature: 4-9 Pacific Erosion Control 5520 Wellesley St., 5te. 100 La Mesa, CA 91942 (619) 589-9042 (619) 469.1327 fax OUU'(Y@O@@ \D)(g\Q~Dldgrcr' ~!IH"1~ Il.!:?I N:: . 4679 @ Description of work: Equipment Qty Hrs Rate Amount CAT 926 Loader w/Op. CAT 950 Loader w/Op. CAT D.5 Dozer w/Op. CAT D.4 Dozer w/Op. !>Cat w/Op. Water Truck w/Op. 1 Ton Flat Bed w/Op. Semi-End Dump w/Op. Skiploader w/Op. Truck & Transfer w/Op. Bobtail Dump w/Op. 1 a-Wheel Dump w/Op. 3" Trash Pump 2" Trash Pump Street Sweeper w/Op. Total a JOB #: / ') -('I JOB NAME:;11oil,llti JOB LOCATION: I/, /1<. '-.: DATE:- /3 -- (7?- P.O. #: J )..il!-<J;,. !../ i* . 'l, J L,o 0 Labor Foreman wJPick Up Operator Laborer 22.00 '-I'tO.O{) Rate Amount 50.00 0.66 Total ~"'O.CJ6 Materials. . Qtv Rate Amount :LJ-Ih ~<-;df. , 7'i~4u.:; ~M\ 15'.40 .6() Total '/' 1340. ClO Total Material Total Labor Total E ui ment Total Amount Due Signature: (Contractor's 4-10 Southwestern Equipment Change Orders (Exhibit 2) 4-11 SOUTHWESTERN EQUIPMENT 5520 Wellesley St., #100 La 'Mesa, CA 91942 (fi)19)469-5811 (619)469-1327 fax \ .. ) UIJli\'!J(Q)lJ,... ;@ N~ 3303 ro: M- 1-4.llin I or..J l"IP..t. --- Ai-l.. ~-I c")~:I!!L---- -.-- JOB t: JOB NAME: DATE: P.O. t: Description of work: --- e....d- <.;,4". uof L.... M~o ~d,~_=,~ ~ nl;~pl~ f'~\ ~. -tho. Equipment CAT 140 Blade w/Op. CAT 613 Scraper w/Op. CAT 615 Scraper w/Op. Skiploader w/Op. B' '.at w/Op. ~a. ,I,.,..ck 10 Ton Roller/Bal'e i Ton Roller/Bare '.'--- ..- .,...-"'--- :at !J50 Loader wlOp. :at 966 Loader w/Op. tobtail Dump o.Wh..1 Dump .- --- . ~ --- --.-.- ._-- .---- -- Total Labor Amount Grade Checker Operator Labor Driver Total .2 Materials 6" Ginneys 8" Ginneys ..Ginn-=~_~h~~~~____ 4' Lath Amount Total Total Material Total Labor Total E ~i ment Total Amount Due Signature: _;~~ (Contractor's Acceptance) 4-12 SOrlTHWES:rERN EQUIPMENT , 5520 Wellesley St., #100 . La Mesa, CA 91942 (619) 469.~ 811 (619) 469-1327 fax '\ UI]UI:!J@IJ@@ N~ 3305 ..----- 0: Iv\... t.AiUin L.ad~.., -'- A4.I-v, i2~ O/in-.nn ...--'- --.------.--- ." ..-----. ----.-.---- t)escription of work: .JOB H: .JOB NAME: DATE: P.O. #: ---. t::f- CI;"""--:- pt..V I ----- ----" .." ------ ._ R..,hrr~ -t'ce.- ~~de-__H&_I-o.. ..l1ed;o.. __,Hd.. ~ <th HOME JOB: _ VENDOR: ~-:I.\L -' ?"D.~'.E1.P'Qffl2)-een CONTRACT NO..~~" JOB NO.(t)/1' wJ _ COST CODF/')~ ::56 ~/DlrJ _DP-TE Equipment CAT 140 Blade wfOp. CAT 613 Scraper w/Op. CAT 615 Scraper w/Op. 5klploader w/Op. B,' ....t w/Op. ;. Jr..uck 10 Ton Roller/Bare i Ton RollerfBarc .at 950 Loader wfOp. :at 966 Loader w/Op. lob.t~~. a-Wheel Dump - -- -'--- .___.._n._' ...--- -"- ---- -' , ! ----, ---' .-.. ------ -- ---- ---- - . .-.--------- ~, . Total P-PPROVEO: Labor -- Qty Hr. Rate Amount Grade Checker .1. R CjL:; Operator Labor ~ R "'?/. :J~<;<- -- Driver .- Total 7.LX Materials --- Qty Rate Amount .. 6.~E~!1ney~. '1 .<)(-1 ,,3<L/ an Ginneys .." _n~"'_._~_ .---. .. -- , Ginney Chasers ? /"i, nIL 4' Lath -_.-.. -- ..--. - --' .---.--.--.-. . n'_"~. --, -- -~FJ Total -I i ---I - ....---.. Total Material I .Total Labor Total Equi ment L- I'.. ! Total Amount Due Signature;...; ~~ (Contractors Acceptance) ~~i,unL-.~ $~rjl2..iSO.11D 4-13 SOUTHWESTERN EQUIPMENT UO\.J\'!7@O@@ N~ 3304 , , 5520 Wellesley St., #100 La 'Mesa, CA 91942 (619) 469.5811 (619) 469.1327 fax ! --..----.-" .. JOB iI: ~tL_lArJ~ A-I-+. ~- -- JOB NAME; JOB LOC,4TION: - DATE: Tv P.O. iI: ----" Description of work: rl- nJin-t~l'" I pi(. '~/~ ------.:-------- ---. -~\ _~-.eqsi-~Lde..---aL.J.9.-MeJ<&---&I ~ -------..---.-- .----.------ Amount L. Equipment _ ___ CAT 140 Blade w/Op. CAT 613 Scraper w/Op. -- Hrs Rate Amount La~ Grade Ch ,;ker Operator Labor Driver CAT 615 Scraper w/Op. Skiploader w/Op- a,' ~.t w/Op. ______ ~_ - I Na.._. Truck - - 10 Ton Roller/Bare -- ----- Materials 6'.' GinneY5- 8" Ginneys Ginney Ch' 4' Lath -.----- --- ,sers i Ton Roller/Bare --..--- :at 950 Loader w/Op. ~at 966- Loader wlOp. lobtai! Dump a-Wheel Dump \'f\()~ e."1:.Io.I lol~L Total Total Total A~~~1t Due Sig"ature~---> - (Contractor's Acceptance) 2-5 iDQ ~m -.--.. Total Materoial Totall.abo[" Total E ui ment-"c:; .-----.---- - ~-_.. 4-14 SO" ITHWI:S:rERf" EOJIPMENT ill ill\V/'lCiJII(";('-) N~ 330 b 5520 Wellesle , St. #1 00 La "Mesa, C .\ 91 142 (619) 469-5811 (619)' '>9.1327 fax -\ I 1 -'-'" JOB NAME: JOB N: 0: M-N\illin Lood ""~- A H. il.-,b-r+..ol;f'(JOO DATE:" P.O. ,': Description of work: ------ -- ~__ ::B....""-.Lonce__..we.st __ 5 Lde. "-.-Of__LA__~Io.-Rd-- ....., >i-h ~ nkmp'c: PK1\ ..-.----.---. n_. ------------ Equipment .-- Ot~ Labor Grade Checker --- Operator Labor Driver Amount - .-- -.-----_._- -" Total CAT 140 Blade wl~ CAT 613 Scraper w/Op. CAT 615 Scraper w/Op. Skiploader w/Op. Sr' ~"at wlOp. Na. 'Truck 10 Ton Roller/Bare j Ton Railer/Bare ---......- "- ..__.___..___ ,n__ Materials Oty Rate Amount 6" Ginneys j -.:J.C-I --:::J.Cj ---.--. ----~._- 8" Ginneys Ginoey Chasers ;z... ~ ~ ~J:.~!!!----- .-'-" Total '-)(} Total Materia.- Total Labor Total E ui ment _J. ...1...__ :.t 950 Loader w/Op. :.t 966 Loader wlOp. lobtai! Dump O.Wheel Dump ..----" ----- ~~~~~-" Total Total Amount Due Signature,',;...- ~~~ (Contractor'S Acceptance) ---- .--- . .----. --~.. ----- - 4-15 SOUTHWESTERN EQUIPMENT 5520 Wellesley St., 4.;100 . La Mesa, CA 9194.2 (619) 469.5811 (619) 46!)-1327 fax .. \ LI ITiJ'\!7@D0J@ N~ 54 97 -------.-- .--.---.--'-- '0: Mr. Millin Lo.~_cLJ'1E:)' ~ ol;""'Qn JOB #: JOB NAME: , DATE: P.O. #: r..,.I- ru""" :3"""'....1.:. o..\. -+\.e ~fk ~ aliI'''',!,'''''' ~'~'f -- ...~r 1'~lcrd r:F 10 .ue..-4iO , I)escrlption of work: Equipment Qty CAT 140 Blade w/Op. CAT 613 Scraper w/Op. J.. CAT 61S Scraper w/Op. Skiploader w/Op. ao~O:.at w/Op. ;. >rruck --- Labor Grade Checker Operator Labor Driv~!-- ...... Qt Hr. Rate Amount -. .- Total 10 Ton Roller/Bare i Ton Roller/Bare :.t 950 Loader w/Op. :.t 966 Loader w/Op. lobtall Dump O.Wheel Dump --'----- Materials Qty Rate Amount 6" Ginney.s -" .;11-1 ::l1J 8" Ginneys Ginney Chasers 7- 7'2. ---::;Jl 4' Lath _0"-'-'-'-- _L-__.. 1-)7) Total Total Amount Due .Total Ma1erial Total Labor Total E ui ment -'''- ._.~~~ Signature: ...p ,-*' . (Contractor's Acceptance] 4-16 SOUTHWEStERN EQUIPMENT 5520 Wellesley St., # 1 00 La 'Mesa, CA 91942 (619) 469.5811 (619) 469.1327 fax uou'\V@o@@ N~ 5496 .. ..~- < -- roo M:l1iJ1;... 0wj ~. AH R;;-h>r..\. 01;,..,.,., .- JOB #: JOB NAME: . DATE: P.O. #: Description of work: C,,+ t"iXh. 3r'"""...k. ""'" _..1J-. A'1.C:-+ """lde ~ L,.,. ~.a J .,.,.. AI. oi= .OknpLC POO"l<'uo.~, Equipment CAT 140 Blade w/Op. CAT &13 Scraper wlOp. CAT 615 Scraper wlOp. Skiploader w/Op. Be"~at w/Op. ;...~ck _.- ...-- .-- ---- - 10 Tan Railer/Bare 5 Ton RolI.,tB.ue :.t 950 Loader wlOp. . :.t 1&& Loader wlOp. Jobtall Dump O.Wheel Dump .--- - ----- - I 1=--. L-L= To\al Labor Grade Checker Operator Labor Driver Total Materials Qty Rate Amount 6" Ginners " ?L.J ;:lW 811 Ginners Ginney Chasers .2 I:>' -,;).(~ 4' Lath " ~'-Q <i.6 Total -=rq Total Material r... , ( ') Total Labor -/ ~ r) Total Enuioment :/n .;/ '). )() Total Amount Due ,~ .rrJ J Signature:_~~~/.4"'---? ,- (Contractor's Acceptancel. 4-17 . SOUTHWESTERN EQUIPMENT 5520 Wellesley St., #100 La "Mesa, CA 91942 (619) 469.5811 (619) 469-1327 fax - ._- TO: rv~c I", /1; r LA+ f'n: ~ '-'''I-r! t'~.~:J"...f ,. r C: Ii ''r''("f'i Description of work: Duu\2@O@@ N:: 5492 (j) JOB #; JOB NAME: f} I !/- ( - <. DATE: P.O. #: - "I !'">."rl .'\ 1\.,.. .~..(""-"..j. -::-~I~~- "C \-\......,=-.n\~.-x r,~ ci,'",,~" i (" I s-.J\,d..., f,,:-'-k; I - ---< --- ....----- Equipment Qty __ Hrs Rate Amount CAT 140 Blade w/Op. ,1 a, Id'J, , -19;--1 CAT 613 Scraper w/)p. , 9 1J7 I ()q(..., CAT 615 Scraper w,.()p. Skip loader w/Op. - Br"~at w/Op. - - W.....r Truck 10 Ton Roller/Bare 5 Ton Roller/Bare Cat 950 Loader w/Op. - Cat 966 Loader w/Op. .- Bobtail Dump 10.Wheel Dump - ~_L Total ) ()~(~ Labor Grade Checker Operator Labor Driver Qty Hrs Rate Materials Qty Rate Amount 6" Ginneys L ;:)Lj ....:ll! 8" Ginneys Ginney Chasers 7 I")" .:J/_ 4' Lath Total ~n Total Material Total Labor Total E ui ment Total Amount Due Signature:__ ~~~~/ (Contractor's Acceptance) 4-18 SOUTH\ IESTERN EQUIPMENT 552t Wellesley St., #100 La Mesa, CA 91942 (6.19) 469-5811 (619) 469-1327 fax . \ 0: U l.ilJ '\V (2) U C95 CE N~ 5495 ..--" -------- JOB t: JOB NAME: " F}.:vI'I DATE: P.O. t: O..cription of work: Cl.. 4 0 wi-. :Y""'de 0'\ p~ t~ \~-+ ~.'cJe 6f ~In.. c.... rl\.. Q+ ~'C: Equipment CAT 140 Blade w/Op. CAT 613 Scraper w/Op. CAT 615 Scraper w/Op. Jklploader w/Op. !lC"" ~8t w/Op. N~. .1'ruck 10 Ton Roller/Bare i Ton Roller/Bare :.t 950 Loader w(Op. :.t 966 Loader w/Op. lobtall Dump o.Whee' Dump ._- --- r:=I Total Labor Grade Checker Operator Labor Driver Materials 6" Ginneys 8" Ginneys Ginney Chasers 4' Lath .___u.__ Qt R.t. Amount ------" -"-'-~-- Total Total Material Total Labor ~ Equipment Tot". Amount Due ~-.~ Signature: ____ -. .... ..r-~"'-'" (Contractor's Acceptance) 4-19 Marathon General, Inc. Change Orders (Exhibit 3) 4-20 -~, ~;' '\ -A"" ,~~ ';: ~' '\"'" .............1.' ~u.- 1Ic"561.~" ~ '-I-..' 'J? ~]ent: ."E'< (;. ('f\ ,\ \, V\. " / \J .1 , . \.,;.:~~,b " me; ~\'!}iI\'co>\~A /Job Location: L- ^ 1\'\ ( C\ \ 0, MA """'A THON GENERft ~ , INC DAILY TIME AND MATERIAL REPORT ..., l.::1 Labor Quantity Rate Extension \O'/L cP7 7()3.~O Foreman w/crew truck Equipment operator or grade checker Laborer B <(;).33(. Equipment Bare Operated Quantity Rate Extension /40 (;.~ ~\",,.i.c.. ''/ 1 oil. 1</3 t5J/5O <0\'2.." ( <Sc. ",,-n- (" V io'/2 150 1575 :Ie.. \00 "1>d\~r 'X s'1-z- /33 )51.:50 O-(J -22- ~:o\\~\ 1)\ S" qj -'-ft? 0 h.:::>c'\" S'LI r) X \D'l. q, 155 so ~~-\..\ '\\'~'C:~- ''1. - '-/1 dOS i) Material and Delivery C- A,~ ((.C"\:J~N-& A..",:-<:,,<.,,}y:, \)..~ (f\,,', p, G,c)o -/.. f=..-.ior-'L. Quantity Rate Extension ~S1t;I>) i G:i 7J-NO "3 0:><Uc:;. .5'-/C Ilv;)O Profit & Overhead % Totalthis ReDDr! /5:55!.<7:. I accopt and ogrwo 10 tho O. harg.. Ind nomlllot,d lbo.l. '"m In luthorlzed rwprwlOntoUyo Ind ~ge~ ~11 ollho owner or conlrlctor. I Ig"o thlt III woll< tilled lboye I, beyond the lOOP' 0' any ,.I0Il ../ r / contract, and 10 conolderwd em woll<. ~ /., '/ 1/ L.t-. ~-:tJ~~ 7"'/d1b' ./J.::...~ V Owners or contractors representaUve Date' .fM rathon General Inc 2002lO8fMaruIhon glnarallme & Matlr1aJ flPOrlr:1ff / 1 , Date: I.{ l"i / 6~ '-'..><'4.-\<"i.d<, o 3-1c'i 82 '''2.. Job' wo. PO, Notes ~ ~ :t <1::] ,~' ~ !' ) V} .2 ..7 'J. Z y' ~ .;> o .:;>j, t. L o J. ~ ~~j o ~ './1-'" .:J/ <: i. '1' \1 -i '1 ...J ,1 .'f- ,J1 ~\J_~ ? ..,; CK 1'\$1 ~ ~ ~ ~ t '-6 ~ . If -f "'~ -::'- I fl"0 4!rc/o~ Date ~ o j) t'1 1\ .. N '- 11 ~ o ____ cC:> _ c:C> ____ c:C> 4 LI c:C>...._...c:C>_cC:>____.a::::::>_ ~ ~-\ ,-;::~, ' , /~-'i-" ~, .~"' \. \ . ~ " J MA --A THON GENERJ'. I INC ~ "', (".J , '1'<;: c"\. \~ , DAILY TIME AND MATERIAL REPORT Date: '-\ Iz.lc.;~~ !--, (,1. ~ 1Ie# 551~J:" ' ~~~nt: ./~ L ~,,(\ \ \ \ \ A "':'o.<'~-;-c\"-'f :;/ 0 .. N \ "" \. '':J '1~~ ..-.!o~:ame: ' c~ \ c:::..\" '.:I~. "'-'L,\ Job. o ~.- <-.'"\ .. .,,/ - . LA 1\ '\.C ,\ l c-_, 8ZZL\ Job Location: WO. PO. Labor Quant~y Rale EJdension Notes Foreman w/crew tlUck -q /07 ;;U,,? Equipment operator or grade checker Laborer /' . ..-.-- LfY6'rJ ~ '" ..30 /5 .; /~r t' JFY'; ,I}J..y-. I! ty1 } ~ , Equipment Bare Operated Quant~y Rate Extension ( 1 n6~.t.o .li'\j/LYJuvE OUT j J ,I \2 b ~\U(\c 'i. ~7 JI.I'/ IOOr if' oj .oJ S. 0=.,()~.,r- .'/.., l\ { - (P \"J L 150 1.00 ~ _ Lr ..~ J '-.."_::r'.:~~ --- '<- i '2- ?3 1/./. pi- \1'0 ( -:::I: Q~ \0(::., '?-c\\-<; "- l\ /33 .... ) 55;) ;J j (JD'2Z ~\? . \\ ..- ''/. Z qp - -"..... ...;" 11(" g is ,A V fQ,c\ <:' D ''/... ~I f)/ 657 '( "" .::-:''L~\ .. , , n ~ t .' ..-r .~ \J t \i .J ~ Malerlal and Delivery Quant~y Rale Extension t 'V ((('\..~"'~(' p...,c IT: <; \c .'~''ic\ Zc..c."" '.>~t;/< ,; C.~\?:::'. 3;2 ex) , :1 1 D ~ ('''I" \:., Cr::()c'l.. 0,_\:1,' \ C. Z IU\\~ S'-Iu loto <.I j /1 e:J. J ,~ r: j -- Profil & Overhead % ,) '" <:: Total this ReDDr! '7IKf7,CP /.# J laccapt an~ agralto tho Cha~~ ftom.lltlo~ abovI. lam an authorlz.~ ropIWHnlaUve an~ agr /L R of tho or contractor. I I that aJ work IIslad :Zla btyo~ tho _pa of any ox~ './n '1-----' 1$iitract: an~;oldlrod o'!J work. Io~ ~ ~!d .,11 I r- ......:: Lf '/1. 0'3 ~?v if! '-\ 15"/0'_<-:' Owners or contractors re resenlallve !:IaiB' alhon Generel, Inc Date p 200V08IMarulhon gen.~ 1m, & Material reportl;dt \ -A-22 ~~~~~~~~~~~~~~~~~~ SUBCONTRACTOR: PROJECT NAME: CONTRACT NUMBER: COST CODE: HANGE ORDE~QUE~ Marathon General. Inc. 1511 S McMillin Olav Ranch. SPA II. Vlllaae 6. La Media Road 061060-61 *IDto~ 03363_ gOL c\ De:lcrlptJon of Change Orrler Request: uct AC Berm 135 If. 5.00 - 75.00 Check One Box Only:' D Add .....',..----...... '~ m Deduc0 D Other (See Explanation Above) The Sum of: Six hundred sevenIY five and 00/100 Dalla.. $ 675.00 . !Jndsr no c/lCumstance will AdditIons and Subtractions be Ilsled on the $8nJ8 change orOer_ Each action shaH be submitted by separal9 form. Change ~ not foJJow/ng ptDCfIdure wiU be rstum8d 10 the Subcontractor Hsred above. c1~~ COrD. SecretarY sUbc07_' or Representative (SlgnatureITltle) Januarv 13. 2004 Date ,tP ~ m ~ a rt1 ~ai).; , E U ;' ~. ~ ,.:..>; : [8 8 B lu04 ' i By /~~~RECr:L- f Change Order No.: 0 o See Attachment for Breakdown Contractor Processing Only Approved rr' Disapproved D De:lcffption of Change Orrler Approval/Disapprova/: ~.,.......~ //R5" /?a:-/78pdd ----- - ~..A'4/ Field superlnte!)lfe~ ;:2. ,< 5" rJ..y Date Original Contract Total: $ L/~ 0 L/ (tS"'dO Total Deductions: $ LS-OO~ Total Additions: $ _ ;.jO j.,/(I r. . RevllllldContractTatal: $=:JiR'ft qat. B_ Final Approval 1.- €--_04- Date r , I (";,~.. :" l" I"~ "i ~ P , ~ ;'~;';'-...:;-',~':-l ..t1_ ''',...I.-';';t.,U~'td~5'..:1 r--' . i I I FEB 4 2004 j REC1:1\iFO RV. '''Tr 4-23 RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING CHANGE ORDERS REQUESTED BY MCMILLIN LAND DEVELOPMENT FOR THE CONSTRUCTION OF TRANSPORTATION DEVELOPMENT IMPACT FEE (TDIF) FACILITIES FOR THE PORTION OF LA MEDIA ROAD BETWEEN OLYMPIC PARKWAY AND SANTA VENETIA STREET WHEREAS, the City entered into an agreement with McMillin Land Development, which authorized McMillin to construct required improvements of La Media Road between Olympic Parkway and Santa Venetia Street to be reimbursed from the project funds and; WHEREAS, in the course of constructing the project it was determined that additional items of work which were not previously included in the original contract needed to be constructed as part of the required improvements of La Media Road, thereby necessitating the approval of certain Change Orders to the contract, and; WHEREAS, McMillin has completed the required La Media Road street improvements, and; WHEREAS, McMillin has submitted a request for reimbursement in accordance with the terms of the agreement, for both the original contract items and the additional Change Order items shown on Exhibits 1,2 and 3, and; WHEREAS, City staff performed an audit of the project to verify the cost of the project and further verified that the required improvements have been completed in accordance with the project plans; NOW, THERFORE BE IT RESOLVED, that the City Council of the City Chula Vista approves the change orders as described in the attached agenda statement including Exhibits 1, 2, and 3, requested by The McMillin Land Development, for the construction of La Media Road Improvements. Presented by Approved as to form by Leah Browder Acting Director of Engineering ~a ~ a.. -t~ Ann Moore City Attorney 4-24 COUNCIL AGENDA STATEMENT Item S Meeting Date 4/4/06 ITEM TITLE: Resolution Approving the Final Map of Sunbow Villas, ChuIa Vista Tract No. 05-03 SUBMITTED BY: Acting Director ofEngineerin~ ~/I . City Manager Ii r If? (4/Sths Vote: Yes_ No.x...J REVIEWED BY: On March 1, 2005 Council approved a Tentative Subdivision Map for Sunbow Villas, a project consisting of a condominium conversion of 202 multi-family units. Tonight's action per Government Code Section 66474.1 will allow the Final Map to record, converting the existing apartments into condominiums. RECOMMENDATION: That Council adopt the resolution. BOARDS AND COMMISSIONS: Not applicable. DISCUSSION: Chula Vista Tract No. 5-03, Sunbow Villas, is a 202 unit condominium project on 12.46 acres located in Rancho Del Sur Phase I, Unit I, in Sunbow, located at the northeast comer of the intersection of Medical Center Drive and East Naples Street. All discretionary action was taken with the approval of the Tentative Map for the project on March 1, 2005 by Resolution No. 2005-067. Government Code Section 66474.1 states: "A legislative body shall not deny approval of a final or parcel map if it has previously approved a tentative map for the proposed subdivision and if it finds that the final map or parcel map is in substantial compliance with the previously approved tentative map." Tenant Notifications & Relocation Assistance: Under State law, condominium conversions require notifications to tenants at several stages during the mapping process. In conformance with State law, two of the required notices were given prior to the public hearings on the tentative map, and more have been, or will be, given before the tenants must vacate a unit and that unit is sold. The City received several complaints from current tenants who believed that they were not being treated fairly by the Developer, Pacifica Sunbow LP, during the condominium conversion process. One complaint concerned the Developer evicting tenants before proper notification had been provided (i.e., 180 days before the requirement to leave). Once staff was made aware of this issue, the Developer was directed to cease evicting tenants until proper noticing had occurred and the Developer complied. Based upon documentary evidence provided by the Developer, staff now believes that all notifications required to this point have been properly served. 5-1 Page 2, Item ~E Meeting Date 4/4/06 The Tentative Map application was filed by another company, CBRE, who offered a tenant assistance program as part of the tentative map application (see attached letter dated February 2, 2005). That program was included in the conditions of approval for this map. Another complaint that staff received from the tenants was that the current Developer, Pacifica Sunbow LP, was not abiding by the approved assistance program. Specifically, the tenants complained that Developer established an arbitrary date in June for existing tenants to be eligible to receive a $1,000 relocation payment. Staff reviewed the original assistance letter with the Developer and it was noted that there were some ambiguities in the proposed program. For example, the letter offered the relocation assistance to "eligible tenants in good standing" but did not define what that term meant. It also did not specify when the relocation would be paid. Staff advised the applicant that all tenants as of the tentative map approval date (March 1, 2005) were considered eligible and should have received the assistance. The Developer therefore agreed to provide the relocation assistance five days before the tenant move out date, and to make a concerted effort to locate and pay those tenants who had already left without receiving payment. The Developer has provided additional information documenting the steps they have taken 1) to provide relocation assistance and purchasing assistance to current tenants, and 2) to fmd and notify those tenants that have since left of the availability of assistance that was mistakenly not provided at the time of their departure (see attached letter and table dated February 1, 2006). Over 75 checks have been sent to those departed tenants by Pacifica. Given the confusion and concerns created by the Developer during the Final Map preparation period, Planning staff and the Developer organized an informational meeting with the remaining tenants on January 12,2006 (see attached meeting agenda). This was one of three tenant meetings the Developer scheduled to make sure the remaining tenants were fully aware of the noticing requirements involved with this condominium conversion process and the assistance the Developer was offering. Some of the tenants were still concerned about the conversion of the apartment complex and felt the Developer should provide more assistance than is offered. Staff explained that the City of Chula Vista does not currently have an ordinance mandating relocation assistance and that amending the ordinance will likely be included as a goal within the upcoming Housing Element Update. Recent Tenant Discussions A discussion with tenants recently has resulted in the Developer depositing funds for tenant relocation assistance with the City's Finance Department. The Finance Department will act as an intermediary for those who did not receive relocation assistance beginning March 1, 2005. The Developer will make further efforts to track down tenants who did not receive their checks. This will be done via a newspaper ad and by purchasing forwarding addresses and searching phone books. The Developer will also send a letter to all remaining tenants explaining that they will receive their $1000 relocation assistance, minus any delinquent payments, from the City acting as a trustee for the Developer's relocation funds. Notices of termination submitted by tenants will be transmitted to the City immediately upon receipt by the Property Manager, at which time Finance staff will be authorized to process the relocation assistance payments to the tenants. 5-2 Page 3, Item Meeting Date ~ ~ 4/4/06 Although the Developer made some errors in notlcmg and assisting tenants since the tentative map approval in March 2005, staff believes that those mistakes have now been rectified and recommends approval of the Final Map. Final Map: The Final Map was reviewed by the City Engineer and the Director of Planning and found to be in substantial conformance with the Subdivision Manual and the approved Tentative Map. The Developer, Pacifica Sunbow LP, has paid all applicable fees associated with the filing of a fmal map FISCAL IMPACT: There is no impact to the General Fund. Any funds paid out to the tenants will be funded through the developer deposit account established by Pacifica Sunbow LP. The Developer has paid all fees and other costs associated with the proposed Final Map, including a cash deposit for $70,000 to secure the construction and inspection of on-site water quality facilities. Attachments: Attachment I: Plat of Chula Vista Tract 05-03, Sunbow Villas Attachment 2: Developer's Disclosure Statement Attachment 3: Developer's Letter & Table Dated February I, 2006 Attachment 4: Agenda for January 12 Tenant Meeting Attachment 5: CBRE Letter dated February 2, 2005 File No. EY-428 J:\EngineerIAGENDAICAS2006\04-04-06IAii3 for Sunbow Vi J.doc 5-3 ATTACHMENT .~ ~o <1.1) \ ~~ ~ f'<4p, """"'3 ~~!!.Un ~ .1 c5 ~. 1/. pOR 1,. ~~p . San Diego land Surveying & Engineering, Inc., 9665 Chesapeake Dr., Suite 445 San Diego, CA 92123 (858 )565-8362 ).. AlTACHMENT 1.. City of ChuIa VISta Disclosure Statement Pursuant to Council Policy 101-01, prior to any action upon matters that will require discretionary action by the Council, Planning Commission and all other official bodies of the City, a statement of disclosure of certain ownership or financial interests, payments or campaign contributions for a City ofChula Vista election must be filed. The following information must be disclosed: 1. List the names ofall persons having a financial interest in the property that is the subject of the application or the contract, e.g., owner, applicant, contractor, subcontractor, material supplier. Pur itir Ci SI JY1\oOW Lv . nil ~ \)@,c.,;rli'.f1tin. \ \ (\\/i',s-1wv 1\-\7., LoP. 2. If any person" identified pursuant to (1) above is a corporation or partnership, list the names of all individuals with a $2000 investment in the business (corporation / partnership) entity. .P i1 (" Sill' \orw \ rlr". 1707=R.n tYJ mi Iy 1iuoJ c4,:;-\e A tvir.l.t/ 3, eco'2- 3. If any person" identified pursuant to (1) above is a non-profit organization or trust, list the names of any person serving as director of the non-profit organization or as trustee or beneficiary or . trustor of the trust. Jjnnp I - 4. Please identify every person, including any agents, employees, consultants, or independent contracto~ou have assigned to represent you before the City in this matter. r,~ V;nin. J:J \ ,;-, -:f,rrl I\\e..; \ 5. Has any person" associated with this contract had any financial dealings with an official** of the City of Chula Vista as it relates to this contract with the past 12 months? Yes _ No V 5-5 _l , City of Chula Vista Disclosure Statement If yes, briefly describe the nature of the financial interest the official'" may have in this contract. ~h) 6. Have you made a contribution of more than $250 within the past twelve (12) months to a current member of the Chula Vista City Council? No V Yes _ If yes, which Council member? 7. Have you provided more than $340 (or an item of equivalent value) to an official" of the City of Chula Vista in the past twelve (12) months? (This includes being a source of income, money to retire a legal debt, gift, loan, etc.) Yes _ No V If Yes, which official'" and what was the nature of item provided? c/7~ Date: 6- 5 - OIQ Signature of Contractorl Applicant Shlhl M f?i'""I'\,y \ Print or type name of Contractor/Applicant * Person is defined as: any individual, finn, co-partnership, joint venture, association, social club, frat=al organization, corporation, estate, trust, receiver syndicate, any other county, city municipality, district, or other political subdivision, - or any other group of combination acting as a unit. * Official includes, but is not limited to: Mayor, Council member, Planning Commissioner, Member of a board, commission, or committee of the City, employee, or staff members. 5-6 .~ Su1ibaw VILLAS ATTAaWENT -3 February 1,2006 Mr. John Schmitz Principal Planner City of Chula VISta Planning and Bunding Department 276 Fourth Avenue Chuta Vista, CA 91910 RELOCATION BENEFITS LETIER Re:" Sunbow Villas (Relocation Assistance) 75D E. NapJes Court Chula Vista, CA 91911 Dear John, Sunbow's Relocation Assistance ($1,000) has been sent to 110 tenants to date which inciudes past tenants. In addition, we are in the process of cutting more checks as tenants turn in their notices to vacate. We'd like to propose the fonowing Relocation Assistance Guidelines for Sunbow Vinas: 1. All tenants who signed a lease on or before June 23, 2005 and vacated after June 23, 2005 will receive Relocation Assistance In the amount of $1,000 (one thousand dollars) per unit regardless of their standing. 2. Relocation Assistance check will be made available fIVe days prior to tenant's mO'le-Out date. To ensure a timely issuance of check tenants should turn in their notice to vacate to Luisa Liberto, Property Manager, with their move-out data and phone number. -3. All tenants purchasing their unit and transferred to another unit (depending on avanability) due to the renovation of the unit to be purchaSed will be issued a relocation check for $1,000 (one thousand dollars) per unit in adcfrtion to the $3,000 (three thousand dollars) eroon towards the unit they purchase. . All tenants that are current in paying their rent will receive their security deposit back in full. With your blessing we would like to send the attached letter litted "Sunbow Relocation Guidelines for Tenants" to the tenantS infonning them of what has Deen recapped In this letter. We appreciate your consideration on this matter. If you have any questions, please feel free to contact me at 619.754.3503 or 619.296.9000x235 CAt:- Christie Po Regiona"1 Supervisor ce: Deepak Israni 5-7 sutow VILLAS PROPOSED TENANT LETTER February 1, 2006 Tenant Name(s) Address City State Zip Dear Resident(s): In response to your numerous inquiries regarding relocation assistance, we're providing the following guidelines to help answer any questions you might still have. Sunbow Relocation Assistance Guidelines: . All tenants who signed a lease on or before June 23, 2005 and vacated after June 23, 2005 wlll receive Relocation Assistance in the amount of $1,000 (one thousand dollars) per unit regardless of their standing. . Relocation Assistance check will be made available five days prior to tenant's move-out date. To ensure a timely check is issued, tenants should turn in their notice to vacate to Luisa Liberto, Property Manager, with their move-out date and their phone number. . 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'1:J~ " C:'" .., ...... !! -'" ~ ~gf !~ CD- I~ ~ ~ ~ ~ ~ (\IN (I) :: O..t U;...... _ON.....U') a: N N I r-- -g~~~ alm-...... C?r--"":T"" N~...... ~ "'";'"",;,,,,;,m g~~cO ................cn *=-.:;t:~ ---- "2"'2"'2 "2 ::::1:::::1:::::1 :::::I E E E E 00 0 0 '-........ ... ---- .!!..!!.!!.!! ""2"'2"'2"'2 ::1:::::1:::1 ::::I tOQ)oco ""'~cc:!.. .....C'(C"'1"'=1" G3 a CD II) tn In r.rJ en \'II <<I m I'll .t::..c..r::::.t:: a.. a. a. a. ,.. ~ CD ~fti "" '" u 0 ,,", .,biC!t .. .. alii ~ E 0-'; " c: :i= 1:1'0 " " ~~ " " ,:; E E ~.g e " .. .. -'" a.. ~ " -'" "E o E .. N ~ ;; E x o ~ <( , ATTACHMENT~ . ,.Planning & Building Department ............................-........... CJTY Of CHUlA VISTA ................. January 12, 2006 Sun bow Villas Condo Conversion - Tenant MeetinQ AQenda 7:00 PM, Sunbow Villas Community Room 1. ,Introduction by City of Chula Vista A. 'Introduction of City Staff B. Tentative Map requirements -Conditions of approval C. Applicant Obligations .Tentative Map -Subdivision Map Act D. Final Map Process 2. Pacifica Companies Presentation A. Tenant Relocation Assistance infonmation B. Update on construction C. Contact infonmation for City of Chula Vista Community Development Department 619.585.5722 for infonmation' on affordable housing and first-time homebuyer programs . D. Contact infonmation for Sunbow - Luisa Liberto, Property Mgr. 619.482.7284 3. Questions and Answers 5-15 CBRE CB RICHARD ELLIS ATTACHMENT 2 Jim Neil 4365 Executive Drive Suite 900 San Diega, CA 92121-2127 CB Ricnerd Ellis, Inc. Brokerage Services 858646 478S Tel 858 S46 398S Fax iim.neiJ@cbre.com www.c:bre.com February 2, 2005 CITY OF CHULA VISTA Planning & Development Department Altn: Richard E. Zumwalt, Associate Planner 276 Fourth Avenue Chulc Vista, CA 91910 " Re: Sunbaw Villas - 750 E. Naples Home Buyer and Relocation Assistance Dear Richard: The following is 0 summary of the tenant benefits that we intend to affer the residents of Sunbow Villas. 1, All eligible tenants in good standing will receive $1,000 to be used for relocation and moving expenses. 2. All eligible tenants in good standing will receive their full security deposit back. 3. In the event that a tenant does purchase their unit, they will receive a $3,000' credit towards the purchase of their unit. Hamebuver Assistance We intend to provide the tenants with valuable information about the process of buying ond financing a condominium, sa that they can became homeowners. In the past, we have teamed up with Community HausingWorks, a local nan-profit organization that helps first- time home buyers to access special. loan and grant programs available through the state and local government. Through their Home Ownership Center they con also help residents with budgeting and credit repoir. We intend to sponsor an and off-site seminars far the residents. Tenant Relocation Assistance If a tenant is unable aedoes not wish to purchase their unit, they will still receive $1,000 for relocation and moving assistance, and will receive their full security deposit back. Additionally, we will provide the referral list of affordable housing that is generated by the Community Development department. If you have any questions, please feel free to contad me at 858-646-4785. Sincerely, CB Richard Ellis, Inc. 2)c)W Jim Neil 5-16 RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FINAL MAP OF SUNBOW VILLAS, CHULA VISTA TRACT NO. 05-03. WHEREAS, the developer, Pacifica Sunbow LP, a California Limited Partnership, has submitted a final map for Sunbow Villas; Chula Vista Tract No. 05-03; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista hereby finds that certain map survey entitled Chula Vista Tract 05-03, Sunbow Villas and more particularly described as follows: Lot 1 of Chula Vista Tract No. 87-8 Rancho Del Sur Phase 1 Unit 1, in the City of Chula Vista,' County of San Diego, State of California, According to Map thereof No.l2060, filed in the Office of the County Recorder of San Diego County on May 2, 1998. Area: 12.4590 Acres Numbered Lots: 1 No. of Lots: 1 Lettered Lots: 0 is made in the manner and form prescribed by law and conforms to the surrounding surveys; and that said map and subdivision ofland shown thereon is hereby approved and accepted. BE IT FURTHER RESOLVED that the City Clerk of the City of Chula Vista is hereby authorized and directed to endorse upon said map the action of said Council; that said Council has approved said subdivision map. BE IT FURTHER RESOLVED that City Clerk be and she is hereby directed to transmit said map to the Clerk of the Board of Supervisors of the County of San Diego. Presented by Approved as to form by t /'. Ann Moo ~'lcity Atto Leah Browder Acting Director of Engineering 5-17 :LLnv :5 Tuesday, April 04, 2006 @ 3:03 p.m. Anonymous Caller: Comments for 4/4/06 Council Meeting Question #1: Was it not a conflict of interest for Steve Castaneda to purchase a unit while employed as a council member? Question 2: Is it not also a conflict of interest for the City Council to now reneg upon its agreements to provide relocation assistance to current sunbow residents in order to protect Mr. Castaneda's original decision which was based on conflict of interest. Statement: Mr. Castaneda should relinquish his property right at Sunbow Villas so that the tenant will not be penalized for his conduct and he will be cleared of the appearance of conflict of interest. C":>(") ~ =i=1 -<-< :0 (")0 .-..., :a ,." m(") (") :::O::z: A I"T1 :0::<::: <nr- o~ < -no<: ~ m -n- W 0 -Ul ('")-i N (""t-o!'> VI .......... . Item 5 A0 \ L\- J ?-O() V SUNNYVALE DEPA""'MENT OF PUB/./C SAFETY 700 ALL AMERICA WAY SUNNYVA/.E, CA 94088 COMPLIANCE ORDER (Sunnyvale Municipal Code Section 1.06.040) TO: Cupertino Villas and Pacifica Companies DATE: February 10, 2006 The city of Sunnyvale has inspected the property located at 880 E. Fremont Ave on the following dates: October 19, 2005, November 30,2005, December 19, 2005, December 21, 2005, January 17, 2006, January 19, 2006, January 24, 2006, February 2, 2006, February 8, 2006, and February 9, 2006, and found numerous violations of the California Fire Code (2001 edition), NFPA 13 (1999 edition), and NFPA 72 (1999 edition) .as adopted by the city .of Sunnyvale (Sunnyvale Municipal Code Ch. 16.52), as reflected in the attached punch lists incorporated herein by reference. These violations constitute a significant and ongoing life-safety concern due to the fact that Cupertino Villas andlor ~cifica Companies intentionally allowed escrow to close on numerous units ~ to .finaliz:m.P.Eiilll1ibLand-Obtaining. a Certificate of Occupancy, and the property is currently being occupied by numerous individuals and families. Cupertino Villas and/or Pacifica Companies has had ample opportunity to correct the violations and bring the property into compliance, yet has failed to do so as of the city's last inspection on February 9, 2006. You are herby notified that the following deficiencies must be corrected by the end of the business day on February 24, 2006, or the city of Sunnyvale intends to seek administrative penalties as authorized by Sunnyvale Municipal Code Chapter 1.06. Said penalties will be assessed up to $2,500 per day for each ongoing violation. Penalties will begin to accrue on February 25,2006. The city may als'O recover reasonable administrative costs associated with this matter. Please see atlached Chapter 1.06 of the Sunnyvale Municipal Code. Don J9hnson, Director I-br-d ouf- 0.+ 4-4--04:> Counc~l Mee;;l1~I)~ -}kyn b b~ ~oY:o.ne.. Au er. pubsfty@cE.sunnyvale.ca.us 140B) 730-7100 AITACHMENT - CUPERTINO VILLAS FEBRUARY 10, 2006 1. Sunnyvale Municipal Code Title .16.52 A. Section 16.52.150: Fire Apparatus Access Roads B. Section 16.52.170: Premises Identification C. Section 16.52.250: 1003.1.1 - General 1003.1.5 - Riser Shut-Off Valves D. Section 16.52, 2aO,Dwelling Unit Smoke Detectors 2. California Fire Code, 2001 Edition A. Section 1003.3.2: Alarms B. Section 1006.2.9.3: Smoke Alarms in Group R Occupancies C. Section 1001.5.1: Fire Protection Systems Maintenance 3. California Building Code, 2001 Edition A Section 1003.3.1.8: Type of Lock or Latch 4. NFPA 13,1999 Edition A Section 5-7.4.2: Deflector Orientation B. Section 3.8.3: Identification ofValiles . C. Section 3-10.1:Waterflow Alarms D. Section 12: System Inspection, Testing and Maintenance E. Section 5-7.5.1: Performance Objective F. Chapter 6: Hanging, Bearing and Restraint of System Piping 5. NFPA 72, 1999 Edition A. Section 8-1.2.4: Smoke Detector Locations and Types of Devices " . ADMINISTRATIVE FINES AND PENALTIES Chapter 1.06. 1.06.010. 1.06.020. 1.06.030. . 1.06.040. 1.06.050. 1.06.060. 1.06.070. 1.06.080. 1.06.090. 1.06.100. 1.06.110. 1.06.120. 1.06.130. 1.06.140. 1.06.150. 1.06.160. 1.06.170. 1.06.180. 1.06.190. Purpose. Defmitions. Notices. Compliance order issuance. Compliance determination. Notice of hearing. Hearing-Findings and order. Administrative order. Administrative penalties. Administrative costs. .. Failure to comply with administrative .compliance .order. Right of jndicial review. Recovery of administrative civil penalties. Report of compliance after administrative order. Compliancedispnte. Lien procedure. Public bearing and protests; Recording Df lien. Satisfaction of lien. 1.06.010. Purpose. This chapter provides for administrative .remedies, which are in addition to alLotber legal .remedies, criminal or civil,. which may be pur.med by.the city to address any violation of this.code. Use of this chapter shall be at the sole discretion of the city. (Ord.2552"96 S 2 (part)). .1.06.020. Definitions. .Forpurposes .0Lthischapter, "director" means the head of any city departrnentwhich .is . charged with responsibility Jor enforcement of any provision of this code. (Ord. 2552-96S 2 (part)). 1.06.030. Notices. (a) All notices required by this chapter ,shall be served as provided in Section 1.08.100. (b) Where real property is involved, written notice shall be personally served or mailed to the property owner at the address as sbown on the last equalized county assessment roll available. (c) Where personal service or service by mail upon the property owner is unsuccessful, a copy of the order shall be conspicuously Posted. at the property which is the subject of the order. (d) The failure of any person to .receive any notice required under this chapter shall not affect the validity 1.06.010 of any proceedings taken under this chapter. (Ord. 2552-96 9 2 (part)). 1.06.040. Compliance order issuance. (a) Whenever the director determines that a violation of any provision of this code within the director's :responsibility is occurring or exists. the director may issue a written compliance order to any person responsi- ble for the violation. (b) A compliance .order issuedpursilant to this chapter shall contain the following information: (1) The date and location of the violation; (2) The provision(s) violated and a description of the violation; <. -(3) The actions required to correct the violation; (4) The ('time period after which administrative . penalties will begin to accrue if .compliance.with .the . order haS not. been achieved; (5) Either a copy of this chapter or an explanation of . the consequences of noncompliance with this chapter and a description of the hearing procedure and .appeal process. .(Ord. 2552-96 !i 2 (part)). 1.06.050. -Compliance determination. (a) If the director determines that all violations have been corrected within the time specified.in the compli- ance..order, nO further.action shaUbe taken. (b) If full compliance is not achieved within the time specified in the compliance order, the direotor shall advise the secretary ,to the appeals board to set a hearing before the board. (c) The secretary to the appeals board. shall cause a written notice of hearing to be served or mailed to. the violator. (Ord. 2552-96S 2 (part)). 1.06.060. 'Notice of hearing. (a) Every notice of hearing 'on. a compliance order shall contain the date, time and place at which the hearing shall be conducted hy the appeals board. (b). Each hearing shall be set for a date not Iess than fifteen days nor more than sixty days from the date of the notice of hearing unless the director determines that the matter is urgent oriliat good cause exists for an extension of time. {c) This hearing serves to provide the full opportuni- ty of a person subject to a compliance order to object to the determination that a violation has occurred andlor that the violation has continued to exist. The failure of any person. subject to a compliance order, pursuant to this chapter, to appear at the hearing shall constitute a failure to exhaust administrative remedies. (Ord. 2552- 96 9 2 (part)). 4c (SunnYVale 1-97) , " before the appeals board including, but not limited to, costs of investigation, staffing costs incurred in prepa- ration for the hearing and for the hearing itself, and costs for all reinspections necessary to euforce the compliance order. (Ord. 2552-96 ~ 2 (part)). 1.06.110. Failure to comply with administrative compliance order. Failure to pay the assessed administrative penalties and administrative costs specified in'the administrative order of the appeals board may be euforced as: (a) A personal obligation of the violator; andlor (b) If the violation is in connection with real property, a lien upon the real property. The lien shall remain in effect until all of the administrative penalties, interest and administrative costs are paid in full. (Ord. 2552-96 9 2 (part)). 1.06.120. Right of judicial review. , Any person aggrieved by an administrative order of the appeals hearing board may obtain review of the administrative order in the superior court by filing"with the court a petition for writ of mandate pursuant to Section 1.08.125. (Ord. 2552-96 ~ 2 (part)). 1.06.130. Recovery of administrative civll penal. ties. The city may collect the assessed administrative penalties and administrative costs by use of all avail- able legal means, including recordation of a lien pursuant to Section 1.06.160. (Ord. 2552-96 ~ 2 (part)). 1.06.140. Report of compliance after adminis. trative order. If the director determines that compliance has been achieved after a compliance order has been sustained by the appeals board, the director shall file a report indicating that compliance has been achieved. (Ord. 2552-96 ~ 2 (part)). 1.06.150. Compliance dispute. (a) If the director does not file a report pursuant to Section 1.06.140, a violator who believes that compli- ance has been achieved may request a compliance hearing before the appeals board by filing a request for a hearing with the secretary to the board. (b) The hearing shall be noticed and conducted in the same manner as a hearing on a compliance order provided in Sections 1.06.060 through 1.06.070. (c) The board shall detennine if compliance has been achieved and. if so, when it was achieved. (Ord, 2552-96 !l 2 (part)). 1.06.100 1.06.160. Lien procedure. (a) Whenever the amount of any administrative penalty andlor administrative cost imposed by the appeals board pursuant to this chapter in connection with real property has not been satisfied in' full within ninety days andlor has not been successfully challenged by a timely writ of mandate, this obligation may constitute a lien against the real property on which the violation occurred. (b) The lien provided herein shall have no force and effect until recorded with the county recorder. Once recorded, the administrative order shall have the force and effect and priority of a judgment lien governed by the provisions of Sections 697.340 of the Code of Civil Procedure and may be extended as provided in Sections 683.110 to 683.220, inclusive, of the Code of Civil Procedure. (c) Interest shall accrue on the principal amount of the judgment remaining unsatisfied pursuant to law. (d) Prior to recording any such lien, the director of finance shall prepare and file with the city clerk a report stating the amounts due and owing. (e) The city clerk shall fix a time, date and place for hearing such report and any protests or objections thereto by city council. (f) The director of finance shall cause written notice to be served OIl the property owner not less than ten days prior to the time set for the hearing. Such notice shall be served as provided in Section 1.08.100. (Ord. 2552-96 ~ 2 (part)). 1.06.170. Public hearing and protests. <a) Any person whose real property is subject to a lien pursuant to Section ,1.06.160 mny file a wrirten protest with the city clerk andlor may protest orally at the city council meeting. (b) Each written protest or objection must contain a description of the property in which the protesting party is interested and the grounds of such protest orobjec- tion. (c) The city council. after the hearing, shall adopt a resolution confirming, discharging or modifying the amount of the lien. (Ord, 2552-96 9 2 (part)). 1.06.180. Recording of lien. Thirty days following the adoption of a resolution by the city council imposing a lien the city clerk shall file the same as a judgment lien in the office of the county recorder of Santa Clara County. The lien may carry such additional administrative charges as set forth by resolution of the city council. (Ord. 2552-96 S .2 (part)). 4e (SunnYVale \.97) . : '.. .::."'\ .'\ J:"2J_~' ks . Cny OF SU~~LF"G<'\ L..!:PARTMEl'IT OF PUBLIC SArE~' . P.o.BOX\~,..'S~~1Wc;llceJ!lio~isr370ffl') .. . \ . ........ . . 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''J,;,:;;:~''.~,:,":"J'"<'l~" ',It';".' '~~ '.: "'~,' :_ : ,- " :: - ,FIRE'PREVEN1F10N\/,I:lAZARDCil(JS"MATERIPlliS:/iEIREreREVENl'ION. ENGINEERING; r.,~',:,,\;,.-<_ < '~),.-.'._-~.- ".,., . ". _." '\. , -. ,~ . ~___,..,\';C- "C".,.";'" '9>~S:Iiile;1.50:'SunnY\1ale;,C lt7ao:.7-212:t:(408l"730-7214f8lc ,"',' " ".",.;~.:,;:....":~,.,:",,.,".,;..1}.~"j,;.::,;,,:"",',~,:;.,':.,'."','",,",,',.:,,;.,:":r,~,',"-;,,.":,'{,p, '"':,-~,'",j.,,.:~i~~~.f.:,!~~iti~' ~~~~~::!,/,:,,: ~':: "~/. ':} ;; }";,;;J,.i:,;.',:~,,~.:,.:,c,.:-,',',,.,,';~,': :. '. ' , ,;;'(;;' :;~~~~S,::;:;;);:C:?;~;~tl"'+' T ! SUNNYVALE DEPARTMENT OF PUBLIC SAFETY 700 ALL AMERICA WAY SUNNYVALE, CA 94088 January 9, 2006 NOTICE This is to advise you that Pacifica Companies, the developer of the property at 880 E. Fremont Avenue, Sunnyvaie, Califomia, has not obtained final sign-off on Building and Fire Permits. Until Pacifica Companies complies with all current code regulations, occupancy of this building is NOT AUTHORIZED. Please contact Kathy Sheppard, Cupertino Villas, (408) 736-8080, for further information. ~~L.~ Mark Frise Fire Marshal Sunnyvale Dept of Public Safety (408) 730-7213 pubsfty@ci.sunnyvale.ca.us (408) 730.7100 COUNCIL AGENDA STATEMENT Item (; Meeting Date 4/04/06 ITEM TITLE: Resolution Approving Agreement with the City of Imperial Beach for Animal Control Services SUBMITTED BY: Director of General Services City Manager J! t'- 77~ 6!- -h-v ? REVIEWED BY: (4/5ths Vote: Yes _ NoXJ Chula Vista has provided animal control services to Imperial Beach since 1999. The existing agreement expired on June 30, 2005. Staff is recommending Council approve a new three-year Animal Control Agreement with option to extend administratively for two additional years upon mutual consent. RECOMMENDATION: That Council adopt the resolution approving the agreement with the City of Imperial Beach for Animal Control Services. BOARD/COMMISSIONS RECOMMENDATION: N/ A DISCUSSION: The City of Imperial Beach has contracted with the City of Chula Vista for animal control services since October 1, 1999. The agreement for the provision of animal control services between the City of Imperial Beach and the CityofChula Vista expired June 30, 2005. Staffhas successfully reached agreement on a new three-year agreement with the City of Imperial Beach. The Imperial Beach City Council approved the agreement on February 15, 2006. The three-year agreement includes an option to extend administratively for two additional years upon mutual consent. Chula Vista will continue to provide a full range of animal control services with three modifications to the original scope of work. The City of Imperial Beach has elected to reduce animal control patrol services from 5 days to 4 days a week and perform their own animal licensing in an effort to reduce their contract cost. In addition, Chula Vista has agreed to provide special animal control patrols when requested by Imperial Beach, provided there are no conflicts with Chula Vista's needs. This will include special animal control patrol hours, sweeps, and beach enforcement and events such as the Sand Castle festivities. All overtime costs for special enforcement patrols will be paid by Imperial Beach. The proposed three-year agreement provides for a 9.3% increase over the three-year term of the agreement. The proposed contract amounts are based on an established formula that ensures full cost recovery for services to be rendered. The proposed contract cost is recommended to increase from $127,272.69 annually to $132,214.65 beginning July 1, 2005; $136,181.65 beginning July 1, 2006 and $140,066.52 beginning July 1,2007. The proposed agreement may also be adjusted annually up to 2% for related increases in the Animal Care Facility services and supplies budget increases with advance notification. 6-1 Item G Meeting Date 4/04/06 FISCAL IMPACT: The proposed three-year agreement will result in a positive impact to the General Fund. The contract recovers all direct costs associated with staffing and services and supplies required to provide animal control services to Imperial Beach in addition to some indirect costs. Moreover, the proposed contract includes the actual cost calculations for the adopted salary increases in the Chula Vista Employees Memorandum of Understanding. M:\General Services\GS Administration\Council Agenda\Imperial Beach contract\IB Contract.doc 6-2 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AGREEMENT WITH THE CITY OF IMPERIAL BEACH FOR ANIMAL CONTROL SERVICES WHEREAS, the City of Imperial Beach has contracted with the City of Chula Vista for animal control services since October I, 1999 and this agreement expired June 30, 2005; and WHEREAS, staff has successfully reached agreement on a new three-year agreement with the City of Imperial Beach and was approved by the Imperial Beach City Council on February 15, 2006. The three-year agreement includes an option to extend administratively for two additional years upon mutual consent; and WHEREAS, Chula Vista will continue to provide a full range of animal control services with three modifications to the original scope of work: 1) the City of Imperial Beach has elected to reduce animal control patrol services from 5 days to 4 days a week and perform their own animal licensing in an effort to reduce their contract cost; 2) Chula Vista has agreed to provide special animal control patrols when requested by Imperial Beach, provided there are no conflicts with Chula Vista's needs and; 3) all overtime costs for special enforcement patrols will be paid by Imperial Beach. WHEREAS, the three-year agreement provides for a 9.3% increase over the three-year term of the agreement. The contract cost will increase from $127,272.69 annually to $132,214.65 beginning July 1, 2005; $136,181.65 beginning July 1, 2006 and $140,066.52 beginning July I, 2007. The agreement may also be adjusted annually up to 2% for related increases in the Animal Care Facility services and supplies budget increases with advance notification. NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Chula Vista does hereby approve the agreement with the City of Imperial Beach for animal control services. Presented by Approved as to form by ~~~~~ Ann Moore City Attorney Jack Griffin Director of General Services 6-3 THE A TT ACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY COUNCIL ~\)[<:N\\\ \'I\\\~~\'\ , Ann Moore City Attorney Dated: March 27,2006 Agreement with City of Imperial Beach Providing Full Animal Control Services 6-4 AGREEMENT BETWEEN CITY OF CHULA VISTA AND CITY OF IMPERIAL BEACH PROVIDING FULL ANIMAL CONTROL SERVICES This Agreement ("Agreement") is entered into by and between City of Chula Vista ("Chula Vista") and the City of Imperial Beach ("Imperial Beach"), dated , 20_ for the purposes of reference only, and effective as of the date last executed is between the City of Chula Vista, ("Chula Vista") whose business address is City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 and the City of Imperial Beach (Imperial Beach) whose business address is City of Imperial Beach Public Safety Department 865 Imperial Beach Blvd. Imperial Beach, CA 91932 RECITALS WHEREAS, Chula Vista has an Animal Care Facility and provides a full range of animal control services; and, WHEREAS, Imperial Beach is in need of such facilities and services in relation to animals within the territorial jurisdiction of Imperial Beach; and desires to enter into an agreement with Chula Vista to provide animal shelter and control services for the impounding, adoption, redemption, and disposition of dogs, cats, and other small animals; NOW, THEREFORE, in consideration of the above recitals and the mutual covenants and conditions set forth in this Agreement, herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby set forth their mutual covenants and understandings as follows: A. SERVICES 1. Chula Vista agrees to provide animal control services to residents of Imperial Beach in the form of shelter services, animal control patrol services, and administrative services. Anima' Control Services Agreement Page 1 of 14 6-5 B. SHELTER SERVICES 1. Chula Vista agrees to permit Imperial Beach the use of the animal care facilities owned and operated by Chula Vista for the impounding, adoption, redemption, and disposition of dogs, cats and other small animals subject to the provisions of the Imperial Beach Animal Ordinances. The facility is located in the City of Chula Vista at 130 Beyer Way. 2. Chula Vista shall provide Shelter Services for dogs, cats, rabbits, small farm animals and other domestic species not identified as wildlife twenty-four (24) hours a day, seven (7) days a week. 3, Chula Vista agrees to provide animal care facility services for the animals of residents of Imperial Beach during normal facility hours, currently Monday through Friday 10:00 to 5:00 and Saturday 10:00 to 4:00. The facility will be closed on Sunday and all major holidays. Chula Vista agrees to notify imperial Beach of changes to facility hours in advance of such changes. 4. Chula Vista agrees to accept all stray animals from Imperial Beach residents at no charge. Imperial Beach residents wishing to relinquish owned animals to the facility for euthanasia or adoption, or wishing to redeem animals will be charged appropriate fees in accordance with Chula Vista's master fee schedule. 5. Chula Vista agrees to hold all dogs and cats for the minimum holding period required by the California Food and Agricultural Code and other applicable state law. As per applicable state code sections, animals with communicable diseases and severe injuries or illness may be euthanized prior to the expiration of the nonmal holding period. Veterinary medical care will be provided as needed for all impounded animals for the duration of their hold period as needed. Chula Vista will attempt to notify owners of identified animals that their animai is in the custody of the Chula Vista Animal Care Facility and advise them of the holding period. Imperial Beach shall relinquish dogs, cats, rabbits, small fanm animals and other domestic species not identified as wildlife to Chuia Vista for disposition in accordance with all applicable laws, policies or procedures as deemed appropriate by the Chula Vista Animal Care Facility Manager. Upon payment of all appropriate fees, Chula Vista will release to the legal owner, any impounded domestic animal. Chula Vista will have discretion without recourse to Imperial Beach to reiease animals under special circumstances regardless of payment of fees. 6. Chula Vista will conduct all impound and administrative hearings as required by law. Imperial Beach will provide a hearing officer if Chula Vista is unable to provide one due to conflicts of interest or prejudice or if the Imperial Beach Municipal Code specifies the hearing officer will be an official from Imperial Beach. Anima! Control Services Agreement Page 2 of 14 6-6 7. Chula Vista shall not be responsible to any resident of Imperial Beach, or to the City of Imperial Beach, because of the destruction of any animal delivered to and accepted by the Animal Care Facility pursuant to this Agreement, and the City of Imperial Beach agrees to hold harmless the City of Chula Vista from any claims arising from damage or injury to animals belonging to residents of Imperial Beach and accepted by the Chula Vista Animal Care Facility. 8. Chula Vista shall maintain its facility in a humane manner and shall keep its facility in a sanitary condition at all times. All services furnished by Chula Vista shall be provided in accordance with local laws and the laws of the State of California. Chula Vista shall use humane methods in the care, euthanizing, and disposition of any animal coming under its jurisdiction. 9. Chula Vista will not sell or give any live or dead animal to a medical research facility at any time or from any jurisdiction. 10. Chula Vista will ensure all dogs, cats and rabbits adopted from the shelter are spayed or neutered at the time of adoption or a spay/neuter deposit will be collected in accordance with state law. Additionally, the Chula Vista Animal Care Facility will provide the public with low-cost spay/neuter information and assistance. C. PATROL SERVICES 1. Chula Vista agrees to provide a uniformed Animal Control Officer to patrol Imperial Beach, four (4) days per week, not to exceed thirty-two (32) hours per week, in the manner and to the extent that Chula Vista deems appropriate, as described more fully below. 2. Patrol services shall include emergency transportation of injured or sick animals, the issuance of citations for violations of state and local laws ordinances, beach patrol, impounding of strays, investigation of biting incidents, vicious or dangerous animals complaints, trapping of animals (except as noted in Section E - Excluded Services), investigating humane complaints, investigating barking dog or animal noise complaints, picking up dead animals and educating the public about pet responsibility. Chula Vista may alter the patrol hours to include Saturdays on a rotating basis as is deemed necessary by both parties. Imperial Beach will pay for all overtime costs associated with emergency responses after normal business hours at the full cost recovery rate approved by Chula Vista. 3. All requests for service will be handled in a reasonable time and manner and based on the priority system set forth below (see priority response chart). Chula Vista will employ staff as needed in emergency situations to assure reasonable response times. Chula Vista is excused from timely performance during Animaf Control Services Agreement Page 3 of 14 6-7 equipment failures, strikes, labor disputes, personnel shortages, severe weather, road impediments, disasters, and other forces outside the control of Chula Vista. ANIMAL CONTROL SERVICES FOR IMPERIAL BEACH Chula Vista Animal Control Response Levels Type of Service Dangerous Animal Threatening Human Possible Rabies/Biter Animal at Large Major Injury to Animal Cruelty to Animal Animal Inside Vehicle Fighting Animals Dogs Harassing Livestock Sick or Minor Injury to Animal Animal Welfare Investigation Quarantine Biter Animal Confined Stay Animal Field Relinquished Animal Dog Running at large Priority Level In Proqress 1 1 1 1 1 1 1 2 2 3 3 3 3" Response Guidelines Level 1 Not in Proqress 3 3 3 3 3 3 3 3 3 N/A N/A N/A 4" First priority, Officer will respond ASAP Level 2 Second priority, Officer will make every effort to respond within 12 hours of receipt Level 3 Third priority, Officer will make every effort to respond within 24 hours of receipt Level 4 Fourth priority, Officer will make every effort to respond within 72 hours of receipt "During normal business hours an Officer will respond ASAP An;mal Control Services Agreement . Page 4 of 14 6-8 ..... . . 4. Livestock will be removed under contract with a separate agency chosen by the Chula Vista Animal Care Facility. The contracting agency shall be capable of removing livestock and shall provide its own equipment and personnel. Trailering, board and other fees related to livestock will be paid by Imperial Beach. Chula Vista agrees to conduct special enforcement animal control patrols when requested by Imperial Beach, provided there are no conflicts with Chula Vista's needs. This will include special animal control patrol hours, sweeps and beach enforcement. All overtime costs for special enforcement patrols shall be paid by Imperial Beach. 5. Chula Vista shall provide Animal Control personnel for scheduled special events as requested by Imperial Beach, provided there are no confJicts with Chula Vista's needs. These events will be performed on an overtime basis and all overtime costs for special events will be paid by Imperial Beach. 6. Chula agrees to conduct special enforcement animal control patrols when requested by imperial Beach, provided there are no confJicts with Chula Vista's needs. This will include special animal control patrol hours, sweeps, and beach enforcement. All overtime costs for special enforcement patrols will be paid by Imperial Beach. D. ADMINISTRATIVE SERVICES 1. Imperial Beach shall implement and administer its own licensing program. In the event Imperial Beach determines this function should be performed by Chula Vista, Imperial Beach shall provide a written amendment to this Agreement. No amendment to the Agreement shall be binding until signed by both Parties. 2. Chula Vista shall provide a representative to attend any Imperial Beach meetings that involve animal control issues upon request and with reasonable notice. 3. A Chula Vista representative shall meet and confer in good faith with an Imperial Beach administrator over operational issues associated with the administration of this Agreement. 4. Maintenance of Records. Chula Vista shall maintain accurate records regarding its performance of Animal Services under this Agreement for a period of three (3) years. Such records shall include Shelter Services records regarding receipt, care, reclaim, and disposition of abandoned, impounded, destroyed, lost or stray domestic animals, including names and addresses of persons reclaiming animals. 5. Inspection of Records. Chula Vista's records regarding Animal Services shall be open to inspection by Imperial Beach, upon request of Imperial Beach during Chula Vista's regular business hours. Animal Control Services Agreement Page 5 of 14 6-9 6. Monthlv Reports. Chula Vista shall deliver to Imperial Beach during the term of this Agreement a monthly Animal Control and Impound Report summarizing Shelter Services provided by Chula Vista to Imperial Beach. This report shall include the following information: Number of animals impounded by type and source and number of animals relinquished by owner. 7. Chula Vista shall establish a notification policy for its officers with the assistance of Imperial Beach officials. The policy shall identify the types of incidents for which Chula Vista Animal Control will be required to notify designated Imperial Beach officials. Notification shall include the nature, circumstances, and status of the incident. Chula Vista will also provide copies of all supporting documents and Information involving the incident. Imperial Beach will provide a list of its designated city officials to Chula Vista and the recommended methods to contact the designated individuals. E. EXCLUDED SERVICES 1. Chuia Vista will not trap skunks, opossums or other indigenous small animals for the purpose of nuisance control. Wildlife will only be handled for purposes of public safety or for humane reasons. Cats, feral or tame, will only be trapped when a bite has occurred or to protect the public health or safety. Cats in traps will be removed from the National Estuarine Research Reserve bird sanctuary. at Imperial Beach's request when staffing is available. Cat traps will be provided and monitored by Imperial Beach. Chula Vista will remove only trapped cats. Only dangerous snakes will be removed from private property. 2. Dead animals on private property are the responsibility of the property owner. Sick or injured animals are the responsibility of the animal owner. F. IMPERIAL BEACH RESPONSIBILITY 1. Payment of Services a. Imperial Beach will pay the actual cost for providing all services provided for under this Agreement. Actual Cost means all customary charges including, without limitation, labor, overtime, benefits, paid time off, administrative costs, indirect overhead charges, supply and food costs, and clerical support. b. Imperial Beach will provide to Chula Vista a 4WD (four-wheel drive) animal control vehicle that is white in color and is substantially similar to Chula Vista's existing animal control fleet. Vehicle replacement, maintenance, fuel, and oil are the responsibility of Imperial Beach. The vehicle will be maintained at the same level of service as Chula Vista vehicles. Any variances of this maintenance schedule will be approved in advance by the Chula Vista Fleet Manager. If Imperial Beach and Chula Vista agree to Anima' Control Services Agreement Page 6 of 14 6-10 extend or not extend services beyond this Agreement, the animal control vehicle shall remain the property of Imperial Beach. The vehicle will be Identified with appropriate lettering spelling out "Imperial Beach Animal Control" and an appropriate Imperial Beach city seal will be pi aced on the left and right doors and the Chula Vista Animal Control phone number clearly displayed. c. Chula Vista will automatically adjust the actual cost calculations for future salary and benefits increases and adjust Imperial Beach payments accordingly. Adopted salary increases in the Chula Vista Employees Memorandum of Understanding of 3% January - December 2006; 3%, January - December 2007; 4% January - December 2008; 4%, January - December 2009; 4% January - December 2010 are included in the proposed contract amounts. The contract may also be adjusted annually up to 2% of the total Animal Care Facility services and supplies and operating capital budget. Overtime costs will be fully reimbursed by Imperial Beach. Chula Vista will notify Imperial Beach by April 30th of each fiscal year of any proposed contract adjustments. d. Commencing on the date of the execution of this Agreement, and extending through June 30, 2008, Imperial Beach agrees to pay to Chula Vista the following Agreement amounts for the services and facilities provided in this Agreement: Contract Fiscal Year Animal Control and Monthly July 1 - June 30 Kennel Service Service Charge Year 1 2005-06 $132,214.65 $11,017.89 Year 2 2006-07 $136,181.65 $11,348.42 Year 3 2007-08 $140,066.52 $11,688.88 Gotional Extensions Year 4 2008-09 $145,877.18 $12,156.43 YearS 2009-10 $151,712.27 $12,642.69 Upon mutual agreement, Chula Vista and Imperial Beach may extend the contract administrative!y for two additional years. The optiona! extensions may be adjusted for unanticipated costs not reflected in this Agreement. Chula Vista shall, on the first day of each month, credit Imperial Beach with the amount of monies received during the previous month from Imperial Beach residents as fees for the redemption of animals owned by Imperial Beach residents. The Chuta Vista Finance Office shall submit the billing to Imperial Beach on or before the 10th day of the month following the billing period and that amount shall be due and payable within 30 thirty-days of the invoice date. A penalty of ten percent (10%) will be assessed on late payments. Additionally, a one and one half (1Y:z%) finance charge per month will be assessed on the original delinquent amount. Animal Control Servir;es Agreement Page 70f 14 6-11 Should Chula Vista terminate or default on this Agreement prior to an installment payment being due, Imperial Beach shall not be required to pay the outstanding installment. However, Imperial Beach shall not be entitled to a refund of any installment made for the prior year. G. SUPPORT SERVICES 1. Imperial Beach will provide Chula Vista with a current listing of all animal licenses issued, including permits or licenses for dogs, cats, dangerous dogs or animals, exotic animals, kennels, pet shops, ranches or farms, dog shows, obedience trials and circuses. 2. Imperial Beach will notify Chula Vista at least 72 hours in advance of any animal-related issues, which are anticipated to be scheduled on an agenda for the City Council or any legislative or administrative body of Imperial Beach when Chula Vista employees will be required to appear. 3. Imperial Beach agrees to provide all pOlice services necessary to carry out its duties including police backup upon request of a Chula Vista Animal Control Officer. 4. Chula Vista Animal Control Officers are employees of the General Services Department of the City of Chula Vista and are required to carry tasers while on duty in their animal control uniform. Imperial Beach agrees to permit Chula Vista Animal Control Officers to use tasers within the City of Imperial Beach. Chula Vista Animal Control Officers also carry tranquilizer guns and equipment in their vehicles. Imperial Beach agrees to permit Chula Vista Animal Control Officers to use this equipment while on duty in their animal control uniform. 5. Imperial Beach agrees to adopt and/or follow the fee schedule established by Chula Vista. Both parties agree to meet and confer in good faith with Chula Vista's' Animal Care Facility Administrator regarding operational matters upon request. 6. Imperial Beach will provide legal representation in cases of public nuisance, dangerous and potentially dangerous animal cases, and for lawsuits, claims, or litigation pertaining to these cases. H. TERMS AND CANCELLATION RIGHTS 1. TERM This Agreement shall become effective as of the last date executed (Effective Date). The initial term of the Agreement shall run for a period of three (3) years from the effective date. The Agreement may be extended for an additional two (2) year period with the written consent of both Parties. Animal Control SelYices Agreement Page 8 of 14 6-12 2. TERMINATION OF AGREEMENT FOR CONVENIENCE Either party may terminate this Agreement at any time and for any reason, by giving specific written notice of such termination and specifying the effective date thereof, at least 90 ninety days before the effective date of such termination. If the Agreement is terminated by Imperial Beach as provided for in this paragraph, Chula Vista shall be entitled to receive just and equitable compensation for all services performed prior to the effective date of such termination. 3. TERMINATION OF AGREEMENT FOR CAUSE If, through any cause, either party shall substantially fail to fulfill in a timely and proper manner any obligation under this Agreement, or violate any of its covenants, agreements or conditions, the parties shall have the right to terminate this Agreement by giving written notification of such termination and specifying the effective date thereof at least five (5) days before termination. If the Agreement is terminated by Imperial Beach as provided for in this paragraph, Chula Vista shall be entitled to receive just and equitabie compensation for all services performed prior to the effective date of such termination. 4. NOTICES AND DESIGNATION OF ADMINISTRATOR a. All notices and demands shall be given in writing by personal delivery or first-class mail, postage prepaid. Notices shall be addressed to the Administrator, or his/her designee, designated below for the respective party. b. If the Administrator, designee or address of either party changes, notice of the change shall be sent to the other party. After the receipt of the notice of change, all future notices or demands shall be sent as required by the notice of change. 5. The following, including their respective addresses, are hereby designated as Administrators for the purposes of this Agreement only: City of Chula Vista: Director of General Services, and/or his/her designee 276 Fourth Avenue Chula Vista, CA 91910 City of Imperial Beach: Director of Public Safety, and/or his/her designee 825 Imperial Beach Boulevard Imperial Beach, CA 91932 Animal Control Services Agreement Page $) of 14 6-13 I. WAIVER No delay or failure of either party to exercise or enforce at any time any right or provision of this Agreement will be considered a waiver of the Agreement or of such party's right thereafter to exercise or reinforce each and every right and provision provided under this Agreement. A wavier to be valid shall be in writing but need not be supported by consideration. The acceptance by Imperial Beach of the performance of any work or services by Chula Vista will not be deemed to be a waiver of any term or condition of this Agreement. J. DEFENSE AND INDEMNITY 1. Claims Arising From Sole Acts or Omissions of the City of Imperial Beach. Imperial Beach hereby agrees to defend and indemnify the City of Chula Vista, and its agents, officers and employees, from any claim, action or proceeding against Chula Vista, arising solely out of the acts or omissions of Imperial Beach in the performance of this Agreement. At its sole discretion, Chula Vista may participate at its own expense in the defense of any claim, action or proceeding, but such participation shall not relieve Imperial Beach of any obligation imposed by this Agreement. Chula Vista shall promptly notify Imperial Beach of any claim, action or proceeding and cooperate fully in the defense. 2. Claims Arising From Sole Acts or Omissions of City of Chula Vista. Chula Vista hereby agrees to defend and indemnify Imperial Beach, and its respective agents, officers and employees, from any claim, action or proceeding against Imperial Beach, arising solely out of the acts or omissions of Chula Vista in the performance of this Agreement. At its sole discretion, Imperial Beach may participate at its own expense in the defense of any claim, action or proceeding, but such participation shall not relieve Chula Vista of any obligation imposed by this Agreement. Imperial Beach shall promptly notify Chula Vista of any claim, action or proceeding and cooperate fully in the defense. 3. Claims Arising From Concurrent Acts or Omissions. Chula Vista hereby agrees to defend itself and Imperial Beach hereby agrees to defend itself, from any claim, action or proceeding arising out of the concurrent acts or omissions of Chula Vista and Imperial Beach. In such cases, Chula Vista and Imperial Beach agree to retain their own legal counsel, bear their own defense costs, and waive their right to seek reimbursement of such costs, except as provided in section 5 below. 4. Joint Defense. Notwithstanding section 3 above, in cases where Chula Vista and Imperial Beach agree in writing to a joint defense, Chula Vista and Imperial Beach may appoint joint defense counsel to defend the claim, action or proceeding arising out of the concurrent acts or omissions of Chula Vista and Imperial Beach. Joint defense counsel shall be selected by mutual agreement of Animal Control SSN;ces Agreement Page 10 0114 6-14 the parties" The parties further agree that no party may bind the other party to a settlement agreement without the written consent of the other party. 5. Reimbursement and/or Reallocation. Where a final judgment of a court award allocates or detenmines the comparative fault of the parties, Chula Vista and Imperial Beach may seek reimbursement and/or reallocation of defense costs, settlement payments, judgments and awards, consistent with such comparative fault. K. INDEPENDENT CONTRACTOR RELATIONSHIP This Agreement shall not be construed to make Chuta Vista the partner, legal representative, or employee of Imperial Beach for any purpose whatsoever, or th"e agent of Imperial Beach, except as agent for the limited purpose of providing Animal Services in accordance with this Agreement. Neither party shall act or attempt to act or represent itself directly or by implication as having any partner, legal representative, or employee status or relationship. The parties shall have the relationship of independent contractors, and except as specifically provided in this Agreement, each party shall be solely responsible for all obligations and liabilities pertaining to the business, activities, and facilities of that party. As an independent contractor, Chula Vista shall obtain no rights to retirement benefits or other benefits, which accrue, to Imperial Beach's employees, and Chula Vista hereby expressly waives any claim it may have to any such rights. L. OWNERSHIP OF MATERIALS All reports, documents or other material provided to Imperial Beach by Chula Vista shall upon delivery thereof become the property of Imperial Beach, without restriction or limitation upon their subsequent use; provided, however, that data base software programs or other data organization methods used by Chula Vista in preparing the report, document, or other material provided to Imperial Beach by Chula Vista shall remain the exclusive property of Chula Vista, without restriction or limitations upon their use. M. CONSTRUCTION 1. Entire Agreement. This Agreement supersedes any prior agreement and contains the entire agreement of the parties on the matters covered. No other agreement, statement, or promise made by any party or by any employee, officer or agent of any party that is not in writing and signed by all parties shall be binding. 2. Amendment. This Agreement may only be amended by the written consent of all the parties at the time of such amendment. Animal Control Services Agreement Page 11 of 14 6-15 3. Governing Law. This Agreement has been executed in and shall be governed by the laws of the State of California. 4. Invalidity. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated thereby. 5. Interpretation of Agreement. This Agreement shall be construed as a whole and in accordance with its fair meaning. Captions and organizations are for convenience and shall not be used in construing meaning. 6, No Strict Construction. This Agreement shall not be strictly construed against any party to this Agreement. 7. Authority. Individuals signing this Agreement have full right and authority to bind their respective Parties to this Agreement. 8. Best Efforts and Cooperation. The parties promise to use their best efforts to satisfy all conditions to this Agreement and to take all further steps and execute all further documents reasonably necessary to put this Agreement into effect. 9. Unless otherwise stated in this Agreement, all persons employed in the performance of services and functions for Imperial Beach under this Agreement shall be Chula Vista employees. No Imperial Beach employee shall perform services or functions that Chula Vista is obligated to provide under this Agreement. All persons employed by Chula Vista to perform the services pursuant to this Agreement shall be entitled solely to the rights and privileges given to Chula Vista employees and shall not be entitled, as a result of providing services pursuant to this Agreement, to any additional rights and privileges given to Imperial Beach employees. Imperial Beach shall not be liable for the direct payment of any salaries, wages, or the compensation Chula Vista personnel performing services pursuant to this Agreement, or any liability other than that provided for in this Agreement. Unless specified otherwise, Imperial Beach shall not be liable for compensation or indemnity to any Chula Vista employee for injury or sickness or any other claims arising out of his or her employment. Chula Vista is an independent contractor, and no agency relationship, either expressed or implied, is created by the execution of this Agreement. 10.Assignability. Neither Imperial Beach nor Chula Vista shall assign or transfer any interest in this Agreement, nor the performance of any obligations due under this Agreement without the prior written consent of the other, and any attempt by either party to assign this Agreement or any rights, duties or obligations arising hereunder shall be void and of no effect. Animal Control Services Agreement Page 120114 6-16 11. Compliance with Laws and Regulations. The enumeration of certain tasks in this Agreement does not relieve the parties of the obligation to perform all tasks necessary for their performance in accordance with applicable laws and regulations. Next page is signature page Animal Controf Services Agreement Page 13 of 14 6-17 SIGNATURE PAGE AGREEMENT BETWEEN CITY OF CHULA VISTA AND CITY OF IMPERIAL BEACH PROVIDING FULL ANIMAL CONTROL SERVICES CITY OF CHULA VISTA Date: Approved as to form: Ann Moore City Attorney CITY OF IMPERIAL BEACH Date: Approved as to form: (J . Animal Control $etVices Agreement / Stephen A. Padilla Mayor Attest: Susan Bigelow City Clerk / ~/ 2 /' ~.r',/ ;;> ......:--z.-- City Manager Attest: (I, c.i. 1/1,1. +!-critZ ) J Page 14 of 14 6-18 COUNCIL AGENDA STATEMENT ITEM TITLE: Item No.: ~ Meeting Date: 4L4Lllii Resolution of the City Council of the City of Chula Vista approving a revised Tentative Subdivision Map for Otay Ranch Village Eleven, located east of Eastlake Parkway and south of Olympic Parkway - Brookfield She~ (BSO) Project LP Director of Planning and BUildin~,~ City Manager 11 ~ Pi<.. (4/Sths Vote: Yes _ No ---X..) SUBMITTED BY: REVIEWED BY: Brookfield Shea Otay (8S0) Project LP proposes to revise the Village I I tentative subdivision map in order to utilize the total units authorized in the Sectional Planning Area (SPA) Plan. This tentative map revision proposes to transfer unused units from various neighborhoods to a multi- family project in Neighborhood R-I 7. RECOMMENDATION: Staff recommends that the City Council adopt a resolution approving Revised Tentative Subdivision Map 06-10 in accordance with the findings contained therein. BOARDS/COMMISSIONS RECOMMENDATION: On March 22,2006, the Planning Commission reviewed the Revised Tentative Map PCS-06-10 and adopted the attached Resolution PCS-06-10 recommending approval by the City Council. On October 23,2001, the City Council approved of ViII age 11 SPA and Tentative Map. The City Council subsequently approved a revised Tentative Map on May 27,2003. ENVIRONMENTAL REVIEW: The Environmental Review Coordinator has reviewed the proposed project for compliance with the California Environmental Quality Act and has determined that the proposed project was adequately covered in previously adopted Final Second Tier EIR 01-02 prepared for the Otay Ranch General Plan AmendmentsNiIlage 11 Sectional Planning Area Plan, and Tentative Map. Thus, no further environmental review or documentation is necessary. Location, General Plan, Zoning and Land Use Criteria Neighborhoods R-17, 18, 19,21,22,25, and MU-l (Mixed-Use) are all located within Phases 2 and 3 of Village I I, an area bounded by Hunte Parkway to the south, Eastlake Parkway to the west, and Olympic Parkway to the north, and the 240-ft. SDGE transmission line easement to the east (see attached Locator Map). The General Plan and Otay Ranch General Development Plan describe Village I I as a typical multi-density residential village including single-family, multi- family and mixed-uses, and the zoning is Planned Community (PC). 7-1 Page 2, Item: 7 Meeting Date: 4/4/0/1 DISCUSSION Both the original 200 I tentative map and the revised 2003 tentative map involved the transfer of units but did not assign all of the units authorized in the Village It SPA Plan. The revisions proposed in this 2006 tentative map to the current 2003 tentative map approved unit reductions and/or transfer of units in multi-family Neighborhoods R-17, 18,21, 22, and 25. In addition, 14 unused Village II SPA Plan single-family units will now be allocated. But for this action, these units would have been undeveloped, since this is the last outstanding tentative map. Specifically, unit counts are reduced in multi-family Neighborhoods R-18, 21, 22 and 25, while the units counUncreases in multi-family Neighborhood R-17. Neighborhoods R-19 and MU-I (Mi>>ed-Use) were combined but maintain the same total unit count. The combined projects in Neighborhoods R-24 and 25 and Neighborhoods R-20, 21 and 22 resulted in overall unit reductions. The unit reductions in multi-family Neighborhoods R-18, 21, 22, and 25 will provide a total of 48 units to be transferred to multi-family Neighborhood R-17, the last neighborhood to be developed in Village II. Together with the 14 unused single-fami'ly units provided for in the SPA Plan, would enable Neighborhood R-17 to increase by 62-units from 118 to 180-units. ANALYSIS The Village II SPA Site Utilization Plan identified "Target Dwelling Units Per Acre" for each Neighborhood Area. The number of units for each neighborhood planning area was then calculated based on the SPA-level acreages. The SPA acknowledges that in final engineering the actual acreages might differ, resulting in a lower number of units per neighborhood than those shown on the Site Utilization Plan. Village II SPA Plan Section 11.2.2.3, Mapping Refinements and Density Transfers, provides the method for balancing increases and decreases in the various neighborhoods to achieve the total 2,304 dwelling units in the village. Four criteria must be met in order to transfer units between neighborhoods, as summarized below: . The total number of units must not exceed 2,304 . The maximum density for the particular zoning category cannot b(, exceeded . Village identity and pedestrian-orientation must be maintained . Increases in neighborhoods must result in corresponding decreases in other neighborhoods. The following table quantifies the changes that have occurred over the build-out of the village and what is now being proposed as a second revision to the original tentative map Brookfield She~ Otay (BSO) Project LP Village II: 7-2 Page 3, Item: 7 Meeting Date: 4/4/0/\ Village 11 V-11 SPA 2001 2003 2006 Difference Sino-Ie Familv: Plan: TM: TM: TM: (^ \: Neiahborhood R-I: 163 156 163 163 Nc~borhood R-2: 47 47 47 47 Neiahborhood R-3: 46 46 46 46 Neiahborhood R-4: 55 54 55 55 Neiahborhood R-5: 37 34 34 34 -3 Neiahborhood R-6: 35 38 38 38 +3 Neiahborhood R-7: 70 67 67 67 -3 Neiahborhood R-8: 64 58 58 58 -6 Neiahborhood R-9: 60 60 60 60 Neiahborhood R-IO: 86 89 89 89 +3 Neiahborhood R-II: 36 34 34 34 -2 Neiahborhood R-12: 58 57 57 57 -1 Neiahborhood R-13: 53 54 54 54 +1 Neiahborhood R-14: 56 54 54 54 -2 Neiahborhood R-15: 68 67 67 67 -1 Neiahborhood R-16: 62 59 59 59 -3 I--- Subtotal 996 974 982 982 -14 Difference ( A \: -22 +8 0 -14 Village 11 V-11 SPA 2001 2003 2006 Difference Multi-Familv: Plan: TM: TM: TM: ( ^), Neiahborhood R-17: 118 118 118 180 +62 Neiahborhood R-18: 125 125 125 112 -13 Neiahborhood R-19: 167 167 167 239 +72 Neiahborhood R-20: 78 78 78 78 Neiahborhood R-21: 112 112 112 102 -10 Neiahborhood R-22: 105 105 105 90 -15 Neiahborhood R-23: 119 119 119 119 Neiahborhood R-24: 169 169 169 169 Neiahborhood R-25: 200 200 200 190 -10 ~ixed-Use MU-I: 115 115 115 43 -72 Subtotal 1308 1108 1308 1322 Difference ( ^ \: 0 0 +14 +14 Total 2304 2282 2290 2304 0 Difference ( A \: -22 +8 +14 0 Based on the table above, the total number of units will not exceed the total Village II SPA Plan unit count of2,304. In addition, as discussed further below, the maximum density for any of the 7-3 Page 4, Item: '/ Meeting Date: 4/4/011 planning neighborhoods are not being exceeded, and the Village 11 identity and pedestrian- orientation will be maintained in all of the neighborhoods. The increase in units for certain neighborhoods resulted in corresponding decreases in units for other neighborhoods. The revised tentative map will memorialize the administrative approvals as provided for in the Village 11 SPA Plan that allowed for the previous unit reductions or transfers in Neighborhoods R-18, R-25 and the combined NeighborhoodsR-19/MU-1 (Mixed-Use) and Neighborhoods R- 20/21/22. All increases and decreases in these neighborhoods were within the density range for each neighborhood's zoning category. Units that have not been used in previous tentative maps would be built in multi-family Neighborhood R-17. As mentioned .above, this revised tentative map will provide for the fulfillment of the Village 11 SPA Plan unit count in multi-family Neighborhoods R-17 through the transfer of 48 multi-family units and the addition of 14 unused single-family units. This proposal is in conformance with the density transfer criteria noted above. The Village 11 SPA Plan doesn't restrict density transfers betwcen multi-family and single-family product types, and any such unit transfers are allowed as long as they can be accomplished within the allowable density range of the neighborhood zone. For multi-family Neighborhood R-I7, the 62-unit increase from 118-units to 180-units raises the density level on the 15.5-acre site from 7.6-units per acre to I1.6-units per acre, where the allowable density range is between 8 to 15 dwelling units per acre for the Residential Multi- Family One (RM-I) Planned Community (PC) District Zoning classification. With regard to the maintenance of the Village 11 pedestrian-orientation for all neighborhoods, Neighborhood R -17 requires review and approval for the fulfillment of such criteria by the Design Review Committee. The increase in units will provide the opportunity for more units to face the public street. This increase will allow better visibility of the street and "ownership" by the future residences. In addition, the increase of 62 units provides the opportunity for better social interaction by the residences with pedestrians on Discovery Falls Drive and Crossroads Street as well as on internal streets within the project. CONCLUSION: The proposal completes the mapping for all of the units that were considered in the Village 11 SPA Plan. Therefore, staff finds that the revised tentative map for Village 11 is consistent with the SPA Plan. FISCAL IMP ACT: There are no fiscal impacts from the preparation of this report and the processing of the Tentative Subdivision Map. All costs are covered by the applicant's deposit accounts. ATTACHMENTS 1. Locator Map 2. Planning Commission Resolution (PCS-06-10) 3. Application with Disclosure Statements 4. Revised Village II Site Utilization PlanlTentative Map J :IPLANNING\HAROLDIPCS-06-10-CCREPORT.DOC 7-4 R-24 R-25 Birch Rd ~ '!!" '6> ~ -0 ~ .i PROJECT LOCATION ................. : Revised Areas : -. . . . . . . . . . . . . . .- CHULA VISTA PLANNING AND BUILDING DEPARTMENT LOC)CATOR ~~J~ Brookfield Otay LLC. PROJECT Ota~ Ranch Village 11, Phase 3, ADDRESS: Revised Tentative Map. SCALE: FILE NUMBER: No Scale PCS-06-10 PROJECT DESCRIPTION: SUBDIVISION Project Summary: Otay Ranch Village 11 Phase 2 and 3 Revised Tentative Map. laled cases: Non. J:\planning\carlos~ocators\pcs061 O.cdr 03.08.06 f.]-f+aC how J ~ RESOLUTION NO. PCS-06-10 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF CHULA VISTA RECOMMENDING THAT THE CITY COUNCIL APPROVE A REVISED TENTATIVE SUBDIVISION MAP FOR THE OTAY RANCH VILLAGE ELEVEN SECTIONAL PLANNING AREA (SPA) PLAN- BROOKFIELD SHEA OTAY PROJECT L.P., CHULA VISTA TRACT 06-10. WHEREAS, the property which is the subject matter of this resolution is identified as Exhibit "A" attached to City Council Resolution and described on Chula Vista Tract 06-10, and is commonly known as "Otay Ranch Village Eleven Revised Tentative Map", ("Property"); and, WHEREAS, a duly verified application for the subdivision of the Property in the form of a tentative subdivision map known as "Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10", ("Project"), was filed with the City of Chula Vista Planning and Building Department on January 27, 2006 by Brookfield Shea Otay Project L.P., ("Applicant"); and, WHEREAS, the application requests the approval for reVlSlons to portions of the approximately 489 acres of land in Village Eleven located east of Eastlake Parkway and south of Olympic Parkway; and WHEREAS, the development of the Property has been the subject matter of the Otay Ranch General Development Plan ("GDP") previously approved by the City Council on October 28,1993 by Resolution No. 17298, and as amended on November 10, 1998 by Resolution No. 19253 ("GDP Resolution") wherein the City Council, in the environmental evaluation of said GDP, relied in part on the Otay Ranch General Development Plan, Final Environmental Impact Report No. 90-01, SCH #9010154 ("Program FEIR 90-01"); and, WHEREAS, the City's Environmental Review Coordinator has reviewed the Project and determined that the Project was adequately covered in the previously adopted Final Second Tier Environmental Impact Report for Village Eleven Sectional Planning Area (SPA) Plan and Tentative Map and the associated Mitigation Monitoring and Reporting Program (FEIR 01-02) that was approved October 23, 2001; and WHEREAS, the Planning Commission set the time and place for a hearing on said Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10, (PCS-06-10) and notice of said hearing, together with its purpose, was given by its publication in a newspaper of general circulation in the city and its mailing to property owners within 500 feet of the exterior boundaries of the Project site at least ten days prior to the hearing; and, WHEREAS, the hearing was held at the time and place as advertised, namely 6:00 p.m. on March 22, 2006, in the Council Chambers, 276 Fourth Avenue, before the Planning Commission and said hearing was thereafter closed. 7-6 Planning Commission Resolution PCS 06-10 Page 2 NOW, THEREFORE, BE IT RESOLVED THAT, from the facts presented to the Planning Commission, the Commission has determined that the approval of Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10, (PCS-06-10) is consistent with the City of Chula Vista General Plan, the Otay Ranch General Development Plan, Otay Ranch Planning Area 11 SPA Plan, and all other applicable Plans, and that the public necessity, convenience, general welfare and good planning practice support the approval. BE IT FURTHER RESOLVED THAT THE PLANNING COMMISSION recommends that the City Council adopt a resolution approving Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10, (PCS-06-10) in accordance with the findings contained in the attached City Council Resolution. And that a copy of this resolution be transmitted to the owners of the property and the City Council. PASSED AND APPROVED BY THE PLANNING COMMISSION OF CHULA VISTA, CALIFORNIA, this 22nd day of March, 2006 by the following vote, to-wit: AYES: NOES: ABSENT: ABSTENTIONS: Vicki Madrid, Chair ATTEST: Diana Vargas, Secretary J:IPLANNINGIHAROLDIRESOLUTIONSIPCS-06-10REvISEDTM-PCRESO.DOC . 7-7 D Q5fiS- - B/l.ookL~14' O-fo---r .L1-C 1.-" j/ '1 "J 1 ~ I' . ~1Ic... P I' .a & -r- n n n g ~ - CU:CC/kr< --J "'F ) tf#athrnen+ J Building Department Planning Division I Development Processing CnY OF CHUIA VISTA APPLICATION · DEVELOPMENT PROCESSING . TYPE B Part 1 T e of Review Re uested o General Plan Amendment o General Development Plan DNew (or) DAmendment o SPA/Specific Plan DNew (or) DAmendment o Zone Change l8 Tentative Subdivision Map (al7U'r"ld~'n.I-) o Annexation o Other: A lication Information Applicant Name: ~o ~'e/ d ()~ L U Applicant Address: 28(; 5 'foirdc. l). ''^fM # 200, Dti AIM. (A '1201 'I Contact: J? ~ 0;/I.JA-n{)fA..) Phone: rffS-8J . Lf81- 850D Applicant's Interest in Property (If applicant is not the owner, the owner's authorization signature at the end of this form is required to process this request,) I2!l.Own 0 Lease 0 In escrow 0 Option to purchase Engineer/Agent: H UnScl&r r ASSoc. Address: 10/79 IItlenn tA.tn~ 51. ffl.n Did'" (,4 '7021:2/ Contact: rr Phone: 58J 558- LfS-Oo Primary contact': [2g Applicant Agent 0 Email addressofPrimarYContact:Hm{).rriLj(o.H()nM.k~S[).Cdl1<\ General Project Description (all types) Project Name: OI::J RNlch V.itlaa, ;ll'hase.'? IUII/kd J Cj) , General Description of Proposed Project: -/7 r, oh Rai1eh Vdf. lie I IJk Subject Property Information (all types) Location/Street Address: Ih nit! Pkw <7U h si. .< 50! Assessor's Parcel #: (/13 - (P/.2 -02 (!by) Total Acreage: i8. Redevelopment Area (if applicable): /oJ! General Plan Designation: RAil t Zone Designation: PC - {)fr::; '&-n.ch I(Lilac!' /1 :SPA " II d Planned Community (if applicable): Current Land Use: Within Montgomery Specific Plan? 0 Yes I)g'No General Plan Amendment Proposed Land Use Designation: Justification for General Plan change: N/~A 91910 276 Fourth Avenue Chula Vista I CalTo~nia (619) 691.5101 ,.~~W?- --- ----- - .. ) .. ,J , OTYOF CHUIA VISTA APPLICATION · DEVELOPMENT PROCESSING . TYPE B Part 2 General Development Plan General Development Plan Name: N / /I Proposed Land Uses / Tolal Acres: I . Commercial / Acres Industrial / Acres Parks / Acres Schools / Acres Community Purpose / Acres Circulation / Acres Public/Quasi / Acres Open Space / Acres Residential/Range: Single Family Detached / to Units Acres Single Family Anached / to Units . Acres Duplexes / to Units Acres Apartments / to Units Acres Condominiums / to Units Acres TOTALS / to Units Acres Annexation Prezoning: N/A WCO Reference #: I Tentative Subdivision Map Subdivision Name: ~ 'Rcvn.ch V~~ /1 CV Tract #: C. V. T. () 1-1/ B Minimum lot size: k 'Ahl. 2 Number of units:23 0 '1 Average lot size: Al.l -<Jhf. OJ' Mvi.J.u:1 TI4 p..-17 : 180 I.-<.I',fr 'frropokd R. -17 = 1/ fj i<-nih .40 --o/;Ol"Oo-r.( 2 7'R<..v, TM Zone Change o Rezoning Proposed zoning: ~24preZOning o Setback Authorization Print applicant name: 'Ronald D, 6 Print owner name.: ~ hu- Applicant Signature: Date: S"/ LLC!. mana ::J')1Vl'1Ll::ki Owner Signature': .Proof of ownership m Date: Chula Vista CaliT~nia 91910 (619) 691-5101 I RBVS.031 Pg2lZ ) J .~\(y ~~~ cnY OF CHUIA VISTA Planning & Building Department Planning Division I Development Processing APPLICATION APPENDIX C Development Permit Processing Agreement Permit Applicant: Applicant's Address: Type of Permit: Agreement Date: Deposit Amount: Brookfield Otav R-17 LLC 12865 Pointe Del Mar. Suite 200, Del Mar, CA 92104 ~ T~tt\1;\/e t--"l~<. Pu.i<.)~iu H PtlA..i\~ _ " ..... .' ..$' ~ ,30 5 .~ .. This Agreement ("Agreement") between the City of Chula Vista, a chartered municipal corporation ("City") and the forenamed applicant for a development permit ("Applicant"), effective as of the Agreement Date set forth above, is made with reference to the following facts: Whereas, Applicant has applied to the City for a permit of the type aforereferenced ("Permit') which the City has required to be obtained as a condition to permitting Applicant to develop a parcel of property; and, Whereas, the City will incur expenses in order to process said permit through the various departments and before the various boards and commissions of the City ("Processing Services"); and, Whereas the purpose of this agreement is to reimburse the City for all expenses it will incur in connection with providing the Processing Services; Now, therefore, the parties do hereby agree, in exchange for the mutual promises herein contained, as follows: 1. Applicant's Duty to Pay. Applicant shall pay all of City's expenses incurred in providing Processing Services related to Applicant's Permit, including all of City's direct and overhead costs related thereto. This duty of Applicant shall be referred to herein as "Applicant's Duty to Pay." 1. 1. Applicant's Deposit Duty. As partial performance of Applicant's Duty to Pay, Applicant shall deposit the amount aforereferenced ("Deposit"). 1.1.1. City shall charge its lawful expenses incurred in providing Processing Services against Applicant's Deposit If, after the conclusion of processing Applicant's Permit, any portion of the Deposit remains, City shall return said balance to Applicant without interest thereon. If, during the processing of Applicant's Permit, the amount of the Deposit becomes exhausted, or is imminently likely to become exhausted in the opinion of the e City, upon notice of same by City, Applicant shall forthwith provide such additional deposit as City shall calculate as reasonably necessary to continue Processing Services. The duty of Applicant to initially deposit and to supplement said deposit as herein required shall be known as "Applicant's Deposit Duty", 2. City's Duty. City shall, upon the condition that Applicant is no in breach of Applicant's Duty to Payor Applicant's Deposit Duty, use good faith to provide processing services in relation to Applicant's Permit application. 2.1. City shall have no liability hereunder to Applicant for the failure to process Applicant's Permit application, or for failure to process Applicant's Permit within the time frame requested by Applicant or estimated by City. 276 Fourth Avenue I Chula Vista v,g,lifrnia I 91910 I (619) 691-5101 ~\ft- -r- ~ - " ~ CIlY OF CHUlA VISTA Planning & Building Department Planning Division I Development Processing Development Permit Processing Agreement - Page 2 2.2. By execution of this agreement Applicant shall have no right to the Permit for which Applicant has applied. City shall use its discretion in valuating Applicant's Permit Application without regard to Applicant's promise to pay for the Processing Services, or the execution of the Agreement. 3. Remedies. 3.1. Suspension of Processing In addition to all other rights and remedies which the City shall otherwise have at law or equity, the City has the right to suspend and/or withhold the processing of the Permit which is the subject matter of this Agreement, as well as the Permit which may be the subject matter of any other Permit which Applicant has before the City. 3.2. Civil Collection In addition to all other rights and remedies which the City shall otherwise have at law or equity, the City has the right to collect all sums which are or may become due hereunder by civil action, and upon instituting litigation to collect same, the prevailing party shall be entitled to reasonable attorney's fees and costs. 4. Miscellaneous. 4.1 Notices. All notices, demands or requests provided for or permitted to be given pursuant to this Agreement must be in writing. All notices, demands and requests to be sent to any party shall be deemed to have been properly given or served if personally served or deposited in the United States mail, addressed to such party, postage prepaid, registered or certified, with return receipt requested at the addresses identified adjacent to the signatures of the parties represented. 4.2 Governing LawNenue. This Agreement shall be governed by and construed in accordance with the iaws of the State of California. Any action arising under or relating to this Agreement shall be brought only in the federal or state courts located in San Diego County, State of California, and if applicable, the City of Chula Vista, or as close thereto as possible. Venue for this Agreement, and perfonmance hereunder, shall be the City of Chula Vista. 4.3. Multiple Signatories. If there are multiple signatories to this agreement on behalf of Applicant, each of such signatories shall be jointly and severally liable for the performance of Applicant's duties herein set forth. 4.4. Signatory Authority. This signatory to this agreement hereby warrants and represents that he is the duly designated agent for the Applicant and has been duly authorized by the Applicant to execute this Agreement on behalf of the Applicant. Signatory shall be personally liable for Applicant's Duty to Pay and Applicant's Duty to Deposit in the event he has not been authorized to execute this Agreement by Applicant. 4.5 Hold Harmless. Appiicant shall defend, indemnify and hold harmless the City, its elected and appointed officers and employees, from and against any claims, suits, actions or proceedings, judicial or administrative, for writs, orders, injunction or other relief, damages, liability, cost and expense (including without limitation attorneys' fees) arising out of City's actions in processing or issuing Applicant's Permit, or in exercising any discretion related thereto including but not limited to the giving of proper environmental review, the holding of public hearings, the extension of due process rights, except only for those claims, suits, actions or proceedings arising from the sole negligence or sole willful conduct of the City, its officers, or employees known to, but not objected to, by the Applicant. Applicant's indemnification shall include any and all costs, expenses, attorney's fees and liability incurred by the City, its officers, agents, or employees in defending against such claims, whether the same proceed to judgement or not. Further, Applicant, at its own expense, shall, upon written request by the City, defend any such suit or action brought against the City, its officers, agents, or employees. Applicant's indemnification of City shall not be limited by any prior or subsequent declaration by the 276 Fourth Avenue I Chula Vista li~_"ff~rnia I 91910 I (619) 691-5101 I ~!~ --p- O' __ ') CIlY OF CHUIA VISTA Planning & Bnilding Department Planning Division I Development Processing Development Permit Processing Agreement - Page 3 Applicant. At its sole discretion, the City may participate at its own expense in the defense of any such action, but such participation shali not relieve the applicant of any obligation imposed by this condition. 4.6 Administrative Claims Requirements and Procedures. No suit or arbitration shali be brought arising out of this agreement against the City unless a claim has first been presented in writing and filed with the City of Chula Vista and acted upon by the City of Chula Vista in accordance with the procedures set forth in Chapter 1 .34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fuliy set forth herein, and such policies and procedures used by the City in the implementation of same. Upon request by City, Consultant shali meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. Now therefore, the pqrties hereto, having read and understood the terms and conditions of this agreement, do hereby express their consent to the terms hereof by setting their hand hereto on the date set forth adjacent thereto. Dated: City of Chula Vista 276 Fourth Avenue Chula Vista, CA By: Dated: 12/05/2005 Brookfield Otav R-17 LLC ~,-, 12865 Pointe Del Mar, Suite 200 ~~'"'' By: Adam D. Pevnev. M.S. 276 Fourth Avenue I Chula Vista Il~.~if~rnia I 91910 I (619) 691-5101 u') ') ~!ft- -r- ~ " Planning & Building Department Planning Division I Development Processing CIlY OF CHUIA VISTA APPLICATION APPENDIX A Project Description & Justification Project Name: Otav Ranch Villaqe 11 Area R-17 Applican't-Name: Brookfield Otav R-17 LLC --- Please fully describe the proposed project, any and all construction that may be accomplished as a result of approval of this project, and the project's benefits to yourself, the property, the neighborhood, and the City of Chula vista. Include any details necessary to adequately explain the scope and/or operation of the proposed project. You may include any background information and supporting statements regarding the reasons for, or appropriateness of, the application. Use an addendum sheet if necessary. For all Conditional Use Permits or Variances, please address the required "findings" as listed in the Application Procedural Guide. N/A - No Conditional Use Permits or Variances are beinq applied for at this time. 276 Fourth Avenue I Chula Vista 1_9'~ornia I 91910 I (619) 691-5101 ~~ ) ~If? -r- ":=: COY OF CHULA VISTA Planning & Building Department Planning Division I Development Processing APPLICATION APPENDIX 8 Disclosure Statement Pursuant to Council Policy 101-01, prior to any action upon matters that will require discretionary action by the Council, Planning Commission and all other official bodies of the City, a statement of disclosure of certain ownership or financial interests, payments, or campaign contributions for a City of Chula Vista election must be filed. The following information must be disclosed: 1. List the names of all persons having a financial interest in the property that is the subject of the application or the contract, e.g., owner, applicant, contractor, subcontractor, material supplier. Brookfield Shea Otav LLC Brookfield OtavLLC Brookfield Otav R-17 LLC Brookfield San Dieqo Builders Inc 2. If any person' identified pursuant to (1) above is a corporation or partnership, list the name's of all individuals with a $2000 investment in the business (corporation/partnership) entity. N/A 3. If any person' identified pursuant to (1) above is a non-profit organization or trust, list the names of any person serving as director of the non-profit organization or as trustee or beneficiary or trustor of the trust. N/A 4. Please identify every person, including any agents, employees, consultants, or independent contractors you have assigned to represent you before the City in this matter. Hunsaker & Assoc. - Chuck Cater Brookfield Otav LLC ( Ron Grunow) Dahlin Group - Martv Volk Brookfield San Dieoo Builders Inc. ( Adam Pevnev) Tributarv 17 - Tom Picard Brookfield San Dieoo Builders Inc. (Ten McHuoh) Has any person' associated with this contract had any financial dealings with an official" of the City of Chula Vista as it relates to this contract within the past 12 months. Yes D- No ~ 5. If Yes, briefly describe the nature of the financial interest the official" may have in this contract. 6. Have you made a contribution of more than $250 within the past twelve (12) months to a current member of the Chula Vista City Council? No ~ Yes D If yes, which Council Member? 276 Fourth Avenue I Chula Vista I California I 91910 I (619) 691-5101 7-14 7: ~:"'- . ) ) Planning & Building Department Planning Division I Development Processing cm OF CHUlA VISTA APPLICATION APPENDIX B Disclosure Statement - Page 2 7. Have you provided more than $340 (or an item of equivalent value) to an official"" of the City of Chula Vista in the past twelve (12) monthS?~S includes being a source of income, money to retire a legal debt, gift, loan, etc.) Yes D- No If Yes, which official"" and what was the nature of item provided? Date: 12/05/2005 Signature of Contractor/Applicant Adam D. Pevnev. M.S. Print or type name of Contractor/Applicant " Person is defined as: any individual, firm, co-partnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, receiver, syndicate, any other county, city, municipality, district, or other political subdivision, -or any other group or combination acting as a unit. 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Ii !'?I- "Ii' I "I r n. .!!I i 1.1 t I' III HI ';r,' "I ,;: I I lIil I'll \,1, ',I(.! . : "! '1;1' !!'I ! !',I ',II';' '01 . " I" II" ,., j,,! ;.ljuh lil:I'1 !i ", !','! II!'I!I/ ,I I' . .it ~ lid Ii!, ", " . II' . i "11 1111 "I i!"" !1:;!i!U II 'I!!! I !!; 1. ~ i.1 ~,.- 00,.- ~ '7w ~CJ ~<! ~ cj....J ~ a ~-J...J!: c..- -' <C>:;SiJ :;; I >.: WI <.!J ~ ~()Z~ <C 0::> I-ZZG Z -u. ~ <(a: $: ~ o (3 ~>- ><( ~I- o .-' . i i ;i;)1 I' iii.;1 .. ~. mhl~ ! i .1,. j, iuil:ii II j,...!lCQ i i ~ - i q~~ ? I ;1 I [~~!1 I .. ~>"'j' f . III:I:~~ i , II!, I ~~!ii15' ~ i, . !HI ~~3: ~ ~ lillllg hW Ii,. ," 111~a !(! I ie;lnlH1 i liHiI'+i ~)(~!~ ,I 'I. II i II ,II ,'1.,1, ,;,II,!! ! 1,1 iludiilIlHiII!i!lin!illdl i! ::::::--.... f)\ -""',1"",.. 7-17 ! i I II II i !I, I I. i .. ! Ii I II, Ii. I I, Ii 7-18 ~ " I N!!I ~ , -- i ~~ ! ~O":l:: . ''''; -' . ~::I ~~ ~ ~>"! :1 ",:I:~i5 ~Oc5 . ~~~ ~~ p- !al,.,1 Ii )111 Iii III J "k ! :J: . ! ! I ~! ! I 'I i~'i! I Hi! ~ . I' ! Ii I, ~!~ 1 I I' I.;. ,; Hhl ;I,ll ! ! ~ i II !i ~ M!I M i I ~~ i '''' '" I "~~ , ~ <I' 2. _ 3::= ~ i>,,! i I ~ t3 ~1I I .~ \1,. ~ jO I iiI !I ~~ I ~.... I i 11,.,1 II i ! , : hi II ! Ii I !ilIiI ; I! Ii Ii !~ '. ID , 7-19 RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING A REVISED TENTATIVE SUBDIVISION MAP FOR THE OTAY RANCH VILLAGE ELEVEN, LOCATED EAST OF EASTLAKE PARKWAY AND SOUTH OF OLYMPIC PARKWAY-BROOKFIELD SHEA OTAY (BSO) PROJECT LLP. WHEREAS, the property which is the subject matter of this resolution is identified as Exhibit "A" attached to City Council Resolution No. and described on Chula Vista Tract 06-10, and is commonly known as Otay Ranch Village Eleven Tentative Map, ("Property"); and, WHEREAS, a duly verified application for the subdivision of the Property in the form of a tentative subdivision map known as "Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10", ("Project"), was filed with the City of Chula Vista Planning and Building Department on January 27, 2006 by Brookfield Shea Otay Project L.P., ("Applicant"); and, WHEREAS, the application requests the approval for reVISIOns to portions of the approximately 489 acres of land in Village Eleven located east of Eastlake Parkway and south of Olympic Parkway; and WHEREAS, the development of the Property has been the subject matter of the Otay Ranch General Development Plan ("GDP") previously approved by the City Council on October 28, 1993 by Resolution No. 17298, and as amended on November 10, 1998 by Resolution No. 19253 ("GDP Resolution") wherein the City Council, in the environmental evaluation of said GDP, relied in part on the Otay Ranch General Development Plan, Final Environmental Impact Report No. 90-01, SCH #9010154 ("Program FEIR 90-01"); and, WHEREAS, the City's Environmental Review Coordinator has reviewed the Project and determined that the Project was adequately covered in the previously adopted Final Second Tier Environmental Impact Report for Village Eleven Sectional Planning Area (SPA) Plan and Tentative Map and the associated Mitigation Monitoring and Reporting Program (FEIR-OI-02) that was approved October 23, 2001; and WHEREAS, the Planning Commission set the time and place for a hearing on said Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10, (PCS-06-10) and notice of said hearing, together with its purpose, was given by its publication in a newspaper of general circulation in the city and its mailing to property owners within 500 feet of the exterior boundaries of the Project site at least ten days prior to the hearing; and, WHEREAS, the hearing was held at the time and place as advertised, namely 6:00 p.m. on March 22, 2006, in the Council Chambers, 276 Fourth Avenue, before the Planning Commission and the Planning Commission recommended approval of the Project and said hearing was thereafter closed; and 7-20 Resolution WHEREAS, a public hearing was scheduled before the City Council of the City of Chula Vista on proposed Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10 (PCS-06-1O), and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby fmd, determine, resolve and order as follows: I. PLANNING COMMISSION RECORD The proceedings and all evidence introduced before the Planning Commission at their public hearing held on March 22, 2006, and the minutes and resolutions resulting therefrom, are hereby incorporated into the record of this proceeding. These documents, along with any documents submitted to the decision makers, shall comprise the entire record of the proceedings for any California Environmental Quality Act (CEQA) claims. II. COMPLIANCE WITH CEQA The environmental impacts associated with this Revised Tentative Subdivision Map for Village Eleven have been analyzed in FEIR-01-02. The City Council has considered FEIR-01-02, and fmds that it was prepared in accordance with the requirements of the California Environmental Quality Act [CEQA], Public Resources Code section 21000 et seq., the CEQA Guidelines, Cal. Code Regulations, Title 14, section 15000 et seq., and the Environmental Review Procedures of the City of Chula Vista. The City Council finds that none of the conditions in CEQA Guideline section 15162 calling for the preparation of a subsequent EIR have occurred. III. ACTION The City Council hereby approves the resolution approving the Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10, (PCS-06-10) involving 489- acres of land known as the Otay Ranch Village Eleven Tentative Map in this resolution, finding it is consistent with the City of Chula Vista General Plan, the Otay Ranch General Development Plan, Village Eleven SPA Plan, and all other applicable Plans, and that the public necessity, convenience, general welfare and good planning and zoning practice support their approval and implementation. IV. TENTATIVE SUBDIVISION MAP FINDINGS Pursuant to Government Code Section 66473.5 of the Subdivision Map Act, the City Council finds that the Otay Ranch Village Eleven Revised Tentative Map, Chula Vista Tract 06-10, (PCS-06-1O) as conditioned, is in conformance with all the various elements of the City's General Plan, the Otay Ranch General Development Plan and Village Eleven Sectional Planning Area (SPA) Plan, based on the following: 7-21 Resolution 1. Land Use The Project is in a planned area that provides urban village uses authorized by the Village Eleven Sectional Planning Area (SPA) Plan. The Revised Tentative Map retains the previously approved total of 2,304 residential dwelling units. 2. Circulation All of the on-site and off-site public and private improvements required to serve the subdivision are part of the project description or are conditioned consistent with the Otay Ranch General Development Plan, and the Village Eleven SPA Plan. The Applicant shall construct those facilities in accordance with City and the Village Eleven SPA Plan standards. 3. Housing The Developer is required to enter into an Affordable Housing Regulatory Agreement. The Agreement will set forth the number and location of affordable housing units in Village Eleven. 4. Parks, Recreation and Open Space The developer has already provided land via an irrevocable offer of dedication, payment of in-lieu fees, or a combination thereof towards a Community Park within the service area of Village 11. The developer will also provide development Park Acquisition and Development (PAD) fees in accordance with CVMC 17.10. 5. Conservation The FEIR addressed the goals and policies of the Conservation Element of the General Plan and found development of this site to be consistent with these goals and policies. The Otay Ranch Resource Management Plan requires conveyance of land to the Otay Ranch Preserve for every one- acre of developed land prior to approval of any Final Map. 6. Seismic Safetv The proposed subdivision is in conformance with the goals and policies of the Seismic Element of the General Plan for this site. No seismic faults have been identified in the vicinity of the Project according to the Village Seven SPA Geotechnical Reconnaissanc.e Report. 7. Public Safetv All public and private facilities are expected to be reachable within the threshold response times for fIre and police services. 7-22 Resolution 8. Public Facilities The Applicant will provide all on-site and off-site streets, sewers and water facilities necessary to serve this Project. The developer will also contribute to the Otay Water District's improvement requirements to provide terminal water storage for this Project as well as other major projects in the eastern territories. 9. Noise The Project will include noise attenuation walls. In addition, all buildings are required to meet the standards of the Uniform Building Code with regard to acceptable interior noise levels. 10. Scenic Hi~hway The roadway design provides wide landscaped buffers along Eastlake, Hunte and Olympic Parkway. There is no scenic highway adjacent to the Project. 11. B icvcle Routes Bicyclists will share internal streets with motor vehicles due to the anticipated low traffic volumes and limited speeds allowed on residential streets. 12. Public Buildings Public buildings are not proposed on the Project site. V. CONDITIONS OF APPROVAL The conditions imposed on the grant of Tentative Map approved October 23, 2001 and May 27,2003 are approximately proportional both in nature and extent to the impact created by the proposed development. VI. CONSEQUENCE OF FAILURE OF CONDITIONS If any of the previously established conditions fail to occur, or if they are, by their terms, to be implemented and maintained over time, if any of such conditions fail to be so implemented and maintained according to their terms, the City shall have the right to revoke or modify all approvals herein granted, deny, revoke or further condition issuance of all future building permits issued under the authority of approvals herein granted, institute and prosecute litigation to compel their compliance with said conditions or seek damages for their violation. 7-23 Resolution VII. INVALIDITY; AUTOMATIC REVOCATION It is the intention of the City Council that its adoption of this Resolution is dependent upon the enforceability of each and every term, provision and condition herein stated; and that in the event that anyone or more terms, provisions, or conditions are determined by a Court of competent jurisdiction to be invalid, illegal or unenforceable, this resolution shall be deemed to be automatically revoked and of no further force and effect ab initio. Presented by Approved as to form by ~/~ tl ~ Ann Moore City Attorney Jim Sandoval Planning and Building Director 7-24 PUBLIC HEARING TO SOLICIT PUBLIC INPUT ON THE 2006-2007 ANNUAL ACTION PLAN; THE FIRST AMENDMENT TO THE 2005. 2010 CONSOLIDATED PLAN; AND, A HUD SECTION 108 LOAN APPLICATION RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE ANNUAL ACTION PLAN FOR FY 2006-2007 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG), HOME INVESTMENT PARTNERSHIP ACT (HOME), AMERICAN DREAM DOWNPAYMENT (ADDI) AND THE EMERGENCY SHELTER GRANT (ESG) PROGRAMS; AND APPROVING THE FIRST AMENDMENT TO THE 2005-2010 CONSOLIDATED PLAN; AND, AUTHORIZING TRANSMITTAL OF 2006-2007 ANNUAL ACTION PLAN AND THE FIRST AMENDMENT TO THE 2005-2010 CONSOLIDATED PLAN TO THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD); AND INSTRUCTING STAFF TO INCLUDE APPROPRIATIONS TO FUND THE ANNUAL ACTION PLAN IN THE FY 2006-2007 PROPOSED BUDGET SUBMITTED BY: ASSISTANT CITY MANAGER/COMMUNITY DEVELOPMENT DIR. 7 I REVIEWED BY: CITY MANAGER )-h. ITEM TITLE: BACKGROUND CITY COUNCIL AGENDA STATEMENT ITEM NO.: MEETING DATE: f'.-' G 04/04/06 4/5THS VOTE: YES D NO D As a Department of Housing and Urban Development (HUD) entitlement community, the City receives funds under three of Federal block grant programs:' Community Development Block Grant (CDBG); the Emergency Shelter Gront (ESG); and the HOME Investment Partnership Act (HOME) program, which includes the American Dream Downpayment Initiative (ADDI). The entitlement amounts are determined by a formula based on statistical and demographic data. The funds are designed for cities to provide decent housing, a suitable living environment, and expand economic opportunities, principally for low and moderate-income persons. Each entitlement community develops their own programs and funding priorities. In addition to the annual entitlement funds, HUD provides cities with other various funding opportunities, which include loans or grant advances such as the Section 108 Loan Guarantee Program. These funding mechanisms are designed to assist cities in financing large-scale development projects at one time rather than phasing them and 8-1 PAGE 2, ITEM NO.: MEETING DATE: <;< ',' 04/04/2006 completing small portions eoch year. The Section 108 Loan is simply an "advance" of future CDBG entitlement funds and, as such, is repaid with a portion of the City's annual entitlement. On February 21,2006, the City Council held a Public Hearing to offer interested parties an opportunity to provide input on the 2006-2007 CDBG, HOME and ESG proposals. The purpose of today's public hearing is to solicit public input, particularly from persons of low and moderate income, on the following: 1. 2006-2007 Annual Action Plan Summary for the CDBG, HOME and ESG Grant Programs; 2. Draft HUD Section 108 Loan Application for use in completing infrostructure improvements; and, 3. First Amendment to the 2005-2010 Consolidated Plan to include the potential use of HUD Section 108 Loan funds and to allow the targeted use of rental assistance funding for displaced persons. RECOMMENDATION 1. Conduct the public hearing to review and accept public comment on: . The 2006-2007 Annual Action Plan, which includes funding recommendations for the CDBG, HOME, ADDI, and ESG programs; . A Draft HUD Section 108 Loan Application; and, . The First Amendment to the 2005-2010 Consolidated Plan. 2. Adopt the resolution approving the following: . 2006-2007 Annual Action Plan and the First Amendment to the 2005-2010 Consolidated Plan and authorizing transmittal of the documents to the U.S. Department of Housing and Urban Development (HUD); and, . Instruct staff to include appropriations to fund the Annual Action Plan in the FY 2006-2007 City Proposed Budget. BOARDS/COMMISSIONS RECOMMENDATION None. DISCUSSION Each year the City undertakes a process to solicit and approve programs and proiects for the CDBG, HOME, ADDI and ESG grant programs. This item addresses the review of the 2006- _"2 8-2 PAGE 3, ITEM NO.: MEETING DATE: t 04/04/2006 2007 entitlement amaunts as well as the requests far funding received fram variaus City departments and lacal organizations. The City Council and public comments received at the February 21, 2006 public hearing on the projects ond programs being considered for 2006-2007 grant funds have been incorporated into' the 2006-2007 Annual Action Plan. An Annual Action Plan Summary is included as Attochment "A" of this report. The City of Chulo Vista's Annual Action Plan is a comprehensive planning document which identifies the City's needs in housing, homelessness, community and economic development. In addition, it includes the ollocotion of funds for capital improvements, community enhancement projects, economic development, public services, affordable housing, first-time homebuyer programs and administration/ planning activities. Per HUD regulations, the City must hold a 30- doy comment period for the public to review the Annual Action Plan to make comments or suggest changes. The 30- day comment period to review the draft began on February 24, 2006 and ended on March 27, 2006. No comments were received. COMMUNITY DEVELOPMENT BLOCK GRANT In order to be eligible for Community Development Block Grant funding, a project or program must address at least one of the CDBG national objectives which are: 1) benefit primarily low and moderate income families; 2) aid in the prevention or elimination of slums or blight; and 3) meet other community needs having a mojor emergency (disasters, etc.). For the 2006-2007 CDBG program, the City of Chula Vista will receive an entitlement of $2,042,661. The total amount of CDBG funding requested is summarized below and includes staff's funding recommendations. All funding recommendations are also subject to further HUD approvol of the Annual Action Plan. CATEGORY AMOUNT STAFF REQUESTED RECOMMENDATION Public Services $692,331 $306,399 Capital Improvement Proiects $1,226,500 $1,055,130 Community Enhancement $672,000 $272,600 Economic Development $36,391 $0 Administration and PlanninQ $440,000 $408,532 TOTAL $3,067,822 $2,042,661 Public Services Category: The City received sixteen (16) eligible requests for public services totaling $692,331. Based on a 15 percent (15%) cap of the entitlement funds ($2,042,661), the city may allocate up to $306,399 for public service programs. The funding requests from public service organizations are CDBG-eligible as they meet the national objective to primarily benefit low-income families. Of the sixteen proposals received, staff recommends funding thirteen (13). _-3 8-3 PAGE 4, ITEM NO.: MEETING DATE: \? 04/04/2006 Amount Funding Organization/Dept. Project Title Requested Recommended ~dult Protective Services South Bay Adult Day Health Care $12,000 $11,000 C. V. Community Callaborative Child Care Coordinator $48,436 $42,000 Chulo Vista Veterans Home Support Rehab Unit Eauipment $3,500 $3,500 City - Parks and Recreation WizKids Proarom $15,000 $12,299 Familv Health Centers of S.D. KidCare Exoress III Mobile $30,000 $27,000 Lutheran Social Services Carina Neiahbor $30,000 $20,000 Lutheran Social.Services Proiect Hand $ 15,000 $8,000 Meals-on-Wheels Meals-an-Wheels Chula Vista $ 12,000 $1 2,000 Reoional Shelter Voucher Prooram Reoional Shelter Voucher Pam. $5,000 $5,000 South Bav Community Services Familv Violence Treatment $50,000 $34,000 South Bay Community Services Prevention & Diversion Project $126,355 $96,600 South Bav Community Services Thursdav's Meal $11,000 $10,000 YMCA Kinship Support Services $55,940 $25,000 Chula Vista Yacht Club Youth Sailina Proaram $20,000 $0 Dress for Success San Diego Dress for Success $8,100 $0 S.D.-Imperial Counties Labor Council Safe Homes Proiect $250,000 $0 TOTAL $692,331 $306,399 Capital Improvement Category: The City has historically allocated approximately $1.1 million of the CDBG entitlement amount to fund capital improvements projects each year. These funds are used to complete infrastructure improvements such as installation of new curb, gutters, sidewalks, ADA pedestrian ramps and public facility improvements in the low/moderate income areas of the City. Following are the funding recommendations for this category: Amount Funding Organization/Dept. Project Title Requesfed Recommended . $225,000 $600,000 $225,000 $22,500 $124,000 $20,000 $10,000 TOTAL $1,226,500 - General Services - General Services - General Services - Public Works De t. - Public Works De t. - Public Works De t. - Public Works De t. _-4 8-4 $209,130 $600,000 $125,000 $ 20,500 $80,000 $10,500 $10,000 $1,155,130 PAGE 5, ITEM NO.: MEETING DATE: "7 -;-, 04/04/2006 Although this category is not subject to a spending cap limit, the amount of funds available is still limited based upon additional funding priorities. Furthermore, the recent increase in construction costs has also limited the City's capacity to complete the needed infrastructure improvements such as streets, ADA accessible pedestrian ramps, and sidewalks, particularly in areas where these infrastructure improvements are not currently in place. In order to address the growing concern of the lack of adequate infrastructure, staff presented the City Council with a financing option on February 14, 2006. This included the use of Section 108 Loan Funds in the amount of $9.5 million. If approved, the Section 108 funds, in its entirety, would be directed at completing these improvements in the southwest area of the City, known as the Castle Park Area (Project Area Map attached as Attachment "C"). Use of these funds would create a substantial positive impact on the community, which has been needed for many years. Potentially, a total of 320 ramps and 400,000 square feet of new sidewalks could be installed within the next three years. Completion of a project of this magnitude with use of normal CDBG funds would otherwise take the City over sixteen years to complete. Council approved the concept and authorized staff to proceed with the preparation of a draft Section 108 Loan Application. Per HUD regulations, the draft Application must be available for public review for thirty (30) days. The review period is from March 10 - April 10, 2006. Upon conclusion of the review period, the application will be submitted to HUD for final review and consideration. Should HUD approve the proposed application, debt service payments would be made with future CDBG entitlements for the next 20 years, beginning with fiscal year 2007-2008. Based on the City's annual entitlement, the requested loan amount, and the current interest rate, the City anticipates annual debt service payments of approximately $750,000 per year taken from the City's yearly CDBG Capital Improvement category. After funding the Public Services category as well as the Administration and Planning, approximately $300,000 would be available for other infrastructure and public facility improvements. In anticipation of receipt of the Section 108 Loan funds, the City must amend the Five- Year Consolidated Plan to include the City's intention to pursue Section 108 Loan funds as well as specify the intended use of the funds. The Consolidated Plan Amendment and the Draft Section 108 Loan Application are currently out for a 30-day public/comment review period and are available for review in the office of the Community Development and the City Clerk. To date, no comments have been received. Community Enhancement Category: Four (4) Community Enhancement Projects requests were received totaling $672,600. Community Enhancement Projects/Programs are designed to address the decline of the low/moderate income areas of our community. There is no funding cap for this category. Staff recommends funding three (3) programs totaling $272,600. _-5 8-5 PAGE 6, ITEM NO.: MEETING DATE: 'l 04/04/2006 Amount Funding Organization/Dept. Project Title Requested Recommended $22,600 $300,000 $100,000 S.D.-1m erial Counties Labor Council Safe and Accessible Sidewalks $250,000 TOTAL $672,600 $22,600 $150,000 $0 $100,000 $272,600 Economic Development Category: The two (2) Economic Development requests total $32,917. However, subsequent to the HUD Audit and Annual Report review, HUD instructed City staff to abstain from funding any activities under this category at this time. Funding Organizotion/Dept. Project Title Amount Requested Recommended . Southwestern Communit Southwestern Communi $25,000 $11,391 $36,391 Business T echnicol Assistance Contractin 0 ortunities TOTAL $0 $0 $0 Administration and Planning: Administration and planning costs are costs related to the general management, oversight and coordination of the CDBG program. No more than 20% of the annual entitlement may be obligated under this category. The following is a summary of the 2006-2007 CDBG Administration and Planning activities which total $408,532. Amount Funding Organizotion/Dept. Project Title Requested Recommended CDBG Pro ram Administrotion $400,000 Fair Housin & Tenant Education $39,000 Re ional Task Force on the Homeless $1,000 TOTAL $440,000 $370,532 $37,000 $1,000 $408,532 HOME INVESTMENT PARTNERSHIP ACT (HOME) PROGRAM The City will receive $954,765 in HOME and ADDI funds from HUD for FY 2006-2007. HOME funds may be used to provide affordable rental housing and ownership opportunities through new construction, acquisition, rehabilitation, and tenant-based rental assistance. Over the past seven-years the City has used these funds to support new construction and acquisition activities related to the development of affordable housing. In order to fund a rental assistance program targeted to "displaced persons", _-6 8-6 PAGE 7, ITEM NO.: MEETING DATE: , '"i'.- ( 04/04/2006 the City has to include this as a special need within the five-year Consolidated Plan. This language is included in the Amendment included as Attachment "B". Funding Organizatian/Dept. Project Title Amount Requested Recommended Community Development HOME Proqram Administration $93,000 $ 93 ,000 Community Development American Dream Down Povment Initiative $17,444 $17,444 Community Development CHDO Assistance for Affordable Housina $140,599 $140,599 Community Development Production of Affordable Housinq $263,722 $263,722 Community Development Tenant Based Rental Assistance $440,000 $440,000 TOTAL $954,765 $954,765 EMERGENCY SHELTER GRANT (ESG) PROGRAM Chula Vista will receive Emergency Shelter Grant (ESG) entitlement funds in the amount of $86,993 for fiscal year 2006-2007. The Emergency Shelter Grant (ESG) program is designed to be the first step in a continuum of assistance to prevent homelessness and to enable homeless individuals and families to move toward independent living. ESG is a formula-funded program that uses the CDBG formula as the basis for allocating funds to eligible jurisdictions. Organization/Dept. Project Title Amount Requested Funding Recommend. City - Community Development ESG Proarom Administrotion $4,349 $4,349 South Bov Community Services Casa Nueva Vida I - ESG06 $85,000 $82,644 TOTAL $89,349 $86,993 _-7 8-7 / PAGE 8, ITEM NO.: MEETING DATE: ~ 04/04/2006 . FISCAL IMPACT For Fiscal Year 2006-2007, the City will receive $2,042,661 in COBG; $954,765 in HOME and $86,993 in ESG, for a total of $3,084,419 in federal grant funds. These amounts represent an approximate reduction of 5-9% from fiscal year 2005-06. The grant funds will be appropriated in the FY 2006-2007 City Proposed Budget as follows: Grant Pragrom (Budget Fund) Budget Category Amount TOTAL $1,055,130 $699,643 $861,765 $370,532 $93,000 $4,349 $3,084,419 Administration Administration Administration In fiscal year 2005-06, the city allocated $384,790 of COBG funds to code enforcement activities such as the Community Preservation and Housing Inspection programs; consistent with Council direction, staff is proposing a significant reduction in COBG funding for these activities. The proposed 2006-07 COBG budget reduces the Code Enforcement allocation to $150,000 and Housing Inspection to zero. This would result in a net impact of $234,790 to the General Fund in fiscal year 2007. Since ongoing resources have not yet been identified to fund these ongoing costs, approval of this action may require offsetting budget reductions in future years. AnACHMENTS Attachment A - 2006-2007 Annual Action Plan Summary Attachment B - 2005-2010 Consolidated Annual Plan Amendment Attachment C- Section 108 Loan Project Area Map _"8 8-8 2006-2007 Annual Action Plan Summary CDBG, HOME and ESG CDBG Requests City - Community Development Fair Housing Council ot San Diego Regional Task Force on the Homeless CDBG Program Administration $ Fair Housing & Tenant Education $ Regional Task Force on the Homeless $ Subtotal - Administration $ 370,532.00 37,000.00 1.000.00 408,532.00 4 Adult Protective SeIVices South Bay Adult Day Health Care $ 11,000.00 5 C. V. Community Collab. Child Care Coordinator $ 42.000.00 6 C. V. Veterans Home Support Fndtn. Rehab Unit Equipment $ 3.500.00 7 Chula Vista Yacht Club Youth Sailing Program $ 8 City - Parks and Recreation WizKids Program $ 12.299.00 9 Dress for Success San Diego Dress for Success $ 10 Family Health Centers of S.D. KidCare Express III Mobile Med. Unit $ 27,000.00 11 Lutheran Social SeIVices Caring Neighbor $ 20.000.00 12 Lutheran Social SeIVices Project Hand $ 8.000.00 13 Meals-on-Wheels Meals-on-Wheels Chula Vista $ 12.000.00 14 Regional Shelter Voucher Program Regional Shelter Voucher Program $ 5.000.00 15 S.D.-Imperial Counties Labor Council Safe Homes Project $ 16 South Bay Community Svcs. Family Violence Treatment $ 34.000.00 17 South 8ay Community Svcs. Prevention & Diversion Project $ 96.600.00 18 South Bay Community Svcs. Thursday's Meal $ 10.000.00 19 YMCA Kinship Support SeIVices $ 25.000.00 Subtotal - Public SeIVices $ 306.399.00 Tcib' No... 20 21 22 23 24 25 26 City - General SeIVices City - General SeIVices City - General SeIVices City - Public Works Dept. City - Public Works Dept. City - Public Works Dept. City - Public Works Dept. Pro eel TIlle . ADA Annual Program (STL318) Emerson Street Drainage (DR 133) Sidewalk Annual Program (STL320) "F" Street and Bay Blvd. Park Eucalyptus Park Memorial Park Norman Park Subtotal - Capital Improvements ~,t~,~~,lfht~~~2:T{rB\:::;:~::::~', ~~~tt:,:i , Reco'mmendatlon '\':""1 $ 209.130.00 $ 600.000.00 $ 125.000.00 $ 20.500.00 $ 80.000.00 $ 10.500.00 $ 10,000.00 $ 1,055.130.00 Attachment "A" 8-9 CDBG Requests (Continued) Ta~ No;" 27 Boys and Girls Club - Lauderbach 28 City - Planning & Building 29 City - Planning & Building 30 S.D.-Imperial Counties Labor Council ,,:~t~)"~i;&f~I:;~f:t'!t~:~~;!;;~:< RecorTunendatlon :"i~' $ 22,600.00 $ 150,000.00 $ $ 100,000.00 To6: No:" f. 31 Southwestern Comm.College Business Technical Assistance $ 32 Southwestern Comm.College Contracting Opportunities $ Subtotal. Economic Development $ Total - CIP, Community Enhancement and Economic Dev. $ 1,327,730.00 Total 06/07 CDBG Funding Plan $ 2,042,661.00 . HOME and ESG Requests HOME Jai:>. No;', 33 City - Community Development 34 City - Community Development 35 City - Community Development 36 City - Community Development 37 City - Community Development HOME Program Administration $ American Dream Dawn Payment Initio $ CHDO Assistance for Affordable Hsng. $ Production of Affordable Housing $ Tenant Based Rental Assistance $ Total. HOME Requests $ 93,000.00 17.444.00 140,599.00 263,722.00 440.000.00 954,765.00 38 City - Community Development 39 South Bay Community Services ESG Program Administration $ Coso Nueva Vida I - ESG06 $ Total - ESG Requests $ 4,349.00 82,644.00 86,993.00 Attachment "A" 8-10 CIlY OF CHUlA VISTA FIRST AMENDMENT TO THE 2005-2010 CONSOLIDATED PLAN A. SACKGROUND The CDBG program allocates annual grants to the City Of Chula Vista to develop viable communities by providing decent housing, a suitable living environment. and opportunities to expand economic opportunities, principally for low- and moderate-income persons, The Consolidated Plan serves as a planning document for the jurisdiction, which outlines the City's goal and objectives to be accomplished with the use of the grants. In the event that the City identifies a change in the goals, objectives or priorities, the Consolidated Plan must be amended in accordance with Citizen Participation requirements. S. AMENDMENT On May 10,2005, the City Council adopted the 2005-2010 Consolidated Plan. Subsequent to the adoption and approval of the Plan, the City has identified new priorities as well as the potential use of new federal funding sources, The following amendment to the 2005-2010 Consolidated Plan is recommended for submittal to the United States Department of Housing and Urban Development. The "Annual Plan will allow the City to reallocate $1.505,289.54 of Community Development Block Grant and Home Investment Partnership Act Funds. The 2005-2010 Consolidated Plan is amended as follows: . Section IV (A): Housing and Community Development Resources Federal: The Consolidated Plan identifies four grant programs as funding sources to be utilized in accomplishing its goals and priorities: 6 Community Development Block Grant (CDBG); o HOME Investment Partnership Act (HOME); o Emergency Shelter Grant (ESG); and, o American Dream Downpayment Initiative (ADDI). The City receives approximately $2 million each year in CDBG funds. In an effort to complete a large-scale capital improvement project, the City will be submitting a Section 108 Loan Application in the amount of $9.5million to First Amendment to the 2005-2010 Consolidated Plan April 4, 2006 Page 1 ot 3 8-11 Attachment "s" HUD. In the event that the loan is approved, debt service payments on the loan would be made with a portion of the CDBG entitlement. The Consolidated Plan is hereby amended to included the following under Section IV{A) of the 2005-2010 Consolidated Plan: o Section 108 Loan Guarantee Funds . Section IV (C): Housing Needs Priorities Under this section, the Consolidated Pan describes Chula Vista's strategies for addressing housing needs/priorities such as: o Priority 1: Maintain and preserve the City's aging housing stock o Priority 2: Provide Affordable Housing Opportunities to low and moderate incQme households o Priority 3: Assist non-profit corporations to develop affordable housing for very low and low income households The City has identified a new priority under the Housing Needs category and hereby amends the 2005-2010 Consolidated Plan to include the following: o Priority 4: Assistance to displaced persons. Implementinq Proqram: Tenant Based Rental Assistance Program HOME funds will be used to provide short-term (2 year) tenant-based rental assistance to Chula Vista residents. Assistance priority will be given to residents which are displaced from their primary residence as a result of any of the following: (i) expiration of affordable housing covenants applicable to such residence; (ii) an action of City or Agency; (iii) closure of a mobilehome or trailer park community in which the household's residence was located; or (iv) a condominium conversion involving the household's residence. One member in the households must have resided in such housing as the primary place of residence for at least one year prior to such action or event. C. PUBLIC PARTICIPATION PROCESS A public comment period on the amendment was conducted from March 10. 2006 thru April 4. 2006. Copies of the draft amendment were made available for public review at the Community Development Department. In addition, a public meeting was held on Tuesday. April 4. 2006 in the City Council Chambers to encourage the public to review the Amendment and provide comments. First Amendment to the 2005-2010 Consolidated Plan April 4. 2006 Page 2 of 3 8-12 Attn,.,hm..nt "8" D. CONTACT For further information, please contact Angelica Davis, Community Development Specialist II, at the City of Chula Vista Community Development Department, 276 Fourth Avenue, Chula Vista, California 91910; (619) 691-5036; adavis@ci.chula-vista.ca.us. First Amendment to the 2005-2010 Consolidated Plan April 4, 2006 Page 3 of 3 8-13 () m Z '" c: '" XI ~ .... )> z c '" o c: Z c ~ -< , > <, , -"'-, +~ 00 )>)> -a CA =tj:! )>m I""'-a -)> 3:::a -a", ::a o < m 3: m Z .... -a ::a o e- m Q z o z '" m () .... (5 z ..... o '" 3: ." ::o:J o < g: m Z ;:;: " " ) > < / " " ... o ~ 3: ." ::o:J o < m 3: m z ;:;: Attachment "c" 8-14 RESOLUTION N0.2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE ANNUAL ACTION PLAN FOR FY 2006-2007 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG), HOME INVESTMENT PARTNERSHIP ACT (HOME), AMERICAN DREAM DOWNPAYMENT (ADD!) AND THE EMERGENCY SHELTER GRANT (ESG) PROGRAMS; AND APPROVING THE FIRST AMENDMENT TO THE 2005-2010 CONSOLlDATED PLAN; AND, AUTHORIZING TRANSMITTAL OF 2006-2007 ANNUAL ACTION PLAN AND THE FIRST AMENDMENT TO THE 2005-2010 CONSOLlDA TED PLAN TO THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD); AND INSTRUCTING STAFF TO INCLUDE APPROPRIATIONS TO FUND THE ANNUAL ACTION PLAN IN THE FY 2006-2007 PROPOSED BUDGET WHEREAS, the City of Chula Vista has prepared the 2006-2007 Annual Action Plan per HUD Rules and Regulations; WHEREAS, the City will receive a 2006-07 CDBG entitlement of $2,042,661; a HOME entitlement of$954,765; and an ESG entitlement of$86,993; WHEREAS, the City has amended the 2005-201 0 Consolidated Plan to include the potential use of Section 108 Loan Funds to be repaid back to HUD from future CDBG entitlements; WHEREAS, the City has followed its Citizen Participation Plan and held a public hearing on housing and community needs on December 6, 2005, February 21, 2006 and April 4, 2006 at which time public testimony was received and considered by the City Council with respect to the Annual Action Plan and Consolidated Plan; WHEREAS, the City has determined that all of the proposed activities meet the CDBG national objectives to benefit primarily low-income households or aid in the elimination of slums and blight; WHEREAS, the City has determined that it is necessary and appropriate to fund special activities by certain sub-recipients to implement neighborhood revitalization and community economic development projects in order to meet the goals and objectives of the Consolidated Plan and the Action Plan; and, NOW, THEREFORE, BE IT RESOLVED based on the findings above, the City Council ofthe City ofChula Vista does hereby approve the First Amendment to the 2005-20 1 0 Consolidated Plan and the 2006- 2007 Annual Action Plan which includes a Annual Action Plan Summary for FY 2006-2007 CDBG; HOME; ADD!; and ESG programs, a copy of which is attached hereto and incorporated herein as Attachment A. BE IT FURTHER RESOLVED, that the Community Development Director is authorized to transmit the 2006-07 Annual Action Plan and the First Amendment to the 2005-2010 Consolidated Plan to the U.S. Department of Housing and Urban Development (RUD); and that staffis instructed to include appropriations to fund the Annual Plan in the FY 2006-07 proposed budget. Presented by; Approved as to form by: Dana M. Smith, Assistant City Manager and Director of Community Development Ann Moore City Attorney J:\COMMDEVlRESOS\2006\04-04-06\CDBGSpending Plan Resolu~o;;-.Jo~ 2006-2007 Annual Action Plan Summary CDBG, HOME and ESG CDBG Requests City - Community Development Fair Housing Council of San Diego Regional Task Force on the Homeless CDBG Program Administration Fair Housing & Tenant Education Regional Task Force on the Homeiess Subtotal - Administration :~t9~:'.::\~:~:~!;~~{5~~/:!'~~:$::fL::t{;,:: Recom'nu!ndatton, ",,:'- $ 370,532.00 $ 37,000.00 $ 1,000.00 $ 408,532.00 rab" \i~:t:' 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Adult Protective Services C. V. Community Collab. C. V. Veterans Home Support Fndtn. Chuia Vista Yacht Club City - Parks and Recreation Dress for Success San Diego Family Health Centers of S.D. Lutheran Social Services Lutheran Social Services Meals-on-Wheels Regional Shelter Voucher Program S.D.-Imperial Counties Labor Council South Bay Community Svcs. South Bay Community Svcs. South Bay Community Svcs. YMCA South Bay Adult Day Health Care Child Care Coordinator Rehab Unit Equipment Youth Sailing Program WizKids Program Dress for Success KidCare Express ill Mobile Med. Unit Caring Neighbor Project Hand Meals-on-Wheels Chula Vista Regionai Shelter Voucher Program Safe Homes Project Family Violence Treatment Prevention & Diversion Project Thursday's Meal Kinship Support Services Subtotal. Public Services ,;;:$t~ff>tJ~~j~*{~~r$~f~l~~;~:L R~~orrimE;ndatlo;:'I"; :i~?,: $ 11,000.00 $ 42,000.00 $ 3,500.00 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 12,299.00 27,000.00 20,000.00 8,000.00 12,000.00 5,000.00 34,000.00 96,600.00 10,000.00 25,000.00 306,399,00 j!~,ii),,, 'No:" 20 City - General Services 21 City - General Services 22 City - General Services 23 City - Public Works Dept. 24 City - Public Works Dept. 25 City - Public Works Dept. 26 City - Public Works Dept. ADA Annual Program (STL318) $ Emerson Street Drainage (DR 133) $ Sidewalk Annuai Program ISTL320) $ "P' Street and Bay Blvd. Park $ Eucalyptus Park $ Memoriai Park $ Norman Park $ Subtotal - Capital Improvements $ 8-16 209,130.00 600,000.00 125,000.00 20,500.00 80,000.00 10,500.00 10,000.00 1,055,130.00 Attachment "A" CDSG Requests (Continued) Boys and Girls Club - Lauderbach City - Planning & Building City Planning & Building S.D.-Imperial Counties Labor Council Capital Improvements Code Enforcement Program Housing Inspection Program Safe and Accessible Sidewalks u 0 a - ommum $ $ $ $ 22,600.00 150,000.00 100,000.00 ,. ,"',,""'..,. Pr~ ect Tltl'; Southwestern Comm.College Business Technical Assistance $ Southwestern Comm.College Contracting Opportunities $ Subtotal - Economic Development $ Total - CIP, Community Enhancement and Economic Dev. $ 1,327,730.00 Total 06/07 CDSG Funding Plan I $ 2,042,661.00 I HOME and ESG Requests HOME 33 City - Community Development 34 City - Community Development 35 City - Community Development 36 City - Community Development 37 City - Community Development HOME Program Administration $ American Dream Down Payment Initio $ CHDO Assistance for Affordable Hsng. $ Production of Affordable Housing $ Tenant Based Rental Assistance $ Total - HOME Requests $ 93,000.00 17,444.00 140,599.00 263,722.00 440,000.00 954,765.00 Pro ESG Program Administration $ Coso Nuevo Vida I - ESG06 $ Total - ESG Requests $ 8-17 4,349.00 82,644.00 86,993.00 Attachment "A" RESOLUTION NO.2006- RESOLUTION OF TIlE CITY COUNCIL OF TIlE CITY OF CHULA VISTA APPROVING TIlE ANNUAL ACTION PLAN FOR FY 2006-2007 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG), H011E INVESTMENT PARTNERSHIP ACT (HOME), A11ERICAN DREAM DOWNPAYMENT (ADD!) AND TIlE EMERGENCY SHELTER GRANT (ESG) PROGRAMS; AND APPROVING TIlE FIRST A11ENDMENT TO TIlE 2005-2010 CONSOLIDATED PLAN; AND, AUTHORIZING TRANSMITTAL OF 2006-2007 ANNUAL ACTION PLAN AND TIlE FIRST A11ENDMENT TO TIlE 2005-20 I 0 CONSOLIDATED PLAN TO TIlE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOP11ENT (HUD); AND INSTRUCTING STAFF TO INCLUDE APPROPRIATIONS TO FUND TIlE ANNUAL ACTION PLAN IN TIlE FY 2006-2007 PROPOSED BUDGET WHEREAS, the City of Chula Vista has prepared the 2006-2007 Annual Action Plan per HUD Rules and Regulations; WHEREAS, the City will receive a 2006-07 CDBG entitlement of $2,042,661; a HOME entitlement of $954,765; and an ESG entitlement of $86,993; WHEREAS, the City has amended the 2005-201 0 Consolidated Plan to include the potential use of Section 108 Loan Funds to be repaid back to HUD from future CDBG entitlements; WHEREAS, the City has followed its Citizen Participation Plan and held a public hearing on housing and community needs on December 6, 2005, February 21,2006 and Apri14, 2006 at which time public testimony was received and considered by the City Council with respect to the Annual Action Plan and Consolidated Plan; WHEREAS, the City has determined that all of the proposed activities meet the CDBG national objectives to benefit primarily low-income households or aid in the elimination of slums and blight; WHEREAS, the City has determined that it is necessary and appropriate to fund special activities by certain sub-recipients to implement neighborhood revitalization and community economic development projects in order to meet the goals and objectives of the Consolidated Plan and the Action Plan; and, NOW, TIIEREFORE, BE IT RESOLVED based on the fmdings above, the City Council of the City of Chula Vista does hereby approve the First Amendment to the 2005-20 I 0 Consolidated Plan and the 2006- 2007 Annual Action Plan which includes a Annual Action Plan Summary for FY 2006-2007 CDBG; HOME; ADD!; and ESG programs, a copy of which is attached hereto and incorporated herein as Attachment A. BE IT FURTIlER RESOLVED, that the Community Development Director is authorized to transmit the 2006-07 Annual Action Plan and the First Amendment to the 2005-20 I 0 Consolidated Plan to the U.S. Department of Housing and Urban Development (HUD); and that staff is instructed to include appropriations to fund the Annual Plan in the FY 2006-07 proposed budget. Presented by: Approved as to form by: Dana M. Smith, Assistant City Manager and Director of Community Development 8-18 .1'\~nMMnl=\^CI:c::t"\c::\?n""::::\n.Lt\A_nlQ\,...nCl~~..........;_... DI_.. 0___1..&:__ -'__ Item 9 Meeting Date 04-04-06 COUNCIL AGENDA STATEMENT ITEM TITLE: A) Resolution of the City Council of the City ofChula Vista, California, approving the fOIm of an AcquisitionlFinancing Agreement pertaining to Community Facilities District No. 13-1 (Otay Ranch Village Seven) B) Resolution ofthe City Council of the CityofChula Vista, California, acting in its capacity as the legislative body of Community Facilities District No. 13-1 (Otay Ranch Village Seven), Authorizing and providing for the issuance of special tax bonds of the district, Approving the fOIm of Bond Indenture, Bond Purchase Agreement, Preliminary Official Statement and other documents related thereto and authorizing certain actions in connection with the issuance of such bonds. SUBMITTED BY: Acting Director ofEngineerin~ Director ofFinancem"- City Manager 11 ~ Jl R REVIEWED BY: (4/Sths Vote: Yes_NoX) On October 25,2005 the City Council held the public hearing to consider fOIming and establishing Community Facilities District No. 13-1 (CFD-13-I). Following the public hearing the City Council adopted Resolution No. 2005-352 fOIming and establishing CFD-13-1 for the purpose of providing for the financing and acquisition for certain authorized public facilities. The City Council also adopted Resolution No. 2005-353 deteImining the necessity for CFD-13-1 in incur a bonded indebtedness not to exceed $20,000,000 and calling a special election to submit separate propositions to the qualified electors ofCFD-13-1 to authorize the levy of special taxes within such district, to authorize such district to incur a bonded indebtedness and to establish an appropriations limit for such district. On November 22, 2005 City Council heard the election results, which declared that 100% of the votes cast were in favor of each of these ballot propositions. The City Council subsequently adopted Ordinance No. 3028 authorizing the levy of special taxes within CFD-13-I. Tonight, Council will consider approving the AcquisitionlFinance Agreement (the "Agreement") with Otay Project L.P. that establishes the procedure for acquiring the improvements to be constructed by the developer. The Agreement requires each individual component of the projects to be 100% completed before acquisition and reimbursement. In addition, Council will consider the authorization of the issuance of special tax bonds of CFD-13-1 in the amount of approximately $16,505,000 and the approval ofthe form of certain documents related to the issuance of the bonds including a Bond Indenture, Bond Purchase Agreement and Preliminary Official Statement. RECOMMENDATION: That Council: · Approve the Resolution (A) approving the AcquisitionlFinancing Agreement that (i) establishes the terms and conditions pursuant to which the City will acquire the authorized 9-/ Page 2, Item q Meeting Date 4-04-06 public improvements, (ii) establishes the terms and conditions pursuant to which the District will agree to issue special tax bonds to finance the acquisition of such improvements and (iii) establishes the procedure for acquiring the improvements from the developer within Community Facilities District No. 13-1, and . Approve the Resolution (B) authorizing the issuance of Bonds, approving the form of the Bond Indenture, Bond Purchase Agreement, and other documents for Community Facilities District No. 13-1 and authorizing certain actions in connection therewith. BOARDS/COMMISSIONS RECOMMENDATION: Not applicable. DISCUSSION: Backl!:round . On October 25, 2005 the City Council held the public hearing to consider forming and establishing Community Facilities District No. 13-1 (CFD-13-1). Following the public hearing the City Council adopted Resolution No. 2005-352 forming and establishing CFD-13-1 for the purpose of providing for the financing and acquisition for certain authorized public facilities. The City Council also adopted Resolution No. 2005-353 determining the necessity for CFD-13-1 in incur a bonded indebtedness not to exceed $20,000,000 and calling a special election to submit separate propositions to the qualified electors of CFD-13-1 to authorize the levy of special taxes within such district, to authorize such district to incur a bonded indebtedness and to establish an appropriations limit for such district. On November 22,2005 City Council heard the election results, which declared that 100% of the votes cast were in favor of each of these ballot propositions. The City Council subsequently adopted Ordinance No. 3028 authorizing the levy of special taxes within CFD-13-I. The Mello-Roos Community Facilities Act of 1982 is a financing mechanism for funding the acquisition or construction of public infrastructure improvements from the proceeds of Community Facilities Districts bonds, which are repaid from an annual special tax collected from the property owners within the district. There is no direct cost to the. City. CFD-13-1 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. District Boundaries Exhibit 1 presents the boundaries ofCFD No. 13-1, which includes parcels located within Village Seven (90.5 gross acres). Otay Project's portion of Village Seven is bounded by La Media Road to the West, Birch Road to the North, Magdalena Avenue to the East and Santa Luna to the South. The Otay Project is anticipating 33 acres will be designated for residential use in their portion of Village Seven and the remaining acres of their portion are to be reserved for Community Public Facilities, streets, Right of Way, and open space. At buildout there will be 361 single-family residential units in Otay Project's portion of Village Seven. 9-J- Page 3, Item q Meeting Date 4-04-06 The Improvements CFD 13-1 is authorized to finance backbone streets and associated improvements (i.e., grading, sewer, streets, landscaping, and utilities) and certain other public facilities otherwise authorized to be financed by the Public Facilities Development Impact Fee (PFDIF). Following is a general description of the proposed facilities including, but not limited to: . La Media - Birch to Southwest Property Line (Traffic Signal included) · Backbone Sewer and Paving (Fleishbein Street and Kincaid Avenue) . Other Backbone Costs - Trail System/Storm Drain System . Magdalena Avenue- Y:z the cost . Santa Luna Street . Slope Landscaping . PFDIF Facilities Preliminary estimates show that the special tax revenue (using the proposed taxes) trom all the taxable properties would support a total bonded indebtedness of approximately $16.5 million (assuming a 6.0% interest rate and a 30-year term on the bonds). A bond sale amount of $16.5 million will finance approximately $14.5 million in facilities (i.e. grading, landscaping, streets, utilities, drainage, sewer, Public facilities etc). The balance provided would provide for a reserve fund, capitalized interest and pay district formation and bond issuance costs. Ultimately, as subdivisions buildout, the developer will finance required improvements that this CFD district cannot finance. In addition, the proposed CFD lies within the City of Chula Vista's Transportation Development Impact Fee (TDlF) benefit area that places a cap on the CFD's ability to finance certain TDIF improvements. Staff and the consultant team are working with the developer to maximize the TDIF facilities to be constructed by the District As noted above, it is currently estimated that only $16.5 million will be available for fimding by this district. However, the District's authorization will be set at $20 million to give the City flexibility in sizing the bonds and to take advantage oflower interest rates should they occur. The actual amount to be financed by CFD No. 13-1 would depend upon a number offactors including final interest rate on the bonds and the value to lien ratio. The bond sale amount and may be higher or lower than the $16.5 million mentioned above depending upon interest rates in the municipal bond market on the date the bonds are priced. Special Tax Report A copy of the Special Tax Report for Community Facilities District No. 13-1 for Village Seven 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 "Amended Rate and Method of Apportionment" (RMA) (approved by Council on September 20, 2005). City Financial Criteria 1~3 Page 4, Item q Meeting Date 4-04-06 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: I. 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. " Bruce W. Hull & Associates conducted an appraisal (December 1,2005) on the property. Exhibit 2 illustrates a bond sale of$16,505,000, which will result in an overall lien ratio of 4.32:1, which meets the minimum aggregate 4: I lien ratio criteria. Resolution There are two resolutions on today's agenda that, if adopted, will accomplish the following: (A) The RESOLUTION APPROVING AN ACQUISITION/FINANCING AGREEMENT for Community Facilities District No. 13-1 (Otay Ranch Village Seven) is the formal action approving the AcquisitionlFinance Agreement (APIA), (Exhibit 3). The APIA generally provides and establishes: · The API A provides that the City may reimburse 75%(base increment) ofthe total cost of the grading, drainage, paving, utilities, and landscaping improvements constructed by the developer upon the determination by the City Engineer that those improvements have been installed per approved plans with required City Inspection. Those facilities may not be functional at that time, and certain activities (i.e. testing, completion of punch list, preparation of as-built drawings) may still be pending. The 25%(retained increment) final payment may be made once all projects within a phase are fully complete and accepted by the City. · The AF I A also conditions the purchase of said improvements to developer's compliance with all the applicable conditions and obligations imposed on the property within CFD-13-I pursuant to the land use entitlements approved by the City, including but not limited to, payment of all applicable fees, dedication of right -of-ways or other property (i.e. parks, open space, etc), payment of assessments installments or special taxes, and construction of all applicable public improvements. Staff has reviewed the proposed agreement and believes that I) the 25% payment retention, and 2) the condition requires compliance with approved land use entitlement will provide enough security to guarantee completion of the improvements while ensuring the financial health of 9..1 Page 5, Item Cj Meeting Date 4-04-06 CFD-13-I. The City retained the finn of Best, Best and Krieger, LLP as Bond Counsel for CFD-13-I. Bond Counsel drafted this agreement for and on behalf of the City with input and review by City staff, developer legal council, developer and financial team. (B) THE RESOLUTION AUTHORIZING THE ISSUANCE OF BONDS AND APPROVING THE FORM OF CERTAIN RELATED DOCUMENTS" authorizes the issuance of limited obligation bonds, pursuant to the Mello-Roos Act in a principal amount not to exceed $17,000,000. The final bond sale amount will be known once the interest on the bonds is detennined at bond sale. In addition, the resolution approves the fonn of the following documents: · The Preliminary Official Statement (Exhibit 4): describing the Community Facilities District and type of bonds, including tenns and conditions thereof, for the bondholders. · The Bond Indenture (Exhibit 5): between the City and the Fiscal Agent, US Bank Trust National Association, that sets forth the tenns and conditions relating to the issuance and sale of the bonds. · The Bond Purchase Agreement (Exhibit6): 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 $288,838.00 based on a bond issue size of$16,505,000.00. · Continuing Disclosure Agreement: between the City and NBS Government Finance Group, as dissemination agent, pursuant to whom 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 ofCFD-13-I 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 fonn 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 pennitted which would result in the annual interest rate on the bonds to exceed 5.75 %. Future Actions Adoptions of tonight's Resolutions will approve the AcquisitionlFinancing Agreement for CFD -13-1 and authorize the issuance of bonds, and approve the fonn ofrelated documents. The issuance of the bonds is anticipated in May of2006. The acquisition of selected public improvements will be audited only after 100% ofthe project is deemed complete. 9-5" Page 6, Item q Meeting Date 4-04-06 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 fonnation 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 ofthe full cost recovery for stafftime involved in district fonnation and administration activities. Staff anticipates that most ofthe CFD-13-1 administration will be contracted out. Attachments: Exhibit 1: Recorded Amended Boundary Map for CFD-13-1 Exhibit 2: Estimated Value to Lien Ratios Based on Appraisal Exhibit 3: AcquisitionlFinancing Agreement for CFD-13-1 Exhibit 4: Preliminary Official Statement for CFD-13-1 Exhibit 5: Bond Indenture for CFD-13-1 Exhibit 6: Bond Purchase Agreement for CFD-13-1 J:\Engineer\AGENDA\CAS2006\04-04-06\CFD13!\A-113 CFD13! revision 2.doc 9~~ ----:;--- 1-1 I C'0 ~ . o Z I- o - 0::' l.L.I-Z O(j)~ (J) UJ UJ-(J) c:::OUJ <((j)C!J ~w~ 0-> all-I 0-0 UJ-.JZ ~O~ ~<C~ <(LLi- >-9 I- - Z ::::> ~ ~ o o o CJ W D Z c( f/J Ll.c( Oz ~a:: zfi: ::J- o;a! 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III .a 8 q~~"S~~ ~O~5'~~ ~ 8 ~ .~ IS. .. '0 <to .. .so ~ g . . '-.. 'j! ~"$~~J.% = ~ t-- 5 .; 0 0 ." . " '0 +% 0 <a ~ :a ~ ~ SI ~ ~ :~ fi~~~~ p. :E' '-~ .i ] "g - ~ ..... '15 '" ~ ~E1j~l~ 8oJ::c~u ~ a B ~ ~ ~ 1~P ~ o o ~ ;:; ~ ] ",' " '" ~ C5 ::s . ~ Ii '" EXHIBIT ~ ACQUISITION/FINANCING AGREEMENT COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN) THIS AGREEMENT, dated as of Aprill, 2006 (the "Agreement"), is made and entered into by and between the CITY OF CHULA VISTA, a charter city duly organized and validly existing under the Constitution and laws of the State of California, (the "City"), COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN), a community facilities district formed and existing pursuant to the laws of the State of California (the "CFD No. B-1"), and OTA Y PROJECT, L.P., a California limited liability partnership (the "Developer"). WHEREAS, the Developer is the master developer of certain property within that portion of the City known as the Village Seven of the Otay Ranch described in Exhibit F attached hereto and incorporated herein by this reference (the "Development Project") and Developer has obtained certain land use entitlements from the City which permit the development of the Development Project; and WHEREAS, as a part of the development of the Development Project, the Developer will be constructing certain public improvements to serve the Development Project including the improvements identified as Improvements Nos. I through 9 in Exhibit A attached hereto and incorporated herein by this reference (the "Improvements") ; and WHEREAS, in order to mitigate the impact that the Development Project will have on the City's existing transportation facilities, the Development Project will be responsible for financing its proportionate share of the cost of construction of those transportation facilities identified in Section 3.54.030 of the Chula Vista Municipal Code and as Improvement Nos. 1 and 2 in Exhibit A hereto (the "Transportation Facilities"); and WHEREAS, the City and the Developer desire that the Agreement provide that CFD No. 13-1 finance the acquisition of Transportation Facilities in an amount equal to the development impact fee obligation imposed pursuant to Chapter 3.54 of the Chula Vista Municipal Code (the "Municipal Code") for the development throughout CFD No. 13-1 (the "Aggregate TDIF Obligation"); and WHEREAS, in order to mitigate the impact that the Development Project will have on the City's existing public facilities other than transportation facilities, the Development Project will be responsible for financing its proportionate share of the cost of the construction of those public facilities identified in Section 3.50.030 of the Municipal Code and as Improvement No. 21 in Exhibit A hereto (the "Public Facilities"); and WHEREAS, the City and the Developer further desire that the Agreement provide that CFD No. 13-1 finance the acquisition or construction of Public Facilities in an amount equal to the development impact fee obligation imposed pursuant to Chapter 3.50 of the Municipal Code for the development throughout CFD No. 13-1 (the "Aggregate PFDIF Obligation") and to provide WDIVEN\327580.1 1 9-9 that funds in an amount equal to the Aggregate PFDIF Obligation be set aside from the proceeds of Bonds issued by CFD No. 13-1 to enable the City to utilize such funds to acquire or construct Public Facilities; and WHEREAS, the Developer requested that the City consider and the City did consider and form CFD No. 13-1 under the terms and conditions of the "Mello-Roos Community Facilities Act of 1982," as amended (Government Code Section 53311 and following) (the "Act"), for the purpose of financing the acquisition or construction of the Improvements and all of the cost of the construction of the Transportation Facilities and the Public Facilities allocable to the Development Project; and, WHEREAS, Developer, in order to proceed in a timely way with development of the Development Project, desires to construct certain of the Improvements that wil~ following the completion of the construction thereof, be acquired, owned, operated and maintained by the City; and, WHEREAS, the City, CFD No. 13-1 and Developer agree that the Improvements to be constructed by the Developer may, upon the completion of the construction thereof, be acquired by the City through financing provided by CFD No. 13-1 at prices determined pursuant to and in accordance with the provisions of this Agreement; and, WHEREAS, the City and the Developer further agree that payment by the City for the acquisition of the Improvements shall be funded solely from the proceeds of bonds which shall be issued by CFD No. 13-1 and which shall be secured by the levy of special taxes within CFD No. 13-1; and, WHEREAS, it is the intent of this Agreement that Developer shall be entitled pursuant to the provisions of this Agreement to be paid for each of the Improvements constructed by the Developer at the prices as determined by the City pursuant to this Agreement upon: (a) the sale and delivery of bonds by CFD No. 13-1 the proceeds of which shall be authorized and designated to make the payments to acquire such Improvements and (b) the completion of the construction of each such Improvement; and, WHEREAS, the City and CFD No. 13-1 are willing to have CFD No. 13-1 finance the acquisition of the Improvements to be constructed by the Developer and all of the cost of the acquisition or construction of the Transportation Facilities and the Public Facilities allocable to the Development Project, subject to the requirements of the Act, the City of Chula Vista Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts adopted by the City Council (the "Goals and Policies") and this Agreement and Developer desires that CFD No. 13-1 so finance the acquisition of such Improvements and all of the cost of the acquisition or construction of the Transportation Facilities and the Public Facilities allocable to the Development Project. NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows: . WDIVEN\327580.1 2 1-/0 SECTION 1. Recitals. The above recitals are all true and correct. SECTION 2. Plans and Specifications. All plans, specifications and bid documents for the Improvements (the "Plans and Specifications") and all changes in the Plans and Specifications necessitated by change orders shall be prepared by the Developer at the Developer's initial expense, subject to City approval. The costs of acquisition of such Improvements shall include costs of the preparation of the Plans and Specifications and all related documentation as set forth in Section 7 below. Developer shall not award bids for construction, commence construction or cause commencement of construction of any Improvement until the Plans and Specifications for such Improvement have been approved by the City. SECTION 3. Design, Bid and Construction of Improvements. Developer covenants and agrees that each Improvement to be acquired from Developer pursuant to this Agreement shall be designed, bid and constructed: (a) in substantial compliance with the approved Plans and Specifications for such Improvement; (b) in a good and workmanlike manner by well-trained adequately supervised workers; ( c) in strict compliance with all governmental and quasi-governmental rules, regulations, laws, building codes and all requirements of Developer's insurers and lenders; (d) free of any known design flaws and defects; and ( e) in substantial compliance with the requirements of Exhibit C hereto which is incorporated herein by this reference. In the event of a protest by a bidder to the award of a contract for the construction of an Improvement or Improvements to the apparent low bidder, the Developer may, in its sole discretion, elect to: (a) award the contract to the apparent low bidder pursuant to the provisions of Exhibit C hereto if the Developer has determined that the bid of the apparent low bidder was, in fact, responsive and that the irregularity upon which the protest is based was minor in nature, i. e., the irregularity did not create an unfair competitive advantage for the apparent low bidder; (b) reject the bid of the apparent low bidder if the Developer determines that the irregularity upon which the protest is based did create an unfair competitive advantage for the apparent low bidder and the bid of the apparent low bidder was, therefore, not responsive and award the contract to the lowest responsive bidder; or 3 WDIVEN\327580.1 9-1/ (c) reject all bids and solicit new bids for the construction of the applicable Improvement or Improvements. Should a legal action be filed challenging the validity of the Developer's decision regarding any such bid protest and/or the award of any contract for the construction of any Improvement, the Developer shall, at Developer's sole expense, defend such action and shall defend, indemnifY, and hold harmless the City, its officers, directors, employees and agents and CFD No. 13-1, its officers, directors, employees and agents (each, an "Indemnified Party" and collectively, the "Indemnified Parties"). SECTION 4. Inspection and Acceptance of the Improvements. The construction activities relating to the Improvements to be constructed by the Developer shall be subject at all reasonable times to inspection by authorized representatives of City. Once an Improvement to be acquired by City is substantially completed in accordance with the approved Plans and Specifications, then such Improvement shall be eligible for payment of the Base Increment of the Purchase Price (as defined in Section 7 below) therefor. . Prior to acceptance by the City of any Improvement constructed by the Developer for purposes of paying the Retained Increment (as defined in Section 7 below) of the Purchase Price, the Developer shall provide to the City Engineer of the City, or his or her designee (the "City Engineer"), the documentation set forth in this Section 4 and Section 7(c)(ii) below and obtain approval of as-built drawings for the Improvement in accordance with the process described below in this Section 4. The engineer of record for any such Improvement ("Engineer of Record") shall file form PW-E-106 (Request for Release of Bonds) with the City Engineer. Within 20 working days of such filing, the field inspector of the City or his or her designee ("Field Inspector") shall issue and transmit to the Engineer of Record a letter requesting (i) as-built drawings and soils reports (when applicable) and (ii) a puncblist of work to be completed or corrections to work to be completed before such Improvement will be eligible for payment of the Retained Increment. Within 20 working days of receipt of the Field Inspector's letter, the Engineer of Record shall prepare redline as-built drawings and submit them, together with any necessary soils reports, to the Field Inspector and the Developer shall complete the items of work and/or corrections specified in the puncblist. Within 10 working days of the Engineer of Record's submittal of the red lined as-built drawings, the Field Inspector shall review such drawings and provide comments. The Engineer of Record shall revise the redline as-built drawings per the Field Inspector's comments and resubmit within 10 working days. The Field Inspector shall make his final review within 5 working days of the Engineer of Record's resubmittal and notifY the Engineer of Record to prepare mylar as-built drawings and a microfiche copy and submit both to the City Engineer or his designee and notifY the Developer of any puncblist items which remain to be completed. The City and Developer shall make best efforts to perform within the time periods described above. The inability of City or Developer to perform within each time period, notwithstanding its best efforts, shall not constitute a breach of this Agreement. SECTION 5. Warranty of Improvements Constructed by the Developer. At all times prior to the City's acceptance of any Improvement constructed by the Developer, the Developer shall be responsible for maintaining such Improvement at the Developer's expense. The Developer 4 WDIVEN\327580.1 9-~ shall be obligated for the period of twelve (12) months immediately following the City's acceptance of such an Improvement to repair or replace, at Developer's expense, any defects or failures resulting from the work of Developer, its contractors or agents. Upon the expiration of such twelve (12) month period, Developer shall assign to City and CFD No. B-1 its rights in and to any warranties, guarantees or other evidence of contingent obligations of third persons with respect to such Improvement. As a condition precedent to the payment of the Retained Increment (as defined in Section 7 below) of the Purchase Price, Developer shall post a maintenance bond in a form reasonably approved by the City, cause such a maintenance bond to be posted, or assign Developer's rights under such a maintenance bond naming City and/or CFD No. B-1 as beneficiary in an amount equal to fifteen percent (15%) of the Purchase Price of such Improvement in order to secure Developer's obligations pursuant to this Section. Upon posting of such maintenance bond, the City shall release any performance, labor and material bonds for such Improvement. SECTION 6. Notice of Completion and Lien Releases. Upon completion of the construction of an Improvement, Developer shall notify the City Engineer in writing of such completion and shall prepare and execute a Notice of Completion for such Improvement in the form prescribed by Section 3093 of the California Civil Code and shall record such notice in the Official Records of the County of San Diego. Developer shall cause its contractors to provide unconditional lien releases for such Improvement in accordance with Section 3262 of the Civil Code. Notwithstanding the foregoing, City may waive the requirement for a Notice of Completion and lien releases if City determines that as of the date of payment of the Retained Increment of the Purchase Price for an Improvement, title to such Improvement or portion thereof satisfies the requirements for Acceptable Title (as hereinafter defined). SECTION 7. Payment of Purchase Price. (a) Amount of Purchase Price. The amount to be paid by City for the Improvements to be constructed by and acquired from Developer (the "Purchase Price") shall, as to each such Improvement, (i) be determined by City in accordance with the provisions of this Section 7, (ii) equal the lesser of the cost or the value thereof, (iii) include the reasonable cost or value of eligible appurtenant public facilities, (iv) include the costs of the title insurance policy described in Section 9 (a), and (v) include all other costs of construction and incidental costs eligible under the Act and the Goals and Policies as a part of the cost of the Improvements. Incidental costs eligible to be included in the Purchase Price of any Improvement shall include the following: (i) Usual and customary design and engineering costs not to exceed the following percentages: a. Civil engineering - 7.5% of the cost of the construction of the Improvement for which the service was performed. b. Soils engineering - 15% of the cost of the grading for the Improvement. WDIVEN\327580.1 5 f-13 c. Landscape architecture - 10% of the cost of applicable landscaping and irrigation relating to the Improvement. d. Survey and construction staking - 2% of the combined cost of the construction and grading for the Improvement. e. Utility engineering/coordination - 3% of the cost of the construction of the applicable dry utilities. (ii) Construction administration and supervision not to exceed, in aggregate, 1.75% of the total construction cost of the Improvement. (iii) Special engineering studies related to "collector" or "transmission" facilities as reviewed and approved by the City Engineer. (iv) Plan check and inspection fees (less any refunds). (v) Capacity or connection fees related solely to the Improvement. (vi) Costs of acquisition of off-site rights-of-way and/or easements including the following: a. Appraisal and title insurance costs. b. Costs of preparing acquisition plats. c. The appraised value or actual cost of right-of-way or easement, whichever is less. d. Legal fees and costs related to eminent domain proceedings approved by the City Attorney. (vii) Costs of environmental reView, permitting and mitigation related to the Improvement. In no event shall the cost or value of the construction of the Improvements be deemed to exceed the construction contract prices set forth in the contracts and change orders approved by City ("Approved Change Orders") pursuant to the applicable provisions of Exhibit C hereto, which is incorporated herein by this reference, or otherwise authorized pursuant to this Agreement. Notwithstanding the foregoing, the aggregate Purchase Price of the acquisition of all new utilities to be owned by a public utility or public utilities may not exceed 5% of the proceeds of WDIVEN\327580.! 6 1-/'1 . . the series of the Bonds to be utilized to pay such Purchase Price less that portion of the reserve fund, costs of issuance and other incidental costs allocable to such amount. (b) Incremental Payment of Purchase Price of an Improvement. The Purchase Price for any Improvement constructed by the Developer shall be payable in not to exceed two increments: (i) the "Base Increment" which shall be an amount equal to 75% of the audited, eligible costs as reflected in the written request for payment of the Base Increment submitted by the Developer and as approved by the Director of Public Works and shall not exceed 75% of the cost estimate set forth in Exhibit A for such Improvement; and (ii) the "Retained Increment" which shall be an amount not to exceed the remaining, unpaid portion of the Purchase Price for such Improvement determined pursuant to the provisions of (a) above. (c) Reauisition for Incremental Payment of Purchase Price of an Improvement. (i) Base Increment. The Developer may submit only one (I) written request to the City Engineer for the payment of the Base Increment for an Improvement constructed by the Developer upon the substantial completion of the construction of such Improvement in accordance with the approved Plans and Specifications. The criteria for determining "substantial completion" of each such Improvement is described in Exhibit B and shall mean generally that construction, or work with respect to such Improvement has progressed to the point where it is sufficiently complete so that such Improvement can be utilized for the purpose for which it was intended. Substantial completion of such an Improvement shall also mean that all components of such Improvement are substantially complete, e.g., in the case ofImprovement including streets (other than streets included in the Traffic Enhancement Improvements), the components are described in footnote I to Exhibit A. Each Base Increment payment request must be in the form attached hereto as Exhibit D, which is incorporated herein by this reference, and conform to the requirements of (f) below. The request for payment of the Base Increment for an Improvement shall be accompanied by a copy of the following documents related to the construction of such Improvement: (I) each construction contract and copy of bid notice for such contract, (2) each change order, (3) each invoice submitted pursuant to such construction contracts, (4) evidence of payment of each such invoice such as copies of cancelled checks or other evidence of payment satisfactory to the City Engineer, and (5) written conditional lien releases executed by each applicable contractor, subcontractor and materialman in a form satisfactory to the City Attorney of the City (the "City Attorney") for such Improvement. (ii) Retained Increment. The Developer may submit only one (1) written request to the City Engineer for the payment of the Retained Increment for an Improvement in the form attached hereto as Exhibit E, which is incorporated herein by this reference, upon the submission to the City Engineer of (1) as-built drawings or other equivalent plans and specifications for such Improvement in a form reasonably acceptable to the City, (2) evidence that the Developer has posted a maintenance bond for such Improvement as required by Section 5 hereinabove, (3) evidence of the satisfaction of the requirements of Section 10 hereinbelow directly related to such Improvement and (4) written unconditional lien releases ITom all contractors, subcontractors and materialmen WDIVEN\327580.1 7 9-15 . satisfactory to the City Attorney for such Improvement. For any costs not included in the Developer's written request for payment of the Base Increment but requested for payment in the Retained Increment the request shall conform to the requirements of (f) below and also be accompanied by the following documents related to such additional costs of the construction of such Improvement if not done so with the written request for payment of the Base Increment: (1) each construction contract, (2) each change order, (3) each invoice submitted pursuant to such construction contracts, and (4) evidence of payment of each such invoice such as copies of cancelled checks or other evidence of payment satisfactory to the City Engineer. (d) Documentation. Any payment request submitted by Developer shall be properly executed and shall include copies of all supporting documents required by subsection (c )(i) or (c )(ii), as applicable. (e) Review of Payment Request for an Improvement. The City Engineer or his designee shall review each payment request and the supporting documentation accompanying such payment request. If the City Engineer finds that any such payment request is incomplete, improper or otherwise not suitable for approval, the City Engineer shall inform Developer in writing within twenty (20) working days after receipt thereof, the reasons for his finding. Developer shall have the right to respond to this finding by submitting further documentation after receipt of the denial. The City Engineer shall review any further documentation received trom the Developer in support of a payment request and inform Developer of his approval or denial of the payment request as supplemented in accordance with this Section within ten (10) working days after receipt of the supplemental documentation. A resubmittal of a payment request shall be deemed a new payment request for purposes of this Section. Subject to the limitations set forth herein, costs incurred under a construction contract for an Improvement entered into pursuant to the requirements of this Agreement and Approved Change Orders shall be deemed to be reasonable and, subject to the other provisions of this Agreement, shall be included in the Purchase Price for such Improvement. . The City Engineer shall, after the sale of the Bonds (defined in Section 18 below) pursuant to Section 18 the proceeds of which are intended to be used to acquire the subject Improvements and after his or her approval of a payment request, immediately forward a request to the Director of Finance of the City notifYing the Director of Finance of his or her approval of the payment request and requesting that such payment be made to the appropriate payee. The Director of Finance shall process any such request of the City Engineer pursuant to the applicable procedures of the Finance Department and shall make or authorize such payment pursuant to such procedures and subsection (h) below. (f) Payment. (i) Prioritv 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 WDIVEN\327580.1 8 1-1ft, 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: Priority 2: Improvement No. I, 3 and 10, in Exhibit A. Improvement Nos. 2 and 4 through 9, inclusive, in Exhibit A. The cost of construction or Purchase Price for any lower priority Improvement shall not be paid unless the cost of construction or Purchase Price for all higher priority Improvements has been paid or the City Engineer has reasonably determined that sufficient proceeds of the Bonds are available to fully fund the cost of construction or Purchase Price of the higher priority Improvements, e.g., such funds have been deposited in a separate account or sub-account and the use of such funds has been restricted to funding the cost of construction or the Purchase Price of such 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. (ii) Timing of the Payment of the Purchase Price for an Improvement. Subject to the limitations contained in (i) above and (iii) and (iv) below, the increment of the Purchase Price for each Improvement shall be paid to Developer within thirty (30) days after the date of the City Engineer's approval of the payment request for any such increment; provided, however, no Retained Increment for any Improvement shall be paid earlier than thirty-five (35) days after the recording of a Notice of Completion for such Improvement. (iii) Source of Payment. The Purchase Price or any increment thereof for an Improvement shall be payable to the Developer solely from those proceeds ("Eligible Improvement Proceeds") of the sale of Bonds as provided in Section 20 hereof authorized and designated for the payment for such Improvement, after all costs off ormation ofCFD No. 13-1 and all costs of issuance of such Bonds have been paid or proceeds set aside for such purpose and deposits of accrued and capitalized interest to the redemption fund, deposits of amounts equal to the Aggregate TDIF Obligation and the Aggregate PFDIF Obligation to the Traffic Facilities Account (defined in Section 21 below) and the Public Facilities Account (defined in Section 21 below), respectively, of the project fund (the "Project Fund") established pursuant to the Indenture (defined in Section 18 below) and the initial deposit to the reserve fund have been made. (iv) Withholding of Payment. In addition to the foregoing, the City shall have the right to withhold payment of the Purchase Price or any increment thereof of any Improvement if (a) the Developer is delinquent in the payment of any assessment installments or special taxes levied by the City or a community facilities district established by the City on properties then owned by the Developer within CFD No. 13-1, (b) the City Engineer reasonably determines that the Developer is not then in substantial compliance with all applicable conditions and obligations imposed upon the Developer hereunder or upon the WDIVEN\327580.1 9 r-/7 Development pursuant to the land use entitlements approved by the City for the Development, including but not limited to, payment of all applicable fees, dedication of all applicable rights-of-way or other property and construction of all applicable public improvements. The City Engineer shall provide written notice to the Developer of the decision to withhold any such payment and shall specifY the reason for such decision. If the payment is withheld as a result of the delinquency in the payment of assessment installments or special taxes, the notice shall identifY the delinquent parcels and the amount of such delinquency. If the payment is withheld as a result of substantial non-compliance with a condition or obligation, the notice shall specifY such condition or obligation and what action will be necessary by the Developer to substantially comply with such condition or obligation. Upon receipt by the City Engineer of evidence reasonably satisfactory to the City Engineer of the payment of the delinquent special taxes or assessments or upon the determination by the City Engineer that the Developer has substantially complied with the subject condition or obligation, the City shall forthwith make any payment which has been withheld pursuant to the provisions of this paragraph. SECTION 8. Audit. The authorized representatives of City shall have the right, upon two (2) days prior written notice to Developer and during normal business hours, to review all books and records of Developer pertaining to costs and expenses incurred by Developer in construction of the Improvements. SECTION 9. Ownership and Transfer of Improvements. The conveyance of the Improvements by Developer to City shall be in accordance with the following procedures: (a) Improvements Constructed on Land not Owned by City. As a condition to the payment of the Retained Increment of the Purchase Price, Developer shall cause an irrevocable offer of dedication to be made to City or an outright grant of a fee interest or easement interest as appropriate, in the sole discretion of the City of the appropriate right, title and interest in and to the portion of the applicable property owned by the Developer related to the applicable Improvement, including any temporary construction or access easements. Developer, whether or not it is the entity constructing the Improvements, agrees to execute and deliver to the City the documents required to complete the transfer of Acceptable Title for property owned by the Developer upon or within which such Improvements are to be located. For purposes of this Agreement, the term "Acceptable Title" shall mean title to the portion of the property to be conveyed free and clear of all taxes, liens, encumbrances, assessments, easements, leases, whether any such item is recorded or unrecorded, except (i) non-delinquent taxes and assessments and (ii) those non-monetary encumbrances and easements which are reasonably determined by the City not to interfere with the intended use of the portion of the property. As a further condition to the payment of the Retained Increment of the Purchase Price for any Improvement, Developer at its sole initial cost and expense, subject to reimbursement pursuant to Section 7, shall cause to be issued a policy of title insurance for such portion of the property in an amount not to exceed the Purchase Price and in the form normally required by City in connection with the dedication of land for subdivision improvements and containing such title endorsements as may be reasonably requested by City. City's WDIVEN\327580.1 10 r-If final acceptance of the portion of the property and the Improvements constructed thereon shall not be unreasonably withheld or delayed. (b) Improvements Constructed on Land Owned bv City. If Developer is authorized to construct an Improvement on land owned in fee by City or on land over which the City owns an easement Developer shall obtain the necessary encroachment permits to enter such land for purposes of constructing such Improvement. City shall cooperate with Developer in issuing such encroachment permits. The Improvements shall be inspected by City on an ongoing basis. SECTION 10. Grading and Subdivision Improvement Bonds. Except as provided below, Developer shall be required to post or cause the posting of bonds or other security acceptable to the City to guarantee completion of the Improvements in accordance with City's standard subdivision requirements and conditions of approval of the Development Project (the "Conditions of Approval"). Labor and materials bonds shall also be required to be provided by the Developer's contractor for all Improvements to be constructed under this agreement. Such bonds shall name the City of Chula Vista as additional obligee and shall remain in effect until the final acceptance of the Improvements by the City Engineer. The presence of Bond proceeds shall not relieve the Developer of requiring this obligation of the Developer's contractor. Performance and labor and material bonds for specific Improvements shall not be required or may be released if: (I) such Improvements constitute a portion of the required subdivision improvements, (2) Bond proceeds equal to 125% of the estimated cost to construct or acquire such Improvements are available and set aside for such purpose, and (3) the Improvements are to be constructed or acquired entirely with the proceeds of the Bonds. Provided that conditions (1) and (2) are satisfied, if an Improvement is to be constructed or acquired only in part with the proceeds of the Bonds, performance and labor and material bonds shall not be required for that portion of the Improvements to be so constructed or acquired except with respect to the portion that will not be acquired or constructed with Bond proceeds. In the event that the Bond proceeds that are available and may be set aside to fund the cost to construct or acquire an Improvement are less than 125% of the estimated cost thereof, the Developer shall be required to provide a performance and labor and material bond or other security satisfactory to the City Engineer and the City Attorney in the amount of such deficiency. City will cooperate with Developer in the termination or exoneration of any performance and labor and material bonds assuring completion of Improvements for which bonds have been sold. The City Engineer shall be the sole judge of determining release of such bonds. SECTION II. Indemnification by Developer. Developer shall defend, indemnifY and hold harmless all Indemnified Parties trom and against any and all claims, losses, liabilities, damages, including court costs and reasonable attorneys' fees by reason of, or resulting trom, or arising out of the design, engineering, solicitation of bids, award of contracts, administration of contracts and construction of the Improvements by the Developer, its employees, agents, independent contractors and/or representatives; provided that any claims for personal injury or property damage which relate to the Improvements shall be limited to those arising out of personal injury or property damage caused by actions or omissions by Developer or Developer's employees, WDIVEN\327580.1 11 9-/9 agents, independent contractors or representatives which occurred during the period prior to the transfer of title to the Improvements by City, whether or not a claim is filed prior to the date of acceptance of the Improvements. Nothing in this Section 11 shall limit in any manner the rights of the City and/or CFD No. 13-1 against any of the architects, engineers, contractors or other consultants employed by the Developer which has performed work in connection with construction or financing of the Improvements. Notwithstanding the foregoing, Developer shall have no obligation to defend, indemnifY or hold harmless the Indemnified Parties from and against any claims, liabilities, losses or damages (including court costs and attorneys' fees) which result from or arise out of the sole negligence or willful misconduct of an Indemnified Party. Except as set forth in this Section 11, no provision of this Agreement shall in any way limit the extent of the responsibility of Developer for payment of damages resulting from the operations of the Developer, its agents, employees or contractors. . SECTION 12. Obligation of City. Neither the City nor CFD No. 13-1 has a legal or financial obligation to construct or finance the actual construction of the Improvements. All costs incurred for actual construction of the Improvements, including all incidentals thereto, shall be borne by Developer, and the obligations of the City and Co=unity Facilities District are limited to the acquisition of the Improvements pursuant to the provisions of this Agreement. SECTION 13. Failure by Developer to Construct Improvements. At any time following commencement of the construction of any Improvements by the Developer the City determines that such construction is not progressing within a reasonable time in accordance with the Conditions of Approval or the Developer fails to demonstrate a continuing ability to complete the construction of such Improvement in accordance with the Conditions of Approval, the City may give written notice of such failure of performance to the Developer. Developer shall have sixty (60) days from the date of receipt of such notice to either (i) cure such failure of performance by demonstrating to the satisfaction of the City during such cure period reasonable progress in the construction of the Improvement and a continuing ability to complete the construction of such Improvement in accordance with the Conditions of Approval or (ii) reasonably demonstrate that such failure of performance is due to circumstances or conditions beyond Developer's reasonable control ("Force Majeure") including, without limitation, the City's actions, omissions or inaction which result in a delay of performance by Developer, labor disputes, acts of God, war, riots, insurrections, civil commotions, moratoriums, inability to obtain labor or materials or reasonable substitutes for either, fire, unusual delay in transportation, and adverse weather conditions. Should Developer fail to reasonably demonstrate such reasonable progress or such continuing ability to complete the construction of such Improvement or Force Majeure, the obligation of the City to pay the Purchase Price for the acquisition of such Improvement pursuant to this agreement may be terminated by the City by providing ten (10) days written notice to the Developer. Upon termination, the City may in its sole discretion then proceed to advertise and bid the balance of the construction of such Improvement, and there will be no further obligation on the part of the City for payment of the Purchase Price for such Improvement due to Developer pursuant to this Agreement. WDIVEN\327580.1 12 9 -;.2!) In the event that the City chooses not to advertise and bid the balance of the construction of any such Improvement following such a termination, any monies remaining in the Project Fund and set aside for the acquisition of such Improvement shall be transferred to the redemption fund established by the Indenture and used to call outstanding Bonds. SECTION 14. Agreement Contingent. As a precondition to the sale of each series of the Bonds of CFD No. 13-1, Developer shall pay in cash to City an origination charge of 1.0% of the amount of the principal amount of such series of the Bonds ("Origination Payment"). Each such Origination Payment shall be at Developer's own expense and not recoverable from the proceeds of the special taxes or trom the proceeds of the Bonds. In the event that any series of the Bonds are, for any reason, not sold, the amount of the Origination Payment made for such series of the Bonds shall be returned to the Developer. This Agreement is contingent upon the successful sale of Bonds, and it shall be null and void if the first series of Bonds are not sold within a three (3) year period following the date of this Agreement, or any mutually agreed extension; however, this time can be extended by request of the Developer and concurrence of the legislative body. The City may, at its option, suspend the performance of its obligations under this Agreement if any legal challenge is filed relating to the validity or enforceability of this Agreement, CFD No. 13-1 proceedings or the issuance of the Bonds. The obligations of the City and CFD No. 13-1 hereunder shall be reinstated upon the entry of a final judgment in any such proceedings upholding the validity and enforceability of the Agreement, CFD No. 13-1 proceedings and the issuance of the Bonds. In the event that a final judgment or other final and non-appealable resolution is entered invalidating or declaring unenforceable this Agreement, CFD No. 13-1 proceedings or the issuance of the Bonds, the City and CFD No. 13-1 may, at their option, terminate this Agreement. SECTION 15. Notice of Special Tax. Developer, or the successor or assigns of the Developer, including but not limited to all Merchant Builders (as such term is defined in Section 16 below), shall provide written notice to all potential purchasers of lots in the form required pursuant to Government Code Section 53341.5 and/or such additional requirements as may be established by the City so advising the potential owner of the fact of CFD No. 13-1, with said document being executed by the potential purchaser. Such notice shall be provided to the potential purchaser a reasonable time before the potential purchaser becomes contractually committed to purchase the lot so that the potential purchaser may knowingly consider the impact of the special tax in the decision to purchase the lot. A copy of all such notices executed by actual purchasers shall be sent to the City Engineer. SECTION 16. Limitation of Aggregate Taxes and Assessments. Developer represents that the Developer has included in all agreements to sell all or any portion of the property to any person or entity for the purpose of constructing and marketing owner -occupied residential dwelling units (each, a "Merchant Builder") provisions requiring the inclusion of the following "escrow instructions" in all sales by such Merchant Builder to residential home owners agrees to the WDIVEN\327580.1 13 9-..11 inclusion of such escrow instructions in all sales by each such Merchant Builder to residential home owners: (a). At or prior to the close of each such escrow with a residential homeowner, the escrow company shall apply a "calculation formula" previously approved by the City Engineer and deposited with the escrow company by the Merchant Builder to detennine the aggregate of all annual ad valorem property taxes, all special taxes authorized to be levied to finance the construction or acquisition of public facilities and all assessment installments authorized to be levied to finance the construction or acquisition of public facilities (the "Total Annual Taxes and Assessments") applicable to the parcel subject to such escrow (the "Applicable Parcel"). (b). !fthe Total Annual Taxes and Assessments exceed 2% of the sales price of the Applicable Parcel, the Escrow Company will make immediate written demand upon the Merchant Builder for deposit into the escrow of the funds necessary to partially prepay the special tax obligation for CFD No. 13-1 or any other community facilities district so that the Total Annual Taxes and Assessments will thereafter be equal to or less than 2% of the sales price of the Applicable Parcel. Such funds must be received by the escrow company prior to the close of escrow of the sale of the Applicable Parcel. The calculation of the prepayment amount for CFD No. 13-1 shall be in accordance with the method of prepayment of special tax as set forth in the rate and method of apportionment of special taxes approved by the qualified electors ofCFD No. 13-1. Upon closing of such escrow, the amount so deposited by the Merchant Builder pursuant to this escrow instruction shall be sent by the escrow company to the Director of Finance, together with written instructions that such amount is to be used to partially prepay the special tax obligation of the Applicable Parcel for CFD No. 13-1 or shall be sent to the other community facilities district for which the special tax obligation has been prepaid with similar written instructions. The provisions of this Section 16 related to sales by Merchant Builders to residential homeowners shall also apply to any sale by Developer of a parcel to a residential home owner. In addition to any other remedy provided for by law or in equity, the City may enforce the provisions of this Section 16 by an action for specific performance or injunctive relief or both. SECTION 17. Relationship to Public Works. This Agreement is for the construction and acquisition of certain Improvements by City and the sale of the Bonds for the payment of construction and acquisition costs for such Improvements and such other amounts as are herein provided, and is not intended to be a public works contract. In perfonning its obligations under this Agreement, Developer is an independent contractor and not the agent of City. City shall have no responsibility for payment to any contractor or supplier of Developer. Notwithstanding the foregoing, Developer may be subject to certain public contract requirements as provided in Section 3 of this Agreement. . SECTION 18. Sale of Bonds. The City shall, immediately upon execution of this Agreement by the parties hereto, proceed with the issuance and sale of an initial series of bonds secured by the levy of special taxes within CFD No. 13-1 (the "Bonds") to be issued pursuant to the Act. The Bonds shall be issued in one or more series and each series shall be sized so that as of the date of WDIVEN\327580.1 14 9-.).:1.. issuance of such series of the Bonds the aggregate appraised value of all taxable properties within CFD No. 13-1 for which such Bonds are being issued shall comply with the value-to-lien standards set forth in the Goals and Policies or as otherwise approved by the City Council pursuant to the Goals and Policies. In addition, as to any subsequent series of Bonds, the issuance of such Bonds shall comply with such parity bonds test as may be set forth in the Bond Indenture. The appraised value of taxable property for purposes of this paragraph shall be determined by an independent appraisal undertaken for the City utilizing appraisal assumptions approved by the City and, as to each subsequent series of the Bonds, consistent with the applicable parity bonds requirements. The proceeds of each series of the Bonds shall be used in the following priority to (i) fund a reserve fund for the payment of principal and interest with respect to such Bonds; (ii) fund capitalized interest on such Bonds in an amount not to exceed the amount required to pay interest on such Bonds until sufficient special taxes may be placed on the tax roll to pay the scheduled debt service on such Bonds; (iii) pay for costs of issuance of such Bonds including, without limitation, underwriter's discount, bond counsel fees, printing, and paying agent fees; (iv) pay for the costs offorming CFD No. 13-1, including reimbursement of advances of funds to the City by Developer to pay for the City's legal, engineering, financial, special tax, appraisal and market absorption consulting expenses incurred relating to the formation of CFD No. 13-1 and issuance of the Bonds; (v) pay the costs of the acquisition or construction the Transportation Facilities and Public Facilities be financed ITom the proceeds of the Bonds, and (vi) pay the costs of the acquisition or construction of the Improvements. The timing of the issuance and sale of the Bonds, the terms and conditions upon which the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing thereof shall be determined solely by the City and shall conform to the Goals and Policies and this Agreement. The sale of the Bonds shall be subject to receipt by the City of a competitively bid or negotiated bond purchase agreement which is acceptable to the City. The sale of the Bonds shall also be conditional upon the preparation of an official statement that is, in the sole judgment of the City, "deemed final" as such term is used in Rille 15c2-12 of the Securities and Exchange Commission (the "Rule"). The principal amount of the Bonds to be issued shall be determined in accordance with the Goals and Policies such that the maximum projected annual special tax revenues securing the Bonds equals at least 11 0% of the projected annual gross debt service on all of the Bonds following the issuance of the Bonds. Developer, on behalf of itself, any affiliates of the Developer and any successor or assign of the Developer including but not limited to all Merchant Builders, agrees (a) to provide all information regarding the development of the property within CFD No. 13-1, including the financing plan for such development, which are necessary to ensure that the official statement for each series of the Bonds complies with the requirements of the Rule and all other applicable federal and state securities laws; (b) to enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to CFD No. 13-1, the development thereof and the Developer as necessary to ensure ongoing compliance with the continuing disclosure requirements WDlVEN\327580.1 15 9-~6 of the Rule and (c) to cause its counsel to provide an opinion of such counsel in a form satisfactory to the underwriter of the Bonds and underwriter's counsel or disclosure counsel, as applicable. . SECTION 21. Development Impact Fee Credit, Payment and Reimbursement. Proceeds of the Bonds (the "TDIF Bond Proceeds") in an amount equal to the estimated Aggregate TDIF Obligation shall be deposited and set aside in a separate account of the Project Fund (the "Transportation Facilities Account") to be established by the Bond Indenture by and between the District and U.S. Bank National Association, as fiscal agent (the "Indenture"). The use of such proceeds shall be restricted to payment of the Purchase Price for Transportation Facilities to be constructed by the Developers. Upon the deposit of the TDIF Bond Proceeds in the Transportation Facilities Account, such amount shall be credited against the Aggregate TDIF Obligation. If and to the extent that the actual Aggregate TDIF Obligation exceeds the amount of the TDIF Deposit, the balance of the Aggregate TDIF Obligation shall be payable pursuant to the provisions of Chapter 3.54. If and to the extent that the actual Aggregate TDIF Obligation is less than the TDIF Bond Proceeds, such surplus shall be transferred to a separate account of the Project Fund (the "Acquisition Account") to be established by the Indenture and used pursuant to the Indenture and this Agreement to pay the Purchase Price for the acquisition of the Improvements. Proceeds of the Bonds (the "PFDIF Bond Proceeds") in an amount equal to the estimated Aggregate PFDIF Obligation shall be deposited and set aside in a separate account of the Project Fund (the "Public Facilities Account") to be established by the Indenture. Except as otherwise provided in this paragraph, the use of such proceeds shall be restricted to payment of costs incurred by the City for the acquisition or construction of Public Facilities. Upon the deposit of the PFDIF Bond Proceeds in the Public Facilities Account, such amount shall be credited against the Aggregate PFDIF Obligation. If and to the extent that the actual Aggregate PFDIF Obligation exceeds the amount of the PFDIF Bond Proceeds, the balance of the Aggregate PFDIF Obligation shall be payable pursuant to the provisions of Chapter 3.54. If and to the extent that the actual Aggregate PFDIF Obligation is less than the PFDIF Bond Proceeds, such surplus shall be transferred to the Acquisition Account of the Project Fund and used pursuant to the Indenture to pay the Purchase Price for the acquisition of the Improvements. SECTION 22. Supplemental Bill for Payment of Special Taxes. Developer acknowledges that the rate and method of apportionment of Special Taxes provides that 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. 13-1, 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. The City has represented to the Developer that delinquencies in the payment of special taxes intended to be collected on property tax bills have occurred in other community facilities districts formed by the City as a result of difficulties experienced by the office of the Treasurer-Tax Collector of the County of San Diego (the "Tax Collector") in the timely billing and collection of such special taxes. If and to the extent that the Tax Collector fails, for whatever reason, to timely bill the full amount of the special taxes levied on properties owned by the Developer or any affiliate of the Developer within CFD No. 13-1, the City, on behalf of CFD No. 13-1, may elect to directly and WDIVEN\327580.1 16 '9--1'1 .\---.,-- separately bill ("Direct Bill") the Developer for such deficiency and Developer agrees to (a) pay such deficiency within the time period specified in such Direct Bill which shall be no less than thirty calendar days from the date of mailing of such Direct Bill or (b) provide the Director of Finance with proof of payment to the Tax Collector of such deficiency in a form satisfactory to the Director of Finance. Should the Developer pay such deficiency directly to the City pursuant to a Direct Bill, the City agrees upon receipt of such payment to timely submit an amendment of the Special Tax levy on the Developer's property to the Tax Collector to reduce such levy by the amount of such payment. Delinquency in the payment of a Direct Bill sent pursuant to the preceding paragraph shall not be enforceable as a personal obligation of the Developer but shall be enforceable in the same manner as if such delinquency had been for the payment of special taxes billed on the property tax bill. SECTION 23. Conflict with Other Agreements. Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer or the Merchant Builders from any condition of development or requirement imposed by any other agreement with City. SECTION 24. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval, discretion or acceptance of any party hereto or any of their respective employees, officers or agents shall be deemed to require that such consent, approval or acceptance not be unreasonably withheld or delayed, unless such provision expressly incorporates a different standard. SECTION 25. Entire Agreement; Amendment. This Agreement and the agreements expressly referred to herein contains all of the agreements of the parties hereto with respect to the matters contained herein and no prior or contemporaneous agreement or understandings, oral or written, pertaining to any such matters shall be effective for any purpose. No provision of this Agreement may be modified, waiver, 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. SECTION 26. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: Developer: Otay Project, L.P. 350 West Ash Street, Suite 730 San Diego, CA 92101 Attn: Kent Aden WDIVEN\327580.! 17 ?~5 City: City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: City Manager Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party. SECTION 27. Severability. If any provision of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. SECTION 28. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the .successors and assigns of the parties hereto. Developer may not assign its rights or obligations hereunder except upon written notice to City within ten (10) days of the date of such assignment indicating the name and address of the assignee. Upon such notice and the assumption by the assignee of the rights, duties and obligations of the Developer arising under or trom this Agreement, Developer shall be released by City trom all future duties or obligations rising under or trom this Agreement. Notwithstanding the preceding sentence, Developer may assign its rights and obligations hereunder as security to lenders for the purpose of obtaining loans to finance development within CFD No. 13-1, but no such assignment shall release Developer trom its obligations hereunder to City. SECTION 29. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California, Additionally, this Agreement and the construction of the Improvements shall be subject to all City ordinances and regulations relating to the requirement of improvement agreements, land division, improvement security or other applicable development requirements. SECTION 30. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by any other party, or the failure by a party to exercise its rights under the default of any other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by any other party with the terms of this Agreement thereafter. SECTION 31. Singular and Plural; Gender. As used herein, the singular of any work includes the plural, and terms in the masculine gender shall include the feminine. SECTION 32. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. SECTION 33. Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and the Developer and shall be deemed for all purposes to have been jointly drafted by the City and the Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement The language in all parts of this Agreement, in all cases, shall be construed as a whole and in . WDIVEN\327580.1 18 r".)~ accordance with its fair meaning and not strictly for or against any party and consistent with the provisions hereof, in order to achieve the objectives of the parties hereunder. The captions of the sections and subsections of this Agreement are for convenience only and shall not be considered or referred to in resolving questions of construction. SECTION 34. Recitals; Exhibits. Any recitals set forth above and any attached exhibits are incorporated by reference into this Agreement. SECTION 35. Authority of Signatories. Each signatory and party hereto hereby represents and warrants to the other party that it has legal authority and capacity and direction /Tom its principal to enter into this Agreement, and that all resolutions and/or other actions have been taken so as to enable such party to enter into this Agreement. SECTION 36. Recordation. The parties shall execute, acknowledge and cause this Agreement, or a memorandum of this Agreement in a form satisfactory to the parties hereto, to be recorded against the Development Project in the Official Records of San Diego County. [End of page. Next page is signature page.] 19 WDIVEN\327580.1 f -.,) 7 Signature Page to AcquisitionlFinancing Agreement by and between the City of Chula Vista and Otay Project, L.P. . EXECUTED by and between the parties hereto on the day and year first hereinabove written. "CITY" CITY OF CHULA VISTA MAYOR CITY OF CHULA VISTA STATE OF CALIFORNIA ATTEST: APPROVED AS TO FORM: CITY CLERK CITY OF CHULA VISTA STATE OF CALIFORNIA ANN MOORE, CITY ATTORNEY CITY OF CHULA VISTA STATE OF CALIFORNIA . WDIVEN\327580.! S -1 9-~8 "DEVELOPER" OTA Y PROJECT, L.P" a California limited liability company By: OTAYPROJECT, LLC, a California limited liability company, General Partner By: OTAY RANCH DEVELOPMENT, LLC, a Delaware limited liability company, its managing member By: S-2 WDIVEN\327580.1 7-4 EXlllBIT "A" ACQUISITION AND FINANCING AGREEMENT FOR CFD 13-1 (OTAY RANCH VILLAGE SEVEN) IMPROVEMENT DESCRIPTION AND ESTIMATED COSTS Improvement Number Improvement Description' Cost Estimate' I La Media Road (TDIF) $4,383,833 2 La Media Road (Non-TDIF) 1,144,303 3 La Media Road Landscaping (TDIF) 1,350,706 4 Magdalena Avenue (Non- TDIF) 1,635,210 5 Santa Luna Street (Non- TDIF) 2,026,462 6 Fleisbein Street and Kincaid Avenue Sewer (Non-TDIF) 507,955 7 Trail Svstem/Storm Drain Svstem 1,459,698 8 Slope Landscapiog 2,339,082 9 Traffic Signals 159,917 10 Public Facilities L927.740 .. Total $16,934,906 Notes: I. The description of the Improvements set forth above is preliminary and general. Such final plans may show substitutes in lieu of, or modification to, the above described Improvements and any such substitution shall not be a change or modification in the proceedings as long as such improvements provide a service substantially similar to the above described Improvements. 2. The costs estimates are preliminary and may be modified from time to time with the consent of the Developer and the City Engineer. The actual Purchase Price for individual Improvements shall be established pursuant to the provisions of the Agreement. WDIVEN\327580.1 A-I '1-30 EXHIBIT "B" SUBSTANTIAL COMPLETION CRITERIA FOR IMPROVEMENTS General: I. Substantial completion of an Improvement for purposes of determining the eligibility of such Improvement for the payment of the "Base Increment" therefore shall mean that the construction or work with respect to such Improvement, including each component of such Improvement, has progressed to the point where it is sufficiently complete so that it can be utilized for the purpose for which it was intended. Substantial completion criteria for each Improvement or component of an Improvement is further described below. 2. Payment for the "Retained Increment" of the Purchase Price for an Improvement shall be in accordance with Section 7, paragraph (c)(ii) and shall be made after submittal of a payment request form, as-built plans and such other documentation as is required pursuant to Section 7 paragraph (c )(ii), posting of maintenance bonds, and submittal oflien release evidence. Substantial Comoletion Criteria: A. Grading: Grading shall be deemed to be complete upon (l) completion of all preliminary grading work (mobilization, site clearing, remedial grading, overexcavation, installation of subdrainage systems) (2) certification of compaction by the geotechnical engineer, quantity verification by the civil engineer, and confirmation by the City inspector and (3) installation of all surface grading improvements (brow ditches, retaining walls, slope protection and similar improvements) and the certification thereof by the geotechnical engineer and confirmation by the City inspector. B. Sewer: Sewer construction shall be deemed substantially complete upon the installation, flushing, and testing of sewer main line, laterals, cleanouts, manholes, and all other appurtenances of the sewer system as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and the verification of such installation by the civil engineer and confirmation of such installation by the City inspector. C. Storm Drain: Box culverts and headwall structures shall be deemed substantially complete upon installation as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and verification of such installation by the civil engineer, and confirmation of such installation by the City inspector. D. Drainage Facilities: Drainage structures including energy dissipation devices (rip-rap, drop structures, cut-off walls, etc), drainage diversion structures, facilities required as part of the environmental mitigation measures, and other drainage channel appurtenances including drainage pipes connecting the brow ditches to the channel, shall be deemed substantially complete for payment of the Base Increment upon the installation thereof as shown on the WDlVEN\327580.1 B-1 9-31 approved plans and specifications therefore and in accordance with City standard plans and specifications and the verification of such installation by the civil engineer and confirmation of such installation by the City inspector. E. Dry Utility Backbone Svstem: Dry utilities (electric, gas, telephone, CATV) shall be deemed substantially complete upon the installation of the conduits, junction boxes, payment of utility fees, and written acceptance of the facilities by the utility companies. F. Roadwav Pavement and Roadway Drainage Svstem: Roadway pavement and drainage improvements shall be deemed substantially complete upon the installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector of all storm drain pipes, catch basins, drainage inlets and cleanouts for the roadway storm drain system, installation of roadway base material, concrete curb and gutter, and AC pavement including the preparation of the sub grade and base material. G. Other Street Surface ImDrovements: Street surface improvements including street lights, traffic signals and conduits, signal interconnect, street name signs, roadway signing and striping, and appurtenances shall be deemed substantially complete when installed as shown on the improvement plans and in accordance with City standard plans and specifications and upon confirmation of such installation by the City inspector. H. Street Landscape Irrigation and Planting: Parkway landscaping within the roadway right of way including planting, irrigation, concrete sidewalks, median maintenance strip, pedestrian ramps, channel maintenance roads and all associated subgrade and base material preparation shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector. I. Slope Landscaping: Landscape planting and irrigation improvements for the slopes outside of the roadway and channel right of way and the regional trail (DG) and fencing shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector. WDIVEN\327580.1 B-2 fj'-3.2- ExmBIT "C" DESIGN, BID, CONTRACT AND CHANGE ORDER REQUIREMENTS 1. General These requirements shall be applied to all improvements proposed to be constructed by the Developer and subsequently acquired by the City through CFD No. 13-1. Except as expressly provided otherwise in the body of this Agreement itself, any deviation trom these requirements mnst be aooroved in writinl! in advance bv the City Engineer. References to the City Engineer means the City Engineer or his or her designee. The City reserves the right to make the final determination of cost of the Improvements to be acquired in accordance with this Agreement. 2. Design Phase A. Only design costs directly related to the public improvements to be acquired are eligible for inclusion. B. Bidding Documents. Two complete sets of bidding documents, including improvement plans, general provisions, and bid proposal forms shall be submitted to the Engineering Division for review and approval within 15 working days of submittal. Advertising for bids shall not take place until the bidding documents are approved in writing by the City. This procedure shall be followed for each contract proposed to be advertised. Unless otherwise noted, the bidding documents shall conform to the following minimum requirements: 1. Unless impractical due to the nature of the improvement, the bid proposal shall be unit priced rather than lump sum. A.C. pavement, base and sub-base shall be bid on a square foot per inch thickness basis. 2. The bidding documents shall require the bidder/contractor to provide the following bonds: a. Bid Bond - 10% of the amount of the bid. b. Material and Labor Bond - 50% of the contract amount. c. Performance Bond - 100% of the contract amount. The Contractor shall post performance and labor and material bonds for all improvements as part of the bid. The City of Chula Vista shall be named as additional obligee with the right to call such bonds if needed. Such bonds shall WDIVEN\327580.1 C -I 9-33 remain in effect until such time as all improvements are completed and accepted by the City Engineer. The City Engineer shall be the sole judge in determining the release of such bonds. 3. The bidding documents shall require the successful bidder to provide evidence of comprehensive or commercial general public liability insurance in the amount of at least $1,000,000 prior to the award of the contract. 4. Unless otherwise required by the City, the contractor is not required to pay prevailing wages. 5. The bidding documents must clearly state the time, date, and place where . bids are to be submitted and opened. 6. The bidding documents shall clearly state the amount of time to complete the work. The time allowed must be reasonable for the amount of work. Accelerated construction time allowances must be supplementally bid, and are not eligible for public finance unless previously approved by the City Engineer. 3. Bidding Phase WDIVEN\327580.! . A. The Notice inviting Sealed Bids shall be published in the Chula Vista Star News and the San Diego Daily Transcript. The notice inviting bids shall state where bidding documents are available. B. The bidding period following the advertisement of the Notice Inviting Sealed Bids shall be a minimum of 14 calendar days. C. Developer shall provide complete sets of bidding documents to all contractors, subcontractors, or suppliers requesting them. A reasonable price may be charged for bidding documents. D. Developer shall keep a log of all persons obtaining bidding documents, and their mailing address. E. Addenda shall be mailed by first class mail to all bidding document holders and the City Engineer. If an addendum is required within five working days of the noticed bid opening date, the bid opening date shall be extended. F. Submitted bids shall be in sealed envelopes. G. Bids shall not be accepted after the stated time for submission. H. Bid opening shall be conducted by the Developer at the Developer's place of business or other site mutually acceptable to the Developer and City Engineer. C-2 9-3'-1 E. Sealed bids shall be opened and read aloud immediately following the submission time. A City representative shall be invited to attend the bid opening. J. Conditioned bids, unless the bid proposal lists them for all to bid on, shall not be accepted. K. The bid proposals shall conform to all state and local laws governing the listing of subcontractors and suppliers. L. The arithmetic of the two lowest bid proposals received shall immediately be checked for errors. M. . A tabulation of all bids received shall be provided to the City Engineer within five working days of the bid opening. N. Award shall be made to the lowest responsible bidder within a reasonable period of time following approval by the City Engineer. O. A preconstruction meeting shall be held with the contractor prior to beginning the work. A City representative shall be invited to attend the meeting. P. The Notice to Proceed shall be issued within a reasonable period of time following the contract execution. 4. Construction Phase D. E. WDIVEN\327580.1 A. The City shall be provided a copy of the construction schedule. B. Developer shall require the contractor to conduct weekly construction status meetings to which a City representative shall be invited. C. Any additional costs incurred for the benefit of the Developer, such as accelerating the construction schedule, shall not be eligible for public financing unless previously approved by the City Engineer. Any additional construction costs incurred due solely to delays caused by the Developer shall not be eligible for public financing. All contracts and construction related records shall be available to the City as and when required for the final determination of eligible costs for the public financing. This shall include trip tickets and other confirmations of material delivered to the Improvement. C - 3 9-35' 5. Change Orders A. No single change order for a TDIF Improvement shall be eligible for inclusion in the Purchase Price for such Improvement that increases or decreases the original contract amount for the construction of such Improvement by more than $50,000 without City Council approval. B. All change orders shall be fully documented and be in a format consistent and be in a format consistent with the original bid items (i.e., show units, unit costs, extensions and total costs). The City Engineer, in hislher sole discretion shall determine the eligibility of each change order for inclusion in the Purchase Price for an Improvement. C. . The aggregate of all change orders for TDIF Improvements, including those for differences between estimated and actual quantities shall not increase the contract amount by more than the amount specified below without City Council approval: Original Contract Range Maximum Aggregate Increase Up to $100,000 10% $100,001 to $1,000,000 $10,000 plus 7% of amount over $100,000 More than $1,000,000 $73,000 plus 5% of amount over $1,000,000 The aggregate of all change orders for any non-TDIF Improvement shall not increase the Purchase Price thereof so as to cause such Purchase Price to exceed the cost estimate for such Improvement as set forth in Exhibit A by more than 25% without City Council approval. D. All change orders involving changes in scope of the project, or increases of contract amounts greater than outlined in C. above shall be submitted to the City Council for approval after the construction of the Improvement is completed, but before the payment of any portion of the Purchase Price for such Improvement is authorized by the City Engineer. Change orders that the Developer does not wish to include in the Purchase Price for an Improvement do not need to go to City Council for approval. . E. Negotiated set price change orders are acceptable where most of the items of work in the change order have unit prices from the bids. Where change orders are for work that does not have unit prices for a substantial portion of the work contained within the bids, time and materials change orders are preferred. C-4 . WDIVEN\327580.1 9~3fo Exhibit "D" City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) Base Increment Payment Request No. The undersigned (the "Developer") hereby requests payment in the total amount of $ for the Base Increment for the Improvements (as defined in the AcquisitionlFinancing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: A. He(she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. The Improvements that are the subject of this Payment Request have been substantially completed in accordance with Exhibits B and C. C. This request for payment of the Base Increment for the Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Base Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. All items have been clearly delineated as DIFINon-DIF eligible (all DIF's) and detailed backup and cost breakdown is provided supporting each item. E. Supporting documentation (such as third party invoices, change orders and checks) is attached with respect to each cost for which payment is requested. F. The Improvements for which payment is requested were constructed in accordance with the requirements ofthe Agreement. G. Developer is in compliance with the terms and provisions of the Agreement. H. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after due inquiry, will attach to the Improvements. WDIVEN\327580.1 D -1 9"-37 . I. A cop(ies) of the letter( s) of unconditional lien release for the Improvements for which payment is requested is included this request. Alternatively, a copy of a letter of conditional lien release for the Improvements for which payment is requested together with a letter from the contractor( s) stating that they have been paid in full by the Developer for the Improvements for which payment is requested is also included in this request. I hereby declare under penalty of perjury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance Director of Engineering Dated: WDIVEN\327580.1 D -2 9 -:31 ATTACHMENT 1 SUMMARY OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. Imorovement Cost Estimate Base Increment Disbursement Reouested [List here all Improvements for which payment is requested, and attach supporting documentation] WDIVEN\327580.1 D - 3 r~,,:19 Exhibit "E" City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) Retained Increment Payment Request No. The undersigned (the "Developer") hereby requests payment in the total amount of $ for the Retained Increment of the Purchase Price of the Improvements (as defined in the AcquisitionlFinancing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: H WDIVEN\327580.1 A. He( she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. Developer has submitted or submits herein to the City, if applicable, as-built drawings or similar plans and specifications for the Improvements and such drawings or plans and specifications, as applicable, are true, correct and complete. C. The Purchase Price for the Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Retained Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. All items have been clearly delineated as DIF/Non-DIF eligible (all DIF's) and detailed backup and cost breakdown is provided supporting each item. E. Supporting documentation (such as third party invoices, change orders, lien releases and checks) is attached with respect to each cost for which payment is requested. F. The Improvements for which payment is requested were constructed in accordance with the requirements of the Agreement. G. Developer is in compliance with the terms and provisions of the Agreement. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after one inquiry, will attach to the Improvements. E - I 9-//0 I hereby declare under penalty of peIjury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance City Engineer Dated: . WDIVEN\327580.1 E - 2 94/ ATTACHMENT I SUMMARY OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. ImDrovement Purchase Drice Base Increment Retained Disbursement Increment Reouested [List here all Improvements for which payment is requested, and attach supporting documentation] WDIVEN\327580.1 E - 3 9-l/~ EXffiBIT "F" LEGAL DESCRIPTION OF PROJECT WDIVEN'327580.1 E - 1 9-'13 ~ g 0.;; .~ ~ ~.~ 'I::.~ ~ "-.; .~ -o~ 1-0 .2., ~O"' o.~O ~ -" U ~ rJ:I 0", >, ~ 0 a "'~'- ~ i1 0 tj!;:: QJ .;3 0 ~ >,~- ;::I....... ~ ..0 0...... .9i3@ [/J....:::J ~ ;\1.~ ~ o ~.s ~~.1J 11';; !J !:; S I)L) ",- =1 .s ~~!E ~ .s a ...... U -=: S! ~.9 H 0 ~ >',,0 @ ~ s ~~~ "'~ '" .13 ~ ~- (.) 0 ..8 ~ 0 ~ oo~"' ~ 5 ~ t3 ~r6h i51'i~ ..,"'~ 5 ~ ~ ]~ -a ~ p." 5 a ~ ~ q ~ 1Is@ ~ E ~ .,g:..!:j ..0 ti~"'O -a..A.~ s.oo ~ 8 ~ ~ .s~~ 1:) ~ 1-0 ~ 00 0 :E'ruc= " 0 0 00 ~ .., ~ .$ ~ .~ sP .~ ~ g ILl '(,) 1-00"' ..c::os2 -g~~ .~ i1 "' '" 0 :S ~ 8 .-5 i3 S:S .., 0 ~ ~ '" ~ s01." ]~ .~ ~.s 'i3 ""'''' 00 .. ~ ." '" i1" d >....., ~'" 11.s ~ s .~ .s ..y -<;;;: rJ:I S S) ,ou ~E~ .".$ ~ t:::jCZ!rJ:I '" 01 ~ 0." ~ {::;Ifi .;; ~ 0 ,-"' .~ 0 " ~ ~ 13';;01 ~ ~ 00 o!: Ii 6- ~~~ EXHibt T 4 Stradling Y occa Carlson & Rauth Draft of 0J0JI0lflBl06 PRELIMINARY OFFICIAL STATEMENT DATED AS OF APRIl, ,2006 NEW ISSUE - BOOK-ENTRY-ONLY NO RATING In the opinion of Best Best & Kn'eger lLP, Bond Counsel, based on an ana(vsis of existing laws, re~lations. rolings and caurt decisions, and assummg, among other matters, compliance with certain cavenant~ interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1 y86 and is exempt from State of California personal income taxes. In the further opmion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjustea current earnings in calculating Jederal corporate alternative minimum taxable income. Bond Counsel expresses no oEinion regarding any other f!deral or state income tax consequences relating to the ownership or disposition 0[. or the accrual or receipt oJ interest on, the Bonds. See' TAX MATTERS" herein. $16,1111,11110' $16.505.000' CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTA Y RANCH VILLAGE SEVEN) 2006 SPECIAL TAX BONDS Dated: Date of Delivery Due: September I, as shown on the iuside cover page The City of Chula Vista Community Facilities District No. 13-1 (Otay Rauch Village Seven) 2006 Special Tax Bonds (the "Bonds") are being issued and delivered to finance various public improvements needed to develop property located within Community Facilities District No. 13-1 (Otay Rauch Village Seven) (the "District"). The District has been formed by and is located in the City of Chula Vista (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 g1 ~. of the Government Code of the State of California), and pursuantto a Bond Indenture (the "Indenture"), dated as of March I, 2006, by and between the District and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"). The Bonda are special obligations of the District and are payable solely from revenues derived from certain annual Special Taxes (as defllled herein) to be levied on certain taxable land within the District and from certain other funds pledged under the Indenture, all as further described herein. The Special Taxes are to be levied according to the rate and method of apportiorunent approved by the City Council of the City and the qualified electors within the District. See "SOURCES OF PAYMENT FOR TIlE BONDS-Rate and Method of Apportiorunent." The City Council of the City is the legislative body of the District. The Bonds are issuable in fully registered fonn and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). IrIdividual purchases may be made in principal amounts of $5,000 and integral multiples thereof and will be in book-entry fonn only. Purchasers of Bonds will not receive certificates representing their beneficial o\VIlership of the Bonds but v.rill receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of DTC or as otherwise described herein. Interest on the Bonds will be payable on September I, 2006 and semiannually thereafter on each March 1 and September 1. Principal of and interest on the Bonds will be paid by the Fiscal Agent to DTC for subsequent disbursement to DTC Participants who are obligated to remit such payments to the beneficial O\VIlers of the Bonds. See "TIffi BONDS-Description of the Bonds" herein. Neither the faith and credit nor the taxing power of the City, the County of San Diego, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Exceptfor the Special Taxes, no other taxes are pledged to the payment of the Bonds. The Bonds are special tax obligations of the District payable solely from Net Special Tax Revenues and other amounts held under the Indenture as more fully described herein. The Bouda are subject to optional redemption, extraordinary mandatory redemption and mandatory sinking fund redemption prior to maturity as set forth herein. See "TIlE BONDS-Redemption ofBonda" herein. CERTAIN EVENTS COULD AFFECT THE ABILITY OF THE DISTRICT TO PAY THE PRINCIPAL OF AND INTEREST ON THE BONDS WHEN DUE. THE PURCHASE OF THE BONDS INVOLVES SIGNIFICANT RISKS, AND THE BONDS ARE NOT SUITABLE INVESTMENTS FOR ALL INVESTORS. SEE THE SECTION OF TIllS OFFICIAL STATEMENT ENTITLED "SPECIAL RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS mAT SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY 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 infonnation essential to the making of an infonned investment decision. MATillUTYSCHEDULE (See Inside Cover Page) The Bouds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Best Best & Krieger LLP, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by the City Attorney and for the Und.ervm.ter by Stradling Y occa Carlson & Rauth, a Professional Corporation, Ne-wport Beach, California, as cOWlsel to the Uuderwriter. It is anticipated tbat the Bonds in book-entry form will be available for delivery to DTC in New York, New York, ou or about Mav . 2006. Dated: Stone & Youngberg LLC A nri) , 2006 .t .T)-F8HmirrarJ, Z~5)'8e! te a';snge. . p,.p:limjrlnro, .mhip.rl tn r.hnrlPp DOCSOCI1147417v,,~022245-0162 0_ 1./1;- I (, MATURlTYSCHEDULE (Base CUSIP: )1 Maturity Date (September 1) Principal Amount Interest Rate Yield CUSIpt Maturity Date (September 1) Prim:ipa/ Amount Interest Rate Yield CUSIpt $ % % $ % % $ $ $ _% Term Bonds due September I, 20_ Yield: _% - CUSlPt: _ % Term Bonds due September I, 20_ Yield: _%-CUSlPt: _ % Term Bonds due September I, 2036 Yield: _% - CUSIP': _ Copyright 2006, American BankErs Association. CUSIP data herein is provided by Standard & Poor's, CUSIP Service Bureau, a division of The McGraw-HiIl Companies, Inc. Neither the Underwriter nor the District takes any responsibility for the accuracy of such data. DOCSOC/1147417v~~022245-D162 9-t/~ ~ CITY OF CHULA VISTA, CALIFORNIA CITY COUNCIL Stephen C. Padilla, Mayor Patty Davis, Depmy Mayor Patricia Chavez. Counci]memher Steve Castaneda, Councilmember John McCann, Councilmember Jerry Rindone, Councilmember CITY STAFF David D. Rowlands, Jr., City Manager Dana Smith, Assistant City Manager Ann Moore, City Attorney Maria Kachadoorian, Director of Finance Susan Bigelow, City Clerk Alex Al-Agha, City Engineer BOND COUNSEL Best Best & Krieger LLP San Diego, California FINANCIAL ADVISOR TO THE CITY Fieldman, Rolapp & Associates Irvine, California SPECIAL TAX CONSULTANT REAL ESTATE APPRAISER McGill Martin Self, Inc. Chula Vista, California Bruce W. Hull & Associates, Inc. Ventura, California MARKET ABSORPTION CONSULTANT FISCAL AGENT Sullivan Group Real Estate Advisors San Diego, California U.S. Bank National Association Los Angeles, California DOCSOC/1147417v'>~022245-0162 'I 9-iJ&:; . 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 tu 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. . All information considered material to the making of an informed investment decision with respect to the Bonds is contained in this Official Statement. While the City maintains an internet website for various purposes, none of the information on its website is incorporated by reference into this Official Statement. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded. 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 captions "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 DOCSOCI1147417v;~022245-0162 9-LJ7 OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. 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/1 147417v"~022245-0162 9-~f TABLE OF CONTENTS Page INTRODUCTION .. ............ ....... ... ......... ....... ..... ...... ............... ...... ... ................. .......... ....... .... ............. .... ... ........... I General........................................................................................................................... ................................ I The District.............................................................................................................................. ...................... I 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.......................................................................................................................... ................ 5 ESTIMATED SOURCES AND USES OF FUNDS ............................................................................................ 6 THE BONDS........................................................................................................................................................6 Authority for Issuance .. ....... ...... ...... ..... ........... ......... ...... .... ..... ...... ... ... ..... ..................... ...... ... .... ... .... ........ .... 6 Purpose of the Bonds ....... ......... ....... ..... ....... ...... ............. ...... ... ... ...... ...... ..... ........................ ................. ..... .... 6 Description of the Bonds .............. ........ ....... ...... .......... ......... ................. ..... ........... .......... .......... ... ... .... ... ....... 6 Redemption of Bonds ............................................................................................................................... ..... 7 Notice and Selection of Bonds for Redemption............................................................................................. 9 Notice of Redemption........................................................................................................................ ............ 9 Effect of Redemption........................................................................................................................ ........... 10 Transfer and Exchange of Bonds .................................................................................................................10 Debt Service Schedule for the Bonds .......................................................................................................... II . SOURCES OF PAYMENT FOR THE BONDS................................................................................................ II Limited Obligations ............. ............ ......................... ...... .... ..... ... ... ......... ........... .... ... .............. .......... ........... II Special Taxes.......................................................................................................................... ..................... 12 Reserve Fund........................................................................................................................... .................... 16 Issuance of Parity Bonds.......................................................................................................................... Mil THE COMMUNITY FACILITIES DISTRICT ................................................................................................. 17 General Description of the District .............................................................................................................. 17 Description of Authorized Facilities ............................................................................................................17 Status of Authorized Facilities.. ..................................... ............ ....................................... .......... ................. 19 Projected Principal Taxpayers..................................................................................................................... 19 Estimated Direct and Overlapping Indebtedness ......................................................................................... 20 Expected Tax Burden...................... ........ .... ............. ...... ..................... ....... ................. ..... ....... ....... .......... Wn Estimated Value-to-Lien Ratios ...... ..... ... .... ...... ........ ..... ....................... ..... ......... ............. ....... ... ....... ... .... un THE DEVELOPMENT AND PROPERTY OWNERSHIP ........................................................................... 'M2!i General Description and Location of the District .................................................................................... 'M2!i The Develoner and Merchant Builders................................................................................................... ~21 Development Plan............................................................................................................................ ........ ;!;1Z2, Development Status......................................................................................................................... ........ ;!;1Z2, Financing Plan ... ........... .... ... .... ... ... ........ ... ........... ..... .... ... ... ................................... ... ... ... ... ... ... ............. ... U30 Status of Entitlement Approvals...... ......................... .......... ........ ............ .......... ................ .......... ............. ;;US Environmental Constraints...................................................................................................................... . ;;US Infrastructure Requirements and Construction Status.............................................................................. U;l5 Potential Limitations on Development .................................................................................................... :>;1.36 Appraisal........................................................................................................................ .......................... ;>.4J1!. Market Absorption Study.... ....................... ......... ........ ............................... ...... ................... ...... ......... ...... ;>.43,2 SPECIAL RISK FACTORS ...... .......... ....... ...... ...... ........... ............... ..................... ................... ......... ............. ~J.2 Concentration of Ownership.. .................... ................ ........ ....... ...... ...... ............. ............... ...... ................. ~J.2 Limited Obligations .................................. ....................................................... ....................... .............. :>640 DOCSOCII14 7417v,,~022245-0 162 9-/f9 TABLE OF CONTENTS Page ~~;C~~~~~~~~~~~i~:~~":::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: = Adiustable Rate and Non-Conventional Mortp"ap"es ............................................................................... 41 Failure to Develop Properties ... '" ................... ............ ......... ...... ......... ......................................... .... ........ J.+:t2 Future Land Use Regulations and Growth Control Initiatives........................................................... ...... J94J Endangered Species ..... ..... ..... ... ... .... .... ..... ... ... ............. ..... .... ..... ....... ...... ... ... ........ .... ..... .... ........ .............. ~ Water Availability............. ... ... ...... ... ............... .... ...... ... ...... ........ ... .......... ... .... ... .... ..... ..... ... ..... ... .... .......... 44:H Natural Disasters...................................................................................................................... ................ 41)4--5. Hazardous Substances..................................................................................................................... ......... 41)4--5. Parity Taxes, Special Assessments and Land Development Costs .......................................................... 1l~ Disclosures to Future Purchasers .... ........ ... .................... ..... ...... ............... ... ........ ............. .... .... ................ 42~ Non-Cash Payments of Special Taxes ..................................................................................................... 4211 Payment of the Special Tax is not a Personal Obligation of the Owners................................................. ~ Land Values ..................................................................... .................... ..................... ............................ 4J41 FDIC/Federal Government Interests in Properties................................................................................... 4J48 Bankruptcy' and Foreclosure............ .... .... .... ...... ........................ ....... ......... ...... .... ............. ..... ... .... ........... 4442 No Acceleration Provision ............... ..... .... ......... ........................................... ....... ..... ......... ........... ... '" ..... ~ Loss of Tax Exemption.. .......................................................................................... ........................~ Limitations on Remedies. ................................................................... ................................................... #S!! Limited Secondary Market ... ...... .... .............. ................... ... .......... ........ ... ...... ....... .............. .... .......... ....... #S!! Proposition 218 ........ .......... ...... .... ...... ............... ..... ............. ............. ..... ... ............. ............... .......... .......... #S!! Ballot Initiatives ................................................ ..... ..... ...... ...... ......... ......... ............. .... ..... ............... .......... 4<>51 CONTINUING DISCLOSURE. ...... ... ....... ........................ ... ... ... ... ................ ..... ... .... ... .... ...... .... .... ... ............. 4751 TAX MATTERS .......... ..... ........ ... ...... .... ... ..... .......... ............... ......... ............. ........ .... ............. ........ .......... ...... 4752 LEGAL MATTERS... .... ..... ....... ... ....... ... ..... .... ... ... ... ...... .... ... ... ...... ... ...... ... ... ... ... ....... ....... ............. ....... ......... 4&5J LITIGATION .. .......... .... ... ........ ..... ......... ......... ...... .... ......... ............ ..... ..... ........ ... ....... ............ ..... ... ........ ... ..... 495J NO RATING. c.. .......... ... ...... ... ..... ... ... .... ........... ... ... ......... ....... ... ... ....... ... ..... ... ...... ... ... ..... ... ............. ... ....... ..... 495J UNDERWRITING .. .... ... ... ..... ........ .......... ..... ...... ... ........... ... ..... ...... ....... ..... ... ... ... ...... ..... ..... ... ..... ... .... ... ........ 4954 FINANCIAL INTERESTS ................. ..................... .......... ... ... ...... ....... ....... .... ... ...... ... .... ..... .... ..... ... ...... ........ 4954 PENDING LEGISLATION ... ....... ....... ... .... .............. ...... ... .... ..... ........... ........ ........ ... .... ......... .............. ........... 4954 ADDITIONAL INFORMATION........... ...... ... ............................... ....... ..... ...... ..................... .... .... ....... .......... 4954 APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F APPENDIX G APPENDIX H APPENDIX I RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ............................A-I SUMMARY OF MARKET ABSORPTION STUDy....................................................... B-1 APPRAISAL REPORT..... .................... ..... .... ....... ........... ........ ....................... ....... ........... C-I INFORMATION REGARDING THE CITY OF CHULA VISTA...................................D-I SUMMARY OF INDENTURE ......................................................................................... E-I CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT...............................F-I CONTINUING DISCLOSURE AGREEMENT OF THE MERCHANT BUILDER....... G-I FORM OF OPINION OF BOND COUNSEL................................................................... H-I DTC AND THE BOOK ENTRY SySTEM........................................................................1-1 11 DOCSOC/1147417v:;~022245-0162 1-;.7) . . DOCSOC/1 147417v:;~022245-0162 [REGIONAL LOCATION MAP] 9-$/ [AERIAL PHOTO] DOCSOCI1147417v;~022245-0162 '1 - 5J.. $Hi,110,OO016.505.000' CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTA Y RANCH VILLAGE SEVEN) 2006 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 fnll 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 AppendixA-"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" or 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 $16,110,00016.505.000' City of Chuta Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven), 2006 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 Community Facilities District No. 13-1 (Otay Ranch Village Seven) (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, 2006. 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, 2006, 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 Net Special Tax Revenues and all moneys in the funds and accounts under the Indenture other than the Rebate Fund, the Project 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 Goverument 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 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. . Preliminary, subject to change. DOCSOC/114 7417v,,~022245-0 162 7-$3 Pursuant to the Act, the City Council adopted the necessary resolutions staring its intent to establish the District, to authorize the levy of Special Taxes (defined herein) on taxable property within the boundaries of the District, and to have the District incur bonded indebtedness. Following public hearings conducted pursuant to the provisions of the Act, the City Council adopted resolutions establishing the District and calling special elections to submit the levy of the Special Taxes and the incurring of bonded indebtedness to the qualified veteFsdlliDn of the District. On November I, 2005, at an election held pursuant to the Act, the landowners who comprised the qualified ~ of the District authorized the District to incur bonded indebtedness in the aggregate principal amount not to exceed $20,000,000 to be secured by the levy of Special Taxes on ta.'Cable property within the District. On that same date, the landowners within the District approved the rate and method of apportionment of the Special Taxes on land within the District to pay the principal of and interest on the bonds of the District issued ferto renlenish the reserve fund for such honds. to Dav costs of administerinp sllch honds and to nav directlv for the facilities authorized to he financed bv the District. The Rate and Method of Apportionment of Special Tax (the "Rate and Method") is set forth in Appendix A hereto. The facilities authorized to be financed by the District are referenced herein as the "Facilities." See "THE COMMUNITY FACILITIES DISTRICT-Description of Authorized Facilities." Description and Development. The District encompasses approximately 89.5 gross acres of which approximately 34 will be developed and is located east of Interstate 805 approximately seven miles southeast of downtown San Diego. The land use entitlements for the District permit development in sub-areas known as "planning areas." Based on current land use approvals and projections, the land within the District is expected to be developed into 361 residential units. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Potential Limitations on Development." As of February I, 2006, grading of the land within the District had commenced and construction of infrastructure (utilities, roads, sidewalks, etc.) is expected to be completed in October 2006. Model homes within certain planning areas of the District are expected to be complete by May 2006 with the sale of homes to commence shortly thereafter. For a more detailed description of development activity within the District, see "THE COMMUNITY FACILITIES DISTRICT-Status of Facilities." Developer and Merchant Builders. The owners of the property in the District are Otay Ranch VII-I, LLC, a Delaware limited liability company ("Otay Ranch VII-I"), Otay Ranch R-2B, LLC, a Delaware limited liability company ("Otay Ranch R-2B"), Otay Ranch Twelve, LLC, a Delaware limited liability company ("Otay Ranch Twelve") and Otay Ranch VII JC, LLC, a Delaware limited liability company ("Otay Ranch VII JC" and together with Otay Ranch VII-I, Otay Ranch R-2B and Otay Ranch Twelve, the "Merchant Builders"). Each of the Merchant Builders is a related entity of Otay Project L.P. (the "Developer"), a Califoruia limited partnership of which Otay Ranch Development LLC, a Delaware limited liability company ("Otay Ranch Development") is the general partner. The Merchant Builders are also related entities of the James Baldwin and Alfred Baldwin families. For certain information concerning the Merchant Builders, see "THE DEVELOPMENT AND PROPERTY OWNERSHIP-The Merchant Builders." Otay Ranch VII-I currently owns Planning Area R-2A, which consists of approximately II acres intended for development of 96 single-family detached residential units and Otay Ranch R-2B currently owns Planning Area R-2B which consists of approximately 6 acres intended for development of 85 single-family detached residential units. Otay Ranch Twelve currently owns Planning Area R-2C which consists of approximately II acres intended for development of 95 single-family detached residential units and Otay Ranch VII JC currently owns Planning Area R-2D which consists of approximately 6 acres intended for development of 85 single-family detached residential units. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Development Plan." DOCSOC/1 14 7417vJa;02224 5-0 I 62 2 , 9 -~'I- . Appraisal. Bruce W. Hull & Associates, Inc. (the "Appraiser") has conducted an appraisal (the "Appraisal") of the taxable land within the District and has concluded, based upon the assumptions and limiting conditions contained in the Appraisal, that, as of December I, 2005, the aggregate value of such land was $71,300,000. In a letter dated Fehrnarv . 2006. the Annraiser confirmed that the value of the taxahle nronertv within the District was not less than $71.300.000. The Sullivan Group Real Estate Advisors (the "Market Absorption Consultant") has prepared a Market Analysis and Absorption Projection report dated December 16, 2005 (the "Market Absorption Study") for the purpose of developing a build out projection for the 361 for-sale residential units planned, but not yet sold, in the District. The Market Absorption Study concludes that the residential units within the District should be built out in the 2006-2007 period assuming continued development with no stops due to unanticipated market or business factors and assuming that the City's building permit allocation procedures are not a constraint on the schedule of development. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-"Current Limitations-.JlJl Building Permit Issuance" "-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 AppendixA-"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Under the Indenture, the District has pledged to repay the Bonds from the Special Tax Revenues remaiuing after the funding of the annual Administrative Expense Requirement of $75,000 ("Net Special Tax Revenues") and amounts on deposit in the funds and accounts established under the Indenture other than the Project Fund, the Rebate Fund and the Admiuistrative 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 offoreclosure 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 certain 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 I 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 I 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-"APPRAlSAL REPORT" herein. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY NOR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET SPECIAL TAX REVENUES DOCSOC/114 7417v;>~022245-0 162 3 9'~ S? - ." AND CERTAIN 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, ouly 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 Appendix I-"DTC AND THE BOOK-ENTRY SYSTEM" herein. The Bonds are subject to optional redemption, extraordinary mandatory redemption and mandatory sinking fund redemption as described herein. For a more complete descriptions of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see "THE BONDS" and Appendix E- "SUMMARY OF INDENTURE" herein. Tax Matters In the opinion of Bond Counsel, based on an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded ITom gross income for federal income tm, purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt ITom State of California personal income !mees. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings in calculating federal corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other federal or state income tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See "TAX MATTERS" herein. Professionals Involved in the Offering U.S. Bank National Association will act as Fiscal Agent under the Indenture and as the initial Dissemination Agent under the Continuing Disclosure Agreement of the Merchant Builders. See Appendix 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 Stradliug Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Underwriter's Counsel. Other professional services have been performed by McGill Martin Self, Inc. as Special Tax Consultant, Bruce W. Hull & Associates, Inc. as Appraiser, and Sullivan Group Real Estate Advisors, as Market Absorption Consultant. 4 DOCSOCI1147417v;~022245-0162 9 -Q- For infonnation concenring 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 Merchant Builders has agreed to provide, or cause to be provided, to each natioually recoguized municipal securities infonnation 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 infonnation 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 l5c2-l2(b)(5). See "CONTINUING DISCLOSURE" herein, AppendixF and Appendix G hereto for a description of the specific nature of the reports to be filed by the District and the Merchant Builders and notices of material events to be provided by each. Bond Owners"Risks Certain events could affect the timely repayment of the principal of and interest on the Bonds when due. See the section of this Official Statement entitled "SPECIAL RISK FACTORS" for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The Bonds are not rated by any uationally 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 Refonn Act of 1995, Section 2lE 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 infonnation 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. Other Information This Official Statement speaks only as of its date, and the infonnation contained herein is subject to change. Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and infonnation do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the constitution and laws of the State as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, 5 . DOCSOCI1147417v~~022245-0162 9-57 .. laws and proceedings, and with respect to the Bonds, by reference to the Indentore. Capitalized t=s not otherwise defined hereio shall have the meanings set forth io the Indentore. Copies of the Indentore and other documents and information referred to herein are available for iospection and (upon request and payment to the City of a charge for copying, mailing and handling) for delivery from the City at 276 Fourth Avenue, Chula Vista, CA 91910, Attention: Director of Fioance. ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth the expected uses of Bond proceeds: Sources of Funds Principal Amount of Bonds Less: Origioal Issue Discount TOTAL SOURCES $ $ Uses of Funds Project Fund $ Capitalized Interest Sub-Account of the Interest Account(l) Reserve Fund Cost of Issuance Fund Underwriter's Discount Administrative Expense Fund TOTAL USES $ (1) Represents gross funded capitalized interest on the Bonds through September 1, 2006. THE BONDS Authority for Issuance The Bonds in the aggregate priocipal amount of $16,110,00016.505.000' are authorized to be issued by the District under and subject to the terms of the Indenture, the Act and other applicable laws of the State of California. Purpose of the Bonds The Bonds are being issued to provide funds to: (i) fmance the costs of constructing and acquiriog certain public facilities related to the proposed development within the District (See "THE COMMUNITY FACILITIES DISTRlCT-Description of Authorized Facilities''); (ii) pay costs related to the formation of the District and the issuance of the Bonds; (iii) fund the Reserve Fund for the Bonds in the initial amount of $ ; and (iv) gross fund capitalized ioterest on the Bonds through September I, 2006. See "ESTIMATED SOURCES AND USES OF FUNDS." Description of the Bonds The Bonds will be issued as fully registered bonds without coupons io denominations of $5,000 and any iotegral 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, priocipal of, premium, if any, and interest on the Bonds will be paid directly to DTC for distribution to the beneficial owners of the . Preliminary, subject to change. DOCSOCIl147417v:;~022245-0162 6 '7-~-f 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 I, 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 I and September I of each year, commencing September I, 2006 (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. Redemption of Bonds Optional Redemption. The Bonds may be redeemed at the option of the District prior to matority, as a whole; or in part, on any Interest Payment Date on and after March I, 20 ~ from such maturities as are selected by the District, and by lot within a matority, 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 March I, 20_ through March I, 20_ September I, 20_and March I, 20_ September I, 20_ and March I, 20_ September I, 20_ and thereafter Redemption Price % 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 matorities, from the proceeds of the prepayment of Special Taxes pursuant to the Rate and Method. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Mareh Sentemher I, ~2ill!6 through March 1,20_ September I, 20_ and March I, 20_ September I, 20_and March I, 20_ September I, 20_ and thereafter Redemption Price % DOCSOC/1 ] 4 74] 7vJ~022245-0] 62 7 <'j-s<1 See "SOURCES OF PAYMENT FOR THE BONDS-Special Taxes-Prepayment of Spectal Taxes" and 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 I in each year commencing September I, 20--, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown on the following redemption schedule. Redemption Date (September 1) Principal Amount $ t t Final Maturity The Bonds maturing on September I, 20_ are subject to mandatory sinking fund redemption, in part, by lot, on September I in each year commencing September I, 20--, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown on the following redemption schedule. Redemption Date (September 1) Principal Amount $ t t Final Maturity The Bonds maturing on September I, 20_ are subject to mandatory sinking fund redemption, in part, by lot, on September I in each year commencing September I, 20--, at a redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to the date fixed for redemption, without premium, in the aggregate principal amounts and in the years shown on the following redemption schedule. Redemption Date (September 1) Principal Amount $ t Final Maturity DOCSOC/1147417v;~022245-0162 8 9-t. () In the event of a partial optional redemption or special mandatory redemption of the Bonds maturing on September 1, 20 ~ September 20_ or September 1, 20 ~ each of the remaining mandatory sinking fund payments for the applicable maturity of Bonds so redeemed will be reduced, as nearly as practicable, on a pro rata basis in integral multiples of $5,000. 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 ITom which such Bonds are to be redeemed and the principal amount of the Bonds to be redeemed ITom each such maturity, the Bonds or portions thereof to be selected for redemption. The notice to the Fiscal Agent shall be given not less than 60 days prior to the redemption date or such shorter period as shall be acceptable to the Fiscal Agent. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and, in selecting portions of such Bonds for redemption, the District shall treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000. Notice of Redemption Notice by Mail to Registered Owners. The Fiscal Agent shall mail, at least 30 days but not more than 45 days prior to the date of redemption, notice of intended redemption, by first-class mail, postage prepaid, to the original purchasers of the Bonds and the respective registered Owners of the Bonds at the addresses appearing on the Bond registry books. The notice ofredemption shall state: (a) the redemption date; (b) the redemption price; (c) the bond registration numbers, dates of maturity and CUSlP numbers of the Bonds to be redeemed, and in the case of Bonds to be redeemed in part, the respective principal portions to be redeemed; provided, however, that whenever any call includes all Bonds of a maturity, the numbers of the Bonds of such maturity need not be stated; (d) that such Bonds must be surrendered at the Principal Corporate Trust Office of the Fiscal Agent; ( e) that further interest on such Bonds will not accrue ITom and after the designated redemption date; (f) the date of the issue of the Bonds as originally issued; (g) the rate of interest borne by each Bond being redeemed; and (h) that any other descriptive information needed to identify accurately the Bonds being redeemed as the District shall direct. Further Notice. Further notice of redemption shall be sent at least two days before the notice of redemption is mailed to the Bondholders, as described above, by registered or certified mail or overnight delivery service to the registered securities depositories and to the national information services listed in the Indenture or, in accordance with the then-current guidelines of the Securities and Exchange Commission, such other securities depositories and services providing information on called bonds, or such other securities depositories and services, as the District may determine in its sole discretion. Failure to Receive Notice. So long as notice by fIrst class mail has been provided as set forth above, the actoal 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. DOCSOCI114 7417vJ~02224 5-0 162 9 9-?1 Certificate of Giving Notice. The notice or notices described above shall be given by the Fiscal Agent on behalf of the District. A certificate by the Fiscal Agent that notice of call and redemption has been given to the registered Owners of the Bonds as herein provided shall be conclusive against all parties, and no Owner whose Bond is called for redemption may object thereto, or object to cessation of interest on the redemption date, by any claim or showing that he failed to receive actoal notice of call and redemption. Noticefrom DTC to BenefICial Owners. So long as the Bonds are held in book-entry-form, notice of redemption will be sent by the Fiscal Agent only to DTC or its nominee. Conveyance of redemption notice by DTC to Beneficial Owners is determined by DTC and its participants and is not the responsibility of the District. See Appendix l-"DTC AND THE BOOK ENTRY SYSTEM." Effect of Redemption When notice of redemption has been given, and when the amount necessary for the redemption of the Bonds called for redemption is set aside for that purpose in the Redemption Fund, the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and upon presentation and surrender of said Bonds at the place specified in the notice of redemption, with the form of assignment endorsed thereon executed in blank, said Bonds shall be redeemed and paid at the redemption price out of the Redemption Fund and no interest will accrue on such Bonds or portions of Bonds called for redemption from and after the redemption date specified in said notice, and the Owners of such Bonds so called for redemption after such redemption date shall look for the payment of principal and premium, if any, of such Bonds or portions of Bonds only to said Redemption Fund. All Bonds redeemed shall be canceled forthwith by the Fiscal Agent and shall not be reissued. Upon surrender of Bonds redeemed in part, a new Bond or Bonds of the same matori1y 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 contioue 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 regnlations as it may prescribe, register or transfer or cause to be registered or transferred, on said register, the 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 maturi1y, 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 matori1y, subject to the terms and conditions of the Indentore, 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 matori1y 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 dnly 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 DOCSOC/1 14741 7vJ~022245-0162 10 I 9. (..,,2.,. denominations authorized by the Indenture, aod in ao aggregate principal amount equal to the priocipal amount of such Bond or Bonds so surrendered. In all cases in which Bonds shall be exchaoged or traosferred, the Fiscal Agent shall authenticate the Bonds in accordaoce with the provisions of the Indenture. All Bonds surrendered in such exchaoge or transfer shall forthwith be caoceled. The Fiscal Agent may make a charge for every such exchaoge or registration of traosfer of Bonds sufficient to reimburse it for aoy tax or other governmental charge required to be paid with respect to such exchaoge or registration or traosfer. Debt Service Schedule for the Bonds Period Ending Principal Interest Total Debt Service (September 1) on Bonds on Bonds on Bonds 2006 $ $ (1) 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 2034 2035 2036 Total $ $ $ (1) To be paid from capitalized interest. SOURCES OF PAYMENT FOR THE BONDS Limited Obligations The Bonds are special, limited obligations of the District payable only from amounts pledged under the Indenture aod from no other sources. 11 DOCSOC/1 14 7417v;;~022245-0 162 9~3 The Special Taxes are the primary security for the repayment of the Bonds. Under the Indenture, the District has pledged to repay the Bonds trom the Net Special Tax Revenues and from amounts held in the funds and accounts under the Indenture, other than amounts held in the Project Fund, the Rebate Fund and the Administrative Expense Fund. Net Special Tax Revenues are the Special Tax Revenues remaining after the funding of the annual Administrative Expense Requirement in an amount not to exceed $75,000. 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, the proceeds of the redemption of delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien of delinquent Special Taxes in the amount of said lien, and interest and penalties thereon. In the event that the Special Tax Revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Fiscal Agent, including amounts held in the Reserve Fund, for the exclusive benefit of the Owners of the Bonds. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF.SAN DIEGO, THE STATE OF CALIFORNIA OR ANY POLITICAL 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 NOR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE NET SPECIAL TAX REVENUES 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 October 25, 2005 for the purpose of fmancing the acquisition, construction and installation of various public improvements necessary to meet increased demands placed upon the City as a result of development within the District. At a special election held on November 1, 2005, 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 $20,000,000, and approved the Rate and Method which authorized the Special Tax to be levied to repay District indebtedness for the District, including the Bonds. The District has covenanted in the Indenture that by July I of each year (or such later date as may be authurized 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 ensning 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 Net Special Tax Revenues 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 shall be classified as Developed Property, Undeveloped Property or Contingent Taxable Property and shall be subject to the levy of annual Special Taxes as described below. An Ta:'{able Property shall be categorized as being located in either Zone A or Zone B. Planning Areas R-2B and R-2D are located in Zone A and Planning Areas R-2A and R-2C are located in Zone B. All Developed Property shall be further classified as Residential Property or Non-Residential Property. DOCSOCI1147417v"~022245-0162 12 ~-t~" / The Maximum Annual Special Ta.,< 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. The Assigned Special Tax for each Assessor's Parcel of Developed Property is shown in the tables below. Assigned Annual Special Tax for Developed Property Land Use Class 1 Description Assigned Annual Special Tax Residential Property $2,750.00 per unit plus $0.45 per square foot of Residential Floor Area Non-Residential Property $6,000 per Acre 2 When a Final Subdivision Map is recorded within Zone A or Zone B, the Backup Special Tax for Assessor's Parcels classified as Residential Property or Non-Residential Property shall be determined as follows: For each Assessor's Parcel of Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property upon its development within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: Zone A $59,505 xA B= ~--------------- L Zone B $37,818 xA B= -------------- L The terms above have the following meanings: B = Backup Special Tax per Lot in each Fiscal Year. A = Acreage classified or to be classified as Residential Property in such Final Subdivision Map. L = Lots in the Final Subdivision Map which are classified or to be classified as Residential Property. For each Assessor's Parcel of Non-Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be deternrined by multiplying $59,505 for Zone A and $37,818 for Zone B by the total Acreage of each Assessor's Parcel of Non-Residential Property and Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area. DOCSOC/1 14 7417v;;~022245-0 162 13 9 -IR S- 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, then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the amount of Backup Special Tax that would have been generated if such change did not take place. The Maximum Annual Special Tax for each Assessor's Parcel classified as Undeveloped Property shall be $59,505 per acre for Zone A and $37,818 per acre for Zone B. Commencing with Fiscal Year 2006-07 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 Ta.x Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property within Zone A and Zone B at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property within Zone A and Zone B, excluding any Assessor's Parcels classified as Undeveloped Property pursuant to 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 Property whose Maximum Annual Special Tax is derived by the application of the Backup Special Ta.x shall be increased Proportionately from the Assigned Special Tax up to the Maximum Annual Special Ta.x for each such Assessor's Parcel. Fourth: If additional monies are needed to satisf'y the' Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on Contingent Taxable Property at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other Assessor's Parcel. 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 of Developed Property, the owner of a parcel of Undeveloped Property 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 BOND$--Redemption-Extraordinary Mandatory Redemption from Special Tax Prepayment." A reqnired prepayment of Special Taxes or the prepayment of another special tax authorized to be levied on a parcel or a fixed lien assessment levied on such parcel 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 iuitial sales price of a parcel to a residential homeowner. Pursuant to the AcquisitionlFinancing Agreement, the Mer"hant BllilaOfs ha','oDeveloner has agreed to comply with the policy. Based on estimated retail home sales prices, the Merchant Builders do not anticipate that the total taxes and assessments, exclusive of special taxes for City maintenance community DOCSOC/1 147417v"~022245-0162 14 9..t.b facilities districts, will exceed 2% of the sales price. As shown in Table 6 under the caption "THE COMMUNITY FACILITIES DISTRICT-Expected Tax Burden," the expected tax burden (excluding special taxes allocable to City maintenance community facilities districts) on a typical single ;family unit in Zone A will be 1.95% of the expected initial assessed value and the expected tax burden (excluding soecial taxes allocable to City maintenance community facility districts) on a typical single ;family unit in Zone B will be 1.97% of the expected initial assessed value. Under the policy, prior to the closing of an escrow for the sale of a residential unit, the Merchant Builders are reqnired 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 to be levied and collected by the Treasurer-Tax Collector of the County of San Diego in the same manner and at the same time as ad valorem property taxes; provided, however, that the District may directly bill the Special Tax or collect Special Taxes at a different time or in a different manner if necessary to meet its financial obligations. 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. The District has covenanted that, to the extent it is legally permitted to do so, it will not reduce the ma:..amum Special Tax rates and will oppose the reduction of maximum Special Tax rates by legal action where such reduction would reduce the maximum Special Taxes payable from parcels on which a completed structure is located to less than 11 0% of Maximum Annual Debt Service on the Outstanding Bonds or where any reduction would adversely affect the interest Owners of the Bonds. The District has also covenanted not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of a Special To." 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." 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: (I) 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 Reqnirement, (4) to make any reqnired transfers to the Rebate Fund and (5) to pay Administrative Expenses of the District above the $75,000 referenced in (I) 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 Special Tax 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. 15 DOCSOCII14 7417v;~022245-O 162 9-&> 7 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 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 for the Bonds, or (iii) one hundred twenty-five percent (125%) of the average annual debt service for 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 fmal year of matority of the Bonds. In the event of a prepayment of Special Taxes, under certain circumstances, a portion of the Reserve Fund will be credited toward the amount to be 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. DOCSOC/1 ]47417v'.~022245-0162 16 'I-hI- Issuance of Parity Bonds The District has covenanted in the Indenture not to issue any other obligations to finance additional public improvements which are payable from the Special Taxes levied on land within the District and which have, or purport to have, any lien upon the Special Taxes superior to or on a parity with the lien of the Bonds. Nothing in the Indenture prevents the District from issuing and selling, pursuant to law, refunding bonds or other refunding obligations payable from and having a first lien upon the Special Taxes on a parity with the Outstanding Bonds so long as the issuance of 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. THE COMMUNITY FACILITIES DISTRICT General Description ofthe District The District consists of approximately 89.5 gross acres and is located in the easterly portion of the City, approximately seven miles southeast of downtown San Diego. The District is a part of Otay Ranch Village Seven ("Otay Ranch Village Seven"), a planned community designated for residential development, public uses (schools, parks), open space lands and both major circulation and internal streets. The District is expected to be developed into 361 single-family residential units. The residential areas planned for the District are divided into four residential "planning areas" which, at buildout, are expected to be developed into 191 single ;family detached residential uuits and 170 single ;family detached alley homes. Planning Area R-2A consists of approximately 11 acres intended for development of 96 single-family detached residential units and Planning Area R-2B consists of approximately 6 acres intended for development of 85 single-family detached alley homes. Planning Area R-2C consists of approximately 11 acres intended for development of 95 single-family detached residential units and Planning Area R-2D consists of approximately 6 acres intended for development of 85 single-family detached alley homes. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Development Plan." Description of Authorized Facilities The facilities authorized to be financed by the District with the proceeds of the Bonds (the "Facilities") consist of various public improvements, described in Table 1 below, to serve property within the District or which are reouired to he con~tructed as a condition of annrova1 of the deve10nment of the nronertv within the District. 10 addition to or in substitution for the Facilities listed below, the City and the M..ehant BaileloFSDeveloner may agree to finance additional or different eligible Facilities. DOCSOC/1 147417v;>~022245-0162 17 7' -b '1 TABLE 1 ESTIMATED COSTS OF AUTHORIZED FACILITIES Projects La Media Road (TDIFtiJ Portion to be Paidby IJ{f!1'ehllnt Portion to be Porliarrto hl! B"iltle. Cost paid from l:!!i!!J!Ji IlIfli-Other Estima/rI') Bonds(2) DeVf!lO"" Source#1 $ $ ~ $() 3,187,760;! 3,l87,760~ 383 833 <;19208 1,144,303 1,144,303 () 1 3<;0 706 --D () 1,200,0001 1,2QQ,QQQl 63<; 210 407 933 () 2,1&6,379~ 2,186,379~ 026 462 026462 () 177,226501 177,226501 ~ ~ 1,459,698 1,459,698 () 2,339,082 2,339,082 () 1<;9917 1<;9917 2,Q 1Q, 1 091 2,QHUQ91 2 927740 927740 ,1 ,1 ~ $() ) 1,OQ1,857 ) 1,QQ1,857 16934906 14492 298 La Media Road (Non-TDIF) T a M"dia Road T anduaninu (TOm Magdalena Avenne (Non-IDIF) Santa Lnna Street (Non-TDIF) Fleisbein Street and Kincaid Avenue Sewer (Non-IDIF) Trail System/Stann Drain System Slope Landscaping Traffic Sivna hi: Those Facilities ~to be fInanced by the Public Facilities Development hnpact FeeC"o) TOTALS (1) Costs shown may not represent the total 68St sf improvement cm;h and soft costs for the FacilitiP.~. The Acquisition/Financing Agreement fer the Distaei dessooes tlte pHe:At) efthe P-Fejestsedahlhhec nrinritiP:liii for tinannnfJ the FanHtie!rii. (2) Preliminary, subject to change. (3) A nOmO" of the total imnrovement rod" for the Fadlith~, will he "aid from hond nroceedill of other r:ommnnitv farHiti~ didrirh formed hv the Citv (4) IDIF is an acronym for Transportation Development Impact Fee. This is a fee paid when permits are pulled which is used to construct City of Chula Vista approved Transportation Facilities to accommodate increased development The TDIF improvement (La Media Road) cost can be used as credit towards the lDIF fees at paanit time. fee ohlip'ation annlirahle to develonmpnt within the Didrict (4~ The proposed allocation of Bond proceeds for these facilities could change and will be prioritized in the AcquisitionIFinance Agreement for the District Sources: :M:~shaRt BuH8.efsDeveloner and McGill Martin Self, Inc. 18 DOCSOC/1 147417vJ~022245-0162 9-70 Status of Authorized Facilities The status of certain of the Facilities serving the District as of De60mBer I, 2995 [CM we "filiate this ta Feb. 11] Februarv 1. 2006 is sununarized in Table 2 below. TABLE 2 STATUS OF FACILITIES (As of December 1, 200!i)Februarv 1. 2006) Public Improvement La Media Road (TDlF)(2) La Media Road (Non-TDIF) La Media Road Landscaninv (TDTF) Magdalena Avenue (Non-TDIF) Santa Luna Street (Non-TDlF) Fleisbein Street and Kincaid Avenue Sewer (Non-TDlF) Trail System/Storm Drain System Slope Landscaping Traffic Silmals Those Facilities elil'ibIe to be fInanced by the Public Facilities Development Impact Fee TOTAL (I) % Completerd: Total Budget (1) Rudvet Spent to Date F.xnended $ $ 2.405.221 68% 3,1&7,769~ 1m! 1,144,303 468.346 .u 1.350.706 --'l II 1,290,999~ ill 2,186,379 306.171 1.4 177,226507.955 126.989 15 1,459,698 951.195 65 2,339,082 0 II 159.917 2.0191091.927. ~ --'l i -.S. 11 001 85716.00 ~ --'l ~ Costs shown may not represent the total cost of improvement collilh and soft costs for the Faci1itifYI Renr~enh the amount the Develnner j" relllDonllilihle to finance nunnant to the r .4.rnni.iiitinnlFinanrinO' AO'reementl, The Acquisition/FinancingAgreem.ent fer the DistRet Elesefites 1:ke pfieaty efthe Pi'sjeetsedahlhhe'li nrinritip.'i for finanrinu the Fari1itie'l. (2) TDIF is an acronym for Transportation Development hnpact Fee. This is a fee paid when permits are pulled which is used to construct City of Chula Vista approved Transportation Facilities to acconunodate increased development The rolF improvement (La Media Road) cost can be used as credit towards the TDIF fees at f3eenit time.fee nh1ip'ation annlirah1e to devplnnmp.nt with tbp. nidrirt Source: :MefeRant Buileie.rs.Develnner Projected Principal Taxpayers Table 3 below sets forth the percentage of the Special Taxes that each of the Merchant Builders would be responsible for in Fiscal Year 2006-07 based on a projected Special Tax levy of $1,177,6151.173.110 and the development status ofland within the District as of February I, 2006. DOCSOC/1l474l7v;~022245-0l62 19 c; - 7/ / ,I TABLE 3 PROJECTED PRINCIPAL TAXPAYERS FOR FISCAL YEAR 2006-07 Planning Area R-2A R-2B R-2C R-2D Merchant Builde,1I) Fiscal Year 2006-07 Special TaxP) $335,293332.643 263,311259.420 319,455324.819 259,553256.228 i 1,177,6151.173.11 % of Total ~28.36% ~22.11 ~27.69 n-MllJ!.4 100 00% Otay Ranch Vll-I, LLC Otay Ranch R-2B, LLC Otay Ranch Twelve, LLC Otay Ranch Vll JC, LLC TOTAL II (I) The Merchant Builders are related entities controlled by members of the James Baldwin and Alfred Baldwin families. (2) Estimated Special Tax Levy for Fiscal Year 2006-07 based on development status as of February I, 2006. Preliminary, subject to change. Source: McGill Martin Self, Inc. Estimated Direct and Overlapping Indebtedness Within the District's boundaries, numerous local agencies provide 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 taxes and assessments on the parcels within the District for fiscal year 2005-06 is shown in Table 4 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. 20 DOCSOC/114 7417v;>~022245-0 162 9~ 7.2.- TABLE 4 DIRECT AND OVERLAPPING DEBT SUMMARY CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTA Y RANCH VILLAGE SEVEN) (1) 2005-06 Local Secured Assessed Valuation: $891,450 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District Southwestern Community College District Sweetwater Union High School District Chula Vista City School District Otay Municipal Water District, hnprovement District No. 27 City of Chula Vista Community Facilities District No. 13 1 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT % ADDlicable Debt 0.0001% $ 419 0.003 2,717 0.003 2,478 0.004 3,536 GoiilOJ!l!! 959 100. 16.110.000~ 100 000 16.505.000 (2) $16,150,10916.515.109 OVERLAPPING GENERAL FUND DEBT: San Diego COlmty Certificates of Participation San Diego County Pension Obligations San Diego County Superintendent of Schools Obligations Southwestern Community College District General Fund Obligations Sweetwater Union High School District Certificates of Participation Chula Vista City School District General Fund Obligations City of Chula Vista Certificates of Participation City of Chula Vista Pension Obligations Otay Municipal Water District Certificates of Participation TOTAL GROSS OVERLAPPING GENERAL FUND DEBT Less: Otay Municipal Water District Certificates of Participation TOTAL NET OVERLAPPING GENERAL FUND DEBT 0.000% 0.0003 0.0003 0.003 0.003 0.004 0.005 0.005 0.005 $ 1,314 3,693 38 68 541 4,399 6,196 590 1.246 $18,085 1.246 $16,839 GROSS COMBINED TOTAL DEBT -(;!J16_~33.194 NET COMBINED TOTAL DEBT $16,168,191 (3) $16,166,91816.531.948 Ratios to 2005-06 Assessed Valuation: Direct Debt ................................................................................ ~ 1852% Total Direct and Overlapping Tax and Assessment Debt.... ........... ~ 1853% Gross Combined Total Debt......................................................... ~ 1854% Net Combined Total Debt............................................................. ~ 1854% (1) Overlapping debt is as of December 1,2005. Direct debt includes Bonds to be sold. (2) Includes Bonds to be sold. (3) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations Source: California Municipal Statistics, Inc. 21 DOCSOC/1 14 7417v;~022245-0 162 9. 7.3 The authorized but unissued debt of eXlstmg community facilities districts with boundaries overlapping the District as of DeeomberFebruarv I, ~2006 is summarized in Table 5 below. In addition, other local agencies whose boundaries encompass all or a portion of the District may form other community facilities districts or assessment districts. TABLE 5 SUMMARY OF OVERLAPPING COMMUNITY FACILITIES DISTRICTS $9,600 $9,306 DeveJnped Residential Special Tax Per Sq. Ft. $ 0.3811 $ 0.3750 Authorized Debt $250,000,000 $50,000,000 District Chula Vista Elementary CFD No. 17(1) Sweetwater High School CFD No. 17(1) Purpose Elementary Schools High Schools Undeveloped Land Special Tax Per Acre (l) On July 1 of each year, the maximum special tax rates shall be increased prior to development of a parcel by the greater of (i) the annual percentage change in the Engineering News Record building cost index for the City of Los Angeles detennined every May 31 for the prior 12-month period, or (ii) two percent per fiscal year, and after development ofa parcel at the rate of2% per annum. Source: McGill Martin Self, Inc. Expected Tax Burden It is expected that the total tax burden, excluding City maintenance community facilities districts, on residential units in the District will be slightly less than 2% of the initial base sales prices of the units. Table 6 below sets forth an estimated property tax bill for a typical single ;family detached unit of 2, I 06 square feet (such square footage being the weighted average of expected unit sizes) in Tax Zone A and a typical single ;family detached unit of 3,047 square feet (such square footage being the weighted average of expected unit sizes) in Tax Zone B. The estimated total effective tax rate for such single ;family detached units is estimated to be 2.11~(' and 2.20% and 2,27%, respectively, of total assessed value, inclusive of City maintenance community facilities districts, and ~1 ,94% and 1471.96%, respectively, exclusive of such amounts. 22 DOCSOC/1147417v;~022245-0]62 / 9-7'1- TABLE 6 SAMPLE PROPERTY TAX BILL PROJECTED FOR FISCAL YEAR 2005-06 TYPICAL SINGLE =FAMIL Y DETACHED UNITS Percent of Total Assessed Valuation House Square F ootage(Weighted Average) Base Sales Price Total Assessed Value Basic Levy MWD CWA Chula Vista Elementary School District G.O. Bond 1.0000% 9.911900fK2% 9,900700274% 9.92720 022~% Sweetwater High School District G.O. Bond 9,91%001:';1% Southwestern Conununity College G.O. Bond Total Taxes Based on Assessed Value 0.007100100% ~.L..D8.% Chula Vista Elementary CFD No. 17 Sweetwater Union High School CFD No. 17 Chula Vista Preserve CFD No. 97-2 City of Chula Vista CFD No. YU-I City of Chula Vista CFD No. 12-M hnprovement Area 2 Mosquito/Rat Con1rol MWD Water Standby Charge Otay Water Availability CW A Water Availability Total Assessments aod Parcel Charges . Total All Property Taxes Total Effective Tax Rate Total Effective Tax Rate Excluding City Maintenance CFD's Source: McGill Martin Self. Estimated VaIue-to-Lien Ratios Single Single httily-.Ji!mi!.r, httily-.f!!mi!J! Tax Zone A Tax Zone B 2,106 3,047 $ 610,950.00 $ 725,000.00 $ 603,950.00 $ 718,000.00 $ 6,039.50 $ 7,180.00 ~3141 ~~ ~1.65.Jfi +1H196 59 M4441360 =1616 ! 2 H-8+>2D..82 .J4@MlI!BJI 6: _11.916040 _=1L8II ~ ~ .,151.59~ 7,.73.18~ 3.51 5.4R ~ 802.60 ~ 1,161.21 789.75 1,142.63 29.91 43.27 3,697.70 4,121.15 l,nO.92U! 1JI2 1,616.21~ 1A2 2.29 11.50 10.00 10.00 2.29 11.50 10.00 10.00 ~ 6 181.e66 76 4.1{i 1 129192613. 28!UJ. H42.211"1o .J.,%I 94% $ 8.118.28854 ~ $ IS 811 7616. 222JI1 ~2.21% +,wI 96% 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 7 summarizes the estimated appraised value-to-lien ratios for property in the District based on the principal amount of the Bonds and the projected Special Tax levy for fiscal year 2006-07 based on property ownership and status of development as of December 1, 2005. . The appraised value of the land within the District, based on the assumptions and limiting conditions contained in the Appraisal, was $71,300,000 as of December 1, 2005. In a letter dated Februarv .2006. DOCSOCI114 7417v:;~022245-0 162 23 9-75 the Annr9iser confirmed that the value of the taxable nronertv within the District was not less than $71.300.000. The estimated appraised value-to-lien ratio for the property within the District currently subject to the levy of the Special Tax, based upon land values and property ownership described in the Appraisal, is approximately 1.121.32' to I as shown in Table 7 below. Table 7 does not include the overlapping debt which is payable from taxes and assessments on land within the District, which, as set forth in Table 4 above, was estimated at $10,109 for fiscal year 2005-06. If the overlapping debt payable from ta;"es and assessments were included, the estimated appraised value-to-lien ratio for the District as a whole would remain at 44M.32' to 1. In the Annual Report to be filed pursuant to the Continuing Disclosure Agreement, the District will estimate the value-to-lien ratios for property within the District subject to the Special Tax based on the assessed value of the taxable property within the District, but not based on the appraised value of the property within the District. The information in the Annual Report for the estimated assessed value-to-lien ratios will follow the format of Table 7. The assessed value of the land within the District subject to the Special Tax levy for fiscal year 2005-06 is $891,450. Dividing this assessed value by the principal amount of the Bonds results in an estimated assessed value-to-lien ratio for the District as a whole of 0.05' to 1. . Preliminary, subject to change. 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'" ~ u I'J Qoii::I: Uij '" P '" '" ~ - U "' "' "' C !;i ~ . 0 is ~ ~ ~ ~ ,. Q 0., Q - ~ C ~ '!;> ~ 1-77 . .~ THE DEVELOPMENT AND PROPERTY OWNERSHIP Except for the information under the captions "-Appraisal" and "-Market Absorption Study, " the Developer and the Merchant Builders 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" herein. No assurance can be given that fUrther development of the land within the District will occur, or that it will occur in a timely manner or in the configuration or intensity described herein, or that any property owner 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 property owners and, in the event that a property owner 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 property owner. As a result, other than as provided herein, no financial statements or information is, or will be, provided about the Developer and the Merchant Builders. 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. " General Description and Location ofthe District The District comprises approximately 89.5 gross acres io the City of which approximately 34 acres are expected to be developed. The District is generally located within the Otay Ranch Village Seven Sectional Planning Area. The District is located east of Interstate 805, along the south side of Birch Road between Magdalena Avenue and La Media Road. Current residential developments in the vicinity of Otay Ranch Village Seven and the District include Lomas Verdes, Rancho Del Rey, Sunbow, Eastlake, Rolling Hills Ranch and San Miguel Ranch. DOCSOC/1 147417v;~022245-0162 26 9~?f The Developer and Merchant Builders Otay Ranch VII-l is a Delaware limited liability company with RSA Holdings, LLC, a California limited liability company, Altfed E. Baldwin, Ronald 1. Baldwin and Steven E. Baldwin as its members. Otay Ranch R-2B is a Delaware limited liability company with Sunrise PC Holdings, LLC, a Delaware limited liability company, Altfed E. Baldwin, Shawn M. Baldwin and Randall Bone as its members. Otay Ranch Twelve is a Delaware limited liability company with Otay Ranch A, LLC, a Delaware limited liability company, James P. Baldwin and Carl H. Renezeder as its members. Otay Ranch Vll JC is a Delaware limited liability company with SIB Management, LLC, a Delaware limited liability company, James P. Baldwin and Joshua 1. Baldwin as its members. Otay Ranch VIl-l has contracted with Pacific Coast Communities, a California cornoration ("Pacific Coast") to build the homes in Planning Area R-2A and Otay Ranch 2-B has contracted with the Sunrise Company, a California cornoration ("Sunrise") to build the homes in Planning Area R-2E. Otay Ranch Twelve has contracted with Oakwood Development, a . California corn oration ("Oakwood") to build the homes in Planning Area R-2C and Otay Ranch VII JC has contracted with Kane Development, a California cornoration ("Kane") to build the homes in Planning Area R-2D. Pacific Coast and Sunrise are each controlled or owned by members of the Altfed Baldwin Family and Oakwood and Kane are each controlled or owned by members of the James Baldwin Family. Each of the Merchant Builders is a related entity of the Developer. The Developer was formed on January 20, 1999 by Otay Project, LLC, as its general partner and South Bay Project LLC and Otay Ranch Development, as its limited partners. Otay Project, LLC was formed August 15, 1997 by South Bay Project, LLC and Otay Ranch Development. As of May 1, 2001, South Bay Project, LLC ceased to be a member of Otay Project, LLC and ceased to be a limited partner of the Developer. The Developer and Otay Ranch Development are under the control of James and Altfed Baldwin. James and Altfed Baldwin and their affiliated companies are land developers and homebuilders in Southern California primarily engaged in the development of master-planned communities in coastal areas in Orange, San Diego, Ventura and Los Angeles Counties. Their companies have operated in the Southern California market for 46 years and have built over 15,000 homes and developed over 20,000 lots in the region. Certain entities owned and controlled by James and Alfred Baldwin have previously filed for bankruptcy and have been delinquent in the payment of property taxes and assessments and were subject to outstanding judgments in connection with these delinquencies. See "SPECIAL RISK FACTORS-Special Tax Delinquencies." . 27 . DOCSOC/1147417v;~022245-0162 9-79 u i;:: --" --" 0 ~" '0 .D '"' , 'E ~ t .... " .~ ~ .", "~ ~ [; - :s 0 "3 ~ ~ U .... U --" " --" --" [; --" of ;::;: >, ] ~ " .... , EO " ~ ~ .. " :> ~ ~" 0 "" -5 ~ 0 .. [; ~ :a " ~ <>: ~ OJ ~ .... 0 ~ - ~ "" .", 0 ~ " ~ ~ >, "0 " ';J (5 0 " .,s 1 co '"' [; u 0.; .. --" ,.j 0 --" '0 t" t" !; " " 0 "= "0' " J: J:t .,s u ~ ~ "" --" - 0 >, --" - 0 ~ ~ 0 "~ u" S ...... ~ ~ ~ s .. :> "~ -5 "" .", .. OJ :a "~ ~ <>: u <E ~ ~ --" ~ - --" " 0 ~~ .,s ...... '0 ~ I '" '0 '" - :> <;' " .,., ~ ... ~ '" 1 u " '" ] '" --" 0 --" .... ~I "... oi 0 1:1 :> 2; ~ "~ " ;!: ~ " ... E- - .... - " " u 15 :a 0 '" <>: u ~ 0 - Q 0 1'" 'f.'YO . Development Plan The approved fmal tract map applicable to the District allows for the development of 361 dwelling units. Upon buildout, development within the District is anticipated to include 191 siogle ;family detached homes and 170 single ;family detached alley homes. Although the Developer has sold the planuing areas to each of the Merchant Builders, the Developer is still responsible for developing the planuing areas to a tiuished lot condition. The Developer expects to develepcomnlete the develonment of the planuing areas to a tiuishedlD1 condition by October, 2006 at a cost of $ .24.054.000. In addition, each of the Merchant Builders has contracted with the Developer to complete certaio in tract improvements consisting of utilities, streets, sidewalks, curbs, gutters and landscaping at a cost of $=19.972.000. Otay Ranch VII currently owns Planning Area R-2A which it purchased trom the Developer on November 18, 2005 at a cost of $38,233,444. Otay Ranch VII expects to build 96 siogle ;family detached homes in Planuing Area R-2A of which U4B. are expected to be completed and sold in 2006 and ~ inc1udinl.' the tbree model bomes. io 2007. Otay Ranch R-2B currently owns Planuing Area R-2B which it purchased trom the Developer on November 18, 2005 at a cost of $28,643,120. Otay Ranch R2-B expects to build 85 single ;family detached homes in Planuing Area R2-B of which '6415. are expected to be completed and sold in 2006, '64~ in 2007 and ;;.116. inc1udinl.' tbe tbree model bomes. in 2008. [WIlY IS THIS LATER TII.'\.N :\BSORPTION STUDY?] Otay Ranch Twelve currently owns Planuing Area R-2C which it purchased trom the Developer on October 27, 2005 at a cost of $37,657,989. Otay Ranch Twelve expects to build 95 single ;family detached homes in Planuing Area R2-C of which ~ are expected to be completed and sold io 2006 and ~~ inc1udinl.' tbe three model bomes. in 2007. . Otay Ranch VII JC currently owns Planuing Area R-2D which it purchased trom the Developer on October 7, 2005 at a cost of $28,387,031. Otay Ranch VII JC expects to build 85 single ;family detached homes inPlanuing Area R2-D of which ~l2. are expected to be completed and sold in 2006 and ~56: in 2007. Table ~ below summarizes the proposed development within the District subject to the Special Taxes. [WE NEED TO DISCUSS UPD:\TES TO WoVE PRICES.] TABLE ~ SUMMARY OF PROPOSED DEVELOPMENT PlDnning Proposed Proposed Square Projeded Areas Lot Size Merchant Builder Number of Units Footage Range Home Prices R-2A $700,00g 750,000, 4,250 Otay Ranch Vll-I 96 2,411-2,868 ~ R-2B $~~- 2,720 Otay Ranch R-2B 85 2,300-2,800 '7OO;WG~ R-2C $~- 4,250 Olay Ranch Twelve 95 2,965-3,092 ~ R-2D $~- 2,720 Otay Ranch Vll IC 85 1,511-1,913 ~~ Source: Merchant Builders. Development Status DOCSOC/1147417vJ~022245-0162 29 f-FI The development status of each of the four planning areas as of Fehruarv. 2006 is described below. Planning Area R-2A. Construction of model homes in Planning Area R-2A is expected to commence in Febflllll)'March 2006 with homes being offered for sale shortly thereafter. At buildout, Planning Area R- 2A is expected to consist of 96 detached single-family residential units on 4,250 square foot lots. Such units are expected to range in size from 2,411 square feet to 2,868 square feet and range in price from $7QQ,999750.000 to $759,90Q.800.000. As of February 1, 2006, Planning Area R-2A was mass graded into a blue-topped condition. Planning Area R-2B. Construction of model homes in Planning Area R-2B is expected to commence in March 2006 with homes offered for sale shortly thereafter. At buildout, Planning Area R-2B is expected to consist of 85 detached single ;family alley residential units on 2,720 square foot lots. Such units are expected to range in size from 2,300 square feet to 2,800 square feet and range in price from $659,OQ9719.200 to $700,900.748.980. As of February 1, 2006, Planoing Area R-2B was mass graded into a blue-topped condition. Planning Area R-2C. Construction of model homes in Planning Area R-2C co=enced in January 2006 with homes being offered . for sale shortly thereafter.bel'inniu!! in Fehruarv. 2006. At buildout, Planning Area R-2C is expected to consist of 95 single ;family residential units on 4,250 square foot lots. Such units are expected to range in size from 2,965 square feet to 3,092 square feet and range in price from $700,000650.000 to $750,000.665.000. As of February 1, 2006, Planning Area R-2C was mass graded into a blue-topped condition. Planning Area R-2D. Construction of the ffiedelnroduction homes in Planning Area R-2D is expected to commence in Feb"""'Y~ 2006 with homes being offered for sale shortly thereafter. MQdd bomes are not exnected to be constructed in Plannin!! Area R-2D. At buildout, Planning Area R-2D is expected to consist of 85 detached single ;family alley residential units on 2,270 square foot lots. Such units are expected to range in size from 1,511 square feet to 1,913 square feet and range in price from $550,Og0544.000 to $595,000.587.000. As of February 1, 2006, Planning Area R-2D was mass graded into a blue-topped condition. Financing Plan The development of Otay Ranch Village Seven will require a large expenditore of funds to fully develop the property and all of the required infrastructure. While the necessary debt and equity sources outside of the Bond proceeds are in place or expected to be in place, the desire and the ability of the Developer and the Merchant Builders to develop the entire project is dependent upon a number of external factors, including the general and local economy and the health of the local real estate market. While the information below represents the Developer's and each of the Merchant Builders' current estimate of the sources and uses of funds there can be no assurance there will not be substantial changes to the actual sources and uses of funds. As set forth in Table M2 below, the Developer expects to finance the remaining costs of the development to be completed by it from Bond proceeds and from proceeds that it has received to date and expects to receive in the future from the sale of the planning areas to the Merchant Builders. Each of the Merchant Builders expects to [mance the remaining costs of the development to be completed by it from various construction loans, 13 Bad preeeedo, home sale proceeds and, if necessary, equity contributions from its members. To the extent that actual revenues are less than projected or are received more slowly than projected by the Developer or the Merchant Builders, other needed financing mechanisms are not put into place, or actual expenses are greater than or occur earlier than projected, there could be a shortfall in the cash required to complete the development as projected above. DOCSOCI1147417v:;~022245-0162 30 "... '1-")... The Developer. Table -W2 below sets forth, as of Febma>y I,Januarv 31. 2006, the expected SODIces of funds and development costs necessary for the Developer to complete the planoing areas to a finished lot condition. In addition, it is expected that the Developer will complete most of the intract infrastructore improvements which will be paid for by the Merchant Bnilders. The costs of these intract improvements are not included in Table--W~ but are in the Merchant Builder budgets described below. There is no assurance that amounts necessarv to finance the remaining develonment ends within the District win he available to the Develoner from the Merchant Builders. or any other source. when needed. Neither the Develoner. the Merchant Bui1ders nor any "(their affiliated entities are under any lep'al obligation of any kind to exnend funds for the develonment of the nronertv within the District. Anv contributions or loans bv the Develoner or Merchant Builders or any other related entities to fund costs of develonment with the District are entirelv voluntarv. . DOCSOC/1 147417v;~022245-0162 31 9-13 ~) ~I~ hlLJ In hI III U J . ~u ~I~ IIUd . I UlI ~I 11119 i · o ~ '<> . I"< ..... . ~ ~ III LJ IIU J " III ! J III II r " - 9.fl M M N '" q ~ ... N N N o VII ~ r-- tt :': - U o U') u o i::) . Otay Ranch VII. Otay Ranch VII purchased the land within Planning Area R-2A from the Developer on November 18, 2005 at a cost of $38,233,444 with cash and an unsecured note ffemDavable to the Developer in the amount of $ .37.856.643. As of February 1, 2006, Otay Ranch VII ha&had expended approximately $ 612.568 in home construction, carrying, marketing and miscellaneous costs to complete Planning Area R - 2A. Otay Ranch VII expects the remaining home construction, carrying, marketing and miscellaneous costs to complete Planning Area R-2A to be approximately $-1Umillion. Otay Ranch VII plans to [mance these remaining costs through a combination of construction loan proceeds and home sale proceeds. Otay Ranch VII expects to obtain by April 2006 a revolving loan from First Bank and Trust in the amount of $39,006,500 with a maximum amount permitted to be outstanding at one time of $17,000,000 (the "Otay Ranch VII Revolving Loan"). The Otay Ranch VII Revolving Loan is expected to be secured by a promissory note, first lien deed of trust on Planning Area R-2A, a security agreement, UCC-l covering all land in Planning Area R - 2A and all improvements and personal property connected with the Otay Ranch VII Revolving Loan. The term of the Otay Ranch VII Revolving Loan is expected to expire "" 30 months from the recordation of the Otav Ranch VII Revolvinl! Loan with a 6-month extension ontion. Of the 96 homes proposed to be constructed in Planning Area R-2A, Otay Ranch VII expects to sell and convey to individual homeowners approximately ;H41I homes in 2006 and ~ homes, inc1udin!!' the three model homes. in 2007. Otay Ranch VII projects that home sale revenues will be not less than $ .75.821.376. As a result, Otay Ranch VII believes that it will have sufficient funds available to complete its proposed development in Planning Area R-2A, to pay the Developer the balance of the land acqnisitio~ and to repay the Otay Ranch VII Revolving Loan. There is no assurance that amounts necessary to [mance the remaining development costs within Planning Area R-2A will be available from Otay Ranch VII, or any other source, when needed. Neither Otay Ranch VII nor any of its affiliated entities are under any legal obligation of any kind to expend funds for the development of the property within Planning Area R - 2A. Any contributions or loans by Otay Ranch VII or any other related entity to fund costs of development with Planning Area R-2A are entirely voluntary. The sole asset of Otay Ranch VII is the land and improvements which it owns in Planning Area R-2A and its only sources of revenue are loans, home sale proceeds,--1IIld eqnity contributions made to it by its members-flll<i pressea" efthe geRas. . Otay Ranch R-2B. Otay Ranch R-2B purchased the land within Planning Area R-2B from the Developer on November 18, 2005 at a cost of $28,643,120 with cash and an unsecured note ffemnavable to the Developer in the amount of $ .28.360.835. As of February 1, 2006, Otay Ranch R-2B ha&had expended approximately $ 517.715 in home construction, carrying, marketing and miscellaneous costs to complete Planning Area R-2B. Otay Ranch R-2B expects the remaining home construction, carrying, marketing and miscellaneous costs to complete Planning Area R-2B to be approximately $-1J!.J million. Otay Ranch R - 2B plans to finance these remaining costs through a combination of construction loan proceeds and home sale proceeds. Otay Ranch R-2B expects to obtain a revolving loan from First Bank and Trust in the amount of $36,500,000 with a maximum amount permitted to be outstanding at one time of $9,000,000 (the "Otay Ranch R-2B Revolving Loan''). The Otay Ranch R-2B Revolving Loan is expected to be secured by a promissory note, first lien deed of trust on Planning Area R-2A, a security agreement, UCC-I covering all land in Planning Area R-2B and all improvements and personal property connected with the Otay Ranch R-2B Revolving Loan. The term of the Otay Ranch R-2B Revolving Loan is expected to expire en Jj) months after the recordation of the Otav Ranch R-2B Revolvint! Loan with a 6-month extension ootion. Of the 85 homes proposed to be constructed in Planning Area R-2B, Otay Ranch R-2B expects to sell and convey to individual homeowners approximately ;!415 homes in 2006, ;!4~ homes in 2007, and ;>+J1i homes, inc1udiDl' the three model homes. in 2008. Otay Ranch R-2B projects that home sale revenues will be not less than $ .62.587.900. As a result, Otay Ranch R-2B believes that it will have sufficient funds available to complete its proposed development in Planning Area R-2B to pay the Developer the balance of the land acqnisition cost and to repay the Otay Ranch R-2B Revolving Loan. There is no assurance that amounts necessary to finance the remaining development costs within Planning Area R-2B will be available from Otay Ranch R-2B, or any other source, when needed. Neither Otay DOCSOC/1147417v:;~022245-0162 33 9-f5 Ranch R-2B nor any of its affiliated entities are under any legal obligation of any kind to expend funds for the development of the property witlrin Planning Area R-2B. Any contributions or loans by Otay Ranch R-2B or any other related entity to fund costs of development with Planning Area R-2A are entirely voluntary. The sole asset of Otay Ranch R-2B is the land and improvements which it owns in Planning Area R-2B and its only sources of revenue are loans, home sale proceeds, and equity contributions made to it by its members-and pre6seds efthe Benas. Otay Ranch Twelve. Otay Ranch Twelve purchased the land witbin Planning Area R-2C from the Developer on October 27, 2005 at a cost of $37,657,989 with cash and an unsecured note ffemDavable to the Developer in the amount of $ .37.285.113.60. As of February I, 2006, Otay Ranch Twelve has expended approximately $ 1.767.077 in home construction, carrying, marketing and miscellaneous costs to complete Planning Area R-;;2e. Otay Ranch Twelve expects the remaiuing home construction, carrying, marketing and miscellaneous costs to complete Planning Area R-2C to be approximately $-n..J. million. Otay Ranch Twelve plans to finance these remaining costs through a combination of construction loan proceeds and home sale proceeds. Otay Ranch Twelve has obtained a revolving loan from Preferred Bank with a maximum disbursement amount of $41,525,955 with a maximum amount permitted to be outstanding at one time of $23,635,000 (the "Otay Ranch Twelve Revolving Loan"). The Otay Ranch Twelve Revolving Loan is secured by a promissory note and first lien deed of trust on Planning Area R-2e. The term of the OtayRanch Twelve Revolving Loan expires onfApril5, ~2003. As of February I, 2006, the outstanding principal balance of the Otay Ranch Twelve Revolving Loan was $ .14.272.359. Of the 95 homes proposed to be constructed in Planning Area R-2C, Otay Ranch Twelve expects to sell and convey to individual homeowners approximately ~ homes in 2006 and ~26. homes. iDcludinv the three model homes. in 2007. Otay Ranch Twelve projects that home sale revenues will be not less than $ .62.616.000. As a result, Otay Ranch Twelve believes that it will have sufficient funds available to complete its proposed development in Planning Area R-2C, to pay the Developer the balance of the land acquisition costs and to repay the Otay Ranch Twelve Revolving Loan. There is no assurance that amounts necessary to finance the remaining development costs witbin Planning Area R-2C will be available from Otay Ranch Twelve, or any other source, when needed. Neither Otay Ranch Twelve nor any of its affiliated entities are under any legal obligation of any kind to expend funds for the development of the property witlrin Planning Area R-2C. Any contributions or loans by Otay Ranch Twelve or any other related entity to fund costs of development with Planning Area R-2C are entirely voluntary. The sole asset of Otay Ranch Twelve is the land and improvements which it owns in Planniog Area R-2C and its only sources ofrevenne are loans, home sale proceeds,-3nd equity contributions made to it by its members and preeseao ef the Bonas. Otay Ranch VII JC Otay Ranch VII JC purchased the land witbin Planning Area R-2D from the Developer on October 7, 2005 at a cost of $28,387,031 with cash and an unsecured note ffemnavable to the Developer in the amount of $ .28.104.746.26. As of February I, 2006, Otay Ranch VII JC hashad expended approximately $ 8S9.366 in home construction, carrying, marketing and miscellaneous costs to complete Planning Area R-2D. Otay Ranch VII JC expects the remaining home construction, carrying, marketing and miscellaneous costs to complete Planning Area R-2D to be approximately $-14 million. Otay Ranch VII J C plans to finance these remaining costs through a combination of construction loan proceeds and home sale proceeds. Otay Ranch VII JC has obtained a revolving loan from First Bank in the amount of $34,258,000 with a maximum amount permitted to be outstanding at one time of $23,000,000 (the "Otay Ranch VII JC Revolving Loan"). The Otay Ranch VII JC Revolving Loan is secured by a promissory note and first lien deed of trust on Planning Area R-;;2D. The term of the Otay Ranch VII JC Revolving Loan expires on .December 9. 2007. As of February I, 2006, the outstanding principal balance of the Otay Ranch VII JC Revolving Loan was $ .15.560.704. Of the 85 homes proposed to be constructed in Planning Area R-2D, Otay Ranch VII JC expects to sell and convey to individnal homeowners approximately ~2.2. homes in 2006 and ~~ homes in 2007. Otay Ranch VII JC projects that home sale revennes will be not less than $ .48.558.744. As a resnlt, Otay Ranch VII JC believes that it DOCSOCI1147417v'>~022245-0162 34 9-16 will have sufficient funds available to complete its proposed development in Planning Area R-2D to pay the Developer the balance of the land acquisition cost and to repay the Otay Ranch vn JC Revolving Loan. There is no assurance that amounts necessary to finance the remaining development costs within Planning Area R-2D will be available from Otay Ranch VII JC, or any other source, when needed. Neither Otay Ranch vn JC nor any of its affiliated entities are under any legal obligation of any kind to expend funds for the development of the property within Planning Area R-2D. Any contributions or loans by Otay Ranch VII JC or any other related entity to fund costs of development with Planning Area R-2D are entirely voluntary. The sole asset of Otay Ranch VII J C is the land and improvements which it owns in Planning Area R-2D and its only sources of revenue are loans, home sale proceeds; and equity contributions made to it by its members anti JH'seeeels efthe Beaes. Status of Entitlement Approvals Otay Ranch Village Seven was pre-zoned Planned Community ("PC'') as part of the General Development Plan ("GDP") planning process. The PC zone required a mnlti-phase planning process beginuing 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 the SPA Plan is the Site Utilization Plan, which designates the zouing designations for the portion of Otay Ranch Village Seven within the District ("Otay Ranch Village Seven"). The SPA Plan was adopted by the City on October 12, 2004 by Resolution No. 2004-330. Under the SPA Plan, Otay Ranch Village Seven is designated for residential development, public uses (school, parks), open space lands and both major circulation and internal streets. . The Final "A" Map for Otay Ranch Village Seven was recorded in September 2005. The Final "B" Map for Otay Ranch Village Seven was approved by the City Council in December 2005 and was recorded in January 2006. The Merchant Builders believe that all discretionary approvals required for the development of the portion of Otay Ranch Village Seven within the District have been obtained. Environmental Constraints The development of Otay Ranch Village Seven as currently planned has undergone extensive environmental and biological review and the necessary environmental approvals for the development of the entire property covered by the final map has been obtained. These include all applicable wetland permits from the Army Corp of Engineers and Califoruia Department of Fish and Game and a water quality certification from the Regional Water Quality Control Board. The Environmental Impact Report prepared for Otay Ranch Village Seven project was certified by the City Council on October 12, 2004. Infrastructnre Requirements and Construction Status The infrastructore requirements for Otay Ranch Village Seven can be broken into three categories as follows: Major Backbone Infrastructure. The major roads which form the primary access to the commuuity are Birch Road, Magdelena Avenue, Wolf Canyon Loop Road, Rock Mountain Road, Bob Pletcher Way, La Media Road and Santa Luna. These major roads are currently under construction with Birch Road approximately W2S% complete, Magdalena Avenue is base paved and approximately W1S% complete and grading is complete for La Media Road and Santa Luna. The Developer expects to complete construction for all of these major roads by October 2006. DOCSOCI1147417v:;~022245-0162 35 ,. 9~j7 . Minor Backbone Infrastructure. The secondary backbone infrastructure consists of the neighborhood streets into the residential project and utilities that serve the residential project. Grading on the neighborhood roads is complete and the Developer expects to complete construction of these improvements by October 2006. Intract Infrastructure. Siugle-family lots in the community have been delivered to the Merchant Builders mapped and rough graded. The Developer will complete all single-family lots in the community to a fiuished condition. Wet and dry utilities will be stubbed to each lot. The Developer will be responsible for completing intract street improvements, utilities and slope landscaping, which. as of Februarv 1. 2006. were annroximatelv 25%J comnlete. Potential Limitations on Development There are several factors that could potentially limit the planned development in the District as discussed below. 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 iudependent 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 witbiu the District, a developer must, prior to fiual map approval for a parcel, enter iuto 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 iu 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 area. On August 9, 2005 the City Council accepted the 2005 GMOC Aonual Report (the "2005 Report"). The 2005 Report covers the eleven public facility and service area "quality of life" measures for the period from July 1,2003 through June 30, 2004, identifies current issues in the second half of 2004 and early 2005 DOCSOCI1147417v;>~022245-0162 36 9~jl and assesses threshold compliance concerns over the next five years. The 2005 Report concluded that there were no unacceptable levels of service or expected unacceptable levels of service for the time periods covered by the 2005 Report. . Monitoring Program. The City implemented a building permit monitoring program (the "Monitoring Program") for a number of projects within the City pursuant to an agreement with the developers of other projects (the "Monitoring Agreement"). Release of certain permits depends upon the construction of certain roadway improvements. If a roadway improvement is not completed by the date set forth in the Monitoring Agreement, then, until it is completed, the corresponding number of bnilding permits attributed to such improvement will be deducted from the total number of permits to be issued for the last 12 months of the Monitoring Program. The amount deducted will be prorated against all developers included within the Monitoring Program on a proportionate basis. The Otay Ranch Village Seven project within the District is not included in the current Monitoring Agreement but it is expected to be included in an amendment to the Monitoring Agreement or a new monitoring agreement to be considered by the City Council in MaFehr AnriIl 2006. Should the City determine that the standards of the Threshold Policy are not being met, it could impose further limitations or a moratorium on the issuance of bnilding permits within the District. The City does not currently anticipate that it will need to further restrict or prohibit the issuance of bniIding permits within the District beyond the restriction discussed below; however, currently unforeseen events could result in further action by the City under the GMOC. A development slowdown or a moratorium on development could adversely impact the rate of development in the District 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 from time to time and no assurance can be given that its terms will not be more restrictive on development than those currently in effect. Current Limitations on Building Permit Issuance. As described below, until certain roads are constructed, the Merchant Builders may obtain only 155 bniIding permits in the District. The Absorption Study assumes that the Merchant Builders will obtain 2 I 0 bniIding permits by the end of September, 2006. Unless the City agrees to increase the number of permits that may be issued through an amendment to the Monitoring Agreement or otherwise, the rate of absorption in the District will be slower than currently projected by the Market Absorption Consultant and the Merchant Builders. One of the conditions of approval of development of Otay Ranch Village Seven limits to 350 the total number of residential building permits that can be issued by the City within Otay Ranch Village Seven prior to the completion of two backbone roads serving Otay Ranch Village Seven - La Media Road and Santa Luna (the "Village Seven Road Condition"). In addition, the subdivision improvement agreement entered into by the City and the Developer limits to a total of 400 the number of residential building permits that can be issued by the City within Otay Ranch Village Seven prior to the completion of State Route 125 to the international border (the "SR 125 Condition"). State Route 125 is an I I mile toll road between Otay Mesa Road and State Route 54 that will run parallel with Interstate 805. State Route 125 is expected to be completed in late 2gg~ sr early 2007. La Media Road and Santa Luna are currently under construction by the Developer and are expected to be completed by }!8ysH!.berOctober 2006. Otay Ranch Village Seven consists of 1,120 residential units, including the 361 residential units planned to be bniIt in the District. The Developer and McMillin Otay Ranch LLC ("McMillin Otay"), the other developer within Otay Ranch Village Seven, have entered into an agreement which allocates the first 350 bniIding permits to be issued to them prior to completion of La Media Road and Santa Luna, 235 to McMillin Otay and 115 to the Developer. Pursuant to that same agreement, McMillin Otay and the Developer have agreed that the additional 50 building permits that may be issued DOCSOC/114 7417v;~022245-0 162 37 9~ff following satisfaction of the Village Seven Road Condition but prior to the satisfaction of the SR125 Condition, shall be allocated 10 to McMillin Otay and 40 to the Developer. The Mer"hant BaildersDeveloner and the City expect that the SR 125 Condition and the Village Seven Road Condition will be superseded when Otay Ranch Village Seven is included in an amendment to the Monitoring Agreement or a new Monitoring Agreement currently being considered by the City, which will allocate all remaining building permits for the planned development in the District. Prior to the satisfaction of the Village Seven Road Condition and the SR125 Condition, the Developer expects to allocate building permits proportionately among the Merchant Builders for the construction of the model homes and construction of production homes in fIrst phase of development and then expects to allocate building permits to each Merchant Builder as they are requested and needed by the Merchant Builders. Appraisal The information regarding ownership of property in the District included in the Appraisal is 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 certain property within the District, taking into consideration the lien of the Special Taxes and the other existing special taxes comprising a lien on property within the District, based upon a number of assumptions and limiting conditions contained in the Appraisal as set forth in Appendix C. In appraising the property in the District, the Appraiser utilized the sales comparison approach to value and discounted cash flow analyses. Under the sales comparison approach to value, the Appraisal takes in to account the development status of the residential lots in the District, analyzes the market for similar properties and compares these properties to the properties in the District. Under a discounted cash flow analysis, the Appraisal takes into account an absorption period, costs of development, sales, marketing and carrying costs and a discount rate which will consider the risk associated with the development and a profIt due to a developer. The Appraiser is of the opinion that the aggregate "as is" value of the land within the District as of December I, 2005, assuming the completion of all improvements to be fInanced with proceeds of the Bonds was $71,300,000. In a letter dated Fehruarv .2006 (the "Letter of Annraisal"). the Annraiser stated that the value of the taxahle nronertv within tbe District as of Fehruarv 1. 2006 was not less tban tbe value nrovided in the Annraisa1. In arriving at its statement of value, the Appraiser assumed that there were 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, that the costs of development provided by the Developer are accurate 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, including no delay in the allocation of building permits as a result of the SR 215 Condition or the Village Seven Road Condition or otherwise). See "-Potential Limitations on Development" above. The Appraisal merely indicates the Appraiser's opinion as to the market value of the property referred to therein as of the date and under the conditions specifIed therein. The Appraiser's opinion reflects conditions prevailing in the applicable market as of the date of value. As set forth in the Appraisal, those market conditions include a recent rapid escalation in the prices paid for developable land in the County. The Appraiser's opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future. 38 DOCSOC/I147417v"~022245-0162 '1-90 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. For a complete list of the Appraiser's assumptions and limiting conditions, see Appendix C-"APPRAISAL REPORT." Market Absorption Study . The Market Absorption Study for the District, dated December 16, 2005 has been prepared by the Market Absorption Consultant. A synopsis and summary of the Market Absorption Study is included herein as Appendix B. The Market Absorption Consultant has estimated, based upon the analysis of relevant demographic and economic conditions in the Chula Vista area, the number and proportion of housing units in the District that can be expected to be marketed annually using the estimated absorption schedules for each of the product types. The Market Absorption Study concludes that the residential units should be built out by the end of 2007 with most of the sales occurring in 2007, and with final absorption occurring in late 2007. The Market Absorption Study projects absorntion hased on sales to homeowners which tvnicallv nrecede actuaJ escrow closinvs hv six months or more. The Market Ahsorntion Studv nroiects tha'4 of the 361 single ;faruily detached units within the District that are subject to the Special Tax, 15 uuits will be absorbed in the second quarter of 2006, 69 units will be absorbed in each of the third quarter of 2006, the fourth quarter of 2006 and first quarter of 2007, 70 units will be absorbed in the second quarters of 2007, 48 units will be absorbed in the third quarter of 2007 and 21 units will be absorbed in the fourth quarter of 2007. To achieve this rate of absorption, the current limitations in the issuance of building permits within the District will need to be modified. See "----Current Limitations on Development" above. This projected rate of absorption is faster than that projected by the Merchant Builders who project that 35 units will be absorbed in 2008. . The Market Absorption Study concludes that success in the development and sale of the proposed residential units within the District will depend on national, regional and local economic conditions during the projected buildout period. The projected buildout schedule assumes that the developers of the units maximize the market potential to bring residential product into the housing market through strict product differentiation, appropriate pricing with other competitive products in light of locational pluses and minuses and a smooth schedule of approvals processing, home construction and infrastructure completion. Specifically, the Market Absorption Study assumes that there will be no prolonged delays due to unusual weather conditions, lack of needed infrastructure, environmental issues, construction worker shortages or City delays in processing final maps, issuing permits, reviewing plans or approving any product plans. The buildout assumes that there will be no delays in development due to growth management efforts or the conditions of infrastructure agreements (including SR125). The actual absorption of units could be adversely affected if one or more of the foregoing assumptions are not realized. See Appendix B-"SUMMARY OF MARKET ABSORPTION STUDY." SPECIAL RISK FACTORS . The purchase of the Bonds involves a significant degree of investment risk and, therefore, the Bonds are not appropriate investments for many types of investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or defmitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See "Land Values" and "Limited Secondary Market" below. Concentration of Ownership As of the date of the Appraisal, all of the land within the District remaiuing subject to the Special Tax levy was owned or controlled by the Merchant Builders. Based on the land use status as of the date of the 39 DOCSOCI114 7417v;>~022245-0 162 '7-9/ Appraisal, assuming no further land sales, 100% of the projected fiscal year 2006-2007 Special Tax levy would be paid by the Merchant Builders which are related entities controlled by the James Baldwin and Alfred Baldwin families. See "THE COMMUNITY FACILITIES DISTRICT-Principal Taxpayers." This concentration of ownership presents a risk to Bondowners. Until the completion and sale of units to individual owners, the receipt of the Special Taxes is dependent on the willingness and the ability of the Merchant Builders and their successors to pay the Special Taxes when due. Failure of the current landowners, or any successor, to pay the annual Special Taxes when due could result in a default in payments of the principal of, and interest on, the Bonds, when due. See "-Failure to Develop Properties" below. No assurance can be made that the Merchant Builders, or their successors, will complete the intended construction and development in the District. See "-Failure to Develop Properties" below. As a result, no assurance can be given that the Merchant Builders or their successors 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 zone and land use class to which a parcel of property is assigned. See AppendixA-"RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" and "SOURCES OF PAYMENT FOR THE BONDS-Special Taxes." The Rate and Method goveruing the levy of the Special Tax expressly exempts property owned by public agencies or a property owners association and certain other public or quasi-public uses, provided that no such exemption shall reduce the sum of all taxable property to less than 10.56 acres in Zone A and 20.81 acres in Zone B. 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. Special 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 DOCSOC/1 147417v"~022245-0162 40 9-9.L the Indenture, in the event of delinquencies in the payment of Special Taxes. See "-Bankruptcy and Foreclosure" below, for a discussion of the policy of the Federal Deposit Insurance Corporation (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. Tbe Mercbant Builders are owned by the family interests of James and Alfred Baldwin. Entities that are or were controlled by James and Alfred Baldwin and their families, including Baldwin Builders, Inc., Baldwin Building Contractors, Ltd., Tiger Two Development, Carmel Valley Partners, Calabasas, LLC and Marlin Development (formerly Village Development, formerly Village Properties) have been responsible for siguificant delinquencies in the payment of Mello- Roos community facilities district special taxes and ad valorem taxes with respect to property in various developments in Califoruia, as discussed below. Marlin Development ("Marlin") is a Califoruia general partnership, which was formed in 1974 under the name "Village Properties." Village Properties changed its name in June 1995 to "Village Development" and subsequently changed its name again in November 1996 to "Marlin Development." Tbe general partners of Marlin are James P. Baldwin and Alfred E. Baldwin. Marlin has been in the development business for over 25 years. Marlin was delinquent in the payment of Mello-Roos commuuity facilities district special taxes on property located in San Marcos and Portola Hills, Califoruia; however, all delinquent special taxes with respect to those properties have now been paid. Calabasas, LLC and Marlin owned property in Calabasas, Califoruia and were delinquent in the payment of Mello-Roos community facilities district special taxes and ad valorem taxes on such property. On November 18, 1998, the County of Los Angeles was granted a Judgment of Foreclosure against Calabasas, LLC and Marlin for the delinquent taxes, and moved to enforce the judgment by fIling Notices of Levy against the property. Marlin paid the levy against its property and Calabasas, LLC sold its property and funds were withheld from the sales proceeds for the full amount of its special and ad valorem taxes. In July 1995, Baldwin Builders, Inc. a corporation owned by James and Alfred Baldwin, and Baldwin Building Contractors, Ltd., a partnership owned 97% by Baldwin Builders, Inc. (the "Baldwin Company") filed for reorgauization under Chapter II of the Bankruptcy Code. In February 1996, in order to obtain new financing for the Baldwin Company, James and Alfred Baldwin personally contributed land they owned with an estimated value of over $30 million and agreed to transfer control of the Baldwin Company to a trustee selected by the new lenders. Pursuant to an agreement approved by the bankruptcy court, James and Alfred Baldwin and their affiliates excbanged mutual full releases of all claims with the Baldwin Company. Baldwin Building Contractors, Ltd. has since had a plan of reorgauization approved and has emerged from bankruptcy under the name "New Millennium Homes." James and Alfred Baldwin are not involved in the management of New Millenuium Homes and have a less than five percent (5%) ownership interest in that company. James and Alfred Baldwin and certain of their affiliated entities, not including any entities involved with the Merchant Builders (collectively, the "Baldwins"), were plaintiffs and defendants in various lawsuits with New MilIenuium relating to alleged purchase options and related matters for two parcels of land owned by the Baldwins. On June 21, 1999, the Baldwins and New MiIIenuium entered into a "Settlement Agreement and Mutual Release" which settled all litigation between the parties and provided for full and complete releases of all claims against each other. . New Millenuium Homes was delinquent in the payment of special and ad valorem taxes on all of its properties, including special taxes on properties located in Calabasas (Los Angeles, CFD No.4), Anaheim Hills (City of Anaheim, CFD No. 88-1, and Orange Unified School District CFD No. 89 2), and Portola Hills (Santa Ana Mountains Water District CFD No.2 and County of Orange CFD No. 872). As part of its plan of reorgauization, New Millenuium Homes has either paid or entered into payment plans with respect to all of its delinquent special and ad valorem taxes. New Millenuium Homes currently does not own any property within the District. DOCSOCI114 7417v~~022245-0 162 41 9-93 Adjustable Rate and Non-Conventional Mortgages Since the end of 2002, many persons have financed the purchase of new homes using loans with little or no downpayment and with adjustable interest rates that start low and are subject to being reset at higher rates on a specified date or upon the occurrence of specified conditions. Many of these loans allow the borrower to pay interest only for an initial period, in some cases up to 10 years. Currently, in Southern California, a substantial portion of outstanding home loans are adjustable rate loans at historically low interest rates. In the opinion of some economists, the significant increase in home prices in this time period (more than 70% since 2003 in southern San Diego County) has been driven, in part, by the ability of home purchasers to access adjustable rate and non-conventional loans. These economists predict that as interest rates on new loans increase and as the interest rates on existing adjustable rate loans are reset (and payments are increased) there will be a decrease in home sales due to the inability of purchasers to qualify for loans with higher interest rates. They further predict that such a decrease in home sales will, eventually, resnlt in a decrease in home prices. Some economists are concerned that such a reduction in home prices will result in recent homebuyers having loan balances that exceed the value of their homes, given their low downpayments and small amount of equity in their homes. . Homeowners in the District who purchase their homes with adjustable rate and non-conventional loans with no or low downpayments may experience difficulty in making their loan payments and pay'JIg the Speeial T"*,,s levied"" their preperty due to automatic mort!!a!!e rate increases and rising interest rates. This could result in an increase in the Special Tax delinquency rate in the District and draws on the Reserve Fund. If there were significant delinquencies in Special Tax collections in the District and the Reserve Fund was fully depleted, there could be a default in the payment of principal of and interest on the Bonds. Some economists have also predicted that, as mortgage loan defaults increase bankruptcy filing by such homeowners are also likely to increase. Bankruptcy filings by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes. See "SPECIAL RlSK FACTORS -Bankruptcy and Foreclosure" below. Failure to Develop Properties Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Bondowners should it be necessary for the District to foreclose on such land due to the nonpayment of Special Taxes. The failure to complete development of the required infrastructure and development in the District as planned, or substantial delays in the completion of the planned infrastructure and development due 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 crom undeveloped property, and may affect the willingness and ability of the owners of such undeveloped property within the District to pay the Special Taxes when due. Land development is subject to comprehensive federal, State and local regulations. Approval is required crom various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency approval or satisfY such governmental requirements would adversely affect planned land development. Finally, development of land is subject to economic considerations. Additionally, two of the Merchant Builders will need to obtain financing to complete their development activities within the District. 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 Merchant Builders have projected, which DOCSOC/114 7417v:;~022245-0 162 42 ^ / '1-17" mayor may not be available. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Finance Plan" herein. The futnre development of the land within the District may be adversely affected by existing or futnre governmental policies, or both, restricting or controlling the development of land in the District. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Potential Limitations on Development" for a discussion of certain potential limitations on the ability of the Merchant Builders to complete the projected development of the District. Specifically, investors should consider the broad power of the City to halt or delay the issuance of building permits under its Growth Management Ordinance. There can be no assurance that the owners of the land in the District will be able to secure all of the necessary land use approvals to develop their properties. See also "-Futnre 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 futnre deterioration of the real estate market and economic conditions or futnre 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. In addition to the foregoing, a substantial portion of projects within the City are historically occupied by commuters to employment centers in other cities throughout the County, and such projects may be adversely affected by circumstances affecting such commuters, including but not limited to rising gasoline prices. 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. The payment of the principal of and interest on the Bonds currently depends upon the receipt of Special Taxes levied on undeveloped property. Undeveloped property is less valuable per uuit 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 or controlled by the Merchant Builders, the timely payment of the Bonds depends upon the willingness and ability of the Merchant Builders to pay the Special Taxes levied on the undeveloped property when due. See "- Concentration of Ownership" above. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of the Merchant Builders and their successors 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 The City currently has the authority under its Growth Management Ordinance to limit or halt development within the District if certain quality of life standards are not met within the City. See "THE DEVELOPMENT AND PROPERTY OWNERSHIP-Potential Limitations on Development." . In addition, it is possible that futnre growth control iuitiatives could be enacted by the voters or futnre 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 iropacting the ability of the owners of such land to complete the development of such land if they should desire to develop it. DOCSOC/1 ]47417v'>~022245-0]62 43 9.15" 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 land within the District or substantial delay in development caused by growth and building permit restrictions or more restrictive land use regulations would cause the values of the 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. Completion of construction of any proposed structures on the 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. To date, no building permits have been issued for the proposed units within the District. Because future development of the property in the District could occur over several years, if at all, the application of future land use regulations to the development of the land could cause significant delays and cost increases not currently anticipated, thereby reducing the development potential of the land and the ability or willingness of owners of such land to pay Special Taxes when due or causing the value of such land within the District to decrease substantially from that contained in the Appraisal. Endangered Species All of the land currently proposed to be developed in the District has been graded. In recent years, however, 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. W ater Availability The development of the land within the District is dependent upon the availability of water for the planned units. The Otay Water District (the "Water District") is the agency responsible for providing water to the District. 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. MWD's major source of water is the State Water Project operated by the California Department of Water Resources. MWD is also apportioned the use of a certain amount of water delivered to the State from the Colorado River. In addition to this apportionment, MWD is also entitled to surplus water from the Colorado River. 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. Reinstatement of surplus water deliveries to MWD can occur if such agreement is executed or if the State takes other actions required by the federal government. Additionally, the availability of water depends upon the weather, the rate of development and other factors. Based on the Water Supply Assessment and Verification Report adopted by the Water District with respect to Otay Ranch Village Seven in March 2004, the Merchant Builders and the City believe that the Water DOCSOC/1147417v';~022245-0162 44 tf.Yh 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 bnilding 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. 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 bnildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. Portions of Southern California are subject to wildfIres. In October 2003, over 200,000 acres and over two thousand homes were destroyed in wildfIres in San Diego County. The land within the District was not affected by these wildfIres. . In the event of a severe earthquake, fU"e, 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 the 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 The presence of a hazardous substance on a parcel may result in a reduction in its value. In general, the owners and operators of a parcel may be reqnired by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to 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. . Since at least 1928, the property in the District was historically used for agricultural purposes. Pesticides were commonly used in connection with agricultural activities conducted on the land within the District. Sampling in Otay Ranch Village Seven conducted by the Developer and by others revealed elevated levels of various pesticides in surface and near-surface soils at various locations throughout the area. Pursuant to a plan of remediation approved by the County of San Diego Departroent of Environmental Health, the Developer removed surface and near-surface soils impacted with pesticides at concentrations above federally-established residential remedial guidelines and placed those soils as deep fIll material at various DOCSOCI1147417v:;~022245-0162 45 9-97 locations throughout the Otay Ranch Village Seven property, including beneath street beds, open space and some residential lots. All such impacted soils were placed a minimum of ten feet below fmal grade and covered with clean fill material at least ten feet in thickness. All work was conducted under the oversight of the County of San Diego Department of Environmental Health, and final placement of impacted soils was accomplished in a fashion determined by the County of San Diego Department of Environmental Health to pose no threat to human health or to the environment. Except as described above, neither the City, the Developer, nor the Merchant Builders have 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 taxes and assessments imposed by public agencies and several overlapping districts also having jurisdiction over the land within the District. See "THE COMMUNITY FACILITIES DISTRICT-Estimated Direct and Overlapping Indebtedness." The Developer and Merchant Builders do not expect that the total ta.,< burden on residential units within the land within the District will exceed the amounts set forth in Table 6 above. The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and special assessments levied by the City and other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed. The Special Taxes have priority over all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See "-Bankruptcy and Foreclosure" below. Development ofland 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 andlor 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 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 public indebtedness secured by taxes or assessments. Any such 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 williugness or ability of an owner of a parcel to pay the Special Tax 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 ioformed 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 at the maximum rate. 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 within the District. While title companies normally refer to such notices in title reports, there can be no guarantee that such DOCSOC/1147417v:;~022245-0162 46 7-9f . reference will be made or, if made, that a prospective purchaser or lender will consider such Special Ta.x 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 ma.ximum amount of such special tax using a statutorily prescribed form. California Civil Code Section l102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due. Non-Cash Payments of Special Taxes Under the Act, the City Council as the legislative body of the District may reserve to itself the right and authority to allow the owner of any taxable parcel to tender a Bond in full or partial payment of any installment of the Special Taxes or the interest or penalties thereon. A Bond so tendered is to be accepted at par and credit is to be given for any interest accrued thereon to the date of the tender. Thus, if Bonds can be purchased in the secondary market at a discount, it may be to the advantage of an owner of a taxable parcel to pay the Special Taxes applicable thereto by tendering a Bond. Such a practice would decrease the cash flow available to the District to make payments with respect to other Bonds then outstanding; and, nuless 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 uuless the District shall have first obtained a report of a Special Tax Consultant certifying that doing so would not result in the District having insufficient Special Tax Revenues to pay the principal of and interest on all Outstanding Bonds and any Parity Bonds when due. Payment of the Special Tax is not a Personal Obligation of the Owners An owner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured oulyby a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the District has no recourse against the owner. Land Values The value of the property within 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, changes in laws regarding real estate taxes and deductions, 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 year. No assurance can be given that a parcel could actually be sold for its assessed value. DOCSOCIl14 7417vJ~02224 5-0162 47 9-91 . The Appraiser has esrimated, on the basis of certain definirions, assumprions and limiring condirions contained in the Appraisal, that as of December I, 2005 the value of the land within the District was $71,300,000. In the Letter of Annraisal. the Annraiser confirmed that as of Februarv 1. 2006. the value of taxable DroDertv witbiD the District was uot less than $71.300.000. The Appraisal is based on the assumptions as stated in Appendix C-"APPRAlSAL REPORT." The Appraisal does not reflect any possible negarive impact which could occur by reason of future slow or no growth voter iniriarives, any potenrial limitarions on development occurring due to rime delays, an inability of the Merchant Builders to obtain any needed development approval or permit, the presence of hazardous substances within the District, the listing of endangered species or the determinarion that habitat for endangered or threatened species exists within the District, or other similar situarions. The Appraiser has condirioned the Appraisal on a specific condirion in addirion to the typical list of assumprions and limiring condirions which is that there are no environmental issues which would slow or thwart development of the District to its highest and best use and that there will be no delay in the issuance of building permits that would slow or thwart development. See "THE DEVELOPMENT AND PROPERTY OWNERSHlP-Potenrial Limitarions on Development". Prospecrive 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 esrimates of value, the Appraiser assumes that any sale will be unaffected by undue srimulus and will occur following a reasonable markering period, which is not always present in a foreclosure sale. See Appendix C for a descriprion of other assumprions made by the Appraiser and for the defmirions and limiting condirions 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 Ta:,<es. See "SOURCES OF PAYMENT FOR THE BONDS-Special Tax-Proceeds of Foreclosure Sales." FDIClFederal Government Interests in Properties The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to proper1ies in which the Federal Deposit Insurance Corporarion (the "FDIC") has an interest. In the event that any financial insriturion making any loan which is secured by real property within the District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the District to collect interest and penalries specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes ouly if those taxes are assessed according to the property's value, and that the FDIC is immune :trom real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligarions when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business pracrice and the orderly administrarion of the insritution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligarion is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalries and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addirion, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. DOCSOC/1 ]47417vJ~022245-0162 48 f-/OtJ The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello-Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The 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 sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, a default in payment on the Bonds. Bankruptcy and Foreclosure Bankruptcy, insolvency and other laws generally affecting creditor's rights could adversely impact the interests of owners of the Bonds in at least two ways. First, the payment of property owners' taxes and the ability of the 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. 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 Merchant Builders or other landowner and if the court found that the Merchant Builders or other landowner had an interest in such moneys within the meaning of Section 541(a)(I) 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. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. No Acceleration Provision The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the Bonds or the Indenture. Loss of Tax Exemption As discussed under the caption "TAX MATTERS," the interest on the Bonds could become includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds as a result of a failure of the District to comply with certain provisions of the Internal Revenue Code of 1986, as DOCSOC/114 7417v:;~022245-0 162 49 9--/()/ . 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 Indentore. 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 interest on the Bonds. Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indentore to the extent that enforceability may be limited by bankruptcy, insolvency, moratorium, or other similar laws affecting generally the enforcement of creditors' rights and by the exercise of judicial discretion in accordance with general principles of equity. 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 the Bonds can be sold for any particular price. Although the District and each of the Merchant Builders 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 information, or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with 'a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different ITom the original purchase price. Proposition 218 An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative") was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIIIC and Article XIIID to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local goverrnnents to impose taxes and property-related assessments, fees and charges." Certain provisions of the Initiative have been interpreted by the courts, although it is expected that various aspects of the Initiative will be the subject of litigation for a number of years. The Initiative could potentially impact the Special Taxes available to the District to pay the principal of and interest on the Bonds as described below. Among other things, Section 3 of Article XIII states that ". . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body ITom 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 nuless 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 I, 1997, a bill was signed into law by the Governor of the State enacting Goverrnnent Code Section 5854, which states that: "Section 3 of Article XllIC 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 50 DOCSOCI114 7417vJ~022245-O 162 9"ltJ 2- consents to, any action by initiative measure that constitotes an impairment of con1ractoal rights protected by Section 10 of Article I of the United States Constitotion." Accordingly, although the matter is not tree trom 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. The provisions of the initiative relatiog to the exercise of the initiative power have not been interpreted by the courts and no assurance can be given as to the outcome of any such litigation. It may be possible, however, for voters or the City Council acting as the legislative body of the 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 existiog levels. Furthermore, no assurance can be given with respect to the futore 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 Adminis1rative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the Dis1rict 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. 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, 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 constitotional initiative process. 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 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 Continning Disclosure Agreement with NBS Government Finance Group, 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 operatiog data conceroing the District. The Annual Report to be filed by the District is to be filed not later than February I of each year, beginning February I, 2007, 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 satisf'y the provisions of Rule 15c2-12. The inclusion of the City's audited financial statements does not mean that the Bonds are secured by any resources or property of the City. See "SOURCES OF PAYMENT FOR THE BONDS-Limited Obligations" and "SPECIAL RISK FACTORS-Limited Obligations." The City has never failed to comply in all material respects with any previous undertakings with regard to Rule 15c2-12 to provide annual reports or notices of material events. The full text of the Disclosure Agreement is set forth in Appendix G. DOCSOCI1147417v;>~022245-0162 51 '1./a6 To assist the Underwriter in complying with Rule 15c2-12(b)(5), ea"" efthe Merchant Builders will enter into a Continuing Disclosure Agreement (the "Merchant Builder Disclosure Agreement") covenanting to provide Semi-Annual Reports not later than February I and August I of each year beginning August I, 2006. The Semi-Annual Reports provided by eaeft of the Merchant Builders are to contain the financial and operating data outlined in Section 4 of form of the Merchant Builder Disclosure Agreement attached in Appendix G and the Semi-Annual Report due in August of each year is to eenflflBcontain the audited financial statements for the prior calendar year if audited financial statements are prepared. EaehNIui!: of the Merchant Builders h.$ nethaYI: failed to comply in all material respects with any undertaking under Rule 15cl2-12. The obligations of each of the Merchant Builders uoder its Merchant Builder 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 such landowner (and all its affiliates) is no longer responsible for the payment of more than 20 percent of the annual Special Tax levy; or (c) the date on which such landowner delivers to the City an opinion of nationally-recognized bond couosel to the effect that the continuing disclosure is no longer required under the Rule. Each of the Merchant Bnilders has also agreed that if it sells or transfers an ownership interest in any property in the District which will result in the transferee becoming responsible for the payment of 20 percent of the annual Special Tax levy in the fiscal year following such transfer, such landowner will cause any such transferee to enter into a disclosure agreement as described in Section 12 of the form of Merchant Builder Disclosure Agreement attached hereto in Appendix G. The Disclosure Agreement of the Merchant Builders 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. TAX MA TIERS In the opinion of Best Best & Krieger LLP ("Bond Counsel"), based upon an analysis of existing laws, regulations, rulings and coort 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 of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum ta.."es, 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 District 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 Couosel has not uodertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurriog (or not occurriog) 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 DOCSOCI114 7417vJ~022245-0 162 52. 9-/~1 occurs or action is taken or omitted upon the advice or approval of counsel other than Best; Best & Krieger LLP. The Internal Revenue Service (the "IRS") has initiated an emanded nrOPTam for auditing tax- exemnt bond issues. includinp both random and targeted audits. It is nossihle that the Bonds win be selected for audit bv tbe IRS. It is also nossible tbat tbe market value of tbe Bonds mi!!bt be affected as a result of such an audit (or bv an audit of similar bonds). Although Bond Counsel is of the opinion that interest on the Bonds is excluded ITom gross income for federal income tax purposes and is exempt ITom State of California personal income taxes, the ownership or disposition of, or the accrnal 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 MA TIERS Certain legal matters incident to the issuance of the Bonds are subject to the approving legal opinion of Best Best & Krieger LLP ("Bond Counsel"). A copy of the proposed form of opinion of Bond Counsel is set forth in Appendix H hereto. The opinion of Bond Counsel will be qualified as to the enforceability of certain of the proceedings by limitations imposed by bankruptcy, insolvency, moratoria and other similar laws affecting creditors' rights, heretofore or hereafter enacted, and by the exercise of judicial discretion in accordance with general principles of equity. Bond Counsel has reviewed the cover page of this Official Statement and the portions hereof under the captions "INTRODUCTION," "THE BONDS," "SOURCES OF PAYMENT FOR THE BONDS" "TAX MATTERS" aud 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 ITom 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 Underwriter by its counsel, Stradling Y occa Carlson & Rauth, a Professional Corporation, Newport Beach, California ("Stradling"). Although it serves as counsel to the Underwriter in connection with the issuance and saie of the Bonds, Stradling represents the City in connection with other financings. Stradling undertakes no responsibility to the purchasers of the Bonds for the accuracy, completeness or fairness of the information in this Official Statement and expressly disclaims any duty to do so. . LmGATION 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 assigornent of a rating of the Bonds. DOCSOCI1147417v,,~022245-0162 53 1'/05 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 an original issue discount of $ and 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 ITom time to time by the Underwriter. FINANCIAL INTERESTS The fees being paid to the Financial Advisor, the Underwriter, Underwriter's Counsel and Bond Counsel are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel represents the Underwriter on matters unrelated to the Bonds and Underwriter's Counsel represents the City on matters unrelated to the Bonds. PENDING LEGISLATION The 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 of and interest on the Bonds when due. ADDITIONAL INFORMATION The purpose of this Official Statement is to supply information to prospective buyers of the Bonds. Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions. The execution and delivery of this Official Statement by the Director of Finance of the City has been duly authorized by the City Council acting in its capacity as the legislative body of the District. CHULA VISTA COMMUNITY F ACILITlES DISTRICT NO. 13-1 (OTA Y RANCH VILLAGE SEVEN) By: /s/ Director of Finance DOCSOC/1 147417v:;~022245-0162 54 . q-/tJh f APPENDIX A RATE AND METHOD OF APPORTIONMENT FOR CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTA Y RANCH VILLAGE SEVEN) 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. 13-1 (CFD No. 13-1) and collected each Fiscal Year commencing in Fiscal Year 2006-2007 in an amount determined by the City Council through the application of the appropriate Special Tax for "Developed Property", "Undeveloped Property" and "Contingent Taxable Property" as described below. All of the Taxable Property CFD No. 13-1, 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 Subdivision Map, parcel map, condominium plan, record of survey, or other recorded document creating or describing the parcel. If the preceding maps for a land area are not available, the Acreage of such land area shall be determined by the City Engineer. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expense Requirement" means an annual amount equal to $75,000, or such lesser amount as may be designated by written instruction ITom 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. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 13-1 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 Indentore; the costs to the City, CFD No. 13-1 or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 13-1 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. 13-1 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. 13-1 for any other administrative purposes, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Taxes. "Assessor's Parcel" means a lot or parcel shown in an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by an Assessor's Parcel number. DOCSOCI1147417vJ~022245-0162 A-I 9-11) 7 "Assigned Special Tax" means the Special Tax for each Land Use Category of Developed Property as determined in accordance with Section c.I.a. "Available Funds" means the balance in the reserve fund established pursuant to the terms of any Indenture in excess of the reserve requirement as defined in such Indenture, delinquent Special Ta.'{ payments not required to fund the Special Tax Requirement for any preceding Fiscal Year, Special Tax prepayments collected to pay interest on Bonds, and other sources of funds available as a credit to the Special Tax Requirement as specified in such Indenture. "Backup Special Tax" means the Backup Special Tax amount set forth in Section C.I.b. "Bonds" means any bonds or other debt (as defined in the Act), whether in one or more series, issued by CFD No. 13-1 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. 13-f' means City of Chula Vista, Community Facilities District No. 13-1. "City" means the City of Chula Vista. . "Community Purpose Facility Property" means all Assessor's Parcels which are (a) classified as community purpose facilities and meet the requirements of City of Chula Vista Ordinance No. 2002-2883 as amended on November 5, 2002 or (b) designated on an "A" Map or a Final Subdivision Map as a community purpose facility. "Contingent Taxable Property" means all Assessor's Parcels of Public Property, Property Owner Association Property, Community Purpose Facility Property, Open Space or other property that would otherwise be classified as Exempt Property pursuant to the provisions of Section E, but cannot be classified as Exempt Property because to do so would reduce the Acreage of all Taxable Property below the required minimum acreage as set forth in Section E.I for Zone A or Zone B as applicable. "Council" means the City Council of the City, acting as the legislative body ofCFD No. 13-1. "County" means the County of San Diego. "Developed Property" means all Assessor's Parcels of Taxable Property for which a bnilding permit has been issued prior to March 1st preceding the Fiscal Year in which the Special Tax is being levied. "Exempt Property" means all Assessors' Parcels that are exempt from the Special Tax pursuant to Section E.I. "Final Subdivision Map" means a subdivision of property, created by recordation of a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) or recordation of a condominium plan pursuant to California Civil Code 1352, that creates individual lots for which residential building permits may be issued without further subdivision of such property. "Fiscal Year" means the period starting July I and ending on the following June 30. DOCSOCI1147417v;~022245-0162 A-2 f-/O! "Indenture" means the indenture, fiscal agent agreement, trust agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the classes listed in Table I of Section C.I.a. "Lot(s)" means an individual legal lot created by a Final Subdivision Map for which a building permit for residential construction has been or could be issued. Notwithstanding the foregoing, in the case of an individual legal lot created by such a Final Subdivision Map upon which condominium units are entitled to be developed but for which a condominium plan has not been recorded, the number of Lots allocable to such legal lot for purposes of calculating the Backup Special Ta.x applicable to such Final Subdivision Map shall equal the number of condominium units which are permitted to be constructed on such legal lot as shown on such Final Subdivision Map. "Maximum Annual Special Tax" means the maximum annual Special Tax, determined in accordance with the provisions of Section C, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non-Residential Property" means all Assessor's Parcels of Developed Property, for which a building permit(s) has been issued to allow the construction of one or more buildings or structures for a non-residential use. "Occupied Residential Property" means all Assessors' Parcels of Residential Property for which title is owned by an end user (homeowner). "Open Space" means property within the boundaries of CFD No. 13-1 which (a) has been designated with specific boundaries and acreage on a Final Subdivision Map as open space (b) is classified by the County Assessor as open space (c) has been irrevocably offered for dedication as open space to the federal government, the State of California, the County, the City, any other public agency or (d) is encumbered by an easement or other restriction required by the City limiting the use of such property to open space. "Outstanding Bonds" mean all Bonds, which remain outstanding as defmed in the Indenture. "Property Owner Association Property" means any property within the boundaries of CFD No. 13-1 which is (a) owned by a property owner association or (b) designated with specific boundaries and acreage on a Final Subdivision Map as property owner association property. As used in this definition, a property owner association includes any master or sub-association. "Proportionately" means for Developed Property that the ratio of the Special Tax levy to the Assigned Special Tax or the Backup Special Tax is equal for all Assessors' Parcels of Developed Property within CFD No. 13-1. For Undeveloped Property or Contingent Taxable Property "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Anoual Special Tax per Acre is equal for all Assessor's Parcels of Undeveloped Property and equal for all Assessor's Parcels of Contingent Taxable Property within CFD No. 13-1. "Public Property" means any property within the boundaries of CFD No. 13-! that which (a) is owned by a public agency, (b) has been irrevocably offered for dedication to a public agency or (c) is designated with specific boundaries and acreage on a Final Subdivision Map as property which will be owned by a public agency. For purposes of this definition, a public agency includes 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. DOCSOC/1147417vJ~022245-0162 A-3 '1-/0 i "Residential Floor Area" means all of the square footage ofliving 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 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 of Special Tax revenue required in any Fiscal Year for CFD No. 13-1 to: (i) Pay Administrative Expenses in an amount equal to Administrative Expense Requirement or such other amount as may be designated by the City (ii) pay annual debt service on all Outstanding Bonds (as defined in Section A) due in the Bond Year beginning in such Fiscal Year; (iii) pay other periodic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Indenture; and (v) pay directly for acquisition and/or construction of public improvements which are authorized to be fmanced by CFD No. 13-1 provided that the inclusion of such amount does not cause an increase in the levy of Special Tax on the Undeveloped Property for CFD No. 13-1; less (vi) a credit for Available Funds. "State" means the State of California. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 13-1 that are not exempt from the Special Tax pursuant to law or Section E below. "Trustee" means the trustee, fiscal agent, or paying agent under the bond indentore. "Undeveloped Property" means, for each Fiscal year, all Taxable Property not classified as Developed Property or Contingent Taxable Property. "Zone A" means the specific geographic area designated as such and as depicted in Exhibit A attached hereto. "Zone B" means the specific geographic area designated as such and as depicted in Exhibit A attached hereto. B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Assessor's Parcels of Taxable Property within CFD No. 13-1 shall be (a) categorized as being located in either Tax Zone A or Zone B, (b) classified as Developed Property, Undeveloped Property or Contingent Taxable Property and (c) shall be subject to the levy of annual Special Taxes determined pursuant to Sections C and D below. Furthermore, all Developed Property shall then be classified as Residential or 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 (I) the Assigned Special Tax described in Table I or (2) the Backup Special Tax computed pursuant to b. on next page. DOCSOCII 14741 7vJ~022245-0162 A-4 q-//rj I .< a. Assil!l1ed Suecial Tax The Assigned Special Tax for each Assessor's Parcel of Developed Property is shown in Table 1. TABLE 1 Assigned Special Tax for Developed Property within Zone A and Zone B Land Use Class Description Assigned Special Tax Residential Property $2,750 per unit plus $.45 per I square foot of Residential Floor Area 2 Non-Residential Properly $6,000 per Acre b. Backuu Suecial Tax When a Final Subdivision Map or a condominium plan is recorded within Zone A or Zone B, 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 Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Residential Property upon its development within the Final Subdivision Map area, the Backup Special Tax shall be the rate per Lot calculated according to the following formula: Zone A $59,505 x A B= --------------.--------- L Zone B $37,818 x A B= ------------------------ L DOCSOC/1147417v..~022245-0162 A-5 Ij' 9-/t! The terms 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 = For a Final Subdivision Map, the number of Lots which are classified or to be classified as Residential Property. For each Assessor's Parcel of Developed Property classified as Non-Residential Property or for each Assessor's Parcel of Undeveloped Property to be classified as Non-Residential Property within the Final Subdivision Map area, the Backup Special Tax shall be determined by multiplying $59,505 for Zone A and $37,818 for Zone B by the total Acreage of any such Assessor's Parcel. 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, then the Backup Special Tax applicable to such Assessor's Parcels shall be recalculated to equal the total amount of Backup Special Tax that would have been generated if such change did not take place. 2. Undeveloped Property and Contingent Taxable Property The Maximum Annual Special Tax for each Assessor's Parcel of Undeveloped Property and Contingent Taxable Property shall be $59,505 per Acre for Zone A and $37,818 per Acre for Zone B. D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2006-07 and for each following Fiscal Year, the Council shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of Special Taxes equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows: First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property within Zone A and Zone B at a rate up to 100% of the applicable Assigned Special Tax to satisfy the Special Tax Requirement. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on all Undeveloped Property within Zone A and Zone B, at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. In determining the Acreage of an Assessor's Parcel of Undeveloped Property for purposes of determining the annual Special Tax to be levied on such Assessor's Parcels of Undeveloped Property, the CFD Administrator shall not include any Acreage shown on any applicable tentative subdivision map or other land use entitlements approved by the City that designates such Acreage for a use that would be classified as Open Space, Property Owner Association Property or Public Property. Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax to be levied on each Assessor's Parcel of Developed Property whose Maximum Annual Special Tax is derived by the application of the Backup Special Tax then the Annual Special Tax shall be increased at the same percentage from the Assigned Special Tax up to the Maximum Annual Special Tax for each such Assessor's Parcel. DOCSOC/1147417vJ~022245-0162 A-6 7' -//2- - Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on all Contiogent Taxable Property at a rate up to 100% of the Maximum Annual Special Tax for Undeveloped Property. Notwithstanding the above, under no circumstances will the Special Tax levied against any Assessor's Parcel of Residential Property be increased by more than ten percent per year as a consequence of delinquency or default io the payment of Special Taxes by the owner of any other Assessor's Parcel. E. EXEMPTIONS !. The CFD Administrator shall classify the following as Exempt Property: (i) Public Property, (ii) Property Owner Association Property, (iii) Community Purpose Facility Property (iv) Open Space and (v) Assessor's Parcels with public or utility easements making impractical their utilization for other than the purposes set forth io the easement; provided, however, that no such classification shall reduce the sum of all Taxable Property to less than 10.56 Acres . for Zone A and 20.81 Acres for Zone B. Assessor's Parcels which cannot be classified as Exempt Property because such classification would reduce the Acreage of all Taxable Property to less than 10.56 Acres for Zone A and 20.81 Acres for Zone B will be classified as Contingent Taxable Property and shall be taxed pursuant to the fourth step of Section D. Exempt status for purposes of this paragraph will be assigned by the CFD Administrator in the chronological order io which property becomes Exempt Property. 2. The Maximum Annual Special Tax obligation for any property which would be classified as Public Property upon its transfer or dedication to a public agency but which is classified as Contingent Taxable Property pursuant to E.l above shall be prepaid in full by the seller pursuant to Section H.I, prior to the transfer/dedication of such property to such public agency. Until the Maximum Annual Special Tax obligation for any such Public Property is prepaid, the propertY shall continue to be subject to the levy of the Special Tax as Contingent Taxable Property. 3. If the use of an Assessor's Parcel of Exempt Property changes so that such Assessor's Parcel is no longer classified as one of the uses set forth in E.!. above that would make such Assessor's Parcel eligible to be classified as Exempt Property, such Assessor's Parcel shall cease to be classified as Exempt Property and shall be deemed to be Taxable Property. F. REVIEW/APPEAL COMMITIEE Any landowner or resident who feels that the amount of the Special Tax levied on their Assessor's Parcel is in error shall first consult with the CFD Administrator regarding such error. If following such consultation, the CFD Administrator determines that an error has occurred; the CFD Administrator may amend the amount of the Special Tax levied on such Assessor's Parcel. If following such consultation and action (if any by the CFD Admioistrator), the landowner or resident believes such error still exists, such person may file a written notice with the City Clerk of the City appealing the amount of the Special Tax levied on such Assessor's Parcel. Upon the receipt of any such notice, the City Clerk shall forward a copy of such notice to the City Manager who shall establish as part of the proceedings and administration of CFD No. 13-1 and a special three-member Review/Appeal Committee. The Review/Appeal Committee may establish such procedures, as it deems necessary to undertake the review of any such appeal. The Review/Appeal Committee shall ioterpret this Rate and Method of Apportionment and make det=inations 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. DOCSOCIl1474] 7vJ2I022245-0162 A-7 9-/13 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. 13-1, 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 t=s and conditions established by the Council pursuant to the Act. However, the use of Bond tenders shall only be allowed on a case-by-case basis as specifically approved by the Council. H. PREPAYMENT OF SPECIAL TAX The following definition applies to this Section H: "CFD Public Facilities" means those public facilities authorized to be financed by CFD No. 13-1. "CFD Pnblic Facilities Costs" means either $ 15.5 million, or such lower number as shall be det=ined either by (a) the CFD Administrator as sufficient to [mance the CFD Public Facilities, or (b) the Council concurrently with a covenant that it will not issue any more Bonds to be secured by Special Taxes levied under this Rate and Method of Apportionment. "Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct the CFD Public Facilities. . "Future Facilities Costs" means the CFD Public Facilities Costs minus that (a) portion of the CFD Public Facilities Costs previously funded (i) ITom the proceeds of all previously issued Bonds, (ii) ITom interest earnings on the Construction Fund actually earned prior to the date of prepayment and (iii) directly ITom Special Ta.,< revenues and (b) the amount of the proceeds of all previously issued Bonds then on deposit in the Construction Fund. "Outstanding Bonds" means all previously issued Bonds which will remain outstanding after the first interest and/or principal payment date following the current Fiscal Year, excluding Bonds to be redeemed at a later date with the proceeds of prior prepayments of Maximum Aonual Special Taxes. 1. Prepayment in Full The Maximum Aonual Special Tax obligation may only be prepaid and p=anently satisfied for an Assessor's Parcel of Developed Property, Undeveloped PropertY for which a bOOding p=it has been issued, or Contingent Taxable Property. The Maximum Aonual Special Tax obligation applicable to such Assessor's Parcel may be fnlly prepaid and the obligation of the Assessor's Parcel to pay the Special Tax permanently satisfied as described herein; provided, however that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Maximum Aonual 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 calcnlated as summarized below (capitalized terms as defmed below): DOCSOC!l147417v,,~022245-0162 A-g 9 -IJi( Bond Redemption Amount plus plus plus plus less less Total: equals Redemption Premium Future Facilities Amount Defeasance Amount Prepayment Fees and Expenses Reserve Fund Credit Cavitalized Interest Credit Prepayment Amount As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows: Step No.: 1. For Developed Property, compute the Maximum Anoual 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 perntit issued for that Assessor's Parcel. For Assessor's Parcels of Contingent Taxable Property to be prepaid, compute the Maximum Anoual Special Tax for that Assessor's Parcel using the Maximum Anoual Special Tax for Undeveloped Property. 2. Divide the Maximum Anoual Special Tax computed pursuant to step 1 by the sum of the total expected Maximum Anoual Special Tax revenues which may be levied within CFD No. 13-1 excluding any Assessors Parcels for which the Maximum Anoual Special Tax obligation has been previously prepaid. 3. Multiply the quotient computed pursuant to step 2 by the priocipal amount of the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount"). 4. Multiply the Bond Redemption Amount computed pursuant to step 3 by the applicable redemption premium on the next possible Bond call date, if any, on the Outstanding Bonds to be redeemed (the "Redemption Premium"). 5. If all the Bonds authorized to be issued for CFD No. 13-1 have not been issued, then compute the Future Facilities Costs. 6. Multiply the quotient computed pursuant to step 2 by the amount determined pursuant to step 5 to compute the amount of Future Facilities Costs to be allocated to such Assessor's Parcel (the "Future Facilities Amount"). 7. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding Bonds. 8. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 9. Determine the Special Taxes levied on the Assessor's Parcel in the current Fiscal Year, which have not yet been paid. DOCSOCI1147417v;~022245-0162 A-9 9-/15 10. Determine the fees and expenses of CFD No. 13-1, including but not limited to, the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds from the proceeds of such prepayment, and the cost of recording any notices to evidence the prepayment and the redemption (the "Prepayment Fees and Expenses"). II. Compute the amount the CFD Administrator reasonably expects to derive from the reinvestment of the prepayment amount less the Prepayment Fees and Expenses, as determined pursuant to step 10, from the date of prepayment until the redemption date for the Outstanding Bonds to be redeemed with the prepayment. 12. Add the amounts computed pursuant to steps 7 and 9 and subtract the amount computed pursuant to step II (the "Defeasance Amount"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve reqnirement (as defined in the Indenture), if any, associated with the redemption of Outstanding Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve reqnirement (as defined in the Indenture) in effect after the redemption of Outstanding Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. 14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of the first interest payment following the current Fiscal Year, a capitalized interest credit shall be calculated by multiplying the quotient computed pursuant to step 2 by the expected balance in the capitalized interest fund after such first interest payment (the "Capitalized Interest Credit"). . 15. The Maximum Annual Special Tax prepayment is equal to the sum of the amounts computed pursuant to steps 3, 4, 6, 10, and 12, less the amounts computed pursuant to steps 13 and 14 (the "Prepayment Amount"). 16. From the Prepayment Amount, the amounts computed pursuant to steps 3, 4, 12, 13, and 14 shall be deposited into the appropriate fund as established under the Indenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to step shall be retained by CFD No. 13-1. The amount computed pursuant to step 6 shall be deposited in the Construction Fund. The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of Bonds. In such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund established under the Indenture to be used with the next prepayment of bonds or to make debt service payments. As a result of the payment of the current Fiscal Year's Special Tax levy as determined under step 9 above, the CFD Administrator shall remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any Assessor's Parcel that is prepaid, the Council shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien 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 uuless the amount of Maximum Annual Special Taxes that may be levied on Taxable Property within DOCSOC/1147417v~~022245-0162 A-IO 1-1/6 CFD No. l3-1 prior to and after the proposed prepayment is at least I. I times the maximum annual debt service on all Outstanding Bonds. 2. Prepayment in Part The Maximum Annual Special Tax on an Assessor's Parcel of Developed Property or an Assessor's 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 HI; except that a partial prepayment shall be calculated according to the following formula: PP = (PE-A x F) + A These terms have the following meaning: PP = the partial prepayment PE = the Prepayment Amount calculated according to Section H. I, minus Prepayment Fees and Expenses determined pursuant to Step 10. F the percent by which the owner of the Assessor's Parcel(s) is partially prepaying the Maximum Annual Special Tax. A = the Prepayment Fees and Expenses determined pursuant to Step 10. The owner of an Assessor's Parcel who desires to partially prepay the Maximum Annual Special Tax shall notifY the CFD Administrator of (i) such owner's intent to partially prepay the Maximum Annual Special Tax, (ii) the percentage by which the Maximum Annual Special Tax shall be prepaid, and (iii) the company or agency that will be acting as the escrow agent, if applicable. The CFD Administrator shall provide the owner with a statement of the amount reqnired for the partial prepayment of the Maximum Annual Special Tax for an Assessor's Parcel within 30 days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor's Parcel that is partially prepaid, the City shall (i) distribute the funds remitted to it according to Step 16 of Section H.I, and (ii) indicate in the records of CFD No. 13-1, that there has been a partial prepayment of the Ma:rimum Annual Special Tax and that a portion of the Maximum Annual Special Tax equal to the outstanding percentage (1.00 - F) of the remaining Maximum Annual Special Tax shall continue to be authorized to be levied on such Assessor's Parcel pursuant to Section D. I. TERM OF MAXIMUM ANNUAL SPECIAL TAX The Maximum Annual Special Ta.x shall be levied commenciug in Fiscal Year 2006-2007 to the extent necessary to fully satisfY the Special Tax Reqnirement and shall be levied for a period no longer than the 2046-2047 Fiscal Year. DOCSOCI1147417v,,~022245-0162 A-II 9-//7 APPENDIX B SUMMARY OF MARKET ABSORPTION STUDY . DOCSOCI114741h>2I022245-0162 B-1 I' 9 -Ill' DOCSOCI1147417v~~022245-0162 APPENDIX C APPRAISAL REPORT C-l t'J 9-/17 APPENDIX D INFORMATION REGARDING THE CITY OF CHULA VISTA GENERAL INFORMATION . This appendix sets forth general information about the City of Chula Vista ("Chula Vista") including information with respect to its finances. The following information concerning Chula Vista, the County of San Diego (the "County") and the State of California (the "State") is included only for general background purposes. General Description Chula Vista is located on San Diego Bay in Southern California, 8 miles south of the City of San Diego and 7 miles north of the Mexico border, in the area generally known as "South Bay." Chula Vista's city limits cover approximately 50 square miles. Chula Vista was incorporated 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, engineeriog services, plamring services, public works, general administrative services and capital improvements. With a January 2005 estimated population of 217,543, 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 2001 181,453 2,863,657 34,441,561 2002 191,033 2,920,010 35,088,671 2003 200,378 2,971,805 35,691,442 2004 208,510 3,013,014 36,271,091 2005 217,543 3,051,280 36,810,358 Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State, 2001-2005, with 2000 DRU Benchmark, Sacramento, California, May 2005. DOCSOC/1147417v:;~022245-0162 0-1 9 -1-<.0 . Building Activity tables. Residential building activity for the past five calendar years for Chula Vista is shown in the following City of Chula Vista New HORsing Units Building Permits Single Family UffitD Multifamily Uilit" T eta! UBit" JfJO() WOl- J(J(JJ J(J(JJ JOIJ4 -l--;+U B&4 +,+49 ~ ~ &e4 -l-;J4l- ~ l,006 ~ ~ ~ ~ ~ ~ 8SUF6e: CeRstrHetisR lR8.l:Istrj Researe.k :BSB:f8.. City of Ciulla Yi~ta Building Permit Valuations :JIJ/J/J ;()(Jl = ;()(M JO()4 Resiat!Rtied Now Sffigl. Familj' $ 31 ~,G&5,~&6 $ 133,85G,&21 $ 113,617,&12 $ 1~8,G45,~31 $ 4.1,795,796 N.w M1f!tifumiPi 74,634,324 IG7,731,7G2 17,388,~3G 118,.&7,194 Hi~,;~5,819 Res. ~^1t &. f..dds H6l 879 79&7,G19 IG 3GI 3GI 13 277 257 16 7~5 '727 T eW ResieteRtial 3~8,583,189 51~,5.9,572 171,338,G73 63G,GIG,382 65U&7,172 } J emesiElentiaJ. }Je'~: Cammersial 17,916,085 22,139,215 2G,92.,.38 54,714,91G 12,176,5&~ NO'", lndHs!Ral 17,418,2g7 2,13~,313 737,.51 7,G71, 17g 4,751,G89 NO'''O!hl!f(l) 1 7,89G, Ig0 11,112,335 22,7e1,2l3 28,G63, 192 27,.37,&31 ..^..fters. &, 4^.4E!s. I G,527J 93 13 G91 60G I~ 367,574 16 2~O 192 19,.1.1.3 T.W NOR Resider.lta! 63,751,585 48,1&2,493 .3,793,G8. IG.,17G,157 91,181,972 ToWill BWlEliag $ 162,331,771 $ 598,G52,G65 $ 535,131,159 $ 73.,I&G,539 $ 715,569,114 Fifcal Year Nwnh". of Ruildi,"(7 p~ Ruildinv Permit Valuationf Percent of '"crea.li!' Over Pr'-V;nlLf Year ThIfIl Cnn'fltruction Valuation (f" Millinnd PerC(1!nl Chanvt! 2000-01 2001-02 2002-03 2003-04 2004-05 ~ ~ ~ ~ ~ $3.986.912 3.032.352 4.013.076 5.049.320 3.374.004 27.39% w,w J2.li 25.ll m.w $S11 5.4J. 662 826 ill 43.50% ~ ll...22 24.77 illJll A1 Iaeru.a8S eRurshes B:f1El rebigieus lm.ilffiBgs, ReSf'itals met i:B.stitutieRHl 1:railffings, sSfleels allEl eal:1sat:1.e:aal ea:Hemgs, resiEleffiiel gamges, pu.9Iie v;eFl~s BRa HtHities Enrilemgs ana He resieletltial altt!fatleR5 ana aaaitieR5. Nete: "TaW )Jllhilaing" is the sam sf ResiaeRtiad atla NanresiEleRtial BuilEling P~t "ITehJati.SRS. TaWs may Ret Baa te sums eee!l"l:ffie ef mElt!fJe:at:leRt felHl6ing, Semel!: CeRstru.eYeR I:n4ustf), R-ese8f"sh Beara. Sou up. Citv of Chllla Vida Finanrp. nenartmpnt and (;jtv of Chub Vida npnartmpnt ofPlanninu and Building DOCSOC/1147417v;~022245-0162 D-2 9 -/..)./ Employment The following table summarizes the labor force, employment and unemployment figures over the period 2000 through 2004 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 Employmenf') Unemployment') Unemployment Rati3) 2000 Chula Vista 79,400 76,000 3,400 4.2% San Diego COWlty 1,378,700 1,324,700 54,000 3.9% California 16,869,700 16,034,100 835,600 5.0% United StateS(4) 142,583,000 136,891,000 5,692,000 4.0% 2001 Chula Vista 81,200 77,500 3,700 4.5% San Diego COWlty 1,410,700 1,351,800 58,900 4.2% California 17,150,100 16,217,500 932,600 5.4% United States 143,734,000 136,933,000 6,801,000 4.7% 2002 Chula Vista 83,500 78,900 4,600 5.5% San Diego COWlty 1,449,800 1,375,400 74,400 5.1% California 17,326,900 16,165,100 1,161,800 6.7% United States 144,863,000 136,485,000 8,378,000 5.8% 2003 Chula Vista 84,600 79,900 4,700 5.6% San Diego COWlty 1,469,800 1,393,500 76,300 5.2% California 17,414,000 16,223,500 1,190,500 6.8% United States(4) 146,510,000 137,736,000 8,774,000 6.0% 2004 Chula Vista 86,000 81,600 4,400 5.1% San Diego COWIty 1,493,200 1,422,500 70,700 4.7% California 17,552,300 16,459,900 1,092,400 6.2% United States(4) 147,401,000 139,252,000 137,020,000 5.5% (1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. ~) The lUlemployment rate is computed ITom UIlfmmded data; therefore, it may differ from rates computed from rounded (4) figures in this table. Not strictly comparable with data for prior years Source: California Employment Development Department, based on March 2004 benchmark, and u.s. Department of Labor, Bureau of Labor Statistics. . DOCSOCI114 7417v'>~022245-0 162 D-3 '1 ~/).-.2- San Diego-Carlsbad-San Marcos Metropolitan Statistical Area ("MSA"), which iocludes Chula Vista, civilian labor force and wage and salary employment figures for calendar years 2000 through 2004 are shown io the following table. These figures are county-wide statistics and may not necessarily accurately reflect employment trends io Chula Vista. San Diego-Carlsbad-San Marcos MSA Civilian Labor Force, Employment and Unemployment Annual Averages, March 2004 Benchmark 1000 1001 1001 1003 1004 Civilian Labor Farce ] ,378,700 ],410,700 ],449,800 ],469,800 1,493,200 Civilian Emp]oyment ] ,324,700 ],35],800 ],375,400 ],393,500 ],422,500 Civilian Unemployment 54,000 58,900 74,400 76,300 70,700 Civilian Unemployment Rate 3.9% 4.2% 5.1% 5.2% 4.7% Total Farm 11,400 11,400 11,000 11 ,200 11,]00 Total Nonfarm ],193,800 ],2]8,400 ],230,700 ],240,]00 ],258,600 Total Private 987,200 1,004,700 ],011,000 ],022,900 ],043,900 Goods Producing ] 92,600 194,400 ]89,000 ] 85,800 192,000 Natural Resources and Mining 300 300 300 300 400 Construction 69,700 75,100 76,400 80,200 87,400 Manufacturing ] 22,600 119,000 11 2,300 ]05,300 104,200 Durab]e Goods 92,200 89,300 84,700 78,800 77,900 Nondurable Goods 30,400 29,800 27,700 26,500 26,300 Service Providing ],00],200 ],024,000 1,04],700 1,054,300 ],066,600 Private Service Producing 794,600 8]0,200 822,000 837,000 851,900 Trade, Transportation and Utilities 202,600 209,000 208,600 209,700 214,500 Who]esale Trade 39,100 4],500 4],300 4],600 4],900 Retail Trade 133,800 135,600 138,000 ]40,800 ]44,300 Transportation, Warehousiog and Utilities 29,800 32,000 29,300 27,300 28,400 Information 39,200 38,800 37,700 36,900 36,400 Financial Activities 7],200 72,000 75,000 79,900 8],600 Professional and Business Services ] 95,200 198,200 20],700 20],200 205,100 Educational and Health Services 11 5,300 116,000 11 9,700 ]2],800 12],300 Leisure and Hospitality ]29,000 13],400 133,800 ]40,700 ] 45,300 Other Services 42,200 44,900 45,600 46,800 47,700 Govenunent 206,600 213,800 2]9,700 2]7,300. 2]4,700 Total, All Industries ] ,205 ,200 ],229,800 ],24],700 ],25],300 ],269,700 Note: The "Total, All Industries" data is not directly comparable to the employment data found herein. Source: State of California, Employment Deve]opment Department, Labor Market Information Division, San Diego-Carlsbad- San Marcos MSA Annual Average Labor Force and Industry Employment, March 2004 Benchmark. DOCSOCII ]474] 7v'.~022245-0162 D-4 9-1.)3 The following listings set forth Chula Vista's principal employers for fiscal year ending June 30, ~2005: Chula Vista's Principal Employers Business Industrial/Office Name B,F,Rnhr DDA Goodrich Aerospace Sharp Chula Vista Medical Center Scripps Memorial Hospital United Parcel Service W.lm.rt # 2291 Sears Roebuck & Co. f, T C Va.aeom of Califomia L P Costco Wholesale Corp # ~lli ATe Vancom Inc. Costco Wholesale Corp..# 460 '}fa! MatlW.lm.rt Store # 3516 Heme D"l'<*#~58 Bayview Behavioral Health Campus Target # 203 Fedemted V.TestemPfepRome Denot 658ffinme Dennt USA Tne Raytheon Systems Company Target # 1815 Target # 204 Hitachi Home Electronics (America) Inc. Knotts Soak City USA Fredericka Manor Source: City of Chula Vista Finance Department. Effective Buying Income Type of Business Aerospace !",Ianufaeturiag Hospital Hospital Parcel Delivery Service ['...poP-Tal Merl.'handi~ General Merchandise TFallGit Camp""Y General Merchandise Genera) Merchandise General Merchandise General Merchandise Building Sup!,lies.<HaFdware Hospital Geal2!FllDenartment l\1ereilaOOi5eSton: D"l'artmeI>tGeneral .8tefeMerr.handisp. Communications Ge:aemlDenartmpnt Merolum<ti.aeSton: CeaefR1Denartmpnt I\TerohaiKftseSton: Home Electronics Entertaimnent - Theme Park Retirement Community No. of Employees +,<m.~ +,mMJJ! &M82!! e4%J1 4!ill 340 ;!84 :!8+m 2M 275 250 m 236 230 ;Will 200 194 180 163 160 160 "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 are 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." DOCSOCI1147417vJ~022245-0162 D-S 9 ~/~'f 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 2000 and 2004. Chula Vista, San Diego County and California Effective Buying Income(l) Median Per Capita Household Percent of Effective B'fting Effective Buying Effective Buying Households Income ~ Income Income over $50,000 2000 Clmla 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 55,210,119 19,092 44,146 42.0 California 650,521,407 18,652 43,532 41.9 2002 Chula Vista $ 2,864,900 $15,231 $40,578 37.0% San Diego County 54,831,958 18,524 42,315 39.7 California 647,879,427 17,737 42,484 40.5 2003 Chula Vista $ 3,420,253 $16,225 $42,389 39.9% San Diego County 57,680,880 19,407 43,346 41.4 California 674,721,020 18,821 42,924 41.2 2004 ClmlaVista $ 3,671,403 $17,375 $45,145 43.6% San Diego County 60,578,879 20,202 44,506 42.8 California 70,108,410 19,469 43,915 42.5 (t) Not comparable with prior years. Effective Buying mcome is now based on money income (which does not take into account sale of property, taxes and social security paid, receipt of food stamps, etc.) versus personal income. (') Dollars in 1housands. Source: "Survey of Buying Power," Sales & Marketing Management Magazine, dated 2001, 2002, 2003, 2004 and 2005. Sales Taxes The following table shows taxable transactions in Chula Vista by type of business during calendar years -l9-992OO!1 through ;ww.,2001. As indicated below, total retail sales for Chula Vista in 2999 mareas_ei BY appreximately 19.11%, oyer the 1999 I_':el, in 2001 increased approximately 4.98% over the 2000 level, in 2002 increased approximately 2.42% over the 200 I level, BRd-in 2003 increased approximately 7.41 % over the 2002 level, and in 2004 increased annroximatelv 11.64% over 2003. DOCSOCI1147417v;~022245-0162 D-6 - 9 -/.2 !;.> A summary of historic taxable transactions for Chula Vista is shown in the following table. City of Chula Vista Taxable Transactions (Dollars in thousands) J1)l)I) 1000 2001 1001 1003 ZfJ1M Apparel Stores Group $ 61,758 $ 66,598 $ 61,937 $ 67,035 $ 67,114 $ 82165 General Merchandise Stores 139,731 495,679 524,942 525,423 553,979 609 028 Food Stores Group 85,662 90,487 92,224 99,897 103,155 1 06 056 Eating and Drinlcing Group 112,329 155,583 164,417 169,892 188,675 213 412 Household GrouplHome Furn. 61,923 66,365 67,827 74,255 78,561 87.203 Appli. Building Material Group 87,9Q2 102,370 97,827 91,235 100,504 142.321 Automotive Group 128,3Q1 145,923 151,812 156,872 178,733 191.185 Service Stations 95,518 121,244 119,050 123,636 148,318 174968 Other Retail Stores 139 g37 157152 183 303 205.564 223.850 239 235 Retail Stores T ota! $ 1,21g,992 $ 1,401,401 $ 1,463,409 $1,513,809 $1,642,889 $ 1 845 573 All Other Outlets 2153% 206.889 225 .256 215349 214344 227767 Total All Outlets $1158388 $ 1 608290 $ 1 688 665 $1729 ]58 $ 1 857 233 $ 2.073 340 Note: Drugs stores are grouped with the General Merchandise Stores and package liquor stores are grouped with the Eating and Drinking Group. Source: State Board of Equa1ization. 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 Traioiog Center. Transportation . U.S. Highways 5 (along the coast) and 805 (ioland) 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. Utilities Electric power and natural gas are provided by San Diego Gas and Electric. Pacific Bell provides telephone service to the area. Otay Water District and Sweetwater Water District provide water service and Chula Vista provides sewer service. DOCSOC/ll4 7417v"~02224 5-0162 D-7 9 ~/.2h APPENDIX E SUMMARY OF INDENTURE The following is a summary of certain provisions of the Bond Indenture (the "Indenture") not otherwise summarized in the text of this Official Statement. This summary is not intended to be definitive, and reference is made to the complete text of each of such documents for the complete terms thereof DOCSOCI1147417v;~022245-0162 E-I 4-/;.)..7 / APPENDIX F CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT . This Continuing Disclosure Agreement dated as of March 1, 2006 (the "Disclosure Agreement") is executed and delivered by Community Facilities District No. l3-1 (Otay Ranch Village Seven) (the "Issuer'') and NBS Government Finance Group as dissemination agent (the "Dissemination Agent"), in connection with the issuance and delivery by the Issuer of its $ 2006 Special Tax Bonds (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2006 (the "Indenture"), by and between the Issuer and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"). The Issuer and the Dissemination Agent covenant as follows: SECTION 1. Puroose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer 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 uuless 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. "Central Post Office" shall mean the Disclosure USA website maintained by the Municipal Advisory Council of Texas or any successor thereto, or any other organization or method approved by the staff or members of the Securities and Exchange Commission as an intermediary through which issuers may, compliance with the Rule, make filings required by this Disclosure Agreement. "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, NBS Government Finance Group, 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. "District" shall mean Community Facilities District No. l3-1 (Otay Ranch Village Seven). "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 ~ 2006 relating to the Bonds. DOCSOCIl147417v;~022245-0162 F-l 9~/.2B " "Participating Underwriter" shall mean Stone & Youngberg LLC, whose address for purposes of this Agreement is One Ferry Bllilding, San Francisco, Califorma 94111, Attention: Research Department. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State of Califorma 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. "Ta..,,-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 Dissenrination Agent to, not later than February I after the end of the Issuer's fiscal year (which currently ends on June 30), commencing with the report due by February I, 2007, 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 ITom and later than the balance of the Annual Report if they are not available by the date reqillred 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 ITom July I 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 of a 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. If by fifteen (15) Business Days prior to such date the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to 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 to the effect that such Annual Report constitutes the Annual Report reqillred to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date reqillred 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/1147417v:;~022245-0162 9 ~/..J'J (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. (e) Notwithstanding any other provision of this Disclosure Agreement, the Issuer and the Dissemination Agent reserve the right to make any of the aforementioned filings through the Central Post Office. SECTION 4. reference: Content of Annual Reuorts. The Issuer's Annual Report shall contain or include by (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. 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 2 in the Official Statement; provided however that such update will not be required after the construction of the public improvements to be constructed with the proceeds of the Bonds is completed; (iv) any changes to the Rate and Method of Apportionment of the Special Taxes approved or submitted to the qualified electors for approval prior to the filing of the Annual Report and a description of any parcels for which the Special Taxes have been prepaid in the Fiscal Year for which the Annual Report is being prepared; (v) an update of the estimated assessed value-to-lien ratios within the District 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 substantially in the form set forth in Table 7; provided, however, that all parcels which constitote Developed Property may be grouped as a single category; (vi) an update of Table 3 in the Official Statement, including (a) the percentage of Special Taxes payable by individual homeowners as a group, and (b) a list of all taxpayers within the DOCSOC/1147417v;~022245-0 162 F-3 '1 -/.:30 -----:--:-< Dis1rict which own property in the Dis1rict upon which 5% or more of the total Special Taxes for the current fiscal year have been levied, and a statement as to whether any of such taxpayers is delinquent in the payment of Special Taxes; (vii) any event known to the Issuer which reduces or slows the number of residential units permitted to be constructed within the Dis1rict or which results in a moratorium on future building within the Dis1rict ; (viii) the statos 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 Ta:'{es 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: (I) principal and interest payment delinquencies. (2) an event of default under the Indenture other than as described in (I) 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) the Bonds. adverse tax opinions or events adversely affecting the tax-exempt statos of (7) modifications to the rights of Bond Owners. unscheduled redemption of any Bond. (8) (9) defeasances. F-4 DOCSOCIl147417vJ~022245-0162 4-/3/ F (10) any release, substitution, or sale of property secunng repayment of the Bonds. (11) rating changes. (b) The Dissemination Agent shall, promptly upon the obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and 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 (t). (c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Dissemination 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 (t). (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 (t). (t) 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 (ii) the Central Post Office or (iii) 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 (t) 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 RetJorting Oblieation. The obligation of the Issuer 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 fmal 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 Aeent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Fiscal Agent shall be the Dissemination Agent. The initial Dissemination Agent shall be NBS Government Finance Group. 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: (I) such amendment is made in connection with a change in circumstances that arises from a change in legal DOCSOCI1147417v:;~022245-0162 F-5 '1-/3.2-. (including regulatory) requirements, a change in law (including rules or regulations) or in interpretations thereof, or a change in the identity, natore 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 circumstances, (3) the Issuer shall have delivered to the Fiscal Agent an opinion of a nationally recognized bond counselor 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 counselor 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 Indentore with the consent of the Owners of the Bonds, provided that the conditions set forth in Section 8(a)(l), (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 fmancial 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 of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Agreement to update such information or include it in any futore 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 IOb-5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Issuer under such laws. SECTION 10. Default. In the event of a 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 Indentore, 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. F-6 DOCSOCI114 7417v~~02224 5-0 162 9-/33 SECTION II. Duties. Immunities and Liabilities of Fiscal Agent and Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnifY and save the Dissemination Agent and its 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 negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schednle of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination 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 Chnla Vista 276 Fourth Avenue Chula Vista, California 9191 0 Dissemination Agent: NBS Government Finance Group 32605 Highway 79 South, Suite 100 T emecnla, California 92592 Attention: Greg Ghironzi 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. COMMUNITY FACILITIES DISTRICT NO. 13-1 (Otay Ranch Village Seven) By: Assistant Director of Finance NBS GOVERNMENT FINANCE GROUP, as Dissemination Agent By: Authorized Officer F-7 DOCSOCI1147417vJ~022245-0162 7' -/3{ EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT . Name ofIssuer: Community Facilities District No. 13-1 (Otay Ranch Village Seven) Name of Bond Issue: $ City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds Date ofIssuance: ~ 2006 NOTICE IS HEREBY GIVEN that the Community Facilities District No. 13-1 (Otay Ranch Village Seven) 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 March 1, 2006, by and between the District and NBS Government Finance Group, as dissemination agent. [The District anticipates that the Annual Report will be filed by .] Dated: NBS GOVERNMENT FINANCE GROUP, as Dissemination Agent cc: City of Chula Vista Stone & Youngberg LLC . DOCSOC/114 7417v:;~022245-O] 62 F-8 9-/-35 APPENDIX G CONTINUING DISCLOSURE AGREEMENT OF mE MERCHANT BUILDERS This Continuing Disclosure Agreement (the "Disclosure Agreement") dated as of March I, 2006 is executed and delivered by (iodividually a "Merchant Builder" and collectively, the "Merchant Builders"), and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent") and as dissemination agent (the "Dissemination Agent"), io connection with the execution and delivery by Community Facilities District No. 13-1 (Otay Ranch Village Seven) (the "District") $ aggregate priocipal amount of its City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds (the "Bonds"). The Bonds are being executed and delivered pursuant to an Indenture dated as of March 1, 2006 by and between the District and U.S. Bank National Association, as Fiscal Agent (the "Indenture"). The Merchant Builders covenant and agree as follows: SECTION 1. Pumose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Merchant Builders for the benefit of the Bondowners and Beneficial Owners and in order to assist the Participating Underwriter in complying with S.E.e. Rule 15c2-12(b)(5). This Disclosure Agreement does not address additional undertakings, if any, by or with respect to persons other than the Merchant Builders 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. Defiuitions. In addition to the defiuitions 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 meauings: "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 io no case shall the District be deemed to be an Affiliate of the Merchant Builders for purposes of this Disclosure 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 iodirectly, to make investment decisions conceruing ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "City" shall mean the City of Chula Vista, Califoruia. "Dissemination Agent" shall mean U.S. Bank National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemioation Agent designated in writing by the Merchant Builders and which has filed with the Merchant Builders and the City a written acceptance of such designation. "District" shall mean Community Facilities District No. 13-1 (Otay Ranch Village Seven). "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-votiog) and (b) all warrants, options and other rights to acquire any of the foregoing. DOCSOCI1147417v;~022245-0162 G-I ,.- -?' ;-"l'~.' ~ "Fiscal Year" shall mean the period beginning on July I of each year and ending on the next succeeding June 3 o. "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 Mnnicipal Securities Information Repository for purposes of the Rule. "Official Statement" shall mean the Official Statement, dated ~ 2006, relating to the Bonds. "Participating Underwriter" shall mean Stone & Youngberg LLC, the original ooderwriter of the Bonds, whose address for purposes of this Disclosure Agreement is One Ferry Building, San Francisco, California 94111, Attention: Research Department, and any other underwriting firm that provides written notice to the Merchant Builders that they are 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 ITom time to time. "Semi-Annual Report" shall mean any Semi-Annual Report provided by the Merchant Builders 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 Reoorts. . (a) The Merchant Builders shall, or shall cause the Dissemination Agent to, not later than February I and August I of each year, commencing August I, 2006, 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 other information as provided in Section 4 of this Disclosure Agreement provided that the audited fmancial statements, if any, of the Merchant Builders may be submitted separately ITom the balance of the Semi-Annual Report due in August of each year and later than the date required for the filing of the Semi-Annual Report due in August of each year if they are not available by that date. (b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Semi-Annual Report to Repositories, the Merchant Builders shall provide the Semi-Annual G-2 DOCSOCI1147417v"~022245-0162 <1-/37 ., Report to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Merchant Builders are preparing, or causing to be prepared, the Semi -Annual Report and the date which the Semi- Annual Report is expected to be available. Ifby 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 Merchant Builders to determine if the Merchant Builders are 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) me a report with the Merchant Builders 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 Revort. The Merchant Builders' Semi-Annual Report shall contain or include by reference the information which is available as of April~ I and OoteeefJanuarv I 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 Stody" and a discussion of the sources of funds to finance development relating to their property within the District, and whether any material defaults exist under any loan arrangement related to such financing. b. A summary of development activity for property owned by the Merchant Builders within the District, 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 by the Merchant Builders including the amount ofland or lots sold and the name of the purchaser oflots to be developed. c. Statos of any material governmentally-iroposed preconditions for commencement or continuation of development of the undeveloped parcels within the District owned by the Merchant Builders and which is known to the Merchant Builders. d. Statos of any material legislative, admiuistrative and judicial challenges known to the Merchant Builders affecting the construction of the site improvements and residential uuits in the District, other than the public improvements described in ( e) below (the "Merchant Builders Improvements"). e. Statos of completion of the public improvements financed by the Bonds and any material legislative, adruiuistrative and judicial challenges known to the Merchant Builders to or affecting the construction of such public improvements (the "District Improvements"). f. Any material amendments to land use entitlements for the property owned by the Merchant Builders within the District or Special Tax rate and method of apportionment with respect to parcels within the District that are known to the Merchant Builders, including (i) a description DOCSOC/1147417v;~022245-0162 G-3 '1-/31 of any amendment to the rate and method that affects the total number of acres subject to the levy of the Special Taxes, and (ii) a listing of any acreage that has become exempt from the levy of Special Taxes. g. In the Semi-Annual Report due in August of each year only and until such time as the Merchant Builders and their 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 Merchant Builders and their 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 Merchant Builders have audited financial statements prepared and the audited fmancial 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 audited financial . statements for the preceding year, and the audited fmancial statements shall be filed in the same manner as the Semi-Annual Report when they become available. The Merchant Builders need only provide audited or unaudited data once per year. h. The filing of any lawsuit against the Merchant Builders or otherwise known to the Merchant Builders which will materially adversely affect the completion of the District Improvements, the Merchant Builders Improvements or the development of undeveloped parcels within the District, or litigation which would materially adversely affect the financial condition of the Merchant Builders or its Affiliates that own property within the District. . 1. A payment default by the Merchant Builders on any loan made to the Merchant Builders (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 fmal official statement, it must be available from the Muuicipal Securities Rulemaking Board. The Merchant Builders shall clearly identify each such other document so included by reference. SECTION 5. Renorting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Merchant Builders 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 Merchant Builders or any of their Affiliates; 2. A payment default by the Merchant Builders or any Affiliate on any loan secured by property within the District owned by the Merchant Builders or any of their Affiliates which is beyond any applicable cure period in such loan; 3. The filing of any proceedings with respect to the Merchant Builders or any of their Affiliates, in which the Merchant Builders or any of their Affiliates that own property within the District may be adjudicated as bankrupt or discharged from any or all of their respective debts or DOCSOCI1147417v:>~022245-0162 G-4 9'-/-39 obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts; and 4. an Mfiliate. A sale or transfer of a majority interest in a Merchant Builder to an entity that is not (b) Whenever the Merchant Builders obtain knowledge of the occurrence of a Listed Event, the Merchant Builders shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) If the Merchant Builders determine that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Merchant Builders 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. SECTION 6. Termination of Reporting Obligation. A Merchant Builder's obligations under this Disclosure Agreement shall terminate upon any of the following events: (a) the legal defeasance, priorredemption or payment in full of all of the Bonds, (b) ID,if as of the date for filing the Semi-Annual Report such Merchant Builder and its Mfiliates (exclusive of Affiliates filiop' a Semi-Annual Renort under a senarate Continuinp' Disclosure Ap"reement) 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, ana the MOfCflllRt Bailaers IllIi'rovementc lIRa IIRj' District Improyemoots te be or (ii) if all residential units constructed by 5tiehth!: Merchant Builder in the District have been c81l1i'loteasold and conveved to individual homeowners, or ( c) upon the delivery by the Merchant Builders 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 Merchant Builders or a private letter ruling obtained by a similar entity to the Merchant Builders. If such termination occurs prior to the final maturity of the Bonds, the Merchant Builders shall give notice of such termination in the same manner as for a Semi-Annual Report hereunder. SECTION 7. Dissemination Agent. The Merchant Builders may !Tom 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 Merchant Builders, the Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Merchant Builders pursuant to this Disclosure Agreement. The Merchant Builders has iuitially appointed U.S. Bank, N.A as the Dissemination Agent hereunder. SECTION 8. Amendment: Waiver. Notwithstanding any other provlSlon of this Disclosure Agreement, the Merchant Builders 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 !Tom a change in legal requirements, change in law, or change in the identity, nature or statos of an obligated person with respect to the Bonds, or the type of business conducted; DOCSOCIl147417v,,~022245-0162 G-5 9" -/L. :) , (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 Indenture for amendments to the Indenture 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 Merchant Bnilders, 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 Merchant Bnilders 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 fmancial information or operating data being presented by the Merchant Builders. 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-AmIual 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 fmancial 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 Merchant Builders 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 reqnired by this Disclosure Agreement. If the Merchant Bnilders choose 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 Merchant Builders 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. . SECTION 10. Default. In the event of a failure of the Merchant Builders 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 Merchant Bnilders 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 Agreenient in the event of any failure of the Merchant Bnilders to comply with this Disclosure Agreement shall be an action to compel specific performance. SECTION II. 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 Merchant Builders agree to indemnify and save the Dissemination Agent, its officers, directors, employees and agents (the "Indemnified Parties"), 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 any Indemnified Party's negligence or willful misconduct. The Dissemination Agent shall not be deemed to be DOCSOCIl14 7417v'>~022245-0 162 G-6 9'-/ .y.'/ acting in any fiduciary capacity for the Merchant Builders, 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 Merchant Builders or an opinion of nationally recognized bond counsel. The obligations of the Merchant Builders under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Indemnified Parties will not, without the Merchant Builders' prior written consent, settle, compromise or consent to the entty 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 Merchant Builders and their controlling persons from all liability arising out of such claim, action or proceedings. If a claim, action or proceeding is settled with the consent of the Merchant Builders or if there is a final judgment (other than a stipulated fmal judgment without the approval of the Merchant Builders) for the plaintiff in any such claim, action or proceeding, with or without the consent of . the Merchant Builders, the Merchant Builders agree to indemnifY and hold harmless the Dissemination Agent to the extent described herein. SECTION 12. Reoorting Obligation of Merchant Builders' Transferees. The Merchant Builders 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 Merchant Builders) 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 and any such Mfiliate agrees to be bound by the obligations under such disclosure agreement. Additionally, the Merchant Builders shall, in connection with any sale or transfer of ownership ofland 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 transferee agrees to provide the information of the type described in Sections 4 and 5 of this Disclosure Agreement, other than Section 4(e) 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 together becoming responsible for the payment of less than 20 percent of the annual Special Taxes. A memorandum regarding the Merchant Builders' obligations under this Disclosure Agreement may be recorded in the Official Records in the office of the County Recorder of the County of San Diego. SECTION 13. Merchant Builders as Indeoendent Contractors. In performing under this Disclosure Agreement, it is understood that the Merchant Builders are an independent contractors and not agents of the City or the District. SECTION 14. Notices. Notices required by this Disclosure Agreement shall be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing: Dissemination Agent: U.S. Bank National Association 633 West Fifth Street, 24th Floor Los Angeles, CA 90071 Attention: Corporate Trust DOCSOCI1147417v,,~022245-0162 G-? f-/c/ .2- Merchant Builders: ] Attention: District: City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attention: Finance Department Re: Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds . Participating Underwriter: Stone & Youngberg LLC One Ferry Building San Francisco, CA 94111 Attention: Research Department SECTION 15. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Merchant Builders, the City, the Dissemination Agent, the Participating Underwriter and Bondowners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 16. Counteroarts. 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. ], a Delaware limited liability company By: Its: . By: Its: U.S. BANK NATIONAL ASSOCIATION By: Its: DOCSOC/1147417vJ2I022245-0162 G-8 9-/.;.;:3 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE SEMI-ANNUAL REPORT Name of the Issuer: Community Facilities District No. 13-1 (Otay Ranch Village Seven) City of Chula Vista, California Name of Bond Issue: City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds Date ofIssnance: ~ 2006 NOTICE IS HEREBY GIVEN that the Merchant Builders have not provided a Semi-Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement. [The Merchant Builders anticipate that such Semi-Annual Report will be filed not later than .J Dated: u.S. BANK NATIONAL ASSOCIATION By: cc: City of Chula Vista, California Stone & Youngberg LLC DOCSOCI1147417v~~022245-0162 G-9 9-/'~l APPENDIX H FORM OF OPINION OF BOND COUNSEL [Closing Date] Mayor and City Council City of Chula Vista 276 Fourth Avenue Chula Vista, CA BOND OPINION $ CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13.1 (OTA Y RANCH VILLAGE SEVEN) 2006 SPECIAL TAX BONDS Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by Community Facilities District No. 13-1 (Otay Ranch Village Seven) (the "District") situated in and formed by the City of Chula Vista, County of San Diego, State of California, of $ aggregate principal amount of the City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds (the "Bonds"). The Bonds are issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part I of Division 2 of Title 5 of the Government Code of the State of California (the "Act"), a resolution adopted by the City Council on ~ 2006 (the "Resolution"), and a Bond Indenture, dated as of March I, 2006 (the "Bond Indenture"), between the District and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"). We have examined the Act, the Resolution, the Bond Indenture and certified copies of the proceedings taken for the issuance and sale of the Bonds. As to questions of fact which are material to our opinion, we have relied upon the representations of the District and the City of Chula Vista without having undertaken to verify the accuracy of any such representations by independent investigation. Based upon such examination, we are of the opinion, as of the date hereof, that the proceedings referred to above have been taken in accordance with the laws and the Constitution of the State of California, and that the Bonds, having been issued in duly authorized form and executed by the proper officials and delivered to and paid for by the purchaser thereof, and the Bond Indenture having been duly authorized and executed by the proper official, constitute the legally valid and binding obligations of the District enforceable in accordance with their terms subject to the qualifications specified below. Except where funds are otherwise available, as may be permitted by law, the Bonds are payable, as to both principal and interest, solely from certain special taxes to be levied and collected within the District and other funds available therefor held under the Bond Indenture. The Internal Revenue Code of 1986, as amended (the "Code"), sets forth certain investment, rebate and related requirements which must be met subsequent to the issuance and delivery of the Bonds for the interest on the Bonds to be and remain exempt from federal income taxation. Noncompliance with such requirements could cause the interest on the Bonds to be subject to federal income taxation retroactive to the DOCSOC/1 147417v~~022245-0162 H-I 9 ,;/- -/w'.<. / / ..,,; date of issuance of the Bonds. Pursuant to the Bond Indenture, the District has covenanted to comply with the requirements of the Code and applicable regulations promulgated thereunder. We are of the opinion that, under existing statutes, regulations, rulings and court decisions, and assuming compliance by the District with the aforementioned covenant, the interest on the Bonds is excluded from gross income for purposes of federal income taxation and is exempt from personal income taxation imposed by the State of California. Weare further of the opinion that interest on the Bonds is not a specific preference item for purposes of the alternative minimum tax provisions of the Code. However, interest on the Bonds received by corporations will be included in corporate adjusted current earnings, a portion of which may increase the alternative minimum taxable income of such corporations. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount, and the amount of original issue discount that accrues to the owner of the Bond is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative .minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. Although interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrnal or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these tax consequences will depend on the recipieut's particular tax status or other items of income or deduction. We express no opinion regarding any such consequences. The opinions expressed herein may be affected by actions which may be taken (or not taken) or events which may occur (or not occur) after the date hereof. We have not undertaken to det=ine, or to inform any person, whether any such actions or events are taken or occur or are not taken or do not occur. The rights of the owners of the Bonds and the enforceability of the Bonds and the Bond Indenture may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted, and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity. Respectfully submitted, Best Best & Krieger, LLP DOCSOCI1147417v;;~022245-0162 H-2 9-fllb APPENDIX I DTC AND THE BOOK ENTRY SYSTEM The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTe. 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 17 A 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 countries that DTe'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, throngh 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 Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries ofDTCC), 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 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the 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 DTe. 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 actua1 Beneficial Owners of the Bonds; DTe's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which mayor 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. DOCSOCII14 7417v;~022245-0 162 I-I 9-1'17 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 ITom time to time. Beneficial Owners of the 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 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 such other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.' s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information ITom the District or the Fiscal Agent, on payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in effect ITom 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 shaIl 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. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, physical Bonds will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained ITom sources that the District believes to be reliable, but the District takes no responsibility for the accuracy thereof. 1-2 ., DOCSOC/1147417v;;~022245-0162 q ,"-.;.' ... .f "'''<1 / . . . arison done by DeltaView on Wednesda , March 08, 2006 11 :53:07 AM cdocs:/Idocsocl1147417/3 cdocs:/Idocsocl114 7 417/5 SYCR 1 Insertion Deletion Movea from t=:;':~'~.::':{:~.~.J.,,:k.k~t:.;;1,;. - Count Insertions Deletions Moved from Moved to St Ie chan e Format changed Total chan es 581 484 o o o o 1065 4 ,~ 'J a-I- '. / J.. i' EX )-1115) T 5 BOND INDENTURE by and between Community Facilities District No. 13-1 (Otay Ranch Village Seven) and u.S. Bank National Association, As Fiscal Agent Dated as of April 1, 2006 Re. $ City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds MSHAH\706289.2 9-/5V TABLE OF CONTENTS . Pal!e ARTICLE I. DEFINITIONS ...................................................................................................1 SECTION 1.01 DEFINITIONS. .... ... ..... ... ... ..... ....... ... ...... ... .... ............. ... ... ... .... ... ... ... .... ...... ......1 ARTICLE n. GENERAL AUTHORIZATION AND TERMS............................................ 14 SECTION2.01 AMOUNT, ISSUANCE AND PURPOSE. ..............................................................14 SECTION 2.02 TYFEAND NATIJRE OF BOND. .......................................................................14 SECTION 2.03 TERMS OF mE BONDs. .................................................................................15 SECTION2.04 DESCRIPTION OF BONDs; INTEREST RATES. ...................................................15 SECTION 2.05 PAYMENT... .... ... .... .... .... ........... ... ......... .... ....... .... ............ ....... ...... ... ... ... ...... 15 SECTION 2.06 ExECUTION OF BONDs. .............. ... ...... ... .... .... .... ... ...... ..... ................. ...... ...... 16 SECTION2.07 ORDER TOPRlNT ANDAUTIffiNTICATE BONDs................................................ 16 SECTION 2.08 BOOKS OF REGISTRATION; BOOKENIRY SYSTEM. .........................................16 SECTION 2.09 ExCHANGE OF BONDs. ... ..... ... .... ........... .... .... .... ... ...... ........ .............. ....... ..... 18 SECTION 2.10 NEGOTIABILITY, REGISTRATION AND TRANSFER OF BONDs............................. 18 SECTION 2.11 AUTIffiNTICATION.... ....... ..... ....... ......... ...... .... ..... ... ... ... ............. ............... ..... 19 ARTICLE m. FUNDS AND ACCOUNTS...........................................................................20 SECTION 3.01 ESTABLISHMENT OF SPECIAL FUNDS..... ....... ........ .... ........ ........ ...... ...... ...... .... 20 SECTION 3.02 SPECIAL TAX FUND. . ....... ...... ......... ...... ... ........... .... ...... ... ....... ............ ...... .... 20 SECTION 3.03 DEBT SERVICE FUND. ............ ... ... ... ... ... ... .... ........ ... ...... ... .... ... ... ... ...... ...... .... 22 SECTION 3.04 COSTS OF ISSUANCE FUND. ... ............. ... ... .... .... .... ... ...... ... ....... ... ........ .... .......22 SECTION 3.05 PROJECT FUND..... ..... ... ... ..... .......... ... ...... .... ........ .... ........ .......... ...... .... .........22 SECTION 3.06 RESERVE FUND. ........ ....... ..... ... ... ............ .... ........ .... ........ .......... ............ .......25 SECTION 3.07 REBATE FUND... .... .......... ..... .... ............ ... .... ..... ... ..... ....... ........ ...... ...............26 SECTION 3.08 REDEMPTION FUND. .. .... ..... ...... ...... ...... ... .... ......... .... ....... ... ..... ...... ... ............26 SECTION 3.09 ADMINISTRATIVE EXPENSE FUND.... ... ... ... .... ..... .... ......... ....... ... ...... ...... .........26 SECTION 3.10 INVESTMENT OF FUNDS. ...............................................................................26 SECTION 3.11 DIsposmoN OF BOND PROCEEDS. ................................................................27 ARTICLE IV. REDEMPTION .............................................................................................29 SECTION 4.01 NOTICE OF REDEMPTION.................... ...... .... ......... ...... ... .......... ....... ... ..... ......29 SECTION 4.02 EFFECT OF REDEMPTION....................... ....... ............... ... ..... ............... ..... ......30 SECTION 4.03 REDEMPTION PRICES AND TERMS. ................................................................. 30 ARTICLE V. SUPPLEMENTAL INDENTURES............................................................... 34 SECTION 5.01 AMENDMENTS OR SUPPLEMENTS. ................................................................. 34 ARTICLE VI. MISCELLANEOUS CONDITIONS ..........................................................36 SECTION 6.01 OWNERSHIP OF BONDs. .............................................................................. 36 SECTION 6.02 MUTILATED, LOST, DESTROYED OR STOLEN BONDs....................................... 36 SECTION 6.03 CANCELLATION OF BONDs. .................................. ........................................ 36 SECTION 6.04 COVENANTS.................................... ... ........... .................................... ...........36 SECTION 6.05 ARBITRAGE CERTIFICATE.. ................................... .. ................................40 MSHAH\706289.2 (i) 9-/51 TABLE OF CONTENTS (Continued) Pa!!e SECTION 6.06 DEFEASANCE......... ... ..... .... ....... ...... ...... .... .... ..... ......... ... ...... ........ .......... ......40 SECTION 6.07 FISCAL AGENT. .. ... .... ..... ... ... .... ....... ........ ........ ... ......... ..... ... ........ ........... ......41 SECTION 6.08 LIABILITY OF FISCAL AGENT. .......................................................................42 SECTION 6.09 PROVISIONS CONS1ITUTE CONTRACT..... ....... ...... ..... ....... ... ........ .......... ... .......43 SECTION 6.10 CUSIP NUMBERS. ........ .......... ......... .... .......... .......... .... ...... ......... ... .... ... ....... 44 SECTION 6.11 SEVERABILITY. .............................................................................................44 SECTION 6.12 UNCLAIMED MONEY. ...................................................................................44 SECTION 6.13 NONPRESENTMENT OF BONDs. ......................................................................44 SECTION 6.14 CONTINUING DISCLOSURE. ............................................................................45 ARTICLE VII. BOND FORM .............................................................................................. 47 SECTION 7.01 FORM OF BONDs. ............................... ........ ............ ..... ........ .................. ....... 47 SECTION 7.02 TEMPORARY BONDs... ..... ....... ............ ....... ..... .......... ......................... ........... 47 ARTICLE VIII. EVENT OF DEFAULT .............................................................................48 SECTION 8.01 EVENTS OF DEFAULT. ...................................................................................48 SECTION 8.02 APPLICATION OF REVENUES AND OTHER FUNDS AFTER DEFAULT ...................48 EXHIBIT "A" - FORM OF BOND ........................................................................................A-l EXHIBIT "B" - FORM OF REQUISITION FOR COST OF ISSUANCE.............................. B-1 EXHIBIT "c" - FORM OF REQUISITION FOR COSTS FROM ACQUISITION ACCOUNT ... ...... ... ... ..... ... ..... .............. ......... ........ ... ............. ......... ... ...... C-l EXHIBIT "D" - FORM OF REQUISITION FOR COSTS FROM TRANSPORTATION FACILITIES ACCOUNT................ ....................................................... D-l EXHIBIT "E" - FORM OF REQUISITION FOR COSTS FROM THE PUBLIC FACILITIES ACCOUNT ... ........... ......... ......... ...... ................... .............. E-I MSHAH\706289.2 (ii) of"""' ) C:;-,/:;;;~ / BOND INDENTURE This Bond Indenture dated as of April 1, 2006, is entered into by and between Community Facilities District No. 13-1 (Otay Ranch Village Seven), a community facilities district organized and existing under the laws of the State, and U.S. Bank National Association, 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. "AcquisitionlFinancing Agreement" means that certain AcquisitionlFinancing Agreement made and entered into on April 1 , 2006 by and between the City, acting on behalf of itself and the District, and Otay Project, L.P., a California limited partnership, 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 ofthe 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 or incurred in participating in and responding to an audit by the Internal Revenue Service; 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 laws and ofthe 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 Otay Project, L.P. 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 MSHAH\706289.2 1 9./5~ Agent, to be allocated as the first priority of Special Taxes received each Fiscal Year for the payment of Administrative Expenses. "Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year, including ITom mandatory sinking fund payments. "Assistant Director of Finance" means the Assistant Director of Finance of the City. "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 in writing by the City Manager or the Director of Finance 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 oflaw before the highest court of the State. "Bondowner" or "Owner", or any similar term, means any person who shall be the registered owner or his duly authorized attorney, trustee, representative or assign of any Outstanding Bond which shall at the time be registered. "Bonds" means the $ City ofChula Vista Community Facilities District 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds issued pursuant to this Indenture. "Bond Year" means each twelve-month period extending ITom September 2 in one calendar year to September I of the succeeding calendar year, except in the. case of the initial Bond Year which shall be the period ITom the Delivery Date to September 1,2006. "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 Debt Service Fund established pursuant to Section 3.0 I 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. MSHAH\706289.2 2 q -/:;;f I . "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 and any supplemental indenture, the Bonds, and any and all other agreements, instruments, certificates or other documents issued in connection therewith; any computer and other expenses incurred in connection with the Bonds; the initial fees and expenses of the Fiscal Agent (including without limitation, acceptance fees and first annual fees payable in advance); and other fees and expenses incurred in connection with the formation of the District and the issuance of the Bonds, to the extent such fees and expenses are approved by the District. "Costs ofIssuance 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. "Debt Service Fund" means the fund created and established pursuant to Section 3.01 hereof . "Debt Service on Parity Refunding Obligations" means the gross debt service due in any Bond Year on any refunding bonds or other refunding obligations which have, or purport to have, a lien upon the Net Special Tax Revenues on a parity with the lien of the Bonds. "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 ftom the redemption of delinquent Special Taxes including the penalties and interest thereon and ftom the sale of property sold as a result of the foreclosure of the lien of the Special Tax resulting ftom the delinquency in the payment of Special Taxes due and payable on such property. . "Delivery Date" means the date on which the Bonds are issued and delivered to the initial purchaser thereof "Depository" shall mean DTC and its successors and assigns or if (a) the then Depository resigns ftom 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 Director of Finance of the City, acting for and on behalf of the District. "District" means Community Facilities District No. 13-1 (Otay Ranch Village Seven) situated in and formed by the City of Chula Vista, California. "DTC" shall mean The Depository Trust Company, New York, New York, and its successors and assIgns. MSHAH\706289.2 3 9~/f.;.G . "Fiscal Agent" means U.S. Bank National Association, and any successor thereto. "Fiscal Year" means the 12 month period beginning July 1 of each year and terminating on June 30 of the following year, or any other annual accounting period hereinafter selected and designated by the District as its fiscal year in accordance with applicable law. "Government Obligations" means obligations described in Paragraph 1 of the definition of Permitted Investments. "Gross Proceeds" has the meaning ascribed to such term in Section 148(f)(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 - I. 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, 2006. "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. MSHAH\706289.2 4 9-15t~ "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. "Net Special Tax Revenues" means the Special Tax Revenues minus amounts applied annually to fund the Administrative Expense Requirement. "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; 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 MSHAH\706289.2 5 9-/G7 . underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated. 2. Federal Housing Administration debentures. 3. The listed obligations of government-sponsored agencies which are not backed by the full faith and credit of the United States of America: A. Federal Home Loan Mortgage Corporation (FHLMC) (1) Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) (2) Senior Debt obligations B. Farm Credit Banks (formerly: Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) (1) Consolidated system-wide bonds and notes C. Federal Home Loan Banks (FHL Banks) (1) Consolidated debt obligations D. Federal National Mortgage Association (FNMA) (1) Senior debt obligations (2) Mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts) E. Student Loan Marketing Association (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 MSHAH\706289.2 9~/s;-f 6. Commercial paper (having original maturities of not more than 270 days rated "A-I" by S&P and "Prime-I" by Moody's. 7. Money market funds rated "AAm-l" 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 "AJ" by Moody's and "A:' by S&P, or better, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated. B. Direct general short-term obligations of any state agency or subdivision or agency thereof described in (A) above and rated "A-l +" by S&P and "Prime- I" by Moody's. 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; MSHAH\706289.2 7 9-/5'j E. no substitution of a United States Treasury Obligation shall be pennitted except with another United States Treasury Obligation and upon delivery ofa new Verification; and F. the cash or United States Treasury Obligations are not available to satisfY any other claims, including those by or against the trustee or escrow agent. 10. Repurchase agreements: With (1) any domestic bank, or domestic branch of a foreign bank, the long term debt of which is rated at least "A" by S&P and Moody's; or (2) 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 "N' rated structured financing (with a market value approach); 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 repurchase agreement shall state and an opinion of counsel shall be rendered at the time such collateral is delivered that the Holder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof (in the case of bearer securities, this means the Holder of the Collateral is 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. MSHAH\706289.2 8 )1. e; - ~., J ;' 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 pari 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 . (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 1 0 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 tree 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 1 0 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 9 MSHAH\706289.2 9-161 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 (I) 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. 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 Govermnent, 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 Govermnent, and (ii) bonds, notes, debentures, obligations or other evidences of indebtedness issued or guaranteed by the Govermnent 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 Revenues 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 633 West Fifth Street, 24th Floor, 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 trust office ofU. S. Bank National Association 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 Public Facilities and the Transportation Facilities. MSHAH\706289.2 10 9-/bJ- . "Project Costs" means all expenses of and incidental to the construction, acquisition, or both, of the Project. Project Costs shall also include interest scheduled to be paid on the Bonds on any Interest Payment Date if and to the extent that (a) the amount payable for such purpose shall not exceed the investment earnings on the moneys on deposit in the Acquisition Account which have accrued to and are on deposit in the Acquisition Account on such Interest Payment Date, (b) such amount represents that portion of interest scheduled to be paid on the Bonds on such Interest Payment Date which is in excess of the aggregate of (i) the amount then on deposit in the Interest Account, (ii) the amount then on deposit in the Special Tax Fund and eligible to be used to pay interest on the Bonds and (iii) the amount then on deposit in the Reserve Fund representing investment earnings on the moneys on deposit in the Reserve Fund in excess of the Reserve Requirement and (b) the amount payable for such purpose, together with all other proceeds of the Bonds which have been used to pay debt service on the Bonds, shall not exceed the amount of capitalized interest on the Bonds permitted under the Act or the Code and the Regulations to be paid from the proceeds of the Bonds. "Project Fund" means the fund by that name established pursuant to Section 3.01 hereof "Public Facilities" means anyone or more of those public facilities set forth in Section 3.50.030 of the Chula Vista Municipal Code, as such section may be amended from time to time. "Public Facilities Account" means the account by that name within the Project Fund established for such series of the Bonds pursuant to Section 3.01. . "Public Facilities Costs" shall mean the cost of acquisition, construction or development of Public Facilities. "Rebate Fund" means the fund by that name established pursuant to Section 3.01 hereof "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 least of (i) Maximum Annual Debt Service for the Bonds, (ii) one hundred twenty-five percent (125%) of Average Annual Debt Service for the Bonds, and (iii) ten percent (10%) of the original principal amount of the Bonds less original issue discount, if any, plus original issue premium, if any, applicable to the Bonds. MSHAffi706289.2 11 7-/63 "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 the District 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 The District 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 originally authorized to be levied on property within the District as approved at the special election held in District on August 12, 2005, and as it may be modified trom time to time in accordance with the Act. "Standard & Poor's" or "S&P" means Standard & Poor's Rating Services, its successors and assigns. "State" means the State of 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. "Tax Certificate" means the certificate delivered by the District on the Delivery Date relating to the requirements of Section 148 of the Code, as it may be amended and supplemented from time to time. MSHAH\706289.2 "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. "Term Bonds" means the Bonds maturing on September I, 20---, the Bonds maturing on September 1, 20_ and the Bonds maturing on September 1, 20_. "Transportation Facilities" means Improvement Numbers 1 and 3 as shown on Exhibit A to the Acquisition Agreernent. . "Transportation Facilities Account" means the account by that name within the Project Fund established for such series of the Bonds pursuant to Section 3.01. "Transportation Facilities Costs" shall mean the cost of acquisition, construction or development of Transportation Facilities. "Treasurer" means the Treasurer of the City acting for and on behalf of the District. "Yield" has the meaning assigned to such term for purposes of Section 148(f) of the Code. . MSHAH\706289.2 13 9-//,5 ARTICLE n. GENERAL AUTHORIZATION AND TERMS SECTION 2.01 Amount, Issuance and Purpose. Pursuant to the provisions of the Act, the Legislative Body has authorized the issuance of the Bonds in an aggregate principal amount of $ . The Bonds shall be designated City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds. The purpose of the Bonds shall be to (a) pay for the acquisition or construction of the Project, Transportation Facilities and Public Facilities, (b) fund the Reserve Fund, (c) pay capitalized interest on the Bonds through September 1 1, 2006 and (d) pay the Costs ofIssuance. 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 ofthe District secured by and payable ITom an irrevocable first lien on the Net 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 Net Special Tax Revenues, neither the faith and 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, except as to the Special Taxes, 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 ITom any source of income other than the Net Special Tax Revenues 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 ITom proceeds of the refunding bonds issued under the Act or under any other law of the State. MSHAH\706289.2 14 9-/bb SECTION 2.03 Terms ofthe 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: Maturity Date (September 1) Principal Amount Interest Rate(%) Maturity Date (September 1) Principal Amount Interest Rate(% ) SECTION 2.04 Description of Bonds; Interest Rates. The Bonds 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 shall be dated as of the Delivery Date, 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, 2006), 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 surrender thereof at maturity or the earlier redemption thereof at the Principal Corporate Trust Office of the Fiscal Agent. Interest on any Bond shall be payable ITom 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 MSHAH\706289.2 15 f-/67 at the time of authentication of a Bond, interest is in default, interest on that Bond shall be payable trom 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 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 of360 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 MSHAH\706289.2 16 9-/61' 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 trom time to time pursuant to this Section. 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 immediately 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 of a 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 determines not to continue to act as securities depository for the Bonds, or (ii) the Depository shall no longer so act and gives notice to the District of such determination, then the District will discontinue the book-entry system with the Depository. If the District determines to replace the Depository with another 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 thereoffor 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 MSHAH\706289.2 17 1./61 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. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments of principal and interest with respect to such Bond and 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 ofDTC. 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 dilly executed by the Owner or his attorney or legal representative, in satisfactory form. Upon any such registration of transfer, a new Bond or Bonds shall be authenticated and delivered in exchange for such Bond, in the name of the transferee, of any denomination or denominations authorized by this Indenture, and in an aggregate principal amount equal to the principal amount of such Bond or Bonds so surrendered. 10 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. . MSHAH\706289.2 18 c:; /7D / -/ ,I ~ SECTION 2.11 Authentication. Only such ofthe 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: FORM OF CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within defined Indenture. Dated: u.s. Bank National Association, As Fiscal Agent By: Authorized Officer MSHAH\706289.2 19 9-/7/ ARTICLE ill. 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. Debt Service Fund, and within the Debt 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, the Transportation Facilities Account and the Public Facilities Account; F. Reserve Fund; G. Administrative Expense Fund; and H. Costs ofIssuance 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 Redemption Fund and the Administrative Expense Fund as set forth in written instructions from an Authorized Representative. B. 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: MSHAH\706289.2 20 9~/7.L MSHAH\706289.2 1. The Fiscal Agent shall each Fiscal Year transfer to the Administrative Expense Fund ITom the first Special Tax Revenues received by the Fiscal Agent during such Fiscal Year an amount equal to the Administrative Expense Requirement. 2. The Fiscal Agent shall transfer to the Interest Account of the Debt 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 transfer to the Principal Account of the Debt Service Fund, on each Interest Payment Date and mandatory sinking fund on each 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 deposits and transfers 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 or the amount, if any, necessary to replenish the Acquisition Account for any payment of interest on Bonds paid as a Project Cost. 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 ITom an Authorized Representative, the Fiscal Agent shall transfer ITom 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 ITom 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 ITom funds other than the Administrative Expense Fund and (b) the cost of which Administrative Expenses will be in excess ofthe 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. 21 9-/7:3 C. The Fiscal Agent shall, upon receipt of Special Tax Revenues representing Prepayments, immediately transfer Prepayments to the Redemption Fund and utilize such funds to redeem Bonds pursuant to Section 4.03 B and to pay interest on such Bonds to the date of their redemption 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. 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 Debt 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. PrinciDal 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 B hereto duly executed by an Authorized Representative, disburse money trom the Costs ofIssuance 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 ofIssuance 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 Acquisition Account of the Project Fund. SECTION 3.05 Project Fund A. Acquisition Account. The Fiscal Agent shall, trom time to time, disburse monies trom the Acquisition Account to pay the Project Costs. Upon receipt of a payment request in the form set forth in Exhibit C hereto duly executed by an Authorized Representative (which payment request shall not exceed the corresponding payment request provided to the City under the AcquisitionlFinancing Agreement), the Fiscal Agent shall pay the Project Costs trom amounts in the Acquisition Account directly to the contractor(s) or such other person(s), corporation(s) or entity(ies) specified in the MSHAH\706289.2 22 9-17~' . 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 of a written notice ITom 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. On or after May 1, 2009, 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 ITom the Delivery Date of the Bonds, any funds derived ITom the Bonds remain on deposit in the Acquisition Account, the Fiscal Agent shall, upon the receipt of written instructions ITom 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 ITom gross income for federal income tax purposes. B. Traffic Facilities Account. The Fiscal Agent shall, ITom time to time, disburse monies ITom the Transportation Facilities Account to pay the Transportation Facilities Costs. Upon receipt of a payment request in the form set forth in Exhibit D hereto duly executed by an' Authorized Representative, the Fiscal Agent shall pay the Transportation Facilities Costs from amounts in the Transportation Facilities 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 Transportation Facilities Account may not be utilized to pay Project Costs. After the final payment or reimbursement of all Transportation Facilities Costs, as certified by delivery of a written notice ITom an Authorized Representative to the Fiscal Agent, the Fiscal Agent shall transfer excess monies, if any, on deposit in, or subsequently deposited in, the Transportation Facilities 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. MSHAH\706289.2 23 q-/75 I On or after May 1, 2009, 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 Transportation Facilities Account to fund Transportation Facilities 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 the Authorized Representative. Upon such transfer the Transportation Facilities 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 Transportation Facilities Account, the Fiscal Agent shall, upon receipt of written instructions ITom 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 ITom gross income for federal income tax purposes. C. Public Facilities Account. The Fiscal Agent shall, ITom time to time, disburse monies from the Public Facilities Account to pay the Public Facilities 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 Public Facilities Costs from amounts in the Public Facilities 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 Public Facilities Account may not be utilized to pay Project Costs. After the final payment or reimbursement of all Public Facilities 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 Public Facilities 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 May 1, 2009, 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 Public Facilities Account to fund Public Facilities 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 theoRedemption 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 MSHAID706289.2 24 9../7~ 3.08 as directed by the Authorized Representative. Upon such transfer the Public Facilities 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 Public Facilities 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 from gross income for federal income tax purposes. SECTION 3.06 Reserve Fund Moneys on deposit in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds as such amounts shall become due and payable in the event that the moneys in the Special Tax Fund and the Debt 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 Debt Service Fund or the Redemption Fund for such purpose. All Permitted Investments in the Reserve Fund shall be valued at their fair market value at least semi-annually on March I and September I. On any date after the transfers required by Section 3.02B(1), (2) and (3) have been made for any Bond Year, if the amount on deposit in the Reserve Fund is less than the Reserve Requirement, the Fiscal Agent shall transfer to the Reserve Fund from the first available monies in the Special Tax Fund an amount necessary to increase the balance therein to the Reserve Requirement. If on September 1 of each year following the payment of scheduled debt service due and payable on such date, or the first Business Day thereafter if September 1 is not a Business Day, the amount on deposit in the Reserve Fund is in excess of the Reserve Requirement, the Fiscal Agent shall transfer such excess to the Special Tax Fund. In connection with any optional or extraordinary mandatory redemption of Bonds, amounts in the Reserve Fund in excess of the Reserve Requirement following such redemption shall be transferred to the Principal Account or the Interest Account of the Debt Service Fund, as applicable, pursuant to written instructions of the District executed by an Authorized Representative and applied to redeem Bonds. Upon receipt of written instructions from an Authorized Representative instructing the Fiscal Agent to transfer certain moneys representing a Reserve Fund credit for the prepayment of a Special Tax obligation, the Fiscal Agent shall transfer the amount specified in such 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 MSHAH\706289.2 25 0./77 -:,;' -/ f' 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 Tax Certificate, 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 Tax Certificate. Notwithstanding the foregoing, the Tax Certificate, including the method of computing Excess Investment Earnings (as defined in the Tax Certificate) 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 for federal income tax purposes of interest on the Bonds then Outstanding. 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 Sections 3.02C, 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 or Section 4.03B, as applicable. Following the redemption of any Bonds, if any funds remain in the Redemption Fund, such funds shall be transferred to the Special Tax Fund. 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 Debt Service Fund, the Project Fund, the Reserve Fund, the Costs ofIssuance 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 MSHAH\706289.2 9 :/71 . 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. Except as provided otherwise herein, any income realized on or losses resulting ITom 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 ITom 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 ITom such Fund; and (2) Monies in the Special Tax Fund, the Debt Service Fund, the Redemption Fund and the Reserve Fund shall be invested only in obligations which will by their terms either mature or allow for withdrawals at par on such dates so as to ensure the payment of principal and interest on the Bonds as the same become due; provided, however, that except for investment agreements as described in paragraph 11 of the definition of Permitted Investments which permit withdrawal at par, investment of monies on deposit in the Reserve Fund shall have an average aggregate weighted term not greater that five (5) years. The Fiscal Agent shall sell or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide monies to meet any payment or transfer for such funds and accounts or ITom such funds and accounts. The Fiscal Agent shall not be liable for any loss ITOm 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 $ less the underwriter's discount of$ and less original issue discount of $ ), the Fiscal Agent shall transfer or set aside and deposit or cause to be deposited such funds as follows: MSHAH\706289.2 27 ~.J"'" C; . / /'1 / -/ l/ $ $ Fund; $ . $ $ shall be deposited in the Acquisition Account of the Project Fund; shall be deposited in the Transportation Facilities Account of the Project shall be deposited in the Public Facilities Account of the Project Fund; shall be deposited in the Reserve Fund; shall be deposited into the Costs ofIssuance Fund; $ shall be deposited in the Capitalized Interest Sub-Account of the Interest Account of the Debt Service Fund; and $ 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. . MSHAH\706289.2 28 < ~ "<1" " ,J .;..,; - , . I ;" L ARTICLE IV. REDEMPTION SECTION 4.01 Notice of Redemption. A. Notice bv 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 4.0 lA 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) Information Services that dissemlliate 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 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 Debt 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 Debt 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 Debt 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 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 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: MSHAH\706289.2 30 9-/PA Redemption Date Redemption Price 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 amounts deposited to the Redemption Fund in connection with a 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 Redemption Fund pursuant to Section 3.02 C and Section 3.06 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 amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Redemption Price C. Mandatory Sinking Fund Redemption The Bonds maturing on September I, 20_ are subject to mandatory sinking fund redemption, in part by lot, on September I in each year commencing September I, 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 (S eptember I) Principal Amount The Bonds maturing on September I, 20-, are subject to mandatory sinking fund redemption, in part, by lot, on September I of each year commencing September I, 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. MSHAH\706289.2 31 9-/1':3 Redemption Date (September I) Principal Amount The Bonds maturing on September I, 20-, are subject to mandatory sinking fund redemption, in part, by lot, on September I of each year co=encing September I, 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 (September I) Principal Amount . In the event of a partial optional redemption or special mandatory redemption of the Bonds maturing on September I, 20-, September 20_ or September I, 20-, each of the remaining mandatory sinking fund payments for the applicable maturity of the Bonds so redeemed will be reduced, as nearly as practicable, on a pro rata basis in integral multiples of$5,000. 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 amount thereof, plus the applicable premium, if any, stated above, 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, in the case of a redemption pursuant to Section 4.03A the maturities trom which such Bonds are to be redeemed, and the principal amount of the Bonds to be redeemed trom 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. MSHAH\706289.2 32 .' /,j 9-/"/ if 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. MSHAH\706289.2 33 9-/.f5 ARTICLE V. SUPPLEMENTAL INDENTURES SECTION 5,01 Amendments or Supplements, The Legislative Body may, by adoption of a resolution ITom time to time, and at any time but without notice to or consent of any of the Bondholders, approve a Supplemental Indenture hereto for any of the following purposes: (a) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Indenture or in any Supplemental Indenture, provided that such action shall not be materially adverse to the interests of the 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 ITom 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 Net 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 5.0 I 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 MSHAH\706289.2 34 " C;./j~/ >_ *'/Q '.#I 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 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 thereofby 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. MSHAH\706289.2 35 9-/1-7 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 oflike 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 oflike 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 hereofwith 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 of such Bonds, and shall be delivered to the Fiscal Agent when such payment or redemption is made. All Bonds canceled under any of the provisions of this Indenture shall be destroyed by the Fiscal Agent, which shall execute and provide the District with a certificate of destruction. SECTION 6.04 Covenants. As long as the Bonds are Outstanding and unpaid, the District shall (through its proper members, officers, agents or employees) faithfully perform and abide by all of the covenants and agreements set forth in this Section 6.04; provided, however, that said covenants do not require the District to expend any funds other than the Net Special Tax Revenues. MSHAH\706289.2 36 7'-/{! A. The District will review the public records of the County of San Diego, California, in connection with the collection of the Special Taxes not later than July I of each year to determine the amount of the Special Tax collected in the prior Fiscal Year and will commence and diligently pursue to completion, judicial foreclosure proceedings against (i) properties under common ownership with delinquent Special Taxes in the aggregate of$5,000 or more by October I following the close of the Fiscal Year in which the Special Taxes were due, and (ii) against 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 faitbfu1ly 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, ITom the Special Taxes which have, or purport to have, any lien upon the Special Taxes superior to or, except as permitted in the following sentence, on a parity with the lien of the Bonds herein authorized. Nothing in this Indenture shall prevent the District ITom issuing and selling, pursuant to law, refunding bonds or other refunding obligations payable ITom 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 each Bond Year on the Annual Debt Service on the Bonds when combined with the Debt Service on Parity Refunding Obligations following the issuance of such refunding bonds or other refunding obligations. D. The District will duly and punctually payor 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 Net 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 in an amount sufficient to pay the Annual Debt Service on the Bonds when due and Administrative Expenses when due. Prior to July 1 of each year, the District shall ascertain the parcels on which the Special Taxes are to be levied in the following Fiscal Year, taking into account any subdivisions of parcels during the current Fiscal Year. The District shall effect the levy of the Special Tax in accordance with the Special Tax RMA and the Act each Fiscal Year so that the computation of such levy is complete and transmitted to the Auditor of the County of San Diego before the final date on which the Auditor of the County of San Diego will accept the transmission of the Special Tax for the parcels within the District for inclusion on the next real property tax roll. Upon completion of the computation of the amount of the Special Tax levy, the District shall prepare or cause to be prepared, and shall transmit or cause to be transmitted to the Auditor of the County of San Diego, such data as such Auditor requires to include the levy of the Special Tax on the next real property tax roll. MSHAH\706289.2 37 '^ f~/h . The District finds and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in co=unity facilities districts in Southern California have ITom 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 co=unity 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 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 set forth in the Special Tax RMA), unless, in connection therewith, (i) the District receives a certificate ITom one or more Special Tax Consultants which, when taken together, certify that, on the basis of the parcels ofland and improvements existing in the District as of the July I 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 largest sum of the Annual Debt Service on the Bonds to remain Outstanding and the Debt Service on Parity Refunding Obligations outstanding ("Maximum Debt Service") after the reduction is approved and will not reduce the Maximum Annual Special Tax payable ITom parcels on which a completed structure is located to less than 110% of the Maximum 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, co=ence 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 ITom 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 1 49(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 ITom gross income of the interest MSHAH\706289.2 38 ,-/10 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. 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(f) 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 payor 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. 1. 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 January 31 st of each year, commencing January 31, 2007, and until October 31 st 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 Net 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. MSHAID706289.2 39 9-/9 J 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. SECTION 6.06 Defeasance. If the District shall payor 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 Net 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 anyone 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 I of the definition thereof, in such amount as an Independent Accountant shall determine (as set forth in a verification report trom 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 ofthe 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 payor cause to be . MSHAH\706289.2 40 '9/ 9).. 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 ITom 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 may be acceptable to the Fiscal Agent. In connection with a defeasance under (b) or (c) above, there shall be provided to the Fiscal Agent a certificate of an Independent Accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Fiscal Agent or 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 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 National Association as Fiscal Agent for the Bonds. The Fiscal Agent is hereby authorized to and shall mail or otherwise provide for the payment of interest payments to the Bondholders, and upon written instruction of the District shall select Bonds fot 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 ITom time to time, subject to any agreement between the District and the Fiscal Agent then in force, pay to the Fiscal Agent compensation for its services, reimburse the Fiscal Agent for all its advances and expenditures, including, but not limited to, advances to and fees and expenses of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and indemnifY and hold the Fiscal Agent, its officers, directors, agents and employees, harmless from and against losses, claims, expenses and liabilities not arising ITom its own negligence or willful misconduct which it may incur in the exercise and performance of its powers and duties hereunder. Such obligations shall survive the termination or discharge of this Indenture. MSHAH\706289.2 41 ....., /~~ <'"4" f / ,l' / 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. If any bank or trust company appointed as a successor publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, thenforthe 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. 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 of a successor Fiscal Agent shall become effective only upon acceptance of appointment by the successor Fiscal Agent. SECTION 6.08 Liability of Fiscal Agent. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Fiscal Agent assumes no responsibility for the correctness of the same and makes no representations as to the validity or sufficiency of this Indenture or of the Bonds, and shall incur no responsibility in respect thereof, other than in connection with its duties or obligations herein or in the Bonds or in the certificate of authentication on the Bonds. The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of the Bonds. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own 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. The Fiscal Agent shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Fiscal Agent may consult with counsel, who may be counsel to the District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered hereunder in good faith and in accordance therewith. Whenever in the administration of its duties under this Indenture, the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a written certificate of the District, and such certificate shall be full warrant to the MSHAH\706289.2 42 '9 -//9-9 Fiscal Agent for any action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence of such matter or may require such additional evidence as to it may seem reasonable. The Fiscal Agent shall have no duty or obligation to enforce the collection of funds to be deposited with it hereunder or as to the correctness of any amounts received, and its liability shall be 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 the Fiscal Agent to risk or advance its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of its rights hereunder. The permissive right ofthe 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 MSHAH\706289.2 43 ....).':"" -~~ '..".I 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 ofthe 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 thereofbecause of or on account of said numbers. 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 circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indenture and the application of any such covenant, agreement or provision, or portion thereof, to any other persons or circumstances, shall be deemed severable and shall not be affected, and this Indenture and the Bonds issued pursuant hereto shall 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 N onpresentment 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 MSHAH\706289.2 44 1-/'11., 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. 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 April I, 2006 between the District and NBS Government Finance Group (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 a 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. MSHAH\706289.2 45 7-/97 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 ChuIa Vista Finance Department 276 Fourth Avenue ChuIa Vista, CA 91910 Attention: Director of Finance RE: Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 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: . U.S. Bank National Association Attn: Corporate Trust 633 West Fifth Street, 24th Floor Los Angeles, CA 90071 Reference: ChuIa 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. MSHAH\706289.2 46 \ {; 9-;9<1' 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. Aoy 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. MSHAH\706289.2 47 '1~/99 . ARTICLE VITI. 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 v.ritten 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 of 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 If a default in the payment of the Bonds shall occur and be continuing, all revenues and any other funds then held or thereafter received under any of the provisions of this Indenture shall be applied as follows and in the following order: . A To the payment of any expenses necessary in the opinion of the District to protect the interest of the owners of the Bonds and payment of reasonable charges and expenses of the Fiscal Agent (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; MSHAH\706289.2 48 .:?-.)O() / ., 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 ofthe 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. MSHAH\706289.2 49 7-.2.0/ IN WITNESS WHEREOF, the District and the Fiscal Agent have executed this Bond Indenture effective the date first above written. COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN) By: DIRECTOR OF FINANCE U.S. BANK NATIONAL ASSOCIATION as Fiscal Agent . By: AUTHORIZED OFFICER . . MSHAH\706289.2 S - 1 9 - ..20.J... EXHIBIT "A" - FORM OF BOND R- $ United States of America State of California CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds Interest Rate Maturitv Date Bond Date CUSIP No. % September 1, 20 2006 Registered Owner: Cede & Co. Principal Amount: City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) (the "District"), situated in Chula Vista, California, for value received, hereby promises to pay, solely from Net 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 semianoually on each March 1 and September 1, commencing September 1, 2006, (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 National Association (the "Fiscal Agent") in St. Paul, Minnesota (or such other office designated by the Fiscal Agent). Interest on this Bond is payable from the Interest 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 trom 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 trom 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 trom 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 trom 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 from a registered owner of at least MSHAH\706289.2 A-I f-~D~ $1,000,000 in aggregate principal amount of the Bonds, by wire transfer in immediately available funds to an account in the United States of America designated by such registered owner. . This Bond is one of a duly authorized issue of the "City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds" (the "Bonds") issued in the aggregate principal amount of$ pursuant to the Mello-Roos Community Facilities Act of 1982, constituting Sections 53311, et seq. of the California Government Code, as amended (the "Act") and the City of Chula Vista Community Facilities District Ordinance enacted pursuant to the powers reserved by the City ofChula 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 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 April 1, 2006, 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 offoreclosure of the lien of the Special Tax to the amount of such lien and penalties thereon minus amounts applied annually to fund the Administrative Expense Requirement (together, the "Net 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 ofChula Vista, the State of California, or any political subdivision thereofis pledged to the payment of the Bonds. Except for the Net 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 1 following the close of the Fiscal Year in which the Special Taxes were due, and (ii) against all properties with delinquent Special Taxes in the aggregate of$2,500 or more by October 1 following the close of any fiscal year if the amount in the Reserve Fund is less than the Reserve Requirement. The Bonds 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, 2006, 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: . MSHAH\706289.2 A-2 9-~6f Redemption Date Redemption Price 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, rrom the amounts deposited in the Redemption Fund in connection with the prepayment of Special Taxes pursuant to the Special Tax RMA. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), together with accrued interest thereon to the date of redemption: Redemption Date Redemption Price The Bonds maturing on September I, 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 (September 1) Principal Amount 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 (September 1) Principal Amount 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 MSHAH\706289.2 A-3 '1-..<05" 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 (September 1) Principal Amount 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 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. . MSHAH\706289.2 A-4 I 9-~DI:1 IN WITNESS WHEREOF, the City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven), has caused this Bond to be dated as of , 2006 and to be signed by the Mayor ofthe City of Chula Vista by his or her manual signature and attested by the City Clerk by his or her manual signature. City Clerk, City of Chula Vista, for and on behalf of the City ofChula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) Mayor, City of Chula Vista, for and on behalf of the City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within defined Indenture. Date: U.S. Bank National Association, as Fiscal Agent By: Authorized Officer MSHAH\706289.2 A- 5 1-..)07 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 qualified guarantor. NOTICE: The signature on this assignment must 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 . MSHAH\706289.2 A-6 " 9 -..,) o.i EXHIBIT "B" REQUISITION FOR COSTS OF ISSUANCE REQUISITION NO. PERTAINING TO DISBURSEMENTS FROM COSTS OF ISSUANCE FUND FOR COSTS OF ISSUANCE The undersigned hereby states and certifies: (i) that she is the duly appointed, qualified and acting Director of Finance of the City of Chula Vista (the "City") and as such she is an Authorized Representative of the District within the meaning of the Bond Indenture hereinafter defined; (ii) that, pursuant to Section 3.04 of the Bond Indenture, dated as of April I, 2006 (the "Bond Indenture"), between U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), by and between the Fiscal Agent and the District, the undersigned hereby requests the Fiscal Agent to disburse, upon receipt of an invoice or invoices from the payees designated on Attachment A attached hereto and incorporated herein by this reference, from the from the Cost ofIssuance Fund established under the Bond Indenture to each such payee, amounts not to exceed the respective sum set forth in Attachment A opposite the designation for each such payee; (iii) that such payments should be made in accordance with the payment instructions contained in such invoices; and (iv) that the amounts to be disbursed are properly chargeable to the Cost ofIssuance Fund. Date: City ofChula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) MSHAID706289.2 By' Maria Kachadoorian, Director of Finance City of Chula Vista B-1 9'dO ,i' ATTACHMENT A COSTS OF ISSUANCE Payee DescriDtion of Cost of Issuance Amount . MSHAH\706289.2 B-2 9-,)/0 . EXHffiIT "C" REQUISITION FOR COSTS REQUISITION NO. _ PERTAINING TO DISBURSEMENTS FROM THE ACQUISITION ACCOUNT OF THE PROJECT FUND TO FUND PROJECT COSTS The undersigned hereby states and certifies: (i) that she is the duly appointed, qualified and acting Director of Finance of the City of Chula Vista (the "City") and as such she is an Authorized Representative of the District within the meaning of the Bond Indenture hereinafter defined; (ii) that, pursuant to Section 3.05A of the Bond Indenture, dated as of April!, 2006 (the "Bond Indenture"), between U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), by and between the Fiscal Agent and the District, the undersigned hereby requests the Fiscal Agent to disburse to the payees designated on Attachment A attached hereto and incorporated herein by this reference, from the Acquisition Account of the Project Fund established under the Bond Indenture to each such payee, the respective sum set forth in Attachment A opposite the designation for each such payee; (iii) that such payments should be made in accordance with the payment instructions contained in Attachment A; and (iv) that the amounts to be disbursed are properly chargeable to the Acquisition Account of the Project Fund. Date: City ofChula Vista Community Facilities District No. B-1 (Otay Ranch Village Seven) By: Maria Kachadoorian, Director of Finance City of Chula Vista MSHAH\706289.2 C -! 9.,-..),11 . . MSHAH\706289.2 ATTACHMENT A PROJECT COSTS Payee Description of Project Costs Amount C - 2 7-.l/~ EXHmIT "D" REQUISITION FOR COSTS REQUlsmON NO. PERTAINING TO DISBURSEMENTS FROM THE TRANSPORTATION FACILITIES ACCOUNT OF THE PROJECT FUND TO FUND TRANSPORTATION FACILITIES COSTS The undersigned hereby states and certifies: (i) that she is the duly appointed, qualified and acting Director of Finance of the City of Chula Vista (the "City") and as such she is an Authorized Representative of the District within the meaning of the Bond Indenture hereinafter defined; (ii) that, pursuant to Section 3.05B of the Bond Indenture, dated as of April 1, 2006 (the "Bond Indenture"), between U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), by and between the Fiscal Agent and the District, the undersigned hereby requests the Fiscal Agent to disburse to the payees designated on Attachment A attached hereto and incorporated herein by this reference, trom the Transportation Facilities Account of the Project Fund established under the Bond Indenture to each such payee, the respective sum set forth in Attachment A opposite the designation for each such payee; (iii) that such payments should be made in accordance with the payment instructions contained in Attachment A; and (iv) that the amounts to be disbursed are properly chargeable to the Transportation Facilities Account of the Project Fund. Date: City of Chula Vista Co=unity Facilities District No. 13-1 (Otay Ranch Village Seven) By: Maria Kachadoorian, Director of Finance City of Chula Vista MSHAH\706289.2 D - 1 9.~!3 ATTACHMENT A TRANSPORTATION FACllJTIES COSTS . Description of Transportation Payee Facilities Costs Amount . . MSHAH\706289.2 D -2 7 . ..(I 'I" EXHIBIT "E" REQUISITION FOR COSTS REQUISITION NO. _ PERTAINING TO DISBURSEMENTS FROM THE PUBLIC FACILITIES ACCOUNT OF THE PROJECT FUND TO FUND PUBLIC FACILITIES COSTS The undersigned hereby states and certifies: (i) that she is the duly appointed, qualified and acting Director of Finance ofthe City of Chula Vista (the "City") and as such she is an Authorized Representative of the District within the meaning of the Bond Indenture hereinafter defined; (ii) that, pursuant to Section 3.05C of the Bond Indenture, dated as of April I, 2006 (the "Bond Indenture"), between U. S. Bank National Association, as fiscal agent (the "Fiscal Agent"), by and between the Fiscal Agent and the District, the undersigned hereby requests the Fiscal Agent to disburse to the payees designated on Attachment A attached hereto and incorporated herein by this reference, from the Public Facilities Account of the Project Fund established under the Bond Indenture to each such payee, the respective sum set forth in Attachment A opposite the designation for each such payee; (iii) that such payments should be made in accordance with the payment instructions contained in Attachment A; and (iv) that the amounts to be disbursed are properly chargeable to the Public Facilities Account of the Project Fund. Date: City of Chula Vista Co=unity Facilities District No. 13-1 (Otay Ranch Village Seven) By: Maria Kachadoorian, Director of Finance City of Chula Vista MSHAH\706289.2 E - I - :1- ~,It; ATTACHMENT A PUBLIC FACILITIES COSTS Description of Public Facilities Pavee Costs Amount . . MSHAH\706289.2 E - 2 q-..)/~ F exHIBIT (p $ CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN) 2006 SPECIAL TAX BONDS BOND PURCHASE AGREEMENT ,2006 Community Facilities District No. 13-1 (Otay Ranch Village Seven) City ofChulaVista Chula Vista, California Ladies and Gentlemen: Stone & Youngberg LLC (the "Underwriter"), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement with Community Facilities District No. 13-1 (Otay Ranch Village Seven) (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. L 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 City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 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, 2006) 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 Exhibit A hereto and 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, 2006, approved in Resolution No. 2006-_ adopted by the City Council of the City, as the legislative body of the District, on _, 2006 (the "Resolution of Issuance"). The Bonds and interest thereon will be payable from a special tax (the "Special Tax") levied and collected on certain taxable land within the District in accordance with Resolution No. 2005-352 adopted by the City Council on October 25, 2005 (the "Resolution of Formation"), Ordinance No. 3028 enacted on December 6, 2005 (the "Special Tax Ordinance"). Proceeds of the sale of the Bonds will be used in accordance with the DOCSOC/1155939v2/022245-0162 '1- )/7 " -< I' Bond Indenture and the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et ~. of the Government Code of the State of California) (the "Act") and the City of Chula Vista Community Facilities District Ordinance ("Authorizing Ordinance" and together with the Act, the "Law"), to acquire certain public improvements described in the Resolution of Formation. The Resolution of Issuance, the Resolution of Formation, the Special Tax Ordinance and the Authorizing Ordinance 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 Bond 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 each of Otay Ranch VII-I, LLC, Otay Ranch R-2B, LLC, Otay Ranch Twelve, LLC and Otay Ranch VII JC (collectively, the "Merchant Builders"), dated on or prior to the date of this Bond Purchase Agreement and addressed to the Underwriter and the District deeming the information in the Preliminary Official Statement (as defined in (c) below) relating to the Merchant Builders 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 , 2006 (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-l2"), the Underwriter has distributed copies ofthe 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 and the Underwriter as set forth in Section 2(g) hereof as evidenced by the execution and delivery of such document by an officer of the District, 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-l2. . . (d) Pursuant to the Indenture and the District Disclosure Agreement the District has agreed to provide, or cause to be provided, to each NRMSIR or the Municipal Securities Rulemaking Board and any public or private repository or entity designated by the State as a state repository for purposes of Rule 15c2-12 adopted by the Securities and Exchange Commission certain annual financial information and notices of the occurrence of certain events, if material. These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12. 2 .' DOCSOC/l155939v2l022245-0162 CJ- ..)// .' (e) At 8:00 A.M., Pacific Daylight Time, on , 2006, 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 documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in immediately available 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 the Otay Project L.P., a California limited partnership ("Otay Project L.P."), 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; DOCSOC/] ]55939v2/022245-0162 3 9-217 . (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 elections within the District to approve the levy of the Special Tax, the facilities eligible for financing and the issuance of the Bonds and recorded thi;: 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 (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 rule 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 circumstances existing at such time, not misleading, the District shall forthwith notifY the Underwriter of any such event of which it has DOCSOC/1155939v2/022245-0162 4 9-";) 0 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 to the District at or prior to the Closing Date, and shall specif'y 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 Net Special Taxes and the moneys in the Special Tax Fund, the Debt Service Fund, the Redemption 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; OJ The District will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualif'y 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 or the District authorized to do so shall be deemed a representation and warranty to the Underwriter as to the statements made therein; DOCSOCIl155939v2/022245-0162 5 ...... ..,. I (~!' '0-1;'; / I (I) 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 therein relating to The Depository Trust Company and its 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 therein relating to The Depository Trust Company and its 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 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 ofthe circumstances under which they were made, not misleading; (n) The District shall use its best efforts to cause Otay Project L.P. and the Merchant Builders 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; . (0) 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)(I) of Rule 15c2-12. The District hereby covenants and agrees that, within seven (7) business days from the date hereof, the District shall cause a final printed form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the District so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board. (P) Except as disclosed in the Preliminary Official Statement, to the best of District's knowledge, there are no entities with outstanding assessment or special tax liens against any of the properties within the District which are senior to or on a parity with the Special Taxes; (q) Neither the City nor the District is in default with respect to any reporting obligation that it has undertaken under Rule 15c2-12 for any indebtedness issued by it. . 3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the District contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City and the District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by 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; DOCSOCf! 155939v2l022245-0162 6 '1.J.). ).. (b) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the District terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: (1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article III ofthe Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest as would be received by the holders ofthe 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, 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, 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) the introduction, proposal or enactment of 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 of a 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 ofthe 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 DOCSOC/l155939v2/022245-0162 7 c- -''''3 , t!"".?- / 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 ofthe United States is s'uch 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. . (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: (I) The Formation Documents and the District Documents, together with a certificate dated as of the Closing Date of the City Clerk to the effect that each Formation Document is a true, correct and complete copy of the one duly adopted by the City Council; (2) The Official Statement; (3) An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Best Best & Krieger LLP, Bond Counsel for the District, in the form attached to the Preliminary Official Statement as Appendix H, and an unqualified opinion of such counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such approving opinion addressed to the District may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it; . (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 by 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 our opinion as to the exclusion from gross income for federal income tax purposes and exemption from State of California personal income taxes of interest on the Bonds, presents a fair and accurate summary of such provisions; (iv) the Special Tax has been duly and validly authorized DOCSOCfl155939v2/022245-0162 8 7-~~ 'I 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 Special Taxes has been imposed on all non-exempt property in the District; and (v) Bond Counsel has examined the proceedings regarding the levy of the Special Tax, including without limitation, the Notice of Special Tax Lien which was recorded for the District pursuant to Section 3114.5 of the California Streets and Highways Code (the "Code") in the official records of the County of San Diego and based on such examination, and its review of applicable laws of the State of California, as of the date of such opinion, Bond Counsel is of the opinion that (a) pursuant to Section 53339.8(a) of the California Government Code, all non-exempt property in the District became subject to the levy of the Special Taxes as of the date of the adoption of the Resolution of Formation, (b) pursuant to Section 53340 of the California Government Code, each levy on such non-exempt property is secured by a continuing lien; and (c) any delinquent Special Taxes levied on such non-exempt property will be subject to foreclosure pursuant to Section 53356.1 of the California Government Code; (5) An opinion, dated the Closing Date and addressed to the Underwriter, of Stradling Y occa Carlson & Rauth, a Professional Corporation, counsel for the Underwriter, to the effect that (i) the Bonds are exempt from the registration requirements of the Securities Act of 1933, as amended, and the Bond Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (ii) without having undertaken to determine independently the accuracy or completeness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives of the City, Bond Counsel, representatives of the Underwriter and others, and their examination of certain documents, nothing has come to their attention which has led them to believe that the Official Statement as of its date and as of the Closing Date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as any financial or statistical data, appraisals, assessed values or projections 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 true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the 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; DOCSOC1l155939v2l022245-0162 9 /" j ') f::';"' '-'1"'(:"p-' f' . (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 Resolutions at meetings ofthe 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 District has duly authorized and executed 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 and the City, from each of the Merchant Builders, in substantially the form attached hereto as Exhibit C and an executed copy of the Continuing Disclosure Agreement from each of the Merchant Builders in the form attached as Appendix G to the Official Statement (each, a "Merchant Builder Continuing Disclosure Agreement"); (9) An opinion dated the Closing Date and addressed to the Underwriter, the City and the District, by counsel to each of the Merchant Builders, substantially in the form attached hereto as Exhibit D; (10) A certificate dated the Closing Date from McGill, Martin Self, Inc. (the "Special Tax Consultant") 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 . DOC50C/1155939v2/022245-0162 10 4' -,).~ ., 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, (ii) it has reviewed the Appraisal and it is of the opinion that information contained therein with respect to taxes and tax rates applicable, and projected to be applicable, to the property in the District is consistent with such information provided by the Special Tax Consultant to the Appraiser, which information so provided was based on information obtained by the Special Tax Consultant iTom the City, the District and the County of San Diego, and (iii) the statements in the Official Statement concerning the Rate and Method of Apportionment of Special Tax and all information supplied by it for use in the Official Statement were as of the date of the Official Statement and are as of the Closing Date true and correct, and do 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 iTom 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) it has reviewed the Official Statement and the Appraisal included in Appendix C thereto and the information in the Official Statement referring to the Appraisal and in the Appraisal is accurate 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, and the assumptions made in the Appraisal are reasonable and (c) no events or occurrences have been ascertained by it or have come to its attention that would materially change the opinion of value set forth in the Appraisal; (12) A letter from Sullivan Group Real Estate Advisors 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 (the "Summary") may be included in the Preliminary Official Statement and the Official Statement, (b) it has reviewed the Official Statement and the Summary and the information regarding the Study and the projected absorption of the proposed development included in the Official Statement is accurate 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, 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 the Merchant Builder Continuing Disclosure Agreement and that each of such documents is a valid and binding obligation of the Fiscal Agent enforceable in accordance with its terms; and DOCSOCIl155939v2/022245-0162 11 .~ "I) '"'""1 ~-... . I I . (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 Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Bond Purchase Agreement, and the unsatisfied conditions are not waived by the Underwriter, 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 Obli~ations. The District's obligations hereunder are subject to the Underwriter's performance of its obligations hereunder, and are also subject to the following conditions: (a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the District executing the certificate referred to in Section 3(c)(6) hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the Formation Documents, the District Documents or the existence or powers of the City or the District; and (b) As of the Closing Date, the District shall receive the approving opinions of Bond Counsel referred to in Section 3(c)(3) and (4) hereof, dated as of the Closing Date, addressed to the City, the District and the Underwriter. 5. herein: EXDenses. Whether or not the Bonds are delivered to the Underwriter as set forth . (a) The Underwriter shall be under no obligation to pay, and the District shall payor cause to be paid (out of any legally available funds of the District) all expenses incident to the performance of the District's obligations hereunder, including, but not limited to, the cost of printing and delivering the Bonds to the Underwriter, the cost of preparation, printing, distribution and delivery of the Bond Indenture, the Preliminary Official Statement, the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Fiscal Agent for the Bonds, Bond Counsel, financial advisor to the City, counsel to the Underwriter in the amount of [$45,000], and any accountants, engineers or any other experts or consultants the District has retained in connection with the Bonds including reimbursements to Otay Project L.P. for advances of such amounts; and . (b) The District shall be under no obligation to pay, and the Underwriter shall pay, any fees ofthe 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 DOCSOC1l155939v2/022245-0162 12 9-~.2P qualify the Bonds for sale under any "blue sky" or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel and any advertising expenses, 6. Notices. Any notice or other communication to be given to the City under this Bond Purchase Agreement may be given by delivering the same in writing to the City at 276 Fourth Avenue, Chula Vista, California 91910, Attention: Director of Finance; and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Stone & Youngberg, 4350 La Jolla Village Drive, Suite 140, San Diego, California 92122, Attention: 1. William Huck, and to One Ferry Building, San Francisco, California 94111, Attention: Public Finance. 7. Parties in Interest. This Bond 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 Bond 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 Bond 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. II. Governing Law. This Bond Purchase Agreement shall be governed by the laws of the State of California. DOCSOC1l155939v2/022245-0162 13 7-.).)-7 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: ,2006 COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTA Y RANCH VILLAGE SEVEN) By: Director of Finance . DOCSOC/1155939v2/022245-0162 14 F.; " 3' .'" _'7". I J / 1W"'''' _....P I EXHIBIT A MATURITY SCHEDULE CITY OF CHULA VISTA COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN) 2006 SPECIAL TAX BONDS Maturity Date (September 1) Principal Coupon Yield $ % % Par Amount $ Original Issue Discount Underwriter's Discount Purchase Price $ DOCSOClI155939v2/022245-0162 A-I C;-.)3J / Price . Optional Redemption. The Bonds may be redeemed at tbe option of the District on any Interest Payment Date prior to maturity as a whole, or in part on any Interest Payment Date on and after March 1, 20_, trom 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 March 1, 20_ through March 1, 20_ September 1, 20_ and March 1,20_ September 1,20_ and March 1, 20_ September 1, 20_ and thereafter Redemption Price 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 the proceeds of tbe prepayment of Special Taxes pursuant to the Rate and Method. Such extraordinary mandatory redemption of the Bonds shall be at the following redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), togetber with accrued interest thereon to the date of redemption: . Redemption Date March I, 20_ through March 1, 20_ September 1, 20_ and March 1, 20_ September 1,20_ and March 1, 20_ September 1, 20_ and tbereafter Redemption Price REDEMPTION PROVISIONS The mandatory sinking fund payments for the Bonds maturing on September 1, 20_, 20_ and 20_ are set forth below: . BOND MATURING SEPTEMBER 1, 20_ Redemption Date (September 1) Principal Amount $ A-2 DOCSOC1l155939v2/022245-0162 f-)~.2-. BOND MATURING SEPTEMBER 1, 20_ Redemption Date (September 1) Principal Amount $ BOND MATURING SEPTEMBER 1, 20_ Redemption Date (September 1) DOCSOCIl155939v2/022245-0162 A-3 9 ~ )-33 Principal Amount $ EXHIBIT B CERTIFICATE OF REPRESENTATIONS AND WARRANTIES OF THE CITY OF CHULA VISTA ,2006 To: Stone & Youngberg LLC San Diego, California Re: $ City ofChula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 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 City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds and pursuant to the Bond Purchase Agreement, dated the date hereof (the "Purchase Contract"), by and between you and Community Facilities District No. B-1 (Otay Ranch Village Seven) (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: (I) 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 (except for information therein as to the book-entry system as to which no view is expressed) 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: Director of Finance DOCSOC/1155939v2/022245-0 162 B-1 9-.)3{ . EXHIBIT C CERTIFICATE OF THE DEVELOPER ,2006 Stone & Youngberg LLC 4350 La Jolla Village Drive, Suite 140 San Diego, California 92122 City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Re: $ City ofChula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds (the "Bonds 'J Ladies and Gentlemen: r 1 (the "Developer"), hereby certifies that: 1. The Developer is the owner of certain of the land within Community Facilities District No. 13-1 (Otay Ranch Village Seven) (the "District"), as described in the Official Statement of the District dated , 2006 relating to the above-captioned Bonds (the "Official Statement"). 2. The Developer covenants that, while the Bonds are outstanding, the Developer will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body which in any way seeks to challenge or overturn the District, the levy of the Special Tax in accordance with the rate and method of apportionment contained in the Notice of Special Tax Lien recorded in the real property records of the County of San Diego (the "Rate and Method of Apportionment") or the validity of the Bonds or the proceedings leading up to their issuance. The foregoing covenant shall not prevent the Developer from (a) 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; or (b) bringing any action, suit, proceeding, inquiry or investigation to enforce the obligations of the District or the City of Chula Vista (the "City") under the District fonnation resolutions or any agreement including, without limitation, the Bond Indenture, the Bond Purchase Agreement, or the Acquisition/Financing Agreement, dated as of March 1, 2006, executed by and between the City and Otay Project L.P., and/or any other agreement with the District and/or the City for which the Developer is a party or beneficiary, so long as any such action or suit does not seek to interfere, or have the effect of interfering, with the levy and collection of the Special Tax in amounts and C-l DOCSOC/1155939v2/022245-0162 9-,)35 at times sufficient to pay the principal of and interest on the Bonds when due and unless such action or suit is brought or filed pursuant to subsection (a) above. 3. Any and all information submitted by the Developer to the City, the Underwriter and Underwriter's counsel in connection with the preparation of the Official Statement, and any and all information submitted by the Developer to the Special Tax Consultant, the Appraiser and the Market Absorption Consultant, was, to the best of the Developer's knowledge, true and correct when given and remains true and correct as of the date hereof, and all information in the Official Statement relating to the Developer and the development of its land within the District was final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934. 4. The statements relating to the Developer, its members and related entities, its proposed development in the District, their property ownership and its contractual arrangements contained in 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 Official Statement become untrue, the Developer agrees to notify the City and the Underwriter immediately. 5. No proceedings are pending or, to the best of the Developer's knowledge, threatened in which the Developer or any of its members may be adjudicated as bankrupt or discharged from any or all of their debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts. 6. Except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or, to the best of the Developer's knowledge, threatened, in any way seeking to restrain or enjoin the development of the property within the District or in any way seeking to invalidate or set aside any final or vesting tentative maps on land in the District. 7. None of the parcels which constitute land within the District owned by the Developer or any of its affiliates are delinquent in the payment of any taxes or assessments. 8. Except as disclosed in the Official Statement, to the best of the Developer's knowledge, no other public debt secured by a tax or assessment on the land in the District is in the process of being authorized and no assessment districts or community facilities districts have been or are in the process of being formed which include any portion of the land within the District. 9. The Developer will advise the District and the Underwriter promptly of the occurrence of any event or circumstances of which it becomes aware of during the ninety days after the end of the underwriting period and a result of which it may be necessary to supplement the Official Statement in order to make the statements therein, in light of the circumstances existing at such time, not misleading. DOCSOC/l155939v2/022245-0162 C-2 I 9-';3>1::> 10. Except as disclosed in writing to the Underwriter and the City, to the best of the Developer's knowledge, there are no events of monetary default or events which with the passage of time would constitute a monetary default under any loan or similar credit arrangement to which the Developer or any of its members is a party which would materially and adversely affect the ability of the Developer to develop the property or pay Special Taxes when due. II. The Developer has duly authorized and executed the Developer Continuing Disclosure Agreement dated as of March I, 2006 (the "Disclosure Agreement"), and such Disclosure Agreement is the valid obligation of the Developer, enforceable against the Developer in accordance with its terms, and none of the documents which govern the Developer would cause such Disclosure Agreement to be invalid or unenforceable against the Developer in accordance with its terms; and no event has occurred which, with the passage of time, would constitute a default by the Developer of any of its obligations under the Disclosure Agreement. 12. 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. [DEVELOPER], a Delaware limited liability company By: r 1, a Its: Manager By: Its: By: Its: DOCSOCIl155939v2!022245-0162 C-3 7' -.) ~ 7 EXHmIT D OPINION OF DEVELOPER COUNSEL (1) The Developer is duly formed, validly existing and in good standing as a limited liability company under the laws of the State of Delaware. (2) The Developer has the power to enter into and perform its obligations under the Continuing Disclosure Agreement dated as of March I, 2006 (the "Developer Continuing Disclosure Agreement"), has duly authorized, executed, and delivered the Developer Continuing Disclosure Agreement, and has authorized the performance of its respective duties and obligations thereunder. (3) The Developer Continuing Disclosure Agreement constitutes a legally valid and binding obligation of the Developer, enforceable in accordance with its terms. (4) The execution and delivery of the Developer Continuing Disclosure Agreement by the Developer, and compliance with the provisions thereof by the Developer will not result in a violation of, a breach of, or a default under the operating agreement of the Developer or, to our knowledge, of any trust agreement, mortgage, deed of trust, note, lease, commitment, agreement, or other instrument to which the Developer is a party, or, to our knowledge, any order, rule or regulation of any court or other governmental body having jurisdiction over the Developer, the breach of which might have a materially adverse effect on the ability of the Developer to perform its obligations under the Developer Continuing Disclosure Agreement. (5) There is no litigation pending or threatened against or affecting the Developer (a) which affects or seeks to prohibit, restrain or enjoin the development by the Developer of the property it owns within the District, or (b) in which the Developer or any of the members of the Developer may be adjudicated as bankrupt or discharged ITom any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, or (c) which seeks to grant an extension of time to pay the Developer's debts, or (d) seeks to effect a reorganization or readjustment of the Developer's debts or (e) if determined adversely to the Developer, would materially and adversely affect the transactions contemplated by the Official Statement to be engaged in by the Developer, or the ability of the Developer to perform its obligations as described in the Official Statement and under the Developer Continuing Disclosure Agreement. (6) During the course of our representation the Developer, we have reviewed certain documents and have participated in conferences in which the contents of the Official Statement and related matters were discussed. To 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 the Developer (excluding thereITom 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-l DOCSOCfl155939v2/022245-0162 ! .~ ") "y 1-;;2 /" RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE FORM OF THE ACQUISITION/FINANCING AGREEMENT PERTAINING TO COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTA Y RANCH VILLAGE SEVEN) WHEREAS, the City Council of the City of Chula Vista (the "City Council"), has held and conducted proceedings relating to the levy of special taxes and the issuance of bonds in a community facilities district to finance the acquisition of certain public improvements, as authorized pursuant to the terms and provisions of the "Mello- Roos Community Facilities Act of 1982", being Chapter 2.5. Part I, Division 2, Title 5 of the Govemment Code of the State of California (the "Act") and the City of Chula Vista Community Facilities District Ordinance enacted pursuant to the powers reserved by the City of Chula Vista under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California (the "Ordinance") (the Act and the Ordinance may be referred to collectively as the "Community Facilities District Law"). Such community facilities district is designated as Community Facilities District No. 13-1 (Otay Ranch Village Seven) (the "District"); and, WHEREAS, the District was formed for the purpose of financing the acquisition of such public improvements from Otay Project, L.P., the master developer of the property within the District (the "Developer"); and, WHEREAS, the City and the Developer have negotiated the terms and conditions pursuant to which the public improvements are to be constructed by the Developer and acquired by the City and bonds are to be issued to finance the acquisition or construction of such public improvements. These terms and conditions have been memorialized in an AcquisitionlFinancing Agreement by and between the City and the Developer (the "Acquisition/Financing Agreement"), the form of which has been presented to this City Council for its consideration and approval. NOW, THEREFORE, BE IT RESOLVED: SECTION I. The above recitals are all true and correct. SECTION 2. The City Council approves the form of Acquisition/Financing Agreement, in substantially in the form submitted. The City Council authorizes the Mayor to execute the final form of the Agreement on behalf of the City. The City Council authorizes the City Manager, subject to the review of the City Attorney and Best Best & Krieger LLP, as Bond Counsel, to approve changes in the Agreement deemed to be in the best interests of the City, approval of such changes to be evidenced by the execution of the Agreement. 9..)3>7 I PREPARED BY: Leah Browder Acting Director of Engineering WDIVEN\327579.1 . APPROVED AS TO FORM BY: ....;~ ti. L.I~ft Ann Moore City Attorney 9 . .rl '-/0 2 THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALL Y SIGNED UPON APPROVAL BY THE CITY COUNCIL '-CL~ ~ Ann Moore City Attorney Dated: March 29, 2006 Acquisition/Financing Agreement Pertaining to Community Facilities District No. 13 (Ranch Village Seven) 1-':?f / ACQUISITION/FINANCING AGREEMENT COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN) THIS AGREEMENT, dated as of April I, 2006 (the "Agreement"), is made and entered into by and between the CITY OF CHULA VISTA, a charter city duly organized and validly existing under the Constitution and laws of the State of California, (the "City"), COMMUNITY FACILITIES DISTRICT NO. 13-1 (OT A Y RANCH VILLAGE SEVEN), a community facilities district formed and existing pursuant to the laws of the State of California (the "CFD No. B-1"), and OTA Y PROJECT, L.P., a California lirnited liability partnership (the "Developer"). WHEREAS, the Developer is the master developer of certain property within that portion of the City Jaiown as the Village Seven of the Otay Ranch described in Exhibit F attached hereto and incorporated herein by this reference (the "Development Project") and Developer has obtained certain land use entitlements from the City which permit the development of the Development Project; and WHEREAS, as a part of the development of the Development Project, the Developer will be constructing certain public improvements to serve the Development Project including the improvements identified as Improvements Nos. 1 through 10 in Exhibit A attached hereto and incorporated herein by this reference (the "Improvements") ; and WHEREAS, in order to mitigate the impact that the Development Project will have on the City's existing transportation facilities, the Development Project will be responsible for financing its proportionate share of the cost of construction of those transportation facilities identified in Section 3.54.030 of the Chula Vista Municipal Code and as Improvement Nos. 1 and 2 in Exhibit A hereto (the "Transportation Facilities"); and WHEREAS, the City and the Developer desire that the Agreement provide that CFD No. 13-1 finance the acquisition of Transportation Facilities in an amount equal to the development impact fee obligation imposed pursuant to Chapter 3.54 of the Chula Vista Municipal Code (the "Municipal Code") for the development throughout CFD No. 13-1 (the "Aggregate TDIF Obligation"); and WHEREAS, in order to mitigate the impact that the Development Project will have on the City's existing public facilities other than transportation facilities, the Development Project will be responsible for financing its proportionate share of the cost of the construction of those public facilities identified in Section 3.50.030 of the Municipal Code and as Improvement No. 21 in Exhibit A hereto (the "Public Facilities"); and WHEREAS, the City and the Developer further desire that the Agreement provide that CFD No. 13-1 finance the acquisition or construction of Public Facilities in an amount equal to the development impact fee obligation imposed pursuant to Chapter 3.50 of the Municipal Code for the development throughout CFD No. 13-1 (the "Aggregate PFDIF Obligation") and to WDIVEN\327580.2 I q~;}t.fCJ- provide that funds in an amount equal to the Aggregate PFDIF Obligation be set aside from the proceeds of Bonds issued by CFD No. 13-1 to enable the City to utilize such funds to acquire or construct Public Facilities; and WHEREAS, the Developer requested that the City consider and the City did consider and form CFD No. 13-1 under the terms and conditions of the "Mello-Roos Community Facilities Act of 1982," as amended (Government Code Section 53311 and following) (the "Act"), for the purpose of fmancing the acquisition or construction of the Improvements and all of the cost of the construction of the Transportation Facilities and the Public Facilities allocable to the Development Project; and, WHEREAS, Developer, in order to proceed in a timely way with development of the Development Project, desires to construct certain of the Improvements that will, following the completion of the construction thereof, be acquired, owned, operated and maintained by the City; and, WHEREAS, the City, CFD No. 13-1 and Developer agree that the Improvements to be constructed by the Developer may, upon the completion of the construction thereof, be acquired by the City through financing provided by CFD No. 13-1 at prices determined pursuant to and in accordance with the provisions of this Agreement; and, WHEREAS, the City and the Developer further agree that payment by the City for the acquisition of the Improvements shall be funded solely from the proceeds of bonds which shall be issued by CFD No. 13-1 and which shall be secured by the levy of special taxes within CFD No. 13-1; and, . WHEREAS, it is the intent of this Agreement that Developer shall be entitled pursuant to the provisions of this Agreement to be paid for each of the Improvements constructed by the Developer at the prices as determined by the City pursuant to this Agreement upon: (a) the sale and delivery of bonds by CFD No. 13-1 the proceeds of which shall be authorized and designated to make the payments to acquire such Improvements and (b) the completion of the construction of each such Improvement; and, . WHEREAS, the City and CFD No. 13-1 are willing to have CFD No. 13-1 finance the acquisition of the Improvements to be constructed by the Developer and all of the cost of the acquisition or construction of the Transportation Facilities and the Public Facilities allocable to the Development Project, subject to the requirements of the Act, the City of ChuIa Vista Statement of Goals and Policies Regarding the Establishment of Community Facilities Districts adopted by the City Council (the "Goals and Policies") and this Agreement and Developer desires that CFD No. 13-1 so finance the acquisition of such Improvements and all of the cost of the acquisition or construction of the Transportation Facilities and the Public Facilities allocable to the Development Project. NOW, THEREFORE, IT IS MUTUALLY AGREED between the respective parties as follows: 2 q~ ;)Lf3 WDIVEN\327580.2 SECTION 1. Recitals. The above recitals are all true and correct. SECTION 2. Plans and Specifications. All plans, specifications and bid documents for the Improvements (the "Plans and Specifications") and all changes in the Plans and Specifications necessitated by change orders shall be prepared by the Developer at the Developer's initial expense, subject to City approval. The costs of acquisition of such Improvements shall include costs of the preparation of the Plans and Specifications and all related documentation as set forth in Section 7 below. Developer shall not award bids for construction, commence construction or cause commencement of construction of any Improvement until the Plans and Specifications for such Improvement have been approved by the City. SECTION 3." Design, Bid and Construction of Improvements. Developer covenants and agrees that each Improvement to be acquired from Developer pursuant to this Agreement shall be designed, bid and constructed: (a) in substantial compliance with the approved Plans and Specifications for such Improvement; (b) in a good and workmanlike manner by well-trained adequately supervised workers; (c) in strict compliance with all governmental and quasi-governmental rules, regulations, laws, building codes and all requirements of Developer's insurers and lenders; (d) tree of any known design flaws and defects; and (e) in substantial compliance with the requirements of Exhibit C hereto which is incorporated herein by this reference. In the event of a protest by a bidder to the award of a contract for the construction of an Improvement or Improvements to the apparent low bidder, the Developer may, in its sole discretion, elect to: (a) award the contract to the apparent low bidder pursuant to the provisions of Exhibit C hereto if the Developer has determined that the bid of the apparent low bidder was, in fact, responsive and that the irregularity upon which the protest is based was minor in nature, i.e., the irregularity did not create an unfair competitive advantage for the apparent low bidder; (b) reject the bid of the apparent low bidder if the Developer determines that the irregularity upon which the protest is based did create an unfair competitive advantage for 3 q~?-LfV WDIVEN\327580.2 the apparent low bidder and the bid of the apparent low bidder was, therefore, not responsive and award the contract to the lowest responsive bidder; or (c) reject all bids and solicit new bids for the construction of the applicable Improvement or Improvements. Should a legal action be filed challenging the validity of the Developer's decision regarding any such bid protest and/or the award of any contract for the construction of any Improvement, the Developer shall, at Developer's sole expense, defend such action and shall defend, indemnify, and hold harmless the City, its officers, directors, employees and agents and CFD No. 13-1, its officers, directors, employees and agents (each, an "Indemnified Party" and collectively, the "Indemnified Parties"). . SECTION 4.' Inspection and Acceptance of the Improvements. The construction activities relating to the Improvements to be constructed by the Developer shall be subject at all reasonable times to inspection by authorized representatives of City. Once an Improvement to be acquired by City is substantially completed in accordance with the approved Plans and Specifications, then such Improvement shall be eligible for payment of the Base Increment of the Purchase Price (as defmed in Section 7 below) therefor. Prior to acceptance by the City of any Improvement constructed by the Developer for purposes of paying the Retained Increment (as defined in Section 7 below) of the Purchase Price, the Developer shall provide to the City Engineer of the City, or his or her designee (the "City Engineer"), the documentation set forth in this Section 4 and Section 7(c)(ii) below and obtain approval of as-built drawings for the Improvement in accordance with the process described below in this Section 4. The engineer of record for any such Improvement ("Engineer of Record") shall file form PW-E-I06 (Request for Release of Bonds) with the City Engineer. Within 20 working days of such filing, the field inspector of the City or his or her designee ("Field Inspector") shall issue and transmit to the Engineer of Record a letter requesting (i) as- built drawings and soils reports (when applicable) and (ii) a punchlist of work to be completed or corrections to work to be completed before such Improvement will be eligible for payment of the Retained Increment. Within 20 working days of receipt of the Field Inspector's letter, the Engineer of Record shall prepare redline as-built drawings and submit them, together with any necessary soils reports, to the Field Inspector and the Developer shall complete the items of work and/or corrections specified in the punchlist. Within 10 working days of the Engineer of Record's submittal of the red lined as-built drawings, the Field Inspector shall review such drawings and provide comments. The Engineer of Record shall revise the redline as-built drawings per the Field Inspector's comments and resubmit within 10 working days. The Field Inspector shall make his final review within 5 working days of the Engineer of Record's resubmittal and notify the Engineer of Record to prepare mylar as-built drawings and a microfiche copy and submit both to the City Engineer or his designee and notify the Developer of any punchlist items which remain to be completed. The City and Developer shall make best efforts to perform within the time periods described above. The inability of City or Developer to perform within each time period, notwithstanding its best efforts, shall not constitute a breach of this Agreement. 4 Vj~?~S WDIVEN\327580.2 .. SECTION 5. Warranty of Improvements Constructed by the Developer. At all times prior to the City's acceptance of any Improvement constructed by the Developer, the Developer shall be responsible for maintaining such Improvement at the Developer's expense. The Developer shall be obligated for the period of twelve (12) months immediately following the City's acceptance of such an Improvement to repair or replace, at Developer's expense, any defects or failures resulting ITom the work of Developer, its contractors or agents. Upon the expiration of such twelve (12) month period, Developer shall assign to City and CFD No. 13-1 its rights in and to any warranties, guarantees or other evidence of contingent obligations of third persons with respect to such Improvement. As a condition precedent to the payment of the Retained Increment (as defmed in Section 7 below) of the Purchase Price, Developer shall post a maintenance bond in a form reasonably approved by the City, cause such a maintenance bond to be posted, or ;lSsign Developer's rights under such a maintenance bond naming City and/or CFD No. 13-1 as beneficiary in an amount equal to fifteen percent (15%) of the Purchase Price of such Improvement in order to secure Developer's obligations pursuant to this Section. Upon posting of such maintenance bond, the City shall release any performance, labor and material bonds for such Improvement. SECTION 6. Notice of Completion and Lien Releases. Upon completion of the construction of an Improvement, Developer shall notifY the City Engineer in writing of such completion and shall prepare and execute a Notice of Completion for such Improvement in the form prescribed by Section 3093 of the California Civil Code and shall record such notice in the Official Records of the County of San Diego. Developer shall cause its contractors to provide unconditional lien releases for such Improvement in accordance with Section 3262 of the Civil Code. Notwithstanding the foregoing, City may waive the requirement for a Notice of Completion and lien releases if City determines that as of the date of payment of the Retained Increment of the Purchase Price for an Improvement, title to such Improvement or portion thereof satisfies the requirements for Acceptable Title (as hereinafter defmed). SECTION 7. Payment of Purchase Price. (a) Amount of Purchase Price. The amount to be paid by City for the Improvements to be constructed by and acquired ITom Developer (the "Purchase Price") shall, as to each such Improvement, (i) be determined by City in accordance with the provisions of this Section 7, (ii) equal the lesser of the cost or the value thereof, (iii) include the reasonable cost or value of eligible appurtenant public facilities, (iv) include the costs of the title insurance policy described in Section 9 (a), and (v) include all other costs of construction and incidental costs eligible under the Act and the Goals and Policies as a part of the cost of the Improvements. Incidental costs eligible to be included in the Purchase Price of any Improvement shall include the following: (i) Usual and customary design and engineering costs not to exceed the following percentages: 5 .'. ,i 1-: >1~c77rp . WDIVEN\327580.2 a. Civil engineering - 7.5% of the cost of the construction of the Improvement for which the service was performed. b. Soils engineering - 15% of the cost of the grading for the Improvement. c. Landscape architecture - 10% of the cost of applicable landscaping and irrigation relating to the Improvement. d. Survey and construction staking - .2% of the combined cost of the construction and grading for the Improvement. e. Utility engineering/coordination - 3% of the cost of the construction of the applicable dry utilities. . (ii) Construction administration and supervision not to exceed, in aggregate, I. 75% of the total construction cost of the Improvement. (iii) Special engineering studies related to "collector" or "transmission" facilities as reviewed and approved by the City Engineer. (iv) Plan check and inspection fees (less any refunds). (v) Capacity or connection fees related solely to the Improvement. . (vi) Costs of acquisition of off-site rights-of-way and/or easements including the following: a. Appraisal and title insurance costs. b. Costs of preparing acquisition plats. c. The appraised value or actual cost of right-of-way or easement, whichever is less. . d. Legal fees and costs related to eminent domain proceedings approved by the City Attorney. (vii) Costs of environmental reVIew, permitting and mitigation related to the Improvement. In no event shall the cost or value of the construction of the Improvements be deemed to exceed the construction contract prices set forth in the contracts and change orders approved by City ("Approved Change Orders") pursuant to the applicable provisions of Exhibit C hereto, which is incorporated herein by this reference, or otherwise authorized pursuant to this Agreement. 6 Q/')t./7 WD!VEN\327580.2 Notwithstanding the foregoing, the aggregate Purchase Price of the acquisition of all new utilities to be owned by a public utility or public utilities may not exceed 5% of the proceeds of the series of the Bonds to be utilized to pay such Purchase Price less that portion of the reserve fund, costs of issuance and other incidental costs allocable to such amount. (b) Incremental Pavrnent of Purchase Price of an Improvement. The Purchase Price for any Improvement constructed by the Developer shall be payable in not to exceed two increments: (i) the "Base Increment" which shall be an amount equal to 75% of the audited, eligible costs as reflected in the written request for payment of the Base Increment submitted by the Developer and as approved by the Director of Public Works and shall not exceed 75% of the cost estimate set forth in Exhibit A for such Improvement; and (ii) the "Retained Increment" which shall be an amount not tq exceed the remaining, unpaid portion of the Purchase Price for such Improvement determined pursuant to the provisions of (a) above. (c) Requisition for Incremental Pavrnent of Purchase Price of an Improvement. (i) Base Increment. The Developer may submit only one (I) written request to the City Engineer for the payment of the Base Increment for an Improvement constructed by the Developer upon the substantial completion of the construction of such Improvement in accordance with the approved Plans and Specifications. The criteria for determining "substantial completion" of each such Improvement is described in Exhibit B and shall mean generally that construction, or work with respect to such Improvement has progressed to the point where it is sufficiently complete so that such Improvement can be utilized for the purpose for which it was intended. Substantial completion of such an Improvement shall also mean that all components of such Improvement are substantially complete, e.g., in the case of Improvement including streets (other than streets included in the Traffic Enhancement Improvements), the components are described in footnote I to Exhibit A. Each Base Increment payment request must be in the form attached hereto as Exhibit D, which is incorporated herein by this reference, and conform to the requirements of (f) below. The request for payment of the Base Increment for an Improvement shall be accompanied by a copy of the following documents related to the construction of such Improvement: (I) each construction contract and copy of bid notice for such contract, (2) each change order, (3) each invoice submitted pursuant to such construction contracts, (4) evidence of payment of each such invoice such as copies of cancelled checks or other evidence of payment satisfactory to the City Engineer, and (5) written conditional lien releases executed by each applicable contractor, subcontractor and materialman in a form satisfactory to the City Attorney of the City (the "City Attorney") for such Improvement. (ii) Retained Increment. The Developer may submit only one (I) written request to the City Engineer for the payment of the Retained Increment for an Improvement in the form attached hereto as Exhibit E, which is incorporated herein by this reference, upon the submission to the City Engineer of (1) as-built drawings or other equivalent plans and specifications for such Improvement in a form reasonably acceptable to the City, (2) 7 , 1"-' q~dLr'6 WDIVENI327580.2 evidence that the Developer has posted a maintenance bond for such Improvement as required by Section 5 hereinabove, (3) evidence of the satisfaction of the requirements of Section 10 hereinbelow directly related to such Improvement and (4) written unconditional lien releases from all contractors, subcontractors and materialmen satisfactory to the City Attorney for such Improvement. For any costs not included in the Developer's written request for payment of the Base Increment but requested for payment in the Retained Increment the request shall conform to the requirements of (f) below and also be accompanied by the following documents related to such additional costs of the construction of such Improvement if not done so with the written request for payment of the Base Increment: (I) each construction contract, (2) each change order, (3) each invoice submitted pursuant to such construction contracts, and (4) evidence of payment of each such invoice such as copies of cancelled checks or other evidence of payment satisfactory to the City Engineer. . (d) Documentation. Any payment request submitted by Developer shall be properly executed and shall include copies of all supporting documents required by subsection (c)(i) or (c)(ii), as applicable. . (e) Review of Payment Request for an Improvement. The City Engineer or his designee shall review each payment request and the supporting documentation accompanying such payment request. If the City Engineer finds that any such payment request is incomplete, improper or otherwise not suitable for approval, the City Engineer shall inform Developer in writing within twenty (20) working days after receipt thereof, the reasons for his finding. Developer shall have the right to respond to this finding by submitting further documentation after receipt of the denial. The City Engineer shall review any further documentation received from the Developer in support of a payment request and inform Developer of his approval or denial of the payment request as supplemented in accordance with this Section within ten (10) working days after receipt of the supplemental documentation. A resubmittal of a payment request shall be deemed a new payment request for purposes of this Section. . Subject to the limitations set forth herein, costs incurred under a construction contract for an Improvement entered into pursuant to the requirements of this Agreement and Approved Change Orders shall be deemed to be reasonable and, subj ect to the other provisions of this Agreement, shall be included in the Purchase Price for such Improvement. The City Engineer shall, after the sale of the Bonds (defined in Section 18 below) pursuant to Section 18 the proceeds of which are intended to be used to acquire the subject Improvements and after his or her approval of a payment request, immediately forward a request to the Director of Finance of the City notifYing the Director of Finance of his or her approval of the payment request and requesting that such payment be made to the appropriate payee. The Director of Finance shall process any such request of the City Engineer pursuant to the applicable procedures of the Finance Department and shall make or authorize such payment pursuant to such procedures and subsection (h) below. (f) Payment. 8 /)-;)tfq i WDIVEN\327580.2 (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: Priority 2: Improvement No.1, 3 and 11, in Exhibit A. Improvement Nos. 2 and 4 through 10, inclusive, in Exhibit A. The cost of construction or Purchase Price for any lower priority Improvement shall not be paid unless the cost of construction or Purchase Price for all higher priority Improvements has been paid or the City Engineer has reasonably determined that sufficient proceeds of the Bonds are available to fully fund the cost of construction or Purchase Price of the higher priority Improvements, e.g., such funds have been deposited in a separate account or sub-account and the use of such funds has been restricted to funding the cost of construction or the Purchase Price of such 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. (ii) Timing of the Payment of the Purchase Price for an Improvement. Subject to the limitations contained in (i) above and (iii) and (iv) below, the increment of the Purchase Price for each Improvement shall be paid to Developer within thirty (30) days after the date of the City Engineer's approval of the payment request for any such increment; provided, however, no Retained Increment for any Improvement shall be paid earlier than thirty-five (35) days after the recording of a Notice of Completion for such Improvement. (iii) Source of Payment. The Purchase Price or any increment thereof for an Improvement shall be payable to the Developer solely from those proceeds ("Eligible Improvement Proceeds") of the sale of Bonds as provided in Section 20 hereof authorized and designated for the payment for such Improvement, after all costs of formation of CFD No. 13-1 and all costs of issuance of such Bonds have been paid or proceeds set aside for such purpose and deposits of accrued and capitalized interest to the redemption fund, deposits of amounts equal to the Aggregate TDIF Obligation and the Aggregate PFDIF Obligation to the Traffic Facilities Account (defined in Section 21 below) and the Public Facilities Account (defined in Section 21 below), respectively, of the project fund (the "Project Fund") established pursuant to the Indenture (defined in Section 18 below) and the initial deposit to the reserve fund have been made. (iv) Withholding of Payment. In addition to the foregoing, the City shall have the right to withhold payment of the Purchase Price or any increment thereof of any Improvement if 9 q ""'0/ ,~::;, WDIVEN\327580.2 . (a) the Developer is delinquent in the payment of any assessment installments or special taxes levied by the City or a community facilities district established by the City on properties then owned by the Developer within CFD No. 13-1, (b) the City Engineer reasonably determines that the Developer is not then in substantial compliance with all applicable conditions and obligations imposed upon the Developer hereunder or upon the Development pursuant to the land use entitlements approved by the City for the Development, including but not limited to, payment of all applicable fees, dedication of all applicable rights-of-way or other property and construction of all applicable public improvements. The City Engineer shall provide written notice to the Developer of the decision to withhold any such payment and shall specify the reason for such decision. If the payment is withheld as a result of the delinquency in the payment of assessment installments or special taxes, the notice shall identify the delinquent parcels and the amount of such delinquency. If the payment is withheld as a result of substantial non- compliance with a condition or obligation, the notice shall specify such condition or obligation and what action will be necessary by the Developer to substantially comply with such condition or obligation. Upon receipt by the City Engineer of evidence reasonably satisfactory to the City Engineer of the payment of the delinquent special taxes or assessments or upon the determination by the City Engineer that the Developer has substantially complied with the subject condition or obligation, the City shall forthwith make any payment which has been withheld pursuant to the provisions of this paragraph. SECTION 8. Audit. The authorized representatives of City shall have the right, upon two (2) days prior written notice to Developer and during normal business hours, to review all books and records of Developer pertaining to costs and expenses incurred by Developer in construction of the Improvements. SECTION 9. Ownership and Transfer of Improvements. The conveyance of the Improvements by Developer to City shall be in accordance with the following procedures: (a) . Improvements Constructed on Land not Owned bv City. As a condition to the payment of the Retained Increment of the Purchase Price, Developer shall cause an irrevocable offer of dedication to be made to City or an outright grant of a fee interest or easement interest as appropriate, in the sole discretion of the City of the appropriate right, title and interest in and to the portion of the applicable property owned by the Developer related to the applicable Improvement, including any temporary construction or access easements. Developer, whether or not it is the entity constructing the Improvements, agrees to execute and deliver to the City the documents required to complete the transfer of Acceptable Title for property owned by the Developer upon or within which such Improvements are to be located. For purposes of this Agreement, the term "Acceptable Title" shall mean title to the portion of the property to be conveyed free and clear of all taxes, liens, encumbrances, assessments, easements, leases, whether any such item is recorded or unrecorded, except (i) non-delinquent taxes and assessments and (ii) those non-monetary encumbrances and easements which are reasonably determined by the City not to interfere with the intended use of the portion of the property. As a further condition to the payment of the Retained Increment of the Purchase Price for any WDIVEN\327580.2 10 (AJ " L~ I -, ,- d-) Improvement, Developer at its sole initial cost and expense, subject to reimbursement pursuant to Section 7, shall cause to be issued a policy of title insurance for such portion of the property in an amount not to exceed the Purchase Price and in the form normally required by City in connection with the dedication of land for subdivision improvements and containing such title endorsements as may be reasonably requested by City, City's [mal acceptance of the portion of the property and the Improvements constructed thereon shall not be unreasonably withheld or delayed. (b) ImProvements Constructed on Land Owned bv City. If Developer is authorized to construct an Improvement on land owned in fee by City or on land over which the City owns an easement Developer shall obtain the necessary encroachment permits to enter such land for purposes of constructing such Improvement. City shall cooperate with Developer in issuing such encroachment permits. The Improvements shall be inspected by City on an ongoing basis. SECTION 10. Grading and Subdivision Improvement Bonds. Except as provided below, Developer shall be required to post or cause the posting of bonds or other security acceptable to the City to guarantee completion of the Improvements in accordance with City's standard subdivision requirements and conditions of approval of the Development Project (the "Conditions of Approval"). Labor and materials bonds shall also be required to be provided by the Developer's contractor for all Improvements to be constructed under this agreement. Such bonds shall name the City ofChula Vista as additional obligee and shall remain in effect until the final acceptance of the Improvements by the City Engineer. The presence of Bond proceeds shall not relieve the Developer of requiring this obligation of the Developer's contractor. Performance and labor and material bonds for specific Improvements shall not be required or may be released if: (I) such Improvements constitute a portion of the required subdivision improvements, (2) Bond proceeds equal to 125% of the estimated cost to construct or acquire such Improvements are available and set aside for such purpose, and (3) the Improvements are to be constructed or acquired entirely with the proceeds of the Bonds. Provided that conditions (I) and (2) are satisfied, if an Improvement is to be constructed or acquired only in part with the proceeds of the Bonds, performance and labor and material bonds shall not be required for that portion of the Improvements to be so constructed or acquired except with respect to the portion that will not be acquired or constructed with Bond proceeds. In the event that the Bond proceeds that are available and may be set aside to fund the cost to construct or acquire an Improvement are less than 125% of the estimated cost thereof, the Developer shall be required to provide a performance and labor and material bond or other security satisfactory to the City Engineer and the City Attorney in the amount of such deficiency. City will cooperate with Developer in the termination or exoneration of any performance and labor and material bonds assuring completion of Improvements for which bonds have been sold. The City Engineer shall be the sole judge of determining release of such bonds. SECTION II. Indemnification by Developer. Developer shall defend, indemnify and hold harmless all Indemnified Parties from and against any and all claims, losses, liabilities, damages, including court costs and reasonable attorneys' fees by reason of, or resulting from, or arising out WDNEN\327580.2 ".... .~"., II .""') '->,;. ":-..., .,f iA ~ J .....C;.' - i (,.:.- , . of the design, engineering, solicitation of bids, award of contracts, administration of contracts and construction of the Improvements by the Developer, its employees, agents, independent contractors and/or representatives; provided that any claims for personal injury or property damage which relate to the Improvements shall be limited to those arising out of personal injury or property damage caused by actions or omissions by Developer or Developer's employees, agents, independent contractors or representatives which occurred during the period prior to the transfer of title to the Improvements by City, whether or not a claim is filed prior to the date of acceptance of the Improvements. Nothing in this Section 11 shall limit in any manner the rights of the City and/or CFD No. 13-1 against any of the architects, engineers, contractors or other consultants employed by the Develop~r which has performed work in connection with construction or fmancing of the Improvements. Notwithstanding the foregoing, Developer shall have no obligation to defend, indemnify or hold harmless the Indemnified Parties from and against any claims, liabilities, losses or damages (including court costs and attorneys' fees) which result from or arise out of the sole negligence or willful misconduct of an Indemnified Party. Except as set forth in this Section II, no provision of this Agreement shall in any way limit the extent of the responsibility of Developer for payment of damages resulting from the operations of the Developer, its agents, employees or contractors. SECTION 12. Obligation of City. Neither the City nor CFD No. 13-1 has a legal or financial obligation to construct or finance the actual construction of the Improvements. All costs incurred for actual construction of the Improvements, including all incidentals thereto, shall be borne by Developer, and the obligations of the City and Community Facilities District are limited to the acquisition of the Improvements pursuant to the provisions of this Agreement. . SECTION 13. Failure by Developer to Construct Improvements. At any time following commencement of the construction of any Improvements by the Developer the City determines that such construction is not progressing within a reasonable time in accordance with the Conditions of Approval or the Developer fails to demonstrate a continuing ability to complete the construction of such Improvement in accordance with the Conditions of Approval, the City may give written notice of such failure of performance to the Developer. Developer shall have sixty (60) days from the date of receipt of such notice to either (i) cure such failure of performance by demonstrating to the satisfaction of the City during such cure period reasonable progress in the construction of the Improvement and a continuing ability to complete the construction of such Improvement in accordance with the Conditions of Approval or (ii) reasonably demonstrate that such failure of performance is due to circumstances or conditions beyond Developer's reasonable control ("Force Majeure") including, without limitation, the City's actions, omissions or inaction which result in a delay of performance by Developer, labor disputes, acts of God, war, riots, insurrections, civil commotions, moratoriums, inability to obtain labor or materials or reasonable substitutes for either, fire, unusual delay in transportation, and adverse weather conditions. Should Developer fail to reasonably demonstrate such reasonable progress or such continuing ability to complete the construction of such Improvement or Force Majeure, the obligation of the City to pay the .Purchase Price for the acquisition of such Improvement pursuant to this agreement may be terminated by the City by providing ten (10) days written notice to the Developer. Upon termination, the City may in its sole discretion then proceed to advertise and 12 .", .- ..,-..,? . Ii '~"..) "'7 ~ d.,.,/..,..., , . WDIVEN\327580.2 ,,' bid the balance of the construction of such Improvement, and there will be no further obligation on the part of the City for payment of the Purchase Price for such Improvement due to Developer pursuant to this Agreement. In the event that the City chooses not to advertise and bid the balance of the construction of any such Improvement following such a termination, any monies remaining in the Project Fund and set aside for the acquisition of such Improvement shall be transferred to the redemption fimd established by the Indenture and used to call outstanding Bonds. SECTION 14. Agreement Contingent. As a precondition to the sale of each series of the Bonds of CFD No. 13-1, Developer shall pay in cash to City an origination charge of 1.0% of the amount of the principal amount of such series of the Bonds ("Origination Payment"). Each such Origination Payment shall be at Developer's own expense and not recoverable from the proceeds of the speciai taxes or from the proceeds of the Bonds. In the event that any series of the Bonds are, for any reason, not sold, the amount of the Origination Payment made for such series of the Bonds shall be returned to the Developer. This Agreement is contingent upon the successful sale of Bonds, and it shall be null and void if the first series of Bonds are not sold within a three (3) year period following the date of this Agreement, or any mutually agreed extension; however, this time can be extended by request of the Developer and concurrence of the legislative body. The City may, at its option, suspend the performance of its obligations under this Agreement if any legal challenge is filed relating to the validity or enforceability of this Agreement, CFD No. 13-1 proceedings or the issuance of the Bonds. The obligations of the City and CFD No. 13-1 hereunder shall be reinstated upon the entry of a fmal judgment in any such proceedings upholding the validity and enforceability of the Agreement, CFD No. 13-1 proceedings and the issuance of the Bonds. In the event that a final judgment or other final and non-appealable resolution is entered invalidating or declaring unenforceable this Agreement, CFD No. 13-1 proceedings or the issuance of the Bonds, the City and CFD No. 13-1 may, at their option, terminate this Agreement. SECTION 15. Notice of Special Tax. Developer, or the successor or assigns of the Developer, including but not limited to all Merchant Builders (as such term is defmed in Section 16 below), shall provide written notice to all potential purchasers of lots in the form required pursuant to Government Code Section 53341.5 and/or such additional requirements as may be established by the City so advising the potential owner of the fact of CFD No. 13-1, with said document being executed by the potential purchaser. Such notice shall be provided to the potential purchaser a reasonable time before the potential purchaser becomes contractually committed to purchase the lot so that the potential purchaser may knowingly consider the impact of the special tax in the decision to purchase the lot. A copy of all such notices executed by actual purchasers shall be sent to the City Engineer. SECTION 16. Limitation of Aggregate Taxes and Assessments. Developer represents that the Developer has included in all agreements to sell all or any portion of the property to any person WDIVEN\327580.2 13 (.], ,._.:' ( - 7' or entity for the purpose of constructing and marketing owner-occupied residential dwelling units (each, a "Merchant Builder") provisions requiring the inclusion of the following "escrow instructions" in all sales by such Merchant Builder to residential home owners agrees to the inclusion of such escrow instructions in all sales by each such Merchant Builder to residential home owners: (a). At or prior to the close of each such escrow with a residential homeowner, the escrow company shall apply a "calculation formula" previously approved by the City Engineer and deposited with the escrow company by the Merchant Builder to determine the aggregate of all annual ad valorem property taxes, all special taxes authorized to be levied to finance the construction or acquisition of public facilities and all assessment installments authorized to be levied to fmance the construction or acquisition of public facilities (the "Total Annual Taxes and Assessments") applicable to the parcel subject to such escrow (the "Applicable Parcel"). . (b). If the Total Annual Taxes and Assessments exceed 2% of the sales price of the Applicable Parcel, the Escrow Company will make immediate written demand upon the Merchant Builder for deposit into the escrow of the funds necessary to partially prepay the special tax obligation for CFD No. 13-1 or any other community facilities district so that the Total Annual Taxes and Assessments will thereafter be equal to or less than 2% of the sales price of the Applicable Parcel. Such funds must be received by the escrow company prior to the close of escrow of the sale of the Applicable Parcel. The calculation of the prepayment amount for CFD No. 13-1 shall be in accordance with the method of prepayment of special tax as set forth in the rate and method of apportionment of special taxes approved by the qualified electors of CFD No. 13-1. Upon closing of such escrow, the amount so deposited by the Merchant Builder pursuant to this escrow instruction shall be sent by the escrow company to the Director of Finance, together with written instructions that such amount is to be used to partially prepay the special tax obligation of the Applicable Parcel for CFD No. 13-1 or shall be sent to the other community facilities district for which the special tax obligation has been prepaid with similar written instructions. The provisions of this Section 16 related to sales by Merchant Builders to residential homeowners shall also apply to any sale by Developer of a parcel to a residential home owner. In addition to any other remedy provided for by law or in equity, the City may enforce the provisions of this Section 16 by an action for specific performance or injunctive relief or both. SECTION 17. Relationship to Public Works. This Agreement is for the construction and acquisition of certain Improvements by City and the sale of the Bonds for the payment of construction and acquisition costs for such Improvements and such other amounts as are herein provided, and is not intended to be a public works contract. In performing its obligations under this Agreement, Developer is an independent contractor and not the agent of City. City shall have no responsibility for payment to any contractor or supplier of Developer. Notwithstanding the foregoing, Developer may be subject to certain public contract requirements as provided in Section 3 of this Agreement. WDIYEN\327580.2 14 q ~ ;) 5'::: SECTION 18. Sale of Bonds. The City shall, immediately upon execution of this Agreement by the parties hereto, proceed with the issuance and sale of an initial series of bonds secured by the levy of special taxes within CFD No. 13-1 (the "Bonds") to be issued pursuant to the Act. The Bonds shall be issued in one or more series and each series shall be sized so that as of the date of issuance of such series of the Bonds the aggregate appraised value of all taxable properties within CFD No. 13-1 for which such Bonds are being issued shall comply with the value-to-lien standards set forth in the Goals and Policies or as otherwise approved by the City Council pursuant to the Goals and Policies. In addition, as to any subsequent series of Bonds, the issuance of such Bonds shall comply with such parity bonds test as may be set forth in the Bond Indenture. The appraised value of taxable property for purposes of this paragraph shall be determined by an independent appraisal undertaken for the City utilizing appraisal assumptions approved by the City and, as to each subsequent series of the Bonds, consistent with the applicable parity bonds requirements. The proceeds of each series of the Bonds shall be used in the following priority to (i) fund a reserve fund for the payment of principal and interest with respect to such Bonds; (ii) fund capitalized interest on such Bonds in an amount not to exceed the amount required to pay interest on such Bonds until sufficient special taxes may be placed on the tax roll to pay the scheduled debt service on such Bonds; (iii) pay for costs of issuance of such Bonds including, without limitation, underwriter's discount, bond counsel fees, printing, and paying agent fees; (iv) pay for the costs of forming CFD No. 13-1, including reimbursement of advances of funds to the City by Developer to pay for the City's legal, engineering, financial, special tax, appraisal and market absorption consulting expenses incurred relating to the formation of CFD No. 13-1 and issuance of the Bonds; (v) pay the costs of the acquisition or construction the Transportation Facilities and Public Facilities be fmanced from the proceeds of the Bonds, and (vi) pay the costs of the acquisition or construction of the Improvements. The timing of the issuance and sale of the Bonds, the terms and conditions upon which the Bonds shall be issued and sold, the method of sale of the Bonds and the pricing thereof shall be determined solely by the City and shall conform to the Goals and Policies and this Agreement. The sale of the Bonds shall be subject to receipt by the City of a competitively bid or negotiated bond purchase agreement which is acceptable to the City. The sale of the Bonds shall also be conditional upon the preparation of an official statement that is, in the sole judgment of the City, "deemed fmal" as such term is used in Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"). The principal amount of the Bonds to be issued shall be determined in accordance with the Goals and Policies such that the maximum projected annual special tax revenues securing the Bonds equals at least 110% of the projected annual gross debt service on all of the Bonds following the issuance of the Bonds. Developer, on behalf of itself, any affiliates of the Developer and any successor or assign of the Developer including but not limited to all Merchant Builders, agrees (a) to provide all information regarding the development of the property within CFD No. 13-1, including the financing plan for such development, which are necessary to ensure that the official statement for IS . WDIVEN\327580.2 I - / ~" . each series of the Bonds complies with the requirements of the Rule and all other applicable federal and state securities laws; (b) to enter into a continuing disclosure agreement to provide such continuing disclosure pertaining to CFD No. 13-1, the development thereof and the Developer as necessary to ensure ongoing compliance with the continuing disclosure requirements of the Rule and (c) to cause its counsel to provide an opinion of such counsel in a form satisfactory to the underwriter of the Bonds and underwriter's counselor disclosure counsel, as applicable. SECTION 21. Development Impact Fee Credit, Payment and Reimbursement. Proceeds of the Bonds (the "TDIF Bond Proceeds") in an amount equal to the estimated Aggregate TDIF Obligation shall be deposited and set aside in a separate account of the Project Fund (the "Transportation Facilities Account") to be established by the Bond Indenture by and between the District and U.s. Bank National Association, as fiscal agent (the "Indenture"). Tbe use of such proceeds shaH be restricted to payment of the Purchase Price for Transportation Facilities to be constructed by the Developers. Upon the deposit of the TDIF Bond Proceeds in the Transportation Facilities Account, such amount shall be credited against the Aggregate TDIF Obligation. If and to the extent that the actual Aggregate TDIF Obligation exceeds the amount of the TDIF Deposit, the balance of the Aggregate TDIF Obligation shall be payable pursuant to the provisions of Chapter 3.54. If and to the extent that the actual Aggregate TDIF Obligation is less than the TDIF Bond Proceeds, such surplus shall be transferred to a separate account of the Project Fund (the "Acquisition Account") to be established by the Indenture and used pursuant to the Indenture and this Agreement to pay the Purchase Price for the acquisition of the Improvements. Proceeds of the Bonds (the "PFDIF Bond Proceeds") in an amount equal to the estimated Aggregate PFDIF Obligation shall be deposited and set aside in a separate account of the Project Fund (the "Public Facilities Account") to be established by the Indenture. Except as otherwise provided in this paragraph, the use of such proceeds shall be restricted to payment of costs incurred by the City for the acquisition or construction of Public Facilities. Upon the deposit of the PFDIF Bond Proceeds in the Public Facilities Account, such amount shall be credited against the Aggregate PFDIF Obligation. If and to the extent that the actual Aggregate PFDIF Obligation exceeds the amount of the PFDIF Bond Proceeds, the balance of the Aggregate PFDIF Obligation shall be payable pursuant to the provisions of Chapter 3.54. If and to the extent that the actual Aggregate PFDIF Obligation is less than the PFDIF Bond Proceeds, such surplus shall be transferred to the Acquisition Account of the Project Fund and used pursuant to the Indenture to pay the Purchase Price for the acquisition of the Improvements. SECTION 22. Supplemental Bill for Payment of Special Taxes. Developer acknowledges that the rate and method of apportionment of Special Taxes provides that 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. 13-1, 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. Tbe City has represented to the Developer that delinquencies in the payment of special taxes intended to be collected on property tax bills have occurred in other community facilities districts formed by the City as a result of difficulties experienced by the office of the 16 .} .:;;51 WDIVEN\327580.2 Treasurer-Tax Collector of the County of San Diego (the "Tax Collector") in the timely billing and collection of such special taxes. If and to the extent that the Tax Collector fails, for whatever reason, to timely bill the full amount of the special taxes levied on properties owned by the Developer or any affiliate of the Developer within CFD No. 13-1, the City, on behalf ofCFD No. 13-1, may elect to directly and separately bill ("Direct Bill") the Developer for such deficiency and Developer agrees to (a) pay such deficiency within the time period specified in such Direct Bill which shall be no less than thirty calendar days from the date of mailing of such Direct Bill or (b) provide the Director of Finance with proof of payment to the Tax Collector of such deficiency in a form satisfactory to the Director of Finance. Should the Developer pay such deficiency directly to the City pursuant to a Direct Bill, the City agrees upon receipt of such payment to timely submit an amendment of the Special Tax levy on the Developer's property to the Tax Collector to reduce such levy by the amount of such payment. Delinquency in the payment of a Direct Bill sent pursuant to the preceding paragraph shall not be enforceable as a personal obligation of the Developer but shall be enforceable in the same manner as if such delinquency had been for the payment of special taxes billed on the property tax bill. SECTION 23. Conflict with Other Agreements. Except as specifically provided herein, nothing contained herein shall be construed as releasing Developer or the Merchant Builders from any condition of development or requirement imposed by any other agreement with City. SECTION 24. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval, discretion or acceptance of any party hereto or any of their respective employees, officers or agents shall be deemed to require that such consent, approval or acceptance not be unreasonably withheld or delayed, unless such provision expressly incorporates a different standard. SECTION 25. Entire Agreement; Amendment. This Agreement and the agreements expressly referred to herein contains all of the agreements of the parties hereto with respect to the matters contained herein and no prior or contemporaneous agreement or understandings, oral or written, pertaining to any such matters shall be effective for any purpose. No provision of this Agreement may be modified, waiver, 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. SECTION 26. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two (72) hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: Developer: Otay Project, L.P. 350 West Ash Street, Suite 730 San Diego, CA 9210 I Attn: Kent Aden WDIVEN\327580.2 ",:!, J:;;' .- ,.., ::, (3 17 City: City ofChula Vista 276 Fourth Avenue Chula Vista, CA 91910 Attn: City Manager Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party. SECTION 27. Severability. If any provision of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. SECTION 28. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Developer may not assign its rights or obligations hereunder except upon written notice to City within ten (10) days of the date of such assignment indicating the name and address of the assignee. Upon such notice and the assumption by the assignee of the rights, duties and obligations of the Developer arising under or from this Agreement, Developer shall be released by City from all future duties or obligations rising under or from this Agreement. Notwithstanding the preceding sentence, Developer may assign its rights and obligations hereunder as security to lenders for the purpose of obtaining loans to finance development within CFD No. 13-1, but no such assignment shall release Developer from its obligations hereunder to City. SECTION 29. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California, Additionally, this Agreement and the construction of the Improvements shall be subject to all City ordinances and regulations relating to the requirement of improvement agreements, land division, improvement security or other applicable development requirements. SECTION 30. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by any other party, or the failure by a party to exercise its rights under the default of any other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by any other party with the terms of this Agreement thereafter. SECTION 31. Singular and Plural; Gender. As used herein, the singular of any work includes the plural, and terms in the masculine gender shall include the feminine. SECTION 32. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. SECTION 33. Construction of Agreement. This Agreement has been reviewed by legal counsel for both the City and the Developer and shall be deemed for all purposes to have been jointly drafted by the City and the Developer. No presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. The language in all parts of this Agreement, in all cases, shall be construed as a whole and in WDIVEN\327580.2 18 1 ."'> r ,,", ,-,'" '" ,.,,).. 'o- j ~. ~... accordance with its fair meaning and not strictly for or against any party and consistent with the provisions hereof, in order to achieve the objectives of the parties hereunder. The captions of the sections and subsections of this Agreement are for convenience only and shall not be considered or referred to in resolving questions of construction. SECTION 34. Recitals; Exhibits. Any recitals set forth above and any attached exhibits are incorporated by reference into this Agreement. SECTION 35. Authority of Signatories. Each signatory and party hereto hereby represents and warrants to the other party that it has legal authority and capacity and direction from its principal to enter into this Agreement, and that all resolutions and/or other actions have been taken so as to enable such party to enter into this Agreement. SECTION 36. Recordation. The parties shall execute, acknowledge and cause this Agreement, or a memorandum of this Agreement in a form satisfactory to the parties hereto, to be recorded against the Development Project in the Official Records of San Diego County. [End of page. Next page is signature page.] 19 . .'1 (Jy ~:Ji'4'-'" .if t;,T' ".;c I WDIVEN\327580.2 Signature Page to AcquisitionIFinancing Agreement by and between the City of Chula Vista and OtayProject, L.P. EXECUTED by and between the parties hereto on the day and year fIrst hereinabove written. "CITY" CITY OF CHULA VISTA MAYOR CITY OF CHULA VISTA STATE OF CALIFORNIA ATTEST: APPROVED AS TO FORM: CITY CLERK CITY OF CHULA VISTA STATE OF CALIFORNIA ANN MOORE, CITY ATTORNEY CITY OF CHULA VISTA STATE OF CALIFORNIA WDIVEN\327580,1 S -I 9-;).0/ ., "DEVELOPER" OTAY PROJECT, L.P., a California limited liability company By: OT A Y PROJECT, LLC, a California limited liability company, General Partner By: OTAY RANCH DEVELOPMENT, LLC, a Delaware limited liability company, its managing member By: ~/ /" WDIVEN\327580.1 8-2 '1 -.2!" ).... CALIFORNIA ALL.PURPOSE ACKNOWLEDGMENT -, - < ~ , - [, State of Calif~ ----, \\ , counni~~Jdi~O On ~h 5--'1 a::c( 0 Date I [. personally appeared Name(tJ-Signer(S) ~ersonally known to me D proved to me on the basis of satisfactory evidence to be the person~' whose nam.,(s)(J;!,,{ subscribed to the wit' instrument and acknowledged to me _' he/ ~/thiy executed the sam" in his/ r/th~ ~th,orizeq... capacity~' s an that by ~r/thoo signaturtf(sJ on the instrument the person(s( or the enti behalf of which the person(s( acted, ecuted t e instrument. ss. . MOIIAWICEUSI (:Qt........ # 1551233 NeIDy MIle . CcIIIIorna j Ian DIego eo.nv U,CamI.--,MarII. [, OPTIONAL Though the infolTl1ation below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: D Individual D Corporate Officer - Title(s): D Partner - D Limited D General D Attorney-in-Fact D Trustee D Guardian or Conservator D Other: Top of thumb here Signer Is Representing: " II) 1999 National NolalyAsSQciaticn' 9350 De SotoAve., P.O. Box 2402' Chatsworth, CA91313-2402' www.naUonalnotary.org Prod. No.S907 . Aeorder: Call TolI.Free 1-aOO-876-8827 . 9-~b2J I I " I " J I " Exhibit" A" Acnnisition and Fimmnnp Agrp.p.ment For crn Nn 11.1 (Ot~v R:ln..h Vill~~p. Sp.ven) Imcrovement Descriction and Estimated Costs Improvement Improvement Description] Cost Estimatl!? N. _h, 1 La Media Road TDIF) $4,383,833 2 La Media Road Non- TOI $1,144,303 3 La Media Road Landsca in TDIF $1,350706 4 Ma dalenaAvenue Non-TDIF $1,635,210 5 Santa Luna Street (Non- TOIF\ $1,700,059 6 Santa Luna Street LandsC8Dina (Non- TDI $326,403 7 Fleisbein Street and Kincaid Avenue Sewer (Non- TDIF $507,955 . Trail S stem/Storm Drain S stem SI,459,698 . Sloce Landscapina 52,339,082 10 Traffic Signals S1599!7 11 Those Facilities to be financed bv the Public Facilities Develooment 1m act Fee(3) S1,927,740 TOTAL $16,934,906 ~ The description of the Improvements S~ forth in this Exhibit" A' it preliminacy and gcncra1. The final pJans and specifications may show substitutes or 11 modificatiOml 10 the proposed Improvements and proposed Improvements may be added or deleted with the COllSCllt ofDcveloptr and the City Engineer. Hoot sptdfied, componem:s of all street improvcment!i eligible for funding shall include (i) grading, (ii) wet and dry utilities within the right-of-way, (iii) norm drain &cilitics, (iv) pavins...(v) CW'b,8IItttr, sidewalk, mediana, (VI) traffic signals, (vii) Jightinll,(viii) 3IId aU OUler appurtena.nt improvCl'tlcnts. 21 CO$! cstimatCII an prelitnimuy and may be modified from time tQ time with the ccnsent ofDevcloper and the City Engineer. The Purchase Price ofaa lmprovclMnl shallbcbasedonactualcQSts. <:OIlJ'(!"". nP'V..lnnf!r Mrr.m M~mn <:..1' Inr ::?- / ..., :,,~ .-:..~-r- C:\Documents and Settings~niktarz.JOHNO\LacaJ Settings\Temporary Internet Files\OLKC1\Exhibit A Final BreakdOW1"l (V4) EXlDBIT "B" SUBSTANTIAL COMPLETION CRITERIA FOR IMPROVEMENTS General: 1. Substantial completion of an Improvement for purposes of determining the eligibility of such Improvement for the payment of the "Base Increment" therefore shall mean that the construction or work with respect to such Improvement, including each component of such Improvement, has progressed to the point where it is sufficiently complete so that it can be utilized for the purpose for which it was intended. Substantial completion criteria for each Improvement or component of an Improvement is further described below. 2. Payment for the "Retained Increment" of the Purchase Price for an Improvement shall be in accordance with Section 7, paragraph (c)(ii) and shall be made after submittal of a payment request form, as-built plans and such other documentation as is required pursuant to Section 7 paragraph (c )(ii), posting of maintenance bonds, and submittal of lien release evidence. Substantial Completion Criteria: A. Grading: Grading shall be deemed to be complete upon (1) completion of all preliminary grading work (mobilization, site clearing, remedial grading, overexcavation, installation of sub drainage systems) (2) certification of compaction by the geotechnical engineer, quantity verification by the civil engineer, and confirmation by the City inspector and (3) installation of all surface grading improvements (brow ditches, retaining walls, slope protection and similar improvements) and the certification thereof by the geotechnical engineer and confirmation by the City inspector. B. Sewer: Sewer construction shall be deemed substantially complete upon the installation, flushing, and testing of sewer main line, laterals, cleanouts, manholes, and all other appurtenances of the sewer system as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and the verification of such installation by the civil engineer and confirmation of such installation by the City inspector. C. Storm Drain: Box culverts and headwall structures shall be deemed substantially complete upon installation as shown on the approved plans and specifications therefore and in accordance with the City standard plans and specifications and verification of such installation by the civil engineer, and confirmation of such installation by the City inspector. D. Drainage Facilities: Drainage structures including energy dissipation devices (rip-rap, drop structures, cut-off walls, etc), drainage diversion structures, facilities required as part of the environmental mitigation measures, and other drainage channel appurtemuices including drainage pipes connecting the brow ditches to the channel, shall be deemed substantially complete for payment of the Base Increment upon the installation thereof as shown on the . WDIVEN\327580.1 B-1 9..);'S- approved plans and specifications therefore and in accordance with City standard plans and specifications and the verification of such installation by the civil engineer and confirmation of such installation by the City inspector. E. Dry Utility Backbone System: Dry utilities (electric, gas, telephone, CATV) shall be deemed substantially complete upon the installation of the conduits, junction boxes, payment of utility fees, and written acceptance of the facilities by the utility companies. F. Roadway Pavement and Roadway Drainage System: Roadway pavement and drainage improvements shall be deemed substantially complete upon the installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector of all storm drain pipes, catch basins, drainage inlets and cleanouts for the roadway storm drain system, installation of roadway base material, concrete curb and gutter, and AC pavement including the preparation ofthe sub grade and base material. G. Other Street Surface Improvements: Street surface improvements including street lights, traffic signals and conduits, signal interconnect, street name signs, roadway signing and striping, and appurtenances shall be deemed substantially complete when installed as shown on the improvement plans and in accordance with City standard plans and specifications and upon confirmation of such installation by the City inspector. H. Street Landscape Irrigation and Planting: Parkway landscaping within the roadway right of way including planting, irrigation, concrete sidewalks, median maintenance strip, pedestrian ramps, channel maintenance roads and all associated sub grade and base material preparation shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector. 1. Slope Landscaping: Landscape planting and irrigation improvements for the slopes outside of the roadway and channel right of way and the regional trail (DG) and fencing shall be deemed substantially complete upon installation thereof as shown on the approved improvement plans therefore and in accordance with City standard plans and specifications and confirmation of such installation by the City inspector. WDIVEN\327580.1 B-2 c;,..2t.." EXHIBIT "C" DESIGN, BID, CONTRACT AND CHANGE ORDER REQUIREMENTS 1. General These requirements shall be applied to all improvements proposed to be constructed by the Developer and subsequently acquired by the City through CFD No. 13-1. Except as expressly provided otherwise in the body of this Agreement itself, anv deviation from these requirements must be approved in writin~ in advance bv the City Engineer. References to the City Engineer means the City Engineer or his or her designee. The City reserves the right to make the final determination of cost of the Improvements to be acquired in accordance with this Agreement. 2. Design Phase A. Only design costs directly related to the public improvements to be acquired are eligible for inclusion. . B. Bidding Documents. Two complete sets of bidding documents, including improvement plans, general provisions, and bid proposal forms shall be submitted to the Engineering Division for review and approval within 15 working days of submittal. Advertising for bids shall not take place until the bidding documents are approved in writing by the City. This procedure shall be followed for each contract proposed to be advertised. Unless otherwise noted, the bidding documents shall conform to the following minimum requirements: 1. Unless impractical due to the nature of the improvement, the bid proposal shall be unit priced rather than lump sum. A.c. pavement, base and sub-base shall be bid on a square foot per inch thickness basis. . 2. The bidding documents shall require the bidder/contractor to provide the following bonds: a. Bid Bond - 10% of the amount of the bid. b. Material and Labor Bond - 50% ofthe contract amount. c. Performance Bond - 100% of the contract amount. . The Contractor shall post performance and labor and material bonds for all improvements as part of the bid. The City of Chula Vista shall be named as additional obligee with the right to call such bonds if needed. Such bonds shall WDNEN\327580.! C-I 9-')~i remain in effect until such time as all improvements are completed and accepted by the City Engineer. The City Engineer shall be the sole judge in determining the release of such bonds. 3. The bidding documents shall require the successful bidder to provide evidence of comprehensive or commercial general public liability insurance in the amount of at least $1,000,000 prior to the award of the contract. 4. Unless otherwise required by the City, the contractor is not required to pay prevailing wages. 5. The bidding documents must clearly state the time, date, and place where bids are to be submitted and opened. 6. The bidding documents shall clearly state the amount of time to complete the work. The time allowed must be reasonable for the amount of work. Accelerated construction time allowances must be supplementally bid, and are not eligible for public finance unless previously approved by the City Engineer. 3. Bidding Phase A. The Notice inviting Sealed Bids shall be published in the Chula Vista Star News and the San Diego Daily Transcript. The notice inviting bids shall state where bidding documents are available. B. The bidding period following the advertisement of the Notice Inviting Sealed Bids shall be a minimum of 14 calendar days. C. Developer shall provide complete sets of bidding documents to all contractors, subcontractors, or suppliers requesting them. A reasonable price may be charged for bidding documents. D. Developer shall keep a log of all persons obtaining bidding documents, and their mailing address. E. Addenda shall be mailed by first class mail to all bidding document holders and the City Engineer. If an addendum is required within five working days of the noticed bid opening date, the bid opening date shall be extended. F. Submitted bids shall be in sealed envelopes. G. Bids shall not be accepted after the stated time for submission. H. Bid opening shall be conducted by the Developer at the Developer's place of business or other site mutually acceptable to the Developer and City Engineer. WDIVEN\327580.1 C - 2 9 ~.) b"f E. Sealed bids shall be opened and read aloud immediately following the submission time. A City representative shall be invited to attend the bid opening. J. Conditioned bids, unless the bid proposal lists them for all to bid on, shall not be accepted. K. The bid proposals shall conform to all state and local laws governing the listing of subcontractors and suppliers. L. The arithmetic of the two lowest bid proposals received shall immediately be checked for errors. . M. . A tabulation of all bids received shall be provided to the City Engineer within five working days of the bid opening. N. Award shall be made to the lowest responsible bidder within a reasonable period of time following approval by the City Engineer. o. A preconstruction meeting shall be held with the contractor prior to beginning the work. A City representative shall be invited to attend the meeting. . P. The Notice to Proceed shall be issued within a reasonable period of time following the contract execution. 4. Construction Phase A. The City shall be provided a copy of the construction schedule. B. Developer shall require the contractor to conduct weekly construction status meetings to which a City representative shall be invited. . c. Any additional costs incurred for the benefit of the Developer, such as accelerating the construction schedule, shall not be eligible for public financing unless previously approved by the City Engineer. D. Any additional construction costs incurred due solely to delays caused by the Developer shall not be eligible for public financing. E. All contracts and construction related records shall be available to the City as and when required for the final determination of eligible costs for the public financing. This shall include trip tickets and other confirmations of material delivered to the Improvement. C - 3 9-;;.hj WDNEN\327580.1 5. Change Orders A. No single change order for a TDIF Improvement shall be eligible for inclusion in the Purchase Price for such Improvement that increases or decreases the original contract amount for the construction of such Improvement by more than $50,000 without City Council approval. B. All change orders shall be fully documented and be in a format consistent and be in a format consistent with the original bid items (i.e., show units, unit costs, extensions and total costs). The City Engineer, in his/her sole discretion shall determine the eligibility of each change order for inclusion in the Purchase Price for an Improvement. C.. The aggregate of all change orders for TDIF Improvements, including those for differences between estimated and actual quantities shall not increase the contract amount by more than the amount specified below without City Council approval: Original Contract Range Maximum Aggregate Increase Up to $100,000 10% $100,001 to $1,000,000 $10,000 plus 7% of amount over $100,000 More than $1,000,000 $73,000 plus 5% of amount over $1,000,000 The aggregate of all change orders for any non-TDIF Improvement shall not increase the Purchase Price thereof so as to cause such Purchase Price to exceed the cost estimate for such Improvement as set forth in Exhibit A by more than 25% without City Council approval. D. All change orders involving changes in scope of the project, or increases of contract amounts greater than outlined in C. above shall be submitted to the City Council for approval after the construction of the Improvement is completed, but before the payment of any portion of the Purchase Price for such Improvement is authorized by the City Engineer. Change orders that the Developer does not wish to include in the Purchase Price for an Improvement do not need to go to City Council for approval. E. Negotiated set price change orders are acceptable where most of the items of work in the change order have unit prices from the bids. Where change orders are for work that does not have unit prices for a substantial portion of the work contained within the bids, time and materials change orders are preferred. WD!VEN\32758Q.1 C - 4 f ~ .) 70 Exhibit "D" City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) Base Increment Payment Request No. . The undersigned (the "Developer") hereby requests payment in the total amount of $ for the Base Increment for the Improvements (as defined in the Acquisition/Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), ail as more fully described in Attachment I hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: A. He(she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. The Improvements that are the subject of this Payment Request have been substantially completed in accordance with Exhibits B and C. C. This request for payment of the Base Increment for the Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Base Increment for which payment is requested has not been the subj ect of any prior payment request paid by the City. D. All items have been clearly delineated as DIF/Non-DIF eligible (ail DIF's) and detailed backup and cost breakdown is provided supporting each item. E. Supporting documentation (such as third party invoices, change orders and checks) is attached with respect to each cost for which payment is requested. F. The Improvements for which payment is requested were constructed In accordance with the requirements of the Agreement. G. Developer is in compliance with the terms and provisions of the Agreement. . H. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after due inquiry, will attach to the Improvements. WDNEN\327580.! D-I I-~;l 1. A cop(ies) of the letter(s) of unconditional lien release for the Improvements for which payment is requested is included this request. Alternatively, a copy of a letter of conditional lien release for the Improvements for which payment is requested together with a letter !Tom the contractor( s) stating that they have been paid in full by the Developer for the Improvements for which payment is requested is also included in this request. I hereby declare under penalty of peIj ury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance Director of Engineering Dated: WDIVEN\327580.1 D-2 /-~7';'" ATTACHMENT 1 SUMMARY'OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO._ . Imnrovement Cost Estimate Base Increment Disbursement Reauested [List here all hnprovements for which payment is requested, and attach supporting documentation] . WDNEN\327580.1 D-3 7- ~ 72J . Exhibit "E" City of Chula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) Retained Increment Payment Request No. The undersigned (the "Developer") hereby requests payment in the total amount of $ for the Retained Increment of the Purchase Price of the Improvements (as defined in the Acquisition/Financing Agreement by and among the City of Chula Vista (the "City") and Developer and described in Exhibit A to that Agreement), all as more fully described in Attachment 1 hereto. In connection with this Payment Request, the undersigned hereby certifies, represents and warrants to the City as follows: A. He( she) is a duly authorized representative or signatory of Developer, qualified to execute this Payment Request for payment on behalf of Developer and is knowledgeable as to the matters set forth herein. B. Developer has submitted or submits herein to the City, if applicable, as-built drawings or similar plans and specifications for the Improvements and such drawings or plans and specifications, as applicable, are true, correct and complete. C. The Purchase Price for the Improvements has been calculated in conformance with the terms of the Agreement. All costs for which payment is requested hereby are eligible costs (as permitted in the Agreement) and have not been inflated in any respect. The Retained Increment for which payment is requested has not been the subject of any prior payment request paid by the City. D. All items have been clearly delineated as DIFlNon-DIF eligible (all DIF's) and detailed backup and cost breakdown is provided supporting each item. E. Supporting documentation (such as third party invoices, change orders, lien releases and checks) is attached with respect to each cost for which payment is requested. F. The Improvements for which payment is requested were constructed In accordance with the requirements of the Agreement. G. Developer is in compliance with the terms and provisions of the Agreement. H. No mechanics liens or other encumbrances have attached, or to the best knowledge of Developer, after one inquiry, will attach to the Improvements. E - I ;-;-~7f WDIVEN\327580.! I hereby declare under penalty of peIjury that the above representations and warranties are true and correct. DEVELOPER: Dated: CITY Payment Request Approved for Submission to Director of Finance City Engineer Dated: . E- 2 ~-~ 7:;;- WDIVEN\327580.1 ATTACHMENT 1 SUMMARY OF IMPROVEMENTS TO BE ACQUIRED AS PART OF PAYMENT REQUEST NO. _ Improvement Pnrchase price Base Increment Retained Disbursement Increment Reouested [List here all Improvements for which payment is requested, and attach supporting documentation] WDNEN\327580.1 E-3 <J-.)7/P EXHIBIT" F" LEGAL DESCRIPTION OF PROJECT . WDIVEN\327580.1 E-1? -,)77 RESOLUTION NO. 2006- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 13-1 (OTAY RANCH VILLAGE SEVEN), 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 RELATED TO THE ISSUANCE OF THE BONDS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION WITH THE ISSUANCE OF THE BONDS WHEREAS, the City Council of the City of Chula Vista ("City Council"), previously conducted proceedings to form and formed a community facilities district pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", being Chapter 2.5, Part I, Division 2, Title 5 of the Government Code of the State of California (the "Act") and the City of Chula Vista Community Facilities District Ordinance enacted pursuant to the powers reserved by the City of Chula Vista under Sections 3, 5 and 7 of Article XI of the Constitution of the State of California (the "Ordinance") (the Act and the Ordinance may be referred to collectively as the "Community Facilities District Law"), such Community Facilities District designated as Community Facilities No.. 13-1 (Otay Ranch Village Seven) (the "Community Facilities District") for the purpose of financing the acquisition or construction of certain public improvements; and, WHEREAS, this City Council 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 this 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, National Association, as fiscal agent (the "Fiscal Agent") setting forth the terms and conditions relating to the issuance and sale of Bonds (the "Bond Indenture"); B. Bond Purchase Agreement authorizing the sale of Bonds to Stone & Youngberg LLC, the designated underwriter ('"the Underwriter") (the "Bond Purchase Agreement"); I 9-,)7;' C. Preliminary Official Statement containing information concerning the terms and conditions of the Community Facilities District and the Bonds, and other information (the "Preliminary Official Statement"); and D. Continuing Disclosure Agreement by and between the Community Facilities District and NBS Government Finance Group, 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 in this Resolution 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 ofChula Vista. NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: . SECTION 1. Recitals. The above recitals are true and correct. SECTION 2. Determinations. The City Council 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 3 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 ofthe Land Secured Bonded Indebtedness. 2 9-~/J The Goals and Policies further provide that the full cash value of each development area for which no final subdivision map has been filed must also be at least 4 times the Land Secured Bonded Indebtedness allocable to each such property. Final subdivision maps have been filed for each development area within the Community Facilities District, therefore, there are no unmapped development areas remaining within the Community Facilities District. These determinations are based upon the full cash value of such properties and development areas as shown upon an appraisal of the subj ect properties prepared by Bruce W. Hull & Associates, a state certified real estate appraiser, as defined in Business and Professions Code Section I 1340( c). These determinations were 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 in the Community Facilities District, the private sale of the Bonds will result in a lower overall cost to the Community Facilities District. SECTION 3. Bonds Authorized. The City Council authorizes the special tax bonds of the Community Facilities District designated as "City ofChula Vista Community Facilities District No. 13-1 (Otay Ranch Village Seven) 2006 Special Tax Bonds" (the "Bonds") in an aggregate principal amount not to exceed $17,000,000 to be issued pursuant to the Community Facilities District Law, this Resolution and the Bond Indenture. 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 4. Authorization and Conditions. The City Council authorizes and directs the City Manager, an Assistant City Manager, the IJirector of Finance and such other official or official.s of the City as may be designated in writing by this City Councilor the City Manager (each, an "Authorized Officer") to execute and deliver the final form of the various documents and instruments described in this Resolution, with such additions pr changes the Authorized Officer may deem necessary and advisable provided that no additions or changes shall authorize an aggregate principal amount of Bonds in excess of$17,000,000, an annual interest rate on the Bonds in excess of fi ve and seventy five hundredths percent (5.75%) per year and an underwriter's discount in excess of one and seventy five hundredths percent (1.75%) 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 5. Bond Indenture. The City Council approves the form of Bond Indenture by and between the Community Facilities District and the Fiscal Agent, with respect to the Bonds as .,..., ..... 3 />,.)<f:) presented to this City Council and on file with the City Clerk. The City Council authorizes and directs an Authorized Officer to complete and execute the Bond Identure on behalf of the Community Facilities District, subject to the provisions of Section 3 above. SECTION 6. Official Statement and Continuing Disclosure Agreement. The City Council 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 or additions 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 City Council authorizes the Director of Finance or, in the absence of th~ Director of Finance, another Authorized Officer, to determine when the Preliminary Official Statement is deemed final, and authorizes and directs the Director of Finance or such other Authorized Official, to provide written certification that the Preliminary Official Statement is final. The execution of the final Official Statement, which shall include such changes and additions 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 authorizes the distribution of the final Official Statement by the Underwriter as the initial purchaser of the Bonds. The City Council approves the form of the 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. The City Council authorizes and directs an Authorized Officer to complete and execute the Continuing Disclosure Agreement on behalf of the Community Facilities District, subject to the provisions of Section 3 above. SECTION 7. Sale of Bonds. The City Council authorizes and approves the negotiated sale of the Bonds to the Underwriter. The City Council approves the form of the Bond Purchase Agreement and authorizes and directs an Authorized Officer to execute the Bond Purchase Agreement on behalf of the Community Facilities District upon the execution of the Agreement by the Underwriter, subject to the provisions of Section 3 above. SECTION 8. 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. The City Council authorizes and directs any Authorized Officer and other responsible City officials, acting for and on behalf of the Community Facilities District, 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 ofthe Bonds upon the receipt of the purchase price of the Bonds from the Underwriter. SECTION 9. Actions. The City Council approves, confirms and ratifies all actions previously taken by the officers and agents of the City ,with respect to the establishment of the Community Facilities District and the sale and issuance of the Bonds. The City Council authorizes and directs the proper officers of the City, acting for and on behalf of the Community Facilities District, 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 4 9--2/1 advisalJle in order to consummate the lawful issuance and delivery of the Bonds in accordance with the Community Facilities District Law, this Resolution, the Bond Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement, and any certificate, agreement, contract, and other document described in the documents approved pursuant to this Resolution. SECTION 10. Effective Date. This Resolution shall take effect from and after its adoption. Presented by Approved as to form by Leah Browder Acting Director of Engineering '--!L., . ~ Ann Moore City Attorney WDrvEN\327578.2 5 9--';;2 COUNCIL AGENDA STATEMENT Item No .J Meeting Date 04-~4-/~ ITEM TITLE: RESOLUTION ACCEPTING PROPOSALS ANDAWARDING CONTRACTS FOR POLICE INITIATED TOWING AND STORAGE SERVICES RESOLUTION AMENDING THE POLICE INITIATED TOWING SERVICE RATE SCHEDULE, ELIMINATING THE TOW REFERRAL FEE AND IMPLEMENTING A TOW LICENSE FEE, AND AUTHORIZING THE POLICE DEPARTMENT TO MAKE ANNUAL CHANGES TO THE POLICE INITIATED TOWING SERVICE RATE SCHEDULE. SUBMITTED BY: Chief of Police ~ E'-.,.. e-~ REVIEWED BY: City Manager j!.~ yl\ (4/5ths Vote: Yes _ No X ) RECOMMENDATIONS: Staff recommends that Council continue this item to a future date. DENNIS W. FREDRICKSON TOMAS V. MAZEIKA. TIMOTHY J. GRANT PETER S. GREGOROVIC' MARC D. CLEA VINGER JACQUELINE F. STEIN MICHELLE M. CLARK ELLIOT H. HELLER JOHN A. CRONIN Fredrickson, Mazeika & Grant, LLP VV\VVV.1'!\1GLFGAL.COJ\.1 SHARI 1. WEINTRAUB MICHELLE I. MORELLI DARLENE M. FIORICA DANIELLE G. NELSON KENYA T. AGUILAR CATHERINE L. GODFREY KARA B. PERSSON ALLISON S. POPEN BRANDY P. TYLER SHIRLEY J. FOSTER' ION S. TANGONAN JOANNE E. SAUNDERS BERNADETTE S. TIONGSON . ANDREW D. TAYLOR. MARIA WVENTIME EST ANISLAO. DARREN J. LACH' 550 WEST "C' STREET SUITE 1400 SAN DIEGO, CALIFORNIA 92101 (619)234--1722 FAX (619)234-1759 . Licensed to Practice in Nevada MEMORANDUM TO: Stephen C. Padilla, Mayor; Patricia E. Chavez, Councilmember; John McCann, Councilmember; Jerry R. Rindone, Councilmember; Steve Castaneda; Councilmember; David D. Rowlands, Jr., City Manager; Ann Moore, City Attorney DATE: April 4, 2006 RE: INFORMATION PROVIDED ON BEHALF OF JC TOWING TO BE CONSIDERED IN THE AWARDING OF CONTRACTS FOR POLlCE- INITIATED TOWING AND STORAGE SERVICES, AND AMENDING THE RATE SCHEDULE (Continue from March 21, 2006 and Staff Recommendation to further continue this item to a future date.) JC Towing respectfully requests the Mayor and City Councilmembers consider the following, prior to any vote on awarding contracts for police initiated towing and storage services based on the Request for Proposals dated October 12,2005: I. CHRONOLOGY OF EVENTS IN JC TOWING'S EFFORTS TO OBTAIN PUBLIC RECORDS TO PREPARE FOR PUBLIC COMMENT AT THE CITY COUNCIL MEETING; TO DATE, THE CITY HAS FAILED TO PROVIDE JC TOWING WITH THE REQUESTED PUBLIC DOCUMENTS December 20,2005 JC Towing's counsel corresponds to John Coggins and Edward Chew, as a formal protest and dispute of the proposed award of the Police Initiated Tow Agreement. This correspondence pointed out deficiencies in the process, both as to determination of "qualified" candidates and the actual potential violation of Vehicle Code section 12110 ifthis agreement is entered into by the City based on the bid amounts of the highest four bidders. NEVAIM 333 Soulh 6th S1,,'el Suitl'2'O LasV,,~a.,Nevada 89101 (702)3Il4-41W1 FAX (7Il2).'M-+lll4 I,QS ANGELES COUNIT 500 Brand Bnul"vard 2(~' Fh",r Gl"ndale. California 1J1203 (818)24&2118 FAX (!l66)41H-'26.1 ORANGECOJ.1NIX 7545 Irvine C",Mr Drive Suitl'200 Irvine, California 92618 (\I4~)727-\I4(.J FAX(8f>fll4n~2b1 RIVF.RSIDE COUNTY 5055 Cany"n Crest Dnv,' Riversid",Ciilifomia92507 (951)682-5500 FAX (!lM)4H-6263 BAY AREA lhOPilleStn','L Suilr710 San Frall<isnl,Calif"mia Wn1 (415}'I57-"X"O FAX(!lM}4n~261 SACRAMENTO '00 Harding B"ulevard Suitl'1l2 Ros,'viUe, California <6h78 (91h)7Kl-14<Kl FAX (91h) 7K'_1421 Memorandum Regarding Awarding Contracts for Police Initiated Towing and Storage April 4, 2006 Page 2 February 16,2006 March 8, 2006 March 17,2006 March 21, 2006 March 23, 2006 March 27, 2006 March 29,2006 April 3, 2006 Response by City Attorney's Office opining that the high bidders were deemed qualified and there is no potential violation of Vehicle Code section 12110, despite no inclusion offacts upon which their position is based. JC Towing's Public Records Acts Request to City (Assistant City Attorney Bart Miesfeld), requesting those documents necessary to address the City Council at its meeting to approve the Police Initiated Tow Agreement. Telephone call from Assistant City Attorney Bart Miesfeld, stating that he was on vacation and will review March 8th Records Request. Telephone call from Assistant City Attorney Bart Miesfeld, stating that City Council's vote on Police Initiated Tow Agreement at tonight's meeting will be continued. Documents requested will be produced Monday, March 27 or Tuesday, March 28. Permitted to review at Police Headquarters, RFP Respondent's Proposals and Site Survey forms. No Score Sheets were produced for review. Written request to City Attorney's Office (Bart Miesfeld) for copies of documents made available for visual review on March 23rd as well as all documents requested on March 8, 2006. Correspondence to City Attorney's Office (Bart Miesfeld) again requesting copies of all prior requested documents. Voicemailleft at City Attorney's Office (Bart Miesfeld) to obtain copies of all prior requested documents. No reply received. Memorandum Regarding Awarding Contracts for Police Initiated Towing and Storage April 4, 2006 Page 3 II. THE PRESENT RFP WHICH AWARDS TO "HIGEST BIDDER(S)" RESULTS IN (I) AWARDING TO EITHER UNQUALIFIED OR LESS QUALIFIED TOW OPERATORS AND (2) A VIOLATION OF VEHCILE CODE SECTION l2I10. 1. AWARD TO UNQUALIFIED OR LESS QUALIFIED TOW OPERATORS. The RFP dated October 12, 2005 provides in relevant part: 2.3 Response to Ranking and Bid Process. Proposals will be grouped in either "qualified" or "Unqualified" categories based on responses to requirements and criteria stated in the Request for Proposal. "Qualified" proposals will continue on in the selection process. "Unqualified" proposals will be eliminated from the process. Contractors who have been assigned a "Qualified" designation will have the opportunity to then bid on one of the four tow rotation slots available. The overall tow services contract for the City will be divided among these four tow rotation slots. The successful high bidders for each slot will then enter into contract negotiations for each slot. Those contractors who do not complete negotiations wili forfeit their bid and the next higher bidder will then be invited to participate in negotiations for the newly vacated tow rotation slot. If there are no more "qualified" bidders to fill the vacant slot, the remaining contractors will provide towing services for that vacant slot until a suitable replacement can be found. Although IC Towing does not address all issues of non-responsiveness with certain Respondents proposals, the following is for illustrative purposes, based on its limited in-person review allowed by the City. A more in-depth illustration will be provided once the City provides copies of all requested documents as discussed above. There are two proposals which contain information which easily demonstrate the lack of or lesser qualification of those tow service providers which are currently recommended as contracting parties because of the "highest bidder" format, discussed in detail below. Anthonv's Auto Center's Proposal: It is clear that Anthony's Auto Center's technical proposal is non-responsive and as a result, they should be considered as "unqualified". This is based on the following facts. The RFP from the City of Chula Vista clearly states on page 3 paragraph 2.1.3, "Section 3 defines the minimum qualifications a firm must possess and demonstrate in order to be considered responsive. Therefore, respondents must explicitlv respond to each numbered sub-section of Section 1." Anthony's Auto Center's response to 3.4.4 is, "Anthony's Auto Center is in compliance." Anthony's Auto Center failed to "explicitly respond" and failed to indicate how or why they are in compliance. As a result, they are non-responsive. Anthony's Auto Center's response to 3.5 is, "Anthony's Auto Center is in compliance with all the requirements for the tow trucks except for the 3-Axle to which it will be purchased within (I) year from the awarding of contract." Again, Anthony's Memorandum Regarding Awarding Contracts for Police Initiated Towing and Storage April 4, 2006 Page 4 Auto Center failed to indicate how or why they are in compliance with Section 3.5. As a result, they are non-responsive. Anthony's Auto Center's response to 3.5.1.5 is, "Anthony's Auto Center wishes to contract out the (1) one 3-Axle semi-tractor for the (1) one year period and attached is a letter of intent to purchase one within the next year." Anthony's Auto Center fails to give any proof of a contract with a company to provide the Heavy Duty Towing on their behalf. Again, Anthony's Auto Center is non-responsive. Additionally, the "letter of intent" does not indicate how they plan to purchase a 3-Axle and it does not indicate from whom they plan to purchase it from or type of 3-Axle they wish to purchase." Anthony's Auto Center's response to 4.3 is, "Anthony's Auto Center agrees and will comply to the removal of inoperable vehicles." Anthony's is non-responsive, they do not indicate how or what they plan to do with regards to this section. American Towin!!'s Proposal: It is clear that American Towing's technical proposal is non-responsive and as a result, they should be considered as "unqualified". This is based on the following facts. The RFP from the City of Chula Vista clearly states on page 3 paragraph 2.1.3, "Section 3 defines the minimum qualifications a firm must possess and demonstrate in order to be considered responsive. Therefore, respondents must explicitly respond to each numbered sub-section of Section 3." American Towing's response to 3.5.1.4 is, "American Towing does not own or operate a medium duty truck with lift or sling capability rated as 15,000 to 20,000 GVW. The 1989 Ford F-600 (20,200 GVW wheel-lift wrecker) is functionally equivalent to the City's requirements." American Towing admits in their own statement that they are non- responsive to the requirements of the City. Furthermore, by allowing such equipment to be considered creates an unfair advantage. A sling on a medium duty wrecker has a specific purpose and use. The F-600 wheel lift wrecker is not equivalent. American Towing's response to 3.5.1.5 is, "American Towing does not own or operate a 3-Axle Semi-Tractor with hydraulic or electrical wheel lift or sling capability lift rated at 48,000 Gross Vehicle Weight (GVW) or greater. Previously the corporation owned a big rig tow vehicle, but determined that the operational costs and the limited demand volume for such services did not justify continued ownership. American Towing understands that the City perceives that there may be an increasing need for big rig services in light of population growth, construction traffic, and increased traffic volume of heavy vehicles. However, at the mandatory pre-bid meeting, the City's representatives conceded that the existing date does not support a mandatory requirement that a company providing towing services own such a vehicle. Although stated as a fairness consideration at such a meeting, the City by permitting a company to contract for such services for one year has implicitly conceded that requiring ownership of a big rig tow vehicle may not be reasonable. Memorandum Regarding Awarding Contracts/or Police Initiated Towing and Storage April 4, 2006 Page 5 Finally, the City of San Diego in its request for proposal process this year has not required mandatory ownership of a big rig tow vehicle. American Towing currently has an agreement with another reliable towing company to provide big rig services, and is willing to extend that agreement to provide services to the City. Moreover, if awarded a contract and if the circumstances during the contract term demonstrates a demand for big rig services and need for ownership of a big rig tow vehicle by all contracting companies, American Towing would be willing to invest in the purchase of such a vehicle. However, under present circumstances such a requirement does not appear to be justified and American Towing notes an exception as provided for in the RFP." American Towing is non-responsive in this category. They admit that they do not own the necessary equipment. They are even bold enough to tell the City that it is not necessary and that they would only consider purchasing a big rig "if the circumstances during the contract term demonstrates a demand for big rig services..." Additionally, they indicate that they have an agreement with "another reliable towing company". However, they do not mention what the agreement is and they fail to mention who the agreement is with. American Towing blatantly dismisses the City's requirements and is clearly non-responsive. As a result, American should be considered as "unqualified". American Towing's response to 3.5.2 is, "Through an existing agreement with a reliable towing company, American Towing has the ability to tow and impound the largest vehicles, including semi-trailers and/or public safety (i.e. fire fighting apparatus) vehicles as specified in the RFP." American fails to indicate any proof of an agreement and fails to mention who the "reliable tow company" is and what type of equipment will be utilized by the "reliable tow company". American Towing's response to 4.7, Collection of Fees, specifically states American Towing's position that the current RFP is in violation of Vehicle Code section 12110. (This is the same position that JC Towing has maintained and is specifically addressed below.) Despite American Towing stating its position that the City's collection of fees based upon the award of the Police Initiated Tow Services Agreement to the "highest bidder," American Towing was deemed to be qualified and one of the "highest bidders" who is a proposed contracting tow service provider with the City under the present RFP. 2. VIOLATION OF VEHICLE CODE SECTION 12110. In addition to RFP Section 2.3 quoted above, the October 12, 2005, states: 5.1 Tow License Fee. Each qualified contractor shall pay a Tow License Fee to the City each year during the length of the contract. Each companies Tow License Fee is based upon the accepted bid amount during the selection process. Each year this fee will be increased in direct relation to the "Basic Tow Rate" enumerated on the Tow Services Fee Schedule and will be billed to the contractor on a quarterly basis. Memorandum Regarding Awarding Contracts for Police Initiated Towing and Storage April 4, 2006 Page 6 In reading these two operative sections, the "highest bidder" is clearly related to the "Tow License Fee," although explicitly not addressed in the RFP. However, these sections are mutually inconsistent in that the "highest bidder" format cannot be used by a municipality based on the Vehicle Code governing a public entity's compensation for arranging or requesting towing services, where that highest bidder format results in the public entity receiving compensation for it actual and reasonable costs in connection with the towing program. California Vehicle Code section 12110 (emphasis added) provides: Compensation for arranging or requesting towing services; restrictions; exceptions; towing franchise awards; offense; penalties (a) Except as provided in subdivision (b), no towing service shall provide and no person or public entity shall accept any direct or indirect commission, gift, or any compensation whatever from a towing service in consideration of arranging or requesting the services of a tow truck. As used in this section, "arranging" does not include the activities of empioyees or principals of a provider of towing services in responding to a request for towing services. (b) Subdivision (a) does not preclude a public entity otherwise authorized by law from requiring a fee in connection with the award of a franchise for towing vehicles on behalf of that public entity. However, the fee in those cases may not exceed the amount necessary to reimburse the public entity for its actual and reasonable costs incurred in connection with the towing program. (c) Any towing service or any employee of a towing service that accepts or agrees to accept any money or anything of vaiue from a repair shop and any repair shop or any employee of a repair shop that pays or agrees to pay any money or anything of value as a commission, referrai fee, inducement, or in any manner a consideration, for the delivery or the arranging of a delivery of a vehicle, not owned by the repair shop or towing service, for the purpose of storage or repair, is guiity of a misdemeanor, punishable as set forth in subdivision (d). Nothing in this subdivision prevents a towing service from towing a vehicle to a repair shop owned by the same company that owns the towing service. (d) Any person convicted of a violation of subdivision (a) or (c) shall be punished as follows: (1) Upon first conviction, by a fine of not more than five thousand dollars ($5,000) or imprisonment in the county jail for not more than six months, or by both that fine and imprisonment. If the vioiation of subdivision (a) or (c) is committed by a tow truck driver, the person's priviiege to operate a motor vehicle shall be suspended by the department under Section 13351.85. The clerk of the court shall send a certified abstract of the conviction to the department. If the violation of either subdivision (a) or (c) is committed by a tow truck driver, the court may order the impoundment of the tow truck involved for not more than 15 days. (2) Upon a conviction of a violation of subdivision (a) or (c) that occurred within seven years of one or more separate convictions of violations of subdivision (a) or Memorandum Regarding Awarding Contracts for Police Initiated Towing and Storage April 4, 2006 Page 7 (C), by a fine of not more than ten thousand dollars ($10,000) or imprisonment in the county jail for not more than one year, or by both that fine and imprisonment. If the violation of subdivision (a) or (c) is committed by a tow truck driver, the person's privilege to operate a motor vehicle shaii be suspended by the department under Section 13351.85. The clerk of the court shall send a certified abstract of the conviction to the department. If the vioiation of either subdivision (a) or (c) is committed by a tow truck owner, the court may order the impoundment of the tow truck invoived for not less than 15 days but not more than 30 days. An e-mail sent November 2, 2005, by Chula Vista Police Department Administrative Services Manager, Edmond Chew, III, makes a "conservative estimate" at the cost of administering the tow program in the amount of $430,000.00 per year. Since it is understood that Negligent Vehicle Impound Program (NVIP) fees must be paid in person at the Chula Vista Police Department prior to release of any vehicle, Mr. Chew allowed that "roughly $170,000.00" of the NVIP amount should be subtracted from the $430,000.00, but concludes that the tow license fee "should fall substantially below the City's" $250,000.00 fees in operational costs. It is uncertain as to how "conservative estimate" was calculated. With the City's current failure to produce the requested public records, JC Towing and all members of the public are unable to determine the factual basis for the Police Departments statements. The departmental budget adopted by the City of Chula Vista budget for fiscal year 2004-2005 available on the City's website does not provide any specific information for either the towing program or revenues and expenses of operation of the NVIP program. In contrast, the City of San Diego budget provides more precise information at least with respect with revenues and expenses associated with the NVIP program for that municipality, which could be found at: http://www,.sandiego.gov.budget/annuallvolume3/pdf/v3police.pdf at page 21 of 21 of the pdf file. It is interesting to note that the City of San Diego budget reflects that San Diego's supplies and services expense for operation of the NVIP program is the same $430,000.00 figure for the fiscal years 2004 and 2005 that Mr. Chew conservatively estimates as the cost of Chula Vista's program. It is important to note that even when equipment and personnel are included in San Diego's expenses, the NVIP program covers all expenses and produces a surplus. It is also understood from Mr. Chew's e-mail that the tow license fee is to replace the tow referral fee, "which traditionally partially offset the cost to administer the tow program." Mr. Chew adds that the tow referral fee was set in 1995, and that since that time City salaries and benefits have increased without an increase with the tow referral fee. This first ignores the fact that the minimum acceptable bid for each tow rotation position is set at $23,750.00, which is an increase under prior requests for proposals that contemplated the continuation of the tow referral fee set at $22,500.00. Although, unsure Memorandum Regarding Awarding Contracts/or Police Initiated Towing and Storage April 4, 2006 Page 8 as to how the minimum bid requirement was calculated, at least one inference is that this amount more accurately reflects the City's actual and reasonable cost in administering the tow program. More importantly, it is uncertain that changing the characterization from a "tow referral fee" to "tow license fee" that is bid by an interested towing company affects application of Vehicle Code section 12110(b).! However the change from the City establishing the amount of "tow referral fee" with the implication that such fee reflects the City's actual and reasonable cost incurred in connection with the towing program to a "tow license fee" where the qualified towing companies that propose to make the highest payments to the City are awarded tow rotation positions certainly creates a risk of criminal liability for each successful bidder. A further ground for the exception for the tow license fee is the City's intent, at the RFP section 5.1, that the improper tow license fee be increased each year in relation to the "basic tow rate" enumerated on the tow services fee. Such annual increase based solely on the basic tow rate without regard to the City's actual and reasonable cost incurred in connection with the City's tow program would be a further violation of that Vehicle Code section 1211 O(b). Further, where the NVIP fees were intended to offset the costs incurred by the City with respect to vehicles tows and impounds, a consequential result is the City potentially profiting from such operations when the City also receives increased fees from the towing companies. By issuing the RFP with the intent to award the Police Initiated Tow Services Agreement to the four "highest bidders," is on its face suspect in that the RFP does not specify the amount the City of Chula Vista requires to be compensated for its actual and reasonable costs in connection with the towing program. To be done properly, the City of Chula Vista must establish a base line of its actual and reasonable costs in connection with the towing program and divide that amount among the number of tow companies it elects to contract with. In such a format, the "most qualified" Respondents should be awarded the contract, thereby eliminating any appearance of impropriety, the possibility of violating Vehicle Code section 12110 and placing its contracting tow companies in jeopardy of also violating Vehicle Code section 12110 and being subject to prosecution for a misdemeanor. I Rose is a rose is a rose is a rose. Sacred Emily Gertrude Stein. (1913), Memorandum Regarding Awarding Contracts for Police Initiated Towing and Storage April 4, 2006 Page 9 3. CONCLUSION. Should the Chula Vista City Council vote for approval of the presently proposed Police Initiated Tow Services Agreement to the current four "highest bidders" based on the RFP dated October 12, 2005, it would (1) expose the City's residents to tow services performed by less qualified tow operators solely because they were "high bidders" and (2) expose the City to a violation of Vehicle Code section 12110. Respectfully submitted, FREDRICKSON, MAZEIKA & GRANT, LLP , Peter S. Gregorovic pgregorovic@fmglegal.com PSG:maf C:\Psg\JCT\chula vista memo re RFP vote.040406.doc COUNCIL AGENDA STATEMENT Item ) \ Meeting Date 4/04/06 SUBMITTED BY: Report on Chula Vista Transit (CVT) Funding and Operations Director of Public Works Operations,!;',/" ~ ' Y. /,,/ Xl/ City Manager (/1 ,r Jl '- (4/5ths Vote: Yes_No-Xl ITEM TITLE: REVIEWED BY: Per Council's direction, tbe following is tbe Transit Division's annual report on CVT's Funding and Operations, RECOMMENDATION: That Council accept tbis report BOARDS/COMMISSIONS RECOMMENDATION: Not applicable DISCUSSION: BACKGROUND At the Council meeting of February 22,2005, Transit staff presented tbe third report to Council on tbe City ofChula Vista's transit system, Chula Vista Transit (CVT), This is an updated report on CVT's funding and operations. CVT is an independent municipal transit system with tbe Council as its governing board. CVT forms part of the Metropolitan Transit System (MTS), which is a network oflocal and regional transit operators. The MTS provides a seamless transit system composed of local, regional and ADA paratransit services. MTS coordinates fares, transfers, routes and information services to the region. Transit staff also works closely witb tbe San Diego Association of Governments (SANDAG) tbe region's transit funding, planning and policy setting agency. FUNDING CVT operating funds come from a combination of State Transportation Development Act (TDA) funds (a Y. of I percent of the State Sales Taxes) and passenger fares, which are used for operations and for capital programming. Prior to July 2001, the City would receive a direct allocation of its IDA funds, but in 2001 regional transit funds were consolidated under tbe Metropolitan Transit Development Board (MTDB), now tbe MTS. OPERATING BUDGETS FY 05 Budget Transit operations' expenditures ended tbe year $166,860 under budget and revenues were $27,585 under projections. Transit staff's goal is to maximize tbe effectiveness of transit funds while recognizing the revenue constraints facing tbe region. The following line items had tbe 11-1 Page 2, Item \ \ Meeting Date 4/M-~ most significant savings: .:. Engine and Transmissions Rebuilds .:. Public Liability and Property Insurance .:. Electricity (Usage and cost lower than projected) .:. CNG Fuel Station Maintenance .:. City Staff Support Services (As needed basis) Service Budget Actual. Difference Chula Vista Transit - Expenditures $6,689,866 $6,536,459 $153,407 Chula Vista Transit - Revenues $2,425,000 $2,397,415 ($27,585) Transit Centers: Bayftont, H Street & $112,352 $98,899 $13,453 Southwestern College Net Variance +$139,275 Table I * Unaudited FY 06 Budget Since the funding consolidation, Transit staff actively participates in the SANDAGIMTS budget process. Along with the region's other Transit agencies, City Transit staff presents its proposed operating budgets. Various budget meetings are held and budgets are adjusted according to the available funds and SANDAG Board funding policies. The following are the current FY 06 operating budgets for CVT: Service Total Budget Fare Revenue Net Subsidy Chula Vista Transit - Expenditures $7,072,538* $2,423,344 $4,649,194 Chula Vista Transit Centers: Bayftont/E Street $114,801 $0 $114,801 H Street Southwestern College Total $7,187.339 $2,423,344 $4,763,995 Table 2 * As part of MTS Mid-year budget adjustment, the FY 06 CVT budget has been increased by approximately $67,000 to reflect unanticipated higher costs of natural gas and diesel. The budget includes approximately $218,156 for Non-Transit City Staff charge-backs, Specialized Services and Risk Management, see Table 3. These funds reimburse the City's General Fund. The Non-Transit City Staff support Transit operations on an as-needed basis. Activity Available Fundiog Non-Transit City Staff $114,896 Specialized Services $15,900 Risk Management $62,700 Bayftont Visitor Center (Stam $24,660 Total $218,156 Table 3 11-2 Page 3, Item : " Meeting Date 4/04/~ Comprehensive Operational Analysis As mentioned in last year's report, MTS has embarked on a regional Comprehensive Operational Analysis (COA) to be conducted by an outside consultant. The objective of this analysis is to take a comprehensive look at all MTS routes, see what the demands are in the region, and look realistically at the markets we can serve. MTS wants to redesign the system to better meet those markets within a fiscally sustainable level of service. Transit staff sent Council an Informational Memorandum dated November 1, 2005 detailing the impact on Chula Vista Transit services. Additionally, MTS planning staff made a presentation at the Council meeting of March 7, 2006. On March 23,2006 the MTS Board approved the implementation of the COA plan. Chula Vista should see changes to its routes in September 2006 and/or January 2007. Award Winning Chula Vista Express Bus (CVX) The Transit Division assisted the Planning Department with a Transportation Demand Management plan (TDM). Two components of the TDM plan were transportation projects. Transit Division staff procured, planned and scheduled the two transportation projects. One was a local shuttle bus and the other a commuter express type service. These two projects provide peak-hour, limited stop bus service for eastern Chula Vista commuters to access H Street Transit Center and Downtown San Diego. Four weekday trips are provided on both services, two trips in the morning and two in the afternoon commute peaks. Small buses are used to provide the local shuttle service and over-the-road (Greyhound type) coaches are used to provide the express bus service to Downtown San Diego. Services started on December 12, 2005. Currently the shuttle and commuter express are averaging 4 boardings per weekday and 44 boardings per weekday respectively. On February 22, 2006 the City Of Chula Vista received the Diamond Award from SANDAG. The award intention is to "honor those companies and individuals who have made a commitment to creating options for commuters and to promote the programs and activities they have established. " FEDERALLY FUNDED CAPITAL PROJECTS FY 05 - FY 06 Projects The funding consolidation allows the City to participate in available Federal Transit Administration (FT A) capital funds programs. City Transit staff has submitted various capital project funding requests to MTS. These request are then ranked by the Capital projects committee that is composed of staff from the various transit agencies. The requests are ranked according to: safety, replacement value, operating cost benefit, travel time savings and customer benefit. Fiscal year 2005 and 2006 capital purchases totaled $500,000 and consisted of the following: 11-3 Page 4, Item I \ Meeting Date 4/04/~ Redesign and Resurfacing of H Street Transit Center - Bus Area Amount - $250,00 Before Mter CCTV Cameras Amount - $500,000 The installation of security cameras, at all City Of Chula Vista Trolley Transit Centers, is a joint project with MTS, CV Police Department and Public Works Operations/Transit Division. Transit staff has identified our share, $250,000, of the cost for this project. Funding will come from Federal Transit Administration 5307 funds. Cameras will have a direct monitoring link to Trolley security and the Police Department. MTS is the lead agency for this project. The project is in the process of being rescoped due to the original bid coming in at $213,000 over budget. One major specification change will be to use a wireless system. The new request for bids will be ready to advertise in late April, according to MTS Trolley staff. FY 07 Federal Funded Project Requests All FY07 projects submitted by City Transit Staff to MTS are being recommended for approval to SANDAG. Capital projects total $207,000: Table 4 Amount $77,000 $40,000 $50,000 $40,000 TDA UNALLOCATED FUNDS Part of the terms of the transit fmancing consolidation was to allow the respective agencies to keep control of any unallocated balance and capital reserves. These funds can be used for a variety of transit projects or placed in a discretionary fund for future opportunities. The City's current unspent and uncommitted unallocated transit funds total $447,010. These funds are available to the City for its discretion to spend on Transit related capital projects and/or operations. 11-4 Page 5, Item i \ Meeting Date 4/04/Ob Table 5 Unallocated TDA Funds S Total Funds Available Unallocated TDA Reserves Capital Reserve Account - Southwestern College Driveway U ades Pre-Consolidation Credits TDA Reserves Notes $868,123 $50,000 $82,154 .. $1,000,277 A roved and Sent Nature Center Shuttle Bus Match er Council Reso. 2004-019 Nature Shuttle Bus Additional Funds per Council Reso. 2005-006 IStreetView: GIS Orthophotography/Topography Project- A roved b Council Reso. 2005-037 Street Swee er er Council Reso. 2005-240 $165,000 $18,000 Sent Spent $30,000 Spent Operator/Servicer/Mechanic Retention Incentive per Council Reso. 2004-303 $119,767 .:....'."..$33'2767 ' :'~A~~~~ '.:;:" " :' $220,500 Sent Total Funds Sent and Antici Unspent to Date: Distribution of Funds Contingent on Ratification of Labor Agreement by Transit Contractor Employees Total of$220,500 approved for distribution over FY 05, 06 & 07. $553,267 Total TDA Fund! Available $447,010 $447,010 $1,000277 BUS STOPS FACILITIES & MAINTENANCE Transit staff continues its project to upgrade existing transit facilities in all areas of the City. Upgrade priority is given to requests by citizens, improved wheelchair access and high ridership bus stops. In addition to the Federal Transit Capital funds, City Transit staff has access to over $310,000 in developer fees to install and upgrade transit facilities in the Eastlake and Otay Ranch areas of the City. City Transit staff has coordinated with the Planning and General Services Departments in the creation of Developer transit capital deposit accounts. The Developers deposit an estimated amount of monies based on future transit services in their respective areas. The following is a summary of some of the projects of significance: 11-5 Page 6, Item I ( Meeting Date 4/04/0i> · Fourteen (14) bus shelters are currently under construction on E. Palomar Street between Paseo Ladera and Olympic Parkway. · Transit continues its installation project of new Steel Mesh Bus Benches with Back and Armrests vs. the flat concrete benches. Over 80 new benches have been installed throughout the City. · Pilot Project - Bus Stop with Solar Lighting (E Street and 4th Avenue) Bus Stop Maintenance Transit staff has tried to be responsive to the community by addressing issues related to trash, graffiti, and weed abatement at or near our bus stops. Transit funds half the salary of a Public Works Senior Maintenance Worker to respond to bus stop maintenance issues. In our efforts to be pro-active the Transit Division continues to contract with the County of San Diego Probation Department for bus stop maintenance services. At a cost of only $364 per day probation crews target specific route segments for maintenance as directed by Transit staff. To date we have seen significant improvements to the appearance of our bus stops at an outstanding cost benefit. Additionally, the new Staff Truck provides the opportunity for City Transit Staff to directly respond to bus stop maintenance issues immediately as they survey the City's transit routes on a daily basis. 11-6 Page 7, Item Meeting Date 4/04/~> Transit staff is working with the Environmental Management Division of the General Services department to promptly remove abandoned shopping carts at City bus stops. The acquisition of a Street Sweeper in 2005 is contributing to the maintenance of the City's transit centers. A noticeable improvement to the aesthetics of the transit centers, which are located at critical gateways to the City, has been made. In conjunction, with the help of Public Work Operations' Park Maintenance crews the landscaping in the planters at the H Street Transit Center has been improved. " Before After OPERATIONS The City OfChula Vista's Department of Public Works Operations, Transit Division, manages CVT. Two full-time City employees, the Transit Coordinator and the Assistant Transit Coordinator, and a half-time Administrative Technician administer the transit system. The Department of Public Works Operations and Transit Division also share one full-time employee: a Senior Maintenance Worker. Transit also employees a part-time Intern to help monitor customer service and performance of our Transit Contractor (ghost- rider type program). Other City staff provide additional support on an as-needed basis. Service planning, scheduling, contract monitoring (operational and maintenance), community relations, budget preparation and monitoring, funds programming, transit facilities monitoring (bus stops, shelters, buildings), regional coordination and operations/capital procurements are among some of the duties and responsibilities of the City's Transit staff. The actual operation of CVT is privatized and operated by A TC/Connex. The service was procured through a two-step, competitively bid process. The Transit Contractor is responsible for the daily operations of the system and the maintenance of the fleet. All the personnel associated with the direct operations of CVT are employees of the Contractor; i.e. management, road supervisors, mechanics, and bus operators. ATCNancom employs approximately 96 Full-Time Equivalent employees. ATCIConnex is currently under a 5-year contract with the City, which terminates on June 30, 2007. The contractor is compensated monthly, based on the number of Revenue Miles operated. The following Table outlines the agreed upon per Revenue Mile rates: 11-7 Page 8, Item i i Meeting Date 4/04/a7 Period Per Revenue Mile Rate Julv I, 2002 - June 30, 2003 $3.1518 Julv I, 2003 - June 30, 2004 $3.2461 Julv 1,2004 - June 30, 2005 $3.3432 Julv I, 2005 - June 30, 2006 $3.4433 Julv I, 2006 - June 30, 2007 $3.5464 Table 6 CVTIMTS Joint Procurement Process A Council informational memo dated January 23,2006, notified Council ofMTS's invitation to participate in a joint procurement process for transit services. This process will involve an initial Request for Proposal (RFP) followed by a negotiated procurement for a service start date of July 2007. MTS will combine three of their current transit contracts in this solicitation, with a goal of achieving imProved economies of scale and reducing transit cost in the region. Adding CVT to the larger procurement process will increase the attractiveness and competitiveness of the CVT contract package, which accounts for 15% of the MTS region's transit contracted services. Transit staff actively participates in all phases of the procurement process. Route Descriptions Chula Vista Transit service is designed to serve the residents of the City of Chula Vista and its visitors. Routes have been planned to serve all trip types. Ten of the II routes have transfer connections with the San Diego Trolley system at BayfrontIE Street, H Street, and Palomar Trolley Stations. Additionally, CVT has transfer connections to two regional bus routes and one Local Transit System: MTS Route 929 via 3rd Avenue and MTS Route 932 via Broadway; and National City Transit at Plaza Bonita. CVT routes are presently operated with the following destinations: CHULA VISTA TRANSIT ROUTES Route Descrintion 701 Serves the H Street Trollev Station and the Palomar Trollev Station via F Street, Hilltop Drive and Main Street 702 Serves the H Street Trolley Station and the Palomar Trolley Station via 4'" Avenue, 2M Street, Melrose Avenue and Palomar Street 703 Serves the H Street Trolley Station and the Palomar Trolley Station via 3'" Avenue, J Street, Crest Street, Oleander Avenue and Orange Avenue 704 Serves the H Street Trolley Station and Southwestern College via H Street, 4'" Avenue, Naples Avenue and E. Palomar (Otay Ranch Village I). This Route also provides express service between Southwestern College and H Street Trolley Station on a limited basis 705 Serves the Bavfront/E Street Trolley Station and Southwestern College via E Street, Bonita Road, and Otay Lakes Road 706 "Downtowner", is a clockwise loop route serving the H Street Trolley Station and business district via 4'" Avenue and 3" Avenue 706A "Downtowner" is a counterclockwise loop route serving the Bayfront Trolley Station, the Chula Vista Marina, KOA Campgrounds and the Chula Vista downtown business district 707 Serves the H Street Trolley Station, Sharp Chula Vista Medical Center and Rancho Del Rey Plaza via East H Street, Paseo Ranchero, and Paseo Ladera 709 Serves the H Street Trolley Station, Southwestern College, Eastlake and Otay Ranch via H Street, E. Palomar (Otay Ranch Village 5), Olympic Parkway and Eastlake Parkway. This Route also provides express service between Southwestern College and H Street Trollev Station on a limited basis 711 Serves Plaza Bonita Shopping Center, Southwestern College and Eastlake via Bonita Mesa Road, Bonita Road, Central Avenue, Corral Canvon Road, East H Street and Otay Lakes Road 712 Serves the Palomar Trollev Station and Sharo Chula Vista Medical Center via Palomar Street, Melrose Ave. and Nanles St. Table 7 11-8 .: Page 9, Item : ; Meeting Date 4/04/0b Since the last report to Council no significant changes to the system have been implemented. As a reminder, the above mentioned route descriptions will have a significant change with the COA study. Changes for Chula Vista are proposed for September 2006 and/or January 2007. Operational Statistics CVT operates approximately 1.4 million revenue miles per year and carried over 3.07 million passengers in FY 05. As part ofMTS, CVT is classified as a Suburban Feeder Transit System. CVT's system productivity exceeds the region's Suburban Feeder average productivity in five of the seven categories. Passengers! Passengers/ Average Op. Cost! Subsidy/ Op. Cost! Farebox FY05 Revenue Revenue Fare/ Passenger Passenger Rev. Mile Recovery Mile Hour Passen!!er Ratio Suburban 1.69 20.77 $0.81 $2.50 $1.69 $4.23 28.65% Feeder AVI!:. Chula Vista 2.24 28.40 $0.79 $1.99 $1.20 $4.46 39.57% Transit % Difference 32.54% ./ 36.74% ./ (2.47%) (20.4%) ./ (29.00%)./ 5.44% 38.12%./ Table 8 Transit Contractor (ATe) Fiscal year 2005 was ATC's third year as the City's transit contractor. Although, we have a contractual relationship with A TC, City Transit staff considers A TC an equal partner in our mutual goal to providing safe, reliable and efficient transportation to the visitors and residents of Chula Vista. We emphasize to ATC that their employees provide and represent a City service that must be delivered with the highest level of professionalism. The following is a list of accomplishments by transit as part of this team effort: Accomplishment Description Performance .:. On-Time Performance - 95.56% Regional Goal 90.0% .:. Trip Completion - 99.93% Regional Goal 99.8% .:. ADA Bus Stop Call-Outs - 94.85% Region Average 75.0% .:. Total Miles per Road Call- 20,000 Industry Standard 9-12K Miles per Roadcall Stand-By Buses To better serve our riders Stand-By buses have been staged at the H Street Transit Center Palomar Transit Center and at Southwestern College to meet passenger peak-load demands. Stand-Bv buses can auicklv respond to service quality issues. Bus Roadeo Hosted the Local Bus Roadeo for the third time. Transit Maintenance Shop Annual Maintenance Audit determined the transit shop to be a "Maintenance Center of Excellence" Table 9 11-9 Page 10, Item Meeting Date 4/04/cJ> RiderlST Transit staff continues to emphasize the highest standards in the delivery of service. The RiderlST customer service based orientation program created by City Transit staff is presented to for all ATC employees. RiderlST emphasizes the importance of providing the highest quality of service to our transit users and details what the City expects from CVT staff. RiderlSTelevates the word "PUBLIC" in "Public Transit" and connects the word "SERVICE" to "Transit": Public Transit is a Public Service. All new A TC employees are made aware of the "Human Element" connected to the service they provide to our community. The following bullet points summarize some of the main topics presented: . Public Service · Human Element of Service · Serving our Riders rather than Processing Them · Bus Operators connect the Service to the Rider · Not Only Meet but Exceed Our Riders' Expectations · Emphasis on "Exceptional Service" · Bus Operator has the Responsibility to Make Things Better for the Riders · Make the City's Values their Own: Professionalism, Accountability, Respect, Teamwork, and Integrity · "Riders' Needs ---. CVT Makes the Connection" The City's Transit Coordinator conducts the RiderlSTpresentations. All ATC employees attended the first session and subsequently all new employees are presented the RiderlST program. To date in FY 05 Transit has received 47 compliments on the service provided by CVT bus operators versus 31 complaints. Organized Labor Activities There has been no change to the labor issues since our last annual report to Council. Twice the ATC drivers have voted down the labor contract and the Amalgamated Transit Union, Local 1309, leadership has not proposed the contract for third attempt at ratification. TRANSIT RELATED CAPITAL ASSETS VehicIes The Table below shows the current CVT bus fleet. The complete transition of the fleet from Diesel to CNG should be completed within the next four years. 11-10 Page 11, Item i, \ Meeting Date 4/04/C6 CVT VEIDCLE FLEET INVENTORY Manufacturer Model Yr Quantitv Length (Ft) Fuel Status El Dorado 2005 6 30 CNG Active New Flyer 2001 10 40 CNG Active New Flyer 2000 15 40 CNG Active New FIver 2000 2 40 Diesel Reassilmed from National City Transit Gillig 1995 2 35 Diesel Active Orion 1991 2 35 Diesel Contim'ency Total 37 Table 10 As of July 2006, the CVT fleet will consist of 31 CNG buses and four active Diesel buses. Three of the four Chance Trolley buses will be auctioned with one trolley bus being turned over to the Nature Center as a back-up vehicle to their CNG bus. The CNG buses are owned by MTS and leased to the City for one dollar a year per bus via an agreement approved by Council on January 12, 1999. Fixed Assets Public Works Center - Transit Using the City's Transit Development Act (TDA) reserves, CVT contributed $7.8 million dollars to the construction of the new Public Works/Transit Maintenance Yard at 1800 Maxwell Road. The specifications of the new Maintenance Yard are as follows: . 25 acre facility . Yard security includes full 24-hour digital camera coverage as well as gate and door card access systems for all employees . Dedicated office space for transit contractor management personal . Locker equipped driver area . Dedicated office space for City Transit staff and extended storage space . Dedicated parking space for 45 buses (current CVT fleet is 37 buses) . Comprehensive fleet management system utilized for both City Public Works Operations and City Transit fleets . Two compressor CNG fueling Station for CVT's fleet of25 CNG buses . Dedicated public access CNG fueling island . CNG de-fueling Station . Main fueling island equipped with three (3) CNG dispensers, three (3) diesel fuel dispensers, two (2) high capacity vacuum hoses, and multiple fluid dispensers to service the buses while they are being fueled . Fully equipped Fare Recovery Room located adjacent to the fuel island . Three bay, state of the art, enclosed vehicle wash building with both brush and brushless fully automated wash bays as well as a hand wash bay for deep cleaning and power washing . Six bay bus maintenance building which includes: o Two parallelogram lift bays 11-11 Page 12, Item \ Meeting Date 4/04/8b o Two, two post, in-ground axle lift bays o One portable lift bay o One pit inspection bay o Chassis wash bay with parallelogram lift o Brake Shop o Tire Shop o Two story Parts Storage Room o Mechanics Room o Maintenance Foreman's Office on the floor o Computer Stations throughout for a future paperless shop Bayfront/E Street Visitor Information Center The City's Public Information and Transit personnel manage the BayfrontIE Street Visitor Information Center (BVIC). This facility was built in cooperation with the County of San Diego to better serve both the visiting public and permanent residents. The City contributed $3.4 million toward the construction of this facility. Regional TDA funds are allocated for the operation and maintenance ofthe BVIC. The City's responsibilities include: · Administration of visitor information center leases · Operation and maintenance of the Information Center and grounds · Administer portion of the budget Southwestern College Transit Stop (SWCTS) The SWCTS was built in 1995 by the County of San Diego with the City agreeing to the responsibility for major maintenance and repairs. Transit staff ensures the City's maintenance responsibilities are met. RIDERSIllP GROWTH CVT ridership has rebounded from a four-year decline. Ridership started to increase in the fourth quarter of fiscal year 2005 and has continued into fiscal year 2006. In the first six months of fiscal year 2006 ridership has increased by 7.8% compared to same period last year. CONCLUSION Ridership and productivity numbers have started to increase. As mentioned previously, the Comprehensive Operational Analysis (COA) study will be the blueprint for future transit services in the region. The next couple of years will be very challenging for the COA will affect the travel patterns of CVT riders. It is our analysis that our riders will adjust to the route changes and will benefit from the increase in service frequency. City Transit staff will continue to work closely with MTS and SANDAG staff to minimize the impacts on Chula Vista Transit services 11-12 . ,.,. Page 13, Item \ \ Meeting Date 4/041Oh FISCAL IMPACT: CVT operations and capital programming contains no General Fund contribution. The CVT's operating and capital programming costs are funded by SANDAG Consolidated TDA Article 4.0 funds and Federal Transit Administration 5307 funds. All City Staff costs are reimbursed by the SANDAG funds. File: DS-027/035 H:\Public Works Operations\A.l13's 2006\A113 CVT Report on Operations and Funding -FY 06 jrc rev.doc 11-13